TMI Tax Updates - e-Newsletter
December 27, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Principles of natural justice - validity of adjudication order - Exercising a jurisdiction in an irregular manner by an authority is different from exercising a jurisdiction by the authority having inherent jurisdiction. I do not find that the Authority, who has issued the show-cause-notice and passed the adjudication order, is having inherent lack of jurisdiction under the statute or he is not authorised to exercise the jurisdiction of adjudication in the case of the petitioners. If the petitioners are not satisfied with the impugned adjudication order or reasons according to petitioners in not sufficient or proper, it can be a case of appeal but not a case for invoking Constitutional writ jurisdiction under Article 226 of the Constitution of India. - HC
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GST:
Cancellation of registration of the petitioner - due to loss incurred, the taxes were not paid - the petitioner shall pay the amount in ten (10) equal installments to be paid on or before the 5th day of each month commencing from 15.01.2022 - As a consequence, let authorities restore the registration of the petitioner within two (02) weeks from the date of receipt of a copy of this order. Any default in repayment as per the schedule indicated would also automatically result in cancellation of the registration of the petitioner. - HC
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GST:
Violation of principles of natural justice - disallowance of input tax credit - This Court also feels that the matter can better be appreciated and gone into by the Appellate Authority which would be in a position to take a view with regard to issues raised by the petitioner in accordance with law after giving full opportunity of hearing to the petitioner - this Court is not inclined to entertain the writ petition for the present. - HC
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Income Tax:
Levy of penalty u/s 271(1)(c) - defective notice - Since it has been found that the show cause notice dated 12.02.2008 that was issued to the Assessee was vague and the penalty proceedings initiated on that basis were vitiated, it would not be necessary to answer substantial questions of law - Once it is found that the show cause notice dated 12.02.2008 issued to the Assessee was not in accordance with law, the orders passed thereon would automatic cease to operate. - HC
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Income Tax:
Reopening of assessment u/s 147 - net loss of cancellation of forward contract - When the primary facts necessary for assessment are fully and truly disclosed, the AO is not entitled on change of opinion to commence proceedings for reassessment. Even if the AO, who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the AO, who has decided to reopen assessment, is not competent to reopen assessment proceedings. - HC
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Income Tax:
Reopening of assessment u/s 147 - There is complete non application of mind on the part of Joint CIT, Range 5(3), Mumbai, while granting sanction under section 151 of Act. There is no prior sanction granted by Respondent No.2 before issuance of notice under Section 148 of the Act. Therefore, the jurisdictional condition of complying with Section 151 was not satisfied - HC
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Income Tax:
Lower deduction certificate u/s 197 - The reasons proceed only on the basis of the liability, if any, which may, or may not, be fastened upon another group company, i.e. CAT-9. That, by itself, cannot be a justification for denying the “Nil‟ rate certificates to the petitioner. The reasons now brought out by Mr. Agarwal do not form part of the reasons contained in the impugned order and the respondents are precluded from citing those as reasons to justify the impugned order issued to the petitioner. - HC
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Income Tax:
Deduction u/s 80P(2)(d) - Interest income earned by the Society comes with the category of income from other sources and Section 80P(2)(d) deals with the eligible deduction in this behalf. It has been held in the connected cases that the assessee is entitled to deduction of interest income earned from Co-operative Banks/Societies/ Federation registered under the Co-operative Societies Act and the income earned from Treasury is not included in Section 80P(2)(d) and is not entitled for deduction from computation of income. - HC
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Income Tax:
MAT computation u/s 115JB - Bad and doubtful debts inclusion to the book profits for computation of MAT liability u/s 115JB - Whether the ITAT has committed the gross error of law in not upholding the addition on account of the provision for doubtful debt made by the assessing officer to the book profit u/s. 115JB? - The case involves no substantial question of law. - HC
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Income Tax:
Exemption u/s 54 - assessee has invested in three residential house properties at three different places - scope of amendment - whether exemption is available in respect of one residential house or more than one? - Since there are favourable judgments in support of the contention raised by the assessee, therefore, we hold that assessee is eligible for claim of exemption u/s 54 in respect of purchase of 3 different residential houses and amendment brought in the Finance Act, 2014 w.e.f. 01.04.2015 will not be applicable in AY 2013-14. - AT
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Income Tax:
Addition on account of diversion of income / profit - there is no evidence to prove that this was some kind of sham arrangement of profits along with markup and secondly, catena of documents and evidences were filed that the said entity is working there and for which mark-up of 10% of management fees is given, therefore, it cannot be held that all those documents are bogus or sham without any material information on record. - AT
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Income Tax:
Revision u/s 263 - claim for deduction u/s 54B - the assessment order cannot be termed as “erroneous”. There is no material on record indicating that the appellant had not satisfied the conditions laid down under the provisions of the Act for claiming exemption u/s 54B of the Act. Therefore, the assessment order cannot be branded as “erroneous” and “prejudicial to the interests of the revenue”. - AT
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Income Tax:
Revision u/s 263 by CIT - as per CIT AO had failed to verify applicability of the provisions of Section 56(2)(viia) - As far as the invocation of Explanation 2 to Section 263 by PCIT in the present case is concerned, we are of the view that only in a very gross case of inadequacy in inquiry or where inquiry is per se mandated on the basis of record available before the AO and such inquiry was not conducted, the revisional power so conferred can be exercised to invalidate the action of AO. - AT
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Income Tax:
Exemption u/s 11 - Expenditure on distributing prize, Honorarium to jury, Event management expenses and Employee benefits - Whether expenditure incurred directly or indirectly in connection with the objects of the Trust? - there is no merit in the contention of the Ld.AO that the expenditure was held towards the routine activities of the trust and hence the same cannot be considered as utilised from the amounts accumulated u/s 11(2) towards a specific activity. - To treat only direct expenditure incurred as application for objects of the Trust would be too narrow a view. - AT
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Customs:
Provisional release of goods - import of Dry Dates - non-furnishing of Phytosanitary Certificate of country of origin - The two parallel proceedings cannot continue together. As the show cause notice dated 30.06.2021 has been issued beyond the time limit prescribed under Section 110(2) of the Act, therefore, the show cause notice dt. 30.06.2021 is barred by limitation and the goods are required to be returned to the appellant. As the Show Cause Notice dated 16.11.2021 is not the subject matter of the appeal, therefore, the Revenue is at liberty to adjudicate the show cause notice dt. 16.11.2021 in accordance with law. - AT
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IBC:
In the interest of justice the time spent till now before the Adjudicating Authority from the 2nd CoC Meeting till the date of this order should be excluded from calculating the period under Section 12 (1), (2) &(3) of the IBC - Since, the Committee of Creditors is reconstituted with the Financial Creditor M/s Bajaj Finance Limited and the Operational Creditor is not having any voting right in the CoC, the main prayer to permit them to change the Resolution Professional and refer the case to Insolvency and Bankruptcy Board of India (IBBI) for proposing the name of a new RP cannot be entertained, since they have no locus standi to do so. - Tri
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Service Tax:
Reversal of CENVAT Credit - capital goods or not - lease rentals - set top boxes and other CPE’s supplied to the consumers on the rental basis - In the absence of any specific statutory provision requiring such reversal along with absence of further availment of credit by any other assessee, it is held that the impugned order is erroneous in its presumption and in application of law. - AT
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Service Tax:
Invocation of extended period of limitation - Levy of interest u/s 75 and penalty u/s 78 - the appellant is working as a nodal agency for the Government Project(s) and are not a Commercial Organisation in the true sense. Further, there is no allegation of suppression or any falsification of the accounts. From the allegations and facts on record, it is observed that these are attributable to the clerical error and lack of proper reconciliation at the time of audit, and before the court below - the extended period of limitation is not invokable. Accordingly, penalty under Section 78 is set aside. - AT
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Central Excise:
CENVAT Credit - input service - transportation of employees by a manufacturer from their designated pick up points to their workplace, by Bus - The service provided was mere in the nature of personal service to its employees which is not permitted to be treated as “input service” - the substantial questions of law as framed are answered against the appellant - HC
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VAT:
Attachment of secured assets - recovery of sales tax dues - the secured creditor would have a first charge over an asset and the charge created in favour of the State of Maharashtra under Section 37 of the MVAT Act would be subject to the first charge created by the Central Legislation namely, Section 26-E of the SARFAESI Act. - In view of this settled legal position and in the background of the facts established in this case, the action initiated by the respondent Nos.1, 2 and 3 to the extent of two properties cannot be sustained. - HC
Articles
Notifications
News
Case Laws:
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GST
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2021 (12) TMI 1102
Maintainability of petition - non-compliance with the requirement of pre-deposit - petitioner has strenuously argued that the aspect of hardship has not been considered by the Tribunal and the High Court - HELD THAT:- The order passed by the High Court is examined whereby the exercise of discretion the Tribunal has not been interfered with by the High Court. There are no reason to entertain this petition under Article 136 of the Constitution of India. Therefore, this petition seeking special leave to appeal is required to be dismissed - petition seeking special leave to appeal is dismissed.
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2021 (12) TMI 1101
Principles of natural justice - validity of adjudication order - appealable order - main ground of challenge of the impugned adjudication order by the petitioners is that though the impugned adjudication order is appealable but the same is without jurisdiction and there is violation of principle of natural justice by not affording them opportunity of hearing - HELD THAT:- It is a settled law that opportunity of hearing may be afforded either by way of allowing the petitioners to make any written representation for their case or it may be by allowing personal hearing and in this case petitioners were allowed to make written representation/objection and when petitioners have not asked for personal hearing and petitioners have not been able to show any provision of relevant laws mandating the authority to give personal hearing, question of violation of principles of natural justice does not arise in this case. It is relevant to note that Section 75(4) of the GST Act simply says about hearing and not about personal hearing. Exercising a jurisdiction in an irregular manner by an authority is different from exercising a jurisdiction by the authority having inherent jurisdiction. I do not find that the Authority, who has issued the show-cause-notice and passed the adjudication order, is having inherent lack of jurisdiction under the statute or he is not authorised to exercise the jurisdiction of adjudication in the case of the petitioners. If the petitioners are not satisfied with the impugned adjudication order or reasons according to petitioners in not sufficient or proper, it can be a case of appeal but not a case for invoking Constitutional writ jurisdiction under Article 226 of the Constitution of India. It is also not a case where the petitioners are remediless against the impugned adjudication order; Forum for statutory alternative remedy is already available to the petitioners. Petition dismissed.
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2021 (12) TMI 1100
Maintainability of petition - appeal preferred under Section 107 of the Central Goods and Services Tax Act, 2017 - petitioner has failed to deposit 10% of the remaining tax amount required to be made mandatorily under clause(b) of sub section(6) of Section107 of the Act - HELD THAT:- It is evident that while preferring an appeal against the order passed by the respondent No.4-Assistant Commissioner, State Taxes, Circle-4, Durg, 10% of the remaining amount of tax in dispute arising for the said period was required to be deposited. However, the petitioner has admittedly not complied with the same - there are no infirmity in the order impugned. The order impugned as passed by the respondent No.3-Joint Commissioner, State Taxes, Durg, is appealable one as statutory appeal is provided under Section 112 of the Act of 2017 before the Appellate Tribunal and without filing the said remedy, the instant petition has been filed, which is rather pre-matured in nature and deserves to be rejected. Petition disposed off.
