TMI Tax Updates - e-Newsletter
September 23, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Grant of Anticipatory Bail - evasion of tax - Considering the fact the petitioner is a young man pursuing his studies, this Court is of the opinion that it is a fit case for grant of anticipatory bail to the petitioner under Section 438 Cr.P.C. - HC
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GST:
Validity of interim order - Challenge to the SCN - Levy of GST - supply of Extra Neutral Alcohol (ENA) - Validity of interim order of the Single Judge bench of HC, directing bank guarantee to be furnished by the petitioner - the right of appeal u/S 107 of the GST Act is available to the appellant. Hence, this court does not find any reasons to interefere with the discretion exercised by the learned Single Judge while considering the interim prayer. - HC
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Income Tax:
Exemption u/s 10A - STP unit - exclusion of hardware component from export turnover - Software without loading onto the hardware could not be used and the hardware with the software loaded into it would be unfit for the intended purpose - AO framed an incorrect question for his consideration that whether sale of Hardware which is not manufactured by the assessee could be considered as part of export. - HC
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Income Tax:
Revision u/s 263 by CIT - AO was not authorized to carry out enquiry beyond the scope of the reasons for which the case was selected under limited scrutiny and therefore the Ld. CIT is not justified in directing the Assessing Officer to carry out the enquiry on the issues other than the issues for which case was selected for limited scrutiny and holding the order as erroneous insofar prejudicial to the interest of the revenue - AT
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Income Tax:
Levy of penalty u/s 272A(1)(d) - The bonafide or other wise malafide of non compliance is also required to be kept in mind. The tax and interest are statutory levies, while penalty imposable u/s 272A(1)(d) is subject to Section 273B. Thus, if the taxpayer is able to demonstrate reasonable cause for failure then no penalty is exigible. If in each case for failure to comply with statutory notices issued by the authorities , the penalty is mandatorily to be imposed u/s 272A(1)(d) on the tax-payers, Section 273B will become otiose - AT
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Income Tax:
Disallowance of assessee's claim of exceptional losses on account of certain trades - Actually if there is any loss incurred on the said transaction, the same shall have to be borne only by the clients. - Merely because those clients had been sourced or referred by assessee to ABML, the losses of those clients cannot be shifted by ABML to assessee - the loss of clients incurred under Options Maxima Scheme claimed by the assessee in its return is not allowable - AT
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Income Tax:
Set off of brought forward loss - Removal of defects in the original return - determination of date of filing of ITR - Once the defects in the original return of income have been removed, then it would relate back to the original date of filing of return of income, which was within the prescribed time and therefore the benefits of filing the return of income u/s. 139(1) of the Act shall follow. - AT
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Income Tax:
Reopening of assessment u/s 147 - unexplained property purchased - nowhere AO has applied his own mind before issuing notice and to arrive at conclusion that assessee has escaped an income and on the basis of report submitted by the Investigation Wing, AO issued notice purely on borrowed satisfaction. - AT
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Customs:
Seeking release of de-stuffed imported goods - Defatted Coconut - since the first appellate authority had allowed the appeal filed by the petitioner vide order dated 22.06.2022, there was no impediment for the original authority to pass a provisional order of release of goods in terms of Section 110A of the Customs Act, 1962.- HC
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Customs:
Levy of penalty - allegation for abatement in smuggling of Gold - the activity of facilitating the financing of fund has been turned by the Ld. Commissioner into participation in the conspiracy to smuggle gold which in our view is based on assumption. For imposition of penalty under Section 112(b) of the Customs Act, 1962 the knowledge with regard to the offence on the part of the person has to be established. In the present matter department failed to do so - AT
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Customs:
Refund claim - amount paid at the time of provisional assessment - Period of limitation - There is no application of Section 27 for refund arising upon finalisation of the provisional assessment. Further the refund is payable to the appellant - assessee with interest as per sub-section 4 of Section 18, subject to the test of unjust enrichment as required under sub-section 5. - AT
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Indian Laws:
Exemption from the levy of property tax - Charitable activity or not - There is to be a detailed verification as to whether the petitioner satisfies the requirement of 'charitable institution'. The mere fact that it has obtained an exemption under Section 12(A) and 11 of the Income tax Act, 1961 would not come to its rescue and the officer must undertake a detailed verification of its financials, including the deployment of its funds and record his satisfaction that receipts/income are being ploughed back into the charitable activity. - HC
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IBC:
Initiation of CIRP - threshold of Rupees One Crore - Default by Corporate Debtor is a condition precedent which gives right to the Operational Creditor to file application under Section 9 but for initiating CIRP process threshold, as prescribed under Section 4, is to be fulfilled by the Operational Creditor on the date of initiation of CIRP process. - AT
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IBC:
Consideration of Resolution plan - Validity of order of NCLT excluding and extending CIRP period - the plan is pending for approval before the same Adjudicating Authority and the Adjudicating Authority for reasons best known to it allowed the application filed by the Respondents No. 5 to 7 is arbitrary and against all canons of law. - AT
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Service Tax:
CENVAT credit irregularly availing/ wrongly utilizing - Tribunal set aside the demand - When a specific plea was raised and even the Adjudicating Authority specifically disallowed the availment or utilization of CENVAT credit, the learned Tribunal ought to have decided the said issue, which, as such, was the main controversy and even when a specific finding was given by the Adjudicating Authority while passing the Order-in-original. - Matter restored back - SC
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Central Excise:
CENVAT Credit - exported of inputs as such - even if inputs are assumed to have been cleared as such, they are duty paid excisable goods which were cleared under bond in terms of Notification issued under Rule 19 which does not provide for reversal of credit of duty paid on such exported excisable goods because legislative intent was to promote export of goods and not export of taxes. - AT
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VAT:
Recovery of dues (commercial tax arrears) - purchase of property through public auction - The burden rests upon the revenue to establish that the consideration for the property is inadequate, that the vendor had due notice of the pendency of the sales tax proceedings and the transfer itself, was a measure to evade tax. In the present case, the parties, that is, the petitioner and the defaulting assessee are admittedly unrelated and the transaction of purchase is bonafide - HC
Articles
Notifications
Circulars / Instructions / Orders
- GST - States - ORDER No. 14/WBGST/PRO/2022 - dated
5-9-2022
Extension of period for completion of Audit as per the proviso to subsection (4) of section 65 of the WBGST Act, 2017 for the period starting on or after 1st day of July, 2017 and ending on or before 31st day of March, 2018 in case of M/s Shah Brothers, bearing GSTIN 19AAOFS2392B1Z0.
- GST - States - ORDER No. 13/WBGST/PRO/2022 - dated
2-9-2022
Extension of period for completion of Audit as per the proviso to subsection (4) of section 65 of the WBGST Act, 2017 for the period starting on or after 1st day of July, 2017 and ending on or before 31st day of March, 2018 in case of Youthstar Vanijya Private Limited bearing GSTIN 19AAACY4812D1ZH.
- GST - States - ORDER No. 12/WBGST/PRO/2022 - dated
31-8-2022
Extension of period for completion of Audit as per the proviso to subsection (4) of section 65 of the WBGST Act, 2017 for the period starting on or after 1st day of July, 2017 and ending on or before 31st day of March, 2018 in cases where audit has commenced till 31st day of May, 2022.
News
Case Laws:
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GST
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2022 (9) TMI 990
Grant of Anticipatory Bail - evasion of tax - Section 132(1)(a) (f)(h)(j) (k) r/w Section 132 (1)(I)(i) of Central Goods and Service Tax Act, 2017 and Section 20 of Integrated Goods and Service Tax Act - HELD THAT:- It is revealed that the main allegation with regard to tax evasion is against the father of the petitioner i.e. Anil Kumar Arora who allegedly cleared goods without issuance of e-way bill and payment of GST and evaded crores of tax. The only allegation against the present petitioner is that he is an active accomplice to his father accused Anil Kumar Arora, however no prima facie case is made out against the present petitioner with regard to tax evasion. So far as the orders passed by co-ordinate Bench of this Court relied upon by counsel for the respondent are concerned, the accused were directly involved in tax evasion. It is well settled that the power exercisable under Section 438 Cr.P.C. is somewhat extraordinary in character and it can be invoked in cases where there are reasonable grounds for holding that a person accused of an offence is not likely to abscond, or otherwise misuse his liberty while on bail. Considering the fact the petitioner is a young man pursuing his studies, this Court is of the opinion that it is a fit case for grant of anticipatory bail to the petitioner under Section 438 Cr.P.C. However, it is expected from him to observe and follow the fundamental duties of a good citizen as enshrined in Article 51-A of the Constitution of India - Bail application allowed, subject to conditions imposed.
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2022 (9) TMI 989
Violation of principles of natural justice - exemption from service tax - transportation services - objection raised by the petitioner supported by any document, or not - HELD THAT:- In limited circumstances wherein forum of appeal is provided with a un-extendable limitation, petition under Article 226 of the Constitution of India can be entertained, after the expire of limitation, and the order impugned can be quashed. However, the learned counsel for the petitioner failed to satisfy the Court that the order passed by the Assistant Commissioner, GST was without jurisdiction or that he acted in flagrant disregard to law or rules of procedure or acted in violation of principles of natural justice - There is no violation of any principle of natural justice or any rules or procedure in this case. So, the order passed by the Assistant Commissioner cannot be interfered with in a application filed under Article 226 of the Constitution of India. Additionally, this Court takes note of the fact that the petitioner in essence is praying for exercise of writ jurisdiction for issuance of a certiorari. Certiorari jurisdiction are not exercise for quashing mere error of fact of law unless there is substantial question of law arises regarding the jurisdiction etc. of the Tribunal and that if that order is allowed to stand a gross injustice would allow to be perpetuated. It is not the case here. There is no gross injustice in this case. There is no violation of rules or procedure and principle of natural justice. Petition dismissed.
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2022 (9) TMI 988
Seeking permission for withdrawal of petition - Evasion of GST - action against the Petitioner under Section 69 read with Section 132 of the GST Acts without following the due process of assessment and adjudication under Section 73/74 of the |GST Acts - HELD THAT:- Without entering into the merits of the matter, the petition stands disposed of as withdrawn.
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2022 (9) TMI 987
Seeking permission to avail input tax credit by filing TRAN-1 in the common portal - seeking to open common portal for filing TRAN-1 by the petitioner for availing Transitional input tax credit - HELD THAT:- It is deemed just and appropriate to dispose of this petition directing the concerned respondents to permit the petitioner to avail input tax credit by filing TRAN-1in the common portal and by further directing the concerned respondents to open common portal for filing TRAN-1 for availing transitional input tax credit. Petition allowed.
