TMI Tax Updates - e-Newsletter
June 2, 2020

Case Laws in this Newsletter:

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

Articles

1. DEFAULT IN PAYMENT OF FIXED DEPOSITS WHICH GOT MATURED

   By: DR.MARIAPPAN GOVINDARAJAN

2. AUDITOR CERTIFICATE FOR DPT – 3 _ DRAFT FORMAT

   By: CSLalit Rajput

3. Maharashtra government's clarification on GST appeals in respect of non constitution of appellate tribunal

   By: Navjot Singh

News

1. Minimum Support Prices (MSP) for Kharif Crops for marketing season 2020-21

2. Cabinet approves Upward revision of MSME definition and modalities/ road map for implementing remaining two Packages for MSMEs (a)₹ 20000 crore package for Distressed MSMEs and (b) ₹ 50,000 crore equity infusion through Fund of Funds

3. Auction for Sale (Re-Issue) of ‘5.09% GS 2022’, Auction for Sale (Re-Issue) of ‘5.79% GS 2030’, Auction for Sale (Re-issue) of ‘GoI Floating Rate Bond 2031’, and Auction for Sale (Re-Issue) of ‘7.19% GS 2060’

4. Shri Piyush Goyal interacts with the captains of the Pharmaceutical industry and Associations;

Notifications

DGFT

1. 08/2015-2020 - dated 1-6-2020 - FTP

Amendment in Export Policy of Alcohol based Hand Sanitizers

Income Tax

2. 31/2020 - dated 29-5-2020 - IT

Income-tax (12th Amendment) Rules, 2020.

Circulars / Instructions / Orders

DGFT

1. TRADE NOTICE NO. 13/2020-21 - dated 1-6-2020

Implementation of MoU between India and Mozambique for import of pigeon peas and other pulses grown in Mozambique

2. 09/2015-2020 - dated 1-6-2020

Amendments in the Appendix 3B, Table 2 of the Merchandise Exports from India Scheme (MEIS)

3. 08/2015-2020 - dated 1-6-2020

Increase in duration of validity of MEIS/SEIS scrips and relaxation in last dates for filling applications under MEIS/SEIS

Highlights / Catch Notes

GST

• Petitioner disputes property attachment due to lack of Section 74 notice; GST Commissioner to resolve u/r 159(5).

  Case-Laws - HC : Provisional attachment of property - petitioner states that in the absence of any notice issued u/s 74 CGST Act, no order of attachment u/s 83 could have been passed by the respondents - Commissioner GST directed to treat the present writ petition as an objection under Rule 159(5) of GST Rules and decide the same within three working days
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Income Tax

• Assessment Reopening Invalid: No Section 148 Notice Issued by Jurisdictional Officer, Lack of Recorded Reasons for Income Escape.

  Case-Laws - AT : Reopening of assessment u/s 147 - No notice of reopening u/s 148 of the Act was given by the Assessing Officer having jurisdiction over the assessee. No reasons were recorded by the jurisdiction so that he believes that income subject to tax has escaped assessment. The notice issued u/s 148 of the Act was by an AO who had no jurisdiction. Hence it is null and void
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• Retention Money Not Income Until Contract Fulfilled: No Vested Right in Assessment Year When Retained.

  Case-Laws - AT : Right to receive the retention money is accrued only after the obligations under the contract are fulfilled and the assessee had no vested right to receive the same in this assessment year, therefore, it would not amount to an income of the assessee in the year in which it is retained.
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• Trust's 300-Year-Old Jain Temple Activities Qualify for Tax Exemptions u/ss 11, 12AA, and 2(15) of Income Tax Act.

  Case-Laws - AT : Exemption u/s 11 - Registration u/s 12AA - Charitable activity u/s 2(15) - the assessee is working for both religious and charitable purpose and the property in question i.e. 300 year old Jain temple is being maintained and used for religious and charitable purpose by the assessee trust under the certificate granted by the Municipal Council. - Registration to be granted.
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• Member Airlines Can Offer Services to Non-IATP Members Under Article 8(2) of India-France DTAA.

  Case-Laws - AT : Accrual of income in India - IATP manual clearly set out that there is no bar on member airline to provide service to non IATP Pool member and in fact, even non IATP Pool members if takes such service from a pool would be considered as a pool service to them. Thus, the assessee being a pool member and providing service in that capacity to the guest members comes under the purview of Article 8(2) of the DTAA between India and France.
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• Interconnection and roaming charges not classified as technical services; exempt from TDS u/s 194J.

  Case-Laws - AT : TDS u/s 194J - Interconnection usages charges (IUC) - FTS - the roaming charges paid by the appellant to other telecom companies are not covered under fees for technical services and out of the purview of TDS provision of 194J.
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• Assessing Officer's Disallowance u/s 14A and Rule 8D Deemed Arbitrary and Unjustified for Dividend Income Expenditure.

  Case-Laws - AT : Disallowance u/s. 14A read with Rule 8D - expenditure related to Dividend income - A bald assertion by AO that he is not accepting the assessee’s claim is arbitrary and so cannot be justified. The AO has not applied his mind while dealing with the issue and his action smacks of arbitrariness and therefore his action cannot be sustained.
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• Denial of Section 12AA Registration Overturned Despite Large Cash Balances and Missing Bank Statements by Applicant.

  Case-Laws - HC : Registration u/s 12AA denied - huge cash balances, generation of huge surpluses in the past and non-furnishing of bank statements, which are essential elements to verify the genuineness of the activity of the applicant - CIT (E) has drawed conclusion from the balance sheet of the applicant in which the society is having huge cash balances in the form of FDR which could otherwise be utilized for expansion of education? - Approval cannot be denied.
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• Court Finds No Legitimate Tax Demand; Income Tax Department's Higher Demand Challenged for Self Assessment Tax Non-Payment.

  Case-Laws - HC : Harassment by the Income Tax Department - higher demand on the ground that the petitioner had not paid the ‘Self Assessment Tax’ - Prima facie this Court is of the view that there is no legitimate tax demand against the petitioner. - Notice issued.
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• Tax Residency Status u/s 6(1)(a) Depends on Voluntary or Involuntary Stay in India, Assessed by Officer.

  Case-Laws - HC : Period of stay in India - ascertaining the tax residency status under Section 6(1)(a) - the issue whether the petitioner’s presence in India was with his consent or against his Will is a question of fact which will have to be decided by the assessing officer.
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Indian Laws

• Conviction Overturned: Insufficient Evidence and Legal Errors in Cheque Dishonor Case Cast Doubt on Guilt Presumption.

  Case-Laws - HC : Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - The judgments of conviction are neither based on correct appreciation of evidence nor the proper application of law. The accused has successfully created a reasonable introspection in the mind of the Court by raising a probable defence that creates a serious doubt about the existence of a legally enforceable debt or existing liability
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Central Excise

• Appellant Can Re-credit Voluntarily Reversed CENVAT Without Filing Refund Claim.

  Case-Laws - AT : CENVAT credit - re-credit taken aver reversal - there is no need of filing of refund claim and in such circumstances the appellant could avail the Cenvat Credit which was voluntarily reversed
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VAT

• Ruling Confirms No Reversal of Input Tax Credit for Inputs Consumed in Manufacturing Despite Invisible Loss.

  Case-Laws - HC : Input Tax Credit - manufacturing loss, but also goods which were traded by the petitioner sold as such - there is no scope for reversal of input tax credit on inputs which get consumed during the course of manufacture as “invisible loss”.
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• Court Condones 9-Year Delay in Appeal Due to Financial Hardship and Staff Retirement; Appeal to Proceed.

