TMI Tax Updates - e-Newsletter
November 25, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Cancellation of registration of petitioner - petitioner herein is ready to furnish all the necessary information, but, in view of cancellation order, the petitioner is not in a position to furnish the same to the 1st respondent. - petitioner to approach the appellant authority as per Section 107 of CGST Act, 2017, within a period of one week from the date of receipt of a copy of this order - HC
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Income Tax:
Long term capital gain - sale of land - Legal owner of asset/property - CIT(A) and the AO has rightly concluded that when GPA was executed, clearly proves that the assessee has no intention of declaring the capital gain in his return of income. Hence, we are of the view that the authorities below have rightly concluded that the entire capital gain is to be assessed in the hands of the assessee to the extent of his share - AT
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Income Tax:
Application for condonation of delay u/s 119(2)(b) - condonation of delay in filing returns and claiming refund - Section 119(2)(b) does not impose any limitation for the purposes of filing an application for condonation of delay. Therefore, it was completely wrong on the part of the 1st respondent to treat the date of filing of application for condonation of delay as the relevant date for the purpose of considering whether it was filed within 6 years or not. - HC
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Income Tax:
Levy of interest u/s 201(1A) - delayed remittance of TDS deducted - delay in remitting the amounts deducted as TDS arose only on account of the fact that the Officer in question was deputed for election duty for the period from January 2014 to May 2014 in connection with the Lok Sabha Election of 2014. - No interest liability - HC
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Income Tax:
Addition u/s 68 - Bogus LTCG - Applying the said doctrine, we have no hesitation to hold that the transaction of purchase and sale of shares of SRK Industries under consideration before us is void ab-initio, this is nothing but sham, make believe and colourful device adopted with excellent paper work with intention bringing the undisclosed income into books of account - Additions confirmed - AT
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Income Tax:
Assessment framed u/s. 153C/263/143(3) - Such satisfaction note along with seized material is passed over to the ld. AO of ‘other person’. Thereafter, the ld.AO of the ‘other person’ is again required to prepare the ‘satisfaction note’ stating that such seized material belongs to ‘other person’, who is under his jurisdiction. In the instant case before initiation of proceeding u/s. 153C of the Act the ld. AO has not prepared the satisfaction note. - proceeding u/s. 153C r.w.s 143(3) are void and ab initio. - AT
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Income Tax:
Rectification of mistake u/s 154 - The set off of the impugned loss against the assessee’s other income without reference to s. 43(5) is clearly a mistake apparent from record which includes a mistake of law as well. The AO thus had the necessary jurisdiction for rectification in respect of the adjustment of the said loss, and the notice dated 14/12/2016 u/s 154, discussed in detailed at para 3.5 of this order, is, thus, a valid notice in the eyes of law. - AT
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Income Tax:
Disallowance with respect to expenditure on ESOP u/s 37 - the expenditure in question is wholly and exclusively for the purpose of the business of the assessee and the fact that the parent company is also benefited by reason of a motivated work force would be no ground to deny the claim of the assessee for deduction, which otherwise satisfies all the conditions referred to in section 37(1) - claim allowed - AT
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Income Tax:
Addition u/s 68 in respect of jewellery - It is not in dispute that what is received as gift is only jewellery. Hence, what is received is only gift in kind. Accordingly, the provisions of Section 68 per se could not be invoked in the instant case. It is trite law and the bare reading of the provisions of Section 68 are very clear that the said provisions could be made applicable only for sums received in cash or cheque or demand draft for which satisfactory explanation could not be given by the assessee. - AT
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Income Tax:
Condonation of Delay of 402 days - We note that the assessee is a District Central Co-op. Bank, managed by highly qualified officers and well trained professionals in respect of accounts and litigation. Therefore, statement of, that the impugned order was misplaced due to shifting of assessee’s office to head office building is a mere statement without any evidence made for the purpose of filing the said affidavit. - AT
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Customs:
Levy of IGST on gods imported under EPCG Scheme - Period between 1.7.2017 to 12.7.2017 - the amendment to Notification No.16/2015-Cus dated 1st April 2015 was clarificatory/curative in nature, consequences have to follow inasmuch as Petitioner will be entitled to refund of the IGST paid by Petitioner. The refund shall be processed and paid together with interest, if any - HC
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Customs:
100% EOU - Seeking the SHIS (Status Holder Incentive Scrip) - status holder is entitled to a Duty Credit Scrip @ 1% of FOB value of exports - the Respondent cannot take advantage of the Authentication Rules to contend that amending the very policy itself is authenticated by the Central Government. As the product is not disputed and export is also not disputed, when the foreign policy clearly covers the Plastics, the Petitioner is certainly entitled to incentives as per policy. - HC
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Corporate Law:
Transfer of shares before liquidation - company in liquidation was ordered to be wound up - The validation of which is sought, have been entered into being fully cognizant of the prohibition in law. No element of benefit to the company in liquidation is manifest, even remotely. In the circumstances, the Court cannot give its imprimatur to such transactions. - HC
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Indian Laws:
Dishonor of Cheque - object underlying Section 138 of the Act is to promote and inculcate faith in the efficacy of banking system and to create an atmosphere of faith and reliance by discouraging people from dishonouring their commitments which are implicit when they pay their dues through cheques - As per settled principle of law while interpreting statutory provision the Court must adopt an approach that effectuates the object of the legislation and not the one which defeats or frustrates the same. - HC
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IBC:
CIRP - Related party - Appellant being ‘related party’ cannot be part of the CoC - present is not a case where IRP has reviewed its decision - there is no error in the decision of the IRP, changing the category of the Appellant from Financial Creditor to related Financial Creditor. - AT
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IBC:
Seeking review of the order - adverse remarks against the applicant - Applicant suppressed material facts and misguided the members of CoC to achieve the desired decision in favour of DSKL. Further, this Tribunal observed that the adverse remarks and observations made in para 54 of the order of the Adjudicating Authority dated 01.03.2021 are not baseless and further observed that for appreciating the materials on record and to decide the matter, such observations are necessary. - There is patent error - Application dismissed - AT
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IBC:
Valuation of Land - Liquidation proceedings - Issue attained finality - Appellant sought fresh valuation - Appellant has filed this Appeal only to delay the proceedings, which practice is deprecated. We confirm the costs of Rs.1,00,000/- imposed by the Adjudicating Authority. - AT
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Central Excise:
Retraction of statements relied upon - The departmental investigating agencies as well as the Adjudicating Authorities have not yet started observing compliance of mandatory statutory provisions i.e. section 9D of Central Excise Act, 1944 and section 138 B of Customs Act, 1962 without which the statement recorded at the stage of inquiry / investigation will not be relevant for the purpose of proving the truth of requisite facts during prosecution. - AT
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Central Excise:
Reversal of CENVAT Credit - the appellant have complied with the condition prescribed under Rule 6(3)(ii) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, therefore demand @ 5% / 6%/ 7% cannot be demanded. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. - AT
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Central Excise:
CENVAT Credit - inputs used for repair - The adjudicating authority himself observed that the processes undertaken was “incidental and ancillary to the completion of the manufactured products - Any process which is incidental or ancillary to completion of the manufactured products is to be held as the process of manufacture in terms of Section 2(f) - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (11) TMI 1067
Seeking grant of GST components along with interest to be paid to the 5th Respondent - execution of works as main contractor and also executes work as sub-contractor to other main contractors - migration to GST regime - variation in the rate with the introduction of GST for the contractors - HELD THAT:- The Petitioner has been issued with the Show Cause Notice No.60 of 2022 - GST dated 29.06.2022 by the Additional Director, Director General of GST Intelligence, Coimbatore, which has been adjudicated by the 5th Respondent and proposal was made demanding GST of Rs.5,11,38,438/- in terms of Section 74(1) of The Central Goods and Services Tax Act, 2017. As a matter of fact, the show cause notice also makes a reference to G.O(Ms)No.296, Finance (Salaries) Department, dated 09.10.2017, which has been issued by the Government of Tamil Nadu in support of the fact that GST ought to be paid by procuring entities while calling upon the Petitioner to discharge the applicable GST. In the meanwhile, the Petitioner was served with the notice by the 5th Respondent fixing dates for personal hearing, pursuant to the show cause notice. Two personal hearings have already been granted and the final hearing is fixed on 17.11.2022 by the 5th Respondent. This Court is of the view that the Respondents 1 to 4 shall consider the representation of the Petitioner dated 12.08.2022, on its own merits and pass appropriate orders in accordance with law, within a period of four weeks from today. It is also open to the Petitioner to submit before the GST authorities seeking further time in view of the pendency of the representation. Writ petition disposed off.
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2022 (11) TMI 1066
Cancellation of registration of petitioner - failure to respond to the show-cause notice and having failed to avail alternative remedy as prescribed under the provisions of Section 107 of the CGST Act, 2017 - petitioner herein is ready to furnish all the necessary information, but, in view of cancellation order, the petitioner is not in a position to furnish the same to the 1st respondent. HELD THAT:- The reality remains that according to Section 107 of the CGST, 2017, any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such appellate authroity as may be prescribed within three months from the date on which the said decision or order is communicated to such person. This Court deems it appropriate to dispose of the Writ Petition, leaving it open to the petitioner to approach the appellant authority as per Section 107 of CGST Act, 2017, within a period of one week from the date of receipt of a copy of this order and if such an appeal is filed, the same be considered and appropriate orders be passed by the appellate authority strictly in accordance with rules, within a period of four (04) weeks thereafter. Petition disposed off.
