TMI Tax Updates - e-Newsletter
June 17, 2021
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Exemption from GST - service of operating mini AC buses by the applicant for B.E.S.T (Brihan Mumbai Electricity Supply Transport Undertaking) - Benefit of exemption not available - Liable to GST @12% - AAR
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GST:
Classification of goods - scientific and technical instruments/ equipment supplied to public funded research institutions, research institutions, universities, Indian Institute of Technology, departments and laboratories of the Central and State Government, basis the certificates appended herewith - Applicant would be correct in charging 5% GST only in 4 cases where all the conditions mentioned in the impugned Notifications are found to be satisfied - AAR
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GST:
Classification of services - Fee from parks - Market fee-daily - Market fee-weekly - Fees for bays in bus stand (bus stand entrance fee collection) - Bus -stand (others), charges for of TV advt. in bus-stand - Bus -stand (others), locker rent provided in bus- stand - Bus -stand (others), flower shop in bus stand in open space - Bus -stand (others), cycle stand, scooter, auto, four wheeler stand in bus stand and other places - Bus -stand (others), collection of room rent for temporary stay - Slaughter house fees - Rent,Travelers’ bungalows & rest house (municipal lodge) - Fees on pay & use toilets - For entry vehicle in the market - - Ruling given - AAR
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GST:
Challenging the order of granting anticipatory Bail - fictitious and non-existent firms - fake ITC availed - The petitioner has not been able to make out a case of supervening circumstances on the basis of which the bail granted to the respondents should be cancelled and nothing has been brought on record to show that the respondents have such a towering personality that their mere presence out on bail would in any manner thwart the further investigation of the case or that they are in any manner threat to the fair trial of this case. - HC
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GST:
Seeking grant of anticipatory Bail - receipt of only invoices against which ITC was wrongly availed - it is not the case of the department that the petitioners are flight risk or there are any chances of their absconding. It is not the case of the department that the petitioners have not co-operated during the period they have joined the investigation on the receipt of the summonses. - The present anticipatory bail application is allowed - HC
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Income Tax:
Addition of outstanding service tax liability u/s 43B - whether the provisions of sec.43B is attracted when no deduction was claimed by the assessee? - the outstanding service tax liability is not liable to be added u/s 43B of the Act, since the same has not been claimed as deduction. - AT
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Income Tax:
Penalty u/s 271 (1) (c) - under reporting of student fee - In the case in hand the assessee, though explained the reasons for discrepancy in the fee recorded in the books of accounts however, the actual fee received by the assessee as detected during the survey proceedings is not in dispute therefore, such an explanation for discrepancies without any supporting evidence and proper details cannot be accepted as bona-fide or reasonable. - Levy of penalty confirmed - AT
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Income Tax:
Appellate order as passed by National Faceless Appeal Centre - NFAC - the centralizedNFAC have chooses to contemptuously ignore the binding precedent of Jurisdictional High Court and have applied the non-jurisdictional High Court decision to deprive the assessee from the benefit of the judicial High Court decision. - A good intentioned and well thought notification issued by the Board for NFAC, is not yielding the desired result on account of incorrect application of law. - AT
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Income Tax:
Penalty u/s. 272A(2)(k) - Assessee had not offered any reasonable cause for delay in filing of TDS statements u/s. 200(3) - The default committed by the assessee is only a minor technical and venial breach. As settled law that no penalty could be levied on an assessee for a mere technical venial breach, more especially when there is no loss caused to the exchequer due to such breach. - AT
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Income Tax:
Deduction u/s 80P(2)(a)(i) - providing credit facility to its members - It is interesting to note here that both the authorities below alleged that the assessee is providing loans to others, but , it is clear from the order of the CIT(A) at para No. 4.3 of his order, the assessee has given loans to only shareholder members. - claim of deduction allowed - AT
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Income Tax:
Deduction u/s 80IB(11A) - The contribution of the assessee towards infrastructure development cannot be undermined, because the construction of the warehouses will be dependent on the requirement of business of handling, storage and transportation of the food grains. There is no fetter in the law; whether the warehouses are constructed by the assessee itself, or warehouses are taken on rent from others. What is relevant is that, profit and gains have to be derived from eligible business from the integrated business of handling, transportation of food grains. Thus, the reasoning and the grounds given by the Ld. AO to reject the claim of deduction cannot be sustained. - AT
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Income Tax:
Disallowance of excess depreciation of electrical installation - since the assessee is engaged in manufacturing of cotton yarn and the electrical installation for which the assessee has claimed depreciation @ 15% are integral part of plant and machinery without which plant and machinery in the unit cannot operate, therefore the depreciation is allowable for the items claimed by the assessee @ 15% by treating the same as electrical installations which forms part of the plant and machinery. - AT
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Indian Laws:
Dishonor of Cheque - Restoration of case - When no prejudice has been caused to the petitioners herein by restoring the complaint to its original number it does not lie in the mouth of the petitioners to raise objections/pleadings that there was a delay on behalf of the complainant in filing a petition under Section 397 Cr.P.C for restoration of complaint which has been dismissed on non-appearance of the complainant at a pre-evidence stage. The present petition is completely bereft of bonafides and merits. - HC
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Service Tax:
Refund of unutilized CENVAT Credit - rejection of refund on the ground that credit was transferred to GST regime through TRAN-1 - it is not a case that the appellant has carried forward ineligible credit into TRAN-1. The credit so transferred by the appellant were eligible credit; the refund was rejected on the ground of time bar and subsequently rejected under GST by invoking the Section 142(3) of the CGST Act 2017. - Matter remanded back to the original authority with a direction that TRAN-1 credit taken by the appellant be directed to be reversed and thereafter the original authority will consider the directions given - AT
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Central Excise:
Denial of Refund claim - Since the appeal of the appellant is pending and during the pendency of the said appeal, the Department cannot withhold the amount recovered from the appellant without serving the copy of the Order-in-Appeal. The retention of the money recovered from his bank account is without authority of law and is hit by Article 265 of the Constitution of India read with Section 35F of the Central Excise Act 1944. - AT
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VAT:
Validity of assessment order - inclusion/ addition of coffee husk in the total turnover of the petitioner - The generation of residue such as coffee husk and sale or transfer of goods in any manner contemplated by the Act, certainly attract the incidence of tax, but not as noted above, i. e., generation and self-consumption. Being an indirect tax, the dealer, for self- consumption of coffee husk, is not obligated to include in turnover or pay VAT. The Department certainly failed in establishing that in the case on hand, the coffee husk is not consumed for self, but was sold by the dealer. - HC
Articles
Notifications
Companies Law-
G.S.R. 409 (E) - dated
15-6-2021
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Co. Law
Companies (Meetings of Board and its Powers) Amendment Rules, 2021
Customs-
52/2021 - dated
15-6-2021
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
GST-
G.S.R. 411(E) - dated
15-6-2021
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CGST Rate
Corrigendum - Notification No. 05/2021-Central Tax (Rate), dated the 14th June, 2021
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G.S.R. 412(E) - dated
15-6-2021
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IGST Rate
Corrigendum - Notification No. 05/2021-Integrated Tax (Rate), dated the 14th June, 2021
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G.S.R. 413(E) - dated
15-6-2021
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UTGST Rate
Corrigendum - Notification No. 05/2021-Union Territory Tax (Rate), dated the 14th June, 2021
GST - States-
G.O.MS.No. 129 - dated
15-6-2021
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Andhra Pradesh SGST
Amendment in Notification G.O.Ms.No.32, Revenue (Commercial Taxes-II) Department, dated 15-02-2021,
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G.O.MS.No. 128 - dated
15-6-2021
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Andhra Pradesh SGST
Amendment in Notification G.O.Ms.No.141, Revenue(Commercial Taxes-II) Department, dated 15.05.2020
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G.O.MS.No. 127 - dated
15-6-2021
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Andhra Pradesh SGST
Notification of persons to whom provisions of sub-section (6B) or sub-section (6C) of section 25 of APGST Act will not apply
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CCST Ref. No. CCW/GST/74/2015 - dated
4-6-2021
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Andhra Pradesh SGST
Extension of the due date for furnishing of FORM ITC-04 for the period January - March, 2021 till 31st May, 2021
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(05/2021) FD 55 CSL 2021 - dated
15-6-2021
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Karnataka SGST
Provide the concessional rate of CGST on Covid-19 relief supplies, up to and inclusive of 30th September 2021
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(04/2021) FD 55 CSL 2021 - dated
15-6-2021
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Karnataka SGST
Amendment in Notification (11/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
Income Tax-
73/2021 - dated
15-6-2021
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IT
Seeks to amend Notification No. 44/2017 dated 05 June 2017
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (6) TMI 522
Exemption from GST - service of operating mini AC buses by the applicant for B.E.S.T (Brihan Mumbai Electricity Supply Transport Undertaking) - Classifiable under Tariff Heading 9966 or not - rate of tax at 12% as renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient or 18% as rental service of transport vehicles with or without operators? - benefit of N/N. 12/2017-CT(R) dated 28.06.2017 or not? - HELD THAT:- In the instant case, the applicant has an agreement with BEST for operation and maintenance of AC mini buses in Mumbai and suburban areas. The applicants owns buses, provides drivers and also incurs expenses on fuel and maintenance of the buses. For all these services provided by the applicant, BEST is paying them service charges on kilometer basis - As per the agreement, Vehicle Registration Charges, Insurance premium for the Buses and other assets owned by the Operator and Motor Vehicle tax within Municipal Limit of Mumbai area will be paid by applicant whereas passenger tax, stage carriage permit, GST and toll tax will be paid by BEST. Whereas, the ownership of the buses lies with the applicant, BEST shall have the exclusive authority to determine routes and schedules and even the drivers shall be under the administrative control of BEST.
There is transfer of right to use the buses to BEST by way of effective possession as well as effective control as is seen from the fact that the buses are plying as per directions and control of BEST and applicant is not free to use the said buses for any purpose other than complete dedication to BEST - In the case of transportation of passengers, the recipient of service would be the passenger whereas in the case of renting of any motor vehicle, the recipient would not be the passenger. In the subject case, the consideration for supply of service is charged from BEST and not the passenger. Therefore in the subject case it is clear that the recipient of service is BEST - the subject activity, amounts to ‘renting of motor vehicle’ and shall qualify as a taxable activity under the provisions of the GST Laws. Since the subject activity is taxable, the provisions of Notification No. 12/2017-CT (R) dated 28.06.2017 is not applicable in the subject case.
