TMI Tax Updates - e-Newsletter
July 16, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Highlights / Catch Notes

• GST:

  Levy of GST - supply of service or not - pure agent services - payment made to American Academy of Professional Coders (AAPC) as examination fee for students on behalf of some of the students of the applicant institute - The collection and payment of examination fee to AAPC by the applicant on behalf of outside students (who are not enrolled for training with the applicant) without collecting any service charge either from students or AAPC is not liable to GST - AAR
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• GST:

  Levy of interest under Section 50 of the Central Goods and Services Tax Act, 2017 - The provisions of Section 42 can only be invoked in a situation where the mismatch is on account of the error in the database of the revenue or a mistake that has been occasioned at the end of the revenue. In a case where the claim of ITC by an assessee is erroneous, as in this case, then the question of Section 42 does not arise at all, since it is not the case of mismatch, one of wrongful claim of ITC. - As far as the levy of interest on belated cash remittance is concerned, it is compensatory and mandatory and the levy is upheld to this extent. - HC
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• GST:

  Threshold limit of contribution to RWA to claim exemption from payment of GST - validity of Circular No.109/28/2019 - The plain words employed in Entry 77 being, ‘upto’ an amount of ₹ 7,500/- can thus only be interpreted to state that any contribution in excess of the same would be liable to tax - the term ‘upto’ hardly needs to be defined and connotes an upper limit. It is interchangeable with the term ‘till’ and means that any amount till the ceiling of ₹ 7,500/- would exempt for the purposes of GST. - it is only contributions to RWA in excess of ₹ 7,500/- that would be taxable under GST Act. - HC
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• Income Tax:

  Validity of order passed by PCIT u/s 264 - Non-consideration of submissions of the assessee - Contention of the respondents that it was time barring matter is not acceptable in view of the fact that the relevant assessment order to be revised was received by the petitioner on 4th February, 2020 and as per the statute, limitation is two years from the date of receipt of such assessment order, so, the time for passing the impugned order was becoming barred on 3rd February, 2022 and in view of this fact, the respondent Commissioner could have easily considered the aforesaid objection of the petitioner on 29th March, 2021. There was enough time available to the Commissioner but hastily he passed the impugned order on 29th March, 2021. - HC
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• Income Tax:

  Addition u/s 68 - share application money received from 6 different companies unexplained - The learned CIT-A did not utter a word in his whole order that what would be the reason for surrender of the sum by the assessee and forfeiture of the share application money immediately in the succeeding year. Therefore we completely agree with the argument of the learned departmental representative that the order of the learned CIT – A does not have any legs to stand. - AT
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• Income Tax:

  Expenditure on brokerage expenditure paid for obtaining investments in mutual funds - investment made in the funds yields income over a period of years, however the said amount of brokerage expenditure incurred is not refundable to the assessee in any circumstances - The expenditure cannot not be categorized in the capital filed on the plea of enduring benefit - Allowed as revenue expenditure - AT
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• Income Tax:

  Exemption u/s 11 - Constitution of the Trust does not remain the same as it was prior to the amendment and hence when the constitution itself is changed and the registration is granted on the new and amended constitution of the Trust, then the benefit of proviso to section 12A would not be available to the assessee for the assessment year preceding to the year in which such registration is granted. The said proviso to section 12A(2) specifically mentions the proceedings of the assessment are pending before the AO. - AT
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• Income Tax:

  Late filing fees u/s 234E - intimation u/s 200A - TDS return for the 1st quarter for the financial year 2014-15 was filed on 25. 08.2015, which was due on 15. 07.2014 - TDS returns were filed after June, 2015, even intimation was issued after June, 2015 - respectfully following the decision of the Pune Bench of the Tribunal discussed above, we allow the appeal of the assessee and set aside impugned order passed by the Ld. CIT(A). - Tri Chandigarh
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• Income Tax:

  Exemptions u/s 11 and 12 - Charitable activity u/s 2(15) - The assessee trust is carrying out the activities of general utility of development of infrastructure for world class gem and jewellery in Surat. Now, on insertion of First Proviso to section 2(15), the benefit of section 11 cannot be deprived as the assessee is not carrying out any trade, commerce or business and only deals with its members to attain its objects. Therefore, it cannot be considered as an entity carrying out business under the guise of charity, as referred at para 3.2 of aforesaid CBDT Circular. - The object of the assessee is of general public utility and does not hit by first proviso to section 2(15) of the Act. - AT
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• Customs:

  Allegation for conducting market inquiry improperly by the Inspector (Cutoms) (now deceased) - No question arises of abeting him at a stage later than the commission of said fraudulent exports. There is no evidence produced by the department which may prove that the appellant ever instigated or conspired or intentionally aided the exporter to fraudulently export the hand woven carpets to traders in different countries and to take as high as 12 Crores of drawback in DAPL and higher drawback in other companies as well. There is no evidence that appellant has been the beneficiary of these amounts or part thereof. - AT
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• Corporate Law:

  Compounding of offence u/s 233B of the Companies Act, 1956 read with the Companies (Cost Audit Report) Rules, 2011 - The amendment takes away the need of taking permission of Special Court - In the case on hand, even though prosecution is pending without seeking permission from the concerned Court, this Tribunal can compound the offence relying upon the aforesaid two judgments of the Hon'ble NCLAT and the amended Section 441(6) of Companies Act, 2013. - Tri
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• IBC:

  Allegation of Wilful and deliberate violation of Resolution Plan by the successful Resolution Applicant(Rl) - application seeking award of criminal punishment be filed by the erstwhile RP before this Adjudicating Authority. - RP could make a complaint seeking criminal punishment against the RA u/s. 74(3) read with Section. 236(2) of the Code without being authorised by the Central Government nor any offences under the Code could be tried by this Adjudicating Authority in view of provisions of Section 236(1) of the Code - Tri
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• VAT:

  Validity of rejecting original ‘H’ declaration forms after completion of the assessment order - there are force in the submission of learned counsel for petitioner that having regard to the lockdown imposed by the Central Government, he was operating from his Chennai office and not at Guntur office. At any rate, having regard to the submission of the petitioner that he is ready to produce forms ‘F’& ‘H’ to the satisfaction of the authorities, we deem it fit to grant an opportunity by following principles of natural justice. - HC
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Articles

• How to read 'PROVISO'?
• SEIZURE OR PROHIBITION ORDER UNDER GST LAWS

Notifications

• Customs

• 59/2021 - dated 15-7-2021 - Cus (NT)
  Exchange rates Notification No.59/2021-Cus (NT) dated 15.07.2021

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• GST - States

• F-A-3-27-2017-1-V (42) - dated 8-7-2021 - Madhya Pradesh SGST
  Amendment in Notification No. F-A-3-27-2017-1-V(54), dated the 30th June, 2017

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• F-A-3-03-20 18-1-V(44) - dated 8-7-2021 - Madhya Pradesh SGST
  Amendment in Notification No. F A-303-2018-1-V(4) dated the 23rd January 2018

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• F A-3-85-2017-1-V (43) - dated 8-7-2021 - Madhya Pradesh SGST
  Amendment in Notification No. F A-3-85-2017-1-V(07), dated 8th February 2019

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• F A 3-06-2021-1-V(41) - dated 8-7-2021 - Madhya Pradesh SGST
  Madhya Pradesh Goods and Services Tax (Amendment) Rules, 2021

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• ERTS(T)65/2017/Pt. II/348 - dated 1-6-2021 - Meghalaya SGST
  Amendment in Notification No. 4/2018-State Tax, dated the 23rd January, 2018

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• 18320-FIN-CTI-TAX-0002/2020 - dated 14-7-2021 - Orissa SGST
  Supersession Notification No. 32713-FIN-CT 1 -TAX-0002/2020, dated the 9th December, 2020

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• 18316-FIN-CTI-TAX-0002/2020 - dated 14-7-2021 - Orissa SGST
  Seeks to amend notification No. 19869-FIN-CT1 -TAX-0022-2017, dated the 29th June, 2017

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• 18312-FIN-CTI-TAX-0002/2020 - dated 14-7-2021 - Orissa SGST
  Seeks to provide concessional GST on specified Goods, upto 30 sept, 2021

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• F.1-11 (91)-Tax/GST/2020(Part-VI) - dated 8-7-2021 - Tripura SGST
  Seeks to waive penalty payable for non- compliance.

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• Income Tax

• 81/2021 - dated 14-7-2021 - IT
  U/s 10(46) of IT Act 1961 - Central Government notifies ‘Himachal Pradesh Computerization of Police Society’ in respect of the specified income arising to that body

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• 80/2021 - dated 14-7-2021 - IT
  Central Government notifies , ‘Haryana Labour Welfare Board’ in respect of the specified income arising to that Board.

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• Insolvency and Bankruptcy

• IBBI/2021-22/GN/REG075 - dated 14-7-2021 - IBC
  Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2021.

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Circulars / Instructions / Orders

• GST - States - CCT/26-4/2017-18/E/858 - dated 6-7-2021
  Clarification regarding GST rate on laterals/parts of Sprinklers or Drip Irrigation System

News

• ₹ 75,000 crore released to States and UTs with Legislature as GST Compensation shortfall

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• India’s Foreign Trade for June 2021

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• Mango export promotion programme organized for the varieties from northern India in Dubai

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• CBIC has proactively put in place a COVID Response Plan (CRP) for speedy clearances of COVID-19 vaccines at all major airports

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• Text of the intervention of the Commerce and Industry Minister Shri Piyush Goyal atthe Ministerial meeting of the WTO on the fisheries subsidy negotiations

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• Commerce Minister bats strongly for India and the Developing World at the WTO;

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• CCI receives notice relating to acquisition of equity stake in JSW Cement by Synergy Metals Investments Holding Limited, under Green Channel and is deemed approved

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Case Laws:

• GST

• 2021 (7) TMI 604
  Levy of GST - supply of service or not - pure agent services - payment made to American Academy of Professional Coders (AAPC) as examination fee for students on behalf of some of the students of the applicant institute - tax liability, when the applicant is collecting the actual examination fee and remitting that amount to AAPC as such without taking any service charges either from students or from AAPC - payment made to AAPC as examination fee on behalf of outside students - applicability of decision of Karnataka Advance Ruling in IN RE: M/S. ARIVU EDUCATIONAL CONSULTANTS PVT. LTD. [ 2019 (10) TMI 757 - AUTHORITY FOR ADVANCE RULING, KARNATAKA] that such payment of examination fee is not a service chargeable to tax under GST laws. Whether the amount of examination fee collected and paid by the applicant to AAPC satisfy the requirement of Rule 33 of the CGST Rules, 2017 so as to be excluded from the value of taxable supply provided by the applicant? HELD THAT:-In the first situation, the applicant is providing training services in relation to medical coding program to the students enrolled with them to appear in the examination conducted by the AAPC. The applicant is collecting fees for such training provided by them and is discharging GST at the rate of 18% on the fees collected. They are collecting the amount required to be paid as exam fees from the students in addition to their training fees and making payment of the exam fee amount through the online facility to AAPC. The applicant is not collecting any service charge for providing the facility for payment of exam fee either from the students or from AAPC - In the second situation the applicant is providing the same online facilities for payment of fees to students who are appearing for the examination conducted by the AAPC but are not enrolled with them for training. The facility of payment of fees through online platform is extended to interested students who approach them. The examination fees is paid by the applicant to AAPC for the examination and certification services provided by the AAPC to the students in addition to the training and fee payment facilitation service provided to the students by the applicant. Therefore, all the conditions mentioned in the said Rule 33 for exclusion of the amount collected as examination fee from taxable value of services provided by the applicant is satisfied - In order to come within the scope and meaning of supply as defined in Section 7 of the CGST Act the activity / transaction shall be for a consideration in the course or furtherance of business. Though the fee payment facilitation services are provided by the applicant in the course or furtherance of their business as the same is being made without consideration it falls outside the meaning and scope of supply as defined in Section 7 of the CGST Act, 2017. Therefore, the applicant is not liable to pay GST on the fee payment facilitation services provided to outside students without consideration. Scope of Advance Ruling - Applicability of ruling of the Karnataka Authority for Advance Ruling in M/s. Arivu Educational Consultants Private Ltd. - HELD THAT:- The question not being in respect of any of the matters on which advance ruling can be sought, this authority is not having jurisdiction to give ruling on the question.

