TMI Tax Updates - e-Newsletter
November 14, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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Income Tax:
Offence punishable u/s 276CC - failure to file the return of income (ITR) - in the instant case on hand, there is no evasion of tax. It is not the case that no return has been filed. In fact, return has been filed and refund has also been ordered. - there is no willful failure on the part of the petitioner to file return. Therefore, offence u/s 276 CC would not be attracted - HC
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Income Tax:
Unexplained share capital and share premium - Not only the assessee has proved the identity and creditworthiness of the investors and genuineness of the transactions by furnishing all the evidences which unequivocally proved all these three ingredients of Section 68 of the Act. Besides the issue of shares at a high premium is a management decision taken by the Board and there is no bar in the instant assessment year to issue shares at a high premium. - AT
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Income Tax:
Benefit of exemption u/s 11/12 - no material which could suggest that the assessee association has deviated from its objects which it has been pursuing since past many decades. In our humble opinion and understanding of law, proviso to section 2(15) of the Act is not applicable to the facts of the case and the assessee-association deserves benefit u/s 11/12 - AT
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Income Tax:
Revision u/s 263 by CIT - if from the assessment records, it is evident that the AO has made due enquiries in response to which assessee has filed its submissions, then even if the assessment order does not discuss all aspects in detail with regards to claim of the assessee, it cannot be held that the order is erroneous and prejudicial to the interests of the Revenue. - AT
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Income Tax:
Reopening of assessment u/s 147 - reasons to believe - the reasons recorded by the AO do not lead to the conclusion that the assessee and Biomatrix were associated enterprises, and, therefore, it could not be said that any income, on account of ALP adjustment, had escaped assessment. - AT
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Income Tax:
Default u/s 201(1) - Short deduction of TDS - Non-residents - transaction of sale of property - The assessee cannot be treated as assessee in default u/s 201(1) of the Act, in the event, where the seller/payee/deductee a none resident has filed return of income and has offered the long term capital gain accrued to him from transfer of sale of property to the assessee for taxation then the assessee can not be held or treated as assessee in default. - AT
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Income Tax:
Disallowance of expenditure incurred on promotional activities - capital expenditure - 36(1)(xii) - When the notifying authority itself has mentioned that the assessee is being notified from AY 2013-14 onwards, we are of the view that the assessee cannot be deemed to have been notified in the year under consideration, being AY 2010-11 - additions confirmed - AT
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Income Tax:
Diversion of income by overriding Title - The assessee has acted as nodal or implementing agency for the schemes framed by GOI. Hence the amounts transferred to TDF/WDF are diverted at source itself and hence, the same does not belong to the assessee. Accordingly, the amounts so diverted to TDF/WDF cannot be brought to tax in the hands of the assessee. - AT
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Income Tax:
Disallowance u/s. 40A(3) - expenses made in cash - Purchase of property as fixed assets - Notwithstanding that the assessee had purchased the aforesaid property in question as a ‘fixed asset’, even if it is to be presumed that the same in the coming times is to be commercially exploited by it for constructing/developing a housing project, the same merely on the said basis would not trigger the applicability of sub-section (3) of Section 40A - AT
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Income Tax:
TDS u/s 194C - payment to works contract - MoU reveals that the work carried out by the developer / contractor was as per the requirements of the assessee - Demand confirmed - On alternative argument, purchase of immovable property, by an assessee from a developer, was otherwise for TDS at 1%. We therefore agree CIT(A) that the assessee was liable to deduct TDS. Assessee therefore cannot be exonerated from the charge of being ‘assessee in default’.- AT
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Indian Laws:
Illegal gratification - Prevention of corruption - appellant was working as an Assistant in the Income Tax office - Once the demand and acceptance is proved, presumption under Section 20 applies with full rigour. There is no evidence or explanation to make out a case on behalf of the defence that the accused has been falsely implicated in this case with an ulterior design on account of any past enmity. The presumption has not been rebutted - HC
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IBC:
Consideration of claim of appellant, after the resolution plan is approved - time limitation - It is well settled that the commercial wisdom of the Committee of Creditors is paramount and cannot be interfered with by the Adjudicating Authority or this Tribunal - Admittedly, the Appellant has not filed its claim within the time and the claim is time barred. - AT
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Service Tax:
Levy of service tax - clearing and forwarding agent service or not - the activity carried out by the appellant was not that of the clearing and forwarding agent as the appellant was not physically handling the goods on behalf of its client - though the Tribunal had earlier concluded that the appellant was liable to pay the service tax as that of a clearing and forwarding agent nothing precluded the Tribunal from revisiting the issue afresh while passing the impugned Final Order - HC
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Service Tax:
Demand of interest and penalty - reversal of CENVAT credit prior to issuance of SCN - Rule 14 of the Cenvat Credit Rules the provisions of which were amended to change the words “taken or utilized”, there cannot be any demand for the interest. - As the entire amount of Cenvat credit was reversed prior to issuance of show cause notice, penalty under Section 73(3) of the Finance Act, 1994 is waived off. - AT
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Central Excise:
Interest for delay in sanction of refund of cenvat credit which was reversed in excess to the actual reversal - the appellants are entitled for the interest in the refund claim sanctioned from the date after 3 months of filing the application for refund claim till the date of sanction. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (11) TMI 593
Seeking grant of bail - availment of irregular Input tax credit - fake invoices - offence punishable under Section 132 of the Central Goods and Services Tax Act 2017 - HELD THAT:- Having regard to the period of custody which has been undergone by the appellants and that the co-accused have been enlarged on bail, the appellants, Ramchandra Vishnoi and Himmat Singh Bhati, are directed to be released on bail subject to such terms and conditions as may be imposed by the Trial Court. Application allowed.
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2022 (11) TMI 592
Cancellation of GST registration of petitioner - non-filing of GST returns for the last six months - time limitation - HELD THAT:- The decisions of this Court in NITHYA CONSTRUCTIONS VERSUS THE UNION OF INDIA [ 2022 (7) TMI 186 - TELANGANA HIGH COURT ] and M/S. CHENNA KRISHNAMA CHARYULU KARAMPUDI VERSUS THE ADDITIONAL COMMISSIONER APPEALS1 AND ANOTHER [ 2022 (7) TMI 82 - TELANGANA HIGH COURT ] where it was held that As per subsection (1) of Section 107 of the CGST Act, limitation for filing appeal is three months from the date of communication of the order appealed against. Under subsection (4) of Section 107 of the CGST Act, the appellate authority may allow the appeal to be presented within a further period of one month, provided sufficient cause is shown by the appellant. The order of respondent No.5 dated 08.04.2020 and the order of respondent No.4 dated 21.10.2022 is set aside - the matter remanded back to respondent No.5 to consider and pass fresh order regarding cancellation of GST registration of the petitioner in accordance with law after giving due opportunity of hearing to the petitioner - petition allowed by way of remand.
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2022 (11) TMI 591
Seeking to accept the FORM GST ITC 02A either by opening the common portal or by accepting it in the physical form or to allow the transfer of credit through GSTR-3B Returns - transfer of credit - Rule 41 A of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- The time is still available, since the new registration certificate is on 21.06.2022 and the petitioner had attempted to file on 20.07.2022 and the period of limitation would be over the next day only. But the petitioner could not file the said form within 30 days because the portal did not allow the petitioner to upload the same. Therefore, this Court is of the considered opinion that the petitioner is entitled to the relief. The petitioner is directed to submit a fresh petition before IT Grievance Redressal Committee. Petition disposed off.
