TMI Tax Updates - e-Newsletter
June 11, 2021

Case Laws in this Newsletter:

Income Tax Corporate Laws Insolvency & Bankruptcy Law of Competition CST, VAT & Sales Tax Indian Laws

Articles

1. Synopsis of three batches of Writ petitions dealt in by Hon'ble Delhi High Court in Super India Paper Products Benlon India Limited Vs UOI.

   By: Dhruv Chhabra

2. Understanding Forex Transactions with Associated Risks

   By: Manish Gupta

3. A Critique on the “Ethanol Blending”

   By: Navjot Singh

News

1. India registered excellent growth in Agriculture Exports during 2020-21

Notifications

Companies Law

1. G.S.R. 396 (E) - dated 9-6-2021 - Co. Law

Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2021

GST - States

2. CCT/26-2/2020-21/73/609 - dated 7-6-2021 - Goa SGST

Amendment in Notification No. CCT/26-2/2020- 21/70/303 dated the 12th May, 2021

3. CCT/26-2/2020-21/72/608 - dated 7-6-2021 - Goa SGST

Amendment in Notification No. CCT/26-2/2018-19/64/1825 dated the 25th November, 2020

4. (4-C/2021) FD 02 CSL 2021 - dated 7-6-2021 - Karnataka SGST

Karnataka Goods and Services Tax (Fourth Amendment) Rules, 2021.

5. (4-B/2021) FD 02 CSL 2021 - dated 7-6-2021 - Karnataka SGST

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

6. (15/2021) FD 16CSL 2021 - dated 4-6-2021 - Karnataka SGST

Amendment in Notification No. (08/2019) No. FD 47 CSL 2017, dated the 23rd April, 2019

7. (14/2021) FD 16 CSL 2021 - dated 4-6-2021 - Karnataka SGST

Amendment in Notification No. (07/2021) No. FD 16 CSL 2021, dated the 6th May, 2021

8. (13/2021) FD 16 CSL 2021 - dated 4-6-2021 - Karnataka SGST

Amendment in Notification (07/2020) No. FD 03 CSL 2020 (e), dated the 27th March, 2020

9. (12/2021) FD 16 CSL 2021 - dated 4-6-2021 - Karnataka SGST

Seeks to rationalize late fee for delay in filing of return in FORM GSTR-7

10. F.1-11 (91)-Tax/GST/2021 - dated 1-6-2021 - Tripura SGST

Seeks to extend the due date for filing FORM GSTR-4 for financial year 2020-21 to 31.05.2021

Highlights / Catch Notes

Income Tax

• Taxpayers entitled to personal hearing in faceless assessments u/s 143(1) for transparency and accountability.

  Case-Laws - HC : Faceless assessment - return was processed under Section 143(1) - As incumbent upon the respondent/revenue to accord a personal hearing to the petitioner. - The entire scheme, encapsulated under Section 144B of the Act, was laid down to bring transparency as well as accountability in the system.According to us, irrespective of whether such a statutory scheme was framed or not, the system has to be both, transparent, and the persons administering it, have to remain accountable. - HC
  Visit to Get Source

  ---

• Faceless Tax Assessment Set Aside for Violating Section 144B; Highlights Importance of Procedural Compliance in Tax Processes.

  Case-Laws - HC : Validity of assessment order - faceless assessment - Violation of provisions of Section 144B - That being the position, there is no option, but to set aside the impugned assessment order dated 15.04.2021, issued under Section 143(3), read with Sections 143(3A) and 143(3B) of the Act, along with accompanying notice of demand, issued under Section 156 of the Act and notice for initiation of penalty proceedings, issued under Section 270A of the Act. - HC
  Visit to Get Source

  ---

• Tribunal Overturns Taxation of Offshore Income for 2016-17, Allows Business Loss Offset Against Foreign Supplies.

  Case-Laws - AT : Income taxable in India - Offshore/foreign supplies - from assessment order for A.Y. 2016-17, it is evident that, the Assessing Officer had framed an assessment on 24.12.2018, even before the Tribunal has pronounced its judgment on 01.07.2019, for the aforesaid assessment year, where he did not himself bring to tax any such sum. Therefore, the Assessing Officer as well as the DRP was not correct in making addition in respect of income from offshore/foreign supplies and thereby no allowing setting off of business loss against such income. - AT
  Visit to Get Source

  ---

• Court Finds No Adjustment Needed on Loan Interest Rate in Transfer Pricing Case Using CUP Method.

  Case-Laws - AT : TP Adjustment - Benchmarking of interest receivable on loan - when the assessee has charged higher interest on loan to subsidiary compared to the prevailing interest rate in the country in which the money is lent, CUP method undisputedly agreed by the parties as the most appropriate method, there is no reason to make any adjustment in the hands of the assessee on this count. Assessee has given comparable instances of the prevailing interest rate for short-term and long-term in Germany, which could not be disputed as a better comparable price. - AT
  Visit to Get Source

  ---

• Property Sale Under Scrutiny: Section 56(vii) Examines Alleged Under-Valuation, No Extra Tax Liability for Son Confirmed.

  Case-Laws - AT : Addition u/s 56(vii) - Addition on account of alleged under-valuation - Since, in the instant case, the assessee has sold her 12.5% share in the property to her son at the prevailing circle rate and there is no evidence on record that the assessee has received something more than the amount mentioned in the sale deed and there is no addition in the hands of the son of the assessee on account of such extra payment made for purchase of the property - AT
  Visit to Get Source

  ---

• Tribunal Deletes Additions to Share Capital as Unexplained Cash Credits; Assessee Proved Transaction Authenticity u/s 68.

  Case-Laws - AT : Addition in respect of the Share Capital and Share Premium as unexplained cash credit u/s. 68 - the assessee could able to substantiate its case and satisfy three ingredients being identity, creditworthiness and genuineness of the transactions. The Hon’ble Tribunal has dealt elaborately on the net worth of these companies and percentage of the investments are comparatively lower than total net worth of the investor companies. - following the judicial precedence, additions deleted - AT
  Visit to Get Source

  ---

• Court Overrules CPC, Orders Deletion of Disallowed Employee Fund Contributions for Provident and ESI Delays.

  Case-Laws - AT : Disallowance of delayed deposit of contribution received by the employees’ towards provident funds and ESI fund - CPC was not justified in disallowing the payment. We therefore direct the deletion of addition. - AT
  Visit to Get Source

  ---

• Assessee's Exemption Denied: Investment in Bonds Beyond 6-Month Limit u/s 54EC Income Tax Act.

  Case-Laws - AT : Exemption u/s 54EC - Assessee has not been able to raise any material contention to dispute this position. He has only submitted that the assessee wanted to invest the long- term capital gain in purchase of another residential property and unable to find the suitable property, he finally invested the amount in long- term capital gain bonds on 21. 01.2020. In my opinion, this aspect is irrelevant to decide the eligibility of assessee for exemption under section 54EC, which specifically provides that the investment in eligible bonds is required to be made by the assessee within a period of six months from the date of transfer of the long-term capital asset in order to claim the exemption on account of long- term capital gain - AT
  Visit to Get Source

  ---

• Interest Disallowance u/s 36(1)(iii) Overturned Due to Lack of Evidence and Unsupported Claims by Authorities.

