TMI Tax Updates - e-Newsletter
July 6, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Validity of assessment order - The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming. - the petitioner is at liberty to approach the appellate authority, by preferring an appeal in a prescribed format, following the procedures contemplated, within a period of two weeks from the date of receipt of a copy of this order. - HC
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Income Tax:
Exemption u/s 11 - Donation to other trusts - no explanation offered for many donations made by the Trust as to whether they were for activities in conformity with the objects of the Trust - Charity is clearly defined as relief of the poor, education, yoga, medical relief, preservation of environment, etc., Thus public charitable trust donating to activities other than education cannot be denied exemption u/s.11 of the Act. Therefore, the conclusion of the Assessing Officer is totally unwarranted. - HC
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Income Tax:
Rejection application for Revision u/s 264 in favor of assessee - Rejection on the ground the assessee has filing an appeal u/s 246 which was rejected by the CIT(A) due to non-payment of tax - the order passed by the 2nd respondent, in rejecting the appeal as void ab initio, cannot be considered as disposing the appeal by any of the above modes specified. Thus, it cannot be said that the order of assessment of the 3rd respondent is “subject of an appeal” placing embargo/ousting the jurisdiction of the 1st respondent under Section 264(4). - HC
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Income Tax:
Eligibility under the DTVSV Scheme - appeals against the orders passed u/s 143(1)(a)(i) or (ii) as a separate category from the appeals from Clauses (iii) to (vi) of 143(1)(a) - When the circulars are issued exercising powers under sections 10 and 11 of DTVSV Act, directions are supposed to aid and smoothen bringing into operation provisions and execution of the actions based thereon. The directions, circulars would not be issued under such provisions digressing or deviating from the object and purpose under the scheme of the enactment. - HC
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Income Tax:
Recovery proceedings - Attachment orders - rights over the property - seeking transfer of property in favor of purchaser - In this case admittedly the transfer was on account the final culmination of the litigation by the order of Hon’ble Supreme Court.There was only a delay in the execution of sale deed due to the pendency of the proceedings as the third and fourth respondent’s mother declined to execute sale deed under the sale agreement dated 30.6.1994 - Therefore, there is no justification in not releasing the registered sale deed in favour of the petitioner as the petitioner is a bonafide purchaser who has purchased the property after a long drawn litigation . - HC
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Income Tax:
Deduction u/s. 37(1) denied - addition on account of export commission treating the same as non-genuine - The assessee before the authorities below failed to furnish the details of the parties despite having several opportunities. Even now before us the matter has been listed 16 times prior to the present date of hearing but the assessee has not brought anything on record about the details of such parties after filing the appeal - Thus it is transpired that it is very unlikely that the assessee shall be in a position to furnish the necessary details. - Additions confirmed - AT
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Income Tax:
The provisions of section 292BB of the Act deals with the situation where notice is not served or not served on time or served in a improper manner viz a viz the assessee does not raise objection before the completion of the assessment. As such, the provision of section 292BB of the Act does not deal about the issuance of notice. In the present case, the issue is whether the assessment framed under section 147/143(3) of the Act is valid without the issuance of the mandatory notice under section 143(2) of the Act. Accordingly we hold that, the provision of section 292BB of the Act does not extend any benefit to the Revenue. - AT
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Income Tax:
Deemed dividend u/s 2(22)(e) - trading receipt i.e. in the course of the business - There may be several reasons for transferring the sum to the personal saving account of the assessee such as the fund was not immediately required for use in the business or there was sufficient capital of the assessee in his business which has been withdrawn or for any other reason. But such withdrawal cannot be a basis to draw an inference that such trading receipts represents the loans and advances in the nature of deemed dividend as provided under section 2(22)(e) - AT
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Income Tax:
Exemption u/s 11 denied - anonymous donations - In present case, it is highly improbable that an organization can receive donation of identical amount of ₹ 4,501/- from total 4851 persons. Therefore, it is fit case to apply the test of human probabilities. No pleadings were made before us as to how it was prevented from filing the correct details before the lower authorities as well as before us. - the transaction of receipt of donation is a sham, a make believe story, a device adopted by the appellant society to bring on record the undisclosed income of the appellant society. - No exemption - AT
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Income Tax:
Revision u/s 263 - AO had issued u/s. 142(1) and has enquired about the details of sale of flat and LTCG etc. by asking question - AO had enquired about the issue of LTCG on sale of flat and has discharged his duty as on investigation and cannot be faulted; and allowing the interest expenditure (capitalized) and which becomes part of the cost of acquisition in the facts of this case is allowable, and is a plausible view and so it cannot be held erroneous and at any rate be held un-sustainable view in law. - AT
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Income Tax:
Addition u/s 45(4) on account of revaluation of assets - distribution of the revaluation amount to the partners capital accounts during the continuation of the firm - the revaluation of the assets of the firm and crediting of the capital accounts of the partners could not have been brought within the meaning of Sec. 45(4) of the Act. - AT
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Customs:
Entitlement of interest on pre-deposit - The interest on the pre-deposit refunded to the appellant is to be determined as pre amended Section 129EE of the Customs Act i.e., for a period commencing after expiry of three (3) months from the date of communication of the order of the appellate authority till the refund of such amount and not from the date of deposit of the said amount till the date of refund. - HC
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Customs:
Seeking release of seized goods - two-sided coated paper in rolls - it is considered to be too early for the Writ Court to express any opinion on the issue, because, adjudication is yet to commence. However, taking out of the fact that paper of all categories which has been mentioned under EXIM Code 4810 is freely importable and only issue would be whether the import effected by the respondent is a "Stock Lot" or not is to be decided. - Goods to be released - HC
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SEBI:
Modes of charging fees to clients by Investment Advisors - Prescribing a mode for charging of fees as also the ceiling of fees to be charged by Investment Advisors amounts to a reasonable restriction, at least in principle, in the matter of carrying on the business or profession of Investment Advisors, apart from being an important measure for protection of investors and development and regulation of securities market. In so far as reasonableness of the particular quantum of ceiling of fees determined by SEBI or conditions laid down for charging of such fees are concerned, there is no material placed on record by the Petitioner to suggest that the fees fixed or conditions stipulated are so unreasonable or capricious as not to admit of Investment Advisors’ freedom to practice their profession or business. - HC
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Central Excise:
Refund of CENVAT Credit - clearances under CT1 Certificates for export - There is no provision in the definition of turnover of services that the export turnover should be taken as per the date of invoice. The refund has to be computed by taking date of FIRC during the particular quarter for the purpose of export turnover. - The denial of refund of CENVAT Credit as time-barred is not acceptable - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (7) TMI 174
Validity of assessment order - violation of constitutional provisions and in violation of the Act - HELD THAT:- The appellate authority is the Tribunal constituted and the appeal is to be preferred under Section 86 of the Indian Evidences Act, 1994. The importance of the appellate remedy can never be undermined and the petitioner has to exhaust the same as the mixed question of fact and law are to be considered by the appellate authority, who is the final fact finding authority - Preferring an appeal is the rule. Entertaining a Writ Petition before exhausting the appellate remedy is an exception. Undoubtedly, writ proceedings may be entertained before exhausting the appellate remedy. However, it is to be ensured that there is an imminent threat or gross injustice warranting urgent relief to be granted. Mere violation of principles of natural justice is insufficient to entertain a writ proceedings under Article 226 of the Constitution of India, as every Writ Petition is filed based on one or the other ground stating that the principles of natural justice is violated or statutory requirements are not complied with or there is an illegality or otherwise.
The High Court cannot conduct a roving enquiry with reference to the facts and circumstances, based on the documents and evidences. Based on the mere affidavits filed by the litigants, the disputed facts cannot be concluded. Thus, the importance of fact finding by the appellate forums is of more value for the purpose of providing complete justice to the parties approaching the Court of law - The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming.
The petitioner is at liberty to approach the appellate authority, by preferring an appeal in a prescribed format, following the procedures contemplated, within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off.
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Income Tax
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2021 (7) TMI 178
Exemption u/s 11 - Donation to other trusts - no explanation offered for many donations made by the Trust as to whether they were for activities in conformity with the objects of the Trust - Whether withdrawal of registration u/s.12AA is not a prerequisite for the denial of exemption under Section 11? - HELD THAT:- According to Section 2(15), charitable purpose includes relief of the poor, education, yoga, medical relief, preservation of environment and preservation of monuments or places or objects of artistic or historic interest and the advancement of any other object of general public utility.
Trust/institution covered under advancement of any other object of general public utility can do commercial activities upto 20% of its total receipts [Proviso to section 2(15)]
In the instant case, the Assessing Officer had first disallowed the entire exemption and subsequently scaled it down to ₹ 14,94,886/- though reiterating that the Respondent/Trust had acted in violation of its own object set out in the Trust deed. If the Assessing Officer had objection regarding the entire amount of donation, then her remand report should not have accepted any of the donations with valid reasons.
Charity is clearly defined as relief of the poor, education, yoga, medical relief, preservation of environment, etc., Thus public charitable trust donating to activities other than education cannot be denied exemption u/s.11 of the Act. Therefore, the conclusion of the Assessing Officer is totally unwarranted.
No reason to interfere with the order of the Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal. We reject the grounds of appeal taken by the Revenue.
