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TMI Tax Updates - e-Newsletter August 24, 2020 Case Laws in this Newsletter: GST Income Tax Corporate Laws Insolvency & Bankruptcy Highlights / Catch Notes GST: Levy of GST - Difference between the Storage or warehousing services and providing warehouse on rent - The service supplied by CWC to the Appellant is renting of immovable property. The amount of rent paid by the Appellant to CWC is taxable at the hands of CWC under the category ‘Rental or leasing services involving own or leased non-residential property’ - AAAR Visit to Get Source GST: Renting services - Residential unit on Industrial plot - Exemption from GST - it can be justifiably inferred that the land was allotted to the owner for industrial purposes and not for residential purposes. Therefore, the building on this land allotted by KIADB cannot be construed as residential building and consequently the building rented out by the owner to the Appellant was not a residential building. - AAAR Visit to Get Source GST: Classification of services - Rate of GST - services provided to Electricity Supply Companies (wholly owned Government of Karnataka undertakings) by way of construction, erection, commissioning, installation, completion, etc. - for availing the aforesaid benefit of tax rate of 12%, it is of paramount importance that the services under taken/work done by the Appellant for the above electricity distribution companies must necessarily be for use which is non-commercial in nature - AAAR Visit to Get Source GST: Valuation - inclusion of value of bus passes distributed by the applicant to the commuters in the value of facilitation charges - A contract is not property, but only a promise supported by consideration. Thus, the bus pass is not an actionable claim as defined under Transfer of Property Act. It is only an instrument accepted as consideration/part consideration while purchasing the service from the Appellant - Value shall be included - AAAR Visit to Get Source GST: Eligibility for exemption from GST - supply of services in the nature of subscription to the J-Gate by the educational institutions - supply of online journals and periodicals - The question before the lower Authority was regarding their eligibility to the exemption notification. There was no question regarding classification and rate of tax of the supply made by the appellant. - Benefit of exemption available - AAAR Visit to Get Source GST: Classification of supply - Composite supply or Mixed Supply - The ‘a la carte’ services provided by the appellant, relating to employee relocation is neither a composite supply nor a mixed supply - the observations made by the Lower Authority in the impugned order to the effect that the service provided by the appellant is covered under the definition of “intermediary’ is expunged as being beyond the mandate of the Authority in the instant case. - AAAR Visit to Get Source GST: Classification of supply - after sales support services, including warranty services - The activities performed by the Appellant with regard to repair and servicing of Volvo vehicles for Indian customers during the warranty period is an activity amounting to a composite supply of goods and service for Volvo Sweden with the principle supply being a supply of service. The recipient of the supply of service is Volvo Sweden.- AAAR Visit to Get Source GST: Classification of process amounting to manufacture - "Tufting" or a process "other than those processes" - Manufacture of PVC Tufted Coir Mats / Mattings / Floor coverings by the process of embedding coir yarn into PVC cannot be considered as textile floor coverings of coir covered under HSN 5702, 5703 or 5705. The process undertaken is a tufting process and if any, PVC or rubber or any other materials are tufted on the textile of coir, which is used as floor mats or mattings, it will come under the Customs Tariff Head 5703 90 90 and is liable to GST at the rate of 12% of GST - AAR Visit to Get Source GST: Input Tax Credit - financial institution or not - option provided u/s 17(4) - the applicant being a Co-operative Society registered with the Central Registrar of Co-operative Societies carrying on the business of financing whether by means of making loans or advances or otherwise, of any activity other than its own qualifies to be a “financial institution” as per the Reserve Bank of India Act, 1934 and consequently also under the CGST Act, 2017. - AAR Visit to Get Source GST: The activity of construction of 45 individual residential houses at different locations on the land belonging to the individual beneficiaries undertaken by the applicant as per the agreement is rightly classifiable as composite supply of works contract as defined in Section 2 (119) of the CGST Act, 2017 supplied by way of construction of single residential units otherwise than as a part of a residential complex and is liable to GST at the rate of 12% - AAR Visit to Get Source GST: Seizure of consignments alongwith vehicle - the revenue has to put its house in order and strive to achieve the lofty targets set by the CGST Act by effectively using the tools of audit, inspection, seizure, prosecution, recovery etc. - In a proceeding u/s 67 of the CGST Act against the supplier, the respondent was not justified in seizing the perishable goods in transit, moreso when the goods had suffered tax and penalty - HC Visit to Get Source GST: Classification of Services - Management services - intermediary services or not - the service of sales presentations of the products of H-J Family of Companies is classifiable as “Other professional, technical and business services” under Service Code 9983.11 and the same is being rendered as an ‘intermediary service’ as defined under Section 2(13) of the IGST Act - AAAR Visit to Get Source Income Tax: Addition u/s 56(2)(b) - the proviso first and second to Section 56(2)(vii) of the Act would be applicable in the case and the stamp duty valuation or the fair market value of the immovable property shall be considered as on the date of booking and payment made by the assessee towards booking of the flat. - AT Visit to Get Source Income Tax: Levy of late fee u/s 234E - The order of the A.O. can be challenged only if the A.O. has failed to comply with the mandatory provisions of Section 200A r.w.s. 234E of the Act while making adjustment and issuing the intimation. In absence of any such allegation by the assessee that the A.O. has violated any of the provisions of Section 200A as well as Section 234E adjustment made by the A.O. on account of late fee U/s 234E of the Act cannot be deleted. - AT Visit to Get Source Income Tax: Long-term capital loss - the orders of the lower authorities are upheld wherein the assessee has been denied the set of and or carry forward of long-term capital loss on transfer of shares on which the assessee has paid securities transaction tax and are covered by the provisions of Section 10 (38) of the Act - AT Visit to Get Source Income Tax: Trading addition - Estimation of income - bogus purchases - when purchased are duly accepted by the VAT Department including the sales and manufacturing account and the quantity utilized for the manufacturing has not been disputed and trading account and books of account have not been rejected, then no separate addition on account of purchase cannot be made - AT Visit to Get Source Income Tax: Capital gain computation - valuation - the assessee pleads that the guideline value does not reflect the market value and by the time the valuation officer went for inspection, the property was already demolished and hence the valuation made by him cannot be considered as a scientific one - we find merit in the submissions of the assessee. - AT Visit to Get Source IBC: CIRP process - The Accounting Conventions cannot supersede any express provisions of the laid down provisions of the specific law on the subject. The I&B Code, 2016 provides the mechanism of Moratorium during the CIRP till the Resolution Plan is approved or Liquidation order is passed. The I&B Code has a provision to override other laws as enunciated above. Hence, even if there are some such provisions in any other law, the I&B Code 2016 will prevail over that. - AT Visit to Get Source IBC: Initiation of CIRP - The debt has been defined in Section 3(11) means a liability or obligation in respect of a claim which is due from any person and includes a Financial Debt and Operational Debt - In view of the definition of debt and default, the retention money, which is part of the main bill, comes under the definition of debt and default. - AT Visit to Get Source IBC: Payment of Gratuity to the employees - The question of distribution of the Gratuity Fund in order of priority, provided u/s 53(1) of the Code does not arise. - The Adjudicating Authority erred in giving direction to the Liquidator that, ‘the Liquidator cannot avoid the liability to pay Gratuity to the employees, on the ground, that ‘Corporate Debtor‘ did not maintain separate funds, even if, there is no fund maintained, the Liquidator has to provide sufficient provision for payment of Gratuity to the Applicants according to their eligibility’ - AT Visit to Get Source Articles AUDIT UNDER GST NATIONAL BOARD FOR MICRO, SMALL AND MEDIUM ENTERPRISES Notifications Customs 27/2020 - dated 21-8-2020 - ADD Seeks to amend notification No. 46/2015-Customs (ADD), dated 4th September 2015 to extend the levy of ADD on imports of "Acrylonitrile Butadeine Rubber" originating in or exported from Korea RP, for a period of three months i.e. upto 3rd December, 2020. 81/2020 - dated 21-8-2020 - Cus (NT) Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020. GST - States ORDER No. 01/2020 - State Tax - dated 6-7-2020 - Chhattisgarh SGST Chhattisgarh Goods and Services Tax (Removal of Difficulties) order, 2020 54/2020 - State Tax - dated 6-7-2020 - Chhattisgarh SGST Amendment in Notification No. 29/2020-State Tax, dated the 31st March, 2020 53/2020 - State Tax - dated 6-7-2020 - Chhattisgarh SGST Amendment in Notification No. 04/2018-State Tax, dated the 24th January, 2018 52/2020 - State Tax - dated 6-7-2020 - Chhattisgarh SGST Seeks to amend Notification No. 76/2018-State Tax, dated the 31st December, 2018 18/2020–State Tax - dated 20-8-2020 - Delhi SGST Seeks to notify the date from which an individual shall undergo authentication, of Aadhaar number in order to be eligible for registration 11/2020– State Tax - dated 20-8-2020 - Delhi SGST Notifies registered persons (hereinafter referred to as the erstwhile registered person), who are corporate debtors under the provisions of the Insolvency and Bankruptcy Code, 2016 Circulars / Instructions / Orders RBI - FIDD.MSME & NFS.BC.No.4/06.02.31/2020-21 - dated 21-8-2020 New Definition of Micro, Small and Medium Enterprises – clarifications Customs - 38/2020 - dated 21-8-2020 Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin Customs - F. No. 390/Misc/3/2019-JC - dated 21-8-2020 Revised guidelines for conduct of personal hearings in virtual mode under CGST Act, 2017, IGST Act, 2017, Customs Act, 1962, Central Excise Act, 1944 and Chapter V of Finance Act, 1994 News Income Tax Department conducts searches in Bhopal Case Laws: GST 2020 (8) TMI 529 Rate of GST - Residential unit - construction of 45 individual residential houses - Benefit of Serial number (i), (v) or (va) of Notification No.11/2017-CT(R) dated 28.06.2017 as amended by Notification No. 03/2019 - CT (R) dated 29.03.2019 - services provided by the applicant to Sri Sathya Sai Trust for construction of low cost housing units for flood-affected individuals in Kerala - exemption from GST by Notification 12/2017- CT (R) dated 28.06.2017 as amended. HELD THAT:- The rate of GST prescribed under this entry applies to construction of affordable residential apartments by a promoter in a residential real estate project intended for sale to a buyer except where the entire consideration is received after issuance of completion certificate. Further, the rate under this entry applies where the supply of the services involves transfer of land or undivided share of land and its value is included in the amount charged from the buyer. As per Para 2 (zze) of Notification No. 12/2017 CT (Rate) dated 28.06.2017; single residential unit means a self-contained residential unit which is designed for use, wholly or principally, for residential purposes for one family - The rate of GST applicable as per the above entry is 12%. The activity of construction of 45 individual residential houses at different locations on the land belonging to the individual beneficiaries undertaken by the applicant as per the agreement dated 16.11.2019 is rightly classifiable as composite supply of works contract as defined in Section 2 (119) of the CGST Act, 2017 supplied by way of construction of single residential units otherwise than as a part of a residential complex and is liable to GST at the rate of 12% as per Sl No.3 (v) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended. 