TMI Tax Updates - e-Newsletter
July 8, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Highlights / Catch Notes
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GST:
Classification of goods - rate of tax - alcohol based hand santizer - applying this test of common parlance and the fact that the impugned product does not have any therapeutic or prophylactic properties, we hold that the alcohol-based hand sanitizer cannot be classified as a medicament under Chapter Heading 3004 as claimed by the Appellant - Order of AAR sustained - AAAR
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GST:
Classification of goods - rate of tax - Isopropyl rubbing alcohol IP - Chlorhexidine Gluconate and Isopropyl Alcohol solution - medicaments or not - Classification of goods is to be determined based solely on the description of goods given in the First Schedule to the Customs Tariff Act read together with the relevant Section Notes and Chapter Notes. Moreover, the conditions and restrictions contemplated by one statute having a different object and purpose should not be mechanically imported and applied to a fiscal statute. The reference to the ITC HS Code for Alcohol-based hand sanitizers which has been made in the DGFT Notification dated 6-5-2020 is not a standard for interpreting the classification of goods as per the Customs Tariff Act. - Ordder of AAR sustained - AAAR
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GST:
Classification of services - services of support services to Airbus SAS which is separately compensated with a service fees computed on a cost-plus markup basis - activities performed by the applicant are fulfilling the parameters mentioned in the definition of ‘Intermediary’ - to be classified as Intermediary services - No eligible for the benefit of export under GST - AAR
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GST:
Levy of Interest in terms of tax to be remitted by adjustment of credit available in the electronic register - Section 50 of the Central Goods and Services Tax Act, 2017 - There interest on delayed payment of GST in cash is OK - the balance of the interest towards tax liability by adjustment of credit is liable to be set aside - HC
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Income Tax:
Assessment u/s 153C - satisfaction on the basis of the borrowed information - It is true that the supreme Court has made the said observations while considering the validity of the reasons recorded by the Assessing Officer for reopening of the assessment of the assessee under Section 147, whereas the present case arises out of the proceedings initiated and the satisfaction recorded by the Assessing Officer for initiating the proceedings under section 153C of the said Act, nonetheless such reliance of the decision of Supreme Court by the respondent could not be said to be out of place when the matter was concerning about the reopening of the assessment of the petitioner - assessee. - HC
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Income Tax:
Prior period expenditure - Whether Tribunal is right in holding that the expenditure was crystalized during the relevant previous year when the assessee hijmself has classified the expenses as "prior period expenditure"? - Tribunal held that one time payment made by the assessee towards prepayment premimum and interest compense is business expenditure in the nature of revenue Expenditure - Revenue appeal dismissed - HC
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Income Tax:
Exemption u/s.10(23) denied - anonymous donations received by any assessee or entity u/s.115BBC - without verifying the documents and objectively selecting some entries and leaving aside the other entries and documentary evidence even without verifying the actual receipt of donation from the so-called donors, if the revenue authorities proceeds to make any addition treating the same as anonymous u/s.115BBC of the Act, then have no hesitation to hold that the addition made is without any basis and keeping aside the sound principles of tax jurisprudence, the same cannot be held as sustainable - AT
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Income Tax:
Capital gain computation - addition u/s. 50C of the Act on account of difference in the value adopted by the DVO and the sale consideration - The incongruity in the statute was glaring and undue hardship not in dispute. Once it is not in dispute that a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as retrospective, effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. - AT
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Income Tax:
Deduction u/s 10A - Software Technology Parks of India (STPI) Unit - splitting up or reconstruction of the existing business - applicability of CBDT Circular No. 1/2005 - it had granted certain benefits u/s. 10B of the Act and though the circular was in the context of section 10B, the ratio of the circular equally applies to Section 10A - AT
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Income Tax:
Addition u/s 69A - chit fund investment - the CIT(A) observed that being govt. employee, the assessee is not permitted to enter in chit fund. Even before us, the ld. AR of the assessee failed to establish that the amount of ₹ 10,00,000/- received from chit fund and the submissions in the written submissions are general and vogue which are not supported to the case of the assessee. - AT
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Service Tax:
SVLDRS - It is a peculiar case wherein personal hearing under the scheme could not take place for the errors which are not attributable to the petitioners, resulting in an order running adverse to petitioners’ interest where they have claimed that more than 90% chunk of the amount payable had already been deposited. Thus, this is a case wherein it would not be improper to intervene in the matter and set aside the impugned Form SVLDRS-3. - Matter restored back - HC
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Service Tax:
SVLDRS - the petitioner has instituted this Writ Petition only on 16.06.2021, nearly a year after the last date stipulated by the Board for payment of tax. In such a situation, this Court is not in a position to intervene in this matter and it is left to the petitioner to pursue its representation, if at all filed, before the Board. - HC
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Service Tax:
