TMI Tax Updates - e-Newsletter
August 18, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Valuation - De-merger - transfer of MIS business to a resulting company - The value of assets which are outside the purview of GST is required to be included in the value of assets for apportionment towards transfer of input tax credit in case of demerger in terms of Section 18(3) of CGST Act, 2017 read with Rule 41(1) of CGST Rules, 2017. - AAR
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GST:
Levy of GST - Composite supply or Principal supply - The street lighting activity undertaken under the Energy Performance Contract dated 1st March 2019 (which involves supply of various goods and rendition of various services), is to be considered as a Composite Supply under the CGST / KGST Act 2017, where the principal supply is the service, classified under SAC 999112. - Liable to GST @18% - AAR
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GST:
Revision of GSTR 3B - the adjudication order is clearly appealable - The writ petition in extraordinary jurisdiction under article 226 of the Constitution of India is not entertained - Once the appeal filed by the assessee is allowed and it is contested that GSTR 3B for the month of March, 2019 suffered from inadvertent mistakes upon evidence led to establish that fact, the appellate authority would have to record a finding in that regard and adjudicate the issue accordingly. If any tax amount is found deposited in excess, over and above, the liability admitted or adjudged for the month of April, 2019, the petitioner may remain entitled to claim benefit of the same in appropriate proceeding, in accordance with law. - HC
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GST:
Confiscation of goods u/s 130 of the GST Act - petitioner sought 233.540 gms of gold ornaments for the purpose of displaying and not for sale - The issue has to be decided by the proper officer on consideration of the entire materials before him and that too, after hearing the petitioner. - The petitioner has to approach the proper officer for making his stand clear and to seek audience before him - HC
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Income Tax:
Disallowance of expenses made u/s.37(1) - disallowance of expenditure on adhoc basis made by the ld. AO by giving a categorical finding that the ld. AO had not even whispered in the assessment order as to how a particular expenditure of the assessee is excessive and not incurred for the purpose of business u/s.37(1) - the incurrence of business expenditure whether it is commensurate with the business receipts earned thereof is of absolutely no relevance to decide the allowability of business expenditure. - AT
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Income Tax:
Capitalization of land for project expenses - Since, land was in pursuant to JDA and assessee has not paid any consideration for land, the question of capitalization of cost of land of 48 row houses does not arise. Therefore, under these facts and circumstances, we are of the considered view that since the lands were never purchased by the assessee nor any consideration was paid with respect to sale, the question of capitalization of said cost does not arise. Notwithstanding to the above, it is also noteworthy to observe that cost of land was never claimed in profit & loss account as expenses and thus, capitalization of such cost of land to the fixed asset is a revenue neutral expenses - CIT(A) has rightly deleted addition made by the AO - AT
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Income Tax:
Reopening of assessment u/s 147 - reasons were recorded on receipt of information from Investigation Wing - Apart from this information, which has been taken as gospel truth by the AO, no independent enquiry has been made to collate and corroborate this statement and information provided by Aseem Gupta to Investigation Wing. - Assessment framed in this case is not sustainable since the very jurisdiction assumed by the AO u/s 147 of the Act is bad in law and assessment framed on the basis of “change of opinion” u/s 147/143 (3) is void ab initio - AT
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Income Tax:
Deduction u/s 10B - activity of conversion of raw gherkins to bottled pickle - amount to ' manufacture' or not - the original commodity of vegetable gherkins transform into pickles, had the same identity as the original gherkins and it was not transformed into new commodity. - assessee is not entitled for the deduction u/s 10B - HC
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Income Tax:
Reopening of assessment u/s 147 - Change of opinion - As has always been observed, notice under Section 147 is not to be casually invoked to suit the convenience of the Department or to correct any alleged errors which would have been committed by the Assessing Officer. In the instant case, we find that, not only the ingredients required to be fulfilled in the first proviso to Section 147 have not been fulfilled, there is no allegation made against the assessee for not having made full or true disclosure of all material particulars and the reopening of the assessment would also be barred in terms of the third proviso to Section 147 - HC
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Income Tax:
Computation of exemption u/s 10B - exclusion of scrap sales from the total turnover as well as the export turnover while computing the exemption - Meaning given by the ICAI clearly denotes that in normal accounting parlance the word “turnover” would mean “total sales” as explained hereinabove. The said sales would definitely not include the scrap material which is either to be deducted from the cost of raw material or is to be shown separately under a different head. We do not see any reason for not accepting the meaning of the term “turnover” given by a body of Accountants, which is having a statutory recognition. - HC
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Income Tax:
Revision u/s 263 - Period of limitation - To be commenced from original assessment order or re-assessment order u/s 147 - In the case on hand, the jurisdiction under Section 263(1) of the Act was exercised with reference to an issue, which was covered in the original assessment order dated 28.12.2006 and it was not an issue, based on which, the reopening of assessment was made under Section 143 of the Act. For all purposes, the period prescribed under Sub-Section (2) of Section 263 of the Act should commence from 31.3.2007 and the two years' period would come to an end on 31.3.2009. - HC
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Income Tax:
Scope of amendment of the Gratuity Act - Applicability of Payment of Gratuity (Amendment) Act, 2010 from 1.1.2007 - the date of commencement fixed by the Executive in exercise of power delegated by the Amending Act cannot be treated to be retrospective as the benefit of higher gratuity is one-time available to the employees only after the commencement of the Amending Act. The benefit paid to the appellants under the office memorandum is not entitled to exemption in view of specific language of Section 10(10)(ii) of the Income Tax Act. - SC
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Customs:
Classification of imported goods - the appellant accepted the mis-declaration in writing. If the pipes and profiles were indeed old, the appellant could have, instead of accepting a mis-declaration, requested for mutilation of these goods as per Section 24 so that they can no longer be used as pipes or profiles but need to be used as scrap only. However, the appellant made a request for spot adjudication accepting the mis-declaration and the order was passed accordingly. The appellant cannot now say that although they wanted a spot adjudication, the department should have still issued a Show Cause Notice. Therefore, the demand of duty in the adjudication order. - The quantum of redemption fine and penalty reduced. - AT
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Customs:
Levy of penalty on Customs Broker - Section 114AA of the Customs Act, 1962 - the Department has failed to prove that there was a mala fide and wilful mis- representation by the Customs Broker. It seems that the Commissioner (Appeals) has totally misunderstood the facts and has wrongly observed that the appellant (Customs Broker) and the exporter have been operating from the same premises and have an identical ICE Code which leads one to suspect the bona fides of the appellant. This finding of the Commissioner is factually incorrect and without any basis - AT
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Customs:
100% EOU - Levy of penalty u/s 112 of the Customs Act - allegation of of conniving in disposal of imported Ball bearings through a shop situated in Kashmiri Gate - The seizure having been vacated, imposition of penalty would not survive - AT
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Corporate Law:
Disqualification of directors - Deactivation of DINs - This Court having considered the said submissions is of the considered view that the new amending law also contemplates levying of ₹ 100/- per each day of default and which permits the regularizing the delay of the petitioners. Therefore, this Court is not inclined to accept the said contention of the learned Assistant Solicitor General for the respondents - the deactivation of the DINs of the petitioners for alleged violations under Section 164 of the Act, cannot be sustained. - HC
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IBC:
Validity of direction issued to the Registrar of Companies to inspect the books and conduct inquiries - Serious irregularities have been found in the forensic audit report - the Adjudicating Authority ordered that the companies' Registrar exercise its power as available to it under Sections 206 and 207 of the Companies Act 2013. It is also important to mention that under Section 206 of the Companies Act, the Registrar is empowered to act on any information he receives. Considering the circumstances of the case, we do not find any irregularity or illegality in passing the impugned Order. - AT
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Service Tax:
Rejection of application by the Settlement Commission - Settlement though read under the Act, cannot be construed as conclusive, in view of the fact that in the event of non-settlement, the issues are to be adjudicated before the Competent Authority under the provisions of the Act. Therefore, it is an additional facility or redressal mechanism contemplated under the Act for the benefit of the aggrieved persons/assessees - this being the scope and spirit of the settlement to be done under the provisions of the Central Excise Act, this Court is of an opinion that the findings of the Settlement Commission in the impugned orders are candid and convincing and there is no infirmity or perversity as such. - HC
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Service Tax:
Invocation of extended period of limitation - wilful suppression of facts - Even suppression of facts has to be wilful and in any case, suppression has also to be with an intent to evade payment of service tax. Though, the Commissioner in the last sentence of paragraph 8.6 of the order observed that “in any case, the noticee, in this case, has willfully contravened the provisions of the Finance Act”, but there is no discussion or reasons given by the Commissioner for so concluding and only a bald statement has been made and that too as an alternative finding. - AT
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Service Tax:
Reverse charge mechanism - service tax on Ocean Frieght - who is liable to pay Service Tax - Even if it is assumed that service tax can be recovered from a third party like the Indian importers in CIF contracts, there is no machinery provided for valuation of such service, and therefore also the impugned Rules and Notifications are unenforceable. It is an admitted position of fact that the Petitioners do not have any information about the actual amount of ocean freight paid by the overseas sellers/suppliers to shipping lines. - The amount already deposited directed to be refunded - AT
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Central Excise:
Refund of cash amount deposited in PLA account - time limitation of period of one year - on 1st July, 2017 the new Act of Goods and Service Tax Act (GST) was rolled down. Section 142 (3) of the said Act permits the refund of any amount other than duty, tax, interest or Cenvat Credit has to be paid to the assessee in cash - the amount in question was appellant’s own money and he was fully entitled to get the refund of the same that too in cash. This amount cannot been made subjected to any other appropriation. Nor the time limit under Section 11B of CEA can be invoked when such money is sought to be refunded. - AT
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Central Excise:
Extended period of limitation - CENVAT Credit - input services - In LTU there are few number of assesses, as compared to the normal Commissionerate and hence the Department has a better grip and knowledge about affairs of a manufacturing unit in the LTU jurisdiction. Further, it is an admitted fact that the appellant have been filing regular returns with the Department - there is no mala fide on the part of the appellant in having taken credit - Demand set aside - AT
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Central Excise:
CENVAT Credit - inputs/capital goods - Welding Electrode - Railway Line material - these were used and situated outside the factory premises - On every item, this Tribunal has considered the admissibility of the cenvat credit and in various judgements, it was held that the credit is admissible on the goods in question. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (8) TMI 673
Levy of service tax - amount received from the PWD Department as per revised estimate in respect of work namely Construction of bridge across Kumaradhara river on Kudmar Shanthimogru Sharavoor Alankar Road - liability to collect and pay goods and services tax on amount received from the Executive Engineer, Public Works, Inland Water Transport Department, Mangalore Division - levy of Goods and Service Tax under the GST Act or VAT Tax under Karnataka Value Added Tax Act? - time of supply. HELD THAT:- The invoices for the transactions are issued after the appointed date and the above invoices should be deemed to have been issued in respect of an outward supply made under the GST Act . Hence the turnovers on which the question is raised by the applicant are deemed to be the turnovers under the GST Act and not under the VAT Act - it can be said that the above turnovers are liable to tax at the appropriate rates under the GST Act. There is no question of the same being taxed under the earlier KVAT Act. Hence, the applicant is liable to charge GST on the said amount and is entitled to collect the same from the recipient of the service. The TDS amount deducted by the Department could be utilised by the applicant while making the payment of the liability but that does not preclude him from paying the tax. Time of supply - HELD THAT:- Section 142(2)(a) of the CGST Act requires the applicant to issue a tax invoice within 30 days from the date of price revision and if the tax invoice is issued within the stipulated time limit, then the date of issue of invoice would be the time of supply for the additional price revision and in case the tax invoice is not issued within the stipulated time, then the time of supply would be the date of price revision. In case where the payment is received earlier to these dates, then the date of receipt of payment would be the time of supply as per Section 13 of the CGST Act.