  Case-Laws - HC : Condonation of delay in filing appeal - appeal filed after a delay of nine years, two months and 15 days - the applicant was facing financial crunch and the employees were taking voluntary retirement - Having had found that there were sufficient reasons given in the delay condonation application, the delay is being condoned.
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Case Laws:

• GST

• 2020 (6) TMI 36
  Provisional attachment of property - petitioner states that in the absence of any notice issued u/s 74 of the Central Goods and Services Tax Act, 2017 (CGST), no order of attachment under Section 83 of the Act, 2017 could have been passed by the respondents - HELD THAT:- This Court is of the view that Rule 159(5) of the Central Goods and Services Tax Rules, 2017 is squarely applicable to the facts of the present case. A Division Bench of High Court of Gujarat in PRANIT HEM DESAI VERSUS ADDITIONAL DIRECTOR GENERAL, DGGI, AZU [ 2019 (4) TMI 917 - GUJARAT HIGH COURT] has held that considering the fact that the petitioners were diligently prosecuting the proceedings before this court under Article 226 of the Constitution of India against the orders of attachment, if the petitioners file objections under sub-rule (5) of rule 159 of the Central Goods and Services Tax Rules, 2017 on or before 18th April, 2019, the competent authority shall consider the same as having been filed within time. It is deemed appropriate to direct the respondent No.1 to treat the present writ petition as an objection under Rule 159(5) of the Central Goods and Services Tax Rules, 2017 and decide the same within three working days - petition disposed off.

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• Income Tax

• 2020 (6) TMI 35
  Period of stay in India - ascertaining the tax residency status under Section 6(1)(a) - petitioner seeking a direction to respondents to disregard/exclude the days spent by the petitioner in India since 15th July, 2016 and for allowing the petitioner to file his income tax returns for the Financial Years 2018-19 and 2019-20 as an NRI - HELD THAT:- Petitioner states that the petitioner has been forced to stay in India due to confiscation of his passport initially by the CBI and later on due to its deposit with the trial court. He points out that the passport of the petitioner is still lying deposited with the trial court. In the opinion of this Court, the issue whether the petitioner s presence in India was with his consent or against his Will is a question of fact which will have to be decided by the assessing officer. Consequently, the present writ petition is disposed of with liberty to the parties to raise all their pleas before the statutory authority, who needless to say, shall decide the same in accordance with law.

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• 2020 (6) TMI 34
  Harassment by the Income Tax Department - higher demand on the ground that the petitioner had not paid the Self Assessment Tax - HELD THAT:- When the petitioner pointed out that the tax had been paid, the respondents passed yet another rectification order dated 16th August, 2019 allowing the credit of Self Assessment Tax of Rs. 1,32,860/-, but this time raised a fresh demand by adding back an amount donated by the petitioner. When the petitioner pointed out that the donated amount had already been added back by him in his return, the respondents uploaded the very first order / intimation under Section 143(1) of the Income Tax Act dated 20th November, 2017 whereby the addition in income on account of donation was deleted, but credit of TDS amount of Rs. 37,100/- was once again denied. Prima facie this Court is of the view that there is no legitimate tax demand against the petitioner. Issue notice. Mr. Zoheb Hossain, learned senior Standing counsel accepts notice on behalf of the respondents. Learned senior Standing counsel for respondents is directed to examine the matter. Let a status report be filed within a period of two weeks.

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• 2020 (6) TMI 33
  Registration u/s 12AA denied - huge cash balances, generation of huge surpluses in the past and non-furnishing of bank statements, which are essential elements to verify the genuineness of the activity of the applicant - CIT (E) has drawed conclusion from the balance sheet of the applicant in which the society is having huge cash balances in the form of FDR which could otherwise be utilized for expansion of education? - HELD THAT:- This case are covered by the decision of this Court passed in The Commissioner of Income Tax (Exemptions), Chandigarh vs. M/s Adesh Foundation (Regd.) [ 2019 (5) TMI 837 - ITAT AMRITSAR] wherein held why should a management, in no dearth of funds, risk its reputation and, rather, even the future of its institution, by asking for such ill gotten money? Clearly, we are unable to regard the present case as one of distinct possibility i.e., the test or the threshold which, in our view, must characterize the impugned transactions of donations which the applicant-appellant targets while seeking benefit u/s. 80G(5), so as to oust its case for being a eligible for approval thereunder. In our view, therefore, the assessee cannot be denied approval - Decided in favour of assessee.

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• 2020 (6) TMI 32
  Disallowance u/s 36 (1) (iii) - assessee has one bank account which consists of mixed funds - AO held that the assessee was not able to satisfy that the advances which were made for the purchase of land and investment in construction of the godown were entitled to the benefit of Section 36 (1) (iii) - CIT(A) gave a categoric finding that the funds used for purchase of land and construction were interest free funds and were not those which were obtained as loan from the bank and this finding on fact has been upheld by the Tribunal - HELD THAT:- Petitioner is not in a position to deny that the matter is squarely covered by the judgments of S.A. Builders Limited Versus CIT (Appeals) [ 2006 (12) TMI 76 - SUPREME COURT] and Bright Enterprises (P) Ltd. Versus Commissioner of Income Tax [ 2015 (11) TMI 342 - PUNJAB HARYANA HIGH COURT] - First question is answered in negative. Sum received as share capital from two companies were accommodation entries - ground taken by the AO was that those investors had sufficient funds yet they have been showing meagre profit from their business - Appellate Authorities noticed that on the asking of the AO, not only all the financers but even the directors of the company were produced. Moreover, the returns of those assessees had been accepted by the revenue and held that in these circumstances the share money investment could not be deemed to have been a paper transaction or an accommodation entry.

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• 2020 (6) TMI 31
  Non compiling conditions precedent for framing the assessment order u/s 143(3) - ACIT, Circle-23(1), Hooghly, has jurisdiction to passed the assessment order in question or not? - HELD THAT:- As relying on K.A. WIRES LTD. VERSUS INCOME TAX OFFICER, WARD 8 (3) , KOLKATA [ 2020 (3) TMI 418 - ITAT KOLKATA] We uphold the contentions of the assessee that the assessment orders passed in both these cases by the ACIT, Circle-23(1), Hooghly, were without jurisdiction. Hence we quash the same for both the assessment years.

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• 2020 (6) TMI 30
  Addition made u/s 14A - HELD THAT:- Issue covered in favour of the assessee by the decision of Special Bench of the Delhi Tribunal in the case of Vireet Investments Ltd.[ 2017 (6) TMI 1124 - ITAT DELHI ]. The Ld. CIT(A) has applied this decision and hence we uphold the same. Accrual of income - Addition on account of rental income - HELD THAT:- This issue is no more res integra as the Tribunal in the assessee s own case in the earlier assessment years [ 2016 (1) TMI 169 - ITAT KOLKATA ] for A.Y. 2007-08 had held that the action of the AO has resulted in taxing notional income in the hands of the assessee, which never accrued and hence cannot he brought to tax. Quantification of disallowance u/s 14A - assessee submitted that application of Rule 8D by the AO was bad in law for the reason that proper satisfaction was not recorded by the AO - HELD THAT:- On a query from the bench, the learned counsel for the assessee submitted that he would have no objection, if the issue is set aside to the file of the AO for de novo exercise on the quantification of the disallowance by applying the decision of the CIT(A) in an appeal for the A.Y. 2015-16 order dated 22nd February, 2019, for the reason that a remand report was called for from the Assessing Officer and the Ld. CIT(A) based the disallowance on the remand report. The ld. departmental representative did not have any objection for this proposal of the learned counsel for the assessee. In view of the above, we set aside the issue to the file of the Assessing Officer for fresh adjudication in accordance with law with the direction to consider and apply the decision of the CIT(A) for the A.Y. 2015-16. CIT(A) in this order, after obtaining a remand report from the Assessing Officer had restricted the disallowance to Rs. 62.67 lacs. In view of the above discussion all these grounds of appeal are set aside to the file of the AO for fresh adjudication in accordance with law. Order is being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Coordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]

