TMI Tax Updates - e-Newsletter
December 20, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Highlights / Catch Notes

• GST:

  Levy of GST - supply or not - part recovery of 'renting of motor vehicles services'/'cab services' from employees in respect of the transport facility provided to them - For applicant, arranging the transport facility for their employees is definitely not an activity which is incidental or ancillary to the activity of software development, nor can it be called an activity done in the course of or in furtherance of development of software as it is not integrally connected to the business in such a way that without this the business will not function. - AAR
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• GST:

  Levy of GST - Valuation - Electricity charges and Water charges paid by the Applicant as per meter reading and collected from the recipients at actual on reimbursement basis - Pure agent or not - scope of supply - The reimbursed electricity and water charges charged to the licensee by issuing debit note or paid by the licensee is considered monthly License fee and total value along with fixed monthly rent is to be considered as transaction value of rent for the purpose levy of tax under GST Act. - AAR
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• Income Tax:

  Reopening of assessment u/s 147 - sanction required u/s 151 has not been validly obtained - even while conveying the approval for re-opening, Addl.CIT has displayed non-application of mind. The non-approval is given for re-opening the assessment of Petitioner but in the reference it pertains to another entity and a communication dated 07/08/2017 is referred to. This also indicates that the Addl.CIT has granted sanction without even reading the letter. The notice under Section 148 has to be set aside and the same is hereby set aside - HC
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• Income Tax:

  Deduction of big amounts debited as IICM contribution in the profit and loss account - Ascertained expenditure - The tribunal examined the factual position as well as the documents which were placed by the assessee and held that the said sum paid to IICM was crystalised as liability of the assessee during the relevant previous year and the sum in question is revenue expenditure incurred for training of the employees/executives and the sum is not hit by the provisions of Section 40 A (9) of the Act. Therefore, the contention advanced by the assessee was accepted and the deduction was directed to be allowed. - HC
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• Income Tax:

  Appeal in case of acquittal - prosecution u/s 277A - condonation of delay in filing an application for grant of special leave to appeal - A very significant and important question regarding power and jurisdiction of this Court arises in the present matter. Considering the views expressed in the abovementioned judgments of the Hon’ble Supreme Court governing the field, we see no option but to resort to Rule 8 of Chapter I of the Bombay High Court Appellate Side Rules, 1960, to make a reference to two or more judges of this Court - HC
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• Income Tax:

  Revision u/s 263 by CIT - Having come to a conclusion that the income should be taxed under the had ‘income from other sources’ it was not open to the PCIT to direct the A.O. to make enquiries and verifications without keeping the issue open for him to be determined afresh. It is evident that the issue was foreclosed in the revisional order itself and the A.O. was simply directed to follow the dotted lines in the garb of lack of proper enquiries or verifications. - Manifestly, the revisional order does not pass the test of prerequisites of jurisdiction embedded in section 263 of the Act. In our view, the PCIT has failed to demonstrate any perceived error in the assessment order. - AT
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• Income Tax:

  Penalty u/s 271G - assessee failed to keep and maintain any information as per the provisions of section 92D - The order of authorities below is conspicuous inasmuch as there is no mention as to what document required/ordered for and which were not maintained. The order passed by the authorities below is mechanical without proper application of mind. Hence, on the touchstone of above discussion and precedents we set aside the order of authorities below and direct that the penalty be deleted - AT
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• Income Tax:

  Additional depreciation u/s. 32(1)(iia) on block of assets like Computers and Software - Assets eligible for additional depreciation must be plant or machinery. Also that such plant or machinery should not be installed in any office premises or residential accommodation. We note that the development activity carried on by the assessee cannot be considered to be a manufacturing activity. - However, the alternative plea to allow the deprecation in the subsequent assessment year on the enhanced WDV of block of assets at the prevailing rates cannot be denied. - AT
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• Income Tax:

  Disallowing the business advances written off - Trading loss u/s 28 - claim of assessee to be considered u/s. 28 or section 37 - In the present facts of the case, there is no dispute that the advances were given by the assessee in the normal course of its business and when a loss arises due to non-recovery of such advances and when the same is irrecoverable and written off as such, the same should be allowed as a business loss while computing the profit and gains of business. - AT
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• Income Tax:

  Scope of Section 44BB - Service tax inclusion in the gross revenue for computing profits under presumptive provisions of section 44BB - The Hon’ble Court is clearly spelt that even otherwise, it is not every amount paid on account of provision of services and facilities which must be deemed to be the income of the assessee under Section 44BB . It is only such amounts, which are paid to the assessee on account of the services and facilities provided by them, in the prospecting for or extraction or production of mineral oils, which alone must be deemed to be the income of the assessee. - AT
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• Income Tax:

  Deduction u/s 80P(2)(a)(i) - assessee has shown interest income which was received from the non-members - There remains no ambiguity that income received by the assessee on the money deposited with the bank is not eligible for deduction under section 80P(2)(a)(i) of the Act - profits and gains attributable to non-members arising as a result of advancement of loans was held to be not an allowable deduction under Section 80P(2)(a)(i) of the Act - AT
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• Income Tax:

  Unexplained expenditures and unaccounted cash payment - Onus to proof - once the revenue has treated the entire amount of expenditure as unexplained expense under section 69C of the Act, there cannot be any addition separately being part and parcel of the total addition otherwise it would lead to the double addition which is not warranted under the provisions of law until and unless the provisions of law requires so - AT
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• Customs:

  Illegal removal of goods under the custody of CFS - Levy of penalty under Regulations 12 (8) of HCCAR 2009, apart from directing the appellants to compensate the Government for the losses caused due to the negligence on the part of the custodian - There has been serious violations to the Government Regulations as alleged by the Revenue, in as much as the goods were released without there being specific instructions to do so from the Revenue. The only natural consequence, therefore, that has to follow is as prescribed under sub-section (3) to Section 45 of the Customs Act, 1962, since the appellant has not made out any case for not invoking the said provision. - AT
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• Customs:

  Import of Embroidery Beads/Stones - the description of the goods in the test report was only an elaboration of the description already given in the bills of entry and nothing else. This cannot be called a mis-declaration of the description of the goods. Therefore, confiscation of the goods under Section 111 (m) and imposition of penalty under Section 125 cannot be sustained and need to be set aside. - AT
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• Indian Laws:

  SAFEMA - Service of primary notice - illegally acquired properties - relatives of the convict - Competent authority claims that the subject property (to be forfeited) is that of the convict and ostensibly held by the relatives of the convict (respondents herein) - in the present case, the properties in question and subject matter of notice under Section 6 are in the name of and held by the two respondents. No entitlement or right has been claimed in these properties by the heirs of the deceased convict. If the properties were in the name of the deceased detenu or convict, then different considerations may have applied. In the context of the present case as the convict had expired before the issuance of notice under Section 6 on 19th January 1994, therefore, the need and requirement to serve notice on him would not arise. - SC
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• IBC:

  Initiation of CIRP - NCLT rejected the application of appellant u/s 9 - Period of limitation - The Ld. Adjudicating Authority has taken note of the fact that the Demand Notice issued under Section 8 of the IBC on 15.03.2019 which was sent through Registered post on 19.03.2019. However, the same was returned with a postal remark “addressee moved”. - The Ld. Adjudicating Authority have giving finding that debt failed due on 01.04.2015 as admitted by the Petitioner, hence the Application filed under Section 9 of the IBC barred by limitation. - AT
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• IBC:

  Initiation of CIRP - NCLT admitted the application - Financial Creditors - Share Application Money in the event of non-allotment of shares - Loan/Debt or not - Share Application Money in the event of non-allotment of shares, attracts interest under Section 42(6) of the Companies Act, 2013 and therefore falls within the ambit of definition of ‘Financial Debt’ as defined under Section 5(8) of the Code - AT
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• Service Tax:

  Classification of service - site formation and clearance, excavation and earth moving and demolition service or not - The appellant had merely procured land, paid Government fees etc. This activity, in no way, can be considered as a taxable service under the category of “site formation and clearance, excavation and earthmoving and demolition service’’ inasmuch as the work assigned under the agreement for completion of the phase I project do not attract any of the clauses itemized in the definition provided under Section 65(97a) ibid. - Similarly, the services provided by the appellant would also not fall under the purview and scope of the definition of “service” as per Section 65B (44) ibid for the period post 01.07.2012, onwards - AT
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• Service Tax:

  CENVAT Credit - consequential refund of Service Tax paid - reverse charge mechanism - The appellant is entitled to Cenvat credit of the said amount deposited under the erstwhile service tax law. As the Cenvat credit is not available, due to the implementation of GST w.e.f. 1st July 2017, the appellant is entitled to claim refund under the transitional provision of Section 142 (3) of CGST Act. - AT
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Articles

• ITC available on GST charged by contractor supplying service of works contract to extent of machine foundation
• SCRUTINY OF RETURNS UNDER GST

Notifications

• Customs

• 73/2021 - dated 17-12-2021 - ADD
  Seeks to impose Anti-dumping Duty on Imports of calcined gypsum powder from Iran. Oman, Saudi Arabia and United Arab Emirates (UAE)

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• 72/2021 - dated 17-12-2021 - ADD
  Seeks to impose Anti-dumping Duty on Imports of hydrogen peroxide from Bangladesh

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• 71/2021 - dated 17-12-2021 - ADD
  Seeks to impose Anti-dumping Duty on Imports of Sodium Hydrosulphite from China PR and Korea RP

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• 70/2021 - dated 17-12-2021 - ADD
  Seeks to amend Notification No. 47/2021-Customs(ADD) dated 26.08.2021 regarding levy of anti-dumping duty on "Natural Mica based Pearl Industrial Pigment excluding cosmetic grade" to amend the name of exporter from "Nanyang Lingbao Pearl Pigment Company Limited Materials" to "Henan Lingbao New Materials Technology Co., Ltd."

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• G.S.R. 864 (E) - dated 17-12-2021 - Cus (NT)
  Seeks to amend Notification No. 83/2021-Customs(N.T.), dated the 27th October, 2021

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• GST - States

• 67/GST-2 - dated 16-12-2021 - Haryana SGST
  Amendment in Notification No.112/ST-2 dated 18.10.2017(Sh. Ravinder Kaushik, Jt. Excise & Taxation Commissioner) under section 96 of the HGST Act, 2017

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• F A 3-33/2017/1/V (86) - dated 16-12-2021 - Madhya Pradesh SGST
  Amendment in Notification No. F A3-33-2017-l-V(42) dated the 29th June, 2017

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• F A 3-32/2017/1V (87) - dated 16-12-2021 - Madhya Pradesh SGST
  Amendment in Notification No. FA3-32-2017-1-V(41) dated the 29th June, 2017

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• 37/2021-State Tax - dated 14-12-2021 - Maharashtra SGST
  Maharashtra Goods and Services Tax (Ninth Amendment) Rules, 2021

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• G.O. Ms. No. 17/2021-Puducherry GST (Rate) - dated 7-12-2021 - Puducherry SGST
  Amendment in Notification G.O. Ms. No. 17/2017-Puducherry GST (Rate), dated 29th June, 2017

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• G.O. Ms. No. 16/2021-Puducherry GST (Rate) - dated 7-12-2021 - Puducherry SGST
  Amendment in Notification G.O. Ms. No. 12/2017-Puducherry GST (Rate), dated 29th June, 2017

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• G.O. Ms. No. 15/2021-Puducherry GST (Rate) - dated 7-12-2021 - Puducherry SGST
  Amendment in Notification G.O. Ms. No. 11/2017-Puducherry GST (Rate), dated 29th June, 2017

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• [G.O. Ms. No. 14/2021-Puducherry GST (Rate) - dated 7-12-2021 - Puducherry SGST
  Amendment in Notification G.O. Ms. No. 1/2017-Puducherry GST (Rate), dated 29th June, 2017

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• 17/2021-VI(1)/349(c-2)/2021 - dated 3-12-2021 - Tamil Nadu SGST
  Jurisdiction of the officers

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• 16/2021-VI(1)/349(c-1)/2021 - dated 3-12-2021 - Tamil Nadu SGST
  Jurisdiction of the officers

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• G.O. Ms. No. 168 - dated 2-12-2021 - Tamil Nadu SGST
  Tamil Nadu Goods and Services Tax (Ninth Amendment) Rules, 2021

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Circulars / Instructions / Orders

• GST - 167/23/2021 - dated 17-12-2021
  GST on service supplied by restaurants through e-commerce operators

News

• Union Commerce Minister Shri Piyush Goyal interacts with Indian exporters and businesses to Enhance Market Access for India in UAE

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• PM GatiShakti roll-out gets Impetus: Empowered Group of Secretaries (EGoS) holds its first meeting

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• Advance Tax collections for the F.Y. 2021-22 (Till 3rd Installment) stand at ₹ 4,59,917.10 crore as on 16.12.2021 which shows a growth of approximately 53.50%

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Case Laws:

• GST

• 2021 (12) TMI 779
  Seeking release of conveyance with goods - since the Tribunal has not yet been constituted in the State of U.P., so this writ petition has been preferred - Section 129 (1) (a) of IGST/CGST Act - HELD THAT:- The matter requires consideration. Giving the circumstances of the present case, this case is not a fit case to issue an interim order at this stage.

