TMI Tax Updates - e-Newsletter
June 5, 2021
Case Laws in this Newsletter:
GST
Income Tax
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
GST
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Interim release of the goods at the time of filing of the appeal - . It seems that provisions of Sections 130 and 140 of Punjab Goods Service Tax Act, 2017 are not clear with respect to the release of the confiscated goods. - The orders dated 19.03.2021 is being clarified that subject to furnishing of bonds to the satisfaction of the respondents, the confiscated goods be released - HC
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Grant of Interim Bail - core argument of the petitioner's counsel was that the case of the petitioner would fall only under Section 132(1)(e) of the Central Goods and Services Tax Act 2017 which is a non-cognizable offence - The re-arrest of the petitioner is not going to serve any purpose, interim bail earlier granted to the petitioner is made absolute. - HC
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Input tax credit - non-payment of GST from April, 2018 to March 2019 - concealment of facts - initiation of inquiry under Section 74(1) of the CGST Act, 2017 - proceeding should be allowed to reach its logical end. - It is useless to keep the writ petition pending and no purpose would be served thereof, inasmuch as if by the final order, is aggrieved, that would give rise to a new cause of action - HC
Income Tax
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Income from house property or income from other sources - If they are inseparable and the intention is to carry on the business of letting out the commercial property and carrying out complex commercial activity and getting rental income therefrom, then such a rental income falls under the heading of "Profits and gains of business or profession". In fact, any other interpretation would defeat the very object of introduction of section 80-IA as well as the scheme which is framed by the Government for development of industrial parks in the country.- HC
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Disallowance of deduction claimed in respect of transitional liability - scientific method adopted for ascertaining the transitional liability of Home Travel Concession (HTC) and Leave Fare Concession (LFC), Silver Jubilee Awards and Re settlement expenses - The Tribunal has affirmed the findings of the Commissioner of Income Tax (Appeals) in a cryptic and cavalier manner. - Deduction allowed - HC
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Receipt of Interest on amount received on compulsory acquisition of land for constructing a house - If only the petitioner is able to demonstrate that the petitioner's tax dues will be zero, if the interest amount is spread over from the year of acquisition till the date of payment, this Court can consider granting relief to the petitioner.The petitioner's counsel would contend that it is for the respondent to issue notice of assessment. I cannot countenance such a contention. We would be justified in ordering refund, only if the petitioner can demonstrate that he is not at all liable to pay any sum towards tax for the amount of compensation received by him. - HC
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TP Adjustment - Treatment of export incentives as non-operating - it is not any initial period of operations of the assessee as taken note of by the DRP. It appears that the DRP mixed up the facts of some other case, which eventually resulted in miscarriage of justice. Thus we are of the considered opinion that the amount of export incentives is liable to be considered as part of operating revenue. - AT
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Claim of Interest u/s.36(1)(iii) - security deposits paid to director’s wife for taking her bungalow on lease - The said property had been taken on lease by the assessee for housing its staff and business guests who visit Lonavala and which inturn had increased the morale of the employees and assessee was benefitted with good business relations with the customers of the assessee company. Hence, the business nexus of taking that property on lease and using it for the purpose of utilisation by its staff and customers of the assessee had been proved and hence cannot be held to be for non-business purposes. - AT
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Revision u/s 263 - non examination of issue of advance given and commision expenses paid - during the assessment the assessee has filed reply to the quarry raised by the assessee and produced relevant evidence and offered explanation in pursuance of the notices issued and after considering those materials and explanation, the assessing officer has come to a certain conclusion, though it has not been mentioned explicitly in the assessment order. - section 263 does not empower the ld. PCIT to take action on these facts - AT
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Income from house property - Levy of deemed rent on the unsold real estate property of the assessee who is a real estate developer - nothing stops the assessing officer from obtaining the municipal ratable value from Departmental or government machinery. Hence we direct the assessing officer to compute the valuation of deemed rent in accordance with our observation as above and take into account the Hon'ble Jurisdictional High Court decision as above. - AT
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Accrual of income - ownership of land vested with the state government - Assessee is acting as an agent of the Government of Maharashtra and thus, the income in question in the form of lease premium, rent, interest on bank deposits, etc. does not belong to the assessee but to the Government of Maharashtra. - AT
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Revision u/s 263 - brought forward loss as deducted in computing the book profit u/s.115JB - We have been confronted with a situation in which the AO incorrectly applied the law because section 115JB was omitted to be applied, which ought to have been applied. In the hue of this factual scenario, it is clear that the assessment order passed by the AO can be clearly described as erroneous and also prejudicial to the interest of the revenue, warranting the invocation of section 263. - AT
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Where the TDS amount has been deposited to the Government Exchequer thorough cheque, whether the date of tendering cheque to the Government’s Banker or the date of realization of the cheque is the date of actual payment - Thus the ‘date of payment’ to Government exchequer through cheque shall be the date of tendering/depositing the cheque, subject to cheque being honoured on presentation. - AT
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Capital gain of sale of asset/factory - regular sale or slump sale - It is settled law that assessee cannot be allowed to take shifting stands while it is claiming that is a sale of an undertaking it is giving evidence that there cannot be a buyer for such unit. In our considered opinion, since the authorities below have not examined this additional evidence, we deem it appropriate to remit this issue also to the file of the Assessing Officer. - AT
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Penalty u/s 271(1)(c) - addition u/s 68 - Penalty has been levied in a mechanical manner without application of mind. In our view, this is a serious mistake in the penalty order which is incurable at this stage - by restoring the penalty to the file of the Ld. CIT(A), the appellate authority can not cure the defect/mistake which has been committed by the AO in the penalty order passed under section 271(1)(c) - AT
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Revision u/s 263 - addition u/s 68 - the assessee was only one of the conduit - entire amount of sales cannot be taxed in the hands of the assessee as unexplained cash credit - the amount of income generated by the assessee, in the capacity of acting as a conduit, i.e. commission on such entries provided by it which may be brought to tax. - AT
Central Excise
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Area Based exemption - refund of Excise duty - benefit of N/N. 20/2008-Central Excise - This petition stands disposed of by directing the Principal Commissioner of GST Dibrugarh to consider the application of the petitioner dated 28.09.2020 claiming for a special rate to be fixed on the basis of the add-ons made to the goods manufactured - HC
VAT
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The subordinate authority is not empowered to supersede the orders passed by the appellate authority and an administrative discipline requires that the subordinate authorities should follow the orders of the appellate authority and even if any lapse, error or otherwise, the subordinate authority is bound to approach the appropriate higher authority for the purpose of setting aside the order passed by the appellate authority. - HC
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Recovery of dues of deceased dealer - charge against property - if the Department wants to recover the dues of the deceased dealer, then the same cannot be recovered from the immovable property in question as the said property is not the estate of the deceased.- HC
Articles
Notifications
Customs-
33/2021 - dated
3-6-2021
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ADD
Seeks to amend Notification No. 6/2016-Customs (ADD), dated the 8th March, 2016
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32/2021 - dated
3-6-2021
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ADD
Seeks to amend notification No. 23/2016-Customs (ADD), dated the 6th June, 2016
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51/2021 - dated
3-6-2021
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Cus (NT)
Supersession Notification No. 48/2021-Customs(N.T.), dated 20th May, 2021
GST - States-
38/1/2017-Fin(R&C)(03/2021-Rate)/1429 - dated
2-6-2021
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Goa SGST
Amendment in Notification No. 38/1/2017--Fin(R&C)(6/2019-Rate), dated the 29th March, 2019
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38/1/2017-Fin(R&C)(02/2021-Rate)/1428 - dated
2-6-2021
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C)(11/2017-Rate), dated the 30th June, 2017
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38/1/2017-Fin(R&C)(01/2021-Rate)/1427 - dated
2-6-2021
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C)(1/2017-Rate), dated the 30th June, 2017
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F.12(1)FD/Tax/2021-23 - dated
4-6-2021
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Rajasthan SGST
Rajasthan Goods and Services Tax (Fifth Amendment) Rules, 2021.