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Income Tax
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2022 (11) TMI 1081
Unexplained Cash Credit u/s. 68 - difference in the balance of certain creditors and also for non compliance on the part of sundry creditors in reply to notice issued u/s. 133(6) - HELD THAT:- As the assessee provided complete details of sundry creditors along with the entries in the ledger account in order to show that various cheque return entries have been wrongly considered as purchases by ld.AO. We further find that the ld. CIT(A) after carefully examining the details filed by the assessee, deleted the addition. The above finding of the ld. CIT(A) stands uncontroverted by the ld.DR. Therefore, under the given facts of the case we failed to find infirmity in the findings of the ld. CIT(A). Thus, ground no.1 raised by the revenue is dismissed. Unexplained cash credit on account of sundry creditors balance - HELD THAT:- As alleged addition is mainly on account of balance of the parties pertaining to the earlier year and transfer of balance of the group concern and thus we find no justification for making this addition. No interference is thus called for in the finding of ld. CIT(A) Thus, ground no. 2 raised by the revenue is dismissed. Addition u/s 69C of the Act for unexplained expenditure - difference in payments received by the vendor and the payments made by the assessee - CIT-A deleted the addition - HELD THAT:- CIT(A) after considering the merits of the case and facts indicated that the said difference was on account of cash payment made for purchase of husk, which was used by power and fuel and these cash entries have been duly acknowledged by the seller. The above findings fact by the ld. CIT(A) remains uncontroverted by the ld. DR, Therefore, we failed to find any infirmity in the findings of the ld. CIT(A). Ground no. 3 raised by the revenue is dismissed.
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2022 (11) TMI 1080
Addition for unaccounted stock - difference in the stock - unaccounted sales - As submitted no difference in the stock and the alleged 914 bags were actually received during the period 09/11/2013 to 12/11/2013 - CIT(A) confirmed the addition mainly on the ground that if the assessee had necessary evidence, he ought to have appealed the action of the survey team which the assessee failed to do and has paid the penalty stating that he did so solely to buy peace of mind - HELD THAT:- Before both the lower authorities, the assessee failed to file any documentary evidence in support of the said 914 bags. CIT(A) confirmed the addition mainly on the ground that if the assessee had necessary evidence, he ought to have appealed the action of the survey team which the assessee failed to do and has paid the penalty stating that he did so solely to buy peace of mind. We find that there is actually shortage of stock because in the stock register, 2203 bags are appearing and as per the physical stock statement 1289 bags were found. So, there is actually shortage of stock of 914 bags and which was treated as unaccounted sales on which the Department of Trade Taxes, Government of NCT of Delhi, has levied the tax/penalty. Now so far as the first contention of the assessee that there was no variation of stock and the total addition made by the Assessing Officer is liable to be deleted, the option left is to send the documents filed before us to the lower authorities for necessary examination/verification. When this was proposed to the ld. Counsel for the assessee, he preferred to rely on his alternate plea raised in Additional Ground No. 5. Thus, Ground Nos. 1 to 4 and additional Ground Nos. 1 to 4 are dismissed. Gross profit element on such undisclosed sales should have been subjected to tax - As considering the judicial precedents wherein it has been held that in case of undisclosed/unaccounted sales, addition could be made only in respect of the profit element. We find that the in the case of CIT vs. Hariram Bhambani [ 2015 (2) TMI 907 - BOMBAY HIGH COURT] considering similar case, where survey was conducted u/s 133A of the Act and unaccounted sales were found and thereafter accepted in the statement recorded. We find that the same are squarely applicable in the facts of the instant case and the assessee having disclosed the gross profit rate of 17.20%, we are inclined to hold that the addition should be sustained only to the extent of ₹17,26,108/-, which is 17.20% of the alleged sum. We, therefore, allow the additional ground no. 5 raised by the assessee and sustain the addition to ₹17,26,108/-. The assessee gets relief of ₹83,09,401/-.
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2022 (11) TMI 1079
Long term capital gain - sale of land - Legal owner of asset/property - claim of proportionate share of 2/3rd - assessee along with his grandmother has executed power of attorney(POA) in favour of one Shri S. Ramaswamy, the agent in respect of the property - proportionate deduction on account of expenses incurred for removal of encroachment, eviction, illegal squatters etc. - HELD THAT:- PoA and sale deed both are executed on the same day by assessee as well as the GPA Shri S. Ramaswamy on 19.02.2015. It means the PoA holder has no legal right or interest in the property and entire consideration belongs to assessee or other co-owner. Even otherwise, Shri S. Ramaswamy has not accounted for this consideration in his return of income or no capital gain is declared either short term or long term by Shri S. Ramaswamy, the PoA holder in his return of income. CIT(A) and the AO has rightly concluded that receipt of 93% of sale consideration i.e., 6,93,50,000/-i.e., sale of land without any encumbrance on the date when GPA was executed including GPA of Rs.7,43,50,000/- clearly proves that the assessee has no intention of declaring the capital gain in his return of income. Hence, we are of the view that the authorities below have rightly concluded that the entire capital gain is to be assessed in the hands of the assessee to the extent of his share and hence, we confirm the order of the lower authorities and dismiss this issue of assessee s appeal. Disallowance of eviction expenses - assessee now before us made submission that the entire details are available with him as regards to eviction payments and eviction expenses which the assessee could not produce before the CIT(A) and hence, he requested that to that extent, the matter can be restored back to the file of the AO because the same were partly produced before the AO just before the completion of assessment - HELD THAT:- After hearing both the sides on this issue, now we are of the view that the assessee is entitled for this claim but assessee has to prove this claim and file evidence. Hence, we restore this issue back to the file of the AO for fresh adjudication after verifying the evidences. This issue of assessee s appeal is set aside and allowed for statistical purposes.
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2022 (11) TMI 1078
Refund of the tax deducted at source (TDS) - income earned on the fixed deposits - mismatch between the return of income and Form 26AS - as submitted by the assessee that since the interest income has arisen in the assessment year under dispute, the assesees are entitled to claim refund of the TDS amount - HELD THAT:- As assessees have entered into concession agreements with FCI for construction, operation and maintenance of Silo Complex. In terms of the concession agreements, the assessees are required to furnish bank guarantees for which the concerned banks have kept securities by way of fixed deposits. Thus, it cannot be denied that the fixed deposits kept with banks are in connection with the business activity of the assessee. That being the factual position emerging on record, the interest income earned has a direct nexus with the business activity of the assessee. In that view of the matter, the interest income earned by the assessee has to be treated as income from business and can be set off against the cost of construction. There is no doubt that the interest income pertained to the impugned assessment year and the concerned banks have deducted tax at source while crediting the interest income to the account of the assessee. The only reason on which the departmental authorities have rejected to grant refund of the TDS amount is, the interest income has been adjusted against the construction expenses. This, as unacceptable. In case of CIT vs. Jaypee DSC Ventures Ltd [ 2011 (3) TMI 309 - DELHI HIGH COURT ] while considering identical nature of dispute has held that the interest income earned on fixed deposits kept as security for performance guarantee is taxable as business income and can be set off against project expenses. AO directed to refund the TDS amount to the assessees. Appeals are allowed.
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2022 (11) TMI 1065
Application for condonation of delay u/s 119(2)(b) - condonation of delay in filing returns and claiming refund - case of the petitioner that the delay in filing the return for the Assessment Year 2010-11 was on account of the fact that the petitioner was suffering from certain ailments and was hospitalized in connection with treatment for a period about four months - HELD THAT:- 1st respondent completely misdirected himself in law while holding that Ext.P5 application of the petitioner for condonation of delay ought to be rejected as it was filed beyond the period specified in the Circular of the Board - It cannot be disputed and it is clear from a reading of the provisions of Section 119(2)(b) that the delay to be condoned is the delay in making 'the application' for refund. 'The application for refund', in this case is the return which was not processed as it was filed beyond the time specified in Section 139 - Therefore, the delay to be condoned was not to be considered with reference to the date on which the application u/s 119(2)(b) was filed, but with reference to the date on which the 'application for refund' (here in this case the return of income) was filed. Section 119(2)(b) does not impose any limitation for the purposes of filing an application for condonation of delay. Therefore, it was completely wrong on the part of the 1st respondent to treat the date of filing of application for condonation of delay as the relevant date for the purpose of considering whether it was filed within 6 years or not. The application for refund, by filing return of income, was admittedly made on 13.7.2012. Delay in filing ought to be with reference to the last date for filing of return of income for the year 2010-11, till 13.7.2012. In this view of the matter, it is not necessary to consider the decisions cited at the bar by the learned counsel for the petitioner. This writ petition is allowed and Ext.P6 is quashed. Ext.P5 application will stand restored to the file of the 1st respondent who will consider the matter afresh, and decide whether the delay from 31.3.2012 (the last date on which return could have been filed for Assessment Year 2010-11) till 13.7.2012 (date of filing of return by the petitioner) can be condoned in exercise of the power conferred u/s 119 (2)(b) of the Act. This shall be done within a period of one month from the date of receipt of a certified copy of this judgment.
