TMI Tax Updates - e-Newsletter
May 4, 2022

Case Laws in this Newsletter:

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

News

1. Annual Aggregate Turnover (AATO) computation for FY 2021-22

2. New financial year begins with record exports of USD 38.19 billion in April

Notifications

DGFT

1. 02/2015-2020 - dated 2-5-2022 - FTP

Extension of relaxation of the Provisions under Notification 20/2015-20 dated 24.08.2021

Circulars / Instructions / Orders

GST - States

1. 10/WBGST/PRO/2022 - dated 28-4-2022

Extension of period for completion of Audit as per the proviso to sub-section (4) of section 65 of the WBGST Act, 2017 for the period starting on or after 1st day of July, 2017 and ending on or before 31st day of March, 2018 in cases where audit has commenced till date.

2. 03/2022(2021) - TNGST - dated 25-4-2022

Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 45th meeting held on 17th September, 2021 at Lucknow

Highlights / Catch Notes

GST

• High court overturns bail cancellation; petitioner met conditions using cash ledger and ITC debit ledger.

  Case-Laws - HC : Cancellation of Bail granted - Failure to deposit amount as a pre-condition of Bail - Adjustment of amount with input tax credit (ITC) instead of depositing in Cash - The petitioner having fulfilled the condition of deposit of the amount partly by cash ledger and partly by debit ledger of the ITC it cannot be said that the petitioner has failed to fulfil the conditions imposed on him. - Order of cancellation of Bail quashed - HC
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• Officer to Review GST Discrepancy in GSTR-1 and GSTR-3B; Interest and Penalty Challenged in Writ Petition.

  Case-Laws - HC : Demand of GST alongwith interest and penalty - purported difference between the contents of two returns i.e., GSTR-1 and GSTR-3B - The contentions raised by the petitioner in the writ petition will be examined by the concerned officer by treating it as representation - HC
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• High Court Quashes Order Due to Lack of Clarity and Natural Justice Violation in Registration Cancellation Case.

  Case-Laws - HC : Cancellation of registration of petitioner - It cannot be disputed that with cancellation of registration, the dealer is liable to both civil and penal consequences. To say the least, the authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. Not only the order is non-speaking but cryptic in nature and the reason of cancellation not decipherable there from. In such circumstances, the Principles of natural justice stand violated - Order quashed - HC
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• "Protowits" Protein Powder with Vitamins Classified Under Chapter 21 for GST Rate Purposes.

  Case-Laws - AAAR : Classification of goods - rate of GST - Dry Powders containing Protein Powder with Vitamins & Minerals - On scrutiny of Chapters 16 to 24 covered by Section IV, it is found that there is no other Chapter more appropriate than Chapter 21 (Miscellaneous Edible Preparations) and as such the product in question viz “Protowits” should be classified under Chapter 21 only. - AAAR
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Income Tax

• High Court Finds Malicious Prosecution in Tax Evasion Case; Authorities Accused of Suppressing Facts and Misleading Information u/s 276 C (2.

  Case-Laws - HC : Offence u/s 276 C (2) - willful evasion of payment of tax or not - malicious prosecution - In the instant case, the Principal Commissioner of Income Tax, who has accorded sanction on 14/03/2019 has not considered the payment of tax with interest by the assessee on 15/02/2018. The proceedings granting sanction to prosecute was contrary to the facts, says, “it is seen from the AIMS that Self- Assessment amount is unpaid”. - the suppression of material facts, intentional suggestion of falsehood and non-application of mind goes to show that, this is a malicious prosecution initiated by the Income Tax authorities by abusing the power. - HC
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• Court Approves Reopening of Assessment u/s 147 for Alleged Diversion of Interest-Bearing Funds; Assessee's Rights Upheld.

  Case-Laws - HC : Reopening of assessment u/s 147 - disallowance of interest - diversion of interest bearing funds - there was sufficient material on the record for reopening/re-assessment of the case of the petitioner for the concerned assessment year. This court is not making any comment on the merits of the case. The assessee will have complete right to put up his case before the assessing officer. - HC
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• High Court Dismisses Revenue Appeals on Section 69A Due to Low Tax Effect; Circular No. 23/2019 Not Retroactive.

  Case-Laws - HC : Maintainability of appeal in High Court - low tax effect - Addition u/s 69A - It is not in dispute that the appeals filed by the appellant-revenue in this bunch of appeals allege the voluntary declaration of the amounts shown as long term capital gain and short term capital loss by the respondents-assessee during the search action under section 132 (4) of the IT Act, 1961. However, in view of the fact that the said Circular No. 23/2019 dated 6th September 2019 read with Office Memorandum dated 16th September 2019 not applicable with retrospective effect, though appellant-revenue has alleged organized tax evasion activity on the part of the respondent-assessee in those pending appeals as on the date of the said Circular No. 23/2019, the appellant-revenue cannot be allowed to pursue these appeals. - HC
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• Transfer Orders u/s 127 of Income Tax Act Are Administrative, Not Quasi-Judicial; Taxpayers Can't Choose Assessing Authority.

  Case-Laws - HC : Transfer of case u/s 127 - The transfer order passed under Section 127 of the Act is more in the nature of an administrative order rather than a quasi-judicial order and the assessee cannot have any right to choose his Assessing Authority, as no prejudice can be said to have been caused to the assessee depending upon which authority of the department passes the Assessment Order. - HC
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• Grant Taxation Must Align with Correct Fiscal Year, Says Assessing Officer for 2016-17.

  Case-Laws - AT : Addition to the total income on account of deferred grant - It is settled principle of law that an amount cannot be taxed in the hands of the assessee if it does not partake the character of income. In the present case, the amount of grant was offered for tax in the year 2016-17. - AO directed to verify and tax the impugned amount in correct Assessment Year. - AT
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• Leave Encashment Not Included in Book Profit Calculation u/s 115JB; Classified as Ascertained Liability.

  Case-Laws - AT : MAT - Disallowance to computation of book profit u/s 115JB - Disallowance of leave encashment as unascertained liability - as the provision for leave encashment has been made by the appellant on actuarial basis, therefore, the same being in the nature of an ascertained liability could not have been added for the purpose of determining the “book profit‟ u/s 115JB - AT
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• Entity's Registration Challenged: No Evidence of Fake Donations or Unaccounted Transactions, Section 11 Exemption at Risk.

  Case-Laws - AT : Exemption u/s 11 - allegation of accommodation entry in the garb of corpus donation - There is no legal admissible evidence on record against the assessee that assessee received any donation from any company as alleged in the report of the Investigation Wing. No evidence of any unaccounted cash transactions conducted by the assessee were found. There is no evidence on record to show that assessee received or paid any commission for indulging in any unaccounted money. Therefore, cancellation of registration in the matter is merely on presumption only. - AT
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• Technical Personnel Services Classified as Professional u/s 194J, Not Section 194C, Affecting TDS Provisions.

  Case-Laws - AT : TDS u/s 194C or 194J - nature of Services rendered - professional services or not - As it is apparent and clear from the terms of the agreement that technical persons carried out tests and Laboratory Technician will be with minimum qualification of MLT/DMLT with science graduate while paramedical worker will be with minimum qualification of SI. It is clear that aforesaid services come within Section 194J and not u/s 194C of the Act - AT
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• Commission Paid to Nonresidents for Overseas Sales Not Taxable u/s 40(a)(ia) of Income Tax Act.

  Case-Laws - AT : TDS u/s 195 - Disallowance of commission u/s 40(a)(ia) - the commission has been paid to various nonresident entities in respect of sales affected by the assessee outside of India, the services have been rendered outside of India and the payments have been made outside of India. - Similarly the exhibition expenses have been paid in respect of participation in various exhibitions held outside of India and even the testing charges have been paid for testing services outside of India. - No Additions - AT
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• CIT(E) Revises Assessment u/s 263 Due to Inadequate AO Enquiry, Overlooking Assessee's Response and Tax Principles.

  Case-Laws - AT : Revision u/s 263 - the Ld. CIT(E) has taken into consideration the incorrect and irrelevant facts to allege that there is no enquiry by the AO and thus the impugned assessment order is erroneous and prejudicial to the interest of the revenue without considering the reply of the assessee to show cause notice u/s. 263 of the Act and keeping aside the basic principles of tax jurisprudence relevant for assessing income of a charitable trust. - AT
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• Dehradun-based Assessee Qualifies for Section 80IC Deduction, Boosts Local Economy by Attracting IT and BPO Companies.

  Case-Laws - AT : Deduction u/s 80IC - assessee controlled and provided all the facilities to its clients from Dehradun and the activities undertaken by the assessee falls in Item No. 13 of Part C of Schedule Fourteenth - The assessee has its operational unit at Dehradun, paying taxes in Uttaranchal, creating jobs in the said State, bringing new IT call centres and BPO companies to Dehradun to deliver IT services. Therefore, it fulfills the conditions to claim the deduction u/s 80IC - AT
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Customs

• Amendment to Notification No. 11/2018 Customs exempts specific goods from Social Welfare Surcharge, aligning with 2022 Finance Act.

  Notifications : Exemption to specified goods from the whole of levy of Social Welfare Surcharge. - Seeks to amend the notification No. 11/2018 Customs to align the HS Codes with the Finance Act, 2022, w.e.f 01.05.2022 - Notification
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• India-UAE CEPA Begins: Customs and Tax Updates for Enhanced Trade and Economic Cooperation in Initial Phase.

  Notifications : Seeks to give effect to the first tranche of India UAE CEPA - Notification
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• Detention Ruled Illegal: Authorities Failed to Provide Legible Documents, Violating Legal Procedures and Rights of Detainees.

  Case-Laws - HC : Smuggling - detention of detenues - non-supply of certain RUDs (relied upon documents) and the supply of illegible RUDs - the failure and non-supply of legible copies of all RUDs despite of a request and representation made by the Detenus for the supply of the same, renders the order of detention illegal and bad in law; and vitiates the subjective satisfaction arrived at by the Detaining Authority. - HC
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• Court Orders Review of Petitioners' Request for Provisional Release of Seized Devices, Subject to Payment of Enhanced Duty.

  Case-Laws - HC : Provisional release of seized goods - Multi-Function Devices - prohibited goods or not - There shall be a direction to the respondents to consider the plea of the petitioners to release the goods by way of provisional release on condition that, the petitioner shall pay/deposit the enhanced duty amount. - HC
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DGFT

• India-UAE CEPA Tariff Rate Quotas Announced; Amendment to Handbook of Procedure 2015-2020 Paragraph 2.107 Explained.

  Circulars : The Tariff Rate Quotas (TRQ) under India–UAE CEPA and procedure for allocation and imports under given TRQs is notified. - Amendment in Para 2.107 (TRQ under FTA/CECA) of Handbook of Procedure 2015-2020. - Public Notice
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IBC

• Surat Municipal Corp. can't claim priority on property tax in insolvency under BPMC Act Sec 141; new owner responsible.

  Case-Laws - HC : Recovery of property tax dues from the Liquidator - The Surat Municipal Corporation cannot claim any first charge or precedence over the subject property by virtue of Section 141 of the BPMC Act. The auction proceedings have attained finality. The writ applicant as on date is the lawful owner of the subject property. The Surat Municipal Corporation may recover the property tax from the writ applicant from the date of purchase of the subject property in the E-auction proceedings. If the entries as regards the sale in the revenue record of rights have not been mutated, the revenue authority shall proceed to do so in favour of the writ applicant. - HC
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• Shareholder Challenges Validity of Claims in Corporate Insolvency Resolution Process, Questions Applicant's Standing in Bankruptcy Proceedings.

  Case-Laws - Tri : CIRP - Validity of claims of the respondents 2 to 7 admitted by the 1st respondent - the applicant herein is a shareholder of the Company and as rightly pointed out by the Respondents that he is not entitled to claim any relief against the CoC or the conduct of the CIRP. - Tri
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VAT

• Bonded Warehouse Sales Exempt from Tax: Panvel to Kalamboli Transactions Classified as Import Sales, No VAT or Sales Tax.

  Case-Laws - HC : Levy of tax and interest on sales made by the petitioner - sale in the course of import - resale of goods in Daman - first point of sale - Since the goods in question were sold by the petitioner from its bonded warehouse at Panvel to the bonded warehouse of the said M/s ASK Agencies at Kalamboli, New Mumbai, the sale was required to be treated as, “Sale in the course of import” and thus the petitioner rightly did not pay any tax on the said transaction being a bond to bond sale. - HC
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Case Laws:

• GST

• 2022 (5) TMI 129
  Cancellation of Bail granted - Failure to deposit amount as a pre-condition of Bail - Adjustment of amount with input tax credit (ITC) instead of depositing in Cash - fake invoices - availing Input Tax Credit (ITC) on the strength of bills of various suppliers which were non-existing and fictitious - HELD THAT:- A reading of Section 49 of GST Act permits availing of the amount in electronic ledger for making any payments towards output tax under the Act or under the Integrated Goods and Services Tax Act. Further Section 49 (5) and (6) describes the manner in which the amount of input tax credit available in the electronic ledger is to be utilised and provides that the balance in electronic cash ledger after payment of tax, interest, penalty, fee etc. may be refunded in accordance with the provisions of Section 54 of the GST Act. Though before the learned CMM and in the reply, the case of the respondent is that the ITCs being fraudulent the same cannot be availed of, during the course of arguments, learned counsel for the respondent does not dispute that the payment of tax could be made from the electronic ledger under Section 49 (4) of the GST Act however, contends that since the learned Trial Court directed the petitioner to deposit the amount of Rs.2.70 crores, he could not have availed the amount of Rs.1.60 crores by debiting the ITCs - the petitioner has to his credit ITC worth Rs.260 crores and the investigation does not show that beyond approximately Rs.42 crores ITCs rest are fraudulent till now. Hence the reversal of the ITC credit for depositing the part amount of Rs.2.70 crores with the department as directed by the learned Trial Court cannot be said to be illegal or unwarranted, warranting cancellation of the bail granted to the petitioner. Undoubtedly, non-compliance of the conditions of bail is a ground for cancellation of the same however, in the present case the condition was to deposit a sum of Rs.2.70 crores with the department which stands satisfied by the petitioner depositing part amount by transfer of ITCs. Further in case the learned Trial Court felt that its order warranted deposit of money only with the department it could have granted time to the petitioner to deposit the same. The petitioner having fulfilled the condition of deposit of the amount partly by cash ledger and partly by debit ledger of the ITC it cannot be said that the petitioner has failed to fulfil the conditions imposed on him. - Order of cancellation of Bail quashed Petition disposed off.

