TMI Tax Updates - e-Newsletter
November 29, 2021

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• GST:

  Confiscation - penalty - Had the show cause notice Form GST MOV-10 been properly prepared, the petitioner could have had adequate opportunity to represent his case and, subject to such proof as required by clause (v) of sub-section (1) of Section 130 of the Act, would not have been saddled with the liability under sub-sections (2) and (3) of Section 130 of the Act. Therefore, the show cause notice Form GST MOV-10 that was issued was defective which resulted in denial of opportunity to the petitioner, and as such, cannot be said to be a show cause notice in the eyes of law. - HC
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• GST:

  Supply or not - club membership services - The amendment to Section 7 (mentioned above) clearly treats the applicant and its member as two different persons where there is a supply of services from the applicant to its members and thus as per the applicant's own submission that two different persons have been envisaged in the law to tax a transaction as a supply made for a consideration, it is found that in the instant case there is a supply by the applicant to its members and consideration is received in the form of “fees”. - AAR
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• GST:

  Supply or not - Rotary Club - meeting expenses - The meetings conducted by the applicant which includes food, refreshment, etc. are nothing but activities carried out by the applicant for its members and therefore we hold that, contributions from the members, recovered for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments, amounts to or results in a supply, in the subject case - liable for GST - AAR
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• Income Tax:

  Sale of the chemical unit of the assessee company - itemised sale OR slump sale - addition under section 50B read with section 2(42C) and explanation 1 to section 2(19AA) - Tribunal in our view, rightly held that the sale cannot be regarded as a slump sale - HC
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• Income Tax:

  Assessment u/s 153A - it is clear that the Assessing Officer while passing the order under Section 153A read with Section 143[3] of the Act, ordinarily cannot disturb the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings establishes that the finalized assessments are contrary to the material unearthed during the course of 153A proceedings - HC
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• Income Tax:

  Assessment u/s 153A - replacement of Chapter XIV-B provisions and introduced Sections 153A, 153B and 153C in the Act by Finance Act, 2003 - The new Section 153A provides the procedure for completion of assessment where a search is initiated under Section 132 or books of account or other documents or any assets are requisitioned under Section 132A, after May 31st 2003. In such cases, the assessing officer shall issue notice to such person requiring him to furnish within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under Section 132 or requisition was made under Section 132A. Thus, it is clarified that the appeal, revision or rectification proceedings pending on the date of initiation of search under Section 132 shall not abate. - HC
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• Income Tax:

  Validity of search action initiated - receipt of search warrant - Once the Managing Director of the company says that the search was carried out in the premises of the company, therefore, it is not option for the assessee to take diametrically opposite stand stating that no search was carried out in the premises of the assessee company. - AT
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• Income Tax:

  Disallowance of car hire charges - personal expenditure or not - when the assessee is having a subsidiary companies in Chennai and some of the Directors are residing at Chennai and the assessee has hired a car for his Directors for the purpose of business, it cannot be said that it is a personal in nature therefore, the Ld. CIT(A) rightly deleted the addition made by the A.O. - AT
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• Income Tax:

  Condonation of delay in filing an appeal - delay of 10 years - it is clear that his state of mind is perfect and he is taking treatment for his ill-health therefore, he must also aware that there was an assessment order and appeal also to be filed. After careful reading of the remand report and also detailed order of the Ld. CIT(A), we find that the assessee was away from the family for 10 years is not believable. For the condonation of the delay, the assessee has to show that there must be a sufficient cause to condone the delay. - AT
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• Income Tax:

  Understatement of sales - search and seizer operation were carried wherein the certain loose papers were found and seized - When all the explanation, documents were before the AO, he must bring on record any contrary evidence, he must have made the inquiry from the purchasers when the data or details of the purchasers were before him, before making the addition on account of understatement of sales. The Assessing Officer has not brought on record any contrary evidence except these loose papers. - AO made the addition own guess work, assumption, presumption and suspicion - AT
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• IBC:

  Validity of Arbitral Award - Seeking stay of proceedings before the NCLT - judgment debtor failed to honour the aforesaid undertaking given before the Hon’ble Supreme Court - The judgment debtor is under the obligation to honour the arbitral Award in its true letter and spirit and cannot escape from paying the balance amount of interest due towards it. - HC
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• Service Tax:

  Levy of service tax - indivisible composite work contracts - From a reading of the show cause notice, no definite view can be taken at this stage, that the said notice is beyond the period of limitation in terms of the proviso to sub-section (1) of Section 73. These are matters for examination and adjudication by the primary authority. - matter restored back to original authority - HC
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• Service Tax:

  Jurisdiction to issue SCN - validity of appointment of officers of DGCEI as ‘Central Excise Officers’ having all India jurisdiction - Though the summons emanate from the office of the Deputy Director of Directorate General of Central Intelligence, the file is transferred to the competent authority. The show cause notice is issued by the proper officer. - The show cause notice is within the jurisdiction and not without, as contended. Therefore, the petitioner has to answer to the show cause notice and further proceedings to take place in accordance with law. - HC
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• Service Tax:

  CENVAT Credit - It is not coming forth from the records of the case as to whether the Department has appealed against such order and if so, the outcome of the same. While holding that the Department is not precluded from issuing SCN to the head office of the Respondents as res judicata would not apply to taxation matters, it is found that there is a dichotomy in the approach of the appellant department. The benefit of doubt should go the appellants. - AT
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• Central Excise:

  CENVAT Credit - manufacture of exempt product namely ‘sludge’ - A manufacturer would be happy when there is less waste or no waste at all since the burden of maintaining the effluent treatment plant and the transportation of the sludge etc. can be minimized. No manufacturer would consciously manufacture waste. For these reasons, it cannot be said that the waste / sludge is an ‘exempted goods’ manufactured by the appellant. - The demand cannot sustain - AT
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• VAT:

  Collection of differential tax - The First Bill was pending in the Legislative Assembly of the State when the Assembly was dissolved. As per Article 196(5) of the Constitution, a bill which is pending in the Legislative Assembly of a State, shall lapse on dissolution of the Assembly. The validation clause was included in Finance Act 16 of 2011 to overcome the legal imbroglio that arose on account of the dissolution of the Assembly on 14.05.2011 and the subsequent presentation of the Second Bill on 19.07.2011. The validation clause brings in a continuity and overcomes the vacuum created by the dissolution of the Assembly. - The State was bound and entitled to recover the differential tax from the dealers - HC
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Articles

• FILING APPEAL WHILE AMNESTY APPLICATION IS PENDING FOR CONSIDERATION – JUSTIFIABLE?

Notifications

• GST - States

• 65/GST-2 - dated 22-11-2021 - Haryana SGST
  Notification to amend notification no. 35/ST-2, dated 30.06.2017 under the HGST Act, 2017

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• 59/GST-2 - dated 26-10-2021 - Haryana SGST
  Haryana Goods and Services Tax (Ninth Amendment) Rules, 2021

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• 55 /GST-2 - dated 14-10-2021 - Haryana SGST
  Haryana Goods and Services Tax (Eight Amendment) Rules, 2021

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• S.O. No 50 - dated 23-11-2021 - Jharkhand SGST
  Amendment in Notification S.O. No. 34 dated- 13th April, 2018 regarding constitution of the Jharkhand Authority of Advance Ruling

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• F A 3-33-2017-1-V-(83) - dated 23-11-2021 - Madhya Pradesh SGST
  Amendment in Notification No. F-A3-33-2017-1-V(42), dated the 29th June, 2017

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• F A 3-10-2020-1-V-(82) - dated 23-11-2021 - Madhya Pradesh SGST
  Amendment in Notification No. F-A-3-10-2020-1-V (19), dated the 26th March, 2021

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• ERTS (T) 18/2018/105 - dated 10-11-2021 - Meghalaya SGST
  Government of Meghalaya appoints the Joint Commissioner of State Tax as the Appellate Authority

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• ERTS(T)18/2018/105 - dated 7-10-2021 - Meghalaya SGST
  Meghalaya Goods and Services Tax (Thirteenth Amendment) Rules, 2018

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• G.O. Ms. No. 116 - dated 27-9-2021 - Tamil Nadu SGST
  Tamil Nadu Goods and Services Tax (Seventh Amendment) Rules, 2021

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• G.O. Ms No. 117 - dated 27-9-2021 - Tamil Nadu SGST
  Amendment in Notification No. II(2)/CTR/132(e)/2021 dated 25th February, 2021

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Circulars / Instructions / Orders

• GST - States - Trade Circular No. 32 T of 2021 - dated 26-11-2021
  Clarification on certain refund related issues
• GST - States - Trade Circular No. 31 T of 2021 - dated 26-11-2021
  Clarification in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of notification 14/2020-State Tax dated 30th March, 2020

News

• Income Tax Department conducts search operations on two major real estate developers of Ludhiana

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• DRI intercepts 2 passengers with illicit foreign currency worth ₹ 3.7 crore at Mumbai International airport

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• Sovereign Gold Bond Scheme 2021-22 (Series VIII) – Issue Price

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Case Laws:

• GST

• 2021 (11) TMI 935
  Rejection of the petitioners claims for budgetary support under a Scheme of Budgetary Support under Goods and Service Tax regime - rejection on the ground that the claims were made for the period prior to the registration which is impermissible - HELD THAT:- Notification dated 05.10.2017 is a Scheme of Budgetary Support under Goods and Service Tax regime to the units located in the States of Jammu and Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim. In pursuance of the decision of the Government of India to provide budgetary support to the existing eligible manufacturing units operating in the states under different industrial promotion schemes of the Government of India, for a residual period for which each of the units is eligible, a scheme was introduced as a measure of good will. It was stated that the Department of Industrial Policy and Promotion (DIPP), the administrative department, had issued Notification dated 05.10.2017 which had come into operation with effect from 01.07.2017 and shall remain in operation for the residual period. Budgetary support under the scheme shall be worked out on quarterly basis and claims for the same shall also be filed on a quarterly basis. It was also specified that the eligible units was required to obtain one time registration and file an application for payment of budgetary support which shall be processed by the Deputy/Assistant Commissioner of the Central Taxes for sanction of the admissible amount. The sanction amount shall be credited into bank accounts of the beneficiaries through PFMS platform of the Central Government. Paragraph 6 thereof, which is pressed by the petitioner, states that the claim for the quarter ending September, 2017 has already become due. In order to mitigate the difficulties of the eligible units, it has been decided that units would be registered on the basis of application filed by them manually and application of claim for budgetary support for the said quarter would also be filed and processed manually. From the circular dated 27.11.2017 it is clear that although the claim for the quarter ending September, 2017 had already become due In order to mitigate the difficulties of the eligible units it was decided that those eligible units would be registered on the basis of application filed by them manually and application for claim for budgetary support for the said quarter (i.e., quarter ending September, 2017) would also be filed and processed manually. Reading the Standard Operating Procedure even for the first quarter ending September, 2017 it is clear that registration under the GST is a necessary prerequisite for the scheme and the UID would be issued only after registration - an argument is sought to be made that if such an application is presumed to have been made even then the petitioner failed to follow up the application. Quite evidently, the manual application 12.12.2017, although permitted under the circular dated 27.11.2017, was not processed for registration by the respondents. Quite evidently although the application for registration and issuance of UID made by the petitioner had been received by the respondent No. 3 on 12.12.2017, the authority neither registered the petitioner nor rejected the application compelling the petitioner to reapply for the same electronically pursuant to which registration and UID was granted on 31.10.2018. The fact that registration and UID was granted makes it evident that the petitioner was eligible for the budgetary support under the scheme. Quite clearly the Respondent No. 3 failed to process the application for registration as required. Since, the Respondent No. 3 failed to grant the registration to the petitioner, although it was an eligible unit, the petitioner could not have made their claims for budgetary support before being allotted the UID - As the respondents have rejected the claims of the petitioner on the technical ground, it is directed that the authorities shall process the four claims made by the petitioner for budgetary support and sanction reimbursements as found eligible within three months from the date of this judgment. Petition allowed.

