TMI Tax Updates - e-Newsletter
July 19, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Classification of goods - rate of tax - Puripapad - Unfried papad - The goods are of different shapes and sizes but similar in respect of the ingredients, manufacturing process and use. Due to advancement of technology, papad does not limit to the same age old traditional round shaped papad but can be in any desired shape and size. - Further, at entry No. 96 of Notification the description goods is 'Papad, by whatever name it is known, except when served for consumption’. - The subject Goods are classified at HSN 19059040 - AAR
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Income Tax:
Disallowance of expenses on account of interest on late payment of service tax - CIT(A) deleted the disallowance holding that the interest on late payment of service tax is compensatory in nature - interest paid for late deposit of the service tax is a permissible deduction - AT
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Income Tax:
Jurisdiction by AO to suo-moto convert protective assessment into substantive assessment post completion of original assessment proceedings - Once the ld CIT(A) was ceased of the matter, the AO could have brought this up before the ld CIT(A) and sought necessary directions. Where however, the AO still hold the belief to take suo-moto action to convert protective assessment into substantive assessment, he could have invoked his jurisdiction in terms of section 147 on satisfaction of conditions specified therein and in absence of thereof, the present action of the AO cannot be sustained in the eyes of law. - AT
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Income Tax:
Income from house property - Estimation of notional rent - We fail to understand as to why the CIT(A) has chosen again to exhibit his scant regard to the judicial discipline and not follow the Hon'ble Bombay High Court decision in the case of Tiptop topography. In the said decision Hon'ble Bombay High Court has expounded that municipal ratable value in an accepted norm for considering the rental value unless the AO shows by some material that the rent offered by the assessee is a manipulated figure. We are again anguished and wonder why the Ld. CIT(A) chose to ignore the Hon'ble Bombay High Court decision - AT
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Income Tax:
Addition u/s 68 - Violation of provisions of section 269SS - unexplained cash deposit - Violation of provisions of section 269SS of the I.T.Act calls for penalty u/s 271D of the I.T.Act, which is a separate proceeding. - Violation of provisions of section 269SS of the I.T.Act cannot be the ground for making addition u/s 68 of the I.T.Act. - AT
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Income Tax:
Estimation of income - Bogus purchases of diamonds - There is evidence received by the Revenue that the entire purchases made by the assessee is bogus i.e., the assessee has not received any diamonds though it has debited the purchase value of diamonds in his books of accounts. This fact is not disproved. When no diamonds are received by the assessee there is no possibility of those diamonds being sold. Hence estimation of profit on sale of diamonds which never existed is not appropriate. - AT
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Income Tax:
Correct head of income - sale of land - “capital gains” or “business income” - In the present case, undisputedly the appellant had made a distinction between those lands which are stock in trade and those lands which are held by investment - none of the factors considered by the AO can militate against the claim of the appellant that it is an investment and the profit arising out of the sale of this land is assessable to tax under the head “capital gains” - AT
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Customs:
Misuse of EPCG licence scheme - use of false and incorrect documents for export of garments as third party exporter - Whether the allegation that the appellants have not fulfilled export obligation is sustainable or not? - it cannot be said that merely by exporting the goods through third party exporter/Rithvikk Garments, the licence holder (Sri Angallamman Knit Fabrics) has violated the conditions of the EPCG licence - AT
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Customs:
Levy of penalty - Proceedings against the Custodian / Cargo Service provider - it is alleged that appellants had allowed the cargo to move into the sterile area without checking the status of Customs clearance i.e., without checking whether LEO was given or not - The details of such unauthorized persons seen in the premises are not furnished by department. The allegation without support of any evidence cannot sustain. - No penalty - AT
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Customs:
Amendment of shipping bills - The appellant has requested for amendment to include MEIS benefit. The department does not have a case that the appellant is not eligible for MEIS benefit claimed by them. The appeal has been filed by department stating flimsy grounds that the department would not be able to retrieve the shipping bill so as to check and verify the amendment made etc. - When the law provides for amendment of shipping bill, the department cannot raise such contentions to deny the legal right of an exporter. - AT
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IBC:
Seeking withdrawal of admitted application - It is not the case of the Intervenors that Demand Notice under Section 8 is pending. It is only their case that money is due. Before Constitution of Committee of Creditors mere filing of a ‘Claim’ does not constitute default per se - the prime objective of the Code is not recovery, but revival - AT
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Service Tax:
Delay in filing appeal before the Apex Court - Condonation of delay - Reduction of delay in filing SLP - one reason for the delay is due to the liner process being followed currently and even if we have a detailed timeline, it may be difficult to avoid delay unless steps in filing of SLP were merged. - Delay condoned - SC
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Service Tax:
Refund claim of input service tax credit - input service or not - Erection, Commissioning & Installation Services - Construction or execution of works contract of a building or civil work only means service towards the construction of a new building especially civil structure work of the building or laying of foundation work for such building for support of capital goods whereas in the present case the nature of services so availed by the appellant was towards electrical works and modernisation of premises and it was not getting a new building constructed. - Credit allowed - AT
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VAT:
Allegation of corruption against the Assistant Commissioner (Assessment) - Irregularity in passing the assessment order - There can be no doubt with regard to the fact that the assessment orders passed by the petitioner are in the nature of definitive judgments in legal proceedings - He had discharged functions as a “Judge” - The petitioner is entitled to get the protection envisaged under Section 3(1) of the Judges (Protection) Act, 1985 in respect of the assessment orders - Prosecution against him, which is based merely on those assessment orders, is barred and not maintainable in law - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (7) TMI 696
Profiteering - benefit of input tax credit - HELD THAT:- Issue notice. Mr. Ravi Prakash, Advocate accepts notice on behalf of the respondents. Let counter-affidavit be filed by the respondents within four weeks. Rejoinder-affidavit, if any, be filed before the next date of hearing.
List on 10th November, 2021.
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2021 (7) TMI 694
Application for amendment of the writ petition - HELD THAT:- In the present application, it has been admitted that the unamended Section 2(6) of Integrated Goods and Services Tax, 2017 has been reproduced in the writ petition and at times, IGST Act has been referred to as ‘CGST Act’. It is stated that though they are inadvertent errors, yet they are inconsequential in nature.
Issue notice. Mr. Asheesh Jain, Advocate accepts notice on behalf of respondents No. 1 and 4. Mr. Manas Bhatnagar, Advocate accepts notice on behalf of respondent No. 2. Mr. Satish Kumar, Advocate accepts notice on behalf of respondent No. 3.
Application disposed off.
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2021 (7) TMI 657
Cancellation of GST registration of petitioner - condonation of delay in filing appeal - Section 107(1) of CGST Act, 2017 - HELD THAT:- In response to the Personal Hearing letters, Sh. Kishan Swaroop Singhal, Counsel for the appellant, vide their letter C.No. Nil dated 07.07.2021 sent through E mail, submitted therein that now the GST portal has allowed to file application for revocation of cancelled GST registration even beyond 90 days but upto within 180 days therefore the assessee prefer to file an application for revocation of cancelled registration and the same has been approved by the competent authority by issuing REG-22.
In view of the request letter of Sh. Kishan Swaroop Singhal, counsel for the appellant dated 07.07.2021 regarding withdrawal of appeal due to revocation of GST registration has been approved by the proper officer by issuing REG-22 in the instant matter - the appeal dismissed as withdrawn.
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2021 (7) TMI 700
Classification of goods - rate of tax - Puripapad - Unfried papad - HSN code - whether the said Goods of the applicant can be termed as Papad? - HELD THAT:- The product ‘Papad’ is an eatable item, originated and mainly consumed in India. We find that for determination of the correct classification of any product, ingredients used in the manufacture of the said product are a decisive factor. In the case of MANILAL COMMODITIES PVT. LTD. VERSUS COLLECTOR OF CUSTOMS [1991 (2) TMI 276 - CEGAT, BOMBAY], the H’ble Tribunal was of the view that the classification on the basis of predominant contents is generally accepted as proper test.
The entry No. 96 of Not. No. 02/2017- CT (rate) dated 28-6-17 has description of goods which reads as under: Papad by whatever name it is known, except when served for consumption. Therefore it can be deduced that all types of “Papad” as per trade/common parlance name are covered under the said entry. In the matters of classification of goods under taxation statutes, all the judicial forums, including the Apex Court, have stressed upon the importance of the identity of the goods in common parlance and there is a plethora of case laws which hold that for classification of goods under statutes for taxation of commercial supplies thereof, the primary test is their identity in the market, or in other words, their common parlance in the market.
The goods are of different shapes and sizes but similar in respect of the ingredients, manufacturing process and use. Due to advancement of technology, papad does not limit to the same age old traditional round shaped papad but can be in any desired shape and size. In the old era, usually ‘papad’ was manufactured manually, therefore it was easy for them to manufacture the Round Shape papad. In the modern era, by the advent of technology, the product is being manufactured by machines and dies of different shape and size is used in the machine. Therefore, with the help of dies of various size and shapes, it is convenient to manufacture different shapes and sizes of papad. Further, at entry No. 96 of Notification No. 02/2017-CT (Rate) dated 28-6-17, the description goods is 'Papad, by whatever name it is known, except when served for consumption’.
The subject Goods are classified at HSN 19059040.
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Income Tax
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2021 (7) TMI 690
Disallowance of claim u/s 80IA/80IB - assessee should have adjusted the losses of other units with the profits of the two units - submission of the assessee that losses of the other units were not actual losses and have already been adjusted in the earlier year and therefore do not call for adjustment in the year under consideration, was not found acceptable to AO - HELD THAT:- CIT(A) while granting relief to the assessee has given a finding that during the relevant period, profits was derived from only 2 units and the computation of deduction u/s 80IA/IB has made as per the provisions of section 80IA(5).
Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. In such a situation, we find no reason to interfere with the order of CIT(A), thus the ground of Revenue is dismissed.
Denial of claim u/s 80M - AO was of the view that since no distribution of dividend was made by the assessee, it was not eligible for deduction u/s 80M - HELD THAT:- We find that CIT(A) while deciding the issue in favour of the assessee has given a finding that out of the total amount of ₹ 5.09 crore (rounded off) was received by the assessee by way of dividend and ₹ 3.97 crore (rounded off) was distributed as dividend to its share holders by the assessee. To support the contention of the distribution of the dividend, assessee had also filed a certificate to the CA for the relevant period. Before us, no fallacy in the findings of CIT(A) has been pointed by the Revenue - no interference of the CIT(A) is called for and thus the ground of the Revenue is dismissed.
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2021 (7) TMI 689
Addition u/s 68 - cash deposited in the bank account of the assessee unexplained - HELD THAT:- A clear finding of the revenue authorities that on perusal of the bank statement and the details furnished by the assessee, the credit entries relating to cash, the name of the alleged person from whom cash has been received, is given but the claim of the identity is not substantiated by way of filing PAN, ITR, confirmation etc. and therefore, identity is not proved by the assessee in second round of assessment proceedings as well.
The cash has been deposited in various names, but the assessee failed to prove their identity. Therefore, sources of deposits were not proved. Thus, though the Tribunal has given opportunity to the assessee for establishing three ingredients that of, identity, creditworthiness and genuineness, the same were not established by the assessee relating to cash deposits before the Assessing Officer as well as before the CIT(A). CIT(A) has rightly held that cash deposited in the bank account of the assessee remained unexplained as per Section 68.
Unexplained cash deposits which has to be restricted to peak relating to addition u/s 68, the same is also not proved by the assessee before the Assessing Officer as well as before the CIT(A). Thus, CIT(A) rightly rejected the said claim. As regards the
As regards, stand taken by the Revenue in Noida charge group cases, the same is rightly rejected as the assessee could not prove as to how the same will be applicable in assessee’s case relating to credit entries in bank account including cash deposits - Decided against assessee.
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2021 (7) TMI 698
Reopening of assessment u/s 147 - validity of sanction granted by the learned CIT u/s 151 - HELD THAT:- The argument advanced before us is contrary to the case set up by the appellant before the statutory Authorities below, inasmuch as it was argued before the Commissioner, Income Tax (Appeals) as well as the Income Tax Appellate Authority that though sanction was mandatory in the present cases, it had been granted by the Commissioner of Income Tax and not by the Joint Commissioner of Income Tax. It was not urged before the statutory Authorities below that no sanction was required in the present cases as the initial assessments had been completed under Section 143(1) of the Act and the notices for Re-assessments under Section 148 had been issued within four years period.
Since the foundational facts sought to be urged in the present appeals are diametrically opposite to the case set up by the appellant before this Court and the statutory Authorities below, this Court is of the view that it is not a fit case where appeals should be entertained under Section 260A of the Act. Moreover, if the facts now urged before this Court are true and correct, then the respondents should have brought the said facts to the notice of the statutory Authorities below by filing appropriate applications.
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2021 (7) TMI 687
Cash found on the date of search - Since the assessee could not satisfactorily explain source, the AO treated the the cash amount as treated as undisclosed income of the assessee and brought to tax - HELD THAT:- The assessee has changed his stand on different levels of the proceedings. At the time of search and seizure operation, he stated that the cash belongs to his wife and at the time of assessment proceedings, he stated that the cash belongs to his son. Further, he stated that it belongs to SNR Nirmal India (P) Ltd.
As per the above section, it is clear that the cash was found in the assessee’s residential premises, which was not explained to the satisfaction of the AO with corroborative evidence as well as before the CIT(A) also. We, therefore, relying on the judgments of CIT Vs. Durga Prasad More [1968 (8) TMI 17 - SUPREME COURT] and the case of Sumathi Dayal [1995 (3) TMI 3 - SUPREME COURT] we uphold the order of the CIT(A) and dismiss ground Nos. 1 & 2 raised by the assessee on this issue.
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2021 (7) TMI 686
Disallowance of expenses on account of interest on late payment of service tax - CIT(A) deleted the disallowance holding that the interest on late payment of service tax is compensatory in nature - HELD THAT:- CIT(A) deleted the disallowance holding that the interest on late payment of service tax is compensatory in nature. While doing so, he relied on the decision of the coordinate Bench of the Tribunal in the case of Messee Dusseldorf India (P) Ltd. [2009 (12) TMI 1034 - ITAT, DELHI]. We do not find any infirmity in the order of the CIT(A) on this issue. We find, the coordinate Benches of the Tribunal are consistently holding that interest paid for late deposit of the service tax is a permissible deduction. Also see DEEPALI DESIGN & EXHIBITS (P) LTD. [2019 (4) TMI 1017 - ITAT DELHI] wherein as held service tax is permissible deduction the interest paid for late deposit of the same is also a permissible deduction and should be allowed in the same manner. - Decided against revenue
Delayed employees’ contribution towards Provident Fund - addition u/s 2(24)(x) and section 36(1)(va) - CIT-A deleted the addition - HELD THAT:- Delayed payments of employee’s contribution to Provident Fund/ESIC is allowable if it is deposited before the return is filed u/s 139(1). In view of the legal position on the issue and the order of the Hon'ble ITAT, Delhi in the appellant’s own case [2017 (1) TMI 1598 - ITAT DELHI] the company is eligible for deduction made by the AO by invoking provisions of Section 36(1)(va) read with 2(24)(x) and 43B of the Act. The AO is, therefore, directed to delete the addition. Also see HC own case [2017 (9) TMI 1688 - DELHI HIGH COURT] - Decided in favour of assessee.
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2021 (7) TMI 684
Revision u/s 263 - AO not examined total claim u/s 80IC - HELD THAT:- There is nothing on the record to say that this component for the claim u/s 80IC which is the subject matter of revision is examined or enquired into by the Assessing Officer and took a plausible view, even if one infers that the Assessing Officer took a view, it can be said that mere taking of view of by the Assessing Officer without having subjected the claim to examination would not make a view of the AO.
In the present case, the subject matter of the appeal before ld.CIT(A) is only in relation to claim for deduction u/s 80IC in respect of profits earned on inter-unit sales and not in respect of profits earned on the sales made to vendors directly from Parwanoo unit. Therefore, this issue was neither considered and decided by the ld.CIT(A) nor subject matter of appeal before ld.CIT(Appeals). Thus, the doctrine of merger have no application to the facts of the present case in view of the plain provisions of Clause (c) of Explanation 2 of sub-section (1) of 263 of the I.T. Act. In the light of the above legal position discussed on the facts of the present case, we are of the considered opinion that the ld.PCIT was justified in exercising the jurisdiction u/s 263 of the I.T. Act and we do not find any merit in the grounds of the appeal filed by the assessee.
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2021 (7) TMI 683
Addition u/s 68 - security deposit - HELD THAT:- AR as well as DR and perusal of orders of the authorities below it is noted that neither Assessing Officer nor the CIT(A) has tried to verify this fact whether security deposit shown from one Shri Raj Bahadur is actual pertains to the financial year 1995-96 or not. If the said deposit is old one and there is no fresh deposit during the year under consideration then this issue does not arise for the year under consideration.
Since the authorities below have not verified this fact and the identical issue is pending adjudication before the CIT(A) for the A.Y. 1992-93 to 1998-99 therefore, this issue is also set aside to the record of the CIT(A) of fresh adjudication after giving an opportunity of hearing to the assessee and conducting a proper enquiry regarding the fact whether it pertains to the financial year 1995-96 or not. CIT(A) is directed to adjudicate the matter within the period of 90 days’ from receipt of this order. - Appeal filed by the assessee is allowed for statistical purposes.
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2021 (7) TMI 681
TP adjustment in respect of Brand royalty - assessee paid Brand royalty under two Agreements, first, at 0.5% under the Agreement dated 01-07-2008 and then again under another Agreement dated 05-04-2001 - duplicate amount of Royalty paid was directed to be disallowed - HELD THAT:- As the facts and circumstances of the assessee‟s ground for the year under consideration are admittedly similar to those of the preceding year, respectfully following the precedent, we set-aside the impugned order on this score and remit the matter to the file of AO/TPO for re-determining the ALP of the international transaction of payment of Royalty and disallow the duplicate payment of brand Royalty in terms indicated above in the Tribunal order for the assessment year 2009-10 above. This disposes of the assessee‟s ground of appeal.
Disallowance of the full amount made u/s.37- assessee paid royalty for use of technical know-how and brand - AO held such payments as not having been incurred for business purposes - HELD THAT:- Since the technology and designs have been used by the assessee in its manufacturing, the royalty for the same cannot be said to be for non business purposes. Similarly, brand royalty has been paid for the use of brand on the products manufactured by it. Admittedly, the assessee was using the Brand name and logo on its manufactured products. These payments, therefore, cannot be considered as meant for non-business purpose, subject to the transfer pricing adjustment. We, therefore, approve the view point taken by the ld. CIT(A) in deleting the disallowance made by the AO u/s.37 of the Act. The Revenue‟s ground is thus dismissed.
TP Adjustment - addition on account of payment of Management fees - assessee declared an international transaction of “Payment of Professional fee” - HELD THAT:- CIT(A) has given cogent reasons for deleting the disallowance inasmuch as the AO simply adopted the TPO‟s reasoning without showing as to how the same applied to the non-AE transactions as well. Further, the expenditure contains payment for Testing fees and also Generic service fee. To this extent, we approve the view taken by the ld. CIT(A). Thus, the ground of the Revenue is dismissed.
