TMI Tax Updates - e-Newsletter
May 31, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

News

1. Recommendations of 43rd GST Council meeting

2. Sovereign Gold Bond Scheme 2021-22 Series III - Issue Price

3. Fibre & protein rice ‘village rice’ from Tamil Nadu exported to Ghana & Yemen

4. Auction for Sale (Re-Issue) of (i) ‘5.63% GS 2026’, (ii) ‘GoI Floating Rate Bond 2033’, (iii) ‘6.64% GS 2035’, and (iv) ‘6.67% GS 2050’

Notifications

Customs

1. 31/2021 - dated 29-5-2021 - ADD

Seeks to impose definitive anti-dumping duty on "Methyl Acetoacetate", originating in or exported from China PR, for a period of five years

FEMA

2. FEMA. 3(R)2/2021-RB - dated 24-5-2021 - FEMA

Foreign Exchange Management (Borrowing and lending) (Amendment) Regulations, 2021

GST - States

3. 44/2020– State Tax - dated 28-5-2021 - Delhi SGST

Seeks to give effect to the provisions of Rule 67A for furnishing a nil return in FORM GSTR-3B by SMS

4. 38/1/2017-Fin(R&C)(199)/1408 - dated 25-5-2021 - Goa SGST

Seeks to extend specified compliances falling between 15.04.2021 to 30.05.2021 till 31.05.2021 in exercise of powers under section 168A of GGST Act

5. 38/1/2017-Fin(R&C)(198)/1407 - dated 25-5-2021 - Goa SGST

Goa Goods and Services Tax (Third Amendment) Rules, 2021.

6. 38/1/2017-Fin(R&C)(197)/1406 - dated 25-5-2021 - Goa SGST

Seeks to amend Notification No. 38/1/2017/Fin(R&C)(100)/2805 dated the 8th May, 2019

7. 38/1/2017-Fin(R&C)(196)/1405 - dated 25-5-2021 - Goa SGST

Seeks to amend Notification No. 38/1/2017- -Fin(R&C)(87) dated the 31st December, 2018

8. 38/1/2017-Fin(R&C)(195)/1404 - dated 25-5-2021 - Goa SGST

Provide relief by lowering of interest rate for the month of March and April, 2021

9. 38/1/2017-Fin(R&C)(194)/1403 - dated 25-5-2021 - Goa SGST

Goa Goods and Services Tax (Second Amendment) Rules, 2021.

10. 18/GST-2 - dated 21-5-2021 - Haryana SGST

Haryana Goods and Services Tax (Fourth Amendment) Rules, 2021

11. 13/GST-2 - dated 21-5-2021 - Haryana SGST

Haryana Goods and Services Tax (Third Amendment) Rules, 2021

12. FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/53 - dated 1-5-2021 - Nagaland SGST

Seeks to extend specified compliances falling between 15.04.2021 to 30.05.2021 till 31.05.2021

13. FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/51 - dated 1-5-2021 - Nagaland SGST

Amendment in Notification No. FIN/REV-3/GST/1/08(Pt-1)(Vol.1)/123 dated the 23rd April 2019

14. CT/LEG/GST-NT/12/17/326 - 03/2021 - dated 1-5-2021 - Nagaland SGST

Amendment in Notification No. 13/2020, dated the 10th November, 2020

15. CT/LEG/GST-NT/12/17/325-02/2021 - dated 1-5-2021 - Nagaland SGST

Seeks to extend the due date for furnishing of FORM ITC-04 for the period Jan-March, 2021 till 31st May, 2021

16. 14838-FIN-CTI-TAX-0001/2020 - dated 25-5-2021 - Orissa SGST

Odisha Goods and Services Tax (Fourth Amendment) Rules, 2021

Highlights / Catch Notes

GST

• GST Council Extends Compliance Deadlines, Reduces Late Fees, and Introduces Amnesty Scheme to Support Taxpayers Amid COVID-19 Challenges.

  News : Recommendations of 43rd GST Council meeting - News
  Visit to Get Source

  ---

Income Tax

• Inherited Property Deemed Hindu Undivided Family Asset, Not Individual; Assessment Order May Be Quashed.

  Case-Laws - AT : Sale of property - Property belongs to the HUF of the assessee Or assessee individual - rights on ancestral property - the property was inherited by the father of the assessee in 1952 and was also conveyed to the assessee after the death of his father in 1955, i.e. before coming into force of Hindu Succession Act, 1950. Accordingly, the property belongs to the HUF of the assessee and not to the assessee individual. Therefore, the assessment order itself is liable to be quashed. - AT
  Visit to Get Source

  ---

• Appellant's bid to reduce book profits u/s 115JB rejected; deemed revenue-neutral due to higher normal tax.

  Case-Laws - AT : Disallowing the claim of the appellant to reduce the reversal of provision for bad and doubtful debts from the book profits computed under section 115JB - if the assessee is not called upon to pay any tax on book profit as taxes on normal computation are higher even after the aforesaid exercise of increase of the book profit by the amount of provision for the concerned year, the exercise would be an empty exercise and revenue neutral. This means that the assessee would not have been called upon to pay any extra tax whatsoever had this exercise been done. - Further, if two views are possible in a statutory tax provisions, the one in favour of the assessee should be adopted. - AT
  Visit to Get Source

  ---

• Income Tax Addition u/s 69 Deemed Unsustainable Due to Lack of Evidence and Non-Disclosure of Foreign Information.

  Case-Laws - AT : Addition u/s. 69 based on information received from Australian Tax authorities - There is absolutely no other material in the hand of the A.O. of proving the addition in the hands of the assessee. Despite the assessee’s request, the copy of information received from Australian tax Authority has not been given to the assessee. - the addition made, which is based upon the information from a foreign source, without confronting the same to the assessee and without any corroborative material is not at all sustainable. - AT
  Visit to Get Source

  ---

• Section 153C Assessment for 2014-15 Misses Deadline; Order Issued Too Late, Barred by Limitation.

  Case-Laws - AT : Assessment completed u/s 153C - Limitation for completion of assessment - Correct date of search - once it is held that the present assessment year i.e., A.Y 2014-15 is the year of search, then the limitation for completion of assessment in the instant case expires on 31.03.2016. - Since the AO in the instant case has passed the order on 30.08.2016, therefore, the same is barred by limitation. - AT
  Visit to Get Source

  ---

• Penalty u/s 271(1)(c) Not Imposed Due to Assessee's Genuine Intent in Revised Tax Return.

  Case-Laws - AT : Levy of penalty u/s 271(1)(c) - weighted deduction u/s 35(1)(ii) claimed in the original return and later in the return filed in response to notice u/s 148 of the Act, he sought to withdrew the claim of weighted deduction - This proves the bonafide intent of the assessee, to purchase peace from the department and to avoid vexatious litigation in this regard. In our considered opinion, this intention of the assessee deserves to be accepted in toto. Hence this is not a fit case for levy of penalty u/s 271(1)( c) of the Act. - AT
  Visit to Get Source

  ---

• Section 40(a)(ia) Disallowance Inapplicable for TDS Shortfall Due to Interpretation Differences in Tax Obligations.

  Case-Laws - AT : Disallowance u/s 40(a)(ia) - shortfall in deduction of tax at source due to difference in opinion - no disallowance could be made by invoking provisions of section 40(a)(ia) of the Act, if there is any short fall in the action of tax at source due to difference of understanding our opinion as to the taxability of any item or nature of payment falling under various TDS provisions - AT
  Visit to Get Source

  ---

• Section 44AD Benefits Granted: No TDS Deduction Required u/s 40(a)(ia) for Income Filed on Presumptive Basis.

  Case-Laws - AT : Disallowance u/s 40(a)(ia) for non deduction of TDS - return of income on presumptive basis u/s.44AD - the assessee is entitled to take the benefit of the provisions of section 44AD of the Act. Based on the above factual position narrated above and precedents applicable to the facts, it is abundantly clear that assessee is not liable to deduct TDS under section 40(a)(ia) - AT
  Visit to Get Source

  ---

Customs

• Suit for Malicious Prosecution Against Customs Filed Within One-Year Limit per Section 12(1) of Limitation Act.

  Case-Laws - HC : Time Limitation period for filing a suit for malicious prosecution, against the customs authorities/officials - The date of the acquittal of the Plaintiff/Respondent is 11th April 2007 and the suit for malicious prosecution was instituted by her on 11th April 2008. As per Section 12(1) of the Limitation Act, the date from which the period of limitation is to be reckoned, is to be excluded while calculating the said period. This would clearly mean that the date, as on which the order of acquittal of the Plaintiff was pronounced by the ld. Sessions Judge, would have to be excluded for the purpose of calculating the limitation of one year for filing of the suit for malicious prosecution. Thus, the limitation, under Section 3 of the Limitation Act r/w Entry 74 of the Schedule would commence only on 12th April 2007. - HC
  Visit to Get Source

  ---

• Transportation costs impact remnant ATF valuation under Customs Act Section 14(1) and 2007 Rule 10(2) only if incurred.

  Case-Laws - AT : Valuation of this remnant ATF - cost of transportation - where transportation of goods is involved and cost is actually incurred or is liable to be incurred for such transportation, such cost has to be added to the transaction value, but where there is no transportation of goods nor there is any liability to incur the cost of such transport, the first proviso to section 14(1) of the Customs Act and rule 10(2) of the 2007 Rules would not be attracted. - AT
  Visit to Get Source

  ---

• Dispute Over Redemption Fine and Penalty for Goods Release; Section 18(2) Adjustment Without Section 28(1) Demand Challenged.

  Case-Laws - AT : Levy of redemption fine and penalty - provisional release of goods - the appellant paid entire amount of the differential duty along with interest thereon and 15% duty as penalty - Without demanding duty under Section 28(1) of the Act, how can it be adjusted under section 18(2) of the Act. Technically speaking the demand of differential duty is also not sustainable in the circumstances till finalization of the assessment; as the appellant has not contested the payment of duty and sought conclusion of the matter under Section 28(5) of the Act. - AT
  Visit to Get Source

  ---

FEMA

• High Court Notes Deficiency in FEMA Adjudication Process Due to Lack of Reasoning in Decision-Making.

  Case-Laws - HC : Offence under FEMA - Distinction between the two stages of the adjudication process - The reasons are the bridge between the material on record and the final decision. Therefore, after considering the judgment of the Supreme Court, the Complaint and the reply of the petitioner to show cause, that is the material on record, the Adjudicating Authority is to give reasons, howsoever brief, at least showing that he is alive to the contentions raised in the reply to the Show Cause Notice and why he is of the opinion that inquiry must still be held. In the present case, this bridge is missing. - HC
  Visit to Get Source

  ---

Indian Laws

• Kerala's 2018 Lottery Rules Valid but Restriction on Other States' Lotteries in Rule 4(4) Overturned as Ultra Vires.

  Case-Laws - HC : Conduct of lotteries - Power of Host State to make rules under section 12 of the Act to monitor the conduct of lotteries of Organising States within the territory of the Host State - Doctrine of occupied field - Doctrine of ultra vires - the Kerala Paper Lotteries (Regulation) Amendment Rules, 2018 are valid and within the legislative competence of the State of Kerala and made validly in exercise of the powers under section 12 of the Act. The words “including lotteries run/organized/promoted by other States” in Rule 4(4) shall stand severed from the remaining provision of the Amended Rules and the severed portion is hereby held as ultra vires the Act. - HC
  Visit to Get Source

  ---

IBC

• Banks Must Reimburse Funds Taken Post-Insolvency Start; Violates Section 14 of Insolvency and Bankruptcy Code.