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2021 (12) TMI 1099
Cancellation of registration of the petitioner - due to loss incurred, the taxes for the period from December, 2017 to December, 2018 could not be paid which was compounded due to non-receipt of incentives by the State Government - HELD THAT:- For serving the larger ends of justice and balancing equities, moreso, in view of the fact that, if the industry starts functioning, it would be in a position, both to satisfy the demand of the respondents as also generate business and to pay future taxes and equally give employment to the workers, the Court is inclined to allow the petitioner to pay the amount as would be quantified by the respondents in ten (10) equal installments. Let respondent no.2 quantify the actual amount which the petitioner is required to pay with regard to penalty and interest and indicate the same to the petitioner within two weeks. Upon doing so, the petitioner shall pay the amount in ten (10) equal installments to be paid on or before the 5th day of each month commencing from 15.01.2022 As a consequence, let authorities restore the registration of the petitioner within two (02) weeks from the date of receipt of a copy of this order. Any default in repayment as per the schedule indicated would also automatically result in cancellation of the registration of the petitioner. - petition disposed off.
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2021 (12) TMI 1098
Violation of principles of natural justice - disallowance of input tax credit - petitioner submitted that the said Assessment Order is absolutely illegal as far as the petitioner is concerned, since it has been passed ignoring the documents filed by the petitioner - HELD THAT:- Though learned counsel for the petitioner has raised issues which require consideration, but since the same are based on facts which are still not admitted or proved, the exercise has to be gone into initially with regard to the factual aspect of the matter and thereafter only the law can be applied once such factual aspects are clear before the concerned authority or the Court. This Court also feels that the matter can better be appreciated and gone into by the Appellate Authority which would be in a position to take a view with regard to issues raised by the petitioner in accordance with law after giving full opportunity of hearing to the petitioner - this Court is not inclined to entertain the writ petition for the present. Petition disposed off.
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Income Tax
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2021 (12) TMI 1096
Validity of reopening of assessment u/s 147 - reassessment argued on non application of mind while granting the sanction under Section 151 of the Act and facts as recorded in the reasons are not correct - HELD THAT:- We are of the view that even in cases where the return of income has been accepted by processing u/s 143(1) of the Act, reopening of an assessment can only be done when the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment. The mere fact that the return has been processed under Section 143(1) of the Act, does not give the AO a carte blanche to issue a reopening notice. Condition precedent of reason to believe that income chargeable to tax has escaped assessment on correct facts, must be satisfied by the Assessing Officer so as to have jurisdiction to issue the reopening notice. In the present case, the Assessing Officer has proceeded on fundamentally wrong facts to come to the reasonable belief/conclusion that income chargeable to tax has escaped assessment. Further, even when the same is pointed out by the Petitioner, the AO in his order disposing of the objection does not deal with factual position asserted by the Petitioner. Thus, it would be safe to conclude that the Revenue does not dispute the facts stated by the Petitioner. On the facts as found, there could be no reason for the AO to believe that income chargeable to tax has escaped assessment. It is settled law as held by the Division Bench of this court in German Remedies Ltd. vs. Deputy Commissioner of Income Tax [ 2005 (10) TMI 76 - BOMBAY HIGH COURT] that while granting approval it was obligatory on the part of the Principal Commissioner of Income Tax to verify whether there was any failure on the part of the assessee to disclose full and true relevant facts in the return of income filed for the assessment of income of that assessment order. The impugned notice and consequential order justifying reasons recorded are unsustainable The impugned notice and consequential order justifying reasons recorded are unsustainable - Decided in favour of assessee.
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2021 (12) TMI 1095
Application u/s 197 - withholding tax at source - TDS u/s 195 of the Act @4% keeping in the interest of Revenue - application for NIL deduction directing the customers of the Petitioner to withhold tax @ 10% is arbitrary and no reason has been given in the order for arriving at such a conclusion - HELD THAT:- As directed to deduct TDS @ 10% on the entire amount. There is no reasoning as to how the rate finally granted has been arrived at. The Impugned Order does not take into account the impact, if any, of the amendment carried out to section 10(50) of the Act by Finance Act 2021 w.e.f. 01-04-2021. The said amendment states that the amounts taxable as royalty/fees for technical services under the Act read with section 90/90A of the relevant double taxation avoidance agreement [DTAA] will not be exigible for being considered for the charge of Equalisation Levy. Petitioner in its application for certificate under section 197 dated 23.09.2021 describes itself as an e-platform operator. In the later part of the same application the petitioner claims itself to be a university for the purposes of article 12(5)(c) of the DTAA between India and United States of America. The AO, in the Impugned Order holds the Petitioner is not eligible for the benefit of article 12(5) (c) of the DTAA. However, the Impugned Order does not contain any reasoning or discussion on the applicability or otherwise of various sub-articles of the DTAA to the fact situation of the case. Consequently, the impugned order dated 27.09.2021 is hereby set aside with a direction to the Respondent No. 1 to pass a de novo reasoned order after taking into account the amendments made to the provisions of section 10(50) of the Act w.e.f. 01.04.2021 i.e. to exclude the receipts of the Petitioner which is subject to withholding tax at source to the extent such receipts are exigible to Equalisation Levy within a period of 4 weeks after granting opportunity of being heard to the petitioner. It will be incumbent upon the petitioner to furnish to the Assessing Officer the information required by the Assessing Officer expeditiously
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2021 (12) TMI 1094
Levy of penalty u/s 271(1)(c) - defective notice - unexplained cash - as argued assessee had offered income in order to buy peace and avoid litigation even though no such income is assessable at the hands of assessee - HELD THAT:- Issuance of such show cause notice without specifying as to whether the Assessee had concealed particulars of his income or had furnished inaccurate particulars of the same has resulted in vitiating the show cause notice. Heavy reliance was placed by the learned counsel for the Revenue on the decision in Mak Data Private Limited [ 2013 (11) TMI 14 - SUPREME COURT] to urge that the penalty contemplated by Section 271 (1) (c) of the said Act was in the nature of civil liability and mens rea was not essential therein. The Full Bench having considered these decisions and having answered the question as regards defect in the notice under Section 271(1)(c) of the said Act resulting in vitiating the penalty proceedings, we find ourselves bound by the answers given by the Full Bench. It would not be permissible for us to disregard this aspect and take a different view of the matter. Accordingly substantial question of law no. III is answered by holding that since the show cause notice dated 12.02.2008 does not indicate whether there was concealment of particulars of income or furnishing of incorrect particulars of such income, the same would vitiate the penalty proceedings. Since it has been found that the show cause notice dated 12.02.2008 that was issued to the Assessee was vague and the penalty proceedings initiated on that basis were vitiated, it would not be necessary to answer substantial questions of law as framed at serial nos. I and II. This is for the reason that the said substantial questions pertain to the merits of the adjudication of the proceedings under Section 271(1)(c) - Once it is found that the show cause notice dated 12.02.2008 issued to the Assessee was not in accordance with law, the orders passed thereon would automatic cease to operate. - Decided in favour of assessee.
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2021 (12) TMI 1093
Reopening of assessment u/s 147 - net loss of cancellation of forward contract - HELD THAT:- At Schedule 31 in profit and loss account shows a figure of ₹ 1070.42 Lakhs as 'net loss of cancellation of forward contract'. Note 40 which forms part of financial statement also mentions about company entering into derivative contract in the nature of forward contract etc. and the company does not use foreign exchange contract for speculative purpose. All these details were available before the AO who passed the Assessment Order dated 28/03/2015. Between the date of order of assessment sought to be re-opened and the date of formation of opinion by the Assessing Officer, nothing new has happened. It is merely a fresh application of mind by a different AO to the same set of facts. When the primary facts necessary for assessment are fully and truly disclosed, the AO is not entitled on change of opinion to commence proceedings for reassessment. Even if the AO, who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the AO, who has decided to reopen assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the AO it would not be open to reopen the assessment based on the vary same material with a view to take another view. - Decided in favour of assessee.
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2021 (12) TMI 1092
Reopening of assessment u/s 147 - Reason to believe - loan given by Petitioner to its foreign subsidiary at 11% p.a. rate of interest and claim of depreciation of goodwill from an amalgamating company - HELD THAT:- As loan given by Petitioner to its foreign subsidiary at 11% p.a. rate of interest and claim of depreciation of goodwill from an amalgamating company. Both these details were made available to the Assessing Officer who had passed the order of assessment sough to be re-opened. As regards loan to a subsidiary, during the assessment proceedings, a letter dated 07/10/2016 was addressed by Petitioners Chartered Accountant to the Assessing Officer where the details of the loan given to its overseas subsidiary and rate of interest charged have been provided. Petitioner, in its statement giving details of disallowances made, also has stated that for AY 2012-13 and AY 2013-14, there was disallowance on account of depreciation of goodwill. Notwithstanding that the Assessing Officer has allowed depreciation of goodwill for AY 2014-15. As held by Apex Court in the case of Indian Eastern Newspaper Society, New Delhi Vs. Commissioner of Income Tax, New Delhi [ 1979 (8) TMI 1 - SUPREME COURT] even if it is an error that the Assessing Officer discovered, still an error discovered on a re-consideration of the same material does not given him power to re-open. When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment. Even if the AO, who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the AO, who has decided to reopen assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the vary same material with a view to take another view. In the circumstances, we are satisfied it is nothing but change of opinion. - Decided in favour of assessee.
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2021 (12) TMI 1091
Reopening of assessment u/s 147 - validity of grant of sanction u/s 151 - HELD THAT:- It is clear from the digital signature on the notice issued by Respondent No.1 that the notice was issued at 2.40 p.m. on 31/03/2019. The sanction by the authority under Section 151 was digitally signed at 2.55 p.m. on 31/03/2019. The explanation furnished by Respondent No. 1 in the order of disposing of objections that initially physical approval was granted and thereafter online approval was granted has not been supported by any material on record. We fail to understand the need to grant online approval at 2.55 p.m. if physical approval was already granted before 2.40 p.m. In the absence of valid explanation by cogent material, we cannot accept explanation by Respondent No.1 in the order of disposing of objections that physical approval was granted before issuance of notice u/s 148. There is complete non application of mind on the part of Joint CIT, Range 5(3), Mumbai, while granting sanction under section 151 of Act. There is no prior sanction granted by Respondent No.2 before issuance of notice under Section 148 of the Act. Therefore, the jurisdictional condition of complying with Section 151 was not satisfied, resulting in Respondent No.1 committing the error of jurisdiction by issuing notice under Section 148 of the Act calling for interference under Article 226 of the Constitution of India. There is complete non application of mind on the part of Joint CIT, Range 5(3), Mumbai, while granting sanction under section 151 of Act. There is no prior sanction granted by Respondent No.2 before issuance of notice under Section 148 of the Act. Therefore, the jurisdictional condition of complying with Section 151 was not satisfied, resulting in Respondent No.1 committing the error of jurisdiction by issuing notice under Section 148 of the Act calling for interference under Article 226 of the Constitution of India.
