TMI Tax Updates - e-Newsletter
October 20, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Classification of services - rate of GST - Eligibility for concessional rate of GST at 12% - The works contract executed by the applicant for construction of IT Incubation Centre for TSIIC falls under exception to Sr. No. 3(vi) of Notification No. 11/2017-C.T. (Rate) wherein the civil structure is meant for commerce/industry or any other business and therefore the supply of this service is taxable at the rate of 9% under CGST and SGST each. - AAR
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Income Tax:
Bogus long-term capital gains (LTCG) arising from sale of shares - AO held that the said LTCG/loss are fabricated/engineered transactions by the respective assessees, sale of which falls under the category of penny stocks and the same were treated as bogus which were added in the total income by treating it as unexplained cash credit u/s. 68 of the Act. - Additions confirmed - AT
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Income Tax:
Rectification of mistake - if we are to quash the assessment order, as being urged by the learned counsel, these rectification powers will be preempted in the sense that once the assessment order itself is quashed, there will be nothing left to be rectified, as a consequence to rectification order passed by the DRP, even though the Assessing Officer has the time, permitted under the statute, to rectify the glaring mistake apparent on record in the impugned assessment order passed by him. - AT
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Income Tax:
Rectification of mistake u/s 254 - effect of subsequent decision - Power to Tribunal to rectify its order - subsequent decision can validly form the basis for rectifying an order of assessment under Section 154 of the Act. - HC
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Income Tax:
Reopening of assessment u/s 147 - Once an order u/s 147 is found to be without authority, the consequential notice under Section 148 of the Act has no legs to stand on and the matter or the assessment cannot be reopened in the absence of the statutory pre-condition being met. - HC
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Income Tax:
Addition u/s.56(2)(vii)(b)(ii) - difference between the value fixed by the stamp duty authorities and the sale consideration - Government of Tamil Nadu has reduced the circle rates of the property w.e.f.2017 - DVO should consider the subsequent downward revision of guideline value for the purpose of registration of properties i.e., the circle rate and give weightage to the same and then estimate the fair market value of the property.- AT
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Income Tax:
Addition u/s 69 r.w.s 115BBE - Heigher rate of income tax - The applicability of provisions of section 115BBE are not relevant in the present case as no excess stock was found. Even otherwise the provisions of section 115BBE cannot be made applicable particularly where the assessee has made a statement that the excess stock was a result of suppression of profit in respect of sales made outside the books of accounts. - AT
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Income Tax:
Income deemed to accrue or arise in India - salary income as accrued to the assessee for work performed in UK - The assessee has placed on record Tax Residency Certificate - As per this certificate, the assessee has claimed relief for foreign earning not taxable in UK for an amount - The same shall be considered by Ld. AO while computing the quantum of income taxable in India - AT
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Income Tax:
Unexplained cash deposits in bank account - the argument that there were past savings which were pooled in and collected and deposited keeping the purpose for which the assessee was working to achieve the claim has been discarded without any basis except the reasoning that ít is very/highly improbable that such a huge amount can would be lying with him idle. - Keeping in view the purpose for which the assessee was working hard, the claim was justified on facts. - AT
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Income Tax:
Exemption u/s 11 - registration u/s 12AB - Conditions imposed by the CIT - The role of the Ld. PCIT while according registration under section 12A is only to make himself satisfied about the genuineness of the activities to be carried out by the assessee trust and the compliance of such requirement of any other law for the time being in force by the trust or institution material to achieve its object and then to accord the registration. - Conditions imposed by the Ld. PCIT while according registration under section 12A of the Act are not sustainable in the eyes of law - AT
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Customs:
Seeking condonation of delay of 715 days in filing the appeal - There is no Vakalatnama on record to show that any other counsel was engaged to file an appeal in the matter. Further, neither the counsel who is said to have first taken up the matter and failed to file the appeal has been named in the application nor has the name of the associate who is said to have left to the office without notice been indicated. - No reasonable grounds have been made out seeking condonation of delay - AT
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Corporate Law:
Anti-competitive practices - from the sequence of events and from the evidences on the record that the conduct of the Appellant and the opposite parties is anti-competitive thus, resulted in limiting production and supply of dubbed movies and their screening within the State of Karnataka which directly hits the provisions of Section 3(1) read with Section 3(3)(b) of the Act. - AT
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Indian Laws:
Constitutional validity of of amendment to LIC Act - Money Bill of not - Sections 128 to 146 of the Finance Act, 2021 - the reason for amendment is to bring the money into the Consolidated Fund of India and all other amendments were required as a consequence thereof and are saved by Article 110(1)(g) of the Constitution of India, because payment of moneys into the Consolidated Fund or the Contingency Fund of India is covered by Article 110(1)(c) of the Constitution of India - it is opined that the amendment in the case on hand falls within the purview of Article 110 of the Constitution of India. - HC
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IBC:
CIRP - Validity of penalty proceedings under the Income Tax Act - The Assessment Order of A.Y. 2018-19 year and notice u/s 274 rws 271 AAC(1) of the Income Tax Act, 1961 and the show cause notice u/s 274 rws 270A for A.Y. 2019-20 and notice u/s 274 rws 271 AAC(1) for A.Y. 2019-20 have been initiated in the teeth of provisions of Section 33(5) of IBC and hence is violative of the Code - Tri
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Service Tax:
Reversal of CENVAT Credit - trading activity - exempted service or not - in either of the two options given in sub-rule (3) of Rule 6, there is no provisions that if the assessee does not opt any of the option at a particular time, then option of payment of 5% or 6% will automatically be applied. - AT
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Service Tax:
Levy of Service Tax - gross amount collected from the subscribers/ultimate customer or only on the gross amount received by them from the Local Cable Operators (LCOs) who are providing the content - The subscription for the Cable Services is collected by the LCOs from the subscribers against the invoice issued as per the Agreement. The respondent issued invoices on the LCOs for the eligible revenue share, so the responsibility to pay taxes on the revenue share is on the respective parties. - AT
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Central Excise:
Export or not - removal of goods to SEZ without execution of bond - Once it is seen/proved that the goods have actually been sent/supplied to the SEZ units (equivalent to export), the absence of Bond becomes a ‘technical/procedural infraction without any Revenue Implication whatsoever’. In fact, in respect of other ten (10) ARE-1s, where also the goods were sent without the cover of the Bond, but it was found that the goods had actually reached to SEZ Units, the corresponding demands have been dropped. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (10) TMI 724
Classification of services - rate of GST - Eligibility for concessional rate of GST at 12% - works contracts - execution of works for Telangana State Industrial Infrastructure Corporation Limited (TSIIC), a Government entity - Applicability of S. No. 3(vi) of the Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017, as amended by? - HELD THAT:- The Memorandum of Association of TSIIC at clause III(a)(3) clearly states that the company pursues the objectives to implement the schemes of incentives, subsidies and the like formulated by the Government of Telangana or Government of India or other authorities or institutions and to administer such schemes of incentives from time to time in the interest of establishments and development of industries. Thus TSIIC organization works to further the policies of the State Government, Central Government and Local Government for development of industries in the State of Telangana. The applicant has executed works contracts for TSIIC which is a Government entity. This work is construction of IT Incubation Centre. Therefore the civil structure is meant for commerce/industry or any other business. The works contract executed by the applicant for construction of IT Incubation Centre for TSIIC falls under exception to Sr. No. 3(vi) of Notification No. 11/2017-C.T. (Rate) wherein the civil structure is meant for commerce/industry or any other business and therefore the supply of this service is taxable at the rate of 9% under CGST and SGST each.
