TMI Tax Updates - e-Newsletter
October 17, 2020

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• GST:

  Detention of consignment alongwith the goods - revised e-way bill could not be uploaded into the system before the commencement of the transportation - the petitioner can be permitted to obtain a release of his goods and vehicle on furnishing a Bank guarantee for the amount covered in the notice. - HC
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• GST:

  Refund of GST amount deposited during investigation - Search and seizure proceedings initiated by the 1st respondent against the petitioner under Section 67 of GST Act - Revenue Sharing - It would be too premature to comment upon the act of the respondents and cannot be said to be against the provisions of the statute or misuse, warranting interference under Article 226 of the Constitution of India. - HC
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• Income Tax:

  Assessment of trust - whether the assessee Trust is a determinate Trust or indeterminate Trust? - Once the benefits are to be shared by the beneficiaries in proportion to the investment made, any person with reasonable prudence would reach to the conclusion that the shares are determinable. Once the shares are determinable amongst the beneficiaries, it would meet with the requirement of the law, to come out from the applicability of Section 164 of the Act. - HC
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• Income Tax:

  Penalty u/s 271(1)(c) - set off of business loss against income from other sources disallowed - Claim of the assessee is in consideration of the financial statements and the assessee adopted one of the possible views that the business loss can be set off against the income from other sources. The assessee has made a claim under the bonafide belief that it is allowable under the law. - No penalty - AT
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• Income Tax:

  LTCG - Benefit of deduction u/s. 54 denied - CIT(Appeals) has gone by the fact that there was absence of Occupation Certificate but this will not be a ground to deny the claim of assessee for deduction u/s. 54 of the Act, as other evidence filed by the assessee sufficiently demonstrates that assessee has constructed a residential house within the period of stipulated by law. - AT
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• Income Tax:

  Levy of penalty u/s 271(1)(c) - wrong deduction of TDS @1% instead of 20.6% - purchase of immoveable property - seller is a Non Resident Indian - Assessee(s) are duly eligible to get the benefit of the provisions of Section 273B of the Act as they have proved beyond doubt that in a bonafide belief they deposited tax @1% u/s 194IA of the Act considering the seller as Resident Indian and later on before conclusion of the proceedings before the Ld. A.O have deposited correct amount of tax @20.6% and applicable interest. - AT
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• Income Tax:

  Income accrued in India - nature of fees for technical services - the provisions of Section 9(1)(i) are not attracted in this case as no income has accrued or arised from the business connection abroad in India. The explanation states that only that part of income from business operations can be said to be accruing or arising in India only if it is relatable to the carrying of operations in India. Thus, the payment received by the assessee neither falls under Section 9(1)(i) or Section 9(1)(vii). - AT
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• Income Tax:

  Deduction u/s 10AA - once separate books of account have been maintained for each of the undertakings, there is no basis for the AO to allege that any of the expenses of non-SEZ units pertained to revenue of eligible units. Once such expenses has also not been claimed, the same is of no consequences. - AT
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• Income Tax:

  Penalty u/s 272A(2)(k) - delay in furnishing quarterly returns/statements - A.O. directed to levy penalty u/s 272(2)(k) of the Act from the date of payment of TDS up to the date of filing of e-TDS statements, since e-TDS statement cannot be filed without payment of TDS to the credit of the Central Government account. - AT
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• Customs:

  Restriction on export of KN96 masks - RBI prohibited Merchanting Trade Transactions (MTT) / Receipt of consideration in foreign currency - the Government of India is the best judge either to ban export of the aforesaid items or to place the aforesaid items under the restricted categories. - The restriction imposed by Government of India and Reserve Bank of India amounts to reasonable restriction and in noway violating the freedom of trade and commerce as pleaded by the petitioner - HC
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• IBC:

  Initiation of CIRP proceedings - In the order of NCLT, there was no finding rendered by the ‘Adjudicating Authority’ as to how a third party payment became a ‘Financial Debt’ or how a ‘Financial Creditor’ had become a ‘Financial Creditor’, in the absence of any ‘Financial Debt’ - Matter restored back - AT
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Articles

• APPLICABLE PROVISIONS OF SEBI (LODR) REGULATIONS, 2015 TO INSOLVENCY AND BANKRCUPTCY CODE, 2016
• RECENT DEVELOPMENTS IN GST

Notifications

• Customs

• 55/2020-Customs (N.T./CAA/DRI) - dated 12-10-2020 - Cus (NT)
  Appointment of CAA by DGRI

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• 54/2020-Customs (N.T./CAA/DRI) - dated 9-10-2020 - Cus (NT)
  Appointment of CAA by DGRI

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• 53/2020-Customs (N.T./CAA/DRI) - dated 9-10-2020 - Cus (NT)
  Seeks to amend Notification No. 35/2020-Customs (N.T./CAA/DRI) dated 10.08.2020

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• DGFT

• 41/2015-2020 - dated 15-10-2020 - FTP
  Amendment in import policy of items under ITC HS Codes 84151010 and 84151090 of Chapter 84 of ITC (HS), 2017, Schedule - I (Import Policy)

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• GST

• 79/2020 - dated 15-10-2020 - CGST
  Central Goods and Services Tax (Twelveth Amendment) Rules, 2020.

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• 78/2020 - dated 15-10-2020 - CGST
  Seeks to amend Notification No. 12/2017 – Central Tax, dated the 28th June, 2017 - the number of HSN digits required on tax invoice

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• 77/2020 - dated 15-10-2020 - CGST
  Seeks to amend Notification No. 47/2019 – Central Tax dated the 9th October, 2019 - filing of annual return under section 44 (1) of CGST Act for F.Y. 2017-18 and 2018-19 is optional for small taxpayers whose aggregate turnover is less than ₹ 2 crores and who have not filed the said return before the due date

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• 76/2020 - dated 15-10-2020 - CGST
  Seeks to prescribe return in FORM GSTR-3B of CGST Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021

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• 75/2020 - dated 15-10-2020 - CGST
  Seeks to prescribe the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from October, 2020 to March, 2021

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• 74/2020 - dated 15-10-2020 - CGST
  Seeks to prescribe the due date for furnishing FORM GSTR-1 for the quarters October, 2020 to December, 2020 and January, 2021 to March, 2021 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year

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• 06/2020 - dated 15-10-2020 - IGST
  Amendment in Notification No. 5/2017 – Integrated Tax, dated the 28th June, 2017

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• GST - States

• 49/2019 – State Tax - dated 14-10-2020 - Delhi SGST
  Delhi Goods and Services Tax (Sixth Amendment) Rules, 2019

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• 38/1/2017-Fin(R&C)(176)/620 - dated 14-10-2020 - Goa SGST
  Goa Goods and Services Tax (Eleventh Amendment) Rules, 2020.

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• 38/1/2017-Fin(R&C)(175)/619 - dated 14-10-2020 - Goa SGST
  Amendment in Notification No. 38/1/2017--Fin(R&C)(134), dated 30th March, 2020

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• 38/1/2017-Fin(R&C)(174)/618 - dated 14-10-2020 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C)(133), dated 30th March, 2020

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• (38/2020)-FD 03 CSL 2020 - dated 13-10-2020 - Karnataka SGST
  Seeks to notify a special procedure for taxpayers for issuance of e-Invoices in the period 01.10.2020 - 31.10.2020.