Whether the service of operating mini AC buses as in the subject case would be subject to GST @12% under Tariff Heading 9966 i.e. ‘renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient’ inserted by way of amendment Notification No. 31/2017 dated 13.10.2017? - HELD THAT:- In the subject case, there is a supply of rental services of transport vehicle where the operator (driver) is also supplied by the applicant to BEST. Hence such rental services of buses as in the subject case would attract 18% GST - The subject case is clearly covered by Entry Sr. No.10 of Notification No. 11/2017 - CT (Rate) dated 28.06.2017 in as much as there is a Rental services of transport vehicles with or without operators. Therefore for the period up to 13.10.2017 i.e when the said Sr. No. 10 was amended, the applicant’s activity would attract GST @ 18%.
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2021 (6) TMI 521
Classification of goods - scientific and technical instruments/ equipment supplied to public funded research institutions, research institutions, universities, Indian Institute of Technology, departments and laboratories of the Central and State Government, basis the certificates appended herewith - part “a” of the Sr. No. “I” of the condition in the Certificate of Registration with DSIR - applicability of N/N. 45/2017-C.T. (Rate) dated 14.11.2020 and corresponding N/N. 45/2017 and 47/2017 issued under the MGST Act, 2017 and the IGST Act, 2017 - HELD THAT:- Considering the fact that conditions prescribed under all Notifications are the same, production of Certificate of registration with DSIR having reference to the erstwhile Notification No. 51/96-Cus should be considered sufficient compliance for eligibility to avail benefit of the Notifications issued under CGST/SGST and IGST - Further, Explanation 2 to Notification No. 47/2017 dated 14.11.2017 as amended explicitly provides exemption would be in line with the notification of the G.O.I. in the M.O.F. (Department of Revenue), No. 51/96-Customs, dated the 23.07.1996 and is applicable with effect from the 15th November, 2017.
As per Sr. No 1 of Notification 45/2017, when the said goods are supplied to public funded research institutions other than a hospital or a university or an HT or an IIS or a National Institute of Technology (NIT)/REC, for availing exemption mentioned therein, the said institution must produce a certificate of registration with DSIR, from an officer not below the rank of the Deputy Secretary in the Union territory in concerned department to the supplier, (in this case, the applicant) at the time of supply of the specified goods - In absence of the necessary certificates/documents having being produced before this authority the applicant is not entitled for exemption as a blanket case.
Benefit of N/N. 45/2017 - HELD THAT:- As per Sr. No 3 of Notification 45/2017, when the said goods are supplied to Departments and laboratories of the Central Government and State Governments, the said departments/laboratories must produce, at the time of supply, a certificate to the applicant from the Head of such Institution, in each case, certifying that the said goods are required for research purposes only. Applicant has submitted that, such certificates are provided to them by the Head of the Institutions to whom the said goods are supplied. However, corresponding documentary evidence has been submitted only in a couple of cases - The Applicant would be correct in charging 2.5% CGST and SGST respectively or 5% IGST, as applicable, by applying Notification No.45/2017-C.T.-(Rate), Notification No. 45/2017-S.T.-(Rate) And Notification No. 47/2017-I.T.-(Rate) all dated 14.11.2017 on the said goods, only when supplied to institutions, universities, IIT, departments and laboratories, etc mentioned in the said Notification 45/2017, on the basis satisfaction of all conditions mentioned in the said notifications.
Applicant would be correct in charging 5% GST only in 4 cases of National Centre for Polar and Ocean Research, University of Delhi, Council of Scientific and Industrial Research CSIR-North East and Institute of Science & Technology where all the conditions mentioned in the impugned Notifications are found to be satisfied and the necessary and proper certificates, complete in all respects as mandated by the relevant Notifications have been produced.
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2021 (6) TMI 516
Challenging the order of granting anticipatory Bail - fictitious and non-existent firms - fake ITC availed - bonafide case for grant of bail or not - HELD THAT:- It is settled that once bail granted should not be cancelled in a mechanical manner without there being any supervening circumstances which are not conducive to fair trial. It cannot be cancelled on a request from the side of the complainant/investigating agency unless and until it is established that the same is being misused and it is no longer conducive in the interest of justice to allow the accused any further to remain on bail. No doubt, the bail can be cancelled only in those discerning few cases where it is established that a person to whom the concession of bail has been granted is misusing the same.
In the instant case, the respondents have joined the investigation and there are no allegations that they have not co-operated in the said investigation - It is also pertinent to mention here that the statements of the respondents have already been recorded in the month of December 2020 which shows that the respondents have been joining the investigation and there are no allegations of non-cooperation. There are no allegations of any tampering or influencing of the witnesses. There are also no allegations that the respondents are flight risk or there is any likelihood of their absconding. The petitioner has not been able to make out a case of supervening circumstances on the basis of which the bail granted to the respondents should be cancelled and nothing has been brought on record to show that the respondents have such a towering personality that their mere presence out on bail would in any manner thwart the further investigation of the case or that they are in any manner threat to the fair trial of this case.
There are no reason for pre-trial incarceration of the respondents in the present case - petition dismissed.
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2021 (6) TMI 515
Seeking grant of anticipatory Bail - receipt of only invoices against which ITC was wrongly availed - bonafide case for grant of bail or not - HELD THAT:- In the instant case, the investigation relates to the period of 2018 and prior to it, the petitioners have joined the investigation and their statements have already been recorded. The employees of the petitioners have also joined the investigation; the main accused was arrested and granted bail. The petitioners have further joined the investigation at least 4 times after the filing of this bail application - the petitioners have already deposited ₹ 2.5 crores with the department; there are no allegations of any threat to any of the witnesses or tampering with the evidence and the documents are in the custody of the department.
Thus, it is not the case of the department that the petitioners are flight risk or there are any chances of their absconding. It is not the case of the department that the petitioners have not co-operated during the period they have joined the investigation on the receipt of the summonses.
The present anticipatory bail application is allowed and it is ordered that in the event of arrest, the petitioners be released on bail on their furnishing a personal bond in the sum of ₹ 5,00,000/- each with one surety each of the like amount subject to the satisfaction of the IO/court concerned and subject to conditions imposed - bail granted.
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2021 (6) TMI 518
Maintainability of petition - appealable order or not - Section 107 of the CGST Act - HELD THAT:- Section 107(6) provides that an appeal shall not be entertained unless the appellant pays the amount of tax, interest, fine, fee and penalty arising out of the impugned order in full, as is admitted by him, and a sum equivalent to 10% of the remaining amount of tax in dispute arising out of the said order.
The petitioner is at liberty to raise all issues before the appellate authority - SLP disposed off.
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2021 (6) TMI 520
Classification of services - Fee from parks - Market fee-daily - Market fee-weekly - Fees for bays in bus stand (bus stand entrance fee collection) - Bus -stand (others), charges for of TV advt. in bus-stand - Bus -stand (others), locker rent provided in bus- stand - Bus -stand (others), flower shop in bus stand in open space - Bus -stand (others), cycle stand, scooter, auto, four wheeler stand in bus stand and other places - Bus -stand (others), collection of room rent for temporary stay - Slaughter house fees - Rent,Travelers’ bungalows & rest house (municipal lodge) - Fees on pay & use toilets - For entry vehicle in the market - N/N. 14/2017C.T.(Rate) dated 28.06.2017(or) Sl.No. 4 of N/N. 12/2017-C.T.(Rate) dated 28.06.2017 - HELD THAT:- The applicant is a ‘Municipality’ as defined in clause (e) of article 243 P of the Constitution and has stated to be covered under the definition of ‘Local Authority’ as defined under Section 2(69) of the CGST Act 2017.
Whether the tax paid by them under Direct charge, when the same is to be paid under Reverse Charge can be condoned as a technical lapse and regularized? - Scope of Advance Ruling application - HELD THAT:- Section 97 (2) of the CGST Act / Tamil Nadu GST Act (TNGST) gives the scope of Advance Ruling Authority, i.e., the question on which the Advance Ruling can be sought - The Act limits the Advance Ruling Authority to decide the issues earmarked for it under Section 97(2) and no other issue can be decided by the Advance Ruling Authority. The question at SI.No.4 seeks regularization of the payment made by them considering the same as a technical lapse, which is not in the purview of this authority as per Section 97 (2) - this question is outside the scope of Advance Ruling application.
The applicant being a Municipality as defined in clause (e) of article 243 P of the Constitution, is a Local Authority under the GST Act. Therefore, if the services listed here are found to be that in relation to the entries of Eleventh [Twelfth Schedule of the Constitution, and the said activities are undertaken by the applicant, a Local authority, when engaged as a ‘Public Authority’, then the said activities are to be treated neither as supply of goods nor supply of services effective from 26.07.2018. Alternatively, the applicant has claimed that the services are covered under the exemption at Sl.No. 4 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended - As can be seen, the entry is not applicable in respect of ‘Local Authority’ effective from 26.07.2018 and stands covered under Notification No. 14/2017-C.T.(Rate) dated 28.06.2017.
In the case at hand, the applicant is a Municipality, which is a local authority and is not a Governmental Authority. Therefore, this entry does not have any application to the applicant. Advance Ruling is applicable to the supplies currently being made or proposed to be made as per S.95 of the GST Act. In that count also, the application in hand being filed after 26.07.2018, the date effective which, the words, ‘Local Authority’ stands omitted, sl.No. 4 of the notification No. 12/2017-C.T.(Rate) dated 28.06.2017 do not have any application and this claim is rejected.
Fee from Park - HELD THAT:- It is stated that the fee is collected for allowing the public, entry to the park maintained by the applicant. As per entry (1) of the Twelfth Schedule above, ‘Provision of Urban amenities such as Parks’ is function bestowed with the Municipality under Article 243 W of the Constitution. The applicant being a local authority is to provide such urban amenities as a public authority - The said activity when provided by the applicant, as per Notification No. 14/2017 C.T.(Rate) dated 28.06.2017 as amended with effective from 26.07.2018, is neither a supply of goods nor supply of service and not taxable to GST.
Market Fees- Daily & Weekly - HELD THAT:- It is stated that the applicant collects entrance fee from the farmers/ Merchants on daily basis for allowing them entry into the market. From the submissions, it is seen that the considerations are for the infrastructure of the shop (thatched shop/ thatched shed/ RC shop/ AC Sheet shed) in the market, open space allotted and the entities (vegetable bundle/ fish basket/ hen/ handcart/ coconut/ leaves bundle/ tomato basket) brought to the market - The considerations collected based on the infrastructure extended to the farmers/ merchants and the entities brought for sale are to convenient the public, wherein the applicant acts as a ‘Public authority’, in relation to the function ‘Markets & Fairs’ listed in the Eleventh Schedule. The said activity when provided by the applicant, as per Notification No. 14/2017 C.T.(Rate) dated 28.06.2017, is neither a supply of goods nor supply of service and not taxable to GST.
