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TMI Tax Updates - e-Newsletter August 24, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws Highlights / Catch Notes GST: Classification of services - The activity undertaken by the applicant is waste treatment/processing of wet waste provided by GCC and maintenance of the designated Micro compost centers of GCC, by employing their own personnel. The activity while covered under the Heading 9994, will more appropriately fall under the Group 99943- waste treatment and disposal services rather than group 99942-Waste collection Services - the classification of the activity of Maintaining Micro Compost Centers and processing the wet waste provided by GCC, is classifiable under Heading 9994 and more specifically under group 99943- 'Waste Treatment and Disposal services'. - AAR Visit to Get Source GST: Exemption from GST - Composite Supply or not - healthcare services - the Supply of medicines and consumables used in the course of providing health care services to In-patients by pharmacy unit of Kumaran Medical Center for diagnosis or treatment during the patients admission in hospital till discharge is to be considered as “Composite Supply” of health care service under GST and consequently exemption from GST is available for such supplies. - AAR Visit to Get Source GST: Input Tax Credit (ITC) - upfront lease premium - The upfront premium made is the lease rentals as per the allotment order/letter of Chennai Port Trusts and it is nothing but lease rentals paid for the services of 'Renting of Immovable property' for business purpose - the upfront premium paid is not related to any construction activity of such covered space but against the rental value for the period of rent calculated for the period of lease and collected upfront. Thus, provisions of Section 17(5) (d) is not applicable to the instant case. - AAR Visit to Get Source GST: Levy of GST - distinct persons - supply of goods or supply of services - The transfer of right to do integration testing, installation and marketing software from the applicant to Karnataka Cost centre is leviable to GST as such transaction is being executed between two distinct persons i.e., two cost centers of the same entity. Further as such supply is found to be involving only transfer of the said right, it is concluded that the supply is of services and not of goods. - AAR Visit to Get Source GST: Seeking grant of Anticipatory Bail - It is apposite to note that as per Sec. 132 of CGST Act, 2017 issuance of invoice or bill without supply of goods or services and wrongful availment or utilisation of input tax limit is cognizable and punishable offence if the amount is over Rs. 5 Crores. In the instant case prima facie there appears a sufficient material which requires physical interrogation. - Anticipatory bail application dismissed. - DSC Visit to Get Source Income Tax: Refund claim along with interest u/s 244A - Since, in the present case, the Assessing Officer has failed to process the return of the petitioner filed in accordance with law within the prescribed time, this Court is of the opinion that the return as declared/filed will have to be treated as ‘deemed intimation’ and an order under Section 143(1) of the Act. - assessee cannot be penalised for inaction on the part of the respondent-department. - If the respondents do not refund the amount immediately due and payable to the assessee, then interest on the said amount would accrue at the expense of the tax payer. - HC Visit to Get Source Income Tax: Revision u/s 263 - Deduction u/s 36(1)(vii) with respect to write off of interest - CIT could not invoke jurisdiction u/s 263 as the view taken by the AO was a possible/plausible view. It was only if the AO had not made any enquiry then it could be said that the order passed was erroneous. This is not a case of lack of enquiry though it may be a case of inadequate enquiry. Inadequacy of enquiry as elucidated above does not give jurisdiction to the CIT to invoke provisions of Section 263 prior to the insertion of Explanation 2. - HC Visit to Get Source Income Tax: Claim of deduction on interest/redemption premium on debentures - The CIT(A) has accepted assessee's explanation that it had quantified the premium as per the agreement dated 15.05.2010 spread over for three financial years. It is trite that a borrowing Company, which issues debentures incurs liability to pay larger amount than what it has borrowed. The assessee - Company has made provision for payment of premium and also paid TDS. The adverse finding recorded by the ITAT that the parties had changed the agreement to suit their convenience and that it is a 'make-believe' story is not supported by any cogent reason nor material on record and therefore, untenable. - HC Visit to Get Source Income Tax: Reopening of assessment u/s 147 - requirement of giving minimum of 7 days notice - While redoing the exercise, it is open to the respondent to issue a notice afresh u/s 148B giving not less than 7 days to the petitioner/assessee to respond and on receipt of the same, the petitioner shall respond by giving their reply or inputs within the time stipulated therein. - HC Visit to Get Source Income Tax: Addition u/s 68 - We do not understand proposition of the assessee that cash had changed the hands from the company to its promoter–Director without any reason and there is no reason forthcoming as to why the cash was paid in cash by the three parties. There is no document produced before either the AO or before CIT (Appeals) or before us to prove the genuineness of the transaction. - While deleting the addition the CIT (Appeals) has not discussed about the proving of genuineness of the transaction by the assessee. - Matter restored back - AT Visit to Get Source Income Tax: Capital gain computation - whether the amount paid by the buyer to the tenant for the vacation of tenancy can be taxed in the hands of the tenants or owner of the capital asset? - Nowhere it was mentioned that the above sum was paid either to the seller or through the seller of the property. From the above statement, it is also very clear that dealings are only between the purchaser of the property and tenants occupied in that premises - The amount should not be taxed in the hands of the owner of the capital asset. - AT Visit to Get Source Income Tax: Revision u/s 263 by CIT - Claim made by the assessee u/s. 32AC in respect of investment made in the new plant & machinery - In assessee’s case while interpreting the wordings “acquires and installs” in section 32AC, the AO has taken one view in allowing the deduction based on the submissions of the assessee of various judicial pronouncements rendered in the context of 32(1)(iia); whereas the CIT is not in agreement with the view based on the plain reading of section 32AC. - the CIT is not justified in setting aside the order of the AO - AT Visit to Get Source Income Tax: Addition as cash receipts and cash payment - the tax auditor reported these two items of cash receipt and cash payment shown under the column of loan and deposits accepted during the year and not under the column for disallowances to be made u/s 40A(3). - Looking at the nature of transactions it is no-where proved that the same can be treated as income u/s 28 or can be disallowed u/s 40A(3) or any other section of the act. At the max both the transactions can be considered for the purposes of section 269SS and section 269T, subject to the clarification of the assessee and various judicial pronouncement in this regard. Hence, we hereby direct to delete addition/disallowance - AT Visit to Get Source Income Tax: Rectification u/s 154 - Deduction u/s 80IB - The assessee would be entitled to the deductions in the rectification under section 154 to the extent permitted by the Board's Circular No. 669 dated 25-10-1993. The Assessing Officer was not right in law in disallowing the rectification application only on the ground that the assessee had failed to furnish the audit report along with the return of income. - AT Visit to Get Source Income Tax: Disallowance of expenses on non-deduction of tax - Without going into the merit of the addition, we find the alternate argument of the ld. Counsel for the assessee acceptable according to which once the assessee is entitled to deduction u/s 10A of the IT Act, then, such higher assessed income on account of disallowance made by the AO is eligible for deduction u/s 10A. Since the assessee is entitled to deduction u/s 10A of the Act, therefore, the assessee is entitled to deduction u/s 10A of the Act on such enhanced assessed income due to disallowance of the expenditure on account of freight charges and expenses on hotel accommodation. - AT Visit to Get Source Income Tax: TP adjustment - Inclusion of excise duty on the operating revenue for two comparables - By including excise duty in the case of two comparables by the ld. TPO, the operating profit has been artificially increased by the amount of excise duty and, therefore, the PLI computed by the learned TPO stands comparatively incorrect. We thus, find no fault with the computation of PLI after netting of excise duty done by the assessee for the purpose of benchmarking its sale and purchase transactions of raw material and goods with its AEs. - AT Visit to Get Source Income Tax: Revision u/s 263 - Out of the three issues raised in the show cause notice u/s 263 of the Act, in two issues ld. AO has conducted complete enquiry during re-assessment proceedings and on the third issue, the very basic facts adopted by ld. Pr. CIT for involving provision of Section 263 of the Act suffers from defect and, therefore, the proceedings u/s 263 of the Act are bad in law. Further, in view of the settled legal position, legally also, no addition can be made on any new issue without issuing a fresh show cause notice u/s 148 of the Act if no addition has been made by the AO in the re-assessment proceedings on the issue raised in the reasons recorded - AT Visit to Get Source Income Tax: Income accrued in India - PE in India - attributing profits to the P.E - Computation made by the A.O. in his assessment order is incorrect as the AO has not allowed the payments made by the Appellant to NSN India for the services rendered by NSN India as a deduction from the profit attributable to the alleged PE. If the said payments are allowed as a deduction from the gross profit figures taken by the A.O., then again the resultant figure would be losses. Consequently, even if the method of attribution adopted by the A.O. is considered to be correct, in any event, there would be no profit/income attributable to the PE. - AT Visit to Get Source Customs: Valuation of 125 consignments of imported toys - applicable tariff concession @ 43% or tariff concession @8% - once the order dated September 29, 2021 passed by the Commissioner (Appeals) was accepted by the competent authority on December 27, 2021, the Department cannot be permitted to take a different stand in the present appeal filed by the appellant. - AT Visit to Get Source Corporate Law: Summon Order - Wrongfully withholding the companies’ property - non-application of judicial mind - As it can be seen from the facts that the fate of the property in dispute is not yet determined, the rival parties are claiming rights over the property in dispute on the basis of the MoU. Till date, neither the petitioner nor the respondent/complainant has the clear title or ownership over the subject property. There is no sale deed in their favour. The suit for specific performance of contract filed by them against original vendee is still pending. - the order of summoning of the petitioner, at this stage, is illegal and the same deserves to be quashed - HC Visit to Get Source Corporate Law: Compounding of offence under Section 266G of the Companies Act, 1956 - on facts, the nature of offence which the company has charged does not invite with imprisonment or imprisonment and fine, but the penalty imposed is punishable with fine, which may extend upto five thousand rupees and where the contravention is continuing one, with a further fine, which may extend to five hundred rupees for everyday thereafter. Thus, the nature of offence is such that it is compoundable, and the same is just and proper. - HC Visit to Get Source Indian Laws: Dishonor of Cheque - ompany in liquidation - whether the impleadment of Official Liquidator is necessary - Undoubtedly the consent terms provided for the consequence of the winding up petition being allowed in the event of any default. But that stipulation appears to be in the nature of a dyke against the default. In such a situation, to accede to the submission on behalf of the applicants, would amount to playing into the hands of a party who succeeds in avoiding the liability under the original proceedings as well as the one incurred under the consent terms. - HC Visit to Get Source IBC: Initiation of CIRP - Financial Debt or not - It is clear that the amount provided by PEC as financial assistance, and claimed by it as financial debt under IBC, is basically for purchase, shipment and export of iron ore fines in fulfilment of the foreign contract. This amount is certainly not an amount given by PEC Ltd. as a financial creditor to a corporate entity M/s Phulchand Exports to ensure its overall financial viability. - The amount as claimed by the Appellant does not fall in the category of ‘financial debt’ as defined in the IBC - the Adjudicating Authority has not erred in passing the Impugned Order, whereby the Section 7 application of the Appellant has been dismissed. - AT Visit to Get Source Service Tax: Refund claim - rejection on the ground of limitation, unjust enrichment - In the instance case service tax was liable to be paid at the relevant time and it is only subsequently that by a retrospective amendment, exemption was granted with a specific condition that refund could be claimed by filing it within six months from the date of enactment of the Finance Bill 2016. The refund claim had, therefore, to be filed within six month from 14.05.2016, but it was filed beyond the said period. - Once the refund claim is held to be barred by time, the question of unjust enrichment would not arise. - AT Visit to Get Source Service Tax: Refund of un-utilised Cenvat credit of Service Tax - The Rule 5 read with notification is very specific and lays down how to determine the quantum of admissible refund from the accumulated cenvat credit - If the Revenue is not in agreement with the claims of the appellants and if, according to Revenue, the services in issue do not fall within the ambit of export of service then the Revenue ought to have initiated the proceedings against the appellants for demanding the Service Tax in respect of taxable service provided by the appellants. Admittedly no such proceedings have been initiated by the Revenue as borne out from the records of the case - Refund allowed - AT Visit to Get Source Central Excise: Classification of goods - sub-assemblies/parts of CTVS (Colour Television Sets) - when the consignments cleared by the appellant did not contain all the parts at the same point of time, Interpretative Rule (a) cannot be pressed into service - It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that complete assemblies/sub-assemblies of CTVS were supplied to the original equipment manufacturers. - AT Visit to Get Source Central Excise: Remission of central excise duty on semi-finished goods destroyed in the fire accident - The Commissioner clearly exceeded his jurisdiction in deciding this issue by going beyond the terms of the remand order passed by the Tribunal as all that was required to be determined by the Commissioner on remand was to verify whether the element of excise duty involved in the goods destroyed by the fire accident was paid by insurance company or not. This issue has now been decided in favour of the appellant by the Commissioner. - Benefit of remission allowed - AT Visit to Get Source Articles Comparison of Relaxations in Reporting Requirements in GSTR-9 & GSTR-9C for FY 2020-21 and FY 2021-22 S.194-IA - TDS BY TRANSFEREE OF IMMOVABLE PROPERTY analysis and discussions. SC direction to Open GSTN portal available to “any aggrieved assessee” Rajasthan HC directs assessee to appear before GST Authorities and allowed interim protection against arrest Notifications Customs 69/2022 - dated 22-8-2022 - Cus (NT) Customs (Compounding of Offences) Amendment Rules, 2022 FEMA G.S.R. 646 (E) - dated 22-8-2022 - FEMA Foreign Exchange Management (Overseas Investment) Rules, 2022 FEMA 400/2022-RB - dated 22-8-2022 - FEMA Foreign Exchange Management (Overseas Investment) Regulations, 2022 GST - States 8/2022-State Tax - dated 3-8-2022 - Jharkhand SGST Seeks to provide waiver of interest for specified electronic commerce operators for specified tax periods F A-3/33/20]7/1/V (48) - dated 26-7-2022 - Madhya Pradesh SGST Amendment in Notification No. F-A3-33-2017-1-V (42) Dated 29th June 2017 F A-3-47/2017/1/V(47) - dated 26-7-2022 - Madhya Pradesh SGST Seeks to amend Notification No. F A-3-47/2017/1/V(59) dated the 30th June, 2017 F A-3-42/2017/1 /V(46) - dated 26-7-2022 - Madhya Pradesh SGST Amendment in Notification No. FA-3-42/2017/1/V(53) dated the 30th June, 2017 F A 3-36/2017/V(51) - dated 26-7-2022 - Madhya Pradesh SGST Seeks to