TMI Tax Updates - e-Newsletter
November 8, 2022

Case Laws in this Newsletter:

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

Articles

1. Saga of availability of Electronic Credit Ledger for Pre-deposit payment for appeal Filing

   By: Dinesh Singhal

2. Failure to Mention Allegations of Fake Invoice against Assessee is Invalid

   By: Bimal jain

3. EXCLUSIVE RIGHT CANNOT BE GRANTED FOR COMMON NAME UNDER TRADE MARKS ACT, 1999

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Shri Piyush Goyal chairs review meeting on exports with Export Promotion Councils and Industry bodies

2. Revenue Deficit Grant (RDG) of Rs. 7,183.42 crore released to 14 States

3. India presents a bright spot amidst the gloom prevailing in the world - Commerce and Industry Minister Piyush Goyal

Notifications

GST - States

1. 9/2022-State Tax - dated 3-11-2022 - Himachal Pradesh SGST

Seeks to bring in force provisions of section 13 of Himachal Pradesh Goods and Services (Amendment) Ordinance, 2022

2. 19/2022-State Tax - dated 3-11-2022 - Himachal Pradesh SGST

Himachal Pradesh Goods and Services Tax (Second Amendment) Rules, 2022

3. 18/2022-State Tax - dated 3-11-2022 - Himachal Pradesh SGST

Seeks to bring in force provisions of sections 2 to 15, except section 13, of the Himachal Pradesh Goods and Services (Amendment) Ordinance, 2022

4. CT/LEG/GST-NT/12/17/2068 - 04/2022 - dated 21-10-2022 - Nagaland SGST

Seeks to extend the due date of filing FORM GSTR-3B for the month of Sept,2022

5. F.1-11(91)-TAX/GST/2022 - dated 21-10-2022 - Tripura SGST

Notification regarding extension for furnishing FORM GSTR-3B for September, 2022

Indian Laws

6. S.O. 5163 (E) - dated 7-11-2022 - Indian Law

Electoral Bond (Amendment) Scheme, 2022

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/OIAE/IGRD/P/CIR/2022/0150 - dated 7-11-2022

Master Circular on the redressal of investor grievances through the SEBI Complaints Redress System (SCORES) platform

2. SEBI/HO/OIAE/IGRD/P/CIR/2022/0151 - dated 7-11-2022

Master Circular on issuance of No Objection Certificate (NOC) for release of 1% of Issue Amount

Highlights / Catch Notes

GST

• Court Allows Amendment of GSTR-1 for January 2019 to Correct GSTIN Error, No Tax Impact Found.

  Case-Laws - HC : Permission to carry out amendment in its GSTR-1 for the month of January 2019 in order to rectify its mistake of mentioning wrong GSTIN number against the invoices raised - The instant case does not present any additional tax impact, or loss of revenue - the interest of justice would be served if the petitioner is allowed to make the necessary correction in GSTR-1 form for January 2019 - HC
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• Court Accepts Delay in Appeal Filing Due to Unintentional Reasons; Petitioner Shows Strong Case and Balance of Convenience Favors Them.

  Case-Laws - HC : Condonation of delay in filing appeal - in the light of the material on record which clearly establishes that the delay in preferring the appeal was wholly unintentional and due to valid and sufficient grounds referred to supra coupled with the fact that the petitioner has a good case to urge on merits and the balance of convenience in its favour. - HC
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Income Tax

• High Court Rules Trust's Fixed Deposit Does Not Violate Objectives; Tribunal's Decision Overturned u/s 12AA.

  Case-Laws - HC : Assessment of trust - cancelling registration of the Appellant u/s 12AA - Admittedly, Appellant-Trust has deposited the sale proceeds in fixed deposit with the Bank for a period of more than six months and, thus, it cannot be said that Appellant-Trust has utilized the sale proceeds contrary to the objects of the Trust. Thus, the finding of ITAT in impugned order that Appellant failed to utilize the sale proceeds for the objectives of the Trust is perverse. - HC
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• Assessing Officer Shouldn't Judge Business Expenses; Decision Lies with Business Owner on Necessary Expenditures.

  Case-Laws - HC : Depreciation on software - It is trite that the AO cannot sit in the arm chair of a businessman and decide what expenditure is expedient. The genuineness of the vouchers is not in dispute. It is for an assessee to decide from time to time the expenditure that he finds it expedient to make in order to promote his business. - HC
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• Liability Misapplied for TDS Short Deduction: Common Area Maintenance Charges Not Part of Rent u/ss 201(1) & 201(1A.

  Case-Laws - AT : Liability u/s 201(1) and 201(1A) - short deduction of TDS u/s 194I - Rent - the common area maintenance charges was not forming part of the actual rent paid to the owner by the assessee company. Payments of rent and common area maintenance charges have been made to distinct entities/companies, therefore, the authorities below were not right in creating the impugned liability payable by the assessee firm under the provisions of sub-sections (1) and (1A) of section 201.- AT
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• Agricultural land sale qualifies for section 2(14) exception; sale consideration via equity shares is permissible.

  Case-Laws - AT : Nature of land sold - agricultural land - law does not prohibit in receiving the sale consideration by equity shares - The land sold by the assessee is an agricultural land used for agricultural purposes and entitled for exception provided under section 2(14) of the Act. - AT
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• Frequent transactions lead to peak credit consideration for deemed dividend u/s 2(22)(e) of Income Tax Act.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) - Considering the fact that the transactions of the assessee with the said company are in the nature of current account transactions with repeated receipt and payment to the said company, the loans are repeatedly being paid back by the assessee within a few days itself and therefore it is only the peak credit which is to be considered for determining the amount advanced to the assessee qualifying as deemed dividend. - AT
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• Assessment Reopening u/s 147 Invalid Due to Lack of Valid Nexus; Section 148 Notice Void.

  Case-Laws - AT : Reopening of assessment u/s 147 - The nexus between formation of belief and material basis which such belief is formed is clearly absent in the instant case and therefore, we are of the considered view that the notice issued under section 148 has no legal sanctity and cannot be sustained in the eyes of law - AT
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• Assessee's Claim of Revenue Expenditure Reclassified as Capital by AO; Not Deductible u/s 37(1) IT Act.

  Case-Laws - AT : Nature of expenditure - assessee itself has capitalized in the financial statements to the expenditure incurred but the assessee has claimed it as a revenue expenditure - the AO has rightly treated it as capital expenditure after observing the submissions of the assessee that the salary paid towards the expansion activities in Hyderabad, the capital expenditiure incurred by the assessee is not allowable u/s 37(1) - AT
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Customs

• Supreme Court rules promissory estoppel inapplicable for benefits under expired Exim Policy; new policy lacks export incentives.

  Case-Laws - SC : Doctrine of promissory estoppel - Claiming benefit as per the old exim policy - new exim policy does not grant such benefit - when the new Exim Policy 1990-93 is held to be applicable under which on export of ‘Minerals and Iron Ore”, there shall not be any benefit of additional licence, the appellant cannot be permitted to claim the benefit of additional licence under the old Exim Policy, which was not in existence. - SC
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• Import Permit Needed for Non-Insecticidal Insecticide Use; Guidelines Suggested for Artificially Ripened Produce Labeling.

  Case-Laws - HC : Import of insecticide for non-insecticidal purpose - Requirement to obtain an import permit - Once an import permit is issued by respondent no.3/CIB&RC, the petitioners will be at liberty to approach the customs authorities. The custom authorities, as alluded to above, will, thereafter, act as per law - respondent no.4/FSSAI is directed to consider framing a regime whereby fruits and/or vegetables which are ripened artificially with the use of ethylene gas, which in turn is produced through use of ethephon powder, as in this case, or other artificial ripeners should have the necessary indication placed on it. - HC
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Indian Laws

• High Court's refusal to appoint arbitrator u/s 11(6) of Arbitration Act overturned; mismanagement claims separate.

  Case-Laws - SC : Refusal to appoint an arbitrator and refer the dispute to the arbitrator - The dispute is with respect to the Share Subscription and Shareholders Agreement which is altogether different from the allegations of mismanagement and oppression at the instance of minority shareholder initiated by the respondent. - The High Court has erred in dismissing the application u/s 11(6) of the Act, 1996 and has erred in refusing to appoint an arbitrator - SC
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• High Court Finds No Grounds to Charge Intermediary Company Under IPC Sections 406, 467, 468, 471, 474, 474-A.

  Case-Laws - HC : Scope of intermediary - delivery of laptop - Flipkart - The factum that the petitioner-Company is an intermediary providing merely access to Sellers/Buyers is not under challenge nor disputed. The ingredients of the offence under Section 406, 467, 468, 471, 474 and 474-A IPC, in sofar, it relates to the petitioner-Company is not made out taking the allegations made in the impugned FIR on face value. - HC
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• Court Questions Validity of Blank Cheque as Debt Security in Partnership Deal Without Written Agreement.

  Case-Laws - HC : Dishonor of Cheque - discharge of legally enforceable debt or not - it is highly improbable that when two persons are entering into a partnership, then a third person would issue a blank signed cheque as security without there being any writing to the effect that the cheque has been issued for security purposes. - HC
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IBC

• Interim Moratorium in CIRP: Section 96 Doesn't Shield Co-Guarantors' Debts; Each Guarantor's Obligations Remain Independent.

  Case-Laws - HC : CIRP - scope of interim moratorium - application to co-guarantors - the effect of the interim moratorium is only in respect of the debts of a particular debtor. By no stretch of imagination can it be said to include other independent guarantors in respect of the same debt of a corporate debtor. Merely because an interim moratorium under Section 96 is operable in respect of one of the co-guarantors, the same would not apply to the other co-guarantor(s). - HC
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• Advocate's Appeal Succeeds in Removing Adverse Remarks Over Conflict of Interest Allegations u/s 7 Proceedings.

  Case-Laws - AT : Seeking expunging the remarks made against the Appellant (Advocate) - conflict of interest and collusion - No prohibition can be read in the statutory provision governing appearance of an Advocate in representing a different company in separate proceedings filed under Section 7. The present is not a case that Appellant has appeared for Resolution Professional and Resolution Applicant i.e. Respondent No.4 in the CIRP of the Corporate Debtor. - The Appellant has made out a case for directing expunction of adverse remarks - AT
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• Operational Creditor's Fraudulent Insolvency Claim Denied; Original Default Date of March 31, 2020, Stands Despite Acknowledgment.

  Case-Laws - AT : Fraudulent initiation of insolvency proceedings by the Operational Creditor in collusion with the Corporate Debtor - When the date of default given by Operational Creditor in Section 9 Application is 31.03.2020, the mere fact that acknowledgement has been given by Corporate Debtor on 03.06.2021 accepting the debt, shall not change the date of default - the reasons given by the Adjudicating Authority that since acknowledgement is 03.06.2021, the date of default will become 03.06.2021 is not agreed upon. - AT
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Service Tax

• Court Examines Service Classification: Record-Keeping Isn't Control of Goods; Appellant Claims VAT Already Paid.

  Case-Laws - AT : Classification of services - Supply of tangible goods service - Merely because a record of actual use of goods is kept it does not amounts to having effective control and possession of the goods. It is also asserted by the appellant that they have paid VAT on the said transaction - AT
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• Services Not Taxable as Manpower Recruitment: Payment Fixed Per Kg or Ton, No Wage Reimbursement Mentioned.

  Case-Laws - AT : Classification of services - manpower recruitment agency services or not - the rate contract provided in the work order clearly indicates that the amount shall be paid at a fixed basis i.e. on per kgs /per metric ton basis. Since there is no specific mention about payment of reimbursement of wages and salaries to the workman, the services provided shall not fall under such taxable category of service.- AT
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Central Excise

• Appeal Abated as NCLT Approves Resolution Plan; No Refund for Appellant's Pre-Deposit During CIRP.

  Case-Laws - AT : Abatement of appeal - CIRP proceedings - refund of pre-deposit - In the instant case the Resolution Plan was approved by the learned NCLT - As the appeal has already been abated therefore the appellant cannot claim any refund before this Tribunal of any pre-deposit made by them before the Commissioner (Appeals) - AT
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VAT

• Clarifying "Local Area" for Entry Tax: Goods Entering Industrial Areas for Manufacture or Sale Trigger Tax Liability.

