TMI Tax Updates - e-Newsletter
November 24, 2020

Case Laws in this Newsletter:

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

TMI SMS

• GST Summon - appearance via video conferencing - Mere apprehension of contracting COVID-19 does not persuade us to grant the relief sought for - HC

  ---

Articles

1. COVID- LOCKDOWN - BELATED OR IRREGULAR ACCOUNTING - SPECIAL CARE IS NEEDED FOR DATE OF TRANSACTIONS

   By: DEVKUMAR KOTHARI

News

1. APEDA has organised Virtual Buyer Seller Meets with potential importing Countries for product promotion of Indian agri products

Notifications

GST - States

1. FTX.56/2017/608 - dated 19-9-2020 - Assam SGST

Seeks to extend period to pass order under Section 54(7) of Assam GST Act

2. F.1-11(19)-TAX/GST/2020(Part-V) - dated 6-11-2020 - Tripura SGST

Seeks to extend the date of implementation of Dynamic QR Code for B2C invoices till 01.12.2020

3. F.1-11(19)-TAX/GST/2020(Part-V) - dated 6-11-2020 - Tripura SGST

Extension of due date of return u/s 44 till 31.10.2020

4. F.1-11(19)-TAX/GST/2020(Part-V) - dated 6-11-2020 - Tripura SGST

Seeks to amend notification no.F.1-11(91)-TAX/GST/2020(Part-II) dt. 20th May,2020

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/CIR/P/2020/233 - dated 23-11-2020

Introduction of Unified Payments Interface (UPI) mechanism and Application through Online interface and Streamlining the process of Public issues of securities under - SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (ILDS Regulations), SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 (NCRPS Regulations), SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008 (SDI Regulations) and SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015 (ILDM Regulations)

FEMA

2. 07 - dated 23-11-2020

Establishment of Branch Office (BO) / Liaison Office (LO) / Project Office (PO) or any other place of business in India by foreign law firms

Central Excise

3. 1076/02/2020 - dated 19-11-2020

Clarification on holding of Pre-Show Cause Notice Consultation

Highlights / Catch Notes

GST

• Residential Flat Shares Sold Post-Completion Certificate Exempt from GST Under Revenue-Sharing Basis.

  Case-Laws - AAR : Exigibility of GST - supply of goods or not - sale of applicant’s share (40%) of residential flats - revenue sharing basis - the amounts received by the applicant, either by himself or through his agents, towards sale of their share of flats are not exigible to GST, if and only if the entire consideration related to such sale of flats is received after the issuance of Completion Certificate - AAR
  Visit to Get Source

  ---

• Court Denies Video Appearance Request, Cites Insufficient COVID-19 Risk Concerns Over Traveling from Bengaluru to New Delhi.

  Case-Laws - HC : Validity of Summon Order - seeking permission to appear through video conferencing - The concept of balance of convenience cannot be tilted in favour of the Petitioner to be allowed to appear through video conferencing, merely because travelling from Bengaluru to New Delhi would be a risk factor for the Petitioner of contracting COVID-19. This mere apprehension of contracting COVID-19 does not persuade us to grant the relief sought for by the present Petitioner. - HC
  Visit to Get Source

  ---

• High Court Sets Aside Garnishee Notice Issued Without Hearing, Emphasizes Compliance with Natural Justice Principles for Future Actions.

  Case-Laws - HC : Principles of Natural Justice - validity of Garnishee Notice - As the Garnishee Notice came to be passed without hearing, the Writ Petition is allowed setting aside the impugned Garnishee Notice, issued by the 1st Respondent, however, leaving it open to the authorities to proceed in accordance with law. - HC
  Visit to Get Source

  ---

• High Court Sets Aside Penalty u/s 122 CGST Act Due to Violation of Natural Justice Principles.

  Case-Laws - HC : Imposition of penalty under Section 122 of CGST Act - Without waiting for statutory period stipulated under the Act, assessment Order came to be issued in Form GSTR ASMT-13 under Section 62 of CGST Act, on 29.01.2019, directing the Petitioner to pay huge sum of money including penalty. - The order came to be passed without following the principles of natural justice, the Writ Petition is allowed setting aside the impugned Order - HC
  Visit to Get Source

  ---

• Court Refuses to Overturn GST Registration Cancellation Due to Delay; Petitioner Urged to Use Statutory Remedies.

  Case-Laws - HC : Validity of SCN - Cancellation of GST registration - this Court does not think it fit to set aside the order of cancellation of registration at such a belated stage, specially as the period of limitation has been extended by the authorities. The petitioner shall exhaust the available remedy under the statute. - HC
  Visit to Get Source

  ---

• Court Orders Reasoned Decision on Late GST Filing Interest u/s 50; Suspends Adverse Actions Pending Resolution.

  Case-Laws - HC : Levy of interest - belated filing of GST returns - Section 50 of the CGST Act - ppropriate reasoned order may be passed affording opportunity to the petitioner, within a period of one month from the date of communication of this order. Till then, adverse order, if any passed against the petitioner, shall not be given effect to. - HC
  Visit to Get Source

  ---

Income Tax

• Jurisdiction for Section 143(3) Income Tax Assessments Hinges on Territory, Residence, Not PAN Jurisdiction. Revenue Argument Rejected.

  Case-Laws - AT : Jurisdiction to frame the scrutiny assessment u/s 143(3) - Jurisdiction recognized by the Act are based on territory, residence, pecuniary, classes of assessee like companies, firms etc. Since the PAN jurisdiction must be an internal arrangement of the Department which does not have the sanction of law and since it is not recognized by the Statute, therefore this contention of the revenue cannot be accepted and so it is rejected. - AT
  Visit to Get Source

  ---

• Court Rules No Taxable Capital Gain for Taxpayer After Section 54F Exemption on Joint Development Agreement Flats.

  Case-Laws - AT : Deduction u/s.54F - Receipt of 10 flats in lieu of Joint development agreement (JDA) of land - assessee did not offer any long term capital gain (LTCG) on entering into joint venture agreement in respect of property - once ecemption u/s 54F is allowed, no capital gain that would remain which is chargeable to tax in the hands of the assessee. - AT
  Visit to Get Source

  ---

• Assessee's Use of Peak Credit Principle Rejected for Unexplained Cash Credits u/s 68 Due to Inadequate Source Explanation.

  Case-Laws - AT : Addition u/s 68 - unexplained cash credit - The assessee had to discharge the primary onus in that regard. The peak credit worked out by the assessee, on the basis that the principle of peak credit applied, notwithstanding the failure to explain each of the sources of the deposits and the corresponding destinations of the payments without squaring them off, was not permissible - AT
  Visit to Get Source

  ---

• Assessee's Income Stands: CIT(A) Accepts Documentation on Share Capital, Premium, and Application Money, No Additions Made.

  Case-Laws - AT : Unexplained share capital - share premium and share application money - Ld.CIT(A) has noted as assessee has filed the confirmation letters, copies of ITRs, copies of bank statements of five parties, who invested share capital. Besides, the assessee has filed the allotment letters, returns as filed with the AO along with Board’s resolution for allotment of shares - No addition could be made - AT
  Visit to Get Source

  ---

Customs

• Plaintiffs Cannot Reclaim Warehouse Goods After Delay Without Valid Reason, Court Rules Against Strategic Legal Misuse.

  Case-Laws - HC : Reclaim of goods after surrender of rights in warehoused Goods (after import) u/s 23(3) - Due to increased customs duty, the plaintiffs could not take the delivery of the goods - Since the plaintiffs have initially surrendered their right and claim over the goods, now they cannot reverse their stand and re-claim the same after inordinate delay without assigning any sufficient condonable reasons for the same. Rather what appears is that the suit filed by the plaintiffs is an afterthought belated machination by misuse of the process of the Court - HC
  Visit to Get Source

  ---

• Goods in Semi-Knocked Down condition must be classified as whole u/r 2(a) of Customs Tariff Interpretation.

  Case-Laws - AT : Classification of goods - consignment imported under SKD condition - When the goods are presented in SKD condition, Revenue does not have authority of law to separate different parts and components and classify them differently in view of Rule 2(a) of General Rules for Interpretation of the Customs Tariff. - AT
  Visit to Get Source

  ---

IBC

• Can NCLT contest property attachment under MPID Act via Section 60(5) of I.B. Code? Ownership under scrutiny.

  Case-Laws - HC : Whether notification issued under Section 4 of the MPID Act and consequent attachment of the property including the bank account of the corporate debtor can be challenged by approaching NCLT under Section 60(5) of the I.B. Code? - Section 18 of the I.B. Code specifying duties of interim resolution professional, although provides in sub-Section 18(f) that he shall take control and custody of any asset over which the corporate debtor has ownership rights, however the same is subject to the determination to the ownership by a Court or Authority. In this particular case, such Court will be the Designated Court as per the provisions of the MPID Act. - HC
  Visit to Get Source

  ---

Service Tax

• Court Rules in Favor of Revenue on Service Tax Refund, Bars Reclaiming Due to Pre-2006 'Business Auxiliary Service' Clause.

  Case-Laws - HC : Recovery of Refund of service tax - appeal is disposed of, answering the questions of law in favour of the Revenue; but restraining the respondent-Revenue from recovering the amounts refunded since as of now the levy of service tax on the payment in lieu of foreign agency commission will not be leviable as 'Business Auxiliary service' prior to 18.04.2006 - HC
  Visit to Get Source

  ---

Central Excise

• Court Directs Correction in SVLDRS-1 Form Misdeclaration; Authorities to Issue Reasoned Order After Application Submission.

  Case-Laws - HC : Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Misdeclaration in SVLDRS-1 Form - This writ petition also stands disposed of by requiring the petitioner to submit an application before the respondent authorities for correction to be made in the information provided in the Form SVLDRS-1 as regards the penalty imposed and upon such application being made, the respondent authorities would pass a reasoned speaking order thereon - HC
  Visit to Get Source

  ---

• CENVAT Credit Rules: No Credit for Electricity from Non-Excisable Bagasse Post-Amendment to Rule 6 on March 1, 2015.

  Case-Laws - AT : CENVAT credit - electricity - captive consumption - Even after the insertion of the Explanation 1 Rule 6 of the CCR with effect from 1 March 2015 equating non-excisable goods with exempted goods for the purpose of Rule 6 of the CCR, the factual position remains that no Cenvat availed inputs were used by the Appellant in the generation of electricity from Bagasse. Bagasse remains non-excisable and the question of availing any credit thereon does not arise. - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2020 (11) TMI 719
  Permission for withdrawal of application - Attachment order - HELD THAT:- In the reference 4th cited, hearing notice was given to M/s. Savitri Ashirvaad Buildtech Limited. In the reference 5th cited, M/s. Savitri Ashirvaad Buildtech Limited, have informed through mail, that the Venture is over and they don t need the ruling. Hence the dealer has withdrawn the advance Ruling Application. The application for advance ruling filed by the applicant is dismissed as withdrawn at the behest of the applicant.

