TMI Tax Updates - e-Newsletter
September 24, 2021
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 - pendency of proceedings / inquiry before respondents - If the applicants cooperate with the inquiry, there is no requirement of their arrest. The applicants are having their own address of residence and business and they are having a good status in society. They can give surety ensuring their appearance. They do not appear to be habitual offender, prosecuted or convicted earlier. Therefore, they deserve to be granted protection for the purpose of conclusion of inquiry by the Proper Officer of the GST Department. - HC
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GST:
Restoration of registration of petitioner - registration of petitioner was cancelled by himself - it is directed that the request of the petitioner made by way of two communications dated 13th August, 2021 and 18th August, 2021 be replied to which is for the purpose of revocation of the self cancellation of registration made by the petitioner or in the alternative the respondent no.2 shall dispose of the appeal bearing in mind the time line of 30th September, 2021, which would not permit utilisation of input tax credit beyond the period of one year. - HC
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GST:
Condonation of delay in filing petition - sufficient ground to condone the delay or not - Grant of default bail - The delay in filing the revision appears to be deliberate and intentional. When the impugned order was passed, at that time there was spread of Covid Virus. So the petitioner cannot take any advantage of spread of Covid Virus subsequently. Even when the limitation expired, at that time also there was no spread of Covid Virus - No sufficient ground is made out to condone such a long delay in filing of this revision. So, delay cannot be legally condoned. Resultantly, the application for condonation of delay stands dismissed. - DSC
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Income Tax:
Condonation of delay in filing the appeal before CIT(A) - In the case at hand, the time limit to file appeal expired on January 18, 2020, and the condonation of delay application was filed on February 6, 2020, before December 4, 2020, the date of the Circular, the appeal would be pending as required under the VSV Act. In any event, the Commissioner of Income Tax (Appeals) himself has addressed a letter dated January 20, 2021 asking the petitioner to furnish ground-wise submissions on the grounds of appeal if petitioner was not opting for VSV Scheme, 2020. This itself would mean the delay also has been condoned. - Order of rejection dated February 26, 2021 is bad in law and is accordingly set aside - HC
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Income Tax:
Bogus LTCG - onus to prove - Penny stock purchases - Claim made u/s 10(38) denied - ITAT remanded the matter back - Where all the evidence had been produced and the CIT(A), after full investigation of the evidence and examination of the accounts, had given a definite finding on the question in issue, the Tribunal's order of remand was held to be invalid. Substantial questions of law framed are answered in favour of the Revenue - HC
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Income Tax:
Assessment in the hands of the non exisiting HUF - The words 'hitherto assessed as undivided' [u/s 171(1)] are very important while considering the section. If the family has already been assessed as a Hindu family, then, under the above provision, it shall be deemed to continue to be undivided family. In the instant case, prior to the assessment year 2002-03, the assessee-family was not assessed as a HUF. Hence, on 30.11.2006, when the assessment was made, the HUF was not in existence. In such a case, the procedure prescribed under Section 171 will have no application as the assessee was not hitherto assessed as HUF and so, the fiction created under that section to deem it as HUF will not arise. - AT
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Income Tax:
Penalty u/s 271D or 271E - Penalty u/s.271D or 271E of the Act is concerned, those are independent proceedings and having nothing to do with assessment proceedings or its outcome - CIT(A) was not justified in cancelling the orders imposing penalty on the ground that the assessment proceedings, during the course of which, penalty u/s.271D and 271E of the Act were initiated have been held to be invalid. Apart from the fact that the order holding the assessments to be invalid has not become final, the CIT(A) ought not to have cancelled the orders imposing penalty on this ground. - AT
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Income Tax:
Revision u/s 263 - Every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law - AT
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Income Tax:
Addition made towards receipt Assignment of Fee - Assessee has withdrawn amount from Escrow account and utilized for its business purpose - Although, there is a timing difference between assessment year 2008-09 and 2009-10, but because there is no change in rate of tax, there is no loss to the Revenue by deferring recognition of income to assessment year 2009-10. It is also a matter of fact that the assessee has not claimed any set-off of loss against said income in the subsequent years. - AO was completely erred in taxing assignment fee for the assessment year 2008-09 - AT
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Income Tax:
LTCG - deductions claimed u/s 54 & 54EC - scheduled property acquired through settlement deed executed by the grandfather of the assessee - Since the asset held by the assessee is a long term capital asset, the Assessing Officer has rightly allowed the exemption claimed under section 54 & 54EC of the Act as per the assessment order and the ld. CIT(A) has erroneously rejected the claim of the assessee. - AT
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Income Tax:
Addition of circular trading purchases - CIT(A) has discussed in his finding that this was not a case of estimation of net profit on circular purchases but this was a case where the assessee had incurred expenses for circular purchases/transaction @ 0.28% and estimated the disallowance @ 0.30% of circular trading purchases - CIT(A) has also explained in his finding regarding analysis of the transaction made by the assessee that these transactions were carried out in order to show better turnover in financial accounts. - Order of CIT(A) confirmed - AT
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Income Tax:
Addition on difference between balance in account as per the books and the balance as per bank statement - cheques issued but not presented - addition can not be made merely because it was not explained by the assessee by overlooking the facts on records which testified that the difference between the books of account of the assessee and bank statement of UCO bank are attributed to cheques/advices issued but not encashed and presented in the bank - we direct the AO to delete the disallowance- AT
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Income Tax:
Correct head of income - The same land when assessee in case, decided to continue with the film production, will be used for the assessee’s business as business asset. Therefore, temporary let out of the vacant land and only be part of business income. Therefore, in the given case the land is separable from the bungalow to let out independently, thus the land can be treated as separate asset and this letting out of the land independently cannot be part of the income from these property. - To be treated as income from business only - AT
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Income Tax:
Disallowing employer’s contribution to superannuation fund u/s 36(1)(iv) - Application filed by the assessee is as long as in 2011 and till date there is no approval by the PCIT despite the assessee filing of necessary evidences and clarifications. It is also a fact that assessee has complied with all the other conditions for claim of deduction except approval which is to be granted by the Department. We see no reason that the assessee cannot claim deduction for the inaction of the PCIT - AT
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Customs:
Rejection of refund claim - Mismatch of re-imported defective goods - it would be appropriate to hold that the Adjudicating Authority below has ignored the verification report prepared by the Department itself which to my opinion is sufficient reason to falsify the allegations in the Show Cause Notice about mismatch. - AT
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IBC:
Approval of Resolution Plan - seeking success fees to the Resolution Professional - The ‘success fees’ which is more in the nature of contingency and speculative is not part of the provisions of the IBC and the Regulations and the same is not chargeable. Apart from this, even if it is to be said that it is chargeable, it is found that in the present matter, the manner in which, it was last minute pushed at the time of approval of the Resolution Plan and the quantum are both improper and incorrect - argument that the Adjudicating Authority should have sent the matter back to the CoC if it was not approving the success fee deserves to be discarded - AT
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Service Tax:
Refund of accumulated credit - Input services - Undisputedly in the refund proceedings under Rule 5 of CENVAT Credit Rules, 2004 as amended any such attempt whereby credit availed during the period under consideration is sought to be denied or varied, is not permissible. If the quantum of the Cenvat Credit is sought to be varied, by holding that certain services do not qualify as input services then the same could have been done by invoking the provisions of Rule 14 of the CENVAT Credit Rules, 2004. - AT
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Central Excise:
CENVAT Credit - input service - legal services - actual recipient of services - even though the case was filed in the name of Distiller’s Association of Maharashtra but since the bill was raised in the name of the appellant, appellant is prima facie entitled for Cenvat Credit but only to the extent of portion of services related to the appellant. In this position, the Cenvat Credit attributed to the appellant needs to be re-worked out. Therefore, entire case needs a reconsideration. - AT
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Central Excise:
CENVAT Credit - restrictions in using the cenvat credit for payment of duty for the clearances - Pursuant to quashing of Rule 8(3A) by the Hon’ble Gujarat High Court, Govt. have chosen to substitute Rule 8(3A) - As per Rules of interpretation, a procedural law is always deemed to be retrospective, unless the same is categorically or specifically made prospective. Thus, the substituted Rule 8(3A) will have retrospective effect, from the date Central Excise Rules, 2002 came into effect. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (9) TMI 1010
Detention or seizure of goods or conveyance - opportunity of hearing to the petitioner not provided - Section 129(1) of the Central GST Act - seeking permission that petitioner may be permitted to institute and/or pursue the statutory remedy of appeal against the order impugned in the present petition - HELD THAT:- The present proceedings are found to have been terminated by the Supreme Court.
The present petition is dismissed with aforesaid liberty.
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2021 (9) TMI 1009
Maintainability of petition - availability of alternative remedy of appeal - Violation of principles of natural justice - no such reply to the show cause notice was given to the Deputy Commissioner who has issued the notice for imposing penalty - order of penalty is appeallable under Section 107 of the U.P. GST Act, 2017 or not - HELD THAT:- It cannot be said that no opportunity of hearing was given, as, the show cause notice was issued to the petitioner to which he could have filed a reply. If the reply which has been addressed to the Commissioner is the one filed in response to the show cause notice, then, it is a moot point as to whether it is in accordance with law. Moreover, we asked learned counsel for petitioner as to whether opportunity of being heard would necessarily mean a personal hearing, he could not place any decision before the Court that it would be so, therefore, we leave all these questions to be raised before the Appellate Authority by the petitioner.
All the pleas, which are being raised herein or which otherwise may be available to the petitioner, can be raised in appeal under Section 107 of U.P. GST Act, 2017, therefore, in view of availability of this efficacious remedy, the petition deserves to be dismissed.
Petition dismissed.
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2021 (9) TMI 1007
Principles of natural justice - adequate service of the show cause notice, preceding that order not made - HELD THAT:- The impugned order came to be passed after service of soft copies of the show cause notice. The petitioner only denies service of the hard copy of the same and has further submitted that the reply of the same could not be submitted as it did not exactly comprehend the nature of the proceedings initiated against it.
As to the other submissions advanced by learned counsel for the petitioner, those point to irregular exercise of jurisdiction but not inherent lack of jurisdiction.
The writ petition is disposed of with a direction, in case, the petitioner files an appeal along with the stay application within a period of two weeks' from today, the same may be entertained on its own merits.
