TMI Tax Updates - e-Newsletter
December 12, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Government Entity or not - Power Supply Infrastructure Development work - CIDCO is covered under the definition of the term ‘Government Entity’ as per Notification No. 31/2017-Central Tax (Rate) - Concessional rate of tax@ 12% would be applicable
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GST:
Requirement of registration - applicability of the GST Act - receipt of fees from members by the Lions Club of Poona, Kothrud - the amounts collected as ‘fees’ from the members are not for the purposes of making any ‘supply’ - The fees collected are used for social causes - No GST liability.
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Income Tax:
Accrual of income - accounting treatment in respect of prepaid cards - there must be the “right to receive the income on a particular date, so as to bring about a creditor and debtor relationship on the relevant date” -a right to receive a particular sum under the agreement would not be sufficient unless the right accrued by rendering of services
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Income Tax:
Drilling rig as a qualifying ship within the meaning of Section 115VD - Revenue’s contentions that the vessel is nothing but “offshore installations” has no merit, in the case of Matdrills of the kind put to use by the assessee
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Income Tax:
Depreciation on storage tanks - @10% or 15% - building or plant and Machinery - the same falls within definition of a “plants” which has been used by the assessee in the business of hiring them for storage petroleum products
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Income Tax:
Bogus long term capital gain - addition made towards unexplained cash credit u/s 68 - revenue did not indicate any specific evidence against the assessee in above terms qua the LTCG derived from transfer of share in STIL - additions deleted.
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Income Tax:
Reopening of assessment - AO cannot act mechanically on the basis of report of Investigation Wing and to show that the AO has applied his mind, he must distinct all those materials and he must also show that what was material on record.
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Income Tax:
MAT computation - Addition towards not deducting the waived interest amount of under ‘one time settlement’ for computing book profit u/s 115JB - sick industrial company - the assessee’s case falls under clause (vii) of explanation (1) to section 115JB - No additions.
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Income Tax:
Capital gain computation - the assessee is not eligible for deduction u/s 54 and shifting of the assessment year for making the addition on this account would not achieve any purpose rather it will defeat the purpose of provisions of section 54
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Income Tax:
Bogus capital gain on sale of long term shares - exemption u/s 10(38) denied - The holding of the shares by the assessee cannot be doubted and the finding of the AO is based merely on the suspicion and surmises without any cogent material to show that the assessee has introduction his unaccounted income in the shape of long term capital gain.
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Income Tax:
Addition u/s 68 - Addition made towards share premium - creditworthiness of the share applicant companies would have to be examined by the AO of those companies and not by the Assessing Officer of the assessee herein.
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Income Tax:
MAT computation - loss arising from foreign exchange fluctuation - Though before us the Revenue contended that the assessee has made only a provision, we find that nowhere in the assessment proceedings such a statement was made - AO has shown the same as loss on account of exchange fluctuation and not as a provision - No additions.
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SEBI:
Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2018
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Service Tax:
Maintainability of writ petition - interpretation of Sections 66D(k), 66D(e) and 66E(e) - Exemption from service tax / negative list - To apply the law to a fact, one must first read the law. The reading entails understanding. And the very understanding is an interpretative process. Interpretation is not a judicial ritual; it is a cognitive process.
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Service Tax:
For one refund claim there cannot be more than one show cause notice and one adjudication order. It is not permitted to Revenue to reject the refund claim on one ground and when the said ground is held unsustainable, to raise the hue and cry that they are also other grounds on which the refund may be rejected.
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Central Excise:
CENVAT Credit - All the elements including the excise duty has gone into the assessable value of the pressure cooker which is cleared along with the free Tawa in the combo-package. This being so, the appellants have rightly availed the Credit on the inputs.
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Central Excise:
CENVAT Credit - Rent-a-cab - it is found that in fact it is not rent-a-cab whereas it is service of supply of tangible goods which was used for organizing medical camp which is in connection to promotion of their product, therefore, it is an input service - credit allowed.
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VAT:
Rejection of books of account was made on valid basis. Therefore, the authorities have not erred in looking into the electricity consumption for the purpose of making an estimation of concealed turnover.
Articles
Notifications
News
Case Laws:
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GST
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2018 (12) TMI 589
Demand of security as per Section 129(1)(b) of the Act - release of seized goods - Held that:- Since the petitioner is the owner of the goods, the authority concerned is directed to release the goods of the petitioner on the petitioner's furnishing security of the amount equivalent to as provided under Section 129 (1)(a) of the Act - petition disposed off.
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2018 (12) TMI 588
Constitutional validity of rule 138(10) of the Central Goods and Services Tax Rules, 2017 / Gujarat Goods and Services Tax Rules, 2017 - validity period of the e-way bill in terms of distance to be travelled in a day - Held that:- Issue Notice returnable on 10th January, 2019.
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2018 (12) TMI 591
Government Entity or not - N/N. 31/2017-Central Tax (Rate) dated 13 October 2017 - CIDCO is a Government Entity or not - rate of tax - whether taxable at the rate of 12% or not?. - Power Supply Infrastructure Development work.
Held that:- CIDCO is constituted and established by the State Government of Maharashtra with 100% participation by way Of Equity or Control to carry out the function of development of new township of New Bombay and therefore CIDCO is clearly covered under the definition of ‘Government Entity’.
Rate of tax - concessional rate of GST @ 12%, with effect from 13.10.2017, as effected by the amendment in Notification No. 11/2017 - Held that:- CIDCO is covered under the definition of ‘Government Entity’ inserted as an amendment in the original Notification No 11/2017-CT(Rate) dated 28.06.2017 vide Notification No. 31/2017-CT(Rate) dated 13.10.2017.
Applicant in their application for advance ruling has stated that the contracts undertaken by them are original works, that the term original works has not been defined in GST Act, that as per the definition under the erstwhile Finance Act, 1994, i) All new constructions, ii) All types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; iii) Erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise - As per para 1.3.1 of CPWD Manual, 2014, “original works” means (i) all new constructions, (ii) all types of additions, alterations and/ or special repairs to newly acquired assets, abandoned or damaged assets that are required to make them workable. (iii) major replacements or remodeling of a portion of an existing structure or installation or other works, which results in a genuine increase in the life and value of the property. Taking into consideration the nature of works contracts allotted to the applicant, it is found that the works to be undertaken by them can be considered as “original work”.
Thus, the works undertaken by them are in the nature of original works.
Whether they are fulfilling the conditions in respect of Government Entity as inserted vide Notification No. 31/ 2017 dated 13.10.2017? - Held that:- The application does not have any explanation/ evidence to substantiate the fulfillment of this condition. However in terms of paras 3 & 4 of Govt. of Maharashtra Resolution dated 25.06.2014, the work of rehabilitation and resettlement with respect to Navi Mumbai International Airport has been given to M/s. CIDCO. As such condition in Column 5 of the Table is fulfilled as far as the first contract (work order) dated 21.06.2017 is concerned - As regards other contract (work order) dated 11.01.2013, the same is to be completed in Ulwe Node. As per Notification dated 20.03.1971 issued by Government of Maharashtra Ulwe is notified as a site for development. In this case also, the condition in Column 5 of the Table is fulfilled - Therefore applicant is eligible for benefit of Sr. No. 3 of item no (vi)(a) of Notification No. 11/2017 - Central Tax read as amended.
With effect from 14.11.2017 only such activity that is composite supply of works contract as defined in clause 119 of Section 2 of the Central Goods and Service Tax Act, 2017 would be eligible for benefit of the Notification against aforesaid Sr. No. and item No. in view of Notification No. 46/2017 - Central Tax (Rate) dtd. 14.11.2017.
Ruling:- CIDCO is covered under the definition of the term ‘Government Entity’ as per Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017.
Concessional rate of tax@ 12% would be applicable in respect of supply of goods/ services, after coming into effect of notification No. 31/2017 CT (Rate) dated 13.10.2017.
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2018 (12) TMI 590
Requirement of registration - applicability of the GST Act - receipt of fees from members by the Lions Club of Poona, Kothrud - supply of goods/services or not - Held that:- This subscription is for the facilities or benefits that would be provided. The definition requires that the club, association, society, or any such body has to provide facilities or benefits to its members. And these facilities or benefits are to be provided for a subscription or any other consideration - In the facts of the instant case, the amounts collected as ‘fees’ from the members are not for the purposes of making any ‘supply’. All are aware that the definition of ‘supply’ under the provisions of the GST Act is an inclusive one. However, it is one for ‘supply’ and the ‘supply’ is of goods or services.
In the present case, the club is not formed to provide any facilities or benefits to its members. The fees collected are used for social causes and to meet the expenses incurred in furtherance of the objectives of the Club. The Club is not formed to provide services to members but people gather under the umbrella of the Club to perform socially relevant activities. A club, association or society as understood under section 2(17) is one which would provide goods or services or both to its members such as recreation, sports, food, etc.
The club is not formed to provide any supply of goods or services to its members qua the fees received from them. There being no supply qua the fees received, there arises no occasion for us to visit the definition of ‘Supply’ under the GST Act. The applicant club as per the facts put up before us does not render any ‘Supply’ for the purposes of the CST Act.
The amounts spent are for building and empowering a human resource to help perform the activities of the Club in a better way. The members pay fees to act as volunteers in the social causes. Besides, the club is not formed to build and empower or impart skills in leadership such that people would get themselves enrolled for acquiring the skills. By no means could it be said that the members pay fees to acquire services of training in leadership development.
Ruling:- No registration is required.
