TMI Tax Updates - e-Newsletter
July 15, 2020
Case Laws in this Newsletter:
GST
Income Tax
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Levy of IGST or SGST & CGST - rate of gst - Fixing of Air conditioner & VRV system in Goa for a client (Recipient) registered outside Goa but not registered in Goa - For classification of any supply as Interstate Supply or Intra State Supply, two ingredients are relied upon and these are location of the supplier and place of supply. - The nature of supply made by the applicant is to be treated as a supply of goods in the course of interstate trade or commerce and tax is to be charged accordingly.
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GST:
Profiteering - sale of Flat - allegation that the benefit of input tax credit not passed on - contravention of section 171 of CGST Act - This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats of the above Project commensurate with the benefit of ITC received by him.
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GST:
Classification of goods - Hand Sanitizers - Hand Sanitizers manufactured by the applicant are of the category of Alcobased hand sanitizers and are classifiable under heading 3808 of HSN to which rate of GST applicable is 18%. - Merely classifying any goods as essential commodity will not be the criteria for exempting such Goods from GST.
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Income Tax:
Revision u/s 263 - the head of assessee’s income derived from its holiday homes i.e. whether it is income from house property as per the PCIT, business income going by the AO in assessment and the CIT(A) and the residuary had of “other” sources in its computation; respectively, is purely a debatable issue. - Assumption of jurisdiction u/s 263 is not proper.
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Income Tax:
Reopening of assessment u/s 147 - Deduction u/s 80IB(10) - built-up area of some of the residential units in the project was more than the prescribed area of 1000 sq. ft - the reopening of the case before us was carried out on the basis of fresh “tangible material” which clearly established that the A.O had a ‘reason to believe’ that the income of the assessee chargeable to tax had escaped assessment.
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Income Tax:
Disallowance of interest u/s 36(1)(iii) - the assessee has successfully demonstrated that the investment in shares to subsidiary company was in furtherance of main objects of its business and, therefore, the assessee is very much entitled for claim of interest paid on borrowed capital.
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Income Tax:
Revision u/s 263 - Capital gain computation - On both the issues i.e (i). applicability of sec. 50C to the transfer transaction under consideration; and (ii). verification of cost of acquisition/improvement of the property in question, which had been adopted by the A.O as the A.O had failed to make necessary inquiries and verifications, therefore, the Pr. CIT in our considered view had rightly exercised his revisional jurisdiction u/s 263 of the Act.
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Income Tax:
Reopening u/s 148 - Unexplained cash credit u/s 68 - AO has not mentioned whether the amount is on account of share capital or loans or expenses. - Addition has been made without specifying as to the nature of the amounts and also without examining the credits in the books of the assessee - Additions deleted.
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IBC:
Seeking exit from CIRP Process - Respondent No. 2 had arrived at a Settlement with the 'Corporate Debtor' - the factum of Respondents having inter se arrived at a Settlement prior to passing of the impugned order and constitution of the 'Committee of Creditors' is nothing but a ploy designed to defeat the legitimate interests of other stakeholders. This factual position is clearly borne out by the sequence of events unfolded by record. - Public interest would not warrant such course to be adopted.
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IBC:
Disciplinary proceedings against the IP - Contravention of provisions of the Code, Regulations, and directions issued thereunder by IP - The registration as an Insolvency Professional suspended for six months - The DC hereby directs the IP to secure reimbursement of an amount of ₹ 73,87,642/- which was paid to lender"s legal counsel (SAM) and charged to IRPC.
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Service Tax:
Rectification of mistake - typographical order - The mistake as alleged is not at all self evident, hence cannot be called as error apparent on record. As for as the plea of cum-tax-benefit is concerned, the plea has not been raised in grounds of appeal. The allegation that the same was not considered by this Tribunal despite been submitted is, therefore, not sustainable.
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Service Tax:
Condonation of delay in filing appeal - In the present case, Commissioner (Appeals) has not passed any order of confirming any demand against the dead person. The Order was squarely on the ground of limitation. The same has been upheld by this Tribunal only because of the statutory mandate upon the Commissioner (Appeals) to not to condone the delay beyond three months - Application for COD dismissed.
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Central Excise:
SSI Exemption - clubbing of clearances - Two independent companies within same complex (factory premises) and common shareholders / directors / management - The clearance of the appellant unit and M/s. NAPL cannot be clubbed. If the clearances of the appellant are to be clubbed with M/s.NAPL then the duty is required to be demanded from M/s.NAPL, which is not the case here
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VAT:
Levy of cost of ₹ 50,000 on the petitioner / Deputy Commissioner - Passing a whimsical order against the assessee - there are no reasonable justification to hold that the petitioner had passed a whimsical order and that it suffered from malice in fact and in law. These observations were unnecessary for the adjudication of the merits of the dispute raised by the assessee. The conduct of the petitioner was not in question. - Order modified.
Articles
Notifications
News
Case Laws:
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GST
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2020 (7) TMI 310
Maintainability of appeal - appealable order or not - Detention of goods alongwith vehicle - Section 129 (3) of the U.P. G.S.T. Act and C.G.S.T. Act, 2017/ Section 20 of the IGST Act, 2017 - HELD THAT:- The instant petition has been filed bye-passing the remedy of appeal under Section 112 of the Act on the ground that the appellate tribunal has not been constituted till date.
It has been pointed out by learned standing counsel that the Government, having regard to the difficulty faced by the assessees in filing appeal on account of non-constitution of the Tribunal and its Benches in various States and Union Territories, has issued Central Goods and Service Tax (Ninth Removal of Difficulties) Order, 2019 notified in the Gazette of India dated 3rd December, 2019 stipulating that in such a situation, the three months' period shall be considered to be the date on which the President or the State President, as the case may be, of the Appellate Tribunal after its constitution under Section 109, enters office - Learned counsel for the petitioner very fairly admits the above legal position and also the fact that the goods have already been released.
The instant petition is disposed of by providing that the petitioner can invoke the remedy of filing appeal before the Tribunal in terms of the provisions of the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019.
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2020 (7) TMI 309
Profiteering - sale of Flat - allegation that the benefit of input tax credit not passed on - contravention of section 171 of CGST Act - penalty - HELD THAT:- the Respondent has passed on benefit of ₹ 28,22,65,749/- to the home buyers on account of ITC which has been duly confirmed by the DGAP. Therefore, the Respondent is directed to pass on the balance benefit of ITC of ₹ 1,04,77,604/-in case of 908 residential flat buyers including the Applicant No. 1, mentioned at Sr. 1 & 2 of Table-G. as per Annexure-15 of the DGAP’s Report dated 10.12.2019. The details of the profiteered amount and the buyers have been mentioned by the DGAP in the above Annexure. These buyers are identifiable as per the documents placed on record and therefore, the Respondent is directed to pass on an amount of ₹ 1,04,23,791/- and the amount of ₹ 53,813/- to the other flat buyers and the Applicant No. 1 respectively along with the interest @ 18% per annum from the dates from which the above amount was collected by him from them till the payment is made, within a period of 3 months from the date of passing of this order as per the details mentioned in Annexure-15 attached with the Report dated 10.12.2019 in terms of Rule 133 (3) (b) of the above Rules. The Respondent shall not adjust any excess ITC benefit which he has passed on as per Annexure-16 against the benefit which is due to the beneficiaries as per Annexure-15. In case the above amount is not refunded by the Respondent during the above period it shall be recovered by the concerned Commissioner CGST/CGST and paid to the eligible buyers.
