TMI Tax Updates - e-Newsletter
April 27, 2021
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Withholding rate of tax in respect of dividend - We are not impressed with the argument advanced on behalf of the revenue that since Slovenia, Lithuania, and Columbia became members of the OECD, not only after the subject DTAA came into force but also after their own DTAA came into force, and therefore, lower rate of withholding tax, i.e., 5% on dividends would not apply to recipients in the Netherlands, who are otherwise covered under the subject DTAA - as that is not how the other contracting State, i.e., the Netherlands has interpreted Clause IV (2) of the protocol appended to the subject DTAA. - HC
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Income Tax:
TDS u/s 194I OR 194C - The only transaction entered into between the Assessee and the lease financing company was to make payment of the amounts due to the company, and the car would be handed over to the employee through the Assessee. Thus there being no work as such being carried out by the lease financing company nor any service as such being rendered by the said company, we are of the opinion neither Section 194-C, nor 194-I of the Act are applicable. - HC
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Income Tax:
Keeping in view Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 and also keeping in view the fact that the material on the basis of which the order has been passed was not furnished to the appellant at any point time, the order passed by the Tribunal is certainly violative of principles of natural justice and fair play as the appellant was not afforded an opportunity to rebut fresh evidence especially when such evidence was based on Google study. - HC
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Income Tax:
Reopening of assessment u/s 147 - penny stock transaction - We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. - the assessee failed to make out a case. - HC
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Income Tax:
Mere discovery of a foreign bank account in the name of the assessee is not sufficient to thrust the tax liability without bringing on record the chargeability of the same under the provisions of the Income Tax Act,1961. It is the settled proposition of law that assessment cannot be carried out on the basis of guess work and there must be more than mere suspicion. In the present case, it is seen that there is no whisper of any enquiry or investigation carried out by the Assessing Officer to demonstrate the existence of source of income in India in respect of deposit found in foreign bank account. - AT
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Income Tax:
TP Adjustment - comparability adjustment on account of abnormal cost - There is no dispute on part of the revenue that in the BPO industry the prevalent rate for services was in the range of USD 8 to USD 15 per hour and was comparable/lower to the rate of USD 19 charged by the assessee from the AE and was at arm’s length applying CUP method. Thus, the adjustment made by the TPO is not sustainable even applying the CUP method. - AT
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Income Tax:
Unexplained cash credit under section 68 - It might be quite possible that search material has a bearing on the income to be determined for the year under consideration but for that purpose the proceedings have already been initiated and the same will be taken care by the revenue authorities in the respective proceedings. Accordingly, we are not convinced with the argument of the learned DR. - AT
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Income Tax:
Addition of unexplained cash credit u/s 68 - Due to existing disputes with the parties by the sister concerns of the assessee, the assessee could not procure the financial statements and income tax returns from the loan creditors to prove their creditworthiness. But there is no dispute that the assessee had indeed furnished the PAN of all the loan creditors. - AO / ld CITA could have cross verified from the PAN of the creditors with the assessing officers of the creditors and ascertain the creditworthiness. - Additions deleted - AT
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Income Tax:
Validity of assessment order us 153A - Approval by the JCIT as required u/s 153D - An irregularity in the assessment order may be rectified by remitting back the matter to the assessment. In the case on hand it is not an irregularity in the assessment order, it is a jurisdictional error. The A.O. has no jurisdiction to pass the assessment order unless the JCIT granted approval. - the orders of both the authorities below were set-aside and the entire assessment order as confirmed by C.I.T.(A) are quashed. - AT
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Indian Laws:
Forum for Arbitration - Seat of the arbitral proceedings - The closest connection test strongly relied upon by Mr. Himani would only apply if it is unclear that a seat has been designated either by the parties or by the tribunal. In this case, the seat has clearly been designated both by the parties and by the tribunal, and has been accepted by both the parties - it is not possible to accept Mr. Himani’s contention that the seat of arbitration ought to be held to be Mumbai in the facts of the present case. - SC
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Service Tax:
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - entitlement to take advantage of CENVAT credit on input tax under the scheme or not - It is an undisputed fact that the respondent has not filed ST-3 returns till the intervention of the department and the assessee however filed a declaration in the year 2019, after introduction of GST. As the respondent has not filed the GST TRAN-1, he is not eligible on account of Rule 6(1) of the CENVAT Credit Rules, 2017. - HC
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Service Tax:
CENVAT Credit - rendering free service and warranty labour charges - learned Commissioner neglected the facts that the income accounted in the Books of Account are through notional entries and these costs are included in the cost of product as confirmed in the refund order. - The confirmation of demand under Rule 6(3)(i) of Cenvat Credit Rules, 2004 is not sustainable in law - AT
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Central Excise:
Sale of mortgaged property for recovery of excise dues - Excise dues are not dues which arise out of land or building. Such liabilities could be in the form of property tax, municipal tax, other types of cess relating to property etc. but cannot mean excise duty dues, which arise out of manufacture - the language in the confirmation of the Sale is with reference to the liabilities relating to the said property and not with reference to the business of the Respondent No.3- borrower; we therefore hold that since Petitioner has not purchased the entire unit with business, it is not liable for the dues of the Excise Department. - HC
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Central Excise:
Recovery of Excise Duty - Compounded Levy Scheme - When the petitioner admits that he was paying the excise duty under the Compounded Levy Scheme and he is bound by the scheme and further, the petitioner admitted the fact that the production unit was closed with effect from 26.04.1999, the petitioner is liable to pay excise duty for the whole year as claimed by the Department. - HC
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VAT:
Validity of remanding the matter to the Assessing Authority - the first appellate authority has adjudicated the controversy on merits and therefore, the tribunal, which is the last fact finding authority was bound to verify the documents on record and to give a finding on law and facts - instead of adjudicating the controversy on merits, the tribunal has remanded the matter to the adjudicating authority. An unnecessary order of remand gives longitivity to the litigation, which is not warranted. - HC
Articles
Notifications
Customs-
25/2021 - dated
26-4-2021
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ADD
Seeks to levy anti dumping duty on imports of Polytetrafluoroethylene (PTFE) Products originating in or exported from China PR, to prevent the circumvention of anti dumping duty levied on Polytetrafluoroethylene (PTFE) originating in or exported from China PR vide notification No. 36/2017-Customs(ADD) dated 28 July, 2017.
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24/2021 - dated
26-4-2021
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ADD
Seeks to levy anti dumping duty on imports of Polytetrafluoroethylene (PTFE) originating in or exported from Korea RP, to prevent the circumvention of anti dumping duty levied on Polytetrafluoroethylene (PTFE) originating in or exported from Russia vide notification No. 23/2016-Customs(ADD) dated 6th June, 2016.
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28/2021 - dated
24-4-2021
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Cus
Seeks to exempt customs duty and health cess on import of oxygen, oxygen related equipment and COVID-19 vaccines, up to 31st July, 2021
SEBI-
SEBI/LAD-NRO/GN/2021/17 - dated
26-4-2021
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SEBI
Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2021
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SEBI/LAD-NRO/GN/2021/16 - dated
26-4-2021
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SEBI
Securities and Exchange Board of India (Portfolio Managers) (Second Amendment) Regulations, 2021
SEZ-
S.O. 1690 (E) - dated
22-4-2021
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SEZ
Central Government notifies the 4.60 hectares area for Special Economic Zone at Doddanakundi Village, Doddanakundi Industrial Area, Bangalore in the State of Karnataka and constitutes an Approval Committee
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (4) TMI 1055
Validity of the Entry No.3(if) read with para2 of the Notification No.11/2017 Central Tax (Rate) dated 28.6.2017 amended by Notification No.3/19 Central Tax (Rate) dated 29.3.2019 - this according to the petitioner has created artificial restriction on the value of the land for undivided share of the land for the purpose of transfer of property for the undivided share - ultra vires to Section 7(2) of the CGST Act read with Entry 5 of Schedule III and Sections 9(1) and 15 of the CGST Act - HELD THAT:- Issue notice making it returnable on 14.6.2021. Ms.Nidhi Vyas, learned AGP waives service of notice on behalf of the State Government. Over and above regular mode of service, service through e-mode is permitted. To be heard with Special Civil Application No.850 of 2017.
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2021 (4) TMI 1054
Validity of authority of the summary order in FORM GST DRC-07 dated 18.02.2021 - challenge on the ground that the summary order is suffering from the vice of non-consideration of submissions made by the petitioner and this also is the case of serious breach of principles of natural justice - HELD THAT:- The statutory provision of section 107 of CGVAT which provides for the appeal to the Appellate authority, if any person is aggrieved by the decision or order passed under CGST Act or the SGST Act or the UTGST Act by the adjudicating authority, within three months from the date on which the decision of the order is communicated to the person concerned. It is deemed appropriate and justifiable to relegate the Petitioner to the appellate authority prescribed under the statute without entering into the merits of the matter. All issues, which have been raised before the Court can be raised before the appellate Authority within the prescribed time of three months, raised in this petition, on seeking a reasoned order from the concerned authority. Let the reasoned order, if not already supplied to the petitioner, be provided within 07 days of the receipt of the copy of this order - Petition disposed off.
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2021 (4) TMI 1053
Detention of goods alongwith the vehicle - detention on the ground that the goods loaded could have been taken via other route which was shorter and instead 450 km long route has been taken via Gujarat - possibility of delivery of the goods in Gujarat or to the nearer place to Gujarat - HELD THAT:- Noticing the fact that the petitioner had sought the time before the respondent No.4 for the hearing of the show cause notice twice, only on the ground of the matter pending before the concerned authority for adjudication, it is deemed appropriate to relegate the petitioner to the concerned officer for adjudication of the show cause notice without entering into merits of the matter. The parties are relegated to the respondent authorities for adjudication of SCN within one week - petition allowed by way of remand.
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2021 (4) TMI 1048
Refund of CGST - zero rated supply - Disposal of the case within 60 days - Section 16 of the Integrated Goods and Services Tax Act, 2017 - HELD THAT:- Issue notice to the respondents. List the matter on 03.05.2021.
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2021 (4) TMI 1031
Refund of IGST - IGST on ocean freight - It is clarified that while the question of the Petitioner being entitled to refund will await the final decision of the Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR [ 2021 (1) TMI 647 - SC ORDER] , the Opposite Parties will not require the Petitioners before this Court hereafter to pay IGST on ocean freight until further orders. These writ petitions are adjourned sine die with liberty to the parties to mention them for listing after disposal of the SLPs pending before the Supreme Court.
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2021 (4) TMI 996
Detention of goods alongwith the conveyance - E-way Bill was not tendered for all the Invoices/Goods in movement which are the one of the documents for transportation of goods - scope of appeal - Demand of IGST alongwith the penalty u/s 129(1)(a) of CGST Act, 2017. Whether submissions made by respondent through cross objections are beyond the purview of appeal filed by the Appellant/Department? - HELD THAT:- The appeal have been filed by the appellant being aggrieved with the penalty imposed under Section 109 (1) (a) of the CGST Act, 2017. Therefore, the respondent was required to file their cross objections upto the extent of the issue raised by the appellant in their appeal memo. But on the contrary to this, it is found that the respondent has raised the fresh plea in their cross objections which I do not find proper as per provisions of Section 107(1) of the CGST Act and Rules made thereunder. If the respondent was aggrieved with the said Order in Original he should have file separate appeal within the prescribed time limits - the cross objections filed by the respondent is beyond the purview of appeal. Therefore, it would not be proper to discuss the issues in the instant matter which are out of scope of the appeal. Whether penalty imposed under Section 129(1)(a) of CGST Act,2017 by the Adjudicating Authority is proper or not? - HELD THAT:- In the instant case, penalty should have been imposed by the adjudicating authority equal to the fifty per cent of the value of the goods reduced by the tax amount paid thereon, whereas it is found that adjudicating authority has imposed penalty equal to 100% per cent of the tax payable on the detained goods which is not proper and correct - In the instant case value of seized goods is ₹ 12,83,589/- therefore, penalty is stands modified to ₹ 6,41,795/- (rounded up) under clause (b) of sub section (1) of Section 129 of CGST Act, 2017 and the penalty already deposited by the respondent may be considered for appropriation accordingly. Appeal allowed in part.
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Income Tax
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2021 (4) TMI 1025
Reopening of assessment u/s 147 - unexplained investment in the assets held outside India from an undisclosed and undeclared source of income from India - reopening on the basis of information received from the Investigation Wing about the foreign bank account in the name of Late Sh. Ladli Pershad Jaiswal - HELD THAT:- For the purpose of assuming jurisdiction u/s 147 of the Act, the Assessing Officer should form reason to believe based on tangible material that income has escaped assessment - such belief should not be on mere suspicion but on the basis of some objective material that leads to prima face case of escapement of income. Although in the present case Assessing Officer was in possession of report of the Investigation Wing about the existence of foreign bank account which has not been denied by the legal heir, however, there is no details or evidence that money lying in the bank account represent undisclosed income in terms of section 5(1) of the Income Tax Act. Assessing Officer in the instant case has failed even to take note of the income tax return filed by the assessee while recording reasons which in our opinion shows non application of mind. The reasons recorded do not inspire confidence to make out a prima facie case for escapement of income and the Assessing Officer in the instant case was carried away by the mere fact of existence of foreign bank account. Assessing Officer himself has mentioned that the assessee late Sh. Ladli Pershad Jaiswal was non-resident of India during AY 1993-94 to 2004-05 and not ordinarily resident for AY 2006-07 and 2007-08. The Assessing Officer in the assessment order at clause 5 has also mentioned that assessee is not ordinarily resident. Under these circumstances and in absence of any factual finding, it is not open to dispute the claim of residential status as declared in the return of income. Since, the proceedings u/s 147 are extraordinary proceedings, the onus is on the Revenue to establish the existence of undisclosed income. Mere discovery of a foreign bank account in the name of the assessee is not sufficient to thrust the tax liability without bringing on record the chargeability of the same under the provisions of the Income Tax Act,1961. It is the settled proposition of law that assessment cannot be carried out on the basis of guess work and there must be more than mere suspicion. In the present case, it is seen that there is no whisper of any enquiry or investigation carried out by the Assessing Officer to demonstrate the existence of source of income in India in respect of deposit found in foreign bank account. Moreover, the Assessing Officer has not brought anything on record to prove that there is money trail which actually flew from India to the foreign bank account maintained abroad. Further, the learned counsel for the assessee also clarified that Sh. Ladli Pershad Jaiswal was not having any major stake or financial interest or business connection in India during the AY 2006-07 and 2007-08. Therefore, we find it difficult to subscribe to the reasoning given by the Assessing Officer while assuming that deposit in the foreign bank account in the year under consideration was sourced from India. In any case, when the addition made by the Assessing Officer is on the basis of peak credit in the month of January 2006 and when Sh. Ladli Pershad Jaiswal expired on 11.08.2005, it is not understood as to how any credit in January 2006 could be attributed to the deceased. In the light of our discussion we are of the considered opinion that the assessment order is not in accordance with law and is liable to be set-aside. In the interest of justice and as requested by the learned CIT-DR at the time of hearing before us, the matter is being restored back to the file of the Assessing Officer with a direction to arrive at specific finding based on certified copy of the bank statement and the nature of credit entry in the said bank account. In case, there is no ground or basis to establish any nexus between the alleged deposits in the bank account and any undisclosed income under the provisions of Income Tax Act or how such credit entries are attributable to the assessee who expired on 11.08.2005 there will be no case for assuming jurisdiction u/s 148 or consequential addition on merit. Needless to say the AO shall give due opportunity of being heard to the assessee and decide the issue as per fact and law after providing relevant documents or evidences that may be taken into consideration while deciding the issue. It is further clarified that the Assessing Officer shall restrict his verification only on the basis of documents which are already available on record and shall not resort any roving and fishing enquiry is permitted. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2021 (4) TMI 1024
Addition u/s 68 - share capital of the assessee company was increased to ₹ 20,00,00,000/- with no satisfactory explanation with regard to settled accounting practices - HELD THAT:- AO had erroneously invoked the provisions of section 68 of the Act to the facts of the instant case, which, in our considered opinion, are not at all applicable herein. This is a simple case of acquiring shares of certain companies from certain shareholders without paying any cash consideration and instead the consideration was settled through issuance of shares to the respective parties. Moreover, in the balance sheet of the assessee company in the schedule to share capital, it is very clearly mentioned by way of note that the fresh share capital was raised during the year for consideration other than cash. Hence we hold that provision of section 68 of the Act are not applicable in the instant case and accordingly the entire addition deserves to be deleted which has rightly been done by the ld. CIT(A) which does not require any interference. Accordingly, grounds raised by the revenue are dismissed
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2021 (4) TMI 1023
TP Adjustment - comparability adjustment on account of abnormal cost - assessee adjusted margin after making the adjustments was worked out at 4.08% - claim of the assessee was rejected by the TPO - HELD THAT:- The assessee in appeal before the CIT(A) filed revised calculation of adjusted margin and adjusted margin was calculated at 12.71%. Thus, the claim of comparability adjustment was not made for the first time before the CIT(A) and only the calculation of the amount of adjustment was revised. CIT(A) has given a detailed finding on the TP Adjustment and there is no other ground in respect of corporate issues by the Revenue. In the transfer pricing documentation, the assessee determined arm s length price of the international transaction of rendering BPO services applying CUP method. Since the prices charged by the assessee at USD 19.20 per hour from the AE exceed the prices charged from the unrelated party, i.e., ALP @ USD 14.00 per hour, the international transactions of BPO services were considered being at arm s length, in the Transfer Pricing Documentation. There is no dispute on part of the revenue that in the BPO industry the prevalent rate for services was in the range of USD 8 to USD 15 per hour and was comparable/lower to the rate of USD 19 charged by the assessee from the AE and was at arm s length applying CUP method. Thus, the adjustment made by the TPO is not sustainable even applying the CUP method. Hence, there is no need to interfere with the findings of the CIT(A). Hence, the appeal of the Revenue is dismissed.
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2021 (4) TMI 1051
Withholding rate of tax in respect of dividend - DTAA with the Kingdom of Netherlands - rejection of the request of the deductees made to respondent no. 1 that the rate of withholding tax should be pegged at 5% and not 10% (as indicated in the impugned certificates) in consonance with Clause (IV) of the protocol appended to the subject DTAA - HELD THAT:- Clearly, the Netherlands has interpreted Clause IV (2) of the protocol appended to the subject DTAA in a manner, indicated hereinabove by us, which is, that the lower rate of tax set forth in the India-Slovenia Convention/DTAA will be applicable on the date when Slovenia became a member of the OECD, i.e., from 21.08.2010, although, the Convention/DTAA between India and Slovenia came into force on 17.02.2005. Therefore, participation dividend paid by companies resident in the Netherlands to a body resident in India will bear a lower withholding tax rate of 5 per cent. The other contracting State, i.e., the Netherlands has interpreted Clause IV (2) in a particular way and therefore in our opinion, in the fitness of things, the principle of common interpretation should apply on all fours to ensure consistency and equal allocation of tax claims between the contracting States. We are not impressed with the argument advanced on behalf of the revenue that since Slovenia, Lithuania, and Columbia became members of the OECD, not only after the subject DTAA came into force but also after their own DTAA came into force, and therefore, lower rate of withholding tax, i.e., 5% on dividends would not apply to recipients in the Netherlands, who are otherwise covered under the subject DTAA - as that is not how the other contracting State, i.e., the Netherlands has interpreted Clause IV (2) of the protocol appended to the subject DTAA. While interpreting international treaties including Tax treaties the rules of interpretation that apply to domestic or municipal law need not be applied, for the reason, that international treaties, conventions and tax treaties are negotiated by diplomats and not necessarily by men instructed in the law. Therefore, their interpretation is liberated from the technical rules which govern the interpretation of domestic/municipal law. The core function of a DTAA should be seen to aid commercial relations and equitable distribution of tax revenues in respect of income which falls for taxation in both the deductor and the deductee States, i.e., the contracting States. Conclusion : Having regard to the foregoing discussion, we are of the view that the impugned certificates dated 16.09.2020 and 04.01.2021 deserve to be quashed. Respondent no. 1 will issue a fresh certificate under Section 197 of the Act, which would indicate, that the rate of withholding tax, in the facts and circumstances of these cases, would be 5%.