Fees for bays in bus-stand - HELD THAT:- It is stated that the applicant collects the fees from the bus owners/ Govt. transport department for allowing parking of bus on per day basis and they claim the same is in relation to the public amenity listed at (q) of Twelfth Schedule of the Constitution. Entry (q) states Public amenities including street lighting, parking lots, bus stops and public conveniences’ - applicant undertakes the activity as a public authority and therefore, the said activity when provided by the applicant, is neither a supply of goods nor supply of service as per Notification No. 14/2017-C.T.(Rate) dated 28.06.2017 as amended effective from 26.07.2018.
Bus-stand, others - HELD THAT:- This aspect is not required to be considered.
Locker rent - HELD THAT:- It is stated that the lockers are extended for rent for the public. The consideration is collected per bag/ suitcase/ bundle with material. The applicant has claimed that the activity is in relation to the function stated at (l) of the Twelfth Schedule of the Constitution - Here, the activity is providing Lockers in the Bus-stand which is not in the genre stated in the said entry. Therefore, providing lockers in the Bus-stand is not an activity in relation to the function at (l) of the Twelfth Schedule and hence, Notification No. 14/2017-C.T.(Rate) dated 28.06.2017 as amended is not applicable to this activity.
Cycle Stand. Scooter, Auto and Four wheeler stand in Bus-stand - HELD THAT:- The applicant provides parking lots which is an activity specified in the said entry. The applicant undertakes the above activity as a public authority and therefore, the said activity when provided by the applicant, is neither a supply of goods nor supply of service as per Notification No. 14/2017C.T.(Rate) dated 28.06.2017 as amended effective from 26.07.2018.
Collection of Room Rent for temporary stay - HELD THAT:- Providing rooms for temporary stay in the Bus-stand is not an activity in relation to the function at (q) of the Twelfth Schedule and hence, Notification No. 14/2017-C.T.(Rate) dated 28.06.2017 as amended is not applicable to this activity - the service of renting of room for temporary stay is exempted under Sl.No. 14 of the Notification No. 12/2017 -C.T. (Rate) dated 28.06.2017 as amended.
Slaughter house fees - HELD THAT:- It is stated that the service is allowing the public for the purpose of slaughter of animals. The applicant has stated that the same is in relation to the function at (r) Regulation of slaughter houses and tanneries of the Twelfth Schedule of the Constitution. The applicant undertakes the above activity as a public authority and therefore, the said activity when provided by the applicant, is neither a supply of goods nor supply of service as per Notification No. 14/2017-C.T.(Rate) dated 28.06.2017 as amended effective from 26.07.2018.
Rent-Travelers’ bungalows & rest house - Municipal lodge - HELD THAT:- The applicant has stated that the activity is allowing public to use single bed room / double bed room on daily basis. They have claimed that the activity is a function listed at (q) of the Twelfth Schedule of the constitution. As, it can be seen, the said entry provides ‘Public amenities including street lighting, parking lots, bus stops and public conveniences’. Renting room for temporary stay on daily rent basis is not an activity in relation to the activities stipulated in the entry (q), as it is not in the genre of the inclusive-activities specified in the said entry. Therefore, providing rooms for temporary stay in the Bus-stand is not an activity in relation to the function at (q) of the Twelfth Schedule and hence, Notification No. 14/2017-C.T.(Rate) dated 28.06.2017 as amended is not applicable to this activity - In the case at hand the service is extended by the applicant and the consideration is mentioned as ₹ 40/- per day per single bed and ₹ 60/- per double bed/per day, which is well within the value of supply mentioned to be exempted under this entry. Accordingly, the services of renting room for temporary Stay are exempted under SI.No. 14 of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 as amended.
Fees on Pay & use Toilets - HELD THAT:- The applicant undertakes the above activity as a public authority and therefore, the said activity when provided by the applicant, is neither a supply of goods nor supply of service as per Notification No. 14/2017-C.T.(Rate) dated 28.06.2017 as amended effective from 26.07.2018.
For entry of vehicle in the market - HELD THAT:- Providing for Markets includes provision for entry of vehicles in the market. Therefore, providing for entry of vehicle in the market is an activity in relation to function ‘(xxii) Markets & Fairs’ entrusted to a Panchayat under Article 243 G of the Constitution. The applicant undertakes the above activity as a public authority and therefore, the said activity when provided by the applicant, is neither a supply of goods nor supply of service as per Notification No. 14/2017-C.T.(Rate) dated 28.06.2017.
Applicability of the Notification to the supplies of the contractors - HELD THAT:- The applicant supplies the ‘Right to collect the fees/right to certain amenities’ to the contractors and the supply undertaken by the contractors are as per the tender conditions which is an independent supply. The applicability of the Notification to the supplies of the contractors is not answered as per S.95(a) readwith S. 103(1) of the GST Act.
Collection of charges for laying of cables alongside roads and collecting road cutting charges as well as annual rent - HELD THAT:- Supply of allowing the road cut for laying the OFC and allowing the space alongside the road for the OFC lines are not ‘composite supply’ as defined under S. 2(30) of the GST Act, 2017 in as much as these two supplies are not made in conjunction with each other in the ordinary course of business, Hence Composite supply cannot be applied for classifying the said service as ‘Renting of Immovable property service’.
Regularization of the payment made - direct charge of reverse charge - scope of Advance Ruling - HELD THAT:- The same is a technical lapse, which is not in the purview of this authority as per Section 97 (2) and therefore, the question is not admitted under Section 98(2) of the Act.
Renting of immovable property service rendered by local authority to Pure state Govt. offices - HELD THAT:- Pure state Govt. offices (viz) Asst. Director of L F Accounts, Project Officer, ICDS, ICDS Centre: Deputy Supt. Of Police and pure Central Govt offices (viz) post offices are fully exempted or not as per entry SI no 8 of the table to Notfn. No 12/2017 dated 28-06-2017.
Renting of immovable property service rendered by local authority to Co-operative society - HELD THAT:- Co-operative society(viz) Chindhamani Super Market, Jeeva Co-Op Society TNSTC Staff Society, Jeeva Co-Op Society and transport corporation TNSTC are exempted or not as per entry SI no 8 of the table to Notfn. No 12/2017 dated28-06-2017.
Renting of immovable property service rendered by local authority to Nationalised Banks - HELD THAT:- Nationalised Banks are exempted or not as per St no 8 of the table to Notfn. No 12/2017 dated 28-06-2017.
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Income Tax
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2021 (6) TMI 513
Taxability as income from ‘Royalty’ within the meaning of section 9(1)(vi) r.w. Article 12 of the Double Taxation Avoidance Agreement between India and USA - receipt as a consideration for sale of Software/License relating to Development of Software - A.Y. 2009-10 - HELD THAT:- The disputed receipt from M/s. Honeywell Technology Solutions Lab Pvt. Ltd. is on account of sale of Software/license and not for parting with the copyright of the software. Since facts of the present case are similar to those considered and decided by the Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd [2021 (3) TMI 138 - SUPREME COURT] respectfully following the precedent, we hold that the amount cannot be brought within the ambit of ‘Royalties’ under Article 12 of the DTAA.
Case of the assessee before the authorities below has been that the receipt is not in the nature of ‘Royalty’, but ‘Business Profits’ - In order to bring `Business profits’ of a resident of the other country to tax in India within the ambit of Article 7, it is sine qua non that the foreign enterprise must have a Permanent Establishment (PE) in India in terms of Article 5 of the DTAA. In the absence of a PE, the taxability under Article 7 does not trigger.
The assessee categorically submitted before the DRP that it did not have any PE in India. As the assessee did not have a PE in India during the relevant year, the mandate of Article 7 cannot activate. A fortiori, the receipt cannot be charged to tax in India as ‘Business profits’ either. In view of the foregoing discussion, we are satisfied that the amount received by the assessee from sale of software/license to M/s. Honeywell Technology Solutions Lab Pvt. Ltd. ceases to chargeable to tax in India. This issue is, therefore, decided in assessee’s favour.
Income taxable in India - chargeability being, income from sale of software license which was held by the AO to be an income in the nature of ‘Royalty’ - A.Y. 2014-15 - HELD THAT:- We hold that receipt of Software license cannot be charged to tax as ‘Royalties’ under the DTAA. In the same manner, the amount will escape taxation as ‘Business profits’ under Article 7 also because of it not having any PE in India.
Albeit Explanation 4 to section 9(1)(vi) is applicable to the year under consideration, but section 90(2) of Act states that where the Central Government has entered into an agreement with the Government of any country outside India under sub-section (1), then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee. In other words, the provisions of the Act or the DTAA, whichever are more beneficial to the assessee would apply. Coming back to the factual panorama, we find that the provision of the DTAA, being more beneficial than that of the Act would apply making the receipt from sale of software license as not chargeable to tax in India.
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2021 (6) TMI 512
Capital gain computation - transfer in the case of appellant and See 50C applicability - AO after giving deduction for indexed cost of acquisition arrived at the long term capital figure - HELD THAT:- At the time hearing before us, the learned AR submitted that dispute with regard to the receipt of sale consideration by the assessee is pending before Civil Court and accordingly, prayed for keeping this appeal in abeyance till the disposal of the dispute by the Civil court on the aspect of consideration as the same would have a bearing on the impugned issues.
With the consent of both the parties before us, we deem it fit and appropriate to remand this appeal to the file of the learned Assessing Officer for denovo adjudication to decide the issue in dispute in accordance with law and based on the final outcome of the dispute before the Civil Court from time to time. The assessee is also directed to report the status of proceedings before the Civil Court to the learned Assessing Officer from time to time. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
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2021 (6) TMI 509
Difference between the contractual amount shown in the TDS certificates and that shown in the Profit and Loss account - Credit of entire amount of TDS shown in TDS certificates - assessee has not offered the entire amount of contract receipts shown in the TDS certificates - HELD THAT:- We have noticed that the aggregate amount of payment received by the assessee during the year under consideration was ₹ 2,78,72,229/-, while the amount actually reconciled in a summary manner was ₹ 2,23,30,487/-. In any case, in our view, the reconciliation made in summary manner will not give correct result. It is the duty of the assessee to reconcile the payments received from each of the parties, i.e., the assessee should furnish reconciliation statement for each of the parties. In fact, the assessee itself has reconciled the payments received from M/s Iconica Constructions in a proper manner. In our view, the assessee should reconcile the payments received from other four parties also in the similar fashion.
In the reconciliation statement furnished by the assessee in summary manner, the assessee has claimed that there is increase in “work-in-progress” amount to the tune of ₹ 2,66,01,891/- and it is further stated that the above said WIP has been offered as income by the assessee. We are unable to agree with the said submission.
The amount of “work in progress” cannot be considered as an item of income offered by the assessee. We explain the same. The amount of “Closing stock”/work in progress” is credited to the Profit and Loss account under “revenue cost matching principle”, i.e., in order to arrive at the correct profit, one is entitled to deduct only corresponding cost. In the normal practice, the purchases made during the year would be booked in the Purchases account and the entire amount shall be transferred to the Profit and Loss account.