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2021 (12) TMI 1090
Reopening of assessment u/s 147 - Notice issued after the expiry of four years - addition u/s 14A - HELD THAT:- No indication that there was any failure on the part of petitioner to truly and fully disclose any material fact. Simply using the words as there is a failure on part of assessee to disclose fully and truly all material facts necessary for its assessment during the year under consideration would not help. These are nothing but bald averments. A failure has to be spelt out in the reasons recorded. Respondents have failed in that. The entire basis for reopening is that provisions of Section 14A and Rule 8D with regard to dividend income was attracted but while completing the scrutiny assessment no mention is made for the same. During the assessment proceedings, after petitioner filed its revised return of income on 29th March 2014, respondent no.1 issued notice under Section 142(1) of the said Act on 17th September 2014. Among other queries, respondent no.1 specifically inquired about the details of dividend income earned and computation of expenses incurred on earning this income as per the provisions of Rule 8D. Petitioner, in its reply dated 24th September 2014 to the notice issued under Section 142(1) of the said Act, has specifically addressed the query with regard to dividend income. Petitioner has stated that the amount of dividend income is exempt so it is not included in computation as taxable income. As far as Rule 8D was concerned, petitioner has submitted that the company is taxable as per the tonnage tax scheme and thereby, it is not claiming any expenditure, viz.-aviz., the exempt income and hence, Rule 8D was not applicable. After considering these submissions of petitioner, the original assessment order under Section 143(3) of the said Act was passed on 28th January 2015. Respondent no.1 has, therefore, applied his mind with regard to petitioner's dividend income while passing the assessment order under Section 143(3) for Assessment Year 2012-2013. We find that the notice has been issued without proper jurisdiction. It is not permissible for respondents to change its opinion based on the same set of facts. In our view, this petition has to be allowed and is hereby allowed - Decided in favour of assessee.
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2021 (12) TMI 1089
Petition under the Direct Tax Vivad Se Vishwas Act, 2020 (the DTVSV Act) - time limit for filing the appeal - appeals which have been filed before the ITAT on behalf of deceased Kalyanji Bhaga - HELD THAT:- Revenue is not denying the fact that the task force was created on two occasions and notwithstanding the appointment of task force, petitioner s were not able to get documents on time because of various organisational changes in the department. In the reply it is stated that in the absence of any material or documents in the Writ Petition, no credence could be given to the averment that the Task Force apparently constituted in the course of recovery proceedings appointed by Respondent No.2 could not provide a copy of the order passed by CIT (A) in September, 2011. Certainly, if only the affiant had gone through the files, he would have noted the notings in the file and he could have filed copy of the notings or the order sheets in the file, if according to him petitioner s averment in the petition was not correct. Respondents cannot simply skirt their responsibility by putting onus on petitioner to provide some documents constituting the task force. Therefore, from the facts as narrated above, we find that the time for filing the appeals against the order of CIT (A) had not expired as on the date of filing the declaration. The rejection of the declaration by petitioner under the DTVSV Act is not correct. We hope the authorities will keep in mind the objective of the DTVSV Act, which is the Act to provide for resolution of disputed tax and for matters concluded there with or incidental thereto. Here is the legal heir who wants to put an end or wants of closure to all the disputes between the deceased Kalyanji Bhagat who was his father and the tax authorities. We fail to understand why Revenue is rejecting these declarations without properly considering the facts and circumstances of the case.
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2021 (12) TMI 1088
Interest charged u/s 220 - Settlement Commission order under Section 245D(4) - HELD THAT:- The effect of the first proviso to sub-Section (2) to Section 220 will be that the amount on which the interest is payable under sub-Section (2) of Section 220 will get modified according to the Appellate order. As seen from the proviso to sub-Section (2) of Section 220, there can be variation in charging interest if ultimately due to the result of Appellate order, the liability to pay the original amount on which interest is levied under Section 220 ceases, accordingly, the Assessee needs to be given the benefit of reduction in interest resulting in reduced payment of interest. In the facts of the present case, CIT(A)(VI), Bombay, by order dated 30/03/1995, directed the Assessing Officer to withdraw the investment allowance granted under Section 32A of the Act. Accordingly, demand notice under Section 156 of the Act came to be issued to Respondent No.1. The said amount of interest on investment allowance under Section 32A was directed to be waived by order dated 05/06/1998 by the Settlement Commission. Petitioners therefore filed an application for recalling the order dated 05/06/1998, which by the impugned order was rejected. The issue involved in the present Petition is restricted only to the liability of Respondent No.1 to pay interest under Section 220 of the Act on the amount of set off of brought forward investment allowance. As per proviso to sub-Section (2) of Section 220 of the Act, once the amount on which interest was charged gets extinguished, consequently the liability of Respondent No.1 to pay interest on said amount will also be extinguished. Mr. Walve is right in submitting that as per Section 245(i) of the Act, the order passed by Settlement Commission is conclusive and binding on all authorities under the Act. But in our opinion, it is not necessary to go into said issue, since the result of the order passed is to extinguish the liability of Respondent No.1 to pay the amount on which the interest was charged under Section 220 of the Act, interference under Article 226 which is discretionary, would result into the revival of illegality. We are therefore of the view that interference by this Court in the present Writ Petition would result in direction to Respondent No.1 to pay interest on an amount which had been extinguished due to the Judgment and consequently will result into miscarriage of justice. The power under Article 226 needs to be exercised to prevent miscarriage of justice. It will be exercised only in furtherance of interest of justice and not merely on the making out of a legal point.
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2021 (12) TMI 1087
Expenditure on replacement of dies and moulds allowed as current repairs - HELD THAT:- As decided in M/S. TVS MOTORS LIMITED [ 2014 (2) TMI 522 - MADRAS HIGH COURT] Expenditure on replacement of dies and moulds are to be allowed as cur rent repairsReplacement of the new dye in the place of old dye would qualify for current repairs under Section 31 of the Act - The decision in CIT Vs. Sri Mangayarkarasi Mills P.Ltd[ 2009 (7) TMI 17 - SUPREME COURT] followed - what is allowable as revenue expenditure under Section 37 of the Act are those expenditure other than one falling for consideration under Sections 30 to 36 of the Act - when the picture tube in a television set is replaced, such repairs would come within the connotation of the phrase current repairs thus, the claim being considered as current repairs, the same would fall under Section 31 of the Act as current repairs - Decided against revenue.
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2021 (12) TMI 1086
Reopening of assessment - Addition u/s 68 - Nature of addition made in order u/s 143(3) r.w.s. 147 - ITAT has observed that the transaction recorded in the books of accounts in the regular course of business is to be accepted as true and correct unless there is a strong evidence to rebut the same and the burden of proof that the transaction is not genuine is on the person who alleges so - HELD THAT:- No substantial question of law is involved in the instant appeal. ITAT has observed that the transaction recorded in the books of accounts in the regular course of business is to be accepted as true and correct unless there is a strong evidence to rebut the same and the burden of proof that the transaction is not genuine is on the person who alleges so. ITAT has further held that the existence of M/s Swift Tie Up Pvt. Ltd. is not disputed. Without bringing any adverse evidence on record, simply on assumptions and presumptions, has held that the transactions of the assessee with M/s Swift Tie Up Pvt. Ltd. are bogus. The ITAT has also observed that the determination of income of ₹ 2,43,59,629/- made by the Assessing Officer is hypothetical and there is no basis for the said determination. The ITAT has held that the Assessing Officer has erred in not allowing the loss of ₹ 11,75,857/- to the assessee as of NCDEX/MCX loss. It was held that the CIT(A) has rightly allowed the said loss to the assessee in the facts and circumstances of the case. ITAT has further observed that the CIT(A) has rightly deleted the addition of ₹ 75,00,000/- to the assessee made under Section 68 as transaction between the assessee and M/s Swift Tie Up Pvt. Ltd. is clearly evident from the documentary evidence produced by the assessee. The ITAT has also upheld the deletion of disallowance donation expenses and disallowance expenses claimed in the P L account by the CIT(A). On a careful scrutiny of the material available on record, the findings recorded by the appellate authorities, we are of the opinion that in the facts and circumstance of the case, the evidence has properly been appreciated by the CIT(A) as well as the ITAT and in the absence of any clinching adverse evidence on record, the said finding of facts are not liable to be interfered with. - Decided against revenue.
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2021 (12) TMI 1085
Lower deduction certificate u/s 197 - Applications u/s 197 for Nil‟ rate of withholding tax as per under Articles 8 and 12 of the India Ireland Double Taxation Avoidance Agreement ( Tax Treaty‟), they were liable to pay tax only in Ireland - HELD THAT:- We find force in the submission of Mr. Jolly that the aspects which the Assessing Officer is obliged to take into consideration, while considering an application under Section 197 of the Act, have not at all been adverted to. The reasons proceed only on the basis of the liability, if any, which may, or may not, be fastened upon another group company, i.e. CAT-9. That, by itself, cannot be a justification for denying the Nil‟ rate certificates to the petitioner. The reasons now brought out by Mr. Agarwal do not form part of the reasons contained in the impugned order and the respondents are precluded from citing those as reasons to justify the impugned order issued to the petitioner. We, accordingly, quash and set aside the impugned order dated 07.09.2021 and remand the matter back to the Assessing Officer, who may pass a fresh order within four weeks from today. The petitioner is directed to provide whatever relevant information is called for by the Assessing Officer without any delay, so that the order is passed within the time frame fixed by us. In the interim, the petitioner will be entitled to avail of the Nil rate of withholding Tax, as has been the position in the past several years consistently.
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2021 (12) TMI 1084
Deduction u/s 80P(2) - AO claimed inclusion of interest income earned by the assessee from the deposit of idle funds with co-operative bank and treasury treating the said income as business income falling within the admissible ambit of deduction u/s 80P(2) (a)(i) - AO treated the interest income as income from other sources and also that the interest income does not come within the purview of Section 80P(2)(d) - HELD THAT:- Substantial question covered by the judgment of the Supreme Court in Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] the assessee since is a registered Co-operative Society and the deduction claimed is interest earned from loans lent to members and amount invested with Co-operative Bank and Treasury, so the threshold eligibility of deduction is admissible to assessee and accordingly the income earned by way of interest from members is eligible for deduction under Section 80P(2)(a)(i) of the Act. Accordingly the questions can be answered against the Revenue and in favour of the assessee. Statement is placed on record. Substantial question nos.1 to 4 are answered in favour of the assessee and against the Revenue. Interest income earned from the deposits the assessee has made with District/State Cooperative Banks and Treasury - Whether the interest income earned by the assessee from the deposits made with District/State Cooperative Banks and Treasury, firstly, would fall as business income of the assessee, and, alternatively, whether the interest income is eligible for deduction under Section 80P(2)(d)? - HELD THAT:- Supreme Court in Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] on the construction of Section 80P(2)(a)(i) read with sub-section 4 of Section 80P. Now provision in Section 80P(2)(a)(i) is read without reference to an activity viz. Primary Agriculture etc. It is noted that Section 80P provides for deduction in respect of income of Co-operative Societies and Section 80P(2) allows a straight deduction from the computation of total income of the assessee/Co-operative Society to the extent mentioned in respect of incomes referred therein. Under Section 80P(2)(a)(i) the whole of profits and gains from business of banking or providing credit facilities to the members of the Society is entitled to deduction. Clauses (ii) to (vii) are unnecessary for the purpose of this judgment, hence not included in the narrative. A Division Bench of High Court of Telangana and Andhra Pradesh in Vavveru Co-operative Rural Bank Ltd [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] has succinctly tabulated the Societies and the benefits to which each one of the category of Societies is entitled to. In the case on hand, there is no dispute that it is not from a Co-operative Society registered under Kerala Co-operative Societies Act. The interest income earned from District Co-operative Bank/State Co-operative Bank, in the facts and circumstances of the case, do come within Section 80P(2)(d). Therefore, the income constitutes income from other sources and the only eligible deduction is covered by Section 80P(2)(d) viz. Interest or dividend derived by the assessee from its investments with any other Co-operative Society. The source of interest income is from Bank and Treasury, interest income received from Treasury be included in the computation of total income of the assessee. In other words, interest earned from Treasury is inadmissible for deduction and interest income from Co-operative Societies registered under the Kerala Co-operative Societies Act are eligible for deduction. The contra consideration of Commissioner of Income Tax (Appeals) and the Tribunal is incorrect and liable to be modified as stated above. Hence, it is held that the interest income earned by the assessee does not come within the ambit of Section 80P(2)(a)(i) and permissible deduction of interest income is limited to Co-operative Societies/Banks registered under Kerala Co-operative Societies Act under clause (d) of the Act and effect order on the above lines is made by the Assessing Officer. The questions are accordingly answered. Deduction u/s 80P(2)(d) - Interest income earned by the Society comes with the category of income from other sources and Section 80P(2)(d) deals with the eligible deduction in this behalf. It has been held in the connected cases that the assessee is entitled to deduction of interest income earned from Co-operative Banks/Societies/ Federation registered under the Co-operative Societies Act and the income earned from Treasury is not included in Section 80P(2)(d) and is not entitled for deduction from computation of income.