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2021 (8) TMI 672
Valuation - De-merger - transfer of MIS business to a resulting company - inclusion of assets which are outside the purview of GST, in the value of assets for the purpose of apportionment towards transfer of input tax credit in case of de-merger in terms of Section 18(3) of CGST Act, 2017 read with Rule 41(1) of CGST Rules, 2017 - determination of value of assets for apportionment towards transfer of input tax credit in case of de-merger in terms of Section 18(3) of CGST Act, 2017 read with Rule 41(1) of CGST Rules, 2017 - whether the assets which are not attributable to any particular GSTIN be considered in the GSTIN of the head office of the Company for the purpose of computation of asset ratio? HELD THAT:- Whenever there is reconstitution of a registered person, by way of demerger, with a specific provision for transfer of liabilities, the said registered person is allowed to transfer the input tax credit which remains unutilized in his electronic credit ledger to the demerged businesses in the manner as may be prescribed - the manner in which the unutilized ITC should be as per the Rules made in this regard. It is clear from the proviso to the sub-rule (1) of Rule 41 of the CGST Rules, 2017 that the input tax credit shall be apportioned between the new units in case of a demerger in the ratio of the value of assets of the new units as specified in the demerger scheme. Value of assets - H ELD THAT:- The explanation to the sub-rule (1) of Rule 41 of the CGST Rules states that the value of assets means the value of the entire assets of the business, whether or not input tax credit has been availed or not. The assets which are outside the GST also form the assets and is included in the scope of entire assets and hence the value of assets which are outside the purview of GST is required to be included in the value of assets for apportionment towards transfer of input tax credit in case of demerger in terms of Section 18(3) of CGST Act, 2017 read with Rule 41(1) of CGST Rules, 2017. Whether the assets which are created to comply with the requirements of accounting standards are also forming the part of the entire assets and hence are includible in the scope of entire assets ? - HELD THAT:- The input tax credit shall be apportioned as per a ratio and that ratio is the ratio of the value of assets of the new units as specified in the demerger scheme. From the clarification given in the para 3(a) Board Circular No. 133/03/2020 dated 23.03.2020 it is noticed that if a company is having a 60% of its entire assets in a state and it transfers 20% of its assets to the demerged entity, the ratio for ITC apportionment would be 20/60. Hence the value of assets of the new units as per demerger scheme should be taken - It is not possible that some assets will not be transferred to the two units coming into existence as the same needs to be transferred to either of the units as per the demerger scheme. The proviso does not state any exclusion for the assets transferred or not transferred as part of the demerger and hence would include all assets. Whether the assets are a part of the balance sheet of any company and they have to be a part of either one or other GSTIN? - HELD THAT:- For the purpose of computation of asset ratio, the assets which are transferred to the new units has to be considered to the total assets which the company was maintaining in the particular state and accordingly ITC apportionment is to be calculated. This is also clarified in the clarification issued in question (a) in para 3 of Circular No. 133/03/2020 - GST dated 23.03.2020.
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2021 (8) TMI 671
Levy of GST - Composite supply or Principal supply - street lighting activity undertaken under the Energy Performance Contract dated 1st March 2019 (which involves supply of various goods and rendition of various services) - supply of luminaires, without which there can be no energy conservation, and which is the primary deliverables, constituting approximately 70% of the total project cost, can be construed as the principal supply - applicable rate of GST - benefit of exemption under Entry 3A of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017, as amended - time of supply of luminaires - Explanation 1 to Section 12(2) of the CGST / KGST Act - valuation of taxable supply - payments are to be received based on energy savings. HELD THAT:- The Applicant entered into an Energy Performance Contract dated 01.03.2019 with BBMP to install and implement energy conservation measures and also to operate and maintain the project Public Lighting Network, in the city of Bengaluru, for a period of ten years, through a special purpose vehicle incorporated by the consortium bidder. The Applicant is primarily required to supply LED luminaires so as to replace the existing luminaries as part of the said project, dimming of switching point LUX during designated hours, and also to undertake measures to achieve guaranteed energy savings - the applicant contends that their supply includes LED luminaries etc., and operation maintenance of the same and thus the said supply qualifies to be a composite supply wherein the supply of LED luminaries becomes principal supply and hence the rate of GST would be the rate of tax applicable to supply of LED luminaries. Further the time of supply is date of invoice. The street lighting activity undertaken under the Energy Performance Contract dated 1st March 2019 (which involves supply of various goods and rendition of various services), is to be considered as a Composite Supply under the CGST / KGST Act 2017, where the principal supply is the service, classified under SAC 999112 - applicable rate of GST on supply made under this contract is 18% as per entry SI.No.29 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. O M of the installed equipments would constitute the principal supply and the applicable rate of GST on the said supply - Applicant is not entitled to the benefit of exemption under Entry 3A of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017, as amended - The time of supply of luminaries is not relevant as the impugned transaction is held to be a supply of service - The value of the taxable supply includes all the amounts received from BBMP pursuant to the contract dated 01.03.2019.
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2021 (8) TMI 669
Revision of GSTR 3B - statutory obligation on the State GST authority - HELD THAT:- There is no statutory obligation existing on the State authorities to allow the petitioner to revise GSTR 3B for the month of March, 2019. The fact that under a circular some discretion has been granted may not be enough in the facts of the present case where, adjudication proceeding has also been concluded against the petitioner. - the adjudication order is clearly appealable. The writ petition in extraordinary jurisdiction under article 226 of the Constitution of India is not entertained - Once the appeal filed by the assessee is allowed and it is contested that GSTR 3B for the month of March, 2019 suffered from inadvertent mistakes upon evidence led to establish that fact, the appellate authority would have to record a finding in that regard and adjudicate the issue accordingly. If any tax amount is found deposited in excess, over and above, the liability admitted or adjudged for the month of April, 2019, the petitioner may remain entitled to claim benefit of the same in appropriate proceeding, in accordance with law. Petition disposed off.
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2021 (8) TMI 664
Provisional attachment of Bank Account - cancellation of registration certificate of petitioner - blocking of input tax ledger - HELD THAT:- After attachment of the bank account on 17.02.2021, the reply was filed by the petitioner on 22.03.2021 and it appears the same has not been decided. Therefore, prima facie it would be non-compliance of Rule 159(5) of the CGST Rules. Now, with respect to the cancellation of registration, in the order, prima facie the reasons have not been assigned as mandated under Rule 21 of the CGST Rules. If the reply is not filed, the attachment order of the bank account and cancellation of registration do not show that what grounds were existing to pass such order. Since the business of the petitioner stands closed for attachment of the bank account and cancellation of registration, strict compliance is required as per the Act and Rules - the interim order shall not preclude the department to proceed in accordance with law and to the mandate of the Act and since the submission made at the bar that the petitioner is cooperating in the further enquiry and he is regularly participating, the department would be free to take any action if the petitioner deliberately avoids any hearing given to them. List in the second week of September, 2021.
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2021 (8) TMI 659
Confiscation of goods u/s 130 of the GST Act - petitioner sought 233.540 gms of gold ornaments for the purpose of displaying and not for sale - no opportunity of hearing was given to petitioner and proceedings u/s 130 of GST was initiated straightaway - HELD THAT:- The petitioner is only required to show cause within seven days of the notice as to why action under Section 130 of the CGST Act should not be taken against the petitioner. Section 130 of the CGST Act, 2017 contemplates opportunity of hearing in order to decide whether the goods are required to be confiscated or not. No doubt, while taking action under Section 130 of the said Act, the proper officer is enjoined with the duty to come to the conclusion that the act on the part of the petitioner is only with an intent to avoid payment of tax, but that has to be decided by the proper officer on consideration of the entire materials before him and that too, after hearing the petitioner. The petitioner has to approach the proper officer for making his stand clear and to seek audience before him - petition as such is premature and the same is accordingly dismissed.
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Income Tax
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2021 (8) TMI 678
Scope of amendment of the Gratuity Act - Applicability of Payment of Gratuity (Amendment) Act, 2010 from 1.1.2007 - Government of India approved enhancement of gratuity to the executives and Non-Unionized Supervisors of Central Sector Enterprises such as the Coal India Limited where the appellants were employed - ceiling of the gratuity was raised to ₹ 10 lakhs w.e.f. 1.1.2007 in terms of office memorandum of Government of India dated 26.11.2008 - grievance of the appellants is that the tax has been deducted at source when the gratuity was paid to the appellants before the commencement of the Amending Act - order passed by the High Court of Jharkhand whereby the claim of the appellants to declare the applicability of Payment of Gratuity (Amendment) Act, 2010 from 1.1.2007 was declined - HELD THAT:- What is exempt from the Income Tax Act is the amount of gratuity received under the Gratuity Act to the extent it does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of Section 4 of the Gratuity Act. The Gratuity Act contemplated rupees ten lakhs as the amount of gratuity only from 24.5.2010. Such gratuity is the amount payable only once. Thus, the cut-off date cannot be said to be illegal, it being one-time payment. Therefore, such amendment in the Gratuity Act cannot be treated to be retrospective. Therefore, the provisions of the statute cannot be said to be retrospective In a recent judgment reported as Himachal Road Transport Corporation Anr. v. Himachal Road Transport Corporation Retired Employees Union [ 2021 (2) TMI 1190 - SUPREME COURT] in the case of payment of increased quantum of death-cum-retirement gratuity, it was held that the cutoff date cannot be said to be arbitrary which was fixed keeping in view financial constraints Thus we find that the date of commencement fixed by the Executive in exercise of power delegated by the Amending Act cannot be treated to be retrospective as the benefit of higher gratuity is one-time available to the employees only after the commencement of the Amending Act. The benefit paid to the appellants under the office memorandum is not entitled to exemption in view of specific language of Section 10(10)(ii) of the Income Tax Act. No error in the order passed by the High Court.
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2021 (8) TMI 677
Revision u/s 263 - Period of limitation - To be commenced from original assessment order or re-assessment order u/s 147 - Though reopening of assessment u/s 147 initiated but no addition was made by the AO - CIT observed that, claim of business loss was erroneous and prejudicial to the interest of Revenue - HELD THAT:- Explanation III to Section 147 of the Act will not alter the position nor improve the case of the Revenue. By virtue of the said Explanation, the Assessing Officer is empowered to assess or re-assess income in respect of any issue, though it has not been specifically mentioned as a reason for reopening under Section 148(2) of the Act. In the case on hand, the jurisdiction under Section 263(1) of the Act was exercised with reference to an issue, which was covered in the original assessment order dated 28.12.2006 and it was not an issue, based on which, the reopening of assessment was made under Section 143 of the Act. For all purposes, the period prescribed under Sub-Section (2) of Section 263 of the Act should commence from 31.3.2007 and the two years' period would come to an end on 31.3.2009. As it is not in dispute that the proceedings u/s 263 of the Act were initiated well beyond the said date, exercise of such power has to be held to be without jurisdiction and barred by limitation. Decided against the Revenue
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2021 (8) TMI 676
Computation of exemption u/s 10B - exclusion of scrap sales from the total turnover as well as the export turnover while computing the exemption - how to compute the total turnover while considering the claim for exemption under Section 10B - HELD THAT:- As decided in PUNJAB STAINLESS STEEL INDUSTRIES [ 2014 (5) TMI 238 - SUPREME COURT] so far as the scrap is concerned, the sale proceeds from the scrap may either be shown separately in the Profit and Loss Account or may be deducted from the amount spent by the manufacturing unit on the raw material, which is steel in the case of the respondent-assessee, as the respondent assessee is using stainless steel as raw material, from which utensils are manufactured. The raw material, which is not capable of being used for manufacturing utensils will have to be either sold as scrap or might have to be re-cycled in the form of sheets of stainless steel, if the manufacturing unit is also having its re-rolling plant. If it is not having such a plant, the manufacturer would dispose of the scrap of steel to someone who would re-cycle the said scrap into steel so that the said steel can be re-used. When such scrap is sold, in our opinion, the sale proceeds of the scrap cannot be included in the term turnover for the reason that the respondent-unit is engaged primarily in the manufacturing and selling of steel utensils and not scrap of steel. Therefore, the proceeds of such scrap would not be included in sales in the Profit and Loss Account of the respondent-assessee. The situation would be different in the case of the buyer, who purchases scrap from the respondent-assessee and sells it to someone else. The sale proceeds for such a buyer would be treated as turnover for a simple reason that the buyer of the scrap is a person who is primarily dealing in scrap. In the case on hand, as the respondent-assessee is not primarily dealing in scrap but is a manufacturer of stainless steel utensils, only sale proceeds from sale of utensils would be treated as his turnover . Meaning given by the ICAI clearly denotes that in normal accounting parlance the word turnover would mean total sales as explained hereinabove. The said sales would definitely not include the scrap material which is either to be deducted from the cost of raw material or is to be shown separately under a different head. We do not see any reason for not accepting the meaning of the term turnover given by a body of Accountants, which is having a statutory recognition. Thus we find that there is no error in the conclusion arrived at by the Tribunal. - Decided against revenue.
