TMI Tax Updates - e-Newsletter
May 4, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Income accrue or arise in India - Revenue from playing of the matches in India - DTAA - Payments made to the Non- Resident Sports Associations in the present case represented their income which accrued or arose or was deemed to have accrued or arisen in India. Consequently, the Appellant was liable to deduct Tax at Source in terms of Section 194E of the Act.
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Income Tax:
Capital gain arising out of transfer of property - Agreement of Sale cum GPA and handing over of the possession - Except being described as the Vendor, the assessee is neither a signatory to the subsequent Sale Deed nor is he the recipient of any of the sale consideration - It is held that the assessee is not liable for tax on any capital gain arising out of transfer of property
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Income Tax:
Validity of assessment - no notice u/s 143(2) issued by the AO who passed the assessment order - change of jurisdiction - Notice was issued by the AO having original jurisdiction - Since there was no notice u/s 143(2) issued by the current AO, the order is not in order.
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Income Tax:
Deduction u/s 80IC - Since in the present case the fact that the assessee had undertaken substantial expansion is not disputed, the assessee, we hold, is entitled to claim deduction @ 100% of its eligible profits for five years from the initial year of substantial expansion even though the assessee has already claimed deduction of the profits at the rate of 100% for first five years subject to the condition that the total period of deduction u/s 80IC will not exceed 10 years from the initial year of commencement of unit
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Income Tax:
Conversion of limited scrutiny into complete scrutiny assessment u/s 143(3) - where the Assessing officer has taken up fresh issue without converting limited scrutiny to complete scrutiny by taking prior approval of the competent authority, then the said order passed by the Assessing officer will be nullity as beyond his jurisdiction.
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Income Tax:
Characterization of Income - Electricity duty exemption - revenue receipt OR Capital receipt - Assessee had not received any benefit by way of adjustment or reimbursement for the year under consideration, so it was a hypothetical income which may or may not materialize to its money value. - additions deleted.
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Income Tax:
Deduction u/s 80IC - @ 25 % OR 100% - Claim during the 7th year - even when an old unit completes substantial expansion, such a unit also becomes entitled to avail the benefit of Section 80-IC. If that is the purpose of the legislature, we see no reason as to why 100% deduction of the profits and gains be not allowed to even those units who had availed this deduction on setting up of a new unit and have now invested huge amount with substantial expansion of those units
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Income Tax:
Levy of late filing fees u/s.234E - assessee filed the TDS return for the respective quarters belatedly - Only the assessee did not comply the provisions of Section 234E of the Act, therefore, the CPC(TDS) has raised the demand against the assessee. The issue before us relates to prior to the amendment in Section 234E - Demand set aside.
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Indian Laws:
Payment of Gratuity - percentage of Basic Salary adjusted towards Gratuity - the appellant was right in going by the provisions of the Act in the present matter and by the ceiling prescribed under Section 4(3) of the Act. Any mistakes on its part in making some extra payments to some of the other employees would not create a right in favour of others in the face of the stipulations in the Trust Deed and the Scheme.
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Indian Laws:
Enforcement of an arbitral award titled as “Put Award” - enforcement of a foreign award - Whether Put option deed is unenforceable and illegal under the provisions of FEMA - an unwarranted hair-spitting was resorted in dissecting the notifications when on the basic premise the respondents were not correct, namely to contend that the Put Option Deed would be invalid under the FEMA as the terms thereof offend the notifications.
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IBC:
Validity of Garnishee Order - CIRP proceedings are ongoing - failure to deposit taxes - resolution plan approved - the State Government was never involved in the corporate insolvency resolution process, and as such, the resolution plan cannot be said to be binding on it.
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IBC:
CIRP proceedings - Entertainment of Lodging of the claim of the Home Buyers - Resolution Professional (RP) rejected the claim - The lodging of the claim with the Resolution Professional being a stale claim and trying to enforce before the Adjudicating Authority upon its rejection cannot be countenanced
Articles
Notifications
Circulars / Instructions / Orders
- Customs - PUBLIC NOTICE NO. 19/2020 - dated
28-4-2020
Guidelines for conduct or personal bearings in virtual mode under Customs Act, 1962
- Customs - Public Notice No. 26/2020 - dated
27-4-2020
IGST Refunds on exports- extension in SB005 alternate mechanism for SBS filed upto 31 .12.2019
- Customs - PUBLIC NOTICE NO. 18/2020 - dated
24-4-2020
IGST Refund on exports-extension in alternate mechanism
- Customs - PUBLIC NOTICE No. 11/2020 - dated
23-4-2020
Paperless Customs-Electronic Communication of PDF based Gate pass and OOC Copy of Bill of Entry to Custom Brokers/Importers
- Customs - PUBLIC NOTICE No. 12/2020 - dated
23-4-2020
Measures to facilitate trade during the lockdown period- Section 143AA of the Customs Act, 1962-
- Customs - PUBLIC NOTICE NO. 17/2020 - dated
22-4-2020
Measures to facilitate trade during the lockdown period- Section 143AA of the Customs Act, 1962- Review of Circular No. 17/2020 dt. 03.04.20
- Customs - Public Notice No. 28/2020 - dated
22-4-2020
Electronic Sealing- Deposit in and removal of goods from Custom Bonded Warehouse - Amendment to Public Notice No. 10/2020
- Customs - Public Notice-29/2020 - dated
22-4-2020
Measures to facilitate trade during the lockdown period- Section 143AA of the Customs Act, 1962 - Amendment to Public Notice No. 22/2020
- Customs - PUBLIC NOTICE NO. 32/2020 - dated
22-4-2020
Measures to facilitate trade during the lockdown period - Section 143AA of the Customs Act, 1962
- Customs - PUBLIC NOTICE NO. 16/2020 - dated
21-4-2020
Special Refund and Drawback Disposal Drive- Implementation of decision to expedite pending refund & drawback claims
- Customs - PUBLIC NOTICE NO. 16/2020 - dated
21-4-2020
Special Refund and Drawback Disposal Drive- Implementation of decision to expedite pending refund & drawback claims
- Customs - Public Notice No. 20/2020 - dated
21-4-2020
Review of Public Notice 14/2020 dated 03.04.2020 regarding "Measures to facilitate trade during the lockdown period — Section 143AA of the Customs Act, 1962
- Customs - Trade Notice No. 03/2020 - dated
20-4-2020
Paperless Customs -Electronic Communication of PDF bases Gatepass and OOC Copy of Bill of Entry to Customs Brokers/Importers
- Customs - Trade Notice No. 03/2020 - dated
17-4-2020
Opening of Central GST offices post Lockdown due to COVID-19
- Customs - PUBLIC NOTICE NO. 15/2020 - dated
15-4-2020
Paperless Customs — Electronic Communication of PDF based Gatepass and OOC Copy of Bill of Entry to Custom Brokers/Importers
