TMI Tax Updates - e-Newsletter
September 23, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Highlights / Catch Notes

• GST:

  Profiteering - Vires of Section 171 of CGST Act and Chapter XV of the CGST Rules - petitioner directed to deposit the principal profiteered amount (i.e. ₹ 7,53,854/- and ₹ 35,898/-) in six equated monthly installments - However, deposit of interest and penalty stayed - HC
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• Income Tax:

  Netting off of the interest income against interest expenditure - assessee has deposited the funds which were not immediately required for the assessee’s business and as and when required, they were immediately withdrawn and used for business purposes. - AO directed to allow the netting off of the interest income against interest expenditure - AT
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• Income Tax:

  Enhancement of Capital Gain - Initially the value was taken as determined by the Sub-Registrar - Later, on objection raised by asessee, matter was referred to DVO - Application of section 50C, since the land is in Dark Zone - DVO has taken excessive rate without considering the average rate per Bigha which is more than double of prevailing Market rate - In addition to cost of boundary wall as taken by the DVO also considered for cost of acquisition - Relief granted to the assessee - AT
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• Income Tax:

  Revision u/s 263 - It is evident that A.O. made enquiries on the issue and assessee complied to the enquiries and filed all the required details. Thus, it is not a case where that A.O. made no enquiry or verification which should have been made. It is clear from reading of notice u/s 263 of the Act, that the proceedings u/s 263 has been started on the same issue which have already been considered and examined by the then A.O. - Revision order set aside - AT
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• Income Tax:

  Determination of LTCG - Valuation u/s 50C - the cost of new asset is not less than the net consideration, therefore, the whole of the capital gain is not chargeable to tax even if the capital gain is computed by taking the value adopted by the stamp authority. Hence, the assessee is entitled for exemption u/s 54F of the Act - AT
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• Income Tax:

  Computation of capital gains -Treating ‘Government Securities’ as Bonds or Debentures for the purpose of the third proviso (now fourth proviso) to section 48 - Just because there is fixed returning income, it cannot be concluded that on sale of such asset no indexation would be granted of the asset is a long term capital asset. - AT
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• Income Tax:

  Demand in respect of firm raised in the name of Partner - In the light of the legal nature of a partnership firm, a demand raised on the managing partner can never be vis ualised as a wrong fixation of liability. It can only be seen as a demand made on the person who is managing the affairs of the firm, for and on behalf of all its partners. Such a demand does not in any way amount to a conclusion that the claim against the other partners has been given up, since the liability of the partners is joint and several. - HC
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• Income Tax:

  Unexplained income u/s 69A - cash deposited during the demonetization period made out of cash in hand (which was more than four months) - penalty proceedings u/s.271AAC - Writ petition dismissed since the petition has option to file statutory appeal before the appellate authority, challenging the order passed by the Assessing Officer. - HC
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• Customs:

  Power of Customs Officers to arrest - Any Person - Where a Customs Officer arrests a person and informs that person of the grounds of his arrest, for the purposes of holding an inquiry into the infringement of the provisions of the Customs Act which he has reason to believe has taken place, there is no formal accusation of an offence. The accusation could be said to have been made when a complaint is lodged by an officer competent in that behalf before the Magistrate. The arrest and detention are only for the purpose of holding effective inquiry under Sections 107 and 108 of the Customs Act with a view to adjudging confiscation of dutiable or prohibited goods and imposing penalty - HC
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• Customs:

  We are not satisfied that under the Act of 1962 such powers have been vested in the Customs officers that they must be regarded as police officers. - The Customs/DRI Officers are not the Police Officers and, therefore, are not obliged in law to register FIR against the person arrested in respect of an offence under Sections 133 to 135 of the Customs Act, 1962. - HC
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• Customs:

  Whether the DRI officers are 'proper officers' for the purpose of Section 28 of the Customs Act, 1962? - Held Yes - The DRI officers are also Customs officers and have been conferred with the powers specified under the various provisions of the Customs Act, 1962. - HC
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• IBC:

  Rule of IRP - A well functioning system of resolution driven by the IPs enables the adjudicator to delegate more and more powers and duties to the professionals. This creates the positive externality of better utilization of judicial time. The worse the performance of IPs, the more the adjudicator may need to personally supervise the process, which in turn may cause inordinate delays. Consumers in a well functioning market for IPs are likely to have greater trust in the overall insolvency resolution system. On the other hand, poor quality, services and recurring instances of malpractice and fraud, erode consumer trust. - Tri
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• Service Tax:

  Rent-a-cab service - allegation that they have deliberately suppressed the material facts with intent to evade payment of service tax - The appellant providing several numbers of vehicles to BSNL etc. on monthly basis against considerations which otherwise are on yearly basis. Also keeping in view the appellant is admittedly registered as rent-a-cab service provider, we hereby answer the question so framed in affirmative i.e. in favour of revenue. - AT
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• Central Excise:

  Reversal of Cenvat Credit under Rule 6 - clearance of iron ore fines - exempted goods or not - the Department has brought nothing on record to show that the iron ore fines can be considered as exempted goods. Admittedly, there is no Notification of the Revenue granting exemption to this product. Thus, the embargo created in Rule 6 (3) (b) of CCR will not apply for removal of iron ore fines from the appellant’s factory.- AT
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• Central Excise:

  Refund of CVD / Excise duty - case is yet to be decided even after 16 years lapsed - We fail to understand that if the claim of the writ applicant could not be looked into and decided by the authority for want of necessary materials, then the authority could have taken an appropriate decision one way or the other for passing an appropriate order. We fail to understand what was the good ground for the department to issue three show cause notices. - HC
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Articles

• NEW TCS FROM BUYERS OF GOODS W.E.F. 01102020 – request to honourable PM and FM to defer new TCS provisions.

Notifications

• Companies Law

• G.S.R. 570 (E) - dated 21-9-2020 - Co. Law
  National Company Law Appellate Tribunal (Recruitment, Salary and other Terms and Conditions of Service of Staff Car Drivers) Rules, 2020.

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• GST

• 68/2020 - dated 21-9-2020 - CGST
  Seeks to grant waiver / reduction in late fee for not furnishing FORM GSTR-10, subject to the condition that the returns are filled between 22.09.2020 to 31.12.2020

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• 67/2020 - dated 21-9-2020 - CGST
  Seeks to grant waiver / reduction in late fee for not furnishing FORM GSTR-4 for 2017-18 and 2018-19, subject to the condition that the returns are filled between 22.09.2020 to 31.10.2020

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• 66/2020 - dated 21-9-2020 - CGST
  Seeks to give one time extension for the time limit provided under Section 31(7) of the CGST Act 2017 till 31.10.2020

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• GST - States

• 38/1/2017-Fin(R&C)(167)/519 - dated 16-9-2020 - Goa SGST
  Goa Goods and Services Tax (Tenth Amendment) Rules, 2020

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• 38/1/2017-Fin (R&C)(168)/520 - dated 16-9-2020 - Goa SGST
  Appoints the 1st day of September, 2020, as the date on which the provisions of section 10 of the Goa Goods and Services Tax (Amendment) Act, 2020, shall come into force

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• 77/GST-2 - dated 21-9-2020 - Haryana SGST
  Notification to extend the due date for filing FORM GSTR-4 for financial year 2019-2020 to 31.10.2020 by amending notification no.57/GST-2, dated 26.04.2019 under the HGST Act, 2017.

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• MAHARASHTRA ACT No. XXIII OF 2020 - dated 16-9-2020 - Maharashtra SGST
  Maharashtra Goods and Services Tax (Second Amendment) 2020

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• MAHARASHTRA ACT No. XXII OF 2020 - dated 16-9-2020 - Maharashtra SGST
  Maharashtra Goods and Services Tax (Amendment) Act, 2020

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• 748-F.T. - dated 18-9-2020 - West Bengal SGST
  Seeks to further extend the due date of furnishing return by composition taxpayers in FORM GSTR-4 for the financial year 2019-20 till 31st October, 2020.

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• 747-F.T. - dated 18-9-2020 - West Bengal SGST
  Seeks to bring into force provisions of sub-section (9) of section 7 of the West Bengal Finance Act, 2020 (West Ben. Act II of 2020) w. e. f. 01.09.2020. (Amendment Section 50 of the WBGST Act, 2017 regarding interest)

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Circulars / Instructions / Orders

• DGFT - 16/2015-2020 - dated 22-9-2020
  Implementation of the Track and Trace system for export of Pharmaceuticals and drug consignments alongwith maintaining the Parent-Child relationship in the levels of packaging and their movement in supply chain — Extension of date of implementation

News

• IFSCA Committee submits interim report on development of international retail business

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Case Laws:

• GST

• 2020 (9) TMI 830
  Profiteering - Vires of Section 171 of CGST Act and Chapter XV of the CGST Rules - vires of Rule 123, 129 and 133(3) of the CGST Rules - violation of Articles 14, 19(1)(g), 50, 256 and 300A of the Constitution of India - HELD THAT:- Keeping in view the orders passed by this Court in Phillips India Limited Vs. Union of India Ors. (W.P.(C) No.3737/2020) as well as M/s Samsonite South Asia Pvt. Ltd. Vs. Union of India Ors. (W.P.(C) No.4131/2020 and M/s Patanjali Ayurved Ltd. Vs. Union of India Ors. (W.P.(C) No.4375/2020), [ 2020 (7) TMI 614 - DELHI HIGH COURT ] this Court directs the petitioner to deposit the principal profiteered amount (i.e. ₹ 7,53,854/- and ₹ 35,898/-) in six equated monthly installments commencing 30th September, 2020 - However, the interest amount directed to be paid by the respondents as well as penalty proceedings are stayed till further orders. List on 03rd November, 2020.

