TMI Tax Updates - e-Newsletter
August 5, 2021

Case Laws in this Newsletter:

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

Articles

1. GST Annual Return : a detailed note on major change made by CBIC vide Notification no. 29, 30 & 31 -CT dated 30.07.2021

   By: Ganeshan Kalyani

2. OFFENCES AND PENALTIES – CIRP - UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016

   By: DR.MARIAPPAN GOVINDARAJAN

3. STATE OF ECONOMY AND GST COLLECTION

   By: Dr. Sanjiv Agarwal

News

1. Various measures taken by Government for promotion of exports

2. 11 Industrial Corridors with 32 Projects to be developed in 4 phases in the country as part of National Industrial Corridor Programme (NICP)

3. India and EU have agreed to resume the negotiations for a balanced, ambitious, comprehensive and mutually beneficial trade agreement

4. New Central Sector Scheme for industrial development of Jammu and Kashmirwill help in creation of more employment opportunities and promotion of tourism in the region

5. India registered its highest ever annual FDI Inflow of US $81.72 billion during the last financial year 2020-21

6. India and World Bank sign $250 million project to make existing dams safe and resilient

7. APEDA inks MoU with University of Agricultural Science, Bangalore for boosting agri-exports

8. CCI receives notice relating to acquisition of equity stake in PNB Housing Finance Limited by Pluto Investments S.à r.l. and Salisbury Investments Private Limited, under Green Channel and is deemed approved

9. CBIC launches Compliance Information Portal (CIP)

10. CBDT extends due dates for electronic filing of various Forms under the Income-tax Act, 1961

Notifications

Income Tax

1. 84/2021 - dated 3-8-2021 - IT

Central Government specifies the pension fund, namely, , the 2726247 Ontario Inc

Money Laundering

2. S.O. 3119 (E) - dated 3-8-2021 - PMLA

Supersession Notification No. S.O. 477 (E), dated the 31st January, 2020

SEBI

3. SEBI/LAD-NRO/GN/2021/35 - dated 3-8-2021 - SEBI

Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2021.

4. SEBI/LAD-NRO/GN/2021/34 - dated 3-8-2021 - SEBI

Securities and Exchange Board of India (Investment Advisers) (Third Amendment) Regulations, 2021

5. SEBI/LAD-NRO/GN/2021/33 - dated 3-8-2021 - SEBI

Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2021

6. SEBI/LAD-NRO/GN/2021/31 - dated 3-8-2021 - SEBI

Securities and Exchange Board of India (Portfolio Managers) (Third Amendment) Regulations, 2021.

7. SEBI/LAD-NRO/GN/2021/30 - dated 3-8-2021 - SEBI

Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2021

8. SEBI/LAD-NRO/GN/2021/29 - dated 3-8-2021 - SEBI

Securities and Exchange Board of India (Credit Rating Agencies) (Amendment) Regulations, 2021

9. SEBI.LAD-NRO/GN/2021/32 - dated 3-8-2021 - SEBI

Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2021

Circulars / Instructions / Orders

SEBI

1. SEBI/ HO/ FPI&C/ P/ CIR/ 2021/ 609 - dated 4-8-2021

Modification in Operational Guidelines for FPIs and DDPs pursuant to amendment in SEBI (Foreign Portfolio Investors) Regulations, 2019

2. SEBI/HO/IMD/IMD-I/DOF5/P/CIR/2021/610 - dated 4-8-2021

Maintenance of Current Accounts in multiple banks by Mutual Funds

Income Tax

3. 15/2021 - dated 3-8-2021

Extension of time lines for electronic filing of various Forms under the Income-tax Act, 1961

DGFT

4. Trade Notice No. 13/2021-22 - dated 4-8-2021

Uploading of e-BRC by 15.09.2021 for shipping bills with LEO upto 31.03.2020 on which RoSCTL scrip has been claimed from DGFT RAs

5. Trade Notice No. 14/2021-22 - dated 4-8-2021

Online Procedure for transfer of Advance Authorisation/EPCG Authorisation in case of amalgamation/de-merger/acquisition etc

Highlights / Catch Notes

GST

• Pure Services to West Bengal's Public Health Dept Exempt from GST; Not Classified as 'Job Work' per Entry 3 Notification.

  Case-Laws - AAR : Classification of services - pure services - The supply of services as undertaken by the applicant cannot be considered as any treatment or process on goods belonging to another registered person so as to qualify as ‘job work’ as defined under clause (68) of section 2 of the Act ibid. - Pure services (without involvement of any supply of goods) provided by the applicant to Directorate of Public Health Engineering, Government of West Bengal, as enumerated in the application, is exempt from GST vide entry serial number 3 of the Notification - AAR
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• Tamil Nadu Labour Welfare Board Must Register for GST Due to Rental Income; Reverse Charge Mechanism Not Applicable.

  Case-Laws - AAR : Applicability of GST registration - Tamil Nadu Labour Welfare Board - The applicant being a person liable to pay GST, has to get registered under GST - The rental income received by the applicant from Government and business entities are taxable to GST - The applicant do not fall under the 'specified class of supplier of services' and therefore 'Reverse charge Mechanism' is not available to the applicant. - AAR
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• Government Entity Must Deduct Tax at Source u/s 51 and Reverse Charge for Legal Services Per Section 9(3) CGST Act.

  Case-Laws - AAR : Liability of GST - Indian Institute of Management, Tiruchirapalli, Tiruchirappalli (IIM) - The Applicant is a Government Entity Under GST Law. - The applicant is liable to deduct tax at source (TDS) u/s 51 of the CGST Act, 2017 read with Notification No. 50/2018-C.T - The applicant is required to discharge Liability on reverse charge basis on supply of services as per Section 9(3) of the CGST Act, 2017, in respect of Legal services received by them for which documentary evidence was submitted. - AAR
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• AAR Confirms Input Tax Credit for Solar PV Plant Design and Execution Under GST Provisions.

  Case-Laws - AAR : Input Tax Credit - inputs/capital goods/input services - items used in Design, Engineering, Supply, Execution (EPC) of 265KW Roof top Grid Solar PV Power Plant as per MNRE 8v IEC Standards - Credit allowed - AAR
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• Petitioner Violated Rule 138 by Fraudulent Goods Transport; Tax Levy and Penalty Imposed; High Court Dismisses Case.

  Case-Laws - HC : Levy of tax and penalty - details not matching with verifying sheets - The much is clearly reflected from the record that the petitioner has transported the goods in violation of Rule 138. The findings have been recorded by the authorities below that it was fraudulently done and the penalty was also levied on the petitioner. - Petition dismissed - HC
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• Central Authorities Can Investigate Despite Ongoing State Proceedings; Delaying Summons May Prejudice Revenue Interests.

  Case-Laws - HC : Jurisdiction to issue summons - Mere pendency of proceedings before the State authorities is not a ground to restrain the Central authorities from issuing summons and conduct investigation regarding certain allegations. Therefore, all these factors require an adjudication before the competent authority and if the summons are kept in abeyance at this stage, the same would paralyze the entire proceedings, which is not only desirable, but would cause prejudice to the interest of the Revenue in the present case - HC
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Income Tax

• Trust's Registration Cancelled for Bogus Donations; Violated Sections 12AA & 80G of Income Tax Act.

  Case-Laws - SC : Exemption u/s 11 - cancellation of registration - donations were received by way of cheques out of which substantial money was ploughed back or returned to the donors in cash. The facts thus clearly show that those were bogus donations and that the registration conferred upon it under Sections 12AA and 80G of the Act was completely being misused by the Trust. An entity which is misusing the status conferred upon it by Section 12AA of the Act is not entitled to retain and enjoy said status. The authorities were therefore, right and justified in cancelling the registration under Sections 12AA and 80G of the Act. - SC
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• Assessing Officer Must Address Objections in Section 147 Reassessment; Assessee Must Provide Further Information if Needed.

  Case-Laws - HC : Reopening of assessment u/s 147 - Disposal of objections against reopening orders - The Assessing Officer has given reasons for rejection of the objections. Such reasons may not be acceptable to the assessee. However, it is for him to provide further details or information to the AO while proceeding with the reassessment proceedings. - HC
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• No Interest on HSBC Geneva Account: Lack of Evidence to Dispute Commissioner of Income Tax (Appeals) Findings.

  Case-Laws - AT : Addition of Interest on the balances in his bank account with HSBC, Geneva - The undisputed fact is that in the alleged sheets of bank deposits received from the French government under DTAC, there is no mention of any interest paid by the bank to the assessee. Therefore, it is illogical to compute interest and that too at the rate prevailing in India. Since there is no documentary evidence to support the presumption of the Assessing Officer, we do not find any reason to interfere with the findings of the ld. CIT(A). - AT
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• Assessee Entitled to Deduct Written Down Value of Assets as Fixed Asset Block Reduced to Nil by Year-End.

  Case-Laws - AT : Computation of short-term capital gains - fixed assets have been reduced to nil at year-end which is evident from assessee’s Balance Sheet as placed on record. Hence, the fixed asset block has ceased to exist. Therefore, the deduction of WDV of assets as attached to above land & shed would be available to the assessee - AT
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• Court Examines Section 36(1)(iii) on Interest Disallowance; Shareholder Overlap Doesn't Affect Dues Recovery Decision.

  Case-Laws - AT : Disallowance of proportionate interest u/s.36(1)(iii) - Merely because the shareholder of the assessee company is also a shareholder of holding company of M/s. Jogindra Exports Ltd., the same would not make any difference for the recovery of the dues by the assessee company. - The decision of not charging interest from M/s. Jogindra Exports Ltd., during the year under consideration was made on account of commercial expediency and to protect atleast the principal portion of the dues by understanding the financial sickness of the borrower company. - AT
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• Penalty for Bogus Purchases u/s 271(1)(c) Deleted; Revenue's Appeal Based on CBDT Circular Rejected.

  Case-Laws - AT : Penalty u/s 271(1)(c) - disallowance of 20% on account of bogus purchases - Monetary limit for filing appeal - The revenue has tried to make out a case that since the addition was made pursuant to information from sales tax department, this penalty appeal falls in the exception carved out in the CBDT circular regarding appeals arising out of additions made pursuant to information from outside agencies. - Argument of the revenue rejected - we uphold the order's of Ld CIT(A) and delete the levy of penalty - AT
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• Taxpayer's Deduction Rejection Alone Doesn't Justify Penalty u/s 271(1)(c) of Income Tax Act.

  Case-Laws - AT : Penalty u/s 271(1)(c) - assessee had sold a plot of land in respect of which deduction u/s 54B claimed - withdrawal of deduction u/s 54B - merely because the assessee had claimed the deduction under section 54B which claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c) of the Act. - AT
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• Section 43B: No Extra Charges for Unpaid Service Tax Due to Unique Accounting with CENVAT Credit.

  Case-Laws - AT : Addition u/s 43B - Method of accounting - unpaid statutory dues of service tax, Excise and PF by changing the method of accounting - The assessee followed the exclusive method of accounting and whatever liability or expense debited in the profit and loss account had been paid through CENVAT credit and profit and loss account so no addition under section 43B on account of unpaid service tax is warranted. - AT
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• Co-operative Sugar Mills' Payments for Harvesting and Transport Expenses Qualify as Revenue Expenditures, Eligible for Tax Deductions.

  Case-Laws - AT : Allowability of harvesting and transport expenses paid by the Co-operative Sugar Mills to its farmers / members for purchase of sugarcane - the payment made to sugarcane growers / members in excess of the administered price determined by the Sugarcane Control Order, 1966 is eligible to be treated as an allowable as the revenue expenditure exclusively incurred for the purpose of business. - AT
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Customs

• High Court Rules Notification Retrospective in Machinery Purchase Dispute Between EOUs u/s 25 Amendment.