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2022 (11) TMI 1064
Maintainability of appeal on low tax effect - cascading effect of circulars - HELD THAT:- The value in the appeal is less than the limit prescribed by CBDT Circular. The Supreme Court in the judgment reported in S.C.Naregal v Commissioner of Income Tax [ 2019 (10) TMI 1535 - SUPREME COURT] has considered the effect of CBDT Circular and dismissed the appeal coming within the purport of CBDT Circular. The valuation of the subject appeal since is less than the limit stipulated by CBDT Circular, the judgment of Apex Court in S.C.Naregal (supra) is applicable to the appeal. By a combined reading of the reported decisions and the order of the Supreme Court we are of the view that the appeal could be dismissed as coming within the monetary limit prescribed in Circular No.3/2018, subject to the observations made in [ 2018 (10) TMI 1977 - SC ORDER]
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2022 (11) TMI 1063
Levy of interest under sub-section (1A) of Section 201 - delayed remittance of TDS deducted from compensation paid to persons from whom land was acquired for the purposes of establishing the Government Medical College at Manjeri - amounts were deducted in the month of January 2014 and the amounts were to be paid over to the Income Tax Department on or before 07.02.2014 - HELD THAT:- It is clear from a reading of Section 201 that the liability to deduct tax arises only when it is required to be deducted under the provisions of the Act. Where there is no liability to deduct TDS, the mere fact that TDS was so deducted and paid to the Income Tax Department belatedly, cannot give rise to a claim for interest under sub-section (1A) of Section 201. We feel that this can be the only reasonable interpretation that can be placed under the provisions of Section 201, as interest under sub-section (1A) of Section 201 is obviously to compensate the Government / Income Tax Department for the delay in payment of taxes, which are rightfully due to the Government. It is clear from Ext.P1 that the delay in remitting the amounts deducted as TDS arose only on account of the fact that the Officer in question was deputed for election duty for the period from January 2014 to May 2014 in connection with the Lok Sabha Election of 2014. Cumulatively, these facts compel me to hold that the levy of interest under sub-section (1A) of Section 201 was wholly unwarranted in the facts and circumstances of this case. The contention that the Income Tax Department had to pay interest on refund amount from a date prior to the date on which the Department received amounts is untenable. The Department was under no obligation to pay interest from a date prior to the date on which it actually received the amounts of TDS. The writ petition is, therefore, allowed.
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2022 (11) TMI 1062
Credit of TDS carried over - TDS being carried forward is claimed in current financial year and adjusted against the tax liability for the year under consideration - Whether TDS was deducted in assessment year 2015-16 towards advance money received and no credit was taken as property was sold in AY 2016-17? - HELD THAT:- As in the financial year 2014-15 advance received against which TDS has been deducted and same was reflected in Form 26AS but same consideration was not received, hence, advance was not taken as income and TDS against that advance was not claimed. The assessee has carried forward to next financial year. In the next financial year 2015-16, relevant to AY.2016-17, full consideration was received and income was offered to tax and TDS was claimed. Therefore, we are of the view that these facts are to be examined by AO. We direct the AO to examine the case of assessee and if he finds that in financial year 2015-16, if the assessee has received full consideration and income was offered to tax and the TDS which was not previously claimed in the financial year 2014-15, has been claimed by the assessee in financial year 2015-16, then TDS credit should be allowed to the assessee. Therefore, we remit the issue back to the file of AO with a direction to examine the facts as narrated by us above and if the same is found as correct the Assessing officer should allow the benefit of TDS in accordance with law. The assessee is directed to co-operate in assessment proceeding, as and when called by AO, he should file the relevant details and documents to prove his claim. This ground of assessee s appeal is allowed for statistical purposes in above terms.
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2022 (11) TMI 1061
Addition u/s 68 - Bogus LTCG - claim for exemption of capital gains u/s 10(38) - HELD THAT:- The appellant deliberately withheld the information from the AO as well as the ld. CIT(A) which is within exclusive knowledge of appellant to establish the genuineness of transactions of purchase of shares of that company. It is nothing but a fraud played by the appellant against the AO as well as the ld. CIT(A) who are quasi judicial authorities employed for execution of the provisions of the Income Tax Act. Therefore, the principle of fraud can be squarely applied to the facts of the present case and principles of natural justice have no application. Applying the said doctrine, we have no hesitation to hold that the transaction of purchase and sale of shares of SRK Industries under consideration before us is void ab-initio, this is nothing but sham, make believe and colourful device adopted with excellent paper work with intention bringing the undisclosed income into books of account. Accordingly, we confirm the orders of the Assessing Officer as well as the ld. CIT(A) and find no merits in the appeal preferred by the assessee before us. Appeal filed by the assessee stands dismissed.
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2022 (11) TMI 1060
Revision u/s 263 by PCIT - second round the assessee during the course of appellate proceedings before the ld. CIT(A) - Additional ground admitted by the ld. CIT(A) - assessment framed u/s. 153C/263/143(3) - CIT(A) raised the additional ground challenging the exercising of the jurisdiction by the ld. AO u/s. 153C of the Act for initiating the proceedings without prior recording a satisfaction note , which was a pre-condition to invoke the jurisdiction u/s. 153C - HELD THAT:- We find that in the case of Peerless General Finance Investment Co. Ltd. [ 2007 (12) TMI 309 - ITAT KOLKATA ] this Tribunal has held that jurisdictional issue, which is relating to validity of assessment order can be raised in the second round of litigation even if the same was not raised in the first round of proceeding - Also see case of Inventors Industrial Corporation Ltd [ 1991 (4) TMI 70 - BOMBAY HIGH COURT ] We find force in the submissions of the ld. Counsel for the assessee and fail to find any merit in the grounds raised by the revenue that the ld. CIT(A) erred in admitting and adjudicating the legal ground challenging the validity of proceeding carried out u/s. 153C of the Act. CIT(A) has quashed the assessment order u/s. 153C of the Act on the ground that the ld. AO failed to record the satisfaction note - The pre-condition for carrying out proceedings u/s. 153C is that if the ld. AO of the searched person and the ld.AO of the other person in whose name incriminating material is found are different, then firstly satisfaction note is prepared by the ld. AO of the searched person mentioning the details of search material not belonging to the searched person but belonging to the other person . Such satisfaction note along with seized material is passed over to the ld. AO of other person . Thereafter, the ld.AO of the other person is again required to prepare the satisfaction note stating that such seized material belongs to other person , who is under his jurisdiction. In the instant case before initiation of proceeding u/s. 153C of the Act the ld. AO has not prepared the satisfaction note. This fact has been admitted by the revenue authorities before us also. Circular No. 24/2015 dt. 31-12-2015 issued by the Central Board of Direct Taxes (CBDT) which has been issued after following the judgment of the Hon ble Supreme Court in the case of M/s. Calcutta Knitwears (supra) [ 2014 (4) TMI 33 - SUPREME COURT ] and also considering the consistent view taken by various Hon ble Courts, we find that the ld. CIT(A) has rightly applied the ratio laid down by the Hon ble Apex Court as well as CBDT Circular No. 24 of 2015 dated 31-12-2015 to hold that proceeding u/s. 153C r.w.s 143(3) are void and ab initio . Since the same was carried out without recording satisfaction by the ld. AO, no interference is called for in the findings of the ld. CIT(A). Thus, all the grounds raised by the revenue in both the appeals are dismissed.
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2022 (11) TMI 1059
Estimation of income - Bogus purchases - HELD THAT:- Respectfully following the judicial precedent in the assessee s own case [ 2019 (8) TMI 1846 - ITAT MUMBAI] we direct the Assessing Officer to restrict the addition to 6% of the bogus purchases. Accordingly, ground No. 2 raised in the assessee s appeal is partly allowed.
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2022 (11) TMI 1058
TP adjustment on account of guarantee commission - DR objected to the application of 0.5% for benchmarking the transaction of corporate guarantee fees - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case in 63 Moon Technologies Ltd (formerly Financial Technologies India Ltd) [ 2021 (12) TMI 989 - ITAT MUMBAI] for assessment years 2009 10 and 2010 11, while deciding similar issue directed the corporate guarantee fee be computed at 0.5%. Disallowance made on account of interest on payment of Zero Coupon Convertible Bonds - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case for assessment years 2009 10 it is clear that the amount of debenture redemption premium is accrued and liable to be deducted. Hence, in the background of aforesaid discussion and precedents, we set aside the orders of the authorities below, and decide the issue in favour of the assessee. Disallowance u/s 14A - necessity of recording satisfaction - HELD THAT:- The satisfaction as required to be recorded under the provisions of section 14A of the Act is not limited to merely disagreeing with the submission of the assessee and requires that the AO should also provide the basis for reaching such conclusion, after having regard to the accounts of the assessee. However, it is evident from the record that in the present case the AO merely disagreed with the suo moto disallowance offered by the assessee u/s 14A and straightaway computed the impugned disallowance by applying the provisions of Rule 8D. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee s own case cited supra, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, ground No. 3 raised in Revenue s appeal is dismissed.
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2022 (11) TMI 1057
Default u/s 201(1) r.w.s 201(1A) - time period for passing order u/s 201 - limitation period as prescribed u/s 201(3) - HELD THAT:- We find that statement of quarterly Nos.1 to 4 for assessment year 2008-09 is filed by assessee on 15.07.2008, 27.10.2008, 30.01.2009 and 22.05.2009 respectively. Admittedly, the last statement of last quarter (Q4) was furnished by assessee on 22.05.2009 a time period for passing assessment order under section 201(1A) as per the time period for passing order at the relevant period, was two years from the end of financial year in which statement under section 200 was filed. Since the last statement was filed by assessee on 22.05.2009, the Assessing Officer / DCIT(TDS) could pass the order upto 31.03.2012. However, the Assessing Officer / DCIT(TDS) passed assessment order on 30.03.2016, which is apparently barred by period of limitation. We find that similar view was taken by Co-ordinate Bench of this Tribunal in the case of State Bank of India Vyara Branch [ 2020 (4) TMI 430 - ITAT SURAT ] and ITAT Mumbai Benches in the case of Sodexo SVC India Pvt. Ltd. [ 2019 (4) TMI 310 - ITAT MUMBAI ] Hon'ble ITAT Mumbai Benches in the case of Sodexo SVC India Pvt. Ltd. [ 2019 (4) TMI 310 - ITAT MUMBAI ] while considering the similar objection of Revenue held that such correction was in the form of rectification was very meager which were pitted in the information like PAN or the details of authorized signatory or details of CFO of the assessee. Such changes have no bearing on the amount on TDS / or deposited or likely to be deposited with this Revenue. Such correction made by way of rectification are negligible. Therefore, we do not find any substance in the submission made by Ld. Sr- DR for the Revenue. Therefore, the appeal of assessee is allowed on legal position / additional ground of appeal.
