TMI Tax Updates - e-Newsletter
May 5, 2021
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Reopening of assessment u/s 147 - Sham transaction of gift - No new material surfaced during the reassessment proceedings on which the AO could have formed a requisite belief with regard to escapement of assessment and the assessee had disclosed all the materials fully and truly during the previous assessment proceedings. Under the circumstances, the impugned Notice under Section 148 of the Act dated 26.02.2019 assuming jurisdiction under Section 147 of the Act after the expiry of four years from the end of the relevant assessment year is clearly without jurisdiction of law and cannot be sustained in law - HC
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Income Tax:
Reopening of assessment u/s 147 - reopening beyond the period of four years - Merely because while framing assessment for the subsequent year, the AO noticed certain irregularity in the claim by itself would not be sufficient to satisfy requirements of the proviso to Section 147 - It is possible that the specific angle of the depreciation earlier claimed to be set off against the income of the current year of the eligible business may not have been in the mind of the Assessing Officer. - Notice quashed - HC
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Income Tax:
Penalty u/ s 271(1)(c) - Disallowance on account of personnel expenses, operative expenses and finance expenses - it a “mere disallowance” of an expense does not warrant a penalty for filing inaccurate particulars of income u/s 271(1)(c). - AT
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Income Tax:
Proceedings u/s. 153C r.w.s. 153A - Recording of satisfaction - CIT (Appeals) not given finding that what basis he came to such conclusion that there was a recording of satisfaction by the Assessing Officer of searched person. We are of the opinion that recording of satisfaction is legal issue which shall be examined by the learned CIT (Appeals) after calling the relevant record from the AO of searched person and decide the issue afresh. - AT
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Income Tax:
Penalty u/s 271G - under TNMM adopted by the assessee, the profit of the international transaction has to be furnished, whereas the assessee has only furnished the entity level margins which consists of overall profits on AE and significant non non-AE transactions - reasonable cause for non-compliance - In the interest of justice, we vacate the order of learned CIT(A) and set aside the issue to the learned CIT(A). - AT
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Income Tax:
Addition u/s 56(2)(vii)(b) - In this case, the Assessing Officer has not found any specific fault in rejecting or not satisfying with the valuation made by the assessee. When the Assessing Officer has not found any defect or error in the valuation of shares by the assessee company, it may not be necessary to apply the method of valuation prescribed under Rule 11UA of the I.T. Rules - AT
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Income Tax:
Addition u/s 68 - unexplained cash deposited in bank accounts - Bank account / statement as books - an addition made in respect of a cash deposit in the bank account of an assessee, in the absence of the same found credited in the ‘books’ of the assessee maintained for the previous year, cannot be brought to tax by invoking the provisions of Section 68. - AT
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Customs:
Refund of SAD - Process amounting to manufacture or not - sterilization, re-packing, re-labelling etc. - From the reply given by the assessees to the show cause notice, dated 01.10.2015, it appears that the assessees did not raise the plea that the Notification No.102/2007 was in supersession of the earlier Notification nor there was any argument made by the assessees with regard to the effect of the Circular No.34/2010-Customs, dated 15.09.2010. Thus the matters requires to be re-examined - Matter remanded back - HC
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Customs:
First time violation of import condition - The petitioner knows that if tomorrow he imports another consignment without Phytosanitary Certificate, then his fate is doomed because such a consignment can never ever be cleared. That is all the more so, because of the order passed in these writ petitions - That apart, as rightly pointed out by the learned counsel for the petitioner, it is not as if a second or third violation cannot be condoned at all. - HC
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Central Excise:
Area based exemption - benefits under the Northeast Industrial Policy - As the Notification dated 27.03.2008 provides for a legal right to the assessee to claim for a special rate to be fixed in the event of there being any add-ons to the goods manufactured, without an appropriate decision being taken on such claim for special rate, it would be inappropriate for the department to proceed against the petitioners as per the rates provided in the Notification dated 27.03.2008. - HC
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VAT:
Stay of recovery - The first appellate authority proceeds to pass a rather mechanical order calling upon the petitioner to remit a further 25% of tax and furnish a bank guarantee for the balance. This is akin to orders that are routinely passed in stay applications and ought not to be passed, as a matter of rote. - HC
Notifications
News
Case Laws:
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Income Tax
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2021 (5) TMI 118
Estimation of income - Bogus purchases - statement of key person of assessee group i.e. Shri Saket Sudhir Mehta was recorded u/s 132(4) wherein he was directed to explain the modus operandi of purchases made by various group concerns since there were allegations that the assessee group indulged in accepting accommodation entries of bogus purchases - HELD THAT:- The basic onus to establish the genuineness of the purchase remained un-discharged. At the same time, the assessee was in possession of purchase invoices and the payment to the suppliers was through banking channels. The ledger confirmation as well as PAN of suppliers was placed on record. The import as well as exports was certified by the custom authorities - complete quantitative tally of stock was provided along with correlation of purchases with corresponding sales. There could be no sale without actual purchase of material keeping in mind the fact that the assessee was engaged in trading activities - this make it a fit case for estimation of profit element embedded in these purchase transactions to plug the possible leakage of revenue.
The approach of Ld. CIT(A) in estimating the profit could not be faulted with.
Estimation made by Ld. CIT(A) - As under similar facts and circumstances, the coordinate bench of this Tribunal, in the cited order of M/s Sur Gem (an associated concern of the assessee) has estimated profit rate of 6% of bogus purchases minus GP already declared by the assessee. The said estimation is in accordance with CBDT instruction no.2 of 2008 dated 22/08/2008 wherein the CBDT has directed all the AOs to accept profit of 6% in diamond business. The assessee, in the present case, has reflected GP rate in the range of 3% to 3.5% in AYs 2012-13 & 2013-14 as is evident from its financial statements. Therefore, following the cited decision of Tribunal and for ease of computations, we direct Ld. AO to make addition of 3% (net) of tainted purchases without any further benefit. The same works out to be ₹ 14,11,982/- (3% of ₹ 4,70,66,091/-) for AY 2012-13 and ₹ 4,81,103/- (3% of ₹ 1,60,36,782/-) for AY 2013-14. The addition to that extent stand confirmed in both the years.