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2021 (7) TMI 159
Addition made towards LTCG denying the benefit of deduction u/s. 54F - assessee had not deposited the sale proceeds in the capital gains deposit accounts scheme maintained with any Nationalised Bank as per section 54F(4) of the Act and therefore, disallowed the claim of deduction - HELD THAT:- On an earlier occasion the SMC Bench of Hyderabad Tribunal in the case of Satya Prakash Reddy Aedudodla [2021 (7) TMI 76 - ITAT HYDERABAD] following the decision of the Division Bench of Chennai Tribunal [2018 (1) TMI 1572 - ITAT CHENNAI] had held that if the sale proceeds are deposited in any Nationalised Bank it would suffice though not transferred to the capital gain deposit scheme account
Therefore, in the interest of justice, we hereby remit the matter back to the file of the Ld. AO to verify whether the assessee has deposited the entire sale proceeds in any of the Nationalised Bank and if found so then the Ld. AO is hereby directed to grant the benefit of deduction provided all the other conditions stipulated under the Act are complied with - Appeal of the assessee is allowed for statistical purposes.
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2021 (7) TMI 177
Maintainability of appeal - Notice issued u/s 148 on a dead person - HELD THAT:- This Court is of the considered opinion that the appellate authority is the final fact finding authority. The facts in dispute between the parties cannot be adjudicated in a writ proceedings, under Article 226 of the Constitution of India, which is to be undertaken by the appellate authority with reference to the original records and documents. Thus, exhausting the appellate remedy is of paramount importance and would be of greater assistance to the High Court to exercise the power of judicial review, under Article 226 of the Constitution of India. The High Court need not undermine the importance of the appellate remedy, as the statute contemplates such appellate remedy with a specific intention to redress the grievances of the assessees and such a benefit need not be denied to an assessee. Various principles for exhausting the appellate remedy and the circumstances under which the High Court may dispense with the appellate remedy are considered by this Court in number of Writ Petitions.
Preferring an appeal is the rule. Entertaining a Writ Petition before exhausting the appellate remedy is an exception. Undoubtedly, writ proceedings may be entertained before exhausting the appellate remedy.In view of the facts and circumstances, the petitioner is at liberty to approach the appellate authority, by preferring an appeal in a prescribed format, following the procedures contemplated, within a period of four weeks from the date of receipt of a copy of this order.
In view of the facts and circumstances, the petitioner is at liberty to approach the appellate authority, by preferring an appeal in a prescribed format, following the procedures contemplated, within a period of four weeks from the date of receipt of a copy of this order.
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2021 (7) TMI 158
Dismissing the appeal in limine on account of non-payment of admitted tax u/s. 249 (4) (a) and delay in filing the appeal u/s. 249(3) by 14 days - HELD THAT:- Since the assessee has paid the self-assessment tax as noted we set aside the order of CIT(A) and restore the file back to him with a direction to adjudicate the appeal on merits and in accordance with law after providing reasonable opportunity of being heard to the assessee in the matter. The assessee is directed to cooperate with the CIT(A) for early disposal of the appeal. Thus, the grounds raised by the assessee are treated as allowed for statistical purposes.
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2021 (7) TMI 157
TP Adjustment - Arm's Length Price - royalty to the Associated Enterprises (AE) - contention raised by the ld. DR for the Revenue based upon the findings returned by the ld. TPO/DRP in Assessment Year 2006-07 that no evidence has been brought on record by the taxpayer to prove rendition of services - HELD THAT:- Following the order passed by the coordinate Bench of the Tribunal in taxpayer’s own case for AY 2005-06 [2020 (12) TMI 723 - ITAT DELHI] we are of the considered view that ld. TPO/DRP have erred in treating the value of the transaction at nil by ignoring the entire evidence brought on record by the taxpayer without making any analysis or bringing on record evidence to support their findings that no material benefit has been received by the taxpayer and order is also not supported with any evidence to prove that taxpayer’s business could be managed and operated by exclusion of various technical operating and strategic services extended by the AE to the taxpayer. So, in these circumstances, addition made by the TPO and confirmed by the ld. DRP for AY 2006-07 is ordered to be deleted.
Addition u/s 40(a)(ia) - payment of salary to non-resident - global account management expenses - HELD THAT:- As decided in own case [2020 (12) TMI 723 - ITAT DELHI] we are of the considered view that the amount paid by the taxpayer to M/s. Expeditors International of Washington Inc. on account of global account management expenses cannot be treated as payment of salary to non-resident but it was in the nature of reimbursement of expenses which cannot be subjected to deduction for TDS, provision u/s 40(a) of the Act being not applicable.
We are of the considered view that amount of expenses incurred by the taxpayer on account of VSAT charges cannot be treated as charges for consultancy or technical services and as such, cannot be subjected to deduction of tax under section 40(a) of the Act. Consequently, order passed by the AO/DRP in AY 2006-07 is not sustainable, hence ordered to be set aside and addition made on account of global account management charges and VSAT charges are ordered to be deleted.
Disallowing the lease line uplinking Charges (VSAT charges) as royalty in view of the Explanation 6 to section 9(1)(vi) - HELD THAT:- In view of the decision rendered in case of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] wherein it is held that unilateral amendment as made in the domestic law cannot be read into Treaty. Hon’ble Apex Court decided that Explanation 6 to section 9(1)(vi) is not applicable to the facts and circumstances of the case. Unilateral amendment in Act cannot be read in as DTAA. Consequently, addition made by the AO and confirmed by the ld. CIT (A) in AY 2008-09 is ordered to be deleted
Excess depreciation claimed by the taxpayer on UPS, printer, etc. - as per AO depreciation on computer accessories @15% as against 60% claimed by the taxpayer - HELD THAT:- As decided in own case [2020 (12) TMI 723 - ITAT DELHI] we are of the considered view that taxpayer is entitled for depreciation @ 60% because computers cannot be run without its accessories i.e. UPS, printer, etc.
Education cess (EC) and Secondary and Higher Education Cess (SHEC) paid on the income tax was an allowable deduction for computing total income - HELD THAT:- Following the decision rendered in case of Sesa Goa Ltd. [2020 (3) TMI 347 - BOMBAY HIGH COURT] and order passed by the coordinate Bench of the Tribunal in case of Sicpa India Pvt. Ltd. [2020 (4) TMI 425 - ITAT DELHI] we are of the considered view that education cess and secondary & higher education cess is an allowable deduction being not hit by the provisions of section 40(a)(ii) of the Act.
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2021 (7) TMI 155
Validity of proceedings u/s 153C - HELD THAT:- Assessing Officer had first of all issued his notice dt. 13-01-2012 u/s. 153A of the Act an admitted fact that the department had also conducted the search in assessee's case as well. And also that Assessing Officer had issued Section 153C notice on 13-01-2012 only. Meaning thereby that the crucial date herein i.e., 13-01-2012 witnessed the Assessing Officer's twin folded action initiating both the 153A as well as 153C proceedings culminating in the impugned assessment u/s. 153C of the Act.
We hold in this clinching factual backdrop that the impugned assessment suffers from a patent legal defect at the threshold itself since the Assessing Officer ought to have initiated the same u/s. 153A in case of the searched assessee than a third party. We thus adopt stricter construction going by hon'ble apex court's full bench decision Commissioner of Customs Vs. Dilip Kumar [2018 (7) TMI 1826 - SUPREME COURT] and quash the impugned assessment itself as 'invalid'.
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2021 (7) TMI 154
Penalty u/s. 271(1)(c) - defective notice u/s 274 - HELD THAT:- In the case under consideration, on perusal of the show cause notices issued by the Assessing Officer u/s. 274r.w.s. 271(1)(c) it is seen that the Assessing Officer did not mention whether the notice is issued for concealment of income or for furnishing of inaccurate particulars of income. Therefore, as per the ratio laid down by the Hon'ble Supreme Court in the case of SSA's Emerald Meadows [2016 (8) TMI 1145 - SC ORDER] the notice issued by the Assessing Officer is not valid and consequently, the order passed u/s. 271(1)(c) is also not valid. Hence, we set aside the order of the CIT(A) and quash the order passed by the Assessing Officer u/s. 271(1)(c) of the Act. Accordingly, the appeal of the assessee is allowed.
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2021 (7) TMI 153
Deduction u/s 80JJA - whether the assessee satisfied the requisite conditions for claim of deduction u/s 80JJAA, had most arbitrarily allowed the same? - assessee had neither raised the claim for deduction u/s 80JJAA in its original return of income nor by way of filing of a revised return, the A.O, therefore, had declined to take cognizance of the same as was raised on the basis of a letter dated 04.03.2014 that was filed by the assessee along with the ‘audit report’ of a Chartered accountant in ‘Form No. 10DA’ - HELD THAT:- As is discernible from the assessment order A.O despite declining to admit the assessee’s claim for deduction u/s 80JJAA of the Act, had however, also dealt with the same on merits, and had concluded that qua the infirmities in the aforementioned claim the assessee was even otherwise not eligible for the same - in the course of the proceedings before the CIT(A), we find, that the assessee had point wise rebutted the observations of the A.O, and considering the same the CIT(A) had held the assessee to be eligible for claim of deduction u/s 80JJAA.
We are unable to persuade ourselves to subscribe to the claim of the ld. D.R that the CIT(A) ought to have restored the matter to the file of the A.O for verifying the assessee’s entitlement for claim of deduction u/s 80JJAA of the Act.
Our aforesaid view is fortified by case of International Tractors ltd. [2021 (4) TMI 1033 - DELHI HIGH COURT] wherein involving identical facts the Hon’ble High Court had set-aside the order of the Tribunal that had restored the issue as regards the assessee’s entitlement for deduction u/s 80JJAA to the file of the A.O. CIT(A) had allowed a legitimate claim of the assessee, therefore, there was no justification on the part of the Tribunal to have restored the matter to the file of the A.O for fresh adjudication. We also find that the A.O in the assessee’s own case for A.Y. 2012-13 to A.Y. 2015-16 had held the assessee to be eligible for claim of deduction u/s 80JJAA of the Act.