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• 2021 (12) TMI 778
  Refund under CGST and SGST Act along with interest - difference between the adjusted total turnover in FORM GSTR-3B and FORM GSTR-01 - refund rejected without assigning any reason against which the petitioner filed an appeal - HELD THAT:- Issue notice. Mr. Sumit Batra, Advocate accepts notice on behalf of respondent no.1 and Mr. Sushil Kumar Pandey, Advocate accepts notice on behalf of respondent no.2/UOI. They pray for and are permitted to file their counter-affidavits within four weeks. Rejoinder-affidavits, if any, be filed before the next date of hearing. List on 29th March, 2022.

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• 2021 (12) TMI 777
  Principles of natural justice - it is submitted that the impugned order has been passed without uploading the order as is required under the provisions of the Tamil Nadu Goods and Services Act, 2017 read with Tamil Nadu Goods and Services Rules, 2017 - HELD THAT:- There is no merits in the submission of the counsel of the petitioner that the petitioner has not been issued with the hearing notice. Be that as it may, the petitioner has an alternate remedy before the Appellate Commissioner under Section 107 of the Tamil Nadu Goods and Services Act, 2017. The petitioner is at liberty to file an appeal before the Appellate Commissioner under Section 107 of Tamil Nadu Goods and Services Act, 2017 within a period of thirty days from the date of receipt of a copy of this order - In case, that such appeal is filed by the petitioner within such time, the Appellate Commissioner shall pass appropriate orders on merits and in accordance with law preferably within a period of three months from the date of receipt of a copy of this order after giving an opportunity of personal hearing to the petitioner. Petition disposed off.

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• 2021 (12) TMI 776
  Revocation of cancellation of GST registration of the petitioner - Section 30 of the TNGST Act - HELD THAT:- The facts on record indicate that the petitioner was issued with a Show Cause Notice dated 24.08.2021 under Section 29 2(b) of the Central Goods and Services Tax Act, 2017. The petitioner was also directed to appear before the Superintendent on 26.08.2019. However, the petitioner failed to respond to the same and under these circumstances, an order of cancellation came to be passed under Section 29 of the aforesaid Act on 24.08.2019. The alternate remedy available to the petitioner to file an appeal before the Appellate Commissioner under Section 107 of the Central Goods and Services Tax Act, 2017 within a period of three months from the date of communication of the order dated 24.09.2019 and within another thirty days after condoning the delay properly explaining the reasons of delay had also expired. The time for approaching the respondent stood extended up to 31.08.2020 by which time the country was under the spell of Covid- 19 and lock down. Meanwhile, the Hon'ble Supreme Court has also passed a s uo motu Writ Petition in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER] and extending the limitation. Since there was a second wave of the pandemic, the Central Board of Indirect Taxes and Customs issued the Notification No.34/2021 Central Tax dated 29.08.2021 in partial modification of the Notification No.35/2020 Central Tax dated 03.04.2020, extended the period for filing appropriate application of revocation of cancellation by 30.09.2021. Considering the fact that the Government had itself taken a decision to allow the persons like petitioners to approach the respondents/appropriate authorities for revocation of the registration granted, there seems to be merits in the submission made by the learned counsel for the petitioner for allowing the writ petition Under Section 30 of the CGST Act, 2017, the petitioner is also required to file the returns along with the tax which ought to have been paid by the petitioner as a condition for entertaining the application in terms of Rule(23) CGST and TNGST Act, 2017 which is also to be complied by the petitioner. The respondents are directed to accept the returns filed in terms of proviso 2 Rule 23 of the either Rules and facilitate the payment of tax by the petitioner - Petition disposed off.

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• 2021 (12) TMI 775
  Maintainability of appeal - appeal was dismissed on the ground of time limitation - Section 107 of The Central Goods and Services Tax Act, 2017 - HELD THAT:- The facts indicate that the third respondent had passed an order dated 15.06.2020 at the time when lock down was clamped on account of the out break of Covid-19 pandemic. The petitioner has filed an appeal on 05.11.2020. After the appeal was filed, the Hon'ble Supreme Court has further extended a period of limitation vide order dated 08.03.2021 and 23.09.2021. The second respondent ought to have taken note of the same and numbered the appeal and taken up the appeal for final hearing. This writ petition stands allowed by directing the second respondent to take up the appeal filed by the petitioner and consider the same in accordance with law and on merits within a period of sixty (60) days from the date of receipt of a copy of this order.

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• 2021 (12) TMI 774
  Levy of GST - supply or not - part recovery of 'renting of motor vehicles services'/'cab services' from employees in respect of the transport facility provided to them - valuation of supply keeping in mind that employee and the applicant are related party as per provisions of GST law - admissibility of ITC in respect of GST paid on inward supply of 'renting of motor vehicles service' which are used for the employee - HELD THAT:- GST is discharged on the gross value of bills raised on the applicant by the third party vendors. We also observe that the partial amounts recovered by the applicant from its employees in respect of use of such transport facility are a part of the amount paid to the third party vendors which has already suffered GST. Therefore, in the subject case, the applicant is not providing transportation facility to its employees, in fact the applicant is a receiver of such services. For applicant, arranging the transport facility for their employees is definitely not an activity which is incidental or ancillary to the activity of software development, nor can it be called an activity done in the course of or in furtherance of development of software as it is not integrally connected to the business in such a way that without this the business will not function. As arranging transport facility to its employee is not a supply of service, accordingly the remaining questions become redundant and merit no discussion - application disposed off.

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• 2021 (12) TMI 773
  Levy of GST - Valuation - Electricity charges and Water charges paid by the Applicant as per meter reading and collected from the recipients at actual on reimbursement basis - Pure agent or not - scope of supply - addition of value of Electricity and Water charges to the monthly License Fee if as per terms of the contract tenant user is paying for such utility services directly to the Service Provider i.e. Electricity Power Distributor/BMC - HELD THAT:- The applicant has agreed to lease out the premises which is an immovable property. As per entry no. 5 (a) of Schedule II. Renting of Immovable Property is a supply of services and liable to tax under the provisions of GST Act. The utilities such as electricity and water supply are basic amenities subject to which competent authority will not issue occupancy certificate for conducting commercial activities/ business - The payment of rent is fixed on monthly basis which is for the occupancy and also the use of the premises whereas the variable amount of electricity and water charges (at actuals), paid by the Licensee, is for effective enjoyment of the rented premises without which the occupation of the premises could not be possible. Thus, the provision of essential services is mandatory on landlord and it is not mere facilitating the payment of electricity charges by the licensor. The value of supply includes incidental expenses charged by the supplier in respect to renting of premises for the purpose of levy of tax except for subsidies provided by the Government and the value of discount. Therefore, the charges for electricity and water charges recovered as reimbursements, even if at actuals, have the nature of incidental expenses in relation to renting of immovable property and are includible in the value of supply and are to be considered as transaction value for the purpose of levy of tax - The concept of a pure agent under GST Laws is covered under the provisions of Rule 33 of CGST Rules, 2017 and as per the said Rule 33, the expenditure or cost incurred by a supplier, as a pure agent of the recipient of the supply shall be excluded from the value of supply. However, such exclusion of expenditure incurred as a pure agent is possible only where certain conditions as mentioned in the said Rules are fulfilled and benefit is available only if the conditions stipulated in the rules are satisfied by the supplier. In the instant case, the main electric meter is in the name of the Applicant ; the service is not acquired from main supplier of electricity on the instructions from the tenant and thus the applicant does not act as pure agent of tenant in this respect. Even after the tenant leaves the premises, the main electric (or main water) meter is going to remain in the name of the Applicant. The supply under the main meter is not due to instructions from any particular tenant. With regards to a 'pure agent', the applicant contends that the reimbursement of expenses, such as electricity charges, water supply charges etc. incurred by it and received from lessee are towards payment to the third party suppliers. In present case the applicant has got the main electric connection in its own name and has created different sub connections at each location to know the actual consumption of electricity and water charges by the tenants which are to be apportioned/recovered from them as per floor space occupied. All these activities show that these supplies are on applicant's own account and is for effective enjoyment of premises. The reimbursed electricity and water charges charged to the licensee by issuing debit note or paid by the licensee is considered monthly License fee and total value along with fixed monthly rent is to be considered as transaction value of rent for the purpose levy of tax under GST Act.

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• Income Tax

• 2021 (12) TMI 772
  Reopening of assessment u/s 147 - Disallowance u/s 14A - HELD THAT:- When the appeal had been preferred by Petitioner before the ITAT, and disallowance u/s 14A of the said Act is the subject matter of that appeal, the AO could not have assessed or reassessed such income. Moreover by issuing the notice u/s 148 the AO in fact is sitting in appeal over the decision of CIT(A) to disallow only under Section 14A of the said Act. If he was aggrieved by the decision of CIT(A) to disallow only ₹ 1,82,207/- under Section 14A of the said Act, Revenue could have filed an appeal before ITAT. Having missed the bus, the Assessing Officer cannot adopt the route of re-opening and issue notice under Section 148. - Decided in favour of assessee.

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• 2021 (12) TMI 771
  Reopening of assessment u/s 147 - sanction required u/s 151 has not been validly obtained - HELD THAT:- The reasons recorded have to be final and it cannot be a draft submission for approval of the Principal CIT or Addl.CIT. The Assessing Officer has to record the final reasons as to why according to him a notice has to be issued under Section 148 and only if the Principal CIT / Addl.CIT is satisfied with the reasons so recorded, they can grant sanction and by applying their mind. The sanction cannot be given mechanically. It is based on the reasons on which a sanction has to be given for issuing the notice. Reasons cannot be submitted in a draft form for approval. The reasons have to be that of the Assessing Officer and the Commissioner cannot improve upon those reasons. Moreover, even while conveying the approval for re-opening, Addl.CIT has displayed non-application of mind. The non-approval is given for re-opening the assessment of Petitioner but in the reference it pertains to another entity by the name Laxmi Organic and a communication dated 07/08/2017 is referred to. This also indicates that the Addl.CIT has granted sanction without even reading the letter. The notice under Section 148 has to be set aside and the same is hereby set aside - Decided in favour of assessee.

