TMI Tax Updates - e-Newsletter
December 24, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Inputs or not - Gift items - The Circular makes it abundantly clear that these items would be called gifts. Hence in this case, since the persons to whom the distributable goods are given are not related parties and are distinct persons and are not employees of the applicant, the transaction is not coming under the scope of supply and hence the applicant is not eligible to claim input tax credit on the same. - AAR
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GST:
Requirement of GST registration - import of services or not - place of supply - Supply of consulting services through sub-station Engineer/ expert of the applicant to OPTCL is not import of service within the meaning of section 2 (11) of the IGST Act. The Engineer/expert belonging to the applicant should be treated as a supplier located in India, and made liable to pay GST, the place of supply being determined in terms of section 12 (2) (a) of the IGST Act - AAR
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GST:
Works Contract Service or not - we are unable to subscribe to the views of the applicant that the supply of services and goods encompassed in the subject work order/contract are naturally bundled. Mere fact that a number of tasks have been entrusted to the applicant would not make it entitled to be categorized as ‘composite supply’ particularly in terms of Section 2(30) of the CGST Act, 2017. - AAR
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GST:
Detention of goods alongwith vehicle - E-Way bill had expired - The assessing officer shall pass a fresh order after giving opportunity of hearing to the petitioner and considering the representation that may be made. No useful purpose would be served in detaining the vehicle and the goods till the fresh order is passed. - HC
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GST:
Profiteering - restaurant service supplied by the Respondent - the GST rate of 5% has been charged w.e.f. 15.11.2017 however the base prices of 170 products have been increased more than their commensurate prices w.e.f. 15.11.2017 which established that because of the increase in the base prices the cum-tax prices paid by the consumers were not reduced commensurately, despite the reduction in the GST rate. - As per the provisions of Sec 171 (1) read with Rule 133 (1) the profiteered amount is determined as ₹ 6,66,700/- - NAPA
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GST:
Profiteering - purchase of flat - The contention of the Respondent is dismissed that the excess (more than commensurate) benefit amounting to ₹ 3,91,714/- passed on by him to 716 homebuyers/ recipients be adjusted against the 'less than commensurate' benefit passed on to the other 20 homebuyers/recipients because the provisions of Section 171 of the CGST Act, 2017 apply to each supply which implies that each homebuyer/ recipient is entitled to the commensurate benefit due to him in respect of the residential unit supplied to him. - NAPA
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Income Tax:
Disallowance of sales promotion expenses being gifts to doctors and hospitals - Allowable business expenditure u/s 37(1) - the MCA regulations are applicable to the doctors and not to the pharmaceutical companies who incur such expenses and therefore these expenses are purely business nature and had to be allowed as wholly and exclusively incurred for the purpose of business under section 37(1) - AT
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Income Tax:
Deduction u/s 80IA(4) denied - The fact that the contract has been awarded by respective Municipal Authorities does not make the assessee ineligible for claim of deduction u/s 80IA of the Act, as substantial work of ‘Solid Waste Management’ is carried out by the assessee and not the Municipal Authorities. - AT
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Income Tax:
Income accrued in India - dependent agent PE in India - Assessee has repeatedly referred to various clauses of contracts/agreements entered into with Indian buyers for purchase/sale of telecommunication network equipment. The contracts are contractual obligations between the parties, inter se, but who could be in a better position than the key employees of HI to tell how the transactions were actually undertaken, which is the ground reality. - AT
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Income Tax:
Reopening of assessment u/s 147 - When the issue is a jurisdictional one, the provisions of Section 292BB of the Act cannot cure jurisdictional error. On perusal of the appellate order, it is also clear that the CIT(A) has discussed the jurisdictional issue raised by the assessee, however, he has rejected the contention of the assessee, which in our opinion, amounts to overruling the CBDT Instruction issued in this regard. - AT
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Income Tax:
Deduction of unaccounted expenses from Unaccounted income - Applicability of provisions of Section 40A(3) - Admittedly, the seized document contains unaccounted income as well as unaccounted expenditure both were duly transacted only in cash. Hence, the applicability of provisions of Section 40A(3) of the Act to the said payments would not serve the scheme of taxation and would ultimately result only ending up in taxing the entire unaccounted gross receipts alone without giving benefit of deduction to the assessee. - AT
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Income Tax:
Addition on account of notional house property income - Rental value had been consistently showing a declining trend in respect of subject mentioned property at Palm Signature Villa, Dubai. Hence, we hold that there is absolutely no justification for the ld. AO to adopt an adhoc increase on 10% over and above the value assessed in the previous year. - AT
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Customs:
Classification of imported goods - Executive IP Phone with 7” colour touch screen, 100 programmable keys, POE and 10/100/100 LAN and PC connections- FON 670i (VoIP Telephone) - the facility of video calling is not available in the model imported by the Appellant. - The product under consideration, which is an Executive IP Phone (Model No. FON670i), is classifiable under CTH 8517 18 10 and not under CTH 8517 69 90 - AT
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Central Excise:
Area Based Exemption - The exemption cannot be restricted to products which are formed in the gaseous stage alone for the reason that the exemption refers to gas based intermediate products and gas exploration and production. The correct interpretation of gas based products would go to include all the products which are produced in the processes of production of gas/LPG. The argument taken by the appellants appears to be farfetched for the reason that even LPG for which the exemption was extended by the department is also in the bottle and sold in the liquefied form. - AT
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Central Excise:
CENVAT Credit - place of removal - the exporter continues to be owner and holds the title to the goods till the respective export consignment is handed over to master of the vessel and goods are loaded on board the vessel and that all services rendered prior thereto were services upto the place of removal within the meaning of Rule 2(l)(ii) of the Cenvat Credit Rules. - AT
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Central Excise:
Reversal of CENVAT Credit - when the Tribunal rejected the contention of the Department regarding the distinction made between ‘input’ and ‘input service’, it is not possible to accept the submission made by the learned authorized representative of the Department that the judgement of the Supreme Court in Hindustan Zinc Ltd. would not be applicable to the present case since it relates to ‘input services’ and not ‘inputs’ - AT
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Central Excise:
Excess availment of CENVAT credit - There is no provision for one to one correlation in CENVAT credit scheme - there is no other evidence on record like investigation from supplier of raw material, transporter or evidence of cash flow back or any inculpatory statement to substantiate that excess CENVAT credit taken was based on paper transaction i.e. without or short receipt of raw material against invoices. - the entire demand of excess CENVAT credit in the absence of any corroborative evidence is nothing but based on presumptions and is not permissible under the law. - AT
Articles
Notifications
DGFT-
49/2015-2020 - dated
22-12-2020
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FTP
Amendment in import policy of Coal and incorporation of Policy Condition No. 7 in Chapter 27 of ITC (HS), 2017, Schedule – I (Import Policy)
GST-
94/2020 - dated
22-12-2020
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CGST
Central Goods and Services Tax (Fourteenth Amendment) Rules, 2020
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93/2020 - dated
22-12-2020
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CGST
Seeks to insert proviso in Notification No. 73/2017– Central Tax, dated the 29th December, 2017 - Waiver of the late fee payable for failure to furnish the return in FORM GSTR-4
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92/2020 - dated
22-12-2020
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CGST
Central Government appoints the 1st day of January, 2021, as the date on which the provisions of Various section of Finance Act, 2020 shall come into force
GST - States-
53/2020–State Tax - dated
21-12-2020
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Delhi SGST
Amendment in Notification No. 4/2018–State Tax, dated the 23rd February, 2018
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30/2020– State Tax - dated
21-12-2020
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Delhi SGST
Delhi Goods and Services Tax (Fourth Amendment) Rules, 2020
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25/2019- State Tax - dated
21-12-2020
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Delhi SGST
Amendment in Notification No. 22/2019- State Tax, dated 20/08/2020
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86/2020 - dated
14-12-2020
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Himachal Pradesh SGST
Rescinds the Notification No. 76/2020-State Tax, dated the 26th November, 2020
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85/2020-State Tax - dated
14-12-2020
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Himachal Pradesh SGST
Seeks to notify special procedure for making payment of 35% as tax liability in first two month
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81/2020-State Tax - dated
14-12-2020
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Himachal Pradesh SGST
Appoint the 10th day of November, 2020, as the date on which the provisions of section 7 of the Himachal Pradesh Goods and Services Tax (Amendment) Act, 2019 shall come into force
Insolvency and Bankruptcy-
S.O. 4638 (E) - dated
22-12-2020
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IBC
Central Government notifies further period of three months from the 25th December, 2020, for the purposes of the section 10A of the Insolvency and Bankruptcy Code, 2016 (31 of 2016)
Money Laundering-
G.S.R. 784 (E) - dated
22-12-2020
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PMLA
Notifies Aadhaar authentication service of the Unique Identification Authority of India under section 11A of the Prevention of Money-laundering Act, 2002
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (12) TMI 898
Validity of attachment proceedings - huge amount is due from the A.K.G Memorial Labour Contract Society Limited for serious violations under the Central GST Act, 2017 including non- remittance and misappropriation of huge amounts of Goods and Service Tax - Section 83 of CGST Act, 2017 - HELD THAT:- The learned Standing Counsel for the 1st respondent also submits that the 1st respondent has already made the payment on the basis of the direction issued by the District Labour Officer for the period from July, 2020 to October, 2020. The petitioner cannot be granted any relief in this writ petition - Petition dismissed.
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2020 (12) TMI 897
Detention of goods alongwith vehicle - E-Way bill had expired - case of the petitioner is that though the authorities were well aware about the fact that the petitioner is the owner of the goods, no notice to the petitioner was issued - principles of natural justice - HELD THAT:- In view of the fact that the petitioner did not have full opportunity to represent the case before the assessing officer, let the petitioner be given such opportunity. For such purpose, without expressing any opinion on the merits and demerits of the case, impugned order dated 09.12.2020 is set aside. The petitioner shall not insist on a separate notice being issued and appear before the said authority and file the objections within a period of two weeks from today. The assessing officer shall pass a fresh order after giving opportunity of hearing to the petitioner and considering the representation that may be made. No useful purpose would be served in detaining the vehicle and the goods till the fresh order is passed. The respondents shall release the vehicle and the goods upon the petitioner giving Bank guarantee of 25% of the said sum of ₹ 12,48,530/- and furnishing further Bank guarantee/immovable security for the remaining sum to the satisfaction of the assessing officer. As soon as the petitioner fulfills these conditions the vehicle and the goods shall be released - Petition disposed off.
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2020 (12) TMI 896
Validity of Sub-rule (4) of the Rule 36 of the GST Rules - It is argued that the Subrule (4) of the Rule 36 of the Rules speaks to restrict the ITC to a buyer of goods of services on the basis of the details of the outward supply furnished by the supplier of the services of goods or on the basis of the common portal - HELD THAT:- Let Notice be issued to the respondents, returnable on 12.02.2021. The respondents shall be served by email over and above the regular service through the Court. Application disposed off.
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2020 (12) TMI 895
Permission for withdrawal of petition - Best Judgement Assessment - petitioner defaulted in filing return for the taxable period in form GSTR-3B for a month in financial year 2019-20 - HELD THAT:- Permission granted. Petitions stand dismissed as withdrawn.
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2020 (12) TMI 894
Detention of goods alongwith vehicle - some mismatch between the invoice and the e-way bill inasmuch as the invoice had been issued by the writ applicant situated at Bhavnagar where the place of dispatch mentioned in the e-way bill is shown to be Jalna at State of Maharashtra - HELD THAT:- Mr. Antani, the learned AGP has fairly pointed out that he has discussed the matter with the officer concerned and he has been instructed to make a statement before the court that the inquiry conducted so far has revealed that there has been no contravention of any of the provisions of the Act or the Rules. Mr. Antani further submits that, as there was some confusion, the authority concerned thought fit to detain the goods under Section 129 of the Act. However, after thorough inquiry, the authority itself has come to the conclusion that it is no longer necessary to detain the goods and the vehicle. This writ application stands allowed - The respondent No.2 shall release the goods as well as the vehicle at the earliest.
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2020 (12) TMI 903
Maintainability of Advance Ruling Application - question raised in the application is already pending or decided in any proceedings in the case of applicant under any provisions of this Act - Section 98 (2) of the CGST Act 2017 - Classification of services - Licensing services for the right to broadcast and show original films, sound recordings, Radio Television Programmes etc. - HELD THAT:- The instant application has been filed on 22.09.2020 and the question raised there in is about the classification of the services being provided by the applicant. It is an undisputed fact that a search, of applicant's registered premises, was conducted by the Superintendent of Central Tax, Anti Evasion, Bangalore West Commissionerate under authorization issued by the competent authority on 30.08.2019, a Statement was recorded on 31.08.2019, an offence case was booked on 11.09.2020 and DRC-01A dated 09.07.2020 was issued on the issue of suppression of taxable value. Further, a summon dated 03.09.2020 was issued seeking clarification on the question of classification. The applicant vide letter dated 08.09.2020 to the Department sought a notice on the issue and informed that they will take up the matter of classification with Karnataka Film Chamber of Commerce and CBIC. It is pertinent to mention here that the DRC-01A dated 10.09.2020 clearly specified the grounds of quantification out of which one issue is the Wrong classification resorted under self assessment by the applicant, under SAC 9973 instead of SAC 9996 14 . Thus it is clearly evident that the issue of classification of the services provided by the applicant was under investigation as evident from DRC-01A dated 10.09.2020. Rule 142[1A] of the CGST Rules 2017, as amended, stipulates that the proper officer may, before service of notice to the person chargeable with tax, interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74, as the case may be, communicate the details of any tax, interest and penalty as ascertained by the said officer, in Part A of FORM GST DRC-01A. Further the said form is prescribed one and contains a reference of the case proceedings, which clearly indicates that proceedings have been initiated and are not concluded. Thus it proves that the case proceedings are pending. The issue raised in the instant application and the issue pending under the proceedings are one and same i.e. classification of the services provided by the applicant. Thus first proviso to Section 98(2) of the CGST Act 2017 is squarely applicable to the instant case, as all the conditions therein are fulfilled - the application is rejected as inadmissible , in terms of first proviso to Section 98(2) of the CGST Act 2017.
