TMI Tax Updates - e-Newsletter
February 12, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Seeking grant of regular bail - the petitioner has made out a case for the grant of regular bail especially, when learned counsel for the petitioner has undertaken before this Court that the petitioner will not obstruct the trial or influence the witnesses, whose statements are yet to be recorded in any manner. In case of default of the above undertaking, the State will be at liberty to approach this Court for passing appropriate orders. - The trial Court/Duty Magistrate concerned is directed to put appropriate conditions upon the petitioner so as to ensure that petitioner does not flee the trial - HC
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GST:
Attachment of the immovable properties and bank accounts of the Petitioner - expiry of a period of one year from the date of the order made under Section 83(1) - After the issuance of the impugned orders, no fresh attachment order has been issued. Consequently, this Court directs the Respondent to defreeze the bank account and release the immovable properties of the Petitioner not later than three days from the date of uploading the order. - HC
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GST:
Classification of supply - works contract services - supply of goods or services or a composite supply - construction of Tunnel and Approach roads. In order to complete the said EPC contract, the main contractor has engaged the applicant as a sub-contractor for drilling and blasting work for rock tunneling - as per the work order submitted by the applicant, it clearly appears that the impugned activity carried out by the applicant can classified as composite supply of works contract for construction of tunnel. - AAR
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Income Tax:
Exemption u/s 11 - registration u/s 12A - Registration under Section 25 of the Companies Act is undoubtedly a relevant factor to be noted while considering an application for registration under Section 12AA of the Act as registration under Section 25 of the Companies Act recognises the main objectives of the company as a non-profit organisation. As noted above, this aspect of the matter has not been dealt with by the tribunal which in our opinion ought to have been and if taken into consideration the decision should lean in favour of the assessee - HC
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Income Tax:
Penalty u/s 271(1)(c) - When the matter travelled to the Tribunal, the explanation which was given by the assessee and accepted by the CIT(A) was once again examined by the Tribunal and after noting several decisions as to under what circumstances penalty can be imposed under Section 271(1)(c) of the Act as also the fact that there was nothing on record to show that the assessee had purposely made a wrong claim, confirmed the order passed by the CIT(A). - No penalty - HC
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Income Tax:
Reopening of assessment u/s 147 - Bogus LTCG - This Court is of the view that in the garb of reassessment proceedings, the appellant cannot seek to verify the same details on the strength of material which was already available on record. This Court is also in agreement with the finding of the Tribunal that the assumption of jurisdiction by issuing notice u/s 148 is bad in law.- HC
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Income Tax:
Rectification u/s 154 - Looking to the finding of the AO that no certificate by the Tax Auditor was furnished to state true and correct fact, in our considered view, the AO himself ought to have made inquiry from the Tax Auditor of the assessee. Undisputedly, it is the Assessing Officer who wanted to amend the concluded assessment. Therefore, he was required to verify the facts by making requisite inquiry. We, therefore, set aside the impugned order and direct the AO to decide the issue afresh after making necessary inquiry and verification of facts related to issue under consideration. - AT
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Income Tax:
Addition u/s. 69/68 - Cash deposit in joint bank account - We are unable to comprehend as to how an addition can be made in the hands of assessee towards cash deposits in the joint bank account when not only the source of deposit but also the entire background of facts leading to the receipt of amount in the hands of assessee's wife was also thoroughly explained before the AO. The assessee's wife was separately assessed to tax, in support of which, her copies of income tax returns were also furnished. We are fully satisfied that the assessee discharged the onus upon him to prove the source of deposit in the joint bank account. - AT
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Income Tax:
TDS u/s 194C - payments made by the assessee to its affiliates - Payment towards face value of the meal vouchers to the affiliates - The entire scheme relating to issuance of printed meal vouchers read with PSS Act and RBI Master Circular make it clear that the assessee is merely a facilitator or a medium for enabling payments to be made by the user of the vouchers to the affiliates when the user purchases food and non alcoholic beverage from the affiliates. In other words, the assessee is merely providing the service of an alternative mode of making payment. - The payment made by the assessee towards face value of the meal vouchers to the affiliates are not in the nature of payment made towards works contract so as to fall within the provision of section 194C - Demand raised under section 201(1) and 201(1A) are deleted - AT
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Income Tax:
Disallowance of legal and professional expenses - All the details of the professional services provided by these six professional have been filed before us. Tax has been deducted at source on prevailing rates of TDS. The alleged amount received by six professional have been offered to tax in their respective return of income. Under these facts and circumstances of the case there remains no reason to question the genuineness of the expenditure claimed by the assessee and ld. CIT(A) has rightly appreciated the fact of this issue and deleted the disallowance correctly. - AT
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Income Tax:
Addition u/s 40A - payment of interest to the business creditors that too sister concerns - once the assessee establishes that there was a nexus between expenditure and the purpose of business, the Revenue cannot justifiably claim to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the said role to decide how much is a reasonable expenditure having regard to the circumstances of the case - AT
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Customs:
Validity of Policy Circular - SFIS Scheme - Since the said Circular does not take away the benefits that have accrued on the basis of the SFI Scheme prior to the contents thereof being clarified by the said Circular, there are no reason to hold such circular to be ultra vires Articles 14 and 19(1)(g) of the Constitution of India as well as section 5 of the FTDR Act and paragraph 3.6.4 of the FTP 2004-2009. However, the demand notice dated 28th January 2010 and the reminder dated 31st May 2010 being unauthorized, are invalid in law and inoperative; hence, the same deserve to be set aside. - HC
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Customs:
Validity of Policy Circular - SFIS Scheme - Had the demand notice/reminder been issued without being goaded by the said Circular but on the ground that the petitioner in terms of its Application and/or the Declaration/Undertaking was not qualified to obtain any benefit of the SFI Scheme and such notice had been made the subject matter of challenge without such application and/or such declaration/undertaking being brought on record of the writ petition, the decision on the issue could have been otherwise. - The non-disclosure of the Application and/or the Declaration/Undertaking by the petitioner does not amount to suppression of material facts warranting dismissal of the writ petition. - HC
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Customs:
Quantum of redemption fine and penalty - misdeclaration of description and value - The redemption fine imposed by the Ld. Commissioner (Appeal) is sufficient in the interest of justice. Further, in the impugned order, the Ld. Commissioner (Appeal) recorded the finding that there is no finding given by the adjudicating authority for imposing the penalty under Section 117 of the Act. In that circumstances, the Ld. Commissioner(Appeal) has rightly dropped the penalty against the respondent. - AT
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Indian Laws:
