TMI Tax Updates - e-Newsletter
November 7, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Validity of fresh proceedings under Section 74 of GST Act - there are no force in the submission of the learned counsel for the petitioner that it is only the Central government authorities that can initiate proceedings under Section 74 of the Act. There is no statutory basis for the said submission made on behalf of the petitioner - HC
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Income Tax:
Accrual of income - Revenue recognition - real or hypothetical income - The assessee did not raise any demand on account of wheeling charges and since, there was uncertainty with regard to recovery / collection of the outstanding amount, the assessee for the AY in question decided not to recognize revenue for wheeling charges - Income did not accrue to the assessee but was a hypothetical income, which could not have been subjected to tax and in view of Accounting Standard-9 - HC
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Income Tax:
Foreign tax credit claimed under Article 24 of India- UK DTAA read with Section 90 - assessee who is a resident of India and has derived from salary which has suffered tax in the UK on account of his employment exercise in UK - Article 16(2) does not apply in the present scenario. In-fact, if we go through the provisions of Section 90(2) of the Income Tax Act, 1961 and Article 24 of the India-UK DTAA, then the claim made by the assessee is valid - AT
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Income Tax:
Accrual of income - Though the payment was not received by the assessee during the year under consideration, however, once the said payment was accrued and become due in the year under consideration, the actual receipt of the payment becomes irrelevant when the assessee is following the Mercantile System of accountancy. - AT
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Income Tax:
Allowable expenditure u/s 37 - Guarantee money - in the event assessee is not able to make good the full payment towards R&R plan as directed by CEC, the guarantee money paid by assessee would be forfeited to that extent. We therefore, cannot concur with the observations of the authorities below that such payment is hit by Explanation 1 to Section 37 (1). - AT
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Income Tax:
TP Adjustment - international transaction of `Payment of Regional Service charges (RSC)’ - TPO has referred to regional services being in the nature of shareholder services in a generic sense. He has not specifically spelt out which services are shareholder services. From the detailed narration of services above, it is more than overt that the services did produce effect to the assessee company. As such, they go outside the ambit of the shareholder services. - the assessee availed the regional services in the carrying on its business at the transacted value. - AT
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Income Tax:
Assessment u/s 153A - Need for spelling out ‘Satisfaction note’ - the ld. CIT(A) while adjudicating the legal issue of the validity of the satisfaction note prepared by the AO to invoke 153C against the assessee foundation, cannot resort to post mortem and resurrect a bad satisfaction note because AO could not have usurped the jurisdiction u/s 153C without preparing a valid Satisfaction Note and therefore AO’s action to invoke the jurisdiction u/s 153C in respect of AY 2014-15 was ab-initio void - AT
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Customs:
Classification of imported goods - goods are old and used rubber tyres reusable as tyres or are old and used rubber tyres scrap being in pressed baled form? - this aspect should be best left to the adjudicating authority to decide, if it requires adjudication. Pre-empting an adjudication on this issue by the writ court by taking a view one way or the other may not be justified. - HC
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Customs:
Valuation of imported goods - watches - rejection of transaction value - in absence of any of the special circumstances indicated in Section 14(1) ibid read with Rule 3 of the Customs Valuation Rules, 2007, the price actually paid to the supplier shall be considered as the transaction value. - AT
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Customs:
Exemption from IGST - Re-import of aircrafts and parts thereof after repairs - the meaning assigned to duty of customs, as discussed above, is the meaning assigned to ‘duty’ under section 2(15) of the Customs Act, which would be the duty leviable under section 12 of the Customs Act. Mere omission to mention “specified in the First Schedule to the Tariff Act” after “Duty of customs” in the conditions set out in column (3) of the Table for Serial No. 2 cannot lead to an inference that duty of customs would include integrated tax and compensation cess. - The Appellant is entitled to exemption from payment of IGST - AT
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IBC:
CIRP Proceedings - Levy and Recovery of Capital Gains Tax - proceeds received from sale of assets of the corporate debtor - the tax liability arising out of the sale of assets by the liquidator shall be distributed in accordance with the provisions of Section 53 of the Insolvency and Bankruptcy Code, 2016 and the capital gain tax shall not be treated as the liquidation cost - Tri
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Service Tax:
Taxability - Whether bariatric surgery which the appellant performs would be cosmetic surgery or plastic surgery so as to be taxable u/s 65(105)(zzzzk) of the Finance Act, 1994 - t bariatric surgery performed by the appellant on patients suffering from morbid obesity coupled with life-taking diseases like Type-II diabetes and Hypertension, arthritis, lipid disorder or obstructed sleep apnea or disease of a like nature, cannot not be subjected to service tax - AT
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Central Excise:
Substitution of estimated amount payable as mentioned in forms SVLDRS-2 and SVLDRS-3 with the tax dues less tax relief amounts - Having regard to the objective of the scheme, in a case of this nature, a reasonable and pragmatic approach has to be adopted so that a declarant can avail the benefits of the scheme; a declarant who seeks benefit under the scheme cannot be put in a worse off condition than he was before making declaration under the scheme. That would defeat the very purpose of the scheme. - HC
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VAT:
Levy of Interest on belated payment of tax - belated filing of returns - Once Section 24(3-A) is held to be applicable, the challenge to the impugned orders is not sustainable - the settled position is that an order is not vitiated merely because a wrong provision of law is cited therein provided the relevant statute contains an appropriate provision for such purpose. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (11) TMI 187
Lifting of attachment over the Bank account of the petitioner - HELD THAT:- There is absolutely no basis in law for proceeding against the petitioner herein, in connection with offences alleged to have been committed by M/s Varma enterprises. The mere fact that a part of the money that was obtained from alleged fraudulent transactions have found its way to the Bank account of the petitioner cannot, without anything to suggest the complicity of the petitioner in such transactions, be the basis for the attachment of the Bank accounts of the petitioner. Thus, there being no material to implicate the petitioner in the alleged fraudulent transaction, Ext.P1 communication issued by the 1st respondent cannot be legally sustained. Petition allowed.
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2020 (11) TMI 186
Reimbursement of differential tax amount arising out of change in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) - HELD THAT:- The petitioner shall make a comprehensive representation before the appropriate authority within four weeks from today ventilating the grievance. If such a representation is filed, the authority will consider and dispose of the same, in the light of the aforesaid revised guidelines dated 10.12.2018 issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by the end of December, 2020. Petition disposed off.
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2020 (11) TMI 185
Validity of fresh proceedings under Section 74 of GST Act - It is the case of petitioner that inasmuch as the petitioner has already been proceeded against, under Section 122 of the GST Act, a fresh proceedings under Section 74 cannot be pursued against him - HELD THAT:- While proceedings under Section 122 are for the purposes of imposition of penalty on an assessee, who has contravened the provisions of the Act, the proceedings under Section 74 of the Act are with a view to recover unpaid tax together with interest thereon, in cases where the non-payment of tax is on account of a suppression or willful misstatement occasioned by the assessee. Also, there are no force in the submission of the learned counsel for the petitioner that it is only the Central government authorities that can initiate proceedings under Section 74 of the Act. There is no statutory basis for the said submission made on behalf of the petitioner. The recovery steps for recovery of amounts confirmed against the petitioner by Ext.P14 order shall be kept in abeyance for a period of three weeks so as to enable the petitioner to approach the Appellate Authority in the meanwhile - petition dismissed.