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6/2021 - VI(1)/114(d-2)/2021 - dated
19-4-2021
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Tamil Nadu SGST
Proper officers to exercise the powers and perform the functions conferred on them
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5/2021 - VI(1)/114(d-1)/2021 - dated
19-4-2021
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Tamil Nadu SGST
Jurisdiction of the GST officers
SEZ-
S.O. 2143 (E) - dated
1-6-2021
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SEZ
Central Government de-notifies an area of 8.57 hectare and notifies an area of 0.09 hectare, thereby making the resultant area as 8.04 hectare, at Plot No.IT-5, Airoli Knowledge Park-TTC Industrial Area, Villages Airoli and Dighe, District Thane in the State of Maharashtra
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (6) TMI 149
Interim release of the goods at the time of filing of the appeal - HELD THAT:- The resolution is not clear as to how the interim release of the goods can be given as at the time of filing of the appeal, the petitioner has deposited the entire 100% of the tax, 100% of the penalty and 10% of the fine amount also. It seems that provisions of Sections 130 and 140 of Punjab Goods Service Tax Act, 2017 are not clear with respect to the release of the confiscated goods. The orders dated 19.03.2021 is being clarified that subject to furnishing of bonds to the satisfaction of the respondents, the confiscated goods be released, keeping in view the petitioner has deposited 100% tax, 100% penalty and 10% of the fine amount - Application disposed off.
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2021 (6) TMI 144
Grant of Interim Bail - core argument of the petitioner's counsel was that the case of the petitioner would fall only under Section 132(1)(e) of the Central Goods and Services Tax Act 2017 which is a non-cognizable offence - HELD THAT:- The fact remains that the petitioner was arrested and was in custody for about six days. The petitioner has also remitted a sum of ₹ 2,67,39,619/- towards tax dues which aspect was taken note of for granting bail. The petitioner was also directed to stay within the Corporation limits of Madurai and appear before the first respondent daily. This condition was subsequently relaxed. Presently the petitioner is appearing before the first respondent twice a week. The re-arrest of the petitioner is not going to serve any purpose, interim bail earlier granted to the petitioner is made absolute. The condition imposed by this Court to appear before the respondents twice a week is also relaxed and the petitioner undertakes before this Court that he would appear before the authority concerned as and when required - petition disposed off.
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2021 (6) TMI 140
Input tax credit - stand of the respondents is that since the dealers have not proved that failure to successfully upload was due to technical glitches in the portal, the petitioners cannot be granted relief - HELD THAT:- The respondent is directed Nos.5 to 7 that to take up the matter once again with GSTIN and ensure that the petition mentioned TNVAT credit available to the petitioners is duly reflected in the respective Electronic Credit Ledgers of the petitioners. Petition allowed.
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2021 (6) TMI 139
Input tax credit - non-payment of GST from April, 2018 to March 2019 - concealment of facts - initiation of inquiry under Section 74(1) of the CGST Act, 2017 - HELD THAT:- This court is of the view that since a proceeding under Section 74(1) of the CGST Act, 2017 has been launched by the respondent No.5, that proceeding should be allowed to reach its logical end. But for the contemplative action, due payment of the petitioner is on hold, the respondent No.5 is directed to complete the proceeding within a period of 2(two) months from the date of receipt of the reply from the petitioner without fail. It is useless to keep the writ petition pending and no purpose would be served thereof, inasmuch as if by the final order, is aggrieved, that would give rise to a new cause of action - petition disposed off.
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Income Tax
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2021 (6) TMI 152
Income from house property or income from other sources - income earned by the appellant from letting out of the building along with other amenities in the industrial park - authorities below treating the business income derived from complex commercial activities of letting out buildings along with the other amenities in an industrial park partly as income from house property and partly as income from other sources - disallowing the expenditure incurred wholly and exclusively for the purposes of the business of complex commercial letting out services - HELD THAT:- As decided in VELANKANI INFORMATION SYSTEMS (P.) LTD. [ 2013 (8) TMI 113 - KARNATAKA HIGH COURT] What is the intention behind the lease and secondly what are facilities given along with the buildings and documents executed in respect of each of them is to be seen. Thirdly, it is to be found out whether it is inseparable or not. If they are inseparable and the intention is to carry on the business of letting out the commercial property and carrying out complex commercial activity and getting rental income therefrom, then such a rental income falls under the heading of Profits and gains of business or profession . In fact, any other interpretation would defeat the very object of introduction of section 80-IA as well as the scheme which is framed by the Government for development of industrial parks in the country. In that view of the matter, the finding recorded by the appellate authority as well as the Tribunal is in accordance with law and does not suffer from any legal infirmity which calls for interference. Income from business - receipts on account of sale of software technical services being meager - HELD THAT:- As substantial question of law has been answered by the Supreme Court in 'PEERLESS GENERAL FINANCE AND INVESTMENT COMPANY LTD. [ 2019 (7) TMI 880 - SUPREME COURT] . The order passed insofar as it pertains to Assessment Year 2010-11 is hereby quashed.
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2021 (6) TMI 151
Disallowance of deduction claimed in respect of transitional liability - scientific method adopted for ascertaining the transitional liability of Home Travel Concession (HTC) and Leave Fare Concession (LFC), Silver Jubilee Awards and Re settlement expenses - as per ITAT making the provision for transitional liability without uncertainty is not possible in respect of these expenses and, therefore, these transitional liabilities are rightly held as contingent liability - HELD THAT:- Tribunal has not adverted to the submissions made on behalf of the assessee which is evident from the written submissions, a copy of which has been produced before us. The Tribunal has affirmed the findings of the Commissioner of Income Tax (Appeals) in a cryptic and cavalier manner. Therefore substantial question of law No.1 is answered in favour of the assessee.
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2021 (6) TMI 146
Reopening of assessment u/s 147 - addition u/s 40A(3) - HELD THAT:- In the case on hand, admittedly, the Department had filed an appeal before the ITAT questioning the order passed by the appellate authority in favour of the assessee. When the appeal proceedings are still pending, it is clearly not open to the respondent to initiate proceedings u/s 147 of Income Tax Act. It is barred under third proviso to Section 147 of the Act. On this sole ground, the notice impugned in the writ petition is liable to be quashed and it is accordingly quashed. The petitioner has today filed a typed set of papers. It can be seen therefrom that one of the petitioner's agent namely Kannan, Pollachi had given a certificate confirming that he had acted as agent for the petitioner and that the amount required for the payment to the farmers was received from the petitioner by self cheque and the same was distributed to the farmers who supplied copra. In fact, along with the said certificate, the details regarding the bank transactions as reflected in the ledger account has also been placed. Appearing for the petitioner would also draw my attention to the fact that even the Pollachi bank account of the petitioner was brought to the notice of the assessing officer in the previous proceedings. It is obvious there is no new material discovered by the respondents. On mere change of opinion, the impugned proceedings could not have been initiated. This is all the more so because, the proceedings have been initiated after a lapse of four years from the end of the assessment year. Since the impugned proceedings are sought to be initiated after a lapse of four years from the end of the assessment year, the authority has to necessarily bring the case within the exceptional circumstances set out in the provision. Since it has been convincingly established that the case of the respondent will not fall under any of the exceptional circumstances, have no hesitation to quash the impugned proceedings as totally lacking in jurisdiction.
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2021 (6) TMI 145
Interest income on amount received on compulsory acquisition of land for constructing a house - compensation received by the land acquisition officer - main contention of the petitioner is that the accrued interest received by him has to be spread over from the date of acquisition and the petitioner's request was not considered - petitioner herein had used the amount received on compulsory acquisition of land for constructing a house and the said claim was supported by a valuation report and held that the Assessing Authority has to give necessary relief to the petitioner on that score - primary contention urged the petitioner is that the interest portion received by the petitioner following his land acquisition should be spread over from the year of acquisition till the year of payment HELD THAT:- We have to necessarily sustain the contention of the petitioner's counsel that even though a sum of ₹ 45,00,000/- was received as interest in the year 2006 for the assessment year 2007-2008, still it cannot be taxed as a single receipt and that the said amount should be spread over from the year of acquisition. We called upon the counsel on either side to file a memo of calculation to demonstrate if by such spreading over, whether the petitioner would be liable to pay any tax at all. The learned Standing Counsel appearing for the respondents filed a statement, which prima facie indicates that the petitioner would definitely have to pay a substantial sum by way of tax. If only the petitioner is able to demonstrate that the petitioner's tax dues will be zero, if the interest amount is spread over from the year of acquisition till the date of payment, this Court can consider granting relief to the petitioner.The petitioner's counsel would contend that it is for the respondent to issue notice of assessment. I cannot countenance such a contention. We would be justified in ordering refund, only if the petitioner can demonstrate that he is not at all liable to pay any sum towards tax for the amount of compensation received by him. As already admitted by the petitioner's counsel, the petitioner received a sum of ₹ 58,00,000/- out of the said amount, ₹ 45,00,000/- alone represented the interest portion. The Standing Counsel has demonstrated that spreading over the interest portion over several years would still attract liability more than what was deducted at source. Since, the petitioner had not demonstrated that the petitioner is not liable to pay any tax, I am not inclined to interfere with the impugned order. The Writ Petition is dismissed.
