TMI Tax Updates - e-Newsletter
May 2, 2020
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Insolvency & Bankruptcy
Service Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
Income Tax
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Refunds along with interest u/s 244A - Processing of ITR u/s 143 - Adjustment of refund with the dues - Since the statute now envisages exercise of power of withholding of refund in a particular manner, it goes without saying that for assessment year commencing after 01.04.2017 the requirements of Section 241-A of the Act must be satisfied. - Revenue directed to refund the amount of ₹ 733 to the appellant within four weeks from today subject to any proceedings that the Revenue may deem appropriate to initiate in accordance with law.
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Assessment u/s 153A - Section 153A of the Act was attracted and accordingly, assessment u/s 153A read with Section 143(3) of the Act had been framed. Since the search had taken place at the residence of the assessee as well, thus, no proceedings for framing assessment u/s 153C of the Act arose.
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Refund of interest u/s 201(1A) - Any payment of TDS by the deductor in respect of payment made to deductee-petitioner will entitle the deductee to get back such TDS with interest at the time of framing of assessment under Section 143(3) of the Act. In such eventuality, it was not proper to hold the deductor as assessee in default under Section 201(1) nor interest could be levied under Section 201(1A) of the Act.
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Dismissal of appeal filed by the Revenue - non obtaining approval of the committee on dispute constituted by the Central Govt. - Matter restored before the ITAT to hear the appeal on merit.
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Benefit of carry forward of losses - failure to file the return of income on time. - assessee does not have a proper case for availing the benefit of carry forward loss by not following the respective provision of filing return within the due date
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Claim of foreign exchange fluctuation loss - ECB was availed for the purpose of expansion of three existing industrial units, hence, not on capital account and further taking note of Accounting Standard/11 r/w Accounting Standard/16, ultimately concluded that assessee’s claim of loss is allowable.
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Long Term Capital Gain - sale of property - diversion of income due to overriding title - whether the sale of the property has been made directly by the SBI and the sale consideration was appropriated to the loan amount? - if the money was routed through the bank account of the assessee before being finally appropriated towards the dues of M/s. PPPL, there cannot be diversion of income by overriding title.
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Deduction u/s. 10(10C) - VRS (Exit Option Scheme) - Employer has deducted tax at source u/s. 192 of the I.T. Act on ex-gratia amount received and the employer has not vouched that the conditions mentioned under Rule 2BA has been cumulatively satisfied. Thus the assessee is not entitled to the benefit of exemption u/s.10(10C)
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Refusing to grant recognition u/s 80G - genuineness of the activities for grant of approval u/s 80G[5](vi) cannot be verified - Reasons cited by Ld. CIT(E)(supra), are not the requirements mandated by provisions of the act, and cannot be the basis for rejection of assessee’s application for recognition u/s 80G.
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Deduction u/s 80-IC - telecommunication software development and trading in telecommunication hardware - Though the services agreement is separately entered into by the assessee, it has a direct nexus and connection with the agreement for supply of software - claim u/s. 80IC to be allowed.
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Addition u/s 68 - LTCG - it is settled position under the law, that tenancy right is a transferable asset. The assessee received consideration on transfer of said right - assessee has unambiguously proved that asset was in the possession of assessee for more than three year, thus, on the sale of tenancy right the assessee is entitled for LTCG.
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Deduction u/s 54F - Clubbing of exempt long term capital gain income of minor children - to find out whether there is any profit or gain chargeable to tax u/s 45(1), the provisions of both the sections are to be read together. Section 54F cannot be read in isolation - CIT(A) was not justified in denying the exemption of capital gain to the minors, which was invested in capital gain accounts scheme (CGAS).
Customs
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Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver - Notification
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Extension of time limits under the Customs Act,1962 and Rules and Regulations issued there under - Trade Notice
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Export of Carpets - generation of wrong documents, due to defects in software - mis-description of value as well as quantity of goods - The appellant on being pointed out by the CHA immediately placed the correct document before Customs Authority on the same very date. In such set of circumstances, no mala fide can be attributed to the assessee so as to confiscate the export consignment or to impose penalty upon them.
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Smuggling - Silver Granules - foreign origin goods - The meaning of bullion thus does not take away platinum, gold or silver in the form of grains/granules. Thus, granules also fall within the definition of bullion. This would lead to the consequence that if the silver granules has foreign markings even though less than 100 kgs. would not be covered by the above Board circular.
IBC
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Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Whether the debt is beyond 3 years from the date of declaration of the amount of corporate debt as NPA in 2013. -In our considered view, such plea stands on no legs for the simple reason that the default which has been shown in the balance sheet of financial year-ended 31-3-2018 is not running from March 2013 or earlier.
Service Tax
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Club and association Service - co-operative society - suppression of facts or not - time limitation - the bonafide belief of the appellant is established - the entire demand is under extended period, the same will not sustain on the time bar itself.
Articles
Notifications
Circulars / Instructions / Orders
- Customs - PUBLIC NOTICE NO. 76/2020 - dated
29-4-2020
COVID-19 Facilitation measures- Guidelines for conduct of personal hearings in virtual mode under Customs Act, 1962
- Customs - PUBLIC NOTICE NO. 75/2020 - dated
28-4-2020
COVID-19 Facilitation measures- Guidelines for conduct of personal hearings in virtual mode under Customs Act, 1962
- Customs - PUBLIC NOTICE NO. 71/2020 - dated
27-4-2020
COVID-19 Facilitation measures-Procedure for assessment in case of non-submission of Original Country of origin Certificates- Amendment to Public Notice No.61/2020
- Customs - PUBLIC NOTICE NO. 72/2020 - dated
27-4-2020
COVID-19 Facilitation measures- Relaxation in procedure for in-Bonding of cargo imported under Ware House Bill of Entry –Amendment to P.N.62/2020 dated 11.04.2020
- Customs - PUBLIC NOTICE NO. 73/2020 - dated
27-4-2020
Extension of time limits under the Customs Act,1962 and Rules and Regulations issued there under
- Customs - PUBLIC NOTICE NO. 68/2020 - dated
23-4-2020
Measures to facilitate Trade during the lockdown period —Section 143AA of the Customs Act,1962 —amendment of Public Notice No. 56/2020
- Customs - PUBLIC NOTICE NO.23/2020-cus - dated
22-4-2020
IGST refunds on exports-extension in alternate mechanism
- Customs - PUBLIC NOTICE NO. 24/2020-cus - dated
22-4-2020
Electronic Sealing-Deposit in and removal of goods from Customs Bonded Warehouses
- Customs - PUBLIC NOTICE NO. 22/2020-cus - dated
22-4-2020
Review of Circular No. 17/2020 dated namely, 'Measures to facilitate trade during the lockdown period- section 143AA of the Customs Act, 1962'-
- Customs - PUBLIC NOTICE NO. 17/2020 - dated
22-4-2020
Measures to facilitate trade during the lockdown period- Section 143AA of the Customs Act, 1962- Review of Circular No. 17/2020 dt. 03.04.20
- Customs - PUBLIC NOTICE NO. 16/2020 - dated
21-4-2020
Special Refund and Drawback Disposal Drive- Implementation of decision to expedite pending refund & drawback claims
- Customs - PUBLIC NOTICE NO. 65/2020 - dated
17-4-2020
Further Amendment of Public Notice No.54/2020 dated 27.03.2020
- Customs - PUBLIC NOTICE NO. 66/2020 - dated
17-4-2020
NOC for release Of Infrared Thermometer due to spread Of COVID-19 pandemic - Relaxation in procedure under Legal Metrology Act,2009
