TMI Tax Updates - e-Newsletter
June 8, 2022

Case Laws in this Newsletter:

GST Income Tax Benami Property Corporate Laws Insolvency & Bankruptcy Central Excise CST, VAT & Sales Tax

TMI Short Notes

1. An insight into Advance Ruling and the functioning of the Authority for Advance Ruling (AAR).

  GST:

Articles

1. BINDING EFFECT OF ADVANCE RULING ON THE INCOME TAX DEPARTMENT

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Smt. Nirmala Sitharaman inaugurates Iconic Week of Ministry of Corporate Affairs during Azadi Ka Amrit Mahotsav celebrations in New Delhi

2. The World will Emulate the example of PM Gati Shakti in the coming years: Shri Piyush Goyal

3. Credit Outreach programme in all districts to be held by all Public Sector Banks as part of the Azadi Ka Amrit Mahotsav tomorrow

4. Drug Destruction Day to be held tomorrow by CBIC as part of Azadi Ka Amrit Iconic Week

5. Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman to launch of Single Nodal Agency (SNA) Dashboard during the Iconic Week Celebrations of Azadi Ka Amrit Mahotsav celebrations of Ministry of Finance

Notifications

GST - States

1. 49/2022-GST - dated 19-5-2022 - Assam SGST

Seeks to extend the due date of payment of tax, in FORM GST PMT-06, for the month of April, 2022 by taxpayers who are under QRMP scheme

2. 48/2022-GST - dated 19-5-2022 - Assam SGST

Seeks to extend the due date of filing FORM GSTR-3B for the month of April, 2022

Income Tax

3. 59/2022 - dated 6-6-2022 - IT

Central Government specified in case of an eligible investment fund referred to in sub-section (8A) of section 9A of the IT Act 1961

Circulars / Instructions / Orders

SEZ

1. TRADE NOTICE No. 01/2022 - dated 3-6-2022

Payment of Customs duty on export of goods. - Supplying goods, or providing services, from Domestic Tariff Area to a SEZ Unit

SEBI

2. SEBI/HO/MIRSD/TPD/P/CIR/2022/80 - dated 7-6-2022

Modification in Cyber Security and Cyber resilience framework for Stock Brokers / Depository Participants

DGFT

3. Policy Circular No. 39/2015-20 - dated 7-6-2022

Relaxation in provision of submission of 'Bill of Export' as an evidence of export obligation discharge for supplies made to SEZ units in case of Advance Authorisation

4. 11/2015-2020 - dated 7-6-2022

Deemed Export - Para 2 (b) (i) of the 'Guidelines For Applicants' under ANF-4F of Handbook of Procedures 2015-2020 has been amended to simplify the procedure and reduce the compliance burden for applying EODC in case of deemed exports.

Highlights / Catch Notes

GST

• Court Rules Invoking Rule 86A to Block Input Tax Credit Requires Self-Sustaining Order; Ongoing Investigation Insufficient Justification.

  Case-Laws - HC : Blocking of Input Tax Credit - the reason to invoke the power conferred under Rule 86A of CGST Rules against the petitioner is an intelligence report received from Principal Chief Commissioner, Central Excise and Central Tax, Vadodara Zone regarding a racket of firms indulging in fake judicial and passing of illicit ITC. Merely by recording that some investigation is going-on a drastic far-reaching action under Rule 86A of the CGST Rules cannot be sustained - It is trite law that a speaking order has to be self sustainable and respondents at this stage cannot be allowed to justify the same by adding reasons to it by filing additional affidavits - Relief granted - HC
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• Court Quashes GST Show Cause Notice, Orders Refund with Interest for Low Turnover in Tobacco Case.

  Case-Laws - HC : Jurisdiction of GST officer to issue the impugned show cause notice - Taxable turnover below threshold limit prescribed qua tobacco products or not - seeking refund the amount, that was deposited respondents, although, given the taxable turnover generated by the petitioner, he was not exigible to tax, on the basis of wrong advise - Relief granted - SCN quashed - refund to be issued with interest. - HC
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• GST on Disciplinary Penalties u/r 7(b)(xiv) Deemed Illegal; Applies Only to Trade or Commerce Penalties.

  Case-Laws - HC : Levy of GST on the penalty levied in the disciplinary proceedings - the penalty imposed, under Rule 7(b) (xiv) of the Code in a disciplinary proceedings initiated against the employees, would not attract the GST and the penalty referred therein would only refer to the penalty imposed in the course of trade or commerce; and hence, the imposition of GST on the penalty is illegal and is liable to be set aside. - HC
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• Goods Seizure Overturned Due to Minor Invoice Error; Clause 5 Allows Exception for Inadvertent Mistakes, No Penalty Applied.

  Case-Laws - HC : Seizure of goods alongwith the vehicle - The imposition of the penal consequences due to an exception, which has been caused on account of the inadvertent human error by not referring the invoice number as “SAI/V-235” and by referring it to “235” only. Since even the invoice number “235” has been consistently maintained in all the documentations, which were made by the petitioner, since it never cleverly intended to evade the tax, or revenue of the State, the exception would fall to be within Clause 5 of the Circular - the imposition made on account of the said human error, which has crept in in invoice number is pardonable under Clause 5 of the Circular - HC
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• Court Grants Relief to Petitioners, Restores Canceled Registration; Appeal's Time Limit and Jurisdiction Examined Under Act Provisions.

  Case-Laws - HC : Maintainability of appeal before Commissioner (appeals) - Period of limitation - Seeking restoration of cancellation of registration - no fault can be attributed to the impugned orders passed by the Appellate Commissioner inasmuch as they cannot exercise jurisdiction beyond the provisions of the Act and are bound to Act in accordance of the provisions of the Act. At the same time, it is found that there are overwhelming reasons for granting reliefs to these petitioners to restore their registration. - relief granted - HC
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• Dried whole turmeric classified as agricultural produce under GST, subject to 5% tax rate.

  Case-Laws - AAAR : Classification of goods - Turmeric (Turmeric in Whole form - not in powder form) - Agricultural Produce or not - the impugned product, i.e., dried turmeric (whole) is a produce out of cultivation of plant, which is subjected to certain post-harvesting processes - it is established beyond any doubt that the post-harvesting processes are carried out by the farmers or producers themselves on their farm. - The Turmeric (Turmeric in Whole form - not in powder form) is covered under the definition of ‘Agricultural Produce’ - Liable to GST @5% - AAAR
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Income Tax

• CBDT Clarifies: Vivad se Vishwas Scheme Extension Only for Payment, Not New Applications Beyond March 2021 Deadline.

  Case-Laws - HC : Vivad se Vishwas Scheme - Extension of the last date for payment of tax sought to be applied for filing new application - No such press release or notification was issued by the CBDT in the case of the latter. Secondly and fundamentally, the two are different. In the case of the former, the declarations were filed within time i.e., before the last date of 31.03.2021. Thereafter the amount to be paid by the declarants were adjudicated by the designated authority whereafter the payments were to be made; it is for the payment of the determined amount that the time line was extended as above. It cannot be equated with filing of declaration beyond the last date. - HC
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• Capital Loss on Loan to BFL Not Allowable u/s 28; Cannot Be Carried Forward or Deducted.

  Case-Laws - HC : Claim towards bad debts - if the provision written back is the excess provision than the money realized, then that would 100% be brought to tax apart from the fact that whether it is a revenue loss or capital loss; the loss sustained by the assessee in respect of the loan advanced to BFL is in the nature of capital loss and is not allowable u/s 28 and there is no transfer of asset involved and hence, the loss sustained by the assessee is not liable to be carried forward, though it is a capital loss. - HC
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• High Court Criticizes Tribunal for Reversing CIT(A)'s Decision on Newspaper Printing as Charitable Activity u/s 11.

  Case-Laws - HC : Exemption u/s 11 - Charitable activity or not - printing of News papers to educate the Toiling Masses being its objects - Tribunal has not rendered any finding on the correctness of the decision of the CIT(A), which examined the factual aspects as to purpose behind which the newspaper was printed and published. Therefore, merely by applying the decision in Al-Madeena Charitable Trust(cited supra), the order passed by the CITA could not have been reversed. - HC
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• Assessing Officer's oversight on unsecured loan interest leads to underassessment; CIT corrects error u/s 263.

  Case-Laws - AT : Revision u/s 263 - during the course of assessment, the AO made an addition on account of unexplained cash credit of unsecured loan u/s 68 - AO omitted to disallow the interest paid on the said unsecured loan while finalising the scrutiny assessment, which has resulted in under assessment of income. In our view, in the instant facts, the Principal CIT has not erred in facts and in law in setting aside the assessment order u/s. 263 of the Act by holding that the order is erroneous and prejudicial to the interests of the Revenue - AT
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• MAT Computation: Capital Losses from Asset Impairment Cannot Reduce Book Profit as Per Section 2(24) Income Tax Act.

  Case-Laws - AT : MAT computation - Disallowances on account of loss on revaluation of fixed assets - The expression 'income defined under Section 2(24) of the Act does not include such capital losses. The capital loss claimed on account of impairment of assets, in our view, is liable to be adjusted for the purposes of determination of book profit similar to the adjustment available in respect of capital receipts not taxable under the normal provisions of the Act. - Assessee is not entitled to reduce the book profit by the capital loss debited to the P&L account which is subject matter of qualification by Auditors. - AT
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• Assessing Officer Wrongly Expanded Tax Scrutiny Without Approval, Violating Section 143(2) and Burdening Taxpayer.

  Case-Laws - AT : Conversion of 'Limited scrutiny' to 'Complete Scrutiny' - We are not convinced with the argument of the DR that the issue raised by the AO is limited to the cash in hand available at the end of the financial year under consideration - as because if we admit the contention of the learned DR then the same will be beyond the scope of limited scrutiny as there was no question raised in the notice issued for the limited scrutiny under section 143(2) of the Act for the cash balance. The right course of action for the AO was to take the approval from the competent authority for expanding the scope of Limited Scrutiny to the regular assessment but he failed to do so. Thus, in our considered view inaction of the AO should not cause any harassment to the assessee. - AT
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• Expenses Disallowed for Exempt Income u/s 14A and Rule 8D Confirmed as Justified by Tax Authorities.

