TMI Tax Updates - e-Newsletter
August 30, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Refund of Input Tax Credit - goods exported - There are no reason whatsoever for denial of refund in respect of ITC pertaining to supplies made by suppliers other than M/s Siddhi Impex. - HC
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GST:
Bonded warehouse transaction - transfer of title of goods by the Applicant to its customers or multiple transfers within the FTWZ - the supply of warehoused goods to any person before clearance for home consumption’ shall be neither a supply of goods nor a supply of service. - AAR
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GST:
Taxability - incidental charges - Maintenance charges for usage of common facilities - as the principal supply i.e maintenance service and PIDP are taxable, interest and penalty collected towards rendering such services will also form part of the value of supply and liable to be tax appropriately in consonance with the principal supply. - AAR
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GST:
Taxability - Supply of raw water and its incidental charges - when the principal supply of raw water is exempted, recovery of interest or penalty for delayed payment of water charges and Reconnection charges are not liable to tax - AAR
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GST:
Classification of goods - rate of GST - HSN Code - used/running Wind Turbine Generator (WTG) / Wind Mill with accessories for sale purpose - entire unit of wind mill is proposed to be supplied as such without dismantling the same. Supply of wind mill with its parts and accessories is a composite supply of wind mill and liable to tax @12% of GST / IGST - AAR
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GST:
Maintainability of Advance Ruling application - non-disclosure of enquiry / summons under Section 70 of CGST Act as 'proceedings' in the advance ruling application - suppression of facts or not - it is apparent that proceedings are pending against the applicant on the date of filing of advance ruling online application - Application rejected - AAR
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Income Tax:
Reopening of assessment u/s 147 - reason to believe - commencement date / year for deduction u/s 80IA - Eligible from 1995 or 2000 - scope of change of opinion - We agree with that this is nothing but a case of change of opinion by the A.O. from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. - HC
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Income Tax:
Validity of Notice calling the petitioner for a hearing challenged in a remand back proceedings - Time limit for completion of assessments and reassessment u/s 153 - Extension of period of limitation after Covid - There is no merits in the challenge to the impugned notice. - HC
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Income Tax:
Addition u/s 40A(3) - payments in cash towards purchases - ld.AR claimed that the payments were covered under the exception of Rule 6DD of the Income Tax Rules, 1962, however, no documentary evidences/ materials were furnished before the Tribunal substantiating and corroborating the claim of the assessee that they are covered under the exception of Rule 6DD of the Income Tax Rules. - Additions confirmed - AT
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Income Tax:
Claim of deduction of unknown liability towards customs duty - Deduction u/s 43B - Fresh claim before AO during the course of assessment proceedings - Since the assessee was not legally obliged to pay customs duty amount, therefore, this additional claim towards payment of customs duty cannot be allowed under the provision of Section 43B(a) of the Act. - AT
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Income Tax:
Short term capital gain or long term capital gain of capital assets - sale of building with land - denying indexed cost of acquisition and indexed cost of improvement claimed by the assessee - different treatment in the hands of co-owner of the property - Action of the AO is not correct - Relief granted - AT
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Income Tax:
Revision u/s 263 - assessee had utilized the unsecured loans for non business purpose and interest paid on the same has been claimed as business expenses - matter restored back for verification - AT
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Income Tax:
Income deemed to accrue or arise in India - Revenue has failed to establish on record through credible evidence that the assessee has a fixed placed PE in India through which it has earned the income relating to sale of software licence. Therefore, in our considered opinion, no part of such income can be attributed to the PE - AT
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Income Tax:
Penalty u/s 271B - delay in filing tax audit report - reasonable / bonafide cause - The assessee is not a habitual defaulter for filing the tax audit report. Therefore, the change of auditor is one of the valid reasons for delay in filing the tax audit report. - No penalty - AT
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Income Tax:
Addition u/s 69C - value of asset bought from the vendor who is alleged to be a suspicious dealer - disallowance of depreciation on the asset above - the AO cannot disallow the total value of the asset and also simultaneously disallow the depreciation claimed by the assessee. The disallowance can only be made to the extent of the benefit claimed by the assessee under the Act. - AT
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Income Tax:
Disallowance of loss on trading in Mentha oil - sale below market price - unrelated party transactions - The assessee has to arrange his business affair keeping in view the best interest of the business including retaining of the customers and AO cannot doubt the business transactions merely on ground that same is below the market price, without bringing on record any malafide in transactions - Additions deleted - AT
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Customs:
Undervaluation of imported goods - MDF boards - large-scale evasion of customs duty - Section 14 of the Customs Act, 1962 - test report disclosed the samples which do not confirm to Grade I or Grade II - The goods are liable for confiscation and accordingly, the confiscation is upheld - Redemption allowed @10% of value plus penalty - AT
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Indian Laws:
Dishonour of Cheque - Quantum of sentence / Fine - The sentence is optional, either it may be imprisonment for two years or fine which may be twice amount of the cheque or both - it is not felt proper to impose sentence of imprisonment but the complaint is pending since 2011 - the respondent can be imposed with the fine being twice the amount of the cheque. There is a request for leniency from imposing twice the amount of the cheque. It can’t be accepted when this Court is not imposing the sentence of imprisonment. - HC
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IBC:
CIRP - Del Credere Agent - Financial Debt or not - in the teeth of Clause 15 of the ‘Del Credere Agency Agreement’, dated 04.04.2017 and keeping in mind of a prime fact that the ‘Default’, which took place, pertaining to the ‘Supply of Goods’, comes within the definition of ‘Operational Debt’, as per Section 5(21) of the I & B Code, 2016 and hence, Section 9 of the I & B Code, 2016, attracts in an ‘unambiguous manner’ - the ‘Debt’, in the present case, cannot be termed as ‘Financial Debt’ - AT
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IBC:
CIRP - Bona fide Home Buyers’ of the Villa - This ‘Tribunal’, keeping in mind of the surrounding facts and circumstances of the instant case, on a careful consideration of respective contentions, advanced on either side, without ‘haziness’, comes to a resultant conclusion, that ‘to and in favour’ of the ‘Appellants / Petitioners’, ‘No Security Interest’, is created, especially, the admitted fact being, ‘no Registered Sale Deed’, was ‘executed’, and as such, ‘no relief(s)’, can be granted to the ‘Appellants / Petitioners’. - AT
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IBC:
CIRP - approval the resolution plan - Present is a case where the Appellant having been given multiple opportunities to submit a Section 12-A proposal and having consistently failed to do so, there does not appear to be any sufficient ground for the Appellant to claim that prejudice has been caused to their interest in allowing Respondent No.3 to submit their resolution plan - AT
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IBC:
Approval of Resolution plan - Validity of order of NCLT issuing direction for consideration of PUFE Transaction Applications first and adjourning the Application for approval of Resolution Plan to be heard later - NCLT erred in observing that the consideration of Plan Approval Application has to be deferred and can be taken only after PUFE Applications are decided. - AT
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PMLA:
Money Laundering - Scheduled offences - The petitioners besides facing trial for the offences under ULA(P) Act, are also facing trial for offence under Section 121-A of RPC. The offence under Section 121-A of IPC, which is in pari materia with Section 121-A of the RPC, was a scheduled offence even prior to the Amendment Act of 2009. On this ground also, the petitioners cannot claim that they could not have been prosecuted for offence under Section 3 of the PMLA. - HC
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Central Excise:
100% EOU - Remission of duty - applicability of Rule 21 of CER on plant and machinery and raw materials which were lost and damaged in fire - if the raw materials/capital goods were destroyed due to accidents which are beyond the control of the assesse, remission is required to be granted. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (8) TMI 1310
Maintainability of appeal - time limitation - appeals filed by the petitioner beyond the statutory period of limitation - HELD THAT:- The issue as to whether the service of Order through web portal under Section 169(1)(d) of the Central Goods and Services Tax (GSST) Act, 2017, has to be considered as sufficient or not has to be decided only in W.P.No.21081 of 2023 [ 2023 (8) TMI 1300 - MADRAS HIGH COURT] . Since the orders were received by the petitioner through RPAD in all cases except in W.P.No.21081 of 2023, there is no merits in these writ petitions. Petition dismissed.
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2023 (8) TMI 1302
Non-production of relevant documents, pursuant to summons issued - HELD THAT:- The appellants are bound to produce the relevant documents in their custody. Accordingly, the order dated 26th October, 2021 is made absolute, subject to the compliance with the directions contained in the order dated 17th July, 2023. Appeal allowed.
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2023 (8) TMI 1301
Refund of Input Tax Credit - goods exported during the period November 2020 to March 2021 - HELD THAT:- There is no allegation regarding any irregularity in respect of the supplies made by the suppliers other than M/s Siddhi Impex. There is also no dispute as to the quantum of the ITC in respect of those supplies. Neither the Adjudicating Authority nor the Appellate Authority has raised any doubt in respect of those supplies. There are no reason whatsoever for denial of refund in respect of ITC pertaining to supplies made by suppliers other than M/s Siddhi Impex. The present petition is allowed. The impugned orders are set aside.
