TMI Tax Updates - e-Newsletter
January 13, 2020
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Securities / SEBI
FEMA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Inability of petitioner in moving Advance Ruling application - It would not be fair that the petitioner is prevented from seeking an advance ruling, merely because he is registered as an OIDAR service provider - The respondents are directed to entertain the physical application
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Income Tax:
Income u/s 2(24) / Exemption u/s 10(24) - receipt by the trade Union for settlement on behalf of member worker - ITAT in the present case wrongly rejected the ratio of the decision of the ITAT in an Identical case - Additions deleted.
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Income Tax:
Deductions u/s 54 and 54EC - LTCG - whether acquisition of flat through allotment by DLF Universal Ltd. has to be treated as a construction of flat? - assessee had booked a semi furnished flat with the builder - No cogent ground to hold that the Respondents do not fulfill the conditions laid down u/s 54 (1) of the Act so as to deny the benefit of the said provision.
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Income Tax:
TDS Credit - claim on the deferred Revenue - Rule 37BA(3)(ii) provides that where tax has been deducted at source and paid to Central Government and income is sustainable over a number of years, credit for tax deducted at source shall be allowed across those years in same proportion in which income is assessable to tax.
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Income Tax:
Addition u/s.69C - unexplained expenditure - Admittedly, in the first round of proceedings, there was no addition made u/s. 69C by the revenue. AO could not have made any addition u/s. 69C in the second round of proceedings.
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Income Tax:
Condonation of delay - delay of 345 days in filing the appeal before CIT(A) - Each case for condonation is to be decided on its own facts and merits. The facts may differ from case to case and there is no straight jacket formula for deciding application for condonation of delay. - Delay condoned.
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Income Tax:
Disallowance of deduction claimed u/s 35(i)(ii) - bogus donation - donation given by the assessee to the donee, on which the assessee no mechanism to check the veracity, can be doubted, more particularly, when certificate to obtain donation has been cancelled after two years of the payment of donation. - No Disallowance
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Income Tax:
Addition u/s 41 - Cessation of liability - the liability has not ceased to exist in true sense in the given facts and circumstances as it has shifted to the partner of the firm who was always otherwise liable for such liability in his personal capacity being partner - Additions deleted.
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Customs:
Refund claim - unjust enrichment - Validity of CA certificate - both the CA certificates are of very old period and for the purpose of unjust-enrichment the present position is relevant for which neither any CA certificate was produced nor any books of account - Therefore, in absence of providing books of account by the appellant, the aspect of unjust-enrichment is not established.
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Customs:
Refund of amount deposited - deficiencies in the TR-6 Challan - To reject the refunds claim claims on such flimsy grounds is nothing but harassment of the litigant, which cannot be appreciated at any point of time.
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Customs:
Interest on delayed payment of Special Additional Duty refundable - Since the decision in the KSJ Metals Impex (P) Ltd., has been stayed I am unable to give any relief to the petitioner at this stage.
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Direct Taxes:
Benami Property - Denial of natural justice - provisional attachment - What also is revealed from the proceedings drawn is that the petitioner has been held to be the beneficial owner of the property and which if he is not he only has to deny the contentions and leave it for the authorities to decide the matter on merits as he is not going to loose anything. - No stay.
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Indian Laws:
Dishonor of Cheque - section 138 of NI Act - territorial jurisdiction - dishonour of cheque had occurred outside the territory of India - since the cheque in question was presented for encashment by the complainant in Canara Bank, Anand Vihar Branch, Delhi-92, complain is maintainable - Petition dismissed
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Indian Laws:
Dishonor of cheque - insufficiency of funds - So far as the proceedings u/s.138 of the Negotiable Instruments Act is concerned, the question of the complainant having money lending licence does not arise - acquittal of the accused on the above said ground by the trial court is also not proper and correct.
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Indian Laws:
Dishonor of cheque - Even if I do not believe the statement of the accused, the documents of the complainant cannot be brushed aside - Since the cheques were given by way of security, which is evident from the complainant’s documents (though this fact has also been suppressed in the complaint petition), I find that Section 138 of the Negotiable Instruments Act is also not attracted in this case.
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Indian Laws:
Dishonor of cheque - Legality of Amendment to Article 142(2) of the Negotiable Instruments Act - there is no infirmity in the amendment. Even otherwise, the Parliament is competent to bring out the amendment under the Negotiable Instruments Act. The said amendment cannot be said to be ultra vires in view of the provisions of the Act or Part III of the Constitution of India.
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Indian Laws:
Dishonor of cheque - Section 13 - The basic law is that the complaint under Section 138 of Negotiable Instrument Act cannot be quashed by High Court by taking recourse to Section 482 Cr.P.C, if disputed questions of facts are involved which need to be adjudicated after respective evidence is led by the parties before the trial court.
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Service Tax:
Demand of service tax for differential amount - mis-matching the ST-3 return with the figures in the receipts shown in the balance sheet - It is mere an assumption that miscellaneous receipts are the part of photography service - Demand set aside.
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Central Excise:
Refund of deposit made - whatever amount has been deposited by the appellant since has been considered by the Tribunal as a deposit under Section 35F for granting the stay, the same needs to be refunded without following the procedure of Section 11B - refund allowed
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Central Excise:
Valuation - Extended period of limitation - Merely because the sister unit will get CENVAT Credit, the appellant cannot NOT PAY full duty in open defiance of the law and take shelter under “Revenue Neutrality” to escape liability. - Demand with penalty upheld.
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Central Excise:
Valuation - components manufactured by the appellant and transferred to their Haridwar Plant for captive consumption in use of motorcycles and their parts - AS per the circular, the goods for captive consumption must be valued based on cost construction method, under Rule 8. The appellant did just that.
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Central Excise:
CENVAT credit - capital goods - capital goods used in the manufacture of dutiable cotton/ denim fabric - benefit of Rule 6(6)(v) extended - the appellant manufacturer is entitled to cenvat credit on capital goods, used partially for export even though domestic clearance are exempt.
Articles
Notifications
News
Case Laws:
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GST
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2020 (1) TMI 392
Inability of petitioner in moving Advance Ruling application - petitioner submits that the petitioner may be permitted to proceed to move the application for advance ruling physically - HELD THAT:- There are no impediment in the petitioner doing so. It would not be fair that the petitioner is prevented from seeking an advance ruling, merely because he is registered as an OIDAR service provider. The respondents are directed to entertain the physical application of the petitioner to seek advance ruling, which may be made within a week. The petitioner is permitted to deposit the fee for advance ruling and provide physical challan to the respondents along with his application. List on 18.02.2020.
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Income Tax
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2020 (1) TMI 410
Correct head of income - sale of Non-agricultural land - Long Term Capital Gain OR Business income - engaged in the business of building construction and land developers - land shown in balance sheet as investment - HELD THAT:- SLP Dismissed.
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2020 (1) TMI 409
Carry forward and set off of unabsorbed depreciation of the amalgamating company - set off unabsorbed depreciation prior to A.Y. 1994-95 to 1998-99 beyond 8 years - HELD THAT:- SLP Dismissed.
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2020 (1) TMI 408
Income u/s 2(24) / Exemption u/s 10(24) - receipt by the trade Union for settlement on behalf of member worker - assessee is a registered trade union who passed an unanimous resolution that as a result of compromise arrived and amount is received from the Company - HELD THAT:- Once the factum of settlement is not disputed couple with the factum of receipt of a particular amount from the Company, and as observed by the Assessing Officer in the assessment order that the amount has been distributed amongst the employees, the case would squarely stand covered under Section 10(24) of the Act. Though the contribution from the employer is received as per the settlement agreement, it is only incidental to the activities of the services of the assessee in resolving the dispute between the member workers and the employer with the intention of advancement of welfare of the members. We take notice of the decision of the Tribunal referred to and relied upon on behalf of the assessee before the Appellate Tribunal in the present case. We are referring to the decision in the case of Mumbai Mazdoor Sabha vs. Assistant Commissioner of Income Tax [ 2016 (11) TMI 537 - ITAT MUMBAI] We are in complete agreement with the aforesaid observations of the Tribunal. - The only reason for the Tribunal in not following the dictum of the said order of the Tribunal is that the amount credited into the Bank Account of the State Bank of India, Chikhli Branch was not shown in the audited books of account and balance-sheet as on 31st March, 2009. According to the Appellate Tribunal, as the assessee failed to show the receipts in its audited books of account, the dictum of law as laid in Mumbai Mazdoor Sabha would not be applicable. We are afraid, we are not in agreement with such finding recorded by the Appellate Tribunal. In fact, in the entire impugned order passed by the Appellate Tribunal, there is no worthy discussion of Section 10(24) of the Act. In the overall view of the matter, we are convinced that the Appellate Tribunal committed an error in dismissing the appeal preferred by the assessee. - Decided in favour of assessee.