  Case-Laws - AT : Addition u/s 14A r.w.r. 8D - There is no such provision in the statute that no disallowance of expenditure could be made on investments made in the earlier years. Admittedly, the exempt income was earned on the investments made in the earlier years and the exempt income was earned in the year under consideration. Therefore, the disallowance made by the AO which was confirmed by the CIT(A) under Rule 8D(2)(iii) is justified. - AT
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Corporate Law

• Firm Partner Liable for Offenses by Firm u/s 240(3) of Companies Act Due to Lack of Separate Legal Identity.

  Case-Laws - HC : Vicarious liability of partner of the firm - separate identity of partnership firm - merely the petitioner running a firm, but it is not a legal entity and it cannot be placed on par with the companies which is registered under the Companies Act - If an offence committed by the firm, is also an offence committed by the partners, it cannot be bifurcated as partners and the firm - the Trial Court, rightly took the cognizance against the petitioner for the offence punishable under section 240(3) of Companies Act. - HC
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Direct Taxes

• Husband's Property in Wife's Name Not Benami Under Exception 3, Clause A, Section 2(9) of Benami Act 1988.

  Case-Laws - HC : Benami Property Transaction - title over the suit properties - Moreover purchase of a property by husband in the name of the wife cannot be called a benami transaction and such type of transaction falls within the exception no. 3 to clause 'A' of sub-section 9 of section 2 of the Prohibition of Benami Property Transactions Act, 1988. In this view the respondent has made out a prima facie case that he has got the right to seek declaration of his title over the suit properties. - HC
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IBC

• Court Upholds Homebuyers' Right to Be Heard in "Amadeus" Project Impleadment Case, Despite Rejection by Interim Resolution Professional.

  Case-Laws - AT : CIRP - Rejection of impleadment - allottees of “Amadeus” a real estate project being developed by the Corporate Debtor - The Financial Creditors in a class, who at present consist of 99.85% of CoC, have every right to be heard in the Applications filed by Respondent No. 2 and 3 whose claim has been partly and fully rejected, respectively by the IRP - It cannot be said that since the Authorised Representative has not came up before the Adjudicating Authority for filing the impleadment application, the Appellants who themselves are Homebuyers have no right to participate in the adjudication initiated by filing applications by Respondent No. 2 and 3. - AT
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• Court Orders Refund of VAT Pre-Deposit to Resolution Applicant, Including Interest, Within 60 Days.

  Case-Laws - HC : CIRP - Claim of successful resolution applicant over pre-deposit made the corporate debtor for filing of an appeal under VAT Act - right of state to recover the outstanding tax liability - the amounts deposited by the Corporate Debtor under protest and by way of pre-deposit as mandatory statutory obligation while filing the appeals, shall be refunded to the petitioner being the Successful Resolution Applicant with applicable interest as per law within a period of 60 days. - HC
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Case Laws:

• GST

• 2022 (6) TMI 279
  Blocking of Input Tax Credit - fraudulent availment of Input Tax Credit - Rule 86A of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- From bare perusal of the provision of Rule 86A of the CGST Rules, it is evident that the power under Rule 86A of the CGST Rules is exercised where the prescribed officer has reason to believe that credit of input tax available in the Electronic Credit Ledger has been fraudulently availed or the assessee is ineligible. The exercise vested in the prescribed Authority is subject to a satisfaction recorded by the said Authority and forming opinion to the effect that the Credit Ledger has been fraudulently availed or the assessee is ineligible in the situations as prescribed under the Rule itself. The impugned order in the present case when tested on the touchstone of the provision contained in Rule 86A and the law referred to herein above, we find that the reason to invoke the power conferred under Rule 86A of CGST Rules against the petitioner is an intelligence report received from Principal Chief Commissioner, Central Excise and Central Tax, Vadodara Zone regarding a racket of firms indulging in fake judicial and passing of illicit ITC. Merely by recording that some investigation is going-on a drastic far-reaching action under Rule 86A of the CGST Rules cannot be sustained - It is trite law that a speaking order has to be self sustainable and respondents at this stage cannot be allowed to justify the same by adding reasons to it by filing additional affidavits. From the reading of the order it is evident that it is bereft of any material or reason to believe that the petitioner is guilty of fraudulent transaction or is ineligible under Section 16 of the CGST Act. The present writ petition is allowed.

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• 2022 (6) TMI 278
  Jurisdiction of GST officer to issue the impugned show cause notice - Taxable turnover below threshold limit prescribed qua tobacco products or not - seeking refund the amount, that was deposited respondents, although, given the taxable turnover generated by the petitioner, he was not exigible to tax, on the basis of wrong advise - HELD THAT:- The petitioner had identified the source from whom he purchased the goods - the taxable turnover of the petitioner was Rs.15 lakhs (approx), which, as noticed, is below the threshold limit of Rs.20,00,000/- fixed for tobacco products - the respondents had no jurisdiction to issue the impugned show cause notice and/or pass the impugned orders. Refund allowed with interest interest @6% (simple) per annum. - the respondents will ensure that the subject premises are de-sealed forthwith. Petition allowed.

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• 2022 (6) TMI 277
  Levy of GST on the penalty levied in the disciplinary proceedings - clause 5(e) of the schedule II of the Central Goods Sales Tax Act, 2017 - Penalty was imposed on the employee against the allegation of fraudulent act and omissions - HELD THAT:- Qua levy of GST, in the order, based on which, the learned Judge passed the order impugned herein, it was held that the penalty imposed, under Rule 7(b) (xiv) of the Code in a disciplinary proceedings initiated against the employees, would not attract the GST and the penalty referred therein would only refer to the penalty imposed in the course of trade or commerce; and hence, the imposition of GST on the penalty is illegal and is liable to be set aside. Appeal disposed off.

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• 2022 (6) TMI 276
  Seizure of goods alongwith the vehicle - petitioner had escaped to refer the alphabetical figures, which was given therein, i.e. SAI/V235 - HELD THAT:- The learned counsel for the State had made reference to a judgement of the Hon ble Apex Court in Achal Industries Vs. State of Karnataka [ 2019 (3) TMI 1483 - SUPREME COURT] , and particularly, he makes reference to para 11 of the said judgement, which has provided that the Court cannot exercise the powers of an economic superiority, in determining the principle of levying of turnover taxes, on the assessee in pursuance to the commercial transaction, which in the said case was falling within the ambit Section 6-B (1) of Karnataka Sales Tax Act, 1957 - In fact, if the opening paragraph of the aforesaid judgement is taken into consideration, it was an aspect, where the charging Section was under consideration. The charging section, was pertaining to the charging of tax on the basis of the turnover of the assessee. The scope of its interpretation has been limited only, qua applicability of the charging section; because of the economic superiority, which has been vested with the revenue for incorporation of a charging section. But here, since the issue involved is not factually akin to the one, which has been settled by the Hon ble Apex Court in the case of Achal Industries, the same would not be applicable in the present case. The imposition of the penal consequences due to an exception, which has been caused on account of the inadvertent human error by not referring the invoice number as SAI/V-235 and by referring it to 235 only. Since even the invoice number 235 has been consistently maintained in all the documentations, which were made by the petitioner, since it never cleverly intended to evade the tax, or revenue of the State, the exception would fall to be within Clause 5 of the Circular dated 14th September, 2018 - the imposition made on account of the said human error, which has crept in in invoice number is pardonable under Clause 5 of the Circular dated 14.09.2018. Petition allowed.

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• 2022 (6) TMI 275
  Application for rectification of summary of order - HELD THAT:- The writ petition has become infructuous in view of passing of the appellate orders annulling the demand notice under GST DRC-07. Therefore, the question of recovery pursuant to the garnishee notice under GST DRC-13 dated 14.2.2020 and 15.01.2021 does not arise. Taking note of the subsequent developments that have taken during pendency of this application. Petitioner has succeeded before the appellate authority and demand notice itself stands set aside. The garnishee notice also therefore does not survive. As such the writ petition has become infructuous - Petition dismissed.

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• 2022 (6) TMI 274
  Validity of SCN issued - Whether show cause notice ought to have been issued in FORM GST DRC-01 electronically, as per Rules 100(2) and 142(1)(a) of the Central Goods and Services Tax (CGST) Rules, 2017? - HELD THAT:- It is to be noted that the petitioner is in default in filing GSTR-3 return for the month of February and March 2018, though for the corresponding period, the petitioner appears to have been filed GSTR-1 2 indicating the outward supply and purchases. The petitioner was issued with a notice, but the petitioner failed to respond. Thus, the impugned order has been passed. The petitioner has squandered the alternative appellate remedy by letting the limitation to expire. Now this Writ Petition has been filed to get over the limitation and pre-deposit. This Writ Petition is disposed off with liberty by giving liberty to the petitioner to file a statutory appeal before the Appellate Commissioner within a period of thirty days from the date of receipt of a copy of this order on making mandatory pre-deposit. The Appellate Commissioner shall entertain the appeal on merits without reference to the limitation and dispose the same in accordance with law.

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• 2022 (6) TMI 273
  Maintainability of appeal before Commissioner (appeals) - Period of limitation - Seeking restoration of cancellation of registration - appeal filed by the petitioner beyond the period prescribed under Section 107 of the respective GST Act, 2017 - HELD THAT:- On 31.01.2022, a batch of writ petitions in TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST), THE ASSISTANT COMMISSIONER (CIRCLE), SALEM BAZAAR [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , relating to the same issue were disposed by this Court subject to certain conditions under similar circumstances. The same relief is to be granted to the petitioner as the petitioner also has similar grievances in those writ petitions - it was held in the case that no fault can be attributed to the impugned orders passed by the Appellate Commissioner inasmuch as they cannot exercise jurisdiction beyond the provisions of the Act and are bound to Act in accordance of the provisions of the Act. At the same time, it is found that there are overwhelming reasons for granting reliefs to these petitioners to restore their registration. Following the earlier decision, relief granted the assessee. The petitioners are directed to file their returns for the period prior to the cancellation of registration, if such returns have not been already filed, together with tax defaulted which has not been paid prior to cancellation along with interest for such belated payment of tax and fine and fee fixed for belated filing of returns for the defaulted period under the provisions of the Act, within a period of forty five (45) days from the date of receipt of a copy of this order, if it has not been already paid. On payment of tax, penalty and uploading of returns, the registration shall stand revived forthwith. Writ petition disposed off.