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• 2022 (5) TMI 128
  Maintainability of petition - appealable order or not - Section 107 of U.P. Goods Service Act, 2017 - cancellation of registration of petitioner - HELD THAT:- Since, the appeal is entertainable under Section 107 of U.P. Goods Service Act, 2017 within three months from the date the order to be appealed against is communicated to a person, as such, it is found appropriate to permit the petitioner to invoke the appellate remedy available to him under Section 107 of U.P. Goods Service Act, 2017. This writ petition is finally disposed of with liberty to the petitioner to invoke the appellate jurisdiction of the appellate authority under Section 107 of U.P. Goods Service Act, 2017.

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• 2022 (5) TMI 127
  Demand of GST alongwith interest and penalty - purported difference between the contents of two returns i.e., GSTR-1 and GSTR-3B - HELD THAT:- Mr. Anuj Aggarwal, who appears on behalf of the respondents no.2 and 4/revenue, says that the concerned officer will examine the contentions raised by the petitioner, along with the necessary documents filed in support of the contentions. The contentions raised by the petitioner in the writ petition will be examined by the concerned officer by treating it as representation - the concerned officer will grant opportunity of hearing to the authorised representative of the petitioner - petition disposed off.

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• 2022 (5) TMI 126
  Seeking release of seized 21 electronic gadgets - seizure during the course of the search carried out under Section 67 of the G.S.T. Act - HELD THAT:- Prima facie, for any Forensic Science Laboratory it should not take much time to retrieve the data from all the three gadgets referred to above. It would not be appropriate for the authority to retain the seized items, even considering the statutory provision of sub-section 7 of section 67 of the Act. However, we would not like to enter into any debate as regards the interpretation of sub-section 7 of Section 67. If the authority on its own looks into the matter and makes an appropriate statement, it may facilitate this Court in disposing of these writ applications accordingly. Let the matters be notified on top of the board.

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• 2022 (5) TMI 125
  Levy of IGST - Ocean Freight - constitutional validity of Notification Nos.10/2017-Integrated Tax (Rate), dated 28.06.2017 and 8/2017-Integrated Tax (Rate), dated 28.06.2017 respectively - HELD THAT:- Learned Government Pleader for Commercial Taxes would submit that the argument of the learned senior counsel that there was no personal hearing may not be correct as objections filed were taken into consideration at the time of passing of the order. The ocean freight alleged to have been paid is given credit and that no loss is caused to the petitioner. However, learned Senior Counsel for the petitioner would contend that in view of the notices issued there is every possibility of collecting ocean freight inspite of the order passed by this Court staying the same. The impugned proceedings in DRC-07 dated 10.02.2022 is set aside and the matter is remanded back to the first respondent, who shall deal with the same and pass appropriate orders after giving an opportunity of personal hearing to the petitioner, in accordance with law. The writ petition disposed off.

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• 2022 (5) TMI 124
  Cancellation of registration of petitioner - Violation of principles of natural justice - the show cause notice called upon the writ applicant to appear for personal hearing on the appointed date and time failing which, the case was to be decided ex-parte - HELD THAT:- On bare perusal of the contents of the show cause notice as well as the impugned order, it is found that the said show cause notice is absolutely vague, bereft of any material particulars and the impugned order is also vague and a non-speaking order. It cannot be disputed that with cancellation of registration, the dealer is liable to both civil and penal consequences. To say the least, the authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. Not only the order is non-speaking but cryptic in nature and the reason of cancellation not decipherable there from. In such circumstances, the Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences. Matter disposed off.

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• 2022 (5) TMI 123
  Classification of goods - rate of GST - Dry Powders containing Protein Powder with Vitamins Minerals - to be classified under HSN 2106 or under chapter 3004 of the GST Tariff Act, 2017? - HELD THAT:- As regard to the Prophylactic use of the product in question, on examination of the appellant s label on the product, it is found that the product in question viz Protowits is undoubtedly described more like a food product than the medicine. The product is described as Chocolate flavour. The picture of the product on the label showing a glass containing the preparation of the said product clearly gives the image of a food beverage like Bournvita or Coffee and other various product available in market now-a-days. Taking into view the totality of the label, the whole thrust is on the food value of the product, it s flavour, deliciousness, richness, nourishment, attractiveness and all other qualities for which normal people look to the food for their health, growth and taste. Easy preparation of the said product is also emphasized - The word prophylactic means the medicines or course of action taken for preventing disease. If the broader sense of prophylactic use is taken, then all foods are prophylactic in nature, as all proper food prevents the diseases by providing necessary energy, strength and nutrition to the body which are essential for preventing the diseases. But in the context of medicines, prophylactic medicines are only those, which prevent the specific diseases by enhancing fighting and resistance capacity to the body or by providing safety mechanism. That some foods or beverages can be akin to the prophylactic medicines are recognized in Chapter 30 of the GST Tariff Act, 2017 and to avert the confusion on this point Note 1(a) in Chapter 30 is inserted for exclusion of such food supplements from the purview of medicaments of Chapter 30. On scrutiny of Chapters 16 to 24 covered by Section IV, it is found that there is no other Chapter more appropriate than Chapter 21 (Miscellaneous Edible Preparations) and as such the product in question viz Protowits should be classified under Chapter 21 only.

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• Income Tax

• 2022 (5) TMI 122
  Recovery proceedings - AO required the petitioner to deposit 20% of the disputed amount - projection of Tax on Returned Income - Certain matters concerning the assessee are pending consideration before the Commissioner of Income Tax (Appeals) - HELD THAT:- Since the matters had arisen out of the proceedings initiated by way of a writ petition before the High Court questioning the demand, both sides are agreeable that the matters pending before the Commissioner of Income Tax (Appeals) be taken to logical conclusion. We, therefore, leave the assessee as well as the revenue to agitate all the issues before the Commissioner of Income Tax (Appeals) in the pending appeals. Let those issues be considered by the Commissioner of Income Tax (Appeals) without being influenced by any of the observations made by the High Court in the order presently impugned. Considering the nature of circumstances, we may direct the Commissioner of Income Tax (Appeals) to dispose of the matters as expeditiously as possible and preferably within three months.

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• 2022 (5) TMI 121
  Validity of Reopening of assessment u/s 147 - unsecured loan taken by the Assessee - HELD THAT:- At the time of Scrutiny Assessment under Section 143(3), the Assessing Officer had asked for the details regarding the unsecured loan taken by the Assessee during the year under consideration and the Assessee furnished the details as asked for and thereafter, after perusing the details so furnished by the Assessee, the Assessing Officer passed an order under Section 143(3) of the Act. Therefore, it cannot be said that there was any suppression on the part of the Assessee in not disclosing true an correct facts. It is required to be noted that even the re-assessment proceeding were initiated beyond the period of four years. Under the circumstances, the High Court is absolutely justified in quashing the re-assessment proceedings and the notice under Section 148 of the Income Tax Act - No interference of this Court is called for in exercise of powers under Article 136 of the Constitution of India. SLP dismissed.

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• 2022 (5) TMI 120
  Nature of receipt - subsidy as capital or revenue in nature - HELD THAT:- High Court by the impugned judgment and order has remanded the matter to the A.O. to pass a fresh order based on the independent analysis as to whether the amount raised by way of subsidy is capital or revenue in nature, we see no reason to interfere with the impugned judgment and order passed by the High Court. Validity of revision u/s 263 - as observed by the High Court, the A.O. accepted the case on behalf of the assessee that the amounts received was capital in nature without any discussion and also noted that the order passed by the A.O. was unreasoned order - HELD THAT:- Considering the above, when the Commissioner was of the opinion that the assessment order passed by the A.O. was prejudicial to the interest of the Revenue, it cannot not be said that the CIT committed any error and/or passed any order without jurisdiction. In view of the above, we see no reason to interfere with the impugned judgment and order passed by the High Court. The Special Leave Petition stands dismissed. However, it is observed and in fact it is specifically observed by the High Court in the impugned order that the A.O. will pass a fresh order based upon his independent analysis as to whether the amount received by way of subsidy was capital or Revenue in nature, we direct accordingly. The A.O. to pass a fresh order in accordance with law and on merits without, in any way, influenced by any of the observations made by the CIT passed in exercise of powers under Section 263 of the IT Act and the observations made by the CIT shall be treated only for the purpose of exercise of powers under Section 263 only. The A.O. to pass appropriate order in accordance with law and on its own merits independently.

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• 2022 (5) TMI 119
  Reopening of assessment u/s 147 - request for extension of time made by the Petitioner - Petitioner received notice under Section 148A(b) which directed the Petitioner to file its response by 17th March, 2022 - HELD THAT:- This Court is of the view that since the Petitioner had sought fifteen days additional time to respond, it would mean fifteen days from 17th March, 2022. Consequently, the impugned order dated 30th March, 2022 as well as consequential notice dated 30th March, 2022 issued under Section 148 of the Act are set aside and the matter is remanded back to the Assessing Officer to consider and decide the petitioner s objections dated 29th March, 2022 in accordance with law within eight weeks. With the aforesaid the present writ petition and application stand disposed of. This Court clarifies that it has not commented on the merits of the controversy. The rights and contentions of all the parties are left open.

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• 2022 (5) TMI 118
  Offence u/s 276 C (2) - willful evasion of payment of tax or not - malicious prosecution - contention of the Standing Counsel for the Income Tax Department is that, the failure to remit the tax and annexing the proof of payment of tax along with the returns filed on 31/07/2017 is sufficient to deem the assessee, a defaulter - HELD THAT:- In the instant case, admittedly there is no concealment of any source of income or taxable item, inclusion of a circumstance aimed to evade tax or furnishing of inaccurate particulars regarding any assessment or payment of tax. What is involved is only a failure on the part of the petitioner to pay the tax in time, which was later on paid after 4 months along with interest payable. So, it would not fall under the mischief of Section 276 C of the Income Tax Act, which requires an attempt to evade tax and such attempt must be a wilful. If the intention (culpable mental state) of the assessee was to evade tax or attempt to evade tax, they would not have filed the returns in time disclosing the income and the tax liable to be paid. They would not have remitted the tax payable along with interest without waiting for the authorities to make demand or notice for prosecution. Thus, except a delay of 4 months in payment of tax, it is clear that there was no tax evasion or attempt to evade the payment of tax. To invoke the deeming provision, there should be a default in payment of tax in true sense. Nothing can be deemed contrary to the fact borne by record. If such deeming fiction is applied by the authority, is has to be termed as non application of mind over the material records. In the instant case, the Principal Commissioner of Income Tax, who has accorded sanction on 14/03/2019 has not considered the payment of tax with interest by the assessee on 15/02/2018. The proceedings granting sanction to prosecute was contrary to the facts, says, it is seen from the AIMS that Self- Assessment amount of Rs.6,85,462/- is unpaid . Further, the Principal Commissioner has conspicuously omitted to record the fact of payment of the tax with interest except to record that, the tax was not paid within the time. On perusing the complaint, this Court finds that, the complaint was filed in the month of July-2019. At paragraph 9 of the complaint, it states that, The complainant states that the accused has failed to pay the tax liability of Rs.6,85,641/- along with its return of income filed on 31/07/2017. Till date the accused has not paid the above said tax amount due to the Department. (emphasis added). Thus, the suppression of material facts, intentional suggestion of falsehood and non-application of mind goes to show that, this is a malicious prosecution initiated by the Income Tax authorities by abusing the power. When the malafide is patently manifested, the petitioners need not be forced to undergo the ordeal of trial, which has no legs to stand - Decided in favour of assessee.

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• 2022 (5) TMI 117
  Reopening of assessment u/s 147 - diversion of interest bearing funds - entire amount given to his son by the petitioner, the interest has not been charged whereas the cash credit bank account from which amount was transferred to his son, the assessee had paid interest @ 14.33 per annum - HELD THAT:- The objections were duly disposed of by the Assessing officer. The order disposing of the objections is also detailed one. It was stated that notice dated 28.03.2017 was issued after obtaining sanction from the competent authority. The judgment cited by the assessee was also duly discussed and considered by the Assessing officer. It is the settled proposition that the writ jurisdiction of the court is to be exercised under certain well established principles. The courts should exercise their writ jurisdiction very sparingly if there is alternative efficacious remedy . The petitioner cannot be allowed to short circuit the procedure merely out of convenience. If a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. In Raymond Woolen Mills Ltd. [ 1997 (12) TMI 12 - SUPREME COURT] it was inter alia held that at the time of initiating the proceedings under Section 147 of the Act, the assessing officer has to only examine whether there is prima facie material on the basis of which the assessment should have been reopened. The Supreme court has held that at this stage the court is only required to see whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency of the correctness of the material is not a thing to be considered at the stage. We consider that there was sufficient material on the record for reopening/re-assessment of the case of the petitioner for the concerned assessment year. This court is not making any comment on the merits of the case. The assessee will have complete right to put up his case before the assessing officer. We consider that there is no violation of the principles of the natural justice. The revenue department has followed the procedure prescribed by the law. We consider there is no ground to interfere at this stage. Hence the petition is dismissed.

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• 2022 (5) TMI 116
  Maintainability of appeal in High Court - low tax effect - Addition u/s 69A - bogus Long term Capital Gain and Short Term Capital Loss - HELD THAT:- As in the appeals preferred after the date of the Circular dated 23/2019 dated 6th September 2019 involved in organized tax evasion activity can be filed on merits before the ITAT/High Courts/ Supreme Court including the cross objections only if the CBDT passes a special order in those SLPs/appeals/cross objections before the Supreme Court/High Courts/Tribunals if the tax limit is less than the specified monetary reliefs prescribed in the Circulars issued by the CBDT under section 268A of the IT Act, 1961. These circulars under section 268A of the IT Act 1961 by the CBDT are issued with an object to not to burden the Courts and Tribunals in respect of the matters where the tax effect is less than the limit prescribed, subject to the exceptions carved out in these Circulars. It is not in dispute that the appeals filed by the appellant-revenue in this bunch of appeals allege the voluntary declaration of the amounts shown as long term capital gain and short term capital loss by the respondents-assessee during the search action under section 132 (4) of the IT Act, 1961. However, in view of the fact that the said Circular No. 23/2019 dated 6th September 2019 read with Office Memorandum dated 16th September 2019 not applicable with retrospective effect, though appellant-revenue has alleged organized tax evasion activity on the part of the respondent-assessee in those pending appeals as on the date of the said Circular No. 23/2019, the appellant-revenue cannot be allowed to pursue these appeals. In our view, since the tax effect involved in this bunch of appeals is less than the monetary limit prescribed in the earlier circulars referred to aforesaid issued by the Department of Revenue, CBDT, Ministry of Finance, Government of India, the appellant- revenue cannot be allowed to proceed with these appeals on merits. The aforesaid appeals are accordingly dismissed, however, without prejudice to rights and liberties of the appellant to approach this Court afresh in appropriate case wherever special orders have been issued by the Board as an exception to the Circular No. 17/2019 and 23/2019 where organized tax evasion activity of the assessee is noted in future i.e. after the date of the said Circular.