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Income Tax
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2022 (10) TMI 728
Bogus long-term capital gains (LTCG) arising from sale of shares - Disallowance of claim of exemption u/s. 10(38) - assessee case as selected for scrutiny u/s. 143(3) through CASS and the issue in all of them for selection relates to suspicious long term capital gain on shares - HELD THAT:- AO held that the said LTCG/loss are fabricated/engineered transactions by the respective assessees, sale of which falls under the category of penny stocks and the same were treated as bogus which were added in the total income by treating it as unexplained cash credit u/s. 68 of the Act. As decided in Swati Bajaj case [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT ] Assessing Officers as well as the Commissioner (Appeals) have adopted an inferential process which is found to be a process which would be followed by a reasonable and prudent person. AO and the Commissioner (Appeals) have culled out proximate facts in each of the cases, took into consideration the surrounding circumstances which came to light after the investigation, assessed the conduct of the assessee, took note of the proximity of the time between the buy and sale operations and also the sudden and steep rise of the price of the shares of the companies when the general market trend was admittedly recessive and thereafter arrived at a conclusion which is a proper conclusion. The issue involved in these appeals is squarely covered against the assessee by the said decision as the fact involved are identical to that which were before the Hon ble High Court. - Decided against the assessee.
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2022 (10) TMI 727
Rectification of mistake - Final assessment order and Dispute Resolution Panel ('DRP) directions passed without application of mind - Dispute Resolution Panel apparently on account of a word-processing cut-paste error, the directions so contained in the DRP‟s order incorporated directions relating to another group concern with a somewhat similar name, i.e. Michael Page International Pte Ltd- as against the assessee i.e. Michael Page International Recruitment Pvt Ltd. - HELD THAT:- DRP Rules prescribes that After the issue of directions under rule 10, if any mistake or error is apparent in such direction, the panel may, suo motu, or on an application from the eligible assessee or the AO, rectify such mistake or error, and also direct the Assessing Officer to modify the assessment order accordingly . In the present case, the rectification has been done suo motu and the assessee has taken no objection to the rectification proceeding either. To this extent also, there is no infirmity in the rectification order passed by the learned DRP. Whether the rectification proceedings were carried out well within the permissible time?- AO even as of now, has the powers under section 154 to rectify the impugned assessment order since four years have not yet elapsed from the end of the financial year in which the assessment order was passed. It is so given the legal position under section 154(7), which provides that save as otherwise provided in section 155 or sub-section (4) of section 186, no amendment under this section (i.e. 154) shall be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed . When AO being an income tax authority under section 116, is allowed a certain time frame for the rectification of mistakes apparent on record in his orders, that time frame cannot be diluted, curtailed or otherwise narrowed down by us. It cannot thus be said that no useful purpose will be served by remitting the matter to the file of the AO even at this stage. To that extent, the plea of the assessee is incorrect. Quite contrary to what has been argued by the learned counsel for the assessee, if we are to quash the assessment order, as being urged by the learned counsel, these rectification powers will be preempted in the sense that once the assessment order itself is quashed, there will be nothing left to be rectified, as a consequence to rectification order passed by the DRP, even though the Assessing Officer has the time, permitted under the statute, to rectify the glaring mistake apparent on record in the impugned assessment order passed by him. We deem it fit and proper to reject the assessee's plea seeking quashing of the impugned order. The impugned order is erroneous inasmuch as it does not give effect to the rectification order passed by the Dispute Resolution Panel, and the right course of action to be followed, therefore, is that the impugned assessment order is to be modified, and subjected to rectification of mistake apparent on the record, in the light of rectification order passed by the Dispute Resolution Panel. In our considered view, therefore, the matter deserved to be remitted to the file of the AO for carrying out necessary rectifications of the impugned order by taking rectified and corrected DRP directions into account. Appeal is allowed for statistical purposes
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2022 (10) TMI 726
Reopening of assessment u/s 147 - disallowing the claim of exemption u/s 54F - notice issued beyond periods of four years - Change of opinion - HELD THAT:- AO has held that the capital gains on sale of the property is exempt from tax. Subsequently, on the same facts and materials available on record, the Assessing Officer came to conclusion that there is an escapement of income, that is capital gains on sale of property is not exempt. On perusal of the orders of authorities below, we find that no new material or any fresh information was brought on record. We also find that the subsequent reopening on the same set of facts with no failure on the part of the assessee to disclose material facts would tantamount to mere change of opinion . As relying on case of CIT v. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] . We hold that the action of the Assessing Officer in reopening the assessment under section 147 of the Act is bad in law. As the impugned notice issued after four years of the end of the relevant assessment year is not sustainable in law and is liable to be quashed, when there was not even a whisper in the reasons that there was any omission or failure on the part of the assessee in disclosing fully and truly the material facts for assessment. See Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] In this case, the assessment was reopened beyond four years from the end of the relevant assessment year under consideration; the proviso to section 147 of the Act applies. Once the proviso to section 147 of the Act applies, it is the duty of the Assessing Officer to prove that the assessee has failed to furnish fully and truly all material facts to complete the assessment. In this case the Assessing Officer was not able to establish that there is failure on the part of the assessee to disclose fully and truly all materials. Therefore, in our opinion, the reopening is invalid beyond four years from the end of the relevant assessment year. - Decided in favour of assessee.
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2022 (10) TMI 725
Correctness of the order passed by CIT(A) in the matter of the processing of income tax returns u/s. 143(1) - HELD THAT:- As the issue in appeal is squarely covered in favour of the assessee, by a co-ordinate bench decision in the case of Kalpesh Synthetics Pvt [ 2022 (5) TMI 461 - ITAT MUMBAI]
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2022 (10) TMI 723
Rectification of mistake u/s 254 - effect of subsequent decision - whether the subsequent decision of the Supreme Court which had overruled its earlier two decisions which formed the substratum of the decision of the Tribunal can be the basis of rectification under sub-section (2) of Section 254 of the Act? - HELD THAT:- A Division Bench of this Court in B.V.K.Seshavataram s case [ 1994 (4) TMI 64 - ANDHRA PRADESH HIGH COURT ] was confronted with a similar situation. In that case, this Court was examining the provision of Section 154 of the Act. As submitted by learned counsel for the appellant, Section 154 of the Act provides for rectification of mistake by an income tax authority. As per sub-section (1) thereof, with a view to rectify any mistake apparent from the record, an income tax authority referred to in Section 116 of the Act may amend the order passed by it; amend any intimation or deemed intimation under Section 143(1) of the Act; amend any intimation under sub-section (1) of Section 200A of the Act; and amend any intimation under sub-section (1) of Section 206CB of the Act. In the facts of that case, this Court held that subsequent decision can validly form the basis for rectifying an order of assessment under Section 154 of the Act. We respectfully agree with the reasonings given by a coordinate Bench of this Court in B.V.K.Seshavataram (supra); rather we are bound by it. If this position is applicable to Section 154 of the Act, we are of the view that it is equally applicable to Section 254(2) of the Act. Summation of our above discussion is that the Tribunal was not justified in rejecting the rectification application of the appellant. We answer question No.1 so framed above in the negative and in favour of the assessee. Resultantly, we set aside the order.
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2022 (10) TMI 722
Reopening of assessment u/s 147 - delayed payment surcharge and interest on account of delayed payment - HELD THAT:- Expression, reason to believe , appearing in Section 147 of the Act does not give authority to the relevant assessing officer to take a different view on a matter which has been previously considered in course of the original assessment. A change of opinion is not permissible under colour of reason to believe . This would apply more so in respect of a notice seeking to reopen the matter pertaining to an assessment year more than four years after the end of the relevant assessment year. As at the time of passing the assessment orders in respect of assessment years 2012-13 and 2013-14, the relevant assessing officer(s) must have noticed the special treatment in the accounts of the delayed payment surcharge and the interest and, upon perceiving the treatment appropriate since the incomes on such counts had only notionally accrued but had not been realised, did not deem the accounts to be inappropriate or the treatment of the relevant heads impermissible; and as such, completed the assessment as per the audited accounts. The fact that a superior officer deemed such treatment unacceptable in respect of a subsequent assessment year, may make the earlier assessment orders fallible and liable to be reopened; though not on the ground that there was no full or true disclosure of material facts by the assessee, but by reason of the methodology adopted for the assessment. However, the freedom to reopen concluded orders of assessment that Section 147 permits in its primary provision is circumscribed by the additional conditions spelt out in its proviso in respect of assessment orders pertaining to the assessment years after the expiry of four years from the end thereof. Even in respect of concluded assessment orders of assessment years falling within the four-year period, there may be perfectly good answers for not reopening the same. But that would pertain to the merits of the matter that ought not to be considered in this extraordinary jurisdiction under Article 226 of the Constitution. The orders passed under Section 147 of the Act in respect of assessment years 2012-13 and 2013-14 are without jurisdiction as they do not comply with applicable condition indicated in the relevant proviso. Once an order u/s 147 is found to be without authority, the consequential notice under Section 148 of the Act has no legs to stand on and the matter or the assessment cannot be reopened in the absence of the statutory pre-condition being met.
