TMI Tax Updates - e-Newsletter
December 7, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Disallowance of expenditure of an amount paid as Tips & Baksis by the bank to casual workers on festive occasion - The disallowance arbitrarily unjustified. - AT
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Income Tax:
Nature of receipt from TIL - payment of reimbursements - Assessee was not the ultimate beneficiary of the sum in question nor did it render any service to TIL. There is no basis on which the AO came to the conclusion that the sum in question was FTS in the hands of the Assessee. - AT
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Income Tax:
Jurisdiction of Additional CIT - The Standing Counsel should understand that this Tribunal is not to decide the mercy petition but has to decide the issue before it in accordance with the settled judicial principles of law. The Tribunal is not to decide the issue on the basis of human and irrelevant consideration. - AT
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Income Tax:
Nature of receipt - Capital or revenue receipt - since the immovable property itself is capital in the hands of the assessee, therefore the right to 'more enjoyment' of this property should also be capital in nature - AT
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Income Tax:
Disallowance made u/s.54G - assessee can purchase machinery even after shifting and commissioning of business from the new premises - there can be time lag between shifting of unit and receipt of capital gains - exemption allowed. - AT
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Customs:
Classification of combine harvester parts - the goods are parts of harvester combine - The goods are classifiable under the heading which occurred last in numerical order among those which equally merit consideration - Chapter heading 84339000 is proper classification of the goods in question - AT
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DGFT:
New Appendices 5 E and 5 F under EPCG Scheme of FTP 2015-20 - reg. - Public Notice
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Corporate Law:
Relaxation of additional fees and extension of last date of filing of Form CRA-4 under the Companies Act, 2013 reg. - Circular
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Corporate Law:
Companies (Filing of Documents and Forms in Extensible Business Reporting Language), Second Amendment, Rules, 2017 (XBRL) - Notification
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Service Tax:
C&F Agency services - nature of various other host of services (additional services) - those activities are not such as may be linked with any of the activities required to be performed to treat the service as "clearing and forwarding" service. - HC
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Central Excise:
Procedure for manual disbursal of budgetary support under Goods and Service Tax Regime to the units located in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim. -reg. - Circular
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Central Excise:
Valuation - inclusion of cost of bought out items - A machinery provision contained in Section 4 and that too the explanation contained therein by way of definition of transaction value can neither override the charging provision nor by reason thereof a goods which is not excisable would become an excisable one only because one is fitted into the other, unless the context otherwise requires. - AT
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Central Excise:
N/N. 3/2004-CE dated 8-1-2004 - the certificate was not issued in favor of appellant - On the perusal of the documents, we are satisfied that link between goods and the appellant and the goods meant for project is established, therefore appellant is entitle for the exemption N/N. 3/2004. - AT
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Central Excise:
CENVAT credit - capital goods - Bagassee Bailing Machine - said machine is used for bailing of baggase which partly used in the factory of the appellant as fuel therefore bailing machine is not used for exclusively in the manufacture of exempted goods, accordingly, Cenvat credit is admissible. - AT
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Central Excise:
Liability of duty on intermediate goods - job-work - it is not the case of the appellant that the Principal manufacturer paid duty at anytime as the goods manufactured by him were exempted from duty. Thus the liability for payment of duty on such intermediate goods manufactured by the Jobworker is on jobworker only. - AT
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VAT:
Exemption from CST - disallowance of export sales - there is no provision under the Act or Rules which mandates that the petitioner should produce a document showing realisation of export proceeds as a condition for claiming the exemption that is available for transactions which are in the nature of sale transaction in the course of export. - HC
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VAT:
Validity of assessment order - period of limitation - Limitation being a mixed question of law and fact, has to be necessarily raised by a party in order that the adjudicating authority applies its mind and renders a finding thereon. The petitioner has not offered any semblance of explanation as to why and for what reason it has failed to raise the issue of limitation - HC
Articles
Notifications
Companies Law-
F. No. 1/19/2013-CL-V - G.S.R. 1480(E) - dated
4-12-2017
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Co. Law
Companies (Filing of Documents and Forms in Extensible Business Reporting Language), Second Amendment, Rules, 2017
GST - States-
39/2017-State Tax - dated
1-12-2017
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Delhi SGST
Appointed Officers under the Central Goods and Services Tax Act, 2017 (12 of 2017) who are authorized to be the proper officers for the purposes of section 54 or section 55 of the CGST Act by the Commissioner in the Board, shall act as proper officers for the purpose of sanction of refund under section 54 or section 55 of the Delhi GST Act
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33007-FIN-CT1-TAX- 0043/2017-S.R.O. No. 547/2017 - dated
14-11-2017
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Orissa SGST
Amendments in the Notification of the Government of Odisha in the Finance Department No.19829-FIN-CT1-TAX-0022/2017, dated the 29th June, 2017
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32219-FIN-CT1-TAX-0043/2017-S.R.O. No. 539/2017 - dated
6-11-2017
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Orissa SGST
Amendment of notification bearing SRO no-295 dated 29th June,2017 including omission of words- ''goggles ...'' in Serial No-411 of Schedule-III.
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31319-FIN-CT1-TAX-0034/2017-S.R.O. No. 530/2017 - dated
28-10-2017
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Orissa SGST
The Odisha Goods and Services Tax (Ninth Amendment) Rules, 2017.
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30768-FIN-CT1-TAX-0043/2017-S.R.O. No. 513/2017 - dated
24-10-2017
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Orissa SGST
Notification for waiver of late fee payable under Section 47(1) of the OGST Act,2017 for all registered persons who failed to furnish the return in Form GSTR-3B for August and September,2017 by the due date.
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30640-FIN-CT1-TAX-0043/2017-S.R.O. No. 510/2017 - dated
23-10-2017
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Orissa SGST
Notification specifying the rate of State Tax @ 0.05 per cent on the intra -State supply of taxable Goods by a registered supplier to a registered recipient for export under certain conditions.
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30293-FIN-CT1-TAX-0043/2017-S.R.O. No. 504/2017 - dated
18-10-2017
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Orissa SGST
Notification specifying the rate of State Tax on food preparations put up in unit containers and intended for free distribution to economically weaker sections of the Society under a programme duly approved by State/Central Government.
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (12) TMI 308
Revision u/s 263 - allowable business expenses - training expenses incurred on the director of the Appellant company - Held that:- In this case, the expenses were incurred for formal education leading to formal degree being MBA awarded in favour of Mr Arnav Kasliwal [director of the Appellant company], the expenses were incurred by the assessee which definitely required greater scrutiny by the AO before allowing the same as business expenses of the assessee and to see that mandate of Section 37(1) is satisfied . Since, relevant and tangible material was not placed before the AO by the assessee during the course of assessment proceedings u/s 143(3) r.w.s. 143(2), the opinion formed by the AO could not have been proper in the absence of relevant material on record as the AO could not have made proper verifications.
Even, the course content of the said course was not produced before the AO despite been asked by the AO during the course of assessment proceedings u/s 143(3) r.w.s. 143(2). Thus, in the absence of relevant and vital information as detailed above, the AO could not have made proper verifications which ought to have been made to have come to the conclusion that these are business expenses allowable u/s 37(1) being incurred wholly and exclusively for the purposes of business of the assessee, which has certainly rendered AO assessment order as erroneous as well prejudicial to the interest of Revenue amenable to interference by learned Pr. CIT by invocation of revisionary powers u/s 263 as the said expenses stood allowed as business expenses despite being absence of relevant and tangible material on record before the AO. Thus CIT has rightly invoked the provision of Section 263 - Decided against assessee.
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2017 (12) TMI 307
Disallowance u/s 14A - Held that:- It appears from the orders of the Departmental Authorities that the disallowance under section 14A r/w rule 8D has been made considering the fact that investments made by the assessee in the equity shares of companies would give rise to exempt income. Thus, prima–facie, assessee’s claim / contention that it has not earned any exempt income by way of dividend in the relevant previous year appears to be correct. That being the case, following the decision of the Hon'ble Delhi High Court in Cheminvest Ltd. v/s CIT [2015 (9) TMI 238 - DELHI HIGH COURT] and the consistent view of the different Benches of the Tribunal, we delete the addition made by the Assessing Officer and sustained by the learned Commissioner (Appeals).
Disallowance of provision for leave encashment - Held that:- As could be seen, deduction claimed by the assessee was disallowed on the reasoning that the amount was not actually paid by the assessee in the relevant previous year. As per section 43B(f) of the Act, which was introduced to the statute by Finance Act, 2001 w.e.f. 1st April 2002, any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee is allowable in the relevant previous year, wherein, such amount was actually paid. Keeping in view the aforesaid statutory provision, we direct the Assessing Officer to verify assessee’s claim and allow it in the assessment year, wherein, the assessee has actually paid the amount towards leave encashment. This ground is allowed for statistical purposes.
Disallowance of deduction claimed for write–off of provisions for bad and doubtful debts - Held that:- Tribunal did not allow assessee’s claim as it was in the nature of provision. He submitted, in the impugned assessment year also, the assessee has not actually written–off the provision. He submitted, the Assessing Officer may be directed to allow assessee’s claim in the assessment year, wherein, the amount is actually written–off. In view of the aforesaid submissions of the assessee, we restore the issue to the file of the Assessing Officer to examine assessee’s claim and allow it in the year of actual write–off subject to fulfillment of other conditions of the Act. This ground is allowed for statistical purposes.