  Case-Laws - AT : Disallowance of interest u/s. 36(1)(iii) - The authorities below have neither given any cogent reasons for rejecting the contention of the assessee based on the audited books of account nor brought on record any evidence to rebut the contention of the assessee. There is no evidence on record to arrive at the conclusion that the advances in question were made during the year relevant to the assessment year under consideration - Additions to be deleted - AT
  Visit to Get Source

  ---

VAT

• Delay in Serving Demand Notice Deemed Clerical Error; High Court Dismisses Petition Lacking Merit.

  Case-Laws - HC : Validity of assessment order - time limitation - delay in service of demand notice - As per the order sheets, the notice for hearing for the purposes of assessment were issued under form JVAT 302 pursuant to which the petitioner appeared through his counsel with books of account and other documents /statutory forms but notice of demand was not issued to him, though they were prepared, corresponding entries were made in register VI and also in the dispatch register in continuity but were not dispatched to the petitioner and it has been stated in the counter affidavit that at best it is a clerical error of non- dispatch of the demand notices which may have happened due to inadvertence. - Writ petition is devoid of merit - HC
  Visit to Get Source

  ---

• Exemption for Entry Tax Must Be Strictly Interpreted; Burden on Assessee to Prove Applicability; Case Remanded for Review.

  Case-Laws - HC : Levy of Entry Tax - it is evident that an exemption Notification should be strictly interpreted and the burden of proving its applicability is on the assessee to show how his comes within purview of exemption Notification. - The revisional authority is required to record the findings on the factual aspect viz., whether goods viz., drill bits, millers and inserts have been consumed as inputs in the process of manufacture of finished goods viz., textile machinery and auto parts. However, no finding has been recorded by the revisional authority. - Matter remanded back - HC
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2021 (6) TMI 336
  Faceless assessment - return was processed under Section 143(1) - Infraction of the statutory scheme encapsulated in Section 144B - HELD THAT:- A careful perusal of clause (vii) of Section 144B (7) would show that liberty has been given to the assessee, if his/her income is varied, to seek a personal hearing in the matter. Therefore, the usage of the word may , to our minds, cannot absolve the respondent/revenue from the obligation cast upon it, to consider the request made for grant of personal hearing. Besides this, under sub-clause (h) of Section 144B (7)(xii) read with Section 144B (7) (viii), the respondent/revenue has been given the power to frame standards, procedures and processes for approving the request made for according personal hearing to an assessee who makes a request qua the same. In several matters, we have asked the counsels for the revenue as to, whether any standards, procedures and processes have been framed for dealing with such requests. The response, which we have got from the standing counsels including Mr. Chandra, is that, to the best of their knowledge, no such standards, procedures as also processes have been framed, as yet. Conclusion - As incumbent upon the respondent/revenue to accord a personal hearing to the petitioner. As noted above, several requests had been made for personal hearing by the petitioner, none of which were dealt with by the respondent/revenue. The net impact of this infraction would be that, the impugned orders will have to be set aside. It is ordered accordingly. This brings us to Mr. Chandra s submission that; the respondent/ revenue should be allowed to proceed afresh in the matter, in accordance with the law. To our minds, if the law permits the respondent/revenue to take further steps in the matter, the Court, at this stage, need not make any observations in that regard. If and when such steps are taken, and there is a grievance, the petitioner can take recourse to the relevant provisions of the Act. The entire scheme, encapsulated under Section 144B of the Act, was laid down to bring transparency as well as accountability in the system.According to us, irrespective of whether such a statutory scheme was framed or not, the system has to be both, transparent, and the persons administering it, have to remain accountable. Therefore, what Mr. Goel has said is something, which is, obvious.

  ---

• 2021 (6) TMI 335
  Validity of assessment order - faceless assessment - Violation of provisions of Section 144B - no show-cause notice cum draft assessment order was issued, as mandated under Section 144(B) - HELD THAT:- As the assertions made in the petition, which are supported by an affidavit, have to be accepted. Revenue, says that the record presently placed before the Court would show that although no show cause notice-cum-draft assessment order was issued, several opportunities were granted by the respondents/revenue, to the petitioner, before the said date, to explain its case.This stand of the respondents/revenue is contrary to the statutory scheme, as engrafted in Section 144B. Therefore, in our opinion, Ms. Kavita Jha, learned counsel for the petitioner, is correct in submitting that the provisions of Section 144B of the Act have been violated. That being the position, there is no option, but to set aside the impugned assessment order dated 15.04.2021, issued under Section 143(3), read with Sections 143(3A) and 143(3B) of the Act, along with accompanying notice of demand, issued under Section 156 of the Act and notice for initiation of penalty proceedings, issued under Section 270A of the Act.

  ---

• 2021 (6) TMI 334
  Initiation of penalty proceedings - HELD THAT:- We are of the view that the impugned assessment order, passed by respondent/revenue under Section 143(3) read with Section 144B of the Income Tax Act, 1961 and notice of demand issued under Section 156 as well as notices for initiating penalty proceedings issued u/s 274 read with Section 270A, and Section 271AAC(1) of the Act, should be set aside, with liberty to the AO to pass a fresh order, after considering the reply/objections of the petitioner. AO is also directed to accord a personal hearing to the petitioner and/or his authorized representative. AO will intimate to the petitioner, the date and time fixed, for personal hearing, via his registered e-mail ID. The AO will also send the link to the petitioner, for the said purpose.

