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TMI Tax Updates - e-Newsletter December 21, 2020 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Classification of goods in the e-tender procurement - the mentioning of HSN Code in the tender document itself shall resolve all disputes relating to fairness and transperancy in the process of selection of bidder, by providing 'level playing field' to all bidders/tenderers in the true spirit of Article 19(1)(g) of the Constitution of India. For any issue relating to the applicability of correct HSN Code or GST rate, it would then be the duty of respondent nos.1 and 2 to seek clarification from the GST authorities. - HC Visit to Get Source GST: Service of demand order - scope of service of the order on the driver of the vehicle - Section 169 of GST Act - the order was served upon the driver of the vehicle, which is not included in any mode of service as prescribed under Section 169 of the Act. - The order is held to be erroneous and is set aside - HC Visit to Get Source GST: Detention of goods alongwith vehicle - detention on the ground that the goods in question were being transported without E-Way Bill - The challenge sought to be raised to the order passed under Section 129 (3) of the Act, 2017, having been made at a belated stage, we are of the view that the relief claimed in this regard in terms of relief clause (I), would be barred by laches - HC Visit to Get Source Income Tax: Bogus LTCG - Penny stock purchases - Claim made u/s 10(38) denied - ITAT remanded the matter back by setting aside the additions - Not only the Assessing Officer, but also the CIT(A) examined the modus operandi of the assessee and held that the shares were purchased through off market and not through Stock Exchange and that the selling rates were artificially hiked later on. - there was no material, which necessitated the remand of the case to the Assessing Officer and it is a clear case where the Tribunal had failed to exercise its jurisdiction in the manner known to law.Tribunal, being a last fact finding Authority, is under the legal obligation to record a correct finding of fact. - HC Visit to Get Source Income Tax: Assessment u/s 153C - it is contended that addition could be made in absence of any incriminating material found during the course of search. - Merely because a satisfaction note has been recorded, cannot lead us to reach to this conclusion, especially when the Revenue has not laid any foundation to support their contention. - HC Visit to Get Source Income Tax: Assessment of Trust - voluntary corpus donations - Whether the assessee is a discretionary Trust - Additions u/s Section 56(2)(vii) read with Section 2(24)(iva) - AOP u/s 2(31)(v) - The assessee is required to be assessed as an “individual”, the beneficiaries have been identified and are identifiable and Section 161 would apply because the income is specifically receivable on behalf of or for the benefit of any one person who are known and whose shares are determinate. The factual positions as brought by the JCIT and the CIT clearly show that the methodology adopted by the assessee was to circumvent the provisions of the Act. - HC Visit to Get Source Income Tax: Grant of interest on refund of amount to the assessee u/s 244A - Interest u/s 220(2) - the finding recorded by the Commissioner as well as the Tribunal that the interest under Section 220(2) of the Act is not chargeable during the period of stay is perverse as the interest is mandatorily leviable under Section 220(2) of the Act. - HC Visit to Get Source Income Tax: Capital gain on Transfer of share - family settlement - In the present case what have been transferred are stock in trade and not a capital asset. Further, in the present case there is a provision in the articles of association of making the gift thus, it meets the provisions of the companies act also. - Gift made by a corporate entity, appellant to 4 different corporate entities, in absence of any consideration, no business income can be charged to tax in the hands of Donor appellant. - AT Visit to Get Source Income Tax: Disallowance u/s 14A - it was incumbent for Ld. AO to record a satisfaction as to why the disallowance offered by the assessee was not sufficient and this said satisfaction was to be arrived at having regard to assessee’s books of accounts. The recording of the said satisfaction was sine qua non before proceeding to apply Rule 8D. - AT Visit to Get Source Income Tax: Disallowance of professional charges - Except for placing on record the bifurcated details of professional charges incurred during the year under consideration, we find that, the assessee had failed to place on record any such material which would substantiate its claim of having incurred the so called professional charges wholly and exclusively for the purpose of its business. - Additions confirmed - AT Visit to Get Source Income Tax: Assessment u/s 153A - The seized paper merely reflect the date, name of transferor and transferee and number of shares. The document does not speak of any unexplained investment made by any of the assessees. No material was found during the course of search so as to indicate any unaccounted investment made by assessee. - No evidence of any unaccounted investment have been found during the course of search. The A.O. made addition merely on presumption. - AT Visit to Get Source Customs: Evasion of Anti-Dumping Duty - import of melamine - rejection of assessable value declared by the Appellant - while there was scope for addition of notional charges in the assessable value under the un-amended section 14 of the Customs Act, but after the actual sale price concept was introduced in the year 2007 on the basis of GATT guidelines and section 14 of the Customs Act was amended in 2007, any inclusion of notional charges seems to have lost its relevance and only actual cost incurred by the buyer is required to be considered - Additions in the absence of cross-examination of these three persons who had given statements regarding the valuation of the imported goods, is not valid - AT Visit to Get Source Customs: Revocation of Customs Broker License - The present proceedings suffer from the vice of biasness as well as are in violation of the principles of natural justice. Also, the show cause notice issued to this appellant is time barred and bad. Further, the present proceedings are by way of repetition of the allegations in the earlier show cause notice issued to the CB company, wherein there is no specific allegation against this appellant and he was not even a party, nor any penalty was proposed against them. - AT Visit to Get Source Service Tax: Refund of accumulated credit - Export of services - debit entry was reflected in the ST-3 return of subsequent period and not for the period in question - Inasmuch the books of accounts stand already debited by the appellant on 05.03.2014, before filing of refund claim on 20.03.2014, there are no justifiable reason to deny the refund claim on the said hyper-technical ground. - AT Visit to Get Source Service Tax: Refund of Cenvat credit - export of service - benefit was accrued in India - the place of provision of service will more appropriately be categorized under Rule 3 ibid inasmuch as the service recipient has its business establishment in United Kingdom and thus, the place of provision of service is outside India, which would be considered as export of service for grant of refund of service tax paid on the input services. - AT Visit to Get Source Central Excise: Recovery of CENVAT Credit - goods returned by its customers under Rule 16 of the Central Excise Rules, 2002 without proper documents - irrespective of fact whether the invoices are of appellant or otherwise if duty paid goods is brought in the factory of the assessee credit can be allowed. - AT Visit to Get Source VAT: Priority of debt - secured creditor or state taxes?, which is prior - Attachment of property - The mortgage of the secured creditor viz. the Petitioner Bank gets prior charge over the charge of the Respondents for tax/VAT dues - HC Visit to Get Source VAT: Validity of demand raised - spot collection of taxes - Since the collection of cheques from the petitioner is admittedly, towards payment of tax, as per the settled law, the said collection by the second respondent on the date of inspection from the petitioner is illegal without there being any assessment order - HC Visit to Get Source Articles ‘Auto Population- a boon or a bane?’ Notifications Companies Law G.S.R. 774(E) - dated 18-12-2020 - Co. Law Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2020 S.O. 4588 (E) - dated 17-12-2020 - Co. Law Companies (Auditor’s Report) Second Amendment Order, 2020 G.S.R. 773 (E) - dated 17-12-2020 - Co. Law Companies (Compromises, Arrangements and Amalgamations) Second Amendment Rules, 2020 Customs 44/2020 - dated 18-12-2020 - Cus Seeks to confirm the provisional Bilateral Safeguard measure on imports of Phthalic Anhydride originating in Korea RP under the India-Korea Comprehensive Economic Partnership Agreement, and to further amend notification no. 152/2009 dated 31.12.2009 to modify the rate of duty of customs on said imports, on recommendation of final findings of Directorate General of Trade Remedies under the India-Korea Comprehensive Economic Partnership Agreement (Bilateral Safeguard Measures) Rules, 2017 GST - States 69/2020-STATE TAX - dated 16-12-2020 - Jharkhand SGST Seeks to amend Notification No. 41/2020-State Tax, dated the 15th September, 2020 05/2020 – STATE TAX (RATE) - dated 16-12-2020 - Jharkhand SGST Amendment in Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017 ERTS (T) 65/2017/Pt.II/218 - dated 2-12-2020 - Meghalaya SGST Seeks to amend Notification No. CTAS-65/2017/12, dated 29th June, 2017 ERTS (T) 65/2017/Pt.II/211 - dated 29-11-2020 - Meghalaya SGST Waive penalty payable under Section 125 of the Meghalaya Goods and Services Tax Act, 2017 G.O. Ms. No. 72 - dated 10-12-2020 - Puducherry SGST Waiver of penalty payable for non-compliance of provisions G.O. Ms. No. 68 - dated 30-11-2020 - Puducherry SGST Seeks to notify class of persons under proviso to section 39(1) G.O. Ms. No. 67 - dated 30-11-2020 - Puducherry SGST Puducherry Goods and Services Tax (Thirteenth Amendment) Rules, 2020 F. 1-11 (91)-TAX /GST/2020 (Part-VI) - dated 16-12-2020 - Tripura SGST Seeks to amend Notification No. F. 1-11 (91)-TAX /GST/2017 (Part-III), dated the 29th June, 2017 F. 1-11 (91)-TAX /GST/2020 - dated 15-12-2020 - Tripura SGST Seeks to waive penalty payable under Section 125 Circulars / Instructions / Orders GST - States - Instruction No. 1/2020-GST - dated 11-12-2020 Standard Operating Procedure (SOP) for verification of taxpayers granted deemed registration News Minutes of the Monetary Policy Committee Meeting December 2 to 4, 2020 [Under Section 45ZL of the Reserve Bank of India Act, 1934] ADB, India sign $300 million loan to upgrade power distribution network in Uttar Pradesh Case Laws: GST 2020 (12) TMI 746 Classification of goods in the e-tender procurement - contention is that the procurement product would fall under Chapter 84 of the GST Tariff of India declared by the GST Council and HSN Code 84148030 is relevant for Turbo charger , or the Procurement Product, which is chargeable at 18% GST - Validity of Public Procurement (Preference to Make in India) Order' 2017 - contention of the learned senior counsel for the petitioner is that a comprehensive reading of the Make in India policy; circular issued by the Railway Board and the tender document indicates that the bidders, including the petitioner herein were required to specify the percentage of local content in the material being offered in accordance with the Make in India Policy - HELD THAT:- There is no dispute about the fact that the petitioner is a local manufacturer recognized and included in the list of approved vendors maintained by the respondent nos.1 and 3. The petitioner has annexed a certificate of the product being indegeniously developed along with the tender documents. The opening of the subject tender, in the instant case, may not be possible as the offer period has expired due to the interim order passed by this Court. Further with the subsequent tender for procurement of the product, namely 'Turbo Wheel Impeller Balance Assembly' having been granted to the petitioner, the prayer nos.2 and 3 of the writ petition have been rendered infructuous. Flaw in the procedure adopted by the Railways in the tendering process - petitioner is aggrieved by the fact that after opening of the financial bids, the ranking of bidders was done on the total price (all inclusive price), which was arrived at by adding base price and GST rate (GST value) - HELD THAT:- The Court cannot examine the details of the terms of the contract which has been entered into by the public bodies or the State. The Courts have inherent limitations on the scope of any such enquiry. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then the Court, cannot act as an appellate Court by substituting its opinion in respect of selection made for entering into such contract. Whether the classification of HSN Code is integral to the tendering process, i.e., whether it has an impact on the selection of tenderers or the choice of tenderers while ranking them after opening the financial bids? - HELD THAT:- The HSN code (Harmonized System of Nomenclature) is provided for each product/service by GST Council to specify the rate at which GST would be applicable. The suppliers have to quote HSN Code of the product to be supplied by them in the tender document, itself. The mentioning of correct HSN Code is necessary to determine the GST rate (GST value) which is to be added in the base price to arrive at the final price offered by the bidder/tenderer - In the case at hand, though the respondent no.6 was ranked as L-1 and the petitioner herein as L-4, but the margin of purchase preference between respondent no.6 (L-1) and petitioner (L-4) became more than 20% on account of mentioning of GST rate at 5% by the respondent no.6 (L-1), which is according to HSN Code of the product in Chapter 86 of GST Tariff. The petitioner herein claims that the correct GST rate should be 18% and the HSN Code which falls under Chapter 84 of GST Tariff would be applicable. Whereas the respondent no.1, Railways in the counter affidavit filed by them did not clarify the correct HSN Code or GST rate of the product and is trying to shift its responsibility by saying that the levy of tax and imposition of penalty for mis-classification of HSN Code is an area of concern of the tax authorities. If the GST value is to be added in the base price to arrive at the total price of offer for the procurement product in a tender, and is used to determine the interse ranking in the selection process, it is incumbent on the part of the respondent nos.1 and 2 to clarify the HSN Code, i.e. to clear their stand with regard to the applicable GST rate and HSN Code of the procurement product - the mentioning of HSN Code in the tender document itself shall resolve all disputes relating to fairness and transperancy in the process of selection of bidder, by providing 'level playing field' to all bidders/tenderers in the true spirit of Article 19(1)(g) of the Constitution of India. For any issue relating to the applicability of correct HSN Code or GST rate, it would then be the duty of respondent nos.1 and 2 to seek clarification from the GST authorities. Petition disposed off. 2020 (12) TMI 745 Validity of SCN - petitioner submits that while show-cause notice was issued under Section 74 of the CGST Act, but as per the summary of the order the demand is stated to have been created under Section 73 of the said act - HELD THAT:- In view of the nature of grievance raised in this writ petition, while keeping the preliminary issue of maintainability open, let a notice of motion including notice on interim prayer, returnable on 01.02.2021 be issued. In view of the projection made by the learned counsel for the petitioner that the disputed tax is being paid in installment, it is provided that till the next returnable date, no coercive action will be taken against the petitioner - List on 01.02.2021. 