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• 2022 (6) TMI 272
  Classification of goods - Turmeric (Turmeric in Whole form - not in powder form) - Agricultural Produce or not - HSN Code - rate of GST - Levy of tax on services rendered by the Appellant as a Commission Agent in APMC, Sangli - applicability of SI. 54 Heading 9986 of Notification No. 12/2017 CT(R) dated 28.06.2017 read with SI. No. 24 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 - requirement of registration under the CGST Act, 2017. HELD THAT:- On perusal of the definition of the term agricultural produce , it is observed that agricultural produce definition contains the expansion term any before the term produce , which clearly imparts a very wide connotation to the term agricultural produce under the GST law. The only constraint for any produce, to qualify for the agricultural produce , is that, either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market - In the instant case, the impugned product is Turmeric (whole), which is supplied by the farmers in the APMC by availing the services of the Appellant, who acts as an authorised commission agent in the sale/purchase of the impugned commodity in the APMC, Sangli. It is seen that the turmeric is harvested from the farm land in the form of raw turmeric. It is to be noted that the fresh turmeric contains moisture, and is blackish in colour, which renders the fresh or raw turmeric perishable and unsustainable. Therefore, to make it more sustainable and marketable, the raw turmeric is subjected to post-harvesting operation, like, boiling, drying and polishing, which are carried out by the farmers themselves on their farm land. Thus, it is clear that the impugned product, i.e., dried turmeric (whole) is a produce out of cultivation of plant, which is subjected to certain post-harvesting processes. Whether these post-harvesting processes on the raw turmeric are usually carried out by the cultivator or producer? - HELD THAT:- On perusal of the affidavit and the declaration made by the said organisation to the effect that various processes, such as, boiling, drying and polishing of fresh harvested turmeric are carried out by farmers in their farms to make the turmeric marketable, it is established beyond any doubt that the post-harvesting processes are carried out by the farmers or producers themselves on their farm. Whether the said post-harvesting processes carried out by the farmers alter the essential characteristics of the turmeric or not? - HELD THAT:- On perusal of the Test Reports, it is observed that there is no difference between the essential characteristics of the raw turmeric and the dried turmeric as oil content and the curcuminoid content are invariably present in both the samples, though in different concentration. The said difference in the concentration of both the components in both the samples, i.e., raw turmeric and dried turmeric, is attributable to the drying of the fresh/raw turmeric having greater content of moisture, which eventually gets removed upon drying during post-harvesting operation to render higher concentration of the aforesaid components in the dried turmeric. Whether the said post-harvesting processes on the raw turmeric are carried out to make it marketable for primary market? - HELD THAT:- The Appellant have submitted that normally, the turmeric in the raw/fresh form is not sold by the farmers in the market, therefore, various post-harvesting processes are carried out by the farmers to make the turmeric sustainable in terms of its appearance and quality, suitable for bringing into a market. Whether the APMC markets where the impugned product is sold by the farmers to the traders by availing the services of commission agent will be treated as primary market or otherwise? - HELD THAT:- Since, the term primary market is not defined under GST law, the letter dated 01.02.2022, issued by APMC, Basmathnagar, Distt.-Hingoli (Maharashtra) is referred, wherein it has inter-alia been declared that The APMC market across the state of Maharashtra act as primary or wholesale market for sale of agricultural produce by the farmers where the Traders/wholesalers make the purchase of such agricultural produce, by following laid down procedure. Thus, attributable to the said APMC letter, it can be aptly concluded that the APMC market, where the impugned product is sold by the farmers, is nothing but primary market. HSN code and rate of GST on the impugned product - HELD THAT:- On perusal of the relevant Chapter and Heading, it is observed that the impugned product, i.e., dried turmeric(whole) will get classified under the Heading 0910 30 20 bearing description as Dried Turmeric (Curcuma) , attracting the GST at the rate of 5%. Whether the services rendered by the Appellant as a Commission Agent in APMC, Sangli, are liable to GST in terms of SI. 54 Heading 9986 of Notification No. 12/2017 CT(R) dated 28.06.2017 read with SI. No. 24 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017? - HELD THAT:- On perusal of the entry at SI. No. 54 of the exemption notification, in the facts of the present case, it is observed that the services provided by the Appellant in the capacity of the commission agent for sale or purchase of impugned product, i.e., dried turmeric(whole), which has been held as an agricultural produce hereinabove, will not be subject to levy of GST. Whether the Appellant is required to be registered under the CGST Act, 2017 for his activities specified under Annexure-I? If yes, under which section of the GST Act, he is required to be registered? - HELD THAT:- The Appellant, who is undertaking the supplies of agricultural produce purely as a commission agent for the farmer, are not liable for compulsory registration under clause (vii) of section 24 of the CGST Act, 2017. However, as they are also undertaking supplies of the impugned product from their own account as a trader, they are required to take registration under section 22(1) of the CGST Act, 2017 subject to the condition that their aggregate turnover exceeds the threshold limit prescribed under section 22(1) ibid.

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• Income Tax

• 2022 (6) TMI 292
  Revision u/s 263 - Assessment order as erroneous and prejudicial to the interest of revenue on the ground that no independent enquiry or verification of the details were made by the A.O - addition of capital account by the partner in cash - HELD THAT:- We are of the considered view that the ld. AR has specifically demonstrated that the Assessing Officer has made enquiries on the issue of capital introduced by the partner Shri Saurabh Goyal amounting to Rs.1.38 crores, out of which 1.04 crores were received by the assessee through banking channel and Rs.34,00,000/- in cash. From the notice issued by the Assessing Officer u/s. 142(1) dated 08.10.2018, question No. 3 there under (assessee s paper book page 59 to 60), it is amply clear that the Assessing Officer asked the assessee to file all the details relating to capital introduction by the partners. Assessing Officer has made sufficient enquiry on the issue of capital introduced by the partner during the relevant year. We may also point out that as per decision in the case of Kesharwani Sheetalaya [ 2020 (4) TMI 765 - ALLAHABAD HIGH COURT ] the onus lay on the assessee firm regarding capital introduced by the partners is discharged and the Assessing Officer was quite correct and justified in accepting the explanation of the assessee in this regard. Therefore, we are compelled to hold that the Assessing Officer has made sufficient enquiries on this issue and therefore, ld. PCIT was not correct in holding the assessment order as erroneous and prejudicial to the interests of revenue on this count. Unsecured loan creditors - As there was no iota of doubt regarding identity and creditworthiness of this loan creditor and the Assessing Officer was right in not pointing out any doubt. Regarding another loan creditor Smt. Manju Goyal, who is mother of one of the partners, it is discernible that she is also earning income from liquor business having turnover of Rs.3.84 crores and gave loan to the assessee firm only of Rs.5 lacs, which is less than her returned income. Similar case is of third loan creditor Smt. Sarika Goyal, who is wife of one of the partners and gave loan of Rs.45,25,000/- to the assessee firm. Smt. Sarika Goyal is also earning income from liquor business having turnover of Rs.26.89 crores and returned income of Rs.48.78 lacs which is higher to the fresh loan given to the assessee firm. Therefore, we are unable to see any ambiguity, perversity or any valid reason to disturb the view taken by the Assessing Officer and accepting the unsecured loan creditors as shown by the assessee. Therefore, we feel satisfied that the Assessing Officer has made sufficient enquiry on the issue on unsecured loan creditors and thereafter allowed the claim of assessee regarding unsecured loans shown in the balance sheet. Therefore, we are not in agreement with the conclusion drawn by the ld. PCIT that the Assessing Officer has not made enquiry in this regard and therefore, the assessment order is erroneous and prejudicial to the interest of revenue. As in recent judgment in the case of Delhi Airport Metro Express P. Ltd. [ 2017 (9) TMI 529 - DELHI HIGH COURT ] we hold that the ld. PCIT can exercise revisionary powers u/s. 263 of the Act in case he feels that the Assessing Officer has not made adequate and sufficient enquiry on a particular issue, then the ld. PCIT is required to undertake enquiries himself to allege the assessment order as erroneous and prejudicial to the interest of Revenue and without such exercise, valid jurisdiction to revise assessment order u/s. 263 of the Act cannot be assumed and exercised. Therefore, in view of foregoing discussion, we reach to a logical conclusion that the ld. PCIT was not correct in alleging the impugned assessment order passed u/s. 143(3) dated 17.12.2018 as erroneous and prejudicial to the interest of Revenue - Appeal of assessee allowed.

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• 2022 (6) TMI 291
  Addition u/s 56(2)(viib) r.w. Rule 11UA - assessee had issued 6% non-cumulative preference shares at issue price of Rs..1000/- per share which includes premium of Rs..900/- per share - assessee has converted the OFCDs into non-cumulative preference share - HELD THAT:- CIT(A) has addressed this issue in detail and held, the section 56(2)(viib)of the Act is clear that the words used in the section are where a company, not being a company in which the public are substantially interested, receives in any previous year . Therefore, the words used are receives. He decided the issue in favour of the assessee. In our view, the receives means not only issue of shares but also receipts of share consideration during the same assessment year. One cannot interpret the law merely on the basis of issue of shares or from receipt of consideration, it has to be issue of shares and receipt of consideration during the same assessment year. It is needless to say that issue of shares includes allotment of shares. In our considered view, Ld.CIT(A) has discussed this issue elaborately in his order and we do not find any reason to interfere with the findings of the Ld.CIT(A). Accordingly, ground raised by the revenue is dismissed. Admissibility of additional evidences and valuation of shares at market value - We observe that revenue has filed the ground that it does not fall under exemption clause mentioned in Rule 46A of I.T. Rules. In this regard, we observe that the Ld.CIT(A) has dealt with the issue in detail before admitting the additional evidences by relying on various decisions. In our view, the issue raised by the revenue in grounds of appeal and the same issue was also raised by the Assessing Officer in his remand report and Ld.CIT(A) has addressed the issue in detail before admitting the additional evidences. We observe from the above findings of the Ld.CIT(A) that he has clearly explained the provisions of section 250 of the Act and he accepted the valuation report considering the fact that the report constitute the very root cause of the additions made by the Assessing Officer and also he has applied his power conferred on him u/s. 250(4) of the Act. Therefore, we are inclined to accept the finding of the Ld.CIT(A) on admitting the additional evidences for the purpose of taking the issue in hand. It is needless to say that Ld CIT(A) has coterminous power to accept or reject the additional evidence filed before him. In the result, Ground No. 2 and 3 raised by the revenue are dismissed.

