TMI Tax Updates - e-Newsletter
April 24, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Exempt supply/Non-GST supply - Transportation by own vehicles on the basis of Invoice(s) and E-way Bill without issuing the consignment note by the Appellant Transporter - Mere non-issuance of the consignment note in such cases does not make them entitled for exemption from payment of GST. However. if the vehicles are provided to the client on rental for use as per their requirement, the services will be classifiable as ‘rental services of transport vehicles'. - AAAR
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GST:
Exemption form CGST and SGST - GTA services - transportation activities - composite contracts or not - divisibility of contracts - Transportation services provided by the appellant being part of the whole works contract will be taxable @ 18% as works contract services and will not be eligible for the exemption - AAAR
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GST:
Liability of Interest u/s 50 of CGST Act - though the liability of interest is automatic, but the same is required to be adjudicated in the event an assesse disputes the computation or very leviability of interest, by initiation of adjudication proceedings under Section 73 or 74 of the CGST Act, till such adjudication is completed by the Proper Officer, the amount of interest cannot be termed as an amount payable under the Act or the Rules - HC
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GST:
Grant of interim bail on the prevalent condition of spread of COVID-19 Virus - evasion of payment of GST - Since the Nabha Jail already stands decongested and there is no reported case of COVID-19 within the premises of jail, therefore keeping in view the nature and gravity of offence and the amount involved this Court does not deem it appropriate to grant interim bail to the petitioner. - HC
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GST:
Demand of Interest u/s 50 of CGST Act without issuing show cause notice (SCN) - Consequence of demanding interest and non-payment thereof is very drastic - impugned demand has been set aside only on the ground of the breach of the principles of natural justice by granting liberty to the respondents to initiate action in accordance with law obviously for recovery of interest. - HC
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Income Tax:
Short-deduction of TDS - interest u/s 201(1) OR 201(1A) - non-deduction of TDS u/s 194A OR 192 - Assessee also could not substantiate that the employees have spent the allowances received by them for the intended purpose. Therefore, the fixed medical allowance given by the employer is taxable as salary income. - AT
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Income Tax:
Extension of Stay - delay in non-disposal of appeal - delay in non-disposal of the appeal is not attributable to the assessee. Hence the balance of convenience lies in favour of the assessee for extending the stay as the assessee has complied with the directions of the Tribunal and the Hon’ble High Court in payment of instalments. - AT
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Income Tax:
Undisclosed income - set off of shares business loss against the undisclosed income - even if that claim is not substantiated, even then the income can be classified under any other head i.e. the income from other sources and benefit u/s.71 of the Act is also allowable - AT
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Income Tax:
Gifts receipt - benefit or perquisite within meaning of section 28(iv) as business income - whenever an amount is paid as personal gift for personal qualities of assessee and as token of personal esteem and veneration, it cannot be subjected to tax as income arising out of business, profession or vocation. - AT
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Income Tax:
Levy of penalty u/s.271B - belated submission of tax audit report - Admittedly, tax audit report was filed alongwith return filed in response to show cause notice issued u/s.148 of the Act which means - No prejudice can said to have been caused for the Department on account of belated submission of tax audit report - No penalty - AT
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Income Tax:
Additions u/s. 9(i)(vi) - transfer of technology fee as royalty or technical fee - In the absence of any findings from the Revenue that the Acqueon Technologies Ltd Inc. USA was paid over and above the purchase price, its treatment that the impugned transaction falls u/s. 9(1)(vi) is not valid - AT
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Income Tax:
Revision u/s 263 - AO is only required to write decision on contentious issues placed before him and not to write decision on the issues on which sufficient enquiry was made and the AO and after enquiry AO is satisfied that the issue is covered in favor of the assessee in accordance with the provisions of law - No error in the order passed by the AO once sufficient enquiry were made - AT
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Income Tax:
Condonation of delay in appeal before CIT(A) - Appeal after failure to get Rectification u/s 154 - delay of 491 days - There is reasonable and sufficient cause for filing the appeal before the CIT(A) belatedly - Delay condoned - AT
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Customs:
Valuation - inclusion of royalty in the transaction value - Rule 10 (c) of Custom Valuation Rules, 2007 - the invoice value is not required to be loaded by including the Royalty and the order of the Deputy Commissioner GATT valuation Cell was set aside. - AT
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DGFT:
Procedural details pursuant to Notification No. 57/2015-20 dated 31.03.2020 and Public Notice 67/2015-20 dated 31.03.2020- Extensions in Import Validity period and Export obligation period in Advance authorizations/DFIA - Circular
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FEMA:
Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2020. - Notification
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Corporate Law:
Constitutional validity of section 140(5) of the Companies Act, 2013 - violation of Article 14 and 21 of the Constitution of India - invocation of the section against the ex-statutory auditors / company auditors - section 140(5) of the Companies Act, 2013 is not unconstitutional - Direction under S. 212(14) of the Companies Act, 2013 dated 29/05/2019 issued by respondent no. 1 Union of India to respondent no. 2 SFIO is unsustainable and it is quashed & set aside. - HC
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PMLA:
Verification of identity by reporting entity - Notification
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SEBI:
Review of provisions of the circular dated September 24, 2019 issued under SEBI (Mutual Funds) Regulations, 1996 due to the COVID - 19 pandemic and moratorium permitted by RBI. - Circular
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SEBI:
Relaxation in Regulation 24(i)(f) of the SEBI (Buy-back of Securities) Regulations, 2018 due to the COVID 19 pandemic - Circular
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Central Excise:
Doctrine of Promissory Estoppel - withdrawal of scheme for revival of economy in Kutch District - Such an exemption by its very nature is susceptible of being revoked or modified or subjected to other conditions. - The respective High Courts have committed a grave error in quashing and setting aside the subsequent notifications/industrial policies - SC
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Central Excise:
CENVAT Credit - inputs and input services used in the power plant - The Tribunal while allowing the appeal of the assessee relied upon its own order passed in the case of the very same assessee but Revenue has not thought fit to challenge the order passed by the Tribunal referred to in Paragraph No.4 of the impugned order - No substantial questions of law - HC
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VAT:
Garnishee Order - Initiation of Coercive action for recovery of the disputed tax and penalty - wherever there is a provision for grant of stay in an appeal or higher proceedings, coercive steps cannot be taken unless and until the authorities dispose of the applications filed under such provisions. - HC
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VAT:
Classification of goods - Bio Marine - Ecornax - Zoonami - The order of the Assessing Authority is completely bereft of any facts at all in support of his conclusion adverse to the petitioner and reliance is placed solely on the clarification issued in the case of the third party dealer. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (4) TMI 666
Liability of Interest u/s 50 of CGST Act - Interpretation of statute - Section 73 of CGST Act - whether interest can be determined without initiating any adjudication process either u/s 73 or 74 of the CGST Act in the event of an assesse raising dispute towards liability of interest? - initiation of recovery proceedings u/s 79 of the CGST Act without initiation and completion of the adjudication proceedings under the Act - HELD THAT:- A bare reading of Section 73(1) of the Act reveals that where it appears to the Proper Officer that any tax has not been paid or short paid" the Proper Officer shall serve notice on the person chargeable with tax, "which has not been so paid" or "which has been short paid" requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under Section 50 of the Act and a penalty leviable under the provisions of the Act and Rules. Thus, a bare reading of Section 73(1) would reveal that if tax has not been paid or has been short paid, a notice is required to be served by the Proper Officer on the assesse not only requiring him to show cause as to why tax be not recovered from it, but also specifying in the notice the interest payable under Section 50 also to be recovered along with penalty. Thus, if there is a short payment of tax or non- payment of tax, a notice is required to be issued even for recovery of interest under Section 50 of the CGST Act.