  ---

• 2020 (11) TMI 718
  Exigibility of GST - supply of goods or not - sale of applicant s share (40%) of residential flats - revenue sharing basis - HELD THAT:- Schedule Il to the CGST Act 2017 specifies certain activities / transactions to be treated as supply of goods / services. Clause 5(b) of the said schedule stipulates that Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly shall be treated as supply of service except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation whichever is earlier. In the instant case the applicant stated that that their share of residential flats have been handed over by the developer after the issuance of completion / occupation certificate dated 26.08.2019 and also clause 1.7 of the Area Sharing Agreement restricts the right of the applicant to execute any sale agreement or any conveyancing deeds till the issuance Of completion certificate and taking over of their share of units / flats. Thus the sale of said flats is not exigible to GST, if and only if they are sold after issuance of Completion / Occupancy certificate, in which case the said transaction is to be treated neither as supply of goods nor supply of services, in terms of clause 5 of Schedule III It is an admitted fact that the developer had the sole and exclusive right of marketing the entire project. The applicant is silent about the fact that whether the developer had executed any sale deeds on behalf of the applicant in respect of the applicant s share of units/flats. Thus if the applicant themselves or the developer on behalf of the applicant have sold the applicant s share of units/flats prior to issuance of completion certificate, then the transactions amount to supply of Works Contract Service are liable to GST - The time of supply in the instant case would be the time at which the constructed flats are handed over by the developer to the applicant. In the instant case the applicant claims / contends that they have received their share of units/flats after the issuance of Completion [Occupancy certificate by Bruhat Bengaluru Mahanagar Palike for 74 units. Thus, the amounts received by the applicant, either by himself or through his agents, towards sale of their share of flats are not exigible to GST, if and only if the entire consideration related to such sale of flats is received after the issuance of Completion Certificate dated 26.08.2019, as the said activities are treated neither supply of goods nor supply of service in terms of schedule III of the CGST Act 2017 subject to Clause 5(b) of the Schedule-II of the CGST Act, 2017.

  ---

• 2020 (11) TMI 717
  Profiteering - Section 171 of CGST Act and Chapter XV of the CGST Rules, specifically Rules 126, 127 and 133 of CGST Rules - HELD THAT:- Petitioner is directed to deposit the principal profiteered amount i.e. Rs. 58, 43, 170/- with Central Consumer Welfare Fund within three months. The interest amount as well as the penalty proceedings and further investigation with regard to other outlets are stayed till further orders. List the matter on 07th December, 2020.

  ---

• 2020 (11) TMI 716
  Validity of Summon Order - seeking direction to Petitioner to tender his statement and adduce evidence through video conferencing, in relation to a summon issued under Section 70 of the Central Goods and Services Tax Act, 2017 - whether the current COVID-19 pandemic situation can ipso facto be cited as a ground to insist that the tendering of statement be done through video conferencing? - HELD THAT:- Concededly, the investigation is ongoing and the Respondent wants to unearth the role of the Petitioner in the alleged tax evasion by the Company. The previous conduct of the Petitioner, at the stage of inspection when the officers of the Respondents were visiting Bengaluru, demonstrates that the Petitioner consistently avoided recording his statement on one pretext or the other. Thus, having regard to the past noncooperative conduct of the Petitioner, and the mere apprehension or fear of the Petitioner of contracting the COVID-19 infection, we would not like to interdict or interfere in the investigation process. No doubt, due to the recent outbreak of COVID-19, the Courts of this country including the Supreme Court as well as this Court have adopted measures to reduce physical presence of the lawyers and litigants, and several social-distancing guidelines have been issued by several health authorities as well as the Government of India. In this process, the use of the modern technologies has been put to use for dispensation of justice by the Courts. However, that is not the situation before us. We are concerned with the investigation being carried out by an investigating agency. The evidence being recorded at this stage would impact the entire investigation of tax evasion. The questioning during investigation has to be on the basis of evaluation and examination of documents. During the process of interrogation, the investigating agency may come across certain relevant facts and discoveries which are germane and crucial for concluding the investigation. Judicial interference at this threshold stage, in such matters relating to investigation, has to be exercised with circumspection. The concept of balance of convenience, therefore, cannot be tilted in favour of the Petitioner to be allowed to appear through video conferencing, merely because travelling from Bengaluru to New Delhi would be a risk factor for the Petitioner of contracting COVID-19. This mere apprehension of contracting COVID-19 does not persuade us to grant the relief sought for by the present Petitioner. Petition dismissed.

  ---

• 2020 (11) TMI 715
  Profiteering - levy of interest at the rate of 18% from the date from which the excess amount was collected by the Petitioner from the buyers till the date of its payment - vires of Rule 133(3)(b) of the CGST/HGST Rules - HELD THAT:- Keeping in view the orders passed by this Court in Phillips India Limited Vs. Union of India Ors. [W.P.(C) No.3737/2020] [ 2020 (6) TMI 626 - DELHI HIGH COURT] as well as M/s Samsonite South Asia Pvt. Ltd. Vs. Union of India Ors. [W.P.(C) No.4131/2020] [ 2020 (10) TMI 1031 - DELHI HIGH COURT] and M/s Patanjali Ayurved Ltd. Vs. Union of India Ors. [W.P.(C) No.4375/2020] [ 2020 (7) TMI 614 - DELHI HIGH COURT] , the interest amount directed to be paid by the petitioner as well as the penalty proceedings are stayed till further orders. List on 07th December, 2020.

  ---

• 2020 (11) TMI 714
  Maintainability of appeal - ex parte order of assessment - principles of natural justice - HELD THAT:- It would be only more appropriate, as is also so submitted by Shri Gautam Kumar Kejriwal, learned counsel for the petitioner, that the petitioner approaches the appellate authority highlighting the issues raised before this Court, as also pointing out the errors apparent on the face of record, if any, enabling the authority to reconsider the petitioner s case based on the material so placed. Shri Pawan Kumar, learned counsel appearing for the State/authority, states that petitioner failed to exercise his statutory right as envisaged under Section 62 of the Act, leaving no option with the authority to pass the order. On merits, we do not express any opinion and leave it to the wisdom of the appellate authority to consider all these issues, to the attending facts. The appellate authority shall consider all aspects and take a decision, preferably within a period of two months thereafter - Petition disposed off.

  ---

• 2020 (11) TMI 713
  Principles of Natural Justice - validity of Garnishee Notice - whether the Garnishee Notice issued by the 1st Respondent is in tune with the principles of natural justice? - HELD THAT:- As the Garnishee Notice came to be passed without hearing, the Writ Petition is allowed setting aside the impugned Garnishee Notice, issued by the 1st Respondent, however, leaving it open to the authorities to proceed in accordance with law. Petition closed.

  ---

• 2020 (11) TMI 712
  Imposition of penalty under Section 122 of CGST Act - case of the Petitioner is that, he has paid total GST liability of Rs. 4,69,92,664/- for the period of February 2018 to December 2018 and filed GST DRC-03, and having accepted the GST liability, interest and late fees, as per the provisions of CGST Act, imposing penalty of Rs. 4,27,19,192/- under Section 122(1) of CGST Act, AP GST Act, is illegal - HELD THAT:- It is to be noted that, Section 122 of CGST Act which deals with Penalty for certain offences states that, wherever there is a violation, a taxable person shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher . It is well settled that, as per the procedure contemplated under Section 73 and 74 of CGST Act, a show-cause notice has to be necessarily issued and same has to be adjudicated following due process of law. Though, the learned counsel for the Petitioner pleaded that, such a notice was never issued, but no effective reply came to be made in the counter denying the said pleading. In fact, a perusal of the material on record show that, a notice under Form GSTR-3A came to be issued, on 15.01.2019, for filing of GSTR-3B returns for the period from February to December 2018 under Section 46 of CGST Act, which was received, on 15.01.2019, itself. Without waiting for statutory period stipulated under the Act, assessment Order came to be issued in Form GSTR ASMT-13 under Section 62 of CGST Act, on 29.01.2019, directing the Petitioner to pay huge sum of money including penalty. The order came to be passed without following the principles of natural justice, the Writ Petition is allowed setting aside the impugned Order - the matter is remanded back to the authorities concerned to deal with the same afresh, in accordance with law, after giving an opportunity of hearing to the Petitioner - Petition allowed by way of remand.

  ---

• 2020 (11) TMI 711
  Validity of SCN - Cancellation of GST registration - SCN was served upon the petitioner asking him to show cause as to why his registration would not be cancelled as the petitioner/taxpayer was found non-functioning/not existing at the principal place of business - It is the contention of the petitioner that the show cause notice was vague - HELD THAT:- It is true that no hearing was given to the petitioner. It is also true that the order of cancellation is not a speaking one. However, the petitioner received such an order on February 14, 2020 and he has moved this Court in August, 2020. There are no reason to invoke a high prerogative writ and allow the prayer of the petitioner to set aside the order of cancellation in view of the provisions of Sections 30 and 107. Section 30 of the GST Act provides that a party aggrieved by an order of cancellation may apply for revocation of cancellation. The apprehension of the petitioner that the entire claim would have to be deposited if the petitioner takes recourse to Section 30, is refuted by Mr. Majumdar - this Court does not think it fit to set aside the order of cancellation of registration at such a belated stage, specially as the period of limitation has been extended by the authorities. The petitioner shall exhaust the available remedy under the statute. Application disposed off.

  ---

• 2020 (11) TMI 710
  Levy of interest - belated filing of GST returns - Section 50 of the CGST Act - HELD THAT:- On perusal of the reply dated 21.2.2020 to the notice dated 7.2.2020, it is suffice to direct respondent No.1 to consider the reply and all the relevant facts as narrated therein, affording opportunity of hearing to the petitioner. In case, the 1 st respondent is of the opinion that compliance has not been made by the petitioner properly, appropriate reasoned order may be passed affording opportunity to the petitioner, within a period of one month from the date of communication of this order. Till then, adverse order, if any passed against the petitioner, shall not be given effect to. Petition disposed off.

  ---

• Income Tax

• 2020 (11) TMI 709
  Disallowance u/s 14A - Tribunal deleting the disallowance as there was no earning of exempt income during the assessment year - Whether no exempt income received by assessee? - non recording of satisfaction - amendment to Rule 8D brought in Finance Act, 2016 with regard to the quantum of expenditure that could be disallowed - HELD THAT:- Identical substantial question of law was considered by this Court in the decision in the case of CIT Vs. Celebrity Fashion Ltd. [ 2020 (9) TMI 1022 - MADRAS HIGH COURT ] to which, one of us (TSSJ) was a party, wherein it was held that in terms of Section 14A of the Act, only expenditure, which was proved to be incurred in relation to earning of tax free income, could be disallowed and such provision could not be extended to disallow expenditure, which was assumed to have been incurred for earning tax free income. It was further held that to apply provisions of Section 14A of the Act, Assessing Officer should have recorded a finding as to how Sub-Section (1) of Section 14A of the Act would stand attracted and in absence of any such finding, the disallowance made was not justifiable. In the present case there is no opinion recorded by the Assessing Officer as to how Sub- Section (1) of Section 14A of the Act would stand attracted. - Decided in favour of assessee.

  ---

• 2020 (11) TMI 708
  Deduction u/s 35(2)(AB) - expenditure outside the in-house R D facility - Whether AO has rightly held that clinical trial expenditure is not eligible for weighted R D deduction u/s 35(2)(AB) and it will be eligible for weighted deduction only if the expenditure is incurred on an in-house R D facility? - HELD THAT:- Tribunal has allowed the deduction in respect of expenses incurred by the assessee on scientific research on in-house research and development facility by placing reliance on the decision of the Gujarat High Court. It is pertinent to mention here that against the aforesaid decision, the revenue preferred special leave petition and CADILA HEALTHCARE LTD. [ 2015 (11) TMI 496 - SUPREME COURT] has remitted the matter to the High Court for consideration afresh along with other issues. Since the Tribunal has neither recorded any reasons nor has recorded any findings on the claim of the assessee, we are left with no option but to quash the order of the Tribunal dated 16.02.2016 insofar as it pertains to claim of deduction of assessee u/s 35(2)(AB) of the Act and remit the matter to the Tribunal for decision afresh in accordance with law after affording an opportunity of hearing to the parties. Therefore, it is not necessary for us to answer the substantial question of law.

  ---

• 2020 (11) TMI 707
  Assessment of income - inclusion of the share income of the minor from the firm which had closed its accounting year on 10.8.75 in the assessment of the assessee for the assessment year 1976-77 - Whether the amended provision which had come into effect from 1.10.75 will apply to an income which had accrued on 10.8.75 for the assessment to be made for the assessment year 1976-77? - HELD THAT:- As relying on SRI LOKNATH GOENKA, SMT. NARMADA DEVI [ 2019 (8) TMI 458 - PATNA HIGH COURT] Appellate Tribunal was not correct, in law, in upholding the inclusion of the share income of the minor from the firm M/s. Om Prakash Co. for it accrued on 10.08.1975, in the assessment year 1976-77, and the amendment which came into effect only on 1.10.1975 was to apply only prospectively and not retrospectively.

