TMI Tax Updates - e-Newsletter
November 23, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Law of Competition PMLA Service Tax Central Excise Indian Laws

Articles

1. Integrated GST Rebate To Advance Authorization License Holders – Is It Fair?

   By: Navjot Singh

2. List of Notifications issued by CBIC on 10.11.2020

   By: Ganeshan Kalyani

News

1. CCI approves acquisition by Reliance Retail Ventures Limited (“RRVL”), Reliance Retail and Fashion Lifestyle Limited (“RRVL WOS”)of the retail and wholesale undertaking and the logistics and warehousing undertaking of the Future Group

2. Finance Minister Smt. Nirmala Sitharaman attends the G20 Finance Ministers virtual meeting

Notifications

GST - States

1. FTX.56/2017/Pt-III/540 - dated 31-10-2020 - Assam SGST

Seeks to amend notification no. FTX.56/2017/607 dtd. 19/09/2020 to extend due date of compliance under Section 171 which falls during the period from "20.03.2020 to 29.11.2020" till 30.11.2020.

2. FTX.56/2017/Pt-I/482 - dated 31-10-2020 - Assam SGST

Seeks to notify the provisions of Sl. No.10 of the Assam GST (Amendment) Act, 2019 to amend the section 50 of the Assam GST Act, 2017 w.e.f. 01/09/2020

3. 67/2020- State Tax - dated 19-11-2020 - Delhi SGST

Amendment in Notification No. 73/2017– State Tax, dated the 30th January, 2018

4. 39/2019- State Tax - dated 19-11-2020 - Delhi SGST

Appoints the 1st day of September, 2019, as the date on which the provisions of section 13 the Delhi Goods and Services Tax (Amendment) Act, 2019, shall come into force

5. KGST.CR.01/17-18 - dated 17-11-2020 - Karnataka SGST

Corrigendum – Notification (16/2020) No.KGST.CR.01/17-18, dated: 12.11.2020

Circulars / Instructions / Orders

Customs

1. 51/2020 - dated 20-11-2020

Clarifications regarding availment of exemption on temporary import of durable Containers

Highlights / Catch Notes

GST

• Court Orders Review of Retrospective Registration Request from July 1, 2017; Decision Based on Merits Required.

  Case-Laws - HC : Grant of retrospective registration with effect from 01.07.2017 for petitioner's Registration Certificate dated 07.06.2018 - This Court directs the fourth and fifth respondents to consider the petitioner's representation, dated 14.09.2020 seeking for validation of his registration from 01.07.2017 itself and pass final orders on merits and in accordance with law - HC
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Income Tax

• Human resource service providers can claim Section 10A Income Tax deduction, including employee training for clients.

  Case-Laws - HC : Deduction / Exemption u/s. 10A - irrespective of the fact whether or not the assessee provides training to its employees or to the employees who are recruited by its clients, since, the assessee is engaged in providing human resource services, its case is squarely covered by Notification dated 26.09.2000. Therefore, the assessee is entitled to the benefit of deduction u/s 10A - HC
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• Exemption Denial u/s 10(38) Overturned Due to Lack of Cross-Examination in Appellate Proceedings.

  Case-Laws - AT : Bogus LTCG - exemption u/s 10(38) on sale of shares denied - During the appellate proceedings, the assessee was not made available any such statement and even the right of cross examination was denied by the ld CIT(A) who exercises the co-terminus powers as that of the AO. - Therefore, the statement of a third party cannot be sole basis of the assessment without given an opportunity of cross examination and consequently it is a serious flaw which renders the order a nullity. - AT
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• Unexplained Cash Credits Denied: Assessee Proves Identity, Creditworthiness, and Transaction Genuineness u/s 68 of Income Tax Act.

  Case-Laws - AT : Unexplained cash credit u/s 68 - Director-promoter of the lending companies have already confessed during the survey action that the lending companies controlled by them are bogus companies engaged in providing accommodation entries - the assessee has discharged the onus cast upon him as he has filed all the documents proving identity , creditworthiness of the parties and genuineness of the transactions and therefore the addition can not be made u/s 68 - AT
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• TDS and Section 40(a)(i) Not Applicable: Computer Maintenance Expenses Classified as Service, Not Royalty, in India-Singapore Deal.

  Case-Laws - AT : TDS u/s 195 - addition u/s 40(a)(i) - computer maintenance expenses - Royalty - The Singapore entity buys various licenses from third party manufacturers and in turn sells the same to the Indian assessee. The Singapore entity is not the owner of any copyright. This is a clear case of providing services by the Singapore entity to the assessee company. Hence, the same cannot fall within the ambit of royalty. - AT
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• No Penalty for Inadvertent Tax Mistake u/s 271(1)(c) Without Evidence of Gross Negligence or Bad Faith.

  Case-Laws - AT : Penalty u/s 271(1)(c) - If authority is satisfied that there was a reasonable cause, it may impose any penalty but inadvertent mistake cannot call for penalty in the absence of any material to show there is gross negligency or want of bona fides on the part of the assessee. - In the instant case, we find no such gross negligency on the part of the assessee and thus in our considered opinion the penalty should be justified for an inadvertent mistake committed by the assessee. - AT
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Customs

• High Court Sets Aside Order Placing Petitioner on Denied Entity List; Natural Justice Principles Upheld.

  Case-Laws - HC : Gross overvaluation to fraudulently avail export benefits - Petitioner placed in the Denied Entity List (DEL) - The submission of the learned counsel for the respondents (Revenue) that the Impugned Order is interim in nature and therefore principles of Natural Justice can be dispensed with cannot also be accepted. - Impugned order set aside - HC
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• High Court Upholds Decision: Diamonds Re-export Allowed with Penalty for Lack of Kimberly Process Certificate Compliance.

  Case-Laws - HC : Permission for re-export of imported diamonds on paying the penalty and redemption fine - Import of rough diamonds without KP (Kimberly Process) certificate - The Circular, which permit import of rough diamonds, mandates confiscation on violation of conditions. - There are no reason to interfere with the judgment of the learned Single Judge - HC
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• Petitioners must appear at DRI office on Nov 17, 2020, for enquiry; can bring food and medicines.

  Case-Laws - HC : Physical presence of the petitioner for enquiry - (i) Petitioners shall appear on 17.11.2020 in DRI office for further enquiry; (ii) They shall be permitted to carry their own food and medicines; and (iii) Enquiry shall be conducted during the office hours and completed as expeditiously as possible. - HC
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• Appeal Confirmed Valid: Filed Within 60-Day Period from Order Receipt, No Delay Before Commissioner (Appeals.

  Case-Laws - AT : Maintainability of appeal - time limitation - If the date of receipt of the order is taken into consideration, it is observed that the appeal was filed within the statutory period of 60(sixty) days and there was no delay in filing the appeal before the Commissioner (Appeals) - AT
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Corporate Law

• Appellant accused of estoppel by conduct for inconsistent positions in USA and India under Indian Evidence Act, 1872.

  Case-Laws - AT : Transmission of shares - estoppel by conduct - The appellant himself has purchased the shares of the respondents of USA based company at a consideration on the same plea, no doubt, but taking a different plea in India and without communicating in explicit terms when this fact was known to the Appellant no.2 since the date of death of the holder of shares or earlier. Indian Evidence Act, 1872 does not permit taking one stand at one place & a different stand at other place. - AT
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IBC

• Tribunal orders ROC West Bengal to reinstate company for insolvency process but fee waiver instruction deemed unsound.

  Case-Laws - AT : Direction issued to the Appellant / ROC, West Bengal to restore the name of the Company for completion of ‘Corporate Insolvency Resolution Process’ effectively in the register of Companies cannot be found fault with. However, the further direction issued by the Tribunal, to the Appellant ‘not to levy any fee / penalty’ to the Company because Company is in ‘Corporate Insolvency Resolution Process’ is legally untenable - AT
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Service Tax

• CENVAT Credit Validity: Registration Not Required for Address on Invoices; ISD Not Mandatory for Credit Distribution.

  Case-Laws - AT : CENVAT Credit - proper invoices or not - validity of invoices/ bills issued to their office which is unregistered - requirement of Central Excise Registration or ISD Registration for availing CENVAT credit on the invoices issued on a different address - There is no law that prescribes that the only way to distribute CENVAT credit is registering as an ISD. - AT
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• Commission-Based Remuneration to Whole-Time Directors Not Taxable Under Reverse Charge Mechanism as Per Companies Act.