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2021 (8) TMI 675
Reopening of assessment u/s 147 - whether the reasons assigned by the Assessing Officer in his communication for reopening the assessment, can be taken to be valid? - HELD THAT:- On a plain reading of the reasons as communicated in the letter, dated 26.09.2017, it is evidently clear that the AO did not have any new tangible material for reopening the proceedings, as the reason is prefaced by the sentence In the return of income filed for the A.Y.2011-12, the assessee has debited a certain amount . Courts have always held that the Assessing Officer is always an independent authority who has to exercise his powers within the four corners of law and it is not for the higher authorities or for the assessee to tell as to in what manner the assessment has to be completed. The duty of the assessee is to fully and truly disclose all the material particulars. There is no allegation made by the AO that the assessee had failed to fully and truly disclose all relevant materials for completing the assessment. Therefore, we are of the view that the reopening was a clear case of change of opinion. We find from the reasons dated 26.09.2017 that there is no whisper of any tangible material, and all information has been culled out from the returns filed by the assessee and the agreement, dated 30.06.2010, which was very much available when the original assessment was completed vide order dated 31.03.2014. Revenue had filed a Miscellaneous Petition in which [ 2017 (2) TMI 546 - ITAT CHENNAI] they had stated that the assessee had produced new material by way of producing the agreement dated 30.06.2010, which was not available when the assessment was completed on 31.03.2014. This appears to be factually incorrect, as the Assessing Officer, while completing the assessment, has specifically noted the agreement which was produced and placed before the Assessing Officer. Be that as it may, the said Miscellaneous Petition has been dismissed by the Tribunal. As has always been observed, notice under Section 147 is not to be casually invoked to suit the convenience of the Department or to correct any alleged errors which would have been committed by the Assessing Officer. In the instant case, we find that, not only the ingredients required to be fulfilled in the first proviso to Section 147 have not been fulfilled, there is no allegation made against the assessee for not having made full or true disclosure of all material particulars and the reopening of the assessment would also be barred in terms of the third proviso to Section 147. As observed earlier, it is a clear case of change of opinion, and that apart, the Assessing Officer has not brought on record any new tangible material to reopen the assessment, which has been done beyond the period of four years. We hold that the reopening proceedings is without jurisdiction and bad in law.
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2021 (8) TMI 674
Deduction u/s 10B - activity of conversion of raw gherkins to bottled pickle - amount to ' manufacture' or not - HELD THAT:- The entire facts reveal that the assessee is running an Agro product unit under the name and style of 'Sterling Agro Products Processing Pvt.Ltd.,' which is very much involved in the production of the pickles from the raw vegetables gherkins and to make a fine pickle vegetable, raw gherkins were processed into various stages like cutting into pails, various process like preculling, washed and loaded in the barrels with preservative chemicals and then cut into pieces, removing the defective fruits and then cut into slices and packed into the bottles as sweet hot pickles. All these processes clearly reveal that the original commodity of vegetable gherkins transform into pickles, had the same identity as the original gherkins and it was not transformed into new commodity. The authorities relied on by the respondent / Department are squarely applicable to the facts of the case and on the other hand, the authorities relied on by the appellant are not supporting his contentions rather it relates to the industrial activities, which is totally different from the facts of the instant case. The questions of law are answered accordingly - assessee is not entitled for the deduction under Section 10B of Income Tax Act and the findings given by the Tribunal that the conversion of raw gherkins to bottle pickle, would not amount to 'manufacture' is sustainable one consequently, they are not entitled for deduction u/s 10B. - Decided against assessee.
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2021 (8) TMI 666
Addition u/s 14A - Whether no exempt income was earned by the assessee? - HELD THAT:- We note of the decision of the Hon'ble Supreme Court in the case of CIT vs. Chettinad Logistice (P.) Ltd., [ 2018 (7) TMI 567 - SC ORDER] wherein, the decision of the High Court holding that Section 14A cannot be invoked where no exempt income was earned by the assessee in the relevant assessment year was affirmed. The decision in the case of Redington (India) Ltd. vs. Additional Commissioner of Income-tax [ 2017 (1) TMI 318 - MADRAS HIGH COURT] would also come to the aid and assistance of the assessee. - Decided in favour of the assessee
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2021 (8) TMI 663
Penalty levied u/s 271G - non furnish of information as per section 92D - bonafide belief - HELD THAT:- Though we have held that the explanation offered by the assessee stating that they are a novice to transfer pricing transactions, which is not prima facie acceptable, but the conduct of the assessee in complying with 12 items out of 16 items as called for by the TPO can be considered to be reasonable and the act cannot be held to be an unreasonable act, but can be considered as a reasonable act of an organization acting with prudence under normal circumstances without negligence or inaction or want of bonafides. There is no finding recorded by the Assessing Officer that the conduct of the assessee lacks bonafide or there was supine indifference on the part of the assessee in not producing the records called for by the TPO, despite notice and despite fixing time frame and not furnishing all the details was on account of inaction leading to failure on the part of the assessee to invoke Section 271G of the Act. - Decided against revenue. Therefore, we are of the view that on facts, the Tribunal rightly held in favour of the assessee by affirming the order passed by the CIT(A). - Decided against revenue.
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2021 (8) TMI 662
Deduction u/s 10B - Whether the Tribunal was right in deleting the legal issue of manufacture without considering the specific omission of the clause by Legislature u/s.10B? - HELD THAT:- As decided in M/S. JANANI HOLDINGS [ 2013 (12) TMI 1718 - ITAT CHENNAI] even the activity of cutting and sizing of marble blocks after excavation would not come within the ambit of expression 'manufacture' or 'production'. In the circumstances, this Court held that the assessee was not entitled to the benefit of section 80HH of the Income-tax Act. This Court distinguished the judgment of the Rajasthan High Court in the case BEST CHEM AND LIMESTONE INDUSTRIES PRIVATE LIMITED [ 1992 (12) TMI 3 - RAJASTHAN HIGH COURT] as engaged in the business of extracting limestone and its sale thereafter converting it into lime and limedust or concrete which was held to be an activity of manufacture or production. The activity of conversion into lime and limedust, according to this Court, in the case of Lucky Minmat (P.) Ltd [ 2000 (8) TMI 6 - SUPREME COURT] certainly constituted a manufacturing process. It was clarified in the said case that mere mining of limestone and marble and cutting the same before it was sold will not constitute 'manufacture' or 'production' but conversion into lime and limedust could constitute the activity of manufacturing or production. This distinction has not been taken into account by the Department while rejecting the claim of the assessee(s) for deduction under section 80-IA - Decided against the revenue.
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2021 (8) TMI 655
Disallowance made u/s.14A of the Act r.w.r. 8D(2) of the Rules both under normal provisions of the Act as well as in the computation of book profits u/s. 115JB - HELD THAT:- From perusal of the audited balance sheet of the assessee that it has sufficient interest free funds in its kitty which is much more than the investments made by it and hence, it could be safely presumed that the investments were made by the assessee out of own funds and not with the borrowed funds. Hence, by respectfully following the decision of HDFC Bank [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] we direct the ld. AO to delete the disallowance of interest under Rule 8D(2)(ii) of the Rules. With regard to disallowance of administrative expenses under Rule 8D(2)(iii) of the Rules, we direct the ld. AO to consider only those investments which had actually yielded dividend during the year and apply 0.5% on the average value of such investments alone for the purpose of disallowance under Rule 8D(2)(iii) of the Rules. This would be in consonance with the decision of Special Bench of Delhi Tribunal in the case of Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] . From the disallowance figures so arrived, the ld. AO is hereby directed to reduce the voluntary disallowance made by the assessee in the return of income under normal provisions of the Act. Disallowance of expenses u/s.14A in the computation of book profits u/s.115JB - We find that the Special Bench of Delhi Tribunal had already held that the computation mechanism provided in Rule 8D(2) of the Rules cannot be imputed for the purpose of making disallowance in terms of Clause (f) of Explanation-2 to Section 115JB(2) of the Act. Hence, only actual expenses incurred by the assessee for the purpose of earning exempt income would be liable for disallowance in terms of Clause (f) referred to thereon. Since, assessee itself, has voluntarily disallowed by identifying actual expenses in the sum of ₹ 3,78,562/- in the computation of book profits u/s.115JB of the Act, the same is hereby directed to be adopted and no further disallowance is warranted thereon. Accordingly, the ground No.2 raised by the assessee is partly allowed and ground No.5 raised by the assessee is allowed. Disallowance made u/s.35(2AB) - assessee had claimed weighted deduction @200% - HELD THAT:- There is no dispute that during the year under consideration, that assessee company was involved in the activities of in-house research and development disallowed and is eligible for deduction u/s.35(2AB) of the Act. The research and development activity carried out by the assessee is duly approved by the Department of Scientific and Industrial Research (DSIR), New Delhi. The assessee also submitted a report in Form 3CL approved by the DSIR, New Delhi. We find that once an expenditure is approved as incurred for development of R D facility (both Revenue and capital expenditure) and such R D facility is also approved by DSIR, New Delhi, the assessee would be entitled for weighted deduction u/s.35(2AB) of the Act. Considering the plain reading of the said Section, coupled with its intention of granting weighted deduction to the assessee for encouraging development of R D facility, we hold that assessee would be entitled for weighted deduction u/s.35(2AB) of the Act in the facts and circumstances of the instant case. - Decided in favour of assessee.
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2021 (8) TMI 652
Assessmentt u/s 153C - documents found stated to be relating to the assessee company or not? - proof of recording of satisfaction u/s.153C - addition u/s 68 - HELD THAT:- On scrutiny of documents and the nature of documents which are the basis for acquiring the jurisdiction and recording of satisfaction u/s.153C, if analysed deeply, it cannot lead to a satisfaction that these documents belong to the assessee or it is capable of drawing any inference that there is any element of undisclosed income which can be held as incriminating. At best it may be reckoned as pertaining to Assessee Company. If the documents were found from the possession of Shri N.K. Jain, then presumption is that the documents belonged to the said persons from whose possession the same was found. There has to be some prima facie reason and cogent material that the seized documents does not belong to the searched person but to someone else. Any statutory record or Company Law requirement documents are found from the possession of the professional of the company that does not meant it is a document belonging to the assessee company which can extrapolate to as incriminating. Had there been any document found from searched person indicating that assessee company has arranged some bogus entry or rotated some undisclosed income or any such similar transaction and that document belong to the assessee, then of course Assessing Officer can reach to his satisfaction that undisclosed income for that assessment year needs to be assessed for the assessment years falling within 6 years of section 153C. Nowhere it has been brought on record that there is any statement or disclaimer by Shri N.K. Jain that these documents does not belong to him or pertain to him or based on these documents any adverse inference can be drawn that there is an element of any undisclosed income belonging to or pertained to the assessee. The document which has been referred in the satisfaction note of the seized documents are all legal document in compliance with the company law and professional documents and as stated above, these documents does not indicate any undisclosed income or expenses. Even the ledger account and bank statement as mentioned in Annexure A-7 are duly disclosed in the audited accounts and nowhere is it indicating any undisclosed income not disclosed in the books of the assessee company or audited accounts. There is not a single document mentioned right from the Annexure A1 to Annexure A7 to point out that the share application money received by four companies were either non genuine or bogus or there is any material that these all are in the nature of accommodation entry. As concluded assessment cannot be interfered unless there is incriminating material discovered from the seized documents belonging to the assessee, and no additions can be made where the assessments are framed u/s.153C for unabated year. The seized documents must at least clearly point out that there is some undisclosed income, which here in this case, even for the sake of repetition, it is reiterated that none of the documents are in the nature of incriminating material so as to warrant any additions - the additions made by the Assessing Officer are beyond the scope of Section 153C r.w.s. 153A. - Decided in favour of assessee.
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2021 (8) TMI 648
Levy of penalty u/s. 271B - no accounts tax audited u/s.44AB - debatable issue - Whether the expression Management Consultancy could not be brought within the ambit of technical consultancy ? - HELD THAT:- The expression Technical Consultancy would only mean rendering of technical services by assessee. In our considered opinion, the expression Management Consultancy could not be brought within the ambit of technical consultancy . Hence, we hold that the provisions of Section 44AA(1) of the Act cannot be made applicable to the assessee in the instant case. Hence, assessee is not liable for getting its accounts tax audited u/s.44AB - the assessee had entertained the bonafide plea that the receipts earned by him for rendering Management Consultancy Services is only a business receipt and not professional receipt. This bonafide plea of the assessee has not been doubted by the Revenue but the Revenue had only tried to take different stand by giving different interpretation to the provisions of Section 44AA of the Act and classifying receipts thereon as professional receipts so as to make assessee eligible for getting its accounts audited u/s.44AB This becomes debatable issue. Hence, the bonafide plea of the assessee coupled with different interpretation given by the Revenue thereby making the issue debatable, would constitute reasonable cause within the meaning of Section 273B of the Act and hence in any case, the assessee would be protected by the immunity provided in Section 273B of the Act. Accordingly, no penalty u/s.271B of the Act could be levied - Decided in favour of assessee.