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• (37/2020)-FD 03 CSL 2020 - dated 13-10-2020 - Karnataka SGST
  Seeks to amend Notification No. (08/2020) No.FD 03 CSL 2020(e), dated the 27th March, 2020

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Circulars / Instructions / Orders

• DGFT - 26/2015-2020 - dated 16-10-2020
  Amendments in Para 4.44 - Monitoring of Export Obligation - of the Handbook of Procedures 2015-20.
• Customs - 46/2020 - dated 15-10-2020
  Testing of outside samples by Revenue Laboratories
• Customs - PUBLIC NOTICE NO. 11/CCP/JMR/2020 - dated 30-9-2020
  Launch of e-Office in Office Of the Commissioner of Customs (Preventive), Jamnagar
• Customs - PUBLIC NOTICE NO. 127/2020 - dated 28-9-2020
  Declaration to be filed  by  importer in terms of Notification No. 90/2020-Customs (N.T.), for preferential rate of duty as per Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 in Bill of Entry
• Customs - PUBLIC NOTICE NO. 33/2020 - dated 23-9-2020
  Customs- Drawbacks – pending due to query reply From exporter and EGM not filed cases
• Customs - PUBLIC NOTICE NO. 10/CCP/JMR/2020 - dated 18-9-2020
  Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin
• Customs - PUBLIC NOTICE NO. 09/CCP/JMR/2020   - dated 16-9-2020
  All India roll-out of Faceless Assessment
• Customs - PUBLIC NOTICE NO. 125 /2020 - dated 14-9-2020
  Guidelines regarding implementation of Section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin
• Customs - PUBLIC NOTICE NO. 124/2020 - dated 14-9-2020
  Operationalization of Faceless Assessment at Mumbai Customs Zone - III
• Customs - PUBLIC NOTICE NO. 122/2020 - dated 8-9-2020
  Approval of different category of processed plant products which have least Phytosanitary risk, amended in PQ-Order, 2003
• Customs - PUBLIC NOTICE NO. 116/2020 - dated 3-9-2020
  Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin
• Customs - PUBLIC NOTICE NO. 117/2020 - dated 3-9-2020
  Advisory on Threat of Unsolicited/ Mystery Seed Parcels from unknown sources
• Customs - PUBLIC NOTICE NO. 24/2020 - dated 31-7-2020
  ICES Advisory 11/2019 (SCMTR) - Introduction of Customs Inland Manifest for eSealed export cargo

News

• AUM through NPS and APY subscribers under Pension Fund Regulatory and Development Authority crosses ₹ 5 trillion

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• Finance Minister Smt. Nirmala Sitharaman attends the Plenary Meeting of the International Monetary and Financial Committee of the IMF through video-conference

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• Income Tax Department carries out searches in Delhi, NCR and Haryana

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Case Laws:

• GST

• 2020 (10) TMI 673

  Detention of consignment alongwith the goods - revised e-way bill could not be uploaded into the system before the commencement of the transportation - HELD THAT:- While the explanation offered by the petitioner is one that ought to be considered by the respondents before passing the final order under Section 129(3) of the GST Act in Form GST MOV- 9, the petitioner can be permitted to obtain a release of his goods and vehicle on furnishing a Bank guarantee for the amount covered by Ext.P11 notice. Accordingly, the writ petition is disposed by directing the respondents to release the goods and the vehicle to the petitioner, on the petitioner furnishing a Bank guarantee for the amount demanded in Ext.P11, making it clear that the objections furnished by the petitioner shall be duly considered by the respondents, and the petitioner afforded an opportunity of hearing, before passing the final order in Form GST MOV-9, in accordance with Section 129(3) of the GST Act.

  Petition disposed off.

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• 2020 (10) TMI 672

  Grant of Regular Bail - offences under Sections 132(1) (b) (c) (d) (f) (i) and (l) read with Section 132 (1) (i) (iv) and read with sub-section (5) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Although in the present case allegations levelled against the petitioners are serious in nature but the fact remains that the petitioners are in custody for the last more than two years and admittedly maximum punishment to be imposed on the accused, if convicted, is five years. Complaint in the present case was filed in the year 2018, whereas, the investigation has been concluded in July, 2020. Now the case is listed before the trial court for recording of pre-charge evidence and the trial may not be concluded at an early date.

  Considering the custody period of the petitioners, but without commenting on the merits of the case, it would be just and expedient to order release of the petitioners on bail - Petitioners be admitted to bail subject to each of them furnishing bail bond in the sum of ₹ 10,00,000/- with one surety in the like amount to the satisfaction of the Trial Court - Petition allowed.

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• 2020 (10) TMI 669

  Validity of impugned summary of show-cause notice - contention of the learned counsel for the petitioner is that the impugned summary of show-cause notice has been issued without issuance of a show-cause notice as is required under Section 74(1) of the CGGST Act, 2017 - HELD THAT:- This Court is of the opinion that the matter need not be kept pending any further for further adjudication by this Court at this stage. The matter as such stands remitted back to the respondent no. 2 to ensure that a show-cause notice as is required u/s 74 (1) is duly issued and served upon the petitioner granting him some reasonable time to respond to the said show-cause notice and thereafter proceed in accordance with the provision of law.

  Petition disposed off.

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• 2020 (10) TMI 671

  Profiteering - validity of order passed - vires of Section 171 of CGST Act and Chapter XV of the CGST Rules - HELD THAT:- Keeping in view the orders passed by this Court in PHILLIPS INDIA LIMITED VERSUS UNION OF INDIA & ORS. [2020 (6) TMI 626 - DELHI HIGH COURT] as well as M/S. SAMSONITE SOUTH ASIA PVT. LTD. VERSUS UNION OF INDIA & ORS. [2020 (7) TMI 526 - DELHI HIGH COURT] and M/S. PATANJALI AYURVED LTD. VERSUS UNION OF INDIA & ORS. [2020 (7) TMI 614 - DELHI HIGH COURT], this Court directs the petitioner to deposit the principal profiteered amount (i.e. ₹ 7,53,854/- minus ₹ 35,898/-) in six equated monthly installments commencing 15th October, 2020.

  List on 3rd November, 2020.

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• 2020 (10) TMI 670

  Refund of GST amount deposited during investigation - Search and seizure proceedings initiated by the 1st respondent against the petitioner under Section 67 of GST Act - Revenue Sharing - compensation to the Petitioners for causing damage to the reputation of the Petitioners - HELD THAT:- The provisions of the Act like inspection of the premises, powers of arrest and summons to produce documents have been incorporated with the aim to prevent evasion of GST at the hands of the unscrupulous taxpayers. Observation of mine would not be connected with the act of the petitioners as it is a general observation. If at all, the residences of the petitioners were visited by the officers of the GST, they could have produced on record the video recording, as it cannot be expected that the petitioners, who are Managing Director and Director of a Media Company would not have installed cameras outside their houses - This Court during the course of the hearing specifically asked the learned senior counsel for the petitioners as to whether the cheque has been encashed or not. On instructions, he said that there is no such information with the same. Thus the statement of the Mr.Sreelal Warrier that the cheque has not been presented on the perpetual request for the time being remained unrebutted.

  To interference in the process issued for auditing of the books as well as order of seizure of the documents would help the department in co-relating the entries in the documents and at the time of auditing of the account. The procedure for taking further action has been prescribed under Chapter 15 of 2017 Act regarding the determination of the tax not paid, short paid, erroneously refunded, input tax credit wrongly availed, utilized etc., and Section 74 deals with short payment of tax or not paid or erroneously refunded or input tax wrongly availed or utilized for any willful misstatement of suppression of the facts.

  It would be too premature to comment upon the act of the respondents and cannot be said to be against the provisions of the statute or misuse, warranting interference under Article 226 of the Constitution of India. It would not be appropriate for this Court to form an opinion with regard to the alleged conduct of the petitioners which is not supported by any material to prima facie bring the case within the realm of judicial review - Petition dismissed.

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• Income Tax

• 2020 (10) TMI 668

  Power to transfer cases u/s 127 - Stay on transfer of case - Period of limitation for passing an assessment - intra-Court appeal - This is a case where the assessment files are being transferred from one city to a neighbouring city hardly 158 kms. away, in the same State. What inconvenience can this cause to V.V. Minerals No.2, especially when they have business and offices in several cities? - HELD THAT:- SLP dismissed.

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• 2020 (10) TMI 664

  TP Adjustment - Comparable selection - benchmarking of international transaction of provision of Ancillary Management Support Services by providing marketing support services to the Associated Enterprises - HELD THAT:- Apitco Ltd. and GPCL rejected on the ground that Government companies are not comparable to business concerns. See PHILIP MORRIS SERVICES INDIA SA [2019 (1) TMI 653 - DELHI HIGH COURT].

  Exclusion of TSR Darashaw Ltd. as no segmental information was available in respect of the different segments operated by the company.

  HSCC (India) Ltd. - assessee claims that because of difference in provisions of doubtful debts, the margins have been incorrectly computed at 18.32% whereas the correct margin is 8.96% - We direct the Assessing Officer/TPO to re-compute the margins of the said concern i.e. HSCC (India) Ltd. by including provision of doubtful debts as an operating item and re-compute the mean margin of assessee.

  Specturm Business Solution Ltd. - Because of the similarity of functions being performed by both the companies, we direct the inclusion of Specturm Business Solution Ltd. in the final list of comparables.

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• 2020 (10) TMI 663

  TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee as engaged in the business of software development and support services to its parent company and exceeding tolerance range of 15% of the RPT need to be deselected from final list.