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2022 (9) TMI 986
Validity of interim order - Challenge to the SCN - Levy of GST - supply of Extra Neutral Alcohol (ENA) - Validity of interim order of the Single Judge bench of HC, directing bank guarantee to be furnished by the petitioner - Section 4 of the Karnataka High Court Act - HELD THAT:- Despite the fact that the challenge is to the show cause notice, the writ petition is entertained. It is also noticed that remedy of appeal is available pursuant to the order to be passed by the authority in response to the show cause notice. Under the circumstances, the discretionary order passed by the learned Single Judge in imposing a condition to furnish bank guarantee to an extent of 25% of the amount mentioned in the show cause notice cannot be construed as an erroneous order to interfere in this intra court appeal on interim order. The contention of the appellant that appeal requires a deposit of only 10% and the filing of appeal on payment of 10% of the demand would automatically ensure stay of impugned order in terms of Sec.107(7) of the GST Act does not come to the rescue of the appellant to say that the impugned order is erroneous. The appellant has chosen to file the writ petition despite the opportunity of showing cause to the show cause notice is available to the appellant. Moreover, the right of appeal u/S 107 of the GST Act is available to the appellant. Hence, this court does not find any reasons to interefere with the discretion exercised by the learned Single Judge while considering the interim prayer. While granting interim order of stay, learned Single Judge has granted eight weeks time to furnish bank guarantee and it would come to an end on 31.01.2022. As the petitioner- appellant was in appeal, the time granted by the learned Single Judge to furnish bank guarantee is extended by another three weeks from 31.01.2022 - Appeal disposed off.
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Income Tax
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2022 (9) TMI 985
Rejecting the books of accounts - Estimation of GP - assessing the gross profit of the Assessee for the relevant assessment year at the rate of 2% of the gross sales - HELD THAT:- ITAT has concurred with the findings of the AO and the CIT(A) and upheld the rate of gross profit at 2% on the gross sales declared by the Assessee. The ITAT rejected the submission of the Assessee for deduction of the statutory taxes i.e., CST by holding that while estimating the gross profit, all expenditure has been accounted for and this includes the expenditure towards taxes. We do not find any perversity in the concurrent findings of the CIT(A) and ITAT. The ITAT is the final fact-finding authority, accordingly no substantial questions of law arise for consideration in the present appeal and accordingly, the same is dismissed.
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2022 (9) TMI 984
Reopening of assessment u/s 147 - Validity of Order passed under Section 148A(d) and the Notice issued under Section 148 - HELD THAT:- This Court is of the view that the issue of alleged illegal mining done by the petitioner has not been conclusively settled in petitioner s favour. The State of Rajasthan still has the option to conduct a further inquiry. In any event, the aforesaid facts disclose that there is a prima facie allegation of income having escaped assessment which will have to be examined by the Revenue Authorities and not the State of Rajasthan. Consequently, the notice under Section 148 of the Act calls for no interference at this stage. Validity of first proviso to Section 149 as decided in Touchstone Holdings Pvt. Ltd. [ 2022 (9) TMI 892 - DELHI HIGH COURT] reassessment notice be deemed as a notice issued under Section 148A of the Act and permitted Revenue to complete the said proceedings. In this case, the income alleged to have escaped assessment is more than 50 lakhs and therefore, the rigour of Section 149(1)(b) of the Act (as amended by the Finance Act, 2021) has been satisfied. Consequently with the aforesaid liberty, the present writ petition and applications stand disposed of. It is also clarified that the petitioner shall be at liberty to raise all its contentions and submissions before the Assessing Officer, except the issue of limitation.
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2022 (9) TMI 983
Assessment order passed u/s 143(3) r.w.s 254 r.w.s 144B - Assessing Authority has not complied with the said directions and has proceeded to pass the impugned order without considering or appreciating the specific directions issued by the Tribunal, as such, the impugned order deserves to be set aside on this ground alone - HELD THAT:- Directions issued by the ITAT while remitting the matter back to the Assessing Authority, it becomes abundantly clear that specific and definite directions were issued to the Assessing Authority to comply before passing the impugned order. However, a perusal of the order will clearly indicate that the said directions have not been complied with by the Assessing Authority as is clear from the impugned order itself. It is also relevant to state that though the Tribunal has directed the Assessing Authority to afford sufficient and adequate opportunity of being heard to the petitioner, the Assessing Authority has granted only a period of two days from 22.09.2021, on which date show-cause notice was issued and called upon the petitioner to furnish his reply on or before 24.09.2021. It is needless to state that a short period of time given by the Assessing Authority to the petitioner to furnish his reply is not only contrary to the directions issued by the ITAT but is also violative of principles of natural justice and the same deserves to be quashed on this ground also. In view of the specific assertion on the part of the petitioner that if one more opportunity is granted, the petitioner would produce additional documents in support of his claim and in consonance with the directions issued by the ITAT while remitting the matter back to the authority, the impugned order deserves to be set aside on this ground also by providing one more opportunity to the petitioner to produce additional materials in terms of the directions issued by the ITAT.
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2022 (9) TMI 982
Reopening of assessment u/s 147 - unexplained and undisclosed fund receipts - Issue of notice where income has escaped assessment - Applicability of provisions u/s 148A - HELD THAT:- It is clear that that for the purpose of Section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time. In the facts of the case, the information is available with AO as per related information details on record containing the Investigation Report in case of one Shiv Shakti Trading Company wherein the DDIT, (Investigation), Unit-3(3), Kolkata has given details with regard to the accommodation entry given by the said Shiv Shakti Trading Company, who is stated to have received unexplained and undisclosed fund for more than Rs.37 crores for the assessment year 2015-16, which in turn has been given to Talland Data Soft Private Limited and other entities and the assessee has also received the fund from the said Talland Data Soft Private Limited as can be seen from the Entry Nos.21 and 22 of the list of the beneficiaries of the account of Talland Data Soft Private Limited available at the Page No.139 of the petition. It is apparent that the information relevant for the assessment year in accordance with the Risk Management Strategy formulated by the Board from time to time is available and therefore we are of the opinion that Assessing Officer has rightly issued the notice by rejecting the objections of the assessee by referring to such information and considering the same in detail, the impugned order passed under Section 148A(d) of the Act is passed giving cogent reasons for rejecting the objections of the assessee in accordance with the provisions of the Act. Assessing Officer has rightly treated the case to be a fit case for exercising powers of reopening of assessment. The provisions under Section 148A of the Act are duly noted and necessary conditions are satisfied which has resulted into impugned notice under Section 148 of the Act. Assessee appeal dismissed.
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2022 (9) TMI 981
Exemption u/s 10A - STP unit - exclusion of hardware component from export turnover - AO has denied the benefit u/s 10A that the hardware was purchased by the assessee but was not manufactured by it - HELD THAT:- AO has denied the benefit u/s 10A that the hardware was purchased by the assessee but was not manufactured by it. It is not the case of AO that hardware was not required at all. On the other hand, the reason for denying the benefit is that assessee had not manufactured the software. The view of CIT(A) is also the same. ITAT considered altogether different points and held that it was not established that software cannot be used without hardware. This was not the question considered by the AO and CIT(A). We may reiterate that ITAT has recorded that wherever software and hardware are inextricably connected and the software cannot be used without hardware, the sale of hardware would be a part of software. The intention of purchaser was to buy the software and the intention of the assessee was to sell the software. It is to be noted that assessee is not a manufacturer or a dealer in hardware. Software will have to be stored/loaded onto a medium for transmission/use. When compared to the cost of software, the cost of hardware is insignificant. Assessee's specific case is, the software and the hardware are inextricably connected. With regard to bifurcation of price in two components, namely consideration for supply of equipments and supply of software, the Delhi High Court has held the payment received by the assessee therein was towards the title and GSM system of which software was an inseparable part incapable of independent use. In the case on hand too, Software could not be exported without loading onto the Hardware. Therefore, in our view software and hardware are inseparable. ITAT has been swayed by its reasoning that sale had been effected by separate invoices and therefore, assessee is not entitled for the benefit u/s 10A. The ratio in Arun Electrics [ 1965 (12) TMI 122 - SUPREME COURT] makes it clear that sale by separate invoices is inconsequential and we are in respectful agreement with that view. Therefore, the said reasoning is unsustainable. In this case, 'manufacture' has to be understood in common parlance as developing software and loading onto the hardware. Software will be written in binary code and it is intangible. It can be used only when loaded onto a compatible hardware. Therefore, in our view, hardware becomes an integral part of the exported commodity. Software without loading onto the hardware could not be used and the hardware with the software loaded into it would be unfit for the intended purpose. On a careful consideration of the entire material on record and the authorities cited before us, we are of the considered view that the Assessing Officer framed an incorrect question for his consideration that whether sale of Hardware which is not manufactured by the assessee could be considered as part of export. - Decided in favour of assessee.
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2022 (9) TMI 980
Validity of orders passed u/s 201(1) and 201(1A) - Assessment u/s 153(2A) as time barred - whether Tribunal is right in law in setting aside the order passed under section 201(1) and 201(1A) of the Act by holding that said orders are time barred by relying on the provision 153(2A) of the Act ? - as per DR provisions of section 153(2A) is applicable only in relation to passing of fresh assessments/re-assessments and not orders passed under section 201(1) and 201(1A) of the Act? - HELD THAT:- ITAT placed reliance on Jodhana Real Estate [ 2004 (7) TMI 43 - RAJASTHAN HIGH COURT] wherein the orders under consideration were passed under Section 143(3) and Section 104 of the Act. In contradistinction, in the case on hand, orders have been passed by the Assessing Officer on 30.03.2011 under Section 201 and 201(A) of the Act. The proviso is unambiguous. For the financial year commencing before 01.04.2007, orders could be passed any time on or before 31.03.2011. Admittedly, the assessment year under consideration is for 1996-97 and the same is prior to financial year before 01.04.2007. In view of the unambiguous language employed by the Legislature, no exception can be taken to the order passed by the AO The authorities relied upon by the the assessee in support of his contention that the AO ought to have passed the orders within a reasonable time do not lend any support to the assessee because, statute permitted the AO to pass orders before 31.03.2011. - Decided in favour of the Revenue and against the assessee.
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2022 (9) TMI 979
Revision filed u/s 264 - petitioner had filed a return of income within time wherein it claims to have inadvertently failed to seek exemption u/s 10 (38) in respect of shares sold in the stock exchange through recognised stock exchange brokers - HELD THAT:- The conclusion of the revisional authority in this matter is erroneous in law. The claim of the petitioner under Section 10(38) is liable to be accepted subject to the claim being in order. Impugned order is set aside for the limited purpose of enabling R1 to call for a report from R2, and decide the question of exemption claimed, on merits.
