TMI Tax Updates - e-Newsletter
June 9, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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Seeking Grant of Bail - duty evasion by generating goods-less invoices leading to revenue loss - Evidently, in contra distinction with the word make, signs, seal, execute or authors, the legislature has opted to use word ‘issues’. As per Oxforddictonary.com, the meaning of word ‘issues’ is : the act of supplying or making available things for people to buy ,or use. Therefore, considering the material available on record, it cannot be contended by the Ld. defence counsel that applicant was not involved in supplying or making available fake/forged goods less invoices. - applicant/accused is not entitled for grant of bail. - DSC
Income Tax
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Salary reimbursed by the AE to the assessee - attribution of salary to the supervisory PE - no adverse inference can be drawn against the assessee merely on the informations displayed on the website. Furthermore, the informations displayed on the website cannot precede the documents which are available on record for deciding the issue on hand. Likewise, the documents in the form of passport and bank statement which were not filed by the assessee, cannot help the Revenue. - AT
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Quantum of the household expenses - the assessee has not furnished any information qua to the household expenses. Thus there remains no alternate except to estimate the household expenses on reasonable basis. In this connection, we find that the learned CIT (A) has treated an amount of ₹ 6 lakhs as household expenses but failed to bring any basis for the estimation of such expenses. Therefore in interest of justice and fair play, we deemed it appropriate to treat such expenses to the tune of ₹ 3 Lacs only. It is also important to note that such household expenses should not be taken as the precedent for any other case of the assessee. It is just on ad hoc basis. - AT
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Revision petition u/s. 264 - disallowance of carry forward of loss to subsequent years - CIT while disposing of the 264 petition of the assessee, had clearly directed the ld. AO to treat the return filed by the assessee originally as a valid return - AO while giving effect to the proceedings of the ld. CIT should not have travelled beyond the directions given by the ld. CIT. The ld. AO should have simply treated the return filed by the assessee originally and accepted the same without resorting to make any disallowances thereon. - AT
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Addition based on loose sheets found during the search - on money payment - Addition u/s. 69A r.w.s.115BBE - -Since, search u/s. 132 was conducted in the residence and the business premises and no evidence was found evidencing application of additional income admitted by the assessee, either in the hands of the company or in the hands of the directors, we do not find any reason to reject the telescopic benefit requested by the assessee. - CIT(A) rightly deleted the additions - AT
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Exemption u/s. 11 - claim of exemption u/s.11 was rejected on the ground that construction of road in village Palitana and Shankheswar was not object of the trust - CIT-A has rightly allowed the exemption - - AT
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Addition u/s 69/115BBE - unexplained money on the basis of difference in stock statement submitted to the lender bank - When no defect is found with the accounts of the assessee explanation rendered by the assessee that the inflated statement was given to the bank to avail higher credit is to be considered in its proper perspective, no interference in deleting such addition either by Ld. CIT(A) - AT
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Validity of assessment - Non service of notice u/s 143(2) - unless there is service of notice in accordance with provision under Section 282 of the Act separately specifying mode of service of notice, it cannot be treated as valid service of notice. - the service of notice under Section 143(2) of the Act, in our considered opinion is no service. Since the initiation of the proceeding is not in adherence to the prescribed rules, the entire proceeding is vitiated and hence quashed. Consequently, all action taken there under is bad. - AT
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Reopening of assessment u/s 147 - while reopening no allegation was made by the learned AO of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment which is the primary condition to be fulfilled for reopening of assessment beyond 4 years from the end of the relevant assessment year as stipulated by the statutory provisions, the reopening cannot be said to be justified at all. - AT
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Disallowance of prior period interest expenses - As assessee had included the same in the closing work-in-progress in AY 2012-13. Hence this is a clear case of omission of booking an expenditure to the closing work in progress, which was rectified during the year under consideration. In any case, we find that assessee has not claimed any deduction for the same warranting any disallowance. - AT
Customs
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Import of raw cashew nuts - objections on the phytosanitary certificate - Though the consignment has reached, the same has not been cleared so far. Even if it is deported, it will not be useful to any one. Instead, the first respondent ought to have permitted the petitioner for fumigation through an accredited treatment provider in India by providing one time relaxation to the petitioner under Article 14 of the Plant Quarantine (Regulations of Import into India) Order, 2003. - HC
Corporate Law
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Redemption of Secured Non-Convertible Debentures (NCDs) - Scope of Resolution plan - The statutory rights of the debenture holders cannot be sacrificed and jeopardized, under the garb of facilitating the Resolution Plan, which is yet to see the light of the day. The ends of justice certainly would not encourage or sanction such a contingency. Besides the Resolution of R1 and the rights of the Petitioner under Section 71(10) are independent of each other. - Tri
Indian Laws
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Levy of duty on inter-State sale of electricity - competence of the State legislature - The IGST Act which aims to levy tax on supply of goods which is in course of inter-State trade or commerce would bring within its sweep supply of electricity also - there is already a Central legislation for levy of duty on inter-State supply of electricity. The State legislature providing for levy of duty on inter-State sale of electricity would thus encroach an occupied field. Any such legislation would also shatter the territorial limitations on State legislature. - HC
Articles
Notifications
Companies Law-
G.S.R. 392(E) - dated
7-6-2021
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Co. Law
Companies (Incorporation) Fourth Amendment Rules, 2021
GST - States-
(11/2021) FD 16 CSL 2021 - dated
4-6-2021
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Karnataka SGST
Amendment in Notification (24/2017) No. FD 47 CSL 2017, dated the 29th December, 2017
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(10/2021) FD 16 CSL 2021 - dated
4-6-2021
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Karnataka SGST
Amendment in Notification (02/2018) No. FD 47 CSL 2017, dated the 23rd January, 2018,
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(09/2021) FD 16 CSL 2021 - dated
4-6-2021
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Karnataka SGST
Amendment in Notification (29/2018) No. FD 47 CSL 2017, dated the 31st December, 2018
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(08/2021) FD 16 CSL 2021 - dated
4-6-2021
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Karnataka SGST
Amendment in Notification (13/2019) No. FD 47 CSL 2017, dated the 29th June, 2017
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F.12 (1)FD/Tax/2021-12 - dated
2-6-2021
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Rajasthan SGST
Seeks to amend notification No. 49/2017- State Tax (Rate) dated 29.06.2017 so as to notify RGST rates of various services as recommended by GST Council in its 43rd meeting held on 28.05.2021
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F.12 (1)FD/Tax/2021-11 - dated
2-6-2021
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Rajasthan SGST
Seeks to amend notifications No. 40/2017- State Tax (Rate) dated 29.06.2017 so as to give effect to the recommendations made by GST Council in its 43rd meeting held on 28.05.2021
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F.1-11 (91)-Tax/GST/2021 - dated
1-6-2021
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Tripura SGST
Seeks to extend the due date of furnishing FORM GSTR-1 for April, 2021
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F.1-11 (91)-Tax/GST/2021 - dated
1-6-2021
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Tripura SGST
Seeks to extend specified compliance falling between 15.04.2021 to 30.05.2021 till 31.05.2021
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605-F.T. - dated
3-6-2021
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West Bengal SGST
Seeks to amend notification no. 1895-F.T. dated 31.12.2018 in order to provide waiver of late fees for specified taxpayers and specified tax periods.
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604-F.T. - dated
3-6-2021
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West Bengal SGST
Seeks to provide relief by lowering of interest rate for the month of March and April, 2021.
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603-F.T. - dated
3-6-2021
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West Bengal SGST
Seeks to make second amendment (2021) to WBGST Rules.
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602-F.T. - dated
3-6-2021
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West Bengal SGST
Seeks to waive penalty payable for non-compliance of provisions of Notification No. 442-F.T. dated 3rd April 2020 (Amendment to notification No. 952-F.T. dated 07.12.2020).
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601-F.T. - dated
3-6-2021
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West Bengal SGST
Seeks to implement e-invoicing for the taxpayers having aggregate turnover exceeding ₹ 50 Cr from 1st April 2021.