  ---

• 2020 (11) TMI 706
  Benefit of Vivad Se Vishwas Scheme ( VVS Scheme ) - Substantial Questions of Law framed for consideration on account of certain subsequent developments - HELD THAT:- As assessee has already availed the benefit under the Act, no useful purpose would be served in keeping this appeal pending. At the same time, safeguarding the interest of the assessee in the event the order to be passed by the Department under the Act is not in favour of the assessee. Accordingly, the Tax Case Appeal stands disposed of on the ground that the assessee has already filed a declaration and the Department shall process the application at the earliest in accordance with the said Act and communicate the decision to the assessee at the earliest. As observed, the assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal.

  ---

• 2020 (11) TMI 705
  Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Appeal is disposed of by remitting the matter back to the Assessing Officer for deciding the issue regarding disallowance under Section 14A as relying on M/s. Marg Limited [2020 (10) TMI 102 - MADRAS HIGH COURT] wherein held that the disallowance under Rule 8D of the IT Rules read with Section 14A of the Act can never exceed the exempted income earned by the Assessee during the particular assessment year and further, without recording the satisfaction by the Assessing Authority that the apportionment of such disallowable expenditure made by the Assessee with respect to the exempted income is not acceptable for reasons to be assigned the Assessing Authority, he cannot resort to the computation method under Rule 8D.

  ---

• 2020 (11) TMI 704
  Reopening of assessment u/s 147 - Deemed dividend addition 2(22)(e) - approval by the JCIT without expressing any satisfaction - HELD THAT:- A summary approval by the JCIT without expressing any satisfaction on presence of underlying materials showing escapement while exercising the functions under s.151 of the Act cannot be countenanced in law. This apart, a consolidated approval memo of multiple assessee without recording satisfaction qua each individual case raises serious doubt on plausibility of implicit satisfaction for each case as contemplated in Section 151 of the Act. A nondescript approval under S. 151 without requisite satisfaction is a nullity. The issuance of notice under S. 147 itself is thus void where the sanction is not obtained in terms of S. 151 of the Act. Hence, on this ground also, the notice under s.147 of the Act itself gets vitiated. Section 147 of the Act confers jurisdiction upon the Assessing Officer for carrying out assessment proceedings. The legal objection raised by the assessee on the validity of assumption of jurisdiction under s.147 r.w.s. 151 of the Act and consequent additions carried out under s.2(22)(e) of the Act within the framework of the provisions of Section 147 of the Act strikes to the root of the matter and therefore can be challenged before the Tribunal even if not raised or not argued diligently before the lower authorities. We, thus, do not concur with the objections of the Revenue on this score. Additions made under s.2(22)(e) of the Act in departure with recorded reasons, cannot be sustained in the current proceedings under s.147 of the Act where no additions towards retuned income has been made on the grounds for which powers under S. 147 were exercised. We thus are not inclined to go into the remaining aspects, if any, concerning merits of the additions. The proceedings under s.147/s.148 of the Act are thus quashed as void ab-initio and the additions made under s.2(22)(e) of the Act is held to be bad in law. - Decided in favour of assessee.

  ---

• 2020 (11) TMI 703
  Unexplained cash deposits u/s 69A - unexplained money - addition made u/s 69A was levied at the rate of 60% in view of the provisions of section 115BBE - HELD THAT:- Assessment for assessment year 2017-2018 was completed u/s 144 prior to the date of filing of the return (assessment was completed on 25.09.2019). The assessee in the paper book has also filed Form 26AS for the assessment years 2015-2016, 2018-2019, etc. On perusal of Form 26AS for the above mentioned assessment years shows huge cash deposits and withdrawals.The assessment year 2018-2019 there are cash deposits of Rs. 49,94,230 and cash withdrawals of Rs. 60,54,406. There is some truth in assessee s contention that cash deposits are attributable to agricultural / trading activities and entire cash deposits in the current account of the assessee cannot be treated as unexplained money and brought to tax u/s 69A. One more opportunity should be granted to the assessee to prove his case that cash deposits are attributable to the agricultural / trading activities. For the above said purpose, the issue raised in this appeal is restored to the Assessing Officer - Appeal filed by the assessee is allowed for statistical purposes.

  ---

• 2020 (11) TMI 702
  No mandatory notice u/s 143(2) issued by eligible ITO - ITO jurisdiction to frame the scrutiny assessment u/s 143(3) without issuing notice u/s 143(2) - assessee objected to the jurisdiction of ITO, Ward-3, Shillong to have issued the statutory notice wherein it was stated that the assessee society is in Tezu which is situated in the State of Arunachal Pradesh and ITO, Ward-2, Digboi has territorial jurisdiction u/s 124 - HELD THAT:- It is an admitted fact that the assessment was framed by the ITO, Ward-2, Digboi and that he has not issued notice u/s 143(2) of the Act which is discernible from the order sheet as well as from perusal of the assessment order - scrutiny assessment u/s 143(3) was framed without issuing notice u/s 143(2) by the ITO, Ward-2, Digboi. The legal issue raised before me is no longer res integra. As in Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] has held that issue / serving notice u/s 143(2) of the Act is sinequa- non before framing of scrutiny assessment u/s 143(3) - Therefore, relying on the said decision of Hon ble Supreme Court, we allow the legal issue raised by the assessee. PAN jurisdiction of assessee - Coming to the contention of the ld D.R that PAN jurisdiction of assessee was with ITO, Ward-3, Shillong and therefore he issued notice u/s 143(2) of the Act after taking note of CASS in the case of assessee ; and later when he came know that jurisdiction was with ITO, Ward-2, Digboi , he has transferred the case to the jurisdiction of ITO at Digboi and since the assessee has participated in the assessment proceedings, there is no prejudice caused to the assessee. This submission of Ld. D.R cannot be accepted since the statute does not recognize PAN jurisdiction. Jurisdiction recognized by the Act are based on territory, residence, pecuniary, classes of assessee like companies, firms etc. Since the PAN jurisdiction must be an internal arrangement of the Department which does not have the sanction of law and since it is not recognized by the Statute, therefore this contention of the revenue cannot be accepted and so it is rejected. Thus ITO, Ward-2, Digboi could not have framed the assessment order u/s 143(3) without issuing notice u/s 143(2) - Decided in favour of assessee.

  ---

• 2020 (11) TMI 701
  Disallowance of provision for unreconciled OD and CC loan - AO has made addition on the basis of provisional profit and loss account and the balance sheet - CIT-A deleted the addition - HELD THAT:- On perusal of the financial statement no where it is appearing in the profit and loss account. Therefore, the AO was not justified to make addition on this account and the CIT(A) has rightly deleted the addition made by the AO. Provisions debited into profit and loss account without creating any liability is not allowable under the Income Tax Act but in the financial statements produced before us, we also do not find anywhere that the particular amount has been debited into the profit and loss account. The findings recorded by the CIT(A) in this regard are justified. Accordingly, we uphold the order of the CIT(A) with regard to deletion of addition made by the AO under the head provision for unreconciled OD and CC loan and dismiss the appeal of the Revenue.

  ---

• 2020 (11) TMI 700
  Revision u/s 263 by CIT - CSR expenses allowability - HELD THAT:- AO had called for and obtained explanation for CSR expenses incurred by the assessee. The explanation given by the assessee before the AO is extracted by it, in its reply to the PCIT u/s 263 - This is not a case where there was no enquiry on this issue by the A.O. It is also not a case of non-application of mind nor in the case where the AO had not examined these particular expenses claimed by the assessee, as alleged in point No. (ii) of the show cause notice by the Pr. CIT. Though the Pr. CIT had made this allegation in his Show Cause Notice, no such finding has been given by the Pr. CIT in his order u/s 263 of the Act. Admittedly, the expenditure in question is audited and is allowable as deduction. The amendment brought about by way of Explanation 2 to section 37 by Finance Act, 2014, was only with effect from 01.04.2015. In the case of Misrilall Mines Pvt. Ltd. [ 2018 (6) TMI 893 - ITAT KOLKATA] and Jindal Power Ltd., Raipur Bench [ 2016 (7) TMI 203 - ITAT RAIPUR] ITAT held that the amendment in question is not retrospective. Expenditure incurred in CSR in accordance with guidelines issued by the Govt. of India is allowable as a deduction for both A.Y. 2013-14 and A.Y. 2014-15. In view of the above discussion, we are of the considered view that there is no error in the order of the Assessing Officer passed u/s 143(3) of the Act in both the assessment year, much less an error, in so far as it is prejudicial to the interest of Revenue. Thus we cancel the orders passed by the Pr. CIT u/s 263 - Decided i favour of assessee. There is no error in the order of the Assessing Officer passed u/s 143(3) of the Act in both the assessment year, much less an error, in so far as it is prejudicial to the interest of Revenue. Thus we cancel the orders passed by the Pr. CIT u/s 263 - Decided in favour of assessee.

  ---

• 2020 (11) TMI 699
  Deduction u/s.54F - Receipt of 10 flats in lieu of Joint development agreement (JDA) of land - assessee did not offer any long term capital gain (LTCG) on entering into joint venture agreement in respect of property - whether there is a transfer of the property within the meaning of section 2(47)(v)? - plea of the assessee was that it is only on delivery of the constructed area by the developer in all respects that a transfer would take place and since no such delivery of built up area had taken place during the previous year - AO was of the view that possession of the property had been delivered to the developer and therefore there was a transfer of the property on the signing of the development agreement dated 21.01.2010 and therefore capital gain was exigible to tax in Assessment Year 2010-11 - HELD THAT:- In the case of K.G.Rukminiamma [ 2010 (8) TMI 482 - KARNATAKA HIGH COURT] the facts were on a site measuring 30 x 110 the assessee had a residential premises. Under a joint development agreement she gave that property to a builder for putting up flats. Under the agreement 8 flats are to be put up in that property and 4 flats representing 48% is the share of the assessee and the remaining 52% representing another 4 flats is the share of the builder. So the consideration for selling 52% of the site was 4 flats representing 48% of built up area and the 4 flats are situated in a residential building. The Court held that the 4 flats constitute a residential house for the purpose of sec 54. The 4 residential flats cannot be construed as 4 residential houses for the purpose of sec 54. It has to be construed as a residential house and the assessee is entitled to the benefit accordingly. In that view of the matter, the Court held that the Tribunal as well as the appellate authority were justified in holding that there is no liability to pay Capital Gains tax as the case squarely falls under sec. 54 of the Income Tax Act, 1961. Post amendment, viz., from 01.04.2015, benefit of s 54F will be applicable to one residential house in India. However, prior to said amendment, a residential house would include multiple flats/residential units. Similar decisions were rendered on identical facts by the Hon ble Madras High Court in the case of CIT vs Gumanmal Jain[ 2017 (3) TMI 394 - MADRAS HIGH COURT] . In the present case all the 13 flats were situate in the same premises and, therefore, the decision rendered in the case of Smt. K.G Rukminiamma (Supra) will apply. In the light of above judicial pronouncements on identical facts and circumstances of the case of the assessee, we are of the view that the Assessee is entitled to deduction u/s.54F of the Act on all the 13 flats and if the deduction is allowed then there would be no capital gain that would remain which is chargeable to tax in the hands of the assessee. We hold and direct accordingly and allow the appeal of the Assessee.