This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats of the above Project commensurate with the benefit of ITC received by him, Since the present investigation is only up to 31.03.2019 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent Accordingly, the DGAP under 133 (4) of the CGST Rules, 2017 is directed to further investigate the amount of benefit which is required to be passed on by the Respondent w.e.f. 01.042019 till 30.06.2020 or till the date of issue of Completion Certificate whichever is earlier.
Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his above project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence, he has committed an offence under Section 171 (3A} of the CGST Act, 2017 and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A} of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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2020 (7) TMI 311
Maintainability of Advance Ruling application - scope of Advance Ruling - Levy of IGST or SGST & CGST - rate of gst - Fixing of Air conditioner & VRV system in Goa for a client (Recipient) registered outside Goa but not registered in Goa - Suppling of Air conditioner to client (Recipient) registered outside Goa but not registered in Goa consisting of Air conditioner (28%) Copper pipe, Drain pipe, Electric cable etc (18%) and fixing rate (18%) - Supplying of Air conditioner (28%) for residential house in Goa consisting of in case require additional item Copper pipe, Drain pipe, Electric cable etc (18%) and fixing rate (18%) - installation of Air conditioner (28%) can be done by sister concern or Third party to client based in Goa or Outside Goa @ (18%) GST for fixing - composite Dealer raise Service Bill for Fixing of Air Conditioner - stabilizer may or may not be sold with Air conditioner what is the Rate of GST Applicable on Stabilizer (18%) when it is Attached / Supplied with Air conditioner (28%) - Centralized Air Conditioning Systems. For (works contract) Rate of GST on Split Air Conditioning System fixed in room. And Rate of GST on movable Air conditioning System. Client Registered in Goa or Client registered outside Goa.
HELD THAT:- This authority is of the view that, issues raised by the applicant are not covered by section 97(2) of the GST Act on which Advance Ruling can be sought. Only one issue could be dealt by this authority for issuing Ruling and that is whether supply made by applicant from Goa on behalf of third person who is not in the taxable territory of Goa to a place in Goa is to be taxed as Interstate Supply or Intra State Supply - For classification of any supply as Interstate Supply or Intra State Supply, two ingredients are relied upon and these are location of the supplier and place of supply. In the instant case, as said by the applicant, location of the supplier is Goa, place of supply will be outside Goa as per section 10(1)(b) of the IGST Act since, goods are supplied on behalf of a registered person outside Goa to a place in Goa.
The nature of supply made by the applicant is to be treated as a supply of goods in the course of interstate trade or commerce and tax is to be charged accordingly.
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2020 (7) TMI 304
Classification of goods - Hand Sanitizers - whether covered under HSN 30049087 or not - rate of GST - HELD THAT:- Hand Sanitizers manufactured by the applicant are of the category of Alcobased hand sanitizers and are classifiable under heading 3808 of HSN to which rate of GST applicable is 18%.
Exemption form GST - HELD THAT:- As far as exempting hand sanitizers as essential commodity since it is classified as such by Ministry of Consumer Affairs, Food and Public Distribution, this Authority is of the view that Exempted goods are covered by Notification no.2 /2017/- Central Tax (Rate) dated 28/06/2017. Merely classifying any goods as essential commodity will not be the criteria for exempting such Goods from GST.
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Income Tax
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2020 (7) TMI 308
Revision u/s 263 - Directions for assessee's income derived from holiday homes under its ownership has to be assessed as income from house property and that from the other holiday homes is to be treated as income from “other” sources - HELD THAT:- We find no reason to sustain the PCIT’s foregoing stand that the assessee's income derived from its holiday homes has to be bifurcated on ownership basis (supra).
CIT(DR) fails to dispute that the AO had very examined the very issue and assessed the assessee’s income from the said holiday homes under the business head than that claimed as income from other sources - PCIT’s observations that the assessee could not demonstrate that “the income from holiday homes as disclosed by it was in any manner whatsoever was examined” during assessment; turns out to be factually incorrect since the AO had not only carried out necessary enquiries but also he changed the head of its income from “other sources” to business
Hon’ble Delhi high court in ITO vs. D.G. Housing Projects Ltd. [2012 (3) TMI 227 - DELHI HIGH COURT] hold that the twin limbs of no enquiry or inadequate enquiry and an erroneous decision by the assessing authority stand on a different footing and the CIT cannot simply remand the issue back for afresh assessment qua the latter.
Issue of the assessment of assessee's income derived from holiday homes claimed as income from other sources in the computation but held as income from business during assessment in subsequent AY 2015-16; stands decided in its favour in the CIT(A)'s order much prior to the PCIT's issuing Section 263 show cause notice dated 11.04.2018. This tribunal’s decision in the Kolkata Reserve Bank Employees Co-operative Credit Society Ltd. [2018 (3) TMI 1825 - ITAT KOLKATA] holds that such an income from holiday homes is not eligible for Section 80P(2)(i) deduction being not business income.
It is crystal clear therefore that the head of assessee’s income derived from its holiday homes i.e. whether it is income from house property as per the PCIT, business income going by the AO in assessment and the CIT(A) and the residuary had of “other” sources in its computation; respectively, is purely a debatable issue. It thus could not be held that that the Assessing Officer’s action sought to be revised as erroneous and causing prejudice to interest of the Revenue.
In landmark decision in Malabar Industrial Co. Ltd. vs. CIT [2000 (2) TMI 10 - SUPREME COURT] holds that both these conditions need to simultaneously exist before Section 263 revision is set in motion. PCIT’s action under challenge is not sustainable since the AO had taken one of the possible views only in this factual backdrop. It is reversed therefore. AO’s regular assessment dated 03.06.2016 is restored as a necessary corollary. - Decided in favour of assessee.