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• 2021 (7) TMI 602
  Seeking permission to withdraw Writ Petition - the same challenge show cause notice issued under the provisions of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This Writ Petition is dismissed as withdrawn. Liberty is granted to the petitioner to put forth its submissions in regard to the preliminary question of assumption of jurisdiction by the Assessing Officer. Let this point be decided first by way of a speaking order before the authority proceeds with the matter on merits, if at all.

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• 2021 (7) TMI 600
  Levy of interest under Section 50 of the Central Goods and Services Tax Act, 2017 - interest on cash remittances - interest on remittances by way of adjustment of electronic credit register - HELD THAT:- In this case, the provisions of Section 42 are not relevant, insofar as the impugned order itself records that the assessee has, on receipt of intimation of the wrongful claim of input tax credit (ITC), accepted the error in claim and has reversed ITC, both attributable to CGST and SGST through voluntary payment of tax in Form GST DRC-03 - The provisions of Section 42 can only be invoked in a situation where the mismatch is on account of the error in the database of the revenue or a mistake that has been occasioned at the end of the revenue. In a case where the claim of ITC by an assessee is erroneous, as in this case, then the question of Section 42 does not arise at all, since it is not the case of mismatch, one of wrongful claim of ITC. Levy of interest on belated cash remittance - HELD THAT:- It is compensatory and mandatory and the levy is upheld to this extent. Petition disposed off.

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• 2021 (7) TMI 595
  Reimbursement of IGST collected on equipment/articles - HELD THAT:- The notifications issued by the State of Haryana and State of Gujarat are appended as Annexures P2 and P3 and are dated 17.05.2021 and 01.05.2021 respectively - Via these notifications, the State of Haryana and State of Gujarat have taken a decision, inter alia, to reimburse the IGST collected on equipment/articles referred to in the aforementioned notifications. List on 14.09.2021.

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• 2021 (7) TMI 591
  Threshold limit of contribution to RWA to claim exemption from payment of GST - validity of Circular No.109/28/2019 dated 22.07.2019 - applicability of N/N. 12/17CT dated 28.06.2017 - submission is that while a contribution of ₹ 7,500/- or less would entitle the concerned assessee to the grant of exemption, if the contribution exceeded ₹ 7,500/-, there was an automatic disentitlement - HELD THAT:- There is no ambiguity in the language of the exemption provision in this case and thus the judgment of the Supreme Court in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] would not be applicable to the facts and circumstances of this case. The ratio of that decision would apply only in a case where the provisions granting exemptions are ambiguous, whereas, in the present case, the Entry, is clear and hence it is only a question of interpreting the same. The intention of the Circular appears clear, that is, to grant exemption in regard to the receipts from services that answer to the description set out therein. The description of the services is also clear, that is, services to the members of an unincorporated body or non-profit by way of reimbursement of charges or share of contribution upto an amount of ₹ 7,500/- in the sourcing of goods or services from a third person for the common use of its members. No ambiguity presents itself on a plain reading of the Entry and the intention is clear, so as to remove from the purview of taxation contribution upto an amount of ₹ 7,500/-. In the case of Dilip Kumar, the Supreme Court reiterates the settled proposition that an Exemption Notification must be interpreted strictly. The plain words employed in Entry 77 being, upto an amount of ₹ 7,500/- can thus only be interpreted to state that any contribution in excess of the same would be liable to tax - the term upto hardly needs to be defined and connotes an upper limit. It is interchangeable with the term till and means that any amount till the ceiling of ₹ 7,500/- would exempt for the purposes of GST. Slab Rate - HELD THAT:- A slab is a measure of determining tax liability. The prescription of a slab connotes that income upto that slab would stand outside the purview of tax on exigible to a lower rate of tax and income above that slab would be treated differently. The intendment of the exemption Entry in question is simply to exempt contributions till a certain specified limit. The clarification by the GST Department even as early as in 2017 has taken the correct view. The discussion leaves no doubt that the conclusion of the AAR as well as the Circular to the effect that any contribution above ₹ 7,500/- would disentitle the RWA to exemption, is contrary to the express language of the Entry in question and both stand quashed. To clarify, it is only contributions to RWA in excess of ₹ 7,500/- that would be taxable under GST Act. Petition allowed.

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• 2021 (7) TMI 550
  Cancellation of registration of petitioner - non filing of GST returns for a continuous period of six months - rejection also on the ground of non payment of tax, late fee and interest - HELD THAT:- The appellant has filed all his pending returns upto date of cancellation of registration and he has also deposited tax liabilities, late fee and interest, therefore it is found that the appellant has now been complied with the relevant provisions in the instant case. In view of the above, the registration of appellant may be considered for revocation by the proper officer. The appellant are directed to file the revocation application in the prescribed form through common portal - The proper officer directed to consider the revocation application of the appellant after due verification of payment particulars of tax, late fee, interest and filing of status returns. Appeal disposed off.

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• Income Tax

• 2021 (7) TMI 601
  Unexplained credit in the bank accounts - AO treating all the credit entries appearing in the bank accounts as income for the purpose of estimating commission income at the rate of 2.25% - HELD THAT:- This Court finds that the Tribunal in the impugned orders has upheld the appellant s contention that the respondent used to provide accommodation entries upon charging commission. Tribunal has held that just because some loose sheets had been found stating that percentage of commission was 1.69% to 2.5% in some transactions, it cannot be presumed that for all transactions the respondent had earned a similar rate of commission. Further relying upon past decisions by a number of Coordinate Benches of the Tribunal adopting a commission rate ranging from 0.15% to 0.50%, in similar matters, the Tribunal passed the impugned order. This Court is of the view that none of the aforesaid findings are so perverse that they warrant an interference in appeal jurisdiction under Section 260A - This Court is also of the view that the Tribunal, being the last fact finding authority, was entitled to guess work and arrive at a ballpark rate of commission. Consequently, no substantial question of law arises in the present appeals. Accordingly, the appeals along with pending applications are dismissed.

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• 2021 (7) TMI 598
  Disallowance of short term capital loss - Whether assessing authority rightly rejected the said claim as the assessee had failed to explain correctness of said claim and failed to substantiate with any materials? - HELD THAT:- It is not in dispute that if against the order passed in the case of the assessee for the Assessment Year 2007-08 an appeal was preferred before this court, which was dismissed in view of the bar contained in the Circular dated 08.08.2019 pertaining to monitory limit. Thus, the order passed by the tribunal has attained finality. Therefore, in the fact situation of the case, the tribunal rightly affirmed the order of the Commissioner of Income Tax (Appeals) in setting aside the disallowance of short term capital loss. Therefore, the substantial question of law No.2 is answered in affirmative and against the revenue.

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• 2021 (7) TMI 594
  Contribution made to the funds as expenditure u/s 37(1) - HELD THAT:- Funds contributed by the assessee neither remains with the Apex co-operative bank nor comes back to the assessee bank in any other form. The amounts have been spent only out of the statutory obligation. It has further been held that Section 37(1) of the Act makes an exception in case of capital expenditure or personal expenditure of the assessee or expenditure of the nature described in other Sections of Chapter IV of the Act. The case of the revenue is not that the contribution made by the assessee to the fund is capital expenditure or is in the nature of personal expenses or expenditure described in any other Sections of Chapter IV of the Act. It has further been held that assessee has incurred the expenditure for the purposes of business and therefore, the same is an admissible expenditure under Section 37 of the Act. This court in case of assessee in respect of Assessment Year 2009-10 [ 2021 (3) TMI 528 - KARNATAKA HIGH COURT] has allowed the payments made to Primary Agricultural Cooperative Societies and District Central Co-operative Banks as an admissible expenditure under Section 37 - Decided in favour of assessee.

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• 2021 (7) TMI 590
  Assessment u/s 153C - search action u/s 132 - addition made on estimated receipts from the customers for getting vehicle registered - HELD THAT:- In assessee's case survey was conducted.No incriminating document was found in this assessee's case for the relevant assessment years. No evidence was collected from any customer which can be a direct and best evidence in this regard.Books of accounts of assessee have not been either rejected or found defective. No evidence was found releable with assessee's case directly from the assessee or on the basis of which any estimation u/s 153C can be done. In this back drop, both CIT(A) and ITAT deleted the additions made by the Assessing Officer for the assessment years 2003-2004, 2004-2005, 2005-2006, 2006-2007 and 2007-2008.

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• 2021 (7) TMI 589
  Validity of order passed by PCIT u/s 264 - Non-consideration of submissions of the assessee - as submitted by the petitioner that his objection has got strong material which goes to the root of the case and non-consideration of the same before passing the impugned order is a gross violation of principles of natural justice - HELD THAT:- Contention of the respondents that it was time barring matter is not acceptable in view of the fact that the relevant assessment order to be revised was received by the petitioner on 4 th February, 2020 and as per the statute, limitation is two years from the date of receipt of such assessment order, so, the time for passing the impugned order was becoming barred on 3rd February, 2022 and in view of this fact, the respondent Commissioner could have easily considered the aforesaid objection of the petitioner on 29th March, 2021. There was enough time available to the Commissioner but hastily he passed the impugned order on 29th March, 2021. The impugned order dated 29th March, 2021 passed by the Commissioner is set aside on the ground of violation of principles of natural justice by not considering the aforesaid objection dated 26th March, 2021 of the petitioner before passing the impugned order in spite of having enough time for passing the impugned order, order dated 29th March, 2021 being Annexure-P/5 to the writ petition, with a direction upon the Ld. Commissioner/respondent no. 2 to consider afresh the case of the petitioner and pass a reasoned and speaking order.

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• 2021 (7) TMI 584
  Rejection of books of accounts u/s 145(3) - GP estimation - HELD THAT:- As per CIT while examining gross margins, the AO should not only compare the past margins of the assessee but also the current year margins of other assessee engaged in similar business. This would give an insight into the actual profit margins during the year under reference and would be a correct guide for estimation of profits. He held that no business can have a minimum threshold G.P every year just to satisfy the whims of the Assessing Officer and the working of the A.O. is more theoretical and mathematical than cogent or real. He accordingly didn t agree with the estimated increase in G.P. rate to 3.03% done by the AO as against 2.57% shown by the assessee. We see no justifiable reasons in interfering with the said findings of the ld CIT(A). We upheld the order of the ld CIT(A) and ground of appeal so taken by the Revenue is dismissed.