  Case-Laws - SC : Interpretation of “local area” - Levy of entry tax - The object of the levy, i.e., entry tax, is the regulation of entry of goods in a regular area for consumption, i.e., manufacture, use or sale. There is no dispute that entry of goods into an industrial area or estate is for their use for manufacturing or for processing or for the purposes of their delivery as their ultimate point of destination, i.e. for the purpose of their “consumption, use or sale” within that area. It could even be that the goods enter within the industrial area or estate, as the ultimate point of destination for their use. In any case, the levy would be attracted because the incidence is the entry into the local area. - SC
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Case Laws:

• GST

• 2022 (11) TMI 324
  Confiscation of goods alongwith the vehicle - Section 129 and 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This Court observed that both the counsels did not notice the earlier order passed by the Division Bench of this Court in Matrix Traders Versus Deputy Assistant Commissioner [ 2022 (5) TMI 741 - ANDHRA PRADESH HIGH COURT ] though it was annexed in the application. The said order is squarely applicable to the issue involved in this writ petition and that learned counsel for the petitioner requested to modify the order of this Court dated 26.05.2022 in terms of order passed by the Division Bench in W.P.No.12843 of 2022, dated 04.05.2022. There shall be stay of further proceedings pursuant to the impugned confiscation order dated 27.04.2022 and the subject goods and conveyance shall be released subject to condition that the petitioner shall pay 1/4th of the amount proposed by the respondent authorities in the impugned show cause notice and on execution of personal bond for rest of the amount. Application allowed.

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• 2022 (11) TMI 323
  Permission to carry out amendment in its GSTR-1 for the month of January 2019 in order to rectify its mistake of mentioning wrong GSTIN number against the invoices raised on Respondent no.5 - permission to respondent No.5 purchaser of the petitioner to avail ITC pertaining to the said transaction - HELD THAT:- A bare perusal of provisions of Section 37 (3) would show that a registered person who has to furnish details of its outward supplies in the returns under sub section (1) for any tax period and which have remained unmatched under Section 42 and 43 (as it existed on the Statute prior to 01.10.2022), shall upon discovery of any error or omission there in rectify such error or omission in such manner as may be prescribed and shall pay the tax and interest, if any, in case there is short payment of tax on account of such error or omission in the return to be furnished for such tax period. Such form GSTR-1 is required to be filed by the supplier furnishing details of its outward supplies, the details of the invoices raised by the petitioner and the tax paid by the recipient. In the instant case it appears that on account of an inadvertent error, the entry relating to Tax Invoice No. 01/2018- 19 dated 17th January 2019 could not be reflected in the GSTR-1 filed by the petitioner against the GSTIN of Eastern Coalfields Limited (GSTIN No. 20AAACE7590E3ZX). Instead it was quoted in the GSTIN of Respondent No.6 MIPL-NKAS (JV) [GSTIN No.20AAEAM0162G1Z9] which was not the recipient of such supplies. Though, Respondent No.5 availed of such input tax credit bona fide believing that it had paid the taxes against such invoices, but on realizing the same reversed the entries in May 2022 as the same we are not reflected in his GSTR-2A return for the said period. The said entries, though reflected in the GSTR-2A of Respondent No. 6 inadvertently, were not availed by Respondent No.6 and rightly so, as it had not received any such supplies against the tax invoice in question - It is not in dispute that such incorrect entries in GSTR-1by Petitioner for the period January 2019 filed in March 2019 were not going to entail any additional tax impact. The rectification exercise would remain revenue neutral. Such TRAN I forms have been allowed to be filed online or manually in cases where TRAN-1 forms were not filed within the time prescribed by certain registered persons/ assessees. The judgment relied upon by the learned counsel for the petitioner are to that effect. The instant case does not present any additional tax impact, or loss of revenue for the State Exchequer and, in fact, such correction of relevant returns in case of the petitioner i.e.,GSTR-1, GSTR-2A in case of the respondent no. 5 and 6 would allow the respondent no.5 to rightly avail the ITC against the tax paid under Tax Invoice number 1/ 2018-19 dated 17th January 2019 issued by the petitioner, the interest of justice would be served if the petitioner is allowed to make the necessary correction in GSTR-1 form for January 2019 - petition disposed off.

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• 2022 (11) TMI 322
  Condonation of delay in filing appeal - sufficient cause for delay present or not - HELD THAT:- The facts and circumstances clearly establish that the petitioner had made out valid and sufficient ground/cause to condone the delay in preferring the appeal before the appellate Authority. It is also clear that the inability and omission on the part of the petitioner to prefer the appeal within the prescribed period was due to bonafide reasons, unavoidable circumstances and sufficient cause. Though it is well settled that Respondent No.1-Appellate Authority does not have power to condone the delay beyond the extended/condonable period of 30 days after expiry of the initial period of 60 days, by adopting justice oriented approach and in order to do complete and substantial justice, in the peculiar/special facts and circumstances obtaining in the instant case and in the light of the material on record which clearly establishes that the delay in preferring the appeal was wholly unintentional and due to valid and sufficient grounds referred to supra coupled with the fact that the petitioner has a good case to urge on merits and the balance of convenience in its favour. It is deemed just and appropriate to exercise the powers under Article 226 of the Constitution of India and condone the delay in preferring the appeal by the petitioner by setting aside the impugned order at Annexure-A and remit the matter back to respondent No.1 for reconsideration of the appeal afresh on merits in accordance with law. Petition allowed by way of remand.

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• 2022 (11) TMI 321
  Input Tax Credit - inaction on the part of the respondents in not enabling Form GST TRAN-1 of the Petitioner through GST portal for claiming the transitional credit available in VAT returns - violation of of principles of natural justice - HELD THAT:- It is very clear that the assesses are given two months time for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 i.e.., w.e.f. 01.09.2022 to 31.10.2022. Further, the authorities were also directed to see that there would be no technical glitches during the said period. A reading of the said order does not anywhere indicate that the same pertains to a particular assessment year. It appears that any assessee, who intends to file concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 and was denied earlier because of some technical problem, is always at liberty to make use of the said order and upload the relevant forms during the relevant period. Petition allowed.

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• Income Tax

• 2022 (11) TMI 330
  Transfer of a case as provided u/s 127 - Validity of Assessment u/s 153C - un-accounted cash transactions - Whether the Order dated 16.02.2021 of Principal Commissioner of Income Tax, Vijayawada transferring the Income Tax jurisdiction of writ petitioner from Mumbai of Maharastha State to Guntur of A.P.State enabling Respondent No.1 to pass the impugned orders is arbitrary and is in violation of Section 127 of Income Tax Act? - HELD THAT:- As on one hand action in terms of Section 127 of Income Tax Act, 1961, was in the offing at Mumbai and opportunity of hearing was scheduled at Mumbai. However, much earlier to it the Order of learned Principal Commissioner of Income Tax Act, Vijayawada transferred the case from Mumbai to Guntur. Be it noted, by 16.02.2021 the competent authority at Mumbai did not even commence the proceedings of transfer as it commenced its proceedings for transfer only on 02.03.2021. In that scenario, even Sub-Section (4) of Section 127 of the Income Tax Act do not come for rescue for the Revenue. As a matter of record the assertions in the writ petition about the above referred notice dated 02.03.2021 issued by the office of the Principal Commissioner of Income Tax, Mumbai remain unquestioned and was not adverted to in the counter affidavit filed for the respondents. The above facts do indicate that at some point of time the revenue was conscious of statutory position as to which was the competent authority to transfer a case in terms of Section 127 of Income Tax. Yet, the action of transfer was taken up and achieved by the authorities of respondent No.1 which is not provided under law. This action on the part of the authorities of Respondent No.1 can be called as arbitrary as it was done in violation of the mandate in Section 127 of Income Tax Act. Article 14 of the Constitution of India provides for equal protection of laws and in the case at hand the acts of the authorities of Respondent No.1 which are based on Order dated 16.02.2021 by the learned Principal Commissioner of Income Tax, Vijayawada stand against that constitutional mandate. The upshot of the above discussion would indicate that the Order of transfer of case under Section 127 was without jurisdiction and the proceedings initiated under Section153C on the part of Respondent No.1 are also without jurisdiction. Therefore, the orders of assessment that were passed by Respondent No.1 on the anvil of the above proceedings under Section 127, 153C shall be held as invalid orders passed without jurisdiction. - Decided in favour of assessee.

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• 2022 (11) TMI 329
  Assessment u/s 153A - Receipt of Cash Gift by the appellant from her husband - HELD THAT:- The assessee has filed Income Tax Returns and financial statement for the relevant assessment year and claimed that her husband has opening cash balance but she could not file any evidence to prove that her husband declared said cash balance in Wealth Tax Return filed for the relevant assessment year, because cash in hand in excess of Rs. 50,000/- is liable for wealth tax. Therefore, the claim of the assessee that she had received cash gift of Rs. 39,75,000/- from her husband cannot be accepted, because, she could not adduce necessary evidences. In so far as balance gift of Rs. 7 lakhs received through bank, no evidence including bank statements of the assessee and her husband was filed to prove that said gift has been received through bank. Further, neither the assessee nor her husband filed any evidences during search and post search proceedings to claim gift paid and received by the parties. Therefore, we are of the considered view that the arguments of the assessee, she had received gift from her husband is only an afterthought that too more than two years from the date of search without any documentary evidences. Hence, we are of the considered view that the AO has rightly rejected the arguments of the assessee and accepted income declared including undisclosed income offered towards source for purchase of property. CIT(A) rightly apprised the facts and sustained the additions made by the AO and thus, we are inclined to uphold the findings of the Ld. CIT(A) and dismiss appeal of the assessee.

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• 2022 (11) TMI 328
  Addition u/s 14A r.w.r. 8D - expenses incurred purportedly for earning exempt income - assessee stated that disallowance was highly unjustified since the investment earning exempt income had not been made out of the business funds of the assessee, but out of his own personal funds - As contended that the interest expenses claimed by the assessee can be safely attributed to relating to his business and having nothing to do with his investments earning exempt income - HELD THAT:- As the financial statements of the assessee produced before us that these investments are clearly not reflected in his business statements but in his personal financial statements. Even the Ld.CIT(A) gave an identical finding of fact in this regard in A,Y 2013-14, while dealing with identical issue of disallowance u/s 14A of the Act on identical investments in PPF and shares made by the assessee. In view of the above, the assessee having reasonably demonstrated that investment which had earned exempt income were made out of his personal funds which fact has been recorded even by the ld.CIT(A) in preceding year for the same investment, We see no reasons to uphold the disallowance of expenses made under section 14A of the Act in the impugned year. The disallowance made therefore as directed to be deleted. Appeal of the assessee is allowed.

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• 2022 (11) TMI 327
  Addition u/s 68 - assessee obtained unsecured loan from various persons who are happened to be the Managing Director s, Family Members and Relatives - HELD THAT:- It is seen from record that the unsecured loans to the tune of Rs. 2.83 Crores which were already existing from the previous assessment year from the same parties. However the assessee is silent about the confirmations, bank details, Return of Income and mode of payment of the loan transactions. During the appellate proceedings before CIT(A), CIT(A) called for a Remand Report and given a relief in the case of Ganpatraj C. Salecha and in the case of Deepak G. Salecha which were found to be genuine by the Assessing Officer. The remaining balance assessee failed to discharge the primary onus by providing the loan details, confirmation letters, Income Tax Return etc. to the satisfaction of the Assessing Officer. Thus the assessee failed to discharge its initial onus cast upon it. In the absence of any further details either before the ld. CIT(A) or before us, we are not in a position to adjudicate the grounds raised by the assessee. Thus the grounds raised by the assessee are devoid of merits without supporting evidences.

