TMI Tax Updates - e-Newsletter
January 11, 2020
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:
Supply or not - Natural bundling of services - specified medical instruments by the Applicant to unrelated parties like hospital(s), Lab (s), for uses without any consideration - Matter remanded back to the AAR
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Income Tax:
Penalty u/s 221 - failure to deposit the TDS amount with the Govt. - In fact, a clear finding has been recorded by the tribunal that question of financial stringency pleaded by assessee was not proved. Even otherwise, it has been held that financial stringency would not justify the non-remittance of TDS to the Government, in as much as, it would amount to utilization of money payable to the appropriate government. - Levy of penalty confirmed.
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Income Tax:
Deduction claimed u/s 54 - Since the assessee has furnished the required details and constructed the small house at the village, where no approvals or permissions are necessary, we do not find any reason to disallow the deduction claimed by the assessee u/s 54F.
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Income Tax:
Disallowance of expenses - CIT(A) deleted the addition without giving an opportunity of being heard to AO - CIT (A) has himself verified the bills - he has given a general assumption that expenditure must have been incurred for such transportation - Such doubtful observation of CIT(A) was not needed - Matter restored before the AO
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Income Tax:
MAT - deduction of Rebate u/s 88E while calculating the tax liability of the assessee for minimum alternative tax u/s 115JB - when the total income is assessed and the tax chargeable is computed, it is from that tax which is chargeable, the tax paid u/s 88E is given deduction, by way of rebate, u/s 87 - This is the legislative intent. That is a promise to give deduction of the tax already paid.
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Income Tax:
Deemed dividend addition u/s 2(22)(e) - It it is the company which owes the assessee the money rather vice-versa, it is unequivocally proved that the advance received from the company by the assessee is in the nature of trade advance against the booking of commercial place being built by the assessee - Additions deleted.
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Income Tax:
Revision u/s 263 - dropping of proceedings by the AO - internal order which was not communicated to the assessee - once the aforesaid decision is communicated and made known to the petitioner, such decision would be amenable to revision u/s 263 of the Income Tax Act, 1961.
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Income Tax:
Deduction of tax at source on year-end provisions - It is not the case of the assessee that it has made an ad hoc provision. Thus it cannot be said that the payee is not identified - TDS liability confirmed
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Income Tax:
TDS u/s 194J - Tax deduction at source on the passengers’ services fees (PSF) - payment to CISF for security - assessee does not pay any sum to CISF but it is paid by the owners and operators of the airport - assessee cannot take shelter u/s 196 as the assessee is not payee to CISF but airport operators pay it - TDS liability confirmed.
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Customs:
Issuance of two SCNs - Valuation of imported goods - Issuing 2 notices in too short a time may suffice the requirements of law in letter but the spirit of the same defeated - the instant case serves as a perfect example to show case as to how adjudication order is not supposed to be passed.
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Customs:
Import of Baggage - the spare parts in question were intended for use in a vehicle imported by the petitioner earlier and put to personal use of the petitioner - the said items of spare parts constituted bona fide baggage.
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Customs:
Import of of Baggage - clubbing of free allowance of other family member - the petitioner could not have contended for a pooling of the baggage allowance permitted in respect of his wife and children to enhance the limit of duty free baggage allowance that was admissible to him in his capacity as a passenger under the Baggage Rules.
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Customs:
The law prevalent as on the date of the import of the vessel in the case on hand would only be applicable and that merely because the bill of entry was not filed at the inception in the year 2012 and the manual bill of entry was filed in the year 2018, that is, about six years after the actual import of goods, the duty and tax cannot be levied based on the law prevalent on the date of the filing of manual bill of entry more particularly as the import of the vessel in May, 2012, is not in dispute and as the vessel ran after getting necessary port clearances on number of occasions is also not in dispute
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Customs:
Refund Claim - only contention of the appellants (Revenue) is that since the claim for refund was not made at the time of supply of goods, the said claim cannot be made belatedly - the appellants does not dispute the fact that the tax has been wrongly paid. If it is not disputed it cannot be retained.
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Customs:
Condonation of delay of 452 days in filing the Appeal - Tribunal has used its judicial discretion not to condone the delay - if the Tribunal followed the decision of the Supreme Court, we cannot hold that the view taken by the Tribunal is perverse.
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Indian Laws:
Dishonor of Cheque - offence punishable u/s 138 - the petitioner was a Key Managerial Person of the accused No.1 company - he was so for the period from 01.04.2015 to 31.03.2016 and the date of the drawing of the cheques in question are 07.06.2019 - notice against the petitioner queshed.
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Service Tax:
Classification of service - Man Power Supply and Recruitment Service or not - job assigned to the appellant for compressing and filling of gas in the cylinder by the help of the Man Power deputed by the appellant - the service is not covered under Man Power supply and Recruitment Service.
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Service Tax:
Services such as rendered by the appellants to their foreign principal fall under Export of Service Rules and are eligible for exemption in terms of Notifications, Export of Service Rules and the Circulars issued by CBEC from time to time for the entire period i.e. 01.07.2003 to 19.11.2003, 15.03.2005 to 30.09.2007 and 01.10.2007 to 30.09.2008
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Service Tax:
Refund of service tax - application was filed beyond a period of one year from the date of payment of duty. - when service tax is not leviable, but it is deposited mistakenly by the Appellant, the provisions of section 11-B of the Excise Act relating to limitation would not be applicable
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Central Excise:
Cancellation of bond - Misuse of Benefit of concessional rate of duty - We are still not in position to appreciate as to what was sought to be achieved or has been achieved by the Assistant Commissioner by cancellation of the bond.
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Central Excise:
The appellant had practice to pay the duty on provisional value at the time of removal of the goods and only on finalization of books of accounts the actual cost of manufacturing is arrived at and whenever there is a short of value, they were paying the differential duty - there is no suppression of facts and mala fide on the part of the appellants. Accordingly the demand for extended period is not sustainable.
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Central Excise:
Clandestine Removal - data from the Hard Disk No. 2 was retrieved on DVD - the said Hard Disk could have been tempered, therefore, cannot be relied upon as evidence inasmuch the said data has been retrieved without ensuring the presence of the appellants.
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Central Excise:
CENVAT Credit - scope of SCN - The show-cause notice was issued alleging that outward freight is not included in the input service whereas in the impugned order the Commissioner(Appeals) has held that the place of removal cannot be beyond the port/ICD/CFS. In fact, this is beyond the show-cause notice.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (1) TMI 338
Supply or not - specified medical instruments by the Applicant to unrelated parties like hospital(s), Lab (s), for uses without any consideration - whether constitutes a supply or whether it constitutes movement of goods otherwise than by way of supply as per provisions of the CGST/SGST Act, 2017? HELD THAT:- There was no occasion for the AAR to go into the issue of whether the supply effected was a composite supply or not. I also find that its findings on the said issue are at any rate legally untenable. The concept of enhancement of utility of the instrument through the supply of reagents/calibrators/disposables, while relevant for the purposes of valuation of the supply of instruments, cannot be imported into the concept of composite supply under the GST Act. A distinction has to be drawn between the nature of a supply and the valuation thereof. While clubbing of two independent supplies may be resorted to for the purposes of valuation of each of those supplies, there is no scope of clubbing of two independent supplies so as to notionally alter the very nature of each of those supplies as they existed in fact, at the relevant point in time. Natural bundling of services - HELD THAT:- The two supplies do not answer to the description of being naturally bundled and supplied in conjunction with each other in the ordinary course of business . While they were not bundled together as a matter of fact, in the instant case, there is also no material to suggest that they are so bundled and supplied in conjunction with each other in the ordinary course of business . In fact, the business model followed by the petitioner appears to have held the field for a considerable period of time and would show that in the ordinary course of business, the supplies are not bundled. As regards composite supply must take into account supplies as effected at a given point in time on as is where is basis. In particular instances where the same taxable person effects a continuous supply of services coupled with periodic supplies of goods/services to be used in conjunction therewith, one could possibly view the periodic supply of goods/services as composite supplies along with the service that is continuously supplied over a period of time. These, however, are matters that will have to be decided based on the facts in a given case and not in the abstract as was done by the AAR. Matter remanded back to the AAR for a fresh decision on the query raised before it by the petitioner company - petition allowed by way of remand.
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2020 (1) TMI 337
Permission for withdrawal of petition - Vires of Article 279-A (5) and explanation to Article 246-A(2) of the Constitution of India - levy of GST on Petroleum Products - HELD THAT:- Petition dismissed as withdrawn.
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2020 (1) TMI 336
Release of seized goods alongwith truck - only objection of the officer is that prima facie documents tendered are found to be defective and for that purpose vehicle cannot be detained because everything can be verified online - HELD THAT:- This Court had an occasion to consider the provisions of Sections 129 and 130 of the Act respectively, in detail, in the case of Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat and allied matters [2019 (12) TMI 1213 - GUJARAT HIGH COURT]. We are of the view that as the notice for confiscation has been issued, it is expected of the writ applicant now to file an appropriate detailed reply to the same, for the purpose of getting such notice discharged. Application disposed off.
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2020 (1) TMI 329
Service of notice - Section 74 read with Section 122 (1) of the CGST/SGST Act - demand of a tax/penalty from estimated turnover for the assessment years 2017-2018 and 2018-2019 - HELD THAT:- Although belatedly, the petitioners have approached the 1st respondent with applications for supply of copies of the documents seized from their premises, and relied upon while issuing Ext.P1 notice to them - Inasmuch as the adjudication proceedings pursuant to Ext.P1 notice have not commenced, and a denial of the request of the petitioners for copies of the documents seized from their premises would tantamount to a violation of the rules of natural justice, the Writ Petitions are disposed off with the direction that the petitioners approaching the 1st respondent within a period of two weeks from today, the 1st respondent shall furnish to them copies of the documents seized from their premises, and reliance on which is placed in Ext.P1 notice, within a week from the date of the petitioners approaching the 1st respondent. Petition disposed off.