- Customs - PUBLIC NOTICE NO. 29/2020 - dated
15-4-2020
Relaxation to Custom Brokers/Importers w.r.t. Customs procedures in view of extension of lockdown
- Customs - PUBLIC NOTICE NO. 28/2020 - dated
15-4-2020
Paperless Customs – Electronic Communication of PDF based Gatepass and OOC Copy of Bill of Entry to Custom Brokers/Importers
- Customs - Public Notice No. 18/2020 - dated
14-4-2020
Paperless Customs — Electronic Communication of PDF based Gatepass and OOC Copy of Bill of Entry to Custom Brokers/Importers
- Customs - Public Notice-14/2020 - dated
13-4-2020
Exemption to goods imported into India against a duty credit scrip issued by the Regional Authority under the Scheme for ROSCTL
- Customs - PUBLIC NOTICE NO. 27/2020 - dated
10-4-2020
COVID-19 facilitation measures: Relaxation in the procedure for IN-Bonding of Cargo imported under Warehouse Bill of Entry
- Customs - PUBLIC NOTICE NO. 26/2020 - dated
10-4-2020
COVID-19 facilitation measures: Procedure for assessment in cases of non-submission of original Country of Origin certificates during COVID-19 related lockdown period
- Customs - Public Notice No. 16/2020 - dated
10-4-2020
COVID-19 Facilitation measures: Procedure for assessment in cases of non-submission of Original Country of Origin Certificate
- Customs - Public Notice No. 17/2020 - dated
10-4-2020
COVID-19 Facilitation measures: Relaxation in the procedure for IN- Bonding Of Cargo imported under Warehoused Bill of Entry
- Customs - PUBLIC NOTICE NO. 16/2020-cus - dated
9-4-2020
Implementation of automated clearance on All-India basis
- Customs - PUBLIC NOTICE NO. 24/2020 - dated
9-4-2020
COVID-19 facilitation measures: Procedure for assessment in cases of non-submission of original Country of Origin certificates
- Customs - PUBLIC NOTICE NO. 24/2020 - dated
9-4-2020
COVID-19 Facilitation measures: Relaxation in the procedure for IN-Bonding of Cargo imported under Warehouse Bill of Entry
- Customs - PUBLIC NOTICE NO. 15/2020-Cus - dated
8-4-2020
Measure to facilitate trade during the lockdown period - section 143AA of the Customs Act, 1962
- Customs - PUBLIC NOTICE NO. 14/2020-Cus - dated
8-4-2020
Customs — Schemes of Rebate of State and Central Taxes and Levies (RoSCTL) and Additional AD-hoc Incentive for export of garments and made-ups
- Customs - Public Notice No. 12/2020 - dated
8-4-2020
Measure to facilitate trade during the lockdown period - section 143AA of the Customs Act, 1962
- Customs - PUBLIC NOTICE NO. 11/2020 - dated
7-4-2020
Extension of time limits under Customs Act. 1962 and Rules and Regulations issued there under
- Customs - Public Notice No. 15/2020 - dated
7-4-2020
Procedure to be followed in cases of manufacturing or other operations undertaken in bonded warehouses under section 65 of the Customs Act, 1962
- Customs - PUBLIC NOTICE NO. 58/2020 - dated
4-4-2020
Issue of Essential service duty pass to various Members of Trade coming to Air Cargo complex, Sahar during breakout of COVID-19-Lock down period/regarding
- Customs - PUBLIC NOTICE NO.57/2020 - dated
4-4-2020
Print out Of Final Bill of Entry' & Uploading of Documents in E-Sanchit- A Facilitation Measure During breakout of COVID-19
- Customs - PUBLIC NOTICE NO. 56/2020 - dated
4-4-2020
Measures to facilitate trade during the lockdown period - Section 143AA of the Customs Act, 1962
- Customs - PUBLIC NOTICE NO. 25/2020 - dated
4-4-2020
Measures to facilitate trade during the lockdown period - Section 143AA of the Customs Act, 1962
- Customs - PUBLIC NOTICE NO. 11/2020 - dated
3-4-2020
Appointment of Nodal Officer in Chief Commissioner's Office for facilitating Customs clearance at the Zonal level amidst the Covid-19 crisis
- Customs - PUBLIC NOTICE No. 10/2020 - dated
27-3-2020
Facilitation of Clearance of Import Cargo by waiver of late filing fees
- Customs - TRADE NOTICE NO. 04/2020 - dated
4-3-2020
GST — Constitution of Grievance Redressal Committee for redressal of taxpayer grievances on GST matters
- Customs - PUBLIC NOTICE No. 08/2020 - dated
2-3-2020
'Implementation of automated clearance on All-India basis'
News
Case Laws:
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GST
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2020 (5) TMI 60
Release of confiscated goods alongwith vehicle - section 129 of CGST Act - HELD THAT:- The writ applicant availed the benefit of the interm-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2020 (2) TMI 1159 - GUJARAT HIGH COURT] - It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged. Application disposed off.
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2020 (5) TMI 59
Release of confiscated goods alongwith vehicle - section 129 of CGST Act - HELD THAT:- The writ applicant availed the benefit of the interm-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2020 (2) TMI 1159 - GUJARAT HIGH COURT] - It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged. Application disposed off.
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Income Tax
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2020 (5) TMI 58
Reopening of assessment u/s 147 - disallowance of additional depreciation on new wind mills installed in wind power generation unit and on new plant machinery installed in textile division - mere change of opinion on the same sets of facts as existed and under the knowledge of the ld. AO during the original assessment proceedings - HELD THAT:- The matter relating to claim of additional depreciation was therefore not examined by the Assessing officer. Where the matter has not been examined by the AO, there is no question of change of opinion as there is no formation of opinion at first place. The contentions so advanced by the ld AR that it is a case of change of opinion and reassessment proceedings cannot be sustained on such change of opinion is not accepted. We find that in the reasons so recorded by the Assessing officer, he has stated that by virtue of amendment brought-in by the Finance Act, 2012, the claim of additional depreciation u/s 32(1)(iia) is allowable w.e.f 1.04.2013 relevant to assessment year 2013-14 which ex-facie suggest that such claim has been wrongly claimed and allowed in the original assessment proceedings without examination is clearly a case of excess claim of depreciation and jurisdiction has been rightly invoked by the AO u/s 147. Disallowance of additional depreciation - HELD THAT:- In respect of claim of additional depreciation on energy saving devices which have been acquired and installed during the year, there cannot be any dispute as the same is clearly allowable under section 32(i)(iia) and the amendment brought in by the Finance Act, 2012 doesn t in any manner impact such a claim of the assessee and thus, the disallowance so made of additional depreciation is hereby directed to be deleted. In respect of additional depreciation on windmills in respect of which the assessee has made additions under the head wind mills at wind power generation unit , we find that the assessee is engaged in the business of manufacturing and sale of textiles (yarn fabrics) and generation and supply of power and satisfies the necessary condition for claim of additional depreciation as prescribed under section 32(1)(iia) and such windmills have been acquired and installed in the financial year relevant to impunged assessment year 2012-13 much after 31.03.2005. Further, we find that the assessee s case is squarely covered by the decision of the Coordinate Bench in case of Mangalam Cements 2017 (2) TMI 631 - ITAT JAIPUR wherein the amendment brought in by the Finance Act 2012 have been duly considered and additional depreciation on windmills for AY. 2008-09 and AY 2009-10 was allowed - Claim of additional depreciation on windmills is allowed and the ground of appeal is thus allowed.
