TMI Tax Updates - e-Newsletter dated: March 17, 2022 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

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TMI Tax Updates - e-Newsletter March 17, 2022 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax Highlights / Catch Notes GST: Detention of goods - It cannot be said that the petitioner had any intent to evade the tax or the mismatch in the quantities is of such nature which shall entail proceedings under Section 129 of the Act. A person, who has already paid a tax of ₹ 12.75 lacs - on a consignment cannot be said to have an intent to evade tax amounting to ₹ 11000/- - HC Visit to Get Source GST: Exemption from GST - sale of produces Distillery Wet Grain Soluble (DWGS) and Distillery Dry Grain Soluble (DDGS) – Cattle feed - the Distillery Wet Grain Soluble (‘DWGS’) and Distillery Dry Grain Soluble (‘DDGS’) are clearly falling under ‘brewing or distillery dregs and waste’ and therefore under tariff item HSN No. ‘2303’. - Liable to GST @5% - AAR Visit to Get Source Income Tax: Imposition of penalty u/s 271(1)(b) - non-compliance of the notice issued under Section 142(1) - if the assessee really had no connection with the Swiss Bank accounts, no prejudice would have been caused to her if she had complied with the notice u/s 142(1) of the Act and filled the consent form. Moreover, it cannot be that penalty is upheld with regard to the attorney holder of the Swiss bank account and not with regard to the account holder no.2 (Appellant-assessee) qua the same bank account. - the penalty imposed upon the Appellant cannot be held to be erroneous and unwarranted - HC Visit to Get Source Income Tax: Exemption u/s 11 - withdrawing the registration u/s 12AA - the Registration u/s 12AA of the Act, once granted, remains valid until it is cancelled by the Commissioner, by due process of law laid down u/s 12AA(3)/12AA(4) of the Act. It cannot cease to be operative unless order u/s 12AA(3)/12AA(4) of the Act is passed by the ld. CIT(E) in accordance with the law for cancellation of registration and that too on an application made by assessee for intimation of amendment in the object which was subsequently withdrawn. Thus, the order passed u/s 12A(1)(ab) is bad in law as well as on facts merely on a ground that the assessee is doing activities of the nature of business/commerce. - AT Visit to Get Source Income Tax: Deduction from Rental income - Disallowance on account of Security Expenses and Gardening Expenses, respectively as part of annual value under Income from House Property - there was no break up provided by the assessee as pointed out by the CIT(A) and also Leave and License agreement no such break up is reflected to claim gardening and security service charges for computing the annual value. - No deduction can be allowed - AT Visit to Get Source Income Tax: Deduction u/s 80P - CIT(A) also did not addressed the grievance of the AO while granting relief to the assessee as to non furnishing of the explanation by assessee before the AO about nature of sources of gross receipt or commission income as were claimed by assessee to be earned from the marketing of agricultural produce grown by its members , before allowing relief to the assessee u/s 80P of the 1961 Act . - the matter restored back to the file of ld. CIT(A) for fresh adjudication on merits and in accordance with law. - AT Visit to Get Source Income Tax: Addition u/s 68 - Bogus share transaction - Assessee has claimed exemption u/s. 10(38) on the huge long term capital gain from the sale of scrip - the assessment order passed u/s. 143(3) of the Act by the Assessing Officer is bad in law and has to be quashed as the Assessing Officer has failed to provide the copies of statements on which he relied on for making assessments and also for not providing cross examination of those persons inspite of specific request made by the assessee. - AT Visit to Get Source Income Tax: Rectification u/s 154 - Treatment to interest incurred by the assessee - Had there been any evidence furnished along with the return of income with regard to completion of construction of the building and its readiness to let out, then the claim of the assessee could have been entertained in the rectification proceedings u/s. 154 of the Act by the revenue authorities. In the absence of any such evidence furnished, the CIT(Appeals) was justified in rejecting the claim of assessee. The issue raised by the assessee is a debatable issue which cannot be rectified in the proceedings u/s. 154 - AT Visit to Get Source Income Tax: Existence of Fixed Place Permanent Establishment (“Fixed Place PE”) and Supervisory Permanent Establishment (“Supervisory PE”) - India-Japan DTAA - Merely providing access to the premises by FRL for the purpose of providing agreed services by the assessee would not amount to the place being at the disposal of the assessee. - Since the goods were manufactured outside India, sale of goods took place outside India and consideration was also received by the assessee outside India, title passed outside India and hence the assessee has not carried out any operation in India in relation to supply of the raw material and capital goods. We therefore hold that the assessee does not have a Fixed Place PE in India. - AT Visit to Get Source Income Tax: Additions towards difference in the 26AS (TDS statement) and the books results - books of account of the assessee duly audited - We have noted that the audited books of accounts and reconciliation and the various entities contract amount offered for tax over a period & time. Only difference between the contract value of each party matches over a period of time irrespective of the year offered by the assessee and therefore, grievance of the Revenue that the assessee has not offered correct income is fully explained by the assessee by filing the chart. - Additions deleted - AT Visit to Get Source Income Tax: Disallowance of exemption u/s 54 within the scope of section 154 - if assessee has received the entire sale consideration before one year and handed over the possession, then affectively assessee has transferred the property. If for extreme and unavoidable circumstances there is slight delay in registering the property exemption cannot be denied. Here the delay is only 11 days. Thus, no adverse inference can be drawn to withdraw the exemption. - AT Visit to Get Source Income Tax: Depreciation on plant and machinery - plant and machinery were installed at customer's premises - It cannot be said that the equipment in question had not been used for the purpose of the business of the assessee. The fact that the equipments were used in the business premises of the clients cannot be the basis to disallow the claim of the assessee for deduction on account of depreciation - AT Visit to Get Source Income Tax: Disallowance of depreciation on plant and machinery installed at customer's premises - the installation of the diagnostic machines owned by the assessee and forming part of its 'Block of assets' at the customers site, being a part of the business of the assessee, and rather as a matter of fact a modus operand! adopted by the assessee to boost its sales of reagents, therefore the latter being found to have duly satisfied the requisite conditions contemplated u/s. 32(1) is thus entitled to deprecation on the said diagnostic machines. - AT Visit to Get Source Income Tax: Reopening of assessment u/s 147 - Assessing Officer to usurp the jurisdiction to reopen the assessment - The first Assessing Officer has made the reassessment after discharging his duties as an investigator as well as that of an adjudicator. So the action of the Second Assessing Officer to again rake up the same issue which has undergone scrutiny by his predecessor Assessing Officer is nothing but review of the action of first Assessing Officer, which power it is settled that the Assessing Officer (second) does not enjoy.- AT Visit to Get Source Income Tax: Validity of Assessment u/s 153A - Proof of valid approvals u/s 153D - In the instant case, as appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment orders without any assessment records what to say about the search material. Therefore, the approval given in the instant case by the Ld. Addl. CIT is not valid in the eyes of law. - AT Visit to Get Source Customs: Fixation of Traiff Values - Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver etc, (including Crude Palm Oil, RBD Palm Oil, Others) - Notification Visit to Get Source Customs: Seeking direction to respondents to cancel and return back the Bank Guarantee, which was executed towards the clearance of goods - SCN and order in original was quashed on the ground of jurisdiction of DRI - as on date, since there has been no adjudication proceedings pending against the petitioner and that has been set aside in the eye of law, the respondents cannot hold the Bank Guarantee given by the petitioner without any authority. Therefore, this Court feels that the prayer sought for in this writ petition can be considered and granted. - HC Visit to Get Source Customs: Valuation - department has enhanced the value on the basis of one invoice - The investigation conducted by the DRI is inconclusive and hence cannot be held against the appellant inasmuch there is no tangible evidence that has been adduced by the DRI and neither a show cause notice has been issued on the basis of said inconclusive investigation of DRI - It is settled law that the price of contemporeous goods cannot be applied invariably in each and every case. Before applying the enhanced comparable price varies circumtances need to be verified such as the quality of goods, quantity of goods, country of origin etc. - AT Visit to Get Source IBC: Maintainability of application - initiation of CIRP - From the invoices which are on the record, it is clear that invoices were issued to the FCIPL and invoices were not directly issued to the Corporate Debtor. The invoices were issued to the FCIPL only for the purpose of due certification by FCIPL and EIL, so that the Corporate Debtor may make the payment. In facts of the case, the Adjudicating Authority has not committed any error in rejecting the Section 9 Application filed by the Operational Creditor. - AT Visit to Get Source Service Tax: Rejection of application filed under Voluntary Compliance Encouragement Scheme, 2013 - It is seen that department has collected the bank details of the appellant and found that there was no sufficient fund to honour the cheque on 31.12.2013. On receiving the cheque, the department ought to have presented the cheque and if the same is dishonored could have rejected the declaration as the payment of 50% dues was not made. Without presenting the cheque, merely collecting the bank details on the date of closure of the scheme, it cannot be concluded that appellant has not paid the tax dues in accordance with the provisions of law. - The rejection of declaration filed by appellant under VCES cannot sustain - AT Visit to Get Source VAT: Benefit of exemption from VAT - it is plain to see that the petitioner manufactures bread and subjects such bread to a further process, which activity falls within the meaning of “manufacture” as used in the said Act for an altogether different product to be produced - it cannot be said that the petitioner”s product rusk is bread or the VAT exemption available to bread in the State must be extended to rusk. - HC Visit to Get Source Articles RECENT DEVELOPMENTS IN GST The Supreme Court sent back matter to High Court, because of short order passed by High Court holding no substantial question of law arose. Notifications Customs 17/2022 - dated 15-3-2022 - Cus (NT) Fixation of Traiff Values - Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver etc, (including Crude Palm Oil, RBD Palm Oil, Others) GST - States FTX.56/2017/Pt-V/74 - dated 24-1-2022 - Assam SGST Seeks to extend the due date for filing FORM GSTR-4 for financial year 2020-21 to 31.07.2021. FTX.56/2017/Pt-V/72 - dated 24-1-2022 - Assam SGST Seeks to amend Notification no. FTX.2017/Pt-II/545 dtd. 22/05/2020 to exclude government departments and local authorities from the requirement of issuance of e-invoice. 05/2021-STATE TAX (RATE) - dated 24-1-2022 - Assam SGST Seeks to provide the concessional rate of SGST on Covid-19 relief supplies, up to and inclusive of 30th September 2021 04/2021-STATE TAX (RATE) - dated 24-1-2022 - Assam SGST Seeks to amend notification No. 11/2017- (Rate) [FTX.56/2017/24 dtd. 26/06/2017] so as to notify GST rates of various services as recommended by GST Council in its 44th meeting held on 12.06.2021. 03/2021-STATE TAX (RATE) - dated 24-1-2022 - Assam SGST Seeks to amend notification No. 06/2019 (Rate) [FTX.56/2017/Pt-II/270 dtd. 03/06/2019] so as to give effect to the recommendations made by GST Council in its 43rd meeting held on 28.05.2021. 02/2021-STATE TAX (RATE) - dated 24-1-2022 - Assam SGST Seeks to amend notification No. 11/2017 (Rate) [FTX.56/2017/24 dtd. 29/06/2017] so as to notify Assam GST rates of various services as recommended by GST Council in its 43rd meeting held on 28.05.2021. 01/2021-STATE TAX (RATE) - dated 24-1-2022 - Assam SGST Seeks to amend notification No. 1/2017 (Rate) [FTX.56/2017/14 dtd. 29/06/2017] to prescribe change in Assam GST rate of goods. AE-I/DT&T/2021-22/63 - dated 14-3-2022 - Delhi SGST Commissioner, State Tax confer powers under section 69, section 70, section 71, section 73 & section 74 of the DGST Act 2017, Jurisdictional Officer AE-I/DT&T/2021-22/58 - dated 14-3-2022 - Delhi SGST Commissioner, State Tax confer powers under section 69, section 70, section 71, section 73 & section 74 of the DGST Act 2017, Jurisdictional Officer AE-I/DT&T/2021-22/55 - dated 3-3-2022 - Delhi SGST Commissioner, State Tax confer powers under section 69, section 70, section 71, section 73 & section 74 of the DGST Act 2017, Jurisdictional Officer 10/GST-2 - dated 16-3-2022 - Haryana SGST Amendment in Notification no. 17/GST-2, dated 31.03.2020 (to implement e-invoicing for taxpayers having aggregate turnover exceeding ₹ 20 Cr. from 01st April, 2022) Circulars / Instructions / Orders Income Tax - 04/2022 - dated 15-3-2022 INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2021-22 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961 News GREENFIELD INDUSTRIAL NODES FDI FROM NEIGHBOURING COUNTRIES MAKE IN INDIA INDUSTRIAL CORRIDORS Unified Logistics Interface Platform (ULIP) INVESTMENT IN INDUSTRIAL SECTOR EXPORT OF FRESH FRUITS DATA OF IMPORTS AND EXPORTS SCHEMES FOR PROGRESS OF INDUSTRIES CCI approves acquisition of Micro Life Sciences Private Limited by South Elm Investments B.V. CCI approves acquisition of equity stake in Future Generali India Insurance Company Limited by Generali Participations Netherlands N.V Case Laws: GST 2022 (3) TMI 682 Detention of goods - Intention to evade tax (GST) - Discrepancies noticed after physical verification of goods and conveyance - Section 129 of the Haryana GST Act, 2017/Central GST Act, 2017 - HELD THAT:- From perusal of the e-Invoice (Annexure P-4/A) it is clear that quantity of consigned goods is shown to be 10430.7 kilograms. An amount of ₹ 1276717.68/- has been paid as tax on the consignment whereas as per the State, it was 10520 kilograms. The said difference in weight is less than 1%. As per State, the alleged evasion shall not be more than ₹ 11000/-. It cannot be said that the petitioner had any intent to evade the tax or the mismatch in the quantities is of such nature which shall entail proceedings under Section 129 of the Act. A person, who has already paid a tax of ₹ 1276717.68/- on a consignment cannot be said to have an intent to evade tax amounting to ₹ 11000/-. At this stage, Mr. Goyal states that the petitioner is ready to pay even the tax and penalty imposed by the State-Authorities which comes to be around ₹ 22000/-. Petition allowed. 2022 (3) TMI 681 Detention and confiscation of goods and conveyance - seeking provisional release of goods alongwith the conveyance - Section 67(6) of the GST Acts - HELD THAT:- In the case on hand, the writ-applicant dispatched goods from Thane to be received by three individual parties within the State of Gujarat. The goods are in the nature of Brass Scrap. While the goods were in transit, the conveyance was seized and detained. The matter as on date is at the stage of GST MOV-10. The inquiry is in progress - the writ- applicant would submit that his client is ready and willing to deposit an amount of ₹ 17,66,620/- towards tax and penalty and upon deposit of the same, this Court may order the release of the goods and conveyance. This writ-application is disposed off with a direction to the respondent no.2 to release the goods and the conveyance on the condition that the writ-applicant shall deposit the amount of ₹ 17,66,620/-. Once such amount is deposited, the respondent no.2 shall release the goods and the conveyance forthwith. Even otherwise the merits of the case, is not gone into. Application disposed off. 2022 (3) TMI 680 Seeking permission to travel abroad - Section 132 (1) of CGST Act - HELD THAT:- Having gone through the facts and circumstances of this matter as well as having gone to the submission made by the learned counsel for the applicant that due to non disposal of the case, the applicant is not able to move abroad and his export business is to suffer losses, this Court deems it to dispose of this application under Section 482 Cr.P.C. finally with a direction to the trial court to decide the said pending application (Crl. Misc. Case No. 324 of 2021) within a period of one month from the date of production of a certified copy of this order. The application stands disposed of finally. 