- Customs - PUBLIC NOTICE NO. 25/2020 - dated
17-4-2020
Special Refund and Drawback Disposal Drive - Implementation of decision to expedite pending refund and drawback claims
- Customs - PUBLIC NOTICE NO. 23/2020 - dated
15-4-2020
Paperless Customs — Electronic Comm unication of PDF based Gatepass and OOC Copy of Bill of Entry to Custom Brokers / Importers
- Customs - PUBLIC NOTICE NO. 20/2020-cus - dated
15-4-2020
Paperless Customs — Electronic Communication of PDF based Gatepass and OOC Copy of Bill of Entry to Custom Brokers/Importers
- Customs - PUBLIC NOTICE NO. 24/2020 - dated
15-4-2020
Issue of Essential service duty pass to various members of Trade visiting Customs formations during breakout of COVID 19 Lock down period
- Customs - PUBLIC NOTICE NO. 15/2020 - dated
15-4-2020
Paperless Customs - Electronic Communication of PDF based Gatepass and OOC Copy of Bill of Entry to Custom Brokers/Importers
- Customs - PUBLIC NOTICE NO. 63/2020 - dated
14-4-2020
COVID-19 Facilitation measures- Relaxation in procedure for clearance of Pharma items requiring NOC/Approval from ADC
- Customs - PUBLIC NOTICE NO. 64/2020 - dated
14-4-2020
Paperless Customs – Electronic Communication of PDF based Gatepass and OOC Copy of Bill of Entry to Custom Brokers/Importers
- Customs - PUBLIC NOTICE NO. 62/2020 - dated
11-4-2020
COVID-19 Facilitation measures- Relaxation in procedure for in-Bonding of cargo imported under Ware House Bill of Entry
- Customs - PUBLIC NOTICE NO. 61/2020 - dated
9-4-2020
COVID-19 Facilitation measures- Procedure for assessment in cases of non submission of Original Country of Origin Certificates
- Customs - PUBLIC NOTICE NO.17/2020-cus - dated
9-4-2020
Electronic Sealing — Deposit in and removal of goods from Customs Bonded Warehouses
- Customs - PUBLIC NOTICE NO.19/2020-cus - dated
9-4-2020
COVID-19 Facilitation measures- Procedure for assessment in cases of non submission of Original Country of Origin Certificates
- Customs - PUBLIC NOTICE NO. 18/2020-cus - dated
9-4-2020
COVID-19 facilitation measure- Temporary provision for filing IGM/EGM without submission of hard copy
- Customs - PUBLIC NOTICE No. 08/2020 - dated
3-4-2020
Concession in Demurrage charges payable to the Airport Operator/ Cargo Terminal Operator by a Shipper Or Consignee or Carrier or Agent for utilising storage facility at Cargo Terminal for storage Of import cargo, etc. for extended period beyond the stipulated free storage period for clearance or removal from the Airport
- Customs - PUBLIC NOTICE No. 09/2020 - dated
3-4-2020
Measure to facilitate trade during the lockdown period - section 143AA Of the Customs Act. 1962
- Customs - PUBLIC NOTICE NO. 11/2020 - dated
3-4-2020
Appointment of Nodal Officer in Chief Commissioner's Office for facilitating Customs clearance at the Zonal level amidst the Covid-19 crisis
- Customs - PUBLIC NOTICE NO. 09/2020 - dated
30-3-2020
Option to avail Section 49 facility during the COVID-19 crisis period
- Customs - PUBLIC NOTICE NO. 08/2020 - dated
30-3-2020
Request for Amendments and Waiver of Late Fee Charges in the Bills of Entry through E-mail procedure as facilitation during outbreak of COVID-19
- Customs - PUBLIC NOTICE NO. 07/2020 - dated
27-3-2020
24x7 Clearance- extension of examination, assessment and clearance at Mangalore Customs
News
Case Laws:
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GST
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2020 (5) TMI 31
Permission for withdrawal of application - HELD THAT:- The petition is dismissed as withdrawn with the liberty to pursue an application under Section 97(2)(E) of the Central Goods and Services Tax, 2017/Madhya Pradesh Goods and Services Tax, 2017.
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2020 (5) TMI 29
Release of confiscated goods alongwith vehicle - section 129 of CGST Act - HELD THAT:- The writ applicant availed the benefit of the interm-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2020 (2) TMI 1159 - GUJARAT HIGH COURT] - It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged. Application disposed off.
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2020 (5) TMI 28
Release of confiscated goods alongwith vehicle - section 129 of CGST Act - HELD THAT:- The writ applicant availed the benefit of the interm-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2020 (2) TMI 1159 - GUJARAT HIGH COURT] - It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged. Application disposed off.
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Income Tax
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2020 (5) TMI 27
Refunds along with interest u/s 244A - initiation of proceedings pursuant to notice under sub-section (2) of Section 143 - exercise of power of withholding of refund - HELD THAT:- We hold that in respect of Assessment Years ending on 31st March 2017 or before, if a notice was issued in conformity with the requirements stated in sub-section (2) of Section 143 of the Act, it shall not be necessary to process the refund under subsection (1) of Section 143 of the Act and that the requirement to process the return shall stand overridden. Whether any intimation is required to be given to the assessee that because of initiation of proceedings pursuant to notice under sub-section (2) of Section 143 of the Act processing of return in terms of sub-section (1) of Section 143 of the Act, would stand deferred? - The processing of return in terms of subsection (1A) of Section 143 of the Act is to be done through centralized processing and as stated earlier, the scope of processing under subsection (1) of Section 143 of the Act is purely summary in character. Once deeper scrutiny is undertaken and the matter is being considered from the perspective whether there is any avoidance of tax in any manner, issuance of notice under sub-section (2) itself is sufficient indication. Sub-section (1D) of Section 143 does not contemplate either issuance of any such intimation or further application of mind that the processing must be kept in abeyance. It would not, therefore, be proper to read into said provision the requirement to send a separate intimation. In our view, issuance of notice under sub-section (2) of Section 143 is enough to trigger the required consequence. Any other intimation is neither contemplated by the statute nor would it achieve any purpose. Submission that the intimation dated 23.07.2018 must be held to be invalid, inter alia on the ground that it was issued well after the period within which the return was required to be processed under sub-section (1) of Section 143 of the Act, must be rejected. Returns filed in respect of assessment year commencing on or after the 1st April, 2017, a different regime has been contemplated by the Parliament. Section 241-A of the Act requires a separate recording of satisfaction on part of the Assessing Officer that having regard to the fact that a notice has been issued under sub-section (2) of Section 143, the grant of refund is likely to adversely affect the revenue; whereafter, with the previous approval of the Principal Commissioner or Commissioner and for reasons to be recorded in writing, the refund can be withheld. Since the statute now envisages exercise of power of withholding of refund in a particular manner, it goes without saying that for assessment year commencing after 01.04.2017 the requirements of Section 241-A of the Act must be satisfied. Whether insofar as AY 2017-18 is concerned, the order dated 14.03.2019 satisfies the required statutory parameters or not? - In the present case, the exercise of power on 14.03.2019 was not only after issuance of notice under sub-section (2) of Section 143 and after recording due satisfaction in terms of Section 241-A of the Act, but was also well within the period contemplated by sub-section (1) of Section 143 of the Act for causing due intimation. There is nothing in the exercise of power that led to the passing of the order dated 14.03.2019 which could be said to have violated any statutory requirements. Insofar as AY 2014-15 is concerned, final assessment order passed under Section 143(3) of the Act indicates that the appellant is entitled to refund of ₹ 733 Crores; while for AY 2015-16 there is a demand of ₹ 582 Crores. During the course of hearing, it was suggested on behalf of the respondents that demands in respect of earlier assessment years including the liability as a result of order dated 28.12.2019 as referred to in para 5.1 hereinabove being outstanding, the respondents would be entitled to invoke the requisite power under Section 245 of the Act to set off the amount of refund payable in respect of AY 2014-15 against tax remaining payable. Since the requisite action is not even initiated, we say nothing in that respect. In the premises, we direct that the amount of ₹ 733 Crores shall be refunded to the appellant within four weeks from today subject to any proceedings that the Revenue may deem appropriate to initiate in accordance with law. We also direct the respondents to conclude the proceedings initiated pursuant to notice under sub-section (2) of Section 143 of the Act in respect of AY 2016-17 and 2017-18 as early as possible.