We are of the view that the issues contested before us require fresh examination.
Accordingly, we set aside the order passed by Ld CIT(A) and restore all the issues to the file of the assessing officer for examining them in the light of discussions made supra. As directed earlier, the assessee shall furnish reconciliation statements for each of the parties in the similar fashion as furnished in the case of M/s Iconica Constructions along with the relevant ledger copies. After examining the reconciliation statements and duly considering any other information and explanations that may be furnished by the assessee, the AO may take appropriate decision in accordance with law. Appeal of the assessee is treated as allowed for statistical purposes.
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2021 (6) TMI 508
Addition of outstanding service tax liability u/s 43B - whether the provisions of sec.43B is attracted when no deduction was claimed by the assessee? - assessee filed a rectification application before Ld. CIT(A) submitting that the assessee has not claimed the service tax liability as deduction in the profit & loss account and hence, the provisions of section 43B of the Act would not apply - HELD THAT:- The co-ordinate bench, in the case of N.R Kumaraswamy [2018 (5) TMI 1962 - ITAT BANGALORE] has taken the view that the provisions of sec.43B are not attracted, if the tax liability is not claimed as deduction. The coordinate bench has taken support of the decision rendered by Hon’ble Bombay High Court in the case of “Knight & Frank (India)(P) Ltd [2016 (8) TMI 1096 - BOMBAY HIGH COURT]. We also notice that the Ahmedabad bench of Tribunal has taken an identical view in the case of SDCE Projects (P) Ltd [2019 (10) TMI 309 - ITAT AHMEDABAD]
We notice that in NOBLE AND HEWITT (I) P. LTD. [2007 (9) TMI 238 - DELHI HIGH COURT] has considered the decision rendered by Hon’ble Supreme Court in the case of Chowringhee Sales Bureau (Pvt.) Ltd [1960 (11) TMI 99 - CALCUTTA HIGH COURT] and then expressed the view that the provisions of sec.43B are not attracted, if the particular item is not claimed as deduction.
We hold that the outstanding service tax liability is not liable to be added u/s 43B of the Act, since the same has not been claimed as deduction. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the impugned addition. - Decided in favour of assessee.
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2021 (6) TMI 507
Penalty u/s 271 (1) (c) - under reporting of student fee - discrepancy in the student fee as shown by the assessee in the books of accounts in comparison to the facts and details noted during the survey - HELD THAT:- Once the computation of the fee by the Assessing Officer is based on the correct facts then the discrepancy in the fee shown by the assessee in the books would amount to furnishing of inaccurate particulars of income. The explanation of assessee is not supported by any facts or details therefore, the said explanation cannot be regarded as bona-fide or reasonable when it is only to dispute the computation of the consolidated fee received by the assessee.
There is no quarrel on the point that as per the explanation 1 to Section 271 (1) (c) the primary onus is on assessee to furnish the explanation which is bona-fide and reasonable and if the Assessing Officer is not satisfied with such explanation the burden is shifted on the Assessing Officer to bring contrary facts or material on record to counter the explanation so furnished by the assessee being not bona-fide. In the case in hand the assessee, though explained the reasons for discrepancy in the fee recorded in the books of accounts however, the actual fee received by the assessee as detected during the survey proceedings is not in dispute therefore, such an explanation for discrepancies without any supporting evidence and proper details cannot be accepted as bona-fide or reasonable.
No error or illegality in the impugned order of the CIT (appeals) in sustaining the levy of penalty under Section 271 (1) (c). The same is upheld. - Decided against assessee.
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2021 (6) TMI 506
Appellate order as passed by National Faceless Appeal Centre - NFAC - appeal against an order passed by the National Faceless Appeal Centre - allowability of claim under section 43B - adjustments u/s 143(1)(a) by disallowing the contribution received from employees towards ESI and EPF - claim denied due to conflicting decision of a non-Jurisdictional High Court - Correct ITAT Jurisdiction over the jurisdictional Assessing Office - NFAC chooses to dismiss the appeal of the assesse by following the non jurisdictional decision - HELD THAT:- Though, centralized NFAC, had been created by the notification by the Central Board Of Direct Taxes however it should be ensured ,that whenever any appellate order is passed by NFAC as per notification either by of draft order, or by way of review the draft order or Final Appellate Order, than Decision of jurisdictional High Court, having the jurisdiction over the assessing officer should be followed and applied by the NFAC.
Merely because there is some conflicting decision of a non-Jurisdictional High Court, the relief should not be refused to the assessee. As per the Notification Clause C an appeal against an order passed by the National Faceless Appeal Centre under the said Scheme shall lie before the Income-tax Appellate Tribunal having jurisdiction over the jurisdictional Assessing Officer. As per Section 260 A of the Income Tax Act, the appeal against the ITAT, order shall lie to The High Court and the High court had been defined under section 269 High Court" means- (i) In relation to any State, the High Court for that State .
Thus appeal against the tribunal ( Agra in present case )shall lie to the Hon’ble Allahabad High Court and therefore the decision rendered by Hon’ble High court is not only binding on the Tribunal but also on NFAC, ( though sitting in Delhi ) which is deciding the lis pertaining to Agra ITAT Jurisdiction (AllahabadHC Jurisdiction).
The purpose of setting up of the centralized NFAC, is to ensure efficiency, transparency and accountability. We have noted down the various stages of finalization of the final appellate order, however as pointed out by us, despite the binding decision of the jurisdictional High Court and tribunal, the centralizedNFAC have chooses to contemptuously ignore the binding precedent of Jurisdictional High Court and have applied the non-jurisdictional High Court decision to deprive the assessee from the benefit of the judicial High Court decision.
A good intentioned and well thought notification issued by the Board for NFAC, is not yielding the desired result on account of incorrect application of law.As notified by the board in the notification it would be using the artificial intelligence and data analytic for the smooth functioning of NFAC, in our view this should be used in all aspects. Further we expect the Board to take appropriate remedial measures at the earliest forrecalling such kind of orders, by issuing comprehensive guidelines for NFAC and give relief to the honest assessee .
In the light of the above said discussion,Judgments of SC and HCs,We hold that NFAC, is bound by the binding decision of the Jurisdictional Allahabad High Court, as the assessing officer is situated, within the territorial and subjective jurisdiction of High court . Hence, we allow the appeal of the assessee by respectfully following the decision of jurisdictional High Court in the matter of Sagun Foundry (P) Ltd.[2016 (12) TMI 1479 - ALLAHABAD HIGH COURT]
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2021 (6) TMI 505
Addition u/s 68 - addition of loan taken from Smt Sita Devi - HELD THAT:- Undoubtedly, before the Commissioner appeal the assessee had produced the source of Smt Sita Devi . The assessee had filed the details of the person, the detail of rural electrification bond, bank statement, registered will etc . On these documents no remanded report was given by the assessing officer and he has not disputed the identity, creditworthiness and relationship of SmtSita Devi .
We are of the opinion that the addition made by the assessing officer are bereft of any merit and are therefore liable to be rejected. In our view, the assessee had fulfilled the preconditions required to prove under section 68.
Addition in Capital Account of M/s Umesh Chandra Gupta (Share Trading business) is made through the withdrawal from the accounts of Umesh & Co. (Food grain business) - HELD THAT:- The finding recorded by the CIT(A) clearly shows that the assessee was provided the copy of the remand report by the CIT(A), to which the assessee had filed the rejoinder also. In our considered opinion, the assessee should make the true and correct statement during the virtual hearing, and it is not expected from the the assessee to make any incorrect submissions.
34. We have also noted that the assessee had filed the additional document /evidence in support of his case to prove the creditworthiness , genuineness and identity of all the six creditors .We also noticed from the persual of the record, that the assessing officer had not given the sufficient opportunity to the assessee to produce the 4 creditors and therefore the assessee failed to produce four creditors before the assessing officer in the remand proceedings.
The additional evidence filled by the assessee in respect to the following four depositors is required to be allowed and therefore we admi the same qua these four persons. Further we have noticed that the assessee was not given the sufficient time to produce these depositor before the assessing officer in the remand proceedings . In the result Ground no2 is required to be remanded back
In respect to Smt Sarita Goel and Arvind Gel . we foud that sufficient opportunity was given by the AO in remand proceedings , therefore the additional evidence can not be admitted qua these two persons.
As noticed that before issuing the cheque for an amount of ₹ 1 lakh, the same amount of cash was deposited in the bank account by the said creditor namely Sarita Goel . The assessee has filed a cash flow statement and have shown the availability of cash of ₹ 1 lakh with Smt Sarita Goel. Assessing officer during the remand proceedings had submitted that it is not possible for such a person who had barely bank balance ranging from ₹ 3000/- to ₹ 30, 000/- .
As mentioned that in subsequent the months the said Smt Sarita Goel was not having income . In our considered opinion the assessee had not be to prove creditworthiness of namely Smt Sarita Goel , a the cash was deposited just two/ three days before the issuance of Cheque.
In the light of the above the addition made on account of creditor Smt Sarita Goel, is liable to be confirmed. Accordingly we confirm the addition of ₹ 1 lakh on account of cash creditor Smt Sarita Goel.
In the result, the addition on account of cash credit of Smt Sarita Goel and Arvind Goel are confirmed and in respect to the Raja Ram Ramchandra, Ajay Kumar Garg, Gauri Goyal and Devendra Goyal the matter is remitted back , for this limited purpose to the file of CIT(A)
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2021 (6) TMI 504
Penalty u/s. 272A(2)(k) - Assessee had not offered any reasonable cause for delay in filing of TDS statements u/s. 200(3) - HELD THAT:- Admittedly, we find that assessee had duly deducted the tax at source and had also remitted the same, of course with some delay, for which it had already been penalised with interest as per the Act. The interest u/s. 201(1A) of the Act had also been paid by the assessee. Admittedly, the assessee had indeed filed its TDS statements u/s. 200(3) of the Act beyond prescribed time. But we find that there is absolutely no loss to the exchequer pursuant to the said delay as the entire taxes that were due to the Government had already been duly remitted by the assessee. Hence, the default committed by the assessee is only a minor technical and venial breach. As settled law that no penalty could be levied on an assessee for a mere technical venial breach, more especially when there is no loss caused to the exchequer due to such breach.
In view of the same, we have no hesitation in directing the ld. AO to delete the penalty levied u/s. 272A(2)(k) in the facts and circumstances of the instant case. Accordingly, the grounds raised by the assessee are allowed.