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2022 (9) TMI 978
Reopening of assessment u/s 147 - Addition u/s 68 - unexplained share capital - HELD THAT:- As there is an information received by learned AO about the share capital received by the assessee at a huge premium which does not support the financial of the assessee, the return of income of the assessee was examined, which did not show any financials to support the above share capital, the funds have been diverted from the assessee to Sahara group, the income of the assessee is meager and therefore all these reasons clearly established that the learned assessing officer has reason to believe that income of the assessee has escaped the assessment. The requisite notices have been duly served on the assessee. The assessee has chosen not to respond to them. Therefore, we do not find any infirmity in the order of the learned assessing officer in assuming jurisdiction u/s 147 of the income tax act. The learned assessing officer has a tangible material, return of income of the assessee was not picked up for scrutiny, the return of income was examined before the issue of notices, belief entertained by the assessee is of a reasonable person and therefore, reopening is upheld. No infirmity is found in the order of the learned CIT A in confirming the same. Therefore, ground numbers 1 4 of the appeal are dismissed. Addition u/s 68 - The companies are registered in Mumbai, but their bank accounts were operated from Lucknow. This coincidence is further corroborated from the fact that now the assessee in form number 36 has given its address which is also at Sahara India point. The company does not have any net worth but amount advanced to Sahara group. Therefore, it is a clear ploy to transfer the money to Sahara group through this shell companies. The information mentioned in the email column of form number 36 is also irrelevant. Form number 36 is also not verified by the managing director of the company. The form number 35 is signed by one person and form number 36 is signed by different person but there is no certification that any of them is the director of the company or managing director of the company authorised to sign return of income u/s 140 of the act. Even the interest of the assessee is also very clear that it wants to get the amount of the addition confirmed in the hands of this assessee, therefore, the real beneficiary of the money is not at all touched. The confirmation of addition in the hands of this company will allow the real beneficiary of the above sum go Scott free. Accordingly, we set-aside the addition added in the hands of the assessee u/s 68 of the Income Tax Act as unexplained share capital, back to the file of the learned assessing officer with a direction to the AO to issue enquiry letter to the banker of these company i.e. ICICI bank, Lucknow to find out who operated this account, the necessary summons to the director of this company as well as the company who received the above sum should also be issued and they must be examined before making addition in the hands of this assessee or deleting the addition. AO is further directed to intimate/initiate if the transaction leads to any violation of the Prohibition of Benami transaction act, 1988. After all these examination, the assessee is directed to show the identity and creditworthiness of the persons who invested money into the assessee, the summons would also be issued to the investor in this company to examine the genuineness of the transaction. If on examination, the learned assessing officer reaches at a conclusion that there is a bigger financial fraud committed by the assessee, the respective authorities are also required to be intimated. Accordingly, ground number 5 and 6 of the appeal are set-aside to the file of the learned assessing officer with above direction. Appeal of the assessee is partly allowed.
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2022 (9) TMI 977
Disallowance u/s. 14A r.w.r. 8D - Expenditure incurred on earning exempt income - HELD THAT:- As per the ratio laid down in the case of PCIT Vs. M/s. Era Infrastructure (I) Ltd [ 2022 (7) TMI 1093 - DELHI HIGH COURT] that no disallowance is to be made u/s. 14A of the Act in case the assessee has not earned any tax free income/exempt income during the year from such investments made by it. This ratio has also been followed by the Tribunal in the case Babul Fiscal Services P.Ltd [ 2022 (9) TMI 98 - ITAT KOLKATA] . Respectfully following the same, hold that since in the instant case also undisputedly there is no exempt income earned by the assessee, the ld.AO was not justified in making disallowance u/s. 14A r.w.r 8D. Therefore, set aside the finding of the ld. CIT(A) and delete the impugned addition made by the ld.AO u/s. 14A of the Act and allow ground nos. 1 to 4 raised by the assessee.
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2022 (9) TMI 976
Disallowance u/s. 14A r.w.r 8D - HELD THAT:- As in the instant case there is no exempt income earned by the assessee, the ld.AO was not justified in making disallowance u/s. 14A r.w.r. 8D. Therefore, set aside the finding of the ld. CIT(A) and delete the impugned addition made by the ld.AO u/s. 14A - Ground of assessee s appeal is allowed. TDS u/s 194A - Disallowance u/s. 40(a)(ia) - HELD THAT:- Assessee had incurred interest expenditure - It was liable to deduct tax at source u/s. 194A - The provisions of section 40(a)(ia) could have been attracted in the case of assessee if the amount of TDS has not been deducted and deposited before the due date of filing of return u/s. 139(1). On perusal of Tax Audit Report provided u/s. 44AB of the Act more specifically annexure 5 for Form 3CB and as stated by the tax of Rs. 3,158/- has been deducted at source on the alleged interest payment of Rs. 31,580/- and the assessee has deposited the amount of Rs.3,158/- on 20-04- 2006, which is much more before the due date of filing return u/s. 139(1). Under these facts and circumstances of the case the ld. AO erred in invoking the provisions of section 40(a)(ia) - therefore, set aside the impugned finding of the ld. CIT(A) and delete the disallowance u/s. 40(a)(ia).
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2022 (9) TMI 975
Reopening of assessment u/s 147 - premature surrendered of policy amount deposited in assessee s bank account - HELD THAT:- Section 45 lays down the tenets for the charge of capital gains tax. The computation of that tax is to be done in accordance with the modus prescribed under section 48. The benefit of indexation of cost of such units should thus be made available on repurchase or redemption of such units. In fact the entire amount was received u/s 80CCB(2) is not liable to be taxed in the hands of the assessee. Assessee argued the legal issue pointed out that the information was received from AIR Data base and the issue was agitated before the appellate authority. But the CIT(A) had not passed any speaking order against the assessee s submissions. The fact related application section 45(6) was also had not discussed by any of the revenue authorities. Considering the veracity of the legal position application of charging section related calculation of tax, the matter is setting aside to ld. CIT(A) for speaking order. Accordingly, the matter is setting aside to the ld. CIT(A) for further adjudication and is directed to pass a speaking order related to the legal point for reopening of u/s 148 on basis of the AIR Information calculation of income under perview of section 45(6) of the Act. Needless to say, the assessee should get a reasonable opportunity for substantiate his claim and the revenue should accept and adjudicate the documents which will be filed by the assessee during the proceeding. Appeal allowed for statistical purposes.
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2022 (9) TMI 974
Reopening of assessment u/s 147 - non-receiving the notice by the assessee during the assessment proceedings - Reason to believe - HELD THAT:- AO had issued notice to the assessee as per the available record in PAN data basis. There is no error on the part of the AO on the service of the notice to the assessee within stipulated time. The assessee also had not informed the AO about his current jurisdiction or the communication address for serving of notice. Related to the grievance for reopening on basis of AIR data which is related to borrowed satisfaction of the AO, this ground is agitated first time before the ITAT. This particular ground was not taken before the CIT(A). In our opinion the said ground should be considered by the CIT(A) on the basis of available record. Assessee had not made any argument on factual ground during the hearing. So, the only ground related to reopening on basis of AIR data is setting aside to the CIT(A) for adjudication. The assessee should get reasonable opportunity of hearing before the CIT(A) for his argument.The appeal of the assessee is allowed for statistical purpose.
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2022 (9) TMI 973
Revision u/s 263 by CIT - revisionary order in the case of limited scrutiny - As per CIT, order of AO is erroneous on non-verification of utilization of the accumulated fund and non-verification of reduction in tangible assets and capital work-in-progress - return of income filed by the assessee for year under consideration was selected for limited scrutiny for verification of payment made to the specified persons - HELD THAT:- Assessing Officer has carried out the enquiry on the issue of verification of limited scrutiny reason. On perusal of the impugned order of the CIT, we find that he has nowhere stated that no verification or any further verification has not been done by the AO on the issue of scrutiny for which the case was selected as limited scrutiny case - CIT has held the order of the AO as erroneous on the ground of no enquiry on other issues i.e. the issue of non-verification of utilization of the accumulated fund and non-verification of reduction in tangible assets and capital work-in-progress. As far as scope of verification in limited scrutiny cases is concerned the CBDT in instruction No. 7/2014 vide letter dated 26/09/2014 has specified that scope of enquiry in limited scrutiny cases should be limited to verification of those particular aspects only and therefore the AO shall confine the questionnaire and subsequent enquiry or verification only on the specific points on the basis of which the particular return has been selected for scrutiny. It is further provided that if there s a potential escapement of the income then Assessing Officer may convert the case into detail scrutiny after prior approval of the higher authorities. For cases selected through CASS cycle 2015 and 2016 the CBDT has further emphasized that scrutiny proceeding in limited scrutiny should be restricted to the relevant parameters which formed the basis for selecting the case for the scrutiny and the Assessing Officer shall not proceed to make other inquiries except with the prior approval of the higher authorities Assessing Officer was not authorized to travel beyond the enquiry on the issue for which case was selected for scrutiny and enquiry on the issues as observed by the Ld. CIT in order under section 263 of the Act on the issue of non-verification of utilization of the accumulated fund and reduction in sale of asset and capital work in progress, were beyond the scope of the limited scrutiny. The Ld. DR has not brought before us whether any permission was sought by the Assessing Officer for converting the limited scrutiny case into a completely scrutiny case. Tribunal in the case of Balvinder Kumar [ 2021 (3) TMI 649 - ITAT DELHI] after analyzing CBDT instructions on the issue of the scope of limited scrutiny held that it would not be open for the PCIT to pass revisionary order under section 263 in the case of limited scrutiny, where the Assessing Officer could not go beyond reason for which matter was selected for limited scrutiny. We hold that in the instant case the Assessing Officer was not authorized to carry out enquiry beyond the scope of the reasons for which the case was selected under limited scrutiny and therefore the Ld. CIT is not justified in directing the Assessing Officer to carry out the enquiry on the issues other than the issues for which case was selected for limited scrutiny and holding the order as erroneous insofar prejudicial to the interest of the revenue. Decided in favour of assessee.
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2022 (9) TMI 972
Estimation of income - bogus purchases - HELD THAT:- We are of the considered view that in the present case, the lower authorities though correctly agreed that only profit embedded in the sales could be brought to tax, however, placed reliance upon the aforesaid decision of Hon ble Gujarat High Court [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] to restrict the disallowance to 12.5% without appreciating the basis on which such percentage of addition was arrived at in the facts of that case. In the present case, reliable industry data was also not brought on record to prove the prevailing profit margin of the ferrous and non-ferrous industry during the relevant assessment year. We deem it fit to modify the impugned order only to the extent that the disallowance on account of bogus purchases should be restricted to the total of rate of VAT applicable during the year under consideration in the State of Maharashtra on the goods traded by the assessee and gross profit earned by the assessee during the year under consideration. We, accordingly, direct the AO to recomputed the disallowance. The sole ground raised in assessee's appeal is partly allowed.
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2022 (9) TMI 971
Levy of penalty u/s 272A(1)(d) - non-compliance of notices u/s 143(2) - non-compliances by the assessee of the notices issued by the AO u/s 143(2) and 142(1) during assessment proceedings - HELD THAT:- The assessee is a retired Professor from Banaras Hindu University. He is still actively involved with various eminent universities and institutions, evidence is placed on record. It is also claimed that due to his engagements with these universities/institutions, he is keeping busy and also requires travels which keeps him away from home town. The switchover of assessment proceedings to electronic mode and now faceless assessments are very laudable steps initiated by GOI, but at the same time there will be some teething problems for the citizens to adapt to new situations especially the older generation which is required to be kept in mind while imposing penalty. The bonafide or other wise malafide of non compliance is also required to be kept in mind. The tax and interest are statutory levies, while penalty imposable u/s 272A(1)(d) is subject to Section 273B. Thus, if the taxpayer is able to demonstrate reasonable cause for failure then no penalty is exigible. If in each case for failure to comply with statutory notices issued by the authorities , the penalty is mandatorily to be imposed u/s 272A(1)(d) on the tax-payers, Section 273B will become otiose. It all depends upon the facts and circumstances of the case which requires investigation of complete facts, so as to ascertain that whether the tax-payer is able to demonstrate the reasonable cause as is contemplated u/s 273B or not. The Authorities must look into the entire facts and then arrive at conclusion whether it is a fit case for imposition of penalty u/s 272A(1)(d). Thus, we consider it fit to set aside the appellate order passed by CIT(A) and restore this matter back to the file of CIT(A) for fresh adjudication, after considering all the relevant facts and circumstances , and then arrive at conclusion whether it is a fit case for levy of penalty u/s 272A(1)(d) - Needless to say that proper and adequate opportunity of being heard be provided by ld. CIT(A) to the assessee in set aside remand proceedings.