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• 2020 (10) TMI 662

  Penalty u/s 271(1)(c) - set off of business loss against income from other sources disallowed - HELD THAT:- The assessee has disclosed the income in the financial statements which is not disputed by the A.O. A.O. has levied the penalty because of set off claimed by the assessee and the mere disallowance or disagreement of a claim cannot be a basis for levy of penalty and also the addition made in the assessment order by the A.O cannot be a gateway for automatic levy of penalty.

  CIT(A) has passed a elaborate order confirming the penalty, overlooking the facts, nature and method of operations of the assessee business. We are of the view that penalty cannot be automatic and rely on the decision of the CIT Vs. Manjunatha Cotton and Ginning factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT].

  A.O has levied the penalty for concealment of income as the assessee company has the treated the speculation loss as a business loss and claimed set off against the income from other sources. Claim of the assessee is in consideration of the financial statements and the assessee adopted one of the possible views that the business loss can be set off against the income from other sources. The assessee has made a claim under the bonafide belief that it is allowable under the law. Direct the A.O to delete the penalty and allow the grounds of appeal of the assessee.

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• 2020 (10) TMI 661

  LTCG - Benefit of deduction u/s. 54 denied - CIT(A) concluded that Assessee did not construct a residential house within a period of 3 years from the date of transfer of the original asset, on the basis that the photograph filed as evidence does not reveal that the construction of the house was on the plot of land purchased by the Assessee and that there was no completion certificate produced to substantiate the claim of the Assessee - HELD THAT:- CIT(A) has ignored the other evidence on record which prove construction and completion of construction of a residential house.

  Merely because the sale deed had not been executed or that construction is not complete and it is not in a fit condition to be occupied does not disentitle the assessee to claim s. 54F relief. As in SAMBANDAM UDAYKUMAR [2012 (3) TMI 80 - KARNATAKA HIGH COURT] followed similar decision rendered by the Hon’ble Madras High Court in the case of Sardarmal Kothari [2008 (6) TMI 15 - MADRAS HIGH COURT]. We are therefore of the view that even on the basis of non-completion of construction of the new asset within the period of 3 years, the deduction u/s.54 of the Act cannot be denied to the Assessee.

  In the present case, we are satisfied on the basis of evidence produced by the assessee that a building had come up over the site purchased by assessee and the purchase of site and cost of construction was much more than the capital gain arrived at by the assessee on sale of ancestral house.

  CIT(Appeals) has gone by the fact that there was absence of Occupation Certificate but this will not be a ground to deny the claim of assessee for deduction u/s. 54 of the Act, as other evidence filed by the assessee sufficiently demonstrates that assessee has constructed a residential house within the period of stipulated by law. The findings of the CIT(Appeals) in this regard are very vague and cannot be the basis to deny the claim of assessee for deduction u/s. 54 of the Act. - Decided in favour of assessee.

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• 2020 (10) TMI 660

  Revision u/s 263 - assessee has made declaration of Capital Gain only in IDS 2016 - LTCG/STCG arising from sale of equity shares - HELD THAT:- AO has issued a questionnaire wherein specific information was sought on transaction of equity shares and working of short term capital gain/long term capital gain. The assessee furnished a detailed reply to the notice issued under section 142(1) of the Act, wherein the assessee while replying to the query on transaction of shares, informed that a declaration under IDS 2016 has been made in respect of long term capital gain arising on sale of shares to GCM Securities Ltd.

  AO after examining the documents accepted the same and made no addition. Merely for the reason that the Assessing Officer has taken a plausible view after examining the records that is not acceptable to the PCIT, would not make the assessment order erroneous. In the present case twin conditions set out in section 263 are not satisfied and hence, the PCIT wrongly assumed revisional jurisdiction. - Decided in favour of assessee.

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• 2020 (10) TMI 659

  Levy of penalty u/s 271(1)(c) - wrong deduction of TDS @1% instead of 20.6% - purchase of immoveable property - seller is a Non Resident Indian - short payment of tax and subsequently the assessee paid the remaining amount of short deducted tax and interest - HELD THAT:- The assessee(s) prudently deducted tax @1% u/s 194 (1A) of the Act. Subsequently when it was brought to their notice that the seller is a Non Resident Indian they as law abiding citizens immediately deposited the correct amount of TDS @20.6% applicable on the said transaction u/s 195 along with interest in addition to 1% already deposited. Mens rea to evade tax is not appearing at any stage of the proceedings on the part of the assessee. No difference for them to deduct tax @1% or 20.6% since it was to be withheld from the purchase consideration. There cannot be any other mal intention for deduction of TDS at lower or wrong rate.

  Assessee(s) are duly eligible to get the benefit of the provisions of Section 273B of the Act as they have proved beyond doubt that in a bonafide belief they deposited tax @1% u/s 194IA of the Act considering the seller as Resident Indian and later on before conclusion of the proceedings before the Ld. A.O have deposited correct amount of tax @20.6% and applicable interest. Thus they had a reasonable cause for the said failure and in addition the decision in the case of SMS India Ltd [2005 (11) TMI 363 - ITAT MUMBAI] also applies squarely on the case of the assessee. We thus set aside the finding of Ld. CIT(A) and direct the revenue authorities to delete the penalty levied u/s 271C - Decided in favour of assessee.

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• 2020 (10) TMI 658

  Deduction u/s.80P - excess provision for Bad and Doubtful Debts Reserve (BDDR) of earlier years written back is taxable income - appellant claimed deduction u/s.36(1)(vii) - full amount of net profit available for the benefit u/s.80P was without the effect of BDDR - HELD THAT:- As seen from the assessee’s return of income for the assessment year 2006-07, being the period, when it was eligible for deduction u/s 80P that it added back BDDR and thereafter claimed deduction u/s 80P on the full amount of income. Again the net effect of this exercise is that the creation of BDDR in the books of account by means of debit to the Profit and loss account and thereafter its reversal in the computation of total income before the claim of deduction u/s.80P is that the full amount of net profit available for the benefit u/s.80P was without the effect of BDDR. To put it simply, suppose Net Profit before BDDR for the year is ₹ 300/-.

  Once BDDR of ₹ 100/- for the year is debited, net profit gets reduced to ₹ 200/-. Again at the time of computation of total income with the addition of ₹ 100/- back to ₹ 200/-, the total of profit again comes to ₹ 300/-, which is available for deduction u/s.80P. Thus, even without taking any deduction of BDDR, there was full deduction u/s.80P in respect of eligible income only.

  With the insertion of sub-section (4) to section 80P w.e.f. 01-04- 2007, the claim for deduction u/s.80P has come to be denied to the societies like the assessee but with the simultaneous onset of the benefit of deduction u/s.36(1)(viia) by the Finance Act 2007 w.e.f. 01-04-2007.

  Irrespective of the fact whether it is case of the period when the assessee was eligible for deduction u/s.80P or thereafter when the benefit of section 36(1)(viia) came to be conferred, the creation of BDDR and its simultaneous addition in the computation of total income has made it clear that, in fact, no deduction was claimed by the assessee in this regard.

  Once the assessee did not claim any deduction in respect of BDDR, there can be no question of taxing the reversal of BDDR in a subsequent year, as has been the case under consideration. We, therefore, overturn the impugned order on this score and hold that the ld. CIT(A) was not justified in upholding the addition to the total income. The same is directed to be deleted.

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• 2020 (10) TMI 657

  LTCG Computation - valuation of the property - Reference to VO - AO to refer the matter to the Valuation Officer (VO) to obtain the correct value of such land - exemption u/s 54F - HELD THAT:- Assessee had filed its objections to the Valuating Officer which have been considered by the V.O. V.O. has not referred to the sale instances filed by the assessee, but has taken the guideline value of the SRO for the relevant year. The assessee has filed sale instances and as seen therefrom the sale consideration mentioned therein for similar properties was around ₹ 2,50,000/-.

  These sale instances were two to three years prior to the sale executed by the assessee. Therefore, they may not reflect the actual market value of the property as on the date of the sale. However, giving weightage to the sale instances, we deem it fit and proper to adopt the market value of the property at ₹ 2,000/- per sq.yard and direct the AO to recompute the long term capital gain by adopting the same and bring the long term capital gain to tax after allowing the other relevant expenditure and exemption u/s 54F. Assessee’s appeal is partly allowed.

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• 2020 (10) TMI 656

  Characterization of income - interest received on fixed deposit during construction period - income from other sources or capital receipt - HELD THAT:- Assessee company is a public limited company and the share application money was kept pending for allotment for a long time.