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2022 (11) TMI 1056
Rectification of mistake u/s 154 - Addition made on account of set off of speculation loss against business income - HELD THAT:- The assessee s claim of the set-off of the impugned loss against business income in assessment as correctly allowed by the AO upon verification, accepted by the ld. CIT(A), was, on examination, found to be de hors both the facts of the case and the law in the matter. There had been, after the initial inquiry, which was again a general inquiry in respect of large expenses , no further verification or even finding by the AO in assessment, who had failed to take note of s. 43(5) of the Act, much less examine the satisfaction of the requirements thereof. Section 43(5) being clearly attracted on the basis of facts borne out by the record, i.e., commodity derivative trading, which is, by definition, speculative, unless, of course, it is qua eligible transactions, defined thereunder and, further, carried through the members of a recognised association, on which commodity transaction tax has been charged. There is in fact no claim of satisfaction of these attributes, or even reference to s. 43(5). The set off of the impugned loss against the assessee s other income without reference to s. 43(5) is clearly a mistake apparent from record which includes a mistake of law as well. The AO thus had the necessary jurisdiction for rectification in respect of the adjustment of the said loss, and the notice dated 14/12/2016 u/s 154, discussed in detailed at para 3.5 of this order, is, thus, a valid notice in the eyes of law. AO, however, rather than ascertaining in the rectification proceedings if the impugned transactions did indeed satisfy the requirement/s of s.43(5) r/w clause (e) of proviso thereto, i.e., defining speculative transaction, issued a finding without any verification and indeed de hors the material on record, stating the impugned loss as on unlisted shares and speculative. Her order therefore, cannot, be approved, and the mistake that imbued the assessment order accordingly continues to obtain. The same ought to have been corrected by the ld. CIT(A), enjoying coterminous powers, in appeal. Both the rectification order, as well as the appellate order holding original assessment as not mistaken, i.e., without impugning the notice for rectification, found valid, its merit apart, cannot have our approval and, thus, be upheld. Both the orders are accordingly set aside, and the matter restored to the file of the AO for causing an adjudication in accordance with law. Lest it may be argued that the matter cannot be in rectification proceedings remitted back with clear directions, reference may be made to the decision in T.S. Rajam v. CED [ 1967 (9) TMI 139 - MADRAS HIGH COURT] which is in respect of estate duty, with cognate provision. The whole premise of rectification proceedings, it needs to be appreciated, and as even explained therein, is toward causing justice, for which reference may also be profitably made to L.Hirday Narain [ 1970 (7) TMI 2 - SUPREME COURT] - The facts of this case, as indeed some others, are striking and illustrative, to which reference may therefore be made, though are not being recounted here so as not to burden this order further (viz. Karamchand Premchand (P.) Ltd [ 1992 (12) TMI 42 - SUPREME COURT] AND T.S. Rajam (supra)). Revenue s appeal is allowed for statistical purpose and the assessee s CO is partly allowed for statistical purposes.
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2022 (11) TMI 1055
Delayed employees' contributions to PF, ESI etc - Addition u/s 43B - HELD THAT:- We hold that the employees contribution to PF and ESI should be remitted before the due date as per explanation to section 36(1)(va) i.e. on or before the due date under the relevant employee welfare legislation like PF Act, ESI Act etc., for the same to be otherwise allowable u/s.43B. We, therefore, see no reason to interfere with the order of the CIT(Appeals). Appeal filed by the assessee is dismissed.
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2022 (11) TMI 1054
Exemption u/s 11 - application for registration of the trust u/s 12AA - application filed by the assessee for the reason that the trust is established for the benefit of a particular community namely Rajput and not for general public - HELD THAT:- It is sufficient if the intention is to benefit a section of the public as distinguished from a specified individual is present . The assessee placed reliance on the case of Ahmedabad Rana Caste Association v. CIT [ 1971 (9) TMI 8 - SUPREME COURT] wherein it was held that an object beneficial to a section of the public is an object of general public utility. But the section of the community sought to be benefited must be sufficiently defined and identifiable by some common quality of a public order or impersonal nature. By way of the above submission, the assessee submitted that CIT(Exemption) never questioned the genuineness of the activities of the Trust. He has only observed that the objects of the Trust show that the Trust is established for the benefit of a particular community . Assessee submitted that insufficient opportunity of hearing was granted by CIT(Exemption). The assessee submitted that in the order CIT(Exemption) mentioned that he was in receipt of the submission in reply to his notices. No show cause notice was issued in response to the written submission filed with CIT (Exemption), proposing to reject the assessee's application and no opportunity was given to the assessee to rebut the same. In absence of any show cause notice issued by CIT (Exemption), the assessee was unable to place the above judicial precedents before Ld. CIT(Exemption) for his consideration, which directly support the case of the assessee as a response to the reasons for which the application was rejected by CIT (Exemption). DR placed reliance on the observations made by CIT (Exemption) in the order. In our view, in the interest of justice, we are restoring the file to the CIT (Exemption) for fresh adjudication, after giving due opportunity of hearing to the assessee to present its case on merits. Appeal of the assessee is allowed for statistical purposes.
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2022 (11) TMI 1053
Penalty u/s 271C - TDS u/s 194C - payments for Infrastructure Development Charges (IDC) has been made to Department of Town Country, Haryana ( DTCP ) which itself is a government department - HELD THAT:- As decided in M/S. TULIP INFRATECH PRIVATE LIMITED [ 2022 (7) TMI 328 - ITAT DELHI] receipts on account of EDC are being deposited in the Consolidated Fund of the State, accordingly directions were issued to colonizer like present assessee, to not deduct TDS. Thus levy of penalty u/s 271C of the Act cannot be sustained. The grounds raised in the appeals are allowed.
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2022 (11) TMI 1052
Penalty imposed u/s 271(1)(b) - default in not responding to the notice issued u/s 142(1) - allegation of non-service of notices - HELD THAT:- Assessee was completed u/s 144 r.w.s. 153C of the Act which clearly shows that the Assessing Officer completed the said assessment for best of his judgment in the absence of assessee u/s 144. On careful reading of the ITAT s order in the case of M/s. Sterlight Fincom Pvt. Ltd. [ 2022 (9) TMI 1391 - ITAT NAGPUR] which held when there is no notice properly served on the assessee, there can be no question of imposing or confirming any penalty u/s 271(1)(b) of the Act and ordered to delete the penalty impose thereof. Thus findings of Tribunal is applicable to the facts of the present case on hand and by applying the same hold that the Respondent-Revenue could not show any evidence establishing that the notices were served on the assessee properly. Thus, a penalty u/s 271(1)(b) of the Act as confirmed by the CIT(A) is set-aside. Thus, grounds of appea raised by the assessee are allowed.
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2022 (11) TMI 1051
Levy of late fees u/s 234E - intimation issued u/s 200A of the Act on processing of Statement of Tax Deducted at Source - HELD THAT:- As decided in K.D. Realities Pvt. Ltd. [ 2019 (11) TMI 1762 - ITAT MUMBAI] deleted the late fee levied under Section 234E of the Act in respect of the quarterly TDS statements filed for the financial years relevant to Assessment Years 2013-14 to 2015-16 holding that the Hon ble High Court of Karnataka in the case of Fatehraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] had concluded, that the notice under Sec.200A of the Act for computing late fee under Section 234E of the Act, to the extent the same related to the period of the tax deduction prior to 01.06.2015 was liable to be set aside. Also see NATIONAL LAMINATE CORPORATION VERSUS ITO-CPC (TDS) UTTAR PRADESH [ 2019 (12) TMI 574 - ITAT MUMBAI] Thus we delete levy of late fees for Assessment Year 2013-14, demanded under Section 234E of the Act. Ground No. 1 raised in the appeal is allowed.