amend Notification No. FA-3-36/2017/1/V(66) dated 30th June, 2017 F A 3-35/2017/1/V(49) - dated 26-7-2022 - Madhya Pradesh SGST Amendment in Notification No. F A-3- 35/2017/1/V(63) dated 30.06.2017 F A 3-34-2017-1-V(50) - dated 26-7-2022 - Madhya Pradesh SGST Seeks to amend Notification No. F A 3-34-2017-1-V (67), dated the 30th June, 2017 F A 3-32/2017/1/V(45) - dated 26-7-2022 - Madhya Pradesh SGST Amendment in Notification No. FA3-32-2017-1-V(41) dated the 29th June, 2017 CT-3-0002-2022-Sec-1-V (CT) (44) - dated 20-7-2022 - Madhya Pradesh SGST Modification of the notification Nos. F A-31-2020-1-V(67), dated the 5th December, 2020 and No. F A 3-07-2021-1-V(26), dated the 10th June, 2021 Income Tax 102/2022 - dated 22-8-2022 - IT Special Court in the Chhattisgarh u/s 280A of the Income-tax Act, 1961 and section 84 of the Black Money Act, 2015 - Designates all the Chief Judicial Magistrate Courts of the State for the areas falling within the respective territorial jurisdictions of the Chief Judicial Magistrate Courts in the State of Chhattisgarh 101/2022 - dated 22-8-2022 - IT Income-tax (Twenty Eighth Amendment) Rules, 2022 SEBI SEBI/LAD-NRO/GN/2022/94 - dated 22-8-2022 - SEBI Securities and Exchange Board of India (Portfolio Managers) (Amendment) Regulations, 2022 Circulars / Instructions / Orders FEMA - 12 - dated 22-8-2022 Foreign Exchange Management (Overseas Investment) Directions, 2022 DGFT - 22/2015-2020 - dated 23-8-2022 Enlistment of an Agency under Appendix 2E of FTP, 2015-2020 -authorized to issue Certificate of Origin (Non-preferential) News Shri Piyush Goyal inaugurates “Conclave on Public Procurement (Preference to Make in India) Order, 2017” Overseas investment rules and regulations notified Another step towards Ease of Doing Business Auction for Sale (re-issue) of (i) ‘7.38% GS 2027’, (ii) ‘GOI FRB 2028’, (iii) ‘7.54% GS 2036’ (iv) ‘6.99% GS 2051’ Case Laws: GST 2022 (8) TMI 922 Classification of services - Maintaining the micro-compost centres and processing the wet waste provided by the Greater Chennai Corporation at designated locations in Center Region Zones 7, 9 10 in Chennai - eligibility of exemption under Serial No 3 of Notification No 12/2017-Central Tax (Rate)., dated 28/07/2017, as amended from time to time - HELD THAT:- The applicant has entered into an agreement with GCC and the work order S.W.M.C.No. A7/0108A/2020 dated 23.07.2020 is issued by GCC to the applicant for Maintaining the Micro Compost Centres and Processing the Wet Waste provided by Greater Chennai Corporation at designated locations in Center Region Zones 7, 9 10 at the quoted processing fees of Rs. 1690/- PMT and for a total contract value of Rs. 9,09,36,027.50/- for a period of three years. SAC 9994 covers 'Sewage and waste collection, treatment and disposal and other environmental protection services' - The applicant has stated that as per their understanding, the activity is classified under Heading SAC 99942. The activity undertaken by the applicant is waste treatment/processing of wet waste provided by GCC and maintenance of the designated Micro compost centers of GCC, by employing their own personnel. The activity while covered under the Heading 9994, will more appropriately fall under the Group 99943- waste treatment and disposal services rather than group 99942-Waste collection Services - the classification of the activity of Maintaining Micro Compost Centers and processing the wet waste provided by GCC, is classifiable under Heading 9994 and more specifically under group 99943- 'Waste Treatment and Disposal services'. Applicability of serial No.3 of Notification No.12/2017-Central Tax (Rate)., dated 28/07/2017 - HELD THAT:- The work order received from GCC to the applicant for maintenance of the Micro Compost Centres is Pure services' rendered to a GCC, a local authority and the said service are activities entrusted to a municipality under Article 243W of the Constitution. Hence, the applicant is eligible for exemption from GST vide SI.No.3 of Notification 12/2017-CT. (Rate) dated 28.06.2017(as amended). 2022 (8) TMI 921 Exemption from GST - Composite Supply or not - healthcare services - supply of medicines, drugs and other surgical goods to In-Patients during the course of diagnosis and treatment of disease, illness, injuries, deformities and abnormalities - supply of medicines, drugs and other surgical goods to Out-Patients during the course of diagnosis and treatment of disease, illness, injuries, deformities and abnormalities - supply of Implants, Prosthetics and Mobility aids during the course of diagnosis and treatment of disease, illness, injuries, deformities and abnormalities - HELD THAT:- From a joint reading of the the exemption entry and the definition of 'health care services' 'clinical establishments' it is evident that the exemption is applicable to a Clinical Establishment , when services by way of diagnosis or treatment or care for illness, etc. are undertaken by such establishment under the directions of a medical doctor for the period upto 17.07.2022, after which the exemption is available only when such services are provided to in-patient who have been housed in rooms, the room charges of which do not exceed Rs. 5000/- per day. The applicant hospital is a Clinical Establishment and for the health care services provided as defined in the Notification above to in-patients from admission till discharge including the supply of medicines, implants and consumables, they are exempt under Si No 74 of Notification no 12/2017-C.T. (rate) dated 28.06.2017 as amended and Sl No 74 of Notification No.II (2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017 upto 17.07.2017; and subsequent to amendment, effective from 18.07.2022, the exemption is applicable for the health care services provided by them to in-patients only when the room - If the room charges exceeds Rs. 5000/- per day then the applicable rate of tax for the health care services is 5% [2.5% CGST 2.5 % SGST] as per entry No. 31A of the Notification 11/2017 CT(rate) dated 28.06.2017 amended vide notification 03/2022 Ct(rate) dated 13.07.2022 w.e.f 18.07.2022, subject to the conditions specified in Column(5) of the entry. Whether the supply of medicines drugs and other surgical goods used in the course of providing health care services to out-patients by pharmacy unit of M/s Kumaran Medical Center for diagnosis or treatment would be considered as Composite Supply of heath care services under GST and consequently they are eligible to avail exemption under Notification 12/2017 CT(rate) read with Section 8(a) of GST? - HELD THAT:- The patients are expected to undertake the prescribed medicines and consumables and the best possible treatment is provided for. In this regard, it is observed that the pharmacy is an outlet to dispense medicines and consumables based on the prescriptions. In the case of Out- patients, it is only of advisory nature and the patients are not mandated to buy from the hospital pharmacy only. They have the freedom to either buy from the hospital pharmacy or other pharmacies of their choice unlike in-patients, where the medicines and consumables are issued by the hospital pharmacy to ensure proper treatment. In the case of in-patients, the hospital is expected to provide provide lodging, care, medicine and food as part of treatment under supervision till discharge from the hospital. But in the case of out-patients, there is no such expectation on the hospital and the out-patient just walks in for consultation and advice. Hence it is clear that the supply of medicines and consumables and Service of consultation of out-patients is not inextricably linked and not naturally bundled. Therefore pharmacy run by hospital dispensing medicine to outpatient or bye standers or others can be treated as individual supply of medicine and not covered under the ambit of health care services. Hence such supply of medicines and allied goods are taxable - the supply of medicine, consumables, etc to out-patients by the Out-patient pharmacy are not exempted. Naturally bundled services - Whether the supply of implants, prosthetics and mobility aids during course of diagnosis and treatment of disease would fall under the ambit of composite supply of healthcare service? - HELD THAT:- The mobility aids, prosthetics which are in the nature of capable of bought and sold separately and which are not naturally bundled with the provision of treatment of patient in the clinical establishment is liable to GST as individual supply of goods. Thus, the supply of implants which are fitted in the body by a surgical procedure in the course of diagnosis and treatment of illness for in-patients would fall under the ambit of Composite Supply with Healthcare being the principal supply and they are exempt under S1 No 74 of Notification no 12/2017-C.T. (rate) dated 28.06.2017 as amended and SI No 74 of Notification No. II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017 as amended, while the mobility aids, prosthetics being in the nature of individual supplies are not part of the 'Composite supply' of 'Health Care services' - the Supply of medicines and consumables used in the course of providing health care services to In-patients by pharmacy unit of Kumaran Medical Center for diagnosis or treatment during the patients admission in hospital till discharge is to be considered as Composite Supply of health care service under GST and consequently exemption under Notification No.12/2017- CT (Rate) read with Section 8(a) of GST is available for such supplies. 2022 (8) TMI 920 Input Tax Credit - upfront lease premium - manner in which input tax credit can be availed if found eligible which is procedural and the same is not within the ambit of this Authority as it is not within the purview of Section 97(2) of the CGST Act 2017 and hence not admitted - HELD THAT:- t is evident that as per Section 16(1), a registered person is entitled to take credit of Input Tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. Section 16 (2) provides that such person will be eligible for such credit only when he is in possession of a tax invoice, has received the goods or services, paid the tax charged on such supply and has furnished the returns. Section 16 (3) provides that if depreciation is claimed the ITC on the said tax component is not available. In the instant case the applicant has been allotted space by Chennai Port Trust vide Allotment Order No. LBS1/992/2020/E dated 27.04.2021 that is intended to be used by them as an extended corporate office for the accommodation of Record/Documentation Room till 31.08.2045 and in respect of the Right of use of the Asset the applicant has stated that ROU Asset that has to be capitalized, amounts to Rs.5,39,21,553/- including the initial direct cost, if any incurred by them - it is seen that input tax credit can be claimed on the upfront lease premium which is paid for the allotted covered space used as an extended corporate office as it is in the course of business. The upfront premium made is the lease rentals as per the allotment order/letter of Chennai Port Trusts and it is nothing but lease rentals paid for the services of 'Renting of Immovable property' for business purpose - the upfront premium paid is not related to any construction activity of such covered space but against the rental value for the period of rent calculated for the period of lease and collected upfront. Thus, provisions of Section 17(5) (d) is not applicable to the instant case. The provisions of Section 17(5)(d) is not attracted to the activity of 'renting Immovable Property Services'. Therefore, the credit of tax paid on the upfront lease rent by the applicant is available subject to fulfillment of other conditions set out under Section 16 of the Act. 2022 (8) TMI 919 Levy of GST - supply of goods or supply of services - transaction of transfer of right to do integration testing, install and market software from Tamilnadu cost centre to Karnataka Cost centre - the transaction is being executed between two cost centers of same entity - HELD THAT:- As per the definition, any transaction is a supply only when it is made for consideration and is a taxable supply. In the instant case, the supply is that of transfer of right to do integration testing, install and market software from the applicant to Karnataka Cost center and the consideration involved is agreed upon by both centers, wherein it has been stated that the applicant is charging a recurring consideration from Karnataka cost center for the transfer of right. The first payment of such recurring consideration has been agreed upon at Rs.1,05,00,00,000J- and the invoice no. OET/CC/001 dt. 30.09.2021, for Rs.1,02,75,11,617/- has been raised. Applicant claims that such an invoice has been raised to set out the books of accounts of cost centers and to charge each cost center for the work being carried out by them - the criterion for the transaction being a supply is satisfied in as much as the transfer of right is made for a consideration. The supply of goods or services between both related and distinct person when made in the course of furtherance of business is an activity to be treated as supply. In the case at hand, the cost centers are located at two different states and applicant has admitted that they have two separate registrations for such centers. Hence they are distinct persons and the supply is also found to be in furtherance of business only in as much as the software when installed is charged a specific cost and it is said to optimize certain features of the product - the extension of right by the applicant to the distinct persons as specified in Section 25, is in the course of furtherance of business for a pre-determined consideration therefore such transfer of right is clearly a supply which is leviable to GST. Supply of goods or services? - HELD THAT:- The vehicles move from the applicant to all distribution centers in India namely Gujarat, Maharastra and the Peformance upgrade software is marketed by the Karnataka cost center, on the applicant agreeing for the same. Hence the applicant is only agreeing to the act of carrying out integration testing, install, and market the software on the vehicles manufactured by them by the Karnataka Cost Centre, at the behest of the end-users. Thus the supply taking place between the applicant and the Karnataka cost center is of the Agreeing the Karnataka Cost Center to carry out the installation and marketing of the software. Hence it is clear that the supply involved is the supply of 'Service' and not of goods. The transfer of right to do integration testing, installation and marketing software from the applicant to Karnataka Cost centre is leviable to GST as such transaction is being executed between two distinct persons i.e., two cost centers of the same entity. Further as such supply is found to be involving only transfer of the said right, it is concluded that the supply is of services and not of goods. 