2020 (8) TMI 528 Nature of supply of services - Difference between the Storage or warehousing services and providing warehouse on rent - Is GST liable to be paid on the entire amount paid as consideration for storage charges or is GST liable to be paid only on the storage of taxable food commodities like palm oil, etc? - exemption from GST in terms of entry SI. Nos 54 or 24 of Rate Notification No 12/2017 CT (R) dated 28-06-2017 - challenge to AAR decision. HELD THAT:- CWC is only providing the 488 sqmetres of space in the central warehouse for rent. The space has been taken on rent by the Appellant for storing the food grains. The activity which is under consideration here is the activity performed by CWC and not the activity undertaken by the Appellant. The supply made by CWC is merely a renting of space. There is difference between `storage or warehousing service and renting of storage premises service. The storage and warehousing service provider normally makes arrangement for space to keep the goods, loading, unloading and stacking of goods in the storage area, keeps inventory of goods, makes security arrangements and provides insurance cover etc. In a case where a person only rents the storage premises, he does not provide any service such as loading / unloading, stacking, security etc. Mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods. The Appellant has referred to a clarification given by the Commissioner Service Tax to the effect that the storage of food grains would not attract service tax - Since we are considering the nature of the service supplied by CWC, the clarification given by the Commissioner Service Tax to the Appellant has no relevance. The service supplied by CWC to the Appellant is renting of immovable property. The amount of rent paid by the Appellant to CWC is taxable at the hands of CWC under the category Rental or leasing services involving own or leased non-residential property (Service Accounting Code - 997212) - decision of AAR upheld. 2020 (8) TMI 527 Time Limitation for filing appeal - delay of 60 days - Renting services - Residential unit on Industrial plot - Exemption from GST - whether the same is an activity of renting of residential dwelling for use as residence which is exempted from GST by virtue of entry No 12 of Notification No 12/2017 CT (R) dated 28-06-2017? HELD THAT:- The provisions of Section 100(2) of the CGST Act mandates that an appeal should be filed within 30 days from the date of communication of the advance ruling order that is sought to be challenged. However, in terms of the proviso to Section 100(2) of the said Act, the Appellate Authority is empowered to allow the appeal to be presented within a further period of 30 days if it is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the initial period of 30 days - In the instant case, the appeal filed against the Advance Ruling order dated 25.09.2019 is evidently belated by 60 days. The appellant, however, has not explained the reason for the delay in filing the appeal. Be that as it may, in the interest of justice, and considering the fact that the delay is within the condonable powers of this Authority, we are inclined to suo moto condone the delay in filing this appeal and proceed with a decision on the merits of this case. Renting services - Held that:- KIADB is a statutory body constituted for the development of industries in the industrial areas of Karnataka. Lands are allotted by the KIADB to entrepreneurs only after the proposals for the proposed utilization of the land for industrial projects is approved by the competent authority. Therefore, it can be justifiably inferred that the land was allotted to the owner for industrial purposes and not for residential purposes. Therefore, the building on this land allotted by KIADB cannot be construed as residential building and consequently the building rented out by the owner to the Appellant was not a residential building. Therefore, the transaction between the owner Shri. Banraji B.H and the Appellants is not one of renting of residential dwelling for use as residence. This transaction is in the nature of renting of non-residential building and hence is liable to be taxed under Heading 997212 and chargeable to tax at 18% GST under entry Sl.No 16 of Notification No 11/2017 CT (R) dated 28-06-2017. Taxability of the charges for the additional facilities provided - Held that:- The lower Authority s finding that this amounts to supply of goods as per entry no.1(c) of Schedule II to the Central Goods and Services Tax Act which reads any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of the full consideration as agreed, is a supply of goods . Accordingly, it is liable to tax at the rate applicable to each of the goods at the time the delivery of the goods is given to Sodexo Food Solutions India Pvt. Ltd. So also, the security services provided by the Appellant is liable to tax as applicable under SAC 998529 at 18% under entry 23(ii) of Notification No.11/2017- Central Tax (Rate) dated 28.06.2017. Decision of AAR upheld. 2020 (8) TMI 526 Classification of services - services provided to Electricity Supply Companies (wholly owned Government of Karnataka undertakings) by way of construction, erection, commissioning, installation, completion, etc. - exemption under entry 3(vi)(a) to Notification No.8/2017-Integrated Tax (Rate) - decision of AAR challenged - HELD THAT:- The transmission and distribution system in the state was under the control of the Government of Karnataka (then Mysore) till year 1957. In the year 1957, MSEB was formed and the private distribution companies were amalgamated with Karnataka Electricity Board. Till the year 1986, KEB was a profit-making organisation. To improve the performance of the power sector and in tune with the Reforms initiated by Government of India, the Government of Karnataka came out with a general policy proposing fundamental and radical Reforms in the power sector. Accordingly, an Act, namely the Karnataka Electricity Reforms Act was passed by the Karnataka Legislature. The main object of incorporating the above companies was to carry out the business of distribution of electricity. The distribution of electricity by the incorporated companies is a commercial activity. Electricity is a concurrent list subject at Entry 38 in List III of the seventh Schedule of the Constitution of India. In India s federal governance structure, this means that both the central government and India s state governments are involved in establishing policy and laws for the electricity sector. This requires the central government and individual state governments to enter into memoranda of understanding to help expedite projects in the individual states. While these incorporated companies are set up with major funding from the State Government and are considered as Government Entities, they are not the Government per se since they do not have the sovereign power which resides with the State Government - the Appellant s argument is rejected on this count and it is held that the electricity distribution companies like BESCOM, MESCOM and HESCOM though being Government Entities, do not qualify as State within the meaning given in Article 12 of the Constitution. For availing the benefit of Sl.No 3(vi)(a) of Notification No. 08/2017-IT(Rate), dated 28-6-2017 as amended, the pre-condition is that the services being provided by the Applicant to BESCOM, MESCOM and HESCOM by way of construction erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a civil structure or any other original works must predominantly be for use other than for commerce, industry, or any other business or profession. This effectively means that for availing the aforesaid benefit of tax rate of 12%, it is of paramount importance that the services under taken/work done by the Appellant for the above electricity distribution companies must necessarily be for use which is non-commercial in nature - From the information available on public domain, it is clear that the principal/primary and foremost aim of these companies are predominantly commercial in nature and more over these electricity distribution companies generally work for the efficient and economic management of Electric power and optimum utilization of available resources. Since the nature of activities of BESCOM, MESCOM and HESCOM are principally and predominantly, commercial in nature, we come to the considered conclusion that the Appellants are not eligible for the benefit of 12% GST in terms of entry Sl.No 3 (vi)(a) of Notification No 08/2017 IT (R) dated 28-06-2017 as amended. Decision of AAR upheld. 2020 (8) TMI 525 Valuation - inclusion of value of bus passes distributed by the applicant to the commuters in the value of facilitation charges as per section 15(2) of the CGST Act, 2017 and KGST Act, 2017 - supply of service in the hands of the applicant - whether classified as merely a supply of facilitation services between BMTC and the commuters? - challenge to AAR decision. HELD THAT:- In order to determine who, the recipient of service is, the agreement under which such service has been agreed to be provided, has to be examined. When the Agreement between BMTC and the Appellant is examined, it is plain that the recipient of the service is the Appellant and it is the Appellant that is obliged to pay for the services provided by BMTC. The position does not change merely because the actual users of the transportation service are the commuters. The recipient of the service is determined by the contract between the parties and by reference to (a) who has the contractual right to receive the services; and (b) who is responsible for the payment for the services provided (i.e., the service recipient). This essential difference has been lost sight of by the Appellant. In the present case there is no privity of contract between BMTC and the commuters. Such commuters may be the users of the services provided by BMTC but are not its recipients. The Education Guide provides that a person who arranges or facilitates a provision of a service, but provides the main service on his own account is excluded from the definition of intermediary . The Education Guide specifically recognizes and well explains that all situations of provision of services on a client s behalf, will not qualify as an intermediary . Where the service is provided on the own account of the service provider, the categorization as an intermediary does not arise. The relevant extract of the Education Guide issued by the C.B.E. C. in June 20, 2012 - The clarification fully recognizes an arrangement between a service provider and a service recipient, where customers of the service recipient are dealt with by the service provider, shall not qualify to be an intermediary . This principle well covers the present arrangement. The service is provided by BMTC to the Appellant as recipient but the customers of the Appellant are dealt with by the service provider. This arrangement does not make the Appellant an intermediary. The Appellant is receiving the services from BMTC on principal to principal basis and is also supplying a service to their clients on a principal to principal basis. There is no dispute that there is a supply of service by the Appellant to the employees who use the transport facility. The question is whether such service is an intermediary service or a facilitation service between BMTC and the commuters. Therefore, the decision of the Maharashtra AAR in the case of IN RE: M/S. JOTUN INDIA PVT. LTD. [ 2019 (10) TMI 482 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] has no relevance to the issue before us. The Appellant in this case, as part of its business activity of operating and maintaining the International Tech Park, also undertakes to arrange for the transport for the staff employed with it and by the various corporate clients of the Tech Park. In this connection, the Appellant charges a fee on their clients for whose employees they are providing the transport facility. This is a service provided by the Appellant to their clients employees on their own account on a principal to principal basis as part of their business activity. It is also seen from clause 13 of the Agreement with BMTC that all commuters travelling in the buses engaged by the Appellant shall possess the identification cards and the monthly passes issued by the Appellant. This evidences that the bus passes procured by the Appellant from BMTC are issued by them to the commuters as part of the service provided by them on their own account. If they were merely facilitating the service or acting as an intermediary, as claimed by them, the bus passes would have been issued by BMTC to the commuters - we agree with the ruling given by the lower Authority and hold that the service provided by the Appellant in arranging the transportation of the employees is not rendered in the capacity of an intermediary and is not a facilitation service between BMTC and the commuters. The service of transporting the employees of the corporate clients of the International Tech Park is rendered by the Appellant on his own account on a principal to principal basis for a consideration. Whether in terms of Section 15 of the CGST Act, the cost of the bus passes would form part of the value of the service provided by the Appellant? - HELD THAT:- It is amply clear that those instruments which satisfy the conditions of being accepted as consideration/part consideration against purchase of specified goods and the identities of the potential suppliers are indicated in the instruments are to be considered as Vouchers for the purposes of GST. Vouchers are neither money nor actionable claim. It is not a claim to a debt nor does it give a beneficial interest in any movable property to the bearer of the voucher. Similarly, in the instant case, the bus passes are purchased by the commuters on paying a value in money. The commuter produces the bus pass for purchasing the service of transportation. The bus pass only give the commuter the right to travel. If the commuter does not use the bus pass within the duration for which it is valid or loses the bus pass, it becomes invalid and cannot be used to procure the service of transportation. The bus pass is only a contract of carriage. A contract is not property, but only a promise supported by consideration. Thus, the bus pass is not an actionable claim as defined under Transfer of Property Act. It is only an instrument accepted as consideration/part consideration while purchasing the service from the Appellant. It cannot be agreed that the bus pass is an actionable claim not liable to GST. The ruling given by the lower Authority is agreed upon and it is held that by virtue of Section 15 of the CGST Act, the value of the service supplied by the Appellants will include the value of the bus passes as well as the facilitation charges. Decision of AAR upheld. 