  Case-Laws - HC : 100% EOU - purchase of certain machinery from another 100 % EOU - Effective date of amendment - From the date of notification or from retrospective effect - The department has misapplied the explanation to Section 25 of the Act with regard to the coming into force of a notification. There appears to be no dispute as to on what date the notification was published, but, when was it given effect to by operation of law. Then, it has to be held that the notification is retrospective, as it is an amendment by substitution. - HC
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• High Court Upholds Extended Detention in Gold Smuggling Case, Dismissing Claims of Advisory Board's Exclusive Review Authority.

  Case-Laws - HC : Illegal detention - Smuggling - Gold - sufficient reason for the continued detention of the detenu beyond the period of 11 weeks from the date of detention - constitution of Advisory Board - There is no merit in the contention of the learned counsel for the petitioner that only the Board constituted under the notification dated 17.3.2020 was competent to consider the case of the detenu - HC
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• Bluetooth Modules Ruled Not Parts of Car Infotainment Systems, Department's Appeal Dismissed as Initial Classification Stands.

  Case-Laws - AT : Classification of imported goods - Bluetooth module - It is not possible to accept the contention of the learned Authorized Representative of the Department that despite a specific finding having been recorded by the Commissioner (Appeals) that the Bluetooth module is not a ‘part’, of car infotainment systems, it should still be considered as a ‘part’ because of the description given by the appellant in the Bill of Entry - AT
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Central Excise

• Gas condensate classified under Heading 2709; NCCD not applicable due to non-marketability. Department can't change stance.

  Case-Laws - AT : Demand of National Calamity Contingent Duty (NCCD) - classification of goods - heavier hydrocarbons - The show cause notices, in the present Excise Appeal, proceed on the footing that the heavier hydrocarbons (gas condensate) should be classified under Heading 2709 of the Tariff Act. The Department cannot, in this Excise Appeal, be permitted to take a stand that is contrary to the stand taken in the show cause notices. - The aforesaid discussion leads to the inevitable conclusion that the product ‘heavier hydrocarbons’ described as ‘gas condensate’ is classifiable under Heading 2709 but NCCD would not be leviable because the product is not marketable. - AT
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VAT

• Poultry Farm Wins Sales Tax Exemption Despite Not Owning Land; Tribunal's Decision Upheld as Non-Perverse.

  Case-Laws - HC : Exemption from payment of sales tax - poultry farm on leased land - exemption was rejected on the ground that the assessee was not the owner of the land where the farm was conducted - owning a land and owning a farm are too entirely different concepts and that without owning any land, one can own and run a farm. - There are no perversity in the order of the Sales Tax Appellate Tribunal in granting exemption to the assessee - HC
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Case Laws:

• GST

• 2021 (8) TMI 146
  Seeking to withdraw Advance Ruling application - applicability of provisions of Entry Number 75 Entry Number 3 of GST Exemption N/N. 12/2017 dated 28.06.2017 - HELD THAT:- The request of the applicant to withdraw the application voluntarily and unconditionally is hereby allowed, without going into the merits or detailed facts of the case. Application is disposed of, as being withdrawn voluntarily and unconditionally.

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• 2021 (8) TMI 145
  Classification of services - pure services - services to local authority - operation of water pump and safeguarding pumping machinery at various Pump Houses in different districts like South 24 Parganas, North 24 Parganas, Howrah, Nadia etc. for supply of drinking water to the public and hospitals upon receipt of work order from Directorate of Public Health Engineering - covered under entry serial number 3 of the N/N. 1136 F.T. dated 28.06.2017 or not HELD THAT:- The term pure services has not been defined under the Act. However, a bare reading of the description of services as specified in entry serial number 3 of the Notification No. 1136 F.T. dated 28.06.2017 denotes supply of services which does not involve any supply of goods can be regarded as pure services. The said entry serial, therefore, specifically excludes works contract services or other composite supplies involving supply of any goods since works contract as defined in clause (119) of section 2 of the GST Act necessarily involves transfer of property in goods (whether as goods or in some other form) - the supply of services as pure services subject to the condition that the supply doesn t involve any supply of goods. The supply of services as undertaken by the applicant cannot be considered as any treatment or process on goods belonging to another registered person so as to qualify as job work as defined under clause (68) of section 2 of the Act ibid. Whether the said services are in relation to any functions entrusted to a Panchayat under article 243G or to a municipality under article 243W of the Constitution of India? - HELD THAT:- The functions entrusted to a Panchayat or to a municipality as listed in the Eleventh and/or Twelfth Schedule includes the functions like drinking water or water supply for domestic, industrial and commercial purposes - the services as provided by the applicant for operation of water pump and safeguarding pumping machinery at various Pump Houses in different districts for supply of drinking water is found to be a matter as listed in the Eleventh and/or Twelfth Schedule in relation to functions entrusted to a Panchayat under article 243G and/or to a municipality under article 243W of the Constitution of India.

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• 2021 (8) TMI 144
  Scope of Advance Ruling application - Taxability - transportation of raw paddy from the point of purchase to the rice mill - reimbursement of Mandi labour charges - HELD THAT:- The questions is entirely related to custom milling of paddy being undertaken by the applicant and an investigation proceedings is already pending on the business activities being carried out by the applicant as a custom miller of paddy. The first proviso to sub-section (2) of section 98 of the GST Act speaks that the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act - The applicant has made the instant application in FORM GST ARA-01 on the common portal on 31.03.2021 and has declared vide serial number 17 of the said application that the questions raised in the application is not pending nor decided in any proceedings in his case under any of the provisions of this Act. No ruling is given for the instant case since the questions raised in the instant application is a subject matter which is found to be pending in case of the applicant under the provisions of the GST Act.

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• 2021 (8) TMI 143
  Applicability of GST registration - Tamil Nadu Labour Welfare Board - rental income received by the board from Government and business entities - rent on immovable properties received by the board from Government and business entities - reverse charge mechanism - HELD THAT:- The applicant is constituted by the Government of Tamilnadu in the year 1972 by Tamilnadu Labour Welfare Fund Act 1972 (Act No.36 of 1972) enacted by the Legislature of the State of Tamil Nadu with a view to promote the welfare of the employees and their family/dependents with the Minister of Labour, Govt of Tamilnadu as the Chairman of the Board to administer the Tamilnadu Labour Welfare Fund and such other actions as assigned by or under the Act. They are executing and implementing various welfare schemes for the benefit of the workers who contribute to Labour Welfare Fund. They receive contribution from employees and matching contribution from employers and Government of Tamilnadu to the fund. The Tamil Nadu Labour Welfare Fund is receiving income which are in the nature of contributions, fines, donations, grand, borrowings etc (at present) and rental income from Government/business entities. The applicant is constituted by the Government of Tamilnadu in the year 1971 by an executive order of the Government (G.O.Ms No. 222 Labour Dept. dated 20.02.1971). The Tamilnadu Labour Welfare Fund Act 1972 was passed by the State and was given effect from 1.1.1973 and the statutory Board was formed effective 01.04.1975 - In the case at hand, the applicant do not have any power under the Tamilnadu Labour Welfare Fund Act for compulsory exaction of fees and the fund is paid by the levies as per the Payment of Wages Act, 1936, Tamil Nadu Shops and Establishments Act, 1947, etc. The only own source is the rental income received by the applicant on lease rentals of their commercial properties. Therefore, applying the above judis-prudence, we hold that the applicant is not a Local Authority for the purposes of the GST Act. The entry No. 8 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 exempts services provided by Central / State Government/ Union territory/ local authority to another Central /State Government/Union territory /local authority. In the case at hand, it has been established, that the applicant is not a Local authority , therefore, the exemption provided in the entry No. 8 of Notification No. 12/2017-C.T(Rate) dated 28.06.2017 is not available to the applicant and the applicant is to discharge the tax liability on the services of renting of commercial properties to Central/State Government/Local Authority. The applicant being not a Local authority is liable to pay GST on the services of renting of immovable property to Government and business entities under forward charge. As the liability to pay the GST is on the applicant, the applicant has to get registered under GST. Tamilnadu Labour Welfare Board, being a person liable to pay GST, has to get registered under GST - The rental income received by the applicant from Government and business entities are taxable to GST - The applicant do not fall under the specified class of supplier of services under Notification No.13/2017-C.T.(Rate) dated 28.06.2017 as amended by Notification No.03/2018 dated 25.01.2018 and therefore Reverse charge Mechanism is not available to the applicant.

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• 2021 (8) TMI 142
  Deduction of TDS - Government Entity or not - Indian Institute of Management, Tiruchirapalli, Tiruchirappalli (IIM) - discharge of liability on reverse charge basis on supply of services or not - Section 9 (3) and 9 (4) of the CGST Act, 2017 - Applicability of Serial No.3 of N/N. 12/2017 - Composite supply of works contract provided to the applicant - covered by Serial No.3 (vi) of N/N. 11/2017 dated 28th June 2017. Admissibility of the application before this authority, under Section 95/97(2) of the GST Act - HELD THAT:- As per S. 9 (3), the provisions of the Act is applicable to recipient as if he is the person liable for paying the tax in relation to supply of such goods or services or both and the provisions of Advance Ruling is applicable to an applicant only with regard to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Thus, advance ruling cannot be sought by a person who is a recipient of the supply of goods or services, when the ruling sought relates to the classification/taxability of such supply received by them - the expression, unless the context otherwise requires read with S. 9 (3) provides for admission of application from service recipients in cases where the question relates to determination of the liability to pay tax on any goods or services. Whether the entry provided under Sl.No.3/3A of the N/N.12/2017-Central Tax (Rate) dt. 28.06.2017 is available? - HELD THAT:- Ruling can be sought by recipient of a supply, who are made liable to pay tax under Section 9(3) only with regard to determination of their liability to pay or not and such recipients cannot seek ruling on the applicability of an exemption notification/preferential rates on such supplies received by them - the question is not admissible and not admitted. Whether IIMT is a Government entity under the GST law? - HELD THAT:- The applicant institute was originally established in the year 2011 as a society registered with the Registrar of Societies, Tamilnadu under the auspices of the Ministry of Human Resources Development with the Chairman to be appointed by the Central Government, two representatives including a financial advisor nominated by the Department of Higher Education, Ministry of HRD, Four representatives from Industry, commerce, labour and thrust areas nominated by the Central Government, Two representatives nominated by the State Government from departments concerned including Chief Secretary of Tamilnadu etc. - Further the institute was initially and also after the enactment of the IIM Act, has been receiving funds from the central Government by way of fund which substantiates the requirement of more than 90% financial participation from the central or state Government. Thus the IIMT satisfies the conditions prescribed to be held as Government entity under the CGST Act 2017. Whether the applicant is liable to deduct Tax? - section 51 of the CGST Act, 2017 - HELD THAT:- The applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017 read with Notification No. 50/2018-C.T dt. 13.09.2018. Whether the applicant is liable to discharge tax on reverse charge basis on supply of services as per Section 9 (3) of the CGST Act, 2017? - HELD THAT:- The security services provided by any person other than a body corporate, received by a registered person is taxable by RCM. In this case, the applicant is registered under GST. In respect of security services they have submitted copies of Tax invoices no.BNTNTR10000262/20 DT. 01.08.2020 and No. BNTNTR10000426/20 DT.05.10.2020 raised by M/s. Security Intelligence Services India Ltd bearing GSTIN No.33AAECS3538A1ZU. From the invoices submitted by them, it is seen that the service provider is a registered Private Limited company and so the tax liability will vest on the service provider only in such cases. Further, the applicant has not submitted the list of all the service providers along with their constitution as called for during the hearing and thereafter. Thus, the applicant has not furnished any other documentary evidence to the effect that security services are provided to them by any other person other than a body corporate - in respect of security services being received from a body corporate the applicant is found not to be liable under RCM to pay tax as per the documentary evidences submitted by them. Any business entity is liable to pay tax under RCM on the legal fees paid to any individual advocate or a firm of advocates - the applicant is found to be liable to pay tax under RCM on the legal fees paid by them. Online education journals and periodicals provided to the applicant by the person located in non-taxable area - HELD THAT:- The applicant is found liable to pay tax under Section 9(3) of the Act in respect of legal services availed by them based on the documentary evidences submitted by them.