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2020 (7) TMI 307
TDS u/s 195 - order passed u/s 201(1A) on failure pay the TDS deducted on royalty payments - Time barred proceedings - CIT(A) has invoked Section 201(3)(ii) and holds that the assessee's impugned default had been committed in FY 2002-03 and the AO's notice stood issued on 03.04.2009, the proceedings initiated herein are barred by limitation since instituted beyond a period of six years from the end of the relevant financial year - HELD THAT:- This is very very fair in stating that the assessee herein is not an Indian resident so as to be covered under the foregoing statutory provision describing limitation in initiation of the impugned proceedings. We therefore reverse the CIT(A)'s action holding the impugned proceedings as time barred. Assessing Officer's order dated 10.06.2009 stands restored as a necessary corollary. Revenue's appeal is allowed.
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2020 (7) TMI 306
Reopening of assessment u/s 147 - Deduction u/s 80IB(10) - HELD THAT:- AO held a bona fide belief that as the assessee had contravened the provisions of Sec. 80IB(10)(a)(iii), it was thus not entitled for claim of deduction u/s 80IB; and the A.O on the basis of verifications carried out in the course of the assessment proceedings for A.Y 2012-13, had gathered, that the built-up area of some of the residential units in the project viz.”Adityavardhan” was more than the prescribed area of 1000 sq. ft, which being in contravention of the norms prescribed in Sec. 80IB(10)(c) rendered the assessee ineligible for claim of deduction under the said statutory provision.
Accordingly, the reopening of the case before us was carried out on the basis of fresh “tangible material” which clearly established that the A.O had a ‘reason to believe’ that the income of the assessee chargeable to tax had escaped assessment. As such, the facts involved in the aforesaid case being distinguishable as against those in the case before us, would thus not assist the case of the assessee.
No infirmity in the assumption of jurisdiction by the A.O u/s 147 of the Act, and are thus not inclined to subscribe to the claim of the ld. A.R that the concluded assessment in the case of the assessee had been reopened on a mere ‘change of opinion’. As such, holding a conviction that the A.O had rightly assumed jurisdiction and reopened the case of the assessee u/s 147 of the Act, we uphold the same to the said extent. Grounds of appeal Nos. 1 & 2 are dismissed.
Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings - HELD THAT:- Assessee was obligated to complete the construction of the housing project as per the approved plan and comply with the I.O.D conditions, and by no means could be permitted to construe the completion of the construction of buildings as completion of the housing project.
Assessee at the time of approval of its plan was well conversant of the fact that on the South side of the plot of land where the road was to be constructed there was a hill on which there was a pylon i.e a tower for transmission of electricity of Tata Electric Company. Now when the assessee at the time of getting its plan approved was well aware of the existence of a pylon i.e a tower for transmission of electricity of Tata Electric Company on the south side of the plot where it had agreed to construct a 18.30 mt wide D.P Road, it could not thereafter be allowed to plead impossibility of performance of the said act. Be that as it may, in the backdrop of our aforesaid observations, we are of a strong conviction that as the assessee had failed to complete the construction of the housing project within the prescribed time limit envisaged in Sec. 80IB(10)(a)(iii) of the Act, therefore, the A.O had rightly declined its claim for deduction u/s 80IB(10) of the Act .
“Explanation (ii)” to Sec. 80IB(10) contemplates that the date of completion of construction of the housing project has to be taken as the date on which the completion certificate in respect of such housing project is issued by the local authority. At this stage, we may herein observe that the importance of the “Explanation (ii)” to Sec. 80IB(10) cannot be undermined for the purpose of construing the scope and gamut of the said statutory provision. Our said conviction is fortified by the judgment of the Hon’ble Apex Court in the case of Dilip Kumar [2018 (7) TMI 1826 - SUPREME COURT] wherein it was observed that an “Explanation” to a statutory provision is inter alia an internal aid for construing the same. In the backdrop of our aforesaid observations, we are of the considered view that the assessee had failed to show as to how its case comes squarely within the realm of the deduction contemplated u/s 80IB(10) of the Act. Accordingly, in our considered view, the A.O had rightly concluded that de hors satisfaction of the conditions contemplated in Sec. 80IB(10) of the Act, the assessee was not entitled for claim of deduction under the said statutory provision. We thus not finding favour with the order of the CIT(A), to the extent he had concluded that the assessee had satisfied the conditions contemplated in Sec. 80IB(10) of the Act, ‘set aside’ his order. The Grounds of appeal No. 1 & 4 raised by the revenue are allowed.
“Built-up area” used in Sec. 80IB(10)(c) - HELD THAT:- Clause (a) was inserted in Section 80IB(14) defining the words “built-up area” to mean the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls, but did not include the common areas shared with other residential units. In our considered view, if the assessee in the case before us had de facto provided the exclusive possession/enjoyment of the “dry balcony” attached with a flat to the purchaser of the said flat (as advertised by it in its brochures), then the same will have to be included while computing the “built-up area” of such flat, failing which the very purpose of the definition of the said term in Sec. 80IB(14)(a) would be rendered as otiose. But then, in the absence of the correct factual position the aforesaid issue before us cannot be adjudicated. We thus in all fairness restore the issue to the file of the A.O for fresh adjudication. In case, the flat purchaser is de facto in exclusive possession/enjoyment of the “dry balcony” attached with the flat, then the area of the same shall be included while computing the “built-up area” of such flat. However, if such projection is either in the nature of a service projection to be used for servicing the building or carrying out repairs of the building, or a common area shared with the other residential units, then the same would not be included in the “built-up area” of the flat.Ground of appeal No. 2 filed by the revenue is allowed for statistical purposes.
Deduction u/s 80IB(10) - flats which were less than 1000 sq. feet in size, when the provisions of the said section allow deduction only upon completion of the entire project and not on part project or on part fulfillment of the requirements stated in the said section, we are afraid does not find favor with us - HELD THAT:- We have perused the order of the CIT(A) and concur with his view that the A.O had failed to point out any arrangement of business between the assessee and any other person with whom he had close relations, which had resulted into generation of excessive profits within the meaning of Sec. 80IB(10) of the Act.
Also, the claim of the assessee that as the land was purchased way back in the year 2004/2005, therefore, the excess profit was attributable to the steep rise in the price of land in the year in which the flats were sold, had also not been taken cognizance of by the A.O in the course of the assessment proceedings. In our considered view, the CIT(A) has rightly concluded that a high GP rate cannot be a sole decisive factor for declining an assessee’s claim of deduction u/s 80IB(10) of the Act. We thus not finding any infirmity in the view taken by the CIT((A) in context of the issue under consideration uphold his observations to the said extent. Ground of appeal No. 3 raised by the revenue is dismissed.