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• 2020 (9) TMI 829
  Provisional attachment of factory premises and residential premises - grievance is that the authority while issuing fresh GST DRC-01A has simultaneously issued GST DRC-01 - HELD THAT:- According to the learned counsel appearing for the writ applicant, his client is yet to reply to the notice issued in Form-01A. It is only thereafter that the further proceedings under GST DRC-01 could have been initiated. Our attention has been drawn to page-85 of the paper book which is the representation addressed by the writ applicant to the Assistant Commissioner of State Tax-04 (Enrocement), Surat, bringing this fact to his notice. This writ application is disposed off with a direction to the Assistant Commissioner of State Tax-04 (Enrocement), Surat respondent No.4, to immediately look into the representation dated 26th August 2020 referred above and annexed at page-85 of the paper book and take appropriate decision in accordance with law within the period of 15 days from the date of the receipt of this order.

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• 2020 (9) TMI 828
  Violation of principles of natural justice - Validity of assessment orders - petitioner seeks one more personal hearing and some time to produce evidences in support of its contentions, which is ignored - HELD THAT:- No serious objection is raised by the revenue to the suggestion given of the Court that the impugned order of assessment be set aside and be redone de novo after affording ample opportunity to the petitioner. The impugned orders of assessments are set aside and the matter remanded to the Assessing Authority to be redone - Petition allowed by way of remand.

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• 2020 (9) TMI 827
  Detention and seizure of goods - Confiscation of goods - case of Revenue is that various irregularities were noticed by the authorities concerned at the time of seizure and detention of the goods and the conveyance - HELD THAT:- We are of the view that we should not interfere at the stage of adjudication of the confiscation proceedings under Section 130 of the Act. The adjudication proceedings shall proceed in accordance with law. However, we are inclined to grant some relief to the writ applicant so as to protect the goods getting damaged, but at the same time keeping in mind the interest of the State also. We direct the writ applicant to deposit an amount of ₹ 1,70,787/- towards tax and penalty with the authority concerned and also furnish a bank guarantee to the tune of ₹ 17,07,876/- of any Nationalized bank. On deposit of ₹ 1,70,787/- towards tax and penalty along with the bank guarantee of ₹ 17,07,876/- of any Nationalized bank, the authority concerned shall release the goods and the vehicle at the earliest. The deposit of bank guarantee shall abide by the final outcome after adjudication. Application disposed off.

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• Income Tax

• 2020 (9) TMI 826
  Unexplained income u/s 69A - cash deposited during the demonetization period made out of cash in hand (which was more than four months) - penalty proceedings u/s.271AAC - HELD THAT:- In the case on hand, the Income Tax Officer/Respondent, taking into account the fact that the explanation given by the assessee that the cash deposited during the demonetization period made out of cash in hand (which was more than four months) of ₹ 11,10,000/- was against human probability and that there is no explanation for the source and nature of cash deposits in the Savings Bank Account, brought the above unexplained income to tax under Section 69A of the Income Tax Act, 1961. Single Judge, after considering the facts and circumstances of the case, without expressing any view on the merits of the matter, disposed of the writ petition, by granting liberty to the appellant/writ petitioner to file appeal before the concerned appellate authority. It shows that the assessee/appellant herein, without availing the appellate remedy, filed the Writ Petition before the writ court. Single Judge, directed the writ petitioner/appellant herein to file statutory appeal before the appellate authority, challenging the order passed by the Assessing Officer. Considering the fact that the Act provides effective and sufficient forum for any aggrieved party to work out their remedy, we do not find any ground or any merit in the appeal. Further, the decisions of the Honourable Supreme Court, relied on by the appellant, would not in any manner advance the case of the appellant/assessee. Therefore, The Writ Appeal is liable to be dismissed.

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• 2020 (9) TMI 825
  Revision u/s 263 - As per CIT AO has categorically failed to verify the deduction u/s 54 - ITAT quashing the revision order - HELD THAT:- Essential condition for the exercise of power u/s 263 that the Commissioner of Income Tax must find an error which is found in the assessment order of the Income Tax Officer prejudicial to the interest of the Revenue and conclusion of the Commissioner that the order is erroneous and prejudicial to the Revenue must be based on materials and contentions raised by the assessee on opportunity of hearing being afforded to him. The findings of facts recorded by the Appellate Tribunal is that one of the requisite conditions for the exercise of power under Section 263 of the Act that the Commissioner should consider the assessment order to be erroneous and prejudicial to the interest of the Revenue is not satisfied in the present case. In arriving at such conclusion, the appellate Tribunal has assigned cogent reasons. - Decided against revenue.

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• 2020 (9) TMI 824
  Addition u/s 68 - genuineness of the transactions - HELD THAT:- AO should have considered the material produced before him, which have also been enclosed herein. On a specific question being asked to the learned counsel for the revenue - whether the bills referred to hereinabove have been produced before the assessing officer, it is submitted that he does not have complete information with regard to the same. On considering these four bills, we are of the view that if the same were placed for consideration before the assessing officer, then he may have come to a different conclusion than what he has arrived at. We also do not notice that the assessing officer has referred to any of these bills, as produced by the appellant. We are of the view that it would be just and appropriate to direct the assessing officer to reconsider the matter afresh by considering these four bills, which are produced herein by the appellant as well as the material already placed before the assessing officer for consideration. Appeal is allowed

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• 2020 (9) TMI 823
  Exemption u/s 11(1)(a) - activity of letting out of halls is covered by the residuary limb of definition u/s.2(15) of the Act and hit by the proviso to Section 2(15) and exempted u/s.11 and 12 of the Act - Whether the entire income derived from Kalyana Mandapam, is utilized for the primary object of the Society? - HELD THAT:- In view of the objects of the trust to be fulfilled, which is for a charitable purpose, the income there from would be entitled to exemption u/s.11(1) of the Act. Whether the income derived from letting out of Kalyana Mandapam, Community Hall and Gnanavapi owned by the appellant/assessee is the income from the House property or business income and whether the same is liable to be taxed or exempted is the other question. The contention of the assessee is that since utilization of the surplus income from the running of Kalyana Mandapam, Community Hall and Gnanavapi are for the objects of the trust, it is exempted from tax. Both the CIT (Appeals) and the ITAT have not discussed about the facts in respect of the surplus income having been utilized for the objects of the trust viz., Running educational institution, providing medical relief to the poor etc., Absolutely there is no discussion of the facts relating to the utilization of earned income from letting out of Kalyana Mandapam and Gnanavapi towards charitable objects such as Education and Medical relief to the poor as given in the objects of the trust. Further, the Assessing Officer has not looked into the fact as to whether the entire income from Community Hall, Kalyana Mandapam and Gnanavapi are utilised for fulfilling the objects of the trust that is being education Medical relief and relief to the poor. The matter is remitted back to the Assessing Officer for de novo consideration as to whether the entire revenue derived from letting out of Kalyana Mandapam, Gnanavapi and Community Hall are utilized for charitable objects of the Trust and also to consider as to whether the income received from the properties of the Trust namely, Community Hall, Kalyana Mandapam and Gnanavapi to be classified as income from House Property or business income since the income there from is utilized for charitable purpose of the trust. The Assessing Officer shall consider the above said questions and decide the matter on merits.

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• 2020 (9) TMI 822
  Validity of demand in respect of firm raised in the name of Partner - TDS u/s 194A - interest paid - failure of the payee-assessee to pay the tax directly as per section 191 - fixing of liability on the assessee and its partners as assessee-in-default - Fix the liability to pay the tax on the correct person - HELD THAT:- The burden to prove that the payee-assessee had paid the tax, which the assessee-deductor failed to deduct was placed on the latter ; by production of a certificate from the accountant. The questions are thus answered against the assessee and in favour of the Revenue. It is settled law that a partnership is neither a natural person nor a juris tic person. It has no separate existence than its partners. The liability of a partnership firm is the liability of its partners. As such, fixing the liability of the firm on its partners can never be held to be illegal. In fact, it necessarily has to be fixed on the partners. In the light of the legal nature of a partnership firm, a demand raised on the managing partner can never be vis ualised as a wrong fixation of liability. It can only be seen as a demand made on the person who is managing the affairs of the firm, for and on behalf of all its partners. Such a demand does not in any way amount to a conclusion that the claim against the other partners has been given up, since the liability of the partners is joint and several. We do not find any perversity in the findings of the Appellate Tribunal. The questions raised in the appeal are answered against the assessee and in favour of the Revenue.