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2021 (12) TMI 1083
Reopening of assessment u/s 147 - deduction claimed under Section 10B,deduction under Section 80HHC - HELD THAT:- We find that the appellant wanted extension of time for the respondent to pass appropriate orders, since the appellant was in the process of collating details of all pending litigations, which were initiated/pending prior to the acquisition of the appellant company by Ms/.Dhanuka Laboratories Ltd. This petition was considered and the learned Single Bench extended the time and subsequently, the appellant had filed this appeal before this Court and the appeal was not numbered immediately because, change of cause title has to be ordered and when the appeal was in the process of being numbered, it appears that the appellant had made an oral mention before the learned Single Bench for further extension of time. From the affidavit filed in support of the Miscellaneous Petition, seeking extension of time, which was filed during July 2021, we find that the appellant was agreeable to cooperate in the proceedings before the respondent The appellant cannot be of disadvantageous position, if they are not permitted to canvass the issue regarding validity of the reopening proceedings more so when, the learned Writ Court has not out rightly rejected the contentions raised by the appellant questioning the validity of the reopening. We had appreciated the said submission of the learned counsel for the appellant, as observed, a prima facie finding has been recorded by the learned Writ Court, but we do not find any conclusive finding on the validity of the reopening of the assessment after taking note of the objections, which have been raised by the appellant questioning the reopening. Therefore, we are of the view that the appellant should not be put to prejudice while filing an appeal before the CIT(A) as against the assessment order wherein, they should be permitted to also raise the issue regarding the validity of the reopening, which can be decided by the CIT(A) as first among the several issues. For such reason, we are inclined to vacate all findings, which have been recorded by the learned Single Bench touching upon the validity of the reopening proceedings. Writ appeal is partly allowed and the observations and findings recorded by the learned Single Bench touching upon the validity of the reopening of the assessment are vacated and the appellant is granted liberty to file appeal before the Commissioner of Income Tax (Appeals) questioning the correctness of the assessment order dated 01.10.2021 canvassing all factual and legal grounds including the validity of the reopening of the assessment and in the event, the appellant does so, the CIT(A) shall consider the issue relating to the validity of the reopening as first among the several issues, which may be raised before the said authority
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2021 (12) TMI 1082
Proceedings u/s 220 (2A) - applications for waiver of interest levied on the tax demanded from the appellant by the respondents - HELD THAT:- We are of the view that the report of Assessing Officer is considered or would be constituting the basis for recording the reasons under sub-section (2A) of Section 220 of the Act, or for rejecting the applications of appellant, it would be in the fitness of things as well as would be conforming to the requirement of affording an opportunity of being heard, if a copy of Assessing Officer's report is also made available to the representative of the assessee or to the assessee. Upon such copy being made available to the assessee or his representative, the effectiveness with which the assessee would have presented a case before the second respondent is different from presenting the case without a copy of the report submitted by the Assessing Officer or appreciating the circumstances stated against the assessee. After perusing the operative portion of the order impugned in Ext.P11 series, we are of the view that the case of appellant under sub-section (2A) of Section 220 of the Act has not been considered in the manner in which the jurisdiction has been conferred on the second respondent and for the said reason alone, orders in Ext.P11 series are liable to set aside and accordingly set aside. Writ appeal is allowed by this Judgment, by setting aside the judgment of learned Single Judge - Matter remitted to second respondent for consideration and disposal afresh in accordance with law. The second respondent on receipt of a copy of this judgment, furnishes a copy of Assessing Officer s report within two weeks thereafter to the assessee by Registered Post Acknowledgment Due/EMS speed post.
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2021 (12) TMI 1081
MAT computation u/s 115JB - Bad and doubtful debts inclusion to the book profits for computation of MAT liability u/s 115JB - Whether the ITAT has committed the gross error of law in not upholding the addition on account of the provision for doubtful debt made by the assessing officer to the book profit u/s. 115JB? - HELD THAT:- Judgment laid down by the Full Bench in case of Vodafone Essar Gujarat Limited [ 2017 (8) TMI 451 - GUJARAT HIGH COURT] relied upon by the ITAT in the impugned order, wherein the issue with regard to the bad and doubtful debts to the book profits for computation of MAT liability in the light of the Explanation (1) to section 115JB of the Act was considered. The issue having already been duly considered by the ITAT following the decision of the Full bench of this Court, the Court is of the opinion that the question proposed by the appellant in the present Appeal could not be said to be substantial question of law within the meaning of Section 260A of the said Act. It may be noted that the Appeal under Section 260A could be admitted only on the High Court being satisfied that the case involves a substantial question of law.
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2021 (12) TMI 1080
Estimation of income - bogus purchases - HELD THAT:- Assessee was indulged in obtaining accommodation entries/ bogus purchases and had not cooperated before the A.O. by providing the relevant details, some addition has to be made. However, 25% of the bogus purchases estimated by the Ld. CIT(A) under the facts and circumstances of this case appears to be on higher side - restrict the same to 12.5% of the bogus purchases made by the assessee which is to be added to the total income of the assessee. Thus, the order of the Ld. CIT(A) is modified and addition is restricted to 12.5% of the bogus purchases - Decided in favour of assessee in part .
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2021 (12) TMI 1079
Exemption u/s 54 - assessee has invested in three residential house properties at three different places - scope of amendment - whether exemption is available in respect of one residential house or more than one? - case of the assessee is that the expression a residential house is to be understood in a sense that the building should be residential one and the word a residential should not be construed as a singular number - HELD THAT:- As decided in SYED ALI ADIL [ 2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT] Even after the amendment of Section 54 and 54F, providing for exemption from long-term capital gains tax, only if the investment is made in one residential house property, one can still invest in more than one house and claim the lax: exemption, provided the taxpayer can prove that all such flats are used as a single residential nit by the family, in the abovementioned case, two residential units were purchased, which were separated by a strong wall and were purchased from two different vendors under two separate Sale deeds - The exemption was still granted to the tax payer, because both the flats were capable of being used as a single residential unit. Therefore the letter 'a' in the context it is used should not be construed as meaning singular. But, being an indefinite article, the said expression should be read in consonance with the other words 'buildings' and 'lands' and, therefore, the singular 'a residential house' also permits use of plural by virtue of Section 13(2) of the General Clauses Act. Since there are favourable judgments in support of the contention raised by the assessee, therefore, we hold that assessee is eligible for claim of exemption u/s 54 in respect of purchase of 3 different residential houses and amendment brought in the Finance Act, 2014 w.e.f. 01.04.2015 will not be applicable in AY 2013-14. - Decided in favour of assessee.
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2021 (12) TMI 1078
Addition u/s 68 - sale of Quoted shares of Premiere Capital Services Limited by relying on various third party documents and statement of third parties - Addition u/s.69 towards the commission paid to entry provider - HELD THAT:- As relying in the case of Shri Amit Mafatlal Shah [ 2020 (4) TMI 894 - ITAT MUMBAI] are neither able to persuade ourselves to subscribe to the adverse inferences drawn by the lower authorities in respect of the share transactions of the assessee by referring to the stand alone statement of Sh. Mukesh Choksi, as the same as observed by us hereinabove, suffer from serious infirmities, and as such cannot be summarily accepted, nor are able to dislodge the genuineness of the purchase and sale of shares which we find had been duly substantiated by the assessee on the basis of material made available on record, which we find had not been dislodged by the lower authorities. We thus in the backdrop of the totality of the facts of the case are unable to find ourselves to be in agreement with the view arrived at by the lower authorities. We thus set aside the order of the CIT(A), and delete both of the addition made u/s.68 and u/s. 69 - Decided in favour of assessee.
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2021 (12) TMI 1077
Disallowance of expenditure reimbursed - reimbursement of expenses to a non-resident placed at Dubai and South Africa - Addition u/s 40(a)(i) - addition on account of diversion of income - HELD THAT:- As reimbursement of expenses of both the entities were for carrying out market research for feasibility and expansion of market in neighboring countries particularly in Gulf and African region and day-to-day coordination in activities for the assessee, negotiation and procurement of orders, securing of materials, supply and distribution of materials to destination sites, logistic support and follow up and liaisoning for projects under execution etc. - as also undisputed fact that these firms were actually carrying out these activities as it has secured work order of more than ₹ 35 crores for the assessee. The copy of work orders were filed before the AO along with various documents and relied upon the correspondence which shows that the efforts were made for getting the new business there. Sans any adverse material, AO cannot question the wisdom and business expectancy in which wake of such evidences and record which has been duly appreciated and taken note of by the ld. CIT (A). The documents which have been referred to in the first appellate order, as incorporated above, clearly show that both the entities i.e. Dubai based and South Africa based has assisted in the business development as well as procurement of huge business orders which was in line with the assessee s business i.e. supply, installation, commissioning and maintenance of DG sets, power equipment and its spares/accessories. There is no adverse material on record to rebut the aforesaid documents as highlighted by the ld. CIT (A) above. Therefore, we do not find any reason to uphold the addition on the ground that there are no commercial activities. Accordingly, the finding of ld. CIT (A) is confirmed. Disallowance made u/s 40(a)(i) - AO held that the said payment of reimbursement of expenses is in the nature of fee for technical services - As noted by the ld. CIT (A), there is no FTS clause in the India UAE DTAA regarding fee of technical services and, therefore, there cannot be any question of withholding of tax. Accordingly, disallowance u/s 40(a)(i) cannot be made. The aforesaid finding of ld. CIT (A) is accordingly confirmed. Addition on account of diversion of income - We are unable to subscribe to the view taken by the AO that it is a paper entity and, therefore, there was diversion of profit. First of all, Chadha Projects JLT, Dubai is an independent entity incorporated under the laws of UAE and was carrying out various activities helping, assisting and getting contracts and procurements of orders for assessee firm and has also disclosed profits in its balance sheet of AED 7,92,674 including mark-up. If the non-resident entity has shown profit, then same cannot be added in the hands of the assessee company as income in India. Firstly, there is no evidence to prove that this was some kind of sham arrangement of profits along with markup and secondly, catena of documents and evidences were filed that the said entity is working there and for which mark-up of 10% of management fees is given, therefore, it cannot be held that all those documents are bogus or sham without any material information on record. Accordingly, findings of ld. CIT (A) on this score are also confirmed. - Decided against revenue.