We are of the considered view that as the assessee’s claim for deduction u/s 80JJAA is duly substantiated by the ‘audit report’ filed by a Chartered accountant in ‘Form No.10DA’ along with the ‘notes’ appended thereto, there would thus be no justification in restoring the matter to the file of the A.O, which in our considered view would be an idle formality, neither in the interest of the revenue nor that of the assessee.
We may herein observe that neither any infirmity as regards the assessee’s entitlement for claim of deduction u/s 80JJAA is discernible from the records nor anything has been placed before us by the ld. D.R to negate the view taken by the CIT(A) that the assessee was eligible for deduction under the aforesaid statutory provision. In our considered view had rightly allowed the assessee’s claim for deduction u/s 80JJAA. - Decided in favour of revenue.
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2021 (7) TMI 152
Deduction u/s. 37(1) denied - addition on account of export commission treating the same as non-genuine - also addition u/s 40(a)(ia) - assessee failed to deduct the TDS on the impugned amount of export commission TDS u/s 195 - HELD THAT:- CIT (A) was pleased to hold that the provisions of TDS are not applicable with respect to the commission paid to the overseas parties.
Besides this the assessee furnishes the necessary details to justify that the export commission was genuine in support of its claim. Accordingly the learned CIT (A) deleted the addition made by the AO for a sum made by the AO. The balance amount was confirmed by the learned CIT (A) on the reasoning that the assessee failed to furnish the details of the parties and the services rendered by such parties.
AR before us at the time of hearing requested to restore the matter to the file of the AO and assured to file the requisite details in support of the claim of the assessee - matter before us pertains to the assessment year 2013-14 which was decided by the AO dated 29 December 2015 and subsequently the learned CIT (A) has passed the order dated 17th February 2016. The assessee before the authorities below failed to furnish the details of the parties despite having several opportunities. Even now before us the matter has been listed 16 times prior to the present date of hearing but the assessee has not brought anything on record about the details of such parties after filing the appeal on 4th April 2018. Thus it is transpired that it is very unlikely that the assessee shall be in a position to furnish the necessary details. Accordingly, we are not inclined to give fresh opportunity to the assessee by restoring the matter to the file of the AO as prayed by the learned AR for the assessee. Accordingly, without going into the merit of the case, the ground of appeal of the assessee, in the absence of documentary evidence as discussed above, is hereby dismissed.
Capitalizing the amount of interest attributable to the advances given to the parties for acquiring the capital asset - HELD THAT:- As the assessee has not utilized the borrowed fund for making the advance to the party as discussed above. Thus the question of capitalizing the element of interest attributable on the advances given by the assessee for acquiring the technical know-how does not arise. Hence the ground of appeal of the assessee is allowed.
Admission of additional evidence - HELD THAT:- AR in the application for the admission of the additional evidences has just casually mentioned that these additional evidences pertain to the 3rd parties and therefore the assessee has taken time to collect the same. The reason given by the assessee is not based on any supporting documents. On perusal of the documents for the admission, we note that all the documents pertain to the period prior to the date of assessment order except some certificate which are not very relevant to decide the issue on hand.
Likewise, it is not also the case of the assessee that the authorities below have not furnished the sufficient opportunities for providing such additional evidences. Accordingly, we are of the view that the additional evidences filed by the assessee in support of its claim cannot be admitted as the assessee has not furnished the sufficient cause which prevented to produce the aforesaid additional evidences. Hence, we deny to accept the additional evidences filed by the assessee and thus without going into the merit of the case, we confirm the order of the authorities below. Hence the ground of appeal of the assessee is dismissed.
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2021 (7) TMI 151
Addition on account of under valuation of closing stock of tea bags - CIT-A deleted the addition - assessee is a wholesale dealers of tea bags whose assessment under Section 143(3) was completed - HELD THAT:- In view of case particularly the damaged stock due to heavy rainfall sold on 02.11.2016 and further that the claim of such damaged stock and subsequent settlement which took place between the assessee and the New India Insurance Company Ltd. in A.Y. 2006-07 supported by corroborative evidence keeps no option for disallowance and addition thereof as made by the Ld. AO is, therefore, not sustainable. Taking into consideration this particular aspect of the matter we do not find any ambiguity in the order passed by the Ld. CIT(A) for deleting the addition so as to warrant interference. Hence, the Revenue's appeal is dismissed.
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2021 (7) TMI 150
Reopening of assessment u/s 147 - non issue of notice under section 143(2) - Whether the assessment made under section 143(3) read with section 147 of the Act without issuing the notice under section 143(2) is valid? - applicability of provision of section 292BB - HELD THAT:- AO was under the obligation to issue a notice under section 143(2) of the Act for making the assessment or reassessment as the case may be under section 147 of the Act. But the AO has not done so. Accordingly, the order framed under section 143(3) read with section 147 of the Act becomes invalid.
The provisions of section 292BB of the Act deals with the situation where notice is not served or not served on time or served in a improper manner viz a viz the assessee does not raise objection before the completion of the assessment. As such, the provision of section 292BB of the Act does not deal about the issuance of notice. In the present case, the issue is whether the assessment framed under section 147/143(3) of the Act is valid without the issuance of the mandatory notice under section 143(2) of the Act. Accordingly we hold that, the provision of section 292BB of the Act does not extend any benefit to the Revenue.
We conclude that it was mandatory to issue the statutory notice under section 143(2) of the Act within the prescribed time and such defect cannot be cured under the provisions of section 292BB - Decided against revenue.
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2021 (7) TMI 149
Disallowance u/s 14A r.w.r. 8D - suo moto disallowance - AO found that the disallowance made by the assessee was not in pursuance to the provisions of section 14A read with rule 8D - HELD THAT:- AO has not recorded any satisfaction for making disallowance u/s 14A we noticed that AO at Page 5 of the assessment order has clearly stated that assessee has not maintained any record to demonstrate that no administrative expenditure has been incurred for the purpose of earning exempt income - AO has also cited instances of administrative expenditure such as the review of investment, monitoring of the activities of the company in which the assessee company has made substantial investment by the director of the assessee company and the employees of the assessee company etc.- salary paid by the assessee company to those employee and the director who have devoted their time towards investment activities have not been utilised exclusively for the purpose of the business of the company.
No merit in the ground of appeal of the assessee that no satisfaction has been recorded by the AO before making disallowance u/s 14A - after perusal of the information on record filed by the assessee we observe that assessee has made investment in equity share of listed company's debentures, bond units of mutual fund etc. and all these have been made through portfolio management consultant who has provided full fledge services in that respect - assessee had suo-motu disallowed an amount u/s 14A - looking to the quantum of exempt income and investment made by the assessee it will be appropriate to restrict the disallowance out of administrative expenditure to the amount - Therefore, appeal of the assessee is partly allowed.
Disallowance as per the clause (f) to Explanation-1 of Sec. 115JB for addition u/s 14A r.w.r. 8D - HELD THAT:- Disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction in the case of CIT Vs. Jayshree Tea Industries Ltd. [2014 (11) TMI 1169 - CALCUTTA HIGH COURT].
As independently. In this regard, we note that there is no mechanism/ manner given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income - we feel that adhoc disallowance will serve the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation - we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently.
We note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1% of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus the ground of appeal of the assessee is partly allowed.
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2021 (7) TMI 173
Reopening of assessment u/s 147 - non disposing of objections raised by assessee - Non speaking order passed - HELD THAT:- Two components are of paramount importance. Adherence of the procedures contemplated, firstly and furnishing reasons for arriving a particular decision, thereafter. Thus, on initiation of re-opening proceedings by invoking Section 147 AO is obligated to follow the procedures contemplated and furnish the reasons for arriving a particular decision. In the present case, reasons are furnished for reopening of assessment.
The objections are to be disposed of in a meaningful manner, in view of the fact that the reopening procedures in the present case falls beyond the period of four years and within six years. Thus, the ingredients contemplated in the proviso clause is to be complied with. Thus, the consideration of objections and the findings for reopening are of vital and in the absence of any reasons, one cannot form an opinion that reopening of assessment is made with reference to the conditions stipulated in the proviso clause to Section 147 - Conditions under the provisions are mandatory. In order to establish the compliance of conditions, the authority competent must provide reasons, stating that the conditions stipulated in the proviso clause has been complied with. Thus, a non-speaking order in this regard cannot be sustained and therefore, the impugned order is to be construed as lacking, on application of mind and the objections raised by the petitioner are not considered, nor a finding is given.
The impugned notice issued by the respondent in proceedings issued under Section 143(2) of the Income Tax Act is quashed and the matter is remanded back to the respondent for fresh consideration. - Decided in favour of assessee.
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2021 (7) TMI 172
Rejection application for Revision u/s 264 in favor of assessee - Rejection on the ground the assessee has filing an appeal u/s 246 which was rejected by the CIT(A) due to non-payment of tax - Whether the rejection of the appeal by the 2nd respondent as void ab initio for having been filed without complying with mandatory provisions of Section 249(4)(a) can be considered as a matter having been “subject of an appeal”, to oust or prevent the 1st respondent from exercising the power of Revision conferred on him under Section 264 of the Act? - HELD THAT:- Admittedly, in the facts of the present case, the appeal filed by the petitioner against the order of the 3rd respondent dt.31.03.2003, had been filed without payment of admitted tax due as per the return of income. Since, the admitted tax due is required to be paid for filing the appeal before the 2nd respondent for it to be entertained, and the appeal having been filed by the petitioner without making such payment, the said appeal, even if filed, cannot be considered as a validly presented appeal. It is for the said reason, the 2nd respondent, without adjudicating the matter on merits, has rejected the appeal as void ab initio, though by using the term as “dismissed”.