Aggregation approach adopted for benchmarking transaction of Management Fees - HELD THAT:- International transaction of Management services was wrongly clubbed and should be separately benchmarked.
Selection of MAM - TNMM adopted by the assessee as most appropriate method, which got disapproved by TPO - HELD THAT:- Assessee moved a Miscellaneous Application against the order of the Tribunal for the assessment year 2009-10 urging that a precise method for the ALP determination of Management Fees ought to have been directed by the Tribunal rather than leaving the matter open to the TPO‟s wisdom. The said Miscellaneous Application came to be dismissed by the Tribunal by holding that the TPO was free to adopt the most appropriate method on the facts and circumstances of the case.
As the facts of this issue for the year under consideration are similar to those of the preceding year, following the view for such earlier year, we set-aside the impugned order on this score and remit the matter to the file of AO/TPO for a fresh determination of the ALP of the international transaction of payment of Management Service Fee in accordance with the observations and directions given in the Tribunal order passed for the assessment year 2009-10.
Additional depreciation on foreign exchange fluctuation loss on repayment of loans, which were taken for purchase of capital assets - HELD THAT:- As noticed above that the assessee availed two loans, viz., first in the year 2002 and second in 2007 and repaid the same in the year under consideration resulting in incurring foreign exchange fluctuation loss. Such a loss is required to be capitalized in terms of section 43(1) read with section 43A. As regards the question of additional depreciation, the same is admissible in respect of assets acquired on or after 1.4.2005.
Patently, no additional depreciation can be allowed to the assessee in respect of loan taken in the year 2002 and the claim will be valid for the loan taken in foreign currency for the purchase of asset in the year 2007. There is no discussion in the assessment order or the impugned order about the bifurcation of the amount of liability discharged by the assessee on account of foreign exchange fluctuation rate difference. On a pertinent query, the ld. AR did not have such figure of forex loss incurred by the assessee, liable to be capitalized for the purposes of additional depreciation, in respect of loan taken in the year 2007. We, therefore, set-aside the impugned order and remit the matter to the file of the AO for examining the detail of ₹ 1.82 crore and allow additional depreciation on forex loss only in respect of repayment of loan taken in the year 2007. In other words, no additional depreciation will be allowed in respect of new asset purchased by the assessee against the loan taken in the year 2002 which got discharged during the year under consideration resulting in foreign exchange fluctuation loss.
TDS u/s 195 - Addition on account of commission - assessee paid commission to overseas agents - assessee submitted that the commission was paid to overseas agents for export orders/business procured by them in overseas territories and hence, deduction of tax at source was not warranted - HELD THAT:- As admittedly, the commission was paid by the assessee to overseas agents for procuring business in overseas territories, the amount of commission in the hands of the commission agents does not become chargeable to tax under the Act. The Hon‟ble Bombay High Court in CIT Vs. Gujarat Reclaim and Rubber Products Ltd.[2015 (12) TMI 1078 - BOMBAY HIGH COURT] has held that the assessee was not obliged to deduct tax at source on commission paid to overseas agent in similar circumstances as are instantly obtaining before us. In view of the foregoing discussion, we are satisfied that the ld. CIT(A) has taken an unexceptionable view and hence no interference is warranted in the impugned order on this score. This ground is not allowed.
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2021 (7) TMI 695
Validity of reopening of assessment u/s 147 - notice to dead person - HELD THAT:- In the present case the Impugned Notice under Section 148 of the Act, having been issued in the name of a dead person, is null and void, and all consequent proceedings/orders, including the Assessment Order and Notices dated 14.11.2019, being equally tainted, are liable to be set aside.
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2021 (7) TMI 679
Addition u/s 68 - Unexplained cash credit - assessee could not submit the address/permanent account number of these parties - HELD THAT:- These parties are the trade creditors of the assessee.The assessee has failed to produce even the Ledger account of these parties before the CIT - A. If these are the trade creditors claimed by the assessee that in subsequent years the sales should have been accounted for in these accounts. If, the sales has been accounted for out of these sundry credits, then the addition u/s 68 of the act would result in to double addition. It is also but natural that assessee has provided services to the guesthouses of various companies as well as of Indian Navy which naturally could not have the permanent account number.
Therefore, in the interest of justice we set-aside the whole issue back to the file of the learned assessing officer with a direction to the assessee to show by producing the Ledger account of the sundry creditors that in subsequent years the sales have been accounted for against the credits received from these parties. If, learned assessing officer finds that the assessee has already accounted for the sales out of the sundry credits, the resultant addition cannot be made in the hence of the assessee u/s 68.
Therefore to that extent the learned assessing officer is directed to delete the addition. With this direction to the assessee, all the grounds of the appeal are restored back to the file of the learned assessing officer to decide the issue afresh.
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2021 (7) TMI 678
CIT(A) assuming jurisdiction u/s 246A - Jurisdiction by AO to suo-moto convert protective assessment into substantive assessment post completion of original assessment proceedings - Undisclosed investment in the land - order of Settlement Commission u/s 245D(4) wherein the AO converted the earlier protective addition made in the hands of the assessee on account of undisclosed investment in the land situated at village Jugalpura, Chitanukalan, Teh. Amer, Jaipur into substantive addition - modification of the original assessment order passed u/s 143(3) r/w section 153A - HELD THAT:- A clear acknowledgment by the AO that the assessee was not an applicant before Income Tax Settlement Commission and there was no discussion relating to investment in the land at Jugalpura in the order so passed by the Income Tax Settlement Commission - question of any direction by the Income Tax Settlement Commission and passing of any order by the AO to give effect to non-existent directions doesn’t arise at first place and that too, in the hands of the assessee who is not an appellant before the Income Tax Settlement Commission. Therefore, we see no reason but to agree with the ld CIT(A), who after going through the order passed by the AO as well as by Income Tax Settlement Commission, has recorded a finding that the assessee was not an applicant before Income Tax Settlement Commission and there being no direction by the Income Tax Settlement Commission in respect of the assessee by way of modification of the original assessment order passed u/s 143(3) r/w section 153A dated 29.12.2016, the order so passed by the AO purportedly giving effect to the order of ITSC u/s 245D(4) is without jurisdiction.
As apparent from the original assessment order passed u/s 143(3) r/w section 153A the department has claimed the undisclosed investment in impugned land purchase in the hands of Indian Medical Trust and substantive addition was thus proposed by the department before the Income Tax Settlement Commission in the hands of Indian Medical Trust. There was thus a proposal to make substantive addition in the hands of Indian Medical Trust, however, in the order so passed by the Income Tax Settlement Commission u/s 245D(4), there was no discussion about any undisclosed investment in aforesaid immoveable property which is apparently suggestive of the fact that such a proposal was not accepted by Income Tax Settlement Commission and as a matter of fact, no addition was made in the hands of M/s Indian Medical Trust on substantive basis.
It is case where there was no substantive addition made in the hands of Indian Medical trust at first place and in absence of substantive addition, the AO has proceeded with protective assessment in the hands of the assessee. Secondly, subsequent to completion of original assessment proceedings made on protective basis in hands of the assessee, realizing the fact that no substantive addition has been made in hands of either of two assessees, the AO changed his position and took a suo-moto decision to convert protective addition into substantive addition in the hands of the assessee. It is AO’s own independent decision subsequent to completion of original assessment and not something which is directed by the Income Tax Settlement Commission.
Once the ld CIT(A) was ceased of the matter, the AO could have brought this up before the ld CIT(A) and sought necessary directions. Where however, the AO still hold the belief to take suo-moto action to convert protective assessment into substantive assessment, he could have invoked his jurisdiction in terms of section 147 on satisfaction of conditions specified therein and in absence of thereof, the present action of the AO cannot be sustained in the eyes of law.
CIT(A) has rightly held that once an assessment has been framed by the AO, he becomes functus officio and whenever the AO wishes to modify and/or enhance the assessment, he is required to reassume the jurisdiction under the Act after satisfying the conditions as so contained in section 154 or section 147 - AO can assume jurisdiction so as to give effect to an order or directions so contained in order passed u/s 250/254/263/264 of the Act.
In the instant case, the AO has not invoked his jurisdiction under section 154 and section 147 and the order so passed is again not an order to give effect to the directions contained in any order passed u/s 250/254/263/264 of the Act, thus, the action of the AO doesn’t have the necessary sanction of the relevant provisions and the order so passed has been rightly set-aside by the ld CIT(A) for want of jurisdiction and requisite sanction under law.
Given the fact that the order so passed by the AO whereby protective assessment u/s 153A r/w 143(3) has been converted into substantive assessment alongwith raising the demand notice on the assessee u/s 156 and initiating the recovery proceedings, the order so passed is clearly an order against which the assessee can appeal before the ld CIT(A) u/s 246A which clearly provides that the assessee can appeal against an order where the assessee denies his liability to be assessed under the Act. Therefore, there is no infirmity in the action of ld CIT(A) in assuming jurisdiction u/s 246A in the instant case and passing the impugned order after calling for the remand report from the AO and providing adequate opportunity to both the parties.
All the additional grounds of appeal as well as original ground of appeal no. 3 taken by the Revenue are hereby dismissed.
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2021 (7) TMI 677
Income from house property - Estimation of notional rent for the flat at Navi Mumbai - HELD THAT:- As clear that assessee has duly informed the fact that agreement entered into the by the assessee for the purchase of said flat was cancelled hence, there was no question of assessing any deemed notional rent for the flat, which was not at all in the possession of the assessee. We set aside the orders of authorities below and direct that addition in this regard should be deleted.