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2021 (12) TMI 1076
Late remittance of employees contribution to PF and ESI u/s 139(1) - contribution paid by the assessee before the due date of filing of return of income u/s 139(1) - HELD THAT:- The Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down by the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1). As the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration - the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee
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2021 (12) TMI 1075
Late filing fee u/s 234E - TDS returns filled in Form 26Q and Form 24Q for various quarters belatedly - HELD THAT:- In the instant case, out of 21 quarters, for 8 quarters the CIT(A) held that the assessee has not brought out sufficient cause for delay. Admittedly, for 8 quarters the issue is directly covered in favour of the assessee by the judgment of the Hon ble jurisdictional High Court in the case of Sri Fateharaj Singhvi v. Union of India Ors.[ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] - assessee has filed application for condonation of delay. However, the CIT(A) without commented on above applications, states that the assessee had not brought out sufficient reasons to condone the delay (for only 8 quarters out of 21 quarters). Therefore, we hold that the CIT(A) has erred in dismissing the appeal pertaining to 8 quarters on the ground of delay in filing the appeal before him. The assessing Officer cannot make any adjustment other than one prescribed in section 200A of the Act. Prior to 01.06.2015, there was no enabling provision in section 200A of the Act for making adjustment in respect of statement filed by the assessee with regard to tax deducted at source by levying fees u/s 234E of the Act. The Parliament for the first time enabled the Assessing Officer to make adjustment by levying fees u/s 234E of the Act with effect from 01.06.2015. The Hon ble jurisdictional High Court in the case of Sri Fateharaj Singhvi v. Union of India Ors. [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] has held that adjustment cannot be made by the A.O. for the respective assessment year prior to 01.06.2015. Therefore, for the relevant assessment years, namely, A.Ys 2013-2014, 2014- 2015 and 2015-2016, the levy of tax u/s 234E of the Act is impressible going by the dictum laid down by the Hon ble jurisdictional High Court in the case of Sri Fateharaj Singhvi v. Union of India Ors. (supra). - Decided in favour of assessee.
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2021 (12) TMI 1074
Addition u/s 69A - difference in the amount charged by the assessee from sale of office space in Siddh Icon project, Baner - HELD THAT:- Section 69A of the Act provides that where in any financial year an assessee is found to be the owner of any money, bullion, jewellery etc., which is not recorded in the books of account and the assessee offers no explanation about the nature and source of its acquisition or the explanation offered is not found by the AO to be satisfactory, the money and the value of such bullion, jewellery etc., may be deemed to be the income of the assessee for such financial year. AO simply took peak sale rate for the two periods under consideration and applied the same to the other properties sold by the assessee during such periods for making the addition. There is no material on record to substantiate that the assessee, in fact, received some thing over and above the declared consideration. Per contra , the assessee tendered host of reasons justifying difference in the rates charged. Secondly, section 69A can be invoked only for such financial year in which the assessee is found to be the owner of the unexplained money, bullion, jewellery etc. Admittedly, section 69A is not applicable to the first two periods which do not fall in the previous year relevant to the assessment year under consideration. We, therefore, hold that the ld. CIT(A) was justified in deleting the addition. Addition u/s.43CA - Reference to stamp value OR amount realized in respect of some other flats sold by the assessee during the period - HELD THAT:- Section 43CA has been inserted by the Finance Act, 2013 w.e.f. 01-04-2014. The assessment year under consideration is 2014-15 and the same is, therefore, applicable. Section 251 of the Act does not empower the CIT(A) to restore any matter to the AO for reconsideration inasmuch as he can only confirm, reduce, enhance or annul the assessment in an appeal filed against the order of assessment. From that angle, the decision of the CIT(A) cannot be countenanced, Howbeit , it is seen that the provision of section 43CA r.w.s.50C govern the situation under consideration. Though technically, we set-aside the view of the ld. CIT(A) in restoring the matter to the file of AO, we direct the AO to compute the amount of addition u/s.43CA with reference to stamp value and not the amount realized in respect of some other flats sold by the assessee during the period. In case the assessee disputes, a valid reference u/s.50C(2), may be ordered by the AO. This ground is disposed off accordingly. Addition u/s.36(1)(iii) - interest bearing loans were found to have been advanced on which no interest was charged - HELD THAT:- The balance in the Reserves and Surplus account at the beginning of the year was at ₹ 2.35 crore, which at the end of the year shot up to ₹ 6.68 crore. Note No.2 gives bifurcation of such amount as indicating that the increase in the Reserves and Surplus was only because of profit during the year at ₹ 4,33,62,794/-. If we exclude the amount of profit during the year, the amount of Share Capital and Reserves and Surplus is short of the fresh loans advanced during the year. As the amount of share capital and the opening balance in the reserves and surplus account is less than the amount of fresh loans given during the year, the presumption as countenanced in Reliance Utilities [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] does not ipso facto apply fully to the facts of the case. On a pertinent query, the ld. AR could not point out the dates on which such fresh loans were advanced during the year so as to find out the amount of shareholders fund existing on such dates. We, therefore, set-aside the impugned order and remit the matter to the file of the AO for deciding this issue afresh in the light of the judgment of Hon ble Jurisdictional High Court in the case of Reliance Utilities (supra). Needless to say, the assessee will be allowed reasonable opportunity of hearing. Deemed dividend u/s 2(22)(e) - HELD THAT:- As seen that the protective addition has been made in the hands of the assessee, who advanced the loans to its sister concerns. The assessee is not the one to have received loans. Section 2(22)(e) applies only when a loan is received which is treated as deemed dividend. As the assessee did not receive any amount from its related companies, the provisions of section 2(22)(e) cannot be applied. We, therefore, uphold the impugned order on this legal issue. Addition as annual letting value of unsold commercial units of the real estate project Siddha Icon - HELD THAT:- It implies that where any building or land appurtenant thereto, held as stock in trade, is unsold at the end of the year, the annual letting value is required to be determined in terms of section 23(5) after a period of one year from the end of the relevant financial year in which the construction is completed. This amendment came into effect from 01-04-2018. The assessment year under consideration is 2014-15 and hence, the insertion will not apply to the instant case. The question as to whether notional rent on the unsold flats lying as stock in trade can be charged to tax as Income from the property came up for consideration before the Pune Tribunal in Kumar Properties and Real Estate (P) Ltd. Vs. DCIT [ 2021 (4) TMI 1163 - ITAT PUNE] . After considering the decisions - both for and against -, the Tribunal decided the issue in favour of the assessee. Respectfully following the aforesaid precedent in Kumar Properties (supra) , we set-aside the impugned order and order to delete the addition sustained in the first appeal.
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2021 (12) TMI 1073
Revision u/s 263 - claim for deduction u/s 54B came to be allowed by the Assessing Officer without verification and enquiries - distinction between lack of enquiry and inadequate enquiry - HELD THAT:- We are of the considered opinion that the Assessing Officer had allowed the claim for deduction u/s 54B of the Act after due verification and examination of the details filed before the Assessing Officer and it cannot be said that there is total lack of enquiry on the part of the Assessing Officer while allowing the claim of the assessee. Therefore, the assessment order cannot be termed as erroneous . There is no material on record indicating that the appellant had not satisfied the conditions laid down under the provisions of the Act for claiming exemption u/s 54B of the Act. Therefore, the assessment order cannot be branded as erroneous and prejudicial to the interests of the revenue . Thus, the ld. Pr.CIT is not justified in exercising the power of revision u/s 263 of the Act and order passed u/s 263 by the ld. Pr.CIT is hereby set-aside. Accordingly, the grounds of appeal raised by the assessee stand allowed.
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2021 (12) TMI 1072
Revision u/s 263 by CIT - as per CIT AO had failed to verify applicability of the provisions of Section 56(2)(viia) - HELD THAT:- AO had applied his mind to the information and details furnished by the assessee and after considering the information, the AO did not proceed to make any addition on account of purchase of unlisted equity shares, which according to us is a possible view - Before us, no material has been placed by the Revenue to demonstrate that the view taken by the AO was wholly unsustainable in law or the AO has not examined the issue which he was required to examine in a limited scrutiny matter. The order of the AO cannot be branded as erroneous if the Commissioner is not satisfied with the conclusion arrived by the Assessing Officer. The order can be brought within the purview of an erroneous order only if it involves an error by deviating from law or upon erroneous application of the legal principle. It is a settled law that the power of revision can be exercised only where no inquiry as required under the law is done and it is not open to enquire in cases of inadequate inquiry. In the present case, as noted above, the AO had raised various queries and the same were also replied by the Assessee. In such a situation it cannot be said that there was lack of inquiry from the end of AO. Co-ordinate Bench of Tribunal in the case of M/S Pawansut Media Services Pvt. Ltd. [ 2021 (11) TMI 924 - ITAT DELHI] on identical facts and relying on the decision of Hon ble Delhi High Court in the case of Pr. CIT vs. Brahma Center Development P. Ltd.[ 2021 (7) TMI 347 - DELHI HIGH COURT] held that PCIT was not justified in assuming the jurisdiction. As far as the invocation of Explanation 2 to Section 263 by PCIT in the present case is concerned, we are of the view that only in a very gross case of inadequacy in inquiry or where inquiry is per se mandated on the basis of record available before the AO and such inquiry was not conducted, the revisional power so conferred can be exercised to invalidate the action of AO. PCIT was not justified in invoking the provisions of Section 263 of the Act to set aside the assessment order passed by AO u/s 143(3) of the Act. We therefore setaside the order of PCIT. Ground of the assessee are allowed.
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2021 (12) TMI 1071
Late deposit of employees share of PF ESI which were deposited after the due date but before the due date of filing of return of income - AO made the additions of the impugned amounts for the reasons that the assessee did not deposit the amounts of employees contribution as per the provisions of section 36(1)(va) - HELD THAT:- As decided in RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED VERSUS THE ITO, WARD 5 (2) , CHANDIGARH [ 2021 (11) TMI 370 - ITAT CHANDIGARH] assessee deposited the contribution of PF ESI belated in terms of section 36(1)(va) of the Act, however, the said deposits were made prior to filing of return of income u/s 139(1). Impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee
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2021 (12) TMI 1070
Addition u/s. 68 - Unexplained share application money - Unexplained Share Capital and Share Premium - HELD THAT:- In this case, the impugned additions have been made because of the reason that the assessee was not able to produce the necessary evidences to prove the genuineness of the transactions relating to the share capital, share premium and unexplained loans. The assessee had duly explained the reasons for his inability to produce the relevant documents during the assessment proceedings as well as in the quantum appeal proceedings before the Ld. CIT(A) - assessee has been able to procure the evidences from the concerned parties including the confirmations and details of bank account etc. to prove the creditworthiness of the investor and genuineness of the transactions, which evidences have been duly considered by the Ld. CIT(A) in penalty appeal and he has deleted the penalty so levied by the AO in respect of the impugned additions made by the Assessing officer. Under the circumstances, it seems that the assessee has a fair case on merits. In our view, interest of justice will be well served, if the assessee is given an opportunity to produce the relevant evidences before the Assessing officer.The impugned order of the CIT(A) is set aside and the matter is restored to the file of the Assessing officer for decision afresh. Appeal of the assessee is treated as allowed for statistical purposes.