Construing of the term “built-up area” - HELD THAT:- As in year under consideration, in A.Y 2011-12 also the CIT(A) had found favour with the claim of the assessee that the area of “dry balcony” was not to be included while calculating the “built-up area” of the flats in the assessee’s project. As such, on the basis of his said observations, the CIT(A) while disposing off the appeal for A.Y 2011-12, had concluded, that the area of all the residential units was well within the prescribed limit of 1000 sq.ft. As we have after exhaustive deliberations not found favour with the manner as per which the CIT(A) had construed the term “built-up area” which stands defined in Sec. 80IB(14)(a), therefore, with specific directions we have restored the matter to the file of the A.O for fresh adjudication. Accordingly, we are of the considered view that on the same terms the matter in the present appeal also requires to be restored to the file of the A.O, who is directed to adjudicate the issue afresh considering our observations/directions recorded while disposing off the Grounds of appeal Nos. 2 & 5.
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2020 (7) TMI 305
Depreciation on ‘Content Management Software’ (‘CM Software’) u/s 32 @12.5% - Disallowance of depreciation claimed on ‘webmaster software for which the appellant failed to satisfy the test of ownership for claiming depreciation - alternatively, the expenditure be allowed as Revenue expenditure u/s 37(1) - HELD THAT:- Assessee has given the description of the software, its functionality which was also submitted before the CIT(A) - From the details and the submissions it is the assessee’s contention that the CMS Software has been developed by it, owned by it and it is used for the purpose of business by updating and managing the Income Tax Act and the other Acts and Rules published by assessee each year. The contention of the assessee of having owning the CMS software by it has not been controverted by the Revenue - incurring of expenditure on its development has also not been disputed by the Revenue. Before us the Ld AR has also pointed out the the software apart from being mainly used by the assessee for its own business is also being used by it to upgrade the website of the Income tax Department. These contentions of the Ld AR has not been controverted by Revenue by placing any material on record.
Claim of depreciation made by the assessee in the subsequent year has not been disturbed by the Revenue.
Thus we are of the view that the AO was not justified in denying the claim of depreciation u/s 32 - alternate claim of allowing the entire expenditure u/s 37(1) is rendered academic and therefore, not adjudicated. - Decided in favour of assessee.
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2020 (7) TMI 303
Disallowance of interest u/s 36(1)(iii) - Investment in the share capital of subsidiary company - HELD THAT:- The undisputed fact is that this is not the first year of business of the assessee. It is also not in dispute that the subsidiary companies of the assessee are also engaged in the same business of production, generation, transmission and distribution and supply of electricity.
The facts of the case in hand are on stronger footing in as much as in the case in hand, the appellant did not advance any loan to its subsidiaries but has invested in the shares of subsidiary companies. As mentioned elsewhere, subsidiary companies of the appellant are engaged in the same business as that of the assessee which is also evident from the main object clause in the Memorandum of Association. See SA BUILDERS LTD.[2006 (12) TMI 82 - SUPREME COURT]
Adverting to the facts of the case in hand, the assessee has successfully demonstrated that the investment in shares to subsidiary company was in furtherance of main objects of its business and, therefore, in our considered view, the assessee is very much entitled for claim of interest paid on borrowed capital. We, accordingly, set aside the findings of the CIT(A) and direct the Assessing Officer to delete the addition. - Decided in favour of assessee.
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2020 (7) TMI 302
Revision u/s 263 - Capital gain computation - A.O had failed to appreciate that as the assessee had sold the property for a sale consideration which was less than the value assessed by the stamp valuation authority therefore, the provisions of section 50C were applicable and A.O had erred in failing to verify that now when the assessee for computing the indexed cost of acquisition/improvement had included interest paid on borrowed funds that were utilized for construction of property, therefore, whether the same was claimed by the assessee as an expenditure under any head viz. “business income” or “Income from house property” in the previous assessment years, and if so, the same were to be disallowed during the year under consideration - HELD THAT:- Although both the parties i.e the assessee and the purchaser had executed a “deed of correction” wherein they had mentioned that the value of the property as per ready reckoner rate was ₹ 4,53,00,690/-, but then, we cannot remain oblivious of the fact that there is no material available on record from where it could be gathered that the valuation adopted by the stamp valuation authority at ₹ 5,53,35,670/- had been substituted by the aforesaid ready reckoner rate of ₹ 4,53,00,690/-. In sum and substance, there is nothing discernible from the records which would reveal that the valuation adopted by the stamp valuation authority had been revised at ₹ 4,53,00,690/-. In the backdrop of the aforesaid facts, we find that the Pr. CIT had directed the A.O to verify as to whether the excess payment of stamp duty was refunded to the assessee or not.
No infirmity in the aforesaid direction of the Pr. CIT, except for the fact that as the stamp duty qua the transfer of the property under consideration was paid by the purchaser party viz. M/s SVG Investments Pvt. Ltd., therefore, the question of refund of any part of the excess stamp duty paid to the assessee would not arise. Accordingly, we to the said extent modify the directions of the Pr. CIT., and direct the A.O to verify as to whether or not the valuation adopted by the stamp valuation authority had been revised at ₹ 4,53,00,690/-. In case, the valuation adopted by the stamp valuation authority had not been revised, then for working the valuation of the property the A.O shall refer the matter to the DVO, as per Sec. 50C(2) of the Act. As such, in terms of our aforesaid observations we uphold the well reasoned view taken by the Pr.CIT and dismiss the objection raised by the assessee.
Verification of the cost of acquisition/improvement of the property - Pr. CIT had observed that as the assessee for computing the indexed cost of acquisition/improvement had included interest paid on borrowed funds as having been utilized for construction of property, therefore, whether the same were claimed by the assessee as expenditure under any head viz. “business income” or “Income from house property” in the previous assessment years, and if so, the same were liable to be disallowed during the year under consideration. In our considered view there in no infirmity in the aforesaid observation of the Pr. CIT. As a matter of fact, the inconsistent approach adopted by the A.O for partly sustaining the interest expenses and partly excluding the same while determining the indexed cost of acquisition/improvement of the property under consideration is beyond our comprehension. Be that as it may, the Pr. CIT in our considered view had rightly directed the A.O to verify as to whether the expenses claimed by the assessee and allowed by him in the course of the assessment proceedings as part of the indexed cost of acquisition/improvement were claimed by the assessee as expenditure under any head viz. “business income” or “Income from house property” in the previous assessment years, and if so, to disallow the same during the year under consideration. Accordingly, finding no infirmity in the aforesaid observations of the revisional authority, we uphold the same.
On both the issues i.e (i). applicability of sec. 50C to the transfer transaction under consideration; and (ii). verification of cost of acquisition/improvement of the property in question, which had been adopted by the A.O as the A.O had failed to make necessary inquiries and verifications, therefore, the Pr. CIT in our considered view had rightly exercised his revisional jurisdiction u/s 263 of the Act.