  Case-Laws - AT : Taxable Service or not - payment of remuneration in the nature and form of commission based on percentage of profit to whole time directors - reverse charge mechanism (RCM) - when the very provisions of the Companies Act make whole-time director (as also in capacity of key managerial personnel) responsible for any default/offences, it leads to the conclusion that those directors are employees of the assessee company. - AT
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Central Excise

• Court Denies Anticipatory Bail in Rs. 150 Crore Excise Duty Evasion Case; Accused Allegedly Avoids Authorities.

  Case-Laws - DSC : Grant of Anticipatory Bail - excise duty evasion case of ₹ 150 crores - department contended that applicant/accused is playing hide and seek and intends to take undue benefit of the fact that after five years of the commencement of investigation i.e. September 2020, as investigation commenced in September, 2015, the department would not be in a position to take the investigation to a logical conclusion - Considering the nature of allegations involved in the present case,this is not a fit case to grant anticipatory bail to the applicant/accused - DSC
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Case Laws:

• GST

• 2020 (11) TMI 658
  Grant of retrospective registration with effect from 01.07.2017 for petitioner s Registration Certificate dated 07.06.2018 - TNGST Act - HELD THAT:- Whether at all the petitioner is entitled for a relief sought for in his representation, dated 14.09.2020 is concerned, it is for the fifth respondent to consider the same on merits and in accordance with law. The petitioner relied upon two decisions of the Hon ble High Court of Kerala in his representation, which according to him, enables the fifth respondent to validate the petitioner s registration from 01.07.2017 itself. The grounds raised by the petitioner in his representation, will have to be considered by the respondents on merits and in accordance with law and in the light of the decisions referred to by the petitioner. No prejudice will be caused to the respondents if the representation of the petitioner is considered by them, on merits and in accordance with law. This Court directs the fourth and fifth respondents to consider the petitioner s representation, dated 14.09.2020 seeking for validation of his registration from 01.07.2017 itself and pass final orders on merits and in accordance with law - Petition disposed off.

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• 2020 (11) TMI 657
  Principles of Natural Justice - Validity of assessment order - replies have not been considered by the respondents under the impugned assessment order - HELD THAT:- In the instant case, the objections raised by the petitioner through their various replies, in which they have reiterated that they are ready and willing to produce books of accounts, were not considered in the impugned assessment order. But the impugned assessment order only based on the alleged deposition made by the petitioner before the Inspecting Officials that they are not maintaining books of accounts without any independent assessment. This Court has also perused and examined the various replies sent by the petitioner and as seen from the said replies, there is no admission on the part of the petitioner that they were not maintaining books of accounts at the time when the Inspecting Offiicials visited the petitioner s place of business. It is also the contention of the petitioner that they have claimed only the eligible input tax credit and there is no bogus claim. However, as seen from the impugned assessment order, as observed earlier, the respondents have mechanically and blindly accepted the alleged statement given by the petitioner before the Inspecting Officials without independently giving reasons after duly considering the objections raised by the petitioner, wherein, they have categorically pleaded that they are always ready and willing to furnish books of accounts to the respondent. The respondents have also not duly considered in the impugned assessment order with regard to the petitioner s claim of input tax credit as per GSTR-3B filed by him. The impugned assessment order passed by the second respondent is arbitrary and is in violation of the principles of natural justice, since no sufficient opportunity was granted to the petitioner nor did the respondents consider all the objections raised by the petitioner - matter is remanded back to the second respondent for fresh consideration and the second respondent shall pass final orders on merits and in accordance with law - Petition allowed by way of remand.

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• Income Tax

• 2020 (11) TMI 655
  Stay of penalty demand subject to payment of 20% of the said amount - Petitioner also sought to restrain the respondents from initiating recovery of any demand of penalty imposed on the petitioner for the relevant assessment years - HELD THAT:- This Court is of the opinion that even if the present writ petition(s) are dismissed at this stage, the maximum amount that the petitioners can be directed to deposit pursuant to the impugned orders and circulars issued by the CBDT would be 20% of the remaining demand which can only be Rs. 1,71,03,416/-. Keeping in view the aforesaid factual scenario, this Court is of the view that there is no reasonable ground for the revenue to hold the excess amount i.e. Rs. 8,28,96,584/- and the same is directed to be released to the petitioners within four weeks. With these directions, present writ petitions and pending applications stand disposed of.

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• 2020 (11) TMI 654
  Computation of taxable income - interest accrued on non performing assets - addition made under Section 40(a)(ia) - assessee maintaining mercantile system of accounting - Tribunal held that the provision for non performing assets made by assessee is proper as it is done as per RBI guidelines - whether RBI guidelines cannot override the mandatory provision of Section 145 of the I.T. Act? - HELD THAT:- First substantial question of law has already been answered by a bench of this court vide judgment in The Urban Co-operative Bank Ltd [ 2014 (10) TMI 740 - KARNATAKA HIGH COURT ] and Special Leave Petition against the aforesaid order has been dismissed by Supreme Court keeping the question of law open. The aforesaid aspect of the matter could not be disputed by the learned counsel for the revenue. For the reasons assigned above the first substantial question of law is answered against the revenue and in favour of the assessee. Deduction for provision for bad and doubtful debt - Benefit under Section 36(1)(viia) - assessee has to first set off the bad debt written off against the provision made under Section 36(1)(viia) of the Act - HELD THAT:- This court in Canfin Homes Ltd. [ 2011 (8) TMI 178 - KARNATAKA HIGH COURT] after taking note of Section 145 of the Act has held that once a particular asset is shown as non performing asset then the assumption that it is not yielding any revenue. When an asset is not yielding any revenue, the question of showing that revenue and paying tax would not arise. The contentions, which are sought to be raised by learned counsel for the revenue do not arise for consideration in the context of substantial question of law, which has been framed by this court. The concurrent findings have been recorded by the Commissioner of Income Tax (Appeals) as well as tribunal in this regard, which cannot be termed as perverse. - Decided in favour of the assessee.

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• 2020 (11) TMI 653
  Deduction u/s.10A - assessee s activity of human resources services are IT enabled services - whether assessee was only making available the data base of qualified IT personnel and entitled to deduction u/s. 10A? - HELD THAT:- Section 10A of the Act deals with special provision in respect of newly established undertaking in Free Trade Zone (FTZ) and provides for deduction. The assessee admittedly is involved in providing human resource services and from the perusal of the order passed by the AO it is evident that if the nature of activity of the assessee is maintenance of computerized database with regard to various types of qualified Information Technology personnel available in India and the company provides the customers with information to potential candidates, which would meet the requirements on the customers. Role of the company is to create an electronic database of qualified personnel and transmit data through electronic means to the client. CIT (Appeals) has also found that the assessee is in the business of supply of manpower from India to its Foreign clients after their recruitment in India. Thus, irrespective of the fact whether or not the assessee provides training to its employees or to the employees who are recruited by its clients, since, the assessee is engaged in providing human resource services, its case is squarely covered by Notification dated 26.09.2000. Therefore, the assessee is entitled to the benefit of deduction under Section 10A of the Act. - Decided in favour of assessee. In view of preceding analysis, the substantial questions of law framed by a bench of this court answered against the revenue

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• 2020 (11) TMI 652
  TDS on interest on borrowings - Assessment of Trust - Tribunal upholding the order of the lower authorities that the share of the beneficiaries is indeterminate and therefore the appellant is liable for tax at maximum marginal rate? - Power of Tribunal when it disagree with earlier decision of Tribunal - as per assessee individual beneficiaries for whose benefit the funds have been borrowed do not have taxable income and are not liable to deduct tax at source - Application of principle of mutuality - HELD THAT:- The Substantial Questions of Law raised in this appeal were considered viz., in the case of Sarvodaya Mutual Benefit Trust, Thellar [ 2019 (7) TMI 1151 - MADRAS HIGH COURT] wherein held there are only two methods of dealing such a situation. Firstly, if the decision is per incurium, a finding to the said effect has to be given. Secondly, the Court or the Tribunal can refuse to follow the decision by distinguishing it on the factual matrix. If for other than these two reasons, the Court or the Tribunal is of the view that the decision rendered earlier is not acceptable to it, then the option is to refer it to a Larger Bench of the Court or the Tribunal. The Methodology adopted by the Tribunal, while passing the impugned order, is incorrect. Therefore, we are inclined to remand the matter to the Tribunal for fresh consideration. We left it open to the Tribunal to take note of the decision in Sarvodaya Mutual Benefit Trust [ 2013 (11) TMI 1270 - ITAT CHENNAI] and if for reasons acceptable to it, the decision can be applied to the facts of the case which is well open to do so, or for if any other reasons, the decision is found to be not acceptable to the Tribunal, then the matter may be referred to the Larger Bench of the Tribunal for consideration in an appropriate manner. Thus the appeal by the appellant / assessee is allowed, impugned order is set aside and the matter is remanded to the Tribunal for fresh consideration.