Extended period of limitation - It is clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when “suppression’ is shown to be wilful with intent to evade the payment of service tax - even suppression of facts has to be wilful and in any case, suppression has also to be with an intent to evade the payment of service tax. - AT
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Service Tax:
Taxability - convenience fee - fee charged on its customers for online booking of movie tickets - online information and database access retrieval system [OIDAR] services or not - Service tax under the category of OIDAR cannot be levied upon a user merely because he receives a code for getting a printout of the ticket from the cinema hall. - AT
Articles
Notifications
News
Case Laws:
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GST
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2021 (7) TMI 265
Classification of goods - rate of tax - alcohol based hand santizer - classifiable under Heading 3808 under the Customs Tariff Act taxable at 18% or classifiable under HSN 3004 taxable taxable 12%? - HELD THAT:- The alcohol-based hand sanitizers are commonly understood as hand hygiene product used to disinfect the hands from disease spreading germs. It is not commonly considered as a medicine used for the treatment or prevention of any disease or ailment. Even during the current pandemic, the use of alcohol-based hand sanitizer has been propagated only as a good hand hygiene practice which will prevent the transmission of the virus from one human being to another - The survey conducted among a cross section of people from different age groups showed that almost 79% were aware that hand sanitizer is used for maintaining good hand hygiene and to prevent the spread of disease during the Covid pandemic. Therefore, applying this test of common parlance and the fact that the impugned product does not have any therapeutic or prophylactic properties, we hold that the alcohol-based hand sanitizer cannot be classified as a medicament under Chapter Heading 3004 as claimed by the Appellant. Classification under HSN Heading 38.08 - HELD THAT:- A DGFT Notification is not an authority for determining the classification of goods under GST law. Classification of goods is to be determined based solely on the description of goods given in the First Schedule to the Customs Tariff Act read together with the relevant Section Notes and Chapter Notes. Moreover, the conditions and restrictions contemplated by one statute having a different object and purpose should not be mechanically imported and applied to a fiscal statute. The reference to the ITC HS Code for Alcohol-based hand sanitizers which has been made in the DGFT Notification dated 6-5-2020 is not a standard for interpreting the classification of goods as per the Customs Tariff Act. Rate of tax - HELD THAT:- The goods falling under Chapter Heading 3808 attract a tax rate of 9% CGST and 9% SGST in terms of entry Sl.No 87 of Schedule III of Notification No 11/2017 CT (R) dated 28-06-2017. With effect from 14th June 2021 up to 30th September 2021, the GST rate on hand sanitizer falling under Chapter Heading 3808.94 has been reduced to 5% GST (i.e 2.5% CGST and 2.5% SGST) vide Notification No 05/2021 CT (R) dated 14th June 2021.
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2021 (7) TMI 264
Classification of goods - rate of tax - Isopropyl rubbing alcohol IP - Chlorhexidine Gluconate and Isopropyl Alcohol solution - medicaments or not - classifiable under the HSN 3808 taxable at 18% or at 12% under HSN 3004? - applicability of Schedule III of Notification No 01/2017-Central Tax (Rate) dated 28-06-2017 - HELD THAT:- Chapter 3004 of the Customs Tariff covers medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses. Though the terms 'therapeutic and prophylactic' have not been defined in either the Customs Tariff or the GST law, a common understanding of the term 'therapeutic' is treatment of a disease whereas 'prophylactic' is preventing the onset or progression of a disease. For a product to be classified as a medicament under Chapter Heading 3004, it is important that the product has either of the two qualities i.e therapeutic or prophylactic. Even if a product is manufactured using ingredients regulated under the Drugs and Cosmetics Act and according to the formula prescribed in the Pharmacopeia, it cannot be classified as a medicament under Heading 3004 unless it is meant for therapeutic or prophylactic uses - the alcohol-based hand sanitizers viz. Isopropyl Rubbing Alcohol and Chlorhexidine Gluconate and Isopropyl Alcohol solution, cannot be considered as a `medicaments' classifiable under Chapter Heading 3004. The hand sanitizers do not serve as a replacement for through handwashing with soap and water. Instead, the alcohol-based hand sanitizers are thought to bring the consumers some of the benefits of handwashing when washing hands with soap and water is not practical in certain settings. In fact, alcohol-based hand sanitizers are usually preferred to handwashing with soap in occupational health care setting and in community settings. They are faster, more efficient and easier on the skin than repeated handwashing with soap and water. However, hand sanitizers are not suitable for all settings. Classification of goods is to be determined based solely on the description of goods given in the First Schedule to the Customs Tariff Act read together with the relevant Section Notes and Chapter Notes. Moreover, the conditions and restrictions contemplated by one statute having a different object and purpose should not be mechanically imported and applied to a fiscal statute. The reference to the ITC HS Code for Alcohol-based hand sanitizers which has been made in the DGFT Notification dated 6-5-2020 is not a standard for interpreting the classification of goods as per the Customs Tariff Act. Rate of Tax - Isopropyl Rubbing Alcohol - Chlorhexidine Gluconate - Isopropyl Alcohol solution - HELD THAT:- The goods falling under Chapter Heading 3808 attract a tax rate of 9% CGST and 9% SGST in terms of entry Sl.No 87 of Schedule III of Notification No 11/2017 CT (R) dated 28-06-2017. With effect from 14th June 2021 upto 30th September 2021, the GST rate on hand sanitizer falling under Chapter Heading 3808.94 has been reduced to 5% GST vide Notification No 05/2021 CT (R) dated 14th June 2021.
