TMI Tax Updates - e-Newsletter
August 2, 2021
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Validity of three adjudication orders made passed exparte - it has been brought to our notice that realizing the difficulties from the spread of pandemic COVID-19, the Government had itself issued an order dated 01.05.2021 extending the period to submit reply and responses, up to 30.05.2021 - Orders quashed - Matters restored back. - HC
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Income Tax:
Penalty levied u/s. 271(1)(c) - capital gain on transfer of agricultural land - As equally true that on the date of sale the said distance was less than 8 KMS. We are of the considered view that the chargeability of capital gain tax under such circumstances is a debatable issue. We further find that the appellant claim is well supported by the certificate of the Tehsildar, Sohna which was also confirmed by the A.O. in his remand report. - the CIT(A) has rightly deleted the penalty levied u/s. 271(1)(c) - AT
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Income Tax:
LTCG - registered sale deed was executed by the legal heirs of the deceased - CIT(A) has not verified this fact but has merely gone by the presumption that the assessee had relinquished her right over the 500 sq. yards plot retained by assessee's brothers. Since the land retained by the assessee's brothers cannot be treated as transfer in their favour, there cannot be any relinquishment or right by the assessee in such property. Therefore, there is no incidence of any LTCG in favour of the assessee - AT
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Income Tax:
Disallowance of deduction u/s 80IAB - income derived from 'Operation and Maintenance Activities' of SEZ - activities of the assessee being a developer, include operation and maintenance of SEZ, and therefore entitled for deduction under section 80IAB of the Act. - AT
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Income Tax:
Accrual of Capital Gain - Surplus which arose on sale through the appellant, of the mortgaged plots of land by the mortgagee of the plots - CIT-A assessment long term capital gain - Assessee company has voluntarily sold the mortgaged property - Additions confirmed - AT
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Income Tax:
Deduction u/s 80IC - existence of multiple “initial assessment years” - AO has simply misunderstood the amendment brought u/s. 80IC and further misunderstood “the substantial expansion” brought by the assessee from A.Y.2009-10. In our considered opinion in the light of the notification issued by the Ministry of Commerce and Industry and in the light of the amendment brought in the Act u/s. 80IC of the Act, the eligibility of 100% deduction would start from initial A.Y. 2009-10. - AT
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Income Tax:
Assessment u/s 143 r.w.s 153A - Period of limitation - Exclusion of certain period - The assessee had filed a writ petition in the Hon’ble Allahabad High Court against the direction of Pr. CIT under section 142(2A) of the Act. This fact was communicated by the Assessee to the Auditor with a request to withhold the audit till the decision of the Court. - the assessment proceedings have not been stayed by an order or injunction of any Court - CIT(A) has gone wrong by invoking the provisions of Explanation-(b) to Section-153B - AT
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Income Tax:
Levy of penalty u/s 271(1)(c) - The Assessing Officer has to record satisfaction before initiating penalty proceedings and the penalty proceedings are subject to judicial scrutiny independent of additions/disallowances made under assessment proceedings. Therefore, levy of penalty for the reason that the addition/disallowance has been accepted by the assessee is not sustainable ground - AT
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Income Tax:
Validity of Draft assessment order passed u/s 143(3) read with Sections 144C - petitioner states that the impugned draft assessment order as been passed without issuance of a show cause notice, as mandated by Section 143(3A)/144B - Matter remanded back for fresh adjudication - HC
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Income Tax:
Addition on account of peak cash deficit worked out by the revenue authorities - the assessee did not explain the difference between the cash found and seized at the premises and the cash mentioned in the cash book - Additions confirmed - HC
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Service Tax:
Rejection of refund claim of service tax - construction of Government buildings - refund arising as a result of restoration of exemption benefit of N/N/. 12/2012 and 25/2012 dated 20/06/2016 - Prospective effect or retrospective effect - since it was prospective in effect, the appellant was not entitled for any exemption - SC dismissed the appeal of the assessee
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Central Excise:
Cenvat credit - Bill of Entry in the name of the supplier of the raw material i.e. Principal - goods were received by the appellant as a job worker and used in the manufacture of goods on the job work basis - appellant is entitled for Cenvat credit on the strength of Bill of Entry even though the same is in the name of Principal but with a declaration in favour of the appellant. - AT
Articles
Notifications
Customs-
64/2021 - dated
30-7-2021
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Cus (NT)
Sea Cargo Manifest and Transhipment (Sixth Amendment) Regulations, 2021.
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63/2021 - dated
30-7-2021
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
GST-
31/2021 - dated
30-7-2021
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CGST
Seeks to exempt taxpayers having AATO upto ₹ 2 crores from the requirement of furnishing annual return for FY 2020-21.
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30/2021 - dated
30-7-2021
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CGST
Central Goods and Services Tax (Sixth Amendment) Rules, 2021.
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29/2021 - dated
30-7-2021
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CGST
Seeks to notify section 110 and 111 of the Finance Act, 2021 w.e.f. 01.08.2021.
GST - States-
F. No. 21/6/GST(A)/2021/LAS-VII/Leg./372 - dated
30-7-2021
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Delhi SGST
Delhi Goods and Services Tax (Amendment) Act, 2021.
SEBI-
SEBI/LAD-NRO/GN/2021/28 - dated
30-7-2021
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SEBI
Securities and Exchange Board of India (Real Estate Investment Trusts) (Amendment) Regulations, 2021.
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SEBI/LAD-NRO/GN/2021/27 - dated
30-7-2021
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SEBI
Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2021.
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SEBI/LAD-NRO/GN/2021/26 - dated
30-7-2021
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SEBI
Securities and Exchange Board of India (Bankers to an Issue) (Amendment) Regulations, 2021.
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G.S.R. 520(E) - dated
30-7-2021
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SEBI
Securities Contracts (Regulation) (Second Amendment) Rules, 2021
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (7) TMI 1257
Validity of three adjudication orders made passed exparte - challenge on account of the fact that for one tax period and for one dispute, there can only be a single adjudication order - HELD THAT:- Undisputedly, three periods for which the orders had been passed are overlapping. Notice dated 22.12.2020 was issued by respondent no.2 for the period July 2017 to March 2018. It covers the entire period and dispute being sought to be adjudicated in the other two notices as well. At the same time, it is found that by notice dated 22.12.2020, next date fixed was 05.01.2021 but the petitioner could not participate in the same on account of the spread of pandemic COVID-19. Also, in that regard, it has been brought to our notice that realizing the difficulties from the spread of pandemic COVID-19, the Government had itself issued an order dated 01.05.2021 extending the period to submit reply and responses, up to 30.05.2021. Subsequently, it was extended up to 30.06.2021. In light of that fact, the order dated 09.06.2021 is clearly an ex-parte order, which has been passed without allowing due opportunity of hearing to the petitioner. Orders quashed - Matters restored back.
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2021 (7) TMI 1254
Cancellation of bail granted - allegations of tempering of evidence and influencing the witnesses - fake and non-existing firm - HELD THAT:- It is trite law that considerations relevant at the time of grant of bail are different than the considerations at the time of cancellation of bail after the accused has remained in custody. Admittedly, the investigation had started in the year 2018 and was continuing when the petitioner was arrested on 9th February, 2021 and was granted bail on 9th March, 2021 - It may be noted that the petitioner was already in custody and despite having been granted bail on 9th March, 2021 till date complaint has not been filed and in case the petitioner was in custody in the event of the complaint not being filed in 60 days, he would have been entitled to default bail. The finding of the learned CMM was that the investigation qua the petitioner was almost complete. There is no averment of the respondent that any further recovery is required to be made from the petitioner. In case other offenders are evading arrest, the same cannot be a ground to cancel the bail granted to the petitioner. Till the next date of hearing, the operation of the impugned order dated 17th July, 2021 is stayed and the NBWs issued against the petitioner are kept in abeyance - List on 7th September, 2021.
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2021 (7) TMI 1253
Maintainability of appeal - pre-condition for filing the appeal - Demand of tax of ₹ 1,89,810 and equivalent amount of penalty imposed in the penalty order - HELD THAT:- Identical issues have been raised in M/S ABHISHEK SALES VERSUS STATE OF U.P. AND 2 OTHERS [ 2020 (1) TMI 515 - ALLAHABAD HIGH COURT] has proceeded to direct the petitioner to deposit 20% of the remaining amount of tax in dispute in accordance with Section 112 (8) of the Act within three weeks from the date of order and in which event, the recovery proceedings for the balance amount shall remain stayed till disposal of the writ petition. All the respondents are granted eight weeks' time to file counter affidavit on behalf of State respondents. The rejoinder affidavit, if any, may be filed within one week thereafter. List thereafter - it is directed that the petitioner shall deposit 20% of the remaining amount of tax in dispute in accordance with Section 112 (8) of the Act within four weeks from today and in which event, the recovery proceedings for the balance amount shall remain stayed till disposal of the instant petition. Application disposed off.