  ---

• 2021 (6) TMI 331
  Income taxable in India - Offshore/foreign supplies - disallowing setting off of business loss against such income - HELD THAT:- It is undisputed fact that the assessee, a foreign company has been making supplies from outside India and as such, since no income has accrued to it in India, said income could not be brought to tax. The findings of the DRP that the assessee is also engaged in installation and supervision, is wholly misplaced - As undisputed fact that the assessee is not engaged in any installation and the assessee at no point denied that the assessee was making supervision of installation and had received supervision fee separately which is offered to tax in return of income. Further the finding of the DRP that the transactions of offshore supply and installation and supervision by it, were closely interlinked and continuous are also based on the wrong footing by the Ld. DR as the same are totally separate from each other and there was no interlink or continuation between the offshore supply, installation and suprevision. The transactions of supplies made are independent and separate with the supervisory fee for MSIL. The consideration for supplier and supervision is also separate. In fact, the Assessing Officer himself has not brought to tax any such amount from supplies made to MSIL from A.Y. 2014-15 onwards. This is evident from assessment order for A.Y. 2016-17. The Assessing Officer had framed an assessment on 24.12.2018, even before the Tribunal has pronounced its judgment on 01.07.2019, for the aforesaid assessment year, where he did not himself bring to tax any such sum. Therefore, the Assessing Officer as well as the DRP was not correct in making addition in respect of income from offshore/foreign supplies and thereby no allowing setting off of business loss against such income. Computation of long-term capital gain on transfer of shares to a non-resident - sale was made in Yen in Japan - conversion rate of currecny - HELD THAT:- Assessee computed capital gain on the transfer of shares held and owned by it of M/s SML Isuzu Ltd. (Indian company) to Isuzu Motors Ltd., Japan (non-resident) based upon the terms of the Share Purchase Agreement (SPA) under which the transfer of the shares was made. Assessing Officer adopted an aggregate sale consideration of Rs. 62,56,09,233/- as against the sale consideration accruing to assessee at Rs. 61,03,74,932/-. Apart from this the Assessing Officer further adopted conversion rate of yen at Rs. 1.62 per Yen, whereas, the conversion rate on the date of agreement to sell i.e. 25.11.2011 was Rs. 1.49 per Yen as agreed in Share Purchase Agreement as the consideration was payable in Yen by nonresident buyer to non-resident seller, both resident of Japan. The sale was made in Yen in Japan and the amount had been paid in Japan. These facts are not at all disputed by the Revenue authorities. While computing the capital gain, the Assessing Officer had adopted conversion rate (for converting capital gain in Yen to capital gain in Rs) i.e. telegraphic transfer buying rate at 0.62 instead of 0.6252. But under which method the same is adopted was not demonstrated by the Assessing Officer in the Assessment Order. It is not known as to what is the basis of the Assessing Officer to have adopted 0.62 instead of 0.6252 on the date of transfer of the shares in April 2012. Thus, the contentions of the Ld. AR that conversion rate for the purpose of computation of capital gain as per Rule 11UA of Income Tax Rules, 1962 is required to be adopted, the said rate was 0.6252 and as such the computation made by the assessee had been correctly adopted by it, appears to be just and proper. Thus, we direct the Assessing Officer to adopt the actual rate of conversion i.e. 0.6252 after verifying the same. Thus, we remand back this issue to the file of the Assessing Officer for proper adjudication after verifying the actual rate of conversion and adopt the same as per the observations made by us hereinabove. Ground Nos. 3, 3.1, 3.2, 3.3, 3.4, 3.5, 3.6 and 4 are partly allowed for statistical purpose. Grant full credit of TDS along with interest under section 244A - HELD THAT:- It is pertinent to note that from perusal of the documents produced before us by the Ld. AR, it can be seen that the amounts reflected towards TDS in Form No. 26AS and the calculation of the Assessing Officer while giving the credit to lesser amount is not proper. Hence, we direct the Assessing Officer to adjudicate this issue properly and grant the claim of the credit of TDS after verifying the Form No. 26AS along with interest u/s 244A of the Act. The issue is remanded back to the file of the Assessing Officer for this specific purpose. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 6 is partly allowed for statistical purpose. Interest under Section 234C - HELD THAT:- It is pertinent to note that the interest under Section 234C is leviable on default in payment of advance tax installment on returned income, but in the present case it is done on assessed income. Thus, when there is no default on the part of the assessee in payment of advance tax as per returned income, such interest levied is not justified by the Assessing Officer. The interest u/s 234C of the Act is levied only when the assessee fails to deposit the tax based upon its return of income. But in the present case, as per the return of income tax payable aggregated which was duly discharged by TDS. These facts were not disputed by the Ld. DR at the time of hearing.

  ---

• 2021 (6) TMI 330
  TP Adjustment - Benchmarking of interest receivable on loan given by the assessee to the subsidiary company in Germany - HELD THAT:- Honourable Delhi High Court in Commissioner of income tax versus Cotton naturals India private limited [ 2015 (3) TMI 1031 - DELHI HIGH COURT] has categorically held that the financial position and credit rating of the subsidiaries will be broadly the same as of the holding company. Therefore, there should not be any adjustment on account of capital risk. The honourable court also categorically held that where the transaction was of lending money in foreign currency to its foreign subsidiaries the comparable transactions therefore was of foreign currency lent by unrelated parties. When the learned CIT- A applied the decision of the honourable Delhi High Court for applying the rate of interest where the foreign currency is lent but did not apply this aspect of the decision. Therefore, when the assessee has charged higher interest on loan to subsidiary compared to the prevailing interest rate in the country in which the money is lent, CUP method undisputedly agreed by the parties as the most appropriate method, there is no reason to make any adjustment in the hands of the assessee on this count. Assessee has given comparable instances of the prevailing interest rate for short-term and long-term in Germany, which could not be disputed as a better comparable price. We allow ground number 1 of the appeal of the assessee (which is the solitary ground of appeal) and direct the learned transfer-pricing officer/assessing officer to delete the adjustment on account of arm s-length price of interest received on loan given to a wholly owned subsidiary in Germany. - Appeal of the assessee is allowed.

  ---

• 2021 (6) TMI 329
  Addition u/s 56(vii) - assessee has received something more than the amount mentioned in the sale deed - Addition on account of alleged under-valuation - as submitted that the assessee was having an undivided share of 12.5% in the property which was transferred at the prevailing circle rate to her son - HELD THAT:- As mentioned earlier, the assessee has sold her 12.5% share in the property to her son and not to an outsider and at the prevailing market rate for which the AO has not invoked the provisions of section 50C of the Act. The AO has no material on record or at his possession to show that the assessee has, in fact received more than what is mentioned in the sale deed. The matter has also not been referred to the DVO. There may be so many reasons for two different rates in the same property such as on account of location of the property, willingness of the seller to sell the property, etc. When a person is not willing to sell the property, but, the buyer is determined to buy the property for becoming the owner of an entire floor, he may have to make some higher payment to tempt the seller to sell the property. In such type of cases it cannot be said that the other sellers must have received payments at the same rate. Since, in the instant case, the assessee has sold her 12.5% share in the property to her son at the prevailing circle rate and there is no evidence on record that the assessee has received something more than the amount mentioned in the sale deed and there is no addition in the hands of the son of the assessee on account of such extra payment made for purchase of the property, therefore, the addition made by the AO on presumption and surmises which has been sustained by the CIT(A), in our opinion, deserves to be deleted. We accordingly set aside the order of the CIT(A) on this issue and direct the AO to delete the addition. Amount received by the assessee due to non-fulfillment of certain obligations - HELD THAT:- As an amount of Rs. 1.30 crores was yet to be received by the assessee since it was forfeited by the buyer of the property on account of non-fulfillment of the obligations set out in the sale deed itself. Under these circumstances, we are of the considered opinion that when the amount was not received by the assessee due to non-fulfillment of certain obligations and that condition was mentioned in the sale deed itself, therefore, we are of the considered opinion that the CIT(A) was not justified in sustaining the addition made by the AO. So far as the observation of the ld.CIT(A) that non-receipt of amount does not change the character of the receipt is concerned, we find, out of the total consideration of Rs. 39.30 crores, a sum of Rs. 2.50 crores was in respect of certain obligations to be fulfilled by the assessee. In the instant case, the assessee could fulfill obligations only upto Rs. 1.20 crores which was received by her. But, for the remaining Rs. 1.30 crores, the assessee could not discharge the obligationfor which the said amount was not received. We find merit in the submission of the ld. Counsel that it is not a case that the whole of the consideration was for the transfer of the property, but, there were certain embargo on the property. Therefore, for removing the embargo, the separate consideration was mentioned in the sale deed as agreed between the seller and the buyer. The said consideration amounting to Rs. 2.50 crores although is the part of the full consideration of the transfer of the property, but, it was specifically in respect of certain obligations to be discharged by the assessee which is also apparent from the copy of the letter dated 19th December, 2011 the relevant portion of which has already been reproduced in the preceding paragraph. Since the assessee could not fulfill a part of the obligation as per the sale deed, therefore, the sale consideration to the extent the obligations are not performed cannot be the part of the apparent consideration. In this view of the matter, we are of the considered opinion that the ld.CIT(A) was not justified in sustaining the addition of Rs. 1.30 crore made by the AO. We, therefore, set aside the order of the CIT(A) on this issue and direct the AO to delete the addition. Thus in case the assessee receives any amount out of the forfeited amount on a future date, the same shall be taxed in the year of receipt. This ground of appeal raised by the assessee is accordingly allowed.

