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TMI Tax Updates - e-Newsletter January 15, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Territorial Jurisdiction - Search and seizure - multiple agencies have carried out search operations - In the course of investigating of a tax entity, a situation may arise where the investigation may have to be carried out from entities which are not within the territorial jurisdiction of the Officer appointed under the Notification dated 19.06.2017 and/or such State Notifications appointing an Officer with the limited territorial jurisdiction. It cannot be said that in every such case, the ‘proper officer’ having limited territorial jurisdiction must transfer the investigation to the ‘proper officer’ having pan India jurisdiction - it would depend on the facts of each case as to whether such transfer is warranted or not. To lay down the indefeatable rule in this regard may not be feasible or advisable, and certainly not acceptable. - Petitions dismissed - HC Visit to Get Source GST: Seeking grant of Bail - bogus ITC was claimed - The fake business entities appear to have been identified. In other words, all the relevant materials which are required to subject the petitioner to prosecution can be said to have been collected during investigation. The petitioner happens to be a local inhabitant. The firm is being run in the name of wife of the petitioner. Being a permanent resident, the Court is of the view that there is a remote possibility of petitioner absconding or fleeing from justice. - Bail granted - HC Visit to Get Source GST: Refund of unutilised input tax credit - officer concerned proceeded on leave on personal grounds and therefore, the matter was assigned to another officer, who was required to give a fresh opportunity of personal hearing to the petitioner - newly appointed officer, without availing any opportunity of hearing passed an order, rejecting the claim of refund - principles of natural justice - matter restored back - HC Visit to Get Source GST: Refund of IGST - There is a direct binding decision of this Court, which is rendered in favour of the assessee holding the assessee entitled to the refund of IGST. Despite the aforesaid decision of this Court in the case of Amit Cotton Industries [2020 (12) TMI 1116 - GUJARAT HIGH COURT], for the reasons best known to the adjudicating authority, the adjudicating authority has failed to abide by the aforesaid decision and has chosen not to take decision with regard to the refund of IGST. - the stand of the respondent Authority to withhold IGST based on non-consideration of Judicial pronouncement is equally irrational and arbitrary. - Refund allowed with 9% interest - HC Visit to Get Source Income Tax: Undisclosed income - issuance of Look Out Circular (LOC) - pre-condition for issuance of a LOC, fulfilled or not - Mere suspicion of a person opening bank accounts in other countries and of investing in a foreign company cannot, in my view, be accepted as the basis for holding that the petitioner being allowed to travel abroad would be ‘detrimental to the economic interests of India’, when it is undisputed that this suspicion has remained a suspicion for such a long period of almost three years. - HC Visit to Get Source Income Tax: Deduction u/s 80P - entities registered under the Souharda Act - Merely, because separate definitions are provided for the words “Co-operative” and “Co-operative Society” under Section 2[e] and [g] respectively of Sec.2 of Souharda Act, it cannot be construed as their characteristic is different, since their nomenclature is different. Importance has to be given to the word “Cooperative” which is found in both the enactments i.e., Act No.11 of 1959 and Act No.17 of 1997, as adjective pre-fixed to the noun that means the characteristic of the organization/institution while applying the principle of hormonial construction and interpretation of the laws, especially the laws which are intended to promote the organization of that character. - Benefit cannot be denied to the assessee - HC Visit to Get Source Income Tax: TDS u/s 192 - Exemption u/s 10(5) - benefit of leave travel concession (LTC) - no claim of exemption could be made, out of the total ticket package spent on overseas travel with part of the journey being within India by the employee. - The bonafide belief pleaded by the appellant assessee is without any legal basis. Considering these aspects, the authorities have rightly held that the assessee as an ‘assessee in default’ - HC Visit to Get Source Income Tax: Reopening of assessment u/s 147 - necessary conditions for initiating and completion - the reopening of the assessment made by the learned assessing officer is not on account of the failure on part of the assessee to disclose fully and truly material facts for assessment of income as well as there is no tangible material available with the assessing officer to reopen the assessment. All the catena of judicial precedents cited before us also laid down the same principles - AT Visit to Get Source Income Tax: Disallowance u/s. 14A r.w. Rule 8D - Mandation of recording satisfaction- We find that the AO had after exhaustively dealing with the contention advanced by the assessee that the disallowance of ₹ 4 lac (supra) offered in the return of income was quite reasonable qua the exempt dividend income, had on the basis of elaborate reasons as to why the said claim of the assessee company was not to accepted and the disallowance was required to be determined as per the mechanism provided in Rule 8D, therein, dislodged the suo motto disallowance that was offered by the assessee in its return of income. We, thus, not being persuaded to subscribe to the claim of the ld. AR that the Assessing Officer had failed to record his satisfaction that as to why the assessee's claim for disallowance u/s. 14A was not to be accepted, reject the same. - AT Visit to Get Source Customs: Jurisdiction - power of DRI authorities to issue SCN - goods imported by the assessee should be rejected or not - show-cause notice proceedings have lingered on for unduly long time - Section 28 of the Customs Act, 1962 - The impugned show-cause notice is set aside with consequential effect. If the petitioner has given any guarantees on account of pendency of these proceedings, the same would stand discharged - HC Visit to Get Source Customs: Benefit of Exemption - In the instant case, the Bill of Entry was not filed; essentiality certificate was not applied for at the time of import. The impugned Rig was seized and such seizure was held by this Bench and was affirmed by the Apex Court. The Bill of Entry was filed on 02.03.2001 and the Bill of Entry was finally assessed. - The impugned goods herein have the taint of being smuggled. Therefore, the same cannot be treated to be normal imported goods as in the cases relied by the appellants. - Claim of benefit of notification rejected - AT Visit to Get Source Customs: Quantum of penalty levied under Section 114 (iii) of the Customs Act, 1962 - fraudulent export as goods were grossly undervalued - the appellant has acted only on the instruction of the employer and more so on the basis of the signed documents i.e. invoice given by his employer. - The exorbitant penalty of ₹ 75 Lacs is not justified - the penalty is reduced from ₹ 75 Lacs to ₹ 25,000/-. - AT Visit to Get Source Customs: Classification of group of goods - measuring devices, namely flowmeters - t Even though it is possible that some of the flowmeters proposed to be imported by the applicant can be used in a system to control and regulate process parameters, these flowmeters, by themselves, are not automatic controlling and regulating apparatuses - The instruments/devices listed at the first paragraph of this ruling merit classification under Heading 90.26 and more specifically, under sub-heading 9026 10 10 of the first schedule to the Customs Tariff Act, 1975. - AAR Visit to Get Source Customs: 100% EOU - Process amounting to manufacture or not - labelling and repacking of the imported goods - inter-unit transfer - In the light of this Foreign Trade Policy and Circular, a wider meaning has to be given to the term “manufacture”. “Repacking and labeling” is construed to be “manufacture” in terms of the said Foreign Trade Policy which is applicable to the case on hand - HC Visit to Get Source DGFT: De-Activation of IECs not updated at DGFT - All IECs which have not been updated after 01.07.2020 shall be de-activated with effect from 01.02.2022 Visit to Get Source Corporate Law: Oppression and Mismanagement - The Related Party Transactions done by the Respondents are contrary to the provisions of law and in breach of the Articles of Association of the Respondent Company and, therefore, the said Related Party Transactions are hereby declared as invalid and all the proceedings which have been done in violation of the Articles of Associations are also hereby declared as invalid - Tri Visit to Get Source Indian Laws: Maintenance of status quo with regard to SARFAESI action - Nonperforming Asset - It appears that the High Court has initially granted an ex-parte ad-interim order mechanically and without assigning any reasons. The High Court ought to have appreciated that by passing such an interim order, the rights of the secured creditor to recover the amount due and payable have been seriously prejudiced. The secured creditor and/or its assignor have a right to recover the amount due and payable to it from the borrowers. The stay granted by the High Court would have serious adverse impact on the financial health of the secured creditor/assignor. - SC Visit to Get Source Indian Laws: Dishonor of Cheque - seeking amendment in the cheque number - cheque number is 054285 and that in the statutory notice the respondent/complainant had mentioned the cheque number as 024337 - The respondent/complainant has not attempted to introduce a number which is totally different to the proceedings and there is no other discrepancy and all other particulars tally with the notice and complaint. - The petitioner/accused has attempted to take undue advantage of a genuine mistake which is curable. - HC Visit to Get Source Indian Laws: Dishonor of Cheque - insufficiency of funds - requirement to issue separate notice to manager or not - Admittedly, in this case, the liability of the petitioner company has not been discharged and also it is not denied that Mr.Hitesh V. Shah is the Director of the company. The Manager, who is in charge of the petitioner company, has entered appearance before the Court below only on receipt of the summon issued to the Director Mr. Hitesh V. Shah and hence, no separate notice is required to be issued to him under Section 138 of the Act. - HC Visit to Get Source IBC: Initiation of CIRP - It is well settled that per incuriam is exception to the rule of precedent. Incuria literally means carelessness. In practice, per incuriam appears to us per ignorantiam. When judgment is rendered in ignorance of binding statute or binding authority the judgment is said to be per incuriam. - The Financial Creditor has full right to initiate action under Section 7 for non-payment of dues - no error has been committed by the Adjudicating Authority in admitting Section 7 Application filed by the Financial Creditor - AT Visit to Get Source Service Tax: Maintainability of writ petition - It prima-facie appears from the reliefs prayed for that if an appeal is filed, then towards pre-deposit the writ-applicant is obliged to deposit 7.5% of the total demand. This may be a little difficult for the writ-applicant but that by itself is not sufficient for this Court to entertain this writ-application, more particularly, when there is an alternative remedy of statutory appeal being available to the writ-applicant. - HC Visit to Get Source Central Excise: Refund - amount paid during the investigation is under protest - main thrust of the ld. A.R. is that the amount deposited by the appellants during the course of investigation has taken the shape of pre-deposit - The appellants are entitled for interest @12% p.a. from the date of deposit till the date of realization of refund of the amount paid during investigation - Appeal allowed - AT Visit to Get Source Articles RECENT DEVELOPMENTS IN GST DGGI oﬃcers empowered to issue summons under GST Notifications Customs 02/2022 - dated 13-1-2022 - ADD Seeks to rescind Notification No. 49/2017-Customs (ADD), dated the 17th October, 2017, to remove levy of ADD on Colour coated / pre-painted flat products of alloy or non-alloy steel originating in or exported from China PR and European Union. GST - States G.O.Ms.No. 10 - dated 12-1-2022 - Andhra Pradesh SGST Amendment in Notification No. 582, Revenue(CT-II) Department, dated 12.12.2017 G.O.Ms.No.7 - dated 11-1-2022 - Andhra Pradesh SGST Amendment in Notification Go.Ms.No. 449, Revenue(CT-II)Department, dated 21.08.2018 G.O.Ms.No. 8 - dated 11-1-2022 - Andhra Pradesh SGST Andhra Pradesh Goods and Services Tax (Eighth Amendment) Rules, 2021 20/2021 – State Tax - dated 24-12-2021 - Jharkhand SGST Seeks to amend Notification No. 4/2018– State Tax, dated the 20th February, 2018 19/2021 – State Tax - dated 24-12-2021 - Jharkhand SGST Amendment in Notification No. 76/2018– State Tax, dated the 24th January, 2019 22/2021—State Tax (Rate) - dated 11-1-2022 - Maharashtra SGST Seeks to supersede Notification 15/2021-ST(R)dated18.11.2021 and amend Notification No.11/2017 State Tax Rate dated 28.6.2017 21/2021-State Tax (Rate) - dated 11-1-2022 - Maharashtra SGST Seeks to supersede Notification 14/2021-ST(R)dated18.11.2021 and amend Notification No.1/2017 State Tax Rate dated 28.6.2017 G.O. Ms. No. 19/2021-Puducherry GST (Rate) - dated 31-12-2021 - Puducherry SGST Amendment in Notification No. 2/2017-Puducherry GST (Rate), dated 29th June, 2017 G.O. Ms. No. 18/2021-Puducherry GST (Rate) - dated 31-12-2021 - Puducherry SGST Amendment in Notification No. 1/2017-Puducherry GST (Rate), dated 29th June, 2017 6184-C/CTD/GST Cell/2018 - dated 31-12-2021 - Puducherry SGST CORRIGENDUM - Notification No. 14/2021-Puducherry GST (Rate), dated the 7th December, 2021 Circulars / Instructions / Orders DGFT - Trade Notice No. 31/2021-22 - dated 14-1-2022 De-Activation of IECs not updated at DGFT DGFT - 46/(2015-2020) - dated 14-1-2022 Amendment of Para 2.54 (d)(v)(iv) of Handbook of Procedures, 2015-2020. News DGGI Officials bust network involving fake invoices worth more than ₹ 4,500 crore; 1 held Shri Piyush Goyal urges Global Venture Capital Funds to focus on Startups from Tier 2 and 3 cities INDIA’S FOREIGN TRADE: December 2021 Case Laws: GST 2022 (1) TMI 554 Territorial Jurisdiction - Search and seizure - multiple agencies have carried out search operations - centralisation of investigation with DGGI, AZU - HELD THAT:- In the present set of writ petitions, the respondents have explained that to bring investigation under one umbrella, the DGGI AZU sought transfer of investigations being carried out by different Commissionerate(s) to itself. This was acceded to by each Commissionerate in both the writ petitions. We have not been shown any prohibition in the CGST Act or the SGST Act to such transfer of investigation. Neither it has been contended that the DGGI, AZU, would otherwise lack jurisdiction to carry out an investigation against the petitioners. It is not denied by the petitioners that the DGGI, AZU has a pan-India jurisdiction. DGGI, AZU would, as Central Tax Officer and in compliance with the mandate of Section 6 of the CGST Act and the SGST Act, have to pass comprehensive order, both under the CGST Act as also the SGST Act. Circular dated 05.10.2018 has no application to the peculiar facts in the present set of writ petitions. In the course of investigating of a tax entity, a situation may arise where the investigation may have to be carried out from entities which are not within the territorial jurisdiction of the Officer appointed under the Notification dated 19.06.2017 and/or such State Notifications appointing an Officer with the limited territorial jurisdiction. It cannot be said that in every such case, the proper officer having limited territorial jurisdiction must transfer the investigation to the proper officer having pan India jurisdiction - it would depend on the facts of each case as to whether such transfer is warranted or not. To lay down the indefeatable rule in this regard may not be feasible or advisable, and certainly not acceptable. The investigations were initiated by various jurisdictional authorities against different entities - Section 6(2)(b) of the CGST Act has limited application and therefore, is not applicable to the facts of the present petitions. Similarly, the Circular dated 05.10.2018 also has no application to the facts of the present petitions. Petition dismissed. 