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• 2021 (11) TMI 934
  Confiscation - penalty - neither the tax nor the penalty, as demanded, was deposited by the owner of the goods or the transporter - Section 107 of the U.P. Goods and Services Tax Act, 2017 - HELD THAT:- The facts and circumstances reflect that the show cause notice dated 23.12.2020 was misleading and incorrect. Where a show cause notice in Form GST MOV-10 is issued, which is a preclude to possibility of imposition of liability in the nature of civil consequences against a person, the same has to be specific, containing necessary and correct particulars that may enable the noticee to clearly understand the matter and appear or file his reply on the date and in the manner specified in the notice. Evidently, the show cause notice sent in the aforesaid Form GST MOV-10 dated 23.12.2020 does not comply with the aforesaid requirement as the date for appearance is stated as 28.11.2020. The quandary and dilemma that can visit a person served with such a show cause notice can only be imagined. Had the show cause notice Form GST MOV-10 been properly prepared, the petitioner could have had adequate opportunity to represent his case and, subject to such proof as required by clause (v) of sub-section (1) of Section 130 of the Act, would not have been saddled with the liability under sub-sections (2) and (3) of Section 130 of the Act. Therefore, the show cause notice Form GST MOV-10 that was issued was defective which resulted in denial of opportunity to the petitioner, and as such, cannot be said to be a show cause notice in the eyes of law. Thus, not only have the principles of natural justice not been complied with by the respondents, the petitioner has also been prejudiced by such non-compliance. There is no material on record to demonstrate that an opportunity of hearing was duly granted to the petitioner as is the mandate of sub-section (4) of Section 130 of the Act. The order passed by the Additional Commissioner Grade II (Appeal)-I, State Tax, Agra as well as the order dated 29.11.2020 Form GST MOV-11 passed by the Assistant Commissioner (Mobile Squad) Unit-2, Commercial Tax, Agra cannot be sustained and are hereby quashed - Petition allowed.

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• 2021 (11) TMI 933
  Supply or not - activity of the applicant i.e. collecting contributions and spending towards meeting and administrative expenditures only - contributions from the members in the Administration Account, recovered for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments - doctrine of mutuality - HELD THAT:- In view of the amended Section 7 of the CGST Act, 2017, it is found that the applicant society and its members are distinct persons and the fees received by the applicant, from its members are nothing but consideration received for supply of goods/services as a separate entity. The principles of mutuality, which has been cited by the applicant to support its contention that GST is not leviable on the fees collected from its members, is not applicable in view of the amended Section 7 of the CGST Act, 2017 and therefore, the applicant has to pay GST on the said amounts received from its members. The entire dispute raised by the applicant in respect of fees received from its members is settled by the above mentioned amendment made to Section 7 of the CGST Act, 2017 and therefore, fees received by the applicant from its members for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments, amounts to 'supply' as defined under the GST Act. In the instant case, the monthly contribution made by the members to the association is in return for receiving the services of the Applicant Club. The money collected by the Appellant from its members is used to procure services and goods from a third party and provide the benefits of such procured goods and services to the members of the association. Under GST, the term 'person' has been defined in Section 2(84) of the CGST Act, 2017, to include an 'individual' as well as an association of persons or a body of individuals, whether incorporated or not. Therefore, the individual members who are members of the Applicant Club are beneficiaries and the contribution made by them is to be considered as consideration for the services received. It is clear that the member and the club are two distinct persons and hence, any activities and transactions between them will be supply between separate/distinct persons. After the retrospective amendment as mentioned above, there remains no doubt that the activities involved in present case are nothing but 'supply', as defined under the Act. The amendment to Section 7 (mentioned above) clearly treats the applicant and its member as two different persons where there is a supply of services from the applicant to its members and thus as per the applicant's own submission that two different persons have been envisaged in the law to tax a transaction as a supply made for a consideration, it is found that in the instant case there is a supply by the applicant to its members and consideration is received in the form of fees .

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• 2021 (11) TMI 932
  Supply or not - amount collected as membership subscription and admission fees from members by the applicant club to meet out the expenses for the object for which it is incorporated - meeting expenses - communication expenses - Audit fees - Rotary International (RI) per capita dues - subscription fees to the Rotarian or Rotary regional magazine and the like - furtherance of business in this activity or not - supply of services to its Members under GST - principles of mutuality - HELD THAT:- In view of the amended Section 7 of the CGST Act, 2017, it is found that the applicant society and its members are distinct persons and the fees received by the applicant, from its members are nothing but consideration received for supply of goods/services as a separate entity. The principles of mutuality, which has been cited by the applicant to support its contention that it is not rendering any supply to its members and GST is not leviable on the fees collected from its members, is not applicable in view of the amended Section 7 of the CGST Act, 2017 and therefore, the applicant has to pay GST on the said amounts received from its members. The meetings conducted by the applicant which includes food, refreshment, etc. are nothing but activities carried out by the applicant for its members and therefore we hold that, contributions from the members, recovered for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments, amounts to or results in a supply, in the subject case - The impugned activities performed by the Applicant for the welfare activities of its members which includes meetings with food and refreshment, etc., is a service rendered by the Applicant to its members as per the definition of the term services . In the instant case, the monthly contribution made by the members to the association is in return for receiving the services of the Applicant Club. The money collected by the Appellant from its members is used to procure services and goods from a third party and provide the benefits of such procured goods and services to the members of the association. Under GST, the term person has been defined in Section 2(84) of the CGST Act, 2017, to include an Individual as well as an association of persons or a body of individuals, whether incorporated or not. Therefore, the individual members who are members of the Applicant Club are beneficiaries and the contributions made by them is to be considered as consideration for the services received. The applicant club and its members are distinct persons and the amounts/consideration received by the applicant from its members are nothing but consideration received for supply of goods/services as a separate entity. The principles of mutuality, which has been cited by the applicant to support its contention that GST is not leviable in its case, is not applicable in view of the amended Section 7 of the CGST Act, 2017 and therefore, the applicant has to pay GST on the said amounts received against membership subscription and admission fees from members.

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• Income Tax

• 2021 (11) TMI 931
  Capital gain - land in dispute to M/s ESS ESS Metals and Electricals on lease for 99 years in the year 1975, and subsequent to the death of Jeewan Lal Virmani, his children selling the same to the assessee under three sale deeds on different dates - sale consideration for transfer of respective shares in the property - Whether parties were closely related and there was no proper basis for settlement of sale consideration between them and it was done with a view to evade payment of tax? - HELD THAT:- CIT(A) and the ITAT have given concurrent findings on the above. It is also not denied that M/s ESS ESS Metals and Electricals held a lease for 99 years with respect to the land and the vendee has paid consideration of ₹ 17 Crores for cancellation of the said lease. In the present case, the vendor did not have an unencumbered right over the land and M/s ESS ESS Metals and Electricals admittedly had a perpetual leasehold right over the land, which right was also extinguished under the Sale Deed. The bifurcation of the sale consideration was not challenged by the Assessing Officer. In fact, the Assessing Officer took ₹ 18 crores received by the respondent as the Sale Consideration. This was clearly erroneous as the Sale Consideration was ₹ 35 crores, however, was bifurcated between two right-holders over the land. The transaction being collusive was not the case of the Assessing Officer. Keeping in view the concurrent findings of fact by the CIT(A) and the Tribunal, this Court is of the view that the said findings should not be lightly interfered with. In fact, the Supreme Court in the case of Ram Kumar Aggarwal Anr. vs. Thawar Das (through LRs), [ 1999 (8) TMI 1008 - SUPREME COURT] has reiterated that under Section 100 of the Code of Civil Procedure, 1908, the jurisdiction of the High Court to interfere with the orders of the Courts below is confined to hearing on substantial question of law and interference with finding of the fact is not warranted if it involves re-appreciation of evidence. Supreme Court in State of Haryana Ors. vs. Khalsa Motor Limited Ors.,. [ 1990 (8) TMI 416 - SUPREME COURT] has held that the High Court was not justified in law in reversing, in second appeal, the concurrent finding of the fact recorded by both the Courts below. The Supreme Court in Hero Vinoth (Minor) vs. Seshamma [ 2006 (5) TMI 478 - SUPREME COURT] has also held that in a case where from a given set of circumstances two inferences of fact are possible, the one drawn by the lower appellate court will not be interfered by the High Court in second appeal. Adopting any other approach is not permissible. It has also held that there is a difference between question of law and a substantial question of law .

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• 2021 (11) TMI 930
  Sale of the chemical unit of the assessee company - itemised sale OR slump sale - addition under section 50B read with section 2(42C) and explanation 1 to section 2(19AA) - HELD THAT:- Tribunal found from the memorandum as well as the addendum that the individual assets were determined and fixed at a pre-determined and agreed value and such price has been received by the assessee by different account payee cheques during the previous year relevant to the assessment year 2009-10 - on perusal of the balance-sheet, the Tribunal found that on the date of transfer apart from the assets which were sold and transferred, the said chemical unit had several other assets which were never sold nor transferred to the purchaser - Tribunal took note of the crucial fact that none of the liabilities were transferred to the purchaser and the same continued to be a liability of the assessee and to be discharged and were discharged by the assessee. Tribunal in our view, rightly held that the sale cannot be regarded as a slump sale. The Tribunal took note of the decision of this Court in the case of Kwality Ice Cream (India) Ltd. [ 2011 (1) TMI 905 - CALCUTTA HIGH COURT] in which it was held that though the sale of the undertaking was for a lump sum consideration, Section 50 of the Act in respect of depreciable assets will override all other provisions and for depreciable assets, the value has to be determined in accordance with the principles of block of assets, read with Section 43(6) of the Act. There are other decisions which were also noticed and referred to by the Tribunal. Thus, we find that the Tribunal has not committed any error of fact calling for an interference by this Court. - Decided against revenue.