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2020 (11) TMI 184
Grant of Bail - offence registered under Sections 419, 420, 467, 468, 471, 34 IPC, read with Section 132(1)(b)(c)(e) and (f) of the Jharkhand Goods Service Tax Act, 2017 - HELD THAT:- This Court directs the Assistant Commissioner, Sales Tax, Dhanbad Circle, Dhanbad to file a detail counter affidavit separately in both the cases i.e. in B.A. No.3578/2020 and in B.A. No.4348/2020 with respect to their involvement and defalcation of the money. Under the aforesaid circumstances, Superintendent of Police, Dhanbad is directed to file affidavit with regard to said certificate issued in favour of Jairam Mahto - Put up this case after three weeks.
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2020 (11) TMI 183
Validity of Exts.P9 and P10 notices issued, prior to the issuance of a show cause notice under Section 73 and 74/ 74 of the GST Act - HELD THAT:- At this stage of the proceedings, where the petitioner is only being requested to pay certain amounts for avoiding a show cause notice that could possibly follow under Section 73/74 , there is no compulsion or demand on the petitioner necessitating an interference in these proceedings under Art.226 of the Constitution of India. At this stage of the proceedings, the petitioner cannot impugn Exts.P9 and P10 notices which do not compel him to resort to any particular course of action. The writ petition in its challenge against Exts.P9 and P10 notices therefore fails - Petition dismissed.
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2020 (11) TMI 182
Vires of Section 16(4) of the Central Goods and Services Tax Act, 2017 - time limit for availment of Input Tax Credit - HELD THAT:- Since the vires of provisions of the Act and Rules are under challenge herein, the subject matter of which is not assigned to this Bench, the instant writ petition be listed before the appropriate Division Bench as per the present distribution of roster.
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Income Tax
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2020 (11) TMI 181
Validity of Income Tax Settlement Order - denial of natural justice - petitioner submits that having reached the Section 245D(4) stage, it was not open to the Settlement Commission to pass an order and now call for another report from the Commissioner, Income Tax under Section 245D(3) and Rule 9 of the Income Tax Settlement Commission (Procedure) Rules, 1997 as it has purported to do by way of the impugned order and that too without giving any opportunity of hearing to the petitioners - HELD THAT:- Undisputed fact remains that the aforenoted petition impugns an anterior order arising from the same settlement proceedings. The final outcome of the said proceedings can possibly affect the present proceedings. Thus, although there may not be a suppression by the petitioners as Writ Tax has not been served upon them, yet keeping in view the pendency of the aforesaid prior writ petition this Court was prima facie inclined to dispose of the present writ petition. As petitioners states that he would be filing a transfer petition in the Apex Court seeking transfer of the Writ Tax to this Court. He states that as the Supreme Court is closed for Diwali break between 07th November to 15th November, 2020, the present writ petition be adjourned to third week of November, 2020 - list the present writ petition on 25 th November, 2020.The date of compliance mentioned in the impugned order as well as email dated 14th October, 2020 is extended till 25th November, 2020.
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2020 (11) TMI 180
Accrual of income - Revenue recognition - real or hypothetical income - addition on account of wheeling charges - assessee is following mercantile system of accounting - HELD THAT:- The Karnataka Electricity Board which owned transmission lines in Karnataka decided to recover wheeling charges from State Electricity Board's of Tamil Nadu, Andhra Pradesh and Kerala to the tune of ₹ 52.89 Crores. The assessee therefore, did not raise any demand on account of wheeling charges and since, there was uncertainty with regard to recovery / collection of the outstanding amount, the assessee for the AY in question decided not to recognize revenue of ₹ 52.89 Crores for wheeling charges. In the meeting held on 04.11.2000 and the same was approved by the board of the assessee. Aforesaid income never accrued to the assessee and was in fact, an hypothetical income and not a real income. Subsequently, on 16.03.2004 in 134th meeting of Southern Regional Electricity Board, the arrangement of cost sharing of wheeling charges by the constituent States itself was scrapped and on the date when the Assessing Officer passed an order i.e., on 31.12.2008, the aforesaid decision was already in existence. Income did not accrue to the assessee but was a hypothetical income, which could not have been subjected to tax and in view of Accounting Standard-9, the assessee rightly decided not to recognize the revenue of ₹ 52.89 Crores for wheeling charges for the relevant assessment year. - Decided in favour of the assessee
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2020 (11) TMI 179
Rectification u/s 154 - Tribunal observed that because of the earlier order, the appeal filed by the assessee challenging the order under Section 154 as confirmed by the CIT(A) is not maintainable - HELD THAT:- Assessee having suffered an order at the hands of the CIT(A) dated 22.01.2015 had to necessarily file an appeal to the Tribunal. This appeal was dismissed by the Tribunal as not maintainable. Tribunal has committed an error in coming to the conclusion that the appeal is not maintainable when the fact remains the appeal is maintainable and necessarily the Tribunal had to clarify that the Assessing Officer should take a decision in the matter as per the remand order [ 2011 (9) TMI 1206 - ITAT CHENNAI] without reference to the order under Section 154 dated 26.07.2010 and the order of the CIT(A) dated 22.01.2015. If this observation had been done by the Tribunal, the present appeal itself could have been avoided. Therefore, we are inclined to interfere with the order passed by the Tribunal. Appeal is allowed, the impugned order is set aside and the substantial questions of law are decided in favour of the assessee and the matter is remanded to the Assessing Officer to comply with the direction issued by the Tribunal in its order [ 2011 (9) TMI 1206 - ITAT CHENNAI] after due opportunity to the assessee. No costs.
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2020 (11) TMI 178
Foreign tax credit claimed under Article 24 of India- UK DTAA read with Section 90 - assessee who is a resident of India and has derived from salary which has suffered tax in the UK on account of his employment exercise in UK - Number of days assessee s stay in the United Kingdom - eligibility of exemption from tax in UK under Article 16(2) of the India-UK DTAA - Whether CIT(A) has grossly erred in facts in stating that the aggregate stay in UK for the said previous year is less than 183 days disregarding the fact that the Appellant stayed in UK for 241 days? - HELD THAT:- It is pertinent to note that the assessee was working in UK for more than 183 days which was never disputed by the Revenue at any point of time. Besides this the Revenue authorities are very well aware that the assessee has paid taxes in UK for the remuneration received in UK. The assessee is a resident of India. Article 16(2) does not apply in the present scenario. In-fact, if we go through the provisions of Section 90(2) of the Income Tax Act, 1961 and Article 24 of the India-UK DTAA, then the claim made by the assessee is valid and, therefore, the Assessing Officer as well as the CIT(A) was not right in making and sustaining the addition in that respect. Hence, appeal of the assessee is allowed.
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2020 (11) TMI 177
Rectification of mistake u/s 254 - whether the profit from sale of agricultural land was to be treated as business income or income from capital gain? - HELD THAT:- While the assessee claimed that the income derived from sale of agricultural land is exempt from being taxed under the head capital gain, the Assessing Officer held that it is to be treated as income from business or profession. Tribunal while deciding the issue in appeal has taken note of the factual matrix as well as the submissions made and has concluded that the nature of land sold being agricultural land, the income derived from the sale of such land cannot be treated as income from business or profession as the land sold is not a business asset. In the present misc. application, the Revenue is basically challenging the aforesaid reasoning of the Tribunal. Revenue in the guise of rectification, in reality, wants review of the appeal order. This, in our view, is not within the ambit of section 254(2) of the Act which is meant only for rectifying mistakes which are apparent on the face of record. Since, the appeal order, prima facie, does not reveal any mistake apparent on the face of record, we are unable to entertain the present application filed by the Revenue - MA dismissed.