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2017 (12) TMI 306
Determination of sale value of shares - accrual of sale consideration - deeming fiction of Section 50CA - Held that:- In view of the finding given above, following conclusions are drawn on the issues/questions we have framed for the purpose of our adjudication:-
* Firstly,the sale value of SBPL as shown by the assessee is not in consonance with the contractual obligations entered by the parties under various Framework Agreements wherein it has been repeatedly envisaged that the value of SBPL was linked with the FMV of HEL/VIL and therefore, the share value as determined accordingly would get enhanced accordingly.
* Secondly, the sale consideration received by the assessee as per the Sale Purchase agreement of 12.03.2014 cannot be reckoned as “accrued” to the assessee in terms of section 48 of the Act, because herein this case it is not a case of simple sale and purchase transaction, albeit rights and obligation of the parties as per the agreements for transfer of shares was in exercise of call/put option, for which transfer price of the shares was determinable on FMV of the share value of VIL. What has been accrued to the assessee is the price of the shares which was to be determined as per the mechanism provided in the Framework Agreements, which stipulated FMV of VIL.
* Thirdly, section 50D as invoked by Ld. CIT (A) would not be applicable on the facts and circumstances of the case; and if at all it could have been brought to tax in the hands of the transferor under the deeming fiction of Section 50CA or Section 56(2)(x), then same are not applicable for the year under consideration as these provisions are applicable from the A.Y. 2017-18.
* Lastly, the value of the SBPL shares as per FMV of VIL would be ₹ 131.86 per share as determined above; and accordingly, AO is directed to compute the capital gain taking the sale value of SBPL at ₹ 131.86 per share.
Rationalisation of capital gain arising from transfer of right shares and rights renouncements - not allowing the cost of interests expenditure capitalized from the acquisition of ‘right shares’ at the time of transfer - Held that:- In our opinion in case of the assessee who has subscribed to ‘right shares’ by paying the actual amount of ₹ 300 crores, then by virtue of specific provision contained in section 55(2), only amount to be allowed as cost of acquisition would be ₹ 300 crores; and no other cost, like interest expenditure incurred on loan taken for purchase of ‘right shares’ could be allowed as deduction as cost of acquisition, while computing the capital gain on transfer of such shares. Accordingly, we hold that the AO was justified in not allowing the cost of interests expenditure capitalized from the acquisition of ‘right shares’ at the time of transfer.
Gain arising from sale of unlisted shares to be taxed as long-term capital gain or short term capital gain - Held that:- Here in this case, the shares have been transferred prior to 31.03.2014, therefore, the newly amended Act would not be applicable at all and the assessee will get the benefit of shorter period, i.e., period of less than 36 months as given in section 2(42A) read withproviso thereto as per the relevant provision existed for the A.Y. 2014-15. Thus, we hold that the AO as well as Ld.CIT(A) are not justified in law in re-characterizing/re-classifying the ‘long term capital gain’ to ‘short term capital gain’ shown by the assessee. Accordingly, the gain on transfer of SBPL’s share would be taxable as ‘long term capital gains’ and not short term capital gains and resultantly, Ground No.1 as raised by the assessee is allowed.
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2017 (12) TMI 311
Deduction U/s 80 (1A) - whether the assessee should be a small scale undertaking on the last day of the previous year relevant to the initial/first assessment year and that the said requirement need not be satisfied in the subsequent assessments? - Held that:- As decided in Commissioner of Income Tax Versus International Tractors Ltd. [2017 (7) TMI 822 - DELHI HIGH COURT] that the Assessee here did not fulfil the eligibility condition for the initial AY i.e., 1997-98; and that notwithstanding that it may have fulfilled the eligibility conditions in the initial AY, it nevertheless had to fulfil the such eligibility condition for every one of the ten consecutive AYs inclusive of the initial AY in order to be eligible for the deduction. - Decided in favour of assessee.
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2017 (12) TMI 305
Disallowance on account of demand for outstanding municipal taxes - Held that:- The assessee has established on the basis of the relevant lease agreement that the property was occupied by the assessee as lessee from 1st April, 2002 and he was liable to pay all the property taxes out-goings and other burdens whatsoever payable to local or other authority upon the demised premises. He has also established on the basis of the demand notice issued by the municipal authority that the amount in question was paid by the assessee on account of municipal taxes for the period from 1st April, 2002 along with the interest thereto. Moreover, the said payment, as pointed out for the assessee, was made on 13.12.2008 i.e. during the year under consideration and the assessee, therefore, was entitled to claim deduction for the same on payment basis as per section 43B of the Act. Thus we are of the view that the disallowance made by the A.O. on account of municipal tax arrears paid by the assessee was not sustainable and the CIT(A) is fully justified in deleting the same. In that view of the matter, we uphold the impugned order of the Ld. CIT(A) giving relief to the assessee on this issue and dismiss ground no 1 of the revenue’s appeal.
Disallowance on account of business promotion expenses - Held that:- After having considered the nature of business of the assessee which warrants the incurring of expenditure on business promotion, the Ld. CIT(A) allowed the claim of the assessee for business promotion expenditure to the extent of 90% and sustained the disallowance only to the extent of 10% on account of personal and unverifiable element involved in the said expenditure. As rightly contended by the learned DR, the relief given to the Ld. CIT(A) to the assessee on this issue to the extent of 90% is quite excessive and unreasonable keeping in view the case made out by the A.O. showing the involvement of personal and unverifiable element, which has remained uncontroverted even before the Ld. CIT(A). Having regard to all the facts and circumstances of the case, we are of the view that it would be fair and reasonable to allow the expenses claimed by the assessee on business promotion to the extent of 75% and disallow the balance 25%. We accordingly modify the impugned order of the Ld. CIT(A) on this issue and sustain the disallowance made by the A.O. on account of business promotion expenditure to the extent of 25%. Ground no 2 of the revenue’s appeal is thus partly allowed.
Addition under section 14A - Held that:- There being net interest income earned by the assessee during the year under consideration, there was no question of making any disallowance on account of interest under section 14A of the Act. As regards the remaining disallowance made under section 14A r.w.r. 8D on account of administrative expenses, it is observed that the same was worked out by the A.O. at ₹ 2,29,022/- being 0.5% of the average investment. The Ld. CIT(A) however has restricted the same to ₹ 1,09,861/- purportedly on the basis of some working filed by the assessee. At the time of hearing before us, the said working is not furnished by the assessee. Even the assessee has not able to explain the basis on which the disallowance of ₹ 2,29,022/- is restricted by the Ld. CIT(A) to ₹ 1,09,861/-. We, therefore, confirm the disallowance made by the A.O. under section 14A r.w.r. 8D to the extent of ₹ 2,29,022/- and allow partly ground no 3 of the revenue’s appeal.
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2017 (12) TMI 304
Revision u/s 263 - entitled to deduction u/s 80IB - Held that:- Electrical installation charges and club membership fees were received by the assessee from the flat holders of the project on account of common facilities and amenities provided to the flat holders in the housing project developed by it. In the case of CIT vs Omaxe Buildhome (P) Ltd. (2016 (9) TMI 295 - DELHI HIGH COURT) has held that housing schemes are not only consisted of built up residential building, but also separate common facilities and amenities provided for residential unit of housing project. It was held that such common facilities and amenities are an integral part of the housing project and the assessee, therefore, would be entitled to deduction under section 80IB.
Having regard to the facts of the present case which clearly show that the copy of the relevant sample agreement was filed by the assessee before the A.O. during the course of assessment proceedings to explain the nature of electrical installation charges and club membership fees received by the assessee, we are of the view that that there was no error in the order of the A.O. in allowing the claim of the assessee for deduction under section 80IB in respect of electrical installation charges and club membership fees received from the flat holders of the project.
As regards the other error allegedly pointed out by the Ld. CIT in the order of the A.O, we find merit in the contention of the learned counsel for the assessee that the relevant amendment to section 80IB(10) having been made with effect from 01.04.2010 i.e. much after the sanction of the housing project of the assessee on30.03.2007, the same was not applicable in the case of the assessee as held in the case of CIT vs Sarkar Builders (2015 (5) TMI 555 - SUPREME COURT) and the order of the A.O. cannot be regarded as erroneous on the ground that the applicability of the said amendment in the case of the assessee was not considered by him. In our opinion, there were thus no errors in the order of assessment made by the A.O. under section 143(3) as alleged by the Ld. CIT warranting revision under section 263. Thus we set aside the impugned order passed by the Ld. CIT under section 263 and restore that of the A.O. passed under section 143(3). - Decided in favour of assessee.
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2017 (12) TMI 303
Disallowance of expenditure of an amount paid as Tips & Baksis by the bank to casual workers on festive occasion - AO as well as the Ld. CIT (A) did not allow this expenditure on the ground that there was no commercial expediency behind incurring this expenditure and that the explanation is not satisfactory - as per assessee the disallowance is bad in law the assessee has produced sufficient evidence in the form of vouchers and receipts in evidence of any payment of Tips & Baksis - Held that:- Payments were made by the Head Office, Regional Offices as well as 44 branches situated in different parts of West Bengal. Such payments are made after due authorization from the management. The revenue authorities were wrong in coming to a conclusion that there is no commercial expediency in making these payments. The disallowance arbitrarily unjustified. Hence we allow this ground of the assessee.
Addition of a provision for amortisation - Held that:- Referring to the CBDT vide its instruction no 17/2008 dated 26.11.2008 and case of Catholic Syrian Bank Ltd. vs ACIT (2009 (8) TMI 858 - ITAT COCHIN) allowing amortisation of the premium paid on acquisition of HTM bonds.