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2020 (1) TMI 306
Profiteering - purchase of the apartments - benefit of reduction in rate of tax or ITC on the supply of construction service by the Respondent after implementation of the GST w.e.f. 01.07.2017 - allegation that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the prices of the apartments purchased by them, on implementation of the GST w.e.f. 01.07.2017 - contravention of provisions of section 171 of CGST Act - HELD THAT:- The Respondent has neither produced the acknowledgement receipts from the recipients nor he has furnished the tax invoices to prove that he has passed on the above amount as benefit of ITC. The Respondent has also not furnished the above details to the DGAP during the course of the investigation. Hence, there is hardly any doubt that the above record has been prepared by the Respondent subsequently to mislead the present proceedings. Therefore, the claim of the Respondent of his having passed on the benefit of ITC to the eligible buyers cannot be accepted as no reliable and irrebutable evidence has been furnished by the Respondent to prove his above claim. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Project (Supertech Basera in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus apparently committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section - Accordingly, a notice be issued to him directing him to explain as to why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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Income Tax
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2020 (1) TMI 358
Deduction u/s 80P(2) - assessee are Co-operative Societies registered under the Kerala Co-operative Societies Act, 1969 - Claim for deduction denied by AO by treating them as Co-operative Banks and not as Primary Agricultural Credit Societies - contention of the appellants is that, in view of the circular No.133/6 of 2007 dated 09.05.2007 issued by the Central Board of Direct Taxes in order to ascertain whether a cooperative society is conducting the business of banking, what shall be considered is whether it is a co-operative bank within the meaning of Part V of the Banking Regulation Act, 1949 and that the criteria shall not be as stated by the Full Bench of this Court in Mavilayi [ 2019 (3) TMI 1580 - KERALA HIGH COURT] - HELD THAT:- The aforesaid contention is misconceived. Clarificatory circulars are issued by Government departments for the guidance of the officers. Such circulars or instructions do bind the department and its officers. But they do not bind the Court in interpretation of statutory provisions. Circulars issued by a Government department cannot have any primacy over the decision of the jurisdictional High Court. Circulars and instructions thus issued will not survive, if they are contrary to the decision of a Constitutional Court. If a circular provides an interpretation of law that runs contrary to the interpretation given by the jurisdictional High Court, it no longer survives. Circulars or instructions given by the department are no doubt binding on the authorities under the Act, but when the Supreme Court or the High Court has declared the law on the question arising for consideration, it will not be open to a party to contend that the circular should be given effect to and not the view expressed in the decision of the Supreme Court or the High Court. Any direction issued by the Government in a circular would be mere expression of its opinion. But, once a provision has been interpreted by the superior court, then it will not be open to the assessee to project an interpretation on the concerned provision in tune with the circular, but against the law laid down by the Court. It is true that, when the Tribunal passed the orders, the decision in Mavilayi (supra) was not in existence. But, the decision in Chirakkal [ 2016 (4) TMI 826 - KERALA HIGH COURT] was then in force. In view of the decision in Chirakkal (supra), it was not necessary for the Tribunal to consider the effect of the circular issued by the department. A circular issued by the department is not binding on the Income Tax Appellate Tribunal also - Decided in favour revenue
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2020 (1) TMI 357
TDS u/s 194C OR 194J - Short deduction of tds - services of Uplinking, Bandwidth Services, Air Time and Channel Carriages to Multi System Operators - whether the payments made by the assessee to the companies with which it had entered into contracts can be said to be remuneration for the rendering of any managerial, technical or consultancy services? - HELD THAT:- The deductees in the instant case simply carried out a contractual work of up-linking and broadcasting programmes made or produced by the assessee in the electronic media by permitting the assessee to avail the benefit of requisite electronic set up against payment of a fee. It is purely contractual in nature and the assessee has the right to use the set up only so long as the contract subsists and the facilities offered by the deductees do not amount to providing technical services and hence, the payments they received from the assessee cannot be termed as fees for technical services . Therefore, Section 194J is not attracted. It is Section 194C which would apply to the facts of case. The definition of work under that Section is inclusive and specifically includes broadcasting and telecasting. The deductees do broadcasting and telecasting work for the assessee and therefore, Section 194C would apply to the facts of this case. The assessee rightly deducted tax at source at the rate prescribed in Section 194C of the Act and there is no short deduction. We find no infirmity in the order under appeal. Imposition of penalty on the assessee by the Assessing Officer is not defensible. The relevant tax records of the deductee companies were produced and the CIT found that the said companies have paid entirety of the tax payable after giving credit for the tax deducted at source. It is not that because of the assessee making deductions under Section 194C, the Revenue has suffered any loss. In the case of Hindustan Coca Cola Beverages Pvt. Ltd. v. Commissioner of Income Tax, [ 2007 (8) TMI 12 - SUPREME COURT] , the Hon ble Supreme Court noted Circular no.275/201/95-IT (B) dated January 29, 1997, issued by the Central Board of Direct Taxes. The said circular declares that no payment visualized under Section 201(1) of the Income Tax Act should be enforced after the tax deductor has satisfied the Officer-in-Charge of TDS that taxes due have been paid by the deducte-eassessee.
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2020 (1) TMI 356
Alternative remedy available to the writ applicant by preferring an appeal before the CIT (Appeals) - Section 44AD applicability - best judgement assessment u/s 144 - Rate of profit determination - HELD THAT:- Having regard to the basic infirmity in the impugned order passed by the Assessing Officer, we are of the view that we should not reject this writ application only the ground that the writ applicant has an alternative efficacious remedy of preferring an appeal before the CIT (Appeals). As decided in CHHABIL DASS AGARWAL [ 2013 (8) TMI 458 - SUPREME COURT] although the Act provides complete machinery for the assessment / reassessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities, yet the remedy under the statute, however, must be effective and not a mere formality with no substantial relief. It is true that when a statutory forum is created by law for redressal of grievance, a writ petition should not be entertained ignoring the statutory dispensation. But, such principles, in a given case, may be given a go bye, if the Court is convinced that on the face of it, the impugned order is not sustainable in law. We are of the view that we should look into the matter on merits while overruling the preliminary objection raised on behalf of the Revenue. We are convinced that the impugned order passed by the Assessing Officer is not sustainable in law. We once again fall back on the directions issued by the Appellate Tribunal. The directions are plain and simple. The Tribunal takes the view that Section 44AD of the Act is not applicable. It directed the assessee to attend the assessment proceedings and justify its case on lower rate of profit in accordance with its books of account. The Assessing Officer was directed to verify the same and decide the issue a fresh (the Tribunal says that decide the issue a fresh means the issue with regard to the claim of lower rate of profit). If the appeal would have been dismissed without there being any direction of remitting the matter to the Assessing Officer, then the effect would have been as if the Tribunal has accepted that the case would fall within the Section 44AD of the Act thereby justifying 8% rate of profit. Here is a case where the Assessing Officer, by its impugned order, has absolutely created new liability for the writ applicant and that too, contrary to the directions issued by the Appellate Tribunal. For the foregoing reasons, we are convinced that the impugned order passed by the Assessing Officer is not sustainable in law. In the result, this writ application succeeds and is hereby allowed. The matter is remitted to the Assessing Officer for fresh consideration of the issue as specifically directed by the Appellate Tribunal. We once again clarify that the Assessing Officer now needs to reconsider the issue with regard to claim of the writ applicant for lower rate of profit and not at the rate of 8%.
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2020 (1) TMI 355
Unexplained cash credits u/s 68 - Discharge of onus - HELD THAT:- Learned departmental representative at this stage quoted hon'ble apex court s decision in PCIT vs. NRA Iron Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] restoring such unexplained cash credits addition in the nature of the share capital / premium invoking accommodation entry providers. We note that their lordships had come across an instance of the concerned assessee having failed to satisfy the above stated three parameters (supra) whereas the facts in the instant case sufficiently reveal that this taxpayer had duly discharged its onus and also responded to section 131 summons. We therefore reject the Revenue s arguments supporting lower authorities action and delete the impugned un-explained cash credits addition. The assessee succeeds in its sole substantive grievance.
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2020 (1) TMI 354
Bogus LTCG - unexplained cash credit u/s 68 r.w.s. 115 BBE - HELD THAT:- After going through the facts and circumstances of the present case and the judgment of the Hon ble Delhi High Court in the case of Udit Kalra vs. ITO [ 2019 (4) TMI 834 - DELHI HIGH COURT] wherein has declared M/s Kappac Pharma as bogus company who made only accommodation entries in which the assessee is a beneficiary. Therefore, no other option except to follow the decision of the Hon ble Delhi High Court, because no other contrary judgment has been produced by the Ld. Counsel for the assesee. Accordingly, following the aforesaid precedent, uphold the well reasoned order of the Ld. CIT(A) and decide the issue in dispute against the Assessee by dismissing the appeal of the assessee.
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2020 (1) TMI 353
Assessment u/s 153C - Addition of brokerage commission - addition made by the AO on the basis of information received during the course of assessment proceedings - HELD THAT:- The assessee has explained that this commission was reflected in the books of accounts and included in the commission receipt by the assessee and offered to tax. This aspect has been considered by the ld.CIT(A) on the basis of explanation and bank statements furnished during the course of assessment proceedings and found that the addition was being made without any evidence, and therefore, unjustified. Before us also, there is no material to justify action of the AO for making the impugned addition. In a proceeding under section 153C, no addition can be made in the absence of any incriminating material. Undisputedly, there is no material evidence with the AO to make the impugned addition. Capital gain computation - nature of land sold - agricultural land of capital asset - Addition with aid of section 50C - CIT- A deleted the addition admitting additional evidence - HELD THAT:- If an agriculture land is situated beyond 8 kms. from the local limit of any municipal or cantonment area, whose population is more than ₹ 10 lakhs, then that would not fall within the ambit of definition capital assets. This demarcation of the geographical situation of the land is to be seen from the boundary notified by the CBDT in its gazette notification. It was brought to the notice of the ld.CIT(A) that the CBDT has notified boundary from where it is to be measured vide notification no.9447 dated 6.1.1994. Thereafter, it has not been revised, and from that boundary limit, geographical situation of the mainland was beyond 8 kms. Hence, it was not a capital asset. As far as admission of additional evidence is concerned, if the ld.CIT(A) has entertained the notification no.9447 for determining the geographical situation of the land of the assessee, then to our mind, this type of material can be considered by the ld.CIT(A) under Rule sub-rule (4) of Rule 46A, and there cannot be any violation at the end of the ld.CIT(A). Considering all these aspects, we are of the view that the ld.CIT(A) has considered the issue analytically and recorded a categorical finding that the land in dispute was situated beyond 8 kms. and it was not a capital asset on whose transfer capital gain can be assessed in the hands of the assessee. - Decided against revenue
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2020 (1) TMI 352
Penalty u/s.271(1)(c) - assessment u/s.153A - assessee has disclosed excess income over and above the income declared in the original return, the same was not mentioned in the body of the show cause notice issued by the AO - HELD THAT:- In the returns filed in response to notice u/s.153A of the Act the assessee claimed that additional income has been received by him and the same was not declared by him in the returns filed before the date of search, therefore the CIT(A) has rightly observed that provisions of Explanation 5A to section 271(1)(c) of the Act are applicable on account of concealment of particulars of his income or furnished inaccurate particulars of income, because all the conditions laid down in Explanation 5A have been met and the deeming provisions of section 271(1)(c) of the Act are clearly applicable to both the cases of the assessee. In view of the above, it is established beyond doubt that the assessee has concealed particulars of its income to the extent of additional income received by him. Ld. AR before us also could not bring any cogent material to controvert the above findings of the authorities below. Accordingly, we do not see any good reason to interfere in the orders of both the authorities below and, hence, we uphold the same and dismiss both the appeals of the assessee for A.Y.2010-2011 2011-2012, respectively. Penalty u/s.271(1)(c) - AY 2012-2013 to 2015-2016 - HELD THAT:- AO in the assessment has initiated penalty u/s.271(1)(c) of the Act on the differential amount disclosed in the return of income filed u/s.153A of the Act by the assessee without mentioning either of the two limbs as provided under the provisions of Section 271(1)(c) of the Act i.e. for concealment of particulars of income or for furnishing of inaccurate particulars of such income. Thereafter in the penalty order dated 28.06.2018, also the AO while levying penalty u/s.271(1)(c) of the Act has used both the expression. AO is not sure on which count he intends to levy penalty as per the provisions of Section 271(1)(c) of the Act either for concealment of particulars of income or for furnishing of inaccurate particulars of such income. Both these situations are contradictory to each other. Neither the assessment order nor the penalty order nowhere states the specific charge of alleged concealment and/or furnishing of inaccurate particulars of income. Therefore, in our opinion, the entire penalty imposed by the AO and confirmed by the CIT(A) stands vitiated and, therefore, is not sustainable. Further, in all the cases, the revised return filed by the assessee has been accepted by the AO. Admittedly, it is also a fact that in the all the cases, both returned income and the assessed income are same. Therefore, when the revised return is accepted and the income is assessed as per the revised return, there is no scope for penalty. - Decided in favour of assessee
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2020 (1) TMI 351
Unexplained cash credit u/s.68 - HELD THAT:- It was for the assessee to prove that the loan creditor had advanced the money out of the income of any other source like his capital i.e. saving of earlier years or receipt from any other person from which the loan creditor could have advanced the loan. The observation of the AO while making the addition u/s.68 is that the loan creditor has deposited the amount in cash of ₹ 7,90,000/- before issuing cheque of an amount of ₹ 8,00,000/- to the assessee on the same day. On perusal of the bank statement of the creditor filed by the assessee, it is observed that nowhere it is shown that the assessee has any other income routed through the bank. From the above, it can be inferred that the creditor is a man of means and the creditworthiness of the lender is not substantiated by furnishing the required details as called for by the Assessing Officer as per section 68 of the Income tax Act. In our considered view, the AO is justified in making the addition and ld CIT(A) is fully correct in confirming the same. Penalty u/s 271(1)(c) - HELD THAT:- Penalty order is based on furnishing of inaccurate particulars but the notice is not specifying exactly on which limb the penalty u/s 271(1)(c) has been initiated. From the notice dated 12.3.2014 produced during the hearing, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. The issue is squarely covered by the decision of the Hon'ble Supreme Court in case of M/s SSA' Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] . Since in the instant case also the inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. We, therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to cancel the penalty so levied u/s.271(1)(c) - Decided in favour of assessee.