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2022 (10) TMI 721
Validity of Reopening of assessment u/s 147 - income chargeable to tax had escaped assessment for three-fold reasons, viz. (i) the offering of the income surrendered in the course of the survey proceedings as business income and claiming of interest and remuneration as a deduction against the same was not as per the mandate of law; (ii) there depreciation on truck was wrongly claimed at a higher rate i.e @40%; and (iii) the failure on the part of the assessee to deduct tax at source on interest paid on loan to a non-banking finance company rendered its claim for deduction of the same liable for disallowance u/s 40(a)(ia) of the Act - HELD THAT:- We are inclined to accept the claim of the Ld. AR that as the concluded assessment in the case of the assessee had been reopened by the A.O by issuing notice u/s.148 i.e. beyond four years from the end of the relevant assessment year i.e A.Y 2008-09, therefore, the assessment so framed in absence of valid assumption of jurisdiction on his part could otherwise also not be sustained and is liable to be struck down on the said count itself. Our aforesaid view that as per the mandate of the 1st proviso to Sec. 147 reopening of a concluded assessment beyond four years from the end of the relevant assessment year, inter alia, in the absence of any failure on the part of the assessee to disclose fully and truly all material facts which were necessary for its assessment is not permissible is supported by the judgment of the Hon ble High Court of Delhi in the case of Haryana Acrylic Manufacturing Company [ 2008 (11) TMI 2 - DELHI HIGH COURT] In the case of New Delhi Television Ltd. [ 2020 (4) TMI 133 - SUPREME COURT] had, inter alia, held, that though the assessee is obligated to disclose the primary facts , but it is neither required to disclose the secondary facts nor required to give any assistance to the A.O by disclosure of the other facts and it is for the A.O to decide what inferences are to be drawn from the facts before him. As in the present case before us the assessee had disclosed fully and truly all the material facts, therefore, by no means he could have been saddled with any failure to disclose fully and truly all material facts that were necessary for framing of its assessment, which would have otherwise justified bringing its case within the realm of the extended time period contemplated in the 1st proviso of section 147 of the Act for validly reopening the same. We, thus, in terms of our aforesaid observation being of the view that the A.O had wrongly assumed the jurisdiction and reopened the concluded assessment of the assessee, which, was earlier framed by his predecessor vide order passed u/s.143(3) therefore, quash the consequential assessment order passed by him u/s.144 r.w.s. 147. Assessee appeal allowed.
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2022 (10) TMI 720
Validity of assessment u/s 153C - Whether incriminating material during the course of search and the assessment is not made based on any seized material ? - HELD THAT:- Revenue had submitted before us that the provision of sec 153A cannot be invoked in the present case as the warrant of authorization had not been issued against the assessee before us. In view of the above, we find the contention of the ld.AR that the right recourse was to exercise power u/s 153A is not sustainable. The decision of the Hon ble Supreme Court in the case of Tapan Kumar Datta [ 2018 (4) TMI 1375 - SUPREME COURT] is applicable to the facts of the case. The proceeding u/s 153A cannot be invoked in the present case, now we have to examine whether the Assessing Officer was correct in invoking the provisions of sec 153C or not. As mentioned herein above, the recording of satisfaction by the Assessing Officer of the searched person or of the other persons (Assessee) is essential in view of the specific mandate provided u/s 153C - As decided the issue in the case of Super Mall (P) Ltd [ 2020 (3) TMI 361 - SUPREME COURT] has held that if the Assessing Officer of the searched person and of the other person is same, then recording of satisfaction in the file of one of the persons will not make any difference. The relevant paragraph of the above said judgement had already been reproduced elsewhere. Admittedly, the Tribunal had directed the Revenue to file the copy of the satisfaction note, if any, available in the case record of the assessee to show that the assessment proceedings u/s 153C were initiated after due recording of the satisfaction. On the last date of hearing i.e. on 4.10.2022 the Tribunal had again reiterated its earlier direction. The revenue is not in a position to trace the satisfaction note as of now as the record is not traceable and may be available with the office(s) of the Revenue. We hold additional ground raised by the assessee is admitted. The matter is remanded back to the file of the learned CIT (A) with a direction to decide the additional ground after collecting the documents/record from the offices of the Assessing Officer/Investigation/Central Circle in accordance with law after affording opportunity of being heard to the assessee. Appeals allowed for statistical purposes.
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2022 (10) TMI 719
Unexplained creditors - Disallowance on ad-hoc basis the 25% of the creditors holding it to be unexplained and 25% of the expenses by holding it to be not genuine and not for business purpose - CIT-A deleted the addition - HELD THAT:- CIT(A) while deleting the addition has given a finding that as far as sundry creditors are concerned in the remand report the AO has accepted the creditors to be genuine and therefore, in such a situation, the holding of 25% of the creditors to be not genuine was not justified. With respect to the disallowance of other expenses, CIT(A) has given a finding that the accounts of the assessee was audited and while disallowing the expenses AO has not pointed any expense where the expenses were not vouched or were for non business purpose. Revenue has not pointed to any fallacy in the findings of CIT(A). In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.
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2022 (10) TMI 718
Addition u/s.56(2)(vii)(b)(ii) - difference between the value fixed by the stamp duty authorities on the sale deed registered and the sale consideration recorded in the sale deed - whether the revised guideline value which is downward revision should be considered for the purpose of valuation of the property for making assessment u/s.56(2)(vii)(b)(ii)? - HELD THAT:- For the purpose of making addition u/s.56(2)(vii)(b)(ii) is the stamp duty value of said property in excess of Rs.50,000/- is to be assessed as income from other sources i.e., consideration which is less than the stamp duty value of the property by an amount exceeding Rs.50,000/-. As noted that the stamp duty defined as per Explanation F to section 56(2)(vii) commence a definition of the expression stamp duty value so as to mean the value adopted or assessed or assessable by authority of the Central Government or State Government for the purpose of payment of stamp duty in respect of an immovable property. It means that the true value of the property or the asset and what should have been the consideration i.e., the fair market value of the property is to be considered for the purpose of considering the provisions of section 56(2)(vii)(b)(ii). In the present case, admitted position is that the Government of Tamil Nadu i.e., Inspector General of Registration has reduced the circle rates of the property w.e.f.2017 comparing to the guideline value of 2015, the same is to be considered for adopting the fair market value of the property for the purpose of section 56(2)(vii)(b)(ii) - DVO should consider the subsequent downward revision of guideline value for the purpose of registration of properties i.e., the circle rate and give weightage to the same and then estimate the fair market value of the property. Hence we set aside this narrow issue to the file of the AO who in turn will refer the matter again to the DVO with a specific direction to consider the guideline value i.e., the downward revision made from 2017 of the relevant area and then make estimated fair market value of the property accordingly - the orders of the lower authorities are set aside and the matter is remanded back to the file of the AO with the above direction. Appeal filed by the assessee is allowed for statistical purposes.
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2022 (10) TMI 717
Assessment u/s 144 - deduction u/s 80C - HELD THAT:- The territorial jurisdiction of the assessee is not in Amritsar but in New Delhi, as per the claim of assessee. But before any of the authorities the assessee had not challenged its jurisdiction. Regarding deduction u/s 80C, the assessee had filed a copy of the receipt as proof of payment of PPF which is primarily showing the payment amount of Rs.70,000/-. In our opinion, the issue of the assessee should be further adjudicated by the ld. CIT(A). In view of these discussions, as also bearing in mind the entirety of the case, we deem it fit and proper to remit the matter to the first appellate authority after giving an opportunity of hearing, for adjudication of jurisdictional ground allowability of Section 80C of the Act in accordance with the law and by way of a speaking order. No other issue was challenged before the ITAT the order passed as per the terms indicated above. Appeal of the assessee is allowed for statistical purposes.