Any appeal, which is not accompanied either by the requisite Court fee, or any other mandatory payment required to be made as per the provisions of the relevant Statute, cannot be considered as a validly presented appeal, and such appeal would be non-est in the eye of law. Once an appeal is considered as non-est in the eye of law, any order impugned in such appeal cannot be considered as “subject of an appeal”, as there is no ascertainment or adjudication of the issues raised in the appeal on its merits.
As noted that Section 251(1)(a) of the Act stipulates that an appeal filed before the appellate authority to be considered as disposed, would require such order under challenge to be either confirmed, reduced, enhanced or annulled. It goes without saying that the disposal is by considering the merits of the matter. In the facts of the present case, the order passed by the 2nd respondent, in rejecting the appeal as void ab initio, cannot be considered as disposing the appeal by any of the above modes specified. Thus, it cannot be said that the order of assessment of the 3rd respondent is “subject of an appeal” placing embargo/ousting the jurisdiction of the 1st respondent under Section 264(4).
Having regard to the position of law elucidated above, this Court is of the considered view that the impugned order passed by the 1st respondent under Section 246(6) of the Act, refusing to exercise Revisional power conferred on him under Section 264(4) of the Act, on the ground that the order of the 3rd respondent dt.31.03.2003 was “subject of an appeal” (underlining supplied by the Court) before the 2nd respondent, cannot be sustained.
Writ Petition is allowed; the impugned order passed by the 1st respondent, is set aside; the matter is remitted back to the 1st respondent (or the concerned Commissioner, in view of passage of time and change of jurisdiction); the 1st respondent (or the concerned Commissioner) is directed to dispose of the Revision petition filed by the petitioner within a period of three (3) months from the date of receipt of a copy of this order, by passing a reasoned order in accordance with law, after affording personal hearing to the petitioner and communicate the same to the petitioner.
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2021 (7) TMI 146
Deemed dividend u/s 2(22)(e) - AO concluded that the assessee by adopting the colourable device has received a sum from Aartee Roadways private Ltd which is nothing but the deemed dividend - HELD THAT:- It is the settled position of law that the trading advance, received by the assessee from a company in which he holds the substantial interest, does not constitute the loans and advances as provided under section 2(22)(e) of the Act for holding such loans and advances as deemed dividend.
The Hon’ble Delhi High Court in the case of CIT v. Raj Kumar [2009 (5) TMI 17 - DELHI HIGH COURT] held that "the word 'advance', which appears in company of word 'loan' in section 2(22)(e), can only mean such advance which carries with it an obligation of repayment and that trade advance, which is in nature of money transacted to give effect to a commercial transaction, cannot be treated as 'deemed dividend' falling within ambit of provisions of section 2(22)(e).
Once it has been established that the amount received by the assessee represents the trading receipt i.e. in the course of the business, the usage of the same whether for commercial or personal purposes cannot change the character such receipt. As such the trading receipt is available at the disposal of the assessee and the revenue cannot direct to him for the usage of such trading receipts in a particular manner. In the given case, the assessee was to supply 150 refrigerated truck bodies and against such supply the assessee inter-alia received a sum which was directly disbursed by the bank on behalf of M/s Aartee Roadways private Ltd.
There may be several reasons for transferring the sum to the personal saving account of the assessee such as the fund was not immediately required for use in the business or there was sufficient capital of the assessee in his business which has been withdrawn or for any other reason. But such withdrawal cannot be a basis to draw an inference that such trading receipts represents the loans and advances in the nature of deemed dividend as provided under section 2(22)(e) - There was no colourable device adopted by the assessee in the given facts and circumstances as alleged by the AO by holding that the transfer of a sum represents the deemed dividend in the hands of the assessee. Hence we do not find any infirmity in the order of the learned CIT (A). Thus the ground of appeal of the Revenue is hereby dismissed.
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2021 (7) TMI 145
Reopening of assessment u/s 147 - deemed dividend u/s. 2(22)(e) - HELD THAT:- As gone through the written submissions of the assessee placed before there is no iota of any discussion with regard to challenging of reopening of assessment. The challenging of reopening is also not tenable because the assessing officer had tangible materials before reopening the case which was found during the course of survey operation U/s 133(A). In the opinion of the assessing officer there was a reason to believe that the assessee had escaped its income and, therefore, the legal ground raised by the assessee is dismissed.
Deemed dividend u/s 2(22)(e) - We direct the AO to delete the addition made by him u/s. 2(22)(e) on account of loan received by the assessee from M/s. Kiran Infertility Centre Pvt. Ltd. on which consideration in the form of interest was paid by the assessee to the benefit of the Company is not sustainable. Accordingly, ground is allowed.
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2021 (7) TMI 143
Exemption u/s 11 denied - anonymous donations - trust is also duly registered u/s. 12AA - HELD THAT:- Transaction of the receipt of the donations is not normal and genuine and militate about the claim of appellant society the transaction of receipt of donations is genuine. It is settled position of law that the burden of proving the genuineness of transaction of receipt of donation is always on the assessee. This burden can be discharged by him be leading necessary evidence or from the circumstantial evidence. In the absence of any positive evidence from the assessee, the AO as well as the appellate authority would be justified applying the test of human probabilities and can draw an adverse inference against the assessee.
In present case, it is highly improbable that an organization can receive donation of identical amount of ₹ 4,501/- from total 4851 persons. Therefore, it is fit case to apply the test of human probabilities. No pleadings were made before us as to how it was prevented from filing the correct details before the lower authorities as well as before us. The only plea made before us was that in view of the voluminous of record the information cannot be filed in physical form. Only in order to verify this genuineness of this claim we had called for a remand report from the Assessing Officer pursuant to which the appellant society had filed a new set of information different from what was filed at the time of original assessment proceedings. This conduct of the assessee made us to believe that the information filed during the original assessment proceedings is not correct or incomplete.
We are inclined to believe that the appellant society deliberately adopted the dilatory tactics before the assessing authority with a view to not to enable the AO to carry out the verification so as to satisfy himself about genuineness of the donations received. It is settled principle of law that the assessee-company cannot be given a second innings to make good its case.
We are of the considered opinion that the transaction of receipt of donation is a sham, a make believe story, a device adopted by the appellant society to bring on record the undisclosed income of the appellant society. Therefore, we do not see any reason to interfere with the orders of the lower authorities. - Decided against assessee.
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2021 (7) TMI 142
Revision u/s 263 - case was selected for scrutiny through CASS - investment in unlisted equities - HELD THAT:- In order to buttress this fact the assessee has filed the bank statement as well as mutual funds statements which reflects that the amount has been received from the redemption of mutual funds wherein the copy of statement showing source of investment made in unlisted equities along with relevant bank statement and mutual funds statement are found enclosed.
He thereafter drew our attention wherein the details of other investment under non-current investment is given wherein the name of investment in equity instruments are given and from a perusal of the same, we note that the details of investment in quoted shares are given. We note from details viz. name of unquoted and quoted shares along with the number of shares held by the assessee as on 31.03.2015. The entire details of investment made by the assessee is seen to have been filed by the assessee before the AO. So, therefore, the Ld. PCIT's allegation that no details was called for by the AO during the enquiry conducted in respect of huge investment made to the tune in unlisted equity is on wrong assumption of facts and therefore the Ld. PCIT erred on this issue.
Disallowance u/s.14A - assessee has suo moto disallowed - This issue has been enquired into by the AO and the assessee has replied to it as aforestated and since the disallowance has been made by the assessee suo moto u/s. 14A read with Rule 8D the fault alleged by the Ld. PCIT is again on wrong assumption of facts. Therefore, the action of the AO cannot be termed as erroneous as well as prejudicial to the revenue for no enquiry on the part of AO - we note that the impugned order of PCIT was without satisfying the condition precedent as stipulated u/s. 263 of the Act that the AO's order dated 19.07.2017 as erroneous as well as prejudicial to the revenue. In the absence of this jurisdictional fact and law, PCIT ought not to have usurped the jurisdiction u/s. 263 to interfere with the assessment order passed by the AO on 19.07.2017. Since the jurisdictional condition precedent has not been satisfied in this case by Ld. PCIT before passing the impugned order, we are inclined to quash the impugned order of Ld PCIT dated 23.03.2020. - Appeal of the assessee is allowed.
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2021 (7) TMI 141
Addition on estimate basis without rejecting the books of accounts - HELD THAT:- AO has not pointed out any defect in the details furnished by the assessee during the assessment proceedings. Likewise, the contention of the assessee before the authorities below that the cost of land in the project of the sister concern was lesser than the cost incurred by it, was not doubted by them (the authorities below).
AO has made the addition after recording the finding that the assessee has shown lesser profit with respect to its residential project in comparison to the project of its sister concern which was eligible for deduction under section 80 IB(10) of the Act. Likewise, the AO made the addition with respect to its commercial projects on the reasoning that the assessee has declared higher cost in the commercial project then the residential project. The view of the AO was based on the reasoning that there was no amenity to be provided with respect to commercial projects.
