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TMI Tax Updates - e-Newsletter June 3, 2021 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Central Excise Highlights / Catch Notes GST: Classification of supply - rate of tax - supply of aerobic micro organism/protein derived thereof used as a biological agent to reduce the requirement of cement in all cementitious / concrete application - The goods are covered under Sl. No. 97 of Schedule-III - Liable to GST @18%- AAR Visit to Get Source GST: Cancellation of registration of petitioner - seeking specific direction to the respondent to permit the petitioner to file GSTR-3B manually while enabling credit without insisting for cash portion of tax liability - In the present case, the total outstanding liability as reflected from the record prima facie appears to be huge with interest and penalty and therefore, unless and until its liability is satisfied, such an interim order should not have been granted in the peculiar facts and circumstances of the case - HC Visit to Get Source Income Tax: Reopening of assessment u/s 147 - Non disposing of objections raised against reopening - The lapse is in clear violation of the decision of the Apex Court. We are of the view that the AO has passed the order mechanically and without application of his mind. In other words not in a meaningful manner. - Matter restored back - HC Visit to Get Source Income Tax: Income from other sources u/s 56(2)(vii) - ancestral property transaction - property was already acquired on power of attorney from the original/legal owners - it is opined by the CIT(A) that the land was not a fresh purchase. Hence, deleted the additions raised in view of the provisions u/s 56(2)(vii)(b) - Order of CIT(A) confirmed - AT Visit to Get Source Income Tax: Deduction u/s 36(1)(xii) - It is for the assessee to substantiate, whether particular expenditure has been incurred for the objects and purpose of the Central Warehousing Act, 1962. In absence of any such detail of the claim of deduction under section 36(1)(xii) of the Act, no useful purpose will be served in restoring the matter back to the file of the AO - AT Visit to Get Source Income Tax: Reopening of assessment u/s 147 - Addition u/s 68 - Merely saying that assessee has a small capital of ₹ 1 lakh and nobody would invest in such a company of the sum to the magnitude of ₹ 67 crores remains merely conjectures and surmises in view of the overwhelming evidences submitted by the assessee and absence of any inquiry by the revenue. for several years - AT Visit to Get Source Income Tax: TDS u/s 195 - withholding demands under section 201 - A tax withholding liability, particularly under section 195, is a vicarious liability and its survival entirely depends on survival of the primary tax liability of income, embedded in the related payments, in the hands of the recipient. Once that primary liability stands quashed, as in this case, the very foundation of tax withholding demands under section 195 ceases to hold good in law. - AT Visit to Get Source Income Tax: Unexplained cash deposits - assessee is having joint account - AO simply brushed aside the explanation and taxed the deposits in the hands of the assessee. When the deposits were made in the joint account the same should be assessed in the hands of correct person after due identification. - AO is not barred from making assessment in the hands of the person who is not assessed to tax if there is taxable income. - AT Visit to Get Source Income Tax: Revision u/s 263 - unexplained cash credit u/s 68 - the documents were very much available on ‘record’ when the ld PCIT examined this assessment folder. When all these details were already on record, it is reasonably expected from ld PCIT to look into those details (as already forming part of record) before arriving at any conclusion that whether the said loan was squared up during the year or not. - PCIT had totally proceeded on incorrect assumption of fact - AT Visit to Get Source Income Tax: Depreciation on intangible asset being 'Right to collect toll" (HOT Assets) - the claim of the assessee towards depreciation under Sec.32(1)(ii) in respect of its intangible rights i.e “right to collect toll”, being in conformity with the mandate of law, is found to be in order. - AT Visit to Get Source IBC: Levy of Maintenance Security Deposit in respect of the property which was e-Auctioned by the Liquidator - Section 61(1) of the Insolvency and Bankruptcy Code, 2016 - Having bid, paid the EMD and gone through the Process Memorandum and terms of LoI, the Appellant herein has exercised their choice of being a successful bidder and now cannot turn around and state that ₹ 6 Lakh amount to be paid towards statutory dues cannot be fastened upon them - AT Visit to Get Source Central Excise: Reversal of CENVAT Credit - Since the appellant has followed Rule 6(2) and has not taken any CENVAT credit on the input services which were used exclusively for providing exempted services, the formula under Rule 6(3A) can only be used to only proportionately divide the credit taken on common input services and deny credit to the extent it is attributable to the exempted service viz., trading during the periods relevant to both appeals, viz., 2015-16 and April 2016 to June 2017 - AT Visit to Get Source Articles RECENT DECISIONS OF GST COUNCIL- AT A GLANCE Important Relaxations in Compliances by MCA Amid COVID Pandemic Tracking of Contractors EPF Compliances by Principal Employer FAQ’s on ICSI CPE Hours {Credit Hours} & Extension Notifications GST 27/2021 - dated 1-6-2021 - CGST Central Goods and Services Tax (Fifth Amendment) Rules, 2021 26/2021 - dated 1-6-2021 - CGST Seeks to extend the due date for furnishing of FORM ITC-04 for QE March, 2021 to 30.06.2021. 25/2021 - dated 1-6-2021 - CGST Seeks to extend the due date for filing FORM GSTR-4 for financial year 2020-21 to 31.07.2021. 24/2021 - dated 1-6-2021 - CGST Seeks to amend notification no. 14/2021-Central Tax in order to extend due date of compliances which fall during the period from "15.04.2021 to 29.06.2021" till 30.06.2021 23/2021 - dated 1-6-2021 - CGST Seeks to amend Notification no. 13/2020-Central Tax to exclude government departments and local authorities from the requirement of issuance of e-invoice. 22/2021 - dated 1-6-2021 - CGST Seeks to rationalize late fee for delay in filing of return in FORM GSTR-7. 21/2021 - dated 1-6-2021 - CGST Seeks to rationalize late fee for delay in filing of return in FORM GSTR-4. 20/2021 - dated 1-6-2021 - CGST Seeks to rationalize late fee for delay in furnishing of the statement of outward supplies in FORM GSTR-1. 19/2021 - dated 1-6-2021 - CGST Seeks to rationalize late fee for delay in filing of return in FORM GSTR-3B ; and to provide conditional waiver of late fee for delay in filing FORM GSTR-3B from July, 2017 to April, 2021; and to provide waiver of late fees for late filing of return in FORM GSTR-3B for specified taxpayers and specified tax periods. 18/2021 - dated 1-6-2021 - CGST Seeks to provide relief by lowering of interest rate for a specified time for tax periods March, 2021 to May, 2021. 17/2021 - dated 1-6-2021 - CGST Seeks to extend the due date for FORM GSTR-1 for May, 2021 by 15 days. 16/2021 - dated 1-6-2021 - CGST Seeks to appoint 01.06.2021 as the day from which the provisions of section 112 of Finance Act, 2021, relating to amendment of section 50 of the CGST Act, 2017 shall come into force. 02/2021 - dated 1-6-2021 - IGST Seeks to provide relief by lowering of interest rate for a specified time for tax periods March, 2021 to May, 2021. 02/2021 - dated 1-6-2021 - UTGST Seeks to provide relief by lowering of interest rate for a specified time for tax periods March, 2021 to May, 2021. GST - States 03/2021 - State Tax (Rate) - dated 2-6-2021 - Bihar SGST Amendment in Notification No. 06/2019-State Tax (Rate), dated the 29th March, 2019 02/2021 – State Tax (Rate) - dated 2-6-2021 - Bihar SGST Amendment in Notification No. 11/2017-State Tax (Rate), dated the 29th June, 2017 01/2021 – State Tax (Rate) - dated 2-6-2021 - Bihar SGST Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017 EXN-F(10)-4/2021 - dated 5-5-2021 - Himachal Pradesh SGST Governor of Himachal Pradesh, constitute the Standing Committee on Anti-Profiteering 5/2021-State Tax - dated 27-4-2021 - Himachal Pradesh SGST Amendment in Notification No. 13/2020-State Tax, dated the 23rd June, 2020 4/2021-State Tax - dated 27-4-2021 - Himachal Pradesh SGST Amendment in Notification No. 95/2020-State Tax, dated the 13th January, 2021 3/2021-State Tax - dated 27-4-2021 - Himachal Pradesh SGST Supersession Notification No. 17/2020-State Tax, dated the 23rd June, 2020 F.12(1)FD/Tax/2021-06 - dated 4-5-2021 - Rajasthan SGST Rajasthan Goods and Services Tax (Third Amendment) Rules, 2021 F.1-11 (91)-Tax/GST/2021 - dated 1-6-2021 - Tripura SGST Seeks to extend the due date for filing FORM GSTR-4 for financial year 2020-21 to 31.05.2021 Circulars / Instructions / Orders SEBI - SEBI/HO/CFD/DIL2/P/CIR/2021/570 - dated 2-6-2021 Streamlining the process of IPOs with UPI in ASBA and redressal of investor grievances News NITI Aayog to release the SDG India Index & Dashboard, 2020-21 on 3rd June 2021 INDIA’S MERCHANDISE TRADE: Preliminary Data, May 2021 Expert Committee on Variable Capital Company submits its report to the International Financial Services Centres Authority (IFSCA) Case Laws: GST 2021 (6) TMI 84 Classification of supply - rate of tax - supply of aerobic micro organism/protein derived thereof used as a biological agent to reduce the requirement of cement in all cementitious / concrete application - HELD THAT:- The goods manufactured by the applicant shall be used as an additives in concrete technology for its basic property to enhance strength and durability along with imparting self-healing and therefore classifiable under tariff item 3824 40 - It is also found that goods under following description falling under Chapter / Heading / Sub-heading / Tariff item 3824 is specified in entry serial number 97 of Schedule-III of Notification No. 1/2017-Central Tax (Rate) dated 28-6-2017 (as amended) and corresponding W.B.State Tax Notification No. 1125 F.T. dated 28.06.2017(as amended). The goods are covered under Sl. No. 97 of Schedule-III of Notification No. 1/2017-Central Tax (Rate) dated 28-6-2017 (as amended) and corresponding W.B.State Tax N/N. 1125 F.T. dated 28.06.2017(as amended) attracting GST @ 18%. 