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2020 (5) TMI 57
Income accrue or arise in India - Revenue from playing of the matches in India - mandate under Section 115 BBA (1)(b) - payment was towards grant of privilege and had nothing to do with matches that were played in India - HELD THAT:- In the present case, the Non-resident Sports Associations had participated in the event, where cricket teams of these Associations had played various matches in the country. Though the payments were described as Guarantee Money, they were intricately connected with the event where various cricket teams were scheduled to play and did participate in the event. The source of income, as rightly contended by the Revenue, was in the playing of the matches in India. The mandate under Section 115 BBA (1)(b) is also clear in that if the total income of a Non-resident Sports Association includes the amount guaranteed to be paid or payable to it in relation to any game or sports played in India, the amount of income tax calculated in terms of said Section shall become payable. The expression in relation to emphasises the connection between the game or sport played in India on one hand and the Guarantee Money paid or payable to the Non-resident Sports Association on the other. Once the connection is established, the liability under the provision must arise. Issue of applicability of DTAA - TDS u/s 194E OR 195 - HELD THAT:- The obligation to deduct Tax at Source under Section 194E of the Act is not affected by the DTAA and in case the exigibility to tax is disputed by the assesse on whose account the deduction is made, the benefit of DTAA can be pleaded and if the case is made out, the amount in question will always be refunded with interest. But, that by itself, cannot absolve the liability under Section 194E of the Act. Payments made to the Non- Resident Sports Associations in the present case represented their income which accrued or arose or was deemed to have accrued or arisen in India. Consequently, the Appellant was liable to deduct Tax at Source in terms of Section 194E of the Act. This appeal, therefore, must be dismissed.
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2020 (5) TMI 56
GP rate estimation - rejection of books of accounts - Assessee argued that while making addition on account of G.P. rate, the amount surrendered should have been considered for calculating the gross profit - HELD THAT:- The gross profit as per the previous year was considered by the AO. The same cannot be said to be excessive or arbitrary. The Tribunal rightly came to the conclusion that surrendered amount of ₹ 10,50,000/- was on account of un-explained investment in the stock. It represented unaccounted transaction and does not represent the profit of unaccounted transaction of purchase and sale. There was no convincing reason put forth by the assessee justifying the low G.P. Rate. There is another aspect of the matter. The Assessing Officer while finalising the assessment considered the profit amounting to ₹ 3,06,705/- as covered under the surrrendered amount of ₹ 10,50,000/- and thereafter made the addition. The conclusion arrived at by the Tribunal is plausible and calls for no interference.
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2020 (5) TMI 55
Capital gain arising out of transfer of property - Agreement of Sale cum GPA and handing over of the possession - HELD THAT:- By virtue of the AGPA dt.29-11-2006, the assessee has parted with his right in the property because he had received the entire sale consideration as agreed to between both the parties and has also handedover the vacant possession of the property to the Vendee therein. It is also stated therein that the GPA is given to the Vendee for the convenience of the purchaser for doing the necessary acts and things on behalf of the Vendor and the Vendee therein. Since the Vendee has paid the entire sale consideration and has taken possession of the property, the Vendee becomes the owner of the property u/s.53A of the TP Act and u/s.2(47) it is a transfer of the property. The Vendee has executed the Sale Deed by virtue of the said AGPA, as he has sold the property to another party for ₹ 9,90,000/-. The sale of the property by the Vendee cum AGPA-holder cannot be considered as sale of property by the assessee. Except being described as the Vendor, the assessee is neither a signatory to the subsequent Sale Deed nor is he the recipient of any of the sale consideration - It is held that the assessee is not liable for tax on any capital gain arising out of transfer of property vide Document No.1610/2012, dt.14-03-2012. Accordingly, the appeal of assessee is allowed.
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2020 (5) TMI 54
Validity of assessment - no notice u/s 143(2) issued by the AO who passed the assessment order - change of jurisdiction - Notice was issued by the AO having original jurisdiction - HELD THAT:- In the present case, the original jurisdiction of the AO is ITO Wad 6(2)(2), Bangalore, who issued notice u/s 143(2) of the Act dated 28.08.2015 fixing the case for hearing on 15th September, 2015. Assessment records were transferred vide order u/s 129 of the Act, to the ITO Ward 6(2)(3), Bangalore, and thereafter notice u/s 142(1) r.w.s. 129 of the Act dated 06.10.2015 was issued and served on the assessee. Thus, it is an admitted fact that the ITOWard 6(2)(3) Bangalore has never issued any notice u/s 143(2) of the Act to the assessee. Since there was no notice u/s 143(2) issued by the Assessing Officer, Ward 6(2)(3), the assessment framed consequently is bad in law. In our opinion, the assessment framed by the ITO Ward 6(2)(3), Bangalore is not in order on the simple reason that this was framed without giving notice u/s 143(2) of the Act. The assessment framed by the ITO Ward 6(2)(3), Bangalore is not in order on the simple reason that this was framed without giving notice u/s 143(2) of the Act. Before framing any assessment, there should be valid notice u/s 143(2) of the Act, as has been held in the case of ACIT And Another Vs. Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT]. No valid notice u/s 143(2) was issued by the AO who held jurisdiction over the case of the appellant, the consequent order passed u/s 143(3) dated 29.12.2017 was legally unsustainable and therefore is null in the eyes of law and therefore quashed. - Decided in favour of assessee.
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2020 (5) TMI 53
Computation of deduction u/s 10A - expenditure incurred towards date link charges / telecommunication charges and foreign travel expenses attributable to delivery of computer software for providing technical services outside India to be excluded both from export turnover and total turnover for the purpose of computation of deduction - HELD THAT:- This issue is squarely covered by the judgment of the Hon ble Supreme Court in the case of CIT v. HCL Technologies Limited [2018 (5) TMI 357 - SUPREME COURT] wherein it was held that the expenditure incurred towards telecommunication charges and foreign travel expenses attributed to the delivery of computer software for providing technical services outside India to be excluded both from export turnover and total turnover for the purpose of computation of deduction u/s 10A of the Act. Being so, we do not find any infirmity in the order of the CIT(A) in following the judgment of CIT v. Tata Elxsi Limited [2011 (8) TMI 782 - KARNATAKA HIGH COURT] and the same is confirmed. Deduction u/s 10A - enhanced income arising out of disallowance u/s 40(a)(ia) against non-deduction of tax on rent payment u/s.194I - HELD THAT:- This issue is squarely covered by the judgment in the case of CIT v. Gem Plus Jewelery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] wherein held that the assessee is entitled to exemption u/s 10A of the Act with reference to the addition of disallowance of payments as a plain consequence of the disallowance and the add back made by the AO is an increase in the business profit of the assessee. Being so, we do not find any infirmity in the order of the CIT(A), hence, the same is confirmed. Deduction u/s 10A - assessee has offered the additional income as business profit in the revised return of income - HELD THAT:- In the present case, the assessee has offered the subsequent realized export income by filing a revised return. Therefore, the same should be considered for granting deduction u/s 10A of the Act, and there is no necessity to rectify the same after completion of assessment as held by the Delhi Tribunal in the case of ITO v. M/s.PCL Exports [ 2011 (3) TMI 1802 - ITAT DELHI] . MAT Computation - Additional revenue to be included in computing book profits u/s 115JB - such amount was not credited to the profit and loss account in the said year - HELD THAT:- Assessee has revised the return of income by including the additional revenue in its total income. However, the assessee did not modify the book profit u/s 115JB of the Act. The Assessing Officer re-computed the book profit by adding the additional income on account of subsequent realization of export profit. In our opinion, the AO book profit, in such cases where the additional revenue was not shown by the assessee in the books of account, as held by the Hon ble Supreme Court in the case of Apollo Tyres Limited v. CIT [2002 (5) TMI 5 - SUPREME COURT] held AO has the limited power of making increase and reductions as provided for in the Explanation to the said section. To put it differently, the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115J - Decided in favour of assessee.