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• 2021 (12) TMI 770
  Disallowance of depreciation - assessee failed to furnish any details either before AO or before him and failed to produce any reliable and convincing material to reverse the findings of the AO and therefore confirmed the findings of the AO - HELD THAT:- The documents referred to by the assessee were taken note of by the tribunal and after carefully considering the computation of total income for all the three Assessment Years, found that the depreciation claimed in the profit and loss account was depreciation claimed as per the Companies Act 1956 and that depreciation has been added to the profit and loss as per profit and loss account and depreciation as admissible under the provisions of section 32 was claimed by providing the relevant depreciation schedule which was given as annexure to the computation of total income in all the three years. In this regard the tribunal noted the depreciation chart which was filed by the assessee before the tribunal containing the records which were already available on file. On going through the records, the tribunal was satisfied that the assessee has added back the depreciation as per profit and loss account to the loss as per the profit and loss account and thereafter claimed depreciation which is permissible under section 32 - Thus, the tribunal concluded that the action of the AO in disallowing the claim is based on the premise that the assessee has made a double claim which was found to be factually incorrect by the tribunal. Accordingly, the disallowance was directed to be deleted. IICM contribution - CIT-A while considering the said issue held that it was not ascertainable as to how and under what circumstances such big amounts have been debited as IICM contribution in the profit and loss account, and it is not ascertainable as to whether claim of such expenses was incidental to the business activities carried on by the assessee or not as per relevant provisions of section 40 A (9) and therefore the expenditure was not allowable - HELD THAT:- The assessee pointed out that the said observation/findings of the Assessing Officer and CIT-A is factually incorrect and the tax auditor has not reported that the said sum has to be disallowed under section 40 A (9) - Assessing Officer and the CIT-A failed to take note of the vital facts that IICM is not a firm/trust/association/company set up for the general welfare of the employees - amount paid by holding company to IICM and subsequent payment made by the assessee company represent fee for participation in training programmes, organised by IICM - contribution made by the assessee company towards training has direct nexus with the nature of business of the assessee and therefore allowable as expenditure wholly and exclusively for the purpose of business of the assessee. The tribunal examined the factual position as well as the documents which were placed by the assessee and held that the said sum paid to IICM was crystalised as liability of the assessee during the relevant previous year and the sum in question is revenue expenditure incurred for training of the employees/executives and the sum is not hit by the provisions of Section 40 A (9) of the Act. Therefore, the contention advanced by the assessee was accepted and the deduction was directed to be allowed. Addition on account of closing stock of coal - CIT-A confirmed the order of the AO on the ground that the assessee failed to produce any evidence to prove their contention that there is no saleable value or realizable value of the closing stock of coal - HELD THAT:- As tribunal held that the value of the coal as determined by the Assessing Officer does not have any basis and accordingly accepted the contention advanced by the assessee - tribunal pointed out that the technical evaluation based on which the coal mixed with Matti etc. has been valued at NIL by the assessee has not been challenged as incorrect by the revenue authorities - as pointed out that in the event of the coal being mixed with Matti, and any sum realized by the assessee on such sale the same would be offered to tax by the assessee under section 28 of the Act or the same sum brought to tax by the revenue under section 41 (1). As perused the findings recorded by the tribunal on the other issues as well. The tribunal has proceeded to deal with the issues one after another. As noted above while dealing with each of the issue the tribunal has given the gist of the findings of the CIT-A who concurred with the Assessing Officer thereafter took note of the submissions of the assessee and decided the same for its correctness. While dealing so the tribunal considered the factual position in its entirety and granted relief to the assessee wherever admissible and permissible - we are fully satisfied that the case before us is entirely factual and the materials which were available on record were re-examined by the tribunal and relief has been granted to the assessee. The revenue cannot dispute the position of law that the tribunal is the last fact finding authority and this court exercising jurisdiction under section 260 A of the Act is not expected to re-examine the facts and record a different conclusion merely because it may be of the view that different conclusion would be appropriate. Though the expression substantial questions of law is not defined in the Act, the tests laid down by the Constitution Bench of the Hon ble Supreme Court in Sir Chunilal V. Mehta and Sons Ltd. [ 1962 (3) TMI 77 - SUPREME COURT] for determining whether a question raised in a case is a substantial questions of law or not could be applied. On going through the entire facts placed before us, we find that none of the five tests laid down therein stand satisfied in the case on hand. Thus we concluded, that there are no substantial questions of law arising in this appeal.

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• 2021 (12) TMI 769
  Reopening of assessment u/s 147 - Eligibility of reasons to believe - Addition u/s 69A - Notice issued after expiry of four years from the end of the relevant assessment year - HELD THAT:- The test to be applied is whether there was reason to believe that income had escaped assessment and whether the AO has tangible material before him for the formation of that belief. Once tangible basis has been disclosed for re-opening the assessment, it would not be appropriate for this court to prevent an enquiry whatsoever by the AO. In this case, the reasons indeed disclose what is that tangible material. We find that the petitioners have filed detailed information called for by the AO under Section 142(1) and 143(2) of the Act and thus participated in the assessment proceedings. This having been done, it is not open for the petitioners to now contend that this Court should exercise its extra-ordinary jurisdiction and prohibit the Authorities from proceeding further with the impugned notice. This is particularly so as the question of jurisdiction has been raised by the petitioners before the AO during the assessment proceedings under the Act. In the present facts, the petitioners have participated in the proceedings before the AO. The objections to the reasons recorded by the AO in support of the impugned notice during the assessment proceedings is to point out to him the reassessment proceedings are bad as the requirement of Sections 147 and 148 are not satisfied. It would be completely different scenario where the petitioners have not participated in the proceedings before the AO and object to exercise of jurisdiction by the Assessing Officer at the very threshold and not while participating in the reassessment proceedings. In such cases, it is not a case of a party seeking identical relief by two parallel modes. The orders passed by the Assessing Officer are subject to effective, efficacious alternative remedy under the Act. Therefore, we see no reason to exercise our extra-ordinary jurisdiction in the facts of this case.

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• 2021 (12) TMI 768
  Validity of Revision order passed u/s 263 by CIT - period of limitation - ITAT to declare the impugned revision assessment order of the Assessing Officer as non-est and is allowing the appeal of assessee against order u/s 263 in technical ground - MAT credit allowability u/s 115JAA - HELD THAT:- As decided in M/S. APEEJAY SHIPPING LIMITED [ 2021 (12) TMI 262 - CALCUTTA HIGH COURT] the order passed by the CIT u/s 263(2) is hopelessly barred by limitation. The Tribunal rightly held that the period of limitation has to be reckoned from the date of the order passed by the AO under Section 143(3) read with Section 263 and not from the date of the order passed by the AO under Section 143(3) read with Section 263 and 251. Thus, we find that the Tribunal rightly allowed by the appeal filed by the assessee.

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• 2021 (12) TMI 767
  Revision u/s 263 - As per CIT assessee s claim for deduction under Section 80IB ought to have been rejected by the Assessment Officer but the same had been allowed - merger of order of CIT with tribunal - Consequently levy of concealment penalty under Section 271(1)(c) - HELD THAT:- AO in proceedings under Section 143(3) of the said Act was pleased to disallow the amount that was claimed towards recovery of amount written off in the earlier year as well as amount being towards receipt of commission disallowed these deductions under Section 80IA of the said Act. This order was challenged by the assessee before the Commissioner of Income Tax (Appeals) and on 31/01/2007 the aforesaid two deductions that were disallowed by the AO came to be permitted. A finding was recorded that the deduction as claimed by the assessee under Section 80IA/80IB was in accordance with law and was hence granted. This appellate order was challenged by the Revenue before the Tribunal. In the judgment dated 29/10/2007 the Tribunal subsequently considered the aforesaid two heads of disallowances and proceeded to dismiss the appeal preferred by the Revenue on merits. It was thus clear from the aforesaid sequence of events that the order passed by the Commissioner of Income Tax (Appeals) dated 31/01/2007 merged in the order passed by the Tribunal on 29/10/2007 and attained finality. Thus as the order of the Commissioner Income Tax (Appeals) having merged with the order of the Tribunal, there was no scope for the Commissioner of Income Tax to initiate proceedings under Section 263 - As on merger of the order passed by the Commissioner with that passed by the Tribunal, the jurisdiction under Section 263 (1)(c) of the said Act could not have been invoked is settled in view of judgment of this Court in Slum Rehabilitation Authority[ 2019 (4) TMI 64 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2021 (12) TMI 766
  Appeal in case of acquittal - prosecution u/s 277A - application seeking condonation of delay in filing an application for grant of special leave to appeal from an order of acquittal under Section 378 (5) of the Code of Criminal Procedure (Cr.P.C.) - alleging falsification of books of accounts and documents while evading tax - complaint under Section 256 of the Cr.P.C. and the respondent stood acquitted - maintainability of the present application for condonation of delay - HELD THAT:- There is no controversy before this Court about the fact that an application for special leave to appeal on behalf of the applicant - Department as the complainant in the present case is governed by special law found in Section 378(4) and (5) of the Cr.P.C. In the case where the complainant is a public servant, as in the present case, the period of limitation is six months and in every other case it is 60 days under Section 378(5) of the Cr.P.C. In this context when the law laid down by the Bench of three Hon ble Judges in the case of Hukum Dev Narain Yadav v/s. Lalit Narain Mishra [ 1973 (12) TMI 92 - SUPREME COURT] and followed in Gopal Sardar v/s. Karuna Sardar [ 2004 (3) TMI 743 - SUPREME COURT] , as also in other subsequent judgments, is perused and appreciated, this Court finds that the test to be applied for examining as to whether a special law expressly excludes applicability of Sections 4 to 24 of the Limitation Act, is not that such specific provisions must necessarily be excluded by referring to them, but the test to be applied would be the one specified by the Bench of three Hon ble Judges of the Supreme Court in the case of Hukum Dev Narain Yadav v/s. Lalit Narain Mishra(supra) i.e. by analyzing the scheme of the special law, the nature of remedy provided therein as the legislature intended it to be a complete Code by itself, which alone should govern the several matters provided by it. A very significant and important question regarding power and jurisdiction of this Court arises in the present matter. Considering the views expressed in the abovementioned judgments of the Hon ble Supreme Court governing the field, we see no option but to resort to Rule 8 of Chapter I of the Bombay High Court Appellate Side Rules, 1960, to make a reference to two or more judges of this Court, on questions framed herein below. The papers of this case be placed before the Hon ble the Chief Justice for the matter to be heard more advantageously by a bench of two or more judges, on the following questions: 1) Whether Sections 4 to 24 of the Limitation Act, 1963, stand expressly excluded under Section 378(4) and (5) of the Cr.P.C. as special law for appeals against acquittal to be filed by the complainant, by operation of Section 29(2) of the Limitation Act, 1963? 2) Whether the Judgment of a Bench of two Hon ble Judges of the Supreme Court rendered in the case of Mangu Ram and others v/s. Municipal Corporation of Delhi[ 1975 (10) TMI 102 - SUPREME COURT] is per incuriam, in view of the earlier judgment of a Bench of three Hon ble Judges in the case of Hukum Dev Narain Yadav v/s. Lalit Narain Mishra(supra)? 3) Whether judgment of the Hon ble Supreme Court in the case of Gopal Sardar v/s. Karuna Sardar [ 2004 (3) TMI 743 - SUPREME COURT] holds that judgment of two Hon ble Judges of the Supreme Court in the case of Mangu Ram and others v/s. Municipal Corporation of Delhi (supra) is not good law in view of the aforesaid earlier judgment of the Bench of three Hon ble Judges of Supreme Court in the case of Hukum Dev Narain Yadav v/s. Lalit Narain Mishra [ 1973 (12) TMI 92 - SUPREME COURT] ? 4) Whether judgment of the learned Single Judge in the case of M/s. Sharmaji Textiles v/s. M/s. Sandeep Traders and others[ 2009 (1) TMI 931 - BOMBAY HIGH COURT] correctly holds that the judgment of the Hon'ble Supreme Court in the case of Gopal Sardar v/s. Karuna Sardar [ 2004 (3) TMI 743 - SUPREME COURT] has not disturbed the earlier judgment of the Bench of two Hon ble Judges of the Supreme Court in the case of Mangu Ram and others v/s. Municipal Corporation of Delhi (supra)? 5) Whether the test laid down in Hukum Dev Narain Yadav v/s. Lalit Narain Mishra(supra) by the Hon ble Supreme Court must be applied to the applications for special leave to appeal filed under Section 378 (4) and (5) of the Cr.P.C. in the context of Section 29(2) of the Limitation Act, 1963? 6) Whether upon applying the test laid down by the Hon ble Supreme Court in the case of Hukum Dev Narain Yadav v/s. Lalit Narain Mishra(supra) i.e. considering the scheme of the special law under Section 378(4) and (5) of the Cr.P.C. pertaining to applications for special leave to appeal by complainants, nature of the remedy provided therein, intending it to be a complete Code in itself, it can be said that Sections 4 to 24 of the Limitation Act, 1963, are excluded in their applicability to such applications for special leave to appeal? 7) In the light of the above, whether the application for condonation of delay filed by the applicant - Department is maintainable?