Disallowance of labour charges - AO, going by the material as well as admission made during search operations, formed an opinion that the assessee group booked bogus labour expenditure - HELD THAT:- It is evident that the assessee imported rough diamonds and exported polished diamonds during the year. The conversion of rough diamonds into polished diamond would certainly require certain labour / job work as rightly noted by Ld. CIT(A). In whole of the year, the assessee has claimed labour charges of ₹ 42,445/- only which has been fully disallowed. We further find that the payment to the labour contractor is though account payee cheques after deduction of tax at source. Therefore, the additions on mere suspicion, in our opinion, could not be sustained in the eyes of law.
On different reasoning, would not require any interference on our part. The ground raised by the revenue stand dismissed. The revenue’s appeal for AY 2013-14 stand dismissed.
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2021 (5) TMI 117
Unexplained investment in villa plot - addition was made on the basis of charge sheet and supplementary charge sheet filed by the CBI based on the facts findings by CBI - CIT-A deleted the addition - as per revenue CIT(A) ought to have decided the case before disposal of appeal by the CBI Special Court as the issue has not attained finality and is still pending - HELD THAT:- An identical issue has been considered by co-ordinate Bench of the ITAT., Chennai in the case of R. Saibabu [2018 (3) TMI 1908 - ITAT CHENNAI]..where the Tribunal, after considering charge sheet filed by the CBI in the case of M/s.Emaar Hills Township Pvt.Ltd. held that unless the Assessing Officer brought on record some additional evidences to corroborate the findings recorded by CBI in the case of M/s.Emaar Hills Township Pvt.Ltd. to arrive at a conclusion that the assessee has paid on-money for purchase of property, no addition can be made only on the basis of charge sheet filed by the CBI, when proceedings are still pending before the CBI Special Court.
Thus we are of the considered view that findings recorded by the learned CIT(A) in light of the decision of ITAT., Chennai Bench is uncontroverted.The Revenue has failed to bring on record any evidence to prove that findings of fact recorded by learned CIT(A) is incorrect or opposed to the facts. - Decided against revenue.
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2021 (5) TMI 125
Reopening of assessment u/s 147 - appellant strenuously contended that the notice issued under Section 148 of the Act was never served on the appellant and failure to serve the same within a reasonable period atleast before the completion of assessment, would result in the assessment being void - HELD THAT:- Tribunal has remanded the matter back to the Assessing Officer to adjudicate the matter afresh, since, right through, the assessee was contending that there was lack of opportunity and there was violation of principles of natural justice.
Thus, we are of the considered view that there is no good ground made out by the assessee to interfere with the order passed by the Tribunal and there is no question of law, much less substantial question of law arising for consideration in this appeal. Accordingly, the appeal fails and it is dismissed.
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2021 (5) TMI 124
Denial of principles of natural justice - Writ Petition prays for a Mandamus directing the respondents to furnish the documents as well as statements of third parties as sought for by the petitioner in his representation and to complete the assessment under Section 153C in line with the principles of natural justice - HELD THAT:- Upon instructions, Mr.Srinivas would state that representation dated 27.02.2021 is indeed pending before the respondents and that the petitioner may approach the respondents at any time for collection of the copies of the documents sought, after paying necessary charges in that regard. This is recorded. He also assures the Court that the respondents have no intention completing the assessment in haste and the petitioner will be afforded full opportunity of hearing prior to orders being passed. This is also recorded.
With the above observations, the mandamus sought stands achieved, and the writ petition is closed.
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2021 (5) TMI 122
Reopening of assessment u/s 147 - Sham transaction of gift - whether the revenue is justified in reopening the assessment for the year under consideration ? - HELD THAT:- We are of the view that, when specific query with regard to transaction of gift was raised by the AO and the same was answered by the assessee, the AO thought fit not to make any addition, which clearly proves that, he consciously formed the opinion and framed the assessment. We have examined the objections raised by the audit party and subsequent enquiries made by the AO before reopening of the assessment. Except the audit objections, no any new material came in the hands of the assessing officer while initiating the proceedings of reopening of the assessment for the year under consideration. The audit objections do not constitute a tangible material to reopen the assessment. Reliance may be placed on the decision of this Court in the case of Adani Exports [1998 (12) TMI 51 - GUJARAT HIGH COURT] wherein, this Court has held that, reassessment was not valid as the AO held no belief on his own at any point of time that, income of assessee had escaped assessment on account of erroneous computation of benefit u/s 80HHC and was constrained to issue notice only on the basis of audit objections. The same view was taken in the case of Indian & Eastern Newspaper Society Vs. CIT [1979 (8) TMI 1 - SUPREME COURT], that the audit objections cannot be basis for reopening of the assessment.
No new material surfaced during the reassessment proceedings on which the AO could have formed a requisite belief with regard to escapement of assessment and the assessee had disclosed all the materials fully and truly during the previous assessment proceedings. Under the circumstances, the impugned Notice under Section 148 of the Act dated 26.02.2019 assuming jurisdiction under Section 147 of the Act after the expiry of four years from the end of the relevant assessment year is clearly without jurisdiction of law and cannot be sustained in law. - Decided in favour of assessee.
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2021 (5) TMI 121
Initiation of the proceedings u/s 153C - HELD THAT:- As rightly pointed out by the learned counsel for the petitioner, a bare comparison of the Assessment order passed under Section 143(3) of the Income Act and the impugned order passed under Section 153C of the Income Tax Act would show that there is no escapement of the income, even according to the respondent.
Counter affidavit itself, it has been fairly conceded in paragraph 20 that there is no change in the demand amount and that the overall demand raised in respect of the assessee and that no further additional demand has been raised by the impugned order. If there is no escapement of income and the petitioner's income has already been determined in the earlier round, there is absolutely no justification in passing one more order under Section 153C of the Income Tax Act. Such an exercise is nothing but reiteration of the earlier order passed under Section 143(3) of the Income Tax Act. WP allowed.
