TMI Tax Updates - e-Newsletter
April 9, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Recovery of interest on GST - Adjustment of amount of rebate claims against the interest on delayed payment of goods and service tax by the appellant - since the interest liability has not been adjudicated, in that circumstances, the recovery of interest from the appellant is not in terms of law and the said recovery cannot be made - there are no merit in the impugned orders, the same are set-aside. - AT
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Income Tax:
Denying the registration u/s.12AA - Charitable activity u/s 2(15) - In any event, CIT (Exemption) should not have come to conclusion that the objects of the appellant society are not charitable in nature and the genuineness of the activities are not established based on the above observations, these observations even are held to be correct cannot lead to the conclusion that the objects are not charitable and genuineness of the activities are in doubt. - AT
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Income Tax:
Levy of penalty u/s.271(1)(c) - estimation of disallowance at 50% of commission and improvement expenditure - in this case, the additions were made on the basis of estimation and as discussed in the cases referred above, the penalty cannot be levied on the basis of estimated additions and thus, it is not a fit case for levying penalty. - AT
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Income Tax:
Addition on account of bogus creditors - non-producing the parties in person - When the purchases from the parties were accepted and the sales made out of those purchases were not doubted, the payments outstanding in the name of those parties were accepted in the subsequent year, then there was no reason to doubt the genuineness of the outstanding balance. - AT
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Income Tax:
ITAT dismissed an appeal solely on account of non-appearance of the appellant - the first application aforesaid of the petitioner, filed in or about March, 2017, for restoration of the appeal dismissed for non-prosecution on 10th December, 2015, was within three years and the ITAT erred in dismissing the same invoking the amendment to Section 254(2) requiring application thereunder to be filed within six months and in not going into the sufficiency of the reasons given by the petitioner for non-appearance. - Appeal restored before ITAT - HC
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Income Tax:
Offences punishable u/s 276C(1) r.w.s 201 and 204 of IPC - unaccounted financial transaction - until and unless it is determined that the unaccounted transactions unearthed during search were liable for payment of tax, penalty or interest, no prosecution could be launched on the ground of attempt to evade such tax, penalty or interest. As a result, the very prosecution launched against the respondent being premature and illegal cannot be allowed to continue. - HC
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Customs:
Refund of Additional Customs Duty - refund rejected on the ground that the claimant is not the importer of the goods - The agreement is sufficient evidence to satisfy that the ownership of the goods was transferred from Doosan Infracore India Pvt.Ltd. to the appellant herein - before the goods were cleared for home consumption as per slump sale agreement, the liability to pay all duties including SAD on the imported goods is on the appellant. Consequent to slump sale agreement, not only the liability to pay duty but also the right to claim SAD refund also is passed on to the appellant herein - sanction of refund to the appellant is legal and proper. - AT
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Customs:
Recording of investigation by way of videography - the need for comprehensive videography, and the installation of CCTV cameras in all investigating agencies has been recognised and directions issued as early as in 2018. - In the absence of any instructions that are reported regarding the status of CCTV cameras in the DRI offices at Kolkata, it is directed that the process of investigation of the petitioners be videographed and the data stored till completion of the proceedings. - HC
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Customs:
Refund claim redemption fine and penalty, since the demand was set aside - Revenue contended that the claim is unsupported by documents - applicability of time limitation - refund claim is after 14 years of alleged deposit - All the contentions of the revenue rejected - HC
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Indian Laws:
Validity of Guidelines issued by the Institute of Chartered Accountants of India (ICAI) - specified number (Cap) of tax audit assignments - The guidelines which are impugned in the High Court and consequent disciplinary proceedings initiated against various chartered accountants throughout the country is an issue of public importance affecting Chartered Accountants as well as the citizens who have to obtain compulsory tax audits. - Transfer Petitions are allowed. - SC
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IBC:
Priority to the first charge holder - Secured Creditor - relinquishment of security interest - Sub-classification inter-se the Secured Creditors in the distribution mechanism adopted in a Resolution Plan of the Corporate Debtor - The impugned order holding that the inter-se priorities amongst the Secured Creditors will remain valid and prevail in distribution of assets in liquidation cannot be sustained - AT
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IBC:
Initiation of CIRP - time limitation - OTS Proposals and Settlement requests and balance sheet referred, it is not found that the Application under Section 7 could be said to be barred by Limitation. - AT
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IBC:
Initiation of CIRP - Appeal against the admission of application - The Corporate Debtor's main contention is that the amounts paid by the Operational Creditor and its financial statements do not match. It is not for the Adjudicating Authority to ascertain, investigate, or fix the exact amount of liability at the admission stage. After the admission of the petition, it is the duty of the Resolution Professional to collate the claims and ascertain the liability. - AT
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Central Excise:
Benefit of SVLDRS - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - In the considered opinion of this Court, by virtue of provisions of Section 125(1)(d) of the Act of 2019, a person who has been served with the notice to show cause under indirect tax enactment for an erroneous refund or refund shall be ineligible to make a declaration under the Scheme to claim benefits thereof and it does not make any difference that the notice to show cause issued stands culminated in passing of the order creating the demand of amount of erroneous refund. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (4) TMI 307
Recovery of interest on GST - Adjustment of amount of rebate claims against the interest on delayed payment of goods and service tax by the appellant - Section 11A of the Central Excise Act, 1944 readwith Section 79 of the CGST Act, 2017 - HELD THAT:- Admittedly, in the case in hand, the appellant has disputed the interest liability and the same has not been adjudicated, in that circumstances, the recovery of interest from the appellant is not in terms of law and the said recovery cannot be made - there are no merit in the impugned orders, the same are set-aside. Appeal allowed - decided in favor of appellant.
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Income Tax
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2021 (4) TMI 310
Estimation of income - bogus purchases - CIT(A) was of the opinion that actual purchases have been made from grey market in cash and such grey market purchases have been supported by purchase bills from Parvati Exports and Mukti Exports thus 25% of the total addition should have been made - HELD THAT:- There is no denying that before the first appellate authority on 21.102016, the partner of Parvati Exports appeared and whose statement has been recorded by the first appellate authority. A perusal of the statement clearly shows that the partner has categorically admitted the transaction with M/s Jain Jewellery. When the bills were shown to the partner, the partner admitted that these bills have been signed by himself. Shri Lodha also explained the mode of payment received from the assessee. Since the purchases with M/s Parvati exports have been duly verified, we do not find any reason why addition should have been made in this respect. We, accordingly, direct the Assessing Officer to delete the addition on account of purchases made from M/s Parvati Exports. In so far as purchases made from Mukti exports is concerned, we find that the appellant has submitted flight/air tickets copy from Delhi to Surat. We also find that sales made out of purchases have been duly accepted by the Assessing Officer. Notice issued u/s 133(6) of the Act was fully served and replied by M/s Mukti Exports though the Assessing Officer has dismissed the reply stating that the envelopes have same handwriting but we do not find any force in this finding of the Assessing Officer as he is not a Forensic expert. Entire addition has been made solely on the statement of Shri Bhanwar Lal Jain, whose statement was never confronted to the assessee nor any opportunity of cross examination was given. We, therefore, do not find any merit in this addition also. Considering the facts of the case in totality, appeal of the assessee is allowed and the appeal of the Revenue is dismissed.
