TMI Tax Updates - e-Newsletter
September 18, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. RESTRICTIONS ON INPUT TAX CREDIT UNDER GST LAWS

   By: DR.MARIAPPAN GOVINDARAJAN

2. RULES AND REGULATIONS FOR VALUATION PROFESSION IN INDIA

   By: Vinay Goel

3. Penalty ₹ 10,000 on ATM soon, for non-replenishment with cash

   By: CSLalit Rajput

News

1. Recommendations of 45th GST Council Meeting - Several people centric decisions taken by GST Council

2. Media Conference - Finance Minister Nirmala Sitharaman on Friday chaired the 45th meeting of the Goods and Service Tax (GST) Council in Lucknow

3. Grant of ₹ 2427 crore released to States for Urban Local Bodies

4. WTO Agreement on Agriculture tilted against developing countries: Shri Piyush Goyal

Notifications

Customs

1. 51/2021 - dated 16-9-2021 - ADD

Seeks to levy anti-dumpnig duty on imports of 'Aluminium foil' originating in or exported from China PR, Malaysia, Thailand, Indonesia for a period of five years.

2. 74/2021 - dated 16-9-2021 - Cus (NT)

Prescribing Rate of exchange of foreign currency equivalent to Indian rupees

DGFT

3. 27/2015-2020 - dated 16-9-2021 - FTP

Amendment of policy condition no. 5 of Chapter 27 of ITC (MS), 2017, Schedule — I (Import Policy)

4. 26/2015-2020 - dated 16-9-2021 - FTP

Last Date for Submitting applications for Scrip based FTP Schemes and validity period of Duty Credit Scrips

Income Tax

5. 112/2021 - dated 16-9-2021 - IT

Central Government specifies the pension fund, namely, the 2726522 Ontario Limited

6. 111/2021 - dated 16-9-2021 - IT

Central Government specifies the pension fund, namely, 2452991 Ontario Limited

Highlights / Catch Notes

GST

• GST Council Revises Tax Rates, Simplifies Filing for Small Businesses, and Integrates Tech to Boost Efficiency

  News : GST Council Meetings and Decisions.
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• Court Allows Manual GST-TRAN-1 Filing, Citing Authorities' Lack of Clear Reasoning for Electronic Submission Denial.

  Case-Laws - HC : Seeking permission for submission of revised FORM GST-TRAN-1 return electronically - permission to petitioner to tender the revised FORM GST TRAN-1 form manually to the authorities - non-application of mind - No reasons are set out for disapproving the TRAN-1 claims. In the absence of reasons, the order cannot be sustained, as it reflects non-application of mind. - HC
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Income Tax

• High Court Upholds ITAT Decision; No Interference in Fact-Based Dispute u/s 260A.

  Case-Laws - HC : Initiation of proceedings under Section 153A - CIT(A) deleted the additions - ITAT confirmed the order of CIT(A) - The relief granted to the assessee is on facts and on merits of the disallowances made and not on the ground that no incriminating material was available. In one of the cases, the correctness of this decision was tested by the Tribunal and the view taken by the CIT(A) has been affirmed. Since the entire dispute revolves on the factual matrix, we are not expected to substitute our opinion in an appeal under Section 260A of the Act. - HC
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• Pr.CIT's application of amended Section 56(2)(vii)(b) in 2014 deemed erroneous; original 2010-11 assessment year rules apply.

  Case-Laws - AT : Revision u/s 263 - non-invoking the provision of S.56(2)(vii)(b) by AO - There was a valid and lawful agreement entered by the parties long back in A.Y. 2010-11 only, when the subject property was transferred and substantial obligations were discharged. The law contained in S. 56(2)(vii)(b) as stood at that point of time, did not contemplate a situation of a receipt of property by the buyer with for inadequate construction. Hence, we are of the considered view that the ld. Pr.CIT erred in applying the said provision. Because of the mere fact that the flat was registered in the year 2014 falling in A.Y. 2015-16 on the fulfillment of the conditions, the amended provision of S. 56(2)(vii)(b)(ii) could not be applied - AT
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• Income Tax Disallowance u/s 40A(7) for Gratuity Issues Sent Back for Further Examination Due to Filing Errors.

  Case-Laws - AT : Disallowance u/s 40 A (7) - disallowance on account of gratuity has been made by the Central processing unit - There is a inconsistency in filing of the return of income by the assessee and therefore it is the duty of the assessee to show before the learned assessing officer the nature of the mistake and how it resulted into double disallowance. - Matter restored back - AT
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• Supreme Court Allows Deduction for Debenture Redemption Premium, Liability Arises in Year of Issuance, Spread Over Maturity.

  Case-Laws - AT : Claim of deduction (expenditure) on account of Premium payable on redemption of debentures - Following the decisin of SC wherein it was held that, "the liability to pay premium arises in the year in which the debentures were issued and could be proportionately spread over the period prescribed for maturity of such debentures. It matters little whether the debentures were redeemable at will or only upon maturity. The Tribunal was in that view perfectly justified in allowing the deduction claimed by the assessee", claim of assessee allowed - AT
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• Assessee uses Rule 11UA(2) for DCF valuation; AO can't challenge recognized methods. Fairness ensured by certification.

  Case-Laws - AT : Additions u/s 56(2)(viib) - it is not denied that the assessee adopted clause (b) of Rule 11UA(2) of the Rules and accordingly obtained a Valuation Report from a Chartered Accountant. Since the law has prescribed the specific method for valuation i.e Discounted Cash Flow Method (hereinafter also referred as "DCF"), so he was free (and rather entitled) to choose this method. The method of valuation could be challenged by the AO only if it was not a recognized method of valuation (as per Rule 11UA (2) of the Rules).The very purpose of certification of DCF valuation by a merchant banker or chartered accountant is to ensure that the valuation is fair and reasonable. - AT
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Customs

• Advance Rulings Under Customs Act: Binding Nature Depends on Specific Decisions, Not Universally Applicable. Competent Authority's Judgment Required.

  Case-Laws - HC : Applicability of Advance ruling - The binding nature is to be decided with reference to the nature of decisions by the Advance Ruling Authority. It is not as if that every finding of the Advance Ruling Authority is binding on all the Authorities across the country. The application of mind by the Competent Authority is the scope under the Customs Act in each and every case and the binding nature is undoubtedly confined in certain circumstances and more specifically, based on the nature of the decision rendered by the Advance Ruling Authority - application of Notification requires an adjudication of facts and on such adjudication if the applicant is entitled for exemption or not, is to be decided based on the Notification and on connected provisions. - HC
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• Customs House Agents Licensing Regulations 2004 Do Not Apply Retroactively; License Revocation and Security Forfeiture Invalid.

  Case-Laws - AT : Revocation of the CHA license - There are no hesitation to hold that the charges levelled against the appellant under CHALR, 2004 cannot sustain when the acts / omissions / cause of action has happened prior to the introduction of the Regulations. The Show Cause Notice itself is not sustainable in law and the entire proceedings are vitiated. The impugned order revoking the license or directing to forfeit the security cannot sustain in law. - AT
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Indian Laws

• Finance Minister chaired the 45th meeting of the Goods and Services Tax (GST) Council in Lucknow.

  News : Media Conference - Finance Minister Nirmala Sitharaman on Friday chaired the 45th meeting of the Goods and Service Tax (GST) Council in Lucknow - News
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Service Tax

• Service Tax on Guest House Services Not Classified as Business Support Services; Commissioner's Tax Demand Unjustified.

  Case-Laws - AT : Levy of service tax - Infrastructural services under the category of Business Support Services - Transit / Guest House services provided to group companies - The infrastructural support services includes only the service specified in the Explanation, which essentially includes setting up office spaces. Thus, accommodation or guest house facility will not form part of infrastructural support services and cannot be treated as provision of BSS - the Commissioner was not justified in confirming the demand on the amount received for transit house under the category of BSS. - AT
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Central Excise

• Cenvat Credit reversal for pressmud production ruled inapplicable u/r 6 of CENVAT Credit Rules, 2004.

  Case-Laws - AT : Reversal of Cenvat Credit - input - input services - pressmud - wastes generated during manufacturing of sugar/molasses - exempt goods - Rule 6(3)(i) of CENVAT Credit Rules, 2004 - in the absence of manufacturing, there cannot be any excise duty and therefore, Rule 6 of the CENVAT Credit Rules, 2004 shall have no application. - AT
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Case Laws:

• GST

• 2021 (9) TMI 784
  Initiation of recovery proceedings or not - vague and non-speaking order - HELD THAT:- Keeping in view the contentions and submissions of learned counsel for the petitioner recorded in the order dated 07 th September, 2021 issue notice. Mr. Siddharth Khatana, learned counsel for Respondent No. 1 and Mr. Naushad Ahmed Khan, learned counsel for GNCTD accept notice. Till further orders, there shall be stay of the order dated 12 th February 2021 passed under Section 73 of the CGST Act - List on the date fixed.

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• 2021 (9) TMI 783
  Seizure order - seeking release/restore the goods seized on 23rd August, 2021 from the premises of the petitioner unconditionally - HELD THAT:- Issue notice - List on 02nd December, 2021.

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• 2021 (9) TMI 782
  Seeking amendment/ revision/correction of TRAN-I - direction to allow filing of the corrected TRAN-1 along with TRAN-2 - permission to carry forward and claim the transitional ITC amount - July, 2017 to December, 2017 - HELD THAT:- List on 18 th March, 2022. The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e-mail.

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• 2021 (9) TMI 778
  Seeking permission for submission of revised FORM GST-TRAN-1 return electronically - permission to petitioner to tender the revised FORM GST TRAN-1 form manually to the authorities - non-application of mind - grievance of the petitioner is that after the introduction of the Central Goods and Service Tax Act, 2017 and Central Goods and Service Tax Rules, 2017, there were several glitches in the online submission of forms software owing to the new regime - Rule 120-A of the Central Goods and Service Tax Rules, 2017 - HELD THAT:- It is found from the contents of the TRAN-1 form that the successful attempt of the petitioner in uploading the form online was nothing new but the exact copy of the form which he had attempted to submit online for the first time and in which effort, he had been unsuccessful because of the glitches in GSTN Portal - the reproduced portion of the order passed by the Superintendent CGST and Central Excise, Amalner Range is an order based on the reference of the ITGRC Committee that the TRAN-1 claims filed by the petitioner has not been approved. No reasons are set out for disapproving the TRAN-1 claims. In the absence of reasons, the order cannot be sustained, as it reflects non-application of mind. The petitioner is permitted to tender the revised form GST TRAN-1, online as well as by tendering a copy manually to respondent No.4 within two weeks time - petition allowed in part.

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• 2021 (9) TMI 776
  Prayer for amendment of petition - blocking of electronic credit ledger beyond one year which is prohibited under Rule 86 A (3) of the C.G.S.T. Rules, 2017 - HELD THAT:- This petition is disposed off with a direction to respondent Nos. 2 and 4 to decide the pending representation of the petitioner dated 15/02/2021, on or before 15/09/2021 in the light of Rule 86-A(3) of the C.G.S.T. Rules, 2017.