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2021 (5) TMI 120
Reopening of assessment u/s 147 - reopening beyond the period of four years - deduction under Section 80IA - HELD THAT:- The reasons itself record that “on verification of the case records, it is also observed that ”. The observations of the Assessing Officer found in the reasons recorded are based on the assessment records of the year under consideration. It is not the case of the Revenue that full details pertaining to the assessee's claim for deduction under Section 80IA were not furnished. Even the assessment order passed under Section 143(3) of the Act contains a reference to the claim of deduction under Section 80IA of the Act.
Merely because while framing assessment for the subsequent year, the AO noticed certain irregularity in the claim by itself would not be sufficient to satisfy requirements of the proviso to Section 147 - It is possible that the specific angle of the depreciation earlier claimed to be set off against the income of the current year of the eligible business may not have been in the mind of the Assessing Officer. Nevertheless, the entire claim of the assessee for deduction under Section 80IA of the Act along with the reasons for revising the return of income with respect to claim under Section 80IA of the Act was before the Assessing Officer and such claim was also processed.
Such being the facts, in our opinion, the notice for reopening issued beyond four year, cannot be sustained - Decided in favour of assessee.
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2021 (5) TMI 119
Assessment u/s 144 challenged - parallel remedies - standing counsel pointed out that in respect of the impugned order, the petitioner has already filed an appeal before the appellate authority and that the appeal petition is pending before the Commissioner of Income Tax (Appeals) - HELD THAT:- We sustain the said objection. It is well settled that a litigant cannot pursue parallel remedies. Of course, in the affidavit filed in support of the writ petition, it has been fairly stated that the petitioner had already filed an appeal. But then, the claim is made that the appellate authority cannot decide the issue raised in the writ petition.
We cannot appreciate such a conduct. Mere filing of the appeal before the appellate authority will not foreclose the right of the petitioner to move the writ court. But then, the appeal should have been withdrawn.
Without withdrawing the appeal, one cannot parallely maintain the two. In any event, the learned standing counsel would point out that the appellate authority is very much competent to go into all the contentions raised in the writ petition.
Therefore, leaving open the right of the petitioner to pursue the appeal remedy, this writ petitions are dismissed
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2021 (5) TMI 103
Validity of notice issued u/s 143(2) as barred by limitation - HELD THAT:- A perusal of the notice shows that the Assessing Officer required the assessee to furnish his return of income. As mentioned elsewhere, the assessee had already filed return of income on 20.03.2017 which was processed u/s 143(1) of the Act on 20.05.2017. These glaring facts are very much available on the face of the assessment order which have been totally ignored by the Assessing Officer while issuing notice u/s 142(1) of the Act dated 22.09.2017.
Subsequently, notice u/s 143(2) of the Act was issued on 16.10.2017. Once again, the Assessing Officer completely ignored the fact that notice u/s 143(2) of the Act was to be issued and served upon the assessee within six months from the end of the F.Y. in which the return of income was filed, i.e. 20.03.2017. This makes the notice issued u/s 143(2) of the Act barred by limitation.
Once a valid return of income was available on record, which was already processed issuing notice u/s 142(1) of the Act asking the assessee to furnish fresh notice in itself is invalid making subsequently proceedings void ab initio.
We are inclined to quash the assessment order dated 29.12.2017 framed u/s 143(3) of the Act for want of jurisdiction as notice issued u/s 143(2) of the Act is barred by limitation. Decided in favour of assessee.
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2021 (5) TMI 102
Penalty u/ s 271(1)(c) - additions were made on account of transfer pricing adjustment in respect of sale of fixed assets - CIT-A deleted the penalty levy - HELD THAT:- We find that the assessee has sold assets at the WDV of the assets as per company law whereas the TPO held that the assessee ought to have sold the assets at the value of the WDV of the block of assets as per the Income Tax Act. The WDV as per the Income Tax Act may not be / cannot be the fair market value of the assets. The assets were transferred at the book value as per the audited accounts of the assessee which is a recognized method of providing depreciation. Such sale of assets after valuation and the adjustment by the TPO by resorting to CUP method cannot be a ground for levy of penalty u/ s 271(1)(c). The case of concealment or furnishing of inaccurate of particulars of income cannot attract the provisions of penalty u/ s 271 (1)(c). Hence, we hold that penalty levied on this ground has been rightly deleted by the ld. CIT (A).
Disallowance on account of expenses - claim of the assessee with regard to personnel expenses, operative expenses and finance expenses cannot be accepted as the assessee has not carried out any business activities during the year under consideration - HELD THAT:- On going through the assessee's activities it can be held that the assessee is continuing to carry out business activities. The activities undertaken are in connection with terms of contract. It cannot be said that the business ceased to exist just because there was no activity of trading or manufacturing during the given period. The assessee has undertaken the activities of reworking and removing of defects in respect of goods sold earlier and also exported certain goods. The assessee has also filed the statutory returns. The disallowance has been made on the grounds that the business has not been carried out but not on the grounds that the expenses are not related to the business.
With regard to the penalty levied on such issue, we find that such disallowance do not fall under the category of furnishing of inaccurate particulars or concealment of such particulars of income.
The penalty cannot be sustained in view of the judgment of Delhi Cloth & General Mills Co. Ltd. [1984 (1) TMI 10 - DELHI HIGH COURT ] wherein it was held that the mere fact that a claim for expenditure stands disallowed does not by itself lead to the inference that the assessee had furnished inaccurate particulars in regard to that item. Also see Reliance Petorproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT]- Thus we hereby confirm the order of the ld. CIT (A) which held that it a “mere disallowance” of an expense does not warrant a penalty for filing inaccurate particulars of income u/s 271(1)(c). Decided in favour of assessee.
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2021 (5) TMI 101
Proceedings u/s. 153C r.w.s. 153A - Recording of satisfaction - HELD THAT:- In the present case, the assessee repeatedly asked for the order sheet entry relating to recording of satisfaction, however the Assessing Officer given a reply that it is a confidential document and it cannot be furnished to the assesses. Even before the CIT (Appeals), the assesses have raised the issue of providing order sheet entry and recording of satisfaction. CIT (Appeals) has not provided the same and dismissed the appeals in a summary manner observing that document found in the course of search constitute as an incriminating material that points to the undisclosed income of a person other than a searched person, then the proceedings u/s. 153C r.w.s. 153A of the Act has been rightly initiated.