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• 2021 (7) TMI 583
  Addition u/s 68 - share application money received from 6 different companies unexplained - CIT-A has deleted the addition made on the details submitted by the assessee of the records of the registrar of Companies of the share applicant, permanent account number and income tax jurisdiction of the share applicant company, the bank statement as well as the acknowledgement of the latest income tax return - HELD THAT:- CIT - A did not mention what further investigation the learned assessing officer could have carried out when neither the assessee could produce any of the directors, nor the director of the assessee company remained present before the AO. Further the respective summons issued twice by the learned assessing officer returned unserved and definition of Inspector also proved that no such company existed at that assessee given by the assessee. Assessee did not give any other address of the shareholders. The financial position of the share applicant was also shaky and lacked any credence. It was also unfair therefore the learned CIT A to note that just because the creditors/share applicants could not be found at the address given it would not give the revenue are right to invoke Section 68 without any additional material to support such a move. In fact the learned assessing officer has done what could have been done. CIT A was further stated by the fact that the money is received by cheque and transmitted through banking channels the genuineness of the transaction stands proved. We are sorry to state that all such transactions are only through banking channels. Merely because the transactions are carried out through banking channels the creditworthiness of the parties as well as the genuineness of the transaction does not prove at all. The learned CIT A further stated that offer of the sum to be taxed by the learned authorised representative who only appeared before the assessing officer could not be the reason for making the addition. He plainly overlooked the fact that the learned assessing officer has not accepted the surrendered made by the learned authorised representative but has made the addition solely on the basis of the material produced by the assessee and failure of the assessee to produce the directors of the shareholders before him not only once but on many occasions. Even the director of the assessee company was not produced. The learned CIT A did not utter a word in his whole order that what would be the reason for surrender of the sum by the assessee and forfeiture of the share application money immediately in the succeeding year. Therefore we completely agree with the argument of the learned departmental representative that the order of the learned CIT A does not have any legs to stand. None of the judicial precedents cited before the learned CIT A applies to the facts of the case. In view of this we reverse the order of the learned CIT A relating the addition made by the learned assessing officer u/s 68 of the income tax act and restore the order of the learned assessing officer. - Decided against assessee.

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• 2021 (7) TMI 582
  Rectification of mistake - ALP adjustment in respect of ITeS services - assessee s contention that the margin of the international transaction of the assessee was 37.54% and that the Average Margin of the comparables adopted by the TPO was 33.13% - HELD THAT:- Since the assessee s margin was higher than the Mean Margin of the comparables, the functional dissimilarities or otherwise of the comparable companies was not necessary to be considered and the assessee had agreed for the same at the time of hearing. Even at the time of hearing of the M.A, the learned Counsel for the assessee submitted that the assessee is not pressing this point for rectification. Therefore, on this issue we do not find any mistake which needs rectification. Interest on advances for investment to AEs - We find that in the assessee s own case for the earlier A.Ys [ 2017 (12) TMI 301 - ITAT HYDERABAD ] Tribunal has set aside the issue to the file of the AO/TPO with a direction to consider the same denovo. Since facts and circumstances are similar and the assessee had relied upon the same during the course of hearing but the same has not been considered, we agree that there is a mistake apparent from record which needs rectification. Mistake on account of interest on outstanding receivables - We find that while determining the ALP adjustment of ITeS services, we had observed that the Assessing Officer had given the negative working capital adjustment. But the working capital adjustment takes care of the interest on receivables as on the closing date of the accounting year and does not take care of the interest on delayed receivables during the relevant year. Therefore, we do not see any mistake in the order of the Tribunal on this issue and the assessee s argument is accordingly rejected.

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• 2021 (7) TMI 577
  Expenditure on brokerage expenditure paid for obtaining investments in mutual funds - investment made in the funds yields income over a period of years, however the said amount of brokerage expenditure incurred is not refundable to the assessee in any circumstances - HELD THAT:- Undisputedly, the expenditure is wholly and exclusively for the purpose of business. The concept of deferred revenue expenditure is not there in I.T.Act, which is duly supported by the decision in Taporia Tools [ 2015 (3) TMI 853 - SUPREME COURT] . The expenditure cannot also not be categorized in the capital filed on the plea of enduring benefit, as per the ratio of Hon ble Supreme Court in Empire Jute Mills [ 1980 (5) TMI 1 - SUPREME COURT] - We have no hesitation to hold that in these circumstances and examining the present issue on the anvil of Hon ble Supreme Court decisions as above, the expenditure incurred on brokerage is to be allowed in full in the impugned assessment year, as deferral of the same over a number of years for income tax purposes is not sustainable - Revenue s appeal is dismissed.

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• 2021 (7) TMI 576
  Grant of approval u/s 80G - CIT-E rejected the application filed by the assessee in Form-10G for approval u/s 80G by holding that the assessee failed to file any reply to the show cause notice, hence, the genuineness of the assessee-trust is doubtful - HELD THAT:- CIT(E) mentioned in his order that the assessee failed to file reply to the order sheet entry dated 24/04/2019 and alleged on other issues also. The AR of the assessee undertook that if one opportunity is granted to the assessee, he will explain the same with documentary evidence. We remit the issue back to the file of CIT(E) with a direction to examine the reply filed by the assessee and if he is satisfied, grant the approval u/s 80G in accordance with law and on merits of the case after providing reasonable opportunity of being heard to the assessee. The assessee is directed to comply to the notices or any directions from the CIT(E), if any, in the proceedings before him for obtaining approval u/s 80G. - Appeal of the assessee is allowed for statistical purposes.

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• 2021 (7) TMI 575
  Penalty u/s 271AAA - Defective notice u/s 274 - non specification of charge - HELD THAT:- On perusal of the show cause notices issued by the Assessing Officer u/s 274 r.w.s. 271AAA dated 28/03/2012, which is placed on record of paper book, it is seen that the AO did not mention whether the notice is issued for concealment of income or for furnishing of inaccurate particulars of income. As per the ratio laid down in the case of SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] , the notice issued by the Assessing Officer is not valid and consequently, the order passed u/s 271AAA is also not valid. Hence, we set aside the order of the CIT(A) and quash the order passed by the Assessing Officer u/s 271AAA. We direct the AO to delete the penalty levied u/s 271AAA - Decided in favour of assessee.

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• 2021 (7) TMI 574
  Revision u/s 263 - exemption u/s 11 - when the assessment order was passed, the trust was not registered u/s 12AA - AO is erroneous and prejudicial to the interest of Revenue by incorrectly holding that verification of the fact of registration of the trust under I.T. Act, 1922 was the very basic direction given by the Hon ble ITAT which the AO has evidently failed to examine whereas no such direction was given by the Hon ble ITAT which has set aside the case to AO to examine whether exemption granted under the Repeal Act was saved by section 297 of the Act and whether it was consistent with the corresponding provisions of law under the new Act? - whether the trust was registered under IT Act, 1922 and if not, no benefit of exemption is to be granted since prior to the amendment dt. 03.08.2016 the nature of trust, its objects activities were not the same making the first proviso to section 12A inapplicable? - HELD THAT:- It is a settled position that unless and until the trust is registered under section 12A, it cannot claim the benefit of section 11 of the Act and thus, registration under section 12A is a condition precedent. The Registration was granted by the Commissioner (Exemptions) vide order dated 5th September, 2016 with effect from 03.08.2016 after the assessee has amended its By-laws and Memorandum of Association whereby certain terms and conditions have been completely changed. Constitution of the Trust does not remain the same as it was prior to the amendment and hence when the constitution itself is changed and the registration is granted on the new and amended constitution of the Trust, then the benefit of proviso to section 12A would not be available to the assessee for the assessment year preceding to the year in which such registration is granted. The said proviso to section 12A(2) specifically mentions the proceedings of the assessment are pending before the AO. We are therefore unable to accede to the contention advanced by the ld AR that where there was no provision for issuing a separate order of registration by the Commissioner in 1922 Act, it would not mean that exemption granted u/s 4(3)(i) of 1922 Act is not saved by section 297(2)(k) of the IT Act, 1961. Under the Act of 1961, the Trust whether constituted and/or formed prior to the said Act coming into force or afterwards, is required to move an application for seeking registration before the Commissioner and such trust must be granted registration and duly registered under section 12AA of the Act. There is thus no mandate under the current statue to treat these two set of assessees differently and thus creating separate class of assessees, one which have been formed earlier and got exemption under the Act of 1922 and those formed subsequently and seeking exemption under the Act of 1961. Both the set of assessees are on equal footing without claiming any differential treatment and have to comply with the conditions as prescribed under the Act of 1961 to continue to claim exemption or to claim exemption, as the case may be, under the Act of 1961. Though it may be inferred that the proceedings before the Appellate Authority are also considered to be the assessment proceedings pending but the same are not regarded as pending before the AO. Even otherwise, when the registration is granted on the amended constitution of the Trust, then the benefit of this proviso to section 12A(2) is not available. The said finding applies equally to the impugned assessment year 2011-12 and we donot find any justifiable reason to deviate from the said finding rendered after detail examination of facts and circumstances of the case which permeates equally through the impugned assessment year - even where it is held that the AO has taken a view that the assessee is entitled to exemption u/s 11 in view of the subsequent registration for the impugned assessment year, the said view is clearly erroneous in light of the clear findings of the Tribunal in the assessee s own case that benefit of proviso to section 12A(2) is not available to the assessee and thus, prejudicial to the interest of the Revenue. We are unable to accede to the various contentions advanced by the ld AR that the AO has complied with the directions of the Tribunal and duly examined this issue with reference to section 4(3)(i) of Act of 1922 vis- -vis section 11 of the Act of 1961 as so directed by the Tribunal and given the fact that the AO having failed to comply and examine the matter, find that the ld. PCIT was justified in exercising his jurisdiction u/s 263 to enforce the directions of the Tribunal and thus to hold the order so passed by AO as erroneous and prejudicial to the interest of Revenue. In the result, we upheld the order of the ld PCIT in exercise of his powers u/s 263 in setting aside the order so passed by the AO and the grounds of appeal taken by the assessee are hereby dismissed.

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• 2021 (7) TMI 572
  Disallowance of interest - appellant company had diverted interest bearing funds to sister concerns / related parties by advancing loans and advances - HELD THAT:- In view of the settled position of law that the disallowance, if any, u/s 36(1)(iii) of the Act can be made only to the extent of incremental loans and advances made during the previous year relevant to the assessment year under consideration - The opening balance of loans and advances of sister concerns / related parties should not be considered for the purpose of making, any disallowance for the year under consideration. It is settled position of law that where there is a mixture of both borrowed funds as well as the interest free funds are available, a presumption has to be drawn that investments are made out of the interest free funds as held in the case of CIT Vs. Reliance Utilities [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and similar is the decision of Munjal Sales Corporation [ 2008 (2) TMI 19 - SUPREME COURT] . Therefore, no disallowance u/s 36(1)(iii) is called for in the light of the above legal settled position of law and facts of the case in respect of the incremental loans and advances made to the sister concerns / related parties during the previous year relevant to the assessment year under consideration. - Appeal filed by the assessee is allowed.

