TMI Tax Updates - e-Newsletter
May 5, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax Wealth tax Indian Laws

Articles

1. BONAFIDE MISTAKES Vs. PENALTY UNDER SECTION 74. PART-2

   By: Sadanand Bulbule

2. Changes in Financial Statements of Companies as per Revised Schedule III of Co Act 2013

   By: ROHIT GOEL

3. DISPUTED AMOUNT OF TAX / PENALTY IS TO BE CONSIDERED FOR MAINTAINABILITY OF APPEAL

   By: DEVKUMAR KOTHARI

News

1. Shri Piyush Goyal asks officials to identify land for ‘Tourist Craft Village’in Haridwar 

2. India’s Services exports set a new record of USD 254.4 Billion in FY 2021-2022, beats previous high of USD 213.2 Billion in 2019-20

3. Monetary Policy Statement, 2022-23 Resolution of the Monetary Policy Committee (MPC) May 2 and 4, 2022

4. Secretary, Department for Promotion of Industry and Internal Trade (DPIIT) chairs roundtable of German Small and Medium Enterprises in Berlin

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD1/MRD1_DTCS/P/CIR/2022/58 - dated 2-5-2022

System and Network Audit of Market Infrastructure Institutions (MIIs)

Highlights / Catch Notes

GST

• Court Dismisses Petition Against Revenue Dept. for Misuse of Funds at SANKALP Event, Cites No Public Interest Benefit.

  Case-Laws - HC : PIL - Allegation of misuse / spending money for conducing annual conferences by Revenue department - Seeking injunction restraining the 3rd respondent from conducting the SANKALP - This petition, even remotely can not be said to be in public interest. On the contrary, it is against the interest of the citizen of our State, which has ultimately brought only disrepute to us, by such petition and further it may be perceived as an adversity on the Central / State relationship as well - HC
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• High Court Considers Clerical Error in Wrong Vehicle Type on e-Way Bill; Impact on Penalty u/s 129(1.

  Case-Laws - HC : Detention of goods alongwith the vehicle - Selection of the ODC vehicle type while generating e-Way Bill - clerical/technical error or done intentionally - levy of penalty/tax under Section 129(1) for such clerical errors - having regard to the fact that very promptly he brought to the notice of the authority concerned and admitted its mistake, we would like to give the writ applicant some benefit of doubt. - HC
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• Court Affirms GST Refund Validity: Tax Credit Utilization Justified, Denial Due to Partial Cash Ledger Payment Unwarranted.

  Case-Laws - HC : Withholding to release refund/reimbursement of additional GST tax liability to the Petitioners - the payment of tax by utilization of the tax credit is a valid mode of payment. The denial to release refund/ reimbursement on the ground that only part amount has been paid by the writ-applicants through the electronic cash ledger is not legally tenable - It may not be out of place to state that the fact that the output tax even in respect of this contract has been paid through the electronic credit ledger does not mean that the input tax credit is claimed in respect of this contract. - HC
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• Accommodation as Principal Supply in Composite GST Service, Includes Naturopathy, Qualifies for GST Exemption.

  Case-Laws - AAAR : Exemption from GST - Accommodation Service or independent clinical establishment - the accommodation service and other services including Naturopathy rendered during the course of said service is covered under composite service and the accommodation service constitutes the predominant element and therefore, becomes the “principal supply” and other services including Naturopathy shall form the part of that composite supply. - AAAR
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• Business Unit Transfer as Service: AAR Confirms as Sale of Going Concern under GST Entry No. 2, Notification 12/2017.

  Case-Laws - AAR : Classification of supply - sale as a going concern - transfer of the business - The transaction of transfer of business unit of the applicant involved in the instant shall be treated as a supply of services - transaction would be covered under Entry No. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 subject to fulfillment of the conditions to qualify as a going concern. - AAR
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• IGST on Steel Sleeper Installation Not a Composite Supply of Original Work, Rules AAR.

  Case-Laws - AAR : Levy of IGST - dismantling of existing sleeper fixing and/or installation of new (H-Beam Steel sleepers) - composite supply of works contract - execution of original work or not - HELD No - AAR
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Income Tax

• Assessment u/s 147 Valid: Sale Consideration Taxed as Capital Gains, Not Section 56. Related Property Dispute.

  Case-Laws - AT : Validity of the assessment proceedings initiated u/s 147 - the assessee has shown the sale consideration under the head capital gain and the amount in dispute directly relates to the same property and therefore the same can only be brought to tax under the head capital gain. In other words, the same cannot be made subject to the tax under the provisions of section 56 - AT
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• Reopening Tax Assessments: 10-Year Limit Not Retroactive, Stays at 6 Years as per Section 149(1) Proviso.

  Case-Laws - HC : Reopening of assessment u/s 147 - Extended Period - 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. - HC
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• Section 43B Applies: Interest Obligation Resolved by Share Conversion, No Outstanding Interest for Future Payment.

  Case-Laws - HC : Disallowance u/s 43B - it is not a case of conversion of outstanding interest into the loan so that the same could be allowed only on the actual payment, more particularly, when as acknowledge by ICICI Ltd. the defaulted interest stands extinguished having realized the fully paid up shares. Consequently, there is no further outstanding interest to be paid by the assessee company in future as it stands extinguished in the year under consideration Section 43B is hereby held to be attracted in the facts of the case. - HC
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• AO's Block Assessment Order Issued Timely on May 30, 2002, Within Deadline u/s 158BC; Assessee's Objections Dismissed.

  Case-Laws - AT : Block assessment - The notice u/s 158BC was issued by AO on 5th May, 2000, which was served on 08th May, 2000. The time limit for passing assessment for Block Period was two years from the end of month in which notice u/s 158BC was served, i.e. 31st May, 2002. The Block Period assessment order passed by AO u/s 158BC(c) read with Section 158BD, was dated 30th May, 2002, which is within limitation period. Thus, the contentions of the assessee are devoid of any merit and are hereby rejected. - AT
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• Income Tax Act: Section 271AAA doesn't require disclosing undisclosed income method solely from Investigation Officer inquiries.

  Case-Laws - AT : Levy of penalty u/s 271(1)(c) r.w.s. 271AAA - There is nothing in the provisions of section 271AAA to say that an assessee is required to disclose the manner in which the undisclosed income is derived and its substantiation only on a query posed to him by the Investigation Officer. Such construction only amount to adding words to the statute which is not a permissible rule of interpretation. - AT
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• Assessee Cannot Contest Jurisdiction Transfer from Jalgaon to Nashik Under Income Tax Act Section 127.

  Case-Laws - AT : Transfer of case u/s 127 - It is trite law that an assessee is barred from raising contention that no opportunity was given to the assessee while transferring the jurisdiction of the case u/s 127 from Jalgaon to Nashik as the order of the transfer of case u/s 127 was within the knowledge of the assessee during the course of assessment proceedings and still the assessee had not chosen to participate in the matter of jurisdiction of the Assessing Officer to whom the case has been transferred - AT
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• Court Rejects Estimated Scrap Sales Addition to Income, Validates Assessee's Consistent Accounting for 2014-15.

  Case-Laws - AT : Addition on account of Repair and Maintenance of Plant and Machinery on estimate basis - sale of scrap - The assessee brought on record a chart of sale made of scrap in last years and subsequent year which revealed that during the financial year 2014-15 it accounted for sale of scrap in its books of account. - no valid justification for estimating the value of scrap and making the impugned addition by discarding the method of accounting regularly employed by the assessee - AT
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• Section 10(38) Exemption Denied: Tax Authorities Confirm LTCG Misuse in Alleged Money Laundering Scheme.

  Case-Laws - AT : Denial of benefit of exemption u/s 10(38) - LTCG - the AO has clearly given the modus operandi of money laundering by the stock broker of the agents and the beneficiaries are interested in having their money laundered. He has given detailed reasoning as to how the assessee has introduced her unaccounted money in the garb of Long Term Capital Gain. - Additions confirmed - AT
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• Section 153A Assessment: No Incriminating Material Found, Voluntary Disclosure Leads to Income Additions Being Deleted.

  Case-Laws - AT : Assessment u/s 153A - Additional income as offered before settlement commission - In the given case, it is also fact on record that in the search, no incriminating material was found and no other material available before the Assessing Officer to sustain the addition except relying on the voluntary disclosure before ITSC. - Additions deleted - AT
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Customs

• High Court Rules No Liability for Respondent on Container Detention, Demurrage, and Ground Rent Charges Request.

  Case-Laws - HC : Seeking waiver/refund of charges like container detention charges, demurrage charges, ground rent charges etc - no liability to be fastened on the respondent - HC
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• Customs House Agent Cleared of Abetment Charges u/s 114(i) of Customs Act; No Evidence of Suspicion Found.

  Case-Laws - AT : Levy of Penalty on appellant –CHA u/s 114(i) of the Customs Act - export of prohibited goods or not - appellant is negligent in performing their duty as a CHA - as the goods were factory stuffed and sealed, the appellant-CHA has no reason to doubt any malpractice on the part of the exporter. Thus, under the facts and circumstances, no case of abetment in attempted export of prohibited goods, against the appellant is made out. - AT
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DGFT

• Import Limit Relaxed: 5.50 Lakh MT Allowed Until September 30, 2022, or Further Notice Under Notification 20/2015-20.

  Notifications : Relaxation of import provisions under Notification No. 20/2015-20 dated 24.08.2021 to allow import of the remaining quantity of 5.50 Lakh MT upto 30.9.2022 or until further orders, whichever is earlier. - Extension of relaxation of the Provisions under Notification 20/2015-20 dated 24.08.2021 - Notification
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Indian Laws

• Cheque Dishonor Disputes: Compounding Offenses Allowed u/s 138 Despite Cr.P.C. Section 320 Restrictions.

  Case-Laws - HC : Dishonor of Cheque - settlement of disputes between the parties - compounding of offences u/s 138 - Needless to say, the operation or effect of a general Act can be curtailed by special Act even if a general Act contains a non obstante clause and as such, provisions contained under Section 320 Cr.P.C. would not come in the way in recording the compromise or in compounding the offence punishable under section 138 of the Act. To the contrary, provisions of section 147 of the Act though start with a non obstante clause but have overriding effect on the provisions contained under section 320 Cr.P.C. - HC
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Service Tax

• Service Tax Refund Claim Valid Within Limitation Period u/s 11B; Initial Rejection for Delay Overturned.