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2021 (7) TMI 263
Classification of services - services of support services to Airbus SAS which is separately compensated with a service fees computed on a cost-plus markup basis - Intermediary services or business support services? - Zero-Rated Supply or a Normal Supply - relationship of principal and agent - HELD THAT:- The applicant is of the opinion that the activities undertaken by them are classifiable under Heading 9983 with description of Other professional, technical and business services . As per the explanatory notes to the scheme of classification of services, heading 998399 offers the same description. This heading includes specialty design services including interior design, design originals, scientific and technical consulting services, original compilation of facts/ information services, translation services, trademark services and drafting services. Intermediary services or not - HELD THAT:- The reliance on principal to principal relationship or calling oneself as an independent contractor is not relevant for the purpose of determining an intermediary as per the definition. An intermediary will merely facilitate or arrange the supply of goods or services between two or more people but will not be providing such supplies on his own account. Here, the word, such is of paramount importance. Such goods in the present case are the raw materials supplied by the vendors to Airbus Invest SAS, France - the activities performed by the applicant are fulfilling the parameters mentioned in the definition of Intermediary as per Section 2 (13) of IGST Act, 2017. The activities carried out in India by the Applicant would constitute a supply as Intermediary services classifiable under SAC 998599 - The services rendered by the Applicant do not qualify as export of services in terms of sub-section 2 of Section 6 of the IGST 2017 and consequently, are exigible to GST at the rate of 18% in terms of clause (iii) of entry no. 23 of N/N. 11/2017-Central Tax (R) dated 28.06.2017.
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2021 (7) TMI 255
Levy of Interest in terms of tax to be remitted by adjustment of credit available in the electronic register - Section 50 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- As per the decision of this Court in M/S. MAANSAROVAR MOTORS PRIVATE LIMITED VERSUS THE ASSISTANT COMMISSIONER, THE SUPERINTENDENT OF GST CENTRAL EXCISE, THE BRANCH MANAGER [ 2020 (11) TMI 107 - MADRAS HIGH COURT ], where it was held that Learned counsel for the petitioner states that the interest liability relating to belated payment of tax both by cash and reversal of ITC has been coercively recovered. With the insertion of the proviso to be taken to be retrospective, these writ petitions are allowed. Thus, the impugned order is partly set aside - this writ petition is disposed off.
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Income Tax
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2021 (7) TMI 262
Assessment u/s 153C - satisfaction on the basis of the borrowed information - whether the books of accounts or documents or assets seized or requisitioned by the other AO in the proceedings under section 153A? - HELD THAT:- The respondent had initiated the proceedings under section 142(1) read with section 153C of the said Act by recording the satisfaction that the documents found and seized from the premises of the accommodation entry provider group of Ahmedabad, pertained to the petitioner - assessee and had a bearing on the determination of the total income of the petitioner for the A.Y. 2012-13. As stated earlier, the petitioner filed the objections against the said satisfaction recorded by the respondent and the said objections have been duly considered by the respondent. Under the circumstances, it could not be said that the respondent had recorded the satisfaction on the basis of the borrowed information. Impugned notice u/s 153C was issued on the basis of incorrect facts - Such satisfaction would be in the realm of subjective satisfaction of the concerned Assessing Officer. The sufficiency or correctness of the documents or material handed over by the other Assessing Officer to him also could not be gone into by the Courts at this stage. In the case of Raymond Woolen Mills Ltd. [ 1997 (12) TMI 12 - SUPREME COURT] it has been held that in determining whether the commencement of reassessment proceeding is valid, the Court has only to see whether there is prima facie some material on the basis of which the department has opened the case, and that the sufficiency or correctness of the material could not be considered at this stage. It is true that the supreme Court has made the said observations while considering the validity of the reasons recorded by the Assessing Officer for reopening of the assessment of the assessee under Section 147, whereas the present case arises out of the proceedings initiated and the satisfaction recorded by the Assessing Officer for initiating the proceedings under section 153C of the said Act, nonetheless such reliance of the decision of Supreme Court by the respondent could not be said to be out of place when the matter was concerning about the reopening of the assessment of the petitioner - assessee.
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2021 (7) TMI 259
Prior period expenditure - Whether Tribunal is right in holding that the expenditure was crystalized during the relevant previous year when the assessee hijmself has classified the expenses as prior period expenditure ? - Tribunal held that one time payment made by the assessee towards prepayment premimum and interest compense is business expenditure in the nature of revenue Expenditure - HELD THAT:- Having regard to the submissions made by the learned counsel on either side, following the ratio laid down in SUSHIL KUMAR GUPTA [ 2012 (9) TMI 621 - SC ORDER] the questions of law are decided against the Revenue and in favour of the assessee.
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2021 (7) TMI 253
Maintainability of Writ petition - mandamus prayer seeking a direction to the respondents for return of the Computer Hard Disk and documents, etc., seized by them - petitioner is aggrieved by the issuance of summons by the respondents and petitioner is aggrieved by the issuance of summons by the respondents - HELD THAT:- When a dispute is pending before the Tax Authority, unless a decision is taken by the authority one way or the other, it is certainly not open to the petitioner to rush to this Court invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. In any event, in a pending dispute of this nature before the Tax Authority, it is certainly not open to this Court to give any direction as sought by the petitioner in this writ petition. What the petitioner could not achieve directly, he is attempting to achieve the same indirectly by invoking the extraordinary jurisdiction of this Court. This Court would certainly not pass any direction when action has been initiated against the petitioner by the Tax Authority and has not culminated or crystallized into any definite decision. Therefore, this Court is of the view that the writ petition is not maintainable for more than one reason that the same being premature and the same being not maintainable - WP dismissed.