Provision made for fraudulent withdrawals - Held that:- Fraudulent withdrawals were committed by one of the employees of the bank in the earlier years. There was no debit to the profit and loss account during the year on this issue. The provision was made in the books of account in the earlier assessment years and no provision was made in this year. Under these circumstances we failed to understand as to how an addition can be made during the year. The A.O. on the one hand observes that the said amount is debited to the profit and loss account in the impugned assessment year 2009-10 and on the other hand makes an addition of a provision made for fraudulent withdrawals in the earlier year without any change in the facts and circumstances of the case. Such addition cannot be sustained. Hence we delete the said addition
Addition for provision for gratuity - Held that:- As there is no provision in the account, Section 40A(7) of the Act has no application. Hence this addition is hereby deleted.
Disallowance of interest payable on deposits borrowings etc. - Held that:- Central Board of direct taxes in circular no 559 dated 24.04.1999 has clarified that securities held by bank must be regarded as stock in trade and that interest payments and receipts from broken period on purchase of securities must be regarded as stock in trade and that only the net interest on securities should be brought to tax as business income. This circular was later withdrawn by CBDT and it was clarified that the issue whether a particular investment in security would constitute stock in trade or not is a question of fact. All these issues have not been property considered by the A.O. or the Ld. CIT(A). The addition under such circumstances cannot be sustained.On these facts and circumstances of the case, we are of considered opinion that all these issues have to be examined in details by the A.O. and a fresh decision taken denovo, in accordance with law. Hence we set aside this issue to the file of the A.O.
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2017 (12) TMI 302
Taxing of income u/s. 44BB as against section 44B - assessee had given three ships on hire that the ships were used for transporting men/goods to offshore locations of India that that the hirer was carrying the activities related to the exploration and production of mineral oil at offshore location - Held that:- Section 44BB will prevail over section 44B as it is a special section which came on statute later and deals with specific activities. If the services provided by the assessee are excluded very little purpose will be served of incorporating section 44BB for computing the profits in relation to the services connected with exploration and extraction of mineral oils. The provision will then operate in a very limited field. In our opinion the Parliament intent was not to give a limited field to the section 44BB. That is why for taking care of the activities related with oil exploration and to segregate the general shipping activities mentioned in section 44B a special provision i. e. 44BB was introduced. The ships were hired by the user for transporting men/machines to locations where it was doing exploration/production of mineral oil. Thus it was not a case of transporting goods or livestock by ships simplicitor. The activity was directly and closely related with ‘services’rendered by plant and machinery and the ships for the purpose of section 44BB have been treated as plant. As the services were rendered 'in connection with' prospecting for and exploration activities so in our opinion the income arising out of such activities has to be assessed u/s. section 44BB and not u/s. 44B of the Act.
Gross receipts for the purpose of computing the presumptive income of the assessee u/s. 44BB - service tax collection addition - Held that:- Service tax collected by the assessee has to be deposited in the government by all the service-tax-collectors. On behalf of the State they collect the tax and deposit in the treasury. There is element of income in it. We hold that the order of the FAA does not suffer from any legal or factual infirmity. So confirming the same we decide the effective ground of appeal against the AO for both the AY. s.
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2017 (12) TMI 301
ALP determination being the interest on loan given to AE - Held that:- The present case, the assessee has remitted the funds as loan and later on decided to convert the same as equity. It is not clear from the records that the purpose for which the loan was given. The assessee claims that it is for the business exigencies (quasi capital) and then it was converted as equity. The assessee has submitted that the parent company has allotted the shares in the FY 2011-12 but it is not clear, when the decision was made to convert the loan into equity. Considering the above facts and issues relating to this transaction, in our considered view, this matter needs further verification at the AO/TPO level to find out the purpose of loan, whether for business exigencies. If it is for the business exigencies and particularly it comes under definition of international transaction, the same has to be considered as financial transaction.
Provision for gratuity added to profit u/s 115JB - Held that:- The approval of the fund is only the procedural aspect, which can be cured. But it is not clear from the record submitted before us that these funds were actually deposited. We refuse to entertain the claim of the assessee that this can be claimed as expenditure. The same is the case with the treatment in the calculation of 115JB. In case the funds are deposited in the separate fund based on actuary valuation, this cannot be added back in the calculation of 115JB to determine the book profit.
We direct the AO to allow the increase in profit consequent to disallowance of provision for gratuity as deduction u/s 10A. Accordingly, ground raised by the assessee is allowed in this regard and the other grounds relating to claim of gratuity as expenditure are dismissed.
Deduction u/s 10A - Held that:- When the assessee seeks permission from the RBI through the authorized dealers for the delayed remittance and the same are ratified by RBI, such realizations are eligible to claim deduction u/s 10A. As per provision of section 10A(3), the realization should be brought to India within 6 months or as approved by proper authority, in the given case, it is RBI, which is the approved authority. Hence, assessee is eligible to claim deduction u/s 10A. Therefore, we direct the AO to allow the assessee’s claim of exemption u/s 10A. Accordingly, this ground is allowed.
Export receivable converted into equity - deduction u/s 10A - Held that:- As the issue under dispute is squarely covered by the decision of the coordinate bench of this Tribunal in the case of Sankhya Infotech Ltd. (2011 (4) TMI 793 - ITAT, HYDERABAD) and the assessee has received approval for the investment, such investments were out of sale proceeds. The authorized dealer has adjusted against such investment and issues FIRC’s to the assessee, then, it amounts to realization of export proceeds within the meaning of actual receipts for the purpose of section 10A. Since, the assessee has not submitted any document in support of approval granted by RBI and FIRC certificates, we remit this issue to the file of the AO to examine the FIRC’s and approval from RBI, in case it is in order, the assessee is eligible for deduction u/s 10A on such sum. Accordingly, ground raised by the assessee is allowed for statistical purpose.
Direct the AO to allow the assessee’s claim of exemption u/s 10A by excluding the branch turnover from both export turnover and total turnover.
TPO has not followed the directions of DRP in pit & substance by overlooking the directions of the DRP to consider the margin in case of assessee as well as comparables after excluding depreciation. Since AO/TPO has arrived ALP adjustment without excluding depreciation, in our considered view the ALP adjustment arrived at by the TPO is not as per the directions of DRP. Hence, we remit this issue back to the AO/TPO to calculate the TP adjustment excluding depreciation.
Considering the fact that section 10A allows assessee to bring the foreign exchange within 6 months to claim benefit under this section. In our considered view, the same can also be extended to assessee as the reasonable period outstanding. Accordingly, we direct the AO/TPO to charge interest of LIBOR + 200 bps on the outstanding amount beyond 6 months. In order to determine the period and computation of interest, the issue is remitted back to AO/TPO. Accordingly, ground raised by the assessee is allowed for statistical purposes.
Addition of towards asset written off and towards depreciation claimed on the above asset - Held that:- In the present case, assessee has purchased this software to improve the business by linking the transaction of different countries. It is not always end up with good decision, it is part of business decisions. It is not always relevant how much revenue it has generated or improved the business. It is not sometimes quantifiable. It is enough to prove that the purchase transaction and relevant payment is proper. AO is expected to verify only the legality and genuineness of the transaction and not the rationale of such transaction, it should be the domain of the management. Accordingly, we direct the Assessee to submit the relevant information relating to purchase and payment of ERP software. The assessee has to submit the copy of bills and payment vouchers with bank statement in which such payments were cleared. We note that assessee has not submitted such information even before AO/DRP even though opportunity was extended. Now, ld. AR has submitted that all the information is available, accordingly, we remit this issue back to the file of the AO with a direction to verify the transaction as per due procedure only for the genuineness of purchase and payment. Assessee may be given proper opportunity of being heard. This ground of appeal is allowed for statistical purposes.
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2017 (12) TMI 300
Assessment under section 153A - Held that:- Assessing Officer was not correct in law in making the addition in the assessment made under section 153A read with section 143(3) when no incriminating material was found during the course of the search in respect of the addition made by him. We note that the search happened on 11th February, 2010 i.e. A.Y 2010-11 and it is not the case of AO that assessments under question were pending before the AO on the date of search. So, as per the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] wherein it was held that no addition can be made without incriminating material seized during search, which is not the fact in the present case before us. - Decided in favour of assessee.
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2017 (12) TMI 299
Nature of receipt from TIL - payment of reimbursements - receipt in nature of FTS - India USA DTAA - payment by TIL to a third party service provider - Held that:- A perusal of the details in Annexure-3 & 4 to this order would go to show that it was third parties who had rendered services to TIL. The actuals billed by the third parties were paid by the Assessee in USA and were later on reimbursed by TIL to the Assessee in India. We are of the view that there is no basis for the AO to conclude that the payment of reimbursements were in the nature of FTS. As rightly contended on behalf of the Assessee, the Assessee was not the ultimate beneficiary of the sum in question nor did it render any service to TIL. There is no basis on which the AO came to the conclusion that the sum in question was FTS in the hands of the Assessee.
Even assuming that the sum in question is in the nature of FTS, under Article 12(4)(b) of the DTAA it is only when technical or consultancy services rendered by the Assessee makes available technical knowledge, experience or skill that the sum in question can be taxed in the hands of the Assessee. There is no evidence brought on record to show that the technical skill, knowledge etc., were made available to TIL by the Assessee. At best the sum in question is taxable only in the hands of the persons who provided the services to TIL and not in the hands of the Assessee. The Transfer Pricing Officer scrutinized the details of reimbursements while examining the international transaction of reimbursement by TIL to the Assessee u/s.92 of the Act and found that the Assessee made no profit on such reimbursements and that the reimbursements were at Arm’s Length. All these circumstances are sufficient to conclude that the order of the CIT(A) on this issue has to be upheld. - Decided in favour of assessee.