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2021 (7) TMI 1214
Refund of ITC - ITC accumulated due to Invented Tax Structure - denial on the ground that the seller has not remitted tax with the appropriate State/Central Government authorities and disclosed in his GSTR-1 Return - HELD THAT:- On going through the submission of appellant and RFD-06 I find that the out of total amount of refund of ₹ 9,54,051/- only ₹ 6,27,004/- have been sanctioned by the adjudicating authority. The adjudicating authority has accordingly processed the refund application and sanctioned the refund amount ₹ 6,27,004/- under Section 54 of the CGST Act, 2017. Further, he also mentioned in the remark that assessee requested to refund the pending sum of ₹ 6,27,004/- hence RFD-06 is being issued, and in column of RFD-06 Wrong ITC Claim ₹ 3,27,047/- (State/UT Tax) has been entered by him - the appellant has stated in appeal memo that due to the lockdown period he was under financial crisis accordingly he submitted their written intimation in Form of GST RFD-09 and RFD-06 was issued without providing him any personal hearing and out of total amount of refund ₹ 9,54,051/- only ₹ 6,27,004/- was paid to him. It would be appropriate to remand back the case to the adjudicating authority to examine the eligibility of ITC in detail and consequently the refund claim of the appellant up to the extent of remaining amount of refund which were not sanctioned. Further, to follow the principle of natural justice by being heard to him and pass the speaking order accordingly - appeal allowed by way of remand.
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2021 (7) TMI 1213
Refund of IGST - IGST was paid inadvertently instead of CGST and SGST - refund claim of excess paid CGST - rejection of refund on the ground of time limitation - it is also alleged that reply to SCN does not address the issue of delay in filing refund application - period July, 2017 to March, 2018 - Section 54 of CGST Act, 2017 - principles of natural justice - HELD THAT:- Despite the submission of written reply, adjudicating authority has passed the Orders-in-Original all dated 23-4-2020 wherein he has rejected the refund claims without granting any opportunity of personal hearing to the appellant. Moreover, adjudicating authority did not consider appellant s request for adjournment of personal hearing until COVID-19 is eased. Thus, it is found that the appellant did not avail the opportunity of personal hearing in the matter. The adjudicating authority while rejecting the refund claims of the appellant neither considered their defence submission/reply nor first request for seeking adjournment of personal hearing due to COVID-19 lockdown. Moreover, the adjudicating authority did not discuss any provisions of law/rules and method on the issue of time barred on which basis the refund claims become time barred - also, passing of non-speaking order indeed amount to denial of natural justice. Before passing of orders the request for seeking adjournment for personal hearing in the matter should have been considered and speaking order should have been passed by giving proper opportunity of personal hearing in the matter to the appellant and detailing factors leading to rejection of refund claims should have been discussed - case remanded to the adjudicating authority for decide the case afresh by following the principle of natural justice and for passing the speaking order in view of submission of appellant - appeal allowed by way of remand.
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Income Tax
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2021 (7) TMI 1264
Withdrawal of exemption granted u/s 10(23C) - seeking for being notified under Section 10(46) - HELD THAT:- Basic difference between the two provisions of the Act viz., 10(23C)(iv) and 10(46) of the Act, is that, while under the first provision, it is only a grant of an approval making an assessee eligible to claim exemption without any certainty of exemption being allowed on any income, since it is subject to scrutiny, the latter provision confers benefit of automatic exemption in respect of the specified income of the assessee as notified by the Central Government in the gazette. Thus, under Section 10(46) of the Act, there is a certainty with regard to claim of exemption. In the facts of the present case, though there are two different provisions of the Act under which the petitioners can claim the benefit, mere fact of petitioners being granted approval under one particular provision of the Act, namely Section 10(23C)(iv) of the Act, in our opinion, would not disentitle the petitioners/ assessees to seek for being notified under a different provision, as it is for the assessees/petitioners to choose as to which of the provisions would be more beneficial. The respondents for the reasons best known did not take any action on the applications filed by each of the petitioners for being notified under Section 10(46) of the Act, nor communicated the reason for not considering the applications, for nearly three years, till the petitioners approached this Court by the present writ petitions. Thus, the action of the respondents in not processing the case of the petitioners and maintaining static silence, cannot be countenanced The understanding of the 2nd respondent that the power to withdraw conferred under Section 293C or Section 10(23C)(iv) of the Act, to be undertaken only at the behest of the respondents and not at the request of the petitioners, does not appeal to this Court, as a correct understanding. As detailed herein above, the word withdraw as used in both the Sections 10(23C)(iv) and 293C of the Act, encompasses in itself the exercise of power even at the behest of the assessee/petitioners, and the contrary view of the respondents is liable to be rejected. It is also to be seen that the petitioners have not sought for grant of exemption under Section 10(46) of the Act either from the day the said provision was introduced or from the date of their initial grant of approval under Section 10(23C) of the Act. The petitioners sought for being notified under Section 10(46) of the Act only from the relevant previous year, having regard to the fact that the benefit of exemption under Section 10(23C) of the Act, was being denied regularly, and they felt that the provisions of Section 10(46) of the Act are more beneficial and are applicable more aptly. In view of the conclusions arrived at by us as above, the petitioners are liable to succeed in these writ petitions. Accordingly, the writ petitions are allowed; the 2nd respondent is directed to withdraw the approval granted to the petitioners under Section 10(23C) of the Act with effect from the date of applications made by the petitioners for being notified under Section 10(46) of the Act; and process the petitioners applications dt. 07.03.2017 and 08.03.2017 filed for being notified under Section 10(46) of Act in accordance with the provisions of the Act, from the previous year relevant to the date of applications, filed.
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2021 (7) TMI 1251
Addition on account of peak cash deficit worked out by the revenue authorities - Search proceedings - actual cash balance as per the books of account on the date of search when the same books of account was part of the seized material and the same was also not rejected and in fact relied upon the income tax authorities and consequently gave a perverse finding on the facts and circumstances of the case - HELD THAT:- Admittedly, during the course of the search at the residential premises of the assessee on 09.10.2009, cash was found and was seized. The assessee was unable to explain the source of cash and cash book was updated only upto 30.09.2009. The cash balance as per the cash book on the date of search i.e., 09.1.2009 reflects the cash balance of ₹ 1,51,66,209/-. The assessee was asked to explain the cash difference. The assessee was unable to offer any explanation and in his statement admitted that cash balance of ₹ 45,40,000/- was seized from his residence and was available at his residence. The assessee was unable to explain the cash difference to the extent of ₹ 1,06,26,309/- and could not explain where the balance case of ₹ 1,06,26,309/- was kept. The Assessing Officer therefore, assessed the peak cash deficit in the cash book at ₹ 55,54,521/- and assessed the aforesaid amount to tax for 2010-11. The said order was affirmed in appeal by the Commissioner of Income Tax (Appeals) and it was held that the cash shown by the assessee in his books is not the real figure. The tribunal has held that despite opportunity being afforded to the assessee, the assessee did not explain the difference between the cash found and seized at the premises and the cash mentioned in the cash book. Thus, it was held that the CIT (Appeals) has rightly held that the addition has been made in respect of peak cash deficit subsequent to search and the cash balance after seizure of ₹ 45,40,000/- is NIL . As further held that the addition has rightly been made for cash payments received in excess of cash receipts after the date of search and the amount was rightly brought to tax in the hands of the assessee. The aforesaid findings are findings of fact recorded by the authorities under the Act and the same cannot be said to be perverse as the findings of fact are based on meticulous appreciation of evidence on record. In the result, the substantial question of law Nos.1, 2 and 4 are answered against the assessee and in favour of the revenue.
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2021 (7) TMI 1249
Validity of Draft assessment order passed u/s 143(3) read with Sections 144C - petitioner states that the impugned draft assessment order as been passed without issuance of a show cause notice, as mandated by Section 143(3A)/144B - HELD THAT:- Mr.Sanjay Kumar, Advocate accepts notice. He states that he does not wish to file any formal reply to the present writ petition. He further states that he has no objection if the petition is allowed and the matter is remanded back to the Assessing Officer for passing a fresh assessment order under Section 143(3) read with Sections 144B and 144C. Learned counsel for the petitioner has no objection to the same. Consequently, the impugned draft assessment order dated 25th March 2021 passed under Section 143(3) read with Sections 144C of the Act and the impugned Assessment order dated 24th May, 2021 passed under Section 143(3) r/w Section 144C(3) read with Section 144B of the Act are set aside and the matter is remanded back to the Assessing Officer for passing a fresh assessment order under Section 143(3) read with Sections 144B and 144C of the Act after giving a show cause notice to the petitioner under Section 144B(1) (xvi) of the Act.
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2021 (7) TMI 1248
Violation of Section 179 - Liability of directors of private company in Liquidation - whether action is permissible only if the company is a Private Limited company and in respect of a Public limited company, Section 179 of the Income Tax Act is not applicable? - HELD THAT:- The matter is to be remanded back for the purpose of fresh adjudication. In this regard, this Court has considered the scope of Section 179 of the Income Tax Act and its application [ 2021 (3) TMI 1232 - MADRAS HIGH COURT] In view of the above facts and circumstances, the Show Cause Notice impugned passed by the 1st respondent in proceedings dated 28.02.2018 bearing reference no.AACCS9190G/Block Asst.92-93 is quashed and the matter is remanded back to the first respondent for fresh consideration.
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2021 (7) TMI 1246
Reopening of assessment u/s 147 - legality of the notice issued u/s 148 - No service of notice u/s 148 of I. T. Act 1961 within the period of limitation - as argued AO Noida had no jurisdiction to issue notice u/s 148 of the Act for re-opening of the assessment - HELD THAT:- This approach of CIT(A) is not proper and is against the settled principle of law. CIT(A) ought to have passed a speaking order considering the all submissions and averment made before him by the assessee or his counsel. Therefore, we set aside the impugned order and restore this issue to the file of Ld.CIT(A) to decide the issue after obtaining Remand Report from the AO as to when notice u/s 148 of the Act was issued to the assessee by the AO at Delhi i.e. ITO, Ward-63(3), New Delhi. - CIT(A) would give a clear finding about the reasons recorded by the AO at Delhi. Ld.CIT(A) would decide the issue raised before him regarding non-receiving of reasons by the Assessing Officer at Delhi and also issue of limitation qua issuance of notice u/s 148 of the Act by the Assessing Officer at Delhi. Since, the impugned order is set aside therefore, all other grounds of assessee s appeal are set aside to the file of Ld.CIT(A) for decision afresh. Appeal of the assessee is allowed for statistical purposes only.