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• 2020 (6) TMI 29
  Re-opening of assessment u/s 147 - addition of the sale proceeds u/s 68 - re-opening in this case is beyond a period of 4 years from the end of the assessment year - Approval in such cases is to be obtained from ACIT or JCIT u/s 151 of the Act and not from the Pr. CIT - HELD THAT:- It is not clear from where the AO picked up these figures for making the addition. DR could not prove the correctness of these figures. AO has mixed up the facts with some other case. Re-opening made based on such incorrect facts or such wrong figures cannot be sustained. The re-opening in this case is beyond a period of 4 years from the end of the assessment year. The AO states that approval for re-opening of assessment was obtained from the Pr. CIT, Kol-5. The original return file was processed u/s 143(1). Approval in such cases is to be obtained from ACIT or JCIT u/s 151 and not from the Pr. CIT. In any event no proof of approval from any authority is produced before me. There is non-application of mind by the AO to the information received, prior the re-opening of the assessment. This fact is clear from the facts and figures given in the reasons recorded are wrong. Such non-application of mind to the information received by the AO prior to recording of reasons for re-opening of assessment makes the reopening bad in law. Re-opening of assessment based on wrong facts and figures is bad in law. The re-opening is also bad in law as it proves non-application of mind by the AO. Addition of the sale proceeds u/s 68 - Assessee has disclosed the sale of shares in its books of account. Once the sale is declared as income by the assessee, the question of treating the same amount as a cash credit u/s 68 of the Act results in double addition. Moreover, the gross receipt cannot be brought to tax, specifically when the assessee had acquired the shares to an allotment as evidenced by the letter of allotment payment details etc. Thus, the addition is also bad on merits. - Decided in favour of assessee.

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• 2020 (6) TMI 28
  Disallowance u/s 54F - amounts spent on construction of the residential house property after the date of long term capital gain/transfer of the original asset - According to AO residential house (flat) was purchased on 29/09/2009, which is beyond the period of purchase of residential house (i.e 17/08/2010 to 18/08/2013) - HELD THAT:- Ratio of the above decision in the case of Ayushi Patni [ 2019 (1) TMI 1130 - ITAT PUNE] is squarely applicable over the facts of the instant case and thus accordingly, we hold that the new asset i.e. residential house has been purchased within two years from the date of transfer of the original asset i.e shares, and thus, the assessee is entitled for benefit of section 54F of the Act. The finding of the Ld. CIT(A) on the issue in dispute is accordingly set aside and the Assessing Officer is directed to allow the benefit of section 54F - Decided in favour of assessee.

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• 2020 (6) TMI 27
  Disallowance of business loss - HELD THAT:- For a small amount the authorities below should not have doubted the explanation of the assessee and others. The reasons given by the A.O. are merely a presumption which could not reject the explanation of assessee that he has suffered genuine business loss. The assessee furnished copy of the invoices and ledger account in support of the above explanation - the documentary evidences which have not been rebutted by the A.O. could not have been disbelieved by the A.O. on irrelevant reasons. A.O. did not examine the parties from whom assessee has purchased the items under reference which were later on sold to other parties when the above two parties refused to accept the goods from the assessee. We are of the view that the A.O. has failed to establish that loss suffered by the assessee is not genuine. There is no reason to sustain the addition - we set aside the Orders of the authorities below and delete the entire addition. In the result, appeal of the assessee is allowed.

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• 2020 (6) TMI 26
  Disallowance u/s. 14A read with Rule 8D - assessee claimed that no expenditure was incurred by the assessee in earning this dividend income - AO disallowed the expenditure alleging that the assessee debited demat charges and therefore disallowances u/s. 14A r.w.r 8D is applicable in case of the assessee - HELD THAT:- AO has not given any reason why he is satisfied with the explanation rendered by the assessee and has simply remarked that he is not accepting the claim of assessee that it did not incur any expenditure for earning exempt income. It has to be kept in mind that reason is the soul of any order and here it is absent. A bald assertion by AO that he is not accepting the assessee s claim is arbitrary and so cannot be justified. The AO has not applied his mind while dealing with the issue and his action smacks of arbitrariness and therefore his action cannot be sustained. And since the ld. CIT(A) s action of non adjudication of the legal issue raised by the ld. CIT(A) makes it unsustainable and so inclined to set aside the order and direct deletion of addition made by AO on this issue by invoking Rule 8D. For the reasons stated above, the appeal of assessee is allowed.

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• 2020 (6) TMI 25
  Penalty u/s 271(1)(c) - unexplained cash credit - HELD THAT:- In response to a specific question from the bench, learned Departmental Representative could not show us any specific initiation of penalty proceedings by the CIT(A). It is only elementary that unless the penalty proceedings are specifically initiated in respect of an addition, the penalty cannot be imposed. As no such addition was made by the Assessing Officer, there could not have any occasion to initiate the penalty in respect of this addition Addition was made by the CIT(A), who has himself termed it as enhancement , and there was no specific initiation of penalty by the CIT(A). In the absence of specific satisfaction recorded by the CIT(A) that the penalty is required to be initiated in respect of the related addition in our considered view, the impugned penalty is devoid of a legally sustainable foundation. We, therefore, deem it fit and proper to delete the impugned penalty. The assessee gets the relief accordingly. Pronouncement of order after the expiry of 90 days from the date of conclusion of hearing - Covid 19 epidemic - world wide lockdown - HELD THAT:- We are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. The extraordinary steps taken suo motu by Hon ble jurisdictional High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case.

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• 2020 (6) TMI 24
  TDS u/s 194J - Interconnection usages charges (IUC) is in the nature of fees for technical services - HELD THAT:- We find in the identical situation the Tribunal M/S. BHARTI AIRTEL LTD. [ 2019 (3) TMI 217 - ITAT AHMEDABAD ] has been pleased to pass orders in Revenue s appeal holding that the roaming charges paid by the appellant to other telecom companies are not covered under fees for technical services and out of the purview of TDS provision of 194J. Order is being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Coordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ].

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• 2020 (6) TMI 23
  Bogus purchases u/s 69C - CIT- A restricted addition to 5% - HELD THAT:- Cash purchases from other parties though those were not recorded in the books of accounts otherwise the sales made could not have taken place. The assessee took bills only from the five parties as accommodation to explain such purchases. Having regard to the particular aspect of the matter when the appellant has already recorded a Gross Profit of 3.56% in his books and the sales has not been doubted, we find no ambiguity in restricting such disallowance to 5% of the alleged bogus purchases by the Ld. CIT(A) so as to warrant interference. We find no merit in the appeal preferred by the Revenue. The order is, therefore, passed in the affirmative i.e. in favour of the assessee and against the Revenue. Pronouncement of order after the expiry of 90 days from the date of conclusion of hearing - Covid 19 epidemic - world wide lockdown - HELD THAT:- Period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force - Without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Exception, to 90- day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.