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2022 (9) TMI 970
Disallowance u/s 80P(2)(d) - assessee is primarily a Co-operative Society dividend income and interest income earned from Surat District Co-Operative Bank, which is also primarily a Co- Operative Society - Whether Co-Operative Society is eligible for deduction under section 80P(2)(d) in respect of interest received from Co-Operative Bank without adjusting interest paid to said bank? - HELD THAT:- As respectfully following the decision Surat Vankar Sahakari Sangh Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] and in Totagars Co-operative Sales Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] wherein it was held that for the purpose of section 80P(2)(d) a Co-operative Bank should be considered by a Co-operative Society and interest earned by Co-operative Society from Cooperative Bank would necessarily be deductible. The assessee is primarily a Co-operative Society dividend income and interest income earned from Surat District Co-Operative Bank, which is also primarily a Co- Operative Society, therefore, the assessee is eligible for deduction under section 80P(2)(d). We direct the Assessing Officer to delete the disallowance and allowed deduction under section 80P(2)(d) of the Act. This ground of assessee s appeal is allowed.
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2022 (9) TMI 969
Depreciation on intangible assets - HELD THAT:- The issue in dispute is a recurring issue coming to the assessee from A.Y.1999-2000 onwards. We find that the same is covered in favour of the assessee by the order of this Tribunal for A.Y.1999-2000 wherein by placing reliance on the decision of the Hon ble Supreme Court in the case of CIT vs. Smifs Securities Ltd. [ 2012 (8) TMI 713 - SUPREME COURT] this Tribunal had already granted depreciation on the intangible assets to the assessee. Similar depreciation was allowed to the assessee upto A.Y.2010-11. We find that the ld. CIT(A) after narrating the entire facts of his order had placed reliance on the orders passed by his predecessor for A.Yrs. 2003-04 to 2010-11 and had granted relief to the assessee - AR before us placed on record the consolidated Tribunal order passed for A.Yrs. 1999-00 to 2010-11 in the case of the assessee wherein this issue is covered in favour of the assessee. Respectfully following the said Tribunal order, the ground No.1 raised by the Revenue is dismissed. Disallowance of assessee's claim of exceptional losses on account of certain trades - HELD THAT:- We are unable to persuade ourselves to accept to this argument of the AR in view of the fact that the clients had incurred losses due to neglect of ABML. Hence it is the goodwill of ABML that would be ruined and not the assessee. Hence there is no question of retention of goodwill for which this loss was absorbed by the assessee. Even assuming if the goodwill of the assessee is to be retained by keeping its clients in good humor by absorbing their losses, the assessee should have recovered the said loss from ABML as admittedly the loss had been incurred only due to neglect of ABML and not the assessee herein. In any event, there is absolutely no justification for the assessee to claim the said loss in its books as deduction. Hence we deem it fit and appropriate to address the entire issue on the first principle basis without placing reliance on any decisions. The ratio laid down in each of the decision is to be seen from the facts prevailing in those cases and could be made applicable only for those facts. Hence the various decisions relied upon by the ld. AR on the aspect of commercial expediency principle and the loss being allowable as trading loss of the assessee either u/s 28 or u/s 37 of the Act would not advance the case of the assessee. AR before us also submitted that the losses incurred by clients of ABML in Options Maxima Scheme were not due to any neglect of ABML and it was caused due to various other factors which were outside the control of ABML. We find that ABML is only the main broker who had developed Options Maxima Scheme and offered it to its clients pursuant to Risk Disclosure Document signed by the clients in favour of ABML. Actually if there is any loss incurred on the said transaction, the same shall have to be borne only by the clients. Even if the clients losses are to be indemnified, it is for ABML to absorb those losses in its books. Merely because those clients had been sourced or referred by assessee to ABML, the losses of those clients cannot be shifted by ABML to assessee by placing reliance on Clause 2.1A of Business Partner Agreement dated 23.08.2010. We hold that the loss of clients incurred under Options Maxima Scheme claimed by the assessee in its return is not allowable and accordingly we reverse the findings of the ld. CIT(A) in this regard and uphold the findings of the ld. AO on the impugned issue. Accordingly, the Ground Nos. 2 3 raised by the revenue are allowed. Disallowance on account of assessee's claim on account of loss arising out of irregularities committed by certain employees - whether the losses had occurred due to embezzlement carried out by employees of assessee or employees of ABML? - HELD THAT:- This matter requires factual verification which would decide the issue in dispute before us. The reliance placed on the decision of Badridas Daga [ 1958 (4) TMI 2 - SUPREME COURT] would certainly come to the rescue of the assessee, if the employee of the assessee had embezzled . On the contrary, if the employee of ABML had done some mischief, then the said loss though borne by the assessee on behalf of the clients should have to be recovered from ABML by the assessee. Hence the allowability of loss could be decided on the facts being brought on record in this regard. Hence we deem it fit and appropriate, in the interest of justice and fairplay, to remand this issue to the file of ld. AO for deciding in accordance with law in the light of aforesaid directions. Ground No. 4 raised by the revenue is allowed for statistical purposes. TDS u/s 194J - Disallowance of provision made for expenses u/s.40(a)(ia) - HELD THAT:- We find that the Tribunal had stated that the said expenses are cost to cost payments falling under the ambit of reimbursement. In that context, it was decided that TDS would not be applicable thereon. Whereas for the year under consideration, we find that assessee had never taken a plea that it is reimbursement of expenses. Even in the statement of facts filed before the CIT(A), the assessee had only stated that these are provisions for expenses made on best estimate basis and tax would be deducted at the time of making actual payment thereon. Hence, we hold that reliance placed on the decision of this Tribunal in assessee s own case would not come to the rescue of the assessee. However, in the interest of justice, we hold that assessee would be liable for deduction of this expenditure in the year in which the tax deducted at source had been duly remitted to the account of the Central Government. Accordingly, the ground raised in the cross objection of the assessee is partly allowed.
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2022 (9) TMI 968
Delayed Employees contribution to the employees provident fund and the employees state insurance fund - Delay deposit (by the assessee-employer) as beyond the due dates - returned income having been made by the AO u/ss. 143(1) and 154 - HELD THAT:- Sec. 43B(b) does not include the employee contribution, and even regarding so is to no avail, rendering the Explanations under reference, even as suggested by their express language, explanatory. An examination of the Notes on Clauses to, and the Memorandum explaining the Provisions of, Finance Bill, 2021, however, resolves the matter beyond the pale of any doubt. While confirming the Explanations under reference to be explanatory of the law, even as signified by the clear, unambiguous language employed therein, are yet stated to be prospective inasmuch as they are applicable assessment year 2021-22 onwards. Lastly, no decision by Hon'ble jurisdictional High Court in the matter has been either cited before me, or found, which, where so, would, irrespective of the view expressed therein, hold for the relevant years, being prior to the year of applicability of the Explanations under reference. No adjustment, in view of the conflicting judicial opinion could, accordingly, be made to the returned income u/s. 143(1)/154, which sections admit only issues on which there could be conceivably no two views, rampant, irrespective of merits thereof, in the instant case, which aspect, as explained therein, has been given cognizance to in making the provision applicable not retrospectively. The assessee, accordingly, succeeds in his challenge to the impugned adjustments, which are held as bad in law and directed for deletion. This is of course subject to any different view taken by the Hon ble jurisdictional High Court for any year prior to AY 2021-22. Assessee appeal allowed.
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2022 (9) TMI 967
Exemption u/s 11 12 - receipt of hostel fees and transportation charges from students of an educational institutions - proof of charitable activity u/s 2(15) - HELD THAT:- Respectfully following the order of Co-ordinate Bench of Tribunal in assessee own case [ 2019 (1) TMI 92 - ITAT DELHI] hold that the assessee is entitled to exemption u/s 11 12 and does not carry on business activities when it receives the hostel fees and transportation charges from students of an educational institutions therefore, order of the authorities below are set aside and grounds of appeal raised by the assessee are allowed.
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2022 (9) TMI 966
Addition considering the exempt agriculture income as income from other sources - HELD THAT:- The assessee has submitted before assessing officer, various details and evidences in support of agricultural income, vide letter dated 28.03.2016. That is, during the assessment proceedings, assessee submitted sale bills, Vouchers, details of expenses. The books of accounts were also produced by assessee along with photographs of Crop before the AO. We note that assessing officer has not refuted or discredited these evidences and documents. AO does not mention why he is not accepting these evidences. On the contrary, the assessing officer has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Hence, we are not inclined to accept the contention of the AO in any manner and hence the addition so made is deleted. Hence this ground of the assessee is allowed. Claim of depreciation denied - eligibility of assessee for set off of carry forwarded losses - HELD THAT:- We have heard both the parties and noted that if the assessee is eligible to claim depreciation and set off of carry forwarded losses of proceeding years, it should be allowed to him as per law, therefore, we remit these issues back to the file of the assessing officer with the direction to examine the eligibility of the assessee to claim depreciation and eligibility of assessee for set off of carry forwarded losses of proceeding years and then after adjudicate these issues in accordance with law. For statistical purposes, these two grounds raised by the assessee are treated to be allowed.
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2022 (9) TMI 965
Set off of brought forward loss - Removal of defects in the original return - determination of date of filing of ITR - Adjustment of long term capital gain against B/F assessed long term loss - notice u/s 139(9) of the Act was issued to the assessee to rectify the defects in the return filed therein - HELD THAT:- Undisputed fact a notice u/s. 139(9) of the Act was issued to the assessee wherein assessee was called upon to remove the defects in the return of income filed u/s.139(1) - Consequent to the notice u/s. 139(9) of the Act, assessee corrected the defects in the original return of income by filing the revised return, within the prescribed period stated in the notice u/s. 139(9) of the Act. Sub Section (9) of Section 139 of the Act is attracted when the AO considers the return of income filed by the assessee to be defective. If the AO considers the return of income to be defective, he is required to intimate such defects to the assessee and give him an opportunity to rectify such defect within a period of 15 days from the date of such intimation or within such further time as granted by the AO. If the defects are not removed within 15 days or such extended time granted by AO, then the return of income shall be treated as invalid return and the provisions of the Act would apply as if the assessee has failed to furnish his return of income. Once the defects which existed into original return of income are removed within 15 days or such extended time granted by AO, the original return upon removal of defects u/s. 139(9) of the Act becomes a valid return. Once the defects in the original return of income have been removed, then seen in the light of the ratio of Hon'ble Bombay High Court decision [ 2009 (4) TMI 108 - BOMBAY HIGH COURT] it would relate back to the original date of filing of return of income, which was within the prescribed time and therefore the benefits of filing the return of income u/s. 139(1) of the Act shall follow. In such a situation, I am of the view that the CPC and CIT(A) was not justified in denying the benefit of setting of brought forward losses of A.Y. 2016-17 while computing the total taxable income for A.Y. 2017-18. We direct that the benefit of carry forward of losses of A.Y. 2016-17 be allowed for set off against the income for A.Y. 2017-18 to the assessee. Thus the ground of assessee is allowed.