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• 2021 (11) TMI 929
  Recovery proceedings - Stay of demand - Properties including the stock-in-trade have been attached - petitioner submits that as his properties including the stock-in-trade have been attached, his business activities have been completely jeopardized, for which reason he is unable to generate any revenue for payment of the tax dues - HELD THAT:- In the light of the contentions made and taking an over all view of the matter, we feel that it would meet the ends of justice, if the attachment of the stock-in-trade of the petitioner is withdrawn to enable him to meet the tax dues in terms of the first proviso to Section 254 (2A) of the Act. In view of the statement made by the revenue itself that not much money could be appropriated through attachment of bank accounts, attachment of the bank accounts may be withdrawn. Order:- Tribunal is directed to expeditiously hear the three appeals of the Revenue and corresponding Cross Objections of the petitioner, preferably within a period of six months from today.Petitioner shall deposit 20% of the tax dues following the order passed by the first appellate authority on 31.03.2018.On such deposit, attachment of the petitioner s bank accounts as well as the stock-in-trade shall stand withdrawn forthwith

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• 2021 (11) TMI 928
  Assessment u/s 153A - replacement of Chapter XIV-B provisions and introduced Sections 153A, 153B and 153C in the Act by Finance Act, 2003 - Whether search u/s 132 of the Act is sine qua non for initiation of proceedings under Section 153A of the Act but it is not dependent on any undisclosed income being unearthed during search? - HELD THAT:- Section 153C provides that where an Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account documents seized or requisitioned belong or belongs to a person other than the person referred to in Section 153A, then the books of account, or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of Section 153A. Assessing Officer while passing the order under Section 153A read with Section 143[3] of the Act, ordinarily cannot disturb the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings establishes that the finalized assessments are contrary to the material unearthed during the course of 153A proceedings, as held by the Co-ordinate Bench of this Court in the case of IBC Knowledge Park (P) Ltd., supra. A concluded assessment could not be disturbed without there being any basis for doing so which is impermissible in law. Even in case of a searched person, the same reason would hold good. As observed in Canara Housing Development Company supra, the Assessing Officer is empowered to assess or reassess the total income of six assessment years i.e., the income which was returned in the earlier return, the income which was unearthed during search and also any income which was not disclosed in the earlier return or which was not unearthed during the search by separate assessment orders but in our considered view the completed assessments should be subject to the safeguards provided in IBC Knowledge Park (P) Ltd. [ 2016 (5) TMI 372 - KARNATAKA HIGH COURT] As regards the pending assessments are concerned only one assessment shall be made separately for each assessment year on the basis of the income unearthed during search and any other material existing or brought on the record of the Assessing Officer. Even in the absence of any incriminating material abated assessment or reassessment could be done. The returns filed under Section 139 of the Act gets replaced by the returns filed under Section 153A[1] of the Act. Pending proceedings in appeal, revision/application shall not abate subsequent to initiation of Section 153A proceedings. Further, recording of satisfaction under Section 153A may not be necessary unlike Section 153C of the Act which mandates recording of satisfaction.- Decided in favour of assessee.

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• 2021 (11) TMI 927
  Delayed Employees contribution to the employees provident fund and the employees state insurance fund - Delay deposit (by the assessee-employer) as beyond the due dates - returned income having been made by the AO u/ss. 143(1) and 154 - HELD THAT:- Sec. 43B(b) does not include the employee contribution, and even regarding so is to no avail, rendering the Explanations under reference, even as suggested by their express language, explanatory. An examination of the Notes on Clauses to, and the Memorandum explaining the Provisions of, Finance Bill, 2021, however, resolves the matter beyond the pale of any doubt. While confirming the Explanations under reference to be explanatory of the law, even as signified by the clear, unambiguous language employed therein, are yet stated to be prospective inasmuch as they are applicable assessment year 2021-22 onwards. Lastly, no decision by Hon'ble jurisdictional High Court in the matter has been either cited before me, or found, which, where so, would, irrespective of the view expressed therein, hold for the relevant years, being prior to the year of applicability of the Explanations under reference. No adjustment, in view of the conflicting judicial opinion could, accordingly, be made to the returned income u/s. 143(1)/154, which sections admit only issues on which there could be conceivably no two views, rampant, irrespective of merits thereof, in the instant case, which aspect, as explained therein, has been given cognizance to in making the provision applicable not retrospectively. The assessee, accordingly, succeeds in his challenge to the impugned adjustments, which are held as bad in law and directed for deletion. This is of course subject to any different view taken by the Hon ble jurisdictional High Court for any year prior to AY 2021-22. Assessee appeal allowed.

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• 2021 (11) TMI 926
  Contribution of employees share towards ESI, PF, Superannuation Fund or any other fund set up for the welfare of the employee u/s 36(1)(va) read with Section 2(24)(x) when the payments were made within the due dates of filing of return u/s 139 - whether the amendment brought in by Finance Act, 2021, is retrospective or prospective in operation? - HELD THAT:- When we adjudicate whether the view of Ld CIT(A) that the explanation 2 brought in by Finance Act, 2021 is retrospective, let us look at the Notes on Clauses and the relevant clauses 8 9 of the Finance Bill, 2021 (supra) pertaining to the issue in hand which in clear and unambiguous terms spells out the intention of Parliament that the amendment shall take effect from 1st April, 2021 and therefore will accordingly apply to Assessment Year 2021-22 and subsequent years. So since the legislative intent is clear, the amendment brought in by Finance Act, 2021 on this issue as discussed is prospective and Ld. CIT(A) erred in holding otherwise. So till AY 2021-22, the Jurisdictional High Court s view in favor of assessee will hold good and is binding on us. As relying on the ratio of the Hon ble Supreme Court in the case of Vatika Township Pvt. Ltd. [ 2014 (9) TMI 576 - SUPREME COURT] and M/s Snowtex Investment Ltd. [ 2019 (5) TMI 1165 - SUPREME COURT] and also taking note of the binding decision of the Hon ble Jurisdictional Calcutta High Court on this issue before us in Shri Vijayshree Ltd. Ltd.[ 2011 (9) TMI 30 - CALCUTTA HIGH COURT ] M/s Coal India Ltd [ 2015 (8) TMI 1451 - CALCUTTA HIGH COURT] , M/s Akzo Nobel India Ltd. [ 2016 (6) TMI 1128 - CALCUTTA HIGH COURT] , we set aside the impugned order of Ld CIT(A) and direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139(1) of the Act. Therefore the appeal of assessee succeeds and so, it is allowed in favor of assessee. Disallowance u/s 14A - HELD THAT:- Since there is no dispute that assessee did not earn any exempt income, we are of the view that no disallowance u/s 14A of the Act was warranted. For taking such a view, we rely on the decision of the Hon ble Delhi High Court in Chem Investments [ 2015 (9) TMI 238 - DELHI HIGH COURT] - Therefore we direct the deletion of the addition /disallowance made by the AO in this regard. Disallowing expenditure incurred on educational sponsorship of assessee company s Director s son - HELD THAT:- Since in the present case there is a nexus with expenses incurred for the higher education of Shri Jay Goel with the business of the assessee company and the recipient of sponsorship has later joined the services of assessee company and is discharging the duties as CEO of the assessee company, the expenditure incurred should be allowed since it has nexus with the business of the assessee. This ground of the assessee stands allowed. Accrual of income - retention money retained by the debtors during the relevant previous year - taken into account while computing the profits and gains of the assessee s business for the assessment year under consideration - HELD THAT:- Since we note that the retention money kept with the Electricity Board which would be released latter only once the assessee fulfills all the obligations under the contract then only the assessee would acquire the right to receive such retention money so this is contingent in nature, so the amount in question cannot be held to have been accured to the assessee and since on facts the assessee has not received the same, even by applying the concept of real income theory, the money retained by the Electricity Board cannot be brought to tax. Thus, we note that in this year under consideration, since no enforceable liability has accrued or arisen, so, it cannot be said that the assessee had any vested right to receive the retention money in question. Assessee had no right to claim any part of the retention money till the verification of the satisfactory execution of the contract is over. Therefore, in this assessment year the retention money retained by the electricity Board cannot be treated as income of the assessee and even though the assessee due to mistake of fact has offered the same as income this year in its Return of Income, deduction of the same should be given and since the decision of the Hon ble Supreme Court in M/s Goetz India Goetz India [ 2006 (3) TMI 75 - SUPREME COURT] does not come in the way of the Tribunal as held by the Hon ble Supreme Court as noted (supra), so we set aside the impugned order of Ld CIT(A) and direct the AO to give relief to the assessee on this issue. However, it is clarified that when the assessee receives or when this amount accrues to the assessee, then it should be taxed in that assessment year and not in this assessment year - Decided in favour of assessee.

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• 2021 (11) TMI 925
  Disallowance u/s 40(a)(ia) - Non deduction of TDS on the guarantee commission paid to Government of Karnataka - HELD THAT:-Guarantee commission is not paid directly to the State Government and they are not levies imposed exclusively on the Assessee. The State Government issues Guarantees on behalf of the Government Departments, Public Sector Undertakings, Local Authorities, statutory Boards and Corporations and Co-operative Institutions. Consequently and hold that the disallowance made u/s.40(a)(iib) of the Act cannot be sustained. Disallowance of guarantee commission under section 40(a)(iib) of the Act is not sustainable and the addition made in this regard is directed to be deleted. - Decided in favour of assessee.

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• 2021 (11) TMI 924
  Revision u/s 263 by CIT - Low income in comparison to very high investments, Large increase in investment in unlisted equities during the year and income in comparison to high loans/ advances/investment in shares - HELD THAT:- The error should be one that is not debatable or a plausible view. Section 263 of the Act invests a power of revision in a superior officer and therefore, by the very nature of the power, does not allow for supplanting or substituting the view of the AO. The appreciation of material placed before the AO is, exclusively within his domain which cannot be interdicted by a superior officer while exercising powers u/s 263 only on the ground that if he had appraised the said material, he would have come to a different conclusion. [See Parashuram Pottery Works Co. Ltd. [ 1976 (11) TMI 1 - SUPREME COURT] . Since in the instant case the A.O. had indeed made enquiries as per the reasons for which the case was selected for limited scrutiny and the case was not converted to full scrutiny, therefore, respectfully following the decision in the case of PCIT vs., M/s. Brahma Centre Development Pvt. Ltd. [ 2021 (7) TMI 347 - DELHI HIGH COURT] we hold that the Ld. PCIT was not justified in assuming the jurisdiction under section 263 of the I.T. Act, 1961. We, therefore, set aside the Order of the Ld. PCIT and allow the grounds raised by the assessee on this issue. So far as various decisions relied on by the Ld. D.R. are concerned, we are of the considered opinion that these are distinguishable and not applicable to the facts of the present case especially when the case of the assessee which was selected for limited scrutiny was never converted to full scrutiny and the assessee had submitted all the details as called for by the A.O. from time to time for the reasons for which the case was selected for limited scrutiny. The grounds raised by the assessee are accordingly allowed.