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2021 (4) TMI 1050
Reopening of assessment u/s 147 - bringing to tax the gross agricultural income declared by the assessee as income from other sources - HELD THAT:- As assessee is allegedly studying at that point of time and his father is an Architect. Therefore, the assessee s contention that year after year he has been misguided by a person i.e. Mr. Raja Rao, an ITP, to file his returns of income declaring agricultural income on the basis of false documents cannot be accepted. Further, the assessee has not taken any action against the said person. The returns of income were not filed all together at one point of time but were filed year after year. Therefore, the bonafides of the assessee are not proved and since the assessee himself has declared the income, as satisfied that the Assessing Officer after being satisfied that the assessee had no agricultural income, had no option but to treat it as income from other sources and bring it to tax. Therefore, the assessee s grounds of appeal on this issue are rejected. CIT (A) had called for a remand report from the Assessing Officer and the Assessing Officer reported that the assessee had received residential house as a gift from his father and that the assessee is in receipt of rental income. Taking the same into consideration only, the CIT (A) has confirmed the addition made by the Assessing Officer, and the assessee is second appeal before the Tribunal. The assessee could not submit any evidence before me to contradict this finding of the Assessing Officer and the CIT (A). Therefore, I do not see any reason to interfere with the order of the AO for the A.Ys 2011-12 and accordingly it is rejected. Further, for the A.Y 2011-12 to 2014-15 another issue emanating from the assessment orders is that the Assessing Officer during the assessment proceedings perused the P L a/c of the assessee and noticed that the assessee has admitted income from business or profession. In connection with the expenditure claim, the assessee was asked to produce the bills and vouchers, but the assessee could not produce any evidence and therefore, the AO disallowed some of the expenditure and brought it to tax. Aggrieved, the assessee preferred an appeal before the CIT (A), but could not produce any evidence before the CIT (A). Therefore, the CIT (A) confirmed the order of the Assessing Officer and the assessee is in second appeal before the Tribunal Agricultural income declared by the assessee which has been brought to tax by the Assessing Officer as income from other sources as was done in the case of Sri Talluri Vijay Rahul. In the case of this assessee also, the assessee did not own any agricultural land but has shown agricultural income claiming that she owns agricultural land of 13.22 guntas situated at Bodanampadu, Kurichedu Mandal, Prakasham District, and as evidence thereof Patta Pass Book No.332 was filed. Similar evidence as in the case of Shri Talluri Vijay Rahul was also filed in the case of the assessee herein and similar enquiry by the Assessing Officer revealed that the assessee did not own any agricultural land and that the was not in the name of Sri Talluri Venkata Narayanamma. Since the facts and circumstances in the assessee s case are the same as in the case of Talluri Vijay Rahul, for the detailed reasons given above, the appeals of this assessee for the relevant A.Ys are also dismissed.
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2021 (4) TMI 1049
Deduction under Section 80JJ(AA) - payments made to the employees hired by the Assessee in the previous year - Tribunal setting aside the disallowance made under section 80JJAA of the Act by holding that the employees in software industry are covered by definition of 'Workman' in Explanation - as per Revenue that the employees of the Assessee would not come within the purview of the definition of workman under Section 2(2) of the Industrial Disputes Act, 1947 and that since the employee has not completed 300 days of employment in the previous year, no deduction could be claimed by the Assessee - HELD THAT:- Assessing Officer had held that the Assessee's employees would not come within the purview of workman under Section 2(s) of the I.D. Act and disallowed the claim, on an appeal filed by the Assessee, the Commissioner, Income-tax (Appeals) CIT(A) accepted the Assessee's contention and held that the Assessee's employee would come within the purview of Section 2(s) of the ID Act. This aspect was not challenged by the Revenue, although the Revenue had filed an appeal against the order of the CIT(A). Having accepted the said finding of the CIT(A) and not having filed any appeal, the Revenue cannot now seek to challenge the said finding in the present appeal. In terms of section 2(s) of the ID Act, the definition of a workman is very wide inasmuch as the said definition would cover any person who has the technical knowledge, self skilled in an industry. It cannot be disputed that the Assessee's business is an industry. It also cannot be disputed that the employees of the Assessee are technical persons skilled in software development and, as such, engaged by the Assessee to render services in the industry being run by the Assessee. Thus the software engineer would also come within the purview and ambit of workman under Section 2(s) of the ID Act so long as such a person does not take a supervisory role. The software engineer per se would be a workman; a software engineer rendering supervisory work would not be a workman. In the present case, it is not the case of the Revenue that the persons employed by the Assessee are rendering any supervisory work or assistance. In the present case, a software engineer is a skilled person, a technical person who is engaged by the employer for hire or reward. Therefore, all the said persons would satisfy the requirement of being a workman in terms of Section 2(s) of the I.D.Act. In our considered view, the concept of the workman has undergone a drastic change and is no longer restricted to a blue collared person but even extends to white-collared person. A couple of decades ago, an industry would have meant only a factory, but today industry includes software and hardware industry, popularly known as the Information technology industry. Thus the undertaking of the Assessee being an industrial undertaking, the persons employed by the Assessee on this count also would satisfy the requirement of a workman under Section 2(s) of the ID Act. What is required is for a person to be employed for a period of 300 days continuously. There is no such criteria made out for a person to be employed in any particular year or otherwise. If such a restrictive interpretation is given, then any person employed post 5th June of a particular year would not entitle the Assessee to claim any deduction. Thus in order to claim the benefit under Section 80JJ-AA, an employer would have to hire the workmen before 5th June of that year. As a corollary, since the Assessee would not get any benefit if the workmen were engaged post 5th June, the employer/Assessee may not even employ anyone post 5th June, which would militate against the purpose and intent of Section 80JJ-AA, which is the encourage creation of new employment opportunities. The Income-tax Appellate Tribunal, while considering a similar situation as in Bosch Limited [ 2016 (11) TMI 375 - ITAT BANGALORE] held that so long as the workman employed for 300 days, even if the said period is split into two blocks, i.e. the assessment year or financial year, the Assessee would be entitled to the benefit of Section 80JJ-AA in the next assessment year and so on so forthwith for a period of three years. The Income-tax Appellate Tribunal, having held to that effect, in our considered opinion, it would not be open for the Revenue to now contend otherwise, more so since the said order has attained finality on account of the Revenue not having filed an appeal. The Apex Court in the case Vatika Township (P.) Ltd. [ 2014 (9) TMI 576 - SUPREME COURT] has also held similarly, in that if there is a benefit conferred by legislation, the said benefit being legislative's object, there would be a presumption that such a legislation would operate with retrospective effect by giving a purposive construction. Thus the clarificatory amendment of the year 2018 can also be said to apply retrospectively for the benefit of the Assessee even though the Revenue contends that there was no provision in the year 2007 permitting the Assessee to avail the benefit of deduction when the employee works for a period of 300 days in consecutive years. The substantial question No.1 is answered by holding that the software professional/engineer is a workman within the meaning of Section 2(s) of ID Act, so long as such a software professional does not discharge supervisory functions, the benefit of Section 80JJ-AA can be claimed by an employer/assessee even if the employee were not to complete 300 days in a particular assessment year but in the subsequent year so long as there is continuity of employment, the Assessee could continue to claim further benefit in the next two years as provided in under Section 80JJ-AA Accordingly, we answer Question No.1 by holding that a software engineer in a software industry is a workman within the meaning of Section 2(s) of the Industrial Disputes Act so long as the Software engineer does not discharge any supervisory role. The period of 300 days as mentioned under Section 80JJAA of the Act could be taken into consideration both in the previous year and the succeeding year for the purpose of availing benefit under Section 80JJAA. It is not required that the workman works for entire 300 days in the previous year. Hence, in the facts and circumstances of the case, the software engineer being workman having satisfied the period of 300 days, the assessee is entitled to claim deduction under Section 80JJAA. TDS u/s 194I OR 194C - disallowance made under section 40(a)(i)/(ia) for sum claimed towards finance of cars - HELD THAT:- Admittedly, the Assessee had lease financed the vehicles for the use of its employees. The lease financing company did not provide any particular service as a driver or otherwise for the purpose of usage of the car. On the car having been provided, the maintenance of the same was to be carried out by the employee of the Assessee, and the lease financing company had no role to play in the same. The only transaction entered into between the Assessee and the lease financing company was to make payment of the amounts due to the company, and the car would be handed over to the employee through the Assessee. Thus there being no work as such being carried out by the lease financing company nor any service as such being rendered by the said company, we are of the opinion neither Section 194-C, nor 194-I of the Act are applicable. Accordingly, we answer Question No.2 by holding that there is no deduction required to be made either under Section 194-C or under Section 194-I of the Act in respect of the payments made to the lease financial company on the lease financial amounts paid to such company by the assessee.Therefore, there is no violation of the said provisions and Section 40(a)(i)/(ia) is not attracted to the present case.
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2021 (4) TMI 1022
Revision u/s 263 - Bogus LTCG - exemption claimed u/s 10(38) denied - HELD THAT:- In our considered view, the Assessing Officer has called for and verified all the details and documents in connection to the purchase and sale of the shares in question and after examining the same, has taken a possible view that the transactions are genuine. This is not a case of non verification or no application of mind. This is not an order passed without making enquiries or verification, which should have been made. In fact, a number of decisions of the Tribunal support the view taken by the Assessing Officer on the very same issue on the very same evidences. Hence the Assessing Officer has taken a possible view. Applying the proposition of law laid down in the cases as extracted above to the facts of the case on hand and considering the proposition of law laid down in the case of Manish Kumar Baid [ 2017 (10) TMI 522 - ITAT KOLKATA] and Navneet Agarwal [ 2018 (8) TMI 509 - ITAT KOLKATA] wherein the genuineness of these transaction were upheld on the facts and circumstances of the case we hold that the revision of the assessment order u/s 263 of the Act, by the ld. Pr. CIT is bad in law. Hence we quash the order passed by the ld. Pr. CIT u/s. 263 of the Act on 20/03/2020 and allow these grounds of the assessee.
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2021 (4) TMI 1021
Disallowance of loss on foreign exchange derivatives - HELD THAT:- Reliance placed on the decision of DCIT vs. Tega Industries Ltd [ 2019 (11) TMI 269 - ITAT KOLKATA] wherein also the issue of MTM loss has been allowed in the favour of the taxpayer on both counts i.e. such loss is neither speculative loss within the meaning of section 43(5) of the Act nor the same being notional or contingent in the nature. Hence the said sum being loss on foreign exchange derivatives deserves to be allowed in the light of the order of Hon ble Tribunal of the preceding assessment year i.e. AY 2008-09 [ 2017 (3) TMI 966 - ITAT KOLKATA] wherein the facts are identical.D/R, could not controvert the arguments of the assessee that the facts are identical for both the Assessment Years. Thus, consistent with the view taken by the co- ordinate bench of the Tribunal in the assessee s own case we delete the disallowance on account of loss on foreign exchange derivatives and allow this ground of the assessee. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We restrict the disallowance u/s 14A of the Act to the extent of exempt income earned by the assessee company during the year.The argument that the Assessing Officer has not recorded satisfaction before the invoking Rule 8D of the Income Tax Rules, 1962 ( Rules ), is not factually correct. On a reading of the assessment order, we find that he Assessing Officer has recorded his satisfaction. In the result, ground of the assessee is allowed in part. Disallowance of non compete fee - Allowable expenditure - HELD THAT:- Coming to the facts in the present case, it is undisputed fact that the consideration is paid to individuals who had experience in the business of consultancy for not to engage themselves in similar kind of business and activities for a period of 3 years. It is also not disputed that such consideration is independent and not part of the cost of acquisition of business paid to shareholders. It is also an admitted fact that both the Share Transfer Agreement and Non-Compete Agreement are separate agreements with different parties, though entered on the same date.The cases relied upon by the assessee above are squarely applicable on the facts of the assessee s case, Thus, the payment in question is revenue in character and hence allowable as an expenditure. Disallowance of depreciation on leased assets and non-grant of claim of principal portion of lease rentals - HELD THAT:- As decided in assessee's own case [ 2016 (7) TMI 1052 - ITAT KOLKATA] wherein the coordinate Bench of the Hon ble Kolkata Tribunal dismissed the Revenue s appeal and upheld the order of the CIT(A) by holding that the lease rentals (net of interest element) should be allowed as deduction. Disallowance of PWC World firm charges - HELD THAT:- As decided in own case [ 2018 (9) TMI 1812 - ITAT KOLKATA] find no substance in Revenue s instant stand. We make it clear that the assessee- company is engaged in multi functional consultancy services as a group entity of PWCDA organization based in Netherlands. Learned counsel has also filed before us relevant assessment records with regard to the payee entity pertaining to the impugned assessment year itself accepting the returned income without making any addition. Necessary reference regarding Firm Services Agreement is also made - no TDS is deductible in case of such firm services agreement payments not including any income component but only reimbursement of expense on cost allocation formula. Addition on account of non refundable grant - HELD THAT:- Grant received for specific purpose i.e., for procuring a capital asset is in the nature of a capital receipt, not subject to tax and this receipt being in cash cannot be taxed u/s 28(iv) of the Act. Hence this ground of the assessee is allowed. Non grant of deduction u/s 35(1)(II) - HELD THAT:- We restore this matter to the file of the Assessing Officer with a direction to verify the certificate issue u/s 35(1)(II) of the Act, which was produced by the assessee before the lower authorities. The Assessing Officer shall dispose off the issue de novo, in accordance with law. This ground of the assessee is allowed for statistical purposes.
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2021 (4) TMI 1020
Validity of assessment order u/s 144 without issuing notice u/s 143(2) - HELD THAT:- As relying on OBEROI HOTELS PVT. LTD. [ 2018 (6) TMI 1472 - CALCUTTA HIGH COURT] , M/S. HOTEL BLUE MOON [ 2010 (2) TMI 1 - SUPREME COURT] and LAXMAN DAS KHANDELWAL [ 2019 (8) TMI 660 - SUPREME COURT] the passing of assessment order u/s 144 of the Act, without issuing notice u/s 143(2) of the Act, by the Assessing Officer having jurisdiction over this assessee, is bad in law and has to be quashed.
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2021 (4) TMI 1018
Addition made towards book profit computed u/s.115JB - difference in income reported in Form No.26AS and income as per books of accounts of the assessee - HELD THAT:- We find that there is no merit in the arguments taken by the assessee in light of decision of Hon ble Supreme Court in the case of Apollo Tyres vs. CIT [ 2002 (5) TMI 5 - SUPREME COURT] because when books of accounts of assessee are not in accordance with Part II and III of Schedule VI to the Companies Act, 1956, then AO is empowered to tinker with net profit by making additions. In this case, assessee has under reported income received from M/s. Shell India Markets Pvt. Ltd., and hence it cannot be said that books of account of the assessee are prepared in accordance with Part II and II of Schedule VI to the Companies Act. Therefore, we are of the considered view that there is no error in the reason given by AO to re-compute book profit by making addition towards income not reported in books of accounts of the assessee. As regards case law relied upon by the assessee, in the case of Apollo Tyres vs. CIT [ 2002 (5) TMI 5 - SUPREME COURT] the same is not applicable because in that case, the books of accounts of assessee are prepared in accordance with Part II and III of Schedule VI to the Companies Act and under those facts, the Hon ble Supreme Court held that once books of accounts are in accordance with Companies Act and approved by the Board, then the AO has no jurisdiction to go behind net profit shown in profit and loss account except to extent provided in Explanation to section 115J of the Act. Hence, we reject arguments of the assessee and confirm addition made by the AO towards income not reported in books to book profit computed u/s.115JB of the Act. Disallowance of expenditure u/s.14A to book profit computed u/s.115JB of the Act - HELD THAT:- We find that ITAT, Special Bench of Delhi in the case of ACIT vs. Vireet Investments (P) Ltd.,[ 2017 (6) TMI 1124 - ITAT DELHI] held that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without restoring to computation as contemplated u/s.14A r.w.rule 8D of Income Tax Rules, 1962. The Hon ble Madras High Court in the case of CIT vs. Shriram Ownership Trust, [ 2017 (6) TMI 1124 - ITAT DELHI] has considered an identical issue and held that no addition could be made to book profit in respect of disallowance of expenditure u/s.14A r.w.rule 8D of Income Tax Rules, 1962. Hon ble Karnataka High Court in the case of CIT vs. Gokaldas Images (P) Ltd [ 2020 (11) TMI 345 - KARNATAKA HIGH COURT] had considered an identical issue and held that disallowance made u/s.14A should not be added to book profit of assessee u/s.115JB of the Act. Therefore, we are of the considered view that the AO is erred in making addition towards disallowance u/s.14A to book profit computed u/s.115JB of the Act and hence, we direct the AO to delete adjustment made to book profit towards disallowance of expenses u/s.14A. Addition towards factory shifting expenditure - AO has made addition incurred towards shifting factory from Grigambakkam to Chrompet on the ground that said expenditure is in the nature of capital expenditure which gives enduring benefit to the assessee - HELD THAT:- We ourselves do not agree with the reasons given by the AO to disallow transportation expenses incurred for shifting factory from one site to another site, because transportation expenses incurred for shifting factory from one place to another place does not give any enduring benefit to the assessee and hence, the same cannot be treated as capital in nature. Hence, we direct the AO to delete addition made towards disallowance of factory shifting expenditure. Addition towards loan received from Shri Muthaiyah, Director of assessee company u/s.68 - HELD THAT:- From the financial statement of creditors, we find that amount advanced to the company was recorded in loans and advances. The assessee has also explained creditworthiness by filing his Income Tax return for relevant assessment year. The AO except stating that loan was received in cash, no other observations were made to reject arguments of the assessee that the creditor is having creditworthiness to provide loan. Therefore, we are of considered view that once identity of creditor is proved and genuineness of transaction is established then merely for the reason that loan is received in cash no addition can be made u/s.68 of the Act. Once initial burden was discharged then burden shifts to the Revenue to prove otherwise as held by the Hon ble Supreme Court in the case of CIT vs. Orissa Corp. P. Ltd.,[ 1986 (3) TMI 3 - SUPREME COURT] . In this case, assessee has filed all possible evidences to prove loan but the AO has disregarded evidences filed by the assessee and made addition only on the ground of receipt of loan by cash. Therefore, we are of considered view that the AO is erred in making addition towards unsecured loan received from Shri R. Muthaiyah - Hence, we direct the AO to delete addition made u/s.68. Levy of penalty u/s.271(1)(c) - addition made towards unexplained cash credit u/s.68 - HELD THAT:- We find that in quantum appeal filed by the assessee, addition made by the AO towards unexplained cash credit has been deleted. Therefore, once addition on which penalty levied u/s.271(1)(c) of the Act was deleted, then penalty levied on said addition cannot survive under law. Therefore, penalty levied by the AO u/s.271(1)(c) of the Act is not sustainable under law and hence, the AO is directed to delete penalty levied u/s.271(1)(c) of the Act.