Dishonor of cheque - A proprietorship concern is not a juristic person. It is merely a trade name used by a person for doing his business. A person may carry on a business in the name of the proprietorship concern but he being the proprietor of the business, would be solely responsible for all the actions and liabilities of the proprietorship concerned. It is correct that the provisions of Section 141 of the Act have no bearing to the present case where the revisionist no. 1 is not a company - the instant Criminal Revision lacks merits and is hereby dismissed at the admission stage. - HC
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IBC:
Once the application of Part II is taken away for debts more than ₹ 1 Crore, there is no further jurisdiction available under the Statute to the NCLT to act as an Adjudicating Authority under the IBC. It is hence a clear case of total want of jurisdiction - In Ext. P9 order, the Tribunal has held that the notification dated 24.03.2020 is prospective in nature and it is not retrospective or retro-active in nature. It is further stated by the Tribunal that notification will not apply to pending applications before the concerned Adjudicating Authority under the IBC prior to the issuance of the aforesaid notification. - The Tribunal has gone wrong in its interpretation of Section 4 of the Act. Section 4, after amendment on 24.3.2020 clearly says that Part II of the IBC shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of default is ₹ 1 Crore. - HC
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IBC:
Initiation of CIRP - The I&B Code, 2016 is not a ‘Debt Enforcement Procedure’. The application of an ‘operational creditor’ is not maintainable, if the ‘Corporate Debtor’ has a dispute about its outstanding/debt. The ‘dispute’ is to be seen by the ‘Adjudicating Authority’ as one based on tenable substantial grounds. In this connection, it is relevantly pointed out that if there is a ‘dispute’ about the debt, then, it is for the ‘applicant’ to approach the competent Civil Court to decide the triable issues. In short, the ‘Adjudicating Authority/Appellate Tribunal’ is not to be utilised as a ‘Debt Collecting Agent’. - AT
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Service Tax:
Taxable services or not - mining services - Appellant had been providing taxable services in the state of Jharkhand prior to obtaining registration in the state of Jharkhand or not - It is also observed that surprisingly, certain invoices raised by the Appellant did not contain any address. Therefore, even if for the sake of argument it is accepted that the Appellant was providing services from Odisha, there are no cogent reason to justify the mention of their address in Jharkhand in the invoices while there being no mention of their registered address in Odisha at the same time. - AT
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Service Tax:
Extended period of limitation - waiver of penalty - The only allegation of these elements held against the appellant in the impugned order is that of ‘suppression of facts‘ and the reason for this is that they have not disclosed the full value of the taxable services in their ST-3 returns. It is also accepted in the impugned order that these services were all duly recorded by the appellant. It is now well established legal principle that ‘suppression of facts‘ is not mere omission. It must be a deliberate act with mens rea to suppress and thereby evade. The facts brought out in the impugned order do not demonstrate the mens rea - AT
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Central Excise:
Demand of central excise duty along with interest and penalty - The Tribunal noted that the Central Excise Duty has been demanded by the appellant on the sole ground of difference between the quantity of the granulated slag shown in the Annual Operational Statistical Report and the quantity shown in the monthly ER-1 return filed for the period July 2004 to March, 2008. Apart from that there is no evidence of removal of goods from the factory. Thus the Tribunal noted that the show cause notice came to be issued solely based upon the difference in the two statements - The respondent explained the difference - The Tribunal rightly granted relief to the respondent considering the factual position - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (2) TMI 512
Seeking grant of regular bail - allegation alleged against the petitioner is of evading goods and service tax and the petitioner is behind the bars for the last 02 years and 08 months - HELD THAT:- The Hon'ble Supreme Court of India in a recent judgment PARESH NATHALAL CHAUHAN VERSUS THE STATE OF GUJARAT ANR. [ 2022 (2) TMI 351 - SUPREME COURT] in a case relating to the evasion of GST, has held that the accused cannot be indefinitely detained in a custody and granted the concession of regular bail, where the accused had undergone custody for a period of 25 months. The allegations alleged against the petitioner are yet to be proved and in case, those allegations are proved, the petitioner can be sentenced to under go imprisonment for a maximum period of five years. As of now, during the course of trial itself, the petitioner has undergone custody for the last 02 years and 08 months - in the present case, the custody period of the petitioner is more than the accused, who was before the Hon'ble Supreme Court of India, especially, in view of the fact that the assertions of the petitioner is that the entire wrongful tax credit amount stands discharged by the recipient tax payer firm and there is no loss, as of now, to the State exchequer, coupled with the fact that the trial is likely to take some time before it concludes as the Courts are working in a restrictive manner due to the pandemic of Covid-19, the petitioner has made out a case for the grant of regular bail especially, when learned counsel for the petitioner has undertaken before this Court that the petitioner will not obstruct the trial or influence the witnesses, whose statements are yet to be recorded in any manner. In case of default of the above undertaking, the State will be at liberty to approach this Court for passing appropriate orders. The trial Court/Duty Magistrate concerned is directed to put appropriate conditions upon the petitioner so as to ensure that petitioner does not flee the trial - petition disposed off.
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2022 (2) TMI 511
Attachment of the immovable properties and bank accounts of the Petitioner - Section 83 of the CGST Act, 2017 - HELD THAT:- Admittedly, every provisional order ceases to have effect after the expiry of a period of one year from the date of the order made under Section 83(1) of the CGST Act. After the issuance of the impugned orders, no fresh attachment order has been issued. Consequently, this Court directs the Respondent to defreeze the bank account and release the immovable properties of the Petitioner not later than three days from the date of uploading the order. The present writ petition along with pending application stands disposed of.
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2022 (2) TMI 510
Rate of GST - grant of mining rights - period 01/07/2017 to 31/12/2018 - HELD THAT:- Since the very issue as to whether GST would be chargeable on minerals on which already royalty has been paid is actively under consideration before a Nine Judges Bench of the Hon ble Supreme Court in MINERAL AREA DEVELOPMENT AUTHORITY ETC. VERSUS M/S STEEL AUTHORITY OF INDIA ORS [ 2011 (3) TMI 1554 - SUPREME COURT] , in the present matter, the petitioner has made out a case for interim order. The matter be listed after disposal of writ petition.
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2022 (2) TMI 509
Refund of GST - zero-rated supply of goods or services or both - Section 54(6) and 54(7) of the CGST Act read with rule 91(2) of the CGST Rules - HELD THAT:- Issue notice. Mr.Satyakam, learned ASC accepts notice on behalf of the Respondents. He, on instructions, undertakes to this Court that the Petitioner s refund application shall be decided in accordance with law within three weeks. Learned counsel for the Petitioner is satisfied with the said undertaking. The undertaking given by learned counsel for the Respondents is accepted by this Court and the Respondents are held bound by the same - List the matter for compliance on 09 th March, 2022.
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2022 (2) TMI 508
Seeking release of seized lorry vehicle - procedure under statutes contemplated under law not followed - violation of principles of natural justice - HELD THAT:- The present writ petition stands disposed of in similar terms to order dated 30.12.2021 passed in W.P.No.29999 of 2021 [ 2022 (2) TMI 126 - ANDHRA PRADESH HIGH COURT ], where it was held that the writ petition stands disposed of with liberty to the petitioner to get the proceeding which has already been initiated by the authorities taken to its logical conclusion, besides praying before the authorities concerned for provisional release of the vehicle, which shall be considered by the authorities concerned in accordance with law expeditiously. Petition disposed off.