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2023 (8) TMI 1300
Whether the service of Order through web portal under Section 169(1)(d) of the Central Goods and Services Tax (GSST) Act, 2017, has to be considered as sufficient or not? List this case after four weeks for filing counter and for final disposal. The respondents are directed to maintain status quo as on date till the next date of hearing.
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2023 (8) TMI 1299
Bonded warehouse transaction covered under Schedule III of the CGST Act, 2017 r/w CGST Amendment Act, 2018 or not - transfer of title of goods by the Applicant to its customers or multiple transfers within the FTWZ - applicability of Integrated Tax (IGST) Circular No. 3/1/2018 dated 25.05.2018. HELD THAT:- Free Trade Warehousing Zone is a Special Economic Zone wherein mainly trading and warehousing and other activities related thereto are carried on. It is a deemed foreign territory within the geography of India for the purpose of tariff and trade. The Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006 are the legal framework for FTWZ. Instructions are also issued by the Ministry of Commerce Industries from time to time to clarify various operational aspects of FTWZ - paragraph 8(a) in the Schedule III is specific to the warehoused goods lying in the warehouses licensed under Customs Act, 1962. Whereas the transactions narrated in the application are in FTWG, which are warehouses governed under the provisions of SEZ Act, 2005 and not licensed under Customs Act, 1962. Therefore, the transactions in the FTWG will not be covered under Schedule III of CGST Act, 2017 read with CGST Amendment Act, 2018. Whether the Integrated Tax (IGST) Circular No. 3/1/2018 dated 25.05.2018 is applicable to the present factual situation? - HELD THAT:- Circular No. 03/01/2018 - IGST, dated 25th May 2018 has been rescinded vide Circular No. 04/01/2019 -IGST, dated 01.02.2019, in view of the amendment made in Schedule III of the CGST TNGST Act, 2017, by inserting Paragraph No. 8(a), so as to provide that the supply of warehoused goods to any person before clearance for home consumption shall be neither a supply of goods nor a supply of service.
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2023 (8) TMI 1298
Taxability - Supply of raw water and its incidental charges - Maintenance charges for usage of common facilities - Participatory Infrastructure Development Scheme (PIDP) charges - interest collected towards delayed payment for Upfront lease premium and Differential lease premium - interest for delayed payment of consideration (as mentioned above) - Penalty for delay in execution of the project and delay in execution of lease deed. Whether the Supply of raw water and its incidental charges are liable to be taxed under the prevailing GST Laws? - HELD THAT:- The raw water supplied by the Applicant to the industrial units is exempted under entry no. 99 of exemption notification No. 02/2017-CT(Rate) dt. 28.06.2017 - Regarding the incidental charges collected from the allottees such as Interest for delay in payment obligations (Water Charges), Penalty for delay in payment obligations (Water Charges), it is observed that when the principal supply of raw water is exempted, recovery of interest or penalty for delayed payment of water charges and Reconnection charges are not liable to tax, as clarified in Para No. 9 of circular No. 178/10/2022 - GST dt. 03.08.2022, issued by the Department of Revenue. Whether the Maintenance charges for usage of common facilities are liable to be taxed under the prevailing GST Laws? - HELD THAT:- In as much as the Applicant has not submitted any documents as required in the Rule/definition of pure agent discussed above, i.e any document such as agreement entered into with the Allotee(s) to act as Pure agent, to incur expenditure or costs, in the course of supply of goods or any other document in support of their claim; the charges collected cannot be treated as reimbursable even if it is only a reimbursement of actual cost - as per provision of Section 7(1) (a), the activity of collecting Maintenance charges for usage of common facilities, would fall in category of supply. A transaction which is incidental or ancillary to sub-clause (a) falls under the scope of sub-clause (b) of Section 2(17) of CGST Act, 2017. The provisions of sections 7(1)(a) of CGST Act, 2017 read with clause (b) of section 2(17) of CGST Act, 2017 indicates that the activities of the appellant would fall under the definition of supply hence chargeable to GST. It is observed that there may be transfer of property in goods and/or services in the course of maintenance of the aforesaid amenities/ buildings which is made against a consideration. Therefore, these activities fall under the scope of supply envisaged under Section 7 of the GST Act and hence liable for GST @ 18% under SAC 995429 vide SI. No. 3 of Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017. Whether the Participatory Infrastructure Development Scheme (PIDP) charges are liable to be taxed under the prevailing GST Laws? - HELD THAT:- The provisions of sections 7(1) (a) of CGST Act, 2017 read with clause (b) of section 2(17) of CGST Act, 2017 indicates that the activities of the appellant would fall under the definition of supply hence chargeable to GST - the activity of rendering infrastructure works as described above, whether on request from the allottee(s) on their own, there may be transfer of property in goods and/or services in the course of upgradation/renovation or reconstruction of the aforesaid structures/ buildings which is made against a consideration. Therefore, these activities fall under the scope of supply envisaged under Section 7 of the GST Act and hence liable for GST @ 18% under Group 99859 (other support services) vide SI. No. 23(iii) of Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017. Whether the interest collected towards delayed payment for Upfront lease premium and Differential lease premium are liable to be taxed under the prevailing GST Laws? - HELD THAT:- When the principal supply itself is exempted, the interest collected towards delayed payment for Upfront lease premium and Differential lease premium are not liable to be taxed under GST Act, as clarified in Para No. 7.1.6 of Circular No. 178/10/2022 - GST dt.03.08.2022, issued by the Department of Revenue. Whether the interest for delayed payment of consideration for the points ( as mentioned above), are liable to be taxed under the GST Laws? - HELD THAT:- For Supply of raw water and its incidental charges, when the principal supply of raw water is exempted, recovery of interest or penalty for delayed payment of water charges and reconnection charges are not liable to tax, as clarified in Para No. 9 of Circular No. 178/10/2022 - GST dt. 03.08.2022, issued by the Department of Revenue. Maintenance charges for usage of common facilities and Participatory Infrastructure Development Scheme (PIDP), the value of supply shall include interest or late fee or penalty for delayed payment of any consideration for any supply. In as much as the principal supply i.e maintenance service and PIDP are taxable, interest and penalty collected towards rendering such services will also form part of the value of supply and liable to be tax appropriately in consonance with the principal supply. Whether the Penalty for delay in execution of the project and delay in execution of lease deed are liable to be taxed under the prevailing GST Laws? - HELD THAT:- Since the main supply i.e the upfront fee collected is exempted as per entry no. 41 of Notification No. 12/2017- CT (Rate) dt. 28.06.2017, penalty for delay in execution of the project and delay in execution of lease deed are not liable to be taxed under the prevailing GST Laws.
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2023 (8) TMI 1297
Classification of goods - rate of GST - HSN Code - used/running Wind Turbine Generator (WTG) / Wind Mill with accessories for sale purpose - Wind Turbine Generator (WTG)/ Wind Mill installed land - HELD THAT:- The transaction of the applicant involving the sale of the wind mills is covered under Clause 4 of Schedule II of the CGST Act, 2017, as the transaction involves disposal of business assets. Accordingly the activity of sale of wind mills amounts to supply of goods - entire unit of wind mill is proposed to be supplied as such without dismantling the same. Supply of wind mill with its parts and accessories is a composite supply of wind mill and liable to tax @ 6% CGST with effect from 01.10.2021 vide entry no. 201A of Notification No. 01/2017 Central Tax (Rate), dated 28.06.2017 as amended vide Notification No. 08/2021 Central Tax (Rate), dated 30.09.2021. Sale of land on which the wind mill is embedded - HELD THAT:- It is ascertained from the Commercial Taxes and Registration Department, Tamil Nadu, that as per the prevailing practice, in cases of transfer of windmill and the embedded land, windmills are not considered as an immovable property and stamp duty is being levied only on the transfer of land under the Indian Stamp Act, 1899. Be it so, according to GST laws, sale of land is not liable to GST, as the sale of land shall be treated neither as supply of goods nor as supply of services in terms of clause 5 of Schedule III of the CGST Act, 2017.
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2023 (8) TMI 1296
Maintainability of Advance Ruling application - non-disclosure of enquiry/summons under Section 70 of CGST Act - HELD THAT:- The applicant is interpreting the term 'proceedings' without considering the first proviso to section 98 (2) of the Act comprehensively - It is apparent that the first proviso covers any 'proceedings' in the case of an applicant under any of the provisions of the Act including Section 70 of the Act, under which investigation is being conducted by DGGI, Chennai Zonal Unit. It is taken into cognizance, the letter received from DGGI, Chennai Zonal Unit letter dt. 03.04.2023, about the investigation being conducted against the applicant from which, it is apparent that proceedings are pending against the applicant on the date of filing of advance ruling online application on 30.12.2022 and liable to be rejected under first proviso to Section 98(2) of the Act. The advance ruling application is rejected.