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• 2022 (5) TMI 115
  Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act, 2021 with effect from 01.04.2021, substituting the then existing provisions, would the substituted provisions survive and could be used for issuing notices for reassessment for the past period? - HELD THAT:- As relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA [ 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT] no notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. By virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.

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• 2022 (5) TMI 114
  Transfer of case u/s 127 - Transfer the jurisdiction to DCIT, Central Circle-8(1), Mumbai from Income Tax Officer Ward-4(2)(2), Ahmedabad - HELD THAT:- We are of the view that facility of investigation or coordinated investigation can be a substantial ground for transfer from one officer to another Officer, more particularly, when the department has some material to establish nexus of the writ applicant with the searched person. One cannot overlook the fact that the writ applicant is suspected to be involved in dubious transactions, whereby as an angadia is found to be habitually claiming ownership of cash seized at various places across the country. In fact, the request seeking transfer has been made from two offices of the department ie. PCIT, Mumbai and Kolkata. It appears from the materials on record that the main purpose of transfer on the ground of centralization of cases is to investigate the dubious transactions of the writ-applicant with various related entities during the relevant period. The transfer order passed under Section 127 of the Act is more in the nature of an administrative order rather than a quasi-judicial order and the assessee cannot have any right to choose his Assessing Authority, as no prejudice can be said to have been caused to the assessee depending upon which authority of the department passes the Assessment Order. The assessee can only be concerned with getting an opportunity of hearing before the concerned Assessing Authority and adduce his evidence and make his submissions before the concerned Assessing Authority. The Income Tax department has recently introduced a scheme of Faceless Assessments with a view to avoid personal hearing and physical interaction of the assessee and the Assessing Authority altogether. The assessee need not even know the name of the Assessing Authority who will deal with his case. Having regard to the position of law as discussed above and also the other materials on record, we are of the view that we should not interfere with the impugned order of transfer passed by the respondent in exercise of powers under Section 127(2) of the Act. The power of transfer of cases may have to be exercised in proper case when sufficient materials on record justify such action. As held by this Court in the case of Hindustan M.I. Swaco Limited [ 2016 (7) TMI 212 - GUJARAT HIGH COURT] , this is, however, not to suggest that the transfer of cases for effective investigation and coordination can be resorted to only in cases of assessee, who are subjected to search operation. Such requirement may arise in other circumstances also . The question whether circumstances warrant transfer or not is a matter for consideration and the decision by the Commissioner. The Commissioner in the case on hand upon due consideration of all the relevant aspects of the matter is satisfied that the case of the writ applicant should be transferred for the purpose of effective and coordinated investigation and assessment. Thus, we are of the opinion that looking to facts and circumstances of the case, where administrative exigencies can be adequately/ comprehensively addressed, such a discretion should not be interfered with under Article 226 of the Constitution. We do not find any patent error of law or any error apparent on the face of the record. The impugned order cannot be said to be ex facie perverse.

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• 2022 (5) TMI 113
  Validity of reopening of assessment u/s 147 - notice issued in the name of a dissolved/struck off company - HELD THAT:- Issue notice. Mr.Kunal Sharma, Advocate accepts notice on behalf of the Revenue and Mr. Awadhesh Kumar Singh ,Advocate accepts notice on behalf of UOI. They pray for and are permitted to file their counter affidavits within four weeks. Rejoinder-affidavits, if any, be filed before the next date of hearing. List on 07th September, 2022. Till further orders, there shall be a stay of the impugned assessment order dated 19th December, 2019 passed by the Respondent No.2 under Sections 144/147 of the Act.

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• 2022 (5) TMI 112
  Validity of order of ITAT - Non-consideration of all the grounds by the tribunal - Appellant had pressed ground Nos. 3 to 5 during the hearing of the appeal - These grounds have been taken note of by the Tribunal in the impugned order. However, in para 5 of the impugned order, the Tribunal has observed that the remaining grounds were not pressed by the assessee - HELD THAT:- The correct remedy available to the appellant at this stage is to approach the Tribunal with an application to seek correction of the observation made by the Tribunal in the opening line of para 5 of the impugned order. In case, the appellant moves an appropriate application within the next three weeks, the same may be dealt with by the Tribunal on its merits.

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• 2022 (5) TMI 111
  Addition on account of provision for inventory of obsolescence - assessee could not give justification regarding provision made by the assessee - CIT-A deleted the addition - HELD THAT:- The assessee has claimed provision for inventory of obsolescence as allowable expenditure. The AO disallowed the same being a provision and not the actual expenses. As per the Assessing Officer, the expenses being uncertain is not allowable expense u/s 37(1) of the Act. We find that this reasoning of AO is contrary to ratio laid down by the binding precedents. See HOTLINE TELETUBE AND COMPONENTS LTD. [ 2008 (8) TMI 6 - HIGH COURT DELHI] and HOTLINE TELETUBE AND COMPONENTS LTD. [ 2008 (8) TMI 6 - HIGH COURT DELHI] - Decided against revenue. CIT-A admitting the additional evidences without affording an opportunity to AO - HELD THAT:- We find that Ld. Sr. DR could not point out that what were the additional evidences filed before Ld.CIT(A) which was not confronted to the AO. Therefore, in the absence of specific averment regarding additional evidences, we do not see any merit in the ground of Revenue s appeal. Thus, Ground No.2 raised by the Revenue is dismissed. Disallowance of non business expenses - HELD THAT:- The disallowance was purely made on adhoc basis. The AO has merely stated that the assessee could not justify the business expediency. We are unable to understand that how the AO was convinced in respect of 95% of expenses being incurred as per the business expediency and with regard to 5%, the assessee could not prove business expediency. This approach of the AO is not inconsonance with the settled principle of law. We therefore, do not see any reason to interfere in the finding of Ld.CIT(A), the same is hereby confirmed. Ground No.3 raised by the Revenue is therefore, dismissed. Addition to the total income on account of deferred grant - assessee submitted that Ld.CIT(A) failed to appreciate the fact that the assessee himself had offered this income in the Assessment Year 2016-17. Therefore, this amount cannot be allowed to be taxed twice - HELD THAT:- It is the say of the assessee that grant was given with specific direction by the grantor to be utilized for capital infrastructure. Since the amount could not be utilized during the year, it was booked as liability and same was written back in the Assessment Year 2016-17 and offered for tax. The Revenue could not controvert the fact that the amount was offered for tax in Assessment Year 2016-17. It is settled principle of law that an amount cannot be taxed in the hands of the assessee if it does not partake the character of income. In the present case, the amount of grant was offered for tax in the year 2016-17. It is also equally settled principle of law that the income is required to be taxed in the correct Assessment Year. We therefore, set aside the impugned order on this issue and direct the Assessing Officer to verify and tax the impugned amount in correct Assessment Year. This ground of assessee s cross-objection is allowed for statistical purposes only.

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• 2022 (5) TMI 110
  Reopening of assessment u/s 147 - assessment order passed without issuing notice u/s.143(2) - HELD THAT:- As framing of an assessment u/s.143(3) of the Act presupposes the issuance of a notice u/s.143(2), the existence of which by no means or stretch of imagination can be substituted by a notice issued u/s.142(1) of the Act. Our aforesaid conviction that issuance of notice u/s.143(2) of the Act is a sine-qua-non for framing of an assessment u/s.143(3) can safely be gathered from the judgment in the case of Assistant Commissioner of Income Tax Vs. M/s. Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] . It has been held by the Hon ble Apex Court that the issue of notice u/s.143(2) of the Act is mandatory and not procedural and if the notice is not served within the prescribed period, then, the assessment order would be invalid. We, thus, in terms of our aforesaid observations are unable to concur with the view taken by the CIT(Appeals) who had upheld the assessment framed by the Assessing Officer u/s.143(3)/148 and accordingly, set aside his order. Thus, the assessment framed by the Assessing Officer u/s.143(3)/148 being devoid and bereft of any force of law is hereby quashed - Decided in favour of assessee.

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• 2022 (5) TMI 109
  Penalty u/s. 271(1)(c) - claim of deduction u/s 24(a) - HELD THAT:- There is no straight jacket formula to say that particular act was a bonafide error or another a deliberate act. The assessee is required to demonstrate from the records that such error occurred due to inadvertent and was not deliberate to avoid tax liability. In the case in hand, the assessee has successfully demonstrated that claim of deduction u/s 24(a) of the Act, was made as the rent was offered for tax under the income from house property. Therefore, in the light of the judgement of Price Waterhouse Coopers (P) Ltd.[ 2010 (3) TMI 80 - SUPREME COURT] the penalty imposed by the AO on this issue cannot be sustained. The AO is therefore directed to delete the penalty. Addition sustained on account of disallowance of claim of depreciation - One of the averments of the assessee before the authorities below was that under the identical facts, the Ld.CIT(A) allowed the claim of depreciation in succeeding year. This fact is not rebutted by the Revenue. It was further contended that the assessee had disclosed and furnished true and correct particulars of its income at the time of filing of return. The assessee had not acted in defiance of law and did not act on conscious in this regard to the law. We find merit into the contention of the assessee merely because if a claim is rejected by the Assessing Officer, would not ipso facto made the assessee liable for penalty. In the present case the Ld.CIT(A) himself allowed the claim of depreciation under the identical facts in the succeeding year. The Revenue has not pointed out any change into the facts and circumstances of the case in the year under appeal. Therefore, in the light of the judgement of Hon ble Supreme Court in the case of CIT vs Reliance Petroproducts (P.) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] the levy of penalty was not justified. Appeal of assessee allowed.

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• 2022 (5) TMI 108
  Disallowance u/s. 14A - whether provisions of section 14A r.w.r. 8D are applicable where the assessee claimed to have incurred no expenditure for earning exempt income? - HELD THAT:- From the additional evidence adduced in the course of hearing (page 1-9), it is evinced that, the interest / finance charges expenditure debited to P L was merely pertaining to discounting of trade bills and guarantee commission which has been duly supported by the copies of bank advice issued by the bankers, which per se discretely leads to an undisputed conclusion that there was no interest expenditure for the year under consideration. Further, the perusal of audited financial statement placed revealed that, the appellant had not only the sufficient capital reserved funds at its disposal, but raised a short term interest-free borrowings from its holding company, and both these facts patently ignored while carrying out the impugned disallowance. In the absence of outside borrowing vis- -vis absence of interest expenditure on any borrowed capital, the appellant claims that, no interest expenditure was indeed incurred for earning exempt dividend income stands tall and de fact remained uncontroverted by the Ld. DR, consequently the disallowance made u/r 8D(2)(ii) remained baseless on records, hence it deserves to be deleted, accordingly we direct as such. Disallowance for indirect administrative expenditure u/r 8D(2)(iii) - DR after going through the details of additional evidence, conceded to the revised computation of the appellant regarding the amount of disallowance worked out u/r 8D(2)(iii), consequently the disallowance on this count is restricted to Rs.1,92,200/- which is worked out on the basis of average investment into the class of dividend earning fund. Disallowance to computation of book profit u/s 115JB - Section 115JB(1) of the Act provides the mode of computation of the total income and tax payable by the assessee u/s 115JB of the Act. Section 115JB(5) of the Act provides that, save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee being a company mentioned in this section , therefore, if any expenditure relatable to earning of income exempt is disallowed u/s 14A of the Act and is added back to book profit under clause (f) of section 115JB of the Act, the same would amount to doing violence with the statutory provision viz., sub-sections (1) and (5) of section 115JB of the Act. It is also pertinent to mention here that, the amounts mentioned in clauses (a) to (i) of Explanation to section 115JB(2) of the Act are debited to the statement of profit and loss account, then only the provisions of section 115JB of the Act would apply. lex lata, the disallowance u/s. 14A of the Act is a notional disallowance and therefore, by taking recourse to section 14A of the Act, the amount cannot be added back to book profit under clause (f) of section 115JB of the Act, and same can find force in the decision of Hon ble Apex Court in the case of Ajanta Pharma Ltd Vs CIT [ 2010 (9) TMI 8 - SUPREME COURT] and VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI] Claim of depreciation made u/s 32 on diesel generator as renewable energy device - Disallowance of 80% depreciation claimed on Diesel Generators - Energy Saving Device - HELD THAT:- A careful consideration of appendix-I reveals that, all the sub- items of renewable energy devices, i.e., devices for generating non-conventional energy qualify for higher rate of depreciation. An item number (m) specifies Any special devices including electric generators and pumps running on wind energy. Although, at the first blush it may appear that this entry (m) includes electric generators and, therefore, diesel sets for generating electrical energy may fall under this sub-item, but on proper scrutiny it would appear that, what is contemplated is electric generators running on wind energy and pumps running on wind energy. Hence, generator sets running on diesel would not fall under an entry (m) of sub-item (xiii). In view of the above analysis of III(8)(xiii)(m) in the table in Part A of Appendix I to the Income Tax Rules, 1962, we are of the clear view that, the diesel generator sets do not fall under entry number (m) so as to entitle the assessee to claim depreciation at the higher rate of 80% per cent. Thus, since the item of diesel generator does not find its place in the enumerated list of class (xiii) of clause entry 8 of block III of New Appendix-I r.w.s. 5 of the IT-Rules, the action of Ld. AO in not allowing the depreciation in the class of Plant Machinery carrying 80% rate of depreciation is sustained, consequently the ground II and its counter parts are dismissed. Disallowance of leave encashment as unascertained liability - HELD THAT:- Hon ble Supreme Court in the case of Bharat Earth Movers Vs CIT [ 2000 (8) TMI 4 - SUPREME COURT] as observed that, what should be certain is the incurring of the liability and the fact that the same is capable of being estimated with reasonable certainty, although the actual quantification may not be possible and if the aforesaid requirements were satisfied, then the liability could not be held as a contingent liability. Although the liability is in praesenti though it is to be discharged at a future date, it would not make any difference if the future date on which the liability is to be discharged is not certain. In the backdrop of aforesaid observations, the Hon ble Supreme Court had concluded that the provision made by an assessee for meeting the liability incurred by it under the leave encashment scheme proportionate with the entitlement earned by the employees of the company, inclusive of the officers and the staff, subject to the ceiling of accumulation as applicable on the relevant date would be entitled to deduction for the accounting year during which the provision is made for the said liability. On the basis of our aforesaid discussion fumus boni iuris, and we are of the considered view, that as the provision for leave encashment has been made by the appellant on actuarial basis, therefore, the same being in the nature of an ascertained liability could not have been added for the purpose of determining the book profit u/s 115JB of the Act, ergo ground number III and all its counter parts of appeal raised by the assessee are allowed