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Income Tax
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2018 (12) TMI 587
Disallowance u/s 14A - assessee has been made investment of interest bearing funds in the partnership firm profit of which was exempt - Held that:- The Special Leave Petition is dismissed on the ground of low tax effect. However, the question of law is left open.
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2018 (12) TMI 581
Penalty levied u/s 271AAB(1)(c) or 271AAB(1)(a) - undisclosed income admitted by the assessee on the basis of incriminating documents found in the course of search - assessment completed u/s 153A - penalty u/s 271AAB in the case on hand is to be imposed u/s 271AAB(1)(c) @ 30% of undisclosed income or u/s 271AAB(1)(a) @ 10% of undisclosed income - Held that:- We find that the fact that AO issued notice u/s 153A on 07.10.2014 requiring the assessee to file the return of income within 30 days of receipt of notice (i.e., the specified date) and that the assessee had not complied with the same is not disputed. The assessee filed the return in response to the notice u/s 153A dated 07.10.2014 only on 01.03.2016; i.e., more than a year after the specified date. We also further observe that the taxes in respect of the undisclosed income were also paid long after the specified date i.e., ₹ 32,11,300/- on 30.10.2015; ₹ 5,39,200/- on 17.12.2015 and ₹ 10,00,000/- on 19.02.2016. It is also not disputed by the assessee that the statement wherein Shri. Kiran Kumar Mahasamudram admitted the undisclosed income was not u/s 132(4) of the Act.
The provisions of sections 271AAB(1)(a) and 271AAB(1)(b) which provides for imposition of penalty @ 10% and 20% respectively are not applicable. The view of the CIT(A), that even though the assessee had not satisfied the conditions specified in 271AAB(1)(a)(iii) of the Act, the failure to do so constitutes reasonable cause as it was due to conditions beyond the assessee’s control and therefore penalty is to be levied only @ 10% and not 30% of the undisclosed income of ₹ 1,31,50,000/- admitted in this Assessment Year, is totally untenable.
Section 271AAB commences with ‘non-obstante clause’ overriding all other provisions of the Act and therefore the CIT(A)’s attempt to read into this unambiguous Section, what is not there by importing discretion in order to reduce the penalty to be levied on the assessee is odious to say the least. We are of the view that the impugned order of the CIT(A) is factually and legally unsustainable and therefore set aside the same. We consequently, restore the order of the AO dated 30.09.2016 levying penalty of ₹ 39,45,000/- u/s 271AAB(1)(c) of the Act @ 30% of the undisclosed income of ₹ 1,31,50,000/- admitted by the assessee for Assessment Year 2013-14. - Decided in favour of revenue.
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2018 (12) TMI 580
Unexplained investment u/s 69A - Cash deposits in the Bank account - Held that:- Cash deposits in the Bank account cannot be automatically construed to be income exigible to the tax from undisclosed sources or u/s 69A of the Act. The facts and circumstances on record, from an appraisal of the assessee’s ICICI Bank account in the case on hand, indicate that the said cash deposits of ₹ 15 lakhs apparently are made out of cash withdrawals of ₹ 29,94,500/- during the year under consideration, and re-deposited in the Bank account depending on the exigencies of assessee’s business.
Before us, Revenue was not able to controvert this argument/contention of the assessee and therefore, of the view that in this factual matrix of the case, the addition of cash deposits of ₹ 11,87,500/- made by the AO as income from undisclosed sources and upheld by the CIT(A) as unexplained investment u/s 69A of the Act is factually unsustainable and therefore delete the same - Decided in favour of assessee.
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2018 (12) TMI 579
Addition u/s.68 - Held that:- We find that the assessee has taken loan from Shri M.Mehta, Proprietor of Amit Handling Agencies on October 19th, November 22nd and December 19th total to ₹ 14 lakhs. The perusal of bank statement shows that the assessee Shri M.Mehta has deposited cash of ₹ 2 lakhs on 19.10.2002, ₹ 5.5 lakhs on 22.11.2002 and ₹ 6.5 lakhs on 19.12.2002 and immediately thereafter cheques were given to the assessee on respective date.
This fact is also confirmed by the Shri M.Mehta recorded on oath u/s.131 of the Act wherein he deposed that he has given 3 cheques to Shri Latif Ayub Kewar, partner of M/s.Kewar Handling and Transporting Company and he deposited those in his bank account and he was the person who deposited those amount in his bank account and got the cheqeus cleared, the addition confirmed by the CIT(A) as therefore upheld. Accordingly, this ground of appeal of the assessee is dismissed.
With regard to ground of Revenue we find that the assessee has furnished details like copy of ledger account acknowledgment receipts, IT Return, Bank Statement and Cash Book, audited report. Further, the AO has also given a finding that the transaction is genuine in his remand report as mentioned in the para 5 of the appellate order. Therefore, merely because the person concerned were not appeared before the AO does not mean that the aforesaid creditors are not genuine. In the light of these facts, we find no reason to interfere with the findings of the ld.CIT(A), accordingly same is upheld, therefore, ground no.1 of the Revenue of appeal is also dismissed.
Addition of labour expenses - NP estimation - Held that:- Cash must be paid to these labourers and truck drivers from source which are not disclosed to the data. This, itself states that there is no doubt in genuineness of the expenditure but AO had made estimation of the undisclosed sources for such expenditure. We further find that on similar facts in the case of sister concern of the assessee ITAT had estimated the net profit @1.4%.
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2018 (12) TMI 578
Depreciation on storage tanks - @10% or 15% - building or plant and Machinery - Held that:-As relying on Ganesh Alu Bhandar v. ITO [2003 (6) TMI 204 - ITAT RAJKOT] Tribunal has observed the assessee has constructed oil storage tank at Kandla Port Trust on the land provided by the Kandla Port Trust. The storage tank has been constructed as per prescribed specification and licensee for the storage of petroleum products has been granted by the Chief Controller of Explosives after inspection of these storage tanks. Thus, the oil storage tank has been constructed as per required specification for storing petroleum product. Therefore, the same falls within definition of a “plants” which has been used by the assessee in the business of hiring them for storage petroleum products. Our view is finds support from the decisions of various High Courts and Tribunal cited above. Therefore, we are in agreement with the order of CIT (A) in allowing depreciation on the oil storage tank to the assessee at the rate prescribed for “plant” in the Act.
Hence, the ground of appeal of Revenue is rejected - we direct the AO to allow depreciation @ 15% as claimed by the assessee on storage tank. - Decided in favour of assessee.
Addition u/s 80IA in respect of income derived from operation and maintenance of storage tank by considering the same as integral part of Port - Held that:- We are of the considered view that the assessee has developed infrastructure facilities, built maintained and operated within the meaning of provisions of section 80IA (4)(i)(b). The assessee is deemed to have made due compliance of provisions of section 80IA(4)(i)(b). The assessee relied in the case of CIT v. A. L. Logistic Pvt. Ltd. [2015 (1) TMI 401 - MADRAS HIGH COURT] held that it is evident that the proposal of the assessee was accepted by the Government on certain conditions which were duly complied with by the assessee. There may not be any specific agreement, but the sequences of events clearly show that the assessee is providing CFS facility in accordance with the conditions laid down by the Government. In such circumstances, there is no need to insist for the specific execution of agreements.
Where no specific agreement with the State Government was entered into but from the approvals granted to the assessee it was inferred that assessee should be deemed to have entered into an agreement with the State Government. Similarly, the issue of the assessee is also supported by the decision in the case of Pr. CIT Seabird Marine Services Pvt. Ltd. [2017 (11) TMI 1008 - GUJARAT HIGH COURT] . Thus, the assessee has complied with all the provisions of section 80IA(4)(i) and is eligible to claim deduction under the said section. - Decided in favour of assessee.
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2018 (12) TMI 577
Disallowance of 10% of the “miscellaneous expenses” - Held that:- Assessee had not maintained any log book/record in respect of telephone expenses, vehicle expenses and hotel expenses, as a result whereof the factum of the said expenses having been incurred wholly and exclusively for the purpose of the business of the assessee cannot be established beyond any scope of doubt. CIT(A) in order to meet the ends of justice has adopted a liberal approach and restricted the disallowance to 10% of the total expenses booked under the said head of expenditure. No infirmity does emerge from the sustaining of the disallowance of 10% of the total miscellaneous expenses by the CIT(A). No reason to dislodge the sustaining of the disallowance of 10% of the miscellaneous expenses by the CIT(A), uphold his order to the said extent. The Ground of appeal No. 1 raised by the assessee is dismissed.
Disallowance of 25% of the travelling expenses - Held that:- Assessee had failed to conclusively establish the incurring of the travelling expenses and its nexus with its business, thus are of the view that the lower authorities were fairly justified in disallowing a part of the said expenses. However, at the same time, we are unable to persuade ourselves to endorse the disallowance of 25% of the said expenses which as per our considered view is highly exorbitant in the backdrop of the scale of the business of the assessee.
There is substantial force in the contention of the A.R that keeping in view the substantial turnover of more than ₹ 610 crores of the assessee company for the year under consideration, incurring of travelling expense to the extent of ₹ 15,08,143/- can safely be held to be a miniscule amount. We the nature of business of the assessee company, therein restrict the disallowance of the travelling expense to the extent of 10% of the total amount of such expenses.