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• 2022 (6) TMI 290
  Addition of employees share of contribution to EPF/ESI to the extent not paid on or before the due date as mentioned in Sec 36(1)(va) - HELD THAT:- Hon ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd.[ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] has taken the view that employee s contribution under section 36(1)(va) of the Act would also be covered under section 43B of the Act and therefore if the share of the employee s share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is covered by the decision of the Hon ble Karnataka High Court. In this case there is no dispute that the assessee made payment of the Employees share of PF/ESI on or before the due date for filing return of income for AY 2017-18 u/s.139(1) . Scope of amendment - whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also? - On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of this order on identical issue the tribunal has taken a view that the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act, deserves to be deleted. Appeal of assessee allowed.

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• 2022 (6) TMI 289
  Addition u/s 14A r.w.r. 8D - Suo moto disallowance by assessee - AO by applying the method under Rule 8D(2)(iii) made further disallowance - as argued when there is no investments made in the year under consideration the disallowance made by the AO under Rule 8D(2)(iii) is not maintainable - HELD THAT:- Sub-section (2) of section 14 clearly explains that the AO is empowered to determine the expenditure in accordance with such method as contemplated under Rule 8D, if it is satisfied with the correctness of the claim of assessee in respect of such expenditure. In the present case, the assessee made disallowance on its own at 5% of exempt income to an extent of Rs.91,875/-. The AO did not accept the same and proceeded to invoke Rule 8D(2)(iii) of Rules which resulted disallowance of Rs.8,11,416/-. AO has also empowered to determine the amount of expenditure if no claim of expenditure incurred in relation to exempt income under sub-section (3) of section 14. Therefore, the method adopted by the assessee by disallowing at 5% of exempt income has no basis. Therefore, the AO is correct in invoking Rule 8D(2)(iii) which was confirmed by the CIT(A) by holding that the AO is justified in not accepting the disallowance made by the assessee on its own at 0.5% of average investments. There is no such provision in the statute that no disallowance of expenditure could be made on investments made in the earlier years. Admittedly, the exempt income was earned on the investments made in the earlier years and the exempt income was earned in the year under consideration. Therefore, the disallowance made by the AO which was confirmed by the CIT(A) under Rule 8D(2)(iii) is justified. Thus, we find no infirmity in the order of CIT(A). Accordingly, the grounds raised by the assessee are dismissed.

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• 2022 (6) TMI 288
  Reopening of assessment u/s 147 - addition u/s 68 - reopening beyond period of four years - HELD THAT:- Since in the instant case the reopening has been made after a period of 04 years from the end of the relevant assessment year, the original assessment was completed under section 143(3) and in the reasons recorded by the A.O. there is mere allegation of failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of assessment, but the reasons do not indicate how the assessee has failed to make full and true disclosure of all material facts, therefore, such reopening in our opinion is in violation of First proviso to Section 147 of the I.T. Act, 1961 D.R. also could not controvert the finding given by the Ld. CIT(A) on this issue while quashing the reassessment proceedings. Since the order of the CIT(A) is based on judicial precedents and the Ld. D.R. could not bring any material to controvert the findings given by the Ld. CIT(A) on this issue, therefore, we do not find any infirmity in the detailed order of the Ld. CIT(A) in quashing the re-assessment proceedings. We, therefore, uphold the same and the grounds raised by the Revenue on this issue are dismissed.

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• 2022 (6) TMI 271
  Reopening of assessment - Validity of notice u/s 148 - assessee obligation to disclose the material facts and such disclosure should be full and true and the petitioner has made true and full disclosure of all material facts - HELD THAT:- As in Phool Chand Bajrang Lal [ 1993 (7) TMI 1 - SUPREME COURT ] had held that the reassessment proceedings may be started either because of some fresh fact come into light which were not previously disclosed or some information with regard to the fact previously disclosed comes into light which intends to expose untruthfulness of those facts. In the present case, the reassessment has been ordered upon discovery of apprehended untruthfulness of facts previously disclosed, and therefore, the judgment in Phool Chand Bajrang Lal (supra) does not support the petitioner and as per the law laid down in Srikrishna [ 1996 (7) TMI 2 - SUPREME COURT ] the reassessment proceedings have rightly been initiated. As already been held by this Court the finding of the Assessing Officer that the petitioner had not made full and true disclosure of all the material facts which relied in an income having escaped assessment is based on reasons which need no interference by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India and we do not find any error apparent on the face of record in the aforesaid finding. The judgment passed by this Court has also been sought to be reviewed on the ground that various case laws relied upon by the petitioner in support of its claim have not been considered by this Court. In the judgment sought to be reviewed, the judgments of Aventis Pharma Ltd. [ 2010 (3) TMI 317 - BOMBAY HIGH COURT ], Arun Gupta. [ 2015 (2) TMI 213 - ALLAHABAD HIGH COURT ] and United Electrical Co. Ltd. [ 2002 (10) TMI 86 - DELHI HIGH COURT ] cited by the learned counsel for the petitioner have been referred to and dealt with. This Court is not obliged to refer to each and every judgment forming part of a compilation of judgments submitted after conclusion of oral submissions, which judgments were not placed before the Court during oral submissions. Moreover, while deciding the writ petition, we have referred to and relied upon the relevant case laws and it is not been submitted by the petitioner that in the judgment sought to be reviewed, the law applicable to the facts of the case has not been taken into consideration. Therefore, this submission also stands rejected.

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• 2022 (6) TMI 270
  Vivad se Vishwas Scheme - Extension of the last date for payment of tax sought to be applied for filing new application - extension of limitation period - HELD THAT:- Supreme Court, in exercise of its powers under Article 142 read with Article 141 of the Constitution of India, had extended the period of limitation so as to minimise the difficulties faced by the litigants and lawyers. The aforesaid orders, in our view, are applicable to regular proceedings; proceedings which are judicial or quasi-judicial, such as, income tax proceedings including filing of income tax return or filing of refund application, filing of appeal etc., It cannot be stretched and made applicable to a one time amnesty scheme like the one introduced vide the Vivad se Vishwas Act, which incidentally was introduced when the pandemic had broken out. Initially, the last date for filing declaration under the Vivad se Vishwas Act was 31.01.2020 which was finally extended to 31.03.2021. Considering the nature and objective of the one time amnesty scheme introduced vide the Vivad se Vishwas Act, in our considered view, extension of limitation granted by the Supreme Court cannot be applied to belated filing of declaration. As a matter of fact, filing of declaration in terms of the Vivad se Vishwas Act, is neither a judicial act nor a quasi-judicial act. It was intended as a one time measure for an eligible declarant to file the declaration within the prescribed period and avail the benefits thereunder. Petitioners having filed the declarations in the third week of June, 2021 much after the last date of filing i.e. 31.03.2021 were not eligible to claim any benefit under the Vivad se Vishwas Act. Therefore, their declarations were rightly not accepted. Extension of the last date for payment of dues as determined by the designated authority in terms of the Vivad se Vishwas Act till 31.08.2021 or till 31.10.2021 by the CBDT cannot be pressed into service by the petitioners to seek extension of the last date for filing declaration. Firstly, in the case of the former, CBDT issued press release on 25.06.2021. No such press release or notification was issued by the CBDT in the case of the latter. Secondly and fundamentally, the two are different. In the case of the former, the declarations were filed within time i.e., before the last date of 31.03.2021. Thereafter the amount to be paid by the declarants were adjudicated by the designated authority whereafter the payments were to be made; it is for the payment of the determined amount that the time line was extended as above. It cannot be equated with filing of declaration beyond the last date. Thus, in the facts and circumstances of the case, the two writ petitions are wholly misconceived. There is no merit in the writ petitions and those are accordingly dismissed.

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• 2022 (6) TMI 269
  Claim towards bad debts - Disallowance by AO as it was not satisfied the criteria laid down u/s 36(2) after having found that money lending and banking are not the principal activities of the assessee and they made the advance of surplus funds available with it for earning interest and they could not recover the principal and hence, the same was written off as irrecoverable - HELD THAT:- As noted by the assessing officer that the advances are transactions on capital account and therefore, the loss suffered by the assessee is capital loss which is neither admissible u/s 36(1)(vii) nor u/s 37(1) - The order of the assessing officer was confirmed by the CIT(A), on the premise that putting surplus money as inter corporate deposit for earning of interest cannot be said to be incidental to business or during ordinary course of business and hence, the loss of investment by way of deposits by the appellant, cannot be claimed as revenue loss. The said order of the CIT(A) was also affirmed by the Tribunal in the further appeal filed by the appellant / assessee, by observing that if the provision written back is the excess provision than the money realized, then that would 100% be brought to tax apart from the fact that whether it is a revenue loss or capital loss; the loss sustained by the assessee in respect of the loan advanced to BFL is in the nature of capital loss and is not allowable u/s 28 and there is no transfer of asset involved and hence, the loss sustained by the assessee is not liable to be carried forward, though it is a capital loss. - Decided against assessee.