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• Income Tax

• 2021 (9) TMI 785
  Reopening of assessment u/s 147 - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - Covid lockdown in India - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - grievance of the petitioner that the notice of like nature could have been issued till the cut off date 30.03.2021 as subsequent thereto the new Section 148A intervened before issuance of notice directly under Section 148 - HELD THAT:- The notification is made by the Ministry of Finance, Central Government considering the fact of lock down all over India, it can be always be assumed that the deferment of the application of section 148A was done in a control way. It is settled proposition that any modification of the Executives implies certain amount of discretion and to be exercised with the aid of the legislative policy of the Act and cannot travel beyond it and run counter to it or certainly change the essential features, the identity, structure or the policy of the Act. Therefore, this legislative delegation which is exercised by the Central Government by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act and notification by executive i.e. Ministry of Finance would be the part of legislative function. Under the circumstances by the notifications the operation of Section 148 of the Income Tax Act was extended, thereby deferment of Section 148A was done. It was done by the Ministry of Finance by way of conditional legislation in the peculiar circumstances which arose during the pandemic and lock down and Central Government can not be said to have encroached upon turf of Parliament. Notification would show that it was issued in exercise of power conferred under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and time for issuance of notice under Section 148, the end date was initially extended uptill on 30th day of April 2021 and subsequently again by notification dated 27th April, 2021 the time limit of 30th day of April 2021 was further extended up till 30th day of June, 2021. By effect of such notification, the individual identity of Section 148, which was prevailing prior to amendment and insertion of section 148A was insulated and saved uptill 30.06.2021. The pandemic and lock down prevailed all over India. The people could not file their return or comply with the various mandate of Income Tax Act. Considering such situation for the benefit of the assessee and to facilitate the individual to come out of woods the time limit framed under Income Tax Act was extended - As the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended. Here in this case, the power to issue notice u/s 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 (Annexure P-1) would also be saved - no interference is required to be made in the said issuance of notice and accordingly the petitions are dismissed.

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• 2021 (9) TMI 781
  Rectification of mistake u/s 154 - seeking refund of the Income Tax (including interest) adjusted in excess of 20% of the disputed tax demand arising in the case of the Petitioner - HELD THAT:- As per mandate of law as well as the fact that refunds have been adjusted against outstanding tax demand by the Authority without following the procedure prescribed under Section 245 of the Act inasmuch as no notice or opportunity of pre-decisional hearing had been provided to the petitioner prior to such adjustment of refund, this Court is of the opinion that the petitioner is entitled to refund of adjustments made in excess of 20% of the disputed tax demands. Consequently, this Court directs the respondent to verify the facts stated in the two writ petitions and if it finds them to be true and correct then to refund the amount adjusted in excess of 20% of the disputed tax demands for the Assessment Years 2016-17 and 2017-18 to the Petitioner within eight weeks. The respondent is also directed to dispose of petitioner s rectification application dated 10th July, 2020 seeking rectification of the assessment order dated 17th June, 2020 for Assessment Year 2016-17 within eight weeks - in view of the above, the present writ petitions and application stand disposed of.

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• 2021 (9) TMI 780
  Removal of office objections - HELD THAT:- We find that Applicant has devoted four pages only to give details of certain connected proceedings which were pending before the Tribunal. Applicant has devoted three paragraphs to comply with the directions passed by this Court in its order dated 10th August, 2021. In paragraph 5, the Applicant has made a general statement that incumbent AO came to know that the Appeal filed by the department on the issue of existence of M.N. Navale Bigger HUF, the Hon ble High Court had dismissed the Appeal for want of removal of office objections - We are informed that Mr. Vipul Bajpayee is junior standing counsel today for the department. Moreover, the Applicant s explanation for non removal of objection contains only conjectures. He says that in between change in the standing counsel of the department may be the reason for non appearance ; there is a possibility of communication gap can be between standing counsel and then AO. , the new officer may not have been fully aware of dismissal of this case. As stated in the Affidavit in Reply, the department was constantly participating in the proceedings before Income Tax Appellate Tribunal on the existence of M.N. Navale Bigger HUF. Therefore, it is inconceivable that during the period 2012 19, the Authority never once enquired about the status of the Appeal before this Court. We are not inclined to grant the relief as prayed for by the Applicant to restore the Appeal that was dismissed pursuant to order dated 16th March, 2016.

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• 2021 (9) TMI 774
  Reopening of the assessment u/s 147 and issuance of notice u/s 148 - eligible reason to believe as mandated u/s 147 - reopening of beyond the period of four years and within a period of six years - TDS u/s 195 - HELD THAT:- Reasons stated in the said proceedings dated 11.04.2014 reveals that no TDS has been made on the Business Development Commission and the same needs to be disallowed as per Section 40(a)(ia). The objections submitted by the writ petitioner on 29.04.2014 in detail was also disposed of by the respondents in vide proceedings dated 07.10.2014. In the said proceedings, the respondents have clearly stated that the matter of non-deduction of tax on business development commission paid to a non-resident was not looked into. This matter was not discussed in the Assessment Order. Further, relying on Section 9(1), the respondents have stated that necessary tax has not deducted on the business development commission paid to non-resident. Business development commission is in the nature of technical services fees paid to the parent entity. The non-deduction of tax in the above payment, raised the liability to tax, which is escaped to assessment . This Court is of the opinion that the reasons furnished for reopening of the assessment cannot be gone into disputed facts and circumstances in the writ petition. Sufficiency of reasons cannot be gone into by the High Court. If there is a reason to believe and such reason to believe is sensible, then it is sufficient to invoke the provisions of Section 147 of the Income Tax Act and the High Court cannot go into sufficiency of the reasons provided for reopening of such assessment. Sufficiency of the reasons deserves complete adjudication of the disputed facts, which cannot be gone into - this Court has no hesitation in arriving a conclusion that the Revenue has to establish the reason to believe for reopening of assessment and it is for the petitioner to establish that such reasons are insufficient for reopening or he has already disclosed truly and fully all materials facts necessary for assessment or under the provisions of the Act, he has got enough defence to rebut the reasons furnished for reopening of the assessment. The writ petitioner is at liberty to avail the opportunities to be provided under the provisions of the Income Tax Act, to do so. This Court do not find any acceptable reason for the purpose of interfering with the initiation of proceedings under Section 147 of the Act for reopening of assessment and accordingly, the respondents are empowered to proceed with the process of assessment and conclude the same as expeditiously as possible. WP dismissed.

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• 2021 (9) TMI 773
  Disallowance u/s 40(A)(3) - cash payments were made to the vendors beyond the threshold limit - CIT(A) did not agree with the assessee and confirmed the disallowance - HELD THAT:- For assessment year 2007-08 tribunal tested the correctness of the decision of the CIT(A). The assessee was a builder and developer and the lands purchased by the assessee were in the nature of stock-in-trade and certain purchases were made in cash and such purchases by cash would be hit by Section 40A(3) of the Act unless otherwise exempted under Rule 6DD of the Rules. Tribunal noted that the assessee was a business man and the cash payments were done for the purchase of lands and also took note that in majority of land dealings, land owners would insist upon payment of money in cash. Furthermore, the Tribunal also noted that the payments were duly recorded in the sale deed, that the same has been registered by the Sub-Registrar and that the amount had been taken into consideration for the purpose of calculating stamp duty and registration.Thus, we find, on facts, that there is no question of law, much less substantial question of law arising in the relevant appeals. For the assessment year 2008-09 - we are of the view that it is not a case where the CIT(A) passed a cryptic order nor the order passed by the Assessing Officer is without application of mind. The assessee has to be blamed for the same because of not giving a proper explanation/reply to the query raised by the Assessing Officer. In any event, we do not propose to non suit the assessee on the ground that certain details were not furnished in proper form. The assessee would state that certain of the vendors, who did not have bank accounts, could not come out of the village to open up the bank account and after insistence, they had opened the bank accounts and in certain cases, advance was paid to the vendors so as to enable them to keep up various other commitments, to which, they had been fastened.In the light of the order of remand passed by us for the assessment year 2008-09 with regard to disallowance u/s 40A(3) stand allowed. While vacating the remarks made by the Tribunal as against the CIT(A) and the Assessing Officer, we remand the matter to the Assessing Officer to consider the genuineness of the stand taken by the assessee in so far as the payments made afford an opportunity of personal hearing to the authorized representative of the assessee and redo the assessment only to the extent indicated in accordance with law Disallowance of land development expenses - Non rejection of books of accounts - HELD THAT:- On appeal before the CIT(A), the assessee had elaborately made submissions and primarily contended that the Assessing Officer did not reject the books of accounts of the assessee, that the accounts were duly certified by a Chartered Accountant and that there was no debit entry, etc. After taking note of the factual position, the CIT(A) held that the disallowance was not justified. CIT(A) noted that the assessee produced vouchers, which contained the details of the names, amounts and signatures and merely because the addresses were not given, the vouchers could not be treated as bogus vouchers. CIT(A) agreed with the assessee that the debit vouchers were not created for claiming any expenditure, but they actually vouched the expenses incurred by the assessee. Furthermore, the CIT(A) noted that the Assessing Officer had checked only the vouchers for the period from 25.3.2007 to 31.3.2007 on a test check basis and not for the whole year. In addition, the CIT(A) observed that the Assessing Officer had not brought out any material on record to establish that the vouchers were bogus. CIT(A) noted was that in spite of the so called high expenditure incurred for land development, the assessee was able to show the net profit rate of 16.01%, which, by any standard, was very reasonable. Thus, the Tribunal set aside the disallowance made by the Assessing Officer. The finding rendered by the CIT(A) was tested for its correctness by the Tribunal, which re-appreciated the facts and concurred with the CIT(A). Therefore, we find no good ground to interfere with the said factual finding. We also find that there are no questions of law, much less substantial questions of law arising in these appeals. Initiation of proceedings under Section 153A - presence of incriminating materials for the assessment years 2008-09 and 2011-12 to 2013-14 or not? - HELD THAT:- Tribunal examined the correctness of the order passed by the CIT(A), who proceeded entirely on the merits of the matter and therefore, the assessee was granted relief by the CIT(A) solely for the reason that there was no incriminating material. But, the CIT(A), having been satisfied on facts, held that no addition needed be made. So far as the order of the Tribunal for the assessment year 2011-12 Mr.T.R.Senthilkumar, learned Senior Standing Counsel appearing for the appellant/Revenue is right in his submission that the Tribunal granted relief to the assessee for the reason that no incriminating material had been found in the course of search and confirmed the order passed by the CIT(A). CIT(A) examined the merits of the matter and found that there was no justification for various disallowances. Therefore, the Tribunal probably missed out this factual position presumably because a batch of cases were before the Tribunal and in all probabilities, both the assessee and the Revenue might not have placed full break up details in a convenient format. The relief granted to the assessee is on facts and on merits of the disallowances made and not on the ground that no incriminating material was available. In one of the cases, the correctness of this decision was tested by the Tribunal and the view taken by the CIT(A) has been affirmed. Since the entire dispute revolves on the factual matrix, we are not expected to substitute our opinion in an appeal under Section 260A of the Act. Thus, we hold that there is no question of law, much less substantial question of law arising for consideration on this issue. Addition on account of escapement of sales - Whether ITAT was justified in deleting the addition in respect of the receipts from Kannagapattu land purchased from Smt.D.Sangupathi and M/s.SSD Homes Estate Developers P limited later transferred to the assessee as advances which ought to have been accounted for sales but has been classified under advances? - HELD THAT:- On perusal of the order passed by the CIT(A) dated 03.4.2018, it is seen that the CIT(A) considered the factual aspects in a detailed manner and deleted the additions. This finding has been affirmed by the Tribunal after re-appreciating the facts. We find no substantial question of law arising for consideration.