2020 (12) TMI 744 Maintainability of petition - appealable order - instant petition is filed as there was no GST Tribunal constituted till date - HELD THAT:- Considering the fact that GST Tribunal has not been established till date and the petitioner has deposited the requisite court fee as required under Section 112 of the The Uttar Pradesh Goods and Services Tax Act, 2017, the writ petition is admitted. Learned counsel for the respondents prays for and is granted four weeks' time to file objections and reply to the objections may be filed within one week thereafter - List thereafter. 2020 (12) TMI 743 Service of demand order - scope of service of the order on the driver of the vehicle - Section 169 of GST Act - HELD THAT:- The admitted fact is that the order was served upon the driver of the vehicle, which is not included in any mode of service as prescribed under Section 169 of the Act. The order is held to be erroneous and is set aside - It is directed that the Appellate Authority shall hear the appeal of the petitioner in accordance with law and on merits, as expeditiously as possible - petition allowed. 2020 (12) TMI 742 Maintainability of appeal - detention of goods on account of wrong mentioning of the place in the E-Way bill - non-constitution of Tribunal - Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 - HELD THAT:- We fail to understand that why the Tribunal has not been constituted till date although the CGST Act was enacted in the year 2017 and the afore-quoted Removal of Difficulties Order was issued on 03.12.2019. Years have passed but the situation has not changed so far. Prima facie, there is failure on the part of the Government to discharge its statutory function by not constituting the Tribunal and thus denying remedy to dealers. Consequently, they are approaching directly to the High Court under Article 226 of the Constitution of India. Notice on behalf of newly impleaded respondent Nos.5 and 6 have been accepted today in court by Sri Krishna Agarwal, learned Central Government Standing Counsel on behalf of ASGI. We request learned ASGI to assist the court in this matter. Put up in the additional cause list on 18.01.2021 for further hearing, along with Writ Tax No.655 of 2018 and connected matters involving question regarding non-constitution of the Tribunal. 2020 (12) TMI 741 Detention of goods alongwith vehicle - detention on the ground that the goods in question were being transported without E-Way Bill - HELD THAT:- We may take note of the fact that implementation of the GST regime has brought about a major reform in the field of indirect taxation and all key aspects starting from registration till filing of the return, raising of e-way bill, filing of the refund claim, passing of an order creating demand of tax and penalty, rectification of the order, etc. are dependant on a technology driven process with regard to which the necessary procedure is provided under the Rules. The relief claimed in this regard in terms of relief clause (I), would be barred by laches; moreso, in the light of the fact that the petitioner claims to have deposited the entire amount of tax and penalty determined under the said order, and by virtue of the deeming provision under subsection (5) all proceedings in respect of the notice specified under subsection (3) shall be deemed to be concluded. As regards the prayer for quashing the summary of the order uploaded electronically in FORM GST DRC07 dated 18.9.2020, as under relief clause (II), we may observe that in the event the petitioner has actually made payment of the entire amount due towards tax and penalty referred to in the notice issued under subsection (1) of Section 129, he may submit proof thereof before the authority concerned and apply for rectification/withdrawal of the said order. Petition dismissed. Income Tax 2020 (12) TMI 747 Recharacterization of the transaction of debt into equity - Treatment of Optionally and Compulsory Convertible Debentures issued by the assessee-company as Equity Share Capital - reversal by the ld. CIT(A) of the view of the AO/TPO in treating the transactions of issue of OCDs and CCDs into Equity capital - HELD THAT:- There is no difference in the form and substance of the transaction. The amount was raised through debentures, reflected in the same way in its accounts and then such debentures also got redeemed by the assessee company. The position would have been different, if the assessee had taken the amount as equity but reflected it only as a debenture and also eventually converted into equity after some time. All the cases relied by the Department fall in such category where the amounts were, in fact, taken as equity but not declared as such and the intention behind the apparent transaction got unearthed due to surrounding circumstances. On the other hand, we are confronted with a situation in which the assessee was in need of funding for its ongoing projects. It took loan through debentures, which were eventually redeemed. So the instant case falls in the general provision of accepting the transaction as such and not in the exception requiring recharacterization of the transaction of debt into equity. De hors the provisions of section 94B and the GAAR in the period anterior to their applicability, the obiter in the case of EKL Appliances [ 1979 (10) TMI 22 - MADRAS HIGH COURT] also supports the view canvassed by the ld. CIT(A) in not approving the recharacterization of the transaction of debt into equity. Thus, the first issue raised by the Revenue in its appeal is determined against it. Arm s length rate for determining the ALP of the International/Specified Domestic transactions of payment of interest - HELD THAT:- On examination of the assessee s Balance sheet for the year under consideration, it emerges that the amount payable to IDBI bank stands at Nil. This shows that the interest rate paid by the assessee to IDBI Bank that was considered as an internal comparable under the CUP method for the earlier year, is no more relevant for the year under consideration. The exercise of ALP determination has to be undertaken each year separately by considering the facts and circumstances that are relevant and germane to the issue for that particular year. Given the fact that the basis for the determination of arm s length rate of interest for the preceding year 2011-12 does not survive and the ld. AR could not point out the rate of interest at which the assessee made borrowings from bank in the year under consideration, we are satisfied that it would be appropriate if the impugned order on this score is set-aside and the matter is restored to the file of AO. We order accordingly and direct the AO/TPO to find out the rate at which interest was paid by the assessee to its bank in the year under consideration and then apply the same as arm s length rate for determining the ALP of the International/Specified Domestic transactions of payment of interest. Disallowance u/s.40(a)(ii) - Education cess and secondary and higher education cess - HELD THAT:- Answering the question posed before it in affirmative, their Lordships held that on the facts found by the authorities below, if a question of law arises (though not raised before the authorities) which has bearing on the tax liability of the assessee, the Tribunal has jurisdiction to examine the same. Having gone through the subject matter of the additional ground taken by the assessee, it is discernible that the additional ground raises a pure question of law. We, therefore, admit the additional ground and espouse it for disposal on merits. We find that the issue raised through the additional ground is no more res integra in view of the judgment of Hon ble jurisdictional High Court in Sesa Goa Lt. Vs. JCIT [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] and CHAMBAL FERTILISERS AND CHEMICALS LTD., PR. COMMISSIONER OF INCOME TAX, KOTA [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] in which it has been held that Education Cess is not disallowable expenditure u/s.40(a)(ii). Also see - As correctness of the amount has not been disputed by the ld. DR, we direct to allow deduction for such an amount. 2020 (12) TMI 740 Bogus LTCG - Penny stock purchases - Claim made u/s 10(38) denied - ITAT remanded the matter back by setting aside the additions - HELD THAT:- Not only the Assessing Officer, but also the CIT(A) examined the modus operandi of the assessee and held that the shares were purchased through off market and not through Stock Exchange and that the selling rates were artificially hiked later on. The above findings have not been set aside by the Tribunal and there is no reason for the Tribunal to remand the matter to the Assessing Officer for a fresh consideration. As pointed out in the decision of this Court in the case of Cholamandalam MS General Insurance Co. [ 2013 (7) TMI 90 - MADRAS HIGH COURT] we find in the instant case that there was no material, which necessitated the remand of the case to the Assessing Officer and it is a clear case where the Tribunal had failed to exercise its jurisdiction in the manner known to law.Tribunal, being a last fact finding Authority, is under the legal obligation to record a correct finding of fact. Where all the evidence had been produced and the CIT(A), after full investigation of the evidence and examination of the accounts, had given a definite finding on the question in issue, the Tribunal's order of remand was held to be invalid. In the recent decision of the Hon'ble Division Bench of this Court in the case of Tharakumari Vs. ITO [ 2019 (3) TMI 647 - MADRAS HIGH COURT] the appeal filed by the assessee in a case relating to penny stock was dismissed after noting the factual findings rendered by the Assessing Officer, the CIT(A) and the Tribunal. Thus, for all the above reasons, we hold that the order passed by the Tribunal calls for interference. Substantial questions of law framed are answered in favour of the Revenue 2020 (12) TMI 739 Assessment u/s 153C - it is contended that addition could be made in absence of any incriminating material found during the course of search . - HELD THAT:- It is clearly discernable that the ITAT has given a finding of fact that the assessments make no reference to the seized material or any other material for the years under consideration, that was found during the course of search, in the case of the assessee. Mr. Maratha is also unable to point out any incriminating material related to the assessee which could justify the action of the Revenue. Merely because a satisfaction note has been recorded, cannot lead us to reach to this conclusion, especially when the Revenue has not laid any foundation to support their contention. In the factual background as explained above, the assumption of jurisdiction under Section 153C cannot be sustained in view of the decision of this Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] . 2020 (12) TMI 738 Depreciation on computers disallowed u/s 40(a)(ia) - TDS u/s 195 - depreciation claimed u/s 32 on an capitalized expenditure on imported software which was purchased by paying without deducting TDS - HELD THAT:- We have considered the rival submissions made on both the sides and have perused the record. The tribunal has not taken into account the decision rendered by M/S WIPRO LTD . [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] and without assigning any reasons has placed reliance on decision of the coordinate bench. Therefore, in peculiar facts of the case, the impugned order passed by the tribunal is quashed and the matter is remitted to tribunal for decision afresh and in accordance with law in the light of rival contentions made by the parties. Therefore, it is not necessary for us to answer the substantial question of law. 2020 (12) TMI 737 Exemption u/s 11 - Appellant having been granted exemption u/s 12A with effect from 01.04.2015, is the Income Tax Appellate Tribunal right in law in holding that the Appellant cannot be treated as charitable for the A.Y.2013-14, in spite of complying and satisfying with all other provisions and preconditions for availing the benefit under Sections 11 12 of Income Tax Act, 1961? - HELD THAT:- The assessee is precluded from contending that the first proviso under Section 12A should be made applicable to them and they should be granted with the benefit from the Assessment Year 2013-14, because the factual position being that only after the deed of trust was amended, the application was considered that too registration having been granted with effect from 01.04.2015 only. Tribunal rightly held against the assessee, stating that there is nothing on record to show that the exemption activities / operations and genuineness of its claims for the Assessment Year 2013-14 was examined. Since registration has been granted only after the deed of trust was amended, the assessee cannot contend that they are to be granted benefit from the Assessment Year 2013-14. 2020 (12) TMI 736 Assessment of Trust - voluntary corpus donations - Whether the assessee is a discretionary Trust - Additions u/s Section 56(2)(vii) read with Section 2(24)(iva) - AOP u/s 2(31)(v) - Power of JCIT to issue directions u/s 144A - HELD THAT:- the JCIT had afforded sufficient opportunity to the assessee and followed the procedure under Section 144A. - there is no procedural infirmity in the assessment order passed under Section 143(3) read with Section 144A of the Act - Further, the assessee is precluded from raising any contention with regard to the jurisdiction of the JCIT to issue direction under Section 144A of the Act nor anything about the procedure followed by the Assessing Officer pursuant to such direction. The underlying principle being that the revenue cannot be worse of in their appeal at the instance of the assessee who has not filed an appeal over such finding of the Tribunal. Status of the assessee - whether assessee trust is to be assessed as an individual or as an association of persons and whether the assessee if has to be treated as an individual would stand excluded from the purview of Section 56(2)(vii) of the Act on the ground that it is not a natural living person? - HELD THAT:- the contention of the assessee that consequent upon the insertion of explanation to Section 2(31), a representative assessee representing individuals is to be treated as an AoP is an argument which cannot be accepted. Those individuals (Beneficiaries) have not come together with a common purpose and they do not have any role in the operation or administration of the Trust. Therefore, the assessee cannot be treated as an AoP. To take a decision in the matter, the facts are very essential. A trustee appointed under a trust created under a Deed of Trust has to be treated as a representative assessee in terms of section 160 of the Act provided he receives or he is entitled to receive any money on behalf of or benefit of any person. Such trustee is deemed to be an assessee for the purposes of the Act. This position becomes clear if one carefully examines section 161(1) of the Act The argument that the beneficiaries are not known cannot be accepted because the Deed of Trust as well as the Supplemental Deed would show that the beneficiaries are top level executives of the Shriram Group of Companies who will be extended financial benefit on attaining the age of 60 years and the set of persons who would be benefited have also been mentioned in the annexures. It is to be further noted that the names of those persons, who are yet to attain 60 years, are well within the knowledge of the assessee and more particularly, to the six group concerns, which extended the gratis and, all those beneficiaries are individuals and therefore, the assessee in the instant case, having received the perquisite on behalf of its beneficiaries, should be treated as a representative of those beneficiaries and therefore, has to be assessed as an individual . In the case on hand, it is accepted by the assessee that it is a discretionary Trust. They have not joined in for a common purpose. They became trustees having been appointed under a Deed of Trust/Supplementary Deed. Therefore, the assessee cannot contend that they have joined together in common for purpose of carrying on an activity. The term individual used in the Act does not mean only a human being but wide enough to include