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2020 (1) TMI 407
Deductions u/s 54 and 54EC - LTCG - whether acquisition of flat through allotment by DLF Universal Ltd. has to be treated as a construction of flat? - HELD THAT:- The assessee was required to purchase a residential house property either one year before, or within two years after the date of transfer of original asset; or within a period of three years after the date he was required to construct a residential house. CBDT in its circulars No. 672 dated 16.12.1993 has made it clear that the earlier circular No. 471 dated 15.10.1986 in which it was stated that acquisition of flat through allotment by DDA has to be treated as a construction of flat, would apply to cooperative societies and other institutions. The tax authorities have relied upon the said circular and held that the builder would fall in the category of other institutions and, therefore, booking of the flat with the builder has to be treated as construction of flat by the assessee. In accordance with the said agreement, the assessee was to make payment in installments and the builder was to construct an unfinished bare shell flat for finishing by the buyers. The possession was granted on 30.03.2013. The lower tax authorities after examining the terms of the agreement, the occupation certificate, and the other letters-offer to finalize the details of interiors, have come to a conclusion that the assessee had booked a semi furnished flat with the builder, namely, DLF Universal Ltd. in the residential group housing complex named as Magnolias DLF Golf Links. Accordingly, the assessee had a window of three years period from 21.12.2011 till 21.12.2014 to construct a house property, calculated from the date of transfer of original asset. The appellant has claimed deduction on amount invested till the due date of filing of return under Section 139 (1) - No cogent ground to hold that the Respondents do not fulfill the conditions laid down under Section 54 (1) of the Act so as to deny the benefit of the said provision. The apprehension expressed by the learned senior standing counsel for the Revenue is not borne from the facts on record. The provision in question is a beneficial provision for assessees, who replace the original long term capital asset by a new one. It cannot be said in the facts of the present case that the deduction claimed for the construction were not relatable to the transaction of sale of the Jor Bagh property which resulted in income by way of capital gains. There is no ground urged by Revenue before CIT (A), or before the ITAT, that the expenditure was not connected with the sale transactions. Deduction u/s 54EC - As decided in COROMANDEL INDUSTRIES LIMITED [ 2014 (12) TMI 852 - MADRAS HIGH COURT] the legislature has chosen to remove the ambiguity in the proviso to Section 54EC(1) of the Act by inserting a second proviso with effect from 1.4.2015.The memorandum explaining the provisions in the Finance (No.2) Bill, 2014 also states that the same will be applicable from 1.4.2015 in relation to assessment year 2015-16 and the subsequent years. The intention of the legislature probably appears to be that this amendment should be for the assessment year 2015-2016 to avoid unwanted litigations of the previous years. Even otherwise, we do not wish to read anything more into the first proviso to Section 54EC(1) of the Act, as it stood in relation to the assessees. In any event, from a reading of Section 54EC(1) and the first proviso, it is clear that the time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied. It would have made a difference, if the restriction on the investment in bonds to ₹ 50,00,000/- is incorporated in Section 54EC(1) of the Act itself. However, the ambiguity has been removed by the legislature with effect from 1.4.2015 in relation to the assessment year 2015-16 and the subsequent years. - Decided against the Revenue Addition of suppression of maintenance charges under the head income from house property received from rented property - HELD THAT:- ITAT has held that the presumption drawn by the AO for making the addition was patently false, based on conjectures and surmises, without appreciating the records and making an inquiry to discredit the evidences and confirmation placed on record by the assessee. DLF Universal Ltd. has confirmed that the payment of rent under the lease agreement to the assessee, and has also stated that no other amount is due on any account whatsoever. Maintenance of the property was being done by the tenant itself. In absence of any evidence of receipt of any amount on account of maintenance, that would contradict the books of account, the deletion made by CIT (A) has been upheld. This consistent factual finding arrived at by the CIT (A) and ITAT does not give rise to any question of law.
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2020 (1) TMI 406
Claim of interest on borrowed funds utilised for investment in shares of CESC - expenditure incurred wholly and exclusively for the purpose of business - Treated as business expenditure on the ground that investment is one of the objectives of the assessee company - HELD THAT:- As decided in Commissioner of Income Tax (Vs) R.P.G.Transmissions Limited (later on name changed to M/s.KEC International Ltd [ 2014 (2) TMI 238 - MADRAS HIGH COURT] tribunal for allowing the assessee's claim of interest paid on borrowed capital. The appellate authority and the Tribunal found that the investment made in shares by the assessee by utilising borrowed capital was for strategic business purposes because the companies were promoted as special purpose companies to strengthen and promote its existing business by combining different business segments and, therefore, the claim was fully allowable under Section 36(1)(iii). We also found that the Revenue did not adduce any material to show that the borrowed capital was utilised by the assessee for non-business purposes. The appellate authority, in our considered view, was correct in allowing the claim of the assessee and deleting the disallowance made by the assessing authority. We also find that the Tribunal in correct appreciation of the matter had in turn confirmed the finding of the appellate authority. - Decided in favour of the assessee
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2020 (1) TMI 404
TP Adjustment - adjustment on account of AMP expenses - existence of international transaction of AMP-expenses - HELD THAT:- Scope and value of the International Transaction cannot be expanded beyond the reimbursement received under MDF agreement to cover the entire gamut of AMP expenditure incurred by the assessee during the year. Regarding the applicability of the Bright Line Text [(BLT) to determine the adjustment in the AMP expenditure has been rejected by the Hon ble Jurisdictional High Court in the case of Sony Ericsson Mobile Communications India Pvt. Ltd. [ 2015 (3) TMI 580 - DELHI HIGH COURT] . In view of the judgment of the Hon ble High Court, we hereby hold that no International Transaction can be presumed to be in existence and hence no addition is called for. Inter company receivables - In this case, admittedly, the taxpayer has provided benefit to its AE by way of advancement of interest free loan in the garb of delay receipt of receivables - DRP held that the TPO charged interest on receivables beyond 30 days and directed to re-compute the interest on receivables beyond the period mentioned in the respective invoices - HELD THAT:- Having gone through entire factum of the issues, we find that the approach of the DRP is not based on sound legal principles. The interest cannot be recomputed treating the transaction as international transaction in case of sale purchases (receivables and payables) based on each invoice. The test to be applied is whether the compensation paid for the products and services is at arm s length, but at the same time it cannot be ignored that the two entities have a business and a commercial relationship. The transfer pricing is a mechanism to undo an attempt to shift profits and correct any under or over payment in a controlled transaction by ascertaining the fair market price. This is done by computing the arm s length price. The purpose is to ascertain whether the transfer price is the same price which would have been agreed and paid for by unrelated enterprises transacting with each other, if the price is determined by market forces. An entity which permits a longer credit period of realizing its sale proceeds would want to receive compensatory interest which is often inbuilt in the price of goods/services sold. Similarly, a customer who is paying the full price upfront would want a discount to account for the prompt payment that is made. The necessity and desirability of an adjustment for the same is advocated by the OECD and the UN guidelines on Transfer Pricing as well. What is required to be done is to examine, by going through entire transaction between the AE and the non AE parties regarding the payment pattern and to arrive at a decision as to whether there is any overt or covert scheme to transfer the profits by the way of delaying the payments to the assessee by the AE and thus getting benefited. This pattern unless established by the revenue, no adjustment on outstanding receivables can be made. Hence, the decision of the TPO of determining the 30 days as the credit period for computing interest on outstanding receivables, without appreciating the actual credit terms offered to the AEs cannot be accepted. Once, the pattern has been established the issue of the netting of outstanding receivables and payables arises. Since, no such pattern is established by the revenue, we hereby direct that the addition made be deleted. Adjustment on account of disallowance of mark-up charged by the AE on the sale of fixed assets - TPO made an adjustment to the international transaction of purchase of fixed assets and made an adjustment to the depreciation claimed on these assets on account of disallowance of the mark-up charged by the AE on sale price of fixed assets - HELD THAT:- Regarding the mark-up, the IPC division charged not more than 1% on the procurement cost of fixed asset by the IPC division from the third party and iMarket Korea Inc. charged a mark-up of 5% of un procurement cost of the fixed assets. The said transactions were benchmark by the assessee using TNMM through a combined transaction approach under the manufacturing segment in TP documentation. The TPO made adjustment to the ALP of the complete import transaction amounts from SEC Korea ignoring the fact that the imports by the assessee were from 4 divisions of SEC Korea, wherein, only IPC division had charged a mark-up of 1% and the imports from other 3 divisions of SEC Korea were made at cost. TPO reduced the ALP of the transaction of purchase of fixed assets by the assessee from its AEs from ₹ 2,149,246,567/- to ₹ 2,085,191,606/- (reduced by ₹ 64,054,961/-) and thereafter, the AO disallowed depreciation of ₹ 20,526,740/-. The argument that segregation of this transaction from other transaction while retaining TNMM for other transactions as a whole cannot be accepted as in determination of ALP this transaction can be tested separately. The ld. AR s submissions about the applicability of case of Magneti Marelli Powertrain India Pvt. Ltd. Vs CIT [ 2016 (11) TMI 123 - DELHI HIGH COURT] has been considered. The mark-up of 1% to 5% has to be allowed as it cannot be said that the AE would be in a position to extend services to the assessee at free of cost. The observation that only one division of AE charging mark-up while others do not charge cannot be a reason to make any adjustments in the mark-up and consequently to the depreciation. Hence, the ground of appeal of the assessee on this issue is allowed. The deduction of the ALP of the transaction on purchase of fixed assets by the assessee is directed to be deleted. Appeal of the assessee is allowed.
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2020 (1) TMI 403
Disallowance u/s 14A r.w.s 8D - HELD THAT:- We find that the mutual funds, which are the subject matter of computation of disallowance, are neither in the opening balance nor in the closing balance. This means that the mutual funds have been purchased and sold during the year itself. u/r 8D, the average of value of investment income from which does not form part of total income as appearing in the balance sheet of the assessee on the 1st day and last day of previous year have been mentioned. Since the average value of investment appearing in the balance sheet on the 1st day and last day is NIL, we are in agreement with the contention of the ld. counsel for the assessee that it is impossible to compute the disallowance either in Rule 8D(ii) or 8D(iii). On peculiar facts of the case in hand, we direct the Assessing Officer to delete the disallowance. Licence fee paid to Government of India department of Telecommunication in consideration for grant of licence to operate and provide services - AO was of the opinion that the expenses incurred on license fee are capital expenditure as per Section 35ABB - HELD THAT:- Since the Revenue is in the process of filing appeal before the Hon'ble High Court the additions have been made. We are of the considered opinion that since the impugned issue is covered by the decision of the coordinate bench in assessee s own case for Assessment Year 2007-08 [ 2015 (1) TMI 924 - ITAT DELHI] as held if any expenditure on account of licence fee was payable up to 31.07.1999, it should be treated as capital expenditure and the licence fee on revenue sharing basis after 01.08.1999 should be treated as revenue in nature. - Decided in favour of assessee. TDS claimed on the deferred Revenue - HELD THAT:- We find that section 199(3) of the Act gives power to the Board to make such rules for the purposes of giving credit in respect of tax deducted or tax paid in terms of provisions of the Act and also A.Y for which such credit may be given. Rule 37BA(3)(ii) provides that where tax has been deducted at source and paid to Central Government and income is sustainable over a number of years, credit for tax deducted at source shall be allowed across those years in same proportion in which income is assessable to tax. We, accordingly, direct the Assessing Officer to give proportionate credit of TDS for the income declared during the year under consideration. With these directions, Ground no. 3 is allowed.