CIT (Appeals) not given finding that what basis he came to such conclusion that there was a recording of satisfaction by the Assessing Officer of searched person. We are of the opinion that recording of satisfaction is legal issue which shall be examined by the learned CIT (Appeals) after calling the relevant record from the AO of searched person and decide the issue afresh. With this observation, we remit this issue to the file of CIT (Appeals) for fresh adjudication. Regarding the objection by the ld. DR that the assessee has co-operated with the AO and precluded from raising this issue before this Tribunal have no merit since the assessee from the beginning sought the copies of recording of satisfaction by the Assessing Officer of searched person. Further at this stage, we are refrained going into other grounds of appeals raised by the assesses. Appeals of the assesses are allowed for statistical purposes.
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2021 (5) TMI 100
Penalty u/s 271G - under TNMM adopted by the assessee, the profit of the international transaction has to be furnished, whereas the assessee has only furnished the entity level margins which consists of overall profits on AE and significant non non-AE transactions - reasonable cause for non-compliance of Section 92D read with Rule 10D(1) without specifying the cause of such non-compliance or demonstrating how the same was reasonable - CIT(A) deleted the penalty levied u/s. 271G by holding that the assessee had made substantial compliance - HELD THAT:- Upon careful consideration, we find that learned CIT(A) has failed to discharge the duty cast upon him. He is passing a quasi judicial order. It was incumbent upon him to pass a proper speaking order while deleting a huge penalty of ₹ 6.63 crores levied by the Assessing Officer which is a detailed order and also relies upon SHATRUNJAY DIAMONDS. [2003 (1) TMI 62 - BOMBAY HIGH COURT] . It is settled law that rules of natural justice are applicable to even administrative order and they are applicable to both the parties in a dispute. On this plank itself the order of learned CIT(A) is not sustainable. Moreover the issue of case laws will arise after learned CIT(A) duly deals with facts and issues, which he has failed to do.
In this connection we refer to the decision of Hon'ble Supreme Court in the case of Kapurchand Shrimal [1981 (8) TMI 2 - SUPREME COURT] wherein held that it is the duty of the appellate authority to correct the error in the order of the authorities below and remit the matter with or without direction unless probable by law. Hence in the interest of justice, we vacate the order of learned CIT(A) and set aside the issue to the learned CIT(A). CIT(A) shall pass a proper and speaking order after giving the assessee proper opportunity of being heard. Assessee is at liberty to canvas the issue at it deems fit - Appeal by the Revenue stand allowed for statistical purpose.
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2021 (5) TMI 99
Addition u/s 56(2)(vii)(b) - valuation of shares - surplus amount received by the assessee on account of premium - HELD THAT:- As decided in M/S LALITHAA JEWELLERY MART PVT. LTD. VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE – 1 (4) , CHENNAI. [2019 (8) TMI 400 - ITAT CHENNAI] AO has not taken into consideration the second limb in explanation to Section 56(2)(viib) of the Act. The second limb provides that when valuation was made by the company, if the Assessing Officer is not satisfied about the valuation, he has to call for material from the assessee how the valuation was made by the assessee-company. Satisfaction of the Assessing Officer as referred in explanation to Section 56(2)(viib) of the Act would be judicial satisfaction of the Assessing Officer. Judicial satisfaction means the Assessing Officer has to take into consideration the well established method of valuation of shares including the assets as explained in Explanation 2 to Section 56(2)(viib) of the Act. It cannot be arbitrary. The Assessing Officer has to take note of the judicial and established principles in arriving at his satisfaction. In this case, the Assessing Officer has not found any specific fault in rejecting or not satisfying with the valuation made by the assessee. When the Assessing Officer has not found any defect or error in the valuation of shares by the assessee company, it may not be necessary to apply the method of valuation prescribed under Rule 11UA of the I.T. Rules. Therefore, this Tribunal is unable to uphold the valuation made by the Assessing Officer under Rule 11UA of the Income-tax Rules, 1962.
Thus we delete the addition made by the AO u/s 56(2)(vii)(b) - Decided in favour of assessee.
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2021 (5) TMI 98
Addition u/s 68 - unexplained cash deposited in bank accounts - Treatment of Bank account / statement as books - HELD THAT:- We observe that credit in the ‘bank account’ of an assessee cannot be construed as a credit in the ‘books’ of the assessee, for the very reason that the bank account cannot be held to be the ‘books’ of the assessee. Though, it remains as a matter of fact that the ‘bank account’ of an assessee is the account of the assessee with the bank, or in other words the account of the assessee in the books of the bank, but the same in no way can be held to be the ‘books’ of the assessee. We have given a thoughtful consideration to the scope and gamut of the aforesaid statutory provision of Section 68, and are of the considered view that an addition made in respect of a cash deposit in the bank account of an assessee, in the absence of the same found credited in the ‘books’ of the assessee maintained for the previous year, cannot be brought to tax by invoking the provisions of Section 68.
The addition sustained by the ld. CIT(A) is in respect of the cash deposits in the bank accounts of the assessee, and not in any 'books' of the assessee for the year under consideration. In the backdrop of the aforesaid settled position of law, the addition made by the A.O in respect of the cash deposits in the bank accounts of the assessee by invoking Section 68 has to fail, for the very reason that as per the judgment in the case of CIT Vs. Bhaichand N. Gandhi [1982 (2) TMI 28 - BOMBAY HIGH COURT], a bank pass book or bank statement cannot be considered to be a 'book' maintained by the assessee for any previous year for the purpose of Section 68 - on this count itself the impugned addition made and sustained deserves to be deleted and we direct to delete the same. No such addition could have been validly made u/s 68 of the Act, therefore, we refrain ourselves to decide the other grounds wherein the assessee has assailed on merits the additions sustained by the ld. CIT(A) - Appeal of the assessee is allowed.