Annual letting value of yashodeep flat at a municipal rateable value - assessee's plea that the said flat was not habitable and was in a ruinous condition was very much before the Ld. CIT(A) - HELD THAT:- CIT(A) noted the plea that when the concerned house property was not in a position to be let out there cannot be any deemed notional rent for the same. For this proposition, he noted the reference by the assessee to several ITAT decisions - CIT(A) chose to display scant regard for judicial discipline. He did not at all refer whatsoever to the ratio emanating from the ITAT decisions. But, simply referred to the provision of the concerned section and Hon'ble Bombay High Court decision in case of Tiptop typography [2014 (8) TMI 356 - BOMBAY HIGH COURT].
The order of Ld. CIT(A) is without any application of mind. There is no discussion whatsoever as to where the act mandates that if a flat is inhabitable and in a ruinous condition notional rent should be computed thereon and imposed upon the assessee. The ITAT decisions referred by the assessee despite being noted has been ignored by the CIT(A). For all the above reasoning including the lack of application of mind by the CIT(A) and the scant regard to the judicial discipline the order of Ld. CIT(A) is set aside and the notional rent addition in this regard is directed to be deleted.
Annual letting value of the flats at 6% of the flats - solitary plea of the assessee in this regard is that the notional rent should be restricted to the municipal ratable value - AO has levied 8% of the cost as notional rent and CIT(A) has restricted the same to 6% - HELD THAT:- We fail to understand as to why the CIT(A) has chosen again to exhibit his scant regard to the judicial discipline and not follow the Hon'ble Bombay High Court decision in the case of Tiptop topography. In the said decision Hon'ble Bombay High Court has expounded that municipal ratable value in an accepted norm for considering the rental value unless the AO shows by some material that the rent offered by the assessee is a manipulated figure. We are again anguished and wonder why the Ld. CIT(A) chose to ignore the Hon'ble Bombay High Court decision - we direct that following the precedent from Hon'ble Bombay High Court as above the rental value should be limited to the municipal ratable value in this regard.
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2021 (7) TMI 676
Assessment u/s 153A - Disallowance of expenses - HELD THAT:- There is no incriminating material qua each of the assessment year roped in under section 153A, then, no addition can be made while framing the assessment u/s 153 A.
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2021 (7) TMI 675
Assessment u/s 153A - incriminating material found in search or not? - HELD THAT:- There is no incriminating material qua each of the assessment year roped in u/s 153 A, then, no addition can be made while framing the assessment u/s 153 A.
As admittedly no incriminating material relating to these assessment years or as a matter of fact for any of the assessment years were found during the course of search - Appeals of the assessee are allowed.
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2021 (7) TMI 674
Disallowance of exemption u/s 54F - assessee had constructed multiple residential houses and not a single residential unit - Scope of amendment to section 54F - HELD THAT:- The provisions of section 54F of I.T.Act was amended vide Finance (No.2) Act, 2014 with effect from 01.04.2015 and has withdrawn deduction for more than one residential unit with effect from 01.04.2015 by replacing word “a” with “one”. In this context, it is relevant to mention that the Hon’ble jurisdictional High Court, prior to the amendment, in the case of CIT v. Smt.K.G.Rukminiamma [2010 (8) TMI 482 - KARNATAKA HIGH COURT] had held that “residential unit house”, used in section 54 makes it clear that, it was not the intention of the legislature to convey the meaning that it refers to a single residential house.
As held by the Hon’ble High Court that if that was the intention, they would have used the word “one”. As in the earlier part, the words used are buildings or lands which are plural in number and that is referred to as “a residential house, the original asset. It was further observed by the by the Hon’ble Court that an asset newly acquired after the sale of the original asset also can be buildings or lands appurtenant thereto, which also should be “a residential house”. Therefore, the letter “a” in the context it is used should not be construed as meaning “single”. It was concluded by the Hon’ble High Court that, being an indefinite article, the said expression should be read in consonance with the other words “buildings” and “lands” and, therefore, the singular “a residential house” also permits use of plural by virtue of section 13(2) of the General Clauses Act - See SMT. RADHA K. GOPAN VERSUS COMMISSIONER OF AGRICULTURAL INCOME-TAX [1993 (6) TMI 7 - KERALA HIGH COURT].
As decided amendment to section 54 of the I.T.Act with effect from 01.04.2015 has been held to be prospective by the Hon’ble Karnataka High Court in the case of Arun K.Thiagarajan[2020 (6) TMI 513 - KARNATAKA HIGH COURT]
Thus we hold that the assessee is entitled to the benefit of section 54F of the I.T.Act, since the relevant A.Y. was prior to the amendment to section 54 of the I.T.Act (i.e.01.04.2015). - Decided in favour of assessee.
Addition u/s 68 - Violation of provisions of section 269SS - unexplained cash deposit - HELD THAT:- In the instant case, the A.O. has not made any opinion on the source of cash deposit in the remand report submitted to the CIT(A), but only pointed out the violation of provisions of section 269SS of the I.T.Act. Violation of provisions of section 269SS of the I.T.Act calls for penalty u/s 271D of the I.T.Act, which is a separate proceeding. Violation of provisions of section 269SS of the I.T.Act cannot be the ground for making addition u/s 68 of the I.T.Act. In the above facts and circumstances of the case, we hold that the addition sustained by the CIT(A) u/s 68 of the I.T.Act is uncalled for and we delete the same. Appeal filed by the assessee is allowed.
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2021 (7) TMI 671
Assessment u/s 153A - Unexplained investment u/s. 69 - valuation report of the District Valuation Officer (DVO) - Estimation of value of assets by Valuation Officer - HELD THAT:- As relying on M/S. NARULA EDUCATIONAL TRUST AND M/S. NARULA EDUCATIONAL TRUST VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1 (3) , KOLKATA [2021 (2) TMI 459 - ITAT KOLKATA] From the perusal of panchnama and the assessment orders, it can be safely inferred that the reference made by DDIT (Inv.) for valuation of the properties was without any incriminating materials found during search [oral or documentary which could have suggested that the assessee has shown less investment in its books for building construction] Therefore, no addition was permissible in the assessment order u/s 153A of the Act in the case of un-abated assessments unless it is based on relevant incriminating material found during the course of search qua the assessee and qua the AY. - Decided in favour of assessee.
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2021 (7) TMI 670
Disallowance u/s. 14A - assessee has made certain investments in shares and since those investments have yielded or may yield income in the form of dividend, long term capital gain etc, which does not found part of income of the assessee and therefore the expenditure was required to be disallowed under the provisions of Section 14A - CIT-A deleted the addition - HELD THAT:- We find that CIT(A) deleted the addition made by AO u/s. 14A by observing the fact that no dividend income has been earned by the assessee during the year under consideration and in the absence of any dividend income, the disallowance u/s. 14A is not called for. CIT(A) had also relied on the decision rendered by the Hon'ble Delhi High Court in the case of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] and Taikisha Engineering India Ltd. [2014 (12) TMI 482 - DELHI HIGH COURT]
As before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue nor Revenue has placed on record any contrary binding decision in its support. In such a situation, we find no reason to interfere with the order of CIT(A), thus the grounds of Revenue are dismissed.
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2021 (7) TMI 669
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - HELD THAT:- As decided in Sahara India Life Insurance Company Limited case [2019 (8) TMI 409 - DELHI HIGH COURT] Notice issued by the learned Assessing Officer would be bad in law if it did not specify under which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars thereof
For the AO to assume jurisdiction u/s. 271(1)(c), proper notice is necessary and the defect in notice u/s. 274 of the Act vitiates the assumption of jurisdiction by the learned Assessing Officer to levy any penalty. In this case, facts stated supra, clearly establish that the notice issued under section 274 read with 271 of the Act is defective and, therefore, we find it difficult to hold that the learned AO rightly assumed jurisdiction to pass the order levying the penalty. As a consequence of our findings above, we direct the Assessing Officer to delete the penalty in question. - Decided in favour of assessee.
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2021 (7) TMI 667
Estimation of income - Bogus purchases of diamonds - HELD THAT:- It is apparent that the assessee has made parallel entries in his books of accounts with respect to the bogus purchases identified at the time of search in the case of Bhanwarlal Group of concerns wherein similar entries were also recorded in their books of accounts. Assessee has also conceded that the payments were made to Bhanwarlal Group of concerns by cheque for purchases of diamonds.
Also revealed from the search conducted in the case of Bhanwarlal group of concerns that the assessee had paid cheque to Bhanwarlal Group of concerns for purchase of diamonds though actually diamonds did not exist. It is also apparent that the assessee has not maintained proper stock recorded corroborating the opening stock of diamonds and purchase of diamonds with the corresponding sale of diamonds and closing stock. In this circumstance, the amount debited in the P & L Account of the assessee towards purchase of diamonds is nothing but bogus claim of deduction in order to reduce the profit of the assessee.
It will not be proper to estimate the income of the assessee on the basis of presumption that the assessee would have sold the diamonds when the so-called diamonds said to have been purchased by the assessee never existed ab-initio. - Decided against assessee.
Estimation of income - bogus purchase of diamonds at 5% of the alleged bogus purchases - HELD THAT:- This is a case where the assessee has claimed bogus purchases of diamonds as its expenditure when the diamonds did not exist at all - assessee has neither disclosed the sale of these diamonds in its P & L Account nor shown the unsold diamonds as closing stock. Therefore, the corresponding revenue from sale of diamonds and the stock position is not disclosed in the P & L Account.
There is evidence received by the Revenue that the entire purchases made by the assessee is bogus i.e., the assessee has not received any diamonds though it has debited the purchase value of diamonds in his books of accounts. This fact is not disproved. When no diamonds are received by the assessee there is no possibility of those diamonds being sold. Hence estimation of profit on sale of diamonds which never existed is not appropriate. For the above stated reasons, we do not find any merit in the order of the Ld. CIT (A) on this issue. Accordingly, we hereby reinstate the order of the Ld. AO. Appeal of the Revenue is allowed.