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2021 (8) TMI 647
Disallowance of expenses made u/s.37(1) - disallowance of expenditure on adhoc basis made by the ld. AO by giving a categorical finding that the ld. AO had not even whispered in the assessment order as to how a particular expenditure of the assessee is excessive and not incurred for the purpose of business u/s.37(1) - HELD THAT:- CIT(A) also observed that it is not the case of the ld. AO that the expenditure debited by the assessee are personal in nature. CIT(A) thereafter, relied on the decision in the case of J.J. Enterprises vs. CIT [ 2001 (9) TMI 6 - SUPREME COURT] and proceeded to delete the adhoc disallowance made by the ld. AO. Before us none of the categorical findings recorded by the ld. CIT(A) had been controverted by the Revenue. It is not in dispute that assessee had indeed earned business income in the form of service charges and same has been assessed as business income by the ld. AO. This itself goes to prove that assessee had indeed carried on business during the year. Once, it is accepted that assessee had carried on business during the year, and when the expenditure debited in the P L account are not doubted either on its genuineness or on its incurrence for the purpose of business of the assessee by the ld. AO, the expenditure thereon, claimed as deduction by the assessee would become allowable expenditure. It is not the case of the ld. AO that the expenditure claimed by the assessee are personal in nature or expenditure incurred were in the capital field. We further hold that the incurrence of business expenditure whether it is commensurate with the business receipts earned thereof is of absolutely no relevance to decide the allowability of business expenditure. Hence, we do not find any infirmity in the order of the ld. CIT(A), granting relief to the assessee. Accordingly, the grounds raised by the Revenue are dismissed.
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2021 (8) TMI 646
Addition on account of difference in stock - valuation of stock held - method of accounting adopted by the tax-payer consistently - difference was there in the valuation made by the registered valuer of the department who applied the market rate and worked out the total stock of the jewellery different as per books of the account of the assessee - CIT-A deleted the addition - HELD THAT:- The assessee while working out the above difference applied the average price which was followed consistently, whereas the registered valuer of the department applied the market rate for valuation of the closing stock. It is well settled that the method of accounting adopted by the assessee consistently and regularly cannot be discarded.Revenue department undisputedly accepted the average cost price method for valuation of the opening stock for the year under consideration as well as the valuation of the closing stock in the earlier years, therefore, the valuation of the closing stock as on 11/11/2013 found during the course of survey, by applying the market rate was not justified, as such the Ld. CIT(A) rightly deleted the impugned addition made by the A.O. We do not see any valid ground to interfere with the findings given by the Ld. CIT(A). - Decided against revenue.
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2021 (8) TMI 645
Addition on account of transfer pricing adjustment - Comparable selection - HELD THAT:- While framing the order under section 92CA(3) of the Act in case of the successor company (the present assessee) with whom the erstwhile company merged, the transfer pricing officer had passed an identical order selecting/rejecting the very same comparables by re-characterizing the successor company as a KPO service provider. In an identical order learned Commissioner (Appeals), though, held that the successor company is not a KPO service provider; however, he retained some of the companies selected by the TPO while upholding the rejection of companies selected by the concerned assessee. See MORGAN STAINLEY ADVANTAGE SERVICES P. LTD. VERSUS DY. CIT RANGE 9 (2) MUMBAI [ 2020 (8) TMI 170 - ITAT MUMBAI] We direct the assessing officer to include R System International Ltd, Allsec Technologies and CG Vak Software Exports Ltd as comparables. Whereas, he is directed to exclude eClerx Services Ltd, Coral Hubs Limited (earlier, Vishal Information Technologies Limited) and Crossdomain Solutions Limited from the list of comparables. After completing the aforesaid exercise, he must compute the ALP of the international transactions.
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2021 (8) TMI 643
Penalty u/s. 271D - violation of provisions of Section 269SS - assessee had accepted cash unsecured loans - assessee had raised unsecured loans from her husband and from her son and a small part of the loan was also raised from a friend - appellant could not prove that loans given were duly reflected in the books of account - HELD THAT:- Lenders to the assessee are individuals and they may not be maintaining books of accounts - they have filed confirmations of having advanced the moneys to the assessee and in the confirmations they have also confirmed that such loans were received back during the year itself. The assessee has reflected the receipt of such loans and repayment thereto in receipt and payment account a copy of receipt and payment account, therefore the first reason for rejecting the appeal of the assessee is not a valid reason. Assessee had not deposited such cash in the bank account - Case the assessee had deposited such cash in the bank account and through that bank account the payment was made whereas in the present case the assessee did not deposit the same in the bank account - in the present case, the purchase of property was done in cash which is apparent from the copy of purchase deed and whereas in that case the assessee had made payments through banking channels therefore this reason is also not sustainable as there is no point in first depositing the cash in the Bank account and then withdrawing it for making cash payment for purchase of property. Assessee could not establish reasonable cause for violating the provisions of Section 269SS of the Act - Assessee had borrowed funds in cash for conversion of leasehold right in to freehold rights and in the present case also the assessee had borrowed funds for purchase of an immovable property. Therefore, the third reason is also not sustainable. - Decided in favour of assessee.
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2021 (8) TMI 638
Assessment u/s 153A - Addition on account of gain on sale of investment - HELD THAT:- When the capital gain earned from the sale of shares were already recorded in the books of accounts and no incriminating material was found during the course of search operation on Jakson Group being run by Sameer Gupta, Bhawana Gupta and Sandeep Gupta, addition made on the basis of sole statement of Sandeep Gupta is not sustainable in the eyes of law, particularly when all the transactions qua sale of shares and capital gain earned during the year under consideration have been duly recorded in the books of accounts. So, in these circumstances we find no illegality or perversity in the impugned order passed by Ld. CIT (A), hence, appeal filed by the revenue is hereby dismissed.
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2021 (8) TMI 636
Deemed dividend u/s 2(22)(e) - whether loans and advances given to a shareholder holding beneficial interest is coming within the ambit of provisions of section 2(22)(e) of the Act or not? - HELD THAT:- In this case, there is no dispute with regard to fact that two transactions between the assessee Shri Naren Rajan and Company are normal trade advances / commercial transactions. In fact, the AO has categorically accepted that two transactions are normal commercial transactions. Therefore, we are of the considered view that once a particular transaction is considered as normal commercial transaction, then the question of application of provisions of section 2(22)(e) of the Act does not arise. The CIT(A) without appreciating the facts, has confirmed additions made by the AO. Hence, we set aside the order of the ld.CIT(A) and direct the AO to delete additions made towards deemed dividend u/s.2(22)(e) of the Act towards advance received from M/s Tristar Accommodation Limited for purchase of villas and payment made as security deposit for Joint Development Agreement. Disallowance of provision made for construction cost of balance flats not handed over to land owner - assessee had entered into a Joint Development Agreement (JDA) dated 18.01.2006 with his sister Smt. Seshu Rajan for development of land measuring 19.65 acres - HELD THAT:- Following various judicial precedents including decision of the Hon ble Supreme Court in the case of M/s. Bharat Earth Movers vs. CIT, [ 2000 (8) TMI 4 - SUPREME COURT ] we are of the considered view that provision made for cost of construction of 17 villas amounting to ₹ 4,76,00,000/- is ascertained liability which accrued for relevant assessment year.Hence, we direct the AO to allow provisions created in the books of accounts for assessment year 2012-13. Disallowance of bad debts - HELD THAT:- We find that the conditions for claim of bad debts as stipulated u/s.36(1)(vii) r.w.s. 36(2) of the Act has been complied with and hence, it is irrelevant whether debt pertains to business which was closed in earlier year or it pertains to business in continuation during the year in which said debt was written off. As long as debt was written off in the books of accounts of the assessee, the same needs to be allowed as deduction. This proposition is supported by the decision of Hon ble High Court of Madras in the case of CIT v. M/s. Rajini Investment Private Limited, [ 2009 (10) TMI 33 - MADRAS HIGH COURT ], where it was clearly held that merely because the money lending business was subsequently discontinued, that is in the subsequent accounting year relating to assessment year, it cannot be held that the assessee was disentitled to claim such deduction. Therefore, we are of the considered view that there is no error in the findings recorded by the ld.CIT(A) to delete addition made towards disallowance of bad debts and hence, we are inclined to uphold findings of the ld.CIT(A) and reject ground taken by the Revenue. Capitalization of land for project expenses - HELD THAT:- We have heard both the parties, perused materials available on record and gone through orders of the authorities below. Admittedly, lands on which 48 row houses have been built were in pursuance of Joint Development Agreement with Smt. Seshu Rajan. The lands on which row houses have been built were never purchased from the land owner. Further, the assessee has incurred cost of construction of 48 row houses and debited under the head direct project expenses into profit loss account. Since the row houses are retained to earn rental income, cost of building of 48 row houses was capitalized in his books of accounts as fixed assets. Since, land was in pursuant to JDA and assessee has not paid any consideration for land, the question of capitalization of cost of land of 48 row houses does not arise. Therefore, under these facts and circumstances, we are of the considered view that since the lands were never purchased by the assessee nor any consideration was paid with respect to sale, the question of capitalization of said cost does not arise. Notwithstanding to the above, it is also noteworthy to observe that cost of land was never claimed in profit loss account as expenses and thus, capitalization of such cost of land to the fixed asset is a revenue neutral expenses, because no evidence was brought on record to establish the fact that the assessee has paid consideration for purchase of land. CIT(A) after considering relevant facts, has rightly deleted addition made by the AO. Hence, we are inclined to uphold the findings of CIT(A) and reject ground taken by the Revenue.
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2021 (8) TMI 635
Taxation of income from sale of commercial off-the-shelf software - HELD THAT:- There is no specific finding by the lower authorities with regard to the licence agreement through which the assessee granted to the parties to use the software to say whether it is just the sale of software or royalty. In our opinion, it is appropriate to remit the issue in the light of judgment in Engineering Analysis Centre For Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] . Accordingly, this issue is remitted back to the file of AO for fresh consideration and decision in accordance with law. Tax foreign exchange difference arising on account of reconciliation of total receipts of the Company with the receipts appearing in Form 26AS - HELD THAT:- Assessee adopted the rate as on 31st March to quantify the receipts appearing in Form 26AS with regard to income received in foreign exchange. According to him, Rule 115 of the I.T. Rules is not applicable to royalty income. In our opinion, the argument of the ld. AR is totally misconceived. The last date in the balance sheet of 31st March is the date of preparation of balance sheet and not for quantifying the foreign exchange rate. In this case, the assessee actually received this amount and that date itself should be considered to determine the value of the amount of tax deducted at source on royalty and not the last date of balance sheet. Being so, we are not in agreement with the contention of the ld. AR. Accordingly, the order of the CIT(Appeals) is confirmed. These grounds are dismissed.
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2021 (8) TMI 634
Interest free loan - interest on borrowed funds - the assessee has sufficient own funds being share capital, reserves and balance in profit loss account, which is sufficient to cover loans given to related parties without any interest and hence, no interest could be disallowed for diversion of funds to related parties - HELD THAT:- In assessee s own case for assessment year 2004-05 [ 2019 (5) TMI 1895 - ITAT CHENNAI] where the Tribunal by following mixed funds theory in light of the decision in the case of CIT Vs. Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] , held that when interest free loan is extended they are firstly sourced out of interest free funds and if it is not sufficient to cover up the entire extent of interest free loan, the balance is met out of interest bearing funds. Tribunal further noted that in the present case, the assessee has sufficient own funds being share capital, reserves and balance in profit loss account, which is sufficient to cover loans given to related parties without any interest and hence, no interest could be disallowed for diversion of funds to related parties. We are of the considered view that there is no error in the findings recorded by the CIT(A) to delete disallowances made by the Assessing Officer towards proportionate interest and hence, we are inclined to uphold findings of the CIT(A) and dismiss appeal filed by the Revenue.
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2021 (8) TMI 633
TP Adjustment - comparable selection - inclusion of Crystal Voxx Limited in the final list of comparable companies with respect of ITES segment - HELD THAT:- As in the case of FNF India Limited [ 2019 (7) TMI 1760 - ITAT BANGALORE] we direct the AO/TPO to include Crystal Voxx Limited as a comparable company. Negative working capital adjustment should not be allowed - HELD THAT:- We hold that since the assessee is a capital service provider, negative working capital adjustment need not be given in the facts of this case.