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2021 (7) TMI 1245
Expenses of purchase of gold bars - HELD THAT:- Assessee is dealing in gold bullion which is purchased and sold at the market rates applicable on day to day basis. The quantity of gold bullion purchased was 16,469.09 grams and the quantity sold was 16,335.07 grams. This shows that the transactions were not just squaring up the balances but the actual transactions took place. Assessee had accounted for the profits and losses involved in the transactions and had paid the income tax applicable. Assessee and M/s N.K. Gold Medallion Pvt. Ltd. charged and paid VAT as applicable. Turnover declared for the F.Y. 2013-14 by M/s Swaran Traders, proprietorship concern of the assessee, proves the substantial sales to multiple parties. CIT(A) has given a detailed finding and there is no need to interfere with the finding of the CIT(A) and the Ld. DR could not controvert the same. Ground Nos. 1 to 5 are dismissed. Addition u/s 68 - HELD THAT:- The dispute was pending in Company Law Board. There was no business in this company since 2011. Due to this dispute, requisite papers like balance sheet etc. were not filed with the Registrar of companies and income tax department. As regards, the source of the amounts received, the company had sold a property of the company for ₹ 12,15,000/-, out of which ₹ 10,00,000/- was received in the bank before days of the transaction with the assessee. The copy of the sale deed is attached. Out of the same sum ₹ 9,80,000/- was transferred to Mrs. Rekha Gupta for which copy of the bank statement was produced by the assessee before the CIT(A). These facts were not disputed by the AO at the time of filing remand report before the CIT(A). As regards to the loan amounting from M/s Anant Shree Financial Services Pvt. Ltd., the Director of this company has mentioned about this loan to Rekha Gupta. Mr. Siddharth Gupta, the Director of this company filed memorandum and articles of association along with Income Tax Return. This is also one of the companies in which Mrs. Rekha Gupta is one of the Directors. The other Directors are family members. The assessee has again mentioned the dispute with her son pending in Company Law Board. This company sold a property out of which was received in bank just before the day of transaction between the company and Mrs. Rekha Gupta. The copy of the sale deed was produced before the CIT(A). Out of the above amount was transferred to the assessee. Thus, these facts were also not disputed by the AO in the remand report. The findings of the CIT(A) do not need any interference - Ground No. 6 is dismissed.
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2021 (7) TMI 1244
Levy of penalty u/s 271(1)(c) - assessee s claim of write off of brought forward unabsorbed depreciation was disallowed by the Assessing Officer while computing book profits under section 115JB of the Act on the premise that cumulative balance in the books of assessee for Financial Year 2002-03 show profits and Reserves Surplus - HELD THAT:- The assessee made claim on the premise that business loss/unabsorbed depreciation were to be considered on year to year basis. The assessee in support of its computation of claim placed reliance on the decision of Tribunal in the case of Amline Textiles Pvt. Ltd. [ 2008 (11) TMI 438 - ITAT MUMBAI]. As against this, the Assessing Officer rejected the claim of assessee following aggregation approach, as reflected in the Balance Sheet. Per approach of Assessing Officer there would be no unabsorbed depreciation/business losses available for adjustment under section 115JB of the Act. There are two school of thoughts in computing set off of unabsorbed depreciation/business losses i.e. year to year basis vs aggregation. Both views are possible as per the language of Explanation- 1 clause (iii) to section 115JB (1) of the Act. This makes the issue debatable. The method adopted by the assessee at the time of filing return was one of the acceptable view. Ergo, the assessee is able to furnish reasonable explanation in making a claim of unabsorbed depreciation while computing book profits u/s 115JB of the Act. In light of the fact discussed above coupled with the fact that divergent views have been expressed by the Tribunal on the issue of treating unabsorbed depreciation/business loss of preceding assessment years while computing book profits u/s 115JB, makes the issue debatable. Hence, no penalty under section 271(1)(c) of the Act can be levied on such disallowance It is no more res-integra that levy of penalty is not automatic. Even if addition/disallowance made by Assessing Officer is accepted by the assessee and is not contested further, it would not result in levy of penalty. Assessment proceedings and penalty proceedings are separate and distinct. The Assessing Officer has to record satisfaction before initiating penalty proceedings and the penalty proceedings are subject to judicial scrutiny independent of additions/disallowances made under assessment proceedings. Therefore, levy of penalty for the reason that the addition/disallowance has been accepted by the assessee is not sustainable ground - Penalty levied under section 271(1)(c) of the Act is deleted - Decided in favour of assessee.
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2021 (7) TMI 1243
Assessment u/s 143 r.w.s 153A - Period of limitation - Exclusion of certain period - The assessee had filed a writ petition in the Hon ble Allahabad High Court against the direction of Pr. CIT under section 142(2A) of the Act. This fact was communicated by the Assessee to the Auditor with a request to withhold the audit till the decision of the Court. - HELD THAT:- We find merit in the submission of the Assessee that as per the provisions of Section 142(2A) of the I.T. Act, 1961, the time period of 90 days plus further extension of 60 days expired on 21.08.2016. Whereas, the A.O. in the instant case has passed the assessment order on 28.10.2016 and, therefore, the order passed by the A.O. is barred by limitation. Finding given by the Ld. CIT(A) that in view of provisions of Section 153B read with Explanation- (b) the time period starting with the date of filing of the writ petition and ending on the date of disposal of the writ petition is to be excluded is concerned, we do not find any merit in the same. Admittedly, the assessment proceedings have not been stayed by an order or injunction of any Court which fact was also brought on record by the A.O. himself at para-7 of the assessment order. Further, although such direction was challenged before the Hon ble High Court, however, no order setting aside such direction has been received by Pr. CIT or CIT which is to be excluded. CIT(A) has gone wrong by invoking the provisions of Explanation-(b) to Section-153B. We, therefore, set aside the order of the Ld. CIT(A) and quash the assessment order passed by the A.O. being barred by limitation. - Decided in favor of assessee.
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2021 (7) TMI 1242
Deduction u/s 80IC - existence of multiple initial assessment years - AO has disallowed the claim of deduction of 100% u/s. 80IC of the Act on the ground that the initial assessment year is A.Y. 2004-05 and therefore, for the year under consideration the assessee is eligible for only 30% deduction - HELD THAT:- We find that the AO has simply misunderstood the amendment brought u/s. 80IC and further misunderstood the substantial expansion brought by the assessee from A.Y.2009-10. In our considered opinion in the light of the notification issued by the Ministry of Commerce and Industry and in the light of the amendment brought in the Act u/s. 80IC of the Act, the eligibility of 100% deduction would start from initial A.Y. 2009-10. We further find that the AO has allowed the deduction from A.Y.2009-10 to 2012-13 which is evident from the assessment orders of the relevant assessment years on record. In our considered view the AO was not correct in disturbing the claim in the 5th year when earlier assessment years has not been disturbed. Hon ble Supreme Court in the case of PCIT Vs. Aarham Softronics [ 2019 (2) TMI 1285 - SUPREME COURT ] has decided this controversy in favour of the assessee and against the revenue. Disallowance u/s.14A - sufficiency of own funds - CIT(A) found that assessee had sufficient own funds to meet the investment and therefore, there was no reason for the disallowance of interest on borrowed capital and accordingly deleted the disallowance - HELD THAT:- As interest free funds (own funds) available with the assessee is far in excess of the investment in share. Therefore, following the ratio laid-down in the case of HDFC Bank Limited [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] and Reliance Utilities and Power Limited [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] , we do not find any error or infirmity in the findings of the CIT(A) ground No. 3 and 5 are dismissed.
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2021 (7) TMI 1241
Assessments in the name of non-existent entities - scheme of amalgamation conceived - assessee ceased to be in existence w.e.f. 29.11.2013 on account of amalgamation - HELD THAT:- Following the case of Maruti Suzuki India Ltd. case [ 2019 (7) TMI 1449 - SUPREME COURT] we are of the considered view that AO as well as ld. CIT (A) have erred in framing / confirming the assessments in the name of non-existent entities, namely, Haryana Gramin Bank and Gurgaon Gramin Bank which are not sustainable in the eyes of law being nullity, hence ordered to be quashed. Consequently, all the appeals filed by the assessee are allowed.
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2021 (7) TMI 1240
Deduction u/s 54F - primary requirements necessitating transfer u/s 53A of transfer of immovable property act are not satisfied - AO disallowed the deduction claimed u/s 54F of the Act on the ground that transfer of immovable property i.e. house property qua which deduction has been claimed by the assessee, is complete only by way of registered sale deed - HELD THAT:- We are of the considered view that benefit of deduction u/s 54F of the Act cannot be denied to the assessee merely on the ground that conveyance deed has not yet been got registered particularly when the assessee is proved to be in possession of the property in question out of which she was already owner in possession of 1/3rd share since 2008 after making a complete payment of the sale consideration to the vendors and has duly proved her possession over the property by way of electricity and water charges bills. So, we find no reason to interfere into the impugned order passed by the ld. CIT (A) allowing deduction to the assessee u/s 54F of the Act, hence appeal filed by the Revenue is dismissed.