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2022 (11) TMI 1050
Disallowance with respect to expenditure on ESOP u/s 37 - outflow of money resulting in an expense - shares pertaining to Ultimate Holding Company are granted to eligible employees of HPISO under the above ESOP schemes - Applicability of section 195/192 - AR submitted differential price/full price of the shares granted under these schemes are considered as a part of 'perquisite' taxable in the hands of employees under section 17(2) - HELD THAT:- As decided in NOVO NORDISK INDIA PVT LTD VERSUS DEPUTY COMMISSIONER OF INCOME TAX [ 2013 (11) TMI 218 - ITAT BANGALORE] The law by now is well settled by the decision of the Special Bench of the ITAT Bangalore in the case of Biocon Ltd. in [2013 (8) TMI 629 - ITAT BANGALORE], wherein it was held that expenditure on account of ESOP is a revenue expenditure and had to be allowed as deduction while computing income - Expenditure in question is wholly and exclusively for the purpose of the business of the assessee and the fact that the parent company is also benefited by reason of a motivated work force would be no ground to deny the claim of the assessee for deduction, which otherwise satisfies all the conditions referred to in section 37(1) of the Act - Expenditure in question was wholly and exclusively for the purpose of the business of the assessee and had to be allowed as deduction as a revenue expenditure. No basis for the observation that the obligation to issue shares at a discounted price to the employees of the Assessee was that of the foreign parent company and not that of the Assessee. Admittedly, the shares were issued to employees of the Assessee and it is the Assessee who has to bear the difference in cost of the shares. The expenditure is necessary for the Assessee to retain a health work force. Business expediency required that the Assessee incur such costs. The parent company will be benefitted indirectly by such a motivated work force. With regard to the observations of the CIT(Appeals) that the ESOP actually benefits only the parent company, we are of the view that the expenditure in question is wholly and exclusively for the purpose of the business of the assessee and the fact that the parent company is also benefited by reason of a motivated work force would be no ground to deny the claim of the assessee for deduction, which otherwise satisfies all the conditions referred to in section 37(1) - disallowance of ESOP expenses has made under the provisions of section 37 of the I.T.Act (though there was some discussion in the draft assessment order with reference to disallowance u/s 40(a)(i) of the I.T.Act). - Decided in favor of Assessee. Payment of leave encashment - allowability of certain payments on actual basis u/s 43B - HELD THAT:-This issue came up for consideration before this Tribunal in [ 2021 (8) TMI 1349 - ITAT BANGALORE] in the case of M/s. Global e-Business Operations (P) Ltd. held in the light of the decision of the in the case of Exide Industries [ 2020 (4) TMI 792 - SUPREME COURT ] the assessee will not be entitled to claim deduction on leave encashment on the basis of the provision. Taking into consideration the circumstances under which the assessee did not claim a sum being leave encashment actually being paid during the previous year relevant to Assessment Year we are of the view that the assessee should be allowed leave encashment actually paid as per provisions of section 43B(f) - We remit the issue to the AO to verify the claim of the assessee and allow deduction to the assessee as per law after affording assessee opportunity of being heard. Not allowing the tax credits (TDS, Advance Tax Self-assessment tax) pertaining to erstwhile Aruba India (Merged Entity) - HELD THAT:- The assessee is entitled for tax credit, which has been paid by Aruba India. Accordingly, the issue is remitted to AO to consider it afresh. Credit for TCS - non-following the direction of the Ld. DRP to grant consequent depreciation on software - HELD THAT:- These issues remitted to the file of AO to grant appropriate depreciation as per the direction of Ld. DRP.
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2022 (11) TMI 1049
Addition u/s 68 in respect of jewellery - genuineness of gift of jewellery - gift from relative - HELD THAT:- For the grandmother giving gift to the granddaughter i.e. assessee herein, in our considered opinion, no occasion need to be proved. It is out of natural love and affection. Why the grandmother had gifted only to one lady member of the family i.e. assessee herein and not to other lady members, as pointed out by CIT(A) in his second contention, is not the lookout of the Revenue. It is the will and desire of the donor i.e. grandmother. We find that the gift deed has been duly accepted by the donee i.e. assessee herein and the gift is complete in all aspects. In any case, we find that this gift is only received by the assessee from grandmother which has been accepted by the grandmother in her gift deed as well as in her affidavit. Hence, the same would be exempt from tax in terms of Section 56(2)(vii) of the Act as the same falls within the meaning of relative . It is not in dispute that what is received as gift is only jewellery weighing 417 gms. Hence, what is received is only gift in kind. Accordingly, the provisions of Section 68 per se could not be invoked in the instant case. It is trite law and the bare reading of the provisions of Section 68 are very clear that the said provisions could be made applicable only for sums received in cash or cheque or demand draft for which satisfactory explanation could not be given by the assessee. In the instant case no cash or cheque has been received by the assessee as gift. The assessee has received only jewellery weighing 417 gms as gift as stated supra from her grandmother. In view of the aforesaid observations, we have no hesitation in deleting the addition - Appeal of assessee allowed.
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2022 (11) TMI 1048
Unexplained investment u/s.69 - Addition on substantive basis and protective basis - HELD THAT:- Counsel could hardly rebut the clinching nexus amongst the assessee and his two sons namely Shri Ramesh and Ashish Shamjibhai Shah as not only having acquired the two shops but also they put on their signatures on the agreement concerned. We, accordingly affirm the impugned addition in assessee s hands as his unexplained investment u/s.69 in principle. Quantification of the impugned addition - Revenue could hardly rebut that it is not this former assessee Shri Shyamjibhai Shivjibhai Shah only who has acquired the twin shops in his name but also his two sons namely Shri Ramesh and Ashish Shamjibhai Shah (supra). We thus see no reason to make the entire addition in this former assessee s hands. We are next informed that the department has already added 1/3rd each of the foregoing sum in his two sons cases as well. And that Shri Ramesh Shamjibhai Shah is already in appea herein. Faced with this situation, we direct the learned assessing authority to assess this first assessee Shri Shyamjibhai Shivjibhai Shah only to the extent of 1/3rd amount in the impugned sum of Rs.2,12,00,000/- followed by the remaining 1/3rd each in the hands of Shri Ramesh Shamjibhai Shah and Shri Ashish Shamjibhai Shah (sons).
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2022 (11) TMI 1047
Condonation of Delay of 402 days - order was misplaced due to shifting of assessee s office to new head office building - assessee filed immediately after the original order found subsequently and due to which there was a delay in filing the present appeal - DR argued that there was no evidence to show the shifting of assessee s office to head office building and the assessee did not place on record any evidence explaining the delay on day to day basis - HELD THAT:- Admittedly, the delay of 402 days as rightly admitted by the ld. AR is inordinate delay and also correct that no reasons were explained on day to day basis in the said notarized affidavit. Merely, stating that assessee s office shifted to head office building does not constitute the valid reason which really prevented to assessee to file the appeal in time. The statement of misplacing of order, in our opinion, the assessee made the same very casually which was made for the purpose of making a statement without any basis. We note that the assessee is a District Central Co-op. Bank, managed by highly qualified officers and well trained professionals in respect of accounts and litigation. Therefore, statement of, that the impugned order was misplaced due to shifting of assessee s office to head office building is a mere statement without any evidence made for the purpose of filing the said affidavit. Therefore, the assessee failed to show valid reasons explaining day to day basis with evidences for the delay of 402 days which really prevented the assessee in filing the appeal in time. Therefore, in the absence of such valid reasons the arguments advanced along with the averments in the notarized affidavit deposed by the General Manager representing the assessee are rejected. Thus, the delay of 402 days is not condoned and the appeal is dismissed.
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2022 (11) TMI 1039
Rectification of mistake u/s 254 - estimation of income for bogus purchases - HELD THAT:- Profit element embedded in the value of disputed purchases was estimated at 12.5% by affirming the order of the CIT(A). On perusal of the file we find that the AR had vide letter dated 27/10/2021 had furnished various decisions of this Tribunal including the decision of this Tribunal in assessee s own case wherein under similar facts and circumstances, the profit percentage has been estimated at 6%. Hence, the non-following of the decision of this Tribunal constitute mistake apparent on record which would be eligible for rectification u/s 254(2) - Hence, we are inclined to accept to the contentions of the ld. AR and accordingly, recall the appeal by allowing the Miscellaneous Application of the Assessee. Registry is directed to fix the main appeal for hearing on 14/11/2022 after informing the both the parties.
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Customs
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2022 (11) TMI 1076
100% EOU - Seeking direction to Respondent to issue the SHIS (Status Holder Incentive Scrip) in accordance with the FTP (Foreign Trade Policy) - Benefit of EPCG Scheme not availed - Petitioner submitted that the impugned order passed by the Respondent without application of mind and totally in contravention of the law particularly the FTP - opportunity of hearing also not provided to petitioner - violation of principles of natural justice - HELD THAT:- Section 5 of the Act makes it clear that the power to amend the policy is always vested with the Central Government. Under Section 6 of the Act, the Central Government may by order published in the Official Gazette, direct that any power exercisable by it under this Act other than the power under Section 3,5,15,16 and 19 of the Act. Therefore Section 6 makes it clear that power to amend the policy is with Government as per Section 5 of the Act. The policy referred is formulated by the Central Government wherein Plastics sector also included to claim certain benefits. Paragraph 2.3 of the FTP 2004-09 as well as the paragraph 2.3 of the FTP 2009-14 contemplate that questions and/or doubts in respect of the interpretation of any provision of the Foreign Trade Policy would be referred to DGFT whose decision would be final and binding, in respect of such questions. Therefore, in the absence of any amendment in the Foreign Trade Policy the main point will arise whether the DGFT by Circular can rewrite the policy or amend the policy. When the policy provides for incentive for entire Plastics sector whether that can be restricted to the particular Serial Number. As per Section 5 of the FTDR Act, 1992, which makes very clear that to amend the policy is always with the Central Government. Such a power has not been granted to the DGFT as per Section 6 of the Act. Considering the powers of DGFP, it is only given power to clarify the doubts raised as to the interpretation of Policy, taking such powers he cannot amend the very Policy itself. Though much reliance has been placed to the notification issued by the DGFP was upheld by the Calcutta High Court and Kerala High Court, the case of UNION OF INDIA VERSUS E.I. DUPOINT INDIA PVT. LTD. AND ANR. [ 2020 (1) TMI 598 - DELHI HIGH COURT] is not applicable to the facts of the present case, where it was held that If the framers of the FTP intended to subject the entitlement, or the eligibility, to benefits under the SFIS, by the objective thereof, the framers ought to have expressly done so. This, having not been done by the framers of the policy, cannot be done by its interpreter. The interpreter of the law cannot be wiser than the framer thereof. Similarly, it is also submitted that the Central Government has notified Authentication (Orders and other Instruments) Rules, 2002 wherein the rule, only with regard to the authentication of orders and all other instruments made in the name of the President. Therefore, the Respondent cannot take advantage of the Authentication Rules to contend that amending the very policy itself is authenticated by the Central Government. As the product is not disputed and export is also not disputed, when the foreign policy clearly covers the Plastics, the Petitioner is certainly entitled to incentives as per policy. In such a view of the matter the impugned order is set aside. Petition allowed.