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2022 (2) TMI 507
Unwillingness to disclose the details regarding transported goods - transport of illicit liquor - HELD THAT:- The very object of GST is One Nation-One Tax-One Market and keeping into consideration, hassle free movement of the vehicles carrying goods, the information regarding each transaction and details can be obtained free hand and such acknowledgment has to accompany with each truck has to be uploaded to a common portal through the internet and once uploaded to a common portal would automatically generate a document is issued, it can be tracked and verified easily by any stakeholders. The report submitted by Shri Prabhat Kumar, Joint Commissioner, Sales Tax (I.B), Commercial Taxes Department, Tirhut Divison, Muzaffarpur, is devoid of any consideration with respect to the E-Way Bill generated for the movement of the vehicles in question on which huge quantity of illicit liquor was being transported and seized by the Excise Officials from the site of National Informatics Centre without verifying the fact that whether any E-Way Bill was generated with respect to the said truck, with regard to the scheduled goods under G.S.T. Act and in the garb of the said, the said truck had carried illicit liquor. The above fact is necessary to establish the complicity of not only the petitioner but also the involvement of the dealers and transporters in the illicit trade of liquor. The Commissioner, Commercial Taxes, Bihar is directed to verify from the National Informatics Portal as to whether how many E-Way Bill has been generated with respect to the vehicle bearing Registration No. UP 78 DN- 7877 from the date of its registration and out of all such E-Way Bill, on how many occasion, the said vehicle has moved inside the State of Bihar. The report must be submitted before this Court on or before 15.02.2022 - Put up this case on 15.02.2022.
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2022 (2) TMI 506
Refund of GST - in respect of refund claim filed under Any Other category instead of category under which Nil refund claim was filed, the condition (b) under Para 3 of the Circular No. 110/29/2019-GST dated 03/10/2019, that of refund application for subsequent period did not appear to fulfilled - HELD THAT:- A perusal of the Order passed by the Assistant Commissioner indicates that he has refused to comply with the Order passed by the Commissioner (Appeals-II) by recording reasons as to why the said Order cannot be complied with as if the Assistant Commissioner was sitting in appeal against the order of the Commissioner (Appeals). The Assistant Commissioner could not have refused to comply with the Order passed by the Commissioner (Appeals-II) on the ground that a decision was taken to impugn the said Order dated 14/10/2019 before GST Tribunal or on other ground recorded by the Assistant Commissioner about his dissent not to follow the said Order passed by his Superior Authority i.e. Commissioner (Appeals- II). The impugned Order passed by the Assistant Commissioner CGST Solapur Division is quashed and set aside - Petition allowed.
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2022 (2) TMI 505
Invocation of bank guarantee furnished by the petitioner, while obtaining release of the goods detained under Section 129(1) of the CGST Act - compliance of Section 107 of the CGST Act - HELD THAT:- Having regard to the period of three months available to the petitioner to prefer an appeal against Ext.P3 order, it is essential in the interests of justice that the bank guarantee is not invoked till the period for filing the appeal expires. The order dated 20.12.2021 produced as Ext.P3 shows that the 1st respondent has invoked the bank guarantee along with the order under Section 129 CGST Act, itself. This writ petition is disposed of directing the 1st respondent to withhold invocation of the bank guarantee for a period of four months from 20.12.2021 to enable the petitioner to pursue the appellate remedy.
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2022 (2) TMI 504
Classification of supply - works contract services - supply of goods or services or a composite supply - Whether the activity should be classified as Composite Supply of works contract for Construction of tunnel under Entry 3 (iv) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 taxable at the rate of 12%? - HELD THAT:- The work awarded to the main contractor viz. NECL is, construction of Tunnel and Approach roads. In order to complete the said EPC contract, the main contractor has engaged the applicant as a sub-contractor for drilling and blasting work for rock tunneling - it is clear that various goods including explosives, tools and other material have to be used during the process of blasting. Hence there is an element of goods involved in the said transaction. Further, there is a service element also in carrying out the whole process starting from drilling till the end by removing the rubble. Hence the activity involves both, the goods as well as the services. In the subject case, there is definitely involvement of supply of services in the form of drilling and blasting and clearing of rubble etc. We also find that to perform such services there is requirements of goods which include explosives. The service of drilling and blasting cannot be conducted without the use of explosives and therefore there is an element of composite supply in the present case. Whether the impugned activity to be carried out by the applicant shall be classified as supply of goods or services or a composite supply of 'works' contract'? - HELD THAT:- The main contractor has been given a contract by MSRDC to construct tunnels for Mumbai Pune Expressway and accordingly, the main contractor has subcontracted the tunneling work to the applicant by way of drill and blast technique of tunneling. In the subject case, the work is for construction of tunnels which can be considered as immovable properties belonging to the Government of Maharashtra. Further as per the work order submitted by the applicant, it clearly appears that the impugned activity carried out by the applicant can classified as composite supply of works contract for construction of tunnel. This would answer the first question raised by the applicant. Whether the impugned activity should be classified as Composite Supply of works contract for Construction of tunnel under Entry 3 (iv) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 taxable at the rate of 12%? - HELD THAT:- The impugned activity/supply undertaken by the applicant as per the subject Work Order received from M/s NECL is drilling and blasting including all tools, materials, explosive vans etc. complete for approach roads and Tunnel Works . Since, the impugned activity carried out by the applicant can be classified as composite supply of works contract for construction of tunnel, the said supply will be covered under Entry 3(iv) of Notification No. 11/2017-CT (Rate) dated 28.06.2017. It is further noticed that similar view has been taken by the Advance Ruling Authority of Gujarat in case of IN RE: M/S. KHEDUT HAT [ 2018 (10) TMI 302 - AUTHORITY FOR ADVANCE RULING, GUJARAT ] that blasting work with use of explosives is a composite supply. Thus, the impugned activity carried out by the applicant is a composite supply of works contract for construction of tunnel and is covered under Entry 3(iv) of Notification No. 11/2017-CT (Rate) dated 28.06.2017.