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• 2021 (9) TMI 769
  Disallowance made u/s 143(1) on account of assessee s failure to pay the employee s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) - HELD THAT:- 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, it is noted that the ld CIT(A) has referred to the explanation to section 36(1)(va) and section 43B introduced 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, he has simply failed to consider the 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 . The impugned assessment year is assessment year 2019-20 and therefore, the said amendment cannot be applied in the instant case. Addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of the employees s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) is hereby directed to be deleted - Decided in favour of assessee.

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• 2021 (9) TMI 767
  Addition u/s 36(1)(va) - delayed payment of employees contribution towards PF ESI - actual date of deposit of employees contribution towards ESI/PF - HELD THAT:- On perusal of both the manual tax audit report as well as data reflected in the return of income, we find merit in the contention advanced by the ld A/R and note that except for the date of deposit, the rest all data is exactly identical in terms of period/month of contribution and amount of contribution towards ESI/PF and in respect of date of deposit, the data in the manual tax audit report shows the actual date of deposit in dd/mm/yy format whereas the data as reflected in the return of income shows actual date of deposit in mm/dd/yy format which apparently has resulted in showing delay in deposit of employees contribution. Given that these details in terms of manual tax audit report and copy of challans reflecting payment of ESI/PF contribution have been submitted before us by way of additional evidence, we hereby admit the same in the interest of substantial justice and remand the matter to the file of the AO for the limited purposes of verifying the actual date of deposit of employees contribution towards ESI/PF as so claimed and where on verification, the AO found the same to be in order, the AO is directed to allow the necessary relief to the assessee by deleting the addition so made.

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• 2021 (9) TMI 766
  Revision u/s 263 - non-invoking the provision of S.56(2)(vii)(b) by AO rendered the assessment order erroneous in so far as it is prejudicial to the interest of the revenue - Stamp Duty Value (SDV) was determined more as against the declared purchase consideration therefore, consequently, the difference amount was to be treated as income from other sources - Assessee having having 50% share - scope of pre amended law - HELD THAT:- The allotment letter provided detailed specification of the property, its identification and terms of the payment, providing possession of the subjected property in the stipulated period and many more. Evidently the seller (builder) has agreed to sale and the allottee buyer (assessee) has agreed to purchase the flat for an agreed price mentioned in the allotment letter. What is important is to gather the intention of the parties and not to go by the nomenclature. Thus, there being offer and acceptance by the competent parties for a lawful purpose with their free consent, we find that all the attributes of a lawful agreement are available as per provisions of the Indian Contract Act, 1872. We also find that such agreement was acted upon by the parties and pursuant to the allotment letter, the assessee paid a substantial amount of consideration of Rs. 45,26,233/-, as early as in the year 2008 itself. We do not find merit in the contention of the ld. CIT that it was a mere provisional attachment which was subject to further changes because of the unexpected happening which may be instructed by the approving authority, resulting into increase or decrease in the area and so on because it is a standard practice so as to save the seller (builder) from the unintended consequences - we are convinced that the parties had already entered into an agreement by way of the allotment letter in on 11.11.2009 falling in A.Y. 2010-11. There was a valid and lawful agreement entered by the parties long back in A.Y. 2010-11 only, when the subject property was transferred and substantial obligations were discharged. The law contained in S. 56(2)(vii)(b) as stood at that point of time, did not contemplate a situation of a receipt of property by the buyer with for inadequate construction. Hence, we are of the considered view that the ld. Pr.CIT erred in applying the said provision. Because of the mere fact that the flat was registered in the year 2014 falling in A.Y. 2015-16 on the fulfillment of the conditions, the amended provision of S. 56(2)(vii)(b)(ii) could not be applied - See BAJRANG LAL NAREDI [ 2020 (1) TMI 1359 - ITAT, RANCHI] . We are not in agreement with the view taken by the ld. Pr.CIT holding the applicability of S. 56(2)(vii)(b)(ii) in the facts and circumstances of the case and therefore we hold that the assessment order, subjected to revision u/s 263, is not erroneous and prejudicial to the interest of the revenue - Decided in favour of assessee.

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• 2021 (9) TMI 765
  Estimation of income - Bogus purchases - assessee has failed to prove the genuineness of the purchases and consumption/utilization of the materials purchased - CIT(A) enhanced the addition to100% of the bogus purchases as against 12.5% applied by the AO - HELD THAT:- We note that in case of bogus purchases the entire purchases can not be brought to tax as has been held in a series of decisions of the co-ordinate Bench wherein it has been held that only profit element can be brought to tax despite the purchases being bogus. After taking into account the facts of the assessee s case, we are of the considered opinion that CIT(A) has wrongly enhanced the addition to 100% and the same can not be sustained. Accordingly, we are setting aside the order of Ld. CIT(A) on this issue by restoring the assessment order. Addition invoking the provisions of section 40A(3) - assessee has made various cash payments exceeding Rs. 20,000/- to various parties -Need to develop identity of the agent as well as suppliers - HELD THAT:- Assessee is engaged in the business of water proofing and labour job work. It was submitted before us that sand is purchased by the assessee from agent who arranged the loaded truck of sand at the site of the assessee on the condition that payment would be accepted in cash only. These transporters are not having any fixed place of business but bring sand filled lorries and come to the site through some reference. These truck drivers are not having any PAN numbers and therefore we find merit in the contention of the assessee that keeping in view of the nature of business of the assessee and nature of material purchase, it is impracticable to make payment otherwise than in cash. We are therefore not in agreement with the conclusion drawn by the Ld. CIT(A) that the identity of the agent as well as suppliers were required to be established in order to claim the expenditure where the payments are made in cash. Only in three cases the payment has exceeded Rs. 20,000/- and in all other cases the payments were below Rs. 20,000/-.Even in three cases the reasonable cause has been explained by the assessee before us that payment had to be made out of business emergencies and practical difficulties. - Decided in favour of assessee.

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• 2021 (9) TMI 764
  Addition of unexplained jewellery and unexplained cash expenditure - HELD THAT:- We find that in this case the jewellery was found to be unexplained during the course of search on account of gold as well diamond jewellery which has been narrated and discussed hereinabove. During the course search three family members namely Mr. Saket Mehta, Mr. Vivek Mehta, Mrs. Shilpa Sudheer Mehtah during recording of statement under section 132(4) specifically stated that the excess jewellery belonged to Ms. Sangeeta Mehta and Mr. Manoj Mehta who are Belgium residents and visit India during family functions and social occasions and used the said jewellery for their personal purposes. We also find that the couple bought some more jewellery during the marriage of their two daughters and the bills whereof are placed at page No.157 to 185 of the paper book with the bills for making the charges - Besides considering the net worth of the family which is approximately Rs. 314 crores as on 31.03.2016, we are quite convinced that the amount of addition is negligible and can not be justified in view of the financial strength and status of the family as well as the foreign residents Ms. Sangeeta Mehta and Mr. Manoj Mehta. Even considering the jewellery found with the family as per circular instruction No.1916 dated 11.05.1994, the addition as sustained by Ld. CIT(A) seems to be fallacious and without any cogent reasons. Considering all these facts and various case laws relied by the Ld. A.R., we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. We are not in agreement with the conclusion of Ld. CIT(A) that the assessee has offered general explanation not supported with the bills, vouchers and bank statement. We find that the confirmation of addition to the extent as unexplained expenditure is against the facts on record which were also available before the authorities below - both the authorities have failed to appreciate the facts in correct perspective. In view of these facts, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition made under section 69C of the Act. - Decided in favour of assessee.

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• 2021 (9) TMI 763
  Disallowance of deduction u/s 80-IA - assessee is engaged in the business of providing telecommunication services, which inter-alia, provide broadband and Internet services - AO denied the deduction as assessee has not maintained separate books of accounts for 80IA eligible unit and non 80IA unit and apportionment of the expenses are not based on the revenue ratio of eligible and non eligible units resulting into higher profit in eligible units than the profits in non eligible units - HELD THAT:- AO has simply disbelieved the allocation made by the assessee on the ground that the expenses must have been allocated on revenue ratio of eligible and non eligible units whereas the allocation of expenses exhibited hereinabove clearly shows that either they are on actual basis or on revenue ratio basis and some of the expenses are directly attributable to the units. In our considered opinion, allocation is based on actual scientific basis duly certified by the CA in Form No. 10CCB and therefore, the same cannot be faulted with. This claim is not for the first time but initial Assessment Year of claim is 2007-08 wherein the Assessing Officer has accepted the claim of deduction. In our considered view, unless the claim is disturbed in the initial Assessment Year, the same cannot be disturbed in the subsequent Assessment Years of the block. AO had allowed claim of deduction in Assessment Year 2011-12 onwards also. Therefore, the Rule of Consistency squarely applies on the facts of the case. In so far as the allocation of other income we find that the same was never claimed as eligible for deduction u/s 80IA of the Act. Therefore, the action of the Assessing Officer is without any basis. Considering the facts of the case in totality, as discussed hereinabove, we direct the Assessing Officer to allow the claim of deduction u/s 80IA of the Act as claimed by the assessee. Nature of expenses - Non confirming of the addition on account of licence fee which was held as capital in nature by the Assessing Officer - HELD THAT:- As pursuant to the directions of the ld. CIT(A), the Assessing Officer, vide order passed u/s 250 r.w.s 143(3) of the Act, deleted the addition made on account of licence fee paid to DOT by following the decision of the Hon ble Delhi High Court in the case of Bharti Hexacom [ 2013 (12) TMI 1115 - DELHI HIGH COURT] - Since the quarrel has now been settled, we do not find any merits in the appeals of the Revenue. The same are accordingly, dismissed.