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2021 (6) TMI 143
Exemption u/s 11 denied - trusts found to have made certain payments to company, the Trustees being specified persons are found to be having substantial interest - HELD THAT:- As apprehension expressed by the petitioner may not be having any basis. The second respondent is only proposing to forfeit the exemption only in respect of the offending payments. The Trusts need not entertain any fear that exemption granted to them u/s 11 of the Act itself would be denied. The petitioner is therefore given three more weeks from the date of receipt of a copy of this order to offer their explanation in response to the impugned notices.
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2021 (6) TMI 138
Alternative claim before the CIT(A) - AO made addition on account of bogus purchases though the assessee is entitled to claim of deduction u/s. 80IA(4)(b) - main contention of AR is that the assessee is eligible to claim deduction u/s. 80IA(4)(b) of the Act and there should not be a separate disallowance under the head alleged bogus purchases - alternative claim before the CIT(A) that if the alleged bogus purchases would be added to the infrastructural profit of the assessee which is exempt u/s. 80IA(4)(b) of the Act since the assessee is eligible for the deduction of claim u/s. 80IA(4)(b) - HELD THAT:- We note that the AO dealt the issues regarding the claim of deduction u/s. 80IA(4)(b) of the and disallowance under the alleged bogus purchases separately in his order. It is also true that the alternative claim made before the CIT(A) stating since the assessee is entitled for claiming deduction u/s. 80IA(4)(b) and the alleged disallowance under bogus purchases does not survive as it would be added to the total income of the assessee. Hon ble High Court of Bombay in the case of CIT Vs. Gems Plus Jewellery Ltd.. [ 2010 (6) TMI 65 - BOMBAY HIGH COURT] the which held the alleged bogus purchases would be added to the infrastructural profit of the assessee which is exempt u/s. 80IA(4)(b) read with clause (c) of the explanation to section 80IA of the Act. The main controversy before us is that having made alternative claim before the CIT(A) which is not dealt by the CIT(A) by speaking order. Having squarely covered by the decision of Hon ble High Court of Bombay in the case of CIT Vs. Gems Plus Jewellery Ltd. (supra) this Tribunal ought to have allowed additional ground in the main appeal, despite which the Tribunal remanded the matter to the file of AO. We note that it is true the AO dealt the above said two issues separately in his order. We note that admittedly, the CIT(A) did not deal with the alternative claim by speaking order. Miscellaneous Application filed by the assessee is allowed.
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2021 (6) TMI 137
Disallowance of the exemption u/s 54 - capital gain taxable for the Assessment Year relevant - CIT(A) who sustained the findings of Assessing Officer and dismissed the appeal filed by the assessee - HELD THAT:- From the finding of the Assessing Officer, it is clear that one part of the direction was considered and another part regarding re-opening of the assessment or taxability of the correct Assessment Year was not considered. AO has failed to give appeal effect and Ld.CIT(A) mechanically sustained the finding of the Assessing Officer without giving any reason as to why the direction of Ld.CIT(A) regarding re-opening of the assessment for the purpose of taxability could not be given effect to. Under these undisputed facts, the finding of Ld.CIT(A) cannot be sustained, therefore, the impugned order is set aside. The Assessing Officer is hereby directed to give effect to the order of the Ld.CIT(A) in accordance with law. It is clarified that the Assessing Officer would be at liberty to re-open the assessment for the relevant Assessment Year as directed by the Ld.CIT(A) in the original appellate proceedings if law so permit. The grounds raised by the assessee are allowed in terms as indicated above. Thus, Grounds raised by the assessee are allowed.
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2021 (6) TMI 136
TP Adjustment - computation of the ALP on the basis of entity level data taken by the TPO as against the assessee s plea for taking segmental level data - TPO refused to accept the companies with the financial data of the preceding year and stuck to the comparables companies with the financials concerning the current year only - AR argued for inclusion of Madhur Industries Limited in the list of comparables - HELD THAT:- When the turnover filter has been accepted by the TPO, in our considered opinion, a mere higher turnover, but within the permissible filter, cannot be a valid reason for its exclusion. Another reason advanced by the DRP is that the business of this entity is not correctly spelt out or legible . On a pointed query, the ld. AR could not point out the nature of business carried on by this company from the Annual report to merit its inclusion or otherwise in the list of comparables. It is just elementary that a company must be functionally similar in order to qualify for inclusion. All other filters come afterwards only when the functional similarity is established. We overturn the impugned order on the exclusion of this company and direct the AO/TPO to re-decide the issue afresh. As it is a comparable chosen by the assessee, the onus is upon it to prove the functional comparability of this company in addition to other filters. If the assessee succeeds in doing so, the TPO will include it in the list of comparables and vice-versa. Needless to say, the assessee will be allowed a reasonable opportunity of hearing. Treatment of export incentives as non-operating - assessee treated export incentive under RTSF segment as operating revenue - TPO abrogated the assessee s contention and treated the same as non-operating - HELD THAT:- DRP went on to discuss some subsidy issue for setting up of industry in backward area and held that such subsidy was definitely not related to operations of the assessee, as the same was a type of financial assistance to tide over the crisis during initial period of operations in the industry and eventually agreed with the analysis made by the TPO and came to hold it to be in the nature of an extraordinary income. Firstly, the issue before the DRP was export incentive and not any subsidy. Secondly, it is not any initial period of operations of the assessee as taken note of by the DRP. It appears that the DRP mixed up the facts of some other case, which eventually resulted in miscarriage of justice. Thus we are of the considered opinion that the amount of export incentives is liable to be considered as part of operating revenue. The assessee succeeds to this extent. Granting proportionate adjustment - TPO rejected the assessee s segmental level benchmarking and went ahead with the entity level approach - HELD THAT:- This issue is fairly settled by a judgment of the Hon ble jurisdictional High court in CIT Vs. Phoenix Mecano (India) Pvt. Ltd [ 2017 (6) TMI 1240 - BOMBAY HIGH COURT] holding that the transfer pricing adjustment made at entity level should be restricted to the international transactions only. We, ergo, direct to restrict the transfer pricing addition only to the extent of international transactions in this segment. Non granting working capital adjustment - HELD THAT:- DRP directed the AO/TPO to allow working capital adjustment after verification. While giving effect to the directions of the DRP, the AO failed to give effect to the same - There is no manner of doubt that the direction given by the DRP is binding on the AO who has to necessarily pass the assessment order in conformity with the directions. This is amply clear from the language of section 144C(13) of the Act AO has not only failed to follow the direction given by the DRP in this regard but is still sitting over the rectification application filed by the assessee for over two and half years. Such an approach needs to be corrected. In such circumstances, we direct the AO/TPO to grant working capital adjustment to the assessee as per the methodology suggested by the DRP, against which the assessee is not aggrieved, in principle - we set-aside the impugned order and remit the matter to the file of AO/TPO for re-determining the Arm s Length Price of the international transactions of RTSF segment. Education cess paid - Allowable deductible expense which is not covered under the u/s 40(a)(ii) - HELD THAT:- The issue raised through the additional ground is no more res integra in view of the judgment of Hon ble jurisdictional High Court in Sesa Goa Lt.[ 2020 (3) TMI 347 - BOMBAY HIGH COURT] in which it has been held that Education Cess is not disallowable expenditure u/s.40(a)(ii) of the Act. Similar view was earlier taken by the Hon ble Rajasthan High Court in Chambal Fertilisers and Chemicals Ltd. and Another [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] . We, therefore, direct the AO to ascertain the correct amount of education cess and then allow a deduction for it, after allowing opportunity of hearing to the assessee.