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2022 (10) TMI 716
Addition u/s 69 r.w.s 115BBE - difference as excess stock instead of short stock as noticed by the department - HELD THAT:- As evident from the record that the excess stock found during the survey was nothing but the Business Stock carried on by assessee which was not declared in the books of accounts and since there is direct nexus of stock found during survey and business carried on by the assessee. Therefore, in our view, the excess stock is only to be treated as income under the head Business and not under deemed income - excess stock found during the survey was not separately and clearly identifiable but was part of mixed lots of stock found at the premises which included the declared stock and stock of sister concern also. In these circumstances, the provisions of section 69 cannot be invoked and it should be taxable as business income The applicability of provisions of section 115BBE are not relevant in the present case as no excess stock was found. Even otherwise the provisions of section 115BBE cannot be made applicable particularly where the assessee has made a statement that the excess stock was a result of suppression of profit in respect of sales made outside the books of accounts. Therefore, in the present case, investment in excess stock computed by the department is liable to be treated as business income and to be taxed under normal provisions and not under the chapter no XII. In the case of M/S BAJAJ SONS LTD.[ 2021 (5) TMI 956 - ITAT CHANDIGARH] it has been held that provisions of section 115BBE are not applicable where Surrender is made to cover any discrepancy. The action of the lower authorities in invoking provisions of Section 115BBE on the surrender income is perverse to the facts on record and held to be bad in law. AO is directed to compute the said surrendered income under normal provisions as applicable to the business income of the assessee. Appeal filed by the assessee is allowed.
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2022 (10) TMI 715
Credit for TDS deducted by the employer but not deposited to Government Account - HELD THAT:- Credit against which is allowed to the assessee and not granting TDS credit for the reasons that no such tax was deposited by the employer of the assessee in the government account. Before us, assessee while making submission, strongly relied on various decisions of Tribunal and the decision of Hon ble Jurisdictional High Court in Kartik Vijaysinh Sonavane [ 2021 (11) TMI 682 - GUJARAT HIGH COURT] Considering various decisions of this combination and decision of Hon ble Jurisdictional High Court in Kartik Vijaysinh Sonavane Vs DCIT (supra), the grounds of appeal raised in the present appeal is restored back to the file of Assessing Officer to verify the fact and grant set off tax shown in Form 26AS as well as tax deducted and reflected in the wages/salary slip of assessee irrespective of the fact that such TDS is reflected in Form 26AS and to pass order afresh in accordance with law. With this direction, the appeal of assessee is allowed for statistical purposes.
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2022 (10) TMI 714
Failure to deposit the employees' contribution to PF/ESI for having not paid the same on or before the prescribed due dates as per section u/s. 36(1)(va) - no payment till the due date, mentioned in the respective Acts, but before the due date of filing return of income u/s. 139(1) - HELD THAT:- As relying on RAJA RAM [ 2021 (11) TMI 370 - ITAT CHANDIGARH] additions made by the AO and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
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2022 (10) TMI 713
Penalty u/s. 271(1)(c) - defective notice u/s 274 - disallowance of deduction u/s. 24 claimed by the Assessee @ 30% of the annual letable value of the rented property - Addition u/s. 40(ia) of the Act on account of non-deduction of tax at source on payments of 20,000 Euro made to a foreign entity for development of unique designs and patterns of various garments - HELD THAT:- The penalty provisions of section 271(1)(c) of the Act are attracted, where the Assessee has concealed the particulars of income or furnished inaccurate particulars of such income. It is also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings - it is imperative for the Assessing Officer to specify the relevant limb so as to make the Assessee aware as to what is the charge made against him so that he can respond accordingly. Having regard to the manner in which the Assessing Officer has issued the notices referred above under section 274 r.w.s. 271(1)(c) of the Act without specifying the limb under which the penalty proceeding has been initiated and proceeded with, apparently goes to prove that notice in this case has been issued in a stereotyped manner without applying mind which is bad in law, hence can not be considered valid notice sufficient to impose penalty u/s 271(1)(c) of the Act and therefore we are of the considered view that under these circumstances, the penalty is not leviable as held by the various Courts including the Hon ble Apex Court and hence, we have no hesitation to delete the penalty under consideration, levied by the AO and affirmed by the Ld. Commissioner - Decided in favour of assessee.
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2022 (10) TMI 712
Disallowance u/s. 14A r.w. Rule 8D - No exempt income earned - HELD THAT:- On perusal of the statement of computation of income it is noticed that for the AYs 2013-14 2014-15 the assessee does not have any exempt income and therefore applying the ratio laid down in the case of PCIT v. Era Infrastructure India Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] we delete the addition made by the AO u/s. 14A for both the assessment years. TDS u/s 195 - Onsite project expenses without TDS disallowed u/s. 40(a)(i) - Scope of made available clause - HELD THAT:- TDS provisions are applicable to the payment made by the assessee to the vendors is that the manpower employed are doing highly technical job whereby the technical knowledge is made available to the assessee. The payments made by the assessee to Datamatics Solutions Inc., USA need to be analysed from the applicability of article 12 of the Double Taxation Avoidance Agreement with US, which states that the provisions of fees for technical service would be attracted if services rendered make available technical knowledge, experience, skill, know-how, or processes or consists of the development and transfer of a technical plan or technical design. With regard to payments made by the assessee to Link List Ltd., UAE., we notice that as per the DTAA between India and UAE, there is no specific clause with regard to the taxability of fees for technical services, and therefore in our considered view the nature of income would take the character of Business Income which can be taxed only when there is a permanent establishment (PE) for the recipient of the payment. Considering the nature of service rendered by the vendors to the assessee, there is no use of technology in the services provided. The vendor is not employing any technology but is providing manpower service to the assessee in order to enable the assessee to meet the project commitments given to the customers. Though the deployed employees may possess the technical knowledge to carry out the services to the customers, no technology is made available to the assessee. Following the ratio laid down in the case of CIT v. De Beers India Minerals (P.) Ltd [ 2012 (5) TMI 191 - KARNATAKA HIGH COURT ] we hold that the assessee is not liable to deduct tax at source for the reimbursement of the salary cost made to the vendor Datamatics Solutions Inc., USA for deployment of manpower. Further the vendor Link List Ltd., UAE does not have a permanent establishment in India and therefor the impugned payments cannot be taxed in India and thereby no tax is deductible at source on these payments. In view of these discussions as per the DTAA between India and USA / UAE, the impugned payments are not fees for technical services and not business income taxable in India. Therefore no disallowance is warranted u/s. 40(a)(i) for non-deduction of tax at source by the assessee. Payments made by the assessee to the third party vendors - We hold that the assessee was not liable to deduct tax at source and therefore no disallowance is warranted. Appeals of the revenue are dismissed.
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2022 (10) TMI 711
Income deemed to accrue or arise in India - salary income as accrued to the assessee for work performed in UK - Period of stay in India - Scope of India-UK Double Taxation Avoidance Agreement (DTAA) - assessee has stayed in India for 63 days during this year - HELD THAT:- We would hold that salary income as accrued to the assessee for work performed in UK would not be taxable in India. However, the salary received for work performed in India would be taxable in India. Accordingly, we direct Ld. AO to re-compute the income of the assessee. The above proposition is also supported by the fact that upon perusal of UK tax return, it could be seen that the assessee has offered earnings from employment for 24184 on net basis which has been tax grossed up for 6046. This is in view of the fact that OFSSL has paid provisional payment of 9062 to UK revenue authorities since the employer has undertaken to meet the UK income tax liability arising from employee s earnings in UK. Accordingly, the assessee has claimed refund of 3016. On the basis of the above, it could be seen that separate tax payment has been made by OFSSL to UK revenue authorities to discharge the tax liability of the assessee in that country. The assessee has also placed on record Tax Residency Certificate - As per this certificate, the assessee has claimed relief for foreign earning not taxable in UK for 7952. The same shall be considered by Ld. AO while computing the quantum of income taxable in India as directed by us in preceding para-7. The appeal stands partly allowed.