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2020 (5) TMI 26
Assessment u/s 153A - Unaccounted investment - HELD THAT:- Since the revenue has not brought any other material evidence to prove that the alleged amount is purely an income the assessee certainly deserves benefit of doubt and further since below the alleged account itself the sum of ₹ 22,40,000/- is mentioned as an amount referred as balance to be for payment. Addition for unaccounted investment in our view cannot be more than ₹ 22,40,000/-. No substantial question of law. No reason has been recorded by the Assessing Officer with regard to the loose papers (LPS-1 page-4) being of the assessee and therefore, the Assessing Officer could not have assumed the jurisdiction in terms of Section 153C - It is for the first time this contention has been raised before this Court. It may be noted that the premises of Regal Homes Group was subjected to search under Section 132 of the Act on 12.08.2014. The residential premises of the assessee were also searched together with the group Concerns including M/s Regal Samarth Construction Company and Regal Samarth Krishna Builders in which appellant-assessee had interest as partner therein. Thus, in the present case, Section 153A of the Act was attracted and accordingly, assessment under Section 153A read with Section 143(3) of the Act had been framed. Since the search had taken place at the residence of the assessee as well, thus, no proceedings for framing assessment under Section 153C of the Act arose. Therefore, Section 153C of the Act had no relevancy in the facts and circumstances of the present case.Consequently, it is concluded that the question No.(ii) as claimed, is misconceived. Appeal dismissed.
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2020 (5) TMI 25
Refund of interest amount payable u/s 201(1A) - interest u/s 244A - Excessive deduction of TDS on the direction of Department - HELD THAT:- Respondent No.1 has rejected the claim vide impugned order dated 14.09.2017 (Annexure P-12). Surprisingly, there is no reference to the order dated 04.08.2017 (Annexure P-11) passed by the respondent No.2 directing the Assistant Commissioner of Income Tax (TDS), Bhopal for compliance of the order of this Court passed [ 2017 (1) TMI 1713 - MADHYA PRADESH HIGH COURT] and refund of interest amount to the NHAI, as claimed, so that subsequently the NHAI can refund the same to the petitioner. It appears that there has been lack of communication between the respondent No.1 and 2. Still further, the respondent No.1 while passing the impugned order dated 14.09.2017 (Annexure P-12) has assigned the reasons that the default was detected in the case of NHAI i.e. the respondent No.3, which was the assessee over which the respondent No.1 exercised jurisdiction. NHAI was liable to deduct and deposit TDS and interest for delay but the NHAI instead of paying it out of its own coffers illegally recovered the amount from IJMC-petitioner. The charge of interest was created on NHAI and not on the petitioner and therefore, the claim of the petitioner was not justifiable. Reasons assigned by the Revenue to decline refund of the interest under Section 201(1A) of the Act recovered from respondent No.3-NHAI on behalf of the petitioner is untenable, as after detailed scrutiny, the respondent No.2 found that the petitioner was assessed at loss and therefore, allowed the TDS credit in its favour. The TDS was refunded to the petitioner in accordance with law. No interest recovered from respondent No.3 under Section 201(1A) of the Act could be legally retained by the Revenue. In these circumstances, the interest under Section 201(1A) of the Act deducted and deposited by the respondent No.3 with the office of the ACIT (TDS), Jabalpur ought to have been refunded. Any payment of TDS by the deductor in respect of payment made to deductee-petitioner will entitle the deductee to get back such TDS with interest at the time of framing of assessment under Section 143(3) of the Act. In such eventuality, it was not proper to hold the deductor as assessee in default under Section 201(1) nor interest could be levied under Section 201(1A) of the Act. Admission of claim of refund of interest amount payable to respondent No.3 by the respondent No.2 and direction being issued in this regard to the respondent No.1 vide order dated 04.08.2017 (Annexure P-11), the impugned order dated 14.09.2017 (Annexure P-12) is quashed. The respondent Nos.1 and 2 are directed to refund the interest amount collected under Section 201(1A) of the Act from respondent No.3 on behalf of the petitioner together with interest under Section 244A of the Act, who in turn, shall pay the same to the petitioner in accordance with law.
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2020 (5) TMI 24
Dismissal of appeal filed by the Revenue - non obtaining approval of the committee on dispute constituted by the Central Govt. - HELD THAT:- A similar question had come up for consideration before this Court in Northern Coal Fields Limited [ 2020 (2) TMI 573 - MADHYA PRADESH HIGH COURT] wherein, the Bench considered the law laid down by the Supreme Court in Electronics Corporation of India Limited vs. Union of India and others [ 2007 (7) TMI 354 - SUPREME COURT] in which it was held that approval of the CoD in terms of its earlier judgment was not required - Impugned orders passed by the Tribunal dismissing the appeals only on the ground that there was no clearance of the CoD, are unsustainable and the same are hereby set aside.
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2020 (5) TMI 23
Deduction under section 10A - AO reducing telecommunication charges only from the export turnover and not making any corresponding reduction in the total turnover - HELD THAT:- As considered the ratio of the judgment of Genpact India vs. ACIT [ 2011 (11) TMI 119 - DELHI HIGH COURT] and we agree with the contention of the Ld. AR that this issue stands covered in favour of the assessee we direct the Assessing Officer to make a corresponding reduction from the total turn-over while computing the deduction u/s 10A - Decided in favour of assessee.
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2020 (5) TMI 22
Addition as excessive payment u/s 40A(2)(b) - HELD THAT:- Provisions of Section 40A(2)(b) of the Act are applicable on expenses claimed as deduction whereas the assessee had purchased a capital asset and therefore, learned CIT(A) had rightly allowed relief to the assessee.Provisions of S,40A(2){b) of the Act are applicable on expenses claimed as deduction. As the appellant has not claimed any deduction out of the related party transaction, the provisions of S.40A(2)(b) cannot be applied. Disallowance of expenses as same related to SEZ unit only - assessee had apportioned the same between two units - HELD THAT:- Before the learned CIT(A), the assessee filed detailed explanations and also filed additional evidences and also filed detailed calculations of cost per unit in SEZ unit as well as in non SEZ unit. From the submissions made before the learned CIT(A), we have observed that cost per unit in both units were almost same and therefore, he rightly deleted the addition There is hardly any difference between the cost of total raw material including the accessories. Even the product mix of the appellant is quite different in both the Units which has also not been taken into account by the AO while making the addition. In such circumstances, the addition made by the AO is not based on the facts of the case and therefore, the addition made by the AO is directed to deleted Negative adjustment made by AO to the eligible profits u/s 10AA - HELD THAT:- It is a well settled rule that the expenses have to be apportioned on actual basis, however when such apportionment is not possible, then the assesse has to retort to other methods. In the present case the appellant submitted the list of expenses which were apportioned on the actual basis and the details of such expenses and the justification for accounting it on actual basis. Regarding the segregation on the actual basis of the appellant, the AO has not found any fault with the basis of allocation on actual basis. If the expenses are allocated on the actual basis, then it is the best method of allocation. If any expense cannot be bifurcated on the actual basis, then only the allocation has to be resorted to. Since the appellant has booked all these expenses on the basis of actual, and the AO has not pointed out any specific fault in such actual basis of booking, the same cannot be disallowed on the basis of general observation by the AO until and unless some defects in the booking of expenses on actual basis is pointed out. Accordingly, the negative adjustment made by AO to the eligible profits u/s 10AA is not justified. Disallowance on account of notional interest - HELD THAT:- CIT(A) has allowed relief to the assessee by holding that assessee had furnished factual submissions and the advances were given for business purposes and therefore, same cannot be treated as non-business purposes. Moreover, the assessee had sufficient interest free reserves to finance interest free advances. In view of the above, ground is also dismissed. Addition of bad debts - HELD THAT:- AO had made this addition by holding that the sale was made out of SEZ unit whereas the fact is otherwise as the sale was made from non SEZ unit. The learned CIT(A) has made a finding of fact that sale to the party was made out of non SEZ unit. Finding no infirmity in the order of leaned CIT(A), ground is also dismissed. EPF penalty and penalty on late submission of excise return - suo moto disallowance made by assessee - HELD THAT:- Observation has been specifically made by learned CIT(A) in his order. We further find that the remaining amount of penalty related to interest on sales tax and re-connection charges of electricity board and learned CIT(A) had rightly held that interest charged by sales tax was compensatory in nature and re-connection charges charged by electricity board were also compensatory in nature and were not penal in nature and therefore had rightly allowed the relief. Disallowing employees contribution PF ESIC - HELD THAT:- We find that learned CIT(A) has dismissed this ground of appeal by relying on the judgment of Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] and no argument was advanced by the learned AR, therefore, there is no infirmity in the order of learned CIT(A). In view of the above, ground nos. 1 to 4 are dismissed.