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2020 (1) TMI 350
Penalty u/s 271(1)(c) - Non specification of charge - HELD THAT:- We find that the notice issued u/s 274 r.w.s.271(1)(c) of the Act apparently goes to prove that the Assessing Officer initiated the penalty proceedings by issuing the notice u/s.274/271(1)(c) of the Act without specifying the assessee has concealed ''particulars of income or assessee has furnished inaccurate particulars of income , so as to provide adequate opportunity to the assessee to explain the show cause notice. Rather notice in this case has been issued in a stereotyped manner without applying any mind which is bad in law, hence is not a valid notice sufficient to impose penalty u/s 271(1)(c) of the Act. See M/S SSA'S EMERALD MEADOWS [ 2016 (8) TMI 1145 - SC ORDER] - Decided in favour of assessee.
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2020 (1) TMI 348
Reopening of assessment u/s 147 - cash deposits in the bank account of the assessee maintained with the ICICI Bank - gifts received from the relatives with or without occasions - HELD THAT:- In the absence of return of income originally filed u/s 139(1) of the Act coupled with huge amounts of cash deposits is good enough to contribute the formation of reason to believe that this is a case of escapement of income. As mentioned in the open Court, proceed to dismiss the legal ground no.1 and 2 raised by the assessee. Gifts received - Gifts are given to the assessee from among the close relatives only. However, these gifts were given with or without any special occasions. The source of sources argument is the only defence from the assessee s side. However, the assessee failed to discharge the onus cast on him with reference to the credibility of the transactions and creditworthiness of the donors and the documentation furnished by the assessee is inadequate and the explanations given by the assessee are general in nature. It is not the case of the assessee or the AR before me that one more opportunity should be granted to the assessee for furnishing of the evidences in support of the creditworthiness of the transactions. AR failed to specify or file the additional evidence to be furnished before the I.T. authorities, if an opportunity is granted. Considering the same, I am of the opinion that the decision of the CIT(A) is fair and reasonable. Ld. AR has not made out a case satisfactorily for remanding to the file of the Assessing Officer/CIT(A). The explanation given by the assessee extracted in para 6.2 of the CIT(A) s order (supra) is duly considered while confirming the order of the CIT(A) on this part of the cash deposits amounting to ₹ 9.25 lakhs
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2020 (1) TMI 344
Dis-allowance of the commission paid to non-resident foreign agents - under invoicing - Non disclosure of Commission to the agent paid at the time of import - DRI found that customs duty was paid on such net amount remitted to the Assessee; the FOB value disclosed, on which customs duty was paid, did not include the commission paid to the foreign agents - HELD THAT:- Special leave petition is dismissed on the ground of low tax effect.
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2020 (1) TMI 343
Addition u/s 68 - Difference of opening cash and debtor balances - Rejection of books of accounts u/s 145(3) - Addition of agriculture income as income from other sources - Considering the interest income as income from other sources - Disallowance of deduction u/s 80C - HELD THAT:- Petitioner seeks permission to withdraw this special leave petition along with pending applications therein due to low tax effect.Permission granted, subject to just exceptions. The special leave petition and pending applications are dismissed as withdrawn, leaving question(s) of law open
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2020 (1) TMI 342
Penalty u/s 271(1)(C) - deduction u/s 80IA(4)(iv) rejected - Amounts paid to the employees under the Voluntary Retirement Scheme - whether such expense was an allowable expense or not? - HELD THAT:- SLP dismissed.
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2020 (1) TMI 341
Disallowance in assessment u/s 158BC - undisclosed income determined by the Assessing Officer by disallowing commission payment - HELD THAT:- SLP dismissed.
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2020 (1) TMI 335
Revision u/s 263 - Whether the order u/s. 263 passed by the Principal Commissioner of Income Tax who has validly assumed jurisdiction within two years from the end of the financial year in which the impugned order under reference was passed? - HELD THAT:- It appears from the finding recorded by the appellate tribunal that as the reassessment proceedings came to be quashed and the same has been accepted by the department, according to the appellate tribunal, there is no scope now for the Commissioner to exercise any power under Section 263 of the Act, 1961. Having heard the learned senior counsel Mr. Bhatt appearing for the revenue and having gone through the materials on record, we are of the view that there is no substantial question of law involved in this appeal. Although Mr. Bhatt tried to persuade us to take the view that the two issues on which the power is required to be exercised under Section 263 of the Act. As the reassessment proceedings came to be quashed and the same has been accepted, no useful purpose would now be served to permit the Commissioner to exercise power under Section263 - Decided against revenue.
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2020 (1) TMI 334
Condonation of delay in filing Form No.10 under section 11(2) of the Act - Petitioner a public trust, is registered under section 12AA - primary ground of refusal that is the Petitioner did not claim of accumulation under section 11(2) in the return of income - HELD THAT:- There is no finding in the impugned order as to whether the entry was made due to an error or it was a deliberate act. The case of the Petitioner of an error of making a claim under a wrong head needs to be considered by the Commissioner. It is not possible for us to decide this question of fact in the first instance. It is for the Commissioner to decide whether the action of the Petitioner was due to inadvertence as claimed by the Petitioner or is a part of a design as claimed by Respondents. In these circumstances, we deem it appropriate to remand the proceedings to the Commissioner to consider this aspect. The order dated 26 September 2019 passed by the Commissioner of Income Tax (Exemptions) is quashed set aside. The application filed by the Petitioner for condonation of delay stands restored for consideration of the Commissioner. The Commissioner will consider the case of the Petitioner on its own merits. If the Commissioner concludes that the Petitioner had made a claim inadvertently in a wrong column, then the question whether cogent reason exists for condonation of delay would arise for consideration. Petitioner will appear before the Commissioner on 20 January 2020, for the Commissioner to give further direction as regards the date of hearing of the application. All contentions are kept open.
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2020 (1) TMI 330
Penalty u/s 221 - assessee in default under Section 201 - HELD THAT:- In the penalty proceedings, assessee admitted that it was an assessee in default. However, a plea came to be raised that within four days of the order passed under Section 201 of the Act, amount which was required to be remitted along with interest had been remitted/paid and contended that delay of 15 months in not remitting the amount of tax to the tune of 2.05crores which was relatable to salary deductions, contract payments, professional fee, etc., paid or payable to parties during the year ending 31.01.2012 had not been remitted or assessee had failed to remit the said amount so deducted to the account of the Central Government was due to financial crisis. Only plea which was available to assessee in the penalty proceedings is to explain the cause for delay. It is in this background, Assessing Officer amongst several questions raised had called upon assessee to answer three pertinent questions which has been noticed by the Commissioner of Income Tax (Appeals) in Paragraph 3.1 of the order and a plain reading of the same would disclose that during the financial year ending in question, assessee was possessing surplus funds of ₹ 7,85,71,805/-. That apart, assessee had made three payments for purchase of sites, three payment for purchase of cars and as such, it was noticed that cars which were purchased was in addition to the existing four cars purchased in the earlier year and the reason of business expediency raised or pleaded by assessee was not suspectable as it was not in the proximity of truth. This finding of fact which had been recorded by the Assessing Officer when being set aside by the 1stappellate authority the least that was expected from Commissioner of Income Tax (Appeals) was to record a finding which would disprove said fact or in other words reasons had to be assigned. This exercise having not been undertaken by CIT (Appeals) and by a cryptic order as noticed herein, finding of the Assessing Officer having been set aside, this has persuaded the tribunal to reverse the finding of CIT (Appeals) and restore the finding of the Assessing Officer in part viz., affirming levy of penalty but reducing the quantum of penalty. We find from the order of tribunal that the finding recorded by the tribunal to arrive at a conclusion is based on sound appreciation of material available before it. In fact, a clear finding has been recorded by the tribunal that question of financial stringency pleaded by assessee was not proved. Even otherwise, it has been held that financial stringency would not justify the non-remittance of TDS to the Government, in as much as, it would amount to utilization of money payable to the appropriate government. As such, by extending its benevolence, tribunal has directed the Assessing Officer to restrict the levy of penalty to a sum of ₹ 20,55,573/- in substitution to ₹ 77,95,155/- levied by Assessing officer. This finding would not call for interference by us particularly when assessee having been declared as an assessee in default under Section 201 (1) of the Act by order dated 30.07.2013 and said order having not been challenged by the assessee. - Decided against assessee.