2022 (8) TMI 918 Seeking grant of Anticipatory Bail - preparing fake ITC invoices with intend to cause wrongful loss to the Govt. - evasion of mandatory CGST thereby committing fraud and cheating - Circular trading - Section 132 of Central Goods and Service Tax Act, 2017 - HELD THAT:- On careful perusal of the documents it appears investigation was carried out by Anti Evasion of Central Goods and Service Tax and Central Excise (CSGT) and it is revealed that the mentioned company is of applicant/accused was engaged in circulating, receiving and issuing fake invoices for the purpose of availing ITC and passing it to other companies without any actual movements of goods which is an offence under Sec. 132(1)(b)(c) of CGST Act, 2017 - Over all as alleged there is an involvement of tax component of Rs. 6.65 Crores for the period from F.Y. 2017-18 to F.Y.2020-21. It further appears from the enquiry the applicant was aware of the activities of fake invoices. The essence of main allegations of the respondent are that applicant is guilty of circular trading by claiming Input Tax Credit (ITC) on the materials without movement and passing on such ITC to companies and therefore there has been contravention of Sec. 132(1)(b)(c) which is cognizable and non bailable offence U/Sec. 132(5) of the CGST Act. There are some admissions from M/s. Amarnath Industries were aware of some illegal transactions being carried out by accused applicant company for the purpose of evading CGST - It appears instead of cooperating with the ongoing investigation by submitting relevant documents and making themselves available for further investigation and enquiry. Applicant filed an anticipatory bail application before this Court. Looking at the gravity of the offence and the amount involved for which an offence U/sec. 151(1)(c) of CGST Act is imposed for evading huge amount of GST and thereby defrauding the Govt. Exchequer for the tune of Crores of Rupees, investigation is in progress and if released on prearrest bail the investigation will become stagnant and they will tamper with the evidence - It is apposite to note that as per Sec. 132 of CGST Act, 2017 issuance of invoice or bill without supply of goods or services and wrongful availment or utilisation of input tax limit is cognizable and punishable offence if the amount is over Rs. 5 Crores. In the instant case prima facie there appears a sufficient material which requires physical interrogation. Anticipatory bail application dismissed. Income Tax 2022 (8) TMI 917 Refund claim along with interest u/s 244A - Time for processing of the return - whether AO failed to process the return filled by petioner within prescribed time - what is deemed intimation u/s 143(1) ? - HELD THAT:- This Court is of the view that after filing of the return (under Section 139 of the Act) along with due verification (under Section 140 of the Act) and paying taxes as per return (under Section 140A of the Act), a tax-payer has to simply wait for the refund (as computed in the return) unless the same is disputed by the Tax Department through notices under Sections 142(1) or 143(2) or a defect memo under Section 139(9) of the Act. Since, in the present case, the Assessing Officer has failed to process the return of the petitioner filed in accordance with law within the prescribed time, this Court is of the opinion that the return as declared/filed will have to be treated as deemed intimation and an order under Section 143(1) of the Act. (See: Court on its own Motion vs. Union of India [ 2013 (3) TMI 316 - DELHI HIGH COURT] This Court is also of the view that an assessee cannot be penalised for inaction on the part of the respondent-department. Concept of intimation under Section 143(1) of the Act and refund are entirely different - Second proviso to Section 143(1) of the Act deals with the issue of intimation and not refund as contemplated under Clause (e) of Section 143(1) of the Act. In fact, the concept of refund has been separately dealt with under Chapter XIX of the Act. Separate claim for refund - This Court is of the view that the assessee need not file any separate claim for refund as the same is deemed to have been incorporated in the return filed by the assessee itself. Further, prior to expiry of time for processing of return or failure of the respondent to process the return within the stipulated and or extended time, the petitioner has no right to expect refund. In fact, upon respondent s failure to process an assessee s return within time, the right to refund arises by operation of law. Application of Rajesh Jhaveri Stock Brokers Private Limited [ 2007 (5) TMI 197 - SUPREME COURT] - The judgment of the Supreme Court in Rajesh Jhaveri Stock Brokers Private Limited (supra) has no application to the facts of the present case inasmuch as it deals with the case of re-assessment and makes a distinction between intimation and assessment under Section 143(1) and 143(3) of the Act. If the submission for Income Tax Department, as articulated in the instructions received by him from the Assessing Officer is accepted, then it would amount to unjust enrichment on the part of the State, which is legally impermissible - It is pertinent to mention that the principle of unjust enrichment proceeds on the basis that it would be unjust to allow a person to retain a benefit at the expense of another person. Supreme Court in a nine Judges Bench judgment in Mafatlal Industries Ltd. vs. Union of India [1996 (12) TMI 50 - SUPREME COURT] has held that once unjust enrichment is proved, restitution is the answer i.e. the person must be given back that benefit. If the respondents do not refund the amount immediately due and payable to the assessee, then interest on the said amount would accrue at the expense of the tax payer. Consequently, the respondents are directed to refund the excess amount paid as tax by the petitioner along with the interest within four weeks of receipt of this order. 2022 (8) TMI 916 Reopening of assessment u/s 147 - breach of the statutory mandate of Section 148-A (c) - multiple transactions such as cash deposits, payments to contractors etc. and has not filed any return of income for the relevant assessment year - HELD THAT:- In the present case, the significance of issuance of a show cause notice at a stage prior to issuance of a re-assessment notice u/s 148 of the Act has been lost on the respondents inasmuch as the impugned order u/s 148A(d) has been passed without considering the detailed reply filed by the petitioner dated 03rd April, 2022. It is pertinent to mention that though the impugned order notes that the Citizen Model School is being run by the petitioner-society, yet it goes on to hold that income had escaped assessment as no return of income had been filed by the school without dealing with the contention of the petitioner-society that all the financial transactions of the school had been accounted for in its return of income. The judgment of the Gujarat High Court in Sardar Vallabhbhai Patel Education Society [ 2022 (5) TMI 1159 - GUJARAT HIGH COURT] is squarely applicable to the facts of the present case. In Gian Castings Private Limited [ 2022 (6) TMI 246 - PUNJAB HARYANA HIGH COURT] the facts which were in controversy have not been set out and therefore it is not possible to assume that there is any similarity with the facts in the present proceedings. The said judgment merely records that the merits of the order passed u/s 148 were under challenge. The challenge before us as noted above is not to the merits of the order but to the breach of the statutory mandate of Section 148-A (c) of the Act, which error is evident on the face of the record. Accordingly, the judgment of the Punjab Haryana High Court in Gian Castings Private Limited (supra) offers no assistance to the respondents. Consequently, as the respondents-revenue have not examined the petitioner s plea that the petitioner-society has included all the transactions carried out by the Citizen Model School in its books of accounts, the impugned order passed on the ground that the case of the petitioner-society was of non-filing of return is set aside and the matter is remanded back to the Assessing Officer to pass a fresh order u/s 148A(d) of the Act in accordance with law within eight weeks. 2022 (8) TMI 910 Addition u/s 68 - Whether identity and creditworthiness of the cash received from the said company has been established? - CIT-A deleted addition - HELD THAT:- As per Section 68 it is the burden on the assessee to establish identity, creditworthiness and genuineness of the transaction for sum credited in the books of accounts to the satisfaction of the AO - We do not understand proposition of the assessee that cash had changed the hands from the company to its promoter Director without any reason and there is no reason forthcoming as to why the cash was paid in cash by the three parties. There is no document produced before either the AO or before CIT (Appeals) or before us to prove the genuineness of the transaction. While deleting the addition the CIT (Appeals) has not discussed about the proving of genuineness of the transaction by the assessee. CIT (Appeals) merely relied on the submission made by the assessee and come to the conclusion in favour of the assessee. The entire approach of the CIT (Appeals) is erroneous and the matter deserves to be re-looked by the AO - Hence, in the interest of justice, we deem it fit to set aside the issue of addition u/s 68 to the file of the AO with a direction to the assessee to prove the creditworthiness and genuineness of the above transaction with creditable evidence and reasons for travelling such amount of cash from the company to the promoter and parties with whom share purchase agreement has been entered. The assessee should also relate the cash deposit date-wise with the cash received by the parties. Needless to say the ld. Assessing Officer shall give opportunity of hearing to the assessee as per law. The grounds of appeal filed by the Revenue are allowed for statistical purpose. 2022 (8) TMI 915 Revision u/s 263 - Deduction u/s 36(1)(vii) with respect to write off of interest receivable forgone under the One Time Settlement ( OTS ) entered into by the assessee with its borrowers and Deduction u/s 36(1)(iii) with respect to Interest expenditure incurred with respect to borrowings made for the slum rehabilitation project at Dindoshi - HELD THAT:- Findings of fact by the Tribunal which is the highest fact finding authority. No material has been brought to our notice controverting the same nor do we find any perversity in the said findings. We observe that the AO had called for particulars of interest. Tribunal clearly records in paragraph 8.2 that this is not a case where the AO has not made inquiry and blindly accept the return filed by the assessee. AO has called for particulars at the time of the scrutiny of assessment proceedings, received the reply and following the principles of natural justice, passed an assessment order expressing his opinion in the matter. Once this is done, then the Commissioner cannot impose/ substitute his opinion on the view taken by the AO to say that the said assessment order is erroneous and prejudicial to the interest of the revenue. Revisional CIT cannot substitute his view upon the view of the Assessing Officer if the Assessing Officer has taken one of the possible/plausible views, unless AO s view is unsustainable in law. As supported by the view of the in the case of CIT (Central), Ludhiana v/s. Max India Ltd. [ 2007 (11) TMI 12 - SUPREME COURT] where it has been observed that where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an order erroneous and prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law. Once the AO has raised queries which the assessee may not have answered fully then to say that this is a case of no enquiry cannot be permitted. What Section 263 covered prior to insertion of Explanation 2 was a case of no enquiry but not a case of inadequate enquiry. As noted above, with the introduction of Explanation 2 with effect from 1st June, 2015 even cases of inadequate or improper enquiry may be covered albeit not for the assessment year in question. We are concerned with the assessment year 2006-07. Prior to the insertion of Explanation 2, it was the prerogative of the Assessing Officer to determine what enquiry he wants to make while completing the assessment. We have already observed that an enquiry was made by the AO and the assessment order passed. CIT could not invoke jurisdiction u/s 263 as the view taken by the AO was a possible/plausible view. It was only if the AO had not made any enquiry then it could be said that the order passed was erroneous. This is not a case of lack of enquiry though it may be a case of inadequate enquiry. Inadequacy of enquiry as elucidated above does not give jurisdiction to the CIT to invoke provisions of Section 263 prior to the insertion of Explanation 2. In our view, the Explanation 2 does not help the revenue in as much as the same is prospective and applicable with effect from 1st June, 2015. Therefore, the order of the Tribunal cannot be faulted with. There is no error apparent nor any perversity in the findings of the Tribunal. The appeal does not raise any substantial question of law and is dismissed. 2022 (8) TMI 914 Claim of Deduction/ expenses on interest/redemption premium on debentures - liability to pay interest/redemption premium has not crystallized during the year - CIT-A allowed the deduction of premium on redemption of debentures as revenue expenditure, which would be spread over to three assessment years - ITAT reversed the order of CIT(A) and restored the order of AO - Whether the Tribunal is justified in law in holding that the genuineness of the Transaction has not been proved beyond doubt without passing a speaking order and ignoring the irrefutable evidence placed before it and consequently passed a perverse order on the facts and circumstance of the case? - HELD THAT:- Issuance of debentures is not in dispute. Deduction of TDS (Tax deducted at source) is also not in dispute. The Tribunal has rightly recorded the correct principle of law that premium paid on redemption of debenture is Revenue expenditure. By the second Addendum Agreement dated 12.11.2012, the HDFC's right to exercise the option of converting the debentures into preference shares has been restored in consonance with the original Agreement. The resultant position is, the HDFC, at its option, could cause the assessee to redeem all debentures on September 20, 2012. The CIT(A) has accepted assessee's explanation that it had quantified the premium as per the agreement dated 15.05.2010 spread over for three financial years. It is trite that a borrowing Company, which issues debentures incurs liability to pay larger amount than what it has borrowed. The assessee - Company has made provision for payment of premium and also paid TDS. The adverse finding recorded by the ITAT that the parties had changed the agreement to suit their convenience and that it is a 'make-believe' story is not supported by any cogent reason nor material on record and therefore, untenable. CIT(A), following the decision in CIT Vs. Asea Brown Boveri Ltd. [ 2008 (8) TMI 348 - KARNATAKA HIGH COURT] and Madras Industrial Investment Corporation Ltd.[ 1997 (4) TMI 5 - SUPREME COURT] has rightly held that the premium payable quantified on redemption of debentures as Revenue expenditure. The impugned order passed by the ITAT is unsustainable and hence, this appeal merits consideration.- Decided in favour of assessee. 2022 (8) TMI 909 Disallowance of Finance Cost - CIT-A held that appellant could not prove the nexus between the Sundry Debtors and Long Term Advances as per accounts and thereby confirming disallowance of Finance Cost - HELD THAT:- By referring to the audited financial statements as pointed out by the Ld. Counsel, we find force in the submission and explanation given by him. In the course of hearing, a chart has been submitted explaining the long term borrowing utilization which very clearly depicts the treatment of the long term borrowing and its utilization. Thus with all its proper reporting and disclosure, we are inclined to accept the submissions of the Ld. Counsel and direct the Ld. AO to delete the addition made - Accordingly, the grounds of appeal in this respect are allowed. Disallowance of sales promotion and advertisement expenses - HELD THAT:- Despite several queries and opportunities made available by the authorities below, the assessee has not been able to establish the nexus between the expenses incurred and the business of the assessee. Assessee has all along submitted only the ledger account copy, which are not sufficient to understand the nature and the purpose of expenses incurred as well as its nexus with the benefits accruing to the business of the assessee - we find it proper to remit the matter back to the file of Ld. AO on this issue and direct the assessee to submit necessary documentary evidences required by the authorities below for substantiating its claim for the deductibility of the expenses. Accordingly, this ground of appeal is allowed for statistical purposes. Disallowance being depreciation on Motor Car inspite of Purchase Bills, Bank loan for car, Tax Token and other evidences - Assessee has claimed that all the payments in respect of purchase of motor cars have been made through banking channel. In the interest of justice and fair play, we find it proper to remit the matter back to the file of Ld. AO and direct the assessee to furnish all the required documents towards the purchase of motor cars as reported in its audited financial statements on which depreciation has been claimed. Ld. AO is also directed to provide reasonable opportunity of being heard in this respect so as to enable the assessee to substantiate its claim. Accordingly, this ground of appeal is allowed for statistical purposes. Appeal of the assessee is partly allowed. 2022 (8) TMI 908 TP Adjustment - determining the ALP at Nil in respect of international transaction of Management Support Services - assessee challenging the action of TPO/DRP in not appreciating the documentary evidences, remand report, etc. - HELD THAT:- On the question of the TPO s view point about the arising of some benefit to the assessee because of the services, we find that the same is not correct. It is a settled legal position that arising or not arising benefit is not an essential criterion for claiming deduction as business expenditure. The mere fact that the assessee received the services, itself enables it to claim the deduction. If the view adopted by the TPO is taken to logical conclusion, then no businessman will ever suffer loss. We, therefore, hold that the benefit test applied by the TPO cannot be approved. Having found that the assessee did receive intra group services from its AE, the next question is the determination of its ALP. The assessee has nowhere determined the ALP of transaction on individual basis. The TPO determined Nil ALP on the premise that since, the assessee did not receive any services, there was no question of making any payment in view thereof. We have overturned the impugned order on the question of receipt of services by holding that the intra group services were actually received by the assessee. In that view of the matter, the ALP of the international transaction needs to be determined afresh. We, therefore, set aside the impugned order and direct the AO/TPO to determine the ALP of international transaction of intra group services afresh as per the law after allowing reasonable opportunity of hearing to the assessee. Appeal of assessee is partly allowed for statistical purpose 2022 (8) TMI 907 Assessment u/s 144 r.w.s. 144(1)(b) - addition u/s 69A - money received from the customers on various dates in old notes cannot be accepted a genuine as the assessee was not supposed to receive currency as per the norms - contention of the assessee is that he has received and remitted the demonetized currency within the time stipulated by the Act No. 2 of 2017 of the Specified Bank Notes (Cessation of Liabilities) Act, 2017 - AO was of the opinion that the assessee has been doing furniture business which does not fall under the exemption category as given by the board such as petrol bunk, hospital, medical shop, Airtel recharge, etc. - HELD THAT:- In this case, admittedly, the assessee has neither filed regular return of income under section 139 of the Act for the assessment year 2017-18 nor furnished complete details in response to various notices issued by the Assessing Officer. Moreover, there was no response to the notices issued by the Ld. CIT(A) also or furnished any explanation/reply and thus, the Ld. CIT(A) confirmed the assessment order. In view of the above, we are of the considered opinion that the assessee shall furnish complete details before the Assessing Officer and the Assessing Officer shall, after verification of details as may be filed by the assessee, decide the issue afresh in accordance with law by affording reasonable opportunity of being heard to the assessee. Appeal filed by the assessee is allowed for statistical purposes. 