  ---

• 2021 (6) TMI 328
  Taxability of the receipt from the BBMB Project - AO has considered the entire receipts from the BBMB Project to be taxable @ 40% + surcharge - HELD THAT:- We find that in A.Y. 2006-07, AO had taxed the receipts from BBMB Projects in similar circumstances @ 40% but when the matter was carried before the CIT(A), CIT(A) directed the AO to tax the receipts from BBMB Project @ 10%. Before us, it is the submission of the Learned AR that the aforesaid order of CIT(A) has attained finality as the order of CIT(A) has not been challenged by the Revenue. The aforesaid contention of the Learned AR has not been controverted by the Revenue by placing any material on record. Thus in subsequent assessment years i.e. AY 2010-11, 2012-13, 2013-14 2014-15 the receipts from BBMB Project have been taxed by the Revenue @ 10% of the receipts. Before us, no distinguishing feature in the facts in the year under consideration and that of the earlier years and subsequent years has been pointed out by the Revenue nor has it placed any material to demonstrate the justification for taking a different view than in earlier and subsequent years. In such as situation in order to maintain the consistency, we hold that the receipts from BBMC Project to be taxed @ 10% of the receipt. We thus direct so. Taxation as royalty and fee for technical services @ 20% instead of 10% - HELD THAT:- As AR has pointed to the amendment made in Article 12(2) of the DTAA between India and Japan by Notification No S.O. 1136(E) dtd 19.7.2006 w.r.e.f 28.6.2006. As per the aforesaid amendment, the tax charged shall not exceed 10% of the gross amount of royalties or fees for technical services. Considering the submission of the Learned AR, we restore the issue to the file of the AO and direct him to compute the taxes on the aforesaid income in accordance with the applicable DTAA and in accordance with law. Needless to state that AO shall grant adequate opportunity of hearing to the assessee. Thus the ground of the assessee is allowed. Charging interest u/s 234-B - HELD THAT:- . It is an undisputed fact that assessee is a foreign company and it is the responsibility of payer to deduct entire tax at source on payments made to the Assessee. As n the case of GE Packaged Power Inc. [ 2015 (1) TMI 1168 - DELHI HIGH COURT] has held that when the assessee was a non resident company, the entire tax was to be deducted at source on the payments made by payee to the assessee and therefore there was no question of payment of advance tax by the assessee and therefore it would not be permissible for the revenue to charge any interest u/s 234B from the assessee. Before us, Revenue has not pointed to any contrary binding decision in its support nor has pointed to any distinguishing facts in the present case and the case relied upon by Ld AR but however it is the contention of the Ld DR that the aforesaid order of the Delhi High Court has been challenged by the Revenue. The contention of the Ld DR of having challenged the aforesaid order of H ble Delhi High Court may be true but at the same time, the Revenue has not placed any material on record to demonstrate that the aforesaid order has been stayed by higher judicial forum. Thus we are of the view that AO was not justified in levying the interest u/s 234B. We therefore direct the deletion of interest. Thus ground of assessee is allowed.

  ---

• 2021 (6) TMI 327
  Levy of penalty u/s 271(1)(c) - enhancement of income by CIT-A - HELD THAT:- As against the enhancement made by CIT(A), assessee had carried the matter before the Tribunal. The Co-ordinate Bench of Tribunal [ 2020 (3) TMI 423 - ITAT DELHI] had held the enhancement made by CIT(A) to be not tenable and therefore cancelled the order of enhancement passed by CIT(A). Thus the enhancement to income made by CIT(A) was annulled by ITAT. Since the impugned penalty levied u/s 271(1)(c) was on the enhancement made by CIT(A) and since the enhancement of income itself has been deleted by the Co-ordinate Bench of Tribunal the penalty order passed by CIT(A) does not survive - Decided in favour of assessee.

  ---

• 2021 (6) TMI 326
  Rectification of mistake u/s 154 - Assessment u/s 143(3) - whether authorities below have erred taking figure of income computed under section 143(1) as returned income by the CPC, instead of income declared by the assessee in the return filed on 29th September, 2020? - HELD THAT:- Though a detailed submissions has been made by the assessee before the first appellate authority, but ld.CIT(A) without going into the merit of the contentions raised by the assessee, summarily and in a cryptic way rejected the same and confirmed order of the ld.AO. CIT(A) ought to have considered the pleadings of the assessee before him and should have passed an order on merit. According to us the mistake is self-evident, and apparent from the record. For rectifying the mistake, the assessee filed rectification application under section 154, which was rejected by the AO on the ground that the same is barred by limitation. This foundational fact was not inquired into by both the authorities below in the course of rectification proceedings under section 154 of the Act, and simply dismissed the application on the ground of limitation. The assessee submitted before the ld.CIT(A) that the assessee has filed application under section 154 on 20.1.2017 against the order passed under section 143(3) on 13.11.2012. Rectification of an order can be made within 4 years from the end of the financial year in which the order sought to be amended was passed, therefore, in the present case period for filing the application expires only on 31.3.2017, and therefore, application of the assessee under section 154 is within the limitation period. As regards, the mistake pointed out by assessee in the impugned assessment order is concerned, as stated above, is self-evident and apparent on face of the record, and thus, the lower authorities are not justified in rejecting the application under section 154 of the Act of the assessee. Allow appeal of the assessee and direct the ld.AO to consider the income declared by the assessee in its return of income, while computing assessed income under section 143(3) of the Act. - Appeal of the assessee is allowed.

  ---

• 2021 (6) TMI 325
  Addition in respect of the Share Capital and Share Premium as unexplained cash credit u/s. 68 - amount received on the share application from five investors for allotment of shares during the financial year - HELD THAT:- We find that no statement has been recorded in respect of these companies in the assessement proceedings. A.O without going into the detail aspects has made addition and further we found that that the A.O has dealt elaborately on the statement of Shri Rajesh Agarwal who was connected to these shareholder companies and further Shri Rajesh Agarwal has retracted his statement and it was also brought to the knowledge of the A.O. A.O has made addition based on surmises and conjunctions without proper verification and enquiry. We find that 4 investor companies financial statements were dealt and the findings are that the investors companies have a positive net worth and only a small percentage of investments were deployed which cannot be disputed. These five investors companies invested in the share capital at share premium in the assessee company referred at Sr. No. 1,2,4,5 and 8 of the chart where the Honble Tribunal has considered the financial aspects and observed that these companies can make investments and the investments percentage range from .47% to 5.45%. All the five investor companies contributed the share capital and premium were subject matter of adjudication by the Hon ble Tribunal and was treated as genuine in the above cases. We find that these five investor companies are part of the decisions of the Hon ble Tribunal for the same assessment year. We Considering the overall facts, circumstances, submissions and Hon ble Tribunal decisions, are of the substantive opinion that the assessee could able to substantiate its case and satisfy three ingredients being identity, creditworthiness and genuineness of the transactions. The Hon ble Tribunal has dealt elaborately on the net worth of these companies and percentage of the investments are comparatively lower than total net worth of the investor companies. Accordingly, we respectfully follow the judicial precedence and set aside the order of the CIT(A) and direct the assessing officer to delete the addition and allow this ground of appeal in favour of the assessee.

  ---

• 2021 (6) TMI 318
  Estimation of income - bogus purchases - HELD THAT:- We find that the Sales Turnover was not in doubt and the assessee was in possession of primary purchase documents. The payment to the suppliers was through banking channels. There could be no sale without actual purchase of material keeping in view the assessee s nature of business. The facts of the case made it a fit case to estimate the profit element embedded in these transactions - CIT(A), after due consideration of assessee s submissions as well as material on record, estimated the additions @25% which is more than enough to take care of the leakage of revenue. Therefore, the estimation could not be termed as unjustified, in any manner.- Appeal stands dismissed.