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2020 (1) TMI 328
Revision u/s 263 - dropping of proceedings by the AO - internal order - whether an order that can be revised u/s 263 - it is contended that decision taken to drop the proceeding initiated pursuant to section 148 though not communicated was nevertheless an order - HELD THAT:- The decision to drop the proceeding has not been communicated to the petitioner. As long as such decision had remained in the files, invocation of jurisdiction under section 263 of the Income Tax Act, 1961 would have been premature. However, once the aforesaid decision is communicated and made known to the petitioner, such decision would be amenable to revision under section 263 of the Income Tax Act, 1961. In this case, the decision has been communicated. Therefore, no reasons to interfere at the stage. Therefore, leave the issue open to be decided by the 1st respondent on merits. Petitioner shall make all submissions on merit including their defence pertaining to jurisdiction. Since the impugned notice is of the year 2003, the authority/respondent is requested to pass appropriate orders within a period of 3 months from the date of this receipt of this order. Writ Petition is disposed with the above directions
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2020 (1) TMI 319
Disallowance of expenses - CIT(A) deleted the addition without giving an opportunity of being heard to AO to examine the additional evidence produced before him in the form of bills/vouchers, TDS Challans etc, which were not produced before the AO, as mandated by Rule 46A(3) of the Income-tax Rules, 1963 - HELD THAT:- Just giving the note will not serve the purpose. Admittedly the various details which have been referred by the learned CIT(A) were not before the assessing officer. Moreover after noting that he has himself examined the bills he has given a general assumption that expenditure must have been incurred for such transportation. When learned CIT (A) has himself verified the bills there was no need of giving such doubtful observation. In this view of the matter there is certainly violation of 46 A and the finding of learned CIT (A) is also not categorical. Accordingly, in our considered opinion the submissions and documents on the basis of which learned CIT (A) has granted relief need to be remitted to the file of Assessing Officer. The Assessing Officer is directed to go through the same and decide as per law. Transfer Pricing adjustment of Singapore AE - HELD THAT:- As regards the Transfer Pricing adjustment, ld CIT(A) has noted that assessee s explanation appears to be acceptable and hence the assessing officer is directed to delete the above addition as the AR has established that the said Nomanbhoy Sons Pte Ltd (Singapore) is not an associated enterprise. In this regard we note that ld CIT(A) has not given a categorical finding. He has used the expression that it appears to him that assessee submissions are correct. In our considered opinion such vague orders are not sustainable. There should have been a categorical finding to be sustainable in law. In our considered opinion, this issue also needs to be remitted to the file of Assessing Officer. The Assessing Officer is directed to consider the issue afresh in light of the submissions and explanations given before the learned CIT (A). Transfer Pricing adjustment - CIT(A) has referred to the assessee submissions and has directed the Assessing Officer to verify and allow - HELD THAT:- We fail to understand as to how the learned CIT(A) can give such suggestions. Firstly, the learned CIT(A) has no power of remand. Moreover the learned CIT(A) has directed to verify and in the same breath he is directing to be allowed. The direction if any in this regard can be to verify and allow as per law. Be as it may we modify order of learned CIT(A) and remit the issues to the file of assessing officer. Assessing officer is directed to examine the same afresh and pass an order according to law after giving the assessee proper opportunity appeal heard.
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2020 (1) TMI 318
TDS u/s 194J - Tax deduction at source on the passengers services fees(PSF) - assessee is a public limited company engaged in the business of running a passenger airline under the name and style Indigo - HELD THAT:- Security services are to be provided by the Airport Owners and operators, who will in turn obtain it from any government agency specified by Central Government. Further, the facility charges are undeniably, service provided by the Airport operators to the passengers of the Airline assessee. Therefore, it is apparent that these parties are providing to the assessee services . Thus, we do not find any reason to hold that the provisions of section 194C do not apply to the passenger service fee payments. It is also relevant to note that several private companies and joint ventures owned and operate the airports in the country. For the facility and security of the passengers the airlines are collecting such fees. Only for the security reasons CISF, as designated by central government, is deployed at those airports. The airline for this reason passenger service fees is collected in their bills by the Airline assessee. Against this the passengers who availed the services of the assessee are provided facility and security. Therefore, the payment by the assessee to the owner of the airport is for the purpose of work which is covered u/s 194C of the Act. Thus, we hold that assessee should have deducted tax at source u/s 194C Security portion is payable by the Airport Authority of India and others to CISF which is govt. Firstly, this argument is flawed because assessee does not pay any sum to CISF but it is paid by the owners and operators of the airport. Hence, in the case of the assessee it cannot take shelter u/s 196 of the Act as the assessee is not payee to CISF but airport operators pay it. Thus, we uphold the order of the ld CIT (A) to that extent. Deduction of tax at source on year-end provisions - According to the provisions of the income tax act the tax is required to be deducted as and when assessee becomes responsible for payment of above sum to other parties. The claim of the assessee is that it is maintaining its books of account on accrual basis of accounting and therefore the amount is required to be provided for. When the expenditure incurred by the assessee, the corresponding liability definitely arises for payment of such expenditure. The amount of expenditure incurred can be determined only if, there is a recipient identified of the sum, there is a methodology available for working out the amount payable by the assessee to the recipient, there is a corresponding liability arising out of the existing contract or customs by the assessee with the recipient. If generally these ingredients are not satisfied assessee cannot be said to have incurred the expenditure. In absence of one of one of these criteria, if provision is made, it is not an ascertained liability but an unascertained liability, which does not satisfied the concept of accrual of expenditure. There may be reasons for receiving the bills by the service providers after certain time lag but that does not absolve the assessee from the liability of deduction of tax at source. In the present case the provision is made under the specified head, provision is also made to on certain basis thereby ascertaining the amount. It is not the case of the assessee that it has made an ad hoc provision. Thus it cannot be said that the payee is not identified. Therefore, according to us, the tax is required to be deducted on the year-end provisions made by the assessee which are ascertained liabilities. No doubt, the learned CIT(A) has given the benefit of the assessee if tax is deducted by the assessee subsequently. Therefore we do not find any infirmity in the order of the learned CIT(A) in holding that assessee has failed to deducted tax at source on year-end provisions. Thus the order of the learned CIT(A) is upheld to that extent. Now if the recipient of the income has shown the above provision in the income by filing the return of income and paying tax thereon, the assessee should be granted the benefit of the proviso to section 201 of the income tax act. In view of this, the assessee is directed to submit the relevant details in form number 26A of the income tax act rules before the assessing officer. On receipt of the above information from the assessee, the AO may determine the amount of default by the assessee and then rework the liability arising on the assessee under section 201 of the income tax act. In view of this ground number three of the appeal of the assessee is also set aside to the file of the learned AO. Levy of interest under section 201(1A) - AO has charged the interest from the. Beginning from the month in which tax was deductible up to the end of the month in which the return was due to be filed by the deducted, without appreciating that interest under that section, if leviable, was required to be computed only till the end of the relevant previous year. To examine the above argument of the assessee the proviso to section 201(1A) is required to be seen which is added with effect from 01-07-2012 corresponding to the proviso added to section 201 of the income tax act. According to that proviso the interest shall be chargeable from the date on which such tax was deductible to the date of furnishing of return of income by the payee. However as the ground number two and three of the appeal of the assessee are set aside to the file of the learned assessing officer, the assessee is at liberty to raise the amount of chargeability of interest with respect to the period, we also set aside this ground of appeal to the file of the learned assessing officer with the liberty to assessee to raise all the pleas charging of interest. Accordingly ground number four of the appeal of the assessee is also set aside to the file of the learned assessing officer. Tax at source on credit card gateway facility fee - The identical issues covered in favour of the assessee by the decision of the coordinate bench for assessment year 2012 13 in case of SpiceJet Ltd wherein has held that assessee was not required to deduct except source on charges written by bank and credit card agencies out of the same consideration of ticket booked through credit/debit cards and the provisions of section 194H are not attracted. Therefore respectfully following the decision of the coordinate bench we find no infirmity in the order of the learned CIT(A). The assessee cannot be held to be an assessee in default with respect to the above payment. Accordingly ground number two of the appeal of the learned assessing officer is dismissed.
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2020 (1) TMI 314
Deemed dividend addition u/s 2(22)(e ) - AO has highlighted the fact that the assessee was holding 86.67% shares in M/s Apra Auto India P. Ltd and had been in receipt of amount running into ₹ 10.57 crores from the account of M/s Apra auto India P. Ltd. - HELD THAT:- Assessee has also not received any advance in the nature of loan or advances as contemplated in the section 2(22)(e) of the Income tax Act, 1961 but received advance against sale of commercial space developed by the assessee on his own land in collaboration with M/s Unitech Limited as per Buyer's agreement. We find that provisions of section 2(22)(e) of the Income tax Act, 1961 are not applicable in case of the assessee as the assessee has received advance of ₹ 5,62,00,000/- from the said company against sale of commercial space in Signature Tower - II, Sector - 15, Gurgaon, Haryana. Since, the said receipts of advance of ₹ 5,62,00,000/- against sale of commercial space is not a receipt in the nature of loan or advance as contemplated in section 2(22)(e) of the Income tax Act, 1961 which attracts the provisions of in that section as the said advance is in the nature of business advance which did not fall within the ambit of provisions of section 2(22)(e) of the Income tax Act, 1961. It it is the company which owes the assessee the money rather vice-versa, it is unequivocally proved that the advance received from the company by the assessee is in the nature of trade advance against the booking of commercial place being built by the assessee, we hereby decline to interfere with the order of the ld. CIT (A) in deleting the addition made by the AO u/s 2(22)(e). - Decided against revenue
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2020 (1) TMI 311
Rebate u/s 88E while calculating the tax liability of the assessee for minimum alternative tax under section 115JB of the income tax act on the book profit - HELD THAT:- Issue decided in HORIZON CAPITAL LTD. [ 2011 (10) TMI 489 - KARNATAKA HIGH COURT] assessee is liable to pay securities transaction tax when he enters into securities transaction. Tax is payable simultaneously after realizing the consideration. However, if that transaction is included in the total income of the assessee where the total income is assessed either under the provisions of the Act or under Section 115JB when tax chargeable on such income is arrived at, he is given the benefit of tax deductions of the amount, which he has paid under section 88E by virtue of Section 87. When under Section 82A, the assessee is made liable to pay tax with an assurance that it will be deducted and section 87 of the Act gives effect to such promise made under the statute. That is the reason why the word used is rebate. The amount paid is handed back to the assessee. In other words, payment of tax twice on the same income is avoided. The contention that this benefit is not available to the assessee whose total income is assessed under Section 115JB has no substance. In other words, when the total income is assessed and the tax chargeable is computed, it is from that tax which is chargeable, the tax paid under Section 88E is given deduction, by way of rebate, under Section 87 of the Act. This is the legislative intent. That is a promise to give deduction of the tax already paid. This is the mode in which tax already paid is handed back at the time of final computation. - Decided against revenue Disallowance of interest expenditure on the ground that the certain loan amount was utilized for acquiring the property - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] that interest free funds were available to assessee which were sufficient to meet its investment in subsidiaries, appellate authorities were justified in allowing assessee's claim for deduction. In the present case the assessee has issued subscribed and paid-up share capital of 19705200/ and reserves and surplus of INR 6 8624247/ which is far more than investment in the answer Plaza shop of INR 1 9009105. Thus following the decision of the honourable Supreme Court, the above addition cannot be sustained. Hence, we direct the learned assessing officer to delete the same. Disallowance of interest paid on loan - Addition deleted by the learned CIT A - HELD THAT:- CIT A has considered each and every item of the interest expenditure and held that same is related to the business of the assessee and further the learned departmental representative could not point out any of the expenditure of interest which is on account of diversion of fund and not for the purposes of the business, we uphold the order of the learned CIT A. Disallowance on account of charges paid to National stock exchange and securities and Board of India treated as the same being penal in nature - HELD THAT:- We find that the above issue is squarely covered in favour of the assessee by the decision of the coordinate bench in Goldcrest capital markets Ltd vs ITO [ 2009 (1) TMI 553 - ITAT, MUMBAI] and ITO vs Reliance share and stockbrokers private limited. [ 2014 (10) TMI 781 - ITAT MUMBAI] . Thus, we find no infirmity in the order of the learned CIT capital and deleting the above addition. Denial of rebate u/s 88E on the interest income - HELD THAT:- CIT A has allowed the claim of the assessee based on the decision of [ 2005 (3) TMI 93 - KARNATAKA HIGH COURT] which has been reversed by the honourable Supreme Court in [ 2007 (12) TMI 271 - SUPREME COURT] . Therefore we set aside whole issue back to the file of the learned CIT A to re-examine the claim of the assessee in view of the decision of the learned assessing officer on the merits in accordance with the law. Accordingly ground number 5 of the appeal of the learned assessing officer is set aside to the file of the learned CIT A. Thus this ground of appeal is allowed with above direction. TDS u/s 194J - disallowance u/s 40 (a) (ia) on account of payment to National stock exchange of security exchange Board of India charges paid by the assessee for non-deduction of tax - HELD THAT:- Above issue has been squarely covered by the decision of the honourable Supreme Court in CIT vs Kotak securities Ltd [ 2016 (3) TMI 1026 - SUPREME COURT] wherein it has been held that Service made available by Bombay Stock Exchange [BSE Online Trading (BOLT) System] for which transaction charges are paid by members of BSE are common services that every member of Stock Exchange is necessarily required to avail of to carry out trading in securities in Stock Exchange; such services do not amount to 'technical services' provided by Stock Exchange, not being services specifically sought for by user or consumer and, therefore, no TDS would be deductible under section 194J on payments made for such services. Disallowance u/s 14A - HELD THAT:- Claim of the assessee is that only investment yielding the exempt income should be considered to workout the average value of investment for the purpose of disallowance of the expenditure. Before us the assessee has submitted the opening and closing balance of investments which yielded dividend income which are placed at page number 38 of the paper book and the assessee has worked out the total disallowance of INR 1 0404/-thereon. The above details were not available with the assessing officer and therefore we direct the assessee to submit the above details before the assessing officer, who may verify and consider the argument of the assessee that only the investments which have yielded the exempt income should be included for the purpose of working out disallowable expenditure as per rule 8D of the income tax rules under section 14 A. Such is the mandate of the honourable Delhi High Court in case of CIT vs Inter Global Enterprises Ltd [ 2016 (9) TMI 552 - DELHI HIGH COURT] - Ground number 2 of the appeal of the assessee is allowed with above direction.