2022 (8) TMI 906 Capital gain computation - whether the amount paid by the buyer to the tenant for the vacation of tenancy can be taxed in the hands of the tenants or owner of the capital asset? - HELD THAT:- Purchaser of the property viz., M/s. Saravana Selvarathnam Retail Private Limited, Chennai, it is very clear that the purchaser has agreed to pay for vacation of tenants of the premises, which was noted in the sized document by the Department and the purchaser has admitted to have made payment for vacation of tenants of the premises, which means, the purchaser has purchased encumbered property and in order to clear the encumbrances, the purchaser paid lump-sum amount to the tenants/occupants of the property. Nowhere it was mentioned that the above sum was paid either to the seller or through the seller of the property. From the above statement, it is also very clear that dealings are only between the purchaser of the property and tenants occupied in that premises - purchaser has not given any details/break-up for arriving the figure of ₹.7.40 crores/₹.6.65 crores, which it was aggrieved to pay for vacation of tenants of the premises or how many tenants have occupied in that premises. Under the above facts and circumstances, we are of the considered opinion that whatever amount paid by the buyer to the tenant for the vacation of tenancy should not be taxed in the hands of the owner of the capital asset. Adoption of value of the property sold by the assessee - AO shall, either adopt the value of the property under section 50C of the Act or DVO valuation of the property. Without any evidence, the AO cannot adopt the value other than the above. In this case, AO has neither referred for the valuation of FMV to the DVO nor considered the guideline value adopted for the stamp duty purposes by the SRO - Admittedly, there was no search and seizure operation carried out in the premises of the assessees. There was absolutely no evidence to show that the assessee have received on-money for the sale of the property. When the Department is alleging receipt of on-money by the assessee the onus cast upon the Department to prove either by way of unaccounted cash deposits in their bank accounts, or unaccounted purchase of any property or any other material evidence about the receipt of the on-money. No allegation shall be sustained without evidence - we set aside the order of the ld. CIT(A) in confirming the addition and direct the AO to adopt the guideline value adopted for the stamp duty purposes by the SRO as FMV of the property under section 50C of the Act and accordingly compute the capital gain. Additional capital gain u/s 54F - Since the assessees could not file the details of cost of constructions, plan approval, or PAN of Shri J. Suresh, Consultant Civil Engineer Approved Value, the Assessing Officer rejected the claim of the assessee. On appeal, the assessees could not produce any details of cost of constructions, plan approval, etc., the ld. CIT(A) confirmed the order of the Assessing Officer in rejecting the claim of the assessees. Before us, assessee has submitted that the assessee s are ready to file all the details before the Assessing Officer and prayed for remitting the matter back to the file of the AO for fresh consideration. By considering the submissions of the ld. Counsel, we set aside the order of the ld. CIT(A) on this issue and remit the matter back to the file of the Assessing Officer for de novo consideration afresh in accordance with law. The assessees are directed to furnish complete details before the Assessing Officer for verification and deciding the issue. 2022 (8) TMI 905 Revision u/s 263 by CIT - valuation requires verification based on correct address given by the buyer - applicability of provisions of section 50C - HELD THAT:- We noted that this very issue of revision proceedings u/s. 263 of the Act in the case of applicability of provisions of section 50C of the Act, where there is difference between the sale consideration as per sale deed and guideline value fixed by stamp valuation authority and because the guideline value is higher than the sale consideration as shown in the sale deed, it cannot be a reason for holding that the assessment is erroneous and prejudicial to the interest of revenue. Admittedly in the present case the assessee has registered the sale consideration in the sale deed of the property sold at Rs. 6,01,47,000/- as against the value adopted by sub-registrar office for charging stamp duty in view of the guideline value fixed at Rs. 9,51,20,528/-. The assessee sold the property of an extent of 9980 sq.ft, bearing Door #31F, Old Door #59, New Door #109, Anna Salai Lane (Mount Road), Guindy Ranganathan Street, Guindy, Chennai 600 032 to M/s. Rajam Foods P Ltd for a sale consideration of 601,47,000/- on 10.07.2015vide a deed of sale registered as document #1908/15 in the office of SRO, Adyar, Chennai. Respectfully following the decision of Hon ble Madras High Court in the case of Smt. Padmavathi [ 2020 (10) TMI 425 - MADRAS HIGH COURT] we are of the view that the revision proceedings and order passed for revising of assessment by the PCIT is bad in law and hence quashed. In the present case before us the PCIT has ignored the valuation report of an approved valuer filed with the AO along with the photographs and survey plan and then framed assessment and formed an opinion that the sale consideration disclosed by assessee is a right consideration. Hence, according to us PCIT cannot interfere in the assessment order while acting u/s. 263 of the Act. Assessee appeal allowed. 2022 (8) TMI 904 Disallowance u/s 14A r.w.r 8D - CIT-A restricted the disallowance to the extent of the exempt income - HELD THAT:- As in conformity with the judicial precedents, we find substantial merit in the conclusion drawn by the CIT(A) which essentially holds that Section 14A of the Act can be triggered only if assessee seeks to square off expenditure against the income which does not form part of total income under the Act and Section 14A of the Act cannot be invoked where no exempt income was earned in the relevant assessment years. Thus, without going into other aspect of contentions, in consonance with the judicial precedents, we do not see any infirmity in the conclusion drawn by the CIT(A) for non applicability of Section 14A of the Act in the facts of the case. The judgment rendered in Joint Investment Pvt. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] thus clinches the issue in favor of assessee. Thus, the CIT(A) has rightly restricted the disallowance to the extent of the exempt income. Significantly, the Hon'ble Delhi High Court in the case of PCIT vs. M/s. ERA Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] had the occasion to examine the law on applicability of Section 14A having regard to the newly inserted Explanation to Section 14A as codified by Finance Act, 2022. The Hon'ble High Court held that the aforesaid Explanation cannot be presumed to be retrospective in operation. As a corollary, the law prevailing prior to the insertion of Explanation would continue to apply and shall not be guided by the Explanation being prospective. We therefore see no reason to interfere with the order of the CIT(A) which is in sync with extant law as expounded by judicial precedents. Appeal of revenue dismissed. 2022 (8) TMI 903 Addition u/s 68 - Unexplained sundry creditors - HELD THAT:- Amount was received through circular trading from Compact Agencies to M/s. SSK Ispat and Power Ltd., to the assessee. In this transaction, AO was unable to verify by issuing notice u/s.133(6) to the party. So accordingly, the addition was made u/s.68. Appellate Authority during the appeal proceedings did not take proper consideration to verify this party in respect of this transaction. Lack of verification was adjudicated by the ld. CIT(A). Where the existence credentialism of the party in question the section 68 will start to play. In any case, un-verified sundry creditors cannot be allowed for deletion of Section 68. So, accordingly, the addition is setting aside to the ld. CIT(A) for further adjudication considering the above-mentioned discussion of ITAT. Needless to mention that the assessee should get a reasonable opportunity for redressal of the grievance. Appeal of the Revenue is allowed for statistical purposes 2022 (8) TMI 902 Revision u/s 263 by CIT - Claim made by the assessee u/s. 32AC in respect of investment made in the new plant machinery - What is prejudicial to the interest of the Revenue ? - HELD THAT:- We notice that the assessee has made submissions before the AO stating that deduction u/s.32AC is allowable even for assets acquired prior to 01.04.2013 but installed during the financial year 2013-14 would be eligible for deduction by relying on various decisions rendered in the context of 32(1)(iia). Though there is no specific mention in AO s order regarding the submissions made and basis of allowing the deduction, the facts of the case is that the assessee did make the submissions and the AO has taken the view that the assessee is eligible for deduction u/s.32AC. Section 32AC is a new provision inserted by the Finance Act 2013 and there is no direct judicial precedence to interpret the words used in the section acquires and installs . There are plethora of decisions that for the purpose of 32(1)(iia), the additional depreciation is allowable even for assets acquired prior to 31/03/2005 provided the installation of such assets is after 31/03/2005. Since the wordings used in section 32(1)(iia) and 32AC are similar whether the ratio of decisions rendered in the context of 32(1)(iia) is applicable for 32AC is a debatable issue where contrary views can be taken. In assessee s case while interpreting the wordings acquires and installs in section 32AC, the AO has taken one view in allowing the deduction based on the submissions of the assessee of various judicial pronouncements rendered in the context of 32(1)(iia); whereas the CIT is not in agreement with the view based on the plain reading of section 32AC. The decision of the AO to allow deduction u/s.32AC cannot be stated as unsustainable in law as he has taken a possible view based on application of mind. The CIT has not brought any material on record to show that the view taken is contrary to law. In the light of these discussions and placing reliance on the decision of Hon ble Supreme Court cited supra, we are of the considered view that the CIT is not justified in setting aside the order of the AO. Accordingly the directions of the PCIT are quashed. Appeal by the assessee is allowed. 2022 (8) TMI 901 Depreciation on goodwill u/s 32(1)(ii) - Whether goodwill does not qualify as business or commercial rights as envisaged under section 32(1)(ii) ? - HELD THAT:- Respectfully following the decision of the Tribunal in assessee s own case for immediately preceding four AYs [ 2021 (3) TMI 683 - ITAT DELHI] and [ 2022 (1) TMI 424 - ITAT DELHI] in the absence of any adverse material brought on record, we set aside the order of the Ld. CIT(A) and direct the Ld. AO to allow depreciation on goodwill. Appeal of assessee allowed. 2022 (8) TMI 900 Penalty u/s 271G - physically filed revised Form No. 3CEB revised form No. 3CEB was not filed online by the assessee thereby specifying revised Domestic Transaction - What amounts to non-furnishing of the relevant documents or non-reporting of transaction of Specified Domestic Transaction? - As per DR requirement under Section 92D(3) was not fulfilled by the assessee relating to the furnishing of correct information - CIT-A deleted penalty levy - HELD THAT:- It is pertinent to note that the revised Form No.3CEB dated 18.03.2016 was filed by the assessee related to claim under Section 80IA - penalty order under Section 271G has stated that the assessee has not filed revised form No.3CEB online. This amounts to admitting that the assessee has physically filed revised Form No.3ECB on 18.03.2016 which cannot be stated as non-furnishing of the relevant documents or non-reporting of transaction of Specified Domestic Transaction. Reliance of the Ld. AR upon the decision of Bumi Hiway [ 2014 (9) TMI 321 - DELHI HIGH COURT ] is very apt in the present assessee s case wherein it is held that where the Transfer Pricing Officer had asked for specific details and documents so these requirements were fully complied with by the assessee company, penalty under Section 271G could not be imposed. Besides this, the Transfer Pricing Officer vide notice dated 10.08.2017 under Section 92D(3) had asked for information related to the transactions which were submitted by the assessee vide submissions dated 17.08.2017. CIT(A) has given detailed finding and there is no need to interfere with the same. Thus, the CIT(A) has rightly allowed the appeal of the assessee. Appeal of the Revenue is dismissed. 2022 (8) TMI 899 Addition u/s 41(1) - cessation of liability - assessee has not been able to produce confirmation for sundry creditors outstanding - HELD THAT:- Deficiencies marked by the AO are not sustainable (i) As assessee had filed confirmations of sundry creditors for purchases (ii) Discrepancies in the opening balance as per balance-sheet and submissions made by the assessee has been duly reconciled and filed before the CIT(A) and we have also considered the same and found to be correct (iii) As per AO balance-sheet of the assessee does not reflect a true and fair view of its affairs is not sustainable as she did not rejected the books of accounts, hence, this finding of her is contradictory and not sustainable and (iv) Notices issued under section 133(6) of the Act were responded by the parties before the CIT(A) and on this aspect, Ld. CIT(A) asked for a remand report from AO, hence, this allegation is also not sustainable. Submissions of the assessee and additional evidences filed before Ld. CIT (A) and accepted by him considering the remand report of A.O., we are of the considered view that order of A.O. was not sustainable and findings of Ld. CIT (A). Addition as cash receipts and cash payment - HELD THAT:- We have gone through the form no 3CD (Tax Audit Report) and submissions before the authorities below made by the assessee. We found the tax auditor reported these two items of cash receipt and cash payment shown under the column of loan and deposits accepted during the year and not under the column for disallowances to be made u/s 40A(3). These two transactions are in the nature of amounts taken / paid in cash from sister /associate concerns. As assessee has not claimed amount of Rs. 19,50,000/- and Rs. 56,00,000/- as expense in its Profit Loss A/c, therefore, it cannot be disallowed. Looking at the nature of transactions it is no-where proved that the same can be treated as income u/s 28 or can be disallowed u/s 40A(3) or any other section of the act. At the max both the transactions can be considered for the purposes of section 269SS and section 269T, subject to the clarification of the assessee and various judicial pronouncement in this regard. Hence, we hereby direct to delete addition/disallowance of Rs 75,50,000/- made by A.O. and sustained by Ld. CIT (A). Applicability of sections 269SS, 269T r.w.s. 271D and 271E are concerned as no action so far has been taken against the assessee by the A.O. in the result there is no cause of grievance made out by the assessee on which this tribunal can adjudicate hence, challenging the initiation itself is not allowed hence, found to be infructuous. 