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2022 (10) TMI 710
Unexplained cash deposits in bank account - argument that there were past savings which were pooled in and collected and deposited keeping the purpose for which the assessee was working to achieve the claim - Appellant is a low educated person doing petty labour jobs and not usual with the legal proceeding under the Income Tax Act and the non-compliance of the notices was not a deliberate act of the Appellant - HELD THAT:- Circumstances consistently available on record that the benefit of past savings of the assessee's family consisting of assessee's wife; two educated daughters and educated son rejected by the AO and sustained by the CIT(A) cannot be upheld looking at the target which the assessee was aspiring for i.e. sending his daughter abroad for further studies. Looking at his background, it was a salute worthy ambition. The wife of the assessee as per pleadings before the AO also was working in other persons households; one Post Graduate daughter was giving tuitions and another Post Graduate daughter was in private employment and the educated son was also gainfully employed. Accordingly, the argument that there were past savings which were pooled in and collected and deposited keeping the purpose for which the assessee was working to achieve the claim has been discarded without any basis except the reasoning that t is very/highly improbable that such a huge amount can would be lying with him idle. Therefore, the assessee's contention is not acceptable . Keeping in view the purpose for which the assessee was working hard, the claim was justified on facts. Accordingly, the respective orders are set aside and Page addition is directed to be deleted. Said order was pronounced in the Open Court at the time of hearing itself. Appeal of the assessee is allowed.
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2022 (10) TMI 709
Exemption u/s 11 - registration u/s 12AB subject to the conditions to be complied with by the assessee - HELD THAT:- When we examine the questions raised by the assessee according registration under section 12A PCIT subject to certain conditions in the light of the provisions contained in the scheme of the Income Tax Act, 1961, registration under section 12A cannot be subjected to any condition as there is an inbuilt mechanism to be complied with by the assessee after getting the registration under section 12AA - compliance of the conditions by the assessees is to be examined by the Assessing Officer (AO) during the assessment proceedings. The role of the Ld. PCIT while according registration under section 12A is only to make himself satisfied about the genuineness of the activities to be carried out by the assessee trust and the compliance of such requirement of any other law for the time being in force by the trust or institution material to achieve its object and then to accord the registration. Conditions imposed by the Ld. PCIT while according registration under section 12A of the Act are not sustainable in the eyes of law. Identical issue has also been decided by the co-ordinate Bench of the Tribunal in case of Bai Hirabai Jamshetji Tata Navsari Charitable Institution vs. CIT (E), Mumbai order dated 29.07.2022. Registration accorded by the Ld. PCIT under section 12A to the assessees is made absolute sans conditions laid down in para 10 of the impugned order. Consequently, both the appeals filed by the assessees are allowed.
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Customs
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2022 (10) TMI 708
Levy of penalty u/s 114 of the Customs Act, 1962 - Smuggling - alleged act of omission / commission - Red Sander Logs - appellant is aggrieved by the direction of the Commissioner (Appeals) remanding the matter to the adjudicating authority to reconsider the non-imposition of penalty on the appellant under sec. 114 of the Customs Act, 1962 - HELD THAT:- From the facts narrated, it can be seen that the adjudicating authority had absolved the appellant from imposing penalty. On perusal of the impugned order, it is seen that after appreciating the facts, the Commissioner (Appeals) has noted that one consignment was already cleared and this was the second consignment that was intercepted by the DRI. She has taken a view that it is obvious that the appellant has abetted Shri Sabarivasan and his aides in misusing the IEC of M/s. Polyhose India (Rubber) Pvt. Ltd. and therefore is liable for penalty under sec. 114 of the Customs Act, 1962. In the present case, the role of the appellant as brought out from the evidence is in arranging the container. The said goods namely container has not been confiscated. Further, the learned counsel for the appellant has raised argument on the basis of the recent Notification No. 56/2015-2020 dated 18.2.2019. Therefore, whether the items namely red sanders was restricted item (license needed for export) during the relevant time has to be examined, it is opined that as the Commissioner (Appeals) has only remanded the matter to relook into the non-imposition of penalty. The appellant would be getting sufficient chance to put forward documents and arguments to establish their innocence. Appeal dismissed.
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2022 (10) TMI 707
Reduced penalty under Section 114 of the Customs Act - improper export of buffalo meat - export of excess quantity of eat, than the processing capacity - refund the drawback - demand for return of drawback is dropped on the ground that no provision exist in the Customs Act for such recovery but confirmed the penalty under Section 114 of the Customs Act by reducing it from Rs.20,00,000/- to Rs.15,00,000/- - HELD THAT:- The Respondent-Department is of the opinion that since Note 6 contains a direction that export of meat and meat products must be sourced exclusively from APEDA approved plants and this M/s. Al-Azlan Frozen Foods could not produce more than 62 MT of frozen buffalo meat per day, there is improper export done by the Appellant. On perusal of the show-cause notice, the Order-in- Original and the Order-in-Appeal it would clearly indicate that they have referred to buffalo meat and processed frozen buffalo meat interchangeably at different places but consistently stated that M/s. Al-Azlan Frozen Food s production capacity of buffalo meat per day is 62 MT. However, going by the APEDA certificate of registration granted to M/s. Al-Azlan Frozen Foods, copy of which is annexed to appeal memo at page 23, the production capacity of this food processing unit M/s. Al-Azlan Frozen Foods was 62 MT of frozen meat per day and 40 MT of chilled meat per day and if both are taken together it would be consistent to the pleading of the Appellant. The show-cause notice did not propose for any action concerning mis-declaration in the shipping bills or propose any penalty, for which discussion on the same is outside the purview of this appeal, besides the fact that not a single shipping bill is annexed to the show-cause notice to substantiate that description of goods exported was different. Since nowhere during adjudication, the Appellant had ever averred that it had exported only frozen meat and as Note 6 has not kept the category of export of meats to frozen one only, there is no basis in the claim made by the Department. This being facts on record and having regard to the fact that Respondent- Department had not taken into consideration the entire production capacity of M/s. Al-Azlan Frozen Foods and confined it to 62 MT meat to presume such mis-declaration though it is only in respect of frozen buffalo meat only, imposition of penalty on the basis of mathematical variation is unsustainable in law and facts. The order passed by the Commissioner of Customs (Appeals), Mumbai-II vide to the extent of confirmation of penalty at a reduced rate of Rs.15,00,000/- is hereby set aside - Appeal allowed.
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2022 (10) TMI 706
Seeking condonation of delay of 715 days in filing the appeal - appeal was filed on March 21, 2022 assailing the order in original dated March 8, 2019 which was admittedly received by the appellant on March 12, 2019 - HELD THAT:- We agree with the authorized representative for the Revenue that it covered those cases where the limitation fell after March 2020 during the Covid period. In the present case, the due date for filing the application was June 10, 2019 several months before the Covid-19 pandemic had even started. Therefore, this order will not come to the aid of the appellant. So far as the substantive ground on which the delay is sought to be condoned is that the appellant s counsel had prepared and drafted the present appeal but the concerned associate of the counsel s office had left without notice and, therefore, there was a delay. The only counsels on record in the present appeal as is evident from the Vakalatnama are Shri Priyadarshi Manish and three of his associates in whose favour a Vakalatnama was filed on March 02, 2022. There is no Vakalatnama on record to show that any other counsel was engaged to file an appeal in the matter. Further, neither the counsel who is said to have first taken up the matter and failed to file the appeal has been named in the application nor has the name of the associate who is said to have left to the office without notice been indicated. There are no reasonable grounds have been made out seeking condonation of delay of 715 days in filing the present appeal - appeal dismissed.
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Corporate Laws
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2022 (10) TMI 705
Seeking consideration of preferential claim - Section 530 (1) (a) of the Companies Act, 1956 - HELD THAT:- Having considered the submissions by learned advocates for the parties and the report of the Official Liquidator, the Official Liquidator is directed to consider the claim of Gujarat Commercial Tax (GST) as preferential claim in light of claim verification report submitted by M/s. Naimish Shah Company, Chartered Accountants. The Official Liquidator is permitted to encash premature FDRs to disburse amount to the secured creditor of the company in liquidation - Application allowed.