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2021 (6) TMI 135
Interest disallowed proportionately u/s.36(1)(iii) in respect of security deposits paid to director s wife for taking her bungalow on lease - HELD THAT:- Assessee had taken property on lease for the purpose of its business. The said property is situated at Lonavala. The said property belongs to the wife of director of the assessee company. The property has been taken on lease based on a registered lease agreement entered into with the wife of director of the assessee company. We find that Smt. Shweta Rasiwasia had retained some portion of the property for her personal use and had leased out the remaining portion to the assessee company and had derived lease rental income thereon. The said property had been taken on lease by the assessee for housing its staff and business guests who visit Lonavala and which inturn had increased the morale of the employees and assessee was benefitted with good business relations with the customers of the assessee company. Hence, the business nexus of taking that property on lease and using it for the purpose of utilisation by its staff and customers of the assessee had been proved and hence cannot be held to be for non-business purposes. AR before us agreed for an adhoc disallowance of 20% that could be made for the purpose of personal usage in view of common facilities that could be attributed for both personal as well as business purposes. Accordingly, we deem it fit to disallow only 20% of ₹ 28,89,000/- on account of rent. As already held that the said Bungalow situated at Lonavala owned by wife of director had been taken on lease by the assessee company for the purpose of its business. Hence, it is quite normal to pay security deposit for the said property to the landlord. This payment of security deposit cannot be treated as meant for non-business purposes . Hence, there is no question of making any proportionate disallowance of interest u/s.36(1)(iii) of the Act. Hence, we direct the ld. AO to delete the disallowance made on account of interest - Decided in favour of assessee.
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2021 (6) TMI 134
Reopening of assessment u/s 147 - reassessment after the expiry of four years - payments without deduction of tax at source and deduction of the alleged contingent liability towards interest - HELD THAT:- Reopening in the realm of the assessee making payments without deduction of tax at source and the last portion is about the assessee claiming deduction of provision towards interest which was contingent in nature. The factum of such three payments and non deduction of tax at source from them and further claiming deduction of the alleged contingent liability towards interest were patent on the face of the return and the accompanying documents. The reasons recorded by the AO cannot be brought within the purview of the `failure of the assessee to disclose fully and truly all material facts necessary for his assessment as, obviously, the relevant items were properly disclosed at the time of filing the return of income. Having not drawn any adverse inference against such items in the original assessment, the AO was debarred by the first proviso to invoke section 147 on the basis of the same material which was fully and truly disclosed by the assessee and was available at the time of original assessment. In view of the above factual panorama, we uphold the action of the ld. CIT(A) in quashing the initiation of the reassessment on this legal issue. Reassessment was prompted because of the TDS survey at the assessee s premises - An order u/s.201(1)/(1A) was passed treating the assessee in default on account of failure to deduct tax at source from Discount to stockiest, Payment of bonus and Payment of interest. The first appeal against that order was rendered in favour of the assessee. In the second appeal preferred by the Revenue, the Tribunal has accorded its imprimatur on the view point of the ld. CIT(A) deleting all the three disallowances made u/s.40(a)(ia) of the Act. When the order u/s.201(1)/(1A), forming bedrock of the additions made in the reassessment order, has itself been quashed, there remains no raison d`etre whatsoever to sustain the additions on merits as well.
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2021 (6) TMI 133
Revision u/s 263 - non examination of issue of advance given and commision expenses paid - HELD THAT:- On perusal of reply dated 21.09.2016 filed by assessee in response to the show cause notice dated 04.08.2016, copy of which is duly acknowledged by assessing officer, the assessee furnished the details of loan and advances to DGVCL and Amrutbhai I Patel. The assessee also mentioned in the reply that loan to Amrutbhai Patel was given as advance for property. The assessee further vide reply dated 25.11.2016 explained that advance given to Amrutbhai Patel was return back in the next year and furnished the copy of ledger account. On perusal of ledger account and bank statement of Amrutbhai Patel, we find that the advance of ₹ 50.00 lacks was return back to the assessee. Thus, the assessee has substantiated its contention, which we find in order. Accordingly the assessment order is not erroneous on this issue. Commissions payments to two persons - We find that during the assessment the assessee has filed reply to the quarry raised by the assessee and produced relevant evidence and offered explanation in pursuance of the notices issued and after considering those materials and explanation, the assessing officer has come to a certain conclusion, though it has not been mentioned explicitly in the assessment order. The ld. PCIT is not agreed with the conclusion reached by the assessing officer. CIT during the revisions proceedings, the assessee again furnished the details of commission payments and the services rendered by Karsan D Bhanushali and Deepak Dama. However, the ld. PCIT instead of giving his finding held that the claim needs to be verified. The Ld. PCIT has not deal with the explanation given by the assessee in the course of section 263 proceedings. Thus, in view of the above mentioned factual and legal discussions section 263 does not empower the ld. PCIT to take action on these facts to arrive at the conclusion that the order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue. Since, on the basis of the material on record and the said explanation and evidence was considered by the assessing officer and a particular view was taken, the mere fact that different view can be taken, should not be the basis for an action under section 263 and it cannot be held to be justified, we hold so. Accordingly the ground No. 5 8 of the appeal raised by the assessee is allowed.
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2021 (6) TMI 132
Income from house property - Levy of deemed rent on the unsold real estate property of the assessee who is a real estate developer - HELD THAT:- Provisions of section 23(5) was inserted to provide relief to the builders and developers from the ambit of deemed rent on unsold stock already present in the sanguine provisions of section 23, for a period of one year with effect from 1.4.2018. Hence the assessee is mistaken in its plea that deemed rent has been levied under the provisions of section 23(5) which as per the claim of the assessee is prospective. As we have noted that it is nobody's case that deemed rent is to be levied under the provisions of section 23(5). Hence this plea of the assessee that deemed rent was not leviable as section 23(5) was not in existence in the statute books for the impugned assessment year is totally unsustainable Thus from the decision and precedence from Hon'ble Delhi High Court in the case of Ansal Housing Finance Leasing Co. Ltd [ 2012 (11) TMI 323 - DELHI HIGH COURT] read alongwith in CIT Vs. Gundecha Builders [ 2019 (1) TMI 112 - BOMBAY HIGH COURT] , it is amply clear that deemed rent from the unsold stock is duly leviable on the assessee on the facts of present case. Hence principally we do not find any infirmity in the proposition that deemed rent is leviable upon the assessee. Rental value - The assessing officer has not levied the deemed rent on municipal ratable value or any nearly similar instance. The reliability of municipal ratable value has been duly upheld in several decisions. AO cannot make any adhoc computation of deemed rent. Hounourable Bombay High Court decision in the case of CIT Vs. Tip Top Typography [ 2014 (8) TMI 356 - BOMBAY HIGH COURT] duly supports this proposition. Thus assessing officer has made an ad hoc estimate of 8.5% of investment on the plea that assessee has not been able to provide the municipal retable value. In considered opinion nothing stops the assessing officer from obtaining the municipal ratable value from Departmental or government machinery. Hence we direct the assessing officer to compute the valuation of deemed rent in accordance with our observation as above and take into account the Hon'ble Jurisdictional High Court decision as above. Since we have decided the issue by duly taking note of Hon'ble Jurisdictional High Court decision and have also applied Hon'ble Delhi High Court decision, the reference to other decision in this case is not considered relevant to adjudication in this case. Appeal by the assessee stands partly allowed for statistical purposes.