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• 2021 (9) TMI 762
  Disallowing the interest claimed under Section 24(b) - part of the housing loan was utilized for advancing to certain parties from whom the assessee has shown interest receipts - quantum of loan utilised for construction of house property AND Quantum of loan utilised for advancing to certain parties - HELD THAT:- The facts which are emerging from records are that the assessee has taken housing loan from ICICI Bank a part of the said loan was utilized towards construction of second floor of the house property and related expenses as well as repayment of earlier loan taken from IDBI Bank for construction of ground and first floor. It is also an admitted fact that a part of the property was self-occupied and a part let out in respect of which rental income has been offered to tax. A part of the housing loan was utilized for advancing to certain parties from whom the assessee has shown interest receipts in her return of income. Therefore, the fact that the loan was taken and utilized for the purposes of construction of house property and for advancing to certain parties and on such borrowing, the assessee has incurred an interest expense during the financial year is clearly emerging from records. Therefore, the interest pertaining to the quantum of loan utilised for construction of house property shall be eligible for deduction against the income shown under the head Income from house property and the remaining interest pertaining to the quantum of loan utilised for advancing to certain parties shall be eligible for deduction against the interest income shown under the head Income from other sources . Addition towards unexplained cash deposit in the bank account - HELD THAT:- On perusal of cash flow statement, it is noted that the assessee was having cash in her hands which reasonably explain the source of cash deposit in her bank account. The addition so made is hereby directed to be deleted.

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• 2021 (9) TMI 761
  Levy of penalty u/s.271(1)(c) - estimated addition made on account of bogus purchases - HELD THAT:- Addition towards bogus purchases has been made only on estimated basis. Hence, no penalty u/s.271(1)(c) on the same would survive in the eyes of law. Moreover, we find that for the A.Y.2009-10, the gross profit shown by the assessee on total transactions is 29.70% which is much more than 12.5% profit estimated by the Tribunal in the quantum proceedings. We find that the Tribunal has directed the ld. AO to adopt 12.5% less gross profit already declared by the assessee, then there would be no addition that could be effectively survive in the transaction. Hence, we hold that it is not a fit case for levy of concealment penalty u/s.271(1)(c) of the Act. Accordingly, the penalty is hereby directed to be deleted for the A.Y.2009-10. As far as the A.Y.2011-12 is concerned, we find that the GP rate already declared by the assessee is 28.3% which is also much more than the percentage directed by the Tribunal to be added. Hence, we hold that it is not a fit case for levy of concealment penalty u/s.271(1)(c) of the Act. Accordingly, the penalty is hereby directed to be deleted for A.Y.2011-12. Appeals of the assessee are allowed.

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• 2021 (9) TMI 760
  Disallowance on account of payment of Royalty - HELD THAT:- For all the previous years [ 2021 (2) TMI 1202 - ITAT DELHI] , [ 2014 (11) TMI 1248 - ITAT DELHI] , [ 2015 (9) TMI 663 - DELHI HIGH COURT] and [ 2014 (11) TMI 191 - ITAT DELHI] this years the issue stands decided in favour of the assessee and, therefore, the Ld. CIT(A) had rightly deleted the addition - Decided in favour of assessee. TDS u/s 195 - deduction of TDS on commission payments made to foreign companies - HELD THAT:- Issue was squarely covered by the order of the Tribunal in assessee s own case for Assessment Year 2012-13 , [ 2021 (2) TMI 1202 - ITAT DELHI] . Also in the case of CIT vs. Maruti Suzuki India Ltd. [ 2017 (12) TMI 474 - DELHI HIGH COURT] and the CIT Delhi-IV, New Delhi vs. EON Technology Pvt. Ltd.[ 2011 (11) TMI 20 - DELHI HIGH COURT] wherein it has been held that no TDS is required to be deducted on the commission paid to overseas agent.- Decided against revenue.

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• 2021 (9) TMI 757
  Interest Income from short term investments - Interest earned on unutilized funds - inextricably linked for the purposes of developing highway as taxable income kept in accordance with NHAI mandate with no liberty to utilize at free discretion and which was reduced from cost of project - contract has been received from NHAI and available funds were to be kept in Escrow Account - HELD THAT:- There are so many stipulations contained and it is clear that there is strategic investment policy in existence and the assessee has received the income from strategic investments - Income received from the investments made from Escrow Account and deposited it into general proceedings account, is taxable under the head Income From Other Sources . Further, going through the conditions of Escrow account any value addition is made either in the form of Interest credited or profit on sale of Investments from permitted investments are to be deposited in the General Proceedings Account as per clause 8.2 (c)(iii) r.w.s. clause 8.5. Both the parties have not brought to our notice about the use of amount deposited in General Proceedings Account. If the said account is to be treated with parity to the Escrow account, then, the assessee is liable to tax on income received in the year in which the assessee is eligible to utilize the disputed amount. In view of the above observations, we remit the issue back to the file of the AO with a direction to examine the issue as per pages 8 to 14 of the paper book filed by the assessee before us. Thus, the ground raised by the assessee on this issue is treated as allowed for statistical purposes. Disallowance of interest on late payments of TDS - grievance of the revenue authorities is that the appellant has deducted TDS but not remitted to the Government Account within the stipulated time for which the appellant had to pay penal interest which has been claimed by the appellant as business expenditure - HELD THAT:- As assessee has not remitted the TDS amounts within stipulated time and paid interest on TDS, which is not allowable expenditure u/s. 37(1) of the Income Tax Act, 1961. At Sl. No. 5 i.e. the income tax paid by the assessee of an amount is also not allowable as per section 37(1) of the Act. Therefore, following the said decision of M/S. GOVINDAM CLEARING AGENCIES PVT. LTD. [ 2020 (9) TMI 577 - ITAT JAIPUR] we uphold the order of the CIT(A) in confirming the disallowance made by the AO on account of interest paid by the assessee on TDS/Income-tax. Thus, this ground of appeal of the assessee is dismissed. Restricting the TDS credit - HELD THAT:- We do not find any error in restricting the TDS credit to Rs. 2,96,061/- as the assessee has not offered the corresponding receipts as income in the impugned AYs. The AO is directed to give credit in the year in which the corresponding receipts have been offered as income by the assessee and give credit after due verification as per law. The assessee is also directed to produce the necessary documentary evidence for proof of payment of TDS by the deductor in the name of the assessee. Therefore, we uphold the order of the CIT(A) on this issue and dismiss the ground raised by the assessee.

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• 2021 (9) TMI 756
  Assessment u/s 153A - Whether Addition without any reference to incriminating material of cash purchase seized during the search action u/s 132? - HELD THAT:- On perusal of the record that papers seized from assessee company are only bills of bricks purchased from local unregistered dealers for use in construction of hotel and payment thereof was made in cash which too was not in violation of section 40A(3) of the Act and those payments for purchase are duly recorded in regular books of accounts which is verifiable therefrom. The soft copy of books of accounts were also available before A.O. in assessment proceedings and copy of books of account showing the said entries were filled in paper book in appeal proceedings which was also forwarded to A.O. in the remand proceedings - A.O. has not made any comment therefor and repeated what is stated in assessment order. No document/loose paper was found/seized during the course of search at the business/residential premises of the assessee indicating any on money receipt/investment/advances made and any unexplained/overstated expenditure etc. in its books of account pertaining to the year under appeal, therefore, we are of the view that the mode and manner of the additions made in the orders passed u/s 153A deserves to be held bad in law. Rejection of books of accounts - Whether CIT(A) erred in allowing books of accounts in spite of the facts the assessee failed to furnish any evidence of bills of entry to determine whether the plant and machinery and other items for the year under consideration were actually received at any part of India and were being used for business purposes? - HELD THAT:- AO has not mentioned the fact that books of accounts were provided to him in the electronic form on 29-12-2016. More so that audit report with requisite performa was also provided to him. The AO s requisition of all the bills and vouchers was not feasible seeing the qty. of bills and vouchers and also that such requisition was made on the fag end of the time barring date. These books and entire bills etc. were provided in the remand proceedings to the AO. In the remand proceedings the AO has not pointed a single defect in the books, bills or vouchers or the audit reports (both internal and external audit). In the remand proceedings the CIF bill, which were not produced before the AO were also produced. Even the allegation of unaccounted cash purchase of bricks was seen to be duly incorporated in the cash book also not adversely commented by the AO/auditor. The action of AO is not backed by any factual defect in the books of bills, vouchers or the audit report. CIT(A) has passed a well-reasoned order - Decided against revenue. Deduction u/s 35AD - assessee has not furnished the report in Form No. 10CCB alongwith return of income which is mandated as per Rule 12(2) of the Income Tax Rules, 1962 AND assessee has not got its recognition in two star or above category classified by the Central Government during the year under consideration as mandated u/s 35AD - HELD THAT:- We observed that the only condition for claim benefit u/s 35AD is that it could be claimed by any person. No approval is required for the same - hotel should be classified as 2-star category or above by the Central Govt. which is precisely the case here. The assessee did construct a hotel which was more than 2-star categories and an application was made on 26-3-2011 to a competent authority. In this application it was well reflected the said hotel is 4-star hotel. Approval of the same was received on 31-3-2016. The receipt of approval of star category letter does not imply that from the date of application to the date of receipt of star category the hotel did not have a star category or was functional without a star category. In fact, the assessee made the intention very clear in the application that it would be operational w.e.f. 26-3-2011. The hotel was operational is also evident from the gross receipt received in the relevant period. The logic adopted by the AO has no factual basis - Assessee has claimed Rs. 13.86 crores on pro-rata basis. Out of the total capital expenditure only Rs. 13.86 crores as claimed u/s 35AD of the Act balance was carried forward as WIP. Same is duly certified by the auditor and is reflected in form 10CCB filed in this regard. - Decided in favour of assessee. Addition u/s 43B - non-payment of interest payment during the financial year since no documentary evidences have been produced - HELD THAT:- Section 43B can be invoked if expenses for which deduction is claimed under chapter IV while computation of business income and not otherwise. In this case, the expenses have been capitalized and carried forward as capital work in progress to next year and no deduction in computation of business income is claimed and therefore, Section 43B is inapplicable in this case. Since, the ld. CIT(A) has deleted this addition on the basis that it is not a business deduction, therefore, Section 43B is not applicable in the case of the assessee. No new facts or circumstances have been brought before us by the ld AR in order to controvert or rebut the factual findings recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) qua this issue and we uphold the same. Addition u/s 69C - assessee failed to produce any documentary evidences regarding address, PAN and TIN of the suppliers - CIT-A deleted the addition - HELD THAT:- As in course of search are only bills of brick purchased from unregistered dealers for use in construction of hotels and are recorded in books of accounts of assessee company. The books of accounts and copy of relevant A/c of purchases are produced for verification. The full address of those unregistered suppliers are available on seized bills itself but being petty unregistered dealers they have no PAN or TIN but this does not make them unverifiable and as expenses are duly recorded in regular audited books of accounts and cash payment which is not in violation of provision of section 40A(3) and its source is verifiable therefrom and in this case expenditure is duly recorded in books of accounts and source of cash payment is clearly depicted in books of accounts being out of withdrawal of cash from Bank A/c(s) of assessee company. Since, the ld. CIT(A) has deleted this addition on the ground that the expenses are duly recorded in the books of accounts which have been verified by the auditor with no adverse remark in the report by the auditor. There is no adverse verification in the remand proceedings too by the AO - Decided against revenue. Addition u/s 36(1)(va) on PF/ESI addition - delay in deposition of employees contribution towards ESI and PF u/s 36(1)(va) r.w.s. 2(24)(x) - CIT-A deleted the addition - HELD THAT:- CIT(A) has placed reliance on the decisions of the Hon ble Rajasthan High Court in the case of CIT, Udaipur Vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd [ 2014 (8) TMI 677 - RAJASTHAN HIGH COURT] and also in the case of CIT vs. State Bank of Bikaner and Jaipur [ 2014 (5) TMI 222 - RAJASTHAN HIGH COURT] - In view of the above discussions, we are of the view that it is not disputed that the payments on account of ESI and PF have not been deposited by the assessee - we hold that there is no justification in the action of the AO in making a disallowance on account of delay in deposition of ESI and PF. No new facts or circumstances have been brought before us by the ld AR in order to controvert or rebut the factual findings recorded by the ld. CIT(A) - Decided against revenue. Income from other sources - whether the receipt shown in form no. 26AS has been duly accounted for under the head revenue from operation ? - CIT-A deleted the addition - HELD THAT:- Necessary evidence like 26AS forms with TDS reconciliation vis a vis receipt and detailed ledger extracts have been furnished and the same were subjected to remand proceedings too. No new facts or circumstances have been brought before us by the ld AR in order to controvert or rebut the factual findings recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) qua this issue and we uphold the same. Addition made on account of excess payment of interest @18% on unsecured loan given to the related parties - as per AO interest @ 12.83% was determined after considering SBI s basic rate and risk factor or say on unsecured loan and assessee itself has taken loan from IDBI @ 14% per annum - CIT-A deleted the addition - HELD THAT:- In this case the support required was high regular and therefore, the promoters who obviously are related persons had to infuse the required amount in the form of unsecured loans without any stipulation of repayment on interest @ 18%. The minimum market rate of interest of unsecured loan through brokers in the year was 14.40% p.a. plus brokerage @ 1.2% and interest payment is to be made by monthly in advance and loan was to be for stipulated fixed period after which repayment has to be made and such loans are available only to persons having credit in market while the loan taken by assessee from above specified concerns who are promoters of company is @ 18% interest. The interest is only credited at year end and not actually paid and loan is unsecured without any stipulation of period in which it is to be paid. Thus on these facts the interest rate of 18% p.a. to specified person is justified and within the market rates of interest on such loans and are at arm s length. No new facts or circumstances have been brought before us by the ld AR in order to controvert or rebut the factual findings recorded by the ld. CIT(A), therefore, we see no reason to interfere into - Decided against revenue.