2020 (8) TMI 524 Delay in filing appeal - statutory period for filing the appeal (which is 30 days from the date of receipt of the order) expired on 2 nd November 2019. However, the appeal was filed before this Appellate Authority on 12 th November 2019 after a delay of 10 days from the statutory due date - HELD THAT:- The provisions of Section 100(2) of the CGST Act mandates that an appeal should be filed within 30 days from the date of communication of the advance ruling order that is sought to be challenged. However, in terms of the proviso to Section 100(2) of the said Act, the Appellate Authority is empowered to allow the appeal to be presented within a further period of 30 days if it is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the initial period of 30 days - In the instant case, the appeal filed against the Advance Ruling order dated 23.09.2019 is evidently delayed by 10 days. The appellant, has satisfactorily explained the reason for the delay in filing the appeal. In the interest of justice, and considering the fact that the delay is within the condonable powers of this Authority, we are inclined to condone the delay in filing this appeal and proceed with a decision on the merits of this case. Eligibility for exemption from GST under Notification No.2/2018- Central Tax (Rate) - supply of services in the nature of subscription to the J-Gate by the educational institutions - HELD THAT:- The services provided to an educational institution by way of supply of online journals and periodicals is exempted from the levy of GST with effect from 25th Jan 2018. However, the exemption is not available when the supply of online journals and periodicals is to institutions providing pre-school education, education up to higher secondary school or its equivalent and vocational educational institutions. Pursuant to this exemption coming into force, the Appellant applied for an advance ruling whether they are eligible for the benefit of sub-clause (v) of clause (b) of entry No 66 of Notification No. 12/2017 Central Tax (Rate) dt 28-06-2017 as amended. The lower Authority has held that the transaction of supply of information by the appellant is a supply of service covered under Heading 998431 whose description is Online text based information such as online books, newspapers, periodicals, directories and the like . It has also been held that the service is taxable to GST at 18% under entry No 22 of Notification No 11/2017 CT (R) dated 28-06-2017. The Appellant has contended that this finding of the lower Authority is beyond the scope of the ruling which has been sought for and is hence not sustainable. We agree on this point. The question before the lower Authority was regarding their eligibility to the exemption notification. There was no question regarding classification and rate of tax of the supply made by the appellant. The supply of services in the nature of subscription to the J-Gate by the educational institutions is eligible for exemption from GST under sub-item (v) of item (b) of serial no.66 of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended by Notification No.2/2018- Central Tax (Rate) dated 25.01.2018. 2020 (8) TMI 523 Taxability under GST - Classification of supply - Composite supply or Mixed Supply - gamut of services collectively referred to as Relocation Management Service provided by the applicant - challenge to AAR decision. HELD THAT:- The appellant is responsible for providing or procuring services which are necessary to complete an employees relocation. The services to be performed by the Appellant may be performed by telephone as well as in person or may be provided by third party service providers - The role of the appellant in so far as third-party service providers are concerned is different in terms of the RSA and the SOW. As per the RSA, the client shall enter into service agreements directly with third-party suppliers providing services within the scope of the agreement. However, the third-party suppliers will address/issue their invoices to the client in the name of the client, but mail the invoices to the appellant for payment processing. The appellant shall forward the third-party supplier invoices to the client who shall provide the appellant the funds for disbursement to the third-party suppliers. Therefore, in the case of the RSA, the Appellant acts as an agent for the purpose of making payments to the third-party suppliers on behalf of the client. It is evident that in the case of the RSA, the appellant is acting only as a payment agent of the client for the supplies rendered by the third-party suppliers. The supplies are made by the third-party service providers directly to the client. The recipient of the service in this case is the client but the payment for the same is made by the appellant to the third-party service provider on behalf of the client. The question of the appellant providing any service in this case does not arise. In the case of the SOW, the appellant is receiving the services from the third-party service provider and in turn billing the client for the service which he has facilitated. The pre-requisite of a composite supply or a mixed supply is that there should be two or more taxable supplies provided together. When there is no supply or only one taxable supply being provided, the question of determining whether it is a composite supply or mixed supply does not arise - Therefore, it is only with respect to the services provided by the appellant in his capacity as a service provider which are to be considered for determining whether the same is a composite supply or mixed supply. The various services relating to the relocation of an employee are already listed. As already mentioned, each of these listed services are chargeable at a specified rate which is given in the RSA as well as the SOW. In addition, the appellant also provides different packages of bundled services and there is a specific rate for each such package. The client may choose several individual services from the list (called as a la carte services) or may opt for any of the packages. The illustrations given under Section 2(30) [definition of composite supply] that for a supply to be considered as a composite supply, its constituent supplies should be so integrated with each other that one is not supplied in the ordinary course of business without or independent of the other. In other words, they are naturally bundled. A natural corollary of the above legal provisions and the term naturally bundled used in Section 2(30) would be that the different elements in a composite supply are integral to the overall supply and if one of the elements is removed, the nature of the supply will be affected. There is no such element in the supplies made by the appellant. The a la carte services chosen by the client is based on the requirement of client s employees and various factors viz. employee title, family make up, to/from location, etc. For example, based on the employee requirement, the client may choose only the visa services, global transportation coordination, storage management and destination service inbound whereas in the case of another employee, the client may opt for only global transportation coordination service and storage management service. The determining factor for a composite supply is the fact that they are naturally bundled. In this case, the naturally bundled aspect of the transaction is not present. Undoubtedly the various services provided work towards the common end of relocating the employee. However, it cannot be said that the services are so bundled in the ordinary course of business. Moreover, the fact that the client can choose from the list of services based on the employee requirement shows that there is no natural bundling of services in this case. The bundling of services is a construct of the appellant s business model to which there is a commercial expediency. The same does not fall within the ambit of a composite supply . The package of bundled services supplied by the appellant for a single price in terms of the RSA and SOW, is a mixed supply in terms of Section 2(74) of the CGST Act, 2017 and the taxability of the mixed supply will be determined in terms of Section 8 (b) of the said Act - The a la carte services provided by the appellant, relating to employee relocation is neither a composite supply nor a mixed supply - the observations made by the Lower Authority in the impugned order to the effect that the service provided by the appellant is covered under the definition of intermediary is expunged as being beyond the mandate of the Authority in the instant case. AAR ruling modified. 2020 (8) TMI 522 Classification of supply - supply of goods or supply of services - export of services or not - zero rated supply or not - appellant are in the business of selling Volvo branded trucks and thereafter providing after sales support services, including warranty services - condonation of delay of 19 days in filing the present appeal - HELD THAT:- The Appellant has stated that the delay had occurred due to the reason that the concerned authorised personnel of the Company were engaged in the Statutory Audit under the Companies Act 2013 and hence were unable to provide the documentation required for filing the appeal within the due date. Considering the averments made by the Appellant, we are of the view that the delay caused in filing the appeal has been sufficiently explained. The delay in filing the appeal is hereby condoned in exercise of the power vested in terms of the proviso to Section 100(2) of the CGST Act. Whether the activities performed by the Appellant with regard to repair and servicing of Volvo vehicles for Indian customers during the warranty period is an activity amounting to a supply of service for Volvo Sweden and consequently whether the same is a zero-rated supply? - HELD THAT:- The question is not whether the activity of repair and replacement of parts done during the warranty period amounts to a supply of service or not. The fact that there is a supply of service in the repairs and replacement of parts during the warranty period, has been admitted by the Appellant. The point that is under dispute is who is the recipient of the service provided by the Appellant during the warranty period? Whether the recipient is the customer who approaches the Appellant with a warranty claim, as held by the lower Authority, or whether the recipient of service is Volvo Sweden who reimburses the cost of parts and service provided in the warranty period? The customers who purchase the Volvo vehicle are entitled to free of charge pre-delivery inspection and free of cost replacement and repairs during the warranty period. Post warranty period, the service of repair and maintenance of the vehicles are on chargeable basis which the customer will pay. In the case of a repair and replacement of a part during the warranty period, it has been undertaken by Volvo Group, as part of its International warranty terms, that the cost of the part and the cost of the service involved in fixing the part is reimbursed to the Distributor. It is an