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Income Tax
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2022 (11) TMI 590
Offence punishable u/s 276 CC - case of the prosecution that the accused have failed to submit his return under Section 139 (1) - HELD THAT:- On a careful perusal of sub clause (i), makes it very clear that in order to bring the charge of criminal prosecution, a willful act on the part of accused is required to be proved. Admittedly, in the instant case on hand, there is no evasion of tax. It is not the case that no return has been filed. In fact, return has been filed and refund has also been ordered. In such a view of the matter, this Court is of the view that there is no willful failure on the part of the petitioner to file return. Therefore, offence under Section 276 CC would not be attracted. Hence complaint filed by the respondent stand quashed. This Criminal Original Petition is allowed
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2022 (11) TMI 589
Unexplained investment in property u/s 69 r.w.s 115 BBE - difference in sale consideration mentioned in the MOU and sale consideration mentioned in the sale deed - HELD THAT:- As it is not the case where during the course of search the assessee has been found to have made any investment but it is a case that as a result of documents found and impounded at the time of survey on M/s Boss Gears Ltd. the impugned addition has been made. Also an undeniable fact that the seller has admitted to have received Rs.9.47 crores as against Rs.18.22crores alleged by the AO. Therefore, the burden is squarely upon the revenue to prove that the actual transaction was of Rs.18.22 crores, which it has grossly failed to establish, and most importantly, assessment order of the seller M/s Boss Gears Ltd., mentioned elsewhere clearly demonstrates that the sale consideration in the case of the seller has been accepted and by any stretch of imagination it cannot be accepted that the Assessing Officer of M/s Boss Gears Ltd. was unaware of the fact that survey operation was conducted at its premises during the financial year relevant to the Assessment Year considered by him while framing the said assessment order. We, therefore direct the Assessing Officer to delete the impugned addition - The grounds argued before us are allowed.
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2022 (11) TMI 588
Interest earned on FD - Income from other sources - HELD THAT:- It is an undisputed fact that all the FDRs were purchased by the assessee for letter of credits and bank guarantees given to various suppliers of goods from abroad. The details have been furnished before the lower authorities, which have been examined and no adverse inference has been drawn in so far as details for issue of letters of credit/bank guarantee in favour of the supplier is concerned. It is also not in dispute that the assessee has reduced interest accrued on FDRs from the Project and Pre-operative Expenses reflected in the balance sheet. Entire transaction has been duly explained by way of Notes to the respective Schedule to the Balance Sheet by the assessee and the auditors. We are of the considered view that the assessee has filed complete details of FDs and has also provided details of LC/BG against which FD was taken and it can be safely concluded that the interest earned on FD is inextricably linked to the setting up the hotel as such and, therefore, the findings of the ld. CIT(A) in treating interest as income from other sources is not only erroneous but against the facts of the case in hand as explained hereinabove. We direct the Assessing Officer to consider the interest as part of capital receipt to be deducted from the cost of project. Disallowance being 1/5 of preliminary expenses u/s 35D - HELD THAT:- It is true that the said claim was made during the assessment proceedings for Assessment Year 2007-08 wherein the Assessing Officer denied the claim of expenses but the CIT(A) allowed 1/5th of the expenses u/s 35D of the Act. It is equally true that once the claim has been allowed in the initial assessment year, the said claim cannot be denied in the subsequent assessment years on identical set of facts. We find that the expenditure was incurred by the assessee towards fees paid to the Registrar of Companies and the said expenditure was incurred in Assessment Year 2007-08 and since it has been considered as preliminary expenses in the said assessment year and since 1/5th of the same has been allowed u/s 35D of the Act, balance has to be allowed in the subsequent four assessment years following the ratio of SHASUN CHEMICALS AND DRUGS LTD. [ 2016 (9) TMI 1199 - SUPREME COURT] We accordingly direct the assessing officer to allow the said claim. Ground No. 3 with sub grounds is allowed.
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2022 (11) TMI 587
Disallowing deduction u/s 80P(2)(a)(i) - income earned from Associate members/ Nominal members - Whether nominal members are treated on par with the members is to be decided with reference to the provisions of State Legislation under which this appellant society was formed and the bye-laws governing the appellant society? - HELD THAT:- Lower authorities had failed to decide the issue with reference to the provisions of the Statute under which the appellant society was formed and the bye-laws of the appellant society. Therefore,we remit the matter to the file of the AO to decide the issue whether a nominal member also falls under the category of a member as provided in the Karnataka Co-operative Societies Act, 1959 and bye-laws of the society, if so, allow the exemption u/s 80P(2)(a)(i) as held by the Hon ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd [ 2021 (1) TMI 488 - SUPREME COURT] . Thus, the matter stands remanded to the file of the Assessing Officer for fresh adjudication in accordance with law. Hence, the grounds of appeal raised by the appellant stand partly allowed for statistical purposes.
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2022 (11) TMI 586
Unexplained share capital and share premium - HELD THAT:- We observe from the records before us and also from the appellate order that the assessee has furnished all the details/evidences qua the share applicants furnishing the names and addresses, PAN cards, share application forms, share allotment advices, confirmations, audited financial statements and also proof of source of source by furnishing necessary documents of the third parties. We note that even the notices issued u/s 133(6) of the Act were duly complied with by the share applicant and they furnished all the evidences as called for by the AO which proved identity and creditworthiness of the investors and genuineness of the transactions as the source of source was also proved. Even the summons issued to the director of the assessee company was complied with by the personal appearance of Shri Arvind Agarwal before the AO. The basis of making addition completely devoid of merit and substance. Not only the assessee has proved the identity and creditworthiness of the investors and genuineness of the transactions by furnishing all the evidences which unequivocally proved all these three ingredients of Section 68 of the Act. Besides the issue of shares at a high premium is a management decision taken by the Board and there is no bar in the instant assessment year to issue shares at a high premium. We are also aware of the fact that the Clause (viib) to Section 56(2) of the Act was brought by Finance Act, 2012. CIT(A) has discussed the individual details of each investor and recorded a finding that how the three ingredients of section 68 of the Act were satisfied on the strength of evidences filed by the assessee as well as by the investors. Considering these facts, we are of the view that the assessee has proved identity and creditworthiness of the shareholders and also the genuineness of the transactions. Therefore, we do not find any infirmity in the order of Ld. CIT(A) who has passed a very reasoned order by following various decisions as discussed therein and therefore we uphold the same by dismissing the appeal of the revenue.
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2022 (11) TMI 585
Non-grant of credit of tax deducted at source - HELD THAT:-The assessee claimed the corresponding TDS credit in the impugned assessment year. Since the payment was released by Reliance Industries Ltd. in the subsequent assessment year after deduction of tax at source, the TDS amount was reflected in Form 26AS for assessment year 2017-18. In fact, the TDS certificate issued by Reliance Industries Ltd., TDS amount was shown for assessment year 2017-18. To a specific query raised by us, learned counsel appearing for the assessee made a statement at the Bar that neither the assessee has claimed TDS credit for the amount in dispute in assessment year 2017-18 nor AO has granted any such credit. On a perusal of Rule 37BA, it is observed that TDS credit has to be granted in the year in which the corresponding income is taxable. As per the accounting principle followed by the assessee, the income relating to the TDS is taxable in assessment year 2016-17. In fact, the assessee has offered the amount to tax in assessment year 2016-17. That being the factual position emerging on record, the assessee must get credit for the TDS in the impugned assessment year. More so, when the assessee has claimed that the TDS credit for the amount in dispute has not been granted in assessment year 2017-18. We direct the AO to grant credit for TDS to the assessee after factually verifying that credit for such TDS has not been granted to the assessee in assessment year 2017-18. Assessee appeal is allowed.
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2022 (11) TMI 584
Benefit of exemption u/s 11/12 - Denial of claim activities of the assessee are commercial in nature and covered by 1st proviso to section 2(15) - HELD THAT:- We find that on identical facts for the A.Y. 2011-12, in assessee s own case[ 2018 (7) TMI 1478 - ITAT DELHI] there was no material which may suggest that the assessee association was conducting its affairs solely on commercial lines with the motive to earn profit. There is also no material which could suggest that the assessee association has deviated from its objects which it has been pursuing since past many decades. In our humble opinion and understanding of law, proviso to section 2(15) of the Act is not applicable to the facts of the case and the assessee-association deserves benefit u/s 11/12 - Appeal of the Revenue is dismissed.