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• 2021 (7) TMI 571
  Revision u/s 263 - deduction u/s 80IA on account of profit from operation of the generation of power through windmill - whether the requisite jurisdiction necessary to assume revisional jurisdiction is there existing before the Pr. CIT to exercise his power? - HELD THAT:- There is difference between Lack of enquiry and inadequate enquiry . It is for the assessing officer to decide the extent of enquiry to be made as it is his satisfaction as what is required under law. Reliance is placed on the decision of CIT v. Sunbeam Auto Ltd.[ 2009 (9) TMI 633 - DE LHI HIGH COURT] wherei has held that if there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass order u/s 263 of the Act, merely because the Commissioner has a different opinion in the matter and that only in cases where there is no enquiry, the power u/s 263 of the Act can be exercised. The ld. PCIT cannot pass the order u/s 263 of the Act on the ground that further/thorough enquiry should have been made by assessing officer. In the assessee`s instant case, we note that Assessing Officer has raised the query and the assessee has replied that query, therefore, the assessing officer would have examined the relevant issues. Hence, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue. Reason (issues) advanced by the ld PCIT, as noted to treat the assessment order, as erroneous and prejudicial to the interest of revenue, is devoid of merit and does not deserve to be affirmed. We quash the order passed by the ld PCIT under section 263 of the Act. - Decided in favour of assessee.

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• 2021 (7) TMI 570
  Enhancement of income made by the CIT(A) by estimating the income - Assessment u/s 143(3) has made adhoc disallowances of various expenses - HELD THAT:- It is evident from the record that the show cause notice dated 16.03.2015 issued by the CIT(A) for enhancement of assessment was received back unserved. Therefore, the adhoc enhancement was made by the CIT(A) without serving the show cause notice on the assessee. Thus, it is clear that though the CIT(A) issued a show cause notice u/s 251(2) but the said notice was not served upon the assessee and consequently the assessee was not given any effective opportunity of hearing before the enhancement. Accordingly, in the facts and circumstances of the case and in the interest of justice the impugned order passed by the CIT(A) is set aside and the matter is remanded to the record of the CIT(A) for deciding the same afresh after giving one more opportunity of hearing to the assessee.

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• 2021 (7) TMI 569
  Revision u/s 263 - deduction on account of unrealized gain on mutual fund while computing book profit u/s 115JB - HELD THAT:- As specifically provided in clause (a) of Explanation 2 below Section 263 if in the opinion of Pr. CIT, an order passed by the AO is without making enquiries or verifications, which should have been made, the same shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue for the purpose of Section 263 calling for exercise of revisionary power. As regards the contention raised by assessee in support of the assessee s claim for deduction on account of unrealized gain on mutual fund while computing book profit u/s 115JB of the Act on merit, we agree with the contention of the Ld. CIT DR that the same is not relevant at this stage as the said issue has not been decided by the Pr. CIT on merit in his impugned order passed u/s 263. While setting aside the order of the AO passed u/s 263, he has directed the AO to frame the assessment de novo after making proper verification / enquiry on the issue of allowability of assessee s claim for deduction on account of unrealized gain on mutual fund while computing book profit u/s 115JB in accordance with law and after giving the assessee-company a reasonable opportunity of being heard. CIT thus has left this issue to be decided by the AO on merit in accordance with law after giving the assessee-company a reasonable opportunity of being heard and the assessee, therefore, is at liberty to support and substantiate its claim on this issue on merit before the AO by relying on the relevant judicial pronouncements. We uphold the impugned order passed by the Ld. Pr. CIT u/s 263 and dismiss this appeal of the assessee.

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• 2021 (7) TMI 568
  Revision u/s 263 - AO has passed the assessment order without making enquiries or verification - HELD THAT:- This is not a case where the AO has passed the assessment order without any enquiry, but the AO has taken one of the possible views taking into consideration the facts and circumstances of the case and the submissions made in the light of the cases relied upon by the assessee. As department has accepted the return of the assessee in the assessment years 2011-12 and 2012 -13 in which the similar issues were involved. The assessee has demonstrated the same by furnishing copies of computations and assessment orders passed u/s 143(3) of the Act. Further, the assessee has also placed on record the copy of notice issued by the AO u/s 142 of the Act issued during the assessment proceedings for the assessment year 2018-19, copy of reply to the said notice and the copy of assessment order passed by the AO u/s 143(3) read with sections 143(3A) 143(3B) of the Act for the assessment year 2018-19 to demonstrate the consistent stand of the revenue in the previous years and the subsequent year. Perusal of the said documents reveal that the department has accepted the plea of the assessee in the assessment years 2011-12, 2012-13 and 2018-19. The Ld. PCIT has not pointed out any material change in the facts of the present case. Claim of deduction u/s 54B 54F - As per the decision of Mahendra Rajnikant Zaveri [ 2018 (1) TMI 182 - ITAT JAIPUR] in the light of the CBDT Circular No 791 dated 02. 06. 2000 and taking into consideration the impossibility of the assessee being able to invest the amount, has held that the period of 6 months for the purposes of investment in specified assets must be reckoned from the date of receipt of consideration. So, we are of the considered view that since the AO had taken a possible view after hearing the assessee in the light of the cases relied upon by the assessee, the Ld. PCIT has wrongly exercise the jurisdiction u/s 263 of the Act and set aside the assessment order. As per the settled law u/s 263 of the Act, the CIT has power to examine an assessment order to ascertain as to whether it is erroneous and prejudicial to the interest of the revenue. Section 263 of the Act does not confer jurisdiction to rectify each and every mistake in the assessment order. Therefore, the assessment order can be revised only where the order is erroneous as well as prejudicial to the interest of the revenue and not for rectification of mistakes in the order. In the present case, since the AO had passed the assessment order after making enquiries and had taken a possible view consistent with the stand of the department in assessee s own cases for the preceding assessment years 2012- 13 and 2011-12 and subsequent assessment year 2018-19, the Ld. PCIT has wrongly invoked the jurisdiction u/ s 263. Appeal of the assessee is allowed.

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• 2021 (7) TMI 562
  Late filing fees u/s 234E - intimation u/s 200A - - TDS return for the 1st quarter for the financial year 2014-15 was filed on 25. 08.2015, which was due on 15. 07.2014 - TDS returns were filed after June, 2015, even intimation was issued after June, 2015 - diversified view - HELD THAT:- In the case of Gangamai College vs. ACIT, [ 2018 (11) TMI 697 - ITAT PUNE ] has held that the AO had no jurisdiction to issue notices u/s 200A of the Act for computing and charging late filing fees u/s 234E of the Act for the period of tax deducted prior to first day of June, 2015, by following the judgment in the case of Fatheraj Singhvi vs. Union of India [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] wherein in has been held that even in the cases of belated returns where it is clearly related to the period prior to 01. 06. 2015. Hon ble Supreme Court in the case of CIT vs. Vegetable Product Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] wherein the Hon ble Court has held that in case of difference of opinion on an issue, the opinion which is in favour of assessee needs to be followed. Since, the issue involved in the present case is identical to the issue involved in the case of Gangamai College vs. ACIT (supra) and the Tribunal has decided the same in favour of the appellant/ assessee, we find merit in the contention of the Ld. counsel that the impugned order is contrary to decision of the Pune Bench of the Tribunal discussed above. Hence, respectfully following the decision of the Pune Bench of the Tribunal discussed above, we allow the appeal of the assessee and set aside impugned order passed by the Ld. CIT(A). Accordingly, we direct the AO to delete late fee imposed in this case. Appeal of the assessee is allowed.

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• 2021 (7) TMI 558
  TDS u/s 195 - assessee had purchased the software from a company located in Israel - AO took a view that payment made for purchase of software was in the nature of royalty and that assessee was required to deduct TDS while making such payment - HELD THAT:- As relying on ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED [ 2021 (3) TMI 138 - SUPREME COURT] amounts paid by resident Indian end-users/distributors to non-resident computer software manufacture/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty' for the use of copyright in the computer software and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in Section 195 of the Income Tax Act were not liable to deduce any TDS u/s 195. We are of the view that Ld. CIT(A) erred in treating the receipts from sale of software as royalty. Accordingly grounds raised by assessee stands allowed.

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• 2021 (7) TMI 555
  Exemptions u/s 11 and 12 - Charitable activity u/s 2(15) - whether the assessee trust (A section 25 company, as per old Companies Act, 1956), is charitable institution or not? - HELD THAT:- We note that assessee trust is a company incorporated u/s 25 of the Companies Act, 1956, as non-profit making organization. The assessee is promoted by Surat Diamond Association, its other members and the Government of Gujarat for development of world class gem and Jewellery Park. The main object of the assessee is to develop the world class gem and jewellery park. The city of Surat had been traditionally the head-quarter of diamond, traded export for Gujarat. We note that in the present case of the assessee, registration u/s 12AA is granted. The assessee trust is carrying out the activities of general utility of development of infrastructure for world class gem and jewellery in Surat. Now, on insertion of First Proviso to section 2(15), the benefit of section 11 cannot be deprived as the assessee is not carrying out any trade, commerce or business and only deals with its members to attain its objects. Therefore, it cannot be considered as an entity carrying out business under the guise of charity, as referred at para 3.2 of aforesaid CBDT Circular. We note that the activities of mutual organizations are to be restricted to contributions from and participation of only their members. In the case of assessee also, it can be seen from the facts discussed by assessing officer as well as assessee that the assessee organization is based on the principle of mutuality. It is clear from the facts that assessee has been allotting the plots and collecting contributions from its members only and there is complete identity between the persons who contribute the amounts to the assessee trust and beneficiaries of assessee`s activities. It is also established from the facts that assessee deals/transacts only with its members strictly for the fulfillment of its objects. The bye laws of assessee`s organization restrict the allotment of plots and receiving contributions from anyone other than members. It is also established that all the contributors as well as beneficiaries of the assessee are its members only and there is complete identity between the contributors and participants. As shown from the records that the assessee trust is not providing any services to the persons other than its registered members. The assessee trust does not distribute its profits among members and it does not pay higher remuneration to its employees. It is abundantly clear that the income of the mutual concern falls outside the ambit of charging section 4 of the Income Tax Act and, therefore, outside the tax net. The net effect of applicability of exemption provision in section 11 is also just the same. The object of the assessee is of general public utility and does not hit by first proviso to section 2(15) of the Act. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on these addition are, therefore, upheld and the grounds of appeal of the Revenue are dismissed.