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2021 (4) TMI 1017
Disallowance of claim made u/s.10B - Whether appellant is carrying out manufacturing activity as defined u/s. 2(29BA)? - even if the activity does not fall within the meaning of the term 'manufacture', it would fall within the meaning of the term 'production' for the purposes claiming the deduction u/s.10B - HELD THAT:- Whether activities carried out by the assessee amounts to manufacture or production of goods or article or thing which qualifies for deduction u/s.10B of the Act is a highly debatable issue. If we go by the judicial precedents, various courts have held that even processing of frozen fish or marine products amounts to manufacture or production. Therefore, when an issue is debatable and if two views can be taken on the issue, then the AO cannot deny beneficial deduction allowed under Income Tax provisions to deny deductions by taken one of the view. This principle is supported by the decision of the Hon ble Supreme Court in the case of Bajaj Tempo Ltd., vs. CIT [ 1992 (4) TMI 4 - SUPREME COURT] where it was held that A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally. Since a provision intended for promoting economic growth has to be interpreted liberally the restriction on it too has to be construed so as to advance the objective of the section and not to frustrate it. Under clause (i) of sub-section (2) of section 15C formation of the undertaking by splitting up or reconstruction of an existing business by transfer to the undertaking of building, raw material or plant used in any previous business results in denial of the benefit contemplated under sub-section. In this case, on perusal of facts available on record, we find that there is no change in facts prevailing at the time when deduction was allowed to the assessee in the assessment year 2004-05 and in the assessment year 2009-10 when deduction was denied. Therefore, we are of the considered view that unless there is change in facts, the AO cannot take a different view for denying deduction claimed u/s.10B of the Act. Hence, we are of the considered view that the assessee is entitled for deduction u/s.10B of the Act in respect of profit derived from 100% export oriented undertakings and accordingly, direct the AO to allow benefit of deduction. Computation of deduction u /s 10B - exchange gain / loss fluctuation is part of export turnover or not? - HELD THAT:- No doubt, exchange fluctuation whether it is gain or loss is attributable to exports effected and ultimately goes to increase or reduce figure of export turnover recorded initially by the assessee in its books of accounts and hence, it is definitely part of export turnover which qualifies for deduction u/s.10B of the Act. But, the fact remains that whether gain or loss incurred by the assessee on account of exchange fluctuation is attributable to export effected by the assessee or not needs to be examined by the AO. Moreover, the ld.CIT(A) has not adjudicated the issue although the assessee has taken a specific ground challenging the findings of the AO. Therefore, we are of the considered view that the issue needs to go back to file of the ld.CIT(A) for reconsideration of the issue and hence, we set aside the issue to file of the ld.CIT(A) and direct him to reconsider the claim of the assessee in light of decision of ITAT, Chennai bench in the case of Changepond Technologies (P) Ltd. [ 2008 (2) TMI 486 - ITAT MADRAS-A] Deduction u/s.10B in respect of expenses disallowed and added back to total income - AO has denied deduction u/s.10B of the Act in respect of various additions made towards provision written back, disallowance of expenses u/s.37 of the Act and disallowance of expenses u/s.40A(7) of the Act - HELD THAT:- Whether enhanced profit on account of disallowance of expenses is eligible for deduction under deduction / exemption provisions of the Act is no longer res-integra. Various high courts have taken a consistent view that enhanced profit on account of disallowance of various expenses goes to increase business profit and to that extent would be eligible for deduction under deduction / exemption provisions of the Act. The Hon ble High Court of Bombay in the case of CIT vs. Gem Plus Jewellery India Ltd., [ 2010 (6) TMI 65 - BOMBAY HIGH COURT] has considered an identical issue and held that enhanced profit on disallowance of expenses is eligible for deduction u/s.10B or 10A of the Act. The CBDT has accepted legal position and issued a Circular No.37/2016 dated 02.11.2016, where it was clarified that enhanced profit on account of disallowance of expenses is eligible for deduction under exemption / deduction provisions by various section of IT Act, 1961. Therefore, we are of the considered view that assessee is entitled for deduction towards enhanced profits. But, fact remains that the issue has not been adjudicated by the ld.CIT(A) and hence, the issue has been set aside to the file of the CIT(A) and direct him to reconsider the issue in light of our findings given herein above. Exclusion of expenses from export turnover and total turnover - HELD THAT:- We find that the issue of exclusion of expenses from export turnover and total turnover is squarely covered in favour of the assessee by decision of Hon ble Supreme Court in the case of CIT vs. HCL Technologies Ltd.,[ 2018 (5) TMI 357 - SUPREME COURT] as held that export turnover is a numerator and also forms a constituent element of the denomination in as much as it forms part of the total turnover. Hence, the export over as numerator must have the same meaning as the export turnover which is a constituent element of the total turnover in the denominator and hence, needs to be excluded from total turnover. Therefore, we are of considered view that the AO is erred in not excluding expenses from total turnover for computing deduction u/s.10B of the Act. But, fact remains that the issue has not been considered by the ld.CIT(A) and hence, assessee has filed a petition u/s.154 of the Act and said petition is pending for adjudication. Therefore, the issue has been set aside to the file of the ld.CIT(A) and direct him to reconsider the issue in light of decision of Hon ble Supreme Court in the case of CIT vs. HCL Technologies Ltd.
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2021 (4) TMI 1016
Revision u/s 263 - claim of deduction under section 54F - non-application of provision of section 50C - HELD THAT:- There is no dispute to the fact that assessee has sold property, which was held in joint names for an amount of ₹ 1 crore and assessee s share being @30 %, the same has been disclosed in his return of income at jantri value of ₹ 30 lakhs - it also remains undisputed facts that the said property was valued by the Sub Registrar of Rajula (district Amreli) at ₹ 6,22,19,600/- and hence there is a difference of ₹ 5,22,19,600/-, in the value of the property shown by the assessee and as per stamp duty valuation. The assessee s share in said amount of ₹ 5,22,19,600/- was therefore, required to be considered u/s 50C of the Act in respect of assessee's total income for assessment year under consideration. Non-consideration of the same by the AO can in no way be considered to be one possible view in the facts of the case, and in view of provisions of section 50C - the omission on the part of the AO to consider such stamp duty valuation of the property at ₹ 6,22,19,600/- and thereby non-application of provision of section 50C of the Act has rendered the assessment order so passed by the AO erroneous, in so far as it is prejudicial to the interest of revenue. About claim of deduction u/s 54 F of the Act, the assessee seeks to submit that they had given all the details to the AO of the property in question. It was submitted that after sale of original property, new property was purchased by them on 04.04.2015, whereas original property was sold on 17.01.2015. In respect of these aspects, it is a fact not disputed by the assessee that old property sold and the new property purchased have not been reflected in balance sheet of the assessee. Even if, the properties were not to be shown in the balance sheet, as none may have existed in the hands of assessee as on 31.03.2015, still the amount received as sale consideration of old property should have been reflected in the balance sheet in Capital Gain account of the assessee, which assessee has neither contended nor has demonstrated. AO while completing the assessment has not looked into and examined these factual aspects. Accordingly, in the facts and circumstances, as mentioned above, the assessment order passed by the AO allowing the deduction u/s 54F of the Act without proper verification of the facts has rendered the assessment order erroneous in so far as it is prejudicial to the interest of Revenue. Based on these facts and precedents applicable to these facts, we hold that ld PCIT has rightly exercised his jurisdiction under section 263 of the Act, thus we uphold the order of ld PCIT. Appeal of the assessee is dismissed.
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2021 (4) TMI 1015
Addition as additional income of the Appellant under the normal provision of the income Tax Act and also under section 115JB - interest receivable on delayed payment - whether no addition could have been made u/s 115JB when the accounts have been audited and approved in the AGM? - HELD THAT:- Interest on delayed payment payable by HPL to HPLCL has been offered to tax under the head other income . This amount is reflected in the annual accounts of the assessee under the head miscellaneous income . CIT(A) has, in our opinion, committed a mistake on fact by not considering the fact that the assessee had already offered the said interest income to tax under the head other income . In this case an amount of ₹ 19.71 crores was interest receivable on delayed payment by HPL and an amount of ₹ 4.20 crores was interest payable to HPL on excess corporate tax collected and both were not part of facilitation charges. The reconciliation statement was for the facilitation charges. Interest does not form part of facilitation charge. The interest transactions were duly accounted for by the assessee. As per the audited accounts of HPLCL, income from facilitation charges was disclosed as ₹ 137,86,20,277/-. ₹ 4,11,39,797/- was an amount of debit notes on fuel savings which was not considered by HPL, while deducted TDS. Further, HPLCL had to pay HPL corporate tax to the tune of ₹ 38.67 crores. This was considered by HPL in the next phase of 2009. Thus these factors are taken into consideration by the ld. CIT(A). Enhancing the income of the assessee by an amount of ₹ 11.40 crores both are normal provisions as well as u/s 115JB of the Act is without proper analysis of the facts and figures is wrong. Hence, we delete this addition to the extent confirmed by the ld. CIT(A). Disallowance of prior period expenses - Addition on reimbursement of expenses paid to Nuovo Pignone on the ground that the invoices do not pertain to March, 2006 and they are prior period expenses - HELD THAT:- We find that certain invoices were raised on the assessee during 06.03.2006 and 16.03.2006. The issue is whether these are prior period expenditure. The assessee is a public sector undertaking. Its accounts are audited by the Comptroller and Auditor General (hereinafter C AG ). Prior period expenditure is normally classified as Prior Period by both the statutory debtor and the C AG. The assessee submits that these expenditures crystallized during the current assessment year. This fact has been accepted by both the statutory auditor and the C AG. Keeping the view taken by the statutory auditor and C AG we hold that this expenditure cannot be classified as prior period expenditure. The bills of March 2006 were received and approved in the next financial year. Thus the disallowance as confirmed by the ld. CIT(A) is hereby deleted and this ground is allowed. Considering the interest income as income from business and profession instead of income from other sources - HELD THAT:- CIT(A) has followed the decision of his predecessor for the AY 2006-07 on identical facts and held that the income in question is assessable under the head income from business and not under the head income from other sources . On a query from the Bench the ld. Counsel for the assessee submitted that, this decision of the ld. CIT(A) on this issue for the AY 2006-07 was accepted by the Revenue and no further appeal was filed before the Tribunal. The ld. D/R could not controvert these submissions of the assessee. Disallowance u/s 40(a)(i) - HELD THAT:- The undisputed fact is that the payment in question is reimbursement of expenditure. The ld. CIT(A) followed the propositions of law laid down by the jurisdictional High Court on this issue and held that no tax needed to be deducted at source, when it is a reimbursement of expenditure. Hence, we find no infirmity in the same. Estimation of income - income from trading - CIT(A) has followed the order of his predecessor for the AY 2006-07 on identical facts and held that the action of the AO in estimating the profit as earning from credit activity is factually incorrect - HELD THAT:- CIT(A) has verified the copies of the electric bills raised by West Bengal State Electricity Board and factually came to a conclusion that these bills were raised only on HPL. These factual findings could not be controverted by the ld. D/R. It is also submitted before us that the Revenue had accepted this particular finding of the ld. CIT(A) for the AY 2006-07 and has not preferred an appeal before the ITAT. Under these circumstances that finding of fact has become final. The ld. CIT(A) has in the impugned order followed the order and propositions laid down by his predecessor for the AY 2006-07. We find no infirmity in the same. Hence, we uphold the order of the ld. CIT(A) and dismiss ground no. 4 of the Revenue.
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2021 (4) TMI 1014
Bogus LTCG - Addition of 30% alleged commission charges - HELD THAT:- Both the lower authorities have erred in law and on facts in treating assessee s long term capital gain as bogus ones in absence of any supportive evidence in their support; whatsoever. The impugned addition(s) qua both aspects are directed to be deleted. Un-explained un accounted cash investment - addition in the nature of on-money paid to Vendor - HELD THAT:- We find no reason to sustain the impugned identical addition of money payment in cash addition in these assessees hands. It is an admitted fact that learned lower authorities have gone by the alleged loose sheet only allegedly revealing the impugned payments made out at assessees behest over and above the sale price involving M/s.Western Pearl Project sold by M/s.Western Constructions/vendees. DR have treated the latter s partner s statement and the alleged Excel sheet as the basis of the impugned additions. Learned CIT-DR also quoted Section 132(4) r.w.s.292C of the Act that such an incriminating material found/seized during the course of search carries presumption of correctness as well. He fails to rebut the clinching legislative expression used in Section 292C of the Act carrying presumption inter alia that the specified categories of the incriminating material are presumed to be belonging to such persons and their contents are true, validly signed and are executed and are treated to be in the possession; qua the concerned assessee only than in case of any third person as well. The Revenue s endeavour to this effect seeking to apply 292C r.w.s.132(4) presumptions fails. We make it clear that hon'ble apex court s recent landmark decision M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] has recently settled the law that provisions of a taxing statement have to be interpreted in stricter parlance only. Revenue has cited statement of M/s.Western Construction s partner that the same duly proved that the on-money payments had been made in cash by these assessees. This argument also fails inter alia for the reasons that Shri Raju had made it clear during and after search that he was not aware of the company s business affairs. And that the alleged document never mentioned these assessee s names at all as it is not only the Assessing Officer in the impugned assessment but even in case of the recipient M/s.Western Construction s assessment order dt.28-12-2018 as well wherein it had been held that the on money amount was attributable to Shri Narendra Kumar Goyal than these twin assessees. Ld.CIT-DR was fair enough in informing the bench that the department has not initiated any action against Shri Narendra Kumar Goyal. That being the case, the Revenue s stand of having strictly gone by the contents of the seized document only to this effect itself is self-contradictory since Shri Goyal (assessees father) has nowhere been examined till date. Assessees statement had duly admitted the impugned on money payment - We are unable to agree with the instant plea based on mere admission made post search in view of the CBDT s circular(s) dt.10-03-2003 and 18-02-2011 making it clear that such an admission of undisclosed income made during search or survey does not carry any significance and the same has to be based on evidence collected in the very process only. Whether the impugned seized material / Excel sheet (not mentioning the assessees names) forms a dumb document or not.? - We make it clear that the department has failed to corroborate the impugned seized document indicating assessee s alleged on money payment over and above the sale price itself. All it has done is to rely on their father s name only. It is nowhere clear as to whether it is an alleged document forming part of the books of account maintained in the regular course of business either by the vendor or vendee side. All it contains therefore is rough notings and jottings only. As relying on Common Cause, Vs. Union of India[ 2017 (1) TMI 1164 - SUPREME COURT] and CBI Vs. V.C.Shukla [ 1998 (3) TMI 675 - SUPREME COURT] holds that such loose sheets deserves to be treated as a dumb documents only since not revealing full details about the dates containing lack of further particulars and therefore, ought not to be made basis of an addition. We accordingly hold that the impugned addition of on-money payment made in both these assessees hands on the basis of a mere dumb document and not corroborated by any other evidence is not sustainable. We thus direct to delete the impugned identical addition forming subject matter of adjudication in both these cases.
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2021 (4) TMI 1013
Denial of natural justice - Unexplained investment u/s. 68 - CIT(A) has dismissed the appeal of the assessee ex-parte without providing proper opportunity to the assessee of being heard - HELD THAT:- On appeal, before the Ld. CIT(A) none appeared on behalf of the assessee on the given dates of hearing. Moreover, there is a long delay in filing the appeal before the Ld. CIT(A) for which the assessee had also not filed a petition seeking condonation of delay stating the reasons. Hence, the Ld. CIT(A) was left with no other option except to dismiss the appeal of the assessee. In this situation, find no much strength in the arguments advanced by the ld. AR. Considering the prayer and the submissions of the Ld. AR, the merger financial resource of the assessee and the nature of issues involved in the appeal, in the interest of justice,hereby condone the delay in filing the appeal before the Ld. CIT(A) and remit the matter back to the file of Ld. AO for de-novo consideration thereby providing one more opportunity to the assessee of being heard. At the same breath, also hereby caution the assessee to promptly co-operate before the Ld. Revenue Authorities in their proceedings failing which the Ld. Revenue Authorities shall be at liberty to pass appropriate Orders in accordance with law and merits based on the materials on the record. Appeal filed by the assessee allowed for statistical purposes
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2021 (4) TMI 1012
Addition u/s 68 - difference in closing balance as per the books of the Appellant and Debtor - HELD THAT:- Documents placed by the assessee before the Revenue authorities sufficiently discharge the onus towards the identity and genuineness of the transaction and creditworthiness of the lender contemplated under s.68 - the statutory discretion available to AO under s. 68 of the Act ought to have been exercised in favour of the assessee. The action of the Revenue authorities thus cannot be countenanced having regard to the extenuating circumstances existing in the case. The addition made under s.68 of the Act on credit received from Rakesh Swadia therefore deserves to be reversed and cancelled. For another credit of ₹ 1 Lakh from Khemka Udyog, it is the case of the assessee that the relevant confirmation from the lender towards repayment of loan could not be furnished due to strained relations cropped up owing to some dispute. The assessee, however, adverted to the bank statement of the assessee to show that an amount of ₹ 51,070/- was promptly repaid on 30.08. 2012 against the credit received on 03. 08. 2012 which proves the bonafides of the credit received from Khemka Udyog. It is also fairly submitted that additions may, at best, be restricted to the balance amount remaining unpaid. Having regard to the fact of repayment of credit to the extent of ₹ 51, 070/-, we find merit in the plea of the assessee for claim of bonafide to the extent of at least ₹ 51,070/-. The additions on this score is therefore restricted to ₹ 48, 930/- and the remaining amount of addition of ₹ 51,070/- is reversed. Reconciliation difference in the closing balance as per the books of account of the assessee and that of debtor M/s. PSL Ltd. -We find the following contentions raised on behalf of the assessee to be noteworthy: (i) no copy of ledger accounts in the books of debtor (PSL Ltd.) was collected by the AO while relying upon the outstanding balance declared by the Chartered Accountant of PSL Ltd. The Chartered Accountant showing confirmation was stated to be mandated by ICICI Bank Ltd. to carry out satisfactory audit of the PSL Ltd.; (ii) no transactions have been carried out during the year with PSL Ltd. and the difference in balance, if any, relates to some earlier year and therefore no event has occurred during the year for taxation purposes; (iii) the excess balance, if any, when received from the party by the assessee would be eventually become taxable in the year of receipt and therefore the entire exercise is, in fact, tax neutral; (iv) the CIT( A) by way of cryptic and non- speaking order confirmed the stand of the AO without taking note of the glaring facts. For the reasons noted above, we find great force in the plea of the assessee for reversal of additions made on account of so called difference in balances.