a group of persons constituting a unit for the purposes of the Act. It was pointed out that the reference to wife, daughter and child of an individual in Section 4 of the Wealth Tax Act would not lead to the construction of the expression individual in Section 3 of the said Act as referable only to a single human being. Bearing in mind the law laid down in the above referred decisions and also taking note of the observations of the Hon'ble Supreme Court in Indira Balkrishna [ 1960 (4) TMI 7 - SUPREME COURT] , that there can be no universal application as to how to come to a conclusion as to status of an assessee, we, on a careful analysis of the facts of the case and noting the recitals in the Deed of Trust and Supplementary Deed, schedules thereof, have no hesitation in our mind to hold that the assessee was rightly assessed as an individual by the Assessing Officer as affirmed by the CIT(A), which was erroneously reversed by the Tribunal. Scope of the term Individual as referrred u/s 56(2)(vii) - HELD THAT:- The reference to clauses (a), (b) and (c) in the proviso under Section 56(2)(vii) would not apply to a representative assessee and no amount has been received from any relative of the individual beneficiary or on account of marriage of the individual beneficiary and the income received on behalf of the representative assessee. Therefore, the contention of the assessee that the assessee being not a living person cannot be brought under Section 56(2)(vii). The assessee is required to be assessed as an individual , the beneficiaries have been identified and are identifiable and Section 161 would apply because the income is specifically receivable on behalf of or for the benefit of any one person who are known and whose shares are determinate. The factual positions as brought by the JCIT and the CIT clearly show that the methodology adopted by the assessee was to circumvent the provisions of the Act. We do not agree with reasons given by the Tribunal holding that the sum received by the assessee could not have been considered as income from other sources under section 56(2)(vii) read with Section 2(24)(xv) and accordingly, the same is set aside and the order passed by the CIT(A) is restored. Disallowance u/s 14A - whether the Tribunal was right in holding that the investment which yielded no exempt income was to be excluded while computing deduction u/s 14A when the Act as well as the Rules do not provide for any such exception - HELD THAT:- As decided in own case substantial question of law has to be answered in favour of the assessee in the light of the decision in the case of M/s.Marg Limited [ 2020 (10) TMI 102 - MADRAS HIGH COURT] - Further, in the case of ACIT, Circle 17(1), New Delhi vs. Vireet Investment (P) Ltd.[ 2017 (6) TMI 1124 - ITAT DELHI] also decided the said issue in favour of the assessee. 2020 (12) TMI 735 Addition of bid loss - disallowance on the ground that the aforesaid claim pertains to beyond the relevant Previous Year and assessee is following hybrid system of accounting - also held that despite several opportunities being afforded to the assessee, the assessee failed to produce the books of accounts to substantiate the aforesaid loss - HELD THAT:- In the instant case, the Assessing Officer has recorded a finding that the assessee has failed to substantiate its claim by producing evidence. However, the aforesaid aspect of the matter has neither been considered by the Commissioner of Income Tax (Appeals) nor the tribunal. The impugned order insofar as it pertains to allowing the claim of the assessee for bid loss is quashed. The matter is remitted to the Assessing Officer and the assessee is granted an opportunity to substantiate its claim for deduction of bid loss by adducing cogent material. Needless to state that the Assessing Officer shall decide the aforesaid issue in the light of decision of the Supreme Court in case of Taparia Tools vs. JCIT, [ 2015 (3) TMI 853 - SUPREME COURT ] 2020 (12) TMI 734 Addition based on document seized during search - Unsigned notings seized during the search - undisclosed income - Addition on the basis of invalid evidence and in the absence of cross examination of the witness, whose statement formed the foundation - HELD THAT:- From the perusal of the order of assessment, it is evident that the AO relied on the document seized during the course of the search and not on the statement of Jayaram and brought to tax as undisclosed income. The assessee had the opportunity to adduce the evidence in rebuttal before the CIT (Appeals) as well as before the tribunal, however, he failed to do so. Even in second round of litigation, the Assessing Officer has placed reliance on the document seized during the course of search in the premises of the assessee and the aforesaid document admittedly relates to transaction in question in respect of which sale deeds have been executed in favour of the assessee. Therefore, the presumption arises that the payment was made to the assessee in view of Section 132(4A) of the Act. Despite opportunities being granted, the assessee did not lead any evidence in rebuttal and did not discharge the burden. Therefore, the finding recorded by the tribunal that a sum was an undisclosed income cannot be said to be perverse. Substantial question of law framed by a bench of this court is answered against the assessee. 2020 (12) TMI 733 Grant of interest on refund of amount to the assessee u/s 244A - Interest u/s 220(2) - HELD THAT:- The levy of interest under Section 220(2) of the Act is prescribed by the statute. When stay is granted to a party, it is always subject to a statutory provision and it is well settled in law that mere grant of stay does not prevent the running of the interest. Therefore, the finding recorded by the Commissioner as well as the Tribunal that the interest under Section 220(2) of the Act is not chargeable during the period of stay is perverse as the interest is mandatorily leviable under Section 220(2) of the Act. 2020 (12) TMI 732 Rectification of mistake - Penalty order u/s 271AA - company in Form No. 3CEB (Report from an accountant to be furnished u/s 92E relating to international transactions) has not disclosed these transactions, which it was required to disclose as per item no. 12 of the report - HELD THAT:- In penalty order u/s 271AA, the Assessing Officer specifically held that the information and documents required to be kept and maintained were not available with the assessee during the assessment proceedings and assessee kept on relying on the TP study of its Indian subsidiary, a separate legal entity. If the assessee as per the mandate of Section 92C would have maintained its own documents relating to the TP adjustment, the AO would have properly been able to determine ALP of the international transactions. But these facts were totally ignored by the CIT(A) and was not contested or disputed by the Assessee during the hearing before us in main appeal. Form 3CEB is to be furnished according to the provisions of Section 92E and for the documents maintained under Section 92D are different. Thus, the mere submission of Form 3CEB with accountant s report will not be treated as documents submitted under Section 92D - As regards the case laws, the same were considered at the time of deciding the appeal, but the arguing counsel for the assessee at the time hearing of the main appeal has not categorically pointed out the supporting factual aspects to the present assessee s case and to those cited case laws. In fact, all the case laws are on different factual aspect wherein the requisite documents were filed by those assesses, but that is not the case in present assessee. In case of Bebo Technologies [ 2013 (8) TMI 997 - ITAT CHANDIGARH] Tribunal deleted the penalty on the ground that show cause notice was not issued before passing the order under Section 271AA -Thus, at this juncture, the Ld. AR is seeking review of the order dated 13.10.2020 by the Tribunal without pointing out any mistake apparent on record as per Section 254 and therefore, the same is not permissible under the provisions of Income Tax Act A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points which were not emerging from the original facts of the case. Thus, the assessee in the present Misc. Applications is seeking review of its own order by the Tribunal which is not permissible in law and hence dismissed. 2020 (12) TMI 731 Capital gain on Transfer of share - whether the appellant company has transferred those shares as part of O P Jindal Group family settlement? - gift of share - HELD THAT:- As the assessee has gifted the share, there is no accrual of any revenue to the assessee. According to accounting standard (9) of Revenue Recognition, Revenue is the gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities of an enterprise from the sale of goods, from the rendering of services, and from the use by others of enterprise resources yielding interest, royalties and dividends. Revenue is measured by the charges made to customers or clients for goods supplied and services rendered to them and by the charges and rewards arising from the use of resources by them. As there is no sale of security by the assessee, there is not any inflow of cash, receivables or other consideration, there is no question of accrual of any consideration to the assessee. Even otherwise we hold that according to the Section 122 of The Transfer Of Property Act, 1882 there is an absence of consideration in case of a gift. It is an undisputed fact that the assessee being the absolute owner of the shares gifted , had full enjoyment rights including to alienate, discard and even demolish, unless prohibited by some statutory provisions, it is within the powers of the assessee to make gift at its free will. Further the shares were credited in the books of account of the donor. The gift is also authorised by articles of association, approved by Board of Directors and Shareholders. We have carefully considered the facts of that case and found that those facts are distinct with the case before us. In that particular case there was no addition in the hands of the appellant donee company but the appeal was merely against a direction by the learned assessing officer to tax the above sum in the hands of the beneficiary by applying the provisions of Section 2 (24) (iv) of the income tax act in the hands of one Ms Arti Jindal while assessing the case of the appellant company. The only grievance in that appeal was that despite no addition was made in the hands of that appellant company, the learned assessing officer s jurisdiction was challenged wherein it has been held that benefit arose to the shareholder of the appellant company by invoking the above provisions of the income tax act. Here we do not have any issue about the taxability of sum in the hands of the donee companies. In fact those have been assessed and there is no addition in the hands of those companies, even otherwise we are not concerned with that /and issue before us is only about taxation of gift in the hands of the donor company. In the present case what have been transferred are stock in trade and not a capital asset. Further, in the present case there is a provision in the articles of association of making the gift thus, it meets the provisions of the companies act also. As asked the learned departmental representative to specifically show us any provision in the Income tax Act which provides for taxation of gift of stock in trade in the hand sof the Donor by imputing market value. No such specific references to section were made. No such provision was shown to us by the ld DR. The issue before us is prior to insertion of Chapter X- A in The Income Tax Act. Gift made by a corporate entity, appellant to 4 different corporate entities, in absence of any consideration, no business income can be charged to tax in the hands of Donor appellant. Accordingly ground number [3] and [4] of the appeal of the assessee is allowed. 2020 (12) TMI 730 TP Adjustment - Comparable selection - HELD THAT:- Assessee ought to have demonstrated difference in the rates of depreciation charged by it vis- -vis the comparables for seeking any adjustment on this score. The ld. AR submitted that such a data portraying difference in rates of depreciation can be compiled very easily and hence requested for granting one more opportunity for making out a case on the above lines before the authorities below. In view of the foregoing discussion and more specifically because of remand order in the first round of proceedings on this count, we are of the considered opinion that it would be in the interest of justice if the impugned order is set aside and the matter is restored to the file of AO/TPO for deciding this issue afresh in the light of new calculation sheet(s) which the assessee is contemplating to file depicting difference in the rates of depreciation by the assessee as well as comparables warranting adjustment, if any. It is made clear that the onus to prove the difference in rates of depreciation between the assessee and comparables will obviously be upon the assessee, who is claiming such an adjustment and also once this exercise is undertaken, it needs to be given a logical conclusion across the board notwithstanding that it may lead to having adverse impact in some comparables, where the rate of depreciation charged may be lower than that of the assessee. However, such an exercise should not put the assessee in more prejudicial position than in which it is before carrying out such an adjustment. 2020 (12) TMI 729 Assessment u/s 153A - addition for unexplained deposits - HELD THAT:- AO has made the addition for these six years on account of unexplained deposits in the bank account of the assessee. As assessee has contended that the additions were made by the AO by considering the deposits only made during the year without taking into account the corresponding withdrawals by the assessee. Thus it is pleaded that the addition if any can be made only for the peak credit in the bank account of the assessee. Since this issue of considering the withdrawals requires verification of the record and therefore, in view of the submissions of both the parties the matters for all these six years is remanded to the record of the Assessing Officer for re-adjudication of the issue of addition on merits after considering the explanation of the assessee including withdrawals made by the assessee from the bank account. Needless to say the assessee be given a proper opportunity of hearing. As regards, the legal issue raised by the assessee challenging the validity of the addition made by the AO in the absence of any incriminating material found and seized during the course of search and seizure operation the same is kept open to be agitated by the parties, if need arises. AO is directed to give finding of fact whether any incriminating material was found and seized during the course of search and seizure action disclosing any undisclosed income of the assessee on account of the deposits made in the bank account. 