  As specifically asked questions to the assessee like Date of receipt of share application money & allotment to shareholders?, Whether the company has followed the relevant rules/provisions of the Companies Act in this regard?, If the shares have not been allotted within 60 days from the date of receipts then the discloser policy in the balance sheet?, Whether it should be treated as current liability or otherwise and treatment in the books of account of the company?, Use of share application money during pendency for allotment? , Applicability of company deposit rules and its classification in the balance sheet & utilization of interest or interest on such deposit and taxability as per the Income Tax Act, 1961?, fixed deposit is a short term fixed deposit or long term fixed deposit and/or auto renewal system in the bank and after maturity the utilization of the interest?

  As assessee could reply only the date of allotment of shares as per balance sheet note No.4.2, which is 29.05.2014 and the rest were remained unanswered. Therefore, the ld. AR submitted that let the AO may examine the above questions which are unanswered.

  Thus with the consent of both the parties for sending back to the file of AO for the examination of above questions for deciding the issue raised as aboveafresh, we remit the matter back to the file of AO for fresh adjudication in the light of the above questions and taxability of interest income as per Income Tax Act, 1961. - Appeal of the assessee is allowed for statistical purposes

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• 2020 (10) TMI 667

  Reopening of assessment - validity of reasons to believe - petitioner's claim for expenses in respect of “Colour Idea Store” as a part of its advertisement and sales promotion expenses - Review petition -HELD THAT:- There is a delay of 299 days in filing this Review Petition and we find no justifiable reason to condone this huge delay.

  Even on merits, we have perused the Review Petition and record of the Special Leave Petition and are convinced that the order, of which review has been sought, does not suffer from any error apparent warranting its reconsideration.

  Review Petition is, accordingly, dismissed on the ground of delay as well as on merits.

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• 2020 (10) TMI 655

  Unexplained investment - scope of section 132(4) - addition on the ground that during the course of search seized paper was found exhibiting advance payment was made by the family for purchase of a land - Revenue has relied on bhakti pocket diary and entries therein - whether only on the basis of the disclosure by an assessee, an addition can be made on account of undisclosed investment in the hands of the assessee ? - CIT(A) has confirmed orders of the AO - HELD THAT:- Addition on the basis of disclosure made under section 132(4) of the Act is to be made on the basis of other corroborative evidence exhibiting unexplained investment or unexplained asset possessed by an assessee.

  Except a disclosure on the strength of certain notings, the department failed to bring any other corroborative evidence exhibiting actual investment by these assessee in the purchase of any land. If the department is able to lay its hand on the details of vendor, details of land, some connection with actual transaction, by part payment through banking channel probably it could be assumed that apart from account payee payment, some cash amount might have been made. But that live link is grossly missing in the instant case. Therefore, we do not find any hesitation in holding that these additions are not sustainable in the hands of these assessee. Accordingly, the appeals and three COs of the assessee are allowed. - Decided in favour of assessee.

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• 2020 (10) TMI 654

  Income accrued in India - nature of fees for technical services - taxability of the amount received by the assessee from Expeditors International in respect of services performed outside India on the export consignments of Expeditors International originating from India - whether DRP is correct in holding that the receipts of the assessee do not fall within the scope of section 9(1)(i)? - HELD THAT:- On going through the provisions of the Act, facts of the case, business operations of the assessee, we hold that the services rendered by the assessee do not fall within the purview of managerial , consultancy or technical services. The payment for freight and logistics cannot be treated as technical services. Similarly, the provisions of Section 9(1)(i) are not attracted in this case as no income has accrued or arised from the business connection abroad in India. The explanation states that only that part of income from business operations can be said to be accruing or arising in India only if it is relatable to the carrying of operations in India. Thus, the payment received by the assessee neither falls under Section 9(1)(i) or Section 9(1)(vii). Hence, we hereby decline to interfere with the directions of the Dispute Resolution Panel in this case. - Decided against revenue.

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• 2020 (10) TMI 653

  Deduction u/s 10AA - undertaking which is formed by splitting up or the reconstruction of business already in existence shall not be eligible for deduction under 10AA - Scheme of amalgamation of Noida SEZ unit and Nagpur SEZ units which amalgamated with the assessee company - assessee failed to submit satisfactory details and justification in respect of each unit that has claimed deduction u/s 10A - HELD THAT:- Expenses which were added back while computing the unit-wise computation for determining the profit eligible for deduction under section 10AA - once the expenditure has been added back which claim has also been accepted by the AO in the order of assessment, then, this, in our opinion, becomes a non-issue. In our opinion, the allegation of the AO that the entire expenses have not been added back and it is a clear admission on the part of the assessee that resources of non-SEZ units have been used for earning of revenue in SEZ units is concerned, this also, is a vague finding without any basis. Mere add back of certain expenses from eligible profits of eligible unit which is accepted in the order of assessment cannot be a basis to assume that the resources of non-SEZ units have been used for earning the revenue in SEZ units.

  So far as the allegation of the CIT, DR that the assessee has failed to submit specific details to specific queries during the course of assessment proceedings is concerned, we find from the paper book that the assessee has in fact filed detailed reply before the AO to the queries raised point-wise. Therefore, this allegation of the ld. CIT, DR in our opinion is without any basis.

  The assessee has not claimed the loss of Hyderabad and Chennai unit while computing the income. In our opinion, once separate books of account have been maintained for each of the undertakings, there is no basis for the AO to allege that any of the expenses of non-SEZ units pertained to revenue of eligible units. Once such expenses has also not been claimed, the same is of no consequences. At best the AO could have reduced the net expenditure claimed from the deduction under section 10AA of the Act and nothing more but the same could not be a reason for the AO to deny the claim of deduction under section 10AA. Therefore, to suggest that there is fictitious arrangement and the entire resources of Chennai unit or Hyderabad unit have been utilised for earning tax free income of SEZ unit is not justified. Suspicion, surmises and conjectures however strong may be cannot be a basis for disallowing a claim of detection. In view of the above discussion, we do not find any infirmity in the order of the CIT(A) in deleting the disallowance of deduction claimed under section 10AA. Accordingly the ground raised by the revenue is dismissed.

  Addition on account of other income from 4 SEZ units - HELD THAT:- Referring to many decisions the ld. CIT(A) has allowed the claim of deduction under section 10AA of the Act on the interest income and ‘other income.’ CIT-DR could not distinguish the various decisions relied on by the ld. CIT(A). In view of the above discussion and in view of the detailed reasoning given by the CIT(A), while allowing the claim of the assessee for deduction under section 10AA & interest income and other income, we do not find any infirmity in the same. Accordingly, the same is upheld and the ground raised by the revenue is dismissed.

  Depreciation claimed on goodwill - difference between the purchase price and the value of the assets in amalgamation - HELD THAT:- In the light of the clear provision of Article II and III of the agreement, we do not find any merit in the aforesaid argument of the Revenue. We find in the case of CIT vs. Smifs Securities [2012 (8) TMI 713 - SUPREME COURT] has held that excess consideration paid by the assessee over the value of net assets acquired by amalgamating company should be considered as goodwill arising on amalgamation and such goodwill is eligible asset for depreciation.

  Thus Excess consideration paid by the assessee over the value of net assets acquired of amalgamating company should be considered as goodwill arising of amalgamation and depreciation is allowable on such goodwill.

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• 2020 (10) TMI 666

  Losses of 80IC unit set off against the profit of the other non 80IC units - substitute Section 10B with Section 80-IC - Whether the decision in KEI Industries Ltd.[2015 (3) TMI 618 - DELHI HIGH COURT] was rightly relied on by the Tribunal while allowing the appeal filed by the Revenue, as the conditions contained in Section 80-IC and that of Section 10B are pari materia and the legal principle has been rightly applied by the Tribunal to say that the loss suffered by the assessee in an unit is entitled to exemption under Section 10B cannot be set off against the income from any other unit not eligible for such exemption? - HELD THAT:- The question would be, can it be done especially, when the Tribunal has not assigned any reasons as to how it came to the conclusion that the decision in KEI Industries Ltd (supra) would squarely apply to the assessee's case and above all, why the finding returned by the CIT(A) was erroneous.

  Decision rendered by the Hon'ble Supreme Court in the case of Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT], which was rendered by the Hon'ble Supreme Court much after the impugned decision by the Tribunal.

  As argued before us by the assessee that Section 10B occurs in Chapter 3 of the Act, which deals with income not to be included in the total income and when income is not to be included in the total income, loss should also be excluded from the total income and cannot be set off against the income from other unit. Further, it is argued that even in the case of Section 10A, the provision was converted into a provision granting deduction and not exemption of income and in several cases, it has been held that profit from Section 10A unit can be set off against the loss of other units.