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2022 (9) TMI 964
Deduction claimed u/s. 80IA - Claim denied as Assessee has claimed the benefit first time in the proceedings u/s. 147 - HELD THAT:- It is admitted fact that the Assessee by e-filing Form 3CA along with its return of income filed on dated 25.09.2015 itself, claimed the deduction under consideration and it is also not the case of the Revenue that the Assessee is not entitled and/or not fulfilled the conditions set out for claiming the said deduction. Therefore, it cannot be said that the Assessee has claimed the benefit first time in the proceedings u/s. 147 and hence not allowed as per judgment of Sun Engineering Works (P) Ltd. [ 1992 (9) TMI 1 - SUPREME COURT] - Had the claim not been filed by the Assessee in its return of income, then certainly, the Assessee would not be entitled to claim the said deduction under the proceedings u/s. 147 of the Act, but it is not the case here. Hence, the contention of the ld. DR to the effect that the Assessee as per judgment of the Hon ble Apex Court in the case of Sun Engineering Works (supra) is not entitled to claim the deduction under challenge, is not tenable. Even otherwise, we observe that the legislature in its wisdom made the beneficial provisions for the deduction(s) under chapter VI-A of the Act, being social welfare legislation and claim of deduction u/s. 80IA is a substantive right and therefore, the purpose thereof cannot be defeated and frustrated. Even otherwise we do not find any reason and/or material to contradict the findings of the ld. Commissioner in coming to the conclusion for allowing the benefit of deduction claimed u/s. 80IA of the Act. Hence, in cumulative effect,we are inclined to uphold the impugned order. Consequently, the appeal of the Revenue Department is liable to be dismissed.
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2022 (9) TMI 963
Reopening of assessment u/s 147 - unexplained property purchased - Reopening on the basis of investigation carried out by the Investigation Wing concluding that there was no transfer of property within the meaning of section 2(47) (v) nor was there any transfer of property within the meaning of section 53A of the Transfer of Property Act - proper registration has not been taken place before the relevant authorities of the State Government - HELD THAT:- In this case, it is an undisputed fact that assessee purchased a flat in residential colony and in assessment order, learned AO himself has mentioned that assessee is having business of Financing services and is a Private Limited Company. In this case, AO received an information from the Investigation Wing that a so called purchase of property by the assessee was purely sham transaction and the loss claimed by the assessee on the sake of the said property on a later date was an artificial loss created by the assessee in its books of account to take the advantage of set off of loss against the income earned by the assessee. But nowhere AO has applied his own mind before issuing notice and to arrive at conclusion that assessee has escaped an income and on the basis of report submitted by the Investigation Wing, AO issued notice purely on borrowed satisfaction. In our considered opinion, in such case addition cannot be made. Appeal filed by the Assessee is partly allowed. Disallowance u/s 14A - Assessee has not submitted any evidence regarding sources and applications in support of its contention that there is a direct nexus between utilization of interest free funds and investigation made by it. In our considered opinion, disallowance under S. 14A r.w. Rule 8D was correctly worked out. The assessee has not disallowed any expenditure for earning exempt income in P L account, which does not form part of total income. Further, the assessee has paid interest of Rs.2,36,887/- and assessee has made average investment of Rs.63,85,900/- and having average assets of Rs.2,00,64,030/-. In our considered opinion, learned AO has rightly made disallowance under S.14A r.w. Rule 8D. In view of the above, we concur the decision of the lower authorities and dismiss this ground of appeal.
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2022 (9) TMI 962
Delayed ESI/PF payments - Disallowance u/s. 36(1)(va) - HELD THAT:- We allow the appeals of the assessee.ESI/PF payments etc. were paid before filing of the return u/s. 139(1) on 26.09.2019. Accordingly, disallowance sustained by the ld. CIT(A) considering the legal position as set out herein above, the order passed cannot be upheld - Decided in favour of assessee.
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2022 (9) TMI 961
Estimation of net profits in absence of reliability of books of accounts - CIT(A) partly allowing the appeal of the assessee by considering net profit to be taken @ 6% instead @ 10% taken by the AO - HELD THAT:- For estimation of profits, either the past history of the assessee which has been accepted and has attained finality or comparable data in case of other assessee involved in the similar line of business would provide a reasonable basis. In the instant case, AO has neither considered the past history or the comparable data of other assessee involved in similar line of business whereas the ld. CIT(A) has considered the past history of the assessee. During the course of hearing, nothing has been brought on record disputing the past history of the assessee which is on record and has been considered by the CIT(A). We therefore do not find any affirmity in the order of the CIT(A) and the same is hereby confirmed. In the result, the ground of appeal taken by the Revenue is dismissed. Addition u/s 68 - whether no supporting evidence had been submitted by the assessee to establish creditworthiness and genuineness of the trade advances? - HELD THAT:- During the course of hearing, our reference was drawn to increase in trade payable during the year and corresponding increase in consumption of raw material during the year and it was submitted that the increase in trade payable is directly linked to purchase and consumption of raw material and where net profit has been estimated, no further disallowance can be made towards the trade payables. We find merit in the contention so advanced by the ld. AR which also find supports from various decisions referred supra and therefore, we do not find any justifiable basis to disturb the findings of the CIT(A) in absence of any contrary material brought on record. In the result, the ground of appeal taken by the Revenue is dismissed.
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Customs
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2022 (9) TMI 960
Applicability of General Alert Circular no. 2/2019 dated 15.04.2019 - proceedings are at the stage of adjudication of the show cause notice - whether the circular form the basis for a duty demand in the petitioner's case - HELD THAT:- The petitioner needs to respond to the show cause notice by raising all permissible contentions as available in law including the contentions as available to the petitioner under the orders passed by the Division Bench of this Court in VEDANTA LIMITED, VERSUS UNION OF INDIA, ASSISTANT COMMISSIONER OF CUSTOMS, COMMISSIONER OF CUSTOMS, DIRECTORATE OF REVENUE INTELLIGENCE NEW DELHI, GOA [ 2020 (2) TMI 703 - BOMBAY HIGH COURT] - the petitioner's case need not be examined, when the proceedings are before the department at the stage of adjudication of the show cause notice. Let a decision on the show cause notice in accordance with law be taken within a period of three months from the date the petitioner submits its reply to the show cause notice. Petition disposed off.
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2022 (9) TMI 959
Seeking release of de-stuffed imported goods - Defatted Coconut - classified under Tariff/ item/CTH 23065020 or otherwise? - seeking issuance of demurrage waiver certificate in terms of rule 6(1) (1) Handling of Cargo in Customs Area Regulation, 2009 - HELD THAT:- The issue in controversy involved in the present petition is directly and squarely covered by the earlier decision of this Court in the case of M/S PAVAN ENTERPRISES VERSUS THE CHIEF COMMISSIONER OF CUSTOMS, THE COMMISSIONER OF CUSTOMS (APPEALS) , THE JOINT COMMISSIONER OF CUSTOMS [ 2022 (8) TMI 1092 - KARNATAKA HIGH COURT ] where it was held that In the light of the specific direction issued by this Court and liberty reserved in favour of the petitioner to file an application under Section 110A of the Customs Act, the respondents clearly misdirected itself in refusing to pass an order of release on the ground that the adjudicating authority had already passed an order against the petitioner by relying upon the order dated 31.12.2021 referred to in paragraph-3 of the impugned order, without appreciating that the same does not pertain to the adjudication proceedings in relation to the petitioner, since the same had already culminated in the order at Annexure- P dated 10.03.2021 itself, much prior to 31.12.2021. Despite the respondents preferring further appeal from the order passed by the first appellate authority, this Court took into account that there is no interim order passed in the said further appeal preferred by the respondents, coupled with the fact that the appeal being continuation of the original proceedings, since the first appellate authority had allowed the appeal filed by the petitioner vide order dated 22.06.2022, there was no impediment for the original authority to pass a provisional order of release of goods in terms of Section 110A of the Customs Act, 1962. The present petition allowed.
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2022 (9) TMI 958
Maintainability of petitioner's appeal - statutory pre-deposit has not been remitted as required, in terms of Section 129E of the Customs Act, 1962 - Duty Drawback claim - scope of the terms 'rebate of duty' and 'duty' - HELD THAT:- There is no merit in the distinction that is sought to be made by the petitioner between the concepts of duty and drawback since what the petitioner/assessee is permitted to draw-back is the duty paid by it on certain inputs, subject to the satisfaction of certain conditions - the benefit of drawback is granted if the assessee in question satisfies the condition imposed, including receipt of the sales proceeds within a stipulated period. The argument that there is a distinction between 'rebate of duty' and 'duty' and that, legally and functionally the two expressions refer to two different concepts is also misconceived as a rebate is nothing but a refund of duty and the nature of both remains the same. In fact, in Circular No.993/17/20140CS dated 05.01.2015, the Central Board of Excise Customs, New Delhi has clarified the position that drawback is a refund of duty on goods exported. In fine, the rejection of the petitioner's appeal for want of compliance with the condition under Section 129E is well founded. Petition dismissed.
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2022 (9) TMI 957
Levy of penalty - allegation for abatement in smuggling of Gold - the activity of facilitating the financing of fund - evidence whatsoever was found to substantiate the finding of the Ld. Commissioner, present or not - existence of mens rea or not - HELD THAT:- For imposition of penalty on a person under Section 112(b), the following conditions must be satisfied. (i) The person must have acquired possession of or must be in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which are liable for confiscation under Section 111 of Customs Act, 1962. (ii) The person must have knowledge or have reason to believe that the goods acquired by him or dealt with by him in the manner as mentioned above, are liable for confiscation under Section 111 i.e. he has knowledge or has reason to believe that any one or more of the contraventions mentioned in Clause (a) to (p) of Section 111 have been committed in respect of the imported goods acquired or dealt with by him. For imposition of penalty under Section 112(b) of Customs Act, 1962, it is also necessary to prove that the person had knowledge or had reason to believe that the goods acquired or dealt with by him are liable for confiscation under Section 111. The role of the Appellant in the whole episode has been derived only from the printout sheet retrieved from the pen-drive seized from the residential premise of Ms. Nita Chunilal and statements of persons. Statements of said persons remained uncorroborated during the investigation. As per the department Shri Rutugna being the mastermind of the smuggling racket, however during the investigation Shri Rutugna has nowhere stated the name of Appellant as connected to his alleged activity of smuggling of gold. From the evidence available on record and statement of Appellant it is clear that he was in normal course arranged the lending of fund that to Shri Mehul Bhimani, however, the activity of facilitating the financing of fund has been turned by the Ld. Commissioner into participation in the conspiracy to smuggle gold which in our view is based on assumption. For imposition of penalty under Section 112(b) of the Customs Act, 1962 the knowledge with regard to the offence on the part of the person has to be established. In the present matter department failed to do so - During the investigation officers did not find any documents/ piece of paper or any other evidence against the Appellant to show that the Appellant financed money for smuggling of gold into India. Clearly, the Appellant did not have knowledge of use of fund financed on his pretext, if any. The appellant cannot come within the ambit of Section 112(b) because appellants had never acquired possession or in any way concerned in any of the activities mentioned in the Section or any measure dealing with any goods which the appellant knew or had reason to believe are liable to confiscation. In the absence of the department having not proved the knowledge of the appellant in the activities relating to the smuggled gold, there were no grounds for imposition of penalty on him. It is now well established that mens rea is an important ingredient for imposing a penalty on the persons enumerated in Section 112(b) of the Customs Act. The evidence brought out by the department nowhere suggests that the appellant was aware that the goods in question were smuggled into the India. Penalty imposed on appellant cannot sustain - appeal allowed - decided in favor of appellant.