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• 2020 (9) TMI 821
  Computation of capital gains -Treating Government Securities as Bonds or Debentures for the purpose of the third proviso (now fourth proviso) to section 48 - HELD THAT:- Issue decided in favour of assessee as relying on own case [2019 (12) TMI 958 - ITAT KOLKATA] . Appellate forum against the orders of the coordinate bench of this Tribunal - Proposition that, when fixed return is assured on a capital asset, indexation should not be granted, is not correct. Even on buildings or land fixed rental income is earned. Just because there is fixed returning income, it cannot be concluded that on sale of such asset no indexation would be granted of the asset is a long term capital asset. This bench has not been informed as to whether the department has accepted the earlier order of the Tribunal on this issue for A.Y. 2010-11 and A.Y. 2014-15 in and carried the matter in appeal before the Hon ble High Court in either of the case, we do not see any reason to deviate form, the proposition of law laid down by the coordinate bench of this Tribunal, on the very same issue in the case of the assessee itself, in the earlier assessment years.

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• 2020 (9) TMI 820
  Reopening of assessment u/s 147 - denial of natural justice - whether the assessee has been granted the opportunity to cross examine Sri.Moideen Koya and his brother Sri.Valiyil Moosa and such persons whose statements have been used to draw adverse inference against the assessee? - HELD THAT:- The order of the learned CIT(A) records that the seller Sri.Moideen Koya has not filed any return of income admitting the income in his sworn statement. The Revenue has not produced any evidence to show whether Sri.Valiyil Moosa has admitted any income from the said transaction. This stand of the Revenue as to whether the said on-money which has been allegedly admitted by Sri.Valiyil Moosa has led to an assessment of higher capital gain tax or whether the said amount has been assessed under any other heads is also not known. These are evidences which would go to lay down the facts properly. As admittedly there has been violation of principles of natural justice also, we are of the view that the issues in this appeal must be restored to the file of the A.O. for re-adjudication after granting the assessee adequate opportunity. A.O. shall provide all such persons whose statements are being used against the assessee for his cross-examination. The presence of the assessee shall not be insisted upon for the purpose of cross-examination. The Authorized Representative shall be permitted to cross-examine the witnesses. Any and all such evidences which are proposed to be used by the A.O. against the assessee shall be given to the assessee and adequate time granted to him to rebutt the same. The principles of natural justice are to be complied with. As the issues in the appeal are restored to the file of the A.O. for re-adjudication after granting adequate opportunity to the assessee, the issues raised by the assessee in his cross objection are also restored to the file of the A.O. - Appeal filed by the Revenue and the cross objection filed by the assessee are partly allowed for statistical purposes.

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• 2020 (9) TMI 819
  TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected which provides IT services such as maintenance of software, management of servers, provision of technical support, documentation of software code and ITES service and Back Office services such as quality assurance, vendor management and investor relationship, etc. Disallowance of employee contribution of PF and ESI - HELD THAT:- We notice that in favour of assessee in Hindustan Organics Chemical Ltd. [ 2014 (7) TMI 477 - BOMBAY HIGH COURT] AND CIT vrs. Ghatge Patil Transports Ltd. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] Following the Vegetable product [1973 (1) TMI 1 - SUPREME COURT ] we are inclined to follow the jurisdictional High Court decision. Accordingly, the grounds raised by the assessee are allowed. Application u/s 154 before AO as substantial carry forward losses and unabsorbed depreciation, which the AO has not disposed off yet - Following the decision of the coordinate bench in the AY 2012-13, the bench gave the direction to AO to dispose off the application as per law. Similarly, we are directing the AO to consider the submissions of the assessee and remitting this issue to his file to pass the rectification application as per law. Accordingly ground raised by the assessee is allowed for statistical purpose.

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• 2020 (9) TMI 818
  Assessment u/s 153A - Addition on account of scrap trading - HELD THAT:- As gone through the orders of the authorities below and found from the record that during the course of regular assessment, the A.O. has not brought on record any evidence to the effect that the assessee has sold any capital asset nor any finding was recorded to the effect that when such asset was acquired to whom it is sold and for what consideration, in absence of any material describing nature of asset, year of acquisition, year of transfer consideration accruing as a result of transfer, the provisions of Section 45 of the Act cannot be applied. A detailed finding has been recorded by the ld. CIT(A) to this effect in para 8 of his appellate order which has not been controverted by the ld. DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the findings so recorded by the ld. CIT(A) and we uphold the same. Undisclosed expenditure u/s 69 - Investment in land jointly with his 2 family members - HELD THAT:- CIT(A) had deleted the addition by observing that this plot was belonging to Shri Mangi Lal Kandoi and the sale proceeds of the same is also added in his end being father of the assessee. The ld. CIT(A) has further held that since the sale of plot has been taxed in the hands of the father of the assessee i.e. Shri Mangi Lal Kandoi, the cost of acquisition should also be considered in the hands of Shri Mangi Lal Kandoi and not in the hands of the assessee. Accordingly, no addition is warranted in the hands of the assessee on account of cost of acquisition. A detailed finding has been recorded by the ld. CIT(A) to this effect in para 11 of his appeal order which has not been controverted by the ld. DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of the ld. CIT(A) for deleting the said addition. Hence, we uphold the same.

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• 2020 (9) TMI 817
  Disallowing claim of deduction u/s 54F - plot purchased was of the commercial nature - HELD THAT:- The only condition has been laid in the Sec. 54F is that either a residential house is purchased or constructed a house for residential purposes in stipulated time, meaning thereby of 'construction of a house for residential purpose' is that some construction should be made by the assessee on the plot, whether assessee is physically residing or not in that house, or whether plot on which house has been constructed is of commercial or agricultural nature, is all immaterial. The said condition was fulfilled by the assessee by constructing a house for residential purpose on the plot purchased by her from JDA on auction and said house was consisted of two rooms, boundary wall with iron gate, electricity connection etc. and house was constructed within stipulated time. All the conditions of claiming deduction under Sec. 54F of the Act were fulfilled by the assessee and all relevant details/evidences submitted before the AO during the proceedings which were examined by him and nothing was remained on the part of the assessee to prove her claim as per provisions of sec. 54F - No merit for declining the assessee s claim of deduction U/s 54F. Legally and factually in interpreting the actual spirit of section 50C for the purpose of working out deduction under section 54F - HELD THAT:- Deeming fiction as provided in sec. 50C in respect of the words 'full value of consideration' is to be applied only to Sec. 48. Words 'full value of consideration' in other provisions of the Act are not governed by the meaning of these words as mentioned in Sec. 50C. Thus, for ascertaining the full value of consideration as mentioned in different provisions except Sec. 48, consideration specified in sale deed has to be considered. The meaning of full value of consideration as referred to in Explanation to Sec. 54F(1) is not governed by the meaning of the words full value of consideration as mentioned in Sec. 50C. In the instant case, the cost of new asset is not less than the net consideration, therefore, the whole of the capital gain is not chargeable to tax even if the capital gain is computed by taking the value adopted by the stamp authority. Hence, the assessee is entitled for exemption u/s 54F of the Act. - Decided in favour of assessee.