  Case-Laws - HC : Refund claim - time limitation - claim was delayed by a period of 4 days - Since the acknowledgment of the refund application was given on 18.2.2014, i.e. within one year from the date when the ship left India, i.e. on 20.2.2013, such refund application being within the period of limitation as stipulated under Section 11B of the Excise Act could not have been rejected as being barred by limitation. - HC
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• TDS Exclusion in Service Tax Valuation: Only Agreed Service Payment Counts, Exclude Withholding Tax from Assessable Value.

  Case-Laws - AT : Valuation - import of services - amount of withhold tax paid by the Appellant, over and above the consideration paid to the foreign service providers, to be included in the assessable value or not - when the TDS amount has been borne by the assessee and only the consideration for the services as agreed upon by the parties has been paid to the service provider, the same cannot be included in the taxable value for determining the Service Tax liability. - AT
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VAT

• High Court Orders Lifting of Unlawful Property Attachments u/s 44 of GVAT Act After Seven Years.

  Case-Laws - HC : Seeking release of attached properties - the entire action on the part of the respondents under the garb of Section 44 of the GVAT Act could be termed as without jurisdiction and arbitrary. It has been more than 7 years that various individual and personal assets of the writ-applicants have remained under attachment. Unfortunately, even the life insurance policies which matured over a period of time could not be encashed on account of the attachment. - Order for immediate lifting of attachment issued - HC
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Case Laws:

• GST

• 2022 (5) TMI 186
  PIL - Allegation of misuse / spending money for conducing annual conferences by Revenue department - Seeking injunction restraining the 3 rd respondent from conducting the SANKALP - HELD THAT:- This petition, even remotely can not be said to be in public interest. On the contrary, it is against the interest of the citizen of our State, which has ultimately brought only disrepute to us, by such petition and further it may be perceived as an adversity on the Central / State relationship as well. For all these reasons, it is found that, such attempts need to be nipped in the bud. This petition therefore needs to be dismissed and further that the said dismissal has to be with costs, with due intimation to the concerned respondent. This writ petition is dismissed, with cost.

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• 2022 (5) TMI 185
  Seeking stay on effect and operation of Annexure P/1 containing impugned notices - demand of interest on delayed payment of tax - recovery notices issued without issuance of SCN - principles of natural justice - HELD THAT:- Stay is granted to the effect and operation of Annexure P/1 containing impugned notices. Accordingly, it is directed that the effect and operation of the impugned notices dated 15.12.2021 and 25.03.2022, both forming part of Annexure P/1, shall remain stayed till the next date of hearing - Post this matter after summer vacation for consideration on admission.

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• 2022 (5) TMI 184
  Detention of goods alongwith the vehicle - Selection of the ODC vehicle type while generating e-Way Bill - clerical/technical error or done intentionally - levy of penalty/tax under Section 129(1) for such clerical errors - evasion of tax or not - HELD THAT:- CBEC/20/16/03/2017-GST Circular makes it clear that in case a consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, the proceedings under Section 129 of the CGST Act may not be ordinarily initiated, more particularly, in the situation, as highlighted in para 5 of the circular - the goods of the writ applicant fall within Clause 5 of the circular referred to above. The manner in which the writ applicant has proceeded so far and also having regard to the fact that very promptly he brought to the notice of the authority concerned and admitted its mistake, we would like to give the writ applicant some benefit of doubt. The impugned notice issued by the respondent No.3 in Form GST MOV 07 dated 12th April 2022 is hereby quashed and set aside. Consequently, the order of detention passed by the respondent No.3 under Section 129(1) of the CGST Act in Form GST MOV 06 dated 12th April 2022 is also hereby quashed and set aside - Application allowed.

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• 2022 (5) TMI 183
  Withholding to release refund/reimbursement of additional GST tax liability to the Petitioners - contracts entered into prior to the GST regime - HELD THAT:- It is unfortunate to note that the respondents have not been able to understand the basic scheme of the GST Act. The input tax credit is admissible under Section 16(1) of the GST Act of the tax paid on goods and services used in the course of the business. The input tax credit claimed by a taxable person gets credited into his electronic credit ledger. Such amount is the actual tax that such taxable person has paid to his supplier, which is further paid to the Government treasury. Thereafter, while making the payment of the output tax, Section 49 of the GST Act entitles a taxable person to utilize the balance available in the electronic credit ledger. Thus, the tax which was already paid by a taxable person is effectively allowed to be set off against the output tax liability. Therefore, the tax payment through the electronic credit ledger is a legally recognized mode of payment under the GST Act. In fact, it is settled legal position that the input tax credit is as good as tax paid by the assessee. Thus, the payment of tax by utilization of the tax credit is a valid mode of payment. The denial to release refund/ reimbursement on the ground that only part amount has been paid by the writ-applicants through the electronic cash ledger is not legally tenable - It may not be out of place to state that the fact that the output tax even in respect of this contract has been paid through the electronic credit ledger does not mean that the input tax credit is claimed in respect of this contract. There is a difference between availment of the input tax credit and the utilization of the input tax credit. Insofar as the passing of the benefit of the input tax credit is concerned, the input tax credit factually availed qua the contract is to be calculated. This is clear from the terms of the order of the Ministry of Railways as well as the JPO. However, insofar as the utilization of the input tax credit from the electronic credit ledger is concerned, the same is only a mode of payment of the output tax. The impugned communication refusing to release the refund/reimbursement of the GST is hereby quashed and set-aside. The respondents are directed to forthwith release the refund in respect of which the pay order has already been generated - Application allowed.

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• 2022 (5) TMI 182
  Exemption from GST - Accommodation Service or independent clinical establishment - benefit of entry No.74 of exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - Aahana Naturopathy Centre - classified under SAC Heading 9993 - composite supply or not - HELD THAT:- In the instant case the applicant has advertised and marketed their accommodation service as their main service and Naturopathy as additional service. Thus, the accommodation service and other services including Naturopathy rendered during the course of said service is covered under composite service and the accommodation service constitutes the predominant element and therefore, becomes the principal supply and other services including Naturopathy shall form the part of that composite supply. On true and fair analysis of the aforesaid Notification, the conclusion is compelling that all services provided in relation to or in addition to accommodation service are liable to GST applicable to Accommodation Service in as much as, all such ancillary/additional activities having a proximal nexus with accommodation service.

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• 2022 (5) TMI 181
  Classification of supply - sale as a going concern - transfer of the business of the CRF unit - supply of goods or supply of services or supply of goods and services? - Entry No. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- In the instant case, admittedly the applicant has entered into an agreement which inter alia involves transfer of goods forming part of the assets of the business. In a standalone manner, such transfer shall be treated as supply of goods in terms of clause (a) of Entry No. 4 of Schedule II - the applicant intends to sell his entire CRF unit where the purchaser agrees to take over the assets as well as the liabilities of the said CRF unit along with the employees and their benefits. Such transfer of a unit of a business cannot be treated as supply of goods since business cannot be said to be a movable property so as to qualify as goods as defined in clause (52) of section 2 of the GST Act. Further, anything other than goods, money and securities falls within the meaning of services as defined in clause (102) of section 2 of the GST Act. To qualify as a going concern , the business must not have intention or necessity of liquidation or of curtailing materially the scale of the operations . In this context, it is mentioned that the applicant has not furnished any documentary evidences from the auditor with regard to the entity s ability to continue in operation for the foreseeable future in absence of which we are unable to conclude that the applicant has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the operations. The transaction of transfer of business unit of the applicant involved in the instant shall be treated as a supply of services - transaction would be covered under Entry No. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 subject to fulfillment of the conditions to qualify as a going concern.

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• 2022 (5) TMI 180
  Levy of IGST - dismantling of existing sleeper fixing and/or installation of new (H-Beam Steel sleepers) - composite supply of works contract - execution of original work or not - benefit of Notification No. 20/2017-Integrated Tax (Rate) dated 22.08.2017 - HELD THAT:- On perusal of the detailed scope of work, it transpires that the applicant has been awarded the contract which involves fabrication, manufacture and supply of galvanized H-Beam steel sleepers after dismantling of existing bridge timber/steel channel sleepers on bridge. The applicant doesn t construct a new bridge nor is the applicant entrusted to lay a new railway track. The applicant undertakes the work of replacing the old sleepers with new one which essentially requires dismantling as well as removal of existing sleepers first. It is also found that the work order has been issued wherein Unit has been specified as per sleeper and the rate has been determined based on (i) number of sleepers to be dismantled and removed and (ii) number of sleepers to be supplied and installed which also establishes the fact that the applicant has been awarded the contract to replace the existing sleepers only - Further, nowhere in the work order, it has been mentioned that the work is related to additions and alterations to abandoned or damaged structures that are required to make them workable. The instant composite supply of works contract cannot be considered as original work in terms of definition given in clause 2 (zs) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

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• Income Tax

• 2022 (5) TMI 179
  Exemption u/s 11 - Deemed registration - consideration before the High Court was whether on non-deciding the application for registration under Section 12AA (2) within a period of six months, there shall be deemed registration or not? - HELD THAT:- The aforesaid aspect has been dealt with and considered in detail by the Full Bench of the Allahabad High Court in its decision in the case of Commissioner of Income Tax vs. Muzafar Nagar Development Authority [ 2015 (3) TMI 99 - ALLAHABAD HIGH COURT (LB) ] After considering in detail the provisions of Section 12AA (2) of the Act and having found that there is no specific provision in the Act by which it provides that on non-deciding the registration application under Section 12AA (2) within a period of six months there shall be deemed registration, the Full Bench of the High Court has rightly held that even if in a case where the registration application under Section 12AA is not decided within six months, there shall not be any deemed registration. We are in complete agreement with the view taken by the Full Bench of the High Court. SLP dismissed.