  ---

• 2021 (6) TMI 315
  Capital gain computation - whether the income on sale of property is assessable in the hands of co-owners, whereas the agreement has been renewed by AOP - Adoption of Fair market Value(FMV) determined by the DVO and the assessee was provided opportunity to file objections - Whether the CIT(A) has power to value the property as on 1-4-198 - HELD THAT:- On perusal of the assessment order, these aspects were never dealt before the A.O. whereas the A.O. has only considered the sale consideration and applied the DVO value. The Ld.CIT(A) has observed that the income from the property and capital gains related to the property has to be allocated and computed in the hands of the Co-owners and not in the hands of the assessee. We find that the assessee has raised the contentions that it is an A.O.P and the three co owners shares are determined and there is a mistake occurred in the hands of the assessee in offering the income instead of in the hands of three co owners of the property. The assessee can not rectify the claim by filling a revised computation of income, but as per the observations in the case of Goetze (india) Ltd [ 2006 (3) TMI 75 - SUPREME COURT] the assessee has to file the revised return of income for such claims before the A.O.But the assessee chooses to file revised computation of income and not revised return of income. We find that the CIT(A) has considered the claim of the assessee and observed that the gains on sale of property shall be allocated among the co-owners. But the point to be considered that the three co-owners have not filed their return of income offering the gains on sale of the property. Further the CIT(A) is not a appellate authority for the three co owners and therefore the CIT(A) findings are not accepted. The assessee should file the revised return of income as per the ratio of the supreme court decision and then the Assessing officers has to determine/assessee the total Income. We set aside the findings of the CIT(A) in this ground of appeal and restore entire disputed issue to the file of the Assessing officer to adjudicate a fresh and the assesses shall file the revised return of income. A.O. shall not be influenced by the observations in the CIT(A) order. A.O. should independently also verify that the income is offered in the hands of the Three Co-owners - assessee should be provided adequate opportunity of Hearing and shall co operate in submitting the information and we allow the grounds of appeal for statistical purpose. Fair Market Value(FMV) to be adopted and the valuation of property as 1-4-1981 , we are of the substantive opinion that the assessee can make claims before the Assessing officer. Since we have restored the disputed issues to the file of the Assessing officer as discussed above, we are of view that these two issues are also restored to the file of the assessing officer to consider and adjudicate on merits and allow the grounds of appeal of the revenue for statistical purpose.

  ---

• 2021 (6) TMI 314
  Estimation of income - bogus purchases - CIT(A) has restricted the addition to 12.5% of the total amount of bogus purchases shown by the assessee as against 25% addition made by the AO - HELD THAT:- CIT(A) has restricted the addition by following the ratio laid down by the Hon ble Gujarat High Court in the case of Simit P. Seth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] in which it is held that in the cases of bogus purchases, only profit element embedded in the transaction is to be taken into consideration while determining the addition on estimate basis. In our considered view, the findings of the ld. CIT(A) are well reasoned and in accordance with the settled principles of law. We further notice that the facts of the case relied upon by the revenue are different from the facts of the present case. Hence, we do not find merit in the contention of the revenue. We accordingly dismissed the appeal filed by the revenue and uphold the findings of the ld. CIT(A). - Decided against revenue.

  ---

• 2021 (6) TMI 313
  Penalty u/s 271 (1) (c) - Bogus purchases - CIT(A) has deleted the penalty levied by the AO holding that penalty proceedings are different from the assessment proceedings and addition of income during assessment proceedings does not ipso facto make the assessee liable u/s 271(1)(c) - HELD THAT:- Since in the present case, the addition has been made on estimation basis it cannot be concluded that the assessee has either concealed his income or furnished inaccurate particulars of his income to initiate proceedings u/s 271(1)(c) CIT(A) has also based his findings on the decision of the coordinate Bench of the Tribunal in the case of SHRI DEEPAK GOGRI [ 2017 (11) TMI 1857 - ITAT MUMBAI] wherein the Tribunal deleted the penalty levied u/s 271(1)(c) of the Act on the basis of addition on account of profit made on estimation basis, holding that the addition made on estimation basis does not amount to concealment of income or furnishing of inaccurate particulars of income. Thus findings of the Ld. CIT(A) are well reasoned and based on the decisions of the Tribunal discussed above. Hence, do not find any reason to interfere with the decision of the Ld. CIT(A) and direct the AO to delete the penalty levied u/s 271(1)(c) 0f the Act. - Decided against revenue.

  ---

• 2021 (6) TMI 312
  Deduction u/s 80P - Income from other sources - Treatment to Interest earned from Cooperative Bank and Commercial Bank - HELD THAT:- As decided in own case [ 2020 (7) TMI 715 - ITAT DELHI ] assessee being a co-operative society not involved in banking operation is not eligible for deduction u/s. 80P(2)(a)(i).The assessee being a co-operative society is eligible for deduction u/s. 80P(2)(d) on the interest earned from other co-operative societies. The assessee is eligible for the expenditure u/s. 57 incurred in earning the interest income which is taxable under the head income from other sources as per Section 56. Thus addition is hereby deleted.

  ---

• 2021 (6) TMI 311
  Disallowance of delayed deposit of contribution received by the employees towards provident funds and ESI fund - HELD THAT:- It is an undisputed fact that there has been delay in the actual deposit of payment to the appropriate authority but at the same time it was also a fact that all the contributions received by the assessee from its employees have been deposited before the due date of filing of return of income. We further find that identical issue arose in the case of Dee Development Engineers Ltd.[ 2021 (4) TMI 393 - ITAT DELHI] wherein the Co-ordinate Bench of Tribunal after considering the decision in the case of CIT vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT] decided the issue of the assessee stating we do not think that the legislative intent and objective is to treat belated payment of Employee s Provident Fund (EPD) and Employee s State Insurance Scheme (ESI) as deemed income of the employer under Section 2(24)(x) of the Act. CPC was not justified in disallowing the payment. We therefore direct the deletion of addition. Thus ground of the appeal of the assessee is allowed.

  ---

• 2021 (6) TMI 310
  Addition towards unexplained expenditure - capitation fee - HELD THAT:- Although this assessee draws salary income all along, neither the AO nor the CIT(A) have considered his cash in hand in AY. 2010-11 so as to give credit thereof before making the impugned addition. Faced with this situation, we deem it appropriate that keeping in mind the assessee s social, economic status, his salary income drawn in the earlier assessment years and past savings, a lumpsum addition of Rs. 2.5 lakhs only would be just and proper with a rider that the same shall not be treated as a precedent in any other case. The assessee gets relief of Rs. 2.5 lakhs in other words. Necessary computation to follow as per law.

  ---

• 2021 (6) TMI 309
  Deductions us 57(iii) - Assessee not being heard - HELD THAT:- As in the facts of the present cases, the assessee apparently was not heard. No doubt the written submissions were available on record, however, they were not considered sufficient for warranting a relief on merits as prayed for. It is not evident from the body of the orders that the assessee was confronted with the fact that these written submissions were not sufficient for the relief prayed for and consequently admittedly no opportunity to support the claim was made available as held in SHRI AMRIK SINGH BHULLAR VERSUS THE ITO, WARD SANGRUR [ 2021 (5) TMI 411 - ITAT CHANDIGARH] . Accordingly, it is seen that since in the facts, the written submissions were not sufficient to grant a relief, then notice to the said effect necessarily should have been given to the assessee. As evident that the opportunity of placing supporting facts or arguments admittedly has not been provided. In these circumstances, considering the prayer of the parties, the issue is remanded back to the file of the AO with a direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The assessee in its own interests is advised to make full and proper compliances before the said authority as failing which it is made clear that the AO shall be at liberty to pass an order on the basis of the material available on record. Said order was pronounced at the time of virtual hearing itself in the presence of the parties via Webex. Appeals of the assessee are allowed for statistical purposes.

