TMI Tax Updates - e-Newsletter
November 4, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Cash sale of the agricultural produce by its cultivator to the trader for an amount less than ₹ 2 Lakh will not attract disallowance, any penalty or PAN
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Income Tax:
Denying the Maryland State Tax credit in the return of income - salary earning from USA - As Section 91 does not discriminate between state and federal taxes, and in effect provides for both these types of income taxes to be taken into account for the purpose of tax credits against Indian income tax liability.
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Income Tax:
Claim of interest paid to partners as deduction - interest on outstanding amount of remuneration - The deduction of interest paid can only be permitted if the assessee is receiving the interest income from the capital contribution made by him.
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Income Tax:
Benefit of Amnesty Scheme - Penalty levied u/s 271D and 271E - When a specified sum is so provided as the penalty, such specified sum is the minimum penalty payable. That does not, however, mean that the benefit of the Scheme can be claimed only by those assessee who have been levied penalty under the provisions of the Act providing for minimum penalty and maximum penalty. - HC
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Income Tax:
Assessee was entitled to 100% exemption or deduction u/s 10-A in respect of the interest income earned by it on the deposits made by it with the Banks in the ordinary course of its business and also interest earned by it from the staff loans - HC
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Income Tax:
Addition of penal interest paid to Sales-tax Department - the interest amount paid is towards delay in payment of tax, is compensatory in nature - Expense towards interest allowed - But penalty is not allowed as deduction.
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Income Tax:
Disallowance of commission - The assessee has submitted that due to services of the sub-agent, the supplier got contract for supply of transformer, but the assessee has not given any detail what kind of services actually helped the supplier in getting the contract - expenses not allowed.
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Income Tax:
Capital gain computation - ownership on property sold - Merely relying on the assumptions and just because the property was purchased by assessee’s husband, it does not mean that there exists some kind of foul transaction and without bringing on record any cogent material to support the AO’s contention, AO cannot presume facts
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Income Tax:
LTCG - Bonus shares - Shares acquired by way of foreign exchange fall within the definition of foreign exchange asset u/s 115 E(b) and the assessee is eligible for a concessional rate of 10% u/s 115E
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Customs:
Classification - once it has been established that the value of the Engineering, Design and Technical documents are required to be added to the assessable value of the related plant and machinery/equipment earlier imported, then each of such import will merit classification under Customs Tariff as that of the main import
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VAT:
Valuation - scope of taxable turnover - whether cost of warranty replacement is liable to be treated as "taxable turnover" or not? - dealer it is an authorized agency of "M/s MUL" and sale is being effected by manufacturing company through dealer - inclusion of value of replacements confirmed. - HC
Articles
Notifications
Customs-
53/2017 - dated
2-11-2017
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ADD
Seeks to impose definitive anti-dumping duty on the imports of " Sodium Chlorate " originating in or exported from Canada, China PR and European Union
GST - States-
Va Kar/GST/04/2017-S.O. No. 115 - dated
25-10-2017
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Jharkhand SGST
The Jharkhand Goods and Services Tax (Ninth Amendment) Rules, 2017.
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Va Kar/GST/04/2017-S.O. No. 114 - dated
24-10-2017
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Jharkhand SGST
Notifies the evidences to be produced by the supplier of deemed export supplies for claiming the refund of Transit Cargo.
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Va Kar/GST/04/2017-S.O. No. 113 - dated
24-10-2017
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Jharkhand SGST
Notification related deemed exports to Advance Authorization.
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Va Kar/GST/04/2017-S.O. No. 112 - dated
24-10-2017
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Jharkhand SGST
State Government notification S.O. No. 69 dated 26th August, 2017 published in the Jharkhand Gazette on 26th August, 2017 is hereby cancelled with effect from the date of publication
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S.O. No. 111 - 39/2017-State Tax (Rate) - dated
24-10-2017
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Jharkhand SGST
Notifies the state tax rate of 2.5 per cent on intra-State supplies of goods Food preparations put up in unit containers.
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Va Kar/GST/04/2017-S.O. No. 110 - dated
20-10-2017
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Jharkhand SGST
Amendments in the Notification No.50/2017- State Tax, dated the 29th June, 2017.
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Va Kar/GST/04/2017-S.O. No. 109 - dated
20-10-2017
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Jharkhand SGST
Extends the time limit for making a declaration, in FORM GST ITC-01.
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Va Kar/GST/04/2017-S.O. No. 108 - dated
20-10-2017
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Jharkhand SGST
Extends the time limit for furnishing the return by an Input Service Distributor FORM GSTR-6.
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Va Kar/GST/04/2017-S.O. No. 107 - dated
20-10-2017
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Jharkhand SGST
Extends the time limit for furnishing the return in FORM GSTR-5A.
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Va Kar/GST/04/2017-S.O. No. 106 - dated
20-10-2017
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Jharkhand SGST
Extends the time limit for furnishing the return by a composition supplier, Form GSTR-4.
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Va Kar/GST/04/2017-S.O. No. 105 - dated
20-10-2017
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Jharkhand SGST
Notification related to Composition Levy.
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Va Kar/GST/04/2017-S.O. No. 104 - dated
20-10-2017
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Jharkhand SGST
Notification related to authorized to be the proper officers.
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Va Kar/GST/04/2017-S.O. No. 103 - dated
20-10-2017
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Jharkhand SGST
Amendments in the Notification No. S.O- 84 dated the 5th October, 2017 - Notification related to Handloom.
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S.O. No. 102-37/2017-State Tax (Rate) - dated
20-10-2017
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Jharkhand SGST
Notifies the state tax on intra-State supplies of goods - Notification related to Motor Vehicle.
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S.O. No. 101 - 36/2017-State Tax (Rate) - dated
20-10-2017
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Jharkhand SGST
Amendments in the Notification No. 4/2017-State Tax (Rate) vide S.O No. 34/2017 dated the 29th June, 2017 - Used vehicles, seized and confiscated goods, old and used goods.
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S.O. No. 100 - 35/2017-State Tax Rate - dated
20-10-2017
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Jharkhand SGST
Amendments in the Notification No. 2/2017 vide S.O. No.32/2017-State Tax (Rate), dated the 29th June, 2017
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S.O. No. 099 - 34/2017-State Tax (Rate) - dated
20-10-2017
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Jharkhand SGST
Amendments in the Notification No. 01/2017 vide S.O No.31/2017-State Tax (Rate), dated the 29th June, 2017
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (11) TMI 212
Penalty u/s 271(1)(c) - as per AO act of claiming set off of loss against capital gains was an act of furnishing of inaccurate particulars of income - Held that:- With regard to the provisions of section 271(1)(c) of the Act, pertaining to penalty, the Hon’ble Apex Court in CIT vs. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT) has authoritatively laid down that making of a claim by the assessee which is not sustainable will not tantamount to furnishing inaccurate particulars. - Decided in favour of assessee.
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2017 (11) TMI 211
Addition on account of bogus purchases - Held that:- Hon'ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd [2013 (10) TMI 933 - GUJARAT HIGH COURT] held that when the assessee made purchases and sold the finished goods as a natural corollary not the entire amount covered under such purchases would be subject to tax but only the profit element embedded therein. Keeping in view the nature of business of the assessee and the fact that the assessee is making some local purchases without any transportation bills lorry receipts etc, the possibility of making purchases in gray market on cash cannot be ruled out. Therefore, keeping in view the net profit rate shown by the assessee at 7.41% and the totality of facts and circumstances into consideration we direct the Assessing Officer to disallow 5% of the above purchases to meet the anomalies and could cover up the leakages of Revenue. Appeal of the Revenue is partly allowed.
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2017 (11) TMI 210
Levy of penalty u/s 271(1)(c) - proof of furnishing of inaccurate particulars of income - disallowance of foreign travelling expenses - Held that:- The penalty order is woefully silent on the issue as to how this satisfaction of furnishing of inaccurate was arrived at. The quantum addition on which the penalty has been imposed pertains to disallowance out of foreign travel expenses but the Ld. CIT (A) has not examined the issue in detail but has simply confirmed the penalty by relying on the findings of the AO and the Ld. CIT (A) in the quantum proceedings. There is no finding by the authorities below on the issue as to how the ‘furnishing of inaccurate particulars’ has come to be established so as to warrant the imposition of penalty. Thus, it is apparent that the penalty has been imposed as an automatic outcome of the confirmation of the quantum addition. Considering all the impugned disallowance does not invite the provisions of Section 271(1)(c) of the Act - Decided in favour of assessee.
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2017 (11) TMI 209
Penalty u/s 271(1)(c) - transfer pricing adjustment - difference in determination of ALP - Held that:- The assessee had obtained a transfer pricing study from an outside expert and the objectivity of the same was not called into question. Therefore, lack of due diligence in determining the ALP is neither indicated nor can be inferred. In such a situation, it cannot be said that the assessee had not determined the ALP in accordance with the scheme of section 92C in good faith and with due diligence and accordingly, the conditions precedent for invoking Explanation 7 to section 271(1)(c) did not exist on the facts of the instant case. Disallowance of advances/balances written off and disallowance out of miscellaneous expenses - CIT (A) has confirmed the penalty on these additions on the ground that the assessee had accepted these additions and that the assessee did not furnish any evidence in support of the write off of advances - Held that:- In the instant case it cannot be said that the assessee had withheld any relevant information regarding miscellaneous expenses or advances/balances written off. The assessee has duly disclosed these amounts in its profit/loss account and has also submitted details thereof during the assessment proceedings. The only reason the penalty was imposed was that the lower authorities did not accept the explanation of the assessee and imposed penalty for concealment of income. Thus, the bona fides of the assesssee cannot be doubted in such circumstances. With regard to the provisions of section 271(1)(c ) of the Act pertaining to penalty, the Hon’ble Apex Court has authoritatively laid down that making of a claim by the assessee which is not sustainable will not tantamount to furnishing inaccurate particulars in CIT vs. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) Assessee appeal allowed.
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2017 (11) TMI 208
Addition u/s 2(24)(x) r.w.s. Section 36(1)(va) on account of delayed deposit of employees PF - Held that:- The issue is squarely covered in favour of assessee and against the Revenue by the jurisdictional High Court in the case of M/s Vijay Shree Limited (2011 (9) TMI 30 - CALCUTTA HIGH COURT) wherein held deletion of the amount paid by the Employees’ contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. As the issue is already covered, hence, we dismissed Revenue’s ground of appeal. Addition on account of diversion of interest bearing loan to non-income generating activity - Held that:- DR has not brought on record any change in the facts of the present case with that of the earlier year pertaining to AY 2010-11 where the issue was decided in favour of assessee by the Hon’ble Tribunal in its own case. Indeed, the own capital of assessee is exceeding the amount of impugned investment. - Decided against revenue Addition u/s 14A r.w.s Rule 8D - Held that:- We find that there was no dividend income earned by assessee in the year under consideration. Therefore, the question of making disallowance u/s. 14A of the Act does not arise. Disallowance on account of commission expense - Held that:- As the assessee failed to bring any evidence to justifying the payment of commission expense. Therefore we are not inclined to interfere in the order of Ld. CIT(A). We uphold the same. Hence, this ground of assessee’s CO is dismissed. Disallowance on account of service charge - Held that:- No documentary evidence furnished by assessee to justify the business connection for payment of such expenses.Hence, this ground of assessee’s CO is dismissed.
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2017 (11) TMI 207
Denying the Maryland State Tax credit in the return of income - salary earning from USA - denial of claim in absence of any revised return of income filed - whether such taxes are not covered within Article 2 of the Double Taxation Avoidance Agreement entered into between India and USA - whether state taxes on income paid by the assessee in the USA are eligible for tax credit? - Held that:- Merely because a judicial precedent is challenged in further appeal, the precedence value of such a judicial precedent does not get diluted. The stand of the CIT(A), in conscious disregard of a binding judicial precedent, cannot but be condemned. The Co-ordinate Bench of this Tribunal in the case of Tata Sons Ltd vs. DCIT [2011 (2) TMI 1528 - ITAT MUMBAI], speaking through one of us, i.e. AM, has decided the issue in favour of the tax payer. - As Section 91 does not discriminate between state and federal taxes, and in effect provides for both these types of income taxes to be taken into account for the purpose of tax credits against Indian income tax liability, the assessee is, in principle, entitled to tax credits in respect of the same - Decided in favour of assessee for statistical purposes.