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2021 (9) TMI 1005
Grant of anticipatory bail - pendency of proceedings / inquiry before respondents - sole submission of learned counsel for the applicants before the court is that they may be allowed anticipatory bail during pendency of enquiry and to appear through Video Conferencing instead of physical appearance to avoid the apprehension of arrest and they may be allowed to submit their documents, as required by GST Department, online in terms of interim order - HELD THAT:- The Court finds that inquiry under Section 70(1) of GST Act is pending against the applicants before the DGGSTI, Gaziabad Unit and apprehension of applicants is that they will be arrested any time even without consideration their documents which has been furnished or about to furnish pursuant to notices issued from the office of respondent No.5. Evasion of GST to the tune of ₹ 27 crore is subject matter of inquiry.
Inquiry under section 70 of GST Act against the applicants is still pending and going on before the respondents and applicants are having a good business and social status in society. In view of discussion, this Court finds that the applicants have no prior criminal antecedents brought on record - Where the implication of a person is for a non-bailable offence, he can apply for anticipatory bail under Section 438 Cr.PC. If the applicants cooperate with the inquiry, there is no requirement of their arrest. The applicants are having their own address of residence and business and they are having a good status in society. They can give surety ensuring their appearance. They do not appear to be habitual offender, prosecuted or convicted earlier. Therefore, they deserve to be granted protection for the purpose of conclusion of inquiry by the Proper Officer of the GST Department.
The applicants Hardeep Singh Banga, Gambhir Singh Banga, Satinder Singh Banga, Amitbir Singh, Harbir Singh Banga, Neeraj Bajaj and Pramod Kathuria shall be enlarged on anticipatory bail till the inquiry is concluded by the Proper Officer of GST Department under Section 70 (1) of the GST Act, on their execution of a personal bond of ₹ 5 crore and Indemnity bond to the tune of ₹ 25 crore on behalf of applicants before the Proper Officer - the applicants shall make themselves available for Online interrogation by the proper officer as and when required.
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2021 (9) TMI 963
Condonation of delay in filing petition - sufficient ground to condone the delay or not - Grant of default bail - It is the stand of the petitioner that only complaint was filed in the case and no final report/challan under Section 173 (2) Cr.P.C. was filed - HELD THAT:- There is no sufficient ground to condone the delay. - The impugned order was passed on 26.08.2019. This revision was filed on 03.02.2021. There is delay of 433 days in filing of this revision. The reason for delay as alleged in the application is that the petitioner was confined in jail in this case. He was released on 01.04.2020 and thereafter, this revision was filed. It is claimed that firstly the revision could not be filed because the revisionist was in custody. Secondly, when he was released on interim bail, there was spread of Covid virus. Perusal of trial court record reveals that the petitioner and his counsel were actively participating in the proceedings before learned trial court.
So the delay in filing the revision appears to be deliberate and intentional. When the impugned order was passed, at that time there was spread of Covid Virus. So the petitioner cannot take any advantage of spread of Covid Virus subsequently. Even when the limitation expired, at that time also there was no spread of Covid Virus - No sufficient ground is made out to condone such a long delay in filing of this revision. So, delay cannot be legally condoned. Resultantly, the application for condonation of delay stands dismissed.
Revision petition dismissed.
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2021 (9) TMI 1003
Restoration of registration of petitioner - registration of petitioner was cancelled by himself - self cancellation of registration had debarred him from applying online - HELD THAT:- There has been a self cancellation of registration on the part of the petitioner, which has made him ineligible for online appeal, which otherwise is permissible under Section 107 of the CGST Act. Section 30 also provides for revocation of cancellation of registration for which according to the petitioner the necessary communication have already provided to the authority concerned. The difficulty on the part of the petitioner is that the petitioner if is not allowed to rectify the return in the form of GSTR-1 and GSTR-3B on or before the due date of filing of the return under Section 39 of the CGST Act, the recipient will not be in a position to avail the input tax credit even though the taxes on such transactions have already been paid to the Government by Chalan dated 23rd August, 2021. The time limit is getting over by 30th September, 2021.
Noticing the short time before the redressal is necessary as has been made-out on account of the provisions of the CGST, and as the appeal is already filed physically, number which have not been given nor is reply to the communication has been made by the petitioner, it is directed that the request of the petitioner made by way of two communications dated 13th August, 2021 and 18th August, 2021 be replied to which is for the purpose of revocation of the self cancellation of registration made by the petitioner or in the alternative the respondent no.2 shall dispose of the appeal bearing in mind the time line of 30th September, 2021, which would not permit utilisation of input tax credit beyond the period of one year.
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2021 (9) TMI 962
Seeking grant of regular bail - ITC passed on the strength of invoices issued through the fake firms - evasion of GST by fraudulent means for which sustainable evidences have already been gathered - offences punishable u/s. 132(1) (b), (c) and (1) of CGST Act, 2017 - HELD THAT:- The allegations of the complainant i.e. CGST Commissioner against the applicant-accused are very serious in nature. As per the complaint, GST evasion of approximately 90 Crores has been committed by the applicant-accused on ITC passed on the strength of invoices issued through fake firms.
Keeping in view the facts and circumstances of the case and serious allegations of the complainant against the applicant-accused, this Court finds no ground to allow the instant application - instant bail application of the applicant-accused is hereby dismissed.
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2021 (9) TMI 961
Cancellation of registration of petitioner - non filing of GSTR returns for a continuous period of six months - revocation of cancellation of registration has been also rejected due to that the applicant has not submitted the DRC-03 for the due Interest on delayed payment for the period May to December-2020 - HELD THAT:- The appellant has filed returns upto date of cancellation of registration hence, it is found that the appellant has substantially complied with the provisions of the CGST Act/Rules, 2017 in the instant case. Therefore, the registration of appellant may be considered for revocation by the proper officer.
Appeal allowed - decided in favor of appellant.
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Income Tax
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2021 (9) TMI 1000
Deduction u/s 80P - interest income earned on account of investments made with co-operative Banks, whether it is entitled to deduction either u/s 80P(2)(d) or u/s 80P(2)(a)(i) - HELD THAT:- Bangalore Bench of the Tribunal in the case of M/s.Vasavamba Cooperative Society Ltd. [2021 (8) TMI 706 - ITAT BANGALORE] had held that the assessee is not entitled to deduction either u/s 80P(2)(d) nor u/s 80P(2)(a)(i) of the I.T.Act with regard to the interest income earned from investments made with co-operative banks. The Bangalore Bench of the Tribunal in the case of M/s.Vasavamba Co-operative Society Ltd. (supra) had followed the judgment of the Hon’ble jurisdictional High Court in the case of Pr.Commissioner of Income-tax & Anr. v. Totagars Co-operative Sales Society [2017 (7) TMI 1049 - KARNATAKA HIGH COURT]
Thus hold that the assessee is not entitled to deduction u/s 80P(2)(d) nor u/s 80P(2)(a)(i) of the I.T.Act in respect of interest income earned from investments with Cooperative Banks.
Deduction u/s 57 - whether the assessee has incurred any expenditure for earning interest income which is assessed u/s 56? - HELD THAT:- A.O. is directed to examine whether assessee has incurred any expenditure for earning interest income, which is assessed under the head `income from other sources’. If so, the same shall be allowed as deduction u/s 57 of the I.T.Act. The assessee is directed to co-operate with the department and furnish the necessary evidence for expeditious disposal of the matter
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2021 (9) TMI 999
Credit of TDS - HELD THAT:- Pursuant to the CIT(A)’s order, the A.O. has given effect by giving TDS credit for a sum of ₹ 2,53,376 instead of ₹ 2,94,511 claimed by the assessee. The prayer of the assessee assessee is entitled to credit for TDS for a sum of ₹ 2,94,511 or 2,78,403 as the case may be u/s 199 r.w.s. 205.
The assessee has given a chart giving the details of TDS credit claimed by the assessee for the assessment year 2016-2017. There is no reason given by the A.O. in his order giving effect of the order (order dated 18.01.2019) why the TDS credit has been limited to ₹ 2,53,376. We direct the A.O. to grant the benefit of TDS claimed by the assessee in respect of income disclosed for assessment year 2016-2017 in view of the provisions of section 199 r.w.s. 205 (also refer to Rule 37BA(iii) of the Income Tax Rules, 1962. With these directions, we restore the issue to the files of the A.O. A.O. is directed to afford a reasonable opportunity of hearing to the assessee - Appeal filed by the assessee is allowed for statistical purposes.
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2021 (9) TMI 998
Licence fee paid to RSCPL - allowable expenditure u/s 37 - HELD THAT:- Revenue has failed to bring on record any distinguishing facts qua the year under assessment vis-à-vis preceding and succeeding years to controvert the findings returned by the coordinate Bench of the Tribunal, we are of the considered view that amount of deduction claimed by the assessee on account of licencee fee paid to RSCPL is allowable expenditure u/s 37.
Ad hoc disallowance @ 10% of the foreign travel expenses claimed by the assessee on ground of personal element in these expenses - HELD THAT:- None of the expenditure claimed by the assessee as business expenditure can be disallowed merely on the basis of surmises. Ld. CIT (A) deleted the impugned addition by following the earlier years order allowing identical expenditure.
When AO has not disputed the books of account qua the expenditure claimed by the assessee in any manner, ad hoc disallowance to the extent of 10% of the foreign travel expenses is not sustainable in the eyes of law. So, we find no ground to interfere in the findings returned by the ld. CIT (A), hence ground determined against the Revenue.
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2021 (9) TMI 1008
Condonation of delay - time limit for filing the appeal u/s 246A exceeded - Application /declaration/ undertaking filed under the provisions of Direct Tax Vivad Se Vishwas Act, 2020 ('VSV' Act) rejected - HELD THAT:- As communication has come from Commissioner of Income Tax (Appeals) and the Commissioner of Income Tax (Appeals) is asking the petitioner to furnish ground-wise written submission on grounds of appeal, it would mean that condonation of delay application has been allowed by Commissioner of Income Tax (Appeals). Therefore for respondent no.2 to say that there is no order condoning the delay and hence, the application/ declaration of petitioner under the VSV Act is rejected, is incorrect.
Section 2(1)(a)(i) of the VSV Act provides for a person in whose case an appeal or a writ petition or special leave petition has been filed either by himself or by income tax authority or by both, before an appellate forum and such appeal or petition is pending as on the specified date is entitled to make a declaration under the Act. The specified date under Section 2(1)(a)(n) of the VSV Act is January 31, 2020. The time to file declaration/undertaking under VSV Act was January 31, 2021. Petitioner has admittedly made its declaration in Form 1 on January 21, 2021, i.e., within the prescribed period.
In the case at hand, the time limit to file appeal expired on January 18, 2020, and the condonation of delay application was filed on February 6, 2020, before December 4, 2020, the date of the Circular, the appeal would be pending as required under the VSV Act. In any event, the Commissioner of Income Tax (Appeals) himself has addressed a letter dated January 20, 2021 asking the petitioner to furnish ground-wise submissions on the grounds of appeal if petitioner was not opting for VSV Scheme, 2020. This itself would mean the delay also has been condoned.