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• 2022 (5) TMI 178
  Validity of reopening u/s 147 - notice issued to non existing entity - HELD THAT:- In Principal Commissioner of Income Tax Vs. Maruti Suzuki India Ltd. [ 2019 (7) TMI 1449 - SUPREME COURT] the Apex Court held that the basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation and notice issued to non existing company, is not curable defect under Section 292-B of the Act. Notice under which jurisdiction was assumed by the Assessing Officer was issued to the non existing company which amounts to substantive illegality and not a procedural violation of the nature adverted to in Section 292-B. The Court held that such a notice can not be stated to be valid. This view of the Apex Court was also followed by this Court in Alok Knit Exports Ltd. [ 2021 (8) TMI 777 - BOMBAY HIGH COURT] where the Court held that notice issued to non existing entity is not valid. - Decided in favour of assessee.

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• 2022 (5) TMI 177
  Unexplained cash credit and income from undisclosed sources - ITAT deleted the addition - department has challenged the order of the ITAT on the ground that the Tribunal has failed to appreciate that the assessee had deposited Rs.5,01,90,000/- in cash on different dates in his bank account maintained with Axis Bank - HELD THAT:- Tribunal has minutely examined the case and marshaled the facts well. It may be noted that the ITAT is final arbiter of the facts and appeal can be entertained by the High court only if there is a substantial question of law.

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• 2022 (5) TMI 176
  Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- In the present case, it is evident from the reasons recorded for reopening that the petitioner had truly and fully disclosed all material facts necessary for the purpose of assessment. In fact, in the reasons for reopening, there is not even a whisper as to what was not disclosed. Assessing Officer has relied upon the records filed by petitioner including the profit and loss account and balance-sheet and says from those records it is revealed that there is closing stock in trade of Rs.33,49,89,003/-. Therefore, the respondent No.1 is relying upon the same primary facts which were before the AO who concluded the assessment proceedings to take a different view. In our view, this is not a case where the assessment is sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but this is a case wherein the assessment sought to be reopened on account of change of opinion of the Assessing Officer about the manner of computation. In view of proviso to section 147 of the Act, the same is not permissible. Appeal of assessee allowed.

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• 2022 (5) TMI 175
  Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- As notice under Section 148 of the Act, 1961 issued by the respondent no.2 is wholly without jurisdiction inasmuch as there was absolutely no information relating to the assessee which may give rise for reason to believe for initiating re-assessment proceedings under Section 147 of the Act, 1961. It further appears that Section 147 of the Act, 1961 is being used as a tool to harass the assessee and the notice, prima facie , appears to be without jurisdiction. We direct the respondent no.2 to file a short counter affidavit by means of his personal affidavit stating as to how the notice under Section 148 of the Act, 1961 issued by him to the petitioner was a valid notice and how the respondent no.2 could get jurisdiction to issue notice under Section 148 of the Act, 1961 when the very basis of issuing notice, ie., reason to believe , recorded by him was totally unfounded, non-existent and wholly baseless. Put up as a fresh case before the appropriate Bench on 19.04.2022.

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• 2022 (5) TMI 174
  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 173
  Disallowance u/s 43B - issuance of shares as against the outstanding liability of interest of the assessee company for the year under consideration - HELD THAT:- The Supreme Court in the case of M.M. Aqua Technologies Ltd. [ 2021 (8) TMI 520 - SUPREME COURT] had an occasion to deal with Section 43B more particularly, Explanation 3C of the Act and found that Explanation 3C was squarely attracted against the outstanding interest had not actually being paid, but instead a new credit entry of loan appeared, bringing the case within the express language of Explanation 3C. The Court further held that what is required to be considered is the extinguishment of liability to pay the interest in the facts of each case. We agree with the view taken by the CIT(A) as confirmed by the ITAT that it is not a case of conversion of outstanding interest into the loan so that the same could be allowed only on the actual payment, more particularly, when as acknowledge by ICICI Ltd. the defaulted interest stands extinguished having realized the fully paid up shares. Consequently, there is no further outstanding interest to be paid by the assessee company in future as it stands extinguished in the year under consideration Section 43B is hereby held to be attracted in the facts of the case. In view of the above, concurrent findings recorded by the CIT(Appeals) and by the ITAT, the question of law raised by the department does not deserve any further consideration. The said question also being no more res-integra, it could not be said that the present appeal involves any question much less substantial question of law.

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• 2022 (5) TMI 172
  Disallowance u/s. 14A read with Rule 8D(2)(ii) (ii) - submission of the Ld. AR that no disallowance of interest expenditure could have been made u/s. 14A of the Act read with Rule 8D(2)(ii) of the Rules as the investments were made out of the own funds of the assessee - HELD THAT:- As relying on case of CIT Vs. Reliance Utilities and Power Ltd.[ 2009 (1) TMI 4 - BOMBAY HIGH COURT] we hold that no disallowance of interest expenditure is warranted under Rule 8D(2)(ii) of the Rule r.w.s. 14A of the Act. Accordingly, the disallowance of Rs.2,84,43,090/- computed by the AO under Rule 8D(2)(ii) is deleted. Dividend income was earned from only one investment i.e. Metro Diary Limited - When there is a common pool of funds, presumption would arise that investments which yield tax free returns were made by the assessee out of its own funds. We also find that no new investment during the year has been made in the shares of Metro Dairy Ltd. as the opening value as on 01.04.2012 was Rs.9,60,50,074/- and closing value of investment as on 31.03.2013 was Rs.9,60,50,074/-. Accordingly, by taking the investments which yielded the exempt income for computing disallowance under Rule 8D(2)(iii) of the Rules @ 0.50% of the dividend earning investment of Rs.9,60,50,074/- comes to Rs.4,80,250/-. The assessee has already made a suo moto disallowance of Rs.2,04,697/- in its return, thus, balance amount of Rs.2,75,553/- (Rs.4,80,250-Rs.2,04,697) is sustained as disallowance u/s. 14A r.w.r. 8D(2)(iii) of the Act. The appeal of the assessee is, therefore, partly allowed.

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• 2022 (5) TMI 171
  Assessment u/s 153C - Undisclosed capital gain - seized document found, the price consideration of sale of property was mentioned at Rs.2,72,00,000/-, whereas as per the sale deed the sale price was Rs.2,01,00,000/-- HELD THAT:- CIT (A) enhanced this amount on some wrong presumption by taking the sale consideration received by another co-owner, Mrs. Priya Suri which is out-rightly incorrect, because as per records the property was owned by two sisters and both have received half the share and hence it cannot be clubbed in hands of assessee. Even this not the case of the Assessing Officer nor there is anything in record. Therefore, the enhancement made by the ld. CIT (A) at the threshold is deleted. Entire basis of addition is based on the seized paper wherein the amount mentioned as against the amount mentioned in the sale deed - Once the assessee had given the reasons as to why the amount received by the assessee was lower than the agreed sale price and not only that, when the AO has made his enquiry directly from the purchaser u/s 133 (6), who has also confirmed that it has purchased the property at the same price i.e. Rs.2,01,00,00/-, then we do not find any reason as to why the addition should be made on such seized document. Apart from that, agreement to sell mentions Rs.2,42,50,000/- and not Rs.2,72,00,000/-. Now, whether the property was agreed to be sold at Rs.2,01,00,000/- or Rs.2,72,00,000/- (as per seized document), but fact of the matter is that property was actually sold at Rs.2,01,00,000/- which has been declared by the assessee in the computation of income as long term capital gain which has also been admitted by the purchaser. Thus, there cannot be any presumption till any contrary material is found form the purchaser also that there was payment over and above the agreed price in the sale deed. Accordingly, on merits, grounds no.2 3 are allowed.

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• 2022 (5) TMI 170
  Unexplained cash credit under the provisions of section 68 - difference in time between the cash deposited in the bank viz a viz cash received as gift - HELD THAT:- We find that there was no contrary evidence brought on record by the revenue suggesting that the amount of cash deposit is not out of the gift amount - the revenue has not brought anything on record in support of its contention that amount deposited by the assessee is not out of the cash gift. To our understanding, merely the difference in time between the cash deposited in the bank viz a viz cash received as gift cannot authorize the revenue authorities to draw inferences against the assessee until and unless some documentary evidence are brought on record contrary to the arguments of the learned AR for the assessee. Admittedly, it is very unusual that a wealthy NRI is accepting the gift from his father and the brother. Generally, the practice is different in the society. As such the NRI make gift to the relatives. But we find that there is no prohibition for the NRI for accepting the gifts from the relatives. In the absence of any prohibition, no adverse inference can be drawn against the assessee based on the prevailing system in the society. It is also interesting to note that the assessee has furnished sufficient documentary evidence of his father and the brother to justify the income in their hands from the activity of agricultural. But none of the authority below has made any cross verification from the concern parties in order to bring out the truth on the surface. To our understanding, the AO before drawing any adverse inference against the assessee, should have cross verified from the donors by issuing notice under section 133(6)/131 - we hold that no adverse inference can be drawn against the assessee by holding that the amount of cash deposited by the assessee in his bank represents the unexplained cash credit under section 68 - Accordingly we set aside the finding of the learner CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.

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• 2022 (5) TMI 169
  Validity of the assessment proceedings initiated u/s 147 - addition under the provisions of section 56(2)(vii)(a) of the Act on account of the money received by the assessee without consideration - HELD THAT:- As per the Revenue the amount of sale consideration received by the assessee stands at Rs.3,05,010,00.00 whereas the assessee has disclosed of sum of Rs.1.50 crores in the books of accounts against the sale of the property. Thus, it is apparent that the amount which has not been disclosed by the assessee represents the sale consideration of the property which can be subject to tax under the provisions of section 48 of the Act. Furthermore, the assessee has shown the sale consideration of Rs.1.50 crores under the head capital gain and the amount in dispute directly relates to the same property and therefore the same can only be brought to tax under the head capital gain. In other words, the same cannot be made subject to the tax under the provisions of section 56 - In our humble understanding, the principles laid down by the ITAT in the own case of the assessee (Supra) are directly applicable to the issue on hand. Hence, we are of the view that the initiation of the proceedings under section 147 of the Act are bad in law. Hence, the ground of appeal of the assessee is allowed.