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2023 (8) TMI 1295
Maintainability of Advance Ruling application - non-disclosure of enquiry / summons under Section 70 of CGST Act as 'proceedings' in the advance ruling application - suppression of facts or not - HELD THAT:- The questions raised in advance ruling application which are already pending investigation by DGGI against the applicant was brought to the attention of the AR in the personal hearings for which the applicant provided various submissions - before venturing to decide the questions on merits, the question of admissibility of the application needs to be decided in view of the intimation received from DGGI, Chennai Zonal Unit about the investigation against the applicant being conducted on the questions raised in the advance ruling application. It is found from the letters received from DGGI, Chennai Zonal Unit about the investigation being conducted against the applicant, an Incident Report No. 89/2022 dated 24.06.2022 having OR No. 89/2022 dated 16.06.2022 determining tax amount of Rs. 474 lakhs Further, the said incident report was issued after the statement deposed by Registrar of the applicant on 18.04.2022 and 14.06.2022. Therefore, it is apparent that proceedings are pending against the applicant on the date of filing of advance ruling online application on 27.06.2022 and liable to be rejected under first proviso to Section 98(2) of the Act. The advance ruling application is rejected.
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Income Tax
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2023 (8) TMI 1309
Assessment u/s 153A - unexplained investment - ITAT confirming the order passed by CIT(A) deleting the additions - As confirmed by HC [ 2022 (7) TMI 1095 - DELHI HIGH COURT] that both the CIT (A) as well as ITAT have given concurrent findings of fact that no incriminating materials had been seized during search. HELD THAT:- UPON hearing the counsel the Court made the following Time to file spare copy is extended by a period of two weeks from today If the spare copy is not filed, the Special Leave Petition shall stand dismissed for non-prosecution without further reference to the Court.
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2023 (8) TMI 1308
Reopening of assessment u/s 147 - assessee has claimed deduction on account of notional foreign exchange loss - change of opinion - as per HC [ 2022 (4) TMI 624 - BOMBAY HIGH COURT] reopening of assessment by the impugned notice dated 31.03.2021 is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings. HELD THAT:- There is an inordinate delay of 382 days in filing this special leave petition which has not been satisfactorily explained. Even on merits, we do not find any good ground and reason to interfere with the impugned judgment. Accordingly, the special leave petition is dismissed on the ground of delay and on merits. Pending application(s), if any, also stand disposed of.
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2023 (8) TMI 1307
Validity of Reopening of assessment - request personal hearing rejected - HELD THAT:- The impugned order is not sustainable, particularly, in the light of the fact that the petitioner has specifically requested for a personal hearing in response to notice issued u/s 148 - That apart, the petitioner has been asked the respondents for a reason to reopen the assessment which was not furnished earlier. It was furnished only after the disposing of the petitioner's objection for reopening the assessment, after the order was passed. The reason for reopening of the assessment also does not make it clear as to whether the amount was deposited in the petitioner's account or in the account of the said M/s. Novateur Electricals and Digital Systems Private Limited. The impugned order is set aside and the case is remitted back to the respondents to pass a speaking order within a period of 45 days from the date of receipt of a copy of this order.
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2023 (8) TMI 1306
Recovery proceedings - attachment orders of bank account - case of the petitioner that the petitioner is a retired employee from the Central Government Ministry of Defence and a pensioner whose pension has been blocked and therefore the order of attachment of his bank account be lifted - HELD THAT:- The respondent is directed to lift the Order of Attachment in so far as the pension of the petitioner is concerned. However, there shall be an embargo on the petitioner from withdrawing any other amounts deposited in the attached account. It is made clear that only the pension that is credited by the pension paying authority shall be allowed to be withdrawn. Respondent shall send suitable communication to the Bank. Meanwhile, the Appellate Commissioner shall dispose of the appeals which have been remanded back to the Appellate Commissioner as expeditiously as possible preferably within a period of three (3) months from the date of receipt of a copy of this order.
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2023 (8) TMI 1305
Addition u/s 68 - doctrine of fraud - AO based on the information received from DDIT (Investigation)-II, New Delhi that the appellant is a beneficiary of the accommodation entries - HELD THAT:- From mere perusal of the assessment order, it could reveal that the respondent-assessee had not discharged the initial onus of proving the identity, genuineness and creditworthiness of the share application money. CIT(A) considering the share application form, board resolution of the company, share receipt letter and confirmation, copy of bank statement of the respondent-assessee etc, had concluded that the respondent-assessee had discharged the initial onus lying upon it. The evidence considered by CIT(A) does not establish the genuineness and creditworthiness of the share application money. Thus, CIT(A) had failed to enquire into the creditworthiness and genuineness of the transactions and there is no evidence brought on record establishing the genuineness and creditworthiness of the share application money. Thus, the order passed by the ld. CIT(A) is perfunctory and not based on any material on record. Thus, the doctrine of fraud can be squarely invoked to the facts of the present case. Decided in favour of revenue.
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2023 (8) TMI 1286
Notice against non existent/ceased company - scheme of amalgamation being sanctioned - HELD THAT:- As noted in our order it is not in dispute that AO was informed that Anirudh Overseas Pvt. Ltd., i.e., the transferor company, had ceased to exist as it had merged with the respondent/assessee, i.e., Archit Securities Pvt. Ltd. This information was given to the AO via letter dated 28.06.2011; which was filed with him on 27.07.2011. The Tribunal adverted to these very facts and thereafter concluded that having regard to the position of law, the assessment order could not be sustained as it had been passed against an entity which was not in existence - We agree with the view taken by the Tribunal. Decided against revenue.
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2023 (8) TMI 1285
Reopening of assessment u/s 147 - reason to believe - commencement date / year for deduction u/s 80IA - Eligible from 1995 or 2000 - scope of change of opinion - HELD THAT:- Division Bench of this court in Aroni Commercials Ltd [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] held that once a query is raised during the assessment proceedings and assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not necessary that the assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. As a background we must note that assessee had established business and had received approval to set up EPZ, i.e., Export Processing Zone vide notification dated 31st May 1994. The Government of India, Ministry of Commerce and Industry vide its letter dated 3rd March 2004 had informed assessee that the EPZ was converted into a Special Economic Zone (SEZ) vide resolution dated 1st November 2000 but all the terms and conditions mentioned in the Notification dated 31st May 1994 remained unchanged. Assessee u/s 80IA was entitled to claim deduction for any ten consecutive assessment out of the period of 15 years commencing from the date the Notification dated 1st November 2000 was issued and assessee has been claiming such deduction. In Assessment Year 2006-07 when the reasons to reopen was issued the A.O. had formed an opinion that assessee was entitled to claim for 15 years only from 31st May 1994 and not from 1st November 2000. Assessee had filed the petition challenging the reopening for AY 2006-07. Order stating that the proceedings that were initiated u/s 147 for AY 2006-07 were dropped. In view thereof assessee withdrew Writ Petition - Mr. Vaidya therefore is justified in submitting that there can never be a case of incorrect dates being stated in Form 10CCB by assessee as regards establishment of Industrial Park. We agree with that this is nothing but a case of change of opinion by the A.O. from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. We should also note that in the affidavit in reply filed through one Ms. Jyothi Sharma affirmed on 24th April 2023 it is stated that the reassessment proceedings have been initiated in view of the objections/ observations raised by the revenue audit. The law on that is quite settled. In every case the Income Tax Officer must determine for himself what is the effect and consequences of the law mentioned in the audit note and whether in consequence of the law which has come to his notice that he can reasonably believe that income has escaped assessment. The basis of his belief must be the law on which he has now become aware and the opinion rendered by the audit party in regard to the law cannot, for the purpose of such belief, colour the significance of such law. The true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income Tax Officer. We have to note that the Income Tax Officer who has issued the notice to reopen and who has recorded the reasons to believe based on which we would assume he has obtained approval under Section 151 of the Act has chosen to suppress the fact that there were audit objections raised. In the reasons to believe there is not even a whisper that there was any audit objection. He was duty bound to disclose that there were audit objections and that he has now become aware of the law based on which he can reasonably believe that income had escaped assessment. Decided in favour of assessee.