This Court, while interpreting the term "tax not paid" has held that if a tax has not been paid within the prescribed period, the same would fall with the expression "tax not paid" as mentioned under Section 73 of the CGST Act. The aforesaid interpretation further finds support from other sub- sections of Section 73, particularly sub-sections (5), (6) and (7) of Section 73 - On going through entire section 73, it would be evident that even in a case where an assesse files his return as per his own ascertainment, pays the tax and even pays interest, but if the said amount paid by the assesse is falling short of the amount actually payable, the Proper Officer is required to initiate proceedings under Section 73(1) for recovery of the said amount of tax and interest.
It is not a true that liability of interest under Section 50 of the CGST Act is automatic, but the said amount of interest is required to be calculated and intimated to an assesse. If an assesse disputes the liability of interest i.e. either disputes its calculation or even the leviability of interest, then the only option left for the Assessing Officer is to initiate proceedings either under Section 73 or 74 of the Act for adjudication of the liability of interest.
Whether garnishee proceedings under Section 79 of the CGST Act can be initiated for recovery of interest without adjudicating the liability of interest, when the same is admittedly disputed by the assesse? - HELD THAT:- Section 79 of the CGST Act empowers the authorities to initiate garnishee proceedings for recovery of tax where "any amount payable by a person to the Government under any of the provisions of the Act and Rules made thereunder is not paid". Since in the preceding paragraphs of our Judgment, we have already held that though the liability of interest is automatic, but the same is required to be adjudicated in the event an assesse disputes the computation or very leviability of interest, by initiation of adjudication proceedings under Section 73 or 74 of the CGST Act, till such adjudication is completed by the Proper Officer, the amount of interest cannot be termed as an amount payable under the Act or the Rules - Thus, without initiation of any adjudication proceedings, no recovery proceeding under Section 79 of the Act can be initiated for recovery of the interest amount.
Application allowed.
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2020 (4) TMI 665
Grant of interim bail on the prevalent condition of spread of COVID-19 Virus - evasion of payment of GST - HELD THAT:- The Hon'ble Supreme Court, in IN RE : CONTAGION OF COVID 19 VIRUS IN PRISONS [2020 (4) TMI 572 - SC ORDER] had directed all the States/Union Territories to consider as to which of the prisoners 'may' be released on interim bail or parole during the pandemic so as to decongest the jails and to prevent outbreak of COVID-19 virus in prisons. Pursuant ot said directions a Committee was constituted in State of Punjab, headed by Chairman, Punjab State Legal Services Authority and certain guidelines were laid for release of certain categories of prisoners.
The present case is a case where the allegations against the petitioners are in respect of section 132 of GST Act 2017 which is punishable for a maximum sentence of 5 years and that as per the policy cases of under trials charged with offences punishable for a sentence of up to 7 years could be considered. However, the offence assumes gravity in view of the colossal amount involved in the present case which is ₹ 20 crores appx. and is certainly a factor to be borne in mind while considering the release of the petitioner on interim bail. Infact the allegations are to the effect that the petitioners had forged bills and other documents in furtherance of their designs to cause loss to State Exchequeuer which prima-facie would also attract an offence punishable under section 467 IPC which is punishable with imprisonment for life.
This Court also draws strength from the fact that State of Bihar has chosen not to release any of the prisoners as the jails are not congested and there was no reported case of corona virus in the jails and the said fact was duly noticed by Supreme Court in its order dated 13.3.2020. Since the Nabha Jail already stands decongested and there is no reported case of COVID-19 within the premises of jail, therefore keeping in view the nature and gravity of offence and the amount involved this Court does not deem it appropriate to grant interim bail to the petitioner.
Application dismissed.
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2020 (4) TMI 664
Demand of Interest u/s 50 of CGST Act - requirement for issuance of SCN for demand for interest under sub section (1) of Section 50 of Central Goods and Service Tax Act 2017 - violation of principles of natural justice - HELD THAT:- Under sub section (1) of Section 50 of the GST Act, interest can be demanded if an assessee fails to pay the tax or any part thereof within the specified period - On plain reading of sub section (1) of Section 73 of the GST Act, it is applicable when any tax has not been paid or short paid. It contemplates that a show Cause Notice is to be issued to the assessee calling upon him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under Section 50 of the GST Act.
Assuming that sub section (1) of Section 73 is not applicable, before penalizing the assessee by making him pay interest, the principles of natural justice ought to be complied with before making a demand for interest under sub section (1) of Section 50 of the GST Act. Consequence of demanding interest and non-payment thereof is very drastic - impugned demand has been set aside only on the ground of the breach of the principles of natural justice by granting liberty to the respondents to initiate action in accordance with law obviously for recovery of interest.
Hence before recovery interest payable in accordance with Section 50 of the GST Act, a show Cause Notice is required to be issued to the assessee. Hence, no case for interference is made out - appeal dismissed.
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2020 (4) TMI 668
Exempt supply/Non-GST supply - Transportation by own vehicles on the basis of Invoice(s) and E-way Bill without issuing the consignment note by the Appellant Transporter - applicability of Rule 42 of the CGST Rules 2017 in case where there is GST and Non GST Supplies and there is a common consumption of input and input services - Challenge to AAR decision
HELD THAT:- The appellant is claiming on its official website (www.kmtrans.in) that they are serving about 90% of car makers viz. Maruti Suzuki, Toyota, Tata, Hyundai, Mahindra etc., are having Fleet Size of 1250, 35 branch offices, 32 loading stations, 80 service support. From this, it is clear that the appellant transporter is not from unorganized sector of transporters and has a vast network all over India for transportation of goods. They are providing services to various manufacturers of motor vehicles involving transportation of motor vehicles which are carried from the factory to the various cities in India where the authorised dealers are located - In the instant case of the appellant, if the lien of the goods is transferred and the appellant becomes responsible for the goods till its safe delivery to the consignee, the services will be classifiable as goods transport agency services and issuance of consignment note or its non-issuance does not make any difference so far as the nature of the activity carried out by them is concerned. Mere non-issuance of the consignment note in such cases does not make them entitled for exemption from payment of GST. However. if the vehicles are provided to the client on rental for use as per their requirement, the services will be classifiable as ‘rental services of transport vehicles'.
The nature of activity carried out by them is independent of the format of e-way bill rather e-way bill format has no connection whatsoever, with the nature of activities undertaken. In any case, mere non-requirement of mentioning of any detail in E-way Bill does not affect liability of payment of GST on any service unless the service has been exempted through an exemption Notification issued by the Government - the contentions of the appellant concerning format of e-way bill are not relevant to the instant issue.
Thus, the services to be provided by the appellant will be liable to payment of GST as specified under Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 (as amended) read with exemption Notifications, under the services relating to transportation of goods or rental services of transport vehicle including supporting service, depending upon the exact nature of activity to be carried out by them.
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2020 (4) TMI 667
Exemption form CGST and SGST - GTA services - transportation activities - composite contracts or not - divisibility of contracts - freight charges recovered by the Appellant under the contract from the customer without issuance of consignment note - Serial no. 18 of Notification no. 12/2017-Central Tax Rate F. No. 334/1/2017, dated 28 June 2017 - Serial no. 18 in Notification no. 12/2017-State Tax (Rate) no. MGST 1017/C.R.103(11)/ Taxation-1 dated 29 June 2017 - Challenge to AAR decision.
The appellant has entered into separate contracts for supply of goods and supply of services and the same does not constitute a composite supply - HELD THAT:- After going through the terms of contracts it is seen that though there are two contracts one for supply of goods and other for supply of services, in fact these two contracts are not separate or independent contracts as envisaged by the appellant but are parts of the one whole contract which are separated by the appellant for the reason known to him - All the contracts are interdependent. Further the contracts are covered by the cross fall breach clause which means breach of one will be deemed as breach of other. The work of Taking Over/Time for Completion of the project and handing over to the Employer upon successful completion is to be completed within 38 months.