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• 2022 (11) TMI 326
  Addition being loss from commodity trading when the assessee failed to bring any supporting evidence on record - HELD THAT:- We have given a thoughtful consideration to the aforesaid observation of the CIT(Appeals) and except for the fact, that the CIT(Appeals) though inadvertently had referred the date of the remand report of the A.O had however, rightly concluded that there was no justification on the part of the A.O to have declined the assessee s claim of loss from commodity trading. We, thus, finding no infirmity in the view taken by the CIT(Appeals), uphold his order to the said extent. Thus, the Ground of appeal No. 1 and Grounds of appeal No. (s) 4 5 (to the extent relevant to the issue) raised by the revenue are dismissed in terms of our aforesaid observation. Whether CIT(Appeals) had erred in vacating the treating by the A.O of the respective additions/credits in the partners capital account as the undisclosed investment of the assessee firm? - As the A.O in the course of the original assessment proceedings had not raised any query as regards the additions/credits in the respective capital accounts of the partners, therefore, as stated by the Ld. AR and, rightly so, the assessee remained under a bona-fide belief that no doubts were there in the mind of the A.O in respect of the same. We, thus, finding no infirmity in admission of the aforesaid documentary evidence as additional evidence U/rule 46A of the Income Tax Rules, 1962 by the CIT(Appeals), uphold his action to the said extent. For addition in hand which had been vacated by the CIT(Appeals), we find that the assessee had duly substantiated the respective sources from where both the partners had made addition/credits in their respective capital accounts - we not only principally concur with the view taken by the CIT(Appeals) that no adverse inferences as regards the additions/credits in the capital account of the partners was liable to be drawn in the hands of the assessee firm, but also even otherwise, are of a strong conviction that as the source of the respective addition/credits had duly been confirmed by the respective partners out of their duly explained sources, therefore, on the said count also, no addition was called for in its hand. On the basis of our aforesaid observation, we uphold the order of the CIT(Appeals) who had rightly vacated the respective additions that was made by the A.O as regards the additions/credits in the partners capital accounts - Decided against revenue.

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• 2022 (11) TMI 320
  Assessment of trust - cancelling registration of the Appellant u/s 12AA - Whether the registration once granted under Section 12AA of the Income Tax Act, 1961 could be cancelled on the basis of same set of provision of the Trust which were examined earlier? - HELD THAT:- In the instant case, it is an admitted fact that registration under section 12AA of the I.T. Act was granted to Appellant-Trust on the basis of Trust Deed dated 20.09.2005. As further an admitted fact that in the Trust Deed dated 20.09.2005, it was specifically recorded, inter alia, that the lands of the Trust were under threat of encroachment by local inhabitants, and, in order to save the land in question, it was felt necessary to utilize the said land by giving it for development for construction of buildings/flats and the proceeds received from consideration amount were to be utilized for the purposes of the Trust. On the basis of the same set Trust Deed, benefit of exemption under Section 12A of the I.T. Act was granted by granting registration to the Trust u/s 12AA. Despite the aforesaid facts, notice was issued to the Trust dated 18th December, 2017 directing the Trust to show cause, inter alia, as to why its registration be not cancelled for violation of the aims and objectives mentioned in the Trust Deed/Memorandum of Association. CIT (Exemptions) passed order cancelling the registration granted in favour of the Appellant-Trust by recording, inter alia, that the Trust created in the year 2005 was created with intent of changing the original Trust Deeds of 1948 and 1987, which was against the wishes of founder of the Trust. As examined the Supplementary Affidavit filed on behalf of the Appellant-Trust including the order passed by ITAT, Ranchi itself in an earlier proceeding pertaining to the year 2013-14, wherein ITAT has clearly held that, earlier, Trust Deeds were not relevant for allowing the benefit of exemption and the income derived from transfer of property was as per the objects of the Trust. We have also considered the instructions issued by CBDT bearing Instruction No. 883-CBDT F.N. 180/54/72-IT (AI) dated 24.09.1975. Said Instructions clearly state that the investment of net consideration received on the transfer of a capital asset in fixed deposit with a Bank for a period of six months or above would be regarded as utilization of the net consideration for acquiring another capital asset within the meaning of Section 11(1A) - Admittedly, Appellant-Trust has deposited the sale proceeds in fixed deposit with the Bank for a period of more than six months and, thus, it cannot be said that Appellant-Trust has utilized the sale proceeds contrary to the objects of the Trust. Thus, the finding of ITAT in impugned order that Appellant failed to utilize the sale proceeds for the objectives of the Trust is perverse. It goes without saying that we have not gone on the issue of utilization of sale proceeds as it is the Assessing Officer to take note of all facts while considering the same under Section 11 of Income Tax Act, 1961. Under the cumulative facts and circumstances mentioned hereinabove, we allow the instant Appeal and set aside the order dated 30.10.2019 passed by ITAT, Ranchi Bench, Ranchi, and, thus, consequently, we further quash and set aside the order dated 04.09.2018 passed by CIT (Exemptions) under section 12AA(3) of the I.T. Act cancelling registration of the Appellant-Trust under section 12A/12AA of the I.T. Act. Decided in favour of the Appellant.

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• 2022 (11) TMI 319
  Depreciation on software - AO has disallowed depreciation on the ground that the supplier of software had informed that the balance payment was not received by them for the reason of non replacement of software version with the latest version - HELD THAT:- It is not in dispute that the software was acquired on 23.3.2012 and the period before the expiry of the financial year namely, 31.3.2012 was less than 180 days. It is not in dispute that the assessee is a consulting engineer and has acquired the software for his use. The letter written by the supplier that the payment was withheld for not updating the software, in our view is not sufficient cause to disallow the depreciation because an engineer who purchases a software can continue to use the existing version till its updation. Sri Dilip is right in his submission that since the period of use is less than 180 days, the assessee shall be entitled for only 30% depreciation. This position of fact and law is not disputed by Sri Annamalai. So far as the expenditure is concerned, AO has rejected the same by merely recording that the assessee had not satisfactorily explained the business expediency. It is trite that the AO cannot sit in the arm chair of a businessman and decide what expenditure is expedient. The genuineness of the vouchers is not in dispute. It is for an assessee to decide from time to time the expenditure that he finds it expedient to make in order to promote his business. Therefore, in our view, on both aspects, the assessee s case merits consideration. Appeal is allowed.

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• 2022 (11) TMI 318
  Disallowance of the depreciation - Appellant had not acquired any business and commercial rights - HELD THAT:- In the case on hand, assessee has entered into various agreements with Central and State Government, etc. The assessee s agreement referred to hereinabove is with the Central Government. Assessee s case is, to obtain that agreement it has incurred certain expenditure. Shri Suryanarayana, pointed out that in case the assessee transfers its rights under the agreement, it will be transfer of an intangible asset similar to the one considered in Areva T D India Ltd., and he is right in his submission. A Concession or a right which accrues over a period of time under an agreement will be in the form of an intangible asset and when transferred, the transferee will also be entitled for continuation of the benefit. AO has stated that the expenses in this case are mostly towards legal, technical and management fee. Such expenditure is incurred to obtain a legally enforceable agreement. ITAT has rightly held that such expenses can be capitalized. It is settled that assessee shall be entitled to claim depreciation on such expenses which can be capitalized. CIT(A) has recorded that the assessee has not proved the expenditure also merits consideration. It is relevant to note that CIT(A), on appreciation of material on record, has held assessee had acquired business and commercial rights and licenses by making payment which were in the nature of intangible asset entitled for claiming depreciation u/s 32(1)(ii) of the Act. This finding has not been challenged by the Revenue before the ITAT. Whether a lease right constitutes an intangible right ? - In our view, Shri Suryanarayana is right in his submission because, the intangible right accrued in favour of assessee is transferable and therefore, the cost incurred towards acquiring leasehold rights shall be eligible for depreciation.

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• 2022 (11) TMI 317
  Revision u/s 263 by CIT - Deduction u/s 54F - details of purchase/investment in property and construction expenses were not submitted - HELD THAT:- The principles laid down by the courts are that the Learned CIT cannot invoke his powers of revision under section 263 if the AO has conducted enquiries and applied his mind and has taken a possible view of the matter. If there was any enquiry and a possible view is taken, it would not give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. The consideration of the Commissioner as to whether an order is erroneous in so far it is prejudicial to the interests of Revenue must be based on materials on record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to start fishing and roving enquiries in matters or orders which are already concluded. AO has issued a notice dated 03-01-2019 u/s 142(1) of the Act to the assessee, wherein he, inter alia, raised queries on documents in support of deduction and exemption claimed, Confirmations of unsecured loans creditors taken during the year, copy of capital account for AY 2017-18, 2016-17.A.R submitted that the assessee has furnished relevant details to the assessing officer viz., details of construction expenses, copy of gift deed, confirmation from various creditors. All the details so furnished. AO has issued another notice dated 09-07-2019 and 22-07-2019 u/s 142(1) of the Act, wherein also identical details were called for. The Ld A.R submitted that the assessee has uploaded the relevant details in the e-portal. According to Ld A.R, the assessee has furnished all the details relating to the above said three issues to the assessing officer and they are very much available in the e-portal of the department. We notice that the Ld PCIT has not considered these documents at all before arriving at the conclusion that the AO has not conducted proper enquiries. We have also perused the various case laws cited by Ld PCIT and notice that they lay down the principles governing the proceedings u/s 263 of the Act. On a perusal of the various details furnished by the assessee to the assessing officer, we notice that the assessee has furnished necessary details before the AO with regard to the above said three issues. Accordingly, we are of the view that the AO has conducted enquiries in proper manner and that there was proper application of mind on the part of the AO in respect of all the three issues and that he has taken a possible view in respect of the same. Accordingly, we are of the view that the impugned revision order passed by Ld PCIT is not sustainable in law on all the three issues. Accordingly we quash the impugned revision order passed by Ld PCIT. Appeal filed by the assessee is allowed.

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• 2022 (11) TMI 316
  Reopening of assessment u/s 147 - addition on protective basis - HELD THAT:- As we are of the view that the reopening of assessment made in the hands of the assessee for making addition protective basis is bad in law, since the same amounts to reopening of assessment merely on suspicion. Accordingly, we quash the assessment order passed in the hands of the assessee. Appeal of the assessee is allowed.

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• 2022 (11) TMI 315
  Short deduction of TDS u/s 194I - Rent - inclusion of common area maintenance charges - Liability u/s 201(1) and 201(1A) - 10 percent TDS should have been deducted u/s 194I or 2 percent deducted by the assessee u/s 194C on payment to Ambience Developers and Infrastructure - HELD THAT:- As payments received by Ambience group are split into two companies of same group on single contract one for rent and the other for maintenance charges. However, the AO noted that this arrangement has been made to avoid the higher deduction of TDS rate applicable to which we do not agree as when the receiver of rent and receiver of maintenance charges are different and distinct and the character of the payment is also different and distinct, then, on the payments towards maintenance charges has to be made after TDS @ 2% u/s 194C of the Act and not @ 10% u/s 194I of the Act. From the material available on record, it is clearly discernible that the assessee company has paid rent to the owner after deduction u/s 194 of the Act @ 10% and the payment for operation/maintenance was made directly to the service provider company after deduction of tax u/s 194C of the Act. Therefore, we are inclined to hold that in the present case the common area maintenance charges was not forming part of the actual rent paid to the owner by the assessee company. Payments of rent and common area maintenance charges have been made to distinct entities/companies, therefore, the authorities below were not right in creating the impugned liability payable by the assessee firm under the provisions of sub-sections (1) and (1A) of section 201. As respectfully following the order of the coordinate Bench of the Tribunal in the case of Kapoor Watch Company Pvt. Ltd. .[ 2021 (1) TMI 209 - ITAT DELHI ] the grievance/grounds of the assessee are allowed and the AO is directed to delete the impugned liability u/s 201(1) and 201(1A) of the Act - Appeal filed by the assessee is allowed.