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2021 (5) TMI 97
Depreciation on bio metric devices - AO restricted the depreciation to 15% as against 60% claimed by the assessee - DR submitted that biometric devices can independently function and are not integral part of computers, therefore, argued that higher depreciation is not allowable - AR submitted that unless the bio metric devices are attached to the computer, the same cannot function independently and the output cannot be taken - HELD THAT:- Hon’ble Madras High Court in the case of CIT Vs. Cactus Imaging India (P) Ltd. [2018 (5) TMI 636 - MADRAS HIGH COURT] held that the computer printers being part of computer is eligible for higher rate of depreciation @60%. While dealing with the issue, the Hon’ble Madras High Court applying the rule of interpretation observed that entry in Appendix I Clause III(5) states computers including computer software and the notes under the Appendix defines the computer software in Clause7 to mean any computer program recorded on disc, tape, perforated media or other information storage device.
The computer was not defined in the Act. Therefore, Hon’ble High Court viewed that if a particular article falls within the description by the force of words used, it is impermissible to ignore the word description. Thus, the Hon’ble High Court held that the printer is integral part of the computer and accordingly held that it is eligible for depreciation @60%. Following the decision of Hon’ble Madras High Court, in the instant case, thought the biometric kit is capable of capturing the data, it needs the computer for taking output.
Hon’ble Mumbai Special Bench in the case of Data Craft India Ltd. [2010 (7) TMI 642 - ITAT, MUMBAI] considered the issues of computer and the computer systems and held that router is a networking device, whose software and hardware are customized to the task of routing and forwarding information and held that the switches can be classified as computer hardware when they are used along with the computer and when their functions are integrated with the computer. In simple words, when device used as the part of computer in its functions, then it would be termed as computer. If we apply the reasoning given by the Hon’ble Madras High Court and the decision of Hon’ble Special Bench of Mumbai Tribunal, biometric device is used along with the computer and fits also into the definition of computer.
if the biometric system is detached from the computer, the same does not serve the purpose for which it is intended. Even in the biometric system also, wear and tear is very high like computer. As per the interpretation of Hon’ble Madras High court in the case supra the functioning of biometric device fits into the computer and eligible for higher rate of depreciation.
Therefore, we hold that bio metric system is a computer and the depreciation required to be allowed at higher rate. Accordingly, we set aside the orders of the Ld.CIT(A) and allow the appeal of the assessee.
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2021 (5) TMI 96
Reopening of assessment u/s 147 - addition u/s 68 - HELD THAT:- It is well settled law that validity of the reassessment proceedings is to be judged with reference to the reasons recorded for reopening of the assessment which is reproduced above. Assessee in the case of M/s Neelkanth Plywood Pvt. Ltd. [2019 (9) TMI 256 - ITAT DELHI] has produced on record the identical worded reasons recorded by the same AO Sh. Virender Singh, ITO, Ward-18(1), New Delhi for reopening of the assessment, copy of the same is produced on record. In the case of M/s Neelkanth Plywood Pvt. Ltd. (supra) the Tribunal considering the issue in detail vide order dated 21.08.2019 reproduced above has quashed the reopening of the assessment. Since the facts of the case of the assessee are identical with the facts of the case of M/s Neelkanth Plywood Pvt. Ltd. (supra).
Thus following the same we set aside and quash the reopening of the assessment u/s 147 - Decided in favour of assessee.
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2021 (5) TMI 95
Assessment u/s 153A - Addition u/s 68 of the Act on account of unexplained share capital and premium - HELD THAT:- As none of the years under consideration are abated assessment year and all are unabated assessment years, therefore, the ratio laid down by the Hon’ble High Court of Delhi in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia [2017 (5) TMI 1224 - DELHI HIGH COURT] squarely apply.
Accordingly, we allow the application filed under Rule 27 and hold that all the assessment orders are bad in law. Appeals of the Revenue are dismissed.
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Customs
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2021 (5) TMI 129
Refund of SAD - Process amounting to manufacture or not - sterilization, re-packing, re-labelling etc. - refund of SAD under Notification No.102/2007-Cus dated 14.09.2007 when the importer has not fulfilled the conditions 2(d) and 2(3)(ii) stipulated in the said Notification - CBEC Circular No.34/2010- Customs, dated 15.09.2010 - HELD THAT:- The effect of Circular No.34/2010 has not been considered by the Tribunal. The learned Senior Standing Counsel for the Revenue lays emphasis on the Circular, which clarifies the position that there is no intention to omit / delete the words “as such” from the Notification, which continues to remain as condition though implied. The Circular is not under challenge in any of the proceedings, nor its applicability has been questioned by the assessee.
The Adjudicating Authority, namely, Commissioner of Customs has taken note of Circular No.34/2010. However, the Tribunal has not considered the correctness of the order passed by the Adjudicating Authority qua the applicability of the Circular, which explains the intention of the Notification. The Tribunal found fault with the Adjudicating Authority in not granting relief in respect of the imports after 11.07.2014 and while granting the relief to the assessees proceeded on the basis that the earlier Notification No.56/1998 required the imported goods to be sold “as such” and it had a more stringent condition and there is no such requirement in the Notification No.102/2007 - this finding prima facie appears to be not sustainable as the issue whether the Notification No. 102/2007 was in supersession of Notification No.56/1998 was required to be considered and decided.
From the reply given by the assessees to the show cause notice, dated 01.10.2015, it appears that the assessees did not raise the plea that the Notification No.102/2007 was in supersession of the earlier Notification nor there was any argument made by the assessees with regard to the effect of the Circular No.34/2010-Customs, dated 15.09.2010. Thus the matters requires to be re-examined, for which purpose, we are inclined to remand the matter back to the Commissioner of Customs to reconsider the entire issue afresh.
Appeal allowed by way of remand.
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2021 (5) TMI 128
Bail application - Smuggling - Gold - value of gold is more than one Crore rupees - non-bailable offence or not - HELD THAT:- Taking into consideration the fact that, Mr. Penkar and Mr. Zamane have been enlarged on bail by the Learned Magistrate, and upon taking into consideration the value of the gold which was seized on 7th December 2019 the applicant, in the facts of the case, also deserves to be enlarged on bail upon imposing certain conditions.
Application allowed.