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• 2021 (9) TMI 754
  Nature of expenditure - Disallowance of certain expenditure being not considered as capital/cost of improvement - HELD THAT:- AO after having accepted initial instalment of lease rent as capital has erred in rejecting subsequent instalments not being in the nature of capital expenditure. The assessee has constructed building on lease hold land. The lease of the land was allowed to the assessee for 30 years, therefore, lease being in the nature of long term lease, the lease rentals are clearly in the nature of capital expenditure. As regards water proofing charges, the assessee has pointed that water proofing was done immediately after completion of construction, this fact is evident from invoices vide which water proofing charges were paid. OC was received by the assessee in the month of June 2007 and the water proofing charges were paid in the month of October December 2007. The water proofing definitely adds value to the asset as it improves the life of the structure/building - subsequent water proof coating may be considered in the nature of repairs and maintenance, in so far as initial water proofing is concerned it is integral part of construction activity, hence, it is to be included towards the cost of asset. 3rd component that has been disallowed by the AO/CIT(A) is vacant land tax and property tax. The payment of said taxes to the municipal authorities are perennial and does not add value to the property, hence, are not capital in nature. Payment of taxes is statutory obligation to be discharged as and when due - no merit in the submissions of assessee to include vacant land tax and property tax in the cost of acquisition. Correct date of indexation for computing LTCG - Whether the benefit of indexation should be allowed to the assessee from the date of allotment of land or from the date the document was registered in the name of assessee? - HELD THAT:- Relevant date for providing the benefit of indexation is when the assessee had first acquired right in the property, execution of registered document is subsequent event to reinforce and protect legal sanctity of the ownership of property - benefit of indexation should be allowed to the assessee in the year, the assessee had acquired right in the property after payment of entire purchase consideration. In the instant case, since the assessee had paid the consideration amount in January 1997 in accordance with the terms and conditions of the tenders floated by MHADA, the benefit of indexation should be allowed to the assessee from 31.03.1997. The findings of the CIT(A) on this issue are set-aside and ground no.2 of the appeal is allowed.

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• 2021 (9) TMI 749
  Exemption u/s 11 - rejection of application for granting registration u/s.12AA - satisfaction of ob j ect of the trust are genuine and charitable u/s 2(15) - HELD THAT:- Commissioner is bound to consider whether the objects of the trust are genuinely charitable in nature and whether the activities which the trust proposed to carry on are genuine in the sense that they are in line with the charitable objects of the Trust. Requirements of Section 12AA of the Act are categorically clear and it is in that respect, the Hon ble Apex Court M/S. ANANDA SOCIAL AND EDUCATIONAL TRUST VERSUS THE COMMISSIONER OF INCOME TAX ANOTHER [ 2020 (2) TMI 1293 - SUPREME COURT] had held that at the time of granting registration u/s.12AA, the Commissioner is supposed to look into the objects of the trust whether they are charitable or not or whether the activities of the trust are genuine and such activities may also include proposed activities of the assessee trust and it should be in line with the charitable objects of the assessee trust. The satisfaction regarding objects and the activities performed or proposed to be performed could not be arrived at by the Ld. CIT(Exemption) since requisite details/evidences were not filed by the assessee. We are of the considered view, in the interest of justice, the matter may be remanded back to the file of the CIT(E) to adjudicate as per law considering the details/ evidences/documents to be filed before him or which may have been filed before him by the assessee while complying with the principles of natural justice. In view thereof, we set aside the order of the CIT(E) and remand the matter back to his file as indicated hereinabove. Appeal of the assessee is allowed for statistical purposes.

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• 2021 (9) TMI 748
  Disallowance u/s 37 - Central Processing Centre passed an intimation u/s 143(1) of the Act - HELD THAT:- assessee has submitted the copy of the computation where the assessee itself has disallowed the sum of rupees one by 14,176 and the breakup of is loss on sale of assets of Rs. 78,949 and interest on tax deduction at source of Rs. 35,227. As the assessee has already disallowed the above sum its computation of total income, once again is disallowance by the Central processing unit resulted into the double addition. Hence the learned assessing officer is directed to delete the above disallowance. Therefore ground number 4 and 5 of the appeal of the assessee is allowed. Disallowance u/s 40 A (7) - disallowance on account of gratuity has been made by the Central processing unit - HELD THAT:- It is apparent that in the breakup of the disallowance u/s 43B assessee has already included the above sum, however correctly the assessee should have disallowed the above sum u/s 40A (7) of the act. There is a inconsistency in filing of the return of income by the assessee and therefore it is the duty of the assessee to show before the learned assessing officer the nature of the mistake and how it resulted into double disallowance. In view of this we set-aside ground of the appeal of the assessee back to the file of the learned assessing officer with a direction to the assessee to show that it has already included in the computation of total income the above disallowance. The AO may verify the same and if it is found that the same is already been disallowed by assessee, the disallowance may be deleted. Disallowance u/s 43B - HELD THAT:- Undisputedly the above sum is not been paid by the assessee before the due date of the filing of the return of income. From the computation of income it is evident that assessee has claimed deduction u/s 43B of the act where the sums have been paid on or before the due date of the filing of the return of income. The same is also disclosed in the tax audit report at serial number 26 (i) (A (a)). Therefore the above deduction has rightly been claimed by the assessee. Therefore it is apparent that there is no inconsistency in the disallowance offered by the assessee. However the set aside this issue also to the file of the learned assessing officer with a direction to the assessee to show the reconciliation of the amount disallowed u/s 43B of the act with respect to each of the items disclosed in the tax audit report. If the AO is satisfied that the disallowance offered by the assessee is correct, about disallowance deserves to be deleted.

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• 2021 (9) TMI 743
  Claim of deduction (expenditure) on account of Premium payable on redemption of debentures - whether premium payable on redemption of debentures is allowable when which it is actually incurred in the year of redemption of the debentures or could be proportionately spread over the period prescribed for maturity of such debentures? - HELD THAT:- This issue as noted by the Ld. CIT(A) is squarely covered by the decision of Hon ble High Court in the case of CIT vs. Jagatjit Industries Ltd. [ 2006 (5) TMI 72 - DELHI HIGH COURT] wherein the Hon ble High Court relied upon the ratio and principle laid down in the case of Madras Industrial Investment Corporation Ltd.[ 1997 (4) TMI 5 - SUPREME COURT] wherein as held that is important is that the liability to pay premium arises in the year in which the debentures were issued and could be proportionately spread over the period prescribed for maturity of such debentures. It matters little whether the debentures were redeemable at will or only upon maturity. The Tribunal was in that view perfectly justified in allowing the deduction claimed by the assessee No infirmity in the order of the Ld. CIT(A) that assessee s claim in respect of proportionate premium on redemption of debentures and in the profit and loss account on the proportionate basis is allowed. Therefore, the addition has rightly been deleted. Disallowance u/s 14A read with Rule 8D - AO had made the disallowance mainly on the computation of disallowance provided by the assessee before the AO - Non recording of satisfaction by AO - HELD THAT:- Whatever exempt income was earned was from mutual fund held earlier which too was liquidated in this year and short term capital gain was offered to tax. When assessee had not made any disallowance in the computation of income AO as per mandate of section 14A(2) was required to examine the accounts of the assessee if he is satisfied with the correctness of the claim of the assessee. He has failed to even note that the investment as noted by him was not capable of yielding exempt income. This clearly shows that there was no application of mind before mechanically proceeding to make the disallowance under Rule 8D. Nowhere it is borne out that assessee had made any offer or surrender of disallowance before the AO. It is just that what should be the computation of disallowance under Rule 8D which was worked out by the assessee before the AO without even noting the fact that disallowance itself is more than the exempt income. Under these circumstances we do not find any reason for upholding the disallowance under Rule 14A because AO has failed to record his satisfaction having regard to the accounts maintained by the assessee as required u/s 14A (2). - Decided in favour of assessee.