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2021 (4) TMI 1011
Levy of penalty u/s. 271(1) - assessee has already opted for settlement of dispute for quantum additions as well as penalty under Direct Tax Vivad Se Vishwas Scheme (VVS Scheme), 2020 and already received Form No. 3 from appropriate authority - HELD THAT:- In view the provisions of section 3 of the VSV Act and FAQ No. 8 as extracted above, it is quite discernible that when the tax arrears include penalty levied on such disputed tax, then in such a case only prescribed percentage of disputed tax is required to be paid by the declarant. Upon perusal for Form No. 3, we find that the assessee has filed declaration for both the appeals i.e. disputed tax appeal as well as penalty appeal and paid prescribed percentage as per the scheme. Since the quantum appeal as well as penalty appeal has been settled by the assessee on payment of disputed tax, the captioned appeal which is in relation to penalty u/s. 271(1)(c) does not survive for adjudication and the penalty would stand deleted.
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2021 (4) TMI 1009
Unexplained cash credit under section 68 - HELD THAT:- As assessee during the assessment proceedings has furnished the necessary details of the fixed assets, along with the name of the suppliers and the breakup of the assets. But the AO has not pointed out any infirmity in such details furnished by the assessee. In fact the assessee has duly discharged its onus by furnishing the requisite details and therefore the onus was shifted upon the AO to reject the contention of the assessee based on the cogent materials. As such the assessee cannot be penalised for non-response of the suppliers, particularly in a situation, where the notices to the suppliers were issued by the AO at the fag end of the assessment. The entire thrust of the learned DR was based on the documents/informations collected in the course of search proceedings under section 132 of the Act which was conducted on 2 May 2013. As per the learned DR the information gathered during the search proceedings should also be considered while adjudicating the issue on hand. The learned DR further submitted that the matter of the assessee for the year under consideration against the search proceedings is pending before the learned CIT (A). Accordingly the learned DR contended that the matter on hand can also be restored to the file of the learned CIT (A) for fresh adjudication along with the search proceedings. However, we are not convinced with the argument of the learned DR for the reason that both the proceedings are separate and independent to each other. The assessments in the search proceedings are special assessments to be carried out under the provisions of section 153A of the Act which begins with non-obstante clause. As a result of search, the proceedings under section 153A of the Act have already begun which are based on the search materials. Furthermore, the issue before us is arising against the assessment order framed under section 143(3) of the Act and we are not adjudicating the appeal/matter arising against the assessment framed under section 153A of the Act. It might be quite possible that search material has a bearing on the income to be determined for the year under consideration but for that purpose the proceedings have already been initiated and the same will be taken care by the revenue authorities in the respective proceedings. Accordingly, we are not convinced with the argument of the learned DR. The cash credit received by the assessee during the year remains no longer unexplained as provided under section 68 of the Act for the reasons as discussed above - Decided against revenue.
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2021 (4) TMI 1045
Applications u/s 245(C) before the Settlement Commission to resolve the disputes with the Income Tax Department rejected - HELD THAT:- Section 245(D) cannot be read in isolation. Section 245(D) is to be read along with 245(C). Both the provisions are to be read together to form an opinion and to cull out the spirit involved in the matter of receiving an application for settlement of cases. Section 245(C) contemplates 'Application for Settlement of cases'. Once an application is filed, it is to be verified, whether the application is filed with reference to the ingredients contemplated under Section 245(C). Once all such ingredients are fulfilled, then the Settlement Commission should follow the procedures as contemplated under Section 245(D). Under Section 245(D), various stages are provided. At any stage, if the Settlement Commission formed an opinion that there was no full and true disclosure with reference to the facts narrated in the application, then the Settlement Commission is empowered to reject the application filed under Section 245(C). Thus, the procedural aspects enumerated under Section 245(D) is to conduct the enquiry for the purpose of settlement and such a procedural aspects are to be read along with the spirit of the provision as contemplated under Section 245(C) of the Act. The report of the Commissioner of Income Tax, opportunity for the petitioner to convert the materials and all such aspects are provided, enabling the petitioner to establish his cases with reference to the applications filed and not in respect of the other income or other materials. Procedures are contemplated in order to cull out the truth regarding the true and full disclosure to be made along with the application filed under Section 245(C) and therefore, at any stage of the enquiry, the Settlement Commission, if able to form an opinion that an application is not filed with true and full disclosure, then such an application shall be rejected. The very legislative intention of the procedures formulated under Section 245(D) is to ensure that the application for settlement of cases are considered in accordance with Section 245(C) and therefore, the powers of the Settlement Commission is limited to the extent of the scope of Section 245(C) and the other provisions of the Act can be exercised only in order to formulate an opinion and not to make a regular assessment under the Act, which is the power to be exercised by the competent authority and certainly not by the Settlement Commission. In the present cases, the findings of the Settlement Commission are unambiguous and specific facts and circumstances were also relied on by the Settlement Commission to arrive a decision regarding true and full disclosure by the petitioner. Such a finding of fact need not be interfered with by the High Court under Article 226 of the Constitution of India, unless such facts are found to be error apparent. When there was an adjudication of facts and the Settlement Commission arrived a finding that factually the petitioner has not established that he filed applications under Section 245(C) with true and full disclosure, then the High Court is expected to exercise restraint in entertaining a writ proceedings under Article 226 of the Constitution of India. The petitioner could not able to establish that he approached the Settlement Commission with clean hands and the element of true and full disclosure as contemplated under Section 245(C) had not been established before the Settlement Commission and therefore, there is no perversity or infirmity as such in respect of the findings arrived. It is brought to the notice of this Court that the Settlement Commission has already been abolished with effect from 01.02.2021. This being the factum established, the writ petitions fail and accordingly, all the three writ petitions stand dismissed
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2021 (4) TMI 1044
Production of additional evidence before the Tribunal - denial of natural justice - TDS u/s 195 - Proceedings under Sections 201 and 201(1A) initiated - payments made by the Appellate under the Distribution Agreement to GIL constituted Royalty under the provisions of Section 9(1)(vi) of the Income-tax Act, 1961 and Article 12 of the Double Taxation Avoidance Agreement between India and Ireland - whether the Tribunal while passing the common order dated 23.10.2017 has violated the principles of natural justice and fair play as it has not afforded an opportunity to the appellant to rebut fresh evidence especially when the fresh evidence was based on Google study? - HELD THAT:- The Tribunal in order has held that no literature or books or documents were filed by the assessee except some of the documents mentioned in the order of the Tribunal and as the parties have failed to bring any tangible material except in the form of written note, the Bench had gone through the books available in public domain at Google Adword or Google analytics and also gone through the website of the Google and the Adword links and based upon the above research carried out by the Tribunal, they have summarized the Google Adword functions. The material on which Google Adword functions were summarized does not find place in the order of the Tribunal nor the material was brought to the notice of the appellant, meaning thereby some material collected behind back of the appellant has been used by the Tribunal and the material brought on record through proper application has not been looked into. Keeping in view Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 and also keeping in view the fact that the material on the basis of which the order has been passed was not furnished to the appellant at any point time, the order passed by the Tribunal is certainly violative of principles of natural justice and fair play as the appellant was not afforded an opportunity to rebut fresh evidence especially when such evidence was based on Google study. Another important aspect of the case is that details of the material has also not been reflected in the order passed by the Tribunal and therefore, this Court is of the opinion that as there is a violation of principles of natural justice and fair play, the matter deserves to be remanded back to the Tribunal for hearing it afresh in accordance with law. The questions are answered in favour of the assessee and against the revenue and the other questions are left open
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2021 (4) TMI 1043
Reopening of assessment u/s 147 - as per assessee proposal for reopening the assessment is liable to be dropped, since there is no finding that there was escapement of income - also contended that for the purpose of carrying on verification exercise, reopening cannot be ordered - HELD THAT:- Though such specific contention was raised, instead of dealing with the same, by passing a speaking order, the first respondent chose to merely inform the assessee that the proceedings have been initiated only with the approval of the jurisdictional Joint Commissioner. The first respondent has not at all dealt with the contentions raised by the assessee. The Hon'ble Supreme Court in GKN Driveshafts [ 2002 (11) TMI 7 - SUPREME COURT] had specifically held that the assessing officer is bound to dispose of the assessee's objections by passing a speaking order. In as much as this requirement of law as laid down by the Supreme Court has not been complied with, the respondent is directed to dispose of the petitioner's objections by passing a speaking order within a period of four weeks from the date of receipt of a copy of this order. We refrain from interfering with the impugned notices. If the assessing officer chooses to reject the petitioner's objections by passing a speaking order, then, it is open to the petitioner herein to move this Court again. All the contentions of the petitioner are left open.
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2021 (4) TMI 1008
Unexplained investment - AR submitted before us that the assessee had obtained loan from his partner for which he has given the confirmation statement - HELD THAT:- Having considered the rival submission, we are of the view that to meet the ends of justice, the matter needs to be remitted back to the file of the Ld. AO for de-novo consideration. Accordingly, we hereby remit the matter back to the file of the Ld. AO with directions to admit any additional evidence filed by the assessee and after examining the same pass appropriate order afresh in accordance with merit and law. Appeal of the assessee is allowed for statistical purposes
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2021 (4) TMI 1007
Addition on account of unexplained investment - A.O. has rightly calculated the purchase amount of the property as per the valuation of the stamp duty Authority as per provision of Section 56(2)(vii)(b) of the Act as applicable w.e.f. A.Y. 2014-15 - HELD THAT:- As observed from perusal of the impugned order that the ld. CIT(A) had held in the impugned order that the A.O. has rightly calculated the purchase amount of the property as per the valuation of the stamp duty Authority as per provision of Section 56(2)(vii)(b) of the Act as applicable w.e.f. A.Y. 2014-15. Accordingly, we do not find any reason to interfere or deviate from the findings so recorded by the ld. CIT(A) and hence, we uphold the same. Appeal of the assessee is dismissed.
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2021 (4) TMI 1006
Non issue of mandatory notice u/s 143(2) - HELD THAT:- As relying on Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT ] and LAXMAN DAS KHANDELWAL [ 2019 (8) TMI 660 - SUPREME COURT] the passing of assessment order u/s 143(3) of the Act, without issuing notice u/s 143(2) of the Act, by the ITO, ward-9(2), Kolkata, is bad in law and has to be quashed.
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2021 (4) TMI 1005
Capital Gains chargeable to tax - Land transferred in favour of M/s. Sai Gokul Builders in the scheme of JDA - non consider the cost of construction of 7 flats while computing the capital gain from the sale - HELD THAT:- In this case, the A.O. denied the cost of construction incurred on 7 flats while computing the capital gain on the reason that assessee has not incurred this expenditure but it was incurred by developer. However, it has to be noted that the assessee has considered cost of these 7 flats as a consideration while computing the capital gain on entering into JDA. Once the assessee includes the cost of these 7 flats as sale consideration while determining capital gain on entering into JDA, the corresponding benefit shall be given on sale of these 7 flats. Now the issue is only with regard to the sale consideration adopted by assessee towards these 7 flats while offering the capital gain. The A.O. cannot overlook the computation of capital gain offered by assessee on entering into the JDA. Once the assessee adopted the cost of these 7 flats for the purpose of offering the capital gain, same to be considered as cost of construction on sale of these 7 flats - This has been supported by the order ofSMT. JEEVA VADIVELU, VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 6 (1) , BANGALORE. [ 2012 (9) TMI 961 - ITAT BANGALORE] Being so, we direct the A.O. to consider the cost of construction of 7 flats while computing the capital gain from the sale of these 7 flats. This ground of assessee is allowed. Determining the value of land transferred to Sai Gokul Builders under JDA at ₹ 800/- p. sq.ft. instead of ₹ 500/- p.sq.ft. as guidance value notified by the Government of Karnataka - As carefully gone through the market guidance value published by the Government of Karnataka w.e.f. 19.4.2017 as per which, the impugned property bearing No.40B/3 40B Sai Gokula Builders situated at Hoodi s village, Bengaluru, East Taluk (erstwhile South Taluk), Mahadevapura, CMC Limits, Ward No.12, K.R. Puram Main Road, Hubli, Bengaluru and it is also noted that the property was converted for non-agricultural residential purposes vide sanction order ALN-SR-1175/1981-82 issued by the Tahsildar, South Taluk, situated at Hoodi s village, Bengaluru, East Taluk (erstwhile South Taluk), Mahadevapura, CMC Limits, Ward No.12, K.R. Puram Main Road, Hubli, Bengaluru. As such notified value was ₹ 550/- per sq.ft. which can be seen from entry No.19 As such in our opinion, the value to be adopted at ₹ 550/- per sq.ft. instead of ₹ 800/- p.sq.ft valued by the A.O. This ground of assessee is allowed.
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2021 (4) TMI 1003
Disallowance of dividend income as exempt in Schedule BP relating to computation of business income - inadvertent error committed by the assessee while filling up the return of income filed through electronic mode - details of exempt income were mentioned in the schedule EI of the return of income - HELD THAT:- An identical issue was examined by the Mumbai bench of Tribunal in the case of Suman Chandra G. Mehta [ 2013 (12) TMI 358 - ITAT MUMBAI] The facts in the present case are identical. The assessee, out of ignorance or inadvertence has omitted to mention the details of exempt income in the relevant Schedule EI . So, the ignorance of the assessee or inadvertent mistake committed by the assessee should not come in his way in claiming exemption, which is otherwise allowable under the Act. It is also not a case that the assessee did not respond to the notice issued by CPC. The assessee has duly responded to the same, but it is the submission of revenue that the assessee should have filed a revised return of income. There is no dispute with regard to the fact that the assessee is entitled for exemption of dividend income. The object of assessment is to determine correct total income of the assessee. Accordingly, I am of the view that the right of the assessee could not be denied merely on accounting of technical errors. Hence there is a mistake apparent from record in not granting exemption claimed by the assessee. Accordingly, the said mistake deserves to be rectified. We set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to allow the exemption claimed by the assessee.
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2021 (4) TMI 1002
Reopening of assessment u/s 147 - reasons for issue of notice u/s 148 were not supplied to the assessee - HELD THAT:- We observe from perusal of the record that the A.O. in his remand report admitted that the assessee has demanded the reasons for issue of notice u/s 148 vide letter dated 24.05.2019, but since there was request in one line, therefore skipped from supply the same. The A.O. also submitted in his remand report that the letter dated 17.10.2019 is not served on to the A.O CIT(A) is of the opinion that mere mentioning a line is not a sufficient demand and about the letter dated 17.10.2019 he completely relied on the submission of the A.O. A.O. in his remand report stated that the letter dated 17.10.2019 was not served on him. In this connection it has been submitted by the ld AR that this letter was served on to the A.O., which is very well evident from the proof of service provided by the Courier agency, the copy of the same was also submitted by the assessee to the Ld. CIT(A) but the same was not appreciated. From the perusal of the courier record, the samw as served upon the A.O., we are of the view that the findings of the Ld. CIT(A) are unjustified and also not in accordance with the law as well as various judicial pronouncements. CIT(A) had not considered the evidences submitted by the assessee during the course of hearing. The assessee submitted the proof of receipt of the letter sent in by placing on record the copy of receipts provided by the courier company, but the Ld. CIT(A) has completely brushed aside the evidences so submitted by the assessee and ld. CIT(A) also approved the act of the A.O., which is unjustified and contrary to the law. A.O. has failed to provide the reasons despite the specific request of the assessee made to the A.O. twice, first just after filing of return u/s 148 and again during the course of assessment. It is needless to mention that without supply of reasons the entire assessment proceedings should be liable to be declared as illegal and bad in the eyes of law. Mandate of Section 151 - As the sanction was accorded by the ld. CIT in a purely mechanical manner without application of judicious mind, therefore, the sanction so accorded cannot be held to be a proper and valid sanction within the meaning of Section 151 of the Act and for this reason also, the impugned notice U/s 148 of the Act falls to the ground and proceedings for reopening of the assessee in absence of valid sanction of CIT cannot be initiated, therefore, in the background of the aforesaid discussions and respectfully following the precedents, as aforesaid, we are of the considered view that proceedings initiated by invoking the provisions of Section 147 of the Act by the AO and upheld by the Ld. CIT(A) are nonest in law and without jurisdiction, hence, the re-assessment is quashed.
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2021 (4) TMI 1000
Revision u/s 263 - exemption under section 54 was granted to the assessee without verifying the facts - cost of improvement inclusion/ exclusion - HELD THAT:- It is not discernible from where the ld. Commissioner has brought report of ₹ 8/- per sq.ft representing the value of the land as on 1.4.1981. He has not made reference to any documentary evidence or sale instance. On the other hand, he has ignored the report of the registered valuer by observing that registered valuer has not assigned any sale instance for arriving at a value of ₹ 196/- per sq.ft. The report of registered valuer has been placed on record by the assessee and justification for value of 1981 worked out by the registered valuer. The registered valuer has made a reference to a sale instance, and thereafter worked out the value of the property as on 1.4.1981. Apart from this aspect, the copy of the agreement dated 7.2.1981 has been placed on record. By way of this agreement, the assessee and others have purchased the suit property from the seller viz. Maganbhai Gordhabhai Patel. In the Schedule-A attached with this agreement, the rate prescribed was ₹ 180/- per sq.feet. The assessee has placed on record true copy of translation of the alleged banakhat- If we look into this agreement, which is very closure to 1.4.1981 along with working of the registered valuer, then it would reveal that in support of her working in indexation cost, the assessee has evidence. On the contrary, the ld. Commissioner did not refer to any sale instance for directing the AO to adopt ₹ 8/- per sq.ft. as on 1.4.1981 for working the cost of acquisition. Commissioner has observed that the assessee failed to show any documentary evidence about the improvement cost claimed at ₹ 11,22,325/-. The AO has not examined this aspect and allowed the claim. Though the assessee has demonstrated the facts as to how she has claimed the improvement cost, and it was a very old claim, the expenditure was incurred in the year 1993-94. It was duly recognized in the return of income for Asstt. Year 2006-07. AO has called for details regarding working of capital gain/loss. He has also called for investment made during the year. According to the assessee, she has submitted all the details and discussed it with the AO. Thereafter, he was satisfied and passed the assessment order under section 143(3) of the Act. It is a different matter that he has not elaborately discussed each and every aspect. But details are available in the record, therefore, it cannot be said that the AO had not applied his mind while allowing the claim of the assessee, and such order cannot be said to be erroneous and prejudicial to the interests of the Revenue. The ld. Commissioner ought to have looked into those details and ought to have arrived at a firm conclusion as to how the assessment order is erroneous. He cannot relegate this aspect to the AO to find as to how his order is erroneous. As in the case of DG Housing Projects Ltd. [ 2012 (3) TMI 227 - DELHI HIGH COURT] has held that the ld. Commissioner should have not relegated the point that assessment order is erroneous to the AO himself. The ld. Commissioner, after analyzing the record, ought to have recorded a categorical finding and provided valid reasons as to how the assessment order is erroneous. In other words, the CIT has to examine the order of the Assessing Officer on merits and then form an opinion on merits that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. In the absence of the same, original assessment order of the AO cannot be said to be erroneous and prejudicial to the interest of the Revenue. Accordingly, we do not find any reason for invoking provisions of section 263 by the ld. CIT, more so when relevant details and explanations were already available on the assessment record and based on which assessment order was passed by the AO. We quash the impugned order passed under section 263 restore that the original assessment order passed under section 143(3) - Decided in favour of assessee.