News
Case Laws:
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GST
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2021 (6) TMI 233
Grant of Bail - fake ITC availed - evasion of GST - fake billing - Bail application was sought to be dismissed on the ground that accused may tamper with the evidences - HELD THAT:- While a vague allegation that the accused may tamper with the evidence or witnesses may not be a ground to refuse bail, but if the accused is of such character that his mere presence at large would intimidate the witnesses or if there is material to show that he will use his liberty to subvert justice or tamper with the evidence. then bail will be refused - Furthermore, In the landmark Judgment of Gurucharan Singh and others v. State [ 1977 (12) TMI 141 - SUPREME COURT] , It was held that there is no hard and fast rule and no inflexible principle governing the exercise of such discretion by the courts. It was further held that there cannot be any Inexorable formula in the matter of granting bail. It was further held that facts and circumstances of each case will govern the exercise of Judicial discretion in granting or refusing bail. No doubt, economic offences should be dealt with sternly, however mere allegations of economic offence does not dis-entitled any person from seeking personal liberty unless there are overwhelming material against such person. In the present case, no trail has been brought on record which shows that accused Ashish Aggarwal is the ultimate beneficiary of alleged fake ITC credits - pre trial detention of accused Ashish Aggarwal is no more required as firstly, he has not been investigated / interrogated while remained in judicial custody since 29.10.2020, secondly, all evidences against the accused are primarily documentary in nature and also the fact that he is not the ultimate beneficiary of alleged fake ITC Credits. The accused Ashish Aggarwal Is admitted to bail on furnishing bail bond In the sum of Rupees One Lakh with one surety of like amount subject to the conditions imposed - application allowed.
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2021 (6) TMI 232
Pre-trial detention of accused - recovery of weapon/equipments / documents used in the alleged crime - tampering of evidences - presumption of innocence of the accused - HELD THAT:- In the criminal jurisprudence prevailing in all common law countries, every person is presumed to be innocent until proved to the contrary. The consequence that logically follows is that an accused ought not to be detained or imprisoned, that the personal liberty even of an accused should not be interfered with, until he is convicted by due process of law. Several offences are notified as being bailable and even in the remainder, that is non-bailable offences, the accused can be enlarged on bail by orders of the Court. Bail is the rule; Jail is the exception. This is what Sections 437/439 of the Cr.PC in terms postulate, viz. that when any person accused of or suspected of the commission of any non-bailable offence is arrested or detained he may be released on bail. However, an exception has simultaneously been prescribed, namely, that such a person shall not be so released unless it appears to the Court, on reasonable grounds, that he has been guilty of an offence punishable with death or imprisonment for life. The presumption of the innocence of an accused can easily be defeated if the investigation is not constrained by time, is open-ended and protracted. It is for this reason that the legislature has wisely provided that the investigation of an accused should reach its culmination by the filing of a Chargesheet/complaint within sixty days, or ninety days where the investigation relates to an offence punishable with death, imprisonment for life or imprisonment for a term of not less than ten years. The accused has already remained in judicial custody for 28 days since 21.09.2020. No further custodial interrogation is required. Ld Sr SPP has stressed upon that the applicant/accused is the mastermind of the alleged evasion. However, it is noted that accused was previously searched on 06.03.2020 and despite lapse of more than 07 months there are no allegations that accused has attempted to flee the country to thwart the course of justice - The quantum of alleged fraudulent claim by accused is yet to be adjudicated. It is also noted that no inquiry/investigation has been cited against accused Sudhir Gulati by Customs Department in respect of exports on which he has claimed ITC. Accused Sudhir Gulati is entitled to bail as not only he has joined the investigation at the first summons but has further been examined while in judicial custody since 21.09.2020. The investigation of DGGI will take considerable time and it is highly unlikely that complaint will be filed soon as the adjudication proceedings are yet to commence - accused Sudhir Gulati, S/o late. Sh. Ram Narian Gulati is admitted to bail on furnishing bail bond in the sum of ₹ 1 Lac with one surety of like amount subject to the conditions that he shall join the investigation / inquiry on summons / intimation issued by the investigating officer and shall not leave the country without permission of the court.
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2021 (6) TMI 231
Seeking Grant of Bail - duty evasion by generating goods-less invoices leading to revenue loss - HELD THAT:- Ld. Standing Counsel took me through the statement of one Manish Jain who levelled specific allegations against the applicant/accused Amit Jain. He has categorically stated that he used to work for applicant/accused Amit Jain and his associates. It is further submitted that he worked as per the guidance/directions of the applicant/accused and his associates - The allegations of Manish Jain are further corroborated by the voluntary statement of applicant/accused Amit Jain recorded on 26.08.2020. It is evident that the applicant/accused was involved in generation of goods less fake invoices for the purpose of duty evasion - However, the applicant/accused cannot escape his liability u/s 132(1)(b) of the Act. Considering the material available on record, it cannot be contended by the Ld. defence counsel that applicant was not involved in supplying or making available fake/forged goods less invoices - the applicant/accused is not entitled for grant of bail. Instant application is bereft of any merits - application dismissed.
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Income Tax
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2021 (6) TMI 262
Reopening of assessment u/s 147 - penny stock transaction - Eligibility of reasons to believe - HELD THAT:- AO himself was satisfied with regard to the information and other material on record, he formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the Karma Ispat Ltd., and the AO had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the AO to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the AO has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. Valid sanction u/s 151 - We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or grounds before the AO and the assumption of jurisdiction on the part of the AO under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render the notice unsustainable. Therefore, the assessee failed to make out a case. - Decided against assessee.
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2021 (6) TMI 260
Rectification of mistake u/s 254 - dismissal of appeal by the Tribunal on default of non-prosecution - HELD THAT:- On perusal of the order passed by the Tribunal, it is clear that the appeal was dismissed for non-prosecution as well as on the premise that defects in the appeal remains uncured without going into the merits of the issue, in the appeal. The approach of the Tribunal is contrary to the law laid down by the Hon ble Supreme Court in the case of CIT Vs. S. Chenniappa Mudaliar [ 1969 (2) TMI 10 - SUPREME COURT] wherein held that the Tribunal is bound to give the decision on merits as questions of facts and law and not merely dismissing of appeal on the ground that party concerned had failed to appear considering the Rule 24 of the Income Tax Appellate Tribunal Rules, 1946. Therefore, in the light of the legal position enunciated above, we are of the considered opinion that the order passed by the Tribunal is not in consonance with the law laid by the Hon ble Supreme Court and plain provisions of Rule 24 of the Income Tax Appellate Tribunal Rules. Even the Jurisdictional High Court in the case of Bharat Petroleum Corporation Limited [ 2013 (10) TMI 1085 - BOMBAY HIGH COURT] held that the dismissal of appeal by the Tribunal on default of non-prosecution is a mistake which can be rectified u/s 254(2) of the Act. On the similar lines, the decision of the Hon ble Delhi High Court in the case of CIT vs. Ansal Housing Construction Ltd.[ 2004 (5) TMI 22 - DELHI HIGH COURT] the decision of High Court in the case of M. S. Joseph Michael Bros. [ 1991 (11) TMI 18 - KERALA HIGH COURT] and INCOME-TAX APPELLATE TRIBUNAL AND ANOTHER [ 1979 (4) TMI 22 - KERALA HIGH COURT] Therefore, it constitutes mistake apparent from the record, capable of being rectified in exercise of jurisdiction vested with the Tribunal u/s 254(2) - Miscellaneous Application filed by the assessee is allowed.