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2020 (11) TMI 176
Disallowance towards environmental expenses - CIT(A) confirming the disallowance to the extent of 50% of the total expenditure - A.O. disallowed the entire expenditure because according to him the assessee s business had stopped, hence, the expenditure incurred under the above head was not laid out wholly and exclusively for the purpose of business - HELD THAT:- Even before the Tribunal the assessee has not produced any material detailing how it had incurred expenditure under the head environmental expenses. A.O. also did not have an occasion to examine in detail the evidence produced as regards incurring of expenses since at the threshold itself the A.O. held that the assessee had closed its business and the expenditure claimed as deduction was not for the purpose of business. We are of the view that the matter needs to be examined by the A.O. afresh. The assessee is directed to produce the details of the expenditure incurred under the head environmental expenses. The A.O. shall afford reasonable opportunity of hearing to the assessee and shall take a decision in accordance with law. Disallowance towards travelling and office maintenance expenditure - CIT(A) confirming the disallowance to the extent of 50% of the total expenditure - HELD THAT:- CIT(A) was of the view that the assessee having admitted that there was a temporary lull in the business affairs of the assessee, there was no necessity for incurring such huge expenditure. Accordingly, he has made adhoc disallowance of 50% of the total expenditure claimed as deduction. We are of the view that the matter needs to be examined by the Assessing Officer de novo since both the A.O. and the CIT(A) have not considered the evidence / details, while drawing conclusions on the said issue. Accordingly, this issue is also restored to the files of the A.O. In the instant case, the CIT(A) had already held that the business of the assessee had not stopped. Accordingly, CIT(A) allowed 50% of the total expenditure. Therefore, the ratio of the judgments relied on by the assessee in its paper book does not have application to the facts of this case. Appeal filed by the assessee is partly allowed for statistical purposes.
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2020 (11) TMI 175
Validity of assessment order passed by the AO for want of a valid notice u/s.143(2) - HELD THAT:- Assessee has not pointed out how the notice issued by the AO u/s.143(2) of the Act on 25-08- 2009 is invalid. Further, the assessee has participated in the assessment proceedings in pursuant to the notice u/s.143(2) of the Act as well as notice u/s.142(1) - when this objection was not raised by the assessee before the authorities below and not disputed the service of notice issued u/s.143(2) of the Act, then in view of the provisions of Section 292BB of the Act, the assessee cannot be allowed to dispute the service of notice issued u/s.143(2) of the Act. It is a matter of fact that the AO issued notice u/s.143(2) on 25-08-2009, which is within the limitation period as prescribed under such section, accordingly, the Ground No.3 of the assessee s appeal is dismissed. NP estimation - rejection of books of accounts - Addition being the Net Profit @10% adopted by the Assessing Officer as against the Net Profit declared by the assessee as 5.7% - HELD THAT:- Net Profit declared by the assessee in the preceding year as well as in the subsequent year, which was accepted by the Assessing Officer is a reasonable and proper guidance to estimate the income for the year under consideration. Having considered the fact that the Net Profit declared by the assessee is more than the average of Net Profit for the AYs.2007-08 and 2009-10, then, even after rejection of books of accounts, no trading addition is called for. Addition made to the gross receipts of the assessee on account of the receipt from M/s.Nagarjun Construction Co., for ₹ 15,58,492/- it is noted that in response to notice u/s.133(6) the said company has furnished information of payment of ₹ 59,70,453/- as well as ₹ 15,58,492/- to the AO. AO further noted that both the TDS certificates are dated 21-06- 2008. The assessee has not disputed the fact that he has reported only ₹ 59,70,453/- but contended that this amount of ₹ 15,58,492/- is part and parcel of ₹ 59,70,453/-. This is not the fact appearing from the certificates issued by M/s.Nagarjun Construction Co. Though the payment was not received by the assessee during the year under consideration, however, once the said payment was accrued and become due in the year under consideration, the actual receipt of the payment becomes irrelevant when the assessee is following the Mercantile System of accountancy. Since the assessee has not claimed the TDS credit against the said amount, therefore, the corresponding TDS credit shall be allowed to the assessee once the said amount is added to the gross receipt of the assessee. Hence, to the extent of the addition in the gross receipts is confirmed. Protective addition on account of un-explained capital introduced by the two partners of assessee-firm - HELD THAT:- Since the AO has made only protective addition in the hands of assessee-firm and proposed to make a substantive addition in the hands of partners, therefore, the fate of the protective addition is depending on the outcome of the substantive addition made in the hands of the partners. Nothing has been brought on record about the substantive addition, if any, made in the hands of the partners of the assessee-firm and further, whether the said addition was challenged and sustained by the CIT(A) or not? Accordingly, when the impugned order was passed by the CIT(A) ex-parte and without considering this material fact of the outcome of the substantive addition, if any, in the hands of the partnership firm, this issue is set aside to the record of the CIT(A) for fresh adjudication, after considering the outcome of the substantive addition, if any, made in the hands of the partners. Needless to mention that assessee should be given a fair opportunity of hearing, before passing a fresh order.
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2020 (11) TMI 174
Disallowance of SPV charges - Business expenditure u/s 37(1) - HELD THAT:- In the present situation, contribution towards SPV is a requirement to be incurred to continue its business activities. In our view, these payments in present case do not fall within the category of penalty. Hon ble Supreme Court has quantified rate for the mass tort, that has occasioned due to illegalities committed in the operation of mines separately. We also note that assessee has suo moto disallowed the payments that fall within the category of penalty which has been computed in accordance with directions of Hon ble Supreme Court (being ₹ 5 crore per hectare for area as under illegal mining pits outside sanctioned areas and ₹ 1 crore per hectare for area under illegal overburden dumps, roads, offices exception outside the sanctioned lease area). Based on above discussions and analysis, we are of opinion that contribution to SPV being 15% of sale proceeds, under category B, is an allowable expenditure for year under consideration. Assessee for assessment year 2013-14 has considered 5% expenditure pertaining to previous year. No details pertaining to previous year expenses is made available before us. Assessee has also not placed before us any documents in relation to the same. Matching principal must be followed and Income tax is a levy on income. It takes into account the point of time at which liability to tax is attracted, i.e.; accrual of income or its receipt. See CIT vs Shoorji Vallabhdas Co [ 1962 (3) TMI 6 - SUPREME COURT ] - 5% expenditure pertaining to previous year claimed by assessee in A. Y. 2013 14 cannot be considered in assessment year 2013-14. We, therefore, confirm the disallowance of the same being ₹ 184,075/- but delete the balance disallowance of ₹ 869,16,539/- out of total disallowance in that year as SPV ₹ 871,00,614/-. Guarantee money for implementation of the R R plan in the respective sanctioned lease areas - HELD THAT:- Assessee could not have ignored the notice and that only upon making good such payments, assessee would have resumed its mining activity. Further it is noted that in the event assessee is not able to make good the full payment towards R R plan as directed by CEC, the guarantee money paid by assessee would be forfeited to that extent. We therefore, cannot concur with the observations of the authorities below that such payment is hit by Explanation 1 to Section 37 (1) . In support of the same, we refer to and rely on our observation and hold that this payment is in the nature of expenditure incurred for purposes of business, and is allowable under section 37 MAT Computation - Amount of carbon credit to be excluded for purpose of computing book profit u/s 115 JB - HELD THAT:- CIT (A) has already accepted the contention of the assessee and held that the sale of carbon Credit is a capital receipt and his finding on this aspect has attained finality because no appeal is filed by the revenue against this finding of Ld.CIT (A). Once it is accepted that the receipt in question is a capital receipt, this judgment of Hon ble Calcutta High Court rendered in case of CIT vs. Ankit Metal Power Ltd. [ 2019 (7) TMI 878 - CALCUTTA HIGH COURT ] becomes applicable. Hon ble Calcutta High Court has duly considered the judgment of Hon ble Supreme Court rendered in case of Appollo Tyres vs. CIT [ 2002 (5) TMI 5 - SUPREME COURT ] and held that where a receipt is not in the nature of income at all, it cannot be included in Book Profit under Section 115JB. Hence, we follow this judgment of Hon ble Calcutta High Court rendered in the case of CIT vs. Ankit Metal Power Ltd. (Supra) and decide this issue also in favour of the assessee in both years.