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2023 (8) TMI 1284
Time limit for completion of assessments and reassessment u/s 153 - Extension of period of limitation after Covid - Validity of Notice calling the petitioner for a hearing challenged in a remand back proceedings - HELD THAT:- This Writ Petition challenging the hearing notice dated 26.02.2020 fixed, pursuant to the ITAT's order dated 20.06.2019, is without any merits. By the impugned order, the petitioner was called upon to come for a personal hearing on 05.03.2020. The said notice fixed the hearing on 05.03.2020. The hearing did not take place on account of out break of Covid-19 pandemic. In any event, the petitioner appears to have sent representation on 12.05.2022 requesting for a personal hearing and reminder dated 28.06.2023, even though according to the petitioner the limitation would have expired on 30.06.2021 in terms of the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. There is no merits in the challenge to the impugned notice. It is however open for the petitioner to send appropriate representation to the effect that the proceedings initiated for the AY 2014-2015 have abated in accordance with Section 153(3) read with proviso to the aforesaid Section of the Income Tax Act, 1961 and the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Writ Petition is disposed of. Since the petitioner has sent the reminder representation on 28.06.2023, the first respondent shall consider and pass a preliminary order based on the petitioner's representation regarding the limitation
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2023 (8) TMI 1283
Reopening of assessment u/s 147 - reason to believe - petitioner has stated that the total deposit in cash that was made by the petitioner was only for INR 21,65,000 as against INR 65,02,546 between 01-04-2015 and 31-03- 2016 - HELD THAT:- As considered the arguments advanced by petitioner and the learned Senior Standing Counsel for the respondent, there is no case made out for interfering with the impugned order. The entries in the bank account that has been filed along with the reply on 16.03.2023 indicates that the petitioner has not only received Rs. 31,80,200/- in cheque but also additionally a sum of Rs. 21,65,000/- in the account. Thus, the proceedings that has been initiated so far, which has been culminated in the impugned Assessment Order and Notice u/s 148 cannot be interfered with. WP dismissed.
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2023 (8) TMI 1282
Addition u/s 50C - difference between the value of property as per Stamp Valuation Authority and as per Government approved valuer - HELD THAT:- We find that the difference between the value as per Stamp Valuation Authority and the value as per the Government approved valuer is less than 10% which is within the leverage provided u/s 50C. The third proviso to Section 50C of the Act provides that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and ten per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of Section 48, be deemed to be the full value of the consideration. The case of the assessee finds support from the decision of Sandeep Kumar Poddar Vs. ITO [ 2023 (3) TMI 666 - ITAT KOLKATA] wherein a similar issue has been decided by the assessee. We, therefore, set aside the order of Ld. CIT(A) and direct Ld. AO to delete the addition u/s 50C - Decided in favour of assessee.
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2023 (8) TMI 1281
Deposit of cash during the period of demonetization - HELD THAT:- As assessee could not bring any evidences to substantiate his claim for justifying depositing the cash in his banks accounts during demonetization period. Furthermore, even no details of the customers from whom the cash collections in SBNs have been made during the demonetization were also filed before the Tribunal. Therefore, we do not find any infirmity with the order of the NFAC, the same is hereby upheld. Addition u/s 40A(3) - payments in cash towards purchases - HELD THAT:- Before the NFAC, no documentary evidences were filed for verification of the claim of the assessee that they have not violated the provisions of sec. 40A(3) of the Act. The assessee had simply filed the written submissions reiterating his earlier submissions made before the AO. At the time of hearing before us also, ld.AR claimed that the payments were covered under the exception of Rule 6DD of the Income Tax Rules, 1962, however, no documentary evidences/ materials were furnished before the Tribunal substantiating and corroborating the claim of the assessee that they are covered under the exception of Rule 6DD of the Income Tax Rules. In view thereof, there is no need of interference with the findings of the NFAC which is upheld. Assessee appeal dismissed.
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2023 (8) TMI 1280
Correct head of income - Agricultural income or business income or income from other sources - AO taken into account agricultural income partially and treated the part as business income/income from other sources - AR submitted that the assessee has not carried out any business activities and was not supposed to maintain books of accounts as the assessee is mainly engaged in agricultural activities of growing of Flower Plants, Vegetable Plants and various types of Lawns during the year under consideration - HELD THAT:- As the assessee is carrying out the agricultural activities and sale of plant to the particular party and this ledger shows the transaction to the extent of Rs. 67,080/- and the difference of Rs. 18,625/- was due to booking of assessee s bills lately which is reflected from the documents produced before the Assessing Officer as well as before the CIT(A). Thus, ground no.1 is allowed. Activity of agricultural in nature in respect of engaging in nursery activities of growing various types of lawns, flower plants and vegetable plants and they cannot be considered as commercial activity for treating the same as business income. The assessee has produced relevant copies of the sales bills as well as the transaction details from Bank Account as well as books of account including Ledger and Invoices. Hence, ground nos.2 3 are allowed. Agricultural expenses , the assessee has shown the sales bills of all the parties including M/s. Green Leaf and at no point of time the Assessing Officer has disputed that the said agricultural income was in fact of commercial activities related to business income. Thus, ground no.4 is allowed.
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2023 (8) TMI 1279
Validity of reopening of assessment - Non-service of notice u/s 143(2) - HELD THAT:- Even if the assessee did not raise any objection to non-service of notice u/s 143(2) of the Act before the AO, the legal contention cannot be dismissed on the strength of provision of section 292BB of the Act as the same has no application to present AY 2007-10. As per decision of Alpine Electronics Asia Pte Ltd [ 2012 (1) TMI 100 - DELHI HIGH COURT] non-service of notice u/s 143(2) of the Act makes assessment order invalid. Accordingly, ground No. 1 of assessee is allowed and consequently, impugned reassessment order u/s 147/143(3) of the Act is quashed being bad in law and invalid. Appeal of the assessee is allowed.
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2023 (8) TMI 1278
Claim of deduction of unknown liability towards customs duty - Deduction u/s 43B - Fresh claim before AO during the course of assessment proceedings - A.O. has did not allow the claim in the absence of revised return of income following the decision of Goetze (India) Limited. [ 2006 (3) TMI 75 - SUPREME COURT] - AO did not allow the claim of the assessee on the ground that deduction cannot be allowed since the AO has no power under the Income Tax Act to allow expenses made by the assessee during the year, but not claimed by the assessee in the return of income - CIT(A) allowed the assessee to raise this contention before him on the ground that the appellate authority including CIT(A) have full power / authority to entertain such claim in appeal and accordingly, permitted the assessee to raise such claim before him - HELD THAT:- We observe that the same are infructuous since the Ld. CIT(A) has permitted the assessee to raise such claim regarding allowability of customs duty paid under protest during the course of appellate proceedings. Accordingly, Ground Nos. 2 3 of the assessee s appeal are dismissed as being infructuous. Additional claim towards payment of customs duty - As we observe that Ld. CIT(A) in his order has observed that as per copy of decision by the Deputy Commissioner of Customs in assessee s case, the assessee was not required to pay customs duty under reference. CIT(A) observe that in view of the aforesaid order passed by the concerned Customs Authority, since the assessee was not required to pay customs duty in all likelihood, the assessee would have already put up a claim for refund of the aforesaid amount which was paid under protest. Since the assessee was not legally obliged to pay customs duty amount, therefore, this additional claim towards payment of customs duty cannot be allowed under the provision of Section 43B(a) of the Act. Accordingly, we find no infirmity in the order passed by Ld. CIT(A) so as to call for any interference, given the facts of the assessee s case. Appeal of the assessee is dismissed.
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2023 (8) TMI 1277
Short term capital gain or long term capital gain of capital assets - sale of building with land - denying indexed cost of acquisition and indexed cost of improvement claimed by the assessee - different treatment in the hands of co-owner of the property - HELD THAT:- We find valid point in the submission of assessee that once in the hands of one of the co-owner of the property the claim for long term capital gain has been accepted by the AO along with cost of acquisition and indexation thereon in our view claim has to be allowed in the hands of the assessee being the other co-owner. This view is supported by the decision in the case of Jaswant Rai [ 1996 (10) TMI 484 - PUNJAB AND HARYANA HIGH COURT] Also in the case of CIT vs. Smt. Laxmi B Menon [ 2003 (4) TMI 38 - KERALA HIGH COURT] agreeing with the judgments of Vimal Chand Golecha [ 1992 (12) TMI 33 - RAJASTHAN HIGH COURT] and Dr. B.L. Ramachandran Rao [ 1997 (2) TMI 28 - MADRAS HIGH COURT] held that the land has to be assessed as long term capital asset and the building has to be assessed as a short term capital asset for the purpose of levy of capital gains tax. Following the above decisions similar view has been taken in the case of JCIT vs. Ashok Kumar Arora. Therefore, even if we accept the alternative claim of the assessee that capital gain has to be computed on land and building separately the position in the assessee s case. Even if capital gain computed on the land and on the building separately as a long term capital asset and as a short term capital asset respectively still there is no liability arises on the assessee to pay additional tax on account of capital gains. We direct the AO to allow indexation on cost of acquisition and cost of improvement while computing the long term capital gain as was done in the case of the co-owner and the assessee s brother Shri Harsh Bansal. Appeal of assessee allowed.
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2023 (8) TMI 1276
Assessment u/s 153A - Addition made protectively in respect of share capital in the absence of any incriminating material found in the course of search - CIT(A) deleted the addition - HELD THAT:- The finding of the CIT(Appeals) that it is an undisputed fact apparent from the assessment order that no incriminating documents/records for any other evidence was found or seized during the course of search proceedings which resulted in any addition in the case of the assessee was not rebutted with evidences by the Revenue before us. In the circumstances the ratio laid down in case of CIT vs. M/s Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] was rightly applied by the Ld.CIT(A) also affirmed in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] .- In the circumstances, no valid reason to interfere with the findings and the decision taken by the Ld.CIT(A) on the issue. Thus, we reject the grounds raised by the Revenue and sustain the order of the Ld.CIT(Appeals). Decided against revenue.