2022 (3) TMI 679 Classification of goods - NAMKEENS or not - Jack Fruit Chips sold without BRAND NAME - Roasted and salted / salted / roasted preparations such as of Ground-nuts, Cashew nut and other seeds, sold without a brand name - salted and masala chips of Potato and Tapioca sold without brand name - covered by HSN Code 2106.90.99 and taxable under Entry 101 A of Schedule of CT(Rate) Notification No. 1 of 2017 or not? - classification of jack fruit chips by supplier under HSN Code 1903 is correct or not - HELD THAT:- From the plain reading of the contents of chapter 21, it reveals that it includes the food preparations which are not elsewhere specified in the customs tariff. Those food preparations not specified or included elsewhere in the tariff being preparations for use either directly or after processing for human consumption are to be classified under this heading 2106. Further the heading 2106 specifically excludes the preparations made from fruit, nuts or other edible parts of plants of heading 20.08, provided that the essential character of the preparations is given by such fruit, nuts or other edible parts of plants. Therefore, it is evident that the entry 2106.90 is a residuary entry in respect of edible preparations and hence the edible preparations shall be classified under this entry only if the same are not classifiable under any of the other specific entries for edible preparations. It is noticed that as per chapter note 1(a) to chapter 20, the chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in chapter 7, 8 or 11. It means that these items not being processed or preserved by the said processes shall be covered in chapter 20. The processes specified in chapter, 7, 8 or 11 are freeing, steaming, boiling, drying, provisionally preserving and milling. Chapter heading 2008 covers roasted, salted or roasted and salted nuts and fruits such as ground nuts, cashew nuts, other seeds and nuts and these are specifically covered under said heading vide sl. No. 40 of schedule II to notification No. 1/2017-CT (rate) - Hence there remains no doubt that the roasted/salted/roasted and salted ground nuts, cashew nuts and other seeds/nuts shall be appropriately classifiable under heading 2008 of customs tariff. Even otherwise also, heading 2106.90 being a residuary heading shall not stand against a specific heading 2008 as per Rules of interpretation of the tariff. Classification of banana chips, tapioca chips, potato chips, jackfruit chips and sharkara varatty, the manufacturing process applied by the appellant in making these items is not in dispute - HELD THAT:- These chips are made by slicing, frying, adding salt or masala or jaggery syrup before packing and supply. It is not the case of the appellant that the essential characteristics of the fruits or vegetables are getting changed by applying the processes. As far as the essential nature of the products remains unchanged, the edible parts of plants are appropriately classifiable under heading 2008. In this case, the raw banana or potato or jackfruit or tapioca even after going through the process of frying and salting remain as vegetables and fruits only. The process of frying in oil and roasting are cooking methods wherein high temperature is used for processing of the edible parts of the fruit or vegetables as in this case. The process of roasting and frying has not been excluded in Note 1 to Chapter 20 and as such Note 1 is applicable to Roasted and fried vegetables, fruits, nuts and edible parts of plants. Further the explanatory notes to heading 2008 specify that this heading covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter. When according to chapter notes and description of tariff items, the products are classifiable under specific headings of Chapter 20, they cannot be classified under Heading 2106 as food preparations not elsewhere specified or included or under Chapter 8 as claimed by the appellant. By applying the rules for interpretation of the tariff, specially rule 1, 2 and 3 of the same, it is evident that the impugned goods are appropriately classifiable under heading 2008 and not under heading 2106. Rule 2(a) provides that any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance, according to which the chips of jackfruit, potato, banana or tapioca gets also appropriately classifiable under. heading 2008 along with specifically covered goods viz. Roasted and salted nuts under examination (which is covered by Rule 3(a) of the said rules for interpretation). Further, chapter 21 covers Miscellaneous edible preparations, whereas chapter 20 specifically covers Preparations of vegetables, fruits, nuts or other parts of plants - Hence, when there is a specific entry providing for the most specific description in the heading 2008 to the impugned products over the residuary heading description of heading 2106.90, the said impugned goods is held appropriately classifiable under heading 2008, by virtue of rule 3(a) of the rules for interpretation. The Jackfruit Chips are classifiable under Customs Tariff Heading 2008.19.40 and is liable to GST at the rate of 12% as per Entry at Sl No. 40 of Schedule II of Notification No. 01 /2017 Central Tax (Rate) dated 28.06.2017 - the classification of Jackfruit Chips by my supplier under HSN code 1903 is not correct - Roasted / salted / roasted and salted Cashew nuts are classifiable under Customs Tariff Heading 2008.19.10 and roasted / salted / roasted and salted Ground nuts and other nuts are classifiable under Customs Tariff Heading 2008.19.20 and is liable to GST at the rate of 12% as per Entry at Sl. No. 40 of Schedule II of Notification No.01 /2017 Central Tax (Rate) dated 28.06.2017 - The salted and masala chips of Potato and Tapioca are classifiable under Customs Tariff Heading 2008.19.40 and is liable to GST at the rate of 12% as per Entry at Sl. No. 40 of schedule II of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017. 2022 (3) TMI 678 Maintainability of Advance Ruling application - Territorial Jurisdiction - Input tax credit - applicant M/s. Granules USA Inc. is a manufacturer of bulk drugs and wholly owned subsidiary of Granules India Limited - M/s. Granules USA Inc. supplied pharmaceutical tablets to M/s. Lambda Therapeutic Research Ltd. from USA on behalf of Granules India Limited. - recipient of the goods M/s. Lambda Therapeutic Research Ltd is eligible to take credit of the IGST or not? - HELD THAT:- It is to inform that Section 96 of the CGST SGST Acts clearly state territorial nexus of an Advance Ruling authority so that an authority for Advance Ruling shall function as such an Authority for Advance ruling for that State or Union Territory in which it is constituted under the CGST SGST Acts. Evidently the applicant seeks clarification regarding the question impacting taxable person who is not a registered taxable person in the State of Telangana. Therefore an Advance Ruling cannot be made for a person not registered in the State of Telangana in light of this provision. Further Clause (a) of Section 95 of CGST Act, 2017 clearly states that Advance Ruling means a decision provided by the authority to the applicant on questions in relation to the supply of goods or services or both being undertaken by such applicant . Here a clarification is sought on a question unrelated to supply of goods or services made by the applicant. Therefore even on this count an Advance Ruling can t be made in the present case. The application is rejected. 2022 (3) TMI 677 Exemption from GST - sale of produces Distillery Wet Grain Soluble (DWGS) and Distillery Dry Grain Soluble (DDGS) Cattle feed undertaken by the applicant - applicability of serial no 102 of Notification No. 02/2017 Central Tax (Rate) dated 28 June 2017 - HELD THAT:- It is observed that the Notification No. 01/2017 classifies brewing or distillery dregs and waste at S.No.104 under tariff item 2303 and the rate applicable is 5% on these products - It is further seen that the chapter headings of the tariff items which qualify as cattle feed at the S.No.102 of Notification No. 02/2017 do not include the HSN 2303 . Thus S.No.102 of Notification No. 02/2017 specifically excludes brewing or distillery dregs and waste . As seen from the averments submitted by the applicant the Distillery Wet Grain Soluble ( DWGS ) and Distillery Dry Grain Soluble ( DDGS ) are clearly falling under brewing or distillery dregs and waste and therefore under tariff item HSN No. 2303 . Hence these are excluded from the exemption Notification No. 02/2017. Income Tax 2022 (3) TMI 676 Reopening of assessment u/s 147 - whether the non-compete fee should be treated as revenue expenditure or capital expenditure? - amount paid for non-compete fee rights while acquiring a business is a capital expenditure and, therefore, though a receipt of non-compete fee is treated as revenue expenditure, the payer cannot claim as revenue expenditure but claim only as a capital expenditure - HELD THAT:- The entire reason to re-open is the basis of the decision of [ 2010 (7) TMI 685 - ITAT, DELHI] . Almost four months later, the assessment proceedings have proceeded and by a letter dated 30th November, 2010, Petitioner has explained why the non-compete fee paid should be treated as revenue expenditure and not capital expenditure and has also relied on various decisions of High Courts to justify its stand. AO was satisfied with the explanation of Petitioner and decided to allow non-compete fee paid to be treated as revenue expenditure. Just because it has not been discussed in the Assessment Order, it does not mean that the issue was not a subject of consideration during assessment proceedings. As held by this Court in the case of Aroni Commercials Ltd . [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] it is not necessary that an Assessment Order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. During assessment proceedings, once query is raised and the assessee has replied to it, it follows that the query raised raised was a subject of consideration of the Assessing Officer while completing the assessment. The very issue of how to treat the non-compete fee paid by assessee was a subject matter of consideration by the Assessing Officer during assessment proceedings leading to the Assessment Order dated 30th November, 2010. It would, therefore, follow that the re-opening of the assessment by the impugned notice dated 20th March, 2013 is merely on the basis of change of opinion by the Assessing Officer from that held earlier during course of assessment proceedings leading to the order dated 30th November, 2010. This change of opinion does not constitute the decision and/or reasons to believe that income chargeable to tax has escaped assessment - Decided in favour of assessee. 2022 (3) TMI 675 Imposition of penalty u/s 271(1)(b) - non-compliance of the notice issued under Section 142(1) - HELD THAT:- A perusal of the paper book reveals that the ITAT in the impugned orders has followed the decision of this Court in the case of Mr. Sanjay Dalmia [ 2018 (3) TMI 1411 - DELHI HIGH COURT ] wherein penalty u/s 271(l)(b) of the Act was upheld for all the seven years arising out of the same search, relating to the same bank account and for the same reason of not filing the consent letter. This Court is of the view that the protective assessment against the Appellant-assessee was deleted by the CIT(A) as the additions had been made both on protective and substantive basis in the hands of her husband with regard to the same Swiss Bank account as he was account holder No.1. This Court is further of the view that the judgment passed by the Supreme Court in Selvi Ors [ 2010 (5) TMI 907 - SUPREME COURT ] has no application to the facts of the present case as the same has only upheld the principle of right of silence and, that too, in the context of criminal proceedings. Though there are certain observations with regard to the non-penal proceedings, yet the same is not the ratio of the said judgment. This Court is of the opinion that if the assessee really had no connection with the Swiss Bank accounts, no prejudice would have been caused to her if she had complied with the notice under Section 142(1) of the Act and filled the consent form. Moreover, it cannot be that penalty is upheld with regard to the attorney holder (Mr. Sanjay Dalmia) of the Swiss bank account and not with regard to the account holder no.2 (Appellant-assessee) qua the same bank account. No question of law arises of consideration and the penalty imposed upon the Appellant cannot be held to be erroneous and unwarranted. Accordingly, the present appeals are dismissed. 2022 (3) TMI 674 Addition on account of arm's length price ['ALP'] adjustments - HELD THAT:- Addition on account of ALP Adjustment, in the petitioner s-assessee s case the same cannot give rise to any liability as the petitioner-assessee has executed an Advance Pricing Agreement ['APA']. As a matter of fact, the APA was executed by the petitioner-assessee on 04.12.2019. Our attention was drawn by Mr Kalra to Annexure A-1, appended the an interlocutory application filed by him i.e., CM No.38352/2021, which is a copy of the order passed by the Transfer Pricing Officer (TPO) u/s 92CA(3) of the Act, concerning the AY in issue i.e., AY 2018-2019. The operative part of the said order, which is dated 26.07.2021, reads thus - 5. Accordingly, No adverse inference is drawn in respect of arm s length price of the International transaction for F.Y. 2017-2018 pertaining to A.Y. 2018-2019. Therefore, any likelihood of tax liability on this score seems unlikely. Addition on account of disallowance of foreign exchange loss on account of 'Marked to Market Losses ' - HELD THAT:- AO has, in fact, not made any estimation as to what is the foreign exchange fluctuation loss (which includes Marked to market loss), that he is likely to disallow. The only aspect that the AO has touched upon to justify the tax liability under this head is that an addition of ₹ 11 crores was made in AY 2016-2017, concerning Marked to market losses. After adverting to this aspect, the AO has let the issue hang in the air as he has not gone on to indicate an estimated amount which he is likely to disallow in AY 2018-2019 on account of foreign exchange fluctuation loss, which includes Marked to market losses, and, therefore, the additional tax burden it would result in imposing on the petitioner assessee under this head. Addition on account of unearned revenue - HELD THAT:- In this case as well, it is not as if the petitioner/assessee is not offering unearned revenue for tax; it is only on account of accounting policy followed consistently that unearned revenue is offered for tax in the year in which services are rendered and/or goods are sold. Thus, the transaction, in effect, being revenue neutral, it does not affect the interest of revenue. The upshot of the aforesaid discussion is that the estimation made by the AO that because there is a likelihood of the petitioner assessee having to bear a tax liability of ₹ 500 crores in AY 2018-19, and, therefore, the refund sought of ₹ 349,41,45,020/- ought to be denied, is not founded on rational and cogent grounds. AO, as rightly argued by Mr. Kalra, has not taken into account the financial wherewithal of the petitioner assessee. It is the petitioner s assessee s claim that, at present, its net worth, as on 31.03.2021, is nearly ₹ 1873.80 crores. According to us, it is not as if the petitioner assessee does not have the necessary financial wherewithal to defray the estimated tax liability, if it arises qua the AY in issue i.e., AY 2018-2019. In any event, besides the refund that the petitioner assessee seeks in the present proceedings, there is, as indicated above, an amount equivalent to approximately ₹ 214 crores which is still locked up with the respondent assessee. Messrs Bhatia and Chandra have indicated to us that the assessment order for AY 2018-19 is likely to be passed shortly, and in any case no later than 31.03.2021.Given the aforesaid facts and circumstances, in any event, the respondents revenue are secure, if not for more amount, at least for ₹ 214 crores towards refund, which is the amount that remains locked up; on which, we are told, no decision has been taken by the respondents revenue as yet - we are inclined to allow the writ petition. 