Deduction of the interest expense u/s 24(b) claimed while computing its income under the head “Income from house property” - A.Y 2014-15 - HELD THAT:- Admittedly, the assessee while computing its income in the previous years under the head “Income from House Property” had claimed deduction u/s 24(b) of the interest paid on loan raised from “Janalaxmi Co-op Bank Ltd”, which funds are stated to have been utilized in construction of the property in question. In our considered view, there is substance in the view taken by the CIT(A) that now when the interest expenditure was allowed as a deduction to the assessee while computing its income under the head “Income from house property”, the same could not have thereafter been allowed as a deduction by allowing it to be capitalized as a part of the cost of acquisition while computing its income under the head “capital gains” at the time of sale of the property. In fact, a view to the contrary would lead to allowing of a deduction to the assessee twice. Our aforesaid view is fortified by the judgment in the case of CIT Vs. Maithreyi PaiI [1983 (11) TMI 43 - KARNATAKA HIGH COURT].
Now when the assessee in the case before us had claimed deduction of the interest paid to “Janalaxmi Co-op Bank Ltd” while computing its income for the previous years under the head “Income from House Property”, therefore, it would not be eligible to once again claim deduction of such interest expenditure in the garb of cost of acquisition of the property while computing the income under the head “Capital gains” at the time of sale of the property in question - finding no infirmity in the view taken up the CIT(A) in context of the issue under consideration, we uphold the same.
Disallowing claim for deduction of repairs and maintenance expenses as part of the “cost of improvement” of the property while computing its income under the head “Capital gain” - HELD THAT:- Assessee as per its certification of the ‘APB’, had claimed, that the copies of the aforesaid invoices/bills were furnished with the lower authorities. On a perusal of Sec. 55(2) of the Act, we find, that if an assessee had incurred an expenditure of a capital nature in making any addition or alterations to a capital asset after it had became his property, then the same would form part of the “cost of improvement” of such property. At the same time, there is a rider provided in the aforesaid statutory provision, which therein envisages that any such expenditure which is deductible in computing the income chargeable under the other heads of income is not to be included within the meaning of “cost of improvement”. In our considered view, in all fairness, the aforesaid issue requires to be restored to the A.O with a direction to verify afresh the maintainability of the aforesaid claim of deduction so raised by the assessee.
Needless to say, the A.O shall in the course of the ‘set aside’ proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at a liberty to substantiate his aforesaid claim on the basis of fresh documentary evidence.
Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [2020 (5) TMI 359 - ITAT MUMBAI]
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2020 (7) TMI 301
Reopening of assessment u/s 147 - validity of the second notice issued by AO under section 148 - HELD THAT:- We note that section 148 of the Act does not authorize the AO to issue fresh notice when proceedings on a previous notice u/s. 148 of the Act are still pending and have not been finally disposed of.
Similar view was taken in Commercial Art Press Vs. CIT [1978 (8) TMI 76 - ALLAHABAD HIGH COURT] wherein it was held that when reassessment proceedings commence following the issue of a notice under section 148 and the same are pending, no fresh notice can be issued under the same provision. The Hon’ble Madras High Court while disposing of the order in A.S.S.P. & Co. 1986 (6) TMI 1 - MADRAS HIGH COURT observed that there could also be no dispute that after the reassessment order is made in pursuance of the first notice issued under section 148, if the ITO has any reason to believe that there is any escapement of the income which will be covered under section 147 of the Act, he can issue fresh proceedings with reference to the assessment order already made in pursuance of the notice under section 148 and in that way he can make any number of times revised order but that cannot affect the position that when a return has been made in pursuance of the notice under section 148, till that return is disposed of by any assessment order or reassessment order, no further notice can be issued under section 148 of the Act.
We find force in the contention of assessee that the second notice u/s. 148 without disposing of the return filed pursuant to the first reopening notice dated 19.10.2011 is invalid and, therefore, all the consequential action which has culminated in the assessment order dated 29.03.2014 is null in the eyes of law and resultantly void, therefore, is quashed. Since the legal issue has been decided in favour of the assessee.
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2020 (7) TMI 300
Reopening u/s 148 - Unexplained cash credit u/s 68 - HELD THAT:- Reasons recorded by the AO that the assessee company received share capital from the entry operator proved to be incorrect based on the facts. Attributing the entry of ₹ 7,00,000 /- to the share capital of the company by the AO to the increased share capital of ₹ 99,00,000 /- found to be incorrect based on the details of the share capital received by the company from the five entities.
We find that the information available with the Assessing Officer pertains to receipt of ₹ 7,00,000/- from two entities namely, Manimala and Virgin Capital whereas the AO made addition of ₹ 14,00,000/- u/ s 68 of the Act. AO has not mentioned whether this ₹ 14,00, 000/- is on account of share capital or loans or expenses. No details of these entries have been given. The AO has failed to examine whether the amount of ₹ 14,00, 000/- credited in the books of the assessee or not, if so under what head. The AO has made addition of ₹ 7, 00,000/- received by M/s Jindal Dal Mills Pvt. Ltd. in the hands of the assessee company. The addition has to be rightly made in the hands of M/s Jindal Dal Mills Pvt. Ltd. instead of the assessee company. It was also not proved that the assessee company whose name figured in the diary entries and shares of an equivalent amounts have been allotted to the common Directors, Sh. Anil Kumar Jindal.
Addition has been made without specifying as to the nature of the amounts and also without examining the credits in the books of the assessee, we hereby allow the appeal of the assessee on grounds of Section 148 and Section 68 - Decided in favour of assessee.
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Insolvency & Bankruptcy
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2020 (7) TMI 299
Seeking exit from CIRP Process - Respondent No. 2 had arrived at a Settlement with the 'Corporate Debtor' - HELD THAT:- The only conclusion deducible is that the factum of Respondents having inter se arrived at a Settlement prior to passing of the impugned order and constitution of the 'Committee of Creditors' is nothing but a ploy designed to defeat the legitimate interests of other stakeholders. This factual position is clearly borne out by the sequence of events unfolded by record.
As the 'Corporate Debtor', despite commitments, failed to settle with all seven Applicants, this could probably be the reason for the Respondents not to seek exit from the 'Corporate Insolvency Resolution Process' before passing of the impugned order as the Settlement inter se them, though not proved to have manifested in the form of a Settlement Agreement, was not all encompassing. This factual position would not warrant exercise of inherent powers under Rule 11 to allow exit of the 'Corporate Debtor' from 'Corporate Insolvency Resolution Process' as the legitimate interests of all other stakeholders, including the Intervenors whose claims have been admitted and the 'Committee of Creditors' is in seisen of the same would be seriously jeopardised. This is apart from the fact that in the event of settlement being entertained the Intervenors whose claims have been admitted will have to face the prospect of garnering the support of threshold limit for initiating de novo 'Corporate Insolvency Resolution Process' against the 'Corporate Debtor' in terms of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019 dated 28th December, 2019.