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2023 (8) TMI 1275
Revision u/s 263 - assessee had utilized the unsecured loans for non business purpose and interest paid on the same has been claimed as business expenses - HELD THAT:- As perused the copy of notice u/s 142(1) issued by the AO vide which various details in respect of the unsecured loan reflected in the balance sheet was called from the assessee. In response the assessee has furnished name and address of the unsecured loans creditors, their PAN no. and amount of unsecured loans taken during the year along with copies of confirmation of loan account and copies of income tax return filed by the lenders, their bank statement and their ledger account as placed in the paper book by the assessee. Ld. Counsel has demonstrated from the copy of various documents placed in the paper book as referred above that assessee has provided the complete details of unsecured loan obtained by the assessee during the year under consideration. However, we have find that regarding utilization of the loans the assessee has only stated that the loans were utilized for import of goods. Assessee has not provided any other relevant material to demonstrate that unsecured loans were utilized for import of goods - AO has not verify the utilization of unsecured loan for the business purpose. Therefore, the order of the PCIT passed u/s 263 of the Act is sustained to the limited extent of verification of the claim of the assessee with respect to utilization of unsecured loan for business purpose. Accordingly, the appeal of the assessee is partly allowed.
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2023 (8) TMI 1274
Unexplained u/s 68 - cash deposits during the demonetisation period - AO treating cash receipts u/s 68 and charging it u/s 115BBE at 60 percent tax with 25 percent surcharge which was brought by amendment on 15/12/2016 (retrospective amendment-after commencement of assessment year 2017-18) - HELD THAT:- AO accepted that it was money deposited by the members and noted that the assessee had brought the entries in its books of account, therefore section 68 will apply and accordingly treated it as income u/s. 68. There is no doubt that the assessee has satisfied the identity of the deposits, who are members of the society and genuineness of the transactions because the amounts have been deposited in the members accounts only. If the AO had any doubts that the assessee has not satisfied the ingredients of section 68, he could have asked further details from the assessee, but the AO has not done the same, which clearly shows that the assessee has discharged its duty to satisfy the requirement of section 68. We further note that the SBNs have been deposited in the members accounts, accordingly, the assessee did not get any extra benefit as observed by the AO which was treated as income us 69A - In view of this, the provisions of section 68 is not applicable in the present facts of the case and the AO without discussing in detail has made addition u/s. 68 which is not proper. Therefore the addition is deleted. Appeal by the assessee is allowed.
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2023 (8) TMI 1273
Income deemed to accrue or arise in India - existence or otherwise of Permanent Establishment (PE) in India -profit attributable to the PE - assessee is a non-resident corporate entity incorporated under the laws of United States of America (USA) and is a tax resident of USA [assessee is a Developer, Marketer, seller of Robotic Process Automation (RPA) and related products and services] - whether the assessee in the relevant assessment years had any fixed place PE in India in terms with Article 5(1) read with Article 5(2) of the India USA DTAA? - HELD THAT:- Facts on record reveal that, though, many of the employees visited India, but there is no evidence to suggest that all of them used the premises of AASPL. Even assuming that all those employees used the premises of AASPL but there is no evidence to suggest that they used the premises for the activity relating to the sale of software. Undisputedly, the receipts, which are sought to be attributed to the PE are from sale of software licence, however, as could be seen from the facts on record, the transfer of licence takes place, once, the licence key is generated and made available to the licencee after execution of the contract. Insofar as the receipts from provision of services, undisputedly, the assessee has offered them to tax. Though,DR has alleged before us that the licence agreement was executed in India contrary to the claim of the assessee, however, no documentary evidences has been brought to establish such facts. Thus, we are of the view that the Revenue has failed to establish on record through credible evidence that the assessee has a fixed placed PE in India through which it has earned the income relating to sale of software licence. Therefore, in our considered opinion, no part of such income can be attributed to the PE. Grounds are disposed of accordingly. Taxability of amount offered towards FTS/FIS - Undisputedly, in the returns of income filed for the impugned assessment years, the assessee has suo motu offered the income received from the services rendered as FTS/FIS under Article 12(4) of India USA DTAA. It is the claim of the assessee that the receipts cannot fall within the ambit of FIS in view of Article 12(5)(a) of the tax treaty. Admittedly, the aforesaid claim was not made by the assessee either before the Assessing Officer or even before learned DRP. Neither of the authorities have factually examined the nature and character of such receipts by investigating into the relevant facts. Therefore, entertaining assessee s claim at this stage, would require fresh investigation into the facts, which in our view, is not permissible.
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2023 (8) TMI 1272
TP Adjustment - AMP expenses - international transaction or not? - HELD THAT:- As decided in assessee own case [ 2017 (2) TMI 650 - ITAT DELHI] considering the material facts like the absence of an agreement, arrangement or understanding between the appellant and ifs associated enterprise for sharing the advertisement, marketing and promotion expenses or for incurring the advertisement, marketing and promotion expenses for the sole benefit of the associated enterprise, payments made by the appellant under the head advertisement, marketing and promotion to the domestic parties cannot be termed as an international transaction specifically when the TPO has not been able to prove that the expenses incurred were not for the business carried out by the appellant in India. Disallowance u/s 14A - when assessee has earned no exempt income - HELD THAT:- Upon hearing both the sides and perusing the records, we find that this issue is squarely covered in favour of the assessee by the Decision of Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] and CIT vs. Holcim India (P) Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT] . Accordingly, this issue is decided in favour of the assessee.
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2023 (8) TMI 1271
Penalty u/s 271B - delay in filing tax audit report - as per assessee delay was due to change of auditor - HED THAT:- The assessee has placed the reasonable cause for delay in submission of the tax audit report u/s 44AB before the revenue authority. The assessee further produced that the delay, only for this impugned assessment year, not in any other assessment years. The assessee is not a habitual defaulter for filing the tax audit report. Therefore, the change of auditor is one of the valid reasons for delay in filing the tax audit report. There is a sufficient reason for delay in submitting the tax audit report before the authority. Accordingly, the penalty u/s 271B is liable to be deleted. Decided in favour of assessee.
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2023 (8) TMI 1270
Reopening of assessment - Addition u/s 69C - value of asset bought from the vendor who is alleged to be a suspicious dealer - disallowance of depreciation on the asset above - HELD THAT:- As case of the assessee is reopened based on the information received from Sales Tax Department, Government of Maharashtra as per which the supplier is declared as non-genuine supplier. Accordingly, the case of the assessee was reopened and the value of the machinery declared by the assessee is disallowed and also the respective depreciation claimed by the assessee is also disallowed. In our considered view the AO cannot disallow the total value of the asset and also simultaneously disallow the depreciation claimed by the assessee. The disallowance can only be made to the extent of the benefit claimed by the assessee under the Act. In the given case the assessee has claimed benefit only to the extent of depreciation. As relying on Sashai Natwar Waghela [ 2020 (11) TMI 595 - ITAT MUMBAI] we direct the AO to delete the additions made. Accordingly, the appeal filed by the assessee is allowed.
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2023 (8) TMI 1269
Disallowance of loss on trading in Mentha oil - unrelated party transactions - special auditor in his report observed that assessee incurred loss - HLD THAT:- Under the provisions of the Act in section 40A(2), it has been provided that if transactions with related parties are carried out below the market price, then AO can substitute the market price of the products with the transacted price, however in case of unrelated party the AO cannot invoke section 40A(2) of the Act and substitute the transacted price with the market price unless books of accounts of the assessee are rejected invoking section 145(3) of the Act and profit or loss of the business is estimated/recasted by the AO. In this case, AO has neither pointed out any defects in the books of accounts of the assessee and nor rejected the books of accounts and thus AO is prohibited from rejecting such transactions although carried out below the market price. The assessee has to arrange his business affair keeping in view the best interest of the business including retaining of the customers and AO cannot doubt the business transactions merely on ground that same is below the market price, without bringing on record any malafide in transactions. We observed that sales by the assessee to Barabanki trading company and Sharp Mint Ltd which constitutes 48.31 percent of the total sales value of the Mentha oil, thus the contention of the assessee of carrying out transactions in the below market price for retaining the customer is having some basis which cannot be ignored. Respectfully, following the ratio laid down in the case of Flipkart India Private Limited [ 2018 (5) TMI 337 - ITAT BANGALORE] we hold that in case of unrelated party transactions, AO cannot substitute the transaction price with the market price unless he invokes provisions of section 145 (3) of the Act and thus, we set aside the finding of the Ld. CIT(A) on the issue in dispute and delete disallowance of loss by the Assessing Officer. The ground No. 2 of the appeal of the assessee is accordingly allowed. Disallowance u/s 14A r.w.r. 8D - mandation of recording satisfaction - contention of the assessee that while making this disallowance AO has not recorded dissatisfaction with the correctness of the claim of the assessee having regard to its books of accounts - HELD THAT:- As per the provisions of the section 14A of the Act, the Assessing Officer can invoke the rule 8D of the Rules for computing disallowance, if he s not satisfied with the correctness of the claim of the assessee in respect of expenditure for earning exempt income. AO did not record a specific satisfaction as why the claim of the assessee of disallowance in terms of the employee cost was not correct. AO only recorded that assessee cannot earn exempt income without any systematic management of its investments which being complex in nature require market research, data analysis and planning. Whereas the assessee has duly itself disallowed the various expenses out of the employee cost, auditor remuneration, communication, computer expenses, electricity expenses, office expenses etc, which according to the assessee were part of the expenses which ought to have been incurred as proposed by the Assessing Officer. AO has not fulfilled the requirement of the recording dissatisfaction under provisions of the section 14A and therefore invoking of the rule 8D is not in accordance with law. The second argument of considering Only the investment which has yielded exempted income, for the purpose of computation of disallowance under rule 8D(2), is rendered academic only and therefore we are not adjudicating the same. The finding of the Ld. CIT(A) on the issue in dispute is set aside and the disallowance made by the AO is deleted. The ground of the appeal of the assessee is accordingly allowed.