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• 2021 (9) TMI 742
  Additions u/s 56(2)(viib) - Addition as income from other sources and taxing the same as revenue income - amount of share premium treated as income from other sources - DCF method Application - Eligibility of valuation Report from a Chartered Accountant - case of the Assessee was selected under CASS and notice u/sec 143(2) reason for selection of the case of the Assessee was Large share premium received during the year - valuation report of the share duly certified by the chartered accountant - case of the assessee before us that the report of the Chartered Accountant evidencing the value of shares as per Rule 11UA of the Act was duly filed before the CIT(A) but the same was not considered - HELD THAT:- Once the assessee had opted to valuation of shares under rule 11 UA by following the DCF method, then it is not open for the assessing officer or to the CIT(A) to adopt a different method of valuation, for determining the fair market value. As per rule 11 UA, the choice is given to the assessee not to the assessing officer. AO is duty bound to examine the working of the DCF method but has no right to change the method of calculating the fair market value of the shares. Once the assessee has exercised its option of opting for DCF method, then the said method is required to be applied however the assessing officer is having the power to review the calculations and correct adoption of the parameters applied by the assessee for the purpose of arriving at valuation of the shares by applying the DCF method. Report has duly been submitted vide DCF method and the Assessing Officer has applied his own method and has computed a different value of share. Explanation to S. 56(2)(viib) of the Act provides that the fair market value (FMV) of unquoted equity shares for the purpose of 56(2)(viib) of the Act shall be the value as determined in accordance with such method as may be prescribed. The prescribed methods of valuations are given under Rule 11 UA of Income Tax Rules, 1962. In the present case, it is not denied that the assessee adopted clause (b) of Rule 11UA(2) of the Rules and accordingly obtained a Valuation Report from a Chartered Accountant. Since the law has prescribed the specific method for valuation i.e Discounted Cash Flow Method (hereinafter also referred as DCF ), so he was free (and rather entitled) to choose this method. The method of valuation could be challenged by the AO only if it was not a recognized method of valuation (as per Rule 11UA (2) of the Rules).The very purpose of certification of DCF valuation by a merchant banker or chartered accountant is to ensure that the valuation is fair and reasonable. Lower authorities have not examined the method adopted by the assessee for the purposes of arriving at the fair market value of the shares and have made the additions on the basis of book value of the shares. The said action of the assessing officer as well as of the CIT(A) cannot be approved as once the assessee has opted for DCF method, then it is not open for the assessing officer/CIT appeal to change the method of valuation the shares. Remand back the matter to the file of the assessing officer with a direction to consider the valuation report dated 6 January 2014 forming part of the paper book based on DCF method and determine the fair market value of the shares allotted by the assessee. Appeal of the assessee is allowed for statistical purposes.

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• 2021 (9) TMI 741
  Addition u/s 153C - absence or presence of incriminating material - Addition of household expenses - HELD THAT:- On going through the order of the AO we do not find mention of any incriminating material relating to household expenses to have come in his possession to show that the same were being incurred from undisclosed sources. Except for the fact that the son of the assessee stated that household expenses were taken care of by his mother, the assessee, and the fact that nature of certain expenses incurred were brought to light as being incurred on children s education, servants, cars maintained etc., nothing else finds mention in the order of the AO or even the CIT(A), showing that household expenses were incurred by the assessee way beyond her disclosed sources. There is no mention as to how he arrived at the conclusion of undisclosed expenses being to the tune of Rs. 25, 000 /- per month, which fact is affirmed by the LD. CIT(A) also when he states that there was no basis for the estimation made by the AO. We find that the son of the assessee, the searched person, had given details of various household expenses and justified the source of the same, giving details and source of payments of various expenses, but there is no mention in the orders of the authorities below as to how the expenses stated to have been incurred did not justify the lifestyle of the assessee. It is but evident that there was no incriminating material pertaining to and justifying the addition made in the present case. - Decided in favour of assessee.

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• 2021 (9) TMI 738
  Reopening of assessment u/s 147 - escapement of income of the capital gain generated on the sale of the property - addition made by the AO, u/s.56(2)(vii) as amount received without consideration - HELD THAT:- On perusal of the above reasons, it is transpired that there was the property which was sold by the assessee but the assessee failed to disclose the income under the head capital gain on account of transfer of such property. Accordingly, the AO formed his reason to believe that income of the assessee has escaped assessment. Moving further, we find that the AO in the assessment framed under section 147 read with section 143(3) of the Act has made the addition for the money received by the assessee from the company namely M/s Multi Industrial Ceramic Pvt Ltd amounting to Rs. 40 Lakh. The basis/reason on which the proceedings were initiated under section 147 of the Act, there was no addition made by the AO qua to that reason. Thus, the basic premise on which the satisfaction was recorded by the AO for initiating the proceedings under section 147 of the Act i.e. escapement of income on account of sale of the property does not survive. Once the basic foundation goes, then there cannot be any addition on account of any other income which has come to the notice of the AO during the proceedings under section 147 of the Act. In holding so, we draw support and guidance from the judgment of CIT vs. Mohmed Juned Dadani [ 2013 (2) TMI 292 - GUJARAT HIGH COURT] Thus proceedings initiated under section 147 of the Act is invalid as there was no escapement of income in the hands of the assessee on account of sale of the property - Decided in favour of assessee.

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• Customs

• 2021 (9) TMI 777
  Exemption from the payment of SAD - Applicability of Advance ruling - N/N. 45/2005 Customs dated 16.05.2005 - Validity of the Circular No.44/203-Customs dated 30.12.2013 - Wind Operated Electricity Generators - clearance of goods to units located in the Domestic Tariff Area (DTA) as stock transfers for the purpose of trading as well as carrying out certain manufacturing activities - HELD THAT:- No doubt, the said Notification is relied on by the petitioner in this writ petition also. However, the stock transfer made with reference to the Maharashtra Value Added Tax Act, is also to be taken note of. With reference to the said issue, the Advance Ruling Authority made a finding that when such goods are sold in Domestic Tariff Area (DTA), are exempted by the State Government from payment of Sales Tax or Value Added Tax. Such an exemption is not available and this finding would be applicable with reference to the State of Maharashtra under the Tax Law in force in the State of Maharashtra. That was further clarified under Serials 82 and 103 of the Schedule C of Maharashtra Value Added Tax Act (MAVT Act) the parts and components of wind operated electricity generators are subject to tax @ 5%. Therefore, it was considered as not a sale as defined under Section 2(24) of the MAVT Act. The present Advance Ruling relied on being rendered by treating the transaction on the factual scenario as projected by the applicant and not on analysis of the factual position. It is significant to note that Section 6(A) of the Central Sales Tax Act deals with the burden of proof etc., in case of transfer of goods claimed otherwise than by way of sale. To put it differently, Section 6A of the Central Sales Tax Act, mandates that stock transfer of goods is not covered within the definition of sale and as such Central Sales Tax is not levied on stock transfer of goods. The binding nature is to be decided with reference to the nature of decisions by the Advance Ruling Authority. It is not as if that every finding of the Advance Ruling Authority is binding on all the Authorities across the country. The application of mind by the Competent Authority is the scope under the Customs Act in each and every case and the binding nature is undoubtedly confined in certain circumstances and more specifically, based on the nature of the decision rendered by the Advance Ruling Authority - application of Notification requires an adjudication of facts and on such adjudication if the applicant is entitled for exemption or not, is to be decided based on the Notification and on connected provisions. The Competent Authority is bound to conduct adjudication by following the procedures as contemplated and in accordance with law - Petition disposed off.

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• 2021 (9) TMI 770
  Valuation of imported goods - Digital Multi-Function Printers / Devices [MFD] of various makes and models with standard accessories and attachments - to be classified under Customs Tariff Heading 84433100 or not - rejection of declared value - failure to produce information as per Hazardous Waste Rules, 2016 - allegation that importer has neither submitted registration certificate from the BIS nor submitted an exemption letter from the Ministry of Electronics Information Technology [MeitY] - restricted goods or not - extension of the period to keep the goods in the warehouse, not applied - warehoused goods is pending clearance - HELD THAT:- The issue decided in the case of COMMISSIONER OF CUSTOMS VERSUS M/S S.P ASSOCIATES, ARIHANT ENTERPRISES, EXCEL COPIERS, CITY OFFICE EQUIPMENTS, PHOTOFAX SYSTEMS, SKYLARK OFFICE MACHINES, STAR COPIERS, SRK OVERSEAS, RANK OFFICE AUTOMATION, PRIUS TECHNOLOGIES, GENUINE COPIER SYSTEMS, AMAR ENTERPRISES, ATUL AUTOMATION PVT. LTD., DELHI PHOTOCOPIERS, KUTTY IMPEX, PHOTO FAX SYSTEM, GEE KAY COMPUTERS AND BEST MEGA INTERNATIONAL) [ 2021 (9) TMI 183 - CESTAT CHENNAI ] where it was held that The case of the Revenue is that Ministry of Electronics Information Technology has issued a circular No.1/2019 dt. 02.05.2019 clarifying that multi-functional devices are basically printers with additional features and covered under the category of printers and plotters as notified in the order - the case of the Revenue regarding prohibition of import lies on a shaky ground of circular issued by MeitY which effectively enlarged the scope of entry in the order itself. The impugned orders are upheld and appeals filed by Revenue are rejected with consequential relief to the respondents. The impugned goods, if not released already by the Customs, must be cleared for home consumption within 10 days from the date of receipt of copy of this order, if the respondents pay the duty and other dues as per the impugned orders - application disposed off.

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• 2021 (9) TMI 768
  Revocation of the CHA license - time limitation - case of appellant is that though the exports have taken place in 2003, SCN proposing to revoke the license has been issued in 2006 under Regulation 22 of CHALR, 2004 - Availment of ineligible drawback - HELD THAT:- It is clear that for the acts or omissions which are done before the CHALR, 2004 came into force [vide Notification No. 21/2004-Cus. (NT) dated 23.2.2004], the erstwhile CHALR, 1984 would apply. The shipping bills in these transactions are of the year 2003. So also in the Show Cause Notice, the department has mentioned the number of two shipping bills for which there was no IE Code mentioned in the shipping bills in respect of M/s. Gomathy Garments and M/s. Akshaya Impex. Both these shipping bills are also dated 11.3.2003. When the transactions are of the year 2003, the provisions in Regulation 2004 cannot bind the appellant. There are no hesitation to hold that the charges levelled against the appellant under CHALR, 2004 cannot sustain when the acts / omissions / cause of action has happened prior to the introduction of the Regulations. The Show Cause Notice itself is not sustainable in law and the entire proceedings are vitiated. The impugned order revoking the license or directing to forfeit the security cannot sustain in law. This apart, the ld. Counsel has also pointed out that there is much delay in adjudication and that for the export in 2003, the order of revocation has been passed in 2011. The Show Cause Notice was issued on 7.8.2006. Personal hearing was conducted before the adjudicating authority on 13.6.2007 and later on 7.2.2008. The impugned order has been passed after concluding the personal hearing with a delay of more than four-and-half years. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2021 (9) TMI 752
  Sanction of Scheme of Amalgamation - section 230-232 of Companies Act - HELD THAT:- By considering the consent affidavits filed on behalf of the shareholders and secured creditors as well as by the majority in debts value of unsecured creditors of the Applicants Companies to approve the Company Scheme and by waiving their right to participate in such meeting, the meeting of the Shareholders, Secured and Unsecured Creditors of the Applicant Companies are hereby dispensed with. The scheme is approved - application allowed.