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2020 (12) TMI 902
Inputs or not - Gift items - promotional products / Materials and Marketing Items used by the Applicant in promoting their brand and marketing their products - section 2(59) of the CGST Act, 2017 - input tax credit in terms of section 16 of the CGST Act, 2017 - HELD THAT:- The applicant states that some of the materials, like display boards, Posters, Outdoor hoardings, remain in his own account and are treated as capital goods. There is no transfer of ownership of these materials to his franchisees, distributors and retailers and hence there is no sale involved in them. Further, it is also seen that these materials have no direct correlation on the amount of sales effected and are only for display in the premises of the franchisees, distributors and retailers and they remain the property of the applicant. The applicant does not show any evidence of these returned back after their effective use - the applicant states that uniforms, gifts and carry bags are provided to the retailers, distributors and franchisees to be used by them or give them free of cost to the purchasers of their materials. Hence they are promotional materials to attract and encourage sales of their goods and hence are expenses in his accounts. In this case, the goods do not remain in the account of the applicant and is transferred to the accounts of the retailers, distributors and franchisees, with a condition that they have to be given free of cost to the ultimate consumers, i.e. sales personnel in case of uniforms, personnel and customers in case of gifts and to the customers in case of carry bags. Non-distributable goods which are given to the distributors, franchisees and retailers - Input tax credit on capital goods - HELD THAT:- The taxes paid by the applicant on the supply of goods or services or both to him qualify as input tax credit - section 16 of the GST Acts provides for the eligibility for taking/ availing input tax credit. Since the applicant has used or intended to use the goods and services procured in the course or furtherance of business, the applicant is entitled to take input tax credit, subject to other provisions of the Act and there is no blockage attributable to section 17 (1) as the applicant has used the goods in the course or furtherance of business - the non-distributable goods are used by the applicant for the purpose of their business and at the time of such writting off or loss or destroyed, the input tax credit claimed on such goods are to be reversed. The applicant has not made any submissions regarding what is ultimately done to these goods after the end of period of usage. Assuming that they are written off or destroyed or lost, the input tax credit claimed under section 16 needs to be reversed as per Rule 43 of the CGST Rules, 2017. Distributable goods, procured by the applicant and used for sales promotion - HELD THAT:- They are given free of cost and there is no consideration for such transfer. The stock register of the applicant would be credited with these materials when they are procured and debited when they are distributed and hence they would be no longer in the accounts of the applicant - applicant, in the instant case, disposes / issues the distributable goods free of cost i.e, without any consideration to two categories i.e. Franchisees (Exclusive Show Rooms) and other shops / retailers, vhere all brands are sold (Retailers / All brands stores). In the instant case, with regard to the first category i.e. the Franchisees of the applicant are associated in the business of one another and hence are related persons. It is an admitted fact that the applicant disposes the distributable goods by way of gifts and free supplies to promote business and hence are to be treated as supplies in terms of para 2 of Schedule I to the CGST Act 2017. Thus the applicant need to discharge applicable GST on such supplies and thereby is entitled to avail input tax credit on the said supply of goods - The second category is that of all brands stores and they do not fall under the related persons to the applicant. Further the above Circular also addresses applicant's contention that items supplied for promotion of the brand is as per contractual obligation hence can't be called as gifts. The Circular makes it abundantly clear that these items would be called gifts. Hence in this case, since the persons to whom the distributable goods are given are not related parties and are distinct persons and are not employees of the applicant, the transaction is not coming under the scope of supply and hence the applicant is not eligible to claim input tax credit on the same.
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2020 (12) TMI 901
Permission for withdrawal of Advance Ruling application - levy of GST on the total amount being collected by them from Virat Associate LLP, which includes DMG Royalty, DMF Owner's Royalty, under forward charge mechanism or on Owner's Royalty only? - HELD THAT:- The applicant vide their letter dated 23.11.2020, requested this authority to permit them to withdraw their application for advance ruling, quoting the reason that certain clauses of the MOU have been mended due to the ill effect of COVID-19 and consequential slow down of the business. The application filed by the Applicant for advance ruling is disposed off as withdrawn.
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2020 (12) TMI 893
Interest liability on Net cash liability - section 50(1) read with Section 75 (12) and 79 of CGST Act, 2017 - HELD THAT:- The writ petition stands disposed of granting liberty to the petitioner to file a detailed representation before opposite party no.5- Superintendent, Central Excise GST, Bhawanipatna Range, Bhawanipatna within a period of three weeks from today. If such representation is filed, the same shall be disposed of by passing a reasoned order, in accordance with law as well as the decision of the GST Council. Petition disposed off.
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2020 (12) TMI 892
Provisional release of detained goods - legality and validity of the very same action of issuing notice in Form GST MOV-10 under Section 130 of the Act on manifold grounds - Section 67(6) of GST Act - HELD THAT:- We should not interfere at this point of time with the adjudication undertaken pursuant to the notice in Form GST MOV-10. Ultimately, if final order of confiscation is passed under Section 130, it shall be open for the writ applicant to avail appropriate legal remedy available to him. However, we are of the view that the goods and the vehicle should not be allowed to remain under detention for an indefinite period of time. Mr. Sheth, the learned counsel appearing for the writ applicant submitted that his client would deposit an amount of ₹ 89,000/- towards the tax plus penalty plus interest, and upon deposit of such amount, the vehicle and the goods may be ordered to be released. The writ applicant is directed to deposit an amount of ₹ 89,000/- with the respondent No.2 and upon deposit of such amount, the respondent No.2 shall, at the earliest, release the vehicle and the goods.
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2020 (12) TMI 891
Profiteering - purchase of flat - Respondent had denied the benefit of ITC to the Applicant and other buyers amounting to ₹ 5,83,593/-, pertaining to the period w.e.f. 01.07.2017 to 31.12.2018 - violation of the provisions of Section 171 (1) of CGST Act - Penalty - HELD THAT:- It has been revealed that the Respondent had not passed on the benefit of additional Input tax Credit (ITC) to the above Applicant No. 1 as well as other homebuyers who had purchased them in his Project Navkar Darshan for the period from 01.07.2017 to 31.12.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017. Penalty - HELD THAT:- It is also revealed from the perusal of the CGST Act and the Rules framed under it that the Central Government vide Notification No. 01/2020-Central Tax dated 01.01.2020 has implemented the provisions of the Finance (No. 2) Act, 2019 from 01.01.2020 vide which sub-section 171 (3A) was added in Section 171 of the CGST Act, 2017 and penalty was proposed to be imposed in the case of violation of Section 171 (1) of the CGST Act, 2017 - Since, no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 31.12.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 15.01.2020 issued to the Respondent for imposition of penalty under Section 177 (3A) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.
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2020 (12) TMI 890
Profiteering - purchase of Flat - Respondent had denied the benefit of ITC to the Applicant and other buyers amounting to ₹ 4,79,04,342/-, pertaining to the period w.e.f. 01.07.2017 to 30.09.2018 - violation of the provisions of Section 171 (1) of the CGST Act - HELD THAT:- It has been revealed that the Respondent had not passed on the benefit of additional Input tax Credit (ITC) to the above Applicant No. 1 as well as other homebuyers who had purchased them in his Project Fusion Homes for the period from 01.07.2017 to 30.09.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017. Penalty - HELD THAT:- It is revealed from the perusal of the CGST Act and the Rules framed under it that the Central Government vide Notification No. 01/2020-Central Tax dated 01.01.2020 has implemented the provisions of the Finance (No. 2) Act, 2019 from 01.01.2020 vide which sub-section 171 (3A) was added in Section 171 of the CGST Act, 2017 and penalty was proposed to be imposed in the case of violation of Section 171 (1) of the CGST Act, 2017 - Since, no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 30.09.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 21.01.2020 issued to the Respondent for imposition of penalty under Section 177 (3A) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.
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2020 (12) TMI 889
Profiteering - restaurant service supplied by the Respondent - allegation that the Respondent had increased the base prices of his products and had not passed on the benefit of reduction in the GST rate from 18% to 5% w.e.f. 15.11.2017 vide Notification No.46/2017-Central Tax (Rate) dated 14.11.2017 by way of commensurate reduction in prices - contravention of Section 171 of the Central Goods and Services Tax Act, 2017 - penalty - HELD THAT:- It is revealed from the record that the Respondent is running a restaurant as a franchisee of M/s Subway India Private Limited in Maharashtra and is supplying various food products to the customers. It is also revealed from the plain reading of Section 171 (1) of he CGST Act, 2017 that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the record that there has been a reduction in the rate of tax from 18% to 5% w.e.f. 15.11.2017, on the restaurant service being supplied by the Respondent, vide Notification No. 46/2017-Central Tax (Rate) dated 14.11.2017 without the benefit of ITC. Therefore, the Respondent is liable to pass on the benefit of tax reduction to his customers in terms of Section 171 (1) of the above Act. It is also apparent that the present investigation has been carried out w.e.f. 15.11.2017 to 31.03.2019. It is also evident that the Respondent has been dealing with a total of 280 items during the period from 15.11.2017 to 31.03.2019. Upon comparing the average selling prices as per the details submitted by the Respondent for the period from 01.07.2017 to 14.11.2017 and the actual selling prices post rate reduction, i.e. w.e.f. 15.11.2017 to 31.03.2019 the DGAP has reported that the GST rate of 5% has been charged w.e.f. 15.11.2017 however the base prices of 170 products have been increased more than their commensurate prices w.e.f. 15.11.2017 which established that because of the increase in the base prices the cum-tax prices paid by the consumers were not reduced commensurately, despite the reduction in the GST rate. As per the provisions of Sec 171 (1) read with Rule 133 (1) the profiteered amount is determined as ₹ 6,66,700/- as has been computed in Annexure-12 of the DGAP's Report dated 29.01.2020. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. Further, since the recipients of the benefit, as determined, are not identifiable, the Respondent is directed to deposit an amount of ₹ 6,66,700/- in two equal parts of ₹ 3,33,350/- each in the Central Consumer Welfare Fund and the Maharashtra State Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) of the CGST Rules 2017, along with interest payable @ 18% to be calculated from the dates on which the above amount was realized by the Respondent from his recipients till the date of its deposit. The above amount of ₹ 6,66,700/- shall be deposited, within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned CGST/SGST Commissioners. This Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Maharashtra to monitor this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by this Authority is deposited in the CWFs of the Central and the Maharashtra State Government. A report in compliance of this order shall be submitted to this Authority by the concerned Commissioner within a period of 4 months from the date of receipt of this order.
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2020 (12) TMI 888
Profiteering - purchase of flat - allegation that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price - contravention of provisions of Section 171 of the CGST Act, 2017 - Penalty - HELD THAT:- The investigation has correctly established that the Respondent has violated provisions of Section 171 (1) of CGST Act 2017 since the benefit derived by the Respondent on account of additional ITC in the post-GST period from 01.07.2017 to 30.06.2019 was not passed on by him to his homebuyers/ recipients commensurately as required under Section 171 of the CGST Act. The contention of the Respondent is dismissed that the excess (more than commensurate) benefit amounting to ₹ 3,91,714/- passed on by him to 716 homebuyers/ recipients be adjusted against the 'less than commensurate' benefit passed on to the other 20 homebuyers/recipients because the provisions of Section 171 of the CGST Act, 2017 apply to each supply which implies that each homebuyer/ recipient is entitled to the commensurate benefit due to him in respect of the residential unit supplied to him. The adjustment sought by the Respondent, if agreed, would result in depriving the aforementioned 20 homebuyers of the benefit which would be against the legislative intent of Section 171 (1) of the CGST Act, 2017 and is hence not acceptable. Whereas the Respondent was required to pass on the ITC benefit of ₹ 2,71,11,917/- (including GST), in respect of the period July 2017 to June 2019, in terms of provisions of Section 171 of the CGST Act, 2017, he has only passed on ₹ 2,67,88,794/- (including GST) to his homebuyers and that the remaining amount of ITC benefit that remains to be passed on to 20 homebuyers (as detailed in Table D of this Order amounts to ₹ 7,14,837/- Hence we take the view that in compliance with the provisions of Section 171 of the CGST Act, 2017, the Respondent is required to pass on ITC benefit amounting to ₹ 7,14,837/- (inclusive of GST) to the twenty homebuyers - Respondent is thus directed to pass on the above amount to the said homebuyers within a period of three months of this Order. Demand of interest - HELD THAT:- It is also revealed from the submissions of the Respondent that he has not passed on interest @18% on the profiteered amount to his homebuyers, including Applicant No. 1 and the 20 homebuyers who are yet to receive the commensurate benefit. Hence, in line with the provisions of Section 171 (1) of the CGST Act, 2017 read with Rule 133 (3) (b) of the CGST Rules, 2017, we order that the applicable interest shall be paid by the Respondent to his homebuyers from the date of receipt of the additional amount of consideration in the hands of the Respondent till the amount is paid to each buyer, as the Respondent has used this amount in his business. Accordingly, the DGAP is directed to ensure that the interest, at the applicable rate, is paid to the eligible home buyers and submit his report confirming payment of the interest within three months of this Order. Application disposed off.