established trade practice that during the warranty period, the manufacturer is obliged to provide the repair and maintenance of the machinery, equipments, vehicles, etc. A warranty is a commitment given by the manufacturer to provide repair, service, replacement, or refund of a product for a certain time period subject to certain conditions. It is also well settled that the cost of repairs and services during warranty period are a part of the cost of the products - In the instant case, the Volvo vehicle which is sold by the Distributor -Appellant is covered by the International Warranty given by the manufacturer Volvo Sweden. When the customer approaches the Distributor from who he has purchased the Volvo vehicle, about a complaint or defect during the warranty period, it is the obligation of the manufacturer to provide the repair of the vehicle and/or replacement of parts. Once it is agreed upon that there is a valid warranty claim by the customer, the manufacturer authorises the Distributor to carry out the repairs and/or replacement of parts and reimburses the cost of the repairs and parts to the Distributor. What is obligatory on the part of the manufacturer is done by the Distributor and for this the Distributor receives a reimbursement of costs. The recipients of the service supplied by the Appellant during the warranty period, will be the manufacturer Volvo Sweden as it is at their behest that the Appellant has undertaken the activity of repair and/or replacement of parts to the customer during the warranty period. The reimbursement received from Volvo Sweden is in the nature of consideration paid by the manufacturer to the Distributor-Appellant for carrying out the service during the warranty period, which activity was part of the obligations of Volvo Sweden - the findings of the lower Authority that the recipient of service is the customer is upheld. Whether the supply of service to Volvo Sweden is a zero-rated supply as provided under Section 16 of the said Act in as much as it amounts to export of services? - HELD THAT:- One of the important requirements for supply of any service to be treated as `export of service is that the place of supply of service is outside India. Thus, determination of place of supply of service by the appellant is a must before concluding whether a supply of service is an export or not - It is evident that determination of place of supply is not a question on which an advance ruling can be sought. The Authority for Advance Ruling and the Appellate Authority for Advance Ruling have both been constituted in exercise of the powers conferred by section 96 and 100 of the Karnataka Goods and Services Tax Act, 2017, which Act extends to the whole of the state of Karnataka. The AAR and the AAAR are creatures of the statute and have to function within the legal boundary mandated by the Act. As the place of supply is not covered by Section 97(2) of the Acts, we refrain from answering this question of the Appellant with regard to export of service on the grounds of lack of jurisdiction. Decision of AAR upheld. 2020 (8) TMI 521 Classification of process amounting to manufacture - Tufting or a process other than those processes - whether mentioned in Headings 5701 to 5704 of the Customs Tariff and the HSN Explanatory Notes to Chapter 57? - coir mats / matting / floor covering with Vinyl (PVC) backing manufactured by the process of embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling is rightly covered under the description coir mats, mattings and floor covering - classified under the Heading 5705 (more specifically under CTH 5705 00 49) of Chapter 57 of the 1 Schedule to the Customs Tariff? HELD THAT:- The manufacturing of PVC tufted coir mats/ matting/floor coverings is done using technologically advanced machines. The raw materials used for its manufacture are Coir yarn, PVC resin, Dolomite filler, Pigment, etc. The coir as well as PVC, chemicals, fillers etc have equal importance. Hence PVC tufted coir mats/ matting/floor coverings cannot be classified as coir mats and mattings. Coir mats, mattings and floor coverings covered under HSN 5702, 5703 and 5705 are taxable at the rate of 5 % GST as per Sl No. 219 of Schedule I of Notification No.01/2017-CT (Rate) dated 28-06-2017 as amended. This entry covers only the commodities which are manufactured exclusively using coir fibre. If any, PVC or rubber or any other materials are stuffed on the textile of coir, which is used as floor mats or mattings, it will come under Customs Tariff Head 5703 90 90 and is liable to GST at the rate of 12% as per Sl No. 144 of Schedule II of Notification No.01/2017-CT (Rate) dated 28-06-2017 as amended. Manufacture of PVC Tufted Coir Mats / Mattings / Floor coverings by the process of embedding coir yarn into PVC cannot be considered as textile floor coverings of coir covered under HSN 5702, 5703 or 5705. The process undertaken is a tufting process and if any, PVC or rubber or any other materials are tufted on the textile of coir, which is used as floor mats or mattings, it will come under the Customs Tariff Head 5703 90 90 and is liable to GST at the rate of 12% as per Entry at Sl No. 144 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 - PVC Tufted Coir Mats and Matting cannot be considered as coir mats, mattings and floor coverings covered under HSN 5702 or 5705 and is appropriately classifiable under HSN 5703 90 90 as tufted mats / matting / floor coverings of coir - The PVC Tufted Coir mats/ mattings / floor coverings are classifiable under Customs Tariff Heading 5703 90 90 and attracts GST at the rate of 12% as per SI No. 144 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. 2020 (8) TMI 520 Classification of services - rate of tax - works contracts awarded by the Government authorities - construction of a building for space transportation system - HELD THAT:- As per Section 2 (119) of the CGST Act, 2017; works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract - On a perusal of the work orders and the agreements entered by the applicant it is clear that the services rendered by the applicant clearly falls within the definition of works contract under Section 2(119) of the CGST Act, 2017. Since the services provided by the applicant under both the contracts fall under the definition of works contract under Section 2 (119) of the CGST Act, 2017 and the services being provided to the Central Government and State Government as discussed above the applicant is eligible for the concessional rate of GST of 12% prescribed in Sl No. 3 (vi) (a) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended. 2020 (8) TMI 519 Maintainability of Application - scope of Advance Ruling - Input Tax Credit - no credit on the inputs lying in stock - no amount of ITC benefit to be passed on to the clients - HELD THAT:- The requirement of the passing over of the benefit of ITC on goods lying in stock as on the appointed date i.e: 01.07.2017 and in respect of the goods procured after the appointed date, which is outside the purview of the matters listed in sub-section (2) of Section 97 of the CGST/SGST Act, 2017 - Hence, no advance ruling can be issued by this authority in respect of the questions raised in this application. 2020 (8) TMI 518 Input Tax Credit - financial institution or not - option provided under Section 17(4) of the CGST Act which prescribes to avail an amount equal to 50% of eligible credit of input tax on inputs, capital goods and input services in that month and the rest shall lapse - HELD THAT:- The conditions to be fulfilled for exercising the option under sub-section (4) of Section 17 is that the supplier shall be engaged in supplying services by way of accepting deposits, extending loans or advances and the supplier shall be a banking company, a financial institution or a non-banking financial company. Both the conditions shall be simultaneously satisfied to be eligible to exercise the option as provided under sub-section (4) of Section 17 of the CGST Act, 2017. Admittedly, the applicant is engaged in supplying services by way of accepting deposits, extending loans or advances. Therefore, the issue to be determined is whether the applicant qualifies to be a banking company, a financial institution or a non-banking financial company. The terms banking company, a financial institution or a non-banking financial company are not defined under the CGST Act, 2017. However, the terms are defined in the explanation to subsection (8) of Section 13 of the Integrated Goods and Services Act, 2017. Even though, the definition in the explanation is for the purpose of that sub-section, the definition can be adopted in the instant case also as the terms are not elsewhere defined in the IGST Act or the CGST Act - On a conjoint reading of the provisions of clauses (c) and (e) of Section 45-1 of the Reserve Bank of India Act, 1934 it is evident that the applicant being a Co-operative Society registered with the Central Registrar of Co-operative Societies carrying on the business of financing whether by means of making loans or advances or otherwise, of any activity other than its own qualifies to be a financial institution as per the Reserve Bank of India Act, 1934 and consequently also under the CGST Act, 2017. The applicant satisfies both the conditions to be eligible for exercising the option provided under sub-section (4) of Section 17 of the Central / State GST Act, 2017. 2020 (8) TMI 517 Seizure of consignments alongwith vehicle - perishable goods in transit - cancellation of registration of the supplier - Section 67 of the CGST Act - whether the department is entitled to seize a consignment of perishable goods in transit more particularly when it is accompanied by a lawful e-way bill, invoice and when it has paid the applicable IGST? HELD THAT:- Under Section 83 of the CGST Act, during the pendency of any proceedings under Section 67 or 74, the Commissioner in order to secure the interest of the revenue can provisionally attach any property. However, such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the Order. Rule 140 of the CGST Rules provide that the seized goods may be released on a provisional basis upon the execution of a bond for the value of the goods in Form INS-04 and furnishing of a security in the form of a bank guarantee equivalent to the amount of applicable tax, interest and penalty payable - Under Rule 141 of the CGST Rules, any perishable goods seized shall be released forthwith by an Order in Form GST INS-05 if the taxable person pays an amount equivalent to the market price of such goods or things or the amount of tax, interest and penalty that is or may become payable whichever is lower. Thus, having regard to the scheme of the CGST Act and the rules, whenever perishable goods are seized, it is the duty of the seizing authorities to obtain a bond and or security or require the payment of the market price of the goods or the amount of tax, interest and penalty whichever is lower. This is precisely the reason that whenever such perishable goods are intercepted and detained under Section 129 of the CGST Act, the period for payment of tax and penalty in respect of perishable goods can be reduced to seven days. If the supplier has made outward movement of goods worth ₹ 73,00,00,000-00, then the recipients must have availed the tax credit and this could not have gone unnoticed by the department. This could be attributed to the lackadaisical attitude of the department and the case of the supplier in the instant case should be an eye opener for the State authorities under the Act to ascertain whether the registered establishments are doing business at the registered places and also to take pro active steps for the installation of Radio Frequency Identification devices as this would help the easy tracking of the movement of goods and for verification of e-way bills and the payment of tax etc. Thus, the revenue has to put its house in order and strive to achieve the lofty targets set by the CGST Act by effectively using the tools of audit, inspection, seizure, prosecution, recovery etc. In a proceeding under Section 67 of the CGST Act against the supplier, the respondent was not justified in seizing the perishable goods in transit, moreso when the goods had suffered tax and penalty - the respondent is directed to forthwith release the lorry bearing registration number HR-55-AF-7882 and the goods carried by it which is covered by the E-Way bill 181110112217 - Petition allowed. 