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TMI Tax Updates - e-Newsletter March 12, 2021 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Requirement of registration - Tamil Nadu Skill development Corporation(TNSDC) - The applicant is not an SSC approved by the NSDC - In the instant case the activities of TNSDC are ‘Supply’ as per Section 7(1) and are not excluded under Section 7(2). Further by the definition of business, the intent of ‘profit’ is not necessary for the activity. Also, only the ‘subsidy’ granted by the Government, stands excluded from ‘Consideration’. Therefore, the supply undertaken by the applicant is liable to GST and subject to the monetary Turnover of the applicant, the applicant is liable to obtain GST Registration - AAR Visit to Get Source GST: Classification of goods - Air Springs - the product as a whole is not an article of vulcanized rubber other than hard rubber and not classifiable under Customs Tariff entry at 40169990. Customs heading entry at 87088000 specifically covers Suspension systems and parts thereof of Motor Vehicles classifiable under CTH 8701 to 8705 and the functional utility of the ‘Air Springs’ being extending suspension or acting as shock absorber designed specifically for Motor Vehicles, the said entry is to be preferred to the residual entry of CTH 8708 9900. - AAR Visit to Get Source GST: Grant of Bail - input tax credit - fake invoices - The rival contentions particularly those relating to delegation of power by the Commissioner regarding recording of reasons to believe for affecting arrest under section 69 of the MGST Act or under the CGST Act may require a deeper analysis by the Court. While we defer examination of the same to subsequent hearing, the same however should not prevent us from dealing with the bail prayer of the petitioner. - Bail granted subject to conditions - HC Visit to Get Source Income Tax: Rectification of mistake u/s 254 - Penalty is levied in the instant case under Section 271(1)(i)(a) of the Act (as it then stood), while the explanation applies to the cases covered by Section 271(1)(i)(b) of the Act (as it then stood). Viewed in the above light also, we are of the view that the rectification petition could not have been allowed by the Tribunal. - HC Visit to Get Source Income Tax: Disallowance on provision of loss on derivative contracts - The loss sustained by the assessee due to fluctuation in foreign exchange while implementing export contract is incidental to assessee's course of business, therefore, such a loss is not a speculative loss but a business loss. - HC Visit to Get Source Income Tax: Revision u/s 264 - Scope of revision under section 264 of the Income Tax Act, 1961 cannot be abused as a substitute to get over an order of assessment passed second respondent without filing an appeal. Nothing to stopped the petitioner from filing a statutory appeal in time before the Commissioner of Income Tax (Appeals). - HC Visit to Get Source Income Tax: Levy of penalty u/s 271D - Receipt of deposits in cash in contravention of provisions of section 269SS - The assessee explained before the authorities below that two of the neighbours of the assessee purchased the properties and they were to make payment to HUDA. Since there was having no bank account, therefore, on their request assessee received the amount and deposited in his bank account - assessee has reasonable cause for failure to comply with provisions of law contained u/s 271D - No penalty - AT Visit to Get Source Income Tax: MAT Computation - computing book profits u/s.115JB - Provision for expenses - All these expenses are in the nature of regular business expenses incurred by the assessee during the year for which bills were not received by the year end, leading to creation of a provision. Since such provision is in respect of ‘ascertained liability, the same cannot be added back while computing book profit u/s.115JB - AT Visit to Get Source Income Tax: Late fee levied u/s 234E - delay in furnishing the tax deducted at source statement - Late fee under section 234B cannot be levied for a period up to 01/06/2015. In the present years under consideration, interest u/s 234B is not leviable for asst. year 2013-14 & 2014-15. However for asst. year 2015-16 the amended provisions would be applicable. In respect of asst. year 2015-16, no interest would be chargeable for the first quarter. - AT Visit to Get Source Income Tax: Addition u/s 56(2)(viib) - Share Capital - excessive Share premium - closely held company - Rule 11UA - Assessee has failed to explain and justify issue of preference shares with a face value of ₹ 10,000/- per share when the fair market value of the shares of the company is ₹ -4.73 per share. The reasons given by the Assessing Officer to treat the transaction as a colurable device to circumvent the provisions of section 56(2)(viib) of the Act, appears to be on sound footing. - AT Visit to Get Source Income Tax: Addition of payment made for legal professional charges - CIT(A) observed that payments do not relate to the professional services received by the assessee but other members of the group companies. - Since no bifurcation has been provided by the assessee, it is very difficult to decide how much of the charges paid pertain to the professional services received by the assessee company. The CIT(A) found that 75% of the expenses must have been incurred on other group companies and accordingly, sustained the addition - For the lack of evidences, we decline to interfere with the findings of the CIT(A) - AT Visit to Get Source Customs: SEIS Scheme - Validity and legality of Policy Circulars - Policy Circular No. 8/2018 dated 21.06.2018 clearly overrides the authority of the Reserve Bank of India and an attempt is made to introduce a provision for issuance of a certificate by the petitioner enabling the local domestic service provider, such as, ports to deem their INR billing as in foreign exchange. Such overriding policy decisions in our view would require an amendment in the FTP 2015-20 and as mandated under the provisions of section 5 of the FT (D&R) Act would have to be carried out only by the Central Government. - such circular is service provider are ultra vires the FTP - HC Visit to Get Source Customs: Detention cum demurrage waiver certificate - respondent No.4 i.e., the shipping line and its principal have taken the stand that they are not customs cargo services provider and therefore the 2009 Regulations are not applicable to them. - conflict between provisions of a subordinate legislation and provisions of a contract - objection of respondent No.4 is not legally tenable. The detention cum demurrage waiver certificate dated 16th November, 2020 has been validly issued as it can be traced to Regulation 10(1)(l) of the 2018 Regulations and under Regulation 10(1)(m) thereof, respondent No.4 i.e., the shipping line is under a legal obligation to comply with the certificate. - HC Visit to Get Source Customs: Import of branded goods in the name of fictitious entities - Misdeclaration and undervaluation - rejection of request for cross examination of the witness - during the course of investigation and while considering the entire matter, the Adjudicating Authority has been able to bring out the facts as to how the appellant has impersonated himself, opened bank account in the name of a fictitious person, remitted customs duty by effecting cash payment in dummy bank accounts, opened in the name of an Enterprise and one person. Therefore, the facts and circumstances of the case would clearly show that the request for cross examination is devoid of merits, lacks bonafide and rightly denied by the Adjudicating Authority. - HC Visit to Get Source Customs: Appointment of members of CESTST - petitioner, Govt, contends that CAT did not consider (a) sub-section (7) added to Section 129 of the Customs Act 1962 (Customs Act), vide the same Finance Act 2017 and which Section 129(7) - contention of the counsel for the respondents is that if the respondents, under the impugned order of CAT were to be given the benefit of the 2017 Rules - Section 129(7) of the Customs Act having admittedly not been noticed by CAT in the impugned order, the same is per incuriam to that extent and cannot be sustained - HC Visit to Get Source Customs: Levy of countervailing duty [CVD] - computation of amount of subsidy - Continuous Cast Copper Wire produced by Metrod Malaysia Sdn Bhd [the appellant] originating in Malaysia and exported from any country, including Malaysia, to India - It is not possible to sustain the CVD levied for “other program” and if this program is excluded from the subsidy margin determination, the appellant would fall below the de minimis level. The imposition of 2.47% CVD on the appellant at serial no. 8 of the notification dated January 8, 2020 is, therefore, liable to be set aside. - AT Visit to Get Source Corporate Law: De-activation of the Director Identification Number (DIN) - The writ petition for challenge to the de-activation of the Director Identification Number are allowed. It was de-activated on account of dis-qualification in one company effecting Director Identification Number for the other companies. The opposite parties are directed to activate the Director Identification Number for use for other company - HC Visit to Get Source Indian Laws: Period of limitation for filing an application u/s 11 of the Arbitration and Conciliation Act, 1996 - The period of limitation for filing an application under Section 11 would be governed by Article 137 of the First Schedule of the Limitation Act, 1963. The period of limitation will begin to run from the date when there is failure to appoint the arbitrator - It has been suggested that the Parliament may consider amending Section 11 of the 1996 Act to provide a period of limitation for filing an application under this provision, which is in consonance with the object of expeditious disposal of arbitration proceedings; - SC Visit to Get Source Indian Laws: Dishonor of Cheque - vicarious liability on Director - The prosecution under section 138 of the Act can be launched for vicarious liability against any person, who at the time of commission of offence was in charge and responsible for the conduct of the business of the accused company. Merely because the petitioner did not sign the cheques in question, is not decisive for launching prosecution against him - HC Visit to Get Source Indian Laws: Dishonor of Cheque - Personal liability of the Director / Signatory of the Company - The appellant is not entitled to contend that the offence has been committed by the Managing Director. Admittedly, the cheque is not drawn on a personal account maintained by the respondent. The cheque specifically states that it has been issued for and on behalf of the company. As such the company alone can be treated as the drawer of the ch - HC Visit to Get Source IBC: Initiation of CIRP - transaction of Financial Debt or not - Loan taken by the Corporate debtor from the sister concern was assigned by the said sister concern to the present applicant - The basic nature of the loan as witnessed from the Loan Agreement (Annexure A-2) will not change. If it was a simple debt extended to the sister concern, merely because the original lender has now assigned the debt to the Appellant will not change the nature of the transaction. - AT Visit to Get Source Service Tax: Cenvat Credit - Rejection of refund claim - Renting of immovable property services - General insurance service - The objection raised by the Department that office at Plot No. Y-14 has also been shared with the other company is not supported by any evidence and hence cannot be accepted merely on presumption basis. On the same count, there is no reason to deny credit on general insurance services availed by the appellant at their office premises i.e. South City Pinnacle - Credit allowed. - AT Visit to Get Source Service Tax: Refund of CENVAT Credit - input services - input services in respect of STPI unit and used the same in the export of services - In view of the clarification given by the Tax Research Unit of CBEC vide their letter dated 16.3.2012, the amended Rule 5 of CENVAT Credit Rules does not require correlation between the output service exported and the input services used in such output services exported. - AT Visit to Get Source Central Excise: Levy of penalty u/s 11AC of the Central Excise Act, 1944 - The appellant was all along filing statutory returns and being pointed out, they paid the duty and interest without disputing the same. There was no intention on their part to evade payment of duty - Penalty deleted - AT Visit to Get Source VAT: Classification of goods - Glow Mint Moisturiser - Glow Fair Moisturiser etc. - Even the supplier is aptly described as Glamour World. It is of course unsafe to base our conclusions on the basis of a title of the product. However, the petitioner himself has brought about the situation since as noted by the Assessing Officer despite opportunity been given, the petitioner failed to provide samples which could be sent for chemical analysis. - HC Visit to Get Source VAT: Allegation of taking Bribe - Petitioner, VAT officer, entered into a conspiracy with the assessee, under investigation, for an amicable settlement of the matter - It eludes comprehension how the petitioner is entitled to get immunity under Section 3 of the Judges (Protection) Act, 1985 for an act, which is not official or judicial, allegedly done by him. Accepting bribe cannot be considered as an act done by the petitioner in the course of discharge of his official or judicial duties or functions. Therefore, the petitioner is not entitled to get any immunity under the Judges (Protection) Act, 1985. - FIR is not liable to be quashed on any of the legal grounds raised by the petitioner - HC Visit to Get Source Articles Valuation of tobacco products for the purposes of payment of basic excise duty & NCCD levied as duty of excise post introduction of GST RECENT DEVELOPMENTS IN GST News DGGI Gurugram officials arrest man for input tax credit fraud of more than ₹ 43 crore APEDA organizes first ever virtual trade fair to boost export potential of India’s agricultural and processed food products Income Tax Department conducts searches in Kolkata 17 States implement One Nation One Ration Card system Case Laws: GST 2021 (3) TMI 451 Scope of Advance Ruling application - governmental authority Providing drinking water and off-take of sewerage in the Chennai Metropolitan area - pure services or not - N/N. 12/2017 dated 28th June, 2017 - HELD THAT:- It is seen that the applicant seeks ruling as to whether the services received by them are Pure Services to avail exemption under Sl.No. 3 of Notification No. 12 /2017-C.T.(Rate) dated 28.06.2017. The admissibility of the application was examined during the hearing extended to them. The applicant stated that they had sought ruling regarding the services received by them for which charges are paid by them, the activity in which they are recipient and not supplier of services. Thus, the question is on the eligibility of a notification in respect of the services received by them and not on the supply made by them. It is evident that an applicant can seek an Advance Ruling only in relation to supply of goods or services or both undertaken or proposed to be undertaken by them. Further, as per Section 103 (1) of the GST Act, the ruling is binding only on the applicant and the concerned officer or the jurisdictional officer of the applicant - In the case at hand, the applicant is the recipient of the services and not supplier of such service. Accordingly, this question is not liable for admission and therefore rejected without going into the merits of the case. 2021 (3) TMI 450 Scope of Advance Ruling application - Levy of GST - supply of safe drinking water for public purpose by Chennai Water Desalination Plant Limited (CWDL) to Chennai Metrowater Supply and Sewerage Board (CMWSSB) - HELD THAT:- It is evident that an applicant can seek an Advance Ruling only in relation to supply of goods or services or both undertaken or proposed to be undertaken by them. Further, as per Section 103 (1) of the GST Act, the ruling is binding only on the applicant and the concerned officer or the jurisdictional officer of the applicant. In the case at hand, the applicant is the recipient of the services and not supplier of such service. The application is not admitted, under Section 98(2) read with Section 95(a) of the CGST Act, 2017/TNGST Act, 2017. 2021 (3) TMI 449 Requirement of registration - Tamil Nadu Skill development Corporation(TNSDC) - TNSDC is registered as a non-profit organization under Section 8 of the Companies act in the year 2013 by the Government of Tamil Nadu with an objective to provide Skill Training Programme for meeting the growing industrial demand for skilled workers - benefit of exemption under Sl. No. 69 8670 of Notification No.12/2017-C.T.