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• 2021 (12) TMI 765
  Deduction u/s 10B - re-computation of deduction under section 10B on account of re-computation of depreciation - Allocation of depreciation on Komori unit between the Manesar unit and Delhi unit in the ratio of the total sales pertaining to each of the units during the year - A.O. was of the view that this claim of the assessee was a deliberate attempt to shift the claim of depreciation to a non-eligible unit so as to lower the profits in the non-eligible unit and showing higher profit in the eligible unit which was thereby eligible for deduction under section 10B of the I.T. Act, 1961 on a higher amount - HELD THAT:- CIT-A correctly held that the allocation was justified and dismissed the appeal of the appellant on this issue. The facts in the appellant s case are identical to the facts in AY 2009-10. Following the decision of the CIT(A) in the appellant s own case for AY 2009-10 the allocation of depreciation made by the AO between Delhi unit and Manesar unit is confirmed. Denial of deduction u/s 10B considering increased profit due to computation of income u/s 40(a)(ia) - It is an admitted fact on record that the computation of deduction u/s 10B for the year under consideration has been done by the AO based on the figures of profit shown by the appellant. This computation of deduction u/s 10B is as per the provisions of the law and requires no interference. The issue of not allowing the deduction u/s 10B on the increased income in view of disallowance u/s 40(a)(ia) pertains to AY 2009-10 and no corrective action, if any, requires to be taken on this account for the AY 2010-11 - no infirmity in the order of the Ld. CIT(A) - Decided against Assessee.

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• 2021 (12) TMI 764
  Revision u/s 263 by CIT - determination of true nature and character of income arising to the assessee on sale of rights in land parcel along with other proposed co-purchasers as confirming parties - case was selected for scrutiny through CASS under limited scrutiny category - allegations made in the revisional order passed against the assessee can be capsulated as (1) wrong characterisation of income under the head capital gains as claimed on the ground that such income arose to the assessee by way of compensation on release of rights in land parcel bearing Survey No.847 PCIT viewed that such gains are susceptible to tax under the income from other sources (2) incorrect claim of exemption and cost of improvement in respect of sale of other two plots HELD THAT:- It is trite that the revenue cannot step into the shoes of the contracting parties to determine the expediency of payment. Where the seller and purchasers have consciously decided to pay compensation for relinquishment of right arising from an erstwhile banakhat and suitable clause to this effect was put up in the registered sale deed, the revenue cannot displace the legal effect of such express terms duly registered. In the factual matrix, the gains arising by virtue of such arrangement is either chargeable under the head capital gains or not chargeable at all. There is no scope for bringing such income to tax under the head income from other sources . Scope of powers under revisionary jurisdiction are not unfettered. Whereas the A.O. had rightly endorsed the corroborated claim of the assessee in this regard, the PCIT, in our view, has attempted to substitute his wisdom by views of the A.O. without any definite basis. If the view of the PCIT towards the banakhat allegedly hollow or unenforceable is accepted, no income can be recognised at all. The view taken by the A.O. is clearly plausible in law and could not have been displaced in a revisionary proceedings by a very untenable or a debatable view. Having come to a conclusion that the income should be taxed under the had income from other sources it was not open to the PCIT to direct the A.O. to make enquiries and verifications without keeping the issue open for him to be determined afresh. It is evident that the issue was foreclosed in the revisional order itself and the A.O. was simply directed to follow the dotted lines in the garb of lack of proper enquiries or verifications. The PCIT has also failed to spell out as to what further enquiry or verifications are required to be made independently where all the evidences are already perused. Manifestly, the revisional order does not pass the test of prerequisites of jurisdiction embedded in section 263 of the Act. In our view, the PCIT has failed to demonstrate any perceived error in the assessment order. Noticeably, the assessee claims a converse situation where the prejudice, if any, has caused to assessee for offering such gains as chargeable to tax, where judicial view is also available for its non chargeability at the threshold. We are thus inclined to agree with various pleas raised on behalf of the assessee for setting aside the revisional order and restore the assessment order in so far as taxability of receipts attributable to impugned land parcel bearing survey no. 847 is concerned. The revisional order is accordingly set aside on the point of taxability of capital gains on sale of land parcel bearing survey no.847 in question. In the light of concession given on behalf of the assessee, the grievance of the Assessee in respect of other land parcels (other than survey no. 847) are, however, answered in negative and against the assessee. Appeal of the assessee is partly allowed.

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• 2021 (12) TMI 763
  Penalty u/s 271G - assessee failed to keep and maintain any information as per the provisions of section 92D - As per AO assessee firm has entered into specified domestic transactions and hence the assessee was liable to keep and maintain such information and document as per the provisions of subsection (3) of section 92D - Appellant submits that there is general and substantial compliance of the provisions of Rule 10D inasmuch as all the requisite documents, details and submissions have been filed before the learned AO in the course of the assessment proceedings and no fault has been found with respect to the same and AO ought to have first issued a notice specifying the document or information to be furnished by the Appellant and only if the Appellant did not comply with such notice could the question of levying penalty under section 271G arise - HELD THAT:- The submission of the assessee is cogent. The order of authorities below is conspicuous inasmuch as there is no mention as to what document required/ordered for and which were not maintained. The order passed by the authorities below is mechanical without proper application of mind. Hence, on the touchstone of above discussion and precedents we set aside the order of authorities below and direct that the penalty be deleted - Decided in favour of assessee. Penalty u/s 271AA - defective notice - Allegation of non strike of irrelevant words - assessee failed to keep and maintain any information as per the provisions of section 92D - HELD THAT:- We find that the notice in this also is an omnibus show-cause notice as it does not strike off/delete the inappropriate/irrelevant/not applicable portion. Such a generic notice betrays a non-application of mind. Hence, the penalty levied pursuant to such a notice is not legally sustainable in law. Hence relying on MR. MOHD. FARHAN A. SHAIKH case [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] we hold that the Assessing Officer was bereft of valid jurisdiction as the notice issued to assessee is unsustainable in law. - Decided in favour of assessee.

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• 2021 (12) TMI 762
  Additional depreciation u/s. 32(1)(iia) on block of assets like Computers and Software - AO disallowed the claim on the premise that the computers were installed in the office premises, thus would disentitle claim for additional depreciation within the meaning of the Proviso 2B to section 32(1)(iia) - HELD THAT:- It was a case of windmill for generation of power wherein additional depreciation was claimed by assessee. AO therein disallowed the claim on the ground that assessee was engaged only in manufacture of textile goods and setting up of windmill had no connection with the manufacture of textile goods. Assessee is already claiming 60% depreciation on the computers which are used for the purpose of business and in rendering of software development services to its associated enterprises. We note that the Ld.AO granted depreciation as per the provisions u/s. 43(3) read that Rule 5 as well as appendix-1 has been granted. Assets eligible for additional depreciation must be plant or machinery. Also that such plant or machinery should not be installed in any office premises or residential accommodation. We note that the development activity carried on by the assessee cannot be considered to be a manufacturing activity. Accordingly, relying on the decision of IBM World Trade Corporation [ 1977 (11) TMI 4 - BOMBAY HIGH COURT] , we do not find any infirmity in the disallowance of additional depreciation to assessee. However, the alternative plea to allow the deprecation in the subsequent assessment year on the enhanced WDV of block of assets at the prevailing rates cannot be denied. - Decided in favour of assessee. Addition of CSR activities - as submitted that donations were made to eligible institutions and deduction u/s. 80G was claimed that pertained to such donations - HELD THAT:- Assessee has suo moto disallowed the expenditure towards the CSR responsibilities u/s. 37(1) of the Act and claimed deduction u/s. 80G to the extent of donations paid to eligible charitable institutions. Thus as relying on FIRST AMERICAN (INDIA) PVT. LTD. case [ 2020 (5) TMI 187 - ITAT BANGALORE] we direct the Ld.AO verify the payments made by assessee towards CSR that also forms part of deduction u/s. 80G. Ld.AO shall then grant the deduction claimed u/s. 80G of the Act in accordance with law. Accordingly, this ground raised by assessee stands allowed for statistical purposes.

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• 2021 (12) TMI 761
  Penalty u/s 271(1)(c) - defective notice - non striking of irrelevant portion of notice - as argued penalty u/s 274 as defective and does not spell out the grounds on which the penalty was sought to be imposed - HELD THAT:- On perusal of the show cause notice issued u/s 274 of the Act it is clear that the same is defective as it does not spell out the ground on which the penalty is sought to be imposed, whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. It can be seen from the copy of the notice proposing penalty u/s 271(1)(c) of the Act, the irrelevant portion has not been strike off. See MANJUNATHA COTTON AND GINNING FACTORY, MANJUNATH GINNING AND PRESSING, VEERABHADRAPPA SANGAPPA AND CO., V.S. LAD AND SONS, G.M. EXPORT [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] Thus show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. -Decided in favour of assessee.

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• 2021 (12) TMI 760
  Disallowing the business advances written off - Trading loss u/s 28 - claim of assessee to be considered u/s. 28 or section 37 - HELD THAT:- Admittedly the money advanced by assessee to Golden Gate was for the purposes of business - AO rightly rejected the claim of assessee u/s 36(2) as assessee had never taken into account the said advance in computing the income of assessee in any of the previous year which is the necessary condition laid down in section 36(2)(i) - AO did not verify the claim as a trading loss u/s. 28 - CIT(A) admitted to the fact that assessee took steps to recover the money from Golden Gate. However, upheld the addition by holding that for year under consideration assessee did not file any case related to bouncing of remaining cheques. In the present facts of the case, there is no dispute that the advances were given by the assessee in the normal course of its business and when a loss arises due to non-recovery of such advances and when the same is irrecoverable and written off as such, the same should be allowed as a business loss while computing the profit and gains of business. As relying in SUMANGAL OVERSEAS LTD. [ 2011 (11) TMI 45 - DELHI HIGH COURT] we hold that the amount that could not be recovered is to be treated as trading loss. Accordingly, the grounds raised by assessee stands allowed.

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• 2021 (12) TMI 759
  Addition u/s 68 - bogus creditors - HELD THAT:- There is a valid confirmation letter and the outstanding is on account of purchases from that company and the AO cannot doubt the genuineness of the transaction and capacity of the lender. Being so, the CIT(Appeals) has taken a correct view of facts of the case and accordingly this ground of the revenue is dismissed. With regard to the addition on account of purchase payable, the CIT(Appeals) observed that the assessee has filed complete list with names of parties and the amount outstanding from the various parties and most of the creditors are below ₹ 5 lakhs. According to the CIT(A), these credits are genuine and outstanding on account of purchases - these purchases ought to have been verified individually so as to satisfy the identity, creditworthiness and genuineness of the transactions which the CIT(Appeals) failed to do so. In view of this, we remit this issue to the file of the AO for fresh consideration - Revenue s appeal is partly allowed for statistical purposes.