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• 2021 (8) TMI 141
  Input Tax Credit - inputs/capital goods/input services - items used in Design, Engineering, Supply, Execution (EPC) of 265KW Roof top Grid Solar PV Power Plant as per MNRE 8v IEC Standards - credit for inputs and services for running the solar plant - HELD THAT:- The applicant is admittedly engaged in the manufacture of goods. Electric Energy is classified under TH No. 27160000 of the First Schedule to the Customs Tariff Act, 1975 and hence, Electric Energy is considered as goods. Accordingly, Electric power is one of the inputs required for carrying out the process of manufacturing. Further, in terms of SI.No.104 of Notification No. 02/2017(Rate) dated 28.06.2017, electrical energy is exempted from tax under CGST Act, 2017. However, in the case of the Applicant, though electric energy is fully exempted under GST, the same is going to be fully capitively consumed by the applicant for manufacture and supply of taxable goods viz. Edible oils as certified by the order issued by the Tamil Nadu Generation and Distribution Corporation Ltd. In the case at hand, the whole designing, engineering, supplying and installation have been done as works contract and as the said solar power plant being Plant and Machinery, the related Credits are not blocked under this Section - While the purchase order has been raised on M/s. KCP Solar Power Industry for Design, Engineering, supply Execution (EPC) of 264.5 KW Roof Top Grid-Tie Solar PV Plant as per MNRE IEC Standards using solar wedge invertor, the grouping under Gross Block Plant Machinery and claim of credit on the goods/services grouped under such plant and machinery is not substantiated thus not satisfying explanation under Section 17 (5). As the entire set up of the solar power plant is vested with M/s. KCP Solar Industry, and has been installed by them, the work executed under Invoice invoice no 135/20-21 dated 10.9.2020 alone qualifies as Plant Machinery and the credit of GST paid in the said invoice amounting to Rs. 8,47,458/- is alone not blocked under this section and hence available as credit. The applicant has entered into works contract for design, engineering and installation along with supply of solar power panel for an agreed consideration of Rs. 1,03,69,458/- which includes the tax of Rs. 8,47,458/. They have procured the said product for use in their business and they have also stated that the entire amount excluding the GST component has been capitalised thereby deprecation on the GST element has not been claimed for which they have produced documentary evidences - the applicant is eligible for availing input tax credit as inputs/capital goods or input services of the items used in Design, Engineering, Supply, Execution (EPC) of 265KW Roof top Grid Solar PV Power Plant as per MNRE IEC Standards procured from M.s KCP Solar Industries as they have been found to comply with the provisions of Sections 16 (1) and (2), 17 (5) of the CGST Act,2017 and that they are found to be using the electricity so generated captively only in the process of manufacture of edible oils, which is a taxable commodity. Eligibility for input tax credit for inputs and services for running the solar plant - HELD THAT:- It is seen that they have not furnished the list of inputs and services that will be used in running the solar plant as they have done for the capital goods vide Appendix-A and elaborated it with the Fixed Assets and Work-in-progress register. They have not even attempted to substantiate their stand in this regard - ruling cannot be passed on this issue for want of valid inputs. Application disposed off.

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• 2021 (8) TMI 138
  Levy of tax and penalty - details not matching with verifying sheets - Section 129 (3) of UPGST 2017 - HELD THAT:- By the impugned orders the authorities below have rejected the claim of the petitioner on the ground that the details mentioned in the invoices at serial nos.1 to 9 are not matching with the verifying sheets available with the mobile squad. This much is also clearly reflected from the record that the petitioner has transported the goods in violation of Rule 138. The findings have been recorded by the authorities below that it was fraudulently done and the penalty was also levied on the petitioner. Petition dismissed.

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• 2021 (8) TMI 137
  Grant of anticipatory bail - issuance of summons u/s 70 of GST Act - HELD THAT:- Matter requires consideration. Applicant will also file supplementary affidavit on the next date stating therein the manner in which he has complied with the summons giving rise to the present application and also annex such documents as may have been filed before opposite party no.2 - without expressing any opinion on the merits of the case, the applicant is entitled to interim anticipatory bail in this case, at this stage. In the event of arrest of the applicant involved in the aforesaid case, he shall be released on interim anticipatory bail during the investigation, till the next date fixed, on his furnishing a personal bond of Rs. 50,000/- with two sureties of the like amount to the satisfaction of the Station House Officer of the police station concerned on the conditions imposed - application allowed.

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• 2021 (8) TMI 136
  Jurisdiction of state or center - Validity of summons issued by the Senior Intelligence officer - intent of prolonging and protracting the investigation - Scope of Section 6(2)(b) of CGST Act - Section 70 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This Court is of the considered opinion that the writ petitioner has approached this Court on every stage, which would reveal that he is attempting to prolong the proceedings, instead of defending his case by producing documents and evidences and established his case or otherwise. Thus, such a conduct of filing writ petition after writ petition, challenging the summons and proceedings intermittently cannot be appreciated by this Court. Scope of Section 6(2)(b) of CGST Act - HELD THAT:- This Court is of the considered opinion that the State authorities issued a notice for intimating discrepancies in the return after scrutiny in proceedings dated 17.12.2020. The said proceedings would reveal that during the scrutiny of the return for the tax period referred certain discrepancies have been noticed. Regarding such discrepancies, the proceedings are initiated and is pending for adjudication - The very purpose and object of Section 6(2) (b) of the Act is to ensure that on the same subject, the parallel proceedings are to be avoided. Once on a particular subject, the State authority has initiated action under the State Goods and Services Tax Act, then alone, the proper answer under the Central Goods and Services Tax Act are restrained to wait till the finalization of the proceedings initiated by the State authorities. However, in all circumstances, and in respect of various other proceedings, the benefit cannot be claimed by the assessees. Mere pendency of proceedings before the State authorities is not a ground to restrain the Central authorities from issuing summons and conduct investigation regarding certain allegations. Therefore, all these factors require an adjudication before the competent authority and if the summons are kept in abeyance at this stage, the same would paralyze the entire proceedings, which is not only desirable, but would cause prejudice to the interest of the Revenue in the present case - the petitioner is at liberty to respond to the summons by producing all relevant documents, evidences, statements, etc., and defend his case in the manner known to law - Petition dismissed.

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• 2021 (8) TMI 96
  Revocation of cancellation of registration - rejection of revocation due to non-submission of reply to the show cause notice within the time specified therein - HELD THAT:- The appellant has now been complied with various provisions, therefore, the registration of appellant may be considered for revocation by the proper officer. Accordingly, the appellant is ordered to file the revocation application in the prescribed form through common portal. Further, the proper officer is ordered to consider the revocation application of the appellant after due verification of payment particulars, filing of returns and compliance of the provisions of CGST Act and rules made thereunder. Appeal disposed off.

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• 2021 (8) TMI 95
  Seeking refund of CGST and SGST wrongly paid - License Fee and Spectrum Uses Charges - payment, in the form of License Fee (LF) for issuance of License and Spectrum Usage Charges (SUC) for use of spectrum, as a percentage of the Adjusted Gross Revenue (AGR) to Department of Telecommunications (DoT) - supply or not - issuance of license and allotment of spectrum as a Statutory fee - LF and SUC charges are consideration for supply or not - scope of Section 54 of the CGST Act, 2017 read with Rule 89 of CGST Rules, 2017 - power of clarifications or circulars to bring a levy or exempt a levy - issue is under litigation or not - principle of natural justice. Whether payment, in the form of License Fee (LF) for issuance of License and Spectrum Usage Charges (SUC) for use of spectrum, as a percentage of the Adjusted Gross Revenue (AGR) to Department of Telecommunications (DoT) is a Supply under GST law or not? - HELD THAT:- The appellant vide para A9, A10 and A11 has mis-interpreted the fact of furtherance of business as per the Government lateral whereas it was for the person who is running a business, here the appellant. Accordingly the levy of GST is appropriately applicable on the appellant as per sub-section (3) of Section 9 of the CGST Act, 2017 read with Notification No. 13/2017-Central Tax (Rate), dated 28 June, 2017 - Further, if there was any doubt regarding taxability of service then the appellant was free to approach the Authority for Advance Ruling as per sub-section (2) of Section 97 of CGST Act, 2017, because question of law about determination of the liability to pay tax on any service may be sought for advance ruling to AAR as per GST law, but the same was not opted by the appellant. Whether issuance of license and allotment of spectrum as a Statutory fee attract any levy of tax as per GST law? - HELD THAT:- On reading the decree it emerges that Price of a privilege was affirmed by the Constitution Bench in the case where fee is fixed but not in the cases where fee is fluctuating as per percentage share (LF SUC) of revenue (AGR) like in the instant case. Therefore, the permission of granting of License by DoT for business activities of the appellant as it is directly nexed with their revenue - If no GST is leviable on grant of license then why a service categories at HSN head 9973 38 as Licensing services for right to use other natural resources including telecommunication spectrum . Else all tax liability would be null, which is wrong interpretation of the aforesaid verdict. Whether LF and SUC charges are consideration for supply as per GST law or not? - HELD THAT:- The consideration in the form of LF and SUC paid by the appellant to the Government is consideration as per clause (31) of Section 2 of CGST Act which cover all the elements specified under ibid section of the Act. There are service provider as well as service recipient and the element of consideration is also involved in the instant case. Hence, the taxability is fasten on these payments as per GST Act. Whether Refund claim is covered under any other category specified under Section 54 of the CGST Act, 2017 read with Rule 89 of CGST Rules, 2017? - HELD THAT:- Refund of unutilized input tax credit is prescribed as per Section 54(3) of the CGST Act, 2017, which allows refund of accumulated input tax credit on input only. In Act and as well as Rules, there is no provision for refund of input tax credit accumulated on input services. Hence, the category specified by the appellant during filing of refund is improper and there is no legal backing in this regard. Whether License fee and Spectrum usage charges paid by the Appellant are covered in Service Rate Notification and are leviable to tax or not? - HELD THAT:- Appellant has paid GST under the HSN Head 9984 meant for Telecommunication Services wrongly whereas, proper HSN head for the payment of GST under Reverse Charge Mechanism for Grant of License and Allocation of Spectrum is 9973 meant for Leasing and Rental services with or without operator . As per Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 rate of GST is defined at S. No. 17 against clause (vi). HSN sub-heading 9973 38, meant for Licensing services for right to use other natural resources including telecommunication spectrum is the proper classification of the nature of service in question. Whether clarifications or circulars can bring a levy or exempt a levy? - HELD THAT:- The statutory liability to pay GST on the Services of Grant of License and Allocation of Spectrum by the appellant was there. Historically, LC and SUC was taxable under Service Tax regime, it clearly shows that this activities falls under the ambit of Service . Quoting the circular of Service Tax regime was only for the sake of defining these activities as Service . However, in the instant case ample statutory provisions are available to fasten liability to pay GST on the appellant. Whether issue can be decided where the issue is under litigation (writ petition filed by the appellant in the Hon ble High Court, Delhi), whether it would be appropriate to grant/sanction refund at this juncture of time? - HELD THAT:- It is well settled law that if any issue is under litigation in Higher Court, then no matter can be finalized till the decision of the Higher Court. Further, the appellant is one hand filing refund for granting the same, whereas on other hand they are under litigation for taxability of the issue before High Court simultaneously. In this juncture of time, when the matter is sub judice, hence it would not be appropriate to grant refund and filing of refund application on the litigated issue itself becomes premature. Whether principle of natural justice has been properly followed in the instant case? - HELD THAT:- In all cases proper opportunity have been provided to the appellant by issuing the show cause notices and by hearing the averment of the appellant before passing of the impugned order. Further, all the submissions/averment have been taken up in the appeal also - there are no merit of the appellant in this context. There are no infirmity in rejecting the refund - appeal dismissed.