The ground urged, apart from not being established by any supporting evidence, does not warrant exit from 'Corporate Insolvency Resolution Process' on the projected ground of Settlement inter se the Respondents, having been arrived at prior to the constitution of the 'Committee of Creditors'. Public interest would not warrant such course to be adopted - Appeal dismissed.
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2020 (7) TMI 295
Disciplinary proceedings against the IP - Contravention of provisions of the Code, Regulations, and directions issued thereunder by IP - CIRP process - IBBI Circular dated 12-6-2018 - HELD THAT:- The RP acts as a negotiator between the debtor and the creditor. He is an officer of the Court who oversees the entire resolution process and manages information thereby ensuring that the stakeholders are appropriately informed. The RP is appointed by the Adjudication Authority and by virtue of the Code, is given the responsibility to effectively manage the CD as a going concern and is entrusted with the fate of the ailing CD during the process of CIRP. This puts the RP in a central position possessing immense powers however, the RP also has the corresponding responsibility to abide by the Code, rules, regulations and guidelines at all times. During the CIRP, IP has to face many hurdles. He holds the information of the CD in trust which should be shared with third parties as permitted by the Code. There may be many outsiders interested in knowing the sensitive information, but RP must refrain from sharing the same unless permitted by the Code.
The IP displayed a negligent approach during the conduct of CIRP.
The DC, in exercise of the powers conferred under section 220 of the Code read with Regulation 13 (3) of the IBBI (Inspection and Investigation) Regulations, 2017 and sub-regulations (7) and (8) of Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, issues the following directions:
The registration of Mr. Ashwini Mehra as an Insolvency Professional, having Registration No. IBBI/IPA-001/IP-P00388/2017-18/10706, shall be suspended for six months - The DC hereby directs Mr. Ashwini Mehra to secure reimbursement of an amount of ₹ 73,87,642/- which was paid to lender"s legal counsel (SAM) and charged to IRPC. The RP shall produce evidence to the Board of deposit of amount of ₹ 73,87,642/- in the account of CD.
The DC also directs Mr. Ashwini Mehra to secure reimbursement of an amount of ₹ 50,74,000/- (Rs. Fifty Lakh Seventy-Four Thousand only) which was paid to Kroll for conducting second forensic audit on the directions of the members of CoC and was charged to IRPC. The RP shall produce evidence to the Board of deposit of amount of ₹ 50,74,000/- in the account of CD - This Order shall come into force on expiry of 30 days from the date of its issue.
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2020 (7) TMI 298
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - service of demand notice - Existence of dispute or not.
Whether the demand notice in Form No. 3 dated 11-9-2018 was properly served? - HELD THAT:- The demand notice dated 11-9-2018 was sent at the address as per the master data at Page No. 6-A of the petition in which the registered office is shown at B-XX-550, Ghumar Mandi, Ludhiana, Punjab-141001. The postal receipt in respect of the Demand Notice is at page-82 (Annexure A-12) of the petition. It is observed that no reply has been received in respect of the above demand notice from the side of corporate debtor.
Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- Since there has been no representation from the side of corporate debtor, therefore, there lies no question of raising dispute by the corporate debtor. Thus, there is no dispute as to the liability between the corporate debtor and the operational creditor.
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 applicant-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 lac by the respondent-corporate debtor.
In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition for initiation of the CIRP process in the case of the Corporate Debtor U.I. Beverages Pvt. Ltd. is admitted - moratorium declared.
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2020 (7) TMI 297
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- Taking into consideration cumulatively clause ‘8 and 9’ of the Franchise Agreement, a sum of ₹ 65 lakhs being an investment on which guaranteed ROI was also promised is required to be treated as a 'financial debt' and that the payment of said 'financial debt' which stood defaulted and hence this Petition will lie before this Tribunal under IBC, 2016 in view of the ROI promised month after month being a consideration for time value to money not being remitted by the Corporate Debtor and in the circumstances the debt will be considered as 'financial debt' falling within the confines of Section 5 (8) (f) of IBC, 2016 and the Petition is hence maintainable before this Tribunal and the jurisdiction of this Tribunal to entertain this Petition cannot be questioned by the Corporate Debtor.
The Franchise Agreement is to be read "as a whole in its entirety" which enjoins upon the parties their respective duties and obligations as well as their rights. As rightly pointed out by Counsel for the Corporate Debtor the Franchise Agreement or for that matter any document which the parties have chosen to rely on, cannot be read in "piecemeal" and has to be read "as a whole" which is a well established legal principle - It is also further seen that the responsibility of running the Store, even though clauses in relation to the same was heavily relied upon by the Counsel for the Petitioner is placed upon the Franchisor, it is required to be seen that the said clauses when Franchise Agreement read as a whole is provided more as a protective measure with a view to protect its trade name and mark and also normally order to have a uniformity and consistency in relation to the Stores operated at several places including the one in the present one and in the circumstances the said clauses cannot be read in isolation viz., 9.1.
The standard as prescribed in relation to the quality, quantity or otherwise taking into consideration the expectancy of the user public when the trade name "Fipola" is associated any adverse usage by the Franchisee will be only detrimental to the trade name of the Franchisor as well as in relation to the Franchise and as already pointed out is o protective measure in relation to its 'trade name' permitted to be utilized by the Financial Creditor - It is also required to be noted that all 'claims' as defined under the provisions of IBC, 2016 namely under Section 3 (6) cannot lead to the filing of a Petition under the provisions of IBC, 2016 in relation to the Corporate Debtor as a 'financial debt' or as an 'operational debt' unless the conditions as provided under Section 5 (8) or 5 (20) as the case may be is satisfied by the Petitioner approaching this Tribunal.
The claim cannot be treated as a 'financial debt' and the Petitioner cannot be treated as a 'Financial Creditor' as defined under Section 5 (8) and 5 (7) of IBC, 2016 respectively - Petition dismissed.
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2020 (7) TMI 296
Liquidation of Corporate Debtor - assignemnet of debt by Operational Creditor - section 5 of SARFAESI Act, 2002 - going concern or not - HELD THAT:- The crucial aspect which is noticed is the term "going concern". Admittedly, it has not been defined in the Code though used at many places, hence, to find out the meaning of 'going concern', we have to look into the dictionary, accounting literature and judicial decision
An organisation is normally viewed as a going concern when it will be running business or continuing operations for a foreseeable future and such organization has neither any intention nor any compulsion or necessity of shutting down or reducing the scale of operations in a substantial manner. Further, going concern also implies ability of a business to meet its financial obligations. Thus, in the event of either business failure or financial failure, question mark is raised on the status of a business entity - The company was incorporated way back in 1920 for the manufacture of various kinds of electrical cables, wires and conductors, radio frequency cables, equipment wires, high temperature cables for domestic and industrial use and for sophisticated applications in defence, electric, electronic and space research in India. Commercial production was started in 1923. Expansions also took place from time to time and in 1970, a factory was acquired in Pune. In fact, upto a certain period, corporate debtor was the only private sector unit which used to manufacture almost all the cables at its Jamshedpur and Pune factories. It is also noted that besides the conventional type of cable accessories and specialised materials related thereto for jointing and terminating the cables were also manufactured. The company was profitable till 1991. Subsequently, it started incurring losses and during 1993-1996, there was a virtual stalemate in the company's operations. Jamshedpur plant was closed down completely for 34 months.