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2022 (10) TMI 704
Anti-competitive practices in violation of Section 3(1) and 3(3)(b) of Competition Act, 2002 - sub-section (1) and (2) of Section 53B of the Competition Act, 2002 - Levy of penalty - HELD THAT:- The 1st Respondent herein, find evidence against the Appellant and the 6th Respondent and observed that it has played a significant role in the organization of the press meet and the participation of the 6th Respondent cannot be said to be in his personal capacity and observed that he was the President of the Appellant during the relevant period of time. The commission also takes note the contents in the press meet held on 01.03.2017, wherein the opposite parties participated and actively advocated the cause of condemning dubbed Kannada Films. Further, the commission observed that the press meet was used as a platform to give coverage to the protest by the opposite parties. One of the contentions of the Appellant is that the cause of the Appellant is to promote Kannada literature and to ensure livelihood of artists in Kannada film industries and not otherwise. However, from the sequence of events and from the evidences on the record that the conduct of the Appellant and the opposite parties is anti-competitive thus, resulted in limiting production and supply of dubbed movies and their screening within the State of Karnataka which directly hits the provisions of Section 3(1) read with Section 3(3)(b) of the Act. This Tribunal is of the view that the order passed by the 1st Respondent dealt all the issues including the evidences led by the Director General and other evidence by the Commission itself. Having dealt the issues meticulously on the basis of the evidence on record, this Tribunal find that there is ample evidence to suggest the existence of anti-competitive conduct by the Appellant and the Opposite Parties. Accordingly, this Tribunal prima-facie holds that the DG and the Commission relied upon the material evidence and comes to a definite conclusion that the Appellant and the Opposite Parties indulge in anti-competitive conduct in violations of the provisions of Section 3 of the Act. This Tribunal finds and affirms the findings and the reasons/inference drawn against the Appellant and the Opposite Parties by the 1st Respondent/Commission and the same is ratified by holding the acts of the Appellant and the Opposite Parties is anti-competitive conduct which resulted in limiting production and supply of dubbed movies into Kannada language and their screening within the State of Karnataka, which directly hits the provisions of Section 3(1) read with Section 3(3)(b) of the Competition Act, 2002 - this Tribunal comes to an inescapable and irresistible conclusion that the order passed by the 1st Respondent is in accordance with law and does not warrant any interference by this Tribunal. Appeal dismissed.
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Insolvency & Bankruptcy
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2022 (10) TMI 703
Approval of Resolution Plan - Rights and duties of authorised representative of financial creditors - Section 25A (3A) of IBC - HELD THAT:- There is no dispute to the fact that the Resolution Plan has been approved by 99.97% of vote shares of CoC. The Appellant- Earth Buyers Association For Justice itself is not member of the CoC. The 35 homebuyers who were sought to be brought on record, 29 homebuyers have not voted for the plan and the class of homebuyers have to sail with the majority of the votes of the homebuyers - even if some of the homebuyers have not voted in favour of the plan they have to sail with the majority. The procedural violations which were sought to be urge before us are not sufficient enough to interfere with the order approving the Resolution Plan. To the similar effect is the Resolution Plan with regard to other two projects, the plan clearly mention that Resolution Applicant proposes to satisfy all the admitted claims in respect of the project by completing the pending construction activities and handing over possession to the allottees, in the manner as proposed, and subject to terms and conditions mentioned in the Resolution Plan. Thus, no good grounds have been made out to interfere with the impugned order approving the Resolution Plan - appeal dismissed.
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2022 (10) TMI 702
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It is clear that the Corporate Debtor s contention that the instant petition is barred by limitation is not a valid one. In light of the acknowledgements dated 31.03.2014, 01.04.2014, 06.08.2014, 12.08.2014, 22.01.2015, 31.08.2017, 01.09.2017 and 17.02.2018 on the part of the Corporate Debtor for its liability towards the Financial Creditor, section 18 of the Limitation Act, 1963 will come into play, thereby starting fresh limitation period from the date of each acknowledgment successively. Therefore, the limitation period would start afresh from the last date of acknowledgment being 17.02.2018 and end on 17.02.2021. The Corporate Debtor has also contended that the instant petition is not maintainable since there is no record of default with any information utility. In this regard, section 7(3) of the Code needs to be referred, which states that the Financial Creditor shall, along with the application, furnish the record of the default recorded with the information utility or such other record or evidence of default as may be specified. As such, the Financial Creditor has sufficiently established the existence of debt and its default on the basis of the CIBIL report, the acknowledgments of debt by the Corporate Debtor, and the OTS - the Corporate Debtor s contention that the OTS was valid till 31.03.2020 is also not maintainable since point 9 of the OTS proposal dated 27.11.2019 (attached as Annexure C to the Supplementary Affidavit) specifically mentions that in case of default of any installments as stipulated in the said sanction, the OTS shall get lapsed. The Corporate Debtor has on several instances, admitted to the existing Financial Debt and its default and the same is also reflected in the report issued by CIBIL. Further, the petition is within the period of limitation and above the pecuniary threshold for the relevant period of time i.e Rupees One Lakh. The present petition made by the Financial Creditor is complete in all respect as required by law. The petition establishes that the Corporate Debtor is in default of a debt due and payable - Petition admitted - moratorium declared.
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2022 (10) TMI 701
Seeking direction against the Liquidator to pay the fees of erstwhile Resolution Professional (for the period of 21.12.2018 to 12.02.2019) - direction to Liquidator to pay the amount to erstwhile Resolution Professional before any other amount to be distributed as per Section 53 of the I B Code, 2016 on priority basis. Whether the present application for the payment to the Resolution Professional for the period beyond what was expressly approved by the COC is maintainable? - Who will decide the fees, if any, due to applicant- erstwhile Resolution Professional as the COC has not been made a party to the application? HELD THAT:- In the present case, in the absence of any order from this Adjudicating Authority appointing a liquidator, the applicant s continuation as a RP is not in contravention of any provisions of IBC - respondent s contention that no fees is payable for the extended period as the same was not ratified by the CoC is untenable. In view of the fact that in the present case, company is already under liquidation, the liquidator is directed to disburse the professional fee of RP at the rate approved by CoC for the period from 21.12.2018 to 12.02.2019 i.e, upto the period ending with order of liquidation. The said amount be disbursed to erstwhile Resolution Professional before any other amount to be distributed as per Section 53 of the I B Code, 2016 as the said fees comes under the heading under section 5(13) i.e., insolvency resolution process cost. The present application is allowed and disposed of accordingly.
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2022 (10) TMI 700
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - whether a dispute existed prior to the issuance of the Demand Notice by the Operational Creditor? - HELD THAT:- It is evident that the disputes raised by the Corporate Debtor vide Letter dated 17th March 2018 were an afterthought and there is no evidence presented to demonstrate their dissatisfaction with the work done by the Operational Creditor before the Legal Notice dated 7th March 2018 was issued - It is clear that if the Corporate Debtor is unable to produce evidence to prove the existence of material disputes prior to issuance of the Demand Notice, then the shelter of this defence will not be available to the Corporate Debtor. The instant Company Petition is liable to be admitted - moratorium declared.
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2022 (10) TMI 699
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The advance given by the OC is also held to be an operational debt. The CD's counsel doesn't raise any objection - considering that there is acknowledgment of debt and acceptance of admission of the receipt of the advance amount of Rs. 1 Crore and in the light of the judgment of the Supreme Court in M/S CONSOLIDATED CONSTRUCTION CONSORTIUM LIMITED VERSUS M/S HITRO ENERGY SOLUTIONS PRIVATE LIMITED [ 2022 (2) TMI 254 - SUPREME COURT ] which held that the amount given as advance would also fall within the definition of operational debt, this application needs to be admitted. Petition admitted - moratorium declared.
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2022 (10) TMI 698
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether CIRP should be initiated against the Corporate Debtor or not can only be decided after deciding the maintainability of the present Section 7 application? - HELD THAT:- As per Section 250 of Companies Act, 2013, the company which is struck off has been given an exception by the Legislature to not to be treated as dissolved in two circumstances i.e., (a) for the purpose of realising the amount due to the company and; (b) for the payment or discharge of the liabilities or obligations of the company. The Corporate Debtor, cannot be considered as dissolved for the purpose of realizing its unpaid dues through the present proceedings - the present Application filed against the Struck off Company is maintainable.