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• 2020 (9) TMI 816
  Revision u/s 263 - survey u/s 133A on 19/02/2015 wherein the assessee company has surrendered amount - addition u/s 40A (3) - HELD THAT:- Karnataka High Court after considering various judicial pronouncement in the case of CIT Vs. Gokul Das Exports [ 2008 (7) TMI 595 - KARNATAKA HIGH COURT] has held that assessing officer taking one out of two views the assessment order is not prejudicial to interest of revenue. In view of the above judicial pronouncements and various other judgements on the issue the assessment order passed by A.O. cannot be treated as an erroneous and prejudicial to the interest of revenue. In the case of CIT Vs. Vodafone Essar South Ltd. ( [ 2012 (12) TMI 70 - DELHI HIGH COURT] held that assessing officer before passing assessment order made an enquiry and directed his mind on all aspects. View adopted by him was clearly one among two plausible views that could have been taken. Commissioner did not specifically furnish any reasons to say why original order was unsupportable in law. Commissioner could not have validity exercised his revisionary power u/s 263 in instant case. The assessee s return was subject to complete scrutiny and after making detailed enquiry and verification of the impounded documents/records seized during the course of survey u/s 133A A.O. determined total income after making addition u/s 40A(3) and lump sum addition for personal element of use in various expenses claimed in P L account. During the course of assessment, the assessee has produced books of accounts, cash book, bills/vouchers etc. Given these undisputed facts as apparent from the assessment order, it is clearly apparent that the assessee has undergone through two detailed proceedings - survey proceedings under section 133A and thereafter assessment proceedings under section 143(3) of the Act where its books of accounts were examined not just once but twice by the departmental authorities and accepted after considering the surrendered amount except for certain additions as made under section 143(3) of the Act. AO has made sufficient enquiries, considered the survey records and the surrender made by the assessee and after considering the submissions of the assessee and due application of mind completed the assessment proceedings under section 143(3) of the Act. It is thus evident that A.O. made enquiries on the issue and assessee complied to the enquiries and filed all the required details. Thus, it is not a case where that A.O. made no enquiry or verification which should have been made. It is clear from reading of notice u/s 263 of the Act, that the proceedings u/s 263 has been started on the same issue which have already been considered and examined by the then A.O. As during the year under assessment advertisement expenses of ₹ 1.93 crore were incurred in comparison to ₹ 2.12 crore in the preceding assessment year. During the year under assessment the advertisement expenses have reduced from 2.12 crore to ₹ 1.93 crore due to better rate negotiations with advertising agency. Assessee company has filed advertising agency wise detail of advertisement expenses and copy of confirmations of Mahesh Advertising Agency and Sai Advertising Agency along with 1st reply letter to the questionnaire dated 20-12-2017. Thus, there is no merit in the ld. Pr.CIT s allegation that at this stage, expenses were not verified by the A.O. Addition to furniture were made during the year and the bills/vouchers of each addition to furniture were filed alongwith copy of its ledger account before the A.O. CIT has also alleged that Vehicle running expenses have been allowed as claimed in the return of income without any verification. Referring details and documentary evidences filed during the course of assessment proceedings it is grossly wrong and bad in law and far away from the facts emanating from the questionnaire (s) issued, note sheet of assessment proceedings and detailed reply and documentary evidences filed as well as books of accounts along with bills/vouchers produced during the course of assessment proceedings, that AO has not verified the foregoing issues warranting invocation of proceedings u/s 263. Revision order set aside.

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• 2020 (9) TMI 815
  Enhancement of Capital Gain - Initially the value was taken as determined by the Sub-Registrar - Later, on objection raised by asessee, matter was referred to DVO - Application of section 50C, since the land is in Dark Zone - HELD THAT:- As during the course of assessment proceedings u/s 143(3)/148 of the Act, the A.O. has enhanced capital gain by taking value as determined by the Sub-Registrar. However, the assessee has filed objection then the matter was referred to the DVO. DVO done valuation without considering the facts that land is in Ecological Area exists in Dark Zone as declared by Geological Survey of India and Central Ground Water Authority, no construction activities are allowed on that land as well as comparable case of adjacent land was also not considered. DVO has taken excessive rate without considering the average rate i.e. ₹ 9,28,300.00 and taken ₹ 22,20,625.00 per Bigha which is more than double of prevailing Market rate. Judicious view should be taken for valuation of land and true valuation is ₹ 9,28,300.00 per bigha as per surrounding sale value to be taken. In addition to cost of boundary wall as taken by the DVO also considered for cost of acquisition. Accordingly, we do not find any merit in the addition so made.

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• 2020 (9) TMI 814
  Disallowance of claim of interest payable on sales tax, excise duty and customs duty - HELD THAT:- We notice that an identical issue has been considered by the coordinate bench in the assessee s own case [ 2017 (12) TMI 570 - ITAT BANGALORE] and it was decided against the assessee. Disallowance of interest payable to micro, small and medium enterprises by invoking section 23 of MSMED Act - A.R submitted that the Income tax Act does not provide for any such disallowance - HELD THAT:- We notice that an identical issue has been considered by the coordinate bench in the assessee s own case and it was decided against the assessee in assessment year 2008-09 [ 2017 (12) TMI 570 - ITAT BANGALORE] Weighted deduction made by the assessee u/s 35(2AB) - assessee had claimed weighted deduction on the gross amount of expenditure incurred by it on R D activities - As per AO reduction is allowable on the net amount of expenditure, i.e., expenditure as reduced by related income - HELD THAT:- Following the order passed by the coordinate bench in 2008-09, we set aside the order passed by Ld CIT(A) on this issue and direct the A.O. to allow the deduction u/s 35(2AB) of the Act on the gross amount of expenditure. Disallowance u/s 14A - Interest disallowance made under rule 8D(2)(ii) of the I.T. Rules - HELD THAT:- Admittedly, the own funds available with the assessee is more than the value of investments as at the beginning and end of the financial year. Accordingly, the presumption is that the assessee has used his own funds for making the investments, in which case no disallowance out of interest expenditure as per rule 8D(2)(ii) of the I.T. Rules is called for. In this regard, we derive support from the decision rendered in the case of Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] . Accordingly, we direct the A.O. to delete the interest disallowance made under rule 8D(2)(ii) of the I.T. Rules. Disallowance made out of administrative expenses, under rule 8D(2)(iii) - Since the factual aspects relating to this issue require examination, we restore the issue of making disallowance under rule 8D(2)(iii) of the I.T. Rules to the file of the A.O. by following the principle laid down in the case of Vireet Investments P Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] - However, if the disallowance worked out by the A.O. turns out to be lower than the amount of disallowance made by the assessee in the return of income, then the disallowance made by the assessee should be restored. Disallowance of provision for bad and doubtful debt u/s 36(1)(vii) - HELD THAT:- We notice that the Hon ble Karnataka High Court has considered an identical issue in the case of Sandvik Asia Limited 2013 (2) TMI 900 - KARNATAKA HIGH COURT and it has been decided in favour of the assessee by following the decision rendered by Hon ble Supreme Court in the case of Vijaya Bank 2010 (4) TMI 46 - SUPREME COURT As noticed earlier that the assessee has reduced the amount of provision for doubtful debts from the amount of sundry debtors in the balance sheet. Accordingly, respectfully following the decision rendered by Hon ble Karnataka High Court, we direct the A.O. to delete the impugned disallowance.

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• 2020 (9) TMI 813
  Reopening of assessment - Addition u/s 68 - client code modification - HELD THAT:- Client code modification has been carried out by the broker in the case of the assessee. According to the information available in the reasons recorded, client code modification is allowed to the brokers by the stock exchange, within a limited window of time after business hours, for rectification of any mistakes in punching of the client code while carrying out transaction of purchase and sale on behalf of the customers. AO has alleged in the reasons recorded that client code modification has been done for shifting of the profit or loss by the assessee. But there is no material to infer that such client code modification has been done with malafide purpose of shifting of the profit or evasion of the tax. There is no material before the Assessing Officer to form such a belief that income had escaped due to such client code modification and thus there is no live link between the material before the Assessing Officer and inference made. In the case of Rajesh Jhaveri Stock Brokers (P) Ltd. [ 2007 (5) TMI 197 - SUPREME COURT] has held that for validity of reason recorded it is essential that there should be a relevant material on which a reasonable person could make requisite belief. In the case of M/s. Coronation Agro Industries Ltd. [ 2017 (1) TMI 904 - BOMBAY HIGH COURT] we are of the opinion that the assessment cannot be reopened validly on the basis of the above reasons recorded in absence of any tangible material to infer that income escaped in the case of the assessee. We, accordingly, quash the reassessment proceedings and set aside the order of the Learned CIT(A) on the issue in dispute. Ground of the appeal of assessee allowed.

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• 2020 (9) TMI 812
  Netting off of the interest income against interest expenditure - taxing interest received during pre-construction period under the head Income from other sources - contention that where the fixed deposits are inextricably linked with the business of the assessee, the interest income therefrom has to be set off against the preoperative expenses of the assessee - HELD THAT:- We find that the assessee has deposited the funds which were not immediately required for the assessee s business and as and when required, they were immediately withdrawn and used for business purposes. Therefore, there is a distinction in facts between earlier years where the Tribunal decided the issue against the assessee, and the AYs before us. Thus following the decision of the coordinate bench of ITAT, Mumbai in the case of Kamat Hotels (India) ltd. [ 2017 (11) TMI 849 - ITAT MUMBAI] we direct the AO to allow the netting off of the interest income against interest expenditure. Accordingly, the additional ground of appeal of the assessee is allowed.

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• Customs

• 2020 (9) TMI 811
  Auction of consignment - order not supplied to petitioner - HELD THAT:- On the last date of hearing i.e. 14th September, 2020, Mr. Dayan Krishnan, learned senior counsel for petitioner had sought time to place on record an undertaking by way of an affidavit. To obviate any future controversy, an authorized representative of the petitioner is directed to meet Terminal Manager, ICD- Tughlakabad, on 22nd September, 2020 and finalise the amount due and payable by the petitioner to the respondent for the said nine containers - Till further orders, the petitioner shall make payment in accordance with the paragraphs 4 (a) and (b) of the affidavit dated 14th September, 2020. List on 28th September, 2020.