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2020 (12) TMI 900
Requirement of GST registration - import of services or not - place of supply - Supply of consulting services through sub-station Engineer/ expert of the applicant to OPTCL - Whether the applicant is required to be registered under Odisha Goods and Services Act, 2017 and Central Goods and Services Act, 2017 for the consultancy services rendered to M/s Odisha Power Transmission Corporation Limited? - HELD THAT:- The expert belonging maintains suitable structures in terms of human and technical resources at the sites of OPTCL. It ensures provision of supply of consulting services for the contract period, indicating sufficient degree of permanence to the human and technical resources employed at the sites. The applicant through its expert belonging, therefore, supplies the service at the sites from fixed establishments as defined under section 2 (7) of the IGST Act. The location of the supplier should, therefore, be in India in terms of section 2 (15) of the IGST Act - the contention of the applicant canot be agreed that the services supplied to OPTCL would be covered under the ambit of Entry No. 1 of Notification No. 10/2017- Integrated Tax (Rate) dated 28th June, 2017 and shall be liable to tax under RCM. Supply of consulting services through sub-station Engineer/ expert of the applicant to OPTCL is not, therefore import of service within the meaning of section 2 (11) of the IGST Act. The Engineer/expert belonging to the applicant should be treated as a supplier located in India, and made liable to pay GST, the place of supply being determined in terms of section 12 (2) (a) of the IGST Act - Since, applicant is liable for payment of GST, he is required to be registered under Odisha Goods and Services Act, 2017 and Central Goods and Services Act, 2017 for the consultancy services provided to Odisha Power Transmission Corporation Limited.
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2020 (12) TMI 899
Works Contract Service or not - nature of supply made by NBCC Ltd. (Applicant) to IIT, BBSR - Legal status of IIT, Bhubaneswar - Governmental Authority or a Government Entity ? - construction of IIT Bhubaneswar Campus allotted to the Applicant company - construction services related to sewerage project falls under clause (iii) of serial no 3 (classification code 9954) of the table in the Notification No. 11/2017-Central Tax(Rate) dated the 28th June, 2017 - rate of GST. Composite supply or not - HELD THAT:- There are number of works entrusted to the applicant under a single contract/agreement made on 02.05.2016. We also find that IIT, Bhubaneswar has engaged the applicant as a Project Management Consultant . In order to execute the project, the applicant has engaged contractors through different competitive tender process. The applicant has awarded different types of works to various agencies/contractors with categorical mention of individual works to be carried out by them with specific remuneration for each such work. Hence, it is a supply having distinctly identifiable components with distinct value attributable to each of the components - Mere fact that a number of tasks have been entrusted to the applicant would not make it entitled to be categorized as composite supply particularly in terms of Section 2(30) of the CGST Act, 2017. Legal status of IIT, Bhubaneswar - Governmental Authority or a Government Entity ? - HELD THAT:- Government of India, Ministry of Human Resource Development is exercising full control over the activities of IITs all over the country. Needless to say that in the given circumstances IIT, Bhubaneswar qualifies to be called and termed as a Government Entity for the purpose of GST law, as it fulfils the necessary and sufficient conditions laid down under Notification No. 11/2017-C.T. (R). It therefore leaves no doubt that IIT, Bhubaneswar is a Government Entity for the purpose of provisions of CGST Act, 2017 and OGST Act, 2017. Sr. No. 3(vi) to the Notification No. 11/2017-C.T. (Rate) - HELD THAT:- The applicant has been engaged as a PMC to execute the contract for carrying out different specified works for IIT, Bhubaneswar which includes erection, commissioning, installation, etc. We also find that for executing the project, the applicant shall be paid agency charges of 5.5% in addition to the actual cost of work. The agency charges are type of commission or remuneration for rendering consulting service to IIT, Bhubaneswar. We also find it necessary to place on record that there are certain items of supply made to IIT , Bhubaneswar including, but not limited to, supply of consulting services which definitely do not find place in the ambit of Sr. No. 3(vi) to the Notification No. 11/2017-C.T. (Rate).Needless to mention that such supply shall not qualify for exemption as envisaged under Sr. No. 3 (vi) to the Notification No. 11/2017-C.T. (Rate), inasmuch as the said supply is a Pure Service and not in the nature of works contract service - works entrusted to the Applicant namely construction of 800 seater boys hostel, 200 seater girls hostel, Construction of lecture hall complex, Construction of Student Activity Centre, Dispensary, Construction of 1000 capacity Auditorium, Construction of Central Research Instrumentation facilities, Construction of Central Workshop, Play grounds are within the purview of sub-clause (b) of Clause (vi) of S1 No.3 (heading 9954) of Notification No. 11/2017-C.T. (Rate) under CGST Act and corresponding notification under OGST Act, 2017, and hence merit exemption where the applicable tax rate is 12%. Construction of Directors Bungalow and construction of staff/faculty quarters - HELD THAT:- The civil construction of residential quarters is not the primary work entrusted to IIT, Bhubaneswar. Accordingly, we fail to understand as to why the benefit of concessional rate @ 12% GST should be available to this particular works contract awarded to the applicant? The intention of the Legislature has been to allow concessional rate to such work which has been entrusted to a Government entity for public interest in general, but extrapolating and extending this concessional rate to any or all activities of IIT, Bhubaneswar will not only be unwarranted but also defeat the very purpose of concessional rate. Hence, we hold that construction of Directors Bungalow and construction of staff/faculty quarters is out of the purview of exemption provided under Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 and would attract GST @ 18%. Thus, the supply of goods and/or services or both which squarely fall within the ambit of scope of work entrusted to IIT, Bhubaneswar by Government of India shall be entitled for concessional rate under Sr. No. 3(vi) to Notification No. 11/2017-C.T. (R). Accordingly, each and every supply under the subject contract shall be treated separately for determining the rate of tax under the CGST Act, 2017 read with the provisions of GST Tariff and respective exemption notifications.
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Income Tax
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2020 (12) TMI 871
Deduction u/s 80IA - Profit from business of operating and maintaining an infrastructure facility for supply of drinking water - HELD THAT:- As decided in own case [ 2017 (12) TMI 567 - ITAT AHMEDABAD] initial assessment year is A.Y. 2005-06 and after thorough examination, the claim of deduction was allowed by the Department. In our understanding of the law without disturbing the claim of the initial assessment year, a similar claim cannot be denied in the subsequent assessment years. Thus we direct the A.O. to allow the claim of deduction u/s. 80IA of the Act. See Katira Construction Ltd. case [ 2013 (3) TMI 416 - GUJARAT HIGH COURT] . Disallowance u/s 14A - Addition of dividend income - HELD THAT:- As we can see, assessee has dividend income of ₹ 9,500/- and it is well settled law that no addition can be made more than dividend income. At it is held in the matter of CIT vs. Vision Finstock Ltd.[ 2017 (7) TMI 1277 - GUJARAT HIGH COURT] wherein Jurisdictional High Court has held that disallowance cannot be made more than dividend income - Decided in favour of assessee.
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2020 (12) TMI 869
Trading Loss - Loss in share business stated to be carried out in proprietorship concern namely M/s B.K. Sheth Trading Co. - The loss stem from decrease in market value of two stocks i.e. M/s Great Eastern Shipping Co. Ltd M/s Prime Securities Ltd. held by the assessee on the Balance Sheet date - scrips were converted into stock-in-trade of the proprietorship concern in earlier AYs 1994-95 1995-96 - HELD THAT:- Inactivity or lull in the business of the assessee for some years cannot conclusively dislodge the claim of the assessee that it was carrying on the business of trading in shares - the valuation of stock-in-trade was in conformity with the method of valuation of stock in trade that was consistently followed by the assessee. Therefore, the claim on account of fall in value of scrips was well in order. We find that similar are the facts in this year. There being nothing contrary on record, respectfully following the earlier view of Tribunal, we hold that the trading loss on account of fall in value of scrips was an allowable trading loss Income from House Property- ALV determination - estimation of ALV on the basis of notional interest - CIT(A) agreeing that notional interest could not be adopted as ALV of the property - HELD THAT:- CIT(A) has rightly concluded that estimation of ALV on the basis of notional interest could not be upheld in the eyes of law. However, the same time, the findings that the property would not be subjected to Rent Control Legislation is bereft of any evidence on record. The income so earned notwithstanding the nomenclature of rental / lease rental or license fees, all are assessable under the head Income from House Property and subjected to similar computations. No difference has been carved out in law in all these different streams of income. The assessee nowhere denied the applicability of Rent Control Act to the stated stream of income. Therefore, the facts of the case are squarely covered by the earlier decision of the Tribunal in assessee s own case for AYs 1996-97 1997-98. There is no change in material facts. No contrary decision is on record. Nothing has been shown that the aforesaid decision of the Tribunal has ever been reversed or not applicable, in any manner. Therefore, respectfully following the consistent stand of the Tribunal, we are inclined to quash the directions given by Ld. CIT(A). The additions, thus made by Ld.AO, stand deleted. Levy of interest u/s 234A, 234B 234C - HELD THAT:- As Counsel submitted that the return of income was filed within time and therefore, there would be no question of levy of interest u/s 234A. Errors have also been pointed out in the computation of interest u/s 234B, 234C. In this regard, it would suffice on our part to direct Ld. AO to recompute the income of the assessee in terms of our above order and levy interest only in accordance with law. This ground stand allowed for statistical purposes.
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2020 (12) TMI 868
Assessment u/s 153A - Assessment in the name of a non-existent entity which had already amalgamated - HELD THAT:- It is observed that a similar issue involving identical and facts and circumstances of the case had come up for consideration before this Tribunal in assessee s own case passed by this Tribunal [ 2020 (9) TMI 1094 - ITAT KOLKATA] the assessments made u/s 143(3) / 153A for A.Y. 2013-14 to 2017-18 in the name of M/s. IQ City Infrastructure Pvt. Ltd., a non-existent entity which had already amalgamated into M/s. Mani Square Pvt. Ltd. were held to be invalid.
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2020 (12) TMI 865
Disallowance made in respect of estimated gross profit - HELD THAT:- CIT(Appeal) on this issue has taken gross profit percentage at 5.57% and since the assessee had already offered gross profit percentage at 4.23%, the Ld. CIT(Appeal) decided to add gross profit percentage of 1.34% i.e. (5.57% -4.23%). Thus, the addition to the tune of ₹ 25,56,706/- i.e. 1.34% of ₹ 19,07,99,008/- was confirmed and the assessee was given relief to the tune of ₹ 22,70,509/-. The findings given by the Ld. CIT(Appeal) does not call for any further interference and is hereby upheld. Addition invoking the provision of Section 40A(2)(b) - salary paid to the three sons of the assessee for the services rendered by them during the course of business activities - HELD THAT:- Salary and bonus paid p.a. to each of the son of ₹ 1,68,000/- i.e. ₹ 14,000/- per month including bonus. Considering these facts, it was asked to the Ld. DR whether this amount of ₹ 14,000/- paid as salary per month to each sons for doing business work of the assessee, whether it was unreasonable. DR submitted that the salary paid for the work done was reasonable. That it is also not the case of the Department neither in the order of AO nor in the order of the CIT(Appeal) that the assessee s sons were not at all involved in the business of the assessee or that there was no work done by them in respect of the business of the assessee. That both, the AO and the Ld. CIT(Appeal) has estimated the adhoc disallowance without specifying reasons for such disallowance without making specific examination of facts and therefore, is unsustainable in the eyes of law. Considering the totality of facts and circumstances, we set aside the order of the Ld. CIT(Appeal) and direct the Assessing Officer to delete the addition on this ground from the hands of the assessee. Adhoc disallowances on telephone expenses on vehicle expenses and on depreciation - 10% adhoc disallowance was made by the Revenue Authorities - HELD THAT:- We would have appreciated the disallowance if the Revenue could have brought forward some specific evidences of such personal usage by the assessee. This fact is not there in the entire exercise neither in the order of the Assessing Officer nor in the order of the Ld. CIT(Appeal). Sans this, nature of disallowance is adhoc only which is not permissible within the purview of taxing statutes and also considering the submissions of the Ld. DR as regards the smallness of the amount involved and as such it will have a negligible or no impact on revenue collection, in view of these facts, we set aside the order of the Ld. CIT(Appeal) and direct the Assessing Officer to delete the addition on these heads from the hands of the assessee. Ground No.3 raised in appeal by the assessee is allowed.
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2020 (12) TMI 863
Addition on account of notional house property income - Signature Villa in UAE owned by the assessee which was kept for self use - CIT(A) while upholding the said addition agreeing with the view of ld. AO to make adhoc increase of 10% over the annual value assessed for the previous assessment year - HELD THAT:- From the perusal of the valuation report, we find that the valuer had categorically mentioned the suo moto value of the subject mentioned property for different parties - Rental value had been consistently showing a declining trend in respect of subject mentioned property at Palm Signature Villa, Dubai. Hence, we hold that there is absolutely no justification for the ld. AO to adopt an adhoc increase on 10% over and above the value assessed in the previous year. Hence, we direct the ld.AO to determine rental income without making any adhoc increase of 10% for the year under consideration. Accordingly, the ground Nos.1-3 raised by the assessee are partly allowed. Disallowance u/s.14A of the Act r.w.r. 8D - Assessee suo moto disallowed expenses - HELD THAT:- We find that the ld. CIT(A) had directed the ld. AO to consider only those investments which had actually yielded exempt income for the purpose of working out the disallowance u/s.14A of the Act r.w.r. 8D(2)(iii) of the rules. This is in consonance with the Special Bench Delhi Tribunal in the case of Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI ] - We are in complete agreement with such direction of the ld. CIT(A). We further direct the ld. AO that in any case, the disallowance made u/s.14A of the Act cannot exceed the exempt income earned by the assessee. From the disallowance so computed as per the aforesaid directions, needless to mention that voluntarily disallowance made by the assessee in the sum of ₹ 60,000/- is to be reduced by the ld. AO.