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2021 (4) TMI 1039
Deduction u/s 10B - appellant is engaged in the business of exporting of collaborative research customized data largely on Computer Aided Design (CAD) platform which falls within the ambit of computer software - HELD THAT:- The activities undertaken by the assessee do fall within the meaning of Engineering and Design. The assessee is producing customized electronic data. The electronic data is received by the assessee from its clients who are abroad and the same after research and development is sent back as customized electronic data to the assessee s clients and therefore, in the considered opinion of this Court, the assessee is certainly entitled for the benefit of deductions under Section 10A of the IT Act. Thus the questions of law framed in this case are answered against the revenue and in favour of the assessee.
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2021 (4) TMI 1038
Settlement Commission order - additional disclosures of income during the pendency of the Settlement Commission - HELD THAT:- Findings of the order of the Settlement Commission clearly established that there are many additions regarding the undisclosed income by the assessee. The additions are made due to the search conducted and the Department has stated that the undisclosed income are more and a regular assessment is to be made in order to scrutinise all the books of accounts and incriminating evidences for the purpose of forming an opinion and to determine the tax payable by the assessee. When such an exercise to be made under the Act is not permitted and if the issues are settled, then this Court has no hesitation in holding that the very purpose and object of the provisions of the Act is defeated. This apart, the very scope of Section 245C of the Act cannot be widened so as to permit the Settlement Commission to make a regular assessment, which is not contemplated. The very factum that there are additional disclosures of income during the pendency of the Settlement Commission, which were not made available at the time of application by the assessee under Section 254C of the Act there is a sufficient cause to reject the application under Section 245C of the Act. The very spirit of the provision is that the application must contain full and true disclosure of income. Once it is established that the application dose not contain full disclosure of income and additions are made during the pendency of the application, it is sufficient to arrive a conclusion that the application made by the assessee is not in consonance with the provisions of Section 245C of the Act and therefore, the same is liable to be rejected in limine. Contrarily, in the present case, the Settlement Commission travelled beyond the scope of Section 245C of the Act and adjudicated the additional income disclosed and further gone to the extent of settling the issues based on the additional income, which were not disclosed at the time of filing of an application under Section 245C of the Act. It is established that the assessee has not approached the Settlement Commission with clean hands. The assessee has not disclosed the true and full income and more specifically, the undisclosed income recovered during the search were not made available before the Settlement Commission along with the application and this would be sufficient to reject the application by the Settlement Commission. Contrarily, the Settlement Commission proceeded by adjudicating the issues on merits on the presumption that the Settlement Commission can pass an assessment order, which is otherwise not permissible under the provisions of Section 245C of the Act. Thus, the order passed by the Settlement Commission is perverse and not in consonance with the provisions of the Income Tax Act, 1961 and the Settlement Commission exceeded its jurisdiction by entering into the venture of a regular assessment, which is otherwise to be made by the Assessing Officer under the other provisions of the Income Tax Act, 1961.
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2021 (4) TMI 1034
Rectification application u/s 154 - application under section 264 has been dismissed/rejected - rectify the mistake of the mis-recording of long-term capital gains in the order under section 143 (1) of the Income Tax Act as being in an inadvertent error as the same had already been considered in the return for the A. Y. 2017-18, assessment in respect of which had already been completed under section 143 (3) of the Income Tax Act - - HELD THAT:- In a situation where there is an appeal that lies to the Commissioner appeals and which has not been made and the time to make such an appeal has not expired in that case the Principal Commissioner or Commissioner cannot revise any order in respect of which such appeal lies. The language is quite clear that the two conditions are cumulative viz: there should be an appeal which lies but has not been made and the time for filing such appeal has not expired in such a case the Principal Commissioner cannot revise. However, if the time for making such an appeal has expired then it would be imperative that the Principal Commissioner would exercise his powers of revision under section 264. The other or second situation is when the Petitioner assessee has not waived his right of appeal; even in such a situation the Commissioner cannot exercise his powers of revision under section 264 (4) (a). In clause (a) of section 264 (4), in the language between filing of an appeal and the expiry of such period and the waiver of the assessee to his right of appeal there is an or thereby meaning that there is an option i.e either the assessee should not have filed an appeal and the period of filing the same should have expired or he should have waived such right. Therefore, there are two situations which are contemplated in said sub-section (4) (a) of section 264. The section cannot be interpreted to mean that for the Principal Commissioner to exercise his powers of revision under section 264 not only that the time for filing the appeal should have expired but also that the assessee should have waived his right of appeal. We are afraid that, that is not how the section can be read. In the facts of the case, Petitioner has not filed appeal against order under section 143 (1) under section 246-A of the Income Tax Act and the time of 30 days to file the same has also admittedly expired. In our view, once such an option has been exercised, a plain reading of the section suggests that it would not then be necessary for Petitioner to waive such right. That waiver would have been necessary if the time to file the appeal would not have expired. Also the argument of the Revenue to say that the Petitioner can still file the appeal by filing an application for condonation of delay, is in our view, not proper and would be a fallacious proposition as after the period of 30 days, there is no right of appeal but an appeal would rest on the discretion of the Appellate Authority to condone delay upon sufficient cause being shown. In matters like these, where the errors can be rectified by the authorities, the whole idea of relegating or subjecting the assessee to the appeal machinery or even discretionary jurisdiction of high court, in our view, is uncalled for and would be wholly avoidable. The provisions in the Income Tax Act for rectification, revision under section 264 are meant for the benefit of the assessee and not to put him to inconvenience. That cannot and could not have been the object of these provisions. We do not find any statement either in the impugned order or in the reply to state that the case of the Petitioner seeking remedy of the purported error was not bona fide. Order passed by the 2nd Respondent- Principal Commissioner is unsustainable and deserves to be set-aside.
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2021 (4) TMI 998
Contribution to Ranbaxy Community Healthcare Society (RCHS) u/s. 37(1) and disallowing on the ground of non-deduction of TDS u/s. 40(a)(ia) - HELD THAT:- As identical issue on similar fact has been adjudicated in the case of the assessee itself in its favour by the Co-ordinate Bench of the ITAT Ahmedabad for assessment year 2009-10 [ 2019 (9) TMI 438 - ITAT DELHI] - The ld. Departmental Representative is fair enough not to controvert these undisputed facts that the instant issue in this ground of appeal is covered by the aforesaid cited decision of the ITAT wherein direct to delete the disallowance of contribution made by appellant to Ranbaxy Community Healthcare Society and Ranbaxy Science Foundation. Furthermore regarding failure to deduct tax on this sum, Ld. DR. could not point out particular section, which warrants deduction of tax at sources on this payment. Therefore, we also hold that in absence of specific section under which the tax is required to be deducted on such contribution without their being any service rendered by the recipient of the contribution disallowance u/s 40a(ia) also cannot be made TP Adjustment - Erred in not considering overseas associated enterprise as tested party being the least complex of the transacting entities and instead considering assessee as tested party thus violating basic principles of transfer pricing - HELD THAT:- As relying on own case [ 2019 (9) TMI 438 - ITAT DELHI] we restore this issue to the file of the TPO for fresh adjudication considering A.E s. as tested party. Therefore, this ground of appeal of the assessee is allowed for statistical purposes. Disallowance u/s 14A - HELD THAT:- Respectfully following the decision of the Hon ble High Court of Gujarat in the case of Corrtech Energy Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] wherein held that in case no dividend income is claimed as exempt no disallowance is to be made u/s. 14A of the Act. Therefore, following the decision of Hon ble Gujarat High Court as cited above, this ground of appeal of the assessee is allowed. Disallowance of deduction claimed u/s. 80IB and 80IC - assessee claimed these deductions in respect of undertakings located in backward area for deduction u/s. 80IB (Goa Unit) and for deduction u/s. 80IC (Paontashahib, Himachal Pradesh) - Assessing Officer stated that no separate books of account have been maintained in respect of the eligible undertaking and concluded that as held in the earlier assessment year the assessee was not eligible for deduction u/s. 80IB/80IC - HELD THAT:- In view of the discussion and following the order of the ITAT Delhi [ 2019 (9) TMI 438 - ITAT DELHI] in which the deduction claimed by the assessee under section 80IB/80IC was completely allowed. Market to market gain as taxable income - disallowance of market to market loss made while completing assessment year 2009-10 - why these expenditure should not be added back to income for the relevant accounting period? - HELD THAT:- Following the decision of ITAT on the identical issue [ 2019 (9) TMI 438 - ITAT DELHI] we hold that the amount written back by the assessee cannot be subject to tax either under normal computation of income tax act or under section 115JB of the Act in the year under consideration. Therefore, following the decision of the ITAT as supra reversal of amount is not taxable under the normal provision and ₹ 1534.16 Mn under section 115JB of the Act as the same was already suffered to tax in the preceding assessment year 2009-10. Therefore, following the decision of the ITAT as supra, this ground of appeal of the assessee is partly allowed. Disallowance on premium paid on FCCB - HELD THAT:- There is clear distinction between bonds and share capital because a bond does not represent ownership of equity capital. Bonds are interest bearing instrument which represents a loan. Therefore, FCCB issued by the assessee company were debt instrument issued by assessee company engaging its liability to pay the debt amount. These bonds are distinguishable from shares since bonds forms part of the loan and does not represent ownership in share capital. Therefore, the premium paid on redemption of FCCB is interest eligible for deduction. The liability to pay premium is contingent upon the right of redemption being exercised by the assessee company. The liability to pay premium is further contingent upon the right of conversion of FCCB to equity share not being exercised by the holders of the FCCB. Therefore, payment of interest in the form of premium which is incurred wholly and exclusively for the purpose of business is to be allowed in the year in which it is incurred. Therefore we consider that premium on redemption of debenture is in the nature of interest allowable as deduction under the provision of the act, therefore, this ground of appeal of the assessee is allowed. Disallowing weighted deduction u/s. 35(2AB) merely on account of failure to produce form 3CL - HELD THAT:- As relying on own case 2016 (12) TMI 1539 - ITAT AHMEDABAD] we direct the Assessing Officer to allow the claim of the assessee after verification of the necessary particulars as directed in the above decision of the ITAT. Therefore, this ground of appeal of the assessee is allowed. Weighted deduction u/s. 35(2AB) on cost of assets provided to employees working in approved R D facilities and engaged in execution of R D activities) - HELD THAT:- The ground raised before us is identical to the issue raised before Delhi ITAT in the case no. [ 2016 (5) TMI 157 - ITAT DELHI] . Hence taking the same view on such issue, we set aside the order of ld. CIT-A to the AO for fresh adjudication. Hence the ground of appeal of the assessee is allowed for statistical purposes. Claim towards investment made by company in overseas subsidiaries expenses) on account of Adjustment of hedging charges - HELD THAT:- Following the decision of the ITAT in the case of the assessee itself [ 2019 (9) TMI 438 - ITAT DELHI] this ground of appeal of the assessee is allowed with direction to the Assessing Officer to adjudicate this issue de-novo as per the direction laid down in the findings of the ITAT as cited above. Deduction for the cess paid by the assessee - Whether the said cess is revenue expenditure (ii) the said cess is not rate or tax debarred by seciton40(a)(ia) of the act.? - HELD THAT:- The similar issue on identical facts was adjudicated by the Co-ordinate Bench of the ITAT Ahmedabad in the case of Jindal Worldwide Ltd. [ 2020 (12) TMI 439 - ITAT AHMEDABAD] and the matter was restored to the A.O. for deciding afresh in view of the judicial pronouncement and the circular of the CBDT as referred above. Therefore after taking into consideration the circular of the CBDT and decisions of M/S. CHAMBAL FERTILIZERS AND CHEMICALS LTD., GADEPAN, DISTT. KOTA. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] and SESA GOA LIMITED, [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] we restore this issue to the file of the Assessing Officer for deciding afresh after taking into consideration the direction laid down in the aforesaid decisions of the Hon ble High Court and the Circular of the CBDT.
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2021 (4) TMI 1033
Deduction u/s 80JJAA - assessee had not made the claims u/s 80JJA and qua prior period expenses, in the original return - assessee did not move the AO with a revised return for claiming deductions under Section 80JJAA of the Act and for prior period expenses and assessee for the first time made these claims before the AO by way of a statement/communication dated 14.12.2009 -CIT(A) concluded that the deduction under Section 80JJAA was correctly claimed by the assessee - Tribunal setting aside the order of the Commissioner of Income Tax (Appeals) [in short CIT(A) ] granting deduction, under Section 80JJAA of the Act and qua prior period expenses - HELD THAT:- Once the Tribunal accepted the view taken by the CIT(A) that it could entertain fresh claims; a view which the CIT(A) has expressed in paragraph 6.6.2 of its order, all that the Tribunal was required to examine was: as to whether the CIT(A) had, scrupulously, verified the material placed before it before allowing deductions claimed by the assessee. The Tribunal, however, instead of examining this aspect of the matter, observed, and in our view, incorrectly, that because an opportunity was not given to the AO to examine the material, therefore, the matter needed to be remanded to the AO for a fresh verification. Unless the Tribunal would have reached to a conclusion and expressed its clear view, in that respect, as to what was wrong or missing in the examination made by the CIT(A), a remand was not called for. We agree with Mr. Seth's contention that the CIT(A) in the exercise of its powers under Section 250(4) of the Act was entitled to seek production of documents and/or material to satisfy himself as to whether or not the deductions claimed were sustainable/viable in law. This was, however, a case where the details were placed before the AO, who declined to entertain the claims only on the ground that they did not form part of assessee's original return and that the assessee had not made a course correction by filing a revised return. This view was based, as noticed above, on the judgment of the Supreme Court rendered in Goetze (India) Ltd.[ 2006 (3) TMI 75 - SUPREME COURT] . The CIT(A), squarely, dealt with this and concluded, that a fresh claim could be entertained. Therefore, the Tribunal, as noticed above, has accepted this view of the CIT(A) and the revenue has not come up in appeal before us assailing this conclusion of the Tribunal. In any event, we are of the view that, if a claim is otherwise sustainable in law, then the appellate authorities are empowered to entertain the same. See ASPENTECH INDIA PVT LTD [ 2011 (11) TMI 366 - DELHI HIGH COURT] Therefore, in our view, the judgment of the Tribunal deserves to be set aside. The fresh claims made by the assessee, as allowed by the CIT(A), will have to be sustained. The questions of law are answered in the favour of the assessee
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2021 (4) TMI 992
Deduction u/s. 80P(2)(a)(i) - AO denied the deduction on the ground that income of a co-op. society, including the profits and gains of banking or providing credit facility carried on by such co-op. society is not eligible for deduction if it is a co-op. bank within the meaning of section 80P(4) - HELD THAT:- As decided in M/s. The Karnataka Alpsankyatar Pattin Sahakari Sangh Niyamit [ 2019 (12) TMI 1481 - ITAT BANGALORE] restore this aspect of the matter back to his file for fresh decision with the direction that he should examine the facts of the present case in the light of these two judgments of Hon'ble apex court rendered in the case of Totgars Co - Operative Sale Society Limited vs. ITO [ 2010 (2) TMI 3 - SUPREME COURT] and in the case of Tumkur Merchants Souhadra Credit Cooperative Ltd. Vs. ITO [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] to find out which judgment is applicable in the facts of the present case. If it is found that the judgment of Hon'ble apex court rendered in the case of Totgars Co-Operative Sale Society Limited vs. ITO (Supra) is applicable in the facts of the present case then it should be held that the assessee is not entitled to deduction u/s. 80P in respect of interest from bank but if it is found that the judgment of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souhadra Credit Cooperative Ltd. Vs. ITO (Supra) is applicable then it should be held that the assessee is entitled to deduction u/s. 80P in respect of interest from bank Disallowance of pigmy commission paid to pigmy agents u/s. 40(a)(ia) - HELD THAT:- As before the lower authorities the assessee has not furnished details of payment and whether it is liable for TDS. Hence this issue is remitted to the AO for fresh consideration with a direction to the assessee to furnish the details of TDS.
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2021 (4) TMI 991
Condonation of delay - delay has made out a sufficient cause or not - Delay of 52 days in filing of the appeal - HELD THAT:- As the Assessee is not in India, he had to depend upon the services of his tax consultant at Vijayawada. He coordinated with the tax consultant at Hyderabad to file the appeal before ITAT. Assessee was regularly pursuing with his tax consultant at Vijayawada about the filing of appeal. He was advised that a fee of ₹ 10,000 needs to be paid as appeal fee to file the appeal, which was paid by the Assessee on 10th December, 2019. It was informed to the Assessee that the due date of filing the appeal expired on 02nd December, 2019. Then it was informed the Assessee that, the tax consultant at Hyderabad was busy in tax scrutiny assessments of other clients till the end of December, 2019. Then the appeal had been drafted and soft copies were sent to the Assessee through email. It was also informed to the Assessee that, only physically signed documents are permitted while filing the appeal before the ITAT. The Assessee sent such documents, duly signed by him, to his tax consultant at Vijayawada. He sent the same to Hyderabad tax consultant, who ultimately got them filed before the ITAT on 23rd January, 2020. The explanation of the Assessee is supported by his affidavit and the department did not express refute the stand taken by the Assessee. The delay in filing the appeal is occurred due to Assessee is staying in abroad, therefore there seems to be no mala fide intention for causing delay but the same prima facie appears to be bona fide and reasonable, hence in our considered opinion the Assessee has shown the sufficient cause for delay and therefore the delay of 52 days in filing of the appeal deserves to be condoned. Even the Assessee intends to get settled the dispute through 'the VSV Scheme' and has already initiated the process and willing to pay the relevant taxes. It is the public policy of nation that litigations must come to an end. Thus we are inclined to admit the appeal by condoning the delay of 52 days in filing of the appeal, consequently the delay stands condoned.
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2021 (4) TMI 990
Denying u/s. 11 exemption for want of Section 12AA registration - HELD THAT:- We notice from a perusal of the Revenue's paper book that the CIT(E), Hyderabad has filed his clarification that the assessee's returns/acknowledgments upto A.Y. 2005-06 bear registration number u/s. 12A 2B-ACCTS-718-10A-VOL-AI-0665 which could not be traced despite the best of the efforts made from the departmental authorities' side. The fact also remains that this is not the Revenue's case that there has been any change in assessee's activity undertaken all along. We therefore reverse the DCIT's order under challenge in the instant 12AA registration process for want of jurisdiction and restore Section 12AA issue back to the CIT(Exemptions) for his appropriate adjudication as per law within three effective opportunities of hearing. It is made clear that assessee shall be at liberty to file all the relevant evidence not only qua to its activities carried out throughout but also that pertaining to the exemption relief granted in the preceding assessment years. This assessee's appeal is accepted for statistical purpose in above terms.