Disallowance u/s 36(1)(ii) - Held that:- A matter of fact that no such payment was made to the said director in the earlier years. We have given a thoughtful consideration to the contentions raised by the A.R in support of its claim that the remuneration of ₹ 36 lac paid by the assessee company to Mr. Mohit Kamboj, director for the services rendered by him was not liable to be disallowed under Sec.36(1)(ii), but are unable to persuade ourselves to accept the same. We have perused the observations of the CIT(A) and find ourselves to be in agreement with the well reasoned view taken by him that the amount of ₹ 36 lac paid by the assessee company to Mr. Mohit Kamboj, director was rightly disallowed by the A.O under Sec. 36(1)(ii). We thus finding no infirmity in the order of the CIT(A) in context of the issue under consideration uphold his order to the said extent. The Ground of appeal No. 3 raised by the assessee is dismissed.
Unexplained cash credit u/s 68 - Held that:- The adverse inferences which have been drawn by the lower authorities on the ground that the said concerns had made substantial payments of amounts to Mr. Mohit Kamboj, in our considered view the same as observed by us hereinabove, being independent transactions will have no bearing on the adjudication of the genuineness of the purchases claimed by the assessee to have been made from the said respective parties. Apart therefrom, in the absence of any irrefutable evidence which would prove to the hilt the in-genuineness of the “labour charges” of ₹ 9,15,684/- claimed by the assessee to have been paid to M/s Arham Jewellery, which had duly reflected a “labour income” of ₹ 30,35,701/- in its profit & loss account for the year under consideration i.e A.Y 2012-13, the adverse inferences drawn by the A.O as regards the veracity of such expenditure is also liable to be vacated. In terms of our aforesaid observations finding no reason to sustain the unsubstantiated estimation of gross profit rate of 2% by the CIT(A), leading to a consequential addition in the hands of the assessee, delete the same.
Bogus purchases - Held that:- As deliberated at length on the sustaining of the addition by the CIT(A) to the extent of ₹ 1,71,73,863/- in context of the purchases made by the assessee from the aforementioned three concerns viz. (i) M/s Arham Jewellery; (ii) M/s Dev Jewells; and (iii) M/s Rajeshwari Impex and have deleted the disallowance of ₹ 1,71,73,863/- for the reason that the purchases claimed by the assessee to have been made from the aforementioned concerns cannot be disallowed by alleging the same as bogus in the absence of irrefutable documentary evidence. Thus, in terms of our observations recorded the ground of appeal No. 1 raised by the revenue in respect of the bogus purchases fails. The Ground of appeal No. 1 raised by the revenue is dismissed.
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2018 (12) TMI 576
Bogus long term capital gain - addition made towards unexplained cash credit u/s 68 - Held that:- Both the lower authorities have adopted identical line of reasoning in treating the sale consideration received on transfer of shares in STIL to be bogus thereby treating the LTCG on sale of such shares as unexplained cash credit u/s 68 of the Act. DR drew our attention to a voluminous exercise undertaken by the AO involving a long drawn process of stock market prices rigging in collusion with the various entry operators.
DR drew our attention to the assessment order indicating the assessee to have allegedly invested the money in M/s TTL (since merged with STIL) not having any sound financial position or business activity so as to justify the LTCG in issue. The cases of Sumati Dayal vs. CIT (1995 (3) TMI 3 - SUPREME COURT) and CIT vs. Durga Prasad More (1971 (8) TMI 17 - SUPREME COURT) were quoted in support to plead that both the lower authorities have made it clear in their respective order(s) about the assessee having acted in collusion with various entry operators for the purpose of bogus LTCG in issue
We find that the revenue did not indicate any specific evidence against the assessee in above terms qua the LTCG derived from transfer of share in STIL. We therefore adopt the above extracted reasoning mutatis mutandis to delete the impugned bogus LTCG addition. Consequently the addition made towards unexplained expenditure on account of commission also stands automatically deleted - decided in favour of assessee.
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2018 (12) TMI 565
Addition u/s 68 - Addition made towards share premium - summons u/s 131 to the director of the assessee company to produce the directors of the investor companies - Held that:- All the share applicant companies in the instant case before us are assessed to income tax - the assessee had duly proved the source of source of source in the instant case. Even if the creditworthiness of the share applicants are to be doubted , then it would be the duty of the AO of the assessee to make enquiries through the ld AO of the concerned share applicants. Once the relevant details are filed by the assessee before the AO to prove the creditworthiness of share applicants, then the same cannot be questioned / disputed by the ld AO of the assessee as the same would be travelling beyond his jurisdiction - the creditworthiness of the share applicant companies would have to be examined by the Assessing Officer of those companies and not by the Assessing Officer of the assessee herein.
The share subscribing companies are duly assessed to income tax. It is not in dispute that the share subscribing companies are in existence. It is not in dispute that the share subscribing companies are duly assessed to income tax and their income tax particulars together with the copies of respective income tax returns with their balance sheets are already on record . Hence it could be safely concluded that they are genuine shareholders and not bogus and fictitious. Accordingly, the ratio laid down in the case of M/s Earthmetal Electricals P Ltd [2010 (7) TMI 1137 - SUPREME COURT] would be squarely applicable to the facts of the instant case.
The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed before the ld AO. Accordingly, all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction were placed before the ld AO and the onus shifted to the ld AO to disprove the materials placed before him. Without doing so, the addition made by the ld AO is based on conjectures and surmises - Decided in favour of assessee
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2018 (12) TMI 575
Revision u/s 263 - addition u/s 68 - genuineness of the share capital received by the assessee from the Mauritian company - Held that:- We agree with the assessee, that the credit standing in the name of the investor who is a non resident, the onus to explain the source of the source did not lay with the assessee, as per section 68. AO on being satisfied with the genuineness of the transaction, being carried out through banking channels, was not required to inquire into the source of the source and therefore the inquiry could not be said to be inadequate on this count.
We hold that the satisfaction of the AO regarding the genuineness of the share capital received by the assessee from the Mauritian company was reasonable considering the documents filed and more importantly considering the fact that on the basis of identical documentation the I.T.A.T. had held identical transaction to be genuine in the case of a company which the assessee company was subsequently was amalgamated with. CIT has not pointed out why any further enquiry was required to be made.
It is not a case where any infirmity has been pointed out in the documents submitted by the assessee or for that matter, the huge share premium has not been justified. If that be the case then of course, the satisfaction of the Assessing Officer could not said to be reasonable and definitely in such a case the enquiry of the AO would have been clearly deficient. That exactly is the fact and situation in which the Hon'ble Apex Court and various other courts have upheld the order passed u/s 263 of the Pr. CIT in various cases cited by the Revenue before us.
But in the present case, the identity, the genuineness and even the share premium received has been established and justified. No reason remains for doubting the transaction. CIT has rested his case for more inquiry in the matter, merely on the basis of suspicion that the transaction may be tainted. This we hold, cannot be the basis for holding the enquiry conducted by the AO as insufficient and the order consequently passed as erroneous for the purpose of assuming jurisdiction u/s 263 of the Act. - Decided in favour of assessee.
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2018 (12) TMI 564
Capital gain computation - FMV determination - Evasion of stamp duty upon transfer deeds - determination of market value for acquisition - methods of valuation to be adopted in ascertaining the market value of the land on the date of the notification under section 4(1) Held that:- In arriving at a reasonably correct market value, it maybe necessary to take even two or all of those methods into account inasmuch as the exact valuation is not always possible as no two lands may be the same either in respect of the situation or the extent or the potentiality nor is it possible in all cases to have reliable material from which that valuation can be accurately determined. See Special Land Acquisition Officer v. T. Adinarayan Setty [1958 (11) TMI 33 - SUPREME COURT]
Likewise Hon’ble Jurisdictional High Court in the case of CIT Vs. J.Chelladurai (2011 (12) TMI 41 - MADRAS HIGH COURT) observed that no useful purpose would be served to remand the matter and further observed it would be reasonable to fix market value of the land by averaging value given by the assessee and the assessing officer as on 01.04.1981. Under these observations from Hon’ble High Courts including from Hon’ble Apex Court, we deem it appropriate to adopt the value as suggested from both sides - it will meet the ends of justice, if the fair market value of the property is adopted at ₹ 3,50,000/- as against ₹ 5,00,000/-, per ground, as on 01.04.1981,suggested by the ld.Counsel for the assessee and ₹ 50,000/-,per ground, adopted by the ld.CIT(A). Thus, the appeal of the assessee is partly allowed.
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2018 (12) TMI 574
Rectification of mistake - Applicability of provisions of section 206AA - application filed u/s 254(2) as barred by limitation as the same was supposed to file within six months from the end of the month in which the order was passed - Held that:- We are in agreement with the claim of the Revenue Department that the proviso of sub-section to Sec.6A of Sec.206C of the Act was inserted in the Act by the Finance Act, 2012 and made applicable w.e.f 1st July, 2012, as in the instant Misc. Application the assessment year involved is 2011-12 and hence, the said proviso to subsection 6A of Sec.206C shall not be applicable which seems to be inadvertently overlooked by the Co-ordinate Bench, therefore, error/mistake apparent from the order is liable to be rectified.
AO and Ld. CIT(A) applied the provisions of section 206AA of the Act which mandates requirement to furnish permanent account number by persons who are entitled to receive any sum or income or amount, on which tax is deductible u/s XVIIB of the Act. Miscellaneous Applications filed by the Revenue Department stands allowed.
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2018 (12) TMI 573
Addition u/s 263 - Non deduction of tds u/s 194J - payment to Mahua Basu Mallick for displaying articles towards Cancel Awareness Programme in Bengali language pursuant to dictations given by the assessee in English - Held that:- This is nothing but a payment made for translation of articles from English to Bengali. This, in our considered opinion, does not require any professional skill, so as to fall within the ken of provisions of section 194J of the Act.