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2020 (5) TMI 21
Reopening of assessment u/s 147 - assessee has not filed its return of income for AY 2012-13 - HELD THAT:- We notice from the record that assessee is a public sector company and due to internal exigencies, assessee has filed its return of income only on serving of notice u/s 148 and there is no dispute as far as the date of filing of return of income and assessee has filed its return of income belatedly even though assessee has to declare huge loss. It is mandatory on the part of the assessee to file its loss return in order to carry forward loss. With regard to submission of Ld. AR that AO cannot initiate the proceedings u/s 147 of the Act for the reason that assessee has not filed its return of income and that reason alone cannot be proper to initiate proceedings u/s 147 by relying upon the decision in the case of General Electoral Trust vrs. ITO [ 2016 (8) TMI 959 - BOMBAY HIGH COURT ]. As observed in the case of trust that income of the assessee is not determinable whether it has taxable income and as per the provision of section 139 assessee is obligated to file only it has taxable income and AO can collect the information u/s 133(6) - we notice that in the present case, the facts are different and as far as trust is concerned, it is obligated to file return of income only when it has taxable income, whereas in the case of a company, it is obligated to file its return of income whether it has profit earned or not and even on carry forward loss is concerned, assessee has to file its loss return within the limitation period in order to avail the benefit of carry forward loss. Case relied upon by Ld. AR is distinguishable and in our considered view, the proceedings initiated by AO u/s 147 is proper. Accordingly, the additional grounds raised by the assessee are dismissed. There is no dispute that assessee has filed its return of income belatedly and as per the provisions of the Income Tax Act, assessee cannot avail the benefit of carry forward without filing the return of income on time. We further notice that Ld. CIT(A) has already considered that the loss return filed by the assessee includes unabsorbed depreciation and business loss and he restricted the denial of carry forward loss only to the extent of actual business loss. Therefore, assessee does not have a proper case for availing the benefit of carry forward loss by not following the respective provision of filing return within the due date. Accordingly, grounds raised by the assessee are dismissed.
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2020 (5) TMI 20
TP Adjustment - transaction benchmarked by using internal Transactional Net Margin Method (TNMM) - whether the arm s length price of international transaction with the AE is to be determined by applying external or internal TNMM? - HELD THAT:- In the facts of the present case, the assessee has furnished the audited segmental accounts of both AE and non AE transactions. Pertinently, even the TPO has also not applied CUP but has determined the arm's length price by applying external TNMM. There is nothing wrong in determining the arm's length price of the transaction with the AE by applying internal TNMM if relevant information relating to both the segments is available. The decisions relied upon by the learned Authorised Representative also support our aforesaid view. Net cost plus margin of the transaction with the AE is 10.35% as against margin of similar transaction with non AE at ( ) 5.33%. Even, adopting the methodology of the TPO of allocating operating cost and depreciation on the basis of sales turnover, the margin of the transaction with the AE @ 5.94% compares favourably with the margin of non AE transaction @ ( ) 8.69% - looked at from any angle, the price charged for transaction with the AE, undoubtedly, appears to be at arm's length requiring no further adjustment. In view of the aforesaid, we uphold the decision of the Commissioner (Appeals) on the issue by dismissing the grounds no.1 and 2, raised by the Revenue. Claim of foreign exchange fluctuation loss - AO disallowed assessee s claim of foreign exchange loss arising out of external commercial borrowing (ECB) merely on the ground that they are contingent in nature - HELD THAT:- As could be seen from the material on record, identical issue came up for consideration before the Tribunal in assessee s own case for the assessment year 2007 08. ECB was availed for the purpose of expansion of three existing industrial units, hence, not on capital account and further taking note of Accounting Standard/11 r/w Accounting Standard/16, ultimately concluded that assessee s claim of loss is allowable. The contention of the learned Authorised Representative that in subsequent assessment years, the Revenue has accepted similar claim of loss by the assessee remains uncontroverted. Disallowance u/s14A r/w rule 8D - AO disallowed comprising of interest expenditure under rule 8D(2)(ii) and administrative expenditure under rule 8D(2)(iii) - HELD THAT:- Assessee has stated that it has not incurred any administrative expenditure for earning the dividend income, however, in our considered opinion some amount of expenditure must have been incurred as the investment requires constant monitoring. It is also observed, in similar circumstances disallowance under rule 8D(2)(iii) was made in assessment year 2007 08, which appears to have been accepted by the assessee. Some disallowance under section 14A r/w rule 8D(2)(iii) has to be made. However, such disallowance has to be restricted to the average value of only those investments which have yielded dividend income during the year. AO is directed to verify the aforesaid aspect and compute disallowance under rule 8D(2)(iii) accordingly. This ground is partly allowed for statistical purposes. Disallowance of the expenditure incurred towards repairs to plant and machinery - HELD THAT:- Before the first appellate authority, the assessee had furnished various additional evidences to prove its claim. Though, such evidences were forwarded to the AO, he has not offered any comment. Commissioner (Appeals) after perusing the details has made an observation that such expenditures were incurred on replacement of spare parts. Nevertheless, he upheld the disallowance by stating that detailed narration of materials / items purchased are not available. We fail to understand the aforesaid reasoning of Commissioner (Appeals). Once he accepts that the expenditures are incurred on replacement of spare parts, he cannot contradict himself by stating that the detailed narration of materials / items purchased are not available. As observed earlier, on a purely ad hoc basis a part of the expenditure incurred by the assessee has been treated as capital in nature. There is absolutely no basis for coming to such conclusion. When the expenditure incurred by the assessee has not been doubted, such disallowance purely on ad hoc basis without being backed by proper reasoning cannot be sustained. Accordingly, we delete the disallowance made by the Assessing Officer. This ground is allowed. Addition u/s 41 - outstanding / payable for more than three years - HELD THAT:- No enquiry has been conducted by the Assessing Officer to demonstrate that there is a cessation of liability. Merely because the liability is pending for more than three years, it cannot be presumed that it has ceased in terms of section 41(1) of the Act. Further, it is evident, before the first appellate authority, the assessee had submitted that a part of the outstanding liability was paid in subsequent assessment year and the balance amount has been written back and offered to tax. However, learned Commissioner (Appeals) without examining the aforesaid facts has sustained the addition made by the AO. The fact that the assessee has paid part of the liability in the subsequent assessment year, demonstrates that the liability has not ceased to exist in the impugned assessment year. Further, the balance amount which remained to be paid is stated to have been offered to tax in the assessment year 2009 10. If the aforesaid is the factual position, no addition can be made by invoking the provisions of section 41(1) of the Act. Subject to verification of assessee s claim that part of the amount was paid to the creditors and the balance amount has been written back and offered as income in the assessment year 2009 10, the Assessing Officer is directed to delete the addition. Provision made for loss arising on sales return - HELD THAT:- In its accounts the assessee has debited an amount of ₹ 40.90 lakh, towards provision of likely loss on sales return, however, in the course of assessment proceedings it has admitted that the amount is erroneously left out from being added in the computation of income and requested the AO to treat the return of income to have been modified to that extent. On the basis of such submission of the assessee, the AO added back to amount to the income of the assessee. That being the case, we are unable to appreciate the grievance of the assessee. Even otherwise also, it is evident, the amount in dispute is a provision made for likely loss on sales return - it is quite clear that the expenditure has not crystallized during the year and is an anticipated loss. That being the case, it cannot be allowed. However, if such loss has actually arisen in the subsequent assessment year due to sales return, the AO is directed to verify and grant consequential relief. This ground is allowed for statistical purposes.