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• 2020 (11) TMI 651
  TP Adjustment - comparable selection - Comparability analysis - HELD THAT:- Accentia technologies Ltd - Several judgments relied upon wherein this comparable is rejected on functionally being different and absence of any segmental data as well as occurring of any extraordinary events as discussed above did not happen in the case of this comparable for this year. In view of this, the decisions relied upon by the assessee does not help the case for exclusion of the above comparable. In view of this we confirm the order of the learned TPO/DRP in including the above comparable company for the comparability analysis of the profit margin of the assessee. ICRA Techno analytics Ltd - This company is engaged in software development and consultancy as well as engineering services, Web development hosting and subsequently diversified into the domain of business analytics and business process outsourcing. Further though it is mentioned that company is engaged in consultancy business as also in software development, therefore this company cannot be compared with the assessee appellant which does not carry on such activity. Naturally the activity of software development and consultancy are altogether different from the functional profile of the assessee. Therefore we direct the learned transfer pricing officer to exclude the above comparable. Eclrex services Ltd - In view of this fact that assessee is not a KPO, the above comparable is required to be excluded. Ld TPO is directed accordingly to exclude this comparable. TCS E serve Ltd - We accept the argument of the assessee that such a large comparable cannot be used to determine ALP of an international transaction of the assessee. Therefore we direct the learned transfer pricing officer to exclude TCS E Serve Limited. Infosys BPO Ltd , which is having the turnover more than 27 times, than the revenue of the assessee. Therefore, for the reasons given by us for exclusion of TCS E Serve Limited we also direct the learned transfer-pricing officer to exclude Infosys BPO Ltd from the comparability analysis. R systems international Ltd with different accounting period compared to the assessee - Though R Systems International Ltd follows calendar year as its accounting year, its financial for the financial year can be recast by considering its quarterly financial results. Several coordinate benches have taken this view therefore, we also direct the assessee to reconstruct the financial results of this comparable by producing credible information with respect to eliminating and includible quarter before the learned transfer-pricing officer.Ld TPO is directed to examine the same and if found in order, include this comparable in the comparability analysis. Interest on overdue receivable from associated enterprise - Overdue receivable from associated enterprise as an international transactions - HELD THAT:- As working capital adjusted margin were considered with respect to all the comparables, therefore, we do not find any reason to further sustain any adjustment on account of interest on outstanding receivables from its associated enterprise. As the outstanding of associated enterprise is shown as debtors and is covered in the working capital adjustment itself, it amounts to double addition. Had the working capital adjusted margin were not taken in case of comparable company, this addition/adjustment would have been worth considering. We direct the learned transfer pricing officer to delete the addition on account of interest on overdue receivable from associated enterprise. Accordingly ground of the appeal is allowed.

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• 2020 (11) TMI 650
  Bogus LTCG - exemption u/s 10(38) on sale of shares denied - investigation carried out by the Investigation Wing, Kolkata wherein certain persons were found indulged in providing accommodation entries - assessment based on statement of third party - information so gathered by the AO were not made available or confronted to the assessee - HELD THAT:- AO has narrated the modus operandi of various entry providers which is a general statement so far as the indulgence of certain persons in providing the accommodation entry of bogus long term capital gains as well as other transactions. However, in the said narration of modus operandi, there is nothing against the particular transaction of purchase and sale of shares by the assessee. AO has specifically mentioned that during the course of enquiry in certain cases it has come to light that large scale manipulation has been done in the market price of shares of certain companies listed on Stock Exchange by a group of persons working as a syndicate for the purpose of providing entry of tax exempt bogus long term capital gains to large number of beneficiaries in lieu of unaccounted cash. These observations of the AO in the assessment order cannot constitute any tangible material or evidence to show that the transaction of the assessee is bogus being an accommodation entry. No such information/documents/statementswas made available to the assessee thereby violating the basic principle of confronting the assessee with the documents which the Revenue wishes to rely against the assessee. In the assessment order so passed, the AO has made reference to a statement of Shri Vipul Vidur Bhatt recorded u/s 132 during certain search operations by the Investigation Wing, Mumbai and has relied on the same for holding the transaction as bogus by availing the accommodation entry of long term capital gain and beneficiary of the bogus LTCG scam. As the assessee was again not confronted with such statement during the show-cause notice and he came to know of the same from perusal of the assessment order, he raised the objection before the ld CIT(A) that no such statement of Shri Vipul Vidur Bhatt recorded u/s 132 was made available to him during the course of assessment proceedings and secondly, he deserves a right to cross-examine Shri Vipul Vidur Bhattwhose statement is being used against the assessee. During the appellate proceedings, the assessee was not made available any such statement and even the right of cross examination was denied by the ld CIT(A) who exercises the co-terminus powers as that of the AO. Thus, in view of the decision of CIT vs A.L Lalpuria Construction (P) Ltd [ 2013 (10) TMI 316 - RAJASTHAN HIGH COURT ] and CCE vs. Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] the assessment based on statement of third party without giving an opportunity to the assessee is not sustainable in law. Therefore, the statement of a third party cannot be sole basis of the assessment without given an opportunity of cross examination and consequently it is a serious flaw which renders the order a nullity. - Decided in favour of assessee Claim u/s 10(38) - Assessee has discharged the necessary onus cast on him in terms of claim of exemption of long term capital gains u/s 10(38) of the Act by establishing the genuineness of transaction of purchase and sale of shares and satisfying the requisite conditions specified therein and the gains so arising on sale of shares therefore has been rightly claimed as exempt u/s 10(38) of the Act. Accordingly, in the facts and circumstances of the case, we set-aside the order of the ld. CIT(Appeals) and the claim of the assessee u/s 10(38) is allowed. The matter is thus decided in favour of the assessee and against the Revenue. Disallowance of interest - AR submitted that the appellant had interest bearing funds - HELD THAT:- Firstly, it is noted that the assessee has interest free funds more than interest bearing funds and in such cases of mixed funds, the Courts have held and upheld the presumption that where any interest free advances have been given, the same are given out of interest free funds. The same is however subject to caveat where it is established that interest bearing funds have a direct nexus and have been utilized in interest free advances. In the instant case, the Revenue has not established any such direct nexus which establishes that interest bearing funds have been utilized for the purposes of making interest free advances. Secondly, the AO has held that assessee has not received any interest income from the partnership firm which we found factually not correct as the assessee has received interest from partnership firm - disallowance of interest is hereby deleted and the ground of appeal so taken by the assessee is allowed.

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• 2020 (11) TMI 649
  Correct head of income - fixed deposit interest income - Income from Business Profession or Income from Other Sources - HELD THAT:- We find that the facts of the assesee involved for the AY 2013-14 i.e the year under consideration are exactly identical with that facts prevailing in AY 2011-12 2012-13. We find that for the AY 2011-12, this Tribunal in assessee s own case [ 2018 (6) TMI 1725 - ITAT MUMBAI] had already adjudicated the very same issue in dispute before us and had dismissed the appeal of the revenue as held interest earned by the assessee was obviously attributable and incidental to the business carried on by it, that it would not be correct to say that this interest was totally de hors the business carried on by it. It is well-settled that interest can be assessed under the head Income from other sources, only if it cannot be brought within one or the other of the specific heads of charge. In the case before us the interest income is clearly and justifiably assessed as business income. In short, the case under consideration is not a case of depositing unutilized and surplus money by the assessee to earn interest and, therefore, the interest earned by the assessee cannot be assessed as Income from other sources - Decided in favour of assessee.