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• 2021 (12) TMI 758
  Revision u/s 263 by CIT - reopening of assessment u/s 147 - revenue accrued but deferred by the Assessee and not offered to tax and consequently there was loss to the revenue - HELD THAT:- There was no prejudice or loss to the revenue whatsoever when the show cause notice u/s.263 of the Act, dated 22.1.2016 was issued by the CIT and when the CIT passed the impugned order dated 11.3.2016. The alleged loss of revenue to the tune of ₹ 216,89,00,773/- has already been brought to tax by the revenue in the order dated 30.3.2015 in the reassessment proceedings. Hon'ble Karnataka High Court in the case of V. G. Krishnamurthy [ 1984 (3) TMI 28 - KARNATAKA HIGH COURT] has held that Section 263 can be invoked by the Commissioner only when he prima facie finds that the order made by the ITO was erroneous and was prejudicial to the interests of the revenue.Both these factors must simultaneously exist. An order that is erroneous must also have resulted in loss of revenue or prejudicial to the interests of the revenue. Unless both these factors co-exist or exist simultaneously, the Commissioner cannot invoke or resort to section 263. It cannot be exercised to correct every conceivable error committed by an ITO. Before the suo moto power of revision can be exercised, the Commissioner must at least prima facie find both the requirements of section 263, namely, that the order sought to be revised is prima facieerroneous and prejudicial to the interests of the revenue. If one of the other factor was absent, the Commissioner cannot exercise the suo moto power of revision under section 263. We are of the view that the impugned order u/s.263 of the Act is liable to be quashed and is hereby quashed. - Decided in favour of assessee.

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• 2021 (12) TMI 757
  Levy of fees u/s. 234E for delay in filing quarterly statements of deduction of taxes u/s. 200(3) - assessee has filed quarterly statement of tax deducted at source in form no. 26Q for all the above three years - HELD THAT:- As brought to the notice of both the sides that jurisdictional High Court of Gujarat in the case of Rajesh Kourani vs. Union of India [ 2017 (7) TMI 458 - GUJARAT HIGH COURT] held that section 234E of the act is a charging provision creating a charge for levy of fess for certain default in filing statements and also held that the fees prescribed u/s. 234E could be levied even without a regulatory provision being found in section 200A for computation of fees. We have noticed that rule 31A of IT rule laid down the time limit for filing quarterly statement for deduction of tax u/s. 200(3) of the act. Section 234E prescribes the charging of fees for every day default in filing of statement u/s.200(3) of the act or any proviso to subsection (3) of section 206 of the act. Section 200A pertained to processing of statement of tax deducted at source and prior to 01-06-2015 this provision did not include any reference of the fees payable u/s. 234E of the act. W.e.f. 1st June, 2015, this provision specifically provides for computing fees payable u/s. 234E of the act. As in the case RAJESH KOURANI [ 2017 (7) TMI 458 - GUJARAT HIGH COURT] has held that when section 234E has already created a charge for levying fees, it would thereafter not have been necessary to have yet another provision creating the same charge. Even in absence of section 200A with introduction of section 234E, it was always open for the revenue to demand and collect the fees for late filing of the statement. As also held that section 234E is a charging provision and it was always open for the revenue to charge fees in terms of section 234E of the act even prior to 1st June, 2015. After considering the above facts and judicial findings, we are not inclined with the contention of the ld. counsel that CPC was not authorized to levy fee u/s. 234E of the act.

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• 2021 (12) TMI 756
  Delayed Employee s contribution towards ESI and EPF - assessee s failure to pay the employee s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) - HELD THAT:- In the instant case, admittedly and undisputedly, the employees contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. Further, the ld D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2018-19 and therefore, the said amended provisions cannot be applied in the instant case. Addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of the employees s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. - Decided in favour of assessee.

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• 2021 (12) TMI 755
  Penalty u/s 271(1)(c) - Defective notice u/s 274 - Non recording mandatory satisfaction as per law - HELD THAT:- Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] , CIT vs. SSA s Emerala Meadows 2016 (8) TMI 1145 - SC ORDER] and Pr. CIT vs. Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] , we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. Even the AO has failed to apply his mind at the time of recording satisfaction at the time of framing assessment to initiate the penalty proceedings u/s 271(1)(c) of the Act as to under which limb of section 271(1)(c) i.e. for concealing particulars of income or furnishing inaccurate particulars of such income, penalty proceedings have been initiated rather written vague and ambiguous satisfaction recorded that, penalty proceedings u/s 271(1)(c) are initiated . So, initiating penalty proceedings on the basis of vague and ambiguous satisfaction rather no satisfaction are bad in law and as such not sustainable. We are of the considered view that AO has failed to make out a case for furnishing of inaccurate particulars of income or concealment of particulars of income by the assessee so as to attract the provisions contained u/s 271(1)(c) of the Act. More so, when undisputedly, income has been estimated by the AO, there is no scope for concealment by the assessee so as to attract the provisions contained u/s 271(1)(c) - Decided in favour of assessee.

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• 2021 (12) TMI 754
  Accrual of income - interest received on bank Deposits - grant received from Government of Karnataka - AO noticed that the assessee has earned interest income on deposits, but did not declare the same as its income - case of the assessee that it is receiving grants from State Government of Karnataka and it was a condition that, if any part of the grant is kept in deposits, the interest earned thereon would also be treated as grant - HELD THAT:- CIT(A) referred to the decision rendered in the case of CIT Anr. Vs. Karnataka Urban Infrastructure Finance Corporation [ 2006 (2) TMI 114 - KARNATAKA HIGH COURT] wherein held that interest accrued on bank deposits could not be treated as income of the assessee as interest was earned out of money given by Government of India for purpose of implementation of Mega City Scheme and interest earned was also utilised for implementation of Mega City Scheme. Also referred to the decision rendered in the case of Karnataka Municipal Data Society vs, ITO [ 2016 (11) TMI 119 - KARNATAKA HIGH COURT ] wherein the Hon ble High Court held that Government money was released to assessee society for utilizing it in Government schemes and interest was accrued on grant money. In such case neither grant amount nor interest thereon could be held as income of assessee as Assessee-society held fund only as a custodian and full command for utilisation remained with Government. Thus interest earned on deposits made out of Government grants was held to be not income of the assessee. Since the Ld CIT(A) has deleted this addition in all the years following the binding decision rendered by jurisdictional High Court, we do not find any reason to interfere with his decision rendered on this issue in all the years under consideration. - Decided in favour of assessee. Disallowance of Repairs and Maintenance expenses - claim of the assessee under the head repairs and maintenance in all the three years referred above, was disallowed by the AO holding it as capital in nature - A.R contended that these expenses are in the nature of replacement of air conditioners, construction of car and two wheelers garages in leased premises, repair renovation of premises etc. Accordingly, the Ld A.R contended that these expenses are in the nature of revenue expenses only - HELD THAT:- In our considered view, this issue requires fresh examination at the end of the AO applying the principles explained by Hon ble Supreme Court in the case of Saravana Spinning Mills Ltd [ 2007 (8) TMI 16 - SUPREME COURT] in all the three years under consideration. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore this issue to the file of AO in all the three years. Disallowance of bad debts claimed - AO noticed that the assessee has written off a sum being excess expenditure incurred in respect of Additional Housing Scheme 1 (AHS 1), since the Government of Karnataka did not reimburse above expenses - HELD THAT:- We have earlier upheld the claim of the assessee that the interest income earned on deposits made out of Government grants is not taxable in the hands of the assessee, since the said interest income is also treated as government grant only, as per the directions of Government of Karnataka. Further, the above said view has also got support of Hon ble High Court of Karnataka. As noticed that the interest earned on deposits has been directed to be treated as part of grant amount. Hence, on a combined reading of various directions given by the Government of Karnataka, it is discernible that the Government, instead of reimbursing the additional amount, has directed the assessee to offset the same against interest earned on deposits, which was also considered to be Government grant. In effect, the Government of Karnataka has actually reimbursed the additional amount out of interest income (grant amount). Hence, we are of the view that the tax authorities are justified in holding that the assessee cannot claim the additional expenses separately. Accordingly, we confirm the order passed by Ld CIT(A) on this issue. Addition of expenditure incurred on skill development of children of Police Personnel - AO considered this expenditure as an expenditure on Corporate Social Responsibility - AO also held that this expenditure is not related to the business activities of the assessee, viz., construction of buildings for police and allied departments and project monitoring - CIT(A) also confirmed the same - HELD THAT:- The assessee could claim this expenditure u/s 37(1) of the Act, as per which the expenditure should be laid out or expended wholly and exclusively for the purpose of business. We notice that the tax authorities have given a specific finding that this expenditure is not related to the business activities of the assessee, viz., construction of buildings for police and allied departments and project monitoring. The contentions of Ld A.R are that the children trained under skill development scheme could be employed by the Civil Contractors, which will in turn facilitate the business activities of the assessee - connection with the business activities of the assessee sought to be established by Ld A.R is far fetched one. Accordingly, we are of the view that the assessee has failed to show that this expenditure has been incurred wholly and exclusively for the purpose of business. Accordingly, we confirm the order passed by Ld CIT(A) on this issue. Disallowance of claim of bad debts - AO noticed that the assessee has claimed Provision towards bad debts as deduction need to be disallowed - HELD THAT:- The orders of tax authorities that they have disallowed only Provision towards bad debts . Admittedly, the provision for bad debts is not allowable as deduction under the provisions of Income tax. Accordingly, we confirm the disallowance made by the tax authorities. Disallowance of Leave encashment expenses - HELD THAT:- We do not find any such disallowance in the assessment order. The Ld A.R also did not advance any arguments on this issue. Accordingly we reject this ground.

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• 2021 (12) TMI 753
  Scope of Section 44BB - Service tax inclusion in the gross revenue for computing profits under presumptive provisions of section 44BB - HELD THAT:- Excludability of service tax in the gross receipts is squarely covered by the judgment of the Hon'ble Delhi High Court in the case of Mitchell Drilling International Pty Limited [ 2015 (10) TMI 259 - DELHI HIGH COURT] wherein held that service tax being statutory levy should not form part of gross receipts as per provisions of section 44BB. Further Hon ble High Court of Uttarakhand in the case of DIT International Taxation Vs M/s Schlumberger Asia Services Ltd.[ 2019 (4) TMI 1177 - UTTARAKHAND HIGH COURT ] held that the amount reimbursed to the assessee (service provider) by the ONGC (service recipient), representing the service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in clauses (a) and (b) of sub-section(2) of Section 44BB of the Act. The Hon ble Court is clearly spelt that even otherwise, it is not every amount paid on account of provision of services and facilities which must be deemed to be the income of the assessee under Section 44BB . It is only such amounts, which are paid to the assessee on account of the services and facilities provided by them, in the prospecting for or extraction or production of mineral oils, which alone must be deemed to be the income of the assessee. Thus we hold that the service tax receipts donot form part of receipts for computation of income in the section 44BB of the Income Tax Act. - Decided against revenue.