  Case-Laws - AT : Seeking direction against the Appellant Banks and Financial Institutions to reimburse all the amounts appropriated by them after the Insolvency Commencement Date - Adjusting of the ‘Claims’ by the Appellant Banks during the CIRP out of the funds of the ‘Corporate Debtor’ results in unjust enrichment of the Banks and further, crediting amounts towards non-fund and fund based accounts during the moratorium period is against the provisions of Section 14 of the Code. - AT
  Visit to Get Source

  ---

• Electricity Charges During CIRP: Recoverable Post-Resolution Plan Approval or u/s 53 if Liquidation Occurs.

  Case-Laws - AT : Recovery of electricity charges during CIRP - Whether the Appellant was entitled to recover electricity charges being incurred by the Corporate Debtor on month to month basis after the CIRP was initiated against the Corporate Debtor? - the same will be part of the CIRP Costs which can be recovered when the Resolution Plan is approved or would form part of Section 53 if the Liquidation has been initiated. - AT
  Visit to Get Source

  ---

Service Tax

• High Court Enforces Compliance on Pre-Deposit Use in Sabka Vishwas Scheme Disputes; Ensures Adherence to Specific Demands.

  Case-Laws - HC : Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - compliance with the requirement to ascertain amount claimed as pre-deposit with respect to the dispute, that the amount of pre-deposit has not been appropriated for any other demand other than the demand reflected in the show-cause notice - Necessary directions issued - HC
  Visit to Get Source

  ---

Central Excise

• Delayed Duty Interest Notice Barred by Limitation Due to Failure to Issue Within One-Year Period.

  Case-Laws - AT : Interest is demanded on account of delayed payment of duty - Period of limitation - As it was in the knowledge of the Revenue that the appellant has not paid the interest very well in January-February 2012 despite direction, but no show cause notice was issued to the appellant within one year from the said period. In these circumstances, the show cause notice issued on 03.09.2015 is barred by limitation. - AT
  Visit to Get Source

  ---

• Parle's CENVAT Credit Distribution on Input Services Based on Turnover Upheld u/r 7(d) of CENVAT Rules.

  Case-Laws - AT : CENVAT Credit - Input service distribution (ISD) - Parle was justified in distributing credits on input services attributable to the final product on a pro-rata basis proportionate to the turnover of each unit between the manufacturing plants of Parle and its contract manufacturing units, including the appellant, under rule 7(d) of the CENVAT Rules. - AT
  Visit to Get Source

  ---

• Appellant Entitled to Interest on Delayed Refund Starting Three Months After Initial Claim Filing Date.

  Case-Laws - AT : Grant of interest on delayed refund - relevant time for calculation of interest - it is apparent on record that the said refund was sanctioned but was adjusted against the demand which was not sustained - the appellant is entitled to claim interest after three months from the date of filing of the refund claim i.e., after 3 months of date of filing the refund claim - AT
  Visit to Get Source

  ---

• Development Commissioner Approves Ceramic Colors Clearance in DTA; Department Can't Claim Suppression Due to Delayed Inquiry.

  Case-Laws - AT : EOU - Clearance of goods in DTA - The permission given by the Development Commissioner - When the description is ceramic colours, in both export as well as DTA clearance documents, the department was within their rights to call for clarification from the Development Commissioner or the appellants so as to satisfy themselves. This having not been done, it is not open for the department to invoke extended period, alleging that the appellants have suppressed some information, after considerable lapse of time. - AT
  Visit to Get Source

  ---

VAT

• Dispute Over VAT Classification: Is an "Embroidered Ladies Suit" an Unstitched Textile Under Schedule V, Serial 1?

  Case-Laws - SC : Classification of goods - textile made ups - whether the commodity which is described as an “embroidered ladies suit”, which the respondent claims to be unstitched, would fall within the description of a ‘textile - The expression “other textile made ups” must be read ejusdem generis with the articles which precede it and should hence comprehend goods of the same class and description. - The product would fall for classification under Serial 1 of Schedule V which is a residuary entry which covers all goods except those which are mentioned and described in Schedules I, II, III and IV - SC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2021 (5) TMI 928
  Grant of Bail - offence punishable under Sections 132 (1)(B) (C) read with 132(1)(I) Central Goods Service Tax (CGST) Act, 2017 - non-bailable and cognizable offence or not - HELD THAT:- The present bail application deserves to be allowed for the reasons; firstly, the maximum sentence provided for the alleged offence under the Act is 5 years; secondly, there is no apprehension, if any, shown by the respondent-department about the accused-petitioner of running away, or tempering or influencing the witnesses in any manner; thirdly, challan has already been presented in the court and due to ongoing Covid-19 problem, the trial is not proceeding; fourthly to show his bona fides the petitioner has already deposited Rupees One Crore Fifty Four Thousand with the department and lastly the petitioner is a 68 years old person and he is not required for any custodial interrogation/investigation. Petitioner be admitted to regular bail subject to satisfaction of the trial Court - Petition allowed.

  ---

• Income Tax

• 2021 (5) TMI 926
  Reopening of assessment u/s 148 - non disposing of the objections raised by the assessee against the reasons recorded before issuance of notice under Section 148 - HELD THAT:- Applying the dictum as laid down in the case of GVK Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT] , we are of the view that disposing of the objections raised by the assessee against the reasons recorded before issuance of notice under Section 148 of the Act, though not part of the statutory requirement, as prescribed under the Act, however, same is guided by the directions issued by the Apex Court. The specific objections raised by the writ applicant, produced on record at page-33 to 45 to this writ application, have not been properly dealt with by the AO. The lapse is in clear violation of the decision of the Apex Court. We are of the view that the AO has passed the order mechanically and without application of his mind. Writ application succeeds in part. The order disposing of the objections filed by the assessee to this petition is hereby set aside and the matter is remitted to the AO. The AO shall take into consideration the objections raised by the assessee and pass a fresh speaking order in accordance with law.

  ---

• 2021 (5) TMI 925
  Reopening of assessment u/s 147 - notice beyond the period of 4 years - HELD THAT:- In the case of GKN Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT ] the Supreme Court has laid down the procedure as to the manner of dealing with the objections raised against the notice under Section 148 of the Act. The Supreme Court has held that when a notice u/s 148 of the Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notice. AO is bound to furnish reasons within a reasonable time and upon receipt of reasons, the noticee is entitled to file an objection to issuance of notice and AO is bound to dispose of the same by speaking order. In the case of SABH Infrastructure Ltd [ 2017 (9) TMI 1589 - DELHI HIGH COURT ] has held that the exercise of considering the assessee s objections to the reopening of the assessment is not a mechanical ritual. It is a quasi judicial function. The order disposing of the objection should deal with each objection and give proper reason for conclusion. The order should reflect proper application of mind. Applying the dictum as laid down by the Supreme Court in the case of GVK Driveshaft (supra), we are of the view that disposing of the objections raised by the assessee against the reasons recorded before issuance of notice under Section 148 of the Act, though not part of the statutory requirement, as prescribed under the Act, however, same is guided by the directions issued by the Apex Court. The specific objections raised by the writ applicant, produced on record at page-44 to 56 to this writ application, have not been properly dealt with by the AO. The lapse is in clear violation of the decision of the Apex Court. We are of the view that the AO has passed the order mechanically and without application of his mind. In other words not in a meaningful manner.In view of the above, this writ application succeeds in part.

  ---

• 2021 (5) TMI 922
  Deduction u/s 80IB(10) - when the assessee has not satisfied the requirements of the said provision and when the project was approved with a sanctioned built up area and the assessee has eventually constructed the area far in excess of what was approved - HELD THAT:- On close scrutiny of the judgment rendered by this court in Brigade Enterprises Ltd.[ 2020 (9) TMI 1137 - KARNATAKA HIGH COURT] and the facts involved in the said case, we are of the considered opinion that the substantial question of law involved in this appeal is squarely answered in the said case. Following the dictum in Brigade Enterprises, the substantial question of law raised in this appeal is answered against the Revenue and in favour of the assessee.

  ---

• 2021 (5) TMI 920
  TDS u/s 194C - disallowance of salary paid to the security guards on the ground that such payments have been made to the contractor without deducting tax - assessee has not disclosed mode of payment of salary - HELD THAT:- We find the assessee in the instant case is a small assessee and has produced confirmation of the persons on the letter head of its firm as proof of payment of salary to these persons. Merely because the assessee has not disclosed mode of payment of salary i.e. either by cheque or cash, the same in our opinion should not doubted by the learned CIT(A) especially when such salary to security guards comes to Rs. 27,000/- per month for four persons. Even, if the payment is made in cash, there will be no violation of section 40A(3) of the Act. We, therefore, hold that the learned CIT(A) is not justified in sustaining the addition paid to four individual persons towards salary to security guards. The first issue raised by the assessee is accordingly allowed. Disallowance on account of shop rent and on account of godown rent - assessee did not file any reply to the query raised by AO - HELD THAT:- We find the assessee neither at the assessment stage nor at the remand stage has produced sufficient documents or evidence for the allowability of the rent. Considering the totality of facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO with a direction to grant one more opportunity to the assessee to substantiate her case and decide the issue as per fact and law. Accordingly, the second issue raised by the assessee in the grounds of appeal is allowed for statistical purpose. Disallowance being proportionate interest on advance to different persons - HELD THAT:- As in view of the decision of the Hon ble Supreme Court in the case of S.A. Builders ltd. vs CIT [ 2006 (12) TMI 82 - SUPREME COURT] no disallowance is called for. However, the learned CIT(A) dismissed the ground holding that no plausible explanation was offered for the query raised on this issue except stating that it was needed for business dealings. From the various details furnished by the assessee, we do not find what was the reason for giving such advance. The commercial expediency of the same has not been established - as not been established as to whether the assessee s own capital and free reserves are more than the interest free advance extended by the assessee during the impugned assessment year. Considering all we restore this issue to the file of the AO with a direction to give one more opportunity to substantiate the commercial expediency or to substantiate that her own capital and free reserves is more than the interest free advances given. The AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. Disallowance of low house hold expenses - HELD THAT:- We find the AO disallowed of Rs. 25,000/- on estimate basis being probable house hold expenditure on the ground that the assessee s withdrawal is only Rs. 1,06,000/- and her husband is earning approximate Rs. 2.50 laksh per annum and the family of the assessee consists of the assessee, her husband and two school going children in the age group of 14 and 11 years. It is the submission of the learned counsel for the assessee that contribution of her husband is about Rs. 2 lakhs and the assessee has shown withdrawal at Rs. 1,06,000/- and such combined withdrawal is reasonable for meeting house hold expenses. We find some force in the above arguments of the learned counsel for the assessee. The addition made by the AO is purely on surmises and conjectures and nothing has been brought on record to show any extravagant expenditure incurred by the assessee during the year. Since, the addition made by the AO is based on surmises and conjectures, which has been upheld by the learned CIT(A), therefore, we set-aside the order of the learned CIT(A) and direct the AO to delete the disallowance.

  ---

• 2021 (5) TMI 919
  Sale of property - assessee had acquired lease rights over the property on 30.6.1950 by virtue of Settlement and Arrangement deed - Property belongs to the HUF of the assessee Or assessee individual - rights on ancestral property - enactment of Hindu Succession Act, in 1956 - Property acquired by virtue of family settlement deed - HELD THAT:- Prior to the enactment of Hindu Succession Act, in 1956, the ancestral property became the HUF property and after the said Act, the ancestral property becomes the self-acquired property of the person on whom it devolves. In the case before me clearly, the property was inherited by the father of the assessee in 1952 and was also conveyed to the assessee after the death of his father in 1955, i.e. before coming into force of Hindu Succession Act, 1950. Accordingly, the property belongs to the HUF of the assessee and not to the assessee individual. Therefore, the assessment order itself is liable to be quashed. Accordingly, grounds of appeal Nos. 2 and 3 are allowed and the assessment order is set aside.