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• 2020 (11) TMI 648
  TDS u/s 195 - additions made u/s 40(a)(ia) - non-deduction of tax at source on payments made to tribals and non-tribals - violation of provisions of section 197(1) - HELD THAT:- Considering the binding decision of Hon ble Jurisdictional Tribunal on identical issue in KOMORRAH LIMESTONE MINING CO. LEARNED [ 2019 (6) TMI 1558 - ITAT GAUHATI] disallowances of payment to tribals whose incomes are exempt u/s 10(26) is to be reversed. In respect of payment to non-tribals, assessee claim is that the recipients disclosed the payments in their respective returns of income. But no documentary evidence in this regard was filed. The non-tribals payees have to satisfy the condition laid down in first proviso to sub-section(l) of section 201. Since no evidence in this regard was furnished, the payments to non-tribals have to be disallowed. We decline to interfere with the order of Id. CIT(A) in deleting the aforesaid addition in respect of payments made to individuals who are specified as Schedule Tribes and confirmed the addition in case of payments to Non-Schedule Tribes. His order on this issue is therefore upheld and the grounds of appeal of the Revenue are dismissed. Disallowance on account of non-deduction of tax at source on payments made to non-tribals as sustained by ld CIT(A) - HELD THAT:- If above payees have included the receipts in their books of accounts and have offered for taxes then the disallowance on account of non- deduction of TDS will not arise. That is, if these payees have included the receipts in computation of the total income and return of income then it would be sufficient compliance of TDS provisions and no disallowance should be made under section 40(a)(ia) of the Act. Therefore, we direct the Assessing Officer to examine whether these above noted payees had included the receipts in their books of accounts/computation of total income. If they had included the receipts in the books of accounts/ computation total income, then in that situation, no any disallowance should be made. However, if these payees did not include the receipts in their books of accounts/ computation of total income, then the Assessing Officer may make the disallowance in accordance with law. Therefore, we restore this issue to the file of the Assessing Officer for statistical purposes.

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• 2020 (11) TMI 647
  Reopening of assessment u/s 147 - purchase of the land was out of gifts/ loan received from relatives/ friend - Notice merely on the basis of presumption and on the basis of information received - whether any tangible material and live link of concealment of income? - contention of the assessee is that the assessing officer has not applied his mind before reopening of the assessment - HELD THAT:- No merit in this contention of the assessee as the material regarding purchase of property was not available before the assessing officer. As the claim of the assessee was before the assessing officer was that he received gift from his family members and friend. In the absence of material evidence supporting such claim the assessing officer was justified in reopening of assessment. Admittedly, in response to notice issued before reopening of the assessment, it was stated that the source of investment was gift and loan from relatives and friend. But no evidence proving creditworthiness of persons was placed before assessing officer. It is noticed that grand-mother, mother, mother-in-law and wife of the assessee from whom he received gift are housewives. They do not have independent source of income except the gift received and savings made out of household expenses. The assessee did not place any evidence proving their independent source of income. Hence, no fault can be found in the action of assessing officer for reopening of assessment. Addition and enhancement made by the Ld. CIT(A) invoking the provision of section 68 - HELD THAT:- Looking to the facts of the present case when the assessee is claiming that the source of investment was from the gifts given by the family members and considering the facts that the assessing officer has verified the factum of gifts received by the assessee and partly granted the relief. There was no credible evidence before the Ld. CIT(A) to rebut the findings of assessing officer. The assessee placed documents related to sale of property by father-in-law and mother-in-law - entire evidence could not be brushed aside without making proper verification. The Ld. CIT(A) was not justified enhancing the income. Therefore, we direct the assessing officer to delete the addition. Addition on declaration made in the return - assessee had placed on record all evidences regarding receipt of gifts etc. from the family members - HELD THAT:- It is settled law that only the receipt that partake character of income is required to be taxed. If receipt is in the nature of gift which does not partake character of income would certainly be not taxable - issue related to gift/loan received from wife, relatives and friend is restored to the file of the assessing officer for verification of veracity of the claim of the assessee - AO is hereby directed to re-examine the issue of gift and loan of the aforesaid persons. If the claim of the assessee is found correct he would delete the remaining addition made in this respect. The grounds of the assessee are partly allowed in the terms indicated hereinabove. Disallowance of opening balance of capital - As contended on behalf of the assessee that the ld. CIT(A) did not consider opening capital as out of gift from father and other family members - HELD THAT:- As the opening balance was part of the enhancement made by the ld. CIT(A) as we have deleted the enhancement. Therefore, this ground of the assesseee s appeal is allowed. Low marriage Expenses addition - HELD THAT:- Looking to the facts of the case, we do not see any infirmity into the finding of the authorities below. The addition made on account of low marriage expenses is hereby sustained. Penalty u/s 271(1)(c) - HELD THAT:- In this case in quantum appeal substantial addition made by the assessing officer has been deleted and rest of the additions made has been set aside for verification of the assessing officer. Under these facts, we hereby set aside the penalty order and direct the AO to delete penalty in respect of additions deleted and additions in respect of issues which have been set aside to the file of Assessing officer for verification.

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• 2020 (11) TMI 646
  Bogus LTCG - Non genuine Share Application Money (Share Capital) - notice u/s. 133(6) has not be responded - finding of the investigation wing of the Income Tax Department that assessee was receipt of bogus accommodation entries from Shri S.C. Shah Group of companies - HELD THAT:- Lower authorities have noted that notice u/s. 133(6) has not be responded. Assessee has submitted that the assessee was not required to produce the director of the investor company. We further note that the issue of additional evidence and additional ground are no more germane to the issue at hand as the assessee has himself produced affidavit from Shri S.C. Shah for the proposition that he is not providing accommodation entry. Examination of the identity, creditworthiness and genuineness of the transaction - The same is not clear from the documents on record. The same is also cogently not brought out in the orders of the authorities below. As assessee submits that if the assessee is asked to produce representative/director of the investor company the same can be attempted - we deem it appropriate to remit this issue of addition u/s. 68 of the Act to the file of the Assessing Office who shall issue necessary notices to the assessee company and shall make the necessary examination with respect to identity, creditworthiness and genuineness of the transaction. He shall properly examine the documents and financial statement being submitted by the assessee company and pass a speaking order - With these directions we remit this issue to the file of the Assessing Officer. Decided in favour of assessee for statistical purposes.

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• 2020 (11) TMI 645
  Unexplained cash credit u/s 68 - Director-promoter of the lending companies have already confessed during the survey action that the lending companies controlled by them are bogus companies engaged in providing accommodation entries - HELD THAT:- Similar issue has been decided by our co-ordinate bench in own case [ 2019 (2) TMI 101 - ITAT MUMBAI ] wherein similar additions were deleted by the Tribunal by treating the loans taken as genuine on the ground that the assessee has discharged the onus cast upon him as he has filed all the documents proving identity , creditworthiness of the parties and genuineness of the transactions and therefore the addition can not be made u/s 68 - Decided in favour of assessee. Interest expenditure paid on unsecured loans - HELD THAT:- Since we have dismissed the grounds raised by the revenue challenging the deletion of unsecured loans by holding that the addition made by the AO is not correct by following the order of the Coordinate bench in assessee own case in earlier years. Therefore the ground on disallowance of interest on these loans can not be disallowed. Accordingly the ground no. 3 is dismissed by upholding the order of ld. CIT(A).

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• 2020 (11) TMI 644
  Addition u/s 68 - Unexplained loans taken - notice under section 133(6) not responded by 51 parties - HELD THAT:- Revenue has not brought on record anything new material in support of the findings of assessing officer. From the record, it is clear that the loan was not taken during this year and taken during earlier AY and through banking channel. Therefore, we are inclined to accept the findings of the CIT(A) and accordingly ground raised by the revenue are dismissed. With regard to other loans taken by the assessee, we notice from the record that assessee has taken loan during the year and it has submitted the confirmation letters from all the parties during the assessment proceedings, except 2 creditors - AO has not verified the confirmation letters submitted during assessment proceedings and had not mentioned anything about it in assessment order - Further assessing officer has disallowed interest paid by the assessee during the year which includes interest on the loan taken during the year and balance which is interest on loan taken during previous assessment years. We notice that assessee has deducted TDS on the above said interest and remitted the same. Since the assessee has paid the interest after deducting due tax and also assessee has submitted the identity creditworthiness and genuineness of the transaction before assessing officer. This fact was appreciated by the learned CIT(A) and also before us, no new document or any material brought on record by any authority in contrary to the findings of learned CIT(A). Therefore, appeal filed by the revenue is dismissed.