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• 2021 (12) TMI 752
  Deduction u/s 80P(2)(a)(i) - assessee has shown interest income which was received from the non-members - impugned income of interest was earned by the assessee from the co-operative banks as well as from the nationalized bank thus as per AO assessee is not eligible for deduction under section 80P(2)(a)(i) - HELD THAT:- The income from the activity of financing from the members is only eligible for deduction under section 80P(2)(a)(i) of the Act. If there is any income arising to the co-operative society from the non-members that will not be subject to deduction under section 80P(2)(a)(i) of the Act. In holding so we draw support and guidance from the judgment of the Hon ble Gujarat High Court in the case of State Bank of India[ 2016 (7) TMI 516 - GUJARAT HIGH COURT] It is only the interest derived from the credit provided to its members which is deductible under section 80P(2)(a)(i) of the Act and the interest derived by depositing surplus funds with the State Bank of India is not being attributable to the business as envisaged under the provisions of the Act. Thus the same cannot be deducted under section 80P(2)(a)(i) of the Act. There remains no ambiguity that income received by the assessee on the money deposited with the bank is not eligible for deduction under section 80P(2)(a)(i) of the Act - profits and gains attributable to non-members arising as a result of advancement of loans was held to be not an allowable deduction under Section 80P(2)(a)(i) of the Act. In view of the above, we do not find any merits in the argument advanced by the learned counsel for the assessee. Determine the income which is not eligible for deduction under section 80P(2)(a)(i) - The income on the deposits from the bank has been treated as income from other sources but the gross income cannot be excluded from the deduction available to the assessee under the provisions of section 80P(2)(a)(i) - It is the net interest income on the deposits from the bank which needs to be excluded from the amount of deduction claimed under section 80P(2)(a)(i) and the same should be brought to tax under the head income from other sources under the provisions of section 56 - To determine, the net income on the deposits from the bank, amount of expenses incurred in generating such interest income should be allowed as deduction from the gross income of interest in pursuance to the provisions of section 57. The expenses such as electricity, rental, audits, printing and stationery which cannot be said to have been incurred wholly and exclusively for the purpose of earning the interest income. Thus, we are not in agreement with the contention of the learned AR for the assessee. But it is also equally important to note that there is no mechanism provided under the provisions of section 57 of the Act for making the disallowance on ad hoc manner as done by the ld. CIT-A. We direct the AO to work out the interest income on the deposits from the bank after deducting the corresponding expenses incurred by the assessee in generating the interest income - such expenses have to be brought on record by the assessee based on cogent materials. Furthermore, if the assessee has made deposits in the banks out of the money borrowed from the members, then the corresponding interest cost borne by the assessee should be allowed as deduction - we hold that there is no infirmity in the order of the learned CIT (A), requiring any interference. Hence, we uphold the same. Hence, the ground of appeal of the assessee is partly allowed for the statistical purposes.

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• 2021 (12) TMI 751
  Unexplained expenditures and unaccounted cash payment - Onus to proof - HELD THAT:- It is the onus of the assessee to justify based on the cogent material that the impugned cash expenditure was incurred out cash balance of the regular cash book of the assessee. If that be so, there cannot be any addition to the total income of the assessee merely on the reasoning that the assessee failed to record the expenditure in the books of accounts on the date of incurrence of the expenses which were actually recorded in the books of accounts on a later date. It is a matter of verification. It has to be seen whether there was the cash available in the books of accounts of the assessee as on the date on which the impugned expenditures were incurred i.e. November 2007. If there was sufficient cash in the books of the firm of the assessee, there is no possibility of treating the impugned expenditure as unexplained expense as provided u/s 69C until and unless the revenue brings on record based on cogent materials that there was no cash available in the books of the assessee on the relevant dates or the source of such expenditure was from the third source which was unexplained. We note that once the revenue has treated the entire amount of expenditure as unexplained expense under section 69C of the Act, there cannot be any addition separately being part and parcel of the total addition otherwise it would lead to the double addition which is not warranted under the provisions of law until and unless the provisions of law requires so - we set aside the issue to the file of the AO for fresh adjudication as per the provisions of law and after necessary verification of the cash book. Ground of appeal of the assessee is partly allowed for the statistical purposes.

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• 2021 (12) TMI 750
  Disallowance u/s 14A r.w.r.8D - HELD THAT:- We find that the assessee own funds are far more that the investments in tax free securities. We note that assessee own funds were ₹ 512.65 Cr whereas the investments in tax free securities were 17.27 Cr. The ld CIT(A) has passed the order after following the decisions of jurisdictional High Court in the case of Reliance Utilities Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] .Therefore, we do not find any infirmity in the order of ld CIT(A) and accordingly the ground is dismissed by upholding the order of ld CIT(A) on this issue. Deduction of u/s 80-IA in respect of profits and gains derived from undertaking engaged in generation of power in the form of steam - HELD THAT:- We are inclined to restore the same to the file of the AO to decide the same after affording a reasonable opportunity to the assessee.

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• 2021 (12) TMI 749
  Late remittance of employees contribution to PF and ESI - As contended that assessee has paid the employees contribution prior to the due date of filing of return under section 139(1) - Scope of amendment - HELD THAT:- On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down by the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) of the I.T.Act. It was further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. As amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee.

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• 2021 (12) TMI 748
  Revision u/s 263 by CIT - allowability of CSR expenses as donation u/s.80G - argument of no adequate inquiry or specific inquiry or recording reasons for accepting assessee s submission - case of the assessee for selected for scrutiny and original assessment was framed by the AO u/s.143(3) - HELD THAT:- Assessee has filed detailed note on allowability of CSR expenses as donation u/s.80G and therefore the issue was considered by the AO during the assessment proceedings. Besides we note that the assessee has filed the Scheme of Arrangement of demerger alongwith all documents including financials of IDMPL, assessment orders of IDMPL determining losses, book entries incorporating the demerger in the books of the assessee. All conditions of section 2(19AA) were complied with and therefore there was a proper demerger and the same has been accepted by AO. Assessee also filed detailed note on allowability of expenses on CSR u/s.80G vide letter dated 14.12.2018.PCIT has formed an incorrect opinion that the AO has not examined the issue of allowability of CSR expense as donation. Claim of business loss of ₹ 14,36,669/- being set off both by the assessee and by IDMPL, we note that the assessee had claimed the loss of ₹ 14,36,669/- in the first revised return filed on 1.11.2017 and in the second revised filed on 29.3.2018 the said claim was withdrawn by the assesse suo-motto as is evident from amount of income returned in both the income tax returns. We note that the income returned in the first revised return at ₹ 18,14,22,950/- was increased to ₹ 18,28,59,260/- in the second revised return filed on 29.3.2018 and the difference between two returned income is ₹ 14,36,669/-. Thus, the claim of loss of ₹ 14,36,669/- was withdrawn by the assessee. Thus we are inclined to hold that the revisionary proceedings were not valid and so is the revisionary order passed u/s 263 of the Act by ld. PCIT. Issue of interest u/s.244A - The facts before us that the ld PCIT has not given any opportunity to the assesse during the revisionary proceedings and it was also not in the show cause notice issued. So on this basis, the revisions can not be sustained. Beside we note that the interest has been correctly allowed and there is no mistake which his prejudicial to the interest of the revenue. In view of these facts we are to quash the revisionary proceedings as well as order u/s 263 as bad in law. - Decided in favour of assessee.

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• 2021 (12) TMI 747
  Delayed employee s contribution - Disallowance u/s 36(1)(va) r.w.s 43B - whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also? - HELD THAT:- As in the case of Essae Teraoka Pvt. Ltd. [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] has taken the view that employee s contribution u/s 36(1)(va) of the Act would also be covered under section 43B of the Act and therefore if the share of the employee s share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is decided in favour of the Assessee. Scope of amendment - The explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so - the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act deserves to be deleted. - Decided in favour of assessee.

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• 2021 (12) TMI 746
  Penalty u/s 271(1)(c) - initiating penalty proceeding u/s 271(1)(c) while assuming jurisdiction u/s 263 - HELD THAT:- The facts are not in disputed. No doubt, the AO has initiated the penalty proceedings in the original assessment order passed under section 143(3) of the Act dated 26.03.2013. AO while reframing the assessment in lieu of appeal effect to the order of the Tribunal passed order under section 143(3) read with section 254 of the Act dated 28.12.2018 has not initiate the penalty proceedings. The question arises whether the revision proceedings for initiation of penalty proceedings can be done in the set aside assessment. We noted that the entire jurisprudence on the above subject is against Revenue and in favour of assessee and more particularly Hon ble Punjab and Haryana High Court has considered this issue and finally, after considering the authorities, held that the initiation of proceedings under section 263 of the Act is not permissible because initiation of penalty proceedings is highly debatable issue. We are of the view that the CIT cannot set aside the Assessment Order for the sole purpose of initiating penalty proceedings in exercise of revisional jurisdiction. Hence, we quash the revision order passed by the PCIT and allow the appeal of the assessee.

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• 2021 (12) TMI 730
  Rectification of mistake u/s 154 - Miscellaneous Applications are filed by the assessees seeking recall of the order of the Tribunal [ 2021 (6) TMI 669 - ITAT HYDERABAD] - Deduction u/s 54F - ITAT remitted the issue to file back to the AO for verification for the allotment of flats, which have been allotted to the assessee in a Block/Tower or in different Blocks/Towers - AR submitted the note along with case law on 28/05/2021, which was not taken into consideration while passing the order - HELD THAT:- To avoid physical contacts due to the global pandemic COVID-19, drop box system for filling any physical documents has been arranged in the office premises w.e.f. 14/08/2020. The ld. AR filed the documents in physical in the drop box, which could not be placed before the Bench at the time of hearing of this appeal as well as up to passing of the order and, therefore, there was no occasion to consider the said documents while passing the order. The said documents were also filed before the office of the DR, ITAT. We make it clear that the main cases had been heard on 27/05/2021 on virtual mode because of Covid-19 pandemic lockdown imposed and the same only forms the sole reason of these assessees as well as their learned counsel having not able to place on record various judicial precedents deciding the issue herein against the department; we find our order dated 18/06/2021 suffering a mistake(s) apparent on record. As considering the case laws we conclude there was a mistake apparent on record in the order passed in [ 2021 (6) TMI 669 - ITAT HYDERABAD] and, therefore, the same are hereby recalled and disposed off.

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• Customs

• 2021 (12) TMI 745
  Illegal removal of goods under the custody of CFS - Levy of penalty under Regulations 12 (8) of HCCAR 2009, apart from directing the appellants to compensate the Government for the losses caused due to the negligence on the part of the custodian - Detention of imported goods - Sewing machines - allegation of smuggling, mis-declaration etc. - serious contravention of Section 45 (2) (b) of the Customs Act, 1962 - CFS has failed to follow the mandatory regulations, especially 5 (1) (i) (n), 6 (1) (f) of the Handling of Cargo in Customs Area Regulations, 2009 - HELD THAT:- The Revenue s case is that on specific intelligence it was found that the goods pertaining to the Bill of Entry No. 3325365 dated 21.09.2017, filed by M/s. Rashi Trader, imported vide container No. ZCSU 8954812 was detained by SIIB Officers for misdeclaration. It was found on examination to contain needles for Sewing Machines on which anti-dumping duty of ₹ 2.51 Crores was applicable. The sewing machine needles were found to have been declared in the Bill of Entry with the intention to evade customs duty which was thereafter seized and handed over to the appellant-custodian. Subsequently, i.e, on 25.10.2017 it appears that SIIB had noticed that the above goods were removed by the CFS on 23.10.2017 at 22.45 hrs. and it was found later that the goods were removed out of CFS by one Shri U. Magesh and R. Prabhakaran on the instructions of Mr. Hariprabhu and Mr. Thirumalai Thyagarajan of Raj Brothers Shipping Pvt. Ltd. The appellant has seriously made allegations against the Revenue and has tried to justify its action on the grounds of having obtained certain documents from the CHA, but it is not at the instructions of the person who authorized detention in the custody of the appellant. There was also allegations that the appellant was not made known the reasons of seizure or the progress in the investigation, but suffice it to say that a CFS need not know the reasons for seizure and detention since such actions are initiated for prevention of evasion of duties by means of smuggling, mis-declaration etc., in the national interest. The CFS has failed in discharging the assigned duty diligently. On the contrary, strangely and in utter disregard, it has chosen to act solely on some documents filed by the CHA, which documents later on turned out to be fake/forged, to release the seized goods. This, rather raises serious suspicion as to the due diligence exercised by the appellant. The release in the first place itself was against the statute as well as the instructions of the Government Authority, then the release was made at the odd hours of the night by accepting useless documents that too without proper verification as to the urgency, and lastly, no verification of identity appears to have been made by not cross-checking with the PAN or GST Registration No. etc. of the CHA. There has been serious violations to the Government Regulations as alleged by the Revenue, in as much as the goods were released without there being specific instructions to do so from the Revenue. The only natural consequence, therefore, that has to follow is as prescribed under sub-section (3) to Section 45 of the Customs Act, 1962, since the appellant has not made out any case for not invoking the said provision. Appeal dismissed - decided against appellant.