2020 (12) TMI 728 TP Adjustment - comparable selection - HELD THAT:- Assessee in engaged in the business of provision of Information Technology enabled Services (ITeS), to its wholly owned holding company thus companies functionally dissimilar with that of assessee need to be deselected. Wrong computation of working capital adjustment - HELD THAT:- It is clear from the perusal of the submissions made by the assessee and the order of the DRP that the argument with regard to adopting weighted average of the interest rate was not considered by DRP. We are, therefore, of the view that it would be just and appropriate to remand the issue to the TPO/AO for fresh consideration with regard to computation of working capital level and the consequent adjustment on account of working capital. Not considering the foreign exchange fluctuation gain earned by the Company as part of operations for the purpose of computing the Assessee's operating mark-up on total cost to arrive at the arm's length price - HELD THAT:- Foreign exchange gain has to be taken as part of the operating profits to the extent that it has nexus with the international transaction in respect of which the ALP is being determined. As far as the issue with regard to treatment of foreign exchange gain as part of operating profit is concerned, this issue is no longer res integra and has been settled by the decision in the case of e4e Business Solutions P. Ltd. v. DCIT[ 2016 (3) TMI 356 - ITAT BANGALORE] . It has been held therein that the gains arising from fluctuation of foreign exchange having nexus with international transaction should be treated as operating income and taken into consideration while computing the operating profit of the assessee. Following the aforesaid decision, we direct the computation of PLI by treating the gains arising from fluctuation of foreign exchange having nexus with international transaction as part of operating income. TPO directed to compute the ALP of the international transaction in question in accordance with the directions contained in this order, after affording the assessee opportunity of being heard. Computation of deduction u/s 10AA - exclusion of telecommunication expenses loss both from the export turnover and total turnover for the purpose of computation of deduction u/s. 10AA - HELD THAT:- In the case of CIT v. Tata Elxsi Ltd [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] has held that charges/expenses relating to telecommunication, insurance charges and foreign exchange loss should be excluded both from export turnover and total turnover while computing deduction u/s.10A of the Act i.e., whatever is removed from the numerator should also be excluded from the denominator while working total turnover and export turnover for allowing deduction u/s.10A. The aforesaid decision of the jurisdictional High Court has been upheld in the case of CIT v. HCL Technologies Ltd.. [ 2018 (5) TMI 357 - SUPREME COURT] . The telecommunication charges should be excluded both from the export turnover as well as total turnover while computing deduction u/s.10AA of the Act. 2020 (12) TMI 727 Admission of additional grounds - HELD THAT:- We inclined to admit the additional ground of appeal since, as assessee rightly contends, it is a pure question of law challenging the very assumption of jurisdiction to pass impugned order which goes to the root of the case and merely because the assessee did not raise this grievance earlier the assessee cannot be prevented from raising this grievance now. In view of these facts, and in view if the law laid down by Hon ble Supreme Court in NTPC s case [ 1996 (12) TMI 7 - SUPREME COURT] admit the additional grounds of appeal and proceed to deal with the same. Reopening of assessment u/s 147 - Non recording satisfaction by the Assessing officer - HELD THAT:- In this case, there is no proper issue of notice u/s.148 of the Act and notice issued without recording the reasons. From the order sheet dated 30.1.2014, it is recorded that the jurisdiction of the case was transferred to ITO Ward -3(4) but on 15.11.2014, the ITO Ward 2(4) had issued notice u/s.142(1) of the Act on same issue and, therefore, the notices issued to the assessee are clearly in mess. On a careful consideration of the matter hold that the assumption of jurisdiction u/s. 147 by the AO is without reasons record and proper service of notice u/s. 148 of the Act and is bad in law and reassessment proceedings and all consequent orders including reassessment order are consequently liable to be quashed. Appeal of the assessee is allowed 2020 (12) TMI 726 LTCG - Computation of full value received on sale of property by the assessee for the purpose of computing the Long Term Capital Gain (LTCG) - HELD THAT:- In the light of the objections given by the assessee to the preliminary report of the AO, the second sale instance which appears to be an extraordinary instance of sale ought to have been excluded. The admitted position is that all the khatas in the survey No. 4, Kurubarahalli Village, Kasaba Taluk, Mysore District, Mysore, have been cancelled by the Tahsildar, Mysore, and there are several litigations. There is also a third acquisition by Mysore Urban Development Authority (MUDA). The specific objection of the Assessee to the preliminary report of the DVO has not been considered by the DVO while giving his final report. In the circumstances, we accept the submission made by the learned Counsel for the assessee and direct that sale instance No.2 as given in the chart above should be excluded and if so excluded, the price of ₹ 80 lakhs received by the assessee should be accepted as correct. Consequently, there can be no addition on account of application of provisions of section 50C of the Act. The addition made is therefore directed to be deleted. Appeal of the assessee is allowed. 2020 (12) TMI 725 Deduction u/s 80P(2)(d) - interest earned from Schedule bank or co-operative bank - HELD THAT:- The claim of the Assessee was that Co-operative Bank is essentially a Co-operative Society and therefore deduction has to be allowed under Clause (d) of Sec.80P(2) - TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] followed the decision of the supreme Court in The Totgars Co-operative Sales Society Ltd.[ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] and held that interest earned from Schedule bank or co-operative bank is assessable under the head income from other sources and therefore the provisions of Sec.80P(2)(d) was not applicable to such interest income. It is thus clear that the source of funds out of which investments were made remained the same in AY 2007- 08 to 2011-12 and in AY 1991-92 to 1999-2000 decided by the Hon ble Supreme Court. Therefore whether the source of funds were Assessee s own funds or out of liability was not subject matter of the decision of the Hon ble Karnataka High Court in the decision cited by the learned DR. To this extent the decision of the Hon ble Karnataka High Court in the case of Tumukur Merchants Souharda Co-operative Ltd. (supra) still holds good. Hence, on this aspect, the issue should be restored back to the AO for a fresh decision after examining the facts in the light of these judgmentof The Totgars Co-operative Sale Society Ltd and Tumukur Merchnts Souharda Co-operative Ltd. (supra). AO will afford opportunity of being heard to the Assessee and filing appropriate evidence, if desired, by the Assessee to substantiate its case, before deciding the issue of deduction which was interest received by the Assessee from Apex Co-operative Bank and which was claimed as deduction u/s.80P(2)(a)(i) or (d). 2020 (12) TMI 724 TP Adjustment - technical support services rendered by appellant to its overseas associated enterprise (' AE ) - comparable selection - HELD THAT:- M/s Acropetal Technologies Limited entity is not purely in the field of rendering ITES services. Its segmental results could not be relied upon which is evident from its financial statements. Therefore, it would not be a good comparable for the assessee. We direct for exclusion of this entity. M/s Coral Hub Limited (earlier known as Vishal Information Technologies Limited) entity has outsourced its services to outside vendors as against the fact that the assessee has rendered the services itself. The business model being different, the two entities could not be compared with each other. M/s Cosmic Global Limited excluded on account of functional dissimilarity in assessee s own case for AY 2008-09 - We find that similar facts exist during the year. No change in the business model of this comparable entity has been shown before us. Therefore, we direct for exclusion of this entity on the ground of functional dissimilarity. Disallowance u/s 14A - assessee earned exempt dividend income and offered suo-moto disallowance in its computation of income - Non recording of satisfaction by AO - HELD THAT:- AO has not faulted with the suo-moto disallowance made by the assessee. The assessee estimated the same @60% of salary of two employees which were stated to be engaged in investment activity. - AO did not demonstrate as to how the said disallowance was inadequate. We find that it was incumbent for Ld. AO to record a satisfaction as to why the disallowance offered by the assessee was not sufficient and this said satisfaction was to be arrived at having regard to assessee s books of accounts. The recording of the said satisfaction was sine qua non before proceeding to apply Rule 8D. Although there is no particular format or manner in which the satisfaction was to be recorded but at least the same should have been discernible from the order of Ld. AO. We find that there is no discussion whatsoever as to sufficiency or insufficiency of suomoto disallowance offered by the assessee. No fault has been pointed out in assessee s methodology of arriving at the said disallowance. The application of Rule 8D was not mechanical. Therefore, the additional disallowance as made by Ld. AO in terms of Rule 8D was to be rejected rather the assessee s suo-moto disallowance was to be accepted. Addition on account of TDS - Assessee claimed TDS credit - HELD THAT:- we find that petty differences have arisen in the account of various deductor. The unreconciled amount varies from as low as ₹ 20/- to as high as ₹ 6,72,400/-. However, as rightly pleaded by Ld. AR, the unreconciled amount could not be treated as unexplained income, keeping in view the fact that the assessee had reflected receipts far in excess of what was shown by the deductor in TDS data. Therefore, we accept the arguments raised by Ld. AR and delete this difference from the income of the assessee. This ground stand allowed. Short Grant of TDS - HELD THAT:- As assessee claimed TDS credit of ₹ 1621.95 Lacs in the computation of income, however, it has been granted credit of only ₹ 1532.97 Lacs. The same being matter of record reconciliation, we direct Ld. AO to grant due TDS credit to the assessee as per law. This ground stand allowed for statistical purposes. 2020 (12) TMI 723 TP Adjustment - addition on account of Arm s Length Price (ALP) - TPO noted that Assessee had paid royalty to Expeditors International of Washington Inc - TPO also concluded that with the payment of royalty, the profitability of the assessee has reduced in comparison to its peer group companies thus held the ALP of the international transaction on account of royalty payment to be Nil and accordingly the income of the assessee was enhanced - CIT-A deleted the addition - HELD THAT:- CIT(A) has considered the supplementary TNMM analysis to check the impact of royalty payment on assessee s profit margin that of independent comparable companies to come to a conclusion that the ratio of operating profit to cost at sales of the assessee is comparable to that of uncontrolled entities but we are of the view that her decision to grant relief is not based solely on the aforesaid supplementary analysis furnished by the assessee at the behest of CIT(A). CIT(A) has taken into consideration various other factors (which are extracted herein above) to come to the conclusion that the AO/TPO was not justified in making the addition. As far as merits of the deletion of addition is concerned, no fallacy in the findings of CIT(A) has been pointed by the Revenue. Even on the issue of alleged violation of provisions of Rule 46A of I.T. Rules, we are of the view that deletion of addition was not based solely on the basis of the alleged additional evidence filed by the assessee but various other material factors as noted in the order. We find no reason to interfere in the order of CIT(A) and thus the grounds of Revenue are dismissed. TDS u/s 195 - Addition u/s 40(a) - addition on account of Global Account Manager(GAM) Expenses paid in foreign currency but no TDS was deducted - CIT(A) while deciding the issue in favour of the assessee has given a finding that the amount incurred by the assessee on account of GAM charges cannot be treated as payment of salary to non-resident but it was in the nature of reimbursement of expenses and the same was not liable for deduction for TDS - HELD THAT:- As in A.Y. 2001-02 2004-05 identical issue arose in assessee s own case and the issue was decided in assessee s favour by the Co-ordinate Bench of Tribunal and the order of the Tribunal has been upheld by the Hon ble Delhi High Court. Before us, no distinguishing feature in the facts of the case in the year under consideration and that of A.Y. 2001-02 2004-05 [ 2011 (12) TMI 104 - DELHI HIGH COURT] has been pointed out by the Revenue. Further no fallacy in the findings has been pointed out by the Revenue before us. Revenue has also not placed any material on record to demonstrate that the order of the Tribunal in assessee s own case in earlier years has been set aside/overruled or stayed by higher judicial forum. In such a situation, we find no reason to interfere in the order of CIT(A). Addition on account of lease line expenses - No deduction of tax u/s 40(a) - CIT- A deleted addition - HELD THAT:- identical issue arose in assessee s own case in A.Y. 2001-02 2004-05 wherein the issue was decided in favour of the assessee by the Co-ordinate Bench of Tribunal. We further find that the order of Tribunal in favour of the assessee was upheld by the Hon ble Delhi High Court. Before us, no distinguishing feature in the facts of the case and that of A.Y. 2001-02 2004-05 has been pointed out by the Revenue. Further no fallacy in the findings of CIT(A) has been pointed before us by the Revenue. Addition on account of royalty expenses - assessee was asked to show has to why the amount not be considered to be payment which is in the nature of enduring advantage and should not be capitalized and disallowed - CIT-A deleted the addition - HELD THAT:- Before us the Ld AR has submitted that the royalty paid by the Assessee in subsequent years has been accepted by the Revenue as no disallowance has been made by the Revenue. The aforesaid contention of the Ld AR has not been controverted by the Revenue. We further find that CIT(A) while deleting the addition has given a finding that the payment on account of royalty is an operational expenses and revenue in nature and therefore the ratio of decision of Hon ble Apex Court in the case of Southern Switchgear [ 1997 (12) TMI 105 - SC ORDER] are not applicable. He has further given a finding that the royalty has already been disallowed by the TPO and the disallowance once again made by the AO results in double disallowance. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. Excess claim of depreciation on computer accessories - AO was of the view that UPS, printers etc. are not part and parcel of the computer but are part of machinery on which depreciation is to be allowed @ 25% and not @ 60% as claimed by the assessee - HELD THAT:- We find that identical issue of excess claim of depreciation arose in assessee s own case in A.Y. 2001-02, 2003-04 2004-05 wherein the Co-ordinate Bench of Tribunal has decided the issue in favour of the assessee. Before us, no distinguishing features in the facts of the case and that of the earlier years has been pointed out by the Revenue. Revenue has also not placed any material on record to demonstrate that the order of the tribunal in assessee s own case in earlier years has been set aside/overruled or stayed by higher judicial forum. 