  In decision in the case of Mohan Breweries and Distilleries Ltd. [2007 (10) TMI 354 - ITAT MADRAS-B] and Rajapalayam Mills Ltd. vs. CIT [1978 (10) TMI 4 - SUPREME COURT] wherein the issue was that loss of unit entitled to deduction under Chapter VI-A, which has been set off against such income in the respective year, cannot be notionally carried forward. Tribunal did not assign any reason as to why it was satisfied that the order of the CIT(A) is erroneous, we deem it appropriate to set aside the order passed by the Tribunal and remand the matter for fresh consideration in accordance with law.

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• 2020 (10) TMI 665

  Assessment of trust - whether the assessee Trust is a determinate Trust or indeterminate Trust? - status under Section 161(1) of the Act on the interest income earned by the assessee from the fixed deposit which is a non venture capital undertaking activity - AO came to the conclusion that it is an indeterminate Trust, as the list of beneficiaries has not been specifically set out in the Deed of Trust? - Whether the beneficiaries are assessed for the income arising from the Trust and whether it is determinate or indeterminate can the trust be assessed once over again? - whether merely because the names of the beneficiaries are not mentioned in the Trust Deed, but shown as beneficiaries and are identifiable and having been assessed whether the Trust can be assessed again?

  HELD THAT:- As decided in India Advantage Fund-VII [2017 (2) TMI 722 - KARNATAKA HIGH COURT] section 164 of the Act gets attracts only when the shares of the beneficiaries are unknown, which is manifest from the marginal heading of that Section itself, viz., Charge of tax where the share of the beneficiaries unknown. That Section comes into play only where any income or any part thereof is not specifically receivable on behalf of or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown, and in such case, the relevant income, or part of the relevant income shall be charged at the maximum marginal rate.

  In order to attract Section 164(1) of the Act, the beneficiaries on whose benefit, such income or such part thereof is receivable are indeterminate and unknown.”

  The legal position qua the applicability of provisions of Section 164(1) of the Act has been thoroughly examined by the Tribunal and by an elaborate order, the Tribunal has held in favour of the assessee. We find that the Tribunal rightly took note of the statutory provisions and the law governing this subject and arrived at a conclusion. - Decided in favour of assessee.

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• 2020 (10) TMI 652

  Penalty u/s 271(1)(c) - LTCG determination - CIT(A) has quashed the penalty order in view of the fact that the A.O. did not specify the limb under which penalty proceedings are initiated - HELD THAT:- CIT(A) has adopted stamp duty valuation fixed by the stamp authority for the year relevant to the assessment year 2008-09 to determine the Fair Market Value of the property transferred by the assessee. There should not be any dispute that the details relating to guideline value fixed by the stamp authorities are available in the public domain and the Ld CIT(A) has adopted the Fair market value pertaining to the year under consideration, while the AO had adopted the value pertaining to AY 2010-11. Hence, we do not find merit in the contentions of revenue.

  A.O. did not specify the limb under which penalty proceedings are initiated and also did not strike off the inapplicable portion in the penalty notice. CIT(A) followed the decision rendered by the jurisdictional High Court in the case of Manjunatha Cotton & Ginning Factory Ltd. [2013 (7) TMI 620 - KARNATAKA HIGH COURT]. No reason to interfere with the orders passed by ld. CIT(A) in quashing the penalty order.

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• 2020 (10) TMI 651

  Addition u/s 68 - Bogus unsecured loan - said creditors/parties were found to be accommodation entry provider/bogus entity as per findings given by the Investigation Wing, Income Tax Department, Mumbai - CIT-A deleted the addition - HELD THAT:- Assessee has furnished documentary evidence including confirmation letters, bank statements, financial statements of the entities from whom, the assessee had obtained loans in question etc. Hence, in our considered view, the assessee has discharged his onus of establishing the identity and creditworthiness of the entities from whom, it had obtained the loans in question. The assessee has also established the genuineness of the transaction by adducing necessary evidence. On the other hand the AO has not brought any material on record to rebut the contention of the assessee.

  Findings of the Ld. CIT (A) are based on the established principles of law and in accordance with the decision of the coordinate Bench rendered in the case of DCIT vs. M/s Manba Finance Ltd. [2019 (2) TMI 101 - ITAT MUMBAI] - Decided in favour of assessee.

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• 2020 (10) TMI 650

  Denial of deduction claimed u/s. 80P(2)(a)(i) - profits earned by the appellant from the business of providing credit facilities to its members - assessee’s claim denied of expenses incurred for earning the interest income/dividend income and allowed only an ad hoc deduction of 10% of such income without any basis, as expenses for earning interest income and dividend income - HELD THAT:- The assessee is having nominal members and having nominal members in the Co-operative Society does not disentitle the assessee for getting exemption u/s. 80P.

  The issue is covered by the above orders of the Co-ordinate Bench relied M/S. KODAVOOR VYAVASAYA SEVA SAHAKARI SANGHA NIYAMITHA [2019 (8) TMI 1269 - ITAT BANGALORE] and is required to be re-adjudicated by the Assessing Officer after considering the above decisions. Accordingly, remit this issue to the file of the Assessing Officer for fresh consideration on similar directions. Thus, this ground of appeal of the assessee is partly allowed for statistical purposes.

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• 2020 (10) TMI 649

  Deduction u/s 80P(2)(a)(i) - exemption shall not be available to co-operative banks (first part) other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank (PLD Banks) - CIT(A) considering that the deduction shall still be available to a co-operative society which is engaged in the business of providing credit facilities to its members - HELD THAT:- The assessee is having nominal members and having nominal members in the Co-operative Society does not disentitle the assessee for getting exemption u/s. 80P - issue is covered by the above orders of the Co-ordinate Bench relied on by the AR and is required to be re-adjudicated by the AO after considering the above decisions. Accordingly KODAVOOR VYAVASAYA SEVA SAHAKARI SANGHA NIYAMITHA [2019 (8) TMI 1269 - ITAT BANGALORE] remit this issue to the file of the Assessing Officer for fresh consideration on similar directions. Thus, this ground of appeal of the assessee is partly allowed for statistical purposes.

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• 2020 (10) TMI 648

  Disallowance of office, administrative costs and other relevant expenses as prior period expenses - non commencement of business - Whether to claim the expenditure as deduction, it is necessary to declare income under the provisions of Chapter XIV-C of the Act? - CIT(Appeals) observed that the expenditure claimed by the assessee was directly related to construction activity and it can be allowed only once the said project is completed or capable of yielding income - HELD THAT:- When the assessee in the present case was in a position to apply for the tender, borrowed money for interest albeit from its holding company and deposited the same on the same day, it shows that the assessee's business had been set-up and it was ready to commence business.

  Difficulty in accepting the argument of revenue stating that till the land is acquired, the business is not set-up is that an assessee may not be successful in acquiring land for long period of time though he is ready to commence his business in real estate, and that would result in the expenses incurred by him throughout that period not being computed as a loss under the head 'Business' on the ground that he is yet to set-up his business. That would be an unacceptable position.

  As seen from the evidence filed by the assessee, the assessee has already commenced its business by entering into agreement with the landlord and also requisite licence and permission from BBMP. It cannot be said that assessee has not commenced the business. Hence the assessee is entitled to claim deduction. Accordingly, we allow the ground raised by the assessee.

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• 2020 (10) TMI 647

  Penalty u/s 272A(2)(k) - delay in furnishing quarterly returns/statements - penalty restricted for the period from the date of payment of TDS where the tax was paid late up to the date of filing of TDS statement, since before the payment of TDS, e-TDS return could not be furnished - HELD THAT:- In the instant case, assessee was in acute shortage of money, as the real estate business was in recession and it had hit the cash flow of the assessee. Assessee incurred huge loss from financial year 2008-09 onwards. For the assessment year 2008-09, assessee had incurred a loss of ₹ 36.21 crores and ₹ 363.93 crores for the financial year 2009-10.

  These losses continued to pile up for the subsequent financial years also. Due to this assessee company could not pay TDS on time. The e-TDS statement u/s 200(3) of the Act can only be filed after paying the taxes to the Central Government.

  Quarterly return of the TDS requires filling of date relating to payment of taxes. Therefore, such returns could be filed only after paying the tax to the Central Government account - Default in non-paying the taxes to the Central Government account in time or for non-deducting the tax at source, there are other provisions for ensuring compliance. In case the assessee fails to deduct tax at source or after deducting fails to pay the same to the Central Government account, the assessee is deemed to be in default u/s 201(1).