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2017 (11) TMI 206
Treating the Long Term Capital Gains (LTCG) as unexplained cash credit u/s 68 - Held that:- In Shyam R. Pawar (2014 (12) TMI 977 - BOMBAY HIGH COURT), it has been held by the Hon’ble Bombay High Court that where DMAT account and contract note showed details of share transaction, and Assessing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income u/s 68. In the case of Arun Kumar Agarwal (HUF) (2012 (8) TMI 398 - JHARKHAND HIGH COURT), the Hon’ble Jharkhand High Court has held that where assessee’s broker share transaction was bone fide in all respect, merely because share broker was tainted violating SEBI regulations, would not make assessee’s share transactions bogus. Also see M/s Indravadan Jain HUF [2016 (7) TMI 16 - ITAT MUMBAI] - Decided in favour of assessee.
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2017 (11) TMI 205
Deduction under Section 10-A - eligibility to interest income earned - income not as a direct result of export - nature of investment of surplus - interest on staff loans - Held that:- Assessee was entitled to 100% exemption or deduction under Section 10-A of the Act in respect of the interest income earned by it on the deposits made by it with the Banks in the ordinary course of its business and also interest earned by it from the staff loans and such interest income would not be taxable as Income from other Sources under Section 56 of the Act. The incidental activity of parking of Surplus Funds with the Banks or advancing of staff loans by such special category of assessees covered under Section 10-A or 10-B of the Act is integral part of their export business activity and a business decision taken in view of the commercial expediency and the interest income earned incidentally cannot be de-linked from its profits and gains derived by the Undertaking engaged in the export of Articles as envisaged under Section 10-A or Section 10-B of the Act and cannot be taxed separately under Section 56 of the Act. We therefore affirm and agree with the view expressed by the first Division Bench of this Court in the case of M/s. Motorola India Electronics (P) Ltd.(2014 (1) TMI 1235 - KARNATAKA HIGH COURT ) - Decided in favour of assessee.
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2017 (11) TMI 204
Bogus purchases - Held that:- As considered the rival submissions and perused the material on record. In our view, the addition u/s 68 cannot be made so far as these liabilities are concerned. Section 68 reads as under:- Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory the sum so credited may be charged to income-tax as the income of the assessee of that previous year. Tribunal is justified in upholding the order of CIT(A) in deleting the addition.
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2017 (11) TMI 203
TDS u/s 194C OR 194I - payment for for hiring of buses - Held that:- We are in respectful agreement of the decision of this Court in Commissioner Of Income Tax (TDS) Versus UPSRTC [2014 (8) TMI 462 - ALLAHABAD HIGH COURT] and therefore held that the provision of Section 194(C) would apply.
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2017 (11) TMI 202
Penalty levied under Sections 271D and 271E - whether as the Sections do not specify any minimum penalty or maximum penalty, the cases of the assessees are outside the Amnesty Scheme mentioned? - Held that:- A reading of Section 271D shows that a person who is liable to pay penalty thereunder shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted, in contravention of Section 269SS. Similarly, under Section 271E also, the penalty provided is a sum equal to the amount of loan or deposit or specified advance, if so repaid. When a specified sum is so provided as the penalty, such specified sum is the minimum penalty payable. That does not, however, mean that the benefit of the Scheme can be claimed only by those assessee who have been levied penalty under the provisions of the Act providing for minimum penalty and maximum penalty.
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2017 (11) TMI 201
Reference to DVO - cost of construction referred to the District Valuation Officer for estimation without first rejecting the books of accounts maintained by the respondent-assessee - Held that:- The question of whether cost of construction can be referred to the District Valuation Officer for estimation without first rejecting the books of accounts maintained by the respondent-assessee has been answered in favour of the assessee by the Supreme Court in Sargam Cinema vs. Commissioner of Income Tax (2009 (10) TMI 569 - Supreme Court of India ). In the present case, a categorical finding is recorded by the Tribunal that the books were never rejected. In the circumstances, reliance placed on the report of the DVO was misconceived. - Decided in favour of assessee.
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2017 (11) TMI 200
Withhold tax under section 195 - payments made by it to Steria France for management services fee and consequently deleting the disallowance made by Ld. AO under section 40(a)(i) - whether if a particular item is not part of 'Export Turnover' when it cannot constitute a part of 'Total Turnover' as well? - Held that:- As far as questions A and B are concerned, they stand answered against the Revenue and in favour of the Assessee by the decision of this Court in Principal Commissioner of Income Tax-8 v. Steria India Ltd.(2017 (11) TMI 174 - DELHI HIGH COURT) in the Assessee’s own case for the AY 2011-12.
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2017 (11) TMI 199
Addition u/s.68 - Held that:- As the assessee was able to explain the deposit in the bank account, also as the authorities below failed to bring on record any evidence contrary to the fact that the cash was not available with the assessee, we are of the view that the explanation of the assessee was plausible and therefore the assessee was able to explain the source of cash deposit. Claim of interest paid to partners as deduction - interest on outstanding amount of remuneration - Held that:- The terms and condition of the partnership deed in the present case were the guiding factors for determining whether the deduction claimed u/s.36 were relatable to the remuneration received by the partner of a firm from such firm. In our considered opinion, if the relevant clauses of the partnership deed provides for payment of remuneration which is independent and separable from the capital contribution made by the partners in the firm and the partnership deed provides for the payment of interest on such contribution, in that eventuality the deduction u/s.36 against the remuneration received by the partners cannot be permitted. The deduction of interest paid can only be permitted if the assessee is receiving the interest income from the capital contribution made by him. In view thereof, we find that the ground raised by the assessee for allowing the deduction is without any merit. Accordingly, we dismiss this ground.
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2017 (11) TMI 198
Validity of reopening of assessment - proceeding initiated without proper assumption of jurisdiction u/s. 147, on the premise of (i) non-service of notice u/s. 148, 143(2) and 142(1); (i) recording of invalid reasons; (iii) failure to record requisite satisfaction; (iv) issuance of proceedings without obtaining requisite approval; and (v) issuance of proceedings beyond the period of limitation - Held that:- Though there is no material before us to ascertain whether such notices were issued and served, but it is discernible from the record that the assessee was cooperating with the department in response to notice u/s. 148. The assessee has also replied in response to this notice that the return originally filed be deemed to be filed in response to notice u/s. 148. The assessee has filed various replies before the Assessing Officer in the re-assessment proceedings. Moreover, the factum of non-service of notice u/s. 143(2) nowhere finds place in the objections filed by the assessee before the Assessing Officer. Therefore, in view of the provisions of section 292BB of the IT Act, the assessee stands precluded to object the service of any notice in order to vitiate the re-assessment proceedings. Accordingly, this contention made by the assessee deserves to fail. The remaining issues regarding non-satisfaction of the conditions envisaged u/s. 147 to 151 and the notice being beyond the period of limitation, too have been decided by the first appellate authority with categorical observation that “case of the assessee was reopened by the AO u/s. 148 of the IT Act, 1961 after duly recording of the reasons. Notice u/s. 148 was issued and duly served upon the assessee on 23.03.2012 in response to which AR of the assessee company appeared before the AO from time to time. Since the notice u/s. 148 was issued on 23.03.2012 within four years from the end of the relevant A.Y. 2007-08, therefore, the notice being within the prescribed time limit the contention of the appellant that notice was barred by limitation is without any merit. No contrary material is laid on record on behalf of the assessee to discard the above findings of the ld. CIT(A). We, therefore, find no justification to interfere with the decision reached by first appellate authority on this count. Accordingly, the legal ground raised before us deserves to be dismissed sans merit and we hold that the objection on validity of proceedings u/s. 147/148 initiated by Assessing Officer, is not sustainable on these counts. Addition on account of interest on disputed arbitration awards not declared as income by assessee during the year - Held that:- Out of three cases, the award in the case of NDCC, Ph-II, NDMC, New Delhi was made in favour of the assessee on 27.01.2007 which has been further challenged by NDMC and rest two awards were received on 17.07.2007 and 06.06.2007 which has been considered as interest income received by the assessee in F.Y. 2007-08. The case laws relied by the assessee are, therefore, applicable in the instant case. The assessee has correctly recorded such receipts as income in his books of account in the subsequent year, but the assessee did not bring any evidence to prove whether it has been offered for tax or not during the subsequent year. Therefore, this aspect needs verification at the stage of Assessing Officer. Therefore, the matter is remanded to the AO to verify the same and act in the light of observations given in the body of this order above. Therefore, this ground of appeal is allowed for statistical purposes Disallowance on account of foreign exchange fluctuation loss claimed by assessee - Held that:- AS 11 enjoins reporting of monetary items denominated in foreign currency using the closing rate at the end of the accounting year. It also requires that any difference, loss or gain, arising from such conversion of the liability at the closing rate should be recognized in the profit and loss account for the reporting period. Similarly, CBDT notification on Income Computation and Disclosure Standards also, inter alia, deals with recognition of exchange differences. The notification also sets out that the exchange difference arising on foreign currency transactions have to be recognized as income or business expenses in the period in which they arise subject to exception as set out in Section 43A of the Act or Rule 115 of the Income-tax Rules, 1962, as the case may be. In view of the various provisions of the Companies Act and the IT Act, it was mandatory to draw accounts as per AS-11. Thus, the loss recognized on account of foreign exchange fluctuation as per notified AS 11 is an accrued and subsisting liability and not merely a contingent or a hypothetical liability. We accordingly observe that the AO is not justified to disallow the foreign exchange fluctuation loss in the instant case. As a result, the appeal of the assessee deserves to be partly allowed.
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2017 (11) TMI 197
Assessment u/s 153A - Addition on account of foreign travel u/s 69C - Held that:- The assessment framed under section 153A, in absence of any incriminating material found during the course of search, is bad in law and cannot be sustained. - Decided in favour of assessee.
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2017 (11) TMI 196
Penalty u/s 271(1)(c) - N.P. determination - Held that:- AO, in the penalty order, has observed that the assessee had concealed the income and has furnished inaccurate particulars. However, the penalty order is woefully silent on the issue as to how this satisfaction of concealment/furnishing of inaccurate particulars was arrived at. The penalty was imposed on the quantum addition which was estimated by applying the net profit rate of 5% as against the net profit rate of 3.65% declared by the assessee. Thus, the addition was, at best, an estimate of the profit by the AO which the assessee would have earned. Therefore, the quantification of the alleged concealment/inaccurate particulars is only an estimate and it is settled law that penalty is not attracted on estimated additions. The Hon'ble Delhi High Court in CIT vs. Aero Traders Pvt. Ltd., (2010 (1) TMI 32 - DELHI HIGH COURT ), has held that no penalty u/s 271(1)(c) can be imposed when income is determined on estimate basis. Thus it is apparent that when the bedrock of instant penalty is the estimate of net profit, the same cannot be sustained. Accordingly, we set aside the order of the Ld. CIT (Appeals) and direct the AO to delete the penalty. - Decided in favour of assessee.