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• 2021 (7) TMI 554
  Disallowance u/s 80IB(10) - whether the assessee is a builder and not a developer and builder ? - HELD THAT:- The nature of activities carried out have to be examined. The customers of the assessee have purchased the property looking at the brand SOBHA which belongs to the assessee. It is the assessee which has formulated the scheme of development in which the sister concern SITPL has no role except for conveying title in respect of theland to the customers of the assessee. So also, the provision of the properties as security for the loans raised by the assessee actually goes to show that the assessee is actively engaged in raising finance for the project and the sister concern has no role to play other than conveying title. Nothing turns much on these aspects of the matter pointed out by the learned DR in the submissions filed before us. We are of the view that the assessee has established that it was carrying out the activities that are done for developing the housing project and various factors pointed out by the Assessing Officer are neither determinative of the issue nor they are relevant to judge the character and status of the assessee with regard to the housing projects executed. - Decided against revenue Disallowance u/s 14A - as stated that in the returns filed pursuant to notice issued u/s 153A of the I.T.Act, the assessee by mistake and sheer inadvertent, erroneously adopted the disallowance u/s 14A of the I.T.Act made in the original assessment - HELD THAT:- The disallowance u/s 14A of the I.T.Act in the original assessment order are subject matter of appeal in regular assessment. Depending upon the final outcome in the regular assessment as regards the disallowance u/s 14A of the I.T.Act, the same shall be adopted in the assessment orders u/s 153A of the I.T.Act. Therefore, with the above directions, ground as disposed of Disallowance u/s 14A r.w.r. 8D(2)(ii) - as decided in the case of CIT Anr. v. Microlabs [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] had held that when investments are made out of common pool of funds and non-interest bearing funds are much more than the investment in tax free securities, no disallowance of interest expenditure u/s 14A of the I.T.Act can be made - HELD THAT:- In the instant case, this specific plea was not raised before the A.O. Therefore, in the light of the judgment of the Hon ble jurisdictional High Court in the case of CIT Anr. v. Microlabs (supra), we restore the case to the A.O. The A.O. shall re-compute the disallowance u/s 14A of the I.T.Act read with Rule 8D(2)(ii) of the I.T.Rules following the dictum laid down by the Hon ble jurisdictional High Court in the case of CIT Anr. v. Microlabs. Deduction u/s 80G - HELD THAT:- Section 80G(1) of the I.T.Act states that the quantum of deduction shall be equal to aggregate of 100% in some cases and 50% in other cases. Hence, there is a restriction on the quantum of deduction which cannot exceed 10% of the gross total income. The learned A.O. has allowed 50% out of the qualifying amount instead of restricting the qualifying amount to 10% of the gross total income. Since the same is opposed the plain language of section 80G(1) of the I.T.Act, the A.O. is directed to allow the deduction u/s 80G(1) of the I.T.Actby restricting the aggregate of the sums to 10% of the gross total income. Computation of book profit u/s 115JB - Disallowance u/s 14A - HELD THAT:- We notice that the Special Bench of ITAT in the case of Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] has expressed the view that the amount disallowed u/s 14A of the I.T.Act cannot be adopted for the purpose of computation of book profit u/s 115JB of the I.T.Act and the disallowance to be made under clause (f) to Explanation 1 has to be computed independently without having regard to the provisions of section 14A of the Act. In view of the above, we are unable to sustain the addition made by the A.O. Since the addition required to be made under clause (f) to Explanation 1 is required to be computed independently, we restore this issue to the file of the A.O. for examining it afresh. Denying a part claim of deduction u/s 80IB(10) - assessee has violated the conditions mandated u/s 80IB(10)(f) - A.O. held that the assessee cannot sell any flat in the housing project to non-individuals - HELD THAT:- There is no restriction for the assessee to sell a flat to a company. Therefore, the A.O. and the CIT(A) has misconstrued section 80IB(10)(f) of the I.T.Act and taken a view that the assessee cannot sell any flat in the housing project to non-individuals, which is erroneous understanding of statutory provisions. Accordingly, we set aside the orders of the A.O. and the CIT(A) on this count. The A.O. is directed to recompute deduction u/s 80IB(10)(f) of the I.T.Act keeping in view the above direction.

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• 2021 (7) TMI 553
  Exemption u/s 54F - deduction was denied mainly on the ground that the assessee had owned more than one residential house as on the date of purchase of new Asset - claim of the assessee was denied firstly on the reason that the assessee has not constructed residential house at Kattigenahalli, Bengaluru and the payment said to be made towards construction was met by assessee by cash - HELD THAT:- On enquiry by the Inspector of the Department, it was revealed that the said property consists of ground floor, first floor and second floor and it was a commercial building evident from page No.24 of the written submissions which is not countered by the learned DR and it was not a residential building and AO in his remand report admitted that assessee did not own more than one house as on date of transfer of property survey No.149, Bokkasagara Village, Anekal Taluk. Therefore, on this count exemption under section 54F of the Act cannot be denied. Payment made towards construction of the house - As a proof of this, in support of this expenditure, assessee filed payment vouchers before us - These evidences were also filed before the lower authorities. The lower authorities have brushed it aside on the reason that these are self-made vouchers or are not having sufficient details regarding the various expenditure incurred by the assessee. In our opinion, without examining the parties concerned, lower authorities have precluded in rejecting the evidence submitted by assessee in the form of bills and vouchers. Being so, the assessee s property No.9 at 100 Ft. Road, BTM Layout, Bengaluru, cannot be considered as a residential property and also expenditure incurred by assessee towards construction of new residential property cannot be brushed aside - evidence brought by assessee in the form of Khatha show that originally at the time of acquisition of property, there was only 500 sq. ft. of built-up area at 3646/8/8/1 as per Khatha extracted at pages 22, 23 of written submissions, the construct area in property bearing No. 8/1, Kattigenahalli Village, Bengaluru, was 500 sq. ft. - as per Khatha dated 23.12.2014 issued by BBMP, the constructed area in the said property was at 2500 sq.ft. Thus, it means that there is addition construction between 14.06.2013 to 23.12.2014 and also supported by the bills and vouchers submitted by the assessee and due consideration to be given to these evidences - we are inclined to grant deduction under section 54F of the Act as claimed by the assessee. - Decided in favour of assessee.

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• 2021 (7) TMI 549
  Disallowance of claim of payment of property tax - CIT-A deleted the addition - HELD THAT:- As decided in own case [ 2021 (2) TMI 1059 - KARNATAKA HIGH COURT] HC confirmed the ITAT s order as regards the deletion of addition - In view of the above finding of the Hon ble High Court, posting of the Revenue s appeal for hearing by the ITAT s Registry is a mistake. Hence, the Revenue s appeal is dismissed.

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• Customs

• 2021 (7) TMI 597
  Seeking grant of Interim Bail - smuggling of gold - whether the petitioners are entitled to get protection as per guidelines issued by the High Power Committee or not? - HELD THAT:- The material collected in case diary submitted by the investigating authority, prima facie shows the involvement of the petitioners in alleged offence of smuggling of gold. The petitioner No. 1- Vijay Baid is also facing proceeding under Section 124 of the Customs Act by the Directorate of Revenue Intelligence, Lucknow Zonal Unit, Lucknow dated 22.02.2020 and for that the investigation is under progress. The show cause notice has been issued without prejudice to any other action that may be taken against the persons/ persons under any other law for the time being in force including the Customs Act, 1962. This prima facie establishes that the petitioners are habitual offenders. The diary statement of the witnesses also prima facie indicates that the petitioners are very much involved in smuggling of gold and silver, which is injurious to economic growth of the nation. Hon'ble the Supreme Court in recent judgment passed on 19th March, 2021 in case of THE STATE OF KERALA VERSUS MAHESH [ 2021 (3) TMI 1226 - SUPREME COURT] , while examining the order passed by the Supreme Court in Suo Moto Writ Petition (C) No. 01/2020 in para 38 held the orders of this Court are not to be construed as any direction, or even observation, requiring release of under-trial prisoners charged with murder, and that too, even before investigation is completed and the charge-sheet is filed. The possibility of the accused /petitioners absconding or otherwise defeating or delaying the course of justice, reasonable apprehension of witnesses being threatened or influenced or of evidence being tempered, therefore, the petitioners are not entitled to get benefit from order of the Supreme Court and the recommendation of the High Power Committee - The Chief Judicial Magistrate, Raipur has not committed any error in rejecting the application of the petitioners for grant of interim bail, warranting interference of this Court. Petition dismissed.

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• 2021 (7) TMI 596
  Rectification of mistake - error apparent on the face of record - Supreme Court in UNION OF INDIA (UOI) AND ORS. VERSUS RAJ GROW IMPEX LLP AND ORS. [ 2021 (6) TMI 778 - SUPREME COURT] has held that matters relating to the interveners shall also be governed by the findings of this judgment and appropriate orders in their regard shall be passed by the authorities/Courts, wherever their matters relating to the subject goods are pending but, their options of further appeal, only in relation to the quantum of amount payable, including that of penalty, is left open - HELD THAT:- The review petitioner states that no error apparent on the face of the record could be pointed, and the review petitioner is constrained to move this Court for necessary directions on the lines of the judgment of the Supreme Court. We are afraid that the scope of review of our order is not properly appreciated by the review petitioner. Having seen that there is no error apparent on the face of record, we are convinced that by referring to the judgment dated 17.06.2021 we ought not to review our order and issue directions on the lines indicated - revision petition dismissed.

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• 2021 (7) TMI 579
  Reassessment of bills of entry - reassessment sought on the ground of wrong classification - N95 Respirator Mask (RC016) - classification of the item under CTH 6307 9020 adopted - HELD THAT:- There is no dispute as regards classification is concerned and it was based on the wrong classification of the appellant that prompted it to seek re-assessment of the Bills-of-Entry, which request is very much correct. Therefore, the direction of the Adjudicating Authority to get the original order modified by resorting to Section 128 ibid. was uncalled for - However, even the Learned Departmental Representative agreed to the request of the Learned Advocate for the appellant for remanding the issue for re-assessment. It is not as though the appellant did not seek re-assessment even before the Adjudicating Authority; the Authority did not discharge his responsibility, but rather directed the appellant to file an appeal. The matter is remanded to the file of the Adjudicating Authority who shall pass an appropriate speaking order in accordance with law, after affording reasonable opportunities to the appellant - Appeal allowed by way of remand.

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• 2021 (7) TMI 578
  Allegation for conducting market inquiry improperly by the Inspector (Cutoms) (now deceased) - Illegal availment of drawback - fraudulent export of goods by the companies of kingpin - penalties u/s 114A and 114AA of Customs Act - HELD THAT:- Nothing has been discussed by the Adjudicating Authority as to what has rendered the alleged casual and amateur manner of conducting market inquiry into an act of alleged abetment for fraudulent export. To further appreciate, it is important to understand the ingredients of the penal offence, namely, abetment. Section 107 of Indian Penal Code 1862 defines abetment to include instigating any person to do a thing or engaging with one or more persons in any conspiracy for the doing of a thing, if an act or illegal omission takes place in pursuance of that conspiracy and in order to the doing of that thing, or intentional aid by any act or illegal omissions to the doing of the said act. The allegation against the appellant is of conducting market inquiry in such a manner so as to aid the fraudulent exporters to draw heavy duty draw backs. Apparently, this inquiry was conducted post the alleged fraudulent exports were already made. It is abundantly clear that to constitute abetment the abetor has to come into action of abeting the offender prior later does or fails to do an act which amounts to committing the crime/offence. The market inquiry was post the commission of crime of fraudulent export of handwoven carpets which were otherwise liable for confiscation to wrongly avail higher duty draw-back by Mr. Sajjan Kumar. Hence, no question arises of abeting him at a stage later than the commission of said fraudulent exports. There is no evidence produced by the department which may prove that the appellant ever instigated or conspired or intentionally aided Shri Sajjan Kumar to fraudulently export the hand woven carpets to traders in different countries and to take as high as 12 Crores of drawback in DAPL and higher drawback in other companies as well. There is no evidence that appellant has been the beneficiary of these amounts or part thereof. Penalties under Section 114 (iii) 114 AA - HELD THAT:- Abeting is something much more than the negligence or dereliction of duties. The noticed negligence on part of the appellant unless and until goes back to the stage of initiation of crime, same cannot be held to the abetment either instigation or conspiracy. The improper and amateur act of market survey in the given facts and circumstance, cannot be held as aiding Shri Sajjan Kumar to make fraudulent export of carpets. Though the Adjudicating Authority below has taken a plea that the appellant in his statement has admitted for the alleged offence but the perusal of the document on record shows that the admission of appellant is only to the fact that the inquiry conducted by him with his Co-Inspector Naresh Kumar is an improper inquiry that too after it was brought to his notice that both the firms inquired by them are found by DRI to have been controlled by same Sajjan kumar who has been investigated in the impugned matter. The said statement has wrongly been considered as an admission of appellant for abeting fraudulent exports made by Sajjan Kumar and for heavy amount of draw back being claimed by him. Appeal allowed.