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• 2022 (6) TMI 268
  Exemption u/s 11 - printing of News papers to educate the Toiling Masses being its objects is not a Charitable activity in nature - Whether Tribunal was right in law in denying the exemption under section 11 to 13 of the Act by placing a very narrow interpretation to the term charitable activity with respect to amount applied towards the objectives of the Trust? - HELD THAT:- From the order passed by the Commissioner of Income Tax (Appeals)- VII, Chennai, we find that the authority had examined the nature and purpose for which the Trust was created and the publication of the newspaper was to educate the toiling masses and having arrived at such a factual conclusion held the denial of exemption under section 11 of the Act was not correct - CIT(A) has also noted as to how the substantial number of people in the country lives in rural areas and about 40% of the population is below the poverty line and the appellant-trust is to educate those daily wage earners in urban areas and industrial workers about the various aspects, which they are bound to know and held that the activity of publishing the newspaper can be covered under advancement of any other object of general public utility . While testing the correctness of the order passed by the CIT(A), the Tribunal had relied upon the decision of the Cochin Bench of this Tribunal in Al-Madeena Charitable Trust -vs- ACIT [ 1999 (11) TMI 104 - ITAT COCHIN] and came to the conclusion that the assessee had not carrying on any charitable activity and therefore, exemption cannot be granted under section 11 of the Act. Tribunal has not rendered any finding on the correctness of the decision of the CIT(A), which examined the factual aspects as to purpose behind which the newspaper was printed and published. Therefore, merely by applying the decision in Al-Madeena Charitable Trust(cited supra), the order passed by the CITA could not have been reversed. Depreciation claim - Tribunal has reversed the finding of the CIT(A) that the claim of depreciation cannot be a double deduction over and above the full value of the assets and with that observation, the Revenue s appeal was allowed. There is no finding rendered by the Tribunal as regards the views expressed by the CIT(A). Before us the assessee would contend that in terms of the decision of the Hon ble Supreme Court in CIT Vs. Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] that the view expressed by the High Court in favour of the assessee should be preferred to the views expressed as against the assessee and this aspect has not been considered by the Tribunal. As assessee placed reliance on the decision of the Punjab Haryana High Court in CIT -vs- Market Committee Pipli reported in [ 2010 (7) TMI 374 - PUNJAB AND HARYANA HIGH COURT] and CIT -vs- Tiny Tots Education Society [ 2010 (7) TMI 377 - PUNJAB AND HARYANA HIGH COURT] wherein, it has been held that depreciation allowance on fixed assets of charitable trusts are not double deduction as claimed by the department. Depreciation on fixed assets - As the decisions of this Court in Director of Income Tax (Exemptions) -vs- Medical Trust of the Seventh Day Adventists [ 2017 (8) TMI 931 - MADRAS HIGH COURT] is fully in favour of the appellant-assessee and the question has been answered in favour of the appellant-assessee. This issue also can be raised before the Tribunal. Thus in the light of what we have observed above, we are of the view that the Tribunal should reconsider the case of the appellant-assessee by taking note of all the facts and legal position that may be placed before the Tribunal by and on behalf of the assessee. Tax Case Appeal is allowed and the order passed by the Tribunal was set aside and the matter is remanded before the Tribunal for fresh consideration on all issues

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• 2022 (6) TMI 267
  Rectification of mistake u/s 154 - denial of exemption u/s 11 - Taxability of corpus donations when exemption u/s.11 is denied is a debatable issue which cannot be entertained u/s. 154 - whether corpus donation has to be taxed or totally exempt at the stage of rectification under section 154 after attaining finality before the final facts finding authority? - HELD THAT:- We find that the rectification petition filed by the assessee under section 154 of the Act is a debatable issue and therefore, it cannot be considered at this stage. That apart, the ld. Counsel for the assessee has submitted that the issue is pending before the Hon ble High Court. Under the above facts and circumstances, we find no infirmity in the order passed by the ld. CIT(A) and accordingly, the appeal filed by the assessee is dismissed.

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• 2022 (6) TMI 266
  Penalty under Section 271(1)(c) - Defective notice u/s 274 - non-filing of return of income - HELD THAT:- It is pertinent to note that the entire basis of imposing penalty was concealment of income on the part of the assessee as to non-filing of return of income by the assessee. But from the perusal of the records we can see that the assessee has filed return of income which was very much submitted before the AO as well as before the CIT(A) and quoted in the written submissions in both the orders - AO as well as the CIT(A) has not at all verified this fact and simplicitor imposed penalty on concealment of income under Section 271(1)(c) of the Act without giving any opportunity to the assessee at the appellate stage i.e. before the CIT(A). Further, it is noticed that in the notice issued under Section 271(1)(c) read with Section 274 of the Act the specific limb was also not mentioned in the notice. Therefore, the decision in the case of CIT vs. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] and CIT vs. Manjunatha Cotton Ginning [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] as well as decision of the Hon ble Delhi High Court in the case PCIT vs. Sahara India Life Insurance Co. Limited [ 2019 (8) TMI 409 - DELHI HIGH COURT] are applicable in the present case. It has been held in these decisions that notice issued by the Assessing should specify which limb of Section 271(1)(c) of the Act penalty proceedings has been initiated. Therefore, the appeal of the assessee allowed.

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• 2022 (6) TMI 265
  Addition u/s 68 - failure of the assessee to prove the genuineness of unsecured loan taken - identity of loan creditors - assessee contended that it was clear that the documents filed before the authorities below clearly substantiated the explanation of the assessee that the amounts received by the assessee from M/s. Makhija Infrastructure Pvt. Ltd. related to the amounts given by customers of M/s. Makhija Infrastructure Pvt. Ltd. as booking advance mentioning the names of the parties also from whom it was received - HELD THAT:- The confirmation of the said party reflects names of individuals, which individuals are found reflected as members/customers of Makhija enterprises in its financial statements, the accounts of the said individuals /members in the books of Makhija enterprises reflects the transaction of amounts advanced by them deposited in the bank account of the assessee. No infirmity in the above documents have been pointed out by the Revenue. Therefore for all purposes the assessee has established the fact that the amount has been received from M/s Makhija Infrastructure through banking channels though not directly through its bank account but by way of cheques of advances paid by its members, deposited in its account. The Ld.CIT(A) does not dispute these facts. The identity of the loan depositor M/s Makhija Infrastructure, its creditworthiness as being its customers /members money, as also genuineness of the transaction stands duly and satisfactorily established. The assessee onus was only with respect to establishing the aforestated ingredients of the transaction, i.e identity, creditworthiness and genuineness of the transaction. These facts having been admittedly duly established, why the advances of members were so paid to the assessee, is not relevant for the genuineness of the transaction. There may be any number of reason for doing so. The amount advanced by members/customers of Makhija Infrastructure is primarily credited in the Books of Makhija Infrastructure. Any question regarding the genuineness of the sources should impact the nature of the credit in the hands of Makhija Infrastructure. The assessee being forwarded these amounts by Makhija Infrastructure questioning the genuineness of the customers/members tantamounts to questioning the source of the source which cannot be the basis for making additions u/s 68. - Decided in favour of assessee. Unsecured loan received from Shri Ramesh Parmar as ingenuine - As noted from the explanation and documents filed by the assessee to the lower authorities that it had been established by Shri Ramesh Parmar that it had received certain amount from M/s. Makhija Infrastructure Pvt. Ltd. which was withdrawn in cash, that subsequently cash was deposited in another bank account of Shri Ramesh Parmar which was advanced as unsecured loan to the assessee. All these transactions happened within a span of few days. Revenue authorities have not disputed the fact of cheque received by Ramesh Parmar from Makhija Infrastructure and withdrawn subsequently by him in cash but has doubted the cash withdrawn as being redeposited and advanced as loan to the assessee in the absence of nexus being established between the amount withdrawn in cash and subsequently redeposited. As long as the transactions have happened within a very short span of time and the Revenue has been unable to establish the usage/application of the amounts withdrawn in cash for any other purposes, we see no reason to hold the explanation of the assessee as totally unbelievable. Further the fact that out of the total loan of Rs. 10,75,000/- received from Shri Ramesh Parmar, an amount of Rs. 6,25,000/- stands returned by the assessee as is clearly reflected in the bank account of Shri Ramesh Parmar filed before us, the explanation of the assessee is further strengthened from the same. Therefore we are not in agreement with the ld. CIT(A) that the genuineness of unsecured loan received from Shri Ramesh Parmar was not satisfactorily explained by the assessee. Addition to be deleted. Appeal decided in favour of assessee.

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• 2022 (6) TMI 264
  Revision u/s 263 - CIT noted from the records that the assessee had claimed deduction of its profits derived from exports with respect to its unit set up in Special Economic Zone (SEZ) u/s. 10AA which deduction he noted had not been examined and verified by the A.O.- No queries with respect to the said claim except for asking for a calculation of the quantum of deduction and accepting the revised calculation furnished by the assessee to it - contention of assessee before us was that it had been explained to the Ld. PCIT that the export incentive was not of the assessee but related to a vendor of the assessee who had passed on the benefit to the assessee - HELD THAT:- We agree with the assessee that these incentives merely tantamounted to reduction in purchase cost of the assessee and were in no way earned on account of the manufacturing activity carried on by the assessee. The decision in the case of Liberty India Ltd. [ 2009 (8) TMI 63 - SUPREME COURT] holds export incentives of assessee s earned on account of the policy of the Government in the course of carrying out its business activities as not being eligible to deduction as not being derived by the undertaking of the assessee but being earned on account of policy of the government. In the present case, since these export incentives have admittedly not been earned by the assessee, the decision of the Hon ble Apex Court in the case of Liberty India Ltd. does not apply to the facts of the present case. In fact we agree with the assessee that this excise duty refund earned by the vendor of the assessee company and passed on to the assessee merely resulted in reduction in purchase cost of the assessee and higher profits on account of the same were therefore eligible to deduction u/s. 10AA of the Act. The order of the Ld. CIT denying the assessee deduction u/s. 10AA on the export incentive is therefore set aside. Claim of deduction u/s. 10AA on domestic sales undertaken within SEZ - contention of the assessee before us was that these export had been undertaken through a third party i.e. M/s. Glonet Marketing Pvt. Ltd., Mumbai and this export was permissible under the SEZ policy - HELD THAT:- The assessee had claimed deduction of profits earned from sales made to one M/s Glonet Marketing Pvt. Ltd. , which sales was in accordance with the SEZ laws, who in turn had exported these goods. In short the assessee had claimed deduction on indirect exports - As in view of the decision of the Hon ble Apex Court in the case of Metal Closures (P.) Ltd. . [ 2019 (1) TMI 228 - SC ORDER] no iota of doubt that the finding of the ld. CIT on this aspect is not in accordance with law. The Hon ble Apex Court having clearly and categorically held that deemed export made through third parties also qualified as export for the purposes of deduction u/s. 10B of the Act, the assessee in the present case being placed in identical set of facts was entitled to and had rightly claimed deduction on the indirect exports made by it amounting to Rs. 396.22 lakhs. The order of the Ld. CIT denying the assessee deduction on the same u/s. 10AA of the Act is therefore held to be not in accordance with law and set aside. Thus assessee s claim of deduction u/s. 10AA on both the export incentives and profits earned from indirect exports was in accordance with law. The order of the ld. CIT passed u/s. 263 holding that the assessment order allowing deduction on these two counts to be erroneous and thereafter denying the assessee deduction on the same is directed to be set aside. Appeal of assessee allowed.