2022 (1) TMI 552 Seeking grant of Bail - bogus ITC was claimed on the strength of fake invoices without physical receipt and supply of goods - Section 132(1)(c) of CGST Act, 2017 - HELD THAT:- In the instant case, the petitioner was arrested on 05.08.2021 for an offence punishable under Section 132(1)(c) CGST Act, 2017 having availed fake ITC by the firm M/s. Arshee Ventures during the period from July, 2017 to March, 2019. As is made to understand, the business premises of the firm was searched and inspected in the year 2018 by CGST Intelligence Wing and the petitioner s statement was recorded and was further examined on couple of times once in the year 2019 and soon before his arrest in the month of August, 2021 and in the meantime, final PR was submitted on 5th October, 2021. The petitioner is claimed to be the authorized agent of M/s. Arshee Ventures with his wife as its proprietor. The allegation is to the effect that the firm in question availed ineligible ITC and also made it available for other business entities by providing fake invoices and thus, passed on within and outside the State. The details of the documentation regarding the illicit transactions have been revealed during investigation. The conclusion which has been drawn by the investigating agency is entirely based on documents which are shown to have been seized during and in course of investigation. The fake business entities appear to have been identified. In other words, all the relevant materials which are required to subject the petitioner to prosecution can be said to have been collected during investigation. The petitioner happens to be a local inhabitant of Sambalpur. The firm is being run in the name of wife of the petitioner. Being a permanent resident of Sambalpur, the Court is of the view that there is a remote possibility of petitioner absconding or fleeing from justice. The petitioner is directed to be released on bail on furnishing a bail bond of ₹ 50,00.000/- with two solvent sureties for the like amount to the satisfaction of the learned court below in seisin over the matter with conditions - Application allowed. 2022 (1) TMI 551 Seeking set aside the summons issued to Ms. Tanuja Gomes - seeking direction to the Respondents to conduct an enquiry without initiating summons and interrogation unless found extremely necessary and only by due adherence of the law - HELD THAT:- A perusal of the reply to the question 34 of FAQs dated 15 December 2018, issued by GST Department would clearly indicate that issuance of summons is a last resort and are not issued in a casual manner. There are no allegations made by the Respondents alleging non-cooperation on the part of the Petitioner - A perusal of the averments in para 7.1 indicates the said summons was issued only in view of the statement made by Shri Piyush Patel which was recorded under Section 70 of the CGST Act 2017, that the decision regarding payment of taxes and claiming of exemption was taken by the director Ms. Tanuja Gomes. In the affidavit-in-rejoinder filed by the Petitioner and the affidavit filed by Mr. Piyush Patel, the averments made by the Respondents in para 7.1 of the reply are denied. The Respondents are directed to inform the Petitioner the list of further documents required to be produced by the Petitioner and other requisite queries to which, they seek clarifications from the Petitioner. Such list of documents along with queries shall be furnished to the Petitioner within one week from today - Petition disposed off. 2022 (1) TMI 550 Issuance of pre-consultation notice - writ applicant was asked to remain present for the purpose of pre-consultation, the writ applicant was not in a position to respond in a short period of time - HELD THAT:- Our attention has been drawn to a recent pronouncement of this High Court in the case of DHARAMSHIL AGENCIES VERSUS UNION OF INDIA [ 2021 (7) TMI 1064 - GUJARAT HIGH COURT] wherein a Co-ordinate Bench of this Court observed that the exercise of pre-consultation should not be a mere eye-wash. Pre-consulation should be meaningful. Let Notice be issued to the respondents, returnable on 23.02.2022. 2022 (1) TMI 549 Principles of natural Justice - No sufficient time was afforded to the petitioner - ex parte order - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This is for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. Impugned order is set aside - petition allowed. 2022 (1) TMI 548 Refund of unutilised input tax credit - officer concerned proceeded on leave on personal grounds and therefore, the matter was assigned to another officer, who was required to give a fresh opportunity of personal hearing to the petitioner - newly appointed officer, without availing any opportunity of hearing passed an order, rejecting the claim of refund - principles of natural justice - HELD THAT:- This Court is of the opinion that the order impugned needs to be quashed and the matter should be remitted by the officer concerned from the stage where he has not followed the principle of natural justice. It is quite obvious and barely there arises any need for the Court to elaborate that once a show cause notice for the refund claim of ₹ 36,85,893/- is issued at the best, the rejection that can be made is for the amount for which the show cause notice is issued and surely not for any higher amount than specified in show cause notice. It is quite obvious that is a gross and apparent mistake that the authority concerned has travelled beyond the scope of show cause notice. That itself is the valid and opt ground for the Court to interfere - Non availment of the opportunity of hearing, more particularly when it affects adversely the petitioner and exceeds the scope of show cause notice, the order deserves indulgence. Noticing the fact that the grievance is with regard to the non availment of opportunity of hearing and being a breach on procedural side, let the same be ordered to be cured without quashing and setting aside the show cause notice itself - the respondent authority is directed to avail an opportunity to the petitioner in relation to the show cause notice dated 16/18.03.2021 to schedule a day for hearing and if the physical hearing is not permitted, the authority concerned shall virtually hear the petitioner and decide the matter in accordance with law bearing in mind the basic requirement. Petition allowed. 2022 (1) TMI 547 Refund of IGST - Export of Comber Noil - Zero Rated Supplies - claim of interest @ 18% on the amount of refund of IGST from the date of shipping bill up till the date on which the amount of refund is paid to the petitioner herein - Petitioner claims that the refund has been arbitrarily and illegally withheld by the respondent authorities - HELD THAT:- In the present case, admittedly, the shipping bills have been amended pursuant to the decision of the Superintendent of Customs (Export). It is not in dispute that the Demand Draft of differential drawback aggregating to an amount of ₹ 3,39,245/- has been realized by the respondent Authorities. As held in various decisions, such Circulars are merely in the form of instructions or guidance to the concerned Department and it explains the provisions of drawback, however, it has nothing to do with the IGST refund. More particularly, Rule 96 of GCST Rules, 2017 is explicitly clear on the said aspect. This Court had an occasion to deal with the similar facts in the case of AWADKRUPA PLASTOMECH PVT. LTD. VERSUS UNION OF INDIA [ 2020 (12) TMI 1116 - GUJARAT HIGH COURT] , whereby reliance was made upon the Circular 37/2018-Customs dated 09.10.2018, whereby the competent Authority had withheld the refund of IGST on the ground that exporters had availed the option to take drawback at higher rate in place of the IGST refund out of their own volition. - Refund allowed. Rate of interest - HELD THAT:- There is a direct binding decision of this Court, which is rendered in favour of the assessee holding the assessee entitled to the refund of IGST. Despite the aforesaid decision of this Court in the case of Amit Cotton Industries [ 2020 (12) TMI 1116 - GUJARAT HIGH COURT] , for the reasons best known to the adjudicating authority, the adjudicating authority has failed to abide by the aforesaid decision and has chosen not to take decision with regard to the refund of IGST. To repeat, on going through entire record, the stand of the respondent Authority to withhold IGST based on non-consideration of Judicial pronouncement is equally irrational and arbitrary. The respondent Authorities are directed to immediately sanction the refund towards IGST paid in respect of goods exported Zero Rated Supplies made under the shipping bill - respondent authorities directed to grant interest @ 9% from the date when the bills for refund of IGST were raised by the petitioner, till its actual payment. Application disposed off. 2022 (1) TMI 546 Seeking withdrawal of petition - Validity of show cause notice and proceedings commenced under Section 74(1) of the Central Goods and Services Tax Act, 2017 - invocation of extended period of limitation - Jurisdiction - HELD THAT:- The officer concerned instead of invoking the provision of Section 73 has done it under Section 74. If at all the department had indicated that the petitioner is not being entitled for the exemption either on the branded or the unbranded products, they could have issued notice of demand within specified period of limitation under Section 73 however, by not so doing, it has issued the show cause notice under Section 74 which is impermissible, hence the present petition. At this stage, learned advocate Mr. Dave seeks withdrawal of this petition with a request that the authority concerned may consider all his contentions which shall be raised in reply to the said show cause notice which shall also include the issue of jurisdiction. The present petition stands disposed of as withdrawn. 2022 (1) TMI 545 Seeking Writ of Mandamus to respondent Nos.2 and 3 either to open the online portal to enable the petitioner to again file the rectified TRAN-I form electronically which was originally filed physically - HELD THAT:- The petitioner is permitted to file once again rectified TRAN-I Form electronically or manually within a period of 30 days from today; pursuant to the petitioner filing the said form, respondents would consider and pass appropriate orders in accordance with law. The petition is allowed. Income Tax 2022 (1) TMI 555 Order Passed as per draft Assessment - Order assessment completed as per the draft Assessment Order - cutting and pasting the draft Assessment Order - Petitioner explained why it could not respond earlier and also showed cause as to why the order as per draft Assessment Order should not be passed but notwithstanding this reply, Respondents have gone ahead and passed the impugned order - HELD THAT:- In our view, there has been total non-application of mind and we would add gross abuse of process by Respondents. Due to the actions / inaction of Respondents, parties are made to incur substantial legal costs and Court s judicial time has also been wasted. It is another case in which, in our view, costs have to be imposed on the Assessing Officer hoping that the concerned parties will also take action against the Assessing Officer for passing such orders without application of mind.4. Assessment Order dated 23/09/2021 is hereby quashed and set aside. The matter is remanded for de novo consideration. The Assessing Officer, who will not be the same officer who passed the earlier Assessment Order, shall consider the reply filed by Petitioner on 12/05/2021 and pass an Assessment Order as he deems fit in accordance with law, within 8 weeks from the time this order gets uploaded but before passing the order shall give a personal hearing to Petitioner. 2022 (1) TMI 553 Undisclosed income - issuance of Look Out Circular (LOC) - pre-condition for issuance of a LOC, fulfilled or not - whether the Court can interfere with the issuance of a LOC or whether it is purely an administrative decision, with which the Court ought not to interfere? - As per the LOC, Undisclosed foreign assets and interests in foreign entities liable for penalty and prosecution under the Income Tax Act - HELD THAT:- Even though the respondents are justified in contending that the scope of judicial review to interfere with the decision of the competent authority issuing a LOC is very limited, it cannot be said that the decision is purely an administrative one or that in no situation can the Court examine the reasons provided by the authority for the issuance of a LOC. When considering a challenge to a LOC, the Courts undoubtedly have a secondary role; and as long as it is found that the decision of the authorities to issue a LOC is a reasonable one, the Court will be circumspect in interfering with the authority s decision to issue the same - in case, it is found that the decision of the authorities is without application of mind to the relevant factors, the Court can, and in fact, should come to the rescue of the individual - there are no merit in the respondent s plea that this Court should not examine the legality of the impugned LOC. Whether having made a request for issuance of the LOC under the OM dated 27.10.2010, the respondents can now seek to defend the LOC by relying on a Clause introduced only vide the OM dated 05.12.2017 which for the first time permits issuance of a LOC, even when there is no involvement in a cognizable offence, a pre-condition for issuance of a LOC under the OM dated 27.10.2010? - HELD THAT:- Once a request for issuance of the impugned LOC against the petitioner was made in February 2019, his case was necessarily required to be governed by the OM of 2010, along with all up to date amendments, including the amendment introduced in 2017. The respondent no.3 s action, in referring to the OM of 2010, while forwarding its request for issuance of LOC against the petitioner was therefore in order, and cannot be read in such a restrictive manner so as to imply that, no reference having been made to the OM dated 05.12.2017, it must be presumed that the respondent no.3 never intended to invoke the Clause introduced vide the OM dated 05.12.2017 - respondent s action, in justifying the issuance of the LOC against the petitioner by relying on the Clause introduced vide the 2017 amendment, can, therefore, not be faulted. Whether the impugned LOC can be held to have lapsed after one year from the date of its issuance or whether the same still continues to hold the field, as urged by the respondent no. 3, for which purpose reliance has been placed on the consolidated guidelines issued by the respondent no. 1, vide it s OM dated 22.02.2021? - HELD THAT:- Merely because the OM dated 05.12.2017 permits the issuance of a LOC, in exceptional circumstances, even when the individual is not involved in any cognizable offence under the IPC or any other penal law, it has to be remembered that this power, is meant to be used in exceptional circumstances and not as a matter of routine, it must therefore, be interpreted in a manner that indicates an offence of such a magnitude so as to significantly affect the economic interests of the country. Mere suspicion of a person opening bank accounts in other countries and of investing in a foreign company cannot, in my view, be accepted as the basis for holding that the petitioner being allowed to travel abroad would be detrimental to the economic interests of India , when it is undisputed that this suspicion has remained a suspicion for such a long period of almost three years. Petition allowed. 