2022 (3) TMI 673 TDS u/s 194A - non-deduction of TDS for interest paid to Barclays Investment Loan (India) Ltd - HELD THAT:- It is explained by the assessee that the lender company has closed its operation in India, therefore, appellant could not lay hand on the certificate issued u/s 201 of the Act. Though appellant succeeded to get certificates from the two other lenders and placing it before the Ld. First Appellate Authority to get part relief. This Bench is of considered view that the appellant needs an opportunity to bring on record the other sources of information or documents to establish if certificate was issued by Barclays Investment and Loan (India) Ltd. Accordingly, the AO is directed to conduct a proper inquiry in that regard including giving opportunity to the assessee. Consequently ground no. 1 is determined in favour of the assessee for statistical purpose. Disallowance of interest on the advances made by the assessee - HELD THAT:- There is no reason to differ. All the machinery for which the advance was given were part of the replacement machinery and said machineries for which the advance was given was not for extension of existing business. The Bench is thus inclined to decided this ground in favour of the assessee. Addition u/s 37(1) of difference in the rate of interest - HELD THAT:- It can be observed that the assessee has paid bill discounting charges 15 and 16% to Sandhar Automotavies (Dhumspur) and 19% to Sandhar Enterprises. While as per the own case of assessee they are connected enterprises of one proprietor. Thus, the Ld. First Appellate Authority has rightly disallowed amount being not based on principles of prudence and considering them excessively paid. Even otherwise, admittedly, in assessee s own case for the year 2012-13, the Co-ordinate Bench has also determined the issue against the assessee and meeting the similar fate, in the present appeal, ground no. 3 is determined against the assessee. Addition u/s 37(1) - HELD THAT:- Sanction letter placed on record by the assessee makes it apparent the loan of the 70,00,000/- , taken from SIDBI was to meet margin money for working capital requirement of the company. The interest on this loan stands allowed by the Ld. AO as revenue expenditure that being so there could be no justification to disallow the process charges made for procuring the loan as capital expenditure. Thus, only to the extent of ₹ 78,652/- impugned addition of total ₹ 2,42,136/- is liable to be set aside. Accordingly this ground is allowed part. 2022 (3) TMI 672 Validity of reopening under section 147 - Reassessment based on information of investigation by search party on third, however, in revised grounds of appeal the assessee has raised altogether new grounds of appeal against re-opening - HELD THAT:- We find that no such ground of appeal challenging the validity of reopening was raised. No application for raising such additional or legal grounds of appeal is filed before Tribunal. Therefore, raising of such revised or substituted grounds of appeal are not in order. However, we shall discuss such issue at later stage. Addition u/s 68 - assessee received unsecured loan - HELD THAT:- The Hon ble Gujarat High Court in case of Pr.CITVs. Skylark Build [ 2018 (10) TMI 1513 - BOMBAY HIGH COURT] held that when amount borrowed by the assessee as unexplained cash credit to make the addition by provisions of section 68, no addition can be made when such borrowing was repaid. Further, the Hon ble Gujarat High Court in case of CIT v. Ayachi Chandrasekhar Narsangji [ 2013 (12) TMI 372 - GUJARAT HIGH COURT] also held that where the department has accepted repayment of loan in subsequent order, no addition was to be made in the current year for cash credit. We find that case of assessee is a better footing as the assessee received unsecured loan in the month of October and repaid the same in February, 2007 along with interest. Further, the Revenue has not disputed the payment of loan in the same assessment year. The Hon ble jurisdictional High Court in case of DCIT Vs Rohini Builders [ 2001 (3) TMI 9 - GUJARAT HIGH COURT] held that when the Assessing Officer has not disallowed the interest in relation to credit in the assessment year and the assessee as deducted tax at source for the interest paid to the creditors, the Department is not justified in making addition under section 68 of the Act. When the unsecured loan has been paid within a short span of time for which the assessee has paid interest and deducted tax thereon. Therefore, the Assessing Officer was not justified in making addition under section 68. Thus, substantial ground of appeal is allowed. 2022 (3) TMI 671 Capital gain on sale of land - assessee along with his four other co-owner sold the land - HELD THAT:- It is admitted fact that sale deed was executed on 23.03.2012 and was presented for registration on 23.03.2012 itself. Assessee along with his four co-owner acknowledged in the sale deed that entire sale consideration of ₹ 15.00 Cores is received before on 23.01.2012. Detail of all payments is duly reflected in the sale deed - the assessee and his co-owner has acknowledged and accepted that first party (assessee and his brother) handed over the peaceful possession to the transferee. As per section 54 of Transfer of Property Act, the sale of immovable property is complete on receipt of consideration and registration of deed of transfer and paid stamp duty chargeable by State Government. Before us, the ld AR for the assessee strongly relied on 'Kabja Rashid dated 04.04.2012. The document dated 03.04.2012 (Kabja Rashid) cannot replace legality and authenticity of registered sale deed dated 23.03.2012. Thus, the document produced by assessee i.e. 'Kabja Rashid to claim the capital gain in subsequent assessment order does not inspire of confidence, which cannot substitute the evidentiary value of registered instrument. CIT(A) in accepting the plea of assessee, that sale deed was executed on 03.04.2012, is factually incorrect. In fact, the transaction of transfer of immovable property would take effect from the execution of the sale deed - mere registration number, volume number and additional book number and pages number is given to the sale deed for the purpose of identification of sale transaction. The specific registration number was recorded on the registered document on 03.04.2014. So far as, the submission of assessee and observation of CIT(A), with regard to taxing of long term capital gain in the hand of co-owners in subsequent assessment order is concern, we find that observation of ld. CIT(A) and submission the assessee are misplaced. Assessee can claim parity under law only on the basis of legally and sustainable view taken in case of co-owners. We are further view that if some wrong approach was adopted which is not in accordance with mandate of law, is accepted in case of other co-owners, the assessee cannot take benefit thereof. Therefore, the order of ld. CIT(A) is set aside. 2022 (3) TMI 670 Exemption u/s 11 - withdrawing the registration u/s 12AA - provisions of Section 2(15) were invoked for denying the registration u/s 12AA - CIT(E) cancelled the registration of the assessee only on a finding that the assessee society is involved in the activities of the nature of business / commerce within the meaning of Section 2(15) only - DR contended that the assessee filed an application and later on suo moto withdrawal was filed when ld. CIT (E) went on examination of activities done by the assessee - HELD THAT:- Finance Act 2017 has brought an amendment in Section 12A, effective from A.Y. 2018-19 by inserting a new sub-clause (ab) in sub-section(1) of Section 12A requiring the trust/ institution to file an application to ld. CIT(E) within 30 days of the adoption /modification of the object which do not conform the condition of registration. It is thus very clear and not disputed by ld. DR also that this amended provision was not in force when the amendment in the object carried out in 2013. This legislative development also vindicates the appellant s stand that there was no statutory requirement at the relevant time to intimate the amendment/ modification in the object of the institution claiming exemption u/s 11 of the Act.Since then there is no change in the facts and circumstances of the case, the fundamental facts accepted by the Department in past has to prevail as per principles of law laid down by the Hon'ble Supreme Court in Radhasoami Satsang vs CIT [ 1991 (11) TMI 2 - SUPREME COURT] . We agree with the argument of assessee that the Registration u/s 12AA of the Act, once granted, remains valid until it is cancelled by the Commissioner, by due process of law laid down u/s 12AA(3)/12AA(4) of the Act. It cannot cease to be operative unless order u/s 12AA(3)/12AA(4) of the Act is passed by the ld. CIT(E) in accordance with the law for cancellation of registration and that too on an application made by assessee for intimation of amendment in the object which was subsequently withdrawn. Thus, the order passed u/s 12A(1)(ab) is bad in law as well as on facts merely on a ground that the assessee is doing activities of the nature of business/commerce. Looking to ld.AR s submission on merits explaining each activities specifying that they are within the definition of Section 2(15) and the comparison of the receipts alongwith the limb of Section 2(15), the GPU percentage is also less than 20%, the same is reproduced in assessee's submission hereinabove and thus even on merits the views of ld. CIT(E) is incorrect on facts . Decision that the ld. DR as pointed out in relation to the execution of commercial contract of Railways whereas in the case before us the same is implementation of various relief schemes and therefore, the same is differentiated. It is apparent and clear that the order passed by the ld. CIT(E) dated 20-03-2001 cancelling the registration of the Society u/s 12A(1)(ab) merely on a finding that the assessee is involved in the activities of the nature of business / commerce within the meaning of Section 2(15) of the Act is bad in law as well as on facts and therefore, the registration canceled is required to be continued and thus the appeal of the assessee is allowed. 2022 (3) TMI 669 Disallowance of bad debts claimed u/s 36(1)(vii) - HELD THAT:- We allow the appeal in favour of the assessee. Accordingly, this ground of the assessee is allowed and the disallowance made u/s.36(1)(vii) is deleted. Disallowance u/s 36(1)(viii) - AO disallowed the claim on the ground that the assessee has not transferred the amount to special reserve as required by sec. 36(1)(viii) - HELD THAT:- We therefore follow the binding decision of the coordinate bench in the case of Vijaya Bank [ 2018 (1) TMI 1575 - ITAT BANGALORE] and hold that reserve credit in the subsequent or succeeding years before the initiation of grant of deduction u/s 36(1)(viii) of the Act is required to be considered while allowing the assessee s claim for the deduction under the said section. We, therefore direct the AO to examine and allow the assessee s claim accordingly. This ground is allowed for statistical purposes. Disallowance u/s 40(a)(ia) - assessee has paid towards NFS ATM charges and towards ATM switch charges to National Payment Corporation of India (NPCI) - AO disallowed the entire amount u/s 40(a)(ia) on the ground that the assessee has not deducted TDS on the said amount - HELD THAT:- As in assessee s own case, we allow this ground in favour of the assessee. Accordingly, this ground of the assessee is allowed. MAT applicability u/s 115JB - HELD THAT:- Since the issue regarding applicability or otherwise of sec.115JB is restored to the file of Ld CIT(A), the next issue urged by the assessee relating to the addition made by the AO while computing book profit u/s 115JB is also restored to the file of Ld CIT(A) for examining it afresh. Deduction being the depreciation on the securities classified as Held To Maturity (HTM) - AO disallowed this claim on the ground that the depreciation cannot be claimed on HTM securities - HELD THAT:- We do not find any reason to interfere with the decision of the CIT(A). Accordingly the decision of CIT(A) with respect to depreciation on HTM securities is upheld and the appeal of the revenue on this issue is dismissed. Disallowance u/s.14A - HELD THAT:- We notice that the co-ordinate benches have decided this issue prior to rendering of decision by Hon ble Supreme Court in the case of Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] However, before us, the Ld A.R relied upon certain other decisions in order to contend that no disallowance u/s 14A is called for. In view of the subsequent development of law on this issue, in our considered view, this issue requires fresh examination at the end of AO by duly considering the various decisions on the subject. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO for examining it afresh. 2022 (3) TMI 668 Disallowance made Rule 8D r.w.s. 14A - HELD THAT:- In the working of disallowance u/s. 14A, it was seen that Clause (iii) of Sub-rule (2) of Rule 8D is primarily applicable in assessee s case, we find the observation of which made by the AO, in our opinion, is a satisfaction recorded by not accepting the disallowance made by the assessee on its own as it was not appropriate method. The AO arrived at such conclusion only on the examination of accounts of the assessee and held disallowance primarily under Rule 8D(2)(iii) is required to be made which clearly shows that the AO not satisfied with the accounts of assessee and proceeded to made disallowance only under Rule 8D(2)(iii) in addition to the disallowance made by the assessee, in our opinion, that the AO examined the accounts of the assessee and by recording its non-satisfaction of the assessment order proceeded to further disallowance as required u/s. 14A - ratio laid down in the case of Godrej Boyce Manufacturing Co. Ltd. [ 2017 (5) TMI 403 - SUPREME COURT ] which was followed by this Tribunal in the case of Caggemini Technology Services India Ltd. [ 2019 (3) TMI 1135 - ITAT PUNE] for A.Y. 2011-12. Thus, the arguments of ld. AR in respect of satisfaction by the AO are rejected. Thus, the order of CIT(A) is justified and the ground No. 1 raised by the assessee is dismissed. Disallowance of valid claim u/s. 80IA - AO denied the claim u/s. 80IA(4) of the Act considering each of the unit as a separate business on stand-alone basis which did not have any profit entitled for the said deduction in the year under consideration - HELD THAT:- As explained by the assessee that all the units have huge brought forward losses as on 01-04-2009 and if profit and loss of each windmill should not be considered on stand-alone basis otherwise windmill business has no positive income entitled to deduction u/s. 80IA of the Act. The AO rejected the said explanation and by considering each windmill as a separate unit and deduction for the year under consideration was denied. CIT(A) following earlier year confirmed the disallowance made by the AO. A similar issue came up before the Tribunal in assessee‟s own case for A.Y. 2010-11 . [ 2019 (1) TMI 1963 - ITAT PUNE] remanded the issue to the file of AO to decide the issue in terms of the ratio laid down by the Hon‟ble High Court of Bombay in the case of CIT Vs. Hercules Hoists Ltd [ 2017 (6) TMI 1125 - BOMBAY HIGH COURT] Disallowance on account of Security Expenses and Gardening Expenses, respectively as part of annual value under Income from House Property - HELD THAT:- The agreement filed before us does not convey anything that the assessee let out its property and in turn it shows contrary to the explanation offered to the AO. The assessee did not furnish any evidence showing that the license fee of ₹ 1,50,00,000/- is inclusive of security and gardening expenses and no bifurcation given in support of its contention as rightly pointed out by the CIT(A). Therefore, in the absence of such valid evidences, we find no infirmity in the order of CIT(A). AR placed on record order of Neelam Cable Manufacturing Co. [ 1997 (8) TMI 102 - ITAT DELHI-A] . On perusal of the same the Tribunal held no separate deduction for security service charges is provided u/s. 24 of the Act but the service charges is to be deductible while computing the annual value u/s. 23 of the Act. In the present case, as discussed above, there was no break up provided by the assessee as pointed out by the CIT(A) and also Leave and License agreement no such break up is reflected to claim gardening and security service charges for computing the annual value. Therefore, the order in the case of Neelam Cable Manufacturing Co. (supra) is not applicable. In view of the discussion made here-in-above, the impugned order passed by the CIT(A) is justified. Thus, ground No. 3 raised by the assessee is dismissed. 