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• Income Tax

• 2021 (8) TMI 139
  Exemption u/s 11 - cancellation of registration of the Appellant granted u/s 12AA - HC setting aside the order passed by Commissioner of Income Tax (Exemption) canceling registration of the respondent Trust u/s12AA and the order passed by the Income Tax Appellate Tribunal dismissing appeals arising therefrom - HELD THAT:- The answers given to the questionnaire by the Managing Trustee of the Trust show the extent of misuse of the status enjoyed by the Trust by virtue of registration under Section 12AA of the Act. These answers also show that donations were received by way of cheques out of which substantial money was ploughed back or returned to the donors in cash. The facts thus clearly show that those were bogus donations and that the registration conferred upon it under Sections 12AA and 80G of the Act was completely being misused by the Trust. An entity which is misusing the status conferred upon it by Section 12AA of the Act is not entitled to retain and enjoy said status. The authorities were therefore, right and justified in cancelling the registration under Sections 12AA and 80G of the Act. High Court completely erred in entertaining the appeal under Section 260A of the Act. It did not even attempt to deal with the answers to the questions as aforesaid and whether the conclusions drawn by the CIT and the Tribunal were in any way incorrect or invalid. Appeal allowed - restore the order passed by the CIT and the Tribunal.

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• 2021 (8) TMI 135
  Addition u/s 41(1) - whether the assessee has obtained a benefit by virtue of remission / cessation, in order to attract applicability of Section 41(1)? - HELD THAT:- In the instant case, from perusal of the Government Order, it is evident that the assessee had paid the loans on behalf of the Government of Karnataka. Therefore, the aforesaid amount was acknowledged as debt by the Government. The Government of Karnataka gave a direction to the assessee to square up the debt in full against payment of Rs. 120 Crores and adjustment of Rs. 240 Crores from Karnataka Power Transmission Corporation Limited. Thus, adjustment of dues and debts between the parties did not give any advantage to the assessee. On the other hand, the assessee on adjustment of the dues sustained a loss to the extent of Rs. 127.66 Crores. The tribunal therefore, held that provisions of Section 41(1) of the Act are not attracted in the case of the assessee. The aforesaid finding of fact is based on meticulous appreciation of material on record and cannot be termed as perverse. It is pertinent to mention here that the aforesaid finding has not been challenged on the ground that it is perverse It is pertinent to note that Supreme Court in MAHINDRA AND MAHINDRA LTD. [ 2018 (5) TMI 358 - SUPREME COURT] has held that there should be an allowance or deduction claimed by the assessee for any assessment year in respect of loss, expenditure or trading liability incurred by the assessee. Therefore, the aforesaid decision is of no assistance to the revenue. The contention of the revenue that in respect of an amount of Rs. 240 Crores, which was claimed by the assessee as an expenditure in the form of trading liability, provisions of Section 41 of the Act are applicable cannot be accepted. Decided in favour of the assessee.

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• 2021 (8) TMI 131
  Deduction u/s 80HHB - AO and the CIT(Appeals) disallowed the claim of assessee of revaluation of government bonds and the loss in sale of government bonds - HELD THAT:- AO accepted the eligibility of assessee for deduction under Section 80HHB vide order dated 15.02.2002, granted 50% on gross total income as quantified deduction u/s 80HHB. There is no mistake if the gross total income amounting to Rs. 21,38,66,220/- remains undisturbed in further adjudication. In the case on hand, claim of assessee on loss of revaluation and sale of government bonds has been accepted. In account parlance, these items are to be deleted from the gross total income of the assessee, then the quantification under Section 80HHB should have been done correspondingly. We notice from the order of Commissioner dated 01.09.2005 (Annexure-I) that a different reasoning is adopted in analyzing the controversy and the conclusion reached therefrom could not be supported from the record. CIT (Appeals) erred in appreciating the effect order and consequential deduction and quantification under Section 80HHB . The Revenue has made out a case and we answer the questions of law in favour of the Revenue and against the assessee. This Court records that the deduction under Section 80HHB quantifying order dated 28.07.2003 is correct and ought not to have been reversed by the CIT (Appeals). The questions of law are answered in favour of the revenue

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• 2021 (8) TMI 130
  Reopening of assessment u/s 147 - Disposal of objections against reopening orders - HELD THAT:- Perusal of the objections raised as well as the reasons stated in the disposal of objections by the AO would be sufficient and further details or scrutiny cannot be made by the High Court in a writ proceedings and all such documents, materials or informations are to be considered by the AO while proceeding with the reassessment. This Court do not find any non-application of mind with reference to the order impugned dated 26.02.2016. The Assessing Officer has given reasons for rejection of the objections. Such reasons may not be acceptable to the assessee. However, it is for him to provide further details or information to the AO while proceeding with the reassessment proceedings. This being the factum of the case, this Court do not find any acceptable reason for the purpose of interfering with the orders impugned. WP dismissed.

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• 2021 (8) TMI 128
  Rectification of mistake u/s 254 - Nature of expenditure - Disallowance of lease rentals - capital or revenue expenditure - alternate plea the assessee had raised that even if the lease rentals are to be treated as capital expenditure, consequential depreciation on the same is to be allowed - It is the plea of the assessee in this MP that while the order of the Tribunal has specifically ruled on the alternate plea of granting depreciation, the substantive issue that the disallowance of the lease rentals is to be quashed, both on facts and legal principles, does not appear to have been specifically adjudicated, even though a general finding has been recorded - HELD THAT:- The mistake in the final Order of Assessment against which Ground No.14 was raised by the assessee was that instead of allowing Rs. 14,80,094/- as depreciation, the AO erroneously disallowed a sum of Rs. 1,49,65,386/- and added the said sum to the total income of the assessee. The Tribunal, while adjudicating the said issue, has rightly held in para 22 of its order that the AO should allow deduction of a sum of Rs. 14,80,094/- as depreciation instead of disallowing a sum of Rs. 1,49,65,386/-. There is no mistake much less a mistake apparent on the face of the record. These is no alternate plea and there could be only one plea i.e., to allow depreciation of Rs. 14,80,094/- and delete the addition of Rs. 1,49,65,386/- which the Tribunal has allowed. The allegations in the MP are all on the basis of surmises as to what the AO would do while giving effect to the order of the Tribunal. This MP is devoid of any merit and the same is dismissed. MP dismissed.

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• 2021 (8) TMI 126
  Disallowance u/s 36(1)(iii) - assessee has paid interest on secured loan more whereas it has given interest free advance less - HELD THAT:- AO, in the instant case, without considering the interest earned by the assessee, has disallowed an amount of Rs. 13,41,068/- being the proportionate interest on interest free advances of Rs. 1,12,03,500/-. In the instant case, disallowance, if any, can be made on the interest free advances of Rs. 17,40,000/- given to Mr. Nazuk Jindal since the same is admittedly for non-business purposes - while computing the proportionate disallowance of interest free advances, the AO has to consider the interest earned on government securities and short-term deposits which was shown separately by the assessee as Income from other sources from the total interest deposited in the Profit Loss Account to the tune of Rs. 27,11,471/-. For computing the proportionate disallowance of interest on the interest free non-business advance of Rs. 17,40,000/-, the AO is directed to set off the interest income of Rs. 9,15,626/- and, thereafter compute the proportionate disallowance. To this extent, the order of the CIT(A) is modified and the ground raised by the assessee is partly allowed. Appeal filed by the assessee is partly allowed.

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• 2021 (8) TMI 122
  Revenue recognition - eligible method of accounting - appellant company followed Percentage Completion Method [PoCM], duly considering the provisions of Accounting Standards 7 and 9 - difference between the profit shown by the assessee and profit computed as per PoCM - HELD THAT:- It is true that the assessee recognised revenue in A.Y 2014-15 when the project was completed only 18.26% and as per the accounting principles read with Guidance Notes under PoCM, revenue has to be recognised after completion of 25% of the project. In our considered opinion, the action of the assessee company on the revenue reported by it on its project Prateek Edifice has not caused any loss to the revenue and the entire exercise is revenue neutral as the assessee has already offered complete amount of tax in the subsequent F.Y., and such completion was before passing of impugned assessment order, which is dated 29.12.2017. These facts clearly show that the Assessing Officer was well aware of the revenue recognised by the assessee from the entire project and the taxes paid by it. As undisputed position that emerges is that the assessee is following consistent method of accounting to recognise revenue under the project. No doubt, the assessee has not included cost of land for computation of profit under PoCM, but before completion of project, the entire revenue has been offered for taxation which also included the impugned addition made by the Assessing Officer. We, therefore, do not find any merit in the impugned addition. Considering the facts of the case in totality, we direct the Assessing Officer to delete the addition. This ground is accordingly allowed. Addition being interest on loan - HELD THAT:- The assessee was asked to furnish clarification in respect of claim of interest. It is also not in dispute that vide letter dated 27.11.2017, the assessee has simply stated that it has borrowed loan from Prateek Infratech Pvt Ltd and M/s Prateek Buildtech India Pvt Ltd for general purposes. No supporting evidences were furnished by the assessee to substantiate its claim. Even before us, no details/documentary evidences regarding claim of interest expenses as revenue expenditure has been furnished. Therefore, the action of the AO is found to be correct - interest on loan amount shall remain added in total project cost. However, in all fairness, we direct the AO to consider this enhanced project cost in total estimated cost of project. With these observations, this ground is dismissed.

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• 2021 (8) TMI 121
  Addition on account of unexplained advance - HELD THAT:- Advance is a debit entry in the books of accounts and the same goes with balance sheet of the assessee and not charged to the profit and loss account. Since nothing has been charged to the profit and loss account, we do not find any logic in the impugned addition and the CIT(A) has rightly deleted it, which calls for no interference. Ground 1 is, accordingly, dismissed. Addition of unaccounted cash receipts on sale of properties - HELD THAT:- None of the buyers confirmed that they have paid anything to the assessee over and above the amount stated in the Builder Buyer Agreement. Field enquiry made by the AO is conclusive evidence that no cash was exchanged between the buyer and the seller. The entire addition has been made on the basis of arithmetical calculation found in the loose sheet of paper. Onus is always on the revenue to bring demonstrative evidences on record to show that cash has changed hands from the buyer to the seller because the sale consideration of the seller is coming from payments made by the buyer and if the buyer categorically stated that they have not paid anything in cash, which enquiry was made by the Assessing Officer himself, the findings of the ld. CIT(A) cannot be faulted with. We, therefore, decline to interfere with the findings of the ld. CIT(A). This ground is also dismissed.