2022 (1) TMI 544 Exemption u/s 10(23C)(iv)/11/12 - whether activities of the respondent/assessee do not qualify for charitable purpose in view of the Proviso to Sec 2(15)? - HELD THAT:- In a writ petition being India Trade Promotion Organization vs. Director General of Income Tax (Exemptions) Others [ 2015 (1) TMI 928 - DELHI HIGH COURT] the learned predecessor Division Bench issued a Mandamus to the appellant herein to grant approval to the respondent herein under Section 10(23C)(iv) of the Act. As revenue states that the revenue has preferred a Special Leave Petition [ 2017 (7) TMI 1313 - SC ORDER] as against the judgment passed in WP which is pending consideration in the Supreme Court. In the said Special Leave Petitions, Leave has been granted. Admittedly, there is no stay of the judgment passed by the learned predecessor Division Bench. Consequently, in view of the judgment of the Supreme Court in Kunhayammed and Others Vs. State of Kerala And Another [ 2000 (7) TMI 67 - SUPREME COURT] and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras, [ 1992 (4) TMI 183 - SUPREME COURT] the present appeals and pending applications are dismissing being covered by the judgment passed by the learned predecessor Division Bench in WP in India Trade Promotion Organization case [supra] . 2022 (1) TMI 543 Reopening of assessments u/s 147 - change of opinion - eligibility of reasons to believe - payment made on account of reimbursement of payroll expenses to subsidiaries incurred outside India and paid to Oracle Financial Services Software INC on behalf of petitioner - HELD THAT:- The documents expressly mention that since the payment is to be made on account of reimbursement only, no tax is required to be deducted. Therefore, a query has been raised and it has been answered. An order under section 92CA(3) of the Act was passed by TPO. Shri Sharma submitted that the order under section 92CA(3) is only concerning whether the amount paid to the companies outside India was correct. Of course, Shri Sharma is correct but what is relevant to note is that this subject has also been discussed by the TPO in his order dated 20th September 2016 (internal page 8). TPO s order finds a mention and reference in the impugned order dated 27th February 2017 at paragraph 4.1.2 and paragraph 4.1.3. Therefore, entire issue regarding petitioner paying huge reimbursement cost on account of salary reimbursement cost of its employee every year was in the active consideration before the Assessing Officer. Shri Sharma was right in stating that this issue has not been discussed specifically in assessment order. But it is settled, law as held in Aroni Commercials Ltd. [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. We are satisfied that it is nothing but a change of opinion on the part of the new AO, who issued the notice u/s 148 of the Act. Change of opinion does not constitute justification and/or reasons to believe income chargeable to tax has escaped assessment. - Decided in favour of assessee. 2022 (1) TMI 542 Reopening of assessment u/s 147 - Eligibility of reason to believe - change of opinion - claim of deduction u/s 80IB(10) - HELD THAT:- Assessment Officer has no power to review an assessment which has been concluded. AO before he passed the assessment order, had in his possession all primary facts necessary for assessment and then he made the original assessment. When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view - See ANANTA LANDMARK PVT. LTD. [ 2021 (10) TMI 71 - BOMBAY HIGH COURT] . We are satisfied that not only material facts were disclosed to the petitioner truly and fully, but they were carefully scrutinized and figures of income as well as deduction were viewed carefully by the Assessing Officer. - Decided in favour of assessee. 2022 (1) TMI 541 Assessment u/s 153C - principal argument canvassed is that Section-153(C) can be invoked with respect to a particular seized document vis-a-vis the transaction - HELD THAT:- So far as the other 05 transactions are concerned, they are not part of the documents seized during the course of the search premises of Dr. Dilip Patel - no incriminating materials was recovered with respect to the particular assessment year i.e.2017-18, for which the information is sought for. It is also submitted that there is no incriminating material found with respect to these 05 other adjoining parcels of land. Our attention was drawn to the reasonings assigned by the Assessing Officer while overruling the objections raised by the writ-applicant. The Assessing Officer has said that as the 05 other parcels of land are adjacent to the land at revenue survey no.77/2/1, logically, it could be derived that the other five sellers must have been paid the amount commensurate to what had been paid to Dr. Dilip Patel. Let Notice be issued to the respondent, returnable on 24.01.2022.Let there be an ad-interim order in terms of Para-10(C). Direct service is permitted. 2022 (1) TMI 540 Deduction u/s 80P - entities registered under the Souharda Act - Appellant Cooperative registered under the Karnataka Souharda Sahakari Act 1997 enacted by the Government of Karnataka falling under the definition of Section 2[19] for the purpose of Section 80P - whether the appellate cooperative is not a cooperative society since it is registered under the Karnataka Souharda Sahakari Act, 1997 and not under the Karnataka Co-operative Societies Act? - Whether the definition of cooperative in Section-2[e] of the Karnataka Souharda Sahakari Act, 1997, enacted by the Government of Karnataka, deeming to be Cooperative Society for the purpose of the enactments mentioned in the said society is only illustrative or exhaustive and not restricted to the enactments mentioned in the said Section? - HELD THAT:- The fallout of the object and reasons and the subsequent amendment which takes the forefront by this 97th Constitution Amendment is appreciating Cooperative movement. By incorporating part IX-B in the Constitution under the head The Co-operative Society and making it part of directive principles of the state policy, it becomes explicit that the co-operative movement is top priority of the Central Government s Policy and its implementation. Merely, because separate definitions are provided for the words Co-operative and Co-operative Society under Section 2[e] and [g] respectively of Sec.2 of Souharda Act, it cannot be construed as their characteristic is different, since their nomenclature is different. Importance has to be given to the word Cooperative which is found in both the enactments i.e., Act No.11 of 1959 and Act No.17 of 1997, as adjective pre-fixed to the noun that means the characteristic of the organization/institution while applying the principle of hormonial construction and interpretation of the laws, especially the laws which are intended to promote the organization of that character. The Souharda Act and the Karnataka Cooperative Societies Act, 1959 are both in force in the State of Karnataka and are regulated by the State Registrar of Co-operatives Karnataka. Registrar of Cooperative Societies governs all Co-operatives while being formed, alteration of bylaws and closure of the Co-operative Societies. Though the aforesaid two Acts are parallel but are in respect of Co-operatives in the State as the name suggests. Once the entities are governed by the Co-operative Principles under the law in force and registered under the State enactment, which by implication or otherwise shall only have a same meaning of Co-operative Society. Both these Acts [Souharda Act and Cooperative Societies Act, 1959] would come within the ambit of Article 246[3] read with Entry 32 of the List-II of Schedule VII of the Constitution of India. The judgments cited by the learned counsel for the Revenue inasmuch as Articles 246 and 254 would be of no assistance in adjudicating the dispute in the case on hand. If a strict literal interpretation is given to the word Co-operative as canvassed by the learned counsel for the Revenue, in the absence of rate of tax fixed for such Co-operative , no tax liability would arise in the light of the judgment of the Hon ble Apex Court in the case of Govind Saran Ganga Saran supra. Hence, the said arguments are negated. The provisions of Section 80P offers tax deduction in respect of income of Co-operative Societies which is enacted with a laudable object of promoting Co-operating moment. Such benefit cannot be denied to the so called Co-operatives under the Souharda Act merely on hyper technicalities. The interpretation given by the Revenue to Section 2[19] of the Act is untenable. A harmonious reading of the said provisions would indicate that Co-operative Society registered under the Co-operative Societies Act, 1959 alone is not the Cooperative Society for the purposes of the Income Tax Act, as the phrase or employed with the following words under any other law for the time being in force in any State for the registration of Co-operative Society if read, Co-operative Societies registered under the Souharda Act which is a State enactment would certainly be construed as Co-operative Society coming within the ambit of Section 2[19]. We find no jurisdictional error in the order passed by the learned Single Judge in extending the benefit of Section 80P to the entities registered under the Souharda Act.Writ appeals stand dismissed. 2022 (1) TMI 539 TDS u/s 192 - Exemption u/s 10(5) read with Rule 2B of the Income Tax Rules, 1962 - liability under Sections 201[1] and 201[1A] - appellant - Bank provides benefit of leave travel concession ( LTC for short) to its employees and while deducting TDS from the salary of the employees - reimbursement of leave travel expenses as claimed by the employee of the Appellant - Whether the Tribunal was justified in holding that in the light of the provisions of Section 10(5) of the IT Act, 1961 read with Rule 2B of the IT Rules, 1962 when the employee has undertaken circuitous route which included foreign leg, the exemption is totally denied without considering the expenditure involved by the shortest route from the place of departure to the place of destination when both the places are within India? - HELD THAT:- The liability under Sections 201[1] and 201[1A] would arise only when the assessee has been declared as an assessee-in-default, the object of which is to recover the tax. Tax compliance has to be made strictly in terms of the Act, not on the advise/Circulars of the Association. Tax being compulsorily payable, in default interest is liable to be paid under Section 201[1A] which is compensatory in nature but that is not so in the case of penalty. The Hon'ble Apex Court in Eli Lilly Co. [ 2009 (3) TMI 33 - SUPREME COURT] , has set aside the penalty order made under Sections 271C read with 273B of the Act directing the Assessing Authority to examine each case to ascertain whether the employee-assessee [recipient] has paid the tax due on, in case tax due on stands paid off, then the Assessing Officer shall not proceed under Section 201[1]. In cases where the tax has not been paid, the Assessing Officer has been directed to proceed under Section 201[1] of the Act. Similarly with respect to Section 201[1A] of the Act, relief has been granted only with respect to penalty proceedings. In the light of this judgment, the shelter taken by the assessee under the bonafide reason cannot be countenanced. We have also perused the e-Circular referred to, by the learned counsel for the assessee dated 03.03.2015, where the interim order of the Hon ble Madras High Court dated 16.02.2015 has been referred to. But in the present cases, journey was undertaken prior to 16.02.2015. As in the case of Commissioner of Income-tax and Another V/s. Larsen and Toubro Ltd.[ 2009 (1) TMI 11 - SC ORDER ] beneficiary of exemption under Section 10[5] is an individual employee. There is no Circular of the Central Board of Direct Taxes [CBDT] requiring the employer under Section 192 to collect and examine the supporting evidence to the declaration to be submitted by an employee[s]. With great respect, we are of the considered view that this judgment would not come to the aid of the appellant to substantiate the arguments advanced in the present case. Having regard to Section 10[5] and Rule 2B, it is clear that leave travel concession is available for an employee to proceed on leave to any place in India [destination] and thereafter return to the place of origin in the shortest route but not with a foreign leg. Such an amount to be allowed as concession cannot exceed the air economy fair of the National carrier by the shortest route to the destination in India. We are of the considered view that no claim of exemption could be made, out of the total ticket package spent on overseas travel with part of the journey being within India by the employee. The bonafide belief pleaded by the appellant assessee is without any legal basis. Considering these aspects, the authorities have rightly held that the assessee as an assessee in default under Section 201[1] of the Act - we answer the substantial questions of law against the assessee. 2022 (1) TMI 538 Deduction under Chapter VI-A u/s 80IA - incurred towards sub-contract payments - HELD THAT:- As relying on own case [ 2022 (1) TMI 342 - ITAT HYDERABAD] we direct the AO to give/allow the deduction u/s 80IA(4) the expenditure of which was incurred towards sub-contract payments. In view of this, the ground is allowed. Disallowance u/s 14A read with rule 8D - HELD THAT:- CIT(A) after relying on various cases of ITAT as well as High Courts and Supreme Court, held that disallowance u/s 14A read with rule 8D cannot exceed the exempt income claimed by the assessee. He, therefore correctly restricted the disallowance to the extent of dividend received by the assessee i.e. ₹ 1,48,970/- and directed the AO to delete the balance amount of ₹ 50,25,20,230/-. MAT credit on deduction u/s 80IA - HELD THAT:- The finding of the CIT(A) that the MAT credit is held not to be eligible for deduction u/s 80IA as it is not directly linked to the eligible business but only comes into operation due to statutory provision. He relied on the decision of the Hon ble Supreme Court in the case of Liberty India Vs. CIT [ 2009 (8) TMI 63 - SUPREME COURT] - Therefore, we find no reason to interfere with the decision and CIT(A) and upholding the same, we dismiss the grounds raised by the assessee on this count. 