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2020 (5) TMI 19
Long Term Capital Gain - sale of property - diversion of income due to overriding title - whether the sale of the property has been made directly by the SBI and the sale consideration was appropriated to the loan amount? - whether the assessee has got the property sold and the buyer has deposited it directly to the SBI and thereafter the SBI appropriated it to the loan amount? - HELD THAT:- It is observed that a vide letter dated 26.05.2007, SBI has written to the buyer of the property M/s. Svarna Infrastructure Builders Pvt. Ltd (supra) to deposit the full value of the consideration with SBI, SSI Branch, Bhowanipore before signing the conveyance deed. However, the Facts are not clear. It is not clear from the document as to whether the SBI conducted the sale by Public Auction and then consideration money was deposited by the buyer directly with the bank; or the sale of property was carried out by the assessee and the sale consideration was deposited by the buyer in assessee's account as per the SBI s instruction or in the account of M/s. PPPL. From the discussion supra, it is needless to say that if the assessee has got the sale of property and consequently, if the money was routed through the bank account of the assessee before being finally appropriated towards the dues of M/s. PPPL, there cannot be diversion of income by overriding title and in that fact situation, capital gains tax liability would arise in assessee's hands. In the interest of justice, we, therefore, remand this issue back to the file of the A.O. for the limited purpose to verify the correct facts on the lines stated by us in the preceding para. In case after due enquiry, he finds that the assessee s case falls in the first category as discussed in para 22 supra, he shall delete the addition. The A.O. shall also afford reasonable opportunity of hearing to the assessee to explain/ substantiate the correct facts and pass a speaking order. Computation of capital gain - computation of indexed cost of acquisition - cost of acquisition of the land to the assessee or the fair market value of the land as on 01.04.1981 - HELD THAT:- Since the land was acquired before 01.04.1981, as per the provisions of the section 55(2) clause (b), the cost of acquisition of the land to the assessee or the fair market value of the land as on 01.04.1981, at the option of the assessee, could be taken to be the cost of acquisition of the land. We note that the Fair market value of the land was determined by the Certified Valuer ₹ 8,30,000/- , which was taken to be the cost of acquisition by the assessee in his revised computation of income. It is noted that the valuation report received from such Valuer was furnished before the AO and is attached herewith in pg. nos. 136-144 of paper book. Thus, we are of the opinion that the computation of indexed cost of acquisition by the AO, taking the cost of acquisition at the cost price of 15.04.1976 without considering the provisions of section 55(2) clause (b) and taking the base cost inflation index at 406 is bad in law and we direct that ₹ 8,30,000/- must be taken as the cost of acquisition instead of ₹ 1,122/-.. So we order accordingly.
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2020 (5) TMI 18
Condonation of delay of delay of 88 days - legitimate reasons of delay - HELD THAT:- As stated that the assessee was suffering from spondylisis. Due to court vacations and owing to the extremely busy schedule of the advocate engaged by the assessee, he was able to fix an appointment with him only during the 2nd week of June - said advocate was hesitant in accepting the brief as he was already preoccupied with certain other matter. Being not well versed with the tax laws, the assessee engaged another advocate who prepared the appeal papers by the end of July. Due to natural calamities in August, there was communication gap between the assessee and the advocate. Finally, the appeal was filed on 19/09/2018. Due to aforesaid reasons, there was delay of 88 days in filing the appeal - there are no wilful latches or negligence in not filing the appeal within the statutory time limit and the delay was occurred due to genuine, compelling, bonafide and legitimate reasons - delay in filing of the appeal cannot be attributable to any latches on the part of the assessee, hence we condone the delay of 88 days Deduction u/s. 10(10C) disallowed - schemes of voluntary retirement of companies or authorities governing the payment of sums - last four conditions mentioned in Rule 2BA of I.T. Rules, 1962, has not been satisfied in this case - HELD THAT:- In the instant case, the assessee has failed to produce certificate from the employer (SBI) stating that the exit option scheme is eligible for benefit of exemption u/s. 10(10C) and is in accordance with the guidelines formulated in Rule 2BA of the I.T. Rules. On the contrary, the certificate issued by the State Bank of India (employer of the assessee) along with the return of income in respect of the above scheme has clearly mentioned that the amount of ex gratia would be added to the total income of the employee for the year and income tax would be recovered at the applicable rate at source. The employer-Bank (SBI) has also deducted tax at source including the ex gratia granted to the employee at the time of retirement. In the certificate also, the retirement scheme is mentioned as exit option scheme and there is no reference regarding fulfilment of conditions prescribed under Rule 2BA of the I.T. Rules, 1962 which stipulates the criteria for exemption u/s. 10(10C) Employer has deducted tax at source u/s. 192 of the I.T. Act on ex-gratia amount received and the employer has not vouched that the conditions mentioned under Rule 2BA has been cumulatively satisfied. Thus the assessee is not entitled to the benefit of exemption u/s.10(10C) - Decided against assessee.
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2020 (5) TMI 17
Eligible profit for deduction u/s.10A - CIT(A) in directing the AO to deduct the export sale proceeds not received within the stipulated period from both the export turnover as well as the total turnover - HELD THAT:- Decision of the Ld.CIT(A) is inconsonance with the decision of CIT v. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] and also the decision of CIT v. M/s.Maars Software International Ltd. [ 2019 (3) TMI 578 - MADRAS HIGH COURT] components of the total turnover/denominator in the formula would be the quantum of export turnover/numerator plus proceeds from domestic sales. Thus what is 'export turnover' for the purpose of the numerator would have to be the 'export turnover' for the purpose of denominator as well and 'export turnover' cannot assume two different characteristics for two parts of the same formula. Disallowing the loss on account of the exchange rate fluctuation in respect of sale proceeds holding to be a notional - HELD THAT:- As decided in OIL NATURAL GAS CORPORATION LTD. VERSUS COMMISSIONER OF INCOME TAX [ 2010 (3) TMI 81 - SUPREME COURT] held that the loss suffered by the Assessee, maintaining accounts regularly on mercantile system and following accounting standards prescribed by the Institute of Chartered Accountants of India (ICAI), on account of fluctuation in the rate of foreign exchange as on the date of balance-sheet was an item of expenditure u/s 37(1) notwithstanding that the liability had not been discharged in the year in which the fluctuation in the rate of foreign exchange occurred. Loss claimed by the Assessee on account of fluctuation in the rate of foreign exchange as on the date of balance-sheet is allowable as expenditure under Section 37(1) - Decided in favour of the assessee Depreciation on the cost of the imported software from the eligible profits for the deduction u/s.10A - what can be allocated between the STP Unit and the non-STP Units is only indirect expenditure. The expenditure which can be directly be identified with a particular unit cannot be apportioned between the two units - HELD THAT:- Admittedly, the AO apportioned the depreciation between the STP units and the non-STP units, but the contention of the assessee is that the depreciation on imported software cannot be apportioned to STP Unit, because it was exclusively used in the domestic sales, is required to be adjudicated with reference to the evidence on record as it is a question of fact. But CIT(A) had not gone into the evidence whether the imported software was used exclusively in the domestic sales or not. In these circumstances, we are of the considered opinion that the matter should go back to the AO to adjudicate the issue as:- Whether the imported software was used exclusively in the domestic sales? If so, to exclude the same from the eligible profit for deduction u/s.10A - Appeal filed by the Revenue is partly allowed for statistical purposes.