From the terms of the contract it is crystal clear that the transportation services provided by appellant which are the part of Fifth service contract is not only integrally connected with Third contract of supply of goods but it is also connected with the other contracts (First, Second, Fourth and Sixth contracts) which are performed by the JV partners other than the appellant - The appellant is entrusted with the work mainly for their expertise in erection and installation of the plant and the execution of turnkey project. The function relating to the supply of material and the rendering of services of erection and installation are integrally connected and interdependent. The terms of supply clearly show that the implementation schedule is not only for supply but also for erection, testing and commissioning of the project.
The supply of the goods and the supply of services are inextricably linked with each other. The contract awarded in substance and essence is a composite contract as defined in section 2 (30) of the C.G.S.T. Act, 2017 for supply of goods and services - The entire transaction of providing the goods and the services is naturally bundled and hence this is clearly a case of composite supply of goods and supply of services.
Another contention made by the appellant is that the Contracts entered into by the Appellant are not composite supply of services as work contract and Services provided by the Appellant are not in relation to immovable property - HELD THAT:- It is seen from the nature of contract which envisages installation, which involves civil works to erect the structure for execution of the project in its entirety. It is an entire system comprising of a variety of different structures which are installed after a lot of prior work which involves detailed designing, ground work. Appellant has also submitted few photographs of the project which clearly shows that the structure is attached to the earth with the help of civil work. The photographs indicate the magnitude of the work done. Further foundations in cement concrete, cement concrete walls as well as cement concrete structures are constructed during the execution of the project. The mode of annexation shows that the groundwork, being the necessary foundation, is an important part of the project. The object of annexation, as said earlier, cannot be to make it movable from one place to the other - Hence considering the scope of the work and the facts revealed by the photographs, it can be very well said that completion of the installation, erection of the total project is resulting into immovable property. Hence the total project assigned to the appellant is nothing but composite supply of works contract as envisaged u/s 2 (119) of GST Act.
Applicability of decision in the Advance Ruling in the case of IN RE: M/S. NR ENERGY SOLUTIONS INDIA PVT. LTD. [2019 (6) TMI 1171 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] - HELD THAT:- From the order of the Advance Ruling Authority in case of M/s. NR Energy Solutions India Pvt. Ltd. it can be seen that the terms of the contract are limited to supply and installation of Relay & Protection Panels and Substation Automation System {SAS) which is a small part of system compare to the whole contract awarded to appellant. The appellant cannot equate the contract of supply and installation of certain part of the system with the whole contract in the present case of on-shore and off-shore supply of goods and services for complete execution of +320KV, 2X1000MW VSC based HVDC Terminals and DC XLPE Cable system between Pugalur and North Trichur - Hence ratio of advance ruling in case of M/s. NR Energy Solutions India Pvt. Ltd. is not applicable to present case.
The agreement for setting up for + 320KV, 2 X1000MW VSC based HVDC Terminals and DC XLPE Cable system between Pugalur and North Trichur associated with HVDC Bipole link between Western region (Raigarh, Chhattisgarh) and Southern region (Pugalur, Tamil Nadu-North Trichur, Kerala) is a composite works contract as defined u/s 2(119) of GST Act and taxable @ 18% and hence:
Transportation services provided by the appellant being part of the whole works contract will be taxable @ 18% as works contract services and will not be eligible for the exemption as provided in Serial no. 18 of the Notification No. 12/2017-Central Tax (Rate) dated the 28th June, 2017 and Notification No. 12/2017-State Tax (Rate) dated the 29th June, 2017.
Order passed by the Advance Ruling upheld.
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Income Tax
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2020 (4) TMI 663
Revision u/s 263 - Disallowance u/s 14A read with Rule 8D - HELD THAT:- AO in the assessment order framed u/s. 143(3) of the Act has observed that the reasons for scrutiny is because of “Large interest expenses relatable to exempt income u/s. 14A.” So we note that the AO has taken the case of the assessee for scrutiny because of “large interest expenses relatable to exempt income u/s. 14A.”
We find that the assessee has not claimed this interest & other expenditure, which is discernible from Computation of total income of the assessee - As safely assumed that the assessee has not incurred any interest expenditure for earning the exempt income. AO has not disallowed any disallowance in this respect u/s.14Ar.w.r 8D of the Rules.
AO observed that the assessee’s case was selected for scrutiny for verification of large interest expenses relatable to exempt income and during the assessment proceedings when the assessee explained the aforesaid facts, the AO agreed with the assessee that it had not incurred any interest expenditure for earning the exempt income.
AO has rightly not disallowed/made any disallowance/expenses especially the interest expenditure for earning any exempt income which is a plausible view. The order of the AO passed u/s. 143(3) of the Act cannot be faulted with for non-invocation of section 14A/r.w.r 8D for such disallowance. Conditions precedent for invoking Rule 8D is that if the AO is not satisfied with the explanation of assessee in respect of expenditure incurred for earning exempt income, then only the AO need to resort to Rule 8D, which is not the case here.
Since the order of AO is not erroneous as well as prejudicial to interest of Revenue, the conditions precedent for invoking revisional jurisdiction u/s. 263 of the Act is absent. PCIT lacks jurisdiction u/s. 263 of the Act to interfere with the assessment order passed by AO. - Decided in favour of assessee.
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2020 (4) TMI 662
Revision u/s 263 - depreciation on the opening written down value ('WDV') of the block of assets leased out under finance lease arrangement, pursuant to allowance of depreciation on the same block of assets for prior years - HELD THAT:- It is noted by the AO that on account of substantial part of the lease transactions conducted by the assessee being claimed as finance lease on which the lessee is claiming depreciation under the Companies Act instead of lessor claiming the depreciation.
This fact was very much in the order of assessment that the assessee is claiming depreciation on assets leased out by it under finance lease and after making enquiry, the said depreciation was allowed by the AO in the Assessment Order and hence, the issue involved in the present year is squarely covered by the Tribunal order in assessee’s own case for earlier Assessment Year i.e. 2008-09 in which it was held by the Tribunal that the Assessment Order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue as the finance lease transaction has been thoroughly examined by the AO in the light of evidence filed by the assessee.
Revenue could not point out any difference in the facts in that year and in the present year therefore,in the present year also, the Assessment Order is neither erroneous nor prejudicial to the interest of the Revenue and hence, learned PCIT had no jurisdiction to revise the said Assessment Order under section 263 - Decided against revenue
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2020 (4) TMI 661
Unaccounted sales - Profit estimation - HELD THAT:- Impugned addition made and confirm is solely based on the statement of the assessee without any corroborative evidence.
In the case of Rajesh Jain v/s DCIT [2004 (2) TMI 286 - ITAT DELHI-A] held that computation of undisclosed income solely on the basis of confessional statement of the assessee was not justified.
Direct the A.O. to restrict the addition to the extent of ₹ 28,240/- being profit element on unaccounted sales. Appeal of the assessee is allowed in part.
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2020 (4) TMI 660
Assessment proceedings u/s.153A - Taxation of Long Term Capital Gain - investment made in purchase of new residential house as provided u/s. 54F(1)(a) - HELD THAT:- Similar enhancement of addition has been deleted in original assessment proceedings, therefore, the same addition cannot be roped in the assessment proceedings u/s.153A and hence same is deleted. - Decided in favour of assessee.
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2020 (4) TMI 659
Assessment u/s 153A - absence of issuance of mandatory statutory notice u/s 153C - HELD THAT:- A perusal of the reply received from the Income Tax department by the assessee under RTI Act shows that the AO has categorically given a reply that no notice u/s. 153C was issued for A. Y. 2012-13.