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2020 (12) TMI 862
Income accrue in India - exclusion/inclusion of profits of foreign branches from taxable income in India - HELD THAT:- The notification deals with connotations of the expression may be taxed , appearing in the tax treaties entered into by India, and there is absolutely no basis whatsoever to support the proposition that the effect of the notification has to be restricted in its application to non-business income only. No such differentiation in treatment of business and non-business income is envisaged in the said notification, nor to do we see any justification for inferring the same Assessee does not have any material whatsoever in support of the proposition canvassed by him, nor does this proposition make any sense on the first principles- inasmuch as once the notification is issued without any such specific restriction for application to business income, we cannot infer a restriction in its application. We, therefore, reject the plea of the assessee, and thus decline to interfere in the matter. We uphold the action of the Assessing Officer in including the profits of the assessee s overseas branches in its taxable income in India. Tax credit for the taxes paid abroad - Assessee has not given specific details of the taxes so paid abroad in respect of which tax credit is sought. On a perusal of the material before us, we find that the assessee has claimed a deduction of ₹ 46,96,14,034 in connection with the taxes paid abroad which has been granted by the Assessing Officer, though under section 91. It is not clear whether this tax credit is in respect of the income of the overseas branches in question of the assessee, or in respect of some other income. We, therefore, direct that in case the assessee furnishes the requisite details of the taxes paid abroad in respect of the profits of these branches, no tax credit has been claimed in respect of the same so far, and in case the claim so made is admissible in terms of the provisions of the related double taxation avoidance agreement, the AO will allow the tax credit, to the extent admissible, for the taxes so paid abroad on incomes of the branches abroad earned in tax jurisdictions with which India has entered into double taxation avoidance agreement. While granting the tax credit, the Assessing Officer will examine the provisions of the respective tax treaty, and compute the admissible tax credit separately for each jurisdiction in accordance with the scheme of related treaty. With these directions, the matter stands restored back. Levy of Minimum Alternate Tax u/s 115 JB - whether or not the assessee bank is liable to subjected to Minimum Alternate Tax under section 115 JB - whether the income of the foreign branches and, provision for bad doubtful debts is required to be excluded from the computation of book profits computed under section 11JB - HELD THAT:- So far as the issue regarding alleged inapplicability of Section 115JB on the assessee is concerned, we reject the plea of the assessee in principle. So far as the computation of book profits for levy of MAT is concerned, we have upheld one of the grievances of the assessee and remitted the matter to the file of the CIT(A) for factual verification. Addition u/s 40(a)(ia) - education cess and higher and secondary education cess - HELD THAT:- The issue is covered, in favour of the assessee in the case of Sesa Goa Ltd [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] but as the related facts have not been examined at any stage, the matter can be remitted to the file of the Assessing Officer for examination de novo in accordance with the law, including the above cited judicial precedent. We accept this suggestion, and, therefore, remit the matter to the file of the Assessing Officer for fresh adjudication as above. Taxability of broken period interest - HELD THAT:- CIT(A) is correct in upholding that the broken period interest paid is taxable on due basis instead of accrual basis. Provision for Wage revision - CIT-A allowed the claim - HELD THAT:- Learned representatives fairly agree that this issue is covered by several decisions of the coordinate benches in assessee s own case, and that is a fact noted by the learned CIT(A) in the impugned order itself as well. There is no good reason, nor has any reason been pointed to us, to take a different view of the matter. Respectfully following the esteemed views of the coordinate bench, and particularly as no contrary view by a higher judicial forum, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. Amortization of premium of investments - CIT-A allowed the claim - HELD THAT:- This issue is covered by several decisions of the coordinate benches in assessee s own case, and that is a fact noted by the learned CIT(A) in the impugned order itself as well. respectfully following the esteemed views of the coordinate bench, and particularly as Hon ble jurisdictional High Court, in the case of CIT Vs HDFC Bank Ltd [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] has taken the same view, we approve the conclusions arrived at by the learned CIT(A) Deductibility of interest on perpetual bonds - Perpetual Bonds cannot be compared to the equity/ share capital of the banks - CIT(A) reversed the action of the Assessing Officer and allowed the said deduction - HELD THAT:- Perpetual bonds issued by the assessee are in nature of borrowings only as interest on these bonds are paid at pre fixed rate, the interest so paid is classified only under schedule -15 - Interest expended in the financial statements. Further, interest paid on these bonds are also subjected to TDS, and that even though the bonds are stated to be perpetual, the bank has an option of issuing call option after a period of 10 years. None of these submissions, however, address the core issue regarding the bonds having an element of refund or repayment. How the interest is shown in the boks of accounts, and whether or not the tax is deducted at source will not govern the issue of deductibility of these amounts, or addresses the issue raise in the judicial precedent in question. The judicial precedent relied upon by the revenue authorities cannot simply br brushed aside; the issue needs to be addressed. In none of the orders of the authorities below the terms on which the perpetual bonds have been issued are discussed in adequate detail, and there is no material before us to come to a categorical finding one way or the other. In these circumstances, in our considered view, the right course of action will be to remit the matter to the file of the Commissioner (Appeals) for adjudication de novo.
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2020 (12) TMI 861
Unaccounted on-money receipts - Whether CIT(A) granting deduction @50% of unaccounted on-money receipts on adhoc basis - HELD THAT:- Considering the fact that these are unaccounted expenses and all these unaccounted expenses could not be fully substantiated by the assessee with proper supporting documents and also considering the fact that assessee s declared profit was 19.97% as per its regular books of accounts which is also categorically admitted by the ld. CIT(A) we hold that the assessee would have made profit of 40% approximaterly on these unaccounted transactions by having the benefit in the form of huge cash discounts, huge savings in levy of indirect taxes, better negotiation of prices of materials due to cash purchases etc. Hence, we direct the ld. AO to add 40% of ₹ 9,75,50,000/- (gross receipts) as the unaccounted income which has to be distributed to all the assessment years in accordance with the percentage of work competed by the assessee. Deduction of unaccounted expenses from Unaccounted income - Applicability of provisions of Section 40A(3) - Section 40A(3) of the Act are concerned in respect of unaccounted business expenses incurred in cash, we find admittedly that these are unaccounted transactions and hence, the same would have to be obviously incurred in cash and accordingly, the provisions of Section 40A(3) cannot be brought into operation at all. Admittedly, the seized document contains unaccounted income as well as unaccounted expenditure both were duly transacted only in cash. Hence, the applicability of provisions of Section 40A(3) of the Act to the said payments would not serve the scheme of taxation and would ultimately result only ending up in taxing the entire unaccounted gross receipts alone without giving benefit of deduction to the assessee. This is certainly not the intention of the legislature and more so, the provisions of the Act. Accordingly, the grounds raised by the assessee in this regard for all the assessment years are partly allowed. Addition made on account of capital contribution in the assessee firm by the partner - HELD THAT:- We hold that the benefit should be given to the assessee by holding that the on-money receipts that pertaining to the entire project were received by the assessee in the initial year itself and the said money is certainly available for making capital contribution into the assessee firm, irrespective of the fact that only part of the such on-money receipts has been offered to tax in A.Y.2011-12. What is to be seen is the availability of cash in the hands of the partner to make the capital contribution in the assessee firm which is explained by on-money receipts. Hence, we direct the ld. AO to delete the addition made being the deficit and unexplained capital contribution. Accordingly, the ground No.3 raised by the assessee is allowed.
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2020 (12) TMI 860
Revision u/s 263 - CIT setting aside the assessment order passed u/s 147/148 - reasons recorded were not valid or was not in accordance with - As per CIT AO has not verified the share premium of ₹ 20 Lakhs from Euphoria Capital Private Limited HELD THAT:- Once, the very basis for reason to believe on the basis of which assessment was reopened does not exist; and the AO has duly accepted after verification that the addition cannot be made and information was incorrect, then, it was incumbent upon the Ld. Pr. CIT to point out as to what was the error in the assessment order. Once, the AO has not made any addition in respect of alleged accommodation entry from M/s Euphoria Capital Private Limited, then there is no scope of expanding the reasons recorded and travel beyond the reasons recorded on which Assessing Officer had acquired jurisdiction for reopening u/s 147 by the Ld. Pr. CIT in his revisionary jurisdiction u/s 263. Here the Ld. Pr. CIT had tried to presume the error in the assessment order which at the face of the record is not there; or there is anything to perceive that Assessing Officer has not examined the information which was the basis for reason to believe for reopening the case. Here in this case, it cannot be held that the AO has not applied his mind on the information received or has not carried out any enquiry or verification. Nowhere, the Ld. Pr. CIT has held as to how the order of the AO is erroneous and prejudicial to the interest of the Revenue. The Ld. Pr. CIT has to establish from the records and has to give reasons as to why the order of the AO is erroneous and prejudicial to the interest of the Revenue to cancel or set-aside the assessment order. We find that nowhere the Ld. Pr. CIT has pointed out any error as to how the order of the AO is erroneous and since one of the condition is lacking, therefore, neither in law nor on facts, he can set aside or cancel the assessment order and direct to pass fresh assessment order. In view of our aforesaid reasoning, the impugned order u/s 263 passed by the Ld. Pr. CIT is quashed. - Decided in favour of assessee.
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2020 (12) TMI 859
Unverifiable purchases - HELD THAT:- There was nothing of documents, were found from the possession of the assessee even during the course of search and seizure operation. PR has also placed reliance on some other judicial decisions, but the facts are totally different from the facts of the case in hand. As mentioned elsewhere, total estimated value of the project for the year under consideration is more than ₹ 300 crores, therefore it would be a futile exercise to doubt the genuineness of a meager amount of ₹ 7.86 crores. Moreover, as mentioned elsewhere, the purchases were duly supported by bills and vouchers. The payment have been made through account payee cheques. The payments are reflected in the bank statement of the payer and the payee. We, therefore, do not find any reason for doubting the genuineness of these purchases. While restricting the disallowance the reasoning given by the first appellate authority is not only absurd, but illogical. Addition u/s 68 - HELD THAT:- Since the loans were found credited in the books of accounts of the appellant, in the light of the provisions of section 68 it was incumbent upon the assessee to discharge the initial burden in proving the identity, genuineness and creditworthiness of the lender, which in our opinion the assessee has grossly failed to discharge. Once the assessee fails to discharge the initial burden cast upon it, the provisions of section 68 become imperative. The FAA has been carried away with the fact that the same amount has been added in the group concerns which was not at all relevant on the facts of the present case.
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2020 (12) TMI 858
Reopening of assessment u/s 147 - ITO jurisdiction to frame the reassessment as per the CBDT Instruction No. 1/2011, dated 31.01.2011 - Jursidiction of Reassessment framed by the ITO/AO - HELD THAT:- We find that the assessee has filed his return of income for the year under consideration before the ACIT, Circle-1, Bhubaneswar, which is clear from the copies of ITR filed for the assessment year 2012-2013 however, the reassessment has been completed by the ITO, Angul Ward, Angul. When the return of income filed by the assessee is more than ₹ 15 lakhs, the ITO has no jurisdiction to frame the reassessment as per the CBDT Instruction No. 1/2011, dated 31.01.2011. ITO/AO should have transferred the case to the Assistant Commissioner/Deputy Commissioner, who is having well jurisdiction to frame the reassessment as per the above CBDT Instruction for the relevant assessment year under consideration. This fact was also uncontroverted by the ld. DR before us. It is also not the case of the revenue that the assessee has not raised any objection with regard to jurisdictional issue before either of the authorities below. The AO in its remand report has also accepted that this is a jurisdictional issue and therefore, he brought the provisions of Section 292BB of the Act to reject the objection of the assessee. When the issue is a jurisdictional one, the provisions of Section 292BB of the Act cannot cure jurisdictional error. On perusal of the appellate order, it is also clear that the CIT(A) has discussed the jurisdictional issue raised by the assessee, however, he has rejected the contention of the assessee, which in our opinion, amounts to overruling the CBDT Instruction issued in this regard. It was the duty of the revenue authorities to give effect to the circulars/instructions issued by the CBDT which are binding on them. If the CBDT Instruction No. 1/2011, dated 31.01.2011 is not accepted by the revenue authorities, as has been occurred in the present case in hand, anyone can frame the assessment/reassessment even having no jurisdiction to enter into the same. The power conferred upon the CBDT to issue instructions and directions by section 119 of the Act is for proper working of the Act, which should be followed by the revenue authorities in true spirit. Reassessment framed by the ITO/AO in the present case is legally not sustainable as having no jurisdiction. Accordingly, we set aside both the orders of authorities below and quash the reassessment framed by the ITO/AO, Angul Ward, Angul and allow the legal issue raised by the assessee.
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2020 (12) TMI 857
Income accrued in India - dependent agent PE in India - Service PE and fixed place PE within Article 5 of Indo China DTAA - Deemed to accrue and arise u/s 9 of the Act Income of the Permanent Establishment - HELD THAT:- The appellant company, Huawei China (HC) had subsidiary in India, namely, Huawei Telecommunications India Company Private Ltd. (HI). HI not only constitutes dependent agent PE of HC but also Service PE and fixed place PE within Article 5 of Indo China DTAA. The counsel had vehemently argued that statements recorded at the time of survey do not have any evidentiary value in light of the decision in the case of S. Kader Khan [ 2007 (7) TMI 182 - MADRAS HIGH COURT] which has been confirmed by the Hon'ble Supreme Court [ 2013 (6) TMI 305 - SC ORDER] - In our considered opinion, the said decision is totally on different set of facts. In the case in hand, statements of key employees relied upon by the Revenue are well supported by documentary evidences in the form of emails which prompted the Revenue to take a stand that the office of HI in India was engaged in carrying out the business activities of HC. Moreover, in the case in hand, income has not been determined on the basis of any banal declaration by any witness but after analysing in detail the activities of the PE in India since its inception Assessee has repeatedly referred to various clauses of contracts/agreements entered into with Indian buyers for purchase/sale of telecommunication network equipment. The contracts are contractual obligations between the parties, inter se, but who could be in a better position than the key employees of HI to tell how the transactions were actually undertaken, which is the ground reality. Income attribution - As decided in own case [ 2014 (4) TMI 770 - ITAT DELHI] equipment, i.e., the hardware supplied by the assessee contained the software and the software was not separately supplied. The only ground stressed upon by the learned DR was to point out the bifurcation of the contract price between the hardware and software. We find that the facts were identical before the Hon'ble Jurisdictional High Court in the case of Ericsson A.B., New Delhi [ 2011 (12) TMI 91 - DELHI HIGH COURT] - we hold that there was only one contract for supply of equipment which included hardware and software both and, therefore, the income from supply of the equipment is to be assessed as business income arising from the assessee's business connection/PE in India. We, therefore, direct the Assessing Officer to rework out the assessee's income accordingly Charging of interest u/s. 234B - HELD THAT:- Under section 195 of the Act, tax is deductible at source from payments made to non-residents. Appellant is a non-resident and thus, tax is deductible at source from the payments made to it under section 195 of the Act. Since tax was deductible at source on all the payments made to Appellant, no advance tax was payable as per the provisions of the Act. In the case of DIT v. GE Packaged Power Inc.[ 2015 (1) TMI 1168 - DELHI HIGH COURT] held that no interest under section 234B of the Act can be levied on the assessee-payee on the ground of non-payment of advance tax because the obligation was upon the payer to deduct the tax at source before making remittances to them. Amendment to the provisions have been brought by the Finance Act, 2012, w.e.f. 1.4.2012 by which a proviso below section 209(1)(d) of the Act has been added but applicable from A.Y. 2013-14. Considering the law on this issue, we direct the Assessing Officer not to charge interest u/s. 234B of the Act upto A.Y. 2012-13. Interest can be levied as per provisions of law from A.Y. 2013-14 onwards.