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2021 (4) TMI 308
Addition on account of bogus creditors - no cognizance of genuineness of 21 parties as those parties has not given any confirmation or not appeared before the Assessing Officer - CIT- A deleted the addition - HELD THAT:- In the present case the assessee disclosed the bank account numbers, name of the bank of the parties vide letter dated 07.02.2013 and 20.02.2013. During the Assessment Proceedings, the assessee also furnished the confirmations of outstanding balance obtained from the said parties, but those parties could not be produced for the reason that a prolonged litigation was going on and the parties were absconding. The assessee furnished the details of their bank account wherein the payment made by the assessee in subsequent year was credited. In fact, the Assessing Officer accepted the purchases made from these parties in whose names, balances were outstanding but only doubted the genuineness. When the purchases from the parties were accepted and the sales made out of those purchases were not doubted, the payments outstanding in the name of those parties were accepted in the subsequent year, then there was no reason to doubt the genuineness of the outstanding balance. These findings given by the CIT(A) are correct as per the records. Merely, non-producing the parties in person despite knowing that these parties are identified parties, cannot determine the non-genuineness of the transaction. Thus, the CIT(A) rightly deleted the addition. Addition relating to job work charge - CIT-A deleted the addition - as per assessee the job work was related to the sister concern and, therefore, the CIT(A) has rightly deleted this addition - HELD THAT:- CIT(A) has given a categorical finding that the Assessing Officer has not brought any comparable cases in respect of increase in job work charges as there is increase in labour and electricity cost which was categorically proved by the assessee before the CIT(A). Ground No. 4 5 are dismissed. Disallowance relating to deduction u/s 80IC - proof of manufacturing activity as undertaken by assessee - HELD THAT:- It is pertinent to note that TMT bars made from MS Ingots suffer from a deficiency in tensile properties, and there arises inconsistency in tensile strength and elongation. But TMT bars produced from continuous casting MS Billets show a remarkable consistency of properties because of the high tensile strength and elongation. - AR submitted that it is a manufacturing activity itself and thus, the assessee has rightly claimed the deduction under Section 80IC which is also accepted in subsequent years by the Revenue. As per the CIT(A) and the Assessing Officer the assessee has not provided all the requisites in respect of claiming deduction under Section 80IC of the Act. Therefore, we are remanding back this issue to the file of the AO for verifying whether the assessee is carrying out any manufacturing activity or not as envisaged under Section 80IC for claiming deduction and if the revenue has allowed the deduction in subsequent years, why the same should not be allowed in this year. Hence, the issue relating to deduction under Section 80IC in the present assessment year is restored to the file of the Assessing Officer. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground of assessee is allowed for statistical purpose.
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2021 (4) TMI 305
Revision u/s 263 - reopening of assessment - information received from DIT (Inv.)-II, New Delhi that assessee has received accommodation entries - HELD THAT:- Pr. CIT has wrongly assumed the jurisdiction under section 263 of the I. T. Act, 1961. It is an admitted fact that in A.Y. 2009-2010 the A.O. has recorded similar reasons for reopening of the assessment. However, the same have been quashed by the Tribunal [ 2019 (4) TMI 357 - ITAT DELHI ] A.O. in the impugned re-assessment order has mentioned the information received from DIT (Inv.)-II, New Delhi that assessee has received accommodation entries of ₹ 40 lakhs. However, A.O. was satisfied with the explanation of assessee and did not make any addition after examining the issue in detail vide Order Dated 30.06.2014. It would, therefore, show that A.O. has taken one of the possible view under the Law. Therefore, on the same set of facts the Learned Pr. CIT should not have taken different view by exercising powers under section 263 of the I.T. Act, 1961. Since the re-assessment proceedings are already declared illegal and bad in Law in A.Y. 2009- 2010 in the case of assessee on the same reasons, therefore, in assessment year under appeal also initiation of reassessment proceedings is illegal and bad in Law. Therefore, the same cannot be subject to proceedings under section 263 of the I.T. Act, 1961. This issue is, therefore, covered by Order of the ITAT, Delhi G-Bench, New Delhi in the case of M/s. Shahi Exports Pvt. Ltd., New Delhi vs., The Pr. CIT, Circle-1, New Delhi [ 2021 (3) TMI 1008 - ITAT DELHI ] In view of the above, we set aside the Order of the Learned Pr. CIT-8, New Delhi and quash the Order passed under section 263 of the I.T. Act, 1961 and restore the Order of the A.O. Accordingly, appeal of the Assessee is allowed.
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2021 (4) TMI 316
Offences punishable under section 276C(1) of the Income Tax Act, 1961 read with sections 201 and 204 of IPC - unaccounted financial transaction as concluded as per documents found in search - Documents destroyed by the respondent/assessee - During the course of search, the respondent took out a piece of paper from his wallet and tore it in front of the officers which contained certain unaccounted loan transactions with several persons / entities -Whether the complaints presented by the authorized officer Sri.Sunil Goutam are without authority of law? - Whether the Principal Director of Income Tax (Investigation) Bangalore was competent to issue authorization to prosecute the respondent for the alleged offences punishable under section 276C(1) of the Income Tax Act, 1961 read with sections 201 and 204 of IPC? - HELD THAT:- As per the notification issued by the Government of India, Ministry of Finance dated 13.11.2014, in exercise of the powers conferred by sub-sections (1) and (2) of section 120 of the Income Tax Act, 1961 and in supersession of the earlier notifications of the Government of India, the Central Board of Direct Taxes the authorization made in favour of Sri.T.Sunil Goutam, Deputy Director of Income Tax (Investigation), Unit-3(1), Bengaluru, is in consonance with the provisions of the Income Tax Act and does not suffer from any error or illegality as sought to be made out by learned Senior Counsel for respondent and hence, the contentions urged by learned Senior Counsel for respondent in this regard are rejected. Prosecution under section 276C(1) of the Income Tax Act - The gist of the offence under section 276C(1) is the wilfull attempt to evade any tax, penalty or interest chargeable or imposable or under reports of the income. What is made punishable is attempt to evade tax, penalty or interest and not the actual evasion of the tax . The expression attempt is nowhere defined under the Act or IPC. In legal parlance, an attempt is understood to mean an act or movement towards commission of a intended crime . It is doing something in the direction of commission of offence . Viewed in that sense in order to render the accused / respondent guilty of attempt to evade tax, penalty or interest, it must be shown that he has done some positive act with an intention to evade any tax, penalty or interest as held in PREM DASS vs. INCOME TAX OFFICER [ 1999 (2) TMI 6 - SUPREME COURT ] that a positive act on the part of the accused is required to be established to bring home the charge against the accused for the offence under section 276C(2) of the Act. In the instant cases, the only circumstance relied on by the learned counsel for petitioner / complainant in support of the alleged charges is that, during the search action, certain unaccounted loan transaction with the several persons / entities were detected and it was ascertained that the respondent had advanced huge amount of loan to these persons / entities and the said unaccounted financial transactions were not disclosed in his returns of income for the relevant years and that the respondent had received huge amount of interest on the said unaccounted loan. These allegations, even if accepted as true, the same do not prima facie constitute offences under section 276C(1) of the Income Tax Act. Tax, penalty or interest could be evaded provided tax or penalty is chargeable or imposable in respect of the above transactions. There is no presumption under law that every unaccounted transaction would lead to imposition of tax, penalty or interest. Therefore, until and unless it is determined that the unaccounted transactions unearthed during search were liable for payment of tax, penalty or interest, no prosecution could be launched on the ground of attempt to evade such tax, penalty or interest. As a result, the very prosecution launched against the respondent being premature and illegal cannot be allowed to continue. No justifiable reason to interfere with the impugned orders. As the prosecution initiated against the respondent is bad in law and contrary to the procedure prescribed under the Code of Criminal Procedure and the provisions of the Income Tax Act, the revision petitions are liable to be dismissed.