  Assessee is also liable to pay interest for the period of default till the payment of tax u/s 201(1A) of the Act. The assessee is also liable for penalty u/s 271C of the Act and prosecution u/s 276B - Therefore, the period levying the penalty has to be counted from the date of payment of tax because the delay in filing the return till the date of payment of tax was already explained on the ground that the assessee could not pay the taxes for which separate penal provisions exist.

  We direct the A.O. to levy penalty u/s 272(2)(k) of the Act from the date of payment of TDS up to the date of filing of e-TDS statements, since e-TDS statement cannot be filed without payment of TDS to the credit of the Central Government account.

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• 2020 (10) TMI 631

  Deduction u/s 80P - interest income earned out of investment with cooperative banks was treated as income from other sources - HELD THAT:- Assessee would be addressed by setting aside the issue of deduction u/s.80P(2)(a)(i) to Ld.AO for consideration afresh, with a direction to the Assessee to produce a certificate from RBI that it does not possess license from it for doing banking business and further that business carried on by Assessee is not akin to business of a co-operative bank.

  First part of Sec.80P(2)(a)(i) allows deduction in respect of income derived by a co- operative Society from business of banking. Even the claim of the Assessee for deduction requires to be examined under the first part of Sec.80P(2)(a)(i) of the Act.

  Hon'ble Supreme Court in case of Citizen Co- operative Society Ltd. [2017 (8) TMI 536 - SUPREME COURT] has also held that, it is also important to ascertain as to what is the nature of income which is claimed as exempt and as to how the principle of mutuality is not violated in respect of such income. An examination of (i)the memorandum of association, the articles of association, (ii) the byelaws and other documents explaining the rules and regulations of the society is necessary, so as to clearly understand the purpose and the nature of business done by it. An examination of the facts in light of discussion cited by Ld.CIT(A) as well as decision in case of Tumkur [2015 (2) TMI 995 - KARNATAKA HIGH COURT] is to be carried out. Remand the issue back to Ld.AO for re adjudicating it afresh on the basis of above direction.

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• Customs

• 2020 (10) TMI 646

  Exotic species - Constitutional Validity of Section 108 of the Customs Act, 1962 - vires of Article 14 and 21 of the Constitution of India - issuance of suitable Circular/Instructions to enable the citizens in domestic possession of exotic species to make declaration under the voluntary disclosure scheme without any fear of actions under the customs Act, 1962 - summon of petitioner for seeking any information relating to the acquisition of the exotic species in possession of the petitioner in respect of which the petitioner is contemplating filing of a declaration under the Voluntary Disclosure Scheme - prohibition on officers of the Respondents from taking any action of summoning the petitioner in connection with inquiry or seizure/confiscation of exotic species in domestic possession, under any law.

  HELD THAT:- The writ jurisdiction under Article 226 of the Constitution of India can be exercised even to protect the apprehended violation of right or to enforce statutory duty. The advisory introduced by the Central Government is in public interest and for a limited period of six months. We do not find it just and expedient to consider the apprehension raised by the petitioner and deal with the issue raised on their own merits.

  At the present juncture, the advisory issued by the Ministry of Environment, Forest & Climate Change sought to bring within its control such "exotic live species" since there was no requirement to maintain any statutory record of possession, acquisition, storage, captive breeding and domestic trade of wild animals/birds within India under the Wild Life (Protection) Act, 1972, the Customs Act, 1962, the Code of Criminal Procedure nor the Indian Penal Code - Therefore, it appears that the Government of India in the absence of any regulation to cover "exotic species" appears to have framed the scheme of Voluntary Disclosure (Annexure-2) and provide for making declarations, whereby the declarant would not be required to produce any documentation in relation to "exotic live species" in its possession, provided the same is declared within six months from the date of issue of advisory. It is clear from the advisory that any declaration made after six months from the date of issue of such scheme, a declarant would be required to comply with the documentation requirements under the extant laws and regulations. Therefore, persons who are holders of such exotic species in the country within India are required to upload the requisite form on the official website of the Government of India in order to complete the stock registration process. Such registration will be done for the stock of animals/new progeny as well as for import and exchange.

  The apparent objective behind the scheme further appears to be to streamline the CITES compliances and provide procedure for import of "exotic live species" and requires their registration/declaration of the progenies of such imported "exotic live species".

  Once a person has made a declaration under the Voluntary Disclosure Scheme under Annexure-1 & Annexure-2, the immunity provided under the said advisory scheme introduced by the Government of India cannot be set at naught by use of Section 108 of the Customs Act, 1962, in order to compel a declarant to divulge the information in respect of such immunity, as promised to the declaration under the Voluntary Disclosure Scheme by the Central Government. It is clear therefrom that once a person has made a declaration under the Voluntary Disclosure Scheme under Annexure-1 & Annexure-2, such persons cannot be proceeded against on the basis of information provided in such declaration and it would not be proper to allow any investigation under the provisions of the Customs Act, 1962, to be initiated at-least till the limited time provided under the Voluntary Disclosure Scheme in order to make declaration thereunder - a declarer who files a declaration of course within the time stipulated therunder, cannot be made subject to any action under the Customs Act, 1962 or any other law in respect of the stock in the guise of any charge of smuggling or dealing in or possessing the smuggled exotic species, whether on conjectures or surmises, or on the strength of any oral statement.

  Since the Union Government acting through the Ministry of Environment, Forest and Climate Change for granting immunity, though for a limited period of six months from the date of issue of such notification to the public at large, the object behind such Voluntary Disclosure Scheme being in larger public interest, is required to be promoted by all Government Departments in order to ensure that any declarer under the scheme is not subjected to any other penal or confiscation under any enactment. If any action is initiated, in such circumstances within the period stipulated in the notification, the same would be clearly, manifestly arbitrary and illegal.

  Section 108 of the Customs Act, 1962 is intra vires accordingly declining the prayer impugning the said provision.

  Insofar as the prayer for issuance of circular in this regard is concerned, we refrain from issuing any such direction, as prayed for, while leaving the same to the wisdom and discretion of the appropriate departments including the Central Board of Indirect Taxes.

  Petition disposed off.

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• 2020 (10) TMI 645

  Restriction on export of KN96 masks - RBI prohibited Merchanting Trade Transactions (MTT) / Receipt of consideration in foreign currency - Validity of circular issued by the Reserve Bank of India dated 23/01/2020 which is in respect of Merchanting Trade Transactions (MTT) - Reserve Bank of India has refused the permission for the subject MTT contract for supply of KN95 masks from China to United States of America - petitioner's contention is that prohibition imposed by Reserve Bank of India is a total prohibition which violates petitioner's fundamental rights guaranteed under Section 19(1)(g) and 21 of the Constitution of India and therefore, Clause 2(iii) deserves to be struck down by this Court.

  HELD THAT:- The Government of India has issued a notification dated 28/07/2020 and later on 25/08/2020 which has already been reproduced earlier and N-95 / FFP2 Mask or its equivalent are under “restricted” category - The Reserve Bank of India has to be adhere to the policy decision taken by the Government of India and in that backdrop the Reserve Bank of India issued executive instructions / circular dated 23/01/2020. Once import of a particular product is barred or export of a particular product is barred, the question of permitting the Merchanting Trade Transactions in respect of that particular products does not arise.

  The circular dated 23/01/2020 provides a restriction upon the Merchanting Trade Transactions and goods which are permitted for export / import under the prevailing Foreign Trade Policy can be subjected to Merchanting Trade Transactions. The Merchanting Trade Transactions also requires adherence to all rules, regulations and directions applicable to exports (except Export Declaration Form) and imports (except Bill of Entry) - The conditions imposed by Government of India as well as Reserve Bank of India are of general application to every Indian entity wishing to carry on Merchanting Trade Transactions. The conditions are neither specific either to petitioner's business, nor to a particular products such as Ventilators or Medical Personal Protective Equipment.

  The Merchanting Trade Transactions involves foreign exchange and issuance of a Letter of Credit in India from a banker as well as Reserve Bank of India through its authorised dealer in foreign exchange. The banker as well as Reserve Bank of India are located in India and therefore, there is a clear nexus between the transactions and the involvement of foreign exchange reserves of Reserve Bank of India - The Foreign Trade Policy is in existence framed by Government of India in exercise of powers conferred under the Foreign Trade (Development & Regulation) Act, 1992 and notifications have been issued by Government of India keeping in view the powers conferred by Section 3 of the Act of 1992. Its purely a policy decision taken by Government of India in larger public interest as there is an acute shortage of the goods which are the subject matter of the present writ petition.