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2020 (5) TMI 52
Capital gains - Transfer u/s 2(47) - sale agreement entered into by the assessee with M/s.Ragas Educational Society was incomplete as the said agreement contemplated completion of registration within 12 months from 21.03.2005, which admittedly did not happen in the instant case - HELD THAT:- AR filed before ACIT,Circle- 1,Chennai stating that the subject mentioned lands were only part of transfer in assessment year 2005-06 and also subject mentioned lands were only agricultural lands and hence out of the purview of definition of capital assets under Section.2(14) of the Act. The Ld. A.O.of assessee s father i.e. ACIT, Circle-1,Chennai was duly convinced by a certificate issued by Village Administrative Officer , who had certified that the subject mentioned lands are agricultural lands and accordingly did not proceed to make any addition in the hands of assessee s father for assessment year 2011-12. AR pleaded that no capital gains at all could be arisen in the hands of assessee in respect of the subject mentioned lands during the year under consideration. The Bench at the time of hearing raised a specific query to the Ld. A.R. to prove the fact that those lands that were registered on 09.12.2010 by the Power of attorney holder are included in 3.935 acres of land for which purpose the Bench directed the Ld. A.R. to match Survey Numbers thereon. Details requires factual verification from the side of the Ld. A.O. and hence in the interest of justice and fair play, we deem it fit and appropriate to remit this issue to the file of Ld. A.O for adjudication in the light of aforesaid evidences and in the light of aforesaid observations and in accordance with law. The Revenue should ensure that there is no double addition made towards capital gains. The assessee should adduce necessary evidences in support of his various contentions. Accordingly grounds raised by the Revenue are allowed for statistical purposes.
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2020 (5) TMI 51
Deduction u/s 80IC - assessee did not file the Form No. 10CCB - assessee firm derives income from manufacturing of Electrical lamps - HELD THAT:- Provision for submission of audit report along with return are not mandatory and that the audit report can be entertained during the assessment proceedings . Issue is covered in favour of the assessee by the aforesaid decision of the Hon'ble jurisdictional High Court in CIT vs Punjab Financial Corporation 2001 (12) TMI 50 - PUNJAB AND HARYANA HIGH COURT] . Considering the facts of the case, the issue is decided in favour of the assessee accordingly. Deduction u/s 80IC - @25% as against 100% claimed by the assessee on account of substantial expansion of the Unit - HELD THAT:- Hon'ble Apex Court in the case of M/s Aarham Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] and find that the Hon'ble Apex Court dealt with the entire scheme of the Act relating to the relevant section i.e. section 80IC of the Act, and arrived at the conclusion that the definition of the initial assessment year contained in clause (v) of sub-section(8) of section 80IC of the Act can lead to a situation where there can be more than one initial assessment year within the said period of ten years Since in the present case the fact that the assessee had undertaken substantial expansion is not disputed, the assessee, we hold, is entitled to claim deduction @ 100% of its eligible profits for five years from the initial year of substantial expansion even though the assessee has already claimed deduction of the profits at the rate of 100% for first five years subject to the condition that the total period of deduction u/s 80IC will not exceed 10 years from the initial year of commencement of unit - Thus, this issue is decided in favour of the assessee.
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2020 (5) TMI 50
Levy of penalty u/s 271 (1)(c) - long term capital gain as well as interest disallowance made - omission to declare long term capital gain in the return of income - HELD THAT:- There was inadvertent omission on the part of the assessee to declare the long term capital gain in his return of income, since the sale consideration received on sale of land was shown as sundry creditors in the books of account - assessee has voluntarily declared the fact of omission to declare long term capital gain in the return of income before the AO during the course of asst. proceedings. Hence the ld CIT(A) has correctly taken the view that penalty is not leviable on the long term capital gain declared by the assessee. Disallowance of interest expenditure - said disallowance was made only for want of proof. In our view the decision rendered by Hon ble Supreme Court in the case of Price Water House Coopers Pvt. Ltd. [2012 (9) TMI 775 - SUPREME COURT] would support the case of the assessee in respect of long term capital gain and the decision rendered by Hon ble Supreme Court in the case of Reliance Petro Products Ltd [2010 (3) TMI 80 - SUPREME COURT] would support the case of the assessee in the case of interest disallowance. The decision in the case of MAK Data Pvt. Ltd. [2013 (11) TMI 14 - SUPREME COURT ] in our view, was rendered by Hon ble Supreme Court in the context of amounts surrendered during the course of survey proceedings and hence the said decision is not applicable to the facts of the present case. In view of the above we do not any infirmity in the decision taken by the ld CIT(A) in deleting the penalty levied u/s 271(1)(c) - Decided in favour of assessee.
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2020 (5) TMI 49
Disallowance of deduction fu/s. 54B - lan d was not used for agricultural purpose as per report of the Talati, therefore, claim of deduction u/s. 54B was disallowed - HELD THAT:- On identical issue in the case of coowners on the similar facts, the Co-ordinate Bench of the ITAT in the case of Balkrishna P. Trivedi [ 2020 (2) TMI 87 - ITAT AHMEDABAD ] have decided the issue of allowability of deduction u/s. 54B of the Act against the assessee. Disallowance u/s. 54EC - HELD THAT:- Identical issue on similar facts in the case of other co-owners Balkrishna T. Trivedi [ 2020 (2) TMI 87 - ITAT AHMEDABAD ] is adjudicated in favour of the assessee. The ld. D.R. is fair enough not to controvert this fact that similar issue is adjudicated in favour of the assessee
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2020 (5) TMI 48
Disallowance of Commission Expenses - assessee has not furnished the required details i.e. the list of commission agents, PAN, Deduction of TDS, confirmation etc. - HELD THAT:- It is noticed that assessee has not furnished basic detail i.e. bill/voucher, PAN, list of commission agents and detail of services rendered for which commission was provided; in spite of giving a number of opportunities. The assessee has also failed to furnish such basic detail before the ld. CIT(A). Even during the course of appellate proceedings before us, the assessee has not filed any such detail. Disallowance u/s. 37 - travelling and vehicle expenses - HELD THAT:- Assessee has shown car hiring income to the amount of ₹ 3,34,626/- in the Schedule K placed in the paper book as business income, therefore, it is not justified to disallow 100% expenses incurred under the head travelling and food expenses. Considering the car rental income and the income earned from business we are of the view that it is reasonable to restrict the disallowance to the extent of 30% of such expenses for want of relevant proper bill and voucher. Accordingly, we restrict the disallowances under the head travelling and fuel expenses therefore, this ground of the appeal is allowed. Addition u/s. 2(22)(e) - HELD THAT:- During the course of appellate proceedings before us, the ld. counsel has contended that these transactions of the assessee company with M/s. Omkara Concrete and Machineries Pvt. Ltd. was in the nature of rental current accommodation adjustment entries and he has referred page no. 5 of the paper book containing ledger account of the company in the books of account of the assessee demonstrating that there were number of debit and credit entries. After considering the above submission of the assesssee, it is noticed that there are large number of entries reflected in the ledger account of the company as pointed out by the ld. counsel as adjustment entries. After considering the nature of transaction being running account as of the nature of adjustment entries, we delete the impugned addition. Therefore, this ground of appeal of the assessee is allowed. Disallowance of Pre EMI Interest - HELD THAT:- Assessee has made alternative plea before the assessing officer that expenditure in the form of Pre EMI interest i.e. capitalized, ld. CIT(A) has treated the EMI interest as capital expenditure instead of revenue expenditure as per the alternative plea of the assessee. After considering the above, we do not find any reason to interfere in the decision of ld. CIT(A), therefore, this ground of appeal stands dismissed.