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• 2020 (6) TMI 22
  Exemption u/s 11 - Corpus donations - HELD THAT:- Out of 11 donors only 2 donors had submitted that they have donated not for corpus. All other donors have appeared and filed their respective covering letters stating that the donations given to the assessee was for the purpose of corpus. In such a scenario, the AO erred in drawing adverse inference against persons who had appeared and corroborated by deposing before the AO that they had made the donations for the corpus of the assessee. However since two (2) donors had submitted that donation is to be treated as donation not for corpus, therefore, we direct partial addition - Decided in favour of assessee. Calculation of the allowable (15%) accumulation of income - As per AO 15% accumulation of income allowed u/s. 11(1)(a) of the Act is to be computed with reference to the net income after deduction of expenses incurred for earning such income - HELD THAT:- The issue under consideration in respect of accumulation of income allowed u/s. 11(1)(a) is no longer res integra. For that we rely on the decision of Green Wood High Trust Vs. ACIT(Exemption) [ 2018 (1) TMI 1105 - ITAT BANGALORE] - direct the AO to allow the accumulation income u/s. 11(1)(a) of the Act at 15% of the gross receipt as claimed by the assessee and consequently ground raised by the assessee is allowed. Excess application of income - HELD THAT:- Hon ble Supreme Court in CIT-Exemptions Vs. Subros Educational Society [ 2018 (4) TMI 1622 - SC ORDER ] wherein it was held that eligible trust which are enjoying the registration u/s. 12AA of the Act are entitled to carry forward and set off of the excess application of income - direct that the excess expenditure incurred by the assessee trust in earlier assessment year should be allowed to be set off against the income of this year and so I allow the claim of the assessee as application of income. Not allowing tax deducted at source - HELD THAT:- As decided in JAYASHREE CHARITY TRUST [ 1984 (12) TMI 30 - CALCUTTA HIGH COURT ] there is no reason to deny the benefit of exemption granted by section 11 to that portion of income which had been taken away by deduction of tax at source on the ground that amount had not been spent/ accumulated for the purpose of charity. Direct the AO to allow tax deducted at source by assessee as application of income. Disallowing the establishment expenses as application of income - HELD THAT:- Said issue is no longer res integra since Hon ble Calcutta High Court in Birla Janhit Trust [ 1990 (8) TMI 5 - CALCUTTA HIGH COURT ] held that salaries and miscellaneous expenses, which are incurred for carrying out the objects and purposes of the trust must be considered as application for charitable purposes. I note that the assessee had claimed total expenses of Rs. 11,27,264/- (establishment expenses), however, AO estimated the expenses at Rs. 13,56,000/- which is per-se arbitrary and erroneous and ld. CIT(A) erred in confirming it. So direct the AO to allow the establishment expenses claimed by the assessee to the tune of Rs. 11,27,264/- as application of income u/s. 11(1)(a) of the Act. Order being pronounced after ninety (90) days of hearing - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, rely upon the decision of the Co-ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ].

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• 2020 (6) TMI 21
  Rectification of mistake u/s 154 - mistake in the intimation issued u/s 143(1) in as much as the long term capital loss carried forward from A.Y. 2010-11 2013-14 was not set off against the long term capital gain for the year under consideration - whether the clerical mistake stated to be committed by the Office Staff of the Tax Advisor of the assessee in not claiming the set off of the said loss against the long term capital gain of the year under consideration while filing the return on-line can be corrected by rectifying the intimation issued u/s 143(1) ? - HELD THAT:- As the issue involved in the present case as well as all the material facts relevant thereto are similar to the case of M/s. Shrikant Real Estates (P) Ltd. [ 2012 (10) TMI 854 - ITAT MUMBAI] we respectfully follow the decision of the Coordinate Bench of this Tribunal rendered in the said case and direct the Assessing Officer to rectify the intimation issued under section 143(1) as sought by the assessee thereby allowing the claim of the assessee for set off of long term capital loss carried forward from the earlier years against the long term capital gain of the year under consideration. - Decided in favour of assessee.

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• 2020 (6) TMI 20
  Appeal dismissed for non prosecution - HELD THAT:- In this case the efforts of the assessee in pursuing this appeal are wanting. What are the efforts the assessee made after writing this letter to the assessing officer were not at all placed before us. Even otherwise looking to the series of correspondence placed before us, each time assessee approached the income tax authorities after a considerable lag of time. This itself shows that assessee is not serious in pursuing this appeal. In view of this, we do not find any infirmity in the order of the learned CIT-A to the extent in not acceding request of the assessee to consider appeal filed in paper format. Even otherwise, he is not authorised to do so. Therefore, appeal is dismissed. In the interest of justice, looking at the various litigations through which assessee is going, we give liberty to the assessee to file a fresh appeal before CIT (A) in electronic format in accordance with the rule along with the necessary application for condonation of delay, justifying the cause in delay in filing of the appeal. If such appeal is filed by the assessee, the learned CIT A may hear the appeal of the assessee after condoning the delay, if found in accordance with the law. Assessee is directed to file the appeal before the learned CIT- A within three months from the date of receipt of this order.

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• 2020 (6) TMI 8
  Reopening of assessment u/s 147 - No notice issued by the Jurisdictional AO - Non disposal of assessee s objection - addition u/s 68 - HELD THAT:- Reasons recorded by the AO that the assessee was beneficiary by way of CCM in derivative transactions was factually incorrect. This shows non application of mind by the I.T.O to the information received by the AO from the ADIT (Inv.), Unit-1(3), Ahmedabad. The law requires that the Assessing Officer prima facie applies his mind to the information received, prior to forming a reasonable belief, that income subject to tax has escaped assessment and thereafter record reasons. When reasons are based on wrong facts, which were not verified, then it is a clear case of non-application of mind by the Assessing Officer to the material received. Thus, there is no direct nexus between the tangible material received and the formation of belief that income had escaped assessment and hence the reopening of assessment is bad in law.Admittedly, the Assessing Officer has not disposed off these objections by way of a speaking order, as mandated by the Hon ble Supreme Court in the case of G.K.N. Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT ] before the completion of assessment. No notice of reopening u/s 148 of the Act was given by the Assessing Officer having jurisdiction over the assessee. No reasons were recorded by the jurisdiction so that he believes that income subject to tax has escaped assessment. The notice issued u/s 148 of the Act was by an AO who had no jurisdiction. Hence it is null and void. It is not a legal notice in the eyes of law. Thus, on this count also, the assessment order passed u/s 143(3) of the Act on 13/12/2016, is bad in law. Addition u/s 68 - AO has not discharged the onus that lay on the revenue to prove that the assessee had earned the income in question. The letter from NSE states the facts which are not controverted by the Assessing Officer. When the NSE states that the assessee has not earned income from derivative transactions, the question of making addition on this ground does not arise. Thus, we delete the addition made. - Decided in favour of assessee. Order being pronounced after ninety (90) days of hearing - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]