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2020 (1) TMI 310
Deduction claimed u/s 54 - Proof of construction in the village - assessee has claimed the deduction stating that the assessee along with his wife has jointly constructed a house at Kotada, Jadodar, Bhuj in Gujarat state - HELD THAT:- In the instant case, the assessee has sold the property consisting of site and Madras terraced building located at Sy.No.129, Block No.4, Plot No.21 22 with D.No.32-37-20 within the Greater Visakhapatnam Municipal Corporation limits, Visakhapatnam for a consideration of ₹ 9,00,000/- along his wife. The total sale consideration of the assessee and his wife was ₹ 18,00,000/- which was received jointly by them and credited in the bank accounts as evidenced from the assessment order. The assessee submitted that the sum of ₹ 18 lakhs was used for construction and accordingly the said amounts were withdrawn from the bank account on various dates. The assessee submitted a certificate from Gram Panchayat confirming the construction of house property on the site owned by them earlier. The AO without making any enquiries disbelieved the claim of the assessee and disallowed the deduction claimed by the assessee which is unjustified according to our view. As per the certificate, the house was constructed during the period 2007-08 and no approval was necessary in the village. The Sarpanch has signed the letter duly signed and stamped the certificate. If the AO did not believe the certificate or considered the same as bogus, the AO ought to have made the enquiries and disproved the genuineness of the certificate issued by the Gram Panchayat. Since the assessee has furnished the required details and constructed the small house at the village, where no approvals or permissions are necessary, we do not find any reason to disallow the deduction claimed by the assessee u/s 54F. Accordingly, we set aside the orders of the Ld.CIT(A) and delete the addition made by the AO. - Appeal of the assessee is allowed
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Customs
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2020 (1) TMI 339
Permission for assessment and clearance of the goods imported by the Petitioner - used aircraft tyres for Animal Driven Vehicles Tractor Trolley Agricultural Use - appellant could not controvert the factum of the earlier interim orders, which have been placed on record, nor can he point out any distinction in the facts of the present case to those of the earlier matters - HELD THAT:- When there is no controversy qua the law question being identical and the facts are also similar, let there be similar interim relief in this matter also. The respondents are directed to permit the clearance of the goods imported by the petitioner subject to conditions imposed.
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2020 (1) TMI 333
Condonation of delay of 452 days in filing the Appeal - penalty u/s 114-A of the Customs Act, 1962 - Tribunal has used its judicial discretion not to condone the delay - contention is that the discretion used is perverse - HELD THAT:- There are no particulars, and an only general statement is made that there were transfers of officers due to annual general transfers and there was heavy workload. It is not asserted that the officers in charge of filing the appeal had a heavy workload and of urgent nature. It is also not stated that the officer in charge of filing the appeal was transferred. Nothing is stated as to who was the officer responsible for filing the Appeal. In the absence of any particulars, if the Tribunal followed the decision in Chief Postmaster General [2012 (4) TMI 341 - SUPREME COURT] , we cannot hold that the view taken by the Tribunal is perverse. Appeal dismissed.
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2020 (1) TMI 331
Maintainability of petition - service of SCN still pending - time limit to issue SCN - HELD THAT:- The respondents have already issued a seizure memo dated 16th August, 2019 and further looking to the fact that an application for provisional release of goods has already been accepted by the respondents subject to petitioner furnishing a Bond equivalent to FOB value of goods, we see no reason to entertain this writ petition. Petition dismissed.
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2020 (1) TMI 327
Refund Claim - time limitation - only contention of the appellants (Revenue) is that since the claim for refund was not made at the time of supply of goods, the said claim cannot be made belatedly - HELD THAT:- There are no merit in this appeal. It is undisputed that the goods supplied to Export Oriented Units at the relevant point of time was entitled for tax refund. Therefore, even though the tax that was paid at the time when the goods were exported it did not entitle the respondents to retain the same. Due to various reasons, tax was paid at the time of exporting the goods. In fact the appellants does not dispute the fact that the tax has been wrongly paid. If it is not disputed it cannot be retained. That is what the Learned Single Judge has held. The learned Single Judge has rightly allowed the petition. Present appeal dismissed.
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2020 (1) TMI 326
Prohibition on seeking assessment/reassessment of vessel - section 17 of the Customs Act, 1962 - whether the levy of the penalty under order, dated 06.07.2018, and the deposit of the same by the petitioner absolved the petitioner from discharging of all its liabilities in respect of the import of the vessel, on 28.05.2012, into Indian waters? - whether the petitioner is not required to file the manual bill of entry at any time later and is, therefore, entitled to withdraw the manual bill of entry having filed, on 10.07.2018? - HELD THAT:- The imposition of the penalty or a direction to the importer to pay charges is for contravention of the provisions of Sections 30 46 of the Act, which is prescribed, and not for absolving or discharging the importer from the liability to present a bill of entry in the prescribed form. Therefore, the contention of the petitioner that once penalty is imposed and deposited, the petitioner is not required to present manually the bill of entry and, therefore, the respondents ought to have considered the request of the petitioner for withdrawal of the manual bill of entry, which was presented for regularisation, needs no countenance. Whether the customs authorities are entitled to assess the impugned vessel to duty, on the premise that the bill of entry is filed in the year 2018, and also collect duties and tax prevalent in 2018 despite the fact that the vessel is admittedly imported into the Indian waters on 28.05.2012 more particularly when the customs duties applicable at that point of time viz., 28.05.2012 were nil and when the integrated tax in terms of Section 3(7) of the Customs Tariff Act, was a levy introduced only w.e.f 01.07.2017? - HELD THAT:- Whether the bill of entry has been presented before the date of entry or after the date of entry, the bill of entry shall be deemed to have been presented on the date of actual entry inwards and the said date of entry shall be reckoned as the relevant date for application of the law prevalent as on that date. The law prevalent as on the date of the import of the vessel in the case on hand would only be applicable and that merely because the bill of entry was not filed at the inception in the year 2012 and the manual bill of entry was filed in the year 2018, that is, about six years after the actual import of goods, the duty and tax cannot be levied based on the law prevalent on the date of the filing of manual bill of entry more particularly as the import of the vessel in May, 2012, is not in dispute and as the vessel ran after getting necessary port clearances on number of occasions is also not in dispute - As admittedly the duties were nil at the time of import in May, 2012, and the integrated tax in terms of Section 3(7) of Customs Tariff Act, 1975 was introduced w.e.f from 01.07.2017, we hold that the petitioner is entitled to the reliefs claimed in the writ petition. Petition allowed.
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2020 (1) TMI 325
Import of of Baggage - clubbing of free allowance of other family member - benefit of the total duty free baggage allowance - case of petitioner is that since the total value of the spare parts was less than the sum total of the baggage allowance permissible for all the passengers, the items imported were within the permissible limits of bona fide baggage exempted from duty for the purposes of Section 79 of the Customs Act, 1962 read with the Baggage Rules, 1998 - Revenue is of the view that spare parts being items for commercial use, would not be entitled for baggage benefits. HELD THAT:- There are force in the contention of the learned counsel for the appellant that the duty free baggage allowance that is permitted under the Rules to a passenger cannot be clubbed with the duty free allowance permitted to another passenger even if he/she falls within the definition of the family of the first passenger - It is relevant to note in the instant case that the baggage in which the spare parts in question were carried, was declared in the name of the petitioner. The baggage in question had therefore to be seen as the baggage of the petitioner as an individual passenger. While it would have been open to the petitioner to claim a duty free clearance in respect of the various articles/spare parts had they been invoiced to, and included in the baggage of, the other passengers who were individual members of his family and in whose names the baggages were registered, perhaps he could have claimed the benefit of duty free allowance as applicable to each of those passengers. In the instant case, however, the items in question were contained in the baggage of the petitioner, and the invoices in respect of the spare parts showed the petitioner as the person to whom the spare parts were sold. We are, therefore, constrained to hold that the petitioner could not have contended for a pooling of the baggage allowance permitted in respect of his wife and children to enhance the limit of duty free baggage allowance that was admissible to him in his capacity as a passenger under the Baggage Rules. As regards the finding of the learned single Judge that the items of spare parts constituted bona fide baggage, we find that the spare parts in question were intended for use in a vehicle imported by the petitioner earlier and put to personal use of the petitioner - Under the said circumstances, and in view of the fact that the items of spare parts were not excluded for carriage in baggage under Appendix I of the Baggage Rules, the finding of the learned single Judge that the said items of spare parts constituted bona fide baggage is upheld. Appeal allowed.