2020 (12) TMI 722 Revision u/s 254 - purchase transactions of the immovable property were carried out and completed prior to effective date of amendment in section 56(2)(vii)(b) - HELD THAT:- Tribunal committed error in rejecting the ground raised towards inapplicability of amended provisions of section 56(2)(vii)(b). CIT(A) has given appropriate relief in this regard. We thus see no wrong in action of the CIT(A). The plea of the assessee that the agricultural land is rural land was raised for the first time before us. In the absence of any findings of the lower authorities on factual aspects, we decline to entertain the aforesaid new plea. We also find no merit in the plea of the assessee for its inapplicability of Section 56(2)(vii)(b)(ii) of the Act to the FY 2013-14 concerning AY 2014-15. The aforesaid provision is applicable from AY 2014-15 and would thus apply to transactions concerning FY 2013-14 as intended by the legislature. Tribunal has dealt with the ground raised in the light of facts placed before it. Thus, the error in conclusion drawn by the Tribunal, if any, as alleged, cannot fall within the sweep of expression apparent mistake governing section 254(2) of the Act. The prayer of rectification is thus not sustainable. Admissibility of additional evidences - Tribunal has applied its mind and taken a conscious view on the admissibility of additional evidences. Hence, the grievances of the assessee on this score do not fall within the purview of section 254(2) of the Act. 2020 (12) TMI 721 Additions on account of unaccounted on-money - unaccounted receipts - it is the case of the assessee that the statement of Managing Partner has been fully honoured and aforesaid on-money receipts in aggregate were bifurcated into two financial years and credited to the Profit and Loss Account of the respective financial years appropriately - HELD THAT:- As taken note of averments made in the statement of Shri Bharat K. Gadhiya recorded u/s 132(4) of the Act and also various evidences found in search. On consideration of these facts, the CIT(A) found the action of the Assessing Officer to be arbitrary and uncalled for. We note that the additions, if accepted, will result in increase in staggering net profit upto 52% which is ostensibly abnormal and out of sync with line of the business. CIT(A) has, in our view, rightly analysed the facts and inter alia observed that major component of expenditure is in the form of interest and remuneration to the partners which have not been doubted by the AO. CIT(A) has rightly concluded the issue in favour of the assessee having regard to the facts and law appreciated - Appeal of the Revenue is dismissed. 2020 (12) TMI 720 TDS u/s 194A - interest payment to GE Capital and Tate Motors Ltd. without deduction of tax as prescribed- addition u/s. 40(a)(ia) for non-deduction of tax) - CIT(A) has deleted the addition holding that once the payments are made and no amount is payable as on 31/03 of the relevant previous year, no disallowance u/s. 40(a)(ia) can be made - HELD THAT:- As gone through the decision of the Hon ble Gujarat High Court in the case of CIT-IV v. Sikanderkhan N. Tanwar [ 2013 (5) TMI 457 - GUJARAT HIGH COURT] wherein it is held that section 40(a)(ia) would cover not only the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year. Accordingly, this issue is restored back to the file of Assessing Officer for adjudicating afresh as per the direction laid down in the decision of Hon ble Gujarat High Court in the case of Sikandar Tunwar [ 2013 (5) TMI 457 - GUJARAT HIGH COURT] . Therefore this ground of appeal of the revenue is allowed for statistical purposes. Disallowance of interest expenses - advances to Company owned by one of the partners on account of diesel and petrol expenses.and no interest was charged from the said partnership firm - Proof of sufficiency of own funds - HELD THAT:- The assessee has not brought any material on record to substantiate that aforesaid huge amount of advance was extended to Ramjibhai and Company exclusively for the purpose of petrol and diesel. The ld. Departmental Representative has pointed out that loan amount was very old which was given in the earlier years and there was no sufficient interest free fund available with the assessee. During the course of course of appellate proceedings before us, the ld. counsel has stated that opening debit balance was ₹ 61,14,336/- and closing debit balance was ₹ 59,31,445/- and the interest free fund available with the assessee was ₹ 64,75,145/-. However, to controvert the submission of the ld. Departmental Representative the ld. counsel has not furnished any information and material to disprove the claim of the Ld. Departmental Representative that the loan amount was pertained to earlier years when the assessee was not having sufficient interest free fund - no merit in the ground of appeal of revenue after considering that the ld. CIT(A) has judiciously restricted the disallowance to the extent of ₹ 3,98,436/- on pro-rata basis. A ddition u/s. 41(1) in respect of outstanding creditors shown in balance sheet - CIT(A) has restricted the addition to the extent of outstanding balance pertaining to Shri Bhemjibhai L. Chaudhary wrongly classified as sundry creditor as the same was pertained to unsecured loan and that person had never filed income tax return and creditworthiness remained unproved - HELD THAT:- After perusal of the information in respect of the aforesaid cases it is clear that complete information has not been furnished. On this issue both the representatives agreed to restore these cases to the file of the Assessing Officer for deciding afresh after examination/verification of the information. Therefore, we restore these cases to the file of Assessing Officer for deciding afresh after verification and examination of the details to be produced by the assessee. This ground of appeal of the revenue is partly allowed. Sustaining the addition to the extent of ₹ 8,39,727/- , the ld. counsel has submitted that the said person has confirmed that this amount was due to him and later the amount was paid to the lender in the subsequent year. In the light of the above fact and circumstances, we also restore this issue to the Assessing Officer for deciding this issue afresh. Depreciation on the Paver machine @ 15% - AO noticed that the said asset was in the name of HMS Construction Pvt. Ltd. and same was not owned by the assessee - HELD THAT:- It is undisputed fact that HMS Construction Pvt. Ltd. had given the possession of the Paver Machine and stock transfer of Paver Machine was done in favour of Gayatri Construction Co. (assessee) and machine was used for the purpose of business. The assessee has made part payment by various cheques and the amount due as on 31-03-2009 as it was decided between them that the ownership paper would be provided to the assessee after making full payment of the consideration. In the light of facts and considering the finding of ld. CIT(A) based on the decision of Deepak Nitrate [ 2008 (5) TMI 233 - GUJARAT HIGH COURT] wherein it is held that since assessee acquired possession and was running factory on payment of a substantial part of price, assessee was entitled to grant of deprecation. In view of the above facts and findings, this ground of appeal of the Revenue is dismissed. GP Addition - rejection of books of a/c u/s. 145 confirming addition of G.P. @ 1.5% of the turn over - HELD THAT:- No merit in the appeal of the Revenue on this issue as the ld. CIT(A) has judicially restricted the addition to the extent of 1.5 % G.P. rate after following the direction laid down in the various judicial findings relevant to the facts and circumstances pertained to the case of the assessee. It is observed that no separate addition for sub-contract expenses is justified since these expenses ultimately also affect the gross profit therefore the ld. CIT(A) has rightly held that addition of 1.5% in G.P. would also covered addition of sub-contract expenses. No merit in the appeal and alternative contention of the assessee because assessee has failed to co-relate the incurring of entire expenses in cash to the different projects therefore labour expenses of ₹ 3.57 crores and diesel/ petrol expenses of ₹ 2.20 crores could not be verified.The assessee has failed to furnish basic detail i.e. project wise details corresponding income and expenditure. To prove the genuineness of the sub-contract expenses claimed to be paid to the three sub-contractors in the initial period of F.Y. 2008-09 the assessee has not even furnish the primary detail as addresses of the subcontractors.The copies of these ledger accounts of these sub-contractors placed at pages no. 87 to 88 contained only the entries of initial payment made in the month of April 2008. There was no further details of nature of contract work and income received from such sub-contract. There are no entries for the remaining period from April 2008 to 31st March 2009. These facts demonstrate that the assessee has failed to substantiate the genuineness of this claim. 2020 (12) TMI 719 TP Adjustment - AO while framing the assessment made a reference under Sec. 92CA(1) to the TPO for determining the ALP of the international transactions of the assessee for the year under consideration - selection of MAM - HELD THAT:- We are unable to sustain the determination of the ALP of the regional management services received by the assessee from its AE, viz. Henkel AG Company, KGaA, at Rs. nil by the TPO without resorting to any transfer pricing exercise as per any of the method prescribed in Sec.92C(1) of the Act, as against that determined by the assessee by adopting TNMM as the most appropriate method. We thus in terms of our aforesaid deliberations vacate the addition towards TP adjustment made by the AO/TPO. The Grounds of appeal No. 1 to 8 are allowed in terms of our aforesaid observations. Disallowance of professional charges - Allowable business expenses u/s 37 - HELD THAT:- Claim of the assessee before the lower authorities, as well before us, that as the aforesaid legal and professional fees incurred by it was neither in the nature of a capital expenditure nor of a personal nature, therefore, the same having been incurred wholly and exclusively for the purpose of its business was allowable as a revenue expenditure under Sec. 37 - assessee except for raising the aforesaid hollow contention had absolutely failed to substantiate its claim of having incurred the aforesaid expenditure in the course of its business. Except for placing on record the bifurcated details of professional charges incurred during the year under consideration, we find that, the assessee had failed to place on record any such material which would substantiate its claim of having incurred the so called professional charges wholly and exclusively for the purpose of its business. Accordingly, in the absence of any supporting documentary evidence which would justify the aforesaid claim of expenditure so raised by the assessee, we find no infirmity in the view taken by the A.O/DRP who in our opinion had rightly disallowed the same. - Decided against assessee. Deduction of sales promotion expenditure on account of travel under taken by its employees for attending a conference - HELD THAT:- We find, that the impugned amount as claimed to have been paid by the assessee to M/s Cox and Kings Ltd. towards travel expenses by Air of its employees for the purpose of attending a conference. Except for harping on the aforesaid unsubstantiated details the assessee had failed to place on record any such material which would substantiate its claim that the aforesaid expenses were actually incurred in the course of its business towards travel expenses of its employees for attending a conference. Accordingly, in the absence of any material supporting the claim of the assessee of having incurred the aforesaid expenses wholly and exclusively in the course of its business, we find no infirmity in the view taken by the lower authorities who had rightly rejected the same. We thus uphold the disallowance carried out by the AO. - Decided against assessee. Claim for deduction of sales promotion expenses - Expenses incurred towards purchase of gold coins etc. which are stated to have been distributed as gifts to clients in the normal course of its business - HELD THAT:- A.O in the absence of any supporting documentary evidence which would establish the factum of incurring of the aforesaid expenses by the assessee in the course of its business, had thus, disallowed the same. Before us, the assessee except for placing on record the bifurcated details of the gifts which are stated to have been given to certain persons, had however, failed to place on record any such material which could fortify its claim of having incurred the said expenditure wholly and exclusively for the purpose of its business. Accordingly, in the absence of any material having been placed on record by the assessee which would persuade us to dislodge the view taken by the A.O, we thus, finding no infirmity in the view therein taken by him uphold the disallowance - Decided against assessee. 2020 (12) TMI 718 Estimation of income - Bogus purchases - HELD THAT:- There is merit in the contentions of the assessee that if quality claim and the discount are taken to the trading account, where they rightly belong as per the accounting principles, then the rate of gross profit comes to 0.52% of sales which compares favourably with the normal rate of gross profit ranging from 0.1% to 0.5% in the assessee s business of trading in HR and CR coils/sheets and galvanized coils/sheets on wholesale basis. Similar level of gross profit has been shown by the assessee in AYs 2008-09, 2009-10 and 2012-13, which has been accepted by the AO in the assessment passed u/s 143(3) of the Act. AO has estimated the profit of the assessee-company at 8% of opening stock held and purchases made during the year on the ground that the sale is not ascertainable with item-to-item purchase and stock held by the assessee. This is the incorrect method adopted by the AO. A perusal of the order of the CIT(A), as mentioned earlier clearly indicates that the assessee filed before the AO the relevant details. AO could have estimated the gross profit margin which is the surplus available out of the sales revenue, after subtracting the cost of goods sold. The correct method is indicated below: Gross Profit = Sales COGS Gross Profit Margin (GPM) = (Gross Profit X 100)/(Sales) AO has resorted to an estimation which is not based on accounting principles. The AO has also disregarded the submissions made by the assessee during the course of assessment proceedings. 2020 (12) TMI 717 Assessment u/s 153A - Addition based on seized documents in search - Unexplained investment - HELD THAT:- It is an admitted fact that on the date of search no assessment was pending in the case of assessee for the assessment year under appeal. It is also not in dispute that during the course of search list of transfer of shares since 01.04.2010 till 31.03.2011 was found and recovered from Jalalabad Road, Shahjahanpur which is not the address of the assessee. Thus, no material was found during the course of search in the case of assessee. Further, such list could not be considered as incriminating material in nature. The seized paper merely reflect the date, name of transferor and transferee and number of shares. The document does not speak of any unexplained investment made by any of the assessees. No material was found during the course of search so as to indicate any unaccounted investment made by assessee. No evidence of any unaccounted investment have been found during the course of search. The A.O. made addition merely on presumption. Thus, it is clear that when no assessment was pending in the case of assessee for the assessment year under appeal on the date of search and no incriminating material was found during the course of search so as to make the impugned addition, therefore, the issue is covered in favour of the assessee by the Judgments of Hon ble Delhi High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] - Decided in favour of assessee. 2020 (12) TMI 716 Disallowance u/s. 14A r.w. Rule 8D(2)(ii) - HELD THAT:- We find that Ld.CIT(A) following the decision of CIT v. Reliance Utilities and Power Ltd.[ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT v. HDFC Bank [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] deleted the disallowance as the assessee has its own interest free funds by way of share capital reserves and surplus, far in excess of the investments made by it in equity shares which got yielded exempt income. We do not find any infirmity in the order of the Ld.CIT(A). Thus, the grounds of the revenue on this issue are dismissed. Disallowance u/s. 14A while computing book profits u/s.115JB - CIT(A) following the decision of Hon'ble Special Bench of Delhi in the case of ACIT v. Vireet Investments Private Limited [ 2017 (6) TMI 1124 - ITAT DELHI] held that the computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s. 14A r.w. Rule 8D of the I.T Rules, 1962. Therefore, respectfully following the said decision we restore this issue to the file of the Assessing Officer who shall decide in accordance with the decision of the Special Bench and compute the book profits accordingly. Grounds on this issue are allowed for statistical purpose. Respectfully following the decision of the Hon'ble Special Bench in the case of ACIT v. Vireet Investments Private Limited (supra), we direct the Assessing Officer to compute the disallowance as per Rule 8D(2)(iii) of I.T. Rules by considering only those investments which yielded dividend income during the assessment year under consideration. 