2021 (6) TMI 83 Government Entity or not - Damodar Valley Corporation - generation, transmission and distribution of electricity - flood control - irrigation and some connected activities like soil conservation, aforestation etc. - Applicability of N/N. 31/2017- Central Tax (Rate) dated 13.10.2017 - HELD THAT:- The term Government entity as it has been defined in the aforesaid notifications evidently denotes that in order to qualify for a Government Entity, the applicant must have been set up by an Act of Parliament or by an Act of State Legislature or it must have been established by any of the Governments i.e. either by the Union Government or by the State Government with 90 percent or more participation by way of equity or control. Further, the applicant is to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority - It, therefore, appears that Damodar Valley Corporation fulfils the criterion laid down for Government entity as per Notification No. 31/2017-Central Tax (Rate)/32/2017- Central Tax (Rate) both dated 13.10.2017 since it has been set up by an Act of Parliament with 100% control to carry out the function entrusted by the Government. This Ruling is valid subject to the provisions under Section 103 until and unless declared void under Section 104(1) of the GST Act. 2021 (6) TMI 82 Grant of Anticipatory Bail - petitioner has neither appeared nor replied to the summons issued - HELD THAT:- Subject to petitioner appearing before the respondent authority and joining investigation, it is directed that in case the respondent authority decides to proceed under Section 69 of the Central Goods and Services Tax Act, 2017 and take coercive measures, a 7-day advance notice shall be served on the petitioner - Bail application disposed off. 2021 (6) TMI 81 Seeking modification of the order - HELD THAT:- There is no reason to disbelieve the assertions made by Ms. Gupta in her application which are supported by an affidavit. Accordingly, the order dated 28.04.2021 shall stand modified to the extent that the said proceedings will reflect the presence of Ms. Gupta - The application is disposed of. 2021 (6) TMI 80 Refund of Integrated Goods and Services Tax - petitioner s principal grievance, is that, the refund of Integrated Goods and Services Tax due to it for the financial year 2019-2020 has not been remitted up until now - HELD THAT:- Issue notice. List the matter on 04.08.2021. 2021 (6) TMI 79 CENVAT credit - inputs utilized for providing output services - HELD THAT:- In the present case, the Court is satisfied that the Petitioner's difficulty in filling up the correct credit amount in the TRAN-1 Form is a genuine one which should not preclude him from having his claim examined by the authorities in accordance with law - Accordingly, a direction is issued to the Respondents to either open the portal so as to enable the Petitioner to file TRAN-1 Form electronically or to accept a manually filed TRAN-1 Form on or before 30th June, 2021. Petition allowed. 2021 (6) TMI 78 The suggestions concerning Central Goods and Services Tax Act, 2017 will be put to the GST Council and Central Board of Indirect Taxes and Customs (CBIC) - Likewise, the suggestions pertaining to the Income Tax Act, 1961 (in short the Act ) will be put to the Central Board of Direct Taxes. List the captioned matters on 01.06.2021. 2021 (6) TMI 75 Cancellation of registration of petitioner - seeking specific direction to the respondent to permit the petitioner to file GSTR-3B manually while enabling credit without insisting for cash portion of tax liability - HELD THAT:- The GST laws do not permit for filing of manual returns. There is no facility under the law to accept manual returns and by allowing respondent No.1 to file returns manually will certainly unsettle the entire scheme of GST and therefore, on this ground alone, the interim order passed by the learned Single Judge deserves to be set aside - In the instant case, the registration of respondent No.1 is not in existence. The registration was cancelled for non-filing of its returns for a continuous period of more than two years and by granting an interim order, respondent No.1 has been permitted to continue its business as a registered dealer even though the law prescribes that a person, who does not file returns for a continuous period of 6 months, is liable to be deregistered. In the present case, the total outstanding liability as reflected from the record prima facie appears to be ₹ 16,83,45,476/- (tax amount) plus interest as applicable and penalty of ₹ 1,70,71,385/- and therefore, unless and until its liability is satisfied, such an interim order should not have been granted in the peculiar facts and circumstances of the case - Appeal allowed. 2021 (6) TMI 74 Submission of Form TRAN-1 or revised Form TRAN-1 after the expiry date - HELD THAT:- The Division Bench of this Court has already decided the issue in UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, THROUGH ITS SECRETARY (REVENUE) VERSUS M/S ASAID PAINTS LIMITED [ 2021 (3) TMI 953 - KARNATAKA HIGH COURT] granting time to the parties to submit Form TRAN-1 returns within a period of 30 days from the date of the order. The present appeal also stands disposed of granting additional 30 days time to respondent No.1 to submit TRAN-1 returns. 2021 (6) TMI 43 Refund of unutilized input tax credit - inverted duty structure - principle of natural justice - period of June, 2019 - HELD THAT:- The adjudicating authority had issued Show Cause Notice in Form of RFD-08 to the appellant, also provided opportunity for personal hearing with a direction to file reply. However, the appellant has not endeavoured to attend the personal hearing though the appellant noticeably contacted to the Department to defer the personal hearing. It is found that the sufficient time was available with the appellant to file reply in the matter if he intended to do so. Therefore, the adjudicating authority has passed the impugned order after providing opportune time to file reply. Admissibility of refund claim - HELD THAT:- The adjudication authority has rejected the refund for the tax period from June, 2019. In this regard, the appellant has pleaded that the input tax credit is accumulated on account of inverted duty structure. The refund of the same is claimed under the clause (ii) of the proviso to Section 54 of the Act and also submitted that the formula given under Rule 89(5) of the CGST Rules, 2017 is inconsistent with Section 54 of the Act and hence is ultra vires. It is also found that refund of input services is not includible in the Net ITC as explained in the clause under Rule 89(5) of the CGST Rules, as amended. Further, as the appellant has not submitted any segregated documents relating to input to the proper officer in spite of providing sufficient opportunities to come forthwith for evidencing stake of inputs for impugned refund claim - there are no infirmity in rejection of the refund - appeal dismissed. 2021 (6) TMI 42 Refund of IGST paid in excess - excess payment of IGST mistakenly is a deposit or Tax - time limitation - principles of natural justice - Whether excess payment of IGST mistakenly would he consider as a deposit or Tax? - HELD THAT:- It is evident that payment made by the appellant by debiting from their ledger against the tax liabilities only. Hence, it may not be termed as deposit rather it is payment of tax only. The amount lying in ledger can only be considered as deposit or amount, further, the appellant has offset their liability in the tax head i.e. in the head of IGST and there is no doubt that the IGST is a Tax in terms of IGST Act, 2017 - the disputed amount paid by the appellant is nothing but it is tax only and it may not be considered as pre-deposit or deposit by any stretch of imagination and further the appellant s contention has not been supported by the provisions of law provided under GST Act or Rules. Whether application for refund filed by the appellant is time barred in terms of Section 54 of the CGST Act, 2017 or not? - HELD THAT:- Any kind of refund s governed by Section 54 of CGST Act read with Rule 89 of CGST Rules, 2017, and procedure for filing of refund application has been given in the said section and rules only. Therefore, refund under Section 77 will also govern under Section 54 of CGST Act, 2017. Accordingly, period for filing of refund in such cases will be apply as per Section 54 and relevant date will also be taken as per this provisions only - contention of the appellant that the time limit has not been provided in Section 77 of CGST Act read with Section 19 of IGST Act, 2017 for filing of refund application is not acceptable. Whether principle of natural justice has been fallowed in the instant case or not? - HELD THAT:- Proper officer has issued show cause notice in Form of GST RFD-08 and personal hearing was also granted by him to the appellant - On perusal of the screen shot of the portal it is found that the show cause notice as well as rejection order were communicated to the appellant through common portal. Further the same fact was also intimated to the appellant vide letter dated 12-6-2020 by the jurisdictional Asstt. Commissioner. The rejection of the refund application of the appellant on the time barred ground is correct and proper - Appeal dismissed - decided against appellant. 2021 (6) TMI 41 Rejection of refund claim - rejection of refund of appellant mainly on the ground that Since the refund of ITC on input service and capital goods have been included in net ITC for the purpose of refund by the assessee, they, as per sub-Rule (5) of Rule 89 of the CGST Rules, 2017 as amended vide Board s Notification No. 26/2018-C.T., dated 13-6-2018 are not entitled to claim refund of ITC - HELD THAT:- The Central Government, in contemplation of the powers conferred by Section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), has amended the Central Goods and Services Tax Rules, 2017 by issuing the Notification No. 26/2013-Central Tax, dated 13-6-2018 - the subject matter has also been under consideration at various judicial quasi judicial authorities and the recent progression in the matter is prominent to deliberate cautiously hereunder, which isn t only a obiter dicta but also laid the foundation for formulation of the principles of law for the purpose of deciding the present problem before us on this issue - The amendment by the Notification No. 26/2018-Central Tax, dated 13-6-2018 is intra vires to the Section 54(3) of the CGST Act, 2017 provisions. Further, the Rule 89(5) is not contrary to the provisions of Section 54(3) of the CGST Act, 2017 as amended albeit it, as a corollary, Rule 89(5) of the CGST Rules, as amended, is in conformity with Section 54(3)(ii). The lexes of the amendments are amply justified. Further, as the appellant has not provided any documents relating to input in spite of providing sufficient opportunities to come forthwith for evidencing stake of inputs for impugned refund claims - Appeal dismissed. 