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2021 (5) TMI 123
First time violation of import condition - relaxation from the requirement to produce Phytosanitary Certificate - Auction of imported goods which were not cleared despite two notices served - HELD THAT:- It is true that the importer cannot demand relaxation of the requirement of production Phytosanitary Certificate as a matter of right. It is equally true that in matters such as this, the Court should be extremely cautious as there are environmental and ecological implications. It is equally true that the petitioner was found to have committed violation of the requirements of Plant Quarantine Regulation of Import in India Order, 2003 on one occasion earlier. It is true that the goods is question have been imported to India without having been fumigated by Methyl bromide at the country of export. The petitioner had imported as many as four consignments at one go.
The very same exercise can be undertaken in respect of the remaining consignments also. This Court can never mandate the authority to be unmindful of the consequences. On the other hand, this Court is only calling upon the authorities to do the very same exercise that was undertaken in respect of the consignment that is subject matter of this appeal. The remaining three consignments can also be similarly fumigated and a similar inspection also undertaken. If thereafter, the authorities are satisfied that the clearance of the said consignments will not be of any threat to Indian ecology and environment, the importer can be allowed to take the goods after paying the applicable duties.
The petitioner knows that if tomorrow he imports another consignment without Phytosanitary Certificate, then his fate is doomed because such a consignment can never ever be cleared. That is all the more so, because of the order passed in these writ petitions - That apart, as rightly pointed out by the learned counsel for the petitioner, it is not as if a second or third violation cannot be condoned at all.
Petition disposed off.
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Corporate Laws
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2021 (5) TMI 108
Approval of scheme of Amalgamation - section 230-232 of Companies Act - HELD THAT:- This Tribunal is of the considered view that the scheme as contemplated amongst the petitioner companies seems to be prima facie in compliance with the provisions of the Companies Act, 2013. Further there seems to be no objection on the part of the shareholders that the Scheme is in any way detrimental to the interest of the shareholders of the Company. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Amalgamation appended as Annexure "4" as well as the prayer made therein.
The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2021 (5) TMI 116
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Financial Creditors - Finance Lease - existence of debt and dispute or not - HELD THAT:- On careful examination of the relevant clauses of the Master Rental Agreement (MRA), the transaction takes the form of financial debt in respect of which there is an amount of the liability in respect of the lease which is deemed as a 'financial lease' under the Accounting Standards (AS) - ICAI. Further, as per Section 5(8)(e) a 'financial debt' includes receivables sold or discounted other than any receivables sold on non-recourse basis - the amount due to the Applicant Bank constitutes a 'financial debt' which was disbursed to the successor for the time value of money.
The contention of the Respondent rejecting the claim of the Applicant Bank do not hold good in view of the reference to the nature of rental agreement which is a financial lease agreement in substance then in form, which is capable of being assigned as per the Clause 26 of the agreement and consequent upon purchase of the rent receivable contained therein the Applicant Bank has acquired the right of the financial creditor as succession in interest - The rejection of the claim by the Respondent in respect of Term Loan II is hereby set aside and since the claim of the Applicant Bank in relation to Term Loan II qualifies to be a 'financial debt', it is directed that the Respondent to admit the claim of the Applicant Bank in relation to Term Loan II and treat the Applicant Bank as a 'Financial Creditor' in terms of the provisions of IBC, 2016.
Application allowed.
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2021 (5) TMI 115
Maintainability of application - initiation of CIRP - Corporate Debtor claims relief from the rigors of the Code triggered on account of a stale and time barred debt - HELD THAT:- This application is filed only for review of the order passed by this Adjudicating Authority on 19.09.2019; review of the order passed by this Adjudicating Authority which is beyond the scope of the IBC. Furthermore, if this Applicant was aggrieved by the order passed by this Adjudicating Authority, the Applicant/erstwhile Board of Directors should have gone for an appeal against the same before the Hon'ble NCLAT.
The Applicant/erstwhile Board of Director has filed an appeal against this order before the Hon'ble NCLAT and sought 10 days' time to settle the entire claim due and payable to the Financial Creditor. In spite of the time being sanctioned by the Hon'ble NCLAT, the Applicant/erstwhile Board of Directors has not settled the claim. Thereafter, the Applicant herein had also filed Civil Appeal No. 2621 of 2020 before the Hon'ble Supreme Court of India. However, the same was withdrawn without any liberty - there is no merit in the aforementioned relief sought for.
Application dismissed.
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2021 (5) TMI 114
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - time limitation - HELD THAT:- The Operational Creditor has proved existence of debt and default. Moreover, this application was filed on 04.11.2019. The pecuniary jurisdiction of this Adjudicating Authority, at the time of filing this application was debt due one lakh and above. Hence, this Adjudicating Authority has jurisdiction to adjudicate this petition. The registered office of the Corporate Debtor is also within the State of Tamilnadu, hence this Adjudication has jurisdiction. The alleged debt due is between the period from 01.04.2018 to 17.07.2019. Hence, it is well within the period of limitation.
This Adjudicating Authority is inclined to admit the Application as has been filed by the Operational Creditor and consequently Corporate Insolvency Resolution Process is initiated - Application admitted - moratorium declared.
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2021 (5) TMI 113
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not before issuance of demand notice - HELD THAT:- A conjoint reading of all the e-mails exchanged between the parties as well as the respective invoices supra, it comes to the fore that there exist a dispute between the parties before the issuance of the Demand Notice and the said dispute is still in existence.
The Hon'ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT] held that the 'existence of dispute' and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the Demand Notice or Invoice as the case may be.
Thus, it is evident that there is a genuine dispute between the parties and the defence raised by the Corporate Debtor on the grounds of existence of a dispute is real and not spurious, hypothetical, illusory or misconceived - Application dismissed.
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2021 (5) TMI 112
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Applicants are ‘decree holders’ and not as allottees in a real estate project - project is a joint venture by the Corporate Debtor and M/s. Cherupushpam Films (P) Ltd - Time limitation - HELD THAT:- In the decision of Hon’ble NCLAT in the matter of Innoventive Industries V. ICICI Bank &another [2017 (9) TMI 58 - SUPREME COURT], it is held that for initiation of CIRP under Sub Section 4 of Section 7 of the Code,2016, the adjudicating authority’ on receipt of application under Sub Section (2) is required to ascertain existence of default from the records of Information Utility or on the basis of other evidence furnished by Financial Creditor under Sub Section 3.