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2020 (12) TMI 855
Order u/s. 143(3) r.w.s. 254 without passing a draft assessment order - ALP determination - final assessment order passed by AO without a draft assessment order - HELD THAT:- As decided in TURNER INTERNATIONAL INDIA PVT. LTD. [ 2017 (5) TMI 991 - DELHI HIGH COURT] held that final assessment order passed by the Assessing Officer without a draft assessment order is to be quashed Hon'ble Supreme Court in the case of DCIT v. Control Risks India (P.) Ltd. [2018 (7) TMI 892 - SC ORDER] had held that when TPO proposes additions to assessee's ALP, the AO is duty bound to pass a draft assessment order. It was held by the Hon'ble Supreme Court that the final assessment order which is passed without a draft assessment order depriving the assessee an opportunity of questioning the draft assessment order before the DRP is in contravention of the provisions of section 144C of the I.T. Act. Also see JCB INDIA LTD [ 2017 (9) TMI 673 - DELHI HIGH COURT ] . Appeal filed by the Revenue is dismissed.
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2020 (12) TMI 854
Reopening of assessment u/s 147 - Non disposing preliminary objections of the assessee by way of a separate order - HELD THAT- In the case on hand before us since Assessing Officer failed to dispose off the preliminary objections of the assessee by way of a separate order, respectfully following the decision in the case of Fomento Resorts Hotels Ltd. v. ACIT [ 2019 (9) TMI 1284 - BOMBAY HIGH COURT] , we quash the re-assessment order passed u/s. 143(3) r.w.s. 147 of the Act for the A.Y. 2011-12. The preliminary ground raised by the assessee is allowed.
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2020 (12) TMI 853
Voilation of Rule 46A of the IT rules committed by the ld. CIT(A) - CIT(A) concluded that there was no suppression of turnover and granted relief to the assessee - Factual details containing input VAT available for set off with output VAT were admittedly not filed before the ld. AO and were filed before the ld. CIT(A) for the first time and the ld. CIT(A) had not sought any remand report from the ld. AO in this regard - HELD THAT:-When this was put to both the parties before us, both the parties agreed for set aside of the matter to the file of the ld. AO for denovo adjudication. Accordingly, in the interest of justice and fair play, we deem it fit and appropriate to remand this issue to the file of the ld. AO for denovo adjudication and decide the matter in accordance with law. Accordingly, the grounds raised by the revenue are allowed for statistical purposes.
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2020 (12) TMI 852
Penalty u/s 271(1)(c) - Undisclosed bank accounts in which contract receipts were deposited - Defective notice - whether, Ld. AO without striking out one of the limb i.e. furnishing of inaccurate particulars of income or concealment of income can levy penalty under section 271(1)(c)? - HELD THAT:- Admittedly assessee had not disclosed to bank accounts in which contract receipts were deposited. While passing penalty order, we note that penalty is levied for concealment as there was material on record to show that bank accounts contained undisclosed income of assessee. This fact is discernible from the assessment order. In the assessment order Ld. AO initiated both the limbs, i.e; concealment and filing of inaccurate particulars. We therefore do not agree with the argument advanced by Ld. AR alleging the validity of notice issued under section 274. Assessee filed revised balance sheet after reconciling/explaining the credits in the above said accounts. The assessment order was then passed after verifying all the details by making an addition on account of unaccounted contract receipts amounting to ₹ 7 lakhs. By producing bank accounts, assessee had displaced the presumption that failure to return the correct income had arisen from any fraud or gross or willful neglect. We also note that no specific addition had been made in the assessment order on this account. No discrepancy having noted by Ld. AO in respect of the 2 accounts except for the fact that assessee had not maintained accounts in respect of the 2 bank accounts declared subsequently. We do not find assessee to be liable for concealment under section 271(1)(c) as during assessment proceedings assessee demonstrated his bona fides. Further assessee has also not filed any appeal against the addition made towards such bank accounts. Thus the conduct of assessee deserves the penalty to be deleted. Penalty levied for delay in uploading the audit report within the due date - HELD THAT:- There has not been assessee has never been held for such default in the preceding years as noted by Ld. AO. We also note that the reason submitted by assessee for the delay in filing of audit report was due to ill-health during the relevant period. There is nothing on record to prove anything contrary by revenue, to what has been submitted by assessee before authorities below or before us. We do not find the conduct of assessee to be malafide under such circumstances. AO at the time of assessment proceedings had the benefit of audit report and therefore in our view levy of penalty should be liberally construed. We therefore do not find any reason to sustain the present penalty. Accordingly grounds raised by assessee in this appeal stands allowed.
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2020 (12) TMI 851
Deduction u/s 80IA(4) denied - substantial work of Solid Waste Management - AO arrived at a finding that it was purely hiring of vehicles for collection and transportation of municipal solid waste including common house gully materials and also materials removed from the slums of various zones - CIT(A) arrived at a finding that the assessee-company has not done the work of waste treatment/processing/development/maintenance of waste, by creating the necessary infrastructure, as has been provided in the provisions of section 80IA(4) - HELD THAT:- In the present case, deduction has been allowed for all the earlier assessment years and the AO has now sought to disallow the deduction for the last two years, whereas the deduction u/s 80IA(4) is allowable for a consecutive period of 10 assessment years. In the instant case, as there in no change in the fact, if deduction has been allowed in the initial assessment years, the same cannot be withdrawn in the subsequent years without making disallowance in the initial assessment years. See PAUL BROTHERS [ 1992 (10) TMI 5 - BOMBAY HIGH COURT] and PAUL BROTHERS [ 1992 (10) TMI 5 - BOMBAY HIGH COURT] The fact that the contract has been awarded by respective Municipal Authorities does not make the assessee ineligible for claim of deduction u/s 80IA of the Act, as substantial work of Solid Waste Management is carried out by the assessee and not the Municipal Authorities. Further section 80IA(4)(i)(b) of the Act requires the assessee to enter into an agreement with the Government for carrying out such an activity and, therefore, the assessee fulfils all the conditions of section 80IA of the Act to be eligible for deduction under the said section. The assessee has been claiming deduction u/s 80IA(4) of the Act on the income earned by it from the activity of solid waste management. There is no dispute that Solid Waste Management System is one of the infrastructure facilities as defined in Explanation to the section 80IA(4) of the Act, which entitles the assessee to claim deduction for the consecutive period of 10 years. In seeking the purpose of a contract, one should treat the contract as a whole. A contract is an integrative framework. Its different parts are entwined. Its different parts are intermingled. In interpreting a contract, one should view it holistically, as a whole. One should evaluate the connections between its various parts in an attempt to arrive at parties joint intent. In view of the factual matrix and position of law delineated we hold that the assessee is eligible for deduction u/s 80IA(4) of the Act. Thus the order of the Ld. CIT(A) is set-aside - Decided in favour of assessee.
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2020 (12) TMI 850
Penalty u/s. 271AAA - payment of taxes were not made on the amount surrendered within the due date - HELD THAT:- CIT(A) has only incorporated the figures given at serial number 1 to 10 and has failed to consider the taxes deposited from serial number 11 to 17 which was not on account of income shown in the return of income. Further, this fact has also been corroborated from the computation of income filed along with return of income, the details of which as incorporated above also matches with Form 26AS. Thus, all the payment of taxes along with interest were duly paid much before due date of filing of return of income. Therefore, the allegation in the charge of the Ld. CIT(A) is completely divorced from the facts and material on record. Accordingly, ground which the Ld. CIT(A) has confirmed the penalty is dismissed. Apart from that, precisely on similar issue and on similar findings of the Ld. CIT(A) in the group cases of the assessee, the Tribunal has come to an independent conclusion that the Ld. CIT(A) has wrongly inferred/interpreted the Form 26AS and therefore, the finding of the Tribunal will also apply mutatis mutandis in this appeal also. Accordingly, the penalty of ₹ 50 Lakhs levied u/s. 271AAA of the Act is directed to be deleted.
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2020 (12) TMI 849
Penalty u/s 271 (1)(c) - bogus purchases - CIT (A) sustained the addition of 12.5% made by the AO - HELD THAT:- CIT (A) has deleted the penalty levied u/s 271 (1) (c) of the Act, by following the decisions of the coordinate Benches wherein the Tribunal has held that where the addition is made on estimate basis, penalty u/s 271 (1) (c) cannot be imposed. Since, the findings of the Ld. CIT (A) are based on the decisions of the coordinate Benches rendered in the cases discussed by the Ld. CIT(A), we do not find any reason to interfere with the findings of the Ld. CIT (A). We accordingly uphold the decision of the Ld. CIT (A) and dismiss the appeal filed by the revenue. Accordingly, we direct the AO to delete the penalty levied under section 271 (1) (c) of the Act. - Decided against revenue.
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2020 (12) TMI 848
Disallowance of sales promotion expenses being gifts to doctors and hospitals - Allowable business expenditure u/s 37(1) - HELD THAT:- Assessee is engaged in the business of manufacturing of pharmaceutical items and sales thereof. Since the assessee is in the business of pharmaceuticals, it is customary in the business of the assessee to incur sales promotion expenses on providing gifts, free samples to doctors, hospitals, medical association for arranging conferences and workshops for demonstrative purposes and also gifts given to customers, distributors, doctors and hospital staff and therefore in our opinion these expenses are clearly covered under the provision of section 37(1) of the Act as wholly and exclusively incurred for the purpose of business. The case of the assessee is squarely covered by the decisions of the co-ordinate bench of the Tribunal in the case of DCIT vs. PHL Pharma (P). Ltd. [ 2017 (1) TMI 771 - ITAT MUMBAI ] and Medley Pharmaceuticals Ltd. vs. DCIT [ 2020 (7) TMI 568 - ITAT MUMBAI ] We find that in these decisions the identical issue has been decided in favour of the assessee by holding that the MCA regulations are applicable to the doctors and not to the pharmaceutical companies who incur such expenses and therefore these expenses are purely business nature and had to be allowed as wholly and exclusively incurred for the purpose of business under section 37(1) - Decided in favour of assessee. Disallowance of interest expenses u/s 36(1)(iii) - HELD THAT:- We find that the assessee s own funds as on 31.03.2014 were ₹ 3,485.91 lakhs whereas the total investments including the flat was to the tune of ₹ 901.40 lakhs. Thus we find merit in the contentions of the assessee that where the assessee s own funds are more than the borrowed funds then inference has to be drawn that investment made by the assessee in the flat was out of own funds and not out of borrowed funds. The case of the assessee is squarely covered by the decision of the Hon ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] wherein in it has been held that where interest free funds available with the assessee are more than the non business investments made by the assessee then a presumption is that assessee has used own funds in the investments and not the borrowed funds. Accordingly, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the disallowance.
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2020 (12) TMI 847
Application u/s 154 requesting the A.O. to give credit for above TDS and refund of the same - order rejecting the assessee s application for rectification u/s 154 assessee filed an appeal to the first appellate authority - assessee did not appear before the first appellate authority, ex parte order was passed - HELD THAT:- It is the case of the assessee that it had not received the notice of hearing issued from the first appellate authority s office. Therefore, the appeal was decided ex parte. In the interest of justice and equity, we are of the view that one more opportunity should be provided to the assessee to explain its case whether it has accounted and declared the income in respect of TDS, which it is claiming refund. For the above said reasons, the case is restored to the file of the A.O. The assessee shall co-operate with the A.O. and shall furnish the necessary details called for. It is ordered accordingly.