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2021 (7) TMI 1239
Reopening of assessment u/s 147 - reasons to believe - HELD THAT:- There is no averment to the effect as to what material facts necessary for assessment were not disclosed by the assessee in the course of original assessment proceedings fully as well as truly. The reasons being justiciable, the AO is expected to record a finding to this effect in the reasons recorded itself. AO has failed on this score. Thus, the reasons recorded when seen on standalone basis do not pass the tests of basic requirement for assumption of jurisdiction u/s 147 of the Act. The notice issued for reopening a completed assessment on the basis of such reasons, is thus, time barred and merge in void. The re-assessment order framed on the basis of a time barred notice, thus, cannot be countenanced in law. Hence, we find merit in the ground raised by the assessee towards lack of jurisdiction u/s. 147 of the Act. Consequently, in our considered opinion, the AO has mis- directed himself in reopening the completed assessment without legal foundation. In this view of the matter, the impugned assessment u/s143(3) r.w. s. 147 of the Act is liable to be set aside and cancelled. As we have held that notice u/s 147/148 of the Act is not sustainable in law, we do not consider it necessary to go into all other legal grounds raised by the assessee in its appeal to support the plea for lack of jurisdiction and also other grounds on merits. - Appeal of the assessee is allowed and appeal of the Revenue is dismissed.
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2021 (7) TMI 1238
Accrual of Capital Gain - Surplus which arose on sale through the appellant, of the mortgaged plots of land by the mortgagee of the plots - CIT-A assessment long term capital gain - HELD THAT:- Assessee company has voluntarily sold the mortgaged property and has received the sale proceeds thereof through banking transactions at the market value, hence surplus arising on the sale of agricultural land declared as capital gain by the assessee has been rightly subjected to taxable income of the assessee for the year under assessment. So, finding no illegality or perversity in the impugned findings returned by the ld. CIT(A), ground nos.1, 2 3 are determined against the assessee. Addition on account of bad debts written off not due to business exigencies but due to collusive nature of transaction as provided under section 36(1)(vii) - CIT (A) deleted the addition by thrashing the facts and settled principle of law on the issue in question - HELD THAT:- This issue has already been decided in favour of the assessee by the coordinate Bench of the Tribunal in assessee s group company case WGF Financial Services Pvt. Ltd. [ 2021 (3) TMI 394 - ITAT DELHI] we are of the considered view that when the assessee has suffered losses in the ordinary course of business as a guarantor it has to be treated as a business loss which is eligible to be written off as bad debt due to business exigencies. There is not an iota of evidence in the file if this business loss is due to collusive nature of transaction as provided u/s 36(1)(vii) of the Act. So, finding no illegality or perversity in the deletion of addition made by the ld. CIT (A), ground is determined against the Revenue.
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2021 (7) TMI 1237
Penalty u/s. 271 (1)(c) - expenditure incurred on construction of Bus Queue Shelter - Revenue or capital expenditure - HELD THAT:- Penalty was initiated and levied in earlier years but was deleted by ld. CIT (A) and his order has been confirmed by the coordinate Bench of the Tribunal on the ground that when the assessee has brought on record all the true and material facts in the return of income, it is merely a difference of opinion if these expenses are to be treated as capital or revenue in nature and is not a case of furnishing of inaccurate particulars of income. Hon ble Apex Court in case of CIT vs. Reliance Petro Products Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] held that merely making a claim which is not sustainable in law by itself would not amount to furnishing of inaccurate particulars. We are of the considered view that by claiming expenditure incurred by the assessee on construction of BQS for and on behalf of New Delhi Municipal Corporation (NDMC) and Mumbai Metropolitan Region Development Authority (MMRDA) as capital in nature does not amount to furnishing of inaccurate particulars of income. So, ld. CIT (A) has rightly deleted the penalty and finding no illegality or perversity in the impugned order, the appeal filed by the Revenue is dismissed.
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2021 (7) TMI 1236
Assessment u/s 153C - Addition u/s 69 - CIT-A deleted the addition - HELD THAT:- As decided in DHARMEN MARBLE STONE VERSUS ACIT, CENT. CIR. 1 (2) (3) AHMEDABAD. [ 2021 (7) TMI 1163 - ITAT AHMEDABAD] addition made by the AO has already been deleted by the CIT(A) on merit. The order of the CIT(A) has not been challenged by the Revenue in further appeal. Therefore, adjudication of legal issue at this stage would only an academic exercise. It is not going to materially affect the assessee in any manner. No other proceedings, in consequence to this proceeding qua the assessee are pending. Therefore, we do not deem it necessary to devote time energy for resolving an academic litigation
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2021 (7) TMI 1235
Addition u/s 50C - sale of land by four co-owners - applicability of the provisions of Section 50C for adoption of deemed full value consideration, while computing the capital gain arising from the sale of land in question - assessee has claimed that the land in question is a Bhumidari land and the ownership is vested with the State Government, hence, the assessee has transferred only the tenancy rights in the land - HELD THAT:- In the case in hand as per the sale deed dt. 26th May 2004 the parties have specifically stated that the land in question is free from any encumbrance and does not fall in the category of ceiling, nazul or leasehold. Therefore, what is transferred by the assessees as per sale deed dt. 26th May 2004 is the ownership of the land for a consideration of ₹ 9,50,000/- whereas the land was valued for stamp duty purpose at ₹ 53,00,000/-. Neither the AO has conducted any inquiry regarding any change in the status of the land in question after the same was purchased in the year 1961 till it was sold in the year 2004 nor the assessee has brought on record any material to say that the land still remains Bhumidari land and the assessee was having only a tenancy rights in the land in question. Therefore, this factual aspect is required to be verified after conducting a proper inquiry particularly from the Revenue department of the State Government in respect of the status of the land at the time of sale on 26.06.2004. Hence, in the facts of circumstances the case and in the interest of justice, this issue is set aside to be record of the Assessing Officer for fresh adjudication after conducting a proper inquiry regarding the status of the land on the date of sale, and then decide the same as per law. Determination of fair market value as on 01.04.1981 - AO has accepted the fair market value of the land as on 01.04.1981 in the case of assessee whereas in the case of co-owner the Assessing Officer has adopted a different valuation. It transpires from the record that the Assessing Officer has accepted the fair market value as on 01.04.1981 in case of Mahendra Singh whereas the different valuation was adopted in case of Rajendra Singh. There cannot be two valuation of the same land when the land was jointly owned by the assesses and sold by one sale-deed. Accordingly addition made by the Assessing Officer by adopting a different fair market value as on 01.04.1981 in case of Rajendra Singh is deleted.
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2021 (7) TMI 1233
Disallowance of deduction u/s 80IAB - income derived from 'Operation and Maintenance Activities' of SEZ - HELD THAT:- A combined reading of provisions of section 80IAB of the Act with section 2(g) and Section 3(10) of the Special Economic Zone Act that a person would be considered as a developer with the grant of letter of approval from competent authority, if the approval has been granted for development, operating and maintaining the SEZ. Therefore, activities of the assessee being a developer, include operation and maintenance of SEZ, and therefore entitled for deduction under section 80IAB of the Act. DR has not disputed or point out any material difference in this year from that of earlier years, so that the Tribunal can take a different view on the issue of claim of deduction under section 80IAB of the Act. Therefore, respectfully following orders of the Tribunal in the assessee s own case cited. [ 2018 (2) TMI 2040 - ITAT AHMEDABAD] ,. [ 2017 (10) TMI 1578 - ITAT AHMEDABAD] and [ 2016 (8) TMI 696 - ITAT AHMEDABAD] based on which the ld.CIT(A) has allowed the claim of the assessee, we uphold order of the ld.CIT(A) and dismiss the ground of appeal of the Revenue.
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2021 (7) TMI 1232
Addition u/s 68 - accommodation entry in the name of the Assessee - assessee was asked to produce parties who invested in the Assessee company to prove the genuineness of the transaction but he has shown its inability to produce - CIT-A deleted the addition - HELD THAT:- There is no reference in the order of ld CIT(A) that how he has dealt the requirement of the ld AO of personal examination of the investor which the Assessee has reportedly failed to produce before the ld AO. CIT(A) has categorically mentioned that on account of independent enquiry, no adverse information came to the knowledge of the share holders that those are non- existent or do not have any capacity. He merely deleted the addition on the basis of the confirmation. He ignored the finding of the ld AO that there were a search in case of Shri S. K. Jain, where he confirmed that these accommodation entries and the assessee is one of the beneficiary therefore the genuineness of the transaction was completely shrouded. To examine the genuineness AO made several attempts for examination of the share holder which the Assessee either expressed inability or completely thwarted the investigation of the ld AO. CIT(A) did not address this issue at all. The onus u/s 68 is always swinging from Assessee to AO and AO to Assessee. In this case, now the onus rests with the assessee to produce the depositors before the ld AO who have invested in the share capital of the company. Assessee failed to do so. The assessee is a private limited company and therefore, it could not have given share subscription to the public at large. It has issued shares to the private parties which are known to the assessee only. It is not the case of the public limited company where the non production of the share holder could not have visualized in isolation against the Assessee. See NRA IRON STEEL PVT. LTD. [ 2019 (3) TMI 323 - SUPREME COURT] and NDR PROMOTERS PVT. LTD. [ 2019 (1) TMI 1089 - DELHI HIGH COURT] As the ld CIT(A) has failed to answer the several observation of the ld AO as stated above, we set aside the both the grounds of appeal of the ld AO back to the file of ld CIT(A) with a direction to the Assessee to produce the share holders before him - Decided in favour of revenue for statistical purposes.