2022 (1) TMI 537 Carry forward of Long Term Capital Loss arising from sale of equity shares - eligible to set off against Long Term Capital Gain (LTCG) of any subsequent assessment year which do not form part of total income as envisaged in the provisions of section 10(38) of the Income Tax Act - HELD THAT:- Following the decision in case of Raptakos Brett Co. Ltd.[ 2015 (6) TMI 529 - ITAT MUMBAI] has attained finality as the appeal preferred by the department against the said decision has been dismissed by the Hon ble Jurisdictional High Court, though, due to non-prosecution. Thus, we do not find any infirmity in the order of the Ld.CIT(A) in allowing the claim of carry forward of Long Term Capital Loss of ₹.17,86,21,665/- arising from sale of equity shares. With regard to case law relied by Ld. DR she relied on Apollo Tyres Ltd., v. DCIT [ 2021 (9) TMI 708 - KERALA HIGH COURT] the issue involved in that case was whether long term capital loss incurred on which STT paid could not be set off against long term capital gain arising out of sale of land, the issue is distinguishable. With regard to Nikhilsawhney [ 2020 (8) TMI 508 - ITAT DELHI] this case was pronounced on 17.08.2020 and subsequently Coordinate Bench has decided the issue in favour of the assessee. Aggrieved, when revenue preferred appeal before Hon'ble Jurisdictional High Court, the same was dismissed. Therefore, the issue under consideration reached finality. Accordingly, ground raised by the revenue is dismissed. Disallowance u/s 14A r.w.r. 8D - disallowance of the expenditure even where taxpayer in particular year has not earned any exempt income - HELD THAT:- Assessee has earned exempt income to the extent of ₹.49,23,544/- whereas the Assessing Officer calculated the disallowance u/s. 14A r.w. Rule 8D to the extent of ₹.67,13,465/- which is more than the exempt income earned by the assessee. The various courts have held that disallowance u/s. 14A of the Act cannot be more than the exempt income earned by the assessee. Therefore, we are in agreement with the finding of the Ld.CIT(A) and we do not find any reasons to interfere with the finding of the Ld.CIT(A). Accordingly, ground raised by the revenue is dismissed. Nature of expenditure - expenses on Software renewal license - revenue oR capital expenditure - HELD THAT:- We observe from the record that Ld.CIT(A) allowed the software licence charges expenses claimed by the assessee by relying on the Coordinate Bench decision in the case of DCIT v. Integrated Technology Solutions Pvt. Ltd. [ 2016 (4) TMI 30 - ITAT MUMBAI] - After considering the detailed findings of the Ld.CIT(A) we do not find any reason to interfere with the findings of the Ld.CIT(A). Therefore, the grounds raised by the revenue is dismissed. Disallowance on account of travelling expenses - assessee could not establish the business relevance of such expenses - HELD THAT:- We observed that the Coordinate Bench in own case after considering the facts in the case of the assessee has allowed 1/7th of the expenses incurred by the assessee as personal. Ld.CIT(A) has relied on the above finding and accordingly, allowed the appeal filed by the assessee before him. After considering the finding of the Ld.CIT(A) we do not find any reason to disturb or interfere with the above finding. Accordingly, ground raised by the revenue is dismissed. 2022 (1) TMI 536 Reopening of assessment u/s 147 - necessary conditions for initiating and completion - Denial of exemption respect of SEZ Unit at Pithampura /disallowance of deduction u/s 10 (10 AA) - HELD THAT:- Non-disclosure of material facts fully and truly is a serious allegation made by the learned assessing officer for reopening of the assessment however for the purpose of reopening of the assessment he is referring the same material which is been disclosed by the assessee during the course of assessment proceedings before him - reasons given by the learned assessing officer for reopening is merely an arithmetical calculation made by him with respect to the turnover of SEZ unit with respect to the purchase of SEZ unit. He did not look into what kind of manufacturing process that SEZ unit undertakes. We failed to understand that when the assessing officer is clearly saying and using the material, which has been submitted before him during the course of assessment proceedings, then how it can be said that the assessee has failed to disclose truly and fully material facts. There is no reference of any tangible material available with AO for reopening of the assessment which is also mandatory requirement for reopening of the assessment thus the reasons itself says that there is no failure on the part of the assessee to disclose fully and truly all metal facts necessary for its assessment and the allegation of nondisclosure is merely a ritual. In fact when the assessment is reopened beyond the period of four years when originally assessed u/s 143 (3) it is the duty of the assessing officer to show in the reasons recorded for reopening of the assessment that how the information originally submitted by the assessee has resulted into escapement of income by not disclosing certain things/information. Further if such things/information would have been disclosed the assessee would not have been allowed the claim of deduction is claimed by him in the original return of income - we find that the reopening of the assessment made by the learned assessing officer is not on account of the failure on part of the assessee to disclose fully and truly material facts for assessment of income as well as there is no tangible material available with the assessing officer to reopen the assessment. All the catena of judicial precedents cited before us also laid down the same principles - we hold that jurisdiction assumed by the learned assessing officer for invoking the provisions of Section 147 is not valid. Accordingly, ground number 1 of the appeal of the assessee is allowed. 2022 (1) TMI 535 Rectification u/s 154 - Capital gain computation - direction to adopt the value determined by the DVO instead of applying deeming provision under section 50C - HELD THAT:- We find that the ITAT in the case of one of the joint-owners, viz. Shri Harik Suryakant Shah dismissed the appeal of the assessee qua challenge to order of the CIT(A) passed under section 250 but allowed appeal of the joint-owner, and set aside order of the CIT(A) passed under section 154 of the Act with direction to adopt the value determined by the DVO instead of applying deeming provision under section 50C of the Act. Tribunal, facts and issues involved in the present appeal being identical, observations and findings of the Tribunal in the case of co-owners [ 2021 (11) TMI 1016 - ITAT AHMEDABAD] shall apply mutatis mutandis in the case on hand as well, more so when, the ld.DR has not pointed out any material difference in facts and circumstances. Therefore, we dispose of both appeals of the assessee with similar directions. 2022 (1) TMI 534 Penalty u/s 271(1)(c) - whether there is concealment of income or the assessee filed inaccurate particulars of the income? - HELD THAT:- In this particular case of the assessee, the Revenue is not invoked the proper limb of Section 271(1)(c) i.e. whether there is concealment of income or the assessee filed inaccurate particulars of the income. It is not at all mentioned by the Revenue authorities in the penalty notice dated 10.09.2013 relating to under which penalty limb of Section 274 r.w.s. 271(1)(c), the assessee's case will fall. Revenue authorities while imposing penalty as well as invoking the penalty provisions cannot be vague in their invocation which is beyond the scope of Income Tax Statute. Besides that, the principles of natural justice were not at all followed by the Revenue in assessee's case. On merit also land in question does not fall within the ambit of capital asset , as defined u/s. 2(14) and therefore, capital gain arising on sale of such lands is exempt, this submission of the Ld. AR is correct and as per law. Therefore, the penalty does not sustain. Incorrect provisions of the penalty - Penalty u/s 271(1)(c) cannot be levied in this assessment year as this is the search year in view of the provisions of Section 271AAA as the search took place on 21.09.2010, the reliance of the Ld. AR on the decision of the Tribunal in case of Dr. Naman A. Shastri [ 2015 (11) TMI 109 - ITAT AHMEDABAD] is apt in the present case. Revenue has invoked incorrect provisions of the penalty and that cannot be said the fault of the assessee. Therefore, penalty does not sustain. 2022 (1) TMI 533 Disallowance of expenditure claimed on account of cost production of feature films - CIT-A retained 50% disallowance - HELD THAT:- Substantial amount of expense to the tune of ₹ 4.77 crores was also stated to have been claimed by M/s. Eagle Films (P) Ltd., in production of the same film (Office Office), the duplicacy of certain expenses cannot be ruled out. Accordingly, it is considered fair and reasonable to disallow 50% of the expenses claimed, since the same had not been subjected to verification by the AO as has also been stated in the remand report. Thus, the addition to the extent is hereby confirmed on account of disallowance of 50% of expenses claimed to have been incurred on cost of production of the film - appeal of the assessee is dismissed. 2022 (1) TMI 532 Exemption u/s 11 - application for registration u/s. 12A refused - proof of charitable activity - refusal to grant registration is that the assessee had failed to provide copy of the Memorandum of Association (MOA) to the Trust as well as it had also failed to provide copy of Receipt and Payment account for three years which had been specifically called for by the Ld. CIT(E) - HELD THAT:- Assessee society has been formed to provide educational facilities to all including the disadvantaged group of society to establish and run various types of educational institutions i.e. schools, colleges/University for art, science, commerce etc. as well as to acquire land, building, funds for running of Dharamshala/Institutions by way of receiving donation, fee, contributions, grants, loans etc. However, we note that CIT(E) has not considered these objectives of the assessee society while rejecting the application of the assessee. CIT(E) has also stated irrelevant reasons like non-filing of the Receipt and Payment Account as well as stating that the veracity of the income and expenditure account could not be established. It is the assessee's contention that these details were not called for by the Ld. CIT(E). Therefore, on an overall view of the facts of the case and considering the settled law that the Ld. CIT(E) has to satisfy himself about the genuineness of the objectives of the society, which in the present case, CIT(E) has not done as per the mandate laid down by law, we restore this file to the office of the Ld. CIT(E) for the purpose of reconsidering the application of the assessee society by examining the objects of the assessee society and by satisfying himself about the genuineness of the objectives of the society at this stage and not further. Needless to say that the Ld. CIT(E) will grant adequate opportunity to the assessee to support its claim prior to the passing of the order afresh. Appeal of the assessee stands allowed for statistical purposes. 2022 (1) TMI 531 Capital gain determination - FMV determination - value determined by Assistant Valuation Officer u/s. 50C(2) - HELD THAT:- As observed that guideline value of the property was much higher than the prevailing market value of the property and the same do not represent true market value of the property. The same is an undisputed fact which is also evident from the valuation made by valuation officers for AY 2015-16 as well as for this year wherein on both the occasions, the valuation has come lower than the guideline value. In such a scenario, the valuation, in our considered opinion, would be subjective matter and no fixed formula could be laid down to ascertain the true fair market value of the property. The difference in two valuations is bound to happen since various factors would be required to be factored in while valuing the property - when once valuation has been done by departmental valuation officer, then the same has to be adopted and should be given due weightage. Further, had valuation report for this year been received by AO before completion of assessment, the same would have been binding on Ld. AO - CIT(A), in our opinion, was not correct to apply the valuation of AY 2015-16 to this year since specific separate reference was made for this year for valuation of property sold by the assessee during the year and the valuation would depend upon many variables viz. location of property, type of property, size etc. Therefore, on the given facts and circumstances of the case, we direct Ld. AO to adopt the fair market value as valued by the valuation officer. - Decided in favour of assessee. 2022 (1) TMI 530 Reopening of assessment u/s 147 - Notice beyond four years - allowability of depreciation on the Bridge @ 25% as applicable to Plant and Machinery - AO restricted the claim of depreciation on the bridge to 10% and the remaining 15% claim has been disallowed and brought to tax - HELD THAT:- Assessee is only a contractor and is not owner of the bridge and therefore, the assessee is not entitled to claim depreciation. AO came to the above conclusion on the ground that these facts were not disclosed at the time of original assessment and the above information was gathered from the note filed by the assessee's holding company i.e., East Coast Construction and Industries Ltd. and therefore, there is an escapement of income to the extent of depreciation allowed by the Assessing Officer at 10% on the basis of claim made by the assessee as if the assessee is the owner of the bridge for claiming the depreciation. AO has reopened the assessment under section 147 of the Act by issuing notice under section 148 of the Act on the ground that there is failure on the part of the assessee to disclose fully and truly all the material facts to complete the assessment. As gone through the reasons recorded by the Assessing Officer and also considered the entire facts of the case find that there is a failure on the part of the assessee to disclose all the information before the Assessing Officer and therefore, the Assessing Officer has reopened the assessment by issuing notice under section 148 of the Act dated 18.03.2010, which is beyond four years, in our opinion, the reopening of assessment is valid and it is in accordance with law. Thus, the ground of appeal raised by the assessee is dismissed. Depreciation on the Bridge - The assessee could not controvert the fact that the assessee is only a contractor and not owner of the bridge and thereby, the assessee is not entitled to claim depreciation. Secondly, the claim of depreciation on the expenditure incurred on development and construction of infrastructural facilities including bridges on BOT basis with right to collect toll has been clarified by the CBDT that the assessee do not hold any right in a BOT project except recovery of toll free to recoup the expenditure incurred and therefore, the assessee cannot be treated as the owners of the property and cannot be allowed depreciation under section 32(1)(ii) of the Act. By considering the above notification of the CBDT, considering all the facts and provisions of the Act, we find that the ld. CIT(A) has rightly directed the Assessing Officer to allow amortization of the expenditure incurred during the tenure of the agreement and thus, no interference is called for in the order passed by the ld. CIT(A). Thus, the ground raised by the assessee stands dismissed. 