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2021 (12) TMI 1069
Late payments towards EPF and ESI under section 36(1)(va) - Payment before furnishing the return of income u/s 139(1) - HELD THAT:- As relying on RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED VERSUS THE ITO, WARD 5 (2) , CHANDIGARH [ 2021 (11) TMI 370 - ITAT CHANDIGARH] the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
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2021 (12) TMI 1068
Exemption u/s 11 - Expenditure on distributing prize, Honorarium to jury, Event management expenses and Employee benefits - Whether expenditure incurred directly or indirectly in connection with the objects of the Trust? - sole objective of the Trust is the running of Infosys Prize annual award to honor outstanding achievements to scholars / scientists - HELD THAT:- The objects of the Trust has also been accepted by the Ld.AO which is to institute prizes which are meant to achievers in various fields and endeavors to elevate the prestige of scientific research in India and inspire young Indians to choose a vocation in scientific research. Since its inception, the assessee focused solely on the governance and running of Infosys Prize, annual award to honor outstanding achievements to scholars / scientists. The contention of the Ld.AO that the expenses are routine expenses incurred for the day to day activities of the Trust is not correct. The expenditure comprised of Honorarium to Juries for selection of prize winners, event management expenses incurred for Infosys Prize ceremony, travelling and conveyance expenses, memento and souvenir expenses, professional charges and service tax thereon, employee benefits and other expenses. These expenses were incurred in connection with the Infosys Prize ceremony held during the year. During the previous year 2015-16 relevant to AY 2016-17, the Infosys Prize was announced on 16.11.2015 and the awards ceremony was held at New Delhi on 13.2.2016. Thus, there is no merit in the contention of the Ld.AO that the expenditure was held towards the routine activities of the trust and hence the same cannot be considered as utilised from the amounts accumulated u/s 11(2) towards a specific activity. The application of income for charitable purpose includes any expenditure incurred directly or indirectly in connection with the objects of the Trust. To treat only direct expenditure incurred as application for objects of the Trust would be too narrow a view. In the present case, the sole objective of the Trust is the running of Infosys Prize annual award to honor outstanding achievements to scholars / scientists. There is no other objectives for which the Trust carried on its activities. Thus, the entire expenditure incurred during the year was towards the purpose of carrying on the aforesaid charitable activity. Income of the current year and income accumulated u/s 11(2) are parked in deposits and SB account with scheduled banks which are permitted as per section 11(5). The maturity proceeds are again reinvested in deposits. Thus, the identity of monies as current year's income and income accumulated u/s 11(2) is not possible. Consequently, the expenditure of ₹ 5,31,43,622 incurred towards the objectives of the Trust should be treated as application of income out of earlier years accumulation of income as declared by the assessee. We are of the opinion that when the expenditure can be treated as application of amount from current year's income, there is no reason as to why the same should not be treated as spent out of earlier years accumulation - no justifiable reason for separating and treating expenditure of ₹ 5,31,43,622 differently from the Prize Money expenditure - Decided in favour of assessee.
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2021 (12) TMI 1067
Late payments towards EPF and ESI u/s 36(1)(va) - Payment before furnishing the return of income under section 139(1) - HELD THAT:- As relying on MOHANGARH ENGINEERS AND CONSTRUCTION COMPANY[ 2021 (9) TMI 1319 - ITAT JODHPUR] and M/S. STATE BANK OF BIKANER JAIPUR AND JAIPUR VIDYUT VITARAN NIGAM LTD. [ 2014 (5) TMI 222 - RAJASTHAN HIGH COURT] the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
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2021 (12) TMI 1066
Estimation of income - the appellant is a entry provider and not making actual sales/purchase and earns nominal income by way of commission on issuing bills to parties @ 0.29% to 0.50% - HELD THAT:- As contention raised by the assessee that order passed by the AO in assessee s own case in succeeding years i.e. AYs 2014-15 2015-16 vide order dated 28.12.2016 28.12.2017 respectively is applicable to the year under consideration by applying the rate of 0.5% of the total billing is not sustainable because in AYs 2014-15 2015-16 there was not even a whisper if assessee had ever entered into the business of providing accommodation entries to the dealers to help them to reduce their tax liabilities rather in those years it was simple case of dealing into wholesale business of trading in which Revenue itself had accepted 0.5% ratio on total billing to assessed income of the assessee. We are of the considered view that on the basis of succeeding years orders having distinguishing facts, assessee s income cannot be estimated by applying the same ratio i.e. 0.5% - CIT(A) has rightly thrashed the issue in the light of the facts and circumstances of the case and prevailing general practices in the identical trade. Finding no illegality or perversity in the impugned order passed by the ld. CIT (A), appeal filed by the assessee is hereby dismissed.
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2021 (12) TMI 1065
Revision u/s 263 by CIT - As per CIT AO has decided the matter in favour of the assessee without going deep into the issue regarding seized foreign currency and excess income over total expenditure - HELD THAT:- Every loss of revenue as a consequence of an order cannot be termed as prejudicial to the interests of the Revenue. In the case of ITO v. DG Housing Projects Ltd [ 2012 (3) TMI 227 - DELHI HIGH COURT] as held that revisional power under section 263 of the Act is normally exercised in the case of no enquiry and not in the case of inadequate enquiry. The Assessing Officer has passed the assessment order after making enquiries, Commissioner of Income-tax (Exemptions) has wrongly observed that the Assessing Officer has passed the order without making any inquiry on the issues discussed in the revisional order. The documents referred by the learned counsel do not suggest that the Assessing Officer has passed the assessment order without conducting any enquiry. Hence, in our considered view this was not the case where the Assessing Officer has passed the assessment without making enquiry for holding the same as erroneous. In the case of. CIT v. Software Consultants [ 2012 (2) TMI 18 - DELHI HIGH COURT] the hon'ble Delhi High Court has held that where no addition is made on the grounds mentioned in the reasons recorded for reopening of the assessment, the assessment order cannot be said to be erroneous under section 263 of the Act In the present case the Assessing Officer has not made any addition on the ground mentioned in the reasons recorded Hence, the findings of the learned Commissioner of Income-tax (Exemptions) are not in consonance with the ratio laid down in the aforesaid case - we allow the appeal of the assessee and set aside the impugned order passed by the learned Commissioner of Income-tax (Exemptions) under section 263 of the Act. - Decided in favour of assessee.
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Customs
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2021 (12) TMI 1064
Provisional release of goods - import of Dry Dates - non-furnishing of Phytosanitary Certificate of country of origin - HELD THAT:-The show cause notice is required to be issued within six months from the seizure of the goods and if the show cause notice cannot be issued within six months, then after recording the reason in writing, the period can be extended for another six months. Further, in case of the goods were provisionally released, then the period of six months shall not apply. Admittedly, in this case, the goods were not allowed to be released provisionally. Therefore, the time limit prescribed under Section 110(2) of the Act shall apply to the facts of the case. Therefore, the show cause notice was required to be issued within six months from the date of seizure i. e. till 01.01.2021, further no time limit has been extended by recording the reasons in writing as the proviso to Section 110(2) of the Act. In the show cause notice, it has been mentioned that the show cause notice was required to be issued on 17.03.2021 under Section 110(2) of the Customs Act, 1962 which has been extended by letter dt. 16.03.2021 that the same has been extended up to 30.06.2021 which is against the law as six months period was expired on 01.01.2021 of the seizure and within six months till 01.01.2021, the Revenue was required to pass an order recording reasons in writing for extension of time. No such order is placed on record - the show cause notice issued to the appellant is barred by limitation, therefore, the show cause notice for absolute confiscation is not sustainable. Accordingly, the goods are required to be released to the appellant after examination thereof to find out whether same are fit for human consumption or not and the demurrage and detention charges are required to be waived. The two parallel proceedings cannot continue together. As the show cause notice dated 30.06.2021 has been issued beyond the time limit prescribed under Section 110(2) of the Act, therefore, the show cause notice dt. 30.06.2021 is barred by limitation and the goods are required to be returned to the appellant. As the Show Cause Notice dated 16.11.2021 is not the subject matter of the appeal, therefore, the Revenue is at liberty to adjudicate the show cause notice dt. 16.11.2021 in accordance with law. The show cause notice has been issued to the appellant beyond the time limit prescribed under Section 110(2) of the Act on 30.06.2021 whereas the goods have been seized on 19.05.2020 and no order recording reasons in writing has been passed for extension of time, therefore, the show cause notice issued to the appellant for absolute confiscation of the goods is not sustainable - Revenue is directed to release the goods to the appellant after examining the same whether same are fit for human consumption or not and the demurrage and detention charges are required to be waived. Appeal disposed off.
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Corporate Laws
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2021 (12) TMI 1063
Sanction of scheme of merger / amalgamation - whether the Tribunal has power to dispense with the meetings of the unsecured creditors of both the Companies? - Section 230 and 232 of the Companies Act, 2013 read with Rule 4 of the Companies (Compromises, Arrangements and Amalgamations), Rules 2016 framed thereunder read with Rule 34 of NCLT Rules, 2016 - HELD THAT:- Keeping in view the lockdown owing to the Covid-19 pandemic and in case physical meetings are not feasible, the meetings of the Unsecured Creditors as aforesaid may be conducted through Video Conferencing or any other audio-visual means capable of being recorded. The raw unedited footage shall be preserved for verification. Both the applicant companies serve notice upon the Regional Director, Ministry of Corporate Affairs, Registrar of Companies, Income Tax Department within whose jurisdiction the assessments of the Applicant Companies are made, the Official Liquidator in case of both the Applicant Companies and GST, BSE, NSE and SEBI in case of transferee company, pursuant to Section 230(5) of the Companies Act, 2013 read with Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Application disposed off.
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2021 (12) TMI 1062
Valuation of shares - shares were valued at higher price and were allotted at higher price - HELD THAT:- The first Respondent company has availed a loan of ₹ 4,70,00,000 from LIC HFL in respect of which ₹ 42697780 was outstanding and the first and second Applicants have given their personal guarantees as security towards this loan. We maintain that in order to safeguard the interest of the Company, this loan until it is fully repaid, would continue for which the guarantee of the Applicants would also continue. As this is a long pending case, in order to cordially dispose the matter, this Tribunal, after having duly considered the decision of Hon ble NCLAT upholding NCLT Chennai Bench decision and taking into consideration the submissions of both the Parties, particularly the interest of the company to continue the Loan from LIC HFL, is of the opinion that the group quoting higher price shall purchase the shares of the other group quoting lower price. Applicants/ Respondents- K.J Paul, Bindu Paul and K. A. Mathaiare are directed to purchase 60,000 shares of Respondents/ Petitioners- P. M. Johny and K. P. Augustine at the rate of ₹ 1941/- each within a period of one month and file a compliance memo to that effect, before this Tribunal - Application disposed off.