The provisions of 194J of the Act are not attracted in the facts of the instant case with regard to the subject mentioned payment of ₹ 96,000/-. The assessee had produced the entire bills, vouchers, bank statements, books of accounts, details of professional fees before the AO which were duly examined by the ld. AO and which fact is also mentioned at page 2 of the assessment order. While this is so, it cannot be said that the AO had not made any enquiry regarding this issue while framing the assessment. AO had taken a possible view on the matter and the CIT is only trying to substitute his own view against the view taken already by the AO, by invoking the revisionary jurisdiction u/s 263 which in our considered opinion, is not permissible - Decided in favour of assessee.
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2018 (12) TMI 563
Addition towards share capital u/s 68 - AO issued notices u/s 133(6) on all the share subscribing companies - identity, creditworthiness and genuineness of the transaction - Held that:- Section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its income of the previous year in which the same was received. In the facts of the present case, both the nature & source of the share capital received with premium were fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants.
The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed before the ld AO. Accordingly, all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction were placed before the ld AO and the onus shifted to the ld AO to disprove the materials placed before him. Without doing so, the addition made by the ld AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 - decided in favour of assessee.
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2018 (12) TMI 562
Deduction u/s 80P(2)(a)(i) - interest income earned from investment in fixed deposits with various banks - assessee is a co-operative society of employees working with the Central Bank of India - Held that:- In peculiar facts and circumstances that assessee’s impugned interest income derived from investment is not eligible for u/s 80P(2)(a)(i) deduction per se. Its reliance on learned co-ordinate bench’s decision in its own case dated 01.03.2018 (2018 (3) TMI 308 - ITAT KOLKATA) is not very well founded since going against the hon'ble jurisdictional subsequent judgment on the very issue. We therefore treat learned co-ordinate bench’s earlier order to be per inquriam as per the CIT vs. B.R. Constructions (1992 (6) TMI 13 - ANDHRA PRADESH HIGH COURT) since not taking into consideration the law settled by hon'ble jurisdictional high court. The Revenue therefore succeeds in its sole substantive ground in principle.
Computation of the impugned sec. 80P(2)(a)(i) deduction - Held that:- There is hardly any dispute about the assessee having derived its interest income from investments made in a nationalised and State co-operative bank (supra). We quote jurisdictional high court’s above stated latter judgment first of all make it clear that the AO needs to re-do the entire computation afresh. He shall treat assessee’s interest income if any, earned from investments made from deposits sec. 64 r.w.s. 63 of the Multi-State Co-operative Societies Act, 2002 to be very much attributable to the business of providing credit facility to its members. This shall follow the necessary netting exercise of the impugned interest income vis-à-vis the corresponding interest expenditure as well for arriving at the impugned disallowance. Needles to say, the assessee shall be afforded adequate opportunity of hearing in consequential proceedings.
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2018 (12) TMI 561
Bogus capital gain on sale of long term shares - exemption under section 10(38) denied - addition made on the suspicion and surmises - Held that:- As decided in SHRI MEGHRAJ SINGH SHEKHAWAT VERSUS THE DCIT, CENTRAL CIRCLE-3, JAIPUR [2018 (3) TMI 1639 - ITAT JAIPUR] Assessee has produced the relevant record to show the allotment of shares by the company on payment of consideration by cheque and therefore, it is not a case of payment of consideration by in cash.
But the transaction is established from the evidence and record which cannot be manipulated as all the entries are part of the bank account of the assessee and the assessee dematerialized the shares in the D-mat account which is also an independent material and evidence cannot be manipulated. The holding of the shares by the assessee cannot be doubted and the finding of the AO is based merely on the suspicion and surmises without any cogent material to show that the assessee has introduction his unaccounted income in the shape of long term capital gain. The order of the Assessing Officer treating the long term capital gain as bogus and consequential addition made to the total income of the assessee is not sustainable. Hence, we delete the addition made by the AO on this account. - decided in favour of assessee.
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2018 (12) TMI 572
Eligibility for claim of exemption u/s 54F - assessee has not deposited the net consideration in the capital gains account scheme as stipulated in section 54F and as the construction of the flats have not been commenced, the purchase deed and the work order placed cannot be relied upon - Held that:- The assessee is eligible for claim of exemption u/s.54F on the amount of investments made upto the date of the filing of return of income. In the result, that the assessee is eligible for claim of exemption u/s.54F of the I.T. Act and Assessing Officer is not correct in denying the claim of exemption. Therefore, the Assessing Officer is directed to grant the exemption u/s.54F
AO disallowed the claim u/s 54F on three counts, i.e., i) the assessee has not deposited the sale consideration before filing the return of income, ii) Assessee has purchased two residential flats instead of 1 flat and iii) the residential flats were not completed within three years from the date of sale. All these aspects were properly addressed and adjudicated by the ld. CIT(A). Therefore, we do not find any infirmity in the order of the CIT(A) in directing the AO to grant exemption u/s 54F to assessee as his decision is in consonance with the decisions of Hon’ble High Courts and ITAT and accordingly we uphold the order of CIT(A) and dismiss the grounds raised by the revenue. - decided in favour of assessee.
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2018 (12) TMI 571
Reopening of assessment - disallowing loss due to change of client code and disallowance on account of commission of 2% for the entry - ‘reason to suspect' or ‘reason to believe’ - validity of reasons to believe - Held that:- AO has been taken mechanically on the basis of alleged report of Investigation Wing. The mere recording/ formulation of reasons on the basis of reproduction of information from Investigation Wing and, issuing notice for initiation of re-assessment proceedings does not constitute application of mind much less independent application of mind. Hence, the proceedings are without jurisdiction. It is settled law that AO cannot act mechanically on the basis of report of Investigation Wing and to show that the AO has applied his mind, he must distinct all those materials and he must also show that what was material on record. Hence, initiation of proceedings is also based on non-application of mind much less independent application of mind.
In this case the proceedings have been initiated on the basis of no material much less any tangible and, relevant material and as such reasons record do not constitute valid reason to believe for initiating proceedings u/s 147 of the Act. It is a case of ‘reason to suspect' and not ‘reason to believe.’
After perusing the aforesaid extracts from the assessment order, it is evident that the assessee has raised objection to initiation of assessment proceedings u/s. 147 of the Act vide letter dated 24.11.2017 and the aforesaid objections were disposed of by the AO vide order dated 27.11.2017, which shows that the AO did not accept the objections so filed, he shall not proceed further in the matter with in a very short period of service of order disposing off objection, however, he has made the order of assessment u/s. 147/143(3) on 8.12.2017, which is not in accordance with law and not permissible. - Decided in favour of assessee.
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2018 (12) TMI 570
MAT computation - Addition towards not deducting the waived interest amount of under ‘one time settlement’ for computing book profit u/s 115JB - sick industrial company - Held that:- In the case of Vista pharmaceuticals (2012 (6) TMI 569 - ITAT HYDERABAD), the coordinate bench has held that when this impugned interest is not actually allowed as deduction in earlier years while computing the book profit in those years, the same can't be brought to tax in this asst. year while computing book profit U/s. 115JB of the Act.
In the case of assessee, AR has brought to our notice that the assessee has not charged the interest waived by the bank as interest in the earlier years and interest was never allowed as deduction while computing book profit in the earlier years and hence the said decisions are squarely applies to the case of the assessee. Further, the assessee’s case falls under clause (vii) of explanation (1) to section 115JB. Therefore, we do not find any infirmity in deleting the addition made on this count. This ground of appeal of the revenue is dismissed.
Addition towards ‘waiver of working capital term loan' - Held that:- We notice that the Hon’ble Delhi High Court Decision in the case of Tosha International Ltd. (2008 (9) TMI 31 - HIGH COURT DELHI) is similar to the facts of the present case held that remission of the principal amount of loan didn’t amount to income - remission would become income u/s 41(1) only if assessee has claimed deduction in respect of expenditure or trading liability - CIT(A) correct in deleting the addition made by the AO towards waiver of capital treating as revenue in nature - decided against revenue
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2018 (12) TMI 568
Revision u/s 263 - erroneous order prejudicial to the interests of the revenue - Held that:- No hesitation to hold that AO during the course of assessment proceedings made detail and specific enquiries in relation to stock and after making detailed enquiries, accepted reconciliation in the variation in the value of stock. Therefore, it cannot be said that the AO did not make any enquiry while framing the assessment order.
CIT has grossly erred in observing that the Assessing Officer should have made a complete enquiry for the amount of excess stock at ₹ 9,95,72,922/- called for documentary evidence for purchase of gold and diamond and verified the genuineness. As mentioned elsewhere, the assessee had filed complete documentary evidences of purchase of gold and diamond and the Assessing Officer has verified the same. Even the alleged excess stock has been explained completely by filing a reconciliation statement. Therefore, it is incorrect to say that neither proper enquiries were made nor any investigation was made by the AO.
As explained hereinabove, we are of the considered opinion that the assessment order framed u/s 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue and the PCIT has erroneously assumed jurisdiction u/s 263 of the Act. We, accordingly, set aside the order framed u/s 263 of the Act and restore that of the Assessing Officer framed u/s 143(3) of the Act. - Decided in favour of assessee.