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2022 (11) TMI 583
Revision u/s 263 by CIT - Unexplained cash deposits during demonetisation, low gross profit and net profit inspite of increased receipts compared to previous years, Service tax applicability for travel business and Sundry creditors - HELD THAT:- This is not a case where no enquiry has been made by the assessee officer during the course of assessment proceedings. It is also not the case of the Pr. CIT that the Ld. AO failed to apply his mind to the issues on hand or he had omitted to make enquiries altogether or had taken a view which was not legally plausible in the instant facts. As held by various Courts sec 263 of the Act does not visualise a case of substitution of the judgment of the Principal CIT for that of the AO, who passed the order unless the decision is held to be wholly erroneous. As noted in various judicial precedents highlighted above, the Principal CIT, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-visit the entire assessment and determine the income himself at a higher figure. Now on the issue that the Ld. AO passed a cryptic order and did not discuss in detail regarding assessee s submissions on various queries raised vide the various notices, in our view it is a well settled position of law that if from the assessment records, it is evident that the AO has made due enquiries in response to which assessee has filed its submissions, then even if the assessment order does not discuss all aspects in detail with regards to claim of the assessee, it cannot be held that the order is erroneous and prejudicial to the interests of the Revenue. The above proposition has been upheld in the case of CIT v. Reliance Communication [ 2016 (4) TMI 173 - BOMBAY HIGH COURT] , Smt. Anupama Bharat Gupta [ 2021 (4) TMI 1000 - ITAT AHMEDABAD] , Goyal Private Family Specific Trust [ 1987 (10) TMI 43 - ALLAHABAD HIGH COURT] , CIT v. Mahendra Kumar Bansal [ 2007 (7) TMI 149 - HIGH COURT, ALLAHABAD] . We thus find no error in the order of Ld. AO so as to justify initiation of 263 proceedings by the Ld. Pr. CIT. The Grounds of appeal raised by the assessee are thus allowed.
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2022 (11) TMI 582
Revision u/s 263 by CIT - as per CIT, no enquiry of large agricultural income and non-verification of unsecured loans taken during the year done - case of the assessee was also selected for limited scrutiny under CASS on these issues and AO after raising specific quarries from the assessee in the notice issued u/s 142(1) - HELD THAT:- AO had issued notices u/s 133(6) on all these parties had duly responded to the said notices by filing ITRs, bank statements, confirmations, and audited annual accounts evidencing the said payments. Therefore we have matetrials before us on the basis of which we reasonable believe that the observations of the Ld. PCIT that the AO has not examined the issues and no notices u/s 133(6) were issued to the lenders is wrong and against the facts on record. We also note that the PCIT has failed to demonstrate as to how the assessment order was erroneous and prejudicial to the interest of the revenue as no relevant findings has not recorded by the PCIT showing that the assessment framed is erroneous as well as prejudicial to the interest of the revenue. As decided in M/s Bengal United Credit Belani Housing Ltd [ 2022 (4) TMI 1465 - CALCUTTA HIGH COURT] and J.K. Tyre Industries Ltd [ 2022 (11) TMI 486 - CALCUTTA HIGH COURT] PCIT has to record reasons justifying the invoking of jurisdiction u/s 263 of the Act as to how the assessment order is erroneous and prejudicial to the interest of the revenue. In absence of which the assumption of jurisdiction u/s 263 is not sustainable under the Act. We therefore respectfully following set aside the order passed u/s 263 of the Act by ld. PCIT on the ground of invalid jurisdiction. Appeal of the assessee is allowed.
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2022 (11) TMI 581
Addition an account of investment in share u/s 69 - HELD THAT:- The investment of Rs. 50 lakhs by way of share application money is out of deposits by the assessee in API Industries Private Limited made in earlier year (i.e. financial year 2011-12) by way of account payee cheque, and therefore addition, if any, can be only made in financial year 2011- 12. It was only out of this deposit made by the assessee in the immediately previous financial year(financial year 2011-12), that the shares were issued by API industries Private Limited to the assessee. Accordingly, the source of Rs. 50 lakhs has been fully explained by the assessee. The counsel for the assessee submitted that all these facts were submitted before CIT(Appeals), however, the same omitted to be considered in the appellate order. In response, the Ld. DR drew our attention and submitted that the cheque was received by API industries Ltd, however, whether the same was credited/encashed in financial year 2011-12 is yet to be verified. Therefore, it cannot be concluded that a transaction in question pertains to financial year 2011-12, and not the impugned assessment year under consideration. Addition u/s 56 of the Act as per Rule 11UA of the Income Tax Rules - HELD THAT:- Assessee has submitted that the source of investment of Rs. 50 lakhs in the shares of API industries Ltd stands fully explained since such allotment was made out of deposits held with the said company from the previous year. Further, all transactions were made by way of account payee cheques, and hence there is no doubt about the genuineness of the same. We also observe that the assessee had submitted that the Ld. CIT(Appeals) has not considered the submission of the assessee to the effect that firstly there was an arithmetical error committed by the AO while computing the value of shares of API industries Private Ltd and secondly, Ld. CIT(Appeals) has erred in facts and in law in not considering the fact that the company has gone into liquidation, and accordingly, the valuation of Rs. 26.39 per share of a company which is in financial distress, is clearly excessive and unreasonable. As in the interest of justice, we are restoring the matter to the file of Ld. CIT(Appeals) so that he may consider the above submissions made by the assessee and verify whether the shares were allotted to the assessee out of deposits held by the assessee in API industries Private Limited from previous financial year. Further, Ld. CIT(Appeals) may also verify the correct valuation of shares as per Income Tax Rules, taking into consideration the fact that the company was in financial distress and in the subsequent year it had also gone into liquidation. The assessee may furnish any supporting documents in support of the same, during the course of appellate proceedings.
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2022 (11) TMI 580
Reopening of assessment u/s 147 - reasons to believe - HELD THAT:- Unless the AO was to give reasons for holding that the assessee company was controlled by this person Section 92A(2)(j) could not have been invoked- and, as we have analyzed earlier as well, mere directorship of the assessee company or that person being described as key managerial person in the annual accounts of the company, can not, by itself, be reason enough to come to this conclusion. It also well-settled in law, to quote the words of the in Hindustan Lever s case [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] that The reasons recorded by the AO cannot be supplemented by filing an affidavit or making an oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced . Viewed thus, the reasons recorded by the AO do not lead to the conclusion that the assessee and Biomatrix were associated enterprises, and, therefore, it could not be said that any income, on account of ALP adjustment, had escaped assessment. As also bearing in mind the entirety of the case, we hold that the reasons for reopening the assessment were unsustainable in law. The impugned reassessment proceedings must stand quashed for this short reason alone. As we have quashed the reassessment proceedings for this short reason, we see no need to deal with other issues raised in the appeal, or in the cross-objections, or on merits.
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2022 (11) TMI 579
Unexplained cash credit u/s 68 - AO has not accepted the explanation of the assessee that previous year agricultural income was deposited - CIT(A) confirmed the order of the AO on the ground that in the assessment year under consideration, the assessee has not having any agricultural income - HELD THAT:- We find that neither the Assessing Officer nor the ld. CIT(A) disputed the agricultural income of previous assessment year - We are of the opinion that out of agricultural income which was left with the assessee, the amount of ₹.4,40,000/- was deposited in the bank account on 16.06.2009. So the assessee has explained the source and the onus are charged by disclosing the source. Therefore, we find that the addition made by the Assessing Officer and confirmed by the ld. CIT(A) cannot be sustained. Accordingly, we set aside the order of the ld. CIT(A) and delete the addition made by the Assessing Officer. Appeal filed by the assessee is allowed.