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2017 (12) TMI 298
Suppression of closing stock - Held that:- It is evident that the Assessing Officer without calling for an explanation from the assessee to reconcile the difference has made the addition alleging suppression of closing stock. However, before the first appellate authority, the assessee has reconciled the difference with supporting evidence which was sent for verification of Assessing Officer. - Decided against revenue
Addition on account of inflated purchases - Held that:- As seen, on the basis of a monthly statement filed by the assessee, the Assessing Officer has made the addition alleging purchase suppression. However, before the first appellate authority, the assessee has reconciled the difference and the learned Commissioner (Appeals) after examining the reconciliation statement having found that it is on the basis of the books of account of the assessee has deleted the addition. Further, it is evident on record, the first appellate authority has sent the evidences filed in the paper book for the examination of the Assessing Officer. Therefore, the allegation of the Learned Departmental Representative that the Assessing Officer was not given opportunity to examine additional evidence is unacceptable. It is further to be noted, the Learned Departmental Representative has not been able to controvert the factual finding of the first appellate authority that the reconciliation submitted by the assessee is on the basis of books of account. - Decided against revenue
Suppression of production resulting in unaccounted sales - Held that:- Commissioner (Appeals) having examined the documentary evidences brought on record being satisfied with the claim of the assessee has deleted the addition. As far as the contention of the Learned Departmental Representative that learned Commissioner (Appeals) has deleted the addition on the basis of addition evidence is concerned, we are unable to accept the same. As could be seen from the impugned order of the learned Commissioner (Appeals), the documentary evidences furnished by the assessee before the first appellate authority in a paper book were sent to the Assessing Officer for his examination and comments. It also emerges from record that during the remand to the Assessing Officer, the assessee has made ground–wise submissions before the Assessing Officer by referring to the relevant supporting documents. In view of the aforesaid, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised.
Addition on account of sale of waste biscuits / biscuit powder / broken biscuit - Held that:- As could be seen, other income shown by the assessee is from sale of broken biscuits, and powder biscuits. While burnt biscuits are of no use, broken biscuits are re–usable in manufacturing process and they have been sold at ₹ 26 per kg. Whereas, biscuit powder is not fit for human consumption, hence, sold at ₹ 1.48 per kg. These facts have been demonstrated through documentary evidence including Central Excise registers before the first appellate authority. Notably, the learned Commissioner (Appeals) after verifying the production records, Excise records, has found that the uniform rate cannot be applied to regular biscuit and burnt / broken / power biscuits. It is a fact on record that the evidences produced by the assessee were sent for examination of the Assessing Officer in remand and before the Assessing Officer the assessee has made detailed submissions justifying its claim. Thus, the learned Commissioner (Appeals) having recorded a purely factual finding based on documentary evidence and which could not be controverted by the Department
Disallowance of expenditure on foreign travel - Held that:- As could be seen from the facts on record, the specific allegation of the Assessing Officer is, except the board resolution and few fax messages, the assessee has failed to bring on record supporting documentary evidence to demonstrate the purpose of foreign travel undertaken by the directors and executives. As in assessee’s own case for immediately preceding assessment year, i.e., 1995–96, the Tribunal has upheld 50% disallowance of foreign travel expenses in respect of the very same persons. Therefore, respectfully following the aforesaid order of the Tribunal, we restore the disallowance made by the Assessing Officer. This ground is allowed.
Unutilised MODVAT credit - Held that:- The issue stands decided in favour of the assessee by the decision of the Hon'ble Supreme Court in CIT v/s Indo Nippon Chemicals Co. Ltd., [2003 (1) TMI 8 - SUPREME Court].
Ad–hoc disallowance made by the Assessing Officer on account of suppressed sale of confectionary - Held that:- Commissioner (Appeals) has recorded a factual finding that most of the discrepancies found by the Assessing Officer are on account of maida which is not a raw material for confectionary. That being the case, there is no justification for even sustaining a part of ad–hoc disallowance made by the Assessing Officer in respect of confectionary. Therefore, we delete the addition sustained by the learned Commissioner (Appeals).
Disallowance of deduction claimed on account of spoilt and damaged goods - CIT-A sustained the disallowance @ 5% out of the deduction claimed on account of mouthwash and toothbrush - Held that:- We are of the opinion that assessee’s claim of deduction on account of spoilt and damaged goods insofar as it relates to biscuits and confectionaries is allowable, since, assessee itself manufactures such items. However, as far as mouthwash and toothbrush are concerned, the assessee has not manufactured such products, therefore, the assessee could have returned such damaged goods to the manufacturer and claimed reimbursement. In view of the aforesaid, accepting the reasoning of the first appellate authority we dismiss the grounds raised by the Department as well as by the assessee.
Addition made with regard to suppressed production resulting in suppressed sales of biscuits - Held that:- As compared to the yield of Mumbai unit in the preceding assessment years as noted above, the assessee has shown a higher yield for the Mumbai unit in the impugned assessment year. Therefore, on over all consideration of facts and circumstances of the case, we are of the considered opinion that rejection of books of account and addition made on estimate basis alleging suppression of sale is not in accordance with law. Therefore, even a part of addition made by the Assessing Officer cannot be sustained. Accordingly, we delete the addition made by the Assessing Officer fully.
Disallowance of deduction claimed under section 80I and 80IA - Held that:- As in assessee’s own case for assessment year 1995–96, we find that the Tribunal has upheld the disallowance of deduction claimed under section 80I and 80IA of the Act. Respectfully following the aforesaid decision of the Tribunal, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the ground raised.
Disallowance of depreciation on guest house - Held that:- The issue has been decided against the assessee by the Tribunal in the preceding assessment years as well as by the decision of the Hon'ble Supreme Court in Britannia Industries Ltd. v/s CIT(2005 (10) TMI 30 - SUPREME Court).
Disallowance of depreciation on certain plant and machinery - Held that:- The machine in question is used for cutting and wrapping confectionary toffees and were delivered at ready to use condition. Thus, it is evident that the machine has no role to play in the production activity. Therefore, when the learned Commissioner (Appeals) has accepted the fact that the machine was purchased and commissioned and formed part of the fixed asset in the relevant financial year, there is no reason to disallow assessee’s claim of depreciation. Moreover, the fact that in the subsequent assessment year, assessee’s claim of depreciation on such machinery has been allowed has not been controverted by the learned Departmental Representative. Therefore, we delete the disallowance made by the Assessing Officer and confirmed by the learned Commissioner (Appeals)
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2017 (12) TMI 297
Validity of the assessment made as the Additional CIT - Lack of inherent jurisdiction - transfer of case - Held that:- Revenue has not been able to demonstrate that the Additional Commissioner of Income tax who had passed the assessment order had valid authority to perform and exercise the powers and functions of an Assessing Officer of the assessee and to pass the impugned assessment order.
Identical issue came up for consideration before the Tribunal in the case of Tata Communications Ltd. for A.Y. 2002-03,wherein decide the issue in favour of the assessee and quashed the assessment made by the Assessing Officer. The learned Standing Counsel even though tried his best and submitted exhaustive arguments to compel us to take a different view from the view which has been take by the co-ordinate bench under similar facts and circumstances of the case of the assessee in A.Y. 2001-02, he could not adduce any cogent material or evidence, which may prove that the facts and issue involved in the impugned assessment year in the additional ground taken by the assessee is different from that of A.Y. 2001-02.
He went on again and again submitting before this Tribunal that if the entire order is quashed after such a long time without deciding the merits of the case, would cause unusual financial burden on the Revenue to refund the taxes paid. The Standing Counsel should understand that this Tribunal is not to decide the mercy petition but has to decide the issue before it in accordance with the settled judicial principles of law. The Tribunal is not to decide the issue on the basis of human and irrelevant consideration. We noted that Hon’ble Supreme Court in the case of CIT vs. Shelly Products & Another (2003 (5) TMI 4 - SUPREME Court) clearly held that taxes paid by the assessee on the returned income cannot be refunded. We, therefore, following the principle of judicial discipline hold that in the facts of the present case, the Additional CIT in the absence of a valid order u/s. 120(4)(b) has well as section 127(1) of the Act would not have exercised power of a Assessing Officer to pass impugned assessment order. Accordingly, the impugned assessment order passed is without jurisdiction would have no show and, therefore, quash the same.
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2017 (12) TMI 310
Addition u/s 69C - books of account seized during the search - rejection of books of accounts - Held that:- The amounts in question have been found to be entered in the regular books of account of the assessee. Therefore, inquiry, if any, in respect of valuation of the building ‘Dhanranjni’ was permissible in the course of regular assessment proceedings. The findings recorded by the Tribunal, therefore, are in consonance with the principles propounded in the above referred decisions of this court. Consequently, it cannot be said that the impugned order of the Tribunal suffers from any legal infirmity giving rise to a question of law, much less a substantial question of law, warranting interference. The appeal, therefore, fails and is accordingly, summarily dismissed.
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2017 (12) TMI 296
Addition in respect of under valuation of closing stock - Held that:- While it is the case of the Revenue that CENVAT credit of ₹ 59,30,117/- represents the part of the closing stock of the assessee in terms of section 145A of the Act, it is the case of the assessee, on the other hand, that the action of assessee is revenue neutral and there is no infringement of s.145A in essence. In this regard, we notice that the issue is no longer res integra and adjudicated in favour of the assessee in its own case in the preceding AY 2008-09 on similar facts.