(Rate) dated 28.06.2017 - HELD THAT:- The entry at Sl.No.69 exempt services covered under specific Headings when provided by a specific class of persons in relation to specific programme/course/scheme and SI.No.70 exempts specific services provided by MSDE empanelled assessing bodies. In the case at hand the applicant is State Skill Development Corporation set up by the Government of Tamilnadu. The applicant is not an SSC approved by the NSDC; they are not assessment agency approved by SSC or NSDC; they are not a training partner approved by the NSDC or the SSC; they are not assessing body centrally empanelled by MSDE. Thus, in the instant case, the activities of the applicant are not satisfying the conditions provided in the SI.No. 69 Sl.No.70 of the Notification No. 12/2017 (CT) R dated 28.06.2017. Therefore, they are not eligible to available exemption as per SI. No. 69 of Notification 12/2017 (CT) R dated 28.06.2017. The applicant has stated that they are similar to the National Skill Development Corporation in as much as they are a not-for-profit corporation set up by the Government of Tamilnadu as a Nodal agency to provide demand based and Industry relevant skills to the unemployed youth to enhance their employability under State Skill Development Programme and Centre Skill Development Programme (in respect of Centrally Sponsored State Managed). It is their claim that they being similar in structure, role and activities to NSDC set up by GOI, the exemption available to GOI is to be extended to them. The words of the entry of the exemption Notification is very clear and unambiguous - In the case at hand, the applicant does not fall under the class of persons who are exempted vide SI.No. 69 70 above and therefore their activities are not exempted. Further, the applicant has referred the notification issued in west Bengal in support of their claim. This has been examined and found that the one notification issued by the west Bengal is pari-materia to the Notification 12/2017 C.T.- Rate dated 28.06.2017 and Notification No. PBSSD/GST-REG/2017/009/273 dated 18(11 September 2017 issued by Paschim aanga Society for Skill Development is specific for PBSSD, West Bengal. No such specific Notification is issued for the State of Tamilnadu. Therefore, the same do not have reference value in the case at hand. In the instant case the activities of TNSDC are Supply as per Section 7(1) and are not excluded under Section 7(2). Further by the definition of business, the intent of profit is not necessary for the activity. Also, only the subsidy granted by the Government, stands excluded from Consideration . Therefore, the supply undertaken by the applicant is liable to GST and subject to the monetary Turnover of the applicant, the applicant is liable to obtain GST Registration - the activities of the applicant are Supply under Section 7(1) of the GST Act and are not exempted under SI.No. 69 70 of the Notification No.12/2017-C.T.(Rate) dated 28.06.2017 and therefore, the applicant is required to be registered under the Act. 2021 (3) TMI 448 Classification of goods - Air Springs - correctly classifiable under Tariff heading 40169990 or Tariff heading 8708 9900 and attract GST at the rate of 18%? - HELD THAT:- The applicant is engaged in the manufacture and sale of Air Springs which are used in Air suspension systems for Buses, Trucks and Trailers. The product is composed of a rubber bellow which includes rubber and fabric composite, beadwire, griddle hoop, crimped top plate, piston and a bumper. The material composition of such Air Spring is approximately 60% metal and 40% rubber. The Air Springs work on the pneumatic system principle, whereby a volume of gas confined within a container is compressed, and, it produces a reaction force. The reaction force takes the vehicle load, makes the ride smoother and reduces wear and tear in the vehicle. Hence, the sole purpose of Air Spring is to provide a smooth, constant ride quality. In the erstwhile Central Excise regime they were classifying their product under the Heading 4016. Effective 01.07.2017, under GST, they have classified their product under CTH 8708. It is seen that all articles of vulcanized rubber(other than hard rubber) not covered by the preceding headings are included in this heading. Thus the entry 4016 is a residual entry which covers Other articles of Vulcanised Rubber other than hard rubber in which CTH 4016 99 is a further residual entry Other and CTH 4016 99 90 is a residual- residual-residual entry and therefore not a specific entry . To be classified under this heading, the product should be an article of vulcanised rubber other than hard rubber and should not be covered under any specific preceeding entries - it is seen that CTH 8708 covers Parts and accessories of vehicles falling under CTH 8701 to 8705. Section Note 2(a) of Section XVII, states that the expression Parts of this Section do not apply to articles covered under CTH 4016-other articles of vulcanised rubber other than hard rubber . The functional unit of the air spring, the container which holds the air i.e, bellows made of fabric-reinforced vulcanised soft rubber and therefore should merit classification under CTH 40169990, the suspension, i.e., the functional utility, is not provided only by the vulcanised soft rubber in the Air Spring . It is the entire formation of the product, bellow by the fabric reinforced vulcanised soft rubber, crimped with the bolts and the steel plate which provides the functional utility , when air is pumped in through the compressor and let out through the connected valves in the system. It is without doubt that the rubber used in the product is vulcanised soft rubber and mere usage of the same in the product do not merit the product to be termed as an article of vulcanised rubber other than hard rubber and classifiable under CTH 40169990.When it is held that the Air Springs are not products of vulcanised rubber other than hard rubber , then there is no application of Note 2 (a) of Section XVII of the Customs Tariff - The Air springs are a part of the Suspension System fitted in the axles of the vehicles falling under CTH 8701 to 8705, designed for use in such vehicles. In the case at hand, it is true that the products are for use primarily with articles of chapter 8701 to 8705. The product Main Air Spring are fitted in the lift axle and act as suspension for lift axle. The product Lift Air Springs are fitted in the lift axle suspension system and operate to move the lift axle up and down. Thus both these air springs are Suspension systems and part thereof and by predominant usage are classifiable under CTH 8708. Following the Apex Court s decision above, the product in hand being suitable for use solely with articles of Chapter Heading No. 8701 to 8705 are classifiable under CTH 8708, more appropriately under CTH 8708 80 00- Suspension Systems and parts thereof . The product as a whole is not an article of vulcanized rubber other than hard rubber and not classifiable under Customs Tariff entry at 40169990. Customs heading entry at 87088000 specifically covers Suspension systems and parts thereof of Motor Vehicles classifiable under CTH 8701 to 8705 and the functional utility of the Air Springs being extending suspension or acting as shock absorber designed specifically for Motor Vehicles, the said entry is to be preferred to the residual entry of CTH 8708 9900. However, the GST rates for the purposes of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 are based on the descriptions in the notification with the CTH at the four digit level - the Air Springs manufactured by the applicant are rightly classifiable under CTH 8708 and more specifically under CTH 8708 8000. 2021 (3) TMI 445 Grant of Bail - input tax credit - fake invoices - Petitioner has completed 54 days in custody. - till date, no charge sheet has been filed - delegation of power by the Commissioner regarding recording of reasons to believe for affecting arrest - violation of fundamental rights of the petitioner under Article 21 of the Constitution of India - HELD THAT:- Section 167 of the Code of Criminal Procedure, 1973 lays down the procedure where investigation cannot be completed in twenty-four hours. As per section 167(2)(a)(ii), the magistrate can authorize detention of an accused upto a maximum period of sixty days where the investigation relates to an offence other then those which are punishable with death, imprisonment for life or imprisonment for a term not less than ten years and on expiry of the aforesaid period of sixty days, the accused person shall be released on bail if he is prepared to and does furnish bail. The rival contentions particularly those relating to delegation of power by the Commissioner regarding recording of reasons to believe for affecting arrest under section 69 of the MGST Act or under the CGST Act may require a deeper analysis by the Court. While we defer examination of the same to subsequent hearing, the same however should not prevent us from dealing with the bail prayer of the petitioner. Petitioner shall be released on bail on furnishing cash surety of ₹ 5,00,000 in Remand Application before the Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Mumbai and within two weeks of his release, to furnish one solvent surety of the like amount before the said authority - Stand over to 20th April, 2021. 2021 (3) TMI 441 Attachment of Bank Accounts - HELD THAT:- Mr. Ravi Prakash is directed to file an affidavit of the concerned officer, which will indicate, under what authority of law, were the amounts collected without issuance of a show cause notice or an order of assessment. List on 07.04.2021. 2021 (3) TMI 429 Release of seized vehicle alongwith the goods - valid E-way bill not present - HELD THAT:- It is not in dispute that at the time of interception, the vehicle was not having valid e-way bill. Thus the said vehicle is detained and proceedings under Section 129 of the GST Act, 2017 are going on. The notice at Ext.P3, mentioning the discrepancies, is served on the petitioner. In this view of the matter, it is for the petitioner to appear and making his stand before the authorities - Petition dismissed. Income Tax 2021 (3) TMI 442 Nature of receipt - proceeds realized by the assessee on sale of Certified Emission Reduction Credit earned on the Clean Development Mechanisam in its wind energy operations - whether capital receipt and not taxable? - HELD THAT:- Question of law involved in the present appeal is covered by the decision of the Division Bench of this Court in S.P.Spinning Mills Pvt. Ltd. [ 2021 (1) TMI 1081 - MADRAS HIGH COURT] wherein the Division Bench held that the receipt should be treated as a capital receipt - Decided in favour of assessee. 2021 (3) TMI 440 Revision u/s 263 - Principal Commissioner of Income Tax has decided to initiate suo motu revision by contending that the order of the Income Tax Officer is erroneous as it is prejudicial to the interest of the Revenue - as averred in the show-cause notice that the valuation report of the DVO, Thiruvananthapuram is reportedly incorrect as communicated by the Asst. Engineer and the Chief Engineer vide letter dated 19.05.2020 - HELD THAT:- The matter is at the stage of show-cause notice. The 2nd respondent has proposed to revise the assessment order at Ext.P2 and for that purpose, objections of the petitioner are invited. Opportunity of hearing is also to be granted to the petitioner vide show- cause notice at Ext.P4. Thus the petitioner shall have full opportunity to put up its case before the revisional authority. At this stage, it cannot be said that the 2nd respondent revisional authority is biased and is bent upon to decide the matter adversly. Official acts are regularly done in wise principle of law and hence without there being any material on record, it cannot be said that issuance of show-cause notice reflects nothing but a biased attitude of the 2 nd respondent. This Court hope and expect that the 2nd respondent shall determine the issue in accordance with the provision of law without being influenced by the fact that the petitioner had approached this Court by filing writ petition. We do not feel it proper to interfere in the show-cause notice issued by the revisional authority, which has the power to revise the assessment order suo motu. The petition therefore fails and the same is accordingly dismissed. 2021 (3) TMI 435 Rectification of mistake u/s 254 - two days after rendering the main judgment in the present case, the Tribunal took a contrary stand in respect of the case of a sister concern of the assessee - the case of the sister concern of the assessee, the very same Tribunal, two days thereafter i.e., 27.11.1997, refused to direct the assessing officer to follow the directions in Ramlal Chiranjilal's case - Tribunal allowed the rectification on the ground that there is a contradiction in the orders of the Tribunal in respect of the case of the assessee as well as that of the sister concern in which judgments were rendered two days apart and that such a contradiction ought to be removed, so as to have clarity in the decisions - HELD THAT:- We are of the view that the reasoning of the Tribunal is erroneous. A decision taken subsequently in another case is not part of the record of the case. A subsequent decision, subsequent change of law, and/or subsequent wisdom dawned upon the Tribunal, are not matters that will come within the scope of 'mistake apparent from the record' before the Tribunal. The different view taken by the very same Tribunal in another case, on a later date, could be relied on by either of the parties while challenging the earlier decision or the subsequent decision in an appeal or revisional forum, but the same is not a ground for rectification of the order passed by the Tribunal. It could at the most be a change in opinion based upon the facts in the subsequent case. The subsequent wisdom may render the earlier decision incorrect, but not so as to render the subsequent decision as a mistake apparent from the record calling for rectification under Section 254 of the Act. Ramlal Chiranjilal's case, in fact was interfered with or reversed by High Court or Supreme Court, and the Tribunal in ignorance of a judgment of Superior Court, still directed Assessing Officer to follow Ramlal Chiranjilal's case. Then the mistakes noted above could facilitate correction under Section 254 of the Act. On the other hand, as in this case, the Tribunal without a changed circumstance surrounding Ramlal Chiranjilal's case entertained a rectification petition. This approach is more counter-productive and contrary to the three-tier mechanism provided under the Act and the subsequent tier to this Court. In view of the above, we hold that, in the circumstances of the case, the Appellate Tribunal went wrong in allowing the rectification application filed by the department on the basis of a decision rendered subsequent to the order that was sought to be rectified. Tribunal has not found in the impugned order that there was any mistake in the earlier order apparent from the record warranting a rectification. The only reason mentioned is that there is a contradiction in the orders passed and no rectification petition has been filed by the assessee in the subsequent case. The satisfaction of the Tribunal about the existence of a mistake apparent on the record is glaringly absent. As revenue further canvassed for the proposition that the reason for filing the rectification petition was on account of the omission of the Tribunal to consider the explanation to Section 271(1) of the Act (as it then stood). Even though the order of rectification issued by the Tribunal does not refer to any such contention having been raised, we are of the view that even the aforementioned contention of the revenue has no basis. In the instant case, the penalty is leviable on account of failure on the part of the assessee to furnish the return without reasonable cause within the time allowed in the manner required under Section 139(1) of the Act. The explanation to Section 271(1) does not apply to the circumstances in the present case. Penalty is levied in the instant case under Section 271(1)(i)(a) of the Act (as it then stood), while the explanation applies to the cases covered by Section 271(1)(i)(b) of the Act (as it then stood). Viewed in the above light also, we are of the view that the rectification petition could not have been allowed by the Tribunal. - Decided in favour of assessee. 2021 (3) TMI 434 Disallowance on provision of loss on derivative contracts - AO made the additions on the ground that, provision for loss cannot be allowed when the actual sales had not even taken place and maturity date of the derivatives contracts has not arisen and the notional loss or notional income and deduction of liabilities which are unascertained does not come within the purview of the I.T. Act - Tribunal deleted the addition - whether Tribunal is right in law in allowing carry forward of loss on derivatives contracts? - HELD THAT:- Revenue has not questioned / doubted the genuineness and reasonableness of the transaction. Similarly, the revenue has not disputed the fact that the estimation was made on reasonable basis and not on adhoc basis which is evident from Paragraph 6.1 of the order of CIT(Appeals). The loss which is claimed by the assessee, is claimed as deductible business expenditure and therefore, provision for loss has to be allowed at the close of the year in accordance with Paragraphs 3 to 39 of the Accounting Standard 11, which deals with foreign exchange contract. It is not disputed by the revenue that forward contracts were entered to protect the assessee from foreign exchange fluctuation in respect of consideration for export proceeds. The tribunal, therefore, rightly relied on the decision in WOODWARD GOVERNOR INDIA [ 2009 (4) TMI 4 - SUPREME COURT] while allowing the market to market loss as relating to forward exchange contract as deduction. The loss sustained by the assessee due to fluctuation in foreign exchange while implementing export contract is incidental to assessee's course of business, therefore, such a loss is not a speculative loss but a business loss. The aforesaid findings have not been demonstrated to be perverse. For the aforementioned reasons, the substantial questions of law No.1 and 3 are answered against the revenue and in favour of the assessee. Disallowance u/s 14A - HELD THAT:- From perusal of the relevant extract of the Supreme Court, it is evident that the decision in MAXOPP INVESTMENT LTD. [ 2018 (3) TMI 805 - SUPREME COURT] deals with applicability of Section 14A of the Act. Therefore, the observations made with regard to applicability of Section 14A in M/S NOVEL SOFTWARE INDIA (P) LTD. are factually incorrect and we hasten to clarify the same. However, from relevant extract of Paragraph 40, it is evident that only expenses proportionate to earning of exempt income could be disallowed under Section 14A of the Act and the decision of MAXOPP INVESTMENT LTD is an authority for the aforesaid proposition that the provision is relatable to earning of actual income. The object of Section 14A is to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the tax incentive by way of exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. It is also clarified by us that while recording the conclusion in KINGFISHER FINVEST LTD. [ 2020 (10) TMI 518 - KARNATAKA HIGH COURT] that disallowance under Section 14A has to be made even taxpayer has not earned any exempt income, this court has misread the ratio of the decision of the Supreme Court in MAXOPP INVESTMENT LTD supra and therefore, the aforesaid view being contrary to the law laid down by the Supreme Court is not a binding precedent. - Decided in favour of assessee. 