2022 (1) TMI 529 Revision u/s 263 by CIT - case of the assessee was selected for limited scrutiny for examination of entire expenditure incurred by the assessee - AO has looked into the expenditure incurred by the assessee limiting to earning of dividend income - HELD THAT:- It is a fact that the case of the assessee was selected for limited scrutiny for examination of entire expenditure incurred by the assessee - AO has looked into the expenditure incurred by the assessee limiting to earning of dividend income. Therefore, in our opinion, the order passed by the AO is erroneous and prejudicial to the interest of the Revenue. So far as merits of the case are concerned, we are of the opinion that the Assessing Officer has to examine the expenditure incurred by the assessee with reference to the dividend income without influencing the observations made by the ld. PCIT with respect to the amended Rule w.e.f. 02.06.2016. Accordingly, we modify the order passed by the ld. PCIT to the extent as indicated above. Disallowance u/s 14A r..w r. 8D - HELD THAT:- After considering the revision order passed under section 263 of the Act as well as assessment order, it is amply clear that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue and the ld. PCIT has rightly directed the AO to re-do the assessment in accordance with law. One of the arguments raised by assessee is that while passing the order under section 263 PCIT has given a finding that 1% of the annual average of the monthly averages of the opening and closing balances of the value of investment has to be disallowed is contrary to the statute. We find from the revision order that the ld. PCIT has not given any finding and it is only his observation and explaining the legal position and directed the AO to re-do the assessment. PCIT has expressed his opinion on the issue and there is every possibility that the Assessing Officer obviously influenced by the opinion expressed by the ld. PCIT. Accordingly, we modify the order passed by the ld. PCIT and direct the Assessing Officer to pass fresh assessment order in accordance with law without influencing the observations made by the ld. PCIT. Accordingly, the appeal filed by the assessee is dismissed. 2022 (1) TMI 528 Penalty levied u/s. 271(1)(c) - Bogus purchases - profit element at 5% of bogus purchases - HELD THAT:- As relying on SHRI DEEPAK GOGRI [ 2017 (11) TMI 1857 - ITAT MUMBAI] , HARIGOPAL SINGH [ 2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT] and AERO TRADERS (P) LTD. [ 2010 (1) TMI 32 - DELHI HIGH COURT] the income of the assessee is estimated on the value of alleged bogus purchases. Therefore, we direct the Assessing Officer to delete the penalty levied u/s. 271(1)(c) - Decided in favour of assessee. 2022 (1) TMI 527 Disallowance u/s. 14A r.w. Rule 8D - Addition of the interest expenditure - disallowance of the interest expenditure qua the outstanding balance of advance/loan - HELD THAT:- We find that a similar disallowance with reference to the aforesaid outstanding amount was vacated by the Tribunal in the assessee's own case for AY 2011-12 and AY 2012-13 [ 2018 (5) TMI 2107 - ITAT DELHI] - Also, we find that relying on the aforesaid orders for the preceding years the tribunal had while disposing off the revenue's appeal in the case of the assessee for AY 2014-15 also, we find that relying on the aforesaid orders for the preceding years the tribunal had while disposing off the revenue's appeal in the case of the assessee for AY 2014-15 - Decided against revenue. Disallowance of the interest expenditure that was made by the Assessing Officer u/s. 14A by triggering the machinery provision contemplated in Rule 8D(2)(ii) - as observed by the CIT(A), and rightly so, as the interest expenditure in question was directly relatable to the loans that were taken by the assessee company for the purpose of its business, therefore, no part of the said interest expenditure could therein be attributed to the activity of earning of exempt income, and disallowed u/s.14A r.w. Rule 8D(2)(ii). See Bharti Overseas Pvt. Ltd. [ 2015 (12) TMI 1423 - DELHI HIGH COURT] no infirmity in the view taken by the CIT(A), who in our considered view had rightly vacated the disallowance of the interest expenditure made by the AO u/s. 14A r.w. Rule 8D(2)(ii). Enhancing the book profits u/s 115JB for Addition u/s 14A r.w.r. 8D - As is discernible from the order of the CIT(A), we find that he had by drawing support from case of ACIT vs. Vireet Investment Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] ,had observed, that no adjustment as regards the disallowance determined u/s. 14A r.w. Rule 8D could have been made for the purpose of determining the book profit u/s. 115JB of the Act. In our considered view, as the order passed by CIT(A) on the aforesaid issue does not suffer from any infirmity, therefore, the view therein taken by him is upheld. The Ground of appeal No. 3 raised by the revenue is dismissed. Mandation of recording satisfaction- as per assessee AO had determined the disallowance u/s. 14A r.w. Rule 8D without recording his satisfaction as to why the suo motto disallowance that was offered by the assessee in its return of income was not be accepted, therefore, he had wrongly assumed jurisdiction - HELD THAT:- We are principally in agreement with the contention of the ld. AR that pursuant to the judgment of the Hon'ble Supreme Court in the case of Maxopp Investments Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] it is no more res integra that an AO prior to dislodging of the assessee's claim of disallowance u/s. 14A of the Act, remains under a statutory obligation to record his satisfaction that as to why the disallowance so offered by the assessee is not to be accepted, however, we find that the facts involved in the case of the assessee before us does not fall within the four corners of the aforesaid settled position of law, and thus, would not assist the case of the assessee before us. We find that the AO had after exhaustively dealing with the contention advanced by the assessee that the disallowance of ₹ 4 lac (supra) offered in the return of income was quite reasonable qua the exempt dividend income, had on the basis of elaborate reasons as to why the said claim of the assessee company was not to accepted and the disallowance was required to be determined as per the mechanism provided in Rule 8D, therein, dislodged the suo motto disallowance that was offered by the assessee in its return of income. We, thus, not being persuaded to subscribe to the claim of the ld. AR that the Assessing Officer had failed to record his satisfaction that as to why the assessee's claim for disallowance u/s. 14A was not to be accepted, reject the same. Manner of quantification of the disallowance of the administrative expenses attributable to earning of the exempt dividend income as per Section 14A r.w. Rule 8D(2)(iii) - the disallowance offered by the assessee company u/s. 14A r.w. Rule 8D(2)(iii) qua the administrative expenses i.e. after considering the 'average value' of such investments on which dividend income was actually received during the year, merits acceptance. We, thus, in terms of our aforesaid observations restrict the disallowance of administrative expenses u/s. 14A r.w. Rule 8D(2)(iii) to an amount of ₹ 21.03 lac, as was offered by the assessee in the course of the proceedings before the lower authorities. As the assessee company had already offered a disallowance in reference to the administrative expenses, therefore, we herein direct the AO to restrict the further disallowance. 2022 (1) TMI 526 Delayed employees share of contribution to ESI - amount not paid on or before the due date as mentioned in Sec 36(1)(va) - scope of amendment to section 36(1)(va) by insertion of explanation 2and the amendment to section 43B by insertion to explanation 5 by the Finance Bill 2021 - HELD THAT:- The Hon ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] has taken the view that employee s contribution under section 36(1)(va) of the Act would also be covered under section 43B of the Act and therefore if the share of the employee s share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is covered by the decision of the Hon ble Karnataka High Court. In this case there is no dispute that the assessee made payment of the Employees share of PF/ESI on or before the due date for filing returnof income for AY 2017-18 u/s.139(1) of the Act. The next aspect to be considered is whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. Appeal of assessee allowed. 2022 (1) TMI 525 Nature of expenditure - expenditure on account of leasehold improvement - revenue or capital expenditure - assessee is a franchise of Domino s Pizza and Dunkin Donuts to run a Dominos outlet having a specific ambience and outlook, assessee was required to make extensive modifications in the premises that was obtained on lease and modification - whether any new asset created? - HELD THAT:- CIT(A) after considering the detailed submissions of the assessee has given a finding that considering the nature of business of the assessee, the modifications done in the various lease premises taken by the assessee for the purpose of business did not create any new asset, the expenditure of renovation and repairs of stores assumed a character of revenue in nature and the expenditure incurred by the assessee was necessary for the purpose of business and squarely fall u/s 37(1) of the Act. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue. Case folowed M/S HI LINE PENS PVT. LTD. [ 2008 (9) TMI 25 - HIGH COURT DELHI] - Decided in favour of assessee. Application of admission of additional ground - fresh claim with respect of allowability of ESOP expenses and allowance of deduction of education cess and secondary and higher education cess paid - HELD THAT:- We find force in the argument of Learned AR that the ground raised is legal in nature. Hon ble Apex Court in the case of National Thermal Power Company Ltd. [ 1996 (12) TMI 7 - SUPREME COURT] has held that the purpose of the assessment proceedings before the taxing authorities is to asses correctly the tax liability of an assessee in accordance with law. It has further held that if as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. In view of the aforesaid, we admit the additional ground of appeal. Applicability of the provisions of Section 92A(2) to the transactions of the assessee with Domino s Pizza Overseas Franchise BV (DPOF), Domino s Pizza International Franchising Inc. (DPIF) Dunkin Donuts Franchising LLC (DDFL) - HELD THAT:- AR has fairly admitted that though CIT(A) had held the transaction by the assessee with DPOF/DDIF and DDFL to be subject to Transfer Pricing Regulation, but on the quantum of addition, he has decided the issue in favour of the assessee. In such a situation, we are of the view that the issue has been rendered academic and therefore requires no adjudication. We therefore dismiss the ground of CO of the assessee. Claim of deduction for ESOP Expenditure - HELD THAT:- It is an undisputed fact that no claim of ESOP expenses was made by the assessee in the return of income nor was it claimed before the lower authorities. Assessee is now claiming the deduction of ESOP expenses in view of the decision of Special Bench of Tribunal in the case of Biocon Ltd.[ 2013 (8) TMI 629 - ITAT BANGALORE] has inter alia held that the discount on issue of Employees Stock Options is allowable deduction in computing the income under the head profit and gains of business . It is also a fact that since the claim was never claimed by the assessee before the lower authorities, there is no finding on the issue by the AO/CIT(A). In such a situation, we are of the view that the issue needs to be examined. We therefore restore the issue back to the file of AO to decide it after considering the submissions of the assessee and in accordance with law. Claim of education cess and secondary and higher education cess paid by the assessee - It is assessee s contention that the aforesaid payment of cess was not claimed as deduction while filing the return of income- HELD THAT:- We find that Hon ble Bombay High Court in the case of Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] after considering CBDT Circular No. F. No.91/58/66-ITJ (19) dated 18th May 1967 has held that provision of Section 40a(ii) of the Act does not include cess consequently, cess whenever paid in relation to business is allowable as deductible expenditure. It further observed that though the claim of deduction of education cess and higher and secondary education cess was not raised in the original or revised return but when it is claimed before the appellate authorities, the appellate authorities is bound to consider such claim Thus the expense on education cess to be allowable expense and therefore, we direct the AO to allow the claim of assessee in accordance with law. Thus, ground of Cross Objection of the assessee is allowed. Customs 2022 (1) TMI 524 Jurisdiction - power of DRI authorities to issue SCN - goods imported by the assessee should be rejected or not - show-cause notice proceedings have lingered on for unduly long time - Section 28 of the Customs Act, 1962 - HELD THAT:- In the present case, the question of lack of jurisdiction of the DRI authorities issuing the impugned show-cause notice is squarely covered by the decision of the Supreme Court in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] . In the said case, this issue came up for consideration and was decided that the entire proceeding in the present case initiated by the Additional Director General of the DRI by issuing show cause notices in all the matters before us are invalid without any authority of law and liable to be set-aside and the ensuing demands are also set- aside. The impugned show-cause notice is set aside with consequential effect. If the petitioner has given any guarantees on account of pendency of these proceedings, the same would stand discharged - petition allowed. 2022 (1) TMI 523 Benefit of Exemption - Rig trident imported in April 1988 - benefit of Notification No. 516/86 dated 30.12.1986 on the strength of the essentiality certificate issued on 21.12.2011 much after the validity of the notification - HELD THAT:- In the instant case, the impugned goods were imported in 1988 and the goods were seized and such seizure was upheld by this Bench and was affirmed by the Apex Court. The appellants were not in the possession of the essentiality certificate at the time of import or at the time of filing of Bill of Entry; the essentiality certificate was applied and issued at a much later date after the expiry of the Notification and there too by a different authority which was not prescribed under the Notification claimed. Therefore, the facts of the cases referred are different and therefore any reliance placed upon them would not lead to a correct decision. In the instant case, the Bill of Entry was not filed; essentiality certificate was not applied for at the time of import. The impugned Rig was seized and such seizure was held by this Bench and was affirmed by the Apex Court. The Bill of Entry was filed on 02.03.2001 and the Bill of Entry was finally assessed. In the cases cited by the learned counsel for the appellants, the assessments were provisional and the certificates were produced before finalization of the assessment - in the impugned case the appellants neither applied for the essentiality certificate nor were in the possession of the same at the time of import. The impugned rig was seized for various violations and the same was upheld by this bench and affirmed by the Apex Court. The impugned goods herein have the taint of being smuggled. Therefore, the same cannot be treated to be normal imported goods as in the cases relied by the appellants. It is found from the records of the case that the conditions of the Notification are also not satisfied, even assuming that the conditions of Notification existing as on the date of filing the Bill of Entry would have to be satisfied. Therefore, there are no merit in the alternate claim also. The appeal is devoid of any merit and is liable to be set aside - Appeal dismissed. 