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2021 (4) TMI 304
Levy of penalty u/s.271(1)(c) - estimation of disallowance at 50% of commission and improvement expenditure - HELD THAT:- It is a basic need of the provisions of law that definite finding is required to be recorded by the Assessing Officer for reaching to a conclusion with regard to concealment of income or furnishing of inaccurate particulars of income and without any such findings, there cannot be any question of imposition of any penalty u/s.271(1)(c) - We find that the Ld. CIT(Appeals) relying on the written submission filed by the assessee adjudicated the claim of commission and also improvement expenditure but failed to make specific enquiry regarding the same and came to a conclusion based on only materials on record - disallowance upheld by the Ld. CIT(Appeals) is merely on estimate basis without any categorical statement of facts whether there is concealment of income‟ or furnishing of inaccurate particulars of income‟. More so, when the disallowances have been enforced by the Ld. CIT(Appeals) on estimation basis, in such scenario, the settled legal position is that no penalty u/s.271(1)(c) of the Act cannot be imposed When the bedrock of instant penalty is on the estimated addition, the same cannot be sustained. Therefore we are of the considered view that in this case, the additions were made on the basis of estimation and as discussed in the cases referred above, the penalty cannot be levied on the basis of estimated additions and thus, it is not a fit case for levying penalty. Accordingly, we set aside the order of the Ld. CIT(Appeals) and direct the Assessing Officer to delete the penalty from the hands of the assessee. Appeal of the assessee is allowed.
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2021 (4) TMI 299
Exemption u/s 54 - Long Term Capital Gains earned by the assessee being invested in another property - Capital Gains invested in the property purchased in name of her married daughter and son-in-law - AO had restricted the claim of exemption to the extent of assessee s share in new property purchased, being 34 % only on her own share, while the Ld.CIT(A) allowed the entire claim on noting the fact that the entire capital gains earned by the assessee had been invested in the new property purchased - only contention of the Revenue being that the decision of Dinesh Verma [ 2015 (7) TMI 486 - PUNJAB HARYANA HIGH COURT] has not been followed by the Ld. CIT(A) - HELD THAT:- We find that the Ld.CIT(A) had taken note of the said decision. He had, we find, taken note of the decision and applied the same to the facts of the present case noting categorically that though the said decision pertained to claim of exemption u/s 54 B of the Act, yet the ratio would be applicable in the instant case also. Assessee had invested the entire Long Term Capital Gains in the purchase of residential property within the stipulated time, while the AO had restricted the exemption to 34 % of the Long Term Capital Gains without acknowledging the fact that the assessee had invested the entire Long Term Capital Gains in the purchase of residential property. We have gone through the decision of the Hon ble Jurisdictional High Court, reproduced in the impugned order, and find that it had allowed exemption of capital gains, to the extent of the sale consideration invested by the assessee in the new asset, denying the exemption to the extent invested by his wife, on noting the fact that the investments in the new property had been made both by the assessee and his wife. The Hon ble High Court held that the assessee would be entitled to the benefit of exemption u/s 54 B only on the amount invested by him after the sale of his original property. Drawing parity from the same, the Ld. CIT(A), we find, has in the present case, noted the fact that the assessee has invested her entire sale consideration in the new property and, therefore, is entitled to exemption of the entire amount of Long Term Capital Gains. We do not find any infirmity in the same.- Decided against revenue.
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2021 (4) TMI 315
Maintainability of appeal on low tax effect - Adhoc provision from the book value of stock to arrive the closing stock is permissible - HELD the appellant submits that the above appeal is not pursued by the Revenue on account of the Low Tax Effect in terms of Circular No.17/2019 dated 08.08.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to ₹ 1 crore - HELD THAT:- Tax Case Appeal is dismissed as withdrawn on account of the Low Tax Effect. The substantial questions of law framed are left open. In the event the tax effect in this case is above the threshold limit fixed in the said Circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits.
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2021 (4) TMI 297
TP Adjustment - Comparable selection - Functional dissimilarity - HELD THAT:- Referring to functions performed by assessee under ITeS segment companies functionally dissimilar with that of assessee need to be deselected from final list. Companies whose RPT is more than 25% the same may be excluded from the finalist.
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2021 (4) TMI 295
Disallowance of 20% of the land development expenses - assessee failed to establish the expenses are genuine as the most of the vouchers produced were self-made and also not in proper order for verification - contention of the assessee is that disallowance of 20% of total expenditure is very high - HELD THAT:- Considering the totality of the facts of the case, we direct the AO to disallow 10% of the total expenditure instead of 20% made by him. Accordingly, the ground Nos. 2 3 raised on this issue are partly allowed. Disallowance u/s. 43B - contribution to PF ESCI under the head 'employee benefit expenses not paid in time - late payments were not allowable expenditure u/s. 43B, the AO disallowed the same u/s. 43B - CIT(A) confirmed the same - HELD THAT:- We remit the issue back to the file of the AO with a direction to decide the same afresh as per the decision of Hon'ble Delhi High Court in the case of CIT Vs. Bharat Hotels Ltd [ 2018 (9) TMI 798 - DELHI HIGH COURT] .
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2021 (4) TMI 294
Lease income from property let out - to be assessed as business income or income from house property - HELD THAT:- In the original return of income filed by the assessee, it had offered it as business income. During the scrutiny proceedings, the assessee filed revised return of income wherein claimed the rent received as income from house property and claimed depreciation as per the Act for the whole year. On careful reading of the agreements, we find that the assets leased out to the Thumbay Hospital India Pvt. Ltd. were using as commercial assets before letting it out by the assessee. Therefore, subsequently, the rent receipts on these commercial assets is to be treated as business income under Chapter - IV-D under the head profits and gains of business or profession but not under Chapter VI-C under the head income from house property as claimed by the assessee. As decided on M/S ULTRAVISION ASSOCIATES AND VICE-VERSA [ 2016 (3) TMI 1109 - ITAT RAJKOT] there was a dispute between the assessee and the AO, as the AO treated the income of the assessee as income from house property whereas the assessee had offered it as business income . On appeal, before the ITAT, the coordinate bench has decided the issue in favour of the assessee that letting out of commercial assets is to be treated as business income. We uphold the order of the CIT(A) in treating the rental receipts from the leased out commercial assets of the assessee as business income and dismiss the grounds raised by the assessee on this issue. The authorities below have rightly taxed the rental income as business income. - Decided against assessee.