  ---

• 2021 (5) TMI 918
  Revision u/s 263 - assessee has been selected for limited scrutiny on two grounds viz. verification of Purchase of property and verification of deduction claimed under the head capital gain and expanding the scope of scrutiny by the way of order u/s 263 - HELD THAT:- As gone through the notice issued by the revenue dated 29.07.2016 wherein the AO mentioned that two issues have been identified for examination which are verification i.e. purchase of property and verification of deduction claimed under the head capital gain. We find that the complete details pertaining to both the issues have been examined by the AO and the replies of the assessee along with the details of sale of shares, confirmation of the parties, bank statements, purchase of property, registration document and deduction u/ s 54F claimed. The entire details of the said two transactions which are the subject matter of scrutiny have been duly provided and examined by the AO and duly accepted after examination and verification. We find that the deduction claimed u/s 54 F was Rs. 6,12 ,10 ,100/- whereas the deduction eligible was Rs. 6,11,19 ,500/-. Thus, there is a computational difference of Rs. 90,600 /- in the claim of deduction u/s 54 F which could have been rectified u/s.154. The provisions of section 263 need not be invoked for computational error for which other provisions of the Act are fairly sufficient. The directions of the ld. PCIT which are beyond the selection criteria of scope of scrutiny for the instant year cannot be held to be legally valid. Appeal of the assessee is allowed.

  ---

• 2021 (5) TMI 917
  Reopening of assessment u/s 147 - as per the assessment order the notice was returned back with the postal remark that the same was not accepted, thus passed assessment order u/s 144 - cash transaction treated as unexplained deposit and treated the same as income under Section 69A - HELD THAT:- As regards the contention of notice not properly served by the Assessing Officer, the explanation of the postal authorities is that the assessee has refused to take notice is a good service and hence ground Nos. 1 to 7 are dismissed. Addition u/s 69A - From the perusal of the record presented before the CIT (A), it can be found that the explanation given by the assessee relating to sale of land for Rs. 36,90,000/- was duly reflected in his bank account. The CIT (A) s stand that no explanation was offered relating to the remaining cash deposit to the extent of Rs. 26,20,000/- is not correct. The cash deposits were made according to the sale deed dated 22.07.2008 and the amount was received on 22.07.2008 and 24.01.2009 which was properly reflected in assessee s bank account. Therefore, the CIT (Appeals) was not right in sustaining the remaining amount of cash deposit to the extent of Rs. 26,20,000/-. Therefore, on merits the assessee succeeds and ground Nos. 8 to 13 are allowed.

  ---

• 2021 (5) TMI 916
  Penalty u/s 271(1)(c) - addition being speculative loss on derivative transactions which according to him cannot be set off against business income and disallowance u/s 14A r.w.r 8D(2)(iii) of the Rules - HELD THAT:- The Hon ble Supreme Court in the case of CIT vs Reliance Petro Products Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] has held that making of an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. Merely because the assessee claimed deduction which has not been accepted by the Revenue, the penalty u/s 271(1)(c) is not attracted. If the contention of the Revenue is accepted, the assessee would be liable for penalty u/s 271(1)(c) of the Act in every case where the claim made by the assessee is not accepted by the AO for any reason. That is clearly not the intendment of the legislature. In view of the above discussion, we are of the considered opinion that the learned CIT(A) is fully justified in cancelling the penalty levied by the AO u/s 271(1)(c) . Even otherwise also, a perusal of the notice issued by the Assessing Officer u/s 274 r.w.s 271 of the Act, dated 29.12.2011, a copy of which is placed at page 87 of the paper book shows that it is in only a printed form without striking off the inappropriate words in the said notice. Therefore, it is not understood as to under which limb of the provisions of section 271(1)(c), the Assessing Officer has initiated penalty proceedings i.e. whether for concealment of income or for furnishing of inaccurate particulars of such income. The Hon ble Delhi High Court in the case of PCIT vs Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT ] has dismissed the appeal filed by the Revenue on identical circumstances, the relevant observations of which have already been reproduced in the preceding paragraphs while recording the arguments of the learned counsel for the assessee. We, therefore, hold that the notice issued by the Assessing Officer is bad in law since it did not specify under which limb of section 271(1)(c) of the Act, the penalty proceedings have been initiated i.e. whether for concealment of income or for furnishing of inaccurate particular of income. In this view of the matter, we uphold the order of the learned CIT(A) cancelling the penalty levied by the Assessing Officer. The grounds raised by the Revenue are accordingly dismissed.

  ---

• 2021 (5) TMI 915
  Validity of Revision u/s 263 - Assessment passed on a dead person - HELD THAT:- Having regard to facts that the order u/s 263 was passed on the assessee, after the death of the assessee and the consequent assessment order u/s 143(3) rw.s. 263 is also passed on a dead person, the said order has no legs to stand. Therefore, we set aside the assessment order dated 5.7.2019 passed on a dead person as not maintainable in law. Assessee s appeal is allowed.

  ---

• 2021 (5) TMI 914
  TDS u/s 194A - Disallowance u/s 40(a)(a) on account of non-deduction of tax at source on interest payments - HELD THAT:- As decided in own case [ 2021 (5) TMI 735 - ITAT HYDERABAD] assessee has deposited the amount with the Court, but, it has not actually paid to the actual recipients directly i.e., pattadars. On analysis of the above cited section and Circulars, it is clear that the assessee is not responsible for deducting tax deduction at source and assessee is also not sure that when the amount shall be paid to the actual recipients/pattadars. In our considered opinion, the addition made in this regard is not sustainable in the eyes of law and, therefore, the addition is deleted. Depreciation on plant and machinery - AO allowed depreciation @ 10% treating it as building as against the assessee s claim of 15% as plant machinery - HELD THAT:- As decided in own case [ 2021 (5) TMI 735 - ITAT HYDERABAD] we allow this ground of appeal of the assessee by holding that the assessee is entitled to charge depreciation @ 15% under the block of assets plant and machinery , as against 10% made by the AO. This ground of appeal raised in both the appeals under consideration is allowed. Disallowance of expenditure by way of penalty or fine for violation of any law for the time being in force - allowable revenue expenditure u/s 37(1) or not? - Since the assessee failed to substantiate the said expenditure with documentary evidence, the AO made the addition, which was confirmed by the CIT(A) - HELD THAT:- The submissions of the assessee is that these are the payments made to various state government departments for delay in submission of form or document or compliance with the procedures, in which case, the payment is not for violation of law but compensation for not complying with law and allowable expenditure as normal business expenditure u/s 37(1) of the Act. We are in agreement with the submissions of the assessee and, therefore, we direct the AO to delete the addition made on this count. Accordingly, this ground of appeal is allowed.

  ---

• 2021 (5) TMI 913
  Unexplained income - Addition of opening stock of assessee undisclosed - HELD THAT:- The clinching issue which goes in favour of the assessee is that the sales made by assessee out of the alleged undisclosed opening stock on by the assessee has been accepted by the learned AO. The resultant trading profit has also been accepted. Further on the opening stock allegedly not existing according to the AO amounting to Rs. 51,051,565/ , assessee has shown sales of Rs. 52,851,660/ and has disclosed a gross profit of Rs. 1,800,095 only. From the above gross profit assessee has incurred expenditure of almost Rs. 10 lakh and has shown meager net profit of Rs. 875,491/ . Therefore, it is apparent that assessee has only got capitalization of Rs. 875,491 where the AO has alleged that the opening stock of Rs. 51,051,565/ is nonexistent and bogus. On the factual metrics itself, the allegation of the learned assessing officer seems to be unsustainable because why a person would show and on accounted opening stock of the magnitude of Rs. 51,000,000 just to on a meager net profit of Rs. 875,000/ No infirmity in the order of the learned CIT A in deleting the addition made by the learned assessing officer holding that the opening stock of the assessee was an unexplained income of the assessee as such stock in trade was not in existence. In the result, the solitary ground of appeal of the learned AO is dismissed.

  ---

• 2021 (5) TMI 911
  TDS u/s 194J - TDS on royalty - payment of minimum guarantee royalty paid by the assessee was outside of the royalty to sub section (vi) of Section 9(1) - HELD THAT:- We find that CIT(A) while deleting the addition has noted that AO was unable to show as to under which of the clause (v) to Explanation 2 to Section 9(1)(vi) of the Act the payment of royalty for the purpose of Section 194J of the Act was covered and the payment of minimum guarantee royalty paid by the assessee was outside of the royalty to sub section (vi) of Section 9(1) and therefore the provisions of Section 194J were not applicable. We further find that on identical issue in assessee s own case for A.Y. 2011-12 [ 2020 (6) TMI 264 - ITAT DELHI] . Before us, Revenue has not pointed any fallacy in the findings of CIT(A) nor has pointed to any distinguishing feature in the facts of the case for the year under consideration and that of AY 2011-12. Revenue has also not placed any material on record to demonstrate that the order of the co-ordinate Bench of the Tribunal in Assessee s own case for AY 2011-12 has been setaside/stayed/orverruled by higher judicial forum. In such a situation, we find no reason to interfere with the order of CIT(A). We therefore dismiss the ground of the Revenue. Additions u/s 69A - HELD THAT:- We find that CIT(A) while deleting the addition has given a finding that the AO has made addition merely on the basis of suspicion without having any material against the assessee. He has further given a finding that entire has been received by the assessee, recorded in the Books of account and therefore no addition u/s 69A can be made merely because the receipt was disclosed of in each two different account. No material has been placed by the Revenue to point out any fallacy in the findings of CIT(A). We therefore find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.

  ---

• 2021 (5) TMI 910
  Disallowing the claim of the appellant to reduce the reversal of provision for bad and doubtful debts from the book profits computed under section 115JB - HELD THAT:- If we apply the purposive test of the enactment being considered here. To recapitulate the provision of the act mandates that if assessee writes back provision for bad debt made in appeal years, the deduction of the same from the book profit is permissible if the provision created in the earlier year has been added back to the book profit. In this regard, the CBDT circular No. 550 explains that such an action in earlier year should have gone to increase the book profit of the said year. We are of the considered opinion that in this regard if the assessee is not called upon to pay any tax on book profit as taxes on normal computation are higher even after the aforesaid exercise of increase of the book profit by the amount of provision for the concerned year, the exercise would be an empty exercise and revenue neutral. This means that the assessee would not have been called upon to pay any extra tax whatsoever had this exercise been done. The explanation invoked by the authorities below is not applicable on the facts of this case. Even for argument sake, we consider the view that there are two views possible, we are of the considered opinion that the view in favour of assessee is on an overwhelming higher side. In this view of the matter, as expounded by the Hon ble Court s Constitution bench in the case of Dilip Gandhi [ 2018 (8) TMI 271 - ITAT MUMBAI] if two views are possible in a statutory tax provisions, the one in favour of the assessee should be adopted. Accordingly, in the background of the aforesaid discussion and precedent, we are of the considered opinion that the order of the ld. CIT(A) is not sustainable. Accordingly, we set aside the order of the ld. CIT(A) and decide the issue in favour of the assessee. Interest u/s.234C - As assessee submitted that interest is leviable on returned income and not on assessed income. That this submission was made but not considered by the ld. CIT(A) - HELD THAT:- Upon careful consideration we find that this issue is consequential, the A.O. shall consider the same as per law.