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• 2020 (9) TMI 810
  Implementation of the order - provisional assessment of goods - import of dry dates - petitioners contend that the respondents are not complying with the aforesaid Orders-in-Appeal, whereas the respondents contend that the aforementioned conditions have not been complied with by the petitioners - HELD THAT:- Without getting into the merits of this controversy, the writ petitions are disposed of with the direction that, if the aforesaid three conditions are complied with by these petitioners, namely the bonds are given, the bank guarantees are given and the phytosanitary certificates are given to the concerned authorities, the goods in question shall be released by the respondent authorities within a period of one week from the date of receipt of the same. Petition disposed off.

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• 2020 (9) TMI 809
  Legality and validity of the seizure of goods - the case of the Department against the writ applicants is that the goods, i.e, scraps in different forms seized from the premises were found to be imported without payment of appropriate customs duty by wrongfully availing the benefit of the notification - HELD THAT:- The larger issues, more particularly the legality and validity of the seizure, shall be examined on the next date of the hearing including the preliminary objection raised on behalf of the respondents as regards the alternative remedy available to the writ applicants. However, having regard to the submissions made by Mr. Parikh, we would like to balance the equities at this stage. We would like to see that the writ applicants do not have to suffer a huge loss in their business, and at the same time, we must also ensure that the interest of the Revenue is also protected. The writ applicants are directed to furnish a running Bank Guarantee of any Nationalized Bank to the tune of ₹ 2.00 Crores, and at the same time, the DRI shall retain with them the raw-goods/materials upto the value of ₹ 10 Crore. If the writ applicants furnish the Bank Guarantee, then the respondents shall provisionally release the rest of the goods (raw materials/finished) at the earliest. Post the matter for further hearing on 12-10-2020.

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• 2020 (9) TMI 808
  Power of Customs Officers as Police officers - Power to arrest - Classification of offences u/s 135 of the Customs Act, 1962 - High Seas Sale - It appears from the materials on record and the pleadings that the respondent no.2 is also contemplating to institute criminal prosecution for the offences punishable under Sections 132 and 135 respectively of the Customs Act, 1962. HELD THAT:- Any person can be arrested for any offence under the Customs Act, 1962, by the Customs Officer, if such officer has reasons to believe that such person has committed an offence punishable under Section 132 or Section 133 or Section 135 or Section 135A or Section 136 of the Customs Act, 1962, and in such circumstances, the Customs Officer is not obliged to follow the dictum of the Supreme Court as laid in the case of Lalitha Kumari (supra). When any person is arrested by an officer of the Customs, in exercise of his powers under Section 104 of the Customs Act, 1962, the officer effecting the arrest is not obliged in law to comply with the provisions of Sections 154 to 157 of the Code of Criminal Procedure, 1973. The officer of the Customs, after arresting such person, has to inform that person of the grounds for such arrest, and the person arrested will have to be taken to a Magistrate without unnecessary delay. However, the provisions of Sections 154 to 157 of the Code will have no application at that point of time. The Customs/DRI Officers are not the Police Officers and, therefore, are not obliged in law to register FIR against the person arrested in respect of an offence under Sections 133 to 135 of the Customs Act, 1962. A Police Officer, making an investigation of an offence, representing the State, files a report under Section 173 of the Code, becomes the complainant, whereas, the prosecuting agency under the special Acts files a complaint as a complainant, i.e. under Section 137 of the Customs Act. The power to arrest a person by a Customs Officer is statutory in character and should not be interfered with. Section 108 of the Act does not contemplate any Magisterial intervention. The statements recorded under Section 108 of the Customs Act are distinct and different from the statements recorded by the Police Officers during the course of investigation under the Code. Applicability of OM PRAKASH AND CHOITH NANIKRAM HARCHANDANI VERSUS UNION OF INDIA [ 2011 (9) TMI 65 - SUPREME COURT] - HELD THAT:- In Om Prakash, the question arose, with respect to the investigation in the cases relating to the Central Excise Act, 1944, and the Customs Act, 1962, as to whether the officers under the said Act could arrest without a warrant in connection with those offences which were non-cognizable and bailable. The powers of the officers of the Excise or the Customs to initiate investigation and to arrest without warrant has been discussed and whether the officers have the powers akin to that of a Police Officer was also looked into. It was held that an offence, in order to be cognizable and bailable, would have to be an offence which is punishable with imprisonment for less than three years. Further, for all those offences which are punishable for a period of three to seven years can be considered as cognizable and non- bailable - The Supreme Court held that the offences under the Indian Penal Code cannot be equated with those listed in the Central Excise Act to draw a conclusion as to which of those offences are non-cognizable and non-bailable. It was held that in view of the Central Excise Act, 1944, the non-cognizable offences are bailable in nature and if a person is arrested, he shall be released on bail. The Supreme Court held that the offences under the Customs Act are bailable and the officers have the same powers as that of a Police Officer. The decision of the Supreme Court in the case of Om Prakash (supra) has no bearing in the case on hand. Scope of the term Any Person u/s 104 - HELD THAT:- The expression 'any person' in Section 104 of the Customs Act includes a person who is suspected or believed to be concerned in the smuggling of goods. However, a person arrested by a Customs Officer because he is found to be in possession of smuggled goods or on suspicion that he is concerned in smuggling goods is not, when called upon by the Customs Officer to make a statement or to produce a document or thing, a person is accused of an offence within the meaning of Article 20(3) of the Constitution of India. Where a Customs Officer arrests a person and informs that person of the grounds of his arrest, for the purposes of holding an inquiry into the infringement of the provisions of the Customs Act which he has reason to believe has taken place, there is no formal accusation of an offence. The accusation could be said to have been made when a complaint is lodged by an officer competent in that behalf before the Magistrate. The arrest and detention are only for the purpose of holding effective inquiry under Sections 107 and 108 of the Customs Act with a view to adjudging confiscation of dutiable or prohibited goods and imposing penalty Whether the DRI officers are 'proper officers' for the purpose of Section 28 of the Customs Act, 1962? - HELD THAT:- This Court had the occasion to deal with the term 'proper officer' in the case of SWATI MENTHOL ALLIED CHEM. LTD. VERSUS JT. DIR., DRI [ 2014 (9) TMI 186 - GUJARAT HIGH COURT ]. The issue involved in the said matter pertained to the exercise of powers by the 'proper officers' vis-a-vis Sections 17, 18 and 28 of the Act. It was held that the notification, for the purpose of Section 2(34) of the Customs Act, assigns functions of the proper officer to the various officers including those under the Directorate of Revenue Intelligence, such as Additional Director, Joint Director, Deputy Directors and Assistant Directors for the purposes of Sections 17 and 28 of the Customs Act. The DRI officers are also Customs officers and have been conferred with the powers specified under the various provisions of the Customs Act, 1962. Misuse of Section 108 of the Customs Act, 1962 - allegations of harassment - HELD THAT:- As such there is no credible material on record except the bare words of the writ-applicant on the basis of which we can arrive at the conclusion that the writ-applicant is being unnecessarily harassed by the DRI officials stationed at Vapi by summoning him time and again - the writ-applicant has, in the past, attended the DRI office at Vapi and his statements have also been recorded. We may only observe that if no further inquiry is necessary, then the writ- applicant may not be unnecessarily called at the office of the DRI at Vapi for the purpose of inquiry. Application disposed off.

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• Corporate Laws

• 2020 (9) TMI 807
  Winding up of Company - Section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 - change of place of registered office of company - HELD THAT:- Considering the lapse of 17 years since the reference dated 20.12.2002 was received from the BIFR in the year 2002/2003 and the Financial Position of the Company as disclosed in the affidavit of the Company as also the Official Liquidator, as, the total assets and the net worth of the Company exceeds the liabilities, as also in view of the three arbitration awards in its favour and the affidavit of Bank of India dated 29.04.2013 this Court is of the view that as the recommendation of the BIFR is not binding and conclusive upon this Court in view of the Division Bench judgment relied upon by the Company's counsel upon the case of J.M. MALHOTRA AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 1994 (9) TMI 365 - MADRAS HIGH COURT ] which has been upheld by the Supreme Court, this Court is of the view that the recommendations of the BIFR can not be accepted at this belated stage for the aforesaid reasons and the proceedings for winding up are liable to be dropped. Even after requisite notification and publication as per Rules no one else has come forward claiming any amount from the Company as a creditor. Moreover, as already stated, the financial position of the company has undergone a change, during pendency of these proceedings. It is worthwhile to mention that these proceedings are not on the grounds for winding up available under the Companies Act and the same have been initiated on the recommendation of the BIFR on the ground referred in Section 20 (1) of the Act, 1985 i.e. the net worth was less than the accumulated losses and the Company was not in a position to meet all its financial obligations within a reasonable time in future and as noticed hereinabove the financial position of the Company has changed in these 17 years, therefore, in view of the above, it can not be said that the Company can not revive itself. Petition disposed off.