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2021 (6) TMI 131
Accrual of income - sums collected by the assessee from the leases entered into by it would have to be treated as its income - assessee had treated the receipts as its liability in its balance sheet, on the ground that the sums were received by it and held by it on behalf of the Government of Maharashtra - Whether CIT(A) is right in holding that ownership of land vested with the state government and also that the income arising from viz. lease premiums, rent, development activities, interest income on funds parked as deposits with the bank etc cannot be assessed as the income of the assessee corporation following the decision of Hon'ble ITAT in the assessee's own case? - HELD THAT:- Assessee is acting as an agent of the Government of Maharashtra and thus, the income in question in the form of lease premium, rent, interest on bank deposits, etc. does not belong to the assessee but to the Government of Maharashtra. We have heard both the parties and perused the record. Both the parties fairly agreed that the grounds raised are covered in favour of the assessee by the order of the Tribunal [ 2018 (11) TMI 778 - ITAT MUMBAI]. We further note that Hon'ble Jurisdictional High Court has not yet reversed the aforesaid order of the ITAT. Hence, we uphold the order of learned CIT(A). Revenue appeals are dismissed.
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2021 (6) TMI 130
Disallowance u/s. 36(1)(va) r.ws. 2(24)(x) - delay in remitting employee's contribution to Provident Fund and ESI - Contributions paid with marginal delay - HELD THAT:- As decided in SHISHIR KUMAR DAS [ 2021 (2) TMI 277 - ITAT HYDERABAD] the decision of Alom Extrusions Ltd [ 2009 (11) TMI 27 - SUPREME COURT] is applicable to both the employer as well as employee's contribution to Provident Fund and ESI and if the assessee has not remitted the amount collected from the employees before the due date of filing of return of income u/s. 139(1) of the Act, then the same has to be disallowed and brought to tax. With these directions, the appeal of the assessee is allowed and the AO is further directed to reconsider the issue, if the contrary view is upheld by the Apex Court in the appeals before the Hon'ble Supreme Court on this issue - Assessee's appeal is allowed for statistical purposes.
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2021 (6) TMI 129
Additional claim made during the appeal proceedings - Deduction u/s 54F denied on the ground that the claim was not made originally - HELD THAT:- We find that the assessee claim of deduction u/s 54F has been rejected without due examination. It is settled law that no tax can be collected or imposed except under the mandate of law. Accordingly, the rejection of claim without examination is not permissible in law. Hon ble Supreme Court in the case of Goetze (India) Ltd.[ 2006 (3) TMI 75 - SUPREME COURT ] has reiterated the power of ITAT to consider a claim which was made otherwise then by revised return. Hence, in the interest of justice, we remit the issue to the file of the AO. AO shall examine the assessees claim and duly decide the same. Appeal by the assessee is allowed for statistical purpose.
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2021 (6) TMI 128
Penalty u/s. 271(1)(c) - Defective notice u/s 274 - concealment of income or frurnishing of inaccurate particulars of income - HELD THAT:- We note that in assessment proceedings the assessing officer has initiated the penalty proceedings on account of furnishing inaccurate particulars of income , whereas in penalty proceedings, the assessing officer has imposed the penalty on account of both the limbs, that is, for concealment of income and furnishing inaccurate particulars of income , hence charge of penalty itself is not certain, therefore, the penalty should not be imposed. AO has initiated the penalty proceedings on one footing and concluded on other footing. In instant case, for furnishing inaccurate particulars of income was not the charge against the assessee; the charge was Concealment of particulars of income . Therefore, in our opinion, the basis of levy of penalty itself is not correct, hence penalty order under section 271(1)(c) of the Act needs to be quashed. Accordingly, we quash the penalty order under section 271(1) (c) of the Act. Appeal of the assessee is allowed.
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2021 (6) TMI 127
Revision u/s 263 - brought forward loss as deducted in computing the book profit u/s.115JB - HELD THAT:- We find that computation of book profit has been dealt with in Explanation 1 to section 115JB. Clause (iii) of Explanation 1 specifically provides : that the amount of loss brought forward or unabsorbed depreciation whichever is less as per the books of accounts shall be reduced from the amount of profit as per the profit and loss account in the computation of book profit . PCIT has noted in the impugned order that the amount of unabsorbed depreciation in this case is Nil and by applying the provisions of clause (iii) of Explanation 1, there will be Nil deduction on this count. Nothing has been said in the written submission to counter this position. Secondly, the amount of deduction u/s 80IA(4) computed in the normal computation of income would also not go to reduce the `book profit u/s 115JB. Assessment order was subject matter of appeal before the ld. CIT(A) and hence power of revision was ousted - In this regard, we find that Explanation 1(c) to section 263 provides that: where an order passed by the AO has been the subject matter of appeal, the powers of CIT under the section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Assimilating the facts of the instant case, we find that the issue of section 115JB was not at all touched upon by the AO nor has the ld. CIT(A) dealt with it. In that view of the matter, this part of the assessment order cannot be said to have merged with the order of the ld. CIT(A) so as to bar revision u/s.263 of the Act. AO did not apply section 115JB which ought to have been applied. This brings us to a situation where the AO failed to apply the provisions of the Act in terms of section 115JB of the Act. The assessee in its written submission has relied on the judgment of Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] . This judgment has approved the validity of the application of section 263, inter alia, in a case of incorrect application of law and the assessment order has been passed without application of mind. It is axiomatic that incorrect application of law also envelopes within its scope a case of non-application of the relevant provisions of law. We have been confronted with a situation in which the AO incorrectly applied the law because section 115JB was omitted to be applied, which ought to have been applied. In the hue of this factual scenario, it is clear that the assessment order passed by the AO can be clearly described as erroneous and also prejudicial to the interest of the revenue, warranting the invocation of section 263.
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2021 (6) TMI 126
Rectification u/s 154 - late deposit of TDS deducted under section 194C and 194J - interest under section 201(1A) - Whether the date of deposit of TDS amount through cheque is, the date of tendering cheque or the date of realization of cheque? - HELD THAT:- CIT(A) has relied on the decisions of Tribunal in the case of ICICI Bank Ltd.[ 2013 (4) TMI 964 - ITAT LUCKNOW ], and GM, MPRRDA, PIU, Shivpuri vs. ITO(TDS) [ 2012 (7) TMI 482 - ITAT, AGRA ] to hold that the date of realization of cheque is the date of payment. The CIT(A) s reliance on the aforesaid decisions to conclude that the issue is debatable is misplaced. We observe that in both aforesaid cases, ostensibly, CBDT Circular No.261 (supra) was not brought to the notice of Bench. Thus, while rendering aforesaid decisions, the Bench was oblivious to Board Circular binding on the Department. CIT(A) in impugned order has only referred to the title (subject) of rectification petition and has not examined the contents of the petition. Para 2 of the petition clearly states the reason for seeking rectification based on CBDT Circular. Therefore, the CIT(A) has erred in not examining the petition of assessee in entirety. We hold that the rectification petition under section 154 of the Act for seeking correction in the date of deposit of TDS amounts was maintainable in its present form. The ground No.1 raised in appeal by the assessee, is thus, allowed. Where the TDS amount has been deposited to the Government Exchequer thorough cheque, whether the date of tendering cheque to the Government s Banker or the date of realization of the cheque is the date of actual payment - The Hon'ble Supreme Court of India in the case of CIT vs. Ogale Glass Works Ltd., [ 1954 (4) TMI 3 - SUPREME COURT ] held that where the payment is made by cheque, the date of payment would be date of delivery of cheque, provided the cheque is honoured on presentation to the bank. Thus the date of payment to Government exchequer through cheque shall be the date of tendering/depositing the cheque, subject to cheque being honoured on presentation. After taking into consideration the facts of instant case and the decisions discussed above, we hold that the TDS deducted under section 194C and 194J of the Act was deposited by the assessee through cheque to the Government s Banker before the due date. Hence, no interest under section 201(1A) of the Act for alleged delay in deposit of TDS amount is chargeable to the assessee. The interest levied under section 201(1A) of the Act is directed to be deleted. The assessee succeeds on ground no.2 of the appeal.