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• 2021 (11) TMI 923
  Prior pried Expense adjustment - HELD THAT:- As observed from the orders of authorities below that the assessee did not filed any details before the AO, while the assessee has filed additional evidences before ld. CIT(A) for the first time to support its stand. It is observed that ld. CIT(A) did not call for remand report/comments from AO on these additional evidences which is in breach of Rule 46A of the 1962 Rules. Further, the ld. CIT(A) has passed a non speaking cryptic order without offering reasons/comments for not allowing the claim of the assessee on each and every item of expenses claimed by assessee as 'Prior Period Expenses'. In our considered view based on facts and circumstances of the case, that the matter needs to be set aside and restored to the file of Assessing Officer for de-novo adjudication of the entire issue on merits in accordance with law. The assessee is directed to produce all relevant evidences/details/explanation before the Assessing Officer in set aside de-novo proceedings - ground of appeal is allowed for statistical purposes. Addition of difference in the Opening Stock in Current Year with that of Closing Stock of the immediately preceding year - AO observed from the record that there is a difference in Opening Stock in Current Year with that of the Closing Stock of the immediately preceding year - CIT(A) rejected the contentions of the assessee by upholding the additions to income made in the assessment order passed by Assessing Officer - HELD THAT:- As observed that there is no difference between the closing stock of the preceding year with the opening stock of the current year, which was ₹ 150.12 lacs - DR has also fairly and correctly submitted that there is no difference in closing stock of preceding year with the opening stock of current year and the issue is to be decided in favour of the assessee. We have observed that as on 31.03.2011, the closing stock was ₹ 150.12 lacs and the opening stock as on 01.04.2011 was also ₹ 150.12 lacs. There is no difference at all between the closing stock in the preceding year and the opening stock in the current year, rather the AO adopted wrong figures of closing stock of current year with that of the increase/decrease in the stock of finished goods. CIT(A) passed cryptic order and did not elaborate on facts correctly. Thus, the authorities below erred in making addition. Thus, based on facts and circumstances of the case, the addition as made by authorities below is not sustainable in the eyes of law and is hereby ordered to be deleted. Allowability of set off of brought forward business losses and unabsorbed depreciation - HELD THAT:- All the earlier year brought forwards business losses which assessee is seeking to set off and carry forward, should be assessed business losses and the return of income for those years ought to have been filed by the assessee within the time stipulated u/s. 139(1) and ought not to be belated return of income filed beyond the due date prescribed u/s. 139(1), otherwise it will be hit by provision of Section 80 and 139(3) So far as quantum of brought forward business losses and unabsorbed depreciation which were assessed to be carried forward to subsequent years and its period of allowability is concerned, we are of the considered view that these facts requires verification by Assessing Officer from the record, and the material on record available before us is not sufficient to give conclusive finding on these facts, and hence we are setting aside this matter to the file of AO for verification of facts and quantum of allowability of brought forward business losses and unabsorbed depreciation, and while allowing the carry forward of business losses, the AO shall also verify that the return of income was filed by assessee in time within due date prescribed u/s. 139(1) for those years and the loss assessed by Revenue to be carried forward for each of the years and period of allowability of business loss for eight assessment years as is available u/s. 72(3) of the 1961 Act. The assessee has also grievance that unabsorbed deprecation amount is wrongly mentioned in grounds of appeal filed with tribunal, this aspect shall also be verified by the AO from records and correct amount be accordingly considered after due verification of records. Depreciation @ 30% of total depreciation claimed on account of unverifiable fixed assets of closed unit at Allahabad and failure to establish usage of these assets for business purposes as is required u/s. 32 - HELD THAT:- The contentions of the assessee that Building and Motor vehicles at Allahabad Manufacturing unit were used for business purposes, building for the purposes of Registered office and Motor Vehicle for the purposes of official usage by Directors, the facts on record are not sufficient to come to conclusive finding that these assets were actually used by assessee and further that these assets were wholly and exclusively for the business of the assessee company to satisfy the mandate of Section 32 and 38(2) of the 1961 Act. Further, contention of the assessee that it only claimed depreciation on Building and Motor Vehicle of Allahabad unit and no depreciation was claimed with respect to 'Plant and Machinery' installed at Allahabad Manufacturing unit, again the facts on record are not sufficient to give conclusive finding on this issue, in the absence of details/break-up furnished by the assessee. The assessee is also aggrieved that figure adopted by AO for disallowance of depreciation is not correct. Keeping in view totality of facts and circumstances of the case, we are of the considered view that the assessee will not be entitled for claiming depreciation on the closed Manufacturing unit at Allahabad, but, however, for verification and adjudication of other claims of the assessee as detailed by us in this order, such as user of building and Motor Vehicles of Allahabad Manufacturing unit for business purposes, that no depreciation was claimed in return of income filed with Revenue with respect to 'Plant and Machinery' installed at Allahabad Manufacturing unit, adoption of the correct amount of disallowance of depreciation, the matter need to be remitted back to the file of AO for fresh adjudication on merits in accordance with law. Disallowance of Rebate Expenses claimed by the assessee as deduction while computing income chargeable to tax under the head 'Profits and Gains from Business or Profession' - authorities below held that no income-tax was deducted at source by assessee u/s. 194H and the same is not allowable as deduction while computing income chargeable to tax - HELD THAT:- The assessee has merely submitted credit notes, and no further details as to contract/agreement with parties, claim(s) raised by parties and evidences to substantiate the claims are bonafide and genuine etc., are furnished by assessee - material on record, is not sufficient to give conclusive finding that these rebate allowed were actually towards breakage or rate difference, and not commission. This requires verifications and evaluation of evidences to come to conclusive finding, firstly that these are business expenses which are incurred wholly and exclusively for business of the assessee and are genuine claims. Further, if the said expenses are within ambit of deduction of income-tax at source, then due income tax was deducted at source and paid to the credit of Central Government within the stipulated time, as is required for claiming deduction under the provisions of Section 40(a)(ia) of the 1961 Act. Thus, keeping in view, totality of facts and circumstances of the case, the matter need to be remitted back to the file of AO for fresh adjudication on merits in accordance with law. Needless to say that the AO shall provide proper and adequate opportunity of being heard to the assessee in set aside proceedings. The evidences/explanations submitted by assessee in its defense shall be admitted by AO, and adjudicated by AO on merits in accordance with law.

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• 2021 (11) TMI 922
  Revision u/s 263 by CIT - Addition on provision of section 41(1) - excess provision made for bad and doubtful debts on ICD was written back in respect of recovery of ICD - HELD THAT:- As during the impugned year assessee was engaged in the process of recovery of loans and interest which was granted earlier and no fresh lending was done in the impugned year. Thus, in the impugned year when the excess provision made for bad and doubtful debts on ICD was written back in respect of recovery of ICD from Som Distilleries Limited, the same was deducted from the net profit as per the audited financial statements in computing income under the head profit and gains from business or profession - no benefit claimed by the assessee in terms of section 41(1) of the Act in respect of the impugned amount. It is also evident that there is no tax advantage derived by the assessee in respect of the impugned amount. It is worth noting that provisions of section 41(1) are attracted only when any allowance or deduction has been claimed in respect of loss, expenditure or trading liability and the assessee has obtained in cash or in any other manner any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof. We find that Ld. Pr.CIT has grossly erred in applying the provisions of section 41(1) in the present case which in no situation is applicable in the facts of the present case. We find that during the course of the assessment proceeding, the Ld. AO specifically asked Vide questionnaire issued on 17.04.2017, to explain large any other deduction claimed in sch. BP creating a loss without any income in Profit Loss Account and explain mismatch between income/receipt credited to Profit Loss Account considered under other heads of income and income from heads of income other than business/profession, which was replied. AO conducted proper enquiry to verify the withdrawal of provision of ICD and allowed the claim on being satisfied with the details and explanation. Thus, the decision of ld. AO cannot be held to be erroneous. We find that the ld. AO has applied his mind while conducting the assessment proceedings. Under these circumstances, where a detailed enquiry has been conducted on particular issue and the Ld. AO has made proper application of mind on the details filed by the assessee and have conducted sufficient enquiry the assessment order cannot be held to be erroneous so far as prejudicial to the interest of revenue. We accordingly quash the impugned revisionary order framed u/s 263 of the Act and restore the assessment order u/s 143(3) - Decided against revenue.

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• 2021 (11) TMI 921
  Addition u/s 14A r.w.r. 8D - Mandation of recording satisfaction - whether or not the A.O had validly assumed jurisdiction and worked out the disallowance u/s 14A r.w Rule 8D? - claim of the assessee before us that the A.O without recording his dissatisfaction as regards the claim of the assessee that no expenditure was incurred for earning of the exempt dividend income had in a mechanical manner dislodged the same and worked out the disallowance u/s 14A r.w. Rule 8D - HELD THAT:- It is a matter of fact borne from the record that the A.O had merely on the basis of his general observations, viz. that investment decisions are very complex in nature and require substantial market research, day-to-day analysis of market trends and decisions with regard to acquisition, retention and sale of shares at the most appropriate time etc., had dislodged the claim of the assessee that no part of the expenses claimed by him in respect of his other non-exempt income could be attributed or related to earning of the exempt dividend income. The failure on the part of the A.O to strictly comply with the aforesaid statutory obligation that was cast upon him, can safely be gathered from the fact that there is no clear finding by him with reference to the assessee s accounts as to how the other expenditure claimed by the assessee in respect of its non-exempt income were related to its exempt income. A simpliciter rejection by the A.O of the aforesaid claim of the assessee which is only backed by his general observations, surmises and conjectures can by no means justify the validity of the jurisdiction assumed by him for computing the disallowance u/s 14A r.w. Rule 8D(2)(iii) in the hands of the assessee. We, thus, not finding favor with the view taken by the CIT(A) who had upheld the validity of the jurisdiction assumed by the A.O for computing the disallowance u/s 14A r.w Rule 8D(2)(iii) set-aside his order.Accordingly, the disallowance made by the A.O u/s 14A r.w Rule 8D is vacated - Decided in favour of assessee.

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• 2021 (11) TMI 920
  Validity of search action initiated - receipt of search warrant - HELD THAT:- Section 132(1) of the Act clearly stipulates issuance of search warrant against whom the search was conducted in accordance with law. In the present case, the search was conducted in the premises of the assessee company which is duly admitted by the Managing Director of the company at the time of recording of her statement. Further from the paper book, we also found that the Managing Director of the company during the appellate proceedings filed an affidavit and in the affidavit he had stated that she is the Managing Director of the Company and the diary was found belonging to the assessee company. the search warrant was clearly issued against the assessee company and, therefore, the action on the part of the revenue to initiate the search proceedings against the assessee company was in accordance with law. In our view, the ld. CIT(A) has rightly relied upon the decision of Hon ble Delhi High Court in the matter of MDLR Resorts Pvt. Ltd [ 2013 (12) TMI 1116 - DELHI HIGH COURT ] and therefore, we do not find any error in the order of CIT(A). Search warrant was required to be received by Smt.Radha S. Timblo in her individual capacity as well as in the capacity of Managing Director and only one signature appears on the search warrant - We are of the opinion that in the Companies Act and also in the Income Tax Act, the Managing Director of the company is an authorised officer to file the proceeding for and on behalf of the company and is also entitled to receive the document on behalf of the company. Admittedly, in her statement, Smt. Radha S. Timblo has categorically mentioned that she is making statement in her individual capacity and being the Managing Director of M/s Timblo Pvt. Ltd.. Once the Managing Director of the company says that the search was carried out in the premises of the company, therefore, it is not option for the assessee to take diametrically opposite stand stating that no search was carried out in the premises of the assessee company. With the above observations, we found that the legal ground raised by the assessee in all the appeals is not maintainable. Accordingly, we dismiss all the appeals of the assessee.