Since the order of the CIT(A) has attained finality as nothing contrary brought to our notice, therefore, the assessment for A.Y. 2012-13 has to be u/s. 153C/153A. Since the AO has not issued the mandatory notice u/s. 153 C as admitted by the AO in his reply to the information obtained by the assessee under RTI Act, therefore, the mandatory procedure prescribed u/s. 153 C has been violated and, therefore, assessment order so passed by the AO is not in accordance with law. Hence, the same has to be quashed. We accordingly hold that the assessment order framed by the AO u/s. 143 (3) / 153 C and 153 A is void ab initio and, therefore, has to be quashed. The ground raised by the assessee is accordingly allowed.
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2020 (4) TMI 658
Short-deduction of TDS - interest u/s 201(1) OR 201(1A) - non-deduction of TDS u/s 194A OR 192 - salary payments of the employees of the assessee that ‘cash medical benefit’ was allowed exemption u/s.10 - AO was of the view that what is contemplated by proviso (iv) to Sec.17(2) was any sum paid by the employer in respect of any expenditure "actually incurred" by the employee on his medical treatment or treatment of any member of his family - HELD THAT:- Assessee was paying medical reimbursement as a component of the monthly payment to the employee and later claiming that it was not perquisite to the extent of ₹ 15,000, the same had to be considered as salary and not exempt perquisite. The reasoning is the same that the payment should not precede the actually incurring of the expenses and it should be only by way of reimbursement. The grievance of the assessee is that there should not be any deduction of TDS on reimbursement of medical allowance and charging of interest thereon.
On perusal of the impugned order CIT(A) observed that the assessee has paid fixed medical allowance and as per the CBDT letter issued to LIC, the exemption of ₹ 15000/- is allowed to reimbursement of actual expenditure. We find that medical allowance is a fixed allowance paid to the employees of a company on a monthly basis irrespective of whether they submit the bills to substantiate the expenditure or not.
Medical reimbursement is a payment made to employees against specific medical bills submitted by them, subject to entitlement. If employees want to claim tax benefit, they should submit bills for the corresponding amount under medical reimbursement. As per the provisions of Income Tax Act, 1961, medical allowance is not categorised as an allowance which bears entire exemption - medical allowance is a fixed pay provided by an employer, and is fully taxable. Employees can claim a tax benefit up to ₹ 15,000/- under medical reimbursement on production of bills and supporting document as per Section 17 (2) of the IT Act, 1961.
Employer has provided fixed medical allowance to his employees - employees have not submitted any bills/vouchers regarding their medical expenses incurred by them. The allowance is exempt to the extent of expenditure incurred by the employees. In the impugned case, there is no any proof of medical expenditure incurred by the employees which is clear from the orders of authorities below.
Assessee also could not substantiate that the employees have spent the allowances received by them for the intended purpose. Therefore, the fixed medical allowance given by the employer is taxable as salary income.
The employer has not been deducted TDS on the fixed medical allowance. CBDT letter relied on by the ld. AR of the assessee has no application on the issue under consideration as the CIT(A) has already dealt the same in the appellate order. The authorities below have decided the issue in detail and accordingly, we uphold the same. - Decided against assessee.
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2020 (4) TMI 657
Extension of Stay - payment in four installments - delay in non-disposal of appeal - HELD THAT:- The Hon’ble Delhi High Court in Pepsi Foods (P) Ltd. Vs. ACIT [2015 (5) TMI 655 - DELHI HIGH COURT] and case of M/s. SAP Labs (I) Pvt. Ltd. Vs. ACIT [2016 (2) TMI 398 - ITAT BANGALORE] has held that, if the delay is not attributable to the assessee, the Tribunal has power to extend the period of stay even beyond the time limit laid down in 3rd proviso to Section 254(2A) .
We, considering the facts and circumstances and the stay petition filed by the assessee, hold that the delay in non-disposal of the appeal is not attributable to the assessee. Hence the balance of convenience lies in favour of the assessee for extending the stay as the assessee has complied with the directions of the Tribunal and the Hon’ble High Court in payment of instalments. Accordingly, we extend the stay of outstanding demand for a further period of six months from the date of this order or disposal of the appeal whichever is earlier - Decided in favour of assessee.
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2020 (4) TMI 656
Condonation of delay - appeal of the assessee was dismissed by the ld.CIT(A) on the solidary ground that the same was not within limitations and assessee had no ‘sufficient cause’ for filing the appeal in time - HELD THAT:- Keeping in view of the decision in Hon'ble Supreme Court in the case of Land Acquison Collector Vs. MST Kitji [1987] [1987 (2) TMI 61 - SUPREME COURT] we find that the assessee had sufficient cause for not filing the appeal in time before the ld.CIT(A). Therefore, considering the reasons as cited in the said application and also keeping in view principles laid down by Hon'ble Supreme Court, we condone the delay in filing the appeal before the ld.CIT(A).
Undisclosed income - set off of shares business loss against the undisclosed income - No claim shall be available for any allowances or expenditure of income referred to any section 68, section 69, section 69A, section 69B, section 69C and section 69D from A.Y. 2013-14 onwards. This amendment being prospective and not retrospective and since the claim raised by the assessee is for the A.Y. 2009-10, therefore, this amendment is not applicable and thus the claim for set off of shares business loss is available to the assessee as benefit provided u/s.71 of the Act may not simply be denied on the ground that the assessee was not able to substantiate his claim for classification under certain head of income. In our view, even if that claim is not substantiated, even then the income can be classified under any other head i.e. the income from other sources and benefit u/s.71 of the Act is also allowable. Therefore, keeping in view of the totality of the facts and circumstances as discussed above and also keeping in view of the decisions as mentioned above, we allow the claim of the assessee for set off of shares business loss against the undisclosed income for the year under consideration, accordingly solitary ground raised by the assessee are allowed.
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2020 (4) TMI 655
Penalty u/s 271(1)(c) - unexplained cash credit u/s.68 - disallowance of expenses - Merely because the assessee could not substantiated his stand of earning income on account of brokerage charges, the same was treated as cash credit u/s.68 - HELD THAT:- AO had made passive disallowance of expenses, without offering any explanation or justification in the same and has not proved beyond doubt any activity of concealment of income on the part of assessee. AO had made arithmetic disallowance without offering any reason, explanation or decision in this regard, In the order of assessment, AO had not provided any reason for disallowance of expenses not even mentioned his express intention to disallow those expenses, thus penalty on the said reason is not imposable.
In the case of DCIT Vs. Kulwant Singh [2019 (4) TMI 1287 - ITAT CHANDIGARH] wherein it has categorically been held that when all the facts with regard to the income were declared in the original return itself, then it cannot be taken as a case of concealment or furnishing of inaccurate particulars of income.
Where the satisfaction of the ld.AO while initiating the penalty proceedings u/s.271(1)(c) with regard to filing of inaccurate particulars of income while making claim of brokerage charges and it was not believed by the ld.AO and the ld.AO has considered the same as cash credit income u/s.68 - we find support from the decision of CIT Vs. Reliance Petro Products [2010 (3) TMI 80 - SUPREME COURT] wherein it has categorically been held that “mere making of a claim, which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding the income of the assessee and such claim made in the return cannot amount to be inaccurate particulars. - Decided in favour of assessee.
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2020 (4) TMI 654
Condonation of delay - reasonable cause for filing appeal in delay - HELD THAT:- A delay of the shortest period may be uncondonable due to unacceptable explanation, whereas in certain other cases, delay of a long period can be condoned, if the explanation is satisfactory. However, if no mala-fide can be attributed to the delay, that delay will be condonable. We find that the assessee has shifted from Surat to Banaras, therefore, the assessee has a reasonable cause for filing appeal in delay. Hence, delay is condoned.