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2021 (4) TMI 293
Denying the registration u/s.12AA - Charitable activity u/s 2(15) - CIT(E) holding that the activities of Trust are not charitable in nature and thereby refusing to grant registration u/s.12AA - whether the activities of the Trust are charitable in nature and Trust is eligible for registration u/s. 12AA? - HELD THAT:- The mere fact that the bills for the expenditure in the name of third party does not lead to the conclusion that the expenditure was not incurred by the appellant society. As rightly submitted by the ld. AR, it can be instance of reimbursement of expenditure incurred by resource person/speaker at the seminar. In any event, it is an item of assessment which can only be considered at the time of assessment. The other reason assigned by the ld. CIT (Exemption) to come to the conclusion that the funds collected remain unutilized for the purpose of pursuit of the objects of the appellant society but were utilized only for the purpose of making the FDs with the bank. Again this is an issue of assessment which can only be considered at the time of assessment, not at the time of grant of registration. The very basis of order of the ld. CIT (Exemption) cannot be sustained in the eyes of law. In any event, CIT (Exemption) should not have come to conclusion that the objects of the appellant society are not charitable in nature and the genuineness of the activities are not established based on the above observations, these observations even are held to be correct cannot lead to the conclusion that the objects are not charitable and genuineness of the activities are in doubt. Commissioner of Income Tax (Exemption) had not referred to any material on record to show that income of trust was applied for the purposes other than the purposes for which the appellant society was formed. Therefore, the order of the ld. Commissioner of Income Tax (Exemption) is set-aside. The ld. Commissioner of Income Tax (Exemption) is directed to grant the registration u/s. 12AA - Decided in favour of assessee.
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2021 (4) TMI 291
Addition u/s 68 - bogus LTCG - information had been received by the Investigation Wing, Chandigarh, from the Directorate of Income Tax(Investigation)- Kolkata about large scale tax evasion in the form of Bogus Long Term Capital Gain claimed by various beneficiaries of the Om Sons Group - Use of penny stocks being sold/purchased to facilitate these transactions, which included the assessee also - assessee contended that the said amount had been disclosed in the hands of M/s Rohit Traders, a partnership firm of the group and in which the assessee was a partner, before the Settlement Commission and taxes duly paid thereon - HELD THAT:- As perused the contents of the statement of facts filed before the Settlement Commission in the case of M/s Rohit Traders and find merit in the contention of the assessee. Undoubtedly the impugned long term capital gain of the assessee alongwith the facilitation charges thereon, stand categorically surrendered as undisclosed income of M/s Rohit Traders,before the Settlement Commission. The Revenue has not controverted the said fact. The impugned income having been categorically taxed as undisclosed income of the assessees firm, we fail to understand why it should be taxed in the hands of the assessee also, which would only result in taxing the same income twice. The observation of the Hon ble Settlement Commission on which the Revenue has relied for dismissing assessee's claim, that they refrain from making any comment in respect of claim of utilization of additional income of M/s Rohit Traders in the hands of partners, in our view, only serves the limited purpose of the Commission refraining from commenting on assessee's which were not there before them. This observation, we find, does not negate the admitted and undisputed fact of surrender of the impugned capital gains of the assessee in the hands of M/s Rohit Traders. We direct the deletion of addition made on account of Long Term Capital Gains and expenditure incurred on account of the same in the hands of the assessee - Decided in favour of assessee. Disallowance of deduction on account of interest paid on housing loan u/s 24, and repayment of the principal amount of housing loan deduction on account of interest earned on saving bank account u/s 80C 80 TTA respectively - claim denied to the assessee for the reason that the necessary documentary evidences were not filed - HELD THAT:- A perusal of the copy of the sale deed of the said property shows that it was purchased in the joint name of the assessee and her husband. The ledger accounts of the housing loan and the assessees capital account in the firm, M/ s Rohit Traders,at P. B 39 - 41 show that loan was being repaid by her, including interest. All these documents were there before the lower authorities and no infirmity has been pointed out in them. Even before us the Ld.DR was unable to point out any discrepancy in the said documents. What emerges therefore as fact is that the assessee was co- owner of property on which housing loan taken was being repaid by her. This fact is corroborated by the bank certificate placed before us at P. B 38, certifying home loan to be in the name of the assessee along-with her husband. The contention of the Revenue that the assessee had failed to establish its claim of deduction on account of repayment of housing loan and interest thereon, merits no consideration. The voluminous evidences filed by the assessee, as stated above, clearly evidence her claim. And all the above documents were there before the lower authorities, who we find have conveniently ignored the same, placing entire thrust on the interest certificate issued by the bank for rejecting the assessee's claim. We hold that the assessee had duly evidenced its claim for deduction u/s 24 of interest on housing loan and u/s 80C of repayment of housing loan - AO is accordingly directed to allow the aforesaid claims to the assessee. Deduction u/s 80 TTA relating to interest earned on saving denied for lack of evidence - Undoubtedly the assessee has claimed deduction of savings bank interest which has been shown as income of the assessee. This income returned is not disputed by the Revenue, therefore, we fail to understand the logic for denial of deduction of the same income. Accordingly we allow the claim of the assessee to deduction u/s 80 TTA of the Act of interest earned on savings bank account.
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2021 (4) TMI 290
Estimation of income - bogus purchases - HELD THAT:- As notices issued by the AO u/s 133(6) to the said parties were returned un-served by the postal authorities with the remarks 'not known . In response to a query raised by the AO, the assessee filed during the course of assessment proceedings copy of audited balance sheet, P L account, audit report, bank statement, purchase/sale bill (party-wise) stock register, purchase/sale bill and mode of payment. AO observed that the assessee could not file transport receipts, octroi receipts, receipts from weighbridge, excise gate pass, goods inward register. We are of the considered view that the estimation be made @ 6% of the disputed purchases. Accordingly, we set aside the order of the Ld. CIT(A) and direct the AO to estimate profit @ 6% on the disputed purchases to tax. - Decided partly in favour of assessee.
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2021 (4) TMI 311
ITAT dismissed an appeal solely on account of non-appearance of the appellant - HELD THAT:- In the present case, admittedly, there is no adjudication by the ITAT on merits. In our opinion, the order of the ITAT, dismissing the appeal of the petitioner for non-prosecution and not on merits, as the ITAT was required to do notwithstanding the non-appearance of the petitioner when the appeal was called for hearing, is violative of Rule 24 supra and thus void. Though the petitioner applied as aforesaid to the ITAT, not once but twice, for hearing of his appeal on merits but the ITAT refused to correct the illegality committed. In the circumstances, notwithstanding the delay on the part of the petitioner in impugning the order dated 10th December, 2015, the same has but to be quashed and cannot be sustained. We are unable to agree with the contention of the counsel for the respondent, that the action of the ITAT, of dismissing the appeal for non-prosecution instead of on merits and of refusal to restore the same notwithstanding applications of the petitioner, is merely an irregularity. We have enquired from the counsels, whether the Rules aforesaid provide for any limitation for applying under the proviso to Rule 24, for setting aside/recall of an ex parte order albeit on merits. The counsels are unanimous, that for making an application under the proviso to Rule 24, no limitation is provided. Even otherwise, the first application aforesaid of the petitioner, filed in or about March, 2017, for restoration of the appeal dismissed for non-prosecution on 10th December, 2015, was within three years and the ITAT erred in dismissing the same invoking the amendment to Section 254(2) requiring application thereunder to be filed within six months and in not going into the sufficiency of the reasons given by the petitioner for non-appearance. Thus the need for us to go into the question of, whether amendment of Section 254(2) of the Income Tax Act w.e.f 1st June, 2016, is prospective or retrospective, does not arise inasmuch as the application filed by the petitioner in March, 2017, also invoking, Rule 24 of the ITAT Rules, was within time and could not have been dismissed applying the provisions of limitation applicable to Section 254(2) of the Act; rather, we entertain doubt whether in the face of the specific provision in the Rules, an application for setting aside of an ex-parte order would at all lie under Section 254(2) of the Act. Appeal restored before ITAT
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2021 (4) TMI 289
Delay of 156 days in filing the appeal before the CIT(A) - HELD THAT:- CIT(Appeals) did not dispute the facts stated in the affidavit. In the case of CIT v. Sanmac Motor Finance Ltd. [ 2009 (4) TMI 331 - MADRAS HIGH COURT] took the view that if the explanation for the delay does not smack of malafides and is not by way of dilatory strategy, the court must condone the delay. According to CIT(A), the bonafides of assessee has to be seen. According to him, in the case of assessee, reasons given are not attributable to any bonafides and therefore the delay in filing the appeal should not be condoned. As already stated the reasons given by the assessee before the CIT(Appeals) in the form of an affidavit for the delay in filing the appeal have not been disputed by the CIT(Appeals). In such circumstances, there existed bonafide reasons for not filing the appeal before the CIT(A) in time. In the circumstances, the CIT(A) should have condoned the delay in filing the appeal - In the case of Sanmac Motor Finance Ltd. (supra) will support the plea of assessee in the facts and circumstances of the case for condonation of delay in filing the appeal. We therefore condone the delay in filing the appeal by the assessee before the CIT(Appeals). The order of the CIT(Appeals) is set aside and the CIT(Appeals) is directed to decide the appeal on merits after affording the assessee opportunity of being heard. Appeal of assessee is treated as allowed.