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• 2020 (11) TMI 643
  Penalty u/s 271(1)(c) - Disallowing 25% of the foreign travel expenses - assessee submitted that one of the director and advisor travelled abroad to expand its business and incurred the above said expenditure - STT charges addition - as argued assessee has made genuine mistake inadvertently - HELD THAT:- We notice that assessee has debited the audit fees after making payment directly to legal and professional fees after deducting proper TDS. The assessee once again passed a journal entry for audit fee to be payable and debited the same in auditors remuneration account. The assessee has not noticed this mistake until the mistake was pointed out by the assessing officer in the assessment proceedings, when this mistake was pointed out by the assessing officer, the assessee accepted the mistake. The same was rectified in the books and respective entries was passed in the subsequent assessment year. The details for the same is placed on record, be noted that this mistake was not detected by the assessee since it has debited the same expenditure in 2 different Ledger accounts. As the mistake was pointed out and the assessee has reversed the whole provisions made by the assessee at the year end 31.03. 2008 to the extent of Rs. 6,06,680/-. In our view this type of mistakes is possible while making provisional entries at the year end. With regards to STT claim also, the assessee has failed to disallow the same in computation statement and this mistake is out of oversight. Considering the total income declared by the assessee, we do not see any reason that assessee would indulge in concealing the income by furnishing inaccurate particulars to the extent of expenditure/income disallowed by the AO and the case of the assessee is similar to the case of Price Waterhouse [ 2012 (9) TMI 775 - SUPREME COURT ]. Therefore we are inclined to accept the contention of the assessee and delete the penalty levied by the assessing officer. - Decided in favour of assessee.

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• 2020 (11) TMI 642
  TDS u/s 195 - addition u/s 40(a)(i) - computer maintenance expenses - Royalty - nature of service rendered by the Singapore entity to the assessee pursuant to the system support and maintenance agreement - assessee s case falls under Article 12(4)(a) of Indo-Singapore Treaty - characterization of income in the hands of Singapore entity - AO observed that the rights of software acquired by the assessee along with computers are very much ancillary to the application or enjoyment of the software rights and therefore, the requirement of make available as contested by the assessee is not required in the instant case - HELD THAT:- From the scope of services rendered by the Singapore entity to the assessee, it could be safely concluded that the said case does not fall within the ambit of purchase of any copyrighted article by the assessee so as to constitute the same to be in the nature of royalty. The Singapore entity buys various licenses from third party manufacturers and in turn sells the same to the Indian assessee. The Singapore entity is not the owner of any copyright. This is a clear case of providing services by the Singapore entity to the assessee company. Hence, the same cannot fall within the ambit of royalty. Whether the subject mentioned incurrence of expenditure by the assessee could be characterized as royalty in the facts and circumstances of the case? - We have already held hereinabove that the subject mentioned expenditure cannot fall within the ambit of royalty. Hence, the disallowance made u/s.40(a)(i) of the Act cannot be made in the facts of the instant case. Since, the relief is granted to the assessee on first principle, the other argument advanced by the ld. AR that money is actually not paid by the assessee during the year under consideration and hence, the same would not be liable for deduction of tax at source, is not adjudicated herein and the same is hereby left open. Accordingly, the ground Nos. 1 2 raised by the assessee are allowed.

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• 2020 (11) TMI 641
  Addition u/s 68 - bogus LTCG - HELD THAT:- Issue involved in the present appeal is squarely covered in favour of the assessee by the decision of AKSHAY JAIN [ 2019 (1) TMI 1404 - ITAT DELHI ] as held that from the perusal of the nature of credit, it is seen that the same has come through sales of shares which fact has also not been doubted by the Department. The source of money is through broker who has undertaken the transaction of the shares lying with the assessee purchased in the earlier years and same has been sold after paying due taxes in the form of STT. Thus, nature of the credit stands fully explained. If it is to be held that assessee has routed his own unaccounted money, then there has to be some material to provide live link nexus to show that the unaccounted money has been routed under the garb of transaction of purchase and sale of shares. If the availability of shares is not in doubt then the sale of the same also cannot be doubted in wake of the evidences as discussed above. Even for the sake of repetition, it is reiterated that it is not a case here that any such information or material was found or discovered that the assessee beneficiary of any accommodation entry nor there is any such statement or material either from the broker or from the stock exchange or from elsewhere. Thus, no reason to sustain the addition made u/s.68. - Decided in favour of assessee. Addition of commission paid for procuring the long term capital gain - HELD THAT:- As we have already adjudicated the main issue in favour of the assessee by holding that the addition of long term capital gain was wrong and directed the AO to delete the same. Therefore, this being consequential ground and AO is also directed to delete the addition - Appeal of the assessee is allowed.

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• 2020 (11) TMI 640
  Penalty u/s 271(1)(c) - concealment of interest income on income tax refund - HELD THAT:- Penalty is not uniform and its imposition depends upon exercising of discretion by the taxing authorities and is imposed as part of the machinery for assessment of tax liability. The word mentioned in the statute may direct that such person shall pay by way of penalty u/s 271 definitely leave certain amount of discretion in imposing penalty which need to be imposed when there is a minor breach of law and when having regard to the facts, end of justice requires that the assessee should not be penalized. Similarly, the word without reasonable cause are also indicative of some kind of discretion in the authority imposing the penalty to find out whether there was a reasonable cause or not. If such authority is satisfied that there was a reasonable cause, it may impose any penalty but inadvertent mistake cannot call for penalty in the absence of any material to show there is gross negligency or want of bona fides on the part of the assessee. In the instant case, we find no such gross negligency on the part of the assessee and thus in our considered opinion the penalty should be justified for an inadvertent mistake committed by the assessee. Hence, penalty order is found to be devoid of any merit and hereby quashed. Appeal filed by the assessee is allowed.

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• 2020 (11) TMI 639
  Disallowing notional interest on loans taken - CIT-A confirmed addition interest paid to various parties related to the Bhanwarlal Jain Group on the accommodation entries of loans and thus justified and addition - HELD THAT:- As decided in own case AO has disallowed interest while framing assessment on the loans taken in the earlier assessment year which stands deleted by the co-ordinate bench, therefore the addition on account of disallowance of interest in the subsequent year can not be sustained on the same loans and accordingly the addition is ordered to be deleted. The first ground raised by the assessee is allowed. CIT(A) directing the AO to add commission expenses incurred on alleged unaccounted loans to the income of the assessee which has resulted in the enhancement of income without giving proper notice - HELD THAT:- Since the addition made on account of unsecured loans has been deleted therefore, the issue of charging commission expense is a consequential and can not be sustained.

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• 2020 (11) TMI 638
  Penalty u/s 271 (1) (c) - assessee had obtained bogus purchase bills from hawala dealers - reopening of assessment - CIT(A) has restricted the addition of 12.5% of the total amount of bogus purchases - HELD THAT:- AO made addition of the total amount of bogus purchases. However, the Ld. CIT(A) restricted the addition to 12.5% of the questioned purchases, which was confirmed by the Tribunal in further appeal. The coordinate Bench has decided the identical issue in case of Sh. Ajay Loknath Lohia [ 2018 (10) TMI 724 - ITAT MUMBAI] in favour of the assessee. Since the facts of the present case are similar to the facts of the cases relied upon by the Ld. counsel for the assessee and the issues involved are identical, we do not find any reason to take a different view in this case. Hence, we decide this issue in favour of the assessee. Accordingly, we set aside the impugned order passed by the Ld. CIT(A) and direct the AO to delete the penalty levied/s 271(1)(c) - Decided in favour of assessee.

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• 2020 (11) TMI 618
  Revision u/ 263 - A.O. default in allowing accumulation u/s 11 (2) in the case of a late return - return of income a well as Form-10 have been filed belatedly - delay in filing of form 10 only has been condoned in exercise of powers delegated to the undersigned. It however, does not mean that the delay in filing of return of income also stands condoned. - as per CIT-A in the absence of condonation of delay in filing of return of income. the claim of exemption u/s 11(2) cannot be allowed in the facts of the present case - HELD THAT:- AO in his order passed u/s 143(3) of the Act on 31/10/2018 had considered each and every aspect of this issue. In fact, the return of income was filed on 20/10/2016 declaring Nil income and this was in time. The assessee filed the revised return of income on 29/11/2017 and this was selected for scrutiny. The ld. CIT(E) while condoning the delay in filing of Form 10 vide his order dt. 20/11/2017, u/s 119(2)(b) of the Act, was aware of all these circumstances. As the original return was filed in time and delay in filing of Form 10 was condoned by the ld. CIT(E), we are of the view that the twin conditions mentioned u/s 13(9) of the Act was satisfied. It is not the case of the revenue that the original return of income was not filed within the due date of filing as specified u/s 139(1) - AO has considered the legal position and has taken a possible view after application of mind. Assessing Officer was bound to consider the original return of income which was filed in time as well as the Form 10 filed after condonation of delay by the ld. CIT(E) and grant exemption to the assessee. He did so in the assessment order passed u/s 143(3) of the Act on 31/10/2018. He took a possible view. Such view cannot be considered as an order which causes prejudice to the revenue - the order passed u/s 263 is bad in law and without jurisdiction - Decided in favour of assessee.