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2020 (11) TMI 173
Assessment of trust - Contribution received towards co-operative education fund - income of the assessee - statutory requirement by misunderstanding the meaning of the words objects and activities - HELD THAT:- In this case, the assessee is acting as an independent trustee for that donation received from various societies as per the provisions of Section 57A r.w.s. 57(2A) of Karnataka Societies Act, 1959 and it cannot be considered for taxing the same. However, we observe that the assessee should have actually kept the said donation in separate account and any amount spent against that donation should have been debited to the separate account without bringing the same into income and expenditure account - incoming and outgoing need not be reflected in the income and expenditure account of the assessee and this donation to be taken out of the income and expenditure account - relevant expenditure spent out of the donation go out from the expenses side in the income and expenditure account. The expenses expended out of this donation will be deducted from the said donation by not charging the same into Income Expenditure Account. Therefore we direct the Assessing Officer to redo the assessment accordingly. Being so, in our opinion, the said contribution is received by the assessee cannot be treated as income of the assessee. This ground of the appeal of the assessee is partly allowed. Denial of exemption u/s 10(23C)(iiiab) - Whether assessee satisfying the twin conditions i.e. existing solely for educational purposes and not for profit and substantially financed by the Government ?- HELD THAT:- Following the Tribunal order in assessee's own case for A.Ys. 2006-07 2005-06 we set aside the order of CIT (Appeals) on this issue and restore the order of Assessing Officer in this regard. This ground of appeal is dismissed. Disallowing deduction claimed u/s 80P(2)(d) - interest earned from savings bank account kept with the co-operative banks on the ground of investments are made in co-operative societies - HELD THAT:- To avail deduction Under Section 80P(2)(d)(i) of the Act, if the assessee carries on business of the banking or providing credit facilities to its members and it must have income of interest or dividend on investment with other co-operative societies may or may not engage in banking providing credit facilities to its members and the head under which the income is assessable is not material for the claim of deduction under the said Section. The society having surplus funds which are invested in savings bank account and the income is included total, the assessee is entitled for deduction Under Section 80P(2)(d) of the Act. Being so, we direct the Assessing Officer to grant the deduction Under Section 80P(2)(d) of the Act. Even the deposits in S.B Account is also an investment by the assessee and the assessee has deposited surplus funds in S.B. Account so as to meet its urgent needs and it cannot be said that the assessee is not entitled to deduction under Section 80P(2)(d) of the Act. Appeals of the assessee are partly allowed.
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2020 (11) TMI 172
Characterization of income - Interest on FDR Flexi deposit - Capital gain or revenue receipt - HELD THAT:- Assessee explained before the AO with regard to interest on mobilization advance is a capital receipt, therefore, it has been reduced from the capital work-in-progress and in case of interest earned on fixed deposit/flexi deposits is a business income, therefore, it has been treated as a revenue income. AO did not accept the claim of the assessee and treated the same as income from other sources. CIT(A) accepted the claim of the assessee in regard to interest on mobilization advance but he did not agree with the interest received on fixed deposits/flexi deposits and upheld the action of AO holding that the AO has rightly treated the interest earned on FDR Flexi Deposit as income from other sources. We observe from the balance sheet for both the assessment years under consideration that the share application money pending for allotment is also appearing and we have decided the similar issue in the case of M/s Haridaspur Paradip Railway Company Limited [ 2020 (10) TMI 656 - ITAT CUTTACK ] in which the issue of share application money were pending for allotment has been remitted back to the file of AO. Before the AO the assessee has also offered it as a business income in the form of written submissions, which has been incorporated by the AO in the assessment order. We found substance on the submission of the ld. CIT-DR. As the issue being similar to the case of Haridaspur Paradip Railway Company Ltd.(supra), therefore, we also remit the issue to the file of AO on the same directions given therein along with some additional direction to the AO for examination as to whether the income which has been transferred into the reserve and surplus account and its utilization, either for revenue purpose or for capital expenditure. The AO is also directed to decide the issue as per law after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to avoid taking any unnecessary adjournment and cooperate with the AO for early disposal of the case. Appeals of the assessee are allowed for statistical purposes.
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2020 (11) TMI 171
TP Adjustment - international transaction of `Payment of Regional Service charges (RSC) pertaining to five intragroup services, whose ALP has been determined by the TPO at Nil - Whether the services were actually availed? - HELD THAT:- Payment for technical regional services in dispute refers to such technical guidance/resolution which the assessee received on day-to-day basis on the issues during the manufacturing activity. To accentuate on the duplication of services, the TPO referred to the payment under the head `Legal Professional expenses debited to the Profit and loss account, which was in addition to the legal charges paid under the regional services. Here again, we find that the separate payment debited to the Profit Loss account is towards availing the services of the consultants in India for local compliance. Thus, it is evident that there is no duplication of services as was canvassed by the TPO. Next point taken up by the TPO is that the assessee did not derive any benefit from such services or there was no need for such services. Suffice to say, it is prerogative of the assessee to have or not to have any services in the course of its business. Assessee is the best judge to decide if any particular services are required for carrying on its business. The TPO cannot step into the shoes of the assessee and decide if there was any need for services. Evidence of availing services by the assessee forecloses the examination by the TPO whether such services were needed or not and whether any benefit was derived or not. Shareholder services take place when some act or service is done by a shareholder to the company in order to ensure that his investment in the shares is safe and further such an act or service does not produce any effect to the company receiving it. TPO has referred to regional services being in the nature of shareholder services in a generic sense. He has not specifically spelt out which services are shareholder services. From the detailed narration of services above, it is more than overt that the services did produce effect to the assessee company. As such, they go outside the ambit of the shareholder services. We are fully satisfied that the assessee availed the regional services in the carrying on its business at the transacted value. Whether the costs are rightly allocated to the assessee? - Amount of costs incurred by the service-providing companies on rendition of services - All details were filed before the TPO, who has acknowledged this fact in second bullet point in para 9.19 on page 42 of impugned order by noticing that: The certificate issued by the independent auditor is only with regard to correctness of the cost allocation as per the terms of the Agreement and the same cannot be considered as a documentary evidence for establishing the ALP of the transaction. The TPO has nowhere in his order questioned the correctness of the certificate of the auditor on cost allocation. Correctness of the cost allocation as per the terms of the Agreement. This brings us to the point that the assessee was allocated ₹ 30.22 crore as Regional Service charges on the basis of actual costs incurred by Goodyear USA and other Goodyear affiliates on which only three Goodyear entities, namely, Goodyear Singapore, Goodyear Shanghai and Goodyear Thailand added mark-up of 5% while Goodyear USA eventually and other entities not adding any mark-up. Whether the payment by the assessee is at ALP? - No substance in the argument of DR that the TPO applied `any other method . Firstly, the TPO has nowhere mentioned in his order that he was applying such `any other method in terms of rule 10AB. Secondly, the TPO has not determined the ALP in any manner. He simply wrote that: the arm s length price of the balance amount of ₹ 26,87,68,644/- is taken as Nil and accordingly an adjustment of ₹ 26,87,68,644/- is made to the value of international transactions of payment of Regional service charges made to the AE . This indicates that the TPO did not determine the ALP under any method much less `any other method . In such circumstances, we cannot countenance the argument of the ld. DR, which is just in the air and does not emanate from the TPO s order. As seen that like the assessee who did not conduct any benchmarking and straightway treated the transaction at ALP under the CUP method without comparing it with any other comparable uncontrolled transaction, the TPO also did not apply any of the prescribed methods for determining the ALP. We respectfully agree with the proposition propounded and do not dispute the ratio laid down in the cited decisions. However, if we hold that the ALP determination by the TPO was not done under any specific or general method and hence the same should be obliterated, a fortiori would be that the ALP determination by the assessee would resurface. Had there been any valid ALP determination by the assessee, we would have readily accepted the proposition laid down in such decisions and set aside the TPO s ALP determination based on no method. But acceptance of such an argument in the instant case will lead to burying the ALP determination of an international transaction with an admitted mark-up, which position is contrary to the prescription of the Chapter-X of the Act. The additional ground urging to set aside the transfer pricing addition on this count, in the prevailing facts is, ergo, not allowed. As seen from the above calculation given on behalf of the assessee and duly verified by the ld. DR that the mark-up on actual costs incurred by the Goodyear entities in rendering regional services to the assessee is 2.22% on total value of services invoiced. This calculation is based on taking all the six regional services together. As the IT services are not to be considered for our purpose, the ld. AR pointed out that even if such services are considered as without any mark-up, the mark-up on aggregate basis in respect of the remaining five services will be 2.52%. Such mark-up is within the tolerance range of 3%. In other words, even if presume that the comparable uncontrolled transaction is at zero mark-up, still the value of the international transaction is within the notified tolerance range. In that view of the matter, the case gets covered by the second proviso to section 92C(2) of the Act not warranting any transfer pricing addition. We, therefore, order to delete the addition of ₹ 26.87 crore and odd.