Gifts receipt - addition being income in the hands of the appellant - Addition u/s 28(iv) - HELD THAT:- In the light of decision of Nirmala P. Athavale [2008 (2) TMI 651 - ITAT MUMBAI] as held that whether where assessee who was a wellknown social reformer and philosopher having lakhs of followers spread all over world and who used to charge no fee or remuneration from his followers or persons who attended his lectures, had received voluntary gifts of certain sum from his followers in recognition of his personal qualities and noble thoughts, gifted sum could not be termed as benefit or perquisite within meaning of section 28(iv) - Similar finding was rendered in the case of Dilip Kumar Roy v. CIT [1973 (7) TMI 4 - BOMBAY HIGH COURT] whenever an amount is paid as personal gift for personal qualities of assessee and as token of personal esteem and veneration, it cannot be subjected to tax as income arising out of business, profession or vocation. Since, the gift is reflected of ₹ 300000/- reflected in the balance account and others were received from followers, therefore, we are of the considered opinion that the addition is not sustainable and the same is directed to be deleted.
Addition representing 1/4th of expenses of Vrajyatra - HELD THAT:- Evidence is in the form of copy of ledger account, templets and receipts of electricity expenses photocopy etc. and affidavit of Shri Satishchandra and placed at paper book 22 supported the fact that the assessee has undertaken Vraj yatra. Since, the assessee being the pujari and does not know the intricacy of law which does not make that the assessee has not incurred expenditure on the Vraj Yatra. Therefore we are of the opinion that the disallowance of expenses at the rate of 1/4th is deleted.
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2020 (4) TMI 653
Deduction u/s 80IB - eligible housing project - basic condition of obtaining the approval from the local authority for housing project unfulfilled - HELD THAT:- The instant case is not case involving some alterations in the building plan at a later stage but is rather a case where the first building plan approved within the cut off limit has been totally obliterated and stands replaced by building plan. The development permission towards the impugned building plan was applied and taken subsequent to the cut off date.
In the absence of any continuity or integrity between the initial approval and subsequent approval,the date of first approval within cut off limit cannot be reckoned for the purposes of second approval. The basic condition of obtaining the approval from the local authority for housing project in specified time limit thus remains unfulfilled for the housing project in question.
The housing project in Explanation-l(i) is qualified and punctuated by implicit condition. The use of word 'the' preceding the; expression 'Housing project1 is suggestive and indicative of the fact that: the 'Housing project' should be broadly the same. Approval for a giver housing project at the first instance will not grant an indefeasible or vested right under Explanation-l(i) for a altogether new project. There should be some demonstrable and intense relationship between earlier approval obtained in respect of 'housing project' vis-a-vis subsequent approval. The law cannot be surpassed to grant relief.
Nothing turns out on the use of the expression ‘revised permission' by local authority. As noted, the approval for revises housing project has no rational connection with the first housing project for which the approval was initially taken.
As per the express language prodigious benefit offered therein stands forfeited unless a housing project is approved by the local authority before 31/03/2008. In the instant case, the second approval taken for the housing project concerning high-rise building betrays the aforesaid condition outlined. This being so, the ratio of the decisions cited do not govern the issue even on most liberal and utmost considerations. Thus, the action of revenue is found to be in accord with mandate of law. - Decided against assessee.
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2020 (4) TMI 652
Levy of penalty u/s.271B - belated submission of tax audit report - HELD THAT:- Admittedly, tax audit report was filed alongwith return filed in response to show cause notice issued u/s.148 of the Act which means that the Assessing Officer had the benefit of tax audit report and no prejudice can said to have been caused for the Department on account of belated submission of tax audit report. See P. SENTHIL KUMAR VERSUS PRINCIPAL COMMISSIONER OF INCOME TAX-5, CHENNAI [2019 (1) TMI 222 - MADRAS HIGH COURT] - we are of the considered opinion that levy of penalty u/s.271B of the Act is not warranted. - Decided in favour of assessee.
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2020 (4) TMI 651
Rectification u/s 154 - rejecting the claim of deduction u/s.54G on the ground that since there is no claim in the Return for deduction u/s.54G, rectification of the intimation for granting the said deduction u/s.54G does not arise - CIT(A), without considering the written submissions with the enclosures of 105 pages filed before him and without giving adequate opportunity to the assessee, and without notifying that there was a delay of 462 days in filing the appeal etc., dismissed the appeal exparte and also dismissed the appeal on technical ground as the assessee has not attached the order under dispute along with the demand notice and appeal fees paid.
HELD THAT:- CIT(A) dismissed the appeal without giving effective opportunity to the assessee. In the facts and circumstances of the case, we set aside the order fo the learned CIT(A) for a fresh examination. The learned CIT(A) would give an effective opportunity of being beard to the assessee on the issue of belated filing of the appeal. In case, he condones the delay, the ld. CIT(A) would adjudicate the issues on merits. In case, he is not condoning the delay in filing the appeal, after giving effective opportunity, he shall pass a speaking order.
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2020 (4) TMI 650
Disallowance u/s. 14A r.w.r. 8D - investments which yielded exempt income during the year for the purpose of computing average value of investment - HELD THAT:- Following the Special Bench decision in VIREET INVESTMENT (P.) LTD. [2017 (6) TMI 1124 - ITAT DELHI] we direct the AO to compute disallowance u/s. 14A r.w.r. 8D(2)(iii) by considering only those investments which yielded exempt income during the year for the purpose of computing average value of investment and accordingly, recompute the disallowance u/s. 14A r.w.r. 8D(2)(iii).
TDS u/s 195 - disallowance u/s. 40(a)(ia) - fees for consultancy services rendered - DTAA between India and Mauritius/Austria/Germany, - HELD THAT:- Disallowances made towards the payments made to Mr. John Lyons, Mr. Walter Sturmer & Mr. Detlef Hasenfuss, since the relevant materials were not placed before the lower authorities, we deem it fit to remit these issues back to the AO for a fresh examination.
The assessee shall lay relevant materials in support of its contention before the AO and comply with the requirements of the AO in accordance with law. AO is free to conduct appropriate enquiry as deemed fit, but he shall furnish adequate opportunity to the assesssee on the material etc to be used against it and decide the matter in accordance with law.
With regard to the payment to HSBC, we find merit in the submissions made by the Ld. AR for the reason that this issue is covered by Article 11(3) - Since, the assessee has made out of a case under item (c) of Article 11(3), supra, the corresponding grounds of the assessee are allowed.
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2020 (4) TMI 649
Additions u/s. 9(1)(vi) - transfer of technology fee as royalty or technical fee - Software license purchased by the assessee- royalty u/s. 9(1)(vi) - Non deduction of TDS u/s 195 - HELD THAT:- As assessee is engaged in the business of development and export of software, providing CTI (Computer Telephonic Integration), system integration, IT consulting services to customers. The assessee has purchased the copyrighted software license from Acqueon Technologies Inc. USA of Acqueon AiQ and IVR connector as off-the-shelf software and used them to develop application as per the requirements of the customers. Therefore, as held by the M/S. VINZAS SOLUTIONS INDIA PRIVATE LIMITED [2017 (1) TMI 1102 - MADRAS HIGH COURT] purchase of copyrighted articles, does not fall within this scope of section 9(1)(vi) of the Act. The assessee has also consumed them to develop the application and sold them. In the absence of any findings from the Revenue that the Acqueon Technologies Ltd Inc. USA was paid over and above the purchase price, its treatment that the impugned transaction falls u/s. 9(1)(vi) is not valid and hence, the corresponding grounds of the assessee are allowed.
Disallowance of payments of contribution towards PF - sums received by the assessee from its employees towards contribution to PF were made beyond the due date as per PF Act - HELD THAT:- Since the AO has not examined as to whether they were remitted within the due date of filing the return of income u/s. 139(1) of the Act, this issue is remitted back to the AO for examination. If the assessee has remitted the sum before the due date of filing the return u/s. 139(1), the AO shall allow the deduction claimed by the assessee in accordance with the Jurisdictional High Court decision in AIMIL LIMITED [2009 (12) TMI 38 - DELHI HIGH COURT] and M/S. ALOM EXTRUSIONS LIMITED [2009 (11) TMI 27 - SUPREME COURT].