2020 (12) TMI 715 Expenditure in respect of Dead Rent paid in respect of mines which are not operational and no manufacturing activity is carried on - Nature of expenses - CIT(A) allowing the claim as revenue expenditure - HELD THAT:- CIT-A correctly allowed the claim of assessee by following the CBDT Circular No.1D(V.53) of 1966, wherein it was laid down that dead rent is allowed as deduction irrespective of the fact whether the mines are operational or not. Environment Protection Fees - allowable revenue expenses - assessee paid a sum to the Govt. of Karnataka towards Environmental Protection Fees levied on the mining leases - AO considered that the assessee would get the benefit of the fee paid for 10 years and allowed 1/10th of the expenditure claimed as deduction by the assessee - HELD THAT:- Environmental Protection Fees cannot be equated to consideration paid for acquiring mining rights and therefore the decision of ITAT Bangalore in the case of K R Kaviraj [ 2017 (12) TMI 1784 - ITAT BANGALORE] is not applicable to the facts of the present case. We are of the view that the sum paid was a compensation paid by the assessee for damage to the environment and it cannot be said that it gives an enduring benefit to the assessee. We therefore agree with the conclusion of the CIT(Appeals) that expenditure in question is a capital expenditure. Appeal by the revenue is dismissed. 2020 (12) TMI 687 Adhoc disallowance of 2.5% of dividend income as expenditure incurred on exempt income when the assessee had identified expenditure to be disallowed - HELD THAT:- From perusal of substantial question of law No.1, we find that the aforesaid substantial question of law is no longer res integra and has already been answered in favour of the assessee by the Supreme Court in 'GODREJ BOYCE MANUFACTURING COMPANY LTD. VS. DY. COMMISSIONER OF INCOME-TAX AND ANR.', [ 2017 (5) TMI 403 - SUPREME COURT] . In view of aforesaid enunciation of law, the first substantial question of law is answered in favour of the assessee and against the revenue. Losses of a 10A/10AA unit as already set-off against other business income of the appellant, should be again carried forward and set-off against eligible profits of the same unit in a subsequent year - HELD THAT:- From perusal of para 17 of the judgment rendered by the Supreme Court in COMMISSIONER OF INCOME-TAX VS. YOKOGAWA INDIA LTD. , [ 2016 (12) TMI 881 - SUPREME COURT] we find that the second substantial question of law is also no longer res integra and has been answered in favour of the assessee by the Supreme Court. Therefore, the second substantial question of law is also answered in favour of the assessee and against the revenue. Disallow the deferred compensation claimed by appellant as the claim does not fall within the parameters of sec.36(1)(iv) (v) r.w.s. 40A(9) - excluding the computer software sales made to STP/SEZ units in India from export turnover for the purpose of computing deduction under Section 10A/10AA of the Act? - excluding the VAT / GST from export turnover and total turnover for the purpose of computing deduction under Section 10A/10AA - HELD THAT:- From perusal of judgment rendered by a bench of this court in 'WIPRO LTD. VS. DCIT' [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] we find that the aforesaid substantial question of law is also no longer res integra and has been answered in favour of the assessee. Therefore, the third , fourth and fifth substantial question of law is also answered in favour of the assessee and against the revenue 80% of the uplinking charges excluded from the definition of turnover, when even the first responded had limited such exclusion to 5% of the telecommunication charges - HELD THAT:- This court in 'COMMISSIONER OF INCOME TAX ANOTHER VS. TATA ELXSI LTD.' [ 2016 (3) TMI 460 - KARNATAKA HIGH COURT] as well as para 21 of the Supreme Court in 'COMMISSINOER OF INCOME-TAX VS. HCL TECHNOLOGIES LTD.',[ 2018 (5) TMI 357 - SUPREME COURT] we find that the sixth substantial question of law is also required to be answered in favour of the assessee and against the revenue. Customs 2020 (12) TMI 714 Seeking declaration that the assessment of all the bills of entry relating to import of tin ingots by the petitioner from Malaysia is final, conclusive and binding - applicability of customs notification No.46/11 dated 01.06.2011 - import of tin ingots from Malaysia - petitioner submits that when the Supreme Court has remanded the parties back to the High Court by restoring the writ petition observing that the Treaty between Republic of India and Association of South East Asian Countries more particularly Article 24 therefore cannot be decided by the adjudicating authority which has to be addressed by the High Court in the writ petition, Principal Commissioner ought not to have issued the said show cause notice. HELD THAT:- The Principal Commissioner of Customs, Ahmedabad is restrained from proceeding with the show cause notice dated 03.12.2019 until further orders. Stand over to 11.02.2021. To be listed along with connected matters. 2020 (12) TMI 713 Evasion of the customs duty on the imported goods - import of Fully Fashioned High Speed Knitting Machine - Export Promotion Capital Goods scheme - HELD THAT:- This writ application disposed off with liberty to the writ applicants to put forward their case in the best possible manner before the adjudicating authority. The adjudicating authority may consider the submissions that may be canvassed before him and take an appropriate decision in accordance with law. It is clarified that the adjudicating authority shall not be influenced in any manner while taking the final decision by the fact that the High Court has declined to entertain the writ application - application disposed off. 2020 (12) TMI 712 Permission to re-export the goods without insisting on payment of redemption fine - Nutrition Supplements - HELD THAT:- As statutory appeal has already been filed by the writ applicant against the final order of confiscation passed by the adjudicating authority, the request to re export the goods also should be made before the appellate authority. This writ application is disposed off with a direction to the respondent No.5 to take up the appeal preferred by the writ applicant at the earliest and decide the same in accordance with law - We permit Mr. Kapoor, the learned counsel to prefer an appropriate application before the appellate authority with a prayer to re export the goods, as prayed for, in this writ application. 2020 (12) TMI 711 Evasion of Anti-Dumping Duty - import of melamine - rejection of assessable value declared by the Appellant and redetermination of the assessable value - whether the importers of melamine had resorted to evasion of anti-dumping duty by over valuation of the goods imported? - extended period of limitation - penalty - HELD THAT:- It is by a Notification dated February 19, 2010 that the Central Government imposed anti-dumping duty on melamine originating from China or any other country other than China at a rate that was equivalent to difference between the amount mentioned in Column No. 9 i.e US$ 1681.49 per MT and the landed value. It was also mentioned in the Notification that the landed value would mean the assessable value as determined under the Customs Act and would include all duties of customs except duties levied under sections 3, 8B, 9 and 9A of the Tariff Act. The Supreme Court in Wipro Ltd. vs Assistant Collector of Customs [ 2015 (4) TMI 643 - SUPREME COURT ] examined the provisions of section 14 of the Customs Act as it stood prior to 2007 and also as it stood after the amendment in 2007. It noticed that under the unamended provision, the principle was to find out the valuation of goods by reference to the value and it introduced a determining / fictional provision by stipulating that the value of all the goods would be the price at which such or like goods are ordinarily sold . However, under the amended provisions, the valuation is based on the transaction‟ price namely, the price actually paid or payable for the goods . What has to be seen under section 14(1) of the Customs Act, as amended in 2007, is the transaction value of the goods imported or exported for the purpose of customs duty and transaction value is stated to be the price actually paid or payable for the goods when sold for export to India for delivery at that time and place of importation. Sub-section (1) of section 14 of the Customs Act also makes it clear that the price actually paid or payable for the goods will not be treated as transaction value‟ where the buyer and the seller are related to each other. As per the first proviso to the amended section 14 (1), certain charges are to be added to the transaction value of the imported goods. It is, therefore, clear that while there was scope for addition of notional charges in the assessable value under the un-amended section 14 of the Customs Act, but after the actual sale price concept was introduced in the year 2007 on the basis of GATT guidelines and section 14 of the Customs Act was amended in 2007, any inclusion of notional charges seems to have lost its relevance and only actual cost incurred by the buyer is required to be considered. Additions on the basis of statement of 3 persons - HELD THAT:- it is necessary to examine whether denial of cross- examination has vitiated the impugned order because it is these statements that were relied upon by the Principal Commissioner to hold that the price of the imported goods had been artificially increased to avoid anti-dumping duty. The Allahabad High Court in Commissioner of Central Excise v/s Kurele Pan Products Pvt. Ltd. [ 2014 (4) TMI 463 - ALLAHABAD HIGH COURT ], while dealing with an excise matter, held that if the authority wants to rely upon the statement of any witness, it is necessary to provide an opportunity to cross-examine the witness and failure to provide such an opportunity results in denial of the principles of natural justice. Cross-examination was held to be a valuable right of the noticee. Time limitation - HELD THAT:- There is no consideration of the reply submitted by the Appellant regarding limitation in the order passed by the Principal Commissioner, since all that has been stated is that noticees No. 1,2 and 4 in collusion with each other had fraudulently succeeded in evading the anti-dumping duty on the melamine imported by them, which required to be recovered from them under the provisions of sub-section (4) of section 28 of the Customs Act. In this connection the Principal Commissioner had observed that the transaction based on fraud continues to be tainted and the person committing fraud is precluded from deriving any benefit - Section 28(1) of the Customs Act requires that if any duty has not been levied for any reason other than the reasons of collusion or any wilful mis-statement or suppression of facts, the proper officer shall, within one year from the relevant date, serve notice on the person chargeable with duty. It was, therefore, imperative for the officer to have mentioned in the show cause notice why the provisions of sub-section (4) of section 28, which permits notice to be issued within five years, were being invoked. In the absence of any charge in the show cause notice and finding in the order passed by the Principal Commissioner, the confirmation of the demand cannot also be sustained - it is not possible to sustain the order dated May 30, 2019 passed by the Principal Commissioner. Appeal allowed - decided in favor of appellant. 2020 (12) TMI 710 Revocation of Customs Broker License - forfeiture of security deposit - penalty - mis-conduct and non-compliance of the regulations of CBLR - appellant disputed the enquiry report stating that the present enquiry officer Shri Rex Hungyo is biased against the petitioner, as he has already in the earlier enquiry report conducted in the matter of show cause notice to the CB company observed that the present appellant have rendered himself liable to be penalized under Regulation 18 of CBLR, 2018 - HELD THAT:- There is no proper enquiry into the allegation of forgery made by this appellant against the other Directors. Further, the department have blindly relied upon the contentions of the other Directors without even examining the original resignation letter dated 22 August, 2018, thus vitiating the proceedings. There are no explanation was called from the other alleging Directors as to why Form DIR-12, for bringing on record the resignation from the directorship of this appellant was filed only on 19 November, 2018, i.e. after about three months and during all this time why they permitted the appellant F-Card holder and Director to use the Customs Broker license of the company. Further there is no explanation obtained by the court below as to the reason for failure on the part of the other Directors to intimate the Custom department of change in the Constitution of the Directors of the company holding CB license. Further the contentions of this appellant as to the forgery and fraud being committed by the other Directors, particularly Shri Mukesh Kumar Saini have not been found to be untrue but have been summarily rejected without any reason recorded. As the Customs Broker account of the custom broking company can be deactivated itself on ICEGATE, still the same was not done by the other alleging Directors till 18 December, 2018, for which there is no explanation. The present proceedings suffer from the vice of biasness as well as are in violation of the principles of natural justice. Also, the show cause notice issued to this appellant is time barred and bad. Further, the present proceedings are by way of repetition of the allegations in the earlier show cause notice issued to the CB company, wherein there is no specific allegation against this appellant and he was not even a party, nor any penalty was proposed against them. Appeal allowed - decided in favor of appellant. 2020 (12) TMI 709 Revocation of Approval granted to the appellant under Section 8 of the Customs Act, 1962 - revocation of approval given to them as custodial of imported goods under Section 45 of the Customs Act, 1962 - HELD THAT:- Considering the livelihood of the appellant is affected, applications for early hearing of the appeals are allowed. As the time sought by the ld. AR to file the cross objection, the request for adjournment of the matter is accepted. The matter is adjourned with the direction to ld. AR to mention the matter after filing the cross objection. No coercive action shall be taken against the appellant till further orders. Registry is directed to list the matter on top priority in next Division Bench after receiving the cross objection from the respondent. It is pertinent to mention that after listing the matter before the next Division Bench, the appellant shall not seek adjournment in any circumstances. Corporate Laws 2020 (12) TMI 708 Validity of Rule 20(4)(vi) of the Companies (Management and Administration) Rules, 2014 - vires of Articles 14 and 19(1)(a) of the Constitution of India - disallowance of remote e-voting or e-voting in the AGM of respondent No.4 or allow the same on the day of the AGM - appointment of an independent observer to oversee the elections of respondent No.4 scheduled on 21.12.2020 - HELD THAT:- While we may examine the challenge to vires of Rule 20(4)(vi) of the Companies (Management and Administration) Rules, 2014, we are not inclined to interfere with the on-going electoral process. We are of the view that once the electoral process has commenced there should be no or little interference by the Court. Issue notice - Stand over to 25.02.2021. 