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Customs
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2021 (4) TMI 303
Refund of Additional Customs Duty - refund rejected on the ground that the claimant is not the importer of the goods - benefit of N/N. 102/2007-Cus. - HELD THAT:- It can be seen that it is for the importer to file refund claim. The definition of importer as it stood prior to 2017 has been referred to by Ld. Counsel for appellant. From the definition, it can be seen that it is an inclusive definition wherein the importer includes any owner or person holding himself out to be the importer. The appellant has entered into slump sale agreement with Doosan Infracore India Pvt.Ltd. on 1.4.2015 for sale of Excavator Division. In the agreement it is stated that all assets and properties of the seller owned or used by the seller in connection with business would fall within acquired assets by the appellant herein. It is also stated that all tax benefits / receivables relating to inventory being transferred including but not limited to refund of SAD would be acquired assets from seller to buyer. After the slump sale agreement of the excavator division, the appellant has become the owner of the imported goods or can be said to be in the shoes of a person holding himself out to be the importer. Though IEC of Doosan Infracore India Pvt.Ltd. was used for clearance of the goods, it cannot be said that appellant is a total stranger to Doosan Infracore India Pvt.Ltd. So also, it cannot be said that the appellant does not have any ownership over the goods. The agreement is sufficient evidence to satisfy that the ownership of the goods was transferred from Doosan Infracore India Pvt.Ltd. to the appellant herein - before the goods were cleared for home consumption as per slump sale agreement, the liability to pay all duties including SAD on the imported goods is on the appellant. Consequent to slump sale agreement, not only the liability to pay duty but also the right to claim SAD refund also is passed on to the appellant herein - sanction of refund to the appellant is legal and proper. In the present case, there is no misuse or abuse of IEC code and the appellant being the owner of the goods has used IEC code of Doosan Infracore India Pvt.Ltd. for clearing the goods - There is no violation of condition of Notification No.102/2007 so as to deny the refund of SAD as the appellant would fit into the definition of importer - Appeal allowed - decided in favor of appellant.
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2021 (4) TMI 314
Refund claim redemption fine and penalty, since the demand was set aside - Revenue contended that the claim is unsupported by documents - applicability of time limitation - refund claim is after 14 years of alleged deposit - CEGAT did not direct refund of redemption fine and penalty - the consignment has been removed from the customs area and goods not available for confiscation. Refund is made by respondent without supporting documents - HELD THAT:- This ground is raised by the appellant without firstly taking note of the observation made by the Commissioner of Appeals in Annexure-B order wherein the claim of respondent with the documents available and produced by respondent has been accepted as sufficient for processing the claim of refund. The Department, if was desirous of challenging the said finding ought to have maintained an appeal before the CESTAT. Having not pursued the remedy against anything recorded on the proof now produced by the respondent, the ground that the refund Customs Appeal is made without supporting documents is unsustainable in law and fact, the contention is rejected. Time Limitation as per Section 27 of the Customs Act, 1962 - HELD THAT:- From a bare reading of Section 27, it is clear that Section 27 deals with refund of duty/interest. We have read the definition of 'duty' to ascertain whether 'duty' in any situation includes redemption fine and penalty as well. The definition of word 'duty' does not give an indication to the said effect. In other words, according to definition in Section 2(15) of Customs Act, 1962, 'duty' means duty leviable under the Act. Section 27, in our considered view, does not Customs Appeal No.3/2018 deal with a claim for redemption fine and penalty. The said contention is unsustainable and accordingly rejected. The next argument is that the Tribunal through orders dated 08.12.1988 and 01.03.1995 did not direct refund of redemption fine and penalty to the respondent - HELD THAT:- Had it been a case where the redemption fine and penalty are set aside, different considerations apply. Here is a case where the matter has been remitted to the primary authority for fresh decision. With a view to continuing to collect or demand or retain redemption fine/penalty, order to that effect is a condition precedent. In the absence of an order, the Department cannot continue to withhold what has been collected as redemption fine and penalty. Hence, the last ground canvassed by the appellant is also unsustainable in law and Customs Appeal accordingly rejected. The direction for refund of redemption fine amounting to ₹ 25 lakhs and penalty of ₹ 5 lakhs in favour of respondent is sustainable in law and fact - Appeal dismissed.
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2021 (4) TMI 312
Recording of investigation by way of videography - validity of summons issued - Smuggling - seizure of 15 kgs of gold - HELD THAT:- A Committee of experts appears to have been constituted to prepare a road map and standard operating procedure, and the response of various States have been sought. Central investigation agencies are also said to have supported this concept. After taking into account all these aspects, the Bench records that a centrally driven plan of action is the right approach and the plan of action should be implemented in a phased manner with a milestone based review mechanism. Supreme Court in D.K.Basu [ 1996 (12) TMI 350 - SUPREME COURT ] wherein the earlier directions that CCTV cameras be installed in all police station and prisons was made. In addition, an oversight mechanism was also directed to be created where an independent committee would study the footage from CCTV cameras and periodically publish reports of its observations. The matter was directed to be listed for periodic monitoring by the Supreme Court - the Supreme Court laments that the majority of the affidavits reports failed to disclose the exact positioning of the CCTV cameras and are bereft of details with regard to the total number of CCTV cameras, their working condition, whether they have recording facilities and for how many days/weeks the data will be stored. Thus the need for comprehensive videography, and the installation of CCTV cameras in all investigating agencies has been recognised and directions issued as early as in 2018. This appears to be a work in progress. Meanwhile Courts continue to be flooded with writ petitions of the present nature putting forth allegations and apprehensions of abuse and torture, both perceived and justified. This would be obviated had a mechanism been put in place to ensure recording of the investigation. Such a process would seek to serve the interests of not only the person under investigation, but also the investigating agency. In the absence of any instructions that are reported regarding the status of CCTV cameras in the DRI offices at Kolkata, it is directed that the process of investigation of the petitioners be videographed and the data stored till completion of the proceedings.