2022 (1) TMI 522 Quantum of penalty levied under Section 114 (iii) of the Customs Act, 1962 - fraudulent export as goods were grossly undervalued - rejection of declared value - appellant s alleged offence is that he has submitted the Shipping Bill duly signed by him wherein, the value was declared exorbitantly higher side - confiscation of goods - HELD THAT:- The valuation was not done by the appellant, the appellant have signed the shipping Bill only on the authorisation of his employer firm M/s. MAZDA GLOBAL, the value was taken from the invoice which was prepared and signed by the Proprietor of M/s. MAZDA GLOBAL Smt. Bharti J Gandhi which was sent to the appellant by Shri Amish Gandhi. The appellant being an employee of the M/s. MAZDA GLOBAL has no reason to dispute the valuation as the original valuation was finalized by his employer M/s. MAZDA GLOBAL through the proprietor Smt. Bharti Gandhi. The appellant being a less graduated person cannot be made to know the technicalities of the product as well as the value of the goods as regard the decision about the nature of the goods and value thereof - As in the present case the facts which is not under dispute that right from manufacturing and valuation of the goods, it is a modus operandi planned by proprietor Smt. Bharti Gandhi and son Shri Amish Gandhi and they issued the invoice for the goods in question therefore, the appellant being employee of the company had no reason to dispute or question the value mentioned in the invoice as that is not his subject matter. He was only authorised to sign and file the Shipping Bill which is not to be prepared only on the basis of invoice. It is also to be noted that even the appellant had no knowledge to prepare Shipping Bill which was admittedly prepared by CHA, he simply put his signature therefore, the only offence which exist is the over valuation of the goods which is not creation of the appellant but it was done by his employer firm through Smt. Bharti Gandhi and her son Shri Amish Gandhi. Allegation that the appellant was aware that the value of the goods is not more than ₹ 10,000/- - HELD THAT:- This version of the appellant came only after the investigation has started. Even as per the standard of the appellant and his education level, it cannot be expected from him to know about value of the goods. Since he has received the invoice from his employer, he had no option except to mention the same value in the Shipping Bill therefore, merely because during investigation he stated that his awareness of the value of the goods i.e. ₹ 10,000/- is baseless, even the value of ₹ 10,000 was not justified - the appellant has acted only on the instruction of the employer and more so on the basis of the signed documents i.e. invoice given by his employer. The exorbitant penalty of ₹ 75 Lacs is not justified - Since the appellant is not involved in the main offence of over valuation of the goods but admittedly signed the Shipping Bill, he is liable for some token penalty - the penalty is reduced from ₹ 75 Lacs to ₹ 25,000/-. Appeal allowed in part. 2022 (1) TMI 521 Smuggling - yellow material found in the baggage - applicability of proviso contained to Section 129 A (1) of the Customs Act - HELD THAT:- The proviso clearly stipulates that no appeal shall lie to the appellate tribunal and the appellate tribunal shall not have jurisdiction to decide any appeal in respect of an order referred to in Clause (b) of Section 129 A (1) if such order relates to goods imported or exported as baggage. In fact, a perusal of the Section 129DD indicates that a revision may lie before the Central Government. As the Tribunal does not have the jurisdiction to decide the appeal, it stands dismissed. 2022 (1) TMI 520 Classification of group of goods - measuring devices, namely flowmeters - to be classified under CTH 90.26 or not - benefit of Notification No. 24/2005-Customs, dated 1-3-2005 (Sl. No. 31). HELD THAT:- The applicant has explained the basis of grouping of the instruments/devices and each group of products are intended for different applications/industries. For example, the Cubemass group of products are for chemical/petrochemical industries while Dosimass are for personal care/F B industries. Two expert opinions, from Fluid Control Research Institute, Palakkad. Kerala; and Institute of Chemical Technology, Mumbai arc also confirming the applicant s stand in respect of the instruments manufactured by their Aurangabad plant. In this case, there are two different possible headings for classification of the impugned devices/instruments, i.e., 90.26 which is for INSTRUMENTS AND APPARATUS FOR MEASURING OR CHECKING THE FLOW, LEVEL, PRESSURE OR OTHER VARIABLES OF LIQUIDS OR GASES (FOR EXAMPLE. FLOWMETERS. LEVEL GAUGES, MANOMETERS, HEAT METERS), EXCLUDING INSTRUMENTS AND APPARATUS OF HEADING 9014, 9015, 9028 OR 9032 or 90.32 which is for AUTOMATIC REGULATING OR CONTROLLING INSTRUMENTS AND APPARATUS . From the product catalogues, it appears that these flowmeters measure the mass flow of liquids and gases, along with other parameters such as temperature. The flowmeters appear to be capable of only measuring the value and the measured parameter(s) are displayed visually or provided as a digital output. Hence, these instruments appear to match the description for goods covered under Heading 90.26, as instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases. I find that the Heading 90.26 specifically mentions flowmeters - The instruments and apparatus of this heading may be fitted with recording, signalling or optical scale-reading devices or transmitters with an electrical, pneumatic or hydraulic output. Measuring or checking apparatus generally incorporates an element sensitive to variations in the quantity to be measured (e.g. Bourdon tube, diaphragm, bellows, semiconductors) moving a needle or a pointer. In some devices the variations are converted into electrical signals. Measuring or checking instruments or apparatus of this heading combined with taps, valves, etc., are to be classified as indicated in the Explanatory Note to Heading 84.81. There is no material to reject the applicant s contention that these flowmeters are individually marketable and in many cases, operate without any control system at the customers end and that they can be used as stand-alone instruments for measurements in some industries (water management and sugar industries) where only measurement is involved for monitoring with no interface with any other system. These flowmeters do not and cannot control the flow of the liquid/gas. The export invoice from parent company in Germany also shows that the classification adopted was CTH 9026. Even though it is possible that some of the flowmeters proposed to be imported by the applicant can be used in a system to control and regulate process parameters, these flowmeters, by themselves, are not automatic controlling and regulating apparatuses - The instruments/devices listed at the first paragraph of this ruling merit classification under Heading 90.26 and more specifically, under sub-heading 9026 10 10 of the first schedule to the Customs Tariff Act, 1975. Appeal allowed - decided in favor of appellant. 2022 (1) TMI 519 Benefit of concessional rate of duty - import of stainless-steel scarp - Entry No. 333 of the Notification No. 12/2012-Cus., dated 17-3-2012, as amended vide Notification No. 25/2013-Cus., dated 8-5-2013 - HELD THAT:- A perusal of the tariff shows that Notification No. 12/2012-Cus., dated 17-3-2021, as amended was superseded vide Notification No. 50/2017-Cus., dated 30-6-2017. Therefore, the applicant s initial contention that there has been no factual change in respect of the application since its original filing doesn t appear to be correct - the said notification has been amended several times since and the amendments carried out vide Notification No. 2/2021-Cus., dated 1-2-2021 are significant in the context of the present advance ruling application. The effect of the amendments carried out w.e.f. 1-2-2021 is that the benefit of NIL rate of duty available to all goods falling under Heading 7204 of the tariff would cease w.e.f. 1-4-2022, and w.e.f. the said date all goods of Heading 7204 would attract basic customs duty @ 2.5%. In view of such a position, the application for advance ruling has become infructuous. Advance rulings can be sought only in respect of the issues permitted under Section 28H of the Act and such ruling would remain in force, as per the provisions of Section 28J(2) of the Act, only till the law or facts remain unchanged. Therefore, advance rulings can only be sought only w.r.t. law or facts that exists at the relevant time and not w.r.t. some hypothetical proposition. In this case, the law/facts existing at the time of original application are no longer existing and therefore, the request for an advance ruling on the basis of such non-existent law/facts merit rejection. The application filed by M/s. ELG India Pvt. Ltd. is rejected as infructuous. 2022 (1) TMI 496 100% EOU - Process amounting to manufacture or not - labelling and repacking of the imported goods - inter-unit transfer - Chartered Accountants Certification is sufficient proof for co-relating to the transfer and receipt of goods or not - applicability of CBEC Circular No.314/30/97/CE dated 06.05.1997 - HELD THAT:- There is considerable force in the arguments advanced by the learned counsel for the respondent inasmuch as the goods said to have been diverted from Bengaluru unit to Venkatapur unit, both being 100% EOUs. On this inter-unit transfer of the raw material, the issue is squarely covered by COMMISSIONER VERSUS SUNIL KUMAR JAIN [ 2015 (9) TMI 1687 - SC ORDER] confirmed by the Hon'ble Apex Court. The finding of the Tribunal is based on this judgment and the same cannot be faulted with - Similarly, no exception can be found with the reasons assigned by the Tribunal in arriving at a decision regarding the eligibility of olives sold in the domestic market which is in conformity with the provisions of the Foreign Trade Policy 2004-2009 as explained by CBEC Circular No.7/2006-Cus, dated 13.01.2006. In the case of COMMISSIONER OF CENTRAL EXCISE, MUMBAI VERSUS JOHNSON JOHNSON LTD. [ 2005 (9) TMI 85 - SUPREME COURT] , the Hon'ble Apex Court considering the meaning of manufacture in the context of Section 2(f) of the Central Excise Act, 1944, has held that the repacking would have to be from bulk packs to retail packs so as to render the product marketable directly to the consumer, wherein it was contended that there was repacking and labelling of the medicaments before sale to the dealer and stock transfer to other depots. It is significant to note all these judgments relates to Section 2(f) of the Central Excise Act, 1944. It is not in dispute that in the present case, we are dealing with 100% EOU, wherein Foreign Trade Policy is applicable, wherein Chapter - 9 provides for definition clause. In terms of the said definition clause - 9.37, manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling, re-conditioning repair, remaking, refurbishing, testing, calibration, re-engineering. Manufacture, for the purpose of FTP, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining - Circular No.314/30/97-CX, dated 06.05.1997 issued by the Government of India, Ministry of Finance (Department of Revenue) deals with the subject of scope of the term manufacture in Notification No.1/95 CE with respect to 100% EOU. The said Notification clarifies that a broader view is called for in respect of interpretation of the provisions of Notification No.1/95-C.E. and the exemption may not be restricted only to cases where manufacture under Section 2(f) of the Central Excise Act, 1944 is involved. It is clarified that the term manufacture for the purpose of export is wider in meaning than that used in Section 2(f) of the Central Excise Act, 1944. In the light of this Foreign Trade Policy and Circular, a wider meaning has to be given to the term manufacture . Repacking and labeling is construed to be manufacture in terms of the said Foreign Trade Policy which is applicable to the case on hand - there are no reason to interfere with the finding of the Tribunal on this point. The appeal stands dismissed. Corporate Laws 2022 (1) TMI 518 Oppression and Mismanagement - reconstitution of shareholders at a meeting of the shareholders of the Company to be convened by and conducted under the supervision of this Tribunal - direction to place for consideration or the shareholders all related party transactions for the years 2015-16, 2016-2017 and 2017-18 in a meeting of the shareholders of the Company to be convened by and conducted under the supervision of this Tribunal - direction to refund to the Company all amounts in related party transactions which do not obtain the approval or the shareholders in a meeting of the shareholders of the Company to be convened by and conducted under the supervision of this Tribunal - reopening of financial statements - HELD THAT:- When a company enters into a related party transaction, covered under Section 188 of the act, this requires the consent of the company's Board of directors. Also, if such a transaction exceeds the monetary thresholds prescribed under Rule 15(3) of the Companies (Meeting of Board and its Powers) Rules, 2014, approval of the shareholders will also be required by way of an ordinary resolution. Such consent can be obtained prior to, or within three months after, entering into the transaction. However, in these matters such an action has not done by the Respondents 2 3. The related party contracts are to be disclosed in the Board of Directors' Report and in a register of such contracts is to be maintained. It is also seen from the records that the respondent companies have not obtained permission from the Board of Directors to enter into these related party transactions. Hence, the contention of the Respondents that these are not Related Party Transactions and that it is Simple Commercial Transactions cannot be accepted. The Related Party Transactions done by the Respondents are contrary to the provisions of law and in breach of the Articles of Association of the Respondent Company and, therefore, the said Related Party Transactions are hereby declared as invalid and all the proceedings which have been done in violation of the Articles of Associations are also hereby declared as invalid - Since it is declared that the action of the Respondents are illegal, any investigation into the Respondent Companies affairs is not ordered and no penalty