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Customs
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2023 (8) TMI 1294
Undervaluation of imported goods - MDF boards - large-scale evasion of customs duty - Section 14 of the Customs Act, 1962 - test report disclosed the samples which do not confirm to Grade I or Grade II - inadmissibility of statements - non-availability for cross-examination. HELD THAT:- The statements made and signed by the dead persons or who cannot be found remain valid and admissible as long as these statements are made in the course of business. Therefore, the Commissioner was right in stating that Customs Officer is not a Police Officer - Statements made before him under Section 108 of Customs Act, 1962 are admissible in evidence and are not hit by Section 25 of Indian Evidence Act as is held by the apex court in the case of ROMESH CHANDRA MEHTA VERSUS STATE OF WEST BENGAL [ 1968 (10) TMI 50 - SUPREME COURT ]. Whether these statements made by Shri Sathyanarayana was it done in the course of business and has it been corroborated with other statements and evidences on record? - HELD THAT:- The statements and the under-invoicing documents were also corroborated by other importers of MDF from Green Panel Products, Malaysia whose names figured in the attachment of the incriminating email. It is also a fact that the other importers to whom show-cause notices were issued, approached the Settlement Commission Bench at Chennai. They admitted and paid the duty differences based on the incriminating email recovered from V R Marketing at Chennai and recovered under Mahazar. The fact that the other importers accepted the incriminating email and under-invoicing documents, goes to prove the authenticity and correctness of all the documents recovered. In view of these corroborated evidences, it is seen that Shri Sathyanaraya s statement and the documents recovered from his computer (extracted below) are authentic, therefore, the Commissioner was right in redetermining the value of the goods of 15 Bills of Entry as Rs.1,61,16,901/- [CIF] under Rule 4 of the Customs Valuation Rules, 1988 read with Section 14 of the Customs Act, 1962. Accordingly, the differential duty of Rs.35,49,849/- demanded under proviso to Section 28(1) of the Customs Act, along with interest is also upheld. The goods are liable for confiscation and accordingly, the confiscation is upheld in all the 15 Bills of Entry. The High court of Kerala in the case COMMISSIONER OF CUSTOMS, COCHIN VERSUS OFFICE DEVICES [ 2009 (6) TMI 66 - KERALA HIGH COURT ] has held that 10% of the value as RF is reasonable and upheld the same, hence the redemption fine of Rs.2,00,000/- which is only 10% of the value is upheld. As per proviso to Section 114A of the Customs Act, 1962, provided also that where any penalty has been levied under this Section, no penalty shall be levied under Section 112 or Section 114. Accordingly, since penalty imposed under 114A is upheld, the penalty of Rs. 25,000/- on M/s. Ply Point under Section 112(a) of the Customs Act, 1962 is set aside. Appeal disposed off.
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Corporate Laws
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2023 (8) TMI 1293
Oppression and Mismanagement - transfer of shares or not - forgery of documents and filing fraudulently false and fabricated returns with the RoC - HELD THAT:- The NCLT has rightly held that the petitioner (Appellant herein) has to first establish his right as a member of the Respondent Company before going into the issues concerning oppression and mismanagement of the Company. There are no merit in the appeal - appeal dismissed.
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Insolvency & Bankruptcy
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2023 (8) TMI 1304
CIRP - Del Credere Agent Agreement, entered into between the Appellant and the Principal' - Commercial Borrowing - Financial Debt , due and payable by the Respondent / Corporate Debtor or not - HELD THAT:- A perusal of the Del Credere Agency Agreement , dated 04.04.2017, entered into between M/s. Chemplast Sanmar Limited , and M/s. Madras Chemicals Polymers ( Appellant / Firm ), represented by its Proprietor Mr. Ashok Gupta (the Agent ), in Clause 1, it is mentioned that the Company , hereby appoints M/s. Madras Chemicals Polymers ( Agent , as Del Credere Agent ), to sell the said Products, manufactured by the Company , on principal to principal basis , in the City of Chennai and its Suburbs, Tamil Nadu, and Customers, nominated by Chemplast , on a non-exclusive basis . It cannot be forgotten that the true relationship of Agent and the Principal , is to be gathered from the nature of the Contract , its Terms and Conditions , and the Terminology , used by the Parties , is not decisive of the Legal Relationship , as per decision of the Hon ble Supreme Court of India in Snow White Industrial Corporation, Madras v. Collector of Central Excise, Madras [ 1989 (4) TMI 81 - SUPREME COURT ]. It is to be remembered that the Proceedings , under I B Code, 2016, are summary in nature , and it is not a Debt Enforcement Procedure . An Adjudicating Authority / Tribunal , is not a Recovery Forum or Court and it does not determine any Claim or Suit , in Summary Proceeding . No wonder, the objective of the I B Code , is to consolidate , and amend the laws , relating to reorganisation and insolvency resolution of corporate persons , partnership firms and individuals , in a time bound manner for maximization of value of assets of such persons , to promote entrepreneurship , availability of credit and balance the interests of all the stakeholders , including alteration in the priority of payment of government dues , and to establish an Insolvency and Bankruptcy Fund, and matters connected therewith or incidental thereto . Going by the Objective and Scheme of the I B Code, 2016 , this Tribunal , on the basis of surrounding facts and circumstances of the instant case, in the teeth of Clause 15 of the Del Credere Agency Agreement , dated 04.04.2017 and keeping in mind of a prime fact that the Default , which took place, pertaining to the Supply of Goods , comes within the definition of Operational Debt , as per Section 5(21) of the I B Code, 2016 and hence, Section 9 of the I B Code, 2016, attracts in an unambiguous manner - the Debt , in the present case, cannot be termed as Financial Debt , as per Section 5 (8) of the I B Code, 2016, in the considered opinion of this Tribunal . Considering the spirit and tenor of the Del Credere Agency Agreement , dated 04.04.2017, this Tribunal , comes to a clear cut conclusion that in the instant case, the Default , arose in relation to the supply of PVC Suspension Resin ( Goods ), to the Respondent / Corporate Debtor , and as such, the amount Claimed , to be in Default , by the Corporate Debtor , as on 20.07.2019, amounting to Rs.1,23,14,186.94/- (vide Part IV of the Application , under Particulars of Financial Debt ), is an Operational Debt , and for the said Operational Debt , only an Application , under Section 9 of the Code , will apply , as opined by this Tribunal . The conclusion arrived at, by the Adjudicating Authority ( National Company Law Tribunal , Division Bench I, Chennai), holding that the Section 7 Application of I B Code, 2016 , is not Maintainable , and resultant dismissal of the same, are free from any Legal Flaws . Appeal dismissed.