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2020 (4) TMI 648
Revision u/s 263 - character and nature of the subsidy received by the assessee - whether order passed by the AO is erroneous and there is loss to the revenue? - HELD THAT: - AO had made adequate enquiry for the purpose of finding the true character and nature of the subsidy received by the assessee i.e. whether the same was capital in nature or revenue in nature. After making sufficient enquiry, AO allowed the claim of the assessee and held the subsidy to be revenue in nature. It is correct that the AO has not written voluminous order accepting the contentions of the assessee. AO is not required to write detailed order accepting the contentions of the assessee, once the same is in accordance with law.
AO is only required to write decision on contentious issues placed before him and not to write decision on the issues on which sufficient enquiry was made and the AO and after enquiry AO is satisfied that the issue is covered in favor of the assessee in accordance with the provisions of law.
No error in the order passed by the AO once sufficient enquiry were made to the true character of the subsidy received by the assessee - issue of subsidy is squarely covered by the decision of the Hon‟ble Supreme Court in the case of Chaphalkar Brothers [2017 (12) TMI 816 - SUPREME COURT]. In view of the matter, we fail to understand how the order passed by the Assessing Officer can be said to be erroneous and prejudicial to the interest of the revenue - Decided in favour of assessee.
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2020 (4) TMI 647
Addition u/s 80IB(10) - CIT(A) deleting the addition holding that the housing project of the assessee was approved by the Collector Pune not as local authority defined u/s. 3(31) o the General Clauses Act?”- HELD THAT:- Relevant Gat Numbers falls in an area controlled under Maharashtra Land Revenue Code and Maharashtra Regional & Town Planning Act (MRTP), 1966. The Collector has given approval of the permission to convert the land to non-agricultural purpose.
He also issued the permission to construct of residential houses and the said property located at above cited Gat Numbers. While granting the permission, the Collector mentioned the terms and conditions in his permission letter from 1 to 33 where the conditions specify the manner of construction of the building, post-construction of the building, obtaining of the completion certificate etc.
Considering the above finding of the CIT(A) on the issue of allowing of deduction u/s 80IB(10) we are of the opinion that the order of the CIT(A) is fair and reasonable and it does not call for any interference. Thus, the ground raised by the Revenue is dismissed.
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2020 (4) TMI 646
Condonation of delay in appeal before CIT(A) - Appeal after failure to get Rectification u/s 154 - delay of 491 days - HELD THAT:- CIT(A) cannot find fault with the assessee.The assessee exploring an alternate remedy by filing the petition u/s 154 before the A.O. and it was filed within the time limit allowed u/s 154 of the Act. The assessee has said to be not received the order passed u/s 154 by the A.O. Later on, the assessee had applied for certified copy of order passed u/s 154 by A.O., which was duly received by the assessee on 10.11.2017.
Assessee filed appeal before the CIT(A) on 23.11.2017 with a delay of 491 days against the order passed by the A.O. u/s. 143(3) - there was a delay of 491 days in filing the appeal before the CIT(A). Accordingly, find reasonable and sufficient cause for filing the appeal before the CIT(A) belatedly. Therefore, condone the delay of 491 days in filing the appeal belatedly before the CIT(A) and direct the CIT(A) to admit the appeal and decide the same on merits. Appeal filed by the assessee is allowed.
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Customs
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2020 (4) TMI 645
Valuation - inclusion of royalty in the transaction value - Rule 10 (c) of Custom Valuation Rules, 2007 - HELD THAT:- It is clear that the proceedings in the present case was initiated consequent to the order in review No. 228/DC/SVB/AK/2012-13 dated 18.05.2012 passed by the Deputy Commissioner of Customs GATT Valuation Cell, Mumbai, whereby the Deputy Commissioner ordered for loading of Royalty Amount in the transaction value declared by the appellant. The Said order was appealed against before the Commissioner of Customs (Appeals)-Mumbai-I, who vide order in appeal No. 247-248/MCH/DC/SVB/2013 dated 28.03.2013 upheld the order of the Deputy Commissioner and dismissed the appellant’s appeal.
The CESTAT Mumbai disposed of the appeal in SANDVIK ASIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI [2015 (11) TMI 1504 - CESTAT MUMBAI] where by the appellant’s appeal was allowed by holding that the invoice value is not required to be loaded by including the Royalty and the order of the Deputy Commissioner GATT valuation Cell was set aside.
Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2020 (4) TMI 644
Constitutional validity of section 140(5) of the Companies Act, 2013 - violation of Article 14 and 21 of the Constitution of India - invocation of the section against the ex-statutory auditors - constant evergreening of debts extended to its subsidiary Companies & third parties/companies by IFIN.
Whether S. 140(5) of 2013 Act is unconstitutional? - Whether it is bad as it singles out only the Company Auditors and excludes the directors or the office bearers of the companies from its scope? - Whether it is arbitrary since it does not carry adequate procedural safeguards as contained in Indian Chartered Accountants Act or in S. 132 of the 2013 Act? - principle of double jeopardy.
HELD THAT:- The Parliament in 2013 Act made provision for NFRA to consider the cases of professional misconduct and for a criminal trial under its S. 447, an agency like NCLT formed under S. 408 has been given a power to issue a direction to change the CA. It is also apparent that NCLT has not been given power to debar or disqualify or impose any punishment on such CA - Proviso to S. 132(4)(a) of 2013 Act shows that after NFRA initiates investigation into the professional misconduct, the Institute of Chartered Accountants looses that jurisdiction - NCLT does not & can not inquire into a professional misconduct by the CA as it is not conferred with power to choose the nature of punishment or its quantum.
Section 140(5) is part of the provision (S.140) which deals with the removal of CA or his resignation. Need of special resolution to remove CA or grant of opportunity to him in that connection are part of this scheme. The concerned CA though removed by special resolution or due to his resignation, is not visited thereby with any action for professional misconduct or prosecution for crime or any disability because of that removal or resignation.
Chartered accountant Act takes care of the professional misconducts by CA while 2013 Act vide S. 132, also deals with type of the said misconducts and vide S. 447, takes care of criminal offences. In this backdrop, it is absurd to assume that S. 140(5) again envisages a punishment for a professional misconduct or for crime of fraud - Debarment or disqualification under 2nd proviso to S.140(5) follows automatically due to statutory mandate and NCLT has no option or discretion in that respect.
As professional misconduct & offence are not dealt with by the NCLT, disqualification stipulated in second proviso to S. 140(5) can not be construed as a second punishment for same misconduct & it also does not attract the principle of double jeopardy. As legislative mandate of disqualification in second proviso to S. 140(5) is not a punishment either for the misconduct or the offence, obviously it is added as a measure to achieve a laudable goal - Respondents as also the Petitioners do not dispute that considering the consequences emanating from scheme of S. 140(5), it needs to be strictly construed. It contemplates “change of CA” as a final order. The order therefore must be executable (executory) and if the CA has already ceased to be such CA, that final order can not be passed as he can not be or need not be changed.
The disqualification prescribed in second proviso to S. 140(5) is not for NCLT’s satisfaction of involvement in fraud or offence of fraud or for professional misconduct. As only fact of final order of NCLT ie a direction to change is the triggering point, it can not attract the principles of double jeopardy at all. Such debarment is avoidable - the CA in relation to whom the NCLT proposes to issue a direction to change, may therefore prefer to walk out by resigning thereby not taking the risk of a disqualification. He is expected to show a mature & neutral attitude - Even when Company proposes to pass a special resolution for removing its CA under S.140(1), the CA can avoid it by putting in a resignation. The scheme of S. 140 itself interposes “resignation” procedure between the decision of Company to move such special resolution & further processing thereof. The Parliament has placed sub-sections (2) & (3) regarding the resignation between sub-sections (1) & (4) of S. 140 and there is nothing in law to demonstrate that the CA against whom the special resolution of “removal” is initiated, can not resign. Such resignation does not lead to any debarment or disqualification in his practice as CA.