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2022 (11) TMI 1046
Levy of IGST on gods imported under EPCG Scheme - Period between 1.7.2017 to 12.7.2017 - Constitutional Validity of Section 3(7) of the Customs Tariff Act, 1975, Section 5 and Section 7(2) of the Integrated Goods and Services Tax Act, 2017 - assessment of duties and IGST made under impugned Bills of Entry - violative of Articles 14, 19, 265 and 300A being unreasonable, discriminatory, arbitrary, oppressive, excessive, premeditated and without the authority of law or not - refund of IGST - Retrospetive effect of N/N. 79/2017-Cus dated 13.10.2017. HELD THAT:- Considering all the pros and cons and after being conscious of the fact that the basic structure of GST was not to grant exemptions, the GST Council decided to grant exemption from IGST, Cess, etc., under Section 6 of the IGST Act, 2017 read with Section 25 of the Customs Act, 1962 to import of goods for exporters availing the scheme of advance authorisation/export promotion capital goods/100% export oriented units upto 31st March 2018 and to continue the existing monitoring scheme for exports. Keeping in mind the the fact that even the Government of India was conscious of the problems faced by the exporters and the fact that the exemption has continued to be extended periodically and is valid even as on date, it is apparent that it was on account of inadvertence or oversight that while amending Notification No.16/2015-Cus, dated 1st April 2015, by Notification No.26/2017-Cus, the words, figures and brackets Sub Section (7) and Sub Section (9) were not inserted and that it was always the intention of the Central Government to exempt imports of capital goods under the EPCG Scheme from payment of additional duty under Section 3 of the Customs Tariff Act. Since we have held that the amendment to Notification No.16/2015-Cus dated 1st April 2015 was clarificatory/curative in nature, consequences have to follow inasmuch as Petitioner will be entitled to refund of the IGST paid by Petitioner. The refund shall be processed and paid together with interest, if any, within four weeks of Petitioner reversing the entries of availment of the subject credit and debiting the said amount from the credit ledger. Petition disposed off.
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Corporate Laws
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2022 (11) TMI 1075
Transfer of shares before liquidation - company in liquidation was ordered to be wound up - Seeking approval to the transfer of 6600 shares of Svadeshi Mills Company Ltd (in liquidation), initially in the name of the applicant No.1 and, thereafter, further, out of those shares, 2800 shares in the joint names of applicant Nos. 2 and 3 and another lot of 2800 shares in the name of applicant No.4, purportedly under Section 536 (2) of the Companies Act, 1956. HELD THAT:- The parameters for exercise of discretion are well neigh settled. The court has absolute discretion to validate a transaction. Exercise of discretion is controlled by the principles which govern exercise of a judicious discretion in other jurisdictions. The Court must be cognizant of all the attendant circumstances and if from all the surrounding circumstances, the Court comes to the conclusion that the transaction, otherwise hit by Section 536 (2) of the Act, 1956, should not be rendered void, the Court would be justified in making a declaration that transaction is not void. If the facts of the case are appraised on the touchstone of aforesaid principles, aspect of delay in laying a claim of ownership over the subject shares can not be said to be wholly inconsequential. Such a claim was made for the first time in the year 2014 - Applicants cannot urge that the transactions were entered into being unaware of the winding up order. Evidently, the applicant No. 1 has received a substantial amount as a part consideration for transfer of shares in favour of applicant Nos. 2 to 4. Such enrichment is clearly in teeth of the prohibition contained in Section 536 (2) of the Act, 1956. The validation of which is sought, have been entered into being fully cognizant of the prohibition in law. No element of benefit to the company in liquidation is manifest, even remotely. In the circumstances, the Court cannot give its imprimatur to such transactions. In a given case, the Court may be justified in validating the transaction entered into even after the passing of the winding up order. However, in the facts of the case, such exercise of discretion would not be justifiable. Application dismissed.
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Insolvency & Bankruptcy
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2022 (11) TMI 1074
Whether the Appellant is a related party of the Corporate Debtor? - Section 5(24) of IBC - objection was raised by a Member of CoC that Appellant being related party cannot be part of the CoC. HELD THAT:- Memorandum of Understanding, which is admittedly executed between the parties on 26.11.2012, i.e., between the Appellant and the Corporate Debtor. The MoU provides AND WHEREAS the Second Party has offered to participate in development of the said project by way of bringing in funds into the said project . Under the MoU, the Second Party is Appellant before us - the clauses of the MoU clearly indicate that the MoU was nothing but a Joint Venture between the parties. Further, the only project of the Corporate Debtor is the project referred to in MoU dated 26.11.2012. The control as envisaged under Section 2(27), participation in the policy decision is also indica of control. The expression control came to be considered by the Hon ble Supreme Court in ARCELORMITTAL INDIA PRIVATE LIMITED VERSUS SATISH KUMAR GUPTA ORS. [ 2018 (10) TMI 312 - SUPREME COURT ] - the Hon ble Supreme Court in the above judgment while discussing the policy decision observed that policy decision would be that decision that would be beyond running day-to-day decisions, i.e., long term decisions. From the clauses of the MoU as noted above, it is clear that decision pertaining to pricing has to be taken with the mutual consent. Thus, there is sufficient control of the Appellant as envisaged in provisions of law. The Appellant being Joint Venture Company of the Corporate Debtor was clearly related party and no error has been committed by IRP in declaring the Appellant as related party . The present is a case, which cannot be said to be a case where IRP has suo-moto changed its decision. The IRP has corrected its earlier decision of admitting the claim of Financial Creditor by changing the category of Appellant as related Financial Creditor. What was held by this Tribunal was that RP cannot change the status of existing creditor on his own. The RP has to maintain an updated list of claims and is entitled to correct the errors, if any, in accepting or rejecting the claim. Further, it is not a case that IRP on his own has changed the category of Appellant. Rather, it was done on the objection of the Punjab National Bank, the Member of CoC, which objection was raised in the very First Meeting of the CoC held on 24.11.2021. Thus, present is not a case where IRP has reviewed its decision - there is no error in the decision of the IRP, changing the category of the Appellant from Financial Creditor to related Financial Creditor. The decision of the IRP has correctly been analysed by the Adjudicating Authority and has received its approval. Appeal dismissed.
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2022 (11) TMI 1073
Seeking review of the order passed by this Tribunal - adverse observations and remarks made against the applicant - Section 420(2) of the Companies Act, 2013 - HELD THAT:- From the provisions of Section 420(2) of the Companies Act, 2013, the Tribunal may rectify any mistake apparent from the record. However, there is no power of review under the Act. The finding of this Tribunal is on the basis of material available before this Tribunal. Further, in para 47 this Tribunal clearly held that the Applicant suppressed material facts and misguided the members of CoC to achieve the desired decision in favour of DSKL. Further, this Tribunal observed that the adverse remarks and observations made in para 54 of the order of the Adjudicating Authority dated 01.03.2021 are not baseless and further observed that for appreciating the materials on record and to decide the matter, such observations are necessary. It is reiterated that the order passed by this Tribunal dated 28.06.2021 is on the basis of material available before this Tribunal and it cannot be said that the said finding / observation against the Review Applicant is only a patent error. Therefore, the provision relied upon by the Learned Senior Counsel for the Review Applicant is not at all applicable to the facts of the present case. Further, it is made clear that this Tribunal does not have any power to review its own orders. This Tribunal comes to a resultant conclusion that the Application filed by the Review Applicant is without any jurisdiction under law - Application dismissed.
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2022 (11) TMI 1072
Valuation of Land - Liquidation proceedings - Issue attained finality - Appellant sought fresh valuation - NCLT imposed cost of Rs. 1,00,000/- Valuation under Regulation 35(2) of the Insolvency and Bankruptcy Board of India, (Regulation Process) Regulations, 2016 - HELD THAT:- The Learned Adjudicating Authority in the first round of litigation has not determined the nature of the land in question but has only decided the objections in regard to the valuation of land in question and that of the Sale of Notice, and observed that the Sale Notice was in accordance with the provisions of Regulations 35(3) (4) of the IBBI (Liquidation Process) Regulations, 2016 - This Tribunal has categorically held that there is no defect in the Valuation Report and that as per the Rules in the Sale Notice, it is mentioned that sale is on an as is where is basis and it is nowhere mentioned that the conversion fees for the land in question to Industrial Use is Rs.110Crs./- The Liquidator has brought to the Notice of this Bench that the land in question was earlier put to e-Auction during Liquidation in March 2019 with the Reserve Price of Rs.52.83Crs./- and no bid was received even at that price and that the Applicant had failed to identify any bidder despite several opportunities being given. The same was also recorded by this Tribunal in the initial round of Litigation. The contention of the Learned Sr. Counsel that the Affidavit filed by MCF before the Hon ble Supreme Court showing that the land was of Industrial Use , is not relevant at this point of time and therefore the subject land has to be revalued, is untenable as the Hon ble Supreme Court has dismissed the Civil Appeal and upheld the Order of this Tribunal, whereunder this Tribunal has held that the Appellant was not able to produce any evidence before the Liquidator that the land was of Industrial Use . It is also an admitted fact that the Appellant did not pay the External Development Charges and there is an outstanding amount due with respect to the same. This issue having attained finality in two rounds of litigation we are constrained to observe that the Appellant has filed this Appeal only to delay the proceedings, which practice is deprecated. We confirm the costs of Rs.1,00,000/- imposed by the Adjudicating Authority. Appeal dismissed.