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2020 (5) TMI 47
Addition u/s 68 - Bogus outstanding balance pertaining to the sundry creditors - HELD THAT:- Genuineness of the same was not disproved by the assessing officer. In the light of the above facts and circumstances, we observed that the assessing officer has incorrectly applied section 68 of the act in respect of outstanding balance of sundry creditors reported by the assessing officer. In addition to above, the assessee has clearly demonstrated the outstanding balance in the name of said parties have been squared off in the subsequent year by payment from account payee cheques as demonstrated in the paper book which was not disputed by the assessing officer. Considering the above facts and circumstances, we are not inclined with the decision of ld. CIT(A), therefore, the appeal of the assessee is allowed. Levy penalty u/s. 271(1)(c) - quantification of purchases sales and estimated addition to profit to the extent of ₹ 15% only - HELD THAT:- It is noticed that assessing officer has not confronted the assessee to produce the parties who were not found at the given addresses. The Co-ordinate Bench of the ITAT had deleted the additions except sustaining the addition on estimated basis to the extent of ₹ 15%. Considering the facts and sustaining of additions on merely estimated basis, we observe that given circumstances it is not a fit case to levy penalty u/s. 271(1)(c) of the act, therefore, penalty levied in this case is deleted. Accordingly, the appeal of the assessee is allowed. Estimation of gross profit @ 3.82% as averages on last three years - HELD THAT:- As during the course of survey against book value of goods the value of goods on physical verification was found to the extent of ₹ 30,75,989/-. In spite of giving a number of opportunity at the level of assessing officer and at the level of CIT(A) the assessee could not produce any evidence to reconcile differences, therefore, we do not find any merit in this appeal of the assessee, therefore, the same stands dismissed.
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2020 (5) TMI 46
Conversion of limited scrutiny into complete scrutiny assessment u/s 143(3) - No approval by the appropriate authority for converting the limited scrutiny into complete scrutiny - case of the assessee was selected for limited scrutiny through CASS - jurisdiction of AO by passing the impugned order u/s 143(3) for the reason that case was initially selected for limited scrutiny and without seeking permission from the competent authority to convert limited scrutiny into complete scrutiny, the addition has been made - HELD THAT:- AO neither in the assessment order nor in the assessment proceedings (as apparent from the notings in the order sheet place on record) has stated that he has sought and has been granted any approval by the appropriate authority for converting the limited scrutiny into complete scrutiny or travelling beyond the matter for which the matter was initially selected for limited scrutiny - nothing has been brought to our notice during the course of hearing by the ld DR that such approval was sought by the AO and has been granted by the appropriate authority. AO has taken up the fresh issue of unexplained investment for purchase of immovable property, which has no connection with the issue of sale of immovable property for which the matter was selected for limited scrutiny, without seeking prior approval of the competent authority. The addition so made u/s 69 is liable to be quashed as the order passed by the AO would be nullity as beyond his jurisdiction in absence of requisite approval from the competent authority. The instructions issued by CBDT from time to time are clear on this point. AO can thus widen the scope of scrutiny where the matter was initially selected for scrutiny assessment. However, the condition precedent for such action of the AO is that he has to follow the procedure so laid down and seek prior approval of the competent authorities. In the instant case, it is an admitted fact that no such approval has been taken by the Assessing officer. It is therefore, a case where the CBDT Instructions which are binding on the Assessing officer have not been followed by him. It is a consistent position taken by various Benches of the Tribunal including Jaipur Benches that where the Assessing officer has taken up fresh issue without converting limited scrutiny to complete scrutiny by taking prior approval of the competent authority, then the said order passed by the Assessing officer will be nullity as beyond his jurisdiction. We set aside and quash the order passed by the AO u/s 143(3) of the Act and ground no. 1 of the assessee s appeal is allowed.
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2020 (5) TMI 45
Nature of expenditure - Expenses relating to technical know-how - Revenue or capital expenditure - HELD THAT:- An identical issue having similar facts has already been adjudicated by this Bench of ITAT in assessee s own case [2019 (6) TMI 655 - ITAT CHANDIGARH] wherein rightly allowed the assessee s appeal following the order of the I .T.A.T. in assessee s own case for assessment year 2009-10. We therefore find no reason to interfere in the order of the Ld.CIT(A) holding the technical knowhow expenses as revenue in nature. Sales tax subsidy received by the assessee by virtue of scheme of Punjab Government has already been decided by the I .T.A.T. in the case of the assessee itself in the preceding years [ 2019 (6) TMI 655 - ITAT CHANDIGARH ] holding the same to be capital in nature and with no distinguishing facts having been brought to our notice by the Ld. DR Characterization of Income - Electricity duty exemption - revenue receipt OR Capital receipt - HELD THAT:- In the present case it is not in dispute that the assessee in view of Industrial Policy 2003 of the State Government of Punjab became eligible for claiming the electricity duty exemption - claim of the assessee was that the said entitlement although accrued but had not been received during the year under consideration, as the case of the assessee was to be examined by a separate Empowered Committee constituted by the State Government. Claim of the assessee that due to pendency of verification of compliance of eligibility condition the assessee had not even filed its claim before the Department for benefit of exemption. The said claims of the assessee are not rebutted by bringing cogent material on record, therefore the electricity duty exemption entitlement although booked in the books of accounts on estimate basis was rightly reduced from the taxable income while filing the Income Tax Return. Assessee was eligible for the incentive on the basis of Industrial Policy 2003 of Government of Punjab on account of expansion of the existing unit and it shall be received by the assessee by way of adjustment in electricity bills of future consumption. Assessee had not received any benefit by way of adjustment or reimbursement for the year under consideration, so it was a hypothetical income which may or may not materialize to its money value. Therefore, the addition made by the A.O. and sustained by the Ld. CIT(A) was not justified, accordingly the same is deleted. Assessee appeal allowed.
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2020 (5) TMI 44
Deduction u/s 80P(2)(a)(i) denied - assessee-society was catering to lending of credit facilities to non-members which was in violation - as per assessee it is a cooperative society, even though it is registered under the Karnataka Souharda Sahakari Act, 1997 - HELD THAT:- As decided in M/S. SINDHU CREDIT SOUHARDA SAHAKARI NIYAMITA [ 2019 (12) TMI 1277 - ITAT BANGALORE] Assessee s claim regarding deduction u/s. 80P(2)(a)(i) cannot be rejected on this basis that assessee is a Souharda Sahakari and therefore, cannot be regarded as a co-operative society. But after holding so, set aside the order of CIT(A) and restore the matter back to the AO for fresh decision regarding allowability of deduction u/s. 80P(2)(a)(i) after examining other conditions for allowing such deduction because those conditions are not examined by the AO till now. - Appeal filed by the assessee is allowed for statistical purposes.
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2020 (5) TMI 43
Deduction u/s 80IC - @ 25 % OR 100% - Claim during the 7th year on the basis of substantial expansion - HELD THAT:- As decided in M/S. AARHAM SOFTRONICS [ 2019 (2) TMI 1285 - SUPREME COURT] carrying out substantial expansion by itself is treated as 'initial assessment year'. It would mean that even when an old unit completes substantial expansion, such a unit also becomes entitled to avail the benefit of Section 80-IC. If that is the purpose of the legislature, we see no reason as to why 100% deduction of the profits and gains be not allowed to even those units who had availed this deduction on setting up of a new unit and have now invested huge amount with substantial expansion of those units - direct the A.O. to allow the claim of the Assessee for deduction under section 80IC - Decided in favour of assessee. Unexplained cash deposit - HELD THAT:- As noticed that the wife of the assessee had shown rental income for the year under consideration which has been accepted by the Department - wife of the assessee could have saved some amount out of the aforesaid rental income, at the same time, the amount of ₹ 2,00,000/- was deposited on 08/05/2014 , so it cannot be presumed that that the total rental income for the whole year was received by the wife of the assessee before that date, particularly when no evidence was furnished to substantiate the same. Therefore, we are of the view that the said deposit of ₹ 2,00,000/- was unexplained. As regards to the another deposit, some amount had been withdrawn from the bank account by the wife of the assessee and remaining account is from the savings from rental income of earlier years - the submission appears to be plausible, however part of the deposit confirmed - Decided partly in favour of assessee.