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• 2020 (9) TMI 806
  Sanction of Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- The Official Liquidator has filed his report dated 20th February, 2020 inter alia, stating therein that the affairs of the Transferor Company have been conducted in a proper manner - From the materials on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled, Petition is made absolute in terms of prayer in the Petition.

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• 2020 (9) TMI 805
  Approval of the Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- It is seen that the scheme is not detrimental to the applicant companies, its shareholders and creditors. The applicants, its members and creditors are the best judge to protect their interest. In the absence that the scheme is not fair, just and reasonable or that it is in contravention of statutory portions and for public interest, the decision of the shareholders and creditors, who have overwhelmingly voted in the favour of the scheme should be up held - upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, the report of official liquidator and Department of Income Tax, there appears to be no impediment in sanctioning the present Scheme. Consequently, sanction is hereby granted to the 'Scheme undersection 230 232 of the Companies Act, 2013. The scheme is approved - petition disposed off.

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• 2020 (9) TMI 804
  Approval of the Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 - HELD THAT:- In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal, sanctions the Scheme of Amalgamation, which are annexed as Annexure A9 with the Company Petition as well as the prayer made therein - Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners. Petition allowed.

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• 2020 (9) TMI 803
  Sanction of Scheme of Merger - Sections 230-232, Section 234 of the Companies Act, 2013 - HELD THAT:- Taking into consideration the application and the documents filed herewith, we propose to issue the following directions with respect to calling, convening and holding the meeting of Equity Shareholders, secured and unsecured creditors or dispensing the same which are as follows: i. Considering the Covid-19 situation, the Applicant Company is dispensed from holding physical meeting of Equity Shareholders, Secured Creditors and Unsecured Creditors All the directions are to be complied with strictly in accordance with the applicable law including forms and formats contained in the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - the present application stands allowed by convening with the meetings of the shareholders and creditors of the Applicant/Transferee Company. ii. With respect to the equity shareholders : Since it is represented by the Applicant Company that there are 14,305 (Fourteen Thousand Three Hundred and Five) Equity Shareholders in the Company as on February 28, 2020, voting shall be conducted through postal ballot and/or e-voting on or before 7th July 2020 iii. With respect to the Secured Creditors : Since it is represented by the Applicant Company that there is 1 (One) Secured Creditor in the Company, vote of such creditor is obtained through postal ballot and/or e-voting on or before 7th July 2020 iv. With respect to the Unsecured Creditors : Since it is represented by the Applicant Company that there are 47 (Forty Seven) Unsecured Creditor in the Company, voting of such creditors are obtained through postal ballot and/or e-voting on or before 7th July 2020

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• 2020 (9) TMI 802
  Sanction of Scheme of Arrangement - Sections 230 to 232 read with Section 66 of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not in violation of any provisions of law and is not contrary to any public policy. None of the parties concerned have come forwarded to oppose the Scheme of Arrangement - Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition filed by the Petitioner Companies are made absolute in terms of prayer clause (a) (b) of Company Scheme Petition. All concerned regulatory authorities to act on a certified copy of this order along with the Scheme duly certified by the Deputy/ Assistant Registrar, National Company Law Tribunal, Mumbai Bench.

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• Insolvency & Bankruptcy

• 2020 (9) TMI 801
  Review of order - correction of an error apparent on the face of record - Section 420(2) of the Companies Act, 2013) r/w Rule 11 of the NCLAT Rules, 2016 - HELD THAT:- It is to be pointed out that the power to Review is not an inherent power and must be showered by Law either expressly or by necessary implication. As a matter of fact, the power to review is a creation of statute. Indeed, a Review Jurisdiction cannot be pressed into service as an Appellate Jurisdiction . Moreover, the Power of Review is not to be confused with an Appellate power. A review cannot be claimed or asked for merely for a fresh hearing or arguments or the correction of an erroneous view taken earlier - It is an axiomatic principle in Law that an error contemplated must be such which is apparent on the face of record and not an error which has to be fished out and searched. The term Review judicially and literally means reexamination or re-consideration . Under the guise of Review the Tribunal would not rehear the parties both on facts and Law . If two views are possible on the point involved, the same is not a ground for Review . It cannot be gainsaid that I B Code, 2016 does not contain any provision for Review . Also, it does not contain any provision similar to Section 420 of the Companies Act, 2013. In this connection, a mere perusal of the National Company Law Appellate Rule 2016 unerringly point out that there is no express Rule for Review . There can be no two opinion of a prime fact that Rule 11 of NCLAT Rules, 2016 is not a substantive Rule which confers any power or jurisdiction on the Tribunal . A Tribunal has no power to perform an act which is forbidden by Law - The term record in Section 420 of the Companies Act, 2013 means record to the proceedings of the case. An error must be a patent error and not a mere wrong decision . Where two views are possible and the matter is debatable, the order cannot be rectified by mistake apparent from record. When there is no mistake apparent from the record in the judgement delivered by a Tribunal, then an application for review filed by the concerned Applicant cannot be construed to be one under Section 420(2) of the Companies Act or under Rule 11 of NCLAT Rules, 2016. Review application dismissed.

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• 2020 (9) TMI 800
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - HELD THAT:- The Ld. Adjudicating Authority have failed to consider the facts that there was a pre-existing dispute between the parties much prior to filing of application under Section 9 of the IBC. The impugned order cannot be sustained in the eye of Law and in view of the Judgment of the Hon ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] and is hereby fit to be set aside and the Appeal is allowed. Corporate Debtor is released from the rigor of the Corporate Insolvency Resolution Process . All actions taken by the Interim Resolution Professional / Resolution Professional and Committee of Creditors , if any, are declared illegal and set-aside - matter remitted to the Ld. Adjudicating Authority to decide fees and costs of CIRP payable to IRP/RP, which shall be borne by the Operational Creditor / Respondent No. 1. Appeal allowed.

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• 2020 (9) TMI 799
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP on justified reasons - The Hon'ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT ] has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum. The instant petition is filed on misconceived fact and law and against the object of Code. Since the Respondent agreed to settle the claim of the Petitioner, subject to substantiating it, we are inclined to dispose of the instant petition directing the Respondent to settle the claim of the Petitioner, provided the Petitioner submitted requisite documents - Petition disposed off.

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• 2020 (9) TMI 798
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is not in dispute that Petitioner has rendered his faithful services to the Respondent in good faith without getting his fees settled before his services. Therefore, the Respondent has rejected the case of Petitioner purely on legal grounds by taking advantage of limited scope available to the Petitioner to invoke provisions of Code. It is true that the Respondent can legally deny the legitimate claim of Petitioner by taking advantage of summary proceedings as provided under the provisions of Code. In any case, professional fee to an experienced person like the Petitioner cannot be mere travelling expenses incurred. Though the instant Petition is not maintainable under the provisions of Code, it would be just and proper for the Respondent to consider the claim of Petitioner at least to pay for some advolreum amount by taking into consideration of principle of good Corporate governance, as the Petitioner is senior Citizen having rendered substantial service to the Company at crucial time. Even though the instant Petition is not maintainable, as per law, we are inclined to dispose the Petition by exercising inherent powers conferred on the Adjudicating Authority, Under Rule 11 of NCLT Rules, 2016, in the interest of justice - Petition disposed off.

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• 2020 (9) TMI 797
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is settled position of law that the provisions of Code cannot be invoked for recovery of outstanding alleged amount(s), but it can be invoked to initiate CIRP for the justified reasons as per objective of the Code. The Hon'ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT ] has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum. The instant Company Petition is not a fit case to initiate CIRP and the Parties can prosecute the alternative remedy by way of Mediation, which is already filed on 31,12,2019, before the District Legal Services Authority, Bengaluru Rural District, and Notice issued under PIM No. 25/2019 dated 31.12.2019 and the next date of hearing is stated to be 18.06.2020 - the instant Company Petition is not maintainable, and there is pre-existing dispute over the issue raised in the instant Company Petition, there is no prima facie case made out, and it is filed with an intention to recover the alleged outstanding amount rather to initiate CIRP on justified reasons. Petition dismissed.

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• 2020 (9) TMI 796
  Impleadment of application - condonation of delay - whether the Applicant is a proper and necessary party to be impleaded in the main Company Petition, whether it has come with a bona-fide claim and reasons for seeking extension of time lines in the CIRP; and whether any prima facie case is made out on merits for any interference to be made by this Authority? HELD THAT:- Basic facts about the commencement of the CIRP vide order dated 27.09.2019, steps taken by the RP, Public Announcement seeking/invitation for expression of interest, the last date for the same, the treatment of the Applicant's EOI etc. are not in dispute and are part of record. However, the Applicant pleads ignorance of the same and contends that the CIRP started only in the first week of February 2020. This assertion we find to be patently untenable as the Code itself prescribes that the CIRP commences on the date the Petition u/s 7 or 9, as the case may be, is admitted, which in this case was 27.09.2019 - Further, the Applicant has made an even more unacceptable averment that the Executive Chairman was busy, and was frequently travelling abroad and missed the newspaper publication calling for EOIs and was unaware of the last dates i.e. 26.12.2019 and 09.02.2019 for submission of EOI and Resolution Plan respectively. This is a patently bald statement without any merit whatsoever, keeping in view the strict timelines provided in the Code for completion of the CIRP. The same is liable to be rejected. Application dismissed.