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2021 (6) TMI 503
Deduction u/s 80P(2)(a)(i) - AO disallowed the claim on the ground that the assessee is not engaged in the business of banking, is not providing credit facility to its members and also on the ground that interest was earned on surplus funds - Since the assessee earned incomes on the investments made from cooperative sector, the AO had calculated the proportionate incomes earned from cooperative banks - CIT(A) disallowed the assessee’s claim of deduction u/s 80P(2)(a)(i) and allowed the deduction claimed u/s 80P(2)(d) - HELD THAT:- We observe that the CIT(A) confirmed the AO’s decision in respect of claim of deduction u/s 80P(2)(a)(i) relying on the judgment of the Hon’ble Supreme Court in the case of Citizen Cooperative Society Ltd., [2017 (8) TMI 536 - SUPREME COURT] the decision of which was followed by the AO while confirming the disallowance. As regards the assessee’s claim of deduction u/s 80P(2)(d) of the Act, the CIT(A) relying on the decision of the coordinate bench of this Tribunal in assessee’s own case [2015 (3) TMI 317 - ITAT HYDERABAD] directed the AO to delete the disallowance made under the said section.
On perusal of the orders of authorities below, we observe from the order of the Assessing Officer that various allegations have been made by the AO regarding the activity of the assessee , without obtaining licence from RBI the assessee carrying out the banking business activity, giving loan to Members and to others and kinds of Members etc which is clear from the assessment order. It is interesting to note here that both the authorities below alleged that the assessee is providing loans to others, but , it is clear from the order of the CIT(A) at para No. 4.3 of his order, the assessee has given loans to only shareholder members.
The issue of deduction claimed U/s 80P(2)(d) has been decided by the coordinate bench of Tribunal in assessee’s own case as cited supra and in which the decision of Hon’ble Supreme Court Totgars Cooperative Sales Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] has been discussed.
TDS u/s 194A - Addition u/s 40(a)(ia) - HELD THAT:- Issue is covered by section 194A(3)(v) in assessee’s favour being a payment made by society to its members. This disallowance is deleted.
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2021 (6) TMI 502
Capital gain computation - treating the assessee’s general power of attorney “GPA” document as “transfer” within the meaning of Section 2(47) of the Act giving rise to the capital gains addition - HELD THAT:- The assessee’s vendee herein has not paid the full amount of ₹ 5.50 crores since only an amount of ₹ 50 lakhs has been received. There is no material to the contrary in the case records. We make it clear that this is not the Revenue’s case that the assessee has in fact received the balance sum post-facto the CIT(A)’s order passed way back on 30-12-2013 under challenge as well. And the clinching fact further remains that once the assessee has not even received the balance consideration, the said entire amount could not be brought to tax in his hands. We thus confirm learned lower authorities’ action to the extent of the actual receipt sum of ₹ 50 lakhs only which deserves assessment being non-refundable in nature.
Faced with this situation, we deem it appropriate to restore the instant sole issue of long term capital gains addition to the tune of ₹ 5,34,34,495/-; back to the CIT(A) for his afresh detailed adjudication keeping in mind not only the relevant facts and circumstances of the transferee’s alleged failure in not paying the balance consideration but also the final outcome of the civil proceedings to this effect as per law, within three effective opportunities of hearing. Assessee’s appeal allowed for statistical purposes
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2021 (6) TMI 501
Deduction u/s 80IB(11A) - income is derived from warehouse business operation and it is deriving profit from integrated business of handling storage and transportation of food grains - HELD THAT:- Assessee has constructed various godowns and some of them were also taken on rent. Assessee has more than 250 rented warehouses and most of them were NCDEX accredited which is strict standard for use of modern technology for storage of food grains and prevention of post harvest loss to the agriculture commodities. From the plain reading of the provision for eligibility for claim of deduction nowhere it is provided that assessee has to own the warehouse or if the warehouses are taken on rent for providing integrated handling storage and transportation services, it would disentitle the assessee for claiming any deduction u/s 80IB (11A).
The contribution of the assessee towards infrastructure development cannot be undermined, because the construction of the warehouses will be dependent on the requirement of business of handling, storage and transportation of the food grains. There is no fetter in the law; whether the warehouses are constructed by the assessee itself, or warehouses are taken on rent from others. What is relevant is that, profit and gains have to be derived from eligible business from the integrated business of handling, transportation of food grains. Thus, the reasoning and the grounds given by the Ld. AO to reject the claim of deduction cannot be sustained.
Whether the undertaking of the assessee had commenced its operation on or after 1st April, 2001 or not? - It has already been clarified by the Ld. Counsel by placing the audited balance sheet as on 31.03.2007 to substantiate that Assessee Company has commenced its operation after 31st March 2007 only which is much after the year 2001. The balance sheet for 31st March 2008 and 2009 clearly shows the business of storage, handling and transportation has started from assessment year post 31st March 2008. Thus, the construction of storage godowns and on rent had started much after the Asstt. Year 2007-08. On these facts it cannot be held that assessee had not commenced its business of operation after the year 2001 which is one of the conditions prescribed u/s 80IB (11A). Accordingly, we hold that assessee fulfils all the mandatory conditions prescribed u/s 80IB (11A), as all its income is derived from warehouse business operation and it is deriving profit from integrated business of handling storage and transportation of food grains.
The assessee is entitled for claim of deduction u/s. 80IB (11A). Accordingly, the order of the Ld. CIT (A) is confirmed and the Revenue ‘s appeal is dismissed.
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2021 (6) TMI 500
Addition u/s 56 (2)(vii)(b) - assessee company is a deemed public limited company - shareholding pattern of the assessee company - DR contended that the CIT(A) has erred deleting the impugned addition made by the Assessing Officer in his regular assessment framed thereby holding that M/s NCC Infrastructure Holding Limited, qualified to be a public limited company(ies) merely because NCC Ltd (a listed company) held more than 40% of the former’s shareholding in the relevant previous year. HELD THAT:- We find no merit in Revenue’s foregoing arguments. The assessee has filed a detailed paper book before the Assessing Officer himself that section 56(2)(vii)(b) did not apply in view of sec.2(18) containing definition of a “company”. The Revenue’s technical argument that the CIT(A) has not offered any opportunity whilst entertaining the assessee’s argument to this effect goes against the records. The same stands rejected therefore.
Whether assessee qualifies to be a company eligible for section 56 (2)(vii b)’s exemption since covered under the clinching legislative expression “where a company, not being a company in which the public are substantially interested” as per section 2(18)(b)(B)(c) of the Act since the said other company was a listed one holding more than 50% of its stake in the relevant previous year - We make it clear that the assessee had duly filed its shareholding chart before the CIT(A) (supra) whose correctness has nowhere been rebutted in Revenue’s pleadings in the instant appeal.
Coupled with this, the CIT(A) has also placed reliance on coordinate bench’s decision (supra) adjudicating the very issue in assessee’s favour and against the department. We therefore find no reason to interfere with CIT(A)’s correct approach in deleting the impugned sec. 56(2)(vii b) addition in question - Decided against revenue.
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2021 (6) TMI 499
Reopening of assessment u/s 147 - Assessing Officer had contested the Revenue’s audit objection allegedly pointing out escapement of assessee’s taxable income which in turn was also approved by the Pr.CIT having jurisdiction - HELD THAT:- The Revenue is fair enough in not denying all these clinching aspects in its pleadings. We thus conclude that the Revenue’s audit authorities’ objection pitted against the Assessing Officer’s opinion having jurisdiction regarding initiation of the impugned re-opening mechanism who duly concluded that no income had escaped assessment; must make way for the latter’s opinion only. We accordingly uphold the CIT(A)’s impugned conclusion quashing the impugned re-opening for this precise reason alone. Revenue’s sole substantive ground fail.
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2021 (6) TMI 498
Disallowance u/s 14A r.w.r. 8D - exempt income to be considered for the purpose of arriving at average value of investment - HELD THAT:-The Hon'ble Special Bench of Income Tax Appellate Tribunal, Delhi in the case of Asstt. CIT Vs. Vireet Investment (P) Ltd., [2017 (6) TMI 1124 - ITAT DELHI] has held that while computing the amount of disallowance under sub clause (iii) of sub-rule (2) of Rule 8D of the Rule, the value of investment which yielded exempt income alone has to be considered for the purpose of arriving at average value of investment, on the similar lines, the decision of the Hon'ble Delhi High Court in the case of ACB India Ltd. Vs. Assistant Commissioner of Income Tax [2015 (4) TMI 224 - DELHI HIGH COURT] and the decision of Marg Ltd. Vs. CIT, [2020 (10) TMI 102 - MADRAS HIGH COURT] and followed subsequently by the Hon'ble Madras High Court in the case of CIT Vs. Shriram Ownership Trust [2020 (12) TMI 736 - MADRAS HIGH COURT] and also by the Karnataka High Court in the case of Pragathi Krishna Gramin Bank [2018 (6) TMI 1283 - KARNATAKA HIGH COURT]
We find merit in the submissions made on behalf of the appellant that the amount of investment which yielded exempt income alone should be taken into consideration for the purpose of arriving at average value of investment as envisaged under sub clause (iii) of sub-rule (2) of Rule 8D of the Rule. Accordingly, we restore the matter back to the file of Assessing Officer for the purpose of computing the amount of disallowance in the above mentioned manner.appeal of the assessee is partly allowed for statistical purposes.
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2021 (6) TMI 497
Validity of reopening of assessment u/s 147 - addition of broken period interest - HELD THAT:- In reply to SCN the assessee has furnished its reply explaining the reason for offering interest income of ₹ 1,04,08,502/- as against amount of ₹ 1,33,76,712/-. After receiving the aforesaid reply of the assessee, there was complete silence at the end of the assessing officer and suddenly, after more than two and half years, the assessing officer again sprang into action by issuing notice under section 148 of the Act on 30-03-2016.
Thus, the aforesaid facts clearly demonstrate that, though, the assessing officer himself was satisfied that the assessee had correctly offered the interest income; however, only because of the audit objection, he initiated the proceedings under section 147 of the Act. That being the case, the reopening of assessment under section 147 of the Act, being merely on borrowed satisfaction, is invalid.
The materials placed before us clearly demonstrate that in course of original assessment proceedings, not only the assessing officer has made thorough enquiry with regard to the disputed issue on which the assessment has been reopened, but the assessee has also furnished all relevant and necessary materials to justify the income offered by it. That being the case, we are of the considered opinion that the reopening of assessment in the present case is invalid and void ab-initio. - Decided in favour of assessee.