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2021 (4) TMI 1030
Reopening of assessment u/s 148 - exemption u/s 54B - beyond 4 years from the end of the relevant assessment year - HELD THAT:- A bare perusal of the reasons recorded, reveal that the findings recorded by the AO with regard to non-production of the necessary documents in support of the claim are without any basis and it reflects total non-application of mind to the record. Records indicate that the details with regard to deduction u/s 54B was called for and the assessee had complied the same by furnishing the registered sale deed and agreement of purchase along with bank particulars. We are of the view that initiation of the proceedings based on the same set of facts, which were earlier relied upon by the AO while framing the assessment order, would nothing but a review of earlier proceedings, which cannot be permitted in law. The attempt on the part of the AO to reopen the assessment is nothing but he has changed his opinion. In the previous assessment proceedings, the AO had consciously applied his mind to the relevant facts and material available and framed the assessment and now, on the same set of facts, again, on the different view by the AO to reopen the proceedings would amount to change of opinion. At the stage of previous assessment proceedings, the assessee had disclosed all the primary facts for the assessment and based upon the materials the AO did not disallow the deduction to the extent of ₹ 1,85,00,000/-. Revenue has failed to show that which necessary facts were not disclosed by the assessee at the stage of previous assessment proceedings. In these circumstances, we are of the view that no new material surfaced during the reassessment proceedings on which the AO could have formed a requisite belief with regard to escape of assessment, especially when the assessee has disclosed all materials fully and truly at the stage of original assessment proceedings. Reference may be made to the case of CIT Vs. Usha International Ltd. [ 2012 (9) TMI 767 - DELHI HIGH COURT] wherein held that the reassessment will be invalid, in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. The reassessment proceedings in the said cases, will be hit by principles of change of opinion . It would be appropriate to rely and refer the observation of the Apex Court in case of CIT Vs. Kelvinator India Ltd,[ 2010 (1) TMI 11 - SUPREME COURT] wherein, it was observed that one must treat the concept of change of opinion as an inbuilt test to check abuse of power by the AO. It was further observed that the AO has power to reopen the assessment proceedings, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. We are of the opinion that the impugned action on the part of the respondent to issue notice under Section 148 of the Act and consequential proceedings are without jurisdiction and therefore, is required to be quashed and set aside and accordingly, it is quashed and set aside.- Decided in favour of assessee.
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2021 (4) TMI 989
Addition of unexplained cash credit u/s 68 of the Act in respect of loans received by the assessee - second round of proceedings before this tribunal - In the first round, this tribunal had remanded the issue to the file of ld CIT-A for the reason that the loan confirmations that were filed by the assessee before the ld CITA in the paper book were not considered by the ld CIT-A - HELD THAT:- We find that the ledger extracts given by the assessee before the ld CITA itself contains the counter signature of the creditors duly confirming all the transactions together with their PAN. From the perusal of the ledger extracts, we find that there is a running account maintained by the assessee with these creditors and all the transactions are routed through regular banking channels in account payee cheques. One more excruciating fact to be noted here is that the assessee had paid interest on these loans after subjecting the same to due deduction of tax at source. We find that the lower authorities had duly granted deduction for the interest expenditure claimed on these loans by the assessee. Once the interest is accepted to be genuine , then how the principal component thereon could be disbelieved by the lower authorities. We are unable to comprehend and unable to persuade ourselves to accept to this act of the lower authorities. We find that the assessee had requested the ld AO to issue summons u/s 131 of the Act to those loan creditors to find out the truth, which was not acted upon by the ld AO - assessee had duly disclosed the identity of the creditors and genuineness of the transactions are very much evident from the ledger extracts itself as all the transactions are routed through regular banking channels and assessee had even paid interest on these loans. Due to existing disputes with the parties by the sister concerns of the assessee, the assessee could not procure the financial statements and income tax returns from the loan creditors to prove their creditworthiness. But there is no dispute that the assessee had indeed furnished the PAN of all the loan creditors. AO / ld CITA could have cross verified from the PAN of the creditors with the assessing officers of the creditors and ascertain the creditworthiness. In any case, all these 5 loan creditors had duly confirmed the transactions carried out with the assessee by way of counter signature in the ledger extracts. We find that no adverse inference was drawn on the said ledger extracts by the lower authorities. Loan borrowed from 20th Century Finance Corporation Ltd had been duly repaid during the assessment year under consideration itself by the assessee with interest. With regard to loans received from Sharda Castings Ltd, Mittal Ispat Ltd and Pondy Metal Rolling Mill (P) Ltd, the assessee had repaid the loans in Asst Year 2000-2001 (i.e the immediately succeeding asst year) together with interest. We find that the ld AR before us had tried to produce certain documents connected with DSQ Software and 20th Century Finance Corporation Ltd (which was demerged later as TCFC Finance Ltd) to prove their creditworthiness. In our considered opinion, these documents are not required to be looked into at this stage as we have already held that the assessee had reasonable cause from not proving the creditworthiness of the creditors by producing the necessary documents due to ongoing legal suits and disputes pending with those creditors vis a vis the sister concern of the assessee. Moreover those disputes are money suits and obviously the loan creditors would not come forward to cooperate with the assessee by furnishing their financials In view of the aforesaid detailed observations, we are inclined to accept to the contentions of the assessee that the loans received from aforesaid 5 parties are genuine and not to be treated as unexplained cash credit u/s 68 of the Act in the peculiar facts and circumstances of the instant case. Accordingly, the grounds raised by the assessee are allowed
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2021 (4) TMI 1029
Disallowance made u/s 40(a)(ia) for non deduction of tax at source on transport charges - Retrospective effect of amendment made by the Finance Act, 2010 in Section 40(a)(ia) - HELD THAT:- The appellant fairly submitted that the issues involved in the present appeal are covered by the decision of the Hon'ble Supreme Court in Commissioner of Income Tax, Kolkata v. Calcutta Export Company [ 2018 (5) TMI 356 - SUPREME COURT] the amended provision of Sec 40(a)(ia) of the IT Act should be interpreted liberally and equitable and applies retrospectively from the date when Section 40(a)(ia) was inserted i.e., with effect from the Assessment Year 2005-2006 so that an assessee should not suffer unintended and deleterious consequences beyond what the object and purpose of the provision mandates. As the developments with regard to the Section recorded above shows that the amendment was curative in nature, it should be given retrospective operation as if the amended provision existed even at the time of its insertion. Since the assessee has filed its returns on 01.08.2005 i.e., in accordance with the due date under the provisions of Section 139 IT Act, hence, is allowed to claim the benefit of the amendment made by Finance Act, 2010 to the provisions of Section 40(a)(ia) of the IT Act - Decided in favour of the assessee.
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2021 (4) TMI 1028
Reopening of assessment u/s 147 - reference to the Settlement Commission in terms of Section 245F(2) - HELD THAT:- Prima facie, it appears that the assessment order passed in respect of petitioner's trust for the Assessment Year 2014-15 is already under reference to the Settlement Commission in terms of Section 245F(2) of the Act, which has been allowed to be proceeded with under Section 245D of the Act. Further, proceedings of the Settlement Commission have already been stayed vide order of the Hon'ble Supreme Court indicated here-in-above. Furthermore, it is undisputed that the order passed under Section 12AA of the Act is already under challenge before this Court. Once the aforesaid proceedings are already pending consideration of this Court, it does not appear to reason as to why the fresh re-asseement notice was required to be issued at this stage. The matter requires consideration for which the opposite parties are granted four weeks' time to file detailed counter affidavit.
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2021 (4) TMI 988
Revision u/s 263 - Order of the Ld.CIT(A) annulling the assessment order passed u/sec143(3) - HELD THAT:- As decided in RELIANCE MONEY INFRASTRUCTURE LTD. VERSUS PRINCIPAL COMMISSIONER OF INCOME TAX, MUMBAI [ 2017 (10) TMI 630 - ITAT MUMBAI] it is not permissible for the Pr CIT to disturb a concluded assessment on the ground that the AO has not dealt with or discussed in the assessment order the issues examined by him during the assessment proceedings. It is enough if the AO has elicited information/explanations from the assessee and the assessee has filed the same before the AO so long as there is no incorrect appreciation of facts or the assessment is not contrary to or not in accordance with law.The amendment to section 263 is also prospective. Thus, the reversionary proceedings u/s 263 of the Act are not validly initiated in view of the facts that the issues raked up by the Pr.CIT stand examined by the AO in the assessment proceedings and the ld Pr CIT has failed to state as to how the order of AO is erroneous and not in accordance with law or settled legal position. Even on merit, the assessee is entitled to all the deductions/claims as per the provisions of the Act. When the revision order u/s 263 of the Act was set-aside being invalid and any subsequent proceedings shall become infructuous. The Ld.DR could not controvert the findings of the Ld.CIT(A) with any new cogent material or information but relied on the Assessing officer order. Accordingly, we do not find any infirmity in the order of Ld.CIT(A) who has relied on the Hon ble tribunal decision and passed a reasoned order and we upheld the same and dismiss the grounds of appeal of the Revenue.
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2021 (4) TMI 987
Reopening of assessment u/s 147 - original assessment was completed u/s 143 (3) - HELD THAT:- We find the AO has issued notice u/s 148 of the Act dated 22.03.2013 for reopening of assessment, whereas the original assessment was completed u/s 143 (3) of the Act determining the total income on 26.08.2008. We observe that the AO has recorded the reasons without intangible information except retreating that the assessee has not disclosed the rental income from the property, but TDS credit is claimed and also higher rebate u/s 88E has been availed. Whereas the Ld. AR submitted that the said information was filed in the original assessment and referred to page 48 to 56 of the paper book. Further, the AO on verifying the facts and the explanations filed has passed the assessment order u/sec143(3) of the Act. Therefore, the reopening of assessment on the same set of facts is only a mere change of opinion and relied on the judicial decisions. We prima facie considering the facts circumstances and the evidences filed are of the view that the notice issued by the A.O. falls beyond the period of time limit. Accordingly, we treat the notice issued as bad in law and quash the assessment u/s 143(3) r.w.s 147 of the Act and allow the ground of appeal of the assessee.
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2021 (4) TMI 1027
Reopening of assessment u/s 147 - penny stock transaction entered by assessee - whether the revenue is justified in reopening the assessment for the year under consideration ? - HELD THAT:- Assessing officer himself was satisfied with regard to the information and other material on record, he formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the Karma Ispat Ltd., and the AO had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the AO to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the AO has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant. We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. We have no hesitation to hold that it could not be said to have that there was no material or grounds before the AO and the assumption of jurisdiction on the part of the AO under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render the notice unsustainable. Therefore, the assessee failed to make out a case.
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2021 (4) TMI 1026
Transfer under Section 127(2) - Transfer of assessment cases - centralize the case of the writ applicant along with the other cases with the DCIT, Central Circle 2, Rajkot with a view to facilitate effective investigation and coordinated action - order transferring the case of the writ applicant from the ITO, Ward 1, Gandhidham to the Joint Commissioner of Income Tax, Gandhidham Range, Gandhidham - HELD THAT:- We are of the view that we should not interfere with the impugned order of transfer passed by the respondent in exercise of powers under Section 127(2) of the Act. The power of transfer of cases would have to be exercised in proper cases when sufficient materials on record justify such action. As held by this Court, in the case of Hindustan M. I. Swaco Limited [ 2016 (7) TMI 212 - GUJARAT HIGH COURT] , this is, however, not to suggest that the transfer of cases for effective investigation and coordination can be resorted to only in cases of assessees, who are subjected to search operation. Such requirement may arise in other circumstances also . In view of the aforesaid, the present writ application and all other connected writ applications fail and are hereby rejected. The interim relief earlier granted stands vacated forthwith.
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2021 (4) TMI 986
Validity of assessment order us 153A - Approval by the JCIT as required under section 153D - Prior approval necessary for assessment in cases of search or requisition - As per assessee, no assessment order shall be passed unless it is approved by the JCIT - HELD THAT:- From the correspondence between the A.O. on one hand and the JCIT on the other hand and the letter addressed by the JCIT to the Commissioner clearly shows that it was at the stage of discussion and the JCIT could not able to make his mind. Ultimately he simply says that due to shortage of time as he was holding charges for six ranges, it is not possible for him to go into the material deep, therefore, he approved the proposal technically as required u/s 153D of the Act, immediately, after the AO brings to his notice that the assessment is getting time barred. From the above communications, it is obvious that the JCIT has not applied his mind even though there was a discussion between the A.O. and JCIT, the JCIT could not make his mind. Hence, this kind of casual approval/technical approval without going to the matter and without applying his mind to the material available on record is not an approval at all. Therefore, A.O. has no jurisdiction to pass the assessment order. In other words, the assessment order passed by A.O. as confirmed by C.I.T.(A) is void, nullity, non-est, hence, cannot be stand in the eye of law. An irregularity in the assessment order may be rectified by remitting back the matter to the assessment. In the case on hand it is not an irregularity in the assessment order, it is a jurisdictional error. The A.O. has no jurisdiction to pass the assessment order unless the JCIT granted approval. This Tribunal is of the considered opinion that this is not a rectifiable error since it is a jurisdictional error and not an irregularity in the assessment proceeding. Moreover, even if the matter is remitted back, the AO cannot do anything better, since time limit provided under the Act has already expired. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of both the authorities below were set-aside and the entire assessment order as confirmed by C.I.T.(A) are quashed. Appeals of the assessee stand allowed.
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2021 (4) TMI 985
Lower tax rate of 10% provided in India-Cyprus DTAA - whether the assessee is entitled to the beneficial provisions of Article 11(2) of the India Cyprus Double Tax Avoidance Agreement (DTAA), which provides, lower tax rate of 10% on interest income arising in India? - HELD THAT:- For requirement of eligibility of lower tax rate of 10%, the recipient should be beneficial owner of the interest. The Tribunal in the case of Golden Bella Holdings Ltd Vs. DCIT (International taxation) [ 2019 (9) TMI 302 - ITAT MUMBAI ] for assessment year 2013-14 in identical circumstances has allowed the benefit of lower rate of tax of 10% It is evident from the order of lower authorities that they have decided the issue of beneficial ownership of interest only on the basis of information of assets and liabilities provided in the return of income, which mistakenly reported by the assessee as Nil and the financial statements including, balance-sheet and Profit and Loss Accounts have not been considered. In such circumstance, we feel it appropriate to set aside the order of Ld. CIT(A) and restore the matter back to the file of the Assessing Officer to decide the issue of beneficial ownership of interest afresh in the light of financial statement of the assessee and documents. The Assessing Officer may examine all the tests laid down in the decision in case of Golden Bella Holdings Ltd. (supra). Ground of the assessee is accordingly allowed for statistical purposes.
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2021 (4) TMI 997
Delayed payments of employees contribution to PF as u/s.36(1)(va) r.w.s 2(24)(x) or u/s 43B - HELD THAT:- Considering the submissions of the parties that the issue raised in present appeal is covered by the decisions of Hon'ble Jurisdictional High Court in CIT Vs GSRTC [ 2014 (1) TMI 502 - GUJARAT HIGH COURT ] wherein it was held that sec. 43B of the Act is not applicable for the delayed payments of employees contribution to PF as under section 36(1)(va) r.w.s 2(24)(x) of the Act. In the light of above discussion and facts and circumstances and judicial decision Hon`ble High Court we upheld the addition made by the ld.AO, accordingly appeal of the assessee is dismissed. In the result, Ground No.1 of the appeal is dismissed. Interest paid to NBFC Kotak Mahindra Pvt. Ltd - assessee submits that the recipient of the interest has paid tax on the interest, therefore this ground of appeal may be restored to the file of the Assessing Officer (AO) for verification of facts, if the recipient has paid tax on the interest received by them than the AO be directed not to made the addition against the assessee - HELD THAT:- Considering the submissions by both the parties and the fact the ld.AR of the assessee submitted that recipient has already paid tax on the interest received, therefore, we restore the issue to the file of the AO to verify the facts if the recipient had paid the tax on the interest paid by the assessee, no disallowance be made against the assessee. Therefore, the A.O. is directed to verify the facts and pass the order afresh in accordance with Law. The assessee is directed to provide all necessary information and documents to the AO, accordingly this ground no.2 is allowed for statistical purpose. Disallowance of interest paid on TDS - assessee submits that the interest paid by the assessee is not a penalty and compensatory in nature and is allowable deduction under section 37 - HELD THAT:- Hon ble Apex Court in Prakash Cotton Mills Vs CIT [ 1993 (4) TMI 3 - SUPREME COURT ] held that whenever any statutory impost paid by an assessee by way of damages or penalty or interest is claimed as an allowable expenditure under section 37(1), the assessing authority is required to examine the scheme of the provisions of the relevant statute providing for the payment of such impost notwithstanding the nomenclature of the impost as given by the statute, to find whether it is compensatory or penal in nature. The authority has to allow deduction under section 37(1) wherever such examination reveals the concerned impost to be purely compensatory in nature. Considering the fact that the assessee has paid interest of TDS, which is statutory impost, paid by the assessee and is compensatory in nature and thus is allowable deduction. Hence, we direct the AO to allow the interest paid by assessee on TDS. In the result, the ground No. 3 is allowed. Disallowance u/s.14A - assessee submits that during the financial year relevant to the assessment period under consideration, the assessee has not shown any exempt income, therefore there should not be any disallowance under section 14A - HELD THAT:- As relying on Cheminvest Ltd. [ 2009 (8) TMI 126 - ITAT DELHI-B ] considering the fact the A.O. has not identified any exempt income earned by the assessee during the year, thus the A.O. was not justified in making disallowance under section 14A. Ground No. 4 of the appeal is allowed.
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2021 (4) TMI 984
Penalty order under section 271(1)(c) - wrong claim of deductions u/s.54EC and 54F of the Act against the Long Term Capital Gain (LTCG) earned on sale of land situated at Vesu, Surat - deduction u/s.54EC allowed to the assessee on the amount invested within the specified period and not on the amount invested after the specified period - HELD THAT:- In CIT Vs Reliance Petroproducts Limited [ 2010 (3) TMI 80 - SUPREME COURT ] holds that quantum and penalty are parallel proceedings wherein each and every disallowance/addition made in former does not ipso facto attract latter penal provision. As the assessee has furnished all the particulars regarding claim of deduction u/s.54EC and 54F of the Act in the Return of Income, and during the course of assessment proceedings, all the material facts relating to investment in Bonds u/s.54EC and specified account 54F of the Act were disclosed to the assessing officer. The assessee also explained that he had received the amount of sale consideration in piecemeal manner and invested the said amount of ₹ 1,50,00,000/- u/s.54EC of the Act, in three different financial years, that is, F.Y. 2009-10, 2010-11 and 2011-12. Therefore, we noticed that no fault has been found by the ld. CIT(A) with the particulars submitted by the assessee in its Return of income. Besides, as we noted above that the charge against which the penalty is to be levied is not specific and when the charge itself is not specific and is vague, the penalty should not be levied. Hence, we are not inclined to accept the contention of the ld. CIT(A) in confirming the penalty imposed by assessing officer under section 271(1) (c ) of the Act, therefore we delete the penalty - Decided in favour of assessee.