Status of report under S. 212 submitted by SFIO - HELD THAT:- Section 212(11) obliges SFIO to submit an interim report when so directed by the Central Government. S. 212(12) obliges him to submit the investigation report after completing the investigation. The section does not speak of said report as “final report”. Parties have for convenience coined that phrase since S. 212 (11) uses the word “interim report”.
There is nothing in S. 212 of 2013 Act to demonstrate that interim report under S. 212(11) can not be an investigation report. When the Central Government calls for the interim investigation report, there is nothing in S. 212(14), which prohibits the Central Government from considering it - As the respondents do not plead on affidavit and bring on record the basic facts to indicate a possibility of due application of mind by the authority granting “direction” to prosecute, no disputed question in relation to such process under S. 212(14) of 2013 Act arises before us. As such, there is no scope for claiming that arguments of the petitioners about non-application of mind raise a disputed question which can be examined during trial.
Thus, section 140(5) of the Companies Act, 2013 is not unconstitutional - Direction under S. 212(14) of the Companies Act, 2013 dated 29/05/2019 issued by respondent no. 1 Union of India to respondent no. 2 SFIO is unsustainable and it is quashed & set aside. The consequential prosecution lodged by the respondent no. 2 SFIO vide Cr. Complaint no. CC 20 of 2019 on the file of Special Court (Companies Act) and Additional Sessions Judge, Greater Mumbai; is therefore not maintainable and it is also quashed & set aside - petition is partly allowed.
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Insolvency & Bankruptcy
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2020 (4) TMI 643
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - pre-existing dispute - HELD THAT:- It can be seen that the parties to the contract by their conduct signified their acquiescence in the continuance of the contract. There is an apparent deviation with respect to the contractual obligations regarding completion of Factory Acceptance Test from the side of both the parties which disturbs the existence per-se of the operational debt. It is an accepted principle for a claim in the nature of operational debt that it emanates from the Purchase Order and the terms and conditions contained therein, the Applicant/Operational Creditor appears to have made suppression of such a material document; no mention seem to have been made in the Application submitted by the Operational Creditor.
The suppression of existence of such a Purchase Order appears to be an attempt to camouflage their contractual obligations so as to establish their claim for operational debt. In addition, the Operational Creditor has not completed the process of erection and commissioning so as to make them eligible to claim the operational debt.
There is a deviation with respect to the contractual obligations regarding completion of Factory Acceptance Test from the side of both the parties which disturbs the existence per-se of the operational debt leading to a pre-existence of dispute - Petition dismissed.
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2020 (4) TMI 642
Maintainability of application - initiation of CIRP - Corporate Debtor failed in making repayment of the Cash Credit, Term Loan, BP, Devolved LC facility availed from the Bank - existence of debt and dispute or not - HELD THAT:- The CD has defaulted in making repayment of credit facilities to the Petitioner Bank and the date of default is 28-8-2014. The Statement of accounts submitted by the applicant confirms the default committed by the Corporate Debtor - The Petitioner Bank has filed the petition within the period of limitation, as the date of payment of INR. 3,75,00,000.00 as on 25-1-2018 whereas this petition has been filed by the Financial Creditor on 1-7-2019 - The present I.B. Petition is filed by the duly authorised official of the Financial Creditor in a prescribed format under section 7 of the I.B. Code annexing copies of loan documents confirming the existence of debt due and defaulted and proposed a name of Resolution Professional to act as an Interim Resolution Professional (IRP).
This Adjudicating Authority is satisfied that:
(a) The Corporate Debtor availed the credit facilities from the Financial Creditor;
(b) Existence of debt is above Rs. One Lakh;
(c) Debt is due;
(d) Default has occurred on 28-8-2014;
(e) Petition has been filed within the limitation period as the Corporate Debtor has paid INR. 4,73,50,000.00 on various dates between 4-11-2016 to 25-1-2018 wherein this petition has been filed on 1-7-2019.
(f) Copy of the Application filed before the Tribunal has been sent to the Corporate Debtor and the application filed by the Financial Creditor under section 7 of IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process in respect of the Corporate Debtor.
Petition is admitted - moratorium declared.
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2020 (4) TMI 641
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- In the present case, there is no such dispute as pre-existing, the dispute which was being claimed to be pre-existing by the corporate debtor did not survive - also, the applicant has attached the copy of Bank statements in compliance of the requirement of Section 9(3)(c) of the I&BC 2016.
The present application is complete and the Operational Creditor is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfilment of requirements under section 9(5) of the Code. Hence, the present application is admitted - Application admitted - moratorium declared.
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Service Tax
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2020 (4) TMI 640
Demand of service tax alongwith interest and penalty - free services - service tax along with interest paid by the appellant before issue of show cause notice - HELD THAT:- The entire calculation of service tax demanded from the appellants was in respect of free services and in respect of each free service Revenue had presumed that the appellant had collected ₹ 625/- which is also clear from the show cause notice that the said figure of ₹ 625 was not forthcoming out of any record in respect of free services maintained by the appellants - the amount of around ₹ 15 lakhs confirmed along with interest and penalty from the appellants being presumptive is not sustainable.
Other amount confirmed and appropriated along with interest - HELD THAT:- The same are not contested by the appellant and therefore, we do not interfere to the same.
Penalties - HELD THAT:- Since the penalties were in respect of such demand confirmed by the Original Authority where the amounts were paid with interest before issue of show cause notice, we, therefore, set aside all the penalties imposed under Section 78 of Finance Act, 1994.
Penalty of ₹ 10,000/- imposed upon the appellants under Section 77 of FA - HELD THAT:- The appellants were already registered and therefore, the said penalty is not sustainable.
Appeal allowed in part.
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Central Excise
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2020 (4) TMI 669
Doctrine of Promissory Estoppel - withdrawal of scheme for revival of economy in Kutch District - Withdrawal of the benefit/incentive scheme to the original writ petitioners - retrospective or retroactive? - effect of subsequent N/N. 16/2008 dated 27.03.2008 - It was the case of the original writ petitioners that the subsequent notification No. 16/2008-CE changed the entire basis of the incentive exemption and had the effect of substantially reducing their entitlement of refund. It was also the case on behalf of the original writ petitioners that as a result of the said amendment which resulted in their entitlement for refund being reduced from nearly 100% of the duty paid to only 34% of such duty amount.
According to the original writ petitioners, since the promised incentive was curtailed midway before the expiry of the five years period, the subsequent notification was in breach of the principle of promissory estoppel.
Whether in the facts and circumstances of the case the subsequent notification which has been quashed and set aside by the High Court being notification No. 16 of 2008 dated 27.03.2008 can be said to be clarificatory in nature and can it be said that it takes away the vested right conferred pursuant to the earlier notification of 2001 and whether the same can be made applicable retrospectively and whether the same has been issued in the public interest and whether the same is hit by the Doctrine of Promissory Estoppel?
HELD THAT:- Once it is held that the subsequent notifications/industrial policies impugned before the respective High Court are clarificatory in nature and it does not take away any vested rights conferred under the earlier notifications/industrial policies.