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• 2022 (5) TMI 168
  Condonation of delay - Delay of 49 days - HELD THAT:- CIT(A) simply brushed aside the reasons filed by the assessee for delay in filing appeal, by stating the appellant has taken the vague and unsupported plea for the delay and which is not verifiable from the records. The appellant has not submitted any evidence either along with the appeal or during appellate proceedings . CIT(A) did not specifically point out any mala-fide intention on part of the assessee which could be attributed to the delay in filing the appeal. Moreover, we also note that even if the application for condonation of delay in filing appeal is rejected, even then the ld. CIT(A) should have disposed of the appeal on the merits and should not have summarily dismissed the assessee s appeal on account of mere 49 days delay in filing appeal, without deciding the appeal on merits. There is no allegation to the effect that the assessee acted in a mala-fide manner. Further, Ld. CIT (A) has not brought anything on record as to how the assessee would stand to gain by not filing the appeal in time. There is a minor delay of 43 days, for which, in our view, the assessee has given a plausible explanation. In the assessment framed on the assessee, Ld. Assessing Officer has made a huge addition of 33,00,000/- as undisclosed income in the hands of the assessee. The assessee, in our view, should not be precluded an opportunity of hearing merits, simply on account of a delay of mere 49 days in filing appeal. Appeal of assessee allowed.

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• 2022 (5) TMI 167
  Validity of proceedings u/s 158BD - Time limit for completion of block assessment - In course of search operation conducted by Revenue u/s 132(1) various books of accounts and documents were found and seized by Revenue - HELD THAT:- The Notice u/s 158BC of the 1961 Act, was issued by the AO of the assessee, on 05th May, 2000, which was served on the assessee, on 08th May, 2000. The assessment is to be completed within a period of two years from the end of month in which notice u/s 158BC was served by the AO on the assessee, which in the instant case was served by the AO on the assessee, on 08th May, 2000, thus, the assessment for the Block Period ended 23.08.1998, in the instant case is to be completed latest by 31st May, 2002, as is provided u/s 158BE - In the instant case, the assessment order for the Block Period from 01.04.1988 to 23.08.1998 under the provisions of Section 158BC read with Section 158BD, was passed by the AO, on 30th May, 2002, which is within the aforesaid limitation period of two years from the end of the month in which notice u/s 158BC was served by the AO which in the instant case was served on 08th May, 2000. The notice u/s 158BC was issued by AO on 5th May, 2000, which was served on 08th May, 2000. The time limit for passing assessment for Block Period was two years from the end of month in which notice u/s 158BC was served, i.e. 31st May, 2002. The Block Period assessment order passed by AO u/s 158BC(c) read with Section 158BD, was dated 30th May, 2002, which is within limitation period. Thus, the contentions of the assessee are devoid of any merit and are hereby rejected. Eligibility of Shri R K Jain who claimed himself to be CIT(A) holding charge of Allahabad, passed the appellate order - This appellate order was passed by Shri R K Jain on 28.09.2006 which is covered by order of Hon ble High Court specifying date of vacation of office as CIT(A), Allahabad by said Shri R K Jain and hence this appellate order dated 28.09.2006 is null and void. If the assessee wanted to agitate the order of Hon ble Allahabad High Court, it could have approached Hon ble Allahabad High Court or Hon ble Apex Court, but to agitate the said issue before tribunal ( being a body lower in hierarchy to Hon ble High Court) once the appellate order dated 28.09.2006 passed by Shri R K Jain is covered by the period declared by Hon ble High Court when he was not holding the charge of CIT(A), Allahabad, is clearly a misuse and abuse of process of law and is contemptuous on the part of the assessee. Thus, we hold that the ld. CIT(A) rightly proceeded to pass impugned appellate order dated 16th February, 2017. Thus, there is no merit in the arguments of the assessee, which stand rejected. We order accordingly. Validity of Second appellate order u/s 250(6) - We have observed that ld. CIT(A) dismissed the appeal of the assessee on the merits of the additions made by the AO in limine without discussing the issues on merits which were raised by the assessee in its appeal filed before ld. CIT(A). The reference is drawn to provision of Section 250(6) of the Act, whereby it is incumbent upon ld. CIT(A) to decide the appeal on merits, after recording his reason for the decision arrived on the issues raised by the assessee in its appeal, but the appellate order in the instant case was passed by ld. CIT(A in limine without discussing the issues on merits wherein he merely confirmed the additions without giving his own reasons for decision by passing a non-speaking and non-reasoned order on merits of each of the additions made by the AO . Thus, the appellate order passed by ld. CIT(A) on the merits of additions made to the income of the assessee by AO,which is a non-speaking and unreasoned order is clearly not sustainable in the eyes of law. Based on facts and circumstances of the case and in the interest of justice and fairness to both the parties, the matter can go back to the file of ld. CIT(A) limited to fresh adjudication of all the issues on merits of additions made by the AO, so raised by the assessee in its appeal filed before ld. CIT(A) on merits in accordance with law. So far as issues raised by assessee on legal grounds, as adjudicated by us in this order, shall remain final and binding on both the parties, per our decision in this order.Thus keeping in view the entire facts and circumstances of the case as discussed above and in fairness to both the parties with a view to grant justice, we are inclined to set aside and remand the matter back to the file of ld. CIT(A) limited to adjudication of issues concerning additions to income made by the AO, to be adjudicated on merits and in accordance with law. Appeal partly allowed for statistical purposes.

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• 2022 (5) TMI 166
  Exemption under section 11 12 - Registration u/s 12A of the Act was withdrawn by CIT(A) - ITAT allowed the appeal of the assessee and cancelled the order of CIT(E) - HELD THAT:- Before us, Revenue has not placed any material on record to demonstrate that the aforesaid order of Tribunal wherein the order of CIT(E) cancelling the registration has been set aside/overruled or stayed by higher judicial forum. We therefore find no reason to interfere with the order of CIT(A). Thus the ground of the Revenue is dismissed.

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• 2022 (5) TMI 165
  Payments of salary to the specified persons - reasonable or not - HELD THAT:- Before me, AR has filed an application under Rule 29 of the I.T. Rules for admission of the additional evidences in the form of ledger account and bank account reflecting the payment. Before me, Learned AR has also pointed to the reasons as to why the aforesaid documents could not be filed before the authorities. we find force in the submissions of the Learned AR for non submission before the authorities. In such a situation, we hereby admit the additional evidences filed by the assessee. Since these evidences were not before the lower authorities - matter needs to be restored back to the file of CIT(A) to decide the issue afresh in accordance with law after considering the additional evidences filed by the assessee. Thus the Ground No.1 is allowed for statistical purposes.

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• 2022 (5) TMI 164
  Benefit of accumulation u/s 11(2) - rejection of claim as assessee did not fulfil the mandated pre-condition of filing Form No.10 within the prescribed period - HELD THAT:- It is an undisputed fact that though Form-10 was required to be filed before 30.09.2018, but, it has been filed before the completion of the assessment. Hon ble Chandigarh Bench of Tribunal in the case of Institution of Civil Engineers Society vs., ACIT (Exemptions) [ 2021 (8) TMI 753 - ITAT CHANDIGARH] after considering the CBDT Circular No.6/20dated 19.02.2020 and the decision of Hon ble Apex Court in the case of Nagpur Hotel Owners Association [ 2000 (12) TMI 99 - SUPREME COURT] and various other decisions cited in the order has held that when assessee had filed Form-10 during the course of assessment proceedings and before the completion of the assessment, the same should be considered by the A.O. while considering the claim of benefit under section 11(2). Revenue has not placed on record any contrary binding decision in its support nor has placed on record any material to demonstrate that the aforesaid decision of ITAT, Chandigarh Tribunal has been stayed, overruled or set aside by any Higher Judicial Forum - Decided in favour of assessee.

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• 2022 (5) TMI 163
  Validity of reopening of assessment - non-service of notice u/s 148 and also notice u/s 143(2) - assessee submits that on inspection of the records it is found that the notice was sent to the old address of the assessee and the notice was returned by the postal authorities and the same was kept on record by the AO and, therefore, the said notice was never served on the assessee - HELD THAT:- As in the case of CIT Vs. Chetan Gupta [ 2015 (9) TMI 756 - DELHI HIGH COURT] wherein the Hon ble High Court held that where notice u/s 148 was not served on the assessee in accordance with law the reassessment made consequent thereto was without jurisdiction and liable to be quashed. In the case on hand as the Revenue could not prove the service of notice u/s 148 on the assessee in accordance with law the re-assessment made u/s 147 read with section 144 pursuant to such notice is void ab initio and bad in law. Hence, the reassessment order made u/s 144 read with section 147 is quashed. - Decided in favour of assessee.

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• 2022 (5) TMI 162
  Addition u/s 69A - unexplained cash deposits made on various dates into his bank account - assessee contended that assessee has sold agricultural land and received sale consideration by way of cash as well as through RTGS and later on in the month of December on 24.12.2008 assessee withdrew an amount of Rs.16,62,000/- intended to purchase land - HELD THAT:- On perusal of the bank statement it is noticed that the assessee has withdrawn Rs.16,62,000/- on 24.12.2008 and also deposited an amount of Rs.12 lakhs on 08.01.2009. Similarly, it is noticed that assessee has withdrawn Rs.30,75,000/- on 13.02.2009 and Rs.25 lakhs was deposited on 17.02.2009. The explanation of the assessee that the monies were withdrawn intending to purchase land but since no suitable land could be found the assessee re-deposited into bank account cannot be brushed aside especially when the assessee and his family who are all agriculturists and they have sold their lands vide sale deed dated 05.08.2008 which is evident from the assessment order itself. Further on perusal of the certificate issued by HDFC Bank withdrawn cash on those dates. Even without going into the additional evidence in the form of the letter for HDFC Bank furnished by the assessee it is abundantly clear from the bank statement furnished by the assessee that there were cash withdrawals and cash deposits into bank accounts. In the case on hand the time gap between cash withdrawals and the cash deposits is not more than 15 days, where the cash deposit of Rs.12 lakhs was made. In case of cash deposit of Rs.25 lakhs made by the assessee the time gap was only 3 days. Similar view has been taken by the Delhi Bench in the case of Moongipa Investment Limited Vs. ITO [ 2011 (8) TMI 1067 - ITAT DELHI] Explanation given by the assessee is a plausible explanation and the bank statement reflects both cash withdrawals and cash deposits within a gap of few days and, therefore, direct the Assessing Officer to delete the addition made u/s 69A - Decided in favour of assessee.