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2021 (6) TMI 258
Disallowance u/s 40A(3) - freight payments made to transporters and truck operator inter-alia for purchase of paddy - HELD THAT:- This issue is already covered against the assessee in assessee s own case in A.Y. 2008-09 [ 2021 (1) TMI 783 - ITAT DELHI] wherein the Tribunal upheld the disallowance under Section 40A(3) to the extent of Freight payments made to transporters and truck operator .In the present assessment year i.e. 2009-10 also there is no distinguishing facts brought out by the assessee. Thus, this addition is sustained Disallowance being depreciation on capital expenditure - This aspect is covered in favour of the assessee in assessee s own case for A.Y. 2008-09 I [ 2021 (1) TMI 783 - ITAT DELHI] . Disallowance u/s 14A read with Rule 8D - HELD THAT:- In the present case, the satisfaction is recorded while invoking Rule 8D of the Income Tax Rules, 1962. But the Assessing Officer considered exempt income earned as share in profit from partnership firm for the purpose of disallowance under Section 14A of the Act. The investments was made out of own funds and not borrowed funds and therefore, the assessee has not made any disallowance out of interest expenditure. AR s contentions that under Rule 8D (2)(iii), what is disallowable is an amount equal to percentage of the average value of investment, the income from which does not or shall not form part of the total income, is right. Therefore, as per the chart given by the Ld. AR, at the time of hearing, we direct the AO to verify the same and thereafter restrict the disallowance only if the contentions of the assessee are found correct, otherwise proceed according to the provisions of Income Tax Act and Rules. Disallowance of expenses on account of non deduction and short deduction of TDS u/s 40(a)(ia) - HELD THAT:- As the issue relating to non deduction of TDS is decided against the assessee in its own case for A.Y. 2008-09 wherein the Tribunal while relying upon the decision of Hon ble Supreme Court in case of Shree Choudhary Transport Compan [ 2020 (8) TMI 23 - SUPREME COURT] held that the amendment made to provisions of Section 40(a)(ia) of the Act vide Finance Act, 2014 do not have retrospective application and thus, confirmed the disallowance made by the Assessing Officer under Section 40(a)(ia) of the Act. Non-deduction of TDS is decided against the assessee in this year as well as the facts are identical in the present assessment year. As regards to short-deduction of TDS, the Ld. AR submitted that the issue is covered in assessee s own case by the Tribunal in A.Y. 2008-09 in ITA No. 4158/Del/2013 vide order dated 19.01.20121 wherein it is held that no disallowance under Section 40(a)(ia) is sustainable in cases of short-deduction of TDS. Thus, the issue relating to disallowance on account of short deduction of TDS is allowed. Hence, Ground No. 10 to 13 are partly allowed. Addition on account of alleged undisclosed sales/difference in stock valuations - HELD THAT:- There was no discrepancy revealed in sales or purchase of the company during the course of search as per the books of accounts and stock. In fact, the stock registers, reveals that the opening stock and closing stock completely tallied with the stock and closing stock as certified in the tax audit report. Even sales tax department has accepted the sales made by the assessee during the year under consideration and no adverse inference has been drawn on this account. The books of accounts have also been statutorily audited with no adverse comments by the auditors. The assessee is following consistent method of valuation of stock which is in accordance with the well accepted principle of accounting propounded by the ICAI, and also has been approved/accepted for the purpose of the computing the taxable income by various Courts and Tribunals from time to time - no evidence for undisclosed sale which was pointed out by the Assessing Officer or by the CIT(A) in their respective orders. Thus, the addition made by the Assessing Officer which was confirmed by the CIT(A) does not sustain. Ground No. 15 to 17 are allowed. Deduction u/s 80IB (11A) - HELD THAT:- CIT(A) has rightly allowed the claim of deduction under Section 80IB(11A) of the Act. It is pertinent to note that all the conditions which have been stipulated in the statute have been fulfilled i.e. all the three activities of handling, storing and transportation have been undertaken on an integrated basis by the assessee.
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2021 (6) TMI 256
Penalty u/s 271(1 )(c) - disallowances of claimed expenses in the LTCG - AO has denied certain expenditure, which were claimed to have been incurred in connection with the acquisition of the flat for claiming deduction u/s 54 - HELD THAT:- We find that on the facts and circumstances of the cse the claim of the assessee is not ex-facie bogus. In these circumstances, assesee cannot be is said to have been guilty of contumacious conduct or that assessee was guilty of furnishing inaccurate particulars of income or concealment of income. This proposition is duly supported by the decision of Hon ble Supreme Court in the case of CIT vs Reliancepetro Products Pvt.Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] . In this case, it was duly expounded that if certain claim of the assessee is denied the same cannot ipso fact lead to the conclusion that the assessee is guilty of concealment or furnishing of inaccurate particulars of income. Furthermore, Hon ble Supreme Court in the case of Hindustan Steel Ltd. vs State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] has also expounded that if the conduct of the assesee is not found to be contumacious the authority may not levy penalty. Thus assessee does not deserve to be visited with the rigors of penalty u/s 271(1)(c). Ld.CIT(A) has completely erred in observing that penalty has to be levied merely because certain tax has to be found to be further payable. - Decided in favour of assessee.
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2021 (6) TMI 255
Penalty levied u/s.271(1)(c) - assessee disclosed unaccounted income during the survey action u/s.133A conducted on the assessee - CIT-A deleted the addition - As per revenue unaccounted income was never part of books of accounts of the assessee and had there been no survey action on the assessee, the income of would have escaped assessment - income declared in the return filed after the date of survey, cannot be considered as voluntary - HELD THAT:- Taking guidance from the decisions of the Hon ble Supreme Court in the case of Reliance Petroproducts [ 2010 (3) TMI 80 - SUPREME COURT] as well as the decision of the Hon ble Delhi High Court SAS PHARMACEUTICALS [ 2011 (4) TMI 888 - DELHI HIGH COURT] andSMT. ANITA KUMARAN [ 2017 (3) TMI 390 - MADRAS HIGH COURT] it is clearly evident that any concealment of income or furnishing of inaccurate particulars of income has to be determined from the return of income filed by the assessee. Further proceedings u/s.271(1)(c) of the Act, is a separate proceedings than from the assessment proceedings and the omission or error i.e. concealment of income or furnishing of inaccurate particulars of income should come out specifically from the return of income filed by the assessee before the Department. There is no scope for any guess work or surmises or any hypothetical situation for imposing penalty u/s.271(1)(c) of the Act. It is an undisputed fact that the amount was disclosed in the return of income by the assessee and it was accepted by the Department. Taking the totality of facts and circumstances, we are of the considered view that in this case of the assessee, it is not a fit case for imposing penalty u/s.271(1)(c) - the findings of the Ld. CIT(Appeals) does not call for any interference and relief provided to the assessee is hereby sustained. Appeal of the Revenue is dismissed.
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2021 (6) TMI 254
Salary reimbursed by the AE to the assessee - attribution of salary to the supervisory PE - assessee in the present case is a foreign company, based in USA with one associated enterprises (AE) namely M/s LZAM India in Vadodara Gujarat India - whether the employees namely Mr. Tim and Mr. Matt are the employees of the assessee Viz a viz rendering services in connection with the supervisory PE or these are the employees of the AE namely M/s LZAM India in India? - HELD THAT:- On perusal of agreement for reimbursement of employee cost between assessee and M/s LZAM India we find the assessee is the ultimate parent company of the M/s LZAM India which is engaged in the business of manufacturing and selling of natural product. The assessee required personnel having high skilled and expertise in connection with its business in India. Accordingly personnel were deputed in India. As agreed upon by the parties that the deputed personnel will be the employee of the M/s LZAM India and will work under the supervision and guidance of M/s LZAM India. LZAM India will pay salary to those personnel and bear the cost of all the benefit provided to them. It was also agreed upon that the part of the salary will be paid in foreign currency to those personnel for the purpose of convenience but the quantum of same would be decided by the M/s LZAM India as per rules and regulation applicable in India. The primary evidences have not been disputed by the authorities below. Thus, no adverse inference can be drawn against the assessee merely on the informations displayed on the website. Furthermore, the informations displayed on the website cannot precede the documents which are available on record for deciding the issue on hand. Likewise, the documents in the form of passport and bank statement which were not filed by the assessee, cannot help the Revenue. In view of the above, we are not convinced with the finding of the learned DRP. Accordingly, we direct the AO to delete the addition made by him. DRP treating Mr. Tim and Mr. Matt as agent of the assessee as per clause 4 of Article 5 of India-US DTTA and accordingly treating the offshore sale as part of the income taxable in India - HELD THAT:- As we have already given a finding that the individuals namely Mr. Tim and Mr. Matt are not the employees of the assessee. Rather these are the employees of the AE of the assessee namely M/s LZAM India. Therefore, the purchase agreement signed by them was entered on behalf of the AE in the capacity of authorized signatory being the directors. Accordingly, it can be concluded that there was no connection in the employees and the assessee which can establish the agency PE in India. Thus the whole basis for treating the transaction of impugned sale and purchase as attributable to the agency PE is not sustainable. Furthermore, the agency PE can be attracted as per the relevant provisions of article 5 and 7 but we note that the conditions as specified therein have not been complied with. Accordingly, we are not convinced with the finding of the learned DRP and direct the AO to delete the addition made by him.