  ---

• 2021 (6) TMI 308
  Condonation of delay - inordinate delay of 640 days has occurred - HELD THAT:- As seen that the assessee having appointed a counsel to represent him as is evidenced from the record itself namely Column No. 4 of page 1 extracted herein above supports the claim that the assessee was live and alert to his responsibilities. In the circumstances, where the counsel was appointed to represent the assessee, the assessee could afford to remain sanguine and rest in belief that all that is required to be done by him is being done. A perusal of the above extract demonstrates that the assessee remained unrepresented. The argument that the order was not available to him is strengthened. Accordingly, in the peculiar facts it clearly demonstrates that the delay has occurred for reasons beyond the control of the assessee. It is seen that even otherwise it is evident on record that no advantage has been gained by the assessee in filing the appeal late nor any advantage vested with the department has been deprived. Satisfied by the explanation afforded on a consideration of facts, circumstances and arguments which stand unrebutted by the Revenue, the delay is condoned.

  ---

• 2021 (6) TMI 307
  Penalty u/s 271(1)(c) - Advance received from Nopany Sons Pvt l td. u/s 68, Addition on account of cessation of liability Addition on account of debit balances written off amounting - HELD THAT:- We find that Ld.CIT(A) has relied on the findings and observations of the Hon ble Tribunal and deleted the penalty. Considering the facts, circumstances and decisions, we do not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue.

  ---

• 2021 (6) TMI 306
  Accrual of income - real income theory determination - Addition on account of interest from bank - AO observed from 26AS data that the assessee had not shown interest from bank thus made the addition - HELD THAT:- Where accrual of an income takes place but its realisation becomes impossible, such hypothetical income cannot be charged to tax. In the case of mercantile system of accounting, an accruing income can be charged to tax only when it is likely to be received under the given circumstances. Even the principal amount of deposit made by the assessee became irrecoverable. These facts indicate that the assessee did not receive any such interest income from Rupee Co-op Bank Ltd. whose functions were banned by the RBI. When we consider the mercantile system of accounting in juxtaposition to real income theory in the facts and the circumstances of the instant case, the inescapable conclusion which follows is that the interest income cannot be included in the total income of the assessee for the year under consideration. Such an income may be appropriately charged to tax on the regularisation of the operations of the bank coupled with the possibility of receipt of income in foreseeable future. Insofar as the instant year is concerned, we hold that the interest cannot be charged to tax. The impugned order is overturned and the addition is deleted. - Decided in favour of assessee.

  ---

• 2021 (6) TMI 305
  Exemption u/s 54EC - Investment made after the cut of date - transfer of the long-term capital asset in order to claim the exemption on account of long- term capital gain - HELD THAT:- In order to claim exemption on account of long- term capital gain under section 54EC the assessee was required to make investment in the eligible bonds within six months from the date of transfer of the long-term capital asset i.e. 12.12.2013. Since the investment in the eligible bonds was admittedly made by the assessee on 21. 01.2014 i.e. after the period stipulated in section 54EC, we find myself in agreement with the ld. CIT(Appeals) that the assessee is not entitled for the exemption under section 54EC. Assessee has not been able to raise any material contention to dispute this position. He has only submitted that the assessee wanted to invest the long- term capital gain in purchase of another residential property and unable to find the suitable property, he finally invested the amount in long- term capital gain bonds on 21. 01.2020. In my opinion, this aspect is irrelevant to decide the eligibility of assessee for exemption under section 54EC, which specifically provides that the investment in eligible bonds is required to be made by the assessee within a period of six months from the date of transfer of the long-term capital asset in order to claim the exemption on account of long- term capital gain - Decided against assessee.

  ---

• 2021 (6) TMI 304
  Bogus LTCG - purchase and sale of shares of penny stock company - HELD THAT:- As convinced with the argument of the assessee that the shares were purchased as long as back in the year 2008 and sold immediately thereafter and the assessee has incurred a loss and only such amount can be disallowed. On going through the assessment order as well as the order of the CIT (A), find that that the main reason for the disallowance is that the Rockon Fintech is a penny stock company and the assessee has invested in penny stock. None of the authorities below have verified the sources for the investment. From the details filed by the assessee before this Tribunal, it appears, that the assessee has used the sale consideration (after sale of other shares) for purchase of shares of Rockon Fintech and immediately thereafter, on sale of the said shares, the assessee has utilized the said sale consideration for purchase of other shares. The assessee has not made any gain from sale of those shares, nor has he claimed any exemption u/s 10(38) of the Act. Therefore as convinced that the intention of the assessee was not to make any gain out of purchase and sale of shares of penny stock company. No disallowance can be made, leave alone the disallowance of value of shares invested. - Assessee s appeal is allowed.

  ---

• 2021 (6) TMI 303
  Disallowance of interest u/s. 36(1)(iii) - amount advanced which was computed @15% on the monthly balances - year of assessment for advances and borrowings - HELD THAT:- As outstanding debit entries do not pertain to the assessment year under consideration and the assessee had sufficient interest free capital to meet these advances during the years when these advances were made. The authorities below have neither given any cogent reasons for rejecting the contention of the assessee based on the audited books of account nor brought on record any evidence to rebut the contention of the assessee. There is no evidence on record to arrive at the conclusion that the advances in question were made during the year relevant to the assessment year under consideration and the assessee had utilized the interest-bearing funds for giving interest free loans to the above five parties. Hence, we find merit in the arguments of the Ld. Counsel for the assessee that the impugned order is not sustainable in law. Further, we are of the considered view that the impugned order is contrary to the evidence on record and also against the settled principles of law. Accordingly, we set aside the impugned order passed by the Ld. CIT(A) and direct the AO to delete the addition made on account of disallowance u/s. 36(1)(iii) - Decided in favour of assessee.

  ---

• 2021 (6) TMI 302
  Rectification of order - Right to be heard - Double payment of Tax - Exemption from levy of Income Tax u/s 96 of the Right To Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 - compensation received on account of compulsory acquisition of land - HELD THAT:- All actions which strike at the non negotiable axiom namely justice should not only be done but seen to be done are expected to be adhered to when the State acts exercising its vast powers over its citizens. The actions are expected to be carried out in fairness. These are the bare minimum standards which are expected to be adhered to. Fair play pre supposes as has been oft laid down fair notice of charge, and place of hearing, opportunity of effective hearing to address the charge and speaking order addressing the reasons for agreeing or disagreeing with the claims put forth. Audi alterem partem which is one of the foundational and fundamental bed rocks of natural justice means and includes that no one should be condemned un heard. Though these Rules are not necessarily codified however, they have evolved over the years and are read into not only when statutory provisions so provide but also in quasi administrative decisions whereby the rights / interests of the party is adversely effected. Thus, even in the absence of a clear legislative mandate, the Courts have repeatedly held that the procedure required to be adhered to envisage a right to be heard. No doubt a party may choose to waive the right to be heard and instead choose to rely on written submissions. However it is the duty of the Court to ensure that the waiver so made is consciously made with full knowledge and understanding i.e; with the foreknowledge that the right to be heard exists. The record is silent on this aspect. Accordingly since there is nothing on record to show that the right to be heard was consciously and knowingly waived, the impugned order is restored back to the file of the CIT(A) with a direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Said order was pronounced at the time of virtual hearing itself in the presence of the parties via Webex.- Appeal of the assessee is allowed for statistical purposes.