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Income Tax
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2022 (2) TMI 503
Exemption u/s 11 denied - dissemination of knowledge through a museum or a science park - assessee is a company registered under Section 25 of the Companies Act - Whether the activity of the petitioner of setting up of museums, science parks, planetariums, interactive galleries, exhibits and other forms of dissemination of knowledge through informal means, at the behest of other public bodies or entities, be regarded as commercial in nature and within the periphery of the proviso to Section 2(15) of the Income Tax Act, 1961? - objects sought to be achieved by establishing such a museum or a science park - who is the keeper of the museums established by the assessee company? - HELD THAT:- In the case on hand, the RBI proposed to establish a museum and financial literary center in Kolkata to explain the development of the monetary system and to exhibit its collection of arte facts . Therefore, a building contractor can hardly be said to be equipped to establish a museum for a specified purpose. Therefore, technical expertise is required, research has to be done and the project has to be conceived in such a manner, it brings about the purpose for which the concept was evolved by RBI. The same would be also for the project which was conceived by the Surat Municipal Corporation. Therefore, to state that the assessee was only a contractor is to belittle their status and the purpose for which they were established by the Ministry of Culture, Government of India. The authorities as well as the tribunal were of the view that it is the RBI which is engaged in the educational activities and not the assessee. This finding is also erroneous as the museum is conceptualised by the assessee and all necessary inputs including training of personnel who are to man the museum or to function as a curator are all the task assigned to the assessee. All these would clearly fall within the objects of the assessee company. Thus, the message and information which will be disseminated through the museum which will be in the nature of a non-formal education is based upon the material which has been evolved by the assessee and implemented for and on behalf of the Reserve Bank of India. The responsibility for museums is on the collection curator, a museum curator or a keeper of the heritage of the institution. The curator is a specialized person/organisation who has been entrusted with the onerous duty of taking charge of the content and interpretation of the heritage value. The role of the curator is a specialist work, they have the expertise to develop as to how the archives could be interpreted through various events. Neither RBI nor Surat Municipal Corporation had the expertise within them to establish the museum. They took a policy decision to do the same, realizing that it required the assistance of experts, awarded the work to the assessee. Thus the role of the assessee in conceptuating, developing and establishing the museum is that of a museum curator who develops interprets and explains the significance of the collections for the study and education of the public. Thus the assessing officer, CIT(A) and the tribunal erred in not addressing the larger perspective of the matter. It needs to be emphasized that museums play a very important and significant role in preserving culture and heritage to be recorded and remembered regardless of its future. Museums function as places for conservation research, education and entertainment for the general public. Thus, indisputably a museum is a place of informal and free choice education and learning. Museums offer educational experience in diverse fields, to be cherished and enjoyed. To reduce the appellant assessee, a Master curator to that of a contractor, is to belittle their role in preserving heritage. The role of the assessee cannot be divested from the project rather it is the project of the assessee which is being manned by the recipient namely RBI and Surat Municipal Corporation. In our considered view this will be the proper manner in which the work assigned to the assessee and completed by them has to be interpreted. Hence, we have no hesitation to hold that the assessee has disseminated knowledge in the process of establishing the facilities for the RBI and the Surat Municipal Corporation. The assessing officer, the CIT(A) and the tribunal did not examine as to the effect of incorporation of the assessee as a company under Section 25 of the Companies Act. This issue was considered in Investor Financial Education Academy where also the assessee was registered under Section 25 of the Companies Act. Whether every company registered under Section 25 would be automatically entitled for registration under Section 12A ? - The Court noted that the Income Tax department has been consistently granting registration to all companies registered under Section 25 of the Act. The Court took note of the decision in ICAI Accounting Research Foundation [ 2009 (8) TMI 61 - HIGH COURT OF DELHI] wherein it is pointed out that the fact that the assessee therein was a company registered under Section 25 of the Act was ignored by the tribunal as the status which has been granted by the Government of India itself is the recognition of the fact that foundation is essentially established for the purpose of education and/or for the advancement of any other project of general public utility. The Court also considered as to whether when one limb of the Government has granted a benefit whether another limb of the Government can ignore the same. Registration under Section 25 of the Companies Act is undoubtedly a relevant factor to be noted while considering an application for registration under Section 12AA of the Act as registration under Section 25 of the Companies Act recognises the main objectives of the company as a non-profit organisation. As noted above, this aspect of the matter has not been dealt with by the tribunal which in our opinion ought to have been and if taken into consideration the decision should lean in favour of the assessee Whether the assessee company was engaged in educational activities? - Merely, because a certain amount has been generated as surplus cannot take away the activities of the assessee as not being charitable for the purpose of imparting education or for general public utility. As could be seen from the memorandum of association, the incumbent profit of the assessee has to be utilised for the promotion of the objects which have been set forth in the memorandum. No portion of the income or property shall be paid or transferred directly or indirectly by way of dividend, bonus etc. Therefore, the finding of the tribunal on this aspect is also not tenable. Thus, when the assessee has not been established for the purpose of earning profit and the income it generates has to be applied for promoting the objects as spelt out in the memorandum and no portion of the income can be directly or indirectly paid by way of dividend or bonus etc, it has to be necessarily held that the assessee is a not for profit organisation but public utility company and the activities of the company for which it has been established would undoubtedly show that the company by establishing knowledge parks, engaged in imparting education and also undertakes advancement of other aspects of general public utility to fall within the definition of charitable purpose as defined under Section 2 (15) - Decided in favour of assessee.
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2022 (2) TMI 502
Penalty u/s 271(1)(c) - Whether non striking of the inaccurate portion by itself invalidates the notice? - unexplained purchase and sale - HELD THAT:- We find that the CIT(A) rightly held that merely because a wrong claim was made by the assessee with regard to the expenses incurred for construction of a compound wall that by itself will not be a reason to impose penalty and, accordingly, vacated the penalty on the said head. With regard to the unexplained purchase and sale, the CIT(A) took note of the explanation offered by the assessee and also the fact that the conduct of the assessee was not contumacious or wilful so as to impose penalty. Accordingly, the penalty imposed on the said head was also vacated. When the matter travelled to the Tribunal, the explanation which was given by the assessee and accepted by the CIT(A) was once again examined by the Tribunal and after noting several decisions as to under what circumstances penalty can be imposed under Section 271(1)(c) of the Act as also the fact that there was nothing on record to show that the assessee had purposely made a wrong claim, confirmed the order passed by the CIT(A). Thus, we find that there is no error committed by the CIT(A) or the Tribunal for us to interfere with the said order. Accordingly, the appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue.
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2022 (2) TMI 501
Validity of reopening of assessment u/s 147 - information received by Revenue from Maharashtra Sales Tax Authority that Assessee was beneficiary of Hawala accommodation entries from entry provider by way of bogus purchase - HELD THAT:- Remand the matter de novo and direct the ITAT to give its findings on the grounds raised in the Misc. Application including consider the judgment of the Bombay High Court in PCIT vs. Mohommad Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] - In this order the ITAT has to also give a finding on the effect of not providing the documents/ affidavits/ declarations by the accommodation entry provider to Petitioner and explain how it meets with the principles of natural justice if they do not find anything wrong in not providing these information/ affidavit/ declarations.
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2022 (2) TMI 500
Exemption u/s 11 and 12 - Whether Tribunal erred in ignoring the fact that the activities of the assessee are not the activities done for 'charitable purpose' according to the Section 2(15) of the Act, since they are of a purely commercial nature? - HELD THAT:- This Court finds that the Tribunal as the last fact finding authority has held that the Revenue had failed to establish that the said activities had been undertaken by the Respondent only in the Assessment Year under consideration. In fact, the said activities have been undertaken by the respondent right from the year 2007-08. A perusal of the paper book also reveals that for the earlier and subsequent Assessment Years, exemptions have been allowed in the similar circumstances. This Court had observed that the impugned order passed by the ITAT suffers from no perversity as it abides by the principle of consistency and uniformity by following orders passed in the earlier and subsequent Assessment Years i.e. Assessment Years 2007-08, 2008-09, 2009-10, 2011-12, 2013-14 and 2014-15. However, at that stage, learned counsel for the Appellant had prayed for some time to obtain instructions and file additional documents. As Appellant states that he has filed the additional documents, however, the same are not on record. In any event, in view of the principle of consistency and uniformity, this Court is of the view that no substantial questions of law arises for consideration in the present case.
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2022 (2) TMI 499
Validity of Assessment u/s 153A - HELD THAT:- This Court is of the opinion that the questions of law raised in present appeal has been settled by the predecessor Division Bench in Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and assessment of the respondent had attained finality prior to the date of search and no incriminating documents or materials had been found and/or seized at the time of search. Accordingly, no addition can be made u/s 153A of the Act as the case of respondent is of non-abated assessment. - Decided in favour of assessee.