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2020 (1) TMI 320
Smuggling - Gold - Disposal of seized gold on the part of Revenue - it is submitted that department had not followed any procedure for the disposal of the gold and the said fact has been admitted by the department vide their letter dated 16.03.2018 - notice is not served to the owner or to the person from whom such goods were recovered - benefit of N/N. 31/1986- Customs dated 05.02.1986 - HELD THAT:- From N/N. 31/1986- Customs dated 05.02.1986, it is apparent that gold in all forms, including bullions, ingot, coin, ornament, crude jewellery is one of the specified goods therein - Further it is observed that the gold was seized on 02.06.1999, the order of confiscation was announced on 23.03.2000. The provision of section 110 of CA permits the disposal of seized goods. In the present case pursuant to the said seizure the original adjudicating authority had confirmed the confiscation where after only the department proceeded for disposal of goods, it being one of the specified goods, in terms of the notification as passed under Section 110(1A) of the Customs Act. Section 1B of 110 of Customs Act provides a procedure to be undertaken by the proper officers for disposal of the goods. It is apparent from record that the said procedure was also duly followed by the department as the inventory of the seized goods was got prepared on 02.06.1999 on the date of seizure itself. The same was also got verified by the Additional Civil Judge (Jr. Division)-Cum-Judicial-Magistrate, Bikaner that too twice i.e. on 03.06.1999 and also on 16.05.2000. Thereafter the impugned goods were deposited in the Malkhana of New Customs House, IGI Airport, New Delhi on 13.07.2000 from where the gold was handed over to State Bank of India (SBI) on 20.03.2001 for disposal which was ultimately sold by SBI on 26.03.2001 for an amount of ₹ 4,84,545/- - This particular perusal is clear enough to show that the disposal of goods was very much in compliance of the statutory procedure. Otherwise also there is always a presumption of correctness in the act of discharge of duty by a competent officer. There is no evidence produced by the Appellant to rebutt the said presumption. In the light of the fact that gold is a commodity the value where of has been increased enormously since the date of impugned disposal in the year 2001 till the date of the order of return in the year 2015 and that there is no apparent fault on part of the department while disposing the same. The department rather has duly complied with the order of return of confiscated goods of the year 2015 by refunding the sale proceeds of the gold as was received in the year 2001. The said amount has duly been encashed by the Appellant that to more than a year prior filing of the impugned appeal. The question is answered with the finding that in the given facts circumstance, the order of this Tribunal stands duly complied with when department returned the sale proceeds of impugned gold as were received in the year 2001 when this gold was auction sold. Thus the appellant is not held entitled for the gold as such nor for its market value as prevalent in the year 2015 - appeal dismissed.
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2020 (1) TMI 315
Smuggling - Gold converted into ornaments - authority of CISF Officer to intercept the gold - reliability on statements - corroborative statements - Seizure - Absolute Confiscation - penalty - HELD THAT:- The entire case was made out by the department as smuggled gold on the basis of conjecture and surmises that the seized gold bangles were made out of smuggled gold converted into ornaments. There are no direct or indirect link in support of the allegation of the department. The Investigating Officer should have enquired the matter in detail in support of their allegation. It appears that the Investigating Officer in the present case had merely proceeded on the basis of the initial statement and have not examined the details thoroughly. They have not investigated even the Invoices submitted by the appellants with the proper local authorities. In such situation, the seizure of gold bangles worn by the Appellant No. 1, cannot be sustained. It is significant to note that the entire case is made out on the basis of statement of Appellant No. 1 - The other statements including Appellant No. 1 s subsequent statement and purchase documents were discarded as afterthought. Apparently, the statement dated 23.06.2017 of Appellant No. 1 is uncorroborative in nature. The gold bangles cannot be held to be of smuggled nature. Hence, the confiscation of the gold bangles and imposition of penalties are not justified - Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 313
Disposal of petition - petitioner is aggrieved with the disposing off the writ petition with a liberty to the petitioner to approach the appropriate forum - appellant contends that the question of approaching the appropriate forum would not arise for consideration and the writ petition has to be decided on merits - HELD THAT:- There are no grounds to interfere in this appeal. During the pendency of the petition, the learned Single Judge has passed various orders and in pursuant to that, the respondents have also passed orders, which are already a part of the record. Writ petition was filed for a declaration that the petitioner is entitled to duty credit scrip of ₹ 1,35,27,742/- vide Annexure C to the writ petition at the rate of 2% of incremental growth in exports during 01.01.2013 to 31.03.2014. Since, interim orders were passed and subsequent orders have also been passed by the authorities based on such directions, it is necessary that the orders passed by the Authorities require to be challenged by the petitioner before the appropriate forum. It is also just and necessary that the petitioner be granted liberty to challenge those orders since subsequent orders have been passed by the authorities pursuant to filing of the writ petition. The writ petition cannot be considered on the pleadings which were made after filing of the writ petition. The writ appeal is disposed off with a liberty to the petitioner to approach the appropriate forum to question the validity of the order dated 09.10.2018 as well as the communication dated 06.11.2018.
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2020 (1) TMI 308
Valuation of imported goods - O General window/split Air-conditioners in assembled condition - enhancement of value - rejection of declared value - Rule 8 of Customs valuation Rules, 1988 - case of appellant is that the importer was not informed of the reasons for rejection of the declared value and the manner of finalization of the assessment - principles of natural justice - HELD THAT:- The case appears to have been built upon the imports made somewhere in 2003 by another importer M/s. Vaz Enterprises who have imported components parts of the same brand of Air conditioner, whereas the present imports are in 2005; it is also not made out as to how the said imports of M/s. Vaz Enterprises are comparable with the impugned import in 2005; except mentioning that the goods are of the same brand nothing more is forthcoming from the OIA and OIO - this cannot be a reason for rejecting the transaction value declared by the appellants as no comparable parameters like supplier, importer, quantity, quality time of import are matching - Moreover in addition to the above, the principles of natural justice have been grossly violated as no sufficient time was given to the respondent to reply to the show cause notices or prepare for personal hearing. Issuance of two SCNs - HELD THAT:- Issuing 2 notices in too short a time may suffice the requirements of law in letter but the spirit of the same defeated. We find that the action of the lower authority is not at all sustainable under law. On merits also the case does not stand on even one leg. Firstly, no reasons were recorded for rejecting the declared value; Secondly, the valuation rules have not been pursued in the sequential manner in terms of Rule 4 of CVR 1988; thirdly no reasons for adopting the value of import which occurred a couple of years ago and lastly difference of additional duty payable was arrived at without rejecting the declared RSP - the instant case serves as a perfect example to show case as to how adjudication order is not supposed to be passed. The impugned order set aside - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2020 (1) TMI 349
Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - existence of debt and default or not - Section 9 of Insolvency and Bankruptcy Code, 2016, R/w Rule 6 of Insolvency Bankruptcy (Application to the Adjudicating Authority) Rules, 2016 - HELD THAT:- There is no dispute with regard to filing of application on behalf of the corporate debtor under section 10 of the I B Code. Admittedly, it is not the case of the corporate debtor that it had paid the agreed fee to the operational creditor. However, the corporate debtor is contending that certain obligations to be discharged in respect of agreement dated 27.03.2018. Said obligations, whatever they may be, have no connection to the obligation discharged under the agreement dated 02.05.2018. The alleged dispute, if any, in respect of agreement dated 27.03.2018 is in no way connected to the services rendered for the corporate debtor under agreement dated 02.05.2018. So, it cannot be said that there is a prior dispute. Secondly, no payment is made to the operational creditor in respect of services rendered for the corporate debtor in filing application under section 10 of the I B Code through its associate, Shri Satishkumar, Practising Company Secretary. The amount payable to the operational creditor falls under the definition of 'operational debt' as it refers to the payment for the services rendered to the corporate debtor. Secondly, demand notice was issued and there is compliance of provisions of section 9 of the I B Code. Thus, there is debt and default of operational debt. As such the petition is liable to be admitted. The Adjudicating Authority admits this Petition under Section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code - petition admitted - moratorium declared.
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2020 (1) TMI 347
Maintainability of petition - initiation of CIRP - Corporate Debtor defaulted in making repayment - Section 7 of the Insolvency and Bankruptcy Code, read with Rule 4 of AAA Rules - it is the case of Corporate Debtor that proceedings was initiated against Corporate Debtor by Financial Creditor only basing on the circular issued by RBI dated 12.02.2018 - HELD THAT:- The Corporate Debtor has mainly relied on JLF meeting held on 06.09.2018. We have gone through the details of the minutes of JLF meeting held on 06.09.2018. It is very clear that the Financial Creditor mainly relied on the guidelines given in the circular of RBI dated 12.02.2018 and timelines provided thereunder and as resolution plan could not be implemented, therefore, the Financial Creditor to approach NCLT as per the circular of RBI. So, there is no other reason to refer the Corporate Debtor to NCLT except solely on the basis of timeline provided in the circular. The minutes of the meeting referred to above disclosed that last date referring the Corporate Debtor to NCLT expires by 11.09.2018. The present petition is also filed against Corporate Debtor on 11.09.2018. The resolution plan could not be deliberated because the timeline provided in the circular came to an end. So, there is no alternative except to refer the Corporate Debtor to NCLT. So, we are totally convinced that the Petition is filed by the Financial Creditor against Corporate Debtor only because of the circular of RBI dated 12.02.2018 which was held to be ultra vires and proceedings initiated in pursuance of said circular are declared to be non-est. Petition dismissed.
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2020 (1) TMI 346
Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - existence of debt and dispute or not - HELD THAT:- The dispute raised by the Corporate Debtor does not fall within the definition of dispute as stated in preceding paragraphs, and the plea of pre-existing dispute is nothing but tenuous defense, created by Corporate Debtor against the Operational Creditor without any merit, which appears in after thought as a counter to defeat the claim of the Operational Creditor. The Registered Office of the Corporate Debtor is situated in Jaipur and therefore this Tribunal has jurisdiction to entertain and try this application. The present Application is complete and the Applicant is entitled to claim its dues, establishing the default in payment of the Operational Debt beyond any reasonable doubt - Application admitted - moratorium declared.
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2020 (1) TMI 345
Maintainability of application - initiation of CIRP - Corporate debtor defaulted in making repayment - existence of debt and default or not - time limitation - HELD THAT:- The present application has been filed Under Sec 7 of the IB code, the applicant has entered into an agreement with the Corporate Debtor for purchase of the flat and accordingly, as per the Schedule shown in Column No. 1 of Part IV, the applicant made payment to the Corporate Debtor and the total amount as per the Schedule shown is ₹ 3,61,512. Time Limitation - the applicant claims that his debt is within time prescribed under the law - HELD THAT:- Mere plain reading of the provisions shows that it is related to the possession of immovable property or any interest therein based on title , whereas the case in hand, is the case, where the applicant has paid money for the purchase of flat and on her request the agreement to purchase the flat was cancelled and that was communicated to the applicant on 10th July, 2013, by the Corporate Debtor. And subsequently on 25th July, 2013, the corporate debtor a)so sent the applicant the Xerox copy of the cheque of ₹ 3,61,512 and from column 2 of Part IV this adjudicating authority find that the total amount of default is of ₹ 26,84,277 - Therefore, the applicant is not claiming the possession or title over the immovable property rather she is claiming the amount, which she has paid along with the interest and compensation. Hence, the case of the applicant comes under Article 137 of the Limitation Act ,1963 and not under Article 65 of the aforesaid mentioned Act as claimed by the applicant in his application. Although the application filed by the applicant is within 3 years from 01.12.2016, but the claim of the applicant is barred under Article 137 of the Limitation Act, because date of default is on 10th July, 2013 or 25th July, 2013, when the default occurred and right to apply accrued. Therefore, this Adjudicating Authority is of the considered view that since the right to apply accrues on 10th July, 2013 or 25th July 2013, from that date, applicant was required to claim the debt within three years i.e. on or before 9th July, 2016 or 24th July, 2016, but the present application is filed on 21st July, 2019, hence the claim of the applicant is barred by limitation. This Adjudicating Authority find and hold, claim of applicant is barred by limitation - application not maintainable and is dismissed.