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2021 (6) TMI 253
Unexplained investments u/s 69 - income of the assessee from the agricultural operations - HELD THAT:- There is neither any discussion in the order of the authorities below nor any submission of the assessee before them (authorities below) suggesting that the assessee was carrying out agricultural operations on the land of the other parties. In the absence of such information, the learned CIT-A, in our considered view has rightly not taken the cognizance of the additional agricultural income of ₹ 12 lakhs. Quantum of the household expenses - The entire amount shown by the assessee was treated as income available for investment. It is not out of place to mention that the assessee has family members such as his brother, brother s wife and his wife. Therefore, some deduction has to be made from the income of the assessee towards the drawing for the household expenses before allocating the same for the purpose of investment. The next issue arises to determine the quantum of the household expenses. Indeed, the assessee is privy to such information. But the assessee has not furnished any information qua to the household expenses. Thus there remains no alternate except to estimate the household expenses on reasonable basis. In this connection, we find that the learned CIT (A) has treated an amount of ₹ 6 lakhs as household expenses but failed to bring any basis for the estimation of such expenses. Therefore in interest of justice and fair play, we deemed it appropriate to treat such expenses to the tune of ₹ 3 Lacs only. It is also important to note that such household expenses should not be taken as the precedent for any other case of the assessee. It is just on ad hoc basis. Benefit considering the past savings of the assessee - In view of the above concurrent findings of the AO for the assessment years 2009-10 and 2010-11 with respect to the past savings and without allocating any expense towards the household expenses, it seems to us that no further benefit to the assessee should be granted. Accordingly we are not convinced with the contention of the learned AR. There was the investment in the Life Insurance premium paid by the assessee and the onus was upon the assessee justify the source of investments based on the documentary evidence which the assessee failed. As such the assessee has issued Gram Sarpunch certificates where in the income of ₹ 20 lakhs from the source of agricultural operation was declared. But the assessee has not brought any evidence suggesting that there was more income earned from the agricultural operations than the certified income of ₹ 20 lakhs. AR made a reference to the judgment of P.K. Noorjahan [ 1997 (1) TMI 6 - SUPREME COURT] but to our humble understanding the ratio of such judgment is not applicable in the case on hand. AO may make the addition on account of unexplained investments under section 69 of the Act, if the assessee failed to justify the source of such investments. Admittedly, the assessee failed to justify the source of investments and therefore we are of the view that addition has been rightly made by the AO which was rightly confirmed by the learned CIT (A). Accordingly, we do not find any reason to interfere in the order of the authorities below except to grant the relief of ₹ 3 Lacs for the household expenses against the estimate made by the learned CIT (A) for ₹ 6 lakhs. - Decided partly on favour of assessee.
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2021 (6) TMI 252
Disallowance of provision to contribution to Gratuity Fund u/s.36(1)(5) - Addition u/s 36(1)(v) on account of gratuity contribution, through the gratuity fund was not approved under the Act - whether the assessee is entitled for the deduction for the contribution made to the gratuity fund which was not approved by the Commissioner of income tax under section 2(5) of the Act in the year under consideration? - HELD THAT:- To our understanding, the assessee should be vigilant enough to pursue its matter before the authorities. The assessee should not fold his hands on the reasoning that its job has done upon making the requisite application before the Commissioner of income tax under section 2(5) of the Act. Undisputedly the approval was granted under section 2(5) of the Act subsequently by the Commissioner of income tax with effect from 1st April 2012 - purpose of creating the approved gratuity fund was to ensure that the amount contributed by the assessee as the employer should leave the possession from its hands. In other words, the assessee should not have any control on the fund created for the welfare of the employees. In the case on hand, there is no ambiguity that there was no control of the assessee of whatsoever on the funds created by it for the welfare of the employees as the fund was invested with the LIC of India and LIC was directly paying amount to the employee on occasion of retirement. As relying on M/S TEXTOOL CO. LTD. [ 2009 (9) TMI 66 - SUPREME COURT] and PRAKASH SOFTWARE SOLUTION PVT LTD [ 2018 (1) TMI 956 - ITAT AHMEDABAD] there is hardly any doubt regarding allowability of deductions for any contributions made to an approved gratuity fund established under an irrevocable trust. Further, no deduction shall be allowed to an organization of any provision for payment of gratuity. Appeal of the revenue is dismissed.
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2021 (6) TMI 251
Revision petition u/s. 264 - disallowance of carry forward of loss to subsequent years - non acceptance of return filed by the assessee - HELD THAT:- AO had passed an order dated 31.12.2009 without mentioning the section under which such order is passed by him and also by summarily disallowing the loss and also suggesting some disallowances on without prejudice basis. In the said order, the ld AO had categorically stated that the e-return filed by the assessee is non-est and invalid. AO had also categorically stated that the proceedings initiated by issuing notice u/s 143(2) of the Act were dropped by him. Hence all the disallowances suggested by him in the said order, even on without prejudice basis, will have no legs to stand. Admittedly, this so called assessment order was passed by the ld AO without issuing notice of demand u/s 156 of the Act, which is also a statutory notice and a statutory document to be enclosed along with the assessment order. Hence it could be safely concluded that the ld AO by committing multiple mistakes in a single so called assessment order, had passed a wholly unsustainable and illegal order. CIT while disposing of the 264 petition of the assessee, had clearly directed the ld. AO to treat the return filed by the assessee originally as a valid return - AO while giving effect to the proceedings of the ld. CIT should not have travelled beyond the directions given by the ld. CIT. The ld. AO should have simply treated the return filed by the assessee originally and accepted the same without resorting to make any disallowances thereon. Even if he resorts to make any disallowance, the ld AO ought to have issued fresh notices u/s 143(2) and 142(1) of the Act duly show causing the assessee with regard to those specific issues. Instead of doing so, the ld AO had merely repeated the same disallowances as was proposed by him originally by him, on without prejudice basis, in the illegal and unsustainable so called assessment order passed without mentioning any section. The said disallowances were even made by the ld. AO without giving any show-cause notice to the assessee expressing his mind to make such disallowances. Hence, the said disallowances made without issuing show-cause notice deserves to be deleted on that count also. We direct the ld AO to delete all the disallowances and accept the return filed by the assessee bank in toto and allow the benefit of carry forward of loss to subsequent years. Appeal of the assessee is allowed.
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2021 (6) TMI 250
Allowability of provision of warranty expenditure - AO had clearly disallowed the provision for warranty expenditure holding it to be contingent - HELD THAT:- CIT (A) had rightly taken note of the legal position governing the allowability of provision for warranty expenditure as laid down in the case of CIT Vs Rotork Controls India Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] . CIT (A) while applying the parameters laid down by the Hon'ble Supreme Court in the said decision, had not considered the most relevant data and information i.e., terms and conditions laid down in the warranty policy for the company, what is the percentage of actual claims made for warranty claims in terms of the sales etc. We are of the considered opinion that the matter should be remitted back to the file of ld. CIT (A) for denovo consideration with a direction to decide the issue on hand keeping in view with the terms and conditions of the warranty policy as well as historical data as laid down by the Hon'ble Supreme Court's decision in the case of Rotork Controls India Ltd. (supra). Accordingly, the matter is remanded back to the file of ld. CIT (A). Appeal of the assessee is allowed for statistical purposes.