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2023 (8) TMI 1292
Maintainability of petition - initiation of CIRP - Operational Creditors - Tripartite Settlement or not - Power of Attorney executed in China and after the execution, was received in India - applicability of Indian Stamp Act - HELD THAT:- The Power of Attorney Document , was not executed in the Stamp Papers of the Law of the Land (India), but the said Stamp Paper, was purchased in India , and prefaced, with the document. Viewed in that perspective, this Tribunal , unhesitatingly, comes to a clear cut conclusion that the Power of Attorney Document , projected before the Adjudicating Authority / Tribunal , by the Appellant / Petitioner / Operational Creditor , is an invalid and unenforceable one, keeping in view of Non-compliance of the necessary ingredients of the Indian Stamp Act, 1899. It is to be remembered that an insufficiently stamped Original Document or an Unstamped Document , can be impounded , and on behalf of the Appellant / Petitioner , before the Adjudicating Authority / Tribunal , a photocopy of the Instrument / Document , was projected and hence this Tribunal , safely and securely holds that the Non-compliance of the ingredients of the Indian Stamp Act, 1899 , the Kerala Stamp Act, 1959 , result in these documents not to be enforceable in Law . One cannot brush aside, a primordial fact that in the instant case, the main CP (IB) / 45 / KOB / 2022, before the Adjudicating Authority / Tribunal (filed by the Appellant / Petitioner ) is founded upon the Non Payment , as per the Settlement Agreement dated 16.07.2020. Although, in the Settlement Agreement , the Respondent / Corporate Debtor, was described as Confirming Party , the Respondent / Corporate Debtor, had specifically guaranteed to pay the Appellant / Petitioner / Operational Creditor , if the Second Party commits Default on the Loan Obligation and Instalment . The real Date of Default , fell during the Suspended Period , to initiate the CIRP Proceedings , against the concerned, under the I B Code, 2016 . Taking note of the facts and circumstances of the instant case, in an integral manner, comes to an inevitable , irresistible and inescapable conclusion that the impugned order passed by the Adjudicating Authority ( National Company Law Tribunal , Kochi Bench), in dismissing the Section 9 Petition , preferred by the Appellant / Petitioner / Operational Creditor , does not suffer from any material irregularity or patent illegality in the eye of Law - Appeal dismissed.
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2023 (8) TMI 1291
CIRP - Bona fide Home Buyers of the Villa - purchase by way of Agreement of Sale and Construction Agreement , dated 12.07.2011, executed by M/s. Samruddhi Realty Limited / Corporate Debtor , after having paid the whole Sale Consideration , and after securing Possession - non-application of mind - violation of principles of natural justice - HELD THAT:- In the instant case on hand, it is crystalline clear that No Security Interest , is created to and in favour of the Appellants / Petitioners , considering the fact that admittedly, no Registered Sale Deed , was executed , by the Appellants / Petitioners and the Corporate Debtor . It cannot be disputed that the Appellants / Petitioners , are in Possession of the Property , in a permissive manner, because of the latent and patent fact that the Corporate Debtor , gave the key of the Villa to the Appellants / Petitioners , so as to enable them to start the Interior Work , and that the Appellants / Petitioners , had incurred an Expenditure of Rs.4,63,000/-, in this regard - It cannot be gainsaid that only the Assets , that are charged as Security Interest(s) , will fall outside the ambit of Liquidation Proceedings . Furthermore, this Tribunal , bears in mind that the Ownership of the Subject Property , rests with the Corporate Debtor . Also, it cannot be brushed aside the Appellants / Petitioners , had in Form G , preferred a Claim of Rs.6,65,191/- for the remaining work , to be completed in the Subject Property . It cannot be gainsaid that in respect of a Sale of an Immovable Property , which is in Value of more than Rs.100/- , it is to be compulsorily Registered , as per Section 17(1)(b) of the Registration Act, 1908, in the considered opinion of this Tribunal . One cannot remain in oblivion of the primordial fact that the term Conveys in Section 5 of the Transfer of Property Act, 1882 , only meant for conveying Ownership , which visualises a Completion , only in respect of an Execution and Registration of the valid Deed of Conveyance . This Tribunal , keeping in mind of the surrounding facts and circumstances of the instant case, on a careful consideration of respective contentions, advanced on either side, without haziness , comes to a resultant conclusion, that to and in favour of the Appellants / Petitioners , No Security Interest , is created, especially, the admitted fact being, no Registered Sale Deed , was executed , and as such, no relief(s) , can be granted to the Appellants / Petitioners . Appeal dismissed.
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2023 (8) TMI 1290
CIRP - approval the resolution plan - Failure to take notice of serious procedural irregularities on the part of the Resolution Professional in the conduct of CIRP - exercise of commercial wisdom of the CoC in approving the resolution plan of Respondent No.3, sustainable or not. HELD THAT:- The CoC through the Resolution Professional has taken abundant precaution to keep the Adjudicating Authority duly apprised of the developments since the filing of the liquidation application. Thus, there is no lack of transparency on the part of the Resolution Professional or the CoC in updating the Adjudicating Authority of the new resolution plan before it and reasons for seeking its fresh directions. And on its part, the Adjudicating Authority allowed the CoC the opportunity to deliberate upon the resolution plan thereby not infringing on the commercial wisdom of the CoC. The 19th CoC meeting clearly notes that multiple opportunities given to the Appellant to submit resolution proposal went futile. No viable resolution plans had been received from the PRAs in last two years. It is pertinent to note that the Appellant even at this stage did not make a murmur of protest of being denied a fair opportunity or level playing field in the CIRP process. Present is a case where the Appellant having been given multiple opportunities to submit a Section 12-A proposal and having consistently failed to do so, there does not appear to be any sufficient ground for the Appellant to claim that prejudice has been caused to their interest in allowing Respondent No.3 to submit their resolution plan - It is also noticed that PRAs had also been afforded reasonable opportunity to submit plans after having issued Form G thrice. The principle of fairness and equity have been reasonably met well - the decision of the CoC to entertain the resolution plan from Respondent No.3 without publication of Form G cannot be viewed to be such a grave procedural non-compliance that the integrity of the entire resolution process was undermined. There has been no suppression of material facts by the Resolution Professional in informing the CoC or the Adjudicating Authority on the proposal received from Respondent No.3 as PRA. Further, the CoC has approved all his actions including seeking the prior permission of the Adjudicating Authority - the CoC had duly considered and accepted the Resolution Plan for placing before the Adjudicating Authority and this was approved by the Adjudicating Authority vide the second impugned order. When the CoC has approved a Resolution Plan by 100% voting share after considering its feasibility and viability, such decision of CoC is a commercial decision. There can be no fetters on the commercial wisdom of the CoC. It is settled law that commercial wisdom of CoC in approving the Resolution Plan is not to be interfered in the exercise of jurisdiction of judicial review either by the Adjudicating Authority or by this Tribunal in the exercise of its appellate powers - the Adjudicating Authority did not commit any error and therefore concur in the second impugned order of the Adjudicating Authority approving the resolution plan. The Adjudicating Authority did not err in approving the resolution plan. In result, both impugned orders do not warrant any interference. Appeals being devoid of merit are dismissed.
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2023 (8) TMI 1268
Approval of Resolution plan - Validity of order of NCLT issuing direction for consideration of PUFE Transaction Applications first and adjourning the Application for approval of Resolution Plan to be heard later HELD THAT:- What appears to be reason which persuaded the Adjudicating Authority to decide the PUFE Transaction Application first is that if the preferential transaction are established against the Appellant, the fate of the project will be in jeopardy. PUFE Applications are a different scheme of proceedings which has to be concluded to its logical act which shall have its consequences as contemplated in the statute. When the CoC approved the Resolution Plan and has also reiterated that Application for Resolution Plan be considered by tis 17th CoC Meeting dated 27.02.2023, there are no reason not to consider the said application merely on the ground that PUFE Applications are pending. The Adjudicating Authority is well within jurisdiction to consider both the Resolution Plan Approval Application as well as PUFE Application but the Adjudicating Authority erred in observing that the consideration of Plan Approval Application has to be deferred and can be taken only after PUFE Applications are decided. Hon ble Supreme Court in Arun Kumar Jagatramka [ 2021 (3) TMI 611 - SUPREME COURT ] had occasion to notice the object and purpose of amendment by which Section 29A was sought to be introduced in IBC and held that Section 29A was added to the Code by the Amendment Act. Owing to this provision, persons, who by their misconduct contributed to the defaults of the corporate debtor or are otherwise undesirable, are prevented from gaining or regaining control of the corporate debtor. This provision protects creditors of the company by preventing unscrupulous persons from rewarding themselves at the expense of creditors and undermining the processes laid down in the Code. The Adjudicating Authority shall proceed to consider the Resolution Plan Application and not to await the decision in PUFE Applications - Adjudicating Authority shall decide the Plan Approval Application and shall also consider the eligibility of the Resolution Applicant which is an issue raised by the Intervener (IIFL Finance Limited) - appeal disposed off.