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2020 (1) TMI 305
CIRP proceedings - scope of claim and counter claim - whether a counter claim can proceed during the period of 'Moratorium' while the Adjudicating Authority (National Company Law Tribunal) allowed the 'Corporate Debtor' to pursue the claim before the Arbitral Tribunal? HELD THAT:- It is true that the 'Counter-claim' made by the 'Corporate Debtor' is a 'separate proceedings' than that of the 'Arbitral proceedings' filed by the 'Claimant'. However, they cannot be segregated and can go on simultaneously together. The claim of the Respondent cannot be determined by the 'Arbitral Tribunal' during the period of 'Moratorium' passed by the Adjudicating Authority. In such situation, as it cannot be decided as to what amount can be taken, we hold that the 'counter-claim' filed by the 'Corporate Debtor' also cannot proceed. This Appellate Tribunal allowed the 'claim petition' filed by the 'Corporate Debtor' of the said case to proceed with. For determination of the claim, it was also noticed that the 'counter-claim' or part of it is set-off with the claim, this Appellate Tribunal observed that the 'claim' and 'counter-claim' should also be heard together by the Arbitral Tribunal, however, with a clear understanding on such determination the 'Corporate Debtor' is liable to pay certain amount, in such case, no recovery is made during the period of 'Moratorium'. There are no merit in the appeal - appeal dismissed.
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2020 (1) TMI 304
Maintainability of application - initiation of CIRP - Corporate Debtor committed default in paying financial debt - debt due and payable - Section 7 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Corporate Debtor is served with the notice of this application. One of the directors of the Corporate Debtor, Mr. Arvind Bhawsinghka appeared on behalf of the Corporate Debtor and filed affidavit-in-reply dated 20.08.2019. The Corporate Debtor admitted the debt and default and also, they contended that time and again they have requested the Financial Creditor to restructure the loan but their request was not acceded to. The Corporate Debtor admitted the debt to be payable to the Financial Creditor and it is default on their part. These are only facts being considered for admission of the Corporate Debtor in CIRP under Section 7 of I B Code, 2016. The application is defect free. Application admitted - moratorium declared.
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2020 (1) TMI 303
Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in paying an amount - existence of debt and default or not - HELD THAT:- Ever since, this Corporate Debtor having not paid the award amount despite the Operational Creditor giving additional time to settle the dues and reminded the Corporate Debtor to pay the claim amount to the Operational Creditor, finally, when no payment came from the Corporate Debtor, this Operational Creditor issued Section 8 Notice on 12.01.2019 by hand demanding payment of the amount aforesaid. On receipt of Section 8 notice, on the same day, i.e. on 12.01.2019, the Corporate Debtor replied admitting the liability that this Corporate Debtor owed to pay ₹ 5,71,515 to the Operational Creditor, but sought additional time to pay this claim to the Operational Creditor. This Operational Creditor has proved existence of debt and default, therefore, this Company Application is admitted by appointing Mr. Senthil Kumar as Insolvency Resolution Professional (IRP) looking at the consent given by the Operational Creditor stating that this Operational Creditor would pay remuneration to the IRP and the expenditure thereto until constitution of CoC. Application admitted - moratorium declared.
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Service Tax
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2020 (1) TMI 324
Refund of service tax - failure to comply with the provisions of section 11-B of the Central Excise Act, 1944, as made applicable to service tax by section 83 of the Finance Act, 1994 - rejection for the reason that it was not made before the expiry of one year from the relevant date - whether the limitation provided for under section 11-B of the Excise Act for claiming refund before the expiry of one year from the relevant date, would be applicable or not to the application filed by the Appellant? HELD THAT:- The Delhi High Court in M/S. NATIONAL INSTITUTE OF PUBLIC FINANCE POLICY VERSUS C.S.T., DELHI [ 2017 (11) TMI 1482 - CESTAT NEW DELHI] clearly held that if service tax was not leviable, but it was paid by mistake, the amount had to be refunded - The Kerala High Court in M/S GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX, DEPUTY COMMISSIONER OF CENTRAL EXCISE SERVICE TAX DIVISION [ 2015 (7) TMI 635 - KERALA HIGH COURT] also pointed out that the distinguishing feature for attracting the provisions under section 11B is that the levy should have the colour of validity when it was paid and only consequent upon interpretation of law or adjudication, the levy is liable to be ordered as refund. When payment was effected, if it has no colour of legality, section 11B is not attracted. Thus, when service tax is not leviable, but it is deposited mistakenly by the Appellant, the provisions of section 11-B of the Excise Act relating to limitation would not be applicable - In the instant case, the Commissioner (Appeals) has rejected the refund claim of the Appellant only for the reason that it was made beyond a period of one year from the date of payment of duty. Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 322
Imposition of penalties u/s 77 and 78 - Non-payment of service tax - Service Tax Registration not obtained - Dry cleaning services - period 01/04/2012 to 30/06/2012 - HELD THAT:- The appellants have not disputed the taxability of the activity undertaken and have also paid the service tax liability as soon as they came to know that their activity is liable to service tax. Further, the appellant during the course of investigation have made various payments which is recorded - The Commissioner (Appeals) in the impugned order has recorded the findings that the appellant had paid the entire dues along with 25% penalty of ₹ 2,64,505/- on 10/10/2018 and the Order-in-Original was dated 27/08/2018. Hence they have not fulfilled the condition as per Section 78 of the Finance Act. In the rectification of mistake application filed by the appellant, learned Commissioner vide his Order dated 05/09/2019 has allowed the ROM and modified the impugned order dated 25/03/2019 to the extent of acceptance of payment of reduced penalty as per proviso to Section 78(1) of the Finance Act, 1994. Other demands of service tax, interest and other aspects stand undisturbed and the appellant has also paid the same as reflected in the table - Further, this ROM was allowed by the Commissioner after the present appeal has been filed and in the present appeal, the appellant has only aggrieved by the demand of balance penalty imposed on them under Section 78(1) of the Finance Act, 1994. Since the Commissioner himself has accepted the reduced penalty by allowing the ROM application filed by the appellant, hence the relief sought has already been given by the Commissioner (Appeals). Other penalties are upheld. Appeal dismissed - decided against appellant.
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2020 (1) TMI 316
Classification of services - Business Auxiliary Services or not - export of services - CBEC Circular No. 111/05/2009-ST dated 24.02.2009 - services rendered relating to sales promotion of the specified products produced by their parent company, Fanuc Ltd., Japan and the said services fall within the ambit of Business Auxiliary Services - HELD THAT:- The services are rendered to Fanuc Ltd., Japan by the appellants. The beneficiary of the service is situated outside India and the services rendered in India. It is not disputed that the remuneration was paid in convertible foreign exchange - also, CBEC vide Circular No. 56/5/2003-ST dated 25th April, 2003 has clarified that Service Tax is destination-based consumption tax and is not applicable on export of services; export of services would continue to remain tax free even after withdrawal of Notification No. 06/99 dated 09.04.1999. This Bench s decision in the case of MAPAL INDIA PVT. LTD. VERSUS COMMISSIONER OF C. EX., BANGALORE [ 2010 (8) TMI 622 - CESTAT, BANGALORE] and other cases cited by the appellants, hold that the services such as rendered by the appellants to their foreign principal fall under Export of Service Rules and are eligible for exemption in terms of Notifications, Export of Service Rules and the Circulars issued by CBEC from time to time for the entire period i.e. 01.07.2003 to 19.11.2003, 15.03.2005 to 30.09.2007 and 01.10.2007 to 30.09.2008 - Therefore, the issue is no longer res integra and the appellants are not liable to pay Service Tax during the said period under the heading Business Auxiliary Service . Maintenance or Repair Services - period 01.10.2007 to 30.09.2008 - penalties - HELD THAT:- The Learned Counsel for the appellants fairly conceded the applicability of such tax. Therefore, there are no reasons to discuss the applicability of the same - However, as requested by the appellants, looking into the facts and the circumstances of the case, the penalties are set aside. Appeal allowed in part.