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2022 (2) TMI 498
Revision u/s 263 by CIT - whether the Commissioner of Income Tax, Kolkata-1 [CIT(A)] while issuing a notice under Section 263 of the Act and adjudicating the matter can travel beyond the allegations set out in the said notice? - HELD THAT:- This issue has been settled in several decisions and it will be beneficial to take note of the decision in the case of Commissioner of Customs vs. Toyo Engg. India Ltd. [ 2006 (8) TMI 184 - SUPREME COURT] wherein the Hon ble Supreme Court held that the department cannot travel beyond the show cause notice. This decision which was followed by the High Court of Delhi in the case of CIT vs. Contimeters Electricals (P) Ltd . [ 2008 (12) TMI 4 - HIGH COURT DELHI] was rightly taken note of by the Tribunal and the appeal filed by the assessee was allowed. Therefore, we find that there is no error committed by the Tribunal in deciding the issue in favour of the assessee. For such reason, the appeal is dismissed and the substantial question of law is answered against the revenue.
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2022 (2) TMI 497
Reopening of assessment u/s 147 - unexplained investment - Appellant - Assessee submitted that even if the explanation offered by the Appellant was not satisfactory the authorities should have applied their discretion properly and ought not to have made the addition mechanically - HELD THAT:- The Court is unable to agree with the above submission of learned counsel for the Appellant that the additions were made mechanically. At every stage the AO, the CIT(A) and the ITAT have granted the Appellant some relief. As regards the addition of ₹ 5,01,000/- there have been concurrent findings by the AO, the CIT(A) and the ITAT. Each of their orders is well reasoned, giving complete reasons. The Court is, therefore, not persuaded to interfere with their concurrent findings. On a careful perusal of the entire record, the Court is of the view that there was justification for the Department invoking Section 147 of the IT Act. The Court finds no reason to interfere. - Decided against assessee.
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2022 (2) TMI 496
Reopening of assessment u/s 147 - determination of Correct head of income - sale of shares of TCS Division by Petitioner was nothing but business income and therefore the profits arising out of the sale of shares held by Petitioner in the group companies would be treated as Petitioner s income from business, and not profits arising out of sale of investment - HELD THAT:- If according to Respondent No. 1 only the sale of shares of TCS was business income and not profits arising of sale of investment to say that the amount has escaped assessment, also indicates non- application of mind. We would also go a step ahead and observe that if only the approving authority under section 151 of the Act had considered the reasons properly, either he would have directed Respondent No. 1 to re-work on the reasons or would not have granted the approval. This is a case where the scrutiny assessment was completed and order under section 143(3) of the Act has been passed followed by a rectification order under section 154 of the Act. Therefore Petitioner s case has been considered at two stages, (i) When the assessment order was passed after scrutiny under section 143(3) of the Act and (ii) When an order under section 154 of the Act was passed. The reasons for proposed re-opening clearly indicates that Respondent No. 1 wants to re-open only on the basis of change of opinion which, as held time and again by various Courts, can not be a ground for reopening. This is because in the assessment order dated 31st December, 2007 passed under section 143(3), the same point raised in the reasons for re-opening has been discussed and considered. Where the assessment is sought to be reopened within a period of 4 years, of end of relevant assessment year, this Court in Jainam Investments [ 2021 (9) TMI 517 - BOMBAY HIGH COURT] AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain precondition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of change of opinion as an inbuilt test to check abuse of power by the AO. Hence, after 1st April, 1989, AO has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. It is settled law that review in the garb of reassessment is absolutely prohibited and the Courts have consistently held that reassessment cannot be allowed in such situation of change of opinion and presence of fresh tangible material is a sine qua non for a valid re-assessment - Decided in favour of assessee.
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2022 (2) TMI 495
Reopening of assessment u/s 147 - Bogus LTCG - HELD THAT:- As admitted position is that the Long Term Capital Gain had not only been disclosed in the return of income by the respondent/assessee, but the same was also claimed to be exempt. No adverse inference was made to the returned income of the respondent/assessee even when the Assessing Officer was fully aware of the Long Term Capital Gain claimed as exempt from tax. This Court is of the view that in the garb of reassessment proceedings, the appellant cannot seek to verify the same details on the strength of material which was already available on record. This Court is also in agreement with the finding of the Tribunal that the assumption of jurisdiction by issuing notice u/s 148 is bad in law. Accordingly, the present appeal and application are dismissed
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2022 (2) TMI 494
Addition u/s 69A or 68 - unexplained cash deposits in the bank account - HELD THAT:- We find that it was a case of sale transaction of diamonds u/s 68 of the Act. The parameters for making addition u/s 68 and u/s 69A, though may appear to be similar, however, is not so; therefore, addition of cash credit u/s 68 of the Act would stand on a different pedestal. The principles governing cash credit under Section 68 of the Act cannot be extended to unexplained investments u/s 69A of the Act. See TILAK RAJ KUMAR AND OTHERS [ 2014 (10) TMI 1 - ANDHRA PRADESH HIGH COURT] - Decided against revenue.
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2022 (2) TMI 493
Disallowance u/s 14A r.w.r. 8D - Mandation of recording proper satisfaction regarding incorrectness of the claim of the assessee - second round of litigation - HELD THAT:- There is no dispute with regard to the fact that Rule 8D of Income Tax Rules, 1962 ( the Rules ) is not applicable for the Assessment Year under appeal. We find that Ld.CIT(A) erroneously affirmed the action of the Assessing Officer regarding disallowance of administrative expenses applying the Rule 8D of the Rules. This approach of authority below is not justified. So far interest expenditure is concerned, the Ld.CIT(A) has given finding on fact that from the details submitted, it was seen that the opening and closing funds available, with the appellant assessee far exceeded the total average investment of ₹ 807.7 crores. This finding on fact is not assailed by the Revenue. However, the disallowance regarding administrative expenditure is under challenge before this Tribunal. Undisputedly, the Assessing Officer made disallowance by applying Rule 8D of the Rules, this Rule came into vogue with effect from Assessment Year 2008-09. Hence, the Assessing Officer erred in law by applying the Rule 8D of the Rules for disallowance. Therefore, looking to the quantum of investment, business of the assessee and material placed before us, we are of the considered view that it would sub-serve the interest of justice if the disallowance is restricted to a sum of ₹ 2,50,00,000/-. As it cannot be presumed that for handling, overseeing and making investment, no expenditure could be incurred. The assessee has failed to demonstrate how much administrative expenditure was incurred qua the investment that earned tax free income. Therefore, a fair estimation is made for such disallowance. The grounds raised by the assessee are partly allowed.
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2022 (2) TMI 492
Employees contribution to Provident Fund and ESIC u/s 2(24)(x) r.w.s 36(1)(va) - HELD THAT:- It is an undisputed fact that though there has been delay in deposit of PF/ESI dues but it is also an undisputed fact that money collected from employees, have been deposited with the appropriate authorities before filing of return of income. As in case Bharat Hotels [ 2018 (9) TMI 798 - DELHI HIGH COURT] has decided the issue in favour of the assessee - no disallowance u/s 36(1)(va) of the Act is called for in the present case. - Decided in favour of assessee.