2022 (3) TMI 667 Penalty u/s 271(1)(c) - Ex-party order passed by AO - Addition u/s 68 - assessee has deposited cash into bank account and no explanation has been provided for the same - HELD THAT:- AO has failed to consider the fact that all the notices were send by speed post and have been received by member of Sahakari Samiti. He explained that the members who received those notices failed to communicate the same to the executives of Sahakari Samiti. Where they could not comply with any notices issued by the Ld AO. In our opinion, AO has erred in passing Ex-party order without giving opportunity to the assessee in furnishing the documentary evidences. The AO has not verified whether the notices sent was received by the assessee. If the disclosure of facts is incorrect or false and to the knowledge of the assessee and it is established, then such disclosure cannot take it out from the purview of the act of concealment of particulars or furnishing inaccurate particulars, thereof for the purpose of levy of penalty. The penalty u/s 271(1)(c) is liveable, if the Assessing Officer is satisfied in the course of any proceedings under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. In the present case, the AO passed ex-parte order and has levied penalty for concealment of such income or non furnishing of particulars u/s 271(1)(c). Rightly pointing the issue is that the assessee has not replied or non compliances for the notice issued by the AO, where the penalty should be levied u/s 271(1)(b). Commissioner of Income-tax (Appeals) erred in holding that penalty u/s 271(1)(c) is liveable. He erred upholding the order by the AO, Where the assessee made an attempt to explain and submitted detailed written submissions before CIT(A) and produced the evidences of Bank Accounts, Bank certificate and details of cash deposits also.. There is no failure on part of the assessee in explaining the source of cash deposit, the Bank Statement, Bank certificate. There is no finding of the AO based on some contradictory evidence to disapprove that explanation offered by the assessee was false or the assessee was not able to substantiate the explanation furnished or fails to prove that such explanation is not bona fide and that all the facts relating to the same and material to the computation of his total income has not been disclosed by him. - Decided in favour of assessee. 2022 (3) TMI 666 Deduction u/s 80P - Assessee is a Cooperative Society engaged in marketing of crops and providing fertilizers, seeds and agricultural equipment s to farmers who are claimed to be its members - AO did not accept the status of the assessee as Co-operative Society rather, the AO held that the assessee is an Association of Person (AOP) and hence in the opinion of the AO , the assessee is not entitled for deduction u/s 80P - HELD THAT:- The assessee being aggrieved filed first appeal with ld. CIT(A), who was pleased to grant deduction u/s 80P to the assessee on the income so claimed to be from marketing commission. The relevant paragraphs of the ld. CIT(A) appellate order are reproduced in the preceding para s of this order. CIT(A) simplicitor granted relief to the assessee by allowing deduction u/s 80P of the 1961 Act on the marketing commission claimed to be earned by the assessee from marketing of agricultural produce of its members. CIT(A) did not adjudicated the status of the assessee as to whether the assessee is to be treated as Co-operative society while assessing its income or the assessee is to be assessed as an AOP as there is no discussion whatsoever in the appellate order passed by ld. CIT(A) on this issue which is infact is an issue which goes to the root of the matter as the assessee will only be entitled for deduction u/s 80P if the assessee is held to be Co-operative Society as is defined u/s 2(19) rather on the contrary the ld. CIT(A) proceeded to grant relief to the assessee by allowing deduction u/s 80P of the Act without adjudicating on this issue . CIT(A) also did not addressed the grievance of the AO while granting relief to the assessee as to non furnishing of the explanation by assessee before the AO about nature of sources of gross receipt or commission income as were claimed by assessee to be earned from the marketing of agricultural produce grown by its members , before allowing relief to the assessee u/s 80P of the 1961 Act . The ld. CIT(A) even did not look into the grievance of the AO that accounts of the assessee were not audited and even tax-audit report has not been filed by the assessee despite the assessee being covered by the provisions of Section 44AB of the 1961 Act, rather ld. CIT(A) proceeded to grant relief to the assessee by simplicitor allowing deduction u/s 80P The provisions of Section 80P are benevolent provisions which must be construed with the object of furthering the co-operative movement generally , but the onus is primarily on the assessee to produce all necessary facts before the authorities to satisfy the authorities that it is entitled for claim of deduction u/s 80P of the 1961 Act. Then it is for the authorities to conduct fact finding enquiry to arrive at conclusion as to the eligibility of the assessee to deduction u/s 80P of the 1961 Act. There is a real distinction between the eligibility of the taxpayer for claim of deduction u/s 80P and the attributability of profits and gains to activities of marketing of produce grown by its members to ascertain the quantum of deduction allowable u/s 80P, as there could be some dealings of the tax-payer with non members or with respect to produce not grown by member which will have bearing on quantification of deduction u/s 80P. Thus adjudication of this issue will require enquiries and verification of the facts, we are inclined to set aside the appellate order passed by ld. CIT(A) on this issue of allowability of deduction u/s 80P and restore the matter back to the file of ld. CIT(A) for fresh adjudication on merits and in accordance with law. The ld. CIT(A) is directed to pass detailed , reasoned and speaking order after making such enquiries and verifications as he may deem fit. The ld. CIT(A) shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. Appeal of revenue allowed for statistical purposes. 2022 (3) TMI 665 Reopening of assessment u/s 147 - eligibility of reasons to believe - Bogus purchases - HELD THAT:- We have gone through the reasons recorded by the assessing officer and observe that the issue of notice u/s148 and assumption of jurisdiction for assessment by the AO was perfectly in accordance with law and his formation of belief for concealment of income was correctly based on material available with him at the time of issue of notice u/s148 of the Act. Consequently, the reassessment proceedings initiated by the AO is in accordance with law. Hence, this ground of appeal of the assessee is dismissed. Estimation of income on bogus purchases - As the issue is squarely covered by the decision of the Coordinate Bench, in the case of Pankaj Choudhary [ 2021 (10) TMI 653 - ITAT SURAT] and there is no change in facts and law and the ld Counsel is unable to produce any material to controvert the aforesaid findings we find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the binding judgment of the Coordinate Bench, we sustain the addition @ 6% of impugned purchases. 2022 (3) TMI 664 Addition on account of peak balance during the year in two bank accounts with HSBC Private Bank(Suisse) SA, Geneva - HELD THAT:- As decided in own case [ 2021 (10) TMI 557 - ITAT MUMBAI] source of the funds transferred from HSBC Abu Dhabi, UAE were stated to be out of the income earned in Abu Dhabi and savings made by the respondent assessee during his stay in Abu Dhabi, UAE as a non-resident Indian since 1976.After considering the facts of the case are in full agreement with the conclusion drawn by the ld CIT(A) that the assessee is not beneficial owner of the bank account held by Blueridge Investment Corporation with HSBC Geneva. Similarly, as regards the joint account of the assessee with his brother in HSBC Geneva CIT(A) recorded a finding on the basis of evidences that money was transferred in the bank account out of the income earned in Abu Dhabi and savings made by the respondent assessee during his stay in Abu Dhabi, UAE as a non-resident Indian since 1976 - we are inclined to uphold the order of ld CIT(A) by dismissing the appeal of the revenue. 2022 (3) TMI 663 Addition u/s 68 - Bogus share transaction - Assessee has claimed exemption u/s. 10(38) on the huge long term capital gain from the sale of scrip MJTL - HELD THAT:- There is no dispute as far as the claim made by the assessee that assessee has made investment in these shares and subsequently sold the same in the Bombay Stock Exchange through the registered stock broker. It is also fact on record AO and the Ld.CIT(A) has not brought anything on record to link the assessee or his brother in any of the price manipulation taken place in the scrip of MJTL. Even the SEBI has exonerated assessee s brother and his wife from any of the charges of price manipulation. AO has discussed in detail the price manipulation happened in this scrip and various intermediaries were involved and none of the intermediators were anyway connected with the assessee or his family members directly/indirectly. Even AO proceeded to make investigations with the share broker through whom assessee has made the sales. These statements or any of the statements recorded by Shri Vipul Vidur Bhatt or any of the intermediaries were never shared with the assessee. Even Assessing Officer has not extended the opportunity of cross examination to the assessee. From the assessment record that during the assessment proceedings assessee has raised several contentions vide letter dated 22.12.2017, in the contentions No. 12 and 13 in which assessee has demanded cross examination of persons whose statements have been discussed in foregoing paragraphs. The assessee also submitted that they do not know any of the said persons and never had connections with them. From the above paragraph it can be noticed the Assessing Officer expressed in clear term that that assessee has not utilized the opportunity extended by the Assessing Officer on the summons dated 27.12.2017 issued by him for the purpose of cross examination at his office. The Hon'ble Supreme Court in the case of Andaman Timber Industries v. CCE [ 2015 (10) TMI 442 - SUPREME COURT] held that when the assessment was made on the basis of the statements recorded from third parties and those statements were not provided nor cross examination was given to the assessee, the Assessment Order made based on those statements is bad in law. Facts and circumstances being identical respectfully following the decision of the Hon'ble Supreme Court, we hold that the assessment order passed u/s. 143(3) of the Act by the Assessing Officer is bad in law and has to be quashed as the Assessing Officer has failed to provide the copies of statements on which he relied on for making assessments and also for not providing cross examination of those persons inspite of specific request made by the assessee. Thus, we quash the assessment orders passed u/s. 143(3) of the Act on this ground. - Appeal of assessee allowed. 2022 (3) TMI 662 Rectification u/s 154 - Treatment to interest incurred by the assessee - i nterest incurred by the assessee on loan borrowed for the purpose of construction of commercial building - claim of the assessee is that building construction has been completed and it was ready to let out and assessee always had the intention to let out the property, however due to market conditions the assessee failed to let out and failure to let out cannot be attributable to the assessee, hence, interest incurred by the assessee towards loan availed for construction of building has to be allowed - HELD THAT:- Unless and until the building is ready to let out, the interest incurred by the assessee on loan borrowed for construction of building has to be capitalised. Since in the present case, there is no evidence to suggest that the commercial building was ready in all respects by getting the power connection, water connection, occupation certificate, clearance from fire fighting department, etc., it cannot be presumed that building was ready to let out and assessee taken any steps to let out. The whole plea of the assessee to let out the property is only on presumption basis without any specific evidence on record to suggest that assessee has taken steps to let out the property. In such circumstances, the lower authorities are justified in disallowing the claim of assessee with regard to interest borrowed on loan used for construction of building. In other words, this interest incurred by the assessee is to be capitalised to the cost of building, rather than the claim of deduction u/s. 24 of the Act. It is well settled that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. In the present case, the Departmental authorities have categorically denied the that the construction of commercial building was completed and it was ready to let out and that assessee had taken steps to let out the property. These findings of the revenue authorities cannot be sought to be rectified in the rectification proceedings. Entertaining such a plea of the assessee would only mean review of the order for which the revenue authorities have no power. In the present case, the assessee has not enclosed any evidence along with the return suggesting completion of construction of commercial building and its readiness to let out, as such the ACIT(CPC) denied the interest claimed by the assessee by way of intimation sent to the assessee. The assessee thereafter sought to rectify the same vide proceedings u/s. 154 of the Act which is not permissible. Had there been any evidence furnished along with the return of income with regard to completion of construction of the building and its readiness to let out, then the claim of the assessee could have been entertained in the rectification proceedings u/s. 154 of the Act by the revenue authorities. In the absence of any such evidence furnished, the CIT(Appeals) was justified in rejecting the claim of assessee. The issue raised by the assessee is a debatable issue which cannot be rectified in the proceedings u/s. 154 - Assessee appeal dismissed. 2022 (3) TMI 661 Rectification of mistake u/s 154 - Assessment u/s 153A - Addition u/s 68 - HELD THAT:- Review of his own order under the garb of rectification of mistake u/s. 154 done by the ld.CIT(A) is complete travesty of appellate proceeding. By no stretch of imagination it can be said that ld.CIT(A) is rectifying a mistake apparent from the record. In the earlier order, ld.CIT(A) has quashed the assessment framed u/s. 153A on a finding that it was a non abated assessment and the addition was dehors any incriminating material found in search. In the present so called rectification order, the ld.CIT(A) has got new found knowledge that there may be a case where subsequent to the search AO may receive or obtain some addition information, which is not emanating from the search and seizure proceeding. Hence, he opined that AO can assume valid jurisdiction. This view of ld.CIT(A) is completely alien to the jurisprudence from Hon ble Bombay High court and Hon ble Supreme Court in this regard. It is clear that dehors incriminating material found during the search, no addition is sustainable u/s. 153A of the I.T. Act in case of unabated assessment. It is undisputed that the assessment for present assessment year is non-abated. The earlier assessment order was already duly framed and subsequently pursuant to search fresh notice u/s. 153A was issued. The AO in the assessment order has clearly noted that during the course of search proceedings, it was found that assessee was generating cash by bogus invoices. There is not a whisper about anything found relating to share application money. The issue of share application money was taken up by the AO by mentioning that on perusal of the balance sheet of the assessee, he has found the same. AO further refers that an information was obtained from FT TR division, Mauritius Revenue authority vide letter dated 14.03.2016. When this is juxtaposed with the date of earlier assessment order i.e. 26.3.2014 and the date of search i.e. 19.3.2015, it is abundantly clear that this is a non-abated asessment and the so called material arose much after search. Hence, there is not an iota of doubt that the material being referred by the AO for making the addition was not found and seized during search. Hence, the jurisdiction of the AO in making the assessment is not legally valid. Hence, the order passed by the ld.CIT(A) as review also is totally unsustainable on merits. Hon ble Supreme Court in the case of T.S. Balram, ITO vs. Volkart Brothers Ors [ 1971 (8) TMI 3 - SUPREME COURT] has held that mistakes apparent on record must be obvious and patent mistake. It should not require a long drawn process of reasoning where there may be conceivably be two opinions. The aforesaid exp osition applies on all fours in the present case. Hence, have no hesitation in holding that this rectification order u/s. 154 passed by ld.CIT(A) is not at all sustainable. Hence, we set aside the same. Appeal of the assessee is allowed. 