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2022 (11) TMI 578
Revision u/s 263 by CIT - AO has not examined the issue of taxable long term capital gain and income from other sources - As per CIT AO has failed to make necessary enquiry and verification in respect of certain items of income during the assessment proceedings which has rendered the order framed u/s 143(3) of the Act as erroneous as well as prejudicial to the interest of the revenue - HELD THAT:- We find that there is no mistake in the order of AO and no prejudice is caused to the revenue as the assessee has duly shown the sale consideration falling to his share. Similarly all other 27 co-owners have also shown the sale in their returns.Besides the confirming parties have also disclosed the sale transaction in their respective returns of income. The said fact was examined and enquired by the AO in the case of assessee during assessment proceedings which culminated u/s 143(3) - We note that at the time of sale by the confirming parties vide sale deed dated 06.08.2013 out of total consideration of Rs. 16.04 crores, Rs. 13.78 crores was paid to confirming parties and therefore the assessee s contentions that it has correctly shown the transaction of sale in its return has legal force and merit. We are of the view that the facts were not correctly appreciated by ld. PCIT. In our opinion, the assessment framed by the AO is neither erroneous nor prejudicial to the interest of the revenue so far as the first issue is concerned. The case of the assessee is squarely covered by the decision in the case of Malabar Industrial Co [ 2000 (2) TMI 10 - SUPREME COURT] wherein the Hon ble Court has held that in order to invoke the provisions u/s 263 of the Act, the PCIT has to be first satisfy twin conditions i.e. the order of AO sought to be revised has to be erroneous as well as prejudicial to the interest of Revenue and if one of them is absent i.e if the order is erroneous but is not prejudicial to the Revenue or vice versa , recourse cannot be had to Section 263(1) of the Act. Similarly in respect of second issue proposed by the PCIT, we note that the sale and purchase were amongst the family members which was also acknowledged by the PCIT in the impugned order. Once this is established that the transaction is between family members the provisions of Section 56(2)(viib) of the Act does not apply. On this issue also , the PCIT has made a finding that the AO has not made any enquiry without making any enquiry himself as to how the assessment order is erroneous and prejudicial to the interest of the revenue which is contrary to the ratio laid down by the Hon ble Delhi High Court in the case of D.G. Housing Project [ 2012 (3) TMI 227 - DELHI HIGH COURT] Thus the assumption of jurisdiction u/s 263 of the Act by the Ld. PCIT and consequent order are invalid and are quashed. The appeal of the assessee is allowed.
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2022 (11) TMI 577
Addition u/s 56(2)(viib) - Method of FMV determination - A.O. has not accepted the valuation made under DCF method by the assessee and adopted the formula as per Rule 11UA and valued the Fair Market Value of shares at Rs. 10/- per share and treated the premium as excess consideration on issue of share premium received which is covered u/s. 56(2)(viib) of the Act and added the same as income from other sources of the assessee company - HELD THAT:- Rule 11UA provides for Determination of Fair Market Value . As per Rule 11UA(2), FMV of unquoted equity shares for the purposes of Section 56(2)(viib) shall be the value of unquoted shares as determined under Clause (a) namely as per prescribed formula or Clause (b) as per Discounted Free Cash Flow method, at the option of the assessee. Thus DFCF method is a prescribed method for determining the FMV of shares as per Rule 11UA(2). As per Rule 11UA(2) Fair Market Value of unquoted equity shares for the purpose of Section 56(2)(viib) shall be the value determined under prescribed formula or as per DCF method which is at the option of the assessee. Thus the DCF method adopted by the assessee for determining the Fair Market Value of shares as per Rule 11UA does not requires any interference. Therefore the additions made u/s. 56(2)(viib) are not sustainable in law and the Ld. CIT(A) correctly deleted the same. Thus the Grounds of Appeal raised by the Revenue are devoid of merits and the same are hereby rejected.
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2022 (11) TMI 576
Unexplained turnover - Difference between sales as per profit and loss account and gross services as per service tax return to the income of the assessee - HELD THAT:- Turnover in service tax return is on account of receipt of money during the year. Therefore, it is apparent that manner of recording turnover for service tax is different than the amount of Turnover shown in the profit and loss account. Though, the difference arising between these two sums is required to be explained by the assessee, [1] with respect to advances [2] grossed up of the services, [ services received during the year, but turnover shown in last year etc. The difference between gross receipt shown by the assessee in service tax return and in the books of accounts may be the first trigger point of investigation and reconciliation, but unless there is difference which shows that there is lower income offered by the assessee in its tax return, the addition cannot be made. We direct the assessee to submit the party wise reconciliation of income offered in the profit and loss account with the amount of gross receipts on which service tax is collected and reconcile the difference between the two. If the advances are received during the year, assessee should also demonstrate that these sums are disclosed in advance received from the customers. Therefore, it is the duty of the assessee to provide reconciliation between the two sums. In view of this, we set aside the whole issue back to the file of the learned AO with a direction to the assessee to submit the reconciliation with proper evidence. Appeal of the assessee is allowed for the statistical purposes.
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2022 (11) TMI 575
Applicability of percentage of surcharge - HELD THAT:- As in view of the findings arrived by the Ld. First Appellate Authority in the case of co-owner it is clear that the surcharge provisions referred to income and not the transaction amount. Therefore taking into consideration the legislative intention it has to be held that the surcharge applicable in the present case is @ 10%. Default u/s 201(1) - Short deduction of TDS - net tax liability deducted on income from capital gain out of transaction of sale of property to assessee AND the appellant has deducted total amount which is higher than the tax liability of deductee - assessee has purchased immovable property from a non resident and paid consideration of the sale without deducting tax at source as non resident seller had disclosed consideration receipt from assessee in their respective return - HELD THAT:- The order of ITAT Panaji Bench in the case of Shree Balaji Concepts [ 2022 (5) TMI 1470 - ITAT PANAJI] supports the claim of assessee that where the assessee has purchased immovable property from a non resident and paid consideration of the sale without deducting tax at source as non resident seller had disclosed consideration receipt from assessee in their respective return the assessee could not held as assessee in default as per amended provision of section 201(1) - As we have noted above the seller/payee/deductee had filed return of income for assessment year 2019-20 declaring the income of long term capital gain from the sale of a residential flat to the assessee and had also paid tax thereon then the assessee could not be held as assessee in default u/s 201(1) off the Act. The assessee cannot be treated as assessee in default u/s 201(1) of the Act, in the event, where the seller/payee/deductee a none resident has filed return of income and has offered the long term capital gain accrued to him from transfer of sale of property to the assessee for taxation then the assessee can not be held or treated as assessee in default. Therefore, the orders of the authorities below, in holding the assessee in default for short deduction of TDS is not sustainable as when seller Non-Resident has filed return of income and due tax has been paid by the payee then the appellant gets immunity under first proviso to section 201 (1) of the Act thus she cannot be treated as assessee in default. - Decided in favour of assessee.
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2022 (11) TMI 574
Revision u/s 263 by CIT - deduction of tax at source u/s 194H of roaming-charges - HELD THAT:- Department has made independent enquiries from assessee with respect to TDS out of roaming-charges and the assessee had filed adequate replies. Thereafter, no order was passed against assessee u/s 201(1)/201(1A) qua TDS out of roaming charges. By such action, the department has accepted that no TDS was required out of roaming-charges. As further demonstrated by assessee had filed the details of such enquiry having been made by department, to Ld. CIT in the reply to the show-cause notice u/s 263. When it is so, the Ld. CIT ought to have taken cognizance and adjudicate the proceeding of section 263 fairly and lawfully. Lastly, we observe that there are decisions in favour of assessee where it has been held that roaming charges does not attract TDS u/s 194J. We also observe from the reply given by DR that the revenue is still contesting the applicability of TDS u/s 194J to roaming charges. It is a settled law that if two views are possible and the AO has followed one which is favourable to assessee, the order of AO cannot be said to be erroneous. The reasons stated above, we are of the firm view that the revision-order passed by CIT does not fulfill the requirement of section 263. Therefore, we are inclined to hold that the revision order is not a valid order and deserves to be quashed. Appeal of assessee is allowed.