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2022 (2) TMI 491
Rectification u/s 154 - mismatch of provision for leave encashment between the figure claimed by the assessee and certified by the Tax Auditor - Admittedly, the assessee did not file any clarification by the Tax Auditor in this regard - whether the AO correctly exercised the jurisdiction u/s 154 ? - HELD THAT:- AO is empowered to amend any order passed by him under the Act with a view for rectifying the mistake apparent from record. Therefore, for exercising power under section 154 of the Act, there should exist a mistake apparent from record. In the present case as per AO the assessee failed to furnish any evidence with regard to its contention that the mismatch of amount on account of leave encashment as per books and as per tax audit report occurred due to clerical/typographical error made in the tax audit report. Moreover, the assessee failed to furnish any certification from the Tax Auditor certifying that there was clerical/typographical error in the tax audit report. Looking to the finding of the AO that no certificate by the Tax Auditor was furnished to state true and correct fact, in our considered view, the AO himself ought to have made inquiry from the Tax Auditor of the assessee. Undisputedly, it is the Assessing Officer who wanted to amend the concluded assessment. Therefore, he was required to verify the facts by making requisite inquiry. We, therefore, set aside the impugned order and direct the AO to decide the issue afresh after making necessary inquiry and verification of facts related to issue under consideration. The grounds raised by the assessee are allowed for statistical purposes only.
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2022 (2) TMI 490
Revision u/s 263 by CIT - case was selected for scrutiny and assessment was completed - As per CIT donation of ₹ 2 lakhs was wrongly allowed by the AO without examining the deduction u/s. Rule 7A(2) - HELD THAT:- Section 263 empower the PCIT to initiate section 263 proceedings where the AO either takes a wrong decision without considering the material on record or he takes a decision without making proper enquiry and that such enquiry was prima facie warranted. If the PCIT was of the opinion that there was no proper enquiry by the AO and the AO accepted the various claims of the assessee mentioned in his order without conducting further enquiry with regard to the genuineness of the claim of the assessee and it is incumbent on the part of the AO to come to an independent conclusion that various expenditure claimed by the assessee were laid out wholly and exclusively for the purpose of business of the assessee. In the present case, as seen from the assessment order, the AO closed his eyes on the issues raised by the PCIT for the reasons best known to him and accepted the deduction claimed by the assessee in his return of income. Though AO is required to make necessary enquiries himself regarding the various claims of the assessee, he failed to do so. Therefore, the issues dealt by the PCIT were within his powers to invoke the provisions of section 263 of the Act where such enquiry was prima facie warranted. In view of the above, we are of the opinion that the ld. PCIT was justified in invoking the provisions of section 263. Deduction under Rule 7A(2) - Admittedly, the PCIT remitted the issues relating to prior period expenses, interest receivable from Karnataka Cashew Development Board, amount spent on bamboo plantation, interest on loan to Mysore Paper Mills Ltd., agricultural Income tax recoverable from Govt. of Karnataka and sundry balance written off as bad debts to the AO for reconsideration as there was no enquiry from the AO on this issues. However, with regard to deduction under Rule 7A(2), he has mentioned that even if the AO finds that finds that the actual allowable deduction is ₹ 7,09,58,595, he shall restrict the deduction to ₹ 6,46,03,000 which is the amount allowed in the original assessment order. In our opinion, the allowability of deduction is to the extent of claim made in the original assessment order of ₹ 6,46,03,000. However, he has not denied this deduction, but only remitted the issue to reconsider the allowability of deduction under Rule 7A(2). Being so, even on this issue there is no error by the PCIT in giving such a direction to the AO. AO is directed to re-examine the entire issues dealt with by the PCIT in his order in accordance with law after giving adequate opportunity of being heard to the assessee. The AO shall not be influenced by any of the observations of the PCIT on merits in his order. However, the AO should not allow the deduction under Rule 7A(2) more than the claim made in the original assessment order. With these observations, we confirm the order of the PCIT. - Decided against assessee.
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2022 (2) TMI 489
Revision u/s 263 by CIT - Admissibility of deduction u/s 80P - CIT held that the AO s order allowing deduction u/s.80P(2)(d) which was interest received on investments with MDCC Bank, was erroneous and prejudicial to the interest of the revenue - According to the CIT, in view of the provisions of section 80P(4) excluding co-operative banks from the purview of section 80P and in view of the fact that provisions of 80P(2)(d) is applicable only in respect of interest on deposits received from co-operative societies, the deduction ought not to have been allowed by the AO - HELD THAT:- The ratio laid down by THE TOTAGARS CO-OPERATIVE SALE SOCIETY [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] is that in the light of the principles enunciated by the Supreme Court in Totgars Co-operative Sale Society [ 2010 (2) TMI 3 - SUPREME COURT] in case of a society engaged in providing credit facilities to its members, income from investments made in banks does not fall within any of the categories mentioned in section 80P(2)(a) - section 80P(2)(d) of the Act specifically exempts interest earned from funds invested in co-operative societies. Therefore, to the extent of the interest earned from investments made by it with any co-operative society, a co-operative society is entitled to deduction of the whole of such income under section 80P(2)(d) of the Act. However, interest earned from investments made in any bank, not being a co-operative society, is not deductible under section 80P(2)(d) of the Act. CIT was therefore justified in exercising his powers of revision u/s.263 of the Act and directing the AO to tax interest income in question as it is neither of the nature specified in Sec.80P(2)(a)(i) or 80P(2)(d) of the Act. Deduction u/s.80P(2)(d) - what is the quantum of interest income that should be brought to tax by the AO, in case the deduction is denied to the assessee u/s.80P(2)(d) - On this aspect, the Hon ble ITAT, Bengaluru Bench in the case of Puttur Primary Co-operative Agriculture and Rural Development Bank Ltd., Vs. ITO [ 2021 (6) TMI 460 - ITAT BANGALORE] the tribunal held that the assessee should be allowed expenses and the entire gross interest cannot be taxed. The order of the CIT is modified to the extent that the deduction while taxing interest income in dispute the AO will allow deduction on account of expenses on the lines indicated above. Appeal of the assessee is treated as partly allowed for statistical purpose.
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2022 (2) TMI 488
Disallowance u/s 14A r.w.r. 8D - Assessee submitted that the own funds available is more that investment made thus the interest disallowance is not called for - HELD THAT:- As the own funds available with the assessee would become lower, only if the value of investments and the amount of Loans and advances are aggregated together. If we compare the own funds with the value of investments, then the own funds is more. Hence the ratio laid down by the jurisdictional High Court in the case of Microlabs Ltd [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] to the effect that, in such kind of cases, the presumption would be that the investments have been made out of own funds, would squarely apply to the facts of the present case - Decided in favour of assessee. Disallowance made u/r 8D(2)(iii) - We set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO with the direction to follow the ratio of decision rendered by the Special bench in the case of Vireet Investments P Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] Disallowance u/s 14A of the Act to be imported in sec.115JB - The issue urged by the assessee is a legal issue and the same has since been settled by the Special bench in the case of Vireet Investments (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it was held that the disallowance made u/s 14A of the Act cannot be imported in sec.115JB of the Act, meaning thereby, the disallowance required to be made under clause (f) of Explanation 1 to sec.115JB should be computed separately without having regard to Rule 8D of IT Rules. Even though the AO has not computed the total income u/s 115JB of the Act, yet there is merit in the contention of Ld A.R that the correct legal principles should have been followed. Accordingly, we restore this issue to the file of AO with the direction to compute the addition to be made under clause (f) of Explanation 1 to sec.115JB of the Act independently on the basis of financial statements of the assessee
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2022 (2) TMI 487
Addition u/s. 69/68 - unexplained source of deposit of cash in a joint bank account maintained by the assessee with his wife in ICICI Bank - assessee repeatedly stated before the AO that his only source of income was salary and no business was carried on - HELD THAT:- In support of the source of deposits, the assessee submitted that Shri Virendra Khilare, late father of his wife gifted certain land to the assessee. Copy of the gift deed was also made available. Wife of the assessee sold the land in plots. She filed her returns for the A.Ys. 2002-03, 2003-04 and 2004-05 declaring income from sale of plots. There is nothing on record to suggest that her income was disturbed in any manner by the AO or it was not genuinely declared. Out of the sale proceeds of the plots, she transferred ₹ 19.69 lakhs to her father through banking channel on various dates, including three transactions in the year 2002 and five transactions in the year 2004 as have been set out on page 3 of assessment order. It was out of such deposits in the bank account of Shri Virendra Khilare, that he gave back ₹ 13 lakhs to his daughter in the year 2004 itself. A sum of ₹ 12,97,600 was deposited in the joint savings bank account out of this amount. Immediately after the deposit of the amount, the same was transferred to his wife's account on 10.12.2004, which was later on utilized by her for purchasing some property. We are unable to comprehend as to how an addition can be made in the hands of assessee towards cash deposits in the joint bank account when not only the source of deposit but also the entire background of facts leading to the receipt of amount in the hands of assessee's wife was also thoroughly explained before the AO. The assessee's wife was separately assessed to tax, in support of which, her copies of income tax returns were also furnished. We are fully satisfied that the assessee discharged the onus upon him to prove the source of deposit in the joint bank account. Setting aside the impugned order, direct to delete the addition - Decided in favour of assessee.