Claims of depreciation allowances on plant & machinery which was stated to be not claimed in the return of income inadvertently - Held that:- The assessee having not claimed the depreciation eligible to it under law, will not operate as estoppel when relevant facts are available on record. In the circumstances, we do not subscribe to the dismissal of the claim of depreciation allowances stated to eligible to the assessee by the CIT(A). The aforesaid view finds support from plethora of decisions including judgement of Hon’ble Bombay High Court in the case of CIT vs. Pruthvi Brokers & Shareholders Pvt.Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT].
We are not inclined at this stage to go into the merits of the claim of depreciation allowance. We set aside and restore the issue to the file of the AO for its de novo examination with a direction to allow the depreciation allowances in accordance with law regardless of its not having been claimed in the return of income. The AO however shall be entitled to make suitable adjustments/corrections in the consequential claim of depreciation allowance in the subsequent years after verification.
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2017 (12) TMI 309
Unaccounted income - price difference between December 2007 and May 2007 - Held that:- There is no evidence brought on record by the Revenue to show that any consideration for purchase of the said shares was paid by the respondent-assessee over and above what was shown by the respondent-assessee. Therefore, on the basis of material on record, the finding of fact recorded by the Assessing Officer was set aside by the Commissioner (Appeals) while deciding appeal. His order has been confirmed by the Appellate Tribunal. The result of the finding is that the direction to treat the price difference between December 2007 and May 2007 as unaccounted income has been set aside. We see no reason to disturb the concurrent findings of fact recorded by the first and second appellate authorities
Sale of shares through IPOs - Tribunal held as cannot be said that frequency of transactions in shares of the assessee was very high - no repetitive transactions were entered into by the assessee and entire investment in shares was made by the assessee out of her own funds - Held that:- Though the Appellate Tribunal has referred to the fact that similar treatment given by the assessee in the books of accounts for the earlier years was accepted by the Assessing Officer, that is not the only ground on which the finding is rendered by the Appellate Tribunal. It is true that paragraph3.3 of the judgment of the first appellate authority may not contain elaborate reasons. However, the Appellate Tribunal has gone into the material on record and recorded the aforesaid findings. There is no reason to disturb the findings of facts recorded on the basis of material on record. There is no perversity in the findings. Hence, no substantial question of law is involved.
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2017 (12) TMI 295
Deduction of maintenance charges and non-occupancy charges paid to the society, from the rent received by the assessee - Held that:- We find that Ld. CIT(A) while deciding these grounds have taken into consideration the facts of the present case as well as judgments passed by the Coordinate Bench of Hon’ble ITAT in the case of Sharmila Tagore Vrs. JCIT [2004 (6) TMI 591 - ITAT MUMBAI] wherein it has been held that the maintenance charges and non-occupancy charges paid to the society is to be deducted from the rent received by the assessee.
Right to 'more enjoyment' of the property - compensation for the impairment of the right of more enjoyment - Capital or revenue receipt - Held that:- Hon’ble Bombay High Court in the case of CIT vrs. Abhasbhoy A Dehagamwalla [1991 (4) TMI 38 - BOMBAY High Court] supported the case of the assessee as by signing the agreement, the assessee has accepted an impairement or injury to its right of ‘more beneficial enjoyment’ of his own property. Therefore, the Ld. CIT(A) has rightly concluded that the amount of ₹ 81,59,061/- received by the assessee in 'settlement of the dispute was rightly taken as compensation for the impairment of the right of more enjoyment. It was also rightly concluded that since the immovable property itself is capital in the hands of the assessee, therefore the right to 'more enjoyment' of this property should also be capital in nature. - Decided against revenue
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2017 (12) TMI 294
Deduction u/s 80IA - year of claim as 'initial assessment year' - Held that:- CIT(A) after appreciating the facts had relied upon the judgment passed by Hon’ble Madras High Court in the case of Velayudhaswamy Spg. Mills (P.) Ltd. v. Asstt. CIT [2010 (3) TMI 860 - Madras High Court] wherein it has been clearly held that where the depreciation and loss of earlier assessment years have already been set off against other business income of those assessment years, there is no need for notionally carrying forward and setting off the same depreciation and loss in computing the quantum of deduction available under section 80-IA.
The Court has held further that the year of commencement alone need not be the 'initial year'. The year of claim also can be considered as 'initial assessment year'. The said judgment has also been followed by different benches of the Hon'ble ITAT. Apart from above, Ld. AR has also drawn our attention to paper book page no. 4 which relates to Circular nO. 1/2016 issued by CBDT dated 15.02.16 wherein it has been clearly held that the term ‘initial assessment year’ would mean the first year opted for by the assessee for claiming deduction u/s 80IA. We have also . . noticed that in the above circular, a direction has been given to the AO to allow deduction u/s 80IA and pending litigation on allowability of deduction u/s 80-IA shall also not be pursued to the extent it relates to interpreting ‘initial assessment year’ as mentioned in sub section (5) of that section. - Decided against revenue.
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Customs
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2017 (12) TMI 292
Classification of goods - combine harvester parts - whether classified under CTH 84339000 or otherwise? - appellant filed one bill of entry declaring the goods as combine harvester parts which have been imported - Held that: - All the goods mentioned in both the invoices parts of the combine harvester. The parts are numbered and if all these parts used altogether then harvester system which has been imported by the appellant in SKD condition can be manufactured otherwise not. The report of the chartered engineer is not conclusive evidence for the Revenue to hold that the goods in question are of general use. In fact chartered engineer has opined that the goods appeared to be of general use also other than those use in harvester combine which clearly shows that as per opinion of the chartered engineer, the goods in question can be used harvester combed as part thereof - the goods are parts of harvester combine.
The goods are classifiable under the heading which occurred last in numerical order among those which equally merit consideration - Chapter heading 84339000 is proper classification of the goods in question - the appellant has correctly classified the goods in question.
Whether confiscation of goods, redemption fine and penalty justified? - Held that: - it is a case of classification of the goods and the adjudicating authority has changed the classification relying upon the report of the chartered engineer. In that circumstance, as it is case of interpretation of classification, therefore, the goods are not liable for confiscation and no redemption fine is imposable on the said goods - penalty also set aside.
Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 291
Levy of ADD - N/N. 73/2003-Cus dated 01/05/2003 as amended by N/N. 95/2006-Cus dated 08/09/2006. Subsequent to the above notification, a fresh N/N. 95/2006-Cus dated 08/09/2006 prescribed provisional levy till new shiper review was completed - Held that: - it is necessary to ascertain the manufacturer, the exporter and the channelising agency in terms of above amendment to decide whether there shall be levy of anti-dumping duty - Record reveals that examination report categorically state that subject goods were manufactured by M/s Foshan Lungo Ceramics Co. Ltd. whereas the claim of respondent was M/s Heyuan Wanfeng Ceramics Co. Ltd.,for which the matter needs scrutiny.
Appeal is required to be remanded to the adjudicating authority to examine the genesis of the levy on the subject goods ascertaining the identity of exporter, producer and channelizing agency exported the subject goods from the subject country - appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2017 (12) TMI 290
Corporate Insolvency Resolution Process - whether the petition satisfies the requirements of section 7 which provide that corporate insolvency resolution process can be initiated against a corporate debtor by attaching record of the default and proposing name of the resolution professional to act as an interim resolution professional? - Held that:- We have thoughtfully considered aforesaid submissions of the learned counsel for the petitioner-Financial Creditor and are of the view that the same are devoid of merit. The expression ‘Debt’ u/s 3(11) of the Code is a general definition and in respect of insolvency resolution and liquidation for corporate debtor section 4 provide that Part II was to be applied to matter related to insolvency and liquidation for corporate debtor where a minimum amount of default is one lac rupees and section 5 further clarifies that in part II the various expression have been defined unless the context otherwise required. The expression debt has not been used in sub-sections (7) and (8) of section 5. The expressions used are financial creditor and financial debt. Every ‘debt’ is not essentially a financial debt. Therefore the definition of expression debt cannot be imported to part II and the argument is hereby rejected.
The guaranteed returns as per the provisions of clause (5.2.a) of SSA would start only after the period of five years has lapsed. The period of five years is to expire in June 2021. There could not be any default. Likewise we find no substance in the argument that in accordance with clause 5.3.1 read with clause 5.8 it could be regarded as default as no valid allotment of share has taken place and in any case period of three years and five years is yet to expire. We are further of the view that any default has not occurred in terms of section 7(5). The expression default has been defined by section 3(12) to mean non-payment of debt when whole or any part or instalment of the debt have become due and payable and the same is not repaid by the corporate debtor. In the present case the petitioner financial creditor has pleaded that no allotment of CCRPL in accordance with law has been made. As a matter of fact allotment made was to an unregistered firm and the ROC refused to register the transfer. Therefore there is no question of any default occurring. Petition fails.
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PMLA
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2017 (12) TMI 289
Prevention of Money Laundering - judicial custody - writ of habeas corpus - Held that:- The reason for the petitioner not pressing his bail application before the learned Special Judge was that on 13.09.2017, in the present proceedings the petitioner had made a statement through counsel that he shall not press his application for regular bail before the Competent Court till the next date of hearing, which got extended from 09.10.2017 to 16.10.2017; and from 16.10.2017 to 17.10.2017 and; from 17.10.2017 to 23.10.2017. On 23.10.2017, the complaint under Section 45 of the PMLA was filed by the Director of ED, whereon cognizance was taken by the learned Special Judge against the accused persons, including the petitioner herein, who was arrayed as accused No.1. The learned Special Judge observed that accused No.1 was already remanded to judicial custody till 25.10.2017 and that he be produced before the Court on 25.10.2017, the date already fixed. On 25.10.2017, the petitioner/ accused No.1 was produced from custody. He was directed to be produced from custody on the next date, which was fixed as 07.11.2017.