In the case of Kasinka Trading [1994 (10) TMI 64 - SUPREME COURT ] , this Court has specifically and clearly held that the doctrine of promissory estoppel cannot be invoked in the abstract and the courts are bound to consider all aspects including the objective to be achieved and the public good at large. It has been held that while considering the applicability of the doctrine, the courts have to do equity and the fundamental principles of equity must forever be present to the mind of the court, while considering the applicability of the doctrine. It is further held that the doctrine must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation. It is further held that an exemption notification does not make items which are subject to levy of customs duty etc. as items not leviable to such duty. It only suspends the levy and collection of customs duty, etc., wholly or partially and subject to such conditions as may be laid down in the notification by the Government in “public interest”. Such an exemption by its very nature is susceptible of being revoked or modified or subjected to other conditions. The supersession or revocation of an exemption notification in the “public interest” is an exercise of the statutory power of the State under the law itself - It has been held that where the Government acts in “public interest” and neither any fraud or lack of bonafides is alleged, much less established, it would not be appropriate for the court to interfere with the same.
In the case of Shrijee Sales Corporation [1996 (12) TMI 61 - SUPREME COURT ], it is observed and held that the principle of promissory estoppel may be applicable against the Government - But the determination of applicability of promissory estoppel against public authority/Government hinges upon balance of equity or “public interest”. In case there is a supervening public interest, the Government would be allowed to change its stand; it would then be able to withdraw from representation made by it which induced persons to take certain steps which may have gone adverse to the interest of such persons on account of such withdrawal. Once public interest is accepted as the superior equity which can override individual equity, the aforesaid principle should be applicable even in cases where a period has been indicated for operation of the promise.
RETROSPECTIVITY/CLARIFICATORY - HELD THAT:- In the case of State Bank of India v. V. Ramakrishnan [2018 (8) TMI 837 - SUPREME COURT ], it is observed and held that the presumption against retrospective operation is not applicable to declaratory statutes. For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective - In the case of State of Bihar v. Ramesh Prasad Verma [1772919], it is observed and held that any legislation or instrument having force of law, if clarificatory, declaratory or explanatory in nature and purport, will have retrospective operation especially in the absence of any indication to the contrary as to retrospectivity either in parent Act or Rules or notifications involved.
Interpretation of Fiscal statutes - HELD THAT:- The respective notifications/industrial policies impugned before the High Courts can be said to be clarificatory in nature and it can be defined as an Act to remove doubts. It cannot be said that by the subsequent notifications/industrial policies the benefits which were accrued/granted under the earlier notifications were sought to be taken away. It also cannot be said that by the subsequent notifications/industrial policies, the rights which have been accrued under the earlier notifications had been taken away.
The subsequent notifications/industrial policies do not take away any vested right conferred under the earlier notifications/industrial policies. Under the subsequent notifications/industrial policies, the persons who establish the new undertakings shall be continue to get the refund of the excise duty. However, it is clarified by the subsequent notifications that the refund of the excise duty shall be on the actual excise duty paid on actual value addition made by the manufacturers undertaking manufacturing activities. Therefore, it cannot be said that subsequent notifications/industrial policies are hit by the doctrine of promissory estoppel. The respective High Courts have committed grave error in holding that the subsequent notifications/industrial policies impugned before the respective High Courts were hit by the doctrine of promissory estoppel.
Thus, once it is held that the subsequent notifications/industrial policies which were impugned before the respective High Courts are clarificatory in nature and are issued in public interest and in the interest of the Revenue and they seek to achieve the original object and purpose of giving incentive/exemption while inviting the persons to make investment on establishing the new undertakings and they do not take away any vested rights conferred under the earlier notifications/industrial policies and therefore cannot be said to be hit by the doctrine of promissory estoppel, the same is to be applied retrospectively and they cannot be said to be irrational and/or arbitrary.
The respective High Courts have committed a grave error in quashing and setting aside the subsequent notifications/industrial policies impugned before the respective High Courts on the ground that they are hit by the doctrine of promissory estoppel and that they are retrospective and not retroactive.
Appeal allowed.
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2020 (4) TMI 639
CENVAT Credit - inputs and input services used in the power plant - electricity supplied to the different units, beyond factory premises - Whether, the CESTAT was justified in not relying the case of SINTEX INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [2013 (6) TMI 178 - GUJARAT HIGH COURT], M/S. MARUTI SUZUKI LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [2009 (8) TMI 14 - SUPREME COURT] and M/s Ultra Tech Cement Ltd versus CCE, Ahmedabad, [2009 (8) TMI 96 - SC ORDER], wherein the facts are similar to the present case?
HELD THAT:- The Tribunal while allowing the appeal of the assessee relied upon its own order dated 09.04.2015 passed in the case of the very same assessee but Revenue has not thought fit to challenge the order passed by the Tribunal dated 09.04.2015 referred to in Paragraph No.4 of the impugned order.
Well if that be the position, then we see no good reason to look into the matter any further - the two questions of law, as proposed by the Revenue cannot be termed as substantial questions of law - appeal dismissed - decided against appellant.
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CST, VAT & Sales Tax
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2020 (4) TMI 638
Garnishee Order - Initiation of Coercive action for recovery of the disputed tax and penalty - periods from June, 2014 to March, 2017 - APVAT Act, 2005 - revision petition and the stay petition were pending - Complaint of the petitioner is that while both the revision petition and the stay petition were pending, the respondents could not have initiated the recovery proceedings - HELD THAT:- The judgments cited by the learned counsel for the petitioner in ANAB-E-SHAHI WINES AND DISTILLERIES PRIVATE LIMITED VERSUS APPELLATE DEPUTY COMMISSIONER, SECUNDERABAD DIVISION, NAMPALLY, HYDERABAD AND OTHERS [1995 (3) TMI 439 - ANDHRA PRADESH HIGH COURT], show that this Court consistently and continuously held that wherever there is a provision for grant of stay in an appeal or higher proceedings, coercive steps cannot be taken unless and until the authorities dispose of the applications filed under such provisions.
The garnishee order is quashed - petition allowed.
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2020 (4) TMI 637
Classification of goods - Bio Marine - Ecornax - Zoonami - whether fall under the categories of aqua feed/bacterial culture/organic manure or not? - HELD THAT:- These products are organic manures that are used for environmental protection and stability in prawn hatcheries and shrimp culture. The order of the Assessing Authority is completely bereft of any facts at all in support of his conclusion adverse to the petitioner and reliance is placed solely on the clarification issued in the case of the third party dealer.
Mr.Hariharan requests that the matter may be remanded back for de novo consideration - there are no reason to accede to this request insofar as the period of assessment is 2004-05 and there is a lapse of 15 years from the period of assessment till date - Petition allowed - decided in favor of petitioner.
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Indian Laws
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2020 (4) TMI 636
Rejection of order of dismissal from the civil services passed by the disciplinary authority - HELD THAT:- It is a case wherein the petitioner has been provided with opportunity of hearing, he has been provided with an opportunity to cross examine the witnesses, basis upon which in the first enquiry report the charges having not been found to be proved but in the second enquiry report three charges have been found to be proved - This Court is of the view that since the fact finding has been recorded by the second enquiry officer, basis upon which the order of punishment of dismissal from services has been passed which has been affirmed by the appellate forum, but, the appellant/writ petitioner has failed to point out any infirmity in the decision making process, warranting this Court to interfere with the charges or the finding recorded by the enquiry officer and therefore, this Court is not inclined to interfere with the same in exercise of power of judicial review by appreciating the evidence otherwise, this Court will be said to be a Court of appeal as has been held by the Hon’ble Apex Court hereinabove.
This Court is not interfering with the finding recorded by the enquiry officer but interfering with the quantum of punishment of dismissal from services by quashing and setting it aside - In consequence thereof, the order passed by the disciplinary authority and the appellate authority are quashed to the extent of quantum of punishment.
The matter is remitted before the disciplinary authority to take fresh decision on the quantum of punishment within a period of three months from the date of receipt of copy of the order - Appeal allowed by way of remand.
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