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2021 (7) TMI 252
Rectification u/s 254 - stand of the Revenue is that in para-16 of the Tribunal s order, as observed that M/s.Jay Corporation was not the owner of the land for which development agreement was executed but this finding is contradictory to the fact narrated in the confirmation letter written by Shri Naresh M. Shah, proprietor of Jay Construction - HELD THAT:- On overall appreciation of all the documents in their setting as a whole, the Tribunal has recorded a finding that Jay Corporation was having development rights. As far as the letter referred by the Revenue dated 2.12.2010 is concerned, in this letter, in para-1 the following narrations is available we had entered into an agreement with the Ganesh Planatation Ltd for construction of building on the land space owned by us . The said agreement was entered into on 26.6.2007 assigning them construction work. On the strength of this paragraph, Revenue is pleading that there is a contradiction in the finding of the Tribunal while taking note of the fact. There is no contradiction. Expression used in this letter is also of building on the land space owned by us i.e. Jay Corporation . This would talk of space i.e. development right on the land. It does not say absolute ownership of the land, and the Tribunal has appreciated this factual position ultimately in the order. Therefore, there is no apparent error in this order of the Tribunal. Misc. Application of the Revenue is devoid of any merit, hence dismissed.
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2021 (7) TMI 250
Income of the assessee not chargeable to tax because of principles of mutuality - HELD THAT:- This issue has already been decided by the Hon ble Supreme Court in assessee s own case reported [ 2020 (4) TMI 827 - SUPREME COURT] . The Hon ble Supreme Court dismissed the appeal of the assessee. Thus, the income of the assessee is chargeable to tax and principle of mutuality does not apply. Income of the assessee not chargeable to tax on the principle of diversion of income by over-riding title - HELD THAT:- This issue is also covered against the assessee in assessee s case by decision of ITAT for assessment years 2001-02 onwards in some of the years vide order dated 9th September, 2019 [ 2019 (9) TMI 551 - ITAT DELHI] wherein held that there is no applicability of doctrine of diversion of income by over-riding title in this case. Also we direct the AO that when this income is held to be chargeable to tax , assessee is principally entitle for benefit of set off of any carry forward losses of earlier years, if determined in accordance with law. The assessee is directed to produce the relevant details before the ld. Assessing Officer.
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2021 (7) TMI 249
Sale of agricultural land - proof of Agricultural income - HELD THAT:- Assessee has not been able to prove ownership of the agricultural lands per se which could give rise to the income claimed as exempt u/s. 10(1) of the Act. No rebuttal has come from the assessee's side in the case file. We thus confirm both the lower authorities' action making the impugned disallowance.
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2021 (7) TMI 248
Exemption u/s.10(23) denied - anonymous donations received by any assessee or entity u/s.115BBC - HELD THAT:- Since the assessee trust is enjoining registration u/s.12A as well as u/s.80G(vi) of the Act, which entitles the trust exempt from tax u/s.11 to 13 of the Act and also benefit of Section 10(23). Books of accounts including ledger shows entry of receipt of donations and counter entry of cancellations of transactions on the very same date and all original receipts along with counterfoil are also available with the trust in its record and original photocopy of which have been placed on record. If any decision has been taken by the trust in the interest of students dropping its idea of receiving donations from the weaker section of the society living in the tribal area and consequently entries were made neutralizing and nullifying the transaction of receipt of the donation, then it has to be presumed that no amount was received by the trust and entries made in the books of accounts and availability of the original receipts alongwith counterfoil also supports the explanation and stand of the assessee. I As during the course of hearing a specific query by the bench, ld. DR in all fairness accepted that neither the AO nor the CIT(A) has made any exercise to verify from the so-called donors as to whether they actually gave any donation to the assessee trust or not. When the assessee trust is submitting all the receipts, relevant books of accounts and documentary evidence before the revenue authorities and without verifying the same objectively selecting some entries and leaving aside the other entries and documentary evidence even without verifying the actual receipt of donation from the so-called donors, if the revenue authorities proceeds to make any addition treating the same as anonymous u/s.115BBC of the Act, then have no hesitation to hold that the addition made is without any basis and keeping aside the sound principles of tax jurisprudence, the same cannot be held as sustainable - Appeal of the assessee are allowed and the AO is directed to delete the addition.
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2021 (7) TMI 247
Capital gain computation - addition u/s. 50C of the Act on account of difference in the value adopted by the DVO and the sale consideration taken by the assessee in his return of income - cost of indexation - HELD THAT:- Since the process of sale has been initiated from the date of Sale Agreement, the character of the transaction vis-a-vis Section 50C of the Income tax Act should also be determined on the basis of the conditions that prevailed on the date the transaction was initially entered into. Accordingly, the applicability of the provisions of section 50C should be looked at only on the date of Agreement to Sell i.e. 29.09.2010. According to the Jantri rate on that date, the stamp duty valuation is less than the sale consideration under the sale deed and hence no addition u/s 50C is required to be made as per proviso to Section 50C of the Act. Although the said amendment is effective from 01.04.2017, however it is to be noted that the said provisions are amended to remove an undue hardship to the assessee or to remove an apparent incongruity and hence it can be applied even in the pending matters and treated as retrospective in nature. There cannot be any dispute that this amendment in the scheme of section 50C has been made to remove an incongruity, resulting in undue hardship to the assessee, as is evident from the observation in Easwar Committee report that The (then prevailing) provisions of Section 50C do not provide any relief where the seller has entered into an Agreement to Sell the asset much before the actual date of transfer of the immovable property and the sale consideration has been fixed in such agreement . Recognizing the incongruity that the date of agreement of sale has been ignored in the statute even though it was crucial as it was at this point of time that the sale consideration is finalized. The incongruity in the statute was glaring and undue hardship not in dispute. Once it is not in dispute that a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as retrospective, effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. As relying on DHARAMSHIBHAI SONANI VERSUS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 9, SURAT [ 2016 (9) TMI 1259 - ITAT AHMEDABAD] and taking into account the facts and circumstances, as narrated above, we remit this issue back to the file of assessing officer. If the assessing officer finds that a registered agreement to sale, as claimed by the assessee was actually executed on 29.09.2010 and the partial sale consideration was received through banking channels, the assessing officer should adopt stamp duty valuation as on 29.09.2010 to compute capital gains. Disallowance of cost of indexation claimed - We find that the dispute between the assessee and the assessing officer is the rate of ₹ 825/- per square meter, as fair market value as on 01.04.1981, whereas the DVO has estimated the fair market value as on 01.04.1981 at the rate of 114.30 per square meter. We note that the DVO has himself stated in his report that the impugned land was situated at more appropriate location as compared to sale instances considered by him. We also agree with assessee s land is situated in New City Light Area of Surat, which is costly area and prices of the land in the said area is very higher side. Therefore, considering the entirety of the facts and taking a holistic view the fair market value @ 607 per square meter should be adopted to meet the end of justice. Accordingly, the AO is directed to apply rate of ₹ 607 per sq. meter for calculation of indexed cost of acquisition for the purpose of computation of long-term capital gain in the hands of the assessee. Therefore, Ground No.2 raised by the assessee is partly allowed.