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2022 (10) TMI 697
CIRP - Validity of penalty proceedings under the Income Tax Act - Prayer for declaring the actions of the respondent as Contrary to I B Code - staying the Assessment Order of A.Y. 2018-19 year dated 13.05.2021 and notice under Section 274 read with Section 271 AAC(1) of the Income Tax Act, 1961 dated 13.05.2021 for A.Y. 2018-19 - Section 60(5)(c) of the IBC, 2016 - HELD THAT:- In the present case at hand, the Corporate Debtor was ordered to be liquidated by order dated 08.08.2018 and the Income Tax Department passed the assessment order on 13.05.2020 and issued a show cause notice on 29.09.2021. It is also seen that the respondent has filed the claim, and it was admitted to the tune of Rs. 7,36,59,888/-. The issue for our consideration is whether the Income Tax Department s action of initiating proceedings under the Income Tax Act and raising demands after the initiation of liquidation is in conformity with the provisions of IBC, 2016 - In the present case, the assessment proceeding for assessment year 2018-19 and the penalty proceedings in assessment year 2018-19 and 2019-20 have been initiated after the order for liquidation. The Assessment Order of A.Y. 2018-19 year dated 13.05.2021 and notice under Section 274 read with Section 271 AAC(1) of the Income Tax Act, 1961 dated 13.05.2021 for A.Y. 2018-19 and the show cause notice under Section 274 read with Section 270A of Income Tax Act, 1961 dated 29.09.2021 for A.Y. 2019-20 and notice under Section 274 read with Section 271 AAC(1) of the Income Tax Act, 1961 dated 29.09.2021 for A.Y. 2019-20 have been initiated in the teeth of provisions of Section 33(5) of IBC and hence is violative of the Code - Application allowed. Claim for fee for the tenure he served as Liquidator - direction to Liquidator/respondent to accept the claim of the applicant for the services provided by him as Liquidator for the period 08.08.2018 to 31.10.2019 - direction to present Liquidator not to claim any fee pursuant to the sale of Corporate Debtor s assets before proper adjudication - HELD THAT:- No case has been made out by the Ex-Liquidator in the present case regarding any realization or distribution beyond the sale of one asset i.e. Toyota Car, and released an amount of Rs.2,60,000/-. In view of the fact that very high amount of liquidation cost are claimed giving the period under consideration, the realization net of other liquidation cost will be in the negative. Admittedly, no amount were distributed during the said period to the stakeholders. Thus, as per Regulation 4(3) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016, no fee is held to be due to the applicant - the prayer of the applicant is rejected and the present application is dismissed. Direction to Ex-Liquidator to release the payment which is related to the professional services provided by the present applicant to the Corporate Debtor during the Liquidation period - Section 60(5) of the IBC, 2016 - HELD THAT:- In the present case, no written contract with the applicant-auditor for the performance of the work has been placed on record during the present proceedings. The financial creditor i.e. State Bank of India has also filed an application praying for directions to conduct the audit of the CIRP cost incurred by the erstwhile Liquidator which are stated to be abnormally high. Needless to say, such type of allegations would not have arisen if the Auditor had done his job diligently - the claim of the applicant for his professional fees fails and the present application is dismissed and disposed of accordingly. Direction to respondents to appoint a competent person to get the CIRP costs audit conducted of the corporate debtor for the period 29.09.2017 to 31.10.2019 - Section 60(5) of the IBC, 2016 and read with Rule 11 of the NCLT Rules - HELD THAT:- There is a need to audit the Books of Accounts of the Corporate Debtor to ascertain the actual position. Furthermore, the reasons extended by erstwhile Liquidator for non production of books for the financial year ending on 31.03.2018 do not appear credible. In view of the above discussions, we allow the prayer for audit of books of accounts of the corporate debtor. The liquidator is directed to appoint an independent Auditor for the purpose of audits of books of account and to ascertain the actual CIRP cost and the expenses incurred in the audit shall be included in the liquidation cost of the corporate debtor - This Adjudicating Authority further directs that the liquidator should also make all efforts simultaneously to retrieve the required information from the computerized data of the corporate debtor from the systems handed over to him after taking charge of the corporate debtor. Application allowed.
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2022 (10) TMI 696
Seeking dissolution of company - section 59 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 (IBBI Regulations) - HELD THAT:- This Bench had directed that notice be issued to the RoC. Pursuant to the service of the notices to the ROC, ROC has filed their status report dated 17.08.2022 and had no objection qua acceptance of the present Application. Necessary compliances of Section 59 and other relevant provisions of the Insolvency and Bankruptcy Code, 2016 read with the regulations have been made within time. More specifically, the submission of the Form GNL-2 to the ROC, after realisation and distribution of the assets to its members and closure of the Bank account. In view of the necessary compliances made and satisfaction accorded by the voluntary liquidator, the present company namely M/s. Lonely Planet India Private Limited hereby stands dissolved with effect from the date of the present order. Accordingly, the Copy of this order be filed with the ROC within the statutory period as per the applicable provisions. The present petition for voluntary Liquidation stands allowed.
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Service Tax
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2022 (10) TMI 695
Reversal of CENVAT Credit - trading activity - exempted service or not - common input service which are used for both dutiable and exempted services - non-maintenance of separate records - Rules 6(3)/6(3A) of Cenvat Credit Rules, 2004 - whether appellant is required to pay 5% or 6% of total sale value of the goods traded by them in terms of provisions of Rule 6(3) when the appellant agree for reversal of actual credit attributed to the quantum of trading sale (trading activity) in terms of Rule 6(3A) following the option available under Rule6(3)? - HELD THAT:- The appellant in the present matter agree to reverse to cenvat credit, this is not under dispute. Therefore, the appellant have complied with the condition prescribed under Rule 6(3)(ii) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, therefore demand of huge amount on the total value of the trading activity cannot be demanded. Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credit attributed to the input or input services used in the exempted goods/ exempted service. It is also observed that in either of the two options given in sub-rule (3) of Rule 6, there is no provisions that if the assessee does not opt any of the option at a particular time, then option of payment of 5% or 6% will automatically be applied. The demand confirmed by the adjudicating authority is legally not correct and therefore the same cannot be sustained - the appellant are required to reverse the proportionate credit relatable/ attributable to the exempted activity - the matter is remanded for the limited purpose of calculating the proportionate reversal credit in terms of Rule 6 of Cenvat Credit Rules 2004 in this matter - appeal allowed by way of remand.
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2022 (10) TMI 694
Levy of Service Tax - gross amount collected from the subscribers/ultimate customer or only on the gross amount received by them from the Local Cable Operators (LCOs) who are providing the content - providing maintenance services to the subscriber/ultimate customer and collecting payments from them and remitting amount to respondent as per their invoice and retaining the balance amount collected by them - eligibility for CENVAT Credit - HELD THAT:- As per the definition of cable operator in Cable Television Networks Act, any person who provides cable service is cable operator, therefore it implies that both MSO and LCOs are cable operators as MSO is providing cable service to LCOs who in turn providing the same to the ultimate customer/ individual. We are in complete agreement with learned Commissioner that the actual functionality of MSOs and LCOs differ from analogue period to DAS period to the extent that during DAS period, the signals received/purchased by MSO were encrypted whereas in analogue period they were not and for viewing of encrypted signals installation of set top boxes at subscriber s end is a must in DAS period and subscribers records in the SMS server were also maintained with MSO. While interpreting the word for such service in Section 67, the Hon ble Supreme Court in the matter of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] has laid down that value of taxable services shall be the gross amount charged by the service provider for such service and the valuation of tax cannot be anything more or less than the consideration paid as quid pro quo for rendering such a service. There is no iota of doubt that LCOs received signals from MSOs (who received the signals from broadcasters) and the ultimate customers/subscribers received signals from the LCOs. The findings of the learned Commissioner is agreed upon that in the post DAS era both MSO and LCOs would fall within the ambit of persons providing taxable services of cable service however the service recipient for both would be different as for the MSOs the recipient is LCOs whereas for LCOs it s the subscribers. It is not disputed that the respondents did not have set top boxes, CAS, SMS etc and were using the infrastructure provided by their group company FTPL and also did not have the equipments required for transmitting the signals by LCOs to subscribers and therefore it is clear that the LCOs were utilising their own infrastructure for transmitting signals to the ultimate subscribers - it is concluded that the respondent is liable to pay service tax only on the gross amount received by them from LCOs. Demand of short payment of amount - denial of Cenvat credit - non-production of respective invoices by the respondent - levy of service tax on audit fee - extended period of limitation - HELD THAT:- It is found that without any discussions and/or proper reasoning the learned commissioner has confirmed the short payment of demand and denied the Cenvat credit to the respondent, which do not find favour the present case, therefore, there are no other option but to set aside the part of the impugned order confirming the short- payment of demand and denial of Cenvat credit alongwith penalty for which cross-objection has been filed by the respondent and remanding the same to the Adjudicating Authority to decide the issue afresh including the issue of extended period of limitation, after giving proper opportunity to the respondent. The appeal filed by revenue is rejected and the cross-objections of respondent are accordingly disposed off.