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• 2021 (8) TMI 119
  Assessment u/s 153A - Addition of peak credit - HELD THAT:- Nowhere the Assessing Officer has demolished this claim of the assessee which means that the AO has inherently accepted the contention of the assessee that the disclosure was at the behest of the tax authorities and calculation of peak credit was also at the behest of the tax authorities. We have carefully examined the computation of income for A.Y 2007 08 and under the head income from other sources at item L Other Income , the assessee has shown income of Rs. 2,23,68,007/ . Once the assessee has returned the undisclosed income and paid taxes thereon, in our considered opinion, there should not be any quarrel to bifurcate the disclosed amount in two A.Ys when tax rate in both the A.Ys is the same and there is no loss to the revenue. We are of the considered view that the revenue authorities should desist from such litigation. Considering the relevant documentary evidences, we do not find any merit in bifurcating the income in two A.Ys when the assessee has paid taxes in A.Y 2007 08. Making the addition of same income in two A.Ys definitely amounts to double taxation. We, accordingly direct the Assessing Officer to delete the addition. Interest on the balances in his bank account with HSBC, Geneva - AO assumed that in India a Savings Bank account holder earns interest at the rate of 4%, therefore, applying the same rate, AO made the impugned addition - HELD THAT:- Action of the Assessing Officer defies the taxability of concept of real income. The undisputed fact is that in the alleged sheets of bank deposits received from the French government under DTAC, there is no mention of any interest paid by the bank to the assessee. Therefore, it is illogical to compute interest and that too at the rate prevailing in India. Since there is no documentary evidence to support the presumption of the Assessing Officer, we do not find any reason to interfere with the findings of the ld. CIT(A).

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• 2021 (8) TMI 118
  Disallowance u/s 14A r.w.r. 8D - HELD THAT:- AO, without recording objective satisfaction as to why the assessee s computation were not acceptable, proceeded to compute disallowance as per Rule 8D. It is settled legal position that the application of Rule 8D is not automatic as held by Hon ble Supreme Court in Godrej Boyce Manufacturing Co. Ltd. V/s DCIT [ 2017 (5) TMI 403 - SUPREME COURT] . Upon perusal of assessment order, we find that Ld. AO has failed to record any objective satisfaction as to why the assessee s stand was not acceptable having regards to the accounts of the assessee as per the mandate of Sec.14A. This jurisdictional requirement was not satisfied by Ld. AO in the present case and Ld.AO straightway proceeded to compute disallowance as per Rule 8D. The application of Rule 8D, in our considered opinion, was not mechanical or automatic. AO has mechanically applied the provisions of Rule 8D(2)(iii) while making the aforesaid disallowance without establishing any nexus of expenditure claimed by the assessee with that of exempt income earned during the year. In the absence of such recorded satisfaction, the additional disallowance as made in assessment order could not be sustained in the eyes of law. Accordingly, we are inclined to delete the additional disallowance as made by Ld. AO while computing income under normal provisions as well as while computing Book Profits u/s 115JB.

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• 2021 (8) TMI 117
  Computation of short-term capital gains from shed - assessee deducted not only the WDV of shed but also deducted WDV of other assets and deposits as per MIDC (authority) - HELD THAT:- The cost of removing would be more than cost of scrap. Since these assets were discarded, the deduction of the same should be allowed u/s 32(1)(iii). Though Ld. CIT(A) concurred that the deduction could be allowed u/s 32(1)(iii) but the same could not be a part of cost of acquisition. Aggrieved, the assessee is in further appeal before us. So far as the write-off of deposits is concerned, we find that the rights in land and shed have been assigned along with all the rights, privileges etc. through composite agreement. The deposits have been paid to MIDC for various purposes in connection with lease of land and therefore, these form part parcel of the land shed. Since, the rights have been transferred, these would also stand transferred to the assignee. This being so, there is no reason as to why the deduction of the same is not available to the assessee while computing the capital gains - we direct Ld. AO to allow the deduction of the same. So far as the write-off of other assets is concerned, we find that fixed assets have been reduced to nil at year-end which is evident from assessee s Balance Sheet as placed on record. Hence, the fixed asset block has ceased to exist. Therefore, the deduction of WDV of assets as attached to above land shed would be available to the assessee

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• 2021 (8) TMI 116
  Disallowance of proportionate interest u/s.36(1)(iii) - assessee has borrowed term loan from HDFC bank during F.Y.2010-11 relevant to A.Y.2011-12 and has advanced loan / intercorporate deposit (ICD) to M/s. Jogindra Exports Ltd., and M/s. Anchor Leasing Pvt. Ltd during the same year - HELD THAT:- Once the borrowed funds were indeed utilized by the assessee company for the purpose of its business, the interest paid on such borrowings becomes an allowable deduction u/s.36(i)(iii) of the Act. Merely because the shareholder of the assessee company is also a shareholder of holding company of M/s. Jogindra Exports Ltd., the same would not make any difference for the recovery of the dues by the assessee company. This is one of the main allegation leveled by the Revenue on the assessee for non-recovery of dues from M/s. Jogindra Exports Ltd., and for disallowance of interest paid on loans in the hands of the assessee company on a proportionate basis. We find that the assessee had duly explained this fact before the ld. CIT(A) by stating that list of Directors extracted by the ld. AO to ascertain the key executives of M/s. Hindustan Appliances Ltd., which is holding company of M/s. Jogindra Exports Ltd., is for F.Y.2015-16 which is much later to the year under appeal. The decision of not charging interest from M/s. Jogindra Exports Ltd., during the year under consideration was made on account of commercial expediency and to protect atleast the principal portion of the dues by understanding the financial sickness of the borrower company. In any case, there is absolutely no provision in the statute to allow interest payment on loans only to the extent of interest income earned by the assessee and disallow the remaining interest portion thereon, as is case before us in the impugned appeal. Facts stated by the assessee company with regard to borrower company becoming sick were not disputed by the Revenue before us. As stated earlier, once it is held that borrowings are used for the purpose of business, interest paid on such borrowing becomes an allowable deduction u/s.36(1)(iii) - we hold that the ld. CIT(A) was not justified in confirming the disallowance of interest - Decided in favour of assessee.

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• 2021 (8) TMI 113
  Penalty u/s 271(1)(c) - disallowance of 20% on account of bogus purchases - Monetary limit for filing appeal - The revenue has tried to make out a case that since the addition was made pursuant to information from sales tax department, this penalty appeal falls in the exception carved out in the CBDT circular - HELD THAT:- Disallowance has been made on an estimated basis on account of the non-production of suppliers before the Assessing Officer. The purchase vouchers were duly produced and the payments were through banking channel - assessee cannot be visited with the rigours of penalty under section 271(1)(c). As a matter of fact on many occasions on similar circumstances in quantum proceedings the disallowance itself has been deleted. In our considered opinion, on the facts and circumstances of the case, assessee cannot be said to have been guilty of concealment or furnishing of inaccurate particulars of income. In this regard, we draw support from the decision of Hindustan Steel Ltd., vs. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] where in it was held that the authority may not levy the penalty if the conduct of the assessee is not found to be contumacious. As tax effect in this case is below the limit fixed by CBDT for filing appeals before ITAT. The revenue has tried to make out a case that since the addition was made pursuant to information from sales tax department, this penalty appeal falls in the exception carved out in the CBDT circular regarding appeals arising out of additions made pursuant to information from outside agencies. We are of the opinion that this plea is not tenable inasmuch as once revenue accepts that penalty is levied on outside agency information /the penalty levied will have no legs to stand. In the background of aforesaid discussion and precedent, we uphold the order s of Ld CIT(A) and delete the levy of penalty. - Decided in favour of assessee.

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• 2021 (8) TMI 112
  CIT(A) rejecting the appeal in limine by holding that the appeal was filed not against the order passed u/s 154 of the Act but against the order pursuant to the grievance petition - HELD THAT:- Indisputably, the impugned order before ld.CIT(A) results in modification of an earlier order passed by the Assessing Officer. It is not necessary that an order passed by the Assessing Officer should contain a specific reference to the section. Reference can be made to the decision of Narayana Row (SAL) Vs. Model Mills, Nagpur [ 1966 (10) TMI 2 - SUPREME COURT] . Needless to say that the labelling of an order does not always decide the question of the validity, an order can be upheld or valid if there is a statutory provision to which it can be validly attributed and more importantly, the word order in the expression from the date of order sought to be amended finding place in the provisions of Sec.154 is not qualified in any other manner and it does not necessarily mean the original order. It can as well be an order which is amended or rectified order as held in the cases of Salem Co-op Spinning Mills Ltd., Vs. CIT [ 1997 (2) TMI 68 - MADRAS HIGH COURT] and Henri Isidore [ 1997 (10) TMI 16 - MADRAS HIGH COURT] . Therefore, the reasoning of the ld.CIT(A) that impugned order before him is not an order u/s 154 of the Act and cannot be accepted. As a consequence, dismissal of appeal in limine by the ld.CIT(A) is erroneous and unjustified.

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• 2021 (8) TMI 111
  MAT computation u/s 115JB - Addition of provision for bad and doubtful debts in the computation of book profit u/s 115JB - CIT-A deleted the addition - HELD THAT:- In this case though in the computation of income filed the provision for bad and doubtful debts had been added back to the total income, however, the Sundry Debtors on the asset side of the Balance Sheet have been reduced by an equivalent amount and since such amount of provision having not been transferred to the liability side of the Balance sheet as current Liabilities and provisions , such provision for bad and doubtful debt is allowable u/s. 36(1)(vi) of the Act. Therefore, in the light of the aforesaid Hon ble Supreme Court decision in the case of Vijaya Bank[ 2010 (4) TMI 46 - SUPREME COURT] the Ld. CIT(A) has rightly allowed the claim of the assessee. And since it has been found that it was actual write off of bad debts and not provision as erroneously noted by AO, clause (c) or (i) of Explanation (1) to sub-section (2) of section 115JB of the Act will not be attracted. As relying on THE PEERLESS GENERAL FINANCE INVESTMENT CO. LTD.[ 2020 (12) TMI 1249 - ITAT KOLKATA] CIT(A) rightly allowed the claim of assessee since the said provision was an actual write off and therefore, it does not attract clause (i) or (c) of Explanation (1) of sub-section (2) of section 115JB of the Act. Therefore, we find no infirmity in the order passed by the Ld. CIT(A) which is confirmed. Appeal of revenue is dismissed.

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• 2021 (8) TMI 110
  Addition u/s 68 - purchase of shares of penny stock - HELD THAT:- Purchase as well as sale transactions have taken place on stock exchange through stock-broker. There is movement of shares in assessee s demat statement. The transactions have taken place through banking channels and duly supported by broker s contract notes, demat statements, ledger statements as well as bank statements. The assessee is regular investor in shares. The assessee has always maintained that the transactions were genuine. As against this, the only adverse material in the armory of Ld. AO is the investigation findings - assessee has not been named in any of the statement. The assessee has denied having known Shri Nikhil Jain Shri Bidyoot Sarkar whose statements form the very basis of doubting the assessee s transactions. The assessee, as rightly pointed out by Ld. CIT(A), had duly discharged the onus to establish the genuineness of the transactions and the onus was on AO to dislodge them. Except for mere allegations, there is no adverse material against the assessee and the additions are based merely on conjectures and surmises. Another aspect is that the provisions of Sec.68, as invoked by Ld. AO, had no applicability to the fact of the case. The invoking of wrong provisions would make the additions unsustainable in the eyes of law - Decided in favour of assessee.

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• 2021 (8) TMI 108
  Difference between income shown as per Form 26AS and income shown as per profit and loss account - HELD THAT:- None appeared on behalf of assessee despite notice. We note that assessee has duly explained to the ld. Assessing Officer that the reason of impugned difference was partly relating to service tax which has been accepted by the ld. AO. However, the explanation of sales which has been considered differently in 26AS and profit and loss account has not been accepted by the ld. Assessing Officer. We note that no reason has been given by the AO as to why he is not accepting them. No case is made out that from the examination of records, the explanation has been found to be incorrect. Without giving any reason, the rejection of the explanation thereof is not sustainable. Hence, we direct that addition should be restricted to the difference as accepted by the assessee in its explanation - Appeal of the assessee stands partly allowed.