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• Customs

• 2020 (11) TMI 637
  Gross overvaluation to fraudulently avail export benefits - Petitioner placed in the Denied Entity List (DEL) - Availment of fraudulent Special MEIS benefits - misdeclaration and forgery of documents - HELD THAT:- Any refusal to grant, suspend or cancel any licence, certificate, scrip or any instrument bestowing financial or fiscal benefits, can only be by an order in writing . In fact, Section 9(4) expressly mandates that suspension or cancellation of any licence, certificate, scrip or any instrument bestowing financial or fiscal benefits can only be for good and sufficient reasons . The requirement of giving reasons cannot therefore, be dispensed with and is mandatory - Even otherwise, it is now firmly established that even an administrative decision having civil consequences must record reasons as a mandatory compliance with principles of Natural Justice. This is especially so where the order itself is appealable, like in the present case. Even otherwise, the necessity of giving reasons cannot be undermined. In the present case, the learned counsel for the respondents has admitted that except for the reference on the website to the Impugned Order dated 10.01.2020, there is no separate order dated 10.01.2020 recording reasons for placing the petitioner on DEL. Therefore, in the so-called order there is no reference to the Show Cause Notices and to the replies submitted by the petitioner and how they have been dealt with and appreciated by the Authority. In fact, it gives no reason except stating that the Firm is under D.R.I Ludhiana Investigation . In terms of the Guidelines reproduced hereinabove, the same cannot be a sufficient reason as the respondent/Authority is to apply its independent mind to the allegations against the petitioner. The respondent admits that barring receiving a reference/request dated 04.09.2019 from the DRI, it has no other material to proceed against the petitioner. The reference/request itself is cryptic. The Show Cause Notice was for availing Special MEIS benefits fraudulently by mis-declaration and forgery of documents . The petitioner in its reply had categorically submitted that it had not claimed or submitted any documents for grant of Special MEIS benefits till date. The petitioner had also requested for a copy of the communication received from DRI to understand the background for the proposed action. The Impugned Order dated 10.01.2020 does not show any application of mind to these submissions as the order contains no reasons - Impugned order set aside. The submission of the learned counsel for the respondents that the Impugned Order is interim in nature and therefore principles of Natural Justice can be dispensed with cannot also be accepted. Impugned order set aside - petition allowed.

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• 2020 (11) TMI 636
  Permission for re-export of imported diamonds on paying the penalty and redemption fine - Import of rough diamonds without KP (Kimberly Process) certificate - challenge on the ground that there was only a procedural defect in the import carried out and there is now a certificate issued as required under Exhibit P5 Circular - HELD THAT:- Exhibit P10 is not a KP Certificate issued for the export of goods from UAE, which alone would validate its import into India. Exhibit P10 is a mere Technical Certificate issued for sending back the goods to UAE, from which country the goods were sourced from. The certificate enables export, to carry out which the appellant would have to first get the goods released by paying the redemption fee and penalty since already the goods are confiscated. A reading of Exhibit P5, hence, makes it mandatory that KP Certificate should accompany the goods on import and even prior to its arrival, the copy of the certificate along with related documents are to be submitted for verification to the GJEPC. The Circular, which permit import of rough diamonds, mandates confiscation on violation of conditions. There are no reason to interfere with the judgment of the learned Single Judge - appeal dismissed.

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• 2020 (11) TMI 635
  Physical presence of the petitioner for enquiry - Detention of goods - permission to petitioners to have food and medicines if enquiry by the officers of Directorate of Revenue Intelligence Office (DRI) were to stretch for long duration - HELD THAT:- Food and medicines are essential requirements. Shri. Aravind has fairly submitted that petitioners may carry food and medicine. This petition is disposed of with following: (i) Petitioners shall appear on 17.11.2020 in DRI office for further enquiry; (ii) They shall be permitted to carry their own food and medicines; and (iii) Enquiry shall be conducted during the office hours and completed as expeditiously as possible.

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• 2020 (11) TMI 634
  Application for out of turn hearing of the appeal - HELD THAT:- Because of the unavoidable circumstances, the matter could not be listed for hearing as there was no sitting of Bench. In the meantime, the appellants have filed this Miscellaneous Application on 17.06.2020 for early hearing of the matter. When the appeal has already been listed on board for hearing, there was no occasion to file this Miscellaneous Application. Subsequently, in view of Public Notice No.1 of 2020 dated 30.06.2020, the appellants were required to file their application as per format as prescribed in Annexure-II. I find from the records that they have filed the application in Annexure-II on 20.08.2020. The Miscellaneous Application for out of turn hearing of the appeal is dismissed as infructuous.

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• 2020 (11) TMI 633
  Maintainability of appeal - time limitation - appellant submits that the period of limitation has been calculated from the date of issuance of the order which is 3rd October 2018 whereas the statutory provisions provided that the period of limitation should be calculated from the date of receipt of the order - HELD THAT:- If the date of receipt of the order is taken into consideration, it is observed that the appeal was filed within the statutory period of 60(sixty) days and there was no delay in filing the appeal - Since the learned Commissioner(Appeals) has not decided the appeal before him on merits, but dismissed the same as time barred, it would be appropriate to remand the matter to the learned Commissioner(Appeals) to decide the appeal on merits. It is also categorically mentioned that there is no delay in filing the appeal before the lower appellate authority, therefore, there is no occasion to visit the aspect of limitation. Appeal allowed by way of remand.

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• Corporate Laws

• 2020 (11) TMI 632
  Transmission of shares - estoppel by conduct - Appellants are alleging that the respondents are putting pressure on the Appellants for transmission of 5000 equity shares erstwhile held by Mr. Mondal in the Appellant No.1 Company without complying with the Indian Laws Intestate Succession - HELD THAT:- It is very much clear that both the Appellants and the Respondents are known to each other for a long time and knows each other families also. It is not in dispute that the Appellant No.2 has purchased the share of California, US based Company on the same identity from the Respondents. It is also not in dispute that in the objections filed by the Appellant before the Tribunal, they have not raised the issue of mother as an inheritor. The Appellants (Respondent at Tribunal) have raised only the issue of production of probate and appropriate legal heir Certificate from Respondents at Tribunal. The issue of mother of Late Mr. Mondal, legal heir was not raised at Tribunal and hence a new ground. In any case the mother has already released her rights as far as back on 25.12.2015 by way of a letter. Even the Respondents are agreeable that let the shares be transmitted in the name of the all three (mother, wife and daughter). Identity is not denied, he cannot take a plea topsy-turvy. He is prohibited by his conduct-estoppel by conduct. In the present case the Appellant company have not assigned a tenable or sound reason as well as taken the correct approach to the issue of transmission. The appellant himself has purchased the shares of the respondents of USA based company at a consideration on the same plea, no doubt, but taking a different plea in India and without communicating in explicit terms when this fact was known to the Appellant no.2 since the date of death of Late Mondal or earlier. Indian Evidence Act, 1872 does not permit taking one stand at one place a different stand at other place. Companies Act, 2013 vide chapter IV specifically regulates the mechanism for Transfer Transmission of Securities. Hence, as per Section 430 of the Companies Act, Civil Court not to have Jurisdiction on such issues. Appeal dismissed.

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• 2020 (11) TMI 631
  Permission to file written submissions - HELD THAT:- Issue notice of this application to the respondents. Mr. Rohit Sud, the learned counsel accepts notice for all the legal heirs of the second respondent-Mr. Ashwini Chopra except for Mrs. Sudarshan Chopra. Mr. Ekansh Mishra, the learned counsel accepts notice for respondents No. 1, 3, 4 6. The applicant s counsel shall collect the notices from the Registry and send the same by speed post immediately to all respondents attaching therewith copy of the application and the entire paper book and the copy of this order. List on 21.09.2020.