Whether the basis adopted by the AO for estimating the profit is sustainable in the eyes of law? - The answer stands in negative. It is because the books of accounts of the assessee were duly audited and no defect was pointed out by the AO. There can be several factors for having shown lesser profit in the project. One of the major factor as highlighted by the assessee was that the land cost with respect to the residential project was higher than the project of the sister concern eligible for deduction u/s 80-IB(10) of the Act. The contention of the assessee has not been doubted by the authorities below. Thus we are of the view that in the absence of any specific defect in the books of accounts of the assessee there cannot be any addition based on estimate to the total income of the assessee.
No ambiguity that the profit declared by the assessee cannot be enhanced on estimated basis without rejecting the books of accounts. The learned DR at the time of hearing has not brought any judgment of jurisdictional High Court in support of his favour. Therefore we hold that the profit enhanced by the AO and confirmed by the learned CIT (A) on estimated basis cannot be added to the total income of the assessee for the reason that the books of accounts were not rejected by the authorities below. Hence the ground of appeal of the assessee is allowed.
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2021 (7) TMI 140
Reopening of assessment u/s 147 - addition on the issue of capital gain arising from the sale of shares as raised in the reasons recorded and Disallowance u/s. 14A read with Rule 8D - HELD THAT:- In the present case, the assessment was reopened, as is evident from the reasons recorded by the AO, on the issue of capital gain arisen to the assessee from sale of shares which according to the AO had escaped assessment and since no addition on account of such capital gain was made by the AO in the assessment completed u/s.143(3)/147 we find merit in the contention for the assessee that the AO had no jurisdiction to make the additions on two other issues and the additions so made are not sustainable as held by the Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. [2011 (6) TMI 4 - DELHI HIGH COURT]
Even the ld. DR has not been able to dispute this legal position emanating from the decision of Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. (supra) as well as the other judicial pronouncements relied upon therein as discussed above. He has also not been able to bring to my notice any judicial pronouncement which is in favour of the revenue on this issue. Accordingly delete both the additions made by the AO in the assessment completed u/s.143(3)/147 of the Act and allow this appeal of the assessee.
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2021 (7) TMI 139
Revision u/s 263 - assessee had claimed the interest on loan as deduction u/s. 24(b) of the Act under the Head ‘Income from House Property” in the return of income of the preceding assessment years prior to the sale of the capital asset/flat - HELD THAT:- According to Ld. PCIT the AO has erred in allowing the claim of deduction of interest by passing the assessment order dated 29.11.2018 but we do not agree with the PCIT. The assessee has not claimed in the preceding assessment years starting from AY 2006-07 to AY 2015-16 deduction of the interest u/s. 24(b).
As carefully gone through the ITR Acknowledgements filed by the assessee from AYs 2006-07 to AY 2015-16 and the computation of total income, Balance Sheet and Ledger account of the interest of housing loan which are placed and thus we find that the Ld. PCIT has erroneously made the finding that the assessee has claimed deduction of interest from AYs 2007-08 to 2015-16 and, this finding of fault/allegation that the AO by allowing the deduction of interest expenses has committed is erroneous act is not sustainable.
The interest expenses as not an expenses on transfer of asset as erroneously observed by the Ld. PCIT. It is part of the cost of acquisition of the asset and not expenses related to sale of flat. PCIT’s observation that the assessee was showing loss from self occupied house property is also factually wrong/erroneous because it is baseless again flowing from imagination - we find that the Ld. PCIT’s impugned order cannot be sustained since he has assumed facts which was not borne out of any material/document and is contrary to the material/evidence on record. Therefore, the assessee succeeds.
We note that in this case the AO had issued u/s. 142(1) of the Act dated 26.11.2018 and has enquired about the details of sale of flat and LTCG etc. by asking question regarding the cost of acquisition of purchase and cost of improvement with evidence in the case of flat sold and pursuant to which the assessee had replied vide letter dated 29.11.2018 placed along with supporting evidence wherein the assessee had filed the computation of LTCG as well as the breakup of the interest which he had capitalized in the AY 2016-17 to the tune - Thus, we note that the AO had enquired about the issue of LTCG on sale of flat and has discharged his duty as on investigation and cannot be faulted; and allowing the interest expenditure (capitalized) and which becomes part of the cost of acquisition in the facts of this case is allowable, and is a plausible view and so it cannot be held erroneous and at any rate be held un-sustainable view in law.
We hold that the very usurpation of jurisdiction by Ld. Principal CIT to invoke his revisional powers enjoyed u/s 263 of the Act is invalid/absent, so the action of Ld PCIT is without jurisdiction and consequently the impugned order of the Ld. PCIT is quashed. Appeal of assessee is allowed.
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2021 (7) TMI 138
Addition with respect to insurance claimed received against the vehicle repairing expenses - HELD THAT:- The amount received by the assessee represents the receipt from the insurance company against the damage of the vehicles which was not offered to tax. The assessee on one hand has claimed full vehicle running expenses and on the other hand insurance claim received by him against such expenses has not been offered to tax. As such, the assessee was liable to offer such insurance claim to income tax. Accordingly, we do not find any infirmity in the order of the authorities below. Hence, the ground of appeal of the assessee is dismissed.
Unreconciled credit balance - HELD THAT:- On perusal of the copies of the ledgers we note that such difference is arising in the account of the sundry creditor on account of opening balance which were carried forward from the preceding year. Therefore such difference in the opening balance cannot be added to the total income of the assessee in the year under consideration.
The impugned difference, if liable to be added to the total income of the assessee, then the same can be done in the year to which it relates and not in the year under consideration. At the time of bearing, the learned DR has not brought anything on record contrary to the argument advanced by the learned AR for the assessee. Accordingly we do not find any reason to uphold the finding of the authorities below.
Disallowance being 20% of various vehicle expenses - HELD THAT:- As noticed that the AO has disallowed 20% of petrol expenses, depreciation: on motor car, interest on car loan, vehicle insurance and vehicle repairing since no log book was maintained to establish exclusive use of vehicle for business purposes. During the course of appellate proceedings, the appellant has not furnished any evidence to prove that he also owned other vehicle for personal use by him and his family members - personal use of the vehicle claimed in the business, cannot be ruled out and accordingly disallowance made by the Assessing Officer which is very reasonable, is sustained.
Disallowance at the rate of 20% is on the higher side and prayed to make some token disallowance in the interest of justice - HELD THAT:- We are of the view that there was no basis of making the disallowance at the rate of 20% of the expenses as discussed above. In fact there is no standard jacket formula for making the disallowance on a ad-hoc basis in the given facts and circumstances. It is because the possibility of personal element in the expenses discussed above cannot be ruled out. However in the interest of justice and fair play, we direct the AO to restrict the disallowance at the rate of 12% of the expenses after considering the preceding discussion. Hence the ground of appeal of the assessee is partly allowed.
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2021 (7) TMI 137
Penalty u/s 271(1)(c) - addition made on account of cessation of liability and income from other sources - whether the assessee has furnished inaccurate particulars of income and concealed the particulars of income with respect to the above items of addition? - HELD THAT:- The term inaccurate particular of income has not been defined under the provisions of section 271(1)(c) or elsewhere in the Act the Act - the meaning of the term inaccurate has been discussed in the case of Reliance Petroproducts (P) Ltd [2010 (3) TMI 80 - SUPREME COURT] wherein it was held that the term ‘inaccurate’ signifies deliberate act or omission on the part of the assessee. As such, the details/informations contained in the return of income /financial statements /audit report which are not correct according to truth, and were furnished by the assessee with the dishonest intent shall be treated as inaccurate particulars.
We find that it cannot be alleged that the assessee has furnished inaccurate particulars of income with respect to the liabilities which ceased to exist in the books as alleged by the Revenue. It is because the assessee in the subsequent year has made the payment of such liabilities. This fact can verified from the copies of the ledgers which are available on record. Accordingly, it cannot be concluded that the assessee has furnished inaccurate particulars of income and thus question of penalty under section 271(1)(c) of the Act does not arise.
Addition on account of the money received by the assessee as confirming party - We find that the assessee contended that such receipt was duly recorded in the books of accounts which were subject to audit. The contention of the assessee was not was not challenged by the authorities below. We are of the opinion that the assessee has made sufficient disclosures in the financial statements. Therefore, the assessee should not be penalized on account of the mistake committed by him inadvertently as discussed above. Therefore, we are reluctant to confirm the penalty levied by the authorities below.
We feel that there was no deliberate intention/ act on the part of the assessee to furnish the inaccurate particulars of income/ concealing the particulars of income. We also find strength from the fact that the assessee has declared the income in the income tax return and the amount involved in the dispute is of negligible value in comparison to the income. Thus we reverse the order of the authorities below and direct the AO to delete the penalty imposed by him under section 271(1)(c). Ground of appeal of the assessee is allowed.
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2021 (7) TMI 136
Addition u/s 45(4) on account of revaluation of assets - distribution of the revaluation amount to the partners capital accounts during the continuation of the firm - whether or not the credit of the revaluation surplus to the capital accounts of the partners, including the retiring partner, wherein in the latter case the amount was transferred to a loan account, did tantamount to distribution of the capital assets of the firm otherwise than by dissolution of the firm within the meaning of Sec. 45(4) ? - HELD THAT:- The issue involved in the case before us is squarely covered by the aforesaid order passed by the Tribunal in the case of the “sister concern” of the assessee, viz. M/s Amardeo Plastic Industries .
Accordingly, respectfully following the view therein taken by the Tribunal, we, herein conclude, that the revaluation of the assets of the firm and crediting of the capital accounts of the partners could not have been brought within the meaning of Sec. 45(4) of the Act. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(A) and vacate the addition made by the A.O u/s 45(4) of the Act. - Appeal of assessee allowed.