  ---

• Corporate Laws

• 2021 (6) TMI 323
  Approval of Scheme of Amalgamation - Sections 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Necessary directions regarding holding and convening of various meetings is issued - directions regarding issuance of various notices to be issued. The scheme is approved - application allowed.

  ---

• Law of Competition

• 2021 (6) TMI 319
  Approval of scheme of Arrangement - Section 230 to 232 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - 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 A4 along with Company Petition as well as the prayer made therein. The scheme is approved - application allowed.

  ---

• Corporate Laws

• 2021 (6) TMI 317
  Seeking approval for reduction of share capital - only objection raised by the income tax department is with regard to an outstanding demand towards fringe benefit tax - Section 66 of the Companies Act 2013 - HELD THAT:- The petitioner has already deposited the amount towards fringe benefit tax and the receipt thereof has been placed on record. Further, no other objection has been raised by the Income tax department. The Application is allowed for reduction of the share capital of the company.

  ---

• Insolvency & Bankruptcy

• 2021 (6) TMI 324
  Seeking extension of time period for completion of the Corporate Insolvency Resolution Process - only a short period of time left for CIRP process - HELD THAT:- It is almost as if the CoC and the resolution applicant are both under an impression that just because resolution is preferable over liquidation, and the resolution applicant is a State entity, any number of exclusions will be granted just for the asking. Granting the present request (for exclusion upto 15.06.2021) will mean that the CIRP has carried on for a period of 483 days beyond the outer limit of 330 days from the scheduled close on 19.02.2020 (upon completion of 330 days in terms of the second proviso to section 12(3) of the Code) - This sleight of hand in breaching the CIRP timeframe more than a year beyond the maximum period of 330 days for the completion of the process, but somehow fitting it into the legal time frame through the device of exclusions must be called out. A well-meaning stratagem devised by the Hon ble Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] declaring that if, on the facts of a given case, it can be shown to the Adjudicating Authority or the Appellate Authority under the Code that only a short period of time is left for completion of the insolvency resolution process beyond 330 days, and that it would be in the interest of all stakeholders that the corporate debtor be put back on its feet instead of being sent into liquidation, it may be open in such cases for the Adjudicating Authority to extend time beyond 330 days, is being misused time and again to cover up the tardy process of completion of CIRP. The prayer for extension of the CIRP from 01.05.2021 till 30.06.2021, for completion of the Corporate Insolvency Resolution Process of the Corporate Debtor is granted - it is also directed that a copy of this order be sent to the Chairman Managing Director of NTPC Limited, and also to the Chief General Managers of the individual members who are banks, and to the Managing Directors of the other entities constituting the Committee of Creditors to enable them to have a hard look at the snail s pace at which the CIRP is progressing - application allowed.

  ---

• 2021 (6) TMI 322
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Waterfall mechanism - existence of debt and dispute or not - HELD THAT:- The Scheme in relation to the Corporate Debtor viz. NOCL which has been proposed under Section 230 of the Companies Act, 2013 read with the attendant provisions of Insolvency and Bankruptcy Code, 2016 was approved by this Tribunal. As per the said Scheme proposed by the Scheme proponent viz. M/s. Haldia Petrochemicals Limited, the Project Assets of the Corporate Debtor stands vested with the Scheme Proponents and as such the Scheme as sanctioned by this Tribunal in respect of the Corporate Debtor is also binding upon the stakeholders of the Corporate Debtor which also includes the Appellant herein. Even though the claim of the Operational Creditor is admitted then as per the waterfall mechanism which has been provided under the Scheme none of the Operational Creditor would have been paid and only the dues of the Financial Creditors have been settled by the Scheme proponents. Appeal dismissed.

  ---

• 2021 (6) TMI 321
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Date of default - date of NPA - Time Limitation - HELD THAT:- Section 3 of the Limitation Act, 1963 states that subject to the provisions contained in sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence. In the present case, the Corporate Debtor has prima facie set up the Limitation as a defence in the present Application - From Part IV of the Application, it is seen that the Financial Creditor has failed to state the Date of Default in the Application. Further, no pleadings as such has been made by the Financial Creditor as to how the present Application falls well within the period of limitation. It is found that the after the Date of Default i.e. the date of NPA of 31.12.2007, the Financial Creditor has not placed any record or document recognized under the law to substantiate that the debt falls well within the period of limitation. This Adjudicating Authority is conscious of the decision of the Hon ble Apex Court in the matter of SESH NATH SINGH ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. [ 2021 (3) TMI 1183 - SUPREME COURT] , has held that the time spent in the SARFAESI proceedings can be excluded in terms of Section 14 of the Limitation Act, 1963 for the purpose of calculating the period of limitation for an Application filed under Section 7 of IBC, 2016. The debt as claimed by the Financial Creditor is time barred and the Financial Creditor has failed to place on record any shred of document recognized under the law to substantiate that the debt falls well within the period of limitation - this Adjudicating Authority, based on the documents filed by the Financial Creditor, comes to an irresistible conclusion that the debt on the part of the Respondent/Corporate Guarantor is time barred and as such the Application filed by the Financial Creditor is liable to be dismissed. Application dismissed on the ground of time limitation.

  ---

• 2021 (6) TMI 320
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Guarantee - Respondent/Personal Guarantor has stood as a Guarantor in respect of the loans availed by the Principal Borrower - HELD THAT:- Immediately upon filing of the Application under Section 94 or 95 of IBC, 2016, this Adjudicating Authority is required to refer the matter to the Board viz. the Insolvency and Bankruptcy Board of India, for approving the name of the Resolution Professional. However, it is to be noted that, this Adjudicating Authority is required to satisfy itself, before referring to the Board the name of the Resolution Professional for its confirmation, as to whether the Application filed under Section 95 of IBC, 2016 satisfies the conditions as laid out in sub - section (4) of Section 95 of IBC, 2016. In relation to Section 95(4)(a), it is seen from the Application filed, that one M/s. Arohi Infrastructure Private Limited(hereinafter referred to as Principal Borrower ) availed financial facility from the Creditor herein to an extent of Rs. 50 Crore repayable within a period of 48 months. For the said facility, the Respondent herein viz. Mr. G. Ramakrishna Reddy stood as a Guarantor vide Deed of Guarantee Agreement dated 28.08.2011 and 28.09.2011 - In relation to Section 95(4)(b), it is seen that the Creditor has issued a Demand Notice on 04.02.2020 as per Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor), Rules, 2019, calling upon the Personal Guarantor to pay an amount of Rs. 232,60,41,491/-. Despite receipt of the Demand Notice on 08.02.2020, the Personal Guarantor has failed to repay the outstanding dues and continues to commit default till date - In relation to Section 95(4)(c), it is seen that the Creditor has filed the Final Award passed by the Learned Arbitrator on 13.07.2019 and that in the counter filed by the Respondent/Personal Guarantor he has not denied that the said sum is not payable. This Application filed under Section 95 of IBC, 2016 is complete and a perusal of Part - IV of the Application posits the fact that the Application has been moved by an Insolvency Professional, viz. Sripriya Kumar. Hence as per Section 97(2) of IBC, 2016 it is directed that the Board viz. The Insolvency and Bankruptcy Board of India, to confirm that there are no disciplinary proceedings pending against Resolution Professional, within a period of 7 days from the date of this order - The matter may be listed for further hearing on 15.06.2021, for awaiting confirmation from IBBI in this regard.