2020 (8) TMI 516 Classification of Services - Management services - intermediary services or not - reimbursement of expenses - requirement of registration under GST - liability of Mr. Santosh to pay tax on the services rendered by him to H-J Family of Companies - time and value of the supply of services - only grievance of the Appellant is regarding the finding by the lower Authority that the management services are being provided in the capacity of an `intermediary as defined in Section 2(13) of the IGST Act - challenge to AAR decision. HELD THAT:- The nature of the transactions of the Appellant as explained by him in his appeal is examined. It is seen that the Appellant is appointed as an Independent Regional Sales Manager for the Middle East and Indian Markets by the H-J Family of Companies, a company engaged in the business of manufacturing and selling various categories of distribution transformer components and accessories. The Appellant is required to make a presentation of the products offered by the H-J Family of Companies. The latter specifies the presentation and the technical details of the said products. The Appellant reports to a Sales Manager based in the office of H-J Family of Companies in Europe and furnishes a report on the status of the sales development (with customers in the Middle East and Indian markets). The Appellant does not conclude contracts between H-J Family of Companies and the final customer and does not directly receive or deal with the products of H-J Family of Companies in any manner. It is also seen that the customers enter into contracts directly with H-J Family of Companies - When we apply the general understanding of the term arranging or facilitation to the instant case, the Appellant facilitates the sale of the products of H-J Family of Companies by undertaking sales presentations to the prospective customers in the Middle East and India. It must be appreciated that devoid of the product, there is no purpose in the sales presentations made by the Appellant. It is only with the sole intention of facilitating the sales of the product of the principal i.e H-J Family of Companies that the Appellant provides the service. There does not seem to be any difference between the meaning of the term intermediary under the GST regime and pre-GST regime. In the pre-GST regime, an intermediary referred to a person who facilitates the provision of a main service between two or more person but did not include a person who provided the main service on his account. Similarly, in the GST regime, an intermediary refers to a person who facilitates the supply of goods or services or both between two or more persons but excludes a person who supplies such goods or services or both on his own account - The service of facilitating a supply of goods between the Principal and the customers is provided by the Appellant to the overseas client (H-J family of Companies). The Appellant is not supplying such goods on his own account. The decision of the AAR is upheld that the service of sales presentations of the products of H-J Family of Companies is classifiable as Other professional, technical and business services under Service Code 9983.11 and the same is being rendered as an intermediary service as defined under Section 2(13) of the IGST Act - appeal dismissed. Income Tax 2020 (8) TMI 515 Levy of penalty u/s 271(1)(c) - addition on account of bogus purchases - Defective notice - AO with respect to addition on account of bogus purchases has recorded that assessee had furnished inaccurate particulars of income b ut while passing the penalty order u/s 271(1)(c) held that assessee has concealed the particulars of income and made itself liable for penalty - AO recorded that assessee had furnished inaccurate particulars of income - HELD THAT:- It is a settled law that while levying penalty, the AO has to record clear satisfaction and thereafter come to a finding in respect of one of the limbs, which is specified under section 271(1)(c). The first step is to record satisfaction while completing the assessment as to whether the assessee had furnished inaccurate particulars of income or concealed his income. Notice u/s 274 read with Section 271(1)(c) of the Act is to be issued to the assessee. AO thereafter has to levy penalty under Section 271(1)(c) of the Act for non-satisfaction of either of the limbs. While completing the assessment, the Assessing Officer has to come to a finding as to whether the assessee has concealed its income or furnished inaccurate particulars of income Considering the facts of the present case in the light of the decision of Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT] wherein held held that where initiation of penalty is one limb and the levy of penalty is on other limb, then in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty. - thus we are of the view that in the present case, the basic condition for levy of penalty has not been fulfilled and that the penalty order suffers from non-exercising of jurisdiction power and therefore penalty order cannot be upheld. We accordingly set aside the penalty order passed by AO. - Decided in favour of assessee. 2020 (8) TMI 514 Deemed dividend u/s 2(22)(e) - amount advanced by the company, M/s. B.T. Kadlag Construction Pvt. Ltd. [BTKCPL] wherein the assessee is a substantial shareholder to the firm, M/s. Renuka Construction, wherein the assessee is a partner having substantial interest - assessee has not complied with the notices of hearing nor has cared for appearing before the First Appellate Authority for prosecuting his appeal - HELD THAT:- As evident from records, the Ld. CIT(Appeal) has passed his order on 15.03.2017 whereas, the submissions of the assessee was filed on 16.03.2017 i.e. one day subsequent to the passing of the order by the Ld. CIT(Appeal). CIT(Appeal) has passed the appellate order only on the basis of the assessment order, Form-35, statement of facts and grounds of appeal. It is also true as evident from the order of the Ld. CIT(Appeal) that sufficient opportunities were provided to the assessee. There was not even a single compliance from the assessee on the given dates of hearing. Though several opportunities were given to the assessee by the Ld. CIT(Appeal), we find that in the interest of justice and for the fact that the Income Tax Laws are within the ambit of welfare legislation one more opportunity may be given to the assessee and therefore, we are of the considered view that the matter should be restored to the file of the Ld. CIT(Appeal) wherein he is directed to examine the facts of the assessee‟s case in terms of Section 2(22)(e) of the Act and various case laws referred by the Ld. AR of the assessee. - Appeal of the assessee is partly allowed for statistical purposes 2020 (8) TMI 513 Disallowance of forfeiture of security deposit being treated as capital loss - CIT-A deleted the addition - HELD THAT:- Assessee has given security deposit for taking the premises on lease. Learned Counsel for the Assessee referred to various replies filed by assessee-company at assessment stage which shows that assessee-company filed all the documentary evidences and explanation before A.O. on the matter in issue. Assessee rightly contended that the security deposit was refundable on completion of the period of the lease. Agreement to this effect was executed and was further supplemental agreements were also entered into and ultimately the assessee-company did not continue with the period of their lease and hence, the security deposit was forfeited by the owner/landlord. These facts clearly show that assessee-company filed sufficient documentary evidences before A.O, which have not been property considered and at the appellate stage the A.O. did not rebut the submissions of the assessee-company to prove that security deposit was forfeited which is a business loss as the same was arising out of the business activities of the assessee. CIT(A), therefore, correctly following the material on record in proper perspective, rightly deleted the addition. We do not find any infirmity in the Order of the Ld. CIT(A) in deleting the addition. - Decided against revenue. Disallowance of interest expenses u/s 36(1 )(iii) - A.O. disallowed the impugned interest on interest free loans and advances - assessee submitted before the CIT(A) that A.O. could disallow the impugned amount under section 36(1)(iii) when borrowed funds were not utilised for the purpose of business and were utilised for the purpose of interest free loans and advances for non-business purposes - HELD THAT:- As per balance sheet of the assessee company [PB-32], assessee-company was having sufficient own funds to give the impugned amount as loans and advances to group concerns in assessment year under appeal. There is a presumption that assessee has not used any borrowed funds for giving the interest free loans and advances. A.O. has not brought any evidence on record if borrowed funds have been used for advance, or non-business purpose or were given to the group concerns as interest free loans and advances. No disallowance have been made by A.O. in preceding A.Y. 2007-2008. Therefore, on the same set of facts, A.O. was not justified in making the disallowance which have been rightly deleted by the Ld. CIT(A). We do not find any infirmity in the Order of the Ld. CIT(A) in deleting the addition - Decided against revenue. Disallowance of capital loss on new block of assets .- Capital loss incurred by transferring the existing block of assets into a new block of assets but ownership over the assets remained unchanged - CIT(A) considering the aleternate claim of assessee in which the assessee contended that if the claim of capital loss is not allowed, claim for depreciation may be allowed for the year - HELD THAT:- Ground No.3 raised by the Revenue is totally irrelevant and is liable to be rejected. There is no grievance raised by the Revenue in the ground of appeal because whatever A.O. has done, has been confirmed by the Ld. CIT(A). Therefore, there is no question of challenging the Order of the Ld. CIT(A) in allowing capital loss, which fact itself is incorrect because capital loss have not been allowed by the Ld. CIT(A). The Ld. CIT(A) has allowed the depreciation on block of asset on this issue against which there is no ground of appeal raised by the Revenue. Since there is no challenge by the Revenue in allowing of the depreciation by the Ld. CIT(A), subject to verification by the A.O, therefore, no further contention can be raised by the Revenue/Ld. D.R. Further the Ld. CIT(A) has allowed the claim of depreciation on block of asset by directing the A.O. to verify the evidences filed during the course of proceedings. Thus, the matter was still with the A.O. to verify the claim of the assessee and allow depreciation as per Law. - Decided against revenue. 2020 (8) TMI 512 Carry forward of MAT credit - Claim carried forward not been granted to the assessee on the plea that assessee has not claimed it in the return of income - HELD THAT:- According to us the Ld. CIT(A) erred in dismissing the appeal of the assessee citing that the issue i.e. carry forward of MAT credit is debatable. In the light of the Hon ble Supreme court decision as well as the decision of the Tribunal cited we are of the opinion that carry forward of MAT credit ought to have been done automatically. Even though the Hon ble Supreme court in Goetz (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT ] held that the AO is not competent to grant any claim without the assessee claiming it in its return of income u/s. 139(1) of the Act has specifically clarified that the embargo on the power of AO not to entertain claims which was not claimed by assessee while filing of return u/s 139(1) of the Act, is not there for the appellate authorities. Therefore, we admit the claim of the assessee regarding the claim of carry forward of MAT credit for AY 2015-16 and restore this issue back to the file of the AO so that the AO can verify the claim of the assessee and if found to be correct i.e. claim for carry forward MAT credit then the AO should allow the claim of the assessee in accordance to law. Needless to say the assessee should be given opportunity of being heard. Appeal of assessee is allowed for statistical purpose. 2020 (8) TMI 511 Addition u/s 56(2)(b) - addition of the differential amount between the same consideration shown in the sale documents and stamp duty valuation taken by the Sub-Registrar - CIT(A) has upheld the addition made by the A.O. on the similar reasoning that the assessee has failed to produce the agreement with the builder at the time of booking of the flat - HELD THAT:- The first and second proviso carve out the exception for taking stamp duty value on the date of agreement prior to the date of registration if an amount of consideration or part thereof has been paid by any mode other than the cash before the date of agreement for transfer of such immovable property. If there is an agreement between the parties, fixing the amount of consideration for transfer of immovable property prior to the date of registration and the purchaser has made the payment of consideration or part thereof before the date of that registered agreement for transfer by any mode other than cash then the value as determined for the stamp duty will be taken on the date of such earlier agreement. All these facts are duly acknowledged by the parties in the registered agreement that earlier there was a booking of flat and the assessee paid part payment of consideration. Hence, the proviso first and second to Section 56(2)(vii) of the Act would be applicable in the case and the stamp duty valuation or the fair market value of the immovable property shall be considered as on the date of booking and payment made by the assessee towards booking of the flat. Accordingly, the orders of the authorities below are set aside and the matter is remanded to the record of the A.O. to apply the stamp duty valuation as on 10/10/2010 when the assessee booked the flat and made the part payment of consideration and consequently, if any difference being the stamp duty valuation is higher than the purchase consideration paid by the assessee, the same would be added to the income of the assessee under the provisions of Section 56(2)(vii)(b) - Appeal of the assessee is allowed for statistical purposes. 