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• 2022 (5) TMI 107
  Reopening of assessment u/s 147 - entitlement of the assessee company for deduction u/s.80IA(4)(iv) qua the power generated by its Captive Power Plant (CPP) that was transferred/sold to MSEDCL, in lieu whereof the latter would give corresponding credit to the assessee company by reducing the amount from the electricity bill payable by the company - HELD THAT:- On a perusal of the order of the CIT(Appeals), we find that it is a matter of fact borne from record that the assessee company had disclosed fully and truly all the material facts that were necessary for framing of its assessment for the year under consideration. Nothing is either discernible from records nor brought to our notice by DR which would show that the facts disclosed by the assessee were either not full or true. In our considered view, now when the assessee had fully and truly disclosed all the material facts in its return of income on the basis of which assessment u/s. 143(3) was earlier framed in its case, therefore, as observed by the Ld. CIT(Appeals), and rightly so, notice u/s.148 issued beyond a period of four years from the end of the relevant assessment year, i.e., A.Y.2010-11 was clearly barred by limitation and without jurisdiction. We, thus, in terms of our aforesaid observations concur with the view taken by the CIT(Appeals). Thus, the Ground of appeal No.1 raised by the Revenue is dismissed. Disallowance claim for deduction u/s.80IA for the reason, that it had by trading surplus power generated to MSEDCL had contravened the provisions of section 80IA - CIT-A allowed the claim - On a perusal of the order of the CIT(Appeals), we find that he had categorically observed that the assessee company has established a separate industrial undertaking, viz. power plant for generation and distribution of electricity which was supplied to its own steel plant, as well as transferred/sold to MSEDCL. It was observed by him that the aforesaid facts had been examined year after year of the order of the Assessing Officer, Addl. CIT, CIT(Appeals) and Hon ble ITAT, which thereafter had been accepted by the Department as it had chosen not to prefer any further appeal for the assessment year(s) 2006-07, 2007-08 , 2008-09 and 2009-10. Also, the CIT(Appeals) had invalidated the view taken by the Assessing Officer that since the assessee company was doing trade by supplying and banking power to MSEDCL, therefore, it had violated Section 80IA(4)(iv) of the Act, for the reason, that the power plant was an integral part of the steel plant and was not a separate industrial unit. It was observed by the CIT(Appeals) that as the aforesaid view of the Assessing Officer was glaringly contrary to the facts that were available on record and had been accepted by him in the original assessment order passed u/s.143(3), dated 14.03.2014, therefore, the impugned reassessment proceedings were embarked upon a mere change of opinion . We have given thoughtful consideration and are of the considered view that no infirmity arises from the aforesaid order of the CIT(Appeals) qua the issue in hand, i.e., entitlement of the assessee for deduction u/s.80IA of the Act on the surplus power transferred to MSEDCL - Decided against revenue.

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• 2022 (5) TMI 106
  Revision u/s 263 - claim of deduction u/s 54B - HELD THAT:- Perusal of the details furnished in respect of capital gain revealed that capital asset was held by the assessee for less than two years and deduction claimed under section 54B was therefore incorrectly claimed by the assessee. AO while framing the assessment order u/s 143(3) of the Act has not looked into this issue, which is erroneous and prejudicial to the interest of the Revenue. Therefore, a show cause notice under section 263 of the Act was issued on 12.1.2016 to the assessee. We find that this is the twelveth hearing of the matter before the Tribunal. None appeared on behalf of the assessee. Though adjournment application has again been filed, but no paper book has been filed by the assessee giving material for considering the stand of the assessee. We find that there was no infirmity in the order of the ld.Pr.CIT for invocation of power u/s 263 which, the ld.Pr.CIT set aside assessment order passed under section 143(3) as being erroneous and prejudicial to the interest of the Revenue and further direction to the AO to make a fresh assessment order. Even otherwise also, there is nothing before us to deviate from the view taken by the ld.Pr.CIT on this issue coupled with the fact that there is no assistance rendered by the assessee to adjudicate the issue involved in the ground raised before us without supporting evidences. As a consequence, the grounds raised by the assessee stand rejected - Decided against assessee.

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• 2022 (5) TMI 105
  Disallowance u/s 14A read with Rule 8D - HELD THAT:- We do not see any infirmity into the order of the Ld.CIT(A) as the Ld.CIT(A) had decided the issue by following the binding precedent, same is hereby affirmed. Moreover, the assessee failed to demonstrate as to what is the basis of suo motto disallowance - On the contrary, it goes to prove that there was some expenditure which the assessee had incurred for earning of exempt income. Looking to the amount of investment, we are not satisfied with the explanation of the assessee. Hence, this ground of the assessee s appeal is dismissed. Disallowance being interest expenses in proportionate to the funds outstanding with the subsidiary company - CIT(A) ruled against the assessee for want of cash flow - HELD THAT:- It is not clear whether the Ld.CIT(A) during the appellate proceedings had called for cash flow for verifying the veracity of claim of the assessee. CIT(A) ought to have decided the issue by making the necessary enquiry through the Assessing Officer but proceeded to confirm the addition without verifying the correctness of the explanation of the assessee. We are of the considered view that the assessee should have filed cash flow statement in support of its claim that the advances to its subsidiary were made out of its own interest free funds. We deem it proper and the interest of justice to set aside this issue to the Assessing Officer for decision afresh. The Assessing Officer would give a definite finding with regard to the utilization of own fund for making interest free advances to its subsidiary and also ascertain the factum of business expediency qua the transaction in question. All these issues are required to be decided after carrying out the necessary enquiry by the Assessing Officer. This ground of the assessee s appeal is allowed for statistical purpose. Disallowance on account of advances of rent written off - HELD THAT:- There is no dispute with regard to the fact that the advances were given through banking channel. In support of the claim that the amount was given for hiring of the premises for opening showroom, the correspondence exchanged between the parties was also filed before the authorities below. The Revenue has not rebutted these evidences by placing any contrary material on records. The assessee filed sufficient evidences in support of the claim of hiring of commercial premises for opening of shop/showroom. Therefore, looking to the facts and material placed before us, we are of the considered view that the advances were given in the course of business by the assessee and for the purpose of commercial expediency. In our considered view, the assessee had rightly claimed it as business loss. Therefore, we hereby, direct the Assessing Officer to delete the addition. This ground of assessee s appeal is allowed. Disallowing advertisement and publicity expenses AND sale promotion expenses - Allowable business expenditure or not? - HELD THAT:- There is no dispute with regard to the fact that the expenditure was incurred in travelling and stay of the Directors of the company. AO had disallowed this expenditure on the basis that the assessee failed to deduct tax. Hence, there is contradictory stand of the authorities below for making and sustaining the disallowance. Therefore, the AO is directed to delete the disallowance of sale promotion expense. However, the disallowance of advertisement and publicity expenses is sustained as the assessee failed to rebut the finding on fact recorded by the Ld.CIT(A). This ground of assessee s appeal is partly allowed. Disallowance of advances written off - HELD THAT:- There is no dispute with regard to the fact that the advances were given through banking channel. In support of the claim that the amount was given for hiring of the premises for opening show room, the correspondence exchanged between the parties was also filed before the authorities below. The Revenue has not rebutted these evidences by placing any contrary material on records. The assessee filed sufficient evidences in support of the claim of hiring of commercial premises for opening of shop/showroom. Therefore, we are of the considered view that the advances were given in the course of business by the assessee and for the purpose of commercial expediency. In our considered view, the assessee had rightly claimed it as business loss. - Decided in favour of assessee. Disallowance being 20% on account of expenditure incurred through credit card - HELD THAT:- We find that the authorities below have made disallowance purely on adhoc and conjecture basis without citing the specific instance of expenditure incurred for personal use. In our considered view merely stating that the expenditure incurred for personal use could not be ruled out, would not be sufficient to make disallowance @ 20% of total expenditure. There has to be some basis regarding adoption of rate at 20% for disallowance. Therefore, in the absence of specific instances regarding expenditure incurred was found to be personal in nature hence, such disallowance on adhoc basis cannot be sustained. We, therefore, direct the Assessing Officer to delete the disallowance. This ground of assessee s appeal is allowed. Disallowance u/s 14A - no exempt income earned - HELD THAT:- The issue is squarely covered in favour of the assessee by the judgement of Jurisdictional High Court in the case of M/s Cheminvest Ltd vs CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] has held that in the case where no exempt income is earned, no disallowance u/s 14A of the Act, is called for. Addition u/s 40A(3) - HELD THAT:- We find that Ld. CIT(A) has given finding on fact that there is no violation of provision of section 40A(3) of the Act. Ld. Sr. DR could not point out any violation by the assessee. Therefore, the decision of Ld.CIT(A) is affirmed. Addition on the basis that the expenditure on current repairs as capital in nature - HELD THAT:- We agree with the Ld AR that the contention of the AO, that certain items of expenses are not directly covered under current repairs, has no basis. Similarly, the ad hoc disallowance of 20% also has no basis - we do not find any expenditure of capital nature in the evidence filed before me. Therefore see no reason to sustain the ad hoc addition made by the Assessing Officer, the same is therefore, deleted - Decided in favour of assessee. Addition towards foreign exchange notional loss - HELD THAT:- The appellant has not dealt in any foreign exchange derivatives. The notional loss has occurred during the course of normal business transaction. And lastly, the department has not objected to such method been followed by the appellant in the earlier years. Therefore, the addition made by the AO on a/c of marked to market losses, is deleted - Decided in facour of assessee. TDS u/s 195 - Addition u/s 40(a)(i) of the Act for non deduction of TDS - HELD THAT:- The appellant before the Assessing Officer has submitted the complete details of payments made to foreign parties alongwith their names, addresses, details of TDS, wherever applicable and the reason wherever tax was not deducted. From the facts perused so far it appeared that the Assessing Officer did not have the specific information in his possession. On the other hand the appellant has submitted the full information available with him - Thus addition to be deleted. Disallowance of expenditure related to tours and travelling - HELD THAT:- We find that the disallowance was made purely on adhoc basis. The AO has not pointed out any specific instance. Therefore, we do not see any reason to interfere in the order of Ld.CIT(A), the same is hereby affirmed. Ground No.6 raised by the Revenue is thus, dismissed.

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• 2022 (5) TMI 104
  Disallowance being commission paid to certain parties - HELD THAT:- As we find that this issue stands decided against the assessee by the co-ordinate bench of this Tribunal for the assessment year 2000-01 Disallowance towards non compete fees treated as revenue in nature and charged to tax - HELD THAT:- We observe that assessee has entered into joint venture with Sharp Corporation, Japan for the purpose of setting up a joint venture company in India (which is an independent company). With the object of marketing, selling and servicing in India certain electronic office products and other equipments. Apart from entering into joint venture agreement, assessee also entered into a Cooperation Agreement in order to avoid competing with the business of joint venture company, which assessee and Sharp Corporation, Japan were interested to develop in India. It is a common interest for both the partners, so that the joint venture company, which has set up in India should not suffer the competition from any of the companies associated with the assessee or assessee itself. It is clear from the record that it is in the interest of the assessee not to venture into the operations of the new joint venture company. In order to avoid any loss, which assessee may suffer due to non compete, the joint venture partner agreed to compensate the same. It is nowhere connected with the day to day running of the assessee company as perceived by the tax authorities that it is a compensation for the loss incurred by the assessee. Therefore, we are not in agreement with the tax authorities that it is compensation for allowing the facilities or widespread network in marketing or selling the products of the joint venture. and it is only a non compete fees paid by the joint venture partner to restrict the assessee not to curtail the development of the new joint venture company. Therefore, we are inclined to allow the claim of the assessee - Decided in favour of assessee. Addition u/s 40A(9) being contribution to Utmal Employees Welfare Fund - HELD THAT:- As decided in own case for the assessment year 2000-01 we allow the ground raised by the assessee. Expenditure in relation to oil exploration u/s 42 - HELD THAT:- As decided in own case for the assessment year 2000-01 CIT(A) has opined that the term used in the language of the section denotes actual usage and not ready to use, which in our opinion is correct. In this case, we observed that the section does specify the use of the said assets which has to be the year in which the asset is used for the purpose of business. Accordingly, we inclined to uphold the order ld. CIT(A) on this issue by dismissing the ground raised by the assessee. Disallowance of expenditure on computer software - nature of expenditure - HELD THAT:- As decided in M/S ASAHI INDIA SAFETY GLASS LTD. [ 2011 (11) TMI 2 - DELHI HIGH COURT] extent of expenditure cannot be a decisive factor in determining its nature and 14 treatment in books of account not conclusive. The Hon ble High Court held that the software expenses were not to create new asset or a new source of income but to upgrade the system and thus the software expenditure is revenue expenditure. Facts being identical, we follow the ratio laid down in the above decisions and hold that the expenditure incurred by the assessee on computer software is revenue in nature. Disallowance under section 14A solely on account of interest - HELD THAT:- We find the identical ground has been decided by the co-ordinate bench of this Tribunal in assessment year 2000- 01 allowed appeal of assessee. Treatment of extinguishment of sales-tax deferred loan liability as revenue receipt - HELD THAT:- As decided in own case for AY 2000-01 We find merits in the case of the assessee that the provisions of section 41(1) of the Act are not applicable, as there is no remission or cessation of 37 the liability. The remission or cessation of liability contemplates a discharge or partial discharge of a liability coupled with no obligation to discharge the balance liability and thus, it would not cover the facts of the present case, where the Appellant has assigned its obligation, although at the present value. The liability has been discharged by the Appellant by making an immediate payment at the present value and therefore it cannot be said that there is a remission or cessation of the liability. Further there is no remission or cessation of the liability for the reason that the assignment of the liability is to a third party whereas qua the Sales-Tax Department the assessee continues to be liable to pay the said amount and thus as for as the Sales-Tax Department is concerned, there is no remission or cessation of a liability. The case of the assessee finds support from the decision of the Apex Court in CIT vs. S. I. Group India Ltd. [ 2015 (11) TMI 1004 - SUPREME COURT] wherein the Apex Court held that when the Sales-tax Department has not accepted the pre-payment, it cannot be a case of cessation or remission of a liability. In the present case also, the assignment has not been accepted by the Sales-tax Department and, therefore, there is no question of cessation or remission of the liability. Besides the 38 deemed loan from the Sales-tax Department is not a loss or expenditure or a trading liability and, therefore, the provision of section 41(1) of the Act is not applicable. The sales-tax originally collected by the assessee was an expenditure which has been allowed to the assessee by treating it as a deemed loan. Once the said amount has been treated as a loan, it loses its characteristic of sale-tax liability. Such deemed loan is not a loss or expenditure or a trading liability and, hence, does not come within the ambit of section 41(1) of the Act. - Similarly the difference arising out of assignment of sales tax liability to be paid in future date at its present value has not resulted in any benefit or perquisites and thus not covered by the provisions of section 28(iv) of the Act as section 28(iv) proposes to tax benefit or perquisite arising from business of the assessee. In the present case the pre-payment of a deferred sales-tax loan liability at the net present value, does not result in any benefit to the assessee - Appeal of assessee allowed. Re-computation of deduction under section 80IA by applying lower market value to power generated by Captive power plant while determining profit of Captive Power Plant - HELD THAT:- We find that this issue has been deliberated and decided by the coordinate bench of this Tribunal for A. Y. 2000-01 held that deduction under section 80IA of the Act is to be computed at the rate at which the electricity is supplied to the consumers and not the rate at which the board purchases the electricity. - Decided in favour of assessee. Claim for deduction u/s 80IA in respect of Captive Power Generating (DG) Units to be allowed. Disallowance under section 14A for the purpose of computing book profit under section 115JB - HELD THAT:- We find that the issue is covered by the decision of the coordinate bench decision in assessee s own case - The issue of adjustments made under section 14A of the Act will not survive as we have deleted the addition under section 14A. Reduction in depreciation arising on account of AO s action to disregard transfer of Bangalore undertaking as slump sale - HELD THAT:- As decided in own case after hearing the parties and perusing the decision of the tribunal in AY 1998-99 has granted relief to the assessee by treating the transfer of Bangalore undertaking as a slump sale . Hence, the consequential reduction in Depreciation by the Department in all subsequent years needs to be eliminated. We are therefore directing the AO accept the depreciation as calculated by the assessee. The additional ground is allowed. Deduction under section 80HHE under section 115JA needs to be computed on the basis of profit as per P L instead of business income computed as per normal provisions of the Act - HELD THAT:- We find that the Hon ble Supreme Court in the case of Ajanta Pharma vs CIT [ 2010 (9) TMI 8 - SUPREME COURT] held that the Appellate Tribunal was right in holding that 100 per cent of the export profits earned by the assessee as computed under section 80HHC(3) was eligible for reduction under clause (iv) of the Explanation to section 115JB. We also find that the above ratio laid down by the Hon ble Apex Court squarely applies to the case on hand. Therefore, we allow the additional ground raised by the assessee.