2021 (3) TMI 431 Revision u/s 264 - Disallowance of proportionate interest borne by the petitioner on the amount paid to Mrs.Thillaikarasi on the ground that the payment made to Mrs.Thillaikarasi was not connected with the business of the petitioner and therefore was not a business expenditure - HELD THAT:- As evident that the petitioner had borrowed capital from the bank and paid amounts the said Mrs.Thillaikarasi contrary to the memorandum and articles of association of the petitioner company. The amount that was paid to Mrs.Thillaikarasi was not a business expenditure. Therefore, the interest paid thereon out of the borrowed capital also cannot be allowed to be written off as business expenditure. Therefore I do not find any merits in the present writ petition. The first respondent Principal Commissioner of Income Tax has rightly rejected the Application filed under 264 of the Income Tax Act, 1961 vide the imugned order. The scope of revision under 264 of the Income Tax Act, 1961 is limited and therefore cannot be interfered. Scope of revision under section 264 of the Income Tax Act, 1961 cannot be abused as a substitute to get over an order of assessment passed second respondent without filing an appeal. Nothing to stopped the petitioner from filing a statutory appeal in time before the Commissioner of Income Tax (Appeals). No merits in the present writ petition. 2021 (3) TMI 428 Deduction u/s 80IA(4) - according to AO in view of the explanation inserted below Section 80IA(13) with retrospective effect from 01.04.2008 has over-riding influence and debars the assessee s claim, because, the assessee s claim of deduction u/s 80IA(4) are in relation to business in the nature of works contract - HELD THAT:- Since the assessee is a developer in the new as well as existing infrastructural projects as stated above, deduction claimed by the assessee u/s 80IA for the A.Y. 2016- 17, to be allowed as rightly decided by Ld. CIT(A) - Decided in favour of assessee. 2021 (3) TMI 427 Levy of penalty u/s 271D - assessee has received cash other than account payee cheque/draft in contravention of provisions of section 269SS - HELD THAT:- Section 273B of the I.T. Act provides that no penalty shall be imposable on the persons or the assessee as the case may be for any failure referred to in section 271D of the I.T. Act, if he proves that there was a reasonable cause for the said failure. The assessee explained before the authorities below that two of the neighbours of the assessee purchased the properties and they were to make payment to HUDA. Since there was having no bank account, therefore, on their request assessee received the amount and deposited in his bank account. The drafts were prepared favouring the HUDA and ultimately the same have been deposited by them. The receipts are in the names of Mrs. Sujata and Shri Dushyant of the equivalent amount. Receipts of HUDA in favour of Shri Dushyant are also placed on record. These facts would clearly disclose that assessee has reasonable cause for failure to comply with provisions of law contained u/s 271D - Further, while passing the assessment order dated 21.03.2014 the AO did not disbelieve the explanation of the assessee as regards receipt of cash from these two neighbours and issue of drafts for these two neighbours and ultimate payment to HUDA. The AO did not record any satisfaction in the assessment order for contravention of provisions of section 271D. Assessee has reasonable cause for failure to comply with provisions of law and that no satisfaction has been recorded by the AO in the assessment order, would clearly show that no penalty is leviable in the matter. 2021 (3) TMI 426 Addition u/s 68 - unexplained cash credit - HELD THAT:- We hold that the authorities below have rightly invoked provisions of Section 68 of the 1961 Act and held that cash deposits in the assessee s ICICI Bank accounts to the tune of ₹ 3,22,68,500/- was the money of the assessee which was deposited by assessee in his bank accounts, during the year under consideration, and these two creditors namely Mr. Anuj Sonkar and Mr. Siddharth Agarwal in whose name the assessee has allegedly shown to have credited these amounts are bogus creditors. We uphold the orders of authorities below and hold that Section 68 was rightly invoked in the instant case. Allowability of set off of loss of current year against income assessed to tax by AO by invoking provisions of Section 68 - AO had denied the set off of current year loss owing to provision of Section 115BBE - HELD THAT:- CIT(A) has not adjudicated on the applicability of Section 115BBE as was in statute at that time, while adjudicating appeal of the assessee. The decision of ld. CIT(A) is reproduced in preceding para s of this order . The assessee being aggrieved has raised ground number 4 in memo of appeal filed with tribunal agitating that the authorities are silent as to set off of current year loss against income charged to tax u/s 68 of the 1961 Act. Thus, in the fitness of things, interest of justice and fair play to both the parties, we are restoring this issue of invocation of Section 115BBE of the 1961 Act by AO for denying set off of current year loss against income assessed u/s 68 of the 1961 Act to the file of learned CIT(A) for fresh adjudication and to pass speaking and reasoned order as to applicability of Section 115BBE read with Section 68 on the facts and circumstances of the assessee s case before denying set off of current year loss against income charged to tax u/s 68 of the 1961 Act, in set aside remand proceedings. 2021 (3) TMI 425 Condonation of delay - Late fee u/s. 234E - Fee for default in furnishing statements - delay in filing the TDS statement and therefore the AO by intimation u/s. 200A - HELD THAT:- As held in the case of MSV IT Solutions Ltd. [ 2018 (10) TMI 1774 - ITAT HYDERABAD] wherein on identical facts noticing that there was no legal remedy prior to 1.6.2015 against an intimation u/s.200A of the Act, the Hyderabad Bench condoned delay in filing appeal before CIT(A). The Assessee is not guilty of negligence and the delay was due to bonafide reasons set out above. The Assessee and as per the ratio laid down by the Hon ble Supreme Court in the case of Collector of Land Acquisition Vs. Mst. Katiji others [ 1987 (2) TMI 61 - SUPREME COURT] delay should be condoned where there is no negligence. The Hon ble Apex Court has emphasized that substantial justice should prevail over technical considerations. The Court has also explained that a litigant does not stand to benefit by lodging the appeal late. The Court has also explained that every day s delay must be explained does not mean that a pedantic approach should be taken. Considering the reasons given by the Assessee for condonation of delay and keeping in mind that technicalities should not stand in the way of rendering substantive justice, we are of the view that the delay in filing the appeals deserves to be condoned. Accordingly the delay is condoned. Since the CIT(A) has not decided the issue on merits, the order of the CIT(A) is set aside and remanded to the CIT(A) with a direction to decide the appeals of the Assessee on merits - Appeals by the assessee are treated as allowed for statistical purpose. 2021 (3) TMI 424 Deemed dividend addition u/s 2(22)(e) - Amount of loans to the extent of the reserves and surplus available with M/s. Shirdi Chemicals Pvt. Ltd., falls within the ambit of provisions of section 2(22)(e) of the Act and, hence, liable to be taxed in the hands of the assessee under the head Income From Other Sources - HELD THAT:- The issue on applicability of provisions of section 2(22)(e) of the Act is squarely covered in favour of the assessee by the decision of the Co ordinate Bench of the Tribunal in assessee s own case in preceding assessment year 2019 10, 2010 11, 2011 12, 2012 13 and 2013 14 wherein the Bench in Revenue s appeal declined to interfere with the order of the first appellate authority and upheld the same. Consequently, we do not find any infirmity in the order passed by the learned Commissioner (Appeals) by allowing the claim of the assessee. Revenue s appeal is dismissed. 2021 (3) TMI 419 TP Adjustment - determination of ALP for provision of SWD services by the Assessee to its AE - comparable selection - application of turnover filter in choosing comparable companies - HELD THAT:- As far as excluding the companies on the basis of turnover is concerned, the issue has been settled in several decisions of the Tribunal and has been elaborately discussed by this Tribunal in the case of Autodesk India Pvt. Ltd. [ 2018 (7) TMI 1862 - ITAT BANGALORE] turnover is a relevant criterion for choosing companies as comparable companies in determination of ALP in transfer pricing cases. There is no decision of the jurisdictional High Court on this issue. In the circumstances, following the principle that where two views are available on an issue, the view favourable to the Assessee has to be adopted, we uphold the order of the DRP excluding 5 companies from the list of comparable companies chosen by the TPO on the basis that the 5 companies turnover was much higher compared to that the Assessee. 2021 (3) TMI 418 Computing deduction u/s10A/10AA - Treatment to amount of expenses incurred by the assessee in foreign exchange - HELD THAT:- The CBDT in its circular No.04/2018 has provided that while computing deduction u/s.10A, the amount of freight, telecommunication charges and insurance expenses should be excluded from both the `Export turnover and `Total turnover . The Hon ble Punjab Haryana High Court in CIT Vs. Mercer Consulting (India) Pvt. Ltd. [ 2016 (8) TMI 1163 - PUNJAB AND HARYANA HIGH COURT] has also held that telecommunication charges should be excluded from both the `Export turnover and also the `Total turnover in the formula while computing deduction u/ss.10A/10AA. In view of the foregoing, it is evident that the amount of expenses incurred by the assessee in foreign exchange should be reduced from both the `Export turnover as well as `Total turnover while computing deduction u/ss.10A/10AA. As the AO reduced such amounts only from the `Export turnover and not the `total turnover , we direct to exclude these amounts from `Total turnover as well while computing the deductions. MAT Computation - disallowance of `Provision for performance bonus and `Provision for expenses while computing book profits u/s.115JB of the Act on the ground that such expenses are unascertained liabilities - HELD THAT:- There is an apparent contradiction in the recording made by the AO. We have gone through the relevant parts of the assessee s tax audit report for the year under consideration, as per which the assessee made provision for bonus. Except for a sum of ₹ 6.36 lakh, the assessee paid the entire amount of bonus in the succeeding year. Thus, it is overt that the provision for bonus is an ascertained liability which was largely discharged in the immediately succeeding year. The next is the item of `Provision for expenses . Details of such provision have been placed at page 64 of the paper book. Such provision includes salary, employee incentive, staff cost, car hire charges, staff training expenses, staff welfare expenses, repairs, maintenance, electricity, travelling, bank charges and insurance etc. On the later pages, the assessee has placed copious details of such expenses. All these expenses are in the nature of regular business expenses incurred by the assessee during the year for which bills were not received by the year end, leading to creation of a provision. Since such provision is in respect of ascertained liability, the same cannot be added back while computing book profit u/s.115JB of the Act. We, therefore, order to treat both the amounts in question as provisions for ascertained liability and not to make any addition to the book profit in this regard. This ground is allowed. Depreciation on computers/computer peripherals - AO allowed depreciation on computers/computer peripherals @15% as against the assessee s claim of 60% - HELD THAT:- , in respect of computer peripherals, the Special Bench of the Tribunal in DCIT Vs. Data Craft India Ltd.[ 2010 (7) TMI 642 - ITAT, MUMBAI] has held that routers and switches should also be classified under the term computers subject to higher rate of depreciation. The Hon ble Delhi High Court in CIT Vs. BSES Yamuna Towers Ltd. [ 2010 (8) TMI 58 - DELHI HIGH COURT] has also made the assessee entitled to higher rate of depreciation in respect of routers and switches. In view of the foregoing discussion, it is graphically clear that the assessee is rightly entitled to the higher rate of depreciation of 60% on computers/computer peripherals etc. The impugned order is overturned on this issue and the necessary relief is allowed. 2021 (3) TMI 417 Expenditure towards contribution to SPV - Allowable revenue expenditure u/s 37(1) - HELD THAT:- Facts leading to the disallowance is in the present case is similar and identical to the facts in the case of Veerbhadrappa Sangappa Co.[ 2020 (12) TMI 1145 - ITAT BANGALORE ], we note that same is the view taken by Co-ordinate Bench in case of M/s Ramgad Minerals Mining Ltd. [ 2020 (11) TMI 174 - ITAT BANGALORE ] Respectfully following the view taken in above decisions and based on the above discussions and analysis, we are of the opinion that 15% contribution to SPV retained by the monitoring committee on behalf of assessee deserves to be treated as business expenditure for the year under consideration. - Decided in favour of assessee. 2021 (3) TMI 416 Weighted deduction u/s. 35(2AB) - significance of date of application for approval - whether date of approval only will be cut off date for eligibility? - HELD THAT:- Assessee was granted recognition of Assessee s in house R D unit granted by the Government of India, Ministry of Science and Technology on on 19th January, 2011 and therefore for AY 2011-12, the Assessee was entitled to deduction u/s.35(2AB) of the Act. The date of application as 12.5.2011 as mentioned in the approval in Form No.3CM was the date on which application for issue of Form No.3CM was made. The application for issue of Form No.3CM is not relevant for allowing deduction under section 35(2AB) of the Act. Form 3CM quantifies the expenditure incurred for carrying out scientific research. The assessee has to make an application for approval in prescribed form 3CK for issue of Form No.3CM and also filed necessary evidence including details of expenditure. Therefore the date of application for approval does not assume any significance as admittedly, the Assessee has obtained approval u/s.35(2AB) of the Act and in any case for AY 2011-12, there was in fact an approval dated 19.1.2011. The Assessee is therefore entitled to deduction u/s.35(2AB) of the Act. We hold and direct accordingly. 2021 (3) TMI 412 Disallowing Section 54F claim in respect of alleged investment in residential house/property - both the lower authorities held the assessee as not entitled for the impugned deduction since neither any capital gains had arisen from transfer of her capital asset nor had she reinvested the same in a residential house so as to be eligible u/s.54F - CIT(A) made detailed discussion that the assessee had also failed to prove such a re-investment in a new residential property by filing cogent detailed evidence - HELD THAT:- We find no merit in Revenue s stand in principle. This is for the reason that it has adopted self-contradictory stand. Meaning thereby that on the one hand it has alleged that since the assessee had received developed commercial area from the developer in lieu of the capital asset handed over to the latter thereby not resulting in any capital gains or consideration money, it has, however, treated an equal sum as assessable under the head long term capital gain . We thus see no reason to accept the Revenue s stand on these mutually contradictory lines. Reinvestment of assessee s capital gains by utilising her joint family s funds - Assessee s detailed paper book filed on 09-02- 2021 placing on record all the relevant details of her house constructed in plot Nos.30 and 31, Magadha Village, Kokapet, Rajendra Nagar Mandal, R.R.District purchased on 21-09- 2005 followed by sanction of construction dt.16-06-2007 and completed on 18-05-2012. We hold in this factual backdrop that larger interest of justice would be met in case the Assessing Officer examines the entire issue of re-investment of assessee s capital gains in the above stated property afresh. Assessee s appeal is treated as allowed for statistical purposes. 