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• 2022 (11) TMI 314
  Addition u/s 69A - CIT(A) deleted the addition - In search proceedings data retrieved from the hard disk revealed undated, unsigned and unexecuted Draft Deed and draft cash receipt relating to the transaction of sale of property between assessee and Shri Munish Arora - HELD THAT:- While deleting the addition, we find that the Ld. CIT(A) was guided by the fact that the addition was made on the basis of undated, unsigned and unexecuted Draft Deed and draft cash receipt retrieved from the hard disk of Shri Naresh Gupta, there being no 3rd party confirmation or corroborating evidence of the receipt of cash. We do not agree with the reasoning given by the CIT(A) for deleting the addition. We find that A.O. has noted that the Draft Deed retrieved from the hard disk showed that the major constituents like the Vendor, Vendee, the name of the shareholders and their shareholdings, the sale consideration were exactly similar in the Draft Deed and original Sale Deed executed by the assessee. In the Draft Deed there was mention about the part of sale consideration of Rs.5 crore paid by Cheque No.222546 dated 16.04.2010 drawn on Bank of Maharashtra, Greater Kailash which matched with the part of sale consideration mentioned in the original Sale Deed executed by the assessee. Thus, when the part of the sale consideration of Rs.5 crores along with the date of cheque, its number and the bank on which it was drawn matched with the Draft Agreement, then this material evidence cannot be simply ignored and brushed aside and overlooked by holding that the Draft Agreement was undated, unstamped and, therefore, cannot be relied upon. A bare reading of Section 69A makes it clear that where the property described under section 69A of the I.T. Act, 1961 is not recorded in the books of account, if any, maintained by the assessee from any source of income and the assessee does not offer any explanation about the nature and source of acquisition of such property and the explanation offered is not satisfactory in the opinion of A.O, then the value of such property would be deemed to be the income of the assessee for such financial year. We find that in the case of Commissioner of Income Tax vs., Bimal Parkash Gupta [ 1989 (1) TMI 42 - PUNJAB AND HARYANA HIGH COURT] has held that the expression income as used in Section 69A has a wide meaning and means anything which come in or resulted in gain. The case law relied upon by the assessee are distinguishable on facts and, therefore, not applicable to the facts of the present case - we are of the view that the Ld. CIT(A) was not justified in deleting the addition. We, therefore, set aside the order of Ld. CIT(A) and uphold the order of A.O. Thus, the ground of Revenue is allowed.

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• 2022 (11) TMI 313
  Additional grounds in terms of additional claims not made in return filed - Set-off of brought forward business losses of previous year as against income of next assessment year - assessee does not claim the same in the return of income - HELD THAT:- In our considered view, even though the assessing officer may not be permitted to allow the assessee s legitimate claim for set-off of brought forward business losses, in the event the assessee does not claim the same in the return of income, however, the appellate authorities are vested with the authority to allow such claim of the assessee, in case the same is tenable in law. In the case of Pruthvi Brokers Shareholders [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] held that an assessee is entitled to raise before appellate authorities additional grounds in terms of additional claims not made in return filed by it. The Karnataka High Court in the case of Karnataka State Co-operative Federation Ltd.[ 2021 (3) TMI 694 - KARNATAKA HIGH COURT] held that assessee s fresh claim before appellate authority is entertainable even when same is not claimed in original return of income nor assessee has filed revised return of income to make such claim. The Bombay High Court in the case of B. G. Shirke Construction Technology (P.) Ltd.[ 2017 (3) TMI 879 - BOMBAY HIGH COURT] has held that an assessee is entitled to make a claim before Tribunal which was not raised before Assessing Officer at time of filing return of income or by filing a revised return of income. In view of the consistent position taken by the various Courts on this issue, in the interest of justice, we are restoring the file to the AO with the direction to verify the assessee s claim of set-off of brought forward business losses of assessment year 2016-17 against income of assessment year 2017-18, and if the claim is legally tenable, to allow for such set-off. Appeal of the assessee is allowed.

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• 2022 (11) TMI 312
  Nature of land sold - agricultural land sold by the assessee is liable for capital gain tax or exempt from taxation - HELD THAT:- As mentioned in the report that the said land was surrounded by a sugar factory and its quarters on north side, on the east side, Nagiri Nagalapuram road was separating a local milk diary and the land, on the west side, a land belongs to Ms. A. Preethi using for agricultural activity and on the south side, a land with unwanted crops belongs to Eskay Agro Tech Ltd., and other than the sugar factory, there was no other industry can be seen near the said land. From the above report that the sugar factory is situated nearer to assessee s land as there is sizeable agricultural activities are carried out and it is clear that it is an agricultural belt as sugar mill was established. Therefore, it cannot be said that the land is not an agricultural land. AO came to a conclusion that the land sold to a company was not carrying agricultural operation and therefore, the case of the assessee does not fall under the exception provided under section 2(14) of the Act. In our considered opinion, the test applied by the AO is not correct. It is for the AO to ascertain as to whether the land sold by the assessee is an agricultural land as per revenue records, the assessee has carried agricultural operation or not and it is not for the Assessing Officer to see to whom the land was sold. One more reason stated in the assessment order that subsequent to the sale, the land was converted into non-agricultural purposes and thereby, the claim of the assessee was denied. Vide order Revenue Divisional Officer has accorded permission for conversion of the agricultural land into non-agriculture purposes, which means, before sale of the land, the land was an agricultural land. Moreover, as per the certificate of the Village Revenue Officer, the assessee was carrying out agricultural operation. Therefore, the AO was not correct in denying the benefit. The observation of the AO that the sale consideration of Rs..1.98 crores for 11 acres is abnormal. The assessee sold his land in acre and it comes to near about Rs..18,00,000/- per acre is, in our opinion, not abnormal. The assessee wanted to sale his land and the purchaser wanted to purchase the land for non-agricultural purposes and therefore, the rate at Rs..18 to 20.00 lakhs per acre cannot be said that it is abnormal. Objection raised by the AO that the sale consideration received by the assessee was in the form of equity share. We find that the law does not prohibit in receiving the sale consideration by equity shares, whether the sale consideration received by the assessee or not is a material fact to be considered. In this case, the assessee has received the sale consideration. Thus, the objection of the Assessing Officer is unwarranted. The land sold by the assessee is an agricultural land used for agricultural purposes and entitled for exception provided under section 2(14) of the Act. Accordingly, we set aside the orders of authorities below and allow the appeal filed by the assessee.

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• 2022 (11) TMI 311
  Addition u/s 68 - penny stock purchases - Bogus LTCG - Conversion of unaccounted income into genuine long term capital gains - HELD THAT:- Except stating that the assessee is one of the beneficiary of alleged bogus long term capital gains transaction of these two companies, but nothing was brought on record to link the transaction of the assessee with investigation report as well as any other evidences which suggest that the assessee is also part of that group of people who were involved in alleged scam. At the same time, although, the assessee claims to have purchased and sold shares of two companies through recognized stock exchange, but that itself is not a ground to accept arguments of the assessee when other evidences clearly prove that these shares were used to provide accommodation entries to various beneficiaries. Therefore, we are of the considered view that neither assessee nor the AO has conclusively proved their case with necessary evidences. Hence, we deem it appropriate to set aside the issue to the file of the AO and direct the AO to provide necessary information used against assessee to take an adverse view on capital gain derived from sale of shares of two companies and further provide an opportunity of hearing to the assessee to refute allegations made by the Department and also if necessary to cross-examine the persons who gave statement on the issue. AO is directed to follow the principles of natural justice while dealing with the issue and also decide the issue in accordance with law. Appeal filed by the assessee is allowed for statistical purposes.

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• 2022 (11) TMI 310
  Revision u/s 263 by CIT - Addition u/s 40A(3) - cash payment in violation of section 40A(3) of the Act towards purchase of land from farmers either in the assessment order or in the office note and considered by the AO during the course of scrutiny proceedings is not a valid argument and only an afterthought - HELD THAT:- Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous, in so far as it is prejudicial to the interest of the revenue. In the instant case, the Commissioner reopened the case u/s 263 of the Act based on the proposal sent by the AO and not on his own volition. We are therefore, of the considered view that reopening is bad in law and hence, we quash the order of the Ld.Pr.CIT. Appeals of the assessees are allowed.

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• 2022 (11) TMI 309
  Revision u/s 263 - Deemed dividend u/s 2(22)(e) - only contention is that excess receipt by the assessee on each date is to be calculated by including the opening excess receipt and every such excess receipt so arrived at is to be treated as independent receipt from the said company and thus treated as deemed dividend u/s 2(22)(e) - whether peak excess receipt, considered by the AO for the purpose, is incorrect ? - HELD THAT:- No merit in this contention of the CIT. The account of the assessee with Tristar Security Pvt. Ltd., wherein the impugned amounts have been received, is undisputedly in the nature of a current account with numerous transactions of giving and receiving amounts to the said company. This is a fact on record and is not disputed. The assessee had explained the nature of transactions between the two as relating to lending and receiving back money from the said company by the assessee to help it tide over short term financial requirements.This explanation of the assessee is reproduced of the Ld.PCIT s order. No infirmity has been pointed out by the PCIT in the same. Considering the fact that the transactions of the assessee with the said company are in the nature of current account transactions with repeated receipt and payment to the said company, the loans are repeatedly being paid back by the assessee within a few days itself and therefore it is only the peak credit which is to be considered for determining the amount advanced to the assessee qualifying as deemed dividend. There is no error, we hold, in the order of the AO treating only the peak withdrawal as deemed dividend. We therefore set aside the order of the Ld.Pr.CIT passed under section 263 - Appeal of the assessee is allowed.

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• 2022 (11) TMI 308
  Reopening of assessment u/s 147 - Assessee is beneficiary of long term capital gains on sale of shares and there is a failure on part of the assessee to disclose his income on account of long term capital gains on sale of shares in her return of income - HELD THAT:- We find that the assessee has duly reported the transaction of sale of shares in her return of income. Further, where the assessee is of the belief that she fulfills the conditions of exemption and has gone ahead and claimed exemption under section 10(38), she is well within her rights to claim exemption under section 10(38) of the Act. The reporting of sale transaction and claiming exemption under section 10(38) cannot be equated with non-furnishing of particulars of income. There cannot be different yardsticks to determine whether the assessee has reported the transaction in her return of income in cases where the assessee has not claimed the exemption and in another case, where the assessee has claimed the exemption. The Revenue is well within its right to examine the claim of the exemption and whether the same has been rightly claimed or not and take appropriate action as per law however, as far as reporting of transaction is concerned, the same has been duly complied with by the assessee. Had the Assessing officer carried out basic enquiry and verification of the return of income before recording the reasons, in all likelihood, he himself would have found the basis so stated as not emerging from the material on the record. Therefore, the belief and the reasoning so arrived at by the AO that the income has escaped assessment on account of failure on part of the assessee to truly and fully disclose the transaction has no material basis and cannot be sustained. The nexus between formation of belief and material basis which such belief is formed is clearly absent in the instant case and therefore, we are of the considered view that the notice issued under section 148 has no legal sanctity and cannot be sustained in the eyes of law and the same is hereby quashed and the consequent reassessment proceedings are thus set-aside. Assesse appeal allowed.

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• 2022 (11) TMI 307
  Rectification of mistake - Excess depreciation has been allowed to the assessee in respect of Multiple Effect Evaporator Plant(MEEP) - HELD THAT:- As assessee submitted that MEE Plant falls within the meaning of Pollution Control equipment eligible for higher rate of depreciation @ 80% whereas, according to the Assessing Officer the said equipment does not help in pollution control and is not eligible for higher rate depreciation. The Assessing Officer examined assessee s claim of depreciation during the course of scrutiny assessment proceedings and allowed the same. Now, on change of opinion the Assessing Officer is disallowing assessee s claim of higher depreciation. The issue is highly debatable and hence, cannot be subject matter of proceedings u/s. 154 of the Act. Short deduction of TDS on payment of rent - The assessee has furnished copy of letter addressed to Maharashtra Pollution Control Board, wherein it is mentioned that MEE Plant is an advanced technology plant to control pollution. The equipment which could be used for greater efficiency which also results in reduction of pollution whether such equipment can be categorized as pollution control equipment requires consideration and debate. Thus, MEE Plant whether eligible for higher rate of depreciation is a subject matter of debate which could not have been settled in rectification proceedings under section 154 of the Act. The other issue is short deduction of TDS on payment of rent. The Hon ble Calcutta High Court in the case of CIT vs. S.K.Tekriwal, [ 2012 (12) TMI 873 - CALCUTTA HIGH COURT] has held that where there is shortfall in deduction of TDS no disallowance can be made by invoking the provisions of section 40(a)(ia). Thus, in the light of above decision no disallowance under section 40(a) (ia) could have been made in the case of assessee. We see no infirmity in the impugned order warranting interference. The same is upheld and appeal by Revenue is dismissed being devoid of any merit.