2021 (6) TMI 40 Confiscation of seized goods which were lying in the unregistered godown - search and seizure of godown - business carried out from unregistered premises with an intent to evade - penalty on proprietor - HELD THAT:- M/s. Taj Iron Store, 25, Dudu Bagh. Loha Mandi, S.C. Road, Jaipur intentionally did not declare the additional place of business i.e. godown situated at S.P. 636, A3 Road No. 6, V.K.I Area, Jaipur in their GST Registration and carried out the business activities from the unregistered place. Further, the appellant could not produce any corroborative evidence in support of their claim that they had applied for amendment in registration of additional place of business i.e. godown. The appellant declared said premises (godown) as an additional place of business in its registration certificate by amending the registration certificate on 17-9-2018 only after search of the godown and seizure of the goods. It clearly shows their mala fide intention with intent to evade GST. Confiscation of goods - HELD THAT:- Appellant have contravened the provisions of Sections 22 (read with Rule 11 of CGST Rules, 2017), 35, 37, 38 39 of the CGST Act, 2017 by storing dutiable goods illegally at an unregistered premise, without any authority of law and also by wrongly accounting for seized goods in their books of account and also not shown the same properly in periodical returns filed by them with the sole intent to evade payment of CGST/SGST. Therefore, the impugned goods i.e. Angle, Channel, Shape, Section, Beam, MS Bar, Flat, Gate Channel, MS Pipe etc., valued at ₹ 5,53,10,466/- stored at the godown of M/s. Taj Iron Store, seized vide GST INS-02 under Panchnama dated 13-9-2018 under Section 67(2) of the CGST Act, 2017 were liable for confiscation under Section 130 of the CGST Act, 2017 read with Rule 139 of the CGST Rules, 2017 and M/s. Taj Iron Store is also liable for penalty under Section 122(1)(xvi) and 122(1)(xviii) of the CGST Act, 2017 and also under Section 125 of CGST Act, 2017. Penalty on Shri Mohd. Riyaz Khan, Proprietor of M/s. Taj Iron Store who was looking after the day to day affairs of the Firm - HELD THAT:- He has abetted and assisted in activities of storing dutiable goods at unregistered premise, without any authority of law and dealing in impugned goods which he knew were liable to confiscation and rendered himself liable to penalty under Section 122(3) and Section 125 of the CGST Act, 2017. Appeal dismissed - decided against appellant. Income Tax 2021 (6) TMI 77 Reopening of assessment u/s 147 - non dealing with objection raised by the applicant against reasons to believe - HELD THAT:- Applying the dictum as laid down by the Supreme Court in the case of GVK Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT] we are of the view that disposing of the objections raised by the assessee against the reasons recorded before issuance of notice under Section 148 of the Act, though not part of the statutory requirement, as prescribed under the Act, however, same is guided by the directions issued by the Apex Court. The specific objections raised by the writ applicant, produced to this writ application, have not been properly dealt with by the AO. The lapse is in clear violation of the decision of the Apex Court. We are of the view that the AO has passed the order mechanically and without application of his mind. In other words not in a meaningful manner. This writ application succeeds in part. The order disposing of the objections filed by the assessee to this petition is hereby set aside and the matter is remitted to the AO. 2021 (6) TMI 76 Reopening of assessment u/s 147 - Non disposing of objections raised against reopening - non dealing with objection raised by the applicant against reasons to believe - HELD THAT:- Applying the dictum as laid down by the Supreme Court in the case of GVK Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT] we are of the view that disposing of the objections raised by the assessee against the reasons recorded before issuance of notice under Section 148 of the Act, though not part of the statutory requirement, as prescribed under the Act, however, same is guided by the directions issued by the Apex Court. The specific objections raised by the writ applicant, produced to this writ application, have not been properly dealt with by the AO. The lapse is in clear violation of the decision of the Apex Court. We are of the view that the AO has passed the order mechanically and without application of his mind. In other words not in a meaningful manner. This writ application succeeds in part. The order disposing of the objections filed by the assessee to this petition is hereby set aside and the matter is remitted to the AO. 2021 (6) TMI 73 Levy of penalty u/s 271(1)(c) - disparity between the returned income and assessed income - Addition on account of unexplained cash deposits AND Addition on account of interest on savings bank account - HELD THAT:- On mere reading of the assessment order, it is evident that the appellant had offered an explanation in support of the sources for the cash deposits. It is stated by the appellant during the course of assessment proceedings as well as proceedings before the ld. CIT(A) that the cash deposits were made out of the withdrawals made from the bank through ATM. The Assessing Officer as well as the ld. CIT(A) had rejected this explanation by holding that no documentary evidence in support of the explanation was filed. It is not the case of the lower authorities that the assessee had filed a false explanation as result of which additions were made. It is settled position of law that mere rejection of the explanation does not entail levy of penalty u/s 271(1)(c) of the Act as held by the Hon ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT ] We are of the considered opinion that it is not a fit case for levy of penalty u/s 271(1)(c) of the Act. - Decided in favour of assessee. 2021 (6) TMI 71 TP Adjustment - Whether any services requiring payment were availed by the assessee? - what is its ALP? - HELD THAT:- TACO provided specific and also exclusive services under the Agreement to the assessee along with certain other group entities, which are not general in nature but precise, detailed and specific. TPO determined Nil ALP by assigning another reason that the assessee failed to show any benefit received by it from the services. In our considered opinion, what is relevant is to consider the availing of the services and not the resultant benefit arising there from. Every expenditure incurred by a businessman cannot necessarily lead to swelling the profit. If the proposition of the TPO is taken to a logical conclusion, then it would mean that no business would ever incur loss, which is not a reality. The important consideration is the incurring of bona fide expenditure and availing of service, which may or may not lead to the increased income. Application of the benefit test is not warranted. Enquiry in this regard should come to an end as soon as the factum of availing the services for the business purpose is established. We have noticed above that the assessee did avail the services from TACO for running its business operations. As such, there was no need to look beyond that and search for some benefit accruing to the assessee as a pre-condition for allowing the deduction. TPO also held that the services, if any, availed by the assessee were in the nature of shareholders services, not requiring payment of any consideration. Suffice to say, shareholder or stewardship services take place when some act or service is done by a shareholder to the company in order to ensure that his investment in the shares is safe and further such an act or service does not produce any effect to the company receiving it. From the detailed narration of services above, it is overt that the services did produce effect to the assessee company. As such, they go outside the ambit of the shareholder services as branded by the TPO. It is, therefore, held that TACO rendered specific and also exclusive services to the assessee, which are not in the nature of shareholder services, and hence require payment of consideration as a quid pro quo in an uncontrolled situation. What is its ALP? - Selection of MAM - CUP V/S TNMM - As neither the comparables chosen by the assessee rendered similar services nor were they located in India. In our considered opinion, the authorities below were justified in rejecting the CUP method applied by the assessee in such a manner. TPO after rejecting the assessee s benchmarking under the CUP method, proceeded to determine the ALP of the transaction under other method as per rule 10AB of the Rules - A bare perusal of the rule makes it graphically clear that the `other method is the one which not only encompasses the price actually charged or paid for benchmarking but also the price which would have been charged or paid in a comparable uncontrolled transaction. Any potential price which could be charged or paid for similar goods/services, even though not actually transacted, can also be accepted for benchmarking the SDT under consideration. In principle, no fault can be found with the TPO in interpreting the rule in the way he did. However, the steps following such an interpretation went awry as he determined the Nil ALP on the bedrock that no services were actually availed by the assessee requiring payment of any consideration, which has been overturned supra. Thus, the application of this method by the TPO in this way is rendered nugatory. Indisputably, all the transactions cited as evidence of `reasonableness are between the associated enterprises and hence controlled transactions. When the legislature specifically provided for considering transactions only between non-associated enterprises, it is absolutely unwarranted to consider any transaction between two associated enterprises for determining the ALP under rule 10AB. We, therefore, jettison the contention advanced on behalf of the assessee in this regard and hold that the transactions between two related enterprises cannot be construed at ALP on the basis of reasonableness of the amount per se. Transaction at ALP On the strength of `reasonableness of expenditure as per the mandate of section 40A(2) - Adopting the TNMM as most appropriate method for showing the SDT at ALP - On an examination of the nature of the SDT of payment of service charges by assessee to TACO, it turns out that the same is entirely different and not at all inter-related with other transactions that the assessee aggregated with. It is just elementary that intra-group services cannot be clubbed with the manufacturing or trading transactions undertaken by the assessee justifying aggregation. We, therefore, hold that the TPO was justified in repelling the assessee s aggregation approach under the TNMM. Having found that the mechanism applied either by the assessee or the TPO under all the three methods is improper, we are left with nothing to adjudicate upon. The Tribunal, being an adjudicating and not an original authority, cannot usurp the power of the AO/TPO and itself undertake the ALP determination in the peculiar circumstances as are instantly obtaining. We set aside the impugned order and remit the matter to the file of the AO/TPO for re-determining the ALP of the SDT afresh as per law after affording opportunity of hearing to the assessee. It is made patent that in the fresh determination, it would be open to the TPO to choose any of the prescribed methods as the most appropriate method to be applied in the prevailing circumstances for re-determining the ALP - we have not totally ruled out the application of the CUP under rule 10B(1)(a) or other method under rule 10AB or the TNMM under rule 10B(1)(e) but rejected the application of the CUP method only because the assessee wrongly applied it by choosing functionally different companies and that too from foreign jurisdictions; of `any other method because the TPO wrongly held that no services were availed and the assessee also wrongly contented for accepting the transaction at ALP only on the strength of `reasonableness of expenditure as per the mandate of section 40A(2) of the Act; and of the TNMM because of the aggregation approach adopted by the assessee. To put it simply, such three methods, inter alia, are also open before the TPO in the fresh proceedings to choose from provided the flaws in their application, as discussed above, are removed and they are correctly applied as per their respective prescriptions. 2021 (6) TMI 70 Revision u/s 263 - Bogus purchases - HELD THAT:- The Jurisdictional High Court in the case of CIT vs Nirav Mody [ 2016 (6) TMI 1004 - BOMBAY HIGH COURT] has held that when a particular view has been taken by the AO, then on the same reasons, the case of the assessee is not required to be reopened in view of the provisions u/s 263 of the Act CIT vs Amitabh Bachchan,[ 2016 (5) TMI 493 - SUPREME COURT] has also speaks that where a specific view has been taken by the AO then interference u/s 263 is not permissible. Maharashtra High Court in the case of CIT vs Gabriel India Ltd.