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• 2022 (6) TMI 263
  CIT-A power to entertain the claim of deduction otherwise then by revised returned - deduction u/s 80G of the Act in respect of donation - disallowance of deduction claimed in respect of donation - Claim before the Ld. CIT(A) rejected on the ground that he does not have power to entertain fresh claim - HELD THAT:- We find that identical issue has been decided by the Hon ble Bombay High Court in the case of Pruthvi Brokers Shareholders [ 2012 (7) TMI 158 - BOMBAY HIGH COURT ] made it clear that Tribunal can entertain the claim of deduction otherwise then by revised returned. Respectfully following the above decision of the Hon ble High Court, we admit the claim of the assessee for deduction u/s 80GGA of the Act subject to verification by the Assessing Officer. Accordingly, we restore the issue back to the file of the Ld. Assessing Officer for examining of the documents in support of claim u/s 80GGA and if the claim is found in accordance with law same may be allowed. The grounds of the appeal of the assessee are accordingly allowed for statistical purposes.

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• 2022 (6) TMI 262
  Deduction u/s 80-IA - disallowances made as appellant is carrying on the business of common effluent treatment plant only - HELD THAT:- Undisputedly, the assessee s claim for deduction u/s 80IA of the Act qua the water treatment system plant commenced in June 2004. It is also not in dispute that assessee s claim qua deduction u/s 80IA of the Act for preceding years i.e. A.Y. 2006-07 to 2011-12 has not been entertained and as such the only inference can be drawn that present claim of the assessee for deduction under section 80IA of the Act has become the first year. We have perused the impugned order passed by the Ld. CIT(A) who has thrashed the facts in the light of the law applicable thereto. After perusing the agreement with Maharashtra Industrial Development Corporation (MIDC), the Ld. CIT(A) observed that the same is a document between Hydroair Tectonics and Patalganga and Rasayani Industries Association (PRIA) with MIDC. There is also one memorandum of understanding between Hydroair and assessee with MIDC as facilitator for setting up a joint venture company namely Pria Ganga Common Effluent Treatment Plant Ltd. When the assessee has failed to fulfill the basic and primary requirements of section 80IA(4) of the Act for its claim under section 80IA of the Act, present year being the first year of claiming a deduction as its earlier claims have already been declined, we find no illegality or perversity in the impugned order passed by the Ld. CIT(A). No new facts and evidences have been brought on record by the assessee who has also not preferred to put an appearance after filing present appeal way back in May 2018. Consequently, impugned order passed by the Ld. CIT(A) is hereby upheld and appeal filed by the assessee is dismissed.

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• 2022 (6) TMI 261
  Revision u/s 263 - CIT held that the impugned assessment order has been passed by the AO without making proper verification of the interest claimed on unsecured loan treated as unexplained cash credit u/s 68 - AO s order as erroneous and prejudicial to the interests of the Revenue - AO did not disallow the interest paid on the unsecured loan treated as unexplained cash credit u/s 68 of the Act, during the scrutiny assessment - HELD THAT:- It is a settled law that no deduction /allowance is allowed and no loss can be set-off against such unexplained cash credit which is considered as income of the assessee. The Gujarat High Court in the case of Fakir Mohmed Haji Hasan [ 2000 (8) TMI 44 - GUJARAT HIGH COURT] held that when (unexplained) income cannot be classified under any one of the heads of income under Section 14, it follows that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. As it is seen that it is a settled proposition of law that no deduction /allowance is allowable against such unexplained cash credit which is considered as income of the assessee. In the present facts, during the course of assessment, the AO made an addition of Rs. 4,73,10,000/- on account of unexplained cash credit of unsecured loan u/s 68 - AO omitted to disallow the interest paid on the said unsecured loan while finalising the scrutiny assessment, which has resulted in under assessment of income. In our view, in the instant facts, the Principal CIT has not erred in facts and in law in setting aside the assessment order u/s. 263 of the Act by holding that the order is erroneous and prejudicial to the interests of the Revenue - Decided against assessee.

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• 2022 (6) TMI 260
  Late filing levied u/s 234E - Intimation u/s 200A - assessee stated that delay in filing TDS return was due to error in mentioning TAN in the TDS challan and since the tax deducted by the assessee is deposited within stipulated date, there was no delay in depositing TDS, and therefore there was no loss to the revenue - HELD THAT:- We note that the issue under consideration is directly covered against the assessee in the case of Rajesh Kourani v. Union of India [ 2017 (7) TMI 458 - GUJARAT HIGH COURT] wherein the Gujarat High Court held even for TDS statements which have been filed prior to 01.06.2015, late filing fee can be levied u/s 234E of the Act, since s. 234E of the Act is a charging section and s. 200A of the Act is a machinery provision providing mechanism for processing a TDS statement and under no circumstances a machinery provision can override or overrule a charging provision. The Hon ble Gujarat High Court held that even in absence of section 200A of the Act i.e. the machinery provision, with the introduction of section 234E (being the charging provision- inserted w.e.f. 1- 7-2012), it was always open for the Revenue to demand and collect the fee for late filing of the TDS statements u/s 234E of the Act w.e.f. 01-07-2012. Appeal of assessee dismissed.

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• 2022 (6) TMI 259
  Reopening of assessment u/s 147 - addition u/s 68 - unexplained cash credits - assessee failed to prove the identity and creditworthiness of share applicants - HELD THAT:- The above said information were very well in existence in the hands of the Ld. A.O when the original assessment order was passed on 29/12/2011. Therefore, we find that the reopening of assessment was without any fresh tangible material. It is well settled law that, in the absence of fresh tangible material, the action u/s. 147 of the Act by the A.O is not tenable under the law. Reopening of the assessment is clearly bad in law and liable to be quashed, accordingly we allow the assessee s grounds of Appeal and set aside the order of Lower Authorities, resultantly, additions stands deleted. Appeal of assessee allowed.

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• 2022 (6) TMI 258
  Adjustment due change in the depreciation rate - adjustment due acceleration in the depreciation rate owing to reworking of useful like of depreciable assets - HELD THAT:- As identical issue has arisen in its own case in Assessment Year 2012-13 [ 2018 (12) TMI 279 - ITAT DELHI] where the issue was set aside to the file of the Assessing Officer with certain directions. The fact and issue being the same, direction of the Assessee Officer should apply mutatis mutandis in the instant case. In view of the consensus arrived in the matter we restore the issue back to the file of the Assessing Officer to implement the directions as applicable in AY 2012-13 in terms of the order of Co-ordinate Bench. MAT computation - Disallowances on account of loss on revaluation of fixed assets and corresponding increase in book profits for the purposes of Section 115JB - HELD THAT:- On perusal of the audit report of the Assessee-company, we observe that the Independent Statutory Auditor has expressed qualified opinion on the financial statement and one of the qualifications relates to claim of loss on revaluation of assets in question. The qualification of Auditor has the effect of stating that book profits declared by the Assessee do not bear the trappings of true and fair expression of statement of profit and loss . This being so, it cannot be said that book profits disclosed in the financial statement is sacrosanct and assessee acquires indefeasible right in the matter of its declaration of book profits. Secondly, we also find merit in the plea of the Revenue that notwithstanding the fact that loss on account of revaluation of fixed asset does not arise by way of provision for diminution in the value of asset but an actual loss, such capital loss is not a deductible loss in nature nevertheless. The expression income defined under Section 2(24) of the Act does not include such capital losses. The capital loss claimed on account of impairment of assets, in our view, is liable to be adjusted for the purposes of determination of book profit similar to the adjustment available in respect of capital receipts not taxable under the normal provisions of the Act. This view is supported by the decision of the Coordinate Bench of ITAT in ITO vs. Ganesh Sagar Infrastructure (P.) Ltd.[ 2021 (11) TMI 1072 - ITAT AHMEDABAD] Assessee is not entitled to reduce the book profit by the capital loss debited to the P L account which is subject matter of qualification by Auditors. Such capital loss is neither eligible for deduction under the normal provisions nor under the alternate provisions of taxation. We thus set aside the action of the CIT(A) on this score and restore the position taken by the Assessing Officer.- Decided in favour of revenue.

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• 2022 (6) TMI 257
  Disallowance u/s 14A - interest disallowance - HELD THAT:- We find that in the audited balance-sheet placed at page 10 of the paper book dated 22.08.2014, shareholders funds comprising of share capital and Reserves Surplus as on 31.03.2013 is Rs.386.60 crores (approx.) and as on 31.03.2014 is Rs.441.78 crores. The shareholders fund is interest-free fund. Now looking towards the investment fetching exempt income, the same are shown in Schedule 14 under the head Non-Current Assets . As on 31.03.2013 it is Rs.161.76 crores and as on 31.03.2014 it is Rs.193.42 crores It is further brought to our notice that out of the non-current assets of Rs.193.42 crores as on 31.03.2014, a sum of Rs.168.62 crores is investment in unquoted shares of subsidiary companies. So the investment in other/ listed equity shares are to the tune of Rs.24.8 crores. As against this figure of Rs.24.8 crores of the investment, the assessee has interest-free fund of Rs.441.78 crores, which is more than sufficient to cover up the investments giving rise to exempt income. Therefore, the ratio laid down by the Hon ble Bombay High Court in the case of Reliance Utilities Power Limited [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] is squarely applicable on the facts and circumstances of the case. We are, therefore, inclined to hold that no interest disallowance is called for as per Rule 8D(2)(ii) of the Act for computing the disallowance under section 14A of the Act. To this extent, the relevant grounds raised in Grounds No. 2.1 to 2.4 are allowed. Disallowance u/s 14A determining the book profit under section 115JB - HELD THAT:- We find merit in the assessee s contention. Special Bench of Delhi Tribunal in the case of ACIT vs.- Vireet Investment Pvt. Limited. [ 2017 (6) TMI 1124 - ITAT DELHI] as well as the judgment of Sobha Developers Ltd. vs.- DCIT [ 2021 (1) TMI 378 - KARNATAKA HIGH COURT] , wherein it has been held that adjustment of disallowance under section 14A could not be made while computing book profit under section 115JB of the Act. Therefore, under the given facts and settled judicial precedence as referred above, we direct the Assessing Officer to compute the book profit without considering disallowance under section 14A of the Act. Thus Ground No. 3 raised by the assessee is allowed.