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• 2021 (12) TMI 744
  Finalization of provisional assessement - import of Embroidery Beads/Stones - enhancement of value - goods confiscated under Section 111 (m) of Customs Act - levy of redemption fine and penalty - HELD THAT:- It is found from the findings of the learned Commissioner that he was correct in coming to the conclusion that transaction value in these cases cannot be rejected and assessment cannot be finalized as per the Office Note of the SIB. Valuation has to be done as per Section 14 of the Customs Act, 1962, i.e. as per the transaction value and if there is reason to doubt the truth and accuracy of the transaction value the reason has to be recorded and after rejecting the transaction value, the correct value should be determined as per the Customs Valuation Rules. There is not even a suggestion in the show cause notice that the transaction value of the imported consignments was not correct or there was relationship between the buyer and seller or that there was any additional consideration for sale or the value was manipulated in any other manner - the learned Commissioner was correct in accepting the value declared by the importer and ordering finalization of the provisional assessment accordingly. Confiscation of the goods under Section 111 (m) and imposition of redemption fine - HELD THAT:- Since, there was no mis-declaration of value as has been correctly found by the learned Commissioner, the confiscation of the goods cannot be sustained on another ground that the description of the goods did not match with that in the test report - the description of the goods in the test report was only an elaboration of the description already given in the bills of entry and nothing else. This cannot be called a mis-declaration of the description of the goods. Therefore, confiscation of the goods under Section 111 (m) and imposition of penalty under Section 125 cannot be sustained and need to be set aside. Imposition of penalty under Section 112 (a) - HELD THAT:- The penalty under Section 112 (a) is imposable for acts or omission which render goods liable for confiscation under Section 111. Since it is found that the confiscation cannot be sustained neither can be the penalty under Section 112 (a). Penalty under Section 114AA of the Customs Act - HELD THAT:- In the impugned order the penalty of ₹ 10 lakhs was imposed upon the importer under Section 114AA but no such proposal was made in the show cause notice and, therefore, it is beyond the show cause notice and cannot be sustained and the same is liable to be set aside. It is further found that no misdeclaration of goods or value has been established in the present case and for this reason also penalty under Section 114AA cannot be sustained. The impugned order is set aside and the importer s appeal is allowed - decided in favor of appellant.

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• Corporate Laws

• 2021 (12) TMI 743
  Seeking a direction to the Registrar of Companies (ROC) to mark the companies enclosed at Exhibit I to the OLR as 'Active' - also seeking permission to Official Liquidator to remove these companies from the register of the voluntary liquidation companies maintained by the Official Liquidator - Appellants grievance stems from the fact that despite the Appellants being diligent in following up with various authorities for the purpose of voluntary winding up, the Official Liquidator filed a report and obtained an ex-parte order against the Appellants. HELD THAT:- Admittedly, the publication under Section 248(5) of the Act was made on 14th December 2018 and by virtue of Section 250 of the Act, the Appellant No.1 Company would cease to exist from such date. The provisions of the Act as pointed out by Mr. Shah, clearly contemplate that the appropriate remedy for the Appellants is to approach the NCLT under Section 252 of the Act. This Court would not have the powers to pass orders under Section 252 of the Act since the exclusive jurisdiction lies with the NCLT. In view of Sections 250 and 252 of the Act, the interpretation of Section 248(8) of the Act canvassed by the Learned Advocate for the Appellants would go contrary to the scheme of the Act, which is impermissible. To read into Section 248(8) of the Act so as to confer jurisdiction on this Court would run contrary to the scheme and spirit of the Act and more importantly for the purpose for which the NCLT was constituted. Appeal disposed off.

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• Insolvency & Bankruptcy

• 2021 (12) TMI 742
  Seeking initiation of Contempt proceedings against the Members of Committee of Creditor (CoC) and Resolution Professional (RP) - wilful and deliberate disobedience of the order - invocation of inherent powers under Rule 11 of NCLAT Rules, 2016 - HELD THAT:- As per Regulation 31 Insolvency Resolution Process costs under Section 5(13) (e) mean defined in clause (a) to (e). for the present case, Regulation 31 (b) is relevant which provides that amounts due to a person whose rightsare prejudicially affected on account of the moratorium imposed under Section 14(1) (d). Due to moratorium period the lessor could not recover the possession of the property from the Corporate Debtor. Thus, the right of lessor to recover rent are affected on account of moratorium. Therefore, the lessor is entitled to recover the rent and which shall include in CIRP costs - there are no substance in the argument that the rent cannot be included in the CIRP costs. Whether the Respondents have wilfully disobeyed the order passed by this Appellate Tribunal on 31.01.2019? - HELD THAT:- In the present case, the CIRP commenced on 25.07.2019 when the Application under Section 9 was admitted and moratorium under Section 13(1) has declared. Subsequently, the RP has filed the Application for liquidation. The Ld. Adjudicating Authority vide order dated 14.06.2019 allowed the Application and liquidation of the Corporate Debtor was initiated and the assets of the Corporate Debtor were put for liquidation. Thus, as per the order dated 31.01.2019 the CoC is required to pay rent since 01.12.2018 till 13.06.2019 i.e. just before initiation of liquidation of the Corporate Debtor - It is true that the Adjudicating Authority vide order dated 14.06.2019 allowed the Application of RP and passed an order of liquidation of Corporate Debtor as no resolution plan has been received and 270 days are over. The Liquidation order is passed on 14.06.2019 this fact is again reiterated by the Adjudicating Authority in its order dated 11.06.2021. As per the Applicant the current rate of two warehouses is ₹ 35,73,270/- including GST. As per the order of this Appellate Tribunal the Applicant is entitled rent 01.12.2018 up to moratorium period i.e. 13.06.2019 just before initiation of liquidation. It comes to ₹ 2,29,88,037 for 6 months 13 days. The Applicant has already received the amount of ₹ 3,02,11,464/- as shown in the Affidavit of the Respondent No. 2. Thus, the Applicant has already received the rent as per the order of this Appellate Tribunal. The moratorium is ceased on 13.06.2019 and the Respondents have paid the rent as per the order of this Appellate Tribunal till order of moratorium - the Contempt Application is disposed of.

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• 2021 (12) TMI 741
  Initiation of CIRP - NCLT rejected the application of appellant u/s 9 - Period of limitation - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Service of demand notice - HELD THAT:- The Ld. Adjudicating Authority has taken note of the fact that the Demand Notice issued under Section 8 of the IBC on 15.03.2019 which was sent through Registered post on 19.03.2019. However, the same was returned with a postal remark addressee moved . The Appellant has also issued Demand Notice through email on the same date demanding the arrears of the Annual Listing Fee. However, no dispute is raised by the Respondent. The Ld. Adjudicating Authority have giving finding that debt failed due on 01.04.2015 as admitted by the Petitioner, hence the Application filed under Section 9 of the IBC barred by limitation. The Ld. Adjudicating Authority has rightly come to the conclusion that the agreement so filed cannot be relied upon, as the same is not a valid agreement in the eye of law, so Learned Counsel for the Appellant relied on an order passed by this Appellate Tribunal in B.S.E. Ltd. Vs. Neo Corp International Ltd. dated 05.04.2019 (supra) is not applicable in this matter - Moreover, Listing Fees comes under the ambit of Regulatory dues which SEBI is entitled to recover. The Respondent being an entitly registered under SEBI, is under an obligation to follow the Regulations prescribed by SEBI for recovery of its dues. The dues so said are not Operational Dues but Regulatory Dues . The Insolvency Law Committee suggests that Regulatory Dues are not to be recovered under Operational Debt . The appeal is dismissed.

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• 2021 (12) TMI 740
  Liability of transfer fee (as demanded by the West Bengal Industrial Development Corporation Limited.) - it is claimed that sale by Liquidator is involuntary on which no transfer fee is payable - HELD THAT:- The transfer fee in respect of transfer made by Liquidator of the lessee assets is liable to be paid and transferee cannot absolve himself from payment of liability to pay transfer fee. An Application was filed by the Appellant to modify the order, praying that direction for payment of transfer fee by the Appellant should be modified. The said Application was specifically rejected by the Adjudicating Authority vide order dated 29th July, 2020. There being specific direction by the Adjudicating Authority for payment of transfer fee by the Appellant and the Appellant having not challenged those orders, cannot be heard in contending that he is not liable to pay transfer fee. Auction of the Sale Assets was already completed on 11th June 2019 and thereafter the Applicant made a request and submitted the higher bid. In the letter quoted, there was specific submission We promise to follow all the conditions of your Auction and we are also ready to pay the transfer charges to WBIDC . The Appellant cannot be now allowed to go back from his statement that he will pay the transfer charges also. Appeal dismissed - decided against appellant.

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• 2021 (12) TMI 739
  Initiation of CIRP - NCLT admitted the application - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Share Application Money in the event of non-allotment of shares - Loan/Debt or not - Statutory accrual of interest under Section 42(6) of the Companies Act, 2013, to be construed as consideration for time value of money or not - HELD THAT:- The Key Feature of a Financial Transaction as contemplated under Section 5(8) is consideration for time value of money . In other words, the legislature has included such financial transactions in the definition of Financial Debt which are usually for sum of money received today to be paid over a period of time in a single or series of payments in the future. In Black s Law Dictionary the expression Time Value has been defined as the price associated with the length of time that an investor must wait until an investment matures or the related income is earned . In the instant case, allotment of equity shares on preferential basis by Private Placement Offer was done and subsequently revoked. The allotment of shares is evident under Form PAS-5, Form PAS-4, the Board Resolution dated 01.08.2018, the Special Resolution dated 25.08.2018 and the Board Resolution dated 11.09.2018. Subsequently vide a Board Resolution dated 10.05.2019, the allotment made in favour of First Respondent was declared as invalid and void ab initio. Therefore, the money given by the First Respondent indeed falls within the definition of Share Application Money. It is clear from the reading of Section 42 of the Companies Act, 2013 and the Deposit Rules that if the Shares are not allotted within 60 days of receiving the Share Application Money, and if the refund does not take place within 15 days form the expiry of 60 days time limit, then this amount will be treated as a Deposit , advanced to the Company, which has to be returned by the Company at the rate of 12 percent per annum from the expiry of the 60th day. Thus the concerned person would get compensation for the time value of money given by him to the Company which changes the nature and character of the money so given. Although the amount was initially paid towards Shares, since the allotment was revoked, the equity did not materialise. Thereafter, by operation of law, Section 42(6) of the Companies Act, 2013, the amount has statutorily been given the character of loan with interest. Same is the case of amounts paid as optionally convertible debentures - when under law, the amount has been treated as a loan, we hold that refund of Share Application Money, in the event of non-allotment of shares attracts interest as provided for under Section 42(6) of the Act and therefore qualifies the essential ingredients of Section 5(8) of the Code in terms of consideration paid for time value of money and therefore falls within definition of the ambit of Financial Debt as defined under Section 5(8) of the Code. Thus, Share Application Money in the event of non-allotment of shares, attracts interest under Section 42(6) of the Companies Act, 2013 and therefore falls within the ambit of definition of Financial Debt as defined under Section 5(8) of the Code - appeal dismissed.