[ 1993 (4) TMI 55 - BOMBAY HIGH COURT] has also speaks the same thing in same sense. The facts of the case relied by the Ld. DR i.e. Sphinx Precision Ltd. Vs. CIT, Shimla [ 2006 (11) TMI 236 - ITAT CHANDIGARH-A] is quiet distinguishable from the facts of the present case being in this case, there was an error in calculation of deduction u/s 80HHC and an error in calculation of income u/s 115JA and the order of the AO was silent on these issues. Taking into account all these facts and circumstances and considering these facts that the issue has not been considered by the AO, while passing order dated 07/12/2016. Therefore, there is no justification invoking the provision u/s 263 of the Act in accordance with law - Decided in favour of assessee. 2021 (6) TMI 69 Income from other sources u/s 56(2)(vii) - ancestral property transaction - property was already acquired on power of attorney from the original/legal owners - assessee purchased the property by virtue of conveyance deed and the market value of the said property was different as compared to the transaction value and stamp duty was paid accordingly - CIT-A deleted the addition - HELD THAT:- As property was purchased by Jagdish Narian Agarwal in the year 1974 after paying the full consideration. The original owners/vendors confirmed the transaction and the parties had given requisite confirmation before the district collector. They transferred the possession of the said land to Late Shri Jagdishnarian Agarwal. Original owners and confirmation parties also executed the Power of Attorney in favour of Late Shri Jagdishnarian Agarwal in which all rights were given to him. The property was exclusively under the ownership and possession of the Shri Jagdishnarian Agarwal, which was acquired by the appellant or other legal heir on demise of his father Shri Jagdish Narian Agarwal. The property was under litigation for a long time and the compensation was given for the settlement. The property was registered with the name of Shri Jagdishnarian Agarwal till the pending of the litigation, however, the same was came with the name of the appellant and other legal heirs by virtue of conveyance deed in the FY 2014-15. The registrar had charged stamp duty and prevailing market value for the said property. Accordingly, it is opined by the CIT(A) that the land was not a fresh purchase. Hence, deleted the additions raised in view of the provisions u/s 56(2)(vii)(b) The facts are not distinguishable at this stage. The factual interpretation of the transaction was clearly described by the CIT(A). Accordingly, we are of the view that the Ld.CIT(A) has passed the order judiciously incorrectly, which is not liable to the interfere with the appeal at this stage. Accordingly, all the issues are deciding in favour of the assessee. 2021 (6) TMI 68 Deduction u/s 36(1)(xii) - assessee claimed for allowing all the expenditure debited in profit and loss account in view of section 36(1)(xii) of the Act, but the Assessing Officer did not give any finding on this claim of the assessee - HELD THAT:- Under this provision the expenses which may not be allowable under section 37 of the Act for not incurred wholly and actually for the purpose of the business, however same were incurred for the objects and purposes authorised by the relevant Act under which such corporation has been established, then those expenses might be allowed under section 36(1)(xii) of the Act. Before us assessee did not furnish details of any amount eligible for deduction under the section 36(1)(xii) of the Act. No evidence have been filed before us to substantiate that said details were ever filed before the AO or the Ld. CIT(A). The assessee has never contested deduction under above provision in earlier years. Even in subsequent assessment year i.e. AY 2007-08, the assessee has not pressed this ground of Cross Objection. Thus, it is evident that ground in current year has been raised in casual manner without any detail of actual amount eligible under the above provision. The claim of the assessee before the Assessing officer was that all expenditures have been incurred for the object and purpose of the Central Warehousing Act. CIT(A) also rejected the claim of the assessee. It is for the assessee to substantiate, whether particular expenditure has been incurred for the objects and purpose of the Central Warehousing Act, 1962. In absence of any such detail of the claim of deduction under section 36(1)(xii) of the Act, no useful purpose will be served in restoring the matter back to the file of the AO. We accordingly dismissed this ground of the appeal of the assessee. Disallowance under section 14A - HELD THAT:- In the cases where shares are held for business purposes and dividend income is also earned from such shares, the disallowance of expenses for earning exempt dividend income has to be made on proportionate basis. The assessment year under consideration being prior to assessment year 2008-09, Rule 8D of Income Tax Rules, 1962 (in short the Rules ) cannot be invoked in the case and the disallowance of expenses has to be made on reasonable basis. The quantification of disallowance in the year under consideration is also restored to the file of the Assessing Officer for deciding in accordance with law keeping in view the overall facts and circumstances of the case including disallowances made in earlier assessment years i.e. assessment years 2002-03 and 2005-06 . Depreciation on the assets having cost upto ₹ 5000/- - AO observed from clause 7(d )and 7(e) of the Tax Audit Report (TAR) that depreciation at the rate of hundred percentile ( 100 %) was charged in the books of accounts in case of assets having cost upto₹ 5000/- - HELD THAT:- The contention of the assessee that said depreciation on the assets having cost less than ₹ 5000/- was claimed in the books of accounts, however, was not claimed for the purpose of computing income as per Income-Tax Act. Since this dispute is a matter of verification of the claim of the depreciation made for the purpose of computation of income under Income-tax Act, we feel it appropriate to restore this issue to the file of the Assessing Officer for adjudication after verification of documentary evidences in this regard. The ground No. 4 of the appeal of the assessee is accordingly allowed for statistical purposes. Verification of share of income from Joint Venture CFS, Ludhiana - HELD THAT:- It is undisputed that income from joint-venture has to be taxed in the hands of the assessee once and same income cannot be taxed twice. Since the assessee is following mercantile system of accounting, the income from joint-venture is required to be taxed on accrual basis after verification of audited accounts of the joint ventures. The Learned Counsel of the assessee has not disputed taxing the same following mercantile system and therefore we are not going into the aspect whether those receipt should be taxable on cash basis . The income from joint-venture once considered on mercantile basis in the year under consideration, same income cannot be taxed by the Assessing Officer on cash basis in subsequent years at the time of receipt. Accordingly, the issue in dispute is restored to the file of the Assessing Officer for adjudication after verification of the documentary evidence including audited accounts of the joint ventures under reference. Applicability of provision of section 115JA - Admission of additional ground - HELD THAT:- As the assessee failed to explain any specific guidelines/instruction for preparing profit and loss account and balance sheet in the relevant regulatory Acts, which could become basis for non-application of sub-section 2 of section 115JB of the Act. Moreover, the assessee has complied the provisions of section 115JA or JB in earlier years and this doubt has been raised for the first time in casual manner, without supporting with any provision under any law - the request of the learned Counsel to restore the matter back to the file of the Assessing Officer is not justified and accordingly rejected. The additional grounds of the appeal of the assessee are accordingly dismissed. Disallowance for Productivity Linked Incentives (PLI) to employees, debited in profit and loss account - HELD THAT:- The calculation has been made on productivity indicator and liability toward each employee has been worked out to ₹ 6300/-. The provision of ₹ 4,15,53,750 /- has been made for staff engaged in different sectors like construction, general etc. and also office location wise ( PB-138). The documents filed by the assessee before the Assessing Officer prima facie shows that liability is an ascertained liability and not a contingent liability. We find that Tribunal in the case of container Corporation of India Ltd. [ 2018 (3) TMI 43 - ITAT DELHI] has allowed the provision of productivity linked incentive on the ground that the liability is in present, quantifiable and not contingent. Since the quantification of liability has not been verified at the level of the Assessing Officer, in the interest of substantial justice, we feel appropriate to restore this issue to the file of the Assessing Officer for verification of documentary evidences and decide in the light of the decision in the case of Container Corporation of India Ltd (supra). The ground No. 1 of the appeal of the Revenue is accordingly allowed for statistical purposes. Addition on account of capitalization of special ( SLP) Dunnage - HELD THAT:- We find that the identical issue of special versus ordinary dunnage and their treatment as capital expenditure or revenue expenditure has been adjudicated by the Tribunal in appeal filed by the Revenue in the case of the assessee [ 2020 (5) TMI 590 - ITAT DELHI] for assessment year 2012-13 - we do not find any error or perversity in the order of the Ld. CIT(A) and accordingly, we uphold the same. The ground No.2 of the appeal of the Revenue is dismissed. Disallowance for Quality improvement expenses - HELD THAT:- The details include unit-wise expenses as well as nature of the expenses which include expenses on labour, lamination, purchase of the cleaning material, expenses related to ISO audit, supply of various construction and miscellaneous material. All these expenses need to be looked into from the angle that same are in the nature of the capital expenditure or in the nature of the revenue expenditure. In view of the facts and circumstances and in the interest of the justice, we feel it appropriate to restore this issue to the file of the Learned Assessing Officer for deciding afresh after affording adequate opportunity of being heard to the assessee. Disallowance for unabsorbed overhead on capital works expenditure - whether the part of overhead charges on monitoring of the capital expenditure of construction, could be charged to revenue expenditure.? - HELD THAT:- The claim of the assessee that same have been charged to revenue expenses, following regular accounting practice whereas according to the Revenue in absence of details of expenses actually incurred, no expenditure can be allowed as revenue expenditure only on the ad-hoc accounting practice. We find that the Tribunal [ 2011 (5) TMI 