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2017 (11) TMI 195
Disallowance of Foreign Exchange Fluctuation loss as speculation loss u/s 43(5) - Held that:- In the assessee’s case, the assessee is an exporter of granite and because of the assessee’s business of export of granite, the assessee could enter into contract with the ICICI Bank for hedging the cross currency transactions to insulate the revenue and to mitigate the loss. The Reserve Bank of India vide circular 22/2007-08 dated 02.07.2007 permitted a person, resident of India to enter into foreign contract with an authorized dealer to hedge an export to exchange risk in respect of transactions for which sale and purchase of foreign exchange is permitted under the Act. It means, authorized dealer can hedge the business receivables so as to enable the parties to avoid exchange value differences. The authorized dealer i.e. bank can do this only for hedging not for speculation. The Reserve Bank of India in July 2006 had issued a master circular consolidating all notifications, guidelines and circulars on the forward and derivative contracts in foreign exchange. In the decision relied by the assessee in the case of London Star Diamond company Ltd. (2013 (11) TMI 424 - ITAT MUMBAI), the Coordinate Bench held that hedging need not be 1 : 1 basis. The coordinate bench of ITAT, Visakhapatnam in the case of Assistant Commissioner of Income-tax, Circle-1, Rajahmundry .v.Sri Ramalingeswara Rice & Oil Mill [2016 (10) TMI 924 - ITAT VISAKHAPATNAM] held that held that no disallowance of loss under forward contract just because assessee had Nil export turnover due to ban on export. In the instant case the assesshad made export turnover of ₹ 40.00 crores and the AO had not made out a case that the total turnover from the derivative transactions was more than the export turnover. Therefore, we hold that the assessee’s case is squarely covered by the case laws relied upon by the assessee and the decision of the London Star Diamond Co. Ltd. (supra) and the decision of this tribunal cited. Hence, the transactions entered by the assessee cannot be held as speculation loss and required to be allowed as business loss. Accordingly, we uphold the order of the Ld.CIT(A) on this issue and allow the appeal of the assessee. Year of allowability - crytalisation of loss - Held that:- As on 31.03.2009, there was an amount of ₹ 18,53,21,184/- under the Master Agreement due and payable to the bank inclusive of interest. The said amount was disputed by the assessee by filing O.S. in the City Civil Court, Hyderabad and the ICICI Bank has filed O.A.No.3181/2009 before Debts Recovery Tribunal-III, Mumbai. Since the liability is in dispute and the same was not crystalised and the assessee did not claim the deduction. Both the assessee and the bank reached an agreement for full and final settlement of ₹ 9,10,00,000/- This is evidenced by a letter of ICICI Bank dated 30.12.2009 relevant to the assessment year 2010-11. Therefore, the loss was crystallized in the year under consideration though incurred in the earlier year, due to pending litigation. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld.
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2017 (11) TMI 193
Treatment to speculation profit as unexplained cash credit under section 68 - Held that:- There was no enquiry made by the Assessing Officer in the said case directly with the concerned Stock Exchange which clearly revealed that the relevant transactions were not done through the Stock Exchange as claimed by the assessee on the basis of Contract Notes issued by the broker. In the present case, such enquiry was made by the Assessing Officer, which clearly revealed that not only the assessee but even the concerned broker was never active on the Stock Exchange. It also revealed that the said broker was indulging in issuing fraudulent Contract Notes which resulted into his expulsion from the membership of the Exchange from 15th May, 2013. As find myself in agreement with the CIT(Appeals) that the genuineness of the assessee’s claim of having earned the speculation profit of ₹ 3,00,905/- was not established and the Assessing Officer, therefore, was fully justified in treating the said amount as unexplained cash credit under section 68 chargeable to tax at the flat rate of 30%. Therefore, uphold the impugned order of the ld. CIT(Appeals) on this issue and dismiss Ground No. 1 of the assessee’s appeal. Claim for short-term capital loss - Held that:- As observed that the shares were purchased by the assessee at ₹ 10/- per share on 01.11.2012 and there is nothing brought on record by the Assessing Officer to show that the fair market value of the said shares as on the date of purchase by the assessee was different from the purchase price shown by the assessee. As regards the allegation of the Assessing Officer that there was no monetary involvement in the transactions in question, the assessee has placed on record the copies of current accounts of the concerned family members as appearing in the books of account of the assessee at page nos. 27 & 28 of his paper book to show that there were substantial monetary transactions between the parties against which the value of share transactions in question was adjusted. Having regard to all these facts of the case, I am of the view that the action of the Assessing Officer in disallowing the short-term capital as claimed by the assessee by doubting the genuineness of the relevant share transaction was not well founded and the ld. CIT(Appeals) was not justified in upholding the said action of the Assessing Officer. Therefore, set aside the impugned order of the ld. CIT(Appeals) on this issue and direct the Assessing Officer to allow the claim of the assessee for short-term capital loss of ₹ 1,00,000/-. Ground No. 2 of the assessee’s appeal is accordingly allowed.
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2017 (11) TMI 192
Addition made u/s. 69C - bogus purchases - Held that:- Only in respect of the two parties namely M/s. Disha Transport Co. and M/s. D.K. Enterprises it is the finding of the Ld.CIT(A) that assessee could not furnish any iota of evidence to show that the purchases made from the parties are genuine, no confirmations, copies of income tax returns, no purchase invoices etc., have been furnished. Therefore, he sustained the disallowance in respect of these two concerns. The action of the Ld.CIT(A) in sustaining the disallowance of purchases from these two parties is upheld. No inference is called for in so far as the decision taken by the Ld.CIT(A) that the purchases cannot be treated as bogus/non-genuine, in respect of the parties/suppliers namely M/s. Siddhi Enterprises, M/s Devchaya Trading Co. and M/s. D.C. Corporation as the assessee produced confirmations from these parties Income Tax returns, VAT returns etc., and the Ld.CIT(A) considering the submissions taking note of the fact that the assessee’s name is not appearing in the list of beneficiaries to whom the parties have provided accommodation entries as deposed in the statements - Decided partly in favour of revenue
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2017 (11) TMI 191
TDS u/s 194C OR 194J - nature of technical services - short deduction of tds - levy of tax u/s. 201(1) and levy of interest u/s. 201(1A) - Held that:- Whether the tax is to be deducted u/s. 194C or 194J, it does not matter, so long as the demand u/s. 201(1) cannot be raised as per the provisions of the Act, on the fact that deductees have paid taxes thereon on the incomes. CIT(A) has considered that assessee has correctly deducted tax u/s. 194C and the issue of demand u/s. 201(1) was considered as an alternative plea. However, we noticed that certain amounts are to be considered u/s. 194J. Therefore, this issue of considering the amounts u/s. 194C or 194J of various services rendered is to be restored to the file of AO for verification afresh keeping in mind the services rendered, the principles of law involved and the facts of the case. In case assessee satisfies that the deductees have paid taxes, the proviso to Section 201(1) may apply and no further demand u/s. 201(1) can be raised. The so called Chartered Accountant’s certificate, filed before the CIT(A) can also be examined, keeping in mind the observations of the CIT(A) in the alternate, plea discussed in para 12 of the order of the CIT(A). Therefore, AO is directed to examine about the nature of services and which of the services are coming u/s. 194J, then examine whether a demand u/s. 201(1) can be raised in AYs. 2013-14 and 2015-16. If assessee satisfies that the deductees have paid taxes thereon on the incomes, no demand u/s. 201(1) can be raised. We are of the opinion that to the extent of levy of interest u/s. 201(1A) is concerned, the issue is to be examined whether any of these services are required to be considered u/s. 194J. In case any of the services are considered to be covered u/s. 194J, then AO is statutorily required to levy interest u/s. 201(1A) even though no demand is raised u/s. 201(1). This requires a separate consideration by the AO. The issue of levy of interest u/s. 201(1A) for the duration of interregnum period i.e., from the date of payment on which TDS was to be made and to the dates payment of tax by the deductees is required to be levied after due examination of the facts. AO is directed to examine the facts and consider the principles of law before levying interest u/s. 201(1A). Assessee should be given due opportunity before deciding the issue. Assessee is also directed to furnish necessary details to examine the services which may be covered u/s. 194C/194J. With these observations, the issues in these appeals are restored to the file of AO, for which purpose the orders of the CIT(A) and AO which were originally passed are hereby set aside with a direction to reexamine the issue as stated above.
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2017 (11) TMI 190
Eligibility to benefit of rate concession u/s 115E - Tax on investment income and long-term capital gains - bonus shares treatment as foreign exchange assets - Held that:- The bonus shares acquire the nature of the original shares, though the cost of acquisition shall be “nil” u/s 55(2)(aa) of the I.T. Act. The clause (iii)(a) thereunder which has been inserted by the Finance Act of 1995 to clarify that where the bonus shares have been allotted, the cost of acquisition can be taken at Rs. Nil. From the computation of income of the assessee, it is seen that the assessee has not claimed any cost of acquisition while computing the long term capital gain from sale of bonus shares. Therefore, in our opinion, the bonus shares are also foreign exchange assets u/s 115E of the I.T. Act. Coming to the second category of shares i.e. the original and the bonus shares transferred to the assessee by the overseas investors without any cost attached to them, we find that the original shares were initially purchased or acquired by the overseas investors by way of inward remittances of foreign exchange and they were also allotted the bonus shares on the original shares. As held by us in the above paragraphs, the bonus shares acquire the character of the original shares acquired by the overseas investors. Coming to their transfer to the assessee, the AO has accepted the assets as long term capital assets by taking into consideration the period of holding of the overseas investors also. Having done so, it is not open to the AO to treat the said asset as acquired without any cost by the assessee. Since the assessee has received the asset without any cost, it has to be treated as a gift and the cost of acquisition of the previous owner has to be treated as a cost of acquisition to the assessee. In view of the same, the original shares acquired by the assessee from the overseas investors are also foreign exchange assets u/s 115E of the Act and the cost of acquisition of the earlier owners has to be allowed as cost of acquisition of the assessee while computing the long term capital gain. Thus the shares sold by the assessee have been treated as long term capital assets and being the assets acquired by way of foreign exchange fall within the definition of foreign exchange asset u/s 115 E(b) of the Act and the assessee is eligible for a concessional rate of 10% u/s 115E of the Act. - Decided in favour of assessee.
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2017 (11) TMI 189
Capital gain computation - ownership on property sold - assessee has entered into sale-cum-GPA with Mr. Kistaiah and others and agreed for a consideration - Held that:- The assessee has entered into sale-cum-GPA with Mr. Kistaiah and others and agreed for a consideration of ₹ 47 lakh and received 46 lakhs. With regard to balance of ₹ 1 lakh, there is no evidence of any receipt nor there is any sale deed to complete the transaction as per the above agreement. Since, the assessee has received major portion of sale consideration and as per the various clauses of the agreement, the GPA holders will govern the property and receive the rent. It shows that the administration of the property was already passed on to the GPA holders. Accordingly, the assessee has no control over the property. The vendors are Mr. Kistaiah and others by virtue of deed 1764 of 2007, dtd. 28/09/2007 and the deed is still alive, not revoked. It clearly indicates that the claimants are GPA holders and not the assessee nor they represented the assessee. What is relevant is the physical evidence available on record not the assumptions or presumptions of the AO. Further, the assessee’s husband took loan from Repco Bank and the same was paid directly to the vendors account and whatever remaining balance was also settled to them. AO has not brought on record anything contrary that the assessee has indirectly benefitted in this transaction or the sale consideration was redirected to the assessee or husband of the assessee. Merely relying on the assumptions and just because the property was purchased by assessee’s husband, it does not mean that there exists some kind of foul transaction and without bringing on record any cogent material to support the AO’s contention, AO cannot presume facts. - Decided against revenue
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2017 (11) TMI 188
Penalty u/s 271(1)(b) - failure of the assessee’s counsel to attend the assessment proceedings - reasonable cause - Held that:- Referring to the submission that assessment proceedings before the AO were earlier being taken care of by the tax counsel, who, however, stopped attending the proceedings without intimating the assessee as differences had developed between the assessee and the counsel. An affidavit to this effect has also been placed on record which has not been contested by the Ld. Senior Departmental Representative. It is our considered opinion that the failure of the assessee’s counsel to attend the assessment proceedings without informing the assessee was a reasonable cause which would fall within the exception as provided in section 273B and, therefore, under the circumstances the penalty imposed under section 271(1)(b) deserves to be deleted. Accordingly, we set aside the order of the Ld. CIT (Appeals) and direct the AO to delete the penalty imposed under section 271(1)(b) - Decided in favour of assessee.
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2017 (11) TMI 187
Disallowance of commission paid to sub-agent - ingenuity of expenditure - CIT-(A) has concluded that the assessee has discharged its onus to establish the fact of rendering services by the sub-agent - Held that:- CIT-(A) has committed error in appreciating the facts of the case. One of the important requirement to examine, whether the expenses were incurred wholly and exclusively for the purpose of business, it was required for the assessee to furnish necessary documentary evidence in support of services rendered by the sub-agent. The documents submitted by the assessee are merely in the nature of paperwork. No documentary evidence supporting the expertise of the sub-agent in bidding process was filed either before the lower authorities or before us. The assessee has not furnished any confirmation either from the principal company M/s Hyosung Corporation, Korea or from M/s PCGIL that the sub-agent provided the services of coordination and follow-up in the process of bidding of tenders for contracts. The assessee has merely submitted that coordination and follow-up services only required use of telephone or email or personal interaction, but it has not provided any documentary evidence before us, which could establish that the sub-agent followed with M/s ‘PCGIL’. The assessee has submitted that due to services of the sub-agent, the supplier got contract for supply of transformer, but the assessee has not given any detail what kind of services actually helped the supplier in getting the contract. In our opinion, the Ld. CIT-(A) is not correct in concluding that the assessee established the fact of rendering services by the subagent. - Decided against assessee.