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• 2021 (8) TMI 107
  Penalty u/s 271(1)(c) - assessee had sold a plot of land in respect of which deduction u/s 54B claimed - withdrawal of deduction u/s 54B - AO in co-owners case disallowed claim u/s 54B as agriculture activities should have been carried out of the land within 2 years immediately prior to the date of transfer of land which was not fulfilled - assessee is the co-owner and therefore he withdrew the claim u/s 54B of the Act when he was confronted regarding the agriculture activities - HELD THAT:- We note that having withdrawn the deduction under section 54B of the Act, the assessee has agreed to pay the taxes alongwith interest and assessee, had in fact, paid the taxes alongwith interest on account of withdrawal of deduction under section 54B - AO has imposed the penalty u/s 271(1)(c) of the Act stating that withdrawal of deduction under section 54B of the Act, is kind of a furnishing of inaccurate particulars of income and concealment of income. We do not agree with the AO, as the assessee had furnished all the details of its deduction u/s 54B in the return of income, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on assessee`s part. It was up to AO to accept assessee`s claim in the Return of Income or not. The assessee was having bona fide belief that he is entitled to claim deduction under section 54B as he was having land at various places. Thus, merely because the assessee had claimed the deduction under section 54B which claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c) of the Act. As conscious of landmark decision in the case of CIT Vs. Reliance Petroproducts [ 2010 (3) TMI 80 - SUPREME COURT] holding that just merely claim of wrong deduction in the return of income does not attract penalty under section 271(1)(c) - Decided in favour of assessee.

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• 2021 (8) TMI 106
  Delay in filing appeal - CIT(A) dismissed the appeal filed by the assessee on account of delay in filing of the same by more than 03 months - HELD THAT:- Since the Ld. CIT(A) in the instant case has dismissed the appeal of assessee on account of delay of more than 03 months, therefore, respectfully following the decision of Collector, Land Acquisition vs., MST. Katiji Ors [ 1987 (2) TMI 61 - SUPREME COURT] direct the Ld. CIT(A) to condone the delay in filing of the appeal and decide the appeal of assessee on merit as per fact and Law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Grounds raised by the assessee are allowed for statistical purposes.

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• 2021 (8) TMI 103
  Addition u/s 43B - Method of accounting - unpaid statutory dues of service tax, Excise and PF by changing the method of accounting - HELD THAT:- CIT(A) after considering the submission of assessee and held that the assessee s service tax disallowance and added by AO has never been claimed as expenses by assessee in its profit and loss account but claim as liability in the balance-sheet. The Assessing Officer has not brought this fact in the assessment order. AO merely calculated the service tax by taking total tax collected by deducting the amount of service tax paid. CIT(A) concluded that no disallowance under section 43B can be made in this case because no expense on this count has been claimed. The assessee followed the exclusive method of accounting and whatever liability or expense debited in the profit and loss account had been paid through CENVAT credit and profit and loss account so no addition under section 43B on account of unpaid service tax is warranted. Hon ble Delhi High Court in CIT vs. Noble Hewitt (I) (P) Ltd. [ 2007 (9) TMI 238 - DELHI HIGH COURT] held that when the assessee was following mercantile system of accounting and had not deposited parts of service tax collection with the authorities concerned. The assessee neither claimed the deduction in this regards nor it debited the amount as expenditure in profit and loss account, there is no question for disallowance of said amount. Objection of Ld. DR for the revenue is that no payment was made by the assessee, therefore, no deduction was allowable - CIT(A) while granting relief to the assessee has taken not of the fact that no disallowance under section 43B can be made in this case because no expense on this count has been claimed. The assessee followed the exclusive method of accounting and whatever liability or expense debited in the profit and loss account had been paid through CENVAT credit and profit and loss account so no addition under section 43B on account of unpaid service tax is warranted. Thus, the grounds of appeal raised by the revenue are dismissed

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• 2021 (8) TMI 99
  Allowability of harvesting and transport expenses paid by the Co-operative Sugar Mills to its farmers / members for purchase of sugarcane - HELD THAT:- The CBDT Circular No.6/2017 dt.10.10.2017 had clarified that the expenses incurred by the Co-operative Sugar Mills on harvesting and transport expenses for procuring the sugarcane from the farmers is allowed as deduction. Hon ble jurisdictional High Court in the case CIT Vs. Manjara Shetkari Sahakari Sakhar Karkhana Ltd.. [ 2007 (8) TMI 260 - BOMBAY HIGH COURT] held that the expenditure incurred on the consideration of business expediency should be allowed as revenue expenditure. Similarly, the Hon ble Madras High Court in the case of CIT Vs. Aruna Sunrise Hotels Ltd [ 2018 (5) TMI 156 - MADRAS HIGH COURT] held that the payment made to sugarcane growers / members in excess of the administered price determined by the Sugarcane Control Order, 1966 is eligible to be treated as an allowable as the revenue expenditure exclusively incurred for the purpose of business. We find that the order of ld.CIT(A) is in consonance with the CBDT Circular as well as the law laid down by the Hon ble jurisdictional High Court and the Hon ble Madras High Court cited supra, no contrary position has been pointed out to us by the ld. CIT D.R. and therefore, we do not see any reason to interfere with the order of ld.CIT(A). Accordingly, the appeal filed by the Revenue is dismissed.

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• 2021 (8) TMI 98
  Deemed dividend addition u/s 2(22) - AO found that the assessee purchased shares from private limited companies through its partner having the share holding more than 10% - HELD THAT:- We deem it proper to remand the matter to the file of AO to decide the issue regarding the applicability of section 2(22)(e) of the Act in conformity with the directions rendered by this Tribunal in earlier years. Thus, the grounds raised by the assessee are allowed for statistical purpose. Disallowance u/s.14A r.w. Rule 8D - HELD THAT:- The fact remains admitted by both the parties before us and also born by the record that no exempt income was derived by the assessee during the year under consideration. CIT(A) examined the record and found that the assessee has not earned any exempt income warranting the disallowance u/s. 14A r.w. Rule 8D. Admittedly, the circular issued by the CBDT is not binding on the appellate authority as rightly held by the CIT(A) in impugned order at page No. 13 and it is justified - as it is clearly established that the assessee has not earned any exempt income. Therefore, no disallowance is warranted by applying the method prescribed under Rule 8D. Therefore, in our opinion the disallowance made by the AO is not warranted and the CIT(A) rightly deleted the same, therefore, we find no infirmity in the order of CIT(A). Thus, the grounds raised by the Revenue fails and are dismissed.

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• 2021 (8) TMI 97
  Unaccounted money - Revenue recovered evidences with regard to the bogus nature of such transactions, based upon such information, the Assessing Officer reopened the cases of the assessee - HELD THAT:- As transactions are sham aimed only to bring unaccounted money in the guise of long term profit on sale of shares being accretion capital account. We find from the record that the assessees have not placed any material to dislodge the findings recorded by the Ld. CIT(A). Therefore, the appeals filed by each of the assessee vis Smt. Manjula Kothari and Shri. Kashyap Kothari is dismissed

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• 2021 (8) TMI 93
  Rectification u/s 254 - AR submitted that the first date of hearing was posted on 04.03.2020 and notice of date of hearing was received by the applicant which was handed over to the associate working in the office of the counsel by the applicant. The associate of the counsel mistakenly noted the date of hearing as 05.03.2020 instead of 04.03.2020 - HELD THAT:- From the records it can be seen that the non-appearance of the counsel was due to inadvertent mistake of the associate of counsel, hence the assessee has genuine reason for non appearance on 04.03.2020. Therefore, we are recalling the order dated 13.03.2020 and restoring the appeal for hearing on 26.07.2021 for fresh hearing. The present miscellaneous application is allowed. The registry is directed to place appeal for hearing on 26.07.2021. Both the parties be given notice accordingly.

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• 2021 (8) TMI 92
  Offences u/s 276C(1) and Section 277 Income Tax Act - tax evasion and giving false statement before the authorities - reliance on admission made by the accused in his statement u/s 132(4) - Show cause notice u/s 279 of the Income Tax Act was issued to accused and it was duly replied by the accused as stated that the accused admitted the existence of foreign bank account and the undisclosed income and therefore has committed the offence u/s 276C(1) read with Section 277 of the Income Tax Act - HELD THAT:- Alleged admissions in the statement u/s 132 (4) of the Income Tax Act Ex. CW-1/G were retracted and were not unequivocal. It is apparent that the statements were made under the belief that no further harassment will be caused to the accused as he wanted to earn peace. The admissions were not unequivocal and were retracted. Once the retraction of a confessional statement takes place the burden to prove that the statement was voluntary is on the prosecution which burden has not been discharged - it was prudent for the complainant department/investigating agency to look forward for other concrete evidence to support its allegations which unfortunately was not done. Therefore, the sanction order u/s 279 (1) of the Income Tax Act which relies upon the admissions of the accused as one of the premises cannot be held valid in the eyes of law. There is a prerequisite of the certification of foreign record by the legal-keeper thereof or by an officer having legal custody of the original as a cardinal indispensable rule. In present case, the bank record in question (page no. 83 to 92) is neither certified by the bank concerned and nor it is clarified that the French Authorities were having possession of the originals. Further, the record is neither certified by the French Authorities or Indian Consulate. The letter from the French Government at page no. 48 is silent regarding the source of document and also about the fact of verification / cross checking of the data from the concerned bank. From the record, it is clear that neither the French Authorities nor the Indian authorities got the data verified from the bank concerned. The source of data is also not clear. In warrants trial cases instituted on the basis of complaint, the quantum of proof which is required for framing of charge is much higher than the state case. Section 245(1) Cr.P.C mandates that charge could be framed only when the evidence adduced by the complainant in pre-charge evidence is such of nature that if left unrebutted would result in conviction. In present case the prosecution has failed to satisfy said ingredients. The prosecution is launched on the basis of retracted admissions. The data obtained from French Authorities is not certified as per section 78 (6) of the Indian Evidence Act. Neither the Indian Authorities nor the French Authorities verified the data from the bank in question. No bank account opening form and KYC documents is obtained during investigation. No transaction from the account of accused to the foreign account is shown. Prosecution has failed to show any link of the accused with the said bank account. Even in the case of prosecution proceeds further on the basis of admitted documents on record, accused cannot be convicted merely on the basis of unauthenticated and unverified printouts obtained from third party. The said documents may create suspicion against the accused but are not sufficient to proceed further by framing of charge and to force the accused to face ordeal of criminal trial. In these circumstances, the aforesaid analysis of testimonies of witnesses and considering the documents available on record, it is clear that the complainant is unable to make out the case and the accused is discharged for the offences U/s 276C(1) and Section 277 Income Tax Act, 1961.