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• 2020 (9) TMI 795
  Approval of Resolution plan - IRP omitted the application (financial credit) as part of the Committee of Creditors ( COC) - failure on the part of IRP to classify the creditor - withdrawal of CIRP under Section 12A of IBC, 2016 - HELD THAT:- A COC validly constituted by the IRP with a 90% voting share is required to approve the withdrawal of an application earlier admitted resulting in the initiation of CIRP of the Corporate Debtor by this Tribunal sitting as an Adjudicating Authority as named under IBC, 2016. Referring to the provisions in relation to the constitution of the COC under IBC, 2016, Section 21(1) of the Code provides upon determination of the financial position after collation of all claims received against the Corporate Debtor the IRP shall constitute the COC and in terms of Section 21(2) it shall comprise of all the financial creditors of the corporate debtor. As per the proviso to Section 21(2), in case the financial creditor happened to be a related party of the corporate debtor it shall not have any right of representation, participation or voting in a meeting of COC. In the absence of any financial creditor(s) in relation to a corporate debtor, proviso to Section 24(8) of the Code contemplates the COC to be constituted in such manner as may be specified. IBBI, being the Regulator has framed regulations to meet such an eventuality in terms of Regulation 16 of Insolvency and Bankruptcy Board of India(Insolvency Resolution Process of Corporate Persons) Regulations, 2016. With the above composition of members, the 1st COC seems to have been held as reflected from the minutes of the COC meeting held on 19.12.2019 which ultimately came to an end because of disturbance by the members based on the insistence of the IRP that the Section 12A withdrawal is to be considered as the Main Agenda which according to him is to get precedence in view of the order of this Tribunal passed on 11.12.2019 in a Miscellaneous Application filed in MA No. 1505 of 2019 even before the constitution of the COC cannot be made at the instance of the operational creditor who initiated the proceedings in the first place - The power of revision provided to the IRP/RP it must be noted is not only confined when the claim came to be admitted on best estimate as provided under Regulation 14(1), but is also available to claims admitted even other wise as well, as the term which has been used in Regulation 14(2) is to the effect that shall revise the amounts, including the estimates of claim made under sub-regulation(1) Thus from the above regulations it is seen that the IRP is having a power to re-constitute the COC based on his decisions, including by way of addition of claims as well as by revision of claims admitted previously based on additional information thereby connoting that he has the power to revise the claimant from one class to another class for e.g.) from a financial creditor as originally admitted to an Operational creditor or vice versa or even based on bona-fide additional information thereby resulting in complete exclusion of a claim previously admitted and the claim forming part of the COC, be it as a financial creditor or as an operational creditor. Thus, in relation to an yet to be admitted and as yet not being part of the COC, the applicant-claimant cannot seek to oppose the resolution of withdrawal as passed by the COC unanimously seeking for withdrawal under Section 12A of IBC, 2016. From the facts as disclosed in the application, it can be discerned that the IRP being not sure about the classification as required to be done under the provisions of IBC, 2016 read with attendant regulations, had been vacillating without understanding the provisions of IBC, 2016 with regard to classification of creditors as disclosed in the constitution of Committee of Creditors filed by the IRP itself allowing different types of creditors to be part of the CoC, as evident from the 1st CoC held on 19.12.2018 and the initial classification and subsequent change, which lead to the other applicants filing these applications before this Tribunal, challenging the action of the IRP and the decision made in the 2nd CoC held on 14.01.2020. In connection with the inefficient function of the IRP/RP/Liquidator, it is worthwhile to recollect the Report of the Bankruptcy Law Reforms Committee Volume I, Rational and Design, 2015 - The role of the IPs is thus vital to the efficient operation of the insolvency and bankruptcy resolution process. A well functioning system of resolution driven by the IPs enables the adjudicator to delegate more and more powers and duties to the professionals. This creates the positive externality of better utilization of judicial time. The worse the performance of IPs, the more the adjudicator may need to personally supervise the process, which in turn may cause inordinate delays. Consumers in a well functioning market for IPs are likely to have greater trust in the overall insolvency resolution system. On the other hand, poor quality, services and recurring instances of malpractice and fraud, erode consumer trust. Since Form FA has also been filed vide filing dated 28th January 2020 having Diary No. 624 of 2020 and as the fees and costs of the IRP has been fully provided for to his satisfaction, no specific order is necessary in this regard. In the circumstances the CIRP initiated by this Tribunal vide order dated 13.11.2019 stands withdrawn, the powers of the Board of Directors which stood suspended is restored and the management and affairs of the Corporate Debtor is directed to be handed over to them by the IRP including the possession and control of books and assets of the Corporate Debtor, if any taken during the CIRP period.

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• 2020 (9) TMI 794
  Whistle blower Activity - this case is cooked up stage managed by Financial Creditor/Corporate Debtor/Resolution Professional, defrauding one and all - HELD THAT:- There is no sufficient proof of loan from Financial Creditor/Applicant to Corporate Debtor. Further, the Corporate Debtor has in reply affidavit admitted Loan . There are two letters from applicant to Corporate Debtor seeking repayment of the alleged loan. The Registry is directed to communicate this order to Resolution Professional by email as well as by speed post - Issue a copy of this order to IBBI for their information and records. Post the matter on 20.03.2020 for further hearing.

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• 2020 (9) TMI 793
  Permission for withdrawal of present matter - Stay of constitution of Committee of Creditors - CIRP process withdrawn - HELD THAT:- It would be necessary to consider the facts as they happened i.e., in chronological order. The Application bearing CP (IB) No 262/9/HDB/2019 was filed by the Operational Creditor M/s. Sri Chaitanya Chlorides u/s 9 of the Code against the Corporate Debtor on 23.04.2019. After affording an opportunity of being heard to the Corporate Debtor, this Adjudicating Authority has admitted the said Application vide its order dated 16.12.2019. Thereafter few more Applications bearing CP (IB) No. 736/9/HDB/2019, CP(IB) No. 774/9/HDB/2019 etc., were filed u/s 9 by the Operational Creditors of the Corporate Debtor including Applicants in IA No. 178/2020 and 179/2020 being considered in this common order. These applications U/s. 9 were considered by this Adjudicating Authority and in view of the initiation of CIRP in the case of the Corporate Debtor and appointment of IRP in CP(IB) No: 262/9/HDB/2019 vide order dated 16.12.2019, these Operational Creditors were directed to make their claims before the IRP, which were made by them. Any direction by this Adjudicating Authority to the IRP not to constitute the CoC before disposal of IA No. 177 /2020 as prayed in IA No. 176/2020 will be against judicial propriety and judicial discipline. Hon'ble Supreme Court in the case of UNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. [ 1991 (9) TMI 72 - SUPREME COURT] have laid this down in unequivocal terms by saying the The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities.'' This Adjudicating Authority cannot and does not deem it proper to restrain the IRP from constitution of the CoC as per the directions of Hon'ble NCLAT - Application dismissed.

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• 2020 (9) TMI 792
  Exclusion of period of 7 days from CIRP end date i.e., 06.02.2020 for the purpose of approving Resolution Plan - HELD THAT:- Considering the submissions, facts and circumstances of case, stage of CIRP, and in view of the decision of CoC in its 9th meeting, this Adjudicating Authority observes that only a short time period is left for completion of CIRP and it would be in the interest of all stakeholders to allow the completion of CIRP rather than going for liquidation of the Corporate Debtor. Accordingly, it is approved to exclude a period of another 7 days from calculation of CIRP period which is ending on 06.02.2020. As such the applicant will have another 7 days w.e.f. 07.02.2020, for completion of CIRP process of the Corporate Debtor. This exclusion is granted on having considered the steps already taken by the RP and the current stage of CIRP in the case of the present Corporate Debtor i.e., M/s. Indu Projects Limited. Application disposed off.