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2021 (7) TMI 1230
Penalty u/s 271(1) (c) - Addition on ad hoc basis - HELD THAT:- AO imposed penalty under section 271(1)(c) of the Act on ad hoc basis without adducing any evidence on record for concealment of income. Penalty under section 271(1)(c) of the Act is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad hoc basis does not result into imposition of penalty u/s 271(1)(c) and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. We find support from the series of decisions by different High Courts as well the decision of the Co ordinate Benches of the Tribunal, wherein it was held that when addition is made on estimate basis, penalty is not sustainable in the eyes of law. Departmental Authorities has not brought any cogent material to prove otherwise warranting interference at the instance of the Revenue. In this view of the matter, we are of the considered view that the learned CIT(A) was indeed justified in deleting the penalty, as there was no concealment of income on the part of the assessee have been proved by the Revenue and additions made on estimation by the Assessing Officer do not call for initiation of penalty - Decided against revenue.
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2021 (7) TMI 1229
Addition on account of Short Deduction of TDS - Intimation u/s. 200A - HELD THAT:- As per the provisions of Sec.201(1), where the assessee, inter-alia, fails to deduct whole or any part of the tax then such persons shall be deemed to be an assessee-in-default. However, as per the first proviso, the assessee shall not be deemed to be assessee-in-default in respect of such tax if the payee has furnished his return of income u/s 139 and has taken into account such payment for computing income and has paid tax due on income declared by him in such return of income. For the same, the payee is required to furnish a prescribed certificate to that effect. Thus, if the assessee could demonstrate the fulfilment of all these requirements, he could not be treated as assessee-in-default. To get the benefit of the proviso, the assessee is directed to demonstrate the fulfillment of these requirements before Ld. TDS officer who shall consider the same. If the same are found in order, the assessee could not be treated as assessee-in-default and the demand raised for short deduction of TDS shall stand deleted. We order so. The ground thus raised stands allowed for statistical purposes. Computation of interest u/s 201(1A) - As per clause (i), The assessee is liable to pay simple interest on short payment of tax from the date on which tax was deductible to the date on which tax was deducted. Clause (ii) provides for interest on the amount of such tax from the date on which the tax was deducted to the date on which the tax was actually paid. As been provided that in case the assessee is not treated as assessee-in-default in terms of first proviso to sub-section (1) then interest under clause (i) shall be payable from the date on which tax was deductible to the date of furnishing of return of income by the payee.Therefore, the statutory provisions are quite clear. The payment of interest shall be mandatory and the period shall run from the date on which tax was payable to the date of furnishing of return of income by the payee. Payment of interest is mandatory but the same may be re-computed at correct rates after ascertaining the fact that whether the assessee could be treated as assessee-in -default or not. The grounds, thus raised, stand partly allowed for statistical purposes.
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2021 (7) TMI 1228
Assessment u/s. 144 - Cash deposits into Citizen Co-operative bank account as income of the assessee under the head 'income from other sources' - HELD THAT:- AO has proceeded on the assumption that the cash deposits are after the death of assessee's father, and the assessee could not file all the details before the AO and the CIT(A), we deem it fit and proper to remit the issue to the file of the AO with a direction that AO shall reconsider the issue afresh in light of material filed by the assessee in accordance with law. The assessee is directed to cooperate with the AO by giving all details, failing which, AO can take necessary decision as per law.
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2021 (7) TMI 1227
LTCG - registered sale deed was executed by the legal heirs of late Sri G. Sattiah - Assessee along with her sister and 6 brothers, sold 12 plots of land and the assessee's 1/8th share in S.R.O. value (after applying the provisions of section 50C - HELD THAT:- Undisputed facts are that the assessee's father, late Sri G. Sattaiah during his lifetime had sold certain piece of land to various vendees and some of the vendees have also passed away and at the request of the vendees and the legal heirs of deceased vendees, the LRs of the vendor, late Sri Sattaiah, have executed registered documents in their favour. In the light of such circumstances, the assessee and her brothers have executed the sale deed, in respect of properties, whose possession of the property was already given. In view of provisions of section 53A of the Transfer of Property Act, the properties have already been transferred in favour of the vendees except for the execution of the registered sale deeds. As rightly contended by the assessee, the transfer has taken place in the earlier assessment years when late Sri G. Sattiah was alive. As regards the finding of the AO that LTCG has arisen out of retention of 500 square yards by assessee's brothers, find that the assessee has stated before the CIT(A) that 500 square yards vested with late Sri G. Sattiah and after his demise, his sons received the property and constructed house thereon and that it was not received by assessee's brothers by virtue of gentleman agreement. CIT(A) has not verified this fact but has merely gone by the presumption that the assessee had relinquished her right over the 500 sq. yards plot retained by assessee's brothers. Since the land retained by the assessee's brothers cannot be treated as transfer in their favour, there cannot be any relinquishment or right by the assessee in such property. Therefore, there is no incidence of any LTCG in favour of the assessee during the alleged assessment year when the registered sale deed was executed by the legal heirs of late Sri G. Sattiah, with regard to the transaction which had taken place during the earlier assessment year. Thus, the assessee's grounds of appeal are allowed.
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2021 (7) TMI 1226
Penalty u/s. 271(1)(c) - Non specification of specific charge - irrelevant portion in the notices were not striked off and contended that such a levy of penalty was void ab initio and requested to be deleted - additions pertain to bank deposits and deduction claimed u/s. 80C - HELD THAT:- CIT(A) had observed that the A.O. records satisfaction for imposition of penalty was for concealment of income, however, he omitted to strike off the irrelevant part of the blank printed format notice u/s. 274 r.w.s. 271(1)(c) and thus without striking off the irrelevant portion in the notice contemplates in vitiating the penalty proceedings. The admitted fact that the A.O. has issued blank printed format notices, without striking off irrelevant portion u/s. 274 r.w.s. 271(1)(c) duly signed under its signature. We understand that the A.O. while issuing Notice under section 271(1)(c) of the Income-tax Act, 1961 is under statutory obligation that the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. These notices primarily suffered from ambiguity and the vice of vagueness, thus, vitiated the penalty proceeding. Decided in favour of assessee.
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2021 (7) TMI 1225
Penalty levied u/s. 271(1)(c) - transfer of agricultural land were subjected to capital gain tax and as the assessee did not offer the gains in his return of income - As strongly contended that when the assessee sold the impugned piece of agricultural land said land was beyond the distance of 8 KMS from the municipal limits and this was confirmed by the Tehsildar of Sohana - CIT(A) deleted the penalty levied by the AO - HELD THAT:- It is an undisputed fact that the distance of the land sold on the date of CBDT notification No. 9447 dated 06.01.1994 was more than 8 KMS. As equally true that on the date of sale the said distance was less than 8 KMS. We are of the considered view that the chargeability of capital gain tax under such circumstances is a debatable issue. We further find that the appellant claim is well supported by the certificate of the Tehsildar, Sohna which was also confirmed by the A.O. in his remand report. Hon'ble Supreme Court in the case of Reliance Petro Chemicals Limited [ 2010 (3) TMI 80 - SUPREME COURT] has held that merely making an incorrect claim would not tantamount to furnishing of inaccurate particulars unless it was established that appellant had acted with mala fide intention. In totality in the light of certificates of the Tehsildar, Sohna we are of the considered view that the CIT(A) has rightly deleted the penalty levied u/s. 271(1)(c) of the Act and calls for no interference. Appeal filed by the revenue is dismissed.
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2021 (7) TMI 1224
Levy of penalty u/s. 271(1)(c) - HELD THAT:- Penalty proceedings u/s. 271(1)(c) of the Act has been initiated by the Ld. AO for concealment of income, but ultimately the penalty has been levied by the Ld. AO for furnishing inaccurate particulars of income. This is a classic case wherein penalty has been initiated under one limb of Section 271(1)(c) of the Act and ultimately levied for another limb of Section 271(1)(c) of the Act. In the case of CIT vs. Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] had held that concealment of income and furnishing of inaccurate particulars of income in Section 271(1)(c) of the Act carry different meanings/connotations and therefore, the satisfaction of the AO with regard to only one of the two breaches mentioned u/s. 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/permit penalty being imposed for the other breach. The order imposing penalty has to be made only on the ground of which penalty proceedings has been initiated, and it cannot be on a fresh ground of which the assessee has no notice. Therefore, where the Assessing Officer initiated penalty proceedings u/s. 271(1)(c) for furnishing inaccurate particulars of income, the order imposing penalty for concealment of income was not valid - we hereby direct the Ld. AO to delete the penalty levied u/s. 271(1)(c). - Decided in favour of assessee.