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2022 (9) TMI 956
Refund claim - amount paid at the time of provisional assessment - amount is found to be paid in excess on finalisation of the assessment is refundable under the provisions of section 18 for sub-section (4) of the Act - principles of unjust enrichment - HELD THAT:- The provisions of provisional assessment as given in Section 18 of the Act, is a self complete code. It provides for the conditions in which provisional assessment shall be made and further provides that pursuant to the provisional assessment, if any, document or information as required by the proper officer for final assessment, the importer exporter, shall submit such document or information within such time as the proper officer shall require. Further, sub-section (2) of Section 18 provides when duty leviable on such goods is assessed finally or reassessed by the proper officer, then the amount paid shall be adjusted against the duty finally assessed or reassessed, as the case may be, and if the amount so paid is short of the duty finally assessed or reassessed, as the case may be, the importer or the exporter of the goods shall pay the deficiency, or otherwise be entitled to a refund, as the case may be. There is no application of Section 27 for refund arising upon finalisation of the provisional assessment. Further the refund is payable to the appellant - assessee with interest as per sub-section 4 of Section 18, subject to the test of unjust enrichment as required under sub-section 5. Refund allowed - the importer respondent is entitled to interest at the prescribed rate as per Section 18(4) read with Section 27A of the Act - appeal dismissed - decided against Revenue.
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2022 (9) TMI 955
Valuation - assessment of Customs Duty - quantity of liquid import cargo - quantified on the basis of weight mentioned in the invoice or on the actual shore tank received weight? - Applicability of Board Circular No.6/2006-Cus dated 12 January, 2006 - HELD THAT:- The issue is no longer under dispute since not only the Hon ble Supreme Court in the case of MANGALORE REFINERY AND PETROCHEMICALS LTD. VERSUS COMMISSIONER OF CUSTOMS, MANGALORE [ 2015 (9) TMI 245 - SUPREME COURT] decided that the quantity of liquid cargo should be taken on actual shore tank received basis and not on the basis of invoice and the same was accepted by the Board by withdrawing the earlier circular. Therefore, the issue is no more under dispute now. Appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2022 (9) TMI 954
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - appeal dismissed on the ground that it is below the threshold limit of Rupees One Crore - HELD THAT:- A default by the Corporate Debtor entitled a financial creditor and operational creditor to initiate Corporate Insolvency Resolution Process. The default is thus condition precedent for initiating CIRP. The minimum amount of default as has been prescribed under Section 4 of the Code has a purpose and object. The object is that unless there is a minimum amount of default, no person should be permitted to initiate CIRP. When the amount of default was amended from Rupees One Lakh to Rupees One Crore, the object was that no application for initiation of CIRP be filed unless the threshold is fulfilled - The initiation date is thus the date on which financial creditor, corporate applicant or operational creditor makes an application to the Adjudicating Authority. Part II of the Code is applicable only when minimum amount of default of Rupees One Crore is fulfilled after 24.03.2020. Thus, right to initiate the CIRP after 24.03.2020 is only on the condition that minimum default is of Rupees One Crore. There is no right to initiate CIRP after 24.03.2020 when minimum default is not Rupees One Crore. Section 10A was inserted in the Code to give protection to the Corporate Debtor from initiation of CIRP process with regard to default committed by the Corporate Debtor after 25.03.2020. The object and purpose of insertion of Section 10A was clearly to save the Corporate Debtor on account of ill-consequences which ensued after spread of COVID-19. 25.03.2020 is the date when lockdown was imposed in the entire country - Section 10A was inserted to give protection to the Corporate Debtor to save from initiation of any CIRP against them since the default committed by the Corporate Debtor was mostly due to ill-consequences of COVID-19. The explanation clearly indicates that the provisions of this section shall not apply to any default committed under the sections 7, 9 or 10 after 25th March, 2020. The idea was to give protection to the Corporate Debtor from default which was committed from 25.03.2020 for period of one year thereafter. It was unable to see how explanation to Section 10A comes to any aid in Appellant s case. Section 10A was introduced for entirely different object and purpose and could not be read to give any support to the submissions which have been made by the Appellant in the present case. When Section 4 is applied to initiation of CIRP process, threshold should not be looked into when a right to sue accrues rather threshold be looked into on the date of initiation. Default by Corporate Debtor is a condition precedent which gives right to the Operational Creditor to file application under Section 9 but for initiating CIRP process threshold, as prescribed under Section 4, is to be fulfilled by the Operational Creditor on the date of initiation of CIRP process. Thus, no error has been committed by the Adjudicating Authority in rejecting Section 9 application filed by the Appellant on 18.01.2021 which did not fulfil the threshold of Rupees One Crore - there are no merits in the appeal - appeal dismissed.
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2022 (9) TMI 953
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - whether payment to the Operational Creditor/Respondent No. 1 as per work order is triggered in the present case giving rise to an operational debt? - existence of debt and default or not - whether the said operational debt exceeds an amount of Rs. 1 lakh and is an undisputed debt? - HELD THAT:- While Corporate Debtor/Appellant has claimed to have paid Rs. 92,62,856/- (Rupees ninety two lakhs sixty two thousand eight hundred fifty six only), the Respondent No. 1 has claimed to have received only Rs. 83,93,717/- (Rupees eighty three lakhs ninety three thousand seven hundred seventeen only). It is pertinent to note that the Corporate Debtor/Appellant has admittedly held back an amount of Rs. 23,72,215/- (Rupees twenty three lakhs seventy two thousand two hundred fifteen only) on the ground that 15% payment was to be released after installation and 5% amount as defect liability to be released after 6 months - Respondent No.1 was entitled to receive 62% payment from out of the retained amount, on pro-rata basis for the completed installations. If that be the case, then payment to the tune of Rs 14.70 lakhs had become due and payable as per payment terms and for which invoices had also been raised. The contention of the Appellant that payment was to be made only after full installation was completed in the respective towers and not on flat-wise completion cannot be acceded to for the following reasons. Firstly, it fails to explain why composite payment was not insisted upon tower-wise for the 80% amount for material delivery and RA bills were accepted. Secondly, from a plain reading of the payment terms, we do not find any embargo having been placed on the Operational creditor from claiming flat-wise payments as long as the installation was complete. Merely placing of conditions prior to release of payment, does not alter the colour and character of the operational debt and does not detract from its having become due and payable. Whether there is existence of dispute between the parties? - HELD THAT:- There is nothing on record to suggest that the Corporate Debtor/Appellant raised any such dispute before receipt of invoices or at any period prior to the issue of demand notice. There is nothing credible to substantiate the pre-existence of dispute. The Corporate Debtor/Appellant has defaulted in the payment of operational debt, of an amount exceeding Rs 1 lakh, which amount had clearly become due and payable, and further in the absence of any pre-existing dispute, there are no error has been committed by the Adjudicating Authority in admitting the application under Section 9 of IBC and initiating CIRP - Appeal dismissed.
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2022 (9) TMI 952
Liquidation of Corporate Debtor - Section 33 of IBC - financial creditor of Guarantor company - Circular Loan transactions or not - applicability of section 7 of IBC - insufficient stamping of letter of guarantee - HELD THAT:- Charge Certificate dated 09.03.2018 issued by Registrar of Companies, Mumbai has been brought on record, which certifies creation of Charge dated 29.12.2017 between G.C. Property Private Limited (First Party) and IL FS Financial Services Limited (Second Party). Charge having been registered by the Corporate Debtor himself, the Corporate Debtor cannot escape from its liability for payment of loan as per its own act of creating mortgage by deposit of Title Deed and registration of Charge. It is further relevant to notice that in the Offer Letter dated 27.12.2017, as extracted above in Security Package , where Primary Security was Flat No.6 and it was noticed in the Offer Letter itself that the valuation of Flat is Rs.300 million, i.e., equivalent to the Financial Facility, which was to be extended to the Principal Borrower - the Corporate Debtor cannot escape from its liability from repayment of the loan sanctioned to the Principal Borrower on the ground that Letter of Guarantee was insufficiently stamped. Whether IL FS can be treated as Financial Creditor of the Guarantor Company or not - HELD THAT:- The submission raised by learned Counsel for the Appellant has to be rejected in view of the law laid down by the Hon ble Supreme Court in Laxmi Pat Surana vs. Union Bank of India and Another [ 2021 (3) TMI 1179 - SUPREME COURT ]. The Hon ble Supreme Court has laid down in the above case where an Application was filed under Section 7 by Financial Creditor against a Corporate Person who had offered guarantee to the two loans of Principal Borrower - It was held in the case that we find no substance in the argument advanced before us that since the loan was offered to a proprietary firm (not a corporate person), action under Section 7 IBC cannot be initiated against the corporate person even though it had offered guarantee in respect of that transaction. Whereas, upon default committed by the principal borrower, the liability of the company (corporate person), being the guarantor, instantly triggers the right of the financial creditor to proceed against the corporate person (being a corporate debtor). Hence, the first question stands answered against the appellant. Transactions which was entered with the Borrower and IL FS was Circular Loan Transactions or not - HELD THAT:- The Corporate Debtor cannot be heard in contending that it has no liability of repayment for the financial facility, which was extended by the IL FS to the Principal Borrower. The mere fact that Principal Borrower has further granted loan to M/s Vadraj Cement Ltd. out of the money received from loan sanctioned by IL FS, cannot be a ground to come to the conclusion that Corporate Debtor has no liability towards payment of loan and no debt is due on Corporate Debtor. We thus do not find any substance in this submission. Section 7 Application has malafidely initiated for purpose other than resolution of the Corporate Debtor or not - HELD THAT:- The Corporate Debtor gave security to secure the loan of Rs.30 crores granted by IL FS to Principal Borrower. Primary security as noted above was residential Flat of the Corporate Debtor and the same was mortgaged by depositing the Title Deed of Flat No.6 on 29.12.2017, with regard to which Charge was also registered. We do not find any malafide in initiation of Section 7 proceedings by the Financial Creditor. There is no denial to default committed in repayment of the loan. When default was committed in the repayment of the loan and debt became due on both Principal Borrower and Corporate Debtor, no error can be said to be committed by the Financial Creditor in filing Application under Section 7 against the Corporate Debtor. Liquidation order - HELD THAT:- Section 33, sub-section (2) clearly empowers the CoC to take the decision to liquidate the Corporate Debtor, any time after its constitution under sub-section (1) of Section 21 and before the confirmation of the resolution plan. In the facts of the present case, no infirmity is found in the Resolution passed by the CoC for liquidating the Corporate Debtor. The Adjudicating Authority after perusing the material on record and after perusing the 3rd CoC Meeting has allowed the Application filed by the Resolution Professional under Section 33. No infirmity is found in the order of the Adjudicating Authority directing for liquidation of the Corporate Debtor. There is no merit in any of the Appeals, both the Appeals are dismissed.