2021 (3) TMI 411 Disallowance of interest expenditure u/s 36(1)(3) - A.O. noticed that the assessee has borrowed funds from banks and other entities and paid interest thereon - AO disallowed proportionate interest expenditure of ₹ 24 lakhs in assessment year 2011-12 and ₹ 41.04 lakhs in assessment year 2012-13 - CIT(A) noticed that the assessee could not establish commercial expediency in making the investment in WSIPL. Accordingly, he confirmed interest disallowance in respect of remaining amount of loans - HELD THAT:- Before us, no material was placed by the assessee to contradict the findings recorded by Ld. CIT(A) on this issue. Accordingly, we do not find any reason to interfere with the order passed by Ld. CIT(A) on this issue in both the years under consideration. Disallowance of advertisement expenses - AO noticed that the assessee has incurred huge amount of expenses on these advertisement expenses - HELD THAT:- Assessee has incurred the advertisement expenditure according to its wisdom/strategy from the point of view of the businessman. It is a well settled proposition of law that the tax authorities cannot sit in the arm chair of the businessman and decide the manner of conducting the business of the assessee. We notice from the assessment order that it is not the case of the A.O. that advertisement expenses incurred by the assessee are not genuine/bogus. The AO has formed the view that the advertisement expenses are huge vis- -vis its Sales revenue. In our view, it should not be the reason for making estimated disallowance. Under these set of facts, we are of the view that the A.O. was not justified in disallowing part of advertisement expenditure on estimated basis and the Ld. CIT(A) was not justified in confirming the same. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue in both the years under consideration and direct the A.O. to delete the disallowance. Disallowance of business promotion expenses - A.O. noticed that the business promotion expenses incurred by the assessee was in the nature of capital expenditure and the same has resulted in creation of an asset of enduring nature - CIT(A) took the view that 25% of the same may be treated as capital in nature - HELD THAT:-Observations of Ld. CIT(A) would show the nature of expenses incurred by the assessee are towards purchase of certain articles, which are for promoting the business of the assessee. In our view, those kind of articles would not give rise to creation of asset of enduring nature. Accordingly, we are of the view that the Ld. CIT(A) was not justified in sustaining addition of part of business promotion expenses. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to delete the disallowance of entire amount of business promotion expenses. Appeals of the assessee are partly allowed. 2021 (3) TMI 409 Reopening of assessment u/s 147 - reopening of assessment beyond a period of 4 years - Disallowance of expenses claimed under breakages damages - Addition for the alleged reason that, it is only an estimate, in the nature of provision and hence not allowable - HELD THAT:- Queries were raised by the Ld.AO on the same issue and assessee had filed submissions in respect of the issues considered for reopening the assessment. On a co-joint reading of all the materials filed by assessee before the Ld.AO in respect of alleged issues and the assessment order passed, it necessarily implies an opinion of the erstwhile assessing officer not to consider the issues to be taxable, though silent in the original assessment order. Therefore and the subsequent issuance of notice to reopen the assessment on such issues amounts to change of opinion. Further the reasons recorded reproduced hereinabove suggests that there was no failure on behalf of assessee to fully and truly disclose all material facts necessary for assessment, which is a necessary precondition for reopening an assessment beyond a period of 4 years as stipulated under the Act. The reasons recorded also reveal that, there has been no new material available with the Ld.AO which could justify the reopening of a concluded assessment beyond a period of 4 years. We set aside and quash the notice dated 17/05/2016 seeking to reopen a concluded assessment to be bad in law. As we have set aside and quashed the notice of reopening, consequential assessment order passed by the Ld.AO stands to be quashed and set-aside. Appeal filed by assessee stands allowed. 2021 (3) TMI 408 Late fee levied u/s 234E - delay in furnishing the tax deducted at source statement - intimation u/s 200A - scope of amendment to section 200A - HELD THAT:- Admittedly, the levy of late fees under section 234E has been exercised under section 200A for period prior to 01/06/2015. We note that the amendment to section 200A of the Act came into effect from 01/06/2015 and is held to be prospective in nature and therefore no computation of fee for the demand or intimation for fee under section 234 E could be made for late deposit of TDS for the assessment years prior to 01/06/2015. This view is supported by the decision of Hon ble Karnataka High Court in case of Fatheraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT ]. Late fee under section 234B cannot be levied for a period up to 01/06/2015. In the present years under consideration, interest u/s 234B is not leviable for asst. year 2013-14 2014-15. However for asst. year 2015-16 the amended provisions would be applicable. In respect of asst. year 2015-16, no interest would be chargeable for the first quarter. We therefore direct Ld.AO to delete the addition made under section 234B of the Act in the hands of assessee for the relevant assessment years under consideration. - Decided in favour of assessee. 2021 (3) TMI 407 Revision u/s 263 - reopening of assessment u/s 147 - book value per share of the assessee company did not justify the issue of shares at a premium, and also the nature and source of such unjustified premium remained unproved and unexplained within the meaning of Sec. 68 - HELD THAT:- AO while framing the assessment in the case of the assessee for A.Y 2009-10, by not bringing the impugned amount of share premium to tax in the hands of the assessee company had thus, by so doing acted as per the mandate of law as then so available on the statute and thus, taken a possible and plausible view which by no means could have been dislodged by the Pr. CIT in exercise of his revisional jurisdiction under Sec.263 of the Act. Period of limitation - Contention of the A.R that as the period of limitation provided for under sub-section (2) to Sec. 263 in the present case was to be reckoned from the end of the financial year in which the intimation under sub-section (1) to Sec. 143 was passed in the case of the assessee, and not from the order of reassessment passed under Sec.143(3) r.w.s 147, dated 13.11.2014, the impugned order passed u/s 263 was thus barred by limitation is acceptable that as the alleged error was not the subject matter of the reassessment proceedings under Sec.147 of the Act, therefore, the period of limitation contemplated in sub-section (2) to Sec. 263 would stand triggered with reference to the date on which the initial intimation under Sec. 143(1) was passed in the case of the assessee company and the same by no means could be related to the date of passing of reassessment order under Sec. 143(3) r.w.s 147, dated 13.11.2014. The impugned order of revision passed by the Pr. CIT under Sec. 263 of the Act pertaining to the aforesaid issue which was not the subject matter of the reassessment order passed by the AO under Sec. 143(3) r.w.s 147, dated 13.11.2014, could have been validly passed within a period of two years from the end of the financial year in which the intimation under sub-section (1) of Sec. 143 sought to be revised was passed, which not having been so done within the aforesaid prescribed period was thus barred by limitation. We are of the considered view that the Pr. CIT had wrongly assumed jurisdiction and therein passed the order under Sec. 263 r.w.s. 254 of the Act, dated 04.12.2019, which thus for the reasons discussed at length by us hereinabove cannot be sustained and is liable to be vacated. Accordingly, we herein set aside the order passed by the Pr. CIT under Sec. 263 r.w.s 254 - Decided in favour of assessee. 2021 (3) TMI 406 Undisclosed income - Search action u/s 132 - CIT(A) deleted the addition made on the basis of snapshot found in the i-phone of the assessee during the course of search u/s.132 of the Act at the residence of the assessee - AO added the entire amount to the income of the assessee by rejecting the contentions of the assessee that the said entries represented the old entries qua the financing business which assessee had been doing on brokerage basis till the year 2007 and which was closed in the year 2008 - CIT(A) deleted the addition by observing that the AO has failed to bring on record any substantive evidence to the effect that assessee has undisclosed/ unaccounted income - HELD THAT:- The undisputed facts are that during the course of search proceedings, certain snapshots taken in the i-phone of the assessee were examined and there were some entries which were claimed by the assessee as pertaining to the litigation which was going on in respect of fianance activities closed in the year 2008. As contended before us that he was facilitator only charging small commission for getting borrowers for intending lenders. Net worth of the payment was ₹ 28.71 Crores as on 31/03/2015 and ₹ 27.33 Crores as on 31/03/2016 and thus, the calculation of the AO that ₹ 1.56 Crores represented the net worth of ₹ 1.56 Crores on 06.07.2015 is wrong and rightly deleted by the ld. CIT(A) - AO has completely failed to bring any substantive evidence on record to prove that these entries represented the amounts in lakhs and hence , we do not find any infirmity in the order of ld. CIT(A) - The order passed by the ld. AO is based on presumption of surmises without any underlying substantive evidences and therefore, was rightly deleted by the AO. We are therefore, inclined to upheld the order of CIT(A) and appeal of the revenue is dismissed. 2021 (3) TMI 405 Exemption u/s 11 - whether the activities of the assessee trust would fall within the realm of trade, commerce or business etc. and thus would be hit by the proviso to Sec. 2(15)‟? - HELD THAT:- As the facts and the issue involved in the case of the assessee for the year in question before us i.e A.Y. 2013-15 remains the same as was there before the Tribunal in its aforesaid case for A.Y. 2009-10 [ 2015 (1) TMI 696 - ITAT MUMBAI] we, thus, respectfully follow the same. As held in own case none of its receipts can be said to be arising or accruing from the activities which can be said to be for the purpose of business or in the nature of trade or commerce. Here in this case all the activities are carried out in accordance with the objects and none of its activities have been found to be non genuine. The assessee's explanation before the DIT regarding nature of receipts clearly shows that they have been received from the members while pursuing objects of the society, specifically mentioned in the objects for which it was granted registration u/s 12A. Otherwise also, if any transaction of the trust which are incidental or ancillary towards fulfillment of the objects of other general public utility, will not normally amount to business trade or commerce, unless there is some intention to carry out business, trade or commerce on a permanent basis or for a reasonable continuity. The LD. DIT has not brought any evidence or material on record to show that the assessee was carrying out the activities on business or commercial principle or outside its objects. Thus on the facts of the present case it cannot be held that assessee's case is hit by proviso to section 2(15) or the registration granted earlier can be canceled within the ambit of section 12AA(3). Accordingly, we herein set aside the order of the CIT(A) and direct the A.O to allow the assessee‟s claim for exemption under Sec.11 - Decided in favour of assessee. 2021 (3) TMI 403 Withholding Tax / TDS - Royalty - Adjustment on account of payment for IT license maintenance cost - finding of the Ld. CIT(A) that no tax has been deducted on payment by the assessee for IT license maintenance cost, whereas it is the contentions of the Ld. counsel that the assessee has deducted tax @ 21.115% u/s 206AA of the Act - HELD THAT:- We set aside the order of the Ld. CIT(A) on the above matter and restore the matter to the file of the TPO/AO to make an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/evidence before the TPO/AO. Adjustment on account of payment of interest on trade credits - Admission of additional evidence - HELD THAT:- The supporting evidence as filed by the Ld. counsel is nothing but additional evidence. We are of the considered view that admission of the additional evidence filed by the assessee on the above ground of appeal by us would facilitate to render substantial justice between the parties. We are aware of the position of law that where an additional evidence has been allowed to be adduced, the interests of justice demand that the other side must be given an opportunity to explain or rebut such additional evidence as held in the case of Smt. Urmial Ratilal v. CIT, [ 1981 (6) TMI 25 - GUJARAT HIGH COURT] - we set aside the order of the Ld. CIT(A) on the above grounds of appeal and restore the matter to the file of the TPO/AO to make an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/evidence before the TPO/AO. 2021 (3) TMI 401 Estimation of income - Bogus purchases - CIT-A restricted the additions @5% - HELD THAT:- It is evident that the assessee was in possession of purchase invoices and it placed on record confirmation of accounts. The payments to the suppliers were through banking channels. The assessee produced stock register extract and correlated the tainted purchases with sales transactions. There could be no sale without actual purchase of material keeping in view the assessee s nature of business. The sales have not been disputed or disturbed by the revenue. In such a case, the approach of Ld. CIT(A) in estimating the additions @5% is quite fair reasonable. We concur with the same and therefore, this ground raised by the revenue stand dismissed. Addition u/s 68 - HELD THAT:- During appellate proceedings, the assessee submitted documentary evidences to demonstrate the fulfilment of primary ingredients of Sec.68. The confirmations of the lender, bank statements, Income Tax Returns, PAN etc. were duly filed in support of the transactions. It is another fact that most of the loans has been taken either from directors or their relatives and therefore, the identity of the lender could not be doubted. The creditworthiness was established by adducing the bank statements as well as Income Tax particulars. The genuineness got established by confirmation of accounts. Since, the assessee discharged the primary onus, as casted upon him in terms of Sec. 68, of proving these transaction, the impugned loans could not be termed as assessee s unaccounted money. Therefore, no fault could be found in the approach of Ld. CIT(A) in deleting the addition u/s 68 as well as interest disallowance. The ground thus raised before us stand dismissed. Addition u/s 36(1)(va) - HELD THAT:- Addition was deleted by Ld. CIT(A) by relying upon the binding judicial precedent in the shape of decision in CIT V/s Hindustan Organic Chemicals Ltd . [ 2014 (7) TMI 477 - BOMBAY HIGH COURT] Since no contrary decision is on record, our interference is uncalled for. Ground stand dismissed. 2021 (3) TMI 399 Addition u/s 56(2)(viib) - income from other sources - excess consideration received in the form of share capital over and above fair market value - assessee submitted CIT(A) has erred confirming additions made by the Assessing Officer towards consideration received for allotment of preference shares over and above fair market value of shares as on date of value without appreciating the fact that the provisions of section 56(2)(viib) of the Act will come into operation only in a case where shares has been issued at a premium over and above face value of such shares - HELD THAT:- Fixing share price at ₹ 10,000/-per preference share is not based on any scientific method or method prescribed under Rule 11UA of Income Tax Rules, 1962. The assessee has not filed any valuation report or evidence to justify value of shares. The assessee has also not explained basis for fixing different share price for equity shares and preference shares. The assessee has also not filed any evidence to explain how a prudent businessman would invest in a company, where its net worth is negative and book value of shares is far less than the face value of preference shares. Therefore, under these circumstances, it is very difficult to accept the arguments of the assessee that transaction of issue of preference shares is a normal commercial transaction and purpose of raising capital is for genuine business purpose of the company. We, further, are of the considered view that from sequent of events and manner in which preference share capital was raised, including terms of repayment, rate of return and period of shares, it can be easily concluded that transaction of issue of preference share capital is arranged transaction in the nature of sham transaction to overcome the amended provisions of section 56(2)(viib). Assessee has failed to explain and justify issue of preference shares with a face value of ₹ 10,000/- per share when the fair market value of the shares of the company is ₹ -4.73 per share. The reasons given by the Assessing Officer to treat the transaction as a colurable device to circumvent the provisions of section 56(2)(viib) of the Act, appears to be on sound footing. Hence, we are inclined to uphold the order of the learned CIT(A) in upholding additions made towards excess consideration received towards allotment of preference shares over and above the fair market value of shares under section 56(2)(viib) of the Act and dismiss appeal filed by the assessee. 