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2021 (7) TMI 666
TP Adjustment - inclusion of M/s. Acropetal Technologies Ltd. as comparable company - HELD THAT:- SEBI has conducted inquiry about the activities of M/s. Acropetal Technologies Ltd. and observed that it has diverted its IPO proceeds to various group companies for non-business purposes and concluded that diversion of IPO funds is a fraud within the meaning of PFUTP regulations. Therefore, we are of the considered view that a company which has committed a fraud, as per findings of SEBI regulations cannot be considered as good comparable for a company, which is providing captive service to its AEs in the area of engineering design service. M/s. Acropetal Technologies Ltd. is not a good comparable and hence, we direct the TPO to exclude M/s. Acropetal Technologies Ltd. from the list of comparables and re-compute margin after exclusion of the company.
Disallowance of expenditure incurred on membership fees paid to Madras Club - AO has disallowed membership fees paid to Madras Club on the ground that it is in the nature of personal expenditure cannot be allowed as deduction - as per assessee expenditure towards club membership fees was for business purpose and without providing adequate opportunity of being heard to the assessee, the Assessing Officer has treated same as personal in nature - HELD THAT:- No merit in the arguments of assessee that membership fees paid to Madras club is having bearing on business of the assessee - club membership fees paid is definitely in the nature of personal expenditure, unless the assessee demonstrates with evidence that it has been incurred for the purpose of promoting business of the assessee. In this case, the assessee has not produced any details to prove that club membership fees paid to Madras club is having been incurred for the purpose of promoting business of the assessee - there is no error in the findings recorded by the Assessing Officer to disallow club membership fees paid to Madras club and hence, we are inclined to uphold the findings of the DRP and reject the ground taken by the assessee.
Disallowance of interest on delayed statutory payments - HELD THAT:- As regards interest on delayed payment of income-tax, there is no dispute with regard to the fact that the learned DRP has recorded categorical finding that assessee itself has added back said interest in the statement of total income and hence, same cannot once again be disallowed. If the assessee has already disallowed interest paid on delayed payments of income tax, then the Assessing Officer is not required to disallow once again said payment, because it amounts to double disallowance. Hence, we direct the Assessing Officer to verify claim of the assessee and take appropriate decision.
Interest on delayed payment of PF - We find that it is a penal in nature for delayed remittance of statutory dues payable under respective Acts and cannot be allowed as deduction. Therefore, there is no merit in the arguments of the assessee that interest paid on delayed remittances of Provident Fund is an allowable deduction.
Delayed remittance of service-tax - We are of the considered view that since service tax is an indirect expenditure, which is allowable under the Act, any interest paid on delayed remittances of such indirect taxes is also in the nature of revenue expenditure, because it is compensatory in nature. Hence, we direct the Assessing Officer to allow deduction towards interest on delayed payment of service tax
Appeal filed by the assessee is partly allowed.
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2021 (7) TMI 665
Penalty u/s 271(1)(c) - defective notice u/s 274 - Non specification of charge - HELD THAT:- Notice issued by the Assessing Officer would be bad in law if it did not specify under which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars thereof.
AO to assume jurisdiction u/s 271(1)(c), proper notice is necessary and the defect in notice u/s 274 of the Act vitiates the assumption of jurisdiction by the learned Assessing Officer to levy any penalty. In this case, facts stated clearly establish that the notice issued under section 274 read with 271 of the Act is defective and, therefore, we find it difficult to hold that the learned AO rightly assumed jurisdiction to pass the order levying the penalty. As a consequence of our findings above, we direct the Assessing Officer to delete the penalty in question. - Decided in favour of assessee.
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2021 (7) TMI 664
Disallowance u/s.14A - as per assessee exempt income was only in the form of dividend from mutual funds and further that there was no buying and selling of such funds frequently or on regular basis and it was only on maturity of old funds that new investments were made - HELD THAT:- Assessing Officer has only observed that the assessee's claim that it had not incurred any expenses in respect of management of investment affairs was not acceptable. The Assessing Officer has also observed that the earning of exempt income is not in nature of passive activity having no input.
Assessing Officer could not have made the impugned disallowance when it was the assessee's claim that no expenditure had been incurred in relation to earning of exempt income specially because the assessee had duly explained that no expenditure was incurred in managing investments in the mutual funds which was based on free advice given by Deutsche Bank Investment Advisor. Accordingly, we set aside the order of the Ld. CIT(A) and direct the Assessing Officer to delete the impugned disallowance. - Decided in favour of assessee.
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2021 (7) TMI 659
Validity reopening of assessment u/s 147 - Notice which was served on the company but issued in the name of the non-existent firm - mistake of issuance of notice in the name of non-existent person - curable defect u/s. 292B - HELD THAT:- The undisputed facts of the present case are that, the notice u/s. 148 of the Act dated 30/03/2017 had been issued in the name of the erstwhile Firm which was not in existence as on that date. It is also noted that, the AO was aware about this fact in as much as in the earlier notice dated 21/03/2014 issued u/s. 148 of the Act for this same year, the AO had recognized M/s. Emta Coal Ltd. as the successor of the Firm. We note that the argument put forth by the ld. CIT, DR in support of the order of the lower authorities, is identical to the argument taken by the Revenue before the Hon'ble Supreme Court in the case of CIT vs. Maruti Suzuki India Limited [2019 (7) TMI 1449 - SUPREME COURT] wherein answering the question against the Revenue and in favour of the assessee, held that irrespective of the fact that the final order contained the names of the non-existent entity and the successor assessee, since the notice u/s. 143(2) of the Act was issued in the name of a non-existent entity, it rendered the entire proceedings and consequent order to be nullity in the eyes of law
Identical legal issue came up for consideration before the Hon'ble Delhi High Court in the case of Savita Kapila vs. ACIT. [2020 (7) TMI 441 - DELHI HIGH COURT] wherein the question before the High Court was, whether the issuance of notice u/s. 148 of the Act in the name of a non-existent person was bad in law or was it a curable defect u/s. 292B of the Act.
Thus we note that there is no whisper much less any allegation by the AO that the assessee has failed to disclose material facts necessary for assessment in the return of income, and therefore the reopening of assessment is held to be bad in law - Decided in favour of assessee.
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2021 (7) TMI 658
Correct head of income - whether or not the surplus arising from the sale of land constitutes “capital gains” or “business income”? - as contended that the finding of the Assessing Officer that the assessee himself had divided the land into pieces is contrary to the facts as the layout of the said land was approved by local authority much before the acquisition by the appellant - HELD THAT:- It is settled position of law that to determine whether a particular transaction is an adventure in the nature of trade or investment, the test to be applied is intention of the party at the time of acquisition of the property as held by the Hon’ble Supreme Court in the case of G. Venkataswami Naidu & Co. [1958 (11) TMI 5 - SUPREME COURT]
If there is any material on record to indicate that the intention of the party is only to re-sell the asset for profit, no doubt it is a stock in trade. In the present case, the land was sold after the gap of decade and there was no material to show that the appellant had acquired the land only with the intention to re-sell the land for profit. The assessee is undoubtedly entitled to hold two different portfolios in respect of the same kind of asset i.e. stock in trade and investment.
In the facts and circumstances of the present case, it does not indicate that the purchase of land was made with the intention to re-sell.
In the present case, undisputedly the appellant had made a distinction between those lands which are stock in trade and those lands which are held by investment - none of the factors considered by the AO can militate against the claim of the appellant that it is an investment and the profit arising out of the sale of this land is assessable to tax under the head “capital gains”. Therefore, the orders of the lower authorities are hereby reversed and set-aside. Thus, the grounds of appeal raised by the assessee are allowed.
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2021 (7) TMI 656
TP Adjustment - Comparable selection - Bharat Earth Movers Limited - HELD THAT:- Authorities below were not justified in including BEML in the list of comparables. We, therefore, direct to exclude it from the final tally of comparables.
JCB India Limited - We uphold the inclusion of JCB India Limited in the list of comparables. At the same time, the TPO is directed to carry out reasonably accurate adjustment to the profit of JCB India Ltd. so as to eliminate the effect of a microscopic difference due to Trading sales and service income. Needless to say, the assessee will be allowed an opportunity of hearing.
Incorrect methodology for computing capacity utilization adjustment - Both the sides are in agreement that the facts and circumstances of this ground are mutatis mutandis similar to those of the preceding years where this issue came up for consideration before the Tribunal. In its order for the A.Y. 2010-11, the Tribunal dealt with the capacity utilization adjustment raised through ground No.4 and decided through para 7 of its order restoring the matter to the file of AO to be dealt with in accordance with its order for the immediately preceding assessment year viz., A.Y. 2009-10. Respectfully following the Tribunal orders in the assessee‘s own case for immediately preceding two years, we set aside the impugned order on this count and remit the matter to the file of AO/TPO for re-computing working capital adjustment in consonance with the methodology provided by the Tribunal in its order for the earlier years.
Adjustment towards voluntary transfer pricing addition offered by the assessee in the computation of total income - We direct the TPO to allow necessary relief qua the suo motu transfer pricing adjustment offered by the assessee, if the resultant transfer pricing addition turns out to be more than that.
PLI determination - Direction given by DRP for taking 0.52% as PLI of the assessee, when correct PLI of the assessee, after considering Foreign Exchange (Net) and written back of Excess Provision for doubtful debts as non-operating income, came to 0.2212% - HELD THAT:- While finalizing the transfer pricing order, the TPO adopted margin of assessee from this segment at (-) 0.22% without providing computation for the same. It has also been mentioned in the same para that the assessee filed a rectification application before the TPO. In this backdrop of the facts, the DRP accepted the contention of assessee and accordingly directed the TPO to take assessee‘s PLI at 0.52%.