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2020 (12) TMI 844
Rectification of mistake - TP adjustment made in respect of interest on loan advanced by the assessee - DRP had directed the A.O. to compute interest at LIBOR rate + 500 basis point AND Tribunal directed the A.O. to determine 12 months LIBOR + 300 basis point - plea of the assessee that the assessee had sought for LIBOR rate + 150 basis point and hence the order passed by the ITAT in directing the A.O. to adopt 12 months LIBOR + 300 basis point is mistake apparent from record - HELD THAT:- We notice that the Tribunal has taken a view on this issue i.e. as against the DRP s direction to adopt interest rate of LIBOR + 500 basis point, the Tribunal has directed the A.O. to adopt 12 months LIBOR + 300 basis point. Non-acceptance of the plea of the assessee does not amount to a mistake apparent from record. There should not be any dispute that the scope of power of rectification of mistake given to the Tribunal u/s 254(2) of the Act is limited and it is well settled proposition of law that the Tribunal is not entitled to review its order under the garb of rectification of mistake apparent from record. The decision taken by the Tribunal in respect of the rate of interest to be adopted is a conscious decision taken by the Tribunal. Since the Tribunal has taken a view on this matter, the same does not constitute mistake apparent from record within the meaning of sec. 254(2). Tribunal has not adjudicated ground No.3 relating to mistake in computing the TP adjustment after the directions given by Ld. DRP - We notice that ground no.3 is a without prejudice ground relating to transfer pricing adjustment pertaining to loans advanced to the AE. In ground no.3, the assessee is pointing out an arithmetic error committed by A.O./TPO while giving effect to the direction given by Ld DRP. In fact, this ground does not require separate adjudication, since the Tribunal has already modified the directions given by Ld DRP. Hence the ground no.3 urged by the assessee shall become infructuous, while giving effect to the order passed by the Tribunal.Accordingly, the decision rendered by the Tribunal on ground no.2 urged by the assessee would take care of ground no.3 also. Disallowance made u/s 35(2AB) - Tribunal, after considering the facts relating to the issue, has restored the same to the file of the A.O for examining it afresh in the light of order passed by Hon ble Karnataka High Court, i.e., the AO should take into account the observations made by the Hon ble Karnataka High Court while examining the issue of deduction u/s 35(2AB) of the Act. Thus, we notice that the Tribunal has taken a conscious view on this matter. Hence we find that the plea made by the assessee by expressing that this issue cannot be restored to the file of AO for fresh examination sounds strange. In any case, we are of the view that such a plea cannot be made in the miscellaneous petition filed u/s 254(2) of the Act. Accordingly, we do not find any mistake apparent from record in respect of this issue as alleged by the assessee. Disallowance of deduction claimed by the assessee u/s 35(1)(i) - Tribunal has restored the issue relating to deduction u/s 35(1)(i) of the Act to the file of the A.O. for examining it afresh in the light of decision rendered by the coordinate bench [ 2015 (3) TMI 535 - ITAT BANGALORE] relating to assessment year 2008-09, meaning thereby, the A.O. is required to follow the decision rendered by the coordinate bench (referred above), if there is parity of facts on this issue. Thus, we notice that the Tribunal has taken a view on this matter also and hence, we are of the view that the order passed by Tribunal on this issue also does not suffer from any mistake apparent from record. Accordingly, we reject this plea of the assessee. Miscellaneous application filed by the assessee is dismissed.
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2020 (12) TMI 843
Deduction u/s. 80P(2) - CIT(A) passed order u/s. 154 wherein the claim of deduction u/s. 80P was denied, by relying on the judgment of the Larger Bench of the Hon'ble Jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. [ 2019 (3) TMI 1580 - KERALA HIGH COURT] . - HELD THAT:- Full Bench of the Hon'ble Jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. vs. CIT (supra) had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s. 80P of the I.T. Act. In view of the dictum laid down by the Full Bench of the Hon'ble Jurisdictional High Court (supra), we restore the issue of deduction u/s. 80P(2) to the files of the Assessing Officer. The Assessing Officer shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a cooperative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s. 80P(2) of the I.T. Act. Disallowance of claim for deduction u/s. 80P made in respect of income from banking and credit business with members - HELD THAT:- Tribunal in the case of Kizhathadiyoor Service Co-operative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as 'income from business' instead of 'income from other sources'. As regards the grant of deduction u/s. 80P of the I.T. Act on such interest income, the Assessing Officer shall follow the law laid down by the Larger Bench of the Hon'ble Jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. vs. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] and examine the activities of the assessee-society before granting deduction u/s. 80P of the I.T. Act on such interest income. It is ordered accordingly. Thus, the appeal filed by the assessee is allowed for statistical purposes.
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Customs
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2020 (12) TMI 885
Seeking direction to the respondents to permit clearance of imported goods on payment of redemption fine and penalty - Peas - HELD THAT:- Let the adjudicating authority pass speaking order(s) of adjudication after hearing the petitioners and upon independent application of mind considering all aspects including the decision of this Court in M/s. Harihar Collections [ 2020 (10) TMI 830 - BOMBAY HIGH COURT ] . Petition disposed off.
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2020 (12) TMI 870
Classification of imported goods - Executive IP Phone with 7 colour touch screen, 100 programmable keys, POE and 10/100/100 LAN and PC connections- FON 670i (VoIP Telephone) - whether classified under CTH 8517 18 10 (as claimed by the Appellant) or under CTH 8517 69 90 (as contended by the Department)? HELD THAT:- The appellant imported an Executive Level IP Phone of model FON 670i. It is, therefore, an IP Phone. The description of the goods under consideration will not fall in either of the two Sub-Headings 8517 11 or 8517 12. Being an IP telephone it would fall under Sub-Heading 8517 18 (third double dash) under which the description of the goods is others . It is a push button type telephone and, therefore, would fall under Tariff Item No. 8517 18 10. Rule 1 of the General Rules also provides that the titles of Section, Chapters and Sub-Chapters are provided for ease of reference - In COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS SIMPLEX MILLS CO. LTD. [ 2005 (3) TMI 117 - SUPREME COURT] , the Supreme Court held that rule I gives primacy to the Section and Chapter Notes along with the terms of the Headings and so this rule should be applied first. It is only when a clear picture is not emerging that the subsequent rules have to be applied. The second entry at single dash level starts with the words other apparatus . This clearly indicates that only those goods which are not covered by the first single dash entry will be covered under the second single dash entry. Thus, as the product under consideration is covered by the first single dash entry, it is not necessary to examine the second single dash entry. Learned counsel for the appellant, in the alternative, submitted that even if the product under consideration is prima facie classifiable under two or more Headings, the classification would be effected in the manner prescribed in (a) or (b) or (c) of rule 3 of the General Rules and so the Heading which provides the most specific description shall be preferred to Headings providing a more general description. In such a situation also the product under consideration would fall under the Tariff Item Heading 8517 - This submission of learned counsel of the appellant deserves to be accepted. The product under consideration is an Executive IP Phone. It would satisfy the specific description of Tariff Item Heading 8517. In MOORCO (INDIA) LTD. VERSUS COLLECTOR OF CUSTOMS, MADRAS [ 1994 (9) TMI 68 - SUPREME COURT] , the Supreme Court held that the First Schedule appended to the Customs Act lays down the General Principles for the interpretation and classification of goods for import tariff and that the applicability of rule 3 arises when the goods consisting of more than one material fall in two or more headings. The Supreme Court observed that each of the classes are mutually exclusive. The Commissioner (Appeals) has relied upon rule 3(c) to hold that since Tariff Item Number 8517 69 90 falls last in the numerical order among those which equally merit consideration, the product under consideration would be classifiable under CTH 8517 69 90 and not CTH 8517 18 10 - Commissioner (Appeals) clearly committed in error in straight away jumping to rule 3 (c) without first exhausting rule 3(a) and rule 3 (b) - Commissioner (Appeals) also committed an error in holding that the goods in question are for video calling. As noticed above, the facility of video codec support is available only in model 675i, whereas the imported goods model is 670i, which does not have any feature of video support. The Order Information contained in the product literature, also describes model 675i as an Executive Video IP Phone , while model 670i is described as an Executive IP Phone . This clearly shows that the facility of video calling is not available in the model imported by the Appellant. The product under consideration, which is an Executive IP Phone (Model No. FON670i), is classifiable under CTH 8517 18 10 and not under CTH 8517 69 90 - Appeal allowed - decided in favor of appellant.
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2020 (12) TMI 882
Permission for withdrawal of petition - submission of inquiry report by the 2nd respondent within 90 days from the date of issuance of SCN - HELD THAT:- This writ petition is dismissed as withdrawn.
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2020 (12) TMI 881
Levy of penalty under Section 112 of the Customs Act, 1962 - import of Fully Fashioned High Speed Knitting Machine - alleged acts of omission and commission resulting in evasion of the customs duty on the imported goods and thereby rendering those goods liable to confiscation - Export Promotion Capital Goods under the scheme of Foreign Trade Policy - HELD THAT:- This writ application is disposed 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.
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2020 (12) TMI 866
Absolute Confiscation - penalty - import of Access Control Card Readers - non-availability of BIS certificate labelling - HELD THAT:- Issue decided in the case of M/S. GLOBAL ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS (NS-V) [ 2019 (4) TMI 1050 - CESTAT MUMBAI] where it was held that the imported goods viz Access Control Card Reader cannot be released for home consumption without requisite No objection Certificate from MSAL, WPC and BIS. It is a fit case where re-export would have been ordered by the Commissioner (Appeals) on the basis of request already received in writing from the appellant by the respondent department on 10th June, 2019 since, Section 128A(3) empowers the Commissioner (Appeals) to make such further inquiry as may be necessary and pass such order - Therefore, when a request was also made by the respondent-department to the appellant to re-export the goods as noted in Order-in-Original and appellant belatedly accepted the same, there was no impediment on the part of the Commissioner (Appeals) in accepting such request and reducing the financial burden, which may be incurred by the respondentdepartment for destruction of the imported goods. It is also a fit case to reduce the penalties to the barest minimum since re-export option itself was initiated by the respondent-department and appellant agreed to comply the same. Appellant s prayer for re-export is accordingly allowed and penalties are reduce to ₹ 1,00,000/- for each count under Section 112(a)(1) 114AA of the Customs Act, 1962 - Appeal allowed in part.
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Corporate Laws
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2020 (12) TMI 867
Seeking winding up of HMT Bearings Limited - Seeking appointment of Counsel who filed the petition as provisional liquidator - Section 272 of the Companies Act, 2013 - HELD THAT:- This Tribunal is empowered under Section 275 (1) of the Companies Act, 2013 to appoint an Official Liquidator for the purpose of winding up of the Company and for this purpose the Tribunal, in accordance with Section 275 (2) of the Companies Act, 2013, to appoint the Company Liquidator from amongst the Insolvency Professionals registered under the Insolvency Bankruptcy Code, 2016. The Petitioner cannot be considered for Company Liquidator as he has rendered his services as an Advocate for Company and the Bench is apprehensive that it may amount to conflict of interest. Upon hearing the submission made by the Learned Counsel for Petitioner and the facts and circumstances stated in the petition, namely the bonafide action taken pursuant to the decision of the Central Government to wind up the Company under Section 271-272 of the Companies Act, this is considered to be a fit case to order winding up / closure of the Company i.e. M/s HMT BEARINGS LIMITED - application allowed.
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2020 (12) TMI 842
Restoration of the name of the Company in the Register of Respondent, which has been struck off - Section 252(3) of the Companies Act, 2013 - HELD THAT:- It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(3) 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. The Company has two properties worth ₹ 21,20,000/- and ₹ 14,50,000/- as per its latest audited balance sheet of FY 2018-19. Since the Properties are in the name of the Company, restoration of the name of the Company is for ensuring the best interest of the shareholders. No prejudice would be caused to any party if the Company's name is restored, as prayed. The Members of the Company have undertaken that post restoration of the name of the Company in the Register of the Registrar of Companies, Bangalore, the Company will complete the Annual filings due for the past years and carry on the business in its ordinary course. Therefore, the interest of justice would be met if the name of Company is restored as prayed for, subject to conditions imposed - the name is restored - application allowed.
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2020 (12) TMI 841
Approval of Scheme of Arrangement and Amalgamation - Section 230-232 of The Companies Act, 2013, read with Rule 15 and 16 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions regarding convening and holding of various meetings issued - directions regarding issuance of various notices, issued - the scheme is approved. The next date of hearing of the Petition shall be on 26.10.2020 for consideration of approval of the Scheme as contemplated between the Petitioner Companies.
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2020 (12) TMI 840
Restoration of name of the Company in register of companies - restoration of original status of the Respondent Company, directors and all other stakeholders as if the name of the Company has not been struck off from the Register of Companies - section 252(3) of the Companies Act, 2013, read with rule 87A of the National Company Law Tribunal Rules, 2016 - HELD THAT:- This Tribunal is of the opinion that it would be just and proper to order restoration of name of the 2nd Respondent Company in the Register of Companies. In view of the averments made and evidence placed, refusal to restore will be an excessive penalty for the over-sight on the part of the 2nd Respondent Company. The Applicant shall file all the pending Financial Statements and Annual Returns with RoC as per the Act and Rules made thereunder. It shall also comply with the provisions of the Companies Act, 2013 without any delay in future. Form INC 28 shall also be filed as per procedure - Further the Applicant is directed to pay the cost of ₹ 25,000/- to the RoC while submitting the documents. This is for the expenses to be incurred by RoC for publication in the Official Gazette and for other related expenses. Application allowed.
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Insolvency & Bankruptcy
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2020 (12) TMI 887
Maintainability of appeal - appeal is filed beyond limitation and even the period extendable by the National Company Law Appellate Tribunal - Validity of Appointment of Liquidator and liquidation of company - HELD THAT:- The admitted case of the petitioner is that the limitation as prescribed under Section 61 Sub Section (2) read with proviso is a strict period of limitation which cannot be extended. Admittedly the period to file an appeal has already lapsed. High Court should resist from exercising jurisdiction under Article 227 of the Constitution of India specifically in a case where a remedy of appeal is provided and a strict period of limitation is made applicable and the aggrieved party permits the period of limitation to lapse, maybe for valid or reasons otherwise - Since order dated 15.10.2020 was admittedly an appealable order, though subject to the period of limitation and no appeal has been filed by the petitioner within the statutory period or the extendable period under proviso to Section 61(2) of the Insolvency and Bankruptcy Court, 2016, I am not inclined to exercise the discretionary powers under Article 227 of Constitution of India to permit a challenge to the said order. The contention of learned counsel for the respondent that Section 5 of the Limitation Act may apply does not arise for consideration in these proceedings. Though, it may arise in case petitioner were to file an appeal before the Appellate Tribunal, in which case it would be for the Appellate Tribunal to consider as to whether provisions of Section 5 of the Limitation Act would apply or not - Petition dismissed.
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2020 (12) TMI 876
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make payment of financial dues - existence of debt and dispute or not - HELD THAT:- In Section 7 of the IBC Application filed on behalf of the Respondent No. 1 that dues amount claimed in default has been shown as ₹ 23,90,64,696.69/- till 28.08.2018 plus further interest the date of default has been shown on 30.06.2015. The Appellant has failed to demonstrate that the impugned order suffers from any legal infirmity - Appeal dismissed.