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• Insolvency & Bankruptcy

• 2020 (11) TMI 627
  Restoration of name of a Company in the register of companies - requirement of pending Financial Statements and Annual Returns with the Registrar - HELD THAT:- It is to be remembered that Rule 12 of Companies (Registration Offices and Fees) Rules, 2014 says that the documents required to be submitted, registered or recorded or any fact or information required or authorised to be registered under the Companies Act shall be submitted, filed, registered or recorded on payment of the fee or on payment of such additional fee as applicable An Appeal can be filed by a person aggrieved by the Registrar of Companies Order notifying the dissolution of the Company, within three years from the date of order of the Registrar of Companies communicating the reasons thereto - In Law, the dissolution of a Company will not result in removing the Debtors liability of the Company for the purpose of discharging the dissolved Company s obligations / liabilities /payment(s) it can carry on its operations. Direction issued to the Appellant / ROC, West Bengal to restore the name of the Company (M/s Goouksheer Farm Fresh Pvt. Ltd.) (First Respondent - in Appeal) for completion of Corporate Insolvency Resolution Process effectively in the register of Companies cannot be found fault with. However, the further direction issued by the Tribunal, to the Appellant not to levy any fee / penalty to the Company because Company is in Corporate Insolvency Resolution Process is legally untenable - appeal allowed.

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• 2020 (11) TMI 626
  Stay on Liquidation proceedings - validity of Liquidation Order - continuation of CIRP - bringing back the money belonging to the corporate debtor - HELD THAT:- An appeal against a liquidation order passed under Section 33 may be filed on the grounds of material irregularity or fraud committed in relation to liquidation order. We find no material irregularity or fraud committed in relation to impugned order - The I B Code, 2016 is not meant for initiating proceedings for prevention of oppression and mismanagement but is armed with provisions under part -II Chapter III for initiation of actions against wrong doers/illegal transactions etc. There are no reason to interfere with the liquidation order passed by the Adjudicating Authority dated 29.07.2020 - the order passed by the Adjudicating Authority is upheld. Appeal dismissed.

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• 2020 (11) TMI 620
  Recovery of amounts from Bank Guarantees - Whether respondent no. 1 is in order in invoking Bank Guarantees when O.M. dated 12.04.2017 (EXHIBIT A5), provides time period for Provisional Mega Projects, for furnishing Final Mega Certificates to the Tax authorities to 120 months, viz. by which validity is available upto 2021, for the applicant to avail benefit of exemption from payment of customs duty? - HELD THAT:- We agree with the contention of the applicant as regards the issue as the Corporate Debtor was given time to submit Final Mega Power Project Certificate within the period of 120 months and in the instant case the Corporate Debtor has imported machinery in the year 2011 and it enjoys benefit of exemption from payment of customs duty for 120 months till 2021. We therefore, have no hesitation in accepting the contention of the applicant that respondent no. 1 is estopped from recovering any amounts whatsoever upto the said period of 120 months from the date of import. Accordingly, Issue No. 1 is answered in affirmative. Respondent no. 1 cannot invoke Bank Guarantee before expiry of 120 months from the date of import. Whether the impugned Bank Guarantees can be termed as PBGs and are exempted from the moratorium under section 14(a)(1) of the IBC as amended by Insolvency and Bankruptcy Code (Amendment) Act, 2020? - HELD THAT:- The important question to decide is whether the impugned Bank Guarantees issued by Corporate Debtor are PBGs or NBGs. When we go into the purpose for which the impugned Bank Guarantees are issued, we understand that these were issued for availing the benefits of exemption from payment of customs duty. Even though the underlying action is to furnish final Mega Power Project Status Certificate in time, then only this exemption is available to the Corporate Debtor. The basic object of this Bank Guarantee is to avail exemption only, not for completion of the project. Therefore, these Bank Guarantees cannot be termed as PBG. These can be termed as NBGs only. As such these guarantees are covered under security interest under section 14(1)(c) of the Code, and not under section 14(3)(b) of the Code, which was amended by Insolvency and Bankruptcy Code (Second Amendment) Act, 2018. The invocation of Bank Guarantee in question will result in decreasing value of the Corporate Debtor and it dissuades participation of prospective applicants from submitting their bids and increase cost of power as there will be substantial impact on the capital cost of the project - issue is answered that the impugned Bank Guarantees are NBGs and are covered by rigor of moratorium under section 14 of the Code. Whether it is in order for respondent no. 1 to invoke Bank Guarantees when, respondent no. 1 has filed its claim with the Resolution Professional for the amount due from the Corporate Debtor for which these Bank Guarantees are issued? - HELD THAT:- As on one hand respondent no. 1 has filed its claim with Resolution Professional for consideration and on the other hand respondent no. 1 tried to invoke Bank Guarantee to recover its dues, thereby putting itself on a higher pedestal than other creditors. The objective of the Code emphasizes on revival and resolution of the Corporate Debtor in a time bound manner while aiming for optimization of value of assets keeping in view the interest of all stakeholders. By indulging in the above act, respondent no. 1 has attempted to better its position and to place itself on a higher pedestal than the other creditors of the same class. Therefore, we are of the view that respondent no. 1 has already filed its claim with the RP, invoking Bank Guarantees, which is not in the spirit of the IBC, viz. maximization of value of assess of the Corporate Debtor and protection of interest of all the stakeholders.

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• PMLA

• 2020 (11) TMI 629
  Money Laundering - Provisional Attachment Orders - attachment of certain properties of the petitioners for a period of 180 days from the date of the said order - petitioners filed the present petition on 15.06.2020 claiming therein that as the period of 180 days from the date of the Provisional Attachment Orders had expired, in terms of Section 5(3) of the Act, the said order ceased to have effect and therefore, the Adjudicating Authority had become functus officio and the proceedings in the complaint cannot proceed - HELD THAT:- The submission of the learned counsel for the respondents that as the delay in proceedings before the Adjudicating Authority cannot be blamed on the respondents, the respondents must not be penalized and the time period should be extended, cannot be accepted. It is not a question of penalization of the respondents for the delay, but of application of the mandate of law from which there is no escape. Equally, the principle of Actus Curiae Neminem Gravabit can also have no application. The 180 days from the date of the Provisional Attachment Order dated 13.11.2019 having expired without any order under Section 8(3) of the Act being passed by the Adjudicating Authority, it is held that the Adjudicating Authority has been rendered functus officio and cannot proceed with the Original Complaint, being O.C. No. 1228/2019 pending before it. The Notice/Summons dated 26.05.2020 is accordingly set aside. In the present case, it is restrained from making any comment on whether the period of total lockdown declared by the Central Government, that is from 24.03.2020 to 20.04.2020, can be excluded for computation of the 180 days, as it is not disputed that even on exclusion of this period, the 180 days would have expired on 16.06.2020, the returnable date of the notice issued by the Adjudicating Authority. Petition allowed.

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• Service Tax

• 2020 (11) TMI 624
  Works Contract Service - exemption under Sl. No. 12(a)/12A of Notification No. 25/2012-ST dated 20.06.2012 - erection, commissioning and installation of transmission lines for various Government companies / corporations - service tax on the reimbursement of amount towards crop compensation, right of way, from the service recipient, being incidental to the works contract executed - Difference of Opinion. HELD THAT:- In view of difference of opinion, the following question(s) arise for consideration. 1. Whether the view of Member (Judicial) is correct, holding that within the extended meaning of Article 243W, read with 12th Schedule of the Constitution, Transmission and Distribution of Electricity is included; Or as held by learned Member (Technical) that Transmission and Distribution of Electricity is not included in Article 243W read with 12th Schedule of the Constitution? The Registry is directed to place the records before Hon ble President for appointment of learned third Member to give opinion on the point(s) of difference.

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• 2020 (11) TMI 622
  Taxable Service or not - payment of remuneration in the nature and form of commission based on percentage of profit to whole time directors - reverse charge mechanism (RCM) - demand of service tax on fixed part as well as the variable pay - benefit of N/N. 30/2012-S.T., dated 20th June 2012 - It is the case of the Department that the said remuneration paid to the Directors would constitute service liable to service tax in the hands of appellant assessee under reverse charge mechanism - HELD THAT:- Section 2(94) of Companies Act, 2013, duly defines whole-time director to include a director in the whole-time employment of the company. A whole-time Director refers to a Director who has been in employment of the company on a full-time basis and is also entitled to receive remuneration. The certificate issued by the company secretory states that the remuneration is given in various form as allowed under the Companies act, 2013. The whole-time Director is essentially an employee of the Company and accordingly, whatever remuneration is being paid in conformity with the provisions of the Companies Act, is pursuant to employer-employee relationship and the mere fact that the whole-time Director is compensated by way of variable pay will not in any manner alter or dilute the position of employer-employee status between the company assessee and the whole-time Director - thus, when the very provisions of the Companies Act make whole-time director (as also in capacity of key managerial personnel) responsible for any default/offences, it leads to the conclusion that those directors are employees of the assessee company. Since demand of service tax is set aside, penalty and interest are also not sustainable. Appeal allowed - decided in favor of appellant.