  ---

• 2021 (5) TMI 904
  Addition u/s. 69 based on information received from Australian Tax authorities - HELD THAT:- Addition is solely made on the basis of statement of the assessee s son before Australian Tax Authorities and affidavit by the assessee before them that fund found in possession of the son were arranged by assessee by hawala transaction. When confronted by the investigation department of the Revenue, the assessee has rebutted the above allegation. The rebuttal or refusal by the assessee has only been referred by the A.O. without bringing on record the actual rebuttal. There is absolutely no other material in the hand of the A.O. of proving the addition in the hands of the assessee. Despite the assessee s request, the copy of information received from Australian tax Authority has not been given to the assessee. In these circumstances, the addition made, which is based upon the information from a foreign source, without confronting the same to the assessee and without any corroborative material is not at all sustainable. Deduction u/s 36(1)(vii) r.w.s. 36(2) - assessee has written off the balance loan outstanding in profit and loss account - company has not returned the loan to the assessee and it has become time barred - HELD THAT:- We find that the assessee s claim is that the assessee has given a loan to a party in the course of business several years ago. Since, the party has not repaid the loan and it has requested its name to be struck off from the Register of company by ROC, the assessee has claimed it u/s.36(2) as bad debt. The revenue has held that this cannot be allowed as it was not a debt which has been written off. We note that if a loan is no longer recoverable that can be considered as a loss and allowed u/s.37(i) of the Act. Quoting a wrong section is not falal. Hence, the fact that the amount has become irrecoverable needs to be examined. Hence, we remit the issue to the file of the A.O. to examine the case of the assessee in light of our observation as above. Needless to add that the assessee should be given an opportunity of being heard.

  ---

• 2021 (5) TMI 901
  Revision u/s 263 - validity of Assessment completed u/s 153C - Limitation for completion of assessment - Correct date of search - as per CIT Expenses and depreciation not properly examined by the AO. AO has not examined the applicability of section 2(22)(e) on intercorporate deposits, AO has not disallowed proportionate interest on advance made to sister concerns, though assessee has paid interest on loans/ advances and AO has not examined the credits received from Mr Vinod Ambawatta - as argued by assessee contravention to provisions of section 153C and without obtaining prior approval of the JCIT HELD THAT:- In view of provisions of section 153C, the date of search in the case of the assessee is 29.08.2013 which date falls under A.Y. 2014-15. Further, the Tribunal in assessee s own case for A.Y. 2012-13 [ 2018 (9) TMI 1686 - ITAT DELHI] has already held that the year of search for the assessee is 2014-15. We, therefore, find merit in the submission of the ld. counsel for the assessee that the present assessment should have been framed by the AO having jurisdiction after cases were centralized i.e., the AO of Central Circle-I, Faridabad whereas the impugned assessment order has been framed by the DCIT, Central Circle-I, Gurgaon and, therefore, the order becomes bad in law. Further, once it is held that the present assessment year i.e., A.Y 2014-15 is the year of search, then the limitation for completion of assessment in the instant case expires on 31.03.2016. Since the AO in the instant case has passed the order on 30.08.2016, therefore, the same is barred by limitation. Further, since the AO has not issued the mandatory notice u/s 153C and has passed the order u/s 143(3) and has not obtained any approval from the JCIT before passing the order for the impugned assessment year which is the search year as held by the Tribunal in assessee s own case in the immediately preceding years, therefore, the order is bad in law. Once it is held that the original order passed by the AO is without jurisdiction being passed by the wrong AO, barred by limitation being passed after 31.03.2016 and bad in law being passed in contravention to provisions of section 153C and without obtaining prior approval of the JCIT, therefore, the order passed u/s 263 against such assessment order is also bad in law and has to be quashed. We hold and direct accordingly. The additional grounds raised by the assessee are accordingly allowed. Applicability of section 2(22)(e) on intercorporate deposits - We find merit in the submission of the ld. counsel for the assessee that all inter-corporate deposits were given in the preceding years and the assessee has, in fact, received the deposits in the current year. Further, even the AO in the order passed subsequent to the 263 order has not made any addition u/s 2(22)(e) of the IT Act, 1961 or disallowed any depreciation on finance cost. Disallowance of proportionate interest on interest free advances to sister concerns - It is an admitted fact that most of these advances were given in the preceding years and no such disallowances were made in the assessments completed. Further, the own capital and free reserves were much more than the interest free advances given to sister concerns. Therefore, we find merit in the arguments of the ld. counsel for the assessee that there is no error in the order of the AO on this issue. Credits received from Mr. Vinod Ambawatta - It is an admitted fact that assessments of the above person were done by the same AO u/s 153C who has passed the order in the case of the assessee. Assessee has filed all the relevant details such as confirmations, proof of identity, copy of ITR, bank details, etc. to prove the ingredients of provisions of section 68 in response to the letter of the AO. Under these circumstances, it cannot be said that the AO has not made any enquiries especially when the assessee as well as Mr. Vinod Ambawata were assessed by the same AO. For invoking the provisions of section 263, the order passed by the AO must be both erroneous and prejudicial to the interest of the Revenue. The twin conditions must be satisfied. Absence of any one condition cannot empower the PCIT to invoke jurisdiction u/s 263 of the IT Act, 1961. The order passed by the AO in the instant case may be prejudicial to the interest of the Revenue but cannot be termed as erroneous in view of our discussion on various issues in the preceding paragraph. Further, even after giving details before the PCIT in response to his notice u/s 263 the PCIT has not examined the details himself and came to a definite conclusion but has merely set aside the matter to the file of the AO for denovo assessment which is not in accordance with law as held in the case of Sunbeam Auto Ltd [ 2009 (9) TMI 633 - DELHI HIGH COURT] - Decided in favour of assessee.

  ---

• 2021 (5) TMI 897
  Disallowance u/s. 40A(3) - HELD THAT:- Since the amounts are in the nature of reimbursement, not debited to P L account of the assessee, no disallowance u/s. 40A(3) is called for. Addition on account of seized material - HELD THAT:- As argued that the name, address, PAN number, bank statement, details of debit, credit and details regarding the refund of the amounts have been duly submitted before the revenue authorities. The amount has been received on 07.03.2007, repaid on 11.06.2007 even before the date of search i.e. 15.11.2007, it can be considered as a business loan received and the same has been duly refunded. We have also perused the record before us and find that there is no material to prove that the amount received is liable for tax u/s. 68 and the addition made by the AO is directed to be deleted. Addition made on account of PDC and notional interest - HELD THAT:- Since, the issue of PDC has already been dealt on merits of the case, we hereby hold that no notional interest on such amount can be upheld. The interest calculated on the PDC by the AO is without any basis or evidence. Hence, we direct the addition made by the AO be deleted.

  ---

• 2021 (5) TMI 896
  Penalty u/s 271(1)(c) - Estimation of income on bogus purchases - CIT-A deleted the penalty - HELD THAT:- AO had disallowed the entire purchases alleged to be bogus; however, learned Commissioner of Income-tax (Appeals) restricted the disallowance to 12.5% being the profit element estimated on the alleged bogus purchases. Thus the purchase of goods by the assessee is not in doubt, but the source of such purchases is doubtful. For that reason alone, the learned Commissioner of Income-tax (Appeals) has made an estimated addition. In the aforesaid scenario, it cannot be said that the assessee has, either concealed its income or furnished inaccurate particulars of income. That being the case, we do not find any infirmity in the order of learned Commissioner of Income-tax (Appeals) in deleting the penalty imposed. - Decided against revenue.

  ---

• 2021 (5) TMI 895
  Capital gain computation - adopting the value determined by the DVO in terms of section 50C - HELD THAT:- As the facts are pari materia with the facts already considered by the Tribunal[ 2018 (10) TMI 1893 - ITAT CHENNAI] Therefore, by following the decision of the co-ordinate Bench of ITAT., Chennai in the case of ITO Vs. Shri Neelamanikandan (supra), we set aside the order passed by the learned CIT(A) and restore the issue to the file of the Assessing Officer and direct him to recompute the long term capital gain by adopting the value determined by the DVO in terms of section 50C of the Act. Appeal filed by the Revenue is treated as allowed for statistical purposes.

  ---

• 2021 (5) TMI 894
  Levy of penalty u/s 271(1)(c) - weighted deduction u/s 35(1)(ii) claimed in the original return and later in the return filed in response to notice u/s 148 of the Act, he sought to withdrew the claim of weighted deduction - HELD THAT:- Explanation to section 35(1)(ii) of the Act clearly supports the case of the assessee by categorically providing that the claim of deduction in the hands of the donor (i.e the assessee herein) cannot be disturbed under any circumstances even if the recognition of the donee institution has been withdrawn by the competent authority subsequently. The purpose of this Explanation is that the bonafide belief of the assessee (donor institution) at the time of making contributions should be respected and it cannot be faulted for the fraudulent acts, if any, committed by the donee institution. Despite this , the assessee had come forward to offer the said claim of weighted deduction by withdrawing the same during the course of assessment proceedings and had paid tax thereon. This proves the bonafide intent of the assessee, to purchase peace from the department and to avoid vexatious litigation in this regard. In our considered opinion, this intention of the assessee deserves to be accepted in toto. Hence this is not a fit case for levy of penalty u/s 271(1)( c) of the Act. We find that this issue on the levy of penalty on the very same addition was the subject matter of adjudication by this tribunal in the case of Sammy E Major [ 2020 (7) TMI 244 - ITAT MUMBAI] for Asst Year 2013-14 wherein the penalty u/s 271(1)( c) of the Act was deleted. In the aforesaid case before this tribunal , the assessee therein made a similar claim of weighted deduction in the original return and later in the return filed in response to notice u/s 148 of the Act, he sought to withdrew the claim of weighted deduction. This tribunal had deleted the penalty u/s 271(1)( c) of the Act in such circumstances. - Decided in favour of assessee.

  ---

• 2021 (5) TMI 892
  Revision u/s 263 - Assessee argued as no opportunity of hearing to the assessee given - Gain on foreign exchange receivables and related forward contracts, is an additional consideration for slump sale of domestic formulation business, and is, therefore, chargeable to tax, which, according to the learned Principal Commissioner, should be added to the returned income of the assessee - HELD THAT:- Principal Commissioner has not given any opportunity of hearing to the assessee on the precise point on which the powers of revision exercised, and, to borrow the words of Hon ble Supreme Court in the case of Amitabh Bachan [ 2016 (5) TMI 493 - SUPREME COURT] there can be no dispute that while the C.I.T. is free to exercise his jurisdiction on consideration of all relevant facts, a full opportunity to controvert the same and to explain the circumstances surrounding such facts, as may be considered relevant by the assessee, must be afforded to him by the C.I.T. prior to the finalization of the decision . To this extent, undoubtedly, the impugned order is vitiated in law, but the question is what are the implications of this failure on the part of the learned Commissioner. While one can understand anxiety of the assessee to bring an end to the dispute at this forum itself, we are of the considered view that the right course of action will be to send the matter back to the file of the Commissioner for giving an opportunity of hearing to the assessee, on the point on which the impugned revision is actually done in the present case, and thus afford an opportunity to the assessee explain the circumstances surrounding this issue, as may be considered relevant by the assessee. Commissioner will also consider whether the rate of foreign exchange conversion, as pointed out by the assessee and as accepted by the Assessing Officer, is indeed in order, and, if so, whether the subject assessment order can indeed be said to erroneous and prejudicial to the interest of the assessee. In other words, before deciding the matter afresh in the remanded proceedings, learned Commissioner must take a categorical call on this factual aspect, now that it has been pointed out, and in case the stand of the assessee is found to be correct, the matter must end there. As the matter is being remitted back to the file of the learned Commissioner, it is made clear that the subject matter of hearing will be confined to the issue in the impugned revision order, that the learned Commissioner does not have the liberty of modifying or expanding the scope of the impugned revision proceedings, as the remand is for the limited purpose of providing an opportunity of hearing to the assessee on the points taken in the impugned revision proceeding - Assessee appeal is allowed for statistical purposes

  ---

• 2021 (5) TMI 891
  Disallowance u/s 40(a)(ia) - shortfall in deduction of tax at source due to difference in opinion - HELD THAT:- As to the taxability of any payment or nature of the payment made under the TDS provisions. It is also submitted that for this reason no disallowance could be made by invoking provisions of section 40(a)(ia). Hon ble Calcutta High Court in case of S.K.Tekriwal [ 2011 (10) TMI 10 - ITAT, KOLKATA] on identical facts analysed identical argument. Their Lordships considered the very same issue of applicability of provisions of section 40(a)(ia) of the Act, in a case where there was short deduction of tax at source on payment made to sub-contractors. Hon ble Calcutta High Court held that if there is any short fall in deduction of tax due to difference in opinion on understanding of taxability of any item or nature of payment falling under various TDS provisions, no disallowance can be made by invoking provisions of section 40(a)(ia) of the Act. Admittedly, the present facts is not the case of no deduction of TDS and that assessee under a bona fide belief, deducted TDS at 2% under section 194C. It is also apparent from the agreement that it was a bundle of services that was rendered by VBHC to assessee against which a consolidated payment has been made. Respectfully following the above decision, we are of the view that no disallowance could be made by invoking provisions of section 40(a)(ia) of the Act, if there is any short fall in the action of tax at source due to difference of understanding our opinion as to the taxability of any item or nature of payment falling under various TDS provisions. Grounds raised by assessee stands allowed.