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• 2022 (5) TMI 103
  Revision u/s 263 by CIT - Exemption u/s 54B and short term capital gain - HELD THAT:- There is no dispute that there is no reference about various enquiries or investigations carried out by Assessing Officer while passing the assessment order on 22/12/2017. Before us, the learned AR of the assessee vehemently submitted that during assessment, AO made detailed enquiries and accepted the claim of assessee on exemption u/s 54B as well as short term capital gain - We find that during the assessment proceedings, the Assessing Officer issued various notices for seeking information and evidence with regard to the claim of exemption u/s 54B as evident from the show cause notice dated 10/11/2017 and 13/11/2017 and 29/11/2017. The assessee furnished his reply and also filed evidence that agriculture land sold by the assessee was used for agriculture activities as evident from extract of 7/12. Thus, the issue was examined by Assessing Officer and on his satisfaction, no addition was made. So far as other issue regarding sale and purchase of other properties i.e. flat in Life Style building, the Assessing Officer vide his notice dated 13/11/2017 required necessary details. Since, the assessing officer has accepted the explanation of assessee, which was coupled with evidence; the assessing officer may not have thought to pass detailed order on the issue examined by her. In our view, once the contention of the assessee on a particular issue is accepted by assessing office, the order is not appealable order and no appeal would be filed, against such accepted position as an assessee will not feel aggrieved with it, it is not necessary to give reasons of acceptance of such pleas. Similar view has been taken by Hon ble Jurisdictional High Court in CIT Vs Nirma Chemical Works Ltd [ 2008 (2) TMI 373 - GUJARAT HIGH COURT] - Appeal of assessee allowed.

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• 2022 (5) TMI 102
  Unexplained cash deposit - assessee challenged the action of the AO before the CIT(A) and explained the source of cash deposit received from his father and uncle from the sale proceeds of agricultural land - HELD THAT:- Since the assessee has produced receipts of transfer of money by his sister through her husband Sh. Rajendra Singh which was received by the assessee in India through the money transfer agent Western Union. The transfer of money was about Rs. 50,000/- in each tranche and there are nine tranche of money transfers. Eight transfers or about Rs. 50,000/- and one is about 1 Lac. Therefore, prima facie, the assessee has discharged its onus to show the source of deposit made in the bank account to the extent of Rs. 5 Lac as the money was received by the assessee as remittance by NRI sister. There is an entry of Rs. 4 Lac in the savings bank account of another sister Smt. Radhika Singh with UCO Bank and therefore, this amount of Rs. 4 Lac is received through banking channel. The bank account statement of the sister shows that there is a transfer of Rs. 4 Lac in the name of the assessee on 13.01.2010. Hence, the assessee has produced the documentary evidence to show transfer through bank account as well as the availability of the money in the bank account is sister. Accordingly, in the facts and circumstances of the case, the addition to the extent of Rs. 9 Lac is deleted and the balance amount of Rs. 3,20,000/- as accumulated savings remains unexplained and the addition to the extent is confirmed. - Decided partly in favour of assessee.

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• 2022 (5) TMI 101
  Exemption u/s 11 - allegation of accommodation entry in the garb of corpus donation - cancellation of registration - addition u/s 68 being corpus donation received from M/s Herbicure Bio- Herbal Research Foundation - HELD THAT:- As decided in SANSKRITI SAGAR VERSUS CIT (EXEMPTION) KOLKATA [ 2017 (9) TMI 1943 - ITAT KOLKATA] when donation have been shown as income and applied the receipts for objects of the Assessee-Trust, no addition could be made against the assessee. The facts in the present case are similar to the case of Fateh Chand Charitable Trust [ 2016 (4) TMI 1119 - ITAT LUCKNOW] . Considering the above discussion in the light of material on record, it is clear that assessee has been carrying out scientific research activities as per its objects. The donation received by the assessee have been used for the scientific research purpose only. There is no legal admissible evidence on record against the assessee that assessee received any donation from any company as alleged in the report of the Investigation Wing. No evidence of any unaccounted cash transactions conducted by the assessee were found. There is no evidence on record to show that assessee received or paid any commission for indulging in any unaccounted money. Therefore, cancellation of registration in the matter is merely on presumption only. - Decided in favour of assessee.

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• 2022 (5) TMI 100
  Late deposit of employees contribution of PF and ESI - addition under section 2(24)(x) read with section 36(1)(va) - HELD THAT:- Admitted facts of the present case are that the payments of PF ESI contribution relating employee s contribution are before the due date of filing of return of income U/s 139(1) of the Act. We have noted that the issue under consideration is covered by the decision of the Coordinate Bench in case of M/s Mohanlal Khatri [ 2021 (11) TMI 1035 - ITAT JAIPUR] held that addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the delayed deposit of the employees s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) - also see AIMIL LIMITED [ 2009 (12) TMI 38 - DELHI HIGH COURT] Also in case of M/s. Industrial Security Intelligence India P Ltd., [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] held that the payment of employees contribution in regard to PF ESI if made before the due date of filing of return of income u/s.139(1) of the Act, the same is allowable as deduction as per the provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B Whether by the Finance Act, 2021, the provisions of Section 36(1)(va) by inserting the Explanation 2 r.w.s. 43B of the Act have been amended, whereby it is clarified that the provisions of Section 43B of the Act shall not apply and shall be deemed ought to have been applied for the purpose of determining the due date under this clause? - We are of the view that the amendment brought in the statue i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee s appeal is allowed.

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• 2022 (5) TMI 99
  TDS u/s 194C or 194J - nature of Service agreement entered by the appellant with various agencies for supply of labour and work - AO concluded on the basis of scope of agreement that the services carried out by the agencies are a professional service and include amount other things conducting different medical tests i.e. DTT, HPLC etc. for Sickle Cell Anemia on the target population, tagging population as per the tests performed, making a database of such tests their results and making all data available to the society - HELD THAT:- In this case, the assessee has entered into agreement with the abovementioned entities for the purpose of carrying out screening (i.e. DTT test, HPLC test etc.) of Sickle Cell Anemia in tribal district of Gujarat. It was seen that the function performed by the above entities fall under the purview of professional services/managerial and consultancy services as per section 194J of the Act and therefore liability of the deduction of tax arises @ 10% u/s. 194J instead of u/s. 194C As it is apparent and clear from the terms of the agreement that technical persons carried out tests and Laboratory Technician will be with minimum qualification of MLT/DMLT with science graduate while paramedical worker will be with minimum qualification of SI. It is clear that aforesaid services come within Section 194J and not u/s 194C of the Act. Therefore, we do not find any ambiguity in the order passed by the learned CIT(A). In our considered opinion, learned CIT(A) has passed a detailed and reasoned order and same does not required any interference at our end. - Decided against assessee.

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• 2022 (5) TMI 98
  TDS u/s 195 - Disallowance of commission u/s 40(a)(ia) - payments made on account of commission, exhibition expenses and testing expenses - assessee has argued before us that there is no sum chargeable to tax as all the payees are of outside India, there is not a single party in whose case the criteria for their residency for charging to tax in India is proved, services are also rendered outside India - HELD THAT:- DR has not pointed that why and how the decision that is relied upon by the AO which in detailed distinguished by the Ld CIT(A) are in correct. In fact, the department has accepted the contention that this sum is not disallowable as the subsequent assessment is completed by the department at retuned income. Not only that the ld. DR has also not countered the notable argument of the AR of the assessee that the subsequent year i.e. 2017-18, the AO raised a pointed query in a notice issued to the assessee and the assessee filed a detailed reply vide letter dated 25.01.2021 and Ld. AO after considering the overall facts presented being similar to the year under considered preferred not to make any addition on the similar issue and has accepted the contention of the assessee for that A. Y.2017- 18. Considering this development for the subsequent year even the disallowance made by the AO shall not sustained as the claim under this year is similar with that of A. Y. 2017-18.On this aspect Ld. DR choose to remain silent, whereas, the Ld. AR of the assessee relied on the judicial decision that in absence of any material change in the facts and circumstances, the Rule of Consistency require that the view already taken must be followed in later years as well and has relied on the judgment in the case of Godrej Boyce Manufacturing Company Ltd. [ 2017 (5) TMI 403 - SUPREME COURT] Undisputed facts are that the commission has been paid to various nonresident entities in respect of sales affected by the assessee outside of India, the services have been rendered outside of India and the payments have been made outside of India. In light of these undisputed facts, the legal proposition laid down in the aforesaid decision equally applies in the instant case and such commission payment cannot be held chargeable to tax in India. Similarly the exhibition expenses have been paid in respect of participation in various exhibitions held outside of India and even the testing charges have been paid for testing services outside of India. Therefore, these payments will not fall in the category of income which has accrued or arisen or deemed to accrued or arise in India. Further, payments have been made outside of India. Accordingly, we are of the considered view that there was no liability to deduct tax at source u/s 195(1) as these payments are not chargeable to tax and the provisions of section 40(a)(ia) cannot be invoked in the instant case.- Decided in favour of assessee.

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• 2022 (5) TMI 97
  Disallowance u/s 43B - A.R. submitted that the assessee had inadvertently deleted excess amount of leave encashment under Section 43B of the Act in the return of income - HELD THAT:- We have heard the rival submissions. In our opinion the plea of the assessee is justified. Accordingly in the interest of justice, we remit this issue to the file of the AO to consider the aggregate amount of provision for disallowance on leave encashment and AO has to decide the issue after giving opportunity of hearing to the assessee. TP Adjustment - comparable selection - Mindtree Limited and e4e Healthcare Business Services Pvt. Ltd. - HELD THAT:- We direct the AO/TPO to include these 2 comparables in the list of comparables while determining the ALP in segment. Exclusion of ICRA Online Limited from the list of comparables - As relying on Lam Research India (P) Ltd [ 2021 (9) TMI 1379 - ITAT BANGALORE] we direct the AO/TPO to exclude ICRA Online Ltd. from the list of comparables while determining ALP of the international transactions. Seeking correct computation of operating margin of Mindtree Limited - As D.R. put no objection on this issue. Accordingly, we direct the AO/TPO to consider the correct operating margin of Mindtree Limited after giving opportunity to the assessee. Negative working capital adjustment - HELD THAT:- As decided in e4e Business Solutions India Pvt. Ltd.[ 2020 (12) TMI 1255 - ITAT BANGALORE] we are of the opinion that the assessee having no working capital risk no negative working capital adjustment is called for. Accordingly, this ground of the assessee is allowed Comparability - Companies functionally dissimilar with that of assessee need to be deselected from final list. Disallowance of deduction under Section 10A - Exclusion of telecommunication expenses both from export sales and total turnover - HELD THAT:- After hearing both the parties we are of the opinion that this issue is settled by the judgment of Hon ble Supreme Court in the case of CIT vs. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] wherein it is held that the expenditure incurred in foreign currency, towards telecommunication to be excluded both from export turnover and total turnover for the purpose of computation of deduction under Section 10A of the Act. Being so, respectfully following the above judgment of the Hon ble Supreme Court we dismiss the ground taken by Revenue. Deduction claimed only on interest earned from fixed deposits - HELD THAT:- We find that this issue is covered by the judgment of Hon ble Karnataka High Court in the case of CIT vs. Hewlett Packard Global Software Ltd.[ 2017 (11) TMI 205 - KARNATAKA HIGH COURT] in favour of the assessee. As such the interest earned from fixed deposit invested in the export earning of the assessee to be included in the profit of the undertaking while computing the deduction under Section 10A of the Act. Accordingly, this ground of Revenue is dismissed.