Order of rejection dated February 26, 2021 is bad in law and is accordingly set aside. Respondent no.2 is directed to process the forms filed by petitioner under the provisions of VSV Act.
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2021 (9) TMI 995
Bogus purchases - Proof of identity, genuineness and creditworthiness of the parties - CIT-A confirmed addition in name of only one party - HELD THAT:- Assessee during the appellate proceedings before the CIT(A) has filed details in respect of identity of the party, address of party, PAN details, mode of payment through banking channel along with copy of bank accounts as well as confirmations of the said accounts except in the case of purchases made from M/s Apex Marketing Company and the rest of the evidences related to each party were produced which was never doubted by the Assessing Officer when called for remand report.
CIT(A) has given a categorical finding that the revenue has accepted the transactions from such parties in the past and the assessee had made purchases on regular basis and these were regular parties from preceding years. In fact the AO has taken cognizance of the opening balances of the purchases pertaining to earlier years which were not corresponding to year under consideration while making the addition. After perusal of the evidences it is found that the assessee has filed proper details before the Assessing Officer and has proved identity, genuineness and creditworthiness of the parties except the purchases made from M/s Apex Marketing Company. Thus, the CIT(A) was correct in reducing the addition to that extent - Decided against revenue.
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2021 (9) TMI 994
Exemption of capital gain income u/s. 54 - investment in purchasing of three units of residential flats for total consideration - assessee had invested the sale consideration received on sale of immovable property in purchasing combined three adjacent flats as a residential house - scope amendment made in the section 54 of the act w.e.f. 1st April, 2015 - HELD THAT:- Assessee had invested the sale consideration received on sale of immovable property in purchasing combined three adjacent flats as a residential house. As per sale deed dated 17th June, 2014 on 18th July, 2014 the builder has issued allotment letter for single combined residential flat to the assessee. With the support of documentary evidences, the assessee has demonstrated that all the three units were not independent as there was single entry and exit and stated that it was one residential house. The assessee has also enclosed copy of allotment letter dated 17th July, 2014 in the paper book wherein the developer has stated that tailor made combined flats on the same floor was specifically constructed for the allottee and there shall be single entry and exit for the allottee and maintenance as per the society rules would be applicable in singular manner on the built up area of 3045 square feet.
We find that issues and facts raised before the Tribunal in the case of the assessee are similar to the facts and issue adjudicated by the Co-ordinate Bench of the ITAT Ahmedabad in the case of Mohmmedanif Sultanali Pradhan [2020 (1) TMI 1489 - ITAT AHMEDABAD] as referred above. Therefore, it would not be appropriate for us to deviate from the view taken in the above case without pointing out any material change in facts and circumstances in the case of the assessee - Decided in favour of assessee.
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2021 (9) TMI 992
Sale of TMT scrap treating the same as unexplained income - HELD THAT:- The assessee’s explanation with regard to interest in the loose sheet i.e. blue diary found during the course of search was that it was for the purpose of memory and the addition could not have been made solely on the basis of loose paper which is against the well settled law in this regard - the entire alleged receipt could not partake character of profit. The profit element embedded into such receipt could be subjected to tax. There is no ambiguity under law that no addition can be made merely on the basis of loose paper without being substantiated by any corroborative evidence. In the present case, undisputedly, one of the entries of ₹ 75,000/- was found to be duly recorded in the books of accounts, therefore, in the agreement with the contention of the learned DR that such figures found on loose sheet could not be imaginary.
Whether the entire receipt is correctly taxed or only the profit element should have been taxed. Admittedly, the AO has not invoked section 69/69A - only profit element should have been taxed - direct the AO to restrict the addition @ 10% of the gross receipts. This ground of assessee’s appeal is partly allowed.
Disallowance of expenditure, where payment has been made in cash exceeding ₹ 20,000/-.- HELD THAT:- Agreement with the contention of the Ld. DR that the assessee was required to demonstrate that the payments which has been made in excess of ₹ 10,000/- fall under any of the exception as provided u/s 40(3) of the Act and Rules framed thereunder. Hence, the findings of the authorities below are affirmed. The ground of the assessee’s appeal is dismissed.
Ad-hoc disallowance - HELD THAT:- We find merit in the contention of the assessee that both the additions has been made on the basis of surmises only. AO has made disallowance purely on the basis of guess work - AO is hereby directed to delete the addition on account of notional interest and ₹ 50,000/- made on account of ad-hoc disallowance out of car, telephone and salary of staff and other expenses. Thus, the ground no.2(iii) and ground no.2(iv) of the appeal are allowed.
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2021 (9) TMI 990
Addition u/s 69 - unexplained money invested in purchasing demand draft from Punjab National Bank - Addition u/s 69A as unexplained cash deposit in bank account - HELD THAT:- We observe that the assessee referred in this decision is also from the same area near Bhopal and against the estimation of agricultural income of ₹ 15,000/- per acre, this Tribunal estimated it at ₹ 22,000/- per acres. Taking basis from this decision even if we take a conservative figure of ₹ 15,000/- per acres then also the estimated income for 23 acres agricultural and for last 10 years comes to ₹ 34,50,000/- and after reducing 50% for household and other expenses there would still remain a saving of ₹ 17,25,000/-. Even this figure of ₹ 17,25,000/- could be sufficient to explain the source of alleged addition of ₹ 12,50,484/-.
Under the given facts and circumstances of the case and the assessee being an owner of 23 Acres of agricultural land being consistently used for agricultural operations, are of the considered view that the accumulated income of past years as discussed above would be sufficient to explain the source of DD purchased in law of ₹ 2,25,000/- and also sufficient to explain the source of alleged cash deposit of ₹ 10,50,484/-. We accordingly set aside the finding of Ld. CIT(A), and delete the impugned addition - Ground no.2 & 3 of the assessee appeal are allowed.
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2021 (9) TMI 989
Reopening of assessment u/s 147 - specific information received by the ld.AO on the basis of search conducted in some other cases - addition made for the alleged ‘on-money’ - HELD THAT:- The seized documents revealed the details of assessee having transacted with the searched parties and the same formed the basis for issuance of notice u/s 148 - Under these given facts, we are of the view that Ld. CIT(A) has rightly dismissed the assessee’s legal ground challenging the validity of assessment proceedings u/s 147 of the Act holding that the notice u/s 148 of the Act has been rightly issued. CIT(A) has rightly dismissed the assessee’s legal ground challenging the validity of assessment proceedings.
Addition made without providing the opportunity of cross examination of the search parties to the assessee before making impugned addition - The registered documents for the purchase of plot of land shows that the consideration is not less than the guidelines rate and both buyer and seller have agreed to this consideration. Assessee has seeked opportunity for cross examination of the searched person, during the proceedings before the Ld. CIT(A) and the same was ignored.
We, observe that such action of the Ld. Assessing Officer of making addition in the hands of assessee based on 3rd party statement/evidence cannot withstand unless proper opportunity of cross examination is provided to the assessee. See ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [2015 (10) TMI 442 - SUPREME COURT].
Assessee has not been provided any opportunity of cross examination of the parties who have stated to have received ‘on money’ from sale of land. We, thus, set aside the finding of Ld. CIT(A) and delete the addition. - Decided partly in favour of assessee.
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2021 (9) TMI 988
Revision u/s 263 - inadequate enquiry v/s lack of enquiry - Incorrect allowance of deduction under s.80IA(4) of the Act & incorrect allowance of depreciation on subsidized capital asset - HELD THAT:- AO has rightly appreciated the peculiar circumstances and ignored the procedural latches and the claim of the deduction under s. 80IA(4) of the Act was allowed after verification in two rounds. The action of the AO being plausible, cannot be regarded as erroneous for taking into account Form 10CCB signed after the date of amalgamation in these peculiar circumstances. The direction of the PCIT on ‘further verifications are required’ in the context of revised Form 10CCB is not intelligible at all. The PCIT himself could have easily verified these obvious facts available on record and pointed out to Revenue. The PCIT has apparently acted without the authority of law asking for some directionless probe on categorical facts and that too after two rounds of assessments on the issue.
We also fail to understand the purport of directions to the AO to verify whether assessee has filed amalgamated financial statement alongwith revised return from the effective date of amalgamation. The facts placed on record vouches for the stand of the assessee. Such non- speaking omnibus direction points to fishing expedition and would evoke an apparent unease in the minds of the tax payers. The PCIT on verification of the case records could have verified these facts very easily without any effort and could have come to some meaningful observations.
PCIT could have gathered the apparent facts without any exertion to our mind. Inexplicably, the PCIT has rather asked the AO to revisit the facts already placed on record and for the purpose unknown to us. The facts available on record clearly points out to proper verification on aspects of deduction claimed and do not warrant any indulgence. Such act of the PCIT to dislodge a quasi judicial order under s. 263 of the Act cannot be countenanced. The revisional action on the first issue therefore is quashed.
Correctness of depreciation on gross value of assets without deduction of subsidy receipt on capital assets obtained from the Government - The highlights of the industrial policy awarding the subsidy was referred to and relied upon. It was thus contended that when under the scheme no payment is made directly or indirectly to meet any portion of the actual cost of acquisition of capital asset and where the release of subsidy itself is determined on the basis of sales tax payment made by the assessee without any reference to the cost of project, Explanation 10 to Section 43(1) has no application. The reliance was placed on the judgment in the case of PCIT vs. M/s. Welspun Steel Ltd. [2019 (3) TMI 397 - BOMBAY HIGH COURT] wherein in the similar facts, the issue was decided in favour of the assessee. It was held therein that the government subsidy which is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, would not be reckoned for the purposes of Explanation (10) to Section 43(1) of the Act. It was pointed out that the PCIT could have easily ascertained the position of law himself.
When a point in issue was not raised in the reasons recorded for alleged escapement of income, the AO cannot be compelled in law to start a witch-hunt to examine all peripheral issues. This will tantamount to roving enquiry in the garb of reopening and expand its scope which is not permissible under s. 147 of the Act. The AO thus was not entitled to revisit the impugned issue of depreciation on capital subsidy. Secondly, the issue raised in second round was in relation to Section 80IA(4) of the Act for which no additions were made and therefore no other additions/ disallowances were permissible in law as echoed by several judicial precedents including CIT V. Jet Airways [2010 (4) TMI 431 - HIGH COURT OF BOMBAY]; Ranbaxy Laboratories Limited [2011 (6) TMI 4 - DELHI HIGH COURT].