imposed on the Respondents for non-compliance of the rules/articles of the Company. Petition disposed off. 2022 (1) TMI 517 Sanction of the Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regards to issuance of various notices also issued. The scheme is approved - Application allowed. Insolvency & Bankruptcy 2022 (1) TMI 516 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Doctrine of stare decisis - existence of debt and dispute or not - HELD THAT:- Section 7 of the I B Code is special remedy provided to Financial Creditors. The Financial Creditor can take recourse to Section 7 when a default has occurred. Present is a case where Application under Section 7 has been filed when a default has occurred. The remedy under Section 7 is special remedy and the provision of I B Code has been given overriding effect from any other law or instrument. A reading of Section 238 indicates that provisions of the Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Thus, what is overridden by the I B Code is both inconsistency with any other law or any instrument having effect. The mortgage is an instrument. The terms and conditions of the mortgage thus cannot claim any superior status and proceedings under Section 7 can be availed irrespective of any contrary or inconsistent condition in mortgage - the mortgage entered between the parties in the present case does not have any inconsistent condition rather the mortgage itself reserves and protects other remedies which are available to the Financial Creditor in any other law. Doctrine of stare decisis means to stand by decided cases. The principle behind the doctrine is that men who are governed by law should be fixed definite and known and when a law is declared by Court of Competent Jurisdiction in absence of any palpable mistake or error, it is required to be followed. Doctrine of stare decisis is wholesome doctrine which gives certainty to law and guide the people to mould their affairs in future. The doctrine is fully attracted on the statutory Tribunal which is well settled - There can be no doubt that the principle of stare decisis is fully applicable on judgments delivered by the NCLT as well as this Appellate Tribunal. Both NCLT and this Tribunal are bound by doctrine of stare decisis. At this juncture, we may clarify that what is binding as a precedent on Company Law Tribunal is the judgment of jurisdictional Tribunal. Judgment delivered by NCLT in other jurisdiction have only persuasive value. It is well settled that per incuriam is exception to the rule of precedent. Incuria literally means carelessness. In practice, per incuriam appears to us per ignorantiam. When judgment is rendered in ignorance of binding statute or binding authority the judgment is said to be per incuriam. The Financial Creditor has full right to initiate action under Section 7 for non-payment of dues - no error has been committed by the Adjudicating Authority in admitting Section 7 Application filed by the Financial Creditor - appeal dismissed. 2022 (1) TMI 515 Maintainability of application - Actionable claim - vested right in respect of a Fora , albeit he has a Actionable Right - Section 7 or 9 of of I B Code - HELD THAT:- This Tribunal aptly points out that a change in Law is undoubtedly a procedural one. A party is to resort to the change under the I B Code, despite the fact that his/its actionable right of cause of action had arisen earlier to an amendment that has been brought about, increasing the threshold limit to ₹ 1 Crore (vide Notification dated 24.03.2020) issued by the Ministry of Corporate Affairs in S.O.1205 ) for considering the Application filed under Section 7 or 9 of of I B Code on after 24.03.2020, even if the Debt is of a date prior to 24.03.2020. In law, a Party has no vested right in respect of a Fora , albeit he has a Actionable Right . After all, the impediment in Section 10(A) of the I B Code is to be viewed from the point of view of the purpose and object sought to be achieved in enacting the same by the Parliament in its wisdom. The limit envisaged under Section 4 of the IBC Code, which was originally for ₹ 1 lakh was increased to ₹ 1 crore by the Central Government through a Notification darted 24.03.2020 thereby the jurisdiction of the Adjudicating Authority was raised from ₹ 1 lakh to ₹ 1 crore. Admittedly, the amount mentioned in the Application before the Adjudicating Authority was ₹ 84,65,550/- and in fact, the Application was filed on 15.09.2020 by the Applicant before the Adjudicating Authority on which date the amendment to Section 4 of the IBC has come into force/existence. The Application is not maintainable - Appeal dismissed. 2022 (1) TMI 514 Liquidation of Corporate Debtor - Section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Despite all possible steps as required under the Code taken during the CJRP, the CoC did not receive any viable resolution plan/proposal for revival of the Company. The CoC in its wisdom has resolved in favour of the liquidation of the Corporate Debtor. This Authority has no reason before it to take a contrary view in terms of Section 33 of the Code. Therefore, it has no option than to pass an order for liquidation of the Corporate Debtor to sale as going concern in the manner laid down in Chapter III of the Code. The Corporate Debtor, Belgium Aluminum Glass Industries Private Limited, shall be liquidated - Application allowed. 2022 (1) TMI 513 Liquidation of Corporate Debtor - Section 33(2) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- In the present case, the Resolution Professional has published the Form G inviting the Expression of Interest (EOI) on 03.09.2020. Thereafter, few prospective Resolution Applicants have come forward showing their interest. However, both of the PRA(s) have withdrawn their EOI before submission of resolution plans. In the 7th meeting of CoC held on 30.12.2020, the CoC has decided to liquidate the Corporate Debtor by passing a resolution in the aforesaid meeting and further resolved to appoint Resolution Professional as Liquidator. In view of the satisfaction of the conditions provided under Section 33 of the Code, the Corporate Debtor i.e. M/s. Sainsons Pulp and Papers Limited is directed to be liquidated in the manner as laid down in Chapter III of the Code. The Corporate debtor is liquidated with immediate effect in the manner provided under Chapter III Part II of the IBC 2016 - Application allowed. 2022 (1) TMI 512 Rejection of interest amount claimed by the Applicant/Operational Creditor - Section 42 of the Insolvency and Bankruptcy Code 2016 - HELD THAT:- It was the duty of the Applicant to produce the documents or evidence or clarification sought by the Liquidator in order to verify his claim for interest. In this case, even though the Applicant sought interest from the Liquidator, he could not produce any document that there was an agreement with the Corporate Debtor for charging interest on the delayed payments before they started purchasing materials from the Applicant. Moreover, even though the impugned order was passed by the Liquidator on 17.03.2021, this Application has been filed on 20.10.2021 beyond the period of 14 days for appeals under Section 42 of IBC. There are no error in the order passed by the Liquidator rejecting the interest claimed by the Operational Creditor, warranting interference by this Tribunal - application dismissed. PMLA 2022 (1) TMI 511 Seeking grant of Anticipatory Bail - Money Laundering - ordinary offence under the Indian Penal Code - predicate offences - mandate of Section 45 of the PMLA Act coming into play or not - HELD THAT:- It is not a question of taking objection but the duty of court to examine the jurisdictional facts including the mandate of Section 45 of the PMLA Act, which must be kept in mind. It is deemed appropriate to set aside the impugned judgment and order and relegate the parties before the High Court for reconsideration of Criminal Petition afresh for grant of anticipatory bail filed under Section 438 of the Code of Criminal Procedure in connection with stated PMLA offence - The High Court may hear the remanded proceedings expeditiously, preferably within four weeks from the date of receipt of copy of this order. Appeal disposed off. Service Tax 2022 (1) TMI 510 Maintainability of writ petition - Validity of show-cause notice and pre-consultation notice which have been issued without application of mind - waiver of pre-deposit on merits to file appeal and stay on the impugned demand - HELD THAT:- The impugned order is appeal-able under Section-73 of the GST Act read with Section-84 of the Finance Act. There is no good ground made out to directly entertain this writ-application questioning the legality and validity of the order in original. It prima-facie appears from the reliefs prayed for that if an appeal is filed, then towards pre-deposit the writ-applicant is obliged to deposit 7.5% of the total demand. This may be a little difficult for the writ-applicant but that by itself is not sufficient for this Court to entertain this writ-application, more particularly, when there is an alternative remedy of statutory appeal being available to the writ-applicant. This writ-application is not entertained on the above short ground alone with liberty to the writ-applicant to prefer an appropriate statutory appeal - writ-application stands disposed of. 2022 (1) TMI 509 Valuation - works contract service - whether the valuation mechanism as per Rule 2A of the Service tax (Determination of Value) Rules, 2006 provides for optional methods or not? - HELD THAT:- It is seen that the contract provides for separate values for supply of materials and there being transfer of property in goods from the Respondent to the intended beneficiary, the same cannot form part of value for the purposes of Works Contract Service and since the value is clearly determinable in the invoice raised by the Respondent, the same is to be allowed as deduction from the value of the entire contract leading to the conclusion that only the Erection and Commissioning job of the contract would be leviable to Service Tax at full rate, which has been paid by the Respondent and also accepted by the Revenue during the investigation proceedings. In the judgment COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, VISAKHAPATNAM - I VERSUS M/S PRAGATI EDIFICE PVT LTD (VICE-VERSA) [ 2019 (9) TMI 792 - CESTAT HYDERABAD] has dealt in great details the option of paying Service Tax under the composition scheme and it cannot be forced on the assessee. Appeal dismissed. 2022 (1) TMI 508 Levy of service tax - collection of toll - Business Auxiliary Service (BAS) or not - appellant was acting as an intermediary and was instrumental in the collection of toll from the vehicles - HELD THAT:- Learned coordinate Mumbai Bench in the case of COMMISSIONER OF SERVICE TAX, MUMBAI VERSUS M/S. IDEAL ROAD BUILDERS PVT. LTD., M/S. MEP TOLL ROAD PVT. LTD. [ 2017 (10) TMI 401 - CESTAT MUMBAI] where it was held that The toll collection is their own income and is not parted with NHAI/MSRDC as they are concerned only with the bid amount finalized in auction and therefore cannot be termed as activity of Business Auxiliary Service. The Civil Appeal admitted by the Hon ble Apex Court against the above order of the Mumbai Bench was subsequently withdrawn by the Revenue. The assertions of the learned advocate to be acceptable that the issue is no more res integra and covered in its favour since same was not distinguished nor any order to the contrary are furnished by the Revenue - Appeal allowed - decided in favor of appellant. Central Excise 2022 (1) TMI 507 Refund - amount paid during the investigation is under protest - main thrust of the ld. A.R. is that the amount deposited by the appellants during the course of investigation has taken the shape of pre-deposit - HELD THAT:- This Tribunal has observed that the amount deposited by the appellant is sufficient for the purpose of Section 35, therefore, this Tribunal dispensed with the condition of pre-deposit of balance amount of dues. From going through the observations of this Tribunal, it is found that the observation of the Tribunal does not say that the amount paid during the course of investigation has taken the shape of pre-deposit. This Tribunal only found that it s sufficient for the purpose of Section 35 of the Act. Further from the facts, it is clear from the order-in-original that the course of investigation, the cheques of ₹ 50 lakhs were tendered on 24.08.2010 was under pressure. The adjudicating authority has held that as they have not filed any complaint for signing the cheques under pressure, it means that they were willingly and concisely paid the amount against their liability. The amount paid during the course of investigation was under protest. The same view was taken by the various High Courts as in the case of THE COMMISSIONER OF CENTRAL EXCISE, COIMBATORE VERSUS M/S. PRICOL LTD., THE CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL [ 2015 (3) TMI 735 - MADRAS HIGH COURT] , wherein the Hon ble Madras High Court has held that there are also many judgments of various courts, which also reiterative the same principle in case any amount is depositing during the pendency of adjudication proceedings or investigation, the said amount would be in nature of deposit under protest. The appellants are entitled for interest @12% p.a. from the date of deposit till the date of realization of refund of the amount paid during investigation - Appeal allowed - decided in favor of appellant. 2022 (1) TMI 506 Excisable goods or not - Bagasse/press-mud - Section 2(d) of the Central Excise Act, 1944 - manufacturing activity is involved in the manufacture of bagasse/press-mud or not - Section 2(f) of the Central Excise Act, 1944 - bagasse/press-mud can be considered as final products in terms of CENVAT Credit Rules, 2004 or not - common inputs/input services were used for the manufacture of both dutiable goods(sugar and molasses) and exempted goods (bagasse/ press-mud) - non-maintenance of separate records - requirement to pay an amount equal to 5% of the value of the exempted goods i.e. bagasse/press-mud, as pre Rule 6(3) of CENVAT Credit Rules, 2004 - penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944. HELD THAT:- The issue is no more res integra as the question as to whether bagasse is manufactured under the provisions of Section 2(f) of the Central Excise Act, 1944 or otherwise and the CENVAT credit availed on the inputs which are used for the manufacture of sugar has to be denied or otherwise has been settled by the apex Court in the case of UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] where it was held that In the present case it could not be pointed out as to whether any process in respect of Bagasse has been specified either in the Section or in the Chapter notice. In the absence thereof this deeming provision cannot be attracted. Otherwise, it is not in dispute that Bagasse is only an agricultural waste and residue, which itself is not the result of any process. Therefore, it cannot be treated as falling within the definition of Section 2(f) of the Act and the absence of manufacture, there cannot be any excise duty. Since it is not a manufacture, obviously Rule 6 of the Cenvat Rules, 2004, shall have no application as rightly held by the High Court. Appeal allowed - decided in favor of appellant. 