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2020 (12) TMI 874
Restraint from selling the property of the Respondent No. 1 till further orders - direction to Respondents not to change the shareholding pattern of the first Respondent Company without seeking prior permission from this Tribunal, etc. - HELD THAT:- In the instant case, although the Appellants have come out with the plea that the Appellant No. 2, his wife and both children were tested positive for COVID 19 and were self-home-quarantine on 05.10.2020 and that the Appellant No. 3 and 4 were out of station along with their family and friends for excursion during the weekend of 2nd October, 2020 to 6th October, 2020 etc. and none of the Appellant Nos. 2 to 4 were aware of any such hearing on 05.10.2020 and neither in a situation to attend the hearing or nor was in a position to appoint any Advocate for them to attend the hearing, and not withstanding the fact that the name of Appellant Nos. 2 to 4 were wrongly shown in the appearance column of the impugned order as Advocates, this Tribunal without precipitating the matter any further and not delving deep in this regard is of the considered view that a latent and patent error had crept in the appearance column of the impugned order and by mistake the Appellants Nos. 2 to 4 were shown as Advocates and this Tribunal at this juncture is of the earnest view that utmost diligence, care, caution and circumspection are required on the concerned person(s) of the Tribunal while marking / noting the appearance of Learned Advocates / Parties/Representatives and quite in the fitness of things, this Tribunal hope and trust such an inadvertent error will not recur again in the near future. It is to be pointed out that the Tribunal as per Section 241 of the Companies Act, 2013 has wide powers to grant relief in cases of oppression etc. It can pass interim orders pertaining to the functioning of the Company in case of oppression and mismanagement. Apart from that, the Tribunal has discretion in moulding the relief even when the concerned petitioner fails to make out a case of an oppression and mismanagement. The Tribunal has to weigh equitable considerations, to be super imposed on legal rights. However, whether an act is an oppressive one or not is basically a question of fact - Undoubtedly, the Tribunal has power to decide whether a particular transaction is a bonafide one entered into in the ordinary course of business without notice of any internal squabbles of the Directors of a Company. In a petition u/s 241 of the Companies Act, 2013 (i) materials ought to be supplied (ii) figures are to be furnished (iii) the allegations are to be proved. The plea of limitation is a mixed question of Law. The power of the Tribunal is to correct oppressive conduct and the said power under section 241-242 of the Companies Act, 2013 is a statutory one - Section 420(1) of the Companies Act, 2013 enjoins that the Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit. The settled legal proposition is that the rules of justice are to supplement the law and not to supplant the same. The term natural justice relates to the quality of fairness to be adopted and the term Natural Justice is another name for common justice. Audi Alteram Partem. In the present case the Appellants have come out with a plea that the impugned order of the Tribunal has paralysed, jeopardized and completely affected the operations of the First Appellant/Company in a grave manner thereby affecting the Allottees Bankers and Creditors . This Tribunal, based on the surrounding facts and circumstances of the instant case in a conspectus manner and especially bearing in mind the ex-parte impugned order dated 05.10.2020 was passed by the Tribunal in Company Petition No./133/2020 which has adverse civil consequences of affecting the First Appellant / Company s business arising thereto without expressing any opinion on the merits of the subject matter in issue, one way or other comes to a consequent conclusion that the said impugned order is in negation of the Principles of Natural Justice and, therefore, to prevent an aberration of justice and to promote substantial cause of justice the said impugned order dated 05.10.2020 in Company Petition No./133/2020 is set aside by this Tribunal. Further, this Tribunal remits back the matter to the National Company Law Tribunal , New Delhi, Court No.- II for denovo consideration and appreciation of the whole gamut of the controversies centering around the main Company Petition. Appeal allowed.
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2020 (12) TMI 873
Liquidation Order - It is stated that the Respondent who has been the Managing Director of the Corporate Debtor had been cooperating with the Appellant but at some point, there was misunderstanding and the Appellant had filed application that Respondent is not co-operating and should not leave Jurisdictional area - HELD THAT:- It is stated by the Appellant that Respondent was earlier cooperating with the Liquidator and is even now cooperating with the Liquidator and the Respondent is still standing by the Memo, we do not find that any Orders as such giving directions to the Respondent are necessary. As regards the contention of the learned Counsel for the Appellant for remarks as have been made in Impugned Order against Appellant, the observations of the Adjudicating Authority will not be taken as adverse remarks but observations in the context of examining the dispute raised before the Adjudicating Authority. The Appellant is at liberty to place detailed Report before the Adjudicating Authority so as to clear the impression of the Adjudicating Authority with regard to the progress of the liquidation proceedings. Appeal disposed off.
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2020 (12) TMI 872
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Did unauthorized Person file the Application? - principles of natural justice - time limitation. Principles of Natural Justice - HELD THAT:- In Appeal, the original of the affidavit of Advocate Annexure A9 at page 129 to 130 of the Appeal Paper Book has not been filed although depicting that Advocate has filed Affidavit in this Appeal. Even otherwise subsequently preparing such affidavit would not be helpful unless on the day concerned the Advocate filed Application that he is present and wants to argue but is not being permitted to argue or whatever. We do not have response of Adjudicating Authority to such allegation. We do not believe that the Adjudicating Authority would not let the Advocate argue and still record that none appeared for the Respondents. Our experience shows that at times, the Advocates are appearing and mark their presence and when the matter is actually called out, at times advocate is unable to reach. If the Authority proceeds further and records the Order that none appeared in spite of repeated calls, we would not give weight to the signature or appearance marked, (which could be even before or after recording of the order) even if the same had not been scored out - Adjudicating Authority considered all issues raised in Reply and which are still being raised and answered them. Thus, no prejudice was caused. Even after hearing Appellants, for reasons this Judgment will show, Corporate Debtor has had no substantial defence - Principles of Natural Justice were not violated. Did unauthorized Person file the Application? - HELD THAT:- It is all comprehensive paragraph which has conferred powers to this Chief Manager. We do not find any substance in the argument that as such General Power of Attorney was executed before coming into force of Insolvency and Bankruptcy Code hence, the said Chief Manager did not have authority. In our view, it is General Power of Attorney and not confined to any particular Act or Acts. We do not find any defect on this account with the Application under Section 7 of IBC - Although the Learned Counsel for Appellants did not turn up to make submissions at the final stage, still the Adjudicating Authority does appear to have considered the objections raised by the Appellants and in Paragraph 12 of the Impugned Order looked into this issue and did not find any substance in the objections raised that the Power of Attorney was not competent to file the Application. Time Limitation - HELD THAT:- The provisions of Limitation Act, 1963 shall apply as far as may be to the proceedings or Appeals before the Adjudicating Authority or this Tribunal. Thus it is necessary to look into the Limitation Act to consider how far Limitation Act may be, or could be applied - there was no intention to give new lease of life to debts which are time-barred. Thus, the consideration is whether a given debt is time-barred. It is also clear from the above that for Applications under Section 7 of IBC the Hon ble Supreme Court in B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [ 2018 (10) TMI 777 - SUPREME COURT] found that residuary Article 137 in the Third Division of Limitation Act dealing with Applications was the Article applicable. The Judgment shows that if there is delay in filing of Application one has to go to the Sections where Section 5 would apply. Section 5 would be relevant if an Application which is time-barred and extension of prescribed period is sought showing sufficient cause for not filing the Application within prescribed period. Section 18 applies to not merely suits but also applications and where before expiry of the prescribed period for an Application an acknowledgment is made, the Section provides for computing fresh period of Limitation from the time when acknowledgment was so signed. Perusal of Section 19 shows that where payment is made on account of a debt or interest before expiration of the prescribed period by the person liable to pay, a fresh period of Limitation shall be computed from the time when the payment was made. The date of NPA will not shift. It will remain the foundational date and Period of Limitation gets triggered from that date. But when prescribed period is computed in accordance with the Limitation Act and facts of this matter, Section 18 and 19 do appear to be attracted - In the instant case, when Bank declared NPA to recover dues, it moved DRT. If the Corporate Debtor made some payments, as a reasonable prudent person, Bank received the payments. Section 19 of the Limitation Act, 1963 is not subject to any qualification/exception that after Account is declared NPA, if the debtor makes payments on account of debt, the Section would not be applicable. The Adjudicating Authority found that there were not merely repayments but also Acknowledgments. We do not find that the Adjudicating Authority erred in its observations of the Impugned Order to hold that the Application was within Limitation - Appeal dismissed.
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2020 (12) TMI 864
Seeking extension of time for filing statutory compliances before Securities and Exchange Board of India - Section 60 (5) of Insolvency Bankruptcy Code, 2016, read with Rule 11, 13 32 of National Company Law Tribunal Rules, (Adjudicating Authority), 2016 - HELD THAT:- The Company / Corporate Debtor was under Corporate Insolvency Resolution Process at the time when the Application was filed by the Resolution Professional on 28.07.2020. We have perused the letters addressed to SEBI and IBBI by the Applicant herein. Admittedly, the Resolution Professional has made efforts to approach the Regulatory Authority for extension of time/waiver of compliances under LODR Regulations. However, no response from the Regulatory Authority in this regard. Considering the exertions of the Resolution Professional; the submissions put forth by him and subsequent liquidation order passed by this Tribunal on 02.11.2020, we are of the considered view that this Application deserves favourable consideration. Now that the Liquidation order is passed by the Tribunal on 02.11.2020, we can direct the Applicant to comply with the statutory compliance during the months of July, August and September, 2020 by granting some additional time. Application allowed - following orders were passed: (a). Extend the time limit till 31.03.2021 for filing of audited financial results (standalone consolidated) for the year ended 31.03.2020 with SEBI. (b). Extend the time till 31.03.2021 for complying the provisions of Regulation 24A and all other applicable Regulations of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
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2020 (12) TMI 877
Maintainability of petition - Works Contract - contract for the construction of certain portion of the Kochi Metro Project - privity of contract between DMRC and the petitioners - statement filed on behalf of the DMRC, contending that there is no privity of contract between DMRC and the petitioners and that the prayer in the writ petition being in the nature of a monetary claim, cannot be agitated in a writ petition filed under Article 226 of the Constitution of India - HELD THAT:- The contention of there being no privity of contract between DMRC and the petitioners to be well-founded. The mere fact that on the request of EIEL, some amounts were directly paid to the petitioners is not sufficient to hold the DMRC liable for the balance payments. As per the terms of the agreements entered into between the petitioner and EIEL, the amounts due to the petitioners is to be paid by EIEL. For the default committed by the said Company, the DMRC cannot be made liable, unless the bills are cleared and a request for direct payment made by EIEL and accepted by the DMRC. The Apex Court has reiterated the settled position that the remedy for violation of a term of contract is not under Article 226 of the Constitution of India. In Kurien E. Kalathil's case [ 2000 (7) TMI 920 - SUPREME COURT ] , the Apex Court observed that a contract would not become statutory simply because it is for construction of a public utility and was awarded by a statutory body and that like private parties, the statutory bodies also have power to contract or deal with property. The prayer for payment of the amounts due to the petitioners by the DMRC is liable to be rejected - Petition dismissed.
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2020 (12) TMI 839
Seeking exclusion of lockdown period from 25.03.2020 till 31.07.2020(128 days) declared by Central and State Governments from the maximum CIRP period of 330 days - section 12 of the Insolvency and Bankruptcy Code, 2016 Read with Regulation 40 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016 read with Rule 11 of NCLT Rules, 2016 - HELD THAT:- The CIRP in the normal course should have been completed by 25.05.2020. However lockdown started from 25.03.2020. According to the applicant the lockdown was till 31.07.2020 in the containment zones. Counsel for RP requested the Tribunal to exclude lockdown period from the CIRP - Actually days lost due to lockdown was 62 days i.e. from 25.03.2020 to 25.05.2020. These 62 days lost in the lockdown period is to be added from 01.08.2020. Thus CIRP of 270 days to be completed by 01.10.2020. Application disposed off.
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2020 (12) TMI 838
Seeking voluntary dissolution of Company - whether the Liquidator has complied the provisions of Section 59 of Insolvency and Bankruptcy Code, 2016 Read with Regulation 3 of Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 before initiating voluntary liquidation of Company? - HELD THAT:- As per Section 59 of the Code, a declaration from the majority of the Directors of the Company verified by an affidavit to the effect that, they have made a full inquiry in to the affairs of the Company and they have formed an opinion that, either the Company has no debt or that it will able to pay its debt in full from the proceeds of the assets to be sold in the Voluntary Liquidation and the Company is not being liquidated to defraud any person - In the instant case, the Board of Directors of the Company passed a resolution for voluntarily liquidating the Company. The Liquidator has filed a copy of Board Meeting dated 02.01.2018 wherein it was proposed to liquidate the company voluntarily. The Liquidator also filed the declaration of solvency by Directors Siddharth Kalidas Vedula, Archana Chepalli Raghunath and Dean Akio Shigenag, Directors have given their declaration of Solvency as Contemplated under Section 59(3) (a) of the Insolvency and Bankruptcy Code, 2016. The Liquidator has complied the Liquidation process as per the Provisions of Section 59 of the Code and also as per IBBI (Voluntary Liquidation Process) Regulations, 2017 and preferred this Application under Section 59(7) for seeking dissolution of the Company M/s. ALEXANDRIA SERVICES (INDIA) PRIVATE LIMITED . Therefore, it is a fit case to order dissolution of the said Company. The Company M/s. ALEXANDRIA SERVICES (INDIA) PRIVATE LIMITED stands dissolved with effect from 10.09.2020 - Petition allowed.