Initiation of penalty under s.271B of the Act, if any, relates back to original assessment dated 14. 03. 2014 when the return was filed post amalgamation. Thus, the show cause notice is time barred in so as the impugned direction is concerned. - Decided in favour of assessee.
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2021 (9) TMI 1006
Reopening of assessment u/s 147 - Satisfaction recorded by AO - HELD THAT:- CBI, Mumbai has filed FIR against the directors of the assessee company and M/s Ardor International Private Limited in which it was stated that modus operandi was a circular routing of funds among inter related parties having common management and address. This information also emphasized that the income chargeable to tax has escaped assessment. The AO with independent application of mind has reopened and the instant proceeding under Section 147 have been initiated after deriving at a satisfaction by the AO. He has also recorded the reasons in writing with independent application of mind. He is expected to form only a prima facie opinion or belief and therefore, according to the respondent, presently no interference is desirable.
The rejoinder affidavit is also filed denying all these aspects and also calling various decisions. The Court has heard extensively both the sides and also examined the material on record. It also called for the details of the FIR filed by the CBI.
Since the Court was disinclined to entertain this petition, learned advocate Mr. Mehta has, on instruction, chosen to withdraw this petition.
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2021 (9) TMI 987
Validity of the order of assessment passed in the status of an HUF - assessment in the hands of the non exisiting HUF - whether assessment can be made in the case of disrupted HUF when the HUF ceased to exist on the date when the order of assessment is made? - whether an HUF which was not hitherto assessed in the status of a HUF, can be assessed by taking recourse to Sec.171? - HELD THAT:- The words 'hitherto assessed as undivided' [u/s 171(1)] are very important while considering the section. If the family has already been assessed as a Hindu family, then, under the above provision, it shall be deemed to continue to be undivided family. In the instant case, prior to the assessment year 2002-03, the assessee-family was not assessed as a HUF. Hence, on 30.11.2006, when the assessment was made, the HUF was not in existence. In such a case, the procedure prescribed under Section 171 will have no application as the assessee was not hitherto assessed as HUF and so, the fiction created under that section to deem it as HUF will not arise.
Where a claim was made on the basis of statute, viz., the provisions of Section 14(1) or Section 6 of the Hindu Succession Act, 1956, insofar as income tax law is concerned the matter has to be governed by Section 171(1) of the Act. The aforesaid decision is on completely different facts and not applicable to the present case in which the HUF was never assessed to tax prior to its disruption and hence provisions of Sec.171 of the Act are not attracted at all.
The decision in the case of Thimmaiah [1964 (11) TMI 12 - SUPREME COURT] is on a different point as to whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Income-tax Officer, while passing the order under section 155 of the Act, was not justified in treating the share income of profit from the partnership firms as unearned.
The same is of no relevance to the present case. The decision in the case of Narendra Kumar J. Modi [1976 (8) TMI 1 - SUPREME COURT] is a case where there was a challenge to an order passed under Sec.25A (3) of the Income Tax Act, 1922. The Hon’ble Supreme Court held that Sub section (3) of s. 25A provides that where an order accepting partition had not been passed in respect of a Hindu Undivided Family assessed as undivided, such family shall be deemed for the purposes of the Act to continue to be Hindu Undivided Family. It was further held that a junior member of the family can, with the consent of all the other members act as a karta, if the senior member gives up his right. The aforesaid decision has no application to the facts of the present case.
We allow the appeal of the Assessee and hold that the assessment in the hands of the HUF is liable to be held as invalid and consequently annulled. In view of the above conclusion the other grounds of appeal are not taken up for consideration. - Decided in favour of assessee.
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2021 (9) TMI 982
Penalty u/s 271D or 271E - Default under provisions of Sec.269SS and 269T - penalty proceedings in the course of any proceedings - CIT-A deleted the penalty levy as the assessment orders in which the penalty proceedings u/s.271D and 271E of the Act were initiated were quashed - HELD THAT:- CIT(A) was not justified in cancelling the orders imposing penalty on the ground that the assessment proceedings in the course of which penalty was initiated have been held to be bad in law and annulled. It is admitted by the parties before us that the revenue is in appeal before the Tribunal against the orders of first appellate authority cancelling the assessment proceedings as invalid and those appeals are pending for consideration.
For penalties pertaining to section 271(1) of the Act, there is a specific requirement that the AO, CIT(A), PCIT or CIT only can initiate the penalty proceedings in the course of any proceedings under the act. But, with regard to initiation of penalty u/s 271D or 271E of the Act there is no such categorical requirement expressly provided in the Act.
Penalty u/s.271D or 271E of the Act is concerned, those are independent proceedings and having nothing to do with assessment proceedings or its outcome - CIT(A) was not justified in cancelling the orders imposing penalty on the ground that the assessment proceedings, during the course of which, penalty u/s.271D and 271E of the Act were initiated have been held to be invalid. Apart from the fact that the order holding the assessments to be invalid has not become final, the CIT(A) ought not to have cancelled the orders imposing penalty on this ground.
We therefore find merit in these appeals by the Revenue. Since, the CIT(A) has not adjudicated the matter on merits, the proper course would be to remit the question of imposition of penalty to the CIT(A) for fresh consideration, leaving all aspects open - Revenue Appeals are allowed for statistical purpose.
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2021 (9) TMI 981
Revision u/s 263 - Cash deposits unexplained - HELD THAT:- Bank statements are filed to submit that this issue has already been examined by the AO after taking into consideration of copy of challans and satisfied to the fact that the assessee facilitated to the clients for rendering better services received amounts from clients to pay income tax challans on behalf them and said amounts were not utilized for any other purpose. Therefore, it cannot be said that the assessee’s intention of the cash deposits into the bank was in a malafide nature to make black money into white during demonetization period.
Once the AO has taken a view on the issue, on which two views are possible, the view which is taken by the AO, if Pr. CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law, as per the ratio laid down in the case of Malabar Industries ltd. Vs. CIT [2000 (2) TMI 10 - SUPREME COURT].
Every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law - in the case under consideration, the view which has been taken by the AO is one of the courses permissible in law, which cannot be brushed aside by the Pr. CIT u/s 263 - we set aside the order of the Pr. CIT passed u/s 263 of the Act, and restore the order of the AO. Accordingly, the grounds raised by the assessee on this issue are allowed.
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2021 (9) TMI 980
Nature of expenditure - Expenditure incurred in respect of "documents and stamp charges" - increase in authorized capital and treated the same as capital expenditure - whether the expenditure on conversion of debenture bond into equity share capital is revenue or capital expenditure? - alternate claim of deduction of impugned expenditure otherwise may be allowed u/s 35D - whether the expenditure on conversion of debenture bond into equity share capital is revenue or capital expenditure? - HELD THAT:- As observed by the ld. CIT(A), facts of the case of the assessee clearly indicate that portion of convertible debenture was converted into equity shares and assessee company had got enduring benefits therefrom and therefore, the expenditure incurred by the assessee on conversion of convertible debentures into equity shares has to be treated as capital expenditure. For which, the ld. CIT(A) relied upon the judgment of Brooke Bond India Ltd.[1997 (2) TMI 11 - SUPREME COURT]. Thus, we are of the view that the ld. Revenue authorities have taken a correct view of the matter while disallowing claim of the assessee.
Alternate claim under section 35D - Section 35D of the Act does not contemplates allowance of expenditure incurred after the commencement of business that too for the expenditure incurred for conversion of debenture into equity share capital. As per Section 35D, any capital expenditure incurred before the commencement of operation of specified business then such expenditure is allowable as a deduction under the income tax in 5 equal annual installments subject to the fulfilment of different conditions given under the Income Tax Act. That was not the case on our hand for the reasons narrated above. The ld. Revenue authorities is, therefore rightly rejected this alternative claim of the assessee.
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2021 (9) TMI 978
Addition made towards receipt Assignment of Fee - Whether not assessable for the current assessment year? - HELD THAT:- As per assignment agreement, the assignee shall pay part of agreed consideration on the date of signing the agreement, but subject to furnishing bank guarantee equivalent to the amount given by the assignee till date the builder obtains planning permission from concerned authorities. We further noted that as per the Escrow agreement, the bank guarantee given by the assignee is irrevocable and unconditional and shall have a validity period of 180 days or till such time, the builder obtains planning permission from CMDA.
The said bank guarantee has been extended from time to time and upto 28.07.2008 - builder has obtained planning permission from CMDA on 12.08.2008. From the above, it is very clear that the assignment agreement with M/s. HTMT Global Solutions Ltd., is complete in all aspects in the financial year relevant to assessment year 2009-10 after fulfilling the conditions imposed upon the assessee and hence, we are of the opinion that the AO was incorrect in coming to the conclusion that the assignment agreement would be complete when the assessee has given bank guarantee on 28.11.2007.
Assessee has withdrawn amount from Escrow account and utilized for its business purpose and therefore, he opined that assignment is complete and fees received is taxable for the assessment year 2008-09 - We do not agree with the AO for the simple reason that once assessee has furnished bank guarantee equivalent to the value of amount paid by the assignee in pursuant to assignment agreement, then the rights of assignee is protected and the money received from assignee can be utilized as wished by the assessee. In this case, the assessee has furnished bank guarantee to the assignee and such bank guarantee is irrevocable and unconditional. Therefore, merely for the reason that money has been withdrawn from Escrow account, it does not mean that assignment is complete in all aspects and fees received from assignment agreement is accrued for the assessee in assessment year 2008-09.
It is not a case of the AO that amount received under assignment agreement is not offered to tax at all. In fact, the assessee itself had admitted assignment fee in the assessment year 2009-10 and paid relevant taxes. Although, there is a timing difference between assessment year 2008-09 and 2009-10, but because there is no change in rate of tax, there is no loss to the Revenue by deferring recognition of income to assessment year 2009-10. It is also a matter of fact that the assessee has not claimed any set-off of loss against said income in the subsequent years.
AO was completely erred in taxing assignment fee for the assessment year 2008-09. The ld.CIT(A) after considering relevant facts, as rightly deleted addition made by the AO. - Decided in favour of assessee.
50% disallowance of depreciation on Wind Turbine Generators (WTGs) - Number of days asset put to use - CIT-A allowed complete 100% claim - HELD THAT:- CIT(A) had recorded categorical finding in light of various evidences filed by the assessee including delivery note for transportation of WTGs, invoices issued by the supplier, installation and commissioning certificate issued by the supplier and commissioning certificate issued by the Superintending Engineer, Tirunelveli Electricity Distribution Circle of TNEB, as per which all 5 windmills were installed and commissioned before 30.09.2007 and thus, the assessee is eligible for 100% depreciation as per law.