1117 - ITAT DELHI] for assessment year 2005-06 has restored the identical issue to the file of the Assessing Officer after examining the nature of the expenses.In view of the above facts and circumstances, the issue in dispute in the year under consideration is also restored to the file of the Assessing Officer for deciding afresh after providing reasonable and adequate opportunity of being heard to the assessee. This ground of the appeal of the Revenue is accordingly allowed for statistical purposes. Addition for income from bonded warehouses - HELD THAT:- Assessing Officer has added the income from warehousing charges which is accrued during the year under consideration. The learned Counsel has agreed in principle that warehousing charges is liable to be assessed on accrual basis in view of Mercantile system followed by the assessee, but he emphasized that income which has been taxed on accrual basis in the year under consideration, should not be subjected to tax twice i.e once on Mercantile basis and second on cash basis. We concur with the above contention of the Learned Counsel of the assessee. Accordingly, the bonded warehouse income added by the Assessing Officer on accrual basis, is hereby confirmed, however, the Assessing Officer is directed to ascertain that, bonded warehouse income which has been added on Mercantile basis in the year under consideration, is not again subjected to tax on cash basis in subsequent years. Additions for various provisions, made by the Assessing Officer in terms of section 115JB - HELD THAT:- As assessee has submitted that provision for gratuity and leave encashment have been made on the basis of the actuarial valuation and therefore, these are ascertained liabilities. Similarly, regarding wealth tax provisions, it has been submitted that the liability has been added back. Similar submissions have been made regarding provision for bad and doubtful debts. Regarding profit linked incentives, we have already restored the issue in dispute to the file of the Assessing Officer for verification of the working of said liability. In view of the above facts and circumstances, we feel it appropriate to restore this issue to the file of the Assessing Officer for verification of the claim of the assessee of actuarial valuation and other documentary evidence to substantiate that the relevant liabilities are ascertained liabilities. Disallowance of social obligation expenditure - AO disallowed the claim of the assessee of social obligation expenses on the ground that there was no provision in the Act to allow such expenses - HELD THAT:- We find that this Explanation has been made effective from 01/04/2015. The Tribunal in the case of Addl CIT vs Rites Ltd [ 2021 (1) TMI 530 - ITAT DELHI] has held this Explanation as prospective in nature. Respectfully, following the above decision, the corporate social responsibility expenses incurred by the assessee in the year under consideration cannot be disallowed invoking Explanation -2 to section 37 of the Act. Accordingly, this ground of the appeal of the Revenue is dismissed. Addition of interest on service tax - No justification was submitted by the assessee before the Assessing Officer for allowing this expenditure. The assessing officer held same to be in the nature of the penalty by the service tax department for default on the part of the assessee and accordingly, he disallowed the expense in terms of Explanation-1 1 to section 37(1) -whether interest paid on delayed deposit of the service tax is in the nature of the compensatory or in the nature of the penalty - HELD THAT:-The payment of sales-tax and service tax both are indirect taxes, which being pari materia , said expenditure on interest for delayed payment of service tax is eligible for allowance as revenue expenditure following the finding of in the case of Lachmandas Mathura [ 1997 (12) TMI 16 - SUPREME COURT] Accordingly, this ground of appeal is restored to the file of the Assessing Officer for verification, whether the assessee has followed inclusive/exclusive method of accounting for service tax and then decide in accordance with law. The ground of the appeal of the assessee is accordingly allowed for the statistical purposes. 2021 (6) TMI 67 Reopening of assessment u/s 147 - Addition u/s 68 - optionally convertible debentures issued to the Infotel technologies Ltd. - HELD THAT:- Merely because the investor has incurred losses it cannot be said that the investment made by such investor is not genuine. However even otherwise for saying so there is no corroborative material available with the assessing officer. Even otherwise how can an assessee have control over the affairs of the lender to the lender‟ to assessee. Any inference against the assessee for that reason cannot be sustained. Now it is to be seen that assessee has filed a substantial evidences before the learned assessing officer, even the representative of the investor company also remained present in response to the summons issued u/s 131 of the income tax act confirming the above investment, but to rebut all those evidences the learned assessing officer has not made any enquiry to show that the documentary evidences submitted by the assessee does not exhibit a genuine transaction. Merely saying that assessee has a small capital of ₹ 1 lakh and nobody would invest in such a company of the sum to the magnitude of ₹ 67 crores remains merely conjectures and surmises in view of the overwhelming evidences submitted by the assessee and absence of any inquiry by the revenue. for several years , assessee, Investor, Investor in the investor are assessed u/s 143 (3) of the act , such assessment orders are produced by the assessee before the assessing officer, it cannot be said that the investment made by Infotel technologies Ltd in the assessee company of ₹ 67 crores is failing the test of genuineness u/s 68 Accordingly, we direct the learned assessing officer to delete the addition in the hands of the assessee made u/s 68 of the income tax act with respect to the optionally convertible debentures issued to the Infotel technologies Ltd. Thus, we reverse the finding of the lower authorities and allow ground of assessee. 2021 (6) TMI 66 TDS u/s 194H - Disallowance u/s 40(a)(ia) on account of non-deduction of TDS on Bank Guarantee Expenses - HELD THAT:- Assessee has paid guarantee commission charges of state bank of India for giving guarantee in favour of the seller of coal to the assessee. It is one of the banking services provided by the state bank of India to the assessee. It cannot be said to be a commission as intended to u/s 194H of the but it is in the nature of Bank charges charged by the bank for provision of services to the assessee. Honourable Bombay High Court in case of CIT TDS (1), Bombay versus Larsen and Toubro Ltd [ 2018 (12) TMI 991 - BOMBAY HIGH COURT] wherein the honourable High Court while dealing with the case for assessment year 2010 11 and also the Notification No 56/2012 of CBDT which has been considered by several coordinate benches and held that same also applies to earlier period then the date of issue of notification, we hold that the assessee was not required to withheld any tax on bank guarantee charges paid to state bank of India and therefore no disallowance would have been made u/s 40 a (ia) of the act. So we confirm the order of the ld CIT (A) . In view of this ground number (1) of the appeal is dismissed. Disallowance of additional depreciation u/s 32 (1) (iia) - assessee has claimed the additional depreciation on the plant and machinery purchased for the power generation plant - HELD THAT:- AO was of the view that the benefit is available only to those undertaking which are engaged in the business of manufacture or production of any article of thing. Generation of power according to him cannot be equated with the production of any article or thing. Further clause ii(a) , subsection (1) of Section 32 of the act was amended with effect from 1 April 2013 and therefore such additional depreciation could be allowed only with effect from 1 April 2013, thus the same was disallowed. Assessee challenged the same before the learned CIT A who allowed the claim of the assessee relying on the decision of the coordinate bench in case of NTPC versus Deputy Commissioner Of Income Tax [ 2012 (5) TMI 127 - ITAT DELHI] where the coordinate bench after considering the several decisions including the decision of the honourable Supreme Court in case of impunity board wherein it was held that the electricity is a goods allowed the claim of the assessee - Therefore respectfully following the decision of the coordinate bench in assessee‟s own case we do not find any infirmity in the order of the learned CIT A in deleting the disallowance of additional depreciation. Disallowance on account of excess depreciation claimed on electrical installations by holding that electrical fittings‟ which are part of the block of furniture and fittings‟ as per the appendix I of The Income Tax Rules, 1962 as plant by ignoring amended subsection (3) of Section 43 - HELD THAT:- We do not find that any such information exists on record that these electrical installations are for the purpose of operation of plant and machinery and to make the plant and machinery functional. The mere assertion by the learned CIT A they are plant and machinery without examining the proper details, the assessee cannot be granted depreciation at the rate of 15% classifying them as plant and machinery. According to us it is apparent that furniture and fittings includes electrical fittings only to the extent of wires, sockets, switches and other fittings and fan etc. We also cannot say in absence of any detail whether the electrical installation falls in this category or not. We set-aside this ground to the file of the learned assessing officer with a direction to the assessee to produce the details of addition of plant and machinery and to show that these are not electrical fittings as classified in note number 5 of appendix I (depreciation schedule). In view of this we set aside the ground number 3 of the appeal of the learned assessing officer back to the file of the learned assessing officer with a direction that after examining the details of the electrical installation and giving a proper opportunity of hearing to the assessee, the issue may be decided whether the electrical installations are furniture and fittings or plant and machinery. Thus, Ground no 3 is allowed with above directions. Disallowance on account of excess deduction claimed u/s 80 IA (8) - what is the market value in relation to goods or services for the purpose of working out eligible profit for deduction u/s 80 IA? - HELD THAT:- The explanation to Section 8 provides that market value‟ mean the price that such goods or services would ordinarily fetch in the open market. Naturally, the taxes and duties are not at all fetched by such goods or services but are the levies of the government on transfer of such goods. The price of such goods can never include the government levy. This is the argument of the learned departmental representative. However when an issue has been decided by higher forum, we are duty-bound to follow the same, as judicial discipline demands, more particularly when in assessee‟s own case on identical facts and circumstances the issue was decided. It is apparent that this issue was raised by the learned assessing officer in assessment year 2009 10 and the coordinate bench after discussing this issue at length has taken a view in favour of the assessee.Therefore respectfully following the decision of the honourable Delhi High Court in assessee own case for assessment year 2009 10, we confirm the order of the ld CIT (A) and ground number 4 the appeal of the learned AO is dismissed. Disallowance of depreciation while calculating the profit 115JB - HELD THAT:- AO has not discussed this issue at all in the assessment order and merely added back same while computing the book profit in the assessment order. As the issue is squarely covered in favour of the assessee by the order of the coordinate benches in assessee‟s own case for the earlier year we do not find any reason to deviate from the same where such addition has been deleted following the decision of the honourable Supreme Court in case of Apollo tyres Ltd [ 2002 (5) TMI 5 - SUPREME COURT] . Thus we confirm order of the ld CIT (A) on this score. In view of this ground number 5 of the appeal of the learned assessing officer is dismissed. 