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2021 (4) TMI 983
Exemption u/s 10(37) - qualify definition of Compulsory acquisition - Whether acquisition of impugned agricultural land by Surat Municipal Corporation (SMC) eligible for exemption? - AO has disallowed the claim u/s 10(37) on the ground that the assessee has sold the land voluntarily, and it is not case of compulsory acquisition of land by SMC - HELD THAT- As relying on Satishbhai M Patel [ 2019 (12) TMI 1291 - ITAT SURAT ] the assessee is eligible for exemption under section 10(37) of the Act. Consequently, the AO is directed to allow exemption under section 10(37) of the Act. In view of this, ground of appeal of the assessee is allowed
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Corporate Laws
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2021 (4) TMI 994
Maintainability of application - Direction to investigate the issue of fake four (4) no. of TDRs - seeking refund of money along with interest - HELD THAT:- While the Respondent has denied receiving any instruction with respect to opening TDR accounts, it has not been denied that no such cheque had been issued to the Bank. We are, however, not convinced as to how a cheque issued in the name of Allahabad Bank can be deposited in the account of a third party - Prima facie, there seems to be an element of fraud in this case. An investigation with respect to the said purported fraud is already underway. This is clear from the letter of Assistant Commission of Police (I), Economic Offence Wing, Detective Department; Kolkata Police dated 05.02.2021, addressed to the Applicant herein that apprises the Applicant of the progress made in the FIR filed by the Applicant. Since, the investigation is already under progress and has reached the advanced stage where arrests have also been made; it would not be appropriate to issue direction upon the CBI to investigate the matter - This Tribunal can exercise its powers only as envisaged under the Companies Act, 2013. The said Act does not confer the power upon this Tribunal to direct the CBI to investigate a case. This Tribunal, therefore, cannot direct the CBI to investigate the case. The present application has been filed under section 290(n) of the Companies Act, 2013. That section empowers the company liquidator to apply to the Tribunal for such orders or directions as may be necessary for the winding up of the Company. The present application is not for winding up of the company and therefore, is also not maintainable under section 290(n) of the Companies Act, 2013. Direction upon the Respondent to refund the money - HELD THAT:- We are not inclined towards granting the same since the same is the subject matter of the aforementioned investigation. The present application is not maintainable on any ground - Application dismissed as not maintainable.
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Securities / SEBI
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2021 (4) TMI 1032
Fraudulent collective investment scheme - HELD THAT:- The applicants company and their agents were engaged in promoting the scheme of the company by selling certificates with a promise of higher rate of interest on the eventuality of the plans of term, hence, it can be said that the activity of the applicants' company appears to be covered under Section 2 (c) of the Act, 1978 and therefore, promotion of such scheme, which is banned under Section 3 of the Act, 1978 is punishable under Section 4 of the same Act, 1978, regarding which, there is sufficient evidence present for framing of charge against the applicants. As regards framing of charge under Section 10 of Protection of Depositors Interest Act, 2005, report of the Competent Authority does not appear to be a condition precedent for lodging of FIR or framing of charge against the persons concerned. Section 13 of the Act, 2005 empowers the Special Court to take cognizance of the offence without being committed the case to it. As the Court of Sessions Judge is notified under Section 4 of the Act and also that there being no procedure prescribed for filing of complaint in this Act, shows that the provisions under the Code of Criminal Procedure are applicable, hence, lodging of FIR under Section 10 of the Act, 2005 is well within the law. Further there is evidence present that depositors were defrauded by the HBN Company in which the applicants are directors, which is prima-facie case for framing charge under Section 10 of the Act, 2005. Hence, after considering on all the submission and the material present in the charge-sheet against these applicants, this Court is of the opinion that prima-facie case for framing of charge against these applicants, framed by the trial Court, is present. Hence, all the revision petitions are liable to be dismissed, which are dismissed accordingly.
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Insolvency & Bankruptcy
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2021 (4) TMI 1001
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - time limitation - HELD THAT:- It is seen from the invoices which are filed by the Operational Creditor are all raised in the months of April and June 2017 and the present Application is being filed on 16.12.2019 and as such the present Application under Section 9 of IBC, 2016 falls well within the period of limitation, as Annexure II(6) at Page No. 37 of the typed set statement of account maintained of the Corporate Debtor in its ledger has also been filed by the Operational Creditor showing the principal sum as outstanding. Further, it is also seen that the Corporate Debtor has not replied to the Demand Notice sent by the Operational Creditor and has also not brought to the notice of the Operational Creditor any dispute which is pending in relation to the said transaction. The Operational Creditor has proved the existence of an 'Operational debt' and its 'default' on the part of the Corporate Debtor and in the absence of any objection being raised by the Corporate Debtor, the Corporate Debtor has committed 'default' in the repayment of the 'Operational debt' to the Operational Creditor and in the said circumstances we are constrained to initiate the CIRP in relation to the Corporate Debtor. Monetary limit for initiation of CIRP - HELD THAT:- In relation to the pecuniary jurisdiction enhanced from ₹ 1 lakh to ₹ 1 crore on and from 24.03.2020, it is seen the present Application was filed before this Tribunal on 16.12.2019 and as such this Tribunal has got pecuniary jurisdiction to entertain the present Application. The Petition, as filed by the Operational Creditor, is required to be admitted under Section 9(5) of the IBC, 2016 - Petition admitted - moratorium declared.
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2021 (4) TMI 999
Directions to the Resolution Professional to effectively handover the unit of the Corporate Debtor for carrying business as per the lease agreement dated 29.09.2020 and release of goods belonging to applicant - Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, it is not in dispute that Corporate Debtor was a going concern at the time of commencement of CIRP. Hence, it was the obligation on the part of RP to keep it as a going concern subject to difficulties/lockdown being imposed on account of Covid-19 pandemic. It is again reiterated that the MoU dated 02.01.2020 was in operation and had a balance period of almost three years, when the Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP). There was a lock-in-period of two years. The goods worth of ₹ 4.00 Crores and more belonging to the Applicant was also lying at the plants, hence, on the removal of lockdown or lifting of restrictions, the Applicant could start the operations without any difficulties. In this situation, we are not able to appreciate as to what prompted RP to not to continue with this arrangement, particularly when the Applicant was already having such arrangement since 2017 and had all the competency and all the resources to continue with the same arrangement and MoU dated 02.01.2020 was still valid. There are two clauses in the definition of claim as per Section 3(6) of the Code. Clause (a) covers right to receive payment. It is important to note that this right is defined in very wide manner and covers various kinds of rights which may arise out of contract or judgment or even disputed. Thus, if claims of applicant are disputed by the RP still it would fall under the definition of claims. Assuming for a moment that it is claimed that payment of old dues was made by applicant and, there is no provision for refund of that, either in MoU dated 02.01.2020 or lease agreement dated 30.09.2020, hence, not admissible. Our answer to this possibility is that first of all these dues were no payable by Applicant under both these agreements and, secondly, lease agreement has not been performed, hence, having regard to the term equitable used in clause (a), the applicant is entitled to get refund of the same on equitable considerations which squarely apply to the facts of the case. Further, provisions of clause (b) can be applied for payment of compensation for breach of MoU on account of premature termination of such MoU (refer clause 12 of MoU). In addition to this, this clause can also be applied to get suitable remedy for breach of lease agreement even if it is disputed by Corporate Debtor. Apart from maximization of value of assets of Corporate Debtor there are three more objects which are relevant for our purposes and are of equal importance. These objects are (1) to promote entrepreneurship (2) availability of credit and (3) balance the interest of all the stakeholders. If we pose a question to ourselves whether Applicant's claims fall under all the three above objects. Even a layman can answer it so. Having arrived at such conclusion, we also state that preamble of any statute is not only a guiding force to find the legislative intent and policy in enacting a statute but such preamble is also equivalent to provisions of law which can be resorted to decide issues arising under that statute. It is absolutely clear that the issues raised in this application can be said both as in relation to or arising out of insolvency resolution and a claim against the Corporate Debtor. Therefore, even if some financial obligation becomes payable by the Corporate Debtor, in our view, the same needs to be met by the Corporate Debtor. Further, CoC is involved and such actions have taken place under their knowledge after certain stage i.e. after publication of advertisement dated 31.07.2017 and resolution for termination of MoU as well as for execution of lease agreement has been approved by CoC and thereafter, these problems have happened, hence, in case the Corporate Debtor does not have resources to meet such obligations, the members of CoC are liable to pay the same. Application allowed.
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2021 (4) TMI 995
Seeking stay of Certificate Case proceedings initiated under section 33(c) of the Industrial Disputes Act, 1947 - moratorium ongoing - compliance with the workmen's demand - HELD THAT:- It is trite law that the Moratorium under section 14(1) will apply to all proceedings of whatsoever nature pending before any Court, Tribunal or Authority. The only exception to the Moratorium is the writ jurisdiction of the Hon'ble High Courts and Hon'ble Supreme Court - It is also apposite to mention here that in terms of section 238 of the Insolvency and Bankruptcy Code, 2016 the provisions of the Code shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being enforced. This is a fit case to restrain the Respondent No. 2 from proceeding any further with the Certificate Case, until the moratorium in terms of section 14(1) of the Insolvency and Bankruptcy Code, 2016 ends - this order shall be brought to the notice of the Respondent No. 2 by the applicant/RP on the next date of hearing, i.e. 13.04.2021 - List this matter on 20/05/2021.
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2021 (4) TMI 993
Assets forming part of Block No. 2 of the Schedule of Assets of the Corporate Debtor - Inclusion of moveable assets and/or aluminium scrap materials lying in the factory premises - moveable assets and/or scrap materials including the aluminium scrap materials lying in the factory premises of the Corporate Debtor (in liquidation) forming part of Block No. 1 of the Schedule of Assets of the Corporate Debtor (in liquidation) - HELD THAT:- From the materials available on record, the ownership of the aluminium scrap in question cannot be conclusively established one way or the other. Therefore, neither the successful auction purchaser nor the Rishabraj Logistics Limited can actually be said to be entitled to take away the aluminium scrap in question - In the absence of any documents to conclusively establish the ownership of the aluminium scrap, the Liquidator is entitled to presume that the same belongs to the corporate debtor until proved otherwise, if nothing else merely on the basis that the scrap in question was found on the premises of the Corporate Debtor and there is no dispute to this. The documents in the form of the alleged rental agreement and the subsequent addendum do not really establish anything. No rentals are envisaged to be paid under these documents. What is actually envisaged is payment of miscellaneous expenditure in regard to this scrap. From this it cannot be established that the goods in question belongs to Rishabraj Logistics Limited. Therefore, at this point of time we refrain from commenting on the ownership aspect. The successful auction purchaser i.e. Rekha Halder, Proprietor of Sayan Enterprises does not really have the right to take away the aluminium scrap lying inside the various shops, which did not ever form part of the auction process - Application dismissed.
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Service Tax
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2021 (4) TMI 1004
CENVAT Credit - rendering free service and warranty labour charges - appellant has not paid any service tax on the said taxable service and the appellant has also not maintained separate accounts of input services utilized for providing exempted services - HELD THAT:- The cost of these services are included in the cost of the product accounted at sales showroom and VAT has been paid at the time of sale of the vehicle which is cleared from the cenvat reversal at sales showroom under Rule 6(3A) - learned Commissioner neglected the facts that the income accounted in the Books of Account are through notional entries and these costs are included in the cost of product as confirmed in the refund order. The confirmation of demand of ₹ 23,725/- under Rule 6(3)(i) of Cenvat Credit Rules, 2004 is not sustainable in law - appeal allowed - decided in favor of appellant.
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2021 (4) TMI 1041
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - entitlement to take advantage of CENVAT credit on input tax under the scheme or not - whether the same has to be treated as pre-deposit under the Scheme or not? - after issuance of show cause notice on 7.9.2018, the respondent did file service tax returns and claimed CENVAT credit - HELD THAT:- The dispute in the present case is that the appellants have disallowed the pre-deposit of ₹ 1,45,87,081/- i.e., amount of CENVAT which is the subject matter of the show cause notice while considering the application preferred in the SVLDR Scheme. The learned Single Judge has allowed the writ petition and has directed the Designated Committee to accept the declaration filed by the petitioner/respondent in the prescribed format as final and issue a modified Form No.SVLDRS-3 giving credit to the sum of ₹ 4,15,14,081/- as deposit and collect the remaining sum as tax dues and on payment of the said dues, issue a discharge certificate under the Scheme. The record of the case reveal that there is a total non compliance of Rule 6 of the CENVAT Credit Rules and the respondent has submitted the invoices pertaining to the year 2013 in the year 2019 which is not during the regime of CENVAT Credit Rules, but during the regime of GST - In the considered opinion of this Court, the learned Single Judge has not at all considered the impact of Rule 6 of the CENVAT Credit Rules, 2017 as invoices were of the year 2013-2014 which is much beyond the period of one year and therefore, the claim of the respondent could not have been appropriated in respect of the amount of ₹ 4,15,14,081/-. Another important aspect of the case is that the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 does not have any authority to modify the SVLDS-3 at all. When once the appellants have adjusted the claim of respondent as the CENVAT credit of ₹ 4,15,14,081/- availed by the respondent and subsequently, utilized, is an inadmissible CENVAT credit and availment of the same is proposed to be denied in show cause notice. Therefore, in the light of Rule 6(1) of the CENVAT Credit Rules, 2017, by no stretch of imagination the respondent was entitled to claim CENVAT credit. It is an undisputed fact that the respondent has not filed ST-3 returns till the intervention of the department and the assessee however filed a declaration in the year 2019, after introduction of GST. As the respondent has not filed the GST TRAN-1, he is not eligible on account of Rule 6(1) of the CENVAT Credit Rules, 2017. The Designated Committee was justified in passing the order which was subject matter of challenge in the writ petition - Decided in favor of Revenue.
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Central Excise
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2021 (4) TMI 1052
Sale of mortgaged property for recovery of excise dues - priority of secured debt over excise duty dues - Petitioner has purchased all the security that was owned by borrowers - HELD THAT:- In the present case as well there is only purchase of land by Petitioner in the auction conducted by DRT, Kolkata and not transfer or disposal of business or trade in whole or in part but only a transfer or disposal of mere landed asset, the proviso to section 11 of the Excise Act would not be attracted. A secured creditor has priority over crown debts/excise dues. Going forward, this is a case where petitioner has purchased land in an auction conducted pursuant to proceedings under the RDDB Act by the Debt Recovery Tribunal Kolkata of the property belonging to the Respondent No. 3 company. Petitioner is not a successor of the business of the erstwhile owner in business or trade viz: of Respondent No.3, having acquired the property without any charge independent of business or trade of the previous owner, nor the Petitioner is in custody or possession of the said property as a successor of the previous owner against whom there was a demand of excise duty. This is also not a case where the entire unit, i. e. the entire business itself was purchased by the Petitioner - Excise duty liability can be fastened only on that person who had purchased the entire unit as a going concern and not on a person who had purchased land and building or machinery of the erstwhile concern. It is only in such cases that the buyer would be responsible to discharge the liability of Central Excise. Otherwise the purchaser cannot be fastened on the liability relating to the dues of the government unless there is a specific statutory provision to that effect. Petitioner is an auction purchaser of the said property and has not acquired the business of the Respondent No.3- borrower. True also that the said purchase as per the order of Confirmation of Sale is subject to worker s liability and other existing liabilities of the owners of the said property. Admittedly, the worker s dues have been settled. Excise dues are not dues which arise out of land or building. Such liabilities could be in the form of property tax, municipal tax, other types of cess relating to property etc. but cannot mean excise duty dues, which arise out of manufacture - the language in the confirmation of the Sale is with reference to the liabilities relating to the said property and not with reference to the business of the Respondent No.3- borrower; we therefore hold that since Petitioner has not purchased the entire unit with business, it is not liable for the dues of the Excise Department. As far as the reliance of the learned Counsel for the Petitioner on the decision of this Court in the case of STATE BANK OF INDIA VERSUS THE STATE OF MAHARASHTRA AND ORS. [ 2020 (12) TMI 1214 - BOMBAY HIGH COURT] is concerned, there appears to be no doubt about the conclusion in the said decision that if any Central Statute creates priority of a charge in favour of a secured creditor, the same will rank above the charge in favour of a State for a tax due thereunder. That the mortgage of the secured creditor will get prior charge over the revenue. The impugned notices dated 29th / 30 th January, 2008, 17th October, 2008 and 14th May, 2009 relating to excise duty dues are quashed and set aside - Petition allowed - decided in favor of petitioner.
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2021 (4) TMI 1042
Recovery of Excise Duty - Compounded Levy Scheme - closure of production units - Time Limitation - HELD THAT:- This Court is of the considered opinion that the judgment of the Hon'ble Supreme Court in M/S. BHUWALKA STEEL INDUSTRIES LTD. ANOTHER VERSUS UNION OF INDIA OTHERS [ 2017 (3) TMI 1357 - SUPREME COURT] is regarding the general question which was raised before the Hon'ble Apex Court and further, the said judgment has been referred to the larger bench. However, the fact remains that the petitioner in the present case had opted for Compounded Levy Scheme which was not dealt with by the Hon'ble Apex Court. Therefore, the case on hand is to be decided independently with reference to the terms and conditions of the Compounded Levy Scheme which was framed under the provisions of the Act and Rules. When the petitioner admits that he was paying the excise duty under the Compounded Levy Scheme and he is bound by the scheme and further, the petitioner admitted the fact that the production unit was closed with effect from 26.04.1999, the petitioner is liable to pay excise duty for the whole year as claimed by the Department. Apart from this, the writ petition is filed after a lapse of 7 1/2 years from the date of passing of the impugned order on 28.07.2011. The writ petitions stand dismissed both on merits as well as on the ground of latches.
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CST, VAT & Sales Tax
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2021 (4) TMI 1047
Refund claim - non-production of C-Form - Contempt petition filed or not - HELD THAT:- Admittedly, the petitioner has not filed a contempt petition for the purported violation of the directions contained in the aforementioned order dated 25.09.2017. The petitioner, nearly after 19 months or so, has filed the instant writ petition - Prima facie, the petitioner appears to be guilty of procrastination. It appears that the petitioner has, possibly, preferred the instant writ petition, as the petitioner cannot, now, take recourse to a statutory remedy. List the matter on 25.05.2021.
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2021 (4) TMI 1046
Eligibility for exemption - M.S. Wires and M.S. Rods - consequential addition of purchase value of M.S.Rod with the gross turnover and taxable turnover in assessment is sustainable in law - HELD THAT:- The sales tax authorities cannot ignore the DIC certificate issued in favour of the Petitioner expressly granting it exemption from payment of sales tax on M.S.Wires produced from M.S. Rods as raw material - The instant case is concerned with AY 1997-98. The STO, the ACST and the Tribunal were called upon to answer the question whether for the said AY the Petitioner could avail the sales tax exemption on the strength of the DIC certificate and whether it fulfilled the conditions therein? The fact that in a subsequent year, from 1st April 2000 onwards, when such exemption was no longer available, the Petitioner took a different stand cannot deprive the Petitioner from getting exemption for AY 1997-98 in terms of the certificate of the DIC. The tax liability for each AY had to be decided on the law prevailing in that AY and if for such AY the Petitioner fulfilled the condition for getting tax exemption, then such benefit could not be denied to it - The counter affidavit filed by the respondents-sales tax authorities is telling. It is said that the Sales Tax Department had decided to cancel the eligibility certificates for sales tax incentives. As we have said the eligibility certificates were issued by the Department of Industries and Commerce and could not be cancelled by the Sales Tax Authorities. The consequential addition of the purchase value of M.S. Rods in the gross turnover and tax turnover of the Petitioner in the assessment order in question cannot be justified and is hereby set aside. Revision petition disposed off.