As observed that the assessee filed a rectification application on this score way back on 13.02.2015. A copy of such an application has been placed. Despite such application, the ld. AR stated that the TPO has not passed any rectification order for a period of more than six years. The ld. DR also could not place on record any rectification order having passed by the TPO on this issue. In such circumstances, we are of the considered opinion that the DRP was fully justified in directing the TPO to consider assessee‘s margin at 0.52% as against (-) 0.22% adopted by the TPO in his order.
Direction of the DRP to compute transfer pricing adjustment on proportionate basis - HELD THAT:- This issue is fairly settled by a judgment of the Hon‘ble jurisdictional High court in CIT Vs. Phoenix Mecano (India) Pvt. Ltd. . [2017 (6) TMI 1240 - BOMBAY HIGH COURT] holding that the transfer pricing adjustment made at entity level should be restricted to the international transactions only. It is pertinent to mention that the Department‘s SLP against this judgment has since been dismissed by the Hon‘ble Supreme Court in CIT Vs. Phoenix Mecano (India) Pvt. Ltd. [2018 (7) TMI 798 - SC ORDER]. Similar view has been espoused by the Hon‘ble Bombay High Court in CIT Vs. Thyssen Krupp Industries Pvt. Ltd [2016 (4) TMI 88 - BOMBAY HIGH COURT] and CIT Vs. Tara Jewels Exports (P). Ltd. [2015 (12) TMI 1130 - BOMBAY HIGH COURT]. We, ergo, direct to restrict the transfer pricing addition only to the extent of international transactions in this segment.
TP addition made in the impugned order is set aside and the matter is restored to the file of the AO/TPO for re-computing the transfer pricing adjustment in the Manufacturing activity segment.
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Customs
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2021 (7) TMI 688
Provisional release of seized goods - various types of imported fabrics - 100% Polyester Knitted Fabric - goods appeared to be of higher quality than what was declared - goods were made of elastomeric yarn or not - seizure of goods under section 110 of the Customs Act - enhancement of declared value - non-related parties.
HELD THAT:- Section 110A provides that any goods seized under section 110, may, pending the order of the adjudicating authority, be released to the owner on taking a bond from him with such security and conditions as the adjudicating authority may require - Discretion is, therefore, cast upon the adjudicating authority for determining the value of the bond to be taken and the security deposit as also the conditions to be imposed while passing an order for provisional release of the goods. The exercise of this discretion has to be fair and reasonable and should not be exercised on irrelevant considerations.
It needs to be noticed that the goods involved in the present two appeals were valued at US$ 2.83 per kg and, therefore, the said assessment order may not have any relevance. The appellant had also pointed out to the adjudicating authority that similar goods were allowed to be imported by other importers at much lower value at US$ 1.55 per kg by the Customs Authority after enhancement of the value of the goods. There is no discussion of this fact in the impugned orders.
In the instant case, the appellants had declared the transaction value of the impugned goods in the Bill of Entries at 0.95 US$ per Kg as per the sales contract between the supplier and the appellant. It is important to note that the appellants and the supplier are not related parties. However, the transaction value declared by the appellant was sought to be re-determined by the Customs department without providing any reasons - In the impugned order, the differential duty has been calculated at the rate of US$ 2.83$ per kg solely on the basis of the DRI letter dated 17.12.2020, which has not been provided to the appellant - The same goods, it has been stated by the appellants, were allowed to be imported by other importers at much lower value at US$ 1.55/kg by the Customs Authorities after enhancement of value, in comparison to the value at US$ 2.83 Per Kg enhanced for the impugned goods. Details of these imports were also brought to the notice of the Customs Authorities, but they have not been discussed.
The provisional release order is modified - Elvance shall execute a bond for ₹ 2 crores and furnish a bank guarantee or a cash security (as decided by the appellant) for ₹ 20 lakhs - Sedna shall execute a bond for ₹ 1 crore and furnish a bank guarantee or a cash security (as decided by the appellant) for ₹ 10 lakhs - Upon execution of the bond and furnishing the bank guarantee/cash security, as directed above, the goods shall forthwith be released and not later than ten days from the date of executing the bond and furnishing security.
Appeal allowed in part.
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2021 (7) TMI 685
Misuse of EPCG licence scheme - use of false and incorrect documents for export of garments as third party exporter - Whether the allegation that the appellants have not fulfilled export obligation is sustainable or not? - HELD THAT:- On perusal of EPCG licence it is seen that it is issued in 2015 by DGFT and the period for completion of the export obligation is six years. Show cause notice has been issued on 18.11.2020. The contention of the appellant that SCN alleging non-fulfilment of export obligation is premature is therefore not without merits.
From the conditions of the EPCG licence, it is also seen that licence holder may discharge the export obligation by way of direct exports as well as through third party exports. In the event of third party exports, name of the third party exporter, name of the EPCG licence holder, licence number and date should be noted on the shipping bill. Thus, it cannot be said that merely by exporting the goods through third party exporter/Rithvikk Garments, the licence holder (Sri Angallamman Knit Fabrics) has violated the conditions of the EPCG licence. Over and above all the facts, it has to be noted that since there is enough time for completion of export obligation and also for submitting necessary documents before the DGFT, the show cause notices issued by the department alleging various violations, in my view, cannot sustain.
There is no evidence to show that appellant M/s.Rithwikk Garments had intentionally made any false endorsements on the shipping bill. Had there been any dishonest intention, the appellants would not have produced such invoice showing lesser amount before the Customs officers. From the statements of both the appellants, it is clear that it is the first time they have endorsed shipping bills with this EPCG licence.
Confiscation of the export goods cannot sustain and it is hereby set aside - penalty imposed on both the appellants is unwarranted - Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 697
Rejection of request for provisional release of consignments - imported black pepper - Section 110A of the Customs Act 1962 - applicability of N/N. 21/2015-20 dated 25.07.2018 - Balance of convenience - HELD THAT:- The commodity in question is agricultural produce. The variety of black pepper imported is stated to be specific to the region of Srilanka, an important ingredient in the making of spices used in Indian cuisine, with a short shelf life. Assuming for the sake of argument that investigation is concluded in favour of the petitioner, if the provisional release is not granted, the entire consignments would have been compromised.
The balance of convenience would thus require that the consignments be released, subject to the petitioner being put to terms. This would also ensure that the interests of the Department are securely protected. The petitioner will remit the entire duty and furnish bond to the satisfaction of the Assessing Authority in regard to interest payable, penalty or charges that may be deemed necessary.
The impugned order is set aside. It is made clear that nothing contained in this order will stand in the way of an independent enquiry by the authorities in the on-going investigation - Petition disposed off.
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2021 (7) TMI 673
Levy of penalty - Proceedings against the Custodian / Cargo Service provider - Smuggling - Smart Tortoises - Red Sanders - it is alleged that appellants had allowed the cargo to move into the sterile area without checking the status of Customs clearance i.e., without checking whether LEO was given or not - violation of Regulation 5(n) of HCCAR,2009 - Allowing unauthorised persons to enter into the area - Penalty.
HELD THAT:- It is seen that allegations made against the appellants that shortcomings as a custodian lead to smuggling of ‘Star Tortoises’ on 07.11.2018 is without any basis. There is no evidence to show that the appellants have in any connection to such seizure of ‘Star Tortoises’.
The allegations in show-cause notice now narrows down to the Shipping Bill No.5981482, dated 01.08.2019, wherein the LEO was given by Customs at 17:27 hrs. It is the case of the department that the appellants allowed the cargo for scanning at 16:45 hrs much before sanction of LEO. On perusal of the X-Ray Register, it is seen that though the cargo had reached for scanning at 16:45 hrs, the same was detained without conducting the X-Ray scan. It was again scanned only at 17:27 hrs, after the sanction of LEO. The department does not allege that the appellant has done the same with any wrongful intention. There is no allegation with regard to the goods exported under the shipping bill.
Allowing unauthorised persons to enter into the area - violation of Regulation 5(n) of HCCAR,2009 - HELD THAT:- Though, it is stated in the show-cause notice that the appellants have allowed unauthorised persons to access the premises, there is no evidence to support the same. The details of such unauthorized persons seen in the premises are not furnished by department. The allegation without support of any evidence cannot sustain.
Penalty - HELD THAT:- The penalty imposed upon the appellants cannot sustain and is not warranted.
Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 660
Amendment of shipping bills - appellant had filed draw-back shipping bills and, thereafter, requested for amendment for including MEIS benefit - DGFT Public Notice No.9/2015-20, dated 16.05.2016 - sub-section(3) of section 41 of Customs Act - HELD THAT:- It is seen from sub-section(3) of section 41 that if EGM/shipping bill filed is incorrect or incomplete, a request can be made for amendment of the same. Such request can be allowed on satisfaction by the proper office that the request made is genuine.
The appellant has requested for amendment to include MEIS benefit. The department does not have a case that the appellant is not eligible for MEIS benefit claimed by them. The appeal has been filed by department stating flimsy grounds that the department would not be able to retrieve the shipping bill so as to check and verify the amendment made etc. - When the law provides for amendment of shipping bill, the department cannot raise such contentions to deny the legal right of an exporter.
Appeal dismissed - decided against Revenue.