2022 (3) TMI 660 Existence of Fixed Place Permanent Establishment ( Fixed Place PE ) and Supervisory Permanent Establishment ( Supervisory PE ) of the assessee in India under the provisions of Article 5 of the Double Taxation Avoidance Agreement entered into between India and Japan. ( India-Japan DTAA ) - attribution of income from offshore supply of raw materials and components and supply of capital goods to the alleged PE of the assessee - assessee is a foreign company and a tax resident of Japan. It is governed by the provisions of the India-Japan DTAA being more beneficial - HELD THAT:- Article 5(1) of the India-Japan DTAA provides that a PE of a foreign enterprise may exist in India when a foreign enterprise has a Fixed Place in India through which the business of the foreign enterprise is wholly or partly carried out. FRL is alleged to be the place of business from which the business of the assessee is being carried out. It is well settled position that in order to constitute a Fixed Place PE it is a prerequisite that the alleged premise must be at the disposal of the enterprise. The Hon ble Supreme Court in the case of Formula One world Championship Vs. CIT[ 2017 (4) TMI 1109 - SUPREME COURT] has held that merely giving access to the premise to the enterprise for the purposes of the project would not suffice. The place would be treated as at the disposal of the enterprise when the enterprise has right to use the said place and has control thereupon. Thus considering judicial precedents wherein the constitution of Fixed Place PE has been considered and adjudicated upon, in our opinion the conditions laid down for creation of a Fixed Place PE is not satisfied in the assessee s case. Merely providing access to the premises by FRL for the purpose of providing agreed services by the assessee would not amount to the place being at the disposal of the assessee. No doubt the assesee has access to the factory premises of FRL but it is for the limited purposes of rendering agreed services to FRL without any control over the said premises. FRL is an independent legal entity carrying on its business with its own clients for which the assessee provides time to time technical assistance as required by it. The business of the assesee is not being carried out from the alleged Fixed Place PE. The Ld. DR in support of his contention that FRL constitutes Fixed Place PE of the assessee has placed reliance on certain clauses of the Licence Agreement and argued that title of goods supplied by the assessee to FRL passed in India and hence the assessee is carrying on business in India. Since the goods were manufactured outside India, sale of goods took place outside India and consideration was also received by the assessee outside India, title passed outside India and hence the assessee has not carried out any operation in India in relation to supply of the raw material and capital goods. We therefore hold that the assessee does not have a Fixed Place PE in India. Supervisory PE - As the employees of the assessee visited India to assist FRL in relation to supplies made by FRL/FCC Clutch to its customers; resolving problems relating to production, fixing of machines, maintenance of machines; checking safety status at the premises and suggesting ways for enhancing safety; support in quality control; IT related services; support for launch of new segment line; etc. In our considered opinion, none of these activities performed by the employees are in the nature of supervisory functions, supervision being the act of overseeing or watching over someone or something which is not reflected in the work done by the engineers in India for FRL. No installation or assembly project was on going at FRL s premises. FRL is in the existing business since many years and no new line of business has been launched by FRL. The employees were not rendering any services in connection with building site or a construction project or an installation project or an assembly project. From the nature of the services rendered by the employees, it is amply clear that these activities were not in connection with a building site or construction installation or assembly project. Hence the issue of computation of period of six months also becomes academic. The employees are visiting India on year to year basis under the contract. In AY 2014-15 and AY 2015-16, the employees visited India to render certain technical services under the Licence Agreement read with Dispatch of Engineers Agreement which have been duly offered to tax by the assessee as FTS as per the provisions of India-Japan DTAA. We therefore hold that the there is no Supervisory PE of the assessee for the AYs under consideration. Since we have held that the assessee does not have a PE, the issue of attribution of profits to such PE does not arise for consideration. Appeals of the assessee are allowed. 2022 (3) TMI 659 Maintainability of appeal on low tax effect - Addition from interest on fixed deposits made in the co-operative banks u/s. 80P(2)(a)(i)/80P(2)(d) - HELD THAT:- We find that CBDT vide circular No.17/2019 in F.No.279/Misc.142/2007- ITJ(Pt) dated 8th August, 2019, has further liberalized its policy for not filing appeals against the decisions of the appellate authorities in favour of the taxpayers, wherein tax involved is below certain threshold limits, and announced its policy decision not to file, or press, the appeals, before this Tribunal, against the appellate orders favourable to the assessee in the cases in which overall tax effect, excluding interest except when interest itself is in dispute, is ₹ 50,00,000/- or less. This circular, only enhances the monetary limits and gives further relaxation. The old circular, beyond any dispute or controversy, categorically applied to the pending appeals as on the date of issuance of circular. The circular dated 8th August 2019 is not a standalone circular. It is to be read in conjunction with the CBDT circular No. 3/2018 (subsequent amendment thereto), and all it does is to replace paragraph nos. 3 and 5 of the said circular. In the circumstances, respectfully following the principles laid down by the Hon ble Supreme Court in the case of the Commissioner of Income Tax-5, New Delhi Vs. Keshav Power Ltd. [ 2019 (8) TMI 811 - SC ORDER] and in the light of the above discussions, the appeal filed by the Revenue is found to be non-maintainable and hence, dismissed. 2022 (3) TMI 658 Disallowance out of job charges - bogus claim of expenses - assessee does not maintain job work register and only summary of job work are available with it and in the absence of any quantitative records maintained item wise, it is absolutely impossible to believe the claim of job work expenses from the above said parties - assessee submitted additional evidences under Rule 29 of the Income Tax Appellate Tribunal Rules 1963 - HELD THAT:- We note that assessee was prevented by sufficient cause not to file these additional evidences before the lower authorities, due to circumstances beyond his control, as narrated by the assessee Hon ble Supreme Court in M.S.Gill vs The Chief Election Commission [ 1977 (12) TMI 138 - SUPREME COURT] held The dichotomy between administrative and quasi-judicial function vis- -vis the doctrine of natural justice is presumably obsolescent after Kraipak (A.K. Kraipak - [ 1969 (4) TMI 103 - SUPREME COURT] ) which makes the water-shed in the application of natural justice to administrative proceedings. The rules of natural justice are rooted in all legal systems and are not any new theology. They are manifested in the twin principles of nemo judex in partesua (no person shall be a judge in his own case) and audialterem partem (the right to be heard). It has been pointed out that the aim of natural justice is to secure justice. In respect of the following parties Viz: M/s Shri Ganesh Fashion, M/s Maruti Nandan Textile, M/s Payal Fashion, M/s Radha Swami Creation, and M/s Deep Creation, the payments were made through banking channel and respective bills of job charges are on the record and assessee also submitted contra accounts, which were not properly considered by ld CIT(A). In respect of M/s Jahanvi Fashion, we note that assessee submitted additional evidences. Therefore, we are of the view that the matter should be remitted back to the file of the ld CIT(A) in respect of above noted six parties only, to examine the evidences and adjudicate the issue in accordance with law. We are of the view that one more opportunity should be given to the assessee to plead his case before the ld CIT(A) in respect of above noted six parties. The assessee should submit these additional evidences, including bank statements and job charges bills before ld CIT(A).We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the ld. CIT(A) to adjudicate the issue afresh on merits,in respect of above noted six parties. Assessee appeal allowed for statistical purposes. 2022 (3) TMI 657 Delayed payment of employees contribution in regard to PF ESI - Payment before the due date of filing of return of income u/s.139(1) - scope of amendment in provisions of Section 36(1)(va) by inserting the Explanation 2 r.w.s. 43B - HELD THAT:- There are series of decisions of various High Courts on this issue and the Hon ble Madras High Court in the case of M/s. Industrial Security Intelligence India P Ltd. [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] held that the payment of employees contribution in regard to PF ESI if made before the due date of filing of return of income u/s.139(1) of the Act, the same is allowable as deduction as per the provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B of the Act. As before insertion of Explanation 2 to Section 36(1)(va) of the Act, there is ambiguity regarding due date of payment of employees‟ contribution on account of provident fund and ESI, whether the due date is as per the respective acts or up to the due date of filing of return of income of the assessee. As noted by Hon ble Supreme Court an amendment made to a taxing statute can be said to be intended to remove hardship only of the assessee and not of the Department. Imposing of a retrospective levy on the assessee would be caused undue hardship and for that reason Parliament specifically chose to make the proviso affective from a particular date. In the present case also, the amendment brought out by Finance Act, 2021 w.e.f. 01.04.2021 i.e. for and from assessment year 2021-22 of Explanation-2 to s. 36(1)(va) of the Act and not retrospectively. It is clear that the amendment brought in the statute i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting Explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue of assessee‟s appeal is allowed. 2022 (3) TMI 656 Reopening of assessment u/s 147 - Non disposal of objection of reopening - HELD THAT:- This is a fatal mistake. In paper book page 26-30 objection raised by the assessee against reopening dated 15.5.2019 are duly attached. When the assessee has duly objected to the reopening it is incumbent upon the Assessing Officer to dispose of the same. Not disposal of objection to reopening is a fatal mistake and vitiates the order of Assessing Officer. As in Asian Paints Ltd. Vs. DCIT [ 2007 (1) TMI 159 - BOMBAY HIGH COURT] duly supports this proposition. When it remains uncontroverted that the assessee has objected to the reopening and the same was not disposed off the validity of jurisdiction by the Assessing Officer loses its legality on the touchstone of the aforesaid decision of Hon'ble Bombay High Court. Hence, we set aside the orders of the authorities below on the ground of jurisdiction defect. Unexplained investment under section 69 - The assessee s explanation is that it has given loan to some parties which gave the said shares to the assessee as securities. That the said party asked the assessee to sell the said shares and after selling the said shares assessee made entries for adjusting the amount received from loan given to the said party and returned the balance amount to the said party. Hence, there is no claim of long term capital gain under section 10(38) of the Act in the books of the assessee. This aspect has been duly supported by documents submitted. None of the above has been controverted by the Revenue. Hence, addition has been made without considering facts, law and income returned by the assessee. Such order without application of mind is not at all sustainable in law. Hence addition made under section 69 of the Act claimed to be for long term capital gain claimed exemption by the assessee under section 10(38) of the Act is not actually correct and same is liable to be set aside on this account also. Accordingly, decide the issue in favour of the assessee. 2022 (3) TMI 655 Additions towards difference in the 26AS (TDS statement) and the books results - assessee argued that merely there is a difference in the 26AS and the books results, there cannot be an addition to returned income the books of account of the assessee duly audited. AO has not found any single defect in the books of accounts that has been produced before the Assessing Officer - main contentions is that the other party has booked the expenses, that cannot be the reason while making the assessment in the case of the assessee, when the contract receipt got reflected in the subsequent year as per regular method of accounting followed - HELD THAT:- Surprisingly one addition is based on 26AS amount and amount in books and another from the expenses booked by the assessee and income of two years comparison. This shows how the additions were made by followings choose pick. It is only elementary that information as per data base of the Revenue authorities cannot be, by itself, a legally sustainable basis for making addition to the income of the assessee and that such imports are based starting point for appropriate inquiry which in this case made and explained by the assessee reconciliation to that want also made. There is nothing more than this information input which has been put against the assessee. We have noted that the audited books of accounts and reconciliation and the various entities contract amount offered for tax over a period time. Only difference between the contract value of each party matches over a period of time irrespective of the year offered by the assessee and therefore, grievance of the Revenue that the assessee has not offered correct income is fully explained by the assessee by filing the chart. The income offered for both the parties, in respect of which the addition made almost reconciled and offered for in the regular books, AO has not rejected the book results. Therefore, it is not required to disturb the books result which has been audited by an independent auditor. Thus, the addition made for an amount of ₹ 18,78,750/-, ₹ 15,23,978/- totaling to ₹ 34,02,728/- as per ground No. 1 are deleted on the basis of finding discussed herein above. For lumpsum disallowance of expenses - It is apparent that on the best the reason known ld. CIT(A), he has not considered the contentions of the assessee that the books of accounts are being audited and no single defects found in the bills vouchers etc. produced before the Assessing Officer. Assessment proceedings no expenses so personal nature of the expenses brought on record. No defect in any of the voucher in nature and expended is placed on record and in absence of any such observations, the ld. Assessing Officer as well as ld. CIT(A) has erred in law as well as on facts in making /confirming disallowance Looking to these factual position that even on comparative the expenses are on lower side with that of last year. DR has not placed anything contrary to this and vehemently contended the observation of the AO. In the light of these observation that there are no defects in the books, bills and voucher no addition can be made. Not only that which expenses to what extent can be considered as private as assessee being an artificial person is not spelt out from the order of lower authorities. The chart suggest that the same are at reduced figure compared to last year. Considering the material evidences and facts placed before us, we delete the lumpsum addition and thus the ground No. 2 is allowed. 2022 (3) TMI 654 Rectification of mistake u/s 254 - mistake apparent on record or not? - HELD THAT:- A careful perusal of the rectification petition clearly shows that the applicant Assessing Officer has not pointed out any mistake, much less a mistake apparent on record which can be rectified within inherently limited scope of Section 254(2), in the impugned order. What he has pointed out are possible arguments in support of the stand of the Assessing Officer in the appeal. At this stage, however, it is neither open for us to re-visit the conclusions arrived at on the merits nor the Assessing Officer has pointed out any mistakes in the conclusions arrived at by us. We therefore, deem it fit and proper to dismiss the rectification petition as ill conceived and devoid of substance. Rectification petition is dismissed. 2022 (3) TMI 653 Deduction of carbon credit receipt u/s.80IA - Nature of receipt - revenue or capital receipt - HELD THAT:- We noted that the issue of carbon credits is fully covered by the decision of the Hon ble Madras High Court in the case of S.P. Spinning Mills Private Limited Vs. Assistant Commissioner of Income Tax [ 2021 (1) TMI 1081 - MADRAS HIGH COURT ]. Also see Commissioner of Income Tax Vs. Ambika Cotton Mills Limited [ 2021 (3) TMI 442 - MADRAS HIGH COURT] Thus we hold that the receipt on carbon credit is in the nature of capital receipt and no disallowance can be made. Thus, we reverse the orders of the lower authorities and allow the appeal of the Assessee on this issue. 