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2021 (6) TMI 249
Penalty u/s 271(1)(c) - whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings? - non recording of satisfaction by AO - HELD THAT:- When the AO has failed to apply his mind while recording satisfaction at the time of framing assessment to initiate the penalty proceedings u/s 271(1)(c) of the Act as to under which limb of section 271(1)(c) of the Act i.e. for concealing of particulars of income or furnishing of inaccurate particulars of income, such penalty proceedings initiated on the basis of vague and ambiguous satisfaction are not sustainable in the eyes of law. Consequently, ld. CIT(A) has rightly deleted the penalty levied by the AO. Finding no illegality or perversity in the impugned order, appeal filed by the Revenue is hereby dismissed.
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2021 (6) TMI 247
Addition based on loose sheets found during the search - on money payment - HELD THAT:- It is settled issue that loose sheets does not convey any meaning without having corroborative evidence. In the instant case, though certain notings were made with regard to cash payment, however, no details were mentioned with regard to plot number, payer, payee and the purpose of payment etc. The assessee has denied having made any payment over and above the sale consideration recorded in the sale deed. Unless there is tangible evidence, merely on the basis of loose sheet which does not have any details do not convey any meaning for making the addition. It is settled issue that the sale consideration recorded in the sale deed needs to be adopted for the purpose of payments made to the vendor as decided in case of Paramjit Singh Vs. ITO [ 1996 (3) TMI 120 - PUNJAB AND HARYANA HIGH COURT] - Thus we hold that the Ld. CIT(A) has rightly deleted the addition - Decided against revenue. Addition u/s. 69A for on money payment - CIT- A deleted the addition - HELD THAT:- As rightly observed by the Ld. CIT(A), the AO relied on the loose sheet for assuming the payment of cash consideration over and above the registered amount as per the registered sale deed, however, there was no corroborative evidence or material found during the course of search. The said loose sheet did not give any details with regard to actual payment, the name of purchaser and the vendor. The assessee denied having made the payment over and above the registered sale deed. He explained the notings on loose sheet are rough notings but not the actual payments. No other corroborative evidence was found by the AO to assert that the payment was made over above the consideration recorded on sale deeds. The legal validity of notings on a loose sheet without having the corroborative evidence has come up before the coordinate bench of ITAT, Amritsar in the case of Smt. Harmohinder Kaur [ 2020 (1) TMI 1459 - ITAT AMRITSAR] as held that without the corroborative evidence, to prove the authenticity of diary seized during the course of search, the AO could not make addition in assessee's income on the basis of notings in the diary. Thus we, hold that in the absence of corroborative evidence to support the payment of on money merely on the basis of some notings on loose papers, the addition made by the AO is unsustainable. Addition u/s. 69C - HELD THAT:- In the case of the assessee no other evidence was found indicating incurring of expenditure estimated by the AO. The assessee has explained the contents of the diary as cash inflow and out flow of M/s. Phozo Digital Press (P) Ltd. which was not controverted by the AO with the tangible evidence. In fact, the AO has acknowledged in assessment order that the cash inflows are related to the company. Therefore, if the contents of the diary and the explanation of the assessee considered together, no addition is warranted in this case. Thus we hold that there is no case for making the addition u/s. 69C on the basis of the notings made in scribbling pad in the hands of the assessees and hence, we, uphold the order of the Ld. CIT(A) and dismiss the appeals of the revenue. Addition u/s. 69A r.w.s.115BBE - cash found was from the undisclosed sources - HELD THAT:- There is no dispute that the assessee has admitted the additional income for the A.Y. 2017-18 and the assessee stated that the cash found during the course of search was belonged to the company M/s. Phozo Digital Pvt. Ltd. and it was the practice to keep cash with the directors of the company in their residences. Since, search u/s. 132 was conducted in the residence and the business premises and no evidence was found evidencing application of additional income admitted by the assessee, either in the hands of the company or in the hands of the directors, we do not find any reason to reject the telescopic benefit requested by the assessee. Hence, we find no reason to interfere with the order of the Ld. CIT(A) and the same is upheld. Appeal of the revenue on this ground is dismissed. Addition of unexplained jewellery u/s. 69C - HELD THAT:- From the facts of the case it is revealed that the assessee explained the source of jewellery as streedhan of two married family members and unmarried female members as well as gifts received on various occasions. It is also customary to receive gifts by female members on various occasions and functions related to the female child, more so in the states of Andhra Pradesh and Telangana. Thus, the source of jewelry to the extent of minimum threshold as per Board Circular No. 1916 stands explained by the assessee. Therefore, we hold that the Ld. CIT(A) rightly deleted the addition placing reliance on Board circular and the decision of this Tribunal in the case of Suresh Kumar Jain [ 2019 (12) TMI 1186 - ITAT VISAKHAPATNAM] Addition on account of gold bars - Assessee explained during the course of search that gold bars were related to the company, kept in assessee's house. The AO made the addition for want of evidence in the form of entries in the books of accounts. Since the gold bars were purchased from the undisclosed income declared in the hands of the company, naturally no evidence would be available, since the same was acquired out of unexplained sources. Therefore expecting the evidence for the application of undisclosed income is unreasonable and ambitious. The assessee has requested for telescopic benefit from the additional income declared in the hands of the company in earlier assessment years and the same is justified. Therefore, we hold that the Ld. CIT(A) has rightly allowed the telescopic benefit and no interference is called for in the order of the Ld. CIT(A).
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2021 (6) TMI 246
Exemption u/s. 11 - claim of exemption u/s.11 was rejected on the ground that construction of road in village Palitana and Shankheswar was not object of the trust - CIT-A allowed the exemption - HELD THAT:- We consider that approach road is an integral part of the temple structure created by the assessee without which it is difficult for the public to access the temple monument and the nature of roads constructed by the assessee was specifically linked to the structure of the temple which was part of the object of the assessee as specified in the clauses 4, 5, 7 and 9 of the object of the trust relating to create, repair, colour building, etc. elaborated in the order of the ld. CIT(A). Considering the aforesaid facts and circumstances, we do not find any infirmity in the decision of ld. CIT(A) in holding that the construction of road was an activity of charitable nature and the assessee was entitled for the benefit u/s. 11 of the act. Therefore, we do not find any merit in the appeal of the revenue and the same is dismissed.
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2021 (6) TMI 245
TP Adjustment - selection of MAM - rejecting Resale Price method - adjustment for the transaction pertaining to export of socks - assessee applied RPM as the most appropriate method to benchmark its international transactions of export of socks to AEs - contention of the assessee is that the assessee has been consistently adopting RPM as the most appropriate method to benchmark ALP of transactions with AEs - HELD THAT:- In the instant case, the Revenue has not brought on record any material fact to show difference in the nature or manner of transactions with AEs. Thus we find no cogent reason to reject assessee's RPM as the most appropriate method to benchmark ALP in the impugned assessment year, when the same was accepted in the earlier and later assessment years by the TPO. The assessee succeeds on rule of consistency. The ground no. 1 of CO is thus, allowed. DRP deleted Adjustment after recording finding of fact that the sale price of goods exported by the assessee to AE is more than or equal to the sale price of goods charged by AE from third parties - DRP recorded this finding on the basis of documents submitted by the assessee and the report of TPO on same. The assessee could reconcile price of 80% of the goods exported to AE vis-a-vis the price charged by AE from third parties. The Department has not been able to controvert factual findings of the DRP based on the report of TPO. Under such circumstances, no adjustment is warranted. We find no infirmity in the impugned findings of DRP. The appeal of Revenue is devoid of merit, hence, dismissed.