2021 (3) TMI 398 Levy of penalty u/s 271(1)(c) - defective notice - Non specification of charge - Assessing Officer had failed to strike off the irrelevant default while calling upon the assessee to explain as to why penalty u/s 271(1)(c) of the I.T Act may not be imposed on him - HELD THAT:- Failure on the part of the A.O to clearly put the assessee to notice as regards the default for which penalty under Sec. 271(1)(c) was sought to be imposed on him by failing to strike off the irrelevant default in the SCN , dated 23.12.2016, had left the assessee guessing of the default for which he was being proceeded against for. As observed by us hereinabove, the Tribunal in the case of a related party of the assessee viz. Smt Divya Shailesh Bhadaliya [ 2019 (2) TMI 1793 - ITAT MUMBAI ] quashed the penalty imposed by the A.O u/s 271(1)(c), for the reason, that the A.O had wrongly assumed jurisdiction without validly putting the assessee to notice vide his SCN issued under Sec. 274 r.w.s 271(1)(c) as regards the default for which the penalty was sought to be imposed on her. As the facts and the issue involved in the case of the assessee before us remains the same, we, thus, in terms of our observations recorded hereinabove find no reason to take a different view and are unable to persuade ourselves to sustain the penalty imposed by the A.O under Sec. 271(1)(c) - Decided in favour of assessee. 2021 (3) TMI 397 Addition u/s 68 - Unexplained cash credit - proof of identity as well as credit worthiness of the creditor and genuineness of the transaction - HELD THAT:- In the present case it is not in dispute that the assessee received the loan from M/s Vastech Solution through banking channel, copy of the details of loan received through cheques of Axis Bank of the assessee's compilation which is copy of the ledger account of M/s Vastech Solution in the books of the assessee company, the said ledger account reveals that the assessee company not only received the amount through cheques but also made the payments. The A.O. as well as the Ld. CIT(A) doubted the amount received by the assessee but no eyebrow was raised on the payments made by the assessee to M/s Vastech Solution during the year relevant to the Assessment Year under consideration. It is also noticed that the firm M/s Vastech Solution was filing the returns of income and copy of the receipt of income tax return for the assessment year under consideration i.e A.Y. 2013-14 is placed at page no. 13 of the assessee's paper book wherein the total taxable income was declared at ₹ 1,69,080/- and the tax payable was ₹ 52,246/-. The said return was signed by one Shri Nitendra Tiwari in capacity of the partner on 31/03/2014, therefore the identity of the firm M/s Vastech Solution cannot be doubted. The said firm also confirmed the loan given to the assessee to the A.O. copy of the said confirmation is placed at page no. 19 of the assessee's compilation. We therefore considering the peculiar facts of the present case, are of the view that the addition made by the A.O. and enhanced by the Ld. CIT(A) was not justified, accordingly the same is deleted. 2021 (3) TMI 395 Rejection of books of accounts - AO framed the assessment exparte u/s 144 and made the addition on account of unexplained deposit in bank account and on account of unexplained investment in purchase of the car also confirmed by CIT-A - HELD THAT:- CIT(A) sustained the additions made by the A.O. by passing the impugned order in slip- shod manner. He simply stated that the assessee could nor furnish the complete set of bills and vouchers and the linking of the transactions to the books entries could not be verified. However, it is not brought on record how and in what manner the transactions to the book entries were not linked. CIT(A) also did not dispose off the legal issue agitated by the assessee against the completion of the assessment under section 144 of the Act. The directions given by the ITAT Chandigarh Bench B Chandigarh [ 2014 (10) TMI 1032 - ITAT CHANDIGARH] were not followed properly, we, therefore deem it appropriate to set aside this case back to the file of the Ld. CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. CIT(A) is also directed to pass the speaking order. We also direct the assessee to cooperate and not to seek undue unwarranted adjournments. - Appeal of assessee allowed for statistical purposes. 2021 (3) TMI 394 Long term capital gain - forced sale of mortgaged property to pay to the lender - distress sale - during the course of the scrutiny assessment proceedings, the Assessing Officer noticed that in the original return of income, the assessee has declared capital gains which was subsequently withdrawn in the revised return of income - as per AO since the plot of land was sold in the open market, it does not mean to foreclosure or action of the property by the lendor under distress AND key differentiating factor in diversion of income is that income in that source is charged with an over-riding title which diverts the income - HELD THAT:- Appellant company received the entire sale consideration and it cannot be said that it was a forced sale due to the pressure mounted by IBFSL. It may be possible that the plot of lands were sold under the vigil and direction of IBFSL but the fact remains that the entire sale consideration was realized by the appellant and thereafter the sale consideration was taken by IBFSL in discharge of its loan. It may be possible that the buyer desired the transfer of title from the owner to avoid any litigation with the owner in future and therefore, IBFSL, after receiving ₹ 3 crores, released the mortgage in favour of the assessee, thus, facilitating the assessee to sell the land with clear title. We are of the view that the income did accrue to the assessee and it cannot be said that the assessee sold the said plots of land involuntarily as forced sale. Considering the facts of the case relating to sale of mortgaged property, we do not find any force in the claim of the assessee. Ground No. 1 is accordingly, dismissed. Addition u/s 36(2) - addition on the amount returned - assessee had given guarantees to the lender on behalf of the borrowers as giving guarantee is one of the business objects of the assessee and for which guarantee commission is charged - AO was of the firm belief that the appellant has not fulfilled the conditions of section 36(2) of the Act as the assessee has not received any guarantee commission from CIPL - HELD THAT:- The entire transaction cannot be considered as the colorable device as the same was never entered with any intent to defraud the Revenue. We find that all the transactions were undertaken with third parties through bank accounts or registered Mortgage Deeds etc. in the regular course of business and were duly recorded in the books of accounts. Nothing could be managed as the transactions were spread over a period of five years. Due to mayhem in the stock market in the year 2008, the stocks of the listed companies nose-dived and the borrowers suffered huge losses, nothing was recoverable from them and there was no point in filing legal suit. It is true that no guarantee commission has been received by the assessee from CIPL but CIPL was not in a position to make any payment to the assessee. It is true that CIPL made certain donations but that cannot be considered against the assessee as the assessee could not be held responsible for the business module of CIPL. The assessee could recover only ₹ 36.50 crores out of ₹ 64.26 crores, the balance written off may not fulfill the condition of section 36(2) of the Act but definitely a business loss suffered by the assessee in carrying out its ordinary course of business. Considering the facts of the case in totality, the write off of ₹ 27,76,92,000/- is definitely a business loss and deserve to be allowed. We accordingly direct the Assessing Officer to delete the addition - Decided in favour of assessee. Addition of payment made for legal professional charges - HELD THAT:- On perusal of the bill show that some of the payments do not relate to the professional services received by the assessee but other members of the group companies. Since no bifurcation has been provided by the assessee, it is very difficult to decide how much of the charges paid pertain to the professional services received by the assessee company. The CIT(A) found that 75% of the expenses must have been incurred on other group companies and accordingly, sustained the addition of ₹ 28.60 lakhs.Before us also, the Counsel was not in a position to furnish the details. For the lack of evidences, we decline to interfere with the findings of the CIT(A), Ground of the assessee is dismissed. 2021 (3) TMI 393 Assessment of trust - depreciation claim - AO disallowed the claim of the assessee for depreciation on the ground that the cost of acquisition of the assets has been claimed as application of income under section 11 of the Act in earlier previous years when the assets were acquired and therefore allowing depreciation on those assets would amount to allowing double deduction which is not permissible u/s.11(6) of the Act - CIT(A) ultimately concluded that the assessee failed to prove that the cost of acquisition of the assets on which depreciation was claimed had not been claimed as application of income in the year of their acquisition - HELD THAT:- Issue with regard to grant of depreciation should be remanded to the AO for fresh consideration. Admittedly, the assessee did not have proper opportunity of being heard before the CIT(A). The Assessee has given the list of fixed assets on which depreciation was claimed by the assessee detailing as to how the value of fixed assets were not claimed as application of income in the year of acquisition. This has not been considered either by the AO or by the CIT(A). Since the matter requires verification by the AO, we deem it fit and proper to set aside the issue to the AO for fresh consideration in the light of the observations made above and the evidence already on record with liberty to the Assessee to produce such other evidence as may be necessary or required to substantiate the claim of the Assessee. Appeal of the assessee is treated as allowed for statistical purposes. 2021 (3) TMI 392 Disallowance u/s. 36(1)(v) - contribution made to LIC as unrecognized fund - HELD THAT:- As in the light of finding of this Tribunal in assessee s own case for A.Y. 2012-13 we hold that the assessee is entitled to claim deduction and accordingly, the AO is directed to allow the claim made by the assessee for the year under consideration. Thus, the ground raised by the assessee is allowed. 2021 (3) TMI 391 TDS u/s 194C - non deduction of TDS in respect of the payment made to various transporters - assessee is a partnership firm and engaged in the trading of consumable items as aata, maida, sugar and edible oil etc - main contention of the assessee is that there is no contractual agreement between the assessee and the transporter and the payment was made to the truck drivers who brought goods to the place of the assessee - HELD THAT:- It is not necessary for the purpose of Section 194C that the contract must be in writing, if there is an oral contract between the parties then the payment made under such contract also falls in the ambit of Section 194C. In case of transport of goods, there is always a builty/consignment issued by the transporter in the name of the consignee the transporter builty/consignment bill in itself is a contract between the parties. As far as the payment made to the driver it is not the payment to the driver in person but the payment in substance made to the transporter through the driver. The driver is only receiver/collector on behalf of the transporter. Therefore, making the payment through driver to the transporter would not obliterate applicability of Section 194C or Section 40(a)(ia). The decision of the coordinate Bench of this Tribunal as relied upon by the assessee in the case of Lalji Vaish Dall Mill was against the revision order passed u/s. 263 and the Tribunal has set aside the said order on the ground that the issue is a debatable issue and the AO has taken a possible view therefore the CIT was not justified in invoking the provisions of Section 263 of the Act. The decision of the Tribunal is purely based on the scope of jurisdiction and power of this Commissioner u/s. 263 of the Act. As regards the other decisions of Hon'ble jurisdiction High Court as well as the decision of Hon'ble Gujarat High Court those decisions are not directly on the point of payment made to the transporter for transportation of the goods of the assessee. Therefore, those decisions would not help the case of the assessee. Since the assessee has pointed out that the AO for the AY 2014-15 has not made any disallowance u/s. 40(a)(ia) in respect of the payment made to the transporters towards freight charges therefore, that crucial fact is required to be verified and considered. Accordingly, the matter is set aside to the record of the AO to reconsider this issue after verification of the fact whether the payment made by the assessee towards freight charges without deduction of TDS was allowed/accepted by the Assessing Officer for the AY 2014-15. - Appeal filed by the assessee is allowed for statistical purposes. 2021 (3) TMI 390 Set off the unabsorbed depreciation/business loss of the assessee incurred during the year and/or brought forward from previous years with the addition made u/s 68 - HELD THAT:- As the assessee has submitted that in the light of the Circular No.11/2019 dated 19.06.2019 the assessee may be given benefit of set off of income determined u/s 68 of the Act against unabsorbed loss as the assessment years involved in these appeals are 2013-14 and 2014-15 which are prior to assessment year 2017-18. The ld. Departmental Representative has also fairly agreed that the assessee is entitled to the set off of income against losses as per the above CBDT Circular. These grounds of the appeals of the assessee are hereby allowed and the Assessing Officer is directed to give the benefit of set off of losses against income determined for the assessment year under consideration as per the aforesaid CBDT Circular. Customs 2021 (3) TMI 444 SEIS Scheme - Validity and legality of Policy Circulars No. 06/2018 dated 22.05.2018 and 08/2018 dated 21.06.2018 - determination of eligibility of service providers for Service Exports from India Scheme (SEIS) to claim benefit to the extent of free foreign exchange earnings - HELD THAT:- In the present case, the petitioner has been granted SEIS benefit / reward in the form of duty free scrips for the financial year 2015-16 by the respondents. For the financial year 2016-17, petitioner's application for seeking benefit under SEIS was pending. In the meanwhile upon representations received from the industry, the impugned circular Nos. 06/2018 dated 22.05.2018 and 08/2018 dated 21.06.2018 have been issued by the respondents - Policy circular No. 06/2018 dated 22.05.2018 states that the actual service providers (and not ports) are eligible for SEIS benefit in respect of their share of earnings made by performing the notified services under the SEIS scheme. Further, the aggregator of services (ports) shall be entitled for benefits under SEIS only for services exclusively rendered by the ports and for which the foreign exchange earnings (or INR payments as allowed under the scheme) are received and retained by them on this account. The port cannot claim benefits to the extent of free foreign exchange earnings (or INR payments as allowed under the scheme) simply routed through it as receipt of service charges with regard to services rendered by other actual service providers. Section 5 of the FT (D R) Act provides that the Central Government may from time to time formulate and announce the Exim Policy by issuing notification in the official gazette. Thus, it is the Central Government which has power to amend the policy by adopting the procedure as stated in the Act; the power to announce the policy and to amend as such solely remains within the domain of the Central Government and cannot be delegated. It is clear that for any amendment to alter or modify the provisions of FTP 2015-20, the powers are exclusively vested in respondent No. 1 i.e the Central Government in terms of section 5 of the FT (D R) Act, 1992. In such circumstances we have to examine as to whether by way of the two impugned policy circulars any new conditions or restrictions can be added or read into the FTP or whether respondent Nos. 2, 3 and 6 can add / alter / amend the provisions of the FTP without recourse to exercise of powers conferred by section 5 of the FT (D R) Act upon the Central Government - By virtue of the two circulars, modification and alteration of provisions of para 3.08(c) of the FTP 2015-20 has been made which stipulates the provisions of deeming INR earning as foreign exchange in terms of the Reserve Bank of India guidelines. Policy Circular No. 8/2018 dated 21.06.2018 clearly overrides the authority of the Reserve Bank of India and an attempt is made to introduce a provision for issuance of a certificate by the petitioner enabling the local domestic service provider, such as, ports to deem their INR billing as in foreign exchange. Such overriding policy decisions in our view would require an amendment in the FTP 2015-20 and as mandated under the provisions of section 5 of the FT (D R) Act would have to be carried out only by the Central Government. Circular Nos. 06/2018 dated 22.05.2018 and 08/2018 