2022 (1) TMI 505 CENVAT Credit - Exempt service or not - employee either provided accommodation in their residential colony and in some cases where the employees are residing outside the factory, house rent allowance given - deemed consideration under Rule 6 (3) of Cenvat Credit Rules, 2004 or not - HELD THAT:- As per Rule 6 for demanding 6%/7% it can be charged only on the value of exempted services. In the present case the appellant are not receiving any value by providing the rental house to their employee within the premises. Since no value is flowing from employee to the appellant there is no question of calculating 6%/7% on the value which does not exist - since the house was provided to the employee which are engaged in the manufacture of the final product hence ultimately all the activities get absorbed in the manufacture of the final product i.e Cement which is cleared of payment of duty. Shri. G Kirupanandan pointed out that the demand under Rule 6 is not only on the renting of the houses but also on the removable of waste and scrap. As of now it is a settled law that in respect of removable of waste and scrap, refuse or by-product Rule 6 is not applicable as held by the Hon ble Bombay High Court in the case of HINDALCO INDUSTRIES LIMITED VERSUS THE UNION OF INDIA, CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CENTRAL EXCISE [ 2014 (12) TMI 657 - BOMBAY HIGH COURT] and the said judgment has been upheld by the Hon ble Supreme Court. In view of this settled position even on scrap the demand of 6% /7% in terms of Rule 6 (3) is not sustainable. The demand raised under Rule 6(3) is not sustainable - Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2022 (1) TMI 504 Validity of assessment order - input tax credit - mismatch in Returns filed by the dealers and information captured by the department - opportunity for personal hearing not provided - violation of the natural justice - HELD THAT:- Though the petitioner failed to come and collect the document after notice was issued to the petitioner on 05.08.2021 for the assessment year 2009-2010 and on 29.07.2021 for the assessment year 2014- 15, it was incumbent on the part of the respondent to call upon the petitioner to come for a personal hearing before passing the impugned orders. That apart, the petitioner had already filed W.P.Nos.18107 and 18109 of 2017 before this Court wherein the respective pre-assessment notices issued to the petitioner dated 05.08.2021 and 29.07.2021 were challenged. Since the impugned orders have been passed without calling upon the petitioner to come for a personal hearing and considering the fact that the contents of the circular dated 24.02.2021 has not been fully complied by the respondent before passing the impugned orders, the impugned orders is quashed and cases remitted back to the respondent to pass a fresh order. The impugned orders which stand quashed shall be treated as corrigendum to the pre-assessment notices dated 05.08.2021 and 29.07.2021 for the respective Assessment Years - petition allowed. Indian Laws 2022 (1) TMI 503 Maintenance of status quo with regard to SARFAESI action - Nonperforming Asset - creation of equitable mortgage by way of deposit of title deeds over the immovable properties with respect to the mortgaged properties - HELD THAT:- In the present case, the respondents borrowers whose accounts have been declared as NPA in the year 2013 have filed the writ petitions before the High Court challenging the communication dated 13.08.2015 purporting it to be a notice under Section 13(4) of the SARFAESI Act. It is required to be noted that as per the appellant assignor approximately ₹ 117 crores is due and payable to the Bank. While passing the ex-parte interim order on 26.08.2015 and while entertaining the writ petitions against the communication dated 13.08.2015, the High Court has directed to maintain status quo with respect to the possession of the secured properties on condition that the borrowers deposit ₹ 1 crore only. Despite the fact that subsequently an application for vacating the exparte ad-interim order has been filed in the year 2016, the application for vacating the interim order has not been decided and disposed of. It is required to be noted that it is the case on behalf of the appellant that as such the communication dated 13.08.2015 cannot be said to be a notice under Section 13(4) of the SARFAESI Act at all. According to the appellant, after the notice under Section 13(2) of the SARFAESI Act was issued in the year 2013 and thereafter despite the Letter of Acceptance dated 27.02.2015, no further amount was paid, the appellant called upon the borrowers to make the payment within two weeks failing which a further proceeding under Section 13(4) of the SARFAESI Act was proposed. Thus, according to the appellant, it was a proposed action. Therefore, the writ petitions filed against the proposed action under Section 13(4) of the SARFAESI Act was not maintainable and/or entertainable at all. It appears that the High Court has initially granted an ex-parte ad-interim order mechanically and without assigning any reasons. The High Court ought to have appreciated that by passing such an interim order, the rights of the secured creditor to recover the amount due and payable have been seriously prejudiced. The secured creditor and/or its assignor have a right to recover the amount due and payable to it from the borrowers. The stay granted by the High Court would have serious adverse impact on the financial health of the secured creditor/assignor. Therefore, the High Court should have been extremely careful and circumspect in exercising its discretion while granting stay in such matters. In these circumstances, the proceedings before the High Court deserve to be dismissed. Petition dismissed. 2022 (1) TMI 502 Dishonor of Cheque - amicable settlement between parties - compounding of offence - requirement to deposit 15% of the amount of the cheque with the Gujarat State Legal Services Authority - the applicant has submitted that the cheque amount is more than ₹ 1 crore and it is difficult for the applicant to deposit 15% amount of the cheque with the Gujarat State Legal Services Authority. It is further submitted that the applicant is in jail since 7.9.2021 - HELD THAT:- The applicant is permitted to deposit 10% of the said cheque amount with the Gujarat State Legal Services Authority, out of which the applicant shall deposit 5% of the said cheque amount within a period of one month and deposit the remaining amount of 5% of the said cheque amount within a period of five months thereafter with the Gujarat State Legal Services Authority. Application disposed off. 2022 (1) TMI 501 Dishonor of Cheque - seeking amendment in the cheque number - cheque number is 054285 and that in the statutory notice the respondent/complainant had mentioned the cheque number as 024337 and he had also given the same number in the complaint and proof affidavit - HELD THAT:- This Court finds it to be a genuine and bonafide error by the respondent/complainant based on the return memorandum issued by the Bank. The Hon'ble Apex Court in S.R. Kumar vs. Sunaad Raghuram [ 2015 (7) TMI 1260 - SUPREME COURT] , has held that though there is no specific provision in Cr.P.C. to amend the complaint or petition filed under Cr.P.C., if amendment sought to be made relates to a simple infirmity which is curable by means of formal application for amendment and by allowing such amendment, no prejudice would be caused to either side, such amendment could be made. In the opinion of this Court, it is only a curable infirmity and by allowing the amendment no prejudice would be caused to the petitioner/accused. The respondent/complainant has not attempted to introduce a number which is totally different to the proceedings and there is no other discrepancy and all other particulars tally with the notice and complaint. The petitioner/accused has attempted to take undue advantage of a genuine mistake which is curable. There is no infirmity or error in the order passed by the trial court - revision dismissed. 2022 (1) TMI 500 Dishonor of Cheque - application praying for deposit of diet money - Section 138 of N I Act - HELD THAT:- This Court is of the considered view that herein there is lapse on the part of the accused but the Court below has also contributed towards this lapse by not undertaking the exercise of going through its orders and ascertaining the fate of the process undertaken by the Court to summon the witnesses in terms of the list of witnesses filed by the accused and the diet money deposited by him. Therefore, in these peculiar circumstances, this Court is of the considered view that interest of justice demands that at least one more opportunity be granted to the accused to lead evidence with Court assistance so that justice is done to him. Parties through Counsel are directed to appear before the learned Court below on 06.01.2022, on which date, the case shall be listed by the learned Trial Court for summoning the witnesses of the accused. Thus, an opportunity will be given to the accused to lead evidence. If he fails to avail this opportunity, his right to lead evidence will be closed. The indulgence, which has been shown in favour of the petitioner by the Court today, shall be subject to payment of cost of ₹ 5000/- by the petitioner to the complainants - petition disposed off. 2022 (1) TMI 499 Suit for recovery of money against the respondent-defendant - breach of contract - seeking extension of period of limitation for filing written statement - HELD THAT:- The submission proceeds on a misconceived notion about concept of limitation. The limitation for filing written statement provided in Order VIII Rule 1 Proviso is thirty days and not one hundred twenty days. The additional period of ninety days is allowed to be utilized for filing the written statement on showing sufficient cause as grace period. It is not the limitation per se. The ninety days additional period allowed to the defendant, it comes into play, if the defendant had failed to file written statement within the prescribed period of thirty days. The ninety days are the additional window following the prescribed limitation in which the defendant may show the sufficient cause to be considered by the Court, to be allowed to file written statement. In SAGUFA AHMED ORS. VERSUS UPPER ASSAM PLYWOOD PRODUCTS PVT. LTD. ORS. [ 2020 (9) TMI 713 - SUPREME COURT] , the Supreme Court explained the concept of extension in cognizance of extension of limitation, it was held that the said judgment extended the period of limitation and did not extend period upto which the delay could be condoned in exercise of discretion conferred by the statute concerned. In that case, the Supreme Court upheld the refusal of the tribunal to condone the delay in the context of Section 421(3) and Section 420(3) of the Companies Act, 2013, in respect of the application for condonation of delay and dismissal of appeal. In the facts of the present case, the written statement was not filed by the defendant within the limitation period of thirty days which expired on 28.2.2020. The benefit of extended period of limitation as per the Supreme Court order would not be available to the defendant. Petition allowed. 2022 (1) TMI 498 Dishonor of Cheque - preponderance of probabilities - legally enforceable debt or not - acquittal of the accused - rebuttal of presumption - Whether the judgment of the learned Sessions Judge in acquitting the accused from the offence under section 138 of the Negotiable Instruments Act basing on the materials available on record is fair and proper? - HELD THAT:- The standard of rebuttal proof that need to be produced by the accuses is not necessarily strict proof beyond reasonable doubt. It is sufficient if the probabilities are proved through preponderance. Hence, the accused need not necessarily get into the box and subject himself for examination or produce any records of his own. And it is sufficient that he could bring out the improbable facts and circumstances from the case of the complainant. Because the object of punishment contemplated u/s 138 N.I. Act for dishonour of cheque is for improving the creditability of the Negotiable Instruments exchanged during commercial transactions and to ensure business viability and not the deterance of criminals. Though, it might be an exaggeration on the part of the accused to state that the complainant had stolen away her cheques when she came come to her house in order to see her sick husband, there are materials to probablise her defence that the impugned cheque was not supported by consideration and it was not given for discharging a legally enforceable liability or debt - A person, who already aggrieved due to non payment of a money-due by a debtor, would not dare to give an another enhanced loan to the same debtor and that too without any security. This is especially clear from the fact established by the defence through Ex.D2/receipt that after the sale transaction between the complainant and the accused, the accused did not owe any money to her . The appellate Court has evaluated the facts and circumstances and other materials available in this case and gave due weight to the preponderance of probabilities established by the defence. Since the case of the defence is more probable and strong enough to improbabilise the case of the complainant, it has chosen to reverse the judgement of the Trial Court - Appeal dismissed. 2022 (1) TMI 497 Dishonor of Cheque - insufficiency of funds - requirement to issue separate notice to manager or not - main contention of petitioner is that the Manager, who is in charge of the petitioner company, was not issued individual statutory notice under Section 138 and hence, he is not responsible for the alleged dishonour of cheques - HELD THAT:- The contention raised by the learned counsel for the petitioner that the present Manager of the petitioner company was not issued individual statutory notice under Section 138, cannot be countenanced for the reason that, in the decision relied on by the learned counsel for the respondent, the Hon'ble Supreme Court in KIRSHNA TEXPORT CAPITAL MARKETS LTD. VERSUS ILA A. AGRAWAL ORS. [ 2015 (6) TMI 344 - SUPREME COURT] has specifically held that if the person committing an offence under Section 138 is a company, every Director of such company who was in charge of that company for conduct of its business shall be deemed to be guilty. Further, the Hon'ble Supreme Court has held that the persons who are in charge of the affairs of the company must naturally be aware of the demand notice issued to the company. Hence, no separate notice is required to be given to such persons - Moreover, it has been held by the Hon'ble Supreme Court that if the contention of the accused is that the offence was committed without their knowledge or that they had exercised due diligence to prevent such commission, the same would be considered only at the time of trial and not at the stage of notice under Section 138. Admittedly, in this case, the liability of the petitioner company has not been discharged and also it is not denied that Mr.Hitesh V. Shah is the Director of the company. The Manager, who is in charge of the petitioner company, has entered appearance before the Court below only on receipt of the summon issued to the Director Mr. Hitesh V. Shah and hence, no separate notice is required to be issued to him under Section 138 of the Act. Since the matter is of the year 2003, the Magistrate is hereby directed to complete the trial within a period of six months from the date of receipt of a copy of this order - Petition dismissed.
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