2020 (8) TMI 510 Levy of late fee u/s 234E - issuing the intimation u/s 200A - HELD THAT:- After the amendment w.e.f. 01/06/2015 in Section 200A of the Act, the A.O. is empowered to make adjustment on account of fee, if any, in accordance with the provisions of Section 234E of the Act. Once there is a default on the part of the assessee in submitting the quarterly TDS statement, the provisions of Section 234E of the Act are attracted and therefore, while processing the quarterly TDS statement, the A.O. is bound to make the adjustment on account of late fee as provided U/s 234E of the Act. The levy of late fee prescribed U/s 234E of the Act is mandatory and consequential in nature, therefore, the same cannot be deleted on the ground of reasonable cause as explained by the assessee. The order of the A.O. can be challenged only if the A.O. has failed to comply with the mandatory provisions of Section 200A r.w.s. 234E of the Act while making adjustment and issuing the intimation. In absence of any such allegation by the assessee that the A.O. has violated any of the provisions of Section 200A as well as Section 234E adjustment made by the A.O. on account of late fee U/s 234E of the Act cannot be deleted. Accordingly, we do not find any error or illegality in the impugned order of the ld. CIT(A) and we uphold the same. - Decided against assessee. 2020 (8) TMI 509 TP Adjustment - whether the TPO is right in comparing the average price of the comparables with the individual invoices raised by the assessee to the associated enterprises for determining the ALP? - HELD THAT:- Provision of rule 10B(1)(a)(i) authorized to identify the comparable uncontrolled transaction or a number of such transactions. Provisions of the rule permits to aggregate the comparable uncontrolled transactions for determining the ALP. Rule does not permit to aggregate the international transactions carried out by the assessee to work out the average price for the purpose of the comparison. As relying on TILDA RICELAND PVT LTD [ 2014 (3) TMI 63 - ITAT DELHI ] we are not impressed with the argument of the learned counsel for the assessee that the TPO erred in comparing the ALP of the comparable companies with the individual invoices raised by the assessee to the associated enterprise. Accordingly, we reject the same. ALP determination - whether the benefit of 5% variation is to be calculated with reference to the ALP determined from the comparable uncontrolled transactions or at the price at which the assessee exported the goods? - HELD THAT:- Company shall become the associate enterprise of another company if at any time during the relevant previous year such company meets the criteria specified under the provisions of section 92A of the Act. Admittedly, the Dyestar Group of companies became the AE of the assessee in the year under consideration i.e. 4th February 2010. Thus, to our understanding such company cannot be taken as comparable company for the purpose of determining the ALP under rule 10A of the Rules. What is left is the non-AE party transactions carried out by the assessee during the year under consideration for the purpose of determining the ALP which works out at ₹ 191.52 which is much more than the price charged by the assessee with the associated enterprise. It is not issue arising from the order of the authorities below and similarly neither the learned AR nor the learned DR brought to our notice at the time of hearing. No infirmity in the order of the authorities below for making such upward adjustment to the total income of the assessee. International transactions carried out by the assessee with Well Prospering Ltd , - whether the transactions carried out with the AE can be considered as one of the comparable for determining the ALP for the purpose of the comparison? - HELD THAT:- Admittedly, the Dyestar Group of companies became the AE in the year under consideration dated 4th of February 2010. The provisions of section 92A(2) clearly states that a company shall become AE of another company at any time during the year under consideration if it meets the criteria provided under section 92A of the Act. Once the comparable company becomes the AE of the assessee in the year under consideration, then such company cannot be considered for the purpose of comparable. We hold that the assessee has mistakenly considered one of its AE (Dyester Group) as the comparable in its transfer pricing study report for the transaction carried out with the Dyester Group only as discussed above, but the income tax authorities were duty-bound to rectify such mistake as discussed in the preceding paragraph. Coming on the merit of the case, if we exclude the Dystar Group as 1 of the comparable for determining the ALP, then the arm length price comes out at ₹ 115.5 and ₹ 122.66 for product namely Reactive Red 195 and Reactive Black 5 respectively whereas the price charged by the assessee from the AE ranges between ₹ 108.75 to 128.12 for product Reactive Red 195 and ₹ 110.06 to ₹ 115.22 for Reactive Black 5 . We direct the AO/TPO to compare the ALP with the each invoice raised by the assessee and wherever he finds the difference exceeding 5% of the actual price, make necessary adjustments. Hence the ground of appeal of the assessee is partly allowed. 2020 (8) TMI 508 Long-term capital loss - AO in not allowing carry forward of long term capital loss claimed by the appellant - entitled to set off and/or carry forward long term capital loss - CIT(A) holding that since the income includes loss , hence section 10(38) will not only apply to STT paid transactions generating positive income but also similar transactions generating negative income (loss) - Whether source of income arising from transfer of shares held as long term capital asset is not exempt from tax? - HELD THAT:- Provisions of Section 10 (38) of the income tax act, any income arising from the transfer of a long-term capital asset , being an equity shares in the company or unit of an equity oriented fund, shall not be included in the total income of the previous year of any person, provided the transaction of the sale of such shares or equity are subject to securities transaction tax, if the same transaction is entered into after chapter VII is enacted. There is no dispute between the assessee and the revenue that if the income arising on the sale of such shares is positive i.e. profit/gain, it would be exempt under this Section. But dispute is that when assessee incurs Loss on transfer of such long term capital assets , whether same shall be ignored for the purpose of computation of the income of the assessee or shall be considered part of the income computation mechanism and should be allowed to be set-off in accordance with other provisions of the act and shall also be carried forward. This issue has arise in because in this year assessee has incurred long- term capital loss on sale of shares which was subject to securities transaction tax. The assessee wants that this loss should be allowed to enter into the computation of total income of the assessee and if is not set-off against any other capital gain in that year, then it should be allowed to be carried forward in future years. In nutshell, the controversy is exemption provisions u/s 10 (38) that income arising from transfer of a long-term capital asset shall only include positive i.e. Gain or the negative i.e. Losses also. Lower authorities have not committed any error in ignoring the loss incurred by the assessee on sale of shares and securities, on which assessee has paid securities transaction tax, holding that when the income is exempt, then both positive income as well as the negative loss , both, do not enter into the regular computation of the assessee. Accordingly, the orders of the lower authorities are upheld wherein the assessee has been denied the set of and or carry forward of long-term capital loss on transfer of shares on which the assessee has paid securities transaction tax and are covered by the provisions of Section 10 (38) of the Act Assessee has also slipped in its written submission that when there are two views on an issue, the opinion which is favourable to the assessee should be adopted. As given our thoughtful consideration to this issue and find that when honourable Supreme Court has decided on issue that income includes losss also, it decides from the day one when the law is enacted. Therefore, now there are no two views on the issue so, we are constrained to take a view in favour of the revenue and against the assessee. 2020 (8) TMI 507 Revision u/s 263 - bogus purchases - HELD THAT:- This is not the case of bogus purchases pursuant to the suppliers name being reflected as tainted dealer in the Sales Tax Department website of Government of Maharashtra. We find that the purchases from M/s. United Marketing made by the assessee is genuine based on the documentary evidences submitted in the paper book and also United Marketing responding before the ld. AO in response to the notice u/s.133(6) of the Act in the case of M/s. Goa Technology and Trade Pvt. Ltd., This squarely proves the identity of the said supplier. Disallowance has been made by the AO in the order giving effect to the order passed by the ld. CIT u/s.263 by following the directions of the ld. CIT. Hence, practically the hands of the ld. AO are tied which could be evident from the observations made by the ld. Administrative CIT in his Section 263 order. As stated earlier, the assessee should have preferred an appeal before this Tribunal against the order passed u/s.263 which was not done in the instant case. In this scenario, the assessee cannot have any grievance over the action of the ld. AO in making the disallowance of purchases by following the directions of the ld. CIT u/s.263. Accordingly, we feel that this appeal itself is not maintainable before us. - Decided against assessee. 2020 (8) TMI 506 Trading addition - Estimation of income - bogus purchases - Non rejection of books of accounts - HELD THAT:- On the credit side of the trading account, sales and closing stock are verifiable and the opening stock is also reflected in the books of account, purchases and the other quantitative details are tallying with the books of accounts and purchases, then there cannot be any inference that purchases made and shown by the assessee are bogus. As regards the difference of rates the AR has already pointed out that assessee had purchased different quality of steel alloys the rate of which was ₹ 110 per kg from different party also and from M/s Maa Durga Trading Company the assessee had purchased steel alloy @ ₹ 32 and @ ₹ 35 and also ₹ 110 per kg. Such an inference drawn by the CIT (A) is divorced from the facts and material on the record. Thus when purchased are duly accepted by the VAT Department including the sales and manufacturing account and the quantity utilized for the manufacturing has not been disputed and trading account and books of account have not been rejected, then no separate addition on account of purchase cannot be made. - Appeal of the assessee is allowed. 2020 (8) TMI 505 Levy of interest u/s. 201(1A) of the Act for delay in deduction of tax at source - HELD THAT:- It is not in dispute that TTML filed [ 2018 (2) TMI 192 - BOMBAY HIGH COURT] and the Hon'ble High Court quashed the order passed by the Assessing Officer withdrawing the exemption certificate issued to the assessee for NIL deduction of TDS. By virtue of the order of the Hon'ble Bombay High Court quashing the withdrawal order passed by the TDS Officer, the certificate dated 04.05.2017 issued by the AO for NIL rate of tax got revived whereby the position prior to cancellation of the certification on 23.10.2017 was restored. In view of a fresh certificate issued for NIL TDS and is applicable for the period 28.04.2017 to 31.03.2018 NIL certificate got revived and the question of deduction of TDS will not arise. In that case there cannot be any delay. In the circumstances there is no question of levy of interest u/s. 201(1A) of the Act. Thus, we direct the Assessing Officer to delete the interest levied u/s. 201(1A) of the Act. Appeal of the assessee is allowed. 