The supplier had also certified installation and commissioning of WTGs. We further noted that TNEB had certified commissioning of WTGs, as per which the Superintending Engineer had issued commissioning certificate for 3 WTGs on 28.09.2007 and for remaining 2 WTGs on 30.09.2007. The assessee had also furnished electricity readings provided for the month of October, 2007 issued by TNEB, which reveals that initial meter reading was taken on 28.09.2007 and upto 13.10.2007. From the above, it is very clear that all 5 WTGs were installed and put to use for more than 182 days and hence, we are of the considered view that the assessee is entitled for 100% depreciation as claimed. - Decided in favour of assessee.
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2021 (9) TMI 977
Capital gain - scheduled property acquired through settlement deed executed by the grandfather of the assessee - claim for cost of indexation as well as deductions claimed u/s 54 & 54EC - consideration of period of holding of the property by the previous owner i.e. grandfather of the assessee - HELD THAT:- Out of total sale consideration, the share of 10.94% was legally and rightly given to the assessee’s father, who held lifetime enjoyment right, which was relinquished and thereby both the assessees sold the said property. Thus, respectfully following the above decision of CV. SOUNDARARAJAN AND ANOTHER [1983 (8) TMI 14 - MADRAS HIGH COURT] the Assessing Officer is directed to compute the capital gains only for ₹.2.03 crores each in the hands of both the assessees and not the entire sale consideration.
Benefit of cost of indexation - Both the assessees have acquired the scheduled property through settlement deed executed by the grandfather of the assessees’. To determine the cost, there are different modes of acquisition. Where the capital asset became the property of the assessee, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it as per section 49 of the Income Tax Act, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. In the present case, the assessees have acquired the property through settlement deed. The settlement deed duly executed becomes effective immediately during life time of all the parties.
The period of holding by the assessee’s grandfather, who was the previous owner of the said property, should be taken into account both for indexation and for long term capital asset. Both the assessees have acquired the property on 10.10.2005 and sold the property on 12.09.2012 and thus, both the assessees are eligible to avail the benefit under section 54 of the Act as the asset held by the assessees are long term capital asset
Assessing Officer has to assess the long term capital gain by taking into consideration of the period of holding of the property by the previous owner i.e. grandfather of the assessee as well as for indexation in view of the decision in the case of CIT v. Manjula J. Shah [2011 (10) TMI 406 - BOMBAY HIGH COURT] as held that the benefit of indexation would be available right from the day the predecessor in title acquired the property, wherever, the acquisition is by a mode mentioned in section 49 of the Act. Since the asset held by the assessee is a long term capital asset, the Assessing Officer has rightly allowed the exemption claimed under section 54 & 54EC of the Act as per the assessment order and the ld. CIT(A) has erroneously rejected the claim of the assessee.
We set aside the appellate order and direct the Assessing Officer to take the sale consideration of the property after payment of ₹.49,98,000/- to the father of the assessees towards lifetime enjoyment and to allow the claim for cost of indexation as well as deductions claimed under section 54 & 54EC of the Act after verification of the details as may be submitted for claiming such deduction. - Decided in favour of assessee.
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2021 (9) TMI 976
Addition of circular trading purchases - AO disallowed 5% of such purchases - assessee has admitted that it was engaged in circular trading wherein the bills/invoices changed hands without movement of physical goods - CIT(A) in estimating the disallowance @ 0.30% - HELD THAT:- During the course of assessment and appellate proceedings the assessee explained the complete modus operandi of circular trading transaction which was carried out to show better turnover - it is undisputed fact that assessee would make payment to the entity from whom it made purchases, who in turn would make consequent payment and the funds would finally reach back to the assessee. In circular trading the payments were made through cheques and profit on circular trading was disclosed by the assessee in its return of income. In the earlier assessment year, the assessee has gone to Settlement Commission and furnished the circular trading/sample bills and chart which was discussed by the ld. CIT(A) in his findings as supra in this order.
CIT(A) has also discussed in his finding that this was not a case of estimation of net profit on circular purchases but this was a case where the assessee had incurred expenses for circular purchases/transaction @ 0.28% and estimated the disallowance @ 0.30% of circular trading purchases - CIT(A) has also explained in his finding regarding analysis of the transaction made by the assessee that these transactions were carried out in order to show better turnover in financial accounts.
Revenue could not controvert the facts reported by the ld. CIT(A) with any relevant material. Therefore, no infirmity in the decision of ld. CIT(A) in estimating the disallowance @ 0.30% of circular trading purchases - Appeal of the revenue is dismissed.
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2021 (9) TMI 975
TP Adjustment - adjustment of outstanding receivables from AEs - HELD THAT:- We find that the Tribunal in the case of assessee itself for Assessment Year 2010-11 [2019 (7) TMI 1663 - ITAT DELHI] interest of credit period granted by the company under normal trade practices was unjustly charged, having heard both the counsel, we are of the considered opinion that if working capital adjustment is granted, then no separate adjustment or interest receivables is required. We do not see any reason to deviate from the decision rendered in the earlier years. The Assessing Officer is directed accordingly. The Ground of appeal No.2 raised by the assessee is thus, allowed.
TDS U/S 195 - reimbursement of relocation expenses form part of secondment contract - Addition u/s 40(a)(i) - Reference to make available clause in terms of India US DTAA - AO treated the same in the nature of FTS and thus chargeable to tax u/s 9(1)(vii) and Article 12(4) of the DTAA between India and USA - HELD THAT:-.CIT(A) confirmed the view of the Assessing Officer by relying on the decision of Centrica Offshore Pvt.Ltd.[2014 (5) TMI 154 - DELHI HIGH COURT] - As contended by assessee that as per India US DTAA, the make available clause is not satisfied in the present case. Therefore, the reimbursement cannot be characterized as FTS. We find that this aspect has not been examined by Ld.CIT(A), therefore, the finding of Ld.CIT(A) is set aside and this issue is restored to Ld.CIT(A) to decide it afresh after having considered the submissions of the assessee regarding make available clause in terms of India US DTAA. Thus, Ground No.3 raised in the assessee’s appeal is partly allowed for statistical purposes.
Allowability of education cess as a deduction u/s 37(1) - HELD THAT:- Respectfully following the judgement of Hon’ble Bombay High Court in the case of Sesa Goa Ltd. vs JCIT [2020 (3) TMI 347 - BOMBAY HIGH COURT] we direct the Assessing Officer to delete the addition. Thus, additional grounds raised by the assessee are allowed.
Allowability of working capital adjustment - HELD THAT:- Since this issue, we have decided in favour of the assessee by following the judgement of Kusum Healthcare Pvt.Ltd [2017 (4) TMI 1254 - DELHI HIGH COURT] and also the decision of Tribunal in earlier years. Therefore, we do not see any infirmity in the finding of Ld.CIT(A) and the same is hereby affirmed.
Allowance of payment of travelling expenses - HELD THAT:- Payment of travelling expenses to its own employee could not fall within the ambit of FTS.
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2021 (9) TMI 1004
Bogus LTCG - onus to prove - Penny stock purchases - Claim made u/s 10(38) denied - ITAT remanded the matter back by setting aside the additions - HELD THAT:- As decided in MRS. MANISH D. JAIN (HUF) [2020 (12) TMI 740 - MADRAS HIGH COURT] Not only the Assessing Officer, but also the CIT(A) examined the modus operandi of the assessee and held that the shares were purchased through off market and not through Stock Exchange and that the selling rates were artificially hiked later on. The above findings have not been set aside by the Tribunal and there is no reason for the Tribunal to remand the matter to the Assessing Officer for a fresh consideration.
There was no material, which necessitated the remand of the case to the Assessing Officer and it is a clear case where the Tribunal had failed to exercise its jurisdiction in the manner known to law.Tribunal, being a last fact finding Authority, is under the legal obligation to record a correct finding of fact.
Where all the evidence had been produced and the CIT(A), after full investigation of the evidence and examination of the accounts, had given a definite finding on the question in issue, the Tribunal's order of remand was held to be invalid. Substantial questions of law framed are answered in favour of the Revenue
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2021 (9) TMI 974
Unexplained money u/s. 69A - explanation to source of income - AO observed that assessee was withdrawing pension to meet his family expenditure and the contention of the assessee that the sum as the accumulated withdrawals over a period of 6 to 7 years is not acceptable and not convincing - HELD THAT:- As the assessee is an old aged person and therefore it is acceptable that he would keep certain cash with him to meet his personal and medical exigencies. The source of income of the assessee is stated to be his pension which is regularly deposited into his bank accounts and as observed from the bank statements, as soon as the pension is deposited, the assessee is withdrawing certain part of it to meet his personal needs. Therefore, it cannot be accepted that the entire withdrawals are kept aside by him which have since been deposited by him. The assessee's argument that provisions of sec. 69A are not applicable is also not acceptable because the assessee has not been able to explain the sources of the entire deposit of ₹ 10 lakhs into his bank account on a single day i.e. on 19.11.2016 after the announcement of de-monetization in November, 2016.
In the interest of justice, the issue is set aside to the file of the A.O. with a direction to re-examine the issue and after allowing reasonable estimation of expenditure towards household & medical expenses, over the years, the balance of withdrawals are to be treated as explained and only the unexplained portion to be treated as income u/s. 69A of the Act. The issue of interest u/s. 234A is also remanded to the AO. Assessee's appeal is partly allowed for statistical purposes.
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2021 (9) TMI 972
Disallowance of deduction claimed u/s. 35(2)(AB) - excessive weighted deduction - HELD THAT:- We found substance on the findings recorded by the lower authorities. Even before us, the ld. Authorised Representative could not controvert the findings of the Lower authorities. On perusal of record, we find that the expenditure incurred by the assessee towards professional charges, rent and electricity and maintenance are expenditure incurred by the assessee which has not been disputed by the revenue authorities, therefore in the interest of the justice it can be allowed u/s. 37(1) of the Act. Therefore, we remit the issue back to the file of AO with a direction to allow the expenditure incurred under the said heads u/s. 37(1) in accordance with law after providing reasonable opportunity of being heard to the assessee in the matter. Grounds raised by the assessee on this issue are treated as allowed for statistical purposes.
Disallowance u/s. 14A rwr 8D - HELD THAT:- We deem it fit and proper to remit the issue back to the file of the AO with a direction to examine the details which will be filed by the assessee before him regarding establishing of having own funds on the particular date of making investments and decide the issue in accordance with law after providing reasonable opportunity of being heard to the assessee. The assessee is directed to substantiate its case that he had sufficient own funds on the particular date of making of investments.