  ---

• 2021 (5) TMI 890
  Disallowance u/s 40(a)(ia) - return of income on presumptive basis u/s.44AD - whether the assessee can take the advantage provided in section 44AD of the Act? - HELD THAT:- Since the assessee s turnover for the Assessment Year 2013-14 is to the tune of Rs. 92,33,844/- and the assessee had filed the return of income on presumptive basis u/s.44AD of the Act, therefore assessee is entitled to take the benefit of the provisions of section 44AD of the Act, and hence assessee is not liable to deduct TDS under section 40(a)(ia). Whole of the process of taxation must follow the procedures which are valid under the law and must adhere to law i.e. substantive one as well as procedural one too. Therefore,as provided in the Constitution of India that every step should be taken to ensure that levy and collection of the taxes is strictly in accordance with law not only substantive one but the procedural law, as well. Therefore, we do not agree with the statement of the assessing officer to the effect that the dues to the crown has no limitation and has precedence over all other allowance and claims. The assessee s turnover for the Assessment Year 2013-14 which is below one crore rupees, the threshold limit prescribed u/s 44AD of the Act and the assessee had filed the return of income on presumptive basis u/s.44AD of the Act therefore assessee is entitled to take the benefit of the provisions of section 44AD of the Act. In view of the reasons set out above, as also bearing in mind entirety of the case, we are of the considered view that the assessee is entitled to take the benefit of the provisions of section 44AD of the Act. Based on the above factual position narrated above and precedents applicable to the facts, it is abundantly clear that assessee is not liable to deduct TDS under section 40(a)(ia) of the Act, therefore we delete the addition. - Decided in favour of assessee.

  ---

• 2021 (5) TMI 889
  Reopening of assessment u/s.147 - issuing notice u/s.148 - addition u/s 69 - search carried out at the premises of assessee - CIT(A) while confirming the order of AO dismissed the appeal on account of non-prosecution - HELD THAT:- In case of Shri Rajiv K.Tulsiyan, Brother-inlaw of assessee . [ 2018 (6) TMI 1754 - ITAT SURAT] tribunal on almost similar set of facts, in case of Shri Rajiv K.Tulsiyan, while admitting the additional evidence, restored the matter to the file of the AO. As considering the statement of assessee and Rajiev K Tulsiyan, recorded by DRI that the affair of assessee s firm was also managed by Rajiv K.Tulsiyan. The ld. AR also vehemently submitted that father of Rajiv K.Tulsiyan was not well during the period when the appeal of assessee was pending before first appellate authority and ultimately died. Further, considering the facts that lower authorities have passed ex-party order against the assessee. Therefore, keeping in view the principal of natural justice that the impugned order is passed without hearing the assessee. Accordingly the additional ground of appeal raised by the assessee is allowed. Appeal of the assessee allowed for statistical purpose.

  ---

• 2021 (5) TMI 887
  Reopening of assessment u/s 147 - no sale of immovable property during the financial year 2010-11 and also requested for supply of reasons for reopening of the assessment u/s 148 - HELD THAT:- There is no mention of any letters nor there was any mention of supplying the reasons for reopening of the assessment to the assessee. Though a specific ground was taken before the CIT (A),he has not held the issue in favour of the assessee. The Hon ble Supreme Court in the case of GKN Driveshafts (India) Ltd [ 2002 (11) TMI 7 - SUPREME COURT] held that where a notice u/s 148 is issued and the assessee, after filing of the return of income in response to such notice, requests the AO to supply the reasons for reopening, AO is bound to supply the reasons for reopening the assessment and only after disposal of the objections, if any, raised by the assessee, can the AO proceed to reassess the income of the assessee. In this case, it is clear that the Assessing Officer has not followed the due procedure as mandated by the decision of the Hon ble Supreme Court in the case of GKN Driveshafts (India) Ltd (cited Supra). We deem it fit and proper to remand the issue to the file of the AO with a direction to supply the reasons for reopening of the assessment to the assessee and only after disposal of the objections, if any, raised by the assessee, the AO shall proceed to recompute the income of the assessee in accordance with law. Needless to mention that the assessee shall be given a fair opportunity of hearing. Assessee s appeal is treated as allowed for statistical purposes.

  ---

• Customs

• 2021 (5) TMI 932
  Time Limitation period for filing a suit for malicious prosecution, against the customs authorities/officials - Section 155(2) of the Customs Act, 1962 - HELD THAT:- A reading of Section 155(2) of the Customs Act, 1962, shows that the earlier Section (in the Sea Customs Act, 1878), has simply been merged and set out in continuity. The side headings of the provision have also been omitted. A cause for confusion has thus arisen, leading to varying interpretations of this provision by different Courts - A perusal of the provisions of The Limitation Act, 1963, shows that the period of limitation for filing of a suit for malicious prosecution is one year, from the date when the Plaintiff is acquitted or when the prosecution against the Plaintiff is otherwise terminated. In the present case, the Plaintiff was acquitted on 11th April 2007. Parallelly, however, show-cause proceedings were commenced against the Petitioner and the show-cause notice, issued by the Customs Authorities, was quashed on 13th September, 2006. The quashing of the said show-cause notice was upheld by the ld. Supreme Court on 18th August, 2017. Considering the fact that the show-cause notice had also raised issues which were overlapping in nature, it is possible to take a view that until and unless this show cause notice finally terminated, with the judgment of the Supreme Court, the limitation does not begin for the Plaintiff to avail her remedy to file a civil suit - In the present case, however, the Court need not even venture so far. The date of the acquittal of the Plaintiff/Respondent is 11th April 2007 and the suit for malicious prosecution was instituted by her on 11th April 2008. As per Section 12(1) of the Limitation Act, the date from which the period of limitation is to be reckoned, is to be excluded while calculating the said period. This would clearly mean that the date, as on which the order of acquittal of the Plaintiff was pronounced by the ld. Sessions Judge, would have to be excluded for the purpose of calculating the limitation of one year for filing of the suit for malicious prosecution. Thus, the limitation, under Section 3 of the Limitation Act r/w Entry 74 of the Schedule would commence only on 12th April 2008. The suit for malicious prosecution in the present case, having been filed on 11th April 2008 which is within the period of one year, is therefore well within the limitation prescribed under The Limitation Act, 1963. This court is of the opinion that the suit is well within limitation, as the period of limitation under Section 3 and Section 12 of the Limitation Act, 1962, r/w Entry 74 of the Schedule of the Limitation Act, would have ended only on 12th April 2008, which is one day after the date when the suit for malicious prosecution was presented by the Plaintiff/Respondent. The suit is thus within limitation. Petition dismissed.

  ---

• 2021 (5) TMI 909
  Rectification of Mistake - waiver of penalty under Section 114AA of the Customs Act - reduction of penalty under Section 112 (a) of the Customs Act - HELD THAT:- The scope of an application under Rules 41 for Rectification of Mistakes is only to rectify any mistake apparent on record and not to review any decision already taken even, if any party feels that the decision is not correct. The aggrieved party can take recourse to appellate remedies if it is not satisfied with the Final Order. The first alleged mistake pointed out by the applicant is that in paragraph 5 of the Final Order, it has been recorded that all the ETAs submitted were fake, while, in fact, as recorded in paragraph 6 of the impugned order in original passed by the Learned Commissioner, only two ETAs were fake and the rest 14 ETAs were issued by DOT but were held to be invalid in the OIO because they were meant for Fitbits manufactured in USA while the Fitbits which were imported were manufactured in China - As clarified in paragraph 2(ii) of the Minutes of the meeting held by Chief Commissioner on 24-11-2016 a copy of which was enclosed as Annexure 20 to the Appeal, the ETAs are valid even if they are of a different country of origin. The two fake ETAs accounted for goods worth Rs. 1,26,69,14/- while the remaining 14 FTAs accounted for goods worth Rs. 1,39,45,581/-. We find that this mistake needs to be rectified in the Final Order. The second alleged mistake is that they had obtained fresh ETAs in lieu of the fake ones which they had initially submitted, therefore, the goods imported were not liable for confiscation. We find that this submission was made and was recorded in paragraph 3 and the decision was recorded in paragraph 7 of the Final order - this submission was considered and in the Final Order, the appellant was still considered liable to penalty. There is no error apparent on record. The third submission is that there is no prohibition on import of wireless devices which was not considered by Tribunal in the Final Order - in paragraph 3 of the Final Order, the argument of the appellant that the goods were not liable for confiscation as they were not imported contrary to any prohibition under the Customs Act or any other law for the time being in force was recorded and the submissions by the DR were recorded in paragraph 4 - In the present case, the entire case is built upon this National Treatment under paragraph 2.03. Therefore, we find no force in the argument of the applicant that their import was not in violation of any law and hence the imported goods were not liable for confiscation nor were they liable to penalty. Penalty imposed on the applicant under Section 112 (a) (ii) of the Customs Act, 1962 - HELD THAT:- The argument of the learned Counsel that the penalty cannot be more than the duty sought to be evaded under Section 112(a)(ii) is untenable since there was neither any allegation of attempt to evade payment of duty by the department nor any arguments were made on this point. We therefore, find that there is no force in this argument. The quantum of penalty, however, needs to be reconsidered, since 14 of the 16 ETAs were genuine with only wrong Country of Origin, which, according to the final clarification of the DOT does not matter and the ETAs are valid. The application for rectification of mistake is disposed off.