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2020 (1) TMI 309
Classification of service - Man Power Supply and Recruitment Service or not - job assigned to the appellant for compressing and filling of gas in the cylinder by the help of the Man Power deputed by the appellant - HELD THAT:- The job assigned to the appellant is for gas filling in the cylinder, cylinder handling, cylinder loading and unloading dispatch of cylinder etc. The charges for the said job is ₹ 1 per EU meter of oxygen and Nitrogen gas filled in the cylinder either through compressor of though liquefied pump. The terms of the contract clearly show that even though the appellant deputed the employees in the factory of M/s. Inox Air Products Ltd for doing the aforesaid job but the service recipient is concern about the job assigned to the appellant i.e. filling of gas in the cylinder, cylinder handling, cylinder loading and unloading etc. The service recipient is not making any payment toward the wages/salary of the employee for the job assigned to the appellant. All the employees are working under supervision and control of the appellant and not under the supervision of M/s. Inox Air Products Ltd. The service recipient M/s. Inox Air Products Ltd is not concern about all the statutory obligation. They are only obliged to make the payment as per the quantum of gases filled in the cylinder by the appellant s employee. This arrangement shows that the appellant have not supplied the Man Power to qualify under the head of service -supply of Man Power and Recruitment service, they have provided the job of filling the gas in the cylinder, handling, loading and unloading etc, therefore, the activity of the appellant is pre-dominantly appears to be covered under production for processing of goods on behalf of the client. However, in the given fact the service is not covered under Man Power supply and Recruitment Service. The appellant have not provided the service of Man Power Supply and Recruitment Agency Service - Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (1) TMI 323
CENVAT Credit - scope of SCN - input services - airfreight - Commissioner(Appeals) decided the issue after 12 years - HELD THAT:- The appellant which is a PSU have availed CENVAT credit on outward freight which falls under the definition of input service prior to the amendment in the definition of input service effected from 01/04/2008. Further, the appeal before the Commissioner(Appeals) was filed in 2007 and the Commissioner(Appeals) after 12 years has given the personal hearing and decided the appeal and has denied the CENVAT credit on air freight and remanded the matter for quantification of the amount relating to airfreight. In view of the decision of the Hon ble Madras High Court in the case of M/S. J.M. BAXI CO. VERSUS THE GOVERNMENT OF INDIA [ 2016 (6) TMI 813 - MADRAS HIGH COURT] and the Apex Court decision in the case of GOVERNMENT OF INDIA VERSUS CITEDAL FINE PHARMACEUTICALS [ 1989 (7) TMI 100 - SUPREME COURT] , the adjudication by the Commissioner(Appeals) is bad in law as the Commissioner(Appeals) has not given any finding for taking the decision after 12 years and the same has caused prejudice. Scope of SCN - HELD THAT:- It is found that the Commissioner(Appeals) has gone beyond the show-cause notice. The show-cause notice was issued alleging that outward freight is not included in the input service whereas in the impugned order the Commissioner(Appeals) has held that the place of removal cannot be beyond the port/ICD/CFS. In fact, this is beyond the show-cause notice. Credit allowed - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 321
Clandestine Removal - suppression of production - shortage of finished goods and raw materials (coal) - period April, 2011 to Nov, 2013 - admissibility of evidences and statements - corroborative evidences of not - Section 36B of the Central Excise Act, 1944 - Section 9D of the Central Excise Act, 1944 - HELD THAT:- The entire case of the department is based upon the computer printouts taken from the computer hard disk, from the premises of the appellant, at the time of search. That, on careful perusal of the Panchnama dated 04.07.2014 (RUD-15) drawn at the Room No. 113, Computer Cell of Central Excise, Hqrs, Raipur, it is found that that the officers have taken the printout (on the basis of which, Central Excise Duty of ₹ 3,03,41,494/- for the period April, 2011 to Nov, 2013 has been demanded)from the one time writable DVD (after copying), however, the said DVD has been written from Hard Disk No. 2 on 03.07.2014. We further find that the Panchnama dated 03.07.2014 has not been relied upon in the show cause notice, and neither the appellant nor his authorised representative was present on 03.07.2014, when the data from the Hard Disk No. 2 was retrieved on DVD. It is clear that the said Hard Disk could have been tempered, therefore, cannot be relied upon as evidence inasmuch the said data has been retrieved without ensuring the presence of the appellants - further, no certificate has been produced by the department as envisaged under Section 36B of the Central Excise Act, 1944, which provides the conditions to be fulfilled in order to admit the said documents in evidence. The computer printouts relied upon by the revenue are not admissible in evidence - As far as statements recorded under Section 14 of the Central Excise Act, which have been relied upon by the revenue, it is found that the learned Commissioner had denied the cross-examination of witnesses, therefore, in view of the decision of Andaman Timber Industries Vs CCE, Kolkata, [2015 (10) TMI 442 - SUPREME COURT] and CCE Vs Kurele Pan Products Pvt. Ltd., [2014 (4) TMI 463 - ALLAHABAD HIGH COURT], the said statements cannot be relied upon as evidence. Thus, the statements relied upon by the revenue are not admissible and cannot be relied upon as evidence and has to be eschewed from evidence - further, there is no corroborative evidence adduced by the department in order to allege huge production and removal of goods. There is no reliable evidence adduced by the department in order to prove clandestine production and removal of goods - the demand of ₹ 3,03,41,494/- along with interest and penalty for the period April, 2011 to Nov. 2013, on allegation of suppression of production and clandestine removal of Sponge Iron, is hereby set aside - further, the appellant has not contested the demand of Central Excise Duty ₹ 2,81,953/- on allegation of shortages of finished goods and raw materials, before the learned Commissioner. Hence, the duty demand of ₹ 2,81,953/- is confirmed, however penalty is set aside. Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 317
Clandestine removal - non-accountal of production as well as raw material - suppression of production of Ingots - parallel invoices - demand on the basis of documents recovered in the form scrap purchase slips, weighment slips, parallel invoices, suppressed electricity consumption - reliance placed on confessional statements - On finding that majority of the clandestine removals by the appellants were made to M/s Gasha Steels, investigation was extended to M/s Gasha Steels and SCNs were issued to both the parties. HELD THAT:- We find from the statements of different persons that most of the clearances were made to M/s Gasha Steels in fact, the SCN at Para No. 38 categorically avers that from the above, it is found that M/s MA Steels Ltd. had removed a total quantity of 15898.175 MT of MS Ingots by way of sale and without payment of duty to M/s Gasha Steels Pvt. Ltd. during the period from March 2004 to February 2006 (up to 14.02.2006) . We find that other than M/s Gasha Steels only two other parties like M/s Scot Free Steel Ltd. and M/s Lal Steel Ltd. have been mentioned in the SCN. No name of any other purchaser is ever whispered. Learned Commissioner has concluded that M/s Gasha Steels have clandestinely removed 2112.154 MT of CTD/TMT bars and 44.0032 MT of scrap cleared without payment of duty. We find that if the learned Commissioner finds that M/s Geisha Steels have only received about 2406.52 MT of MS Ingots form the appellants, as against the alleged removal of 15898.175 MT of MS Ingots by the appellants to M/s Gasha Steels, he cannot confirm duty on the alleged removal of 16274.565 MT of MS Ingots totally by the appellants. Commissioner finds that out of alleged 15, 898.175 MT of Ingots, only 2406.52 MT of MS Ingots are proved to have been removed by the appellants to M/s Gasha Steels - If the clandestine receipt by M/s Gasha Steel is not established, logical conclusion is that clandestine clearance by the appellants is not also established to that extent. The inconsistency becomes more glaring when we note that both the orders are passed on the same day. We find that the appellants cannot be victimised for the inconsistency. The adjudicating authority has given contradictory conclusions in the two cases and the department has not appealed against the other order passed in respect of M/s Gasha Steels. Therefore, we confirm the demand to the extent of allegations in respect of clearances to other units and to the extent the adjudicating authority found to be to be acceptable in the case of clearances to M/s Gasha Steels. Penalties imposed on Managing Director and Director of the appellants - HELD THAT:- Smt. K.K. Hajira, MD had no role in the day to day activities of the company. No role played by her has been brought on record to establish that her acts of omission and commission have rendered the goods liable for confiscation and that she was actively involved in the duty evasion resorted to by the appellant. Therefore, we find that no case has been made to impose penalty on her - As regards, the penalty imposed on Sh. Yousuph Mekkoth, Director of the appellants, we find that the penalty imposed is already very low. Looking into the role played by Sh. Yousuph Mekkoth, Director in the facts of the case, we find that no case is made out to interfere with the impugned order therefore the penalty imposed on Sh. Yousuph Mekkoth, Director is sustainable. Appeal is allowed by way of remand to the adjudicating authority, restricting the demand to 2,782.91 MT of Ingots - We direct that for the purposes of calculation of duty, lowest value per MT over the years, as discussed in the SCN shall be taken in to account - Penalty under Section 11 AC shall be restricted to be equal to the amount of duty so calculated.
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2020 (1) TMI 312
Demand of interest on differential duty - valuation under cost construction method - at the time of the removal the cost of manufacturing not available, they were paying duty on the provisional value and after the finalization of the books of the companies, they were calculating the exact cost of the manufacture and were paying a differential duty - Time limitation - HELD THAT:- Hon ble Supreme Court in the case of M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 2019 (5) TMI 657 - SUPREME COURT] held that the interest is chargeable from the due date as prescribed in rule 8 of Central Excise Rules, 2002 and not from the payment of differential duty. Therefore, the demand of interest on merit is sustainable, however, the appellant have strongly argued on the limitation. Time Limitation - HELD THAT:- The appellant had practice to pay the duty on provisional value at the time of removal of the goods and only on finalization of books of accounts the actual cost of manufacturing is arrived at and whenever there is a short of value, they were paying the differential duty - there is no suppression of facts and mala fide on the part of the appellants. Accordingly the demand for extended period is not sustainable. Demand set aside on the ground of limitation.
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2020 (1) TMI 307
Cancellation of bond - Misuse of Benefit of concessional rate of duty - import of Crude Palm Stearin for Manufacture of Excisable Goods - N/N. 21/2002-Cus dated 01.03.2002 - allegation is that appellant had misused the facility granted them to them in terms of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - whether Assistant Commissioner was correct in canceling the bond/undertaking executed by the appellants in terms of Rule 4 of the above Rules? HELD THAT:- The order of cancelation of the bond, would imply what do revenue authorities intend to discharge the bond in respect of the goods imported by the appellant prior to its cancellation. The bond is for end usage of the goods. In any case the imports are not made against the bond, but are in terms of the application made by the importer and countersigned by the jurisdictional Assistant Commissioner with whom the bond for end usage has been executed - Assistant Commissioner could have at any time refused to countersign the application if he was having doubt in respect imported goods or their end usage in manufacture of the finished goods. Can on the strength of this bond appellant make an application to the Assistant Commissioner Central Excise for counter signature for future imports? - HELD THAT:- On the date today any order passed by us in this appeal cannot be of any relevance for future imports, nor for the past imports that have been made by the appellants. If for contravention of end use conditions in respect of the goods imported on the basis of the certificate countersigned by the Assistant Commissioner Central Excise are to be initiated then they will have to be in terms of the Rule 8 of the above referred rules, or any proceedings in respect of the short payment of duty at the time of clearance of goods are to be initiated then the same can be only in terms o Section 28 of the Customs Act, 1962. Both the proceedings have to be independent of the bond executed - Hence on the date the entire proceedings in this appeal have become an exercise in futility both for the appellant and revenue. Appeal dismissed as infructuous.
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CST, VAT & Sales Tax
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2020 (1) TMI 332
Review application - Concessional rate of tax - failure to furnish the original Declaration Form 'C' and Form 'H' - Sales Tax Act - HELD THAT:- The present writ petition filed by the Assessee has no merit and deserves to be dismissed - Not only the controversy on merits is covered by the decision of the Honourable Supreme Court consistently, but the scope of the Review prescribed under Section 37(7)(a) of the TNGST Act also does not permit the Tribunal to review the original order made on the basis of the claim of the Assessee that he was now ready to file the duplicate 'C' and 'H' forms to avail concessional rate of tax / exemption from payment of tax, and it is only upon discovery of the new and important facts, which were not within the knowlege of the Assessee despite due diligence, there can be ground for review, which is not the case in the present facts of the case. Since the Assessee was not entitled to claim the concessional rate of tax / exemption from payment of tax on the basis of duplicate 'C' and 'H' forms as per the law settled, the learned Tribunal cannot be said to have erred in rejecting the Review Application filed by the Assessee - petition dismissed.
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Indian Laws
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2020 (1) TMI 340
Dishonor of Cheque - offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - vicarious liability on the petitioner or not - HELD THAT:- The petitioner being an Independent and a Non-Executive Director, in the absence of any specific role attributed against the petitioner for his active participation in the day to day affairs of the company and of taking all decisions of the company, where the petitioner was not a signatory to the cheques in question, vicarious liability cannot be fastened on the petitioner in the absence of any specific role attributed to him, in as much as, the contentions that have been sought to be raised during the course of the arguments and in the affidavit in reply to the petition on behalf of the respondent in relation to the petitioner being in a Key Managerial Person and the petitioner having participated in 100% all the meetings of the accused company, are not spelt out in the complaint that had been filed by the respondent. Taking into account also the factum that even if the petitioner was a Key Managerial Person of the accused No.1 company as per the reply affidavit of the respondent as filed on 08.07.2007, he was so for the period from 01.04.2015 to 31.03.2016 and the date of the drawing of the cheques in question are 07.06.2019 - In view thereof, the impugned order dated 20.02.2017 of the Trial Court of the learned MM-01, New Delhi to the extent that summons are issued to the petitioner for an alleged commission of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 is thus, quashed. Petition allowed.
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