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• 2022 (5) TMI 161
  Income accrued in India - Taxability of the receipts - gross basis or on net basis - Receipts in nature of fee for technical services are to be taxed on net basis under section 44DA - Whether receipts were not effectively connected with the PE of assessee in Indian and thus were liable to be taxed on gross basis @ 10% u/s 115A? - HELD THAT:- As decided in own case [ 2022 (2) TMI 697 - ITAT DELHI] assessee s receipts from the contracts in India are not effectively connected with PE in India. Accordingly,as directed the Assessing Officer to tax such receipts on net basis as per section 44DA of the Act. - Decided against Revenue.

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• 2022 (5) TMI 160
  Estimation of income - bogus purchases - CIT(A) had restricted the addition 25% - Assessee has not put in appearance to prosecute the appeal - HELD THAT:- It can be observed from the order of Ld. Tax Authorities below that the Ld. AO has rightly relied the detailed collection of evidence by the Investigation Wing which stood un rebutted by the assessee and the ld. First Appellate Authority has benefited the assessee under law by restricting addition to 25% so no apparent case of any interferences made out. The appeal is dismissed Ex Parte.

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• 2022 (5) TMI 159
  Transfer of case u/s 127 - transferring the jurisdiction of the case from Jalgaon to Nashik - jurisdiction of AO to pass orders - contention of the appellant that the Assessing Officer had no jurisdiction to pass the assessment order, as no opportunity was offered by the Commissioner of Income Tax-II, Nashik while passing the order u/s 127 - HELD THAT:- We are of the considered opinion that this issue cannot be agitated in the assessment proceedings, as assessment proceedings are independent of proceedings u/s 127 of the Act. The proceedings u/s 127 are independent of the assessment proceedings, in the event an assessee is aggrieved by an order u/s 127, necessary remedy lies elsewhere as held by the Hon ble Punjab Haryana High Court in the case of Jaswinder Kaur Koover vs. CIT [ 2006 (11) TMI 153 - PUNJAB AND HARYANA HIGH COURT ] It is trite law that an assessee is barred from raising contention that no opportunity was given to the assessee while transferring the jurisdiction of the case u/s 127 from Jalgaon to Nashik as the order of the transfer of case u/s 127 was within the knowledge of the assessee during the course of assessment proceedings and still the assessee had not chosen to participate in the matter of jurisdiction of the Assessing Officer to whom the case has been transferred. The assessee cannot be allowed latter to challenge the jurisdiction of the Assessing Officer as held in the case of Pannalal Binjraj vs. Union of India [ 1956 (12) TMI 1 - SUPREME COURT ] and the Hon ble Gujarat High Court in the case of Shivabhai Khodabhai Patel vs. CIT [ 1999 (12) TMI 31 - GUJARAT HIGH COURT ] - the objection raised by the assessee challenging the transfer of jurisdiction of the case does not stand the test of the law. Thus, this contention is devoid of any merit and, accordingly, we dismiss the same. Addition based on the information contained in the document impounded from the office premises of third party - As contended that the impounded document from the premises of the third party cannot be used as incriminating material for the purpose of making addition in the assessment made pursuant to notice u/s 153A - HELD THAT:- No doubt the impounded document no.98 of Annexure A-1 was impounded from the office premises of M/s. Mahavir Civil Engineering Services Pvt. Ltd. The business premises of the appellant is also same. Therefore, there is no merit in the contention of the appellant that the document was impounded from the premises of the third party. When the document was in the name of the appellant and found in the business premises of the appellant, even loose sheets is a document as mentioned u/s 132(4) r.w.s. 292C of the Act. The contention of the appellant that the documents found in possession and control of third person in the course of search, is not correct. This presumption raised u/s 132(4A) remains uncontroverted by the appellant by leading necessary evidence. It would clear that it is a document showing the receipt of commission income, the onus lies upon the assessee to show that the said transaction was reflected in the regular books of account maintained and offered to tax. In the circumstances, Assessing Officer would be justified in drawing adverse inference on failure of the assessee to explain the contents of the document. Therefore, the Assessing Officer is justified in drawing an adverse inference that the appellant is in receipt of unaccounted income - Decided against assessee. Levy of penalty u/s 271(1)(c) r.w.s. 271AAA - appellant had offered a sum of Rs.1 crore as additional income and the assessment was completed by the Assistant Commissioner of Income Tax, Central Circle-1, Nashik passed u/s 143(3) r.w.s. 153B - HELD THAT:- It is admitted position that the appellant during the course of giving statement u/s 132(4) had not disclosed the manner in which the undisclosed income had been derived and its substantiation nor was there any query posed by the Investigating Officer of the Department during recording of such statement. We have carefully gone through the provisions of section 271AAA which clearly stipulates that in case search had been initiated u/s 132 on or after 1st day of June, 2007 but before the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income. Admittedly, in view of the fact that the assessee had failed to disclose the manner in which the undisclosed income has derived and its substantiation, the requirements stipulated in sub-section (2) of section 271AAA does not stand specified. There is nothing in the provisions of section 271AAA to say that an assessee is required to disclose the manner in which the undisclosed income is derived and its substantiation only on a query posed to him by the Investigation Officer. Such construction only amount to adding words to the statute which is not a permissible rule of interpretation. In view of this, we find it difficult to agree with the decision of CIT vs. Mahendra C. Shah [ 2008 (2) TMI 32 - GUJARAT HIGH COURT ] and CIT v. Radha Kishan Goel [ 2005 (4) TMI 47 - ALLAHABAD HIGH COURT ] In our considered opinion, the decision of Smt. Ritu Singal [ 2018 (3) TMI 593 - DELHI HIGH COURT ] is more reasoned and considered decision and, therefore, we prefer to follow the view of the Hon ble Delhi High Court in the case of Smt. Ritu Singal (supra) and, accordingly, uphold the levy of penalty u/s 271AAA of the Act. - Decided against assessee.

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• 2022 (5) TMI 158
  Disallowing expenses on account of additional depreciation - appellant has claimed additional depreciation on new plant machinery purchased and installed during the year as per the provisions of section 32(iia) - HELD THAT:- As relying on SCIENTIFIC ENGINEERING HOUSE PVT. LIMITED VERSUS COMMISSIONER OF INCOME-TAX, AP [ 1985 (11) TMI 1 - SUPREME COURT] since tools, dies, jigs etc. are used by the appellant for its business of manufacturing switchgear products it is evident that moulds, dies and tools are not independent of the plant and machinery, but are parts of the machinery. Once they are worn out, the machines cannot turn out the product to the business specifications and this has to be obtained only on a replacement of the tools or the dies and moulds. Further also, in assessee s own case in the subsequent years, the revenue has allowed the claim of additional depreciation on these tools etc. and thus the ground raised in the appeal is allowed.

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• 2022 (5) TMI 157
  Addition u/s 68 and 69 - addition on account of sale of immovable property not disclosed to the Department and unexplained cash credit - HELD THAT:- CIT(A) has passed a very reasonable order justifying both the additions made by the A.O. In absence of any other material brought before us to take a contrary view than the view taken by the Ld. CIT(A), we find no infirmity in the order of the Ld. CIT(A) upholding both the additions. Accordingly, the order of the Ld. CIT(A) is upheld and the grounds raised by the assessee are dismissed.

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• 2022 (5) TMI 156
  Addition on account of Repair and Maintenance of Plant and Machinery on estimate basis - sale of scrap - HELD THAT:- The assessee is a Society registered under the U.P. Cooperative Society Act. Therefore, it has to act within the parameters laid down therein. Before the Ld. AO the assessee explained that it has to take permission of the Administrator of the Society for the sale of scrap. The case of the assessee has all along been that the assessee is adopting the method of accounting on cash basis meaning thereby that as and when the sale of scrap is held in two-three years the same is accounted for. Before the Ld. CIT(A) also it was explained by the assessee that when the scrap is generated out of stores consumption the same is sold with the permission of District Magistrate after inviting tenders and sale of scrap is shown in the year of sale of scrap in the accounts. CIT(A) has accepted it as a matter of fact that the practice of not showing the amount of scrap in its books in the year of generation but accounts for the same as sale in the year scrap generated is sold, is being followed by the assessee since long. The assessee brought on record a chart of sale made of scrap in last years and subsequent year which revealed that during the financial year 2014-15 it accounted for sale of scrap in its books of account. We are, therefore, of the view that there is no valid justification for estimating the value of scrap and making the impugned addition by discarding the method of accounting regularly employed by the assessee - Decided in favour of assessee.

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• 2022 (5) TMI 155
  Contribution received towards PF/ESIC by the assessee from its employees was not deposited before the due date - HELD THAT:-The issue is no more res-integra. The issue has already been settled in favour of the assessee by various judicial pronouncements by the Tribunal. The Hon ble Jurisdictional High Court of Delhi in the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd. [ 2018 (9) TMI 2009 - DELHI HIGH COURT] We are of the view that the AO was not justified in denying the deduction claimed by the assessee on account of late deposit of PF/ESI/EPF, albeit before filing the return of income. Admittedly in all the above-stated matters, the Revenue had not contended that the assessee has deposited the contribution after the filing of the return of income - Decided in favour of assessee.