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2021 (7) TMI 246
Capital gain computation - validity of reference to DVO under section 55A - determination of Fair market Value (FMV) - rejecting registered valuer's report for determining cost of acquisition of land as on 01.04.1981 - Whether Ld. CIT(A) as well as the A.O. has erred in computing LTCG by taking FMV as on 01.04.1981 on the basis of DVO report ignoring the statutory position of law that reference to DVO u/s 55A is not valid prior to 01.07.2013?- HELD THAT:- There is no dispute that assessee while computing the capital gain adopted fair market value on the basis of Government approved value @ 300 per sq. mtr in respect of all 3 parcels of land. AO adopted value suggested by DVO in assessee s own case @ ₹ 185 per sq. mtr part of land and @ 200 per sq. mtr with regard to other part of land. We find that before the Tribunal the assessee has raised additional ground of appeal which is purely legal in nature. Assessee submits that the assessee vide adopting value of asset on higher rate than the fair market value and the amendment made in section 55A w.e.f. 01.07.2012 is not applicable. As relieng upon the decision of Pooja Prints[ 2014 (1) TMI 764 - BOMBAY HIGH COURT] and CIT Vs Gaurngiben S Shodhan. [ 2014 (2) TMI 78 - GUJARAT HIGH COURT] wherein it was held that the amended provision of section 55A is not retrospective. Further, we find that in similar said of fact this combination in Jagrutiben V. Patel [ 2020 (11) TMI 991 - ITAT SURAT] from points the following order. Considering the aforesaid factual and legal discussion and keeping in view the binding decision of jurisdictional High Court in Jagrutiben V. Patel (supra) Hon'ble Bombay High in Pooja Prints (supra) that amended provision of section 55A is not applicable on the transaction made prior to 01.07.2012. - Decided in favour of assessee.
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2021 (7) TMI 245
Recovery proceedings - Attachment orders - NCLT's order is binging and any recovery of an amount in excess of the specified amount - HELD THAT:- Hon'ble Supreme Court after considering the tax value involved, deemed it appropriate to dismiss the tax appeal leaving the question of law for adjudication at appropriate stage. The Hon'ble Rajasthan High Court in the case of Ultra Tech Nathdwara Cement Ltd. v. UOI [ 2020 (4) TMI 269 - RAJASTHAN HIGH COURT] had held that NCLT's order is binging and any recovery of an amount in excess of the specified amount in the NCLT's order is totally illegal and arbitrary. The Hon'ble Andhra Pradesh Telangana High Court in the case of Leo Edibles Fats Limited v. Tax Recovery Officer [ 2018 (8) TMI 62 - TELANGANA ANDHRA PRADESH HIGH COURT] had held that the Income Tax Department cannot claim any priority merely because of fact that order of attachment was issued long prior to initiation of liquidation proceedings under Code against company. The Madras High Court in the case of Official Assignee v. T.R. Bhuvaneswari [ 2016 (6) TMI 291 - MADRAS HIGH COURT] had held that the Official Assignee need not go before Central Board of Direct Taxes praying for waiver of interest under sections 234A, 234B and 234C as Insolvency Court itself can consider question of waiver of interest in terms of power conferred under section 7 of Presidency Towns Insolvency Act, 1909. The other judicial pronouncements relied by the learned AR are also to the effect that NCLT orders are binding and the Revenue cannot recover any amount other than specifically mentioned in the said order. We are of the view that the Revenue being not in a position to recover any amount exceeding ₹ 1 lakh in the facts of this case, no useful purpose would be served in adjudicating the issue raised in this appeal. Taking into consideration the tax value involved, we dismiss the Department's appeal being below the monetary limit specified under the Board Circular No. 17/2019 dated 8th August, 2019.
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2021 (7) TMI 244
Deduction u/s 10A - Software Technology Parks of India (STPI) Unit - splitting up or reconstruction of the existing business - voilation of the conditions stipulated u/s. 10A - HELD THAT:- We find that the Tribunal had extensively examined the issue in its order placing reliance on the decision in the case of CIT vs. Expert Outsource (P) Ltd. [ 2011 (3) TMI 1428 - KARNATAKA HIGH COURT ] and had also analyzed the CBDT Circular No. 1/2005 and thereafter, had provided relief to the assessee. In fact, the Hon'ble Karnataka High Court in its decision (supra.) itself has analyzed the applicability of CBDT Circular No. 1/2005 dated 06.01.2005 and that it had granted certain benefits u/s. 10B of the Act and though the circular was in the context of section 10B, the ratio of the circular equally applies to Section 10A - Appeal of the Revenue is dismissed.