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• 2020 (11) TMI 621
  CENVAT Credit - proper invoices or not - validity of invoices/ bills issued to their office which is unregistered - requirement of Central Excise Registration or ISD Registration for availing CENVAT credit on the invoices issued on a different address - rule 4A of the 1994 Rules read with rule 9 of the 2004 Rules. HELD THAT:- Once the requirement of rule 4A of the 1994 Rules and rule 9 of the 2004 Rules are satisfied, the benefit of CENVAT credit could not have been demanded. Thus, the Commissioner was not justified in denying the benefit of CENVAT credit on the unregistered premises. The Commissioner has further held that the benefit of CENVAT credit for services received by the Appellant on the strength of invoices addressed to another unit is not admissible as the Appellant failed to take Central Registration or ISD Registration to avail and distribute the CENVAT credit - This finding of the Commissioner is also not correct. There is no law that prescribes that the only way to distribute CENVAT credit is registering as an ISD. It has also contended by learned Counsel for the Appellant that no service tax was payable in respect of services imported prior to April 18, 2006. In this connection it has been pointed out that demand on Rs. 7038 was confirmed in respect of services imported from M/s P L Design Company Limited during the period 2005-06. The amount of service tax has been paid by the Appellant and it has also been appropriated in the impugned order. It is, therefore, not necessary to decide this issue. Except for the demand of Rs. 7038/- that has been appropriated, the remaining demands confirmed by the Commissioner in the impugned order are set aside - Appeal allowed - decided in favor of appellant.

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• 2020 (11) TMI 619
  Valuation - inclusion of balance amount which is in the nature of Travelling Expenses and Boarding Expenses - reimbursable expenses or not - HELD THAT:- The demand is made on the amount that has been incurred by the appellant for travelling as well as lodging expenses. These are nothing but reimbursable expenses and the appellant has paid service on Audit Fee received as consideration for the service rendered - Demand do not sustain - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (11) TMI 656
  Grant of Anticipatory Bail - excise duty evasion case of Rs. 150 crores - It is submitted that investigation in the present case has already been concluded and the amount deposited by the applicant/accused is sought to be adjusted towards the final adjudicated amount - HELD THAT:- The applicant/accused is alleged to be involved in a duty evasion case of Rs. 150 crores. Even during the course of investigation, it is informed that he was not forthcoming on certain vital issues of investigation and he is giving evasive replies to the query of the investigating agency - Ld. SPP has informed the court that applicant accused is involved in the commission of an offence u/s 9 (b), (bb), (bbb) and (bbbb) of the Central Excise Act, 1944. It is further informed by Ld. counsel for department that applicant/accused is playing hide and seek and intends to take undue benefit of the fact that after five years of the commencement of investigation i.e. September 2020, as investigation commenced in September, 2015, the department would not be in a position to take the investigation to a logical conclusion Considering the nature of allegations involved in the present case,this is not a fit case to grant anticipatory bail to the applicant/accused, hence, his bail application stands rejected.

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• 2020 (11) TMI 623
  Maintainability of appeal - non-compliance with the requirement of pre-deposit - section 35F of the Central Excise Act, 1944 - HELD THAT:- The learned Commissioner(Appeals) has not decided the case on merits, but has dismissed the appeal on the ground of non-compliance with the provisions of section 35F of the Central Excise Act, 1944. After filing appeal before the Tribunal, the appellant has deposited an amount of Rs. 10,00,000/-, which is sufficient to hear their appeal on merits. The appeal filed by the appellant is allowed by way of remand to learned Commissioner(Appeals) for deciding the case on merits, without insisting on any further pre-deposit - Appeal allowed by way of remand.

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• Indian Laws

• 2020 (11) TMI 630
  Cancellation of Bail granted - Smuggling - Contraband item - Section 36A(1)(d) of NDPS Act for offences under Section 8(c) punishable under Section 21(c), 22(c), 23(c), 28 and 29 read with Section 38 of the NDPS Act - HELD THAT:- The appellants car by which they were travelling from Omerga to Hyderabad on 11.01.2018 was intercepted by the D.R.I. officials of Hyderabad Zonal Unit near the Kamkole near Hyderabad and from the possession of the appellants 45.874 Kgs of narcotic substance was recovered. Appellants in the statement recorded under Section 67 of NDPS Act have stated that they have started from Omerga to Chennai in the car in which the narcotic substance was being transported. The remand of the appellants was extended from time to time till 12.07.2018 by Special Court, Hyderabad. On 11.01.2018, recovery of narcotic substance was also made at Omerga in the factory premises of M/s Pragati Electrical Work, MIDC Omerga, Maharashtra, on which D.R.I. has registered a case and a combined complaint dated 06.07.2018 was submitted by Intelligence Officer, D.R.I., Bangalore before the Special Court, Omerga. Complaint under Section 36A(1)(d) of NDPS Act for offences under Section 8(c) punishable under Section 21(c), 22(c), 23(c), 28 and 29 read with Section 38 of the NDPS Act has been filed dated 06.07.2018 by Intelligence Officer, D.R.I. in Omerga Court. It is true that two offences, one at Hyderabad being at the instance of D.R.I., Hyderabad namely D.R.I. 48 of 2018 was registered and another case Special NDPS No. 17 of 2018 by the D.R.I., Bangalore, Zonal Unit. A combined complaint taking care of both the offences was filed before the Special Court, Omerga as noted above wherein offences committed by the accused were also inquired and dealt with. There is ample material in the complaint that the transportation of narcotic substance started from Omerga, Maharashtra and was being allegedly to be taken to Chennai and intercepted at Hyderabad. The complaint, which has been brought on the record gives the detailed facts including the journey and the interception of appellants at Hyderabad. The combined complaint having been filed on 06.07.2018, i.e., well within 180 days, the High Court did not commit any error in cancelling the default bail granted to the appellants on 12.07.2018. There is no ground for interfering with the impugned judgment /order of the High Court - All the appeals are dismissed subject to liberty granted to the appellants.

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• 2020 (11) TMI 628
  Detention order - rejection of right to represent - preliminary submission of the petitioners is that before the Advisory Board, while the petitioners have been denied right to be represented through counsel, the respondent was represented through a counsel at the hearing - HELD THAT:- The fundamental right of the petitioners under Article 14 of the Constitution of India stood vitiated when they were denied the right of legal representation before the Advisory Board in the light of the fact that the respondent was, indeed, represented through counsel Mr. Jitendra Mishra. Firstly, the petitioner was never put to notice that their request to be represented through counsel before the Advisory Board was ever accepted. In fact, their representation making that request was rejected on 22.7.2020. It is also evident from the additional affidavit filed by respondent nos. 1, 2 and 4 that the representation submitted on behalf of the petitioners on 6.8.2020 was not even placed before the Advisory Board for its consideration, on the ground that it was received shortly before the scheduled hearing on 7.8.2020 - this is found to be a gross violation of the petitioners right of consideration of representation by the Advisory Board. Despite having made the said representation, the same was not placed before the Board. Clearly, therefore, the fundamental right of the petitioners under Article 14 and 22 of the Constitution stood violated. Thus, the continued detention of the petitioners is without the authority of law, since the petitioners have not been afforded the right to have their case considered by the Advisory Board in terms of Section 8 of the COFEPOSA Act - detention of the petitioners, therefore, cannot be sustained, and is accordingly quashed - petition allowed.

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• Law of Competition

• 2020 (11) TMI 625
  Invitation of bids for tender - qouting of double price - Section 53 B of the Competition Act, 2002 - HELD THAT:- The CCI has found that the Appellant failed to define or suggest relevant market. It found it is neither necessary nor feasible to delineate the relevant market in the absence of requisite data on record particularly in the light of market emerging out of RSDOs reply which CCI received. The CCI deciphered that apart from the Opposite Party (Respondent No. 2) there are at least four other major global players in the market for rolling stock mounted GPR for Ballast Inspection in India. The Order as reproduced names of the other players. The Appellant is trying to put the burden on CCI to find out the relevant market instead of itself defining or suggesting relevant market with prima facie material. Apart from this, the order of CCI shows that there are other players available in the market. There is no material shown that the Appellant had approached the other players - no case is made out to entertain the Appeal. The Appeal is dismissed without admitting the same.

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