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2021 (4) TMI 1057
Validity of assessment order - Transfer of title of goods - seeking direction to First Appellate Authority to hear appeal without insisting for pre-deposit as required under Section 62(5) of the PVAT Act - HELD THAT:- Considering the peculiar facts and circumstances of the case on record, in our view, the ends of justice would be met if the respondent is directed to deposit a further sum of ₹ 5 crores within four weeks from today. SLP disposed off.
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2021 (4) TMI 1040
Validity of remanding the matter to the Assessing Authority for passing fresh reassessment order after verifying transactions under dispute in detail - said transactions had already been verified by the JCCT (Appeals) and findings on the same were recorded by him in the order impugned before the Hon'ble Tribunal - HELD THAT:- From close scrutiny of the order passed by the first appellate authority, it is evident that the first appellate authority has adjudicated the controversy on merits and therefore, the tribunal, which is the last fact finding authority was bound to verify the documents on record and to give a finding on law and facts - instead of adjudicating the controversy on merits, the tribunal has remanded the matter to the adjudicating authority. An unnecessary order of remand gives longitivity to the litigation, which is not warranted. The substantial question of law is answered in favour of the petitioner and against the respondent. The impugned judgment dated 20.08.2018 passed by the tribunal is hereby quashed - Appeal allowed in part.
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2021 (4) TMI 1037
Levy of sales tax on the entire sales turnover - eligibility of tax deduction as per Rule-3 of the KST Rules - HELD THAT:- It is evident that the dealer is supposed to pay net tax to the Government on its sales and net tax for the purposes of this Act, means the difference between the 'output tax and input tax', which is the amount of net tax. Input tax is levied only in case of sale of taxable goods through a dealer - In the instant case, the KSBCL is exempt from tax and therefore, the petitioner does not pay any tax on the purchases made by it and there is not Input tax in the hands of the petitioner. Thus, the petitioner has no Input tax in its hands. The petitioner therefore, cannot be permitted to contend that it is liable to pay tax only on value addition and not on the entire amount. The substantial questions of law are answered against the petitioner and in favour of the respondent - Petition dismissed.
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2021 (4) TMI 1036
Disallowance of input tax credit - purchasing dealers either been deregistered or had failed to discharge their tax liability paid on such sales - failure to discharge the burden under Section 70 of the KVAT Act of proving the correctness and genuineness of the claim - HELD THAT:- The Tribunal has relied upon the decision of this Court passed in THE STATE OF KARNATAKA VERSUS SRI RAJESH JAIN [ 2017 (1) TMI 333 - KARNATAKA HIGH COURT] where it was held that Once the purchaser dealer-assessee satisfactorily demonstrates that while purchasing goods, he has paid the amount of VAT to the selling dealer, the matter should end so far as his entitlement to the claim input tax credit. The substantial questions of law involved in this petition are covered by the aforesaid decision of the Division Bench of this Court - there are no merit in this petition and the substantial questions of law are answered against the petitioner and in favour of the assessee - petition dismissed.
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2021 (4) TMI 1035
Adjustment of amount which is due and payable to the petitioner as assessee towards their liability under the amount payable as per the Amnesty Scheme - HELD THAT:- The issue involved in the instant writ petition regarding adjustment of amount which is due and payable to the petitioner as assessee towards their liability under the amount payable as per the Amnesty Scheme is no more res integra. In the matter of M/S. STEEL EXCHANGE INDIA LTD VERSUS THE ASST. COMMISSIONER, STATE OF KERALA [ 2020 (7) TMI 756 - KERALA HIGH COURT] it has been held that The department has not preferred any appeal against the said order so as to cast any doubt on the entitlement of the petitioner for the refund amount. In that scenario, when amounts are liable to be paid by the petitioner to the department for the purposes of getting the benefit of the Amnesty Scheme, an adjustment of the refund amounts due to the petitioner towards whatever amount is found payable by the petitioner, would not in any manner offend the terms of the Scheme because it is simply an adjustment towards the payment to be made under the Scheme and the amount was appropriated. In this view of the matter, non adjustment of the amount due and payable to the petitioner being assessee for the assessment years 2006-07, 2007-08, 2013-14 and 2016-17 towards their liability under the Amnesty Scheme 2020 cannot be justified - petition allowed.
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Wealth tax
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2021 (4) TMI 1019
Wealth tax assessment - valuation of assets under the Wealth Tax Act - valuation of immovable assets and revaluation thereof - HELD THAT:- The revaluation of the properties at Banjara Hills and Madhapur needs reconsideration by the AO in the light of the CBDT Circular No.3 dated 28.09.1957 above and if the value of the assets was fixed by the Assessing Officer in A.Y 2002-03 in accordance with law, then he has to adopt the same for the next two succeeding A.Ys. The Assessing Officer is directed accordingly. Further, the additional ground raised by the assessee with regard to the chargeability of Wealth Tax on Madhapur property is admitted and is also remanded to the file of the Assessing Officer for consideration in accordance with law. Assessing Officer is also directed to verify the existence of movable assets during the financial year and if they do not exist, then Assessing Officer cannot make any addition in this regard.
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2021 (4) TMI 1010
Wealth tax assessment - assessee wrongly admitted the value of the land at Baraniputhur as an asset in the AY 2008-09, although, the assessee was not owner of the land in that assessment year- HELD THAT:- As the assessee became owner of the land during the period relevant to the AY 2009-10 only. However, the assessee pleads that when the compliances were made subsequent to the receipt of notices u/s.17B for various AYs in 2016, the assessee committed an error and admitted the value of land in the earlier year return itself i.e. in AY 2008-09. In this regard, the assessee placed reliance on the copies of Sale Deed, Encumbrance Certificate, etc. We are of the considered view that when the assessee became owner of the impugned land? i.e. whether during the period relevant to the AY 2008-09 or from the AY 2009-10, requires a fresh examination. We deem it fit to remit these issues to the file of the AO for a fresh examination. The assessee shall place relevant material in support of its contentions before the AO and comply with the requirements in accordance with law. The AO on due examination and after affording adequate opportunity to the assessee, shall determine the issues in accordance with law. Appeals filed by the assessee are tread as allowed for statistical purposes.
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Indian Laws
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2021 (4) TMI 1058
Availability of beds for COVID patients - availability of medical Oxygen in the NCT of Delhi - Efficient usage of Oxygen - testing facilities for Covid-19 through the RT-PCR test - critical medicines required for the treatment of serious Covid-19 patients falling in short supply - Wastages of vaccine. Availability of beds for COVID patients - HELD THAT:- Ms.Roli Khare, Director, Ministry of Health and Family Welfare has stated that the Central Government is endeavoring to make more beds available. She states that presently the hospitals of the Central Government are occupied by non-covid patients in need of critical care, such as patients who require dialysis, or suffering from cancer and other serious disease. Considering the fact that the number of COVID patients, who are now needing hospitals if for greater than the numbers which were turning up last year even during the peak of the pandemic, the Central Government should urgently look to allocate more beds among their hospitals for COVID patients - Central Government directed to look into the aspect of bed allocation for COVID patients keeping in view the prevailing circumstances, and report in this regard on the next date of hearing i.e. 22.04.2021. Availability of medical Oxygen in the NCT of Delhi - HELD THAT:- Looking to the number of COVID positive patients all over the country, and the pattern which is emerging with regard to the spread of the viral infection and the severity with which it is impacting people in different States and regions, we direct the Central Government to review the allocation of Oxygen on a dynamic basis i.e. on a day to day basis, so that its utilization is achieved in the most efficient manner. Efficient usage of Oxygen - HELD THAT:- The need for oxygen is now. Any delay in this regard would lead to loss of precious lives. We, therefore, direct the Central Government to implement the said decision forthwith, and make available oxygen to hospitals which are running out of their supplies, lest there is grave loss of life suffered by patients being treated thereat. Ramping up of the testing facilities for Covid-19 through the RT-PCR test - HELD THAT:- For the purpose of setting up of Covid testing facilities, the entrepreneurs/ doctors have to obtain clearance from the Indian Council for Medical Research (ICMR). It has been brought to our notice that the procedure for such clearances is also highly time consuming. We do not wish to, in any way, impinge on the authority of ICMR, and we do not expect the ICMR to relax its standards in the matter of granting its permissions and clearances. However, looking to the present day situation, we direct the ICMR to give top priority for such clearances so that the RTPCR Labs could be set up or expanded without any delay. Delay in preparation of RT-PCR Test Reports - HELD THAT:- The patients who undergo the RT-PCR test,s are required to provide their Aadhar Cards. Despite that being the position, the testing agencies are required to fill up detailed forms online, which take up to 15 minutes per form. We, therefore, direct the Central Government, and the ICMR, to review the form in which the information is required to be uploaded by the testing agencies, so as to reduce their burden and wastage of time, as this appears to be acting as a bottleneck in the matter of preparation of reports. Critical medicines required for the treatment of serious Covid-19 patients falling in short supply, and also being sold at a premium in the black market - HELD THAT:- The Central Government should dynamically review the distribution of Remedesivir in the States and Union Territories on a daily basis, on the basis of the need, assessed on the basis of the serious active Covid patients, who need to be administered the said Drug. This is essential to maximise the efficient use of the said Drug - Looking to the present day situation, there can be no doubt that a case is made out for exercise of its power by the Central Government/ Controller under the aforesaid provisions of law. At the same time, the interests of the Patent holders/ licensees should be kept in mind, since it on account of their investments, inventions and hard work that such like medicines are made available to the public at large. The best course would be encourage the existing manufacturers to ramp up their production on a war footing. They should also be encouraged to grant voluntary licenses to other entities to manufacture the requisite drugs. Wastage of vaccines - as many as about 44 lakhs vaccines have been wasted out of the 10 crores vaccines allocated to different States - HELD THAT:- This is because of the restriction with regard to the age, or category of people who are entitled to take the vaccine. According to the present dispensation, people who are above 45 years of age are entitled to take the vaccine. The Government has recently announced that from 01.05.2021, all above the age of 18 years would be entitled to take the vaccine. In our view, wastage of even a single dose of vaccine, when the same is proving to be life saving, would be a criminal waste. We are informed that each vial of the vaccine has 10 doses. Once the vial is opened, it has to be either fully consumed, or the remainder goes waste. It should be possible for the Government(s) to devise ways and means so as to register volunteers who may be below the age group of 45 years, and above the age of 18 years who could be called upon to take the residual doses of vaccine, in case, there are doses left unutilised after, say, 05.00 P.M on each day. That would ensure that all the doses are fully utilised, and not wasted - We direct the Government to look into this aspect forthwith and report status on the next date. List on 22.04.2021.
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2021 (4) TMI 1056
Territorial Jurisdiction - Forum for Arbitration outside India - Foreign award - two companies incorporated in India can choose a forum for arbitration outside India or not - award made at forum outside India, is foreign award under Part II of the Arbitration and Conciliation Act, 1996 or not - enforceabillity of such award. Seat of the arbitral proceedings in the present case - HELD THAT:- Clause 6 of the settlement agreement extracted above would show that arbitration is to be resolved in Zurich in accordance with the Rules of Conciliation and Arbitration of the ICC. In similar circumstances, in MANKASTU IMPEX PRIVATE LIMITED VERSUS AIRVISUAL LIMITED [ 2020 (3) TMI 302 - SUPREME COURT] , where disputes were to be resolved by arbitration administered in Hong Kong , the Court concluded that On a plain reading of the arbitration agreement, it is clear that the reference to Hong Kong as place of arbitration is not a simple reference as the venue for the arbitral proceedings; but a reference to Hong Kong is for final resolution by arbitration administered in Hong Kong. The agreement between the parties that the dispute shall be referred to and finally resolved by arbitration administered in Hong Kong clearly suggests that the parties have agreed that the arbitration be seated at Hong Kong and that laws of Hong Kong shall govern the arbitration proceedings as well as have power of judicial review over the arbitration award. The closest connection test strongly relied upon by Mr. Himani would only apply if it is unclear that a seat has been designated either by the parties or by the tribunal. In this case, the seat has clearly been designated both by the parties and by the tribunal, and has been accepted by both the parties - it is not possible to accept Mr. Himani s contention that the seat of arbitration ought to be held to be Mumbai in the facts of the present case. Part I and Part II of the Arbitration Act are mutually exclusive - HELD THAT:- This Court categorically held that a foreign award cannot be refused to be enforced merely because it was made between two Indian parties, under pari materia provisions of the Foreign Awards Act. The Court also held that since this plea had never been taken in any of the courts below, it was not available to the appellant to raise the said plea before this Court for the first time - It must be remembered that when a foreign award is sought to be enforced under Part II of the Arbitration Act, the explanation to section 47 makes it clear that it is the High Court alone which is the court on whose doors the applicant must knock. This is sought to be answered by Shri Himani by stating that since the explanation to section 47 is in direct collision with section 10(3) of the Commercial Courts Act, vide section 21 of the Commercial Courts Act, section 10(3) would prevail over the explanation to section 47. It will be noted that section 10(1) applies to international commercial arbitrations, and applications or appeals arising therefrom, under both Parts I and II of the Arbitration Act. When applications or appeals arise out of such arbitrations under Part I, where the place of arbitration is in India, undoubtedly, the definition of international commercial arbitration in section 2(1)(f) will govern. However, when applied to Part II, international commercial arbitration has reference to a place of arbitration which is international in the sense of the arbitration taking place outside India. Thus construed, there is no clash at all between section 10 of the Commercial Courts Act and the explanation to section 47 of the Arbitration Act, as an arbitration resulting in a foreign award, as defined under section 44 of the Arbitration Act, will be enforceable only in a High Court under section 10(1) of the Commercial Courts Act, and not in a district court under section 10(2) or section 10(3). Appeal disposed off.
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2021 (4) TMI 982
Fabricating false deed of agreement for sale for the purpose of being shielded from legal action in the disproportionate assets case - seizure of currency in addition to jewellery and property papers - assets disproportionate to the Appellant s known sources of income - Section 195(1)(b) of the Code of Criminal Procedure, 1973 - HELD THAT:- In the present case, the allegation against Accused Nos. 2 and 3 is that they colluded with Appellant/Accused No. 1 to create a false sale deed, and gave false explanation of escrow arrangement amongst the three parties, to justify how the seized currency came to be in the Appellant s possession. This was done to exonerate the Appellant/Accused No. 1 and recover the seized currency at the stage of investigation itself, which is deemed to be a stage of a judicial proceeding under Explanation 2 of Section 193. Had the genuineness of the sale deed been accepted, the Respondent may have erroneously opined that the seized currency belonged to Accused No. 2, and consequently abandoned proceedings under Section 13(1)(e), PC Act against the Appellant. Therefore Section 193, IPC is squarely applicable to the allegations at hand. Whether an offence under Section 193, IPC committed at the stage of investigation, prior to production of the false evidence before the Trial Court by a person who is not yet party to proceedings before the Trial Court, is an offence in relation to a proceeding in any court under Section 195(1)(b)(i), CrPC? - HELD THAT:- The presence of in relation to under Section 195(1)(b)(i) means that Iqbal Singh Marwah would not have blanket application to every case where a complaint is lodged in respect of an offence specified under that Section. However, on the facts of Bandekar Brothers, this was not a situation in which the offence complained of did not have a reasonably close nexus with the court proceedings. The offence of giving false evidence was committed by the respondents, who were party to the court proceedings, for the purpose of leading the Court to form an erroneous opinion on a point material to the result of the proceedings. Hence it could be said that though the offence was not committed during the course of the court proceedings, it was certainly committed in relation to such proceedings. The construction of the words in relation to must be controlled by the overarching principle applicable to Section 195(1)(b), CrPC as stated in PATEL LALJIBHAI SOMABHAI VERSUS THE STATE OF GUJARAT [ 1971 (5) TMI 75 - SUPREME COURT] and SACHIDA NAND SINGH AND ANR. VERSUS. STATE OF BIHAR AND ANR. [ 1998 (2) TMI 583 - SUPREME COURT] , which was affirmed by the Constitution Bench in IQBAL SINGH MARWAH ANR. VERSUS MEENAKSHI MARWAH ANR. [ 2005 (3) TMI 750 - SUPREME COURT] . That is, even if the offence is committed prior to giving of the fabricated evidence in court, it must have a direct or reasonably close nexus with the court proceedings. In case the bar under Section 195(1)(b)(i) is applied to offences committed during the course of investigation, the Court may think it fit to wait till the completion of trial to evaluate whether a complaint should be made or not. Subsequently, the Court may be of the opinion that in the larger scheme of things the alleged fabrication of evidence during investigation has not had any material impact on the trial, and decline to initiate prosecution for the same. The investigation agency cannot be compelled to take a chance and wait for the trial court to form its opinion in each and every case Whether the words stage of a judicial proceeding under Explanation 2 to Section 193, IPC can be equated with proceeding in any court under Section 195(1)(b)(i), CrPC? - HELD THAT:- This Court has, in some instances, opined that where the law deems proceedings before a certain authority to be judicial proceedings , the same would be considered as proceedings in any court under Section 195(1)(b)(i), CrPC. Therefore, if the offence under Section 193, IPC is committed before such an authority, the written complaint of that authority is mandatorily required for trial of the offence - in the present case, it is not the Trial Court but the Respondent authority/agency which has been directly impacted due to fabrication of evidence by the Appellants/accused. The Appellants intention was not to mislead the Trial Court, at least not at the first instance. Rather, their goal was to ensure that the Appellant/Accused No. 1 was cleared of wrongdoing at the stage of investigation itself. It was after being charged under Section 193, IPC, that the Appellants/accused reiterated the fictitious escrow arrangement story before the Trial Court so as to prove their innocence. Hence it cannot be said that the offence under Sections 120B read with 193, IPC was committed by the Appellants in relation to a proceeding in a court under Section 195(1)(b)(i), CrPC. The questions of law stated in paragraph 6 (supra)stand answered against the Appellants/accused. Even on merits, we do not find any valid reason to interfere with the concurrent findings of the Trial Court and the High Court. The High Court has rightly observed that the Appellant/Accused No. 1 had not raised the defence of holding the money in escrow for Accused Nos. 2 and 3 at the time of search conducted at his house on 24.01.2001. The supposed agreement of sale was also not produced - The stamp paper on which the sale deed was made was also proved to be illegal. Hence it is apparent that the Appellants/accused entered into an elaborate conspiracy and attempted to create a false circumstance of escrow transaction for the purpose of shielding Appellant/Accused No. 1 from prosecution. In fact, the High Court has shown great lenity by reducing the sentences awarded to the Appellants/accused in view of their advanced age and delay in completion of the trial. In view of the gravity of the offence, no further benefit can be granted to them in this regard. Appeal dismissed.
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