dated 21.06.2018 in so far as they seek to add and amend the provisions of the FTP 2015-20 by inserting additional conditions to curtail the rights / benefits claimed by the petitioner as service provider are ultra vires the Foreign Trade Policy for 2015-20 - Impugned order of refusal dated 25.10.2018 passed by the Additional Director of Foreign Trade, Mumbai cannot be sustained and is accordingly quashed and set aside 2021 (3) TMI 443 Seeking direction to the respondents to strictly implement and enforce the detention cum demurrage waiver certificate - respondent No.4 i.e., the shipping line and its principal have taken the stand that they are not customs cargo services provider and therefore the 2009 Regulations are not applicable to them. - conflict between provisions of a subordinate legislation and provisions of a contract - HELD THAT:- A conjoint reading of sections 45 and 141 of the Customs Act makes it clear that officers of customs have an overall control over the goods unloaded in a customs area or which are in custody of persons approved by the Principal Commissioner or Commissioner. However, as we shall see, such general power cannot be invoked by a customs officer to issue a detention cum demurrage certificate to a customs freight station or to a shipping line - We need not labour much on the 2009 Regulations because the customs cargo services provider as defined under the said Regulations i.e., respondent No.5 has decided to comply with the detention cum demurrage waiver certificates dated 10th November, 2020 and 16th November, 2020 issued by respondent No.3. The only obstacle now to the release of the goods of the petitioner is respondent No.4 and its principal who have taken the stand that they are not customs cargo services provider and therefore the 2009 Regulations are not applicable to them. The detention cum demurrage waiver certificate dated 16th November, 2020 is not in terms of Regulation 10(1)(l) of the 2018 Regulations and in any case it is not bound by the same - Stand of respondent No.4 is that its principal had entered into a contract with the petitioner by way of the bill of lading dated 4th June, 2020; therefore petitioner being in a contractual relationship with the principal is bound by the terms of the contract which includes payment of detention charges for use of the containers. It has also taken the stand that it is not bound by the detention cum demurrage waiver certificate dated 16th November, 2020 of respondent No.3 because of the contract and also because the said certificate is not in terms of the 2018 Regulations. The issue boils down to a conflict between the 2018 Regulations which is a subordinate legislation having the force of law on the one hand and the contractual right of the shipping line on the other hand - The question as to whether in the event of a conflict between provisions of a subordinate legislation and provisions of a contract which one would prevail is no longer res integra - In State of Rajasthan Vs. J. K. Synthetics Limited, [ 2011 (7) TMI 1300 - SUPREME COURT ] , Supreme Court has held that the lease-deed under consideration was governed by the Mineral Concession Rules, 1960. Though the lease-deed provided that any royalty not paid within prescribed time should be paid with simple interest at the rate of 10% per annum, the same was subject to the Mineral Concession Rules, 1960 which upon amendment increased the rate of interest to 24% per annum in the event of default. In the circumstances, it has been held that any term in the lease-deed prescribing lesser rate of interest would have to yield to the Mineral Concession Rules, 1960 from the date of amendment as the rules will prevail over the terms of the lease. There are no hesitation to hold that objection of respondent No.4 is not legally tenable. The detention cum demurrage waiver certificate dated 16th November, 2020 has been validly issued as it can be traced to Regulation 10(1)(l) of the 2018 Regulations and under Regulation 10(1)(m) thereof, respondent No.4 i.e., the shipping line is under a legal obligation to comply with the certificate. Thus, the detention cum demurrage certificate dated 16th November, 2020 is binding on respondent No.4. That apart, holding on to the goods of the petitioner by respondent No.4 post the detention cum demurrage waiver certificate dated 16th November, 2020 and levying detention charges thereafter would be illegal and thus unlawful. Respondent No.2 shall take all necessary steps and ensure that the detention cum demurrage waiver certificates dated 16.11.2020 are implemented by all concerned including respondent Nos.4 and 5 and thereafter to release the imported goods of the petitioner - petition allowed. 2021 (3) TMI 439 Maintainability of petition - alternative remedy of appeal present or not - Import of branded goods in the name of fictitious entities - Misdeclaration and undervaluation - rejection of request for cross examination of the witness - petition dismissed on the ground that there is no acceptable explanation given by the appellant for not having resorted to the alternate remedy of filing an appeal before the Customs, Excise and Service Tax Appellate Tribunal - import of such imitation stones on monetary consideration - Levy of penalty - whether order is violative of Article 21 of the Constitution of India? - violation of the principles of personal hearing (natural justice) or not HELD THAT:- The outcome of the investigation was that Mr.Zahir Hussain was the actual owner of the goods imported by M/s.Abi Sathiya Enterprises and Mr.Zahir Hussain, in connivance with the appellant and Mr.T.Suresh, had imported branded glass chatons in the guise of artificial stones by grossly under invoicing the value of the consignment by misusing IECs, issued in the name of M/s.Abi Sathiya Enterprises. Similar is the outcome of the investigation in the other case as well - The reply given by the appellant has been dealt with by the adjudicating authority from paragraph 80 of the Order-in-Original No.640 of 2012 and from paragraph 40 of the Order-in-Original No.639 of 2012. In the reply/representations, which the appellant had sent, he has not been specific as to why he requires cross examination because, the appellant has not brought out any independent facts or evidence as his defence to the allegation made against him in the show cause notice. The reply is a bald denial of the entire allegations stating that the appellant is not involved in the import of the said items - during the course of investigation and while considering the entire matter, the Adjudicating Authority has been able to bring out the facts as to how the appellant has impersonated himself, opened bank account in the name of a fictitious person, remitted customs duty by effecting cash payment in dummy bank accounts, opened in the name of an Enterprise and one Shri Rakesh Upadhaya. Therefore, the facts and circumstances of the case would clearly show that the request for cross examination is devoid of merits, lacks bonafide and rightly denied by the Adjudicating Authority. The appellant would seek to argue that the proceedings are vitiated on account of mala fide. If this is the case of the appellant, then there should be specific allegation against the named officers against whom, he alleges mala fide or bias. Admittedly, no such officer has been made a party to the writ petition. Therefore, the plea of mala fide exercise of power has to be definitely rejected. The request made by the appellant to cross examine few of the co-noticees, who were also involved in the transaction was rightly denied by the Adjudicating Authority and no prejudice has been caused to the appellant on the said ground. The reasons assigned by the Adjudicating Authority to deny cross examination, taking note of the factual situation, is well founded. That apart, the other co-noticees have not retracted their statements rendered by them under Section 108 of the Act, which is binding - the order passed by the Adjudicating Authority does not suffer from any error of law for interfering with the same. Appeal dismissed. 2021 (3) TMI 438 Appointment of members of CESTST - petitioner contends that CAT did not consider (a) sub-section (7) added to Section 129 of the Customs Act 1962 (Customs Act), vide the same Finance Act 2017 and which Section 129(7) - contention of the counsel for the respondents is that if the respondents, under the impugned order of CAT were to be given the benefit of the 2017 Rules - HELD THAT:- Though the counsel for the respondents is correct in his contention aforesaid but it is not as if the order of CAT whereunder the said benefits had been directed to be given to the respondents, had/has attained finality. The same was subject matter of the judicial review in this petition and in which exercise of power of judicial review, merit is found in the contention that CAT, in the impugned order has not noticed Section 129(7) of the Customs Act which permits of no ambiguity. In accordance therewith, the respondents, who are pre 2017 appointees, are to be continued to be governed by the 1987 Rules and not by the 2017 Rules. The respondents cannot pick beneficial provisions from both the Rules. They cannot claim security of tenure till the age of superannuation, under the 1987 Rules and at the same time claim emoluments under the 2017 Rules. They forget that post 2017 appointees have a maximum tenure of five years only. Without a challenge being made to Section 129(7) of the Customs Act and/or the same being struck down, the principle of equal pay for equal work, though otherwise appears to be justified, could not have been applied in contravention of the statute. However for application of the said principle also, a comparative study of all the terms and conditions of appointment have to be made and which has also not been done in the impugned order. Section 129(7) of the Customs Act having admittedly not been noticed by CAT in the impugned order, the same is per incuriam to that extent and cannot be sustained - Petition allowed. 2021 (3) TMI 423 Seeking waiver of penal charges for late filing of Bill-of-Entry - HELD THAT:- Identical issue decided in the case of M/S. BLUELEAF TRADING COMPANY VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE [ 2019 (5) TMI 672 - CESTAT CHENNAI] where it was held that Appellant is clearly not the first importer, there is request for amendment in IGM on record, allowed by the Revenue after collecting requisite fees and these are clearly post-import developments. The subsequent developments, were perhaps necessitated because of the goods being perishable. Clearly, no mala fide is found in the above developments by the Revenue and therefore, it can be safely assumed that the Revenue was otherwise satisfied with sufficient cause . Penal charges for late filing of Bill-of-Entry is to be set aside - appeal allowed - decided in favor of appellant. 2021 (3) TMI 422 Liability of the appellant to redemption fine under Section 125 of the Customs Act, 1962 - Confiscation remains unchallenged - penalty u/s 112 (a) ibid - classification of Chick Peas (Tanzania Yellow Gram (Desi Chick Peas)) - HELD THAT:- An identical issue came up for consideration before the Tribunal in the case of M/S. O.M.S. SIVAJOTHI MILLS VERSUS THE COMMISSIONER OF CUSTOMS [ 2019 (8) TMI 1039 - CESTAT CHENNAI] where it was held that When the order as to the confiscation remains unchallenged, the importer accepts the order of confiscation and even the exporter offers willingness to accept back (re-export) the consignment, there cannot be any question of redemption fine. Therefore, the redemption fine imposed and upheld by the First Appellate Authority cannot sustain and is accordingly set aside - the redemption fine charged under Section 125 of the Customs Act, 1962 is unsustainable and the same is required to be deleted. Levy of penalty under Section 112 (a) of the Customs Act, 1962 - HELD THAT:- A reading of the said Section makes it clear that the penalty under Section 112 (a) would be imposed in the case of improper importation of goods which has rendered the imported goods liable to confiscation under Section 111 and for this, it is held that abatment is not a criterion - the case on hand gets covered under the mischief of Section 112 (a) ibid - however, the penalty imposed under Section 112 (a) of the Customs Act, 1962 is reduced to ₹ 50,000/- Appeal allowed in part. 2021 (3) TMI 415 Valuation of imported goods - enhancement of the custom value of the imported goods - HELD THAT:- Though the appellant, at the time of clearance of the goods, given consent for the enhancement of the value, however at the same time they have protested the enhancement by requesting for speaking order vide letter dated 14.05.2019 and a reminder letter dated 27.05.2019. Thereafter, the assessing authority i.e Deputy Commissioner of customs passed a speaking order dated 15.05.2019. In these circumstances the appellant has right to appeal against the speaking order. Therefore, it cannot be said that only because the appellant has given the consent, appellant cannot challenge the enhancement of value. There is a clear violation of principles of natural justice on the part of the assessing authority. The speaking order, which was passed in violation of principles of natural justice, will not sustain - matter remanded to the Adjudicating Authority for passing a de-novo speaking order after providing all the necessary documents in support of enhancement of the value and granting the appellant sufficient opportunity of personal hearing. Appeal allowed by way of remand. 2021 (3) TMI 404 Levy of countervailing duty [CVD] - Continuous Cast Copper Wire produced by Metrod Malaysia Sdn Bhd [the appellant] originating in Malaysia and exported from any country, including Malaysia, to India - computation of amount of subsidy - case of appellant is that Subsidy was incorrectly computed for other program , which was not countervailable as it granted exemption only in respect of import of that quantity of raw material which was required for export production - it is also alleged by appellant that no CVD could have been imposed on drawn Copper Wire manufactured by the appellant i.e. Copper Wire of less than 6mm manufactured by using drawing process and falling under CTH 74081990. If the other program is excluded from the subsidy margin determination, the appellant would fall below the de minimis level and, therefore, would be excluded from the purview of the impugned notification? - HELD THAT:- The appellant was granted exemption from import duty on raw materials used for the manufacture of finished products. The duty exclusion requirements on raw materials for manufacturing the finished product have been indicated in Appendix A, while the exemption period, storage of raw material and markets are set out in Appendix I. The conditions specified in Appendix I would indicate that the appellant had been granted full import duty exemption on import of Copper Rods to be used for producing Copper Wire for the export market. It also specifies that 1 MT : 1 MT input-output ratio has to be maintained, which means that for every 1 MT of Copper Rod imported duty free, 1 MT of Copper Wire is required to be exported. The Designated Authority was aware of claim made by the appellant that the subsidy on the import of raw material would not be countervailable, since the appellant had used the imported duty free Copper Rods for producing Copper Wire solely for export market but the Designated Authority did not raise any doubts on this aspect, either in the verification report or in the disclosure statement. The Designated Authority did not at any point express any view that the appellant had exported lesser quantity of Copper Wire than the quantity of Copper Rods imported by it duty free - In fact, in the verification report as also the disclosure statement, the Designated Authority took this subsidy program as program 24 for which CVD has been recommended in the final findings as it provides exemption from import duty on raw material used for all kinds of manufacturing activity and not solely for the manufacture of export products. It also transpires from the records that the appellant made submissions in the comments to the disclosure statement regarding its claims that the duty free raw material imported was exclusively used for the production of goods that were exported but the Designated Authority, without seeking any further clarification from the appellant on the comments, determined the said program to be countervailable on the ground that the appellant failed to give sufficient evidence or step by step explanation of the verification mechanism followed by the Government of Malaysia for determining whether there was excess remission or not. It is not possible to accept the contentions advanced by the respondent that the appellant did not provide adequate evidence before the Designated Authority to substantiate that inputs were used exclusively for manufacturing goods and that adequate verification mechanism did not exist. The approval letter issued by MIDA did not merely mention that the imported goods, on which duty was exempted, were to be used exclusively for manufacturing products for exports but also provided a detail procedure to be adhered to in Appendix A and Appendix I to the letter - inevitable conclusion that follows from the discussion is that there was a step by step verification in place for ensuring that no excess remissions take place. It is not possible to sustain the CVD levied for other program and if this program is excluded from the subsidy margin determination, the appellant would fall below the de minimis level. The imposition of 2.47% CVD on the appellant at serial no. 8 of the notification dated January 8, 2020 is, therefore, liable to be set aside. Copper Wire manufactured by the appellant is not akin to Continuous Cast Copper Wire Rods and, therefore, no CVD could have been imposed on drawn Copper Wire manufactured by the appellant - HELD THAT:- Such being the position, it would not be necessary to examine the submission raised on behalf of the appellant that the drawn Copper Wire manufactured by the appellant is not akin to Continuous Cast Copper Wire Rods . The imposition of 2.47% CVD on the appellant at serial no. 8 of the notification dated January 8, 2020 is set aside - Appeal allowed - decided in favor of appellant. Corporate Laws 2021 (3) TMI 433 De-activation of the Director Identification Number - Section 164(2) of the Companies Act, 2013 - HELD THAT:- Similar controversy was raised in other High Courts and after considering the issue at length, the Gujarat High Court decided batch of petitions in GAURANG BALVANTLAL SHAH S/O BALVANTLAL SHAH VERSUS UNION OF INDIA [ 2019 (1) TMI 27 - GUJARAT HIGH COURT ] - Therein also, the name of the petitioner was struck off from the list of Director of various companies. The publication of which was made under Section 248 of the Act of 2013. A direction to activate the Director Identification Number of the petitioner forthwith has been given, if not activated so far. It was however with the liberty to take legal action against the petitioner for any statutory default or non-compliance of the provisions of the Companies Act. The writ petition for challenge to the de-activation of the Director Identification Number are allowed. It was de-activated on account of dis-qualification in one company effecting Director Identification Number for the other companies. The opposite parties are directed to activate the Director Identification Number for use for other company - Decided in favor of petitioner. 