  ---

• 2020 (11) TMI 698
  Addition being the amount of PF and ESI u/s 36(1)(va) - amount remitted to the concerned accounts before the due date of filing the return of income - HELD THAT:- In the instant case, there is no dispute that the amounts-in-question with regard to EPF and ESI were remitted to the concerned accounts before the due date of filing the return of income u/sn 139(1). This, the Tribunal has consistently taken a view that if the PF and ESI are remitted to the respective accounts, the same are required to be allowed as deduction. See KLR INDUSTRIES LTD., HYDERABAD [ 2015 (7) TMI 684 - ITAT HYDERABAD] No disallowance could be made in respect of employees contribution of PF and ESI if the same are deposited before the due date of filing the return of income. Accordingly, we set aside the order of Ld.CIT(A) and delete the addition made by the AO. The appeal of the assessee on this ground is allowed. Addition proportionate expenditure attributing to non-taxable units - HELD THAT:- Assessee is having four units, for which the income and expenditure has been allocated unit-wise and head-wise. The assessee also stated that separate books of accounts are maintained for each unit and if separate books are maintained, there is no case for disallowance of expenditure on estimation basis. AR also submitted that all the expenditure was distributed among all the units proportionately and there is no case of making estimated disallowance relating to non-taxable unit. AO neither rejected the books of accounts nor made out case of suppression of taxable income, or inflation of expenditure in taxable units. We hold that there is no case for making the addition on estimation basis, hence, we set aside the orders of lower authorities and delete the additions made by the AO. The appeal of assessee on this ground is allowed. Set-off of loss before allowing the deduction u/s 10A - HELD THAT:- In the case of CIT Vs. Yokogawa India Ltd [2016 (12) TMI 881 - SUPREME COURT] it was held that the profits and gains of business of eligible undertaking has to be made independently and immediately after the stage of determination of its profits and gains and it is premature to apply the provisions of Section 70, 71 and 72 of the Act at the stage of determination of profits and gains of the business, thus held that the deduction u/s.10A of the Act is to be allowed from the gross total income of eligible undertaking but not at the stage of computation of total income. We direct the AO to allow the deduction at the stage of computation of gross total income but not under Chapter-VI for arriving the total income, accordingly we set aside the order of the CIT(A) and remit the matter back to the file of the AO for limited purpose of computing the deduction u/s.10A of the Act as per the order of the Hon ble Apex court supra. Accordingly, the appeal of the assessee on this ground is allowed for statistical purposes.

  ---

• 2020 (11) TMI 697
  Estimation of income - bogus purchases - CIT-A restricting the disallowance to 12.5% - HELD THAT:- As relying on SIMIT P SHETH [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] no infirmity in the order passed by the Ld.CIT(A) in restricting the addition/disallowance to the extent of 12.5% of the purchases. Grounds raised by the revenue are dismissed.

  ---

• 2020 (11) TMI 696
  Addition u/s 68 - unexplained cash credit - HELD THAT:- If the assessee fails to give any explanation of the source and nature of money deposited in his bank account, definitely the provisions of Section 68 of the income tax act applies, as the assessee has failed to discharge initial onus cast upon him. In absence of any evidence, that he is carrying on business as a commission agent, cannot be believed. Even if it is believed, that he is a commission agent, the ignorance of the fact that who is principal, on whose behalf he is working, is not known to the assessee or he is not disclosing, it clearly shows that addition is required to be made in the hands of the assessee as there is no explanation about the source and nature of credits - Addition on account of unexplained cash credit being cash deposited in the bank account of the assessee confirmed. Claim of the assessee to grant the benefit of peak credit - No substantial the argument in view of the decision in case of CIT versus DK Garg [ 2017 (8) TMI 450 - DELHI HIGH COURT] it is held that that where an assessee was unable to explain the sources of deposits and the corresponding payments , he was not entitled to get the benefit of peak credit . If the assessee, had wanted to avail of the benefit of the peak credit , he ought to have disclosed all the facts within his knowledge concerning the credit entries in the accounts. He had to explain with sufficient details the sources of all the deposits in his accounts as well as the corresponding destinations of all payments from the accounts. He should have been able to show that the money had been transferred through banking channels, from whom to his bank account, the identity of the creditors and that the money paid from the accounts of the assessee. The assessee had to discharge the primary onus in that regard. The peak credit worked out by the assessee, on the basis that the principle of peak credit applied, notwithstanding the failure to explain each of the sources of the deposits and the corresponding destinations of the payments without squaring them off, was not permissible - Decided against assessee.

  ---

• 2020 (11) TMI 695
  Disallowing the non-compete fee - Nature of expenditure - revenue or capital expenditure - HELD THAT:- The above issue stands decided against the assessee by the Tribunal in assessee s own case for A.Y. 2002- 03 Tribunal again, in assessee s own case for A.Y. 2001-02[ 2020 (4) TMI 823 - ITAT DELHI] has decided the issue regarding disallowance of non-compete fee against the assessee by following the decision of the Tribunal in assessee s own case for A.Y. 2002-03. In view of the consistent decision of the Tribunal in assessee s own case, the grounds raised by the assessee have to be decided against the assessee. Disallowing being 1/5th of service charge and processing charges debited to the Profit Loss Account - HELD THAT:- CIT(A) upheld the action of the AO on the ground that the assessee failed to demonstrate before him with any evidence to substantiate such service charges and processing charges. While doing so, he also rejected the additional evidences filed before him. It is the submission of the ld. Counsel that such additional evidences were crucial for deciding the issue before the CIT(A) which he should have admitted. Further, once he has called for a remand report from the AO, he should have admitted those additional evidences. It is also his alternate submission that in subsequent assessment years, i.e., from A.Y. 2006-07 to 2009-10, such disallowances made by the AO were deleted by the CIT(A) and in A.Y. 2010-11, no such disallowance has been made by the AO. - we deem it proper to restore the issue to the file of the AO with a direction to grant one final opportunity to the assessee to file the requisite details and reconcile the differences between outstanding appearing in its books of account and the balance appearing in the accounts of the third parties. The assessee is directed to file the requisite details and necessary evidences to substantiate the claim of such service charges and processing charges. MAT computation u/s 115JB - CIT (A) directing the AO to exclude the share premium amount from the book profit calculated for the purposes of Section 115JB - HELD THAT:- No infirmity in the order of the CIT(A) approving the adjustment of security premium account with brought forward losses. Further, the Hon ble Supreme Court in the case of Apollo Tyres [ 2002 (5) TMI 5 - SUPREME COURT] has held that the AO does not have the jurisdiction to go beyond the net profit shown in the Profit Loss Account except to the extent provided in the Explanation to section 115J which has been relied on by the CIT(A). In view of the above and in view of the detailed reasoning given by the CIT(A) at para 6.3 of his order, we do not find any infirmity in the same in absence of any contrary material brought to our notice by the ld. DR. Accordingly, the order of the CIT(A) is upheld and the ground raised by the Revenue is dismissed.

  ---

• 2020 (11) TMI 694
  Disallowance u/s. 14A r.w.r. 8D - Huge interest free funds - HELD THAT:- There was no justification for making disallowance out of interest expenditure incurred on earning exempt income. In respect of disallowance of administrative expenditure, we have gone through the order in the case of the assessee itself for the assessment year 2012-13 [ 2018 (12) TMI 1651 - ITAT AHMEDABAD] wherein the disallowance in respect of administrative expenditure was restricted to Rs. 6 lacs after taking into consideration the total exempt income earned by the assessee of Rs. 63,35,308/-. Respectfully following the decision of the Co-ordinate Bench on the similar facts and identical issue, we restrict the disallowance out of administrative expenses to Rs. 7 lacs as asssesse has earned dividend income of Rs. 77,60,108/- as against dividend income of Rs. 63,35,308/- earned in A.Y. 2012-13. Accordingly, the appeal of the assessee is partly allowed.

  ---

• 2020 (11) TMI 693
  Unexplained share capital - share premium and share application money made u/s.56(1) / u/s 68 - AO has said that since the premium charges are in excess of intrinsic value of the shares, the provisions of Section 68 of the Act could also be applied - Quantum addition deleted by CIT-A - HELD THAT:- This issue has been dealt with in length in the appellate order, wherein the Ld.CIT(A) has categorically held that the provisions of Section 56(1)(viib) of the Act are not applicable to the year under consideration, since new provision is introduced by the Finance Act, 2012, which is effective from AY.2013-14. CIT(A) after considering the assessee s contentions and submissions has given finings that the provisions of Section 68 of the Act were also satisfied by the assessee. Ld.CIT(A) has noted as assessee has filed the confirmation letters, copies of ITRs, copies of bank statements of five parties, who invested share capital. Besides, the assessee has filed the allotment letters, returns as filed with the AO along with Board s resolution for allotment of shares. Under these circumstances, we do not find any reason to interfere with the order of Ld.CIT(A), which otherwise appears to be quite reasoned and correct. - Decided in favour of assessee.

  ---

• 2020 (11) TMI 692
  Disallowance of interest paid - CIT(A) had deleted the same by appreciating the fact that assessee had sufficient interest free funds - HELD THAT:- It could be safely presumed that assessee had sufficient own funds to make interest free advances to its sister concerns and to its outsiders. By placing reliance on the decision of the Hon ble Bombay High Court in the case of Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] we hold that no disallowance of interest paid by the assessee could be made in the facts of the instant case. Accordingly, the ground No.1 raised by the revenue is dismissed. Disallowance of remuneration paid to the Director u/s 40A(2) - CIT-A restricted addition at 20% as against 50% made by the ld. AO - HELD THAT:- Disallowance has been made @ 20% by the lower authorities by applying the provisions of Section 40A(2)(a) of the Act without bringing any comparable instances to drive home the point as to why the salary paid to the Director Mr. Pankaj Dayal was excessive or unreasonable. There is no finding by the lower authorities that the said Director is not competent or not technically qualified to receive such remuneration. In any case, the disallowance has been made only on an adhoc basis by the lower authorities. Since, the assessee has not preferred any appeal against the order of the ld. CIT(A) before us, we do not deem this as a fit case to interfere with the finding recorded by the ld. CIT(A). Accordingly, we direct the ld. AO to restrict the disallowance at 20% of total salary paid to the Director - Ground No.2 raised by the revenue is dismissed. Disallowance of 50% of total advertising and publicity expenses - HELD THAT:- GMR Sports Pvt. Ltd., possessed the sponsorship of IPL team of Delhi Dare Devils and this sum paid for purchase of 32 tickets in corporate tax for watching IPL matches enabled the assessee company to advertise its real estate projects by way of display boards in all the matches at Feroz Shah Kotla Cricket Stadium, New Delhi. This obviously improved the performance of the functioning of the assessee company and hence, the same would be wholly and exclusively for the purpose of business. But since the assessee has not preferred any appeal before us, against the order of the ld. CIT(A) granting relief only to the extent of 50% of the said expenditure, we do not deem it fit to interfere with the said finding of the ld. CIT(A). Accordingly, ground No.3 raised by the revenue is dismissed. Disallowance of rent expenses - CIT-A restricted addition @ 10% as against 60% done by AO - HELD THAT:- CIT(A) had given proper finding with regard to apportionment of rent not being done by the assessee to its group companies and had restricted the disallowance to 10% of the total rent paid. When a particular premises is occupied by the assessee and others (whether it is a group company or not), the rental payment and other maintenance expenses included therein are to be apportioned in a just and fair manner. When this is not done by the assessee, disallowance of expenses had to be made in the hands of the assessee. In the instant case, the ld. CIT(A) had restricted the disallowance to 10% of the total rent paid in the hands of the assessee. Ground No.4 raised by the revenue is dismissed. Disallowance of business promotion, electricity, legal and professional charges, repairs maintenance, travelling and conveyance and miscellaneous expenses - CIT-A restricted addition to 10% as against 40% disallowed by the ld. AO - HELD THAT:- Assessee had not preferred any appeal against this order of the ld. CIT(A) before us. Since the same premises has been occupied by various concerns of the assessee, the entire expenses has to be apportioned in a just and fair manner based on the usage and the ld. CIT(A) had restricted the disallowance to 10% thereon - since no appeal has been preferred by the assessee before us against the order of ld. CIT(A), we do not deem it fit to interfere with the finding of the ld. CIT(A) especially when assessee was not categorically able to prove even before us that the subject mentioned expenditure were incurred only for the business purpose of the assessee. Hence, the disallowance restricted to 10% on adhoc basis by the ld. CIT(A) does not require any interference. Accordingly, the ground No.5 raised by the revenue is dismissed. Addition on account of disallowance with respect to cost of goods sold - HELD THAT:- CIT(A) had given a categorical finding that the ld.AO had grossly erred in rejecting the book results of the assessee without pointing out any discrepancy in the books of accounts produced before him during the course of assessment proceedings. We also find that the entire details of opening stock, purchases and project expenses and closing stock were also filed before the AO as narrated hereinabove and the same were duly reproduced in the order of the ld. CIT(A). The said facts as reproduced in the order of ld. CIT(A) has not been controverted by the ld. DR before us. The law is now very well settled that without pointing out any discrepancy in the books of accounts produced by the assessee, the ld. AO cannot reject the book results as per his whims and fancy. See POONAM RANI [ 2010 (5) TMI 57 - DELHI HIGH COURT] and M/S JAS JACK ELEGANCE EXPORTS. [ 2010 (4) TMI 84 - DELHI HIGH COURT] . No infirmity in the order of the ld. CIT(A) deleting the addition made on account of cost of goods sold - Ground No.6 raised by the revenue is dismissed.