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• 2022 (5) TMI 96
  Revision u/s 263 - Existence of corpus fund and investments in land and buildings - HELD THAT:- CIT DR has not controverted the fact that during the financial period, the assessee did not receive any corpus donation and did not purchase or acquire any land, therefore, no enquiry was required to be made in this regard and thus, the observations made by the CIT in the notice u/s. 263 of the Act and in the impugned order are clearly irrelevant and incorrect factual position of the assessee case. In view of CBDT Circular dated 14.9.1990 (supra) the corpus donation cannot be treated as income of the trust. This proposition has been rendered by Hon ble Supreme Court in the case of Mata Amrithanandamayi Math Amritapuri [ 2018 (5) TMI 1028 - SC ORDER] therefore, the observation of Ld. CIT(E) in the notice u/s. 263 of impugned order are clearly an outcome of consideration of irrelevant and incorrect factual position keeping aside Board Circular (supra). We also observe that CIT(E) submitted that the assessee has not submitted any reply either to show cause notice or in response to the opportunity accorded to it. AR has successfully demonstrated that the assessee filed reply to the show cause notice dated 26.3.2021 and no further opportunity beyond 30.3.2021 was given to the assessee. Therefore, these observations of the CIT(E) are also not sustainable in law. CIT is required to direct the AO only after coming the conclusion that the earlier finding of the ITO was erroneous and prejudicial to the interests of the revenue. In the present case, the Ld. CIT(E) has taken into consideration the incorrect and irrelevant facts to allege that there is no enquiry by the AO and thus the impugned assessment order is erroneous and prejudicial to the interest of the revenue without considering the reply of the assessee to show cause notice u/s. 263 of the Act and keeping aside the basic principles of tax jurisprudence relevant for assessing income of a charitable trust. We, therefore, in view of foregoing discussion, reach to a logical conclusion and compelled to hold that the revisionary order passed u/s. 263 of the Act by the Ld. CIT(E) is not sustainable and valid. - Decided in favour of assessee.

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• 2022 (5) TMI 95
  Disallowance being employees contribution to provident fund and employees state insurance u/s. 36(1) - whether the payment made beyond the due date prescribed under respective statutes, but before the due date prescribed u/s. 139(1)? - HELD THAT:- On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down by the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd. Vs. DCIT [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s. 139(1) - Decided in favour of assessee.

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• 2022 (5) TMI 94
  Employees contribution to PF and ESI has been paid by the assessee beyond the due date prescribed in the respective Acts - HELD THAT:- As in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) of the I.T.Act. It was further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. The amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. - Decided in favour of assessee.

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• 2022 (5) TMI 93
  Accrual of income - deduction on account of Special Additional Duty (SAD) receipts in its computation of income - treating the Special Additional Duty [payment of custom duty] as income of the assessee on receipt basis - whether the receipts were in the nature of contingent receipt and actually the assessee has offered for taxation in subsequent year, as and when actually sanctioned by the Customs Department and received by the assessee? - HELD THAT:- As noted that the claim of assessee seems reasonable but the claim is subject to verification. As decided in M/S EXCEL INDUSTRIES LTD. AND MAFATLAL INDUSTRIES P. LTD. [ 2013 (10) TMI 324 - SUPREME COURT] that income accrues when it becomes due but it must also accompanied by a corresponding liability of the other party to pay the amount. Further held that, only then it can be said that for the purpose of taxability that income was hypothetical and it had really accrued to the assessee. As in the present case, the subject verification of SAD receipts whether approved by customs authorities and when it was approved, the income accrued in that year only. This is a matter of verification by the AO. Even the AO will verify whether the assessee in subsequent year has declared the corresponding income or not. As the issue is clear that income will accrue when the corresponding liability of the other party to pay the amount and on this principle we remand the matter back to the file of the AO for verification. The appeal of the assessee is allowed subject to verification of facts.

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• 2022 (5) TMI 92
  Disallowance of payment of employees contribution towards Provident Fund and ESI under section 36(1)(va) read with section 43B - HELD THAT:- This issue stands covered by series of decisions of this Tribunal following various judgments of Hon ble High Courts including Delhi High Court that, if the payment of employees contribution to PF/ESI though has been made beyond the amendment of statutory date but much before filing of return of income, then no disallowance can be made - See FLYING FABRICATION VERSUS DEPUTY COMMISSIONER OF INCOME TAX [ 2021 (11) TMI 1041 - ITAT DELHI] . As amendment regarding due date of deposit of employees contribution of PF/ESI are prospective, i.e., beyond AY 2021-22 and the same is allowed if it is paid before the due date of filing of Income-tax return prior to AY 2021-22 and same cannot be disallowed u/s 36(1)(va) - Decided in favour of assessee.

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• 2022 (5) TMI 91
  Addition on account of Excess Stock - suppression of the stock of bullion - argued Revised stock tally wherein all the quantity of Sale as per Bills and Stock match - HELD THAT:- Considering the two fold contentions of the ld. A.R we find substantial force in the same, viz (i). that the CIT(Appeal) by taking recourse to a self-contradictory approach had wrongly refused to consider the assessee s revised stock statement; and (ii). that the A.O had erred in not considering the net weight (i.e weight of 99.50% purity gold as mentioned in the invoices) of the aforementioned two sale transactions in question, viz. (a) Invoice No. V4, dated 29.03.2013 of 560.560 grams (gross weight) i.e 95% purity which on conversion into 99.50% purity was reduced to 532.5 grams (net weight); and (b). Invoice No. V5, dated 30.03.2013 of 909.560 grams (gross weight) i.e. 88% purity which on conversion into 99.59% purity was reduced to 800.4 grams (net weight). We herein vacate the addition made by the Assessing Officer towards the alleged suppression of the stock of bullion. Accordingly, we set-aside the order of the CIT(Appeal) to the extent he had upheld the addition made by the A.O. The Ground of appeal No. 1 is allowed in terms of our aforesaid observations. Unexplained cash deposit in the assessee s bank account - unexplained money Addition u/s 69A - HELD THAT:- Department in exercise of its powers u/s. 226(3) of the Act may call upon a banker to pay the money held in the account of the assessee towards discharge of the latter arrears due towards the department. In sum and substance, the aforesaid statutory provision, i.e. Section 226(3) of the Act clearly recognizes the amount lying in the bank account of the assessee as money . In the backdrop of the aforesaid position of law, we are of the considered view that a meaning of the term money different to that as provided in sub-section (3) of Section 226 of the Act would neither be permissible nor justified. We, thus, in terms of our aforesaid observations are unable to concur with the claim of the ld. AR that as the amount lying in the assessee s saving bank account with State Bank of Patiala, Branch :Kanak mandi, Hoshiarpur would not fall within the meaning of money , therefore, the CIT(Appeals) had wrongly triggered the provisions of section 69A of the Act and subjected to the same to tax. Accordingly, finding no infirmity in the view taken by the CIT(A) that the unexplained cash deposits in the assessee s bank account was liable to be brought to tax under Sec. 69A of the Act, we uphold the same. The Ground of appeal No. 2 raised by the assessee is dismissed.

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• 2022 (5) TMI 90
  Deduction u/s 80IC - as per CIT assessee is not rendering services in the field of Information and Communication Technology ( ICT ) industry required for claiming deduction u/s 80-IC - HELD THAT:- As decided in own case [ 2017 (11) TMI 1541 - ITAT DELHI] assessee controlled and provided all the facilities to its clients from Dehradun and the activities undertaken by the assessee falls in Item No. 13 of Part C of Schedule Fourteenth to the Income Tax Act, 1961. The assessee has its operational unit at Dehradun, paying taxes in Uttaranchal, creating jobs in the said State, bringing new IT call centres and BPO companies to Dehradun to deliver IT services. Therefore, it fulfills the conditions to claim the deduction u/s 80IC - assessee rightly claimed the deduction u/s 80IC of the Act and the AO was not justified in denying the said claim. In that view of the matter, we set aside the impugned order and direct the AO to allow the claim of the assessee. - Decided in favour of assessee.

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• Customs

• 2022 (5) TMI 89
  Smuggling - detention of detenues - non-supply of certain RUDs (relied upon documents) and the supply of illegible RUDs - non-application of mind or not - retraction of statements - HELD THAT:- As the RUDs; supplied to the Detenus as well as relied upon by the Detaining Authority, in arriving at its subjective satisfaction were admittedly illegible; it has the unnerving consequence of violating the constitutional rights guaranteed to the Detenus. There are considerable gap of time between the retraction of their statements by the detenus and co-detenus, and the rebuttal thereof by the DRI. This belated rebuttal on the part of the official respondents was relevant and germane and therefore, merited consideration by the Detaining Authority, particularly when extensive reliance was evidently placed upon those statements. The Detaining Authority would also have been well-advised to consider the aspect of admissibility of the statements, which stood retracted; and were only belatedly rebutted by the Sponsoring Authority, two days before the passing of the impugned orders of detention. Once the Detaining Authority has relied upon the inculpative statements of the co-accused their retractions assumed great relevance in the factual backdrop of the present case. Consequently, the admissibility of the said statements becomes dubious once there is a retraction, which issue merited consideration, was evidently not afforded to it by the Detaining Authority. The legal position is that, if the documents are relevant and have a direct bearing on the case, they must be placed before the Detaining Authority for its subjective satisfaction . It is trite to say that when a person is detained in pursuance to an order of preventive detention, the statutory authorities are constitutionally charged with the responsibility of ensuring that the grounds of detention, including legible copies of all RUDs and other relevant documents that are considered whilst forming the subjective satisfaction, are provided to the detenu by the Detaining Authority; so as to enable the detenu to make an effective representation to the Advisory Board, as well as to the Detaining Authority. Therefore, the failure and non-supply of legible copies of all RUDs despite of a request and representation made by the Detenus for the supply of the same, renders the order of detention illegal and bad in law; and vitiates the subjective satisfaction arrived at by the Detaining Authority. Thus, it is concluded that the Detaining Authority gravely erred in relying upon illegible documents which is equivalent to non-placement of RUDs by the act of omitting them from due consideration which consequently vitiates the subjective satisfaction arrived at by the detaining authority. Resultantly, the impugned detention order stands invalidated. Whether the argument premised on Section 5A of the COFEPOSA Act by the official Respondents has the effect of saving the detention order? - HELD THAT:- It is settled law and not in dispute that under section 3 of COFEPOSA it is only the detaining authority, which can ultimately decide to pass or not, a detention order against any person, and that too, after himself perusing each and every document and material placed before it. It is also not in dispute that the subjective satisfaction of the detaining authority itself is to be arrived at after perusing all the relevant documents and material. This is a constitutionally provided condition precedent for passing a valid order of Detention - there are considerable force in the contention that had the Detaining Authority himself perused the RUDs for arriving at its subjective satisfaction and formulation of grounds, it would have been alive to the fact that various RUDs placed before it were illegible. Thus, in cases where orders of detention fail on the ground that the subjective satisfaction of the Detaining Authority is vitiated owing to non-application of mind; the protection afforded qua severability of grounds stipulated under the provision of 5A of the COFEPOSA Act, are neither attracted nor available, in law. Petition allowed - decided in favour of the detenus and against the respondents.

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• 2022 (5) TMI 88
  Provisional release of seized goods - pendency of withholding of the goods concerned - Multi-Function Devices - prohibited goods or not - notification dated 18.03.2021 - HELD THAT:- In this regard, the policy decision taken by the Government i.e., the Revenue has already been put under challenge in a batch of cases before this Court, which are said to be pending. Moreover, in the case of M/S DELHI PHOTOCOPIERS VERSUS THE COMMISSIONER OF CUSTOMS (GR. 5) CHENNAI II ORS. [ 2021 (8) TMI 1244 - SUPREME COURT] , the Hon ble Supreme Court has taken note of these factors, where the arguments advanced on behalf of the Revenue before the Hon ble Supreme Court was that, on and from 01.04.2020, the goods, according to the Department, are clearly prohibited goods and on and from that date, unless an order is made under Section 125 of the Customs Act, the goods stands confiscated, the Hon ble Supreme Court had stayed the confiscation process and also has observed that, the notification dated 01.04.2020 is the subject matter of controversy before the Hon ble Supreme Court, particularly in view of the subsequent notification dated 18.03.2021. Therefore, the goods which are in question were allowed to be released by way of provisional release on the same terms and conditions, which means, the enhanced duty has to be paid by the petitioners/importers as a condition precedent for getting release of these goods by way of provisional release. Therefore, as of now, unmindful of the pendency of the litigations with regard to the applicability or otherwise of the notifications, namely notification dated 01.04.2020 or 18.03.2021, independently the prayer sought for by way of Mandamus can be considered and granted, because of the aforestated judgment, where, the learned Single Judge M/S. BEST MEGA INTERNATIONAL VERSUS THE COMMISSIONER OF CUSTOMS (GR. 5) , THE ADDITIONAL COMMISSIONER OF CUSTOMS (GR. 5) , THE DEPUTY COMMISSIONER OF CUSTOMS (GR. 5) , THE DIRECTOR GENERAL OF FOREIGN TRADE AND ADDITIONAL SECRETARY TO THE GOVT. OF INDIA [ 2021 (2) TMI 826 - MADRAS HIGH COURT] has been confirmed by the Hon ble Supreme Court in M/S DELHI PHOTOCOPIERS VERSUS THE COMMISSIONER OF CUSTOMS (GR. 5) CHENNAI II ORS. [ 2021 (8) TMI 1244 - SUPREME COURT] , where it was held that The confiscation of these goods is stayed. The Notification dated 01.04.2020 is the subject matter of controversy before this Court, particularly in view of a subsequent Notification dated 18.03.2021 that has been pointed out by Mr. Arvind Datar, learned senior counsel. There shall be a direction to the respondents to consider the plea of the petitioners to release the goods by way of provisional release on condition that, the petitioner shall pay/deposit the enhanced duty amount. On receipt of such enhanced duty amount paid by the petitioners, the goods in question shall be released within a period of three weeks thereafter - petition disposed off.

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• Corporate Laws

• 2022 (5) TMI 87
  Sanction of Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.