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2020 (5) TMI 16
Exemption u/s 11 - refusing to grant recognition u/s 80G - genuineness of the activities for grant of approval u/s 80G[5](vi) cannot be verified - Assessee is a charitable trust established vide trust deed to run either with the college (education) and also to carry out charitable activities under relief of poor AND assessee obtained registration under section 12AA - HELD THAT:- Undisputedly, assessee has been granted registration under section 12 AA of the Act, and that there is nothing on record brought out by authorities below, or Ld.CIT DR regarding violation of objects of Trust. Grant of approval/recognition u/s 80 G can act as catalyst to encourage prospective donors to look at intended activities/objects and possibly provide financial support through donations/contributions. In the facts of present case, assessee was holding valid registration under section 12 AA as on date of impugned order, which conversely means that Ld.CIT (E) was satisfied with objects of assessee in not disputing the registration under section 12 AA. Reasons cited by Ld. CIT(E)(supra), are not the requirements mandated by provisions of the act, and cannot be the basis for rejection of assessee s application for recognition under section 80G. We also notice that Ld.CIT(E) has not examined the application of assessee in terms of section 80 G (5) - we remand the question of grant of approval under section 80 G (5) (vi) to Ld.CIT (E) for fresh consideration - Decided in favour of assessee for statistical purposes.
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2020 (5) TMI 15
Deduction u/s 80P(2) - Assessee is a Co-operative Milk Producers society, registered under, The Karnataka Souharda Sahakari Act, 1997 and provides credit facilities to its members - Assessee claimed deduction u/s 80P on the interest received from Co-operative Bank on fixed deposit for the years under consideration which was disallowed by Ld. AO observing that section 80 P (2) (d) does not contain the word bank - HELD THAT:- As facts in present case are not readily available on record and there is no finding of authorities below on this factual aspect regarding the source of funds deposited on bank on which interest income was earned, the issue should go back to the file of CIT(A) for fresh decision. The Bench also proposed that regarding the applicability of Hon ble Apex Court rendered in the case of The Citizen Co Operative Society Ltd., vs. ACIT [ 2017 (8) TMI 536 - SUPREME COURT] also, the Ld. CIT(A) should pass speaking and reasoned order after comparing facts of present case with that of The Citizen Co Operative Society Ltd., vs. ACIT (supra) under co operative society Act, applicable in State of Karnataka. Set aside order of CIT(A) and restore the matter back to his file for fresh decision in light of above discussion, by way of a speaking and reasoned order after providing adequate opportunity of being heard to both sides. He is also directed to examine the facts of present case in the light of these two judgments of Tumkur Merchants Souharda Credit Co Operative Ltd., vs. ITO [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] and PCIT and Another vs. Totagars Co Operative Sale Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH and pass necessary order - Appeal filed by the assessee is allowed for statistical purpose.
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2020 (5) TMI 14
Deduction u/s 80-IC - disallowance of deduction profits derived from manufacture or production of any article or thing - profits and gains derived by the business of the undertaking that was set up in the State of Himachal Pradesh - assessee is a company engaged in telecommunication software development and trading in telecommunication hardware required mainly to run their software that are being supplied to the prospective consumers - HELD THAT:- No conclusive to hold that there were two segments or verticals and is contrary to the Agreements under which the Assessee had to perform certain obligations to BSNL in the form of supply of software, hardware, installation and maintenance thereof. As we have already seen, the agreement with ZTE is very clear that the supply of software and hardware necessary to support the software supply, installation commissioning as well as rendering support services were to be done on a turnkey basis. Though the services agreement is separately entered into by the assessee, it has a direct nexus and connection with the agreement for supply of software. In these circumstances, the decisions cited by the ld. counsel for assessee, clearly supports the case of the assessee. We are therefore of the view that the claim made by the assessee for deduction u/s. 80IC of the Act ought to have been allowed by the AO/CIT(A) and they fell into an error in not allowing the said claim u/s. 80IC of the Act on service charges.- Decided in favour of assessee. Deduction on account of bad debts written off - HELD THAT:- AO never doubted that the sum written off as bad debts was already included as income of assessee in the earlier previous years. There is no condition laid down in section 36(1)(vii) that the sum which is written off as bad debts should have suffered tax and if that income is claimed as exempt or deduction is claimed, then deduction on account of bad debts written off should not be allowed. We are also satisfied that the assessee has established that the sum written off as bad debts was in fact offered to tax in the earlier previous years as income and included while computing total income. The requirement of establishing that the debt has become bad and irrecoverable is no longer necessary after the decision of TRF Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] - We are therefore of the view that none of the reasons assigned by the revenue authorities to deny the benefit of deduction on account of bad debts written off are sustainable. - Decided in favour of assessee.
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2020 (5) TMI 13
Addition u/s 68 - bogus proceeds on sale of tenancy rights - HELD THAT:- AO made investigation from the buyer of the property i.e. Pine Tree Estate Pvt. Ltd. The AO recorded that only income tax return for A.Y. 2016-17 was filed by the buyer in response to notice u/s 133(6). No further action or investigation about the creditworthy of buyer was conducted by AO. The income tax return always contained the PAN of the assessee, which is sufficient to carry out further enquiry against the said buyer. No such show-cause notice to prove the creditworthy of Pine Tree Estate Pvt. Ltd. was issued by the AO. Registered transfer deed of tenancy clearly shows that the payment of consideration for transfer of asset/tenancy right was paid to assessee through Demand Draft No. 407314 dated 28.05.2015 drawn on HDFC Bank. Thus, in the aforesaid transaction, no addition under section 68 can be made against the assessee. The assessee right from the beginning has categorically stated that consideration of ₹ 22.50 crore was received against the transfer of tenancy right. As we have noted earlier that it is settled position under the law, that tenancy right is a transferable asset. The assessee received consideration on transfer of said right - assessee has unambiguously proved that asset was in the possession of assessee for more than three year, thus, on the sale of tenancy right the assessee is entitled for LTCG. Therefore, the addition under section 68 against the proceeds of sale consideration is not unjustified. In the result, Ground No.1 of the appeal is allowed. Exemption u/s 54F - HELD THAT:- In the computation of income and working of Capital Gain the assessee has claimed exemption on the ground that assessee has invested the sale proceeds for acquisition of residential property/ flat No. 39 in Raheja Towers, Rajabhau Desai Marg, Prabhadevi, Mumbai. As the AO treated the sale proceeds of tenancy right as unexplained cash credit and resultantly not allowed the deduction/exemption under section 54F. Considering the fact that we have allowed LTCG by allowing Ground No.1 in favour of assessee. Thus, we direct the AO to verify the fact about the investment of sale consideration / gain in purchase of new residential house and allow exemption/deduction under section 54/54F in accordance with law. In the result, this ground of appeal is allowed for statistical purpose.
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2020 (5) TMI 12
Deduction u/s 54F - Clubbing of exempt long term capital gain income of minor children - HELD THAT:- Lower authorities have not disputed the date of acquisition and sale of assets, nature of asset and the period of holding, at the hand on the minors. There is no dispute that the gains earned by minors were invested in CGAS. After the investment made by minor children u/s 54F left no chargeable capital gain which could be clubbed u/s 64(1A) in hands of assessee. The coordinate bench of Kolkata Tribunal in Rajeev Goyal [ 2012 (6) TMI 139 - ITAT KOLKATA] held that in case of clubbing of income of minors child, deduction u/s 54EC is to be allowed on minors income from LTCG separately and only net income is to be clubbed. In Madan Lal Bassi [ 2003 (11) TMI 292 - ITAT CHANDIGARH-A] Chandigarh bench of Tribunal also held that u/s 45(1), any profits or gains arising from the transfer of a capital asset are chargeable to income-tax. Save as otherwise provided in various sections including section 54F - If section 54F is applied, only the amount of capital gains found taxable after application of above provisions can be charged to income-tax. Therefore, to find out whether there is any profit or gain chargeable to tax u/s 45(1), the provisions of both the sections are to be read together. Section 54F cannot be read in isolation. Tribunal the AO / CIT(A) was not justified in denying the exemption of capital gain to the minors, which was invested in capital gain accounts scheme (CGAS). We direct the AO to allow exemption with regard to the capital gain earned and invested on behalf of both the minors in CGAS. Denial of exemption u/s 54F - AO denied the exemption u/s 54 to the assessee by taking view that the assessee is owner of more than one residential house on the date of transfer of shares from which the assessee earned LTCG - HELD THAT:- The entire benefit/gain earned by assessee was invested in CGAS. The assessee further claimed that neither the possession of the asset was given nor conveyance deed was executed. Thus, interest in the asset was transferred. We have noted that there is no clarity about the facts whether the assessee owned any other residential house or not, in the order of AO as well as CIT(A). Therefore, we deem it appropriate to restore this issue to the file of AO to decide the issue afresh. The assessee is also directed to bring all the facts with clarity before AO.