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• 2022 (11) TMI 306
  Levy of penalty u/s 271(1)(c) - where the income with reference to which penalty was levied, was already included in the return of income - HELD THAT:- It is an admitted fact that the additional income declared during the course of survey operations was already included in the return of income under the provisions of section 139 - The Hon ble Delhi High Court in the case of SAS Pharmaceuticals, in a case involving the identical facts held that no penalty could be imposed as there was no concealment or furnishing inaccurate particulars of income, as the assessee had made a complete disclosure in the return of income and offered the additional amount for the purpose of tax. We are of the considered opinion that it is not a fit case for levy of penalty u/s 271(1)(c). Accordingly, we uphold the order of the ld. CIT(A) deleting the penalty u/s 271(1)(c) - Thus, the grounds of appeal filed by the Revenue stand dismissed.

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• 2022 (11) TMI 305
  Levy of late fees u/s 234E - belated submission of tax deducted at source statement - HELD THAT:- It is only w.e.f. 01.06.2015 an amendment was made u/s 200A of the Act providing that fee u/s 234E could be computed at the time of processing of the return of income and intimation could be issued specifying the same payable by the dedutor as fee u/s 234E of the Act. The Hon ble Karnataka High Court in the case of Fatheraj Singhvi vs. Union of India, [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01.06.2015. Therefore, late fees u/s 234E of the Act can be levied only prospectively w.e.f. 01.06.2015. The decision rendered by the Hon ble Bombay High Court in the case of Rashmikant Kundalia and Others [ 2015 (2) TMI 412 - BOMBAY HIGH COURT] does not come to the rescue of the Revenue, inasmuch as, the Hon ble High Court had only upheld the constitutional validity of the provisions of section 234E of the Act. The Hon ble High Court had not gone into the issue of retrospective operation of provisions of section 234E of the Act. In the circumstances, we direct the DCIT, TDS (CPC), Ghaziabad to delete the late fee being levied u/s 234E of the Act. Assessee appeal allowed.

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• 2022 (11) TMI 304
  TDS u/s 194H - credit card commission under the head commission, brokerage and discounts - Addition u/s 40(a)(ia) for non deduction of tds - HELD THAT:- We observe that the similar issue regarding credit card commission has been decided in assessee s own case in the assessment year 2010-11 [ 2015 (11) TMI 1880 - ITAT BANGALORE] decided in favour of the assessee as held that such payments were more in the nature of bank charges than in the nature of commission and Section 194H of the Act would not be attracted. - Decided in favour of assessee. Disallowance u/s 14A - HELD THAT:- There is nothing on record to suggest that the assessee has not earned any exempt income for the relevant assessment year. For the limited purpose of examination of the same, the matter is restored to the files of the AO. AO on examination finds that there is no exempt income earned during the relevant assessment year, there shall be no disallowance u/s 14A of the IT Act. The AO shall decide the issue as per law laid down by the Era Infrastructure India Ltd., [ 2022 (7) TMI 1093 - DELHI HIGH COURT] Nature of expenditure - revenue expenditure claimed by the assessee whereas it is in the nature of capital in nature - assessee could not prove that it is a revenue expenditure - HELD THAT:- We observe that the AO has observed that the assessee itself has capitalized in the financial statements to the expenditure incurred but the assessee has claimed it as a revenue expenditure and the assessee also could not justify that this expenditure is in the nature of revenue expenditure before us. Therefore, the AO has rightly treated it as capital expenditure after observing the submissions of the assessee that the salary paid towards the expansion activities in Hyderabad, the capital expenditiure incurred by the assessee is not allowable u/s 37(1) of the Act. Therefore, we uphold the order of the AO and reverse the order of the CIT(A). Allowability of processing fees and interest paid by the assessee on the loan taken - HELD THAT:- No infirmity in the order of the CIT(A) and this issue is also covered by the judgment of Hon ble Supreme Court in the case of Vardhman Polytex Ltd. Vs. CIT [ 2012 (9) TMI 519 - SC ORDER] in favour of the assessee. Therefore, we dismiss this ground of the Revenue.

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• 2022 (11) TMI 303
  Allowability of employees contribution of ESIC and PF - deposited beyond time mentioned in the respective Statutes but before filing income tax return u/s 139(1) - HELD THAT:- As held in various courts that the payment of employee s contribution beyond the due date mentioned in the relevant statute but before the due date of filling the return of income u/s 139(1) is allowable expenditure. Assessee s appeal is allowed.

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• 2022 (11) TMI 302
  Disallowance of sale and administrative expenses - Assessee failed to produce any bills/vouchers - only contention raised by assessee is that its pump/filing station for petrol, diesel etc. is in remote area and no bills /vouchers for expenses are available - HELD THAT:- It of the considered view that since the assessee has completely failed to produce any bills/vouchers for sale and administrative expenses to substantiate that these sale and administrative expenses were incurred wholly and exclusively for the business of the assessee, and the Assessing Officer made disallowance to the tune of 25% of these expenses which is reduced by ld. CIT(A) to 12 % wherein substantial relief is already granted by ld. CIT(A). Revenue has not come in appeal against relief granted by ld. CIT(A), and thus, in my considered view , no interference is called for with the appellate order passed by ld. CIT(A) and the estimate of disallowance made by ld. CIT do not call for any interference by me , as there is no material on record which could justify further relief. No merit in the appeal filed by assessee before tribunal on this issue, which now stand dismissed. Disallowance of drawings for household expenses - AO estimated household drawing expenses of Rs.20,000/- per month - HELD THAT:- Keeping in view that we are presently concerned with financial year 2012-13 , the drawings towards household expenses to the tune of Rs.10,000/- per month is quite justifiable and is reasonable , more-so keeping in view status of the assessee that he is retailer of Bharat Petroleum Corp. Ltd. and having a petrol filing station , of which the annual turnover was substantial to the tune of Rs.11.77 crores during the year under consideration and in my view , drawings for household expenses of Rs.10,000/- per month is quite reasonable . Thus , in nutshell, the assessee is not entitled for any further relief towards estimation of household expenses . This disposes ground number 5, which now stands dismissed.

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• 2022 (11) TMI 301
  Revision u/s 263 by CIT - assessee claimed deduction u/s 80IA - HELD THAT:- As pertinent to note that the very issue which was taken into account by the PCIT u/s 263 of the Act was already controverted by the Assessing Officer to the assessee during the assessment proceedings under Section 143(3) of the Act and after verification has been disallowed upon which the CIT(A) has rejected the appeal of the assessee as stated by the Ld. AR during the hearing. Section 263 of the Act is invoked when there is assessment order which is prejudicial to the interest of Revenue. But in the present case, the very basis of exercising the revisionary power u/s 263 does not survive as the AO has taken precaution and verified all the factors on the very same issue during the assessment proceedings. PCIT cannot review the AO s order unless there is substantial loss on the part of the AO which is prejudicial to the interest of the Revenue. In the present case, the very basis of Section 263 of the Act has not been properly invoked by the PCIT as the Assessing Officer has taken utmost interest of the Revenue and the same cannot be stated as prejudicial to the interest of Revenue. Hence, appeal of the assessee is allowed.

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• Customs

• 2022 (11) TMI 300
  Doctrine of promissory estoppel - Claiming benefit as per the old exim policy - new exim policy does not grant such benefit - Entitlement of benefit of additional licence on the export of processed iron ore - period April, 1990 to March, 1991 - HELD THAT:- It is an admitted position that the processed iron ore had been exported during April, 1990 to March, 1991. It is to be noted that under the Exim Policy 1990-93, Minerals and Iron Ore are included in the list of ineligible items. As per Exim Policy 1988-1991, only the export of unprocessed iron ore was ineligible to get the benefit of additional licence. However, when the new Exim Policy 1990-93 came into existence, the Minerals and Iron Ore are in the list of ineligible items the appellant had actually exported processed iron ore during the period April, 1990 to March, 1991, which was under the regime of new Exim Policy 1990- 93 and as observed hereinabove under the new Exim Policy 1990-93, the export of Minerals and Iron Ore are included in the list of ineligible items, the appellant has been denied the benefit of additional licence. At this stage, it is required to be noted that under the Exim Policy, the benefit of additional licence which as such was in the form of an incentive is available on actual export in the preceding year and the benefit of such export for the purpose of additional licence to the FOB value shall be available in the next year. Under the Exim Policy, the benefit of additional licence shall be available only on actual export in the previous year and that too to eligible items only - in the absence of any challenge to the new Exim Policy 1990-93 under which on export of Minerals and Iron Ore , there shall not be the benefit of additional licence, the new Exim Policy 1990-93 shall be applicable. The appellant is claiming the benefit of additional licence under the Exim Policy 1988-91 on the ground of promissory estoppel. However, when the new Exim Policy 1990-93 is held to be applicable under which on export of Minerals and Iron Ore , there shall not be any benefit of additional licence, the appellant cannot be permitted to claim the benefit of additional licence under the old Exim Policy, which was not in existence. Doctrine of promissory estoppel - HELD THAT:- It is required to be noted that the benefit of additional licence was in the form of an incentive. The DEFT/Union is free to change the Exim Policy and consider from time to time on which items there shall be an incentive and on which items there shall not be any incentive. To grant the benefit of an incentive is a policy decision which may be varied and/or even withdrawn. No exporter can claim the incentive as a matter of right. Under the circumstances, the doctrine of promissory estoppel shall not be applicable to such a policy decision with respect to incentive, more particularly when it is well within the right of DGFT/appropriate authority/Union to come out with a new Exim Policy - The policy and the incentive scheme are very clear. Incentive in the form of an additional licence is on actual export in the previous year. Therefore, the relevant date shall be the date on which the export is made. Claim of benefit on the ground that some other similarly situated exporters have claimed the benefit - HELD THAT:- Merely because some others are granted the benefit wrongly, the appellant cannot be permitted to pray for the similar benefits. There cannot be any negative discrimination which may perpetuate the illegality. The appellant cannot be allowed the benefit of additional licence on the ground that some others might have been granted such benefits de hors the scheme, which otherwise the appellant is not entitled to under the scheme - It is very unfortunate that despite the High Court s order, no further enquiry has been conducted. Be that as it may, once it is held that the appellant is not entitled to the benefit of additional licence on export of Minerals and Iron Ore , the matter ends there and the appellant cannot be allowed such benefit, which otherwise the appellant is held not entitled to. The High Court has rightly confirmed the order passed by the authority denying the benefit of additional licence to the appellant - Appeal dismissed.

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• 2022 (11) TMI 299
  Seeking release of imported goods - issuance of Waiver Certificate under Regulation 10(1) of the Handling of Cargo in Customs Area Regulation 2016 and Regulation 10(1) of Ship Cargo Manifest and Transhipment Regulation, 2018 - HELD THAT:- The Commissioner of Appeals allowed the appeal filed by the respondent by referring to clarification issued by the Ministry of Commerce and Industry, Department for Promotion of Industry and Internal Trade, Government of India dated 24 th February, 2022. The clarification was sought for by the respondent with regard to merit of inflatable party items/party decoration foil items. The clarification sought for was whether the said items would fall within the scope of the Toys Quality Control Order, 2020. By clarification dated 24th February, 2022 the said authority had stated that the holiday decorations that are primarily intended for ornamental purpose or Christmas decoration are not included in the scope of the Toys (Quality Control) Order. Regarding the classification, the respondent/writ petitioner would contend that the appeal is pending before the Tribunal at the instance of the revenue and in the meantime the respondent/writ petitioner is willing to comply with the direction issued by the Assistant Commissioner of Customs, Appraising Group VI and they are agreeable to pay the differential duty. The order and direction issued by the learned Single Bench was perfectly justified. In fact, the Assistant Commissioner of Customs, Appraising Group VI rightly understood the scope of the proceedings and took note of the clarification issued by the Ministry of Commerce and Industry dated 24th February, 2022 and balancing the interest of revenue has sent the communication dated 22nd June, 2022 - Appeal dismissed.