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Insolvency & Bankruptcy
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2021 (7) TMI 680
Condonation of delay of 241 days in filing the Company Petition - applicability of Section 5 of the Limitation Act, 1963 where there are cases of filing Company Petition beyond the limitation period - case of Appellant is that the Adjudicating Authority in the impugned Order had failed to appreciate that in as much as Section 238 A of the Insolvency and Bankruptcy Code, 2016 provides that the Limitation Act, 1963 shall apply as far as may be to the proceedings under the Code before the Adjudicating Authority or the Appellate Tribunal - HELD THAT:- It is to be pointed out that Section 433 of the Companies Act and Section 238 of the I&B Code apply to the Provisions of the Limitation Act, as far as may be. As such, the Limitation period mentioned in the Code will not apply notwithstanding anything to the contrary mentioned in the Limitation Act - Indeed, the Limitation Act, 1963 is applicable to all applications filed under Section 7 and 9 of the I & B Code from the inception of the Code. Therefore, Article 137 of the Limitation Act, 1963 gets attracted.
It is significantly pointed out that the condonation of delay cannot be claimed as a matter of right. Of course, the condonation of delay is a matter of discretion of the Court/Tribunal. It cannot be forgotten that limitation is a prescription of repose and unless the statute allows the Court, an element of discretion, by way of an application for condonation of delay, the Court/Tribunal has no power to find out a method in granting relief to a person who may appear to have suffered. When there is want of due care and attention or want of due diligence, the Tribunal may decline to entertain an application, as there is no sufficient cause for the delay.
Notwithstanding the fact that the Limitation Act, 1963 is applicable to the Applications projected under Section 7 and 9 of the Code from the I & B Code and hence, the ingredients of Article 137 of the Limitation Act, gets attracted. As such, the Right to sue accrues when a Default occurs and if the Default had occurred beyond three years, the Limitation period for filing of an application under Sections 7 and 9 starts sticking from the date of Default committed by the Corporate Debtor.
Section 5 of the Limitation Act, 1963 may be pressed into service to condone the delay in filing necessary interlocutory application, in the considered opinion of this Tribunal. However, it is for the Applicant/Appellant to explain the delay that has occasioned to the subjective satisfaction of the Tribunal - In the instant case, this Tribunal is not subjectively satisfied as to the occurrence of the long and inordinate delay of 241 days and therefore, this Tribunal is not inclined to extend its ‘helping hand of judicial arm of generosity’, based on the facts and circumstances of the case which float on the surface.
The Appeal is devoid of merits - Appeal dismissed.
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2021 (7) TMI 672
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of privity of contract between the Operational Creditor and the Corporate Debtor or not - original work order was issued by Gammon India Limited but the actual work was done by the Operational Creditor in respect of project site of Gammon Infrastructure Projects Limited - some of the bills were also paid by the Gammon Infrastructure Projects Limited - existence of debt and dispute or not - reply to demand notice not sent - HELD THAT:- It is very clear from the said work order that the work order has been issued and duly signed by the Gammon India Limited. The Operational Creditor also annexed copy of the order dated 22.03.2017 passed by this Tribunal in Company Scheme Petition No. 125/2017 jointly filed by Gammon India Limited and Gammon Engineers and Contractors Private Limited (Corporate Debtor) whereunder the scheme of transfer of Gammon India Limited as transferor company with Gammon Engineers and Contractors Private Limited as the transferee company was approved by this Tribunal under which all the assets and liabilities of the transferor company were taken over by the transferee company i.e. Corporate Debtor. Therefore, it is very clear from the above two documents that the Corporate Debtor being the transferee of Gammon India Limited cannot deny the unpaid bills of the Operational Creditor.
Mere forwarding of the bills submitted by the Operational Creditor to Gammon Infrastructure Projects Limited by the Corporate Debtor does not absolve the Corporate Debtor from its liability. There was no dispute with regard to the debt and default in this case. The respondent has not sent any reply to the demand notice issued by the petitioner.
This tribunal is of the considered opinion that the above company petition is liable to be admitted - Petition admitted - moratorium declared.
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2021 (7) TMI 668
Maintainability of application - initiation of CIRP - Corporate Debtor failed to pay the defaulted payment of installment - account declared as Non-Performing Asset - the Respondent Bank has mentioned the date of default as 07.06.2016, whereas, under Section 7 an Application was filed by Respondent Bank on 06.06.2019 - time limitation - HELD THAT:- An application under Section 7 of the IBC was filed by Respondent No. 1/ Financial Creditor, namely, the Bank of India on 04.06.2019. Further, from the perusal of the application Part-4 Volume-I of the Appeal Paper Book marked at Page-38 the date of default is mentioned as 07.06.2016 - The Appellant in the Reply Affidavit filed before the Adjudicating Authority Para 4 at Page- 65 of the Appeal Paper Book, Volume- I has already stated that 07.06.2016 is the date when the account of the Appellant was declared NPA. And in Para-9 of the Reply Affidavit marked at Page- 67 of the Appeal Paper Book, they have admitted that the installment of month of January, 2019 remain unpaid so the default date started on 30.01.2016.
There is a clear acknowledgment on behalf of two Directors one who have died subsequently.
There is no illegality in the Impugned Judgement passed by the Adjudicating Authority and Impugned Judgement is hereby affirmed - there is no merit in this Appeal - Appeal dismissed.
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2021 (7) TMI 663
Seeking withdrawal of admitted application - Pre-constitution stage of CoC - submission of the Learned Counsel is that the ‘Operational Creditor’ has wrongly proceeded against the ‘Corporate Debtor’ instead of the sister concern and that the sister concern has already paid all the amounts claimed by the ‘Operational Creditor’ - HELD THAT:- Section 12-A read together with amended Regulation 30-A effective from 25.07.2019 provides that stage of pre-Constitution of CoC which is now covered in Regulation 30-A(1)(a). It is evident that Section 12-A deals with the situation of Withdrawal of Application admitted under Sections 7, 9 or 10, on an Application made by the Applicant with the approval of 90% voting share of the Committee of Creditors, in such manner as may be specified’, meaning thereby that Section 12-A refers to a situation Post Constitution of CoC, whereas Regulation 30-A(1)(a) deals with procedure to be followed Pre- Constitution of CoC. It is stated by the Learned Sr. Counsel that the language of the Section, whereunder IBBI has been empowered to frame Regulations is clear that the said Regulation should be consistent with the I&B Code.
Rule 11 of NCLAT Rules, 2016 provides that ‘Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Appellate Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal.’ - in the present case, there is no force in the contention of the proposed Intervenor Applicants that the Application for Withdrawal, filed, prior to Constitution of CoC ought to be mandatorily dealt with the provisions under the Regulation 30-A(1)(a).
It is not the case of the Intervenors that Demand Notice under Section 8 is pending. It is only their case that money is due. Before Constitution of Committee of Creditors mere filing of a ‘Claim’ does not constitute default per se. It is only on the basis of the ‘Claims’ that the CoC is constituted. In a catena of Judgements the Hon’ble Supreme Court has reiterated that the prime objective of the Court is not recovery, but revival - in the interest of Justice, the inherent powers under Rule 11 can be exercised by both NCLT and NCLAT which may allow or disallow the Application of Withdrawal keeping in view the interest of the concerned parties and the facts of each case.
Application allowed.
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Service Tax
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2021 (7) TMI 661
Refund claim of input service tax credit - input service or not - Erection, Commissioning & Installation Services - denial of refund on the ground that the definition of input service exclude service portion in executing of works contract service, including services listed under clause (b) of Section 66E of Finance Act, 1994, insofar as used for construction of executing of works contract services of building of civil structure or part thereof - HELD THAT:- The Commissioner(Appeals) has not properly appreciated the definition of input service as provided in Rule 2(l) of CENVAT Credit Rules, 2004.
On perusal of definition of 'input service', it is found that the credit which has been excluded from the definition of input service under clause 2(A) are (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services. Construction or execution of works contract of a building or civil work only means service towards the construction of a new building especially civil structure work of the building or laying of foundation work for such building for support of capital goods whereas in the present case the nature of services so availed by the appellant was towards electrical works and modernisation of premises and it was not getting a new building constructed.
It is found that the circular No.943/4/2011-CX dt. 29/4/2011 provides that if the input services used for repair or renovation of the factory or the office, then cenvat credit is allowed and is covered by the definition of input service. Further it is found that since the appellants are engaged in export of software services wherein the human resource and infrastructure facility is availed in order to provide export of service and the services in dispute in the present case was essential for rendering export of service.
In the case of M/S MUSADDILAL PROJECTS LTD. VERSUS CCE, C & ST, HYDERABAD-I [2017 (4) TMI 951 - CESTAT HYDERABAD] an identical issue was considered and in para 15, the Tribunal has held that modernisation and renovation of the premises fall in the definition of input service - Similarly in the case of M/S MAHINDRA & MAHINDRA LTD. VERSUS CCE, HYDERABAD - I [2016 (6) TMI 1000 - CESTAT HYDERABAD], the Tribunal has held input service includes services rendered in relation to modernisation, renovation and repair of the factory and offices.
Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 699
Delay in filing appeal before the Apex Court - Condonation of delay - Reduction of delay in filing SLP - one reason for the delay is due to the liner process being followed currently and even if we have a detailed timeline, it may be difficult to avoid delay unless steps in filing of SLP were merged. He suggested that instead of files going from one desk to another in the office of Commissioner in the field , then in Directorate, in CBDT/CBIC and then Ministry of Law and likewise again in the return journey, it should be examined whether an Inter-ministerial standing committee would be administratively possible.
HELD THAT:- During the course of the hearing, various suggestions have been discussed including the need to incorporate technological innovations in the process of monitoring litigation involving the revenue arm of the Union government. In order to facilitate further deliberations by the authorities of the Union government, we post the further hearing on 15 March 2021. It is requested that a consolidated proposal also incorporating technological modalities be placed before the Court on the next date of listing. The Solicitor General has agreed to interact with the Director General, National informatics Centre.
Since sufficient cause has been shown in condoning the delay, delay in filing the appeal is condoned - Counter affidavit shall be filed within three weeks from today.