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• 2022 (6) TMI 256
  Reopening of assessment u/s 147 or 153C - assessment was reopened mainly on the basis of information received from ACIT, Ahmadabad that during search proceedings in the case of M/s. Dharmadev Infrastructure Ltd., they unearthed the information relating to bank account in the case of assessee which contain the details of deposits and cash deposits - whether the information found during the search can be applied to reopen the assessment instead of assessing the return of income under the provisions of section 153C? - HELD THAT:- As relying on Karti P. Chidambaram [ 2021 (7) TMI 393 - MADRAS HIGH COURT ] any material found during the search can be applied to initiate proceedings only u/s. 153C of the Act, not under section 147 of the Act. Accordingly, we are in agreement with the grounds raised by the assessee that the proceedings initiated u/s. 147 of the Act is void ab initio. Accordingly, any proceedings relating to the above assessment is also becomes invalid. Accordingly, the appeal filed by the assessee is allowed in this regard.

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• 2022 (6) TMI 255
  Conversion of Limited scrutiny to Complete Scrutiny - competent authority for expanding the scope of Limited Scrutiny - addition u/s.69A r.w.s. 115BBE - approval from the competent authority for expanding the scope of Limited Scrutiny or not? - unexplained deposit of cash in the bank account - HELD THAT:- AO has not made any addition qua the deposit of cash for which the case was selected under scrutiny. Accordingly, we hold that the AO has exceeded his jurisdiction by treating the closing cash in hand as income from undisclosed sources which was not mandated under the Limited Scrutiny notice issued u/s 143(2). DR before us has not brought anything on record justifying that the Limited Scrutiny was converted by the Assessing Officer under normal scrutiny after obtaining necessary approval from the appropriate authority. We are also not convinced with the argument of the DR that the issue raised by the AO is limited to the cash in hand available at the end of the financial year under consideration - as because if we admit the contention of the learned DR then the same will be beyond the scope of limited scrutiny as there was no question raised in the notice issued for the limited scrutiny under section 143(2) of the Act for the cash balance. The right course of action for the AO was to take the approval from the competent authority for expanding the scope of Limited Scrutiny to the regular assessment but he failed to do so. Thus, in our considered view inaction of the AO should not cause any harassment to the assessee. As relying on RAJESH JAIN VERSUS INCOME-TAX OFFICER, WARD-1, JIND [ 2005 (4) TMI 629 - ITAT CHANDIGARH] we are not convinced with the finding of the authorities below. As such the entire issue should have been limited to the extent of the dispute raised in the notice u/s 143(2) for the limited scrutiny but the AO in the present case has exceeded his jurisdiction as discussed above. Thus the ground of appeal of the assessee is allowed.

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• Benami Property

• 2022 (6) TMI 287
  Benami Property Transaction - title over the suit properties - application for temporary injunction to restrain the appellant from alienating the properties - purchase of a property by husband in the name of the wife - respondent is the husband of the appellant - HELD THAT:- Though the appellant has contended that she purchased the suit properties from her own income, there is no material to substantiate her contention. Rather she has admitted that loan was raised in their joint names for purchasing the property and that the respondent repaid the loan. The appellant is a housewife and for this reason, it is difficult to believe that she could purchase the suit properties. It is the clear case of the respondent that he was working as a Subedar in the Indian Army and till 2015, the appellant and the children were living with him. In this view, it may not be possible to hold at this stage that she had independent source of income. Moreover purchase of a property by husband in the name of the wife cannot be called a benami transaction and such type of transaction falls within the exception no. 3 to clause A of sub-section 9 of section 2 of the Prohibition of Benami Property Transactions Act, 1988. In this view the respondent has made out a prima facie case that he has got the right to seek declaration of his title over the suit properties. The appellant has made her intention very clear to alienate the property. She may have stated that because the respondent neglected to maintain her and their children and this has necessitated the alienation, but this reason cannot be considered to hold that she has every right to alienate the property, especially in a circumstance where she has not produced any material to show that the suit properties can be considered as her absolute properties. Section 14 of the Hindu Succession Act does not apply to the present circumstance. In this view if the alienation takes place, certainly the respondent s interest would be affected. Circumstances indicate the balance of convenience being in favour of the respondent. The principle laid in the case of R. Dilip Kumar Vs. Ramu [ 1992 (6) TMI 185 - KARNATAKA HIGH COURT] is actually not helpful to the appellant. The principle that no order of injunction can be issued if the plaintiff s case is doubtful, is restated in the said decision. On the premise of the facts of that case, the co-ordinate Bench of this court declined to grant an order of temporary injunction. As it is found that discretion is properly exercised by the trial court for granting temporary injunction, there cannot be interference in the appeal filed under Order 43 Rule 1 CPC. Regarding the limitation period as argued by the appellant s counsel, it may be stated that the date of purchase of the property, in the facts and circumstances of the case on hand, cannot be considered as date of accrual of cause of action. The date of denial of the right of the plaintiff is what matters for reckoning the period of limitation and therefore the argument of the learned counsel cannot be accepted at this stage. The trial court may give a finding with regard to limitation if an issue is framed to that effect.

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• Corporate Laws

• 2022 (6) TMI 286
  Vicarious liability of partner of the firm - separate identity of partnership firm - summons issued to the petitioner - reply to the notice not received - violation of Section 240 (3) of Companies Act - HELD THAT:- It is revealed that the respondent SFIO filed private complaint against the petitioner for the offence punishable under section 240 (3) of Companies Act alleging that the petitioner was appointed as an Auditor of the company and notice was issued by the respondent for furnishing some details of the Company and he has filed to furnish. Therefore the offence was committed by the petitioner, hence liable for punishment and penal action. A partnership firm is not a corporate entity, it does not have a separate legal persona and this has several important legal consequences in the relationship between the parties all rights and duties only exist between the parties, inter se the right and duties of the partnership are the rights and duties of the partners for as per the partnership deed. Therefore, a partner cannot be bifurcated from a firm, for example for a firm minimum two partners are required, if one partner is retired either by resignation or by death, the firm becomes a proprietorship. Therefore, merely the petitioner running a firm in the name of N.D.S. CO., but it is not a legal entity and it cannot be placed on par with the companies which is registered under the Companies Act - A partnership firm is not a separate legal entity distinct from its partner it is merely a collective name given to the individuals composing it and even as per the definition of the Indian Partnership Act, as person who have entered into partnership with one another called individually partners and collectively a firm and the name under which their business is. If an offence committed by the firm, is also an offence committed by the partners, it cannot be bifurcated as partners and the firm - the Trial Court, rightly took the cognizance against the petitioner for the offence punishable under section 240(3) of Companies Act. Criminal petition dismissed.

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• Insolvency & Bankruptcy

• 2022 (6) TMI 285
  Appeal before NCLAT - applicability of time limitation - Section 61(2) of the IBC - Non-consideration of claim regarding the provident fund dues - HELD THAT:- The limitation prescribed by Section 61 of the IBC fell for consideration of this Court in KALPRAJ DHARAMSHI ANR. VERSUS KOTAK INVESTMENT ADVISORS LTD. ANR. [ 2021 (3) TMI 496 - SUPREME COURT] . In the said judgment, it was categorically held by this Court that an appeal against the order of NCLT shall be preferred within a period of 30 days from the date on which the order was passed by the NCLT. The Appellate Tribunal has the power to extend the period of limitation by another 15 days. The Appellate Tribunal committed an error in issuing notice in an appeal that was filed by Respondent No.1 with delay of 388 days - Appeal allowed.

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• 2022 (6) TMI 284
  CIRP - Claim of successful resolution applicant over pre-deposit made the corporate debtor for filing of an appeal under VAT Act - right of state to recover the outstanding tax liability - recovery of claims or claim any debts owed to them by the corporate debtor accruing prior to transfer date and that consequences shall follow - Section 83 of the RVAT Act, 2003 - HELD THAT:- As the original assessee, i.e. M/s. Binani Cement Ltd., was compelled to file the appeals with pre-deposits of a percentage of the tax liability by way of mandatory statutory obligation as per the assessment orders issued by the Commercial Taxes Department, the consequential relief pursuant to extinguishment of the demands under the assessment order would definitely require a direction for refund of the amount to the successful Resolution Applicant, i.e. the petitioner herein, who took over the assets and liabilities of the sick unit according to the Resolution Plan approved by the NCLAT. In the case of State of Gujarat Vs. Essar Steel Ltd. [ 2016 (5) TMI 221 - GUJARAT HIGH COURT ], Hon ble Gujarat High Court directed refund of predeposit on acceptance of the appeals and decided the issue in favour of the assessee. In the present case, though the appeals have not been accepted, but an analogous situation has been created with acceptance of the Resolution Plan and extinguishment of all debts/liabilities of the sick unit towards the statutory creditor, i.e. the State Government/Commercial Taxes Department. The consolidated impugned order dated 28.12.2020 passed by the Rajasthan Tax Board, Ajmer in the appeals filed by the petitioner is set aside to the extent the applications filed by the petitioner for refund of pre-deposit amounts with interest were rejected. The amounts deposited by M/s. Binani Cement Ltd. as mandatory statutory obligation while filing the appeals before the Tax Board shall be reimbursed to the petitioner within a period of three months from today with interest at the rate applicable by law. These Revisions/ Sales Tax References deserve to be and are hereby allowed - the demands raised by the Commercial Taxes Department against the Corporate Debtor M/s. Binani Cement Limited except to the extent admitted by NCLAT are declared to be infructuous/ are quashed/struck down - the amounts deposited by the Corporate Debtor under protest and by way of pre-deposit as mandatory statutory obligation while filing the appeals, shall be refunded to the petitioner M/s. UltraTech Nathdwara Cement Limited being the Successful Resolution Applicant with applicable interest as per law within a period of 60 days.