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• 2022 (5) TMI 154
  Denial of benefit of exemption u/s 10(38) - LTCG - assessee failed to substantiate with evidence to his satisfaction regarding sale of shares of M/s Lifeline Drugs Pharma Ltd. which increased from Rs.6 to Rs.186.84 in just 18 months - According to him, hike in price of the scrip is not supported by the fundamental of the company and the assessee could not substantiate with any supporting evidence to justify the transaction - HELD THAT:-. We find the ld. CIT(A) in his elaborate order has decided the issue and dismissed the appeal filed by the assessee on the ground that the AO has clearly given the modus operandi of money laundering by the stock broker of the agents and the beneficiaries are interested in having their money laundered. He has given detailed reasoning as to how the assessee has introduced her unaccounted money in the garb of Long Term Capital Gain. Nothing has been brought by the assessee before us to take a contrary view than the view taken by the ld. CIT(A) on this issue. We, therefore, uphold the order of the Ld. CIT(A) and the ground raised by the assessee is dismissed.

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• 2022 (5) TMI 153
  Late deposit of PF and ESI employee s contribution - addition u/s 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] . It is clear that there are series of decisions of various Hon ble High Courts on this issue and even Hon ble Jurisdictional High Court in the 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. Scope of amendment - 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 152
  Assessment u/s 153A pursuant to search - Additional income as offered before settlement commission - subsequent to search action assessee has disclosed additional income before ITSC - AO observed that Assessing Officer he is entitled to use all the material filed before ITSC for the purpose of completing the assessment and even without incriminating material, addition can be made since assessee has offered additional income before ITSC - CIT(A) sustained the additions made by the Assessing Officer by applying the provisions of section 245HA - HELD THAT:- It is fact on record AO relied on the informations submitted before ITSC which in fact is only voluntary disclosure of adhoc expenses in order to avoid unnecessary verification and cumbersome exercise of following up with the Tax Authorities. Since settlement commission has rejected the application of the assessee, now assessee retracts the submissions made before settlement commission. The Assessing Officer now relying on the adhoc disclosure before settlement commission in order to make additions, which in our considered opinion is not proper. As Assessing Officer can use all the material which is submitted before settlement commission and Assessing Officer can make the addition based on the proper evidences on concealment of income or any evidences which proves that assessee has not disclosed its proper income. In the given case, it is also fact on record that in the search, no incriminating material was found and no other material available before the Assessing Officer to sustain the addition except relying on the voluntary disclosure before ITSC. As relying on Anantnadh Constructions and Farms (P.) Ltd. [ 2017 (5) TMI 1692 - ITAT MUMBAI] we are inclined to delete the additions made by the Assessing Officer by solely relying on the information submitted before ITSC without there being any material in support of proposed addition. Accordingly, ground No. 1 and 2 are allowed. Deduction on account of education cess on the tax payable by the assessee - HELD THAT:- We observe that the Hon ble Jurisdictional High Court has considered this issue in detail in the case of Sesa Goa v. JCIT[ 2020 (3) TMI 347 - BOMBAY HIGH COURT] and held in favour of the assessee.

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• 2022 (5) TMI 151
  Rectification of mistake u/s 154 - Revision u/s 263 - mis-match of receipts as per 26AS form and books of account - A.O. has sent a proposal to Ld. Pr.CIT, Central for revision of proceedings u/s. 263 - HELD THAT:- In the Income Tax Act, no where mentioned that A.O. will send a proposal to the Pr.CIT/CIT for initiation of revisional proceedings u/s. 263. We are of the opinion, Ld. A.O. ought to not to have sent the aforesaid proposal to the Pr. CIT if there was any ambiguity in the order passed by the Ld. A.O. then he could have rectified he mistake u/s. 154 of the Income Tax Act. As we can see such exercise is not being done by the Ld. A.O. rather he chosen to send a proposal for revision of his order to the Ld. Pr. CIT. In revisional proceedings u/s. 263, Ld. Pr.CIT is required to apply his own mind and satisfaction before invoking the provision of Section 263 and not merely at the behest of the proposal forwarded by the A.O. is against the spirit of the Act as held by the Pune Tribunal in the case of Span Overseas Ltd. [ 2015 (12) TMI 1743 - ITAT PUNE] A.O. ought not to have forwarded proposal to the Pr.CIT/CIT for revision of his own order have already remedy is available with the Assessing Officer to rectify his mistake u/s. 154 of the Income Tax Act, 1961. Ld. Pr.CIT ought to have applied his own mind independently than should have initiated proceeding u/s. 263 of the Income Tax Act. We are of the considered opinion; same is amount to miscarriage of justice. Appeal of assessee allowed.

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• 2022 (5) TMI 134
  Unexplained cash loan - addition made as based on the documents seized during the course of search at the office premises of M/s Maad Realtors and Infra Private Limited. - HELD THAT:- Letter filed before the Assessing Officer submitted that the entry of Rs. 25,00,000 in cash was by mistake of the accountant was passed in the Ledger account of the assessee and the same in fact was investment by Rashmi Ameya Developers Housing Estate Realtors Ltd, the Assessing Officer neither called for any information / document from Rashmi Ameya Developers Housing Estate Realtors Ltd. nor issued any notice under section 133(6) of the Act to ascertain the authenticity of such a statement. Assessing Officer completely dis-regarded the aforesaid letter dated 08.09.2016 and merely on the basis of seized document page 15 made addition in the hands of the assessee as unexplained cash loan to M/s Maad Realtors and Infra Private Limited. Further, the Assessing Officer also neither recorded any statement of the director/partner of M/s Maad Realtors and Infra Private Limited nor granted opportunity of cross examination to the assessee. Thus, the impugned addition is based only on entry found in the seized documents, without the same being corroborated with any other evidence found during the course of search or post search investigations and assessments. Further, we agree with the submission of learned A.R. that section 292C of the Act is not applicable in the present case, as it is not the claim of Revenue that seized documents were found in the possession of the assessee. Decided in favour of assessee. Addition on account of unexplained expenditure - HELD THAT:- From the contents of loose documents, as mentioned in the impugned order passed by the learned CIT(A), it is evident that the same is nothing but the calculation of cumulative interest on month-to-month basis by charging the interest in the next month on the principal plus interest of the preceding month. Further, the details do not show any payment or receipt of interest on monthly basis, otherwise, the principal amount would have been actually reduced rather than being increased. In the present case, no evidence has been brought on record by the Assessing Officer to prove that assessee was involved in 2 projects named in the loose documents. In view of the above, we find no infirmity in the order passed by the learned CIT(A) deleting the addition made by the Assessing Officer on account of unexplained expenditure. Accordingly, grounds raised in Revenue s appeal are dismissed.

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• 2022 (5) TMI 133
  Disallowance u/s 14A - Disallowance exceeding amount of dividend income - HELD THAT:- As in the assessee s own case for the assessment year 2004-05 and 2005-06, [ 2022 (1) TMI 44 - ITAT DELHI] the Co-ordinate bench has directed the Ld. AO to re-determine the disallowance u/s 14A of the Act after considering the judgment of Hon ble Supreme Court of India in Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] and further directing that in no way disallowance determined by the AO shall exceed 10% of the amount of dividend income. It was submitted that unlike in the earlier years in the revised return of income suo moto disallowance was made by the assessee but the Ld. Tax Authorities below have not taken the same into consideration. . Ld. DR could not distinguish the facts or cite any other legal proposition to contrary. The bench is of considered view that the present matter also deserves to be restored to the files of ld. AO to determine the disallowance in terms of aforesaid observations. Accordingly, Ground no. 1 is allowed for statistical purposes. Nature of expenditure - amount paid by the assessee to M/s Vilter Manufacturing Corporation, USA as fee for user of know-how - capital expenditure or revenue expenditure - HELD THAT:- As in the assessee s own case for the assessment year 2004-05 and 2005-06, [ 2022 (1) TMI 44 - ITAT DELHI] not finding favour with the view taken by the lower authorities wherein they had rejected the assessee s claim for deduction of the payment made for the technical know-how to M/s Vilter Manufacturing Corporation, USA as a revenue expenditure, and had dubbed the same as a capital expenditure, set- aside the.order of the CIT(A) and direct the A.O to allow the assessee s claim for deduction of the aforesaid amount of payment as a revenue expenditure - Decided in favour of assessee. Depreciation @ 60% on UPS - AO restricted the claim of depreciation @ 15% only on the UPS and disallowed the excess 45% - HELD THAT:- UPS is integral part of the computer and the depreciation upon same should be one given upon the computers @ 60%. Accordingly the ground is decided in favour of assessee and the ld. AO shall reassess the depreciation @ 60%- Decided in favour of assessee.

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• 2022 (5) TMI 132
  Disallowance of payment of employees contribution towards Provident Fund and ESI under section 36(1)(va) read with section 43B - scope of amendment - HELD THAT:- Now, 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] 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) - See RAJ KUMAR VERSUS ITD, CPC, BENGALURU KARNATAKA [ 2022 (2) TMI 1224 - ITAT DELHI] - Decided in favour of assessee.

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• 2022 (5) TMI 131
  Disallowance of payment of employees contribution towards Provident Fund and ESI under section 36(1)(va) read with section 43B - scope of amendment - HELD THAT:- Now, 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] 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) - See RAJ KUMAR VERSUS ITD, CPC, BENGALURU KARNATAKA [ 2022 (2) TMI 1224 - ITAT DELHI] - Decided in favour of assessee.

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• 2022 (5) TMI 130
  Disallowance of payment of employees contribution towards Provident Fund and ESI u/s 36(1)(va) read with section 43B - scope of amendment - HELD THAT:- Now, 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] In the latest judgment of the coordinate Bench of the Tribunal in case of Raj Kumar [ 2022 (2) TMI 1224 - ITAT DELHI] the Tribunal held that 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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• Customs

• 2022 (5) TMI 150
  Seeking release of consignment - waiver/ refund of detention/demurrage/shipping charges - HELD THAT:- Once the bank guarantee is furnished of the requisite amount, the goods shall be provisionally released in favour of the writ applicants. The respondent No.2 shall see to it that the inquiry is concluded within a period of twelve weeks from today. If for any good reason or if the respondent No.2 has some information as regards the origin of the goods and need some more time, then it shall be open for the respondent No.2 to file an appropriate application seeking extension of time period to complete the inquiry. Application disposed off.