2022 (8) TMI 898 Bogus purchases - gain of MT of FAT SNF respectively in the Trading account for the assessee - AO noted that the total quantities of opening stocks and procurement of milk during the year is reflected by the assessee as 36707.30 M.T. where as the milk procurement for contract manufacturing is only 1594.33 M.T. which is very about 4.34% of the total milk shown in the trading account - HELD THAT:- What is established before CIT(A) is that the gain on account of reduction in process loss due to modern facilities is used for manufacturing of Ghee/Butter/SMP/DW/Other products, which is part parcel of closing stock factored in trading account (part of MMPOreport)/audited annual accounts. Therefore, the same is attributable to the contract work for Mother Dairies Ltd. The Bench is of considered opinion that assessment order under the Act has to be passed on cogent evidence and sound reasoning which is on the basis of verifiable events. The reasons may be subjective, however the reasons inducing the said belief must always be objective. The objective reasons should lead to the formation of the subjective belief that, income is liable for assessment. In the case in hand the Ld. AO has relied his belief that ideally the quantum of FAT / SNF received from Mother Dairy should tally with the FAT SNF sent back on completion of processing work. However, he failed to appreciate that every business activity has some inherent peculiarities which bring some incidental profits to the businessman than may actually appear to a prudent mind. When raised before Revenue, same need to be appreciated without much emphasis on evidence of every thing being incorporated in agreements. In present case, even the assumptions on which, the Ld. AO proceeded, in absence of evidence, have been factually corrected by Ld. CIT(A) on basis of additional evidence and no interference in the same is called for. The grounds no 1 and 2 raised by the revenue have no substance. The same are determined against the Revenue. 2022 (8) TMI 897 Revision u/s 263 - assessment was framed u/s. 143(3) - Disallowance of excess claim of depreciation on motor car, Excessive claim of depreciation on Energy Saving Device and Wind Turbine Generators and Disallowance u/s. 14A - difference in income shown by assessee and income transferred by Emtici Engineering Ltd. is on account of comparing the amount of income shown by assessee with amount on which TDS is deducted and also the service tax charged on that income - HELD THAT:- There is a difference of income - This income was not considered by the assessing officer while passing the assessment order u/s. 143(3) of the Act, which is erroneous order and prejudicial to the interest of the revenue. It is further seen from record while the original assessment was completed the assessing officer has issued 143(2) notices calling from various details. The assessee have made detailed reply claiming the TDS credit availed by the assessee, the same is already been reproduced. There is an Indemnity Bond given by the assessee company to the assessing officer, as against the claim of TDS total credit from Emtici Engineering Ltd. and Prayas Engineering Ltd. vide Indemnity Bond dated 21.03.2016. Thus it cannot be said the assessing officer has not conducted proper enquiry before passing the above assessment order. In our considered view the assessing officer has clearly issued notices u/s. 143(2) from time to time calling from various details and on receipt of the reply from the assessee, with relevant records passed the above assessment order, which cannot be said neither erroneous order nor pre judicial to the interest of the revenue. Further we could see the assessee has followed Rule 37BA procedures by obtaining Indemnity Bond which containing the name, PAN No. of the person to whom credit is to be given amount of TDS and reasons for giving credit to such person. As rightly held in the case of Naresh Bhavani Shah (HUF) [ 2017 (7) TMI 819 - GUJARAT HIGH COURT] that these conditions in brief are that the deductee files a declaration with the deductor in this respect, such declaration would contain the details of the person entitled to the credit and the reasons for giving such credit and lastly the deductor issues certificates for deducting tax at source in the name of such a person. Respectfully following the above judgment of the Hon ble Jurisdictional High Court, we have no hesitation in quashing the revision order passed u/s. 263 by the CIT- 2, Vadodara is not in accordance with law and therefore the same is hereby quashed. The grounds of appeal raised by the Assessee are hereby allowed. 2022 (8) TMI 896 Penalty u/s 271(1)(c) - Non specification of charge - Defective notice u/s 274 - assessee submitted that the Assessing Officer did not specify the charge and the limb under which the penalty is levied - HELD THAT:- We hold that the show cause notice, which has not specified the charge and limb under which the penalty is proposed to be levied, is void ab initio and the consequent penalty imposed on the basis of such notice is, therefore, illegal and bad in law and liable to be deleted. Accordingly, the penalty is deleted and the appeal of the assessee is allowed. 2022 (8) TMI 895 Exemption u/s 11 - Treatment of Development Fund as Tuition Fees - whether the development funds given and collected by the institution are akin to the tuition fees collected or not? - Whether the development fund collected partakes the character of revenue receipt or corpus donation u/s 11(1)(d) and capital receipt in nature? - HELD THAT:- Development Fee relates to rates to be determined by the UGC and AICTE. Different rates may prescribe for payment, fee, seats and foreign NRI seat holders. As the fee chargeable will be notified by the relevant committee it shall be the duty of the statutory body concern to communicate the rate of development fee to such bodies well in advance to enable the appropriate committee to suitable incorporate such rates. In the case of an educational institution which collected fees on account of building fund and treated as corpus, the Hon ble Karnataka High Court in Bharatiya Samskriti Vidyapith Trust [ 2013 (11) TMI 1594 - KARNATAKA HIGH COURT] held that, since the assessee had specifically mentioned building fund on fee receipts and had later applied for the purpose of building, it could be said that there was a specific direction under 11(1)(d). Similar view has been taken in the case of Sri Ramakrishna Seva Ashrama [ 2011 (10) TMI 369 - KARNATAKA HIGH COURT ] wherein Court held that if the amounts received are held as capital and only applied for specific purposes then it can be said that there was a specific direction to treat it as corpus funds. Court further held that the requirement is that the voluntary contributions have to be made with a specific direction. The law does not require that the said direction should be in writing. In the absence of the direction in writing, the only way that one can find out whether there was a specific direction is to find out how the money so paid it is utilized. In the instant case, the Development Fee has been directly taken to corpus account as capital receipt u/s 11(1)(d) and has also invested in the fixed asset in the year. Ergo, we hold that the Development Fee is to be treated as corpus fund allowed to be taken as capital receipt. Computation of 15% u/s 11(1)(a) of net surplus in place of gross receipt - We hold that 15% accumulation is allowed on the income from property held under trust. These provisions have been further clarified in the case of Addl. CIT Vs. A.L.N. Rao Charitable Trust [ 1975 (9) TMI 44 - KARNATAKA HIGH COURT] wherein lordships has explained the law with an example of Rs. 1,00,000/- gross income and assuming an expenditure of Rs. 20,000/-, Court has held that Rs. 25,000/- being 25% (now 15%) of gross receipts will be allowed as accumulation u/s 11 (1)(a). Hence, keeping in view the provisions of Section 11(1)(a) and the judgments of Hon ble Supreme Court, we hold that the amount eligible u/s 11(1)(a) be determined taking into consideration, the income derived from the property held under trust to the extent to which the income so accumulated is not in excess of 15% of income from such property. 2022 (8) TMI 894 Rectification u/s 154 - Deduction u/s 80IB - denial of exemption u/s.80IB for the reason that the audit report in Form-10CCB was not filed alongwith the return of income and was only filed after the intimation u/s. 143(1) was issued - HELD THAT:- Undisputed fact that the claim of the assessee u/s. 80IB has not been allowed by the authorities below only because of the reason that the audit report in Form-10CCB was not filed along with return of income and was only filed after receipt of intimation u/s. 143(1) and therefore the assessee filed rectification applications u/s. 154 after uploading Form-1CCB which was rejected by CPC. CIT(A) has rejected the appeals by holding that there was no mistake apparent from record. However, while holding so, he escaped the contents of Circular No.689 dated 24.8.1994 which clearly directs the Officers to allow rectification u/s. 154 for non filing of audit report or other evidence which could not be filed with the return of income. The assessee would be entitled to the deductions in the rectification under section 154 to the extent permitted by the Board's Circular No. 669 dated 25-10-1993. The Assessing Officer was not right in law in disallowing the rectification application only on the ground that the assessee had failed to furnish the audit report along with the return of income. Tribunal was right in law in extending the benefit of Board's circular to the assessee's case as well. The Assessing Officer has rightly been directed to rectify his order and extend the benefit of deductions under sections 80HHE and 80GG to the assessee in terms of the Board's circular. For the reasons stated above, the substantial questions of law on which the appeal is admitted are answered in the affirmative, i.e., in favour of the assessee and against the revenue. 2022 (8) TMI 923 Disallowance of delayed payment of PF and ESI - assessee s failure to pay the employee s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) - Scope of amendment - HELD THAT:- In the instant case, admittedly and undisputedly, the employees contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. Further, the ld D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2019-20 and therefore, the said amended provisions cannot be applied in the instant case. See SHRI GOPALAKRISHNA ASWINI KUMAR [ 2021 (10) TMI 952 - ITAT BANGALORE] Addition by way of adjustment while processing the return of income u/s 143(1) made by the CPC towards the deposit of the employee s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. Appeal of assessee allowed. 2022 (8) TMI 893 TP adjustment - comparable selection - functional dissimilarity - HELD THAT:- Companies functionally dissimilar and diversified services with that of assessee software service provider need to be deselected from final list. Disallowance of expenses on non-deduction of tax - Non deduction of TDS Freight charges u/s 194C and Expense on hotel accommodation u/s 194I - As submitted deduction u/s 10A of the Act shall be computed on the assessed income after considering all the allowances/disallowances made by the AO during the assessment proceedings - HELD THAT:- AO, on the basis of the TDS Survey, conducted and order passed by the ITO, TDS made addition on account of Freight charges and expense on hotel accommodation by invoking the provisions of section 40(a)(ia) of the Act. Without going into the merit of the addition, we find the alternate argument of the ld. Counsel for the assessee acceptable according to which once the assessee is entitled to deduction u/s 10A of the IT Act, then, such higher assessed income on account of disallowance made by the AO is eligible for deduction u/s 10A. Since the assessee is entitled to deduction u/s 10A of the Act, therefore, the assessee is entitled to deduction u/s 10A of the Act on such enhanced assessed income due to disallowance of the expenditure on account of freight charges and expenses on hotel accommodation. We, therefore, allow the ground of appeal by the assessee. 2022 (8) TMI 892 TP Adjustment - comparable selection - HELD THAT:- As assessee is doing part of software development cycle and therefore has been categorised as a captive software development service provider as well as ITeS segment, catering to needs of the group. The assessee in TP study held to be comprise of Software Engineers, who develop project based on inputs received from AE. Engineers employed by assessee designs functional specifications for the project identification of interfaces components coding and bug fixing. Ultimate approval and owner of project developed is the AE. In our view, by involving itself in process of Software development for AE, assessee cannot be held to be fulfledged Software Development Company. One has to look into transaction in regards to services rendered and FAR, which catagorises it to be a captive service provider, working on business model of cost plus margin. It is observed that comparables sought to be excluded are 100 % Software Development Companies, having high turnover and therefore respectfully following aforestated view in case of Genesis Integrating Systems India Pvt. Ltd. [ 2011 (8) TMI 952 - ITAT BANGALORE] these comparables are to be excluded on both the counts of functionally not being similar with that of assessee and also because they have a high turnover of more than 200 crore. Thus respectfully following above decisions, we uphold exclusion of Tata Elxsi Ltd., Sasken Communication Technologies Ldt, Persistent Systems Ltd., L T Infotech Ltd., and Infosys Ltd., by applying turnover filter under SWD Segment and for ITeS Segment, Infosys BPO Ltd., iGate Global Ltd., and Mindtree Ltd., by applying turnover filter, from final list. Foreign exchange loss or gain as part of operating expenditure and excluding depreciation cost - Whether DRP erred in directing the Ld.AO/TPO to consider the foreign exchange fluctuation to be operating in nature? - HELD THAT:- As relying on Finastra Software Solutions (India)(P.)Ltd. [ 2018 (5) TMI 1808 - ITAT BANGALORE] we uphold the treatment of foreign exchange loss/gain to be operating in nature. Depreciation cost treated as being non-operating in nature - AR submitted that for year under consideration also the assessee charged higher rate of depreciation as compared to companies selected by Ld.TPO - HELD THAT:- Facts being the same with assessment year 2009-10, we do not find any infirmity in adopting the consistent view to in computing the margin in respect of the comparables after excluding the depreciation from the cost. In the result the appeal filed by revenue stands dismissed. Comparable selection - Companies being functionally dissimilar to the SWD services segment of Assessee need to be deselected. Working capital adjustment - We are of the view that it would be appropriate to direct the Ld.TPO/AO to examine the grievance of the Assessee in this regard and rework the working capital adjustment in accordance with law. Short-Grant of TDS Credit - We direct the Ld.AO to verify the claim based on the evidence filed by the assessee in accordance with law. 2022 (8) TMI 913 Validity of order passed u/s.144 r/w 144B - non granting petitioner an opportunity of personal hearing and without considering the legal effect of petitioner having emerged out of corporate insolvency resolution process under the provisions of the Insolvency and Bankruptcy Code - HELD THAT:- In respect of notices issued to petitioner under section 148 of the Act for A.Y. 2013-14 to A.Y. 2017-2018, the AO shall deal with the objections dated 10th December, 2021 of petitioner before proceeding with the assessment proceedings. AO shall give petitioner an opportunity of personal hearing before passing the order disposing off the objections. Notice for personal hearing shall be given to petitioner at least seven working days in advance before passing such order. A list of judgments, if any, sought to be relied on by the Assessing Officer shall be given to petitioner along with the notice of the personal hearing. In the event the Assessing Officer decides to reject the objections of petitioner, assessment proceedings shall be commenced not before four weeks after serving the order disposing off the objections on petitioner. The orders that may be passed by the Assessing Officer as above shall be speaking orders dealing with each and every submission/ contention/objection of petitioner. The same shall be done within a period of six weeks from the date of uploading of this Order. Petitioner is at liberty to file further submissions/objections, if any, before respondents. 