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2020 (5) TMI 42
Condonation of delay for filing and appeal before CIT(A) - delay of 272 days - Sufficient and reasonable cause explained by the assessee - Earlier assessee had filed rectification application u/s 154 - HELD THAT:- We considering the observations of MST Katiji others [1987 (2) TMI 61 - SUPREME COURT] and submissions of the assessee, condone the delay of filing the appeal before the CIT (Appeals) and restore the entire disputed issues to the file of CIT (Appeals) to admit the appeal and adjudicate on merits and pass a speaking order. Further provide adequate opportunity of hearing to the assessee, and the assessee shall co-operate in submitting the information for early disposal of the appeal and allow the grounds of appeal of the assessee for statistical purpose.
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2020 (5) TMI 36
Levy of late filing fees u/s.234E - assessee filed the TDS return for the respective quarters belatedly - Intimation issued u/s. 200A - HELD THAT:- Assessee has deducted TDS, which has been deposited within the time and on perusal of the demand notice raised by the CPC(TDS), it is noticed that there is no any short payment, short deduction/collection, interest on payment default u/s.201(1A)/206C(7) of the Act, interest on short payment, interest on deduction/collection default u/s.201(1A)/206C(7) of the Act, interest on short deduction/collection, interest on late deduction/collection, which shows that there was no delay for deduction and deposit. Only the assessee did not comply the provisions of Section 234E of the Act, therefore, the CPC(TDS) has raised the demand against the assessee. The issue before us relates to prior to the amendment in Section 234E of the Act. We have also gone through the decision of the coordinate bench of the Tribunal in the case of Glee Pharma Pvt. Ltd. [ 2017 (8) TMI 1455 - ITAT CUTTACK] wherein the Tribunal has decided the issue in favour of the assessee upto the extent of amendment in Section 234E of the Act w.e.f.01.06.2015. We direct the AO to delete the fee levied u/s. 234E for the 1st, 2nd, 3rd 4th quarters for the Financial Year 2013-2014 relevant to assessment year 2014-2015 and for the 1st, 2nd, 3rd 4th quarters for the Financial Year 2014-2015 relevant to assessment year 2015-2016 on account of late filing of TDS return - Allow the appeals of the assessee
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Customs
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2020 (5) TMI 41
Principles of natural justice - conclusion of assessment, without complying with the directions issued by the CESTAT on 20.01.2017 - HELD THAT:- In the instant case, even without examining the reasons as to why the respondent authority was unable to comply with the directions issued by the CESTAT in its order dated 20.01.2017 in toto, the fact remains that the respondent authority has not supplied the documents, which it was asked to do so by the CESTAT, to the petitioner. Hence, the best course of action that was available to the respondent authority was to request the CESTAT to amend its earlier order by filing appropriate application within the stipulated period instead of insisting upon the petitioner to go ahead with the assessment. This can never be the spirit of assessment and the assessee concerned cannot be sent from pillar to post, particularly, on the very issue on which the challenge has been made. This court is conscious of the fact that the differential duty imposed upon the present petitioner and six other Noticees is huge. The matter is quite old and involves a long drawn legal battle, which has continued till date. The final adjudication could not be made in the wake of this challenge and the directions issued by the CESTAT. However, that also cannot be a ground for the court to permit breach of the principles of natural justice - It is not only about the grant of an opportunity of being heard to the party concerned, but of complying with the principles of natural justice, which includes the furnishing of relevant documents also, which is vital for the purpose of adjudication. Considering the facts of the case, this court is of the opinion that the communication dated 15.11.2018 addressed to the advocate for the petitioner by the Office of the respondent No.2 stating that in case of non furnishing of final submissions by the petitioner before 30.11.2018, the case shall be proceeded for final adjudication, deserves indulgence. The action of the respondent No.2 authority seeking to proceed with the assessment of the petitioner, without complying with the directions issued by the CESTAT in its order dated 20.01.2017, would entail to the exercise of the powers by this court since the authority, which, otherwise has the powers, has not taken any steps in compliance of the directions issued by the CESTAT. Hence, the communication dated 15.11.2018 issued by the Office of the respondent No.2 deserves to be quashed and set aside and appropriate directions are required to be issued to the respondent No.2 - the impugned communication dated 15.11.2018 addressed to the learned advocate for the petitioner by the Office of the respondent No.2 herein is quashed and set aside - petition allowed in part.
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Corporate Laws
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2020 (5) TMI 40
Sanction of scheme of amalgamation - transfer of business of the transferor company and all the properties, assets, rights and claim to the transferee company - sections 230(1) and 232 of the Companies Act, 2013 - HELD THAT:- In compliance with the order dated August 1, 2019 the petitioner-companies have filed affidavit of service affirmed on October 9, 2019 evidencing service of notice upon the Central Government through the Regional Director NER, Ministry of Corporate Affairs, Registrar of Companies, Shillong, Official Liquidator, Income-tax Department, Reserve Bank of India, by speed post and through hand delivery at their respective addresses - it is also revealed that the Regional Director, NER Ministry of Corporate Affairs has furnished his response by way of affidavit dated September 6, 2019 and has made observation in paragraph 2 stating, inter alia, therein that they have no objection to the proposed scheme of amalgamation - On further perusal of the record has revealed that the official liquidator pursuant to provisions of sections 230 to 232 of the Companies Act, 2013 read with rule 16 of the Companies (Compromise, Arrangement and Amalgamations) Rules, 2016 in respect of the petitioner/transferor company has furnished his response by way of affidavit on August 9, 2019 and has made observation in stating, inter alia, therein that he has no objection to the proposed scheme of amalgamation. In the view of the facts stated above in absence of any objection from the authorities concerned and since the requisite compliances have been fulfilled, the scheme of the amalgamation mentioned in this petition is sanctioned by this Bench to be binding with effect from April 1, 2018 on the transferor company and their shareholders and all concerned - petition disposed off.
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Insolvency & Bankruptcy
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2020 (5) TMI 38
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Scope of Operational Debt - interpretation of section 5(21) of IBC, 2016 - Learned Counsel for the Operational Creditor referred to section 5(21) of the IBC, 2016 and submitted that 'Operational debt' is not only restricted to goods and services being rendered but also includes debt in respect of the payment of dues arising under law for the time being in force - HELD THAT:- It is evident that, in relation to the second part of the definition of 'Operational Debt', it is clear that the 'debt in respect of payment of dues arising under any law for the time being in force' should be payable to the Central Government, State Government or any Local authority - However it is evident from the records, that in the present case, the Operational Creditor is not a Central Government or State Government or a Local authority - Hence, the submissions made by the learned Counsel for the Operational Creditor, does not hold water in view of the interpretation given above to section 5(21) of IBC, 2016. Petition dismissed.
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2020 (5) TMI 37
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- In order to comply with the requirement of clause (a) of section10(3) of the Code the petitioner has placed on record all the necessary documents to prove the existence of financial/operational debt and the amount as required in column 3 of Part-III of the Application Form. The details of the operational debt in default have also been provided - there is no revenue from operations from the financial year 2015-16 till 2018-19. It could also be observed that the petitioner company went into a loss making concern from financial year 2017-18 to 2018-19. It is clear from the above that the corporate applicant has failed to pay its debt and has thus committed default. It is thus competent to set in motion the insolvency resolution process under the Code to ensure maximum value of assets which is in the interest of all the stakeholders. Petition admitted - moratorium declared.