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• 2022 (5) TMI 149
  Seeking waiver/refund of charges like container detention charges, demurrage charges, ground rent charges etc - clearance of goods imported by the petitioner - case of petitioner is that despite the final assessment of the goods and payment of the assessed customs duties, the goods imported by the writ applicant were not cleared - HELD THAT:- Having regard to the ratio of the decision of the Supreme Court in the case of JINDAL DRUGS LTD. ANR. VERSUS THE UNION OF INDIA ORS. [ 2018 (8) TMI 49 - SUPREME COURT ] and also that of the Delhi High Court in the case of M/S. GLOBAL IMPEX THROUGH ITS PARTNER, SHREE SHYAM ENTERPRISES, SURENDER KUMAR JAIN THROUGH ITS PROPRIETOR, BISHT INTERNATIONAL THROUGH ITS PROPRIETOR, ROOP SINGH ENTERPRISES THROUGH ITS PROPRIETOR, VERSUS MANAGER, CELEBI IMPORT SHED AND ANR., UNION OF INDIA ORS. [ 2019 (12) TMI 957 - DELHI HIGH COURT ], where it was held that demurrage, to CELEBI, would be payable by the petitioners-importers in these writ petitions, and not by the Customs authorities. Thus, no liability to be fastened on the respondent - application dismissed.

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• 2022 (5) TMI 148
  Levy of Penalty on appellant CHA u/s 114(i) of the Customs Act - export of prohibited goods or not - appellant is negligent in performing their duty as a CHA - acceptance of work order through the freight forwarder - HELD THAT:- It is found that the appellant has received full set of documents through the freight forwarder and there was no reason for him to doubt the genuineness of the exporter. Further, as the goods were factory stuffed and sealed, the appellant-CHA has no reason to doubt any malpractice on the part of the exporter. Thus, under the facts and circumstances, no case of abetment in attempted export of prohibited goods, against the appellant is made out. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2022 (5) TMI 147
  Seeking dissolution of company - Section 481 of the Companies Act, 1956 - HELD THAT:- Though it cannot be gainsaid that the OL is unable to proceed with the winding up of said company for want of funds, it is clear that just and reasonable circumstances exist for acceding to the dissolution prayer. These reasonable circumstances are as alluded to/delineated. This takes this order back to the seven limbed prayer in the captioned company application - it would be appropriate that the undistributed funds in the hands of OL, the details of which have been captured in the said report, shall be deposited in the appropriate Public Account of India in the Reserve Bank of India after making permissible standard statutory deductions and after incurring reasonable incidental expenses as permissible under the statute and the Rules threat i.e., said Act and Rules therein. The company is dissolved - application allowed.

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• 2022 (5) TMI 146
  Oppression and mismanagement - fraudulent removal of Petitioner from directorship of the Company by attaching false resignation letters bearing forged signatures of the Petitioners - Section 169 of the Companies Act, 2013 - Respondents have alleged that the land was encroached and occupied in due course and that too due to negligence of the Petitioners - Legality of e-Form DIR-12 filed for the cessation of Petitioner No. 1, 2 and 3 from directorship of the Respondent Company - legality of transfer of shares - HELD THAT:- In the instant case, no evidence has been submitted by the Respondents in relation to compliance of procedural aspects while giving effect to the said resignation. No document relating to meetings of Board of Directors for taking note of the resignations has ever been produced by the Respondents. Moreover, on receipt of complaint from the Petitioners, the Registrar of Companies, Bihar took cognizance in the matter and issued a show cause notice dated 20.06.2019 to the Respondents seeking their reply within 15 days. However, no representation is stated to have been made by the respondents in this regard. Thereafter the ROC marked the R1 Company as having management dispute . This Tribunal is of the view that due compliance of Section 169 of the Companies Act, 2013 has been done in removal of Respondent No. 2 and 3 from directorship of the Respondent Company. On the above basis, it is proved that the Respondent No. 2 and 3 have committed acts of oppression and mismanagement against Petitioners as well as the Respondent Company. Petition allowed.

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• Insolvency & Bankruptcy

• 2022 (5) TMI 145
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Since the Corporate Debtor has committed default in payment of the outstanding debt of the Operational Creditor, the petition under section 9 of the Code filed by the Operational Creditor deserves to be admitted. Application admitted - moratorium declared.

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• Service Tax

• 2022 (5) TMI 144
  Validity and legality of FORM SVLDRS 3 - cleaning services - period between 16.06.2005 and 31.03.2008 - demand of service tax alongwith interest and penalty - grievance is that despite the fact that 50% amount towards the predeposit had already been made, the Committee constituted for the purpose of looking into the claim under the Scheme while issuing the SVLDRS 3 granted deduction of Rs. 20,11,712 /- only and the balance amount of Rs. 21,60,023 /- was shown as payable which appears to be on the count that the writ applicant has not made payment of such amount. HELD THAT:- When the Tribunal itself has recorded in its order dated 14.03.2011, that out of the total confirmed duty of Rs.83,43,470/-, the appellant i.e. the writ applicant herein has already deposited an amount of Rs.49,33,521/- along with interest of Rs.3,93,178/-, then what further objection the Committee could have had for the purpose of processing the application filed by the writ applicant. The Committee should once again look into the aforesaid aspect, more particularly, the order passed by the Tribunal itself and thereafter, proceed further in accordance with law. Let the aforesaid exercise be undertaken within 8 weeks from the date of receipt of writ of this order.

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• 2022 (5) TMI 143
  Refund claim - time limitation - claim was delayed by a period of 4 days - Constitutional Validity of clause 3(g) of Notification No. 41/2012-ST dated 29.6.2012 along with Explanation thereto - ultra-vires Section 83 of the Finance Act read with Section 11B of the Excise Act or not - period of limitation for the purpose of filing refund application under the Finance Act in case of export of goods through air or sea - HELD THAT:- The refund application is to be filed within one year from the relevant date and the expression relevant date in the context of export by sea or air is defined as the date on which the ship or the aircraft in which the goods are loaded leaves India. It is to be further noted that as per clause (A) of the Explanation, refund includes rebate. Explanation to clause 3(g) of the Notification states that the date of export shall be the date on which the proper officer of the Customs makes an order permitting the clearance and loading of the goods for exportation under Section 51 of the Customs Act. Hence, as per the Notification, the refund claim is to be filed within one year from passing of the order permitting the clearance and loading of the goods for exportation under Section 51 of the Customs Act. Such prescription of limitation is in direct conflict with the statutory provision, i.e. Section 11B of the Excise Act, which provides for limitation to commence from the date when the ship leaves India. Since the acknowledgment of the refund application was given on 18.2.2014, i.e. within one year from the date when the ship left India, i.e. on 20.2.2013, such refund application being within the period of limitation as stipulated under Section 11B of the Excise Act could not have been rejected as being barred by limitation. In any case, once it is held that the impugned clause 3(g) and the Explanation thereto of the Notification No.41/2012-ST dated 29.6.2012 is ultra vires Section 83 of the Finance Act read with Section 11B of the Excise Act, the impugned orders rejecting the refund on the ground of limitation cannot be sustained. The impugned clause 3(g) of the Notification No.41/2012-ST dated 29.6.2012 along with the Explanation is declared as being ultra vires Section 83 of the Finance Act read with Section 11B of the Excise Act - Application disposed off.

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• 2022 (5) TMI 142
  Levy of service tax - entire construction activity is sub-contracted - appellant not undertaking any construction by themselves - whether the Appellant is liable to pay Service Tax under complex service prior to 1.6.2007? - HELD THAT:- As per decision of the Hon ble Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] held that composite contracts involving transfer of property in goods is not liable to Service Tax prior to 1.6.2007. Thus, the law on this point is well settled. Though the said grounds were not raised in the Show Cause Notice or in the impugned order, since the decision of the Hon ble Supreme Court is binding on this Tribunal it cannot be held that the Appellant was liable to pay Service Tax. Hence, the finding of the Commissioner that the Appellant was not liable to pay Service Tax during the relevant period i.e. from April 2005 to March 2007, is upheld. Once the Appellant is not liable to pay Service Tax, they are also not entitled to avail cenvat credit of the amount collected in the name of Service Tax and is liable to be paid to the Government Exchequer. Applicability of provisions of Section 11D - HELD THAT:- The present case is one where tax was collected even though the activity was liable to tax. Only sub-section (1A) of Section 11D covers such a situation and this sub-section was introduced only in 2008 - The present case is not covered under Sub-section (1) which deals with collection of an amount of tax in excess of the liability - the demand under Section 11D for the period upto 17.04.2006 is set aside. Demand under Section 73A(2) for the period after 18.04.2006 is upheld - The demand of interest under Section 73B is set aside - The imposition of penalty under Section 77 (2) set aside - The demand towards ineligible credit is confirmed and the amount reversed as payment of Service Tax will be treated as reversal - The demand of Service Tax of Rs.17,85,000 on import of service, along with interest and imposition of penalty are set aside. Appeal allowed in part.

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• 2022 (5) TMI 141
  Valuation - amount of withhold tax paid by the Appellant, over and above the consideration paid to the foreign service providers, to be included in the assessable value or not - import of services - reverse charge mechanism - period from May 2006 to March 2010 - recovery of CENVAT Credit on various input services availed in connection with the construction of the hotel. Service Tax liability on the withholding tax component - HELD THAT:- It is true that, the issue is covered in favour of the Appellant in various decisions relied upon by the learned counsel for the Appellant. However, it is observed that, the issue as to how the withholding tax paid in India would be treated by the Foreign Service provider, while determining his tax liabilities, has not clearly come out in those decisions - With regard to limitation, the decision in M/S. T.V.S. MOTOR COMPANY LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, CHENNAI [ 2021 (9) TMI 81 - CESTAT CHENNAI] , is squarely applicable to this case, where it was held that when the TDS amount has been borne by the assessee and only the consideration for the services as agreed upon by the parties has been paid to the service provider, the same cannot be included in the taxable value for determining the Service Tax liability. The demand of Service Tax of Rs.10,24,257/- for the period May 2006 to March 2010, by way of issue of SCN on 08.06.2011, by invoking the extended period of demand, is not sustainable, in the absence of any justification for invoking the extended period. Accordingly, the above demand of Service Tax, along with demand interest and penalties is set aside as time barred. CENVAT Credit - HELD THAT:- During the relevant period, the definition of the term input service specifically covered services used in relation to setting up of the premises of the provider of output services . The reliance placed by the Commissioner on CBEC Circular No.98/1/2008 dated 04- 01-2008, is not sustainable in as much as the said circular has been held to be contrary to the provisions of law, in several judgments. It is a fact on record that these services were used for construction of hotel premises, from which various taxable services would be provided by the Appellant, after completion of construction - The definition of the term input has been amended from 07.07.2009 so as to specifically exclude the goods used for construction of immovable property from the scope of inputs , whereas there is no such restriction in the definition of input service . Even though there was an observation in the impugned order that the disputed credit has been reversed voluntarily by the Appellant, admitting their ineligibility to credit, the said observation is effectively countered by the learned counsel for the Appellant, by drawing reference to the reply to the SCN and written submissions. The demand for denial of CENVAT Credit is not sustainable in law. Since the demand itself is not sustainable, the demand of interest and imposition of penalty are also liable to be set aside. Since the credit has already been reversed, the Appellant is entitled for consequential relief as per Section 142 (6)(a) of CGST Act, in view of the introduction of GST - Appeal allowed.