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2020 (1) TMI 402
Net profit determination - CIT-A confirming the net profit rate of 8% - AO held that the assessee has failed to maintain complete and correct books of account with documentary evidence - HELD THAT:- We find that the assessee has submitted before the CIT(Appeal) by relying on the decisions in the case of Dhampur Sugar Mills Ltd [ 1972 (3) TMI 16 - ALLAHABAD HIGH COURT] and M/s IVF Holdings (P) Ltd. Mumbai [ 2011 (7) TMI 1242 - ITAT MUMBAI] that where the revised return has been filed as per the terms of the provisions of section 139(5), the original return shall be treated as withdrawn. Therefore the revised return is only to be considered during the assessment proceedings. However, the AO, on the basis of original return of income pointed out some discrepancies and rejected the books of account. We find from the submission made by the assessee before CIT(Appeal) that the tribunal of Amritsar Bench in the case of Mohan Singh Contractor [2012 (6) TMI 877 - ITAT AMRITSAR] . has considered 5% NP rate has reasonable in the case of contractor. Therefore, considering all, we direct the AO to apply 5% NP rate in the case of assessee on the gross receipt of ₹ 3,15,21,611/- including return of income of ₹ 6,87,464/-. The AO is directed to recompute the taxable income of the assessee by applying 5% NP rate. Accordingly, this appeal is partly allowed.
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2020 (1) TMI 401
Unaccounted investment in land - HELD THAT:- As perused the statement made by the said Shri Indravadan Intwala and the cross examination done by the assessee of the said statement at page no.13 of the order of the AO. On specific question in the cross examination put by the assessee to the said witness i.e. Shri Shri Indravadan Intwala to the effect that what was the consideration received by him? and in reply to this question, the said Shri Indravadan Intwala has categorically admitted that he do not remember but it was as per sale deed executed . When once the said Shri Indravadan Intwala in his categorical examination in respect of the consideration received by him has clearly stated that he had received the consideration in respect of land sold to the assessee as per sale deed executed by him. Therefore, there was no doubt left for the Revenue to discard the said statement made during cross examination of said Shri Indravadan Intwala. The Revenue Authorities have misinterpreted, misconstated the statement of Shri Indravadan Intwala wherein he has nowhere mentioned the specific amount of on money received from the assessee, on the contrary had specifically and in clear words had admitted in cross examination to question no.3 that the sale consideration received by him was as per sale deed executed . We are also of the view that the sale deed executed by the Shri Indravadan Intwala in favour of assessee was a registered document and therefore presumption of correctness is attached to the contents contained in the said register document. Therefore, if the Revenue wanted to uproot the said presumption, then it was the onus of the Revenue to bring on record some cogent, convincing or admissible evidence on record to disprove the contents of the registered documents in the shape of sale deed. Therefore, there was no occasion left with the Revenue to make additions merely on some vague answers given by the said Shri Indravadan Intwala. It is a settled Law that no additions can be made on suspicions as howsoever strong the suspicion may be, but the same cannot take place of proof. Therefore, keeping in view of the above principles in mind, we allow this ground and deleted the addition, accordingly appeal of the assessee is allowed.
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2020 (1) TMI 400
Penalty u/s 271(1)(c) - AO made disallowed @25% of bogus purchases - HELD THAT:- Sales were actually made. As purchases were not made from the bills providers as it is and evident that the purchases were made from the third party. Since the goods were exported the same were routed through customs authorities hence, the corresponding sales are not in dispute. The bills were from accommodation entries provider were recorded in the books of accounts and quantities were entered into books The purchase amount was not verifiable and as such,5% profit rate on bogus purchases was applied by the Tribunal. From the order of the AO, we found that the AO has estimated the income on the bills of purchases of diamonds. The similar issue had come before the Hon'ble M.P. High Court in the case of CIT vs. Shivnarayan Jamnalal [ 1996 (5) TMI 9 - MADHYA PRADESH HIGH COURT] wherein the Hon'ble High Court has held that the books of accounts maintained by the assessee were not properly maintained and if assessee has not concealed any material and not tried to defraud the authorities, the penalty cannot be levied, because the income was assessed on estimate basis. Just because Appellant s explanation was not found acceptable by the AO, it does not follow that that the Appellant was unable to substantiate his explanation by providing various evidences and judicial opinions. Explanation 1 to section 271(1)(c) of the Act does not therefore cover the case of the Assessee. Based on the above facts of the case; it can be held that the Assessee had made all the necessary disclosures on a bonafide belief, which is not agreeable to the AO, it will not automatically lead to a case for penalty under section 271(1)(c). We are therefore of the considered view that the penalty is not sustainable in law in the ratio laid down by the Hon ble Supreme Court in case of CIT v Reliance Petro-products Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] wherein it was held that merely because the assessee has claimed the expenditure, which claim was not accepted or was not acceptable by the revenue, penalty under section 271(1) (c) of the Act cannot be attracted. - Decided in favour of assessee.
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2020 (1) TMI 399
Valuation of stock of jewellery - addition u/s.69C by treating the purchases of 823.57 carats of diamonds made during the year as unexplained expenditure - HELD THAT:- There is no need to treat the opening balance of diamonds of 278.04 carats as unaccounted stock or make any addition thereon on account of valuation difference. It is not in dispute that the opening balance as on 01/04/2004 of 278.04 carats of diamonds have been duly reflected in the books of accounts of the assessee with proper valuation and part of it were also found as stock on the date of survey. The total stock found during the survey was subjected to valuation by the departmental valuer and difference in valuation was attributed for the opening stock quantity also. We hold that since the opening balance of diamonds have already been duly reflected in the books of accounts and duly accounted by the assessee, there cannot be any addition in the sum being the valuation difference on the same. Hence, we hold that the ld. CIT(A) had rightly deleted the said addition. AO in the second round of proceedings had made an addition u/s.69C by treating the purchases of 823.57 carats of diamonds made during the year as unexplained expenditure. It would be pertinent to note that the second round of proceedings had emanated out of the directions given by the Tribunal as reproduced supra. Admittedly, in the first round of proceedings, there was no addition made u/s.69C by the revenue. AO could not have made any addition u/s.69C in the second round of proceedings. Even otherwise, we find that the assessee had duly offered to tax in the return of income, the value of purchase of 823.57 carats of diamonds in consonance with the declaration made by him at the time of survey and hence there is no need to make any further addition thereon. We find that the revenue had raised an additional ground challenging the deletion of addition u/s.69C. No arguments were advanced by the ld. DR at the time of hearing before us in this regard. We find that even the written submissions filed by the ld. DR, does not make any mention about the addition made u/s.69C of the Act. We hold that the ld. CIT(A) had rightly deleted the addition made u/s.69C of the Act in the sum of ₹ 1,59,53,910/- on which, we do not find any infirmity. Addition made on account of value of 823.57 carats of diamonds purchased during the year - HELD THAT:- We find that the ld. CIT(A) had erred in holding that ₹ 33,49,991/- being the difference in value of diamonds purchased during the year would go to increase the purchase cost thereon and consequently to be allowed as deduction, thereby making it revenue neutral. In this regard, it is pertinent to note that this finding of ld. CIT(A) is misconceived in as much as the difference of ₹ 33,49,991/- , being the valuation difference in respect of purchase of 823.57 carats of diamonds during the year, could be added only u/s.69C of the Act as unexplained expenditure and as per the proviso to Section 69C of the Act, the addition made thereof cannot be allowed as deduction. The argument of the ld. AR that this sum of ₹ 33,49,991/- to the extent proportionately included in closing stock as on 31/03/2005 should be allowed to be carried forward and allowed as deduction as and when they are sold, is devoid of merit and against the provisions of the Act. Hence, the said argument of the ld. AR is hereby rejected. Accordingly, the original grounds and the additional grounds raised by the revenue are disposed in the aforesaid manner.
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2020 (1) TMI 398
Condonation of delay - delay of 345 days in filing the appeal before the learned CIT(A) - HELD THAT:- The assessee has shown before us that he is a Senior Citizen of 80 years and is suffering from multiple diseases. Normally, no person will be benefitted by filing its appeal late beyond the time prescribed by statute. It is also well settled that whence technicalities are pitted against substantial justice, the Courts will normally lean towards substantial justice, unless malafide is shown to be at writ large on the part of litigant. There is no such allegation by Revenue that the assesse filed its appeal late with learned CIT(A) deliberately with some ulterior motive. Rather the assessee is a Senior Citizen of 80 years of age and has claimed to be suffering from multiple diseases. The affidavit to that extent is filed before us and is reproduce above in this order. We have no reasons to disbelieve version of assessee rather assessee being a Senior Citizen of 80 years of age deserve liberal approach in condoning the delay in filing appeal late with learned CIT(A). Each case for condonation is to be decided on its own facts and merits. The facts may differ from case to case and there is no straight jacket formula for deciding application for condonation of delay. Thus, we in exercise of our powers u/s. 254(1) of the 1961 Act condone the delay in filing appeal late by 345 days with learned CIT(A) by assessee in the instant case as in our considered view the assessee has shown sufficient cause and hence we set aside appellate order dated 10.04.2019 passed by learned CIT(A) and restore the matter back to the file of learned CIT(A) for fresh adjudication. The learned CIT(A) is directed to adjudicate all the grounds raised by assessee in its appeal filed with learned CIT(A). Needless to say that the learned CIT(A) shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law.
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2020 (1) TMI 397
Deduction u/s 35(2AB) - in-house research and development facilities - HELD THAT:- Though, the assessee has produced a copy of Form 3CM before the AO, it has not attached any enclosure specifying a list of assessee s various in-house research and development facilities, etc. Though, the assessee filed its return of income with the Revenue for the assessment year 2015-16 on 15.10.2015, it has not filed the required audit report before the competent authority with DSIR on or before 30.09.2015, as required under the provisions. From the material available on record, it is clear that the assessee filed certain particulars before the competent authority with DSIR on 22.12.2017 only, i.e., after a long gap i.e. about 2 years 3 months after the due date and almost at the end of the assessment proceedings U/s.143(3) for the assessment year 2015-16, which was completed on 26.12.2017. In order to claim the exemption from payment of Income Tax, the assessee has to comply with the provisions of the Act as well as the Rules made there under and establish it in RAMAKRISHNA DEO. [ 1958 (10) TMI 9 - SUPREME COURT] before the Income Tax Authorities. In this case, it is clear from the above facts and circumstances that the assessee has not laid the required material before the competent authorities in time and probably because of that they could not entertain/consider it, etc. Since the assessee has not complied with the provisions as required and has not laid the required material before the authorities concerned, the disallowance made is justified. The corresponding grounds of the assessee fail. Assessee s alternate claim that the impugned expenditure may be considered and allowed u/s.37 - We find merit in the assessee s claim. However, since the lower authorities have not examined this issue, we deem it fit to remit this issue back to the AO for a fresh examination. The assessee shall lay all materials in support of its contention before the AO and comply with the requirements of the AO in accordance with law. The Assessing Officer is also free to conduct appropriate enquiry as deemed fit, however, he shall furnish due opportunity to the assessee on the materials etc., to be used against the assessee and on due consideration of the assessee s clarification / explanation shall pass the order in accordance with law. Disallowances made U/s.37 towards travelling expenses and donation - HELD THAT:- Since, the assessee has not laid any material in support of its contention either before the ld.CIT(A) or before us, we do not find any reason to interfere with the order of the ld.CIT(A). With regard to the disallowance of sales tax penalty, since the assessee has not laid any material to say that this disallowance is not warranted U/s.37, we confirm the order of the ld.CIT(A). The corresponding grounds of the assessee on these issues fail.