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• 2022 (11) TMI 298
  Import of insecticide for non-insecticidal purpose - Requirement to obtain an import permit from respondent no.3/Central Insecticide Board and Registration Committee - applicability of provisions of Section 38 (1) (b) of the Insecticides Act, 1968. Whether, having regard to the provisions of Section 38(1)(b) of the 1968 Act (which is an exemption provision), the other provisions of the 1968 Act would be applicable, given the fact that the petitioners are seeking to use the imported product only for non-insecticidal purpose i.e., as an artificial fruit ripener? HELD THAT:- Having regard to the provisions of Section 3(e)(i) of the 1968 Act, the imported product will fall within the definition of the term insecticide . It is also not in dispute that respondent no.4/Food Safety and Standards Authority of India [FSSAI] has taken the stand (albeit, after having the product examined by a panel of scientists), that ethephon is not carcinogenic i.e., it is fit for human use, as long as it does not come in direct contract with the food substance, which in this case is fruits - the petitioners grievance thus arose from the impediment caused to the clearance of their product for home consumption. It is averred that, even though respondent no.4/FSSAI has indicated that ethylene gas can be used to ripen fruits, the custom authorities have refused to clear the imported product/ethephon on the ground that the petitioners did not have the requisite import permit. Since the petitioners have agreed to furnish the necessary information, in this case the issue as to whether information was required to be given or not, has become academic. Once an import permit is issued by respondent no.3/CIB RC, the petitioners will be at liberty to approach the customs authorities. The custom authorities, as alluded to above, will, thereafter, act as per law - respondent no.4/FSSAI is directed to consider framing a regime whereby fruits and/or vegetables which are ripened artificially with the use of ethylene gas, which in turn is produced through use of ethephon powder, as in this case, or other artificial ripeners should have the necessary indication placed on it. List the above-captioned matters before this court on 30.11.2022 only for the purposes of ascertaining as to whether compliance has been made with the directions - petition disposed off.

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• Insolvency & Bankruptcy

• 2022 (11) TMI 297
  CIRP - scope of interim moratorium - application to co-guarantors - Seeking recovery from the defendants no.1 and 2, the ex-promoters of Bhushan Steel Limited - HELD THAT:- It is clear that Section 179(1), which provides the jurisdiction for the DRT with respect to insolvency matters of individuals and firms, is subject to Section 60 of the IBC. Sub-section (1) of Section 60 of the IBC provides that in relation to insolvency resolution for corporate persons, including corporate debtors and personal guarantors, the Adjudicating Authority shall be the NCLT. Sub-section (2) of Section 60 provides that where the CIRP of a corporate debtor is pending before an NCLT, an application relating to the insolvency of a personal guarantor of such corporate debtor shall be filed before the same NCLT. Sub-section (3) of Section 60 further provides that the insolvency resolution process in respect of a personal guarantor pending in any Court or Tribunal, shall stand transferred to the adjudicating authority dealing with the insolvency resolution process of the corporate debtor. The NCLT would be the appropriate adjudicating authority in respect of insolvency proceedings initiated against the defendants in their capacity as personal guarantors for the corporate debtor, Bhushan Steel - the insolvency proceedings against the defendant no.2 under Section 95 of the IBC were initiated before the NCLT on 4thMarch, 2020, before filing of the present suits and in view thereof, the interim moratorium under Section 96 would be operable insofar as the defendant no.2 is concerned. In the present case, the application against the defendant no.1 has been filed under Section 95 of the IBC by State Bank of India on 28th May, 2022, as a creditor of the corporate debtor/borrower for whom the defendant no.1 stood as a guarantor. Therefore, the relevant date on which the interim moratorium under Section 96 would kick in would be 28th May, 2022. This is not a case where the insolvency application has been filed with a mala fide intention by a debtor/guarantor himself so as to take the benefit of the interim moratorium under Section 96 of the IBC. The language of Section 96(1) of the IBC cannot be stretched so as to include all co-guarantors within the ambit of the interim moratorium. The reference to all the debts in Section 96(1)(a) has to be in respect of all debts of a particular debtor. This is clear from the language used in Section 96(1)(b)(ii) to the effect that the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt. Therefore, the effect of the interim moratorium is only in respect of the debts of a particular debtor. By no stretch of imagination can it be said to include other independent guarantors in respect of the same debt of a corporate debtor. Merely because an interim moratorium under Section 96 is operable in respect of one of the co-guarantors, the same would not apply to the other co-guarantor(s). The interim moratorium under Section 96 in respect of one of the guarantors would not ipso facto apply against a co-guarantor - the clear statutory mandate under Section 96 of the IBC, the proceedings in the present suit are stayed against both the defendants. Application disposed off.

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• 2022 (11) TMI 296
  Condonation of delay in filing appeal - approval of resolution plan - Section 61 of the IBC, 2016 - HELD THAT:- It is an admitted case of the parties that Appeal has been filed by the Appellant against the Order dated 15th June, 2022 on 01st August, 2022 i.e. 47th Day. The first submission of the Appellant is that 30th and 31st day being holiday and Court reopened on 1st August, 2022 only, hence filing the Appeal on 01st August, 2022 is within time - The Limitation as prescribed by Section 61(2) is 30 days. Under proviso, the Appellate Tribunal may allow an Appeal to be filed after said period of 30 days if it is satisfied that there is sufficient cause for not filing the Appeal but such period shall not exceed 15 days. According to the Appellant 46th and 47th Day i.e. 30th and 31st July were holidays. For purposes of extending the benefit of Section 4 of the Limitation Act, the Limitation has to be expired on the date when Court is closed, present is not a case where the Limitation expired on a date when the Court was closed since limitation is of 30 days and not 45 days. The power to condone the delay of 15 days is exercised by this Tribunal under proviso to Section 61(2) of the Code but it cannot be said that period for limitation is 45 days. Thus the present is not a case where benefit of Section 4 can be extended. Section 14 of the Limitation Act in strict terms does not apply to the Appeal which is clear from the plain reading of Section 14 of the Limitation Act. The limitation act uses the expression Application , Suit and Appeal differently and the provisions in the schedule providing for limitation of Application, Suit and Appeal are all different - The law is thus well settled that even in cases where Section 14 is not strictly applicable, the principle underlying Section 14 can be invoked. From the facts of the present case, it is clear that Appellant is claiming benefit of Section 14 on the basis of I.A. No. 145 of 2022 filed in the same proceeding i.e. C.P. IB No. 107/ALD/2019. In which proceeding, by Impugned Order, I.A. No. 79 of 2022 has been allowed - Present is not a case where it is even contended that IA No. 145 of 2022 was not entertained due to any defect of the jurisdiction or other cause of like nature. The Adjudicating Authority before whom the Application was filed, was fully competent to entertain the Application. The principle under Section 14 are attracted when a claimant is prosecuting another civil proceeding the use of expression another civil proceeding as occuring in Section 14(1) and 14(2) is for definite purpose and object. The Applicant is not entitled to claim benefit of Section 14 of the Limitation Act, 1963 on account of having filed an I.A. No. 145 of 2022 in the same proceeding i.e. CP(IB) No. 107/ALD/2019 which was dismissed as withdrawn on the request made by the Appellant - the jurisdiction of this Tribunal to condone the delay is of only 15 days in addition to period of limitation of 30 days. The delay in filing the Appeal is beyond 15 days after expiring of the limitation, the delay in filing the Appeal cannot be condoned - appeal dismissed.

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• 2022 (11) TMI 295
  Seeking expunging the remarks made against the Appellant (Advocate) - conflict of interest and collusion between Appellant, Respondent Nos. 2, 3 and - HELD THAT:- The basis of observations made by the Adjudicating Authority is the fact that the Appellant who was appearing for the Resolution Professional in the CIRP of the Corporate Debtor has also filed an Application under Section 7 on behalf of Damayanti Tea Industries , which is a unit of CCIPL. CCIPL is promoter of the Respondent No.4 (Resolution Applicant). The observations made by the Adjudicating Authority in paragraph 17.3 gives an impression that Appellant has appeared both for Resolution Professional and Resolution Applicant in the CIRP of the Corporate Debtor, which is not the fact of the matter. The Appellant was not appearing for Respondent No.4 which is a Resolution Applicant in the CIRP of the Corporate Debtor. The Appellant has filed Section 7 Application on behalf of Damayanti Tea Industries which is a separate company registered under the Companies Act - The Section 7 Application filed by Damayanti Tea Industries has no concern with the subject matter of CIRP of the Corporate Debtor. No prohibition can be read in the statutory provision governing appearance of an Advocate in representing a different company in separate proceedings filed under Section 7. The present is not a case that Appellant has appeared for Resolution Professional and Resolution Applicant i.e. Respondent No.4 in the CIRP of the Corporate Debtor. The Appellant has made out a case for directing expunction of adverse remarks contained in the judgment dated 08.04.2022 - appeal allowed.

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• 2022 (11) TMI 294
  Fraudulent initiation of insolvency proceedings by the Operational Creditor in collusion with the Corporate Debtor - It is submitted that Application under Section 9 was not a genuine Application - HELD THAT:- The facts of the present case make it amply clear that object of filing Section 9 Application by the Operational Creditor was not for resolution of insolvency of Corporate Debtor, but was an attempt to stop the implementation of RERA order and to take back the Project from the Appellant. Mr. Raj Kumar, the Director of M/s. Rudra Buildwell Constructions Pvt. Ltd. has been challenging the orders passed by the RERA in First Appeal and Second Appeal on behalf of the Corporate Debtor. The Operational Creditor, thus, Mr. Raj Kumar, who has filed Section 9 Application as Director of M/s. Rudra Buildwell Constructions Pvt. Ltd. has clearly identified himself with the Corporate Debtor and was espousing the cause of the Corporate Debtor by challenging the order of the RERA - The sequence of the events and the various proceedings taken with regard to Project in question by the Homebuyers as well as by the Corporate Debtor, indicate that CIRP initiated by the Operational Creditor by filing Section 9 Application was for purposes other than for the resolution of insolvency. The reason given by Adjudicating Authority for rejecting argument of Section 10A was based on alleged acknowledgement letter dated 03.06.2021 received from the Corporate Debtor. When the date of default given by Operational Creditor in Section 9 Application is 31.03.2020, the mere fact that acknowledgement has been given by Corporate Debtor on 03.06.2021 accepting the debt, shall not change the date of default - the reasons given by the Adjudicating Authority that since acknowledgement is 03.06.2021, the date of default will become 03.06.2021 is not agreed upon. The Adjudicating Authority itself formed an opinion that it has prima facie satisfied that Application is barred by Section 10A and thereafter time was granted by the Adjudicating Authority to file additional affidavit. The additional affidavit gives only explanation of letter by the Corporate Debtor acknowledging the debt dated 03.06.2021. The letter dated 03.06.2021 was also before Adjudicating Authority, when order dated 29.11.2021 was passed dismissing the earlier Application, which was dismissed as withdrawn. The order dated 18.04.2022 is set aside and Company Petition No. IB-11/ND/2022 is dismissed as having been filed malifide for purposes other than resolution of insolvency of the Corporate Debtor - A penalty of Rs.25,00,000/- is imposed on Respondent No.2 - M/s. Rudra Buildwell Constructions Pvt. Ltd. through its owner Shri Raj Kumar to be paid within a period of one month by Bank Draft drawn in the name of Pay and Accounts Officer, Ministry of Corporate Affairs - Appeal allowed.

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• PMLA

• 2022 (11) TMI 293
  Seeking enlargement of bail - money laundering - predicate offence - diversion of funds/shell companies - It is the specific allegation that the petitioner herein through the said entities collected money from the public through investment apps by offering high and lucrative returns under exchange for the money deposited by them and in this regard more than 300 crores was collected from various depositors and more than 290 crores was diverted to various shell companies - HELD THAT:- Admittedly, the nature of services which was represented to Razorpay and PayU were not adhered to and it was Power Bank and Sunfactory which lured the general public to invest the money. It is also evident that Power Bank and Sunfactory were not available on Google Playstore and later on complaint came to be filed in Cr.No.8/2021. Later on Enforcement Directorate has taken up this case. It is also evident from the records that there is specific allegations that the present petitioner did not cooperate during the investigation and the software developer informed that some source code in the software for gaming platform was manipulated by the present petitioner and gateways were linked to Power Bank and Sunfactory. There is no dispute of the fact that the petitioner is partner in both M/s. Clifford Ventures and M/s. H S Ventures Inc. and admittedly more than 290 crores was diverted to various companies and though the services of Razorpay and PayU were taken, but the amount was routed through Power Bank and Sunfactory apps. Thus it clearly establish the intention of the petitioner for routing the transactions from different sources of business - The records also prima-facie disclose that money collected from public has been transferred to several various companies by the petitioner without there being any reason/occasions. It is further alleged that it is a process of concealment and layering of funds that had been acquired by duping the public at large. Admittedly after completing preliminary investigation, the complaint came to be lodged and there is prima-facie material. The other ground for bail on predicate offence cannot be entertained as admittedly it is a economic offence and it is required to be dealt firmly. Further the explanation under Section 50 of the PML Act is required to be considered during the course of the trial and prima-facie there is material evidence which disclose that he has cheated public at large by receiving deposits to the tune of more than Rs.300 crores - Admittedly petitioner is also involved in similar offences in other States also. Looking to these facts and circumstances, this is not a fit case wherein discretion can be exercised in admitting the petitioner on bail. Petition dismissed.