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• 2022 (6) TMI 283
  CIRP - Rejection of impleadment - allottees of Amadeus a real estate project being developed by the Corporate Debtor - Whether the application for impleadment filed by the Appellants before the Adjudicating Authority seeking impleadment in I.A. Nos 2275 of 2021 and 2286 of 2021 deserve rejection on the ground that Authorised Representative of Homebuyers who are creditors in class is not representing the creditors in a class before the Adjudicating Authority? - Whether the Appellants have no right to participate in adjudication of the claim of the Financial Creditors whose claim has been rejected by the IRP? - Whether the Adjudicating Authority committed error in rejecting impleadment application filed by the Appellants? HELD THAT:- The statutory scheme as is reflected from Section 21(6-A) and Section 25-A of the Code indicates that the Authorised Representative is chosen to represent the creditor in a class in the CoC. The Authorised Representative needs to attend the meeting of the CoC and vote on behalf of the Financial Creditor to the extent of voting share of the Financial Creditor. The Adjudicating Authority in its order has referred to Regulation 16A Sub-regulation (5) of the CIRP Regulations, 2016. Regulation 16A deals with the Authorised Representative. Regulation 16A provides for procedure of choosing an Authorised Representative of creditors of the respective class - The mere fact that the Authorised Representative of a creditor in a class have no role in receipt and verification of the claim of the creditors, it cannot be held to mean that creditors in a class have no right with regard to receipt and verification of their claim. The clarification as contained in Regulation 16A(5) has been read by the Adjudicating Authority to an extent which it never meant. The conclusion recorded by the Adjudicating Authority in paragraph 23 on the basis of erroneous interpretation of Regulation 16A(5) resulted in a wrong conclusion that the creditors in a class have no role in receipt or verification of claims of creditors. Right of impleadment of Appellants in Applications filed by Respondent No. 2 and 3 challenging the rejection of their claim as Financial Creditors - HELD THAT:- The Appellants are also Financial Creditors in a class and they represent majority of the Homebuyers in class, as has been pleaded by the Appellants. The Financial Creditors in a class, who at present consist of 99.85% of CoC, have every right to be heard in the Applications filed by Respondent No. 2 and 3 whose claim has been partly and fully rejected, respectively by the IRP - It cannot be said that since the Authorised Representative has not came up before the Adjudicating Authority for filing the impleadment application, the Appellants who themselves are Homebuyers have no right to participate in the adjudication initiated by filing applications by Respondent No. 2 and 3. The Hon ble Supreme Court held that Phoenix Arc Pvt. Ltd. [ 2021 (2) TMI 91 - SUPREME COURT ] and Yes Bank [ 2019 (1) TMI 1800 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] being Financial Creditors they were legitimately within the right to seek direction for exclusion of AAA Landmark Pvt. Ltd. and Spade Financial Services Pvt. Ltd. from the CoC. The Adjudicating Authority committed error in rejecting impleadment application filed by the Appellants to implead them as party respondent - Appeal allowed.

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• 2022 (6) TMI 282
  Right to present application for Approval of Resolution Plan - barred under Section 29A(f) of IBC or not - rejection of Resolution Plan in view of the disqualification provided under Section 29-A (f) of the Insolvency and Bankruptcy Code, 2016 - seeking direction to Resolution Professional to place the present Applicant s Resolution Plan for consideration before the Committee of Creditors - locus standi to file the application challenging the eligibility of successful resolution applicant. Whether the Unsuccessful Resolution Applicant is having any locus standi to file the application challenging the eligibility of successful resolution applicant for presenting and approval of the resolution plan? - HELD THAT:- It cannot be said that the applicant has no locus standi to challenge the eligibility of the Successful Resolution Applicant for submitting the resolution plan, much less can it be said to be an abuse of the process of law with some vested interest. Whether successful resolution applicant, namely, M/s Aggarsain Spinners Limited, is eligible under Section 29A(f) of the Code as per IA No.348/2021? - HELD THAT:- Proviso (1) to Section 30(4) requires that committee of creditors shall not approve a resolution plan where the Resolution Applicant is ineligible under Section 29A of the Code. Before submitting a plan before the committee of creditors, it is also incumbent upon the Resolution Plan to verify whether the Resolution Applicant is eligible under Section 29A of the Code - suffice for this Tribunal to pertinently point out that an ex-facie opinion is to be offered to the committee of creditors by the Resolution Professional that the law was violated. It is also the duty of the Resolution Professional to determine as to whether the eligibility criteria of the Resolution Applicant prescribed in Section 29-A of the Code are satisfied. The Resolution Professional has to consider the objections brought to his notice prior to the submission of the Resolution Plan to the Committee of Creditors . As per Section 30(2) of the Code, the Resolution Professional has to examine each resolution plan received by him to confirm that the resolution plan provides for payment of Insolvency Resolution Process Costs, Payment of Debts of the Operational Creditors, management of the affairs of corporate debtor, the fulfilment and supervision of resolution plan, other requirement as may be specified by the Board and that it does not violate any of the provisions of the law for the time being in force 0 A bare perusal of Section 29A(f) reveals that Resolution Applicant shall not be eligible to submit a resolution plan if it is prohibited by SEBI from trading in securities or accessing the securities markets. Whether an express order of prohibition is required to be passed by SEBI directly or otherwise? - HELD THAT:- When SEBI having no restrictions in delegation of its power and functions under Section 11(1) of the SEBI Act, then certainly there was no need to pass any independent order directly by SEBI debarring the resolution applicant from accessing the securities market. More so Section 29A(f) of the Code does not provide for an order to be passed by SEBI prohibiting the resolution applicant from trading in securities or accessing the securities market. Admittedly, no such order was passed by SEBI expressly and it was also not required to be passed directly by SEBI when it has got ample open-ended powers to delegate its regulatory function to any other authority including BSE. Whether the information received from SEBI by a third party under the RTI Act, 2006, filed in IA No.155/2022 is having some bearing upon the eligibility part of the successful resolution applicant? - HELD THAT:- While taking into consideration the point of eligibility of Resolution Applicant at the time of submitting the resolution plan, it is evident that no such order was every passed by SEBI at any point of time on the basis of such circulars. The said order could have been passed under the quasi-judicial powers of the SEBI, but so far as regulatory functions of SEBI is concerned, the said power stands delegated to BSE as so clarified by SEBI in its reply to the application under the RTI Act that SEBI by circular dated 01.08.2017, inter alia, states that the concerned stock exchange and depositories shall coordinate with each other and ensure compliance with the circular requirement. Therefore, it can be said that under the quasi-judicial function of SEBI, no such order was passed but under the regulatory functions, this power was delegated to the stock exchange to pass the appropriate order debarring the defaulter/non-compliant of the said circular issued by SEBI. Whether the Resolution Professional has discharged his duty diligently about verifying the eligibility of resolution applicant before submission of resolution plan to committee of creditors for discussion and approval? - HELD THAT:- There is no averment and evidence placed on record on behalf of the Resolution Professional that before submitting the resolution plan to committee of creditors for approval, he had verified the antecedents of the resolution applicant from the websites of SEBI and BSE. If SBI has accessed this information from the BSE website, then certainly Resolution Professional could have also done so, if acted diligently. In these circumstances, it can be safely concluded that Resolution Professional has failed to discharge its duties diligently about verifying the eligibility of Resolution Applicant. Whether the matter be referred back to the committee of creditors for determining the question of eligibility or this Bench may decide the eligibility of the Resolution Applicant and reject the resolution plan submitted by the Resolution Applicant being ineligible under Section 29A(f) of the Code? - HELD THAT:- From the careful perusal of the finding of the Hon ble NCLAT, this Bench is competent to decide issue of ineligibility of Resolution Applicant at the time of submitting the Resolution Plan under Section 29A(f) of the Code as it has not been decided by the Committee of Creditors when the Resolution Plan was put before it by the Resolution Professional for approval. The Resolution Applicant is declared ineligible under Section 29A(f) of the Code at the time of submission of the resolution plan and resolution plan submitted by Resolution Applicant stands rejected - the matter is referred back to the Committee of Creditors, which is ordered to be reinstated and revived to make another attempt for consideration of other resolution plans in accordance with law - application allowed.

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• Central Excise

• 2022 (6) TMI 281
  Condonation of delay of 1191 days in filing the appeal - satisfactory justification for delay not provided - HELD THAT:- On going through the application, satisfactory explanation for condonation of delay in filing the appeal before this Tribunal, is not found. Learned counsel is also not able to provide any satisfactory reason to explain the delay. It is settled law that for condoning the delay in filing the appeal, the delay needs to be explained to the satisfaction of the appellate authority. Reliance can be placed in the case of OFFICE OF THE CHIEF POST MASTER GENERAL VERSUS LIVING MEDIA INDIA LTD. [ 2012 (4) TMI 341 - SUPREME COURT ] where it was held that The claim on account of impersonal machinery and inherited bureaucratic methodology of making several notes cannot be accepted in view of the modern technologies being used and available. The law of limitation undoubtedly binds everybody including the Government. There are no justification in this application seeking condonation of delay of 1191 days in filing the appeal - appeal dismissed.

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• CST, VAT & Sales Tax

• 2022 (6) TMI 280
  Levy of tax with penalty u/s 10A of the CST Act - transfer of right to use goods - revised show cause notice issued without meeting out the legal requirements - alleged misuse of C Forms in respect of purchases made by the appellant - HELD THAT:- It is evident that the respondent refused to examine the contentions raised by the appellant with respect to the control and possession over all goods at all times, but never parted with it, as the same are irrelevant. In any event, the respondent has already decided to conclude levy of tax and penalty against the appellant, without even waiting for the objections filed by them. While so, the revised notice issued by the respondent cannot be allowed to be sustained. The learned Judge failed to consider the same and erred in directing the appellant to file their objections to the impugned notice. Therefore, we are inclined to interfere with the order passed by the learned Judge. Misuse of C- Forms - HELD THAT:- The appellant submitted that an opportunity may be given to the appellant to approach the appellate authority, in the event of passing an order under the CST Act, and to prove by documentary evidence that they have never misused the C forms. This court finds some bona fide in the contention so raised on the side of the appellant. The revised notice issued by the respondent dated 30.08.2012 as well as the order of the learned Judge are set aside - the respondent to redo the entire exercise by issuing a fresh notice under the relevant enactments, to the appellant within a period of three weeks from the date of receipt of a copy of this order - appeal disposed off.

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