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2021 (8) TMI 632
Reopening of assessment u/s 147 - reasons were recorded on receipt of information from Investigation Wing - case of the assessee was reopened second time - Share capital received from M/s. Moderate Credit Corporation Ltd. - HELD THAT:- Perusing of the reasons recorded and assessment order framed in this case further shows that, the entire reopening and assessment proceedings have been based upon the information received by the AO from the Investigation Wing of Income-tax, where Aseem Gupta had admitted to provide accommodation entries to several beneficiaries with the help of several bank accounts opened in the name of several proprietary concerns and companies in which either he himself or his employees were Director or proprietor. Apart from this information, which has been taken as gospel truth by the AO, no independent enquiry has been made to collate and corroborate this statement and information provided by Aseem Gupta to Investigation Wing. The issue in question that assessee company has received accommodation entry from Moderate Corporate Corp. belonging to one Aseem Gupta, CA was subject matter of the earlier assessment framed u/s 147 read with section 143 (3) of the Act. Last sentence of the reasons recorded apparently goes to prove that AO has reopened assessment u/s 147/148 of the Act to verify the genuineness, identification and creditworthiness of the aforesaid transaction. It is settled principle of law that jurisdiction u/s 147 can only be assumed to enquire into the escapement of income or on the basis of some tangible material - See M/S SBS REALTORS (P) LTD. VERSUS INCOME TAX OFFICER, WARD-22 (4) , NEW DELHI [ 2019 (4) TMI 357 - ITAT DELHI] Assessment framed in this case is not sustainable since the very jurisdiction assumed by the AO u/s 147 of the Act is bad in law and assessment framed on the basis of change of opinion u/s 147/143 (3) is void ab initio and is not sustainable in the eyes of law, hence quashed. Since assessment framed is not sustainable in the eyes of law on legal grounds, grounds raised on merits are not required to be disposed off.- Decided in favour of assessee.
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2021 (8) TMI 631
Revision u/s 263 - deduction u/s 35AC - HELD THAT:- PCIT has failed to mention as to how the assessment order was erroneous and prejudicial to the interest of the Revenue. In respect of the queries raised by the Ld. PCIT, the assessee gave explanations. The Ld. PCIT could not find any error or discrepancy in the explanation submitted by the assessee requiring any further investigation. There is no finding given by the PCIT that the explanation given by the assessee was not justified or there was any scope of further enquiries in this respect. As per the provisions of section 263 of the Act, the Ld. PCIT was supposed to apply his mind to the explanation submitted by the assessee and come to a conclusion that the order passed by the AO was erroneous and prejudicial to the interest of the Revenue and further he was supposed to make or to cause to make necessary enquiries to arrive at a conclusion that the assessment order in question was not sustainable. The exercise of revisional jurisdiction u/s 263 of the Act has been made by the ld. PCIT in a casual and mechanical manner which is not sustainable in the eyes of law. The impugned order passed u/s 263 of the Act is, therefore, quashed. AO not added the notional rent income from the rest of three flats under income from house property - The assessee had let out the property in F.Y. 2016-17 and the rental income had accrued from June 2016. It had further been submitted that the assessee had paid advance against property at LT Tower and the assessee had received possession of the property in May 2018. The assessee was joint owner of the property at L T Parel Project with another daughter Ms. Aditi Chamaria. The assessee was 50% owner of the property at Merlin, Kolkata with his wife Ms. Sarita Bajaj. The wife of the assessee had let out the property during the year under review and was in receipt of the rental income. The entire total income of the property was received by the wife of the assessee and she was subject to highest rate of taxation. She had paid substantial part of the purchase consideration and as per understanding between the co-owners the rent was received by her. Though, the assessee duly explained about the date of coming into possession of the some of the properties and that on becoming owner in possession of the properties in question, the rental income was duly offered for taxation. Further that in respect of one property, his wife had taken into account the rental income. However, the ld. PCIT in a mechanical manner set aside the assessment order observing that the aforesaid explanations were not available to the Assessing Officer - Decided in favour of assessee.
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2021 (8) TMI 629
TP Adjustment - international transaction of allowing credit period to the AE - HELD THAT:- A.Y. 2014-15 is covered under roll-back period of the APA. Also, the FAR for all the years covered under APA is same. Hence, the period of realization of 60 days which is agreed in the APA for 01 April 2017 onwards should be considered for A.Y. 2014-15 as well. The principle laid down in the decisions referred to in paragraph 10 of this order will apply to the present case also. We hold and direct accordingly. Deduction u/s 10AA - Deduction u/s 12AA - communication and travelling expenses - HELD THAT:- We are of the view that it would be just and appropriate to direct the AO to consider the claim of the assessee regarding software expenses in the light of the invoices admitted as additional evidence by us. To the extent that the software expenditure is in the nature of payment of licence fee for a period of less than 1 year, the same could not be regarded as a capital expenditure and should be allowed as a deduction as was directed by the DRP in its directions dated 06.09.2018. As far as the grant of foreign tax credit projected of the grounds of appeal raised by the assessee is concerned, we admit the withholding tax certificate evidencing payment of tax in foreign country and direct the AO to give credit to such taxes in accordance with law as mentioned in section 90 of the Act, after affording assessee opportunity of being heard. The AO is also directed to exclude communication and travelling expenses from the total turnover while computing eligible deduction under section 12AA of the Act. Thus, the relevant grounds of appeal of the assessee are treated as allowed for statistical purposes. Levy of interest under section 234A - assessee had filed the return of income within the due date prescribed - AO is directed to examine the claim of the assessee in this regard, after affording opportunity of being heard. Levy of interest under section 234B is purely consequential ground with regard to initiation of penalty proceedings u/s 271(1)(c) of the Act is not appealable.
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2021 (8) TMI 627
Disallowance of Corporate Social Responsibility (CSR) expenditure - revenue or capital expenditure - claim of the assessee is that the ld. CIT (Appeals) then should have directed the ld. Assessing Officer to grant depreciation on these assets - HELD THAT:- Assessee has paid premium of land for this facility. The building is constructed of prefabricated steel structure and cannot be held to be a temporary structure. Therefore, this expenditure cannot be allowed to the assessee as Revenue expenditure under Section 37(1) of the Act. Naturally these expenditure are capital in nature and also involve substantial payment for the land premium - there are certain expenditure for the construction of the training institute with pre-fabricated steel at Ghitorni, New Delhi. To claim the depreciation on this the assessee should have submitted the details of the actual cost of the asset, ownership of the asset and actual use of the asset. No such details are provided before us. In view of this, we send the issue back to the file of the ld. Assessing Officer directing the AO to examine the claim of the assessee for depreciation on this asset to the extent of cost of building. Assessee is directed to submit the relevant details before the Assessing Officer. With respect to the up-gradation of complex in Agartala and school construction in Rajkot, we find that both these expenditure are not for the purposes of business and, therefore, neither they can be allowed under Section 37(1) of the Act nor any depreciation can be allowed on these assets as they are not used for the purpose of the business of the assessee. Accordingly, ground No. 5 of the appeal of the assessee is partly allowed with above direction. Disallowance u/s 14A r.w.r.8D - assessee has claimed exemption of dividend income - assessee has disallowed suo moto a sum - HELD THAT:- We find that assessee has investment in joint ventures and liquid funds amounting to in all to ₹ 22,359 lakhs. From the joint ventures no exempt income is received during the year. Total dividend is from liquid funds. The assessee has share capital and pre-reserve to the extent of ₹ 79,550 lakhs which is higher than the amount of investment and, therefore, no disallowance under Section 14A read with Rule 8D(2)(i) and (ii) can be made. Further for working out disallowance under 8D(2)(iii) clearly the average of investment with exempt income should be taken. Such is the mandate of Hon'ble Delhi High Court in the case of ACB India Ltd.[ 2015 (4) TMI 224 - DELHI HIGH COURT] - Based on this the disallowance comes to ₹ 68.68 lakhs, which is the suo moto disallowance made by the assessee - Decided against revenue. Disallowance u/s.40(a)(ia) - non-deduction of TDS on 'Bank Guarantee Expenses' - Applicability of Notification No. 56/2012 of the CBDT in this regard issued vide F. No. 275/53/2012-IT (B)/SO 3069(E) dated 31.12.2012 - HELD THAT:- We find that the issue is squarely covered in favour of the assessee in assessee's own case for assessment year 2011-12 [ 2018 (5) TMI 2081 - ITAT DELHI] held that the Notification issued by the CBDT was to remove the rigorous of TDS and for unnecessary hardship. Therefore, it was held that the Notification issued also applies to assessment year 2011-12 though it is stated to be applicable with effect from 1.01.2013. There is no change in the facts and circumstances of the case. Therefore, respectfully following the decision of the co-ordinate bench in assessee's own case, we confirm the order of the ld. CIT (Appeals). Ground No. 4 of the appeal of the ld. Assessing Officer is dismissed. Allowance of Corporate Social Responsibility expenditure incurred by the assessee on awareness campaign ignoring the content of Explanation (2) of Section 37(1) - CIT (Appeals) has allowed this expenditure holding that these are the advertisement expenditure and assessee was the sponsor displaying its logo HELD THAT:- We do not find any infirmity in holding that the above expenditure is an advertisement expenditure incurred by the assessee. With respect to the applicability of Explanation (2) to Section 37(1) of the Act, same applies with effect from 1.04.2015 i.e. assessment year 2015-16 and not to this year. In view of this, ground No. 5 of the appeal of the ld. Assessing Officer is dismissed.
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Customs
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2021 (8) TMI 670
Provisional release of the Vessel - requirement of furnishing bank guarantee or cash deposit and execution of bond - HELD THAT:- The evasion of duty on the materials, namely, the HSD and the sludge oil does not appear to be of substantial amounts for which the bank guarantee of ₹ 35 lakhs, as furnished by the petitioner, can be said to be insufficient. The question is, however, of the Vessel itself being treated as goods and which is valued at ₹ 7 Crores. As to whether the Vessel would be liable for confiscation and further consequential orders, is an issue which would be required to be decided in the adjudication of the show cause notice, which has now been issued to the petitioner calling upon the petitioner to reply the same within 30 days of its receipt. It would be appropriate that the respondents proceed to adjudicate the show cause notice, after the reply is filed by the petitioner within the prescribed period of 30 days granted to it from the date of the receipt of the show cause notice. At this stage it may not be appropriate to consider the merits of the rival contentions which are certainly issues falling under the show cause notice. It would be in the interest of justice that provisional release of the Vessel by the respondents be ordered pending the adjudication of the show cause notice - Petition disposed off.
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2021 (8) TMI 667
Issuance of a scrip under Incremental Export Incentivisation Scheme (IEIS) - rejection on the ground of the application being time-barred - HELD THAT:- The petitioner did not comply with the time lines to submit a complete application which was to be filed by March 31, 2016. The petitioner was informed of the rejection of its application on May 05, 2016. The petitioner although attempted to give justification by its letters as noted by us, however the fact remains that the petitioner approached the PRC for the first time by an application dated November 21, 2017, which was almost 19 months after rejection of its application being deficient. The petitioner s approach of merely writing letters after the decision dated May 05, 2016 cannot be construed as an assertion of its rights in the manner known to law. There are much substance in the submission of Mr.Jetly that the petitioner was not diligent in asserting its rights and pursuing its cause. The delay is quite gross which would disentitle the petitioner to any equitable and discretionary reliefs. We are, accordingly, not inclined to exercise our jurisdiction under Article 226 of the Constitution, to entertain this petition. Petition dismissed.
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2021 (8) TMI 661
Jurisdiction - competency of the DRI to issue show cause notice under Section 28 of the Customs Act, 1962 - Tribunal is empowered to remand the case without deciding the issues raised therein on the ground that jurisdiction of the officer to issue show cause notice is under dispute or not? HELD THAT:- No useful purpose would be served by remanding the matter, as the Commissioner of Customs has already adjudicated the issue and without deciding the merits of the matter, the appeals should not have been allowed. An order of remand should be unconditional or qualified. If it is an unconditional order of remand, that would mean that the reasons assigned by the adjudicating authority, namely, the Commissioner of Customs, Chennai, are incorrect, and the Tribunal was duty bound to record such finding and then set aside the order, and if it is satisfied that a fresh opportunity needs to be given either to the assessee or to the Revenue, then, an order of remand has to be passed. In the case on hand, the Tribunal is the last fact finding authority in the hierarchy of authorities and it is open to the Tribunal to directly receive the documents subject to reasons being recorded. Therefore, without reasons being recorded, the appeals should not have been allowed and remanded to the adjudicating authority and also parallelly status quo being ordered to be maintained. The appeals are restored to the file of the Tribunal and the order of status quo granted by the Tribunal shall continue to remain in force - Appeal allowed.