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2021 (6) TMI 496
Fringe benefit Tax on account of free / concessional tickets given to employees and their family members - HELD THAT:- We find that the issue in dispute with regard to valuation of fringe benefits on account of free / concessional air tickets given to employees and their family members is squarely covered by the decision rendered by this Tribunal in the case of Jet Airways India Ltd., vs DCIT [2013 (1) TMI 722 - ITAT MUMBAI] wherein held we agree with the submissions of the counsel that the nearest available, logical and acceptable method is to value the benefit as per the cost assigned for provisions for the frequent flyer programme in the books of account. More so, because such provision has been accepted by the Department in the assessee' s own case from the assessment year 1999-2000 till assessment year 2005-06 and as this method is scientific and has attained finality in due course of time since the assessment year 1999-2000, keeping in mind that the members of the frequent flyer programme scheme are from the general public. Thus restore this issue back to the files of the Assessing Officer who directed to value the fringe benefit of free/concessional tickets as per the valuation of frequent flyer programme as provided by the assessee in its books of account as the same has also been accepted by the Department while making provisions for " frequent flyer programme" for earning JP mileage, and if there are costs for foreign travels the same should be eliminated from the same, thereafter, the Assessing Officer is also directed to reduce the cost recovered from the employees.
Direct the Assessing Officer to verify from the special auditor' s report about the actual figure of the tickets issued.The assessee is directed to furnish the details of the amount recovered from the employees towards the cost/concession/free tickets. The Assessing Officer is directed to reduce the value of the fringe benefit to the extent of the cost of benefit recovered by the assessee from its employees - Ground raised by the Revenue is allowed for statistical purposes.
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2021 (6) TMI 494
Best judgment assessment u/s.144 - violation of Rule 46A - AO was not provided an opportunity to verify - HELD THAT:- We on perusal of the assessment order found that the assessee before the A.O. has filed the return of income in response to notice u/s. 148 of the Act. When the notice u/s. 142(1) of the Act was issued twice and the show cause notice, there was no compliance. The assessee has submitted the details for the first time before the CIT (A) referred at para 5 of the CIT (A) order and the said information was not submitted before the A.O. for various reasons.
We are of the considered opinion that, the assessee has to comply with Rules and regulations. when the documents were submitted for the first time before the CIT (A) the provisions of Rule 46A shall equally applicable. Accordingly, we find that there is a violation of Rule 46A as the A.O. was not provided an opportunity to verify and examine the evidences filed by the assessee in the appellate proceedings. The CIT (A) could have called for the remand report on the evidences filed by the assessee as referred at para 5 of the CIT (A) order but allowed the assessee appeal. Therefore, for limited purpose we find that the documents which the Ld. CIT (A) has relied are to be examined and verified by the Assessing officer.
We set-aside the order of the CIT (A) and restore this disputed issue to the file of the assessing officer with above directions and the assessee should be provided with adequate opportunity of hearing and shall cooperate in submitting the information - Appeal filed by the revenue is allowed for statistical purposes.
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2021 (6) TMI 491
Bogus LTCG - Penny stock purchases - genuineness of claim of LTCG u/s. 10(38) - HELD THAT:- As in the case of assessee also there was no evidence produced by the Ld. AO to show that there was an agreement between assessee and any other party which are alleged to be involved in providing accommodation entry.
Thus respectfully following the ratio laid down in the case of Krishna Devi [2021 (1) TMI 1008 - DELHI HIGH COURT] and Swati Luthra [2019 (7) TMI 526 - ITAT DELHI] which is squarely applicable on the facts and issues raised before us, are of the considered view that the claim of LTCG u/s. 10(38) from sale of equity shares of Terbotech Engineering Limited is genuine and the assessees is entitled to claim the benefit. Thus, no addition was called for u/s. 68 of the Act for unexplained cash credit. We, further hold that the assessee is regularly dealing in equity shares as an investor and as its main source of income salary and other from other sources and the frequency of transactions in purchase and sale of shares is less, it cannot be held to be carrying on business of purchase/sale of shares as an adventure in nature of trade. - Decided in favour of assessee.
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2021 (6) TMI 486
Addition u/s 68 - whether the assessee has been able to discharge the primary onus on it to prove the nature and source of the credit found in the books of the assessee by proving the identity, creditworthiness and genuineness of the parties and the share transaction? - HELD THAT:- According to assessee from a perusal of the bank statements filed it is discernible that the transactions i.e. share capital and premium were transferred through proper banking channel and according to assessee it was not the case of the A.O that there was any cash deposit prior to the issue of cheques to the assessee company. Thus the assessee claims that the genuineness of the transaction cannot be disputed. And in order to prove the creditworthiness of the share subscribers, the Ld. A.R drew our attention to audited balance sheet of the share subscribing companies and contended that shareholders possess sufficient capital and reserves out of which share subscription amounts were paid through account payee cheques. So according to assessee, it has discharged the burden of proof casted by section 68 of the Act in respect of share capital & premium it collected. And according to assessee, without finding any infirmity in the documents produced by the assessee in respect of identity, creditworthiness and genuineness of the transaction, no addition u/s 68 of the Act was warranted and the Ld CIT(A) after considering and appreciating inter-alia these facts have deleted the addition. - Decided in favour of assessee.
Disallowance u/s. 56(2) (viib) - difference of the book value and issue value - HELD THAT:- We note that the difference of the book value and issue value is meagre/negligible, therefore, we do not find any infirmity in the action of the Ld. CIT(A) in deleting the addition, so we confirm the same.
Disallowance of excess depreciation of electrical installation - HELD THAT:- We note that the assessee has claimed depreciation on electrical installation @15% applicable for plant and machinery whereas the A.O has considered the rate of depreciation of electrical installation at 10% each and disallowed 5% on depreciation claimed by the assessee. We note from the items mentioned in the Ld. CIT(A)’s order which goes on to show that these are electrical installations which are integral part of the plant and machinery, without which the plant and machinery cannot operate.And since the assessee is engaged in manufacturing of cotton yarn and the electrical installation for which the assessee has claimed depreciation @ 15% are integral part of plant and machinery without which plant and machinery in the unit cannot operate, therefore the depreciation is allowable for the items claimed by the assessee @ 15% by treating the same as electrical installations which forms part of the plant and machinery. Therefore the order of the Ld. CIT(A) is confirmed.
Addition under the head employee’s contribution to ‘Provident fund and ESIC’ by invoking section 36(1)(va) r.w.s 2(24)(x) of the Act - A.O disallowed the deduction claimed by the assessee in respect of employee’s contribution to Provident Fund and ESIC on the ground that the same was not remitted within the due date prescribed in the PF & ESI Act - HELD THAT:- We find that the assessee has deposited the PF & ESIC amount within the time allowed for filing Income Tax return under section 139(1) of the Act,therefore the Ld. CIT(A) has followed the order of the Hon’ble jurisdictional High Court in the case of Vijayashree Ltd. [2011 (9) TMI 30 - CALCUTTA HIGH COURT] therefore, no infirmity can be attributed to his impugned action and so we confirm the order and dismiss these grounds of appeal of the Revenue.
Addition u/s 68 - HELD THAT:- Addition was made for the loan taken by assessee from eight (8) parties which was admittedly the carry forwarded loans/opening loans of this assessment year, which means they were not pertaining to this assessment year. We note that the opening balance of unsecured loan as on 01.04.2014 was ₹ 5.5 crores and since ₹ 1,00,00,000/- was paid by the assessee in this assessment year through banking channel on 03.04.2014 the Assessing Officer has added the balance amount of ₹ 4.5 crores, which is un-disputably loan of the previous year, which means this loan of Rs..5.5 crores itself has been accepted by the Assessing Officer in A.Y. 2014-15 as genuine. Therefore, the addition of ₹ 4.5 crores which is admittedly loan taken by the assessee in the earlier year cannot be taxed, in this assessment year. So the action of the Assessing Officer is per-se bad in law and therefore, we confirm the decision of the Ld. CIT(Appeals) in deleting the addition
Interest expense claimed by assessee as paid to the lender parties which consists of parties from which loan as obtained, as well as from parties to whose opening/closing balance of loan was added back - HELD THAT:- As these loans were brought forward loans as on 01.04.2014 and which has been squared up /repaid by the assessee in this assessment year itself, which fact is evident by perusal of pages 178 to 188 of the paper book and it is noted that there was no fresh loan from these three parties and we note that the opening loan with interest due to them were repaid in this year through banking channel after duly deducting TDS. So the question of disallowing the interest given by the assessee to these three (3) parties also cannot be accepted and we are of the opinion that the Ld. CIT(Appeals) rightly deleted the same.
Unexplained cash credit - HELD THAT:- Assessee has discharged its onus casted upon it to prima facie prove the identity, creditworthiness and genuineness of the share-subscribers and the share capital and premium collected by it. And the additional requirement of source of source of the share capital and premium has also been brought to the notice of lower authorities, including the confirmation is there on record. Therefore, the addition u/s 68 of the Act was not warranted and therefore we direct deletion of addition
Disallowance of interest - HELD THAT:- Since the assessee had paid interest to each loan creditor after duly deducting taxes u/s 194A in respect of such interest and the loan creditors had disclosed interest income in their respective tax returns,thereforein the facts and circumstances the Ld CIT(A) rightly deleted the addition and we confirm the same. The Revenue appeal on this issue fails.
TDS u/s 195 - Addition u/s 40a(i) on account of payment of sales commission - HELD THAT:-We note that the foreign agents were residing outside India and have earned income for their work outside India, therefore they need not pay any tax in India. In such a scenario there was no legal necessity for the assessee to deduct tax u/s 195 of the Act. We note that the Revenue other than raising this ground of appeal has not provided any material to show that services were rendered by these agents in India or even a part of the services were rendered in India, so as to attract any tax liability in their hands in India; and since the amount paid to non-residents were not legally chargeable to tax in India, then the assessee has no liability to deduct tax on the payment and consequently therefore no disallowance u/s 40(a)(i) was called for and for this proposition we rely on the decision of Hon’ble Supreme Court in GE India Technology Centre Private Ltd. [2010 (9) TMI 7 - Supreme Court] therefore we confirm the order of Ld. CIT(A) and dismiss the grounds of appeal of the Revenue.
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Corporate Laws
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2021 (6) TMI 490
Approval of scheme of Amalgamation - Section 232 Read with Section 230 and Section 66 of the Companies Act, 2013 - HELD THAT:- Section 230(i) of Companies Act, 2013 contemplates holding of meeting unless 90% of the Creditors gave consent by way of Affidavits to dispense with meetings.
In this case, all the equity shareholders, preference shareholders of the Applicant Companies gave their consent by way of affidavits. The unsecured creditors of the first Applicant Company have not given consent by way of Affidavits. Unsecured creditors of the second and third Applicant Companies have given their consent stating no objection to the scheme by way of affidavits. Therefore, the request of the first Applicant Company for conveying meeting of unsecured creditors be convened and held in the manner directed.
Application allowed.