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• 2021 (11) TMI 919
  Reopening of assessment u/s 147 - addition u/s 68 - Validity of two separate assessment orders by two different A.Os. for the same assessee for the same assessment year - HELD THAT:- It is a peculiar case of reopening of the assessment on account of cash deposit in the bank account by two different Assessing Officers for the same assessee for the same assessment year Once the A.O. has already made an assessment in the order under section 147/143(3) in the case of the assessee for the same assessment year for the reason that assessee has made cash deposit of ₹ 15,02,250/- in his bank account, therefore, in my opinion it is not permissible by another A.O. to reopen the assessment on the very same issue and pass the order under section 147/144 of the I.T. Act, 1961. When the PAN was available with the Department and an order had already been passed under section 147/143(3) for the same assessment year for the same reason, therefore, the second order passed by the A.O. dated 07.12.2017 in my opinion does not stand in the eyes of Law unless and until the first order is withdrawn. In this view of the matter, I am of the considered opinion that the second order passed by the ITO, Ward-32(2) in the instant case does not survive since there cannot be two different assessment orders for the same assessee for the same assessment year with the same PAN by two different A.Os. The grounds raised by the assessee are accordingly allowed.

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• 2021 (11) TMI 918
  Correct head of income - income arising out of shares - business income or income from capital gains - HELD THAT:- In this case the assessee has purchased shares of Induslnd Bank on 18.12.2009 and sold the same on 23.03.2011. The holding period of the shares is more than 12 months and only single activity carried by the assessee. In the balance sheet also it has shown as an investment. In view of the above facts, we are of the opinion that the activity carried by the assessee cannot be treated as a business activity. As laid down in the CBDT circular No. 4/2007, the substantial nature of transactions and the manner of maintaining books of accounts plays an important role in determining the nature of transaction. Also, as depicted by the Circular No. 06/2016, in the present case, the appellant has treated the shares as investment and not as stock-in-trade and there are no fine grounds to say that the appellant is a dealer in shares and not an investor especially when the sale of shares was a single solitary transaction - Decided against revenue. Disallowance u/s. 14A - assessee has disallowed an amount suo-moto as expenses attributable to the earning of the exempt dividend income - HELD THAT:- We find that the Ld. CIT(A) only directed the A.O. to verify entire investments and exclude investments which has no exempt income yielded and direct the A.O. to re-compute disallowance of Rule 8D(2)(iii) of the Rules r/w s. 14A of the Act. Hence, we find no infirmity in the order passed by the Ld. CIT(A). Disallowance of Board meeting expenditure - assessee has conducted a Board meeting at Chennai on various dates and has incurred the above expenditure towards travelling, boarding, lodging, credit card expenditure AND that the assessee's registered office is situated in Delhi, there is no purpose of holding the Board meeting in Chennai - CIT-A deleted the addition - HELD THAT:- We find that when the assessee is having subsidiary and associated offices in Chennai and some of the Directors are staying at Chennai, it is a business convenience of the assessee to conduct the Board meeting. The A.O. cannot decide where the assessee has to conduct the Board meeting. In view of the above, we are of the opinion that the Ld. CIT(A) rightly deleted the addition. Disallowance of car hire charges - case of the A.O. is that the assessee has taken a Honda Civic car on rent which is registered in Chennai and the assessee is having no business connection in Chennai therefore, the above expenditure incurred by the assessee is not a business purpose it is only personal purpose - HELD THAT:- We find that when the assessee is having a subsidiary companies in Chennai and some of the Directors are residing at Chennai and the assessee has hired a car for his Directors for the purpose of business, it cannot be said that it is a personal in nature therefore, the Ld. CIT(A) rightly deleted the addition made by the A.O. By considering the above order passed by the Ld. CIT(A), we find no infirmity in the order passed by the Ld. CIT(A). Revenue appeal dismissed.

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• 2021 (11) TMI 917
  Condonation of delay in filing an appeal - delay of 10 years - sufficient cause to condone the delay explained or not? - HELD THAT:- Assessee knows that there are proceedings pending before the A.O. for which he has appeared already along with his C.A. and also other assessment years pending before the A.O - we are of the view that the assessee knowingly not to choose file an appeal in time before the Ld. CIT(A). Apart from that the assessee filed an affidavit before the ITAT, wherein he has stated in paragraph-I that he is away from family since 11.07.2001, which is factually not correct because the assessee has appeared before the A.O. on 19.03.2003, 18.10.2004, 26.02.2004 therefore, the plea of the assessee that he is away from the family cannot be accepted. As per the remand report submitted by the A.O. that the assessee suffering from sugar, joint pain since 20.01.2002 for that he is taking treatment from Dr. Muralidharan, BAMS and the assessee is visiting the hospital for the period from 20.01.2002 to 28.08.2010 as an outpatient. From the above, it is clear that his state of mind is perfect and he is taking treatment for his ill-health therefore, he must also aware that there was an assessment order and appeal also to be filed. After careful reading of the remand report and also detailed order of the Ld. CIT(A), we find that the assessee was away from the family for 10 years is not believable. For the condonation of the delay, the assessee has to show that there must be a sufficient cause to condone the delay. In this case, the assessee himself decided as per his affidavit not to go to his house knowingly that there must be an assessment order. No one is prevented the assessee to go to his house therefore, we are of the opinion that there is no sufficient cause to condone delay. Accordingly, the appeals filed by the assessee are dismissed.

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• 2021 (11) TMI 916
  Understatement of sales - search and seizer operation were carried wherein the certain loose papers were found and seized - second round of appeal before tribunal - CIT-A deleted the addition - HELD THAT:- AO made addition only by making the arbitrary calculation on the basis of above loose papers without bringing any positive, corroborative evidence on records in support he has proceeded on his own imagination, assumptions, presumptions or guess work - when the Assessing officer himself recorded the statements of Marketing manager Sh. Ankit Jain who was handling the sales was recorded on 21/10/2010 U/s 131 wherein he has clearly explained and stated about the size of flats are 1001 sq ft.(built up area) and 1126 sq ft. (built up area) only. He also explained about the size of flats mentioned in the broacher i.e. 1666 and 1484 sq ft. that this was nothing but super built up area of both type of flats constructed by the Company. Regarding charging of rates by the assessee Company from the customer in question No.5 he has clearly stated the facts that the rates per sq ft are charged on built up area only In all the agreements the built area as well as total sale consideration has been mentioned clearly. When all these explanation, documents were before the AO, he must bring on record any contrary evidence, he must have made the inquiry from the purchasers when the data or details of the purchasers were before him, before making the addition on account of understatement of sales. The Assessing Officer has not brought on record any contrary evidence except these loose papers. The Notarized sales agreements cannot be discarded in front of loose rough estimated papers without bringing any contrary evidences to rebut the same. On this preposition, we draw strength from the decision of the Hon ble MP High court in the case of CIT v/s Dolphin Builders (P) Ltd . [ 2013 (6) TMI 103 - MADHYA PRADESH HIGH COURT] wherein it was held that Department had not examined any purchaser or flat owner to verify correctness of noting that some higher amount was paid by said purchaser to B Builders or fact that actual price was much higher to price which was recorded in account books. The Tribunal had also found that if any amount was collected in excess to the agreed price then B could have been liable for that and not the assessee. Aforesaid reasoning of the Tribunal was reasonable. Though there might be some doubt about the price of the flats but until and unless it could have been proved by some evidence, aforesaid doubt could not take place of proof. Until and unless such noting was corroborated by some material evidence, the AO erred in making addition in the income. AO made the addition own guess work, assumption, presumption and suspicion by using rough estimated cutting noting which were prior to the A.Y. s under consideration which was not desirable in the eye of law. Hence also no were liable to be made. CIT-DR has not brought on record any new facts or circumstances to controvert the findings so recorded by the ld. CIT(A) qua this issue, therefore, considering all, we do not see any reason to interfere to deviate from the findings so recorded by the ld. CIT(A) qua this issue, accordingly, we uphold the same. - Decided against revenue.

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• 2021 (11) TMI 915
  Reopening of assessment u/s 147 - Non issuing mandatory notice u/s 143 (2) - validity of Notice by affixture - HELD THAT:- Serving officer could not state in his report the any name and address of the witnesses who have identified the house of the assessee and in whose presence the notice was affixed. Further, the affidavit in assessment records is missing thus in contravention of Rule 20 of Order V of CPC 1908. We find that in case of Jagannath Prasad [ 1976 (9) TMI 19 - ALLAHABAD HIGH COURT] there was only single attempt by the inspector and the reason enumerated was that door was locked. Thus the findings of above case are squarely applicable in assessee s case. In view of the above judicial pronouncements, we are of the view that the Notice by affixture needs to be done in accordance with procedure laid down in by Order V, rule 17-20 of CPC Thus the reassessment proceedings, so initiated, are bad in law as the Assessing Officer failed to serve the notice u/s 143(2) of the I.T. Act on the assessee. Accordingly, we quash the assessment order framed u/s 144 r.w.s. 147 of the IT Act for A.Y.2009-10 - Decided in favour of assessee.

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• 2021 (11) TMI 914
  Validity of assessment - limitation period to issue notice u/s 143(2) - whether the limitation period commences from the date of the actual filing of RoI or rectified RoI. - HELD THAT:- CIT(A) rejected the assessee s contention and observed that the proviso to section 143(2) allows the AO to issue the notice before the expiry of six months from the end of financial year in which the return is furnished. He interpreted the words end of financial year in which the return is furnished to mean that the limitation period given in the Act will extend from the date of actual filing the RoI. He interpreted the provision to mean the limitation period commences from the date of the actual filing of RoI or rectified RoI. The assessment procedure laid down in the Act are based on the respective financial year and assessment year. The responsibilities of assessee as well as AO are clearly specified in the Act so that the assessment can be completed for the respective AY s as per the time frame given in section 153(1). The words used in section 153(1) are any time after expiry of 21months from the end of the AY in which the income was first assessable . In case if we accept the proposition of Ld. CIT(A) then there will not be any finality to the assessments selected for scrutiny under CASS or any other method of selection. Itwill defeat themethod specified in the Act. It is irrelevant when the defect is cured by the assessee but what is relevant is the responsibility of the AO to follow the due procedure set out in the Act. It is his duty to issue the notice u/s 143(2) within the prescribed time limit. The Courts have held that once the AO misses the above time frame to issue the notice, the assessment will be bad in law. With regard to rectification of defect in the RoI filed u/s 139(1) and limitation period to issue notice u/s 143(2) as relying on KUNAL STRUCTURE (INDIA) (P.) LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-2 (1) (2) [ 2020 (2) TMI 725 - GUJARAT HIGH COURT] we are inclined to set aside the order passed by the Ld. CIT(A) and the order passed u/s 143(3) is defective and bad in law. Accordingly, grounds raised by the assessee is allowed.