2021 (6) TMI 65 Credit of TDS - whether the credit of the TDS has to be allowed corresponding to the income offered or the income has to be computed according to the amount of TDS which has been deducted and claimed by the assessee? - HELD THAT:- AO was required to exclude the credit of the TDS, but instead, he added the advance amount as income of the assessee in the year under consideration. The action of the Assessing Officer without any reasoning is not justified. Simultaneously, the claim of the entire amount of the TDS by the assessee in the year under consideration is also not justified. CIT(A) noted this fact, however, she upheld the addition proposed by the Assessing Officer instead of restricting the credit of the TDS. The duly of the AO is to decide, whether particular receipt is in the nature of taxable income and raise tax liability corresponding to that. He cannot assess particular receipt as income merely on the ground that tax on such receipt has been deducted by the deductor. In the case, the AO was required to examine whether the work was performed by the assessee for entire amount or for the amount of ₹ 48,06,843/- only. Without examining that issue, he is not justified in holding the advance amount as taxable receipt of the year. In the case of Varsha G. Salunke [ 2005 (9) TMI 226 - ITAT BOMBAY-F] also the payment was received in one year, however, bills for part of payment received in subsequent years. The Tribunal directed to give credit of the TDS the year in which income was offered for taxation. We feel it appropriate to restore the issue in dispute to the file of the Assessing Officer, with the direction to the assessee to demonstrate taxability/non-taxability of amount in the year under consideration with the help of documentary evidences including, bills/invoice, proof of work performed etc. Then, the Assessing Officer shall decide the issue in accordance with law. Ground No. 1 of the appeal is accordingly allowed for statistical purposes. 2021 (6) TMI 59 TDS u/s 195 - withholding demands under section 201 - tax liability - assessee pointed out that the very taxability of payments, in respect of which impugned tax withholding demands are raised, have been negated in the hands of the recipient, i.e. Braitrim UK Ltd., by a coordinate bench - as submitted that once the primary liability of the recipient has come to an end, vicarious liability of the payer cannot survive - HELD THAT:- The plea of the learned counsel is indeed well taken. A tax withholding liability, particularly under section 195, is a vicarious liability and its survival entirely depends on survival of the primary tax liability of income, embedded in the related payments, in the hands of the recipient. Once that primary liability stands quashed, as in this case, the very foundation of tax withholding demands under section 195 ceases to hold good in law. We, therefore, quash the impugned demands under section 201(1) r.w.s. 195 as well. The assessee gets the relief accordingly. 2021 (6) TMI 58 Allowance of MAT credit u/s. 115JAA (2A) exclusive on surcharge and education cess resulting in short credit - HELD THAT:- In the case of Srei Infrastructure Finance Ltd. Vs. DCIT, Circle-11(2), Kolkata [ 2016 (8) TMI 967 - CALCUTTA HIGH COURT] has held that MAT credit u/s. 115JA had to be allowed before making addition of surcharge and cess and MAT credit u/s. 115JA brought forward from earlier years is to be set off against tax on total income after taking into account amount of surcharge and cess. ITAT Kolkata in the case of Bhagwati Oxygan Ltd. vs. ACIT [ 2017 (12) TMI 786 - ITAT KOLKATA] held that payment of entire tax including surcharge and cess eligible for MAT credit u/s. 115JB of the Act. It is also observed that assessee has not debited surcharge and cess in the profit and loss account. In the light of the above facts and findings of the various judicial pronouncements as cited supra in this order, we consider that ld. CIT(A) is not justified in disallowing the claim of MAT credit of the assessee pertaining to the surcharge and cess which was already paid by the assessee as part of book profit u/s. 115JB(A) of the Act. Accordingly, this appeal of the assessee is allowed. 2021 (6) TMI 57 Unexplained cash deposits - assessee is having joint account with HDFC Bank - HELD THAT:- As deposits were made in joint account maintained in the names of Marri Venkata Subbareddy being a first holder, the assessee and her mother-in-law Smt.Subbayamma Reddy. In the assessment order, the AO has not given any reason to assess the deposits made in the bank account in the hands of the assessee instead of her mother-in-law Smt. Subbayamma Reddy, though, the assessee has given a letter to the AO stating that the deposits made in joint account belonged to her mother-in-law Smt. Subbayamma Reddy. AO simply brushed aside the explanation and taxed the deposits in the hands of the assessee. When the deposits were made in the joint account the same should be assessed in the hands of correct person after due identification. In the instant case, the assessee furnished the letter but the AO has not made any effort to verify the correctness of the statement made by Smt. Marri Vijaya Lakshmi stating that Smt. Subbayamma Reddy is not an Income-tax assessee. AO is not barred from making assessment in the hands of the person who is not assessed to tax if there is taxable income. Smt. Subbayamma Reddy also did not refuse or reject the statement made by the assessee and therefore we hold that when specifically made out the case that deposits were made by her mother-in-law Smt. Subbayamma Reddy who is the joint account holder, there is no justification to make the addition in the hands of the assessee, hence, we set aside the order of the ld. CIT(A) and delete the addition made by the AO. Even otherwise, the assessee has the furnished cash flow statement explaining the source of the deposits, the cash deposits made by the assessee are supported by the withdrawals made in the account and the department did not bring any evidence to dispute the cash flow statement of the assessee. According to the cash flow statement there was a deficit of ₹ 76000/- only. Since all the joint account holders are the Income-tax assessees, there is no reason to suspect the negative balance of ₹ 76,000/-. Therefore, on merits also, the assessee succeeds. 2021 (6) TMI 56 Revision u/s 263 - unexplained cash credit u/s 68 - loans received by the assessee which were also squared up by the assessee - HELD THAT:- We find that the ld PCIT had assumed revision jurisdiction u/s 263 of the Act on incorrect assumption of fact on the ground that the sum represent loan squared up during the year by the assessee. Whereas, from the aforesaid facts narrated and from the tax audit report submitted by the assessee before the ld AO, which are forming part of the records, we find that the said loan received from Shri Nilesh Patel is not at all squared up during the year. As find from the financial statement as on 31.3.2015 under the head Unsecured Loans, the party Shri Nilesh Patel is shown as outstanding loan payable. As find from paper book containing letter filed before the ld AO in the original assessment proceedings, the complete details of loans received by the assessee, squared up during the year, together with their name and address of the lenders, their PAN, mode of receipt, purpose of loan , their assessment particulars, their income tax returns etc. Admittedly , these details were filed by the assessee after the completion of assessment u/s 144 of the Act on 8.12.2017. Hence it could be safely concluded that these documents were very much available on record when the ld PCIT examined this assessment folder. When all these details were already on record, it is reasonably expected from ld PCIT to look into those details (as already forming part of record) before arriving at any conclusion that whether the said loan from Shri Nilesh Patel was squared up during the year or not. PCIT had totally proceeded on incorrect assumption of fact. Hence we have no hesitation in quashing the revision order passed by the ld PCIT u/s 263 of the Act at once. Accordingly, the grounds raised by the assessee are allowed. 2021 (6) TMI 55 Depreciation on intangible asset being 'Right to collect toll (HOT Assets) - assessee company had claimed depreciation on carriage ways @ 25% by treating the same as intangible assets - AO relying on the CBDT Circular No. 9/2014, dated 23.04.2014, was of the view that the cost of construction incurred by the assessee on infrastructure facility for development of roads/highways under the BOT project may be amortized evenly over the period of the concessionaire agreement after excluding the time taken for creation of such facility - HELD THAT:- The issue as to whether an Infrastructure Development company which had constructed a road on build, operate and transfer (BOT) basis on the land owned by the Central Government would be eligible for claim of depreciation in respect of its intangible rights i.e right to collect toll under Sec. 32(1)(ii), is squarely covered by the aforesaid order of the Special bench of the Tribunal in the case of ACIT, Circle 10(2), Hyderabad, Vs. Progressive Construction Ltd.[ 2017 (3) TMI 1167 - ITAT HYDERABAD] and also the orders of the coordinate benches of the Tribunal viz. (i) DCIT, Circle-9(1)(2),Mumbai Vs. M/s Atlanta Ltd. Mumbai [ 2018 (2) TMI 1514 - ITAT MUMBAI] and (ii) ACIT Vs. M/s PNG Tata Ltd. [ 2019 (8) TMI 347 - ITAT CHENNAI] We, thus, finding ourselves to be in agreement with the view taken by the Tribunal in the aforesaid cases, respectfully follow the same. Accordingly, the claim of the assessee towards depreciation under Sec.32(1)(ii) in respect of its intangible rights i.e right to collect toll , being in conformity with the mandate of law, is found to be in order. We thus not finding favour with the view taken by the CIT(A) therein set aside the same. The Ground of appeal No. 1 is allowed in terms of our aforesaid observations. Disallowance u/s 36(1)(iii) of interest - sufficient self-owned funds and internal accruals to give the advances - HELD THAT:- Admittedly, in case, if an assessee has sufficient interest free funds available with it which would suffice to meet its investments, then, no disallowance of any part of the interest expenditure pertaining to such investments would be called for in its hands. Our aforesaid view is fortified by the judgment of the Hon ble Supreme Court in case of CIT Vs. Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] As is discernible from the order of the CIT(A), we find that it was the inter alia claim of the assessee before him that as the advances in question were given out of its internal accruals and self-owned funds thus, no disallowance under Sec. 36(1)(iii) was liable to be made. However, as the claim of the assessee that it had sufficient self-owned funds and internal accruals to justify the advances given during the year in question is not clearly borne from the records, therefore, in our considered view the matter in all fairness requires to be revisited by the A.O. Accordingly, we herein restore the aforesaid issue to the file of the A.O with a direction to re-adjudicate the same in the backdrop of case of CIT Vs. Reliance Industries Ltd.. In case, the claim of the assessee that it had sufficient self-owned funds and internal accruals to meet out the advances in question is found in order, then, no disallowance of any part of the interest expenditure would be called for under Sec. 36(1)(iii) of the Act.Ground of appeal No. 2 is allowed for statistical purpose. 2021 (6) TMI 54 Addition made on account of revaluation of stock - method of valuation adopted by assessee - HELD THAT:- The closing stock of raw materials and finished goods was reflected at the reduced value which had resulted in increase in loss for the year. We find that the assessee had pleaded that the method of valuation adopted by it was in consonance with Indian Accounting Standard 2 on Inventories issued by the Institute of Chartered Accountants of India (ICAI) which is mandatorily to be followed by the assessee. As brought to the notice of the ld. CIT(A) by the assessee that the same issue had cropped up in assessee s own case for A.Y.2014-15 and the ld. AO had not made any disallowance on account of stock in A.Y.2014-15. We find that assessee has been consistently following the same method of accounting for valuation of inventories in earlier as well as subsequent years. We find that the lower authorities had grossly erred in not understanding the accounting practice followed by the assessee for valuation of inventories which is normally accepting accounting practice prevailing in India. No infirmity in the valuation method adopted by the assessee which has resulted in claim of expenses due to valuation of stock at lower of cost or net realizable value. Accordingly, the grounds raised by the assessee are allowed. 2021 (6) TMI 45 Penalty levied u/s. 271(1)(c) - CIT(A) deleted the penalty levied u/s. 271(1)(c) on the ground that quantum additions/disallowance were deleted by the Hon'ble ITAT - HELD THAT:- On a perusal of the order of the Ld.CIT(A) we do not find any infirmity in the order passed in deleting the penalty since the very basis for levy of penalty i.e. addition made in the assessment proceedings was deleted by the Tribunal and in which case penalty will not survive. Hence the Ld.CIT(A) rightly deleted the penalty. Thus, we confirm the order of the Ld.CIT(A) in deleting the penalty. Ground raised by the Revenue is rejected. Customs 2021 (6) TMI 61 Imposition of Penalty u/s 114(1) of Customs Act, 1962 - Smuggling - Red Sanders - HELD THAT:- The documents filed by Shri Ankit Sharma, the representative of the exporter, the documents were found in order and the goods examined by the examiner. In that circumstance, after examination of the goods and shipping bill, the role of the appellant comes to an end. There is no evidence placed on record with regard to any investigation done with the transporter while transportation of the goods from CFS, Dappar to port of export. As the appellant has no role to play regarding change of goods or export of Red Sandal. Investigation to this effect is silent. In that circumstance, the benefit of doubt goes in favour of the appellant. Therefore, no penalty can be imposed on the appellant without bringing any evidence on record. Appeal allowed - decided in favor of appellant. Corporate Laws 2021 (6) TMI 64 Seeking to place before this Tribunal the proposed sale of equity shares of non-Applicant Group companies which are listed on stock exchanges in India - Oppression and Mismanagement - Sections 241 and 242 of the Companies Act, 2013 - HELD THAT:- The Respondent has not made any objection to the Application. It is submitted that the relief sought is in the interest of the selling companies and their stakeholders. Considering the facts and circumstances of the case the proposed sale of shares as mentioned in Para 14 above held by IFIN and IMICL can be taken on record in accordance with the approval of Hon ble Justice Mr. D. K. Jain (Retd.) dated 12/12/2019. The selling entities can be permitted to consummate the sale of the listed shares. The Application be and the same is allowed. 2021 (6) TMI 63 Approval of scheme of amalgamation - section 230-232 of Companies Act - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled, petition is made absolute in terms of prayer clauses (a) to (c) of the Company Petition. Petition allowed. 2021 (6) TMI 53 Seeking restoration of name of company in the Register of ROC - Section 252 of the Companies Act, 2013 - HELD THAT:- The provisions of Section 252 of the Companies Act, 2013 and more particularly the 'just' ground as envisaged under Sub-section (3) of Section 252 of the Companies Act, the restoration of the name of the Applicant Company in the register maintained by the Respondent is allowed, subject to the directions imposed - application allowed. Insolvency & Bankruptcy 2021 (6) TMI 72 Levy of Maintenance Security Deposit in respect of the property which was e-Auctioned by the Liquidator - Section 61(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Appellant had participated only in the 5th Auction and therefore the question of whether the MSD charges were raised in the previous Auctions or not, is irrelevant. The draft Letter of intent and the Process Memorandum dated 21.04.2020 clearly stipulates that an amount of ₹ 6 Lakhs (approximately) towards interest bearing Maintenance Security Deposit with DLF (towards Maintenance Deposit) is to be paid and would be a part of the asset of the successful bidder. The Process Memorandum issued by the Liquidator evidences the same in Clause 14(III) and therefore the stand of the Appellant that Clause 5 of the Letter of intent should be redrafted making the MSD a part of the total bid amount of ₹ 130 Lakhs cannot be justified. Having bid, paid the EMD and gone through the Process Memorandum and terms of LoI, the Appellant herein has exercised their choice of being a successful bidder and now cannot turn around and state that ₹ 6 Lakh amount to be paid towards statutory dues cannot be fastened upon them - Taking into consideration the current Covid situation and the facts and circumstances of the case, the Liquidator shall accept the balance sale consideration of ₹ 120 Lakhs + ₹ 6 Lakhs (MSD) without charging any interest provided the amount is deposited in the account of the Corporate Debtor within 10 days from the date of receipt of a copy of this Order. The other directions with respect to Title deeds and documents, issued by the Learned Adjudicating Authority in the Impugned Order stand confined. There are no illegality or infirmity in the Impugned Order passed by the Learned Adjudicating Authority - appeal dismissed. 2021 (6) TMI 52 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The CD has not raised any dispute over quality or quantity of goods supplied by the OC. It is reiterated that the CD vide letter dated 09.06.2018 has acknowledged its liability to pay the outstanding dues of OC. Materials were supplied, invoices were raised and no dispute in respect of material supplied has been raised by CD. The applicant has placed sufficient evidence in support of its claim. Going by the above details, the OC has clearly established the existence of debt and default on the part of the CD. The petition is within limitation period. The present application deserves to be admitted. Hence, the present application is admitted initiating CIRP on the CD, with immediate effect - Moratorium declared. 2021 (6) TMI 51 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:- The demand notice, invoices filed by the Operational Creditor, the detail of which is given under Para IV of the Petition, compliance with the requirements of Section 9(3)(b) and (c), and the report filed by the Independent Chartered Accountant, clearly established that the Corporate Debtor has defaulted in making the payments of the debt due to the Operational Creditor. Thus, the application is admitted, and the commencement of the CIRP is ordered against the corporate debtor viz., M/Hemam Engineering Industries Ltd, which ordinarily shall be completed within 180 days, reckoning from the day this Order is passed. Application admitted - moratorium declared. 2021 (6) TMI 50 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - HELD THAT:- There has been no admission of operational debt by the respondent. In fact, there has been a dispute regarding the quality of the goods being supplied by the applicant and in furtherance to which the overseas client raised concern about the same and said that they will not be liable to make repyment as the goods supplied are not of any use. There was existence of dispute much prior to the issuance of notice under Section 8 of the Code. Respondent has raised the dispute with sufficient particulars. The amount of claim raised by the applicant clearly falls within the ambit of disputed claim. The claim of dispute suggests the need of elaborate investigation. In the facts it is reiterated that existence of genuine dispute in the present case cannot be ruled out - As per Section 9 (5) (ii) (d) of the Code provides that adjudicating authority shall reject the application if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. This petition fails and the same is rejected. 2021 (6) TMI 49 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- There has been no admission of operational debt by the respondent. In fact, there has been a dispute regarding the approval of rates and bill as issued by the operational creditor against the Corporate Debtor. Further the corporate debtor on 14.12.2019 vide an email already intimated the applicant regarding the approval of the rates which are not matching with those as originally approved which clearly shows that the invoices were not acknowledge by the Corporate Debtor. There was existence of dispute much prior to the issuance of notice under Section 8 of the Code. Respondent has raised dispute with sufficient particulars. The amount of claim raised by the applicant clearly falls within the ambit of disputed claim. The claim of dispute suggests the need of elaborate investigation. In the facts it is reiterated that existence of genuine dispute in the present case cannot be ruled out. As per Section 9 (5) (ii) (d) of the Code provides that adjudicating authority shall reject the application if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility - petition fails and the same is rejected. 