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2020 (11) TMI 170
Reopening of assessment u/s 147 - Unexplained addition u/s 68 - HELD THAT:- As a regular assessment and the Assessing Officer had nowhere recorded the assessee s failure in having disclosed fully and truly, all the relevant particulars, sec. 147 first proviso restricting the exercise of the re-opening jurisdiction without satisfying the corresponding embargo, renders the same as not sustainable in the eyes of law. We quote hon'ble apex court s celebrated decision in K.Y. Pillah And Sons [ 1966 (10) TMI 35 - SUPREME COURT] to affirm the CIT(A) s action quashing the impugned re-opening in entirety as their lordships made it clear long back that such a course of actors may not involve independent examination of the relevant facts at the tribunal s behest.- Decided against revenue.
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2020 (11) TMI 169
Condonation of delay - Reasons of delay - delay of 285 days - inadvertent lapse on the part of its chartered accountant - HELD THAT:- In the case before us the chartered accountant of the assessee company i.e Shri Nishit Dave, partner of M/s Jayesh Dadia and associates LLP, had filed an affidavit , dated 15.02.2019, therein instils sufficient confidence as regards the genuineness and veracity of the explanation of the assessee pertaining to the reasons leading to the aforesaid delay in filing of the present appeal. On a perusal of the affidavit filed by the chartered accountant, it can safely or rather inescapably be gathered that he had in unequivocal terms admitted that the delay in filing of the appeal with the CIT(A) was attributable on account of an advertent omission on his part. Unable to persuade ourselves to subscribe to the manner in which the CIT(A) had summarily rejected the affidavit of the chartered accountant and consequently dismissed the appeal of the assessee company by holding that de hors a sufficient cause, the delay in filing of the appeal could not be brought within the realm of the provisions of Sec. 249(3). Shri Ketan Gandhi, director of the assessee company had also in order to buttress the aforesaid factual position as regards the delay in filing of the appeal deposed the facts on the basis of clearly worded affidavit. On the basis of the aforesaid factual matrix, we are of a strong conviction that in the absence of any facts proving to the contrary, the claim of the assessee that the delay in filing of the appeal was attributable on account of an inadvertent lapse on the part of its chartered accountant could not have been summarily scrapped, specifically when the assessee s chartered accountant had filed an affidavit supporting the aforesaid factual position. As such, we are of the considered view that the delay in filing of the present appeal can safely be held to be attributable on account of a lapse on the part of the chartered accountant, which in no way would suffice for justifying the declining of the admission of the appeal by the CIT(A). We thus condone the delay of 285 days involved in filing of the present appeal. Accordingly, in terms of our aforesaid observations, we herein set aside the order of the CIT(A), and therein restore the matter to his file with a direction to adjudicate the same on merits.
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2020 (11) TMI 168
Assessment u/s 153A - Need for spelling out Satisfaction note - requisite satisfaction in terms of section 153C - incriminating materials found in search or not? - HELD THAT:- Since the original scrutiny assessment u/s 143(3) of the Act for AY 2014-15 in the case of assessee foundation was framed on 31.12.2016, therefore, the assessment was not pending before AO on the date when Satisfaction Note was prepared, so as per the settled position of law, the AO ought to have discussed in the Satisfaction note the jurisdictional facts i.e. incriminating materials qua the assessee qua AY 2014-15, for invoking section 153C jurisdiction. As noted earlier there is no whisper about M/s PHPL opting for IDS Scheme, 2016 and according to us, the ld. CIT(A) while adjudicating the legal issue of the validity of the satisfaction note prepared by the AO to invoke 153C against the assessee foundation, cannot resort to post mortem and resurrect a bad satisfaction note because AO could not have usurped the jurisdiction u/s 153C without preparing a valid Satisfaction Note and therefore AO s action to invoke the jurisdiction u/s 153C in respect of AY 2014-15 was ab-initio void and therefore the CIT(A) cannot correct a jurisdictional issue and therefore this action of ld. CIT(A) was itself untenable in the eyes of law. Even if for argument s sake, the ld. CITDR s contention regarding M/s PHPL opting for IDS Scheme, 2016 is considered we find force in the argument of ld. A.R that Shri Ladia s statement during the survey on 23.09.2016 that M/s PHPL has received back the donated amount of ₹ 50 lacs from the assessee foundation does not corroborate with their subsequent action of only disclosing an amount of ₹ 25 lacs for AY 2014-15 during the IDS Scheme, 2016. We note that for AY 2013-14 to 2016-17 M/s PHPL has disclosed in IDS Scheme, 2016, a total of ₹ 71.25 lacs which fact goes on to show that M/s PHPL had enough money in its kitty to give donation to assessee foundation. Therefore, the action of M/s PHPL declaring ₹ 25 lacs as undisclosed income for AY 2014-15 cannot be considered to justify the action of ld. CIT(A) in confirming the addition of ₹ 50 lacs as against the assessee foundation. The contentions raised by the Ld. CIT DR are devoid of merits and so it is rejected and therefore on merits also the assessee succeeds. However, since we allow the legal issue raised by the assessee, we hold that the action of AO to invoke section 153C of the Act was without jurisdiction and, therefore, the impugned action of AO to issue notice u/s. 153C of the Act is null in the eyes of law and therefore ab-initio void and so it is quashed. - Decided in favour of assessee.
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2020 (11) TMI 167
Revisionary proceedings u/s 263 - Assessment was reopened u/s 147 to the effect that assessee is beneficiary of bogus hawala purchases - PCIT has exercised the revisionary jurisdiction on the ground that AO has not correctly assessed the income from bogus purchases - HELD THAT:- Debatable issue on which more than one plausible views are reasonably possible and if the AO has taken one possible views it can not be said that assessment is erroneous and prejudicial to the interest of the Revenue. In the case of CIT vs. Nirav Modi [ 2016 (6) TMI 1004 - BOMBAY HIGH COURT] which has been passed after considering the decision of the Hon'ble Apex Court in the case of Malabar Industries Company Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] wherein it has been held that in order to invoke the revisionary jurisdiction the twin conditions have to be satisfied namely (i) the assessment order should be erroneous and (ii) also prejudicial to the Revenue. The Hon ble Court has held that where two views are possible and AO has taken one of the possible views there is no occasion to invoke the provision of section 263 even the Hon ble Supreme Court has dismissed the SLP filed by the Revenue against this decision in CIT vs. Nirav Modi [ 2016 (12) TMI 1596 - SC ORDER] - Therefore, we are not in concurrence with the conclusion of the Ld. PCIT on this issue - Decided in favour of assessee.