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2018 (12) TMI 586
Non compliance to notice u/s 142 (1) - Non submission of ITR - penalty under Section 271(1)(b) - breaches committed in compliance with the requirement of law under Section 139 (1) - Cognizance of the offence under Section 276 CC read with Section 278B of Income Tax Act - Held that:- The offence under Section 276 CC of IT Act deals with failure to comply with the obligation under Sections 139 (1) or 142(1) or 148 of IT Act. Disobedience of each said provision of law itself constitutes a distinct offence. The offence under Section 276 CC, prima facie, stood constituted upon failure on the part of the assessee to furnish the return of income for the assessment year in question within the period prescribed in law. The notices by the assessing authority under Section 142 (1) were issued with the objective of facilitating best judgment assessment. The failure to abide by such notices would also constitute offence, distinct from the offence that had been earlier committed by virtue of breach of Section 139 (1). The assessment proceedings are not related to these criminal prosecutions. They may eventually have a bearing for the benefit of proviso to Section 276CC to be invoked but not so as to inhibit continuation of the criminal process. See KARAN LUTHRA VERSUS INCOME TAX OFFICER (ITO) [2018 (10) TMI 135 - DELHI HIGH COURT].
In the present case, there was a breach even in compliance with the notice under Section 142 (1), which by the same logic as indicated above, constitutes distinct offence. There is no merit in the contentions raised in the petition. The same is dismissed.
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2018 (12) TMI 585
Accrual of income - accounting treatment in respect of prepaid cards - Rendering of Services - Income recognition - Accounting standards - amount received on sale of prepaid cards to the extent of unutilized talk time - assessee was engaged in the business of providing basic telecom services in the State of Rajasthan and had both prepaid and postpaid subscribers - Held that:- Paragraph 7 of Accounting Standards stipulates that revenue from service transaction can be recognized either by proportionate completion method or by the completed service contract method. Revenue is generally recognized when the service is performed. Proportionate completion method is a recognized accounting method, as per which revenue is recognized proportionately by reference to the performance of each act. Under this method, revenue is determined on the basis of contract value, associated costs, number of acts or other suitable criteria. When services are provided by an indeterminate number of acts over a specific period of time, revenue is recognized on a straight line basis over the specific period. This is subject to any evidence that some other method would be better and more appropriate for representing the pattern of performance.
What is the relevant yardstick is the time of accrual or arisal for the purpose of its taxation, viz., in order to be chargeable, the income should accrue or arise to the assessee during the previous year. If income has accrued or arisen, even if actual receipt of the amount is not there, it would be chargeable to tax in the said year. Though the amount may be received later in the succeeding year, the income would be said to accrue or arise if there is a debt owed to the assessee by somebody at that moment. From this, it follows that there must be the “right to receive the income on a particular date, so as to bring about a creditor and debtor relationship on the relevant date” -a right to receive a particular sum under the agreement would not be sufficient unless the right accrued by rendering of services and not by promising for services and where the right to receive is anterior to rendering of service, the income, therefore, would accrue on rendering of services.
The appropriation of prepaid amount was contingent upon the assessee performing its obligation and rendering services to the prepaid customers as per the terms. If the respondent-assessee had failed to perform the services as promised, it would be liable and under an obligation to refund the advance payment received under the ordinary law of contract or special enactments, like the Consumer Protection Act. The aforesaid legal position would meet the argument of the Revenue that the prepaid amount received was not liable to be refunded or repaid, whether or not any services were rendered. - Decided in favour of assessee.
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2018 (12) TMI 584
Addition u/s 68 - unexplained cash deposits in the Axis Bank account of the appellant-assessee - CIT-A upheld part addition observing that the assessee had not given any explanation for cash withdrawals of ₹ 5,10,550/- between the period 12th June, 2009 to 16th October, 2009 - Held that:- Commissioner of Income Tax (Appeals) had proceeded to give a different and new reasoning, which was not confronted for explanation before the first appellate order was passed. The appellant-assessee was taken by surprise. Reasoning in the form of additional ground, it is submitted, should not have been made the basis without asking and raising a specific query. It is also highlighted, with some merit, additions made include two small deposits of ₹ 3,250/- and ₹ 14,400/- made on 17th August, 2009 and 27th October, 2009. In the alternative, it was submitted that the addition should be partial.
We find that the Tribunal in the impugned order has failed and not taken note of the aforesaid contentions raised in respect of the deposit of ₹ 4,92,900/-. The said issue has not been examined in the light of the pleas and aspects that arise for consideration. Accordingly, we feel that the matter should be re-examined by the Tribunal. Liberty is also given to the appellant-assessee to file an application for additional evidence to justify and explain the reason for substantial cash withdrawals made between 12th June, 2009 to 16th October, 2009. We clarify that we have only remanded the matter for fresh consideration and have not finally determined or decided the aspect and issue on merits.
Question of law is accordingly answered, partly in favour of the appellant-assessee and against the Revenue with an order of remand to the Tribunal. We clarify that the remand is only restricted to the extent of the deposit of ₹ 4,92,900/-. We have not remanded the issue regarding sale of wearing apparel and silver utensils as appellant-assessee has not been able to justify and explain that cash deposits of more than five lacs were made out of sale proceeds of wearing apparel and silver utensils. There is no evidence and material to establish sale, inheritance etc..
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2018 (12) TMI 583
Addition u/s 68 - Unexplained cash credit - Held that:- Explanation of the assessee connecting the other cash withdrawals to cash deposits was rejected noticing the time difference between the withdrawals and deposits. The dates of withdrawal and deposits in cash, we observe, are not disputed and challenged. This reasoning has merit in view of rather illusionary explanation given by the appellant-assessee for making withdrawal of more than ₹ 99,00,000/- in cash during 12 months from April, 2009 to March, 2010. Pertinently, the alleged deal did not materialize. Reasoning of the assessing officer was for additional reason confirmed by the Commissioner of Income Tax (Appeals).
Aforesaid factual findings have been upheld by the Tribunal, which is the final fact finding authority.
Burden to explain the source of cash deposit was on the appellant-assessee, who as per the finding has not been able to discharge this burden. The evidence on record is undisputed, and the inference and factual findings recorded we would observe are supported by cogent and weighty reasoning. Explanation of the assessee has been duly considered and not ignored. Implausible and lame justification for making cash withdrawals has exposed and dented the concocted explanation regarding source of the cash deposit. Factual findings are based on cumulative effect of all facts covering all essential points. We would not interfere with factual findings unless they are irrational and absurd, which no person acting judicially and properly instructed in the field of law of taxation would have passed.
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2018 (12) TMI 582
Drilling rig as a qualifying ship within the meaning of Section 115VD - Held that:- This issue is covered against the Revenue by decision of the Delhi High Court dated 8th November, 2012 the Commissioner of Income Tax, New Delhi versus Jagson International Limited. [2012 (11) TMI 594 - DELHI HIGH COURT] in the case of offshore installations which are stationed at one place, the very nature of the activity in which the assessee engaged is to carry out operations in different places; necessarily, at least for a short duration the vessel has to be stationed at one place. In these circumstances, Revenue’s contentions that the vessel is nothing but “offshore installations” has no merit, in the case of Matdrills of the kind put to use by the assessee - reasoning and findings of the Appellate Commissioner and the Tribunal cannot be found fault with - Decided in favour of the assessee
Disallowance under Section 14A - Held that:- Supreme Court in Godrej Boyce Manufacturing Company Limited versus Deputy Commissioner of Income Tax Mumbai & Anr. [2017 (5) TMI 403 - SUPREME COURT OF INDIA] after referring to Section 14A has held that Rule 8D is in the nature of best judgment determination as it prescribes a formula for determination of the expenditure incurred in relation to income that does not form part of the total income under the Act, in a situation where the assessing officer is not satisfied with the claim of the assessee. The jurisdictional requirement for invoking Rule 8D is recording of satisfaction by the assessing officer that having regard to the accounts of the assessee placed before him, it is not possible to generate requisite satisfaction with regard to the correctness of the claim of the assessee. It is only then that the provisions of Sub-section 2 and 3 to Section 14A read with Rule 8D of the Rules or best judgment determination can be applied. This statutory mandate is not satisfied in the present case.
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2018 (12) TMI 566
MAT computation - loss arising from foreign exchange fluctuation as an unascertained liability to be added back to the book profit as per Clause (c) of Explanation to Section 115JA - Held that:- The scheme of Section 115J is a complete code by itself and a decision rendered in respect of a deduction under Section 37 of the Act cannot be made applicable. This very question was considered in the case of NHPC Limited [2018 (4) TMI 47 - PUNJAB AND HARYANA HIGH COURT] in which one of the questions, to be precise question no.6 was relating to computation of book profits for the purpose of Minimum Alternate Tax (MTA) under Section 115JB. In the said case, the Assessing Officer held that the amount was merely provisional and at the time of actual repayment of loan, the position may vary resulting in a profit and therefore, it was not an ascertained liability. Though before us the Revenue contended that the assessee has made only a provision, we find that nowhere in the assessment proceedings such a statement was made.
Even while passing the assessment order, the Assessing Officer has shown the same as loss on account of exchange fluctuation and not as a provision - Decided in favour of the assessee.
Income eligible for deduction under Section 80IB - Interest from deposit with Tamil Nadu Electricity Board and Interest received from housing and vehicle loans advanced to its employees - Held that:- It is not disputed by the Revenue that the assessee borrows amounts from the bank at a higher rate of interest and extends housing and vehicle loans to its employees at subsidised rates. Thus, these loans and advances being incentives to the employees, has to be held to be directly relatable to the interest of industrial undertaking.