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2021 (7) TMI 243
Addition u/s 69A - chit fund investment - assessee had cash deposits into bank account during the demonetization period - as per CIT-A assessee is a state government employee and as per the provisions of the state government conduct rules, state government employees are not permitted to make investment in speculative transaction - HELD THAT:- CIT(A) demonstrated in his order that the assessee does not have sufficient money to pay monthly chit installments by way of recording his statement u/s. 131 of the Act and examining the bank statements, further observed that no documentary evidence was filed by the assessee to establish genuineness of the chit fund claim. Further, the CIT(A) observed that being govt. employee, the assessee is not permitted to enter in chit fund. Even before us, the ld. AR of the assessee failed to establish that the amount of ₹ 10,00,000/- received from chit fund and the submissions in the written submissions are general and vogue which are not supported to the case of the assessee. CIT(A) examined the bank statement of the assessee and after observing the monthly expenditure of the assessee and nature of transactions carried out by the assessee, he has rightly sustained the addition made by the AO - No infirmity in the order of the CIT(A) in confirming the addition - Decided against assessee.
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2021 (7) TMI 239
Revision u/s 263 - assessee paid transport charges without deducting tax at source - HELD THAT:- although the assessee has brought to the notice of the ld. PCIT that as per the Hon ble ITAT decision M/S. SUGARCHEM [ 2018 (2) TMI 1457 - ITAT MUMBAI] no disallowance can be made u/s. 40(a)(ia) even if there is a violation under section 194C(7) of the Act and when two views are possible on this issue ,proceedings u/s. 263 cannot be initiated etc., the ld PCIT set aside the assessment order u/s. 263 without meeting the assessee s objections legally. When two views are possible on an issue, if the AO has taken one view with which the CIT does not agree, it cannot be treated that the order passed by the AO is erroneous and prejudicial to the interest of revenue. Thus, in this case, the decision of the A O has been subsequently upheld by two different decisions of the Hon ble ITAT, therefore , the decision taken by the assessing officer does not fall within the scope of section 263 of the Act and hence order of the PCIT is unsustainable in law. Therefore, we hold that the order passed u/s. 263 is not sustainable in law - Decided in favour of assessee
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2021 (7) TMI 237
Disallowance u/s. 36(1)(ii) bonus and commission paid to the directors as per agreements of appointment - CIT(A) confirming the disallowances of bonus and commission to Directors by stating that these were not linked to any specific service rendered and without going through the facts that the whatever be the nomenclature the remuneration within the prescribed limit as per company law is allowable. - HELD THAT:- As bonus and commission paid to the directors paid as per the agreement of their appointment with the assessee; and since amount given to the directors were within the prescribed limit as per the Company Law, the claim of expenditure ought to have been allowed by the AO. As decided in own case [ 2019 (3) TMI 1894 - ITAT KOLKATA] CIT(A) upheld the disallowance on the ground that the agreements are generally worked. In our view, this is not a valid ground to make this disallowance. Agreements are to be understood in such a way in which both the parties to the agreement, desired and understood. Section 36(1)(ii) does not apply in this case. Hence, we allow the grounds of the assessee
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2021 (7) TMI 236
Assessment u/s 153A - incriminating materials have been found during the search or not? - HELD THAT:- The date of search in the present case was on 26.08.2015 and the assessment for the assessment year 2012-13 has been completed u/s 143(3) and the amount received from M/s Cindy Goods Supply Pvt. Ltd. of ₹ 3,50,00,000/-, thus the assessment in question has to be treated as a completed assessment not as an assessment kept in abeyance which necessitates the requirement of incriminating material to make any addition u/s 153A. Keeping in view the fact that no incriminating materials have been found during the search which led to the addition, the fact that the lender company cannot be treated as a paper company owing to the returned income mentioned above, keeping in view the order of the Co-ordinate Bench of the Tribunal regarding the treatment of amounts received from M/s Cindy Goods Supply Pvt. Ltd. in the case of Nimbus India Ltd. which was also assessed u/s 153A and since the sources have been substantiated, we hereby hold that no addition is warranted in the case of the assessee. - Decided in favour of assessee.
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Customs
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2021 (7) TMI 261
Seeking no Dues Certificate and exit certificates - Seeking exit from SEZ scheme - vacation of premises - Refund of customs duty and interest - the amount was paid under protest - HELD THAT:- The Petitioner has shown willingness to pay all the dues as assessed by the revenue department for exiting the SEZ scheme vacating units No. 501 and 601. The department as well has filed an affidavit-inreply on 02.07.2021 on behalf of the respondents referring to that application dated 24.03.2021 has been filed by the petitioner for permission to clear e-waste, scrap and the balance capital goods on payment of applicable duty under rule 74(5) SEZ rules, 2006. The same has been processed and necessary permission to file bill of entry had been given to them and the petitioner has filed the bills of entry for the clearance and applicable duties would be levied on the basis of the Customs Tariff Act. It has been referred to that the applicable duty as on 30.06.2021 has been worked out to be approximately ₹ 91,00,000/-. It has further been referred to that request of the petitioner is being processed under rule 74 of the SEZ rules, 2006. The respondents would carry out necessary process for the No Dues Certificate and exit certificates referred to above vacating units No. 501 and 601 as early as possible preferably within a week and pass appropriate orders on fulfillment of the conditions - Petition disposed off.