Disallowance under rule 8D(2)(iii), the claim of the assessee is that the dividend earned by the assessee was directly credited to its bank account without any effort from it and hence, there was no administrative expenditure warranting disallowance. As per rule 8D(2)(iii), the disallowance is to be made only on the average value of the investment from which the assessee yielded exempt income. Therefore, the issue is remitted to the file of the AO to recalculate the average value of the investment from which the assessee has received exempt income and disallow as per rule 8D(2)(iii) of the Rules. The ground No. 3 is allowed for statistical purposes.
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2021 (9) TMI 971
Validity of Revision u/s 263 by CIT - Notice to non existing person. company/dissolved trust - curable defect u/s 292B - whether the notice issued by the ld. PCIT to a dissolved trust is legally valid or not? - HELD THAT:- The order of the ld. PCIT issuing notice to an extinguished trust is illegal and it is not a procedural irregularity which can be cured u/s. 292B. This precise issue had come up for consideration by the Hon'ble Supreme Court in the case of Pr. CIT vs. Maruti Suzuki India Ltd.[2019 (2) TMI 325 - SUPREME COURT]non existing company.
We find that in the instant case also, the revenue has been duly informed about the dissolution of the trust and still chose to continue the proceeding on the dissoluted entity which was no more in existence. Hence, following the aforesaid ratio and principle laid down by the Hon'ble High Court and the Hon'ble Apex Court, we hold that impugned order passed by the Pr. CIT in the name of "Varnika RPG Trust" is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B and hence order passed on non-existent entity is a nullity. - Decided in favour of assessee.
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2021 (9) TMI 968
Addition on difference between balance in account as per the books and the balance as per bank statement - difference between the books of accounts of the assessee as on 31.03.1990 and bank statement of Uco Bank, Harnam Street Branch - HELD THAT:- Bank statement relates to the year 1993 and therefore we find merit in the contention of the Ld. A.R. that it is rather impossible to produce the statement belonging to 1993 in the year 2018. Moreover, the fact of the cheques not presented in the bank in the subsequent year has been confirmed by the AO after enquiring the same from the UCO bank.
Amount of cheques issued by the assessee which were reversed subsequently for the reason that same were not presented for payment. So far as the discrepancies in the dates are concerned, we do not find that any minor mistake as such would lead to such a heavy addition in the hands of the assessee that too when the verification of facts are almost impossible due to the fact that these entries belong to 1993.
These cheques were never encashed from the bank a finding qua which has been given in the remand report by the AO after carrying out verification from then UCO bank - addition can not be made merely because it was not explained by the assessee by overlooking the facts on records which testified that the difference between the books of account of the assessee and bank statement of UCO bank are attributed to cheques/advices issued but not encashed and presented in the bank - we direct the AO to delete the disallowance - Decided in favour of assessee.
Assessment of interest income - whether to be assessed as cash system of accounting instead of mercantile system of accounting - CIT(A) deleted the addition - HELD THAT:- CIT(A) allowed the appeal of the assessee by following the decision of the co-ordinate Bench of the Tribunal in the case of Sudheer Mehta A.Y. 2009-10 to 2011-12 [2017 (12) TMI 1668 - ITAT MUMBAI]. Accordingly, we do not find any infirmity in the order of Ld. CIT(A) and same is upheld by dismissing the appeal of the Revenue.
Penalty us 271(1)(c) - whether notice barred by limitation? - HELD THAT:- As per the provisions of section 275 of the Act, the A.O. ought to have passed the penalty order u/s. 271(l)(c) of the Act on or before 31.05.1995 as the ld CIT(A) passed the order on 28.10.1994. Since the penalty order has been passed on 28.04.2006, in our considered view ,the same was beyond the limitation period and hence void ab initio. As the penalty order passed beyond the time limit permissible u/s. 275(l)(a) of the Act and is invalid and void ab initio. Consequently the same is quashed. - Decided in favour of assessee.
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2021 (9) TMI 1001
Refund with interest u/s 244A - adjustment of refund towards pre-deposit - HELD THAT:- Writ petitioner will do the needful qua refund qua third respondent within a fortnight from today i.e., by 17.09.2021.
The third respondent shall complete the exercise of refund as captured in paragraph 4 of the counter affidavit (extracted and reproduced supra elsewhere in this order) as expeditiously as possible and in any event within 12 weeks therefrom i.e., on or before 10.12.2021.
The above draws the curtains on the captioned writ petitions and this Court places on record its appreciation for the fair stand taken by the learned Revenue counsel.
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2021 (9) TMI 967
Correct head of income - letting out of the land independently which is part of the business asset of the assessee - business income or income from house property - HELD THAT:- Assessee was using the bungalow and land together for the film production as part of business assets. Since the film production is stopped, it has separated the bungalow and vacant land. It uses the bungalow for storage for its own purpose and leases the vacant land not on the regular basis but based on the requirement of the other production houses. It leases only the vacant land which it was earlier utilized for its own business. Just because, it let out only the vacant land the type of assets will not change - it will remain as business assets. Since, it is part of total asset of the assessee. The assessee claims depreciation only on bungalow and not on vacant land. When the assessee let out not on regular but based on the requirement of the industry, it can only be treated as income from letting out business assets. Moreover, the assessee demonstrated that the land can be separated and used to earn independent income.
We notice that the vacant land cannot reasonably expected let from year to year basis. Therefore, the annual value cannot be reasonably estimated or expected. The vacant land is continuing to be used or usable for film production. The same land when assessee in case, decided to continue with the film production, will be used for the assessee’s business as business asset. Therefore, temporary let out of the vacant land and only be part of business income. Therefore, in the given case the land is separable from the bungalow to let out independently, thus the land can be treated as separate asset and this letting out of the land independently cannot be part of the income from these property.
With the above observations, in our considered view, the letting out of the land independently which is part of the business asset of the assessee can be treated as income from business only. - Decided against assessee.
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2021 (9) TMI 966
Disallowing employer’s contribution to superannuation fund u/s 36(1)(iv) - inaction on the part of PCIT to decide the application - superannuation fund under the head ‘employee’s benefit’ and charged to Profit and Loss Account - Whether assessee in getting approval of superannuation fund for which the assessee has framed a scheme for superannuation fund? - HELD THAT:- Application filed by the assessee is as long as in 2011 and till date there is no approval by the PCIT despite the assessee filing of necessary evidences and clarifications. It is also a fact that assessee has complied with all the other conditions for claim of deduction except approval which is to be granted by the Department. We see no reason that the assessee cannot claim deduction for the in action of the PCIT. Hence, we reverse the orders of the lower authorities and respectfully following the legal proposition laid down by High Courts in the above case laws, we allow the claim of the assessee.
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2021 (9) TMI 964
Penalty levied u/s 271(1)(c) - non disclosure of the interest income - bonafied belief - Addition made on account of interest income earned on FDRs made out of funds received by the assessee for two projects - HELD THAT:- We find, are identical, with that of A.Y 2007-08 to 2011-12[2015 (1) TMI 1464 - ITAT CHANDIGARH] penalty having been levied on identical income of interest earned on FDR’s made from the same specific purpose funds, i.e RGCTP and JNNRUM, And relates to A.Y 2012-13, which is prior to the settlement of the dispute on 14-03-2013. The decision rendered by the ITAT in the preceding years therefore, deleting the penalty levied by holding that the agreement to levy no penalty would apply, that the non disclosure of the interest income was under a bonafide belief that it was non taxable, would squarely apply in the present case also. The argument of the Ld.DR that the settlement of the dispute was year specific merits no consideration as we find that the ITAT had categorically held in its order passed for A.Y 2010-11 & 2011-12 that the settlement was issue specific and not year specific and applied to all interest incomes not returned upto the date of settlement.
We see no reason to interfere in the order of the Ld.CIT(A) and the appeal filed by the Revenue is, therefore, dismissed.
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Customs
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2021 (9) TMI 1012
Levy of anti – dumping duty - Styrene Butadiene Rubber imported from Korea - classified under the heading 4002 of the First Schedule of the Customs Tariff Act, 1975 or otherwise? - HELD THAT:- In the present proceedings, there is no dispute about the position that the product under consideration of the Designated Authority was SBR of 1500, 1700 and 1900 series falling under CTH 4002.19 of the Customs Tariff Act 1975 but not goods covered by the CTH 40021100 - while SBR of the 1900 series is a dry polymer, the goods imported by the respondent were in a liquid form and hence, according to the respondent, fall for classification under CTH 40021100 as Latex. In this context, reliance was sought to be placed on the Vanderbiit Rubber Handbook and an opinion obtained from the University of Mumbai. On the above premises, it was submitted that the goods which were imported fall under CTH 40021100. It was urged that the literature indicates that goods imported in a liquid form would fall for classification as Latex and the opinions of experts demonstrate that the Styrene content is not decisive on whether or not the goods would fall for classification as Latex.
The Tribunal has not looked into the merits of the appeals at all on the facetious ground that the show cause notice did not contain any basis to doubt the classification of the goods and that while issuing the notice, the adjudicating authority had not examined the classification based on the report of the laboratory. The findings of the Tribunal are contrary to the record and cannot therefore be sustained.
Since the Tribunal has not considered the case of the respondent in appeal on merits, it would be appropriate to restore the proceedings back to the Tribunal for the purpose - Appeal allowed by way of remand.
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2021 (9) TMI 969
Rejection of refund claim - Mismatch of re-imported defective goods - Seeking amendment in the Bill of Entry - Section 128 A (3) of Customs Act, 1962 - HELD THAT:- Initially the Original Adjudicating Authority had failed to consider the verification report dated 29.04.2015 and ignored the re-examination of goods due to which the Commissioner (Appeals) vide Order of 20.07.2018 had remanded back the matter. Post re-consideration also the proposal in Show Cause Notice has been confirmed and the refund claim of ₹ 1,76,905/- has been rejected on the ground of alleged mismatch of the goods. Commissioner (Appeals) also vide the Order-under-challenge has rejected the appeal holding that appellant has not explained the reason and has not convinced the Department for mismatch of description of goods in the Invoice submitted by the appellant with the check-list of Bill of Entry.
Alleged mismatch in description of goods - HELD THAT:- It cannot be denied by the Department nor actually has been denied that it is the invoice of January, 2015 only which was got compared with both said Invoices of 2014. In view thereof the initial findings that the re-examination report did not reveal anything about the description of goods vis-à-vis Invoice No.FACTU 20150005 are apparently wrong on the face of its record. The said findings of Original Authority have been confirmed in verbatim by Commissioner (Appeals) vide the Order-under-challenge. Accordingly, it would be appropriate to hold that the Adjudicating Authority below has ignored the verification report prepared by the Department itself which to my opinion is sufficient reason to falsify the allegations in the Show Cause Notice about mismatch.