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• 2021 (12) TMI 738
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dues or not - HELD THAT:- There is clear acknowledgement of debt by the corporate debtor in email dated 15.12.2018 annexed as Annexure-P9 (Colly) with the petition. It is also pertinent to take a note that the Notification regarding the enhancement of minimum amount of default to Rs. one crore for the purpose of Section 4 was issued by the Ministry of Corporate Affairs on 24th March, 2020 and the amount defaulted by the Corporate Debtor is much before the coming into effect of notification dated 24th March, 2020. Since any notification issued by the Government is generally prospective in nature unless specifically expressed, hence the said notification is not applicable to the present case. This Tribunal is inclined to admit this application and accordingly initiate the process of CIRP of the Corporate Debtor - Application admitted - moratorium declared.

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• Service Tax

• 2021 (12) TMI 737
  Classification of service - site formation and clearance, excavation and earth moving and demolition service or not - agreement for carrying out various activities namely, procurement for land from farmers, getting land thus procured converted from agricultural land to non-agricultural land, seeking various government permissions and approvals, necessary till formation of residential layouts etc. - scope of service - HELD THAT:- Clause (97a), defining the term site formation and clearance, excavation and earth moving and demolition was inserted in Section 65 ibid vide Finance Act, 2005 dated 13.05.2005 w.e.f 16.06.2005. Such definition was in vogue till introduction of the negative list concept, effective from 01.07.2012. Under the amended provisions, Section 65B was inserted in the statute book, providing for interpretation of various clauses contained therein. Clause (44) in the said section has assigned the meaning of the phrase service for the purpose of levy and collection of service tax. The scope of work assigned to the appellant for performance under the Phase-I project were limited for the purpose of purchasing of land from the farmers; signing of agreements of the proposed land in favour of the members of society; processing of papers with the Government and other statutory bodies for getting the land in favour of such members and for ensuring that the in-principle approval has been obtained for the layout plan from the concerned statutory authorities. Further, it is observed from the case records that the Partner of the appellant has sworn an affidavit dated 15.11.2021, confirming inter alia, that the appellant is still in the Phase I stage and had completed only purchasing of the land, seeking various permissions and that no physical activity has been started/undertaken for carrying out the work under the Phase II and Phase III projects - the appellant had only undertook the activities for completion of phase I of the project and did not undertake any activities concerning phase II and phase III. The appellant had merely procured land, paid Government fees etc. This activity, in no way, can be considered as a taxable service under the category of site formation and clearance, excavation and earthmoving and demolition service inasmuch as the work assigned under the agreement for completion of the phase I project do not attract any of the clauses itemized in the definition provided under Section 65(97a) ibid. Thus, the activities undertaken by the appellant pursuant to the agreements entered into with the society will not fall under the taxing net for levy of service tax up to the period 01.07.2012. Similarly, the services provided by the appellant would also not fall under the purview and scope of the definition of service as per Section 65B (44) ibid for the period post 01.07.2012, onwards inasmuch as such definition clause has specifically excluded the activity of transfer of title in goods or immoveable property by way of sale etc. Hence, mere procurement of land from the farmers and getting necessary approval from the government authorities will not create a tax liability under the taxable category of service . It is a settled legal position that levy of service tax depends on the service rendered, but not on the basis of agreements which were never fulfilled and no payment was received by the service provider. Appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 736
  CENVAT Credit - consequential refund of Service Tax paid - reverse charge mechanism - HELD THAT:- There is no mala fide on the part of the appellant in not depositing the service tax on ocean freight under the reverse charge mechanism. Even otherwise, leviability of service tax on ocean freight has been highly debatable issue, and the same travelled to this Tribunal earlier also in different Appeals as well as before the higher courts. The appellant is entitled to Cenvat credit of the said amount deposited under the erstwhile service tax law. As the Cenvat credit is not available, due to the implementation of GST w.e.f. 1st July 2017, the appellant is entitled to claim refund under the transitional provision of Section 142 (3) of CGST Act. The adjudicating authority is directed to disburse the refund to the appellant within a period of 30 days from the date of receipt of the copy of this order, alongwith interest as per Rules - Appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 735
  Entitlement for interest on refund - refund of interest rejected on the ground that the required co-relation of FIRCs was not furnished before the original authorities - Section 11BB of the Central Excise Act, 1944 - HELD THAT:-The interest under Section 11BB on the delayed refunds is consequent to the granting of refund under Section 11B by the authorized officer and therefore, not independent of it. As could be seen from the impugned order, the Commissioner (Appeals) has directed the Adjudicating Authority to reconsider afresh the claim of the appellant for refund and therefore, any finding on the claim of the appellant for interest may impact the denovo proceedings that are pending before the Adjudicating Authority. The appellant s claim for interest under Section 11BB is premature at this stage, since as of now, the appellant s claim for refund is pending adjudication. The claim for interest is therefore too early since the same depends upon the outcome of the proceedings. In any case, interest under Section 11BB is automatic and once the refund is sanctioned, then the interest follows. This issue is also remanded to the file of Original Authority, for reconsideration - appeal allowed by way of remand.

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• Central Excise

• 2021 (12) TMI 734
  Maintainability of petition - availability of efficacious remedy of appeal - section 35 of the Central Excise Act, 1944 - HELD THAT:- List on 25.02.2022.

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• 2021 (12) TMI 733
  Levy of penalty u/r 26 of the Central Excise Rules, 2002 - clandestine clearance of M.S. ingots - HELD THAT:- The penalty of ₹ 4,00,000/- has been imposed on the company in which the appellant was Director and ₹ 3,00,000/- has been imposed on the appellant - the ends of justice will be met if the penalty imposed on the appellant is reduced from ₹ 3,00,000/- to ₹ 1,00,000/-. The appeal is partially allowed reducing the penalty imposed on the appellant under Rule 26 of the Central Excise Rules, 2002 from ₹ 3,00,000/- to ₹ 1,00,000/-.

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• 2021 (12) TMI 729
  Reversal of CENVAT Credit - Outward GTA services availed on supplying goods on FOR basis to various clients - place of removal - HELD THAT:- The issue at hand has been decided by this tribunal in the case of M/S ULTRATECH CEMENT LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1487 - CESTAT AHMEDABAD] where it was held that as the ownership of the goods remained with the Appellants till the goods reached to the customer s doorstep and the freight charges as well as damage (insurance) to the goods till destination were borne by the Appellant, they are eligible for the credit of service tax paid by them on outward freight. The appellant have claimed that the facts are identical in the instant case in so far as the goods are delivered on FOR basis and ownership of goods is transferred only on buyers premises - The adjudicating authority can go into the facts and if it is found that the contract is of supply is on FOR basis and the ownership of the goods is transferred at the buyer s premises then the benefit of the credit may be allowed. Appeal allowed by way of remand.

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• Indian Laws

• 2021 (12) TMI 732
  SAFEMA - Service of primary notice - illegally acquired properties - relatives of the convict - Competent authority claims that the subject property (to be forfeited) is that of the convict (V.P. Selvarajan) and ostensibly held by the relatives of the convict (respondents herein) - requirement to serve a primary notice under Section 6(1) of the 1976 Act upon such convict with copy thereof to his relatives under Section 6(2) of the 1976 Act - whether nonservice of such primary notice upon the convict would vitiate the entire proceedings initiated only against his relatives? HELD THAT:- On plain as well as contextual reading of Section 6, it is crystal clear that the notice under Section 6(1) is required to be issued to any person to whom the Act applies. As is evident from Section 2(2) of the 1976 Act, the Act applies not only to convict or detenu, but also to their relative, associate including holder of any property being Section 2(2)(c), 2(2)(d) and 2(2)(e) respectively. The purpose of issuing notice is to enable the person concerned (noticee) to discharge the burden of proof as propounded in Section. In a given case, however, if the property is held by a person owing to merely being in legal possession thereof, but the ownership of the property at the relevant time is that of the convict or detenu or his/her relative, as the case may be, it would become necessary for the Competent Authority to not only give notice to the person in possession of the property in question but also to the person shown as owner thereof in the relevant records. Similarly, in a case where the person shown as owner in the relevant records had purchased the subject property from the convict or detenu and is a subsequent purchaser, notice is required to be issued to both - the present owner and the erstwhile owner (convict or detenu), as the case may be. The convict or detenu cannot be heard to claim any right in such property including proprietary rights and for the same reason, he is not expected to discharge the burden of proof under Section 8 of the 1976 Act as to whether it is his legally acquired property nor can he be said to be the person affected with the proposed action of forfeiture as such. Going by the definition of illegally acquired property in Section 3(1)(c) and of person in Section 2(2) to whom the Act applies, if the property is held in the name of the relative of the convict or detenu before or after the commencement of the Act, the notice under Section 6(1) needs to be issued to such person (recorded owner as well as in possession), who alone can and is expected to discharge the burden of proof in terms of Section 8 of the 1976 Act - so as to dissuade the Competent Authority from proceeding further against such property. Indeed, if the illegally acquired property is held in the name of the relative, but the de facto possession thereof is with some other person, who is not covered by the expression person as given in Section 2(2), in such a case primary notice under Section 6 is required to be issued to the relative of the convict or detenu and copy thereof served upon such other person who is in de facto possession thereof (albeit for and on behalf of the relative of the convict or detenu). Even in this situation, notice to the convict or detenu may not be necessary much less mandatory. For, the 1976 Act applies even to the relative of the convict or detenu holding illegally acquired property either by himself or through any other person on his behalf. Notice under Section 6(1) cannot be issued in respect of properties for which the Competent Authority has no evidence or material to record reasons to believe that the properties were acquired from the assets or money provided by the convict/detenu. The expression reasons to believe is a phrase used in several enactments and interpreted by this court to mean not mere subjective satisfaction based on surmise and conjecture, but a belief that is honest and based upon reasonable grounds - Recording of the reasons to believe and satisfaction of the aforesaid conditions is an important condition precedent a sine qua non and its violation would have legal consequences. It is a jurisdictional requirement, which, unlike a procedural requirement, would affect the proceedings if not complied with. Therefore, in such cases, the question of no prejudice is unavailable as the provision for issue of notice and satisfaction of the precondition for the issue of notice, i.e., reasons to believe , is mandatory and not optional or directory. Thus, in the present case, the properties in question and subject matter of notice under Section 6 are in the name of and held by the two respondents. No entitlement or right has been claimed in these properties by the heirs of the deceased convict V. P. Selvarajan. If the properties were in the name of the deceased detenu or convict, then different considerations may have applied. In the context of the present case as the convict V.P. Selvarajan had expired before the issuance of notice under Section 6 on 19th January 1994, therefore, the need and requirement to serve notice on him would not arise. Appeal allowed.

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• 2021 (12) TMI 731
  Dishonor of Cheque - Agreement to sell - Collaboration agreements - power to summon Section 138 read with Section 142 of the NI Act - HELD THAT:- In the present case, the entire premise of filing of the Criminal Complaints was that the petitioner had paid the amounts of ₹ 30 lacs and ₹ 20 lacs as advance payment for purchase of the aforementioned two properties. On a perusal of the Criminal Complaints, it is noted that the petitioner has averred that amounts of ₹ 30 lacs and ₹ 20 lacs were paid against Receipts. It is also his case that the advance payments were made towards purchase of the aforesaid properties. Besides, in his cross-examination conducted on 18.12.2018, the petitioner had deposed that he was in possession of the original Bayana Receipt, Agreement to Sell and the Collaboration Agreements executed between the erstwhile owners of the properties and the respondent. In this backdrop, the applications under Section 311 Cr.P.C. were filed on 22.07.2019, which came to be dismissed vide the impugned order on 08.08.2019. Further, considering that the factum of execution of the aforesaid Receipts was mentioned in the Criminal Complaints, while other documents were mentioned at the time of the cross-examination in as early as 2018, the petitioner s applications under Section 311 Cr.P.C. for his re-examination and placing on record of the aforesaid documents cannot be said to constitute filling up of lacuna in the case. Both the petitions are allowed, subject to payment of composite cost of ₹ 10,000/- to be deposited by the petitioner with the Delhi State Legal Services Authority within two weeks from the date of passing of this order.

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