  ---

• 2021 (6) TMI 316
  Seeking impleadment of the Applicant in the present Company Petition - CIRP not yet started - Section 65 of the I B Code, 2016 - HELD THAT:- A bare reading of Section 65(1), states that If, any person initiates the insolvency resolution process - However, in the present case the CIRP has not yet been initiated. As CIRP has not yet been initiated. The Applicant can approach this tribunal under Section 65 of I B code, only once the Petition is admitted and CIRP has been initiated - application disposed off.

  ---

• CST, VAT & Sales Tax

• 2021 (6) TMI 339
  Validity of assessment order - time limitation - delay in service of demand notice - proper explanation for the delay or not - HELD THAT:- It is not in dispute that the petitioner was a dealer registered under the provisions of Jharkhand Value Added Tax Act, 2005 (JVAT Act) and Central Sales Tax, Act, 2006 (CST Act) and the petitioner filed application for surrender of the registration certificates before the Commercial Tax department w.e.f. March, 2015 for which acknowledgements regarding submission of such applications have been annexed as annexure 1 and 1/1 of each of the writ petitions. The petitioner was regularly filing its returns to the respondent-Commercial Tax department and its regular assessment proceedings were completed - The petitioner was served with four demand notices for the assessment years, 2009-10 and 2010-11 , both CST and JVAT through e-mail on 03.08.2018 wherein the date of payment has been notified as 13.08.2018, i.e., after expiry of more than four years from the alleged date of demand notices. In the present cases, the notices of demand have been communicated after expiry of the period of limitation for assessments but certainly within the period of limitation for recovery of demands. As per the order sheets, the notice for hearing for the purposes of assessment were issued under form JVAT 302 pursuant to which the petitioner appeared through his counsel with books of account and other documents /statutory forms but notice of demand was not issued to him, though they were prepared, corresponding entries were made in register VI and also in the dispatch register in continuity but were not dispatched to the petitioner and it has been stated in the counter affidavit that at best it is a clerical error of non- dispatch of the demand notices which may have happened due to inadvertence. Time limitation - HELD THAT:- Passing of order of assessment and issuance of demand notice are two different stages. Passing of assessment order is followed by verification of payments made by the assessee , preparation of demand notice, entry made in dispatch register and issuance of demand notice to the assessee and this is also coupled with entry in register VI. The limitation for completion of assessment is three years from the end of the financial year under section 35(8) but demand is recoverable as an arrear of land revenue under rule 17(4) and section 51 provides that for limitation for recovery of tax as 12 years from the date of relevant assessment - Rule 38 of the JVAT rules provides that all records specified in the said rule shall be retained and made available for inspections/audit/verifications for a period of five years, after the end of the year. In the present cases the order sheets reveal that the date on which the impugned orders of assessments were passed, the petitioner not only appeared through an advocate but even its liability was quantified and mentioned in the order sheets after passing the orders of assessment in separate sheets. The writ petitions being devoid of any merit, are hereby dismissed.

  ---

• 2021 (6) TMI 338
  Levy of Entry Tax - cutting tools were used by it for roughing, drilling and boring of semi finished goods and for cutting and shaping of metals and other materials - benefit of exemption as contained in Explanation I to the Notification dated 30.03.2002 issued by the Government of Karnataka - Section 3(1) of Karnataka Tax On Entry Of Goods Act, 1979 - HELD THAT:- If goods specified in the table are bought by the dealer into the local area for consumption or use as raw materials, component parts and inputs in the manufacture of an intermediate or finished product, such goods are exempted from levy of tax. A constitution bench of the Supreme Court examined the correctness of the ratio laid down by three judge bench in SUN EXPORT CORPORATION VERSUS COLLECTOR OF CUSTOMS, BOMBAY [ 1997 (7) TMI 117 - SUPREME COURT] , in which it was held that an ambiguity in a tax exemption provision or Notification must be interpreted so as to favour the assessee claiming the benefit of such exemption - from the said case, it is evident that an exemption Notification should be strictly interpreted and the burden of proving its applicability is on the assessee to show how his comes within purview of exemption Notification. The revisional authority without assigning any reasons has concluded that cutting tools are not used as raw materials, component, parts and inputs in the manufacture of intermediate of finished product. The revisional authority is required to record the findings on the factual aspect viz., whether goods viz., drill bits, millers and inserts have been consumed as inputs in the process of manufacture of finished goods viz., textile machinery and auto parts. However, no finding has been recorded by the revisional authority. In the absence of the aforesaid finding on the factual aspect of the matter, we are unable to adjudicate the question of applicability of Notification in case of the appellant - the order passed by the revisional authority requires to be set aside. The matter is remitted to decide the matter afresh after affording an opportunity of hearing to the parties - Appeal allowed by way of remand.

  ---

• 2021 (6) TMI 332
  Vires of Rule 6 (1 B) of the Maharashtra Value Added Tax Rules, 2005 - tenure of two years for members of the Maharashtra Sales Tax Tribunal - HELD THAT:- Respondent to file their reply on or before 12.02.2021 with copy to other side. Rejoinder if any, to be filed on or before 17.02.2021 with copy to other side. Matter to appear on board on 22.02.2021.

  ---

• Indian Laws

• 2021 (6) TMI 337
  Seeking grant of Bail - Smuggling - recovery of contraband item - Heroin - personal search of accused was carried out or not - evidentiary value of petitioner s statement recorded under Section 67 of the Act - HELD THAT:- In the present case, 46 small zip lock polythene packets containing contraband were recovered from the bag of co-accused Madan Lama and 01 packet was recovered in possession of present petitioner. In total, 475 gm. contraband/ heroin was recovered in this case - The stand of NCB is that personal search of accused was not carried out, as 01 packet containing contraband recovered from petitioner was in his hands while exchanging it for money and the remaining 46 packets were recovered from the bag of co-accused and, therefore, notice under Section 50 of the Act was not required to be given. This has so been observed by the court below while dismissing petitioner s bail application. Further, the evidentiary value of petitioner s statement recorded under Section 67 of the Act cannot be prejudged at this stage. Moreover, question regarding call detail and chats, will be also tested during trial. In the present case it is not disputed that one packet recovered in the hands of petitioner contained 10 gm. of contraband, which falls within the category of small quantity . Thus, the prima facie role attributed to the petitioner in the present case appears to be that he had purchased one packet containing 10 gm. charas, which essentially is small quantity - The substance recovered in this case is not of commercial quantity. Thus, the bar of Section 37 of NDPS Act is not applicable. Moreover, petitioner is in judicial custody since 19.12.2020. Charge sheet in this case has been filed but Charge is yet to be framed and trial will take substantial time. Accordingly, this Court is of the considered opinion that petitioner deserves to be released on bail. Petition allowed.

  ---

• 2021 (6) TMI 333
  Incorrect reporting of the proceedings - HELD THAT:- Any slant in the reporting, which is not in line with the orders of the Court, leads to multifarious problems including the embarrassment that counsels appearing in the matter may encounter vis-a-vis their respective principals. - Petitioner undertook to remove the contents, the disconcerting blog, titled A Summer of Relief for Taxpayers from its website. List the matter on 22.07.2021.

  ---