  Thus, in short the statutory provisions, rules, circulars and notifications issued from time to time permits Merchanting Trade Transactions only in respect of goods that are permitted for export and import under the prevailing Foreign Trade Policy of India and the question of complete ban in respect of freedom of trade and commerce as argued by learned counsel does not arise.

  In our country keeping in view the COVID-19 Pandemic large number of front line health workers and Doctors have succumbed to Corona Virus on account of inadequate Personal Protective Equipment Kits. The Ventilators are also in short supply and therefore, the Government of India is the best judge either to ban export of the aforesaid items or to place the aforesaid items under the restricted categories.

  It is true that the Constitution of India guarantees fundamental right in respect of freedom of trade and commerce, however, the same can be subjected to reasonable restrictions as the same has been done in the present case.

  The restriction imposed by Government of India and Reserve Bank of India amounts to reasonable restriction and in noway violating the freedom of trade and commerce as pleaded by the petitioner - Petition dismissed.

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• 2020 (10) TMI 644

  Jurisdiction - power of adjudicating authority to question the action of Director General of Hydrocarbon, Government nilegaonkar 1/3 5-wp-1794.2017.odt of India in making the amendments to the Essentiality Certificate dated 4/11/2013 - HELD THAT:- After having minutely considered the impugned order in original as well as the judgments cited at the bar, prima facie we are of the view that the adjudicating authority was not justified in discarding the amendments to the Essentiality Certificate; thus imposing customs duty, interest and penalty on the petitioner who is a subcontractor of Oil and Natural Gas Corporation (ONGC), engaged in providing offshore drilling and production services in relation to oil exploration at various sites in Mumbai High.

  Since pleadings are complete, list the matter for final hearing on 26/11/2020.

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• 2020 (10) TMI 643

  Refusal to issue the Detention Certificate - waiver of Demurrage Charges - HELD THAT:- We are satisfied that while the matter has been remanded back to the learned Commissioner, the demand made under the said order, on account of Detention Certificate not being issued by the Commissioner of Customs, cannot be sustained for the time being and therefore, payment thereof, in favour of the respondents 3 and 4 viz., Deputy General Manager Cargo, Airport Authority of India, Chennai, and the Assistant General Manager (F&A), Airport Authority of India, Chennai, cannot arise. Such payment can be made, if, only after such reconsideration on remand, the concerned Commissioner again passes a fresh order and sustains the order against the Appellant. The said order obviously has to be passed after giving due and reasonable opportunity of hearing to the Appellant to ascertain as to whether reasons for delay in issuing the permission for transshipment was on account of fault of the officials at the Chennai Airport during the relevant period or on account of any fault of the Appellant, the custodian of the goods at the relevant point of time.

  The learned Commissioner is directed to decide the issue once again, as directed by the learned Single Judge, as expeditiously as possible, preferably within a period of six weeks from today - appeal disposed off.

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• 2020 (10) TMI 642

  Condonation of delay of around 4700 days in filing the appeal before the Tribunal - HELD THAT:- There is no denial in the communication dated 30.8.2019 placed on record by Revenue, about the aforesaid date of service of the impugned order by the department on the applicant. Thereafter as per the case records, the appeal has been filed by the applicant immediately on 26.7.2018 with the instant application. No doubt the Tribunal can condone the delay on showing the sufficient cause for not filing the appeal within the normal period of limitation.

  The Hon’ble Supreme Court in the matter of Perumon Bhagvathy Devaswom v. Bhargavi Amma [2008 (7) TMI 836 - SUPREME COURT] has laid down that the words “sufficient cause for not making the application within the period of limitation should be understood and applied in a reasonable, pragmatic, practical and liberal manner, depending upon the facts and circumstances of the case, and the type of case. The words ‘sufficient cause’ in Section 5 of Limitation Act should receive a liberal construction so as to advance substantial justice, when the delay is not on account of any dilatory tactics, want of bona fides, deliberate inaction or negligence on the part of the appellant”.

  Therefore in the peculiar facts of this case, sufficient cause has been shown by the applicant for not preferring the appeal within the normal period of limitation. There is some negligence on the part of the applicant also as he did not take any steps to inquire about the status of his case before the adjudicating authority for so many years, therefore although I am condoning the delay but with a cost of ₹ 5,000/- to be deposited by the applicant within a period of 8 weeks to be paid to the “PM CARES Fund”.

  Application allowed - the registry is directed to list the appeal for hearing on its turn after the applicant file the proof of payment of cost with the Registry.

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• Corporate Laws

• 2020 (10) TMI 641

  Rectification of the Register of Members of the Respondent Company - Restraint on Respondent Company from holding the Annual General Meeting or Extraordinary General meeting - Whether the Company by exercising paramount lien can sell off the shares of a shareholder for recovering the dues? - HELD THAT:- The Respondent Company in the instant petition will fall under the category of "unpaid seller" who can exercise the above rights only. Nothing more. It is settled law as decided by the Hon'ble Supreme Court of India in its judgement in TRIVENI SHANKAR SAXENA VERSUS STATE OF U.P. AND OTHERS [1991 (12) TMI 285 - SUPREME COURT] a lien is only a right to retain which is rightfully and continuously in possession belonging to another until the claims are satisfied. It can be acquired either by contract or by operation of law. It is the right of retention of goods - in the absence of delineated process to exercise paramount lien, the Respondent Company can exercise lien to the extent of retention of goods; in this case shares which can be extendable payable to the shareholder - thus, they have no right to unilaterally sell the shares which are in possession of the shareholder, without the consent.

  Whether the action of 1st Respondent Company is backed up by any contractual agreement to recover the 'rental dues' by auctioning the shares? - HELD THAT:- We have not come across any agreement showing that shops under occupation of the Petitioner is given on lease to them by the Respondent Company. As averred by the counsel for the Respondent company, company was collecting service charges from the shops as no agreement was in place. In the absence of a written agreement a documentary evidence to support their action, the very action of the Respondent's company was without any basis. Any of the unilateral action by one party, will not bind the others and will be set aside - During the arguments the bench asked to the PCS representing the company whether the company has taken any steps to get the shop vacated by the occupants for their rental arrears. The respondents submitted that they have not taken any action in this regard.

  Whether due process is followed by the Company in auctioning and allotting the shares to a 3rd party? - HELD THAT:- The Articles of Association of the company is silent about the process to be followed to ensure paramount lien. However, in the Respondent Company, the lien was exercised for recovery of rental dues by auction the shares. Here the Respondents exercised right to lien to recover the arrears of rent from the shareholder who has not agreed to execute rental/lease agreement - In the instant petition, the Respondent auctioned the shares without the consent of shareholders and without original shre certificate and transfer form in their possession. The earlier action appears to the illegal and not as per the Companies Act 2013. As such the answer to the third point is also negative.

  Accordingly, the company has no right to auction and allot the shares to the third parties ignoring the right of fully paid up shareholders. The rental dues claimed by the respondent company is not supported by rental/lease agreement which is agreed by shareholder - thus, the entire acts of the company to auction the shares appears to be malfide and with ulterior motives.

  The Petitioner is declared as the legitimate equity share holder under Folio No. 53 - it is hereby directed that the rectification of the Register of Members of the Respondent Company by re-entering the total number of 100 equity shares belonging to the Petitioner in the share register of the company and further ordering to restore the total shareholding of the Petitioner as it is existed prior to 08.02.2019 forthwith - Respondent Company is restrained from conducting tender for sale of 100 shares from allotting or effecting transfer of any shares belonging to the petitioner without his express consent to any members or non-members till rectification of share register - Respondent Company is directed to file the Register of Members after carrying the rectifications as per this order, with Registrar of Companies within a period of one month - respondent company is directed to pay ₹ 25,000/- to the petitioner towards the costs and damages sustained by the petitioner in this regard.

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• 2020 (10) TMI 640

  Approval of the Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the report filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, report filed by the official liquidator and also as no objection from any quarter against the Scheme has been received; there appears to be no impediment in sanctioning the present Scheme - sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013.

  Scheme approved - application allowed.