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2021 (7) TMI 254
Maintainability of petition - contractual obligations between the parties - adjudication with reference to documents and evidences - HELD THAT:- The disputed facts between the parties based on certain contractual obligation can never be adopted in writ proceedings by the High Court. Such issues cannot be decided nor a finding can be given based on the affidavits filed by the respective parties in the writ petition. Under these circumstances, the petitioner is at liberty to approach the appropriate forum for redressal of his grievances in the manner known to law. Petition dismissed.
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Corporate Laws
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2021 (7) TMI 241
Approval of Scheme of Arrangement by way of Amalgamation - Sections 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions with respect to convening/holding or dispensing with the meetings of the Equity Shareholders, Secured and Unsecured Creditors is issued - various directions regarding issuance of various notices also issued. The scheme is approved - Application allowed.
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Insolvency & Bankruptcy
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2021 (7) TMI 242
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Financial Creditor has succeeded to make out a case for triggering the Corporate Insolvency Resolution Process. The material on record clearly goes to show that the Corporate Debtor had availed the loan facility and has committed default in the payment of the said debt amount. The applicant 'financial creditor' has placed on record evidence in support of the claim as well as to prove the default. There is no bar for Financial Creditor from proceeding under the provisions of Code. There is no document placed on record by Corporate Debtor to show that payment of debt, as claimed by the applicant, is made or is not due and payable. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of the Code - thus, a default has occurred and debt has remained unpaid. Thus, the application warrants admission as it is complete in all respects and is admitted initiating CIRP as prescribed under the Code. The scheme is approved - moratorium declared - application allowed.
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2021 (7) TMI 240
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - no document placed on record to substantiate the defense of the corporate debtor - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The default has occurred with respect to financial debt. It is observed that ex facie there is no satisfactory evidence produced by the corporate debtor with respect to the payment made to the applicant of its debt. Further, there is no document placed on record to substantiate the defense of the corporate debtor, that the default has not occurred. As long as the extension was granted by the applicant, debt was allowed to be restructured, but after the 21.10.2019 there is no document produced to show that the debt is not due and payable. The date of default is 22.10.2019 and the application is filed on 07.11.2020, which is well within the period of limitation and not barred by law - the registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The application is complete which is filed on the proforma prescribed under Rule 4(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of the Code. This bench is satisfied that a default has occurred, and debt has remained unpaid. Thus, the application warrants admission as it is complete in all aspects and is admitted initiating CIRP as prescribed under the Code. Application admitted - moratorium declared.
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2021 (7) TMI 238
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The learned Counsel appearing for the FC submits that the Hon ble Tribunal may not entertain this IA filed by the CD on account of the Appeal preferred by the FC before the Hon ble Supreme Court against the order of the Hon ble NCLAT dated 18/06/2020 [ 2020 (8) TMI 424 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ]. The Learned Counsel also submits that this matter may be taken up only after the verdict of the Hon ble Supreme Court on the appeal preferred - the Learned Counsel for the CD also submits that the matter need not be taken up before the verdict of the Hon ble Supreme Court on the appeal preferred by the FC. From the documents, affidavits, orders of the Hon ble NCLAT and the Hon ble Supreme Court made available, there are no reason to entertain this IA - matter remanded back the matter to this Bench to pass an order afresh after providing an opportunity to the opposite party - the CIRP has been set aside but the Application filed by the FC before this Bench under Section 7 of the IBC is alive and not dismissed.
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Service Tax
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2021 (7) TMI 260
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - while granting second personal hearing, typographical / clerical error crept in SVLDRS-2B - principles of natural justice - HELD THAT:- The petitioners claim of having deposited a sum of ₹ 50,00,000/- towards service tax liability pursuant to show-cause notice is not denied; and it is required to be ascertained as to whether the payment claimed by the petitioners is towards said liability and as such, hearing was necessary, a room for which is given in the scheme, particularly under section 127. According to the petitioners, they had applied for adjournment in Form SVLDRS-2A and in response even Form SVLDRS-2B had been assigned for such purpose. The revenue as well, as a matter of fact, has referred to that Form SVLDRS-2B had been issued, albeit, there has been typographical / clerical error in the same. It is not denied that on 03/03/2020, the petitioners had requested for hearing on 05/03/2020 and in response thereto, found Form SVLDRS-2B had been issued with error showing hearing to be held on 09/03/2021 but on 07/03/2020 itself impugned order Form SVLDRS-3 has been passed. It is a peculiar case wherein personal hearing under the scheme could not take place for the errors which are not attributable to the petitioners, resulting in an order running adverse to petitioners interest where they have claimed that more than 90% chunk of the amount payable had already been deposited. Thus, this is a case wherein it would not be improper to intervene in the matter and set aside the impugned Form SVLDRS-3. The matter restored before the Designated Committee for, hearing the petitioners and verification of records and issue a revised Form SVLDRS-3, on verification of factual position of payment of ₹ 50,00,000/- towards liability under the show-cause notice - petition allowed by way of remand.
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2021 (7) TMI 258
Levy of service tax - Membership of Clubs and Association Service - HELD THAT:- This issue has been dealt with by the Supreme Court in STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT ] which judgment the assessing authority did not have the benefit of, at the time when the impugned order-in-original was passed. The matter remitted to the file of the Assessing authority to be redone afresh - Petition allowed by way of remand.