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2021 (7) TMI 1223
Reopening of assessment u/s 147 - Bogus purchases - information gathered from DGIT (Investigation) Mumbai that Sanjay Choudhary group persons had floated various companies which are engaged in the business of providing accommodation entries in the form of bogus unsecured loans, bogus purchases, bogus capital gains and assessee also was one of the beneficiaries by obtaining bogus purchases - HELD THAT:- Admittedly this information was obtained by the Ld. AO based on search and seizure action carried out in the case of Shri Sanjay Choudhary group wherein it was found that the said group was engaged in providing accommodation entries without actual supply of goods, which had ultimately triggered the reopening of assessment in the case of the assessee. CIT(A) had observed that from the information so received, the assessee's name appeared in the list of beneficiaries who had taken accommodation entries. Obviously this would result in formation of belief in the mind of the AO that income of the assessee had escaped the assessment as the said information constituted tangible material. We find that the Ld. CIT(A) had also placed reliance on the decision of the Hon'ble Gujarat High Court in the case of Peass Industrial Engineers Pvt. Ltd.[ 2016 (8) TMI 280 - GUJARAT HIGH COURT] in support of its contentions, while upholding the validity of reopening. Hence, we do not find any infirmity in the order of the Ld. CIT(A) upholding the validity of reopening of the assessment in the instant case. Accordingly, the ground No. 1 raised by the assessee for both the years is hereby dismissed. Bogus purchases - In the instant case, the sales made by the assessee within the disputed purchases had not been doubted by the Revenue. Hence, it could be safely concluded that assessee could have made purchases from grey market in order to have some savings in indirect taxes and incidental profit element thereon by making cash purchases. Hence, it would be just and fair to bring to tax only profit element embedded in the value of such disputed purchases. We find based on the report of the task group for diamond sector published by the Government of India, Ministry of Commerce and Industry, in this regard, wherein the benign/presumptive taxation threshold was set at 2.5%. We hold that profit percentage embedded in the value of disputed purchases estimated at 2.5% thereon, would meet the ends of justice. The Ld. AO is directed accordingly.
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2021 (7) TMI 1222
Assessment u/s 153A - Non-service of notice - HELD THAT:- There is no dispute of the fact that the search seizure operation in this case took place on 20.06.2014, by which date the time period to issue notice u/s. 143(2) for assessment year 2009-10 stood expired. There is also no dispute that no incriminating material was found during the search and seizure operation to base any addition qua this assessment year. In CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] Hon'ble Delhi High Court held that the assessment cannot be made arbitrarily without any relevance or nexus with the seized material and the assessment in such cases has to be made only on the basis of incriminating material found during the search and completed assessments cannot be interfered with arbitrarily. In such circumstances, the finding of the ld. CIT(A) cannot be interfered with. - Decided against revenue.
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2021 (7) TMI 1221
TDS u/s 194I - rent paid to five person - Addition u/s. 40(a)(ia) - HELD THAT:- In so far as the payment to four persons is concerned, none of such persons received an amount exceeding ₹ 1,80,000/- in the financial year and therefore, under proviso to section 194-I, no deduction need be made. This is the reason why the ld. CIT(A) did not confirm such an addition and she confined her discussion to the addition of ₹ 3,36,000/-. Though it is implied from the order of the ld. CIT(A), now we expressly state that the addition made by the Assessing Officer in respect of payments made to four individuals is unsustainable and shall stand deleted. Amount paid to one Sh. Chandra Kant Adrekar - The record reveals that Form 26A dated 10.01.2017 was issued by the assessee and it was countersigned by the Chartered Accountant and inasmuch as it was not submitted to DCIT(Systems), the ld. CIT(A) held that there was no sufficient compliance with the Rules. Be that as it may, the leaned CIT(A) was not sure as to the fact whether the income of the payee was below the maximum amount not chargeable to tax. As submitted before the ld. CIT(A) that the assessee was required to file the details of expenses, on which TDS was deducted and the Assessing Officer did not seek any explanation for non-deduction of TDS in respect of this amount. According to the assessee before the ld. CIT(A), this prevented the assessee from producing Form 26A before the Assessing Officer. In these circumstances, when once form 26A was produced before the CIT(A), the fact of income of the payee below the maximum amount not chargeable to tax assumes importance, and in the absence of any finding on this aspect, the addition cannot be sustained. In the circumstances, we find it difficult to sustain the orders of the authorities below and accordingly allow the grounds of appeal. - Decided in favour of assessee.
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2021 (7) TMI 1219
Addition u/s 40A(7) - contribution towards the gratuity funds - HELD THAT:- It is the case of the assessee that the assessee had made contribution towards the gratuity funds during the assessment year under consideration and therefore the assessee is entitled to the dedication liable under section 40A(7) of the Act. Once the assessee had made the payment during the year under consideration then the same is required to be allowed. However, the above said fact have not been considered by the lower authorities and therefore we deem it appropriate to remand back the matter to the file of the concerned AO to verify whether the contribution towards the gratuity funds were paid by the assessee during the year under consideration or not. If on verification the AO comes to the conclusion that the contribution were made in the year under consideration then the AO is directed to allow the benefit of 40A(7) to the assessee - while verifying above set back of contribution the AO shall afford the opportunity to the assessee and also permit him to support the contention on the basis of the documents/evidence may be advised. Accordingly, the appeal of assessee is allowed for statistically purposes.
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2021 (7) TMI 1217
Penalty u/s 271(1)(c) - disallowance on account of direct expenses - HELD THAT:- Whether or not the learned CIT(A) was justified in deleting the penalty u/s 271(1)(c) of the Act imposed by the AO. After hearing the Departmental Representative, we are of the considered opinion that penalty u/s 271(1)(c) levied by AO has no legs to stand, when the corresponding additions made by the AO has already been reduced substantially on the basis of estimation by the Tribunal - when the aforesaid quantum addition is based purely on estimation, the penalty levied u/s 271(1)(c) cannot be sustained. Such proposition of law has been laid down by the Tribunal time and again in plethora of cases. Consequently, we do not have enough reason or do not find any infirmity in the order of the learned CIT(A) deleting the penalty under section 271(1)(c) of the Act imposed by the AO. Accordingly, the order of the learned CIT(A) is hereby upheld. The grounds raised by the Revenue are dismissed.
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2021 (7) TMI 1215
Disallowance u/s 14A - assessee has suo-moto disallowed an amount - HELD THAT:- After considering the submissions of the assessee, we are in agreement with the assessee based on the decisions of the Hon ble High Court s that the disallowance under section 14A is restricted to exempt income earned by the assessee. As relying on Chalet Hotels Ltd [ 2021 (1) TMI 1134 - ITAT MUMBAI] we are inclined to direct the assessing officer to restrict the disallowance under section 14A to the extent of exempt income earned by the assessee. Accordingly ground raised by the assessee is allowed.
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Corporate Laws
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2021 (7) TMI 1262
Sanction of Scheme of Amalgamation - Section 230 - 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- The Petitioners have made the instant Petition before this Tribunal, among other things, seeking final sanction to the proposed Scheme of Amalgamation - The date of hearing of the Petition filed jointly by the Petitioners for sanctioning of the Scheme is fixed on 13.09.2021. Notice of hearing of the Petition in form NCLT 3A shall be advertised once in English newspaper Financial Express and in Bengali newspaper Aajkal not less than 10 (Ten) clear days before the aforesaid date fixed for hearing.
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Insolvency & Bankruptcy
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2021 (7) TMI 1263
Appellant seeks clearance of lease rent and maintenance bill for the year 2019-2020, alongwith Interest - seeking clearance of water bill dated 07.02.2020 as well - Resolution Plan approved by Adjudicating Authority - HELD THAT:- In this case, there is apparent mistake that the lease rent and the electricity and water bill all are essential supply and should form part of Insolvency Resolution Process cost vide Chapter IX IBBI (Insolvency Resolution Process for Corporate Persons) Regulation 2016, Regulation 31 32 and R/w Section 5(13) (e) and 14(2) of the Code - The Adjudicating Authority has approved the Resolution Plan which is at Annexure-E page - 70 of the Appeal paper book vide Clause 6.2 has clearly stated that in case the actual CIRP is higher than the estimated CIRP cost the Resolution Applicant will pay the higher amount. The Resolution Applicant is liable to pay the principal amount due for the specified period of the bill i.e for the CIRP Period, without considering the interest components as part of Insolvency Resolution Process Cost which he is liable to pay - It is settled law that the Insolvency and Bankruptcy Code, 2016 is a complete Code. Hence, all concerned are required to comply with the express provisions of the Code without any deviation. Appeal allowed in part.
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2021 (7) TMI 1234
Lease agreement - lease entered into in accordance with law for renewing the existing lease hold rights, subsequent to notice under SARFAESI - It was contended by the Applicant that the execution and registration of the Lease Deed dated for a period of 20 years, being subsequent to issuance of the SARFAESI Notice was unlawful as being violative of Section 13(13) and the spirit of SARFAESI Act, 2002 - right of the mortgagor to put the property on lease conditional upon Section 65A(2) of Transfer of Property Act, 1882 - Clarification sought of the judgement in the case of Delhi Administration V/s Gurdip Singh Uban and Others [2000 (8) TMI 1106 - SUPREME COURT] - HELD THAT:- There are no provisions in the IBC which permits us to review the judgment passed by this Tribunal. The provisions of Rule 31 of NCLAT Rules, 2016 is also not applicable in the facts of the instant Application because the judgment has already been delivered and the matter has been disposed off. The clarification Application which has been filed is just not for clarification/modification/recall of the Judgment passed by us but for review of the Judgment resulting reopening/rehearing the issue and such practice may not be done for want of provisions to review in IBC - the averments made in the clarification application do not have any merit - application dismissed.
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2021 (7) TMI 1220
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - reply to the demand notice made or not - HELD THAT:- This Adjudicating Authority is satisfied that the Operational Creditor has proved its case by placing evidence that default has occurred for which the Corporate Debtor was liable to pay. Reply to demand notice - HELD THAT:- It is seen that no reply to the demand notice served u/s. 8 of the Code was ever made by the Respondent to indicate either existence of dispute or proof of payment of the impugned debt. In fact, during the initial phase of the instant proceedings upto 13.02.2020, the Respondents sought time for settling the matter and for filing Joint Memo of Settlement, but there was no representation thereafter. The Operational Creditor has fulfilled all the stipulations as required under the provisions of the IB Code, 2016 for the purpose of initiating Corporate Insolvency Resolution Process. In these circumstances, having satisfied with the submissions made by the Petitioner/Operational Creditor, this Adjudicating Authority is inclined to admit the instant Application. The instant application is hereby admitted - Moratorium declared.