In Arul Mariammal Textiles Limited [2018 (8) TMI 1729 - MADRAS HIGH COURT] we had an occasion to consider similar issue and after taking note of several decisions on the point, decided the question in favour of the assessee holding that the interest income earned by the assessee is merely incidental and not the prime purpose of doing the act in question -it is not the case of the Revenue that the amount was deposited in fixed deposit solely for the purpose of earning interest nor it is the case of the Revenue that the amount, which was deposited in fixed deposit was a surplus money, which was lying idle in the hands of the Assessee. - Decided in favour of assessee.
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2018 (12) TMI 567
Capital gain computation - Disallowing the claim of indexed cost of construction/improvement - non furnish of documentary evidence to prove the quantum of expenditure on improvement - Held that:- Assessee did not file any documentary evidence and consequently the addition made by the AO was upheld by the ld. CIT (A). Even before us, the assessee has neither produced any supporting evidence nor claimed that the assessee is having any supporting evidence. Accordingly when the assessee has not produced any documentary evidence in support of the claim, we do not find any error or illegality in the orders of the authorities below, qua this issue.- Decided against assessee.
Disallowance of deduction u/s 54 - mandation of deposit of the amount in the Capital Gain Account Scheme - Held that:- Once the assessee satisfies the condition of depositing the amount in the Capital Gain Account Scheme, only then the proviso to section 54(2) can be pressed into service. In case the assessee has not deposited the amount in the Capital Gain Account Scheme, then the investment is required to be made prior to the due date of filing of return u/s 139. Hence when the new residential house was neither acquired or constructed within the time period prescribed under section 54(1) of the Act, then the assessee is not eligible for deduction under section 54 and shifting of the assessment year for making the addition on this account would not achieve any purpose rather it will defeat the purpose of provisions of section 54 - AO was justified in not allowing deduction u/s 54, hence, the action of the AO is hereby upheld - decided against assessee.
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2018 (12) TMI 537
Drilling rig as a qualifying ship within the meaning of Section 115VD - Held that:- This issue is covered by decision of the Delhi High Court in The Commissioner of Income Tax New Delhi versus Jagson International Limited [2012 (11) TMI 594 - DELHI HIGH COURT] against the Revenue and in favour of the respondent-assessee. Appeal against the said decision is pending before the Supreme Court as Special Leave Petition has been admitted/leave granted.
As the parties submit that ruling by the Supreme Court would equally apply in the present appeal. Recording the above, the appeal is disposed of.
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2018 (12) TMI 569
Computing income from long term capital gain - Disallowance of indexed cost of improvement - addition towards the land levelling cost claimed to have been incurred in the year 1984 for want of any supporting evidence - Held that:- The assessee filed the receipt of the said expenditure before the ld. CIT(A) - the receipt filed by the assessee which is placed and found that the said receipt contains all the details of the tractor with registration number and owner of the tractor who has issued the receipt. The nature of work done alongwith the rate as well as the total amount raised against the said work.
It is stated in the said receipt that the levelling of the land was got done for the purpose of irrigation from canal though subsequently the assessee also got the tube well bored in the land itself. Thus, having regard to the area of the land and the contents of the receipt we find that the claim of expenditure incurred in the year 1984 for land levelling has been established by the assessee by production of the said receipt. Accordingly, the claim of the assessee deserves to be allowed. - Decided in favour of assessee.
Disallowance of claim U/s 54B - agriculture land purchased for ₹ 7 lakhs on 16.05.2012 in the name of the son is before the date of transfer of agriculture land sold by the assessee and that the expenditure of ₹ 10,11,000/- incurred on such land is not eligible for deduction - Held that:- Having regard to the facts and circumstances of the case when the assessee himself has declared the transfer of the land in question vide agreement dated 11/6/2013 then the earlier agreement dated 29/12/2011 cannot be considered as a relevant document for the purpose of transfer of the land in question. There is no dispute that the land for ₹ 7.00 lacs was purchased by the assessee vide agreement dated 16/5/2012 which is prior to the sale declared by the assessee vide agreement dated 11/6/2013. Consequently, the said purchase prior to the sale of the existing land would not be allowable for deduction U/s 54B of the Act.
Disallowance of expenditure claimed by the assessee on improvement of the said land which is purchased vide agreement dated 05/7/2013 - Held that:- As far as the expenditure incurred by the assessee for improvement of the agricultural and making it fit for agricultural operations, the said expenditure can be allowed as cost of the land itself. However, the expenditure incurred for construction of two rooms cannot be regarded as an expenditure incurred for the purpose of agricultural land. Hence we allow the part claim of the assessee to the extent of the expenditure incurred on improvement of the agricultural land and erection of boundary wall. The Assessing Officer is directed to recompute the deduction U/s 54B of the Act by allowing the said part of cost of improvement on the agricultural land.
Claim of deduction U/s 54B regarding the stamp duty expenditure was not taken as part of cost of purchase of land - Held that:- We find that the stamp duty is part of cost of purchase of land and therefore while allowing the claim of deduction U/s 54B of the Act, the total cost of land including the stamp duty has to be taken into consideration. Accordingly, we direct the Assessing Officer to consider the stamp duty paid by the assessee as part of the cost of purchase of agricultural land while computing the deduction U/s 54B of the Act. Hence, this ground of assessee’s appeal is partly allowed.
Restricting the claim of deduction U/s 54F - CIT(A) has adopted the cost of new house estimated by the DVO and consequently restricted the deduction U/s 54F of the Act to ₹ 20,07,687/- as against the deduction claimed by the assessee of ₹ 27,39,676/- - Held that:- So far as the purchase consideration of residential plot, the assessee has produced the evidence of ₹ 8.50 lacs as recorded in the purchase agreement dated 17/8/2013 and further an affidavit of the seller was filed by the assessee. Therefore, to the extent of the cost of plot of land in question is concerned when the assessee has produced the evidence of actual purchase consideration paid by the assessee then the question of estimation of the purchase consideration does not arise. Even otherwise when the land in question is within the village abadi land then the DLC rate adopted by the DVO is not proper. Hence, to the extent of the cost of purchase of land we allow the claim of assessee of ₹ 8.50 lacs being the actual purchase consideration paid by the assessee.
As regards the cost of construction of the house, we find that the assessee has filed a valuation report of registered valuer estimating the cost of construction at ₹ 37,03,630/- whereas the DVO has estimated the cost of construction at ₹ 32,74,800/-. Since the claim of assessee as well as the department is based on the estimated cost of construction determined by the respective valuers, therefore, it is a pure subject matter of estimate not based on actual expenditure incurred - when two separate estimates are the basis of claim of both the parties then to bring the controversy to an end we find it proper to estimate the cost of construction of the house as average of both the estimates made by the registered valuer as well as by the DVO. AO is directed to take the cost of construction of house as average of both the valuations done by the registered valuer and by the DVO. Hence, this ground of appeal is partly allowed.
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Customs
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2018 (12) TMI 559
Principles of Natural Justice - Valuation - rejection of value based on contemporaneous imports - Held that:- The Commissioner (Appeals) has relied upon the certificate issued by the Department of Polymer Science & Rubber Technology, CUSAT which was produced before him. He further note that this certificate was not produced before the adjudicating authority and the Commissioner (Appeals) has not given any opportunity to the Department to controvert the findings recorded in the certificate issued by the Department of PS & RT.
Further, relying upon the certificate, the Commissioner (Appeals) has set aside the Order-in-Original without affording any opportunity to the Department to controvert the said findings which is in violation of Rule 5 of the Customs (Appeals) Rules 1982.
Appeal allowed by way of remand.
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2018 (12) TMI 558
Valuation of imported goods - rejection of declared value - it appeared that the value of the import consignment was mis-declared and it was required to be re-determined - Held that:- In the instant case, having declared a price which is less than that of the scrap, the appellants cannot claim by any stretch of imagination that the value declared by them was correct. Moreover, there was discrepancy in the quantity also as found during the physical examination. The test report given by the Custom House Laboratory has indicated that the composition of the material in the impugned goods was far different from the one submitted by the appellants. These factors together would constitute beyond doubt reason to believe that the declared value was incorrect. Therefore, the declared price was rightly rejected.
Appeal dismissed - decided against appellant.
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Service Tax
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2018 (12) TMI 560
Maintainability of petition - efficacious alternative remedy - Appellate authority rejected the appeal on the grounds of limitation. - interpretation of Sections 66D(k), 66D(e) and 66E(e) - Exemption from service tax / negative list - it is claimed that inspection and testing fee it collects is a part of transmission and distribution of electric energy. - Held that:- It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations, should we need recourse to Article 226 of the Constitution. It illustrates two such occasions: where the very vires of the statute are in question or where private or public wrongs are so inextricably mixed up that for preventing public injury and for vindicating public justice a suitor may need constitutional remedies - the Court must have good and sufficient reason to bypass the alternative remedy provided by the statute. Surely matters involving the revenue where statutory remedies are available are not such matters.
Is the statutory adjudicatory mechanism under the Finance Act 1994 ill-suited to resolve the disputes the writ petitions have raised? - Held that:- Section 66D contains the “negative list of services”. Among them found are a few services by the Government or a local authority. The petitioner claims that the transmission and distribution of electricity by any of its utilities is exempted under Section 66D(k) of the Act. In addition, it claims that its purchasing the materials used for transmission activities is purely sale and purchase stands exempted under Section 66D(e) of the Act. Examined further, the petitioner Board also pleads that the inspection and testing fee it collects is a part of transmission and distribution of electric energy. So it is not based on any special contract. By that reckoning, the inspection and testing fee, the Board asserts, will not fall within the mischief of Section 66E(e) of the Act.