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• Service Tax

• 2020 (9) TMI 791
  Rent-a-cab service - appellant is providing several numbers of vehicles to BSNL etc. on monthly basis against considerations - it was alleged that M/s AHT T despite providing taxable services to various customers and realizing the values of the said services, did not disclose the same to the department and thereby have deliberately suppressed the material facts with intent to evade payment of service tax - HELD THAT:- It cannot be disputed that both in renting and licensing , de facto possession of the thing is enjoyed. Difference is well carved out under the law wherein both, de jure possession and control is given, but in renting , it is right-in-rem whereas in licensing , it is right-in-persona. When rent-a-cab scheme operator gives the car on rent, de facto possession is, of course, there but, it is not acceptable to uphold that wherever de jure control and possession of the vehicle stands transferred in law from the owner to the person on renting/hiring the service that the service tax is leviable and this is, of course, not different than services rendered on a contractual basis, providing transport service for fixed amount of periodical return or fare. This was reiterated by Hon ble High Court of Allahabad in the case of ANIL KUMAR AGNIHOTRI VERSUS COMMISSIONER, CENTAL EXCISE KANPUR [ 2018 (1) TMI 171 - ALLAHABAD HIGH COURT] earlier also. The Punjab Haryana High Court was also considering the question as to whether transport service provided by the respondent-firm to the Indian Oil Corporation was liable to service tax or not. The Court, after considering various provisions as also decision of the High Court of Judicature at Madras in the case of SECY. FEDERATION OF BUS-OPERATORS ASSN. OF TN VERSUS UNION OF INDIA [ 2001 (4) TMI 7 - MADRAS HIGH COURT] , applied all vital observations of Madras High Court mutatis mutandis to the case before the High Court. Accordingly, it held that transport service provided to Indian Oil Corporation was the taxable service and it set aside the decision of the Tribunal by upholding the view canvassed by the Revenue. The appellant providing several numbers of vehicles to BSNL etc. on monthly basis against considerations which otherwise are on yearly basis. Also keeping in view the appellant is admittedly registered as rent-a-cab service provider, we hereby answer the question so framed in affirmative i.e. in favour of revenue. Appeal dismissed.

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• 2020 (9) TMI 790
  Classification of services - service classified in more than one category of taxable service - clients were granted the right to sell the goods using the trade mark 'LUX' owned by the appellant in return of the consideration mentioned in the said agreement - SCN was issued proposing demand of service tax under the category of Management Consultancy Services for the period 01.04.2002 to 09.09.2004 and under the category of Intellectual Property Services for the subsequent period 10.09.2004 to 15.02.2005. HELD THAT:- The issue stands settled in favour of the appellant assessee by series of decisions rendered by the various coordinate Benches of this Tribunal wherein it has been held that the intellectual property service which is made the subject matter of service tax levy is transferred prior to the date of introduction of taxable entry under the head Intellectual Property Services w.e.f. 10.09.2004, no service tax is leviable - the service tax cannot be demanded from the appellant in the present case when the subject service was rendered prior to the introduction of taxable entry under the head Intellectual Property Service i.e. 10.9.2004. With regard to other issue as contended by the Ld. DR that the agreement was modified on 15.02.2005 retrospectively from 10.09.2004 to reduce the value of taxable service, we are of the view that the said aspect is not relevant when the tax itself is held to be not payable as the date of entering into the original agreement i.e. 01.04.2004 is not in dispute. The impugned demand of service tax, interest and penalty are set aside - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (9) TMI 789
  Time limitation - Refund of CVD / Excise duty - case is yet to be decided even after 16 years lapsed - HELD THAT:- The impugned show cause notices are very interesting to read as it exhibits complete non-application of mind. The claim of the writ applicant put forward almost 16 years back is yet to be decided by the authority because, according to the respondents, the original record of the claim is not available. We fail to understand that if the claim of the writ applicant could not be looked into and decided by the authority for want of necessary materials, then the authority could have taken an appropriate decision one way or the other for passing an appropriate order. We fail to understand what was the good ground for the department to issue three show cause notices. The respondents are directed to decide the claim of the writ applicant for the refund of the CVD / Excise duty in the Form R in accordance with law within a period of two months from the date of receipt of the writ of this order. If the department wants any documents for the purpose of looking into the claim, then the writ applicant shall furnish all such necessary and relevant documents at the earliest - application disposed off.

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• 2020 (9) TMI 788
  Rejection of Refund claim - time limitation - section 11 B of the Central Excise Act, 1944 - HELD THAT:- The appellants had two units, one in DTA unit and other is 100% EOU, refund claim have been filed by both the units. DTA have cleared the goods against CT-3 to their 100% EOU and have claimed refund. The 100% EOU has claimed refund for goods exported. Earlier in the proceedings the matters was remanded by tribunal - The appellants are of the view that both Appeal are within the limitation of one year. It is seen that the Appeal No. E/13076/2018 pertains to period October 12 to Dec. 12 and the refund claim was filed on 04.10.2013 - In appeal no. E/13077/2018 pertains to the period April 13 to June 13 and refund claim was filed on 09.04.14. In these circumstances it is seen that in both these cases the refund has been filed more or less within one year of limitation, the exact period of limitation would depend on the dates when the exports were made. The appellants would be entitled to refund in respect of exports made from 4.10.12 onwards in case of Appeal No. E/13076/2018 and from 9.4.2013 onwards in case of Appeal No. E/13077/2018. The matter regarding these two appeals is remanded for determination and sanction of exact amount of refund admissible in above terms - As regards other six appeals the only issue is if the appellants are entitled to re-credit of Cenvat Credit reversed at the time of filing of these refund claims which were later rejected by revenue. It is obvious that the reversal of Cenvat Credit was for the purpose of claiming refund and in these circumstances that the appellants are not granted refund, the credit reversed becomes admissible for re-credit. Appeal allowed in part.

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• 2020 (9) TMI 787
  Reversal of proportionate Cenvat credit - common input/input services used for manufacture of dutiable as well as exempt goods - Rule 6(3A) of the Cenvat Credit Rules, 2004 - HELD THAT:- The issue arising out of the present dispute regarding determination and payment of amount as per the formula prescribed under sub-rule (3A) of Rule 6 ibid is no more open for any debate in view of the Co-ordinate Bench decision of the Tribunal in the case of the appellant itself COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT VERSUS M/S. RELIANCE INDUSTRIES LIMITED [ 2019 (3) TMI 784 - CESTAT AHMEDABAD] . There are no merits in the impugned order passed by the learned Commissioner (Appeals) - appeal allowed - decided in favor of appellant.

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• 2020 (9) TMI 786
  Reversal of Cenvat Credit - clearance of iron ore fines - separate excisable goods but exempted commodity or not - whether iron ore fines in question are needed to be considered as exempted goods, being sold for consideration during the relevant period as provided under the amended provisions of Rule 6 (1) of CCR, 2004? - HELD THAT:- It is foremost important to understand the procedure or the activity of the appellant. Not only from the show cause notice, but from the appellant s submission, the admitted procedure adopted by the appellant in manufacturing the final product i.e. sponge iron is that, the appellant procures iron ore etc., as the input for manufacturing sponge iron. The iron ore lumps of different sizes are first crushed and are then segregated by screening. It is thereafter that requisite sized iron ore /ore lump is fed in the sponge iron klin. In the aforesaid process of segregation, the iron ore fines are inevitably generated. Thus these fines, cannot be considered as the result of the manufacturing activity of the appellant, since no manufacturing activity is involved for emergence of the same out of iron ore by the appellant. It is not the case of the respondent that sieving out of the finer input from coarser one, will be a manufacturing activity. In the present case, the fine iron ore (input) is inevitably generated in the process of segregation, is admittedly not usable in the klin for the purpose of manufacture of the final product i.e. the sponge iron. However, it is still the part of the input. The iron ore fines are therefore, held not to be the excisable commodity. The findings of original adjudicating authority are found to be correct. The findings of impugned order under challenge being contradictory to this effect, are held perverse and liable to be set aside - Further, the Department has brought nothing on record to show that the iron ore fines can be considered as exempted goods. Admittedly, there is no Notification of the Revenue granting exemption to this product. Thus, the embargo created in Rule 6 (3) (b) of CCR will not apply for removal of iron ore fines from the appellant s factory. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (9) TMI 785
  Rectification of mistake - Section 84 of the Tamil Nadu Value Added Tax Act, 2006 - reversal of Input Tax Credit - Despite objections filed by the petitioner, orders of assessment came to be passed by the Assessing Officer on 31.12.2019 - Non-speaking order - principles of natural justice - HELD THAT:- The impugned orders are clearly contrary to law insofar as they are non-speaking and have been issued in violation of principles of natural justice, despite the specific request of the petitioner for personal hearing. Though the provisions of Section 84 of the Act do not specifically mandate an opportunity of personal hearing, except if the rectification is initiated suo motu at the instance of the Assessing Officer, it goes without saying that for fair disposal of a matter, an assessee/dealer should be heard in person in order to appreciate the contentions put forth prior to conclusion of the proceedings, all the more in a case where the dealer has specifically sought an opportunity of personal hearing. The impugned assessments and orders under Section 84 are set aside and will be redone de novo by the Assessing Officer. The petitioner will be heard by the Officer on Wednesday, the 9th of September, 2020 at 10.30 a.m., either virtually or by way of physical hearing as may be mutually convenient to the parties, to be communicated to the petitioner and orders shall be passed within a period of four (4) weeks from 09.09.2020. Petition disposed off.

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