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2017 (11) TMI 186
Addition of penal interest paid to Sales-tax Department - Held that:- On perusal of the clause 30(1) above, it is evident that amount paid is toward interest at the rate of 1% per month, for the period from the tax payable has become due to the date of payment or to the date of order of assessment whichever is earlier. Thus, the interest amount paid is towards delay in payment of tax, is compensatory in nature. Penalty of ₹ 5,000/- for the default under section 30(4)(d) of the Jharkhand VAT Act, 2005, has already been upheld by us as not in the nature of compensatory. Accordingly, the amount of ₹ 16,46,444.96 being compensatory in the nature, is allowable in terms of the decision of the Hon’ble Supreme Court in the case of Swadeshi Cotton Mills Ltd. Vs.CIT (1997 (5) TMI 5 - SUPREME Court). In view of above discussion, we summarise that out of amount of ₹ 86,72,759.42, amount of ₹ 70,26,314.46 is directed to be disallowed and amount of ₹ 16,46,444.96 is directed to be allowed. The ground of the appeal of the assessee is accordingly partly allowed. Disallowance of interest on account of interest expenses being of capital nature - Held that:- The interest earned on money received from share capital was temporarily placed in fixed deposits, which has been held as interest in the nature of capital receipt liable to be set off against preoperative expenses. In the instant case also identical issue of netting off of interest income earned on borrowed money deposited in banks, against the interest expenditure during construction is involved, thus, respectfully following the decision of the Tribunal in the case of Bokaro Power Supply Company Pvt. Ltd. (2015 (1) TMI 45 - ITAT DELHI) we uphold the finding of the learned CIT-(A) on the issue in dispute and accordingly, the ground No.1 of appeal of the Revenue is dismissed.
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2017 (11) TMI 185
Penalty u/s 271C - non deduction of tax/ short deduction of tax on account of bank guarantee commission to various banks u/s 194H - Held that:- Hon Delhi High court in JDS apparel (P) ltd (2014 (11) TMI 732 - DELHI HIGH COURT ) has also held that bank is not acting as an agent of the assessee. The provision of section 273B of the Act provides that penalty u/s 271C of the Act cannot be levied if the assessee shows reasonable cause for the failure referred to in that provision. In the present case non-deduction tax at source on bank guarantee commission is supported by many decisions of the coordinate benches as well as the notification issued by the CBDT. Therefore, even if assuming that there is a default of non-deduction of tax at source it cannot be said that it is without a reasonable cause. As held in case of CIT Vs. Bank of Nova Scotia [2016 (1) TMI 583 - SUPREME COURT] in confirming the decision of a coordinate bench, where Hon'ble Delhi High Court rejected appeal of the revenue , that for the purpose of levy of penalty it is necessary to establish that there was contumacious conduct on the part of the assessee. The coordinate bench also followed several decisions of the Hon'ble Delhi High Court for deleting the penalty u/s 271C of the Act. There was no such contumacious conduct shown by the revenue in the present appeals. Thus deleting the penalty levied u/s 271C confirmed - Decided in favour of assessee.
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2017 (11) TMI 184
Bogus purchases - G.P. determination - assessee before us submitted that he is into 100% exports of trading of cut and polish diamonds - The Task Group for Diamond Sector submitted to Department of Commerce also suggests that the profit margin in trading of goods is in the range of 1% to 3% - Held that:- In the circumstance we direct the Assessing Officer to estimate the profit element from the purchases treated as non-genuine at the rate of 2% uniformly for all the Assessment Years 2007-08, 2008-09, 2010-11, 2011-12 and 2013-14. The grounds raised by the Revenue for the Assessment Years 2007-08, 2008-09 and 2011-12 and the grounds raised by the assessee for the Assessment Years 2008-09, 2010-11, 2011-12 and 2013-14 on this issue are dismissed and ground raised by the assessee on this issue for the Assessment Year 2007-08 is partly allowed. Disallowance made u/s. section 14A r.w. Rule 8D - Held that:- We direct the Assessing Officer to restrict the disallowance u/s. 14A r.w. Rule 8D to the extent of dividend income of ₹.38,380/- and ₹.11,180/- received for the Assessment Year 2008-09 and 2013-14 respectively and compute the income accordingly.
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2017 (11) TMI 183
Addition of bogus purchases - estimating of profit - Held that:- Hon'ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd [2013 (10) TMI 933 - GUJARAT HIGH COURT] held that when the assessee made purchases and sold the finished goods as a natural corollary not the entire amount covered under such purchases would be subject to tax but only the profit element embedded therein. Similar view has been taken by the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Seth (2013 (10) TMI 1028 - GUJARAT HIGH COURT). Simply because the parties were not produced the entire purchases cannot be added as held by the Bombay High Court in the case of CIT v. Nikunj Eximp [2013 (1) TMI 88 - BOMBAY HIGH COURT]. Thus, following the above decision of the Hon'ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd (supra), We direct the Assessing Officer to restrict the disallowance to 12.5% of the purchases treated as non-genuine by estimating profit element in such bogus purchases.
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2017 (11) TMI 182
TPA - selection of comparable - Held that:- The assessee Exxon Mobile Co. India Pvt. Ltd., (in short EMCIPL) is a company of Exxon Mobile Corp. Group of US and is responsible for information dissemination, maintaining customer relationship and market development for it’s A.E. Exxon Mobile Chemical Co. USA (in short EMC). It is also providing application research and technical services to associated enterprises and in addition provides back office support services to the A.E., thus comparables functionally dissimilar with that of assessee need to be deselected from final list.
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2017 (11) TMI 181
Income from hedging transaction of Menthol Oil - whether be treated as a business income for the purpose of section 80IB or not? - Held that:- This year it appears that the assessee incurred loss from hedging contracts in Menthol Oil and the Assessing Officer treated such loss as speculation loss following the stand taken in earlier years that the income from hedging contracts is the income from speculation business. In assessee’s own case the Coordinate Bench in earlier years held that income from hedging contracts is a business income thus respectfully following the said decision we uphold the order of the Ld.CIT(A) in holding that he hedging loss is the business loss in the case of the assessee not a speculation loss. Grounds raised by the Revenue on this issue are dismissed. Disallowance of expenses of Daman Unit - AO disallowed the expenses on the ground that the manufacturing activities of Daman Unit were closed in Financial year 2005-06 and there was complete stoppage of activity - Held that:- This issue came up before the Tribunal for the Assessment Year 2009-10 in assessee’s own case wherein allowed the claim of the assessee holding that, expenses are incurred in the normal maintenance of business which have to be incurred inspite of closer of operations of the unit. We direct the Assessing Officer to allow the said expenditure as deduction in computing the income of the assessee. This ground of appeal is allowed. Disallowance u/s. 14A r.w. Rule 8D(2)(iii) - Held that:- Taking the totality of facts and circumstances into consideration, we direct the Assessing Officer to restrict the disallowance under Rule 8D(2)(iii) to 5% of the dividend income earned by the assessee. In the result the ground raised by the assessee is partly allowed.
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2017 (11) TMI 180
Bogus purchases - estimating extra G.P. on bogus purchases - Held that:- No opportunity to cross examination was provided by the lower authorities inspite of asking by assessee. As the facts and circumstances in the instant case are parametria to the decision of Tribunal in case of Tristar Jewellery Exports Pvt. Ltd., (2015 (12) TMI 1366 - ITAT MUMBAI ), we do not find any merit for upholding addition of 3% G.P. on such purchases. It is also pertinent to mention here that entire profit of the assessee was eligible for exemption u/s. 10A in respect of unit situated at the SEZ, therefore, assessee was not going to have any gain by showing lower profit.
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2017 (11) TMI 179
Income from the letting out of the cinema building - Income from commercial building named “Bharat Talkies” as rental income - head of income - income from house property or income from business - Held that:- It is seen that apropos the building, for Assessment Years 2006-07 & 2007-08, rent received, shown as business income by the assessee, was accepted by the department and no addition was made. Facts for the year consideration have not undergone any change from those present in the said earlier years. Therefore, the observation of the CIT(A) that if in the earlier years, any decision has been taken by the Assessing Officer without considering a particular fact, the same mistake is not to continue, is not appropriate, since the facts in the year under consideration, as observed, are the same as those for the earlier years. The principle of res-judicata may not be applicable, but in the unchanged facts over the years, as accepted by the Department itself, consistency needs to be maintained. Therefore, the Assessing Officer is directed to treat the rent from the building as business income, as shown by the assessee. So far as regards the income from parking space, it is not refuted that the parking space is appertenant to the building and so, the income there-from also requires to be treated as business income. The Assessing Officer is directed accordingly. Considering the issue of disallowance of expenses claimed in the profit & loss account and disallowance of brought forward unabsorbed depreciation, the ld. CIT(A) has not given any finding on these aspects, though Grounds Nos. 6 & 7 were specifically taken before the CIT(A) by the assessee. The Assessing Officer is directed to decide these issues afresh in the light of our conclusion arrived at with regard to the treatment of the income from the letting out of the cinema building and the parking space.
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2017 (11) TMI 178
TPA - working capital adjustment - Held that:- As gone through the TP study of the assessee and also the TP order of the TPO. Though the AO has stated that the working capital adjustment is allowed, the working of such adjustment is not available on record and it is not evident that the margins of the assessee and the comparables are arrived at after such adjustment. The decisions relied upon by the learned Counsel for the assessee support this contention. Though, we agree with the assessee’s contention that no separate addition of interest on receivables is required after allowing working capital adjustment, in the absence of material on record, we are unable to give any relief to the assessee on this ground. Therefore, we deem it fit and proper to direct the AO to examine if the final margins of the comparables and the assessee have been arrived at after WC adjustment to hold the international transactions of the assessee to be at “ALP” and if it is found to be so, then we direct that no further addition on account of interest on receivables shall be made. However, in the event, it is found that WCA has not been made to the final margins which are compared to the margin of the assessee, then the AO shall allow the reasonable period of credit i.e. three months from the date of notice and on the outstanding balance exceeding such period, the interest at LIBOR rate may be applied for making the adjustment. Assessee’s appeal is treated as allowed for statistical purposes.
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2017 (11) TMI 177
Additions u/s. 69C for disallowing alleged bogus purchases - Held that:- No prejudice is caused to the assessee by non granting of opportunity of cross examination by the authorities below as right of cross examination is not absolute as in the instant case even primary onus that fell on the assessee did not stood discharged. Had assessee discharged its primary onus, but still the authorities proceed to prejudice assessee based solely on the incriminating statements/affidavits of third parties recorded at the back of the assessee, the right of the assessee to cross examine these third parties will become absolute. It is not a case that the authorities below have merely/solely relied on the statement/affidavit of third parties namely hawala dealers recorded at the back of the assessee to cause prejudice to the assessee rather primary onus that lay on the assessee was not discharged by the assessee . Thus we uphold/sustain the orders of learned CIT(A) in which we donot find any infirmity, which we confirm/sustain . The assessee fails in this ground. Disallowance of interest paid to the members of AOP by invoking provisions of Section 40(ba) - Held that:- The assessee has now filed an additional evidences by way of supplementary partnership deed dated 22.09.2008 amending original JV agreement dated 12-09-2008 and it is now claimed that the status of the assessee is of the partnership firm and not AOP . The assessee has also filed correspondence with registrar of firms, which are all placed in paper book filed with the tribunal. These documents needs verification by the authorities below and we are inclined to set aside and restore this issue to the file of the AO for necessary verification and enquiry before adjudicating denovo on merits in set aside proceedings after giving an opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. One peculiar facts we have observed that the supplementary partnership deed is dated 22.09.2008 modifying J.V agreement dated 12.09.2008 . The stamp paper used for aforesaid supplementary partnership deed are issued by treasury on 28-04-2008,while the original J.V agreement was executed on a stamp paper issued by treasury on 02.09.2008. The A.O shall verify this aspect and its genuineness as to why old stamp papers which were issued by treasury even prior to the execution of JV agreement were used by the assessee for modifying original JV agreement to execute supplementary partnership deed.