2021 (3) TMI 396 Demand of return of deposit alongwith interest - Granting of appropriate rate of Interest for the delayed period - negligence of the Board of the Respondent- Company either in making the payment or giving any reply at all to the demand of the Petitioner - HELD THAT:- Deposits can be accepted by the Companies under Section 73 to Section 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 as amended time to time. For invoking the jurisdiction of the Tribunal as per Section 74(2) under the Companies Act, 2013, even a partial failure by the Company to repay the deposit was sufficient. In fact, Section 2 (31) of the Companies Act speaks of the meaning of deposit. The Tribunal is having vide discretionary powers regarding the repayment of Deposit (s) but it must exercise its discretion objectively taking into consideration all the relevant aspects in a conspectus judicial manner. In reality, the distinction between deposit and loan may not be a relevant factor for interpreting the term Deposit . To put it succinctly, under the new Companies Act, 2013, the definition of the term Deposit is of wider amplitude. In the present case, this Tribunal could not find any evidence the Company filed application before the Registrar of Companies regarding any statement of the deposits accepted by the company and sums remaining unpaid on such amount with the interest payable thereon along with the arrangements made for such repayment. It is evident from the receipt No. 140 issued by the Respondent No.1 Company to the petitioner on 23.05.2012 that the petitioner issued a cheque (No. 118356) of ₹ 2,45,000 towards deposit/Loan. The Respondent did not submit any evidence of Board Resolution with regard to the collection of money - As far as the natural justice is concerned, it is true that the Company retained the Deposit amounts for its business purposes which was otherwise to be paid to the depositors on the due date of maturity (in the present petition no due date or interest payable is referred by both the parties) or in other words, the Company has used the money of the public for number of years for its business purposes. Therefore, it is an accepted commercial principle to pay Interest to a person whose money is used by the Borrower for its business advantage. Granting of appropriate rate of Interest for the delayed period - HELD THAT:- The Legislature is very much convinced of the fact that if the Share Application money is used by the Company without allotment of Shares of Securities, then such Share Application money shall be treated as if it is a deposit with the Company on which 12% Interest can be earned. The present case also falls within the same category, which is in favour of the Depositor. If this principle is followed, then it is judicially correct to order the grant of Interest @ 12% per annum for the delayed period. Since the instant petition remained pending for quite some time, a direction is issued to the Respondent company to repay the amounts due and payable to the petitioner with 12% interest for which the company has defaulted and shall file an unconditional affidavit stating strict compliance, with the Registrar of Companies, Kerala by 01.05.2021 - Petition disposed off. 2021 (3) TMI 389 Sanction of Scheme of Arrangement - Section 230 to 232 of the Companies Act, 2013 - HELD THAT:- Various directions regarding holding and convening of various meetings issued - various directions regarding issuance of various notices, in connection to the meetings to be served, also issued. Application disposed off. 2021 (3) TMI 388 Sanction of Scheme of Amalgamation - section 230-232 of Companies Act - HELD THAT:- Various directions regarding holding and convening of various meetings issued - directions regarding issuance of notices also issued. Application disposed off. 2021 (3) TMI 387 Sanction of Scheme of Amalgamation - section 230-232 of Companies Act - HELD THAT:- Various directions regarding holding and convening of various meetings issued - various directions regarding issuance of notices also issued. Application disposed off. Insolvency & Bankruptcy 2021 (3) TMI 430 Handing over physical possession of the office premises - Recovery of municipal tax dues from assessee - scope of subject matter under IBC - Whether the writ jurisdiction of this court under Article 226 of the Constitution of India can be invoked in the matter, despite the availability of an alternative remedy? - HELD THAT:- The nature of challenge thrown in the writ petition is on the ground of absence of jurisdiction and not wrongful exercise of the available jurisdiction , thus bringing it within the fold of Article 226 of the Constitution. In such a scenario, the present writ petition is maintainable - although a wrongful exercise of available jurisdiction would not be sufficient to invoke the High Court s jurisdiction under Article 226 of the Constitution, the ground of absence of jurisdiction could trigger such invocation. Hence, in view of the nature of challenge involved in the present writ petition, the same is maintainable in law. Whether the property-in-question, having been seized by the KMC in recovery of its statutory claims against the debtor, can be the subject-matter of a Corporate Resolution Process under the Insolvency and Bankruptcy Code, 2016? - HELD THAT:- In the present case, the Corporation followed such procedure and took possession of the disputed property for non-payment of tax. Thus, there was no further scope for any determination of ownership of the property by the KMC. As such, there arose no question of the task of the interim resolution professional, in taking control and custody of the asset, being subject to the determination of ownership by any authority, as contemplated under Section 18(f)(vi) of the IBC. Rather, the claim of the KMC, in the absence of any successful challenge thereto, attained finality, fastening a liability upon the corporate debtor - the finalized claim of the KMC can very well be the subject-matter of a Corporate Resolution Process under the IBC. Both the issue answered in the affirmative and against the writ petitioner. 2021 (3) TMI 413 Maintainability of application - initiation of CIRP - Appellant claimed that there was default in payment of debt on the part of the Corporate Debtor - Loan taken by the Corporate debtor from the sister concern was assigned by the said sister concern to the present applicant - whether the transaction concerned can be treated as a transaction of Financial Debt as defined in Section 5(8) of IBC? - HELD THAT:- It is apparent that there can be debts which do not necessarily fall in the definition of financial debt or operational. Money borrowed against payment of interest comes within the definition financial debt. However, if the money borrowed is not against payment of interest, under the definition of financial debt, the core requirement is to find whether there is consideration for the time value of money . The facts of the matter disclose and the Appeal also records that when the Corporate Debtor was unable to get any further loan from the market after having taken loan from M/s. Tata Capital Financial Services Ltd., M/s. Sameer Sales which was related party to the Corporate Debtor, extended interest free unsecured loan to the Corporate Debtor payable on or after 1st February, 2020 and that too upon demand by the lenders. It has been then argued that the Appellant after execution of the Assignment Agreement in its favour, not being related party and having taken the assignment for consideration, the loan extended would have to be treated as a Financial Debt. We are unable to accept such argument - The basic nature of the loan as witnessed from the Loan Agreement (Annexure A-2) will not change. If it was a simple debt extended to the sister concern, merely because the original lender has now assigned the debt to the Appellant will not change the nature of the transaction. There are no error in the findings recorded by the Adjudicating Authority where the Adjudicating Authority found that the transaction is not a transaction of financial debt and thus declined to admit the Application under Section 7 of IBC - appeal dismissed. 2021 (3) TMI 386 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - claims dues of Operational Creditors - existence of debt and dues or not - HELD THAT:- There is no truth in the story of issuing debit note by the Corporate Debtor or acceptance thereof by the Operational Creditor. The version of the Operational Creditor that neither of the two letters were received by the Operational Creditor and the seal and initials also do not belong to the Operational Creditor in any manner appears to be probable one. The Operational debt of ₹ 1,70,82,059.04 is due and outstanding to be payable by the Corporate Debtor to the Operational Creditor. The Corporate Debtor has failed to clear its outstanding and defaulted in making the payment in spite of notice under Section 8 of the IBC. The sum of ₹ 1,70,82,059.04 is payable along with interest to the Operational Creditor - there are no hesitation in admitting the petition and ordering initiation of CIRP against the Corporate Debtor. Application admitted - moratorium declared. Service Tax 2021 (3) TMI 421 Rejection of refund claim - export of services - renting of immovable property services - general insurance service - Manner of calculation of refund as per Rule 5 of the Credit Rules - Entitlement of interest under Section 11BB of the Central Excise Act on delayed refund amount - Rule 5 of the CENVAT Credit Rules. Renting of immovable property services - General insurance service - HELD THAT:- On further perusal of the lease agreement, it is noted that the appellant had their registered office at Plot No. Y-14 for which reason the same has been mentioned in the invoice - The certificate issued by the landlord clearly mentions that they have rendered renting of immovable property services to the appellant in respect of rented premises i.e. South City Pinnacle situated at Plot No. X1-1. In view of the said factual matrix, there is no reason to dispute the receipt of services by the appellant in the absence of any contrary finding. The objection raised by the Department that office at Plot No. Y-14 has also been shared with the other company is not supported by any evidence and hence cannot be accepted merely on presumption basis. On the same count, there is no reason to deny credit on general insurance services availed by the appellant at their office premises i.e. South City Pinnacle - Credit allowed. Manner of calculation of refund as per Rule 5 of the Credit Rules - HELD THAT:- As per the formula prescribed in Rule 5 of the Credit Rules, refund amount need to be ascertained by applying the ratio of value of export turnover to the total turnover on the net CENVAT Credit amount . The said net CENVT credit amount is the total of credit availed on inputs and inputs services as reduced by the amount in terms of Rule 3(5C). The said Rule 3(5C) is the amount to be paid by the manufacturer of excisable goods for corresponding inputs used for manufacture of goods on which duty has been remitted under Rule 21 of the Central Excise Rules. The said Rule 3(5C) has no relevance in the given case of assessee who is a service provider and not the manufacturer - there cannot be any question of making any deduction of the amount of credit utilised for payment of output service tax on domestic services in order to arrive at net CENVAT credit since not prescribed in the Rules - Department made a fundamental error in so far as computation of refundable amount is concerned - decided in favor of appellant. Entitlement of interest under Section 11BB of the Central Excise Act (as also made applicable to Service Tax) on delayed refund amount - HELD THAT:- The law is amply clear that when there has been a delay in payment of refund amount, the assessee is entitled for interest under Section 11BB - the original authority has not dealt with the entitlement of interest. Further, in appeal also, the learned Commissioner has not given any finding despite that the appellant assessee has taken the same in their grounds of appeal. Since there has been a delay in sanctioning refund, the appellant s entitlement to interest is upheld. Matter remanded to quantify and grant refund - appeal allowed by way of remand. 2021 (3) TMI 420 Refund of CENVAT Credit - input services - Event Management Service - Real Estate Agency Service - Works Contract Service - period April to June 2017 - Rule 5 of CENVAT Credit Rules, 2004 - HELD THAT:- Both the authorities have taken a narrow interpretation of Input Service definition. In fact, as far as Real Estate Agency Service is concerned, the said service has been availed for identifying the office premises from where the software services can be exported by the appellant and without office premises, software services cannot be rendered hence the said service is directly related to the primary business requirement of the appellant and it has a direct nexus with the Output Service exported by the appellant - credit allowed. Works Contract Service - HELD THAT:- Both the authorities have not appreciated the fact that the appellants have availed the services towards repair and maintenance of office premises which is essential for the provision of output services - credit allowed. Modernization, renovation, repair and maintenance of office premises - HELD THAT:- This specifically included in the definition of Input Service under Rule 2(l) of CENVAT Credit Rules, 2004 - credit allowed. Real Estate Agency Service - HELD THAT:- Issue decided in the case of M/S. PREM STEELS (P) LTD. VERSUS CCE, MEERUT-I [ 2009 (3) TMI 23 - CESTAT, NEW DELHI] where it was held that activities of arranging sale thereof would cover the definition of Real Estate Agent - credit allowed. 2021 (3) TMI 414 Refund of CENVAT Credit - input services - input services in respect of STPI unit and used the same in the export of services - Circular No.120/01/2010-ST dated 19.1.2010 - Mandap Keeper and Restaurant Service - Public Management Relation Service - Video Production Agency services - Sponsorship Service - refund denied only on the ground of lack of nexus between the input services and the output services which is exported - Rule 5 of CENVAT credit Rules, 2004 - HELD THAT:- All the services on which the refund has been rejected have been consistently held to be input services in various decisions relied upon by the appellant. Moreover, the Department has not questioned the service on input services at the time when the CENVAT credit was taken and a per the decision of this Tribunal in the case of K Line Ship Management [ 2018 (12) TMI 1481 - CESTAT MUMBAI] , the Department is not permitted to question the same at the time of claiming refund. In view of the clarification given by the Tax Research Unit of CBEC vide their letter dated 16.3.2012, the amended Rule 5 of CENVAT Credit Rules does not require correlation between the output service exported and the input services used in such output services exported. The appellant is entitled to refund of CENVAT credit except in the case of Mandap Keeper and Restaurant Services - Appeal allowed in part. Central Excise 2021 (3) TMI 410 CENVAT Credit - service tax paid on the tour operator services utilized for arranging the foreign trips of the dealers - HELD THAT:- The issue is covered by the precedent decisions of the Tribunal. Reference can be made to the decision in the case of M/s Savita Oil Technologies Ltd. Vs. Commissioner of Central Excise, Belapur [ 2018 (4) TMI 1385 - CESTAT MUMBAI ] where it was held that all the services are necessary for carrying out overall operation of the manufacturing and sales of the goods therefore all the services are clearly covered under the definition of input service as per rule 2(1), of CCR 2004. Credit allowed - appeal allowed - decided in favor of appellant. 