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2021 (6) TMI 489
Approval of scheme of Merger - section 230-232 of Companies Act - HELD THAT:- Considering the entire facts and circumstances of the case and on perusal of the Scheme and the documents produced on record, it appears that the requirements of the provisions of Sections 230 and 232 of the Companies Act, 2013 are satisfied - The Scheme of Merger, which is at Annexure F to the instant petition mentioned amendments is hereby sanctioned and it is declared that the same shall be binding on the Petitioner Companies, namely, Parsec Enterprises Private Limited and Saurashtra Cement Limited and their shareholders, and all concerned under the Scheme.
The petition is allowed.
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2021 (6) TMI 488
Approval of scheme of amalgamation - seeking to dispense with the meeting of Equity Shareholders and Secured Creditors of the Applicant Companies - seeking to direct to convene the meeting of Unsecured Creditors of the Applicant Company - Sections 230 & 232 of the Companies Act, 2013 - HELD THAT:- The Companies has followed extant provisions of Companies Act in framing the Scheme in question, which are duly approved by the Board of Directors of the Companies involved. The Statutory Auditors/Chartered Accountants of the Companies have also issued respective Certificates by inter-alia certifying the details of shareholders, creditors, and compliance of accounting treatment as prescribed U/s. 133 of the Companies Act, 2013 with reference to the Scheme in question. The Applicant Companies have disclosed all the material facts relating to the Scheme in question and filed necessary documents along with the Application.
Convening and holding of the meetings of the Equity Shareholders of the Applicant Companies is hereby dispensed with - Convening and holding of the meetings of the Secured Creditors of the Applicant Companies is hereby dispensed with - Application disposed off.
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2021 (6) TMI 483
Reduction of Share Capital - Section 66 of the Companies Act, 2013 read with the National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016 - HELD THAT:- Since all the requisite statutory compliance having been fulfilled and that the proposed reduction of Share Capital shall not cause any prejudice either to the members or the creditors of the Petitioner Company and in consideration of the affidavit submitted by the Regional Director, Eastern Region, representing the Central Government and the Registrar of Companies, West Bengal, the scheme for reduction is passed.
The capital of M/s. Titagarh Enterprises Limited is henceforth ₹ 2,57,50,000/- divided into 2,57,50,000 equity shares of ₹ 1/- each, reduced from ₹ 25,75,00,000/- divided into 2,57,50,000 equity shares of ₹ 10/- each by cancelling and extinguishing, in aggregate ₹ 23,17,50,000/- i.e. 90% (ninety per cent.) of the total Face Value of issued, subscribed and paid-up equity share capital of the Company by way of reduction of Face Value of Equity share of ₹ 10/- (Rupees Ten only) each to Re. 1/- (Rupee One only) each, by adjustment with the accumulated negative balance of statement of profit & loss amounting to ₹ 30,07,74,367/- of the Company.
Signed on this, the 18th day of March, 2021.
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Insolvency & Bankruptcy
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2021 (6) TMI 495
Fresh claim after approval of resolution plan - Power to recall the order or set aside the order by which the Resolution Plan was approved - power of review is not provided under the IBC - whether direction can be given to the RP to consider the claim filed by any of the creditors either financial or operational once Resolution Plan has been approved - HELD THAT:- Admittedly, there is no provision for review of an Order under the Insolvency & Bankruptcy Code (IBC) and the applicant has also not produced any provision/law to show that this Adjudicating Authority is empowered to review its own order - Also, reading of Section 420 of the Companies Act, 2013 shows that the Tribunal may, at any time within two years from the date of the order, with a view to rectify any mistake apparent from the record, amend any order passed by it, if the mistake is brought to its notice by the parties - In the light of that provision, when we consider the case in hand, we notice that Section 420 of the Companies Act, 2013 gives a limited power to the Adjudicating Authority i.e. to rectify any mistake apparent from the record only.
Error/mistake in the order passed by the Adjudicating Authority, by which the Resolution Plan was approved - HELD THAT:- Admittedly, the applicant has not raised any objection on the Resolution Plan. Therefore, they are not the necessary party in this proceeding. It is seen from the record that the applicant had filed the claim after the approval of the Resolution Plan by the CoC but before approval of the Resolution Plan by the Adjudicating Authority - From the perusal of the order passed by the Adjudicating Authority, we notice that all the facts and provisions of law, which are required to be considered while approving the Resolution Plan, have been taken note of and well discussed by this Adjudicating Authority before approving the plan. We do not see any mistake apparent from the record, which requires any rectification. Hence, Section 420 of the Companies Act, 2013 is not applicable in the case in hand - Thus, neither there is any justification nor there is any specific provision for review of an order passed by the Adjudicating Authority.
Once the Resolution Plan has been approved by the CoC as well as the Adjudicating Authority, then in such a case, whether the law permits the Adjudicating Authority to give a direction to the RP to consider the claim filed by any of the creditors either financial or operational? - HELD THAT:- The Hon'ble Supreme Court in the JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE ASSOCIATION & ORS. VERSUS NBCC (INDIA) LTD. & ORS. [2021 (3) TMI 1143 - SUPREME COURT] has reiterated the decision of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] and held that the claim, which was not submitted within the stipulated period, shall not be taken into consideration.
In the present case, it is seen that the applicant had filed the claim after the approval of the Resolution Plan by the CoC and before the approval of the Resolution Plan by the Adjudicating Authority. Hence, once the Resolution Plan has been approved by the CoC as well as by the Adjudicating Authority or it is pending for consideration before the Adjudicating Authority, if the claim is not submitted within the time prescribed under the law, in such a case, the Adjudicating Authority cannot direct the RP to consider the claim filed by any of the creditors, either financial or operational.
Application dismissed.
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2021 (6) TMI 493
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is a settled position of law that the provisions of Code cannot be invoked for only for recovery, but only for justified reasons as per the Code. The Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited v. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT] has inter alia held that I & B Code, 2016 is not intended to be a substitute to a recovery forum and cannot be used to jeopardise the financial health of an otherwise solvent company by pushing it into insolvency.
There is a dispute regarding the quality of services of the Petitioner which need a trial at relevant forum and this forum cannot be misused as a substitute to recovery mechanism - Further on perusal of the Master data available on the MCA Website, it is seen that no charges exist against the Respondent company, and it is active and compliant. The Petitioner has not provided any document to show that the Respondent company is insolvent so as to initiate corporate insolvency resolution process against the company.
This petition has been filed with an intention to substitute recovery proceedings with an application under section 9 of the Code, 2016 which defeats the objects of the Code - Petition dismissed.
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2021 (6) TMI 492
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Financial Creditors - HELD THAT:- "Debt" as per the Code means a liability or obligation in respect of a claim which is due from a person, a 'claim' being a right to payment. Such a right would arise from some agreement between the parties in the transaction. The event which triggers the applicability of the Code is 'occurrence of default'. Section 3(12) of the Code defines 'default' as non-payment of debt, when whole or any part or instalment of the amount of debt has become due and payable and is not repaid by the corporate debtor. The phrase 'debt has become due and payable' means that the debt is payable at the present moment - Also, it is imperative that the agreement, basis which a debt or default is to be determined are acted upon by both sides, as the performance of the obligations by each party may be contingent upon the similar performance by the other party.
The default in paying against the schedule of payment after 18 months was contingent upon the release of the Additional Security by the Petitioner as also sale of apartments as per the Escrow Account receipts. But the sale of apartments itself was contingent upon the health of the real estate sector in recent times being severely affected by the Covid 19 pandemic and the ensuing lockdowns. Major decisions have been taken to protect industry from its effects, to inject economic stimulus and to revive the economy. On 24.03.2020 the minimum threshold of default was increased from ₹ 1 Lakh to ₹ 1 Crore, various provisions were modified/suspended, so that Companies facing financial stress due to the pandemic can be supported rather than be pushed into CIRP. Debts are being restructured as per Government guidelines.
In the instant case, we are unable to come to a conclusion that the Respondent is insolvent. Its release of charges by the Vijaya Bank Consortium and issue of NOC showed that it had cleared all its dues. A look at the Respondent's long list of assets held by the Petitioner as security itself, with valuation of more than 800 crore, land the developer's share in the project, shows that it possesses huge parcels of land, many times over in value of the loan, apart from the corporate guarantee given by the parent, Mantri Developers Private Ltd. It has invested large amounts in completed and near completion projects, which will convert to liquidity in due course. It is engaged in the construction of several huge projects in Bangalore. There was a steady inflow of receipts, although temporarily affected by the pandemic and lockdowns - Considering its assets, the loan amount is meagre, but can be repaid as and when the apartments are sold or its other assets held as security/additional security are released to it and disposed of. It would be against the objects of the Code to push such an entity into the rigours of insolvency, that too when its liquefiable assets as well as recurring income from sales are entirely held by the Petitioner, with a continuing stream of receipts.
In the present case, no case has been made out by the Financial Creditor for initiating CIRP against the Corporate Debtor, especially when the default is contingent upon the Financial Creditor's actions of release of Additional security as per the Sanction Letter and the Loan Agreement, the continuing receipts through the Escrow Account as per the Assignment Agreement; the readiness of the Respondent to pay the debt and seeking a reschedulement and very recent exchanges between the two in this direction; and the ongoing pandemic conditions.
Petition is disposed of by directing both Petitioner and the Respondent to work out a repayment methodology so as to clear the debt within a period of six months from the receipt/uploading of this order.
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2021 (6) TMI 487
Direction to Respondents to handover possession of the Vehicles to the Applicant as the assets of the Company - seeking direction that no third party interest be created over the said Vehicles - personal guarantees to the corporate debtor - HELD THAT:- Admittedly, on the date of commencement of the Corporate Insolvency Resolution Process, the registration certificates of the vehicles are in the name of the Corporate Debtor - As per Section 14 of IBC, the Respondents are prohibited from enforcing any security on the assets of the company and as per Section 18 of the IBC, RP has to take control and custody of any assets over which the Corporate Debtor has ownership rights as recorded in the balance sheet of the Corporate Debtor.
The Respondents, who are possessing the vehicles have to hand over the vehicles to the Applicant. Respondents have the liberty to file their claim before the RP for their dues - Application allowed.
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2021 (6) TMI 485
Maintainability of application - initiation of CIRP - Corporate Debtor committed a default in payment of its dues - existence of debt and dispute or not - HELD THAT:- A perusal of the proceedings over the last one year shows that none has appeared for the Respondent to defend the case made out by the Petitioner u/s. 9 of the Code. It is seen that on many occasions the notices were not served upon the Respondent. Notices issued by this office on the Corporate Debtor and its MD were returned as no one was found at the address. Several attempts were made by the Respondent to serve notices, under directions issued by this office. However on two occasions notices are stated to have been served.