Thus, the petitioner continues to be in judicial custody and there appears to be no illegality whatsoever in his continuing judicial custody. The petitioner has statutory remedy of seeking regular bail from the Competent Court under Section 45 of the PMLA. Thus, there was no question of this Court being called to issue a writ of Habeas Corpus for release of the petitioner when he is continuing in judicial custody. Not only his present judicial custody appears to be legal, but his initial arrest on 25.08.2017, and his subsequent remand to ED custody on successive occasions, and his eventual judicial remand also appears to be a result of application of judicial mind. The same cannot be described as mechanical.
Thus, we agree with Mr. Mahajan that, firstly, there was no illegality in the initial arrest of the petitioner. There was sufficient compliance of Article 22(1) of the Constitution of India, as the petitioner stood informed of the grounds of his arrest when he was permitted to read the same. He was also informed of the same vide the remand application under Section 167 Cr PC read with Section 65 of the PMLA moved on 26.08.2017. We also agree with the submission of Mr. Mahajan that a writ of habeas corpus does not lie in the facts of the present case, since the petitioner was placed initially in ED custody remand, and thereafter in judicial custody by orders passed by a competent court with due application of mind. W.P. dismissed.
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Service Tax
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2017 (12) TMI 286
Clearing and forwarding agency services - certain contracts entered into by the assessee, amongst others with Rampur Distillery and Holosticks India Pvt. Ltd. being in the nature of commission agency contracts also involving, in some parts, supervision of transportation of goods in certain circumstances - Whether the agreement entered into by the party for providing host of services viz. Supervision of transportation, Arranging transportation, Commission on Sale & Follow-up of Payment, would not constitute the service "Clearing & Forwarding Operations? - Revenue appeal against the majority order of the Tribunal.
Held that: - the assessee was engaged merely in procurement of purchase orders for it's principal on commission basis which service became taxable only upon an amendment made to the Act and by introduction of new service being 'business auxiliary service', under Section 65(19) of the Act w.e.f. 01.09.2009 - All the activities that have been noted by the Technical Member to conclude that the assessee was engaged in 'clearing and forwarding' service are such activities as are not involved either with clearing of goods or with forwarding of any goods to any destination or person. Rather, those activities are only ancillary or supplementary to the activity of commission agency as they only seek to ensure prompt placement of orders; prompt supply of goods and prompt payment against such supplies etc. These are all arising from contract of commission agency. In any case, those activities are not such as may be linked with any of the activities required to be performed to treat the service as "clearing and forwarding" service.
Appeal dismissed - decided against Revenue.
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2017 (12) TMI 285
Maintainability of ROM application - there is no apparent mistake in the Tribunal's order - Held that: - It may mention that if some incidental facts were not noticed and discussed ROM is not maintainable. Only cumulative effect has been given in the order - In the garb of rectification, fresh order cannot be passed.
There is no apparent mistake in the Tribunal's order - the Tribunal has adopted the reasons passed by the Commissioner (Appeals) regarding extended period of limitation - there is no merit in the ROM application - ROM application dismissed.
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2017 (12) TMI 284
Penalty u/s 78 - Delayed payment of service tax - payment of tax with interest on being pointed out but before issuance of SCN - invocation of Section 73(3) whether justified or not? - Held that: - SCN can be waived u/s 73(3) only when there is no suppression of fact or malafide intention with intend to evade payment of duty and the amount of service tax liability alongwith interest is paid by the assessee before issuance of the SCN.
In Section 73(4) of the Act, it is provided that if the non-payment of service tax is on account of suppression, mis-declaration, fraud, collusion etc. the provision of Section 73(3) is not applicable - The appellant by not declaring the correct value despite collecting the service tax and non-payment thereof fall under the provisions of Section 73(4) of the Act, therefore not entitled for the immunity as provided u/s 73(3) of the Act.
Penalty upheld - appeal dismissed - decided against appellant.
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Central Excise
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2017 (12) TMI 283
Valuation - inclusion of cost of bought out items - Freight - place of removal - case of Revenue is that the entire said receipt at the customers premises constitute the powder coating plant and since the customers premises is the place of removal, value of all bought out items is to be included for the purpose of assessment - Held that: - it is not in dispute that the Revenue is seeking to include the cost of bought out items supplied directly to site for the purpose of charging Central Excise duty. It is not in dispute that no manufacturing activity in respect of such items has been done by the appellant - The liability to Central Excise duty arises only when there is a manufacturing activity undertaken and in the absence of manufacturing activity the liability of Central Excise does not arise.
Similar issue decided in the case of COMMISSIONER OF CENTRAL EXCISE, PONDICHERRY Versus ACER INDIA LTD. [2004 (9) TMI 106 - SUPREME COURT OF INDIA], where it was held that Excise duty would be leviable only on the goods which answer the definition of excisable goods and satisfy the requirement of Section 3. A machinery provision contained in Section 4 and that too the explanation contained therein by way of definition of transaction value can neither override the charging provision nor by reason thereof a goods which is not excisable would become an excisable one only because one is fitted into the other, unless the context otherwise requires.
Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 282
Absolute confiscation of export goods - soap stone powder - misdeclaration of description of goods - penalty - Held that: - Entire investigation result brought out above said material facts and evidence and unerringly established that the Appellant M/s Petroslov India was instrumental to export soap stone powder in the name of SSEPL with the conscious involvement of SSEPL. That remained uncontroverted by appellants without leading any cogent and credible evidence. Considering the role played by the logistics manager Shri Subramaniam Devar and godown keeper Shri Abhimanyu Singh, learned Adjudicating Authority held that entire evidence gathered by investigation were credential and were cogent establishing role of all the three appellants in deception of Customs - decided against appellant.
Penalty on Shri Bhaskar.D. Kolakat and Shri Rajshekhar Pillai, Directors of M/S. Sai Shradha Exim Pvt Ltd - Held that: - all the appellants were found to be consciously involved to file shipping bills for export of misdeclared goods - Export formalities were completed by M/s Sai Shipping Agency involving all the three appellants. - penalty on all appellants upheld.
Confiscation of goods u/r 25 of CEA, 1944 - redemption fine - penalty - Held that: - Revenue proved entire malafide design of the appellants who committed fraud against Customs filing false documents, misdeclaring description and value of goods and they could not come out with clean hands to prove their innocence, they are bound to face penal consequences of law - Entire submission of Revenue as above has force and based on evidence. Appellants could not repel the same without leading and cogent and credible evidence to the contrary - matter remanded for impodition of redemption fine and penalty.
Decided against appellant and part matter on remand.
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2017 (12) TMI 266
Liability of duty on intermediate goods - job-work - who is liable, job-worker or principal manufacturer? - Rule 4 (5) (a) and Rule 4 (6) of CCR - N/N. 214/86-CE dated 25.3.1986 - whether job-worker is exempt from duty on intermediate goods when principal manufacturer discharges such duty?
Held that: - the fact remains is that neither the goods after jobwork were cleared as such on payment of duty nor were used in manufacture of dutiable final products by the Principal manufacturer. Hence the duty liability would be on the real manufacturer of goods i.e the Jobworker. Since the Principal manufacturer pays the duty on the product arising out of manufacture even at the jobworkers end, he is eligible to avail credit. The Rule 4 (5) (a) thus is a facility to the principal manufacture to send goods for jobwork on which cenvat has been availed. It is nothing to do with the duty payment of goods - Rule 4 (6) is a facility to the Principal manufacturer to clear the goods directly from the premises of jobworker after payment of duty. Notably it is not the case of the appellant that the Principal manufacturer paid duty at anytime as the goods manufactured by him were exempted from duty. Thus the liability for payment of duty on such intermediate goods manufactured by the Jobworker is on jobworker only.
The Jobworker, M/s Thermax being manufacturer of excisable goods is liable to pay duty on the intermediate goods manufactured by him on jobwork basis which supplied to their principal M/s Thermax Babcock - appeal dismissed - decided against appellant.
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2017 (12) TMI 281
Benefit of N/N. 5/99-CE dt. 28.2.99, 6/2000-CE dt. 1.3.2000, 3/2001-CE dt. 1.3.2001 and 6/2002-CE dt. 1.3.2002 - various parts/machinery of boilers - goods supplied in the CKD/SKD form - Held that: - the goods supplied in the CKD/SKD form also eligible for exemption N/N. 3/2001-CE dt. 1.3.2001 - even if some parts of the entire boiler procured by the appellant from outside, the goods manufactured by the appellant and supplied in CKD/SKD is correctly classifiable as boiler under Chapter Heading 8402.10 and eligible for exemption N/N. 3/2001-CE. - reliance placed in the case of Commissioner of Central Excise, Delhi-IV Versus Rachitech Engineers Pvt Ltd [2015 (6) TMI 823 - CESTAT NEW DELHI], where it was held that even supply of a part of the non-conventional Energy System i.e. Chimney was also extended the benefit of pari materia N/N. 6/2002-CE dt. 1.3.2002.
Time limitation - Held that: - the appellant have bonafidely declared the goods manufactured by them in their classification list filed in 1995, thereafter they were issuing invoices for clearance parts of boiler as a piecemeal of complete boiler under chapter heading No.8402.10 - no suppression of fact can be alleged against the appellant - demand is also hit by limitation in absence of any suppression of fact on the part of the appellant.
Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 265
100% EOU - N/N. 53/97 customs dated 3-6-1997 and 1/95-CE dated 4-1-1995 - allegation was made that certain quantity of final product manufactured out of imported input has been cleared to DTA availing exemption under N/N. 8/97. Therefore demand of duty was made - imported Aniline oil used in manufacture.
Held that: - The report of the Indian Institute of Material Management does not state that all the clearances made to DTA were not out of purely indigenous material. All it says is that imported Aniline oil has been consumed in excess of that which is required for production of exported goods. It does not automatically mean that entire quantity of goods manufactured and cleared in DTA has been manufactured out of mixed or imported Aniline Oil.
The order of the commissioner in so far as it relates to fact that imported and indigenous aniline oil not been stored separately is upheld. The Tribunal order which is specifically directed to apply the FIFO method to ascertained the quantity of finished goods manufactured wholly or partly from imported raw material. The fact that Tribunal had directed to apply the principle of FIFO method, just because material got mixed, it cannot be said that entire quantity of finished goods was manufactured out of mixture of imported and indigenous raw material. The FIFO method has been suggested by the Tribunal to segregate the quantity relatable to finished goods manufactured out of indigenous and imported raw material - reference made by IIMM was not proper - matter remanded for getting entire data of aniline oil to arrive at quantity of finished goods manufactured and cleared in DTA wholly or partly from the imported raw material.
Appeal allowed by way of remand.
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2017 (12) TMI 280
Remission of duty - goods destroyed in fire - clandestine removal - Held that: - The impugned order does not bring out any independent corroborative evidence to shows that the goods found at M/s Noor Printing Press were cleared clandestinely by the Appellant or were same goods on which remission has been sought by the Appellant - the goods in dispute i.e alleged to have been found in drums at M/s Noor Printing press were only 2773.5 Kgs whereas the remission claim filed by the Appellant is in respect of 61496.09 Kgs of finished goods. There is no dispute about the remaining quantity. The evidence relied upon by the adjudicating authority nowhere leads to the conclusion that the goods in respect of which the remission has been claimed were removed clandestinely - remission of duty allowed.
CENVAT credit - inputs used in finished goods destroyed in fire - Held that: - issue of reversal of cenvat credit of inputs used in finished goods stands settled by Hon’ble Madras High Court judgment in case of COMMISSIONER OF C. EX., CHENNAI-III Vs. JOY FOAM PVT. LTD. [2015 (7) TMI 386 - MADRAS HIGH COURT] as per which no reversal of credit is required - demand set aside.
Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 279
Excisability/marketibility - stock of goods lying the finishing room - case of Revenue is that the goods that were lying in the finished room were not semi-finished fabrics that should have been cleared on payment of duty under the regime of normal assessment and not under section 3A of Central Excise Act, 1944 - compounded levy scheme - Held that: - mere entry in RG1 register of goods in the finished room did not render goods marketable - it is seen that no evidence of marketability of the goods and therefore its excisability has been produced - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 278
N/N. 3/2004-CE dated 8-1-2004 - it was alleged that the certificate was not issued in favor of appellant nor it contains details of goods therefore the adjudicating authority has denied exemption notification - Held that: - As per the notification, it can be seen that only those goods in respect of which certificate is issued by collector/Dy. Commissioner/District Magistrate of the District in which project is located is produced to the Dy. Commissioner or Asstt. Commissioner of Central Excise as the case may be having jurisdiction. Notification provides that goods which he supplied should be covered under the certificate.
In the present case though the name of the appellant is not appearing in the certificate but goods supplied by the appellant is clearly appearing in the purchase order issued by M/s. Hindalco to M/s. Gannon Dunkerley & Co. The said purchase orders reference is appearing in the certificate issued by the collector/district magistrate of Sambalpur district. The same goods were supplied by the appellant to M/s. Gannon Dunkerley & Co in turn M/s. Gannon Dunkerley & Co supplied the samegoods to M/s. Hindalco - On the perusal of the documents, we are satisfied that link between goods and the appellant and the goods meant for project is established, therefore appellant is entitle for the exemption N/N. 3/2004.
Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 277
Valuation - includibility - additional packing in wooden box/caret which was over and above the packing - Held that: - additional packing is for safe transportation of goods otherwise for the packing of the goods the primary packing is sufficient - issue has been considered by the Hon’ble Supreme Court in case of M.R.F. Ltd [1995 (5) TMI 28 - SUPREME COURT OF INDIA] wherein it was held that cost of packing in which goods are ordinarily sold in the course whole sale trade to the wholesale buyer cost thereof alone is includible in the cost of packing incurred protecting the goods in transit is not includible - additional packing is provided only in few cases for the purpose safe transport therefore the additional packing is not includible in assessable value - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 276
N/N. 89/95-CE dated 18-5-1995 - the appellant cleared the soapstock which generated during the refined edible oil and it was exempted from the payment of excise duty vide N/N. 115/75-CEX dated 30-4-1975 - Held that: - identical issue decided in the case of COMMISSIONER OF CENTRAL EXCISE, JALANDHAR Versus AG FLATS LTD. [2011 (7) TMI 968 - CESTAT, NEW DELHI], where it was held that the products, in question, have not been shown to be of no value or negligible value which have only to be discarded, the same would not be eligible for exemption under N/N. 89/95-C.E - benefit not allowed - appeal dismissed - decided against appellant.
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2017 (12) TMI 275
Rebate - Section 11 of the Central Excise Act, 1944 - Held that: - certain amount of confirmed dues recoverable by revenue have been adjusted while sanctioning rebate claims under Section 11 of the Central Excise Act, 1944 - the status of demand at the time of adjustment of demand against refund needs to be the key criteria for deciding if the said adjustment was done rightly or wrongly. It is a recovery under Secation11of the Central Excise Act, 1944, just like any other recovery against a confirmed demand. Since the amount has been recovered it would be due for refund only if the appellant succeeds finally with respect to such demand - appellant can file a refund claim - appeal dismissed - decided against appellant.
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2017 (12) TMI 274
Validity of remand proceedings - case of appellant is that Adjudicating Authority in denovo adjudication should have passed the denovo order not only on re-quantification of demand but also on other issues such as merit, limitation and other issues - Held that: - It is observed from the remand order of the Tribunal that the learned Counsel for the appellant categorically stated that issue on merit, limitation etc. may be kept open while remanding the case - since the Tribunal had remanded for re-quantification, at the same time the issue on merit was not decided as Tribunal had not gone on other issues such as merit, limitation etc. It cannot be said the remand is confined to re-quantification and the appellant was not at liberty to raise other issue - matter remanded to the adjudicating authority to pass a fresh order on all the issues - appeal allowed by way of remand.
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2017 (12) TMI 273
Refund of excess paid duty - value of scrap on which appellant have discharged excise duty - comparable price - Held that: - if the price of comparable goods is available, same can be applied to determine value - in the present case appellant have relied upon purchase invoice of scrap whereunder they purchased the scrap. However, at the same time department could not produce any material on record to reject such comparable price or to prove some different price of other comparable goods therefore in such situation the comparable price adopted by the appellant could not be rejected in absence of any other material evidence.
Aappellant correctly applied the price of the comparable goods i. e. scrap. Accordingly, whatever excess excise duty was paid the same is refundable in accordance with law - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 272
CENVAT credit - steel items - supporting structure for the capital goods - Held that: - items used for fabrication of supporting structure cannot be called components, the credit of duty paid cannot be allowed - with effect from 07.07.2009 the definition of ‘input’ appearing in Rule 2(k) of the Cenvat Credit Rules, 2004 has been amended and it specifically excludes cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods from the ambit of definition of inputs - credit cannot be allowed - decided against assessee.
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2017 (12) TMI 271
CENVAT credit - capital goods - angles, channels, beams, nut-bolts, guides, etc, used to manufacture the storage racks for use in their factory - Held that: - storage racks or crate would qualify as accessories to the capital goods as defined under the clause (1A) of the definition of capital goods but angles, channels, etc. are not by themselves storage systems and therefore, they are only parts of such accessories. The definition does not cover parts of the accessories of capital goods and therefore, the appellants are not entitled to the credit on angles, channels, nuts and bolts used for manufacture of storage racks, which in turn are accessories of the capital goods.
Penalty u/r 15 (1) of the CCR - Held that: - there is no ground for sufficient justification for imposition of such penalty and the same is set aside.
Appeal allowed in part.
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2017 (12) TMI 270
CENVAT credit - various input services - denial on the ground that appellant failed to provide necessary evidence before the authority below for which there was disallowance of the cenvat credit of the respective amount involved in each appeal ordered and also on the ground of nexus - Held that: - on all services, except 4 services, namely Membership of Clubs, Reverse services by Director of company, Clubs and Association services, and Real Estate Agents services, the manner of disallowance made by the learned authorities below is without any cogent reason and evidence to the contrary. The disallowances were mechanical in nature - Therefore there cannot be any doubt at all about the availment of the input credit for manufacture of output establishing the nexus between the two - credit allowed on all the services except 4 services as mentioned.
CENVAT credit - Membership of Clubs - Reverse services by Director of company - Clubs and Association services - Real Estate Agents services - Held that: - cenvat credit availed on these services are not eligible to get any cenvat credit on the facts and circumstances of the case since appellant did not bring out any appealable reason to satisfy that it has a proven case of nexus and integral connection between the input service and output manufactured - credit on these 4 services denied.
Penalty - Held that: - the penalties shall stand reduced to the extent of credit of input services disallowed.
Appeal allowed in part.