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2022 (11) TMI 1045
Permission to operate, run and maintain the F B outlet at the resort of the respondent No. 1-UG Hotels and Resorts Limited - seeking handover of peaceful vacant possession of the resort to the Administrator/to the buyer - HELD THAT:- The averment made in para 69 of the reply affidavit filed by the Respondent No. 1 wherein the Ld. Administrator received a proposal from M/s G.R. Buildhomes Pvt. Ltd. who have offered to purchase and acquire the Shilon Bagh Resort on as-is-where-is basis for a consideration of Rs. 40 crores and have deposited with the Ld. Administrator a sum of Rs 2 crores which were kept as FDRs and the same is pending for consideration and decision by the Tribunal. The joint application was filed before the Company Law Board and consent was recorded in the order dated 02.12.2013 and Justice (Retd.) Manmohan Sarin was appointed as Administrator to the Hotel and Resorts. Liberty also given in the impugned order to approach before NCLT in case of any difficulty in the implementation of the order. Keeping in view the equities, the facts and circumstances of the case and the background of the Company Law Board order, this instant Appeal is allowed with a direction to the National Company Law Tribunal, Chandigarh Bench, Chandigarh to take up the Applications i.e. CA No. 74 of 2021 CA No. 75 of 2021 filed by the Ld. Administrator and after hearing the parties, the Tribunal may pass appropriate orders taking into consideration the subsequent developments in the matter, at an early date. Appeal disposed off.
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2022 (11) TMI 1044
CIRP - Date of default - whether the application was barred by time limitation - Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted - non-performing assets - HELD THAT:- The material on record shows that the Corporate Debtor had paid an amount of Rs.50,000/- on 13.10.2017, reaffirmed by the Corporate Debtor vide Reply dated 04.12.2017, whereunder an objection was raised to the possession Notice issued by the Financial Creditor under the SARFAESI Act. From the ratio of the Judgement in DENA BANK (NOW BANK OF BARODA) VERSUS C. SHIVAKUMAR REDDY AND ANR. [ 2021 (8) TMI 315 - SUPREME COURT ], it is clear that even an offer of One-Time Settlement made within the period of Limitation can be construed as an Acknowledgement of Debt . Any acknowledgement in the Balance Sheets, or any part payments made thereunder can be construed as an Acknowledgement under Section 18 of the Limitation Act, 1962 . The Hon ble Apex Court in a catena of Judgements has laid down that it is not the date of NPA which strictly triggers the cause of action but the date of default - In the instant case, it is to be construed that the date of default is 31.03.2016 as till then, several attempts were made to restructure the loan and fresh sanctions were also made in favour of the Corporate Debtor . At the cost of repetition, the last payment was made on 13.10.2017 and this part payment is covered under Section 18 of the Limitation Act, 1962. Thus, the Application was well within the period of Limitation. It is also relevant to note that the copy of the Financial Statements dated 2013, 2014 showing the record of default were also appended to the Application. The documents on record clearly evidence that there was a date of default and we find no illegality or infirmity in the Order of the Adjudicating Authority in admitting the Section 7 Application - however the Company is already under Liquidation as of today. Appeal dismissed.
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Service Tax
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2022 (11) TMI 1043
Exemption from Service tax - works contract service - Commercial or Industrial Construction Service - Construction of Complex Service - site formation and clearance, excavation, earth moving demolition services - construction work carried out for M/s Gujarat Energy Transmission Corporation Ltd. - construction work of laying of drainage/sewerage pipelines and related work carried out for Ahmedabad Urban Development Authority (AUDA) and Ahmedabad Municipal Corporation (AMC) under the works contract service - construction of commercial complex consisting shops at Jasdan Bus Terminus carried out for Gujarat State Road Transport Corporation Ltd. (GSRTC) - construction of residential complexes carried out for Gujarat State Police Housing Corporation Ltd. - construction work carried out for Navsari Agricultural University - work carried out for M/s Sabarmati River Front Development Corporation Ltd. - principles of natural justice. HELD THAT:- As regard the service provided to Gujarat Energy Transmission Corporation Ltd. it is found that such services are exempted from payment of service tax in terms of Notification No. 45/2010 ST dated 20.07.2010. The decisions relied upon by the Appellant in this context also support the claim of appellant, however we do not find any finding on this aspect in impugned order. Similarly from the definition of commercial or industrial construction service defined in Section 65(25b) it is found that the said definition exclude the services provided in respect of road and transport terminals. The definition of residential complex as defined in Section 65(91a) of Finance Act 1994 also does not include a complex which is intended for personal use as residence, the explanation clause of said definition also defined personal use includes permitting the complex for use as residence by another person on rent or without consideration. The Notification No. 17/2005 S.T. dated 07.06.2005 exempts Site Formation and clearance, excavation and demolition and such other similar activities carried out in the course of construction of roads, Airports, Railways, terminal, bridges, tunnels, dams, ports or other ports etc. from the levy of service tax. In respect of other services also appellant claim the service tax exemption. In support of their arguments appellant also produced work orders issued by Ahmedabad Municipal Corporation, Gujarat State Police Housing Corporation Ltd., Navsari Agricultural University, Gujarat State Road Transport Corporation and Sabarmati River Front Development Corporation Ltd. - in the impugned matter the as regard the exemptions appellant also not produced their claim properly before the adjudicating authority with supporting documents. It is seen that the Ld. Commissioner has also not examined the claim of appellant properly, therefore, we find it appropriate to remand the matter to the Commissioner to examine this issue afresh, after taking into consideration the documents/ details /contracts /agreements and judgments relied upon by the appellant in support of service tax exemption. The lower adjudicating authority has not considered all the issues in the light of the legal authorities and judicial pronouncements while deciding the issue - case remanded back to the adjudicating authority for consideration of all the issues and thereafter to pass an order afresh after giving reasonable opportunity to the appellant of being heard - appeal allowed by way of remand.
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2022 (11) TMI 1042
Levy of Service tax - service in relation to laying of pipeline - commercial and industrial construction service - inclusion of value of pipes supplied free of cost by the recipient of service in the taxable value - HELD THAT:- The appellant had taken a definite stand before the Original Adjudicating Authority that they are not required to discharge the service tax on the pipe which are supplied by the service recipient during providing of services. Since the original adjudicating authority decided the matter on limitation and dropped the quantum of demand, appellant not challenged the said finding before the Ld. Commissioner (Appeals). Non-inclusion of cost of the material received from the service receivers in the gross value of the services provided - HELD THAT:- This issue is no more res integra in view of the decision of the Larger Bench decision of the Tribunal in the case of M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] in favour of the assessee. Hence, the demand of Service Tax on this issue cannot be sustained. The Ld. Adjudicating Authority had not given any finding on these issues that whether the value of pipes supplied by the recipient of service is to be included in the value of calculation of service tax or not - the Adjudicating Authority should have examined the matter afresh in detail before passing the impugned order. He is also required to examine the claim of the appellant on limitation also. Matter remanded to the Adjudicating Authority to decide the impugned matter afresh - appeal allowed by way of remand.
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Central Excise
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2022 (11) TMI 1071
Wrongful availment of CENVAT Credit - admission of fictitious transportation by using registration number of vehicle of defunct transport firm - retraction of statements relied upon - May, 2012 to September, 2014 - contravention of provisions of Rule 3, 4 and 9 of Cenvat Credit Rules, 2004 - HELD THAT:- The plain reading of sub section (1) of section 9D of Central Excise Act makes it clear that clause (a) and (b) of the said section sets out circumstances in which a statement made and sanctioned by a person before Central Excise Officer of a gazetted rank during the course of inquiry or proceedings under the Act, shall be relevant for the purpose of proving the truth of the facts contained therein. Any findings solely based upon the statements cannot be confirmed against M/s. Mittal Pigments Pvt Ltd. unless those statements have stood the test of Section 9(D) of Central Excise Act. Apparently and admittedly Shri Amit Gupta was not examined by the Adjudicating Authority. More so, for the reason that Shri Amit Gupta was not even allowed to be cross-examined by the appellant and that Shri Sanjeev Maggu had retracted the statements which had been relied upon by the Original Adjudicating Authority - there are no infirmity in the order of Commissioner (Appeals) while denying the admissibility of these statements. The departmental investigating agencies as well as the Adjudicating Authorities have not yet started observing compliance of mandatory statutory provisions i.e. section 9D of Central Excise Act, 1944 and section 138 B of Customs Act, 1962 without which the statement recorded at the stage of inquiry / investigation will not be relevant for the purpose of proving the truth of requisite facts during prosecution. It is therefore desired that department may come with certain guidelines so that the efforts of investigating team may not be discarded for the reason of non-compliance of aforesaid provisions. Appeal of Revenue dismissed.