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2022 (11) TMI 573
Diversion of income by overriding Title - Taxability of Money received for distribution as per Govt. Scheme - The excess amount over and above 0.50% of the amount transferred to TDF/WDF. - RIDF/STCRC are schemes framed by the Government of India and it has appointed the assessee as implementing agency. - assessee is allowed to retain a margin of 0.50% - HELD THAT:- the Government of India has devised schemes for promotion of investments in agriculture and rural development. As per the scheme the banks were directed to deposit shortfall amounts in giving priority sector lending by banks with the assessee herein, which in turn, would lend the said money to State Governments to carry out various schemes of agriculture and rural development. The net surplus between the interest income and interest expenditure under this scheme was directed to be appropriated as per the scheme - i.e. the assessee herein should take 0.50% as its income. and the excess amount of surplus over and above 0.50% referred above shall be transferred to TDF/WDF. The AO has taken the view that, since the assessee did not keep the funds pertaining to TDF/WDF in separate bank accounts and used it for its own business purposes, the amount so transferred to these funds would constitute income of the assessee. The assessee has acted as nodal or implementing agency for the schemes framed by GOI. Hence the amounts transferred to TDF/WDF are diverted at source itself and hence, the same does not belong to the assessee. Accordingly, the amounts so diverted to TDF/WDF cannot be brought to tax in the hands of the assessee. Disallowance of expenditure incurred on promotional activities - capital expenditure - 36(1)(xii) - Since the notification was not available for the year under consideration, the Ld CIT(A) confirmed the disallowance on the ground that the assessee is not a notified u/s 36(1)(xii) of the Act during the year. - HELD THAT:- When the notifying authority itself has mentioned that the assessee is being notified from AY 2013-14 onwards, we are of the view that the assessee cannot be deemed to have been notified in the year under consideration, being AY 2010-11. Accordingly, we confirm the disallowance made by the AO. Further, in the preceding paragraphs, we have held that the amounts transferred to Watershed Development Fund (WDF) is a case of diversion of income by overriding title. We have also held that the assessee is not the owner of funds so transferred WDF. If the above said amount of Rs.44.70 crores have been spent out of the funds so transferred to WDF as per the directions issued by GOI/RBI, the assessee could not claim such expenditure incurred out of WDF, held as not belonging to assessee, as deduction. Assessment of service charges on accrual basis - HELD THAT:- There is no dispute with regard to the fact that the assessee has been following consistent accounting policy to recognize income by way of Service charges on receipt basis. The assessee submitted that there was uncertainty in recovering service charges. There should not be any dispute that an income can be recognized under mercantile system of accounting also, only if there is certainty of its recovery. Considering the past consistent practice followed by the assessee, we are of the view that this addition is not justified. Accordingly, we set aside the order passed by CIT(A) on this issue and direct the AO to delete this addition. Claim for deduction of Education cess as allowable expenditure - HELD THAT:- In view of the retrospective amendment brought in by Finance Act, 2022 in the Income tax Act, the claim of the assessee is not allowable. Accordingly, we reject the same.
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2022 (11) TMI 572
Disallowance u/s. 40A(3) - expenses made in cash - assessee had purchased the aforesaid land in question for a consideration (including registration charges) as a fixed asset and had reflected the same as such in its balance sheet for the year under consideration - assumption of the A.O, that the land in question was acquired/purchased by the assessee as a part of its stock-in-trade, and not as an investment as was projected in its balance sheet - HELD THAT:- Observation of the A.O that the assessee had purchased the land in question not as an investment, but as stock-in-trade of its business as that of a builder/developer is merely backed by his assumption that as the assessee was engaged in the business as that of a real estate builder and developer, therefore, the land in question in all probability would have been purchased for the said business purpose, i.e, developing of a housing project on the same. Undeniably, the dislodging of the assessee s claim is only backed by an unsubstantiated assumption of the AO, and is not supported by any material proving otherwise. We are afraid that the aforesaid observation of the A.O does not find favour with us, as the land in question, as claimed by the assessee was purchased as an investment and formed part of its fixed asset in the balance sheet. Notwithstanding that the assessee had purchased the aforesaid property in question as a fixed asset , even if it is to be presumed that the same in the coming times is to be commercially exploited by it for constructing/developing a housing project, the same merely on the said basis would not trigger the applicability of sub-section (3) of Section 40A of the Act, as at the relevant point of time the assessee had made an investment towards purchase of a capital asset and not stock-in-trade. On a subsequent conversion or treatment by the assessee of the aforesaid capital asset as a stock-in-trade of its business of a real estate builder and developer, the provisions of sub-section (2) of Section 45 would though get triggered, but then such subsequent event would not lead to invocation of section 40A(3) of the Act. As the assessee in the case before us had at the relevant point of time made the investment towards purchase of a capital asset, which falls beyond the realm of sub-section (3) of Sec.40A of the Act, therefore, as claimed by the Ld. AR, and rightly so, no disallowance under the said statutory provision was called for in its hands. We, thus, in terms of our aforesaid observations not finding favour with the view taken by the lower authorities set-aside the order of the CIT(Appeals) and vacate the disallowance.
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2022 (11) TMI 571
TDS u/s 194C - Default u/s. 201(1) and levying interest u/s. 201(1A) - payment to works contract - AO held that the payment made by assessee was towards works contract on which TDS was liable to be made and the MoU between assessee and M/s. Shree Sai Associates is in the nature of contract - HELD THAT:- Clause (16) of the agreement mentions that the developer / contractor would be liable to pay sales tax on the works contract, VAT / service tax or any other applicable taxes leviable on or during the course of the development of the project land. The clause (17) further refers to the name that shall be adopted for the entire project that would be decided by the assessee alone. The obligation clause no. (22) of the MoU reveals that the work carried out by the developer / contractor was as per the requirements of the assessee. Assessee could have approached various government officials for necessary permission and therefore approach the developer/contractor to carry out the development of residential layout in all respects over the project land. We do not hesitate to agree with the view taken by the revenue authorities that, the agreement between assessee and M/s.Shree Sai Associates is in the nature of works contract. Before us, assessee alternatively argued that, the amount made towards the cost of the land and expenditure towards various permission, should be kept outside the purview of TDS provision as these are expenses, which does not fall within the ambit of works contract. In any event, purchase of immovable property, by an assessee from a developer, was otherwise for TDS at 1%. We therefore agree CIT(A) that the assessee was liable to deduct TDS. Assessee therefore cannot be exonerated from the charge of being assessee in default . The alternative argument advanced by the assessee deserves to be accepted as the cost of the land cannot be considered to be liable for TDS along with the expenses incurred towards various permissions from the State Government. Therefore the levy of interest u/s. 201(1A) of the Act, computed by the Ld.AO for A.Ys. 2013-14 and 2014-15 should exclude the payment made towards cost of the land and various approvals. We therefore do not find any infirmity in the view taken by Ld.CIT(A) in the appeals filed before us. Appeals filed by the assessee stands dismissed.
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2022 (11) TMI 554
Nature of expenditure - Software Development Expenditure - revenue or capital expenditure - HELD THAT:- The Software Development expenses claimed by the assessee are in the nature of payment of salaries and allowances to the Engineers, travelling expenses, etc. The assessee is engaged in the process of providing automation, software and hardware engineering. The said expenditure is in the regular course of business of the assessee, which has been named as Software Development Expenditure. CIT(A) has given a categoric finding that the said expenses are not towards Software Development for use by the assessee but for rendering services to the clients including overseas clients. Thus, the expenditure has been incurred in the regular course of business of the assessee and for earning revenue and profits, hence, the expenditure is on revenue account. DR has not been able to controvert the findings of the CIT(A). We find no infirmity in the order of CIT(A) on this issue, hence, the same is upheld and the appeal of Revenue is dismissed being devoid of any merit.
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Customs
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2022 (11) TMI 570
Seeking provisional release of seized goods - Betel Nut product known as Supari (unflavoured supari) of Myanmar Origin - prohibited item for import under DGFT Notification No.20/2015-2020 dated 25.07.2018, or not - HELD THAT:- On a perusal of the Notification No.20/2015-2020, dated 25.07.2018, it appears that if the declared import value is less than Rs. 251/- per kilogram, the import of Arecanut is prohibited and thus, the Adjudicating Authority after taking note of the aforesaid notification comprehensively, has issued a show cause notice No.88/2022, dated 05.08.2022 to the appellants / respondents 1 and 2. The appellants/ respondents 1 and 2 are directed to consider the applications of the first respondent / writ petitioner in all the cases for provisional release under Section 110-A of the Customs Act and the same shall be disposed of by the Adjudicating Authority on merits and in accordance with law, within a period of one (1) week from the date of receipt of a copy of this judgment. Appeal disposed off.