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2017 (12) TMI 269
Refund claim - deemed export to 100% EOU - denial on the ground that the supplies made to 100% EOU cannot be treated as deemed export - Rule 5 of Cenvat Credit Rules 2004 - Held that: - on careful reading of the unamended and amended Rule 5 of the Cenvat Credit Rules, it is found that there is no significant difference, as regard term export for the purpose of Rule 5 of Cenvat Credit Rules, 2004, therefore there is no reason to interpret differently the term ‘export’ under the amended Rule 5 - the appellant is entitled for the refund under Rule 5 against the supplies made to the 100% EOU.
Reliance placed in the case of M/s. Uniworth Textiles Ltd. Versus CCE, Raipur [2016 (8) TMI 939 - CESTAT NEW DELHI], where it was held that the clearances to 100% EOU be considered on par with physical export for which refund of un-utilised cenvat credit is allowable.
Appeal dismissed - decided against Revenue.
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2017 (12) TMI 268
CENVAT credit on returned goods - Rule16 (1) of Central Excise Rules, 2002 - the appellant on the returned goods carried out the processes such as straightening, dimension checking heat treatment, lacquer quoting etc, whether theses process amounts to manufacture? - Held that: - it cannot be accepted that the appellant have carried out any other process such as galvanizing and redrawing of the pipe. In absence of these process whatever process carried out it does not amount to manufacture - in terms of Rule 16(2) of the Rule, the appellant on the process not being manufacture required to pay duty equivalent to the amount of cenvat credit availed at the time of receipt of returned goods.
The process does not amount to manufacture, therefore the differential duty demand is sustainable - Since the issue of short payment of duty was raised by the audit party there is a clear suppression of fact on the part of the appellant as the fact that what credit was availed and whether the same was paid or otherwise, was not disclosed to the department - demand with interest and penalty upheld.
Appeal dismissed - decided against appellant.
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2017 (12) TMI 267
CENVAT credit - capital goods - Bagassee Bailing Machine - whether the bailing machine is eligible for availment of Cenvat credit under capital goods? - Scope of SCN - case of appellant is that SCN has not alleged the admissibility of the Cenvat credit in respect of bailing machine therefore Commissioner (Appeals) order traveled beyond the scope of SCN - Held that: - It is observed that the said issue was not raised in the SCN therefore Ld. Commissioner(Appeals) traveled beyond the scope of the show cause notice for this reason itself order is not sustainable.
Even on the issue of admissibility of Cenvat credit on bailing machine it is observed that it is incorrect to say that bailing machine was used exclusively for exempted goods. The fact is not under dispute that said machine is used for bailing of baggase which partly used in the factory of the appellant as fuel therefore bailing machine is not used for exclusively in the manufacture of exempted goods, accordingly, Cenvat credit is admissible.
Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (12) TMI 264
Exemption from CST - disallowance of export sales - demand on the ground that on the ground that the petitioner did not produce documents to show that he had realised the proceeds of the export sale in foreign currency, in India - Held that: - there is no provision under the Act or Rules which mandates that the petitioner should produce a document showing realisation of export proceeds as a condition for claiming the exemption that is available for transactions which are in the nature of sale transaction in the course of export. The exemption under the CST Act is available to an assessee if he demonstrates that the sale transaction occasioned a movement of the goods from within the country to a place outside the country.
The documents produced by the petitioner clearly indicate that the goods, which were the subject matter of the sale transaction with a foreign buyer, had left the shores of India for a foreign destination as shown in the documents. In the absence of anything to suggest that the goods did not cross the customs frontiers of India, the respondents cannot take a stand that the transaction in question was not an export sale transaction for the purposes of exempting the transaction from the levy of CST under the CST Act - Petition allowed - decided in favor of petitioner.
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2017 (12) TMI 263
Validity of assessment order - time limitation - APVAT Act - case of petitioner is that out of the block period of 1.9.2005 to 31.3.2012, the period of 1.9.2005 to March 2009 falls beyond the limitation period of four years, that therefore respondent No.4 had no jurisdiction to pass such an order and that, as the power exercised by respondent No.4 is without jurisdiction - case of Revenue is that the writ petition was filed bypassing the effective alternative remedy of appeal before the A.P. VAT Tribunal and that therefore the same is liable to be dismissed in limine - Held that: - The rule of alternative remedy is not a rule of law, but a self imposed restriction by the Constitutional Courts. When a statute created efficacious remedies, a litigant cannot insist on entertaining the writ petition without availing such remedies. Though availability of an alternative remedy is not an absolute bar for entertaining the writ petition, ordinarily this Court would not allow a litigant to bypass an alternative remedy except in exceptional situations.
It is not the pleaded case of the petitioner that its case falls in any of the exceptions recognized by the Supreme Court as discussed above or that the issue raised in this writ petition cannot be adjudicated by the A.P. VAT Tribunal presided by no less an officer of a Special Grade District Judge - the petitioner is not entitled to invoke the jurisdiction of this Court without availing the statutory remedy of appeal before the Tribunal.
Time limitation - case of Revenue is also that as the petitioner has not raised the aspect of limitation in both the rounds of litigation before the Assessing Officer as well as the Deputy Commissioner, it is barred from raising such plea in the present writ petition - Held that: - the counsel for the petitioner is labouring under a misconception that this Court has duty and obligation to entertain writ petitions in order to set aside every wrong or illegal order. The law is well settled that the jurisdiction under Article 226 of the Constitution of India is discretionary and this Court would not be compelled to adjudicate upon the merits of a case merely because a case is made out that the order challenged before it is illegal. While exercising the jurisdiction under Article 226 of the Constitution, this Court would consider the conduct of the party and the facts and circumstances of the case, before adjudicating the case on merits.
Limitation being a mixed question of law and fact, has to be necessarily raised by a party in order that the adjudicating authority applies its mind and renders a finding thereon. The petitioner has not offered any semblance of explanation as to why and for what reason it has failed to raise the issue of limitation - the conduct of the petitioner shows that there is lack of diligence in raising necessary plea which ought to be raised by it and a decision invited thereon. The absence of explanation on the part of the petitioner for not raising the objection in spite of repeated opportunities to raise such objection, both before the original and the appellate authority, would give rise to a presumption that it has deliberately not raised the issue in order to avoid a finding from the jurisdictional hierarchical authorities.
Petition dismissed - decided against petitioner.
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Wealth tax
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2017 (12) TMI 262
Assessment of wealth including agricultural land - Addition made in the context of retrospective amended Explanation-1 to section (ea) of the Wealth Tax Act - Held that:- The Wealth Tax Act, 1957 defines the “assets” in clauses (e) and (ea) of section 2. The assets include the ‘urban land’ as per subclauses (i) to (v) of section 2(ea). the highlighted portion above excludes two types of land from the definition of ‘urban land’. (1) The lands need to be classified in the Government records as an Agricultural land and the same should have been used for agricultural purposes. Thus, these twin conditions are required to be fulfilled by the assessee for claim of exclusion from the definition of an ‘urban land’.
The second type of land for exclusion from the definition of ‘urban land’ relates to the land on which no construction of a building was permissible under any law for the time being in force. Such lands are also allowed for claim of exclusion from the definition of ‘urban land’.
The present issue for adjudication before us relates to the first type of land which deals with the twin conditions of classification of a land as an agricultural land in the Government records and use of the said land for agricultural purposes. Considering all, we are of the opinion that the order of CWT(A) is required to be reversed for both the years. Therefore, considering the principles of natural justice and also the issues of fairness, we remand this issue to the file of the CWT(A) for fresh adjudication in the matter. CWT(A) shall grant reasonable opportunity of being heard to the assessee in accordance with the set principles of natural justice. Accordingly, all the grounds raised by the Revenue are allowed for statistical purposes. Appeals of the Revenue are allowed for statistical purposes.
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Indian Laws
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2017 (12) TMI 288
Suit for recovery along with interest - dishonour of cheques - Held that:- Trial court in our opinion is justified in dismissing the leave to defend application because in the statement recorded by the appellant/defendant in the Section 138 of Negotiable Instruments Act proceedings, the appellant/defendant on 15.2.2013 in response to a court question stated that cheques in question bear the signatures of the appellant/defendant and that the appellant/defendant did not know how the cheques came to the possession of the complainant (i.e plaintiff in the subject suit), whereas a different stand was taken in the leave to defend application filed by the appellant/defendant that the subject cheques were given to Sh. Brij Bhushan and not to the respondent/plaintiff and that Sh. Brij Bhushan appeared to have illegally given the subject cheques to the respondent/plaintiff.
The cheques are the cheques of the appellant/defendant. The cheques do bear the signatures of the appellant/defendant. The appellant/defendant pleaded that the cheques were given in blank to Sh. Brij Bhushan but this defence has been rightly found by the trial court to be a complete moonshine and this Court has given an additional reason that if there was a compromise between Sh. Brij Bhushan and the appellant/defendant, then, there was no reason why at the time of compromise, the appellant/defendant would not have taken the cheques from Sh. Brij Bhushan way back in January, 2011. The leave defend application was thus rightly dismissed by the impugned judgment.
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2017 (12) TMI 287
Power to summon material witness, or examine person present - opportunity to cross-examine a witness is not given to the either of the party - Held that:- The very purpose of Section 137 of Evidence Act and Section 311 Cr.P.C. would be defeated if the opportunity to cross-examine a witness is not given to the either of the party.
In the present case the dismissal of the application moved by the petitioner No.1 under Section 145 (2) NI Act as well as under Section 311 Cr.P.C. otherwise means obstruction in bringing out the evidence on record.
The Court is duty bound to allow the cross-examination of the witness whose examination-in-chief has already been recorded. Without allowing cross-examination of the statement of such witness the same cannot be read in evidence in the instant summary procedure case.
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