2021 (6) TMI 48 Seeking substitution of the proposed Interim Resolution Professional - proposed Interim Resolution Professional shows reluctance due to COVID-19 and weak immune system - It is deposed by the Interim Resolution Professional that there are no disciplinary proceedings pending against him with the Board or ICSI Institute of Insolvency Professionals - HELD THAT:- The instant application is allowed and the name of the earlier proposed Interim Resolution Professional Mr. Sameer Rastogi be substituted with Mr. Vekas Kumar Garg . Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt or not - service of demand notice - HELD THAT:- An affidavit dated 29.03.2019 (Annexure A-10) has been furnished by the petitioner stating that no reply to demand notice has been received nor any notice of dispute has been received by Operational Creditor. The demand notice in Form No. 3/4 was properly delivered by the Operational Creditor and no pre-existing dispute is proved. It has been shown that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. It is also observed that the conditions under Section 9 of the Code stand satisfied. The petitioner-operational creditor states that from the above mentioned facts it is clear that the liability of the respondent-corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is more than ₹ 1 lakh by the respondent-corporate debtor. Application admitted - moratorium declared. 2021 (6) TMI 47 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It is evident that the respondent has not adhered to the terms and conditions of the order and has raised the issue of quality/specifications of the product as a moonshine defence for not paying the operational debt. Had there been any serious issue with regard to specification/quality of the product supplied by the applicant, the respondent could have returned the product immediately on receipt of certificate of analysis dated 09.05.2019 and 18.05.2019. The instant petition filed by the applicant is well within limitation and there is no pre-existing dispute regarding the operational debt from the side of the corporate debtor - from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt due and payable to the Applicant. The documents produced by the operational creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'operational debt' - Petition admitted - moratorium declared. 2021 (6) TMI 46 Publication of Invitation for Expression of Interest - forbearance from functioning as Resolution Professional in respect of the 3rd Respondent M/s. Kamachi Industries Limited. - Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 r/w Rule 11 of the National Company Law Tribunal Rules, 2016 and Regulation 40A C of the Insolvency And Bankruptcy Board of India (Insolvency Resolution Process For Corporate Persons) Regulations, 2016 - HELD THAT:- In relation to the timelines as fixed by the IBC, 2016 primarily under Section 12 of the IBC, 2016, the Hon'ble Apex Court in the judgement of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT ] had an occasion to consider in light of the amendment made to Section 12 of IBC, 2016 by virtue of Insolvency Bankruptcy Code (Amendment Act), 2019 with effect from 16.08.2019 as to whether 330 days period is mandatory or directory. It is also required to be seen that in the present instance, apart from the delay arising out of any litigation, the nation itself is confronted with a pandemic and in the circumstances the applicability of timelines which had been fixed under Regulation 40A for the completion of the CIR Process by IBBI, the Regulation itself had chosen to exclude from CIR Process the timelines in the wake of COVID-19 under Regulation 40C - it is seen that the outer limit of 330 days has not been completed (i.e.,) at the time when this Application had been moved before this Tribunal. It is also required to be seen that even as per the submission of the Ld. Senior Counsel for the Applicant, the nation is facing an extraordinary situation due to COVID-19 pandemic and a sporadic lockdown is being imposed by the Central Government as well as the State Government which in effect cripples the functioning of RP during the CIRP in a seamless manner. In relation to the claim of the Applicant that because of the overshooting of the timeline and in the circumstances as to whether the CIR Process would become a nullity and that the CIRP is required to be suspended, the Hon'ble NCLAT in the matter of Committee of Creditors of Rosewood Trexim Pvt. Ltd. Through Resolution Professional in Company Appeal (AT) (Insolvency) No. 1066 of 2020 has held that the CoC which was in existence at the time when the lockdown came into force as a sequel to the outbreak of COVID-19 declared as pandemic resulting in all activities related to trade and commerce business reaching to a grinding halt, CoC as an institution cannot be said to have got dissolved, more so, when taking factors of the pandemic into consideration and also in exercise of suo-moto jurisdiction of the Hon'ble Apex Court and the Hon'ble NCLAT wherein the limitation stood excluded - the CoC would not be deemed to have been dissolved at least for the purposes of passing of a resolution seeking exclusion of lockdown period and extension of the CIRP period beyond the prescribed time of 180 days and also allowed exclusion of 203 days due to COVID-19 pandemic has also granted extension of the CIRP period by 90 days. This Application stands dismissed. 2021 (6) TMI 44 Liquidation of the Corporate Debtor - Exclusion of time spent in the scheme process - Section 60 (5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Scheme of the appellant before Hon'ble NCLAT i.e. MEPL received only 50.37 % as against the requirement of seventy five percent of secured creditors, in meeting held on 26.2.2020. The lockdown has commenced only on 25.03.2020 till date we have no, received any objections or challenges regarding the process and outcome under Section 230 of the Companies Act, 2013. The Hon'ble NLCLAT in order dated 01.07.2019 has said not inclined to interfere with the impugned order(s) of liquidation dated 06.12.2018. Hence, we have no option left but to permit applicant to proceeds with the liquidation as per the Order of Adjudicating Authority dated 06.12.2018 and 03.01.2019 - the liquidator shall proceed with the liquidation process of the Corporate Debtor as per order dated 06.12.2018 and 03.01.2019, in accordance with rules and in terms of Regulation of the IBBI (Liquidation Process) Regulations, 2016. Exclusion of time spent in the scheme process - HELD THAT:- Regulation 2B(2) of the Liquidation Process Regulations provides for exclusion of time taken with respect to compromise or arrangement, in computation of the liquidation period. It also prescribes a period of only ninety days, counted from the liquidation commencement date, for the completion of the process. As Regulation 2B was introduced pursuant to the Amendment Regulations, its provisions are admittedly inapplicable to the present case - order of liquidation was dated 06.12.2018. Hence, as per the time frame, the liquation period is two years, the liquidation ought to be completed on or before 05.12.2020. Since the country has been under pandemic period due to covid 19 and resultant lockdown of the nation'' the time frames have been excluded since 25th march, 2020. The liquidation can be completed well within the time frames. The loss of 367 days in litigation will not impact the time frames for completion of the liquidation process. Further, the lock down has not been full lifted. Hence, there are ample time on the hands of the liquidator to diligently complete the process of liquidation. Application disposed off. Central Excise 2021 (6) TMI 62 Area-based exemption - Capital goods - exempt goods - N/N. 49/2003-CE dated 10.6.2003 - HELD THAT:- The credit is available to the assessee on capital goods in terms of Rule 3 of Cenvet Credit Rules, 2004 if the said goods used in the manufacture of dutiable goods. However, these capital goods have been used for manufacture of dutiable goods, in that circumstance, the assessee is entitled to take credit. Admittedly, the facts are not in dispute that these goods have been installed during the period November, 2015 to March, 2016, the appellant opted out of area based exemption which clearly indicates that the appellant used capital goods for manufacture of dutiable goods. It is admitted fact that the goods have been used by the manufacture of dutiable goods, therefore, in terms of Rule 3 of the Cenvet Credit Rule,2004 the appellant is entitled to avail credit - Appeal allowed. 2021 (6) TMI 60 Reversal of CENVAT Credit - value of service in case of trading - proportionate amount of CENVAT credit of common input services attributable to the exempted services is reversed - HELD THAT:- Undisputedly, trading is a form of service and no service tax is leviable on it and hence it is an exempted service. Usually the amount one pays to a service provider is the value of the services. For example, what one pays a doctor, dentist, lawyer, hair dresser, etc. represents the value of their services. Unlike other services, the amount transacted in trading represent not only the service rendered by trader but also the value of the goods delivered. The service element cannot be the total turnover of the goods traded but is only a small fraction of the turnover. This turnover represents the value of the goods plus the value of the service rendered by the trader - Explanation I(c) to this Rule for both the relevant periods (2015-16 and April 2016 to June 2017) clearly specifies that in case of trading service, the value of the service is the difference between the buying and selling price or 10% of the traded goods whichever is higher. The adjudicating authority erred in not taking this Explanation into account while calculating the amount required to be reversed as per Rule 6(3A) and reckoning the total trading turnover as the value of the exempted services rendered. Whether only the CENVAT credit taken on common input service should be considered or the entire CENVAT credit taken should be considered for calculating the proportionate amount of CENVAT to be reversed as per Rule 6(3A)? - HELD THAT:- The appellant has taken no credit on inputs or input services used exclusively for exempted services and had taken credit only on the inputs and input services used in manufacture of dutiable goods. The only dispute is regarding the credit on common input services used in their headquarters which was transferred to the field units through ISD invoices. This credit cannot be attributed wholly to either the dutiable goods manufactured or the exempted service rendered viz., trading. This should therefore, be apportioned. Since the appellant has followed Rule 6(2) and has not taken any CENVAT credit on the input services which were used exclusively for providing exempted services, the formula under Rule 6(3A) can only be used to only proportionately divide the credit taken on common input services and deny credit to the extent it is attributable to the exempted service viz., trading during the periods relevant to both appeals, viz., 2015-16 and April 2016 to June 2017 - the main basis on which the demands were raised in both the Show Cause Notices have already been dropped by the adjudicating authority since the appellant had reversed proportionate amount of credit. Only the computation of the amount to be reversed is in dispute. The impugned orders cannot be sustained - Appeal allowed - decided in favor of appellant.
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