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2022 (2) TMI 486
Deduction u/s 54 - assessee not able to obtain gainful possession of the property for availing the deduction of section 54 - delay in the project by the builder - assessee has made the payment to the builder within the stipulated time but there was some issue of obtaining the completion certificate by the builder, hence, there was some delay in handling over the possession - HELD THAT:- We find that assessee has complied with the condition mention under section 54 of the IT Act to claim the exemption. As pointed out by the assessee the handing over of the possession was delayed due to fault on the part of the builder and assessee has complied with the necessary condition of payment as required. There is a due agreement and part amount was paid. Accordingly, in such situation, the decision of Hon ble Supreme court in the case of Sanjeev Lal [ 2014 (7) TMI 99 - SUPREME COURT] provides that part payment will also suffice the ingredients of transfer for the purpose of section 54 - Decided against revenue.
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2022 (2) TMI 485
Reopening of assessment u/s 147 - Eligibility of reasons to believe - mandation of recording reasons to believe - HELD THAT:- From the perusal of the aforesaid reasons we find that the ld. AO had not recorded anywhere regarding the failure on the part of the assessee to make full and true disclosure of material facts in the original assessment proceedings. This is a mandatory requirement of law as held by the Hon'ble Jurisdictional High Court in the case of Hindustan Lever Ltd., vs. ITO [ 2004 (2) TMI 41 - BOMBAY HIGH COURT ] CIT(A) had quashed re-assessment proceedings on the mere fact that the ld. AO in the reasons recorded for reopening the assessment had not indicated any failure on the part of the assessee to make full and true disclosure of material facts during the original assessment proceedings - Decided in favour of assessee.
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2022 (2) TMI 484
Unexplained cash deposited in the bank account - addition u/s 68 - HELD THAT:- We find that the authorities below have not considered the contention of the assessee that he had received gift from his father who had sold agricultural land. Moreover, the Assessing Officer has not brought any contrary material refuting the claim of the assessee that he received gift from his father who had sold agricultural land in the month of April, 2011 located in Budhera, Gurgaon. Therefore, considering the material available on record and finding of the authorities below hereby direct the Assessing Officer to delete the addition. Thus, grounds raised by the assessee are allowed.
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2022 (2) TMI 483
Assessment order made in the name of non-existent company - Scheme of amalgamation completed - HELD THAT:- When a query was put to ld. counsel, Shri Sridhar fairly agreed that the CIT(A) has not adjudicated this issue on jurisdiction specifically raised before him. He conceded that matter can be referred back to the file of the CIT(A) to adjudicate this issue. He argued that first CIT(A) will adjudicate this jurisdictional issue and then he will decide merits also afresh. DR has not seriously conceded the above averments of the ld. counsel. In view of the decision of CIT(A) that the issue of assessment on non-existent company is not adjudicated and has confession given by both the sides, we are setting aside the order of CIT(A) and remand the matter back to his file for fresh adjudication, first on the issue of jurisdiction i.e., assessment on non-existent company and second after that on merits. In term of the above, the order of CIT(A) is set aside and the matter remanded back to his file. Appeal filed by the assessee is allowed for statistical purpose.
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2022 (2) TMI 482
Reopening of assessment u/s 147 - reopening was beyond 4 years - unabsorbed depreciation disallowed - HELD THAT:- As gone through the reasons recorded as well as original assessment order. We noted that the reasons for reopening and the issue examined by the AO in original assessment proceedings are exactly the same. There is no difference. As we have already extracted the reasons recorded as well as the finding of the AO in original assessment proceedings, we could not point out what is the failure of the assessee to disclose fully and truly the material facts for completion of assessment of the assessee. Even on merits the CIT(A) has categorically held that the assessee is eligible for carry forward of depreciation for the assessment year 2002-03 to 2004-05. - Decided against revenue.
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2022 (2) TMI 481
Income accrued in India - consideration earned by the Appellant from supply of CAS and Middleware products to the Indian customers - addition under royalties' as defined u/s. 9(1)(vi) of the Act and Article 12(3) of the India-Swiss Confederation Double Taxation Avoidance Agreement ('India-Swiss tax treaty') - HELD THAT:- Issue decided by the Hon'ble Tribunal in Appellant's own case [ 2020 (7) TMI 640 - ITAT DELHI ] for the previous AY 2016-17 and even covered by the recent judgment of the Hon'ble Supreme Court in the case of Engineering Analysis Centre For Excellence Private Limited Vs. Commissioner Of Income Tax Another [ 2021 (3) TMI 138 - SUPREME COURT ] - Decided in favour of assessee.
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2022 (2) TMI 480
Long term capital gain - JDA agreement - permissive possession v/s legal possession - Transfer of capital asset u/s 2(47) - assessee along with other co-owners has entered into Joint Development Agreement (JDA) for development of land belonging to them - assessee contended that he has not handed over the possession of the property as per the joint development agreementHELD THAT:- The assessee has given only permissive possession and not legal possession. Accordingly, following the said decision of M/S. ANUGRAHA SHELTERS (P) LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-11 (1) BANGALORE [ 2021 (12) TMI 589 - ITAT BANGALORE] we hold that the transfer has not taken place during the year under consideration. Accordingly, capital gain is not assessable in the hands of the assessee during the year under consideration. Decided in favour of assessee.
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2022 (2) TMI 479
Delayed deposited the contribution of PF ESI - Payment beyond the due date but before the filing of the return of income - HELD THAT:-See HARENDRA NATH BISWAS VERSUS DCIT, CIRCLE-29 KOLKATA [ 2021 (7) TMI 942 - ITAT KOLKATA] wherein held that we do not accept the Ld. CIT(A)'s stand denying the claim of assessee since assessee delayed the employees contribution of EPF ESI fund and as per the binding decision of the Hon'ble High Court in Vijayshree Ltd.[ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds and we allow the appeal of the assessee.