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• Customs

• 2021 (11) TMI 913
  Seeking a direction to the respondent authorities to process and refund the claim of IGST of the petitioner - HELD THAT:- The Department had taken the necessary initiative to make the refund and the refund could not be effected as because the account provided by the petitioner were not acceptable by the system in the department, we provide that a representative of the petitioner would visit the office of the Customs Division, Dhubri and sort out the matter and the Customs Department may also explore any other alternative means for making the payment of the amount in consultation with the representative of the petitioner. Interest - HELD THAT:- We are unaware of the amount the Department intends to pay to the petitioner as because the amount sought to be refunded is not disclosed to the petitioner. If at all, any further grievance still remains on the interest aspect, the petitioner is at liberty to approach again. Petition disposed off.

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• 2021 (11) TMI 912
  Refund of SAD - payment SAD through duty credit scrip is a valid discharge of duty or not - HELD THAT:- It is an undisputed fact on record that the disputed goods imported by the appellants on payment of SAD were sold in the domestic market on discharge of appropriate VAT/Sales Tax amount levied by the respective State Governments. Further, the conditions itemized in the notification dated 14.07.2007 as amended, have been duly complied with by the appellants, as a result, the original authority had sanctioned the refund claim with regard to the SAD amount paid in cash. The base notification dated 17.09.2007 and the amending notification nowhere specified that cash refund should not be considered, in the eventuality, when the same was paid by using the duty credit scrips. Since the legislative intent is to extend the benefit of exemption upon fulfillment of certain conditions, denial of such benefit in absence of any express provisions in the statute defeats the very purpose of such legislation. The Hon ble Delhi High Court in the case of ALLEN DIESELS INDIA PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2016 (2) TMI 247 - DELHI HIGH COURT] , in an identical case, has held that upon fulfillment of the requirements contained in the notification, the benefit of refund should be available to the claimant. It has further been held that the circulars issued by CBEC, imposing additional restrictions for the availment of the benefit of the duty exemption cannot be acted upon inasmuch as an amendment to the notification can only be issued in exercise of the powers contained in Section 25(1) of the Customs Act, 1962 and not otherwise. There are no merits in the impugned order, insofar as it has rejected the appeal filed by the appellants in denying the refund benefit arising out of the notification dated 14.09.2007, as amended - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2021 (11) TMI 911
  Sanction of the Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 ( The Act ) read with the Companies (Compromises, Arrangements Amalgamations) Rules, 2016 - HELD THAT:- There appears to be no impediment in sanctioning the Scheme, which appears to be fair and reasonable and not contrary to public policy or violative of any provisions of law. All the statutory requirements of Sections 230-232 of the Act appear to have been complied with. Taking into consideration the facts, the Company Petition is allowed and the Scheme annexed with the Petition is hereby sanctioned, with the Appointed date fixed as April 1, 2019. The Petitioner Company-1/Transferor Company be dissolved without winding up. The scheme is approved - application allowed.

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• 2021 (11) TMI 909
  Oppression and mismanagement - breach and wilful disobedience - Sections 397, 398, 399, 402, 403, 406, 235, 237 and 247 read with Section 111 of the Companies Act, 1956 - HELD THAT:- There is no dispute that the earlier interest @15% was being paid till 30.09.1998 and the above observations only indicate that the payments were earlier made @ 15% but that the observations cannot read to mean that even from 01.04.1999 the Respondents agreed to make the payment @ 15%. The expression at agreed rate as contained in paragraph 33 of the judgment of this Tribunal dated 20.08.2019 is capable of interpretation as put by the Respondents. When general body Resolution dated 25.09.1998 have expressly decided to pay interest @ 10% from 01.04.1999 and the general body Resolution is not denied or challenged by the Applicants, their insistence that the unsecured loan was to be paid @ 15% annually even after 01.04.1999 cannot be accepted. It is well settled that it is not permissible to the Court to examine the correctness of the earlier decision which has become final between the parties. However, when an order was reasonably capable of more than one interpretation a proceeding for contempt would not be maintainable. No case has been made out to punish the Respondents for contempt. The Respondents having themselves initiated proceedings for execution of the judgment dated 20.08.2019 and have expressed their willingness to deposit the entire amount with interest @ 15% till 30.09.1998 and thereafter @ 10% per annum annually compounded till the date payment is made, the Respondents are permitted to deposit the amount as above before the Executing Court within one month from today. Contempt Application is disposed off.

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• Insolvency & Bankruptcy

• 2021 (11) TMI 910
  Validity of Arbitral Award - Seeking stay of proceedings before the NCLT - Section 36(1) of Arbitration and Conciliation Act, 1996 read with Order XXI Rule 11 CPC - HELD THAT:- It is noted that when judgment debtor approached Hon ble Supreme Court seeking stay of proceedings before the NCLT, it undertook to pay within twelve weeks the amount of ₹ 8.81 crores i.e. the amount claimed by the decree holder in its petition before the NCLT i.e. the awarded amount of ₹ 8,35,33,837/- + interest @ 12% from the date of Award till the date of filing of the petition i.e. 27.05.2019 as ₹ 38,17,382 + ₹ 8,00,000/- towards awarded cost of arbitration proceeding, to the decree holder. However, judgment debtor failed to honour the aforesaid undertaking given before the Hon ble Supreme Court, the decree holder filed the contempt petition, wherein the Hon ble Supreme Court vide order dated 07.02.2020 gave last opportunity to the judgment debtor to make the payment of ₹ 8.81 crores within two weeks in compliance of order dated 13.09.2021. The aforesaid direction of Hon ble Supreme Court relates to the root of the matter i.e. direction to the judgment debtor to pay the amount claimed by the decree holder before NCLT as on the said date i.e. 27.05.2019, as awarded by the Arbitral Tribunal. The spirit of the said direction is to honour the arbitral Award in its true essence. The arbitral Award is very clearly worded that the awarded amount of ₹ 8,35,33,837/- has to be paid together with future interest at the rate of 12 percent per annum from 08.01.2019 i.e. the date of the award till date of payment on the awarded amount in favour of decree holder . So, upon payment of ₹ 8,81,51,219/-crores to the decree holder, the judgment debtor cannot now claim that it has already honoured the arbitral award by complying the directions of Hon ble Supreme Court vide order dated 07.02.2020. The judgment debtor is under the obligation to honour the arbitral Award in its true letter and spirit and cannot escape from paying the balance amount of interest due towards it. The judgment debtor is directed to pay the balance amount of interest, which is due and payable to decree holder from 27.05.2019 with interest @12% p.a. till the date of realization - petition disposed off.

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• 2021 (11) TMI 908
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is seen from the records that the Corporate Debtor through its Reply dated 15.02.2020, has admitted its liability to pay to the Operational Creditor. Further the Corporate Debtor Company is in financial crunches hence there is nothing much to say in defense. The Corporate Debtor has no objection for Admission of this present Petition. On the basis of the evidences on record the Operational Creditor has established that he has delivered services to the Corporate Debtor Company for which an amount of ₹ 5,99,250/- is due and a default has also occurred. Considering these facts and circumstances, the nature of the Debt is an Operational Debt as defined under section 5 (21) of the Definitions under The Code. There is a Default as defined under section 3 (12) of The Code on the part of the Debtor. The Operational Creditor has successfully demonstrated and proved the debt and default in this case and has also proved that there is absolutely no reason for the Corporate Debtor to hold on to the payment of the invoices. The Operational Creditor has also suggested the name of proposed Interim Resolution Professional along with his consent letter in Form-2 - Petition admitted - moratorium declared.

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• 2021 (11) TMI 907
  Directions to complete verification of dues to be paid to the Applicants amongst others - HELD THAT:- Learned counsel for the Respondent submitted that the aforesaid documents have already been handed over to the Applicant and that there is no any document left with the Liquidator to handover to the Applicant. It is also stated that this application has been filed as a delaying tactics of the liquidation process. All the documents sought for and available with the Liquidator have been handed over to the Applicant, nothing remains to be considered in this application. Hence, this application is rejected. Application dismissed.

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• 2021 (11) TMI 906
  Liquidation of the Corporate Debtor - Section 33(3) and 33(4) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- All necessary directions requiring liquidation of Corporate Debtor has been passed duty - all necessary compliances have been made. The Corporate Debtor M/s. Palm Lagoon Backwater Resorts Private Limited is hereby put under liquidation with immediate effect under Section 33(1) of IBC, 2016 - application allowed.

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• 2021 (11) TMI 905
  Seeking extension of the term of Joint Managing Director and Managing Director of R-1 Company for a period of three years - HELD THAT:- The observations made by NCLT in para 10 (ii) that the performance of the Gujarat Division cannot be solely attributable to the Gujarat Group, as it was not receiving the required funds and had to go for high cost external borrowings read with the observations that the Board did not give adequate attention to the revival of the Gujarat Division and that nothing prevented the Board to formulate the revival plan to put things in Order , may prejudice the rights of the Appellants in the main Company Petition. The NCLT has observed that the Board is empowered to take all decisions, the factual matrix of the matter together with the chequered history and also that significant time has lapsed as the main Company Petition No. 428 of 2018 was filed way back on 19.03.2018 alleging Oppression and Mismanagement of the affairs of R-1 Company and further that the main Company Petition is listed for hearing before NCLT in less than 4 weeks time from today, we are of the considered view that in the interest of justice, NCLT shall dispose of the matter as expeditiously as practicable beginning the hearing on 28.10.2021 uninfluenced by the observations made in para 10 (ii) and (iii) of the Impugned Order dated 11.06.2021. Appeal disposed off.

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• 2021 (11) TMI 904
  Dissolution of Corporate Debtor - Regulation 22(2) of IBBI (Insolvency Resolution Process of Corporate Persons) Regulations 2016 - HELD THAT:- This Bench is of the view that the prayer made by the IRP for dissolution of the Corporate Debtor cannot be accepted since the Liquidation is a pre-requisite to the Dissolution and in the present case, no order of Liquidation has been passed due to absence of any such proposal and non-functioning of the CoC. Even if the ETO Bahadurgarh has withdrawn its claim, the CoC could have functioned with the Sole Member/Operational Creditor, at whose instance the CIRP was initiated. However, in the present case we notice that even the Sole Member/Operational Creditor of the CoC has been shirking from the responsibility and not pursuing the CIR Process of the Corporate Debtor - As per the Code, if any person [as defined under Section 3(23) of IBC] initiates the Insolvency Resolution Process fraudulently or with malicious intent for any purpose other than for the resolution of the insolvency, or liquidation, such an act is punishable under Section 65(1) of IBC 2016. Hence, before taking any action under Section 65(1) IBC 2016, we think it proper to issue a show cause notice, under Rule 59 of the National Company Law Tribunal Rules 2016, on the Operational Creditor M/s. Om Logistics Ltd. through its Directors as to why the penalty as stipulated under Section 65(1) of IBC, 2016 shall not be imposed on it. Ld. Registrar NCLT is directed to issue the show cause notice under Section 65(1) of IBC 2016 read with Rule 59 of the National Company Law Tribunal Rules, 2016 on M/s. Om Logistics Ltd. through its Directors giving them fifteen days' time to explain and submit in writing as to why the penalty as stipulated under Section 65(1) of IBC, 2016 shall not be imposed on them. When the Applicant is unable to carry forward the CIR process for want of cooperation/participation from the sole member of CoC, it is deemed appropriate to terminate the CIR process of the Corporate Debtor - by exercising the jurisdiction under Section 60(5) of IBC 2016 along with inherent power under Rule 11 of the NCLT Rules, 2016, the CIR process of the Corporate Debtor is terminated with immediate effect and release the Corporate Debtor from the rigors of the CIRP and moratorium. Application allowed.