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2021 (7) TMI 171
Eligibility under the DTVSV Scheme - appeals against the orders passed u/s 143(1)(a)(i) or (ii) as a separate category from the appeals from Clauses (iii) to (vi) of 143(1)(a) - HELD THAT:- All the adjustments referred to under sub-clauses (i) to (vi) of clause (a) of Section 143(1) are indication of forming one category and as such are grouped under sub-clause (a) of Section 141(1). Classifying the adjustments in (iii) to (vi) of Clause(a) of Section 143(1) to be eligible under the DTVSV Scheme and excluding the adjustments referred to in (i) and (ii) under the circular No. 21 of 2020 without substantiating the same with any rationale or plausible basis or material therefore, would be arbitrary, unreasonable and discriminatory.
The same would be in breach of Article 14 of Constitution of India and be liable to be set aside as such. Such a classification sought to be made would not be fitting into the requirements of intelligible differentia having nexus to the object to be achieved. Despite a query from the Court as to the purpose of this classification, there was no answer forthcoming from the Revenue. There does not appear to be any object to be achieved by such an unreasonable and arbitrary classification leading to discrimination among tax payers whose cases are falling in Clauses (i) or (ii) on one hand and those whose cases fall under Clauses (iii) to (vi) of Section 143(1)(a) of the IT Act.
On which basis circular purports to exclude appeals arising from the orders passed u/s 143(1)(a)(i) or (ii). Neither there is reference to any basis for the same in the circular nor there is any provided in the affidavit-in-reply. Having regard to the provisions of the enactments and the rules thereunder, in the absence of any material, we are not in a position to appreciate that there is exclusion of appeals arising from orders passed under section 143(1) (a)(i) or (ii) of the IT Act. It is not the case that there is any particular object sought to be achieved by such exclusion of the appeals arising from the orders passed under section143(1)(a)(i) or (ii).
When the circulars are issued exercising powers under sections 10 and 11 of DTVSV Act, directions are supposed to aid and smoothen bringing into operation provisions and execution of the actions based thereon. The directions, circulars would not be issued under such provisions digressing or deviating from the object and purpose under the scheme of the enactment.
The situation thus emerges that answer to question No. 71 in the circular No. 21 of 2020 tends overreach the purpose and intendment underlying the provisions of the Act and the Rules and purports to exclude an otherwise eligible assessee on a ground and reason neither contained in nor reflected from the scheme. The circular is manifestly divorced from the object and purpose of DTVSV scheme.
The answer to question no.71 purporting to exclude appeals against the orders under section 143(1)(a)(i) or (ii) is unsustainable and unacceptable. In the circumstances, emerging exclusion from the answer to question No. 71 of the circular No. 21 of 2020 dated 04.12.2020 is untenable and deserves to be set aside. We, therefore, set aside Answer to Question No. 71 of Circular No. 21 of 2020 dated 04.12.2020
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2021 (7) TMI 134
Estimation of bogus purchases - HELD THAT:- Without purchases there cannot be processing of yarn, therefore, entire alleged bogus purchases cannot be disallowed. The possibility is that the assessee made purchases from grey market and obtained bogus purchase bills from hawala operators. It is only the profit element embedded in such transactions that has to be brought to tax. See PCIT vs. Paramshakhti Distributors Pvt. Ltd [2019 (7) TMI 838 - BOMBAY HIGH COURT] - assessee submitted that the G.P declared by the assessee in assessment year 2010-11 is 6.68%. However, on perusal of assessment order it is observed that the G.P has been worked out to be 8.12%. The same has not been disputed by the assessee either before the First Appellate Authority or the Tribunal. To meet ends of justice it would be fair to restrict disallowance on unproved purchases to 10%. Appeal by the assessee is partly allowed.
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2021 (7) TMI 133
Reopening of assessment u/s 147 - HELD THAT:- We are of the considered view that the AO has considered the return of income, computation of income, balance sheet, profit and loss account and tax audit report and raised queries and reviewed the reply of the assessee. We find that from these very records, the AO noted and formed a belief that income has escaped assessment which means that there was no new tangible material or information.
The relevant note to the balance sheet shows that the Assessing Officer wants to re-examine/review the very same note for assumption of jurisdiction u/s. 148 of the Act. In our considered opinion, this is nothing but change of opinion and absence of tangible new material.
We are of the considered view that on the basis of the same assessment record as was filed by the assessee during the original assessment proceedings and also scrutinised by the Assessing Officer, before passing original assessment order u/s. 143(3) of the Act is the basis for seeking reopening of the assessment.
Reasoning given by the Assessing Officer for reopening assessment is nothing but change of opinion and a new approach to the existing facts. Therefore, the impugned reassessment notice cannot be sustained and is hereby quashed.
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2021 (7) TMI 132
Addition of loss of client code modification - CIT-A deleted the addition - HELD THAT:- A perusal of assessment order reveals that the Assessing Officer has disallowed assessee's claim of loss arising out of client code modification purely on surmises and conjectures. In assessment order, the AO has comprehensively given modus operandi of brokers in generating non-genuine losses by misusing code modification facility.
AO has failed to establish link between the loss claimed by the assessee on account of client code modification and non-genuine client code modification practices adopted by the brokers. AO has not given any cogent reason to reject explanation offered by the assessee on loss resulting from client code modification. AO in entire assessment order has not named the broker who was instrumental in providing bogus client code modification entry to the assessee.
Not emanating from the assessment order whether any search/survey or any other investigative enquiry was made on the broker from whom it is alleged that the assessee has obtained fictitious entry of loss arising from client code modification. The observations made by AO are generic and not specific to the assessee. CIT(A) has deleted addition inter alia for the reasons: the Assessing Officer has made addition in the absence of cogent evidence against the assessee and no adverse finding with regard to fictitious losses incurred and claimed by the assessee. - Decided against revenue.
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2021 (7) TMI 130
Addition on the basis of material found during the course of survey - HELD THAT:- We satisfied that there was substantial evidence in the hands of survey team in the form of receipts. Therefore, statements recorded by the survey team on the basis of such receipts cannot be alleged as not based upon credible evidence. We may point out that in the present case, no retraction was filed by the assessee before the authorities below nor during the course of survey proceedings and also during the course of assessment proceedings by way of any plausible evidence or by any other mode.
The statements recorded by the survey team based on credible evidence without any retraction by the assessee has to be accepted and thus the findings recorded by the AO as well as ld CIT(A) deserves to be upheld being sustainable and based on reasonable basis and evidence. Appeal of the assessee is dismissed.
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2021 (7) TMI 129
Rejection of books of accounts u/s 145(3) and applying GP @ 1.66% - HELD THAT:- Where the books of accounts are rejected by the AO, the AO is to assess the income of the assessee on the basis of best judgment and average of past years GP rate which has attained finality has been considered as proper and reasonable basis and guidance for the best judgment. In the instant case, the AO has adopted G.P rate of immediately preceding year as compared to average of past GP rates. The assessee has submitted that average of past three years GP rate comes to 1.44% as compared to current year rate of 1.52%. We therefore, find that the assessee has declared better gross profit rate of 1.52% as compared to average of past three years GP rate of 1.44% and even where the books of accounts are rejected, there is no basis for making the addition in the hands of the assessee. Therefore, leaving the question of rejection of books of accounts open as the same has become more academic in nature, the addition so made is directed to be deleted.
Depreciation and other expenses relating to tanker on perusal of explanation and documentation - HELD THAT:- We find that there is no merit in disallowance of the said expenses and the same are directed to be deleted.
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2021 (7) TMI 166
Recovery proceedings - Attachment orders - rights over the property - seeking transfer of property in favor of purchaser - HELD THAT:- In this case, the petitioner has been fighting for her rights over the property in terms of a sale agreement dated 30.06.1994. The Hon’ble Supreme Court ultimately accepted the contention of the petitioner that the third and fourth respondent’s mother late Mrs.J.Padmini ought to have executed a sale deed in favour of the petitioner in terms of the aforesaid sale agreement dated 30.06.1994.
The third and the fourth respondents who were minors at the time of execution of the sale agreement on 30.06.1994 ought to have executed the sale deed in favour of the petitioner. Therefore, the subsequent tax liability of the fourth respondent and her husband for the Assessment Years 2012-13 and 2013 -14 cannot be to the disadvantage of the petitioner, since the petitioner has been diligently litigating since 2004. Therefore, fruits of the decree in a contested suit cannot be denied merely because the seller or one of the persons had incurred subsequent tax liability. The fruits of a decree will date back to the date of the suit.
The records also indicate that earlier an application was filed by late Mrs.J.Padmini before the Principal District Court, Coimbatore to obtain court’s permission to execute the sale deed. If IT was however withdrawn by her. Thus, the attachment of the property on 27.03.2017 by the officer of the 1st respondent cannot override the commitment under sale agreement dated 30.6.1994.
Section 281 of the Income Tax Act, 1961 applies only to a situation where an assessee during the pendency of any proceeding under the Act, or after completion thereof, but before the service of a notice under Rule 2 of the Second Schedule, creates a charge on, or parts with the possession (by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever) of, any of his/her assets in favour of any other person.
Only such charge or transfer is void as against any claim in respect of any tax or any other sum payable by the assessee as a result of completion of the said proceedings or otherwise.
The tax liability of the aforesaid firms of which the fourth respondent and her husband were the partners are subsequent to the commitment in the sale agreement dated 30.6.1994. Therefore, there is no justification in not releasing the registered sale deed in favour of the petitioner as the petitioner is a bonafide purchaser who has purchased the property after a long drawn litigation .