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Central Excise
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2021 (7) TMI 682
CENVAT Credit - duty paying documents - denial on the ground that the appellant company has availed CENVAT credit on the strength of fake invoices without actually receiving the goods in violation of the CENVAT Credit Rules, 2004 - demand based on statements made by the manufacturers and the Excise dealers - rejection of request for cross-examination of the persons whose statements have been relied upon - HELD THAT:- The entire proceedings have been initiated on the basis of statements made by the manufacturers and the Excise dealers which have been solely relied to conclude that the appellant has not received the goods. The appellants in the course of adjudication have been consistently demanding cross-examination of the witnesses whose statements have been heavily relied upon by the Department. The appellants have pleaded that the goods on which credit have been availed were duly received by them and duly accounted for in the statutory records and that payments have been made through banking challans.
The request for cross-examination of the persons whose statements have been relied upon has been turned down on the ground that despite several opportunities given by the Department, those persons failed to turn up before the authorities. Identical observation has been made in para 3.12 of the other adjudication order dated 15.09.2017 - the reasons assigned by the authorities below to reject cross-examination is clearly unsustainable in legal parlance for the obvious reason that no adverse inference can be drawn against assessee whose statements are to be relied by the Revenue without ascertaining the veracity in the absence of cross-examination.
The Tribunal in the case of M/S NIDHI AUTO PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA-I [2019 (6) TMI 899 - CESTAT ALLAHABAD], while relying on the ratio laid down by the Hon’ble High Court in the case of COMMISSIONER OF CENTRAL EXCISE, MEERUT-I, MEERUT & ANOTHER VERSUS M/S PARMARTH IRON PVT. LTD., BIJNOR. [2010 (11) TMI 109 - ALLAHABAD HIGH COURT] has held that when the Revenue does not allow cross-examination of any prosecution witness then Revenue cannot rely on the statement given by such prosecution witness for confirmation of demand.
Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 662
CENVAT Credit - input services - outward GTA services - sale of goods on FOR basis - price is inclusive of freight - HELD THAT:- The facts and documents related there to submitted by the learned Counsel shows that sale of goods is on FOR basis, the freight was paid and born in bond by the appellant. Sale price is inclusive of freight on which excise duty was charged.
Similar issue decided in appellant's own case BANCO PRODUCTS INDIA LTD VERSUS C.C.E. & S.T. -VADODARA-I [2021 (3) TMI 507 - CESTAT AHMEDABAD] where it was held that the invoices clearly mentioned a condition that the sale is on FOR basis and risk upto the destination is covered. It is also not the case of the department that outward transit insurance was paid by the consignee. In this case it is clear that the sale is on FOR basis and sale invoices itself is a kind of contract and no further contract is required to ascertain that whether the sale is on FOR basis or not. Therefore, there is no dispute that sale is on FOR basis and hence credit is admissible.
Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 655
Wrong Circular was mentioned - Board Circular No. 97/8/2007-ST was wrongly mentioned whereas the correct circular No. is 1065/4/2018-CX dated 08.06.2018 which needs to be corrected - HELD THAT:- There is an apparent error in mentioning the circular no. in para 4 of the order. Accordingly in place of Circular No. 97/8/2007-ST, Circular No. 1065/4/2018-CX dated 08.06.2018 is corrected and read accordingly. The error pointed out by the applicant stands corrected.
ROM application allowed.
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CST, VAT & Sales Tax
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2021 (7) TMI 693
Allegation of corruption against the Assistant Commissioner (Assessment) - Irregularity in passing the assessment order - Whether an Assistant Commissioner of the Sales Tax Department, who passes an order of assessment of tax under the Kerala Value Added Tax Act, 2003, is entitled to get the protection envisaged under the Judges (Protection) Act, 1985?
HELD THAT:- Section 79 of the KVAT Act has nexus with official acts done under that statute. The section consists of two sub-sections which operate in two different fields. The first sub-section speaks of bar of suits against any officer or servant of the Government, for any act done or purporting to be done under the KVAT Act, without the previous sanction of the Government. The second sub-section deals with liability of an officer or servant of the Government in respect of any such act in any civil or criminal proceeding, if the act was done in good faith in the course of the execution of duties or the discharge of functions imposed by or under that statute - In the instant case, admittedly, sanction for prosecution against the petitioner under Section 19(1) of the PC Act has been granted by the State Government. Once sanction under Section 19(1) of the PC Act has been granted for prosecution against the petitioner, it is not necessary to obtain any separate sanction of the Government under Section 79(1) of the KVAT Act.
There can be no doubt with regard to the fact that the assessment orders dated 04.05.2011 and 31.05.2011 passed by the petitioner are in the nature of definitive judgments in legal proceedings. There is no dispute with regard to the fact that the petitioner was empowered by law to pass the assessment orders. In such circumstances, the petitioner, while passing the assessment orders dated 04.05.2011 and 31.05.2011, had discharged functions as a “Judge” as envisaged under Section 2 of the Act.
Whether passing an assessment order under the KVAT Act constitutes an act in the discharge of judicial functions or duties as envisaged under Section 3(1) of the Act? - HELD THAT:- The act of the petitioner, passing the assessment orders dated 04.05.2011 and 31.05.2011, as a quasi-judicial authority under the KVAT Act, was an act done or committed by him in the course of discharge of his official or judicial duty or function. Therefore, he is entitled to get the protection under Section 3(1) of the Act. It follows that the prosecution against him, which is based on the assessment orders dated 04.05.2011 and 31.05.2011 passed by him, is not maintainable.
Section 55 of the KVAT Act provides for appeal against an order of assessment. As per Clause (i) of Section 55(1) of the KVAT Act, appeal against an order passed by an authority of the rank of an Assistant Commissioner lies to the Deputy Commissioner (Appeals) - In the instant case, it is alleged that the petitioner, who was in the rank of Assistant Commissioner, did not obey the written directions given by the Deputy Commissioner in the matter of assessment of tax. The petitioner, while acting as a quasi-judicial authority, was not bound to obey such directions. Assessment of tax made by him in violation of such directions cannot make him liable for committing any offence.
In the present case, the petitioner was the competent authority under the KVAT Act who had the power to assess the tax due from M/s Nano Excel Enterprises. The assessment orders passed by him were in legal proceedings and, therefore, he would be squarely covered under the definition of “Judge” in Section 2 of the Act which refers to every person who is empowered by law to give a definitive judgment in any legal proceeding - If a public servant, acting as a quasi judicial authority under a statute, passes an order and if such order is in favour of a person other than the Government, any pecuniary advantage obtained by such person by virtue of such order, cannot be the basis for prosecution of the public servant under the PC Act, unless there is allegation that the public servant was actuated by extraneous considerations or oblique motives in passing the order.
The petitioner is entitled to get the protection envisaged under Section 3(1) of the Judges (Protection) Act, 1985 in respect of the assessment orders dated 04.05.2011 and 31.05.2021 passed by him and that the prosecution against him, which is based merely on those assessment orders, is barred and not maintainable in law - Petition allowed.
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2021 (7) TMI 691
Violation of Principles of Natural Justice - reassessment afresh after providing an opportunity of personal hearing - deemed assessment order by accepting the total turnover reported through the returns as required under Section 22(2) of the TNVAT Act - HELD THAT:- Section 27 of the Tamil Nadu Value Added Tax Act, 2006, provides for reasonable opportunity, which includes the personal hearing under Section 27(4) of the Act, which is mandatory. However, the petitioner has not been given personal hearing and therefore, considering the facts and circumstances of the case, this Court is of the considered view that the impugned order is liable to be set aside and the matter needs consideration afresh.
The matter is remanded back to the second respondent for fresh consideration after giving reasonable opportunity including the personal hearing as contemplated under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006 - Petition allowed by way of remand.
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Indian Laws
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2021 (7) TMI 692
Dishonor of Cheque - Filing a case for Suit for recovery of money after initiating action u/s 138 of N.I.Act - Validity of FIR registered - Allegation is that the discount as promised by seller were not provided - matter of contract to be proved by the second respondent for recovering the amount said to be due to him - HELD THAT:- If the FIR registered against the petitioners and two others is read, it appears that the second respondent wanted to purchase laptops from the first petitioner’s business concern and there is no dispute with regard to this. The petitioners dispute offering of discount to the extent of 15 to 18% and claim to have supplied the entire quantity of laptops which is again disputed by the second respondent. But what is important to be noted here is that on 16.11.2018 itself, the second petitioner lodged an FIR with Halasur Police against the second respondent, his wife Smt. H.G. Pranitha, Mrs. Kavitha Wagamore and Mrs. Vasudha Shenoy alleging that his employees viz., Mrs. Kavitha Wagamore and Mrs. Vasudha Shenoy colluded with the second respondent and his wife to run a parallel business under the name and style of Viva Info Solutions and caused loss to him - According to the second respondent, the petitioners have to pay him an amount of ₹ 4.95 crore towards the discount offered to him, which is disputed by the second petitioner. Therefore it may be stated that if really the petitioners had offered discount, it is a matter of contract to be proved by the second respondent for recovering the amount said to be due to him. He has to file a suit for recovery of money against the petitioners.
If really the second respondent’s grievance about cheating and forgery by the petitioners is genuine, he should have made a report to the police much earlier. If he thought of making a complaint to the police after registration of FIR against him in Cr.No.421/2018 and initiation of proceeding under Sec.138 of N.I.Act, obviously a doubt arises about the veracity in the contents of FIR 34/2019. The petitioners have made allegations against his employees viz., Mrs. Kavitha Wagamore and Mrs. Vasudha Shenoy and that the second respondent has also blamed them in his FIR. Therefore it can be said that the allegations against this petitioner in FIR No.34/2019 do not prima facie appear to be believable.
Petition allowed.
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