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• 2022 (5) TMI 86
  Oppression and Mismanagement - Seeking to implead the petitioners as additional Respondents - seeking to permit the petitioners to file a counter affidavit - allegation is that the majority shareholding obtained by the 3rd respondent was by adopting illegal means and by misinterpreting the order of NCLT, Chennai Bench - HELD THAT:- This application has been filed by two shareholders for their impleadment as additional respondents in Company Petition No. TCP/34/KOB/2019 which has been filed during 2019 and since the pleadings are complete, the matter is in the list for final hearing. At this belated stage, these applicants have come forward for their impleadment, that too in a petition filed under Section 241 242 of the Companies Act,2013. Such petitions are maintainable only when an eligible person files the same in terms of Section 244 of the Companies Act. Instead of filing a Company Petition (for which these applicants are not eligible), they are trying to intervene in this Company Petition. Considering this application on merit, on-going through the documents annexed and the arguments advanced by the learned Counsel for the parties, it is held that an application for impleading a party should carry all the relevant facts and circumstances, which show/prove that the person making such application for impleadment is a necessary/proper party. On the basis of the documents produced and submissions of the applicants, it is opined that the applicants have to establish how their rights as a shareholder will get affected by any order that may be passed by the Tribunal. The applicants failed to prove that they are necessary and proper parties as per Section 241 of the Companies Act, 2013, who is in the management of the affairs of the Company against whom any acts of oppression and mismanagement are complained of. Moreover, merely holding of shares cannot be regarded as a sufficient ground for allowing all the shareholders to join the litigation and for adjudication of the issues raised. In the present Company Petition, the applicants are not necessary parties and they cannot be impleaded as respondents. Their remedy is to file a Company Petition, to which also they are not eligible as they do not have the required percentage of shares in the company. This application is devoid of merit and accordingly the same is dismissed.

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• 2022 (5) TMI 85
  Sanction of Scheme of Amalgamation - Sections 230-232 of the Companies Act, 2013 - HELD THAT:- From a perusal of the materials placed on record, it appears that the Scheme of Amalgamation annexed to this petition is a fair and reasonable one and does not violate any provisions of law and is not contrary to public policy. As per the Scheme the entire undertaking, assets, business, liabilities of the Transferor Company proposed to be amalgamated and stand vested with the Transferee Company as a going concern - Since all the requisite statutory compliances prescribed under Sections 230 and 232 of the Companies Act, 2013 have been followed, this Tribunal finds that the Scheme of Amalgamation annexed to these Petitions can be sanctioned and made absolute in terms of the prayer (1) in the said Company Petitions. The Scheme is sanctioned, which shall be binding on the Members/Shareholders, Secured Creditors, Unsecured Creditors and employees of the Petitioner Companies. The appointed date of the Scheme is fixed as opening hours of 1st April 2019 for Henry and Farad Private Limited (Transferee Company) and Hesel Engineering Private Limited (Transferor Company) - Application allowed.

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• Insolvency & Bankruptcy

• 2022 (5) TMI 84
  Recovery of property tax dues from the Liquidator - period prior to 26.02.2021 - priority of charges over subject property - whether the Surat Municipal Corporation can claim any first charge or precedence over the subject property for the purpose of recovering the arrears towards the liability of property tax incurred by the Kohinoor Diamonds by virtue of Section 141 of the Gujarat Provincial Municipal Corporations Act, 1949? - HELD THAT:- It is not in dispute that what is sought to be recovered by the Surat Municipal Corporation from the erstwhile Kohinoor Diamonds are the statutory dues towards the property tax. As observed by the Supreme Court in the case of AI CHAMPDANY INDUSTRIES LTD. VERSUS OFFICIAL LIQUIDATOR [ 2009 (2) TMI 470 - SUPREME COURT] , if the property tax was merely a statutory dues without creating any encumbrance on the property, then it is not obligatory on the part of the auction purchasers to make an investigation as regards the title etc. It would mean that auction purchasers need not find out all the liabilities of the company in liquidation in their entirety. In the present case, there are no fault with the Official Liquidator in putting the subject property to E-auction. Also there are no fault with the writ applicant in participating in the auction proceedings. It is not in dispute that the writ applicant was the successful bidder. In RUKMANI VERSUS THE DEPUTY COMMERCIAL TAX OFFICER I, [ 2013 (3) TMI 205 - MADRAS HIGH COURT] , the Madras High Court held that, as the proviso to Section 24-A of the T.N.G.S.T. Act itself indicated, a charge may not be enforced against a transferee if he/she has had no notice of the same unless, by law, the requirement of such notice had been waived. The Surat Municipal Corporation cannot claim any first charge or precedence over the subject property by virtue of Section 141 of the BPMC Act. The auction proceedings have attained finality. The writ applicant as on date is the lawful owner of the subject property. The Surat Municipal Corporation may recover the property tax from the writ applicant from the date of purchase of the subject property in the E-auction proceedings. If the entries as regards the sale in the revenue record of rights have not been mutated, the revenue authority shall proceed to do so in favour of the writ applicant. Application disposed off.

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• 2022 (5) TMI 83
  Maintainability of application - initiatiion of CIRP - Seeking to initiate CIRP, against Mr. Jai Kumar Goyal, one of the Directors of M/s. BRG Iron Steel Co. Pvt. Ltd., who is the Personal Guarantor of Central Bank of India, in relation to the credit facilities extended by the Bank in favour of BRG - Financial Creditors - existence of debt and dispute or not - HELD THAT:- There does not appear to be any request of the Resolution Professional for issuance of the instructions for the purpose of conducting negotiations between the debtor and creditors for arriving at the repayment plan. Therefore, based on the reasons recorded in the report submitted by the Resolution Professional, the application, filed under the provisions of section 95 of the IBC, 2016 is hereby admitted under section 100 of the IBC, 2016. The Insolvency Resolution Process is initiated against the respondent and the moratorium is declared, which begins with the date of admission of the application and shall cease to have effect at the end of the period of 180 days, as provided u/s. 101 of IBC, 2016 or until this Adjudicating Authority approves the repayment plan under sub-section (1) of section 114 of the Code. The Insolvency Resolution Process stands initiated against the debtor/Personal Guarantor - Application admitted - moratorium declared.

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• 2022 (5) TMI 82
  Seeking direction to respondent to deposit the amount forthwith to the account of the RP maintained for the purpose of CIRP towards the contribution towards its share of CIRP Cost - levy of maximum penalty of one crore rupees to the respondent for initiating the Insolvency Resolution Process with malicious intent under Section 65(1) of Insolvency and Bankruptcy Code, 2016 in addition to the CIRP cost (in case of failure to deposit the amount) - HELD THAT:- Since the Operational Creditor has not paid the amount to the RP, which the operational creditor has to pay for the initiation and completion of the CIRP, the Resolution Professional is forced to file this application. After issue of notice, the respondent appeared through counsel on 17.12.2021 and stated that the Respondent wanted to file a counter to the application and the matter was adjourned to 06.01.2022 granting time. However, since no reply/ counter has been filed by the Respondent, this Tribunal on 06.01.2022 directed Shri. P. R. Shanmugham, Director of the Respondent Company to appear in person through VC. On 31.01.2022, Shri. P. R. Shanmugham appeared and stated that he has paid Rs. 1,00,000/- and sought further time to settle the dues - He was directed to deposit the balance amount within two weeks. However, the balance amount was not deposited by him. Hence, vide order dated 17.02.2022, he was directed to pay the balance amount of Rs. 3,43,377/- to the account of RP on or before 08.03.2022. But this direction was also not complied with by the Respondent and as a special case; the time for payment was extended upto 16.03.2022 making it clear that no further time will be granted. Even though the Tribunal gave amble opportunity to the Respondent to make the payment, all the directions have been flouted by him. In order to proceed with the CIRP, it is necessary that all the parties should cooperate and make the respective payments. The Operational Creditor who filed this IB petition should be a party who should take more vigilant action to complete the process, so that they will get their share of money at the earliest possible. Respondent is directed to make the payment of Rs. 3,02,358/- to the Resolution Professional immediately at any rate within 2 weeks from the date of receipt of this order - Application disposed off.

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• 2022 (5) TMI 81
  CIRP - Validity of claims of the respondents 2 to 7 admitted by the 1st respondent - adjudication of such claims and fixing the same on the basis of the documents/evidences produced by the applicant and the documents or other evidences as may be produced by the respondents - HELD THAT:- After a detailed hearing and considering all the contentions of both sides, this Tribunal vide order dated 20.09.2021 dismissed that MA with costs of Rs. 25,000/- which according to the Liquidator, the applicants therein have not paid - Without complying with the direction in that order, the applicant has again moved this Tribunal taking some other contentions regarding the non-acceptance of his claim and the interest levied by the Federal Bank. The Liquidator has satisfactorily clarified why his claim was not accepted and the interest charged by the Bank is as per the agreement between the Bank and the Corporate Debtor. It appears to us, that the only intention of the applicant is to delay the proceedings in one way or the other approaching various forums including the Hon ble Supreme Court of India, wherein all his attempts were failed. From the verification of the earlier proceedings of this matter, it is seen that the Suspended Directors are not at all co-operating in the CIR Process and they were only on the lookout of creating hurdle to the continuation of CIR Process. Moreover, the applicant herein is a shareholder of the Company and as rightly pointed out by the Respondents that he is not entitled to claim any relief against the CoC or the conduct of the CIRP. Application dismissed.

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• 2022 (5) TMI 80
  Legality of Committee of Creditors - Committee of Creditors allegedly formed with just two creditors - validity of first meeting of COC and its minutes - HELD THAT:- It is important to appreciate the significance of the timeline. The Corporate Debtor was not in pink of its health when it defaulted and hence the resolution was initiated. During the CIRP period, an insolvency professional exercises the powers of the Board of Directors and manages the operations of the Corporate Debtor as a going concern and there is uncertainty about ownership and control of the corporate, post-resolution. If such a state of affairs continues too long, it is likely that organizational capital will diminish making the resolution difficult. A very long CIRP period is likely to push the Corporate Debtor towards liquidation while reducing its liquidation value. The claim of the applicant/Corporate Debtor in this application is that no sufficient period was granted for the public announcement in view of Covid-19 pandemic and without considering the spread of Covid-19 and the situation of national lockdown, the date to accept the claims of the creditors should have been extended. This application has been filed by the applicant Corporate Debtor on 07.02.2021 seeking the aforesaid reliefs. The applicant herein is exploiting the benefit under Covid-19 pandemic and trying to destroy the very purpose of the I B Code,2016. 180 days is a long period now with all the advantages of modern technology and well-informed brains. Going forward, a CIRP could possibly be completed in a few days or even hours, particularly with the use of artificial intelligence. Considering the present stage of the CIRP and the Resolution Professional had already given ample opportunity to the claimants to file the claims, if any, and updated the list of creditors vide order dated 26th November 2021 as on 28.10.2021 and that a Resolution Plan has already been under the consideration of the CoC, there are no reason to entertain this application and grant any relief to the applicant. Application disposed off.

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• 2022 (5) TMI 79
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor is liable to pay the Petitioner and defaulted in making the payment to the Petitioner. Considering the facts, it is concluded that the nature of Debt is a Financial Debt as defined under section 5(8) of the Code. It has also been established that there is a Default as defined under section 3(12) of the Code on the part of the Debtor. The two essential qualifications, i.e., existence of debt and default , for admission of a petition under section 7 of the I B Code, have been met in this case. Besides, the Company Petition is well within the period of limitation. The formalities as prescribed under the Code have been completed by the Petitioner, and therefore this Petition deserves Admission . Petition admitted - moratorium declared.

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• Service Tax

• 2022 (5) TMI 78
  Benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - benefit could no be availed of due to technical glitches - It is the petitioner s case that because of Covid-19, it could not take necessary steps for availing the benefits of the Scheme, within the timeframe fixed by the respondent - HELD THAT:- Mr. Bhatia says that the instant writ petition could be treated as a representation, which the concerned Commissionerate can be called upon to consider and dispose of. The writ petition will be placed before the Delhi East Commissionerate, which issued the show cause notice dated 07.09.2018. 9.1. The Delhi East Commissionerate will, inter alia, consider the submission advanced before us by Mr. Bhatia, that in certain cases, exceptions have been made and those wanting to avail the benefits of the Scheme have been entertained, even after the deadline fixed under the Scheme i.e., 30.06.2020 had been crossed. Petition disposed off.

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• 2022 (5) TMI 77
  Classification of services - Business Auxiliary Service or not - Storage and Warehousing Services or not - appellant purchases liquor from distilleries from in and outside State of Karnataka and distribute the same in the State - appellants also store liquor for a maximum period of 90 days without charging any storage fee - period October 2011 to September 2012 - HELD THAT:- The case is no longer res integra as submitted by the learned counsel for the appellant - this very Bench in the appellant s own case KARNATAKASTATE BEVERAGES CORPN. LTD. VERSUS COMMR. OF ST, BANGALORE [ 2007 (8) TMI 55 - CESTAT, BANGALORE] has held that there is also no justification for imposing such a savage penalty on a State Government Corporation. In the present case, the appellants have discharged their statutory functions as the mandate given by the Karnataka State Excise Act and Rules thereunder and have not rendered any services such as Business Auxiliary Service and Storage and Warehousing Service . Therefore, the payments received by them in the form of commission or warehousing charges are not exigible to service tax - the impugned orders as far as they relate to the party s appeals are not sustainable and needs to be set aside. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2022 (5) TMI 76
  Interest of delayed refund - Section 11BB of CEA - Area based exemption claimed - rejection of interest on the ground that the provisions of Section 11BB shall not apply in case where the Exemption Notification No. 32/99-CE dated 08.07.1999 is being claimed - section 11b also not applicable to the present case - HELD THAT:- In the case of DHARAMPAL SATYAPAL LTD. VERSUS UNION OF INDIA [ 2018 (1) TMI 1565 - GAUHATI HIGH COURT ], the Hon ble High Court passed a similar Order and allowed the interest on account of delayed payment of refund under Section 11BB. The SLP filed against the said Order by the Revenue in UNION OF INDIA VERSUS DHARAMPAL SATYAPAL LTD. [ 2018 (7) TMI 2098 - SC ORDER ] is pending before the Hon ble Supreme Court and the notice was issued. It is also found that no stay from the operation of the Order of the Hon ble High Court was granted by the Hon ble Supreme Court - Under the prevailing circumstances the Order of the Hon ble Gauhati High Court in the case of M/s.Dharampal Satyapal Ltd. Vs. UOI has the binding effect on this Tribunal. The Appellant is entitled for interest under Section 11BB. Accordingly, interest is allowed to the Appellant under Section 11BB immediately after 3 (three) months from the date of filing of the application - appeal allowed - decided in favor of appellant.