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2021 (6) TMI 244
Addition u/s 69/115BBE - unexplained money on the basis of difference in stock statement submitted to the lender bank and Krishi Upaj Mandi Samiti, Agar Malwa - A.O made addition on the ground that the appellant has shown more stock to the bank as hypothecated than in the books of accounts - Assessee argued that result reflected in the books of accounts or stock shown in the books of accounts has not been considered in its proper perspective by the Ld. A.O - HELD THAT:- As appellant is subjected to the statutory audit under the various Act, 1961 and Excise Act. No discrepancy was found by the department. It is the settled position of law that addition cannot be made u/s 69B of the Act based on stock shown and inflated quantity/value of stock given to bank to avail higher credit facilities. If the addition made was allowed to continue, the financial statement would get completely distorted. Such an addition on account of difference in stock can only be made on adequate material which admittedly was filed to be relied upon by AO. We have also considered the order passed in the case of CIT V/s Arrow Exim (P) Ltd [ 2010 (1) TMI 769 - GUJARAT HIGH COURT ] where the stock hypothecated with bank valued higher than shown in the books of accounts. When no defect is found with the accounts of the assessee explanation rendered by the assessee that the inflated statement was given to the bank to avail higher credit is to be considered in its proper perspective, no interference in deleting such addition either by Ld. CIT(A) or by the Tribunal is called for as of the observation of the Hon'ble Court. Considering the explanation rendered by the appellant in support of the accounts maintained by the assessee for inflated statement submitted to the bank to avail higher credit, we find no justification in the order passed by Ld. CIT(A) in deleting such addition made by the Ld. A.O on account of unexplained investment without any ambiguity so as to warrant interference. Hence we find no merit in the appeal preferred by Revenue and the same is, thus, hereby dismissed.
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2021 (6) TMI 243
Validity of assessment - Non service of notice u/s 143(2) - HELD THAT:- Taking into consideration of the entire aspect of the matter we are of the considered view that unless there is service of notice in accordance with provision under Section 282 of the Act separately specifying mode of service of notice, it cannot be treated as valid service of notice. In the case in hand the Revenue has failed to show, that service of notice under Section 143(2) of the Act effected within the stipulated time under the provisions of Section 143(2) of the Act on the assessee or on any of their employees/ relatives or any authorized representatives particularly in adherence to provision under Section 282 of the Act either by post or as if it were a summons issued by a Court under the Code of Civil Procedure, 1908 (5 of 908). In that view of the matter the service of notice under Section 143(2) of the Act, in our considered opinion is no service. Since the initiation of the proceeding is not in adherence to the prescribed rules, the entire proceeding is vitiated and hence quashed. Consequently, all action taken there under is bad. The impugned addition, made by the Revenue is, thus, hereby deleted. Appeal of the assessee is allowed.
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2021 (6) TMI 242
Reopening of assessment u/s 147 - calculation of capital gain, wherein the consideration of the sale of the property in question was taken less than the guideline value - HELD THAT:- It appears that in the original assessment order the Ld. A.O had verified and examined the facts and documents and accordingly given its opinion on the facts. In fact the claim of exemption under section 54B of the Act was denied by the Learned AO in the original assessment proceeding on the premise that the new asset being the agriculture land was purchased by the appellant on 22.03.2011 i.e. after the date of filing of return under section 139(1) of the Act. Ultimately the issue was resolved by the CIT(A) in favour of the assessee in the appellate proceeding. But it appears that during the reassessment proceeding, on the similar issue, the AO had given his different findings. This clearly demonstrates that the matter did came for due consideration before the Learned AO and was in fact considered. When during the original assessment proceeding upon considering all aspect of the matters and upon proper application of mind the determination of amount of taxable income was made and the tax paid thereon, in the absence of any error and/or mistake being found merely for the sake of giving different opinion the learned AO is not permissible to change the earlier opinion. Neither any new material and/or information has been brought by the learned AO for reopening of assessment. When reopening has been done on the same set of facts/documents and/or information is by the Ld. AO in the instant case the same cannot be indulged which would amount to give premium to the authority exercising quasi-judicial function to take benefit of its own wrong. Apart from that while reopening no allegation was made by the learned AO of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment which is the primary condition to be fulfilled for reopening of assessment beyond 4 years from the end of the relevant assessment year as stipulated by the statutory provisions, the reopening cannot be said to be justified at all. The same, in our considered opinion is merely a change of opinion and therefore bad in law, void ab initio and without any jurisdiction and hence liable to be quashed. Thus in the absence of any new material which can lead to reassessment proceedings by the Ld. A.O particularly when the original assessment u/s. 143(3) of the Act was completed upon due consideration of the relevant materials made available by the assessee for adjudication of the same issue involved therein, we find no justification in such reassessment initiated by Ld. A.O which has rightly been considered in its proper perspective by Ld. CIT(A) - Decided in favour of assessee.
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2021 (6) TMI 235
Disallowance of prior period interest expenses which relates to work-in-progress - assessee pleaded that it had not claimed any expenditure or deduction towards the said prior period interest and that the same has only been debited to work-in-progress - HELD THAT:- Admittedly, this interest expense though pertains to AY 2012-13 was never claimed as deduction by the assessee. If due provision has been made on mercantile basis then the same would have got included in the opening work-in-progress and the opening work-in-progress thereon would have increased byinterest expenses. Since no provision was made by the assessee in AY 2012-13 for this interest expense, it was not included in the opening work-in-progress. As assessee had included the same in the closing work-in-progress in AY 2012-13. Hence this is a clear case of omission of booking an expenditure to the closing work in progress, which was rectified during the year under consideration. In any case, we find that assessee has not claimed any deduction for the same warranting any disallowance. Hence, we also find that assessee has furnished Profit Loss Account for the year ended on 31.03.2013 without interest expenses and with interest expenses to drive home the point that loss for the year remains the same in both the scenario. As safely concluded that loss for the year continues to remain the same and hence the contention of the assessee that it had not claimed any deduction in the return of income for the AY 2013-14 towards prior period interest deserves to be accepted and accordingly the grounds raised by the assessee are allowed.
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2021 (6) TMI 234
Reopening of assessment u/s 147 - addition being profit earned by the assessee on commodity trading - as argued when no addition is made on the issue on which the assessment was reopened, is it open for the Assessing Officer to make additions or disallowance on other issues which were not the reason recorded for reopening the assessment? - HELD THAT:- AO has not made an addition being profit earned by the assessee on commodity trading which was the reasons for the Assessing Officer to believe that income subject to tax has escaped assessment, based on which, reasons were recorded and reopening of assessment was done u/s 147. As relying on case of M/s. Infinity Infotech Parks Ltd. [ 2014 (9) TMI 1142 - CALCUTTA HIGH COURT] AO cannot make additions on issues which had not formed the basis of reopening of assessment, when no additions has been made in the assessment order passed u/s 147 r.w.s. 143(3) of the Act on the issue, based on which the reasons were recorded and assessment reopened. Thus, we hold that the assessment order passed u/s 147 r.w.s. 143(3) of the Act on 29/08/2018, is bad in law. On merits, we find that the Assessing Officer has issued notice u/s 133(6) of the Act to NMCE and that NMCE has confirmed all the transactions. The assessee has filed voluminous evidence and confirmations. These evidences, were not controverted by the Assessing Officer. - Decided in favour of assessee.
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Customs
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2021 (6) TMI 265
Import of raw cashew nuts - objections on the phytosanitary certificate - Permission for re-export of goods - name of the plant product was spelt correctly as cashew dry nuts the botanical name was wrongly written as zingiber officinale instead of anacardium occidentale - Article 3(1) of the Plant Quarantine (Regulations of Import into India) Order, 2003 - HELD THAT:- The petitioner is in the business of import of raw cashew nuts and re-export the same. In one of the consignments of bill of entry dated 13.06.2020, the phytosanitary certificate produced by the petitioner was not accepted by the first respondent on certain doubts on the certificate. The petitioner has filed an appeal as against the order of deportation and this Court, taking into consideration of the available provisions under Article 14 of the Plant Quarantine (Regulations of Import into India) Order, 2003, disposed of the writ petition filed by the petitioner to consider his case in the light of Article 14 of the Plant Quarantine (Regulations of Import into India) Order, 2003. Article 14 of the Plant Quarantine (Regulations of Import into India) Order, 2003, enables one time relaxation, in certain cases, in the absence of phytosanitary certificate. It is the case of the petitioner that while announcements were reported by the Government without fumigation certificate as that of this case, relaxation were provided under Article 14 of the Plant Quarantine (Regulations of Import into India) Order, 2003. Therefore, the petitioner has also offered for fumigation of the goods through an accredited treatment provider - Though the consignment has reached, the same has not been cleared so far. Even if it is deported, it will not be useful to any one. Instead, the first respondent ought to have permitted the petitioner for fumigation through an accredited treatment provider in India by providing one time relaxation to the petitioner under Article 14 of the Plant Quarantine (Regulations of Import into India) Order, 2003. The matter is remitted back to the first respondent to fumigate the goods through an accredited treatment provider, by providing one time relaxation to the petitioner under Article 14 of the Plant Quarantine (Regulations of Import into India) Order, 2003, within a period of four weeks from the date of receipt of a copy of this order - petition allowed by way of remand.