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2020 (1) TMI 396
Disallowance of deduction claimed u/s 35(i)(ii) - bogus donation to Herbicure Health Care Bio Herbal Research Foundation, Calcutta - AO received information from the investigation wing that the aforesaid institution was engaged in facilitating the donation in lieu of earning commission and assessee was one the beneficiaries - HELD THAT:- As decided in S.G. VAT CARE P. LTD [ 2019 (1) TMI 1694 - ITAT AHMEDABAD] AO is harping upon an information supplied by the survey tem of Calcutta. He has not specifically recorded statement of representatives of the donee. He has not brought on record a specific evidence wherein donee has deposed that donations received from the assessee was paid back in cash after deducting commission. On the basis of a general information collected from the donee, the donation made by the assessee cannot be doubted. Neither representatives of the donee have been put to cross-examination, nor any specific reply deposing that such donation was not received, or if received the same was repaid in cash, has been brought on record. In the absence of such circumstances, donation given by the assessee to the donee, on which the assessee no mechanism to check the veracity, can be doubted, more particularly, when certificate to obtain donation has been cancelled after two years of the payment of donation. It is fact which has been unearthed subsequent to the donations. Therefore, there cannot be any disallowance on this issue. We allow this ground.
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2020 (1) TMI 395
Addition u/s 68 - unexplained cash credit - HELD THAT:- There was no credit on account of loan or any sum as contemplated under the provisions of section 68 of the Act in the year under consideration in the books of account of the assessee, therefore, we are of the view that no such addition is warranted under section 68 of the Act. As such, the amount was credited in the account of the partner, thus even if it is assumed that the provisions of section 68 are attracted then it would be applied in the hands of the partner of the assessee. It is because the amount was credited in the account of the partner by way of adjustment entry. As such, the assessee is outside the purview of the provisions of section 68 of the Act. - Decided in favour of assessee. Addition u/s 41 - Cessation of liability - HELD THAT:- A plain reading of the provisions reveals that it is applicable with respect to the trading liabilities and there is no information available on record suggesting that the impugned liabilities were representing the trading liabilities. As such, it was noticed that the assessee out of such loan and liabilities has advanced a sum of ₹ 1,39,35,033/- to its group concerned and this fact has not been doubted by the authorities below. Therefore, in the absence of documentary evidence it cannot be assumed that there was trading liability which has ceased to exist in the books of accounts. Indeed the liabilities in the books of accounts of the firm have ceased to exist as the same was transferred to the account of the partner. But, it does not mean that the trade creditors have waived their rights for the amount receivable from the assessee. As such, now the partner was liable for the payment of such amount as it was transferred to his individual account by the assessee. It is also a fact on records that, the partners are liable for the liabilities of the partnership firm. Thus, the liability of the partnership firm is not limited unlike the body corporate. Thus, we are of the view that the liability has not ceased to exist in true sense in the given facts and circumstances as it has shifted to the partner of the firm who was always otherwise liable for such liability in his personal capacity being partner. We hold that the provisions of section 41(1) of the Act cannot be invoked in the given facts and circumstances. Accordingly we reverse the order of the authorities below. - Decided in favour of assessee. Penalty u/s 271(1)(c) - HELD THAT:- The quantum addition made by the AO has already been deleted by us in the appeal filed by the assessee. Once the quantum addition has been deleted, there is no question of claiming the penalty under section 271(1)(c) of the Act. Accordingly, we delete the penalty levied by the authorities below.
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2020 (1) TMI 372
Depreciation on office equipment - @10% OR 15% as claimed by the assessee - On examination of them, the ld. CIT(A) confirmed the addition made by the AO on office equipment on the ground that the nature of items comprised under this head are more in the nature of electrical fittings and installations eligible for depreciation @ 10% and not plant and machinery on which depreciation of 15% is permissible. The Ld.CIT(A) dismissed the appeals of the assessee. HELD THAT:- In the assessee's own case [ 2016 (5) TMI 1518 - ITAT CHENNAI] the co-ordinate bench has decided the issue on allowability of depreciation on office equipments in favour of the assessee - Depreciation @ 15% allowed on Office Equipments
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Benami Property
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2020 (1) TMI 382
Benami Property - Denial of natural justice - Provisional attachment of the immovable property under the provisions of The Prohibition of Benami Property Transactions Act - main contention of the petitioner is that the impugned order has been passed without giving any opportunity of hearing, without issuance of the show cause notice, without complying with the mandatory provisions of Section 24 of the PBPT Act - HELD THAT:- Department had initiated a show cause notice on 02.12.2019 under Section 24(1) calling upon the explanation from the petitioner who has been held to be the beneficial owner and respondent No.5 as a Benamidar. The show cause notice was seeking for explanation as to why the property should not be treated as benami property and why the respondent No.5 should not be treated as benamidar so also as to why the present petitioner be not held the beneficial owner. Plain reading of the content of the notice dated 02.12.2019 as also the order impugned dated 04.12.2019, it clearly reflects that the final adjudication is yet to be concluded and for which the petitioner has been called upon and it is only as an interim measure that the provisional attachment has been made and same has been done too with a purpose that the property does not to get further sold and it remains intact. What has also to be appreciated is that the provisional attachment is only an arrangement done to preserve the property until the authority completes the proceedings under the Act. What cannot be lost sight is the fact that the petitioner as well as the respondent No.5 also can appear before the authorities and can put forward their defence and establish the fact that the property cannot be termed as a benami property. What also is revealed from the proceedings drawn is that the petitioner has been held to be the beneficial owner of the property and which if he is not he only has to deny the contentions and leave it for the authorities to decide the matter on merits as he is not going to loose anything. On the contrary, if he claims to be the beneficial owner then the prohibition of the department becomes relevant rather it would make the case of the department stronger of the property being a benami property in the name of respondent No.5. This Court does not find any strong case made out by the petitioner calling for an interference with the impugned order.
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Customs
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2020 (1) TMI 393
Validity of notices issued under Sec.108 of the Customs Act - demand of CCTV replay - case of petitioner is that notices issued under Sec.108 of the Customs Act does not contain the subject matter regarding which the investigation is conducted by the 2nd respondent and the demand of production of CCTV footages of 11.11.2019 was not possible by the petitioner as he is not the custodian of the same - HELD THAT:- Having regard to the nature of the factual matters raised in this petition, this Court deems fit it not necessary to keep the matter pending any longer, and suffice to order that the competent authority among the respondents will proceed with the matter in pursuance to the impugned notices strictly in accordance with law, so as to not to give room for any complaint. Petition disposed off.
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2020 (1) TMI 391
Release the goods for re-export - petitioners submitted that the petition be permitted to be withdrawn with a liberty to the petitioners to file appeal under the provisions of Section 129-A of the Customs Act to the Tribunal i.e. CESTAT - HELD THAT:- Permission, as sought for, is granted with aforesaid liberty. It goes without saying that it would be absolutely open to the petitioners to urge the Tribunal in the appeal or, if permissible with appropriate application, for seeking appropriate interim orders in accordance with law for release of goods and present proceedings shall not be treated in any manner an impediment in the way of the parties in justifying their contentions before the Tribunal. Petition disposed off as withdrawn.
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2020 (1) TMI 389
Benefit of exemption of the SWS amount - benefit of N/N. 24/2015-Customs dated 08.04.2015 vide Annexure-D - HELD THAT:- It is deemed appropriate to dispose of the writ petition with a direction to respondent No.4 to consider and decide the representation dated 16.07.2019 submitted by the petitioner, if not already decided, by a speaking order within a period of six weeks from the date of receipt of certified copy of the order passed today. Petition disposed off.
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2020 (1) TMI 384
Interest on delayed payment of Special Additional Duty refundable - N/N. 102 of 2007-Cust dated 14.9.2007 - HELD THAT:- The reasoning in the impugned order is contrary to the scheme of the Customs Act, 1962. The exemption notification issued under Section 25A merely relaxes the condition from levy of tax. Refund of Duty is stipulated therein subject to the conditions. Procedure for refund of Duty is governed by Section in 27 and the payment of interest on delayed payment thereon under Section 27A of the Customs Act. The notification cannot be read in isolation of the Customs Act, 1962. If there is delay in payment of any refund claim, the 2nd respondent is duty bound to pay the interest in terms of Section 27A of the Customs Act - At the same time, since the decision of this Court rendered in KSJ Metals Impex (P) Ltd [ 2013 (6) TMI 148 - MADRAS HIGH COURT ] has been stayed I am unable to give any relief to the petitioner at this stage. The respondent shall pass appropriate orders as and when the division Bench dispose KSJ Metals Impex (P) Ltd case, unless there is an earlier decision of the Hon'ble Supreme Court on the very same subject - Petition disposed off.
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2020 (1) TMI 363
Rectification of mistake - appellate remedies - Classification of goods - rate of duty - HELD THAT:- The appellate remedies available to an entity aggrieved by the order of the Tribunal had been exhausted. Withdrawal of an appeal after invoking the jurisdiction of the Hon ble Supreme Court to avail of a provision in law encoded for rectification of a mistake in the order appealed against without express permission of the Hon ble Supreme Court to do so would a presumptuous displacement of superior authority by an inferior one. We do not consider it appropriate for the Tribunal to entertain such an application in these circumstances and without such express permission having been granted to do so by Hon ble Supreme Court. Application dismissed.