  ---

• 2021 (5) TMI 908
  Confiscation - short payment of Customs Duty - valuation of this remnant ATF - cost of transportation - rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT:- An amount should actually be agreed to be paid and a liability created is for such payment, irrespective of actual payment. The use of the word paid or payable means that it would cover those cases also where actual payment of the agreed amount for cost and services is deferred to be paid on a subsequent date - Even under rule 10(2) of the 2007 Rules, the cost of transport incurred in respect of the imported goods is required to be added to the value of imported goods only if the same has been incurred and does not already form part of the value of the goods that are imported. The first proviso to rule 10(2) of the 2007 Rules contemplates of a situation where the cost of transportation is not ascertainable and it is only in such a situation that 20% of the FOB value of imported goods can be added. It, therefore, follows that where transportation of goods is involved and cost is actually incurred or is liable to be incurred for such transportation, such cost has to be added to the transaction value, but where there is no transportation of goods nor there is any liability to incur the cost of such transport, the first proviso to section 14(1) of the Customs Act and rule 10(2) of the 2007 Rules would not be attracted. Transportation - whether the ATF which is filled in the fuel tank of an aircraft is actually being transported through an aircraft? - HELD THAT:- The answer clearly is that the airlines are not transporting ATF for delivery to India. ATF which is filled in the fuel tank of the aircraft is actually required to fly the aircraft and is a consumable for the airlines. It cannot, in such circumstances, be urged that ATF is being transported through the aircraft. A different situation would, however, arise if an oil company specifically imports ATF in large containers/tanker as goods or as cargo, for the purpose of selling the same to airlines. There can be no doubt that in such a situation the cost of transportation for import of ATF would have to be included in the transaction value for the purpose of determining the customs duty liability - Thus, if there is no transportation of remnant ATF, the notional cost of freight cannot be included in the value of remnant ATF. Cost For Transportation - HELD THAT:- If no cost of transportation is incurred/suffered by the airlines, no amount as cost is payable in towards transportation of the remnant ATF - In the instant case, it has been found as a fact that neither the ATF is transported nor any cost is incurred. The notional value of transportation under the proviso to rule 10(2) of the 2007 Rules cannot, therefore, be added to the transaction value. The transaction value has to be determined strictly in accordance with section 14(1) of the Customs Act and rule 10(2) of the 2007 Rules. Notional charges have to be included only in cases where actual invoice price for the remnant ATF is not available or such invoice price does not include the cost of transportation when actually incurred but the amount incurred is not ascertainable. The Instructions further provide that in the absence of such invoice price, the price at which Indian Airlines/ Air India purchase the ATF at the Mumbai Airport i.e. IOCL price for International flights should be taken into consideration. The Instructions do not mandate further addition of insurance charges when IOCL price is to be adapted, even when such charges are not incurred - thus, the inclusion of the cost of insurance or the cost of transport is dependent on the provision of section 14(1) of the Customs Act and rule 10(2) of the 2007 Rules and not on any practice followed by the Customs Authorities/Airlines. No amount towards alleged transportation cost is required to be included in the value of remnant ATF under rule 10(2) of the 2007 Rules for determining the transaction value under section 14(1) of the Customs Act - reference answered.

  ---

• 2021 (5) TMI 905
  Quantum of Redemption Fine and Penalty - misdeclaration of imported goods - goods declared as heavy melting scrap but was found to be re-rollable scrap - HELD THAT:- Nowhere, the Revenue has come with the evidence that prior to the physical examination of the goods in question, the appellant was having any knowledge of the description of the goods that they are not heavy melting scrap and are re-rollable scrap. In this circumstance, although the goods are liable for confiscation as they were not found as declared but redemption fine imposed is on higher side, accordingly the same is reduced to Rs. 40,000/- and penalty is also reduced to Rs. 10,000/-. Appeal allowed.

  ---

• 2021 (5) TMI 902
  Levy of redemption fine and penalty - provisional release of goods - goods declared as as heavy melting scrap but was found to be secondary and defected MS Sheets - HELD THAT:- On detection of the goods on being mis-declared by the appellant, the appellant sought provisional release of the goods which was allowed and at that time, the appellant paid differential duty alongwith interest and 15% of duty as penalty in terms of Section 28(5) of the Customs Act, 1962. Later on, the show cause notice has been issued to the appellant to adjust the duty paid by the appellant under Section 18(2) of the Customs Act, 1962. The provision of Section 18(2) speaks that when the duty leviable on such goods is assessed finally (or re-assessed by the proper officer) in accordance with the provisions of this Act, then the amount paid by the assessee at the time of clearance shall be adjusted. On going through the records placed, there is no final assessment order has been placed which means the provisional release of the goods has been treated as final and the duty paid by the appellant has been adjusted under Section 18(2) of the Act. It is very strange that without finalization of the assessment, re-assessment of the bill of entry, how the duty paid by the appellant has been adjusted under section 18(2) of the Act and demanded the interest and imposed the penalty on the appellant. Without demanding duty under Section 28(1) of the Act, how can it be adjusted under section 18(2) of the Act. Technically speaking the demand of differential duty is also not sustainable in the circumstances till finalization of the assessment; as the appellant has not contested the payment of duty and sought conclusion of the matter under Section 28(5) of the Act. Moreover, when the demand of interest has been made under Section 28 AA of the Act, naturally or consequentially the provisions of Section 28(5) of the Customs Act, 1962 have been attracted in the facts and circumstances of the case. Therefore, the duty, interest and penalty paid by the appellant at the time of clearance of the goods shall amounts to be concluded under Section 28(5) of the Customs Act, 1962 Instead of doing so, the officers of the Revenue has gone beyond that, which is not permissible in law. The duty, interest and 15% penalty in terms of Section 28(5) of the Customs Act, 1962 paid by the appellant is sufficient - appeal allowed.

  ---

• Corporate Laws

• 2021 (5) TMI 893
  Approval of Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- The instant petition is admitted and next date of hearing is fixed on 21st May, 2021. At least 10 (ten) clear days before the said date fixed for hearing, the Petitioners shall cause notice of hearing to be advertised in the FINANCIAL EXPRESS in English and Bengali translation thereof in DAINIK STATESMAN as per Rule 16(1) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Another notice pursuant to Section 230(5) of the Companies Act, 2013 along with accompanying documents, including the copies of the aforesaid Scheme and statement under the provisions of the Companies Act, 2013, as sent earlier, shall be served again on the aforesaid Statutory Authorities by sending the same to them by hand delivery through special messenger or by post or by email within one week from the date of receiving this order. Petition disposed off.

  ---

• Insolvency & Bankruptcy

• 2021 (5) TMI 921
  Seeking direction against the Appellant Banks and Financial Institutions to reimburse all the amounts appropriated by them after the Insolvency Commencement Date - Seeking to resume the working capital limits as available to the Corporate Debtor as on the Insolvency Commencement Date. HELD THAT:- As per Section 17(1)(d) of the I B Code, the Financial Institutions maintaining the accounts of the Corporate Debtor have to act on the instructions of the Interim Resolution Professional in relation to such accounts and furnish all information relating to the Corporate Debtor . This Tribunal in a catena of Judgements has held that Banks cannot debit any amounts from the account of the Corporate Debtor Company after the Order of moratorium, as it amounts to recovery of amount - the Banks cannot freeze accounts nor can they prohibit the Corporate Debtor from withdrawing the amount as available on the date of moratorium for its day-to-day functioning. Section 14 of the I B Code overwrites any other provision contrary to the same and any amount due prior to the date of CIRP cannot be appropriated during the moratorium period. It is seen from the record that payments due under the LCs have been made out of the funds of the Corporate Debtor as is established from the reduction of liabilities under non-fund based facilities. Adjusting of the Claims by the Appellant Banks during the CIRP out of the funds of the Corporate Debtor results in unjust enrichment of the Banks and further, crediting amounts towards non-fund and fund based accounts during the moratorium period is against the provisions of Section 14 of the Code. The non-Applicants are directed to release the title deeds for effective implementation of the terms of the Resolution Plan as provided for under Section 31 of the Code - application allowed.

  ---

• 2021 (5) TMI 912
  Recovery of electricity charges during CIRP - Whether the Appellant was entitled to recover electricity charges being incurred by the Corporate Debtor on month to month basis after the CIRP was initiated against the Corporate Debtor? - HELD THAT:- Regulation 32 makes the distinction clear. If the electricity consumption was for manufacturing and output of the Biscuits which is the normal operation of the Corporate Debtor, in that case dues arising from such supply of electricity during moratorium would have to be paid during moratorium - In present matter the consumption is stated to have been for running of office and security of Corporate Debtor. In that case, the same will be part of the CIRP Costs which can be recovered when the Resolution Plan is approved or would form part of Section 53 if the Liquidation has been initiated. The electricity charges during CIRP would form part of CIRP Costs - Appeal disposed off.

  ---

• 2021 (5) TMI 900
  Seeking possession of an asset of the corporate debtor held by India Infoline Finance Ltd. through SARFAESI proceedings - HELD THAT:- The Applicant has filed the financial contract disclosing that the Suspended Director Mr. Vinay Jain executing a loan agreement in favour of the Applicant herein, the Applicant disbursing the loan amount to the ESCROW Account, thereafter appropriating the said amount towards the earlier loan accounts which became irregular and also documents reflecting sale of the property mortgaged by Best View Properties Limited. Moreover, the Suspended Directors of the Corporate Debtor have not denied anywhere about taking amounts through three loan accounts prior to availing this loan by the Suspended Director of the Corporate Debtor and depositing this loan amount of Rs. 85 Crore in the ESCROW Account, thereafter adjusting the same against the previous three loan accounts. All these transactions having remained apparent on record, we wonder how this RP has ignored all this material establishing financial contract, disbursal of the amount, thereafter signing memo of deposit of title deeds for creation of equitable mortgage. With regard to obligation of guarantee, there is a separate guarantee deed the corporate debtor taking obligation upon itself to pay the loan amount of Rs. 85 Crores along with the interest in the event Vinay Jain defaulted in repaying the loan amount. In addition to it, the corporate debtor has also given its property as security by deposit of title deeds. These are two separate agreements binding the corporate debtor. To proceed against the corporate debtor to place claim upon it as financial debt, IIFL need not rely upon the mortgage charge because section 5 (8)(i) of the Code says that when any guarantee is given over the money borrowed by the borrower with a promise that he would repay the money borrowed along with interest, such obligation of guarantee will fall within the ambit of the clause (i) of section 5 (8) of the Code. For the present claim will fit into clause (i) of definition of financial debt, to admit the claim, the RP need not look into as to whether any charge created and whether such charge has been properly recorded. Of course, all documentary proof is evident on record to prove that money is availed, security is given towards the consideration received. Application disposed off.

  ---

• 2021 (5) TMI 898
  Exclusion of time from CIRP process - covid-19 lockdown pandemic situation - HELD THAT:- The prayer of the IRP to exclude to 154 days to continue CIRP till 17/07/2020 has already been allowed by this Bench. So, this prayer of the applicant has become infructuous in view of the order dated 11.02.2021 passed by this Bench. Stay on proceeding not provided - HELD THAT:- Since the proceeding was not stayed by the Hon ble NCLAT, therefore, the prayer of the applicant to exclude the period commencing from 27.07.2020 to 04.09.2020(39 days) on the ground that Hon ble NCLAT has stayed the proceeding is not liable to be accepted. Accordingly, this prayer of the applicant/Resolution Professional is hereby rejected. Exclusion of Covid-19 period exclusion for the period beyond 17.07.2020 to 27.07.2020 for the situs of office of RP (as registered with Insolvency and Bankruptcy of India) being in Containment Zone - HELD THAT:- Mere plain reading of the Rule 15 and 153 shows that the time appointed or fixed by or under these rules can be extended but herein the case in hand, the time for completion of the CIRP is not fixed under the NCLT rules rather it is fixed under the IBC, 2016. Section 12 of IBC, 2016 makes a provision for completion of CIRP and in view of second proviso of Section 12 Sub Section 3 of the IBC, 2016, the Insolvency Resolution Process shall mandatorily be completed within the period of 330 days from the insolvency commencement date - this Adjudicating Authority is not empowered to extend or exclude the period under Rule 15 and 153 of the NCLT Rules, 2016 - The period of 11 days commencing from 17.07.2020 to 27.07.2020 is excluded on the ground that the Registered office of The Resolution Professional was situated within the Containment Zone at Vaishali Sector-1, Ghaziabad. Seeking further exclusion of 60 days period for lockdown and Covid-19 Pandemic in view of infection in employees intermittent during the period of lockdown - HELD THAT:- The applicant has failed to produce any document to show that two employees whose Covid-19 reports have been enclosed by the applicant were the employees of the applicant and they played a vital role in completing the CIRP period and in their absence, it could not be possible to proceed further in the CIRP. Therefore, on the ground of infection to the employees during the period of lockdown, the prayer of the applicant to exclude the period of 60 days is not liable to be accepted. Application disposed off.