  ---

• Customs

• 2020 (11) TMI 691
  EPCG Scheme - non-issuance of Occupation Certificate - Construction of a multistoried building for operating a hotel - the cost included the cost of imported goods against which customs duty was not paid, as the goods imported were against 50 EPCG licenses - HELD THAT:- Since an application is pending, I am not going into the merits of the case. The EPCG committee is requested to consider the application filed by the petitioner on 9th August, 2020 within four weeks from today. The committee is also requested to pass a reasoned order after giving opportunity of hearing, not only to the petitioner but also to the customs authority, if required. As the petitioner has already alienated with the goods, imported without payment of customs duty, the customs authority may proceed to encash the bank guarantee for realising the customs duty but such realised amount shall be kept in a separate account and not to be appropriated as government dues till a reasoned order is passed by the EPCG committee. If the reasoned order is in favour of the petitioner, the customs department shall refund the amount to the petitioner at an earliest. Petition disposed off.

  ---

• 2020 (11) TMI 690
  Direction to the respondent to finalise the bills of entry filed by the petitioner for clearance of goods - polyester knitted fabrics - period 2013 to 2016 - HELD THAT:- Keeping in view the limited prayer made in the writ petition, the same is disposed of with a direction to the respondent to finalise the bills of entry filed by the petitioner for clearance of goods namely polyester knitted fabrics during the period 2013 to 2016 within a period of six weeks - Petition disposed off.

  ---

• 2020 (11) TMI 689
  Reclaim of goods after surrender of rights in warehoused Goods (after import) u/s 23(3) - Due to increased customs duty, the plaintiffs could not take the delivery of the goods - Decree of mandatory injunction directing the defendants to deliver 58 bales, 76 bales and 61 bales respectively of the goods amenable to customs duty - defendants took the plea that the plaintiffs themselves have surrendered the goods in terms of Section 23(3) of the Customs Act vide letter dated 10-12-1985 and therefore, no cause for the plaintiffs to file the suit was made out - Section 23 of Customs Act - HELD THAT:- Learned Counsel for the respondents could not show any such document or evidence that they have availed of the remedy provided under the Customs Act. The Customs Act which being a special Act has provided remedial action against the orders of the authorities and which the plaintiffs failed to have recourse to and therefore, having failed to exhaust the departmental remedies provided under the Act, the plaintiffs to the mind of this Court cannot have resort to general provisions by way of filing civil suit seeking mandatory injunction. More so, even in the suit the plaintiffs have not challenged the letter dated 25-2-1986 by which the Collector, Central Excise and Customs disallowed clearance of the goods, therefore, by resorting to such a suit the plaintiffs cannot bypass the administrative order which was never put to challenge either in the hierarchy of the Act or even in the suit. The Learned Trial Court has rightly held while deciding issues No. 1 to 3 that since plaintiffs have surrendered the goods in terms of Section 23(2) of the Customs Act and therefore, are not entitled to any mandatory injunction nor have ever availed of the remedy provided by way of appeal under the Customs Act - In the impugned findings the Learned First Appellate Court has failed to appreciate this important aspect of the evidence and the admitted facts and by mis-construing the truth on the records has arrived at a totally perverse and illegal finding purely on the grounds that the act of the department for not supplying the orders was mala fide and that is how the decision stood reversed. Since the plaintiffs have initially surrendered their right and claim over the goods, now they cannot reverse their stand and re-claim the same after inordinate delay without assigning any sufficient condonable reasons for the same. Rather what appears is that the suit filed by the plaintiffs is an afterthought belated machination by misuse of the process of the Court - the impugned findings reversing the judgment of the Trial Court are highly erroneous and need to be set aside by way of acceptance of the instant appeal. Appeal allowed - decided in favor of appellant.

  ---

• 2020 (11) TMI 688
  Maintainability of appeal - non-deposit of pre-deposit amount - Principles of Natural Justice - grounds urged in the appeal is that the third respondent ought to have extended an opportunity to the petitioner to cross-examine the officers who allegedly conducted search and seizure proceedings - HELD THAT:- In the present case, the appeal is dismissed on the ground that the petitioner did not deposit 50% of the demand in terms of the order dated 2-2-2016. It must also be mentioned that the directors of the petitioner s company also did not deposit 50% of the penalty imposed on them, and further it must also be mentioned that there is no dispute that none appeared for the petitioner on 18-10-2016 when the appeal was listed for orders on an application filed for recall of the order dated 2-2-2016. The CESTAT s order is not an order of modification or confirmation or annulling, or an order of remanding. The impugned orders will have to be set aside and the appeal restored for fresh disposal as contemplated under Section 129B of the Customs Act leaving it open to the parties to urge their respective grounds before the CESTAT. Further, given the facts and circumstances of the case, it would also be just and reasonable to restore the petitioner s application for recall of the interim order dated 2-2-2016. Petition allowed in part.

  ---

• 2020 (11) TMI 687
  Smuggling - gold chain - gold bangles - gold anklet - Reopening of adjudication proceedings - section 124 of Customs Act - HELD THAT:- There is no force and merit in the submission of the Learned Counsel for the petitioner. The reference to Section 124 of the Customs Act in not issuing any notice in writing for confiscation or imposition of the penalty cannot be agitated after the lapse of three years. Alleged non-adherence to the provisions of Section 124 by issuing a separate notice before imposition of penalty and confiscation, cannot be raised for the first time in the writ petition, that too after a gap of three years. However, on going through the adjudication order of Ext. P3, the petitioner suffered a statement which was not found to be sufficient and was served with Ext. P2 summons to appear and explain along with the documents regarding the jewellery. In the absence of any challenge to the adjudication order for the last three years is a deemed acceptance, there is no provision for re-opening of the adjudication proceedings to attempting to circumvent appeal. The litigants cannot be permitted to agitate remedy of the issue with the purported cause of action by submitting an application for reopening - Petition dismissed.

  ---

• 2020 (11) TMI 686
  Implementation of order passed by this Tribunal and for early hearing of the said application - restoration of CHA license not stayed - HELD THAT:- In view of the fact that operation of the order dated 21.11.2019 has not been stayed or vacated by the higher appellate forum, the Revenue has left with no alternative, but to implement the order of the Tribunal in true letter and spirit. However, since it is contended that the order dated 21.11.2019 has already been appealed against by Revenue, we direct that the Revenue should obtained the stay order from the Hon ble Bombay High Court in staying operation of the order dated 21.11.2019, if any, or to implement the said order passed by the Tribunal on expiry of the period of one month. Registry is directed to list the matter for reporting compliance on 16.11.2020.

  ---

• 2020 (11) TMI 685
  Classification of goods - consignment imported under SKD condition - Exemption for the purpose of assessment for countervailing duty - Import of components for manufacturing colour Doppler SSD-4000 Ultra Sound Scanners - HELD THAT:- When the goods are presented in SKD condition, Revenue does not have authority of law to separate different parts and components and classify them differently in view of Rule 2(a) of General Rules for Interpretation of the Customs Tariff. If Revenue wants to remove certain parts from the SKD package and classify differently, then Revenue has to establish that remaining parts, if assembled together have essential character of final product. Revenue has not brought forward any such evidence. Further, CBIC issued clarification which is reproduced in foregoing paragraph. The said clarification relies on Chapter Note 2(b) to Chapter 90 and the same is binding on departmental officers. Thus, the impugned orders are not sustainable. Appeal allowed - decided in favor of appellant.

  ---

• Corporate Laws

• 2020 (11) TMI 683
  Restoration of the name of the Respondents Company in the register maintained by the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- The provisions pertaining to restoration of the name of the company has been provided in Section 252 of the Companies Act, 2013 which includes that, if it is just and equitable to restore the name of the respondent- company in the Registrar of Companies, it may direct the RoC to restore the name in its Register - The appellant Income-tax hasbeen able to satisfy this Bench that they are the aggrieved party within the meaning of Sec.252(1) read with Section 252(3) of Companies Act, 2013 and great prejudice will be caused to Revenue and public at large, if the name of the respondent company is not restored back. The Appellant has filed its affidavit of service on 05.02.2020, wherein it states that service through publication was effected through newspapers Financial Express and Jansatta on 30.01.2020 on the Respondent Company and its Directors in pursuance of the order of this Tribunal. It is further stated that in spite of proper service to the respondent nos. 2 to 4, none appeared. Hence, the case was proceeded ex-parte against the said Respondents vide order dated 03.03.2020. On 15.10.2020 respondents 2 to 4 put in appearance and both the sides agreed to revival of the respondent company - The Income Tax Department is an aggrieved party within the meaning of section 252(1) and a creditor under Section 252(3) as it has to recover tax demand and penalty from the respondent company and great prejudice will be caused to the Appellant if the name of the respondent company is not restored back. In the above circumstances, this appeal is allowed. The Registrar of companies is therefore directed to restore the name of the Respondent Company in their Register - Application allowed.

  ---

• 2020 (11) TMI 682
  Approval of Scheme of Arrangement for the demerger - Section 230-232 of Companies Act - HELD THAT:- Direction for dispensation of various meetings issued - directions for issuance of various meetings issued - application disposed off.

  ---

• 2020 (11) TMI 681
  Approval of scheme of amalgamation - Section 230-232 of the Companies Act, 2013 - HELD THAT:- In compliance of Sub-Section(5) of Section 230 of the Act and Rule 8 of the Companies (CAA) Rules, 2016, all the applicant companies shall send notices under Sub-Section (3) of Section 230 read with Rule 6 of the Rules with a copy of the Scheme of Arrangement, the explanatory statement and the disclosures mentioned in Rule 6 to (a) the Central Government through the Regional Director, South Eastern Region; (b) the Registrar of Companies, Kerala and (c) the Income Tax Authorities immediately at any rate within a week from the date of receipt of this order. The said notices be sent either by Registered Post or by Speed Post or by Hand Delivery at the Offices of the authorities as required by Sub Rule (2) of Rule 8 of the Rules. The aforesaid authorities, who desire to make any representation under Sub-Section (5) of Section 230 shall send the same to this Tribunal within a period of 30 (thirty) days from the date of receipt of such notice, failing which it shall be deemed that they have no representation to make on the proposed Amalgamation of the aforesaid Companies. The Applicant Companies are directed to present a Petition to this Tribunal in Form No.CAA-5 for sanction of the Scheme of Amalgamation of Narmada Design and Construction Private Limited and Narmada Builders and Traders Private Limited with Rhea Traders Private Limited. Application disposed off.