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2021 (8) TMI 641
Classification of imported goods - hollow profiles and pipes weighing about 10 MT found in the consignment - whether the goods are actually pipes and profiles and to be classified as such or merely as part of scrap - demand of customs duty - levy of redemption fine and penalty - HELD THAT:- The only documents on the basis of which a decision can be made in this regard are the examination reports and the letter given by the appellant to the Customs authorities both of which confirm that they were indeed hollow profiles and pipes and not scrap as declared. The appellant accepted that the mis-declaration, waived the Show Cause Notice by asking for a spot adjudication. If the appellant had contested the nature of the goods, a Show Cause Notice would have been issued and the remaining procedures followed. Once the appellant gave in writing that they have mis-declared the goods, they should be classified as profiles and pipes only and duty should be charged accordingly. It is worth noting that the goods were examined and on the request of the appellant, re-examined and after both these reports confirmed that the goods were hollow profiles and pipes, the appellant also accepted the mis-declaration in writing. If the pipes and profiles were indeed old, the appellant could have, instead of accepting a mis-declaration, requested for mutilation of these goods as per Section 24 so that they can no longer be used as pipes or profiles but need to be used as scrap only. However, the appellant made a request for spot adjudication accepting the mis-declaration and the order was passed accordingly. The appellant cannot now say that although they wanted a spot adjudication, the department should have still issued a Show Cause Notice. Therefore, the demand of duty in the adjudication order. The quantum of redemption fine and penalty reduced. Appeal allowed in part.
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2021 (8) TMI 640
Levy of penalty on Customs Broker - Section 114AA of the Customs Act, 1962 - wrongful duty drawback claim - case is that no evidence of the mobile phones having been manufactured in India so as to claim duty drawback in terms of Section 75 of Customs Act - HELD THAT:- The appellant who is the Customs Broker has only filed the shipping bills pertaining to the exports made by the ADPL Customs Intelligence Unit conducted the investigation and prima facie found that the mobile phones exported were not manufactured in India and have been manufactured in China and the exporter ADPL was not entitled to drawback under Section 75 of the Act. A SCN was issued demanding drawback of ₹ 1,20,02,815/- along with interest but after following the due process, the Additional Commissioner only confirmed the demand of drawback to the tune of ₹ 50,48,749/- as per Rule 16 of Customs, Central Excise Service Tax Drawback Rules, 1995. Further, the rejection of this amount is under challenge before the Revisionary Authority. In the present case, the Department has failed to prove that there was a mala fide and wilful mis- representation by the Customs Broker. It seems that the Commissioner (Appeals) has totally misunderstood the facts and has wrongly observed that the appellant (Customs Broker) and the exporter have been operating from the same premises and have an identical ICE Code which leads one to suspect the bona fides of the appellant. This finding of the Commissioner is factually incorrect and without any basis - the Commissioner on the basis of these facts has wrongly come to the conclusion that the appellant is involved in the illegal export whereas the appellant is only a Customs Broker who has filed the shipping bills on the basis of the documents furnished by the exporter. The imposition of penalty itself is not sustainable in law - Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 639
100% EOU - Levy of penalty u/s 112 of the Customs Act - allegation of of conniving in disposal of imported Ball bearings through a shop situated in Kashmiri Gate - validity of levying penalty when confiscation itself has been set aside - HELD THAT:- It is clear from the provisions of section 112 of Customs Act, that confiscation of goods is a necessary and pre-requisite condition for imposition of penalty. The appellant has also submitted that the proceedings against the main accused in the case of M/s Bhagwati International were set aside as far as the confiscation of goods alleged to have been sold through different shops located in New Delhi. The seizure having been vacated, imposition of penalty would not survive, as held in the case of MUNILAL MEHRA VERSUS COMMISSIONER OF CUSTOMS (ADJ.), MUMBAI [ 2008 (1) TMI 167 - CESTAT MUMBAI] . Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (8) TMI 660
Disqualification of directors - directors failed to file financial statements or annual returns for a continuous period of three years - Section 164(2) of Companies Act - HELD THAT:- Under Section 164(2) of the new legislation i.e., Act 18 of 2013, no such distinction between a private company or a public company is made and as per the said provision goes to show that no person who is or has been a director of a company , fails to file financial statements or annual returns for any continuous period of three financial years, will not be eligible for appointment as a director of a company. As already noted, the said provision, came into force with effect from 01.04.2014. Coming to the facts on hand, the 2nd respondent has disqualified the petitioners under Section 164(2)(a) of the Act 18 of 2013, for not filing financial statements or annual returns, for period prior to 01.04.2014. The action of the 2nd respondent runs contrary to the circular issued by the Ministry of the Corporate Affairs, and he has given the provisions of Act 18 of 2013, retrospective effect, which is impermissible. Section 164(2)(a) of the Act is a deeming provision and the disqualification envisaged under the said provision comes into force automatically by operation of law on default and Legislature did not provide for issuance of any prior notice, but the respondents notified disqualification even before it incurred, and deactivated DINs, which is illegal arbitrary and against provisions contained in Section 164(2)(a) of the Act. Deactivation of DINs - HELD THAT:- Clauses (a) to (f) of Rule 11, provides for the circumstances under which the DIN can be cancelled or deactivated. The said grounds, are different from the ground envisaged under Section 164(2)(a) of the Act. Therefore, for the alleged violation under Section 164 of the Act, DINs cannot be cancelled or deactivated, except in accordance with Rule 11 of the Rules. This Court having considered the said submissions is of the considered view that the new amending law also contemplates levying of ₹ 100/- per each day of default and which permits the regularizing the delay of the petitioners. Therefore, this Court is not inclined to accept the said contention of the learned Assistant Solicitor General for the respondents - the deactivation of the DINs of the petitioners for alleged violations under Section 164 of the Act, cannot be sustained. The impugned orders in the writ petitions to the extent of disqualifying the petitioners under Section 164(2)(a) of the Act and deactivation of their DINs, are set aside, and the 2nd respondent is directed to activate the DINs of the petitioners, enabling them to function as Directors other than in strike off companies - Petition allowed.
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2021 (8) TMI 626
Scheme of Arrangement by way of Amalgamation - section 230-232 read with section 66 of Companies Act, 2013, and read with Rule 15 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- There is no additional requirement for any modification and the Scheme of Amalgamation appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. All the statutory compliances have been made under Sections 230 to 232 of the Companies Act, 2013. The Scheme of Amalgamation annexed as Annexure-1 with the Petitions is hereby sanctioned - Petition allowed.
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2021 (8) TMI 624
Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 and other applicable provisions of the Act as well as Rules made there-under - HELD THAT:- Directions regarding holding, convening and dispensation of various meetings issued - directions regarding issuance of notices also issued. The application is allowed.
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Insolvency & Bankruptcy
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2021 (8) TMI 656
Dissolution of Corporate Debtor company - applicability of Section 53 of the IBC on EPF - HELD THAT:- From the records, it is seen that the Appellants though made their claims during CIRP, however, the claims have not been notarized as per the procedure. However, prima facie, the value of the assets of the Corporate Debtor being nil, the Liquidator may not be able to pool the funds, distribute the same(sum) in pursuance of Section 53 of the I B Code 2016. The main contention of the Appellant is that Section 53 of the IBC is not applicable in the case of EPF. Since the Employees Provident Fund Act is a special Act and prevails over all other acts and submits that the dues which are payable to the employees cannot be treated as part of the asset of the Corporate Debtor. In view of the nil value and keeping in view of the dissolution of the company there being no other source to pay to the Employees Provident Fund, being a Government Agency, since the Corporate Debtor was dissolved, the company is no more in existence in the eye of law - Appeal dismissed.
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2021 (8) TMI 653
Validity of direction issued to the Registrar of Companies to inspect the books and conduct inquiries - Section 206 and Section 207 of the Companies Act, 2013 - Directions to furnish the report to the Appropriate Authority for necessary action - Section 208 of the Companies Act - HELD THAT:- Under Sub-section (4) of Section 206 of the Companies Act 2013, if the Registrar is satisfied based on information available or furnished to him or on a representation made to him by any person that the business of a company is being carried on for a fraudulent or unlawful purpose, the Registrar may, after informing the Company of the allegations against it by written Order, call on the Company to furnish in writing any information or explanation the matters as specified in the Order and carry out such enquiry as he deems fit after providing the Company with a reasonable opportunity of hearing - It is pertinent to mention that under proviso to Sub-section (4) of Section 206, Central Government is empowered to direct the Registrar or any inspector appointed by, for the purpose to carry out the enquiry under this sub-section. It is essential to mention that the proceeding under the Insolvency and Bankruptcy Code, 2016, is initiated by the Corporate Debtor/Corporate Applicant itself. Serious irregularities are reported in the Forensic Audit Report against the Corporate Debtor. However, the power of the NCLT to order an investigation under the Companies Act, 2013 can not be denied. But whether the Adjudicating Authority under the I B Code is empowered to order inquiry and investigation about affairs of the Company or not is to be observed - Based on the Forensic Audit Report and Application filed by the RP, the Adjudicating Authority noticed that the Corporate Debtor had diverted a sum of ₹ 541.58 lakh to a related party viz., Trinity Papers India P. Limited., the attention is drawn to the Financial Statements as enclosed for the period 2016-17, 2017-18 and 2018-19. Under Section 210(1)(b) of the Act, the Central Government can investigate independently. As per Section 210(3), the Central Government has no option but to direct an investigation, appoint an Inspector, and obtain his report. The Inspectors are empowered to scrutinise the materials gathered from a Company and prepare the report. Section 210 of the Act specifies a procedure for an investigation by SFIO. As per Section 60(1) of the Code, National Company Law Tribunal is an Adjudicating Authority possessing concurrent jurisdiction under the Companies Act, 2013 and also under the I B Code, 2016. The Tribunal/Adjudicating Authority on receipt of an Application/complaint of breach of the relevant provisions of the IBC, 2016 and the Companies Act and after satisfying itself that there are attendant circumstances pointing out fraudulent/wrongful trading has been committed then, it is well within jurisdiction to refer the matter to Central Government for an investigation by Inspectors to be appointed by the Central Government. In the instant case, the Applicants/RP filed an Application under Sections 43, 45 and 66 of the I B Code 2016 but has restricted its relief only to Section 66(2). Therefore, considering the serious nature of the transaction as brought forth in the Forensic Audit Report, the investigation has been ordered to the concerned Registrar of Companies - In the instant case, it is evident that CIRP has been initiated by the Corporate Applicant/Corporate Debtor through its Promoters/Directors U/S 10 of the Code on 4th March 2019. When the Corporate Debtor applies for Initiation of Corporate Insolvency Resolution Process on its own, the Corporate Debtor is required to make it complete disclosure of its affairs as mandated under the provisions of the I B Code 2016. The disclosures, in particular, Form 6 of the said Rules and the Annexures filed thereunder, are of significant importance in coming to a conclusion on the existence of insolvency of the Corporate Debtor and initiating the Corporate Insolvency Resolution Process. It is also evident that serious irregularities have been found in the forensic audit report - the Adjudicating Authority ordered that the companies' Registrar exercise its power as available to it under Sections 206 and 207 of the Companies Act 2013. It is also important to mention that under Section 206 of the Companies Act, the Registrar is empowered to act on any information he receives. Considering the circumstances of the case, we do not find any irregularity or illegality in passing the impugned Order. Appeal dismissed.
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2021 (8) TMI 628
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- As per Part IV from I, the debt fell due when the invoices were raised in the year 2011-12. The debt was admitted by the corporate debtor in terms of agreement dated 15.09.2014. The winding up proceedings, were initiated in the year 2016. The IBC demand notice was sent in July 2017 and the present application is filed on 22.01.2019. Hence the application is not time barred and filed within the period of limitation. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The present application is filed on the Performa prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section 9 of the code and is complete. Existence of dispute or not - HELD THAT:- The SPA executed on 25.05.2016, was never revoked hence Ms. Radhika Singh is duly authorized to filed the present application. Moreover, there is a pre-existing dispute among the parties and the same is validated as per emails correspondences exchanged during the year 2011-2012 wherein the corporate debtor had raised dispute with regards the inferior quality of goods. The disputes have also been raised by the corporate debtor in its reply to the winding up notice and demand notice under Section 8 of IBC of the applicant. This leaves no doubt that the so called dispute raised by the corporate debtor is not merely a moonshine dispute. A conclusion can be drawn that there is Preexistence dispute which was raised by the corporate debtor time and again in terms of the agreement executed between the parties much prior to the notice served under section 8 of I B Code by way of its reply to statutory notice for winding up as well reply to winding up petition and also in reply to Section 8 notice under IBC. It is a fit case to reject the application under section 9 of the I B Code. Application dismissed.