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Customs
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2020 (11) TMI 166
Classification of imported goods - goods are old and used rubber tyres reusable as tyres or are old and used rubber tyres scrap being in pressed baled form? - it is contended that petitioner has misinterpreted the description of import items by saying that pressed baled would mean that the tyres are scrap - HELD THAT:- Ministry of Environment, Forest and Climate Change, Government of India had issued officer memorandum dated 29th November, 2019 granting permission/no objection to the petitioner for import of 10,000 MT of old and used rubber tyres scrap (multiple cuts/pressed baled/shredded) for manufacturing of crumb rubber. Also, Directorate General of Foreign Trade, Government of India had issued import/export licence (authorisation) dated 28th November, 2019 to the petitioner for importing certain restricted items which has been described as old and used tyres scrap (multiple cuts/pressed baled/shredded). It is evident that seizure of goods is not an end in itself. Goods can only be seized if the proper officer has reason to believe that such goods are liable to confiscation. Further more, seizure cannot also be for an indefinite period. Timeline is provided in sub section (2) of section 110. In case of confiscation, the statute has provided for the requisite procedural safeguards in section 124. As a pragmatic measure, provisional release of seized goods pending adjudication is provided in section 110A. Having regard to the dispute raised and the statutory framework in place, we feel that it may not be proper for the writ court to step in at this stage to render a finding as to whether the seized goods are old and used rubber tyres scrap in pressed baled form or rubber tyre in reusable form; in other words, whether the imported goods fall under the customs tariff heading of 4004000 or under the heading of 4012, which will basically be a finding of fact. Therefore, we are of the view that this aspect should be best left to the adjudicating authority to decide, if it requires adjudication. Pre-empting an adjudication on this issue by the writ court by taking a view one way or the other may not be justified. While respondents have stated that getting the goods examined by a Chartered Engineer is a well established departmental procedure, it is also a well established departmental procedure that in the case of seizure samples are drawn and then sent for testing in accredited laboratory/laboratories. We see no harm in acceding to such a request of the petitioner. Rather it will only facilitate a fair investigation and consequently fair adjudication. Petition disposed off.
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2020 (11) TMI 165
Condonation of delay of 764 days in filing appeal - imposition of penalty on the Appellant, a clearing and forwarding Agent - alleged violation of Regulation No. 11(a) and (n) of CBLR, 2013 - HELD THAT:- For the fault of the advisor/counsel, the Assessee should not suffer and the fact finding bodies like Tribunal should make endeavour to decide the appeals on merits, as far as possible rather than taking a pedantic approach of dismissing the appeals on the ground of delay, unless there is a gross delay and no sufficient reason is made out. Keeping in view the fact that there was a finding against the Assessee about the alleged mis-declaration, for which penalty was imposed on the Assessee, we are of the view that the Final Appellate Authority under the Act, ought to have applied its mind to the merits of the case and then decide the appeal on merits - the matter is remitted back to the learned Tribunal for deciding the appeal on merits and in accordance with law, after giving an opportunity of hearing to both the parties - Appeal allowed by way of remand.
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2020 (11) TMI 164
Valuation of imported goods - watches - rejection of transaction value - Revenue has mainly contended that the impugned order is not legal and proper inasmuch as the prevalent price of same model of watches sold in ecommerce sites by different sellers at the relevant point of time was at much higher side - HELD THAT:- The learned Commissioner (Appeals) has recorded the findings that price taken for comparison from e-commerce sites cannot be considered as contemporaneous value of goods to reject the transaction value and has also relied upon various authoritative judgments pronounced by the Hon ble Supreme Court, wherein it has been held that in absence of any of the special circumstances indicated in Section 14(1) ibid read with Rule 3 of the Customs Valuation Rules, 2007, the price actually paid to the supplier shall be considered as the transaction value. The observations made by the learned Commissioner (Appeals) in the impugned order are in conformity with the statutory provisions. Thus, such findings recorded in the impugned order cannot be disturbed at this juncture for deciding the case differently - there are no infirmity in the impugned order passed by the learned Commissioner (Appeals) - appeal dismissed - decided against Revenue.
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2020 (11) TMI 151
Exemption from IGST - Re-import of aircrafts and parts thereof after repairs - Availability of Integrated Goods and Service Tax [the Integrated Tax] exemption provided at serial no. 2 in the General Exemption Notification No. 45/2017 dated June 30, 2017 - HELD THAT:- A bare perusal of section 12(1) of the Customs Act shows that duties of customs shall be levied at such rates as are specified under the Tariff Act or any other law for the time being in force, on goods imported into, or exported from India. The contention of the learned Authorized Representatives of the Department is that section 12(1) of the Customs Act leaves no manner of doubt that duties of customs are levied not only under the provisions of the Customs Act and the Tariff Act but also under any other law for the time being in force . Thus, the integrated tax leviable on imported goods by the Integrated Tax Act would also be a duty of customs and, therefore, the Appellant was correctly denied exemption from integrated tax leviable under section 3(7) of the Tariff Act - even the levy of additional duty under section 3 of the Tariff Act, which is in addition to the duty of customs under section 2 of the Tariff Act, would not be duty of customs for the purpose of Notifications issued under the Customs Act. It is, therefore, clear that though integrated tax is levied under section 5 of the Integrated Tax Act, but it is collected in accordance with the provisions of section 3 of the Tariff Act on the value as determined under the Tariff Act and at the point when duties of customs are levied under section 12 of the Customs Act. Thus, integrated tax is levied under section 5(1) of the Integrated Tax Act and only the procedure for collection has been provided under section 3 of the Tariff Act. A perusal of the main body of the Exemption Notification would indicate that it refers not only to duty of customs leviable thereon which is specified in the First Schedule to the Tariff Act, but also to integrated tax and compensation cess which are leviable thereon respectively under sub-sections (7) and (9) of section 3 of the Tariff Act. However, column (3) of the Table accompanying the main Notification for serial no. 2 refers to only duty of customs (without mentioning leviable thereon which is specified in the First Schedule ), on the fair cost of repairs carried out with insurance and freight charges - It is not possible to accept this reasoning advanced by the learned Authorised Representatives of the Department. In the first instance, the meaning assigned to duty of customs, as discussed above, is the meaning assigned to duty under section 2(15) of the Customs Act, which would be the duty leviable under section 12 of the Customs Act. Mere omission to mention specified in the First Schedule to the Tariff Act after Duty of customs in the conditions set out in column (3) of the Table for Serial No. 2 cannot lead to an inference that duty of customs would include integrated tax and compensation cess. It would also be relevant to refer to the entries at serial no. 1 of the Exemption Notification. Serial no. 1 specifically refers to what types of duties or taxes are leviable under different situations. There is a specific reference to integrated tax in column (3) in connection with serial no. 1 (d) and to integrated tax and compensation cess in connection with serial no. 1(e). There is, therefore, enough intrinsic evidence in the Exemption Notification itself to show that integrated tax cannot be understood as duty of customs in the Exemption Notification. Thus, the absence of mention of integrated tax and compensation cess in column (3) under serial no. 2 of the Exemption Notification would mean that only the basic customs duty on the fair cost of repair charges, freight and insurance charges are payable and integrated tax and compensation cess are wholly exempted - It would, therefore, not be necessary to examine the contention of learned Authorised Representatives of the Department that in case of any ambiguity in an Exemption Notification, the benefit should go to the Revenue. It would also not be necessary to examine the remaining contentions advanced by the learned Counsel for the Appellant that the activity of repairs is supply of service or that the said activity would not fall under the category of import of service under the Integrated Tax Act since the necessary ingredients mentioned therein have not been fulfilled. The Appellant is entitled to exemption from payment of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2020 (11) TMI 163
Directions to respondents to permit the petitioners to get reappointed as Directors of any Company or appointed in any other Company without any hindrance - HELD THAT:- The issue involved in these writ petitions is no more a res integra. It is to be stated that the Registrar of Companies (RoC) has been disqualifying the Directors under Section 164(2)(a) of the Companies Act, 2013 by order dated 08.09.2017. Another list was published in the website of the first respondent on 01.11.2017 disqualifying the Directors. Yet another list of Directors were disqualified on 17.12.2018 by the RoC. Petition allowed.