2022 (8) TMI 912 Validity of reopening of assessment u/s 147 - as per the petitioner objection raised by the petitioner has not been properly considered - HELD THAT:- Ground raised by the petitioner that, while rejecting the objection of the petitioner by orders dated 19.03.2022, the objection raised by the petitioner has not been properly considered, is not appealing to this Court at this juncture because there has been consideration and rejection has been made and if that will have any repercussion in the present impugned orders i.e., assessment orders dated 28.03.2022, the same can very well be assailed collaterally, if the petitioner has chosen to go before the Appellate Authority, challenging the impugned assessment orders. Therefore, the said objections raised by the petitioner or the ground urged by the petitioner with regard to the jurisdiction of the Revenue, to invoke Section 147 or Section 148 is concerned, that cannot be gone into at this juncture especially in these writ petitions. After the rejection was made on 19.03.2022 of the objections of the assessee, a reasonable time should have been given to the assessee to respond to the show cause notices. It may be either the final show cause notice or by way of notice either under Section 142 (1) or Section 143 (2) of the Act as the case may be. In the present case, after the 19.03.2022 rejection order, straight away, final show cause notices were issued on 24.03.2022, giving only a very short time up to 27.03.2022 and in the meanwhile, the petitioner has already approached this Court by filing the aforesaid two writ petitions. The said reasons stated by the writ petitioner for deferring the date was not considered, as impugned orders of assessment was passed on 28.03.2022. Therefore, this Court feels that a fair opportunity was not given to the petitioner even after the show cause notices dated 24.03.2022. In view of the aforesaid facts, this Court also feels that the impugned orders dated 28.03.2022 are in violation of the principles of natural justice. On that ground itself, the impugned orders i.e., the assessment orders dated 28.03.2022 are liable to be set aside. Thus assessment orders which are impugned herein are hereby set aside and the matters are remitted back to the respondent / Revenue for reconsideration. 2022 (8) TMI 891 TP adjustment - interest earned on loan to AE - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of the Hon ble coordinate bench of the ITAT Kolkata in the assessee s own case Assessment Year: 2012-13 [ 2018 (9) TMI 1909 - ITAT KOLKATA] Assessment Year 2012-13 2013-14 [ 2018 (11) TMI 1711 - ITAT KOLKATA] , there being no change in the facts except for the quantum. Further, we find that the assessee had benchmarked the transactions of loan given to its AE by applying CUP method as mentioned in the TPSR. The assessee has obtained the prevailing LIBOR rates by applying external CUP method and considered itself as the tested party for the purpose of benchmarking the transactions. We note from the TPSR that the assessee has earned interest income of USD 1,39,479.45 (equivalent to Rs.82,70,726/-) @ 5% per annum on the USD amount which is based on LIBOR + 345 bps. Since the issue is already covered and has been dealt extensively by the Co-ordinate Bench of the ITAT Kolkata in the assessee s own case and the Department has failed to suggest any exception on facts or law involved in the Assessment Year under consideration, we respectfully adopt the detailed reasoning given by the Co-ordinate Bench (supra) and accordingly dismiss the ground/s relating to this issue raised by the Department in its appeal. Fees on corporate guarantee for AE - On the perusal of the audited financial statements of the assessee, we failed to understand from where and how the ld. TPO has figured out that the assessee has issued corporate guarantee for its AE and proceeded to benchmark @ 3.125% and arrive at an upward adjustment - We fully concur with the submissions made by the ld. Counsel for the assessee as noted above that the impugned addition is arbitrary, imaginary, untenable and not backed by any evidence of fact as is also demonstrated from the additional notes on financial statements placed - Hence, we find no reason to interfere with the factual finding given by the ld. CIT(A) while deleting the impugned adjustment - We thus, accordingly dismiss the grounds taken in this respect by the Department in its appeal. Sale and purchase of raw material and other goods with AEs - manner in which the PLI is to be worked out - Assessee has computed it on the basis of OP/OR as the most appropriate PLI as against which the ld. TPO has considered OP/OC to be the most appropriate PLI. The ld. CIT(A) has given a finding that application of PLI as OP/OC is the most appropriate PLI and has directed the ld. TPO / AO to re-compute and re-work the PLI and the mean of PLI of the comparables. The assessee has not challenged this finding of the ld. CIT(A) and we do not find any reason to interfere with the finding given by the ld. CIT(A) to this effect. Accordingly, the PLI is to be computed on the basis of OP/OC. Selection and rejection of comparables identified by the ld. TPO and by the assessee - We find that the ld. CIT(A) has meritoriously dealt with the matter by taking note of the FAR analysis and the economic analysis undertaken by the assessee in its TPSR which the ld. TPO failed to undertake in respect of the seven new comparables identified by him. We find force in the submissions made by the ld. Counsel of the assessee in respect of selection and rejection of comparables noted above. Accordingly, on this specific issue also we do not find any merit in interfering with the factual findings given by the ld. CIT(A) Inclusion of excise duty on the operating revenue for two comparables out of the said 19 comparables by the ld. TPO - AO ought to have maintained consistency within the comparables and not to have included excise duty component in the case of two comparables while excluding it in all other cases. Ld. Counsel took us through the records to demonstrate the effect of excise duty on the computation of PLI in the case of two comparables vis- -vis other comparables and from the perusal of the same we find that while computing the PLI, the assessee has excluded the excise duty component from the operating revenue for the purpose of benchmarking. By including excise duty in the case of two comparables by the ld. TPO, the operating profit has been artificially increased by the amount of excise duty and, therefore, the PLI computed by the learned TPO stands comparatively incorrect. We thus, find no fault with the computation of PLI after netting of excise duty done by the assessee for the purpose of benchmarking its sale and purchase transactions of raw material and goods with its AEs. The ld. CIT(A) has given a direction to the ld. TPO/AO to re-work the PLI of tested party and re-compute the mean PLI of the comparables with reference to the accepted set of comparables based on his meritorious findings. We find that giving such directions is well within the powers of the Commissioner of Income Tax (Appeals) as enunciated u/s 251(1)(a) of the Act. Accordingly we dismiss the grounds of appeal raised by the Department on this issue and also Ground No. 3 of the cross objection of the assessee. Ground Nos. 1 and 2 of the cross-objections filed by the assessee are allowed. 2022 (8) TMI 911 Reopening of assessment u/s 147 - Mandation of minimum of 7 days notice must be given - HELD THAT:- Sub-Section (b) of Section 148 makes it clear that while serving a notice on the assessee to show cause, even such time may be specified in the notice being not less than 7 days and not exceeding 30 days from the date on which the said notice is issued. Therefore, sub- Section(b) of Section 148 contemplates that, a minimum of 7 days notice must be given. Herein a case in hand, notice dated 17.03.2022 was issued giving time upto 21.03.2022 therefore, the minimum 7 days since has not been given in this case, on that ground also consequential proceedings, which is impugned herein is vitiated and it can be interfered with. Thus impugned order is hereby set aside. As a sequel, the impugned order is also set aside and the matter is remitted back to the respondent. While redoing the exercise, it is open to the respondent to issue a notice afresh u/s 148B giving not less than 7 days to the petitioner/assessee to respond and on receipt of the same, the petitioner shall respond by giving their reply or inputs within the time stipulated therein. 2022 (8) TMI 890 Revision u/s 263 - Reopening of assessment initiated for one reason that the assessee company is the beneficiary of unaccounted money taken in the form of accommodation entry - assessee failed to discharge the onus to prove the identity and creditworthiness of the cash creditors to advance money and the genuineness of the transaction - HELD THAT:- In the light of the provisions of section 263 and a settled position of law, powers u/s 263 of the Act can be exercised by the Pr. Commissioner/Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and also prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the AO has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. See SHRI NIRAV MODI [ 2016 (6) TMI 1004 - BOMBAY HIGH COURT] As in the present case series of facts prove beyond doubt that the ld. AO has conducted a detailed enquiry about the issue of alleged transaction of the assessee with M/s. Pushkar Trading and Holding Pvt. Ltd. and after examining the documents filed by the assessee, AO was satisfied that the assessee has not entered into any bogus/accommodation entry/transaction with this party and there is no element of undisclosed income and further, the transaction was not of Rs.60,00,000/- but it was transaction of Rs.30,00,000/- as the loan received on 13.10.2010 and the same amount repaid on 25.11.2010. We are of the considered view that the order of the AO dated 30.11.2018 cannot be termed as erroneous and prejudicial to the interest of the Revenue on the basis of this issue of the alleged transaction with M/s. Pushkar Trading and Holding Pvt. Ltd. S.K. Hawala Scam - Copies of bank statements were filed which were examined by the ld. AO, and after doing necessary examination concluded that no addition needs to be made in the hands of the assessee on this issue. Since there is a detailed enquiry conducted by the ld. AO and he has accepted one of the permissible view after examining the records it cannot be said that it is a case of no enquiry or incomplete enquiry and therefore, there is no room for ld. Pr. CIT to assume jurisdiction u/s 263 of the Act on this issue. Whether AO did not make any enquiry in respect of the share application money received in the financial year 2010-11? - Re-assessment proceeding was carried out for the specific reasons recorded attached to the notice issued u/s 148 of the Act. No addition has been made on the issues mentioned in the reasons recorded which in itself precludes the ld. AO from making any other addition in view of the ratio laid down by Hon ble Bombay High Court in the case of Jet Airways (I) Ltd. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] wherein it has been held that If after issuing a notice u/s 148 of the Act, the ld. AO accepts the contentions of the assessee and holds that the income for which he had initially formed a reason to believe that it had escaped assessment, has, as a matter of fact, not escaped assessment, it is not open to him to independently assess some other income, and if he intends to do so, a fresh notice u/s 148 of the Act would be necessary, the legality of which would be tested in the event of a challenge by the assessee . Since ld. AO had not made any addition for the reasons recorded, no addition could be made on any other issue without issuing a fresh show cause notice u/s 148 of the Act. Under these circumstances, invoking the provisions of Section 263 of the Act was bad in law. Out of the three issues raised in the show cause notice u/s 263 of the Act, in two issues ld. AO has conducted complete enquiry during re-assessment proceedings and on the third issue, the very basic facts adopted by ld. Pr. CIT for involving provision of Section 263 of the Act suffers from defect and, therefore, the proceedings u/s 263 of the Act are bad in law. Further, in view of the settled legal position, legally also, no addition can be made on any new issue without issuing a fresh show cause notice u/s 148 of the Act if no addition has been made by the AO in the re-assessment proceedings on the issue raised in the reasons recorded. We, therefore, hold that ld. Pr. CIT erred in invoking the jurisdiction u/s 263 of the Act and thus the impugned proceedings are quashed and the reassessment order is restored. Appeal of assessee allowed. 2022 (8) TMI 889 Income accrued in India - PE in India - attributing profits to the P.E - amount of income which can be attributed to the P.E and which is taxable in the hands of the assessee - revenue determined the assessee as being a Dependent Agent PE (DAPE) - assessee emphatically denies that the Appellant has a P.E. in India. - HELD THAT:- On a plain reading of Article 7(1) of the DTAA, the question of attributing profits to the P.E. arises only if the foreign enterprise is making a profit. This is the condition precedent. If it is making a loss then no question arises at all of attributing any profit to the P.E., which would be taxable in India. AO has taken gross profit margins of the Appellant Company for 2009 and 2010 as per its audited accounts instead of the net profit margins. The gross profits margins of the Appellant Company for 2009 and 2010 were positive, and that was how the A.O. could attribute profits to the P.E. In so adopting the gross profit margins of the Appellant Company, the A.O. has acted in a manner which is directly contrary to Article 7(1) of the DTAA and also contrary to the said Special Bench Judgment. It is the Net Profits margins which are to be considered as for attribution as per the DTAA. Computation made by the A.O. in his assessment order is incorrect as the AO has not allowed the payments made by the Appellant to NSN India for the services rendered by NSN India as a deduction from the profit attributable to the alleged PE. If the said payments are allowed as a deduction from the gross profit figures taken by the A.O., then again the resultant figure would be losses. Consequently, even if the method of attribution adopted by the A.O. is considered to be correct, in any event, there would be no profit/income attributable to the PE. Consequently, even if the Appellant has a P.E. in India, no profit or income can in law at all be attributed to the P.E. which would be taxable in India. Hence, we hold that the adjudication on issue of PE would be academic in nature. R D centre FPPE - The issue of Global Development Centres not being a fixed place PE would also be an academic discussion owing to nonavailability of the attributable profits. Further, the Hon ble Jurisdictional High Court in the case of Adobe Systems Incorporated [ 2016 (5) TMI 728 - DELHI HIGH COURT] and the Hon ble Supreme Court in the case of ADIT vs. E-Funds IT Solution Inc. [ 2017 (10) TMI 1011 - SUPREME COURT] held that R D centres cannot give rise to any PE. Software supply Royalty - This issue is covered in favour of the Appellant by the Judgment of the Delhi High Court in the case of Ericssion AB [ 2011 (12) TMI 91 - DELHI HIGH COURT] .The Supreme Court of India in the case of Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] settled the long-running contentious issue over how payments made by Indian customers to non-resident suppliers for the use or resale of computer software should be characterised, providing much-needed tax certainty on the issue.Thus Software sales cannot give raise to Royalty income taxable in India in the case of the assessee before us. Appeal of assessee allowed. Customs 2022 (8) TMI 886 Seeking restoration of appeal - failure to comply with the statutory requirement of deposit contemplated under Section 129E of the Customs Act, 1962 - it is stated that the appellant was close to bankruptcy due to financial crisis and so could not deposit the statutory amount contemplated under Section 129A of the Customs Act - time limitation - HELD THAT:- A perusal of the Rule 20 of the Customs, Excise and Service Tax Appellate Tribunal Rules, 1982, leaves no manner of doubt that it is only when the appellant does not appear when the case is called on for hearing and the appeal is dismissed for default and the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non-appearance when the appeal was called on for hearing, the Tribunal shall make an order setting aside the order and restore the appeal. In the present case, learned counsel of the appellant had appeared on the date fixed and made submissions. It is on a consideration of the submission advanced that that the appeal was dismissed for non-compliance of the statutory requirement. Rule 20, in such circumstances, would not be applicable. It is true that no time limit is prescribed for filing an application for restoration of appeal, but nevertheless the applicant has to be the vigilant and the application should be filed at the earliest opportunity after explaining the cause for non-appearance of the applicant on the date when the matter was called out. In the present case, the application was filed by the appellant for recall of the order dated 07.07.2015 only on 31.05.2022. The appellant had throughout contested before the Delhi High Court and the Supreme Court that it should not be required to deposit the amount because the un-amended provisions of Section 35 of the Customs Act would be applicable. Even after the dismissal of the Civil Appeal by the Supreme Court on 23.01.2017, the appellant took more than five years to file the application for recall of the order. No satisfactory explanation has been given by the applicant for this enormous delay. In fact, only a casual statement has been made that earlier the financial capacity of the appellant was bad and it took sometime to recover, whereafter the amount was deposited in September 2020. The application was filed after two years of the deposit. The application, therefore, deserves to be rejected for this reason also. Application dismissed. 