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2017 (11) TMI 176
Assessments made u/s 153A - seizure of incriminating material from the search - Held that:- The assessing officer made the addition on the basis of invoices seized during the course of search relating to non tax invoices issued without collection of VAT to the dealers of Gold / Bullion. According to the Ld.AR, the invoices raised on sales made to dealers (Tax invoices) were not seized by the department, hence there was a difference. During the appeal hearing, the assessee had submitted all the details of sales made in paper book and the same were placed before the AO at the time of hearing. The assessee has submitted the complete details on the sales made with regard to tax invoices i.e. dealers with address and amount which is enclosed in page no.51 of paper book. From the grounds of appeal and the submissions made before the Ld.CIT(A), it is evident that the assessee has canvassed the case on merits but not on legal grounds. Therefore, we have no hesitation to hold that the Ld.CIT(A) while deciding the appeal has considered the issue both on legal grounds as well as on merits. Hence, we hold that the case need not be remitted back to the file of the Ld.CIT(A). Addition towards valuation in closing stock - unexplained investment - difference in stock with reference to the bill books and invoices - Held that:- The assessee has produced both the bill books before the assessing officer along with books of accounts, but the assessing officer did not find any defect in the books of accounts. As per the invoices, the purchases and sales are tallied and there was no difference. The assessing officer having verified books of accounts with the bill books, no defect was found by the assessing officer. All the purchases and sales are accounted and there was no discrepancy in the stock. There was no dispute with regard to the purchases. The assessee had declared the sales inclusive of 62 bars in sales account and furnished the details with address to the AO. The AO did not make any enquiry with regard to the sales and no difference was found. Therefore we hold that there is no case for making the addition on account of unexplained investment. The assessing officer made the addition as unexplained investment but the assessing officer did not make out a case that the purchases were made from the unaccounted sources. When the purchases were made from the business funds and duly accounted in the books of accounts, there is no case for making addition as unexplained investment. Additions of suppression of sales due to a difference in VAT return and the income tax returns - Held that:- The assessing officer drawn his conclusion based on original VAT return filed by the assessee. The assessing officer did not consider the revised VAT return though it was filed before the AO during the assessment proceedings. Therefore, we remit the matter back to the file of the assessing officer, directing the assessing officer to consider the revised VAT return and decide the issue afresh on merits. Thus ground allowed for statistical purpose.
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2017 (11) TMI 175
Revision u/s 263 - allowability of expenditure towards management fee - Held that:- In this case, the assessee is filing regular income tax returns and claiming the expenditure with regard to the management consultancy fee payable to DPW right from assessment year 2004-05 to 2009-10 The assessee has filed the returns of income and there was no dispute. The assessee has claimed the expenditure and added back to the income in the respective years with a clear noting at the end of statement of computation. The assessment records are available to the assessing officer at the time of giving effect to the CIT(A)’s order. The A.O. also has given a finding in the assessment order passed u/s 143(3) of the Act in the assessment year 2010-11 that the above expenses are allowable in the respective assessment years but not in the assessment year 2010-11. Therefore, merely because there was no detailed discussion by the A.O. in the consequential order, it is not correct to hold that the A.O. has taken the decision to allow the expenditure without verification and with misunderstanding. The entire material was placed before the A.O. and after considering the available material, the A.O. allowed the deduction hence we hold that the A.O. has allowed the expenditure correctly as per law. Also, there is no dispute with regard to the genuineness of expenditure. The assessee has debited the expenditure and added back to the income. While giving effect to the CIT(A) order, the A.O. has allowed the expenses pertaining to the respective assessment years correctly. The A.O. has not allowed any excess expenditure or any bogus claim. Therefore, we hold that the order passed by the A.O. giving effect to the CIT(A) is neither erroneous nor prejudicial to the interest of the revenue - Decided in favour of assessee Incorrect assumption of jurisdiction by the CIT u/s 263 against the consequential order of CIT(A) - A.R. argued that the assessing officer passed order giving effect to the appellate order of the Ld. CIT(A) u/s 251 of the Act, and the Principal CIT has no jurisdiction to revise the CIT(A)’s order - Held that:- CIT(A) has passed the order u/s 251 of the Act with a direction to the A.O. to allow the deduction ‘in accordance with law’. Consequent to the direction of the CIT(A), the A.O. has passed the consequential order, which involves verification also. As per the provisions of section 263 of the Act, the Principal CIT is vested with the powers to take up the orders passed by the A.O. for revision. From perusal of the sub section (1) of section 263 of the Act, the Principal CIT is entitled to call for the record and examine the record of any proceeding under this Act in the case of order passed by the A.O. Thus, the Principal CIT has power to examine whether the consequential order passed by the A.O. is in accordance with the direction of the CIT(A) or not. The Ld. Principal CIT has not tinkered with the order of CIT(A). Therefore, we hold that the Principal CIT has rightly assumed the jurisdiction and passed the revision orders and there is no error in assumption of jurisdiction. The assessee’s appeal on this ground is dismissed.
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2017 (11) TMI 174
Withhold tax u/s 195 - payments made by it to Steria France for management services fee - ITAT deleting the disallowance made by Ld. AO under Section 40(a)(i)- Held that:- Issue stands answered against the Revenue by the decision of this Court in Steria (India) Limited v. Commissioner of Income Tax-VI (2016 (8) TMI 166 - DELHI HIGH COURT). The Court accordingly declines to frame the question. Particular item is not part of 'Export Turnover' when it cannot constitute a part of 'Total Turnover' as well - whether ITAT was correct in law in holding that if a particular item is not part of 'Export Turnover' when it cannot constitute a part of 'Total Turnover' as well? - Held that:- Having perused the said judgment The Commissioner of Income Tax-8 v. M/s. Gem Plus Jewellery India Ltd. (2010 (6) TMI 65 - BOMBAY HIGH COURT) the Court is not persuaded to take a view different from that taken by the ITAT or the Bombay High Court that the total turnover always includes the export turnover and that if a particular item is not part of the export turnover, it cannot constitute a part of the total turnover either
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2017 (11) TMI 173
Deduction u/s 54F - disallowing 50% of labour expense which resulted in reducing the construction value of the residential property - Held that:- As gone through the material as per record and observed that the existence of residential house was evident from the construction of room, bathroom, water tank, boundary wall etc. There was electricity connection in the house with meter near the entry of constructed house. We have also observed that existence of these facts were not disproved by the assessing officer as he has not referred the matter to the valuation officer. After taking into consideration the specific facts of this case we are of the view that for lack of some facilities it is not appropriate to categorized the aforesaid house as non-residential house. Inter alia we are inclined with the decision of the CIT(A) that the assessee has failed to fully substantiate the claim of labour expenses by not furnishing the relevant evidences as elaborated in the findings of the Ld.CIT(A). Therefore, we do not find any error in the findings of the Ld.CIT(A) of disallowing 50% of labour expense (Rs 11,50,000/- ) which resulted in reducing the construction value of the residential property to ₹ 54,50,000/- and restricting the deduction u/s 54F of the Act to ₹ 52,63,756/- on the basis of 1/6th share of the assessee. Therefore, the appeal of the revenue is dismissed. Invoking provision of section 94(7) on account of disallowance of loss relating to short term loss on sale of Mutual Funds we find that the assessee failed to controvert the applicability the provision of section 94(7) to the fact of the case of the assessee, therefore, the cross objection filed by the assessee on this issue is rejected Also dismissed in view of the applicability of provision of section 2(22)(e) for accepting loan from the company in which he was a director and beneficial owner of holding 20% shares
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2017 (11) TMI 172
Penalty u/s 271(1)(c) - invalid notice - non specification of grounds - Held that:- Having regard to the fact that in the instant case the notice issued u/s 274 r.w.s. 271(1)(c) of the Act dated 29.03.2012 does not specify the grounds of initiation of penalty proceedings, the same is invalid and untenable in the eyes of law. Accordingly, the penalty imposed u/s 271(1)(c) of the Act is directed to be deleted on this count itself. - Decided in favour of assessee.
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2017 (11) TMI 171
Request for registration of the assessee society u/s 12A(1) rejection - assessee had failed to provide the complete address and PAN of the donors and also failed to produce the books of account, bank statements and vouchers in respect of expenses claimed by the assessee for verification of the objects and activities of the trust - Held that:- On a careful consideration of the matter and having regard to the submissions of the ld. AR, we are of the considered opinion that instead of dismissing the appeal in limine for non-production of the record before the Ld. CIT (E) during the course of enquiry, the ends of justice would be met by allowing an opportunity to the assessee to prove their case with reference to the documentary evidence to be produced before the Ld. CIT (E). It is made amply clear that it is the final opportunity to the assessee to produce all the relevant record before the Ld. CIT (E) and to cooperate for the disposal of the matter on merits. Ld. CIT (E) will afford an opportunity to the assessee to prove their case by producing the record available with them.
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Customs
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2017 (11) TMI 170
Valuation - enhancement of declared values - Whether the import of impugned goods is a pre-condition / intrinsic part of the total importation of the main plant and machinery or whether the goods can be considered as having been imported for subsequent post-import activity? - Held that: - from the copy of the agreement available before us, it emerges that the agreement involves purchase of complete design, equipments, systems, technical services and training for Coke Oven plant and by-product plant project - the purchase of design is also part of the bucket list of purchase - sufficient evidence has been unearthed by the department to establish that declared / invoice values were much lower than the actual price adopted by the appellant to the foreign supplier - We are not able to find any infirmity in such enhancement of the declared values and the appellant's prayer on this count will also fail. Classification of Engineering Design and Technical Documentation - Whether "Engineering Design and Technical Documentation" imported can be classified under Chapter 49 of CTH as claimed by the appellant or whether they are required to be classified along with the main plant and machinery and equipments imported for the project? - Held that: - We have then no doubt in our mind that the import of the Engineering Design and Technical Documentation are not for any post-import activity but are indispensible condition to the import of the main plant and equipment/machinery - once it has been established that the value of the Engineering, Design and Technical documents are required to be added to the assessable value of the related plant and machinery/equipment earlier imported, then each of such import will merit classification under Customs Tariff as that of the main import and we therefore are not able to find any infirmity in the change of classification ordered by the adjudicating authority. Redemption fine - Held that: - The goods have been confiscated under Section 111 (m) of the Act which ordains that any goods which do not correspond to in respect of value or in any other particular with the entry made under the Act shall be liable for confiscation. When imported goods have been evidently found as not corresponding in respect of value, hence their confiscation under Section 111 (m) is ordinarily very permissible. There is also no bar for imposition of redemption fine under Section 125 if there is no duty liability has been determined - however, quantum of redemption fine reduced. Penalties - Held that: - we find that they are commensurate with the acts and omissions alleged against the appellant in each of those cases and also keeping with the penal provisions they have been invoked in the SCN and found as correct by the adjudicating authority. This being so, we do not interfere with the imposition of penalties on the appellants or the quantum thereof. Appeal allowed in part.