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2021 (6) TMI 264
Conversion of the shipping bill from 'drawback shipping bills to drawback-cum-advance authorization' shipping bills - HELD THAT:- It is revealed that the advance authorization licence taken by the petitioner is not disputed. The petitioner had exported garments under the Shipping Bill Nos. 4885813/08.09.2014, 4885840/08.09.2014 and 4885839/08.09.2014 under DBK Scheme and the said shipping bills were cleared for export under RMS, without any examination and LEO granted on 09.09.2014. The contention of the learned Special Government Pleader that the request for conversion of 'drawback shipping bill' to 'drawback-Cum-advance authorization shipping bill' said to have been filed by the petitioner on 08.12.2014 before the Custom House, Tuticorin could not be traced after lapse of five years and six months cannot be accepted by this Court - It is to be noted that since there was no response from the 1st respondent, the petitioner submitted a grievance in Centralized Public Grievance Redressal System and the same was also disposed of by rejecting the request of the petitioner for conversion of the shipping bills. The matter is remanded back to the first respondent for fresh consideration after giving reasonable opportunity including the personal hearing and appropriate orders shall be passed on merits and in accordance with law - Petition allowed by way of remand.
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Corporate Laws
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2021 (6) TMI 248
Redemption of Secured Non-Convertible Debentures (NCDs) - Scope of resolution plan on redemption - Seeking intervention in the captioned Company Petition - Petitioner are party to the ICA or not - debenture trustee - hearing of Application under Section 71(10) of the Act - no Resolution Plan has yet been finalised - HELD THAT:- Section 71(10) entitles the debenture holders and the debenture trustee to make the Application to the Tribunal where the Company fails to redeem the debentures on the date of the maturity or fails to pay the interest on the debentures when it is due. The issue of debentures is a contract between the debenture holders and the Respondents. The Petitioner as the debenture trustee acts in the interest of the debenture holders and is specifically permitted under 71(10) of the Act to approach the Tribunal - the Applicant could not be classified as 'a person interested in the matter'. Besides the Petitioner in its Petition has clearly pleaded that neither it nor the debenture holders are parties to the ICA nor have acceded there to. Therefore, the Applicant cannot be regarded either as a necessary or proper party to the Company Petition. The statutory rights of the debenture holders cannot be sacrificed and jeopardized, under the garb of facilitating the Resolution Plan, which is yet to see the light of the day. The ends of justice certainly would not encourage or sanction such a contingency. Besides the Resolution of R1 and the rights of the Petitioner under Section 71(10) are independent of each other. The Resolution on the basis of an administrative Circular of the RBI would not thwart the statutory rights of the Petitioner. Therefore, hearing of the Company Petition in the absence of the Applicant would not be an abuse of the process of the Tribunal. The Application is frivolous and is devoid of any merits whatsoever - application dismissed.
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2021 (6) TMI 239
Restoration of name of company in the Register of Companies - Section 252 (3) of the Companies Act, 2013 - HELD THAT:- The Company has bought a land to the extent of 3500 square feet. Further, the object of the Company as stated in the MoA is that to perform civil constructions, flat promotions, real estate and infrastructure developments. Thus, the above documents shows that the Company was active and carrying on its business for the purpose of which it was incorporated. Further, from the Balance Sheet filed for the Financial Year 2018 - 2019, under the caption Current Assets, a sum of ₹ 1,82,11,775/- is shown as Inventories - the Company has been active for the period two years preceding the date of strike off and carrying on its business for the purpose of which it was incorporated. Taking into consideration the provisions of Section 252 of the Companies Act, 2013 which vests this Tribunal with a discretion where the Company whose name has been struck off and such Company is able to demonstrate that there is a running business as on the date when the name was struck off and also keeping in consideration that it is just to do so can restore the name of the Company in the register. The name of the company is ordered to be restored - application allowed.
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2021 (6) TMI 237
Approval of scheme of Amalgamation - section 230-232 of Companies Act - HELD THAT:- On perusal of the Scheme, reports of the Regional Director, Official Liquidator, and reply/undertakings of the Petitioner Companies thereon and the documents produced on record, the Scheme of Amalgamation appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. All the statutory compliances have been made under Section 230 to 232 of the Companies Act, 2013. The scheme is approved - petition allowed.
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Insolvency & Bankruptcy
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2021 (6) TMI 257
Liquidation of Corporate Debtor - period of CIRP was over - Section 33(2) of IBC, 2016 - HELD THAT:- Perusing the whole case records including the Resolution passed by the CoC in the 10th meeting held on 09.03.2021, this Bench observed that the period of CIR Process of 270 days in this case has been completed on 11.03.2021 excluding the stay period of 73 days and lock down period of 132 days. The Corporate Debtor M/s.Atlas Gold Townships (India) Pvt Ltd is hereby put under liquidation with immediate effect under Section 33(2) of IBC, 2016 -
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2021 (6) TMI 241
Seeking direction to the Respondent to perform his duty under Section 17 and Section 18 of IBC and not to act arbitrarily - time barred agreement for sale - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, it is seen that payment for sale consideration is not supported by valid documentary proof for payment of sale consideration. The Applicant having paid more than 98% of the total consideration in the year 1995, waited till 2016 for enactment of IBC, thereafter in the OA admission and belatedly submits the Claim Form to RP/Respondent herein. Other than the photo copy of list of allottees and unregistered agreement for sale, there is no other proof. As per the Agreement, the construction ought to be completed within 24 months i.e. on or before 19.08.1997. The unregistered Sale Agreement states that total sale consideration is sum of ₹ 2,53,84,000/- out of total sale consideration, as per the sale agreement, a sum of ₹ 2,50,00,000/- was paid. In other words, major portion of sale consideration has been paid before execution of unregistered Agreement for Sale. However, the mode of payment has not been mentioned in the said agreement. Further, the Applicant has not furnished details and documentary evidence regarding payment. Having paid more than 98% of the sale consideration, the Applicant has not obtained registration of Sale Deed for Undivided Share of Land. The construction ought to have been completed within 24 months as per the said agreement. The Agreement for Sale is not valid since it is time-barred, no proof of payment of sale consideration, the Agreement for Sale itself is hopelessly time-barred and delay in submission of claims is not substantiated by valid reason. Hence, the Respondent has rightly rejected the claim - application dismissed.
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2021 (6) TMI 240
Voluntary Liquidation - Dissolution of the Applicant Company - Section 59(7) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It appears that the affairs of the Company have been completely wound up and the assets of the Applicant Company have been completely liquidated and as such the Applicant Company deserves to be dissolved. Accordingly, in exercise of the powers conferred under Section 59(8) of IBC, 2016, the dissolution of M/s. Jurong Engineering (India) Private Limited is ordered and the Applicant Company shall stand dissolved from the date of this order - application allowed.