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PMLA
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2021 (7) TMI 1258
Seeking grant of Bail - procedure under Section 19 PMLA was followed or not - Enforcement Directorate can be complainant and the Investigating Officer at the same time or not - effect of declaration of twin conditions under Section 45 of the PMLA have been declared unconstitutional and ultra virus. Non-compliance under Section 19 of the PMLA - HELD THAT:- Admittedly, Bimal Jain was arrested in execution of the NBW by the learned Special Judge, PMLA while taking cognizance of prosecution complaint filed by the Enforcement Directorate and thus there was no occasion to comply with the requirement of Section 19 of the PMLA. The very fact the complaint was filed by the Enforcement Directorate arraying petitioner Bimal Jain as accused No.2, prima facie show there were reasons to believe the person was guilty of offence punishable under Section PMLA as the complaint is filed only against a person who is presumed to be guilty. Admittedly, the learned Special Judge, PMLA took cognizance of the complaint filed by the Enforcement Directorate as he reasonably believed petitioner Bimal Jain, being guilty of offence of money laundering. Whether the complainant and the Investigating Agency cannot be same? - HELD THAT:- Issue decided in the case of MUKESH SINGH VERSUS STATE (NARCOTIC BRANCH OF DELHI) [ 2020 (9) TMI 419 - SUPREME COURT] where it was held that merely because the informant is the investigator, by that itself the investigation would not suffer the vice of unfairness or bias and therefore on the sole ground that informant is the investigator, the accused is not entitled to acquittal. Twin conditions of 45 of the PMLA - HELD THAT:- Admittedly the Hon ble Supreme Court in Nikesh Tarachand Shah (supra) declared the Section 45 of the PMLA as it stood then, as unconstitutional and violative of Articles 14 and 21 of the Constitution of India, but the defects pointed out by the Hon ble Supreme Court in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR. [ 2017 (11) TMI 1336 - SUPREME COURT] were cured by the Legislature and an amendment to section 45(1) was made vide the Finance Act, 2018 (No.13 of 2018). Under the amendment Act, section 45(1) was revived and for the words punishable for a term of imprisonment of more than three years under part A of the Schedule , the words under this Act were substituted in section 45(1) of the PMLA. Therefore, merely because the entire section is not re-enacted would be of no consequence since the provision even after being declared unconstitutional, does not get repealed or wiped out from the statute book and it only becomes unenforceable. Therefore, once the Parliament steps in and cures the defect pointed out by a Constitutional Court, the defect appears to be cured and the presumption of constitutionality is to apply to such provision - there is a presumption in favour of constitutionality since the amended section 45(1) of the PMLA has not been struck down. If Section 45(1) of the PMLA is ignored, whether the petitioners are entitled to bail per parameter of Section 439 Cr P C.? - HELD THAT:- The investigation conducted by the Directorate of Enforcement so far has revealed Naresh Jain along with his brother Bimal Jain and other accomplices hatched a criminal conspiracy to cause loss to the exchequer and banks by indulging in illegal foreign exchange transactions on the basis of forged/ fabricated documents. For the furtherance of conspiracy, documents like identity proof, birth and education certificate, voter ID, PAN Card and signatures were forged/fabricated to incorporate entities, operating bank accounts, facilitating bogus/over-invoiced/ under invoiced import and export transactions and rotation of the funds through web of shell companies to cause undue benefit to the parties involved and loss to the exchequer and banks. Naresh Jain also facilitated parking of funds abroad by Indian nationals through his international Hawala transaction structure created in India and in various other jurisdictions - During the investigation conducted so far, out of 450 shell companies, 603 bank accounts of 311 companies have been examined and it has been gathered that Naresh Jain and his accomplices including the Bimal Jain rotated funds approximately to the tune of ₹ 96,000 Crores for providing accommodation entries of approximately ₹ 18,679 Crores to 973 beneficiaries. Petitioner Bimal Jain was made a director in various companies in which proceeds of crime generated by Naresh Jain and his accomplices were projected as untainted properties and is in possession of proceeds of crime to the tune of ₹ 35,78,53,638/-. Even the allegations are the petitioners have forged their medical certificates and Naresh Jain continues the criminal activities while in Jail and the investigation in the case is still going on and a large number of activities/fact accounts/witnesses /employees and beneficiaries are involved - It is also alleged if enlarged on bail there is every likelihood the petitioners may flee to Dubai or elsewhere to avoid the process of law and they are flight risks. Bail cannot be granted to both the petitioners - petition dismissed.
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2021 (7) TMI 1256
Money Laundering - Proceeds of crime - scheduled offences - cheating more than 13,000 investors who are the members of the Society - mis-used of funds of the public and re-investment of the money - diversion of deposits from the Financial Institutions to other businesses - Section 420 of IPC - HELD THAT:- The ED produced the documents and also the petitioner counsel has produced an Observation Report, which reveals that the petitioner is one of the Directors; one Harish was the President; Siddegowda was the Vice President and there were other 13 Directors. All other Directors and President were not arrested by the ED except this petitioner. The observation report reveals that the total investment was ₹ 650,41,68,190/-. The reserved amount is ₹ 12,93,42,844/-; the share investment is ₹ 24,74,89,000/-; the loan obtained for an amount of ₹ 6,09,73,928/-. The investment is ₹ 6,35,12,658/-. The Property is 7,68,69,008 and the loan lent is ₹ 702,28,44,385/-. As per the report of the petitioner, the Society was running under profit, but not under loss. But the contention of the respondent is that the accused himself has borrowed huge loan without security and has reinvested in various businesses like Kanva Fashion, Kanva Developers, Kanva Health Care, Kanva Resorts and other businesses - Looking to the entire facts reveals that the petitioner was involved in reinvesting the money by borrowing it from the Society out of the deposits which is nothing but proceeds of the crime is nothing but Money Laundering which attracts the offence under the PML Act. On merits, absolutely there is no case for the petitioner. Looking to the entire medical documents, it reveal that the petitioner is in danger due to various ailments and therefore, he require proper treatment in the good multi-Specialty Hospital at Bengaluru. It is not possible to provide proper treatment by the Jail Authorities which requires more expenses, which cannot be borne by the Government. The Government cannot spend tax payers money. The Court will not grant bail to the accused where economic offences are involved and huge public money is involved. But only on the ground for the purpose of providing medical treatment this Court is required to consider medical ground but not on merits of the case. Therefore, by looking to the facts and circumstances of the case, in order to provide proper medical care and protection to the petitioner, if bail is granted to the petitioner, no prejudice would be caused to the prosecution case - the petitioner is required to be released on bail on medical ground. Both the criminal petitions are allowed.
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Service Tax
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2021 (7) TMI 1261
Rejection of refund claim of service tax - construction of Government buildings - refund arising as a result of restoration of exemption benefit of N/N/. 12/2012 and 25/2012 dated 20/06/2016 - Prospective effect or retrospective effect - Rule 173-S of the Central Excise Rules, 1944 - it was held by High Court that the notification No. 12/2012 25/2012 ceased to exist w.e.f. 01/04/2015. The exemption was revived by notification dated 01/03/2016. But since it was prospective in effect, the appellant was not entitled for any exemption, which the appellant was aware of and with open mind and eyes deposited the service tax due with interest. HELD THAT:- There are no infirmity in the view taken by the first authority, which has been rightly affirmed by the Customs, Excise and Service Tax Appellate Tribunal, as well as the High Court. There is no merit in this appeal - appeal dismissed.
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2021 (7) TMI 1260
Classification of services - contract for supply of mud and spreading and dumping of earth on agricultural land - classifiable under site formation and clearance service, excavation, earth moving and demolition service or not - period 01 October, 2007 to 31 March, 2008 - time limitation - it was held by CESTAT that findings of the Adjudicating Authority that since the agricultural land was subsequently converted into commercial land, the activity undertaken by the appellant prior to the said conversion would become taxable subsequent to conversion of the land, cannot be agreed upon. HELD THAT:- There are no reason to interfere with the impugned order - appeal dismissed.
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2021 (7) TMI 1259
Maintainability of appeal - Classification of services - Whether or not, the Boards and the University are educational institutions. If the Boards and University are found to be educational institutions, the services provided to them are exempt? - it was held by High Court that Once it is held that the service recipients are educational institutions, the impugned show-cause notices are rendered unsustainable. HELD THAT:- The Special Leave Petition under Article 136 of the Constitution, need not be entertained - the Special Leave Petition is accordingly dismissed.
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2021 (7) TMI 1255
Benefits as far as the Chit Fund Companies - Nature of activity of chit fund business - cash management / fund management - whether classifiable under the category of banking and other financial services ? - HELD THAT:- This Court is of the considered opinion that the benefits conferred by the Supreme Court is to be extended and in respect of all other allegations, an adjudication is to be entertained with reference to the findings made by the Original Authority/Appellate Authority - the Original Authority or the Appellate Authority, as the case may be, made certain findings in respect of the claim made by the petitioner. As far as the benefits conferred by the Hon'ble Supreme Court in the case of UNION OF INDIA AND ORS. VERSUS M/S. MARGADARSHI CHIT FUNDS (P) LTD. ETC [ 2017 (7) TMI 224 - SUPREME COURT] , are concerned, the same is to be extended and as pointed out by the learned Senior Standing Counsel for the respondent, the benefits have already been extended in favour of the petitioner - However, the Appellate Authority may segregate the issues and accordingly proceed with an adjudication. If any appeal is preferred by the petitioner, challenging the order in original and the show cause notice, which are under challenge in the present writ petitions. This being the factum, the petitioner is at liberty to file an appeal within a period of four weeks from the date of receipt of a copy of this order in a prescribed format and by complying with the Statute and the Rules and the Appellate Authority, on receipt of any such appeal from the petitioner, shall condone the delay, if any and entertain the appeal and adjudicate the issues on merits and in accordance with law - Petition disposed off.