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2021 (8) TMI 625
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - date of default is 02.06.2014 and the Application has been filed on 16.10.2019 - HELD THAT:- Apart from the decree passed by the Principal District Judge, Kadapa on 02.06.2014, the Operational Creditor has not attached any other document in order to show proof of the debt. Further, in Part-IV of the Application, the Operational Creditor has mentioned the date of default clearly as 02.06.2014 and it is an undisputed fact that the present Application has been filed before this Tribunal on 16.12.2019. Also, the Operational Creditor has failed to place on record any document to show that the debt claimed by them, is well within the period of limitation. The Operational Creditor has clearly slept over his rights to enforce the purported decree in accordance with law against the Corporate Debtor within the stipulated limitation period and is now attempting to use this forum as a Court of execution and the Hon'ble Supreme Court in the matter of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] has categorically held that this Authority should not be used as a Court of execution. The debt as claimed by the Operational Creditor is time barred and the Operational Creditor has failed to place on record any iota of document recognized under the law to substantiate that the debt falls well within the period of limitation - the debt as claimed by the Operational Creditor is time barred and as such the Application filed by the Operational Creditor stands dismissed as not maintainable.
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2021 (8) TMI 623
Seeking to issue direction regarding Consideration of Expression of Interest/Resolution Plan by the RP and COC - seeking directions to the RP to call for meeting of Committee of Creditors - seeking exclude the litigation period in view of proviso 12(3) of I B Code - HELD THAT:- In this matter, the CIRP was initiated on 25.07.2018 and the final list of resolution applicants was notified on 16.11.2018 and it is further seen that the last date for submission of the Resolution Plan was 06.12.2018. Under Section 33 of the IBC, an Adjudicating Authority is vested with the power to pass the liquidation order. Whereas under Section 34 of the IBC, 2016, the Adjudicating Authority is empowered to appoint the Liquidator - the application filed by the Resolution Professional for liquidation under Section 33 of the IBC, 2016 has already been allowed. Vide that Order, this Adjudicating Authority held that The assets of the Corporate Debtor be put for liquidation as no resolution plan has been received and 270 days are also over. The matter is pending only for appointment of the RP as a liquidator as no decision has been taken by the CoC in this respect. Whenever the Adjudicating Authority pass an order for liquidation of the corporate debtor under section 33, the Resolution Professional appointed for the corporate insolvency resolution process under Chapter II shall, subject to submission of a written consent by the Resolution Professional to the Adjudicatory Authority in specified form, act as the liquidator for the purposes of liquidation unless replaced by the Adjudicating Authority under sub-section (4) Section 34 of IBC 2016. Thus, so far as the liquidation order under Section 33(1) of the IBC, 2016 is concerned, the first part of the order dated 14.06.2019 shows that the order of liquidation was passed on two grounds i.e. no resolution plan was received and the period of CIRP was already over. Hence, in view of Section 34(1) of the IBC, 2016, unless the Resolution Professional is replaced under Sub-section 4 of Section 34 of IBC, 2016, he shall continue to act as Liquidator - It is also the admitted position of law that there is no power for review of order under the IBC and once the liquidation order is passed by this Adjudicating Authority on 14.06.2019, there is no scope to recall. The subsequent order dated 04.07.2019 cannot be read as an order of recall of the order of liquidation, rather it can be treated as an order which deferred the matter that was for consideration i.e., confirmation of the liquidator under Section 34(4) of the IBC, 2016 only. There are no force in the contention of the Applicant and no reason to give any direction to the applicant or the COC in respect of the Expression of Interest/Resolution Plan of Resolution Applicant M/s. Hindustan Aqua Private Limited received by the Resolution Professional - application dismissed.
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PMLA
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2021 (8) TMI 665
Money Laundering - scheduled offences - hearing on charges and trial proceedings in subject Sessions Cases registered for the offences under PML Act before commencement of hearing on charges and trial proceedings in the subject Calendar Cases registered for the predicate/scheduled offences - conduct of trial proceedings of predicate/scheduled offences and offences under PML Act simultaneously or not - HELD THAT:- A bare reading of Sections 2(1)(u), 3 and 44(1)(d) of PML Act along with explanations thereof makes it clear that the offence of money laundering is a stand-alone offence and the trial proceedings are completely different to that of the scheduled offence. Trial of money laundering offence is independent trial and it is governed by its own provisions, it will not meddle with the trial of scheduled offence. Similar question came up for consideration before the Hon ble High Court of Madras in Smt.Soodamani Dorai Vs. Joint Directorate of Enforcement s case [ 2018 (10) TMI 330 - MADRAS HIGH COURT ] relied by the respondents, wherein, it was held that adjudication, prosecution and trial under PML Act is independent of scheduled offence. Further, a reading of the provisions of PML Act makes it clear that though the commission of scheduled offence is a fundamental pre-requisite for initiating proceedings under the PML Act, the offence of money laundering is independent of the scheduled offences. The scheme of the PML Act indicates that it deals only with laundering of money acquired by committing the scheduled offence. In other words, the PML Act deals only with the process or activity of proceeds of crime, including its concealment, possession, acquisition or use and it has nothing to do with the launch of prosecution for scheduled offence and continuation thereof - Once an offence under the PML Act is registered on the basis of a predicate/scheduled offence, then it stands on its own and it does not require support of predicate/scheduled offence. As per the scheme of the PML Act, it does not depend upon the ultimate result of the predicate/scheduled offence. Even if the predicate/scheduled offence is compromised, compounded, quashed or the accused therein is/are acquitted, the investigation under PML Act does not get affected, ceased or wiped out. It may continue till the Enforcement Directorate concludes investigation and either files complaint or closure report before the Special Court. PML Act is a special statute enacted with a specific object to track and investigate cases of money-laundering. Therefore, if the contention of the learned senior counsel for the petitioners that when the foundation (predicate/scheduled offence) is removed, the structure/frame work thereon (offence under PML Act) falls is accepted, it will have frustrating effect on the intention of Legislature in enacting the PML Act, so also on its enforcement - Further, the burden of proof in the predicate/Scheduled offences and the offence under PML Act is different. Unless proceeds of crime are established by putting the accused on trial, any prosecution of the person under PML Act would be premature and would be futile exercise. Since the offence under PML Act is a stand-alone offence and not dependent on predicate/scheduled offences, it can be proceeded with independently without awaiting the outcome of result of scheduled offences or commencement of trial in the predicate/scheduled offences. Further, there is no requirement under law to conduct trials of both category of cases simultaneously. Therefore, the contention that Money Laundering offence starts at the end of predicate offence and commencement of trial in offence under PML Act shall not precede trial of predicate/scheduled offence, is unsustainable. It is well established that though the powers of this Court under Section 482 Cr.P.C., are very wide, those powers are required to be exercised sparingly and with abundant caution. The said inherent power can be exercised only when there is abuse of process of Court or to secure ends of justice - there is nothing to say that the order impugned suffers from illegality or impropriety or the Court below had acted beyond its jurisdiction. Criminal Revision Case is dismissed.
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Service Tax
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2021 (8) TMI 668
Rejection of application by the Settlement Commission - Demand proposed on exempted Course - Courses approved by All India Council for Technical Education (AICTE) as stated in the affidavit - vires of Section 76(A)(6)(b) of the Finance Act, 2010, inserting the above Explanation to Section 65(105)(zzc) of Finance Act, 1994 - Settlement Commission rejected the application on the ground that the dispute exists between the Department and the petitioner and therefore, the jurisdiction of the Settlement Commission under the provisions of the Act, is ousted. HELD THAT:- This Court is of an opinion that the Settlement Commission followed the procedures by considering the application filed by the petitioner as well as the issues proposed for settlement. When the Settlement Commission, in clear terms, formed an opinion that the failure of the petitioner/applicant and the absence of true spirit of settlement shows a lack of cooperation and further, the petitioner had not come out with true and full nature of disclosure and in this context, the Settlement Commission formed an opinion that the Commission cannot take on itself the role of Adjudicator. The observations made by the first respondent that the Bench is constrained to believe that the lack of cooperation on the applicant/petitioner emerges as the main cause for the kind of deadlock to this issue. The Commission further proceeded by stating that the Settlement Commission is not the Forum to decide the Bench contentious issues by weighing in the evidence let in by the rival parties to the proceedings and conclude one way or the other. The Settlement Commission has rightly formed an opinion that the disputed issues cannot be adjudicated in an application filed to settle the issues. Thus, the spirit of provision under the Central Excise Act, in the matter of entertaining the application for settlement has been rightly considered by the Settlement Commission and there is no infirmity or perversity as such - The settlement of cases under Section 32E of the Central Excise Act, no doubt, is the right provided to a person. However, such right is contemplated subject to certain terms and conditions. The settlement, in other words, is a facility provided to get this from the adjudication. Therefore, the party willing to settle the issues statutorily is expected to approach with true and full disclosure of facts and extend full cooperation for the settlement of issues. Settlement though read under the Act, cannot be construed as conclusive, in view of the fact that in the event of non-settlement, the issues are to be adjudicated before the Competent Authority under the provisions of the Act. Therefore, it is an additional facility or redressal mechanism contemplated under the Act for the benefit of the aggrieved persons/assessees - this being the scope and spirit of the settlement to be done under the provisions of the Central Excise Act, this Court is of an opinion that the findings of the Settlement Commission in the impugned orders are candid and convincing and there is no infirmity or perversity as such. The writ petition is dismissed.
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2021 (8) TMI 654
Seeking adjustment/appropriation of excess tax paid against net amount of interest payable - Penalty u/s 76 of FA - HELD THAT:- In the impugned order, the learned Commissioner has confirmed the demand of interest of ₹ 8,94,092/- under Section 75 of the Finance Act and on re-quantification, the Department itself has come to the amount of ₹ 7,22,523/- which is also incorrect as per the appellant because the interest has been calculated on a wrong amount as stated by the appellant. Hence, there is a divergence of opinion between the appellant and the Department regarding the quantification of the interest. The interest needs to be re-quantified again by the Department as per the statements made by the learned Counsel for the appellant. For this purpose, the matter is remanded back again to the Assistant Commissioner for re-quantification of the interest payable under Section 75 - Appeal allowed by way of remand.
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2021 (8) TMI 651
Refund of service tax paid erroneously - transaction was for construction of a single residential house, and thus exempted vide Sl. No.14 of N/N. 25/2012-ST dated 20.06.2012 - rejection of refund on the ground that the eligibility for a refund exists only when it involves construction of a single residential unit and not a residential unit as part of the residential complex - HELD THAT:- The appellant s case is squarely covered by the Order passed by this Tribunal in the case of ASHISH OBEROI VERSUS COMMISSIONER OF CENTRAL TAX, BANGALURU SOUTH COMMISSIONERATE [ 2019 (7) TMI 215 - CESTAT BANGALORE] wherein the Tribunal has allowed the appeal of the appellant. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 650
Refund of service tax - rejection of refund on the ground of non-submission of necessary documents as per N/N. 41/2016 dated 22.09.2016 - non-compliance of requirements under Section 11B of the Central Excise Act, 1944 as made applicable to Finance Act, 1944 vide Section 83 of the Act - HELD THAT:- The appellant filed refund claim which arose as a consequence of introduction of Section 104 of the Finance Act w.e.f. 31.03.2017. Further, N/N. 41/2016 dated 22.09.2016 has exempted taxable service provided by the State Government Industrial Development Corporation/Undertakings to industrial units by way of granting long term lease on industrial plot from so much of service tax leviable thereon under Section 66B of the said Act, as is leviable on the one time upfront amount payable for such lease. Vide Section 104 (1), exemption was provided from said services for the period from 01.06.2007 to 21.09.2016 and it was provided that the refund claim should be filed within a period of six months from the date from which Finance Act, 2017 is promulgated and come into force. In the present case, the appellant filed the refund claim within time and the only ground for which the refund was rejected by the Original Authority and upheld by the Appellate Authority is that the appellant did not produce sufficient documents in the form of invoices/bills showing that they have paid the service tax to KINFRA. During the pendency of the appeal, the appellant filed various invoices/bills issued by KINFRA showing the payment of service tax by the appellant for which the refund claim has been filed by the appellant - KINFRA has also issued a certificate dated 02.02.2021 certifying that they have not availed any CENVAT credit on the service tax paid by the appellant. These bills/invoices issued by KINFRA clearly show the payment of service tax by the appellant to KINFRA and KINFRA in turn has paid the same to the Government. Though these invoices/bills were not produced before the Original Authority but various Challans issued by KINFRA were produced along with worksheets showing the payment of service tax to KINFRA by the appellant. The appellants have produced sufficient documents to prove the payment of service tax - refund cannot be denied - appeal allowed - decided in favor of appellant.