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• 2020 (6) TMI 7
  MAT Applicability of section 115JB in the case of the assessee being a bank - HELD THAT:- As decided in own case [ 2016 (1) TMI 135 - ITAT KOLKATA ] provisions of section 115JB of the Act are not applicable in the case of the assessee bank and further held that the amendment brought in section 115JB of the Act read with Explanation 3 thereon by the Finance Act 2012 is applicable only with effect from Asst Year 2013-14 onwards in line with the Notes to Clauses of Finance Act 2012 . - Decided in favour of assessee. Prior period expenses disallowance - HELD THAT:- As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of A.Y. 2010-11 and 2012-13 [ 2018 (11) TMI 1784 - ITAT KOLKATA ] we respectfully follow the order of the Tribunal for the said years and uphold the impugned order of the Ld. CIT(A) deleting the disallowance made by the AO on account of prior period expenses. Disallowance made on account of cost of debit card (ATM card) ATM machine charges - HELD THAT:- As decided in own case [ 2018 (11) TMI 1784 - ITAT KOLKATA ] we find that the issuance of ATM Cum Debit Cards to the customers of the assessee bank is part of the business activity of the assessee and there is no enduring benefit to the assessee out of incurring this expenditure. CIT(A) had observed that in the past the department had been accepting this expenditure as a revenue expenditure and we find no change in facts and circumstances of the case for the year under appeal with regard to the impugned issue warranting the department to take CL different stand. This fact has not been controverted by the revenue before us. Though the principle of res judicata does not apply to income tax proceedings in our opinion the principle of consistency cannot be given to go bye. Disallowance u/s 14A read with Rule 8D(2)(ii) of the Rules as applicable to the assessee bank - HELD THAT:- As decided in own case [ 2016 (1) TMI 135 - ITAT KOLKATA ] we uphold the impugned order of the Ld. CIT(A) deleting the disallowance made by the AO u/s 14A read with Rule 8D and dismiss ground no. 4 of the revenue s appeal. Disallowance u/s 40(a)(ia) for non-deposit of TDS - HELD THAT:- As decided in own case [ 2020 (2) TMI 948 - ITAT KOLKATA ] since the assessee has deducted and deposited tax on contractual payments under consideration before the due date of filing of return of income, disallowance u/s 40(a)(ia) is not warranted, therefore, we delete the disallowance -This issue is accordingly restored to the file of the AO for the limited purpose of verifying the claim of the assessee of having paid the relevant TDS amount before the date of filing of return of income u/s 139(1) of the Act for the year under consideration and to decide the same accordingly. Disallowance of share issue expenses - allowing the deduction being 1/5th of the total share issue expenses u/s 35D - HELD THAT:- Respectfully following the decision of Mumbai Bench of this Tribunal in the case of Indusind Bank Ltd. [ 2019 (2) TMI 1713 - ITAT MUMBAI ] we direct the AO to allow the claim of the assessee for share issue expenses u/s 35D of the Act being 15th of the total expenses. Ground No. 2 of the assessee s cross-objection is accordingly allowed. Disallowance of assessee s claim for deduction u/s 36(1)(viii) - HELD THAT:- As the issue involved in the present case as well as all the material facts relevant thereto are similar to the case of Allahabad Bank [ 2019 (6) TMI 993 - ITAT KOLKATA ] we respectfully follow the order of the Coordinate Bench of this Tribunal passed in the case of Allahabad Bank and direct the A.O to allow the deduction u/s 36(1)(viii) of the Act as claimed by the assessee. Municipal Valuation for determination of rental income from the relevant properties - HELD THAT:- No infirmity in the impugned order of the ld. CIT(A) directing the A.O to adopt municipal valuation to determine the rental income of the assessee from the concerned properties. Order is being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Coordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]

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• 2020 (6) TMI 6
  MAT Computation - Reduction of Book Profit by lower of Unabsorbed Depreciation or Business loss, whichever is less without setting off of amounts written back as per order of BIFR - HELD THAT:- Since the assessee was discharged by SICA on 16/08/2011 and its net worth turned positive by virtue of implementation of revival scheme, the assessee would be precluded from relief u/s 115JB in view of Explanation 1(vii) to Section 115JB (2) and therefore, no relief would be available from AY 2011-12 onwards. Therefore, the matter of applicability of Sec.115JB was delved into by CBDT and it was proposed to restrict the relief u/s 115JB as per the provisions contained therein. This being the case, the plea as raised by AR could not be accepted since the assessee s claim was specifically examined by appropriate authorities and it was decided not to extend the benefit of provisions of Sec. 115JB after assessee s net worth turned positive. No relief could be granted to the assessee on this point. The case law in CIT V/s Tube Investments of India Ltd. [ 2012 (1) TMI 35 - MADRAS HIGH COURT ] is factually distinguishable since the assessee s net worth had not turned positive in that case and the relief as proposed by BIFR was not specifically rejected by the CBDT. Further, that case deal with deduction u/s 43B to an entity which has taken over a sick company. Reduction in Book Profits u/s 115JB - HELD THAT:- As per the express provisions of Explanation-1(iii) to S.115JB (2), the assessee would be entitled for deduction of amount of loss brought forward or unabsorbed depreciation whichever is less as per books of account. It is also evident that the assessee has claimed lower of depreciation and book loss while computing Book Profits u/s 115JB for AY 2012-13 which has not been disturbed by AO in the assessment order for AY 2012-13. Therefore, we find certain strength in these arguments. We find that the issue of aforesaid adjustments has not been delved upon either by Ld. AO or by Ld. CIT(A). Therefore we deem it fit to remit the matter back to the file of CIT(A) to specifically adjudicate the issues raised under the appeal by way of a speaking order and bring on record correct factual matrix, in this respect. Needless to add that reasonable opportunity of hearing shall be granted to the assessee, who, in turn, is directed to substantiate his claim. Order is being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Coordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ].

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• 2020 (6) TMI 5
  Denial of deduction u/s. 80IA for interest on income tax refund - HELD THAT:- Interest accrues to the assessee as per statutory mandate only and it accrues to every assessee under certain conditions irrespective of manner of earning of the income. The source of the interest was necessarily to be traced to the fact that the assessee was deprived of use of money due to excess payment of taxes and the same would bear no nexus with the business activities being carried out by the assessee. The argument that lower TDS would have meant lower interest expenditure is misplaced. The deduction of interest is allowed to the assessee as per the mandate of Sec. 36(1)(iii) only. The TDS is also deducted as per statutory mandate only and the same is applicable to each type of assessee under certain conditions. Therefore, the said argument, in our opinion, would not materially alter the basic fact that interest on Income Tax refund would bear no nexus with the eligible activities being carried out by the assessee. Going by the ratio of Liberty India [ 2009 (8) TMI 63 - SUPREME COURT ] we confirm the stand of Ld. CIT(A) in the impugned order. Interest on fixed deposits since the accrual / source of interest would be traced to investment made by the assessee with the Banks in the shape of FDRs notwithstanding the motive which led to make those investments. The assessee s only source of income may be the earnings from eligible business but the accrual of interest could not be said to have any nexus with the eligible business rather the same would be traced to investments made by the assessee with the Bank. The words derived from would not cover sources of income beyond first degree. Therefore, the action of Ld. CIT(A) in bringing to tax the same, is upheld. Consequently, ground No. II stands dismissed. Depreciation on Terminal Rights - HELD THAT:- This issue is covered in assessee s favor by the cited decision of the Tribunal for AY 2010-11 [ 2018 (3) TMI 1865 - ITAT MUMBAI ] wherein it was held that since prescribed rate of depreciation as per Rule is 25%, the assessee would be entitled for the same. Facts are parimateria the same in this year. Therefore, taking the same view, we direct Ld. AO to allow depreciation at prescribed rate of 25%. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Coordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ].