  ---

• 2020 (11) TMI 680
  Restoration of name of the company in the Register of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The Appellant has submitted sufficient evidence that it has been in operation during the period preceding strike off, therefore it could not be termed as a defunct company as per section 252 of the Act. Thus, taking into consideration the provisions of Section 252(1) of the Companies Act, 2013, which vests this Tribunal with a discretion where the Company, whose name has been struck off, and such Company is able to demonstrate that it is just to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserve to be restored. Application restored - appeal allowed.

  ---

• 2020 (11) TMI 679
  Approval of Scheme of Amalgamation - section 230 and 232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules 2016 - HELD THAT:- Perusal of the scheme shows that the accounting treatment is in conformity with the established accounting standards. In short, there is no apprehension that any of the creditors would lose or be prejudiced if the proposed scheme is sanctioned. The said Scheme of Amalgamation will not cast any additional burden on the stakeholders and also will not prejudicially affect the interests of any class of the creditors in any manner. The Appointed date of the said Scheme is 01st April, 2018 - Petitioner Companies have stated that the scheme Proposed does not fall within the ambit of sections 5 and 6 of the Competition Act, 2002. The scheme does not require any modification as it appears to be fair and reasonable, not contrary to public policy and also not violative of any provisions of law. All the statutory compliances have been made under section 230 to 232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The Scheme of Amalgamation between the Transferor Companies 1 2 and the Transferee Company was duly approved by the shareholders of respective companies - Petition allowed.

  ---

• Insolvency & Bankruptcy

• 2020 (11) TMI 678
  Winding up of Company - whether the Company Court would retain jurisdiction to hear the winding up petition? - HELD THAT:- It is clear from the Judgment that the learned Judge was of the view that the Company Court retains jurisdiction over winding-up petitions which were filed before the IBC came into force. In that view of the matter, the Court held that the Official Liquidator acting as the Provisional Liquidator could retain the symbolic possession of the assets and properties of the Company (in liquidation). It was also decided that questions of title to the flats, etc. were declaratory in nature and could hence only be decided by this Court. The important part of the Judgment however is the point of time when this Court reasserts its jurisdiction for deciding the issues related to the Company (in liquidation). This Court is informed that the Corporate Insolvency Resolution Professional (CIRP) commenced in March, 2019. An order of the NCLT, Kolkata Bench dated 12th February, 2020 records that the CIRP period of 330 days was completed on 5th February, 2020 and that one more opportunity for resolution of the corporate debtor [the Company (in liquidation)] was being given and 90 days was excluded from the CIRP period. The Resolution Plan has admittedly not seen the light of the day. More than six months have passed since the 90 days extension given to the RP in terms of the order dated 12th February 2020 of the NCLT. It is evident therefore that no Resolution Plan is forthcoming in the near future. However, since the application of the RP is due to be listed on 15th December, 2020, this Court is inclined to pass final order only after 16th December, 2020. List this matter on 16th December, 2020.

  ---

• 2020 (11) TMI 677
  Maintainability of petition - availability of alternate remedy of appeal provided under Section 61 of the I.B. Code - Whether notification issued under Section 4 of the MPID Act and consequent attachment of the property including the bank account of the corporate debtor can be challenged by approaching NCLT under Section 60(5) of the I.B. Code? HELD THAT:- Full Bench of this Court in the case between Vijay C. Pulijal vs. State of Maharashtra [ 2005 (9) TMI 303 - HIGH COURT OF BOMBAY ] held that the provisions of MPID Act are ultravires for want of legislative competence of the State legislature. The Full Bench of this Court took a view that the MPID Act transgressed into the field reserved for Parliament. The Full Bench held that the subject matter covered by the MPID Act squarely falls within the ambit of section 58-A and 58-AA of the Companies Act. Thus, it is clear that MPID Act is a complete Code and enacted to protect the interest of depositors in Financial Establishments. The Respondent, i.e. IRP, was mainly aggrieved by the issuance of notification dated 19/10/2018 under Section 4 of the MPID Act. As set out hereinabove Section 7 of MPID Act provides a remedy to the aggrieved person including the present Respondent, i.e. IRP, to approach the Designated Court pointing out the objection to the attachment of any property of the Financial Establishment or any portion thereof. The Designated Court is empowered to either make the order of attachment passed under sub-Section 1 of Section 4 absolute or varying it by releasing a portion of the property from attachment or cancelling the order of attachment entirely. Thus, it is clear that the Respondent-IRP is having a remedy to approach the Designated Court under Section 7 of the MPID Act. A bare reading of the provisions of the MPID Act clearly demonstrates that action taken under the MPID Act is to be challenged before the Designated Court under the MPID Act and the order passed by the Designated Court can be challenged in appeal before the High Court under section 11 of the MPID Act. Thus it is clear that Section 18 of the I.B. Code specifying duties of interim resolution professional, although provides in sub-Section 18(f) that he shall take control and custody of any asset over which the corporate debtor has ownership rights, however the same is subject to the determination to the ownership by a Court or Authority. In this particular case, such Court will be the Designated Court as per the provisions of the MPID Act. The appropriate forum to challenge the attachment of the account of the Respondent is the Designated Court under MPID Act where the Respondent can raise all contentions on merits and also can point out the provisions of I.B. Code and the effect of the same on the steps taken under the MPID Act. It will be for the MPID Court to consider the interplay of the provisions of the MPID Act and the I.B. Code and rule on the matter. Such ruling would obviously include even the aspect of prior appointment of IRP by NCLT and subsequent attachment of the said account by notification dated 19.10.2018 issued under Section 4 of the MPID Act. The Respondents can approach the Designated Court under section 7 of the M.P.I.D. Act seeking appropriate reliefs - Petition disposed off.

  ---

• 2020 (11) TMI 676
  Direction to 2nd Respondent to release the machinery in possession with the 1st Respondent/Corporate Debtor and transfer the possession of the same to the Applicant - HELD THAT:- In the statement, in regard to payment for the security arrangements of the Corporate Debtor it is stated that even though three securities have been arranged to guard the Corporate Debtor premises to keep the machineries, the Resolution Professional has limited it into two securities charges and claimed the six months charges of Rs. 1,90,080. Since the applicant undertake to make payment of Rs. 75,000/- in addition to Rs. 38,414/- already paid by them, the Resolution Professional should accept that amount, as the Corporate Debtor property is still under the possession of the Resolution Professional, the Resolution Professional has also to bear a part of the payment, without shouldering the full responsibility on the applicant as the CIR Process is not yet completed. Regarding the other payments, since the applicant has agreed to bear the CGST payment provided the Bristo Foods Pvt.Ltd. cooperate in signing the documents and that they are ready to pay the upfront amount of Rs. 2,95,400/- provide the Bristo Foods Pvt.Ltd allow them to lift the machineries, there will not be any further dispute in those matters. They have also undertook to remove the machineries without causing any damage to the property of the Corporate Debtor. The applicant shall pay the CGST liability of Rs. 19,40,892/- demanded by the CGST Department and the Corporate Debtor Bristo Foods Pvt.Limited or Resolution Professional, as the case may be, sign the communications to be submitted to the Department, as the registration number is with the Bristo Foods Private Limited - applicant shall pay the upfront amount of Rs. 2,95,400/- towards the outstanding dues to the Bristo Foods Pvt.Limited. Application disposed off.

  ---

• 2020 (11) TMI 675
  Permission to applicant/State of Kerala to use the Corporate Debtor Hospital, RIMS Hospital, Erattupetta as Covid Hospital for Covid patients with immediate effect - Section 33(1)(b) of IBC, 2016 - HELD THAT:- The request of the applicant District Collector seems to be reasonable in view of the pandemic condition in the State of Kerala, due to Covid-19. Hence this M.A is allowed with the following conditions: - I. A detailed inventorisation of the subject property be carried out in the presence of the officials of the Applicant, the representative of the Liquidator prior to handing over of the premises to the applicant. II. During the acquisition of the Corporate Debtor (Hospital)the applicant cannot change or make any permanent structure in the aforesaid premises. III. The subject property (Hospital) be taken over by the Applicant on as is where is basis without any further liability/expenditure on the part of Respondent, including but not limited to Electricity charges, Water usage, cleaning Sanitisation, Repair and maintenance of building and repairs and maintenance to machineries and equipment s, etc. till the date of returning possession. (in this connection GO(MS) No.21/2020 Disaster Management Department dated 25.06.2020 may be referred to). IV. that any amount that is spent by the applicant for using the Hospital cannot be claimed from the Respondent herein. V. the Applicant shall not allow the Promoters or their representatives to enter the Hospital premises or engage in the management of the Hospital during the period when the Applicant is utilising the property. VI. On receipt of the letter based on this Order, the Liquidator will immediately hand over the premises to the applicant District Collector, for a period of Two months (60 days). VII. The Applicant will return the premises to the Liquidator after expiry of two months (60 days) from the date of taking over the premises from the Liquidator, without any wear and tear and on as is where is basis. In case the purpose for which the premises taken by the applicant is not completed, the applicant District Collector is at liberty to approach this Bench for further orders. If no request for extension is received it would be presumed that the applicant is no more interested to continue the purpose for which the Corporate Debtor is taken and the Liquidator can proceed to procure back the Corporate Debtor (Hospital) for Liquidation purpose. VIII. The premises shall be used only for Covid Treatment under Covid 19 and that it should not be used for any other purpose, whatsoever.

  ---

• 2020 (11) TMI 674
  Exclusion of lockdown period w.e.f. 25.03.2020 to 30.06.2020 from the CIRP period - Section 60(5) of the IBC Code, 2016 read with Regulation 40(C) of the IBBI (IRP for Corporate Persons) Regulations, 2016 and read with Rule 11 of NCLT Rules, 2016 - HELD THAT:- The Hon ble Supreme Court of India in Suo Motu Writ Petition (Civil) No(s). 3/2020 in Re: cognizance for extension of Limitation, vide order dated 23.03.2020, [ 2020 (5) TMI 418 - SC ORDER ] observed as under:- This Court has taken Suo Motu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 Virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under Special Laws (both Central and/or State). The Insolvency and Bankruptcy Board of India, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, vide notification dated 29.03.2020 has held Special provision relating to time-line Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process. Similarly, the Insolvency and Bankruptcy Board of India, vide notification dated 20.04.2020, inserted Regulation 47 A to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 held that Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purpose of computation of the timeline for any task that could not be completed due to such lockdown, in relation to any liquidation process. In the circumstances and for the reasons mentioned in the application and in view of the orders of the Hon ble Supreme Court of India, National Company Law Appellate Tribunal and in view of the Regulations issued by Insolvency and Bankruptcy Board of India, the instant application is allowed.

  ---

• 2020 (11) TMI 673
  Permission for withdrawal of Resolution Plan post CoC s approval - HELD THAT:- It is very interesting to note that the factors which Adjudicating Authority is now capable to consider for limited judicial view are not mentioned in Section 30(2). This is a significant departure in judicial approach whereas earlier it was generally held that the role of NCLT was limited to see that Resolution Plan confirms to the requirements of Section 30(2) on the assumption that both RP and CoC had already seen aspects mentioned therein and merits of the Commercial wisdom of CoC could not be interfered with The CoC must take into consideration interest of all stakeholders in the best possible manner and for that purpose, it should follow the principle of fair play and reasonableness while supervising CIRP and approving the Resolution Plan. Consequently, the process adopted by Resolution Professional and CoC should not only be in accordance with the provisions of IBC, 2016 but should also not be arbitrary or unreasonable. The above proposition has also been statutorily recognized by way of amendment of Regulation 39(3) of CIRP Regulations. It is also noteworthy provision of simultaneous voting on Resolution Plan has been brought in this regulation which also goes to show the legislative intent as regard to transparent process be followed by RP/CoC. There appears to be a certainty in the mind of RP/CoC that irrespective of delays to any extent such application is not required as Resolution Applicant cannot withdraw itself from such process. The Resolution Applicant is granted permission to withdraw its Resolution Plan - Application disposed off.