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Corporate Laws
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2021 (4) TMI 320
Winding up of Company - it was a specific case of the appellant, that on account of the defective material supplied by the respondent, the appellant had suffered huge losses and as such, it was the appellant who was entitled to receive the damages from the respondent - satisfaction of respondent s claim to the extent mentioned in the order impugned in the appeal - HELD THAT:- It is therefore well settled, that if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. It is equally well settled, that where the debt is undisputed, the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt. It is equally settled, that the principles on which the court acts are first, that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends - As to whether the defence of a Company is in good faith or as to whether it is of a substance and as to whether it is likely to succeed in point of law and as to whether the company adduces prima facie proof of the facts on which defence depends, would depend upon the facts of each case. Both the learned Company Judge as well as the Division Bench upon appreciation of the materials placed on record have found, that the defence as sought to be raised by the appellant with regard to the quality of the material supplied by the respondent being defective was by way of an afterthought. The Division Bench found, that when the appellant raised a dispute about the quality, the same was acknowledged by the respondent and it was reflected in its conduct by the grant of credit. It observed, that the respondent had fairly acknowledged the defects when there were any and it was reasonable to presume, that if there were any other defects, it would have recorded the same in some manner or the other. The Division Bench further found, that it was difficult to accept the case of the appellant, that the discussions with regard to defective material were only oral. In the present case, the Division Bench has not issued a direction to grant the interest as claimed by the respondent. On the contrary, it has declined to enter into the question, as to whether the appellant was also liable to pay the interest since the learned company judge had not referred to the said issue. The Division Bench therefore, while dismissing the appeal, has done so without prejudice to the respondent s contention regarding interest which may be claimed either by way of an application for clarification before the learned judge or by way of an appeal or by any other proceeding. The defence of the appellant could not be said to be bona fide, in good faith and of substance. - Appeal dismissed.
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2021 (4) TMI 292
Approval of scheme of amalgamation - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- From a perusal of the material brought on record, it appears that the Scheme of Amalgamation is fair, reasonable and is not detrimental to the Members or Creditors or contrary to public policy. Further, as per the Petition, the Scheme in question will bring about operational synergies of the combined entity, have a more efficient and cost-effective management system in view of consolidation of operations Consolidation and Synergies in business operations; Increase in net worth of the Transferee Company and will facilitate effective and fast mobilization of financial resources for meeting its increased capital expenditure for future expansion, etc. The procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the Scheme of Amalgamation, as approved by the Boards of Transferor Company, is hereby sanctioned. The procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the Scheme of Amalgamation, as approved - the scheme is sanctioned. Application allowed.
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Insolvency & Bankruptcy
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2021 (4) TMI 309
Maintainability of application - initiation of CIRP - Appeal against the admission of application - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - pre-existing dispute or not - Operational Debt or not - HELD THAT:- As per the General Agency Agreement between the Operational Creditor and the Corporate Debtor, the Corporate Debtor acted as an agent of the former in India and collected various payments due to the Operational Creditor's customers remitted the same to the Operational Creditor. The Operational Creditor has annexed various invoices and debit notes with the Petition as evidence of the claim amount. Since the Corporate Debtor was an agent and service provider of the Operational Creditor, the amounts due under the transactions would fall within the ambit of Operational Debt as defined under Section 5 (21) of the Insolvency and Bankruptcy Code 2016. Time Limitation - HELD THAT:- Section 7 of the I B Code comes into play on non-payment of debt when whole or any part or instalment of the amount of Debt has become due and payable and is not paid by the Corporate Debtor. When the Corporate Debtor acknowledges the liability before the expiration of three years, from that point fresh period of Limitation u/s 18 of the Limitation Act starts. But such acknowledgement must be before the expiration of the prescribed period of Limitation, including the fresh period of Limitation due to acknowledgement of the Debt, from time to time for the institution of proceeding under Section 7 of the Code. The limitation period started after the General Agency Agreement's termination, when demand was raised, and the default was committed by the Corporate Debtor. Therefore, the limitation period is regularly getting extended by implication of Section 18 of the Limitation Act. Thus it is clear that the Debt is not barred by Limitation. Pre-existing dispute or not - HELD THAT:- It is a settled position of law that once the Debt and default in question are proved, and the Corporate Debtor raised no prior dispute, it is mandatory for the Adjudicating Authority in an Application filed under Section 9 of the Code, admit the Petition for Initiation of CIRP. We believe that the Appellant's objection regarding the pre-existing dispute is not sustainable in the above circumstances - the Corporate Debtor owes a debt of more than Rupees One Lac, i.e. above the threshold limit, and it committed default in discharging the same. It also appears that there was no pre-existing dispute. The Corporate Debtor's main contention is that the amounts paid by the Operational Creditor and its financial statements do not match. It is not for the Adjudicating Authority to ascertain, investigate, or fix the exact amount of liability at the admission stage. After the admission of the petition, it is the duty of the Resolution Professional to collate the claims and ascertain the liability. Appeal dismissed.
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2021 (4) TMI 302
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make the repayment of its dues - time limitation - Appellant claims that the debt due and claimed before the Adjudicating Authority by the Bank was time-barred and thus the Application should not have been admitted - HELD THAT:- Hon'ble Supreme Court in the case of SESH NATH SINGH ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. [ 2021 (3) TMI 1183 - SUPREME COURT ] where it was held that Section 5 and Section 14 of the Limitation Act are not mutually exclusive. Even in a case where Section 14 does not strictly apply, the principles of Section 14 can be invoked to grant relief to an applicant under Section 5 of the Limitation Act by purposively construing sufficient cause . It is well settled that omission to refer to the correct section of a statute does not vitiate an order. The documents on record referred by Learned Counsel for Bank show series of Acknowledgments of debts by Corporate Debtor since date of NPA which extend period of limitation if Section 18 of Limitation Act is considered. Considering the Judgment of the Hon ble Supreme Court in Sesh Nath Singh, OTS Proposals and Settlement requests and balance sheet referred, it is not found that the Application under Section 7 could be said to be barred by Limitation. Appeal dismissed.