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2017 (11) TMI 169
Smuggling - Gold Biscuits - main contention of the appellant is that the appellant purchased the gold legally from M/s Bhawana International under proper bills and paid VAT - authenticity of bills under dispute - Held that: - On perusal of the retail invoices, dated 12.04.2014 and 14.04.2014, I find that the goods were sold under the description of gold bars . They have paid output VAT of 1% on the selling price. The company s VAT TIN and PAN have been mentioned. The investigating officers had shown the photographs of the seized gold. There is no material available on record to show that the retail invoices placed by the appellant are false or fabricated. Apparently, the retail invoices are VAT paid and the VAT registration number and PAN were mentioned. It is noted that the said officers had merely recorded the statement of the proprietor of M/s.Bhawana International and no attempt was made to confront the evidence namely retail invoices of M/s.Bhawana International produced by the appellant. Therefore, the purchase documents as produced by the appellants cannot be discarded on the basis of the statement, without any verification of the content of the retail invoices. The appellant produced the retail invoices of M/s.Bhawana International and there is no material available on record that the said invoices are not genuine - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 168
Penalty u/s 112(a) of the CA, 1962 on CHA - it was alleged that appellant had in fact abetted for the lower discharge of customs duty by indulging in such undervaluation by not including the freight in the assessable value - Held that: - though the liability and confiscation of the goods has been upheld, the fact remains that the importer has misstated and accepted that it was their mistake in directing the CHA not to include freight element and in order to achieve it, they had instructed for manipulating the shipping bills. Be that as it may, charge of abetment on the CHA could not be established, which is also more or less the findings of the first appellate authority - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 167
Implementation of order - Refund claim - whether the second refund claim filed by the appellant on 03/09/2010 (formal) is hit by limitation or otherwise? - Held that: - the first refund claim was filed on 18/07/2007 which went into litigation and had to be decided by the first appellate authority on 23/12/2009 in favor of the appellant. As a consequence of such an order, Revenue authorities should have suo motu granted the refund if they have not filed an appeal against such order - the Board’s circular No.275/37/2K-CX. 8A dt. 02/01/2002 as amended by Board’s circular No.96/1/2017-CX.I dt. 10/03/2017 would apply in this case. Division Bench of this Tribunal in the case of Lorenzo Bestonso Vs. CC(Imports), Nhava Seva [2014 (9) TMI 984 - CESTAT MUMBAI], on a similar situation has held that there being a consequential relief, it was incumbent upon the Revenue to refund the amount deposited during the investigation. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 166
Benefit of N/N. 64/88 Cus. dated 01.03.1988 - import of CT Scanner (duty free import) - non-fulfillment of condition of Notification - burden to prove - Held that: - instead of contesting the factual finding recorded by the original authority regarding treatment of outpatients as well as inpatient in terms of the said notification, the appellant simply questioned the findings without any supporting evidences. It is necessary for the appellant to avail additional concession to establish that such condition has been duly fulfilled. It is not for the Revenue to establish that the appellant did not fulfill such conditions. In the absence of any record to substantiate the fulfillment of the condition, the original authority is correct in arriving at the conclusion therein - appeal dismissed - decided against appellant.
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Corporate Laws
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2017 (11) TMI 165
Direction to appoint a “TECHNICAL MEMBER” at National Company Law Tribunal, Ahmedabad Bench - Held that:- At the first instance, Notification was issued by constituting Bench with two members viz. Member (Judicial) and Member (Technical) at Ahmedabad. But subsequently, exercising powers conferred under proviso to Section 419 of the Companies Act, 2013, order dated 12.08.2016 is passed constituting Bench at Ahmedabad with only Member (Judicial). Reading of the provisions referred in Section 419 of the Companies Act, it empowers the President to constitute the Bench with only one member. If there is any difficulty, it is open for the petitioner to make representation, but at the same time, we do not find any reason to entertain the petition at this stage. While granting liberty to the petitioner to file representation before the President of National Company Law Tribunal, this petition is disposed of. It is made clear that in the event of any further difficulty, liberty is granted to the petitioner to approach this Court.
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2017 (11) TMI 163
Oppression and mismanagement - Held that:- Petitioner is claiming for his arrears of salary in this petition. That is a matter to be agitated in Civil Court. Even according to the petitioner, process house was stopped in February, 2013 and he left the company in May, 2013. Therefore, petitioner, if he is entitled he can claim arrears of the salary provided if it is within the limitation by filing a suit for recovery of amount in Civil Suit but not in this petition. There are no acts of oppression and mismanagement qua the shareholding of the petitioner. Therefore, there are no grounds to establish the allegations of oppression and mismanagement. In view of the above discussion, petitioner is not entitled for any reliefs prayed by him. However, in the interest of justice and in order to safeguard shareholding of the petitioner and his wife and considering the fact that there is no scope for the petitioner to actively participate in the activities of the company, this Tribunal is of the considered view that, petitioner and his wife can be given option to sell their shares for a fair market value fixed by an independent valuer appointed by this Tribunal. Petitioner and his wife, if they are willing to sell their shares, they shall file an application before this Tribunal within two months from the date of this order for appointment of independent valuer to assess fair market value of the shares of the first respondent company as on the date of filing of petition. In case, if the petitioner files such application, this Tribunal shall appoint independent valuer to determine the fair value of shares on the date of filing of petition and further decide the mode and manner of transfer of shares. In case if the petitioner and his wife are willing to sell their shares, respondents No. 2 and 3 shall purchase shares of the petitioner at a fair market value determined by the independent valuer appointed by this Tribunal.
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Insolvency & Bankruptcy
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2017 (11) TMI 194
Corporate insolvency procedure - proof of existence of dispute - Held that:- All that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defense which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defense is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application. At paragraph 45 of the said Judgement in relation to `existence of dispute' it has been observed as follows: Going by the aforesaid test of "existence of a dispute", it is clear that without going Into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defense is not spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the parties, which may or may not ultimately succeed, and the Appellate Tribunal was wholly incorrect In characterizing the defense as vague, got-up and motivated to evade liability. In the light of the above the contentions of the Learned Counsel for the Petitioner relating to dispute may not be of much effect. Hence, taking into consideration all the above including facts and position of law, we are not inclined to admit this Petition and hence the Petition is dismissed, but without costs.
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2017 (11) TMI 164
Corporate Insolvency resolution process - Held that:- As objected by the corporate debtor that certification of the proposed Interim Resolution Professional (IRP) is not in conformity with the requirement of the Code and the application filed by the applicant bank is incomplete in this aspect. From the perusal of records, it is seen that the Applicant Bank and the proposed IRP were directed to take necessary steps to remove the defect and file proper certification vide order dated 08.09.2017. In compliance of the order dated 08.09.2017, an amended Form-2 has been duly filed by the Applicant Bank on 14.09.2017, which is on record. Hence, it is seen that the defect pointed out by the corporate debtor has since been cured. Under sub-section 5(a) of Section 7 of the Code, the application filed by Financial Creditor under Section 7 is admitted on satisfaction that: I. Default has occurred, II. Application is complete, and III. No disciplinary proceeding against the proposed 1RP is pending. In the case in hand the respondent company has committed a default in repayment of the outstanding amount. Moreover, the application of the financial creditor is complete and there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete and the applicant financial creditor is entitled to claim its outstanding financial debt due to the corporate debtor and that there has been a default in payment of the financial debt. Therefore, in terms of Section 7(5)(a) of the Code, the present application is admitted. A moratorium in terms of section 14 of the Code is being issued.
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Service Tax
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2017 (11) TMI 159
Time Limitation - non-payment of service tax - case of appellant is that the assessee was under the impression and bona fide belief that no Service Tax is payable by them and they did not collect any Service Tax from the services of commission agent provided by them from the service recipients, and there was no malafide intent - Held that: - there is suppression but still I do not find any intention on the part of the assessee for not paying Service Tax as Commission agent under BAS. Business Auxiliary Service has gone into lot of change from 01.07.2003 and since the services provided in the year 2005-07, there was no of confusion in this period about payment of Service Tax on Commission agent service for which they failed to collect/charge Service Tax from the recipient of Service and there cannot be any intention for if they have knowledge about Service tax liability they could have charged and collected it from the manufacturer. In turn the manufacturer would have availed cenvat credit on the service tax so paid as the services of procurement of sale orders for their manufactured goods fell into definition of input services. Hence, by no stretch of imagination, it may be held that this was intention for not paying Service tax - appeal dismissed - decided against Revenue.
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2017 (11) TMI 158
Levy of service tax - Cargo Handling services - It is submitted that the transportation with incidental loading would be classifiable under Goods Transport Agency service and Service Tax is payable by the client under reverse charge mechanism - Held that: - The expressions loading, unloading, packing or unpacking of cargo in the main part of the definition of Cargo Handling Service, make it clear that the loading, unloading, packing or unpacking of cargo would be leviable to Service Tax under the category of Cargo Handling Service - In the present case, we have seen from the work order dated 30.09.2002 of Mahanadi Coalfields Ld., that the scope of the work is under the caption of Hiring of Pay loader for mechanical transfer of Coal into Railway Wagons at SPUR Siding - these agreements/contracts are for loading of coal into wagons in the railway sidings and loading and unloading are of predominant nature. It would come within the purview of the definition of Cargo Handling Service - demand upheld. Business Auxiliary Service - appellant submitted that the activities of removal of shale, stone, extraneous materials and breaking clean Coal to (-) 200 mm size are integral part of the mining process - Held that: - the Tribunal in the case of Aryan Energy (P) Ltd. v. Commr. of Cus. C.Ex., Hyderabad-I [2008 (5) TMI 248 - CESTAT Bangalore] held that the activities relating to Coal mining, washing of coal (benefication) are treated as part of mining activity and mining service came into effect from 01.06.2007 and set aside the demand under the category of Business Auxiliary Service - the processing of the coal in a mine is in a wide range. The activities of removal of the shale, stone, extraneous materials and breaking up of the coal are after the excavation of coal from the mines. Apparently, the processes undertaken by the appellants are for marketability of the coal and part of the mining activities. Hence, the demand of Service Tax under the category of Business Auxiliary Service cannot be sustained - demand withheld. Site Formation Services - appellant submitted that the excavation and removal of over-burden is an integral part of the mining activity and it is in relation to mining of mineral and taxable under section 65(105)(zzzy) as mining of mineral service w.e.f. 01.06.2007 - Held that: - we find from the works order that the blasting will be done by Department of Explosives and the excavation work will be done by the appellant in the nature of extraction of coal mechanically in benches from available coal at any depth. Therefore, it is an integral part of the mining job and we agree with the submission of the appellant - demand withheld. Cleaning services - adjudicating authority observed that the appellant was allocated work by Damodar Valley Corporation (DVC) for removal of technological waste from CHP area, DTPS and it would come under cleaning service - Held that: - from the definition of cleaning service under section 65(24b) , it is clear that the cleaning activity would cover cleaning of commercial or industrial building or premises thereof or factory, plant or machinery, tank or Reservoir of such commercial or industrial buildings or premises - t is seen from the letter dated 03.02.2004 of DVC that the appellant was awarded tender for excavation of Ash from different field of Ash Ponds of DTPS, DVC, Waria, Nuisance free transportation and disposal of Ash in abandoned mines of ECL. It appears that the purpose of the tender is for disposal of Ash in the abandoned mines of ECL. The appellant is engaged for transportation and disposal of Ash in the abandoned mines. The letter does not show that the appellant was engaged for cleaning of the premises - demand withheld. Construction of Residential Complex Service - adjudicating authority observed that the appellant was engaged for the construction of staff dormitory including the work of internal water supply and sanitation at NTPS, DVC, Mejia by National Building Construction Co.Ltd.. It is included within the definition of Residential Complex under section 65(91a) of the Act - Held that: - the appellant constructed a building consisting of 54 individual units of Bachelor accommodation having one room with kitchen space and attached Bathroom in each unit. This fact was not disputed by the appellant. It is not a case of construction of one residential unit. Therefore, it would come within the purview of definition of complex and the demand of Service Tax is justified - demand upheld. The demand of Service Tax on other issues and imposition of penalties are set aside. Appeal allowed in part.
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2017 (11) TMI 157
CENVAT credit - whether the availment of CENVAT credit on common input services which are used for trading as well as rendering taxable output services is correct as also liability of interest on the full credit availed on capital goods in the first year itself? - Held that: - As regards the availment of CENVAT credit on the capital goods, 100% of the amount of Central Excise duty paid, appellant’s availment of 100% of credit of duty paid on capital goods in the first year was an error, as per law appellant is entitled to avail CENVAT credit of balance 50% in the subsequent year - demand set aside. Eligibility to avail CENVAT credit on FRO crates which are not capital goods - Held that: - FRO crates cannot be considered as capital goods, if they are not considered as capital goods, the explanation given by the appellant before the lower authorities that such crates are used by them for movement of their various components which are used for rendering output service as authorised service station can be considered as inputs. Hence availment of CENVAT credit of the Central Excise duty paid on such FRO crates cannot be disputed and the appeal to that extent contesting the findings has merits and is allowed. Availment of CENVAT credit on capital goods without proper documents - Held that: - In the case in hand, appellant is not providing any output service in order to avail the input service which has been taxed and charged by the service stations to whom appellant has outsourced the services of rendering free warranty services - credit not allowed. Appeal allowed in part.