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2020 (5) TMI 35
CIRP proceedings - Entertainment of Lodging of the claim of the Home Buyers - Resolution Professional (RP) rejected the claim - production of additional documents - HELD THAT:- The documents bearing 1004/2014 in relation to the property is registered with sub-registrar Office, Thiruvallur, which is sought to be relied upon for the purpose of conveyance of undivided share of land as prescribed in the Schedule of property in the said registered documents. In addition, Memorandum of Agreement as entered into between the parties dated 25-3-2014 is also sought to be relied on by the Applicants to establish that the monies which are figuring in the respective Sale Agreements or Memorandum of Agreements have been duly paid to the Corporate Debtor, and in the said circumstance, the Claim cannot be rejected and that all the payments which are also extracted hereinabove by way of tabulation in Para supra are in relation to the purchase of properties, and hence, it is appropriate that the Applicant should be categorised as 'Home Buyer' and that the Resolution Professional was wrong in not entertaining the Claim as filed under Form CA meant for the Home Buyers. Hon'ble Supreme Court in the case of PIONEER URBAN LAND AND INFRASTRUCTURE LIMITED ANOTHER VERSUS UNION OF INDIA OTHERS [ 2019 (8) TMI 532 - SUPREME COURT] has held that a speculative Home Buyer is not entitled to come as a Financial Creditor under the category as defined under section 5 (8) (f) of the I B Code, 2016 as a Home Buyer - The fact that the three Sale Agreements along with the Memorandum of Agreements which are being touted by the Applicant clearly shows that the transactions, if at all are to be considered as being speculative and the transaction cannot considered as genuine made from the stand point of a Home Buyer so as to come for the claim to be lodged in Form CA. The lodging of the claim with the Resolution Professional being a stale claim and trying to enforce before the Adjudicating Authority upon its rejection cannot be countenanced - Application dismissed.
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Service Tax
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2020 (5) TMI 34
Levy of Service Tax - Commercial or Industrial Construction Service - composite works contract - period during August 2005 - HELD THAT:- The works executed by the appellant is composite in nature involving both supply of goods as well as rendering of service. The department has agreed that the appellant s activity is covered by Works Contract Service for the period subsequent to 1.6.2007. The Hon ble Supreme Court in the case of Commissioner of Central Excise Customs, Kerala Vs Larsen Toubro Ltd. [ 2015 (8) TMI 749 - SUPREME COURT ] has held that activities which gets covered under Works Contracts Service w.e.f. 1.6.2007 cannot be classified under any other service for the period prior to 1.6.2007 - Ratio of the said judgment is squarely applicable in the present case. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (5) TMI 39
Validity of Garnishee Order - CIRP proceedings are ongoing - failure to deposit taxes by Banks for the period from 2011-12 2012-13 - direction to Banks to pay into Government's treasury, on account of tax / penalty due under the JVAT Act - resolution plan approved - According to the petitioner, since no claim was made by the State Government as regards the aforesaid tax liability in the corporate insolvency resolution process - bar on realisation of the amount under Section 31 of the IB Code - scope of 'Operational creditor' and 'Operational Debt' - HELD THAT:- In the present cases, the State Government shall fall within the definition of 'operational creditor', and the taxes payable by the petitioner shall fall within the definition of 'operational debt', as defined in the IB Code - As such, there can be no doubt that the case of the petitioner shall be governed by the provisions of the IB Code. There are force in the submissions of the learned Additional Advocate General that the tax amount, which had been sought to be realised from the petitioner Company, had already been realised by the petitioner Company from the customers which was to be deposited in the Government Exchequer, but that having not been done by the Company and the amount having been utilized for its business purposes, throughout after the years 2011-12 and onwards, shall certainly amount to criminal misappropriation of the Government money by the Company, and the State Government is entitled to realize the same with the penalty due thereon. It is also found that the re-assessment orders were passed on 17.08.2018 as contained in Annexure-3 to the writ applications, by which date the resolution plan was already approved by the NCLT on 17.04.2018, but the same was never brought to the knowledge of the Commercial Tax officials by the Company, even though the petitioner Company was given a hearing by the Assessing Authority, i.e., respondent No. 4 Assistant Commissioner of State Tax, Bokaro Circle, Bokaro, before passing the re-assessment orders - also, the notice under Section 13 of the IBC Code was never published in the State of Jharkhand, rather the notice was published only in the Business Standard of Kolkata Edition on 24.07.2017 as contained in Annexure-7 to the supplementary affidavit. There is no denial to the fact that such notice was never published in the State of Jharkhand. A conjoint reading of Section 13(1)(b) of the IB Code read with Regulation 6 aforesaid, clearly shows that the public announcement had to be made in the newspapers with wide circulation at the location of the registered office and principal office, of the petitioner Company. Admittedly, the registered office of the petitioner Company is at Ranchi, and its principal place of business is in the District of Bokaro, both of which are situated in the State of Jharkhand, but no public announcement of the corporate insolvency resolution process was made in the State of Jharkhand - since the resolution plan is approved by the NCLT, and not interfered with even by the Hon'ble Apex Court as pointed out above, we are not required to look into the legality or otherwise of the resolution process, but the fact remains that due to non publication of the public announcement of the corporate insolvency resolution process in the State of Jharkhand, the authorities of the Commercial Taxes Department had no occasion to have any knowledge about the corporate insolvency resolution process of the Company, and they were deprived of making their claim before the interim resolution professional - Since the State Government was not involved in the resolution process, the resolution plan cannot be said to be binding on the State Government under Section 31 of the IB Code. We are not inclined to entertain these writ applications, even though there is a resolution plan in favour of the petitioner Company, approved by the Adjudicating Authority, i.e., the NCLT, for the simple reason that it was never brought to the knowledge of the Commercial Tax authorities of the State of Jharkhand that the corporate insolvency resolution process had been initiated against the petitioner Company, and no public announcement of the corporate insolvency resolution process was made in the State of Jharkhand - Admittedly, the State Government was never involved in the corporate insolvency resolution process, and as such, the resolution plan cannot be said to be binding on it. Petition dismissed.