2022 (3) TMI 652 Bogus purchases u/s 69C - No evidences showing physical movement of goods - HELD THAT:- Assessee produced bills raised by all the six parties and in some cases credit notes given by the said parties before the AO. AO added entire purchases only on the ground that the assessee could not produce any evidences showing physical movement of goods. AO made addition only on the pretext that there was no evidence showing the physical movement of goods purchases, in our opinion, is not correct to treat the entire purchases as bogus and gross profit should be determined at 10%. Therefore, by following the finding of Co-ordinate Bench in the case of Dilawar R. Shaikh [ 2017 (8) TMI 1658 - ITAT PUNE] we direct the AO to determine gross profit at 10% on such alleged purchases. Thus, the ground Nos. 1 to 3 raised by the assessee are allowed. Disallowance made u/s. 14A - HELD THAT:- We deem it proper to remand the issue to the file of AO for computing the disallowance of expenditure relating to the investments yielded exempt income. The assessee is liberty to file evidences, if any, in support of his claim. Thus, ground Nos. 4 and 5 raised by the assessee are allowed for statistical purpose. 2022 (3) TMI 651 Disallowance of exemption u/s 54 within the scope of section 154 - exemption u/s 54 on account of long term capital gain on account of sale of house property which was invested in the purchase of another property one year ago, that is, the purchase deed was executed on 13.01.2012 - HELD THAT:- We find that the assessee has claimed exemption u/s 54 on account of long term capital gain on account of sale of house property which was invested in the purchase of another property one year ago, that is, the purchase deed was executed on 13.01.2012. AO had allowed this claim vide in scrutiny assessment vide order passed u/s 143(3). Once the claim has been allowed in scrutiny proceedings, then the AO cannot withdraw the claim u/s 154, by mere change of opinion and without there being any apparent mistake on record. It is well settled proposition that AO cannot review his own order within the limitation and scope of section 154. There is no mistake apparent on record for the reason that; firstly, the formalities of sale and receiving of the entire sale amount was completed including handing of the possession was duly completed within the period of one year, that is, by the month of November 2012; and only due to some exceptional and unavoidable circumstances, there was a delay in registration which, here in this case. Secondly, it is undisputed fact that assessee has purchased the residential property on 13.01.2012 and assessee can claim exemption u/ 54 if she sale property within one year. Now, if assessee has received the entire sale consideration before one year and handed over the possession, then affectively assessee has transferred the property. If for extreme and unavoidable circumstances there is slight delay in registering the property exemption cannot be denied. Here the delay is only 11 days. Thus, no adverse inference can be drawn to withdraw the exemption. Accordingly, we hold that the exemption allowed by the AO in the original assessment order u/s 143(3) was correct and assessee s appeal is allowed. 2022 (3) TMI 650 Rectification of mistake - CIT(A) completely rejecting the working capital adjustment while determining the arm's length price for the SWD services provided by the Assessee which was granted by the Ld. AO/ Ld. TPO even though on a restricted basis. - whether CIT(A) erred in disregarding the fact that working capital adjustment is an economic adjustment which would enhance the comparability analysis and ought to be carried out for the purposes of comparability analysis? - HELD THAT:- We have carefully gone through the log book maintained by us and find that there is no whisper about these grounds during the hearing of the appeal, as such the Tribunal recorded a finding in para 29 of its order that no other grounds were pressed in the TP matters, other than what is adjudicated by the Tribunal in its order. Being so, we do not find any infirmity in the order of the Tribunal on this issue. Accordingly, the MP filed by the assessee is dismissed. Comparability of KALS Information Systems Ltd - The Tribunal committed an error in giving finding in para 43 of its order. Accordingly, para 43 of the order of the Tribunal dated 24.11.2021 is modified and substituted to read as follows:- 43. Accordingly, this comparable to be excluded in the list of comparables. Except the above, there is no change in the order of the Tribunal dated 24.11.2021. 2022 (3) TMI 649 Depreciation on plant and machinery - AO pursuant to the directions of D.R.P. has disallowed depreciation on plant and machinery on the ground that the plant and machinery were installed at customer's premises and hence were not 'put to use' in the business of the assessee - HELD THAT:- The issue of depreciation on assets installed at customer's premises, was decided in favour of the assessee by the Kolkata Bench of Tribunal in assessee's own case for A.Y. 2008-09 [ 2017 (4) TMI 446 - ITAT KOLKATA] wherein as held installation of equipments in the client's premises of assessee's equipments was necessary and part and parcel of nature of business carried on by the assessee. It cannot therefore be said that the equipments in question had not been used for the purpose of the business of the assessee. The fact that the equipments were used in the business premises of the clients cannot be the basis to disallow the claim of the assessee for deduction on account of depreciation. - Decided in favour of assessee. TP adjustments should be restricted to the value of the international transactions only . See NALCO WATER INDIA LIMITED[ 2019 (9) TMI 609 - ITAT PUNE] Erroneous computation of transfer pricing adjustment in the manufacturing segment - Selection of comparable - HELD THAT:- Neither the assessee nor the T.P.O. applied any such filter at the time of the Transfer pricing study or the TP assessment. The selection of 18 comparables by the TPO is without any such filter. We appreciate that there is a marked difference in the profit earned from export and domestic sales of similar goods because of foreign market conditions and export incentives allowed by the Government of India. In such a scenario, some sort of export to sales filter is warranted. There is no foundation for the assessee seeking 15% filter of export sales to total sales of the segment. In fact, there is no statutory mandate of any specified percentage. Giving due importance to this filter in the facts and circumstances of the extant case, we are of the considered opinion that filter of 25% of export sales to sales of the segment will be in order. We order accordingly. Our view is fortified by the judicially accepted related party transactions (RPT) filter of 25% in several cases. Both the sides agreed to such a filter during the course of hearing. We, therefore, set aside the impugned order and remit the matter to the file of the AO/TPO to undertake the selection of comparables afresh in the light of the above filter and re-adjudicate the issue as per law after complying with the principles of natural justice. Therefore, ground No. 4 is allowed for statistical purposes. Erroneous determination of A.L.P. of intra-group service fee as NIL - HELD THAT:- As decided in own case [ 2016 (3) TMI 639 - ITAT KOLKATA] We are of the view that the first ground for confirming disallowance by CIT (A) that no independent documentary evidence had been furnished by assessee to show that the fact of actual services having been rendered to assessee and Nalco Pacific too could not substantiate the claim for provision of actual services with documentary evidence, has no leg to stand. Benefit of +/-3% range as per the proviso to sec. 92C(2) of the Act should be granted while calculating the transfer pricing adjustments, if any. Levy of interest u/s. 234A and 234B of the Act on account of unanticipated transfer pricing adjustment made by the TPO and disallowance made by the A.O - HELD THAT:- At the time of hearing, the learned counsel for the assessee fairly submitted that this issue may be remanded to the file of the A.O/TPO for verification and then re-adjudicate as per law. The learned D.R. conceded to the submissions of the assessee. Having heard the parties, in the interest of justice, we remand this issue to the file of the A.O/T.P.O. for re-adjudication as per law while complying with the principles of natural justice. 2022 (3) TMI 648 Disallowance u/s. 10A - excess deduction u/s. 10A - Revenue is against the deletion of disallowance u/s. 10A Bby CIT-A ignoring the connected provisions of section 80IA(10) of the Act - assessee is a 100% Export Oriented Unit under STPI scheme and a wholly owned subsidiary of Romax Technology Ltd., UK. - HELD THAT:- AO's calculation of excess deduction u/s. 10A is based on the Arm's Length price based profit of the IT Enabled service rendered vis- -vis the assessee's actual profit from such services. It is pertinent to mention that the assessee's Associated Enterprises, namely, Romax Technology Ltd., UK is not chargeable to tax in India - assessee offered suo motu higher income in its hands, which was albeit deductible u/s. 10A, without conferring any corresponding benefit to its AEs in terms of higher deduction of expenditure. AR brought to our notice an order passed in Honeywell Automation India Limited. [ 2021 (6) TMI 172 - ITAT PUNE] in which the case of excessive deduction made by the AO u/s. 10A(7) read with section 80IA(10), similar to the one under consideration, was disapproved. The ld. DR fairly conceded that the facts and circumstances of the instant case are mutatis mutandis similar to the Honeywell Automation India Limited and Another (supra). Respectfully following the precedent, accord my imprimatur to the order passed by the ld. CIT(A). - Decided against revenue. 2022 (3) TMI 647 Disallowance of depreciation on plant and machinery belonging to the appellant company and installed at customer's premises for the business of the assessee - HELD THAT:- In this case, the customers of the assessee are either the stand alone pathology laboratories or the hospitals with such in-house laboratories, which carry out the diagnosis of a medical disease by subjecting the patients sample with the use of reagents in the diagnostic machines/instruments. The modus operandi adopted by the assessee for running its business of trading in diagnostic machines and reagents, which is commonly followed in the trade line of diagnostic industry. We herein vacate the consequential finding of the CIT(A) which had so emerged on the basis of his aforesaid misconceived and ill founded observations that the diagnostic machines installed by the assessee at the customers site under the reagent rental contracts were not from the assesses 'Block of assets', but formed part of the letters 'Stock in trade'. We thus being of the view that the installation of the diagnostic machines owned by the assessee and forming part of its 'Block of assets' at the customers site, being a part of the business of the assessee, and rather as a matter of fact a modus operand! adopted by the assessee to boost its sales of reagents, therefore the latter being found to have duly satisfied the requisite conditions contemplated u/s. 32(1) is thus entitled to deprecation on the said diagnostic machines. We thus in light of our aforesaid observations set aside the order of the CIT(A) and allow the appeal of the assessee. Difference in Form 26AS and the receipts shown by the assessee - HELD THAT:- We find that no new facts have been brought to our notice. Therefore, we do not find a reason to come to a different conclusion than the one arrived at by the authorities below. Ground 2 of the assessee is dismissed. 2022 (3) TMI 646 Validity of assessment u/s 144 - ex parte order passed u/s. 144 - assessee is seeking one more opportunity to present its case before the lower authorities - HELD THAT:- It is an established principle of natural justice that a litigant should be heard before a decision is taken and before any addition is made by the AO on information obtained from third parties/own source, he must confront the assessee with the material so obtained. Considering the totality of the facts and in the interest of justice, we are of the view that assessee deserve one more opportunity. We therefore restore the issue back to the file of AO and direct him to decide the issue afresh considering the submissions of the assessee. Assessee is also directed to promptly furnish all the required details called by the AO. We therefore, restore the issue back to the file of AO and direct him to pass a fresh order after granting adequate opportunity of hearing to the assessee. Thus the appeal of Assessee is allowed for statistical purposes. 2022 (3) TMI 645 Correct head of income - Interest awarded u/s. 28 of Land Acquisition Act, 1894 - whether taxability of such interest is of Capital nature and should be included to Consideration received for the purpose of computation of capital gain u/s. 45 of Income Tax Act, 1961? - HELD THAT:- After considering the submissions of both the parties, it is noticed that a similar issue has already been adjudicated in case of ITO Vs. Smt. Chawli Devi [ 2021 (5) TMI 730 - ITAT CHANDIGARH ] wherein held interest received by the assessee during the impugned year on the compulsory acquisition of its land u/s. 28 of the Land Acquisition Act, is in the nature of compensation and not interest which is taxable under the head income from other sources u/s. 56 of the Act as held by the authorities below. The compensation being exempt u/s. 10(37) of the Act is not disputed. In view of the same the order passed by the CIT(Appeals) upholding the addition made by the AO on account of interest on enhanced compensation is, not sustainable. Decided in favour of assessee. 2022 (3) TMI 644 Reopening of assessment u/s 147 - Assessing Officer to usurp the jurisdiction to reopen the assessment - Second Assessing Officer reissuing notice to reassessment - assessment has been reopened after four (4) years from the end of the relevant assessment year and the relevant assessment year (AY 2012-13) has undergone scrutiny assessment under section 153A read with section 143(3) - Unexplained cash credits - reasons recorded by the Assessing Officer to reopen the assessment and test whether the Assessing Officer had successfully usurped the jurisdiction - HELD THAT:- Assessing Officer (first) being satisfied about the nature and source of the credit entries from both these companies has accepted the same as genuine and passed the reassessment order under section 153A/143(3) of the Act vide order dated March 31, 2016 Thus we find that the first Assessing Officer had in fact conducted detailed enquiry in respect of these two companies while enquiring about other eleven (11) companies from which the assessee had shown credit entries. First Assessing Officer had confronted the assessee with the adverse report from the very same source which has now prompted the present incumbent/second Assessing Officer to issue notice under section 148 of the Act (i.e. Investigation Wing of the Department, Kolkata). Taking cognisance of the adverse report from the same source the first Assessing Officer had issued show-cause notice dated December 10, 2015 (supra) and alleged that these two companies (M/s. Samkit Finance Pvt. Ltd. and M/s. Saphire Conclave Pvt. Ltd.) were not found to be existing. So it is noted that the first Assessing Officer (Assistant Commissioner of Income-tax) had raised serious doubt about the existence of these two companies based on the Investigation Wing report itself and after conducting enquiry and verification and after approval from Joint Commissioner of Income-tax under section 153D has passed the reassessment order dated March 31, 2016 accepting the nature and source of the credit entries from these two companies also. So we find that the first Assessing Officer has made the reassessment after discharging his duties as an investigator as well as that of an adjudicator. So the action of the Second Assessing Officer to again rake up the same issue which has undergone scrutiny by his predecessor Assessing Officer is nothing but review of the action of first Assessing Officer dated March 31, 2016, which power it is settled that the Assessing Officer (second) does not enjoy. So the impugned actions of the second Assessing Officer can at best be termed as change of opinion after review of earlier assessment which is not a jurisdictional ground to legally/validly usurp reopening jurisdiction. And therefore the action of the second Assessing Officer is held to be bad in law on this score alone. Moreover, we find substantial merit in the contention of the learned authorised representative Shri S. K. Tulsiyan that the second Assessing Officer has believed escapement of income on the strength of borrowed satisfaction of the Investigation Wing without conducting preliminary enquiry which action is also bad in law. Moreover, it is noted that in this case the first proviso to section 147 is attracted, and as discussed supra, the assessee has discharged the burden casted upon it and has disclosed during reassessment dated March 31, 2016 fully and truly all material facts necessary for assessment which culminated in the Assistant Commissioner of Income-tax order dated March 31, 2016 under section 153A/143(3) of the Act. On appeal, the learned Commissioner of Income-tax (Appeals) has gone through the search folder and the remand report of the Assessing Officer and has returned a finding that the assessee has discharged its burden in respect of credit entries from both these companies. Thus we find that the essential condition precedent for invoking reopening jurisdiction under section 147 for the assessment year 2012-13 is absent. Second Assessing Officer has erroneously assumed jurisdiction without satisfying the first proviso to section 147 of the Act also, which also makes the order of second Assessing Officer bad in law. As per the discussion (supra) looking from any angle as discussed, the action of the Assessing Officer to usurp the jurisdiction to reopen the assessment for the assessment year 2012-13 cannot be countenanced and is held to be bad in law for want of jurisdiction and the learned Commissioner of Income-tax (Appeals) erred in holding otherwise. Therefore, we allow the legal issue challenging the jurisdiction of the Assessing Officer and allow the cross-objection of the assessee. 