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2022 (11) TMI 1070
Recovery of CENVAT Credit u/r 6 of the Cenvat Credit Rules 2004 along with interest and penalty - common input services used for rendering Erection, Commissioning and Installation Services provided in Jammu and Kashmir - exempt services or not - non-maintenance of separate records - HELD THAT:- Undisputedly the appellants have used common input services for providing services in State of Jammu Kashmir and other parts of India. The proviso to sub-clause (2) of Rule 1 of Cenvat Credit Rules states that nothing contained in these rules relating to availment and utilization of credit of service tax shall apply to the State of Jammu and Kashmir . Again, as per Section 64 of the Finance Act, 1994, the Act extends to the whole of India except the State of Jammu Kashmir. Thus, there is no levy of service tax on the services provided in Jammu Kashmir. The Department has construed or rather confused the services rendered in Jammu Kashmir to be exempted services. Sub-clause (2) of Rule 6 of Cenvat Credit Rules, 2004 speaks about the situation when the service provider is rendering output services which are chargeable to tax as well as exempted services. The services rendered in Jammu Kashmir are not chargeable to service tax and therefore, are not taxable services. But this does not make them exempted services also. A service becomes an exempted service when by notification or law, the service tax payable on such service is exempted. Rule 6(2) does not apply to a situation where the service provider renders both taxable services and services which are not subject to service tax. The law is silent in this regard. The Department cannot construe the services provided to Jammu Kashmir as exempted services and press into application, in such situations, Rule 6 of Cenvat Credit Rules, 2004. In the present matter appellant already reversed the proportionate Cenvat Credit attributable to the said disputed service. Therefore, the appellant have complied with the condition prescribed under Rule 6(3)(ii) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, therefore demand @ 5% / 6%/ 7% cannot be demanded. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. The Learned Commissioner had rightly dropped the demand and granted the relief to the respondent. Hence, the Revenue has not made out any grounds before us to interfere with the impugned order. Appeal of Revenue dismissed.
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2022 (11) TMI 1069
CENVAT Credit - inputs used for repair - appellant had received back forklift trucks in terms of Rule 16 of Central Excise Rules, 2002 - processes undertaken amounted to manufacture or not - HELD THAT:- As a result of the processes undertaken, the goods as received were converted to different capacity and to different model number. They were even cleared to different customers. The adjudicating authority himself observed that the processes undertaken was incidental and ancillary to the completion of the manufactured products - Any process which is incidental or ancillary to completion of the manufactured products is to be held as the process of manufacture in terms of Section 2(f) - Same view has been held by the Tribunal in various cases - reliance can be placed in the case of M/S. NEW BHARAT FIRE PROTECTION SYSTEM PVT. LTD VERSUS COMMISSIONER OF CENTRAL EXICSE, THANE-I [ 2016 (11) TMI 1204 - CESTAT MUMBAI] and JINDAL STAINLESS STEELWAY LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [ 2016 (6) TMI 760 - CESTAT MUMBAI] . Appeal allowed.
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2022 (11) TMI 1041
Levy of penalty imposed under Rule 15(2) of the Cenvat Credit Rules, 2004 - entire amount of inadmissible credit was deposited by them along with interest prior to issuance of show cause notice - existence of malafide intent or not - HELD THAT:- Undisputedly in the present case the entire amount was paid by the appellant prior to issuance of the show cause notice as has been recorded. As per para 25.1 of the impugned order, it is observed that the assessee/appellant has deposited an amount of Rs.76,88,567/- against the confirmed demand of Rs.73,56,672/- confirmed by the impugned order. This amount was apportioned by the Commissioner in the impugned order. They have also deposited the interest of Rs.12,13,947/-. All the amounts were deposited prior to issuance of show cause notice. Appellant has already paid the credit even prior to the issuance of the show cause notice. In an issue which is just with regard to quantification of the cenvat credit reversal, no malafide intention can be attributed to the appellant - Commissioner has himself concluded that in the same situation the appellant was acting under a bonafide belief and no malafide intention could have been attributable to them for imposition of penalty under Section 11AC of the Central Excise Act. Then what the Commissioner has held in respect of these demands cannot be sustained. There are no justification in imposition of penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act - appeal allowed.
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Indian Laws
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2022 (11) TMI 1077
Dishonor of Cheque - statutory compliance of conduct of Inquiry under section 202 of IBC or not - HELD THAT:- Section 202 of the Code nowhere puts restriction on the Court of taking cognizance without holding an inquiry. The amendment to Section 202 only convey that if accused resides outside the jurisdiction of Magistrate, it is incumbent on the Magistrate to hold inquiry either himself or through Police. Thus, the restriction is on issuance of process under Section 204 and not on taking of cognizance. The Supreme Court in above referred case Suo Moto Criminal Petition (CRL.) No. 2 of 2020 [ 2021 (4) TMI 702 - SUPREME COURT] has clarified that during inquiry under Section 202 of the Code evidence of witnesses can be taken on affidavit in terms of Section 145 of the N.I. Act. Thus, there is no requirement to hold separate inquiry nor the Code provides as to in which manner the inquiry has to be conducted. The only requirement of amended Section 202 of the Code is that when the accused is residing at a place beyond the jurisdiction of the Magistrate, either he shall inquire into the case himself or direct an investigation to be made by the Police Officer - filing of affidavit under Section 145 of the N.I. Act can be treated as an evidence and therefore, perusal of affidavit along with documents amounts to holding an inquiry for the purposes to find out whether a case is made out for issuence of process. It is totally a factual aspect to see whether the Magistrate has followed the mandate of conducting inquiry. Though the reasons are required for issuance of process however at this stage it is expected to record the reasons in brief to satisfy about the sufficiency of material to proceed further. Elaborate reasoning is not necessary but order of issuance of process must reflect due application of mind. Thus, it is apparent that the Magistrate has complied the mandatory requirement of Section 202 of the Code of holding inquiry and the impugned orders reflect due application of mind therefore, the challenge raised in this petition is untenable - petition dismissed.
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2022 (11) TMI 1068
Dishonor of Cheque - insufficiency of funds - complaint was barred by time limitation or not - time limitation for second SCN when the first SCN was itself time barred - whether the Courts below erred in dismissing the complaint without exercising jurisdiction under Section 142(1)(b)? - HELD THAT:- The Trial Court instead of appreciating the facts of the complaint to ascertain as to whether sufficient cause for not making a complaint within the prescribed period has been shown by the complainant or not dismissed the complaint holding that the second legal notice cannot be considered and the complaint is barred by time when limitation is counted from the date of the first legal notice. The said reasoning has been upheld by the revisional Court as well. In the considered opinion of this Court though filing of separate application seeking condonation of delay may be desirable but is not mandatory when the complaint itself offers explanation for delay. If from pleadings raised in the complaint itself, the Court could find that there is sufficient cause shown by the complainant explaining the delay, the Trial Court ought to have exercised its jurisdiction to condone such delay. It will be apt to refer to law laid down by Apex Court in BIRENDRA PRASAD SAH VERSUS THE STATE OF BIHAR AND ORS. [ 2019 (5) TMI 1912 - SUPREME COURT ] wherein in somewhat similar circumstances, the Supreme Court held that the High Court has merely adverted to the presumption that the first notice would be deemed to have been served if it was dispatched in the ordinary course. Even if that presumption applies, we are of the view that sufficient cause was shown by the appellant for condoning the delay in instituting the complaint taking the basis of the complaint as the issuance of the first legal notice dated 31 December 2015. This Court has no hesitation in holding that even if first demand notice dated 15th of May, 2012 is taken to be the trigger point giving rise to cause of action and the complaint is held to be barred by time, the explanation given in the complaint itself constitutes sufficient cause for condoning the delay in instituting the complaint and the Courts below fell in error in dismissing the complaint. The questions framed in Para 9 ibid are thus answered accordingly. Trite it is that object underlying Section 138 of the Act is to promote and inculcate faith in the efficacy of banking system and to create an atmosphere of faith and reliance by discouraging people from dishonouring their commitments which are implicit when they pay their dues through cheques - As per settled principle of law while interpreting statutory provision the Court must adopt an approach that effectuates the object of the legislation and not the one which defeats or frustrates the same. Petition allowed.
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2022 (11) TMI 1040
Dishonor of Cheque - insufficient funds - legally enforceable debt or not - compromise entered into between parties - section 138 of NI Act - HELD THAT:- In the backdrop of aforesaid litigation, now compromise has been effected between the parties. Both the parties have agreed about payment of Rs.1 crore each in aforesaid suit bearing Nos.60, 61, 62, 63, 64, 65, 66 and 67 of 2017, along with proportionate interest amount, so as to make the total of the entire decretal amount, equal to the extent of amount of Rs.8.35 crore, lying deposited, alongwith up-to-date interest, which accrued on the basis of the amount deposited in the form of FDRs. The party of second part i.e. Atma Tubes Products Limited has no objection and has unconditionally agreed for the release/payment of said amount i.e. Rs.8.35 crore, alongwith up-to-date interest, which has accrued thereon, qua the FDRs, aforesaid, towards full and final settlement of all the claims, by way of decretal of the suits, either individually or in the consolidated form. In pursuance of the aforesaid compromise, so reached, between the parties, now a request is made to the Courts concerned, either to decide the civil summary suits bearing Nos.60, 61, 62, 63, 64, 65, 66 and 67 of 2017, individually or in a consolidated manner, as it deems appropriate, whereby, the decretal amount, in total, should be to the extent of Rs.8.35 crore, together with the up-to-date interest, on the amount of FDRs. In pursuance of release of aforesaid amount, the concerned Courts shall also dispose of all the appeals filed to challenge the judgments of conviction passed in complaints under Section 138 of the NI Act and pass appropriate orders, thereupon. The present revision petitions stand disposed of, being compromised.
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