In this case admittedly the transfer was on account the final culmination of the litigation by the order of Hon’ble Supreme Court.There was only a delay in the execution of sale deed due to the pendency of the proceedings as the third and fourth respondent’s mother declined to execute sale deed under the sale agreement dated 30.6.1994 - Therefore, there is no justification in not releasing the registered sale deed in favour of the petitioner as the petitioner is a bonafide purchaser who has purchased the property after a long drawn litigation .
This Court is inclined to allow this writ petition as prayed for.
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Customs
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2021 (7) TMI 161
Refund of CVD and SAD paid in excess - Time limitation - Section 27 of the Customs Act, 1962 - HELD THAT:- Admittedly, the application for refund is made under Section 27 of the Customs Act, 1962. The Hon’ble Supreme Court in the case of PAROS ELECTRONICS (P) LTD. VERSUS UNION OF INDIA [1995 (1) TMI 95 - SUPREME COURT], while dealing with the above provision, has inter alia held that If the application is under Section 27 of the Act then the authority, being a creation of the statute, must act within the ambit of that provision and if the application is delayed he has no alternative but to reject it as barred by limitation.
There are no reasons to interfere with the rejection of refund - appeal dismissed.
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2021 (7) TMI 176
Entitlement of interest on pre-deposit - whether the appellant is entitled to interest on pre-deposit under section 129EE of Customs Act - HELD THAT:- While the original provision stipulated interest would be payable at a rate specified in Section 27A after expiry of three months from the date of communication of the order of the appellate authority, till the date of refund of such amount, the substituted provision provided for interest at a notified rate not below 5 per cent and not exceeding 36 per cent from the date of payment till the date of refund of such amount. Moreover, the proviso to the substituted provision clarified that all amounts deposited under Section 129E prior to the commencement of the substituted provision on and from 2014 would be guided by pre-amended section 129EE.
The interest on the pre-deposit refunded to the appellant is to be determined as pre amended Section 129EE of the Customs Act i.e., for a period commencing after expiry of three (3) months from the date of communication of the order of the appellate authority till the refund of such amount and not from the date of deposit of the said amount till the date of refund.
Appeal dismissed.
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2021 (7) TMI 175
Recovery of arrears of Revenue - HELD THAT:- The notice of demand to the defaulter was issued, that in case of default, steps would be taken to realize the amount in accordance with the provisions of the Customs (Attachment of Property of Defaulters for the recovery Government Dues) Rules, 1995. Thus, the grievances, if any exist, regarding the recovery, the petitioner has to approach the competent authorities and this Court cannot entertain a writ proceedings as the original orders passed by the authorities right from the year 2011 became final and based on those orders, actions are initiated to recover the arrears. This being the factum established, the petitioner is at liberty to approach the authorities concerned, in the manner known to law.
Petition disposed off.
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2021 (7) TMI 170
Import of apple from China - permissible Import or not - online auction notification dated 13.10.2017 - HELD THAT:- Interim order was passed by this Court at the time of admission and the respective learned counsel appearing on behalf of the respondents brought to the notice of this Court that the apples imported were became rotten and were destroyed and therefore, no further consideration is required in this writ petition.
The writ petition stands disposed of.
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2021 (7) TMI 169
Seeking release of seized goods - two-sided coated paper in rolls - whether the importer has made out a prima facie case for clearance of the goods with or without any conditions? - HELD THAT:- The learned Writ Court could not be justified in rendering a finding, which will have a direct impact on the adjudicatory process. To be noted that the respondent-writ petitioner did not approach the Court for direction to the appellants to consider their case for provisional release of the imported consignment and that such a request was kept pending for a prolonged period. Nor it is the case of the respondent that any order was passed by the Department either accepting the request for provisional release with or without conditions or rejecting the request for provisional release. Since the prayer sought for by the respondent-writ petitioner was for issuance of an innocuous relief, the Court was required to confine itself to the relief sought for and not traverse beyond the boundaries, which will have impact on the adjudication process.
The argument of the learned counsel appearing for the respondent-importer is that at the first instance, the item description as mentioned against EXIM Code 4810 has to be looked into before going into the sub-items, one of which is 4810 13 19, under the category 'Other' and if the EXIM Code 4810 is taken into consideration, the different size and GSMs will not bring the import within the meaning of different description under Clause-2(d) of the clarification - it is considered to be too early for the Writ Court to express any opinion on the issue, because, adjudication is yet to commence. However, taking out of the fact that paper of all categories which has been mentioned under EXIM Code 4810 is freely importable and only issue would be whether the import effected by the respondent is a "Stock Lot" or not is to be decided.
The imported goods may be directed to be released subject to the condition that importer give an undertaking to participate in the adjudication to be done by the appellant-Department - Appeal allowed in part.
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Corporate Laws
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2021 (7) TMI 148
Sanction of the Scheme of Amalgamation - section 230(6) read with section 232(3) of the Companies Act, 2013 - HELD THAT:- Considering the submissions and considering the no-objection certificate issued by the RBI, the scheme is approved.
Application allowed.
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Securities / SEBI
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2021 (7) TMI 168
Modes of charging fees to clients by Investment Advisors - Constitutional validity and vires of Regulation 3(XII) of the Securities and Exchange Board of India (Investment Advisors) (Amendment) Regulations, 2020 (“Amendment Regulations”), by which Regulation 15A was inserted into the Securities and Exchange Board of India (Investment Advisors) Regulations, 2013 and Circular issued in pursuance thereof, being Circular Reference No. SEBI/HO/IMD/DF1/CIR/P/2020/ 182 dated 23.09.2020 challenged - whether the Board has the requisite authority under the SEBI Act, in the first place, to make regulations concerning charging of fees by Investment Advisors from their clients? - challenge is on the footing of both want of legislative power in SEBI (by delegated authority) to make a provision such as regulation 15A or to issue a Circular such as Circular dated 23.09.2020 and breach of fundamental right of Investment Advisors to carry on a profession of their choice by enacting unreasonable restrictions - HELD THAT:- As specifying measures for protection of investors and development and regulation of securities market being the duty of the Board under Section 11 of the SEBI Act and without prejudice to the generality of such duty the Board having the express power to regulate the working of Investment Advisors (under Sub-Section (2)(b) of Section 11), which, as noted above, encompasses measures to provide for the manner of charging of fees as well as cap of fees, the impugned regulation (Regulation 15A) is clearly within the delegation made in favour of the Board under Section 30(1) of the SEBI Act. If charging of fees in accordance with the specification of the Board is accordingly made a condition of continued registration under Section 12 of the SEBI Act, such condition would be covered by Section 30(2)(d) of the SEBI Act.
On the subject of violation of Article 19(1)(g) of the Constitution of India, it is important to note that the impugned Regulation as well as the Circular issued by SEBI in pursuance thereof does not in any way prohibit any party from carrying on the business or profession of Investment Advisor. The Regulation and Circular merely put restrictions, and reasonable restrictions at that, on the general right of businessmen and professionals to carry on the business or profession of Investment Advisor. Prescribing a mode for charging of fees as also the ceiling of fees to be charged by Investment Advisors amounts to a reasonable restriction, at least in principle, in the matter of carrying on the business or profession of Investment Advisors, apart from being an important measure for protection of investors and development and regulation of securities market. In so far as reasonableness of the particular quantum of ceiling of fees determined by SEBI or conditions laid down for charging of such fees are concerned, there is no material placed on record by the Petitioner to suggest that the fees fixed or conditions stipulated are so unreasonable or capricious as not to admit of Investment Advisors’ freedom to practice their profession or business.
Petitioner herein cannot seek much assistance from this decision. In the first place, unlike in that case, which did not have any regulatory statutory framework for fixing of a ceiling of permissible tax audits or fees for such audits, in our case the SEBI Act makes particular provisions empowering the Board to regulate the working of Investment Advisors. The profession or business of Investment Advisor is not a traditional profession having its own customs and conventions. Nothing at least has been pointed out to us by learned counsel for the Petitioner in that behalf. If anything, Investment Advice is a profession/business which has come about as an adjunct of the securities market; the Investment Advisor works because investors need professional advice for participating in the affairs of the securities market. It is the statutory duty of SEBI to protect such investors, and develop and regulate that market inter alia by regulating the working of Investment Advisors. If, for performing such duty, SEBI fixes the manner of charging of fees by Investment Advisors or the maximum permissible fees, such fixation per se cannot be faulted as being violative of Article 14 or 19(1)(g). It is another matter, if, whilst fixing these matters, SEBI acts in an unreasonable or capricious manner; in such case, its legislative (or executive) exercise may be vitiated by arbitrariness eschewed by Article 14 or unreasonable restriction not being covered under Article 19(6) and thus infringing Article 19(1)(g). That, we are afraid, has not been the case here.
No merit in the challenge to the impugned Regulation as well as the impugned Circular prescribing modes as well as ceiling of fees to be charged by Investment Advisors.
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Insolvency & Bankruptcy
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2021 (7) TMI 147
Liquidation of the Corporate Debtor - section 33(2) of Insolvency and Bankruptcy Code - HELD THAT:- Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor where the resolution professional, at any time during the CIRP but before confirmation of the resolution plan, intimates the Adjudicating Authority of the decision of the CoC approved by not less than sixty-six percent of the voting share, to liquidate the Corporate Debtor. In the present case, the CoC has resolved by 100% voting share to liquidate the Corporate Debtor.
The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof - Application allowed.