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Benami Property
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2020 (5) TMI 11
Benami transactions - Prohibition of the right to recover property held benami - family dispute between spouses causes collateral damage on others related to them leading to even financial institutions acting arbitrarily and causes hardship to them - HELD THAT:- A very large amount of money for the purchase of the subject property was supplied by the petitioner and his wife, the close relationship between the petitioner, petitioner s wife, her sister (the 8th respondent) and the 5th respondent whom she married, created a position of confidence and trust on the first three persons and of good faith in the 5th respondent; and the ostensible title of the 5th respondent is being held by him in a fiduciary capacity for the benefit of petitioner and his wife. Also the possession of the property is with the petitioner admittedly. Admittedly the petitioner attended the registration of the sale of the subject property as a proxy for the 5th respondent. T herefore the instant case falls within Sec.4 (3) (b) of the Benami Transactions (Prohibitions) Act,1988 and is not hit by Sec.3 thereof. I t is settled law that Section 54 of the Transfer of Property Act does not lay down a law as to whether in all situations an apparent state of affairs as contained in a deed of sale would be treated to be the real state of affairs. It does not bar a benami transaction. There is no embargo in getting a property registered in the name of one person; although the real beneficiary thereof would be another. [see Jai Narain Parasrampuria v. Pushpa Devi Saraf - 2006 (8) TMI 527 - SUPREME COURT ] Though the regd. sale deed dt.5.3.2016 stands in the name of the 5th respondent, he has no title to it and the actual owner is the petitioner and his wife. Petition is disposed of declaring that the 5th respondent was only the ostensible owner of the subject property and the real owner was the petitioner who financed the purchase of the subject property; and respondent nos.1 to 4 and 7 are directed to transfer the subject property to the petitioner by private treaty invoking Rule 8(5)(d) of the Security Interest Enforcement Rules, 2002 subject to the petitioner mortgaging the said property to the Bank to repay the balance payable to it and continuing to pay the installments fixed by it without fail. Interlocutory Application Nos.2 and 3 of 2019 are dismissed, and Interlocutory Application Nos.4, 5, 6 of 2019 and 1 of 2020 are allowed. No order as to costs.
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Customs
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2020 (5) TMI 10
Export of Carpets - generation of wrong documents, due to defects in software - mis-description of value as well as quantity of goods - confiscation - redemption fine - Levy of Penalty on CHA u/s 114 (iii) of the Customs Act, 1962 - HELD THAT:- The appellant on being pointed out by the CHA immediately placed the correct document before Customs Authority on the same very date. In such set of circumstances, no mala fide can be attributed to the assessee so as to confiscate the export consignment or to impose penalty upon them - also, the second set filed by the appellants correctly covered all the aspects of the export consignment including the quantity, quality description and value etc. - confiscation set aside. Valuation of goods - HELD THAT:- The Commissioner has gone by the market inquiries which fact by itself cannot be held to be sufficient to reject the value of the exported goods. It is worth noticing that the appellant has placed on record BRC s indicating and evidencing the total realization of the exported goods. The said fact has not been disputed by the Adjudicating Authority. In this scenario, the value of the goods cannot be doubted and the declared value has to be accepted. Appeal allowed - decided in favor of appellant.
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2020 (5) TMI 9
Smuggling - Silver Granules - foreign origin goods - Department was of the view that the silver being foreign origin and that the appellant not been able to establish the duty paid on the said silver or legal import, is smuggled in nature - Confiscation - penalties - Circular of the Board dated 11.06.1990 - HELD THAT:- From the circular, it is seen that the Govt. has made clear that the provisions of section 123 of Customs Act, 1962 should not be invoked, when persons are found possession of silver bullion less than 100 kgs. Further that when silver bullion is in the form of bars of 30 kgs. each and also silver bullion which bear foreign markings even though less than 100 kgs. can be subject to seizure for which proceedings can be initiated. In the present case, the silver is not in the nature of bars or coins. It is in the form silver granules. As per the circular, when silver bullion is found in possession with foreign markings the same can be subject to seizure, if it is less than 100 kgs. In the present case, the quantity of silver bullion is 60 kgs. Then the question arises, whether silver granules would fall within the definition of silver bullion - The meaning of bullion thus does not take away platinum, gold or silver in the form of grains/granules. Thus, granules also fall within the definition of bullion. This would lead to the consequence that if the silver granules has foreign markings even though less than 100 kgs. would not be covered by the above Board circular. Whether silver granules in the present case has foreign markings? - HELD THAT:- The marking cannot be endorsed on silver granules as in case of silver coins or silver bars. The only practical way to endorse a marking on silver in the form of granules is to mention the markings on the packing /boxes which holds the silver granules - In the present case, the silver granules were found in carton boxes on which there was specific mention of the name of foreign manufacturer, lot nos., the date of manufacture etc. The scanned copy of the markings on the boxes has been placed as part of the record, which is reproduced under and would help for better appreciation - Thus, it can be seen that the markings on the boxes clearly indicated the silver granules was of foreign origin. Then the burden shifts on to the appellant to show how the markings do not relate to the silver contained inside the boxes. The appellant also relies upon ledger extracts/ accounts to tentend that silver was purchased by him. Shri Gaurav Agarwal has deposed that he had purchased silver granules vide eight transactions from M/s. S.B. Ornaments Pvt. Ltd., Agra, M/s. Nishant Silver Handicraft, Mathura and M/s. Prasanth Silver Handicraft, Mathura. Appellant has produced some invoices and accounts to support this - The statement of Shri Gaurav Agarwal is totally silent on this aspect. At the cost of repetition it has to be mentioned that the carton boxes which contained the silver granules correctly mentioned the quantity in each box to be 10kgs, the name of manufacturer, the lot no. year of manufacture, purity etc. - Further, it is a question to be answered by the appellant as to whether the silver granules after being processed out of a bar by the appellant retain such high purity. The appellant has not been able to establish that the silver was legally imported and suffered Customs duty - the confiscation of goods and penalties imposed are legal and proper - Appeal dismissed - decided against appellant.
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Insolvency & Bankruptcy
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2020 (5) TMI 8
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The plea of the Corporate Debtor that the Company is a solvent and going concern, cannot be made a ground for delaying the initiation of CIR Process or to keep in abeyance the instant Application as sought for as this Tribunal is required in case of a 'financial debt' which is due and in the event of 'default' as defined under I B Code, 2016 is perforce required to admit the Application and the parties including the Corporate Debtor can have recourse during CIR process to submit a plan for restructuring if otherwise not disqualified. The Application, as filed by the Financial Creditor is required to be admitted under section 7 (5) of the I B Code, 2016. Application admitted - moratorium declared.