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2020 (1) TMI 362
Refund of amount deposited - principles of unjust enrichment - deficiencies in the TR-6 Challan produced by the appellant - Confiscation of imported consignments - waste paper - imposition of penalty - confiscation and penalty was imposed on the ground that the declaration made by the appellant was not proper - HELD THAT:- The objection raised by the revenue are unwarranted, inasmuch as, it is the same TR-6 Challan on which the fine and penalty was deposited and no objection was raised by the revenue at that point of time. Even if the authorities were of the view that the TR-6 Challans produced by the appellant is not perfect, there must be parallel evidences to show that the said deposits were made by the assessee. It is not the revenue s case that redemption fine and penalty was not deposited by them during the pendency of adjudication. The consignment was cleared by the Customs only on such deposits. The records maintained by the appellant would also reveal the deposit of the said amounts. To reject the refunds claim claims on such flimsy grounds is nothing but harassment of the litigant, which cannot be appreciated at any point of time. Also, the appellant have produced a certified copy of the challan from the bank indicating that the said deposits were made by the assessee in their bank. Principles of Unjust Enrichment - HELD THAT:- The refund relates to the redemption fine and penalty which was deposited by the appellant at the time of clearance of their consignment in terms of the order passed by the Original Adjudicating Authority. The said pre-deposits made for the purpose of filing an appeal before Tribunal as also for clearance of the goods has been held to be not attracted to the provisions of unjust-enrichment, inasmuch as, the same were not made in the ordinary course of business. To deny the refund of the same to the appellant, on success of their appeal before Tribunal, on the ground of unjust-enrichment, amounts to unjustified action on the part of Revenue. Refund allowed - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 360
Refund claim - unjust enrichment - It was observed by the lower authorities that though the appellant had submitted CA certificate but the books of account were not submitted - HELD THAT:- The unjust-enrichment has to be examined only at the time of release of the refund even as on today it is to be ascertained that whether the incidence of duty has been passed on and otherwise. The appellant is not able to submit any books of account from which it cannot be ascertained that the amount for which the refund has been shown as receivable which can establish that the incidence of duty has not been passed on. Validity of CA certificate - HELD THAT:- The CA certificate is not a concluding document that shows the incidence was not passed on but it is based on the books of account. In absence of any books of account for the current period, the CA certificate cannot alone help the appellant to overcome the aspect of unjust-enrichment - in the present case both the CA certificates are of very old period and for the purpose of unjust-enrichment the present position is relevant for which neither any CA certificate was produced nor any books of account - Therefore, in absence of providing books of account by the appellant, the aspect of unjust-enrichment is not established. Refund cannot be allowed - appeal dismissed - decided against appellant.
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2020 (1) TMI 359
Smuggling of Gold - onus to prove - whether the appellant has satisfactorily discharged his onus under Section 123 of the Customs Act, 1962 to the effect that the gold seized from him is not smuggled gold? - seizure of Gold - confiscation of Indian Currency - imposition of penalty. HELD THAT:- The allegation is that the appellant has smuggled gold, which is liable for confiscation under Section 111 of the Customs Act, 1962. The gold was not seized while it was being smuggled either at the Port or at the Airport. It was seized from his shop in the City. In such cases, Section 123 of the Customs Act, 1962, provides in respect of the gold and some other notified goods, if the seizure was under reasonable belief, that they are smuggled, the onus of proving that they are not rests upon the person from whom the goods were seized. Reasonable belief - HELD THAT:- The seizure was based on the information that they had received and that the documents pertaining to the gold, were not found in shop at the time of seizure. There is nothing on record to suggest that the pieces which were seized had any foreign markings. Under these circumstances, we find that there was no reasonable belief for the seizure - Further, we find that the appellant had produced various documents to show how he came in the possession of gold and these documents, on investigation, were found to be genuine. It is for this reason that the Ld. Commissioner has refrained from imposing any penalty upon the appellant under Section 114AA of the Customs Act, 1962 - not only was there no reasonable belief for seizure of the gold and the Currency in the first place, but also that the appellant has satisfactorily explained that the gold and currency which were in his possession. The confiscation of gold and the currency and imposition of penalty upon the appellant under Section 112 of the Customs Act, 1962, are, therefore, not sustainable - Appeal allowed - decided in favor of appellant.
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Securities / SEBI
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2020 (1) TMI 377
Non compliance of various provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Penalty imposed - HELD THAT:- The appellant has violated various provisions of the Listing Regulations. The limited prayer made before us was that due to unforeseen events, the stock exchange should have taken the events as a mitigating factor to waive or reduce the quantum of penalty. In this regard, we find that the exceptions carved out in the circular dated May 3, 2018 relates to certain events which in the instant case was not existing. Further, we find that there no justification or any reason has been given as to why a Company Secretary and the two independent directors could not be appointed. In the absence of any cogent reasons, we do not find any justification to reduce the quantum of penalty.
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2020 (1) TMI 368
Non-disclosure of the 'rejection' of Forest Clearance ( FC for convenience) by the Ministry of Environment and Forests ( MoEF for convenience) on an application for iron ore mining filed by ECL was material to an Initial Public Offer ( IPO for convenience) made by ESL and for disclosure under Clause 36 of the Listing Agreement for ECL - HELD THAT:- In the row relating to Environmental Clearance what is indicated in the above table is that the approving authority for both in respect of coking coal mining and iron ore mining is the MoEF; approval in respect of coking coal mining has been received and approval in respect of iron ore has been received, but applicable once forest clearance is received. When this statement was published as part of the prospectus the 04.10/11.2008 rejection letter of the FAC as well as the rejection letter dated January 16, 2009 of the MoEF and the subsequent efforts made by the appellants for reconsideration were all in the knowledge of the appellants. Therefore, great effort has been made to put such facts in a compact statement like received, but applicable once forest clearance is received ; a clear case of not only partial/inadequate disclosure but also to the effect of concealment. Instead of disclosing a rejection everything else has been disclosed. The emphasis made by the learned counsel for the appellants also on various correspondences by different authorities seeking approval for the project from MoEF including the letter from the Prime Minister's Office ( PMO ) to the MoEF also does not absolve the appellants from the required disclosures in the prospectus/under the Listing Agreement. The PMO letter is a reply to a VIP reference with a copy to MoEF clearly stating that forwarded for its consideration and appropriate action most expeditiously . Appropriate action could be another rejection by the MoEF; approval cannot be assumed. We do not propose to deal with the contention of the learned senior counsel for ESL that ESL has undergone a CIRP and all claims relating to penalties etc. have been permanently extinguished and so on under the approved Resolution Plan. We would just state that those issues would be addressed by the appropriate authorities under applicable laws. In the interest of justice we tend to agree with the submissions of the appellants in Appeal No. 202 of 2016 and in 223 of 2016 that non-disclosure of the initial round rejection of the mining project proposal in the Prospectus is not in the category where maximum penalty is imposable. Here, we consider the continued efforts of these appellants (ESL and ECL) in pursuing the matter further for reconsideration etc. as well as in detailing the risk factors with possibilities of not getting the final approval etc. as disclosed in the prospectus as mitigating factors. Accordingly we would reduce the amount of penalty of ₹ 1 crore each imposed on ESL under Section 15HB of the SEBI Act to ₹ 50 lakhs. A similar penalty of ₹ 50 lakh on the three Merchant Bankers jointly is sufficient to meet the ends of justice. However, as far as the appeal of ECL is concerned, the penalty imposable under the provisions of 23A(a) and 23E of the SCRA is a maximum of ₹ 1 crore and ₹ 25 crore respectively. Therefore, the penalty of ₹ 50 lakh each imposed under the said provisions cannot be termed as excessive or harsh. Therefore, no interference is needed. The contention of the appellant ECL that sub-section 23E of SCRA, 1956 is not applicable to the appellant-company since it is applicable only to persons managing CIS or mutual funds is an incorrect reading of the sub-section. Sub-section would make it abundantly clear that a company failing to comply with listing conditions or delisting conditions etc. shall be liable to a penalty not exceeding ₹ 25 crores. Such listing/delisting conditions are relevant to a company rather than persons managing CIS or mutual funds. Reducing the penalty amount from ₹ 1 crore each to ₹ 50 lakh each. The penalty of ₹ 50 lakhs imposed on the appellants shall be paid jointly and severally by the appellants.
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2020 (1) TMI 366
Ad-interim ex-parte order - appellants Restrained from accessing the securities market - violation of PFUTP Regulations 2003 - related party/related party transactions - Finding of manipulation of the books of account or misrepresentation of financials or diversion/siphoning off the funds of the Company - HELD THAT:- We are unable to fathom why the explanations provided by the appellant both relating to the basic facts on the proposed merger and its failure was not given sufficient consideration in the impugned order particularly because of the given business model of Tree House. Tree House is operating in the area of education both for running its own schools, through franchise system and/or by providing funds to various trusts. If that business is adversely affected due to unfavourable business environment obviously that would be a factor leading to the decline in performance as well as profitability. Therefore without passing any judgment on the veracity of the complaints between two groups/different entities the facts on record have to be analyzed in judging/evaluating business performance particularly when there are reliable evidence in the form of orders of the High Court etc. available. Similarly, we are unable to agree with the contentions of SEBI that a trustee of a public charitable trust is a related party going by the correct reading of the definition in the Companies Act as well as in the LODR Regulations, unless there is evidence to show that those Trusts have been set up or operating for the benefit of the appellant(s). Moreover, there is nothing on record to show that Mr. Giridharilal, the trustee has personally benefited in any manner not only by virtue of being a trustee or in general by any other means. Similarly, we are also unable to appreciate fully the allegations relating to the inflated expenditure on furniture and fixtures etc. particularly in the absence of any evidence on diversion of money/resources belonging to Tree House being shown. How far SEBI can reassess or reevaluate business decisions and audited figures given in financial reports of a company unless explicit proof/evidence relating to siphoning off or manipulation of accounts is available is also a question that needs to be answered by SEBI. In the absence of such information authorities are not in a position to pass business judgments regarding what could be or what should be the cost/expenditure on a particular equipment/tool such as furniture and fixtures. These are all business decisions of the concerned entity and decisions to be taken by the authorized persons. If any malafide in terms of siphoning off of funds etc is observed in the accounts of the listed companies SEBI definitely has the power to intervene in the interest of investors and securities market. There is yet another aspect which makes the impugned order not fully sustainable. Admittedly, based on media report an investigation was started by SEBI in December 2016. The investigation continued for more than a year and thereafter an ex-parte interim order dated March 7, 2018 was passed. By the said interim order SEBI further directed NSE to appoint an independent auditor/audit firm for conducting a detailed forensic audit of the books of account from the financial year 2011-12 onwards for verifying, inter alia, the manipulation of the books of account, misrepresentation of financials and/or business operations of the appellant Company and wrongful diversion/siphoning off the funds by the Company through related party transactions etc. As on date, nothing has been shown on record to indicate any finding through interim audit report with regard to the manipulation of books of account or siphoning off the funds of the Company. The forensic audit is still underway. We find that the ex parte interim order was issued on the basis of presumption of certain transactions and after acknowledging the dispute between the appellant and Zee group in 2015 and the expenses incurred by the Company from the financial year 2011-12 onwards. No case of urgency was made out in the instant case for grant of an ex parte interim order or for continuation of the said interim order to restrain the appellant from the securities market. It is settled law that an ex parte interim order is required to be passed in order to curb further mischief or to stop large scale exercise of possible mischief of tampering with the securities market. If during a preliminary enquiry, it is found prima facie, that the person is indulging in manipulation of the securities market, it would be obligatory for SEBI to pass an interim order or for that matter an ex parte interim order in order to safeguard the interests of the investors and to maintain the integrity of the market. The purpose of passing an ex parte interim order is to prevent further mischief or where the act to be prevented is imminent or where action to be taken brooks no delay.