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• 2021 (11) TMI 903
  Seeking necessary instructions to the RP to consider the claim without having any regard to the delay - Resolution plan not approved - HELD THAT:- When we read the old and new regulation 12(2) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 then it can be said that prior to the amendment in regulation 12(2), a claim is required to be filed before the IRP or the RP as the case may be, till the approval of a resolution plan by the committee and that is the reason earlier the Co- ordinate Bench has given directions to the RP to consider the claim in some cases but after the amendment till the approval of the resolution plan by the committee was substituted by on or before the 90th day of the insolvency commencement date. Herein the case in hand, as we notice that the CIRP was initiated on January 27, 2020 and thereafter, the public announcement was made and within the prescribed period no claim was placed by the applicant. We further notice that, in view of the amended regulation 12(2) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016, the claim was not filed within the 90 days of the insolvency commencement date. Due to pandemic the lockdown was imposed by the Government the claim could not be submitted within time. Admittedly, in another matters, we exclude the period of lockdown which was imposed on March 25, 2020 till May 31, 2020, i. e., 68 days, if we exclude this period of lockdown while calculating the period of 90th day from the CIRP period even then the claim of the applicant is delayed because it was submitted on December 23, 2020. In view of regulation 12(2), the prayer of the applicant is not liable to be accepted - Application dismissed.

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• PMLA

• 2021 (11) TMI 902
  Money laundering - Freezing of petitioner's bank account - grievance of the petitioners can be addressed in the proceedings for continuation of freezing orders or not - urgency in the matter as salaries and statutory benefits of the employees have not been paid and the employees would suffer hardship - HELD THAT:- This Court is inclined to grant interim order to the extent of payment of salary to the employees of the petitioners. There shall therefore, be a direction to the respondents to permit the petitioners to operate the bank accounts to the extent of ₹ 2 crores, subject to their furnishing bank guarantee for the said amount. The petitioners are permitted to operate the bank accounts with respect to the amounts deposited on or after 12.10.2021, forthwith. Both the learned counsel agree that in terms of this interim order, the Writ Petitions may be disposed of giving liberty to the petitioners to approach the Adjudicating Authority, in accordance with law. Petition disposed or giving liberty to the petitioners and the respondents to raise all legal contentions before the Adjudicating Authority.

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• Service Tax

• 2021 (11) TMI 901
  Levy of service tax - indivisible composite work contracts - respondent has prima facie taken a view that petitioner had rendered certain taxable services and declared the value of the services in its return of income under the Income Tax Act, 1961, but as the service provider had not paid any service tax, the same has resulted in non-payment of service tax - why income declared in the Income Tax Return for the period 2016-17 and for the period 2017-18 up to June, 2017 should not be treated as income received from taxable services under the Finance Act, 1994, besides levy of interest and imposition of penalty? - HELD THAT:- In the instant case, the two aspects i.e., whether the petitioner had provided services to only Governmental authorities, and not others, and even if provided to Governmental authorities, whether the contracts were indivisible, or composite, and secondly whether the extended period of limitation as per the proviso to sub-section (1) of Section 73 of the Act, would be applicable or not, would depend upon the factual examination and adjudication by the adjudicating authority. We are of the view that to preempt the adjudicating authority from carrying out the said exercise at the threshold would not be justified. From a reading of the show cause notice dated 18.10.2021, no definite view can be taken at this stage, that the said notice is beyond the period of limitation in terms of the proviso to sub-section (1) of Section 73. These are matters for examination and adjudication by the primary authority. In the circumstances, it would be in the interest of justice if the petitioner is relegated to the forum of adjudication before the respondent No.1. Ordered accordingly. Petition disposed off.

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• 2021 (11) TMI 900
  Jurisdiction to issue SCN - validity of summons issued to the officers of the petitioner - validity of appointment of officers of DGCEI as Central Excise Officers having all India jurisdiction - premeditated mind and lacking in judicial discipline - whether proceedings instituted are without jurisdiction? - HELD THAT:- The jurisdiction of the Chief Commissioner of Central Excise, Bangalore has come to the Principal Commissioner of Tax-1, Bangalore and Chief Commissioner of Tax-II, Bangalore. Likewise, territorial jurisdiction of Principal Commissioners of Service Tax is conferred on the Principal Commissioner of Service Tax- I depicting several zones in Bangalore and Principal Commissioner of Service Tax-II depicting several zones in Bangalore. This notification comes into effect from 15-10-2014. After the 2nd respondent issuing summons and recording statements, the matter is referred to the Principal Additional Director General, Central Excise Intelligence of Service Tax. This is in terms of Notification issued on 15.10.2014 pursuant to which, the Principal Additional General, Central Excise Intelligence, Principal Additional Director General, Service Tax or Principal Additional Director General, Audit shall exercise the power of the Principal Commissioner. The five officers who are indicated are empowered to exercise the powers of the Principal Commissioner. Likewise, Senior Intelligence Officer, Central Excise Intelligence, Superintendent, Service Tax or Superintendent Audit could exercise the power of the Superintendent. The justification of the revenue is in terms of the said notification, the summons that were issued by the Intelligence Officer is now transferred to Principal Commissioner who has also issued a detailed show cause notice which is impugned in the writ petition to answer the notice - a Central Excise Officer would mean the Principal Chief Commissioner of Central Excise, Principal Commissioner of Central Excise, Additional Commissioner of Central Excise and other officers as defined under the Act. If the definition of Central Excise Officer under the Act is read in tandem with the impugned notification, it becomes unmistakably clear that a Principal Commissioner of Central Excise is also a Central Excise Officer and the power of the Principal Commissioner can be exercised by the aforesaid 5 officers one of whom is the Principal Additional Director General, Central Excise Intelligence. In taxing parlance, an Assessing Officer before whom a particular assessee goes, Authority cannot transfer the proceedings even to the next assessing officer as it becomes without jurisdiction. It is not a case of the kind at hand as the second respondent has not exercised the jurisdiction of the competent authority. Though the summons emanate from the office of the Deputy Director of Directorate General of Central Intelligence, the file is transferred to the competent authority. The show cause notice is issued by the proper officer. Therefore, I decline to accept that the show cause notice issued is without jurisdiction. The show cause notice is within the jurisdiction and not without, as contended. Therefore, the petitioner has to answer to the show cause notice and further proceedings to take place in accordance with law. Petition dismissed.

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• 2021 (11) TMI 899
  CENVAT Credit - input services common to both taxable as well as exempt services - Rule 6(3A) of CCR,2004 - adjudicating authority dropped the demand for the period prior 1.4.2011 on the ground that trading is classified as an exempted service only from 1.4.2011 - whether the turnover of a particular unit should be taken into consideration for arriving at the amount of tax credit to be reversed in terms of Rule 6(3A) of CENVAT Credit Rules, 2004? - HELD THAT:- For the period 01.04.2011, the issue stands decided in the case of MERCEDES BENZ INDIA PVT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-1 [ 2014 (4) TMI 12 - CESTAT MUMBAI] wherein it was held that trading is not an exempted service prior to 01.04.2011; provisions of Rule 6 requiring reversal of 6% of trading turnover is not applicable. We also find that the matter prescribed under Rule 6 of CCR, 2004, can be applied for the period before 01.04.2011 also as held by the Tribunal in the case of M/S TFL QUINN INDIA PVT. LTD. VERSUS CC CE, HYDERABAD-IV [ 2016 (6) TMI 230 - CESTAT HYDERABAD] . It is not coming forth from the records of the case as to whether the Department has appealed against such order and if so, the outcome of the same. While holding that the Department is not precluded from issuing SCN to the head office of the Respondents as res judicata would not apply to taxation matters, it is found that there is a dichotomy in the approach of the appellant department. The benefit of doubt should go the appellants. Coming to the period subsequent to 01.04.2011 when trading came to be considered as an exempted service, we find that the appellants have reversed credit, of ₹ 27,37,30,026/- for the period 2011-12 to 2014-15, in terms of Rule 6(3A) of CCR, 2004, on proportionate basis - Hon ble Karnataka High Court has dealt with the very same issue in the case of THE COMMISSIONER OF CENTRAL EXCISE BANGALORE - IV (ERSTWHILE BANGALORE - II) COMMISSIONERATE VERSUS M/S. ITC LIMITED [ 2021 (5) TMI 366 - KARNATAKA HIGH COURT] and the Hon ble High Court has held relying on the Division Bench decision in the case of COMMISSIONER OF C. EX., BANGALORE-I VERSUS ECOF INDUSTRIES PVT. LTD. [ 2011 (2) TMI 1130 - KARNATAKA HIGH COURT] held that there are only two limitations imposed under Rule 7 of the Rules, for distribution of credit by an Input Service Distributor. The learned Commissioner s order is legal and proper and as such does not require any interference - appeal dismissed.

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• 2021 (11) TMI 898
  CENVAT Credit - value of trading activities to be taken for calculation - whether the value of goods, deemed to be supplied in execution of works contract, are to be treated as trading simplicitor, for calculation of amount for reversal (of proportionate credit), as per Rule 6(3)(ii) of Cenvat Credit Rules? - HELD THAT:- The addition to the trading turnover, of the value of the goods deemed to be supplied in execution of the works contract, is erroneous and wrong. Accordingly, the show cause notice is mis-conceived. It is further noticed that in the earlier period, identical show cause notice dated 2.9.2016 was issued to the appellant for denying cenvat credit to the extent of ₹ 1,37,01,095/- . On similar grounds, the said show cause notice was adjudicated by the Addl. Commissioner vide order-in-original dated 26.03.2018, wherein similar demand with respect to the goods deemed to be supplied in the course of works contract service, was dropped. The said order has been accepted by the Department, as no further appeal has been filed. The appeal is allowed.