2022 (8) TMI 885 Valuation of 125 consignments of imported toys - applicable tariff concession @ 43% under serial no. 427 of Part A of the notification dated July 22, 2005 or tariff concession @8% under serial no. 428 of Part A of the aforesaid notification? - HELD THAT:- In order to examine the submissions made by learned counsel for the appellant that once the order of the Commissioner (Appeals) has been accepted by the Department, on an issue which is involved in this appeal, it would not be open to the Department to take a different view in this appeal. The records indicate that the adjudicating authority passed an order dated May 31, 2019 confirming the demand and rejected the contention of the appellant therein that higher abatement was correctly obtained - It is against this order dated May 31, 2019 passed by the Joint Commissioner of Customs that an appeal was filed before the Commissioner (Appeals), who by order dated September 29, 2021 allowed the appeal and set aside the order dated May 31, 2019 passed by the Joint Commissioner. There are substance in the submission advanced by the learned counsel for the appellant that once the order dated September 29, 2021 passed by the Commissioner (Appeals) was accepted by the competent authority on December 27, 2021, as is clear from the information made available to the appellant under the Right to Information Act, the Department cannot be permitted to take a different stand in the present appeal filed by the appellant. The order dated March 28, 2019 passed by the Principal Commissioner deserves to be set aside and is set aside - Appeal allowed. 2022 (8) TMI 888 Benefit of exemption - Import of Camera - Extended period of limitation - Jurisdiction of DRI to issue Show Cause Notice (SCN) - Proper Officer - Validity of proceeding initiated for Recovery of duty not paid - HELD THAT:- Issue notice. List in the last week of July, 2022. 2022 (8) TMI 887 Maintainability of appeal - time limitation - HELD THAT:- The appeal before the First Appellate Authority was beyond the period of limitation. The petitioner tried to make out a case that he was served with the order in the year 2013, which is just not delivered either by the First Appellate Authority or even by the CESTAT - SLP dismissed. Corporate Laws 2022 (8) TMI 884 Summon Order - Wrongfully withholding the companies property - non-application of judicial mind - dispute between the parties is with respect to ownership of the property - HELD THAT:- The Hon ble Supreme Court in the matter of M/S. PEPSI FOODS LTD. ANR VERSUS SPECIAL JUDICIAL MAGISTRATE ORS [ 1997 (11) TMI 518 - SUPREME COURT] while considering the scope of the High Court s power to quash criminal proceedings in exercise of power under Articles 226/227 of the Constitution of India or of Section 482 of Cr.P.C., has held that summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto - It is also a settled law that if the High Court finds that invoking a criminal jurisdiction is an abuse of the process of law, the High Court should not hesitate to exercise its power under Section 482 of Cr.P.C. or 226 of the Constitution of India. A perusal of the provisions of Section 630 of the Companies Act would show that the same is a summary procedure. The concerned criminal court cannot determine the dispute as to the title of the property under dispute. Obviously, such questions are to be decided by the competent civil court - It is thus seen that Section 630 of the Companies Act can be invoked when there is no dispute or in any event, no bonafide dispute with respect to the property in question exists. If there is any dispute involving title to the property, the same would be adjudicated by the concerned civil court and not by Magistrate under Section 630 of the Companies Act. A perusal of the overall facts of the case would clearly demonstrate that there are serious disputes pending between the parties with respect to the property in dispute. The said dispute goes to the very entitlement of the complainant as to whether the same would fall within its share or as to whether the petitioner would be entitled for title and ownership of the property in dispute - In the instant case, the MoU clearly stipulates which company would go to which group. The company itself, in the present case, falls into the share of the rival group of the present petitioner. The MoU was entered on 24.01.1989. Much before the MoU, the Agreement to Sell the property in dispute was entered into on 04.02.1984. There have been various cases between the parties on account of their differences. This court finds that the learned Magistrate has committed a palpable error while summoning the petitioner for offence punishable under Section 630 of the Companies Act. A perusal of the impugned order dated 19.10.2012 does not reflect any application of mind with respect to the facts as stated in paragraph 19 of the complaint regarding the pendency of the civil suit between the parties - As it can be seen from the facts that the fate of the property in dispute is not yet determined, the rival parties are claiming rights over the property in dispute on the basis of the MoU. Till date, neither the petitioner nor the respondent/complainant has the clear title or ownership over the subject property. There is no sale deed in their favour. The suit for specific performance of contract filed by them against original vendee is still pending. This court is, therefore, of the considered opinion that the order of summoning of the petitioner, at this stage, is illegal and the same deserves to be quashed - Petition allowed. 2022 (8) TMI 882 Seeking restoration of name of company in the Register of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- The Appellant though has not submitted sufficient evidence that the Company has been in operation, but as per the Balance Sheet the Company has current liabilities of Rs. 55,85,000/- and fixed assets in the form of capital work in progress amounting to Rs. 91,29,422. The Company also has a colonizer certificate issued by the Municipal Corporation Bhopal. Under the provisions of Section 252(3) of the Act, this Tribunal is vested with the discretion, where the Company whose name has been struck off and such Company is able to demonstrate that it is just to do so, to restore the name of the Company in the Register of the Registrar of Companies in the interest of all stakeholders, including the Appellant herein who seeks restoration of the name of the Company in the Register maintained by Registrar of Companies. The Company deserves to be restored - Application allowed. 2022 (8) TMI 883 Compounding of offence under Section 266G of the Companies Act, 1956 - discretionary power exercised in compounding the offence by the Board under 266C read with Section 621A of the Act - contravention of Section 266G of the Act or not - Whether the compounding of the offence by the Board under Section 266C read with Section 621A is justified without seeking prior permission from the Court? - HELD THAT:- The company does not dispute that they had applied for three DINs, but specifically contends that obtaining of DIN was by using different IDs and address and was obtained due to inadvertence and not intentional and contended that the company was only using one DIN. To consider whether order of the Board is justifiable, relevant provisions needs to be considered - A careful reading of the provisions envisage that it excludes such offences which are punishable with imprisonment only or with imprisonment and also with fine. Thus, on facts, the nature of offence which the company has charged does not invite with imprisonment or imprisonment and fine, but the penalty imposed is punishable with fine, which may extend upto five thousand rupees and where the contravention is continuing one, with a further fine, which may extend to five hundred rupees for everyday thereafter. Thus, the nature of offence is such that it is compoundable, and the same is just and proper. Whether the compounding of the offence by the Board under Section 266C read with Section 621A is justified without seeking prior permission from the Court? - HELD THAT:- The appellant sought to contend that prior permission of the Court needs to be accorded for compounding of offence is contrary to the intention of the legislature for enacting the provision under Section 621A as the powers under Section 266C are concurrent/parallel powers to be exercised by the Company Law Board/other Authorities or Court in seisin of the matter with a difference that a Company Law Board can proceed to compound such offence either before or after the institution of any prosecution whereas criminal Court possesses similar power to compound such offence only after institution of prosecution and as the Apex Court held in the case of VLS. FINANCE LTD. VERSUS UNION OF INDIA AND OTHERS [ 2013 (5) TMI 348 - SUPREME COURT] where it was held that while interpreting the provisions of a statute, the court avoids rejection or addition of words and resort to that only in exceptional circumstances to achieve the purpose of Act or give purposeful meaning. It is also a cardinal rule of interpretation that words, phrases and sentences are to be given their natural, plain and clear meaning. Appeal dismissed. Insolvency & Bankruptcy 2022 (8) TMI 881 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Financial Debt or not - existence of debt and dispute or not - whether the amount given by the so-called Financial Creditor (Appellant) to the Corporate Debtor (Respondent) is a financial debt under the IBC, and if it is so, then is the repayment of the debt in respect of the claim in default and due and payable to the Appellant? - HELD THAT:- It is clear from the pleadings and documents submitted by the parties that the Foreign Contract was entered into between the buyer Networth Trading Pte Limited and seller PEC Ltd. on 2.11.2010. Thereafter, for fulfillment of this contact, an agreement (referred as Associate Buyer Agreement ) was signed on the next day i.e. 3.11.2010 between the Appellant and Respondent. The Foreign Contract is regarding procurement and shipment of 1,00,000 WMTS 5% at seller s option of iron ore fines from Mormugao Port, India to a port in China. The payment condition included on the contract mentions that the buyer shall arrange payment within 7 days from the date of dispatch of documents from seller bank. Thus, payment is to be made by the buyer Networth Trading Pte Ltd. to the seller PEC Ltd. after shipment from Mormugao Port in India - The Foreign Contract also stipulates that the Associate Supplier shall abide by the terms and conditions of the foreign contract and foreign contract shall form an integral and inseparable part of this agreement i.e. Associate Supplier agreement (reference clause 4 of the Associate Supplier Agreement). Thus, it is abundantly clear that a buyer-seller contract was entered into between the Networth Trading Pte Limited, Singapore and PEC Limited on 2.11.2010 and in furtherance of contract, PEC entered into an agreement with the Associate Supplier Phulchand Exports Pvt. Ltd. (Respondent) through a separate agreement dated 3.11.2010. The financial assistance provided to the Associate Supplier by PEC Ltd. is to fulfill, perform and discharge the obligations and responsibilities of PEC under the foreign contract. It is clear that the amount provided by PEC as financial assistance, and claimed by it as financial debt under IBC, is basically for purchase, shipment and export of iron ore fines in fulfilment of the foreign contract. This amount is certainly not an amount given by PEC Ltd. as a financial creditor to a corporate entity M/s Phulchand Exports to ensure its overall financial viability. An examination of the debt given as advance by PEC Ltd. in the light of the definitions provided in sub-section 11 of section 3 and clause (f) of sub-section 8 of section 5 of the IBC makes it clear that while the amount advanced by PEC to M/s. Phulchand Exports Pvt. Ltd. would be a debt under the definition given section 3(11) of the IBC, it should have the commercial effect of borrowing, and more so a borrowing that helps in ensuring financial viability of the corporate debtor for it to qualify as financial debt under the IBC. Therefore, the amount provided by PEC Ltd. as interest-bearing advance to the Respondent does not qualify to be a financial debt as defined under the IBC. The amount as claimed by the Appellant does not fall in the category of financial debt as defined in the IBC - the Adjudicating Authority has not erred in passing the Impugned Order, whereby the Section 7 application of the Appellant has been dismissed. Appeal dismissed. 2022 (8) TMI 880 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- In the instant case, as can be seen from the dates, the decree passed by the DRT is on 22.10.2016 and the Section 7 Application was filed within three years on 17.12.2019. Keeping in view, the ratio of the Hon ble Apex Court in Dena Bank (now Bank of Baroda) [ 2021 (8) TMI 315 - SUPREME COURT ] the contention of the Learned Sr. Counsel for the Appellant that a decree is not a Financial Debt as per Section 5(8) of the Code is untenable. The question here is not whether a decree is a Financial Debt . The issue here is whether a Recovery Certificate/decree can extend the period of Limitation which has already been answered by the Hon ble Apex Court in Dena Bank (now Bank of Baroda) . The Hon ble Apex Court in Laxmi Pat Surana Vs. Union Bank of India Anr. , [ 2021 (3) TMI 1179 - SUPREME COURT ], has held that Section 7 comes into play when the Corporate Debtor commits default. Section 7, consciously used the expression Default not the date of notifying the loan amount of the Corporate Person as NPA. Further, the expression Default has been defined under Section 3(12) to mean non-payment of debt when whole or not 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 . Therefore, it is clear that what has to be seen is essentially not the date of NPA, but actually the date of default . Hence, the contention of the Learned Sr. Counsel for the Appellant that the date of NPA being 31.03.2013. The date of default ought to have been construed as 30.06.2013 (90 days later) and therefore Application is barred by Limitation , is unsustainable. Having regard to the ratio of the Hon ble Apex Court in Asset Reconstruction Company India Ltd. Vs. Tulip Star Hotels Ltd. and Ors. , [ 2022 (8) TMI 70 - SUPREME COURT ], wherein it has been stated that acknowledgement in Balance Sheets further extends the period of Limitation and has observed an application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgement of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years. In the fourth CoC Meeting, the CoC Members resolved to go ahead with the Liquidation Process. The RP filed the Status Report stating that on 29.12.2020 a Liquidation Application was filed before the Adjudicating Authority, but has not yet come on board for hearing. Needless to add, the Adjudicating Authority shall proceed in accordance with law. This Tribunal is of the earnest view that the Section 7 Application filed by the Respondent/ Financial creditor is well within the period of Limitation and hence this Appeal fails and is accordingly dismissed. 2022 (8) TMI 879 Lifting of lien from the account belonging to the Corporate Debtor - whether the amount of Rs. 62,24,082/- and also the subsequent demands arising out of the proceedings under the EPF and MP Act, 1952 are recoverable from the corporate debtor? - Section 8F of EPF MP Act, 1952 - HELD THAT:- The records indicate that an enquiry under section 14B/7Q of the EPF and MP Act, 1952 was concluded and demand of 62,24,082/- was issued against the Establishment for the dues for the period from 09-02-2018 to 20-12-2019 and also for failure to deposit the PF amount. This amount also included damages under Section 14-B and interest under section 7Q of the Act. As the same was not deposited in time by the establishment, an attachment order under Section 8F was issued on 02.07.2019 to Kotak Mahindra Bank., which in turn marked a lien for Rs. 62,24,082/- but did not deposit the amount with the office of the EPFO - it is a settled issue that when it comes to non-payment of the EPF arrears by the Corporate Debtor the issue is one of compliance of Law . As clarified in the extracts, all the dues raised by the EPFO under various sections, including interests and penalties are to be paid by the new establishment under Section 17B of the Employees Provident Funds and Miscellaneous Act, 1952. Furthermore, under Section 30(2)(e) of the Resolution Plan, in order to be legitimate, the resolution plan cannot contravene any of the provisions of any law in force. Thus, in the present context, it is incumbent on the RP/SRA to ensure that Section 17B of the EPF and MP Act, 1952 are complied with. As mentioned, Section 17B lays down that in case of a transfer of Establishment, the person to whom the establishment is transferred is liable to pay the contributions and other sums due from the employer under any provision of the EPF and MP Act, 1952. Thus, the amount of Rs. 62,24,082/- demanded by the authorised officer of EPFO by letter dated 13.06.2019 and served on the Kotak Mahindra Bank on 05.07.2019 to be fully complied. The applicant's prayer to lift the lien from the account bearing No. 1211116245 belonging to the Corporate Debtor for an amount of Rs. 62,24,082/-, which was imposed in view of the order dated 02.07.2019 passed by respondent No. 2 i.e. Authorised Officer of the EPFO cannot be acceded to - Application dismissed. 