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2020 (1) TMI 365
Delayed disclosure of material informations as required under Clause 36 of Listing Agreement read with Section 21 of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as, SCRA'') and trading in the scrip of appellant - Washington Warning, China Announcement - HELD THAT:- It is to be noted that while having the negative information of slapping of the warning, the appellant sold shares of Jubilant Life Sciences on February 25, 2013. His explanation for the same is that he required funds for renovation of his house is not substantiated by any material on record. As argued before us that for penalizing a person for insider trading, SEBI has to establish that the appellant has traded on the basis of the unpublished price sensitive information as provided by Section 15G of the SEBI Act as quoted above. On the other hand, the AO has relied on the provisions of Regulation 3 of the PIT Regulations as amended in 2002 which provided that only having possession of unpublished price sensitive information is sufficient to attract the provisions. Prior to 2002, the Regulation 3 was on the line of the provisions of Section 15G of the SEBI Act, which provided that the insider trading in securities should be on the basis of unpublished price sensitive information. It has been now established by the catena of cases that even if the penalty would be imposed only when the trading is done on the basis of any unpublished price sensitive information, the person against whom the charges are levelled will have to show that the trading was not done on the basis of the information but for other reasons, since the explanation would be especially within his own knowledge. In the present case, the appellant provided the explanation which remained uncorroborated. Non-closure of the trading window during the period or non action by SEBI on this count is irrelevant. It is established that the present appellant being a Vice President of Jubilant Life Sciences had sold shares when adverse information reached him and purchased when positive news reached him when both remained to be published. AO has provided the table of price fluctuation in the scrip to show that the warning letter had adverse impact while the acceptance letter on positive impact had the positive impact on the prices. Besides this, the AO has rightly noted that this factor is irrelevant. In this view of the matter, the appellant would be guilty of insider trading. AO has imposed penalty of ₹ 10 lacs on each of the appellants Jubilant Life Sciences, Jubilant Stock Holding, Shyam Sunder Bhartia and Hari Shankar Bhartia and Amit Arora equally. The reasoning forwarded by the AO was that though the gains for the violation cannot be estimated, the violations being in the nature of detrimental to the investors, adversely impacting the equilibrium of the fair market. The appellant in Jubilant Life Sciences would be liable for penalty only on one count i.e. for non-disclosure of the China warning immediately. The penalty accordingly is reduced to ₹ 5 lacs.
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FEMA
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2020 (1) TMI 405
Compounding of contravention of [Regulation 7] of FEMA - Procedure for compounding - HELD THAT:- When the information is brought to the notice of the RBI, before remitting the case to the appropriate adjudicating authority under the amended proviso, exercise of taking decision under sub-rule (2), does not get diluted in any manner. It is open for the compounding authority, after considering the objections received from the Enforcement Directorate and affording an opportunity of hearing, to take a decision to remit the case to the appropriate adjudicating authority so that requirement of sub-rule (2) of Rule 8 is complied with fully. In the instant case, merely coming into existence of the proviso will not render requirement of sub-rule (2) of Rule 8 nugatory. The proviso is in addition to sub-rule (2) and has to be read through sub-rule (2) and not otherwise as canvassed by Learned Advocate for the respondents, that is to say what is provided under sub-rule (2), cannot be read through the amended proviso to sub-rule (2) under the subsequent notification dated 20-2-2017. The Court has perused the communications of the Enforcement Directorate which are addressed to the Special Director, Directorate of Enforcement, Western Region, Mumbai, which refer to the proceedings of justification to the export obligation by the petitioner regarding cut and polished diamond under three separate purchase contracts. As the Court is not entering into the merits of the impugned decision, no further reference is made to such communication, leaving it upon respondent No. 2, in exercise of powers under sub-rules (1) and (2) to take a decision after affording an opportunity of hearing to the petitioner to contend that the so called proceedings of the Enforcement Directorate are not pertaining to the transaction in question. After hearing the petitioner, it is open for respondent No. 3 to take a decision in accordance with law. The impugned communication dated 24-5-2017 is set aside accordingly. Respondent No. 3 is directed to take a fresh decision in accordance with law, particularly follow requirement of sub-rule (2) of Rule 8 of the Rules. The petition stands allowed to the aforesaid extent. Rule is made absolute.
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Service Tax
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2020 (1) TMI 394
Condonation of delay of 468 days in filing appeal - no reasonable reasons for condonation of delay produced - HELD THAT:- We are not inclined to entertain the Special Leave Petition under Article 136 of the Constitution of India. SLP dismissed.
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2020 (1) TMI 379
Classification of services - Survey and Map-making service or not - appellant technical support services to civil engineering projects undertaken by the Government agencies such as Rural Panchayath Engineering Department, Irrigation Department and Public Works Department - Board s Circular No.B1/06/2005-TRU dated 27.7.2005 - HELD THAT:- It is not disputed that the appellants during the relevant period were providing technical support service to civil engineering projects undertaken by the Government agencies and therefore, by the definition of taxable service, the activities undertaken by the appellants are excluded from the scope of taxable service of Survey and Map-making. Further, this has also been clarified by the Circular issued by the Board dated 27.7.200 - Further, we have also examined the definition of Consulting Engineering Service and the activities carried out by the appellant do not fall in that category. If the activities of the appellant fall under the Consulting Engineering Service , then there was no necessity to carve out specific service of Survey and Map-making Service with effect from 16.6.2005. In the case of BOARD OF CONTROL FOR CRICKET IN INDIA (BCCI) VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2007 (5) TMI 24 - CESTAT, MUMBAI] , it was held that the assessee s service cannot be taxed prior to 16.6.2005. In the said decision, the Tribunal has held that a subsequent entry having been enacted covering the activity without any change of the existing entry, the same has to be interpreted as if the earlier existing entry did not cover the subsequently created entry. The impugned order is not sustainable in law - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 371
Non-payment of service tax - commission agent services - job of the appellant is that where their principal are not getting payments towards providing telecommunication of service, the appellant recovers the amount from the telecom service recipients and the same is remitted to their principal - invocation of extended period of limitation - demand alongwith interest and penalty. HELD THAT:- Apart from the explanation given by the appellant during the course of investigation, the appellant was entitled to claim the Cenvat credit on services received by them and the said credit could have been utilized for payment of the service tax in question. Further, on perusal of the show cause notice, it is found that there is no specific allegation against the appellant for suppression of facts, fraud or willful mis-statement or intent not to pay service tax. In these circumstances, penalty under Section 78 of the Act cannot be imposed on the appellant - Moreover, when there is no intent to evade payment of service tax on suppression of facts, fraud or willful misstatement, the extended period of limitation also cannot be invoked. The extended period of limitation is not invokable. Consequently, demand beyond the period of limitation is set aside and no penalty under Section 78 of the Act can be imposed on the appellant - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 370
Demand of service tax for differential amount - photography service - demand on the ground that the figures shown in ST-3 Returns are mis-matching with the figures in the receipts shown in the balance sheet - period 2006-07 and 2007-08 - HELD THAT:- The Revenue failed to prove that the miscellaneous receipts shown by the appellant are the part of photography service. It is mere an assumption that miscellaneous receipts are the part of photography service - Without any evidence and record, on miscellaneous receipts shown by the appellant in their balance sheet, the service tax cannot be demanded. In the absence of any evidence placed on record by the Revenue, demand of service tax is not sustainable against the appellant - Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (1) TMI 378
CENVAT credit - capital goods - capital goods used in the manufacture of dutiable cotton/ denim fabric - capital goods used in the manufacture of Cotton yarn - Rule 6(4) of CCR - Cotton yarn cleared on payment of duty - documentary evidence to prevail over oral evidence - Execution of bond not required in case of export of exempt goods. In any case, it is only a procedural requirement - Cotton yarn captively consumed in manufacture of dutiable denim fabric, as well as cleared on payment of duty - eligible documents under Rule 9(1) of the Credit Rules - Extended period of limitation - interest - penalty. HELD THAT:- The receipt and installation of the capital goods, on which cenvat credit is objected, is not disputed. As regards the error in the address of the particular unit of the assessee company is concerned, this is not a good reason for rejection of the cenvat claim as the invoice is in the name of the appellant company only, and subsequently they have got the error rectified by the supplier of the capital goods. Further, it is not disputed that the machinery in question although being used for manufacture of cotton yarn and cotton fabrics is also capable for manufacturing PV yarn, as certified by the manufacturers / supplier of the machinery. Further, the fact of export is not disputed of the cotton yarn /fabrics, which were removed from the factory without payment of duty and were exported. Even if the capital goods have been partially used for manufacture of dutiable goods or on payment of duty or have been exported (which amounts to removal of goods on payment of duty), the appellant is entitled to cenvat credit on the capital goods in question. The special procedure for removal of dutiable goods under Rule 19 of Cenvat Credit Rules read with Notification No. 42/2001-CE is not applicable for removal of exempt goods for export. As the said Rule, read with notification are only for the purpose of safeguarding the interest of Revenue. Further, Rule 6(4) of Cenvat Credit Rules as substituted w.e.f. 01.04.2016, provides that no cenvat credit shall be allowed on capital goods used exclusively in the manufacture of exempted goods for a period of two years from the date of commencement of commercial production. The appellant fulfils the criteria for availing cenvat credit on capital goods under Rule 3 read with Rule 9(1) of Cenvat Credit Rules, 2004 - under the facts and circumstances, the provision of Rule 6(4) of Cenvat Credit Rules are not attracted, as Rule 6(6)(v) provides that the provision of sub rule (4) shall not be applicable in case the excisable goods removed without payment of duty, are cleared for export under bond in terms of provisions of Central Excise Rules, 2002. As part of the export has taken place under bond LUT and certain other consignment have been exported without executing LUT , claiming the goods as exempted under Notification No. 30/2004, in any case it is settled principle of law that only the goods are exported from the country and not the taxes. The Central Excise law provides for clearance of goods for export, either under bond in which case the terminal excise duty is not paid at the time of clearance from the factory, but in the terms of the bond the manufacturer is obligated to export the goods and get the bond discharged - As the export of goods is not doubted, this Tribunal is of the view that the benefit of Rule 6(6)(v) is required to be extended to the appellant. Accordingly, it is held that the appellant manufacturer is entitled to cenvat credit on capital goods, used partially for export even though domestic clearance are exempt. The appellant is entitled to cenvat credit on the capital goods in question - Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 376