The corporate debtor is not a going concern, particularly when vast technological changes have taken place over a period of last 25 years and the plant and technology in possession of the corporate debtor are obsolete, out-dated and beyond repair/renovations due to depletion thereof. To put it in simple words, corporate debtor is not a going concern but already a gone concern.
Whether corporate debtor can be or should be made a going concern? - HELD THAT:- It is an undisputed legal position that IRP is appointed when CIRP is initiated against the corporate debtor by the order of the Adjudicating authority and such IRP is made responsible to manage the operations of corporate debtor as a going concern, hence, what is most crucial is that as on the date of initiation of CIRP, corporate debtor should be a going concern. This is not the case here, hence, to say that it should be continued as a going concern when it is not so nor there appears to be any possibility of the (sic) due to reasons mentioned by CoC while passing the resolution for liquidation which have been listed - Although the Code implies that only a going concern at the date of initiation of CIRP should be made to run as such subject to conditions imposed in the IBC, 2016, however, if CoC provides necessary interim finance and other requisite infrastructure is put in place, then, there is no bar that a closed concern cannot be made operational or a going concern. Though it is easy to say but a herculean task in reality, but it remains a possibility and depends upon the willingness of all the parties involved in the resolution of insolvency of a corporate debtor in a most beneficial manner to all.
The status of the corporate debtor need not be made as a going concern as there is no legal necessity to do so mandatorily. However, as mentioned earlier, if the lenders wish to do so voluntarily, they can do so.
Role and power of CoC - HELD THAT:- The basic structure of the IBC, 2016 is based on the theme of creditors in control. Therefore, the CoC has been empowered to exercise its jurisdiction in espect of all the key matters during CIRP without any interference as far as its commercial wisdom is concerned. The only restriction is that any activity/decision of CoC should not be in contravention or violation of any law for the time being in force. The role of Adjudicating Authority to disturb the decisions of CoC is very limited in scope and its obligation is further circumscribed by explicit provisions of IBC, 2016 giving extensive jurisdiction to CoC in respect of all crucial decisions.
As far as taking care of interest of workmen/employees being operational creditors, no doubt, liquidator is supposed to dispose of the assets as a package, in terms of provisions of Regulation 32 and 32A of IBBI (Liquidation Process) Regulations 2016 read with Regulation 39C of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016, keeping in mind such objective along with maximisation of value for all stakeholders. Having said so, we are of the view that commercial wisdom of CoC cannot be challenged as it is basic instinct of the Code and this has been held so in the case of K. Sashidhar and aforesaid decision also.
Whether the process of passing such resolution can be said to be fair and reasonable? - HELD THAT:- In the present case, it is not in dispute that financial statements have not been prepared after the year 1999. The statutory records and other accounting records at different locations are not available to the extent to enable the resolution professional to prepare the accounts for which efforts had been done as mentioned in the various progress reports filed after initiation of CIRP. The claims by the creditors have been verified mostly from their own records or through the records of the third parties - information memorandum, if prepared, would not have served any purpose. Further, in the first four CoC meetings, it has been submitted that efforts were made to prepare Information Memorandum. However, once a decision has been taken by CoC for liquidation, then, preparation of information memorandum loses all its significance as liquidator has to prepare asset memorandum.
After taking into consideration the applicable legal position and carefully analysing the facts of conducting of CIR Process including meetings of CoC and the fact that progress reports of all minutes of such meetings have been filed with this Authority as per the relevant Regulation, we hold that there is no lacunae or non-compliance in regard to following of process. Further, all other lenders who are financial institutions and also have substantial stake by way of outstanding debts, have also consented to the proposal made by CoC. Thus, for this reason also, there remains no scope for us to have a limited judicial review of such actions.
Consequence of order of liquidation - HELD THAT:- The group of assets and liabilities have not been identified for sale as a going concern under Regulation 32(e) or 32(f). This leads to a situation where, now, liquidator has to act for sale as a going concern under Regulation 32(e) and 32(f) as per the provisions of Regulation 32A(3) of the Liquidation Process Regulations, 2016 and he shall identify the group of assets and liabilities in consultation with the Consultation Committee to be sold as a going concern. Thereafter, if such process does not yield any result, then the liquidator shall be at liberty to realise assets in terms of provisions of regulation 32(a) to 32(d) of Liquidation Process Regulations, 2016.
Whether in the facts and circumstances of the case, the corporate debtor or its business or any part thereof be sold as a going concern if the order of liquidation is passed? - HELD THAT:- Only a large corporate having entrepreneurial instincts coupled with a necessity to establish a unit suitable to his corporate requirements may come forward. Since it is very hard to conceive as to how the undertaking which comprises of only land and workers could be useful to him. Thus, it is the intention of the acquirer that would be the deciding factor for disposal of the corporate debtor or its assets as a going concern. This business paradigm needs to be passed through the legal mechanism prescribed under the IBC, 2016. Though we have already held that it is not a going concern, hence, it cannot be run as a going concern by RP and liquidator is required to run the unit only for its beneficial liquidation but there is no bar also if somebody comes and wants to start an industrial activity with the help of the assets of the corporate debtor or in the name and style of the corporate debtor as well.
Validity of assignment - HELD THAT:- The fact which is noticeable even in petition filed under section 9 on 28-11-2018 and no aggrieved party filed any interlocutory application to raise this issue as it would have an impact on the composition of CoC if the corporate debtor was admitted into CIRP. Thus, prima facie, this issue has been closed by the parties by their own conduct and cannot be raised now.
All pleas of all parties regarding validity of assignment are rejected and dismissed, both on the ground of maintainability as well as on merits - Corporate Debtor is liquidated - moratorium shall cease to have effect.
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Service Tax
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2020 (7) TMI 294
Rectification of mistake - typographical order - errors are impressed upon to be the error apparent on record - HELD THAT:- The very perusal makes it ample clear that once an activity is not taxable, the order confirming the tax liability cannot be passed and thus is an error. Hence, there is no hesitation to hold that the word “upheld” in the is a typographical error. It should be read as " the order to that extent is hereby set aside".
With respect to the remaining mistakes as pointed out by the applicant since those have been objected as being out of scope of the rectification, we first need to highlight the scope of rectification. The Tribunal no doubt can recall its order in view of Section 129 B (1) of Central Excise Act, 1944.