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Central Excise
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2020 (12) TMI 875
Excess availment of CENVAT credit - whether the appellant had taken excess CENVAT credit as arrived by the department, holding that it was paper transaction without or short receipt of raw materials? - Extended period of limitation - HELD THAT:- The value so arrived was compared with the value of raw material consumed as shown in the Balance Sheet of respective financial year. ER-1 return shows the amount of CENVAT credit taken on the quantity of raw material purchased and not on the quantity of raw material consumed. There is no provision for one to one correlation in CENVAT credit scheme - there is no other evidence on record like investigation from supplier of raw material, transporter or evidence of cash flow back or any inculpatory statement to substantiate that excess CENVAT credit taken was based on paper transaction i.e. without or short receipt of raw material against invoices. There is also no reference to any statutory provisions to justify/ support the said computation of excess CENVAT credit demanded in the instant case. Therefore the entire demand of excess CENVAT credit in the absence of any corroborative evidence is nothing but based on presumptions and is not permissible under the law. The Tribunal in the case of BEER BROS. VERSUS COMMISSIONER OF CENTRAL EXCISE, NEW DELHI-I [ 2015 (9) TMI 1439 - CESTAT NEW DELHI] held that charge of excess cenvat credit on the strength of balance sheet only is not sustainable. Extended period of limitation - HELD THAT:- In the present case, the entire demand is based on the audit objection and is alleged to have been detected only after the audit was conducted - The allegation of suppressing the facts from the department does not hold good in the event of periodic audit of the appellant as above. There is no other evidence in the impugned order to show that the appellant has willfully suppressed the facts from the department in order to evade payment of duty. As such extended period of limitation cannot be invoked in the present case. Appeal allowed - decided in favor of appellant.
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2020 (12) TMI 883
Validity of order passed by Appellate Tribunal - Violation of principles of natural justice - invocation of Rule 26 of the Central Excise Rules, 2002 - invocation of provision of Section 112(a) and Section 112(b) of the Customs Act, 1962 simultaneously - cross-examination of the Panchas and other witnesses, whose evidences are the bone of the entire findings of the Appellate Tribunal not allowed. HELD THAT:- Issue Notice to the respondent, returnable on 19th January 2021.
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2020 (12) TMI 856
Reversal of CENVAT Credit - clearance of sulphuric acid from the factory of the responden - demand raised under rule 6(3) of the CENVAT Credit Rules 2004 - Department entertained a view that sulphuric acid, cleared to the fertilizer units without payment of duty, is an exempted product and hence the respondent is liable to pay an amount in terms of rule 6(3)(i) of the Credit Rules - HELD THAT:- What is important to note is that for the demands raised under rule 6(3)(i) of the Credit Rules in respect of sulphuric acid for the earlier period, the Supreme Court in UNION OF INDIA OTHERS VERSUS M/S. HINDUSTAN ZINC LTD. [ 2014 (5) TMI 253 - SUPREME COURT] held that sulphuric acid is a by- product and there is no necessity to maintain separate records for the zinc concentrate used in the production of sulphuric acid and that rule 57CC does not talk about emergence of final product and a by-product. The judgment of the Supreme Court in UNION OF INDIA OTHERS VERSUS M/S. HINDUSTAN ZINC LTD. [ 2014 (5) TMI 253 - SUPREME COURT] was subsequently followed by the Tribunal in several cases, including that of the respondent in M/S. HINDUSTAN ZINC LTD. VERSUS CCE ST, UDAIPUR [ 2018 (2) TMI 1303 - CESTAT NEW DELHI] where it was held that Sulphuric Acid, which has emerged as a technical necessity, which is a by-product, cannot attract the provisions of the said Rule, as the same are applicable only to the final products . Thus, when the Tribunal rejected the contention of the Department regarding the distinction made between input and input service , it is not possible to accept the submission made by the learned authorized representative of the Department that the judgement of the Supreme Court in Hindustan Zinc Ltd. would not be applicable to the present case since it relates to input services and not inputs - appeal dismissed - decided against Revenue.
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2020 (12) TMI 878
Condonation of delay in filing appeal - opportunity to explain the delay not provided - respondents is that this submission is made because it is urged that the appeal is decided without opportunity to the petitioner and there is violation of the principles of natural justice - HELD THAT:- It appears rather indisputable that the petitioner is not heard by the first respondent, this Court is of the considered view that the impugned order could be quashed and the appeal could be restored on the file of the first respondent with liberty to the petitioner to file an application for condonation of delay, if such application is not already filed, and canvass for condonation of delay in filing the appeal while calling upon the first respondent to consider such application strictly in accordance with the provisions of the Central Excise Act, 1944 and the decisions on the jurisdiction to entertain the appeal beyond the proscribed period under the provisions of the Central Excise Act, 1944. Appeal is restored on the file of the Commissioner, Central Excise (Appeals-I), Bengaluru, the first respondents, for reconsideration with liberty to the petitioner to file an application for condonation of delay, if such application is not already filed, observing that the first respondent shall consider the same in accordance with the provisions of the Central Excise Act, 1944 and applicable law - petition allowed.
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2020 (12) TMI 846
CENVAT Credit - place of removal - input services relating to export of goods to Nepal upto and at the port, airport and land border Customs station by the appellant - requirement of Rule 2(l)(ii) of the Cenvat Credit Rules satisfied or not - HELD THAT:- In the instant case the documents on record evidences that the subject goods were exported under bond by the appellant on FOB basis. Further, all the said services were and had to be rendered and/or availed at or prior to the port of shipment premises. None of these services were or can be rendered after the said goods are removed from the port. They have to be rendered before the vessels containing the subject goods left the port, from where the removal of the said goods took place. In case of export consignments ownership transfer takes place through Bill of Lading and hence the exporter continues to be owner and holds the title to the goods till the respective export consignment is handed over to master of the vessel and goods are loaded on board the vessel and that all services rendered prior thereto were services upto the place of removal within the meaning of Rule 2(l)(ii) of the Cenvat Credit Rules. In the case of COMMISSIONER VERSUS DYNAMIC INDUSTRIES LTD. [ 2014 (8) TMI 713 - GUJARAT HIGH COURT] , the Hon ble Gujarat High Court has held that where exports are on FOB basis, place of removal is the port and not factory gate and hence since the impugned CHA, shipping agent and container services were utilised for purposes of export of final products and exporters could not do business without them, the service tax paid on these services availed was admissible. It has been further held that the words input services cannot be given restrictive meaning in view of the phrase means and includes used in Rule 2(l) of the Cenvat Credit Rules. The appellant has correctly availed of credit of the subject input services - Appeal allowed - decided in favor of appellant.
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2020 (12) TMI 845
Area Based Exemption - N/N. 33/99-CE dated 08.07.1999 - exemption on LPG and Solvex-GL - Whether the Commissioner(Appeals) is right in holding that Review Commissioner s view that Solvex-GL, being gas is excluded from sub-serial No.13(i) of the schedule to the Notification No.33/99 CE dated 08.07.1999 as amended, is eccentric, irrational and egregious? - HELD THAT:- Notification No.33/99 provides for exemption to goods specified in the schedule appended to the Notification and cleared from a unit located in the state of Assam or Tripura or Meghalaya or Mizoram or Nagaland or Arunachal Pradesh as the case may be, from so much of the duty of excise, leviable thereon, under any of the said acts as is equivalent to the amount of duty paid by the manufacturer of goods from the account current maintained under Rule9 read with Rule 173 G of the Central Excise Rules, 1944. On perusal of Schedule to the Notification at Sl.No.13, it is apparent that the exemption is available to the gas based intermediate products. Sub-Sl. No. 13(i) of the schedule relates to gas exploration and production. Whereas Sl.No.13 mentions about gas based inter-mediate products. Sub-Sl. No.(i) refers to gas exploration and production. It is evident that the schedule not only refers to certain products but also to certain processes. The only inference one can get is that the products generated in the processes mentioned are covered by the entry and are eligible for exemption. Going by the manufacturing process given by the respondents and not disputed by the Revenue, we find that Solvex GL is manufactured during the process of production of LPG gas which is subsequently bottled and sold. The exemption cannot be restricted to products which are formed in the gaseous stage alone for the reason that the exemption refers to gas based intermediate products and gas exploration and production. The correct interpretation of gas based products would go to include all the products which are produced in the processes of production of gas/LPG. The argument taken by the appellants appears to be farfetched for the reason that even LPG for which the exemption was extended by the department is also in the bottle and sold in the liquefied form. The Notification does not give any such interpretation. It is clear that the entry 13 of the schedule refers to certain products which are not gaseous in nature. The main heading gas based intermediate products has to include all the products intermediate or finally produced or occurring or manufactured in the process of exploration and production of gas. The distinction that the department is trying to bring in between liquids and gases is not acceptable. The Notification squarely covers the impugned product and the benefit of the same is available to the respondents - Appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2020 (12) TMI 886
Recovery of Tax Arrears - benefit of Section 31 of the IBC 2016 - before the annual return could be filed by M/s Bhushan Steel Limited, it appears that certain claim under Section 7 of Insolvency and Bankruptcy Code, 2016 was filed by the State Bank of India before the National Company Law Tribunal, New Delhi - HELD THAT:- The petitioner is not entitled to the benefit of Section 31, which was amended prospectively w.e.f. 16.08.2019, in so far as the tax arrears arising from the impugned assessment orders, are concerned. Put up in the additional cause list on 07.01.2021 at 2 P.M. for further hearing, along with records of Writ Tax No.1085 of 2018, Writ Tax No.697 of 2019, Writ Tax No.843 of 2019 and Writ Tax No.609 of 2020 - Before the next date fixed, the parties may also exchange affidavits.
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2020 (12) TMI 880
Exempt sales or not - demand notice challenged on the ground that it has been made after the lapse of six years from 30.06.2012 when the assessment for the year 2009-2010 was deemed to have been made as it is in contravention of the bar created in Section 27(1) as well as Section 84(1) of the TNVAT Act - HELD THAT:- It is clearly evident from the dictum laid down in the authoritative pronouncements in SALES TAX OFFICER ANR. VERSUS SUDARSANAM IYENGAR SONS [ 1969 (8) TMI 86 - SUPREME COURT] that for the purpose of reckoning limitation of six years from the date of assessment under the relevant provision of the TNVAT Act, what is crucial to be ascertained is that the re-assessment proceedings should have commenced within that time limit in order to be valid, and the date of its conclusion would be inconsequential. Having regard to that settled position of law, the notice for commencing re-assessment proceedings had been issued in the present case on 08.10.2018, which is beyond the period of six years from 30.06.2012 when the assessment was deemed to have been made. In that view of the matter, it is not possible to sustain the impugned Notice issued by the Respondent for re-assessment of tax liability of the Petitioner under the TNVAT Act and the same is quashed. Petition ordered.
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2020 (12) TMI 879
Maintainability of appeal - alternative remedy of petition was available - Petitioner did not prefer any appeal before the Appellate Authority, but has instead filed these Writ Petitions challenging the order passed by the Respondent beyond the maximum limitation period of 60 days 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 - Petition dismissed.
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Indian Laws
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2020 (12) TMI 884
Adequacy of Documents - Declaration of technical bid of the respondent No.5 submitted for settlement of M.G. Bazar Foreign Liquor Shop No.4 - HELD THAT:- This court cannot be oblivious of its jurisdictional limit in the matter of the judicial review - The court does not have omnibus powers to decide a decision on the merit of the decision of the competent authority. Its power is limited to examine the process to see whether the fair play principles at that stage was conformed to. The respondents No.1,2,3 4 cannot take a stand that they can depart from the standard by which they professed its action to be judged. They must scrupulously observe those standards on pain of invalidation of an act in violation of them. Thus, what the respondents No.1,2, 3 4 have asserted in their reply that the Clauses 4(ii) (iii) of the DNIT are not essential and mandatory in nature is not accepted by us. That plea is rejected. But we find that even if that plea is rejected, their decision may not be affected substantially. What we have observed that the respondent No.5 has clearly stated that he does not have the immovable property but the said respondent has submitted the statement in respect of the bank balance and the supporting documents issued by the Bank Manager of the bank where the respondent No.5 maintained his savings and there is no dispute that the said documents were duly notorized. What is required in terms of the Clauses 4(iii) of the DNIT is uploading of a no objection certificate from the owner of the building along with supporting documents duly attested by the Notary Public. It is an admitted fact that no objection certificate and touji record had been uploaded with the technical bid. Regarding the mismatch of number of touji is concerned, the official respondents have clarified their position by stating that there was a typographical mistake. When the document itself is present the tendering authority can waive such objection by taking into consideration the document itself. [15] So far the objection relating to Rule 26(3) of the Tripura Excise Rules is concerned, what is relevant is the present status of the building not what was earlier at the time of opening of the touji. Touji cannot be treated as a perennial document for status of the building - The official respondents did not accept the field inquiry report as that showed the premises as a whole to measured at 407.745 square feet and it was an RCC building. As such, no legal wrath did surface so far. Neither from the reply nor from the records so produced it can be gathered how the official respondents had dealt with the said observation as regards non-availability of any permission order in the physical verification report. This is a serious issue cannot be simply brushed aside - the challenge structured upon non-compliance of the requirement of Clauses 4(ii) (iii) of the DNIT is bound to fall through. But we cannot say that the official respondents had taken all relevant consideration for coming to that decision. The official respondents were bound to take a decision on the observation made by the filed verification committee, as reproduced, before opening of the financial bid inasmuch as the State cannot extend its patronage of any form to any illegal act in whatever form. Thus, they were under obligation to take a decision on the observation of the said designated committee in respect of non-production of the sanction for construction of the building as required under law. The non- production may mean absence of sanction of plan. In that event the construction is bound to termed as grossly unauthorized and the state patronage in the form of granting licence to run a foreign liquor shop should not have been extended. The respondent No.3 shall take a fresh call and decide on the observation made by the field verification committee as constituted by him. Till then the decision to grant the licnece to the respondent No.5 shall be put on hold. If the respondent No.3 arrived at a decision that the said construction relating to the proposed shop had been carried out unauthorizedly and there had been no sanction of plan for such construction on the date when the bid was uploaded in response to the DNIT, he shall take a decision appropriate in the circumstances - Petition disposed off.
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