Valuation - components manufactured by the appellant and transferred to their Haridwar Plant for captive consumption in use of motorcycles and their parts - appellant valued them at 110% of cost of production under Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and also sold identical goods to independent buyers at a higher price - extended period of limitation - penalty - Board Circular No. 643/34/2002-CX dated 1-7-2002. It is a case of the revenue that where is a sale price to independent buyers, the same should be adopted even for goods which are transferred to sister units for captive consumption - It is a case of the appellant that such goods must be valued at the rate of 110% of the cost of production as per Rule 8 of Central Excise Valuation Rules regardless of fact that the identical goods were also sold to independent buyers at a higher price. HELD THAT:- After 2000, the Central Excise Valuation under Section 4 has been revised and the concept of normal price has been replaced with the concept of transaction value . In other words, with respect to each sale the value has to be determined as per the value of that transaction independent of other transactions. If the price is higher in one invoice and lower in another invoice, the valuation for these invoices would be the corresponding prices. There is no concept of uniform value for all transactions after the year, 2000. There are cases when the goods are not sold, but, are captively consumed or are sold through related buyers. Such cases are covered by the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The question in this case is where there is an independent sale and also captive consumption of identical goods, should the value for captive consumption be based on cost of production under Rule 8 or equal to the value of identical goods sold to independent buyers. Evidently, as they are different transactions, the values are different which should apply. This issue has also been clarified by the Board in Circular No. 643/34/2002-CX dated 1-7-2002 - Thus, not only do the Central Excise Act and Rules provide for independent valuation in respect of each clearances, even CBEC has clarified that regardless of the availability of sale price to independent buyers, the goods for captive consumption must be valued based on cost construction method, under Rule 8. The appellant did just that. Thus, there is no basis for the department s demand of central excise duties based on the price at which identical goods are sold to independent buyers - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 375
Valuation - stock transfer or sale - applicability of Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - extended period of limitation - penalty - HELD THAT:- The argument of the appellant that since they were not making any profit during the relevant period and hence they were correct in paying duty on only 100% of the cost of production instead of 110% mandated by the rule has no legal basis to stand on. Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 does not depend on the extent of profit earned by the appellant. They could a running in loss or earning a 1000% profit. The valuation as per is captively consumption has to be at 110% of the cost of production. This rule was clearly openly defied by the appellant, in order to evade payment of central excise duty. The fact that their sister concern will get CENVAT Credit of duty paid has no bearing either on the excisability of the goods or on their valuation. The appellant willingly evaded payment of duty because they decided that they will pay duty only on 100% of the cost of production even though the law required them to pay on 110% of the cost of production. This is not a case where the law is ambiguous leaving it open to different interpretations but is a case of open, defiance of law. Therefore, the intention to evade payment of duty is self evident. Merely because the sister unit will get CENVAT Credit, the appellant cannot NOT PAY full duty in open defiance of the law and take shelter under Revenue Neutrality to escape liability. It would have been a different case if the Rule could be read or understood in more than one way and the appellant understood it incorrectly. In such a case, the claim of lack of intention to evade payment of duty could come to their rescue. Extended period of limitation - penalty - HELD THAT:- We do not find even the remotest possibility of reading the words profit margin in Rule 8. To say that they will pay duty only on 100% of the cost of production even if the Rule unambiguously says it should be 110% is only a clear violation of the Rule with intent to evade payment of duty even if such intentional evasion may not have ultimately added to the profits of the company. We, therefore find sufficient grounds to invoke extended period of limitation - penalty also upheld. The demand invoking the extended period of limitation along with interest and imposition of penalties are correct and proper and call for no interference - Appeal dismissed - decided against appellant.
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2020 (1) TMI 374
SSI Exemption - clubbing of clearances - dummy unit - mutuality of interest - sole reason for clubbing the clearances of JPPL with PPI only that there were some financial transactions and there are controlled by family member and there are some records were found in each other factory premises - HELD THAT:- During the course of visit, the machinery for manufacture of finished goods was found installed in the premises of JPPL. Moreover, some stocks on finished goods were also lying there and it is not denied by the Revenue that these two units are not separate units. In fact, both the units are located at a distance of 5 KM. from each other and having any manufacturing infrastructure separately installed in their premises. Merely, both the units are owned by the family members cannot be the reason for clubbing the clearances. Moreover, it was not alleged in the show cause notice that JPPL is a dummy unit. Further, the directors of both the units are not common and initially PPI was a proprietorship concern and JPPL is a private limited company. The private limited company is distinct from an individual, therefore, it cannot be said both are same units. In the absence of any corroborative evidence on record, the clearances cannot be clubbed. The other ground for clubbing the clearances is that there are some financial transactions between each unit - HELD THAT:- The individuals have given money on loan to the units and if other unit is required money, the same is returned by the other unit to the individual who further give the loan to that unit and on all the transactions interest has been paid. In these circumstances, it cannot be said that there was flow of funds between the both units and these types of transactions cannot be the reason for clubbing the clearances - Moreover, another allegation is that both units are managed by the family members or one person, the same cannot be the reason to club the clearances. The clearances of both the units cannot be clubbed together and M/s JPPL is entitled for benefit of SSI exemption N/N. 08/2003-CE dated 01.03.2003 - Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 373
CENVAT credit - capital goods - various items of the machinery - credit denied on the ground that at the time of receipt of capital goods in the refinery where the same had been installed for setting up Nephtha Cracker Plant, the appellant were not owner of the goods, as the same had been brought by their contractor for setting up the plant; and that the goods after being installed had becomes fixed to earth structure which is not excisable and hence the Cenvat Credit of Central Excise duty involved these goods would not be available to the appellant. HELD THAT:- For capital goods Cenvat Credit, the items must be among those mentioned in this Rule and should have been used in the factory of the manufacturer and how the items are not used relevant. The words used in Rule 2(a) are used in the factory of manufacturer of the final product not used in the manufacture of final product . Therefore, once any item received in the factory is capital goods in terms of Rule 2(a) of the Cenvat Credit Rules, and is used in the factory, the manufacturer would be entitled to Cenvat Credit of excise duty paid in respect of the same. If the logic of the commissioner in the impugned orders are accepted, no capital goods Cenvat Credit can be allowed in respect of any item of capital goods enumerated in Rule 2(a) of the Cenvat Credit Rules, as all the items various items of machinery covered under Chapter 84, 85 90 of the Tariff, pipes tubes, tanks, pollution control equipments refractors etc. have to be installed in the factory before being put to use and after installation, the same would become fixed to earth plant - Reading the impugned orders give an impression that the same has been passed without any application of mind. Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 369
CENVAT Credit - input service distribution - credit has been denied to the appellant which has been distributed by the Input Service Distributor (ISD) - Rule 7 of the Cenvat Credit Rules, 2004 - whether any notice has been issued to the ISD or not? HELD THAT:- The answer came that no notice has been issued to the ISD - In terms of Rule 3 of the Cenvat Credit Rules, 2004, whatever service tax has been paid by the appellant, the appellant is entitled to avail Cenvat credit on that. Admittedly, the distribution of the Cenvat credit has not been disputed, therefore, the appellant is entitled to avail Cenvat credit on this ground only. In the impugned order, the learned Commissioner (Appeals) has made an observation that Parwanoo unit might be availing exemption under Notification No. 50/2003-CE dt. 10.06.2003. The said observation is factually incorrect as the appellant has produced ER-1 Returns for their Parwanoo unit before me, wherein it has been shown that the appellant is paying duty on their manufactured products. There are no merit in the impugned order, the same is set aside - Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 367
CENVAT credit - input services - labour service - denial on the ground that the service provider is registered for service namely, private security agency service - denial also on the ground of nexus - HELD THAT:- As regard the reason for denial of credit that the service provider is registered under private security agency service and the invoice for the service was raised under the head of labour service, there is no dispute that whatever service was mentioned in the invoice was received by the appellant and the same was used in their manufacture, with these facts credit cannot be denied. As regard the classification it is the subject matter of the service provider. The classification cannot be disputed in the hands of the recipient of the service as has been held in the case of M/S. NEWLIGHT HOTELS RESORTS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST., VADODARA [ 2014 (11) TMI 209 - CESTAT AHMEDABAD] , therefore, for this reason the cenvat credit cannot be denied. Scope of SCN - discrepancies pointed out in the service invoice issued by the service provider as regard incorrect address - HELD THAT:- Firstly there is no charge in the Show Cause Notice regarding the said discrepancy, therefore, the adjudicating authority cannot go beyond the scope of Show Cause Notice as the appellant was never put to notice about the new issue raised in the adjudication order. Secondly, it was not disputed by the department that the service was received by the appellant and used in the manufacture however, even if, there is any error in mentioning the address so long the service is received by the appellant, credit cannot be denied. Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 364
Refund of deposit made - refund rejected on the ground that the deposit made is payment of duty and not deposit under Section 35F, therefore, the refund should have been filed under Section 11B - HELD THAT:- The full amount of duty and additional amount of 50,00/- deposited by the appellant was considered as sufficient for the purpose of pre-deposit required under Section 35F of Central Excise Act, 1944 and the balance amount was waived. With this clear findings in the stay order there is no doubt that the amount of duty and additional amount of ₹ 50,000/- paid by the appellant is under Section 35F. Board has clarified in Board Circular F.No. 275/37/2J-Cx. 8A dated 02.01.2002 that Any amount which is paid under Section 35F no formal refund application under Section 11B is required, merely a letter claiming the refund is sufficient which the appellant has admittedly submitted within the time after the Tribunal s order dropping the demand. Thus, whatever amount has been deposited by the appellant since has been considered by the Tribunal as a deposit under Section 35F for granting the stay, the same needs to be refunded without following the procedure of Section 11B - refund allowed - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 361
CENVAT Credit - input services - services of fumigation of export containers at port - denial of credit on the ground that it is used beyond the place of removal and the service has no nexus with the manufacture of the goods - HELD THAT:- The fumigation service is used for fumigation of export containers wherein the export goods are stuffed exported. This service is performed at port of export - It has been consistently held that all the services used in respect of export of goods up to the port of export are considered well within the place of removal. In case of export beyond the port of export is only out of place of removal. The denial of credit on the ground that the service was used beyond the place of removal is factually and legally incorrect - appeal allowed - decided in favor of appellant.