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• 2022 (5) TMI 75
  CENVAT Credit - appellant is outsourced manufacturing unit - distribution of input service credit on pro-rata basis proportionate to the turnover of each unit between the manufacturing plants of M/s. PBPL and its contract manufacturing units including M/s. Balaji Edibles i.e. the appellant - violation of Rule 7 of CENVAT Credit Rules 2004 - HELD THAT:- From the decision relied upon by the appellant i.e. M/S. KRISHNA FOOD PRODUCTS, MS. MARIAMMA R. IYER AND M/S. PARLE BISCUITS PVT LTD. VERSUS THE ADDITIONAL COMMISSIONER OF CGST C. EX [2021 (7) TMI 296 - CESTAT NEW DELHI] it is clear that the said issue has already been decided by the larger bench of this Tribunal hence remains no more res integra. Further perusal of the said decision shows that the decision in the case of SUNBELL ALLOYS CO OF INDIA LTD MACHSONS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS [2014 (2) TMI 297 - CESTAT MUMBAI] as have been relied upon by Commissioner while passing the order under challenge have also been discussed and distinguished by the Larger Bench of this Tribunal. It is also perused that the said decision has already been followed in similar facts and circumstances by this Bench n the case of AJMER FOOD PRODUCTS PVT LTD. VERSUS COMMISSIONER OF CGST CENTRAL EXCISE JAIPUR II [2021 (9) TMI 4 - CESTAT NEW DELHI]. No distinguished fact is apparent on record in the present appeal nor could have been brought to the notice by the learned DR, who rather expressed no objection for following the decision of the Larger Bench. M/s. PBPL was justified in distributing credits on input services attributable to final product on pro rata basis proportionate to the turnover of each unit between the manufacturing plants of M/s. PBPL and its contract manufacturing units including the appellant under Rule 7(d) of the CENVAT Credit Rules - the appellant is held entitled to avail the CENVAT credit where input services is attributed to the goods on which the excise duty is paid and includes the cost of services on which credit was taken. Appeal allowed - decided in favor of appellant.

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• 2022 (5) TMI 74
  Seeking condonation of the delay in filing the appeal - appellant had resigned from Directorship of the company - Section 35B of the Central Excise Act, 1944 - HELD THAT:- It is seen that in the present appeal, the appellant has stated in the delay condonation application that consequent to the recovery proceedings initiated by the Superintendent, the appellant made a request, by a letter dated February 21, 2019, that a certified copy of the order dated June 30, 2017 be provided and after the appellant was provided with a certified copy of the order, he filed the appeal on March 07, 2019. The appellant, therefore requested that the period of limitation should be counted from February 21, 2019. This delay condonation application has been verified by Tasleem Ahmed stating therein that the averments made in the delay condonation application are true and correct to the best of information and belief of the applicant and nothing has been concealed. On January 27, 2022 time has been granted to the appellant to file a proper affidavit to explain why a fresh appeal was filed against the same impugned order - Neither on March 30, 2022, when the matter was listed nor today the learned counsel for the appellant has appeared nor any affidavit has been filed - Such an abuse of the process cannot be over looked and has to be viewed seriously. The appellant has not only concealed material facts but has also deliberately stated false facts before the Tribunal with ulterior motives. It is, therefore, a fit case for imposition heavy cost upon the appellant. The cost is determined at Rs.10 Lakhs, which cost shall be deposited by the appellant within a period of six weeks from today in the PM CARES Fund - thus, the delay condonation application is accordingly dismissed with costs of Rs. 10 Lakhs.

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• CST, VAT & Sales Tax

• 2022 (5) TMI 73
  Levy of tax and interest on sales made by the petitioner - sale in the course of Import - warehoused goods - resale of goods in Daman - first point of sale - constitutional validity of Section 3 of the MVAT Act read with notification No. VAT/1511/C.R.-57/Taxation-1 dated 30th April, 2011 - levy of Central Sales Tax is contrary to the constitutional scheme of taxation or not - revenue neutrality - levy of tax is contrary to Article 265 and 300A of the Constitution of India or not? - HELD THAT:- A perusal of the record indicates that, the impugned levy under the assessment year 2016-2017 is in respect of point to point sales. The petitioner has been also levied highest rate of tax despite having been paid on the resale by the purchasing dealer (M/s Damania Enterprises) in the destination state Daman inspite of non issuance of C-Form. During the pendency of this writ petition C-Forms have been already furnished to the petitioner. The petitioner is at liberty to submit such C-Forms before the assessing authority in so far as high rate of tax demanded from the petitioner for not having been submitted the C-form earlier. The Hon ble Supreme Court in a case of HOTEL ASHOKA (INDIAN TOURISM DEVELOPMENT CORPN. LTD.) VERSUS ACCT AND ANR. [ 2012 (2) TMI 62 - SUPREME COURT] has held that, no tax on the sale or purchase of goods can be imposed by any State when the transaction of sale or purchase takes place in the course of import of goods into or export of the goods out of the territory of India. If any transaction of sale or purchase takes place when the goods are imported in India or they are exported from India, no State can impose any tax thereon. The Supreme Court considered the situation whether the goods brought from foreign countries by the assessee had been kept in bonded warehouses and they were transferred to duty free shops situated at International Airport of Bengaluru as and when the stock of goods lying at the duty free shops was exhausted. It is held by the Supreme Court that, when the goods are kept in bonded warehouses, it cannot be said that the said goods had crossed the customs frontiers. The goods are not cleared from the customs till they are brought in India by crossing the customs frontiers. When the goods are lying in the bonded warehouses, they are deemed to have been kept outside the customs frontiers of the country. Since the goods in question were sold by the petitioner from its bonded warehouse at Panvel to the bonded warehouse of the said M/s ASK Agencies at Kalamboli, New Mumbai, the sale was required to be treated as, Sale in the course of import and thus the petitioner rightly did not pay any tax on the said transaction being a bond to bond sale. In view of Section 3 and 41 of the MVAT Act read with Notification No. VAT/1511/C.R.-57/Taxation-1 dated 30th April, 2011, which are applicable to the facts of this case, the tax was required to be paid only in relation to sales of liquor which were purchased from the registered dealer on or after 01st May, 2011. This position is also reflected in the trade circular dated 4T of 2013 dated 26th June, 2013 - since the goods in question were transferred from the petitioner to M/s ASK Agencies suffer a single levy at the point of first sale, the tax in question already having been levied on the goods in question a fresh levy proposed to be made by the assessing officer in the hands of the petitioner is clearly in the teeth of Section 3 of the MVAT Act read with notification No. VAT/1511/C.R.-57/Taxation-1 dated 30th April, 2011 and is beyond scope and jurisdiction of the charging section and other provisions of the MVAT Act. A perusal of the Section 3 of the MVACT Act clearly indicates that, the levy under the said provision qua goods is in the hands of the dealer. Under Section 41(5) of the MVAT Act levy is only on the licensor. The levy of tax on the transaction has been already extinguished in view of the payment thereof already made by M/s ASK Agencies - In the facts of this case, the rate of customs duty would be applicable when the goods were cleared from the warehouse under Section 68, on the date on which a bill of entry for home consumption in respect of said goods was presented by the assessee for clearance U/Sec. 68(1)(5) of the Customs Act. The said M/s ASK Agencies had cleared the goods for home consumption. The petitioner in this case has impugned the assessment order on various grounds including on the ground that tax demanded from the petitioner by the assessing officer is in excess of jurisdiction, without authority of law and unsustainable as the transaction is inter state (within Maharashtra) - Though an alternate remedy against the impugned assessment order is available to the petitioner since the impugned order is in excess of jurisdiction, bar to the maintainability would not apply to the facts of this case. The impugned assessment order thereby imposing a levy of fresh tax at this stage on the same transaction which has been already paid by M/s ASK Agencies is contrary to and in the teeth of Articles 265, 286 and 300A of the Constitution of India and thus deserves to be quashed and set aside on this ground also - Petition allowed.

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• 2022 (5) TMI 72
  Validity of Assessment order - only two days time were granted to produce the original verification letters - petitioner failed to produce the verification letters - grant of opportunity to produce the verification letters as directed in appellate order - HELD THAT:- The interest of justice warrants petitioner be granted a breathing time to produce the original of the verification letters, especially since the petitioner submits that said letters are now available with him. If the original verification letters are available with the petitioner, there is no reason why an opportunity should not be granted, though stricto sensu the circumstance may not warrant such an indulgence to be shown. Since the strict adherence to time may not have been possible due to Covid-19 regulations, a lenient view can be adopted to render justice to the assessee, without causing serious prejudice to the revenue. Ext.P4 order dated 25.10.2021 is liable to be set aside, granting liberty to the petitioner to produce the original verification letters, directed to be produced in Ext.P2 order of the appellate authority, on 28.02.2022 at 11 a.m., before the 1st respondent - petition allowed.

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• Indian Laws

• 2022 (5) TMI 71
  Maintainability of petition - Dishonor of Cheque - direction to deposit 20% of the compensation amount as a pre-condition for suspension of sentence during the pendency of the appeal - applicability of section 148 of NI Act - HELD THAT:- Reliance placed in the case of M/s Ginni Garments and another Versus M/s Sethi Garments and another [ 2019 (4) TMI 1248 - PUNJAB AND HARYANA HIGH COURT ] where it was held that All the petitions, wherein the order of the Trial Courts, directing the accused to deposit up to 20% of the cheque amount as interim compensation; are challenged, are allowed. Thus, it is clearly established that the pre-condition as imposed by the Additional Sessions judge, Amritsar, cannot be found fault with, being legal and in consonance with the provisions of Section 148 of the Negotiable Instruments Act, 1881. Petition dismissed.

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• 2022 (5) TMI 70
  Dishonor of Cheque - Compounding of offences - It was contended that the matter has been amicably resolved between the petitioner and the complainant-respondent - Section 147 of the Negotiable Instruments Act - HELD THAT:- The issue regarding compounding under the Negotiable Instruments Act at the stage of appeal as well as revision has come before this court as well as before the Hon ble Supreme Court and they have upheld that the powers under Section 147 of the Negotiable Instruments Act can be invoked at any stage of the proceedings i.e. at the stage of trial, appeal or at the revisional jurisdiction and that the courts should be liberal in exercising such powers. The offence is thus ordered to be compounded in light of the substantive statutory provision and judicial mandate. The judgment order declaring the petitioner as proclaimed person passed by the Additional Sessions Judge, Gurugram and the judgment of conviction and order of sentence passed by the Judicial Magistrate First Class, Gurugram are accordingly set aside - the petitioner shall be released on bail subject to his involvement, if any, in any other case, upon payment of cost of Rs. 10,000/- to be deposited by the petitioner with the District Legal Services Authority, Gurugram within one month from the date of receipt of certified copy of this order. Petition allowed.

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• 2022 (5) TMI 69
  Dishonor of Cheque - insufficiency of funds - discharge of legally enforceable/recoverable debt or not - Acquittal of the accused - offence punishable under Section 138 of NI Act - HELD THAT:- Herein in this case the accused taken the contention that it was a security cheque which was given to the accused for some other transaction for getting rented car from the complainant but he has not produced any document to prove his contention - once the cheque is issued as security for the loan and if the loan is not paid back then if the cheque is dishonoured which attract 138 of NI Act - Therefore, the contention of the accused counsel cannot be acceptable that the cheque was given only for security purpose but without producing any document to show he has repaid the loan to the complainant, then he has to pay the cheque amount when it is presented for encashment which is legally recoverable debt. Another contention taken by the accused is that the complainant is not having capacity to lend so much amount as loan but in the cross examination of PW1 he himself elicited complainant is having 7 cars and he is running the travel agency and accused also running travel agency and appellant also had purchased 4 Innova cars for let out in his travel agency - The contention of the respondent accused is not acceptable as the complainant is having 7 cars of his own and other 4 Innova cars purchased for letting out for rent. Therefore merely he purchased car by loan, that itself is not ground to say he has no money in his hand when he is having 11 cars and travel business. The capacity of the complainant clearly reveals he has capacity to pay such amount to the accused. Hon ble Supreme Court also held in a recent judgment 2019 (4) TMI 660 - SUPREME COURT relied by the accused counsel where the Hon ble Apex Court has held the financial capacity are based upon the evidence lead by the defense. The accused required to raise the probable defense in his evidence but here in this case he has strengthen the evidence of the complaint that he is having 11 cars. Such being the case, the contention of the respondent counsel cannot be acceptable. Therefore, it is held the cheque was issued for discharge of the loan and the same was dis-honoured for want of funds, thereby the accused committed the offence under 138 of NI Act. Appeal allowed - decided in favor of appellant.

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• 2022 (5) TMI 68
  Dishonor of Cheque - insufficiency of funds - opportunity of cross-hearing - allegation is that petitioner has repeatedly filed applications and has not availed the opportunity of cross-examination earlier granted - HELD THAT:- Though the case is of the year 2013, the examination-in-chief happens in the year 2019 when the present respondent enters into the proceedings as the representative of the complainant, who dies during the pendency of the proceedings. After the said date, there has been continuous adjournments in the matter and for the first time, an application was filed on 04.10.2021 by the petitioner seeking cross-examination of PW-2 under Section 311 of the Cr.P.C. The said application came to be allowed on 06.11.2021. The fact remains that the learned counsel appearing for the petitioner-accused has not been able to cross-examine the complainant at any point in time in the proceeding. Therefore, it would become a case where there is no cross-examination permitted to the petitioner and result in miscarriage of justice. Since the petitioner is the accused, all opportunity to the accused to protect himself or defend himself should be granted, this is the purport of Section 311 of the Cr.P.C. Section 311 of the Cr.P.C. mandates that the application can be preferred at any stage of proceedings. Thus in the light of the fact that the learned counsel appearing for the petitioner has not cross-examined the complainant at all, it is deemed appropriate to grant one more opportunity to the learned counsel for the petitioner to cross-examine PW-2 on a particular date and conclude the same on the said date. He shall not be entitled to file any application under Section 311 of the Cr.P.C. seeking recall or for further cross-examination of PW-2, but this would be on imposition of costs - petition allowed.

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