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2020 (11) TMI 162
Sanction of Scheme of Amalgamation - sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- Directions regarding various meetings to be held and to be convened are issued - directions regarding service of notices issued - scheme sanctioned.
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2020 (11) TMI 161
Restoration of name of company in the Register of Companies - section 252(3) of the Companies Act, 2013 read with Rule 87A of the National Company Law Tribunal Rules, 2016 - HELD THAT:- The Appellant has been able to satisfy this bench that it has certain assets which necessitate and justify the restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would neither be just nor equitable. As per several decisions of various courts it should only be an exceptional circumstance that court should refuse restoration where the company has been struck off for its failure to file annual return as that would be excessive or inappropriate penalty for that oversight. The Respondent herein, is ordered to restore the original status of the Appellant Company as if the name of the Company has not been struck off from the Registrar of Companies and take all consequential actions such as change of Company's status from 'Strike Off to 'Active' (for e-filing), restoration of status of DIN etc. - Application allowed.
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2020 (11) TMI 160
Restoration of name of company in the Register of Companies - section 252(3) of the Companies Act, 2013 read with Rule 87A of the National Company Law Tribunal Rules, 2016 - HELD THAT:- The provisions pertaining to restoration of the name of the company has been provided in Section 252 of the Companies Act 2013 which includes that, if it is just and equitable to restore the name of the company in the Registrar of Companies, it may direct the ROC to restore the name in its Register - The Appellant has been able to satisfy this bench that it has certain assets which necessitate and justify the restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would neither be just nor equitable. As per several decisions of various courts it should only be an exceptional circumstance that court should refuse restoration where the company has been struck off for its failure to file annual return as that would be excessive or inappropriate penalty for that oversight. The Registrar of Companies, the Respondent herein, is ordered to restore the original status of the Appellant Company as if the name of the Company has not been struck off from the Registrar of Companies and take all consequential actions such as change of Company's status from 'Strike Off to 'Active' (for e-filing), restoration of status of DIN etc. - Application allowed.
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2020 (11) TMI 159
Oppression and mismanagement - Section 241-242/244 of the Companies Act, 2013 - alleged unilateral and illegal acts committed by Respondent No. 2 and his branch of the family in relation to the affairs of the company in the manner prejudicial and oppressive to the petitioners and against the interest of the company - HELD THAT:- This Tribunal is of the view that prayer made by the respondent cannot be allowed for joint operation of the bank accounts as it will result in inducting the said respondents back as directors of the Company which cannot be done at this interim stage. This Tribunal hereby allows the prayer made by the petitioner by permitting the banking operations of respondent No. 1 i.e. Madhusudan Motors Pvt. Ltd. to be restored with the conditions that the company will be permitted to operate the bank accounts to ensure day to day bussiness of the company. Only routine expenditure is being permitted to be made from the bank accounts till the final disposal of the company petition by this tribunal or till the further order and it is also directed to respondent No. 1 as well as he petitioner to file the quarterly statements of the expenditure and bank accounts every three months before this Tribunal. This tribunal grants interim relief directing the banks to defreeze the bank accounts of Respondent No. 1 Company - Application allowed.
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Insolvency & Bankruptcy
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2020 (11) TMI 158
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- As per Section 7 of IBC, in an application preferred by the Financial Creditor for initiation of Corporate Insolvency Resolution Process, the Adjudicating Authority is required to see the existence of financial debt and ascertain the existence of default. As per the documents submitted by the Petitioner that there is a financial debt in the form of loans availed by the Corporate Debtor. The date of default is on 26.10.2015. The last date of transaction from the statement of accounts furnished is on 22.06.2017. The application is filed on 12.04.2018, hence the application is filed well within the period of limitation. From the documents placed on record, this Adjudicating Authority is satisfied that default has been committed by the Corporate Debtor in repayment of loan amount to the Bank. The petition is complete - Petition admitted - moratorium declared.
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2020 (11) TMI 157
CIRP Proceedings - Levy and Recovery of Capital Gains Tax - proceeds received from sale of assets of the corporate debtor - the amount to be included in the liquidation cost or to be distributed as per waterfall mechanism under Sec 53 of IBC? - HELD THAT:- This Adjudicating Authority is of the view that the applicability of Sec 45 and 46 of The income Tax Act will not have an overriding effect on the water fall mechanism provided under Sec 53 of the IBC, 2016, which is a complete code in itself and thus capital gain shall not be taken into consideration as the liquidation cost. Further, it is observed that Sec 178 of Income Tax Act, 1961 provides for a priority in appropriation of the amount set aside by the liquidator for clearance of tax dues but it is to consider that the liquidation of accompany could be under the provisions of different enactments. And as for liquidation under IBC, Sec 178 of IT Act stands excluded by virtue of amendment of Section 178(6) with effect from 01.11.2016, in accordance with the provision of Sec 247 of the IBC read with Third Schedule appended there to, therefore, as the corporate debtor is in liquidation under the Code, the Income Tax Department can no longer claim a priority in respect of clearance of tax dues as provided Under Sec 178(2) and (3) of the Income Tax Act, 1961. As per Sec 238 of the Code, the provision of the Code shall have an overriding effect on any other enactment and Sec 53 of the Code provides the waterfall mechanism for distribution of assets in which Sec 53(b) i.e. the debt owed to the secured creditors has been given priority over government dues as reflected under Sec 53(i) and has to be dealt accordingly. Thus, the tax liability arising out of the sale of assets by the liquidator shall be distributed in accordance with the provisions of Section 53 of the Insolvency and Bankruptcy Code, 2016 and the capital gain tax shall not be treated as the liquidation cost - application disposed off.
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Service Tax
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2020 (11) TMI 153
Business Auxiliary Services - commission received from financial institutions for arranging finances for the purchasers - HELD THAT:- Since the Central Government has implemented the Goods and Service Tax Act in 2017, with effect from 1st July 2017, service tax has been subsumed into the same; consequently this Writ Petition has become infructuous. In view of the subsequent events, nothing remains for further consideration in the Writ Petition - Writ Petition is dismissed as infructuous.