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2017 (11) TMI 156
Levy of service tax - screening of films - whether the appellant is liable to pay service tax on the screening of films in their multiplex? - Held that: - there is no dispute of fact that the appellant have been screening films in their multiplex on Revenue Sharing basis, which is undisputed finding recorded by the ld. Commissioner in the impugned order. Accordingly, we hold that the appellant is not liable to pay Service Tax for Screening of Films and payments to distributors in their theatre - demand set aside. Renting of immovable property service - Held that: - we allow this appeal by way of remand to the ld. Commissioner, so as to reconcile the payments made by the tenants for the period prior to 30/09/2011. The appellant is also directed to reconcile their accounts and if any amount is payable by them for the period subsequent to 30/09/2011, calculate the same and after depositing the tax, if any, intimate to the Adjudicating Authority. Appeal allowed in part and part matter on remand.
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2017 (11) TMI 155
Penalty u/s 76 and 78 of FA - reverse charge mechanism - appellant is an exporter and received the services from a commission agent located outside India. In terms of Section 66A of the Finance Act, 1994, the appellant is required to pay the Service Tax under reverse charge mechanism on the services received from outside India but the appellant did not pay Service Tax thereon under reverse charge mechanism - malafide intent or not - invocation of section 80. Held that: - till the decision of Indian National Shipowners Association vs. UOI [2008 (12) TMI 41 - BOMBAY HIGH COURT], the exporters were under doubt that whether they are liable to pay Service Tax under Section 66A of the Finance Act or not under reverse charge mechanism and the same has been settled by the Hon ble High Court of Bombay in November, 2008. Admittedly, the period in dispute is upto March, 2008. The benefit of Section 80 of the Finance Act can be extended to the appellant, consequentially, no penalty imposed on the appellant - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (11) TMI 154
CENVAT credit - input services - Air Travel Agency Services - Consulting Engineering Services - General Insurance Service - Management Consultant Services - C&F Services - Man Power Service - Maintenance or Repair Services - denial on the ground that they have no nexus with the manufacture of finished products - Held that: - with regard to General Insurance Service, the authorities below have noted that appellant has not adduced any document to establish that the services were availed for insuring the Plant and Machinery - issue with regard to eligibility of credit on General Insurance services require to be remanded to the adjudicating authority for reconsideration of the issue - matter on remand. Manpower service - Held that: - 'Outdoor Catering Services' as well as 'Man Power Recruitment Agency Service' fall under two different categories. The services availed is Man Power Recruitment Agency Service and such recruitment of man power may be used in different areas of production/work in the factory. The use of man power in the canteen cannot be considered as an activity of out outdoor catering services - Further it is also seen that no such allegation has been raised in the SCN - the admissibility of the credit on the disputed services have been analyzed and held in favor of the assessee. Appeal allowed in part and part matter on remand.
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2017 (11) TMI 153
CENVAT credit - windmill maintenance charges - denial on the ground that the windmills are situated outside the factory - Held that: - The Hon’ble High Court of Bombay in the case of Endurance Technology Pvt. Ltd. [2015 (6) TMI 82 - BOMBAY HIGH COURT] has held that management, maintenance and repair of windmills installed by the respondents is input service as defined by clause "l" of Rule 2. Rule 3 and 4 provide that any input or capital goods received in the factory or any input service received by manufacture of final product would be susceptible to CENVAT credit. Rule does not say that input service received by a manufacturer must be received at the factory premises - the disallowance of credit is unjustified - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 152
CENVAT credit - duty paying documents - Department was of the view that appellant is not eligible to take credit on the invoices issued by M/s. Excellent 2 Publicities or Jaya TV or on the invoices issued by Jaya TV to M/s. Excellent 2 Publicities - Held that: - On perusal of the invoices issued by M/s. Excellent 2 Publicities to the appellant, it is seen that the amount collected is reimbursement of service tax paid to Jaya TV. There are invoices issued by Jaya TV to M/s. Excellent 2 Publicities to show that Jaya TV has collected the service tax from M/s. Excellent 2 Publicities which was paid by the appellant. Thus, the document issued by Jaya TV to M/s. Excellent 2 Publicities together with the documents issued by M/s. Excellent 2 Publicities to appellant would establish that the appellant has paid service tax on the broadcasting service - denial of credit unjustified - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 151
CENVAT credit - input services - Life Insurance Policy of the employees - vehicles used for transportation of employees - Held that: - similar issue decided in the case of Commissioner of Central Excise, Bangalore-III, Commissionerate Versus Stanzen Toyotetsu India (P.) Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT] where it was held that Cenvat credit can be availed with respect to these services as these services are rendered in relation to the manufacturing activity and there is nexus between services and the final product - appeal dismissed - decided against Revenue.
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2017 (11) TMI 150
Imposition of penalty - suppression of facts - whether the appellant herein needs to be visited with equivalent that penalty under the provision of Rule 25(2) of the CCR 2004 read with section 11AA of CEA 1994 or otherwise? - Held that: - appellant herein having clearly recorded that they had availed Cenvat credit on the various inputs as per the Annexure to the ER-I (undisputed) that it cannot be held that appellant had intension to evade the Central Excise duty in availing such Cenvat credit of the Central Excise duty paid on pipes delivered at the site of the customers - during the period in question, provision of Cenvat credit rules also permitted delivery of duty paid inputs directly at the premises of job worker or at the site and Cenvat credit was allowed of duty paid on such materials - The equivalent penalty imposed on appellant, in such a situation is unwarranted. The equivalent amount of penalty imposed on the appellant is not satisfying the ingredients of section 11AC of CEA 1994 and rules made thereunder, accordingly the impugned order to the extent it has upheld imposition of equivalent penalty of ₹ 13,17,930/- is unsustainable and liable to be set aside - As regards, the penalty of ₹ 6,114/- the said penalty is correctly imposed and there is no reason for setting aside such penalties. Appeal allowed in part.
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2017 (11) TMI 149
Refund of duty paid under protest - unjust enrichment - Held that: - Invoices itself clearly indicate that the assessee had granted benefit of only 25% of the duty element to the customers and that they have to produce the evidence which is to be examined and for that purpose, the Commissioner(Appeals) has remanded the matter back to the original authority to reexamine the evidences produced by the assessee - matter on remand. The Commissioner(Appeals) has the power of remand which is now well settled by catena of judgments of the Tribunal. Appeal allowed by way of remand.
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2017 (11) TMI 148
CENVAT credit - inputs/capital goods - Held that: - the appellant has by oversight availed 100% of the credit on capital goods wherein the appellant was required to take only 50% in the first financial order and the remaining in the next financial year; but as soon as the Department pointed out this lapse, the duty was reversed along with interest. In that kind of a situation, as per Section 11A(2B) of the Central Excise Act, the show-cause notice should not have been issued. Valuation - amortisation cost of freely supplied material - includibility - Held that: - the demand of duty on non-amortisation cost of freely supplied material in the assessable value of the final product amounting to ₹ 17,291/- was paid along with interest of ₹ 3,113/- on 22/01/2007. CENVAT credit - returned goods - Held that: - the credit availed on the finished goods returned under Rule 16 of the Central Excise Rules, 2002 has been converted into scrap and ₹ 12,217/- was paid along with interest of ₹ 2,892/- on 22/01/2007. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 147
Valuation - royalty - includibility - Department was of the view that the amount collected in the guise of royalty was nothing but part of sale consideration - Held that: - there is no relationship between the appellant and the marketing company and the marketing company is also dealing with other goods like switches and the departmental investigations revealed that these products are not marketed under the brand name ‘Farcom’ - demand upheld. Extended period of limitation - Held that: - since the appellant has not suppressed the facts from the Department and entertained a bona fide belief that the royalty amount is not to be included in the assessable value, therefore the extended period of limitation is not invokable. Penalty - Held that: - the appellant is also not liable to pay the penalty in view of the fact that there was no intention to evade payment of duty. Appeal allowed in part.
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2017 (11) TMI 146
Entitlement of interest - belated sanctioning of the refund claims - Held that: - there was protracted litigation on the refund claims and sanctioning thereof by the lower authorities and the matter was settled by the Hon’ble High Court in appellant’s favor. The appellant having filed refund claims as early as in 1996-97 was correct in claiming the interest liability from the Revenue authorities under the provisions of Section 11B of Central Excise Act, 1944 - the appellant is eligible for the interest on the amount of refund claims after three months from the date of filing. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 145
Benefit of N/N. 3/2004-CE dt. 08/01/2004 - clearance of pipes - non-fulfillment of notification condition - Held that: - the respondent had procured duty paid inputs for manufacturing of MS pipes. Respondent undisputedly supplied these pipes to the Government organisations by claiming the benefit of Notification No.3/2004 which has been denied as they have not produced essentiality certificate from the authorities as mentioned in the Notification but subsequently produced the certificate; hence the exemption has been correctly extended by the first appellate authority. Demand of CENVAT credit - Held that: - when the appellant sought the benefit of Notification No.3/2004, he did not avail the CENVAT credit on the inputs which were utilised for manufacturing of the said MS pipes; subsequently when the demand of the duty liability was issued by the departmental officers by denying the benefit of the notification and during the course of investigation, they availed the CENVAT credit which was eligible for them and utilised the same for discharge of duty - the entire exercise is of non-eligibility to avail CENVAT credit is a non-est as an extending benefit of exemption of notification therein, no question of CENVAT credit on inputs, the same stance vindicated by the reversal of the amount by the assessee/respondent. Since the benefit of notification was correctly extended, the reversal of CENVAT credit in a form of payment of duty is correct, the question of demand of interest or imposition of penalties does not arise. Appeal dismissed - decided against Revenue.
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2017 (11) TMI 144
Refund of duty paid on coal ash - Held that: - Tribunal in the case of ABB Ltd. [2016 (6) TMI 441 - CESTAT BANGALORE] has held that it is a settled position of law that the appropriation of refund amount towards duty demand pending in other cases which has not attained finality is not legal and proper - the appropriation of the refund against the disputed pending appeal is not sustainable in law as the demand in those cases have not reached finality. Therefore impugned order set aside - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 143
SSI exemption - Clubbing of clearances - dummy units - the Managing Director of the main appellant is functioning as proprietary concern involved in similar activity and as such the SSI exemption claimed by the main appellant was sought to be denied by combining the turnover of all the three units - Held that: - there is no discussion or finding regarding overreaching financial control, flow back of benefits among the three units. The location of units in the same premises by itself shall not make any of the unit as a dummy unit. Corroborate evidences are required to establish such unit's existence as dummy - Admittedly, all the three units are duly registered with District Authorities, Income Tax and Sales Tax Authorities. To establish a unit dummy or only existing in paper, sufficient corroborate evidences are to be produced which will mainly relate to financial control, functional independence and manufacture of items which are same and various other facts - In the present case, the evidences available are not leading to such conclusion. Demand set aside - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 142
Valuation - correctness of value adopted - penalty - Held that: - there is no discussion regarding the background or reason for imposition of penalty. Apparently the impugned order restricted the scope of decision with reference to the direction issued by the Tribunal on valuation issue. However, when the liberty is given to the Commissioner for imposition of penalty after a due findings, a clear reason based finding should have been recorded by the original authority before imposing penalties under Rule 209A - In view of complete absence of any reasoning for imposition of penalty on these appellants, penalties under Rule 209A of the CER 1944 set aside - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 141
Manufacture - process OF refurbishing old Ambulances - benefit of N/N. 06/2006-CE dt. 01.03.2006 - whether the renovation of 14 old and used Ambulances amounts to manufacture? - Held that: - the appellants have showed that the vehicles which they have received were in the nature of the Ambulances ab initio as is evident from the certificate of the registration taken by the Joint Director, Medical and Rural Health, Govt. of Tamil Nadu. Hence, the finding given by the Ld. Commissioner in his order that the vehicles which the noticee received could not be used as Ambulance is patently erroneous - after the process of refurbishing/renovation, vehicle remained as an Ambulance only and did not undergo any transformation to a new product. The nature and use of the vehicle, in other words the basic character of the vehicle, remained same as before the process of refurbishing. In our view, therefore, no new article emerged out of the process undertaken by the appellant. As regard demand of duty on customization of motor vehicle we find that the respondent is carrying out the activity of cosmetic changes on the duty paid cars and vehicles these duty paid vehicles are completely ready for use with its body. They are doing cosmetic changes as per the requirement of the customer inside and outside of the vehicle. In our considered view these activity do not amount to manufacture for the reason that the original duty paid motor vehicles remained as motor vehicles only, except some changes and due to these changes original identity of the product in terms of Central Excise provisions does not change. Classification of ambulances manufactyured by appellant - N/N. 06/2006-CE dt. 01.03.2006 - Held that: - issue of classification of Ambulances was examined by this Tribunal in the case of Sita Singh & Sons Pvt. Ltd. Vs. Commissioner of C. Ex. Delhi-IV [2016 (7) TMI 346 - CESTAT CHANDIGARH], where also the vehicle was capable of carrying more than 12 people as in the present case, it was held in that case that vehicle in question can carry more than 12 persons excluding the driver or 14 persons including the driver. Therefore, we hold that the vehicle in question is classifiable under heading 87.02 of CETA. - It is not disputed that the appellant have not availed the Cenvat Credit on chassis. Since, we have held that the goods are classifiable under Tariff Heading No. 8702, the appellants are therefore entitled to the benefit of Sr. No. 41 of N/N. 06/2006-CE. Valuation - chassis is supplied after payment of duty by the principal manufacturer - Held that: - the value of the chassis and duty thereon is to be excluded for determining the net duty liability on the Ambulance - this issue has been settled by this Tribunal in its judgments in the case of CCE, Pune Vs. Ashiyana Autobodies Ltd. [2016 (12) TMI 1451 - CESTAT MUMBAI], where it was held that duty of excise paid on chassis is excludible - the duty has to be calculated on the fabrication charges only. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 140
Benefit of N/N. 9/2003-CE dt. 1.3.2003 - suppression of facts - Whether otherwise the impugned product CERA Polycure was manufactured by the appellants or whether the same has been only traded by them? - Held that: - In the absence of any clear cut evidence to incorporate the allegations of manufacture of Cera Polycure W, the demand of duty demanded in respect of that item will not sustain and will have to be set aside - demand set aside. Whether the appellant's products would be classifiable under Chapter 3214 as held by the lower authorities? - Held that: - there has been no discussion or analysis on the reasons why the items would not be classifiable under 3824.90. In view of the contentions of the appellants, the matter should be considered afresh and conclusions arrived at concerning classification merited would only after proper analysis and reasoning - matter on remand. Whether duty liability can be foisted in respect of 18 products manufactured and originally cleared from the factory on payment of Central Excise duty, which was subsequently returned as sales returns for various reasons at their depot and sold to other purchasers on commercial invoice? - Held that: - From the orders of the lower authorities, we find that there is insufficient discussion and analysis to arrive at the conclusions against which the appellant is in appeal. Ld. Advocate has stated that they are in a position to prove their bonafide in the matter. Accordingly, in the interest of justice, this issue too needs to be sent back for re-adjudication - matter on remand. Appeal allowed in part and part matter on remand.