  ---

• FEMA

• 2021 (5) TMI 929
  Offence under FEMA - Distinction between the two stages of the adjudication process - eligible reasons by the respondent no. 1 for the formation of opinion to proceed with the inquiry against the petitioner - HELD THAT:- The Adjudicating Authority, under the Scheme of the FEMA, performs a quasi-judicial function as opposed to a purely administrative function. The requirement of giving reasons therefore cannot be undermined and must be insisted upon from the Adjudicating Authority. The reasons to be given for its opinion under Rule 4(3) of the Adjudication Rules to proceed with the inquiry though need not be as elaborate as in a Court decision or let s say an order passed by the Adjudicating Authority under Rule 4(8) of the Adjudication Rules, but have to be adequate, proper and intelligible, sufficiently clear and explicit. They must reasonably deal with the substantial points raised in the matter and show that they were taken into consideration. However, the extent and nature of reasons depend upon specific facts and circumstances of each case. The Impugned Opinion/Order dated 05.06.2020, does not satisfy the test of giving reasons by the respondent no. 1 for the formation of opinion to proceed with the inquiry against the petitioner. The reasons are the bridge between the material on record and the final decision. Therefore, after considering the judgment of the Supreme Court, the Complaint and the reply of the petitioner to show cause, that is the material on record, the Adjudicating Authority is to give reasons, howsoever brief, at least showing that he is alive to the contentions raised in the reply to the Show Cause Notice and why he is of the opinion that inquiry must still be held. In the present case, this bridge is missing. It is also to be seen as to whether the inquiry deserves to be set aside only for the above violation. In the present case, as noted herein above, the Supreme Court has passed a detailed judgment finding various acts of violation of the FEMA and the Rules/Regulations framed there-under inter alia against the JP Morgan group of companies, may not be specifically by name against the petitioner. The present inquiry has been initiated on the direction of the Supreme Court in the said judgment. The allegations against the petitioner also cannot be said to be such that do not warrant any inquiry given the above factual background. The role of the petitioner and its employees and the capacity in which they acted in the transactions in question need a detailed inquiry as such allegations form part of a larger whole which is being inquired into. Considering that at the stage of Rule 4(3) of the Adjudication Rules, the Adjudicating Authority was merely to form an opinion whether to proceed with the inquiry; and as held by the Supreme Court in Natwar Singh [ 2010 (10) TMI 156 - SUPREME COURT] it is only thereafter that the real and substantial inquiry into allegations of contravention begins ; and that unlike the final order imposing penalty, the opinion formed by the Adjudicating Authority whether an inquiry should be held into the allegations made in the complaint are not fraught with such grave consequences , and as held by the High Court of Bombay in Shashank Vyankatesh Manohar [ 2013 (8) TMI 435 - BOMBAY HIGH COURT] that in case the objections are such as would require detailed consideration, the authority concerned can dispose of the objections by stating that the same would require detailed consideration, which would be done at the disposal of the notice by the final order , it is held that there was enough reason for the respondent no. 1 to form an opinion to proceed with the inquiry against the petitioner and no useful purpose would be served by quashing the impugned Opinion and insisting on the reasons to be first recorded. Exercise of powers under Article 226 being discretionary in nature, this court, in the peculiar facts of the present petitions, does not find it fit to exercise the same. Even though the Impugned Opinion of the Adjudicating Authority does not record any reasons for the same, the same is sustained. This shall, however, not be considered as an affirmation of this Court to the manner in which such opinion is to be recorded. It is also made clear that this Court has not expressed any opinion on the merit of the allegations made against the petitioner in the Show Cause Notice or the inquiry.

  ---

• Service Tax

• 2021 (5) TMI 923
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - compliance with the requirement to ascertain amount claimed as pre-deposit with respect to the dispute, that the amount of pre-deposit has not been appropriated for any other demand other than the demand reflected in the show-cause notice and that there have to be verification as to the factual assertions of the petitioner by looking into the challans of the petitioner - HELD THAT:- This court has disposed of W.P.No.11485/2020 on 17.02.2021 [ 2021 (3) TMI 1018 - KARNATAKA HIGH COURT ] examining in detail the aspect relating to adjudication of pre-deposit and accordingly, no detailed order as regards to the legal contentions advanced in common in the present petition as were raised in W.P.No.11485/2020 is required while observing that legal aspects have been elucidated in the said order - While taking note of the observations made in W.P.No.11485/2020, the estimate made in Form SVLDRS-2 and 3 are set aside. The first respondent to re-work the statement in SVLDRS-3 after arriving at a conclusion regarding the deposit over and above the amount of Rs. 20,27,249/- that has already been given credit as per the earlier SVLDRS-2 form, which is now set aside. Insofar as other deposits are concerned, the respondents to verify after taking note of the submissions at Annexure- E to the petition and affording an opportunity of personal hearing for the purpose of clarification by the petitioner and then arrive at a fresh statement in SVLDRS-3. While taking note of the observations made in W.P.No.11485/2020, the estimate made in Form SVLDRS-2 and 3 are set aside. The first respondent to re-work the statement in SVLDRS-3 after arriving at a conclusion regarding the deposit over and above the amount of Rs. 20,27,249/- that has already been given credit as per the earlier SVLDRS-2 form, which is now set aside. Insofar as other deposits are concerned, the respondents to verify after taking note of the submissions at Annexure- E to the petition and affording an opportunity of personal hearing for the purpose of clarification by the petitioner and then arrive at a fresh statement in SVLDRS-3. Petition disposed off.

  ---

• Central Excise

• 2021 (5) TMI 931
  Refund / Recovery of alleged excess amount of the money refunded earlier to the petitioner towards excise duties - case of petitioner is that though the petitioner is entitled to special rate to get these benefits and applied for finalizing the same, the authorities have not considered the same despite repeated representations submitted in that regard - HELD THAT:- It is directed that the respondent No.2, i.e., Commissioner, Central Goods and Service Tax, Guwahati shall dispose of the representations submitted by the petitioner including the one dated 27.01.2021 for fixation of special rate within four weeks from the date of receipt of a certified copy of this order. It is also directed that till such decision is taken by the authorities on consideration of the representation(s) submitted by the petitioner, the authorities shall not take any coercive action against the petitioner pursuant to the demand notice dated 01.01.2021 challenged in this writ petition. This Court would make it clear that any such repayment in instalments may be made by the petitioner after disposal of the representation submitted by the petitioner in the manner directed above and if there be any amount to be refunded, the same be refunded in equal instalments as indicated in the aforesaid letter dated 29.01.2021 - List along with WP(C) No.2841/2021 on 14.07.2021.

  ---

• 2021 (5) TMI 930
  Refund of alleged excess amount of the money refunded earlier to the petitioner towards excise duties - HELD THAT:- It is directed that the respondent No.2, i.e., Commissioner, Central Goods and Service Tax, Guwahati shall dispose of the representations submitted by the petitioner including the one dated 05.02.2021 for fixation of special rate within four weeks from the date of receipt of a certified copy of this order. It is also directed that till such decision is taken by the authorities on consideration of the representation(s) submitted by the petitioner, the authorities shall not take any coercive action against the petitioner pursuant to the demand notice dated 01.01.2021 challenged in this writ petition. List along with WP(C) No.2566/2021 on 14.07.2021.

  ---

• 2021 (5) TMI 907
  Interest is demanded on account of delayed payment of duty - supplementary invoice during the period 2009-10 for the period 2008-09 to 2010-11 - Penalty - Time Limitation - HELD THAT:- In this case, it is a fact of record that the appellant did not pay interest for the intervening period when they issued supplementary invoices for duty paid thereon. It is also a fact on record that thereafter an audit took place in January-February 2012 for the period 2008-10 and asked the appellant to make the payment of interest for the intervening period, but the appellant did not comply with the said direction. Thereafter, the Revenue was sleeping for more than 3 years and on the morning of 3rd September 2015, a show cause notice was issued to demand interest for the intervening period by invoking extended period of limitation. As it was in the knowledge of the Revenue that the appellant has not paid the interest very well in January-February 2012 despite direction, but no show cause notice was issued to the appellant within one year from the said period. In these circumstances, the show cause notice issued on 03.09.2015 is barred by limitation. The demand of interest is not sustainable - no penalty can be imposed on the appellant - Appeal allowed - decided in favor of appellant.

  ---

• 2021 (5) TMI 906
  CENVAT Credit - CENVAT Credit - Input service distribution (ISD) - input service is attributed to the goods on which excise duty is paid includes the cost of services on which credit was taken - Issuance of Input Service Distributors invoice by Parle to its contract manufacturing unit - contract manufacturing is carried out in terms of notification No. 36/2001-CE (NT) - HELD THAT:- The appellant accepted the authorization and agreed to discharge all liabilities under the Excise Act and Rules made thereunder in respect of the goods manufactured from time to time by the appellant on behalf of Parle. The terms and conditions also stipulate that the appellant would work as a job worker for manufacture of Biscuits for Parle and that Parle would arrange to send the raw materials and packing materials to the appellant on payment of Central Excise duty and that the appellant would avail CENVAT credit of Excise duty paid on the raw and packing materials and capital goods. It also provides that the appellant would made excise invoice/stock, Transfer Notes to Depots or Wholesalers of Parle and would pay Excise duty on the assessable value as shown in the invoice of Parle - It is in terms of the CENVAT Rules, the Registration Exemption Notification and the aforesaid authorization that it has to be determined whether input service credit is available to the appellant even prior to 01.04.2016. The Constitution Bench of the Supreme Court in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] was constituted to examine what would be the interpretative rule to be applied while interpreting a tax exemption provision/ notification when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied. The Supreme Court observed that the core issue to be examined in the event of any ambiguity in an exemption notification is whether the benefit of such an ambiguity should go to the assessee or should be considered in favour of the revenue by denying the benefit of the exemption to the assessee. CENVAT is a beneficial scheme with the stated purpose of allowing CENVAT credit of all taxes paid on inputs and services so as to avoid cascading effect of taxes and duties - even in terms of the provisions of rule 2(m) and rule 7 of the CENVAT Rules, as they stood prior to 01.04.2016, the appellant could distribute CENVAT credit in respect of the service tax paid on inputs services to its manufacturing units, including a job workers. Parle was justified in distributing credits on input services attributable to the final product on a pro-rata basis proportionate to the turnover of each unit between the manufacturing plants of Parle and its contract manufacturing units, including the appellant, under rule 7(d) of the CENVAT Rules. It would not be necessary to answer the issue that whether the appellant would, irrespective of the answer to the first issue, be entitled to avail CENVAT credit when input service is attributed to the goods on which excise duty is paid and includes the cost of services on which credit was taken. The matter may now be placed before the Division Bench for disposal of the appeal.