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2020 (11) TMI 152
Taxability - Whether bariatric surgery which the appellant performs would be cosmetic surgery or plastic surgery so as to be taxable under section 65(105)(zzzzk) of the Finance Act, 1994 - Period from November, 2011 upto March, 2015 - HELD THAT:- The bariatric surgery is distinct from the plastic or cosmetic surgery. Bariatric surgery is a procedure through which the intake capacity of the patient is restricted, thereby resulting in weight loss which is necessary for control of obesity related diseases, while plastic or cosmetic surgery is intended to improve the outer shape and appearance of the body. Bariatric surgery is undertaken only on those patients who are diagnosed with morbid obesity, which itself is a disease, with other co-morbidities and on such patients who have a BMI of over 32.5. The Central Board of Excise and Customs has also clarified that the service proposed to be taxed were cosmetic surgery and plastic surgery undertaken to preserve or enhance physical appearance or beauty. Liposuction has been mentioned to a commonly known cosmetic surgery. Liposuction, however, is not bariatric surgery. The aim of liposuction is only to remove the excess fat of the body from specific target areas through suctioning so as to improve the shape and contour of the body, but the aim and object of bariatric surgery is to cure the state of morbid obesity and related disease. The discharge summary of the patients has been enclosed Annexure-5 to the appeal memo. The diagnosis and the summary of the case in all the discharge summary mentions morbid obesity with one or more life-taking disease of the nature referred to by the appellant. It is, therefore, not possible to conclude from the discharge summary that the patients undergoing bariatric surgery did not suffer from morbid obesity coupled with such diseases. Thus, when the Department itself accepted the findings of the Additional Commissioner in the aforesaid order dated February 22, 2016 that bariatric surgery is not cosmetic surgery or plastic surgery, it is not open to the Department to now contend that bariatric surgery is cosmetic surgery or plastic surgery. The confirmation of demand in the impugned order for this reason cannot be sustained - thus it can be concluded that bariatric surgery performed by the appellant on patients suffering from morbid obesity coupled with life-taking diseases like Type-II diabetes and Hypertension, arthritis, lipid disorder or obstructed sleep apnea or disease of a like nature, cannot not be subjected to service tax under section 65(105)(zzzzk) of the Finance Act. Appeal allowed.- decided in favor of appellant.
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Central Excise
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2020 (11) TMI 156
Amount of tax dues - Substitution of estimated amount payable as mentioned in forms SVLDRS-2 and SVLDRS-3 with the tax dues less tax relief amounts - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - whether the petitioners could be prejudiced or put in a worse off condition firstly by filing appeal before the CESTAT and secondly by filing declarations under the scheme? HELD THAT:- We may refer to the maxim reformatio in peius. It is a latin phrase meaning a change towards the worse i.e., a change for the worse. As a legal expression it means that a lower court judgment is amended by a higher court into a worse one for those appealing it. In many jurisdictions, this practice is forbidden ensuring that an appellant cannot be placed in a worse position as a result of filing an appeal. When the above phrase is prefixed by the words no or prohibition , which would render the maxim as no reformatio in peius or prohibition of reformatio in peius, it would denote a principle of procedure as per which using a remedy available in law should not aggravate the situation of the person who avails the remedy. In other words, a person should not be placed in a worse position as a result of filing an appeal. No reformatio in peius or prohibition of reformatio in peius is a part of fair procedure and thus by extension can also be construed as part of natural justice. It is not only a procedural guarantee but is also a principle of equity. The initial show cause-cum-demand notice dated 17.01.1992 cannot be said to be in existence after the order in original was passed on 29.03.2006 which order has been accepted by the department. Quantification of dues had been done which was accepted by the department - Since the figures i.e., demand amounts in the order in original dated 29.03.2006 have been accepted by the respondents, it is those figures which would be material and not the figures mentioned in the show cause-cum-demand notice. Petitioners cannot be put in a worse off condition or the situation faced by them cannot be aggravated because they had availed the remedy of appeal or had sought relief under the scheme which is a beneficial one. Having regard to the objective of the scheme, in a case of this nature, a reasonable and pragmatic approach has to be adopted so that a declarant can avail the benefits of the scheme; a declarant who seeks benefit under the scheme cannot be put in a worse off condition than he was before making declaration under the scheme. That would defeat the very purpose of the scheme. This Court had already clarified that payments made by the petitioners following issuance of forms SVLDRS-2 and SVLDRS-3 would be subject to outcome of the writ petitions and if the petitioners succeed, they would be entitled to the refund of excess payment made without having to institute separate proceedings - the tax dues in respect of each of the three petitioners shall be treated as ₹ 6,15,017.00, ₹ 10,12,375.00 and ₹ 2,66,193.00 respectively, ₹ 18,93,585.00 collectively, and payments made by the petitioners in excess shall be refunded to them within a period of eight weeks from the date of receipt of a copy of this judgment. Petition allowed.
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CST, VAT & Sales Tax
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2020 (11) TMI 155
Levy of Interest on belated payment of tax - belated filing of returns - Section 24(3) of the TNGST Act read with Section 9(2-A) of the Central Sales Tax Act, 1956 - HELD THAT:- As per Section 24(3- A) of TNGST Act, a dealer who files the prescribed return, after the expiry of the prescribed period, but within 10 days from the expiry thereof is required to pay interest at 2% of the tax payable for every month or part thereof. It is abundantly clear that the liability to pay interest under Section 24(3-A) is triggered if the return is not filed on the prescribed date - However, this provision applies only if the return is filed belatedly but within 10 days from the expiry of the prescribed period. The prescribed period in these cases is the 12th of the succeeding calendar month and the learned Additional Government Pleader does not dispute the fact that the returns were filed on or before the 20th of the succeeding calendar month, which is within 10 days from the prescribed last date. Therefore, Section 24(3-A) undoubtedly applies to these cases. On account of the above position, we conclude that the apposite provision, in this case, is Section 24(3-A) rather than Section 24(3). Once Section 24(3-A) is held to be applicable, the challenge to the impugned orders is not sustainable and these orders are not liable to be interfered with except to the limited extent of holding that the relevant provision in these cases is Section 24(3-A) and not Section 24(3). In this regard, the settled position is that an order is not vitiated merely because a wrong provision of law is cited therein provided the relevant statute contains an appropriate provision for such purpose. The writ petitions are disposed of by affirming the liability to pay interest, albeit in terms of Section 24(3-A) of the TNGST Act read with the relevant provision of the CST Act, where applicable.
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2020 (11) TMI 154
Vires of Bihar Entry of Goods into Local Area for Consumption, Use or Sale Therein (Amendment and Validation) Act, 2008 - ex-parte assessment order - It is the argument of the petitioner that the schedule under the amendment Act, 2007 wholly substituted the schedule under the principal Act, which also meant that all notifications prescribing rate of tax for the scheduled goods stood repealed - HELD THAT:- SO 95 dated July 31, 2008 which prescribes that the said Notifications were to come into force with effect from April 1, 2008 is merely clarificatory in nature and in any event would not supersede or substitute the earlier Notifications, i.e. SO 92, SO 159; or SO 99. It is a settled principle of law that fiscal statutes need to be interpreted and applied strictly and the benefit of doubt, if at all, would enure in favour of the assessee. However, it is equally settled that if the assessee is liable to be subjected to incidence of taxation, then he must abide by and be dutiful in paying the tax, expeditiously, and in accordance with law - Upon perusal of the impugned assessment order dated August 25, 2011 passed by the Assistant Commissioner of Commercial Taxes, Gopalganj Circle, Gopalganj, which according to Shri Vikash Kumar, the learned counsel for the Revenue, is not placed fully on record, we notice that he same was passed in the absence of the assessee and was ex parte in nature. The order appears to have been passed without proper application of mind. Even the order passed by the Revisional Authority, running into one and a half pages, to say the least, is cryptic in nature, not even referring to, much less dealing with the contentions raised by the petitioner. The Assessing Officer shall pass a fresh order with respect to the assessment in issue, i.e., assessment years 2006-07 and 2007-08 - Petition allowed by way of remand.
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