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2021 (6) TMI 124
Capital gain of sale of asset/factory - regular sale or slump sale - claim of the assessee is that it has engaged into slump sale as such it is claiming that provisions of section 50C are not applicable - Admission of additional evidence - HELD THAT:- In the instant case what was sold was definitely not an undertaking but a factory. CIT(A) has noted that the assessee has contended that it has produced some sale bills before the Assessing Officer and has contended that those sales to prove that the unit was running and was an ongoing business concern. However, learned CIT(A) has noted that a few instances of sale cannot prove that production was going on. That it is quite possible that the sale was made from stock of unsold finished goods. That the assessee did not produce the profit and loss account and the balance-sheet of the Roorkee unit in support of its claim that the production activities were continuing where the unit was sold. Operations at Roorkee unit needs examination with relation to profit and loss account of the assessee. Here we note that in the cost of material consumed in the profit and loss account of the assessee there was no purchase of material at Roorkee Unit. So prima facie learned CIT(A) s finding is correct that no manufacturing activity has taken place and assessee has only shown opening raw material as consumed. We find that in the profit and loss account while closing stock of Roorkee unit shown as nil, opening stock for that year for raw material - how financial note reflects raw material consumed clearly shows an anomaly in the preparation of financial account. In our considered opinion this aspect needs examination at the level of Assessing Officer. We note that learned counsel has produced before us valuation report giving valuation of the items sold. This is additional evidence not produced before the authorities below. We note that this additional evidence in the shape of valuation report itself states that as the assessee s unit was established in a delayed manner and it was no longer eligible for incentives available there. The valuer himself states that there are no comparative sales instances. The said report while discussing fair market rate has clearly mentioned that we find that there was no buyer for industrial unit, not eligible for incentive. This amply casts doubt over the claim of the assessee that this was slump sale of an undertaking. It is settled law that assessee cannot be allowed to take shifting stands while it is claiming that is a sale of an undertaking it is giving evidence that there cannot be a buyer for such unit. In our considered opinion, since the authorities below have not examined this additional evidence, we deem it appropriate to remit this issue also to the file of the Assessing Officer. The Assessing Officer shall examine this issue afresh after taking into account additional evidence.- Appeal by the assessee stands allowed for statistical purposes.
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2021 (6) TMI 118
Penalty u/s 271(1)(c) - addition u/s 68 - share application money received for allotment of 55,57,000 equity shares - allegation of the AO was that the assessee has routed his unaccounted money - HELD THAT:- We note that in this case, while passing the penalty order, the AO has not discussed or mentioned the charge on which the penalty was levied. AO has not discussed at all one of the two limbs on which the penalty was proposed to be levied. We are quite convinced with the arguments of the Ld. A.R. that how a penalty could be imposed without AO being satisfied on the charge on which the penalty was proposed to be levied - penalty has been levied in a mechanical manner without application of mind. In our view, this is a serious mistake in the penalty order which is incurable at this stage and the penalty order passed by the AO is an invalid order and therefore can not be sustained. D.R. request that the penalty may be restored to the file of the Ld. CIT(A) can not be accepted at this stage as it will not serve any useful purpose by restoring the appeal to the file of the Ld. CIT(A). This is so because by restoring the penalty to the file of the Ld. CIT(A), the appellate authority can not cure the defect/mistake which has been committed by the AO in the penalty order passed under section 271(1)(c) dated 28.03.2011.- we set aside the order of Ld. CIT(A) by holding that the order of penalty passed under section 271(1)(c) of the Act by the AO is an invalid order and is accordingly quashed. - Decided in favour of assessee.
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2021 (6) TMI 116
Revision u/s 263 - addition u/s 68 - GP estimation - HELD THAT:- As assessee has furnished necessary documents with respect to parties from whom it has realized the amount against the sales made to them. In other words the burden imposed i.e. identity, genuineness of transactions and parties credit worthiness upon the assessee, for invoking the provision of section 68 were duly complied with. Accordingly, the AO has not treated the amount of sales as unexplained cash credit under section 68 - AO has taken a conscious view which was one of the possible view by accepting the purchases and sales as genuine. Thus CIT cannot substitute the possible view taken by the AO Even for the sake of adjudication, we assume that the purchases viz a viz sales are bogus in the given facts and circumstances, then also the entire amount of sales cannot be treated as unexplained cash credit of the assessee. It is because the assessee has not shown the gross amount of sales as agricultural income rather it has shown only the difference between the purchase and sales whereas the original party namely M/s Greenwell Orchard has shown the entire amount of sale as agriculture income without showing any expenses. Accordingly the AO in the assessment of M/s Greenwell Orchard has allocated 20% of the sales value as expenses which was subsequently reduced by the learned CIT (A) to the tune of 5% of the sales value. Assessment framed in the case of M/s Greenwell Orchard under section 143(3) read with section 147 of the Act has been set aside by the learned Pr. CIT under section 263 on the reasoning that the entire amount of sale proceeds is unaccounted income of the assessee. From all these above details, it is revealed that it was the Greenwell Orchard which was engaged in generating/converting its unaccounted income into agriculture income wherein the assessee was only one of the conduit - entire amount of sales cannot be taxed in the hands of the assessee as unexplained cash credit - the amount of income generated by the assessee, in the capacity of acting as a conduit, i.e. commission on such entries provided by it which may be brought to tax. Thus the entire amount of sales cannot be treated as income of the assessee. Hence, the order of the l d. CIT under section 263 of the Act is not sustainable - Decided in favour of assessee.
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Insolvency & Bankruptcy
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2021 (6) TMI 125
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Homebuyers of Real Estate Project - threshold limit not reached - existence of debt and dispute or not - HELD THAT:- As per the Insolvency and Bankruptcy Code, (Amendment) Ordinance, 2019 dated 28.12.2019 the financial creditors who are homebuyers of Real Estate Project can file a petition under section 7 of the Code, 2016, jointly only if there are 100 of such homebuyers or if they are 10% of total homebuyers whichever is less. However, in the instant petition, only 2 Homebuyers have filed the petition which neither amounts to 10% of the total class of financial creditors or 100 Financial Creditors and therefore this petition cannot be entertained. In the instant case, the Petitioner has already obtained order from the relevant forum under the RERA Act and the same can be executed before relevant forum. A case under the Code, 2016 is not made out as the petition is clearly an attempt to substitute the recovery mechanism and amounts to forum shopping. Further, since the Petitioner does not meet the minimum threshold of 10% of Financial Creditors of the same class, the petition fails and deserves to be dismissed - the Petitioner has made out a case that it is before this Tribunal basically to seek execution of a decree passed by the Karnataka, RERA, Bengaluru. In the instant case the Petitioner is before this Tribunal mainly to execute its decree and hence would not be eligible to file a Petition for execution of the decree received from the Karnataka, RERA - if home buyers who obtain decrees from other fora also are permitted to file petitions under the IBC, that would defeat the purpose of the above referred amendment in section 7 of the Code laying down the threshold of 100 or 10% home buyers, whichever is less. The decision of the NCLT, Allahabad Bench in AJAY WALIA VERSUS M/S. SUNWORLD RESIDENCY PRIVATE LIMITED [ 2018 (7) TMI 2175 - NATIONAL COMPANY LAW TRIBUNAL, ALLAHABAD] , supports the view that where the Allottee/Applicant has subrogated its rights in favour of a Bank by way of Tripartite Agreement, the liability to make payment to the Allottee cannot be saddled upon the Corporate Debtor and the Applicant cannot be treated as a Financial Creditor. Petition dismissed.
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2021 (6) TMI 123
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The matters were reserved for orders on 22.10.2020 and thereafter the Corporate Debtor filed IA/1152/IB/2020 before this Tribunal on 22.10.2020 itself seeking relief to direct the Financial Creditor to accept the One - Time settlement proposal dated 21.10.2020 by accepting the token payment of ₹ 30,00,000/-. Subsequently, it is seen that the Corporate Debtor has filed another IA/170/CHE/2021 before this Tribunal on 28.01.2021 seeking thereof to reopen the matter and take the One - Time Settlement letter issued by the Corporate Debtor and to pass suitable orders - When the aforesaid IA's came up for hearing before this Tribunal on 09.03.2021, it was represented by the Learned Counsel for the Financial Creditor that the OTS proposal as given by the Corporate Debtor is not acceptable to the Financial Creditor and as such they are willing to proceed with the matter. Thus, in view of the same, nothing survives in IA/1152/2020 and I A/170/CHE/2021 and accordingly, the same stands closed. It has also been consistently held by the Hon'ble Supreme Court both in Innoventive Industries Ltd. Vs. ICICI Bank and another [ 2017 (9) TMI 58 - SUPREME COURT] as well as Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT] after going through the Scheme of I B Code, 2016 in depth in relation to an Application under Section 7 filed by a Financial Creditor as compared to the one filed under Section 9 by an Operational Creditor, in relation to a Section 7 Application where there is an existence of a 'financial debt' and its default is in excess of ₹ 1,00,000/- (now increased to ₹ 1 Crore), this Tribunal is bound to admit the Application and as a consequence trigger the Corporate Insolvency Resolution Process (CIRP) and in relation to a Section 7 Application defence of set off or counter claim put forth by the Corporate Debtor cannot be considered as a dispute in relation to the Financial debt and its default. This Application as filed by the Applicant - Financial Creditor is required to be admitted under Section 7(5) of the I B Code, 2016 - Application admitted - moratorium declared.