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2022 (11) TMI 569
Smuggling - foreign marking gold bars - gold ingot - issuance of notice under Section 124 of the Customs Act, 1962 - HELD THAT:- Mr.Santhanaraman will assure the Court that the investigation will be completed and show cause notice under Section 124 of the Act issued within the time frame set out under Section 110(2) of the Act. This is recorded. He would, incidentally, point out that the presence of the petitioners may be required in the course of investigation itself, for which purpose, summons may be issued to them. Mr.Zahir Hussain, learned counsel for the petitioners would submit that presently there is a difficulty that the petitioners are facing in arriving in India on account of a ban on their arrival - Mr.Santhanaraman claims lack of knowledge of any such ban and would further assure the Court that summons, if issued, will be accompanied by all acts necessary to facilitate the arrival of the petitioners in India for the purpose of their appearance before the authorities. This is also recorded. It is made clear that the investigation shall be conducted in accordance with law and shall be videographed. The earlier orders of this Court to the effect that the respondents shall preserve the CCTV footages of the seizures as well as the movement of the petitioners within the Terminal is reiterated. The recording will be retained till conclusion of proceedings in entirety, including appeal/revision. The petitioners are at liberty to seek copies of the recordings (CCTV footage as well as the recordings by the Customs Authorities of the seizures) and such copies, if and when sought, shall be supplied upon payment of necessary charges. Petition closed.
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Insolvency & Bankruptcy
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2022 (11) TMI 568
Rejection of Application under Section 65 and 76 of I B Code - rejection on the ground that Special Court established under IBC is alone competent to entertain Criminal Proceedings in respect of offence punishable under the provisions of the Code and the Adjudicating Authority has no role in implementing the penal provisions under the Code - HELD THAT:- Law is well settled, that the Adjudicating Authority with regard to allegation of offence in appropriate case, can always refer the recommendation to the Insolvency and Bankruptcy Board of India or to the Central Government to consider as to whether the case is made out for filing a complaint before the Special Court. The observations of the Adjudicating Authority is not approved to the extent that the Adjudicating Authority has no role in implementing the penal provisions in the Code. Limited role which can be performed by the Adjudicating Authority is to make a reference if there are allegations which need consideration by IBBI or Central Government for purpose of filing a complaint. In the facts of the present case where the Adjudicating Authority has found that there was pre-existing dispute between the parties and Application under Section 9 was not liable to be admitted - there are no reason to issue any direction to the Adjudicating Authority at this stage to consider making a reference to the Board or Central Government for prosecution under Section 76 Application disposed off.
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2022 (11) TMI 567
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Notice of Dispute issued by the Corporate Debtor after receiving the Demand Notice - pre-existing dispute between the parties or not - HELD THAT:- The Notice of Dispute issued by the Corporate Debtor after receiving the Demand Notice, which notice of dispute contains relevant facts indicating that there is pre-existing dispute. The Adjudicating Authority has rightly rejected the Application filed under Section 9 of the Code as per the provisions of the Code. Thus, no illegality has been committed by the Adjudicating Authority in rejecting the Section 9 Application - appeal dismissed.
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2022 (11) TMI 566
Consideration of claim of appellant, after the resolution plan is approved - time limitation - contention of the Appellant is that the Appellant being an Operational Creditor of the Corporate Debtor filed its claim and is entitled to claim from the Corporate Debtor, while the stand of the Respondent is that the Appellant has not filed its claim within the time as prescribed under the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, therefore, the claim is barred by limitation, accordingly, the claim has not been considered. HELD THAT:- It is an admitted fact that the Appellant filed its claim on 24.07.2019 whereas the public announcement was made on 06.12.2018 and it has been widely circulated in the English and Hindi newspapers and also posted on the IBBI website. The last date for submission of claim was 17.12.2018, however, the Appellant has not filed its claim within the time. From Rule 12 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the claim has to be submitted on or before 90th day of the insolvency commencement date i.e. in this case the insolvency commencement date is 03.12.2018 and the 90th day expires on 03.03.2019, however, the appellant admittedly filed its claim on 24.07.2019, which is beyond the period prescribed under the Rules. Whilst the facts leading to passing of the order (impugned) dated 02.01.2020 is that the Respondent (RP) filed an application under Section 30(6) read with Section 60(5) of the I B Code, 2016 seeking approval of the Resolution Plan under Section 31 of the Code read with Regulation 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 in respect of the Corporate Debtor. The Adjudicating Authority after satisfying that the plan is in compliance of sub-section (2) of Section 30 and meets the requirement and as approved by the Committee of Creditors under sub-section (4) of Section 30 approved it vide its order dated 02.01.2020 - The ground for rejection is limited to the matter specified under Section 30(2). It is however reiterated that the resolution plan in question meets the requirements specified in Section 30(2) of the Code and the reasoned commercial decision of Committee of Creditors is neither discriminatory nor perverse with the aforesaid observations the plan has been approved. Once the plan is approved by the Adjudicating Authority under Section 31(1) of the Code, it shall be binding on the Corporate Debtor and its employees, members, creditors (including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed,) guarantors and other stakeholders involved in the Resolution Plan. It is well settled that the commercial wisdom of the Committee of Creditors is paramount and cannot be interfered with by the Adjudicating Authority or this Tribunal - Admittedly, the Appellant has not filed its claim within the time and the claim is time barred. The plan has been approved by the Adjudicating Authority on 02. 01. 2020 and this Tribunal in the judgment in CA ( AT ) ( Ins ) No. 143 of 2020 upheld the plan approved by the Adjudicating Authority. Thus, it is settled proposition of law that the commercial wisdom of the Committee of Creditors in approving or rejecting a Resolution Plan is essentially based on a business decision which involves evaluation of Resolution Plan based on its feasibility and viability of the Corporate Debtor - this Tribunal comes to an irresistible and inescapable conclusion that the Appellant has failed to make out any case either on law or on facts. Appeal dismissed.
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2022 (11) TMI 565
Consideration of resolution plan of the applicant being most eligible resolution applicant in the present case - seeking withdrawal of new expression of interest being illegal - seeking stay on proceedings arising out of the new Expression of Interest/Form G - HELD THAT:- There is no ambiguity in the said order for which clarification is required as sought by the Committee of Creditors. It seeks to invite all the resolution applicants of the earlier round/process including the applicant in IA No.1355 of 2022. Now the cardinal question for determination in both these applications is whether Committee of Creditors can be allowed to do so in order to avoid any grievance of such resolution applicants ? Thus, when other Resolution Applicants were not included in the final list of H1 to H4 by the Committee of Creditors then it can be safely deduced that they were not in the fray of competing Resolution Applicants finally. If other Resolution Applicants of the earlier round including the applicant in IA No.1355/2022 were/are interested to compete then none stopped them to apply when fresh EOI/Form G inviting fresh resolution plans was approved by the Committee of Creditors and issued by the Resolution Professional - Although, IA No.1355/2022 deserves dismissal with heavy costs but we refrain ourselves from imposing such costs because Committee of Creditors itself has prompted to file IA No.1381/2022, wherein it sought clarification of unambiguous order dated 10.10.2022. Application dismissed.
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2022 (11) TMI 564
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Respondent claimed that the application is barred by limitation since certain invoices were of the year 2013. In the present case the Operational Creditor has relied on multiple invoices to arrive at the amount of Rs. 1,92,93,421. The last payment was made on 31.10.2016. In the ledger maintained by the Corporate Debtor an amount of Rupees 1,54,21,882 is due and payable against the service of the Operational Creditor. For the aforesaid amount the Respondent has already settled the claim of Rs. 1,54,21,882 with the Operational Creditor which was the liability as admitted by the Corporate Debtor. The Respondent has also filed an affidavit in respect to settlement of dues with the Operational Creditor - the dispute with respect to the remaining amount is disputed and it is evident from the documents placed on record by the Corporate Debtor that there exists a pre-existing dispute between the parties and it is the mandate of law that if there exists a pre-existing dispute between the parties the Adjudicating Authority must reject the application under section 9(5)(ii)(d). On hearing the arguments of the learned counsel for the Operational Creditor as well as the reply filed by the Corporate Debtor and upon appreciation of the documents placed on record to substantiate their respective claims, this Adjudicating Authority dismisses this application filed by the Operational Creditor under Section 9 of Insolvency and Bankruptcy Code, 2016 as there is a pre-existing dispute between the parties and IBC is not a substitute for a recovery forum. However, the claim under any other law, if permissible, can be pursued by the Petitioner as prescribed under that law. Application dismissed.