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• Customs

• 2021 (8) TMI 133
  100% EOU - purchase of certain machinery from another 100 % EOU - Effective date of amendment - From the date of notification or from retrospective effect - applicability of explanation II to N/N. 23/2003-CE - Section 25(1) of the Customs Act, 1962 - HELD THAT:- There is no dispute as to the fact that the condition imposed with regard to the date of installation or period within which installation has to take place stood amended by Notification No. 34/2015 dated 25.05.2015. In the said amended notification, it has been specifically stated that the amendment is by way of substitution. If such is the position, it is need to be considered, as to what would be the effect of a substituted resolution or the substituted notification. This issue is no longer res integra and has been considered in several decisions and one of which being M/S. MEHLER ENGINEERED PRODUCTS INDIA PVT. LTD VERSUS THE UNION OF INDIA, THE COMMISSIONER OF CUSTOMS, THE ASSISTANT COMMISSIONER OF CUSTOMS (GROUP-3) , THE ASSISTANT COMMISSIONER OF CUSTOMS (REFUNDS) [ 2018 (7) TMI 39 - MADRAS HIGH COURT] wherein after considering a catena of decisions on the point, it was held that after a subsequent act amends an earlier one in such a way as it incorporates itself or a part of itself into the earlier, the Act must be construed as retrospective . The department has misapplied the explanation to Section 25 of the Act with regard to the coming into force of a notification. There appears to be no dispute as to on what date the notification was published, but, when was it given effect to by operation of law. Then, it has to be held that the notification is retrospective, as it is an amendment by substitution. The learned Single Bench has considered this aspect and has observed that it is true that the notification reads that it is a substitutive amendment, but has denied the relief to the petitioner on the ground that it is an accrued liability - Admittedly, on the date when the show cause notice was issued dated 29.01.2018, the exemption notification stood amended by issuance of Notification No.34/2015. Therefore, the question of treating the amount of duty as an accrued liability is incorrect. The order impugned in the writ petition is without jurisdiction - Petition allowed.

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• 2021 (8) TMI 129
  Illegal detention - Smuggling - Gold - sufficient reason for the continued detention of the detenu beyond the period of 11 weeks from the date of detention - constitution of Advisory Board - HELD THAT:- The provisions of Section 8 (a) of the COFEPOSA Act provide for the constitution of Advisory Boards. Significantly, those provisions do not use the words appropriate Government . Section 8 (b), no doubt says that the reference to the Advisory Board shall be by the appropriate Government and uses the words the Advisory Board . We cannot, however, give any significance to the word the before the words Advisory Board to hold that the Advisory Board must be one constituted by the appropriate Government. We cannot read into Section 8 (a), the requirement that the reference must be to an Advisory Board constituted by the appropriate Government. Section 8 (b) uses the words appropriate Government only to indicate that the reference must be made by the appropriate Government as defined in Section 2 (a). The Parliament deliberately has not used the words appropriate Government in Section 8 (a) and we see no reason to read it in that manner. The Constitution as it stands today does not call for such an interpretation. It appears to us that the provisions of Art.22(4) of the Constitution and Section 8 of the COFEPOSA only requires that the case of the detenu could be considered by an Advisory Board consisting of persons having the qualifications mentioned in Art.22(4) and constituted by appropriate notification under Section 8 of the COFEPOSA Act. The Learned Counsel for the petitioner has no case that the Advisory Board which considered the case of the detenu has not been constituted under Section 8 of the COFEPOSA Act. There is no merit in the contention of the learned counsel for the petitioner that only the Board constituted under the notification dated 17.3.2020 was competent to consider the case of the detenu - Petition dismissed.

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• 2021 (8) TMI 120
  Classification of imported goods - Bluetooth module - to be classified under Customs Tariff Heading (CTH) 8529 90 90, as claimed by the Department and not under CTH 8517 62 90 as claimed by the appellant? - HELD THAT:- The Bluetooth module receives radio frequency analog signals from other devices (like mobile phone), converts the radio frequency analog signals into digital signals and thereafter transmits the signals back to the Bluetooth module of mobile phone (in radio frequency signal form) or to the micro controller (brain) of the car infotainment system (in electric signal form). For any product to be classifiable under the sub-heading 8517 62, it should receive, convert, and transmit voice, images and other data. The Bluetooth module receives, transmits and converts data, voice, etc. through radio frequency signals to enable connectivity between the user s mobile phone and car infotainment system - the Bluetooth module is engaged in reception, transmission and conversion of voice and other form of data. Accordingly, it would fall under sub-heading 8517 62 and consequently deserves to be classified it under CTH 8517 62 90. Even after holding that Bluetooth module is not a part as it can be used in many devices like printers, computers, hard drive, compact disc, digital camera etc., and all these devices can work independently without Bluetooth module, the Commissioner (Appeals) still accepted the contention of the Department that it would be classifiable under CTH 8529 90 90 on the basis of Section Note 2(b) for the reason that Bluetooth module is principally used with car infotainment system. There is no challenge by the Department to the finding recorded by the Commissioner (Appeals) that Bluetooth module is not a part of car infotainment systems as the Department has not filed any cross-appeal. It is, therefore, not possible to accept the contention of the learned Authorized Representative of the Department that despite a specific finding having been recorded by the Commissioner (Appeals) that the Bluetooth module is not a part , of car infotainment systems, it should still be considered as a part because of the description given by the appellant in the Bill of Entry - Once Bluetooth module is classified under CTH 8517 62 90, it would not be necessary to examine the contention advanced by the learned counsel for the appellant that even if Bluetooth module is considered to be a part of car infotainment systems, it would still merit classification under CTH 8517 62 90. Bluetooth module deserves classification under CTH 8517 62 90 as contended by the appellant and not under CTH 8529 90 90 as contended by the Department - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2021 (8) TMI 124
  Seeking an Order directing a Forensic Audit caused in respect of the affairs and accounts of the 1st Respondent Company as well as the Respondent No. 7 and present a report - HELD THAT:- Without expressing any opinion in regard to the merits of the Appeal, keeping in view the facts and circumstances of the case and the serious allegations of irregularities alleged by the Appellants and also having regard to the fact that no Statutory Audit has been done for the years 2018-19 and 2019-20; the RoC letter detailed in the Impugned Order, that the Forensic Audit is being sought for by shareholders who own a substantial 49.4% of the shares, we are of the considered view that a Forensic Audit in respect of the affairs and accounts of the Company Account with effect from Financial Year 2017-18 is necessary in the larger interest of the Company. The Forensic Auditors Report will helpful to decide the veracity of the allegations of Oppression, Mismanagement and Financial irregularities. The Independent Chairperson Mr. E. Selvaraj is directed to appoint a Forensic Accountant before 20th August, 2021 for conducting a Forensic Audit for the Financial Years 2017-18 to 2020-21, in respect of the affairs and accounts of the Respondent Company. The Forensic Accountant shall submit the Report in a sealed cover to the Appellate Tribunal, within a period of three months from the date of appointment. The fees of the Forensic Accountant shall be borne by the Company. Application allowed.

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• 2021 (8) TMI 104
  Seeking restoration of the name of the Respondents-Company M/s. R Sons Builders Private Limited in the register maintained by the Registrar of Companies - Section 252(1) of the Companies Act, 2013 - HELD THAT:- The income received by the respondent-company is required to be verified and assessed in the hands of the Appellant under the Income-tax Act, 1961 and to undertake assessment proceedings but name of the respondent-company has to be restored in the Register of RoC. To render assessment order valid in the eyes of Law and to enable the Appellant to take steps for recovery of taxes and for any further consequential proceedings, the respondent-company s name be restored to the Register of Companies as if the name of the company was never struck off - Denial to restore the name of the respondent company in the Register of the ROC will not only condone the wrong doing of the respondent company but it will also encourage of escapement of tax liabilities by such subterfuge which will be prejudicial to the interest of the revenue in the long run. The service of notice to respondents has been made through publication in newspaper, but none appeared. The Registrar of companies is directed to restore the name of the Respondent Company in their Register and also proceed to take such other and further penal action against the respondent in accordance with the statutory provisions - Application allowed.

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• 2021 (8) TMI 101
  Seeking restoration of the Appellant Company in the register maintained by the Registrar of Companies - Section 252(1) of the Companies Act, 2013 - HELD THAT:- This Bench, is of the view that the only ground on which the Appellant Company is seeking its revival is the Litigations that are pending by or against it. From perusal of the documents placed on record, it is observed that the Company was incorporated in the year 1996 and since then, it has never filed its Financial Statements and Annual Returns. The Report of RoC also confirms that the only balance sheet filed by the company for the FY 2016-17 also depicts nil revenue from its operations. Further, the Income Tax Department has stated that though it has no objection towards the revival of the company, it has no record of its Income or Income Tax Returns in its data base - From perusal of the record of Litigation also, it is observed that there are other parties too on the side of Appellant Company through which the Litigation may continue and be pursued. That the pending litigation against the Appellant Company cannot be the sole ground to seek its revival since the Litigation can still be carried on by the other contesting parties. This Bench is not inclined to interfere with the striking off action taken by the RoC against the Appellant Company under Section 248(5) of the Companies Act, 2013 - appeal dismissed.

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• 2021 (8) TMI 94
  Appointment as Independent Chairperson - HELD THAT:- Since the name of Mr. E. Selvaraj appears in all the panel of names filed by both the Appellants and Respondent Nos. 1 3 and 2, 4, 6 7, a query was put to the Learned Sr. Counsel Mr. Krishnan Venugopal and Learned Counsels Mr. Naveen R. Nath and Mr. Saji P John, whether a consensus could be arrived at with respect to the name of Mr. E. Selvaraj to be appointed as an Independent Chairperson to administer and manage the affairs of the Company/Hospital till the disposal of these Appeals. An amount of Rs. 50,000 per month plus the expenses incurred towards Air Fare and Hotel Stay be paid as remuneration borne by the Company. The parties shall also identify the place of stay to the comfort and convenience of Mr. E. Selvaraj. - Application disposed off.

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• Insolvency & Bankruptcy

• 2021 (8) TMI 115
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- There is nothing shown that the Application under Section 9 of IBC was in any other manner incomplete. The matter is remitted back to the Adjudicating Authority. The matter may be placed before the Adjudicating Authority on 17th August, 2021. The Adjudicating Authority will admit the Application and pass the necessary consequential orders on Admission - appeal allowed.

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• 2021 (8) TMI 109
  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:- This Bench is of the view that the Corporate Debtor in its reply has clearly stated that due to poor business performance across the hospitality sector coupled with other financial obligations such as payment of salaries of employees etc. lead to unintentional delay in payment of EMIs. He has added that he is still desirous and willing to clear the outstanding dues of the Applicant. . Evidently, the Corporate Debtor has admitted its inability/liability to pay the dues and default committed. This Bench is, therefore, inclined to initiate the CIR Process against the Corporate Debtor. The present Petition being complete and having established the default in payment of the Financial Debt for the default amount being committed above the threshold limit, the present Petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code - Petition admitted - moratorium declared.

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• 2021 (8) TMI 105
  Liquidation of the corporate debtor - Section 33(1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The CIRP of 180 days in the present matter expired on 08.09.2019 and because the corporate debtor does not have any asset/business nor have any reliable financial statement, it is seen from the provisions of IBC, 2016 is to only press the liquidation mode as provided under the provisions of section 33 of IBC, 2016. This Tribunal in the circumstances taking into consideration the provisions of law as well as on facts on record to order for liquidation of the corporate debtor and in the circumstances the corporate debtor stands liquidated and the incidence of liquidation to follow, on and from the date of this order in terms of the provisions of IBC, 2016 and more particularly as given in Chapter-III of IBC, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 along with the following directions imposed. Application allowed.

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• 2021 (8) TMI 102
  Seeking to order direction to Resolution Professional to admit the entire claim filed by the applicant/financial creditor - section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is observed that on 27.10.2019 the resolution plan was approved by the CoC with 87.57% voting share and the applicant has filed Form of the claim on 26.02.2019, which is much prior to the approval of the plan by the CoC. The clause 8.6(3) of resolution plan covering the issue raised by present applicant and also statements made by Ld. RP Mr. Sonbhadra alongwith Ld. counsel for RP assuring allottees interest in terms of clause of resolution plan, the present application stands satisfied and is disposed of.