2020 (12) TMI 707 Restoration of name of the Petitioner Company on the Register of Companies maintained by the Registrar of Companies - section 252 (3) of the Companies Act, 2013 R/w Rule 87A of the NCLT (Amendment) Rules, 2017 - HELD THAT:- It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(1) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any Application within such period for obtaining the status of a dormant Company U/s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. It is true, while exercising jurisdiction of the Tribunal under the provisions of Companies Act, 2013, the Tribunal has to take into consideration the gravest economic condition prevailing in the Country due to pandemic conditions, while considering the issue especially in imposing costs. Therefore, the interest of justice would be met, if the name of Company is restored as prayed for, however, subject to conditions mentioned below. The name is restored - Application allowed. Insolvency & Bankruptcy 2020 (12) TMI 706 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt or not - existence of debt and dispute or not - HELD THAT:- The Applicant on 23.10.2019 sent a Demand Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 read with Rule 5 of the Insolvency and Bankruptcy (Applications to Adjudicating Authority) Rules, 2016 for the unpaid operational debt to the Corporate Debtor and no reply has been sent by the Corporate Debtor. The provision of Section 9(3)(b) of the code has also been complied with. The Applicant has therefore filed this petition as an Operational Creditor praying for initiation of Corporate Insolvency Resolution Process of the Corporate Debtor for its inability to liquidate their claim of ₹ 2,02,05,776/- including interest charged at 18% - Notice was issued however, the Corporate Debtor did not appear before the Adjudicating Authority and the order was reserved on 13.11.2020. It is observed that the Applicant has clearly established the existence of debt. In the above circumstances this Tribunal initiates CIRP of the Respondent company. Application admitted - moratorium declared. 2020 (12) TMI 705 Extension of a period of 90 days from the Corporate Insolvency Resolution Process (CIRP) period of Corporate Debtor - HELD THAT:- We are mindful of the fact that w.e.f. 24.03.2020 the Central Government declared a nationwide lockdown and prohibited all non-essential activities in response to the onset of the COVID-19 pandemic. The lockdown was subsequently opened only partially in different parts of the state and in India. Due to severe liquidity crunch and dislocation of manpower, several businesses have shut down. Movement of men and material has been restricted. The Government has announced several steps to infuse more liquidity and to get the businesses running again. We are convinced that these extraordinary circumstances justify the exclusion of time as prayed for. By allowing the time as prayed for, the RP would get the requisite time to complete the CIRP as per the Rules laid down in this regard, be able to maximize the value of assets and prevent the Corporate Debtor from going into liquidation. A period of 90 days shall be excluded and the CIRP period would get extended by 90 days w.e.f. 26.05.2020, to enable the RP to conclude the CIRP in respect of the Corporate Debtor - Application allowed. 2020 (12) TMI 704 Oppression and Mismanagement - Contempt proceeding - alleged contemnor for willfully and deliberately disobeying the order - partition of the shareholding in the R1 company - maintenance of status quo of the shareholdings and fixed assets of R1 company - HELD THAT:- The respondents are directed to file the up-to-date status of the affairs of the company as has been prepared by the respondents, and continue doing so on monthly basis which would include accounts, till the partition proceedings are initiated and completed. Since these directions to the respondents to file the same with the Tribunal were left out from being mentioned in the order, the respondents cannot be made liable under contempt, particularly in view of the fact that they are stated to have been preparing the same regularly. Since the order dated 11th February 2020 required certain clarification, it is made clear in this order and may be read accordingly by all concerned. Since there is no violation of the orders of this Tribunal, the present application filed by the applicant is dismissed. PMLA 2020 (12) TMI 703 Direction to the 2nd respondent to refrain from detaining the petitioner beyond reasonable time and to permit the presence of a legal practitioner during questioning - Summon order - Section 50 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- There are substantial force in the preliminary objection regarding maintainability raised by the learned ASG. Exhibit P11 summons is issued under Section 50(2) of the Act. A person issued with summons is bound to attend in person or through authorised agents, as the officer issuing the summons directs, and is bound to state the truth upon any subject respecting which he is examined or makes statements and to produce such documents as may be required. As held by the Apex Court in KIRIT SHRIMANKAR VERSUS UNION OF INDIA AND OTHERS [ 2014 (12) TMI 150 - SUPREME COURT] , no cause of action arises merely for reason of a person being called upon to state the truth or to make statements and produce documents. The submission of the learned counsel for the petitioner cannot be accepted that the cause of action is based on the repeated summoning of the petitioner in spite of his illness, which gave rise to the reasonable apprehension that the petitioner will be forced to give statements against his will. There are no basis for such apprehension inasmuch as the date for appearance was changed by the 2nd respondent on three occasions, acceding to the request made by the petitioner. Having commenced an investigation or proceeding, the 2nd respondent cannot be expected to wait indefinitely to suit the petitioner's convenience - As held by the Apex Court in DUKHISHYAM BENUPANI VERSUS ARUN KUMAR BAJORIA [ 1997 (11) TMI 428 - SUPREME COURT] , it is not for this Court to monitor the investigation and to decide the venue, the timings, the questions and the manner of questioning. Petition dismissed. Service Tax 2020 (12) TMI 702 Maintainability of petition - Petitioner did not prefer any appeal before the Appellate Authority, but has instead filed this Writ Petition challenging the order passed by the Respondent beyond the maximum limitation period of three months from the date of receipt of copy of that order - HELD THAT:- The Hon'ble Supreme Court of India in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [ 2020 (5) TMI 149 - SUPREME COURT ] has emphatically laid down that the High Court in the exercise of powers under Article 226 of the Constitution of India ought not to entertain Writ Petition assailing the order passed by a Statutory Authority which was not appealed against within the maximum period of limitation before the concerned Appellate Authority. It is not possible for this Court to express any view on the correctness or otherwise on the merits of the controversy involved in the matter - the Writ Petition, which cannot be entertained, is dismissed. 2020 (12) TMI 701 Levy of service tax - services rendered to foreign companies for the period April 1, 2007 upto February 27, 2010 - service tax demand under reverse charge on the amount paid to foreign agents from the Financial Year 2008-09 to Financial Year 2010-11. Levy of service tax on the commission received from foreign companies - HELD THAT:- The issue has recently been decided against the Revenue by this Bench in M/s Involute Engineering Pvt. Ltd. [ 2020 (12) TMI 533 - CESTAT NEW DELHI ] where it was held that the only requirement after the amendment in rule 3 (2) of the 2005 Rules is that the service recipient should be situated outside India and consideration should be received in foreign currency. Both the conditions stand satisfied. Even otherwise, for the period prior to February 27, 2010, it has been held that no service tax could be levied. Levy of service tax on commission paid by the appellant to foreign agents during the period from Financial Year 2008-09 to Financial Year 2010-11 - HELD THAT:- The facts are required to be examined by the Commissioner afresh. For this purpose, it shall be open to the appellant to submit a representation with factual aspect and supporting documents before the Commissioner within a period of six weeks from today. The Principal Commissioner shall thereafter take a decision within a period of three months, without being influenced by any of the observation made in this order - matter on remand. Appeal allowed in part and part matter on remand. 2020 (12) TMI 700 Refund of Service Tax paid under protest - contribution received from members of a co-operative housing society - Rejection of refund claim on the ground that appeal is pending in the Hon'ble Supreme Court against the cited judgment gives an impression that orders of the Tribunal are to be disregarded after filing of the appeal - Principles of natural justice - SCN not issued to appellant before rejection order - HELD THAT:- Rejection of refund claim by him on the ground that appeal is pending in the Hon'ble Supreme Court against the cited judgment gives an impression that orders of the Tribunal are to be disregarded after filing of the appeal . It appears that he was empowered to violate the principles set by the Tribunal, once the same had been challenged in an appellate forum despite the settled principle of law that such an order has to be respected unless and until the same is set aside - learned Commissioner (Appeals) had gone on a different ground basing on the Circular No. 175/01/2014-ST and Notification No. 25/2012-ST [Sr. No. 28 (c)] that has clearly demonstrated that such Residential Welfare Association (RWA) must be a non-profit entity and collecting a contribution within monetary celling of ₹ 5000/- prescribed in the said notification though without expressing in clear language that in fulfilling such conditions only, doctrine of mutuality would be respected. As found from the case record, appellant was not even issued with a show-cause notice before rejection of such refund claim, for which appellant also raised the issue of violation of principles of natural justice as a ground for setting aside the Order-in-Original before Commissioner (Appeals). Compliance of such a requirement would have enabled the appellant to establish per head contribution of members to RWA and if such constitution is non-profit in nature. This is a fit case that requires to be re-adjudicated by the Commissioner (Appeals) who is equally empowered under Section 35A(3) of the Central Excise Act, 1944, applicable to Service Tax matters too, to make an inquiry himself and arrive at a finding - appeal is allowed by way of remand to the Commissioner (Appeals). 2020 (12) TMI 699 Refund of accumulated credit - Export of services - debit entry was reflected in the ST-3 return of subsequent period and not for the period in question - allegation that the condition 2(h) of the Notification does not stand satisfied - HELD THAT:- The appellant had taken a categorical stand that the debit was made on 05.03.2014, i.e. prior to filing of the refund claim. The Revenue is not disputing the said debit entry but is adopting a hyper technical view that such debit entry was reflected in the ST-3 return of subsequent period and not for the period in question. The entire idea of debit of cenvat credit before filing of refund claim is that an assessee does not avail the dual benefit of credit as also refund of the same. It is primarily for this reason that the relevant rule read with notification in question requires debit before filing of refund claim so as to avoid double benefit to the claimant - This was also observed by the Tribunal the case of M/s. Kellogg and Andelson Management Service Pvt Ltd. Vs. CST, Chennai II [2018 (8) TMI 1680 - CESTAT CHENNAI ] . There is no dispute about the fact that services in question were exported and appellant is otherwise entitled to the refund of accumulated credit in terms of Rule 5 of the Cenvat Credit Rules read with Notification in question - Inasmuch the books of accounts stand already debited by the appellant on 05.03.2014, before filing of refund claim on 20.03.2014, there are no justifiable reason to deny the refund claim on the said hyper-technical ground. Revenue is directed to refund the admissible amount of credit to the appellant - appeal allowed - decided in favor of appellant. 2020 (12) TMI 698 Refund of Cenvat credit - export of service - benefit was accrued in India - refund denied on the ground that there was no export of service and thus, the case of the appellant falls outside the scope and ambit of the statutory provisions, disentitling it to claim the refund benefit - period January to June' 2017 - whether, the requirement of Rule 5 ibid read with the notification issued there under had been complied with by the appellant for grant of refund of service tax paid on the input services? HELD THAT:- It cannot be said that the beneficiary from the movie is an Indian entity i.e. the appellant herein inasmuch as the sole rights of the movie belong to M/s Apple Orange (an overseas entity) and the appellant is only charged with the task of carrying the production activities of the film for a specific consideration - it is evident that as well as India, the subject movie was also shot at different foreign locations. Further, apart from India, the movie had also been released in various other countries internationally, especially in U.K. and U.S.A., wherefrom it had made a substantial gross collection. Therefore, the impugned order holding that the movie was produced/released and the benefit was accrued only in India is factually incorrect. The impugned order at paragraph 8.3 and 8.4 has referred to Rule 8 of the Place of Provision of Services Rules, 2012 and the guidelines provided in CBEC Education Guide to conclude that in the case of a service receiver, the place relevant for determining location is the place where the service is 'used' or 'consumed'. Insofar as Rule 8 ibid is concerned, the statute recognizes the location of the recipient of service, in case, where both the provider as well as the receiver of service are located within the taxable territory i.e. India - In the case in hand, the contents of the agreement clearly provide that the main producer and the beneficiary of the subject movie is M/s Apple Orange. Since, such recipient of service is located in United Kingdom, which is a place outside the geographical limits of India, in my considered view, the provisions of Rule 8 ibid shall not be applicable to the present case. On the other hand, by close scrutiny of the rules framed under the Place of Provision of Services Rules, 2012, the case of the appellant will not be governed under Rule 4 to Rule 12 itemized therein. Rather, the place of provision of service will more appropriately be categorized under Rule 3 ibid inasmuch as the service recipient has its business establishment in United Kingdom and thus, the place of provision of service is outside India, which would be considered as export of service for grant of refund of service tax paid on the input services. There are no merits in the impugned order, in so far as it has upheld the adjudication order on the ground that the appellant should not be entitled for refund benefit provided under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012- C.E. (N.T.) dated 18.06.2012 - appeal allowed - decided in favor of appellant. Central Excise 2020 (12) TMI 697 Refund claim - time prescribed u/s 11B of the Central Excise Act - mistake of law or not - exemption ab-initio - circular dated 15.03.2013 - refund of Terminal Excise Duty - HELD THAT:- The appeal is admitted on the substantial questions of law. 2020 (12) TMI 696 Recovery of CENVAT Credit - goods returned by its customers under Rule 16 of the Central Excise Rules, 2002 without proper documents - demand on the ground that the amount paid by the Appellant as excise duty was actually on trading of goods as the process of cutting, slitting and polishing on imported China pipes couldn t be a manufacturing process - time limitation - HELD THAT:- The Appellant has produced copies of its tax invoice, credit note as well as buyer s debit note for return of the said duty paid goods by its customers - From the same it is clear that the Appellant had sold goods after payment of excise duty to it s customers and when the same are returned for any reason, the Appellant is entitled to Cenvat credit of the same subject to conditions of Rule 16 of the Central Excise Rules, 2002. From the plain reading of the above Rule 16, it can be seen that though under Cenvat credit Rules, Cenvat credit is allowed only on input but under special provision of Rule 16, the Cenvat credit is allowed even on the finished goods on the condition that at the time of re-issue of such finished goods, the assessee is required to pay appropriate excise duty. In the present case, there is no dispute on payment of duty on the re-issue of the goods on which credit was taken. Therefore, in terms of Rule 16, the Appellant is entitled for the credit. Te issue is no more res integra - The Tribunal in the case of M/S. BALMER LAWRIE CO. LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2016 (8) TMI 1113 - CESTAT MUMBAI] has held that irrespective of fact whether the invoices are of appellant or otherwise if duty paid goods is brought in the factory of the assessee credit can be allowed. Thus, Appellant can avail the Cenvat credit of the duty paid goods and since there is no dispute in the present case that the goods were not duty paid goods. The demand for recovery of Cenvat credit fails. Further, it is also on record that the Appellant s activities were known to the department since inception as earlier also a SCN dated 01/04/2015 was served on the Appellants for recovery of Cenvat credit availed on imported china pipes which were cleared after payment of duty. Time Limitation - HELD THAT:- The current proceedings being on the same foot by treating amount paid by the Appellant as not excise duty, cannot be sustained by invoking extended period of limitation as the department was very much having knowledge of the entire proceedings since inception. Thus, the demand cannot sustain on limitation ground as well. Appeal allowed - decided in favor of appellant. 