Anything to become the subject matter of rectification it has to be self evident, obvious and palpable mistake which do not require any further deliberations.
Reverting to the remaining submissions of the applicant when read along with the final order, it is observed that the plea about the composition scheme has clearly been dealt with as specific finding that the rate at which the Appellant has paid the duty is in itself sufficient that he has not availed the benefit of composition scheme. Hence, there was no reason with this Tribunal to order for any consequential benefit - Coming to the calculation error as pointed out since the same involves a long drawn procedure of verifying the record which otherwise is out of the scope of the Tribunal. The mistake as alleged is, therefore, not at all self evident, hence cannot be called as error apparent on record. As for as the plea of cum-tax-benefit is concerned, the plea has not been raised in grounds of appeal. The allegation that the same was not considered by this Tribunal despite been submitted is, therefore, not sustainable.
The request about making a typographical correction in para-8 of the final order has been considered, rest all the requests have been declined - Application allowed in part.
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2020 (7) TMI 293
Condonation of delay in filing appeal - appeal filed after a period of 3 months and 10 days - power of Commissioner (Appeals) to condone delay - sufficient cause for delay present or not - HELD THAT:- The appeal was filed on 02.12.2014 though it was to be filed on or before 22.08.2014 thereby causing a delay of 3 months and 10 days in filing the same before Commissioner (Appeals). We observe that the applicant had, therefore, filed an application praying for condonation of delay before Commissioner (Appeals) and order of Commissioner (Appeals) is in respect of the said application praying for condonation of delay. In view of Section 35 of Central Excise Act, delay was not condoned. As a result where of the appeal could not have sustained.
The ground of death as taken is also not sufficient in explaining the impugned delay as admittedly the death of proprietor of appellant occurred during the pendency of proceedings before Commissioner (Appeals). There is no doubt about the fact that no demand can be confirmed and no recovery proceedings can be initiated against a dead person.
In the present case, Commissioner (Appeals) has not passed any order of confirming any demand against the dead person. The Order was squarely on the ground of limitation. The same has been upheld by this Tribunal only because of the statutory mandate upon the Commissioner (Appeals) to not to condone the delay beyond three months - Application for COD dismissed.
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2020 (7) TMI 292
Condonation of delay in filing Rectification of Mistake application - time limitation as provided in Section 35 C of the Central Excise Act - HELD THAT:- The limitation was applicable to the Tribunal for taking suo moto action for rectification of mistake, but the aggrieved party can file an application for rectification of mistake at any time, but showing the reasons for causing the delay, that there has been injustice done to them due to error in the order of this Tribunal - further, the decision of the Apex Court in the case of Sunita Devi Singhania Hospital Trust [2008 (11) TMI 249 - SUPREME COURT] was not available to the Larger Bench of the Tribunal.
The delay in filing the Rectification of Mistake Application as the delay has been reasonably explained, is condoned - ROM application allowed.
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Central Excise
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2020 (7) TMI 290
Implementation of order regarding Grant of interest on delayed refund - HELD THAT:- The order of rejection of interest passed by the Mr. Shubh Agarwal, Assistant Commissioner, amounts to interference in the process of justice delivery system. Mr. Shubh Agarwal was bound to implement the order of this Tribunal or in the alternative file an appeal before the Higher Court alongwith stay application. Thus, not following the order and direction of this Tribunal, Mr. Shubh Agarwal committed insubordination, by sitting in appeal on the order of this Tribunal. Accordingly, Mr. Shubh Agarwal, Assistant Commissioner is hereby directed to show cause as to why not the statement of contempt be drawn against him and referred to Hon’ble Rajasthan High Court for further action in the matter, under the contempt of Court Act.
Mr. Shubh Agarwal is hereby given one more opportunity to comply with the Final order of this Tribunal and accordingly in the alternative he may file a compliance report of having complied with the order of this Tribunal, on or before 26.02.2020. Put up for further orders on 26.02.2020.
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2020 (7) TMI 291
SSI Exemption - clubbing of clearances - Two independent companies within same complex (factory premises) and common shareholders / directors / management - benefit of N/N. 8/03-CE dated 1.3.2003 as amended from time to time - HELD THAT:- It is a fact on record that M/s. NCPL was established in the year 1993 as private limited company and M/s. NAPL as a private limited company.
As per the CBEC Circular No.6/92 dated 29.5.1992, the Board has clarified that private limited companies are treated as separate, therefore, we have no hesitation to hold that both the units are separate units.
As (i) both are private limited companies, (ii) both are manufacturing different products, (iii) both are having separate electricity connection, (iv) both are having different raw material which is separately stored, (v) both are having separate work force, (vi) both are having separate bank account and accountant to maintain record, (vii) both are having independent buyers and consideration have never flown from one company to another, (viii) money lended by one company has been returned, there is no diversion of funds and flow of funds from one unit to another unit, (ix) creation of the units were within knowledge of department since long back, (x) the appellant is availing benefit of SSI since its incorporation, (xi) shares holders of both the companies are same and common but not all (xii) directors of the are common but not all (xiii) the appellant is working in a separately demarcated portion. Moreover, necessary statutory declarations were filed by the appellant from time to time.
Reliance can be placed in the case of CCE, JALANDHAR VERSUS M/S. S.K. SACKS PVT. LTD., SHRI ARVINDER PAL SINGH, DIRECTOR [2017 (3) TMI 413 - CESTAT CHANDIGARH] where it was held that when the units have separate registration with the Central Excise Department/Income-Tax Authorites, permission to do job work on behalf of other undertaking, factors like one supervisor working for both the units and one unit have certain financial dealings for the other unit cannot be a basis for clubbing of clearances of two units.
The clearance of the appellant unit and M/s. NAPL cannot be clubbed. If the clearances of the appellant are to be clubbed with M/s.NAPL then the duty is required to be demanded from M/s.NAPL, which is not the case here - the appellant is entitled to avail the benefit of exemption Notification No.8/03-CE dated 1.3.2003 - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (7) TMI 289
Levy of cost of ₹ 50,000 on the petitioner / Deputy Commissioner - Passing a whimsical order against the assessee - The Single Judge observed that the petitioner had passed an order which “is therefore nothing less than suffering from malice-in-facts as well as malice-in-law”. - Validity of reassessment order - HELD THAT:- The setting aside of the reassessment is not in question in the present proceedings nor is the direction imposing costs. The direction to recover costs from the petitioner and the observations against her are in question - there are no reasonable justification to hold that the petitioner had passed a whimsical order and that it suffered from malice in fact and in law. These observations were unnecessary for the adjudication of the merits of the dispute raised by the assessee. The conduct of the petitioner was not in question.
The order of the learned Single Judge quashing the reassessment is not the subject matter of the present proceedings and nothing contained in this order shall amount to an expression of opinion on the correctness of that direction - SLP disposed off.
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