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2021 (8) TMI 642
Invocation of extended period of limitation - wilful suppression of facts with an intent to evade payment of service tax, exists or not - necessary ingredients for issuance of SCN, present or not - section 73(1) of the Finance Act, 1994 - HELD THAT:- Tribunal in M/S. SHIV-VANI OIL GAS EXPLORATION SERVICES LTD. VERSUS CST, NEW DELHI [ 2016 (10) TMI 878 - CESTAT NEW DELHI] , wherein the Tribunal after making reference to the decision of the Supreme Court in COSMIC DYE CHEMICAL VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [ 1994 (9) TMI 86 - SUPREME COURT] , observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. The Commissioner, therefore, fell in error in observing that the appellant had suppressed information from the Department regarding payment of service tax by the appellant on works contract service and availment of CENVAT credit and then holding that mere suppression of facts was enough for invoking the extended period of limitation. Even suppression of facts has to be wilful and in any case, suppression has also to be with an intent to evade payment of service tax. Though, the Commissioner in the last sentence of paragraph 8.6 of the order observed that in any case, the noticee, in this case, has willfully contravened the provisions of the Finance Act , but there is no discussion or reasons given by the Commissioner for so concluding and only a bald statement has been made and that too as an alternative finding. It is not possible to sustain the finding recorded by the Commissioner that the Department was justified in invoking the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act. Also, the proposal in the show cause notice relating to recovery of amount under section 73A of the Finance Act and interest thereon under section 73B of the Finance Act has not been confirmed in the impugned order - It is not possible to accept the contention of the learned Authorised Representatives for the Department that since there was a proposal for recovery of ₹ 2,44,48,095/- under section 73A of the Finance Act in the show cause notice, the said demand can be confirmed in these proceedings, even if the Commissioner has dropped the demand made under section 73(1) of the Finance Act. The imposition of penalty and recovery of interest cannot also be sustained - Such being the position, when the demand could not have been confirmed under section 73(1) of the Finance Act, it will not be necessary to examine the other contentions raised by the learned Counsel for the appellant for quashing the impugned order. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 637
CENVAT Credit - input service exclusively used for providing exempt services - Banking and other Financial Service - Collateral Management charges - levy of service tax on the interest earned by the bank on loans/ advances - HELD THAT:- Giving of loans is not a service, rather it is an activity of the Bank in which money in real terms which is akin to goods, is given to borrower. Further, for the reason that interest earned by the Bank on loans is not liable to tax, the show cause notice alleged that giving of loan is an exempt service. Further, the SCN have been issued after more than 32 months from the last date when the return was due from the financial year ending 31.03.2010. The show cause notice is bad for invoking the extended period of limitation. There is no suppression of facts or contumacious conduct on the part of the appellant. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 630
Reverse charge mechanism - service tax on Ocean Frieght - who is liable to pay Service Tax - CIF contract or FOB contract - whether the contract was CIF or it was on FOB basis makes any difference as far as the payment of service tax liability is concerned/ - service tax rightly paid under N/N.15 and 16 of 2017 or not - entitlement for refund even in terms of section 142 of CGST Act. CIF contract or FOB contract - HELD THAT:- FOB (i.e. Free on Board) is a contract of sale between the foreign supplier and the local importer, where the importer would engage the vessel/ship owner or operator for importing goods into India. In the FOB contract, the service of transportation of goods by ship or vessel is received by the importer in India, whereas such service is rendered by the owner/operator of the foreign going vessel - In the case of CIF contract, the overseas supplier would engage the vessel owner/operator for the transportation of goods to India. The hiring of the vessel/ship and also payment of the transportation charges i.e. ocean freight of such vessel owner/operator are made by the overseas supplier in the CIF contract. The service of transportation of goods by vessel is thus received by the overseas supplier from the foreign going vessel owner/operator in the CIF contract. The title of Section 26 shows that the rule provided thereunder is the prima facie rule subject to the agreement otherwise between the parties. This is clearly indicated by the expression unless otherwise agreed with which the section begins. The parties to the contract are, thus, free to by-pass the prima facie rule provided in Section 26 by making agreement otherwise. The prima facie rule in Section 26 is that the goods remain at the seller s risk until the property in the goods is transferred to the buyer. But when the property in the goods is transferred to the buyer the goods are at the buyer s risk whether delivery has been made or not. When the Respondents have admitted that the importers in India are not persons receiving service of sea transportation, and that it is the Respondent s case that the Indian importers were indirectly receiving such service and hence were persons liable to pay service tax on such service; it is clearly a case where the Respondents propose to charge service tax from the third parties i.e. the Indian importers by implication, and not by clear words of the charging section - Even if it is assumed that service tax can be recovered from a third party like the Indian importers in CIF contracts, there is no machinery provided for valuation of such service, and therefore also the impugned Rules and Notifications are unenforceable. It is an admitted position of fact that the Petitioners do not have any information about the actual amount of ocean freight paid by the overseas sellers/suppliers to shipping lines. Notifications of year 2017 under which the payment of Service Tax has been made in October, 2018 - HELD THAT:- The Notification Nos. 15/2017-S.T. and 16/2017-S.T. making Rule 2(1)(d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting Explanation-V to reverse charge Notification No. 30/2012-S.T. is struck down as ultra vires Sections 64, 66B, 67 and 94 of the Finance Act, 1994; and consequently the proceedings initiated against the writ applicants by way of show cause notice and enquiries for collecting service tax from them as importers on sea transportation service in CIF contracts are hereby quashed and set aside with all consequential reliefs and benefits - Since the Notification under which the payment was made have as such been struck down, any payment made pursuant thereto no more remains under the scope of the charging section, i.e. it cannot be called as duty. Still retaining the said amount will therefore unjustly enrich the Department. The consequence, accordingly, is that the appellant is entitled for the refund of the said amount. The duty, which was paid by the petitioner, which was otherwise not payable on the exported goods and therefore, rebate of such duty was not admissible in terms of Rule 18 of the Central Excise Rules. However, the duty, which was paid by the petitioner is held to be treated as voluntary deposit. As per Section 142(3) of the GST Act, every claim for the refund filed by any person before, on or after the appointed day i.e. 1-7-2017 for refund of any amount of Cenvat credit, duty, tax, interest or any other amount paid under the existing law, should be disposed of in accordance with the provisions of existing law and any amount eventually accruing to such person should be paid in cash - in view of this clear provision, the Respondent No. 2 ought to have directed the sanctioning Authority to refund the amount of the duty refundable to the petitioner in cash instead of credit in Cenvat Account. Appeal allowed.
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Central Excise
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2021 (8) TMI 657
Refund of cash amount deposited in PLA account - time limitation of period of one year from the relevant date i.e. the date of account current balance as on 30th June, 2017 - Section 11B of Central Excise Act, 1944 - HELD THAT:- It is an admitted fact that appellant was having account current/ PLA for payment of duty. It also cannot be disputed that the purpose of such account is that the money deposited by the assessee in such account has to be debited there-from as and when the duty for clearance of goods is required to be paid by the assessee i.e. against a liability that has to reckon in future. Admittedly the closing balance of said PLA account as on 30th June, 2017 was ₹ 2,02,162/-. Admittedly as on 30.07.2017 the duty liability of appellant for the impugned period was discharged and the aforesaid amount was appellant s money to be adjusted against any duty liability arising after 01.07.2017 - the amount in question was not at all the amount of duty or interest it was rather appellants own amount which either could be utilized by him while discharging his duty liability else the appellant was entitled to get the refund thereof. It is also the fact that on 1st July, 2017 the new Act of Goods and Service Tax Act (GST) was rolled down. Section 142 (3) of the said Act permits the refund of any amount other than duty, tax, interest or Cenvat Credit has to be paid to the assessee in cash - the amount in question was appellant s own money and he was fully entitled to get the refund of the same that too in cash. This amount cannot been made subjected to any other appropriation. Nor the time limit under Section 11B of CEA can be invoked when such money is sought to be refunded. The Commissioner (Appeals) has wrongly invoked the Section 11 B of CEA and the concept of limitation embodied in the said section - appeal allowed.
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2021 (8) TMI 649
CENVAT Credit - input services - service tax paid on outward transportation of finished goods i.e. transportation of goods - place of removal - time limitation - HELD THAT:- On perusal of the excise invoices issued by the appellant to their buyer M/s General Motors India Pvt. Ltd., being invoice dated 31 July, 2012, it is evident that freight is not a part of the sale price, and freight has been shown separately after charging the excise duty on the ex-factory price. Thus, under the Sale of Goods Act, in view of the terms of sale between the parties, the property in the goods is transferred on the event of goods being delivered to the transporter by the seller for delivery to the buyer, unless otherwise so stipulated in the contract - in the facts and circumstances, the place of removal is the factory gate of the appellant seller - the appellant have been rightly denied Cenvat credit on merits. Time limitation - HELD THAT:- The appellant is registered unit and have been in LTU for most of the period under dispute. LTU was created by the Department to cater to the large assesses for smooth assessment and compliance of the tax liability. In LTU there are few number of assesses, as compared to the normal Commissionerate and hence the Department has a better grip and knowledge about affairs of a manufacturing unit in the LTU jurisdiction. Further, it is an admitted fact that the appellant have been filing regular returns with the Department - there is no mala fide on the part of the appellant in having taken credit, which has been duly recorded in the books of account ordinarily maintained in the normal course of business - the extended period of limitation is not invokable. Appeal allowed in part.
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2021 (8) TMI 644
CENVAT Credit - inputs/capital goods - Welding Electrode - Railway Line material - credit denied on the ground that some of the input/ capital goods were not used in or in relation to manufacture of final product and as regard the railway line material, since these were used and situated outside the factory premises cenvat credit was disallowed - HELD THAT:- All the goods have been used in or in relation to manufacture of the final product directly or indirectly. MS Gratings were used as an essential accessory for supporting and holding and for approaching or reaching out plants/ processing units of refinery in which raw material is processed for manufacture of petroleum products. Looking to the nature of the industry, it is a technological necessity without which the processing unit cannot perform. Welding material - HELD THAT:- The welding material is used for repairs and maintenance of the plants and machinery, the repair and maintenance activities are essential for smooth manufacturing operations without which manufacturing activity is not feasible, therefore, the cenvat credit is clearly admissible. Railway line material - HELD THAT:- Railway line material is used to move inputs/ raw material and manufactured goods within the factory premises. The movement of goods through railway track is directly connected to the manufacture of final product, therefore, the credit cannot be denied on these items. On every item, this Tribunal has considered the admissibility of the cenvat credit and in various judgements, it was held that the credit is admissible on the goods in question. Therefore, following the precedent decisions of this Tribunal and various courts, the appellant is entitled for the cenvat credit on the said goods - credit allowed - appeal allowed - decided in favor of appellant.
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Indian Laws
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2021 (8) TMI 658
Maintainability of Petition - availability of an alternative remedy of filing an appeal - the complaint filed by the petitioner was dismissed for non prosecution - HELD THAT:- If the petition is rejected, it would resulted in miscarriage of justice. Availability of an alternative remedy of filing an appeal is not an absolute bar in entertaining a petition under Section 482 of the Code. Trial court has dismissed the complaint on technical ground and therefore, interests of justice required this Court to exercise its jurisdiction to set aside the order of the trial court so that the trial court can proceed with the trial on merits. Though the statement of the petitioner that for the last few hearings, the petitioner could not attend the hearing before the court below due to personal and health issues and he had lost the contact details of the counsel on record, does not evoke confidence of the court, the matter could be restored on terms - Resultantly, the petition is allowed. The complaint is restored to file on payment of cost of ₹ 1,000/- to the respondent-accused - The court below shall take up the matter at the stage it was dismissed for non prosecution.
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