  ---

• 2021 (5) TMI 903
  Grant of interest on delayed refund - relevant time for calculation of interest - annual production capacity under Compound Levy Scheme was fixed - HELD THAT:- The appellant filed the refund claim on 14.09.2005. The said application was kept pending by the Revenue and the same was not entertained. It was entertained only after the adjudication order on 31.10.2008 and the amount of refund was adjusted against the demand raised by order dt. 17.10.2008. Again, the litigation continued and finally this Tribunal hold that the said demand is not sustainable and remanded the matter back to the adjudicating authority for fresh adjudication. In terms of the decision of the Hon ble Apex Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] , wherein the Apex Court has held that if the assessee filed the refund claim is entitled to claim the interest on delayed refund after three months from the date of filing of the refund claim although there is a litigation in the matter. In the present case, it is apparent on record that the said refund was sanctioned but was adjusted against the demand which was not sustained - the appellant is entitled to claim interest after three months from the date of filing of the refund claim i.e., after 3 months of date of filing the refund claim i.e., 14.09.2005 till its realization. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (5) TMI 899
  EOU - Clearance of goods in DTA - manufacture and export of Ceramic Colours/Pigments, falling under CETA 32071040 - It was alleged by the Department that the items cleared in DTA by the appellants were not similar to the goods exported and there was violation of the provisions of Para 6.8 of FTP - benefit of N/N. 23/2003-CE dated 31.03.2003 - Extended period of limitation - similarity of goods, exported by the appellant - HELD THAT:- Various judgments have given wider meaning to the word Similar . It would mean similar, same class of or same kind of goods. In the instant case, the goods exported and the goods cleared are described as ceramic colours. In view of the ratio of the various judgements cited, there is not even an iota of doubt that the goods cleared by the appellant in DTA are nothing but the goods which are similar to the goods exported well within the meaning assigned to the same in paragraph 6.8 of FTP. It has been demonstrated that the manufacturing activity is same for both type of colours. The similarity of the goods is established beyond reasonable doubt by the test report got conducted on the impugned goods for the subsequent period and relied upon, as is evident from the Order-in-Original, dated 31.12.2012 (adjudicating the SCN issued for the period Feb 2011 to Jan 2012). The facts of the case here are in a narrower compass compared to the cases discussed as above, the difference in goods only being that of concentrated or diluted. Both of them are named ceramic colours only. Test reports indicated that they have similar composition as rightly held by the Learned Commissioner for the subsequent period. Therefore, there is no doubt that the goods exported and the goods cleared by the appellants are similar in terms of Para 6.8 of FTP. Moreover, the fact that Development Commissioner has issued permission is not denied - In view of the judgement in COMMISSIONER OF C. EX., HYDERABAD VERSUS NOVAPAN INDUSTRIES LTD. [ 2007 (1) TMI 5 - SUPREME COURT] , the Order-In-Original should hold good for the earlier period also. It is pertinent to note that the department did not bring forth any change in the circumstances or the quality of the goods exported and cleared in DTA by the appellant. The department has wrongly tried to differentiate between the goods on the basis of physical characteristics or the price of the same. Thus, the department has wrongly tried to differentiate between the goods on the basis of physical characteristics or the price of the same. Time Limitation - HELD THAT:- The permission given by the Development Commissioner would certainly indicate the products which are to be exported and cleared in DTA. When the description is ceramic colours, in both export as well as DTA clearance documents, the department was within their rights to call for clarification from the Development Commissioner or the appellants so as to satisfy themselves. This having not been done, it is not open for the department to invoke extended period, alleging that the appellants have suppressed some information, after considerable lapse of time. No suppression, leave alone intent evade duty has been established - the goods cleared in DTA by the appellants in DTA are similar to those exported and that there are no violations provisions of either paragraph 6.8 of FTP or Central Excise notification 23/2003, the appeal survives on merits - the issue of limitation will be inconsequential. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (5) TMI 888
  Recovery of Refund of 50% of amount of CGST with interest and penalty - benefits under the Northeast Industrial Policy - HELD THAT:- Let a notice of motion returnable on 19.05.2021 be issued. As the learned Standing counsel for the respondents has accepted notice extra copy of the writ petition be provided within 2(two) days - List the matter on 19.05.2021.

  ---

• CST, VAT & Sales Tax

• 2021 (5) TMI 933
  Classification of goods - textile made ups - whether the commodity which is described as an embroidered ladies suit , which the respondent claims to be unstitched, would fall within the description of a textile under Entry 21 of Schedule I (as the respondent asserts) or under Entry 16 of Schedule II which is other textile made ups and the residuary entry in Schedule V? - UP VAT Act, 2008 - HELD THAT:- Firstly, the expression in Entry 16 of Schedule II is other textile made ups . A textile made up is an article which is manufactured or stitched from any type of cloth. In the present case, going by the case of the respondent, the product is unstitched because the ultimate work of stitching the salwar kameez is yet to be performed and is not carried out by the respondent. In the circumstances, the product can certainly not be called as a textile made up. Secondly, the entry other textile made ups is not a residuary entry for Schedule II, but is used in conjunction with the expression bedsheets and pillow covers . The expression other textile made ups must be read ejusdem generis with the articles which precede it and should hence comprehend goods of the same class and description. The general entry other textile made ups must receive a meaning and connotation bearing in mind the preceding items of Entry 16. Hence, it is not possible to accept the view of the first appellate authority that the product falls within the purview of Entry 16 of Schedule II. The product would fall for classification under Serial 1 of Schedule V which is a residuary entry which covers all goods except those which are mentioned and described in Schedules I, II, III and IV - the judgment of the Tribunal as well as of the first appellate authority would have to be set aside. Appeal allowed.

  ---

• 2021 (5) TMI 924
  Revision of assessment order - principles of natural justice - Levy of purchase grievance of the petitioner is that the second respondent passed the impugned Revision of Assessment order even without any new/fresh facts, de hors the records and on mere change of opinion - Section 22(2) of the TNVAT Act - HELD THAT:- The issues involved in these present writ petitions are squarely covered by the order of this Court in batch of Writ Petitions in M. RAVICHANDRAN, N. SENTHILKUMAR, P. DHASARATHAN, B. SUBRAMANIAN, R. RAJAGOPAL VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, STATE TAX OFFICER [ 2018 (12) TMI 1885 - MADRAS HIGH COURT] where it was held that It has been consistently held that the reopening of assessment by change of opinion is impermissible. Petition allowed.

  ---

• Indian Laws

• 2021 (5) TMI 927
  Conduct of lotteries - Power of Host State to make rules under section 12 of the Act to monitor the conduct of lotteries of Organising States within the territory of the Host State - Doctrine of occupied field - Doctrine of ultra vires - Federalism. Whether a Host State is entitled to enact rules for monitoring the conduct of lotteries by other Organising States within the territory of the Host State? - HELD THAT:- In BR. ENTERPRISES VERSUS STATE OF UP. AND OTHERS [ 1999 (5) TMI 498 - SUPREME COURT] it has been held in paragraph 71 that State lotteries are gambling and that it would not be a trade to qualify itself to be a trade and commerce as used in Article 301 and neither the individual, far less the State, can seek enforcement of such right for it to be declared free, throughout the territory of India. It further held that the right of sale of lottery tickets whether by the State or others could neither be a fundamental right nor a right under Article 301 and that none could seek it as free trade, like other trades, even though it may have the authority of law. The Court went on to hold that the authorization under the Act to States to conduct lottery is solely for the purpose of earning revenue. A reading of section 12 of the Act will reveal that a general power is conferred upon the State Government to make rules to carry out the provisions of the Act. There is no indication either in the Act or in section 12, that the power conferred on the States to make rules, is confined only to the Organising State. Such a narrow interpretation is not warranted under the terms employed. If such an interpretation is adopted, the same will lead to an anomalous situation - Under section 12 of the Act, apart from the general rulemaking power, specific power is also conferred upon the State Government to make rules in respect of time to be fixed for claiming prize money and the period to be fixed for draws of all lotteries. That power, no doubt, relates to Organising States. In exercise of the general power conferred upon the State Government to make rules, the State Government cannot transgress areas that are already covered by the Act or the Central Rules. However, if in respect of areas where the Act and the Central Rules are silent, it cannot be said that the Host State is powerless to make rules. Doctrine of occupied field - HELD THAT:- The doctrine of occupied field cannot be invoked to test the validity of a State rule enacted in exercise of the power conferred by the Central legislation. If a Central legislation confers general rule-making power upon the State, in areas where the Central Government has not framed rules, the State Government will be entitled to frame rules. The doctrine of occupied field will not in such instances be applicable, unless there is an intrusion. In simple terms, the principle of the doctrine of occupied field is that if the Parliament legislates on a particular subject, and thereby occupies the field, the State legislature is completely debarred from legislating on the same subject. When the very legislation enacted by the Parliament confers power upon the State Government to make rules to carry out the provisions of the Act, the doctrine of occupied field has no application, unless the State entrenches upon the field already occupied. Doctrine of ultra vires - HELD THAT:- The Central Rules have not eroded the power of the Host State under section 12 of the Act also on account of rule 3(22) and rule 5(1) of the Central Rules. In fact, according to us, the enactment of Central Rules enhanced the need for the Host State to enact rules. As mentioned earlier, to ensure compliance of the conduct of lottery of the Organizing State, within the territory of the Host State, in accordance with the Act and also for the Host State to form an opinion about any violation or irregularities in organizing or conducting lottery in the Host State, rules are essential - the Host State is entitled to make rules under section 12 of the Act to monitor the conduct of lotteries of Organising States within the territory of the Host State. Whether any of the provisions of the Amended Rules are ultra vires the Act? - HELD THAT:- Rule 4(4) of the Amended Rules shows that the Secretary of the Kerala Government, Taxes Department shall be the authority for conduct of lotteries organized by other States. The right to conduct a lottery is vested with the State Government under section 4 of the Act. The right to conduct a lottery is vested with the Organizing State under section 4 of the Act. When the right to conduct the lottery is vested with the Organizing State, rule 4(4) of the Amended Rules, to the extent it specifies that the Secretary to the Government Department of Taxes, Kerala, shall be the authority for the conduct of lotteries run/organized/promoted by other States, infringes upon the right of the Organising State to conduct lotteries as per the provisions of the Act - the plain meaning of the word conduct in rule 4(4) of the Amended Rules gives a meaning that conduct of lottery of the Organizing State shall be by an officer of the Host State. This is a clear intrusion into the authority of the Organising State and is contrary to the provisions of the parent Act. The said Rule is a clear infraction of the Act. It is a settled principle that when a provision of law is found to infract the Constitution or the parent statute, the entire statute or even the entire provision need not be struck down, if the offending portion could be severed from the non-offending portion of the provision or statute - Applying the said principle to rule 4(4) of the Amended Rules, it can be seen that the offending portion of the said rule are the words including lotteries run/organized/promoted by other States and if the said offending portion is deleted or severed, the rule will still continue to have meaning and life. Applying the doctrine of severability, we sever the aforesaid words from rule 4(4) and hold the severed portion of the said rule as ultra vires the Lotteries (Regulation) Act, 1998. The provision under rule 9A(3) can also be viewed in another perspective. If the Host State forms an opinion that the conduct of lottery by an Organizing State within the territorial jurisdiction of the Host State is in contravention of the Act or the Rules, then it need not continue to let its subjects be exploited by the Organizing State or its promoter, until the Central Government takes a decision. From the time it forms an opinion, till a decision is taken by the Central Government, if such lotteries continue unabashedly to exploit the subject of the Host State, a remedy must be available to the Host State. Rule 9A(3) comes into play in such instances. Such a provision cannot be regarded as intruding into the powers of an Organizing State. Federalism - HELD THAT:- The Kerala Paper Lotteries (Regulation) Amendment Rules, 2018 are valid and within the legislative competence of the State of Kerala and made validly in exercise of the powers under section 12 of the Act. The words including lotteries run/organized/promoted by other States in Rule 4(4) shall stand severed from the remaining provision of the Amended Rules and the severed portion is hereby held as ultra vires the Act. Appeal allowed - decided in favor of appellant.

  ---