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2017 (11) TMI 139
Penalty u/r 15(2) of CCR, 2004 - confiscation of excess stock - mens rea - Held that: - there had been negligence on the part of the appellant in maintaining the records - appellant submits that the shortage could be due to mere processing loss during the course of manufacture. I find that this is an inescapable consequence of the process of manufacture and needs to be pre-determined - matter on remand. Penalty u/s 11AC of CEA - Held that: - there is no material on record available of fraud, suppression, collusion, willful mis-statement or contravention of any provision with an intent to evade payment of duty. In the present case, the appellant had reversed the amount demanded on the quantity found short and therefore, penalty under Section 11AC is not justified - duty demand with penalty set aside. Appeal allowed in part and part matter on remand.
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2017 (11) TMI 138
Clandestine removal - It is alleged that the consumption of the input material is abnormally low - Held that: - the charge against the respondent is that the clandestine removal of the goods on the basis of abnormal loss of the inputs used in the manufacture of the final products. It is seen from the records that the Revenue had not conducted any investigation and/or inquiry to ascertain the reason for low consumption of the input materials. The respondent had given explanation that the consumption of the input material is depending upon the various factors. The Adjudicating Authority had not examined the issues in detail - appeal dismissed - decided against Revenue.
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2017 (11) TMI 137
CENVAT credit - Commissioner (Appeals) observed that the assessee had paid the required demand alongwith interest and reduced penalty within the stipulated time. The Commissioner (Appeals) set aside the penalty on the ground that the assessee had not willfully made any mis-statement or suppressed facts or violated any provision of the Act or Rules with on intent to evade payment of duty - Held that: - I do not find any material to establish malafide intent on the part of the respondent - order of the Commissioner (Appeals) upheld - appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2017 (11) TMI 136
Valuation - scope of taxable turnover - whether cost of warranty replacement by Revisionist is liable to be treated as "taxable turnover" or not? - Held that: - It is not the case of Revisionist that relationship of Revisionist with "M/s MUL" is that of principal to principal but it admits that it is an authorized agency of "M/s MUL" and sale is being effected by manufacturing company through Revisionist. Similarly, goods have been supplied by M/s MUL directly and there is no independent transaction between Dealer and customer but Revisionist is acting as an agent of M/s MUL. Neither learned counsel for Revisionist could show any otherwise distinction nor there is any material to show that Revisionist Dealer acted as a Principal with respect to sale of vehicles as also replacement of parts and it was not an agent of manufacturer but its status is that of a Principal vis-a-vis M/s MUL. Reliance placed in the case of Mohd. Ekram Khan & Sons Versus Commissioner of Trade Tax, UP [2004 (7) TMI 341 - SUPREME COURT OF INDIA], where it was held that In a case manufacturer may have purchased from the open market parts for the purpose of replacement of the defective parts. For such transactions, it would have paid taxes. The position is not different because the assessee had supplied the parts and had received the price, and the transaction was subject to levy of tax. Revision dismissed - decided against revisionist.
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2017 (11) TMI 135
Adjustment of excess paid tax - Form No.I - Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 - Section 6(4) of the Samadhan Act - Held that: - Section 7(1)(b) of the Act would be relevant as the petitioner has disputed the tax as well as the penalty, in terms of the said provision, the petitioner has to pay 50% of the disputed tax and since he has also disputed the penalty, he has remitted 25% of the 50% of the tax in dispute. The language in the statute is clear that the 25% is not on the penalty imposed, but it is on 50% of the tax in dispute - on a plain reading of Section 7(1)(b) of the Act would show that whatever payments paid towards the disputed tax could very well be reckoned for payment towards the dispute regarding penalty because what is directed to be paid is 25% of such 50% of the tax in dispute - petition dismissed - decided against petitioner.
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2017 (11) TMI 134
Validity of assessment order - belated approach - the impugned assessment orders were passed on 06.01.2016 and 30.06.2016 respectively, and the petitioner has neither exhausted the appellate remedy available under the Act, nor approached this Court earlier, questioning the validity and correctness of the assessments - Held that: - except, for the assessment year 2013-14, the tax demanded for all other three assessment years are less than ₹ 1,00,000/-. The explanation now offered by the petitioner before this Court is that the petitioner has got all the details to establish that the allegations made against them is not sustainable, and if the details of the web-report has been furnished to the petitioner with an opportunity to cross-examine the third party, then, they would be in a position to establish their case that those transactions have no connection with them, or, it was in the course of normal business practice, and there is no suppression of turnover - Considering the peculiar facts and circumstances of the case, this Court is inclined to give one more opportunity to the petitioner to go before the Assessing Officer to substantiate their case - petition allowed by way of remand.
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2017 (11) TMI 133
Validity of assessment order - TNVAT Act - requirement of pre-deposit - Held that: - As this Court, in a catena of decisions, directed the assessees to execute a personal bond in lieu of furnishing bank guarantee, is of the view that it would be sufficient if the petitioner furnishes bond for the balance 50% of the tax and penalty instead of bank guarantee - petition allowed in part.
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Indian Laws
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2017 (11) TMI 162
Challenging the detention order - offence under under Section 3 (1) of COFEPOSA Act - Held that:- With the ground already having been considered and rejected by the Court which has been affirmed by the Supreme Court, it is not possible for this Court to permit the Petitioner to again urge the same ground for questioning the same detention order. As regards the representation made by the Petitioner on 6th September, 2017 not having been considered and rejected by the Detaining Authority, the Court does not appreciate how this affects the validity of the detention order dated 10th October, 2016. Although it would be open to the Petitioner to make repeated representations, the ground on which the representation was made was only that the co-detenue's detention had been quashed. That ground was, for reasons already noted, not available to the Petitioner. As regards the delay in the detention order being served on the husband of the Petitioner, the counsel for the Petitioner was unable to explain what prevented the Petitioner from urging this ground when the earlier writ petition was filed. Even in the additional affidavit filed, there has been no explanation why such a ground could not have been urged earlier. Unless the Court is satisfied that the Petitioner was prevented for some valid reason from urging such ground, it will not be open to the Petitioner to have a second round of litigation to question the same detention order when the first round of challenge has ended in dismissal of a writ petition. As regards the acquittal of Mr. Raju Arora for the offences under Section 174 and 175 of IPC, the Court does not think it provides the Petitioner with any valid ground to challenge the impugned detention order. The Court is not satisfied that the Petitioner has made out any ground for a second shot at challenging the detention order dated 10th October, 2016. Writ petition is accordingly dismissed.
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2017 (11) TMI 161
Offence under NDPS Act - Held that:- The trial Court has imposed punishment of 13 years rigorous imprisonment and fine of ₹ 2.00 lakhs and in default of payment of fine additional rigorous imprisonment of 3 years. There is nothing on record to show that accused has ever been convicted earlier for any crime. The prosecution version shows that he fell prey to avarice of earning money which he would get if he had successfully reached the recovered Ganja at the designated place but the in meantime he was caught. It is his first offence as per record. The learned lower Court could have taken a little lenient view by imposing minimum punishment under law which is 10 years, but it has chosen to award punishment higher to that probably because the quantity of Ganja recovered was much higher than the commercial quantity. It is also apparent that the default clause carries 3 years additional rigorous imprisonment and the amount of fine being two lacs, appears to be such, which the accused would not be able to arrange and hence would have to suffer additional 3 years rigorous imprisonment. In view of this, taking into consideration all the facts and circumstances and looking to the poor financial condition as stated by the learned counsel for the accused appellant and not disputed by the learned counsel for Union of India, it would be proper if substantive sentence is reduced to minimum prescribed under 20 (b) (ii) (C) i.e. 10 years rigorous imprisonment instead of 13 years and in default of payment of fine he may be directed to further undergo simple imprisonment of one year. In view of above, the appeal is partly allowed. The conviction of the accused appellant under section 8/20 (b) (ii) (C) of the NDPS Act is modified by reducing it to 10 years rigorous imprisonment instead of 13 years and in default of payment of fine of ₹ 2 lakhs he shall further undergo simple imprisonment of one additional year. If the accused has already spent the said period in jail, he shall be set at liberty in this case forthwith, if not required in any other case.
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2017 (11) TMI 160
Offence under Negotiable instruments Act - Reason available for the complainant to have escaped the liability - FIR was lodged by the complainant on 01.03.2016 as a counter-blast - Held that:- It is apparent that the cheques were submitted in 2015 and as soon as the aforesaid legal notice dated 09.12.2015 under Section 138 of the Negotiable Instruments Act was served upon the complainant on 15.12.2015 and a letter was sent by the complainant on 21.12.2015, as a counterblast, the present FIR has been lodged by the complainant on 01.03.2016 levelling allegations against the petitioners, which clearly are nothing but an effort of the complainant to escape the liability arising out of the Negotiable Instruments Act. The presumption clause of the Negotiable Instruments Act is absolute and has been discussed in the precedent law cited above, and thus, allowing the complainant to carry on with such malicious criminal proceedings in response to the proceedings under Section 138 of the Negotiable Instruments Act would be nothing but an abuse of the process of law. Learned Public Prosecutor has shown the case diary, and the case diary does not reflect any answer to the counterblast criminal proceedings, as it is reflected by the documents that the cheques were actually issued by the complainant, and even if some kind of dispute regarding the multiple Firms, or the words ‘Private Limited’ is there, the same can be a good defence for the complainant at the time of contesting the proceedings under Section 138 of the Negotiable Instruments Act, but the same cannot be a ground for criminal prosecution against the petitioners. Present misc. petition is allowed and the impugned FIR No.42 dated 01.03.2016 registered at Police Station, Bichhwal, District Bikaner is quashed and set aside.
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