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• 2020 (6) TMI 4
  Re-opening of the assessment u/s 147 - Whether royalty was duly disclosed and offered to tax in the return of income filed by American Express (India) Ltd. in the capacity of the representative assessee for the assessee? - HELD THAT:- As gone through the reasons as were recorded prior to the assumption of jurisdiction for reassessment. It is seen that the reassessment proceedings were initiated on the basis of the information which was already available with the Department at the time of completion of the original assessment proceedings. It is apparent that no new information or material has been brought on record by the AO to establish or even indicate that any income for the year under consideration has escaped assessment. One of the allegations by the AO has been that the assessee has not offered to tax the royalty of USD to 263,532 received from American Express (India) Pvt. Ltd. towards the right given for use of Global Makers System, Software and application. This allegation is factually incorrect in as much as it is apparent from the records that American Express (Indian) Pvt. Ltd. had filed the return of income in the capacity of the representative assessee for the assessee company on 28th November, 2003 wherein this royalty income had been offered to tax @ 15% under Article-12(3) (a) of the DTAA between India and USA. As seen that a proper discloser was made in this regard in the return of income filed by the assessee in response to the notice issued u/s 142(1) on 16.02.200 - royalty of USD 263,532 was duly disclosed and offered to tax to the return of income filed by the American Express (India) Pvt. Ltd. Company in the capacity of the representative assessee of the assessee company, it cannot be said that any new information had come in the possession of the AO so as to warrant invocation of reassessment jurisdiction on this issue. As contention was duly accepted by the AO during the course of assessment proceedings and thus the re-opening of the concluded assessment on this issue would tantamount to re-visiting the issue without there being any fresh material having been brought on record by the AO. The action of the AO in invoking the jurisdiction u/s 147 would fall outside the purview of the said section. Reasons recorded for initiation of the reassessment proceedings, is that the assessee had set up equipment in the form of mid-range and mainframe computer and network in the USA was payable by American Express (India) Pvt. Ltd. to the assessee company for the relevant period as consideration for the use of computer, server, network etc. which was covered by the definition of royalty both under the Act as well as the DTAA but was not offered to tax. In this regard again it is seen that this observation of the AO is incorrect in as much as the assessee had duly offered the royalty in the return of income filed by the American Express (India) Pvt. Ltd. in the capacity of the representative assessee for the assessee company. Thus, on this count the reassessment has been initiated on an issue which was factually incorrect and was already concluded and would thus not be sustainable. Reassessment proceedings have been initiated on the ground that the assessee had seconded some employees to American Express (India) Pvt. Ltd. which would constitute a fixed place of business of the assessee company. In this regard also, it is seen that the assessee had furnished copies of agreement relating to the second-ment of employees during the course of the original assessment proceedings vide submissions dated 13th March, 2006 and, thus, apparently, this issue also was examined by the AO and it was the view of the AO then that there was no fixed place PE and the return of the assessee was accepted in the original assessment proceedings. This information also was available at the time of the completion of original assessment proceedings and no fresh information came to be in possession of the AO on this issue also. Reassessment proceedings in this case were initiated without there being any fresh material in possession of the AO. There was no tangible material with the AO which could justify the initiation of reassessment proceedings. The aspects recorded by the AO in the reasons to believe were known to the Assessing Officer at the time of original assessment also and apparently the explanations offered by the assessee appear to have been taken into account. AO cannot be permitted to review his earlier assessment order in the garb of reassessment. Also the reassessment jurisdiction cannot be invoked by a mere change of opinion. In the case of Le Passage To India Ltd. [ 2014 (4) TMI 750 - DELHI HIGH COURT] has held that where the reasons to believe do not reveal as to what tangible material the Assessing Officer came to obtain to justify the reassessment notice and where an aspect which was known to the Assessing Officer at the time of the original assessment and the explanations of the assessee appeared to have been taken into account, the assessment cannot be reopened. Reasons recorded nowhere reveal as to what tangible material, the Assessing Officer came to obtain to justify the reassessment notice and, therefore, the reassessment proceedings have been wrongly initiated - on the facts of the case and respectfully following the ratio of the judgment of the Hon ble Apex Court in CIT vs. Kelvinator India Ltd.[ 2010 (1) TMI 11 - SUPREME COURT] and of the Hon ble Delhi High Court in the case of Le Passage To India [ 2014 (4) TMI 750 - DELHI HIGH COURT] we quash the reassessment proceedings - Decided in favour of assessee.

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• 2020 (6) TMI 3
  Addition of retention money - disallow the TDS credit claimed in respect of the retention money - HELD THAT:- CIT(A) has taken care of the TDS issue and the assessee has not preferred to challenge the action of Ld. CIT(A) which crystallizes. Therefore, the direction of the Ld. CIT(A) to the AO to disallow the TDS credit claimed in respect of the retention money not shown as income by the assessee in the revised return and to allow it in the year in which the assessee declares retention money as its income takes care of the TDS credit even if erroneously claimed by the assessee in respect of the retention money. The relevant clauses of the contract that the contractees had the right to withhold certain percentage of the consideration till the conclusion of the project and only after certification of concluded projects the retained portion of the amounts are disbursed finally which may be in the succeeding assessment years and is contingent upon the terms and conditions of the contract. AO has not disputed the amount which has been retained by the contractees. In such a scenario, merely because the assessee had booked the income in this year without actual receipt of it, cannot be chargeable to tax as per the Act. The reasons given by the AO to disallow the claim of the assessee cannot be sustained and was rightly repelled by the Ld. CIT(A) whose view to accept the claim of assessee is based on the accepted judicial precedents laid down by the Hon ble jurisdictional High Court in CIT Vs. Simplex Concrete Piles [ 1988 (12) TMI 52 - CALCUTTA HIGH COURT ]; Hon ble Gujarat High Court in Anup Engineering Ltd. [ 2000 (7) TMI 17 - GUJARAT HIGH COURT ]; Hon ble Bombay High court in CIT Vs. Associated Cables P. Ld. [ 2006 (8) TMI 135 - BOMBAY HIGH COURT ] and in CIT Vs. Ignifluid Boilers (I) Ltd. [ 2006 (1) TMI 76 - MADRAS HIGH COURT ]. We hold that in the factual circumstances especially as per the terms of contract between the assessee and the contractee, the retention money retained by the contractee is deferred payment and is contingent upon satisfactory completion of contract work. Right to receive the retention money is accrued only after the obligations under the contract are fulfilled and the assessee had no vested right to receive the same in this assessment year, therefore, it would not amount to an income of the assessee in the year in which it is retained. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) and so, we confirm it and dismiss the appeal of the Revenue. Order is being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Coordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]

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• 2020 (6) TMI 2
  Exemption u/s 11 - Registration u/s 12AA denied - Charitable activity u/s 2(15) - assessee is working for both religious and charitable purpose - HELD THAT:- On examining the facts and issue of the instant appeal in the light of above referred decision of Shri Jain Shwetamber Murtipujak Sangh V/s CIT [ 2015 (3) TMI 1377 - ITAT PUNE] we find that the issue stands squarely covered in favour of assessee with regard to the issue of registration u/s 12AA and we therefore, respectfully following the above decision are of the considered view that Ld. CIT (Exemption) erred in denying the registration u/s 12AA to the assessee completely ignoring the fact that the assessee is working for both religious and charitable purpose and the property in question i.e. 300 year old Jain temple is being maintained and used for religious and charitable purpose by the assessee trust under the certificate granted by the Municipal Council. Ground raised by the assessee and direct Ld. CIT (Exemption) to grant the certificate of registration u/s 12AA. Appeal of the assessee is allowed.