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2021 (6) TMI 238
Validity of conduct of the Operational Creditor which has subverted the entire Corporate Insolvency Resolution Process (CIRP) initiated by this Tribunal against the Corporate Debtor - HELD THAT:- In the instant case on hand, it is required to be noted that upon the Applicant providing the information in relation to his e-mail id to IBBI seeking for empanelment in accordance with procedure laid down as discussed in Takkshill Enterprises [ 2019 (1) TMI 330 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI ], IBBI had forwarded the list of RP's/Liquidator's who can be appointed as such where the Operational Creditor has failed to propose a name and in the main Application in CP/737/IB/2018 since the Operational Creditor had failed to disclose a name of the IRP proposed, this Tribunal chose to appoint the Applicant as the IRP of the Corporate Debtor, M/s. Sandhhya Shipping Services Private Limited and based on the information forwarded by IBBI and as contained in the said list which had also been extracted in order of admission itself passed on 14.03.2019, the Registry of this Tribunal had also duly communicated the same to e-mail id of the Applicant on 19.03.2019. There is no scope for the invocation of the maxim as sought to be relied on, as the facts herein only points out to the absolute negligence on the part of the Applicant to thoroughly verify his e-mail which had resulted in the 'dereliction of duty' on his part as enjoined by the provisions of IBC, 2016. Appeal dismissed.
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2021 (6) TMI 236
Condonation of delay of 873 days in submitting the claim before the liquidator - direction to liquidator to accept the claim of the appellant - HELD THAT:- It is a fact borne on record that the applicant has failed to submit the claim during the corporate insolvency resolution process and that it is averred in the application that the applicant came to know about the liquidation process of the corporate debtor only when the public announcement was made on March 22, 2018. The public announcement is being made only for the sake of the stakeholders to submit the claim before the liquidator and the applicant as per the averments made in the application, being aware of the fact that the public announcement has been made has failed to submit the claim before the liquidator. Hence, the applicant came to know about the order of liquidation passed against the corporate debtor as early as on March 22, 2018 and thus cannot take a plea that they came to know about the liquidation of the corporate debtor only on a subsequent date. It is to be noted here that the provisions of the IBC, 2016 mandate that the claimants are required to submit the claim to the liquidator in such form and in such manner along with such supporting documents as specified by the Board. Thereafter, upon submission of the claim, the liquidator is required to verify the claims within the time limits specified by the Board and in this connection referring to the relevant Regulations, namely, the IBBI (Liquidation Process) Regulations, 2016 and more specifically under regulation 30, the liquidator is required to verify the claim submitted within a period of 30 days from the last date of receipt of the claims and may either admit or reject in whole or part as the case may be of such claim - As against the rejection of the claim, section 42 of the I and B Code, 2016 provides for a time window of 14 days upon receipt of such decision to the creditor to file an appeal to the Adjudicating Authority against the said decision of the liquidator. It may be noted that under regulation 44(1) of the IBBI (Liquidation Process) Regulations, 2016, the liquidator is directed to liquidate the corporate debtor within one year from the date of commencement of the liquidation proceedings and regulation 44(2) stipulates that, after the expiry of one year, the liquidator shall file an application to the Authority to continue the liquidation period along with a report and explain why the liquidation has not been completed. Thus, it can be seen that the liquidation is a time bound process and the liquidator is being made accountable and required to explain, if there is any delay caused in the liquidation process. In view of the IBC, 2016 being a time bound process as well as the learned liquidator being under a compulsion to complete the liquidation process within a period of one year from the date of commencement of liquidation, application stands dismissed, however without costs.
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Central Excise
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2021 (6) TMI 259
Calculation of depreciation of capital goods for reversing the credit - whether the straight line method or the written down value method has to be adopted for calculating the depreciation? - HELD THAT:- It is seen that the Commissioner (Appeals) has directed to calculate the depreciation by giving an overall limit of 70%. The appeal was only with regard to the question as to whether the straight line method or the written down value method has to be adopted for calculating the depreciation. In such circumstances, when both sides did not have any contentions as to the rate of 2.5% applied, the Commissioner (Appeals) ought not to have given any direction to calculate the depreciation by subjecting it to a cap of 70%. The Tribunal in the case of SIDDHARTH POLYSACKS PVT. LTD. VERSUS COMMR. OF C. EX. SERVICE TAX, JAIPUR-I [ 2015 (12) TMI 70 - CESTAT NEW DELHI] , on the very same issue of the method that has to be adopted for calculation of depreciation prior to 27.02.2010, has held that the straight line method has to be adopted. The duty has to be determined by applying 2.5% per quarter and calculating depreciation adopting the straight line method - the matter is remanded to the Original Authority, who shall calculate the depreciation adopting the straight line method - Appeal allowed by way of remand.
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Indian Laws
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2021 (6) TMI 263
Levy of duty on inter-State sale of electricity - competence of the State legislature - vires of Section 4(4)(d) of the Tripura Electricity Duty Act, 2019 - HELD THAT:- The contention of the State is that upon amendment of Entry 54 of List II the same is no longer subject to Entry 92A of List I and as a result Entry 53 of List II now stands as an independent fountain source of State legislative power and even if read conjointly with Entry 54, as of date the same is not subservient to Entry 92-A of List I as was the position pre 101st Constitutional amendment . This argument proceeds on a wrong legal principle that entries in the lists to the Seventh Schedule are source of legislative power which theory as noted earlier has been rejected by the Supreme Court in number of decisions. Again there is an inherent fallacy. Term goods has been defined in the Constitution under clause (12) of Article 366 as to include all materials, commodities and articles. Electricity continues to be treated as goods for the purpose of this clause also. Further, sub-section (24) of Section 2 of IGST Act provides that words and expressions used and not defined in the said Act but defined in the CGST Act shall have the same meaning as assigned to them in the said Act. In turn, CGST Act defines term goods in sub-section (52) of Section 2 as to mean every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. Thus, IGST Act which aims to levy tax on supply of goods which is in course of inter-State trade or commerce would bring within its sweep supply of electricity also - there is already a Central legislation for levy of duty on inter-State supply of electricity. The State legislature providing for levy of duty on inter-State sale of electricity would thus encroach an occupied field. Any such legislation would also shatter the territorial limitations on State legislature. The GST related amendments in the Constitution would not have rendered the ratio of the decision of the Supreme Court in case of National Thermal Power Corporation Ltd. [ 2002 (4) TMI 694 - SUPREME COURT] inapplicable in relation to the assertion of the State legislature of its power to frame a law for levying tax on inter-State sale of electricity. Final relief that can be granted to the petitioner must be subject to the well established principle of unjust enrichment. In large number of decisions, the Supreme Court has laid down that whenever a question of refund of tax or duty arises, the petitioner before the Court can claim such refund only to the extent it has borne the element of duty or tax, as the case may be. If the petitioner has already passed on the burden of tax to other person or ultimate consumer, refunding the duty even on a declaration of the taxing statute being unconstitutional, will amount to unjust enrichment. The petitioner, therefore, can claim refund of duty already collected only to the extent it can establish that the duty element was owned by the petitioner without passing it on to the purchaser or the end consumer. In the petition itself the petitioner has averred that some of the duties the petitioner has borne whereas the rest of the duty element has been passed on. The petition is disposed of with directions and declarations that Section 4(4)(d) of the E.D. Act, 2019 is unconstitutional and ultra vires, being beyond the competence of the State legislature - No duty on the petitioner s inter-State sale of electricity shall henceforth be levied and collected.
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2021 (6) TMI 261
Grant of Anticipatory Bail - demand of illegal gratification - offence punishable under Sections 12, 7(a) and 13(2) of the Prevention of Corruption Act, 1988 - HELD THAT:- From the complaint, it appears that present applicant was referred as Shri Verma, officer. From the statements of the prosecution witnesses recorded by the investigation officer, during the course of investigation, it appears that present applicant was not Shri Verma but he was Shri Arora and his correct name is shown in column no.7 of the complainant. However, in the description of the complaint, he was referred as Shri Verma, Officer. Amount of GST if applicable would be deposited through bank only and no amount in cash would require to be demanded or to be paid. If we refer the panchnama drawn during the course of investigation, it also supports the case of the prosecution that presence of the present applicant was also found as well as participation in the offence. Present applicant has been charged with the offence under the Prevention of Corruption Act 1988 and the investigation is at a very crucial stage. No exceptional or special circumstances have been pointed out by the learned applicant for the applicant for the purpose of grant of anticipatory bail - The presumption of innocence cannot be sole consideration of the grant of bail as requested. Application rejected.
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