Since the refund claim has been rejected only on ground of alleged mismatch which Departments own reports falsifies, the appellant is held entitled for the impugned refund - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2021 (9) TMI 997
Seeking directions to Appellants to file their written claims before the Respondent - Financial Creditors/homebuyers - HELD THAT:- The Appellants are hereby directed to file their claims in terms of the aforesaid provisions before the Resolution Professional/ Respondents within two weeks from today - Learned Counsel for the Resolution Professional/ Respondent is hereby directed to verify the claims in terms of the various provisions and forward the genuine claims of the Learned Counsel for the Appellants to Adjudicating Authority.
The timeline provided by the IB Code, with the aforesaid directions - Appeal is hereby disposed of
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2021 (9) TMI 993
Liquidation of the Corporate Debtor - non-implementation of the Resolution Plan - whether the prayer of the Appellant with regard to liquidating the Corporate Debtor ought to have considered or not? - HELD THAT:- The Ld. Adjudicating Authority observed that the ‘Tribunal’ (NCLT) cannot either order Liquidation or to direct the refund of the EMD, as the Tribunal has become Functus Officio after approval of the Resolution Plan with the consent of both the parties.
Admittedly the CIRP was initiated on 20th September 2019. 270 days completed on 23rd August 2020 and 330 days completed by the end of October 2020. The Application filed by the Appellant bearing MA No.186/KOB/2020 in the month of November 2020 i.e., after completion of 330 days - The fact is that the 330 days have been completed and the Respondent did not implement the plan and filed an Application before the Ld. Adjudicating Authority bearing IA No. 16/2021 praying the ‘Tribunal’ to permit the Respondent/Applicant in IA No. 16/2021 to withdraw the Resolution Plan and set aside the Order of the Ld. Adjudicating Authority dated 10th September 2020 whereby the plan of the Respondent/Applicant was approved.
Having observed by the Ld. Adjudicating Authority that it cannot recall the Order of approval of the Resolution Plan and cannot direct the refund of the EMD and having rejected the Application filed by the Respondent bearing IA No. 16/2021, the Ld. Adjudicating Authority ought to have considered the prayer as made by the Appellant with regard the passing of Liquidation Order in view of non-implementation of the Resolution Plan by the Resolution Applicant and completion of 330 days. If 330 days completes and the Resolution Applicant failed to implement the plan, the Adjudicating Authority ought to have passed the Order of Liquidation as per the provision of the I & B Code, 2016 - This ‘Tribunal’ is not going into the aspect with regard to the forfeiture of the performance security and withdrawal of the plan.
This ‘Tribunal’ comes to a conclusion that 330 days have expired and upon non-implementation of the plan by the Resolution Applicant, the Adjudicating Authority ought to have passed the Order of Liquidation of the Corporate Debtor - Appeal allowed.
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2021 (9) TMI 991
Seeking for removal of the Appellant (APSTC/TSTPC) from the ‘CoC’ - Promotion of trade from the State and create logistics infrastructure in the state and to carry out its existing business of manufacture and sale of notebooks for students - ‘related party’ as construed under Section 24(5) of the ‘I&B’ Code, 2016 - submission of appellant is that there is no participation in policy making of the First Respondent/ Company nor there is interchange of managerial personnel between the Appellant and the First Respondent/ Company - HELD THAT:- It must be borne in mind that the expression ‘control’ in Section 29A(c) of the ‘I&B’ Code symbolizes only the positive control i.e. that the mere power to block special resolutions of a Company cannot amount to control. In reality, the word ‘control’ juxtaposed with the term ‘management’ means ‘De facto control of actual management or policy decisions that may be or are in reality taken - this Tribunal points out that, the Appellant’s Managing Director was also a Director of the first Respondent Company. Moreover, the Director nominated by the Appellant, in fact, advises the Appellant / Company in matters relating to the first Respondent / Company.
The part played by the two nominee Directors clearly point out that the first Respondent / Company acts on the advice, direction and instructions of the Appellant in its normal business affairs relating to the first Respondent. As such, this Tribunal is of the earnest opinion that the Appellant ‘squarely comes within the ambit of related party as per clause (f) of Sub Section 24 of section 5 of the Code.
The other important fact that cannot be brushed aside is that that the First Respondent had reported the transactions between the Appellant and it, in their ‘Annual Reports’ and ‘Audited Financial Statements’. Besides this, as perceived from the ‘Articles of Association’ and the requisite majority needed for taking important business decisions, the conduct of the business of the First Respondent, the establishment of First Respondent Company, all considered in an integral and cumulative manner will exhibit the noteworthy influence of the Appellant in issues concerning the First Respondent. In this manner also, the First Respondent is treating the Appellant as ‘Related Party’.
The Appellant / Company has a control in regard to the arrangement of ‘Board of Directors’ of the First Respondent / Company and on this score also, the Appellant comes within the purview of ‘related party’ as per clause L of sub section 24 of 5 of the ‘I&B’ Code, as opined by this Tribunal - It is to be pointed out that the ‘Articles of Association’ point out that action relating to significant matters ought to be taken only by affirmative vote of three or more Directors and in the qualified majority, minimum one Director is to be nominated for inclusion by the APTPCL.
Considering the facts and circumstances of the instant case in a conspectus fashion and keeping in mind the ingredients of the ‘Articles of Association’ to the effect that the nominee Directors have a vital influence in regard to the working of the ‘Corporate Debtor’, this Tribunal unhesitatingly comes to a consequent conclusion that the Appellant is a ‘related party’ and the view arrived at by the ‘Resolution Professional’ to include the Appellant/TSTPCL as member of the ‘Committee of Creditors’ is clearly unsustainable in the eye of law.
This Tribunal concurs with a view arrived at by the ‘Adjudicating Authority’ in the ‘impugned order’ that the Appellant is a ‘related party’ - Appeal dismissed.
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2021 (9) TMI 986
Condonation of delay of 12 days in filing appeal - seeking extension of limitation period prescribed under law - Section 61 of the IBC - HELD THAT:- The impugned order is pronounced on 03.02.2020. In view of the provisions under Section 61 of the IBC as per prescribed period the Appeal was required to be filed within 30 days till 04.03.2020. However, the Appeal was filed on 29.12.2020 i.e. after a delay of 299 days. As per proviso to sub-Section (2) of Section 61 of the IBC, this Tribunal may condone the delay for a period not exceeding 15 days. Ld. Counsel for the Appellant has taken shelter of the order passed by the Hon’ble Supreme court in India in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [2020 (5) TMI 418 - SC ORDER] extended the limitation period prescribed under law.
Admittedly, the MOU which alleged to be forged and fabricated document did not form the basis of any adjudication. Therefore, Ld. Adjudicating Authority has rightly held that the provisions of Section 340 of the Cr.P.C are not attracted in the facts of this case - there are no flaw in this finding.
The Appeal is dismissed as barred by limitation as well as on merits.
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2021 (9) TMI 984
Approval of Resolution Plan - seeking success fees to the Resolution Professional - grievance raised is that the approval of the success fees was a commercial decision of the CoC and the Adjudicating Authority could not have interfered with the same while approving the Resolution Plan and directing distribution of the amount set apart for success fees - HELD THAT:- The provisions as appearing in IBC and as can be seen from Regulations read with the Code of Conduct all indicate that although quantum of fees have not been fixed that the Code and Regulations do intend to control the manner in which Resolution Professional charged fees and according to Learned Amicus Curiae, the quantum of fees payable is a subject which is justiciable before the Adjudicating Authority if it is found to be unreasonable and if the manner, method of payment is inconsistent with the Regulations. The quantum of fees can be fixed by the CoC but it would be subject to scrutiny by the Adjudicating Authority as what is reasonable fee is context specific and it is not part of the commercial decision of the CoC. The CoC exercised commercial decision with regard to Resolution Plan which is required to be approved and although CIRP Costs are required to be paid on priority, the reasonableness of fees is not part of commercial decision.
The IBBI has power to take disciplinary action in the event of misconduct or breach by Insolvency Professional. In the absence of such power with Adjudicating Authority, the matter of fees would be completely unchecked and devoid of scrutiny. Para 30 of the Written Submissions filed by the Learned Amicus Curiae may be reproduced.
Reference to term “success fee” in Annexure-B of the Circular dated 12.06.2018 which was view of the ‘Society for Insolvency Practitioners of India’ is a term which is unguided. Rather even the said society has a caveat to it when it mentions that the success and contingency fee is only to the extent that it is consistent with the requirements of integrity and independence of Insolvency Professionals. In our view, if the Resolution Professional seeks to have success fee at the initial stage of CIRP, it would interfere with independence of Resolution Professional which can be at the cost of Corporate Debtor. If success fee is claimed when the Resolution Plan is going through or after the Resolution Plan is approved, it would be in the nature of gift or reward. “Success fee”- term is contrary to what IBBI provided in its Circular dated 16.01.2018 that Insolvency Professional shall render services for a fee which is a reasonable reflection of his work.
The ‘success fees’ which is more in the nature of contingency and speculative is not part of the provisions of the IBC and the Regulations and the same is not chargeable. Apart from this, even if it is to be said that it is chargeable, it is found that in the present matter, the manner in which, it was last minute pushed at the time of approval of the Resolution Plan and the quantum are both improper and incorrect - argument that the Adjudicating Authority should have sent the matter back to the CoC if it was not approving the success fee deserves to be discarded as the Adjudicating Authority while not accepting the success fee merely asked proportionate distribution which would even otherwise have happened if “success fee” was set aside as the money would become available improving percentage of other creditors’ dues.
There is no substance in the Appeal - appeal dismissed.
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2021 (9) TMI 983
Withdrawal of resolution plan post approval of the same by the COC - jurisdiction of the Ld. Adjudicating Authority to approve or reject resolution plan - parameters/requirements prescribed under Section 30(2) of the Code fulfilled or not - can resolution applicant can unilaterally seek to withdraw an approved Resolution Plan - process note as mandated under Section 25(2)(h) of the Code - HELD THAT:- It is quite clear that the SRA could not have been allowed to withdraw the Resolution Plan after it had been approved by the CoC. The Adjudicating Authority had no jurisdiction to rely on residuary powers of Section 60(5)(c) to entertain the application of SRA. The grounds raised by SRA of delay also are clearly untenable.