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• 2020 (6) TMI 1
  Accrual of income in India - revenue receipts as from operation of aircraft in international traffic - India and France (DTAA) - Revenue contended that the assessee provides its services both to airlines who are members of IATA/IATP as well as members who are not members of IATP and does not receive any reciprocal services in India and considering the scale of activities both inside India as well as outside thus an independent commercial and business activity which is in no way ancillary or connected to the business in the operation of aircraft as defined by Article 8(4) of the DTAA between India France - HELD THAT:- Assessee company is a member of IATP and the DTAA between India France clearly set out that those who are members of pool are exempt from tax in India. AO was not right in rejecting the claim of the assessee that profit from technical handling services is covered by Article 8 and in treating the Technical Income as fee for technical services covered u/s 115A read with Section 44D and taxed the same at 20% of the gross receipts. CIT(A) rightly held that the assessee s income from ground handling and technical handling services is covered by Article 8 of the Indo-French DTAA. But the CIT(A) further held that income earned from rendering service to Iberworld a non IATP member would be taxed under Article 7, that is what challenged before us by the assessee. IATP manual clearly set out that there is no bar on member airline to provide service to non IATP Pool member and in fact, even non IATP Pool members if takes such service from a pool would be considered as a pool service to them. Thus, the assessee being a pool member and providing service in that capacity to the guest members comes under the purview of Article 8(2) of the DTAA between India and France. Therefore, the CIT(A) was not right in sustaining the taxability under Article 7 of the DTAA. Thus, appeal of the assessee is allowed. Validity of reopening of assessment u/s 147 - HELD THAT:- After going through the reasons it can be seen that the Assessing Officer has prima facie reason to believe that there is escapement of income as no return was filed by the assessee which is admitted fact. Thus, initiating proceedings u/s 148 of the Act are just and proper.

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• Customs

• 2020 (6) TMI 19
  Charges demanded by CFSs/ICDs for release of containers - HELD THAT:- As far as the Container Freight Stations (CFSs) and Inland Container Depots (ICDs) in minor ports are concerned, the petitioner, without prejudice to its rights and contentions and subject to the outcome of the present petition, shall be at liberty to have its containers released on payment of such charges as may be demanded by such CFSs/ICDs. As far as the CFSs/ICDs in major ports are concerned, the learned counsel for the respondent no. 1 and 4 submits that the CFSs are bound by its direction dated 23.04.2020 and the respondent no. 1 and 4 are in the process of ensuring compliance of such CFSs with the said direction.

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• Corporate Laws

• 2020 (6) TMI 18
  Fresh re-auction order - reserve price reduced in fresh auction - Company under liquidation - there was no participant in the first round - No cogent reason is reflected from the orders passed by the learned Company Judge in respect of grant of permission relating to reduction in the reserve price and re-auction was held - HELD THAT:- If the Court feels that the price offered in the auction is not the adequate price, the Court can certainly order for re-auction and in the present case, a person i.e. present appellant has offered Rs. 2,80,00,000/- more in the matter, and therefore, fresh auction is inevitable. Another important aspect of the case is that the sale was confirmed on 02.03.2020 in presence of advocate of respondent No.2 with a direction to deposit entire sale consideration within a period of 60 days from the date of the order i.e. by 01.05.2020, however, respondent did not deposit any amount by 03.05.2020 and taking shelter of pandemic COVID 19, a prayer was made for extension of time. This Court, as the amount offered by respondent No.2, which is less than the initial reserve price of Rs. 31,00,00,000/- and which is again less than the amount offered by the appellants, cannot be accepted as the difference is about Rs. 2,79,00,000/-. The Official Liquidator is receiving almost 2.80 crore extra amount and on technicalities, such an offer cannot be thrown in a dustbin. It is certainly true that the present appellant has not participated in the process of tender but at the same time, assets of the Company, as the initial price was fixed at Rs. 31,00,00,000/-, cannot be given to a person, who has offered Rs. 28,15,00,000/- only - the prayer made in the OLR for fresh e-auction should have been allowed and not further extension could have been granted keeping in view the peculiar facts and circumstances of the case to respondent No.2 to deposit the amount. The orders dated 02.03.2020 and 04.05.2020 are hereby set aside and the prayer made by the Official Liquidator in OLR No.31/2019 for holding fresh e-auction is allowed.

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• 2020 (6) TMI 17
  Reference of matter for arbitration - Works Contract - Invitation for tender for carrying out the balance work - privity of contract or not - Petition had sent pre-termination notice to respondent no.4, on the ground that respondent no. 4 had committed delay and breaches against the contractual delivery date of 12 months i.e. by 17th January, 2014 the respondent no.4 was not in a position to complete the said works - Micro, Small and Medium Enterprises Development Act, 2006 - HELD THAT:- There is no privity of contract between the petitioner and respondents no. 2 and 3 - In view of various clauses of the contract, there is nothing on record to show that respondent no.4 had taken consent of the petitioner to give sub- contract to respondent no.2, who in turn gave further sub- contract to respondent no.3. Moreover, this Court in order dated 12th April, 2016 in Special Civil Application No. 3419/2016 has categorically held that there is no privity of contract between the petitioner and respondents nos. 2 and 3. Therefore, in no circumstances, application filed by respondent no.2 could have been proceeded further by respondent no.1 when it is an admitted position that there is no privity of contract between the petitioner and respondent nos. 2 and 3. If there is dispute between respondent no.2, 3 and 4, the petitioner is not liable in any manner whatsoever more particularly, when respondent no.4 has admitted that there is a final settlement between the petitioner and respondent no.4 with regard to the outstanding dues. The findings given by respondent no.1 Council in paragraph no. 3 and 4 as referred to herein above are self-contradictory. Respondent no.1 Council on one hand has observed that this is the only civil remedy for involving all the three respondents, except M/s. Indian Oil Corporation Limited but in the next paragraph it has observed that it is very shocking and painful argument by learned advocate of M/s. Indian Oil Corporation Limited before the Council that it has no knowledge of the work by M/s. Hariom Builders and M/s. H.P. Associate. The respondent no.1 council appears to have taken into consideration the work done by respondent no.2 and 3 only without referring to the respective clauses of the agreement between the petitioner and respondent no.4 - Moreover, in absence of any contract between petitioner and respondent nos. 2 and 3, the petitioner could not have been dragged to arbitration proceedings only because respondents no.2 and 3 have carried out work pursuant to the contract awarded to respondent no.4 by the petitioner. Findings given by respondent no.1 Council in the impugned order is therefore contrary to the facts materials on record. Respondent no.1 Council has not taken into consideration the relevant materials on record but has been swayed away by the factor of work being carried out by respondent nos. 2 and 3 - the petitioner cannot be said to be a buyer only because respondents no.2 and 3 carried out the work on behalf of respondent no.4 because definition of buyer means whoever buys goods or services for consideration. The petitioner has never bought any goods or received any service from respondents no. 2 and 3 who are suppliers for any consideration. According to provision of section 15, liability of the petitioner would arise only if the petitioner is a buyer. In the facts of the case, the petitioner cannot be said to be buyer as there was no privity of contract between the petitioner and the respondent nos. 2 and 3. Therefore, when there is no liability of the petitioner to make payment, provisions of section 18 would not come into operation because there is no amount due to be paid by the petitioner to either respondents no. 2 or 3 - the impugned order referring the matter to arbitration qua the petitioner is not tenable in law. The impugned order dated 17th April, 2018 passed by respondent no.1 council is modified so far as it directs the petitioner to be arrayed as respondent in the arbitration proceedings. The order passed by respondent no. 1 Council therefore, now would be applicable only qua respondents no. 3 and 4 who where original respondents no. 2 and 3 before respondent no. l Council - petition allowed in part.