Whether the Application was filed under Section 7 of I&B Code,2016 by the Applicants in the capacity of Allottees of Apartments or on the basis of Arbitral Award as Decree Holders? - HELD THAT:- If the builder fails to deliver the possession of the real estate project, they agreed to pay penalty of ₹ 25/- per square feet to the Applicants. Here, the debt was disbursed against the consideration for the time value of money which includes an amount raised from an allottees under a real estate project, and this transaction has the commercial effect of a borrowing.
Whether the Application is barred by limitation? - HELD THAT:- The Applicants have entered into an Agreement of Sale and subsequently sale deed was also executed, which has occurred over three years prior to the date of filing of this Application. In the present case, the Corporate Debtor has not delivered the possession of the real estate property. The default has committed only when possession was scheduled to be delivered. Since the default had occurred over three years before the date of filing of Section 7 Application, the Application is a time barred Application.
Whether the Application is maintainable against the Corporate Debtor/builder alone since the project is a joint venture by the Corporate Debtor and M/s. Cherupushpam Films (P) Ltd? - HELD THAT:- Both the parties would be jointly responsible for and participate in the construction or development. The terms and conditions with respect to institutional areas and common areas also reflect that the cost would be shared between both the parties at the rate of 60 and 40 substantiates that it is a ‘Joint Venture’ Agreement. Thus the Agreement entered between the Corporate Debtor and M/s. Cherupushpam Films Pvt Ltd dated 08.12.2003 reflects a commercial transaction in the nature of a ‘Joint Venture’ wherein there is division of profits - this Tribunal observe that in such kind of a Joint Venture Project, both the parties, if they are a Corporate should be jointly treated to be one for the purpose of initiation of CIRP.
The Applicants have failed to succeed in this Application - Application dismissed.
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2021 (5) TMI 111
Liquidator of Corporate Debtor - Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - seeking an order that the existing Resolution Professional to act as the Liquidator of the Corporate Debtor for the purpose of liquidation of the Corporate Debtor - HELD THAT:- Apparently on reading all the pleadings and submissions made by the respective Learned Counsels, it is very clear that, CoC members and the Resolution Professional were at loggerheads. There was no co-operation or co-ordination between them. Both parties are throwing so much of allegations against each other. However, this Adjudicating Authority does not want to go into the merits of the conduct and the lapses, if any, on the part of the Resolution Professional.
Since the Financial Creditors together holding 96.55% voting rights of the Corporate Debtor, has raised serious allegations against the conduct in which the CIRP against RP, it cannot be buried under the carpet. Hence, the Registry shall forward this order along with the copy of the application filed in IA/650/IB/2020 to IBBI, to verify if there are any lapses on the part of the RP in process of the CIRP - Since there are allegations by the majority of the CoC members against this particular Applicant/Resolution Professional, this RP is not appointed as a Liquidator of the Corporate Debtor.
More than 330 days of the CIRP period was ended on 17.01.2021 and no Resolution Plan or any proposal is pending, and also the company is not a going concern, considering all these facts, it is ordered that the Corporate Debtor herein shall be liquidated - Application allowed.
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2021 (5) TMI 110
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Financial Creditors - Existence of debt and dispute or not - HELD THAT:- The Corporate Debtor in its reply raised defects regarding the Authorization letter, jurisdiction of the Hon'ble Tribunal and Computation of the Default amount which the financial Creditor vide its reply affidavit dated 16.02.2021 has replied to all the objections raised. Mere plain reading of the provision under section 7 of IBC shows that in order to initiate CIRP Under Section 7 the applicant is required to establish that there is a financial debt and that a default has been committed in respect of that financial debt. That while dealing with the said matter the Financial creditor has clearly established that a financial debt in form of Channel finance Loan has been advanced to the Corporate Debtor which can be clearly substantiated by the Confirmation of balance letter dated 18.09.2017 wherein, the Corporate Debtor confirmed the remaining balance of the said loan to the Financial Creditor.
The Tribunal on a keen examination of the application and perusal of the documents submitted by both the parties can clearly substantiate that the attached receipts issued by the Financial Creditor indicating repayment of ₹ 3 Crore are towards the Hindalco account as dealer code HIN0001 has been clearly stated on the attached receipts. Whereas, no receipt regarding payment towards Vedanta account has been annexed by the Corporate Debtor.
The documents submitted by the Financial Creditor and the Corporate Debtor clearly substantiate the Financial Creditor's claim that the Corporate Debtor has defaulted on repayment of loan amount - this tribunal after giving careful consideration to the entire matter, hearing the arguments of the parties and upon appreciation of the documents placed on record to substantiate the claim, this Tribunal admits this petition and initiates CIRP on the Corporate Debtor with immediate effect - Application admitted - moratorium declared.
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2021 (5) TMI 109
Liquidation of Corporate Debtor - Section 33(2) read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Applicant submitted that the Applicant/RP is not willing to continue as Liquidator. In this circumstance, this Adjudicating Authority as per Section 34(5) of the IBC, 2016 hereby directs the Insolvency and Bankruptcy Board of India (IBBI) to propose the name of another Insolvency Professional to be appointed as a Liquidator and IBBI as per Section 34(6) of the IBC, 2016, shall propose the name of another Insolvency Professional along with written consent from the Insolvency Professional in the specified form within 10 days from the date of receipt of this order.
Post for further orders on 26.04.2021.
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2021 (5) TMI 107
Liquidation of the Corporate Debtor - appeal pending before the Hon'ble NCLAT - liquidation sought on the ground that the only asset of the Corporate Debtor is a fixed deposit of ₹ 3.5 Crore - HELD THAT:- In the present case, the CoC has resolved by 100% voting share to liquidate the Corporate Debtor as the Corporate Debtor has no immovable assets. Be that as it may, it will not be justifiable to pass an order of liquidation at this stage till the Hon'ble NCLAT takes a final view on the appeal filed. This view is being taken in view of the fact that the only asset of the Corporate Debtor is a fixed deposit which can be withdrawn and distributed within a short period of time, and it would be a tad difficult to reverse the clock once the liquidation order is passed. If further action is taken to distribute the fixed deposit by liquidating the same, then it will also have the effect of rendering the appeal otiose.