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2021 (12) TMI 1061
Rejection of Application of the Appellant for transmission of shares - Section 58 of the Companies Act, 2013 - appellant having locus standi to file appeal or not - time limitation - Whether the Appeal filed with appropriate documents? - HELD THAT:- In the appeal it is stated that A true and correct copy of the Section 56 application dated 19.03.2020 is produced herewith and marked for reference as Exhibit P-8 . We have gone through the Exhibit P-8 and found that the Application for Transmission of Shares/ Debentures produced by the Appellant is not in proper form and the same is defective due to lack of fulfilment of the appropriate columns in the Application. Whether the Appellant have locus standi to file this Appeal? - HELD THAT:- The Articles of Association of the Respondent Company clearly depicts that without stating any reason thereof where it is not proved to their satisfaction that the proposed transferee is a responsible person the Board may refuse to register any transfer of shares, subject to the provisions of the Companies Act, 1956 - the Appellant filed a defective application before the Respondents without legal succession certificate and that Appellant did not have locus standi to file this Appeal. Whether this Appeal is barred by limitation? - HELD THAT:- This Appeal has been filed before this Tribunal on 01.10.2020 i.e., after 93 days from the date of rejection of the Application. Hence, the application is barred by limitation period under Section 58(3) of the Companies Act, 2013. Application dismissed.
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2021 (12) TMI 1060
Seeking winding up of company - Section 271 (a) of the Companies Act, 2013 - HELD THAT:- Since the Company or its representatives have not named an Insolvency Professional to be appointed as Provisional Liquidator, this Tribunal takes the name of Insolvency Professional from the panel of IP s approved by the IBBI for the period from 01.07.2021 to 31.12.2021 for being appointed as the provisional Liquidator. Mr. Rajmohan R appointed as the Provisional Liquidator to carry out the functions as mentioned under Section 290 of the Companies Act, 2013 - application allowed.
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2021 (12) TMI 1059
Sanction of scheme of arrangement - sections 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing of various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2021 (12) TMI 1058
Seeking modification of discrimination in payment under the Resolution Plan on the basis of the Assenting and Dissenting/Abstaining Financial Creditor - seeking that all Secured Financial Creditors (FCs) inter alia Applicants be treated equally for payment of plan value subject to their individual exposure with the same terms as that of Assenting FCs - HELD THAT:- Section 30(2)(b) of the Code provides for the payment of debts of the Dissenting FCs in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with Section 53(1) of the Code in the event of liquidation. Explanation 1 to Section 30(2)(b) of the Code further clarifies that distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors - It is pertinent to note that the invocation of BG is as per the terms of Resolution Plan. Thus, any increase in the claim amount of the Assenting FCs due to the invocation of such BG cannot be a ground for challenge by the Dissenting FCs on grounds of discrimination. Further, the decision to include the invoked amount of the BG to the fund-based debts is a commercial decision of the CoC. It is noted that the BG invocation and the revision in the amounts of Assenting FCs is as per the terms of the Resolution Plan - Resolution Plan once approved by the AA shall stand frozen and shall be binding on all stakeholders including FCs. Application dismissed.
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2021 (12) TMI 1057
Interpretation of statute - section 17 of IBC - Confusion regarding section 17 among Corporate Debtors and practitioners - main allegation was that the Respondent/ Resolution Professional has failed to take over the affairs of the Corporate Debtor and to immediately take over custody and control of the assets without taking necessary steps to ascertain the financial position of the Corporate Debtor - HELD THAT:- A plain reading of the Section 18 of IBC makes it clear that the Code empowers the Resolution Professional to take control and custody of any property which the Corporate Debtor has complete ownership. This power of the Resolution Professional extends to properties that are part of the court proceedings. Section 20 mandates the IRP to preserve and protect the value of the property and to manage the operations of the corporate debtor as a going concern. But in this case, even though the RP is empowered to take possession of the Registered Office and records of the Corporate Debtor, he has taken only symbolic possession of the same and allowed the suspended Directors to enjoy for their benefits. This is against the provisions of the Code. With the concept of Creditors in Control under IBC, after the initiation of the Corporate Insolvency Resolution Process (CIRP), the CoC assumes decision-making powers for the management of the CD. IRP/ RP is an independent professional to take care of the interests of all the stakeholders. Thus both IRP/RP and CoC have to work in tandem and the overall interest of resolution while balancing the interests of all stakeholders. But here there is a clash of interest among the member of CoC and the Resolution Professional. In its first meeting of the CoC, it appointed the Resolution Professional, who was then convening and conducting the meetings of the committee - On verification of records of this case, it is seen that only one meeting of Committee of Creditors took place with the presence of Resolution Professional, and without making any endeavour for inviting Expression of Interest, the CoC unanimously resolved to liquidate the Corporate Debtor. In the interest of justice the time spent till now before the Adjudicating Authority from the 2nd CoC Meeting till the date of this order should be excluded from calculating the period under Section 12 (1), (2) (3) of the IBC - Since, the Committee of Creditors is reconstituted with the Financial Creditor M/s Bajaj Finance Limited and the Operational Creditor is not having any voting right in the CoC, the main prayer to permit them to change the Resolution Professional and refer the case to Insolvency and Bankruptcy Board of India (IBBI) for proposing the name of a new RP cannot be entertained, since they have no locus standi to do so. Application disposed off.
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2021 (12) TMI 1056
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - whether the provisions of Section 10A stand attracted to an application under Section 9 which was filed after 5th June 2020 (the date on which the provision came into force) in respect of a default which has occurred after 25 March 2020? - HELD THAT:- Under Section 9(1), the Operational Creditor may file an application before the Adjudicating Authority for initiating the Corporate Insolvency Resolution Process ( CIRP ), after the expiry of a period of ten days from the date of delivery of the notice (or invoice demanding payment) under Sub-Section (1) of Section 8, if the operational creditor does not receive payment from the Corporate Debtor or a notice of the dispute under Sub-Section (2) of Section 8 - The proviso to Section 10A stipulates that no application shall ever be filed for the initiation of the CIRP of a corporate debtor for the said default occurring during the said period . The explanation which has been inserted for the removal of doubts clarifies that Section 10A shall not apply to any default which has been committed under Sections 7, 9 and 10 before 25 March 2020. It is clear that the Executive in the Promulgation of the Ordinance to meet an extraordinary situation and to avoid causing further stress to the already beleaguered businesses due to COVID pandemic throughout the world and also in addition affected by the lock down enforced by the State of the Union, all beyond their control have chosen to suspend the filing of any application in relation to defaults arising on or after 25.03.2020 - the Corporate Debtor received the products in various lots on 21.03.2020 and 23.03.2020 and also on 30.05.2020, where the part payments were made on 28.05.2020 and 28.07.2020 into the bank account of the Operational Creditor against the total amount due. Therefore, the date of default cannot be considered as 21.03.2020, as it is only the date of order but from the date 28.07.2020, the Corporate Debtor failed to pay the balance amount. The records produced as evidence to prove the outstanding dues categorically show the default date as 28.07.2020 and not 21.03.2020 - the applicant purposefully sought amendment of the date of default in this application to fall outside the preview of Section 10A of the Code, by hood winking this Tribunal in order to substantiate the efforts of the Operational Creditor and to recover their legitimate dues. It is clearly established that an attempt is being made to deliberately misuse the provisions of Insolvency Bankruptcy Code defeating the very intent for which it was enacted - the application filed by the Operational Creditor stands rejected under Section 60 (5) of Insolvency Bankruptcy Code, 2016 - Application dismissed.
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2021 (12) TMI 1055
Scope of Liquidation estate - appellant were workmen/ employees of Excel Glasses Limited under Section 42 of Insolvency Bankruptcy Code, 2016 - HELD THAT:- On verification of records it is found that the submission of the Respondent that he has not been provided with any order from the appropriate authority in connection with payment of gratuity etc. Since the Appellants have not produced any order of the Labour Court or such authorities the Liquidator on his own cannot decide on disputed liability of them. He can only act on the strength of crystalized claims. It is the settled position of law that the provident fund, the pension fund and the gratuity fund, do not come within the purview of liquidation estate for the purpose of distribution of assets under Section 53 of the Code. Based on this, the only inference which can be drawn is that Pension Fund, Gratuity Fund and Provident Fund can t be utilised, attached or distributed by the liquidator, to satisfy the claims. Section 36(2) of the I B Code 2016 provides that the Liquidator shall hold the Liquidation Estate in fiduciary for the benefit of all the Creditors. The Liquidator has no domain to deal with any property of the Corporate Debtor, which is not the part of the Liquidation Estate. The claim of wages cannot be sanctioned unless the statutorily constituted forums either under the Industrial Dispute Act, Payment of Wages Act and Bonus Act have rendered its decision. However, no such decision or award is available in favour of the workmen entitling them to claim these amounts - Appeal dismissed.
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2021 (12) TMI 1054
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - minimum threshold limit for filing an application under sections 7, 9 and 10 of the IBC, 2016 - HELD THAT:- In proceedings before the Tribunal, when a liberty is being granted to a person, it goes without saying that the said liberty can be availed only if it is in consonance within the procedure established under the law for the time being in force. It is to be noted that as on the date when the liberty was granted to the operational creditor, the minimum threshold limit for filing an application under sections 7, 9 and 10 of the IBC, 2016 was ₹ 1 lakh. However, the Central Government through the Ministry of Corporate Affairs vide Notification No. S. O. 1205(E), dated March 24, 2020 has increased the minimum threshold limited from ₹ 1 lakh to ₹ 1 crore. Hence, on and from March 24, 2020 all the applications filed under sections 7, 9 and 10 of the IBC, 2016 before this Tribunal are required to satisfy the said condition and the debt amount due as claimed in Part-IV of the application is required to cross the threshold limit of ₹ 1 crore. A liberty granted by this Tribunal, cannot act in derogation or in violation of the law which is prevailing time being in force - a liberty being granted to the operational creditor to file a fresh application in case a default occurs cannot be stretched to such an extent that would circumvent the law which is prevailing as on date. It is now trite, that the Notification issued by the Central Government vide S. O. No. 1205(E), dated March 24, 2020 by increasing the pecuniary jurisdiction of this Tribunal from ₹ 1 lakh to ₹ 1 crore would operate prospectively, that is to say the said notification would be applicable to the matters which are filed before this Tribunal on and from March 24, 2020 - the application filed by the operational creditor before this Tribunal falls well short of the pecuniary limit of ₹ 1 crore and as a consequence thereof, the application is liable to be dismissed. Application dismissed.
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PMLA
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2021 (12) TMI 1053
Maintainability of petition - availability of alternative remedy of appeal - Validity of Provisional Attachment order - HELD THAT:- The writ petition is partly allowed by directing that, subject to the petitioners filing a statutory appeal before the Appellate Tribunal within a period of two weeks from today, the parties will maintain status quo qua the subject matter of the impugned order till the petitioners appeal and stay application are taken up for consideration by the Tribunal as and when it becomes functional.