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• Service Tax

• 2022 (11) TMI 325
  CENVAT Credit - common input services - time barred demand for the period April to September 2008 - Explanation 1 (d) to Rule 6(3D) of the CCR for computing exempt service pertaining to trading in securities is not applicable for the period prior to 01.04.2011 - extended period of limitation - HELD THAT:- It is quite evident that the appellant had submitted the entire information in respect of the input services and their use in the exempted output services. Further it is also evident that Commissioner has failed to point out even a single information which was relevant for determination of the issue in question. Can there be any specific reply without a specific query. When the appellant had submitted the voluminous information as has been accepted by the Commissioner in the impugned order it is for the revenue authorities to scrutinize the same and arrive at the conclusions in a time bound manner. Failure to make any inquiry specific to availment of CENVAT Credit on taxable and exempted services by the department cannot be ground for invocation of extended period of limitation by alleging charge of suppression against the appellant. For its own failure to make inquiry and investigations within the prescribed period of time, department cannot invoke extended period of limitation. The demand to this extent cannot be sustained and needs to be set aside. Computational Errors - HELD THAT:- As regards computational error as stated by the revenue in the appeal the issue do not involve any specific question of law to be agitated upon. Appellant have also pointed out certain computational errors in calculating the amounts to be confirmed. These are matter of factual verification for which we would remand the matter back to the original authority for re- computation of demand if any in accordance with the principles of law. The applicability of Rule 6 (3) by treating the 34 services as has been held by the Commissioner as common input services for providing the exempted and taxable services of brand promotion - the present case is not for determination of common input services, but revenue needs to identify those services which have been exclusively used for providing the taxable service and those which have been used for management of investments. Undisputedly appellants are engaged in providing the brand promotion service by promoting the brand name of TATA. They have availed CENVAT credit in respect of various services used in their activities of brand Promotion. Extended period of limitation - HELD THAT:- The extent period of limitation is not available to the revenue as the ingredient as required for invoking the extended period are not available in the present case, it is held that against penalties imposed on the appellant under Rule 15 (3) or 15 (4) of Cenvat Credit Rules, 2004 as applicable during the relevant period read with Section 78 of the Finance Act, 1994 cannot be sustained. Since the matter needs to be remanded back to original authority for taking into account the observations made, the liability to interest will come only on the redetermined amount - appeal allowed by way of remand.

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• 2022 (11) TMI 292
  Levy of service tax - salary paid on secondment of employees - Section 65(105) (k) of the Finance Act, 1994 - HELD THAT:- Issue notice on this limited issue.

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• 2022 (11) TMI 291
  Classification of services - Supply of tangible goods service - equipment namely drill pipes to M/s Cairn Energy India Private Limited, Gurgaon on rental basis - right of possession and control of equipment was with the appellant - HELD THAT:- The appellant is inter-alia engaged in supply of tangible goods service. The appellant has stated that whenever they are providing any equipment along with expert manpower they are paying service tax as can be seen from various invoices raised by them. He pointed out in some such invoices when drill pipes are supplied along with other equipment to be handled by their own personnel then the rent of drill pipes is also included in the assessable value in supply of tangible good service. He pointed out that in the case of supply being made to M/s Cairn Energy no expert manpower was sent along with pipes and it was merely a supply of pipes to M/s Cairn Energy India Private Limited, Gurgaon. The said pipes were used independently by M/s Cairn Energy India Private Limited, Gurgaon and rent was to be calculated on the basis of actual usage of goods in terms of the service order dated 13.08.2009. Merely because a record of actual use of goods is kept it does not amounts to having effective control and possession of the goods. It is also asserted by the appellant that they have paid VAT on the said transaction - the argument of Revenue that in absence of any manpower of appellant at the site where such drill pipes were sent, how effective control and possession could be exercised cannot be accepted. There are no merit in the argument of the Revenue - appeal allowed.

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• 2022 (11) TMI 290
  Classification of services - manpower recruitment agency services or not - agreement with the appellant for packing and salvaging activities - HELD THAT:- On going through the relevant contract entered into by Appellant with M/s Pino Bisazza Glass Pvt. Ltd and find that M/s. Pino has entered into agreement with the appellant for packing and salvaging activities. The appellant was paid for carrying out such activities on per Kgs / Per Metric Ton basis. The workmen deployed by the appellant for carrying out such activities were under the supervision and control of the appellant. M/s Pino, who entrusted the job contract to the appellant was no way concerned with the workmen deployed by the appellant. Since there is no specific mention about deployment of labour/work force, the services provided by the appellant should not fall under the taxable category of manpower recruitment or supply agency service. Further, the rate contract provided in the work order clearly indicates that the amount shall be paid at a fixed basis i.e. on per kgs /per metric ton basis. Since there is no specific mention about payment of reimbursement of wages and salaries to the workman, the services provided shall not fall under such taxable category of service. It cannot be said that the appellant had provided the Manpower Recruitment and Supply Agency Service - the service tax demands confirmed on the appellant cannot be sustained. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2022 (11) TMI 289
  Refund of pre-deposit - Abatement of appeal - CIRP proceedings - Rule 22 of CESTAT (Procedure) Rules, 1982 - HELD THAT:- It is not disputed that the Resolution Plan for the appellant company was approved by Learned NCLT vide its orders dated 3.7.2019 and 22.7.2019. As per Section 31(1) of I B Code, once a resolution plan is duly approved by the Adjudicating Authority, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors including the Central Government, any State Government or any local authority, guarantors and other stake holders - In the instant case the Resolution Plan was approved by the learned NCLT vide its order dated 3.7.2019 and certain clarifications in some paragraphs of the order were made by the learned NCLT vide its order dated 22.7.2019. In the matter of M/S. ALOK INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR AND COMMISSIONER OF CEN. EXCISE, MUMBAI CENTRAL [ 2022 (10) TMI 801 - CESTAT MUMBAI ] of this Tribunal in similar circumstances in which it has been held that the appeal abates in terms of Rule 22 ibid with effect from the date of approval of resolution plan by learned NCLT. As the appeal has already been abated therefore the appellant cannot claim any refund before this Tribunal of any pre-deposit made by them before the Commissioner (Appeals), as the power which Hon ble Supreme Court/High Courts can exercise are not available with this Tribunal - Application disposed off.

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• 2022 (11) TMI 288
  CENVAT Credit - availment of credit on remaining 50% unavailed credit in respect of capital goods which allegedly were not in possession and use of the manufacturer (RSP) since the RFP had stopped production at the time of availment of such CENVAT Credit - violation of Rule 4(2)(b) of the CENVAT Credit Rules - Suppression of facts or not - HELD THAT:- Factory in terms of Section 2(e) of the Central Excise Act includes any number of inputs within the same premises irrespective of the number of Central Excise registrations. Thus no distinction between the Rourkela Steel Plant (RSP) and Rourkela Fertilizer Plant (RFP) can be inferred as both are one and the same factory - the Tribunal in the case of DHAMPUR SUGAR MILLS LTD. VERSUS COMMISSIONER OF C. EX., MEERUT [ 2001 (1) TMI 129 - CEGAT, COURT NO. IV, NEW DELHI] held that the number of different plants manufacturing different excisable goods in the same premises would constitute one factory. Their separate registration under Rule 173G of Central Excise Rules, 1944 would not mean that they are different factories. Different units to be regarded as one factory if all excisable goods are manufactured in the same premises. The audit para No.2 of IR No.30/2004-05 on the basis of which the present issue was raised has been dropped by AG (Odisha) as held in the present Order-in-Original (para 5.9 at page 63). Intimation by the Department to the Appellant regarding dropping of the said para forms part of the Appeal Paper book. The Show Cause Notice dated 19.11.2007 was issued to the Appellant on the basis of said audit para. When the audit Memo itself has been dropped, the present proceeding which has been originated from the said audit Memo has become non est - Hon ble Supreme Court in the case of ANAND NISHIKAWA CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT [ 2005 (9) TMI 331 - SUPREME COURT] has held that when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. On identical issue the Show Cause Notice has been adjudicated in favour of the Appellant and has attained finality in the absence of any challenge by the Department. The subsequent notice cannot be issued beyond limitation as held by the Hon ble Supreme Court in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP [ 2006 (4) TMI 127 - SUPREME COURT] . The impugned orders cannot be sustained and are accordingly set aside - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (11) TMI 287
  Levy of entry tax - Interpretation of local area occurring under Entry 52 of List II of the Seventh Schedule to the Constitution - whether the exclusion of an industrial area or areas from the limits of municipal councils or municipalities under the state laws in exercise of statutory power or by virtue of a declaration under proviso to Article 243-Q, would result in that area ceasing to be a local area within Entry 52 of List II and consequently precluding State from levying and collecting entry tax from those areas? HELD THAT:- In the present case, two or more sets of law, operate within the two states. The first set of statutes are the enactments, that impose the levy, which is entry tax. The incidence is entry into a local area. A local area is defined as including industrial establishments, or estates. The second set of laws that are involved, are the concerned municipalities laws, such as the Orissa Act of 1950- which by proviso to Section 4 (1) excludes industrial areas, from the rigours and requirements of the municipalities enactments - the provisions in Part IX-A of the Constitution provide for constitution of municipalities, their duration, powers and responsibilities of authorities of the municipalities. Municipalities were conceived as vibrant democratic units of self-governance. Their term or duration was provided to be for five years; regular elections, to elect representatives of municipalities was contemplated. The special features of the municipalities contemplated by the provisions contained in Part IX-A, however need not be present in other bodies created by law, such as Boards, etc. Such statutory bodies, like industrial estates may perform some municipal functions. However, that some municipal functions are performed by such bodies ipso facto does not result in their acquiring the features of municipalities which are contemplated by Part IX-A of the Constitution. The burden of the appellants song, so to say, is that when a notification is issued, excluding industrial areas or estates from municipal areas, they cease to be local areas, and cannot be treated as such for the purpose of levy of entry tax - The focus of provisions of Part IX-A of the Constitution inserted through the 74th Amendment was on local self-governance and all provisions concerning it. It had no relevance to the issue of State taxation. Furthermore, the exercise of power by the Governor to exclude from the limits of a municipal area, industrial estates or large areas that were predominantly industrialised areas is upon the condition that such areas provided a minimum modicum of municipal services. The pattern of State enactments which emerges from a reading of various decisions of this Court is that every State has a set of municipal or local self-governance laws, such as those dealing with municipalities, cantonments, panchayats, gram panchayats, etc., on the one hand, and those that deal with industrial areas as for instance, the UPIAD Act, Gujarat Industrial Development Act, 1962 etc. on the other. The object of the levy, i.e., entry tax, is the regulation of entry of goods in a regular area for consumption, i.e., manufacture, use or sale. There is no dispute that entry of goods into an industrial area or estate is for their use for manufacturing or for processing or for the purposes of their delivery as their ultimate point of destination, i.e. for the purpose of their consumption, use or sale within that area. It could even be that the goods enter within the industrial area or estate, as the ultimate point of destination for their use. In any case, the levy would be attracted because the incidence is the entry into the local area. SLP dismissed.