Time limitation - Section 73 of FA - Held that:- As is well known, the limitation is a mixed question of fact and of law. Summary adjudication under Article 226 of the Constitution is hardly suited to resolve that dispute. Second, let us consider whether a statutory body can resolve, as the Electricity Board puts it, intricate interpretative issues. Indeed, the Board has laid much emphasis on Whirlpool Corporation. But the Electricity Board or even the petitioners in the other two writ petitions have not complained that the Revenue has trampled on their fundamental rights or violated the principles of natural justice. Nor are the proceedings the Revenue initiated are alleged to be ultra vires.
It is not a case of the Revenue’s lacking the inherent, or subject matter, jurisdiction. Then comes interpretation. Intricate or plain, interpretation is the daily bread and butter of every adjudicatory- judicial, quasi-judicial-body or even an administrative body. To apply the law to a fact, one must first read the law. The reading entails understanding. And the very understanding is an interpretative process. Interpretation is not a judicial ritual; it is a cognitive process. Period. Even otherwise, legislative interpretation is not the sole prerogative of the Constitutional Court, though the legislative invalidation is.
Petition dismissed.
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2018 (12) TMI 555
Refund application - time limitation - Rule 5 of CCR read with N/N. 5/1006-CE NT - Held that:- In the instant case, the service rendered by the respondent was completed only on 30th June, 2012. Moreover the amount received by them on 30th April, 2012 was by way of an advance. The said invoice related to period April to June, 2012. Hence the relevant date has to be taken only from the date of completion of service not from the date of receipt of payment which is prior to the date of completion of service.
For one refund claim there cannot be more than one show cause notice and one adjudication order. It is not permitted to Revenue to reject the refund claim on one ground and when the said ground is held unsustainable, to raise the hue and cry that they are also other grounds on which the refund may be rejected.
Appeal dismissed - decided against Revenue.
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2018 (12) TMI 554
Refund of service tax paid on reverse charge basis - service received from the abroad for the period prior to 18.04.2006 - rejection of refund on the ground of unjust enrichment - principles of natural justice - Held that:- Necessary documents to prove that there is no unjust enrichment has not been submitted by appellant before original authority. Before Commissioner (Appeals) also they only submitted balance sheet and CA certificate, however, no further details like, Ledger, Schedule, etc. in support of the balance sheet were submitted before Commissioner (Appeals). Therefore, in absence of such documents, it is not possible to ascertain that whether the incidence of service tax paid and claimed as refund was passed on to any other person or otherwise.
In interest of justice an opportunity can be given to the appellant to satisfy the sanctioning authority regarding the issue of unjust enrichment by producing all the necessary documents - appeal allowed by way of remand.
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2018 (12) TMI 553
Construction services - Construction of Residential Complex Service - Commercial Construction Service - demand of service tax - period March 2006 to June 2010 - Held that:- The issue involved in this case is no more res integra as the same has already been considered and laid to rest by the decision of this very Bench of the Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2018 (9) TMI 1149 - CESTAT CHENNAI] wherein it has been held that works contract cannot be taxed prior to 01.06.2007 and in respect of any contract which is a composite contract, service tax cannot be demanded under CICS/CCS for the period after 01.06.2007.
The issue being identical, the above ruling squarely applies to the case on hand. Further, no contrary decision was brought to our notice by the Revenue.
Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (12) TMI 552
Valuation - related party transaction - additional consideration in the clearance of ‘silico manganese’ and ‘high chrome ferro manganese’ to M/s Steel Authority of India Ltd. - Rule 8 of Central Excise Rules - Held that:- The respondent is a subsidiary of M/s Steel Authority of India Ltd; that they are related is not in doubt. Respondent is also a speciality manufacturer and, while operating as an independent manufacturer, their expertise was resorted to by the parent company on their raw materials for a process where product was to be used in the steel plant. The invoices submitted by Learned Counsel make it amply clear that the cost of conversion is not market-determined but specifically agreed upon by the two entities - the special provision of rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 to be invoked to the exclusion of all others. Rule 11, read with rule 6, of the same rules are intended to cover situations of clearances in the normal course to independent buyers and hence not applicable in the present instance.
There is no allegation that the computation of value under rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 has ignored or excluded any includable element - Indeed, the cost of the raw material, subsumed in the ‘slag’ has, undoubtedly, been included in the computation under rule 8 and with such inclusion the discharge of duty liability on the goods cleared to the principal manufacturer incorporates the cost of the material subsumed in the ‘slag’ that has emerged during the process of manufacture. It could also be said that ‘slag’ is not a distinct product but is a remnant of the manufacturing process liable to appropriate duty on clearance as such. There is, therefore, no merit in the grounds adduced by Revenue.
Appeal dismissed - decided against Revenue.
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2018 (12) TMI 551
Clearance of industrial valves without payment of duty - International Competitive Bidding (ICB) - N/N. 6/2006-CE dt. 1.3.2006 - requirement of production of a certificate from a duly authorized officer of the Director General of Hydro Carbons in the Ministry of Petroleum and Natural Gas, Government of India - it was alleged that neither the appellant nor the sub contractor had produced such a certificate - Held that:- The remand directions of CESTAT in the said final order were in a very narrow compass. The matter was remanded to the adjudicating authority only to cause verification whether the certificates produced later meet the requirement of the notification. The said Tribunal’s order also clarified that the exemption is available only in cases where necessary certificates to ensure its proper end-use is produced. Quite evidently, beyond these directions, the adjudicating authority should not have caused further tooth-combing of the matter.
The dispute whether for benefit of Notification No.6/2006-CE, the conditions of Customs Notification No.21/2002-Cus. are required to be fulfilled, has been laid to rest by the Hon’ble High Court of Bombay in the case CCE Nashik Vs Kent Introl Pvt.Ltd. [2015 (11) TMI 1167 - BOMBAY HIGH COURT]. The Hon’ble High Court has held that such conditions of Customs notification are applicable only to the importer order and not to a domestic manufacturer.
The refunds of ₹ 77,95,480/- and also ₹ 49,11,485/- respectively sanctioned to appellants in respect of clearances made claiming the very same Central Excise Notification No.6/2006-CE have been inter alia held as erroneous refunds, will also not sustain and are therefore set aside - Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 550
Method of Valuation - Physician Sample of medicament manufactured on job work basis for the principal and cleared the same to the principal - whether valued u/s 4 or u/s 4A of CEA - Held that:- It has been held that in case of Physician Sample manufactured on job work basis, the valuation should be done on the cost of raw material plus job charges as held by the Hon’ble Supreme Court in the case of Ujagar Prints [1989 (1) TMI 124 - SUPREME COURT OF INDIA] - the proposal of valuation by the Revenue that it should be on pro rata value of Section 4A of trade pack is not correct and legal - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 549
CENVAT Credit - various input services - denial on account of nexus - Held that:- When the Revenue entertains a doubt as to the use of the impugned services in relation to the manufacture of final product, it is the primary duty of the assessee to place facts first and then address the issue of eligibility with the aid of decided case laws as to availing of input service tax Credit on the services.
The appellant in the appeal memo has filed copy of its replies filed in response to the Show Cause Notices and on a perusal of the same, it is found that the appellant has rather proceeded to address the eligibility taking shelter under various case laws instead of first satisfying the first question.
It is deemed proper to modify his directions and direct the adjudicating authority not to be influenced by any of the findings/directions of the Commissioner (Appeals), rather restrict himself to the doubts entertained in the Show Cause Notice and pass a fresh adjudication Order - appeal dismissed.
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2018 (12) TMI 548
CENVAT Credit - Common inputs and input services used in manufacture of taxable as well as exempt goods - separate accounts not maintained - Tawas being cleared without payment of duty amounted to trading activity which, being an exempted service, Credit reversal is sought - Held that:- Merely because the Tawas are supplied by the job worker to the appellant and then cleared to the customer, the Department has taken the view that the clearance of Tawa is a pure trading activity. It has to be noted that inputs for manufacture of Tawa has been supplied by the appellant herein. So also the job work charges are paid as conversion charges to the job worker. These elements including the excise duty has gone into the assessable value of the pressure cooker which is cleared along with the free Tawa in the combo-package. This being so, the appellants have rightly availed the Credit on the inputs.
The activity of supply of job worked goods to the principal manufacturer and thereafter, the clearance of the finished product, cannot be considered as a trading activity. Consequently, there is no requirement for the appellant to comply with the provision of maintaining of separate accounts as per Rule 6 of the CENVAT Credit Rules, 2004 - the Credit availed on the inputs used for the manufacture of Tawa is correct and proper.
Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 547
CENVAT Credit - capital goods/inputs - MS Angles, Channels and HR Plates, Signal Cables and Seamless Pipes - Held that:- The impugned goods which are used as support structures have been held to be eligible by this very Bench of the Tribunal in the case of Commissioner of G.S.T. & Central Excise, Trichy Vs. M/s. Shree Ambika Sugars Ltd. [2018 (6) TMI 733 - CESTAT CHENNAI] - the remand Order passed by the Commissioner (Appeals) being contrary to the ratio laid down by this Bench in the case of M/s. Shree Ambika Sugars Ltd. is unsustainable - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 546
CENVAT Credit - denial of credit on the ground that appellant is not the manufacturer of the goods - credit of service tax paid on GTA Services availed for transport of inputs from the supplier to factory of job worker - GTA Services for transport of finished goods from the factory of job worker to the appellant’s depot - penalty - Held that:- The issue stands decided in appellant own case LOTTE INDIA CORPORATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PONDICHERRY [2014 (2) TMI 482 - CESTAT CHENNAI], where it was held that credit cannot be allowed - denial of credit justified.