2022 (3) TMI 643 Validity of Assessment u/s 153A - Proof of valid approvals u/s 153D - function to be performed by the Addl. CIT or CIT in granting previous approval - HELD THAT:- In the instant case, as appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment orders without any assessment records what to say about the search material. Therefore, the approval given in the instant case by the Ld. Addl. CIT is not valid in the eyes of law. We, therefore, hold that the approval u/s 153D has been granted without application of mind and is invalid, bad in law and is liable to be quashed. Since, we have held that the approval u/s 153D is invalid and bad in law, therefore, the Assessing Officer cannot pass the assessment order u/s 153A of the Act against the assessee. Therefore, all assessment orders are vitiated for want of valid approvals u/s 153D of the Act and as such no addition could be made against the assessee. We quash the assessment order passed u/s 153A of the Act. The additional ground raised by the assessee in the cross objection is allowed. 2022 (3) TMI 642 Reopening of assessment u/s 147 - eligibility of reasons to believe - Addition u/s 68 - unexplained share capital - HELD THAT:- We find that the Assessing Officer has accepted the objections of the assessee, and has not assessed or reassessed the income, which was the basis of the notice. Therefore, in the light of the judgment of JET AIRWAYS (I) LTD. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] it would not be open to the Assessing Officer to assess income under some other issue independently. Considering all we quash the assessment order framed under section 147 read with section 143(3) of the Act. Since we have quashed the assessment order, we do not find it necessary to delve into the merits of the case.- Decided in favour of assessee. Customs 2022 (3) TMI 641 Seeking direction to respondents to cancel and return back the Bank Guarantee, which was executed towards the clearance of goods - SCN and order in original was quashed on the ground of jurisdiction of DRI - HELD THAT:- For whatever reason, the adjudication proceedings issued against the petitioner dated 25.09.2019 has been quashed or set aside by the orders of this Court dated 25.10.2021 - Subsequently, if there is any review of the law declared by the Hon'ble Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] , it goes without saying that, depending upon the outcome of the decision, what shall be the further consequential action, can be decided and that may be indicated by the Hon'ble Supreme Court. However, as on date, since there has been no adjudication proceedings pending against the petitioner and that has been set aside in the eye of law, the respondents cannot hold the Bank Guarantee given by the petitioner without any authority. Therefore, this Court feels that the prayer sought for in this writ petition can be considered and granted. There shall be a direction to the respondents to return back the Bank Guarantee for an amount of ₹ 7,49,088/- issued by Axis Bank, Purasawalkam, Branch, Chennai BG, which was executed towards the clearance of goods, covered under Bill of Entry both dated 06.10.2017 within a period of two weeks from the date of receipt of a copy of this order - Petition allowed. 2022 (3) TMI 640 Classification of imported goods - import of old and used rusty rails for melting (Heavy Melting Scrap) - classifiable under Chapter Heading 7302 as alleged by revenue or Chapter Heading 7204 as declared by the appellant? - validity of enhancement of value of goods from USD 110 PMT to USD 176.58 PMT - levy of interest - HELD THAT:- The appellant has relied upon the survey report/ certificate dated 22.04.1996 issued by M/s SGS India Limited at the land port; Advice of status by City National Bank USA dated 12.10.1996 and the contract entered between the appellant and his foreign buyer, which show that goods imported are Used Rail Heavy Melting Scrap. On the other hand, no evidence has been led by the department in order to classify the goods under Chapter Heading 7302. Also the lower authorities have discarded the evidence led by the appellant by merely relying upon the Circular 17.01.2006 classified the goods under Chapter 7302 - As per the facts of the present case, it is undisputed that the report certifies that the goods is question are rusted, re- rollable rails/rail of iron and steel of varying length starting from 1 m length to 12.5 m. Due to the varying length, it establishes that the rails of different length are meant for remelting. It is well settled law that burden to classify the goods under particular heading is on the department. In the present case, the department has not discharged their burden to prove their alleged classification of goods by adducing cogent and tangible evidence - the impugned goods are rightly classifiable under Chapter Heading 7204 as USED RAIL HEAVY MELTING SCRAP. Valuation of goods - HELD THAT:- The value of goods has been rejected by the department by straight away applying Rule 10A of the Customs Valuation Rules and re-determined by applying Rule 3(i) read with Rule 4(i) of the Customs Valuation Rules, without first rejecting the value under Section 14 of the Customs Act, 1962. It is noted that it is well settled law that department has to first reject the transaction value under Section 14 of the Customs Act, 1962 with cogent evidence and thereafter the department has to apply the valuation rules sequentially. In the present case, the department has enhanced the value on the basis of one invoice no. 4433 dated 26.04.1996 by one ALL-RAD VERTRIESS in which the goods are sold at the rate of USD 176.58. It is also found that transaction value cannot be rejected merely on the basis of one invoice, which even the department has failed to link with the present impugned consignments. The investigation conducted by the DRI is inconclusive and hence cannot be held against the appellant inasmuch there is no tangible evidence that has been adduced by the DRI and neither a show cause notice has been issued on the basis of said inconclusive investigation of DRI - It is settled law that the price of contemporeous goods cannot be applied invariably in each and every case. Before applying the enhanced comparable price varies circumtances need to be verified such as the quality of goods, quantity of goods, country of origin etc. In the present case, the revenue has neither carried out any investigation on this aspect nor brought any such data of the import related to invoice no. 4433 dated 26.04.1996 which was the sole reliance for enhancing the value. Demand of interest - appellant s contention is that the goods were never warehoused, therefore, interest cannot be levied - HELD THAT:- It is pertinent to note that it is the department who has not assessed the Bills of Entry due to the various reasons such as litigation by the various parties in connection with the supplies, detention of goods by the DRI. The assessment was admittedly done by the department on the direction of the Hon ble High Court vide order dated 28.02.2104. Therefore, the assessment was admittedly done on 28.03.2014. The due date for payment of duty is from the date of assessment of Bills of Entry in terms of Section 47 of the Customs Act, Therefore, it at all there is any liability of interest, it should start from the date of assessment of Bills of Entry i.e. 28.03.2014 - in the facts of the present case, demand of interest is not sustainable for the period prior to assessment of Bills of Entry which has taken place on 28.03.2014. Appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2022 (3) TMI 639 Jurisdiction - whether the relief granted by the Adjudicating Authority directing the DVC to provide new connection to the SRA after payment of the security deposit could have given by the Adjudicating Authority while the main appeal was pending and whether the jurisdiction under IBC is not proper in granting such a relief? - HELD THAT:- The legal validity of the resolution plan as approved by the Adjudicating Authority which was assailed in CA (AT)(Ins) 1111 of 2019 has been considered and decided by this tribunal and the approval of resolution plan has been upheld therein. The liabilities of DVC that relate to past dues prior to the Effective Date have been extinguished under the approved Resolution Plan and DVC is prohibited from raising any further demand on this account. The clause (d) in Para 6 Section VI of the Resolution Plan directs DVC to restore the power connection immediately after the Effective Date and not withhold/disconnect power supply on the ground of pending old dues whose claim has been submitted to Resolution Professional during CIRP and which have been taken care of in the resolution plan and clause (f) directs DVC to commit supply of power to the plant of CD immediately after the Effective Date - the Impugned Order directs SRA to apply for fresh connection with payment of security deposit that may be admissible under WBERC Regulations and DVC shall have to grant temporary connection within 10 days of its order after payment of security deposit. As the issue regarding legality of the resolution plan is being dealt with in CA (AT)(Ins) No. 111 of 2019 we are limiting our consideration in this appeal to the propriety of order directing DVC to grant new temporary connection to DVC after payment of security deposit. The commitment to supply power to the corporate debtor should be in accordance with the WBERC Regulations made under the Electricity Act. Clause (g) above, which directs DVC to ensure availability of continuous power to the plant at the same rate at which it is supplied power to the adjoining units, will have to be modified since the conditions that are applicable for supplying power to the corporate debtor under a new agreement shall be at the tariff rate and conditions that would prevail at the time of signing of the agreement for a fresh connection by DVC with the Successful Resolution Applicant under WBERC Regulations. The Impugned Order which directs a new temporary connection to be provided to the SRA within ten days of application after payment of requisite security deposit cannot be faulted, since this direction is in accordance with the provisions contained in the Successful Resolution Plan and it is now decided in CA (AT) (Ins) No. 1111 of 2020 that the successful resolution plan suffers from no illegality - the successful resolution applicant has to apply for fresh connection, payment of security deposit and any other charges that may be admissible under WBERC Regulations will have to be paid by the successful resolution applicant - the supply of electricity to the corporate debtor should be in accordance with the WBERC Regulations made under the Electricity Act. Appeal disposed off. 2022 (3) TMI 638 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - privity of contract between the Operational Creditor and Corporate Debtor or not - HELD THAT:- When perusal of Letter of Assurance issued by the Corporate Debtor, it is clear that the Corporate Debtor undertook to make payment directly to the Operational Creditor w.e.f. 01.09.2014 which was subject to receipt of invoices duly certified by M/s FCIPL and EIL. Thus, certification of invoices by M/S FCIPL and EIL was condition precedent for making payment. Said Letter of Assurance cannot be stated to be a letter by which the Corporate Debtor substituted itself in the shoes of FERNAS. The assurance was for limited purpose and Corporate Debtor was liable to adhere to the assurance as per assurance given in the said letter. The present is the case where Corporate Debtor shall not be treated to be substituted in place of the Original Contractor and limited liability to make payment was accepted by the Corporate Debtor subject to certification of the bills by the Original Contractor. Before the Adjudicating Authority itself, the Corporate Debtor has filed detailed reply where with regard to all items of the claim made by the Operational Creditor detailed reply was given - it is clearly pointed out in the reply that the bills which are claimed by the Appellant could not be paid due to non-certification of invoices. Retention of money - HELD THAT:- he retention money has not been deducted by the Corporate Debtor and there is no claim of payment of retention money. The claim of TDS has been dealt duly. From the invoices which are on the record, it is clear that invoices were issued to the FCIPL and invoices were not directly issued to the Corporate Debtor. The invoices were issued to the FCIPL only for the purpose of due certification by FCIPL and EIL, so that the Corporate Debtor may make the payment. In facts of the case, the Adjudicating Authority has not committed any error in rejecting the Section 9 Application filed by the Operational Creditor. Appeal dismissed. 2022 (3) TMI 637 Seeking exclusion of time period of 170 days from 06.07.2021 to 22.12.2021 from the total period of completion of CIRP process - HELD THAT:- In view of the situation of the COVID-19 pandemic, the Hon'ble Supreme Court of India in Re: cognizance for extension of Limitation, [ 2020 (5) TMI 418 - SC ORDER] where it was held that To obviate the difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective Courts/Tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings. Similarly, the Insolvency and Bankruptcy Board of India vide notification dated 20.04.2020, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Resolution Process for Corporate Persons) Regulations, 2016 and the said regulation held that the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purpose of computation of the timeline for any task that could not be completed due to such lockdown, in relation to any CIRP. After the grant of the exclusion period of 238 days, the period of CIRP i.e. 270 days, will end on 08.09.2022. Further, the applicant herein had published an invitation for the resolution plan and pursuant to the same, the Resolution Professional has received prospective resolution plans from the two prospective resolution applicants - application allowed. 2022 (3) TMI 636 Validity of rejection of resolution plan - it is alleged that Resolution Plan submitted by the Applicant was not placed before the CoC and the Resolution Professional (RP) unilaterally disqualified the Applicant on the ground that the Applicant is a connected party to an undischarged insolvent. Whether the Resolution Professional (RP) should place the Resolution Plans before the CoC without he himself disqualifying any of the Resolution Applicants unilaterally? - HELD THAT:- After approving the plan by the Committee the Resolution Professional (RP) shall submit to the Adjudicating Authority. It was finally held that the CoC has power to decide and approve the Resolution Plan of the Resolution Applicant's and CoC also can consider the eligibility/ineligibility of the Resolution Applicants under Section 29(A)(e) of the Code. Hence, since the law is made very clear with regard to placing of the Resolution Plan before the CoC before disqualifying any of the Applicants under any of the Provisions of law and under Section 29A of IBC which is the case with the Applicant present before this Tribunal, by answering this point infavour of the Applicant, this Tribunal is inclined to allow the Application partly. Whether the rejection of the Resolution Plan by the Resolution Professional (RP) is valid? - HELD THAT:- This Tribunal is not inclined to make any observation with regard to this point as the same would have the effect of influencing the decision that has to be taken by the CoC after the Resolution Plan of this Applicant is placed before it. The Application is partly allowed. 