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• CST, VAT & Sales Tax

• 2022 (5) TMI 187
  Attachment of personal assets - non-discharge of liability by two proprietary firms and the two partnership firms - Availment of ITC illegally - large scale fraud - whether the personal assets of the writ applicants can be put to auction and the amount be recovered towards the discharge of the liability of the two proprietary firms and the two partnership firms? - HELD THAT:- Section 44 of the Act provides for a special mode of recovery. Section 44 starts with a non-obstante clause. Sub section (a) to section 44 is more in the nature of a garnishee provision. Sub section (a) provides that any person from whom any amount of money is due or may become due to a dealer then such money can be appropriated towards the discharge of the liability of the dealer. It is not the case of the department that the case falls within sub section (a). What is sought to be relied upon is sub section (b). Sub section (b) provides that any person who holds or may subsequently hold any money for or on account of such dealer then that money can be appropriated towards the discharge of the liability of the dealer. The writ applicant no.3 namely Ruchita Mukesh Kapadia got married to the writ applicant no. 1 Rohan Sunil Shah in 2014. Ruchita appears to be a native resident of Mumbai before her marriage. The department has gone to the extent of attaching her bank account running in the joint name of her father at Mumbai. It is difficult to understand, how her bank account, running jointly with the name with her father, could have been attached under Section 44 of the Act. Post this matter for final disposal on 23.03.2022 on top of the Board.

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• 2022 (5) TMI 140
  Return of seized material (13 loose papers) - rejection of explanation pertaining to seized materials as an afterthought - order of assessment was against the principles of natural justice or not - rebate against purchases from unregistered dealer at the time of assessment - enhancement of suppressed purchases and evaded sales - HELD THAT:- Admittedly, the order dated 29.11.2013 specifically states that all the loose parchas found at the time of survey dated 30.10.2012 be retained till passing of the order by the first appellate authority. In this background, the applicant submitted the reply, but so far as the reply to the seized documents, i.e., parcha nos. 1, 5, 7 8, were concerned, the same were also submitted. The Tribunal, being a last Court of fact, ought to have considered the submission made by the learned counsel for the applicant, but the same has not been considered and only on the ground that it is an afterthought, the same has been rejected. The matter is remanded back to the Tribunal to reconsider the matter afresh in the light of the observations made and decide the same in accordance with law - Revision allowed.

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• 2022 (5) TMI 139
  Seeking release of attached properties - whether the respondents could have proceeded to attach the individual and personal properties of the writ-applicants by invoking Section 44 of the GVAT Act? - HELD THAT:- The question posed is no longer res integra in view of the recent pronouncement of this High Court by this very Bench in the case of SHRI SHAKTI COTTON PVT. LTD. VERSUS THE COMMERCIAL TAX OFFICER [2022 (4) TMI 196 - GUJARAT HIGH COURT] where it was held that Section 44 of the GVAT Act is being misused to the maximum. Either the authorities concerned have no idea about the scope and true purport of Section 44 of the GVAT Act or they just pretend to be ignorant of the correct interpretation of Section 44 of the GVAT Act. In the case on hand also, it cannot be said by any stretch of imagination that the four firms had any debtor creditor relationship with the writ-applicants herein. It also cannot be said by any stretch of imagination that the four firms had any debtor-creditor relationship with late Sunil Shah - the entire action on the part of the respondents under the garb of Section 44 of the GVAT Act could be termed as without jurisdiction and arbitrary. It has been more than 7 years that various individual and personal assets of the writ-applicants have remained under attachment. Unfortunately, even the life insurance policies which matured over a period of time could not be encashed on account of the attachment. The respondents are directed to immediately lift the attachment over all the individual and personal assets of the writ-applicants and release them free from all encumbrances, except for the property referred to in the notice dated 13.10.2017 - application allowed.

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• Wealth tax

• 2022 (5) TMI 138
  Nature of land sold - assessee has filed details that the land sold is agricultural land and claimed exemption u/s.2(14) of the Act and the assessee filled following details but the AO rejected the assessee s claim that the assessee has sold agricultural land - HELD THAT:- We noted that the assessee sold the land at 127, A Block, Panruti Village, Sriperumbudur Taluk, Kanchipuram District and the adjacent land sold by assessee s family member Smt. Majeeda Shahida Begum [ 2018 (7) TMI 2256 - ITAT CHENNAI] having same address No.127, Panruti Village, Sriperumpudhur Taluk, as the Tribunal in that matter has remanded the matter back to the file of the AO, taking a consistent view, we also restore this issue back to the file of the AO with identical directions. The issue on merits is kept open. Hence, this appeal of assessee is allowed for statistical purposes. Whether this is agricultural land or land liable to wealth tax in term of Section 2(ea) of the Wealth Tax Act, 1957? - Since the matter is restored back to the file of AO in the income tax proceedings, the matter relating to wealth tax in these two appeals is also restored back to the file of the AO. In case, the land is agricultural land in term of section 2(ea) of the WT Act, wealth tax will not be levied and in case it is an asset in term of section 2(ea) of the WT Act, the AO will levy wealth tax accordingly. Hence, both the appeals of assessee are allowed for statistical purpose.

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• 2022 (5) TMI 137
  Wealth tax assessment - assessment of cash in hand in the hands of individual assessee - whether liable to wealth tax or not? - assessee claimed that he runs a big retain chain of business in the State wherein the daily cash sales clocks in an average of Rs.1.5 crores and availed overdraft facility from Indian Bank, T.Nagar Branch against the security of current asset, mainly of stock in trade with the condition that the realization of sale proceeds is to be deposited with them - HELD THAT:- We noted that the assessee may be having big retail chain of business but assessee is an individual. Admittedly, the assessee has cash in hand of Rs.1,41,65,793/-. As per the Wealth Tax Act, Section 2(ea) i.e., definition of assets in relation to assessment year commencing on the 1st day of April 1993 or any subsequent assessment year means (vi) cash in hand, in excess of fifty thousand rupees, of individuals and Hindu undivided families and in the case of other persons any amount not recorded in the books of account We noted that assessee is an individual and this cash in hand is kept in the capacity of individual and not kept as cash in books of accounts. As per the definition of section 2(ea)(vi) of the Act, the excess cash in excess of rupees fifty thousand will be treated as asset and will be included in the net wealth of the assessee. In term of the above, we find no infirmity in the orders of lower authorities and accordingly this issue of assessee s appeal is dismissed.

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• Indian Laws

• 2022 (5) TMI 136
  Dishonor of Cheque - legality of direction to pay interim compensation to the complainant as per the provisions of Section 143(A) of Negotiable Instruments Act - non-speaking order - opportunity of hearing not given to petitioner - violation of principles of natural justice - HELD THAT:- Admittedly, the Delhi High Court in M/s Jsb Cargo [ 2021 (12) TMI 898 - DELHI HIGH COURT ] remitted the matter to trial Court after holding that provision of Section 143(A) of Negotiable Instruments Act, is only directory in nature. Admittedly, no opportunity was given to the petitioner to file his response, before passing of the impugned order despite the fact that he had not pleaded guilty to the notice of accusation served upon him under Section 138 of Negotiable Instruments Act. From the perusal of impugned order, it appears that the Trial Court granted interim compensation under Section 143(A) of Negotiable Instruments Act just in a routine manner and there is no application of mind as to why the said compensation has to be awarded. The Trial Court misread Section 143(A) of Negotiable Instruments Act and treated the said provision as mandatory in nature, whereas the legal position is otherwise. The impugned order to the extent it has been challenged is liable to be set aside being non-speaking and contrary to settled position of law - the matter is remanded back to learned Trial Court to dispose of the matter regarding grant of interim compensation to the complainant/respondent under Section 143A, in accordance with law within one month of the receipt of certified copy of this order - Petition allowed by way of remand.

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• 2022 (5) TMI 135
  Dishonor of Cheque - settlement of disputes between the parties - compounding of offences u/s 138 of Negotiable Instruments Act - HELD THAT:- After having taken note of the provisions contained under Section 320 Cr.PC and Section 147 of the Negotiable Instruments Act, the High Court of Allahabad in Rishi Mohan Srivastava s case [ 2021 (8) TMI 728 - ALLAHABAD HIGH COURT ] held that inherent powers under Section 482 Cr.P.C. can be exercised only when no other remedy is available to the litigant and not where a specific remedy is provided by the statute. It has been further held by the Allahabad High Court that court can always take note of any miscarriage of justice and prevent the same by exercising its powers under Section 482 of Cr.P.C. Needless to say, the operation or effect of a general Act can be curtailed by special Act even if a general Act contains a non obstante clause and as such, provisions contained under Section 320 Cr.P.C. would not come in the way in recording the compromise or in compounding the offence punishable under section 138 of the Act. To the contrary, provisions of section 147 of the Act though start with a non obstante clause but have overriding effect on the provisions contained under section 320 Cr.P.C. This Court finds no impediment in accepting the prayer made in the instant petition and accordingly, same is allowed

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