The liquidation of the Corporate Debtor cannot be allowed at this stage - application dismissed.
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2021 (5) TMI 106
Trespassing the property of Corporate Debtor as held by Liquidator - Case of appellant is that Police Authorities failed to provide sufficient security to the Liquidator - HELD THAT:- It is surprising to see that the Police Authorities who are duty bound to protect the life and property of the citizens and prevent the crimes, have failed to provide sufficient security to the Liquidator in protecting the assets of the Corporate Debtor, by taking appropriate action against the miscreants and trespassers against whom complaints after complaints have been lodged by the Liquidator, which has encouraged them to repeat their illegal actions. The local Police should have acted quickly in the matter even on the first complaint which would have been caused a deterrent effect on the miscreants and their associates.
The need to file the present application seeking directions from this Adjudicating Authority has arisen because the Police Authorities have not been able to help the applicant in spite of requests having been made to provide security to the Private Security Guards deployed by the Liquidator at the site of the factory to protect the properties of the Corporate Debtor (in Liquidation). It may be informed that the Liquidator has been performing his statutory obligations and the Police Authorities are supposed to provide him necessary help and protection.
The respondents i.e., the Superintendent of Police, Purba Medinipur and Officer-in-Charge of Bhabanipur Police Station are directed to take immediate action against the miscreants who had trespassed the premises and caused fire or theft in the premises and a report in this regard shall be placed before this Adjudicating Authority through an Officer not below the rank of an Inspector of Police on the next date of hearing, i.e. 11.06.2021.
Application listed for hearing.
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2021 (5) TMI 105
Seeking approval of this Tribunal to liquidate the Company - HELD THAT:- The requirement of the provisions of Section 59, read with the relevant rules, have been satisfied by the Liquidator. Since there is no liability on the Company and no fraud has been found against it either by the Auditors in their report or by the Liquidator, particularly, in the absence of any response from the Registrar of Companies, West Bengal and the Official Liquidator, the dissolution of the Company Lipika Collection Private Limited is ordered - application allowed.
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2021 (5) TMI 104
Liquidation of Corporate Debtor - no Resolution Plan received and the CoC by 100% voting share approved liquidation of the Corporate Debtor - HELD THAT:- This is a case where no Resolution Plan was received and the period of CIRP has expired on 14.06.2020. Therefore, there is no alternative but to order the liquidation of the Corporate Debtor.
The liquidation of Corporate Debtor is permitted - application allowed.
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Central Excise
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2021 (5) TMI 127
Area based exemption - benefits under the Northeast Industrial Policy - N/N. 20/2008-Central Excise dated 27.03.2008 - HELD THAT:- This petition is instituted on the grievance that the Notification dated 27.03.2008 having been restored as per the judgment of the Supreme Court, an application dated 01.04.2021 under Clause 3(1) of the Notification No.20/2008-Central Excise dated 27.03.2008 was submitted by the petitioner claiming for a special rate, but the same has not been given its consideration and without giving a due consideration to the claim for special rate made by the petitioners, the respondents now intend to make recovery on the premises that the refund of excise duty would be as per the rates provided in the Notification dated 27.03.2008. As the Notification dated 27.03.2008 provides for a legal right to the assessee to claim for a special rate to be fixed in the event of there being any add-ons to the goods manufactured, without an appropriate decision being taken on such claim for special rate, it would be inappropriate for the department to proceed against the petitioners as per the rates provided in the Notification dated 27.03.2008.
This petition stands disposed of by directing the Principal Commissioner of GST Guwahati to consider the aforesaid application of the petitioner dated 01.04.2021 claiming for a special rate to be fixed on the basis of the add-ons made to the goods manufactured.
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CST, VAT & Sales Tax
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2021 (5) TMI 126
Validity of assessment order - application for interim protection - HELD THAT:- The basis for decision in an application for interim protection would be the trifecta of whether there is a prima facie case, financial stringency and balance of convenience for grant of orders. The applications for stay filed by the petitioner are detailed and seeks to make out a case on the aspect of prima facie case as well as on balance of convenience citing the automatic charge created by virtue of Section 42 of the Act.
As far as financial stringency is concerned, there is no quarrel on the position that the petitioner has sufficient resources to meet the liability, if and when such liability becomes confirmed and demand is raised.
The first appellate authority proceeds to pass a rather mechanical order calling upon the petitioner to remit a further 25% of tax and furnish a bank guarantee for the balance. This is akin to orders that are routinely passed in stay applications and ought not to be passed, as a matter of rote. The impugned orders are set aside - Petition disposed off.
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Indian Laws
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2021 (5) TMI 130
Refund of booking amount to allottees - Allottees have claimed relief on the basis of clause 18 of "model agreement" for sale as given under rules of RERA - HELD THAT:- In the instant case the transaction of sale and purchase of the flat is cancelled at initial stage. Allot-tees merely booked the flat and paid some amount towards booking and executed letter for request of reservation of the flat in printed form. Thereafter there is no progress in the transaction and neither allotment letter nor confirmation letter is issued by Promoter. Agreement for sale is not executed between the parties. Parties never reached to the stage of executing agreement for sale. There was no attempt to execute agreement on the part of either party. In such circumstances, Allottees cannot claim refund on the basis of binding effect at clause (18) of "model agreement" for sale under rules of RERA - Transaction in the instant case is not governed by Section 18 of RERA. In this peculiar matter, though the claim of refund is not governed by any specific provision of RERA, it cannot be ignored that object of RERA is to protect interest of consumer. So, whatever amount is paid by home-buyer to the Promoter should be refunded to the Allottee on his withdrawal from the project.
Regulatory Authority and Appellate Tribunal are having inherent powers under the Regulations framed under RERA to pass such orders which are necessary to meet the ends of justice. In exercise thereof in the instant case, it is in the interest of justice to direct the Promoter to refund the total amount paid by Allottee accordingly. In our view, the impugned order is not correct, proper and legal and therefore it deserves to be set-aside - Appeal allowed.
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