  ---

• 2020 (11) TMI 672
  Dissolution of the Corporate Debtor - Section 54 of the IBC - Whether the pendency of any Investigation on the Corporate Debtor creates a bar for passing on order of dissolution of a Company? HELD THAT:- When a company gets dissolved under Section 248, it will cease to operate except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company. Though the Legislature has specifically made such a provision when dissolution takes place by virtue of Section 248 of Companies Act 2013, such exception cannot be presumed to be available as a thumb rule in situations when dissolution takes place via other modes especially under the I B Code, 2016, where no such provision is expressly available. It is evident that the pendency of an Investigation creates a bar for RoC to strike off the name of the Company from the register of companies, as well as for making an application for removal of the name of the Company - That it is an established fact that the moment the dissolution of a Company takes place, its legal entity ceases to exists, neither it can sue nor it can be sued in its own name. Thus, it is clear that the dissolution puts an end to the legal existence of a Company. Once a company is dissolved, it becomes a non-existent party and therefore, no action can be brought in its name. Further, the Liquidator shall also not be able to represent the non-existent Corporate Debtor before any of the investigating forum. In order to facilitate completion of investigation, maximisation of assets and the value thereof and to ensure smooth distribution of the proceeds arising out of such investigation amongst various stakeholders of the Corporate Debtor, the judicial propriety demands that the Corporate Debtor should not be dissolved at this stage when the investigation as ordered by Hon ble NCLAT is pending - the pendency of an investigation creates a bar in ordering dissolution of the company. Application dismissed as premature.

  ---

• 2020 (11) TMI 671
  Liquidation order - no privity of contract - financial debt - Applicant Bank has claimed that it has got absolute right to file claim Petition before the Liquidator and the said claim is squarely falling within the purview of financial debt and alleged that the Liquidator has erroneously rejected the claim Petition on the ground that there is no privity of contract between 1st and 2nd Respondents - HELD THAT:- The Appellant Bank has filed its claim in relation to the dues pending from COGIL before the Liquidator of NOCL. However, COGIL had filed its claim before the Liquidator, which stood rejected and against the said order of rejection, no appeal seems to have been preferred by COGIL before this Tribunal. Since COGIL has filed its claim before the Liquidator of NOCL, it will not in any way entitle the Appellant Bank to make a claim in relation to the COGIL vis-avis the company under liquidation with the Liquidator of the NOCL. The recourse if at all can be only against the COGIL in relation to the debts owed to the Appellant and not against NOCL, unless the said company, namely NOCL has stood as a guarantor/surety to the loan and financial facilities by the Appellant to COGIL. From a careful perusal of the pleadings as contained in the Appeal nothing comes to the fore to the said effect. Further, it is also required to be seen, eventhough a valiant effort was made by the Learned Counsel for the Appellant to bring in the aspect of privity and proximity of NOCL to the debts of COGIL owed to the Appellant in relation to the aspect of security by way of mortgage of lands sub-let by NOCL to COGIL with the concurrence of SIPCOT of the leased portion, however even from the said angle, the 1st Respondent Company under liquidation through its Liquidator and its creditors cannot be bound in terms of Section 125 of the Companies Act, 1956 or under Section 77 of the Companies Act, 2013 in view of the absence of Registration of charge with the concerned Registrar of Companies in relation to the assets charged, even assuming if there is any, in the absence of any privity to the contract as between COGIL and the Appellant. It is seen that a charge of Equitable Mortgage by deposit of title deeds was created by COGIL in favour of the Appellant Bank in respect of the properties which were leased out by NOCL to COGIL. However, from the claim form filed in Form D by the Appellant Bank with the Liquidator on 10.01.2019, in relation to the details of debt incurred, it is stated that COGIL had availed term loan disbursed on 02.09.2011. In relation to dates giving rise to cause of action, if assuming if there is any, as against NOCL, nothing more has been specified as to when the debt of the Appellant Bank has become due and payable - Further, from the records, it is evident that the Appellant Bank has relied on the letter of rejection of the Liquidator dated 11.05.2020. As per Section 42 of IBC, 2016, an Appeal against the order of Liquidator has to be filed within a period of 14 days from the date of decision of the Liquidator. Apparently, it is seen that the Appellant Bank has filed the present Appeal via email before the Registry of this Tribunal on 11.06.2020 and there has been a delay of 17 days on the part of the Appellant Bank in filing the present Appeal before this Tribunal and also it is evident from the records that no Application seeking for condonation of delay has been filed by the Appellant Bank before this Tribunal. In absence of any specific Application seeking for condonation of delay having been filed by the Applicant in approaching this Tribunal by way of an Appeal against the Order of rejection of its claim by the Liquidator beyond the prescribed period of 14 days - The Appeal as filed by the Appellant Bank under Section 42 of IBC, 2016 is liable to be dismissed. Appeal dismissed.

  ---

• 2020 (11) TMI 670
  Exclusion of time period from time period for completion of CIRP of Corporate Debtor - extension of 120 days from 01.07.2020 to 28.10.2020 for completion of CIRP of Corporate Debtor - HELD THAT:- In this case, the CIRP period of 180 days has already been extended by another 90 days vide this Adjudicating Authority s order dated 05.11.2019 and by virtue of section 12 of IBC, 2016, a period another 60 days was extended vide order dated 11.02.2020. The period of 270 days + 60 days came to an end on 09.02.2020 and 09.04.2020 respectively. Now that the Applicant herein is seeking exclusion of period lost due to outbreak of Covid-19 pandemic. Considering the submissions, facts and circumstances of case, interest envisaged by the Prospective Resolution Applicant for resolution of Corporate Debtor and in view of the decision of CoC in its 17th meeting dated 29.06.2020, as well as the economic scenario emerging due to COVID-19 pandemic and it s fall out, this Adjudicating Authority observes that exclusion of time period for completion of CIRP lost due to lockdown imposed by Central Government and State Government from time to time would be in the interest of all stakeholders, to allow the completion of CIRP rather than going for liquidation of the Corporate Debtor which should only be initiated as a last resort. Accordingly, this Adjudicating Authority hereby approve the exclusion of another period of 97 days from calculation of CIRP period. This exclusion is granted on having considered the steps already been taken by the RP, approval by the CoC with 81.11% and the current stage of CIRP in the case of the present Corporate Debtor i.e., M/s. Athena Chhattisgarh Power Limited. Further, upon considering the aspect of exclusion of period of 97 days, this Adjudicating Authority is of the view that a sufficient time is already been granted for completion of CIRP - petition disposed off.

  ---

• 2020 (11) TMI 669
  Approval of Resolution Plan - Directions to the Committee of Creditors (CoC) requiring the CoC to consider Final Resolution Plan - directions to amend the Request For Resolution Plan (RFRP) issued by the Resolution Professional - main contention of the learned counsel for the applicants is that certain clauses in the RFRP are in contravention of the provisions of the SARFAESI Act and the RBI Guidelines. HELD THAT:- The Resolution Plan was rejected on the ground that M/s. Prudent ARC will not invest in equity and will not become a shareholder of the Corporate Debtor. RFRP provides that in case of Consortium, all the parties in the Consortium to be jointly and severally liable for implementation of the Plan. This objection has been raised by the Resolution Professional from time to time. However, the Plan was not amended to include M/s. Prudent ARC to share the responsibility of implementing the Resolution Plan jointly and severally with other Resolution Applicants in the Consortium. The plan is not in conformity with the RFRP. The RFRP is duly approved by the CoC. When the Plan is in conformity with the RFRP, then only the Resolution Professional is expected to place such Resolution Plan with CoC. The Adjudicating Authority cannot decide viability or feasibility of the requirements in RFRP. The CoC in its wisdom has formulated RFRP in their own interest. The Resolution Plan is inevitably to be complied with the requirements before placing the same at CoC for its consideration. M/s. Prudent ARC joined in the Consortium only to satisfy the requirements of networth. It is the requirement of RFRP that the Resolution Applicant cannot unilaterally change/withdraw Resolution Plan once it is submitted to the Resolution Professional. According to the Resolution Plan filed by the Resolution Applicants, M/s. Prudent ARC, they will not participate in the equity as per the extent of RBI Guidelines. It is very clear from the arguments of the learned counsel for the Resolution Professional that the Plan submitted by the applicants is contrary to the conditions laid down in RFRP. Interestingly, the Resolution Professional had given three chances to the applicants to make amendments to the Resolution Plan so as to make it compatible with requirements of the RFRP. Instead of complying with the requirements of the RFRP, M/s. Prudent ARC is voicing its difficulty in complying with the RFRP requirements. The personal difficulties of M/s. Prudent ARC have nothing to do with the requirements of RFRP. The requirements of RFRP bind on all the Resolution Plans. The Resolution Professional is expected to place Resolution Plans which are in conformity with the requirements of RFRP. There is no need to place the Resolution Plans which are not in conformity with the RFRP requirements. Section 30(3) of the I B Code provides that if the Plan confirms the requirements contained in section 30(2) of the I B Code, then the same to be placed before the CoC. There is nothing wrong in not placing the Resolution Plan of the applicants before the CoC since the Plan is not conforming to the requirements of the RFRP. Further it is not satisfying the requirements of Section 30(2)(c) and (d). Therefore, there is no irregularity committed in not placing the Resolution Plan of the applicant before the CoC and rejecting the same by the Resolution Professional. Application dismissed.

  ---

• 2020 (11) TMI 668
  Exclusion of certain time from the CIRP period in view of the time lost in replacing the Interim Resolution Professional and also the lockdown imposed due to Pandemic Covid-19 - HELD THAT:- The Hon ble Supreme Court of India in Suo Motu Writ Petition (Civil) No(s). 3/2020 in Re: cognizance for extension of Limitation, vide order dated 23.03.2020, [ 2020 (5) TMI 418 - SC ORDER ] observed as under:- This Court has taken Suo Motu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 Virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under Special Laws (both Central and/or State). The Insolvency and Bankruptcy Board of India, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, vide notification dated 29.03.2020 has held Special provision relating to time-line Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process. Similarly, the Insolvency and Bankruptcy Board of India, vide notification dated 20.04.2020, inserted Regulation 47 A to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 held that Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purpose of computation of the timeline for any task that could not be completed due to such lockdown, in relation to any liquidation process. In the circumstances and for the reasons mentioned in the application and in view of the orders of the Hon ble Supreme Court of India, National Company Law Appellate Tribunal and in view of the Regulations issued by Insolvency and Bankruptcy Board of India, the instant application is allowed.

  ---

• PMLA

• 2020 (11) TMI 667
  Money Laundering - proceeds of crime -reasons to believe - It is alleged that the appellant no.1 Mr. Bharat Yadav has acquired properties in his name as well as in the name of his family members from the proceeds of above mentioned crimes including the alleged crime of robbery, dacoity, extortion and offences relating to arms under Arms Act, 1959, since 1988 onwards. It is also alleged that appellant no.1 Mr. Bharat Yadav has acquired aforesaid immovable properties after 01.07.2005 (i.e. after PMLA came into force), from his criminal activities, in his name or in the name of his family members. HELD THAT:- The Ld. Adjudicating Authority has not examined whether the satisfaction of the Complainant regarding reasons to believe is in accordance with law - On perusal of the PAO, it is seen that the Deputy Director has only mention the verbatim of Section 5(1)(b) of the PMLA, 2002. The impugned order dated 31.05.2018 is set aside and remanded to the Adjudicating Authority for re-adjudication of the case against the appellants within 180 days from the date of receipt of this order or from the date of the order when either of the parties brings it to the knowledge of this order. The appellants are directed to file appropriate application within thirty (30) days from today raising all the legal issues raised in these appeals, before the Adjudicating Authority, who shall after giving due opportunity to both the parties decides all the legal issues including the issue of reasons to believe - The Adjudicating Authority shall decide all the issues raised in the case, except the issues decided above, in accordance with provisions of sub-section 2 of Section 8 of PMLA,2002 and also record findings whether all or any of the properties attached are involved in money laundering under Section 8(3) of PMLA, 2002. This Tribunal has not expressed any opinion on merits of the source of income, earnings out of which or by means of which the appellants have acquired attached properties. However, during the course of proceedings before the Adjudicating Authority the attachments shall continue and both the parties shall maintain status quo in respect of the attached properties - Application disposed off.