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2021 (7) TMI 144
Seeking approval of resolution plan - section 30(6) of Insolvency and Bankruptcy Code, 2016 read with Regulation 39(4) of Insolvency 8B Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, r/w. rule 11 of NCLT rules - HELD THAT:- In K. Sashidhar v. Indian Overseas Bank & Others [2019 (2) TMI 1043 - SUPREME COURT] the Hon'ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per Section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority. On receipt of such proposal, the Adjudicating Authority (NCLT) is required to satisfy itself that the resolution plan as approved by CoC meets the requirements specified in Section 30(2). No more and no less.
Hon'ble Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors. [2019 (11) TMI 731 - SUPREME COURT] "the limited judicial review available to AA has to be within the four corners of section 30(2) of the Code. Such review can in no circumstance trespass upon a business decision of the majority of the CoC. As such the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved as held in para 42 of the said judgment.
The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39(4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law.
The resolution plan is approved - moratorium shall cease to have effect - application allowed.
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2021 (7) TMI 135
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Applicant has filed this petition under Section 9 of I & B Code after 2 years of the Resolution Plan approved and Plan is under implementation - HELD THAT:- Reliance placed in the Judgment of the Hon'ble Supreme Court in the cases of GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR & ORS. [2021 (4) TMI 613 - SUPREME COURT], the present petition needs to be rejected as the Law is settled that once the Resolution Plan is approved by the Adjudicating Authority becomes binding on all stakeholders and all claims not dealt stand extinguished.
There are no merit in the contention of the Petitioner that it could not know about the initiation of CIRP within 90 days from the date of initiation when the notice inviting claims was published by the IRP in the Newspapers and the Petitioner has been perusing the Civil Suit filed by it against the Respondent in the year 2014.
Petition dismissed.
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Service Tax
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2021 (7) TMI 164
CENVAT Credit - input services - sub-contract of assembling / installation services - post-manufacturing activity or not - HELD THAT:- It is seen from the Statement of Demand as well as the earlier show cause notices referred in para-2 of the Statement of Demand that the main allegation raised against the appellant is that the credit is not eligible for the reason that the assembling / installation activity sub-contracted by them is a post-manufacturing activity.
When there is no allegation against the appellant, mere findings recorded in the order is of no consequence to deny the credit.
The credit has been wrongly disallowed - Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 160
Revised refund claim - barred by time limitation or not - refund pertains to the period from 01.04.2016 to 22.08.2016 - HELD THAT:- Admittedly, the denial of refund by the First Appellate Authority pertains to the period from 01.04.2016 to 22.08.2016 and it is the case of the Revenue that the refund claim for this period was clearly made after a lapse of ONE year and hence hit by limitation in terms of paragraph 3(g) of the N/N. 41/2012-ST dated 29.06.2012.
This Bench of the Tribunal, in the case of M/s. Ashok Granites Ltd. v. Commissioner of Central Excise & Service Tax, Salem [2016 (7) TMI 1078 - CESTAT CHENNAI], under almost similar facts, has held that The imposition of period of limitation, without statutory amendment, through a notification, therefore, cannot prevail.
The above view clearly supports the case of the assessee rather than supporting the view of the revenue - denial of refund on the ground of time-limit is not in order and therefore, the impugned order is set aside - decided in favor of assessee.
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Central Excise
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2021 (7) TMI 163
Refund of CENVAT Credit - clearances under CT1 Certificates for export - applicability of time limitation - paragraph 3(b)(i) of the N/N. 27/2017-C.E.(N.T.) - HELD THAT:- Reliance placed on an order of the Mumbai Bench of the CESTAT in the case of OCEANS CONNECT INDIA PVT LTD VERSUS CCE PUNE-III [2016 (9) TMI 377 - CESTAT MUMBAI] wherein, after considering the arguments and the provisions, the Co-ordinate Bench has held that From the aforesaid provision in clause (D) of Rule 5(1) for export turnover of services, one of the element is payment received during the relevant period for export services. In the present case as per the FIRC the payment in convertible foreign currency was received during the relevant quarter therefore the same should be considered as export turnover during the relevant quarter only. There is no provision in the definition of turnover of services that the export turnover should be taken as per the date of invoice. The refund has to be computed by taking date of FIRC during the particular quarter for the purpose of export turnover.
The denial of refund of CENVAT Credit as time-barred is not acceptable - Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 162
Levy of penalty u/s 11AC of the Central Excise Act, 1944 read with Rule 15 Cenvat Credit Rules, 2004 - appellant has reversed the credit along with interest immediately on being pointed out by the department - suppression of facts or not - HELD THAT:- The appellant has reversed the credit availed on Works Contract Service and Man-power Supply Service immediately on being pointed out by the department. The credit was reversed in 2014 along with applicable interest. The issue whether the credit is eligible or not is a legal issue. No positive evidence is brought to light that the appellant had any fraudulent intention to avail such credit. Though the department alleges suppression of facts, it has to be stated that the said availment of credit came to light from the accounts maintained by the appellant. The strong inference would be that the appellant reflected the availment of credit in their accounts and the allegation of suppression fails.
The penalty under section 11AC cannot sustain - Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 156
CENVAT Credit - input services - Outdoor Catering Services - Landscape/Gardening Services - HELD THAT:- The Hon’ble jurisdictional High Court in M/S. ROCA BATHROOM PRODUCTS (P) LTD. VERSUS THE COMMISSIONER OF G.S.T & CENTRAL EXCISE, CHENNAI OUTER COMMISSIONERATE [2018 (11) TMI 1446 - CESTAT CHENNAI] has ruled in favour of the assessee. The Hon’ble jurisdictional High Court has also referred to a decision of the Hon’ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE VERSUS MILLIPORE INDIA (P.) LTD. [2011 (4) TMI 1122 - KARNATAKA HIGH COURT], wherein the Hon’ble Court has extracted the definition of input services and the same has been interpreted and it was held that The Environmental law expects the employer to keep the factory without contravening any of those laws. That apart, now the concept of corporate social responsibility is also relevant. It is to discharge a statutory obligation, when the employer spends money to maintain their factory premises in an eco-friendly manner, certainly, the tax paid on such services would form part of the costs of the final products. In those circumstances, the Tribunal was right in holding that the service tax paid in all these cases would fall within the input services and the assessee is entitled to the benefit thereof - the credit allowed on gardening services.
Catering Services - HELD THAT:- Although the above interpretation squarely applies to Catering Services as well, but however, a factual verification as to whether the said services were availed by all the employees or were they provided only to specific employees, is required to be ascertained - this issue alone is sent back to the file of the Adjudicating Authority for the factual verification and if it is found that the service was provided to the employees in general, then no denial is called for.
The appeal therefore stands partly allowed and partly remanded on the above terms.
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2021 (7) TMI 131
Extended period of Limitation - period involved in this case is May 2012 to January 2014 whereas the show cause notice has been issued on 02.06.2017 - CENVAT Credit - credit has been denied to them on the premise as per N/N. 02/14-CE (N.T.) dt.20.1.2014, the appellant was not entitled to credit prior to the N/N. 01/10-CE dt.6.2.2010 - HELD THAT:- Similarly placed assessee was allowed the credit although against those orders, the appeals have been filed by the Revenue before the Commissioner (Appeals), in that circumstance, when the Revenue is having divergent views on the issue, the extended period of limitation is not applicable. Admittedly, in this case, the show cause notice has been issued by invoking the extended period of limitation, therefore, it is held that the denial of credit is barred by limitation.
Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (7) TMI 167
Levy of Entry Tax - air conditioners and goods that were purchased were used in execution of works contract - fall within the definition of “sale” under Section 2(28) of VAT Act or not - contractee has deducted the tax at source and issued TDS certificates - HELD THAT:- On perusal, the impugned assessment orders would show that the petitioner, by way of his objections to the show cause notices dated 08.10.2018 took the legal plea that the refrigeration goods purchased by him from out side the State were used in the works contract for which VAT has been paid during the relevant years and therefore, the value of those goods fall under the definition of “sale” within Section 2(28) of VAT Act, 2005 and consequentially the petitioner need not pay entry tax in respect of value of those goods in view of the exemption provided under Section 3(2) of Tax on Entry Act. The 1st respondent discarded the above objections of the petitioner and passed the impugned order.
Also, the Assessing Authority has not discussed about the applicability or non-applicability of Section 3(2) of Tax on Entry Act to the petitioner’s case. Therefore, we do not have the advantage of knowing the mind of the Assessing Authority/1st respondent - it is considered apposite to direct the 3rd respondent to dispose of the said appeal within a specified time.
Petition disposed off.
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2021 (7) TMI 165
Validity of deemed assessment order - assessment of total and taxable turnover - grievance of the petitioner is that without considering the petitioner's explanation, the respondent has confirmed the proposal vide proceedings - HELD THAT:- The impugned notice and the detailed representation of the petitioner dated 08.02.2021 would reveal that the original assessment order was passed by the respondent, by accepting the total and taxable turnover of ₹ 9,86,723/-, for the assessment year 2014-2015. Subsequently, based on the departmental web report, it was ascertained that the petitioner made purchases to a turnover of ₹ 26,54,345/- as per annexure II of the selling dealers and ₹ 10,79,396/- was shown as purchase turnover, thereby the respondent proposed to assess the total /taxable turnover under Section 27(1) (a) of the TNVAt Act, along with levy of penalty under Section 27(3) (c)of the TNVAT Act.
Without adverting to the merits of the case, the respondent is directed to consider the petitioner's representation dated 08.02.2021 and pass appropriate orders, after affording an opportunity of personal hearing to the petitioner, within a period of twelve weeks from the date of receipt of a copy of this order - Petition disposed off.
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