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• 2021 (9) TMI 740
  Winding up the Respondent Company - Section 271(c), (d) and 272(3) of the Companies Act, 2013 - HELD THAT:- The affairs of the company have been conducted in a fraudulent manner, the persons concerned in the formation or management of its affairs have been found guilty of fraud, misfeasance or misconduct in connection therewith and that the company has made a default in filing with the Registrar its financial statements or annual returns for immediately preceding five consecutive financial years Hence it is found proper that the Company be wound up in the interest of justice and as prayed for by the Petitioner. The order is hereby passed for winding up of the Company, Saradha Build Creation Pvt. Ltd., under the provisions of Section 271(c) and (d) of the Companies Act, 2013 - Application allowed.

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• 2021 (9) TMI 739
  Settlement of shares - Petitioner submits that the Petitioner has bought the entire shares of 30 (thirty) lacs from the ICICI Bank and even, if the shares are settled with 25% of the total face value of Rs. 30.00 crores, the Petitioner is entitled to get Rs. 7.50 crores plus interest etc. - HELD THAT:- Certain clarifications/papers/documents relating to the sale of shares by ICICI to the Petitioner, decision of CDR/OTS by the Lenders especially relating to these 30.00 lacs shares, claim of Standard Chartered Bank and payment to the Standard Chartered Bank are required to be perused. The ICICI Bank and the Standard Chartered Bank are directed to file their clarifications in the form of an Affidavit enclosing the documents exchanged between the ICICI Bank and the Standard Chartered Bank, Standard Chartered Bank with the Consortium Lenders and the Respondent Company relating to only these 30 (thirty) lacs shares before 23.04.2021 - the Senior Officials of ICICI Bank and Standard Chartered Bank conversant with these 30 (thirty) lacs shares need to be present in next hearing along with their Counsels, if any, to clarify certain points which may be required for disposal of the matter. The Respondent Company is to file in the form of Affidavit all the documents/letters exchanged between itself with the Standard Chartered Bank, CDR, Consortium Lenders, OTS settlement only for these 30 (thirty) lacs shares by 23.04.2021 - List the matter along with all IAs on 03.05.2021 for final hearing.

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• 2021 (9) TMI 737
  Compliance with the Mutual Settlement Agreement between the Petitioner and the Respondent or not - release of collateral security provided - HELD THAT:- Considering the fact that the Unit is an MSME one, the prayer made by the Respondent to grant some time to discuss the matter with the concerned Bank for implementation of the conditions/release of the land, guarantees and Fixed Deposits of the Petitioner, is accepted. Fifteen (15) days time is granted as prayed, for negotiation/discussion with the Bank/Petitioner. Both the parties are at liberty to negotiate with each other/with the concerned Bank in the light of the CGTMSE Guarantee Cover available for MSME Unit for resolution of the issues advanced - List the matter on 24.03.2021.

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• Insolvency & Bankruptcy

• 2021 (9) TMI 759
  Seeking exclusion of 55 days from the timeline of Resolution Process - section 12 R/W Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The learned R.P has sought exclusion of 55 days time from the timeline of CIRP as approved by the CoC due to the number of litigations including the Writ Petitions filed before Hon ble High Court by the Suspended Directors, Appeal filed before Hon ble NCLAT by the CD and lockdown for the second wave of the Covid 2019. The reasons mentioned in the prayer for exclusion of 55 days from the timeline of the CIRP period are satisfactory. Hence exclusion of 55 (Fifty Five) days are hereby allowed from the timeline of the CIRP - application allowed.

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• 2021 (9) TMI 758
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute prior to the issue of Demand notice or not - HELD THAT:- There is an existence of dispute from 04.07.2017 i.e. well before the issuance of the demand notice by the OC on 17.05.2019. As per the provision of IBC 2016, an Application filed under Sec 9 0f IBC needs to be rejected if there is an existence of Disputes prior to the issue of Demand notice by the OC upon CD. This application filed under section 9 of the IBC, 2016 is hereby rejected - Application dismissed.

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• 2021 (9) TMI 753
  Initiation of preliminary enquiry under Section 340 of Code of Criminal Procedure against the Financial Creditor - direction to competent officer or Registry of this Hon ble Tribunal to make a complaint in writing and send such complaint in writing to the Magistrate of First-Class having jurisdiction - offences under Sections 193, 199, 200, 463 and 471 of the India Penal Code, 1860 - HELD THAT:- There is no need to entertain the prayer made here by the Suspended Management/Director, when the Petition filed by the FC for Rs. 7,43,15,000.00 under Section 7 of IBC has been admitted and CD is under Moratorium. IRP has been appointed by this Bench and he is performing his duties as per the provisions specified under Sections 17, 18, 20 21 of IBC, 2016. The IRP/RP is duty bound to examine the documents minutely before admitting any claims submitted by the Creditors including the claim of the Applicant. Application rejected.

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• 2021 (9) TMI 747
  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:- The Corporate Debtor has neither filed any reply nor appeared before the bench. The corporate debtor was proceeded ex-parte on 07.07.2021. As per Form V, Part IV, the Corporate Debtor is liable to pay an outstanding sum of Rs. Rs. 6,91,594/- along with interest @ 24% p.a. of Rs. 1,25,161.94/- - The date of default as per part IV, has occurred from the expiry of ten days of receipt of Invoice the date of receipt of the last invoices was on 08.04.2019. The present application was filed on 04.02.2020, hence the debt is not time barred and the application is filed within the period of limitation. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - the present application is complete and the Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. The present application is admitted, in terms of section 9(5) of IBC, 2016. Application admitted - moratorium declared.

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• 2021 (9) TMI 746
  Liquidation of Corporate Debtor - percentage of distribution of CIRP liquidation cost, pursuant to sec 53 of IBC, 2016 read with regulation 42 of IBBI (Liquidation Process) Regulations, 2016 between the secured creditors - HELD THAT:- It is evident from the bare perusal of the section 53 of the IBC, 2016 that the proceeds from the sale of the Liquidation assets shall be distributed in such an order that the Insolvency resolution process cost and Liquidation cost to be paid in full in the first and the foremost priority, along with that the Regulation 42 of IBBI (Liquidation Process) Regulations, 2016 clearly specifies that the Liquidation cost shall be deducted before the distribution is made. Whereas, in the present case in hand the applicant submits that the Respondent No. 1 i.e., SIDBI has not paid the contribution towards the CIRP and Liquidation cost except Rs. 60,000/- - in the present case in hand the Applicant/Liquidator s prayer as to whether to charge in the percentage of claim admitted or in the percentage of realization stands answered that the applicant/Liquidator shall calculate the fees proportionately on the basis of realization. The Respondent No. 2 and Respondent No. 3 as stated by applicant in the application do not have any objection to the same. Whereas, the reply filed by the Respondent No. 1 contains no valid contention in respect to calculation of fees Proportionately from the proceeds. Whether as per regulation 2A of IBBI (Liquidation Process) Regulations, 2016 i.e., amended on 25.07.2019, the financial institution (unsecured creditor) who was the CoC member during the period of CIRP, is liable to pay the CIRP Liquidation Cost u/s. 53 of IBC, 2016? - HELD THAT:- It is clearly evident that the above said regulation is not applicable on the Liquidation proceedings of the present matter in hand. Further, as submitted by the applicant/Liquidator the realization from assets is enough to cover the Liquidation cost. Hence, the Respondent No. 1 i.e., SIDBI contention that financial creditors to contribute excess of the financial costs over the Liquid assets of the Corporate Debtor as stated in Regulation 2A of IBBI (Liquidation Process) Regulations, 2016 does not stand any merit. Whether the period of dispute between liquidator secured creditor should be excluded, to calculate of percentage of fees of liquidator? - HELD THAT:- Since, the Applicant/liquidator successfully listed out the circumstances due to which the delay in completion of Liquidation process has taken place along with the Directions which the Applicant/Liquidator sought from the Adjudicating Authority in respect to the disputes arisen with the Respondent No. 1 i.e., SIDBI hence, the period of dispute between the secured Creditor and the Liquidator is excluded as the applicant successfully shown his bona fide for the delay in completion of Liquidation Process. Whether the secured creditor, who has realized from the property u/s. 52 of IBC, 2016 is liable to pay the liquidation cost? - HELD THAT:- In the present matter in hand the applicant/Liquidator submitted that the Respondent No. 3 i.e., Corporation Bank raised the objection to bear the Liquidation cost incurred after the date i.e., 16.01.2020 of realization of their property u/s. 52 of IBC, 2016 since, the Respondent No. 3 has already realized from the property thus, it may not be proper to direct the Respondent No. 2 and Respondent No. 3 to bear their part of the Liquidation cost for the delay caused due to dispute between the Applicant/Liquidator and Respondent No. 1. Hence, in this peculiar situation this tribunal directs the Liquidator to meet the Liquidation cost as a priority from the funds realised in liquidation. Application disposed off.

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• 2021 (9) TMI 745
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Resolution Professional, having not succeeded in getting any Resolution Plan for the revival of the Corporate Debtor, the Adjudicating Authority has no other alternative but to pass an Order, requiring the Corporate Debtor to be liquidated in the manner as laid down in Chapter-III, Section 33 of the Insolvency Bankruptcy Code, 2016. Further, the Corporate Debtor, Mohan Motors Distributors Private Limited, is also not a going concern, with no employees, and huge accumulated losses - Since there is no other option other than to pass an Order for liquidation of the Corporate Debtor, we are inclined to invoke Section 33 of Chapter-III of the Insolvency Bankruptcy Code, 2016, ordering liquidation of the Corporate Debtor, namely, Mohan Motors Distributors Private Limited, as laid down in this Chapter. The Corporate Debtor is ordered to be liquidated - Application allowed.

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• 2021 (9) TMI 744
  Seeking exclusion of period starting on the date of commencement of CIRP till the availability of books of accounts and details from the personnel of the Corporate Debtor - HELD THAT:- Section 19 provides for the personnel of the Corporate Debtor to cooperate with the interim resolution professional and if they do not cooperate, an application may be preferred under sub-section (2) thereof. Although the application under section 19(2) has been filed in the present case, it has not been pressed for hearing so far. Filing an application does not absolve the RP of his duties but he also has to pursue the application diligently, which has not been done in the present case. Although a provision for filing of application against the non-cooperating members has been provided for in the Code, the same shall not be resorted to unless the professional has discharged his duties proactively and diligently. The duty cast upon the IRP and the RP under sections 18 and 25 of the Code are not empty formalities that the professionals have to discharge just for the sake of doing it. Section 25(2) provides, inter alia, for the RP to take custody and control of all the assets of the Corporate Debtor, including the business records of the Corporate Debtor. In the present case, all that the RP has done is contact the member of the suspended board through email and speed post. The utter lack of seriousness on the part of the RP in discharging his duties under the Code is appalling. Coming back to the point of exclusion, although a discretion has been provided to the Adjudicating Authority to enlarge the time for completion of CIRP, the discretion is to be used sparingly and judiciously in cases where the Applicant demonstrates that the Corporate Debtor is only a few days short of achieving a resolution by way of a resolution plan and that it would be in the interest of all stakeholders that the Corporate Debtor be put back on its feet instead of being sent into liquidation. Application dismissed.