Penalty - Held that:- The issue is interpretational one and also taking note of the fact that the appellant has filed the appeal before the Hon’ble High Court on the bonafide belief that the credit is eligible, the penalty imposed are unjustified and requires to be set aside.
Appeal allowed in part.
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2018 (12) TMI 545
CENVAT Credit - case of the department is that since no manufacture process was being done in the appellant’s premises, they are not eligible for Cenvat credit either on the inputs or on the capital goods - Held that:- The manufacturing done by the job workers is treated as manufacturing of the assessee himself. Even, as per N/N. 214/86-CE dated 25.03.1986, in case of job worker, the principal manufacturer is required to pay duty - since the final product is cleared by the assessee as if it is manufacturing the excisable goods by them, they are clearly entitled for Cenvat credit - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 544
CENVAT Credit - various input services - denial of account of nexus in or relation to manufacture of final product - Held that:- All the input services have been held as input services in various judgments cited by the Ld. Counsel, accordingly, all the services are indeed input services and credit is admissible.
Rent-a-cab - Held that:- On perusal of invoice, it is found that in fact it is not rent-a-cab whereas it is service of supply of tangible goods which was used for organizing medical camp which is in connection to promotion of their product, therefore, it is an input service - credit allowed.
Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 543
Clearance of processed knitted cotton fabrics - N/N. 14/2002-CE dated 01.03.2002 (serial No. 12) - case of Department is that appellant is not fulfilling the condition no. 3 of the said Notification inasmuch as the unprocessed cotton fabrics used in the manufacture of processed knitted cotton fabric is clearly exempted and no duty was paid consequently - Held that:- The issue is no longer under dispute as under the same set of facts and the issue on merit it has been decided by the Larger Bench in the case of Arvind Products Ltd. [2014 (11) TMI 79 - CESTAT AHMEDABAD], where it was held that the only condition to be fulfilled is the assesse should not take cenvat credit that will be sufficient for allowing the exemption Notification No. 14/2002-CE.
Benefit is to be extended to appellant - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 542
CENVAT Credit - duty paid by the job worker - Held that:- Hon’ble Gujarat High Court in the case of Rohan Dyes & Intermediates Ltd [2013 (4) TMI 277 - GUJARAT HIGH COURT], in identical issue has held that the Tribunal rightly rejected the contention of the Revenue that the respondents should have reversed the Cenvat credit taken before sending the goods to the job worker since the job worker had not followed the procedure of job work - credit allowed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (12) TMI 541
Undisclosed sales turnover - Rejection of books of accounts - rejection solely on the ground that the account books and the stock register could not be produced during the survey conducted on 21.04.2012 - Held that:- There does appear to exist undisclosed stock having been discovered by the authorities on 21.04.2012 during the course of survey proceedings. Though, the quantity of excess/undisclosed stock discovered during that survey may itself not be such as may justify the total enhancement made to the turnover, however, it cannot be lost sight that in the present case, the assessee was found to have been indulged in purchase/manufacture and sale of goods outside its regular books of accounts.
The books of accounts were not produced on the date of survey and the finding with respect to the shortage and excess in the stock appears to be based entirely on facts, the further finding recorded by the authorities that the assessee had engaged in concealment of his turnover does not appear to suffer from any perversity - the rejection of books of accounts was rightly upheld.
Estimation of turnover - Held that:- Though, the goods are claimed to be excisable goods and it is further claimed that there is no other material to establish concealment of turnover, the authorities appear to have rightly considered the electricity consumption disclosed by the assessee itself in the earlier year. In the given facts of the case, the same does not appear to be irrelevant or arbitrary.
Consumption of electricity - Held that:- The assessee having remained engaged in the same activity in the earlier years, and the manufacturing activities have also been the same, the consumption of electricity, in such facts, offered a fair basis to make a guess of the estimated turnover - in the present case, rejection of books of account was made on valid basis. Therefore, the authorities have not erred in looking into the electricity consumption for the purpose of making an estimation of concealed turnover. The presentation arising on account of excisable nature of goods stood rebutted by discovery of undisclosed stocks.
Benefit of purchase tax - Held that:- Once the assessee deposits the tax on estimated purchase, he would be entitled for the corresponding benefit against payment of tax on turnover of sale.
Revision disposed off.
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2018 (12) TMI 540
Non-compliance with pre-deposit - appellant pleads for some more time to comply with the Tribunal's directions - Held that:- This Court will not interfere with the discretion of the Tribunal in imposing any condition to sustain a stay, more particularly when that discretion has a statutory sanction. Nevertheless, given the persistent plea the petitioner's counsel advanced about the petitioner's acute financial problems, this Court may take considerate view of the situation.
Petition disposed off holding that the petitioner shall deposit the amount as the Tribunal directed, in three equal monthly instalments.
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2018 (12) TMI 539
Validity of assessment order - petitioner again challenged the Ext.P4 order in the second appeal, before the Appellate Tribunal, the second respondent. The petitioner, in the appeals, filed stay petitions, too - Held that:- The petitioner has exercised on time his statutory remedy of filing second appeals. True, before the Tribunal, stay petitions are pending. Procedural fairness demands that the authorities wait, before taking further steps, until the appellate authority decides on the stay petitions - petition disposed off directing the respondent authority to defer coercive steps until the second respondent considers the stay petitions.
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2018 (12) TMI 538
Principles of natural justice - validity of assessment order - case of petitioner is that the Assessing Officer did not comply with the principles of natural justice while passing the orders of assessment - Held that:- It is seen that the Assessing Officer issued the notice of proposal on 21.06.2018, wherein, he has stated that the petitioner can also avail an opportunity being heard in person on any working day within the period of 10 days. Therefore, it is evident that the exact date of personal hearing is not indicated by the Assessing Officer.
In the absence of any communication from the Assessing Officer, the petitioner is justified in not making their appearance before the Assessing Officer, since the date of such hearing was not intimated to the petitioner in writing.
The matter has to go back to the Assessing Officer for reconsidering the whole issue after giving due opportunity of personal hearing to the petitioner exactly intimating the date of such hearing, more particularly, when the Assessing Officer has proposed to impose penalty also under Section 27(3)(c) of the Tamil Nadu Value Added Tax Act, 2006 - petition allowed by way of remand.
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Indian Laws
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2018 (12) TMI 557
Liability of purchaser of property in e-auction to clear the dues of previous owner - sale of immovable property by e-auction - denial of registration of property on the ground of attachment of said property - some dues were payable to the Punjab Government, which were pending against the previous owner of the said property - Section 31B of SARFAESI Act - Held that:- Section 31B leaves no manner of doubt that the rights of a secured creditor to realise secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall have to be paid in priority over all other debts and government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority - Hence it clearly emerges that the revenues, taxes, cesses and rates due to the Central Government, State Government or a Local Authority shall not have precedence or preference over the dues recoverable by a secured creditor by sale of secured asset. Moreover, it is an admitted fact herein that the respondent-bank had auctioned the property in question under the Act being a secured asset, duly mortgaged in their favour by the previous owner, to secure the credit facilities allowed by the respondent-bank.
In M/s Rana Girders Limited vs. Union of India and others, [2013 (8) TMI 540 - SUPREME COURT], the Apex Court held that the subsequent purchaser could not be burdened with the liability relating to the dues of the Government until and unless there is a specific provision in the statute mandating first charge for the purchaser.
In the case in hand, the petitioner had purchased the property in e-auction being the highest bidder, believing that the property was free from all encumbrances and charges. Thus, the petitioner was under no obligation to discharge the liability of the outstanding dues against the previous owner.
Petition allowed - decided in favor of petitioner.
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2018 (12) TMI 556
Smuggling - heroin - NDPS Act - acquittal of offence - case of appellant is that the entire proceedings were vitiated as the Investigating Officer was herself the complainant, who had submitted/filed the written complaint, wherefrom these proceedings emanated.
Held that:- A holistic reading of Mohan Lal [2018 (8) TMI 963 - SUPREME COURT OF INDIA] leaves no manner of doubt that the Supreme Court has disapproved, in cases relating to prosecution under the NDPS Act, not only the informant being the IO, but also the complainant, the officer who apprehends the accused, or the officer who conducts the search, being the IO. The reasons, for taking such a view are also clearly delineated in the said decision. The Supreme Court has clearly expressed a view that, if the person making the allegations is himself asked to investigate, serious doubts would arise with regard to his fairness and impartiality. It has also noted that it would be illogical to presume, and contrary to human conduct, to expect the IO, who had himself provided the initial information, or filed the complaint against the accused before the competent court, or even conducted the apprehension or search of the accused, to, at the conclusion of the investigation, submits a closure report, which could invite an inference that he had obviously implicated the accused, with all its attendant consequences, “for the complainant himself”.
The submission of appellant to the effect that, if the complainant, who has filed the complaint in a case relating to prosecution under the NDPS Act, was herself/himself the IO, the entire investigation and subsequent prosecution and trial stand vitiated, and that the accused is entitled, ipso facto, to acquittal, merits acceptance.
Also, there can be no manner of doubt that PW-1 Anju Singh was herself the IO as well as the complainant.
The appellant is entitled to be acquitted of the offence for which she stands convicted - appeal allowed.
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