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2022 (11) TMI 563
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- On perusal of the record it is seen that the applicant had entered into two agreements dated 07.12.2016 and 04.05.2019 with the corporate debtor. Copy of the promissory notes dated 07.12.2016 and 04.05.2019 are annexed. The corporate debtor has neither denied the debt nor raised any dispute of money received. On perusal of the reply filed it is seen that the corporate debtor has admitted the debt, though not as financial, but as operational debt. The contentions raised by the corporate debtor about maintainability of the application in its reply, are devoid of any merit. Thus, it is evident that the debt is due and payable and default has occurred. The present application is complete in terms of Section 7(5) of the Code. The applicant is entitled to claim its dues, establishing the default in payment of the financial debt beyond doubt. In light of the facts and records the present application is admitted and CIRP is ordered to be initiated against corporate debtor. Petition admitted - moratorium declared.
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Service Tax
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2022 (11) TMI 562
Jurisdiction of High Court to entertain the appeal - Levy of service tax - clearing and forwarding agent service or not - specific case of the appellant was that the appellant was not providing any taxable service of a clearing and forwarding agent to M/s.Grasim Industries Ltd. as it was not physically dealing with the goods namely, cement on behalf of its client M/s.Grasim Industries Ltd. - HELD THAT:- If the dispute pertained to claim or denial of benefit of exemptions under a Notification under Section 93 of the Finance Act, 1944 [Chapter V Service Tax Act], it could be said that it pertained to a dispute relating to the rate of tax and therefore, this Court was barred under the exclusions in Section 35-G of the Central Excise Act, 1944. In such case, only the Hon ble Supreme Court has the exclusive jurisdiction under Section 35L of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1944 - the High Court has jurisdiction to entertain the appeal against an order of the Tribunal determining the taxability of a service under the provisions of the Finance Act, 1944 [Chapter V Service Tax Act] as the dispute was not relevant to valuation or rate of tax. The decision of this Court in S. Senniappa Mudaliar V. The Government of Madras, [ 1964 (9) TMI 91 - MADRAS HIGH COURT] was followed by a Full Bench of the Kerala High Court in M.Syed Alavi and Others Vs. State of Kerala , [ 1981 (5) TMI 113 - KERALA HIGH COURT] . It held that an order of remand remanding a case back is to be held as an interlocutory order. The Court further held that while the authority passing order pursuant to remand order was bound by remand order, the Appellate Courts / Authorities are not bound by it. The activity carried out by the appellant was not that of the clearing and forwarding agent as the appellant was not physically handling the goods on behalf of its client Therefore, though the Tribunal had earlier concluded that the appellant was liable to pay the service tax as that of a clearing and forwarding agent vide Final Order No.808/2005 dated 03.06.2005 impugned in C.M.A.No.951 of 2008 [ 2005 (6) TMI 5 - CESTAT, CHENNAI] , nothing precluded the Tribunal from revisiting the issue afresh while passing the impugned Final Order No.1296/2009 dated 09.09.2000 which has been impugned in C.M.A.No.696 of 2010. Appeal allowed.
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2022 (11) TMI 561
Demand of interest and penalty - reversal of CENVAT credit prior to issuance of SCN - HELD THAT:- Since the basic fact is that the respondent has reversed the entire Cenvat credit taken by them even prior to issuance of the notice without utilizing the same, there are no merit in the appeal filed by the Revenue. This appeal basically does not challenge the dropping of demand by disallowing the abatement claimed, but seeks to ask for interest on the Cenvat credit wrongly taken by the respondent and for imposition of penalty on the respondent. The Principal Commissioner has in para 15 of the impugned order very categorically discussed the issue and has recorded his finding that not a single penny of the Cenvat credit taken was utilized before its reversal. Accordingly he has held that no interest was to be demanded. Just by taking the Cenvat credit in its book of account without utilizing the same, respondent has not caused prejudice to the Revenue. Taking note of the Hon ble Supreme Court decision in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. 2011 (2) TMI 6 - SUPREME COURT] and Rule 14 of the Cenvat Credit Rules the provisions of which were amended to change the words taken or utilized , there cannot be any demand for the interest. As the entire amount of Cenvat credit was reversed prior to issuance of show cause notice, penalty under Section 73(3) of the Finance Act, 1994 is waived off. Appeal dismissed.
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Central Excise
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2022 (11) TMI 560
Interest for delay in sanction of refund of cenvat credit which was reversed in excess to the actual reversal - Rule 6(3) of CCR, 2004 and Section 11 BB of CEA - HELD THAT:- There is no dispute regarding sanction of refund as the appellant has been granted the refund of excess reversal of cenvat credit. The Learned Commissioner has denied the claim of interest on the ground that since the appellant were entitled to take the suo moto credit the refund is not governed by section 11 B. It is surprising to note that in one hand the department has undisputedly sanctioned the refund in cash obviously under section 11B then why the different treatment should be given for grant of interest which is consequential to refund under section 11 B. There is no dispute that there is a delay in sanctioning the refund against the application of refund filed by the appellant on 24.05.2016 and 21.07.2016 whereas the refund was granted on 05.11.2018. It is settled law that in case of delay in sanctioning refund after 3 months of filing of application the assessee is entitled for the interest after 3 months from the date of application till the sanction of refund - the appellants are entitled for the interest in the refund claim sanctioned from the date after 3 months of filing the application for refund claim till the date of sanction. Appeal allowed.
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Indian Laws
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2022 (11) TMI 559
Dishonor of Cheque - compounding of offences - amicable settlement of the matter - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- The enquiry made with the parties who are physically present convinces the Court that both the parties out of their free consent and volition and in their best interest have settled the matter amicably which is further corroborated by the submissions made by their learned counsels - on the terms of the said joint application, the parties be permitted to compound the offence under Section 147 of the N.I. Act, however, subject to the payment of the graded cost by the petitioner/accused. Section 147 of the N.I. Act has made every offence punishable under the N.I. Act as compoundable. As such, there is no bar for the parties in the proceeding to compound the offence - Admittedly, in the instant case, the cheque amount is for a sum of Rs. 7,00,000/-, as such, the graded cost would be Rs. 1,05,000/-. The parties are permitted to compound the offence under Section 147 of the N.I. Act. The matter is settled as per the terms mentioned in the joint application and also the independent affidavits filed by both side and the petitioner herein who was accused in the Trial Court in C.C. No. 14347/2016 is acquitted of the offence punishable under Section 138 of the N.I. Act - the present revision petition stands disposed of.
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2022 (11) TMI 558
Dishonor of Cheque - legally enforceable debt or liability or not - rebuttal of presumption - section 138 and 139 of NI Act - HELD THAT:- It is not in dispute that pursuant to the agreement dated 9.11.2017 (Annexure P-4) executed between partners of Firm M/s. Blue Diamond Associates including both the parties, subject cheque was issued by the petitioner in favour of respondent/complainant against transfer of their share in his favour, which was said to be dishonoured by the Bank and despite service of legal notice, amount of cheque was not paid by the petitioner, thus, all the necessary ingredients under Section 138 of the NI Act are attracted against the petitioner in the instant case. This court is not impressed at all with the submissions made hereinabove by learned counsel for the petitioner, as there was specific condition in the agreement dated 19.11.2017 that remaining amount i.e. Rs.2,62,00,000/- has to be paid by petitioner (party No. 2) to respondent (party No. 1) necessarily along with interest till 31.12.2019. It is also specifically mentioned in the agreement that if the amount was not paid within the stipulated period i.e. till 31.12.2019, then respondent/complainant (party No. 1) would have all the right to encash the cheques and it is also a matter of fact that since aforesaid amount i.e. Rs.2,62,00,000/- alongwith interest was not paid by petitioner (party No. 2) within the stipulated period and, thereafter, the cheque was deposited for encashment, which was dishonoured by the Bank, therefore, it cannot be said that since the cheque was given as security cheque, hence, offence under Section 138 of the NI Act is not attracted against the petitioner. In the case of Ripudaman Singh v. Balkrishna [ 2019 (3) TMI 1895 - SUPREME COURT] , their Lordships of the Supreme Court have held that though agreement to sell does not create interest in immovable property, however it constitutes enforceable contract between parties, therefore, cheques issued under and in pursuance to agreement to sell is payment made in pursuance of legally enforceable debt or liability. In the instant case, objection/grounds raised by petitioner, registering the complaint case under Section 138 of the NI Act against him are grounds of his defence, which are required to be proved by him before the learned trial Court by adducing evidence. If those grounds are allowed to be entertained at this interlocutory stage, then it will amount to grant the petitioner/accused unmerited advantage. The petition under Section 482 of the Cr.P.C., being devoid of substance, is liable to be and is hereby dismissed.