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• PMLA

• 2021 (8) TMI 134
  Money Laundering - Bribe - proceeds of crime - seeking to quash the proceedings that has been launched by the Enforcement Directorate for the offence under Section 3 read with 4 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- In this case, the proceeds of crime quantified by the Enforcement Directorate at Rs. 25,00,000/-, being the bribe amount that was received by Dr. S. Murugesan (A1) in his clinic on 07.01.2013, was seized by the CBI and therefore, there was no scope for Dr. R. Gunaseelan (A2) to project it as untainted money. Superadded, Dr. R. Gunaseelan (A2) is not a co-accused even in the prosecution that has been launched by the CBI in C.C.No.15/2014 against Dr. S. Murugesan (A1) and the representatives of Adhiparasakthi College. The impugned complaint of the Enforcement Directorate shows that Dr.S.Murugesan (A1) had demanded Rs. 1 crore from Asan Memorial educational institution to give them permission for starting dental course. In connection with this allegation, the CBI registered a case in RC.MA1.2013. A.0004 dated 08.02.2013 and after completing the investigation, filed a final report in C.C.No.13/2014 in the IX Additional Special Court for CBI Cases against Dr. S. Murugesan (A1) and Dr. R. Gunaseelan (A2) for the offences under Sections 120-B read with Sections 7, 8, 12 and 13(2) read with 13(1)(d) of the PC Act. The impugned complaint filed by the Enforcement Directorate is predicated on the bribe amount of Rs. 25,00,000/- relating to Adhiparasakthi College, which, cannot form the basis for prosecuting Dr. R. Gunaseelan (A2) - petition allowed.

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• Service Tax

• 2021 (8) TMI 140
  Condonation of delay in filing appeal - HELD THAT:- The circumstances in which the delay took place in the present case have been set out in the report. Sufficient cause for condonation of delay has been made out. Accordingly, the delay is condoned. There are no merit in the appeal. The appeal is accordingly dismissed.

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• 2021 (8) TMI 123
  Refund of unutilised cenvat credit of service tax - Requirement of debiting the amount of the refund in cenvat credit account - condition in terms of Rule 2(h) of N/N. 27/2012CE dt. 18/06/20212 satisfied or not - interest on delayed refund - HELD THAT:- The statutory auditor of the appellant has issued a certificate which is on record and was also submitted before both the authorities below and as per this certificate, the appellant has reversed the amount of Rs. 7,41,538/- twice and has not reclaimed until June 2017 and has also not carried forward under GST regime and hence are eligible for refund in terms of Rule 5 of CCR, 2004 - also, the appellant has explained in detail in their grounds of appeal, reasons of the excess debit in their letter dt. 21/12/2018 but both the authorities did not consider the same. Also, same officer granted refund for immediate past period based on debit in ledger accounts but surprisingly failed to adopt the consistent stand for the impugned period - the original authority had erred in not appreciating the cenvat ledger account which showed a positive balance of Rs. 21,51,584/- at the time of filing the refund application for the subject period and erroneously concluded that the amount lying in balance is only Rs. 2,42,312/- - the appellant is entitled for refund of unutilised cenvat credit. Interest on delay in refund - HELD THAT:- As per the decision in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] , appellant is also entitled for grant of interest on delayed refund claim beyond the period of three months. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (8) TMI 127
  Invocation of extended period of limitation - CENVAT Credit - inputs - let export services - rail freight BL charges - destination delivery charges - detention charges - WCT services - rent a cab service - construction services - whether the department has rightly invoked the extended period of five years, while making the demand for the period September, 2013 to August, 2016 vide Show cause notice dated 21.7.2017? - Penalty - HELD THAT:- As per section 11A of Central Excise Act as was applicable at the time of issue of impugned show cause notice, the notice would have been served within 2 years of noticing of short comings on the part of assessee. However sub section 4 thereof extend the said period to that of five years in case it is observed that duty has not been paid or short paid or erroneously refunded by reason of fraud collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty. Reverting to the facts of the present case, apparently and admittedly there was no disclosure on the part of appellant to the Department informing the availment of CENVAT Credit post let export order. The information was given only after it was demanded by the Department post audit of the appellant records. No doubt there is no provision in the CENVAT Credit Rules for disclosing the particulars of import service on which CENVAT Credit is availed by the manufacturer nor there is any column in ER / ERI /ST 3 return to indicate various input service in respect of which CENVAT Credit is taken but since system is based on self assessment scheme, the particular opportunity as prescribed Performa of return to be filed by the assessee - there are no infirmity in the findings of Commissioner (Appeals) that being a private limited company engaged in the manufacture / export of motor vehicle parts and availed CENVAT Credit since long is supposed to have knowledge of law and procedure laid down with regard to availment of CENVAT Credit, ignorance of law otherwise is not a defense available. Penalty - HELD THAT:- The appellant wrongly took the CENVAT Credit on the services which were not eligible import service. Over and above, there is apparent admission of the appellant that the credit availed has been wrong. Such case is definitively a case of suppression of facts that too with intention to evade payment of duty - there are no infirmity in the order under challenge where the penalty for the period April, 2013 to August, 2016 has been imposed upon the appellant. Appeal dismissed.

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• 2021 (8) TMI 125
  Recovery of Central Excise Duty alongwith interest and penalty - by-product, called HMDSO generated during the manufacture of final product from the raw material - Rule 4(5) of CENVAT Credit Rules - HELD THAT:- It is clear that the appellant who is manufacturer of organic compound anti-biotic, precisely the inputs used by him is HMDS while processing such inputs, the appellant not only gets the final product, the anti biotic but also gets a by-product / waste called HMDSO - There is no denial to the fact that it is the by-product / waste (HMDSO) which has emerged with the final product (anti-biotic/ organic compound ) of the appellant from the inputs HMDS is sent to the job worker for the reason that this by-product has a potential of releasing the inputs i.e. HMDS by further recovery process as 75% of such HMDS is still contained in the said by-product i.e. HMDSO. Rule 4(5) of Cenvat Credit Rules is not applicable to the given facts and circumstances. Because what has been sent to the job worker is not the inputs as such, but the by-product emerging along with final product - there is no possibility of 100% reversal of HMDSO given to the job worker. This apparent admission that the job worker has returned the returnable yield of HMDS to the appellant from HMDSO received, within 180 days thereof - It remains unrebutted that what has been given to the job worker was the waste which emerged along with final product and not the inputs as such, used by the appellant for manufacturing anti-biotic as a final product. Rule 4(5)(a) of the Cenvat Credit Rules, 2002 does not cover the return of waste and scraps. The matter was remanded back to the Original Adjudicating Authority on the ground that test report based on which Commissioner (Appeals) has arrived at the conclusion regarding generation of waste was not available before the Original Adjudicating Authority - Appeal allowed by way of remand.

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• 2021 (8) TMI 114
  Demand of National Calamity Contingent Duty (NCCD) - classification of goods - heavier hydrocarbons - intermediate product in the manufacture of Mixed Fuel Oil/ Naphtha or not - burden to prove - Board Circular dated 09.01.2004 - extended period of limitation - interest - penalty - HELD THAT:- In the present case, the product described in the show cause notices is heavier hydrocarbons which is an intermediate product in the production of Naphtha. The Department has classified it under Heading 2709, which classification has not been disputed by the respondent in this Excise Appeal filed by the Department. It is, therefore, clear that a contrary stand has been taken by the Department in the show cause notices, which were the subject matter of the earlier Excise Appeal and the show cause notices which are the subject matter of the present Excise Appeal. The Department had previously issued multiple show cause notices to the respondent alleging that the product was classifiable as NGL under Tariff Item No. 2710 12 20 of the Tariff Act. However, the present show cause notices have been issued by the Department claiming classification of NGL under Chapter Heading No. 2709 of the Tariff Act. It is, therefore, not possible to accept the contention of the learned Authorized Representative appearing for the Deparmtment that the product should be classified as NGL under the same Heading as was classified in the order of the Tribunal passed in the earlier Excise Appeal. The show cause notices, in the present Excise Appeal, proceed on the footing that the heavier hydrocarbons (gas condensate) should be classified under Heading 2709 of the Tariff Act. The Department cannot, in this Excise Appeal, be permitted to take a stand that is contrary to the stand taken in the show cause notices. The aforesaid discussion leads to the inevitable conclusion that the product heavier hydrocarbons described as gas condensate is classifiable under Heading 2709 but NCCD would not be leviable because the product is not marketable. Extended period of limitation - suppression of facts or not - HELD THAT:- From the reply filed by the respondent in response to the show cause notices it is seen that the contention that is now being raised in regard to the extended period of limitation was not raised by the respondent, though the show cause notices had invoked the extended period of limitation - It would, therefore, not be appropriate to examine the contentions now sought to be raised in this appeal, more particularly when the respondent has not filed any cross appeal for supporting the order of the Commissioner on this ground. Penalty and Interest - HELD THAT:- Once it is held that the demand cannot be sustained, the imposition of penalty or recovery of interest cannot also be sustained. Appeal dismissed.

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• 2021 (8) TMI 100
  Condonation of delay in filing appeal - sufficient cause for delay or not - time limitation - appeal dismissed on the ground that the same is barred by time invoking section 35(1) of Central Excise Act, 1944 - HELD THAT:- There are no fault on the part of the appellant to form a reasonable apprehension of receiving the order not prior than 2 to 3 years. Commissioner (Appeals) has considered the date of communication of order dated 31.10.2017 i.e. 10.11.2017 on which date the department mentioned to have despatched the said order to the present appellant by speed post. First of all, date of despatch cannot be the date of communication. As per General Clauses Act, dispatched letter cannot be presumed to be delivered before 15 days of date of despatch. Secondly, despatching the order by speed post is not acceptable mode of service. Section 35F of Central Excise Act mandates that the appeal before Commissioner (Appeals) is to be filed within 60 days of receipt of the order by Original Adjudicating Authority. In addition, it mandates that the Commissioner (Appeals) can condone the delay on sufficient cause being shown but not beyond the period of 30 days from the expiry of said period of 60 days - Commissioner (Appeals) had no option to condone the delay which involves more than 90 days from the date of receipt of the order challenged before him. Seen from that angle, there seems no infirmity in the order under challenge. The appellant has sufficient cause for filing the appeal on 13.8.2019 against Order of 31.10.2017. Accordingly, said delay is hereby condoned - the matter is remanded back to Commissioner (Appeals) for adjudicating the matter on merits - Appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2021 (8) TMI 132
  Exemption from payment of sales tax - poultry farm on leased land - exemption was rejected on the ground that the assessee was not the owner of the land where the farm was conducted - HELD THAT:- This Court had taken note of the decisions in RAMALINGAM NADAR SONS VERSUS STATE OF KERALA [ 1993 (4) TMI 282 - KERALA HIGH COURT ] holding that though Section 10(1) of the Act gives power to the Government to grant exemption or reduction in rate of tax either prospectively or retrospectively, Section 10(3) did not expressly confer the power for retrospectively cancelling or varying a notification already issued. In the said decision, this Court had categorically held, after referring to the notifications which have been extracted by us above, that, owning a land and owning a farm are too entirely different concepts and that without owning any land, one can own and run a farm. The issue raised in this revision is squarely covered by the legal principle laid down in SELVAM BROILERS (P) LTD. VERSUS ASSISTANT COMMISSIONER (ASSMT.) AND OTHERS [ 2002 (5) TMI 831 - KERALA HIGH COURT] . If SRO.No.7/2002 cannot have any retrospective operation as declared by this Court in the afore-cited decision, it is not open for the State to contend that with effect from 01.04.2000, exemption for poultry farmers is available only if they own the land on which they conduct the farm within the State of Kerala. Such a contention is wholly unacceptable and has no merit at all. There are no perversity in the order of the Sales Tax Appellate Tribunal in granting exemption to the assessee by view of SRO.No.1090/99 as amended by SRO.No.291/2000 and SRO.No.877/2000 for the year 2000-01 - revision dismissed.

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