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2021 (4) TMI 301
Priority to the first charge holder - Secured Creditor - relinquishment of security interest - Sub-classification inter-se the Secured Creditors in the distribution mechanism adopted in a Resolution Plan of the Corporate Debtor - Appellant s claim that it was initially having first charge on the immovable and movable assets of the Company which was later changed to second charge is disputed by the Respondents by contending that in absence of Appellant substantiating its claim of holding second charge over immovable properties of Corporate Debtor and no certificate having been issued by ROC to such effect, no charge on the part of Appellant could be taken into account by the Liquidator. HELD THAT:- While it is true that the relinquishment of security interest affects the order of distribution, it is equally true that the Secured Creditor does not lose its status of being a Secured Creditor though he has elected to forego his right of enforcing security interest. Whether the Secured Creditor holds first charge or second charge is material only if the Secured Creditor elects to realise its security interest. A conjoint reading of Sections 52 and 53 of I B Code, leaves no room for doubt that the legislature in its wisdom thought it proper to provide an option to the Secured Creditor armed with a security interest to choose out of the two options viz. either enforce security interest against the asset out of liquidation estate which is the subject of security interest or relinquish the same and claim as Secured Creditor in the manner set out under Section 53(1)(b)(ii) ranking equal to other Secured Creditors. It is manifestly clear that in the event of a Secured Creditor electing to realise its security interest but failing to realise the whole amount due to it would be entitled to distribution of assets under Section 53(1)(e)(ii) for any amount that remains unpaid following the enforcement of security interest thereby ranking lower in priority as compared to a Secured Creditor who has relinquished its security interest to the liquidation estate and is entitled to distribution of assets under Section 53(1)(b)(ii) - It is significant to note that Section 53 has been given overriding effect and the non-obstanate clause contained in the very opening words of the Section leaves no room for doubt that the distribution mechanism provided thereunder applies in disregard of any provision to the contrary contained in any Central or State law in force. Of course first charge holder will have priority in realising its security interest if it elects to realize its security interest and does not relinquish the same. However, once a Secured Creditor opts to relinquish its security interest, the distribution of assets would be governed by the provision engrafted in Section 53(1)(b)(ii) whereunder all Secured Creditors having relinquished security interest rank equally and in the waterfall mechanism are second only to the insolvency resolution process costs and the liquidation costs. The Secured Creditors admittedly having relinquished their security interest to the liquidation estate, Section 53 would come into play and the Secured Creditors viz. Appellant and the Respondents 2 and 3 shall rank equally under Section 53(1)(b)(ii) for distribution of assets. Admittedly, Respondents 2 and 3 were first charge holders. They would have enjoyed priority in the event they had not relinquished their security interest. Once they elected for relinquishment of security interest, for distribution of assets they would be governed by the waterfall mechanism recognised under Section 53 of the I B Code mandating equal ranking amongst the Secured Creditors. Sale proceeds in such case have to be distributed equitably amongst the Secured Creditors who rank equally and it would be irrespective of any charge they were holding prior to relinquishment of security interest. In ICICI Bank vs. Sidco Leathers Ltd. Ors. [ 2006 (4) TMI 264 - SUPREME COURT ], the Hon ble Apex Court, while taking note of Section 48 of Transfer of Property Act, observed that the claim of first charge holder shall prevail over the claim of the second charge holder and where debts due to both the first charge holder and the second charge holder are to be realised from the property belonging to the mortgager, the first charge holder will have to be repaid first. - The Hon ble Apex Court observed that while enacting the Companies Act parliament cannot be held to have intended to deprive the first charge holder of the said right. Such a valuable right must be held to have been kept preserved. It referred to an earlier judgment titled Workmen of Firestone Tyre and Rubber Company of India vs. Management Ors. [ 1973 (3) TMI 134 - SUPREME COURT ] observing that if such valuable right of first charge holder was intended to be taken away, Parliament, while amending the Companies Act would have stated so explicitly. The view taken by the Adjudicating Authority on the basis of judgment of Hon ble Apex Court in ICICI Bank vs. Sidco Leathers Ltd. [ 2006 (4) TMI 264 - SUPREME COURT ] (which is pre-IBC), ignoring the mandate of Section 53 of I B Code which has an overriding effect and came to be enacted subsequent to the aforesaid judgment rendered by Hon ble Apex Court explicitly excluding operation of all Central and State legislations having provisions contrary to Section 53 of I B Code, is erroneous and cannot be supported. The impugned order holding that the inter-se priorities amongst the Secured Creditors will remain valid and prevail in distribution of assets in liquidation cannot be sustained - Appeal allowed.
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2021 (4) TMI 300
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt - existence of debt and dispute or not - HELD THAT:- Even though the Corporate Debtor admits categorically that there is amount due and payable, there is no default in making payment to the applicant - The debt and default are proved. The applicant herein has not proposed name of any Interim Resolution Professional. In view of the same, this Adjudicating Authority appoints Mr. Saradindu Jena is appointed as Interim Resolution Professional. Application admitted - moratorium declared.
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2021 (4) TMI 298
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Dues - existence of debt and dispute or not - HELD THAT:- The Financial Creditor has proved existence of debt and default and there being no denial from the Corporate Debtor with respect to outstanding due against the Corporate Debtor, the application stands admitted - Petition is admitted - moratorium declared.
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2021 (4) TMI 296
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- There was no appearance on the part of the Corporate Debtor. In the circumstances, the matter is proceeded with, in the absence of the Corporate Debtor. As this Company Petition is only a sequel to the earlier Petition filed, wherein the Corporate Debtor specifically admitted the debt and has also arrived at a settlement between the parties and which amounts stood unpaid even as of today as brought to the notice of this Tribunal vide the present Company Petitioner. In view of the fact that there is an existence of debt owed and the default has been committed on the part of the Corporate Debtor, this Tribunal is constrained to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Application admitted - moratorium declared.
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PMLA
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2021 (4) TMI 313
Attachment of various property belonging to the petitioner - Applicability of PML Act to the erstwhile State of Jammu and Kashmir - action of the Authorities under the PML Act - HELD THAT:- It can be seen that the proceedings initiated against Ahsan Ahmad Mirza were challenged by him in a petition AHSAN AHMAD MIRZA AND OTHERS VERSUS ENFORCEMENT DIRECTORATE ANOTHER [ 2019 (10) TMI 1408 - JAMMU AND KASHMIR HIGH COURT] , which petition was, however, dismissed by a Coordinate Bench of this Court vide Judgment and Order dated 15.10.2019. Counsel for the parties state that a Letters Patent Appeal is filed and is pending before a Division Bench of this Court. Having gone through the writ petition as also the Judgement of the Coordinate Bench in Ahsan Mirza s case, it can be seen that some of the issues raised by the petitioner in the present petition were also issues, which were raised and decided by the Coordinate Bench, which now, form the subject matter of consideration by the Division Bench of this Court - Considering the fact that the genesis of the proceedings both against the petitioner, Dr. Farooq Abdullah as also the appellant, Ahsan Ahmad Mirza, lies in the case which is pending trial before the Designated Court and the issues being common, in my opinion, therefore, are required to be considered together. The matter be considered by a Division Bench of this Court.
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2021 (4) TMI 287
Extension of judicial custody of both the accused - alleged crime of money laundering done by both the accused - HELD THAT:- It is proceeds of crime which construes an offence of money laundering under Section 3 punishable under Section 4 of P.M.L.Act, if such a person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following process or activities connected with proceeds of crime namely concealment or possession or acquisition or use or projecting as untainted property or claiming as untainted property in any manner whatsoever, the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. Merely the fact that FIR of scheduled offence on which ECIR was registered has been compounded by accepting C report by concerned J.M.F.C at Aurangabad, in my view cannot be derooted the commission of offence of money laundering, as described in Section 3 punishable under Section 4 of PMLA. Because sub-clause (i) of the explanation of Section 3, which elaborates the activities connected with proceeds of crime i.e may be concealment, may be possession, may be acquisition, may be use, may be projecting as untainted property or may be claiming as untainted property in any manner whatsoever - accepting C summary final report or compounding of scheduled offence will not give automatic nullification of the acts done by the accused under PMLA. There are no hesitation to extend judicial custody of both the accused till ED may file final report. Further, under Section 167 of Cr.P.C., there is adequate grounds, for authorize detention of the accused. Hence, judicial custody of both the accused is extended for next 14 days. The accused has to be remanded to judicial custody. Therefore, question of releasing them on any bond, as prayed does not arise - Application dismissed.