While it is noted that the operational debt is owed to the Petitioner Operational Creditor, and the Respondent cannot be allowed to thwart these proceedings by remaining absent, we still consider it necessary to allow time to the Petitioner to place on record all such evidence with regard to service of notice on the key managerial personnel of the respondent company, their being available, the status of the company etc. such that the ordering of CIRP would be a meaningful exercise.
Petition disposed off.
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2021 (6) TMI 484
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - loan agreement existed between the Financial Creditor and the Corporate Debtor or not - existence of debt and dispute or not - HELD THAT:- There is no loan agreement between the Financial Creditor and the Corporate Debtor. Neither is there any other document/letter that proves that the loan was requested by the Corporate Debtor from the Financial Creditor. There is also nothing on record to substantiate that the loan was given against time value of money. Nothing has been placed on record to indicate that interest was payable. Nor is there any document corroborating the conditions under which the loan was repayable - The Applicant has also not produced the board resolution wherein it would have been resolved that the said loan amount is/was to be disbursed to the account of the Corporate Debtor.
The Applicant has produced a copy of relevant pages of bank statement of account bearing: 083150550890026 for the periods 10.04.2019 to 16.04.2019 and 04.07.2019 to 12.07.2019, wherein payments received from the Corporate Debtor are reflected. In absence of the entire bank statement after the alleged loan was disbursed and this Application was filed, there is no way to ascertain whether these are the only payments that have been received by the Financial Creditor or there have been more payments - Also, the certificate from the Financial Creditor's bank does not mention that the alleged loan amount has not been repaid by the Corporate Debtor. It only mentions that no amount has been received in the account of Financial Creditor from the Corporate Debtor only between 01.10.2019 and 31.10.2019 - Further, Applicant has filed a copy of Form 26AS showing TDS for Financial Year 2018-2019 by Kohinoor Steel Pvt. Ltd. However, deduction of tax solely does not establish either the debt or a default thereof.
The Application made by the Financial Creditor is not complete in all respects as required by law. From the Application and the documents annexed thereto, it cannot be ascertained whether the Corporate Debtor is in default of a debt due and payable, or that the default is in excess of the minimum amount of one lakh rupees as stipulated under section 4(1) of the Code at the relevant time - The documents presented do not inspire the confidence of this Adjudicating Authority.
Petition cannot be admitted and is dismissed.
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2021 (6) TMI 482
Approval of Resolution Plan - section 30 (6) of the Insolvency & Bankruptcy Code, 2016 - HELD THAT:- The Resolution Applicant takes over the Corporate Debtor with all its assets and liabilities as specified in the Resolution Plan subject to orders passed herein. The Resolution Plan has been approved by the CoC in its meeting held on 17.09.2020 with 100% votes - As held by Hon'ble Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors [2019 (11) TMI 731 - SUPREME COURT], it was held that the limited judicial review available to AA has to be within the four corners of section 30(2) of the Code. Such review can in no circumstance trespass upon a business decision of the majority of the CoC. As such the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved.
The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38 (1A) and 39 (4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law - Application allowed.
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Service Tax
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2021 (6) TMI 510
Refund of unutilized CENVAT Credit - rejection of refund on the ground that credit was transferred to GST regime through TRAN-1 - HELD THAT:- Originally when the appellant filed the refund claim of ₹ 43,91,346/- under Notification No.05/2006, the same was partially allowed to the extent of ₹ 11,92,412/- and the original authority rejected the refund of ₹ 31,98,934/- only on the ground of time bar. The original authority took more than 4 years to decide the refund claim of the appellant and in the meantime GST Law has come into force. Now, the appellant filed the appeal before the Commissioner (Appeals) but as on the date of filing the appeal before the Commissioner, the appellant was uncertain about the outcome of the Order-in-Appeal and the due date to file TRAN-1 was fast approaching therefore the appellant decided to transfer the credit into TRAN-1 otherwise the appellant would have lost the entire credit if the same was not transferred into TRAN-1. Subsequently, the Commissioner (Appeals) remanded the matter back to the original authority with certain directions to examine the refund claim of the appellant on merits keeping in view the decisions of the Tribunal and the Circular No.120/2010 issued by the Board - the Commissioner (Appeals) has wrongly considered the claim under Notification No.27/2012 instead of Notification No.05/2006, it is pertinent to note that under Notification No.05/2006, the requirement for debiting the refund claim amount did not exist. Further, I find that it is not a case that the appellant has carried forward ineligible credit into TRAN-1. The credit so transferred by the appellant were eligible credit; the refund was rejected on the ground of time bar and subsequently rejected under GST by invoking the Section 142(3) of the CGST Act 2017.
Matter remanded back to the original authority with a direction that TRAN-1 credit taken by the appellant be directed to be reversed and thereafter the original authority will consider the directions given - appeal allowed by way of remand.
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Central Excise
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2021 (6) TMI 511
Denial of Refund claim - denied on the ground that the claim is nowhere related to Section 35F - Section 11B of Central Excise Act 1944 - HELD THAT:- Once the appeal was admitted thereafter the appellant sought the refund of the amount recovered by the Deputy Commissioner without serving the Order-in-Appeal. It is really strange that after the decision of the Commissioner (Appeals) dated 30.12.2014, no recovery proceedings was initiated by the Department for 4 years and all of a sudden after more than 4 years, the recovery was sought by writing a letter and that too without supplying the copy of the Order-in-Appeal passed by the Commissioner (Appeals). Further, I find that the authorities below has wrongly considered the said refund under Section 11B of the Central Excise Act whereas the appellant has sought the refund on the ground that once he has filed the appeal before the Tribunal on payment of 10% duty then the recovery is automatically stayed and the Department cannot retain the amount forcibly recovered from the bank account of the appellant during the pendency of the appeal before the Tribunal.
Since the appeal of the appellant is pending and during the pendency of the said appeal, the Department cannot withhold the amount recovered from the appellant without serving the copy of the Order-in-Appeal. The retention of the money recovered from his bank account is without authority of law and is hit by Article 265 of the Constitution of India read with Section 35F of the Central Excise Act 1944.
The impugned order rejecting the refund of the amount recovered from the bank account of the appellant is not sustainable in law more so when the appeal of the appellant is already pending for disposal before the CESTAT, Bangalore - Appeal allowed - decided in favor of appellant.
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2021 (6) TMI 517
Classification of goods - industrial chemical ‘Sikko Sol’ - classifiable under sub-head No. 2710 1213 of the Central Excise Tariff Act,1985 or otherwise? - period from 01.04.2011 to 31.12.2015 - HELD THAT:- A notice was issued under Section 174(2)(e) of the Central Goods & Service Tax Act, 2017 on 02.02.2021, for initiation of process of recovery. On 22.02.2021, the raw material/finished goods, movable and immovable properties were attached. Plant and machinery was also attached - it is deemed fit and proper in the interests of justice to restore the appeal before the CESTAT which shall be decided on its own merits.
The petitioner shall give an undertaking that it shall neither alienate movable or immovable property nor create third party rights - The respondents are directed to defreeze the bank accounts and the petitioner shall undertake to utilize it only for the purpose of his business - SLP disposed off.
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CST, VAT & Sales Tax
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2021 (6) TMI 514
Validity of assessment order - inclusion/ addition of coffee husk in the total turnover of the petitioner - omissions or suppressions by the dealer in maintenance of record or production of records, registers, etc. - HELD THAT:- Pre-assessment notice was issued on September 24, 2013, reply dated October 8, 2013 was received on October 9, 2013 by the assessing officer and on October 9, 2013 order in annexure A was made by the assessing officer. Reference to these three dates is made to demonstrate that the Commercial Tax Officer just by receiving the reply on October 9, 2013 has made the order in annexure A. Apparently, order in annexure A is not preceded by enquiry of any sort - The principle laid down by this court in SUZION INFRASTRUCTURE SERVICE LTD. VERSUS CTO [2010 (6) TMI 677 - KERALA HIGH COURT] has been considered by this court in other reported decisions on which the petitioner is relying upon - the order in annexure A is vitiated for not holding enquiry, illegal and is liable to be set aside.
Non-consideration of sales turnover of husk - HELD THAT:- The assumption that coffee husk is generated as coffee seed are sold, coffee husk could also be sold and that the dealer is liable to pay tax thereon, is illegal and unsustainable. The orders in annexures A to C do not consider the issue on the lines discussed above and certainly are based on assumption of sale of coffee husk by the dealer. The liability under the Act arises only in the manner and mode the dealer comes under obligation to pay tax, but not otherwise. The generation of residue such as coffee husk and sale or transfer of goods in any manner contemplated by the Act, certainly attract the incidence of tax, but not as noted above, i. e., generation and self-consumption. Being an indirect tax, the dealer, for self- consumption of coffee husk, is not obligated to include in turnover or pay VAT. The Department certainly failed in establishing that in the case on hand, the coffee husk is not consumed for self, but was sold by the dealer. The Tribunal, while examining this aspect, calls upon the dealer to prove that the dealer has not sold the coffee husk. The fact that concurrent findings are recorded is not reason to list the legal contention with fundamental principles involved in indirect taxation, and the findings when examined in this perspective fail to convince this court.
The proposed inclusion of coffee husk in the turnover of dealer for the subject assessment years is unsustainable and illegal and the dealer has produced the account registers for which the assessing officer proposes to passing separate order under the CST Act - the omission or suppression noted is an ancillary circumstance following the main allegation in non-disclosure of coffee husk - the order in annexure A as modified by the order of Tribunal are liable to be set aside - revision allowed.
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Indian Laws
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2021 (6) TMI 519
Dishonor of Cheque - Restoration of case - Presumption in favour of holder - Section 139 of NI Act - HELD THAT:- The purpose of introducing Section 138 of the N.I. Act was to bring sanctity in commercial transactions. The negotiable instruments like cheques started losing their creditability in not being honoured on presentment. The legislature found that an action in civil court for collection of the negotiable proceeds like a cheque was defeating the very purpose of recognizing the negotiable instruments as speedy vehicle of commerce - It is now well settled that even if the cheque gets dishonoured with endorsement “Payment stopped by drawer” and there were insufficient funds on the date when the cheque was presented it amounts to an offence under Section 138 of the N.I. Act.
When no prejudice has been caused to the petitioners herein by restoring the complaint to its original number it does not lie in the mouth of the petitioners to raise objections/pleadings that there was a delay on behalf of the complainant in filing a petition under Section 397 Cr.P.C for restoration of complaint which has been dismissed on non-appearance of the complainant at a pre-evidence stage. The present petition is completely bereft of bonafides and merits. It is apparent that the petitioners do not want to contest the case on merits - The petitioners herein had yet not been summoned and as held by the Division Bench, no prejudice will be caused to the petitioners herein if the complaint is restored. The complaint is yet to be heard on merits.
The petition is dismissed along with the pending application.
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