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• Corporate Laws

• 2021 (7) TMI 566
  Seeking restoration of name of company which was struck off by the Registrar of Companies, Uttar Pradesh - section 252(3) of the Companies Act, 2013 read with Rule 87A of the National Company Law Tribunal Rules, 2016 - the company is a living entity and also has certain assets which necessitate restoration of name - HELD THAT:- The documents relied upon by the Appellant unmistakably demonstrate that the Appellant Company is a living entity. The Appellant has been able to satisfy this bench that it has certain assets which necessitate and justify the restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would neither be just nor equitable - As per several decisions of various courts it should only be an exceptional circumstance that court should refuse restoration where the company has been struck off for its failure to file annual return as that would be excessive or inappropriate penalty for that oversight. It is therefore the Registrar of Companies, the Respondent herein, is ordered to restore the original status of the Appellant Company as if the name of the Company has not been struck off from the Registrar of Companies and take all consequential actions such as change of Company's status from 'Strike Off' to 'Active' (for e-filing) etc. - Application allowed.

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• 2021 (7) TMI 565
  Entitlement and eligibility to seek direction for calling an Extra-ordinary General Meeting in the Respondent Company by this Tribunal - Section 98 of the Company Act 2013 - HELD THAT:- Under Section 98 of Companies Act, 2013, Tribunal may either Suo motu or on the application of any director or member of the company may exercise its power, only if; for any reason, it is impracticable to call a meeting of a company, other than an annual general meeting - Whereas a bare perusal of the provision of Section 100 of the Companies Act 2013 shows that the board may whenever it deems fit may call an extra ordinary general meeting of the company under Section 100(1) of Companies Act, 2013 - Apart from that provision, even a shareholder under Section 100(2) of Companies Act, 2013 may send a requisition to call an EOGM and in view of Section 100(4) of the Companies Act, 2013, on the requisition of the shareholder, if the Board does not within twenty-one days from the date of receipt of a valid requisition, proceed to call a meeting for the consideration of that matter on a day not later than forty-five days from the date of receipt of such requisition, the requisitionists themselves within a period of three months from the date of the requisition shall call and held a meeting in the same manner in which the meeting is called by the Board. The petitioner being the shareholder of the company is entitled under the law to submit a requisition to call an EOGM under Section 100(2) of the Companies Act, 2013. Apart from that it is admitted by the petitioner that the petitioner is the director of the company and the respondent No. 2 in its reply has also admitted that the resignation of the petitioner No. 1 from the post of director has not been accepted as yet and the name of the petitioner No. 1 and her son are still appearing on the website of Ministry of Corporate Affairs, as Directors in the respondent No. 1 company. So, the petitioner may even call an EOGM u/s. 100(1) of the Companies Act, 2013. It is seen that there is a specific provision under the Companies Act, 2013 to call an EOGM and there is no objection on behalf of respondent No. 2 to call an EOGM under Section 100 of the Companies Act, 2013. Hence, it is not impracticable to call an EOGM of the company. So, under such circumstances instead of exercising power under Section 98 of the Companies Act, 2013, it is deemed proper to direct the petitioner to call an EOGM of the company as per the provision contained under Section 100 of the Companies Act, 2013. The prayer of the petitioner to call an EOGM of the company under Section 98 of the Companies Act, 2013 is hereby rejected and the petitioner is hereby directed to take appropriate steps to call an EOGM in accordance with the provision of Section 100 of the Companies Act, 2013 - Application disposed off.

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• 2021 (7) TMI 561
  Compounding of offence under Section 233B of the Companies Act, 1956 read with the Companies (Cost Audit Report) Rules, 2011 - Section 441 of the Companies Act, 2013 - delay in filing application is properly explained - HELD THAT:- From the case of Pahuja Takii Seed Ltd. Ors. Vs. Registrar of Companies, NCT of Delhi Haryana [ 2018 (11) TMI 195 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] it is clear that although the offence is punishable with fine not exceeding twenty-five lakh rupees in case of company, it could be compounded by the Tribunal. Section 441(6) of the Companies Act, 2013 as it stood amended with effect from 2nd November, 2018, gives power to this Tribunal to compound the offences punishable under the Companies Act, 2013 other than the offences punishable with imprisonment only or with imprisonment and fine irrespective of the pendency of prosecution even without permission of the Criminal Court. The amendment takes away the need of taking permission of Special Court - In the case on hand, even though prosecution is pending without seeking permission from the concerned Court, this Tribunal can compound the offence relying upon the aforesaid two judgments of the Hon'ble NCLAT and the amended Section 441(6) of Companies Act, 2013. The Tribunal being the Adjudicating Authority hereby compounds the said offence under Section 233B of the Companies Act, 1956 for the Financial year 2013-14 on payment of the compounding fee of ₹ 5000/- by the Applicant No. 1 Company and ₹ 40,000/- each by the Second and Third Applicants. The total compounding fee payable by the Applicants No. 1, 2 and 3 is ₹ 85,000/- - Applicants are directed to remit the compounding fee to the relevant 'Head of Accounts' of the Ministry of Corporate Affairs (MCA) by way D.D. or online payment, within three weeks from this date and report the compliance before this Tribunal on 26.07.2021. Petition disposed off.

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• Insolvency & Bankruptcy

• 2021 (7) TMI 593
  Maintainability of writ petition - petitions are filed on the premise that the appeals and stay petitions are not being taken up by the NCLAT - effective alternative remedy of appeal under Section 61 of I B Code - HELD THAT:- As observed by the Apex Court in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT] the IBC, 2016 is a Single Unified Umbrella Code, covering the entire gamut of the law relating to insolvency resolution of corporate persons and others in a time bound manner. The code provides a three-tier mechanism namely, (i) the NCLT, which is the adjudicating authority (ii) the NCLAT, which is the appellate authority (iii) the Supreme Court, which is the final authority, for dealing with all issues that may arise in relation to the re-organisation and insolvency resolution of corporate persons. An order passed by the NCLT is appealable to the NCLAT under Section 61 of the Code and the orders of the NCLAT are amenable to the appellate jurisdiction of the Supreme Court under Section 62. One of the issues that arose for consideration before the Division Bench in SULOCHANA GUPTA VERSUS RBG ENTERPRISES (P.) LTD. [ 2021 (1) TMI 240 - KERALA HIGH COURT] , was the maintainability of the writ petition under Article 226 against an order of the NCLT. The Division Bench, after elaborate survey of precedents, answered the issue by holding that the writ petition to be not maintainable. In view of the exposition of the Honourable Supreme Court regarding the objective of the Code and the authoritative pronouncement of the Division Bench, the writ petitions are dismissed.

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• 2021 (7) TMI 581
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - Exercise of jurisdiction by Adjudicating Authority while examining the nature of transaction - collusive application or not. Whether the Adjudicating Authority has exceeded in its jurisdiction while examining the nature of transaction in question? - HELD THAT:- The IBC recognizes that for the success of Insolvency regime the real nature of transaction has to be unearthed in order to prevent any person from taking undue benefit of its provisions to the detriment of the rights of legitimate creditors. It means, while admitting the Application under Section 7 of the IBC, it is the duty of the Adjudicating Authority to investigate the real nature of the transaction in order to prevent any person from taking undue benefit of its provisions to the detriment of the rights of legitimate creditors. The Adjudicating Authority is obliged to investigate the nature of the transaction and should be very cautious in admitting the Application in order to prevent taking undue benefit of provisions of IBC to detriment of the rights of legitimate creditors as well as to protect the Corporate Debtor from being dragged into CIRP with malafide - the argument of Ld. Counsel for the Appellant that Ld. Adjudicating Authority when entered into investigating the nature of the transaction then exceeded in its jurisdiction under Section 7 (5) of the IBC, is not convincing. Whether the transaction in question is Financial Debt? - HELD THAT:- As per the definition given in Section 5(8) of IBC, 'financial debt' means a debt along with interest, if any, which is disbursed against the consideration for the time value of money. The essential requirement is of disbursement and consideration for time value of money - The Financial Creditor is not doing financial business but manufacture of rice. On the other hand, the Corporate Debtor Company incorporated on 11.09.2018 having authorized and paid share capital of 7crores 30 lacs, as per the MCA data filed by the Financial Creditor showed that the Bank of Baroda has sanctioned cash credit limit to the tune of ₹ 24 crores in the year October, 2018. According to the Financial Creditor, they have granted a loan of ₹ 10 lacs on 20.04.2019 - it is not convincing that the Corporate Debtor Company having paid up share capital of 7 crores 30 lacs and cash credit limit to the tune of ₹ 24 Crores has to take a loan for ₹ 10 lacs from the Financial Creditor and that the Corporate Debtor is not able to make repayment of ₹ 10 lacs and has no objection if the Application under Section 7 is allowed and the CIRP initiated against the Corporate Debtor Company - the transaction in question is not a financial debt within the meaning of Section 5 (8) of the IBC. Whether a default has occurred? - HELD THAT:- In support of date of default, the Financial Creditor has not filed any document. Therefore, it is not clear that how the financial creditor has arrived at date of default is 21.04.2019 (i.e., just next day of disbursement of loan) or 30.09.2019. It is not the case of the Financial Creditor that they have served demand notice on the Corporate Debtor and the Corporate Debtor has failed to make the payment or the loan was given for a specific period - the Financial Creditor has failed to satisfy that the transaction in question is a Financial Debt and a default has occurred. Whether the application in question is collusive? - HELD THAT:- Nobody will believe that the Corporate Debtor Company having paid up capital of ₹ 7 Crores 30 lacs and Bank of Baroda has sanctioned cash credit limit for the amount of ₹ 24 Crores, is not able to make a payment of ₹ 10 lacs and they have no objection, if the CIRP is initiated against the Company. In this case when the Corporate Debtor has admitted the default in repayment then they should have make the prayer that they are ready to settle the matter with Financial Creditor instead of submitting that they have no objection in admitting the application. In the circumstances, Ld. Adjudicating Authority held that it is a case of collusive Application - Financial Creditor has filed MCA Data of the Corporate Debtor Company, which shown an open charge in favour of Bank of Baroda, such loan was sanctioned on 12.10.2018 and on 02.08.2019 bank declared the account of Corporate Debtor as NPA. Thereafter, the bank has initiated recovery proceedings against the Corporate Debtor under the provisions of Section 13 (4) SARFAESI Act. Ld. Adjudicating Authority has given a finding that the Corporate Debtor trying to seek benefits of moratorium under Section 14 of the IBC and other advantages in accordance with other provisions of the IBC and thereby rejected the Application filed under Section 7 of the IBC - the Ld. Adjudicating Authority, is agreed upon, as there is inevitable conclusion that the Financial Creditor colluded with the Corporate Debtor and filed the Application with other than the Resolution or for ulterior motive to prevent the Bank of Baroda to recover the debt from the Corporate Debtor. There is no merits in this Appeal - Appeal dismissed.