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Service Tax
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2021 (12) TMI 1103
Maintainability of appeal before the HC - Levy of service tax on commission received in advance, debit card income, Renting of immovable property, services rendered by the Jammu and Kashmir Branch, and business auxiliary services - Recovery of CENVAT Credit with interest and penalty - CESTAT [ 2020 (2) TMI 1579 - CESTAT BANGALORE] has set aside the demand - HELD THAT:- In the light of the provisions and the judgment [ 2011 (4) TMI 500 - KARNATAKA HIGH COURT] , it is clear that the order passed by the Appellate Tribunal relating to determination of any question having relation to the rate of service taxes which is nothing but taxability of services for the purpose of assessment would lie before the Hon ble Apex Court under Section 35L(b) of the Act and not to the High Court under Section 35G. The appeal is not maintainable under Section 35G before this Court. - Decided against the Revenue.
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2021 (12) TMI 1052
Time limitation - time barred assessment - no justification for passing the assessment order under the extended period of limitation - non-filing of return - challenge has been made on the ground that the assessment had become time barred; there was no justification for passing the assessment order under the extended period of limitation - HELD THAT:- The above ground is not a sufficient ground for invoking our writ jurisdiction under Article 226 of the Constitution of India when there is a statutory alternative remedy in the form of provision for appeal i.e., Section 85 of the Finance Act, 1994. That being the position, we decline to entertain the writ petition and relegate the petitioner to the forum of appeal, as provided under the statute. To enable the petitioner to file the appeal, we direct that for a period of three weeks from today, no coercive action shall be taken against the petitioner. Petition disposed off.
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2021 (12) TMI 1051
Reversal of CENVAT Credit - capital goods or not - lease rentals - set top boxes and other CPE s supplied to the consumers on the rental basis - HELD THAT:- The issue in respect of the CPE, provided by the appellant on rental basis, which upon deactivation of service have not been returned back by the customer, to the appellants have been dealt by the tribunal in various cases - reliance can be placed in the case of VIDEOCON D2H LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS SERVICE TAX [ 2020 (2) TMI 1254 - CESTAT MUMBAI] where it was held that In the absence of any specific statutory provision requiring such reversal along with absence of further availment of credit by any other assessee, it is held that the impugned order is erroneous in its presumption and in application of law. Reversal not required - appeal allowed - decided in favor of appellant.
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2021 (12) TMI 1050
CENVAT Credit - availment and utilization of credit on the basis of the invoices addressed to the assessee, other than the registered office premises - contravention of the rule 3 (i) of the Cenvat Credit Rules 2004 or not - extended period of limitation - HELD THAT:- The issue involved in the present case is squarely covered by the decision of the Tribunal in the case of KINETIC ADVERTISING (I) PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-II [ 2018 (6) TMI 257 - CESTAT MUMBAI] , wherein the Tribunal relying on the decision in MANIPAL ADVERTISING SERVICES PVT. LTD. VERSUS CCE., MANGALORE [ 2009 (10) TMI 434 - CESTAT, BANGALORE] has held that Appellants are eligible for the credit availed by them on the invoices issued to their branch offices. However, on perusal of the ST-3 Returns enclosed, it is found that, the appellant has in column of Cenvat Credit Taken indicated the credit taken nil throughout. Although in the column of Credit utilised , they have indicated the utilization of credit in each of the Return for every month. Undisputedly, the show cause notice has been issued to them for denial of the credit taken., whereas the appellant has summarized the utilization of the credit as not the credit taken. They have not substantiated their claim by ST-3 Returns to the effect that they have not taken the credit by producing the relevant cenvat credit register - Para 41 of the impugned order cannot be faulted with as the appellant has failed to produce the cenvat credit register before the concerned adjudicating authority. However, this issue becomes irrelevant. As the demand of service tax is being set aside, so is the demand of interest and penalty imposed on the appellant - appeal allowed - decided in favor of appellant.
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2021 (12) TMI 1049
CENVAT Credit - input - non-submission of service tax invoice or some information was missing - short paid tax - suppression of turnover/non-disclosure of true turnovers in the Service Tax Return - levy of interest and penalty - invocation of extended period of limitation - HELD THAT:- The cenvat credit of ₹ 3,780/- with respect to the input service already received from the D.P. Khandelwal Co is allowed - So far the credit for service tax of ₹ 55,282/- received from N.K. Buildcon is concerned, matter remanded to the Original Adjudicating Authority with directions-if the assessee produces a certificate from N.K. Buildcon in support of this amount along with reference to Bill and Invoice No., the Adjudicating Authority shall accordingly allow this credit. Short payment of tax - Allegation of suppression of turnover/non-disclosure of true turnovers in the Service Tax Return - HELD THAT:- The appellant has successfully reconciled their turnover figure as per Profit Loss Account and as per taxable turnover in the Service Tax Return. Accordingly, this ground is allowed and the demand of ₹ 5,50,450/- is set aside. Invocation of extended period of limitation, whether correctly done - Levy of interest under Section 75 and penalty under Section 78 - HELD THAT:- The appellant is a State Government Undertaking, where 100% shares are owned by the State Government through the Governor of the State. The appellant maintains proper books of accounts, which are subjected to audit. There may be some clerical error in maintaining their records, or as stated, the documents got mis-placed due to shifting of the office. Further, the appellant is working as a nodal agency for the Government Project(s) and are not a Commercial Organisation in the true sense. Further, there is no allegation of suppression or any falsification of the accounts. From the allegations and facts on record, it is observed that these are attributable to the clerical error and lack of proper reconciliation at the time of audit, and before the court below - the extended period of limitation is not invokable. Accordingly, penalty under Section 78 is set aside. The appeal is allowed and only the issue as regards cenvat credit of ₹ 55,282/- (N.K. Buildcon) is remanded to the Original Adjudicating Authority - Appeal allowed in part and part matter on remand.
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2021 (12) TMI 1048
Classification of services - security services or not - providing armed security guards to public sector banks / undertakings and government departments, and collection of charges for the same - HELD THAT:- The appellant is performing statutory duties and the amount so collected is being deposited in the government treasury. CBEC has issued a Circular No.89/7/2006-ST dated 18.12.2006 clarifying that wherever the charges collected by any sovereign public authority for carrying out any statutory function, the same is not liable to levy of service tax. Further, there is a CESTAT decision THE DEPUTY COMMISSIONER OF POLICE JODHPUR, SUPERINTENDENT OF POLICE VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, JAIPUR- [ 2016 (12) TMI 289 - CESTAT NEW DELHI] , where it was concluded that the police department which is in the agency of State Government cannot be considered to be a person engaged in the business of running security services. The CESTAT in the said decision has held that the activity undertaken by the police is not covered by the definition of security agency under Section 64(94) of the Finance Act, 1994 - same view has been expressed by the Mumbai Bench of the Tribunal in the case of MUMBAI POLICE VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2018 (4) TMI 418 - CESTAT MUMBAI] . Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (12) TMI 1047
CENVAT Credit - input service - transportation of employees by a manufacturer from their designated pick up points to their workplace, by Bus - service for personal use or consumption of any of the employees - activity of providing bus transport services to its employees, at the cost of the Manufacturer, to reach factory in time and the expenses incurred by the Manufacturer in providing such service, (which amount is taken into consideration, while determining the final price of the product) - renting of motor vehicle, which is Capital Goods for Service Provider - HELD THAT:- Considering the effect of definition of input service after 01.04.2011 it was found that establishment of such canteen was primarily for personal use or consumption of the employees and after such amendment no cenvat credit could be availed. This view has been upheld by the Hon ble Supreme Court in TOYOTA KIRLOSKAR MOTOR PRIVATE LIMITED VERSUS THE COMMISSIONER OF CENTRAL TAX [ 2021 (12) TMI 420 - SC ORDER] while dismissing the Special Leave Petition on 18.11.2021 preferred by the said appellant - The facts of the present case also indicate that the facility of transportation provided by the appellant to its employees was merely in the nature of service for personal use or consumption of its employees. The decisions relied upon by the learned counsel for the appellant are clearly distinguishable. In THE PRINCIPAL COMMISSIONER VERSUS M/S. ESSAR OIL LTD. [ 2015 (12) TMI 1062 - GUJARAT HIGH COURT] there was no dispute by the Department in that case that the services consumed by an assessee were related to various stages of its manufacturing and business activities. The same is not the case herein. The Tribunal did not commit any error whatsoever in disallowing cenvat credit to the appellant after 01.04.2011 in view of the amended provisions. The service provided was mere in the nature of personal service to its employees which is not permitted to be treated as input service - the substantial questions of law as framed are answered against the appellant - Appeal dismissed.
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CST, VAT & Sales Tax
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2021 (12) TMI 1046
Attachment of secured assets - recovery of sales tax dues - Section 26-E of the SARFAESI Act and Section 31-B of the Recovery of Debts and Bankruptcy Act, 2002 - HELD THAT:- In the case of the Cosmos Cooperative Bank .v/s. State of Maharashtra and other [ 2019 (11) TMI 1689 - BOMBAY HIGH COURT ], the Division Bench of this Court at the Principal seat at Bombay has held that on harmonious reading of Section 26-E of the SARFAESI Act and Section 37 of the MVAT Act it would be clear that the secured creditor would have a first charge over an asset and the charge created in favour of the State of Maharashtra under Section 37 of the MVAT Act would be subject to the first charge created by the Central Legislation namely, Section 26-E of the SARFAESI Act. In view of this settled legal position and in the background of the facts established in this case, the action initiated by the respondent Nos.1, 2 and 3 to the extent of two properties cannot be sustained. Petition allowed.
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Indian Laws
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2021 (12) TMI 1097
Cancellation of contract for providing healthcare, kitchen and dietary services - petitioners have been blacklisted for a period of two years - HELD THAT:- Given the facts of the case, the explanation advanced by the petitioner for being unaware that its GST registration had been cancelled, does not inspire confidence. In these circumstances, keeping in view the manner in which the petitioner secured the contract with the respondent, while there are no infirmity in the respondent s decision to terminate its contract with the petitioner, it is found that respondent s decision to blacklist the petitioner for a period of two years wholly unwarranted. For one, it is a well-known fact that the economy has suffered a major setback ever since the onset of the COVID-19 pandemic and small business, such as the petitioner, are bearing the brunt of this. There are no reason to doubt the petitioner s explanation for the financial difficulties that occasioned the default in paying returns and eventually led to the suspension and cancellation of its GST registration. Small proprietorships, such as the petitioner s, are already flailing in this economy and finding it hard to survive and the respondent, being a State, cannot be blind to this reality. Permitting a punitive action of this nature to continue would deal a greater blow to the survival of small businesses such as the petitioner. After all, as the petitioner has rightly contended, at the time when the impugned order was passed, the entire basis for the respondent s grievance with the petitioner that the GST Department had cancelled its registration stood resolved under the directions of the learned Appellate Authority. The respondent ought to re-consider the decision to blacklist the petitioner and, while doing so, duly take into account the significant fact that the GST Department has itself adopted a compassionate view towards the prevailing circumstances and the strata to which the petitioner and its sole proprietor belong - the impugned order is set aside to the extent that it blacklists the petitioner for a period of two years. The respondent shall reconsider this aspect, by taking into consideration the observations made by this Court today. Petition disposed off.
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