2022 (3) TMI 629 Seeking action post Resolution Plan approved - seeking adjudication of unresolved question of law arising out of final resolution plan and consequential directions thereof - whether the post approval of the resolution plan, the Financial Creditor of Corporate Debtor would continue to re-course to enforce the excluded securities? - HELD THAT:- This Bench is of the prima facie view that though the excluded securities as defined under the resolution plan means the promoter guarantee, Corporate guarantee issued by the Ushdev International Limited , the encumbrance created on the following immovable by the promoter of third parties, but however, these expressly declared excluded security are subsumed under clause 3.3 (iii) (c) and (h) wherein the plan proposal any balance financial debt forming part of admitted debt (unpaid debt) shall be converted into non-convertible redeemable preference share of the company being zero dividend and non-cumulative in nature at their face value. Further, the unpaid debt shall be converted into new preference share as detailed in schedule V. When the unpaid debt is converted into preference share there is no question of any outstanding liability which is available for enforcement qua the excluded the securities as provided to the Financial Creditor. When there is no debt which is realisable there is no question of any enforcement thereof. The applicant being dissenting Financial Creditor has opted to choose out of the plan but will be entitled to the rights available to the dissenting Financial Creditor as per Section 53 of the Code. This Bench therefore, concludes that the excluded securities are subsumed in the definition of unpaid debt and nothing remain to be realisable when the debt is extinguished and converted in to preference share as provided under the plan. The discussion of the CoC Members captured in the minutes of the meeting no way helps the applicant to enforce the excluded securities. In fact, there is novation of contract by approval of resolution plan by the CoC and all the CoC Members have acquiesced their rights to enforce such excluded securities and the applicant bank being part of the CoC, though being dissenting creditors is bound by the decision of the majority of CoC members. Application dismissed. 2022 (3) TMI 628 Approval of Resolution plan - HELD THAT:- The approval of the resolution plan has been sought under Section 31 of the Code. The conditions provided under Section 31(1) are that the resolution plan is approved by Committee of Creditors under Section 34 of the Code and that the resolution plan so approved meets the requirement of Section 30(2) and that the Resolution plan has provisions for its effective implementation - resolution plan was approved by 91.06% majority of the CoC and therefore, the conditions of Section 30 (4) are satisfied. The resolution plan requires that the Resolution applicant would provide payment of CIRP cost in full and actual basis. The RA shall pay an amount of ₹ 1 crore which shall be utilized for making payment of CIRP cost, if the amount is less than the balance amount payable to CIRP cost shall be paid out of the first tranche of INR 48.14 crores to be paid by the Resolution Applicant to the Financial Creditor. The liquidation value is approximately ₹ 71.28 crores however the resolution plan provides for payment of 227 crores. Out of the resolution amount, an amount of ₹ 225.14 crores is proposed to be paid upfront to the financial creditor. On the closing date the RA shall pay INR 48.14 crores to the financial creditor. The RA shall pay INR 50 Crore on 60th day from the closing date and pay 50 Crores to Financial Creditor on 90th Day, ₹ 27 Crores to the Financial Creditor 120th days from the closing date. The performance Bank guarantee submitted by the RA shall be appropriated towards this tranche of 27 Crores. Section 30(2)(c) (d) the resolution plan provides that upon approval, the RA will constitute an Interim Monitoring Agency, which shall comprise of four members out of which two members shall be appointed of RA and two members shall be appointed by the CoC - Section 30(2) (e), the RP has certified that the Resolution Plan complied with the provision of the Code and regulation and does not contravene any provision of law from the time being in force. In COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT ] the Hon ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. The Resolution plan is accordingly approved - any relief sought in the Resolution Plan, where any contract, agreement understanding, Proceeding, action, notice etc. not specifically identified, or is for a future contingency, is, at this point of time, rejected - Resolution Plan as approved is binding on the Corporate Debtor and other stakeholders involved so that the revival of the Corporate Debtor can come into force with immediate effect - Moratorium imposed under section 14 shall cease to have effect from the date of this order. Application allowed. Service Tax 2022 (3) TMI 635 Recovery of service tax - reverse charge mechanism - appellant is receiving the taxable services from outside India and incurred the expenditure in foreign currency - Acquisition Expense - administration service - stock exchange fees - period 2006-07 to 2008-09 - Extended period of limitation. Acquisition Expense - demand on the ground that these are not in the nature of Legal Consultancy Service as the appellant could not produce any documentary evidence and therefore the service tax was confirmed under Business Support Services - HELD THAT:- The services received from the same service provider, part of the same accepted as a Legal Consultancy Service and demand there to was dropped. It is found that in respect of the services availed for which the demand was confirmed, the appellant have not produced the documents which support their stand that the service is of Legal Consultancy service. Therefore, this issue needs to be re-considered. Administration service - it is the submission of the appellant that there is no service provided by the their group company i.e. Dishman Europe Ltd. to them but this is reimbursement of expenses to their group company - HELD THAT:- Though the appellant claimed that this expenses are reimbursement but no details were brought on record to ascertain whether this expenses are on account the activity amount to services to the appellant by their group company or by any other service provider. Therefore, to finally come to the conclusion whether any service is involved and same is liable to service tax, details of this administrative service needs to be verified on the basis of source documents. Demand on stock exchange fees - HELD THAT:- It is found that no documentary evidence was produced to show that this is a statutory levy and the appellant have paid as reimbursement. It appears that the Stock Exchange has charged fees to the appellant against the stock exchange service, therefore, in the facts of this activity, the stock exchange- Singapore has provided the service to the appellant against stock exchange service therefore, this clearly covers under taxable service and appellant is liable to pay tax under Reverse Charge Mechanism in terms of Section 66A read with Rule 2(1)(d)(iv) of Service Tax Rules, 1994. Accordingly, demand of service tax on stock exchange service is upheld. As regard the demand of service tax on acquisition expense and administrative service, the matter is remanded to the adjudicating authority to re-consider afresh - demand on stock exchange fees upheld - appeal allowed in part by way of remand. 2022 (3) TMI 634 Rejection of application filed under Voluntary Compliance Encouragement Scheme, 2013 - rejection on the ground that the appellant has not paid 50% of the declared tax dues on or before the last date i.e. 31.12.2013 - whether the appellant can be considered to have paid 50% of the declared tax dues when part of the amount has been presented by cheque on the last date of the scheme? - HELD THAT:- Rule 6 of the Scheme which has been noticed above states that the amount has to be paid in the manner prescribed for payment of service tax under Service Tax Rules, 1994. Rule 6(2A) of Service Tax Rules, 1994 provides for payment of service tax by way of cheque also. In the present case, the appellant has filed the declaration along with the demand draft and cheque on the last date of the scheme. In page 32 of the appeal paper book, the letter accompanied with the documents is furnished by the appellant - Though the appellant specified the number of the demand draft as well as the cheque, he had not specifically stated that 000416 pertains to cheque and not demand draft. It is seen that department has collected the bank details of the appellant and found that there was no sufficient fund to honour the cheque on 31.12.2013. On receiving the cheque, the department ought to have presented the cheque and if the same is dishonored could have rejected the declaration as the payment of 50% dues was not made. Without presenting the cheque, merely collecting the bank details on the date of closure of the scheme, it cannot be concluded that appellant has not paid the tax dues in accordance with the provisions of law. The rejection of declaration filed by appellant under VCES cannot sustain - Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2022 (3) TMI 633 Non-deletion of Tax free and First Point Tax Paid goods turnover from the taxable turnover - receipts of hire charges recovered from contractors by appellant falls within ambit of deemed sales as contemplated u/s 2(g)(iv) of the Orissa Sales Tax Act or not - receipt of hire charges of machineries from inter-department of the assessee for account purpose is sale to self as contemplated u/s 2(g)(iv) of the Orissa Sales Tax Act or not - HELD THAT:- The proceedings should be remitted back to the High Court for disposal afresh. To facilitate this process, the appeals are allowed and the impugned order is set aside. All the tax revisions, namely Tax Revision shall stand restored to the file of the High Court. The appeals are disposed of. 2022 (3) TMI 632 Seeking revision of an appellate order - revision rejected on the ground that it was barred by limitation - whether Section 70 of Meghalaya Value Added Tax Act, 2003 permits this Court to entertain a petition for revision beyond the 60 days period indicated in such provision? - Benefit of exemption from VAT - The petitioner manufactures a product that is generically known as rusk. Rusk is a form of toasted bread that, unlike untoasted bread which is soft, is crunchy and it is consumed more as a biscuit than as bread or even toasted bread. HELD THAT:- In the present case, Section 70 of the said Act prescribes a period of 60 days after being notified of the decision subjected to revision for the petition for revision to be carried to the High Court. Section 70 of the said Act does not expressly provide for any power to condone any delay, nor does it expressly prohibit a petition for revision to be entertained beyond the period of 60 days upon sufficient cause for the delay being shown. There is, therefore, no express exclusion in the said Act, within the meaning of the expression expressly excluded contained in the final limb of Section 29(2) of the Act of 1963. However, the expression expressly excluded has to be reasonably understood in the sense that if, by necessary implication, there is exclusion of any of the provisions contained in Sections 4 to 24 (inclusive) of the Act of 1963 in the special or local law, such implied exclusion would also fall within the fold of the expression expressly excluded. For such purpose, the principle embodied in the Latin maxim expressio unios est exclusio alterius may be referred to since it is a cardinal rule that when one or a few matters out of several possible are exclusively referred to, the obvious necessary implication is that the others have been excluded. There is no express exclusion within the meaning of the relevant expression in Section 29(2) of the Act of 1963 which operates on or in respect of Section 70 of the said Act pertaining to petitions for revision carried to this Court. Though it is wholly unnecessary to surmise why there is no express inclusion or express exclusion of the power to condone the delay in Section 70 of the said Act, it may be conjectured that considering the status of the High Court, the legislature deemed it fit to leave the matter open to discretion for the principles of justice, equity and good conscience to be applied by the highest judicial forum in the State - Upon a reading of the relevant provisions of the statute pertaining to VAT in the State, notwithstanding such enactment being a complete code pertaining to all VAT matters, Section 70 of the said Act cannot be said to have expressly excluded the authority of the High Court to condone any delay in the institution of a petition for revision thereunder. In this case, the petitioner invoked the authority of the Board of Revenue under a statute that was applicable to undivided Assam and prior to the State of Meghalaya being carved out. There is no doubt that with a bit more diligence and appropriate industry the revision ought to have been carried to this Court within the stipulated time. But it does not follow that the petitioner herein proceeded mala fide before the Board of Revenue or did not attempt to diligently pursue its challenge to the order impugned in the present proceedings - It was a mistake on the part of the petitioner to approach the Board of Revenue, but it does not appear that the petitioner did not seek to pursue the challenge to the order impugned herein with any degree of diligence. What is apparent in this case is that the petitioner may be using the same raw material as in the manufacture of bread, whereupon the petitioner manufactures a form of bread and refines the same to rusk. The process has been explicitly described at page 9 of the petition as quoted above. Thus, it is plain to see that the petitioner manufactures bread and subjects such bread to a further process, which activity falls within the meaning of manufacture as used in the said Act for an altogether different product to be produced - it cannot be said that the petitioner s product rusk is bread or the VAT exemption available to bread in the State must be extended to rusk. Application disposed off. 2022 (3) TMI 631 Concessional rate of tax - purchase of agri films and cement on issuance of form 'C' declaration from other State dealers - levy of penalty at 150% of the tax due under section 10A of the CST Act - HELD THAT:- The petitioner had violated the provisions of the CST Act and the levy of penalty by the third respondent is correct. Accordingly, it set aside the order of the second respondent / Appellate Authority and restored the order of the third respondent / Registering Authority. In the light of the admitted fact that the petitioner had purchased the goods that are not covered under the Form B registration certificate issued to them, at the concessional rate against issuance of form 'C' declaration, this court has no hesitation to hold that they had violated the provisions of the CST Act, thereby attracting penalty under section 10A of the CST Act. The first respondent has rightly rendered such a clear cut finding for levying penalty on the petitioner, which warrants no interference by this court. As regards the quantum of penalty @ 150% of the tax due, having regard to the facts and circumstances of the case, it will be fair and just, if the penalty is levied at 100%, instead of 150%. Accordingly, this court reduces the penalty imposed on the petitioner to 100% from 150% of the tax due. The order of the Tribunal is modified to that extent. Petition disposed off. 2022 (3) TMI 630 Validity of assessment order - sales suppression besides adding 50% towards probable omission - petitioner mainly contended that the first respondent has passed the order, which is impugned in this writ petition, without physically verifying the delivery challans - excess stock of doors noticed during inspection were either damaged doors or there is a calculation mistake made by the inspection team but it was not properly appreciated by the first respondent-Tribunal - levy of penalty u/s 12 (3) (b) of the TNGST Act - HELD THAT:- The Tribunal, on perusal of the stock register or the records relating to the case, has rendered a specific finding that there were interpolations made in the entries in the stock register and therefore, the plea of the petitioner cannot be accepted. Such a finding of fact rendered by the Tribunal is not required to be interfered with by this Court. On the whole, the various findings rendered by the Tribunal in the order, which is impugned in this writ petition, are based on material evidence over which this Court cannot interfere in exercise of the jurisdiction conferred under Article 226 of The Constitution of India. There is no illegality or perversity in the order passed by the first respondent-Tribunal, warranting our interference - Petition dismissed.
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