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2021 (6) TMI 122
Seeking exclusion of the period w.e.f. 01.08.2020 to 31.10.2020 from the calculation of the total period of the CIRP - HELD THAT:- Hon'ble National Company Law Appellate Tribunal in IN RE : SUO MOTO [2 020 (6) TMI 495 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] has held that the period of lockdown ordered by the Central Government and the State Governments including the period as may be extended either in whole or part of the country, where the registered office of the Corporate Debtor may be located, shall be excluded for the purpose of counting of the period for 'Resolution Process under Section 12 of the Insolvency and Bankruptcy Code, 2016, in all cases where 'Corporate Insolvency Resolution Process' has been initiated and pending before any Bench of the National Company Law Tribunal or in Appeal before this Appellate Tribunal. The Insolvency and Bankruptcy Board of India, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, vide notification dated 29.03.2020 held that the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process. Application is allowed to the limited extent to exclude the period w.e.f. 01.08.2020 to 31.10.2020 from the CIRP period.
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2021 (6) TMI 121
Extension of the period of Liquidation of the Corporate Debtor for two more years - Regulation 44(2) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- It is stated in the Application that the Applicant is duty bound to perform its duties again, as per the Insolvency and Bankruptcy Code, 2016, for which the Order of extension of the Liquidation process for two more years is required - The prayer for extension of the period of Liquidation of the Corporate Debtor for two more years beyond 10-10-2020, in accordance with regulations as laid down in Regulation 44(2) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, is hereby granted for successful completion of the Liquidation process of the Corporate Debtor. Application allowed.
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2021 (6) TMI 120
Seeking exclusion of certain time periods from the total time period of 330 days - Section 12 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- On the ground of lockdown imposed by the Central Government as well as State Government, we have excluded the period from 25.03.2020 to 30.06.2020 i.e. total 97 days while calculating the total period of CIRP and while applying the same principle in this matter, we hereby exclude the period from 25.03.2020 to 30.06.2020 i.e. total 97 days (instead of period from 25.03.2020 to 31.08.2020 as prayed by the applicant) while calculating the total period of CIRP. The applicant has not claimed the extension beyond the 330 days on the ground of exceptional circumstances rather he has claimed the period on the ground of pendency of the application - In terms of the second proviso of Section 12 (3) of the IBC, the corporate insolvency resolution process shall mandatorily be completed within a period of three hundred and thirty days from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor . Petition disposed off.
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2021 (6) TMI 119
Seeking grant of exclusion of further 15 days from the period of Corporate Insolvency Resolution Process which is expiring on 14.01.2021 - Section 60(5) of Insolvency Bankruptcy Code, 2016 - HELD THAT:- Considering the submissions made by the RP and the stage of the CIRP process, the Bench deems it fit and proper to exclude 15 days as a special case from the CIRP period so as to enable the RP to complete the remaining CIRP process. The Application is allowed for exclusion of 15 days from the CIRP period i.e. from 15.01.2021 to 29.01.2021 after having considered the steps already taken by the RP and the current stage of CIRP in respect of M/s. PPS Enviro Power Pvt. Ltd.
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2021 (6) TMI 117
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - issuance of TDS certificate - Time Limitation - HELD THAT:- The issuance of TDS certificate does not amount to an acknowledgement of debt by the Corporate Debtor. The amount shown in the ledger account of the applicant cannot be treated as acknowledgement of debt. Since, the applicant in its part-IV of the application has admitted that the last payment was made on 28.03.2017 and he also received a part payment on 28.04.2017 whereas the present application has been filed on 04.02.2021, that is after a period of three years when the right to apply accrues in view of Article 137 of the Limitation Act. The present Application stands Dismissed as barred by limitation.
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2021 (6) TMI 115
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- We are dealing with an economic legislation, where parties, who are liable to repay the loan takes such pleas just to avoid their obligation and such practice could not be allowed to succeeded except when there is a some fundamental principles of law such as debt being barred by limitation is involved or there exists some deficiency which is fatal to the jurisdiction of this Authority or where such application has been filed with malicious intent. None of these factors exists for the present application. There are no merit in the contentions of the Corporate Debtor (Corporate Guarantor) that guarantee is barred by limitation. Because, first liability under such guarantee should accrue and become payable then only default resulting into cause of action arise from such date of default and the period of limitation would have to be counted therefrom. In this case, there are instances of defaults being on different dates and of difference amounts. Finally, such default has occurred on 8th February, 2019 in a cumulative manner. An application under Section 7 of the Code has been filed on 21st January, 2020, hence, not barred by limitation at all. Further, if we take into cognizance letter written by the Corporate Debtor on 13th September, 2019, the same amounts to promise to pay a debt barred by limitation is for squarely falls under Section 25(3) of the Indian Contract Act, 1872 r.w. Section 127 of the same Act. The provisions of Limitation Act, 1963 do not affect the provision of Section 25 of Indian Contract Act, 1872 as provided in Section 29(1) of Limitation Act, 1963. The application is otherwise complete and defect free and deserves to be admitted - application admitted - moratorium declared.
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2021 (6) TMI 114
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - HELD THAT:- It is noted that eight (8) Section 9 applications are pending out of which three (3) are pending before Court No. 1 and five (5) are pending before Court No. 2. One application under Section 7 of IBC, 2016, i.e., CP(IB) No. 276 of 2020 is also pending. Four applications which have been disposed of would have to be revived if the order of CIRP is set aside. Apart from this situation, I state that no financial plan has been provided to us so as required since beginning so that we could consider the claim of the applicant as per law. As without such plan no effective purpose can be envisaged by setting aside of one CIRP order particularly when the Hon'ble NCLAT has itself, in recent orders held that IBC is a time-bound process and time-lines must be adhered to. Hence, all old petitions need to be disposed of ASAP. Discretion to prepone the matter needs to be utilised in a cautious manner - matter be heard on 01.03.2021 which is also the conclusion of the Learned Judicial Member.
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2021 (6) TMI 113
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - arrears of lease rent - Operational debt or not - existence of debt and dispute or not - HELD THAT:- The corporate debtor has taken the premises on lease based upon the lease agreement executed between the corporate debtor and the operational creditor. The lease agreement provides for payment of lease rent for the use of premises and other services rendered by the operational creditor, hence, there cannot be a dispute that the corporate debtor is liable to pay the consideration for use of such facilities and, therefore, the lessor has got a claim to receive such payment as creditor irrespective of its classification as operational creditor or other creditor. Accordingly, we reject the contention that the outstanding sum is not a claim within the meaning of Sec. 3(6) of Insolvency Bankruptcy Code, 2016. It is apparent that rental obligation are to be considered as operational debt and consequently claim of operational creditor. Secondly, observation in para 4.3.3 make it absolutely clear that raw material and other inputs cannot be sole criterion to define the scope of term services - if a restricted meaning is given then the amount payable to consultancy, adviser etc. who play an important role in running of organisation will not be able to initiate CIRP and which cannot surely be an intention of legislature - the arrears of lease rent are operational debt. Accordingly, this contention of the corporate debtor is rejected. Thus, in this view of the matter, the provision of Regulation 32 of the Corporate Insolvency Resolution Process could not be pressed into service to interpret provision of Section 5(21) of the Code. Thus, considering the facts and circumstances of the case, applicable legal provisions and recent judicial precedents as well, we are of the view that there is no merit in any of the claims made by the Corporate Debtor - The application filed by the Operational Creditor is otherwise complete and defect free and this application also complies with all requirements of the Code and Regulations made thereunder. Application admitted - moratorium declared.