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• Service Tax

• 2021 (9) TMI 779
  Direction to accept payments (belatedly) determined pursuant to Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- Suffice to dispose of captioned writ petition as closed, preserving the rights of the writ petitioner to send a representation to the respondents and making it clear that if the writ petitioner is so advised and if the writ petitioner sends a representation, it is open to the respondents to consider the same on its own merits and in accordance with law uninfluenced by this order. In other words, this order will neither impede nor serve as a impetus, if a representation is made. Captioned Writ Petition is disposed of.

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• 2021 (9) TMI 772
  Levy of service tax - Infrastructural services under the category of Business Support Services - Transit / Guest House services provided to group companies - Manpower Supply Services - Transfer of employees group companies - Difference between ST-3 Balance Sheet - Wrong Availment of CENVAT Credit. Levy of Service Tax - Business Support Services - transit house income - HELD THAT:- The provision of housing facility on short-term basis is specifically covered under short-term accommodation services , which has been subjected to service tax w.e.f. May 01, 2011 under section 65(105) (zzzzw) of the Finance Act. As this service is a new entry and has not been carved out from any other existing service, it cannot be included under any other category, including BSS, prior to May 01, 2011. This is what was held by Bombay High Court in Indian National Shipowners Association [ 2009 (3) TMI 29 - BOMBAY HIGH COURT] . The Bombay High Court observed that introduction of a new entry and inclusion of certain services in that entry would pre-suppose that there was no earlier entry covering the said services. It was also observed that creation of the new entry was not by way of amending the earlier entry and it was not carved out of any earlier entry. The infrastructural support services includes only the service specified in the Explanation, which essentially includes setting up office spaces. Thus, accommodation or guest house facility will not form part of infrastructural support services and cannot be treated as provision of BSS - the Commissioner was not justified in confirming the demand on the amount received for transit house under the category of BSS. Manpower supply services - appellant was supplying manpower to its group companies - HELD THAT:- Reliance was placed in the case of M/S MIKUNI INDIA PVT. LIMITED VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, CUSTOMS CENTRAL EXCISE [ 2019 (8) TMI 260 - CESTAT NEW DELHI] where Division Bench in M/s India Yamaha Motor Private Limited [2019 (7) TMI 772 - CESTAT NEW DELHI] examined the issue both for the period prior to 1 July, 2012 and for the post negative list for the period subsequent to 1 July, 2012 and held that neither during the pre-negative list nor post negative list, Service Tax could not be levied on deputation of employees from a group company in Japan to the Appellant in India - thus, the appellant is not engaged in rendering supply of manpower service - demand set aside. Difference between ST-3 and balance sheet - HELD THAT:- The appellant had clearly explained the difference in the values appearing in the Service Tax Return and the Balance Sheet. The reason stated was that the appellant had reported wrong value-cum-tax basis in the Service Tax Return, whereas the appellant paid service tax on the correct value. These facts were placed before the Adjudicating Authority with supporting documents but the same have not been considered. The explanation offered by the appellant was required to be examined - for the reason that the category of taxable service under which the demand was confirmed has not been specified and for the reason that the appellant has satisfactorily explained the difference in the tax value, the demand under this head cannot be sustained. Wrong availment of credit - demand on the ground that closing balance as per Service Tax-3 returns in the months of March, 2006 and March, 2008 was NIL - period April, 2006 and April, 2008 - HELD THAT:- It is seen that the Commissioner has not examined the documents that were on record. It would, therefore, be appropriate to remand the matter to the Commissioner to examine this issue, after taking into consideration the documents, including the Chartered Accountant certificates which are at pages 1428 to 1435 and 1470 of the appeal memo. The order dated April 18, 2013 passed by the Commissioner, except to the extent it has confirmed the demand of CENVAT credit for the months of April 2006 to April 2008, cannot be sustained and is set aside. So far as the confirmation of demand of CENVAT credit for the months April 2006 to April 2008 is concerned, the Commissioner shall re-examine the matter - Appeal allowed by way of remand.

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• 2021 (9) TMI 755
  Maintainability of appeal - order passed by the Additional Commissioner has been dismissed for the reason that it was filed beyond the period of limitation - power of Commissioner (Appeals) to condone the delay - section 85(3) of the Finance Act - HELD THAT:- The Supreme Court in SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] examined the provisions of section 35 of the Central Excise Act, 1944, which are pari materia to the provisions of section 85 of the Finance Act, and observed that the delay can be condoned in accordance with the language of the Statute which confers power on the Appellate Authority to entertain the appeal by condoning the delay only upto 30 days after expiry of 60 days, which is the normal period for preferring the appeal. It is for this reason that the Supreme Court observed that the Commissioner and the High Court were justified in holding that there was no power to condone the delay after the expiry of the further period of 30 days. Reliance by the learned Authorized Representative appearing for the Department on the decision of the Supreme Court in Singh Enterprises is misplaced. It is no doubt true that the Supreme Court held that an appeal has to be filed within the period prescribed in the Act and the provisions of section 5 of the Limitation Act cannot be availed of, but the period of three months has to commence from the date a copy of the order is actually served upon the appellant and in the instant case the order was actually served upon the appellant only on July 05, 2011 - the appeal presented by the appellant on August 05, 2011 was within the initial period of three months prescribed in sub-section (3) of the section 85 of the Finance Act. The order dated November 26, 2015 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside - Appeal allowed.

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• 2021 (9) TMI 751
  Business Auxiliary Service - promotion or marketing of goods produced or provided by or belonging to the client to CCIPL - HELD THAT:- The issue is decided in the case of M/S KANDHARI BEVERAGES P LTD VERSUS C.C.E. - CHANDIGARH [ 2020 (11) TMI 925 - CESTAT CHANDIGARH] where it was held that no demand of service tax is sustainable against the appellant. No demand of service tax is sustainable - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (9) TMI 786
  Violation of principles of natural justice - adjudicating authority has relied on the report of the Central Revenue Control Laboratory (CRC) to reject the petitioner s explanation - HELD THAT:- The report of the CRCL was first confronted to the petitioner on 20.10.2020 and not earlier. Therefore, in the first place adequate opportunity was not granted to the petitioner to object to that report. In absence of any discussion as to the objection thus raised by the petitioner, in the order impugned, and further in view of the further assertion made by the petitioner, the complete copy of the report of the CRCL dated 3.6.2020/13.7.2020 had not been supplied to the petitioner, it is found that the principle of natural justice has been violated, inasmuch as neither the petitioner was confronted with the adverse material within time as to allow it a reasonable opportunity to object to the same nor his objection submitted has been considered in the impugned order. No useful purpose would be served in relegating such a petition to the forum of alternate remedy as was also submitted by the revenue - adjudication order dated 28.10.2020 passed by the Commissioner, Central Tax, GST, Gautambuddh Nagar is hereby set aside - Petition allowed.

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• 2021 (9) TMI 771
  CENVAT Credit - inputs - V belts - procured pulleys - denial on the ground that appellants were not manufacturing any goods and the activity that took place was trading of goods - HELD THAT:- It is not disputed that the appellant has cleared the final product viz. Belt Accessories (Pulleys and V Belts) after payment of excise duty. When the appellant has discharged the excise duty on final product then the department cannot disallow credit alleging that there is no process of manufacture. In case of any doubt, the department ought to have intimated the appellant before discharge of excise duty. In the present case payment of duty on the inputs is not disputed. The Hon ble High Court of Bombay in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] held that when the duty has been paid on the finished products then the availment of the credit of duty paid on inputs cannot be faulted. The demand cannot sustain - Appeal allowed - decided in favor of appellant.

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• 2021 (9) TMI 750
  Reversal of Cenvat Credit - input - input services - pressmud - wastes generated during manufacturing of sugar/molasses - exempt goods - Rule 6(3)(i) of CENVAT Credit Rules, 2004 - HELD THAT:- In the instant case appellant had been asked to reverse the credit with interest etc. against clearance of pressmud. However, it has been made crystal clear that bagasse (a similar waste product like pressmud) is not a manufactured product but is only an agricultural waste and residue, which is not the result of any process and therefore cannot be treated as falling within the definition of Section 2(f) of the Central Excise Act, 1944 that defined a manufacturer and in the absence of manufacturing, there cannot be any excise duty and therefore, Rule 6 of the CENVAT Credit Rules, 2004 shall have no application. In obedience to the judicial precedent set by the Hon ble Apex Court in UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] , such executive instruction as contained in the Circular dated 25.04.2016 at para 4.2 is not enforceable. Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2021 (9) TMI 775
  Dishonor of Cheque - discharge of enforceable debt or not - rebuttal of presumption or not - only point involved in this case is that the cheque itself was not issued in discharge of any liability and accordingly, one of the basic ingredients of the offence under Section 138 of the Negotiable Instruments Act was not at all satisfied - HELD THAT:- The Complainant s son was trying to change his transporting business after selling his trucks and about this, the petitioner had knowledge and so the petitioner came in contact with the Complainant side and offered his son to participate in a new business and after being convinced, the Complainant spent a huge amount in the business of the petitioner by his selling trucks, but on asking to repay the benefits of the share, the petitioner issued a post dated cheque bearing no. 831577 dated 15.08.2006 for a sum of Rs. 24,344/- in favour of the Complainant. On presentation of the cheque on 7.09.2006, 19.09.2006 and also on 18.10.2006 with the consent of the petitioner, the same was dishonoured due to being not arranged for. The further case of the Complainant was that the petitioner was informed in respect of the payment of the bounced cheque amount, but he did not pay the same. The Complainant sent a legal notice to the petitioner on 31.10.2006 by registered post and also by courier service, but the petitioner did not pay the said amount and ultimately, the Complaint case was filed. This Court finds that C.W.-2 is the Complainant who has stated that the petitioner had issued Cheque No.831577 dated 15.08.2006 for a sum of Rs. 24,344/- in his favour and he identified the writing and signature of the petitioner which was marked as Exhibit-1. On presentation, the cheque was not encashed and it was dishonoured. He identified the bank return memos which were marked as Exhibits- 2, 2/1 and 2/2 respectively - This Court finds that all the witnesses examined on behalf of the Complainant have clearly stated about the dishonour of the cheque, the return memo, legal notice, etc. Any debt or liability could not be disproved by the defence. In this case, the learned trial court found that the said cheque was issued by the petitioner in favour of the Complainant for discharging his debt, but the same was returned by the bank unpaid because of insufficient fund which falls under the purview of the Section 138 of the Negotiable Instruments Act. This Court finds that the learned appellate court also recorded that all the basic ingredients for offence under Section 138 of the Negotiable Instruments Act were satisfied and accordingly conviction of the petitioner was upheld. This Court finds that both the learned courts below have appreciated the evidences on record and have rightly considered the provision under Section 139 of the Negotiable Instruments Act while upholding conviction of the petitioner under Section 138 of the Negotiable Instruments Act. This Court also finds that all the basic ingredients for filing the Complaint case for offence under Section 138 of the Negotiable Instruments Act were duly satisfied. There is no illegality or perversity in the impugned judgments of conviction and order of sentence of the petitioner. Petition dismissed.

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