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• 2021 (7) TMI 580
  Maintainability of application - CIRP is initiated - amount claimed to be in default were deposits made by flat owners with the Developer - while CIRP was pending, the Respondent No. 1 filed proceedings under Section 7 of IBC for the amounts deposited in terms of the agreement to sell, with the Developer - HELD THAT:- It is clear that the Sale Agreement executed between the Developer M/s Avaani Projects and Infrastructure Ltd. and the main land owner M/s Electrical Manufacturing Company Ltd. and the Corporate Debtor as Maintenance Company were to render common service and upkeep till the Association/Society of the flat owners was formed. The Corporate Debtor was to look after the maintenance till three years of the Deed of Conveyance by the respective purchasers with the Developer and Maintenance Company or so soon after completion of construction of Phase II of Avani Oxford whichever was later. The Appeal has also put on record that Avani Oxford Project received Completion Certification on 21st March, 2016. The application under Section 7 of IBC (Page 39 of the Appeal) is dated 21st November, 2019. Record shows that the Financial Creditors also moved the National Consumer Disputes Redressal Commission in July, 2016 in which orders were passed and even written submissions were filed by the Developer and that the Financial Creditors were pursuing their remedies. The Balance Sheets of the Corporate Debtor have also been filed - The Respondent No. 1 Company of Flat Purchasers has been trying to get back the money deposited by Flat Buyers themselves. They have also pursued rights in Consumer Forum - there is no substance in the claim made by the Appellant that the debt is time barred. Admittedly, the amounts were collected by the Developer and kept with its subsidiary, the Corporate Debtor, for the purpose of maintenance till the Association/ Society or Holding Organization (i.e. Respondent No. 1) gets established to hand over the amounts to the body of the flat owners. Section 5(8)(f) Explanation makes it clear that any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing. The claim made by Respondent No. 1 is accepted that it is the Financial Debt . There is Financial Debt due and in default of amount more than threshold stated in Section 4 of IBC. There is any error in the impugned order vide which the CIRP was initiated. Appeal dismissed.

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• 2021 (7) TMI 567
  Seeking Liquidation of Corporate Debtor - also seeking appointment of liquidator - Section 33 and 34 of the Insolvency Bankruptcy Code - HELD THAT:- Upon going through the contents of the present Liquidation application and the provisions contained in the Code this Adjudicating Authority is of the view that as Sec. 33(1) of IBC, 2016 contemplates that this Tribunal can pass an order of liquidation of the corporate debtor, if the maximum period permitted for the completion of the CIRP is over and in the present matter more than 1000 days has passes since initiation of CIKP and as by operation of Sec. 33(1) IBC, the corporate debtor is necessarily required to be ordered for the liquidation under Sec. 33(1)(b) of the IBC, 2016 - even COC in its 18th meeting held on 04.01.2020 has with 95.29% majority has passed the resolution to liquidate the Corporate Debtor as no resolution plan was received for revival of the company and even the latest valuation of the assets have not attracted any resolution plan and further the commercial wisdom of the COC cannot be challenged which has approved the resolution for liquidation of the company. This Adjudicating Authority hereby directs that the Corporate Debtor i.e. Shree Bhawani Paper Mills Ltd. shall go into Liquidation and the moratorium declared for the Corporate Debtor under Liquidation shall cease to have effect from pronouncement of this Order - Resolution Professional Ms. Anju Agarwal is appointed to act as liquidator - application allowed.

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• 2021 (7) TMI 564
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational debt or not - payment of Minimum Guaranteed Royalties to the Operational Creditor - use of Trademark - licensed product - existence of debt and dispute or not - HELD THAT:- As per the judgment VIKAS SALES CORPORATION AND ANOTHER VERSUS COMMISSIONER OF COMMERCIAL TAXES AND ANOTHER (AND OTHER APPEALS AND WRIT PETITIONS) [ 1996 (5) TMI 363 - SUPREME COURT] it is held that incorporeal rights like trademarks, copyrights, patents and rights in personam capable of transfer or transmission are included in the ambit of goods - Further having considered the facts and circumstances and the material available on record the Adjudicating Authority is of the view that for a claim to fall within the definition of 'operational debt', the operational creditor must establish that it has a right to payment in respect of the provision of goods or services and also that Corporate Debtor has committed a default towards its liability or obligation in respect of such outstanding claim . In the present case, the MGR was a fixed payment due and payable by the Corporate Debtor to the Operational Creditor under the Agreement and the non-payment by the Corporate Debtor, for using the Trademark which is the Licensed Product of the Operational Creditor, amounted to an operational debt under the IBC. It has been observed that time and again the Corporate Debtor has admitted its liability be it by way of making a part payment (first and second quarter payment) or by submitting before the Adjudicating Authority that admittedly the claim of the Applicant arises out of failure to pay the Minimum Guaranteed Royalties and were not paid on the condition that the Operational Creditor under the obligation to promote the brand for the Corporate Debtor therefore, it is a clear admission of default and this Adjudicating Authority does not have to indulge in the details or the terms of the Agreement. The Corporate Debtor did not raise any dispute in terms of Section 8(2)(a) read with Section 5(6) of the IBC, either with regard to the (a) existence of the amount of debt, (b) the quality of goods or service, or (c) the breach of a representation or warranty, either directly or indirectly. Therefore, the defense of pre-existence of dispute can be categorized as a moonshine dispute. The Application is admitted and the commencement of the CIRP is ordered - Moratorium declared.

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• 2021 (7) TMI 563
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT:- The date of default is 29.12.2015 which is the date of the last invoice issued which was unpaid, and the present application is filed on 24.09.2018. Hence the application is not time barred and filed within the period of limitation - the registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. Existence of dispute before the receipt of demand notice or invoice - HELD THAT:- On appraisal of the arguments advanced by the Ld. Counsels, it emerges that there were disputes existing prior to the issuance of the Demand Notice - in the e-mail dated 07.08.2014, 27.03.2015, 01.02.2016, 25.03.2016 and 08.04.2016 stating the deficiency in the goods (PP sacks) supplied and that the foreign customer had rejected the entire shipment of raw material supplied by the Operational Creditor, causing a loss of USD 60030 to the Corporate Debtor establishes that the Operational Creditor was aware of the dispute prior to issuance of Demand Notice dated 01.11.2017. A pre-existing dispute does not entitle the Operational Creditor to seek Insolvency Resolution of the Corporate Debtor. This Bench is of the view that the prayer for initiating Corporate Insolvency Resolution process against the Corporate Debtor is not sustainable - Application disposed off.

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• 2021 (7) TMI 560
  Seeking Liquidation of Corporate Debtor - seeking appointment of liquidator - Section 33 and 34 of the Insolvency Bankruptcy Code - HELD THAT:- It is pertinent to refer Section 33(1)(a) of the IBC, which mandates that where the Adjudicating Authority before the expiry of maximum period permitted for completion of the corporate insolvency resolution process under Section 12 or the fast track corporate insolvency resolution process under Section 56, as the case may be, does not receive a resolution plan under sub-section (6) of Section 30, it shall pass an order requiring the Corporate Debtor to be liquidated in the manner as laid down in the manner. The Tribunal observes that upon failure of the resolution process and no approved resolution plan and further on completion of statutory CIRP process, there is no alternative left but to order in conformity with the decision of the CoC liquidation has to follow under Section 33 of the Code. Adherence of the statutory requirement has to be done as the language of the Code is clear that the adjudicating authority must give effect to it whatever may be consequences - even CoC in its 8th meeting on 04.11.2020 has with 100 % majority has passed the resolution to liquidate the Corporate Debtor as no resolution plan was received for revival of the company and further RP has complied with the provisions laid down under Insolvency and Bankruptcy Code. Thus, by exercising the power under Section 33(1), this Adjudicating Authority hereby directs that the Corporate Debtor i.e. V.A.M. Resorts and Hotels Pvt. Ltd. shall go into Liquidation and the moratorium declared for the Corporate Debtor under Liquidation shall cease to have effect from pronouncement of this Order - the Resolution Professional Mr. Ashish Singh is appointed to act as liquidator. Application allowed.

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• 2021 (7) TMI 559
  Allegation of Wilful and deliberate violation of Resolution Plan by the successful Resolution Applicant(Rl) - Seeking encashment of Performance Guarantee - backing out after submission of Resolution Plan - criminal punishment u/s. 74(3) of I B Code - application seeking award of criminal punishment be filed by the erstwhile RP before this Adjudicating Authority. Can the RA be accused of backing out after submission of Resolution Plan, so as to warrant criminal punishment u/s. 74(3) of the Code? - HELD THAT:- In the scheme of the IBC, if a successful RA either refuses or evades the implementation of the approved Resolution Plan, it may tantamount to an offence under Section 74(3) of the Code - The rationale behind criminal punishment for breach or violation of a resolution plan is for maintaining the sanctity of the CIRP process and for deterring pseudo-bidders from delaying or sabotaging the insolvency resolution process - The RA had taken out a sum of over ₹ 40cr from their account for making DD/Bankers Cheque of equal amount for making down payment as per the Resolution Plan way back on 02.02.2021 itself, which has been allowed to be revalidated on 07.05.2021 by this Bench. The RA's conduct, thus appears bona fide and they cannot be held liable for breach of the Resolution Plan so as to warrant punishment u/s. 74(3) of the Code - question framed above in the negative. Can an application seeking award of criminal punishment u/s. 74(3) of the Code be filed by the erstwhile RP before this Adjudicating Authority? - HELD THAT:- The IBC being a complete Code in itself has also incorporated a specific section for trial of offences under the Code by a Special Court - A reference to the provisions of section 236 makes it abundantly clear (I) that all offences under IBC shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013 and (II) that a complaint in this behalf can only be made either by the Board or the Central Government or any person authorised by the Central Government. The applicant in the instant application on the one hand has failed in due discharge of his duties as an erstwhile RP and a Member of the MC, by absenting himself from the meeting of the MC on 29.01.2021 and on the other, he also failed in maintaining due diligence while filing the instant application before us without referring to the provisions of S. 236 of the Code according to which neither he could make a complaint seeking criminal punishment against the RA u/s. 74(3) read with Section. 236(2) of the Code without being authorised by the Central Government nor any offences under the Code could be tried by this Adjudicating Authority in view of provisions of Section 236(1) of the Code - the second question framed also answered in negative. Application not maintainable and is dismissed.

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• 2021 (7) TMI 557
  Seeking intervention in support of application filed by Ex Resolution Professional under section 66 read with section 43 of IBC, 2016 - seeking to allow the applicants access to all the reports, findings and other documents - HELD THAT:- The judgment of the Hon'ble High Court of Delhi in M/S. VENUS RECRUITERS PRIVATE LIMITED VERSUS UNION OF INDIA AND ORS. [ 2020 (11) TMI 850 - DELHI HIGH COURT ], wherein the Hon'ble High Court decided the question of whether an application filed under Section 43 of the Code, for avoidance of preferential transactions, can be adjudicated upon by the National Company Law Tribunal (NCLT), after the approval of a resolution plan and conclusion of CIRP. It is clearly evident from the aforesaid judgment that once the Resolution plan of a Resolution Applicant is approved it cannot file an avoidance application under section 43 of IBC, 2016. It is pertinent to mention that the case in hand where the applicant No. 1 is the successful resolution applicant seeking to intervene in the Avoidance application filed by the erstwhile Resolution professional prior to the approval of resolution plan is not maintainable and no direction prayed in the present application can be granted to the applicants. Application dismissed.