2020 (8) TMI 504 Capital gain computation - cost of acquisition as on 01.04.1981 for the land and building - AO referred the property to the Valuation Officer and adopted the value determined by the Assistant Valuation Officer and re-worked the indexed cost of acquisition and then determined the long term capital gain in the respective assessee s hands - HELD THAT:- When the AO proposed to assessee the value of the land adopting the value shown by the registration authority and adopt the value of the super structure as per the valuation officer s report, the assessee submitted that the impugned property was given on rent for ₹ 4,000/- per month with a rental advance of ₹ 2,00,000/- and therefore, it is proper to adopt the value on rent capitalisation method as per the provisions of the Wealth Tax Act. AO did not agree with assessees plea and proceeded to compute the capital gains based on the value shown by the stamp authorities and the valuation officer. Before us, the assessee pleads that the guideline value does not reflect the market value and by the time the valuation officer went for inspection, the property was already demolished and hence the valuation made by him cannot be considered as a scientific one - we find merit in the submissions of the assessee. Existence of rental agreement, the receipt of rent and rental advance is not disputed. Therefore, we are of the view that the value of the land and building should be determined on the basis of rent capitalisation method. The assessee has quantified the value at ₹ 8,28,750/-, which may be rounded off to ₹ 10 lakhs. Therefore, we direct the AO to adopt ₹ 10 lakhs towards the cost of acquisition for the land and building as on 01.04.1981 and proceed to determine the cost of indexation accordingly, for the determination of capital gains in the respective assessee s hand. Assessee s appeal is treated as partly allowed 2020 (8) TMI 503 Addition towards chit dividend from Osmania Chit Funds - CIT(A) observed that the assessee has not filed copy of the receipt of ₹ 27,482/- only or that it is not relating to the year of account - HELD THAT:- CIT(A) observed that the assessee has not filed copy of the receipt of ₹ 27,482/- only or that it is not relating to the year of account. Even before the Tribunal, no evidence is filed. Therefore, the Ground raised by the assessee on this issue is rejected. Addition towards commission received - assessee has pointed out that there is a mistake in arriving at the figure - HELD THAT:- Assessee has drawn our attention to Form 26AS, where the receipt to the extent of ₹ 13,50,647/- were reflected, on which, TDS was also deducted. On perusal of the order of the CIT(A), find that the Ld.CIT(A) has corrected this mistake and restricted the addition to the extent of ₹ 1,54,172/- only. Therefore, find no reason to interfere with the order of Ld.CIT(A) and the Ground raised by assessee in this regard, is dismissed. Addition representing the credits into the bank account of State Bank of Hyderabad, Domalguda branch, Hyderabad - HELD THAT:- Registered Settlement Deeds were executed on 16-08-2008 23-10-2008, while the cash was deposited on 13-12-2008. Therefore, the possibility of a family settlement cannot be ruled out. It is also seen that the elder brother of the assessee, Shri Venkat Reddy and also the mother of the assessee have executed the Settlement Deeds. Since the Revenue also has not brought out that there were other properties which have been settled in favour of the assessee, the contention of assessee that he has received ₹ 15 Lakhs towards settlement of family property cannot be ruled out totally. Considering the preponderance of probabilities and circumstantial evidence, I am inclined to accept the source of deposit of ₹ 10 Lakhs as the receipt of the amount from his brother. Therefore, the addition to the extent of ₹ 10 Lakhs is deleted and the Ground raised by assessee in this regard is allowed. Disallowance of foreign tour expenses - HELD THAT:- Assessee has not been able to produce any evidence to establish that the travel was for business purposes, see no reason to interfere with the well reasoned order of the Ld.CIT(A) on this issue. Hence, this Ground of appeal is rejected. 2020 (8) TMI 502 Denying the benefit of claim of deduction u/s 11 - Stay of demand - activities of micro finance - reasoning of the AO to deny the claim of exemption was that the assessee was engaged in micro finance activities, wherein it was charging exorbitant interest from its beneficiaries and there was no charitable activities involved in micro finance activities - HELD THAT:- Tribunal in assessee s own case [ 2018 (6) TMI 1310 - ITAT COCHIN] held that the micro finance conducted by the assessee is not a charitable activity, for identical facts, these appeals filed by the assessee are rejected. Stay Applications filed by the assessee become infructuous and the same are dismissed as such. 2020 (8) TMI 501 Deduction u/s 80P - disallow the claim as that the assessee was doing the business of banking, and in view of insertion of section 80P(4) with effect from 01.04.2007 - CIT(A) passed order u/s 154 wherein the claim of deduction u/s 80P was denied - HELD THAT:- The Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P Thus restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. In this case, the A.O. had concluded that out of the total loan disbursed by the assessee only 12.54% are for agricultural purpose / allied activities. I am of the view that the above finding of the A.O. is not conclusive unless each loan applications / loan ledger are verified and the A.O. AO shall examine the activities of the assessee afresh and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) - Appeal filed by the assessee allowed for statistical purposes. Corporate Laws 2020 (8) TMI 500 Disqualification of Directors - non-submission of annual returns and balance-sheet for previous financial years starting from 2011 to 2012 to 2013 to 2014 - Section 164(2) (a) of the Companies Act, 2013 - HELD THAT:- On the question whether proviso to Section 167(1) is retrospective or prospective, detailed hearing should be made on exchange of affidavits. Therefore, the respondents are at liberty to file affidavit-inopposition within four weeks from date and serve a copy of the same to the learned advocate for the petitioner. In present set of writ petitions the petitioners have been able to make out an arguable case and balance of convenience and inconvenience is in favour of the petitioners - the petitioners are at liberty to file affidavit-in-reply within two weeks from the date of receipt of affidavit-in-opposition. Insolvency & Bankruptcy 2020 (8) TMI 499 CIRP process - Set off certain amount to be paid by the Aircel Companies to the Airtel Companies - HELD THAT:- It is observed that whether during the period of Corporate Insolvency Resolution Process when Section 14 (Moratorium) of the I B Code, 2016 is in operation whether any dues can be set off as per Accounting Conventions when Moratorium is in force. The Accounting Conventions cannot supersede any express provisions of the laid down provisions of the specific law on the subject. The I B Code, 2016 provides the mechanism of Moratorium during the CIRP till the Resolution Plan is approved or Liquidation order is passed. The I B Code has a provision to override other laws as enunciated above. Hence, even if there are some such provisions in any other law, the I B Code 2016 will prevail over that. The Respondent No.1 2 are directed to pay the amount whatever has been set off by them to the Aircel Entities - appeal allowed. 2020 (8) TMI 498 CIRP process - applicability of time limitation - challenge to impugned order is limited to issue of limitation, it being raised as a ground in appeal that the financial debt in respect whereof the Financial Creditor sought triggering of Corporate Insolvency Resolution Process was not payable in law, same being barred by limitation - HELD THAT:- It is well settled by now that the provisions of the Limitation Act, 1963 are applicable to applications relating to triggering of Corporate Insolvency Resolution Process under I B Code and Article 137 of the Limitation Act, 1963 prescribing a period of three years applies to such applications. In Vashdeo R. Bhojwani vs. Abhyudaya Co-operative Bank Limited and another [ 2019 (9) TMI 711 - SUPREME COURT ], the Hon ble Apex Court referring to its Judgment rendered in B.K. Educational Services Private Limited vs. Parag Gupta and Associates [ 2018 (10) TMI 777 - SUPREME COURT ] it was held that it is manifestly clear that the right to sue accrues when a default occurs and if such default has occurred over three years prior to the date of filing of application, the application would be barred by limitation except in cases where on the facts of the case such delay is condoned. Computation of a fresh period of limitation from the date of acknowledgment of liability - HELD THAT:- Such acknowledgment in respect of any right has to be in writing and signed by the borrower against whom such debt is claimed well before the expiration of the prescribed period for a suit or application in respect of such right. Any acknowledgment made after the period for enforcement of such right, recovery of such property or debt would not fall within the purview of Section 18 of the Limitation Act, 1963 for the purpose of commencement of fresh period of limitation. In the instant case, the account of the Corporate Debtor was classified as NPA on 1st May, 2000 which is admitted as the date of default. This being an admitted fact and clearly discernible from Form-1 (application by Financial Creditor to initiate Insolvency Resolution Process under Section 7 of the I B Code ) Column 2 of Part-IV at page 65 of the appeal paper book which clearly specifies the date of default as 1st May, 2000 when the account of Corporate Debtor was classified as NPA as stated earlier. The filing of recovery proceeding before the Debts Recovery Tribunal and the claim being subsequently decreed would not shift the date of default. It is settled position of law that in application under Section 7 of the I B Code relief is sought for Resolution of Insolvency of the Corporate Debtor - It is apt to notice that Section 7 of the I B Code has been brought into force on 1st December, 2016 vide S.O. 3594(E) dated 30th November, 2016. Therefore, triggering of Corporate Insolvency Resolution Process in respect of defaults occurring prior to 1st December, 2013 would be impermissible in view of application of Article 137 of the Limitation Act, 1963. The arguments canvassed on behalf of the Appellant that initiation of Corporate Insolvency Resolution Process at the instance of the Financial Creditor was unsustainable as the same had been filed well beyond the period of three years from the date the account of Corporate Debtor was classified as NPA - Appeal allowed. 2020 (8) TMI 497 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - petition dismissed on the ground that there were pre-existing disputes between the parties - HELD THAT:- Adjudication authority failed to consider that the respondent has sought to confuse matters by relating to prior correspondence, in fact that it was the liability of the respondent and that the respondent under an arrangement with the said M/s Hindalco Industries Limited had intended to clear the dues to the Appellant. The said arrangement was seemed to be made to run away from the obligation to pay the debt by the respondent as Hindalco could not hold respondent s payment contractually and also Hindalco can pay directly to the Appellant subject to confirmation from the Respondent, however there is no such confirmation from the respondent - Adjudicating authority failed to consider that respondent has sought to shift the liability from itself to Hindalco Industries Limited to make payment to the appellant with a view to deny the appellant of its legitimate dues. The defence raised by the respondent is not genuine and an after-thought merely to evade making payments of the liabilities under the purchase orders to the appellant. Case remitted to the Adjudicating Authority, Mumbai Bench to admit the application and pass appropriate order in presence of the parties - appeal allowed. 