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2022 (11) TMI 557
Dishonor of Cheque - compounding of offences - amicable settlement of disputes - Section 147 of the Negotiable Instrument Act - HELD THAT:- Section 147 of the Negotiable Instrument Act provides that every offence punishable under the Act shall be compoundable notwithstanding any provision under the Code of Criminal Procedure. This obviously would have reference to section 320 of the Code of Criminal Procedure which provides that certain offences enumerated thereunder are compoundable at the instance of the person who has suffered the harm. In VINAY DEVANNA NAYAK VERSUS RYOT SEVA SAHAKARI BANK LTD [ 2007 (12) TMI 444 - SUPREME COURT] the Hon'ble Supreme Court has held that the parliamentary intention under section 147 of the Negotiable Instruments Act appears to be that normally compounding of offences under the Act should not be denied - In KM. IBRAHIM VERSUS KP. MOHAMMED ANR. [ 2009 (12) TMI 903 - SUPREME COURT] the Hon'ble Supreme Court has observed that section 147 of the Negotiable Instruments Act shall have overriding effect over any other provision under the general laws. In view of the settlement between the parties, the prayer for compounding the offence under section 147 of the Negotiable Instruments Act is granted - revision allowed.
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2022 (11) TMI 556
Illegal gratification - Prevention of corruption - appellant was working as an Assistant in the Income Tax office - specific plea of defence taken in the examination under Section 313 Cr.P.C., is that he had no role in issuance of clearance certificates and the work was confined to those assessee whose names started with Alphabet-A - whether the preliminary inquiry on receipt of the complaint was held as per norm? - HELD THAT:- This Court is of the view that the proceedings of preliminary inquiry do not form substantive evidence and the object of enquiry is not to ascertain the veracity of the allegation being made, but to see whether cognizable offence is made out or not. There is no prescribed mode for preliminary inquiry. The object is to see that the stringent provisions of the P.C. Act do not become a means of persecution of honest and upright public servant before the case is registered. It has been held in CENTRAL BUREAU OF INVESTIGATION AND ORS. VERSUS THOMMANDRU HANNAH VIJAYALAKSHMI AND ORS. [ 2021 (10) TMI 1376 - SUPREME COURT] that preliminary enquiry is directory and not mandatory in nature. It is a settled position of law that even faulty investigation or motivated omissions and commissions will have no bearing on the merit of any case unless it has caused prejudice to the accused in his defence. In the present case, P.Ws.3 and 5 were independent witnesses who accompanied the trap team and have supported the prosecution case on the point of recovery of the tainted money. PW 5 has deposed that the accused had been demanding illegal gratification for issuing the clearance certificate. He has given in details of the pre trap procedure adopted by the trap team in para 2 and 3 of his deposition. He has also proved different material exhibits. In para 5 he has deposed that he along with Binod Kumar went to the table of accused Arun Kumar when the demand was made by him on which the amount was given to him. He has stated in detail about the events following the arrest of the accused. Against these positive statements one line in the cross-examination is that he cannot say who is the informant or what does he do cannot be read in isolation to deny the positive statements made by him. That the challenge on this ground does not succeed. Whether the ingredients of the offence have been proved to bring home the charge under Section 7 of the PC Act? - HELD THAT:- Proof of demand, acceptance and recovery are the sine qua non to prove the charge under Section 7. Without the proof of demand presumption cannot be drawn under Section 20. Thus, in a case where the complainant himself resiles and refutes the charge of demand that becomes fatal to the prosecution case - In so far as the presumption permissible to be drawn under Section 20 of the act is concerned, such presumption can only be in respect of the offence under Section 7 and not the offences under Section 13(1)(d)(i)(ii) of P.C. Act. In any event, it is only on proof of acceptance of illegal gratification that presumption can be drawn under Section 20 of the act that such gratification was received for doing or forbearing to do any official act. Proof of acceptance of illegal gratification can follow only if there is proof of demand. As the same is lacking in the present case the primary facts on the basis of which the legal presumption under Section 20 can be drawn are wholly absent. Once the demand and acceptance is proved, presumption under Section 20 applies with full rigour. There is no evidence or explanation to make out a case on behalf of the defence that the accused has been falsely implicated in this case with an ulterior design on account of any past enmity. The presumption has not been rebutted - the prosecution has succeeded to prove its case beyond the shadow of all reasonable and probable doubt. Under the circumstance, there are no infirmity in the Judgment of conviction passed by the learned Court below under Section 7 and 13 (2) r/w 13 (1) (d) of the P.C. Act. Considering the nature of offence, protracted nature of litigation and the amount involved, a punishment of six months simple imprisonment under Section 7 of the PC Act and one year simple imprisonment under Section 13 (2) r/w 13 (1) (d) of the P.C. Act with a fine of Rs.1000 under both the sections shall meet the ends of justice. Both the substantive sentences to run concurrently. In default of payment of fine, the accused to undergo simple imprisonment of 15 days each. Appeal dismissed.
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2022 (11) TMI 555
Dishonor of Cheque - insufficiency of funds - existence of legally enforceable debt or not - Whether a single complaint in respect of a cheque issued on behalf of the first accused company and two other cheques relating to the personal bank account of the 2nd accused is maintainable? HELD THAT:- Section 143 of N.I.Act contemplates summary trial of the cases, and according to section 262 of Cr.P.C., the procedure prescribed for trial of summons cases is to be followed. Charge is not framed in the trial of summons cases or summary trials, only substance of accusation is stated to the accused. But, for the purpose of analysis, reference may be made to sections 219, 220(1) and 223(a) Cr.P.C. Section 219(1) provides for charging and trial of a person who is accused of committing more offences of the same kind within a space of twelve months, but a single trial for more than three offences is not permitted - If this analysis is applied to the factual situation in the instant case, the transaction in connection with which cheques were issued can be said to be the same. The transaction pertains to loan liability of the first accused-company. Therefore what is deducible is, second accused who stands in dual capacity can be tried together for the dishonour of the cheque of the company and two cheques of his personal bank account. A single demand notice was enough and a single complaint is maintainable. Existence of legally enforceable debt or not - HELD THAT:- There is no effective cross-examination of PW.1 on Ex.P.22. One suggestion found is that the complainant has misused Ex.P.22. That means accused No. 2 does not dispute execution of Ex.P.22 and according to him it was misused. Therefore if on 5.2.2009, Ex.P.22 came into existence nullifying the MoU and other agreements, Ex.D7,D.8 and D.9 can hardly have any effect. If this is the picture obtainable from documentary evidence, the findings of the Magistrate cannot be sustained. A clear conclusion can be drawn that the cheques were issued for discharging part of the liability of the company - It is admitted that the cheques were dishonoured for insufficiency of funds in the bank accounts. Demand notice was issued within the prescribed time. Demand was not fulfilled and thereby penal consequences under Section 138 of N.I. Act ensued. For these reasons, the findings of the Magistrate cannot be sustained. The acquittal judgment requires to be set aside. In regard to dishonour of cheque as per Ex.P.1, the first accused is to be convicted and in terms of section 141 of N.I.Act, accused No. 2 who is its Managing Director is to be sentenced. And in regard to cheques as per Ex.P.2 and Ex.P.3, accused is to be held guilty and sentenced for the offence under section 138 of N.I.Act - Appeal allowed.
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