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2021 (7) TMI 1247
Refund of Cenvat credit - during the period the respondent was not registered as service provider - CESTAT allowed the refund - N/N. 5/2006-C.E. (N.T.), dated 14-3-2006 - notice was served on the first respondent, the same returned with the postal endorsement left as early as 8-6-2019 - first respondent did not even intimate the Revenue about the change of office - HELD THAT:- Tribunal stated the legal position that the State should not be enriched at the costs of its citizen. There can be no quarrel over the said proposition. However, the Tribunal failed to consider as to whether the Commissioner (Appeals) was justified in passing the common order dated 18-12-2013 allowing the appeals filed by the first respondent-assessee. Several grounds have been raised by the Revenue before the Tribunal, which could be seen from the grounds of appeal annexed in the typed set of papers. The Tribunal was required to examine the correctness of the common order passed by the Commissioner (Appeals) with reference to the grounds raised by the Revenue before it - the common impugned order is without any discussion on any of the grounds raised by the Revenue. The matters are remanded to the Tribunal for a fresh consideration in accordance with law after issuing notice to the first respondent-assessee - Appeal allowed by way of remand.
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2021 (7) TMI 1216
Interest on late payment of sanctioned refund - Section 11BB of Central Excise Act, 1944 - despite order, refund not ordered till date - HELD THAT:- The refund claim of the appellant stands already allowed with consequential relief. Since the order of Commissioner (Appeals) is silent about the sanction of interest and the law if mandates the interest to flow consequent to sanction of refund that shall be covered under the order of consequential relief already passed by Commissioner (Appeals). There are no cause of action as of now available with the appellant to challenge the said order. The appropriate remedy would have been sought by filing an application to the Department seeking implementation of the impugned order No.81/2019 dated 25th November, 2019. The appeal is, therefore, held to be pre-mature, accordingly, stands disposed of giving liberty to the appellant to approach the Department.
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Central Excise
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2021 (7) TMI 1252
Rebate Claim - rejection on the ground that the application seeking rebate was not filed within the time prescribed - exports effected by the appellant during August 2015 to March 2016 - section 11B of CEA - HELD THAT:- A reading of Section 11B of the Act makes it explicitly clear that claim for refund of duty of excise shall be made before the expiry of one year from the relevant date. The time prescribed under Section 11B of the Act was earlier six months which was later on amended on 12.05.2000 by Section 101 of the Finance Act, 2000. Rule 18 of the Central Excise Rules and the Notification dated 06.09.2004 did not prescribe any time for making any claim for refund as Section 11B of the Act already mandated that such application shall be filed within one year. Section 11-B of the Act being the substantive provision, the same cannot yield to Rule 18 of the Rules or the Notification dated 06.09.2004. In the present case too the application filed by the appellant claiming rebate was beyond the period of one year. Consequently, the respondent was right in rejecting the claim of appellant on the ground that it was belated. Appeal dismissed - decided against appellant.
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2021 (7) TMI 1231
Cenvat credit - Bill of Entry in the name of the supplier of the raw material i.e. M/s Marico Limited - goods were received by the appellant as a job worker and used in the manufacture of goods on the job work basis - HELD THAT:- Right from the Show Cause Notice the case of the department is only that whether the appellant is entitled for the Cenvat credit on the strength of Bill of Entry which is in the name of principal supplier M/s Marico Limited along with declaration given by M/s Marico Limited. There is no dispute about receipt, use of the goods supplied by M/s Marico Limited under the cover of Bill of Entry along with declaration in favour of the appellant. Even though the Bill of Entry is in the name of M/s Marico Limited but on the basis of declaration it is established that the material has been supplied to the appellant for job work, therefore, merely because Bill of Entry is bearing the name of M/s Marico Limited, Cenvat credit cannot be denied to the appellant. In the case of M/S TRICHEM LAB. (BOMBAY) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR [ 2016 (6) TMI 616 - CESTAT MUMBAI] , Tribunal has considered that on the basis of the Bill of Entry supported with declaration given by the importer is a valid document for availing the credit by the job worker - thus, appellant is entitled for Cenvat credit on the strength of Bill of Entry even though the same is in the name of M/s Marico Limited but with a declaration in favour of the appellant. Credit allowed - appeal allowed - decided in favor of appellant.
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2021 (7) TMI 1218
Refund of CENVAT Credit - pre-deposit made under protest - invoices issued fraudulently - rejection on the ground of time limitation - Section 11B (5) (ec) of Central Excise Act, 1944 - HELD THAT:- There is no denial for the fact that ₹ 10,30,000/- was deposited by the appellant at the stage of investigation itself. Any deposit made at the time of investigation is settled to be an amount to be called as pre-deposit under protest. The second proviso to section 11B of CEA is sufficient to hold that the adjudicating authority below has wrongly invoked Section 11B ofCentral Excise Act to hold the impugned refund as barred by time. The relevant date in terms of 11 B (ec) shall be the date of the final order which is 10 November, 2017. The application for refund in question has been filed on 9 July, 2018 as is apparent from the documents annexed with the written synopsis and has also been noted by Adjudicating Authority - the document submitted by the appellant which apparently bears the acknowledgment of receipt by the Department as well has to be considered as the date of application of refund which is 9 July, 2018. Seen from this angle, the application is held within one year from the date of Final decision in favour of the appellant. The cumulative finding of the entire discussion is that Section 11 B has wrongly been invoked by adjudicating authority below. Otherwise also the refund claim has been made well within the reasonable period - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (7) TMI 1250
Exemption from tax - sale of Intra-ocular lenses - exempt under the provisions of the TNGST Act or not? - Third Schedule to the TNGST Act read along with Section 8 - HELD THAT:- This Court is of the considered opinion that whether the exemption granted is general in nature or certain conditions are impliedly or expressly imposed is the point to be considered. The object of Section 8 of the TNGST Act is to grant exemption in respect of the goods and such exemption is subject to such restrictions and conditions as may be prescribed by the appropriate Government - there is no further classification or condition is required in respect of the grant of exemption. The Third Schedule to the TNGST Act unambiguously stipulates goods exempted from tax by Section 8 . It commences the following goods produced or manufactured in India as described in Column (3) against the relevant heading in column (1) of the First Schedule to the Additional Duties of Excise (Goods of Special Importance Act, 1957) (Central Act 58 of 1957) . Therefore, Third Schedule stipulates goods exempted from tax. Intra-ocular lenses - HELD THAT:- Part-B is relevant. Item No.2 of Part-B denotes aids for physically disadvantaged persons as notified by the Government . Item No.2 did not prescribe any goods within the meaning of Section 8 of the TNGST Act. Section 8 contemplates 'goods specified in the Third Schedule'. However, Item No.2 of Part-B did not prescribe any goods. Contrarily, the said Item states that such goods, which all are aids for physically disadvantaged persons are to be notified by the Government. Therefore, Item No.2 Part-B is a general exemption granted, as far as the aids for physically disadvantaged persons are concerned and what all are the aids which all are exempted were notified by the Government in G.O.No.30 dated 27th March, 2005 - This Court has no doubt with reference to the language adopted in Item No.2 of Part-B of the Third Schedule to the TNGST Act, which contemplates aids for physically disadvantaged person . The aids for physically disadvantaged may be many in numbers. However, such aids notified by the Government alone are exempted under the statute more specifically, Third Schedule. In the present case, five goods are exempted from sale tax. Further, the Third Schedule to the TNGST Act commences by contemplating goods exempted from tax by Section 8 , Therefore, once a particular goods is exempted from tax by Section 8, then such goods are to be treated as generally exempted, unless there is an expressed restriction or condition attached to the exemption clause. In the present case, there is no such restriction or condition contemplated in Item No.2 of Part-B of the Third Schedule. Item No.2 generally states 'aids for physically disadvantaged persons as notified by the Government'. Thus, the Government notified five goods which all are exempted and those five goods are to be exempted generally and therefore, the condition now suggested by the Government in their counter is presumptive and not supported with the provisions of the TNGST Act. Certain implied conditions may be possible only on certain circumstances - In the present case, the inference regarding any such implied condition cannot be drawn, as the language employed in Item No.2 of Part-B of the Third Schedule is unambiguous. It states 'aids for physically disadvantaged persons' and not all the aids for physically disadvantaged persons are exempted. In the absence of any specific condition to that effect, the respondents cannot presume or assume and impose sale tax in respect of the Intra-ocular lenses irrespective of the fact whether it is sold either to the dealer, hospital or to the Doctor or otherwise. This Court is of an opinion that the concept of conditional exemption as contemplated by the respondents is not traceable in any of the provisions of the TNGST Act, nor in the notification. Once the goods are exempted under the TNGST Act, then it is to be exempted under the CST Act also in view of Section 8 of the CST Act - This being the constructive interpretation to be adopted in respect of such exemption, which all are granted for the benefit of the group of people in general, this Court is of the opinion that if any such presumptive condition is accepted, the same will cause inconvenience to the physically disadvantaged persons and thus, the case of the respondents is to be rejected. Petition allowed.
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