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Indian Laws
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2020 (1) TMI 390
Dishonor of cheque - Section 138 of the Negotiable Instruments Act, 1881 - issue raised by the petitioner in the present petition cannot be appreciated at this stage as the same can only be adjudicated at the time of trial - HELD THAT:- It is well settled that for the purpose of quashing of a complaint, the High Court cannot look into the defence of the accused. The Court is only required to see whether on the basis of the averments made in the complaint and the relevant particulars produced by the Complainant, there are grounds for proceeding against the accused. Inherent power of quashing criminal proceedings should be exercised very sparingly and with great circumspection. It does not confer on the court to act arbitrarily as per its own whims and caprice. The basic law is that the complaint under Section 138 of Negotiable Instrument Act cannot be quashed by High Court by taking recourse to Section 482 Cr.P.C, if disputed questions of facts are involved which need to be adjudicated after respective evidence is led by the parties before the trial court. It cannot be said that the learned trial Court has committed any error and / or illegality in issuing summons for offence under Section 138 of the Negotiable Instruments Act, 1881, or the same deserves to be quashed and set aside by this Court in exercise of powers under Section 482 of the Code of Criminal Procedure. Petition dismissed.
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2020 (1) TMI 388
Dishonor of Cheque - insufficiency of funds - Section 138 of the Negotiable Instruments Act - time limitation - HELD THAT:- The documents on record, which show that the cheque was presented in the Bank, which was dishonoured and then the stipulated time, as required under law on 22.12.2014 with the endorsement Insufficient funds thereafter, notice was issued to the respondent within two days through Bank, which is Ex.CW1/D, in the learned Court below, on the address of the respondent, which is the same address and now in the present petition, endorsement on the same was unclaimed and before that intimation was left by the addressee by the postal authority. In these circumstances, the presumption is that it was received by the respondent and the same was returned to the addressee by the Post Office on 24.12.2014 and it could have been taken three days to reach back to the sender. In the instant case, the presumption has to be taken that it is received by the addressee, when it was on the known address, which is the same address in the present petition and after thirty days, the time comes 24th January, 2015 i.e. the presumption period and fifteen days thereafter, 8th January, 2015, i.e. the time to make the payment and thereafter, the complaint was required to be filed within one month by 5th March, 2015, but the complaint was filed in the month of February, 2015, which is within limitation. It is clear that the complaint was filed within time and the learned Court at Rampur Bushehar, has got territorial jurisdiction to adjudicate the case. Notice was duly served upon the respondent, as it was the same address, of which, the present petition is filed. In these circumstances, jurisdiction of Section 482 of the Code of Criminal Procedure, is not required to be exercised and complaint cannot be quashed. The present petition sans merits, deserves dismissal and is accordingly dismissed.
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2020 (1) TMI 387
Dishonor of Cheque - Section 138 of the Negotiable Instruments Act - rebuttal of presumptions - HELD THAT:- It appears that admittedly the cheques in question were issued by the petitioner in favour of the complainant. It is also an admitted fact that all the cheques were dishonoured when the complainant presented the same for encashment. In the present case the materials placed on record show that both the Learned Courts below came to the concurrent findings that the petitioner issued the cheques in question in discharge of his liability to repay the loan as par the loan agreement. Issuance of cheques in question is an admitted fact. Defence was taken by the petitioner that those cheques were issued by him for consultancy which the complainant was required to provide him. The said consultancy was not provided to him. But the petitioner has totally failed to discharge that burden by adducing cogent and convincing evidence - I do not find any ground to interfere with the concurrent findings of both the Learned Courts below. It is well settled principle of law that in exercise of its power under Section 482 of the Code of criminal Procedure, the High Court should not in absence of perversity, upset concurrent factual findings of Trial Court and Appellate Court. Moreso, the High Court in exercise of its inherent power should not re-analyze and reassess the materials particularly the evidence on record - On perusal of the entire materials on record, it can be said that the Learned Courts below have rightly come to the conclusion that the petitioner committed an offence punishable under Section 138 of the Negotiable Instruments Act. Application dismissed.
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2020 (1) TMI 386
Dishonor of Cheque - insufficiency of funds - cheque not issued towards any debt - allegation that accused persons made mischief by issuing cheque for which they committed an offence under the provision of Negotiable Instrument Act, 1881 - HELD THAT:- As per complaint the cheque was not issued towards any consideration or to clear of any debt or liability. As there was no deed / agreement for sale executed as required under law, the payment for consideration does not arise and in that view of the matter the requirement of Section 138 N.I. Act, i.e., money paid to discharge in whole or in part of any debt or other liability, is found absent. As the ingredients of the offence U/s.138 N.I. Act are lacking, taking of cognizance for that offence by the learned S.D.J.M., Bhubaneswar is not sustainable in the eye of law, hence, the same is liable to be quashed. The proceeding u/s138 of the Negotiable Instruments Act, 1881 is quashed.
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2020 (1) TMI 385
Dishonor of cheque - Legality of Amendment to Article 142(2) of the Negotiable Instruments Act - challenge made primarily on the ground that the amendment goes completely contrary to the judgment of the Honourable Supreme Court in DASHRATH RUPSINGH RATHOD VERSUS STATE OF MAHARASHTRA ANOTHER [ 2014 (8) TMI 417 - SUPREME COURT] where it was held that Once the cause of action accrues to the complainant, the jurisdiction of the Court to try the case will be determined by reference to the place where the cheque is dishonoured. HELD THAT:- By virtue of the said amendment, the entire basis of the judgment of Dashrath Rupsingh Rathod has been removed. The power of the Legislature to take away the basis of a judgment by making amendments is well settled. It is trite law that the Legislature can take away the basis of the judgment of a judicial pronouncement by either passing a Validating Act or passing amendments to the parent Act - Reference can be made to the case of STATE OF KARNATAKA ETC. VERSUS M/S PRO LAB ORS. ETC. [ 2015 (2) TMI 388 - SUPREME COURT] and STATE BANK'S STAFF UNION MADRAS VERSUS UNION OF INDIA ORS [ 2005 (9) TMI 650 - SUPREME COURT] . Thus, there is no infirmity in the amendment. Even otherwise, the Parliament is competent to bring out the amendment under the Negotiable Instruments Act. The said amendment cannot be said to be ultra vires in view of the provisions of the Act or Part III of the Constitution of India. The amendment cannot also be called to be manifestly arbitrary in the absence of any materials on record. Petition dismissed.
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2020 (1) TMI 383
Dishonor of cheque - Section 138 of the Negotiable Instruments Act - the cheques, which were dishonoured, were given by way of security - suppression of fact by the complainant - HELD THAT:- This Court finds that long standing business transaction and inability of refunding a loan has been given a color of criminal offence of cheating punishable under Section 420 of the Indian Penal Code. A breach of trust with mens rea gives rise to a criminal prosecution. In this case when I go through the evidence before charge of the complainant and the documents of the complainant, I find that there were long standing business transactions between the parties. Since 2011 money was advanced by the complainant and his family members to the accused and the complainant witness admits that money was also transferred from the account of the accused to the account of daughter of the complainant. From the evidence, I find that there is no material to suggest existence of any mens rea. Thus, this case becomes a case of simplicitor case of non-refunding of loan, which cannot be a basis for initiating criminal proceeding. It is the documents of the complainant, which show that the cheques were given by way of security. Even if I do not believe the statement of the accused, the documents of the complainant cannot be brushed aside - Since the cheques were given by way of security, which is evident from the complainant s documents (though this fact has also been suppressed in the complaint petition), I find that Section 138 of the Negotiable Instruments Act is also not attracted in this case. Application allowed.
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2020 (1) TMI 381
Dishonor of cheque - insufficiency of funds - acquittal for the offence - section 138 of the Negotiable Instruments Act - existence of loan - existence of legally enforceable debt or not - whether the non-production of any licence for providing loan is fatal to the complainant's case? - whether there was existence of any legally recoverable debt and how it has to be considered? HELD THAT:- The issue is covered in the case of H. Narasimha Rao. Vs. Venkataram [ 2006 (10) TMI 504 - KARNATAKA HIGH COURT ] where it was held that once the cheque is proved that the same was issued with reference to any debt, even if it is a time barred debt, in such an eventuality such stand is not available to the accused that there is no existence of any debt or liability. Therefore, on the said ground, the acquittal recorded by the trial court is not proper. So far as the proceedings u/s.138 of the Negotiable Instruments Act is concerned, the question of the complainant having money lending licence does not arise - acquittal of the accused on the above said ground by the trial court is also not proper and correct. The judgment of acquittal for the offence punishable under Section 138 of the Negotiable Instruments Act is hereby set aside - Appeal allowed.
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2020 (1) TMI 380
Dishonor of Cheque - section 138 of NI Act - territorial jurisdiction - It is the submission of the learned counsel for the petitioner that as the cheque has been drawn on M/s. Standard Chartered Bank, Sharjah Branch, UAE, the dishonour of same had occurred outside the territory of India and as such the Courts in Delhi have no territorial jurisdiction - HELD THAT:- The Cr.P.C. is no longer res integra and the same has been decided long back in the decision rendered by the Supreme Court in M/S BRIDGESTONE INDIA PVT. LTD. VERSUS INDERPAL SINGH [ 2015 (12) TMI 777 - SUPREME COURT ] where it was held that the Judicial Magistrate, First Class, Indore, would have the territorial jurisdiction to take cognizance of the proceedings initiated by the appellant under Section 138 of the Negotiable Instruments Act, 1881, after the promulgation of the Negotiable Instruments (Amendment) Second Ordinance, 2015. The cheque in question was presented for encashment by the complainant in Canara Bank, Anand Vihar Branch, Delhi-92, the present petition is dismissed along with pending applications - petition dismissed.
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