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2021 (4) TMI 288
Rejection of prayer of applicant to grant custody of respondent Nos.2 and 3 for further period of 7 days for the purpose of investigation - Section 420 of the Indian Penal Code - HELD THAT:- The respondent Nos.2 and 3 were in custody of the applicant from 6 pm of 27th January 2021 to 2nd February 2021. According to this Court, five complete days period for confronting the respondent Nos.2 and 3 with the alleged devices is sufficient. During the course of arguments, the learned Special P.P. produced a file of investigation carried out by the Investigating Agency containing statements of the respondent Nos.2 and 3/accused allegedly recorded under Section 50 of the said Act. Even if the respondent Nos.2 and 3 are remanded to judicial custody, the Investigating Agency can confront them with the aforesaid documents in jail, after taking necessary permission from the Trial Court, as per the provisions of law. And only for that purpose their custody for interrogation is not necessary - Otherwise also the investigation of the present crime pertains to documents/digital files on electronic devices, which are already seized by the Investigating Agency. The Trial Court after taking into consideration various attending circumstances has rejected the request of the applicant for further custodial interrogation of the respondent Nos.2 and 3 - there is no error or illegality committed by the Trial Court while passing the impugned Order - revision application dismissed.
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Service Tax
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2021 (4) TMI 306
CENVAT Credit - inputs/capital goods - Angles, Channels, Beams, MS Tower parts (SS Mats) etc. used in erection and installation of towers - Pre-fabricated buildings/shelters/PUF panels used for housing/storage of generating sets and other components/equipments/spares etc. - denial on account of nexus with output services - extended period of limitation - HELD THAT:- Hon ble Bombay High Court in Bharti Airtel Limited v. CCE, Pune-III [ 2014 (9) TMI 38 - BOMBAY HIGH COURT ] has upheld the stand of the Department disallowing credit, while Hon ble High Court that of Delhi held that credit is admissible in the case of Vodafone Mobile Services Others [ 2018 (11) TMI 713 - DELHI HIGH COURT ] . The jurisdictional High Court has not pronounced any judgment on this issue. Thus, it is clear that two High Courts have taken a completely contrary opinion in the matter having identical facts as the instant case. Both the decisions are appealed against and admitted and are for consideration before the Hon ble Apex Court. We find that there is no judgement passed by the jurisdictional High Court on this issue. However, we find that Larger Bench of the Tribunal in the case of Tower Vision India Pvt Ltd Vs CCE [ 2016 (3) TMI 165 - CESTAT NEW DELHI (LB) ] has deliberated the issue at length and decided that credit is not admissible. We are of the considered opinion that we are bound by the judgement of the larger Bench. Extended period of Limitation - HELD THAT:- In the instant case, demand pertains to period 10.9.2004 to 30.09.2006. Show cause Notice has been issued on 06.07.2009, which is clearly beyond the period of limitation - There was difference of opinion between members of CESTAT. The issue was referred to Larger Bench. It clearly indicates that the issue involved is of interpretation of a question of Law and therefore, mala fides cannot be attributed. The appellants submitted that they have been regularly filing returns - Hon ble High Court of Karnataka MTR Foods Ltd [ 2012 (10) TMI 165 - KARNATAKA HIGH COURT ] held that under such circumstances, extended period cannot be invoked. While upholding the Revenue stand on merits, the appeals are allowed on limitation.
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Central Excise
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2021 (4) TMI 317
Benefit of SVLDRS - SCN was issued for Recovery of amount refunded erroneously - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - benefit of scheme rejected by the designated committee holding that by virtue of provisions of Section 125(1) (d) of the Act of 2019, the petitioner is not eligible for benefits inasmuch as, the issue pertains to amount refunded erroneously - Sections 121 (c) 125 (1) (d) of Finance Act, 2019 - HELD THAT:- Undoubtedly, Section 121(c) defines 'amount of arrears' means the amount of duty, which is recoverable as arrears of duty under the direct tax enactment in the situations specified. It in no manner deals with the amount of erroneous refund recoverable from the assessee. Moreover, the provisions of Section 125(1) (b) specifically exclude the persons from eligibility to make a declaration under the Scheme who have been issued a show cause notice under indirect tax enactment for erroneous refund or refund. Admittedly, after the SLP filed by the Revenue against the judgment dated 24.8.16 being allowed by the Supreme Court, a show cause notice was issued by the competent authority calling upon the petitioner to show cause and explain within 30 days of receipt of the notice as to why ₹ 26,80,834/- refunded to them erroneously should not be recovered from them alongwith interest at the prevailing rates under Section 11A 11AB respectively of the Act of 1944, which culminated in passing of the order dated 30.11.17. In the considered opinion of this Court, by virtue of provisions of Section 125(1)(d) of the Act of 2019, a person who has been served with the notice to show cause under indirect tax enactment for an erroneous refund or refund shall be ineligible to make a declaration under the Scheme to claim benefits thereof and it does not make any difference that the notice to show cause issued stands culminated in passing of the order creating the demand of amount of erroneous refund. Petition dismissed.
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Indian Laws
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2021 (4) TMI 319
Transfer of shares - pre-emptive right to purchase of shares - consideration of agreements which contains arbitration clause - HELD THAT:- It is obvious that whether the MoU has been novated by the SHA dated 12.04.1996 requires a detailed consideration of the clauses of the two Agreements, together with the surrounding circumstances in which these Agreements were entered into, and a full consideration of the law on the subject. None of this can be done given the limited jurisdiction of a court under Section 11 of the 1996 Act - Detailed arguments on whether an agreement which contains an arbitration clause has or has not been novated cannot possibly be decided in exercise of a limited prima facie review as to whether an arbitration agreement exists between the parties. Also, this case does not fall within the category of cases which ousts arbitration altogether, such as matters which are in rem proceedings or cases which, without doubt, concern minors, lunatics or other persons incompetent to contract. There is nothing vexatious or frivolous in the plea taken by the Appellant. Apart from going into a detailed consideration of the MoU and the SHA, which is exclusively within the jurisdiction of the arbitral tribunal, the learned Single Judge, while considering clause 28 of the SHA to arrive at the finding that any kind of agreement as detailed in clause 28.2 between the parties shall stand superseded, does not even refer to clause 28.1. No consideration has been given to the separate and distinct subject matter of the MoU and the SHA. The judgment of the High Court is set aside and matter referred to the parties to the arbitration of a sole arbitrator, being Justice Aftab Alam (retired Judge of this Court), who will decide the dispute between the parties without reference to any observations made by this Court, which are only prima facie in nature - appeal disposed off.
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2021 (4) TMI 318
Validity of Guidelines issued by the Institute of Chartered Accountants of India (ICAI) - specified number (Cap) of tax audit assignments - Seeking for transfer of several writ petitions pending in the Kerala High Court, Madras High Court and Calcutta High Court - validity of Chapter VI of Guidelines No.1CA(7)/02/2008 dated 08.08.2008 - disposal of writ petition on early date - HELD THAT:- The fact that this Court on 03.04.1991 had dismissed the Transfer Petition Nos.614-615 of 1990 observing that the concerned High Courts may dispose of the writ petition on early date cannot be treated any kind of bar in transferring the writ petition in the present batch of cases. At the time when the earlier transfer petition was dismissed, conflicting judgments on subject in issue by different High Courts had not come. Cap on the number of audits - HELD THAT:- There are conflicting judgments of different High Courts taking different views on the similar guidelines. Further, transferring the writ petition to one High Court i.e. Calcutta High Court does not preclude the consideration of prayer of the petitioner for transferring the writ petitions to this Court in present matter. The guidelines which are impugned in the High Court and consequent disciplinary proceedings initiated against various chartered accountants throughout the country is an issue of public importance affecting Chartered Accountants as well as the citizens who have to obtain compulsory tax audits. Thus, to settle the law and to clear the uncertainty among tax professionals and citizens, it is appropriate that this Court may transfer the writ petition, to authoritatively pronounce the law on the subject. Transfer Petitions are allowed.
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