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2022 (10) TMI 693
Refund of un-utilisedCenvat Credit on input service used in providing taxable service - Business Auxillary Service - Intermediary Services or not - HELD THAT:- The Tribunal in COMMISSIONER OF GOODS SERVICE TAX GURGAON-II VERSUS ORANGE BUSINESS SOLUTIONS PVT. LTD. [ 2019 (5) TMI 1351 - CESTAT CHANDIGARH] dismissed the same after going into detailed facts of the matter including the agreement between the Orange Business Services and its customer and also taking into consideration the Guidance Notes of CBE C dated 20/06/2012 clarifying the meaning of Intermediary . As the cited decision has not been stayed or set aside in any appeal, as we can gather from the case records, therefore there is no reason for us to take a contrary view. Since the issue involved herein is no more res integra in view of the decision, therefore following the same we do not find any merit in the appeal filed by the Revenue and the same is accordingly dismissed.
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Central Excise
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2022 (10) TMI 692
Export or not - removal of goods to SEZ without execution of bond - execution of Bond or Letter of Undertaking as required under Rule 19 ibid - non-submission of proof of export in respect of such removal - demand alongwith penalty - HELD THAT:- As per the procedure set out in Notification No.42/2001-CE(NT), the duplicate copies of the relevant ARE-1 should have come to the concerned Range Officer as mentioned in the ARE-1s. The Department could have reconciled/tallied the desired particulars from such duplicate copies supposed to have been sent to them by SEZ Customs. But no action/attempt appears to have been taken in this regard/direction - Once it is seen/proved that the goods have actually been sent/supplied to the SEZ units (equivalent to export), the absence of Bond becomes a technical/procedural infraction without any Revenue Implication whatsoever . In fact, in respect of other ten (10) ARE-1s, where also the goods were sent without the cover of the Bond, but it was found that the goods had actually reached to SEZ Units, the corresponding demands have been dropped. Similar issues came up for consideration in the cases of CCE Vs. Dashion Ltd., [ 2016 (2) TMI 183 - GUJARAT HIGH COURT ] and CCE Vs. National Engg. Ind. Ltd., [ 2016 (5) TMI 12 - RAJASTHAN HIGH COURT ] and it was decided that substantial benefit cannot be denied because of procedural irregularity. It is deemed appropriate to remand the matter to the ld.Adjudicating Authority to verify the relevant documents and pass a speaking and reasoned denovo order in accordance with law and in view of the principles of natural justice - the Appeal filed by the appellant is allowed by way of remand.
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Indian Laws
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2022 (10) TMI 691
Striking off the defence of the appellant original defendant allowing the application submitted by the original plaintiff landlord submitted under Section 13(6) of the M.P. Accommodation Control Act, 1961 - HELD THAT:- The impugned judgment and order passed by the High Court and that of the learned Trial Court striking off the defence of the appellant is quashed and set aside and the appellant is permitted to defend the eviction suit/suit, which may be considered in accordance with law and on its own merits. However, at the same time to strike the balance, we direct the appellant tenant to pay the rent @ Rs. 58,650/- till September, 2011; @ Rs. 76,245/- for the period between October, 2011 to September, 2014; @ Rs. 87,681/- for the period between October 2014 to September, 2017; @ Rs. 1,00,833/- for the period between October, 2017 to September, 2020; @ Rs. 1,15,958/- for the period between October, 2020 to September, 2023 and to continue to pay the rent @ Rs. 1,15,958/- for the period October, 2023 onwards till the final disposal of the suit to be paid within six weeks from today. Appeal allowed.
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2022 (10) TMI 690
Constitutional validity of of amendment to LIC Act - Money Bill of not - Sections 128 to 146 of the Finance Act, 2021 - Section 5(9) of the Life Insurance Corporation Act, 1956 and Sections 128 to 130 and Sections 132 to 146 of the Act of 2021- case of petitioner is that every participating policyholder was entitled to a minimum of 90% of the surplus arising from non-participating policies, but the amendment under challenge has reduced their entitlement to nil and, therefore, being a policyholder, she has challenged Sections 128 to 146 of the Act of 2021, apart from Section 5(9) of the Act of 1956. Whether the amendments fall within the realm of the subject-matters under Article 110 of the Constitution of India? HELD THAT:- The issue in this regard was considered by the Apex Court in the case of Justice K.S.Puttaswamy (Retd.) , [ 2018 (9) TMI 1733 - SC ORDER] , and ROJER MATHEW VERSUS SOUTH INDIAN BANK LTD. OTHERS [ 2019 (11) TMI 716 - SUPREME COURT] . It was held that Money Bill cannot be construed in a restrictive sense and that the wisdom of the Speaker of the Lok Sabha must be valued, save where it is blatantly violative of the scheme of the Constitution - It is now settled law that mere reference to a Larger Bench does not stop operation of the judgment till it is reversed by the Larger Bench and, thereby, the judgments of the Apex Court in the cases of Justice K.S.Puttaswamy (Retd.) , and ROJER MATHEW, remain operational and binding on this court. The view aforesaid is fortified by the judgment of the Supreme Court in the case of ASHOK SADARANGANI ANR. VERSUS UNION OF INDIA ORS. [ 2012 (3) TMI 587 - SUPREME COURT] wherein it has been held that a mere reference of an issue to a Larger Bench would not make the judgment inoperative. The judgments of the Apex Court in the cases of Justice K.S.Puttaswamy (Retd.) , and Rojer Mathew , can be applied to the present case. It is, however, necessary to deal with this case even independent to the judgments, cited supra, because the Notes on Clauses to the amendments elaborates the reason to bring in the amendment. It has been stated that the amendment is brought in to allow the Central Government to float the IPO and receive the money into the Consolidated Fund of India. In view of the above, the reason for amendment is to bring the money into the Consolidated Fund of India and all other amendments were required as a consequence thereof and are saved by Article 110(1)(g) of the Constitution of India, because payment of moneys into the Consolidated Fund or the Contingency Fund of India is covered by Article 110(1)(c) of the Constitution of India - it is opined that the amendment in the case on hand falls within the purview of Article 110 of the Constitution of India. The word only used in the definition of Money Bills given under Article 110 of the Constitution of India has to be read along with Article 110(1)(g) of the Constitution of India. If the word only is meant to govern only the subject-matters falling in any of the categories given under sub-clauses (a) to (f) of clause (1) of Article 110 of the Constitution of India, then it would make Article 110(1)(g) of the Constitution of India redundant, as Article 110(1)(g) of the Constitution of India provides for any matter incidental to any of the matters specified in sub-clauses (a) to (f) of clause (1) of Article 110 of the Constitution of India. Therefore, the word only has to be read in conjunction with Article 110(1)(g) of the Constitution of India. The petitioner has challenged the amendment in reference to Article 110 of the Constitution of India without challenging the certificate issued by the Speaker of the House of the People, though his decision is taken as final as per Article 110(3) of the Constitution of India. Moreover, as recorded in the previous paragraphs, when the petitioner was asked as to whether he would challenge the certificate issued by the Speaker of the House of the People, he answered in the negative and this shows that the challenge is made to the amendment ignoring the constitutional mandate under Article 110(3) of the Constitution of India. There are no merits in the writ petition to challenge the Act of 2021 in reference to the amendment in the Act of 1956 - petition dismissed.
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