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2021 (6) TMI 112
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - service of demand notice - time limitation - HELD THAT:- On perusal of the records it is found that reply has not been filed by the respondent despite giving number of opportunities. The instant petition filed on 09.12.2019 was notified for the first time on 01.01.2020. On perusal of the record it is also found that the demand notice issued by the applicant under section 8 of the I B Code on 24.09.2019 has been served upon the corporate debtor - On perusal of the record it is also found that the instant petition filed by the applicant is well within limitation and there is no denial of the operational debt or any pre-existing dispute regarding the operational debt from the side of the corporate debtor. In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt due and payable to the Applicant - The documents produced by the operational creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'operational debt'. The petitioner is able to establish that there exists debt as well as occurrence of default and the amount claimed by operational creditor is payable in law by the corporate debtor as the same is not barred by any law of limitation and/or any other law for the time being in force - it is evident that the corporate debtor has committed default in payment of operational debt and, therefore, it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code. Petition admitted - moratorium declared.
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Central Excise
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2021 (6) TMI 147
Area Based exemption - refund of Excise duty - benefit of N/N. 20/2008-Central Excise dated 27.03.2008 - HELD THAT:- This petition is instituted on the grievance that the Notification dated 27.03.2008 having been restored as per the judgment of the Supreme Court in the UNION OF INDIA AND ANR. ETC. VERSUS M/S V.V.F. LTD. AND ANOTHER ETC. ETC. [ 2020 (4) TMI 669 - SUPREME COURT ], two application dated 28.09.2020 under Clause3(1) of the Notification No.20/2008-Central Excise dated 27.03.2008 was submitted by the petitioner claiming for a special rate, but the same has not been given its consideration and without giving a due consideration to the claim for special rate made by the petitioners, the respondents now intend to attach the bank accounts of the petitioner on the premises that the refund of excise duty would be as per the rates provided in the Notification dated 27.03.2008. As the Notification dated 27.03.2008 provides for a legal right to the assessee to claim for a special rate to be fixed in the event of there being any add-ons to the goods manufactured, without an appropriate decision being taken on such claim for special rate, it would be inappropriate for the department to proceed against the petitioners as per the rates provided in the Notification dated 27.03.2008. This petition stands disposed of by directing the Principal Commissioner of GST Dibrugarh to consider the application of the petitioner dated 28.09.2020 claiming for a special rate to be fixed on the basis of the add-ons made to the goods manufactured - Petition allowed.
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CST, VAT & Sales Tax
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2021 (6) TMI 150
Seeking registration of Sale Certificate in respect of the schedule mentioned property by the petitioner Bank - HELD THAT:- The legal issue involved in this writ petition is no longer res integra and has been considered in several decisions of this Court and the latest of which being in the case of TAMILNAD MERCANTILE BANK LIMITED VERSUS THE JOINT I SUB REGISTRAR, M/S. TOUGH BAGS, LALITHA RAMALINGAM, R. PALANIAPPAN, R. THIRUMALAIAPPAN, SAKTHIMALA, M. UDAYARAJAN, HEMALATHA, SHRIRAM TRANSPORT FINANCE COMPANY LTD. [ 2021 (1) TMI 1118 - MADRAS HIGH COURT] where it was held that the petitioner Bank cannot be denied the relief as sought for. In such view of the matter, both the writ petitions stand allowed. The first respondent in both the writ petitions are directed to register the sale certificates issued by the petitioner Bank in favour of the respondents. The right of the Commercial Tax Department qua the secured creditor was subject matter of consideration by the Full Bench in the case of Assistant Commissioner (CT), Anna Salai-III Assessment Circle Vs. Indian Overseas Bank [ 2016 (12) TMI 373 - MADRAS HIGH COURT] and it was held that the secured creditor namely the Bank will have precedence over the dues payable to the Commercial Tax Department. The Sub Registrar has to necessarily delete the schedule mentioned property attachment reflected in the encumbrance certificate at the instance of the commercial tax department. In the result, the writ petition is allowed. It is made clear that though the attachment at the instance of the first respondent Commercial Tax Department has been directed to be deleted, it will not in any manner affect the department's right to collect the dues from the default assessee by proceeding in accordance with law - Petition allowed.
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2021 (6) TMI 148
Works contract - rate of tax on transfer of material - suppression of purchases during inspection - HELD THAT:- In view of the fact that the Appellate Deputy Commissioner considered the issues elaborately and allowed portion of the claim set out by the petitioner, the Commercial Tax Officer cannot pass any order contrary to the orders passed by the Appellate Deputy Commissioner and therefore, the Commercial Tax Officer exercised excess jurisdiction, which is impermissible - This Court is of the considered opinion that in respect of the said appeal filed by the respondent-Department before the Tribunal, the respondents are at liberty to pursue the matter pending before the Tribunal and the Tribunal is expected to consider the appeal on merits and pass orders in accordance with law by affording opportunity to the parties. The impugned order dated 29.01.2016 is clear that the issues considered by the Appellate Deputy Commissioner were considered by the Commercial Tax Officer and the order was passed, which runs counter to the order passed by the Appellate Deputy Commissioner. The subordinate authority is not empowered to supersede the orders passed by the appellate authority and an administrative discipline requires that the subordinate authorities should follow the orders of the appellate authority and even if any lapse, error or otherwise, the subordinate authority is bound to approach the appropriate higher authority for the purpose of setting aside the order passed by the appellate authority. The excess amount of tax already paid by the petitioner is to be adjusted with reference to the financial year 2010-11 and such adjustment is to be made subject to the orders to be passed in the appeal, which is pending before the Tribunal - Petition allowed.
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2021 (6) TMI 142
Validity of assessment order - suo motu invoked his jurisdiction under Section 84 of the Tamil Nadu Value Added Tax Act - no personal hearing was afforded to the petitioner - principles of natural justice - HELD THAT:- Since the jurisdiction under Section 84 of Tamil Nadu Value Added Tax Act was suo motu invoked by the assessing authority himself, I must hold that the original orders of assessment dated 28.03.2017 automatically go. As I have already pointed out, the said orders were passed without granting personal hearing to the petitioner. The core contention raised by the learned counsel for the petitioner is that the impugned orders are vitiated by pre-determination. The assessing authority has chosen to go by what transpired during the inspection by the Enforcement Wing Officials. This contention advanced by the petitioner's counsel is amply borne out by the text and language of the impugned orders. In the impugned orders, the assessing authority had stated that since he is a quasi-judicial authority, he will always issue revision notice only after thoroughly going through all the facts and defects pointed out in the inspection records - In the case on hand, one of the defects pertains to non-payment of tax by the other end dealer. In the decision M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT] it was authoritatively laid down by the Madras High Court that in all such cases of mismatch, the enquiry must be conducted with the other end dealer also. But in the impugned order, it has been mentioned that it is the assessee, who must establish with proof that his seller has paid tax due to the Government. The matters are remitted to the file of the second respondent and the second respondent will issue one more personal hearing notice to the petitioner - Petition allowed by way of remand.
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2021 (6) TMI 141
Recovery of dues of deceased dealer - deletion of charge against property - Mutation of charge over the property - HELD THAT:- Late Kamlesh Manilal Thakkar was the proprietor of the proprietary concern, namely, M/s. Thakkar Manilal Devchand and he passed away on 31st December, 2010. The Department, in so many words, has stated that the property in question was not of the ownership of Kamlesh Manilal Thakkar but the lawful owner is Smt. Nirupaben Manilal Thakkar (the writ applicant herein). In such circumstances, it was informed by the Department to the Mamlatdar that no other steps were required to be taken with respect to the property, and the mutation of the charge over the property bearing No.21919 be cancelled - if the Department wants to recover the dues of the deceased dealer, then the same cannot be recovered from the immovable property in question as the said property is not the estate of the deceased. Application disposed off.
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