2021 (3) TMI 402 CENVAT Credit - raw materials used for the manufacture of pig iron - Rule 6 of the Cenvat Credit Rules, 2004 - HELD THAT:- All the inputs are utilized for the manufacture of pig iron and boulder slag is only waste generated in the course of manufacture of pig iron. Therefore, the cenvat credit is not taken specifically for the manufacture of boulder iron. It has been held time and again by the Tribunal and the Superior Courts that boulder, like bagasse, coming into existence in the manufacture of sugar cannot be held to be excisable for the purpose of payment of amounts under Rule 6 of the Cenvat Credit Rules, 2004. This Bench of the Tribunal in the appellant s own case NEO METALIKS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, BOLPUR [ 2016 (12) TMI 1214 - CESTAT KOLKATA ], on the same issue, had allowed their appeal relying upon the Tribunal s decision in the case of TATA METALIKS LTD. VERSUS COMMISSIONER OF C. EX., KOLKATA-II [ 2002 (10) TMI 179 - CEGAT, KOLKATA] . Credit allowed - Appeal allowed - decided in favor of appellant. 2021 (3) TMI 400 Levy of penalty u/s 11AC of the Central Excise Act, 1944 - default in payment of duty and and the payment is made along with applicable interest - intent to evade present or not - HELD THAT:- There are no ingredient to evade payment of duty and all the transactions were carried out by the Department. Circumstances have to be kept in mind, which resulted in short payment of duty by the appellant. It has also been contended by the appellant that all the transactions were reflected in the monthly returns from time to time and therefore, the question of alleging fraud, mis-statement, suppression of facts etc. cannot be invoked. Besides, it is also on record that short payment occurred due to clerical error. The appellant was all along filing statutory returns and being pointed out, they paid the duty and interest without disputing the same. There was no intention on their part to evade payment of duty - Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2021 (3) TMI 436 Classification of goods - Glow Mint Moisturiser - Glow Fair Moisturiser etc. - whether these items were in the nature of ayurvedic medicines and drugs on which according to the Schedule-II(a) to TVAT Act, 5% duty would be attracted? - Department claims that these items were in the nature of cosmetics and toilet articles which according to Entry No.45 to Schedule -II(b) of the Act, the rate of duty would be 12.5 percent to 14.5 percent as fixed by the Government from time to time - HELD THAT:- The names of the products suggest they are all in the nature of cosmetics. These products are moisturisers, fair skin solutions, hair solutions for better glow etc. One of them is plain and simple shampoo for glowing hair. Even the supplier is aptly described as Glamour World. It is of course unsafe to base our conclusions on the basis of a title of the product. However, the petitioner himself has brought about the situation since as noted by the Assessing Officer despite opportunity been given, the petitioner failed to provide samples which could be sent for chemical analysis. On record, there is a letter dated 04.02.2016 written by the Superintendent of Taxes to the petitioner asking the petitioner to provide samples of such products. His recording of the order that despite opportunities, the petitioner did not supply the samples, cannot be disputed without any firm basis for the same. Petition dismissed. 2021 (3) TMI 432 Doctrine of double jeopardy - Allegation of taking Bribe - Petitioner, VAT officer, entered into a conspiracy with the assessee, under investigation, for an amicable settlement of the matter - Commission of an offence under Section 13(1)(d) of KVAT Act - Whether it be in a writ petition filed under Article 226 of the Constitution of India or in an application filed under Section 482 of the Code of Criminal Procedure, 1973 by the accused? - HELD THAT:- In the instant case, the doctrine of double jeopardy has got no application. In the first place, the petitioner has only been discharged in the previous case. In the second place, the prosecution against him in the instant case is for entirely different offences and not for the same offence. Principle of Issue Estoppel. The principle of issue estoppel is also known as cause of action estoppel . It is different from the principle of double jeopardy. This principle applies where an issue of fact has been tried by a competent court on a former occasion, and a finding has been reached in favour of an accused. Such a finding would then constitute an estoppel, or res judicata against the prosecution but would not operate as a bar to the trial and conviction of the accused, for a different or distinct offence. It would only preclude the reception of evidence that will disturb that finding of fact already recorded when the accused is tried subsequently, even for a different offence - Thus, the rule of issue estoppel prevents re-litigation of an issue which has been determined in a criminal trial between the parties. If with respect to an offence, arising out of a transaction, a trial has taken place and the accused has been acquitted, another trial with respect to the offence alleged to arise out of the transaction, which requires the court to arrive at a conclusion inconsistent with the conclusion reached at the earlier trial, is prohibited by the rule of issue estoppel. In order to invoke the rule of issue estoppel, not only the parties in the two trials should be the same but also, the fact in issue, proved or not, as present in the earlier trial, must be identical to what is sought to be re-agitated in the subsequent trial. It eludes comprehension how the petitioner is entitled to get immunity under Section 3 of the Judges (Protection) Act, 1985 for an act, which is not official or judicial, allegedly done by him. Accepting bribe cannot be considered as an act done by the petitioner in the course of discharge of his official or judicial duties or functions. Therefore, the petitioner is not entitled to get any immunity under the Judges (Protection) Act, 1985. Ext.P1 FIR is not liable to be quashed on any of the legal grounds raised by the petitioner. There is no sufficient ground to quash Ext.P1 FIR - The writ petition is liable to be dismissed. Indian Laws 2021 (3) TMI 447 Period of limitation for filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 - whether the Court may refuse to make the reference under Section 11 where the claims are ex facie time-barred? - HELD THAT:- It is now fairly well-settled that the limitation for filing an application under Section 11 would arise upon the failure to make the appointment of the arbitrator within a period of 30 days from issuance of the notice invoking arbitration. In other words, an application under Section 11 can be filed only after a notice of arbitration in respect of the particular claim(s) / dispute(s) to be referred to arbitration [as contemplated by Section 21 of the Act] is made, and there is failure to make the appointment - The period of limitation for filing a petition seeking appointment of an arbitrator/s cannot be confused or conflated with the period of limitation applicable to the substantive claims made in the underlying commercial contract. The period of limitation for such claims is prescribed under various Articles of the Limitation Act, 1963. The limitation for deciding the underlying substantive disputes is necessarily distinct from that of filing an application for appointment of an arbitrator. Given the vacuum in the law to provide a period of limitation under Section 11 of the Arbitration and Conciliation 1996, the Courts have taken recourse to the position that the limitation period would be governed by Article 137, which provides a period of 3 years from the date when the right to apply accrues. However, this is an unduly long period for filing an application u/S. 11, since it would defeat the very object of the Act, which provides for expeditious resolution of commercial disputes within a time bound period - the application under Section 11 was filed within the limitation period prescribed under Article 137 of the Limitation Act. Nortel issued the notice of arbitration vide letter dated 29.04.2020, which was rejected by BSNL vide its reply dated 09.06.2020. The application under Section 11 was filed before the High Court on 24.07.2020 i.e. within the period of 3 years of rejection of the request for appointment of the arbitrator. Whether the Court while exercising jurisdiction under Section 11 is obligated to appoint an arbitrator even in a case where the claims are ex facie time-barred? - HELD THAT:- The amendment to sub-section (8) of Section 11 by the 2019 Amendment [which is also yet to be notified], provides that the arbitral institution will be empowered to : (a) seek a disclosure in writing from the prospective arbitrator in terms of sub-section (1) of Section 12, to secure the appointment of an independent and impartial arbitrator; and (b) ensure that the arbitrator has the qualifications required by the arbitration agreement - The issue of limitation, in essence, goes to the maintainability or admissibility of the claim, which is to be decided by the arbitral tribunal. For instance, a challenge that a claim is time-barred, or prohibited until some precondition is fulfilled, is a challenge to the admissibility of that claim, and not a challenge to the jurisdiction of the arbitrator to decide the claim itself. The issue of limitation which concerns the admissibility of the claim, must be decided by the arbitral tribunal either as a preliminary issue, or at the final stage after evidence is led by the parties. This is a case where the claims are ex facie time barred by over 5 years, since Nortel did not take any action whatsoever after the rejection of its claim by BSNL on 04.08.2014. The notice of arbitration was invoked on 29.04.2020. There is not even an averment either in the notice of arbitration, or the petition filed under Section 11, or before this Court, of any intervening facts which may have occurred, which would extend the period of limitation falling within Sections 5 to 20 of the Limitation Act. Unless, there is a pleaded case specifically adverting to the applicable Section, and how it extends the limitation from the date on which the cause of action originally arose, there can be no basis to save the time of limitation - In the present case, the notice invoking arbitration was issued 5 years after rejection of the claims on 04.08.2014. Consequently, the notice invoking arbitration is ex facie time barred, and the disputes between the parties cannot be referred to arbitration in the facts of this case. The period of limitation for filing an application under Section 11 would be governed by Article 137 of the First Schedule of the Limitation Act, 1963. The period of limitation will begin to run from the date when there is failure to appoint the arbitrator - It has been suggested that the Parliament may consider amending Section 11 of the 1996 Act to provide a period of limitation for filing an application under this provision, which is in consonance with the object of expeditious disposal of arbitration proceedings. 2021 (3) TMI 446 Dishonor of Cheque - vicarious liability on Director - Petitioner is a Director, however, he did not sign the cheques in question nor he ever participated in the transactions in question - case of petitioner is that merely because he was Director of the company at the relevant time does not make him vicariously responsible for the acts and omissions on the part of the remaining Directors or the accused company itself and hence has no role in the offence - HELD THAT:- The offence under Section 138 of the N.I. Act is an offence in the personal nature of the complainant and since it is within the special knowledge of the accused as to why he is not to face trial under section 138 N.I. Act, he alone has to take the plea of defense and the burden cannot be shifted to complainant. There is no presumption that even if an accused fails to bring out his defense, he is still to be considered innocent. If an accused has a defense against dishonor of the cheque in question, it is he alone who knows the defense and responsibility of spelling out this defense to the Court and then proving this defense is on the accused. In view of the procedure prescribed under the Cr.P.C, if the accused appears after service of summons, the learned Metropolitan Magistrate shall ask him to furnish bail bond to ensure his appearance during trial and ask him to take notice under Section 251 Cr.PC and enter his plea of defence and fix the case for defence evidence, unless an application is made under Section 145(2) of N.I. Act for recalling a witness for crossexamination on by an accused of defence - Once the summoning orders in all these cases have been issued, it is now the obligation of the accused to take notice under Section 251 of Cr.P.C., if not already taken, and enter his/her plea of defence before the concerned Metropolitan Magistrate's Court and make an application, if they want to recall any witness. If they intend to prove their defence without recalling any complainant witness or any other witnesses, they should do so before the Court of Metropolitan Magistrate. The prosecution under section 138 of the Act can be launched for vicarious liability against any person, who at the time of commission of offence was in charge and responsible for the conduct of the business of the accused company. Merely because the petitioner did not sign the cheques in question, is not decisive for launching prosecution against him - Further, prima facie it appears that even in the reply by the accused persons dated 27.08.2019, there was no specific denial about the role attributed to the accused Sumit Bhasin in the negotiations and transactions that were effected with the complainant. The deal with the complainant was not a trivial or a routine case of marketing, sale or purchase of goods or services. At the cost of repetition, when such a huge investment was being sought from the complainant and applied for the running of the affairs of the company, it is not fathomable that the accused persons were unaware of the financial implications for themselves and for the accused company. Jurisdiction - HELD THAT:- In exercise of its jurisdiction under Section 482 Cr.P.C. cannot go into the truth or otherwise of the allegations made in the complaint or delve into the disputed question of facts. The issues involving facts raised by the petitioner by way of defence can be canvassed only by way of evidence before the Trial Court and the same will have to be adjudicated on merits of the case and not by way of invoking jurisdiction under Section 482 Cr.P.C. at this stage. The parameters of the jurisdiction of the High Court in exercising jurisdiction under Section 482 Cr.P.C, are now almost well-settled. Although it has wide amplitude, but a great deal of caution is also required in its exercise. The requirement is the application of well-known legal principles involved in each and every matter Adverting back the facts of the present case, this Court does not find any material on record which can be stated to be of sterling and impeccable quality warranting invocation of the jurisdiction of this Court under Section 482 Cr.P.C. at this stage - In the instant case, all these issues mentioned hereinabove involves disputed question of facts and law and cannot be decided unless and until the parties go to trial and lead their respective evidence. Though invariably the initial phase of a litigation under Section 138 of the N.I. Act depends on how well the pleadings or the allegations are laid down or articulated, by the complaint, in the ultimate analysis it is the trial that alone can bring out the truth so as to arrive at a just and fair decision for the parties concerned. There are no flaw or infirmity in the proceedings pending before the Trial Court - petition dismissed. 2021 (3) TMI 437 Dishonor of Cheque - Personal liability of the Director / Signatory of the Company - insufficient funds - cheque issued to discharge a liability which the signatory of the cheque owed to the appellant - signatory was also the Managing Director of the company - HELD THAT:- In the case on hand, the cheque in question is signed by the respondent for and on behalf of the company and the cheque is issued on an account maintained by the company with the bank. As such, the drawer of the cheque can only be the company and not the signatory, who has affixed the signature on behalf of the company. A reading of Section 138 extracted above clearly shows that it is the drawer of the cheque who is deemed to have committed the offence under the section. It follows therefore that the offence if at all, in the case on hand can be said to have been committed only by the company. If the company is deemed to have committed the offence, necessarily, going by Section 141 of the Negotiable Instruments Act, the company should have been made a party to the proceedings and it is only on finding that the company has committed the offence, that the Managing Director could have been made liable for the offence. The appellant is not entitled to contend that the offence has been committed by the Managing Director. Admittedly, the cheque is not drawn on a personal account maintained by the respondent. The cheque specifically states that it has been issued for and on behalf of the company. As such the company alone can be treated as the drawer of the cheque who can be deemed to have committed the offence under Section 138. Admittedly, the appellant does not have a case that the company owes any amount to him - Appeal dismissed.
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