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2021 (7) TMI 257
Seeking Revenue to accept payment pursuant to issuance of Form 3 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - whether original time of 30 days from issuance of Form 3 has been overridden by the Department - N/N. 13 of 2016 dated 01.03.2016 - HELD THAT:- Though the decision of the Board was sought for specifically, an affidavit has been filed by the Commissioner/R5 stating that since the petitioner has not made the remittance within the due date of 30.06.2020, the application ought to be treated as lapsed. There are no reason to keep this writ petition pending any more. The petitioner is permitted to make a representation within a period of one week from today, accompanied by a copy of this order to the Board and the Board is directed to consider the same and pass appropriate orders within a period of four (4) weeks from receipt thereafter. Petition disposed off.
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2021 (7) TMI 256
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Time limitation - application has been filed in 2019 and Form 3 in this case is dated 03.01.2020 - HELD THAT:- The petitioner has filed a representation, which contains two dates, 30.03.2021 and 05.04.2021, before the Chairman, Central Board of Indirect Taxes, for which there is no acknowledgement, even for dispatching the same, praying for a permission to remit the tax under the Scheme - That apart, the petitioner has instituted this Writ Petition only on 16.06.2021, nearly a year after the last date stipulated by the Board for payment of tax. In such a situation, this Court is not in a position to intervene in this matter and it is left to the petitioner to pursue its representation, if at all filed, before the Board. Petition dismissed.
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2021 (7) TMI 251
Taxability - convenience fee - fee charged on its customers for online booking of movie tickets - online information and database access retrieval system [OIDAR] services or not - period 01.04.2007 to 31.12.2011 - extended period of limitation - demand of interest and penalty as well. Invocation of extended period of limitation - suppression of facts or not - whether wilful suppression of facts is necessary or just suppression (unknowingly) is also sufficient for invocation of extended time? - HELD THAT:- It is clear from the facts that as far back as on 27.07.2009 the Department was aware that the appellant had been collecting convenience fees from customers and by 11.08.2010 the Department was also aware of the quantum of convenience fees collected, which amount has also been mentioned in the show cause notice dated 14.06.2012. It is, therefore, more than apparent that the Department was aware of the collection of convenience fees by the appellant much before one year from the date of issue of the first show cause notice dated 14.06.2012. It cannot, therefore, be said that the appellant had suppressed facts relating to collection of convenience fee from the Department and, therefore, the confirmation of demand by the Commissioner for the period 01.04.2007 to 31.03.2011 is clearly not warranted. The Supreme Court and the Delhi High Court have held that suppression of facts has to be wilful and there should also be an intent to evade payment of service tax - It would also be useful to refer to a decision of the Tribunal in Shiv-Vani Oil Gas Exploration Services Ltd.[ 2016 (10) TMI 878 - CESTAT NEW DELHI] , wherein the Tribunal after making reference to the decision of the Supreme Court in Cosmic Dye Chemical vs. CCE, Bombay [ 1994 (9) TMI 86 - SUPREME COURT] , observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when suppression is shown to be wilful with intent to evade the payment of service tax - even suppression of facts has to be wilful and in any case, suppression has also to be with an intent to evade the payment of service tax. There is no finding by the Commissioner as to whether suppression of facts was wilful and in the context of intent, the Commissioner held that there is no necessity that suppression of facts has to be with an intent to evade the payment of service tax. The confirmation of demand of service tax of ₹ 1.27 crores on convenience fees for the period commencing 01.04.2007 to 31.03.2011 is beyond the prescribed period of one year contemplated under section 73(1) of the Finance Act and, therefore, this demand deserves to be set aside. Whether the convenience fees that is charged by the appellant from each user over and above the prescribed value of the movie ticket can be subjected to service tax under OIDAR? - HELD THAT:- A conjoint reading of the clauses of the Terms Conditions of the contract would indicate that the purpose for charging convenience fee is to receive a consideration for offering a facility of online booking and in the facts of the present case would relate to online booking of tickets. It needs to be noted that the purpose of the transaction is to book and procure a ticket online by a user, though the website may provide for various other information like the current movie being exhibited, the upcoming movies and the timing of the movies. These information are even otherwise available through newspaper advertisements or other advertisements and no charge is leviable for the same - It is clear that the pith and substance and the dominant intention of the arrangement is not to access/retrieve data/information but it is an arrangement by which the facility of online booking is made available to users. There is no manner of doubt that the essential characteristic of the arrangement under consideration in these appeals is availing the facility of online booking of ticket and not accessing/retrieving any data/information. Service tax under the category of OIDAR, therefore, cannot be levied upon a user merely because he receives a code for getting a printout of the ticket from the cinema hall. The inevitable conclusion that convenience fee is not charged by the appellant for any access/retrieval of information or data base. Service tax under OIDAR cannot, therefore, be levied upon the appellant for the period prior to 01.07.2012. The appellant has stated that it started discharging service tax on convenience fees under the negative list regime after July 1, 2012 under the category of other taxable services - the confirmation of demand of service tax of ₹ 1.27 crores for the period 01.04.2007 to 31.03.2011 out of the total demand of ₹ 2,02,31,146/- covered under the two show cause notices dated 14.06.2012 and 15.03.2014 cannot also be sustained for the reason that it is for a period beyond the prescribed period of one year contemplated under section 73(1) of the Finance Act and the extended period of limitation could not have been invoked. Demand of interest and penalty - HELD THAT:- As the confirmation of demand under the two notices cannot be sustained, the imposition of penalty and interest under sections 78 and 75 of the Finance Act cannot also be sustained. The impugned order confirming the demand of service tax under the two show cause notices dated 14.06.2012 and 15.03.3013 is liable to be set aside and is set aside - Appeal allowed - decided in favor of appellant.
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