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Indian Laws
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2020 (5) TMI 33
Payment of Gratuity - percentage of Basic Salary adjusted towards Gratuity - It was submitted that the emolument sheets issued to the respondent from time to time indicated that a sum of 4.81% of his basic salary had been adjusted towards gratuity; in the year 2007 the respondent was promoted to the post of Chief Executive Officer and his emoluments had almost doubled, and that is is entitled to be paid for the additional amount - HELD THAT:- The intent of the Trust Deed and the Scheme is thus clear that the governing principles as regards the amount to be calculated and the rates to be applied have to be in accordance with the provisions of the Act, if an employee is covered by the provisions of the Act. If the amount is to be so calculated according to the provisions of the Act, in case of employees covered by the provisions of the Act, there is no other alternative which is offered by the Company or which is part of any award or agreement or contract entered into between the employer and employees. Thus, no reliance could be placed on Section 4(5) of the Act to submit that the employees are entitled to some greater advantage than what is available under the Act. As stated earlier, for Section 4(5) to apply there must be two alternatives, one in terms of the Act and one as per the award or agreement or contract with the employer - The Scheme does not therefore offer to the employees covered by the Act any other alternative apart from what is payable under the Act. The Trust Deed and the Scheme were executed and formulated in the year 1979 when the wage-bracket was a definite parameter for an employee to be covered under the Act. The intent of the Trust Deed and the Scheme has to be understood in that perspective. The idea was not to afford to the employees who are covered by the provisions of the Act, a package better than what was made available by the Act, but it was to extend similar benefit to those who would not be covered by the Act. In Beed District Central Cooperative Bank Ltd. [2006 (6) TMI 507 - SUPREME COURT] , the gratuity scheme provided by the employer had better rate for computing gratuity but the ceiling limit was lower; whereas the entitlement under the provisions of the Act was at a lesser rate but the ceiling prescribed by the Act was higher than what was provided by the employer. This Court laid down that an employee must take complete package as offered by the employer or that which is available under the Act and he could not have synthesis or combination of some of the terms under the scheme provided by the employer while retaining the other terms offered by the Act - The High Court in the present case, however, distinguished said decision on the ground that the Scheme of the appellant itself provided for the rates as per Section 4(2) of the Act but without upper limit under Section 4(3) of the Act . In our view, the High Court failed to consider the effect and impact of Rule 6(b) of the scheme. The Single Judge did refer to said Rule 6(b) but found that the Rule was so broadly drafted that it could not be construed to contemplate the ceiling limit under Section 4(3) of the Act. The true import of Rule 6(b) which gets further emphasized by stipulation in the Appendix to the Scheme was lost sight of by the authorities under the Act and by the High Court. If an employee is covered by the provisions of the Act, according to said Rule 6(b), the amount of gratuity has to be calculated in accordance with the provisions of the Act - in case of such an employee the gratuity has to be calculated in accordance with the provisions of the Act and while so calculating, not only the basic principle available in Section 4(2) as to how the gratuity is to be calculated must be applied but also the ceiling which is part of Section 4(3) must also apply. The rates and the modalities of calculations of gratuity as available under the Scheme of the Rules are to apply only to those employees who are not covered by the provisions of the Act. Thus, the Authorities under the Act and the High Court erred in accepting the claim preferred by the respondent. We hold that the appellant was right in going by the provisions of the Act in the present matter and by the ceiling prescribed under Section 4(3) of the Act. Any mistakes on its part in making some extra payments to some of the other employees would not create a right in favour of others in the face of the stipulations in the Trust Deed and the Scheme.
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2020 (5) TMI 32
Enforcement of an arbitral award titled as Put Award - enforcement of a foreign award - Put Option Deed - entitlement to damages for the non-performance of the Put Option Deed by Responsive and Wellknown - Responsive and Wellknown defended the arbitral claim as made by Banyan Tree to contend that neither Banyan Tree was entitled for specific performance nor damages should be awarded under the Put Option Deed. Put Option Deed Not Being Adequately Stamped - HELD THAT:- It is significant that Banyan Tree in the reply affidavit (to the respondents affidavit raising this objection on the document not been adequately stamped), has categorically contended in paragraph 3 (c) that the stamp duty of ₹ 300/- has been paid by the respondents on the put option deed, under which rupees hundred was paid in accordance with Article 5(h) (B) of the Maharashtra Stamp Act and as the document also contained an indemnity a further stamp duty of Rupees two Hundred was paid under Article 35 of the Maharashtra Stamp Act,(as payable in the year 2008). In the rejoinder affidavit of the respondents dated 12 July 2019, the respondents have thought it proper not to deny this assertion of the petitioner as raised in paragraph 3 (c) of the reply affidavit. Hence the petitioner s contention in regard to the put option deed being adequately stamped as per the provisions of Article 5 (h) (B) has also been admitted by the respondents. The arbitral tribunal admitted the document in evidence, and has adjudicated the rights and obligations arising under the said document interalia by granting claims as made by the petitioner. Accepting such plea in these circumstances would mean that in exercising jurisdiction under Section 48 of the A C Act the Court would be reopening the trial as need before the arbitral tribunal even on factual issues. This is certainly not the jurisdiction of the Court under Sections 47 to 49 of the A C Act. In these circumstances, surely these decisions are of no avail to the respondents - the objection of the respondents to the enforceability /execution of the award on the ground of the put option deed not being adequately stamped stands rejected. Put option deed being unenforceable and illegal under the provisions of the Securities Contracts (Regulation) Act 1956 (SCRA) and the notifications issued thereunder - HELD THAT:- The put option deed which is a fallout of the SPA is a contract between shareholders which recognises the right of Banyan Tree/petitioner to exercise the put option in regard to the put securities. By itself put option deed is not a speculative contract merely because it involves sale of the Put securities. Only on exercise of the put option by issuance of a put option notice, which was exercised by Banyan Tree in the year 2015, an obligation was created on the promoters/respondents to purchase the securities by payment of the put option price. Hence a contract for the sale or purchase of securities had come into existence only in the year 2015 when Banyan tree exercised its option - As the option in favour of the Banyan Tree could neither be dealt nor traded on the stock exchange, being a specific buyback arrangement between the shareholders, there was no question of any speculative transaction between the parties, attracting the provisions of SCRA or the notifications issued thereunder. It is thus not possible to accept the respondents contention that the put option deed fell foul of section 18A of the SCRA, interalia being not traded on a recognised stock exchange. There is nothing illegal when the arbitral tribunal holds that section 18 A of the SCRA does not absolutely prohibit put options in the Put Option Deed and that the contract between two shareholders, containing an option in the nature as contained in the put option deed is completely different from options contract or derivatives contemplated by section 18A of the SCRA. In any event it cannot be held that that tribunal s view on this question, which is arrived at, on interpretation of the terms and conditions of the put option deed, is an impossible view nay illegal. Put option deed is unenforceable and illegal under the provisions of FEMA - Held that:- Considering the legislative scheme under FEMA it cannot be conceived, that any violation of the provisions of FEMA can either render the put option deed to be illegal or/or the foreign award in question would be rendered unenforceable. In my opinion an unwarranted hair-spitting was resorted in dissecting the notifications when on the basic premise the respondents were not correct, namely to contend that the Put Option Deed would be invalid under the FEMA as the terms thereof offend the notifications. As clearly seen from the authoritative pronouncement of the Supreme Court in Vijay Karia s case (supra) a challenge to the enforceability of a foreign award on the ground that the contract violates the provisions of FEMA and regulations made thereunder and/or if the award is enforced it may violate the provisions of FEMA is no more res integra. The respondents contentions questioning the enforceability of the arbitral award on the ground of violation of FEMA and/or the regulations made thereunder are thus required to be rejected. Objection on the ground that the award is contrary to the fundamental public policy - HELD THAT:- The arbitral award satisfies all the legal requirements in law so as to be enforced as a decree of this Court. Banyan Tree is correct in its contention that the respondents having accepted investment from Banyan Tree and subsequently being hugely benefited from the same ought to have been fair and honest in their dealing with a foreign party who expected a legitimate exit as explicitly understood and provided for in the Put Option Deed. Banyan Tree is also correct in its contention that the legal pleas apart from being without substance were merely an eye wash so as to make an attempt to deprive Banyan Tree of the fruits of the award. Although the pleas as raised by the respondents can be said to be legal pleas, but the entire approach of the respondents in pursuing the present proceedings was nothing less than converting these proceedings as if it is an appeal knowing well the limited scope of interference under Section 48 of ACA. Taking an overall view of the matter, the respondents in these circumstances cannot deprive Banyan Tree of the fruits of the arbitral award. The Put Award dated January 15, 2019, (as subsequently corrected),in SIAC ARB 37 of 2016 is declared to be binding under section 46 and enforceable as a decree of this Court, under Part II of the Arbitration and Conciliation Act 1996 - Petition allowed.
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