  ---

• Service Tax

• 2020 (11) TMI 666
  Recovery of Refund of service tax - foreign agency commission rendered - services rendered prior to 18.04.2006 - Applicability of Section 66A in the Finance Act, 1994 - HELD THAT:- This Court in SOUTHERN SURFACE FINISHERS AND THRICHUR DISTRICT PADDY MARKETING AND PROCESSING CO-OPERATIVE SOCIETY LIMITED VERSUS THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, MUVATTUPUZHA AND THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, THRISSUR [ 2018 (11) TMI 1208 - KERALA HIGH COURT] considered the Constitution Bench decision and found that the mistake if committed by the assessee, whether it be on law or facts; the remedy would be only under the statute. If that be so, the questions of law have to be answered in favour of the Revenue and against the assessee. But, however, we notice that the amounts have been refunded to the assessee as per the order of the original authority. Though, the question of law is answered in favour of the Revenue, the Revenue to be incapable of recovery of the amounts refunded as tax due - appeal is disposed of, answering the questions of law in favour of the Revenue; but restraining the respondent-Revenue from recovering the amounts refunded since as of now the levy of service tax on the payment in lieu of foreign agency commission will not be leviable as Business Auxiliary service prior to 18.04.2006.

  ---

• Central Excise

• 2020 (11) TMI 665
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Misdeclaration in SVLDRS-1 Form - rejection of benefit under the scheme on the ground that the amount of penalty had not been stated in the SVLDRS-1 form which makes it an incorrect declaration - HELD THAT:- The issue as to whether an inadvertent mistake as regards the penalty imposed being not correctly stated in the SVLDRS-1 form, it has been decided by this Court in its judgment [ 2020 (6) TMI 38 - GAUHATI HIGH COURT ] where it was held that This writ petition also stands disposed of by requiring the petitioner to submit an application before the respondent authorities for correction to be made in the information provided in the Form SVLDRS-1 as regards the penalty imposed and upon such application being made, the respondent authorities would pass a reasoned speaking order thereon - Petition disposed off.

  ---

• 2020 (11) TMI 664
  Maintainability of appeal - monetary amount involved in the appeal - HELD THAT:- The matters are covered by the Litigation Policy of the Government being F.No.390/Misc./116/2017-JC dated 22.08.2019. Since the quantum of dispute in the present appeals is well within the amount as notified in the Litigation Policy before the Tribunal, it is deemed appropriate to dispose of the appeals in terms of litigation policy vide Board s instruction being F.No.390/Misc./116/2017-JC dated 22.08.2019. The appeals are disposed off under the National Litigation Policy.

  ---

• 2020 (11) TMI 663
  CENVAT credit - electricity - captive consumption - common Cenvat availed inputs and input services in the generation of electricity without maintenance of separate records - Rule 6(3)(i) of the CCR - extended period of limitation - interest - penalty - HELD THAT:- The self-same issue had fallen for consideration of the Hon ble Allahabad High Court in the GULARIA CHINI MILLS AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2013 (7) TMI 159 - ALLAHABAD HIGH COURT] wherein the Hon ble Court observed that electrical energy generated from Bagasse is not covered under Chapter 27 of the CETA and is therefore, non-excisable thereby not attracting the provisions of Rule 6 at all as observed from para 22, 26 32 thereof. The said decision has also been upheld by the Hon ble Supreme Court in the UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] . Even after the insertion of the Explanation 1 Rule 6 of the CCR with effect from 1 March 2015 equating non-excisable goods with exempted goods for the purpose of Rule 6 of the CCR, the factual position remains that no Cenvat availed inputs were used by the Appellant in the generation of electricity from Bagasse. Bagasse remains non-excisable and the question of availing any credit thereon does not arise. That the Appellant had maintained separate records and refrained from availing any credit on the other indirect inputs is also evidenced from the CA Certificate dated 22 February 2017 which has been sought to be refuted by the Adjudicating Authority on the ground that the same is limited to non-availment of credit on few inputs only. However, the adjudicating authority has not referred to any other inputs over and above, those mentioned in the CA Certificate. Therefore, the Certificate of the expert could not have been discarded without any specific and cogent evidence concerning the disputed period. Time Limitation - HELD THAT:- The Adjudicating Authority himself has accepted that a Notice for the prior period was issued on the self-same issue for the period 2013-14 and the demand covering of 6% under Rule 6(3) was dropped by the Adjudicating Authority therein. Under these circumstances, the subsequent Notice could not have been issued invoking the extended period of limitation. Appeal is allowed on merits as well as limitation

  ---

• CST, VAT & Sales Tax

• 2020 (11) TMI 684
  Direction to prevent the official Respondents herein from lowering their seniority - Respondent was directly recruited as a Group-II Officer in the post of Assistant Commercial Tax Officer (ACTO)[now re-designated as Deputy Commercial Tax Officer(DCTO)], which is the entry level post in the Subordinate Services of the Commercial Taxes Department, and were in the post of Joint Commissioners/Deputy Commissioners when the writ petitions were filed - HELD THAT:- Division Bench set out the four principles that were adopted by the Division Bench of this Court in W.P. 12786 of 1975 and affirmed by the Hon ble Supreme Court in paragraph 4 thereof. In addition, in paragraph 5, the Division Bench of this Court referred to and extracted an earlier order based on the statement of the learned Advocate General. The said extract refers to the statement of the learned Advocate General that the seniority list that was placed before the Hon ble Supreme Court in the contempt proceedings would operate only up to the year 2010 and would change thereafter on account of the increase in cadre strength both in the year 2010 and 2013. It also records the fact that direct recruits and promotees disagree as to whether the seniority list meets the parameters. After recording the aforesaid, in paragraph 8, the Division Bench directed the State Government to await the outcome of W.A. No.2280 of 2011 and proceed in terms of the four principles set out in paragraph 4. Therefore, it is clear that the Division Bench did not impose an embargo on the State Government so as to prevent the preparation of the seniority list but made it clear that the preparation of the seniority lists should be in accordance with the four principles. The reason for directing the State Government to await the outcome of the judgment in W.A. No.2280 of 2011 is stated in paragraph 2 of the above judgment and will be clear when the nature of the said dispute is examined. The State Government is entitled to prepare the seniority lists by adhering to the applicable general and special rules and the four principles that were formulated by this Court and affirmed by the Supreme Court, including by making revisions in consonance therewith. However, as regards temporary posts, the door was shut firmly by the Supreme Court and as reiterated by the Division Bench in the judgment in W.A. No.2280 of 2011, no revision can be made on that score without the intervention of the Supreme Court - Once the provisional seniority lists are prepared and published, it will be open to the private parties herein to object to and challenge the same, if they are aggrieved in any manner. Appeal allowed.

  ---

• 2020 (11) TMI 662
  Validity of impugned notice of default assessment of tax and interest and the impugned notice of default assessment of penalty - Section 137 of the Delhi Land Reform Act, 1954 - assessment years 2012-13, 2014-15, 2015-16 and 2016-17 - DVAT Act - HELD THAT:- Since the demands and penalties are the basis on which the impugned writ of demand dated 29th September, 2020 has been issued, this Court is of the view that petitioner must challenge the demands and penalties in accordance with the statutory mechanism. At this stage, Mr. Rajesh Mahna, learned counsel for the petitioner states that petitioner shall withdraw the present writ petition and challenge the demands and penalties in accordance with the DVAT Act. The statement made by Mr. Rajesh Mahna is accepted by this Court and the petitioner is held bound by the same. To facilitate the filing of the said proceedings, the writ of demand dated 29th September, 2020 is stayed for a period of six weeks.

  ---

• 2020 (11) TMI 661
  Violation of principles of natural justice - Validity of assessment order - purchase omission committed by the petitioner - sales suppression - mismatch between the sales and purchases - TNVAT Act - HELD THAT:- Even though the petitioner has raised all the aforementioned contentions in the reply dated 07.03.2018 to the pre revision notice, dated 07.02.2018, the respondent under the impugned assessment order has not considered the same, but has passed the assessment order only based on the alleged sworn statements signed by the petitioner at the time of inspection by their Enforcement Wing Officials at the place of business of the petitioner. As seen from the impugned assessment order, no personal hearing was afforded to the petitioner before passing of the impugned assessment order. This Court is of the considered view that principles of natural justice have been violated by the respondent before passing of the impugned assessment order and therefore, the Writ Petition is maintainable - the matter is remanded back to the respondent for fresh consideration and the respondent shall pass final orders on merits and in accordance with law after affording sufficient opportunity to the petitioner including granting them the right of personal hearing within a period of twelve weeks from the date of receipt of a copy of this order. Petition allowed by way of remand.

  ---

• 2020 (11) TMI 660
  Validity of pre-assessment notices - alleged mismatch between the details contained in the annexures to the petitioners returns - HELD THAT:- These Writ Petitions are pre-mature. It is true that the Officer has called upon the petitioner/assessee to appear and submit such details as may be available with it to substantiate the alleged mismatch between the details contained in the annexures to the petitioners returns vis-a-vis the details contained in the annexures to the returns filed by the supplying/purchasing party dealers. This Court in M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT] has held that cases of mismatch should be addressed in a scientific manner and has also directed the setting up of a central mechanism to facilitate sharing of data inter se assessing officers to rule out mismatch of factual particulars. It appears that this central mechanism is yet to be constituted. What is relevant is that there should be a complete and total transparency in regard to the materials/data relied upon by the Department in framing of assessments and the sharing of the materials with the assessee prior to completion of assessment. I hardly need to reiterate that the ratio of the decision in JKM Graphics binds the Department strictly. The Commissioner has, in Circular No.3 of 2018 dated 18.01.2018 directed all assessing officers to keep assessments involving the issue of mismatch pending till such time a central mechanism is put in place. In the present matter, Ms.Madhiri, on instructions, confirms that the details of third party dealers have, in fact, been, collated and are available with the Officer. In such circumstances, proceedings may well proceed and no longer await setting up of a central sharing mechanism, as its purpose stands achieved in this matter - Writ Petitions are dismissed as pre-mature.

  ---

• Indian Laws

• 2020 (11) TMI 659
  Summon Order - non-applicability of the Payment Settlement Systems Act, 2007 - It was submitted on behalf of the petitioner that the prescribed procedure as provided under the Payment Settlement Systems Act,2007, for determination of the aspect of liabilities for alleged commission of offences is provided thereunder and that the offences mentioned under the said enactment are not completely in pari materia with the provisions under the Negotiable Instruments Act, 1881 - HELD THAT:- Even the parties to CC No. 1566/2019, 1565/2019 (out of which the impugned order arises) and CC No. 1567/19, do not relate to the same parties and apparently no such common order as the order dated 11.3.2019 could have been passed in relation to CC No. 1565/19 with other cases 1566/19 and 1567/19. Furthermore, it was also essential for the learned Trial Court to consider the aspect of the applicability or otherwise of the provisions of the Payments Settlement Systems Act, 2007, read with the terms of the contours of the complaint in CC No. 1565/19, in as much as it has been submitted specifically on behalf of the petitioner that the petitioner is entitled to be tried, if required, to be so tried under the appropriate provisions of law. Matter remanded back to the learned Trial Court to consider the aspect of summoning or otherwise of the accused in CC No. 1565/19 in terms of the averments made in the complaint CC No. 1565/19 qua the applicability of the provisions of the Payment Settlements Systems Act, 2007 read with the provisions of the Negotiable Instruments Act, 1881, which be so determined in accordance with law - petition allowed by way of remand.

  ---