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2022 (9) TMI 951
Consideration of Resolution plan - Validity of order of NCLT excluding and extending CIRP period - whether the resolution plan submitted for approval of the Adjudicating Authority under Section 31 of I B Code, 2016 is binding on the CoC and Successful Resolution Applicant? - HELD THAT:- It is a settled position of the law that once the CoC has approved a resolution plan which has been submitted for approval under Section 31 of the Code, whether the same is binding on the CoC. It is unequivocal that Section 31 of the Code deal with approval of resolution plan and if the Adjudicating Authority is satisfied that the resolution plan as approved by the Committee of Creditors under sub-section (4) of Section 30 meets the requirement as referred to in sub-section (30), it shall by order approve the resolution plan which shall be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government any State Government or any Local Authority etc. In the present case, the Adjudicating Authority vide impugned order directed the 1st Respondent to place the resolution plan before the CoC for its consideration by excluding and extending the CIRP period, when an application is pending for approval of resolution plan, which is completely illegal and against the law laid down by the Hon ble Supreme Court in Ebix Singapore [ 2021 (9) TMI 672 - SUPREME COURT ] - This Tribunal in the facts of the present case, is of the opinion that there are no reasons for extending and excluding the CIRP period by the Adjudicating Authority. It is not the case that no PRAs received in the CIRP process and to afford an opportunity to call for PRAs with an aim to avoid liquidation of the Corporate Debtor. In the present case, the plan is pending for approval before the same Adjudicating Authority and the Adjudicating Authority for reasons best known to it allowed the application filed by the Respondents No. 5 to 7 is arbitrary and against all canons of law. Whether the Adjudicating Authority can overlook the decision of CoC which was taken in their commercial wisdom? - HELD THAT:- The commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated process within the time lines prescribed by the I B Code - reliance can be placed in the case of Hon ble Supreme Court in K. Shashidhar Vs. Indian Overseas Bank Ors. [ 2019 (2) TMI 1043 - SUPREME COURT ]. The Adjudicating Authority is not authorised to pass any orders which would circumvent and attempt to frustrate the resolution plan pending before it for consideration under Section 31 of the Code. The bitter truth remains that the Respondents No. 5 to 7 are completely standing outside of the CIRP and once evinced their EoI and backed out from participating in resolution process and now after completion of the CIR period their application cannot be considered. The reason given by the Adjudicating Authority that the 1st Respondent has not provided the documents to the Respondents No. 5 to 7 is concerned from the records, it is seen that the audited balance sheet up to a period of financial year 2014-15 was available from the data room which was accessible by all the PRAs including the Respondents No. 5 to 7. Further the financial statements for years 2015-16, 2016-17 and 2017-18 were also made available in the data room - This Tribunal does not go into the oblique motive of these Respondents in submitting the resolution plan belatedly. This Tribunal is of the view that the resolution plan submitted by the Respondents No. 5 to 7 on 27.05.2020 after expiry of CIRP period is illegal and this Tribunal upholds the decision taken by the 1st Respondent in rejecting the plan of the Respondents No. 5 to 7 vide its communication dated 18.06.2020 is legal and valid - Impugned order is unsustainable and the same is set aside. Appeal allowed.
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2022 (9) TMI 950
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- There is no reason to deny the Petition under section 7 filed by the Financial Creditor to initiate the CIRP against the Corporate Debtor as the Corporate Debtor himself has admitted its liability. On perusal of the documents submitted by the Applicant, it is clear that financial debt amounting to more than Rs.1,00,00,000/- (Rupees One Crore Only) is due and payable by the Corporate Debtor to the Applicant. There is default by the Corporate Debtor in payment of debt amount. Therefore, it is the fit case for initiation of CIRP against the corporate debtor. Hence, the Application filed by the Financial Creditor is liable to be admitted. The application is complete and has been filed under the proper form. The debt amount is more than Rupees One Crore and default of the Corporate Debtor has been established. Application admitted - moratorium declared.
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2022 (9) TMI 949
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Service of demand notice - HELD THAT:- A perusal of Part IV of the Form V, reveals that the Operational Creditor has submitted that the Corporate Debtor has made payments for invoices ranging from 05.01.2018 till 03.04.2019. However, the amount claimed by the Operational Creditor is for 11 invoices ranging from 27.02.2018 to 23.04.2018. Further, the date of default mentioned by the Operational Creditor on page 9 of the petition is 05.03.2018 which is for default relating to an invoice dated 26.02.2019 i.e. a future date. Further, the said invoice dated 26.02.2019 has not been put on record. Therefore, the instant petition is an incomplete one. Also, keeping in mind that the date of default is 05.03.2018, a perusal of Annexure E of the Reply Affidavit shows that various payments have been made by the Corporate Debtor to the Operational Creditor on 27.03.2018, 06.04.2018, 07.04.2018, 20.04.2018 and so on. As such, the date being 05.03.2018 cannot be considered as date of default and therefore the instant petition is defective in nature. Service of demand notice by email - HELD THAT:- This Adjudicating Authority is satisfied that since the mentioned email id is registered with the ROC as the email-id of the company, the service of the demand notice to the said email id is valid. As such, the demand notice was successfully delivered to the Corporate Debtor and no reply was given by it. Pre-existing dispute or not - HELD THAT:- The fact that no reply to the demand notice was issued by the Corporate Debtor, would not prevent the Corporate Debtor from bringing on record facts to establish pre-existing disputes relating to the instant petition - it can be seen that the dispute relating to the weight of the reels supplied was first raised by the Corporate Debtor vide letter dated 01.10.2018 i.e. much prior to the issuance of the demand letter by the Operational Creditor on 02.09.2019. the said dispute has also been acknowledged by the Operational Creditor vide email dated 01.10.2018. Without going into the merits of the said disputes, this adjudicating authority is satisfied that there are pre-existing disputes in the instant petition. The pre-existing disputes in the instant case are not mere feeble arguments, instead they are backed by evidence. As such, in presence of pre-existing disputes, the instant petition is not maintainable - this Adjudicating Authority is satisfied that the instant petition is liable to be rejected - Petition dismissed.
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2022 (9) TMI 948
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor failed to adhere to the terms and conditions of the said restructured cum sanctioned letter and defaulted in payment of the outstanding dues to the Financial Creditor. Thereafter, the Financial Creditor on 07 May, 2018 sent a notice under section 13 (2) of the SARFAESI Act, 2002. As per the records the account of the Corporate Debtor was declared as NPA as on 28 February, 2018. Upon perusal of the Pending restructural proposal vis-a-vis OTS of the loan in the name of the Corporate Debtor is adequate enough to attract section 18 of the Limitation Act, 1882, which envisages that the acknowledgment of debt within the period of limitation would give rise to a fresh period of limitation. The present petition made by the Financial Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time - Petition admitted - moratorium declared.
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2022 (9) TMI 947
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 - service of demand notice - whether the demand notice in Form 3 dated 03.02.2020 was properly served? - HELD THAT:- The demand notice was received as per tracking report mentioned at Page No. 51 of the main petition and through e-mail on 24.02.2020 (Annexure A-6). In view of the same, it is held that the demand notice has been duly served. However, reply was received to the demand notice sent through e-mail, whereby the corporate debtor admits the liability by stating, to close the project as it is where basis and to excuse from the payments as they do not have sufficient funds. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is deposed by petitioner that the operational creditor affirms that the corporate debtor has not given any notice raising dispute relating to the unpaid amount of operational debt as claimed in the application. The same has been inferred from the affidavit in terms of Section 9(3)(b) of I B Code, 2016. The affidavit is attached with the main petition from page 59 to 61. It implies that there is no pre-existing dispute in relation to the debt claimed as per Part IV of Form 5. Moreover, the corporate debtor in its reply stated that the amount claimed is not denied and the respondent is not in a position to repay the debt in question. Therefore it is evident from above that the present petition is of admitted liability. Whether this application is filed within limitation? - HELD THAT:- A demand notice issued dated 03.02.2020 in Form 3 attached as Annexure A-5 was duly served on the corporate debtor through speed post delivered on 29.02.2020. It is to be noted that the period of limitation would begin from the date of default i.e. 13.09.2019. This application was filed on 13.03.2020 and refiled on 02.11.2020 vide Diary No. 2002. Therefore, this Adjudicating Authority finds that this application is filed within limitation. It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident that from the above mentioned facts that the liability of the corporate debtor is undisputed as it is stated by respondent/corporate debtor in its reply that due to adverse financial conditions. Thus, the respondent-corporate debtor has admitted its liability. Accordingly, the petitioner proved the debt and the default. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition is admitted. Petition admitted - moratorium declared.
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Service Tax
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2022 (9) TMI 946
CENVAT credit irregularly availing/ wrongly utilizing - levy of service tax - Works Contract Service - failure to declare the full taxable value in ST-3 returns - failure to discharge the service tax on the gross receipts value - failure to have regularly and habitually retained the service tax collected from their clients - failure to file the Half Yearly ST-3 returns within the prescribed due dates - failure to apply correct service tax in the ST-3 returns - failure to furnish the CENVAT Credit availed details and copies of Invoices/bills on the strength of which they availed CENVAT Credit - period post 2007 - HELD THAT:- It is not disputed by the assessee that the services rendered by the assessee and the contract entered into by the assessee be treated as Works Contract and therefore, the assessee is liable to pay the service tax. From the impugned order passed by the Tribunal, it appears that though the learned Tribunal has touched the aspect of wrong/irregular availment/utilization of CENVAT credit while narrating the facts, however, thereafter there is no further discussion at all on irregular/wrong utilization/availment of the CENVAT credit - It was the specific case on behalf of the Revenue that, without producing any invoices and/or other documentary evidences, the assessee was not justified in utilizing and/or availing the CENVAT credit. When a specific plea was raised and even the Adjudicating Authority specifically disallowed the availment or utilization of CENVAT credit, the learned Tribunal ought to have decided the said issue, which, as such, was the main controversy and even when a specific finding was given by the Adjudicating Authority while passing the Order-in-original. Matter remanded to the learned Tribunal to decide the appeal afresh, more particularly, with respect to the CENVAT credit utilized/ availed by the respondent-assessee - appeal allowed by way of remand.