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• 2021 (7) TMI 556
  Secured Financial Creditor or not - seeking to put Resolution Plan again in terms of the change in status of the Applicant as a Secured Financial Creditor - HELD THAT:- Considering the fact that the loan was disbursed to the corporate debtor by the applicant but the said is not supported with any documentary evidence to show the creation of security interest as mentioned in IBBI (Liquidation Process) Regulations, 2016. Hence, the arguments that the present applicant needs to be classified as secured creditor cannot be accepted - The RP has rightly considered the absence of any proof of security document and then declared the applicant as unsecured financial creditor, at par with financial creditors in class of creditors being home buyers. In absence of any registration of charge in the ROC record of the corporate debtor, the present applicant needs to be recognized as unsecured financial creditor. Moreover, the resolution plan is approved by CoC and the resolution applicant cannot be put to hardship of facing new claim/new category of a claim. The present application fails and is rejected.

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• 2021 (7) TMI 552
  Maintainability of application - issue connected with CIRP relating to continuance of the affair of the Corporate Debtor - Seeking directions for issuance of a No Objection Certificate (NOC) in favour of Applicant No. 1 for the purpose of creating temporary security of 20% of the value of project land in favour of Ghaziabad Development Authority (GDA) in terms of Clause 4.7 of Pradhan Mantri Awas Yojana (PMAY) policy - seeking to release surplus value of security those were created by the applicant in favour of the DHFL so that the applicant can raise further loans from other Banks/Financial Institutions for construction in the project land - seeking waiver as well as reduction of rate of interest. Maintainability of application - issue connected with CIRP relating to continuance of the affair of the Corporate Debtor - HELD THAT:- By reading the provisions of Section 60(5) and 231 of IBC it is opined that this Adjudicating Authority possess with necessary jurisdiction under the above sections and in the light of Hon'ble Supreme Court decision in the matter of Gujrat Urja Vikas Nigam case [ 2017 (10) TMI 1533 - SUPREME COURT] to deal with the issue intrinsically connected with CIRP and which relates to continuance of the affair of the Corporate Debtor as going concern - the present application is maintainable before this Adjudicating Authority. Merits of the case - HELD THAT:- It is now a well settled legal position, under the IBC that the business of a Corporate Debtor undergoing CIRP must be ensured to run smoothly and as good as a going concern. The initiation of CIRP does not prevent/or prohibit the business activity of the Corporate Debtor but it is the duty of the Administrator and of the CoC to ensure that the Corporate Debtor should run all its business activities as a going concern. That apart as per settled Constitutional Law of the Land and declared by the Hon'ble Supreme Court that even in Administrative /Executive nature of proceedings it is incumbent upon the Government bodies/organization which are treated as instrumentality of state (Article 13 of the Constitution of India) to follow and adopt reasonable, just and fair procedure for making administrative decision and to maintain the transparency in their findings. As per record it is evident and may be seen that the GDA issued demand letter dated 01.10.2019, inter alia, for creation of ad hoc security and have also been apprised that GDA has issued notices dated 16.12.2020 calling upon the applicants to accomplish the mandatory requirements including creation of ad hoc security, in default of which the project shall stand disapproved. The representations made by the applicants span over a period of 16 months and even today they are facing hard ship - any further delay would irretrievably prejudice the project which is time bound in nature and under the supervision of the State Government and Central Government. Application disposed off by declaring that the applicants are entitled to create ad hoc security in favour of GDA in terms of Clause 4.7 of PMAY and they are eligible to raise additional loans from other banks and financial institutions by creating additional securities on the project land - the Administrator is directed to consider the grant of NOC in consultation with the CoC by retaining adequate and sufficient security as per their norms and to release encumbrances on security in surplus found against the outstanding amount of loan disbursed by the DHFL to the applicants and to grant the same by four weeks from the date of receipt of the copy of this order. Application is partly allowed and stands disposed off.

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• Service Tax

• 2021 (7) TMI 573
  Refund of service tax - Service Tax was erroneously paid by SIPCOT on developmental charges - rejection on the ground of time limitation - HELD THAT:- The issue involved is no more res integra as the same issue has been dealt with by the Chennai Bench of the CESTAT in M/S. DYNAMIC TECHNO MEDICALS PVT. LTD. VERSUS COMMISSIONER OF CGST CENTRAL EXCISE [ 2021 (4) TMI 888 - CESTAT CHENNAI] where reliance placed in the case of Teknomec Vs. CGST CE, Chennai [ 2019 (7) TMI 1416 - CESTAT CHENNAI ] , where this Tribunal held that when claim has been filed within reasonable time from the date when appellant received intimation from SIPCOT, the refund has to be granted. The Adjudicating Authority shall ascertain whether the date of refund application satisfies the time limit under Section 11B of the Central Excise Act, 1944 and if so, then the refund shall be issued with consequential benefits - appeal allowed by way of remand.

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• Central Excise

• 2021 (7) TMI 551
  CENVAT Credit - input services - Air Travel Services - Train Services - Courier Services - HELD THAT:- The issue of Cenvat Credit on Air Travel Services, Train Services and Courier Services has been settled in various judgments - reliance can be placed in the case of SEMCO ELECTRICAL (P.) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2009 (12) TMI 143 - CESTAT, MUMBAI] and JAYPEE REWA PLANT VERSUS COMMISSIONER OF C. EX., BHOPAL [ 2009 (7) TMI 488 - CESTAT, NEW DELHI] . Courier Agency Services - HELD THAT:- Reliance can be placed in the case of M/S. NANA UDYOG VERSUS COMMISSIONER OF CENTRAL EXCISE ST., SURAT [ 2015 (2) TMI 433 - CESTAT AHMEDABAD] where it was held that CENVAT credit of service tax paid on Courier Services is admissible to the appellant. Credit allowed - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (7) TMI 603
  Maintainability of petition - entertaining a Writ Petition before exhausting the appellate remedy - requirement of filing an appeal for effective adjudication - validity of original assessment orders - HELD THAT:- The power of judicial review of the High Court under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority by following the procedures as contemplated, but not the decision itself. Therefore, the routine entertainment of a Writ Petition by dispensing with appellate remedy is not preferable and such an exercise would cause injury to the institutional hierarchy and the importance attached to such appellate institutions. The appellate institutions provided under the statute at no circumstances be undermined by the higher Courts. The appellate forums are the final fact finding authorities and more so, possessing expertise in a particular field. The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming - the petitioner is at liberty to prefer an appeal before the respondent, within a period of four weeks from the date of receipt of a copy of this order, in the prescribed format and complying with the provisions of the Acts and rules. The Writ Petitions stand disposed of.

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• 2021 (7) TMI 599
  Levy of entry tax - competence to collect entry tax - new Rolls Royce Ghost Motor Car Vehicle bearing chassis - HELD THAT:- Filing a writ petition, avoiding payment of Entry tax and keeping the writ petition pending for about nine years, can never be appreciated and it is not made clear even now, whether the Entry tax as applicable has been paid by the petitioner or not. On account of efflux of time, the learned counsel for the petitioner also has not stated anything regarding this. It is no more res-integra and the Hon'ble Supreme Court of India in the case of STATE OF KERALA AND OTHERS VERSUS FR. WILLIAM FERNANDEZ ETC. ETC. [ 2017 (10) TMI 491 - SUPREME COURT] ruled that the respondents are competent to collect Entry Tax and therefore, the petitioner herein is also liable to pay the Entry Tax as per the claim made. he petitioner is bound to pay the Entry tax for the Rolls Royce Ghost Motor Car Vehicle bearing chassis number SCA664S07CUH16754, and Engine number 90430224, which is imported from England. Accordingly, the petitioner is directed to pay the Entry tax as demanded by the respondents within a period of two weeks from the date of receipt of a copy of this order, by adjusting 20% of Entry tax as ordered by this Court in the interim order dated 17.07.2012, if already paid - Petition dismissed.

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• 2021 (7) TMI 588
  Adjustment of tax collected by the Government of Kerala - petitioner states that though the representation/objections was submitted, the respondents have not passed any orders and the Writ Petition is also pending for several years - HELD THAT:- This Court is of the considered opinion that the objections/representation received in this regard from the petitioner on 01.03.2014 is to be considered with reference to the provisions of law and based on the principles laid down by the Hon'ble Apex court of India. In order to establish the case, the petitioner has to enclose copies of the representation/objections and the judgments of the Hon'ble Supreme Court in the subject, enabling the authorities to consider the objections already filed. The 1st respondent/the Deputy Commercial Tax Officer-III, Thoothukudi is directed to consider the objections/representation submitted by the writ petitioner on 01.03.2004 and pass orders by affording opportunity to the writ petitioner and a personal hearing, if any such request is made, and dispose of the same, within a period of twelve weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2021 (7) TMI 587
  Levy of penalty - impugned order passed without considering the objections as well as the judgment of the High Court and Hon'ble Supreme Court - HELD THAT:- The petitioner submitted a detailed representation to the 1st respondent on 01.03.2004 and even prior to that, the petitioner submitted his objections on 19.02.2004. Neither the objections filed before issuing the impugned order, nor the representation submitted subsequent to the impugned order are considered by the 1st respondent with reference to the principles already adjudicated and concluded. In view of the efflux of time of more than 17 years, this Court is not inclined to go into the merits of the case with reference to the records available with the respondents. The 1st respondent/ Deputy Commercial Tax Officer-III, Thoothukudi is directed to consider the representation submitted by the writ petitioner on 01.03.2004 and by affording opportunity to the writ petitioner and personal appearance, if any request is made, and pass orders on merits, as expeditiously as possible and within a period of twelve weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2021 (7) TMI 586
  Revision of assessment - summon of witnesses - opportunity to cross-examine the seller was provided or not - violation of principles of natural justice - HELD THAT:- As per Section 81 of the TN VAT Act, ample power has been given to the respondent to summon the witnesses to appear before them, by following the procedures contemplated under Code of Civil Procedure. Without following the same and without the seller being appeared before them for cross examination, by the petitioner, the respondent has passed the impugned order and the respondent has miserably failed to exercise the said statutory power given to him. Admittedly, the seller has not been present before the Court and the petitioner has not taken any steps to summon, as per Section 81 of the TNVAT Act, 2006 - matter remanded to the respondent to pass orders afresh, in accordance with law, by following the procedure contemplated under the Act, to summon the witnesses, so as to enable the petitioner to cross-examine the seller. Petition allowed by way of remand.

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• 2021 (7) TMI 585
  Validity of assessment order - validity of rejecting original H declaration forms after completion of the assessment order for the assessment year 2015-16 - copy of the assessment order, which was said to be sent by registered post could not be received on account of ongoing pandemic lockdown situation - violation of principles of natural justice - HELD THAT:- Admittedly, the date of assessment order is 30.03.2020 and the said date falls within the covid lockdown period. Therefore, there are force in the submission of learned counsel for petitioner that having regard to the lockdown imposed by the Central Government, he was operating from his Chennai office and not at Guntur office. At any rate, having regard to the submission of the petitioner that he is ready to produce forms F H to the satisfaction of the authorities, we deem it fit to grant an opportunity by following principles of natural justice. The impugned assessment order is set aside - the 1st respondent is directed to afford an opportunity of hearing to the petitioner and to submit the relevant documents and consider the same and pass an appropriate order in accordance with the governing law - Petition allowed.

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• Indian Laws

• 2021 (7) TMI 592
  Seizure of Contraband item - Hashish Oil - prosecution records show that the first accused was arrested, and noting was seized from petitioner - HELD THAT:- The prime accused, from whom the contraband was seized, has already been granted statutory bail. No further purpose can be served by detaining the petitioner in custody - petitioner shall be released on execution of bonds and subject to fulfilment of conditions imposed - petition allowed.

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