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• 2022 (11) TMI 286
  Validity of assessment order - enhancement of gross turnover - petitioner contended that Assessing Officer, by merely taking into consideration one or the other figures from books of account of the petitioner, have alleged concealment of sales without any evidence - HELD THAT:- It is an admitted fact that the Assessing Officer has accepted the books of account of the petitioner and, in the Assessment Order, no adverse evidence has been recorded demonstrating concealment of sale. However, the Assessing Officer, by comparing the Statement of Sales as reflected in the books of account (Annexure-5 at page 61) with the Consumption account (at Page 45) treated the difference of the amount of Rs. 10,46,08,885.86 (-) Rs. 9,63,41,597 = Rs. 82,67,288.86 as the concealed sale turnover of iron ore. From the Tax Audited Report submitted to Income Tax Department (Annexure-4), it would be evident that cost of goods sold was clearly reflected as Rs. 10,46,08,886/-, whereas, from the Sales Statement, it was evident that said goods were sold at Rs. 9,63,41,597/-. Thus, the differential amount was not the concealed sales amount of the petitioner, but was the loss suffered by the petitioner on sale of iron ore, which is evident from the books of account of the petitioner itself. The Assessing Officer, on one hand, treated the loss suffered by petitioner as concealed sale amount of iron ore, and, on the other hand, by comparing the gross profit shown in books of account of the petitioner, and, by stating, inter alia, that gross profit has been shown less by the exact amount of Rs. 82,67,288/-, proceeded to levy tax again on the said amount by treating it as concealed sale. It appears that the Assessing Officer has completely misconceived itself while passing Assessment Order, as, on one hand, the loss suffered on sale of sponge iron was treated as concealed sale amount, and, on the other hand, exact sale figure was treated to be the concealed sale amount of sponge iron by stating, inter alia, that petitioner has shown less gross profit in the books of account. The order passed by Revisional Authority dated 07.03.2017, Appellate order and Assessment Order including consequential Demand Notice dated 02.02.2011are, hereby, quashed and set aside - matter is remanded to the Assessing Officer to pass de novo Assessment Order after giving opportunity of hearing to the petitioner and further to enable the petitioner to explain the figures mentioned in its books of account. Petition allowed by way of remand.

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• 2022 (11) TMI 285
  Validity of assessment order - execution of Works Contracts - Composition Scheme - territorial jurisdiction to assess the case of the Petitioner - HELD THAT:- It is an undisputed fact that, the dealer opted for Composition Scheme and filed Form VAT 250 on 10.06.2015, wherein, the dealer opted for payment of tax by way of composition, for the full value of the contract of Rs.4,35,00,000/-. The dealer commenced its activity of contract by purchasing the goods to a tune of Rs.94,16,538/- for the purpose of construction and development activities at his apartments and by selling the apartments to a tune of Rs.10,00,000/-. Having regard to the filing of Form VAT 250 and opted for Composition Scheme by filing VAT 250, the Petitioner would come under the purview of Section 4(7)(d) and Rule 17(4) of VAT Act. It may be true that the second Respondent is the territorial Assessing Authority, but it is not in dispute that the first Respondent is having territorial jurisdiction over the dealer. The G.O.Ms. No. 503, dated 08.05.2009, which came into effect from 01.05.2009, which is referred to in the affidavit filed in support of the Writ Petition, would show that, if the Deputy Commercial Tax Officer is having territorial jurisdiction over the dealer, he can deal with the case of the dealer irrespective of the fact whether the original order under Appeal or Revision order has been passed by him or not - the argument of the learned Counsel for the Petitioner that the first Respondent has assessed the case of the Petitioner without having territorial jurisdiction, cannot be accepted, when it is a fact that the Petitioner also falls within the territorial jurisdiction of the first Respondent. Whether the findings given by the Assessing Authority vis- -vis finding given by the Appellate Authority are correct? - HELD THAT:- The purchases made prior to declaration of VAT 250 and the sale made [apartments], the Appellate Authority found that the method adopted in levying tax is totally incorrect. The Appellate Authority categorically held that, when the Petitioner has opted for Composition Scheme and not claimed ITC, then the Assessing Authority has to levy tax under Rule 17(4) of the VAT Act. Having said so, the Appellate Authority further said that the Assessing Authority, without verifying the records properly, levied tax on purchases also, which is against the spirit of VAT Act and, accordingly, remanded the matter back. It is very clear that the Assessing Authority has once again levied tax on the purchases made before filing of VAT 250 period, though tax was paid on them at the time of sale of the apartments, which, as urged by the learned Counsel for the Petitioner, prima facie, may amount to double taxation. The argument that the first Respondent has no power to assess the case of the Petitioner is rejected, but, however, on the second issue, the matter is remanded back to the first Respondent to deal with the same in accordance with law by taking into consideration the observations made by the Appellate Authority - the Writ Petition is allowed by way of remand.

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• Indian Laws

• 2022 (11) TMI 284
  Refusal to appoint an arbitrator and refer the dispute to the arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- Considering the fact that Share Subscription and Shareholders Agreement dated 27.04.2016 entered into between the appellants and the respondent contains the arbitration clause in case of dispute between the parties arising out of the said agreement, we are of the opinion that the High Court ought to have allowed the application under Section 11(6) of the Act, 1996 and ought to have left the issue on arbitrability of dispute between the parties to the arbitrator. The High Court has refused to appoint an arbitrator, interalia, on the ground that at the time when the application was filed there were already arbitral proceedings pending between the parties and the award was passed and also on the ground that the proceedings were pending before the NCLT at the instance of the respondent on the allegation of mismanagement and oppression which was filed by the respondent as minority shareholder. Refusal to refer the dispute between the parties and appoint an arbitrator, namely that the proceedings at the instance of the respondent as minority shareholder for oppression and mismanagement is pending before the NCLT - HELD THAT:- On the pendency of such proceedings the application under Section 11(6) of the Act, 1996 cannot be dismissed. It should be left to the arbitrator to consider the entire aspect. The dispute is with respect to the Share Subscription and Shareholders Agreement which is altogether different from the allegations of mismanagement and oppression at the instance of minority shareholder initiated by the respondent. The High Court has erred in dismissing the application under Section 11(6) of the Act, 1996 and has erred in refusing to appoint an arbitrator with respect to the dispute between the parties with respect to the Share Subscription and Shareholders Agreement dated 27.04.2016. The impugned judgment and order passed by the High Court is set aside - Appeal allowed.

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• 2022 (11) TMI 283
  Dishonor of cheque - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- A complaint under Section 138 cannot be transferred as per the convenience of the accused. However, the petitioner is a woman and a senior citizen. Therefore, she can always seek exemption from personal appearance. If an application is made by the petitioner for grant of exemption, the learned trial Judge shall favorably consider the same. The Trial Judge shall compel the petitioner to appear only when her presence is absolutely mandatory for the conduct of the trial. The transfer petition is dismissed.

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• 2022 (11) TMI 282
  Dishonor of Cheque - acquittal of present petitioner under section 255(1) of the Code of Criminal Procedure - whether the complainant of a complaint case filed U/s 138 of N.I Act can be treated as victim as defined U/s 372 of the Code of Criminal Procedure? - HELD THAT:- It is pointed out that if it is to be construed that a complainant could also file an appeal to the Sessions Court under Section 372 proviso or to the High Court under Section 378(4) of the Code, it would mean that a complainant in a complaint case would have two remedies and if he chooses the remedy under Section 372 proviso, he could file an appeal as of right to the Sessions Court without leave and if he files an appeal under Section 378(4) of the Code, special leave is required. The law makers would not have wanted to provide two remedies to a complainant in a complaint case. The amendment of the Code in 2009 was not with the intention of providing multiple remedies to a complainant. Law makers did not confer concurrent jurisdiction on the Sessions Court and the High Court to entertain an appeal by the complainant against acquittal in a complaint case. A complainant in a case U/s 138 of the Act of 1881 could not challenge the order of acquittal before the Sessions Court under the proviso to Section 372 of the Code and his only remedy is to file an appeal to the High Court with special leave under Section 378(4) of the Code - Therefore, a complainant in a case arising out of private complaint, who has already provide the right of appeal U/s 378(4) of the Code, can not be permitted to take recourse to Section 372 of the Code. The instant appeal has got merit and it is allowed.

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• 2022 (11) TMI 281
  Dishonor of Cheque - vicarious liability of the Director - It is submitted that the petitioner had resigned from the directorship of the accused company prior to the date of the issuance of cheque - offences under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 - HELD THAT:- The petitioner on behalf of the accused company was allegedly directly responsible for dealing with the respondent/complainant, he executed transaction documents/agreements with the complainant/respondent, the petitioner expressed his continued commitment towards on going funding process of the accused company and assured to be available for discussion and support to the accused company, even after his resignation. The pleas raised by the petitioner in his defence are a matter of trial and the petitioner is at liberty to raise the same before the Ld. Trial Court - There are no merits in the petition - petition dismissed.

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• 2022 (11) TMI 280
  Scope of intermediary - delivery of laptop as per specifications ordered or not - Whether an intermediary as defined under Section 2(1)(w) of the I.T. Act, 2000, would be liable for any action or inaction by a party or a vendor/seller making use of the facilities provided by the intermediary in terms of Buyers/Sellers Terms of Use of the Company? HELD THAT:- In the present case, petitioner-Company has complied with the requirements of sub-sections (2) and (3) of Section 79, as well as, the Information Technology (Intermediaries Guidelines) Rules, 2011 - the Company has exercised due diligence under Section 79(2)(c) of the Information Technology Act, 2000, read in conjunction with the Information Technology (Intermediaries Guidelines) Rules, 2011. The only liability of an intermediary under Section 79(3)(b) of the I.T. Act, 2000, is to take down third-party content upon receipt of either a court order or a notice by an appropriate government authority and not otherwise. As per complaint filed by the complainant indicates that the petitioner-Company, raised the grievance of the complainant with the Seller - In terms of Section 79 of the I.T. Act, 2000, there does not appear to be any distinction between passive and active intermediaries in so far as the availability of the safe harbour provisions are concerned. An intermediary is not liable for any third-party (Seller) information, data or communication link made available or posted by it, as long as it complies with Sections 79(2) or (3) of the I.T. Act, 2000. The exemption under Section 79(1) from liability applies when the intermediaries fulfil the criteria laid down in either Section 79(2)(a) or Section 79(2)(b), and Section 79(2)(c). The factum that the petitioner-Company is an intermediary providing merely access to Sellers/Buyers is not under challenge nor disputed. The ingredients of the offence under Section 406, 467, 468, 471, 474 and 474-A IPC, in sofar, it relates to the petitioner-Company is not made out taking the allegations made in the impugned FIR on face value. Petition allowed.

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• 2022 (11) TMI 279
  Dishonor of Cheque - discharge of legally enforceable debt or blank cheque issued for the purpose of security - rebuttal of presumption - accused is guilty for commission of offence punishable under Section 138 of N.I. Act or not? - HELD THAT:- Both the courts below have taken into consideration the entire evidence and documents on record and have convicted the petitioner under Section 138 N.I.A. and sentenced him as has been stated hereinabove. It has not been shown to this Court that any finding / observation of both the Courts below is perverse or illegal or any evidence or document has been misread or misconstrued. In the present case, it is not even prima-facie proved that the present cheque was issued as a security cheque. The appellate Court had taken into consideration the evidence of complainant as CW-1, who had specifically stated in his evidence that the petitioner had given a cheque to him in the month of October 2013 and the same was duly filled up by the petitioner and it is also recorded that no suggestion was given to the complainant at the time of his evidence that the cheque was given at the time of execution of the partnership deed, which as per the case of the petitioner was executed between the brother of the petitioner and the complainant - the evidence of the complainant, which fully supports the averments made in the complaint, has remained unrebutted. Learned counsel for the petitioner has not referred to any piece of evidence before this Court to show that the said evidence of CW-1 has been misread or misconstrued. Even the argument sought to be raised by learned counsel for the petitioner that the cheque was issued by the petitioner at the time of the execution of the partnership deed between the brother of the petitioner and the complainant, is highly unbelievable. Apart from the fact that there is no evidence to substantiate the said plea, it is also highly improbable that when two persons are entering into a partnership, then a third person would issue a blank signed cheque as security without there being any writing to the effect that the cheque has been issued for security purposes. Even the plea with respect to the loan amount being of Rs.3 lacs, whereas the cheque in question being to the tune of Rs.2,81,000/- is devoid of merits and deserves to be rejected. On a specific query put by this Court, learned counsel for the petitioner has fairly stated that he did not raise any such plea before the courts below. Further nothing has been shown to this Court that any such suggestion was given to CW-1 when he appeared in the witness box and thus, the said plea is apparently an afterthought. Petition dismissed.

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