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2022 (9) TMI 945
Non-issuance of Discharge certificate in Form SVLDRS-4, despite required payments made - HELD THAT:- The material on record clearly establishes that the petitioner had already paid a sum of Rs.1,49,27,961/- to the respondents, who had accepted the entitlement of the petitioner under SVLDR Scheme - the respondents have accepted and acquiesced to the fact that the petitioner was entitled to the benefit of the SVLDR Scheme and the petitioner having paid the aforesaid sum of Rs.1,49,27,961/- on 31.12.2019 within a period of 30 days from 02.12.2019 on which date Form SVLDRS-3 was issued, respondent No.2 clearly fell in error in issuing show-cause notice without considering or appreciating that the payment referred to without considering or appreciating or taking into account the said undisputed payment made by the petitioner. The impugned show-cause notice is clearly contrary to the undisputed to the facts and circumstances and consequently, upon petitioner making payment of the aforesaid amount on 31.12.2019 within the stipulated period of 30 days within 03.12.2019, the petitioner is clearly entitled to the benefit of the SVLDR Scheme and consequently, petitioner is entitled for issuance of Form SVLDRS-4 in his favour. The impugned notice deserves to be quashed and necessary directions are to be issued to the respondents in this regard - Petition allowed.
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2022 (9) TMI 944
Rejection of refund claim - construction of Government buildings - rejection of refund on the ground of time limitation - it is alleged that refund claim was not filed within a period of six months as provided in sub Section (3) of Section 102 of Finance Act, 1994 - HELD THAT:- The issue has been settled by the decision of Hon ble Madhya Pradesh High Court in the case of M/S MDP INFRA (INDIA) PVT. LTD. VERSUS COMMISSIONER, CUSTOMS, CENTRAL EXCISE CGST [ 2019 (2) TMI 208 - MADHYA PRADESH HIGH COURT ], which was approved by the Hon ble Apex Court in MDP INFRA (INDIA) PVT. LTD. VERSUS COMMISSIONER [ 2021 (7) TMI 1261 - SC ORDER ], where it was held that Evidently, the Notification No. 12/2012 25/2012 ceased to exist w.e.f. 1-4-2015. The exemption was revived by notification dated 1-3-2016. But since it was prospective in effect, the appellant was not entitled for any exemption, which the appellant was aware of and with open mind and eyes deposited the service tax due with interest. It was only by virtue of subsequent legislation the notification was made effective from retrospective date with the stipulations that refund can be claimed within specific time provided. There was thus no ambiguity nor any dispute as would have prevented the appellant from seeking refund within the period of limitation. Appeal dismissed - decided against appellant.
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Central Excise
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2022 (9) TMI 943
Extended period of limitation - non-payment of service tax on Management of Business Consultancy Service - suppression of facts or not - Whether the Tribunal was justified in remanding the matter back for limited purpose of calculation of service tax leviable for normal period of limitation on cum tax basis? - HELD THAT:- There is no specific allegation made against the respondent that they had willfully avoided payment of tax by suppressing the material facts with an intent to evade payment of tax. In the absence of such allegation, merely using the expression suppression cannot be a ground for invoking the extended period as held by the Hon ble Supreme Court in COMMISSIONER OF C. EX., CHENNAI-I VERSUS CHENNAI PETROLEUM CORPN. LTD. [ 2007 (4) TMI 4 - SUPREME COURT ] where it was held that We have held that the electricity generated from RFO which was captively consumed by the refinery was not liable to duty. To that extent, the demand made in the show cause notice dated 17th February, 1999 fails. Thus, there was no willful suppression of material facts made by the respondent with an intent to evade payment of tax. The learned Tribunal rightly granted relief in favour of the assessee and the order does not call for any interference - the appeal filed by the revenue is dismissed and the substantial question of law is answered against the revenue.
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2022 (9) TMI 942
CENVAT Credit - input services - outdoor catering services - period January 2010 to August 2010 - demand alongwith interest and penalty - HELD THAT:- From the periods involved in both the Show Cause Notices, it is seen that only one month from 1.4.2011 to 30.4.2011 pertains to the period after the amendment in the definition of input services. The Hon'ble Supreme Court in the case of TOYOTA KIRLOSKAR MOTOR PRIVATE LIMITED VERSUS THE COMMISSIONER OF CENTRAL TAX [ 2021 (12) TMI 420 - SC ORDER] has held that after 1.4.2011, the assessee cannot avail credit on outdoor catering services. Following the same, credit availed for the period 1.4.2011 to 30.4.2011 which is part of the Show Cause Notice dated 12.9.2011 is not eligible for credit. For the remaining period i.e. from January 2010 to August 2010 as well as from September 2010 to March 2011, the credit will be eligible as the definition of input service prior to 1.4.2011 included such services - Following the decisions in the cases of M/S. SHARDA MOTOR INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL GOODS SERVICE TAX [ 2019 (7) TMI 253 - CESTAT CHENNAI] and M/S. CHENNAI CONTAINER TERMINAL PVT. LTD. VERSUS COMMISSIONER OF GST CE, CHENNAI [ 2021 (8) TMI 900 - CESTAT CHENNAI] , it is held that the credit on outdoor catering services for these periods is eligible. Appeal allowed in part.
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2022 (9) TMI 941
CENVAT Credit - denial of credits - exported of inputs as such - allegation that no manufacturing process had been undertaken - HELD THAT:- In the instant case whether the process undertaken by the Appellant will enable it to avail CENVAT Credit is to be determined. Even by going through the alternative plea made by the Appellant, it can very well be said that it was entitle to get CENVAT Credit on those 4 items also. Going by the alternate plea made in the appeal memo at para 3.1 it would make it quite clear that even if inputs are assumed to have been cleared as such, they are duty paid excisable goods which were cleared under bond in terms of Notification issued under Rule 19 which does not provide for reversal of credit of duty paid on such exported excisable goods because legislative intent was to promote export of goods and not export of taxes. This submissions is further strengthen and supplemented with reference to the reliance placed by the Appellant in the relevant case laws on the issue, besides the fact that Section Note - 6 of Chapter XVI of the Central Excise Tariff Act, 1985, that was also referred by the Commissioner (Appeals) in his order but in a different context, clearly reveals that in respect of goods covered under this Section dealing with television image and sound recorders, incomplete or unfurnished goods having essential character of complete or finished article shall also amount to manufacture. The order passed by the Commissioner of Central Tax, Central Excise Service Tax (Appeals), Raigarh to the extent of denial of CENVAT Credits on those 4 items namely copper strips, lights, copper fasteners and paints is hereby set aside - Appeal allowed.
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CST, VAT & Sales Tax
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2022 (9) TMI 940
Eligibility for exemption in terms of the provisions of the Tamil Nadu Urban Land Tax Act, 1966 - income derived from the letting out of the lands, utilized fully for the purposes of the temple - section 27 of Tamil Nadu Urban Land Tax Act, 1966 - rejection of exemption solely on the ground that no undue hardship is caused to the petitioner by calling upon it to remit tax - HELD THAT:- With the recognition of, and exemption granted to religious institutions by virtue of the authority under Section 27 of the Act, there is a presumption that the payment of Urban Land Tax causes undue hardship to them. The authority has erred in revisiting the aspect of undue hardship, as it has been taken none of the accepted by the State in the aforesaid Government Order. There is no other reason for the denial of exemption and the impugned order is thus set aside. Grant of exemption - HELD THAT:- G.O.Ms.No.1834, Revenue Department, dated 29.10.1983 was passed taking note of the suggestions of the Urban Land Tax Exemptions Committee constituted under G.O.Ms.No.461, Revenue Department, dated 17.03.1983, as it was felt that the criteria for grant of exemption should be revisited and reformulated - Since admittedly, R1 has lost sight of the applicable G.O. and has rejected the claim of exemption on an erroneous premise, while setting aside the order, the petitioner is permitted to appear before the Authority on 25.07.2022 without awaiting any further notice with a copy of the financial records (though the same are already on record) as well as any other documents for establishing its entitlement for exemption. Petition disposed off.
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2022 (9) TMI 939
Recovery of dues (commercial tax arrears) - Seeking registration of charge in respect of the property - purchase of property through public auction - Section 24-A of TNGST Act - HELD THAT;- Reliance upon the provisions of Section 24-A are misplaced in the facts and circumstances of this case. Section 24 of the Act sets the stage for the raising of a valid demand. To invoke the protection afforded by Section 24-A, the revenue must engage in some constructive act, such as identification of the properties of a defaulting assessee, communication with the assessee concerned in that regard, issuance of a notice of attachment in statutory form, communication of the attachment to the sub-registrar concerned for creation of charge and ensuring that the encumbrance certificate reflects such charge. The respondent officials, have not, in the present case, engaged in any of the acts as aforesaid or taken any precautions to secure the interests of the revenue. Mere reference to Section 24-A is insufficient to protect the interests of the Department and enforcement of the demands can be proceeded with only if the assets have been attached in the first place - In the present matter, as in so many others, there has been absolutely no move by the Commercial Taxes Department to secure its interest by actual attachment of the property. The attachment of the property is a pre- condition, without which, the provisions of Section 24-A are of no assistance to the revenue. The burden rests upon the revenue to establish that the consideration for the property is inadequate, that the vendor had due notice of the pendency of the sales tax proceedings and the transfer itself, was a measure to evade tax. In the present case, the parties, that is, the petitioner and the defaulting assessee are admittedly unrelated and the transaction of purchase is bonafide - Section 24A is also inapplicable in the present case, since the sale transaction was in the year 2010 and a mere demand without any action taken by the Commercial Taxes Department to secure the properties in question would not justify the present impugned action taken belatedly after nine years. Petition allowed.
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Indian Laws
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2022 (9) TMI 938
Exemption from the levy of property tax - Puducherry Municipality Act, 1973 - Applicability of Section 124 of the Act providing for general exemptions - demand notice issued for the period 2010-11 to 2016-17 dated 26.10.2018 - educational or medical institutions - HELD THAT:- As far as the provisions of Section 124(c) are concerned, any building used for educational purposes that is attached to an educational institution, must qualify for the exemption as per a plain reading of the provision. As expressed by the Division Bench in the case of SRIRAM EDUCATIONAL TRUST VERSUS THE PRESIDENT [ 2008 (1) TMI 996 - MADRAS HIGH COURT] there is no necessity to strain the language of the Act as the language is clear and does not admit of any ambiguity. The question is whether the hospital is in fact, being used 'for educational purposes'. To determine this, the authority considering the claim of exemption, would have to look into the activities of the institute/hospital, bearing note of the use to which they are being put. As to the argument that a hospital ancillary to a Medical College assumes a special status as a teaching hospital, also and equally engaged in the dissemination of medical education, such an argument bears looking into, including specifically whether the hospital is being run along commercial lines, how the income earned is being utilized as well as other relevant factors in arriving at a considered decision in regard to the claim of the petitioner. The impugned order is entirely silent on all these aspects. Claim under Section 124(e) - HELD THAT:- There is to be a detailed verification as to whether the petitioner satisfies the requirement of 'charitable institution'. The mere fact that it has obtained an exemption under Section 12(A) and 11 of the Income tax Act, 1961 would not come to its rescue and the officer must undertake a detailed verification of its financials, including the deployment of its funds and record his satisfaction that receipts/income are being ploughed back into the charitable activity. The matter remanded to the file of the authority for denovo adjudication - Petition allowed by way of remand.
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