In the matter of ‘Ebix Singapore’ [2021 (9) TMI 672 - SUPREME COURT], Hon’ble Supreme Court has referred to Section 12 of IBC which stipulates the timeline within which the CIRP is to be completed. Regulation 40A of the CIRP Regulations provides a detailed model timeline for CIRP which accounts for all the procedural eventualities that are permitted by the statute and the Regulations - As observed by the Hon’ble Supreme Court, the Resolution Applicant is deemed to be aware of the IBC and its mechanisms. The Resolution Applicant, after obtaining the financial information of the Corporate Debtor through the informational utilities and perusing the IM, is assumed to have analysed the risks in the business of the Corporate Debtor and submitted a considered proposal. After the plan has been approved, the SRA could not be heard making the complaints regarding incomplete information (which here is even otherwise not established) to withdraw from the Resolution Plan. The grievance appears to be made just to raise a petit ground.
The judgment in the matter of ‘Ebix Singapore’ [2021 (9) TMI 672 - SUPREME COURT] has been passed by the Hon’ble Supreme Court on 13th September, 2021, after the arguments in these Appeals were over. The Hon’ble Supreme Court has taken conspectus of the complete law on the subject and although the Learned Counsel for parties have made various submissions whether or not the power under Section 60 of IBC could have been exercised; whether or not the SRA had a good ground to withdraw; whether or not there was mis-information in Information Memorandum, we need not go into these details to burden this judgment with those details as the law is now clear on the issues as involved in the present Appeals.
The matter is remitted back to the Adjudicating Authority. Adjudicating Authority is directed to consider the application filed by the Resolution Professional under Section 30/31 of IBC urgently and decide the same within one month - appeal disposed off.
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Service Tax
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2021 (9) TMI 985
Levy of service tax - Man Power Recruitment & Supply Service - deputation of employees for the business contingencies arising in their own group companies - HELD THAT:- The appellants (formerly known as M/s.Light Alloy Products Ltd.) have deputed their employees for the business contingencies arising in their own group companies such as, M/s.LAP Ross Engineering Ltd; payments for which were made by debit notes or book adjustments. They have not raised any invoice as such and did not collect the service tax. Understandably, the relation between the appellants and the group companies to which their employees have been deputed is not one of an agency and the client.
This issue was discussed at length by the Hon’ble High Court of Gujarat in the case of COMMISSIONER OF SERVICE TAX VERSUS ARVIND MILLS LTD. [2014 (4) TMI 132 - GUJARAT HIGH COURT] where it was held that The definition though provides that Manpower Recruitment Supply Agency means any commercial concern engaged in providing any services directly or indirectly in any manner for recruitment or supply of manpower temporarily or otherwise to a client, in the present case, the respondent cannot be said to be a commercial concern engaged in providing such specified services to a client. It is true that the definition is wide and would include any such activity where it is carried out either directly or indirectly supplying recruitment or manpower temporarily or otherwise.
Appeal allowed - decided in favor of appellant.
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2021 (9) TMI 979
Refund of accumulated credit - Input services - Banking and Financial Services - Cab Operator Services - Courier Services - Maintenance and Repair Services - Market Research Agency Service - Rule 5 of the CENVAT Credit Rules, 2004 as amended by the Notification No 18/2012 -CX (NT) dated 07.03.2012 - HELD THAT:- From the plain reading of the said rule it is evident that the amended rule 5, does not require establishment of any nexus between the input services and the exported services. The rule only provides that the admissible refund will be proportional to the ratio of export turnover of goods and services to the total turnover, during the period under consideration, of the Net CENVAT credit taken during that period.
Undisputedly in the refund proceedings under Rule 5 of CENVAT Credit Rules, 2004 as amended any such attempt whereby credit availed during the period under consideration is sought to be denied or varied, is not permissible. If the quantum of the Cenvat Credit is sought to be varied, by holding that certain services do not qualify as input services then the same could have been done by invoking the provisions of Rule 14 of the CENVAT Credit Rules, 2004.
Since the Commissioner (Appeals) has by the impugned order held the refund to be admissible, to the extent of CENVAT Credit held admissible by him subject to verification of the documents by the original authority, his order is modified to this extent i.e. that entire credit as claimed by the Appellant for determining the refund amount is held admissible if not held admissible in proper proceedings initiated under Rule 14 of the CENVAT Credit Rules, 2004.
The appeal filed is thus allowed subject to verification of the subject documents by the adjudicating authority, for which the matter is remanded to original authority - appeal allowed by way of remand.
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2021 (9) TMI 965
Levy of service tax - restaurant service or not - service tax on the food served in the rooms - HELD THAT:- Reliance was placed on the Board Circular dated 10.05.2011, wherein the Board have clarified that food served in the hotel room is not liable to service tax. It was further held that for service of food in the hotel room, the said activity was not chargeable to service tax under the head ‘restaurant service’.
Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (9) TMI 996
CENVAT Credit - input service - legal services - actual recipient of services - case was filed in the name of Distiller’s Association of Maharashtra but since the bill was raised in the name of the appellant - HELD THAT:- There is no dispute that the legal case was filed by the Distiller’s Association of Maharashtra which consists of many member manufacturers. Therefore, the beneficiary of the outcome is not only the appellant but all the members which means that the service was availed by all the members of the association. Though the invoice was raised in the name of appellant but the services availed against the said bills has benefitted to all the members of the association - even though the case was filed in the name of Distiller’s Association of Maharashtra but since the bill was raised in the name of the appellant, appellant is prima facie entitled for Cenvat Credit but only to the extent of portion of services related to the appellant. In this position, the Cenvat Credit attributed to the appellant needs to be re-worked out. Therefore, entire case needs a reconsideration.
Input service or not - legal service - HELD THAT:- The legal service is directly for the case related to manufacture of the final product. Moreover, the legal service is prescribed as input service in the inclusion clause of definition of input service - the legal service is an admissible input service.
Matter remanded to the adjudicating authority for passing a fresh order - appeal allowed by way of remand.
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2021 (9) TMI 973
CENVAT Credit - restrictions in using the cenvat credit for payment of duty for the clearances - contravention of Rule 8(3A) read with Rule 4(1), 8(1), 8(3) of Central Excise Rules - Applicability of Rule 25 of Central Excise Rules - HELD THAT:- There is a conflict in the provisions of Rule 8(3) and Rule 8(3A), prior to its substitution w.e.f. 11.07.2014. Rule 8(3) provides for levy of interest at the specified rates for late deposit of tax plus duty for the period of default. Thereafter, again Rule 8(3A) provides for denial of facility of paying duty through cenvat credit, and further deems the clearances so made by using cenvat credit as to have been cleared without payment of duty.
Pursuant to quashing of Rule 8(3A) by the Hon’ble Gujarat High Court and other High Courts, inspite of filing of appeal by the Revenue before the Hon’ble Supreme Court, the Government have appreciated the anomaly in the Rules, and have chosen to substitute Rule 8(3A), which provides for payment of interest @ 1% p.m. on such amount of duty not paid, after one month of the due date, for each month and part thereof to be calculated from the due date, for the period during which such default continues - As per Rules of interpretation, a procedural law is always deemed to be retrospective, unless the same is categorically or specifically made prospective. Thus, the substituted Rule 8(3A) will have retrospective effect, from the date Central Excise Rules, 2002 came into effect.
Applicability of Rule 25 of Central Excise Rules - HELD THAT:- The provisions of Rule 25 of Central Excise Rules are not attracted, as admittedly appellant have issued invoice for clearance, and transaction is recorded in books of account.
Appeal allowed - decided in favor of appellant.
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2021 (9) TMI 970
CENVAT Credit - duty paying documents - credit on the basis of supplementary invoices issued by the Coal Companies - issue pending before Supreme Court - HELD THAT:- The issue involved herein is no more res-integra and is decided in the case of M/S. ULTRATECH CEMENT LTD. VERSUS C.C.E., RAIPUR [2018 (8) TMI 236 - CESTAT NEW DELHI] where it was held that the connected matters are pending adjudication before the Hon’ble Apex Court, issue being already sub-judiced the element of confusion cannot be ruled out.
Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (9) TMI 1002
Validity of reassessment order - benefit of input tax credit - consideration of H form submitted by the petitioner for exemption of turnover tax on the export effected - prohibition on initiation of fresh recovery proceedings in respect of the re-assessment order - HELD THAT:- Perusal of the impugned order at Annexure-A will clearly indicate that except for stating that the notice alleged to have been sent by the respondent No.2 to the petitioner was returned unserved with the endorsement “no such premises found”, the respondent No.2 did not intimate or notify the petitioner about the proceedings nor was the petitioner heard before passing the impugned order, which clearly shows that no opportunity, much less reasonable or sufficient opportunity was provided to the petitioner before passing the impugned order which is violative of principles of natural justice and deserves to be quashed.
On the ground of violation of principles of natural justice alone, the impugned order passed by the respondent No.2 as well as subsequent endorsement at Annexure-B dated 1.4.2021 deserve to be quashed - Petition allowed by way of remand.
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Indian Laws
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2021 (9) TMI 1011
Cancellation of Country Liquor license - recovery of certain amount towards the balance - applicability of the amended Rule 13 to pre-existing contracts - the main contention before this court is that amounts collected as departmental management fee were not adjustable - HELD THAT:- The obvious basis of the principle against retrospectivity is the principle of 'fairness’, which must be the basis of every legal rule. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation.
The findings and conclusions previously recorded would have been dispositive of the issues arising in this appeal. However, this court is mindful of the fact that the respondent had succeeded before the High Court and was thus entitled to claim adjustment of the departmental management fees, for the period after its contract was terminated. The respondent was also entitled to claim relief under the Amnesty Scheme, which was denied to it despite having succeeded before the High Court - Since the respondent had approached this Court complaining that the State had sought to auction his properties, a status quo order was made, binding the parties not to take fresh steps. In view of the findings recorded, the State has to ensure that the property of the respondent is released from attachment and due possession is handed back to the latter within the same period of two months.
The following directions are given:
(a) Upon payment of 50% of the amount, i.e. 50% of ₹40,51,288/- within two months from today, the respondent’s liabilities towards the arrears of dues for the liquor vend in issue which was cancelled by the appellant State’s order dated 30-09-1993 shall stand discharged;
(b) The state is hereby directed to release the respondent’s property attached and sought to be sold, towards satisfaction of the above liability, upon receiving the said balance 50% of the amount within two months or latest within four weeks of receipt of the amount;
(c) The respondent shall not be liable to pay any interest for the upheld payment or for any other reason whatsoever, on the principal amount, i.e. ₹ 40,51,288/-. The State shall refrain from initiating any proceedings for its recovery towards arrears for the said period the contract was to be in operation, i.e. 1993-94.
The appeal is dismissed.
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