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2020 (5) TMI 7
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - time limitation - acknowledgement of debt - HELD THAT:- The amount of debt and default is not in dispute. Time Limitation - HELD THAT:- It is not in dispute that such amount of debt due and payable by the Corporate Debtor to the Financial Creditor has is appearing in the financial statements for the year ended 31-3-2018. It is also not in dispute that in the Auditor's Report fact of default by Corporate Debtor in the payment of loan and interest has also been reported. The only plea which has been taken by the Corporate Debtor that such financial statements are for the period which is beyond 3 years from the date of declaration of the amount of corporate debt as NPA in 2013. -In our considered view, such plea stands on no legs for the simple reason that the default which has been shown in the balance sheet of financial year-ended 31-3-2018 is not running from March 2013 or earlier. Acknowledgement of debt - HELD THAT:- The presentation in the balance sheet or auditor's report there to amounts to acknowledgement of debt by corporate debtor. This proposition is now more or less settled. The application filed by the Financial Creditor under section 7 of the Insolvency Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, namely R.P. Info Systems Ltd. is hereby admitted - moratorium is declared.
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2020 (5) TMI 6
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of dispute or not - time limitation for filing of application by Financial Creditor - HELD THAT:- The period during which a party has been prosecuted with due diligence, another proceeding whether in a court of first motion or an appeal or revision against the party that period shall be excluded where the proceeding relates to the same matter in issue and therefore, when we placed reliance upon Section 14 of the Limitation Act, then we are of the considered view that the decision upon which the Ld. Counsel for the Corporate Debtor has placed reliance under the facts and circumstances of the case in hand is not applicable rather in view of the facts discussed, we are of the considered view that period spent in the proceeding pending before the DRT, DRAT and Hon'ble Delhi High Court is liable to be excluded while computing the period of limitation and when we shall exclude that period then we are of the considered view that application filed by the Financial Creditor is within time. There are no force in the contentions raised on behalf of the Ld. Counsel for the Corporate Debtor that the present proceeding is barred by limitation, accordingly, we find that it is well within time. In order to trigger the proceeding under section 7 of IBC, we have to see only two things i.e. there is a financial debt and the debt is due. It is of no matter that the debt is disputed. In the light of the decision, when we shall consider that case in hand then we find, the documents and the pleading shows that the financial debt has been given by the applicant to the Corporate Debtor and that has not been repaid, which would also evident from the One Time Settlement Proposal dated 15-9-2018, 15-9-2018 15-2-2019 - thus, the Financial Creditor has established this fact that there is a financial debt and that has not been paid and so there is default and he is legally entitled to get' that amount. It is seen that there is default in payment, there is a financial debt and the amount in default is more than ₹ 1, 00, 000/-which is the minimum threshold limit fixed under IBC, 2016 and there are no disciplinary proceedings pending against the proposed IRP. Under the circumstances, this Adjudicating Authority is inclined to admit this petition and initiate CIRP of the Respondent. Petition admitted.
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2020 (5) TMI 5
Liquidation of Corporate Debtor - expiry of CIRP date - section 33 (1) (a) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, the CIRP period is stated to have been expired on 26-7-2019 and no resolution plan under section 30 (6) of the Code was received by the Adjudicating Authority before that date. In fact, an application is received from the RP for liquidation of the corporate debtor, since despite invitation for EOI being issued thrice, no resolution plan was received. Therefore, the order is being passed requiring the corporate debtor to be liquidated in the manner as laid down in Chapter III of the Code and the directions for issue of public announcement stating that the corporate debtor is in liquidation and requiring such orders to be sent to the authority with which the corporate debtor is registered, are being issued. The RP has stated that the Liquidator's fee in terms of Regulation 39 D of the CIRP Regulations, 2016 has been approved by the CoC. Further, the CoC has also recommended that the Liquidator may first explore the sale of the corporate debtor as a going concern in accordance with the Regulation 39 C. It is also stated in the minutes of the 6th meeting of CoC that since the corporate debtor is not a going concern, the sale of assets of corporate debtor shall be in accordance with clause (a) to (d) of the Regulation 32 and was approved by the CoC - thus, he Bench is satisfied that the Corporate Debtor Company is required to be liquidated and accordingly, it is ordered that the Corporate Debtor shall be liquidated. Application allowed.
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2020 (5) TMI 4
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The loans were applied for by individual borrowers for varying amounts, and a statement of every account has been maintained separately. The amounts were disbursed into individual accounts and the installment due would be transferred automatically to the Developer under standing Instructions As per clause 2.9 of their agreement, the liability to pay EMIs was that of the borrower. The default giving rise to the financial debt is due from the loanee and not from the Developer. The transaction relied upon does not make the Respondent company liable to be proceeded u/s 7 of the Code. Filing of such a petition is an abuse of the process of law - Petition rejected.
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2020 (5) TMI 3
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of dispute or not - HELD THAT:- It is noted that the Corporate Debtor has admitted the liability by the letter dated 12-2-2018, at pp.34-35. There is no reply on behalf of the Corporate Debtor - There is unequivocal admission of the debt due and payable to the Operational Creditor in the letter dated 12-2-2018 (at pp.34-35), which is the reply to the Demand Notice dated 27-12-2017. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Application admitted - moratorium declared.
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Service Tax
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2020 (5) TMI 2
Refund of CENVAT Credit - rejection for the reason that there is mismatch between the invoices, the service tax amount is not mentioned in the invoices etc. - HELD THAT:- The learned counsel has submitted that the appellant did not appear for personal hearing and, therefore, they could not furnish necessary documents to establish their contentions. The appellant has to be given a further chance to establish their claim for refund. The appeals are remanded to the adjudicating authority who shall reconsider the issues arising in these appeals afresh - Appeal allowed by way of remand.
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2020 (5) TMI 1
Club and association Service - co-operative society - provision of service from one to person to another, or not - mutuality of interest - suppression of facts or not - time limitation - HELD THAT:- The issue that whether the club, association or cooperative society are liable for service tax on services provided by these entities to their members was under litigation before various courts and judgments given by various High Courts in favour of the assessee that whenever there is service from such entities to its members, since the principle of mutuality is involved, it cannot be said that there is a provision of services. Time Limitation - HELD THAT:- Subsequently, the issue has been decided by the larger bench of Supreme Court. In this background, it cannot be said that the appellant had any malafide intention to evade the service tax. It is also submitted by the appellant that they are the registered cooperative society and all the necessary books are maintained. Therefore, the bonafide belief of the appellant is established - the entire demand is under extended period, the same will not sustain on the time bar itself. Appeal allowed - decided in favor of appellant.
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Indian Laws
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2020 (5) TMI 30
Meghalaya Regulation of the Game of Arrow Shooting and the Sale of Teer Tickets Act, 2018 - Closing down all running illegally teer-counters in the State and to provide age limit restrictions for entering into the betting of teer and to ensure that the distance in terms of Section 6 of the Meghalaya Regulation of the Game of Arrow Shooting and the Sale of Teer Tickets Act, 2018 - case of petitioner is that many such teer-counters in different parts of the State, especially in Garo Hills and Tura district, are being run without obtaining any license - sole purpose of filing this PIL is to ensure compliance of various provisions of the Act of 2018 and also to ensure that the State exchequer is not put to any loss of revenue - HELD THAT:- Compliance of Section 6 of the Act of 2018 has to be scrupulously ensured which mandates the teer-counters and bookmakers are required to be located not less than 1000 feet or 300 meters away from the nearest place of worship or educational institution. No doubt the petitioner has not given any specific instances except making certain allegations against the respondent No.9-Association, nevertheless, it is the mandatory duty of the respondent-authorities, especially the Commissioner of Taxes and Superintendent of Taxes located in different districts in the State, particularly Tura Circles I and II, to ensure periodical checking of all such sites where licensees of the earlier Act of 1982 used to run the teer-counters and elsewhere, and if any new teer-counters has been established, and are being run. The respondent-State is directed to ensure that the sites of all teer-counters in the State are inspected, especially those teer-counters, which were run by earlier licenses and if such teer-counters are found to run without new license, they should be immediately closed down and should be allowed to operate only if they obtain the license and fulfill various requirements under the Act of 2018 especially Sections 6 and 16 - petition disposed off.
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