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• 2020 (10) TMI 639

  Direction/clarification from this Court for implementation of final order - Serious differences as well as clash of interest among the directors of the company which resulted in deadlock in function of company and the production in the manufacturing unit - HELD THAT:- The document(s) in question and Forms, which includes E-Form, Annual and Financial Statement of the Respondent Company, these are subject matter of the present Company Petition shall not be taken on record or acted upon for any purpose of the Respondent Company until its AGM/EGM is duly convened and approved such document(s)/Form(s)/Statement(s)/E-Form (s)/E-Statement(s) and duly ratify its filing with requisite majority in such AGM/EGM till such period the Office of the ROC can declared its E-Form/document(s) as "NTBR", so as to avoid further complication in the matter. As, we have already clarified in our previous order dated 10.10.2019 that ROC is not required to convene such AGM/EGM, but only to facilitate the same and such meetings is required to be convened by the Respondent Company through the Petitioner and the Advocate Observer appointed by this Court. In such proposed AGM/EGM the ROC shall depute its "OBSERVER" who may be an Officer of the Office of the ROC or may be an Independent Professional. The Observer shall produce their independent report and to be submitted to the Office of the ROC and/or if necessary to this Court for further course of action to be taken in the matter.

  In such proposed AGM/EGM the Independent "Observer" appointed by this Court (vide our order dated 27.06.2019 ) i.e. Mr. Harmish Shah, Advocate alongwith Independent Director through Bank of Baroda and Facilitator(s)/Chartered Accountant(s) appointed by this Court shall also remain present and participate in the discussion of meeting but without having right of voting. A report in this respect to be prepared and to be submitted by the Advocate Observer to this Court as well as to the Office of the ROC.

  Application disposed off.

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• Insolvency & Bankruptcy

• 2020 (10) TMI 638

  Initiation of CIRP proceedings - order of NCLT - also alleged that the ‘Corporate Debtor’ was never issued with a notice by the Tribunal, in the application filed by the First Respondent / ‘Financial Creditor’ - HELD THAT:- It is to be pointed out the question of whether there is a ‘debt’ and ‘default’ can be looked into only if a ‘Corporate Debtor’ disputes the debt or comes out with a plea that there is no default, though there is a ‘debt’. Besides this, in (Blacks’ Law Dictionary 9th edition) the words ‘time value’ are defined to mean the price associated with the length of time that an ‘investor’ must wait and till an investment matures or the related income is earned.

  In the instance case, the Appellant has come out with a plea that the ‘Corporate Debtor’ was never issued with notice by the ‘Adjudicating Authority’ (Tribunal) and since the ‘serving’ of advance copy of the application to the ‘Corporate Debtor’ cannot be construed / deemed to be service of notice in the eye of Law, this Tribunal holds that the ‘Adjudicating Authority’ / Tribunal while reserving orders in C.P. No. IB-3228 (ND)/2019 had committed error of jurisdiction in reserving orders and passed the impugned judgement without issuing notice to the ‘Corporate Debtor’ which is clearly unsustainable in the eye of Law.

  When a plea is taken before this Tribunal that there was no ‘Debt’ extended by the ‘Financial Creditor’ to the ‘Corporate Debtor’ and added further there was no privity of contract between the ‘Financial Creditor’ and ‘Corporate Debtor’, this Tribunal is of the earnest opinion that in the impugned order there was no finding rendered by the ‘Adjudicating Authority’ as to how a third party payment became a ‘Financial Debt’ or how a ‘Financial Creditor’ had become a ‘Financial Creditor’, in the absence of any ‘Financial Debt’ -

  It cannot be brushed aside that the third party ‘Taj Consultancy’ was not a party to the proceeding before the ‘Adjudicating Authority’ and further that Mr. Rajeev Aggarwal, according to the Appellant is neither a Director or a Shareholder of the ‘Corporate Debtor’ and the impugned order is conspicuously silent about this vital aspect. On this score also the impugned order of the ‘Adjudicating Authority’ suffers from legal infirmity.

  Matter remanded to the ‘Adjudicating Authority’ [National Company Law Tribunal, New Delhi Bench-VI, New Delhi] for fresh consideration and appreciation - appeal allowed by way of remand.

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• Service Tax

• 2020 (10) TMI 636

  Permission for withdrawal of appeal - Benefit under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- In view of the detailed submission made by the learned Advocate, the prayer for withdrawal of the appeal is allowed. However, it is made clear that in case the settlement under the Scheme fails, the appellant assessee can file an application before the Tribunal for restoration of their appeal.

  Appeal allowed.

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• 2020 (10) TMI 637

  Maintainability of petition - availability of alternative remedy of appeal - Recovery of tax arrears due to Central Government - HELD THAT:- Considering that the petitioner has alternative remedy of appeal, it is not deemed appropriate to entertain the writ petition directly. The applicant-petitioner shall be liable to make pre-deposit cannot be a reason to bye-pass the alternative remedy. While disposing of the writ petition with liberty to the petitioner to file appeal before the Commissioner (Appeals), the petitioner is directed to make prayer before the appellate authority citing the aforesaid reasons seeking waiver of pre-deposit and also for appropriate interim relief.

  The writ petition is disposed of with liberty to the petitioner to file an appeal before the Commissioner of Central Excise (Appeals) within a period of ten days from today along with a certified copy of this order. In the event, the appeal is filed, the appellate authority shall consider and dispose of the same on merits in accordance with law within a period of 60 days from the date of filing of the said appeal.

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• Central Excise

• 2020 (10) TMI 635

  Direction to the opposite party to communicate/provide/supply a copy of the order within a stipulated time - HELD THAT:- Since the dispute pertains to classification of the intermediary parts of hoists/gates of River barrages, radial gates, Penstock pipes, Embedded parts, Hoists and Hoist Supporting structures, which will have recurring effect on the petitioner, we deem it appropriate to allow the writ petition with a direction to the opposite party to provide a fresh certified copy of the order dated 21.12.2017 passed by the Commissioner of (Appeals) to the petitioner, within a period of fifteen days hence, with liberty to the petitioner to now file their appeal against the said order within a period of 30 days from the date of receipt of the order dated 21.12.2017 before Central Excise, Service Tax Appellate Tribunal, Kolkata.

  Petition allowed.

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• 2020 (10) TMI 634

  Rectification of Mistake - According to learned counsel for the applicant/appellant, there are some contradictions in the order of the Tribunal and the said contradictions have been mentioned in the instant application - HELD THAT:- The grounds raised by the applicant are not sufficient for any kind of rectification. It is settled legal principle that the Tribunal cannot take up exercise on re-appreciating the evidences and to embark on an act of reviewing the decision under the guise of rectification of mistake. An error apparent on the face of the record means an error which strikes on the mere looking and does not need long drawn-out process of reasoning on points where there may conceivably be two opinions. Such effort should not require any extraneous matter to show its incorrectness. To put it differently, it should be so manifest and clear that no court would permit it to remain on record. While applying the guiding principles in the facts of the present case in my opinion, there is no error apparent from the record calling for rectification.

  ROM application dismissed.

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• CST, VAT & Sales Tax

• 2020 (10) TMI 633

  Rectification of Mistake - error apparent on the face of record - it is the contention of the petitioner that the assessment was completed against him by making huge additions on account of non-filing of audit report in Form 13 & 13A - HELD THAT:- The reasoning of the assessing authority in Ext.P7 order is legally flawed. While it may appear at first blush that what the petitioner was seeking was essentially a review of the assessment order, in the light Ext.P2 judgment that was passed by this Court as early as in 2014 and which has not been the subject matter of any appeal before the Supreme Court, the assessing authority has to be seen as having ignored a binding precedent while completing the assessment. The said mistake occasioned by the assessing authority has therefore to be seen as an error apparent on the face of the record, which could be corrected through a rectification of mistake application. This is more so because there is no lengthy argument to be advanced by the assessee for the purposes of pointing out the apparent mistake that was occasioned by the assessing authority.

  The writ petition by directing the 3rd respondent to pass fresh orders on merits in the rectification of mistake application, taking note of the observations in this judgment, and after hearing the petitioner, within two months from the date of receipt of a copy of this judgment.

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• 2020 (10) TMI 632

  Levy of tax within the state - Interstate sale or an interstate works contract? - transaction carried out by the respondent-assessee, pursuant to a contract entered into with M/s.KMC Construction Ltd. - HELD THAT:- The works contract executed by the respondent-assessee is an interstate works contract and the State of Kerala, merely for the reason that the plant was erected within the State, cannot levy tax on the transfer of goods in the form of goods or in any other form by accretion of such goods in the works; when the goods were sourced from abroad and another state, the latter of which was taxed in the State from which the purchase was made.

  The question is answered in favour of the assessee and against the Revenue.

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