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PMLA
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2023 (8) TMI 1267
Money Laundering - Scheduled offences - respondents were well within their jurisdiction to initiate proceedings against them under the provisions of the PMLA or not - Constitutional validity of the provisions of the PMLA - HELD THAT:- The same has been finally decided by the Supreme Court in the case of Vijay Madanlal Choudhary and others vs. Union of India and others, [ 2022 (7) TMI 1316 - SUPREME COURT] . A three Judge Bench of the Supreme Court in the aforesaid case has upheld the constitutional validity of various provisions of the PMLA. The judgment of the Supreme Court in the aforesaid case being binding upon this Court, as such, there is no scope for this Court to re-open the issue. In the instant case, the petitioners are facing trial for various offences under ULA(P) Act whereas the respondents have initiated proceedings against them for offences under the PMLA. So, the petitioners are neither being prosecuted nor punished for the same offence. The offences under ULA(P) Act are quite distinct from the offence under the PMLA. The Supreme Court has in Vijay Madanlal Choudhary s case [ 2022 (7) TMI 1316 - SUPREME COURT ], while interpreting the provisions contained in Section 3 of the PMLA, which defines the offence of money laundering observed involvement in any one of such process or activity connected with the proceeds of crime would constitute offence of money-laundering. This offence otherwise has nothing to do with the criminal activity relating to a scheduled offence except the proceeds of crime derived or obtained as a result of that crime. From a perusal of the observation of the Supreme Court, it is clear that the offence under Section 3 of the PMLA is an independent offence distinct from the offences under ULA(P) Act which has been incorporated in the Schedule to the PMLA - it is also clear that merely because the predicate offence in the instant case dates back to a period when such offence was not incorporated in the Schedule to the PLMA, it cannot be stated that that the petitioners cannot be prosecuted for the offence under the PMLA. The petitioners besides facing trial for the offences under ULA(P) Act, are also facing trial for offence under Section 121-A of RPC. The offence under Section 121-A of IPC, which is in pari materia with Section 121-A of the RPC, was a scheduled offence even prior to the Amendment Act of 2009. On this ground also, the petitioners cannot claim that they could not have been prosecuted for offence under Section 3 of the PMLA. There are no merit in these petitions and the same are, accordingly, dismissed.
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Central Excise
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2023 (8) TMI 1303
SSI exemption - use of brand name of others - use of brand name of others - benefit of exemption under Notification dated 01.03.2002 bearing No.8/2002-Central Excise denied - HELD THAT:- Reliance placed in the case of Commissioner of Central Excise, Hyderabad IV Vs. Stangen Immuno Diagnostics [ 2015 (6) TMI 155 - SUPREME COURT] , wherein this Court while considering an earlier judgment in Bhalla Enterprises [ 2004 (9) TMI 109 - SUPREME COURT] has noted the observations that if the assessee is able to satisfy the assessing authorities that there was no such intention or that the user of the brand name was entirely fortuitous and could not on a fair appraisal of the marks indicate any such connection, it would be entitled to the benefit of exemption. An assessee would also be entitled to the benefit of the exemption if the brand name belongs to the assessee himself although someone else may be equally entitled to such name. In the present case, there was a usage of a well known brand name SUNCA by the appellant(s), although it was registered by M/s. Sun Fat (Holding) Co. Ltd., which did not make a difference to the denial of the benefit of exemption to the appellant(s). The observations of this Court in Bhalla Enterprises has been culled out in the form of a test laid down in Stangen Immuno Diagnostics [ 2015 (6) TMI 155 - SUPREME COURT] . A reading of judgement clearly indicates that in order to deny the benefit of exemption under the Notification, it must be established by the Department that (1) the goods in respect of which the exemption is sought use the same or similar brand name; (2) the said brand name is used with an intention of indicating a connection with the Assessees goods and such other person; and (3) use of such a brand name is to indicate such a connection. The appellant(s) in the instant case is manufacturing emergency lamps and, therefore, the use of brand name SUNCA in the instant case is only fortuitous, being no intention on the part of the appellant(s) to use the said brand name to show a connection with M/s. Sun Fat (Holding) Co. Ltd. The show cause notices were issued on an erroneous premise inasmuch as the Department itself had changed its line of arguments before CESTAT - Appeal allowed.
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2023 (8) TMI 1266
100% EOU - Remission of duty - applicability of Rule 21 of CER on plant and machinery and raw materials which were lost and damaged in fire - HELD THAT:- It is seen from the records that in case of the capital goods, the Appellant has procured them between 2002 to 2007 as per the Bill of Entry details given by them at Page 23 to 25 of the Appeal Paper Book. Since the Department has also made use of this detailed statement to arrive at the demand of Customs duty on such imported capital goods, it clarifies that the Department does not dispute that these capital goods were procured about 3 to 10 years prior to the fire accident. Therefore, admittedly these capital goods were being properly used in the factory premises for production of the finished goods which were exported by the EOU. As per the Notification No. 52/2003, if the Capital goods are not installed and used within a period of one year from the date of import, the same would amount to contravening the conditions set up under this Notification. As per the factual matrix discussed above, the capital goods have been used for more than three to ten years. Hence, the Department cannot claim that the conditions of Notification No. 52/2003 were not fulfilled. Further it is seen that in case of Laxai Avanti Live Sciences Pvt. Ltd. Vs. CC., C. Ex S.T. Hyderabad [ 2017 (3) TMI 451 - CESTAT HYDERABAD] , the Tribunal has held As the goods is not lost or destroyed, the assessee made a request for relinquishment of the title to the goods with the intention of abandoning the same. By such abandonment and relinquishment, the title in the imported goods is divested and the title vests with the Department. The Tribunal on a proper consideration of the facts keeping in mind the legal principles involved has rightly set aside the order passed by the original authority as well as the Appellate Commissioner granting remission of duty to the assessee. It is in accordance with law. Thus, it has been held that if the raw materials/capital goods were destroyed due to accidents which are beyond the control of the assesse, remission is required to be granted. Accordingly, the impugned OIOs are not legally sustainable - appeal allowed.
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CST, VAT & Sales Tax
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2023 (8) TMI 1289
Exemption from Entry tax - expression 'Manufacturing Dealer' as used in the Notification dated 18.2.2003 (Annexure-2 to the Revision Application) issued under Section 4-B of the Uttar Pradesh Tax on Entry of Goods Act, 2000 - it was held by High Court that It is the Assessee who had made the first sale and shall be deemed to be a manufacturer dealer and liable to claim benefit of the exemption Notification dated 18.02.2003. HELD THAT:- There are no ground to interfere with the judgment/order impugned in this petition. SLP dismissed.
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Indian Laws
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2023 (8) TMI 1288
Dishonour of Cheque - acquittal of accused - blank signed cheques - rebuttal of presumptions - Loan advanced or not - evidences not appreciated in correct manner - several contradictions in the case set out by the complainant in the legal notice. Black signed cheques - HELD THAT:- This Court notes that it was rightly held by both the Courts below, after taking note of judicial precedents, that the law did not require the entire cheque to be filled by the drawer only and if the signatures were admitted, the person signing the cheque would be liable to the holder for the amount as mentioned in the cheque, in due course. The contention raised on behalf of petitioner that since the complainant had filled the details on the blank signed cheque handed over to her by the petitioner, the same would lead to an inference that there was no legally recoverable debt, is without any merit. As revealed from records including cross-examination of the petitioner, the petitioner thereafter had not asked the complainant to return his blank signed cheques nor he had lodged any complaint in this regard with the police or any other department. It is also a matter of record that the complainant had presented the cheques for encashment not only once but twice, however, the petitioner had even then neither approached or contacted the complainant, nor he had given any reply to the legal notice sent by her despite having received the same - the defence raised by the petitioner that the cheques were not issued toward a legally enforceable debt did not hold any ground. As far as the other contention that income tax officer had informed the Court that income tax returns of the complainant for several years in between were not available with them is concerned, it is to be noted that the officer concerned had informed the Court that the department was not able to procure the required documents despite best efforts as the voluminous records had got mixed up due to shifting of their offices. Further, as regards the argument that the complainant was not financially strong so as to have advanced any loan to the petitioner, the complainant had stated that for the grant of first loan to the petitioner, she had obtained a loan of Rs. 6.35 lakhs from her mother-in-law and taken rest amount from the chest reserves of home and for the second loan, she had sold her jewellery. These averments of the complainant were also corroborated from her income tax returns and other material produced by the complainant. This Court is also of the view that the defence raised by the petitioner was not sufficient to rebut the presumption raised against him under Section 118(a) and 139 of NI Act, and where the issuance of cheques and signatures on the same were not disputed and when the complainant was sufficiently able to establish the factum of having advanced loans to the petitioner as well as their sources, this Court find no infirmity with the judgment passed by the learned ASJ vide which the conviction of the petitioner under Section 138 of NI Act as recorded by the learned MM was affirmed. Petition dismissed.
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2023 (8) TMI 1287
Dishonour of Cheque - Quantum of sentence / Fine - whether on the basis of the documents produced by the accused, can it be said that the complainant was carrying a money lending business and without license? - HELD THAT:- The accused tried to take defence about re-payment, however, he could not substantiate it. There is due compliance about issuance and service of notice. So finding of the trial Court requires to be set aside. The complainant has proved the ingredients for offence under Section 138 of Negotiable Instruments Act. The accused needs to be dealt with as per law. Mr. Sawant submitted that instead of remanding the matter this Court can decide this matter. He submitted that there is a punishment in the form of imprisonment and fine being twice amount of the cheque. The sentence is optional, either it may be imprisonment for two years or fine which may be twice amount of the cheque or both - it is not felt proper to impose sentence of imprisonment but the complaint is pending since 2011 - the respondent can be imposed with the fine being twice the amount of the cheque. There is a request for leniency from imposing twice the amount of the cheque. It can t be accepted when this Court is not imposing the sentence of imprisonment. Appeal allowed.
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