2022 (8) TMI 878 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- It is settled law that even though the default amount mentioned in the petition is not proved but default of amount proved is covers the threshold amount the petition can be admitted. It is not necessary to prove the exact due amount mentioned in the petition, if the amount proved is satisfy the threshold amount the petition is liable to be admitted. This Tribunal notes that the objections raised by the respondents have been convincingly responded to by the OC. The corporate debtor could not establish that the leave and licence agreement executed on October 5, 2015 and the service agreements dated October 3, 2015 were terminated earlier and they have handed over peaceful possession of the premises to the OC. The corporate debtor vide its e-mail dated August 31, 2020 has rejected the invocation of arbitration clause. Thus, the arbitration proceedings never commenced - The CD has not produced details of any payment made to OC in respect of monthly rent, etc. Thus, in the opinion of this Tribunal operational debt and default is established. In result, going by the facts and circumstances of the case and the material on record, this petition is admitted. The application filed by the operational creditor under section 9 of the Insolvency and Bankruptcy Code, 2016 is hereby admitted for initiating the corporate insolvency resolution process against Coppertun Brewing P. Ltd. - moratorium declared. Service Tax 2022 (8) TMI 877 CENVAT Credit - input services used in manufacture of dutiable goods/taxable services as well as in trading activity (exempted service) - demand of amount paid in excess of 20% of service tax payable from the credit account - period from April 2006 to March 2008 - demand of 8%/6% of the value of traded goods (exempted service) - period from April 2008 to March 2011 - whether the Explanation to rule 2(e) is prospective in nature as submitted by the appellant or it merely clarifies that trading activities were always an exempted service , as is contended by the department? - Extended period of limitation - HELD THAT:- To understand the scope of Explanation , it would be useful to refer to the decision of the Supreme Court in Sedco Forex [ 2005 (11) TMI 25 - SUPREME COURT] . The Supreme Court clarified that if Explanation widens the scope of the main provision, then it would be presumed to have only prospective effect, unless a contrary intention is expressed by the legislature. The same view was expressed by the Supreme Court in Martin Lottery. The Supreme Court, in effect, held that the use of the phrases, it is hereby declared or removal of doubts , in itself will not enable a presumption to be drawn that the Explanation is retrospective. The Tribunal in Trent Hypermarket [ 2019 (6) TMI 1327 - CESTAT MUMBAI] , while dealing with the definition of exempted service under rule 2(e) of the Credit Rules, held that trading cannot be treated as an exempted service for the period prior to 01.04.2011 and the Explanation added on 01.04.2011 was prospective and not retrospective. Thus, it is, therefore, clear that trading was not an exempted service prior to 01.04.2011. The demand confirmed in the impugned order cannot, therefore, be sustained and is liable to be set aside - Even otherwise, the demand for the period 2006 to 2008 would not survive as there was no restriction on availment of credit as the restriction was in respect of utilization. It also needs to be remembered that for not exercising the option under rule 6 of the Credit Rules, the option of payment of 6/8 percent of trading of goods ( exempted service ) cannot be thrust upon the appellant. This view finds support from the decision of the Telangana High Court in Tiara Advertising [ 2019 (10) TMI 27 - TELANGANA AND ANDHRA PRADESH HIGH COURT] and the decision of the Tribunal in Agrawal Metal Works [ 2022 (7) TMI 924 - CESTAT NEW DELHI] . Thus, the demand of Rs. 5,98,82,040/- for the period from April 2008 to March 2011 cannot also be sustained. It is not necessary to examine the contention advanced by the learned counsel for the appellant regarding invocation of the extended period of limitation. Appeal allowed. 2022 (8) TMI 876 Refund claim - Retrospective exemption - rejection on the ground of limitation, unjust enrichment and also for violation of the provisions of section 102 (1),(2) and (3) of the Finance Act 1994 - whether the refund claim was filed within the stipulated period contemplated in section 102 (1) that was introduced by Finance Bill 2016? - HELD THAT:- This section provided retrospective exemption to construction service for the period commencing from 01.04.2015 to 29.02.2016. At the same time, this section also provided that refund of service tax paid during the period from 01.04.2015 to 29.02.2016 has to be filed within a period of six months from the date of enactment of the Finance Bill 2016 i.e. 14.05.2016. It is not in dispute that the refund claim was actually filed on 05.10.2017 which is beyond the period of six months contemplated under section 102 (1) of the Finance Act. In the instance case service tax was liable to be paid at the relevant time and it is only subsequently that by a retrospective amendment, exemption was granted with a specific condition that refund could be claimed by filing it within six months from the date of enactment of the Finance Bill 2016. The refund claim had, therefore, to be filed within six month from 14.05.2016, but it was filed beyond the said period. The contention of the learned counsel for the appellant that since the limitation period of one year contemplated under section 11B of the Central Excise Act 1944 provides for filing of the claim within one year from the date of payment of tax, the refund claim filed by the appellant should be treated to have been filed within time as it was filed within one year cannot also be accepted for the reason that section 102 (1) of the Finance Act itself provides for a limitation period of six months for filing a refund claim - Once the refund claim is held to be barred by time, the question of unjust enrichment would not arise. This appeal is, accordingly, dismissed. 2022 (8) TMI 875 Levy of penalty - Business Auxiliary Service - amount has been received by the Appellant as commission from Amway and Britt - period 2006-07 to 2010-11 - HELD THAT:- There are force in the submissions of the Ld.Advocate for the Appellant and therefore hold that the proceedings should have been concluded before issuance of the Show Cause Notice - the Service Tax as confirmed in the Adjudication order is upheld - penalties set aside - appeal allowed - decided in favor of appellant. 2022 (8) TMI 874 Refund of un-utilised Cenvat credit of Service Tax - Input Service used in provision of Business Support Service(BSS) exported outside India - intermediary services - place of provision of services - rejection on the ground that the service rendered is not BSS but intermediary service and hence the place of provision of service is in India and not outside - HELD THAT:- Commission is being paid to an intermediary not the transfer pricising, whereas the appellant herein was getting transfer pricising. There is nothing on record to show that the appellant is liasioning or acting as intermediary between the HLX and its clients. Therefore, the finding of the lower authorities that the appellant is an intermediary is misplaced. It is astonishing to notice that although for earlier periods the then adjudicating authority allowed the refund claim of the appellant, but without looking into those orders and without giving any reason for not following the earlier orders, this time the concerned Authorities held otherwise by denying the credit. It is observed that the learned Commissioner in the impugned order has also places reliance on the website without confronting the appellant with the said material, which is completely in violation of the principle of natural justice and also beyond the show cause notice as the show cause notice did not rely upon any such website. Admittedly the refund claims have been filed by the appellants under Rule 5 ibid r/w Notification No. 27/2012 dated 18/06/2012. The said rule provides for refund of accumulated Cenvat Credit in respect of goods and services exported under bond or undertaking. This rule is very specific and lays down how to determine the quantum of admissible refund from the accumulated cenvat credit - If the Revenue is not in agreement with the claims of the appellants and if, according to Revenue, the services in issue do not fall within the ambit of export of service then the Revenue ought to have initiated the proceedings against the appellants for demanding the Service Tax in respect of taxable service provided by the appellants. Admittedly no such proceedings have been initiated by the Revenue as borne out from the records of the case and therefore in a way Revenue itself has allowed this taxable service provided by appellants as export of service. If that is so then in the proceeding under Rule 5 ibid revenue cannot deny refund by treating the service provided not to be export of service. The orders of lower authorities denying Cenvat credit on impugned services are not sustainable in law and therefore the appeals filed by the appellant deserve to be allowed - appeals are accordingly allowed subject to calculation of refund of un-utilised Cenvat credit by the adjudication authority on the basis of the documents submitted by the appellants and for this limited purpose these appeals are remanded to the original authority. Central Excise 2022 (8) TMI 873 Classification of goods - sub-assemblies/parts of CTVS (Colour Television Sets) - to be classified under Heading 85.28 of the Central Excise Tariff, or not - extended period of limitation - penalties - interpretation of Rules 2(a) of the Central Excise Tariff - HELD THAT:- It would also be useful to contrast this Interpretative Rules 2(a) with Interpretative Rules 2(a) of the Customs Tariff, which is identical with the only difference being that instead of removed , the expression presented appears in the Customs Tariff. In regard to the applicability of rule 2(a) of the Customs Tariff to import of goods, it has been repeatedly held that until all the components of the complete article are presented together for assessment at the same point of time, rule 2(a) cannot be invoked to classify the parts as complete article. It has also been held that consignments removed/presented at different points of time from different factories cannot be clubbed together to classify the parts as complete article. In the present case, it is not in dispute that not even a single consignment was cleared or removed from the factory of the appellant to the manufacturers containing all the parts of CTVS at the same point of time. All the consignment of sub-assemblies/parts (except for 21 Flatron) the colour picture tubes were not supplied and the colour picture tubes were always purchased by the manufacturers from the picture tubes manufacturers directly - when the consignments cleared by the appellant did not contain all the parts at the same point of time, Interpretative Rule (a) cannot be pressed into service - It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that complete assemblies/sub-assemblies of CTVS were supplied to the original equipment manufacturers. Even otherwise, rule 2(a) could not have been invoked for the reason that classification of the goods in the present case would be governed by Section Note 2 to Section XVI of the Central Excise Tariff and the Rules of Interpretation would not be applicable at all - in view of Rule 1, sub-assemblies and parts cleared by the appellant are to be classified under Heading 85.29 only. Once the goods are classifiable under a particular Heading by application of the Headings and relevant section and chapter notes, the classification cannot be altered by taking recourse to the Interpretative Rules. Penalties - HELD THAT:- Once it is held that the duty demanded in the show cause notice cannot be confirmed, penalties cannot be imposed upon S.N. Rai and Atul Tandon. Other contentions not examined. Appeal allowed. 2022 (8) TMI 872 Remission of central excise duty on semi-finished goods destroyed in the fire accident - goods destroyed because of fire - Commissioner observed that the documents did not reveal that the insurance claim filed by the appellant contained the element of excise of duty - Whether the party is eligible for remission of duty? - HELD THAT:- Out of the claim for remission of Rs.40,97,341.00 for both finished and semi-finished goods, the party is entitled for remission of Rs.1,19,232.00 on finished goods. Once it is established that the party is entitled to remission of duty on the goods destroyed in fire accident caused due to reasons beyond the control of the party, the demand of duty on such goods is not sustainable. I, therefore, hold that the demand of duty of Rs.40,97,341.00 on the goods, both semi-finished and finished, which were destroyed completely due to fire accident caused by Short Circuit, is not sustainable. Whether CENVAT Credit reversed by the party was unwarranted? - HELD THAT:- The Commissioner has observed that the duty reversed by the party amounting to Rs.41,01,620.00 was correct. Whether the party's settlement of insurance claim with respect to finished goods and semi-finished goods has any bearing on the case from revenue point? - HELD THAT:- The Commissioner clearly exceeded his jurisdiction in deciding this issue by going beyond the terms of the remand order passed by the Tribunal as all that was required to be determined by the Commissioner on remand was to verify whether the element of excise duty involved in the goods destroyed by the fire accident was paid by insurance company or not. This issue has now been decided in favour of the appellant by the Commissioner. The order passed by the Commissioner holding that the appellant is not entitled to remission of duty on semi-finished goods, therefore, cannot be sustained and is set aside. The appellant is entitled to remission of duty availed on semi-finished goods burnt/damaged to the extent of Rs.35,60,087/- - the order dated 08 April, 2009 passed by Commissioner to the extent it denies remission of duty on semi-finished goods to the extent of Rs.35,60,086/- burnt/damaged in fire is, accordingly, set aside. Appeal allowed. Indian Laws 2022 (8) TMI 871 Dishonor of Cheque - discharge of legally enforceable debt - leave of the Court under section 446 of the Companies Act - whether the impleadment of Official Liquidator is necessary in a complaint for the offence punishable under section 138 of the Act, 1881, where it is alleged that the company in liquidation has committed the said offence? - HELD THAT:- In the facts of the case, if the submission on behalf of the applicants is readily acceded to, then M/s. Rangara would get a long leash to avoid the liability by taking undue advantage of its own default. M/s. Rangara, it can be fairly assumed, entered into consent terms in the Company Petition to wriggle out of the consequences which would have otherwise ensued in the Company Petition. M/s. Rangara committed default in compliance with the undertakings in the consent terms. Undoubtedly the consent terms provided for the consequence of the winding up petition being allowed in the event of any default. But that stipulation appears to be in the nature of a dyke against the default. In such a situation, to accede to the submission on behalf of the applicants, would amount to playing into the hands of a party who succeeds in avoiding the liability under the original proceedings as well as the one incurred under the consent terms. In a case of this nature, a distinction is necessarily required to be made between a winding up order passed after weighing of all the options, especially after recording satisfaction under sub section (2) of section 440 of the Companies Act, 1956 and an order of winding-up, which is invited, by executing consent terms. It is trite, an order of winding-up on merits manifests a judicial exercise upon recording a satisfaction that having regard to the interest of the creditors or contributors or both, winding-up is imperative. In all the complaints, the process was issued in the year 2016-17. Trial has commenced. Two of the complaints are at the stage of recording the cross examination of the complainant s witnesses. At this juncture and in the light of the facts which have emerged, inherent jurisdiction to indict the complaints need not be exercised - application dismissed.
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