2020 (12) TMI 695 Maintainability of appeal - not depositing the mandatory pre-deposit under Section 35F of CEA - HELD THAT:- The appellant had already filed Revision application challenging the decision of the Commissioner (Appeals) whereby the Commissioner (Appeals) had accepted the Department s appeal. Also, the appellant has filed the revision application against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Bangalore. Also, the Revenue has now attached the copy of the notice issued by the Revisionary Authority which shows that the whole issue is pending with the Revisionary Authority, Government of India. Since the issue is pending before the Revisionary Authority, it was incumbent on the original authority not to adjudicate the protective notices issued by them and should have waited till the decision of the Revisionary Authority. Matter remanded to the original authority with a direction to keep the whole matter in abeyance till the decision of the Revisionary Authority - appeal allowed by way of remand. CST, VAT & Sales Tax 2020 (12) TMI 694 Issuance of C-Forms - inter-state purchase of natural gas which is consumed by the petitioner in the manufacture of commodities no longer defined as goods - petitioner has been denied C forms on the ground that natural gas purchased by it in the course of inter-state sale is used for manufacturing of float glass which is not covered by the definition of goods under section 2(d) of the CST Act - HELD THAT:- In CARPO POWER LIMITED VERSUS STATE OF HARYANA AND OTHERS [ 2018 (4) TMI 146 - PUNJAB AND HARYANA HIGH COURT] Punjab Haryana High Court dealt with the challenge made by the petitioner to refusal of the respondents to issue C forms in respect of natural gas purchased by it in the course of inter-state sale and used by it for generation of electricity and it was held that The respondents are liable to issue C' Forms in respect of the natural gas purchased by the petitioner from the Oil Companies in Gujarat and used in the generation or distribution of electricity at its power plants in Haryana. It may be mentioned that against the decision of Punjab Haryana High Court in Carpo Power Limited, State had filed S.L.P. before the Supreme Court but the S.L.P. was dismissed by the Supreme Court by holding that there was no legal and valid ground for interference. A case for interim relief has been made out. Further, there should be uniformity in orders in similar matters - as an interim measure, we stay operation of the letter / order dated 22.08.2019 issued by respondent No.2 and direct the respondents to issue necessary C forms to the petitioner. Stand over to 06.01.2021. 2020 (12) TMI 693 Priority of debt - secured creditor or state taxes?, which is prior - Attachment of property - recovery of sales tax dues payable by Respondent - Section 32 of the Maharashtra Value Added Tax Act, 2002 (MVAT Act) and proceedings under the Maharashtra Land Revenue Code - HELD THAT:- Petitioner is a secured creditor as it has a debt / receivable due to it which has been secured by mortgage - From a plain and conjoint reading of Section 31-B of the RDB Act and Section 25-E of the SARFAESI Act it is clear that by virtue of the non-obstante language contained therein, the rights of secured creditors to realise secured debts by sale of assets over which security interest is created, shall have priority over Government dues including revenues, taxes, cesses and rates due to the Central/State Government or to the Local Authority. Respondent No.2 had claimed first charge on the said property, inter alia, stating that it had initiated recovery proceedings under Sections 33 and 34 of the MVAT Act on 10th March 2016 whereas attachment under Section 32 of the MVAT Act was vide letter dated 28th March, 2018 to the Petitioner. Petitioner had initiated proceedings under the provisions of the RDB Act. It has also taken steps as noted above to enforce the security interest in the said property vide notice dated 27th November 2017 under Section 13(2) of the SARFAESI Act prior to the notice dated 28th March 2018 of Respondent No.2. The facts in the case at hand being similar to the facts in the case of ASREC (INDIA) LIMITED, A COMPANY VERSUS THE STATE OF MAHARASHTRA, THE OFFICE OF THE SALES TAX AND THE OFFICIAL LIQUIDATOR OF THE HIGH COURT OF BOMBAY AS THE OFFICIAL LIQUIDATOR OF M/S. CRYSTAL MIRAGE PVT. LTD. [ 2019 (12) TMI 633 - BOMBAY HIGH COURT] that decision would squarely be applicable to the facts of this case that if any Central statute creates priority of a charge in favour of a secured creditor, the same will rank above the charge in favour of a State for a tax due under the value added tax of the State. Therefore, in our view what becomes relevant in the facts of this case is the issue of priority of charge on the said assets of secured debt over tax dues and not whether the charge is first or not in time. Non-registered mortgage - HELD THAT:- Even if the Petitioner s mortgage was not registered under Section 26-D of the SARFAESI Act, the alleged non registration, would not affect the legal position on the issue of priority. The mortgage of the secured creditor viz. the Petitioner Bank gets prior charge over the charge of the Respondents for tax/VAT dues - Petition allowed - decided in favor of petitioner. 2020 (12) TMI 692 Request for issuance of Form F has been rejected - rejection on the ground that the dealer did not rectify the error in the returns within the specified time period - issuance of Forms F pertaining to fourth quarter of the year 2015-16 - HELD THAT:- This Court is of the view that no useful purpose would be served by keeping the petition pending. Consequently, this Court directs the respondent no.1 to allow the amendment sought for by the petitioner in its return of fourth quarter of Year 2015-16. However, this direction shall remain suspended till the Civil Appeals pending before the Supreme Court, taken note of hereinabove, are decided and this direction shall abide by the decision that the Supreme Court renders. Petition disposed off. 2020 (12) TMI 691 Taxability under VAT - online booking charges charged by a Cinema Hall Owner - Whether the online booking charges charged by a Cinema Hall Owner besides the cost of ticket for entry into the cinema hall and enjoy the entertainment in the form of a movie, is a part of taxable receipt by the Cinema Owner for the purposes of the Tamil Nadu Entertainment Tax Act, 1939 ? - appellant paid service tax on the same - HELD THAT:- Similar issue decided in the case of PVR LTD., (FORMERLY KNOWN AS SPI CINEMAS PVT. LTD.) NEW DELHI VERSUS COMMERCIAL TAX OFFICER [ 2020 (10) TMI 778 - MADRAS HIGH COURT] where it was held that levy of Service Tax and Entertainment Tax on online ticket booking charges are mutually exclusive. Assessee has paid Service Tax under Finance Act 1994 on such 'online booking charge' for the period from 01.07.2012. The Assessing Authority has also dealt with the definition of Section 3(7)(c) of the Act and has emphasized the words any payment for any purpose in addition to the payment for admission to the entertainment . The said reassessment order was passed exercising the powers under Section 7(2) of the Act 1939, and the Assessing Authority not only imposed tax at the rate of 30% on the online booking charges to the extent of ₹ 41,96,277/- but imposed penalty @ 150% under Section 7(3) of the Act to the extent of ₹ 62,94,416/- vide Assessment order dated 21 September 2015, for AY 2010-11. Following the same, demand set aside - appeal allowed - decided in favor of appellant. 2020 (12) TMI 690 Maintainability of petition - Petitioner did not prefer any appeal before the Appellate Authority, but has instead filed this Writ Petition challenging the order passed by the Respondent beyond the maximum limitation period of three months from the date of receipt of copy of that order - HELD THAT:- The Hon'ble Supreme Court of India in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [ 2020 (5) TMI 149 - SUPREME COURT ] has emphatically laid down that the High Court in the exercise of powers under Article 226 of the Constitution of India ought not to entertain Writ Petition assailing the order passed by a Statutory Authority which was not appealed against within the maximum period of limitation before the concerned Appellate Authority. This Court is not inclined to delve into the merits of the controversy involved in the matter. At the same time, it is made clear that the Petitioner shall not be precluded from working out its rights for rectification of the impugned order by proceedings under Section 84 of the TNVAT Act, if it is otherwise entitled, in accordance with law and that no view has been expressed by this Court on the correctness or entitlement of the claim made by the Petitioner in that regard - the Writ Petition, which cannot be entertained, is dismissed. 2020 (12) TMI 689 Validity of demand raised - primary ground for challenge is that the spot collection of taxes is wholly illegal and unwarranted, when the assessment for the respective year is still pending - HELD THAT:- It is settled law that recovery of tax in advance by inspecting officials (Enforcement Wing) is illegal. In the counter affidavit filed by the first respondent, in paragraph No.3, the first respondent has admitted that four cheques given by the petitioner on the date of inspection was only towards the payment of tax even though in the impugned demand, they have mentioned that it is towards compounding fees. Since the collection of cheques from the petitioner is admittedly, towards payment of tax, as per the settled law, the said collection by the second respondent on the date of inspection from the petitioner is illegal without there being any assessment order. It is also admitted fact that no assessment order has been passed pursuant to the impugned notice of demand, dated 17.04.2017. The impugned demand made by the respondent is illegal without there being an assessment order - Petition allowed - decided in favor of petitioner. 2020 (12) TMI 686 Grant of an interim order would amount to granting of final relief - HELD THAT:- Writ Petition (Stamp) No.93160 of 2020 is listed for further consideration on 01.12.2020 - In that view of the matter, above Writ Petitions be listed together with Writ Petition (Stamp) No.93160 of 2020 on 01.12.2020. Writ Petitions be listed together with Writ Petition (Stamp) No.93160 of 2020 on 01.12.2020. Indian Laws 2020 (12) TMI 688 Seeking appointment of a Sole Arbitrator for resolving the disputes that have arisen between the parties - Sub-lease deed - Section 11(5) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- A perusal of the provisions indicate the manner in which the determination of lease would occur, which also includes determination by forfeiture due to the acts of the lessee/tenant in breaking the express condition agreed between the parties or provided in law. The breach and the consequent forfeiture could also be with respect to non-payment of rent. In such circumstance where the lease is determined by forfeiture and the lessor sues to eject the lessee and, if, at the hearing of the suit, the lessee pays or tenders to the lessor the rent in arrear, Section 114 of TP Act provides that the Court instead of passing a decree for ejectment may pass an order relieving the lessee against the forfeiture due to which the lessee will be entitled to hold the property leased as if the forfeiture had not occurred. Under Section 114A of the TP Act a condition for issue of notice prior to filing suit of ejectment is provided so as to enable the lessee to remedy the breach. No doubt the said provisions provide certain protection to the lessee/tenant before being ejected from the leased property - the same cannot be construed as a statutory protection nor as a hard and fast rule in all cases to waive the forfeiture. It is a provision enabling exercise of equitable jurisdiction in appropriate cases as a matter of discretion. Such equitable protection does not mean that the disputes relating to those aspects between the landlord and the tenant is not arbitrable and that only a Court is empowered to waive the forfeiture or not in the circumstance stated in the provision. When the disputes arise between the landlord and tenant with regard to determination of lease under the TP Act, the landlord to secure possession of the leased property in a normal circumstance is required to institute a suit in the Court which has jurisdiction. However, if the parties in the contract of lease or in such other manner have agreed upon the alternate mode of dispute resolution through arbitration the landlord would be entitled to invoke the arbitration clause and make a claim before the learned Arbitrator - the Court having jurisdiction alone can advert into all these aspects as a statutory requirement and, therefore, such cases are not arbitrable. As indicated above, the same is not the position in matters relating to the lease/tenancy which are not governed under the special statutes but under the TP Act. Insofar as eviction or tenancy relating to matters governed by special statutes where the tenant enjoys statutory protection against eviction whereunder the Court/Forum is specified and conferred jurisdiction under the statute alone can adjudicate such matters. Hence in such cases the dispute is non-arbitrable - If the special statutes do not apply to the premises/property and the lease/tenancy created thereunder as on the date when the cause of action arises to seek for eviction or such other relief and in such transaction if the parties are governed by an Arbitration Clause; the dispute between the parties is arbitrable and there shall be no impediment whatsoever to invoke the Arbitration Clau The petitioner in the instant case while invoking the Arbitration Clause has proposed the name of Justice (Retired) Mukul Mudgal as the Sole Arbitrator. The respondent neither replied to the said notice nor objected to the Arbitrator proposed by the petitioner. In that backdrop since a dispute between the parties is to be resolved through Arbitration, the prayer made in this petition is liable to be accepted - Petition allowed - decided in favor of petitioner.
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