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• 2021 (11) TMI 897
  Classification of services - supply of man power and recruitment services or not - independent contractor carrying out the manufacturing activity in the premises of the service recipient - HELD THAT:- The issue has already been decided by this Tribunal in M. ARUL PRAKASAM, S. SUBARAYALU, G. RAMAKRISHNAN, R. ATHINARAYANAN AND P. KANNUSAMY VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2021 (8) TMI 1063 - CESTAT CHENNAI] where it was held that the activity undertaken by the appellants cannot fall under the category of manpower supply service. The issue is no longer res integra. Following the orders of this Tribunal, the impugned order is not sustainable and same is set aside - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (11) TMI 896
  CENVAT Credit - manufacture of exempt product namely sludge - appellants have used common inputs for manufacture of dutiable product (Gelatine) and exempted product (Sludge) - non-maintenance of separate records - Rule 6 (3) of Cenvat Credit Rules, 2004 - period from 10.05.2008 to 30.09.2011 - HELD THAT:- The demand has been raised on the view that the sludge removed is an exempted goods manufactured by the appellants. The appellant does not consciously manufacture any waste. During the course of manufacture, the waste that arises is drained into the Effluent Treatment Plant. Thus, waste removed from the Effluent Treatment Plant forms sludge and is removed on a daily basis to a dump yard from where it gets dried and is thereafter sold to fertilizer manufacturers. The appellant has to comply with the pollution control requirements and therefore maintain the Effluent Treatment Plant and remove the waste as per the effluent norms. A manufacturer would be happy when there is less waste or no waste at all since the burden of maintaining the effluent treatment plant and the transportation of the sludge etc. can be minimized. No manufacturer would consciously manufacture waste. For these reasons, it cannot be said that the waste / sludge is an exempted goods manufactured by the appellant. The said issue stands considered by the Tribunal in the case of ITC LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM [ 2013 (12) TMI 928 - CESTAT CHENNAI] . In fact, the Commissioner (Appeals) has cited the said decision to set aside the demand prior to 10.05.2008. It has to be stated that even after 10.05.2008, though the Explanation to Section 2(d) states that any article, material or substance which is capable of being bought and sold for a consideration will also fall within the definition of goods , in the present case, the appellants having not manufactured the waste consciously, it cannot be considered as an exempted goods falling under Rule 6 (3) of CCR 2004. The demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 895
  Clandestine removal - CTD bars and rods - shortage of inputs - department has been able to sufficiently establish the basis of the duty demand or not - penalty - HELD THAT:- When the Tribunal had not made any observations with regard to the shortage of raw materials and had clearly remanded to look into the transactions between the traders and M/s. MMSD and the method adopted by the appellant to clandestinely clear the finished products through M/s. MMSD, the quantification of shortage of raw materials on the basis of EXIM Policy, was totally unwarranted and purposeless. The input output ratio given in the EXIM Policy (Sl. No. C513) has been adopted to calculate the input output ratio of manufacture of CTD bars. The appellant herein has neither imported raw materials nor do they export their finished products. This ratio has not been made the basis for quantification of duty in the Show Cause Notice. Though the remand was to look into the demand of ₹ 12,90,032/-, the duty confirmed in the impugned order is ₹ 21,15,379/-. This is because the Commissioner has added ₹ 11,48,044/- which has been already upheld by the Tribunal to the amount of ₹ 9,67,335/- arrived by him. I cannot understand the logic of the adjudicating authority in adding the amount that has already been upheld by the Tribunal. Though the Tribunal has remanded the matter to look into the penalty that has to be imposed after readjudication of the issue of ₹ 12,90,032/- that has been remanded, the issue of penalty in regard to ₹ 11,48,044/- has to be recorded separately. The duty demand that has been already upheld by the Tribunal cannot be added to the amount of adjudication in denovo adjudication. The adjudicating authority has confirmed the total demand of ₹ 21,15,379/-. There is no demand of ₹ 21,15,379/- at the time of adjudication. The demand adjudicated is only ₹ 12,90,032/-. There cannot be confirmation of a higher amount. The Commissioner having analysed merely the shortage of raw materials, the argument of the learned counsel that they requested for cross-examination of mahazar witnesses and the adjudicating authority did not allow the same acquires relevance - though in the Show Cause Notice it is alleged that 615.28 MTs of CTD bars were clandestinely removed through M/s. MMSD and duty demand of ₹ 12,90,032/- was raised, in the present order, the adjudicating authority has held that the CTD bars unaccounted would be 461.37 MTs only. Then it has to be explained through which of the traders, the same were shown to be purchased. The allegation on this issue is that the clearance was camouflaged through fake invoices of many traders. The evidences in this line are not discussed. Department has not been able to establish with preponderance of probability the duty demand in respect of 615.28 MTs of CTD bars received by M/s. MMSD as alleged in the Show Cause Notice - the demand confirmed in regard to the CTD bars received by M/s. MMSD requires to be set aside - Since the remand was for reconsidering the penalty, the duty demand upheld by the Tribunal with respect to ₹ 11,48,044/- having attained finality, the equal penalty confirmed in the earlier adjudication order would sustain. Appeal allowed in part.

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• 2021 (11) TMI 894
  Process amounting to manufacture or not - Ethanol Blended Petrol - whether the production of 10% Ethanol Blended Petrol (EBP) which involves the blending of 10% duty paid ethanol with 90% duty paid Motor Spirit (MS, commonly known as petrol) amounts to manufacture in terms of Section 2(f) of the CEA? - liability of excise duty prior to the issuance of Notification Nos.61,62,63, 64/2008-CE dated 24.12.2008 - HELD THAT:- The dispute involved in this case pertains to the period from 16.12.2008 to 23.12.2008. We find that by placing reliance on the decision of BHARAT PETROLEUM CORPN. LTD. VERSUS COMMR. OF C. EX., LUCKNOW [ 2009 (2) TMI 170 - CESTAT, NEW DELHI] , this Tribunal has set aside the Order-in-Appeal and allowed the appeal filed by M/s Bharat Petroleum Corporation Limited holding that the process of blending of small quantity of MFA with MS and HSD does not amount to manufacture and thus, would not attract payment of Central Excise duty. The issue arising out of the present dispute is no more open for any debate - Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 893
  Refund of CENVAT Credit - Credit under protest - rejection on the ground of time limitation - HELD THAT:- The reversal of CENVAT credit on 29.10.2005 was under protest, ifso facto, as the same was reversed during the pendency of the adjudication proceedings and the appellant had contested the amount in dispute. The refund claim is within time as the same is filed within 2 months from the date of order-in-appeal. The adjudicating authority is directed to grant refund of the said amount in cash, as required under the Transitional Provisions of CGST Act, and is further directed to pay interest @ 12 p.a. from the date of reversal of the cenvat credit amount till the date of payment, (as per Section 35 FF, which provide for interest from the date of deposit till the date of refund) - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (11) TMI 892
  Collection of differential tax - compounded tax for dealers in ornaments or articles of gold, or other metals were retrospectively amended for the year 2011-12 - interpretation of the validation clause - HELD THAT:- Under S. 8(f)(i) of the KVAT Act, the rate of compounded tax for dealers who opted to pay tax under the section for the first time was marginally higher than those who had opted to pay the tax at compounded rates from the previous year or even before that period. Section 8(f)(v) of the Act dealt with the category of dealers who had opted for compounded tax from the previous years. It may be essential to extract section 8(f)(i) and S.8(f)(v) of the KVAT Act as it stood on 31-03-2011. As per the provisions of Article 196(5) of the Constitution of India, a Bill pending before the Legislative Assembly of a State shall lapse on dissolution of the Assembly. The 12th Kerala Legislative Assembly was dissolved on 14-05-2011 and thus, the First Bill lapsed as on that date, by operation of law. The apparent confusion among the dealers is created on account of the wording in the validation clause of Act 16 of 2011. On a deeper scrutiny of sub clause (2) of the validation clause, it can be understood that the language used in the said provision was not with a view to erase the retrospectivity brought in by the amended provisions but was intended only as a measure of validating the First Bill which had by virtue of Article 196(5) of the Constitution lapsed. The First Bill was pending in the Legislative Assembly of the State when the Assembly was dissolved. As per Article 196(5) of the Constitution, a bill which is pending in the Legislative Assembly of a State, shall lapse on dissolution of the Assembly. The validation clause was included in Finance Act 16 of 2011 to overcome the legal imbroglio that arose on account of the dissolution of the Assembly on 14.05.2011 and the subsequent presentation of the Second Bill on 19.07.2011. The validation clause brings in a continuity and overcomes the vacuum created by the dissolution of the Assembly. The State was bound and entitled to recover the differential tax from the dealers and the demand notices were issued in valid exercise of power - Petition dismissed.

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• Indian Laws

• 2021 (11) TMI 891
  Smuggling - narcotic drugs concealed in a suit case - offences under Sections 21(c) and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - HELD THAT:- On perusal of the testimony of witness recorded before the learned trial court, impugned judgment and order on sentence as well as decisions relied upon, this Court finds that there are material contradictions in the story put-forth by the prosecution. It is a settled law that an accused is presumed to be innocent unless proven guilty and to prove the guilt, the prosecution is required to substantiate its case by showing that the due procedures prescribed under the NDPS Act have been followed, coupled with the assistance of material witnesses. However, in the present case, prosecution has not made any efforts to trace out the co-accused Sanjay, who had purportedly brought the substance for delivery to the appellant. The prosecution has even failed to examine the panch witnesses namely, Raj Kumar and Ombir, who would have proved the arrest and recovery. The Panchnama prepared at the spot did not bear signatures of any of the panch witnesses. In addition, the manner in which the offending vehicle was traced, apprehended and recovery was made, also casts a doubt upon the credibility of prosecution case. Also, prosecution has failed to substantiate as to how two reports obtained from CRCL had different analysis and as to why opinion of PW-19 with regard to two different reports, one of Diactyl Morphin (Heroin) and the other for Opium being drawn from two different samples, be not accepted. This Court finds that prosecution has immensely failed to prove its case beyond reasonable doubt, therefore, it is a fit case to grant benefit of doubt to appellant/accused - Petition allowed.

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• 2021 (11) TMI 890
  Smuggling - recovery of Pseudoephedrine during search - mandatory provisions of Section 50 NDPS Act have been followed or not - section 67 NDPS Act - HELD THAT:- In the instant case, on 10.01.2019 a secret information was received and petitioner was intercepted at IGI airport while he was travelling to Dar-Es-Sallam via Doha and during search 24.5 Kg. of Pseudoephedrine was recovered from his bag. The petitioner during investigation tendered his voluntary statement U/s 67 NDPS Act and admitted the recovery. The petitioner was supposed to hand over the suit case containing Pseudoephedrine to his co-accused at Tanzania which was seized from his possession. During investigation, mobile phone of the petitioner and other co-accused persons were examined and it was found that they were in constant touch with each other. Manner in which the samples were drawn was as per law or not - it is contended that the sample were not taken from each packet and this is totally a violation of law in drawing the sample of drugs - while issuing notice U/s 50 of the NDPS Act the mandatory provisions of Section 50 NDPS Act have been followed or not - HELD THAT:- Both the contentions are liable to be rejected as they relate to violation of the procedural aspects which can only be looked into during the course of trial and cannot be deeply analyzed at the stage of bail. Applicability of embargo of Section 37 of NDPS Act - the substance recovered is neither a narcotic drug nor a psychotropic substance - HELD THAT:- In the instant case, there is a recovery of huge quantity of Pseudoephedrine i.e. 24.5 Kg. which was recovered from the possession of the petitioner while he was present at the IGI airport for travelling to Tanzania. In the instant case, looking into the allegations against the petitioner, quantity of the substance recovered and also the fact that the petitioner is a foreigner and bail of the co-accused has been dismissed by this court vide order dated 24.11.2020, no ground for bail is made out. The bail application is dismissed.

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