2020 (8) TMI 496 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt or not - time limitation - account declared as NPA - HELD THAT:- Similar issue fell for consideration before the Hon ble Supreme Court in GAURAV HARGOVINDBHAI DAVE VERSUS ASSET RECONSTRUCTION COMPANY (INDIA) LTD. AND ANR. [ 2019 (9) TMI 1019 - SUPREME COURT] . In the said case, the Hon ble Supreme Court has noticed that the Respondent was declared NPA on 21st July, 2011. The Bank had filed two OAs before the Debts Recovery Tribunal in 2012 to recover the total debt. Taking into consideration the facts, the Supreme Court held that the default having taken place and as the account was declared NPA on 21st July, 2011, the application under Section 7 was barred by limitation. Therefore, it will be evident that for triggering application under Section 7 the date of default is to be noticed for counting the period of limitation under Article 137 of the Limitation Act, 1963 - it will be evident that Section 13(2) notice was issued on 3rd September, 2014 as the Corporate Debtor (Defendant No.1) committed default in repayment of the said cash credit facilities after the said facility has been declared as NPA. The application under Section 7 has not been filed within three years from the date of default/ NPA having been declared before 3rd September, 2014, as pleaded before the Debt Recovery Tribunal, Ahmedabad in Original Application No. 239 of 2016. As the application under Section 7 being barred by limitation, the application was not maintainable and was fit to be dismissed. Application dismissed. 2020 (8) TMI 495 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of dispute or not - HELD THAT:- After the corporate insolvency resolution process was initiated on 25th March, 2018 and number of claims were filed by different financial creditors and the operational creditors , the claims amounting to ₹ 3000 crores. In view of the said position, the Appellant Vishal Vijay Kalantri on behalf of the Promoter sought time to settle the claim under Section 12A. The learned counsel for the Appellant wanted to highlight the merit to suggest that there is a pre-existence of dispute . However, as more than one and a half year has passed and as the matter remains pending since long because of the Appellant Vishal Vijay Kalantri , the Promoter would have settled the matter with the creditors and also sought time, we are not inclined to determine the initial issue whether there was a pre-existing dispute or not. Even if, the proceedings is quashed on the pre-existing dispute , as admittedly there is a default of payment and it will regenerate other proceedings, which is not desirable. Admittedly, the Committee of Creditors now approved the plan as submitted by the APSEZL with 99.68% voting share and approved on 19th September, 2019. The impugned order dated 25th March, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench is upheld and the appeals preferred by Vishal Vijay Kalantri is dismissed and it is declared that both the appeals preferred by APSEZL as infructuous - The matter stands remitted to the Adjudicating Authority to pass appropriate order under Section 31 of the I B Code in accordance with law. 2020 (8) TMI 494 Liquidation of Corporate Debtor - no Resolution Plan , is approved by the Committee of Creditors - Section 33 of the I B Code - HELD THAT:- It cannot be lost sight of that where no Resolution Plan , is approved by the Committee of Creditors , an Adjudicating Authority is bound to order Liquidation of a Company. If the time prescribed under Sec 12 of the I B Code had lapsed, an Adjudicating Authority will pass an Order of Liquidation against Corporate Debtor regardless of whether the management of Corporate Debtor or the Resolution Applicant had enough opportunity to come up with viable/suitable Plan, as the case may be. Notwithstanding the fact that Resolution of Corporate Insolvency is meant for survival of a Company as a Going Concern, it cannot be ignored that Timely Liquidation is a palatable/desirable one too over an Indefinite Resolution Proceedings . When the Committee of Creditors is of the view that no useful purpose will be served in continuing/elongating the Insolvency Resolution Process because of the fact that there was no Resolution Plan to the satisfaction of the Committee of Creditors , then an Adjudicating Authority is undoubtedly to pass necessary orders as per Sec 33(1)(a) and Sec 34(1) of the I B Code for announcement of Liquidation in respect of a Corporate Debtor . Section 240A of the Code to Micro, Small and Medium Enterprises - HELD THAT:- Financial Creditor or an Operational Creditor has a right to file necessary application for Insolvency . The creditors of Micro, Small and Medium Enterprises can take it to Insolvency . In fact, Sec 240A (2) of the Code confers power on the Central Government to direct by notification in Public Interest that any of the provisions of I B Code shall not apply to MSMEs or apply to them with such variations as may be mentioned in the notification. Appeal dismissed. 2020 (8) TMI 493 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - whether the Applicant is a Financial Creditor and the Debt duly payable in law by the Corporate Debtor? HELD THAT:- Application under Section 7 of IBC, the Financial Creditor to initiate CIRP against the Corporate Debtor before the Adjudicating Authority when a default has occurred. The Creditor has been defined in Section 3(10) of IBC means any person to whom a debt is owed and includes a Financial Creditor, an Operational Creditor, a Secured Creditor, an unsecured Creditor and a Decree holder. Debt has been defined in Section 3(11) means a liability or an obligation in respect of a claim which is due from any person and includes a Financial Debt and Operational Debt. The Default has been defined in Section 3(12) of IBC means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the Debtor or the Corporate Debtor as the case may be. In view of default made by the Respondent-Corporate Debtor, the Appellant filed the Application before the Adjudicating Authority and the Adjudicating Authority admitted the Application and observed that the debt and default is concerned, the Corporate Debtor does not deny the same. Further it is observed that the financial facilities have been duly granted and the amounts have been disbursed. In the facts of the present case, the Adjudicating Authority has already observed that the adverse observation will be subject to final outcome of the investigation. The Hon ble Supreme Court in the matter of ICICI Bank Vs. Shanti Devi Sharma and Others [ 2008 (5) TMI 707 - SUPREME COURT ] held that the Court could have been more careful to note that the facts that it discussed were alleged. Recognising as such, the Court clarified that its observations were not to influence or affect the proceedings. The adverse observations made by Adjudicating Authority, being admittedly subject to correction in investigation, were avoidable. They will not affect investigation in any manner or be basis to hold adversely against Appellant Bank or its officials. For the purpose of finding debt due and default for admitting Application it was not possible to accept defence of valuation claimed in averments vis- -vis valuation done in record of seizure - the Adjudicating Authority could not have decided such averments. Appeal disposed off. 2020 (8) TMI 492 Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- This Tribunal is of the considered opinion that the Corporate Debtor had accepted that all the works have attended by the Operational Creditor and further requested the Operational Creditor to attend to the work as a Special case request. From the reading of the e-mail, the request made by the Corporate Debtor is not part of the original work and it is a Special Request made to the Operational Creditor to do the work. There are no record or document to establish that there exists any dispute nor raised any dispute by the Corporate Debtor, hence, we conclude that there is no pre-existing of dispute. The Operational Creditor had awarded the work and the retention money cannot be treated as separate money. The retention money is a part of main bill which was retained by the Corporate Debtor as per the terms of the Work Order and the same shall be released after completion of the work and issuance of the Completion Certificate. The Respondent No. 1 being a Corporate Debtor is due and payable retention money which is part of the main Bill thereby the Operational Creditor is well within the definition of Section 5(20) IBC - In the present case, the Demand Notice dated 01.03.2018 was received by the Corporate Debtor on 09.03.2018. However, they fail to bring to the notice of the Operational Creditor with regard to existence of dispute in their reply or even shown existence of dispute prior to the issuance of Demand Notice. The Respondent No. 1 had not raised any dispute which is existing prior to the issuance of Demand Notice. Further Section 3(2) of IBC define default. As per said Section, the default means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the Debtor or Corporate Debtor as the case may be. The debt has been defined in Section 3(11) means a liability or obligation in respect of a claim which is due from any person and includes a Financial Debt and Operational Debt - In view of the definition of debt and default, the retention money, which is part of the main bill, comes under the definition of debt and default. The Respondent No. 2 falls under the category of Operational Creditor and the debt is an Operational Debt as per law, which is due and payable - there is no pre-existence of dispute and Application is not barred by limitation - Appeal dismissed. 2020 (8) TMI 491 Payment of Gratuity to the employees - Adjudicating Authority had directed the Liquidator to pay the Gratuity to the employees, and further observed that the Liquidator could not avoid the liability to pay Gratuity to the employees on the ground that the Corporate Debtor didn't have separate funds for payment of gratuity - HELD THAT:- It is the settled position of law, that the provident fund, the pension fund and the gratuity fund, do not come within the purview of liquidation estate for the purpose of distribution of assets under Section 53 of the Code. Based on this, the only inference which can be drawn is that Pension Fund, Gratuity Fund and Provident Fund can t be utilised, attached or distributed by the liquidator, to satisfy the claim of other creditors. Sec 36(2) of the I B Code 2016 provides that the Liquidator shall hold the Liquidation Estate in fiduciary for the benefit of all the Creditors. The Liquidator has no domain to deal with any other property of the corporate debtor, which is not the part of the Liquidation Estate. On perusal of the statutory provision of Section 5 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. It is apparent that the establishment, to which the said Scheme of Employees Provident Fund applies, has to create a fund in accordance with the provision of the Act and the Scheme. Section 5(1-a) provides that the Fund shall vest in, and be administered by the Central Board constituted under Section 5(a). The question of distribution of the Gratuity Fund in order of priority, provided under Section 53(1) of the Code does not arise. However, the Adjudicating Authority has given direction to the Liquidator that, the Liquidator cannot avoid the liability to pay Gratuity to the employees, on the ground, that Corporate Debtor did not maintain separate funds, even if, there is no fund maintained, the Liquidator has to provide sufficient provision for payment of Gratuity to the Applicants according to their eligibility - this Appellate Tribunal is of the considered opinion that the Adjudicating Authority erred in directing the Liquidator to make provision for payment of Gratuity to workers, as per their entitlement. Appeal allowed. 2020 (8) TMI 490 Liquidation Order - settlement of disputes of Corporate Debtor - HELD THAT:- The Appeal deserves to be disposed of with directions as were given in the matter of Y. SHIVRAM PRASAD AND ASSET RECONSTRUCTION COMPANY (INDIA) LTD. VERSUS S. DHANAPAL ORS. AND SERVALAKSHMI PAPER LTD. ORS [ 2019 (5) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] of this Tribunal so that the Liquidator can take steps under Section 230 of the Companies Act, 2013 read with the provision of IBC, where it was held that The liquidator is required to act in terms of the aforesaid directions of the Appellate Tribunal and take steps under Section 230 of the Companies Act. If the members or the Corporate Debtor or the creditors or a class of creditors like Financial Creditor or Operational Creditor approach the company through the liquidator for compromise or arrangement by making proposal of payment to all the creditor(s), the Liquidator on behalf of the company will move an application under Section 230 of the Companies Act, 2013 before the Adjudicating Authority i.e. National Company Law Tribunal, Chennai Bench. The present Appeal is disposed off in terms of the directions as noticed in the matter of Y. Shivram Prasad Vs. S. Dhanapal Ors.
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F: ONLINE SOFTWARE IMPORT DUTY CALCULATION REG

F: PAYMENT TO CINE OR TV ARTISTS. LIABILITY UNDER RCM

F: Input Tax Credit

F: Bill To a Overseas Company Supply of goods Locally

F: iterest liability

C: Extension of due date for filing of Form No. 10A/10AB under the Income...

N: Export of 2,000 MT of White Onion under Code 0703 10 19

C: Ease of Doing Business: Text on Contract Note with respect to Fit and ...

A: REFUND OF ITC ON EXPORT OF GOODS WITHOUT PAYMENT OF TAX – RULE 89(4) O...

A: FILING APPEAL AS PER THE DIRECTIONS OF HIGH COURT