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• 2020 (6) TMI 16
  Suppression of facts - Change in management - the petitioners did not seek any permission from BIFR for any change in the management - increase in authorized share capital - HELD THAT:- It appears that there are disputed questions of facts as stated by both the sides on affidavit. Moreover, it is also not in dispute that BIFR was functional when the interim order was passed by this Court. It appears that the petitioners have suppressed the material facts on record when the interim order was passed by this Court by pointing out that resolution dated 27.11.2015 was contrary to the directions of the BIFR in its order dated 18.2.2009. However, the petitioners did not point out that BIFR had already sanctioned the scheme on 17.7.2013 after taking into consideration the order dated 18.2.2009 and subsequent various orders passed from time to time - It appears that thereafter, petitioners have tendered their resignations on 4.2.2015 which is suppressed by the petitioners. The petitioners have also suppressed about the appointments of respondents nos. 1 and 2 as directors way back in 2007 and 2009. The petitioners have also suppressed the fact of execution of shareholders agreement, indemnity bond and personal guarantees on 27.9.2007 in favour of respondents nos. 1 and 2. Thus it is apparent that the petitioners have not come with clean hands before the Court. In the facts of the present case as there is active suppression on part of the petitioners, the decision of the Jharkhand High Court in case of MUNNAM SANJAY AND ORS. VERSUS THE STATE OF JHARKHAND AND ORS. [ 2019 (1) TMI 1779 - JHARKHAND HIGH COURT] relying upon various decisions of the Supreme Court would be applicable wherein it has been held It is thus evident that it is the duty of the litigant to approach the Court at equity with clean hand and it is not available to him that which fact is to be disclosed and which fact is not to be disclosed rather his duty is only to approach the court of law by complete disclosure at each and every fact and it is upon the court to decide which fact is necessary to be accepted and which is not necessary to be accepted. This writ petition deserves to be dismissed only on the ground of suppression of material facts - When the petitioners have not come with clean hands before the Court and have suppressed the material facts, the petitioners are not entitled to any relief under Articles 226 and 227 of the Constitution of India. Moreover, the petitioners have also suppressed that BIFR was functional when the interim order was passed by this Court. Petition dismissed.

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• Central Excise

• 2020 (6) TMI 15
  Maintainability of appeal - Sab-ka-viswas (legacy dispute resolution scheme) 2019 - HELD THAT:- The appeal is dismissed for non-prosecution - If the appellant has indeed not applied for SVLDRS and also wishes to pursue it, they may file an application for restoration of appeal.

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• 2020 (6) TMI 14
  CENVAT credit - re-credit taken aver reversal - capital goods used for Job work under N/N. 214/86 - HELD THAT:- Issue decided in appellant own case M/S. VIKRANT EXTRUSIONS VERSUS COMMISSIONER OF CENTRAL EXCISE ST, DAMAN [ 2019 (6) TMI 1491 - CESTAT CHENNAI] where it was held that the assessee is entitled to take note of as per Rule 6(5) of the Cenvat Credit Rules, 2004, as there is no dispute of the fact that a sum of Rs. 3,21,308/- available as Cenvat credit was in respect of input services, which are given under Rule 6(5) of the Cenvat Credit Rules, 2004. There is no need of filing of refund claim and in such circumstances the appellant could avail the Cenvat Credit which was voluntarily reversed. Appeal allowed - decided in favor of appellant.

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• 2020 (6) TMI 13
  Denial of CENVAT Credit - input services - GTA Services - period March 2005 to January 2006 - HELD THAT:- The impugned order has once again raised the same demand which has already been settled in favour of the assessee. The only proper course would have been to challenge the same further rather than knocking at the back door, which is not permissible. Demand set aside - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (6) TMI 12
  Maintainability of appeal - Requirement of mandatory pre-deposit - appeal came to be dismissed for non-enclosing the receipt of deposit of 20% of the demand as envisaged under Section 48(4)(ii) of the VAT Act - HELD THAT:- This court has taken note of Ground-6 raised by appellant in that case that some time ought to have been granted to the appellant to comply with requirement of Section 48(4)(ii) of VAT Act. By oral submissions, learned counsel also tried to convince this Court that now the appellant, somehow was able to arrange the amount required for the pre-deposit and as such, by recording submissions of learned counsel for the appellant, Annexure A2 order was passed. Looking to the pleadings of appellant in tax case no.68/2019 and in WP 132/2019, particularly ground no.6 wherein the appellant wanted an opportunity to make the default good. The other thing is that this court while passing orders in tax case no. 68/2019, has recorded the submission of the learned counsel for the petitioner that by now somehow they managed to arrange funds to comply the provision of mandatory deposit. In the aforementioned facts of the case, appellant will not be permitted to raise the different pleas in different proceedings. Appeal dismissed.

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• 2020 (6) TMI 11
  Condonation of delay in filing appeal - appeal filed after a delay of nine years, two months and 15 days - HELD THAT:- The reasons given in the application were sufficient to condone the delay. When the affidavit had gone unrebutted and in the affidavit it has been stated that Jaipal was not an employee of the applicant and further it was stated that the applicant was facing financial crunch and the employees were taking voluntary retirement, the delay in filing the appeal ought to have been condoned even though there was a substantial delay. Having had found that there were sufficient reasons given in the delay condonation application, the delay is being condoned - revision allowed.

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• 2020 (6) TMI 10
  Input Tax Credit - manufacturing loss, but also goods which were traded by the petitioner sold as such - HELD THAT:- The issue as to whether the petitioner was liable to pay /revise Input Tax Credit availed on various goods manufactured, is now covered by a decision of this Court in M/S. RAN INDIA STEELS (P) LTD. VERSUS THE PRINCIPAL SECRETARY / COMMISSIONER OF COMMERCIAL TAXES, THE COMMERCIAL TAX OFFICER (FAC) , CHENNAI [ 2019 (12) TMI 1305 - MADRAS HIGH COURT] where it was held that there is no scope for reversal of input tax credit on inputs which get consumed during the course of manufacture as invisible loss . There is no question to denying Input Tax credit availed on goods manufactured and traded by the petitioner unless they were contrary to other provisions of the order. Since the respondent also included the turnover purportedly purchased by the petitioner and sold while confirming the demand, the impugned orders need to be aside. Petition disposed off.

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• Indian Laws

• 2020 (6) TMI 9
  Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - failure of the drawer to make the requisite payment within fifteen days from the date of receipt of the notice - section 138 of NI Act - HELD THAT:- Although the violation of the provisions of Section 269SS of the Income tax Act is an offence under Section 271-D of the Act, but it is not an offence under the Negotiable Instruments Act, 1881, which is silent about the cash limit. Thus, these violations alone may not be sufficient to throw away the complaint in entirety; still, it remains as one of the factors which would weigh in favor of the accused, while appreciating the evidence led in the course of discharging the statutory presumptions of Ss. 118 and 139 of the Negotiable Instruments Act, 1881 - Another factor that creates a serious doubt in the credibility of the holder of the cheque is that in cross-examination, the complainant admitted that although he was an Income Tax Payee, he had not mentioned the loan of Rs. 4,00,000/- in his books of accounts. The fundamental law relating to the successful rebuttal of the statutory presumption under Section 118 and 139 of the Negotiable Instruments Act, 1881 by the accused is that the burden to prove the accusations shifts back upon the complainant after the accused reasonably discharge the initial statutory onus of proof by establishing the facts contrary to the complaint s evidence, or by showing that the existence of consideration was improbable, or doubtful, or the same was illegal. After this, the burden shifts back to the complainant who will be obliged to prove her case just like any other criminal trial, where the initial burden is always on the accuser, and it never shifts - Failure to establish the accusations beyond a reasonable doubt would disentitle her for granting relief based on the bouncing of the negotiable instrument. The judgments of conviction are neither based on correct appreciation of evidence nor the proper application of law. The accused has successfully created a reasonable introspection in the mind of the Court by raising a probable defence that creates a serious doubt about the existence of a legally enforceable debt or existing liability - this Court is allowing the present petition, setting aside the judgments of conviction, and acquitting him of the accusations, by giving him the benefit of the doubt. Petition allowed.

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