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2022 (2) TMI 478
Addition u/s 36(i)(iii) - interest on advances made - Disallowance of interest made on the opening balance/amount - HELD THAT:- As stated by the Ld. DR, and rightly so, as the assessee had during the year under consideration continued to pay interest on the interest bearing loans raised from the banks in the preceding years, therefore, there being a direct nexus between the outstanding balance of the interest free loans that were advanced to the aforementioned party and the said interest bearing funds, there can be no justification in not disallowing the interest corresponding to such interest free advance during the year under consideration, for the reason, that the amount of such advance was merely in the form of Opening balance and had not been given during the year under consideration. As part of the interest expenditure claimed as deduction by the assessee during the year under consideration pertained to the interest bearing loans that were raised by the assessee in the immediately preceding year and, continued as such during the year under consideration, therefore, we are unable to comprehend as to on what basis the assessee is claiming that no disallowance of the interest expenditure was called for with respect to the opening balance of the outstanding interest free advance that was given to the aforementioned party. Accordingly, we are unable to persuade ourselves to subscribe to the aforementioned claim of the assessee, and thus, reject the same. Whether no disallowances u/s 36(1)(iii) is called for to the extent the assessee was found to be in possession of interest free funds during the year under consideration and as the assessee had funds in the form of capital deployed by the partners on which interest was being paid @3% per annum, therefore, the disallowances, if any, u/s 36(1)(iii) of the Act was to be restricted in the backdrop of availability of the aforementioned amount of concessional interest bearing funds to 3% p.a. and not 8% p.a as worked out by the AO - As interest free funds are available with the assessee, then, a presumption would arise that the investments made were from its interest free funds. See RELIANCE UTILITIES POWER LTD. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] As the assessee was admittedly having interest free funds of ₹ 16,99,632.68 i.e. unsecured loans raised from family members, therefore, no disallowance to the said extent qua the loan/advances given by the assessee to M/s. Khaira Trading company was called for - We, thus, vacate the disallowance of the interest expenditure u/s 36(1)(iii) qua the aforementioned amount. As regards the balance amount of the interest free advance given by the assessee firm to the aforementioned party, viz. M/s. Khaira Trading Company i.e. ₹ 37,00,367.32 [₹ 54,00,000/- (-) ₹ 16,99,632.68], we are of the considered view that as the assessee firm had sufficient amount of capital of the partners of ₹ 1.54 crore on which interest was being paid @3% per annum, therefore, the disallowance u/s 36(1)(iii) with respect to the aforesaid balance of amount of ₹ 37,00,367.32 was to be restricted to 3% per annum and not 8% per annum as had been worked out by the AO. We, thus, in terms of our aforesaid deliberations modify the disallowance worked out by the AO u/s 36(1)(iii) of the Act.Grounds of appeal Nos. 2 to 3 are partly allowed
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2022 (2) TMI 477
Reopening of assessment u/s 147 - whether or not the AO was justified in reopening the case of the assessee u/s 147? - Long term capital gain (LTCG) was determined after applying the provisions of section 50C - entitlement of the assessee for claim of deduction u/s 54F - HELD THAT:- Though the AO had applied the deeming provision of section 50C of the Act for computing the LTCG in the hands of the assessee, but in our considered view, the entitlement of the assessee for claim of deduction u/s 54F of the Act continues to remain dependent on the amount of the net consideration that was received by him on the transfer of the property in question. As stated by the ld AR, and rightly so, the AO without applying his mind had in a mechanical manner reopened the case of the assessee u/s 147 of the Act. Although, we are not oblivious of the fact that an AO at the time of reopening of the case of assessee is not required to conclusively prove that the income of the assessee chargeable to tax had escaped assessment, and is only required to have with him a bonafide reason to believe that the income of the assessee chargeable to tax had escaped assessment, but then, where in the totality of the facts of the case before him it can safely be gathered that no income of the assessee chargeable to tax had escaped assessment, there would be no justification on his part in reopening the case of the assessee by taking recourse to the provisions of section 147 - we not being able to persuade ourselves to uphold the very basis on which the case of the assessee had been reopened u/s 147 of the Act, thus, set aside the assessment framed by him u/s 143(3) r.w.s. 147 of the Act, dated 16.11.2011. Assessee appeal allowed
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2022 (2) TMI 476
Delayed employees contribution towards ESI/PF - failure to pay the employee s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) - Scope of amended provisions - HELD THAT:- In the instant case, admittedly and undisputedly, the employees contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, I find that there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2018-19 and therefore, the said amended provisions cannot be applied in the instant case. - Decided in favour of assessee.
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2022 (2) TMI 475
Disallowing employees contribution to PF ESI, which was paid before the due date of filing of the return of income u/s 139(1) - Scope of amendment to section 36(1)(va) and 43B - HELD THAT:- As in Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) - Also further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. Therefore, the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction - Decided in favour of assessee.
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2022 (2) TMI 474
TDS u/s 194C - payments made by the assessee to its affiliates - Payment towards face value of the meal vouchers to the affiliates - primary contention of the assessee that in terms of approval granted by the Reserve Bank of India (RBI) under the Payment and Settlement Systems Act, 2007 ( PSS Act ), the assessee is operating a payment system for issuance of meal vouchers, wherein, the only role played by it is to provide an alternative system of payment - As per assessee since the payment made by the assessee to the affiliates is merely reimbursement for the prepaid vouchers under the alternative system of payment, it is not exigible to TDS provisions - HELD THAT:- The factual matrix reveals that the assessee is operating a semi-closed prepaid payment system being authorized by RBI in terms of section 7 of the Payment and Settlement System Act, 2017. Under the aforesaid scheme, the assessee issues printed paper vouchers to be utilized for purchase of food and non-alcoholic beverages at certain specified establishments. It is an accepted factual position that the service charge received by the assessee, both, from the customers as well as affiliates is offered as income. So far as the face value of the meal voucher is concerned, as per clause 8 of RBI Master Circular placed in the paper book, the amount received from the customers towards issuance of meal vouchers has to be kept in escrow account maintained with any Scheduled Commercial Bank. The Master circular mandates that the amount so deposited in the escrow account can only be used for making payment towards reimbursement of the face value of the meal voucher to the affiliates. The Government Regulations make it clear that the face value of the meal vouchers cannot be used by the assessee for any other purpose. Thus, it is very much clear that the amount received by the assessee from customers for providing the meal vouchers is not an income of the assessee but has to be used only for the purpose of making payment to the affiliates towards redemption value of vouchers. The entire scheme relating to issuance of printed meal vouchers read with PSS Act and RBI Master Circular make it clear that the assessee is merely a facilitator or a medium for enabling payments to be made by the user of the vouchers to the affiliates when the user purchases food and non alcoholic beverage from the affiliates. In other words, the assessee is merely providing the service of an alternative mode of making payment. Except one of the categories i.e. catering, the payment of the face value of meal vouchers to affiliates would not come within the definition of work either as per the general meaning or even under the extended meaning of work as per section 194C of the Act. In so far as catering is concerned, the admitted factual position is, the assessee has deducted tax on the payment made to caterers, who basically are in house facilities established by customers of the assessee. Thus, under no circumstances, the payment made by the assessee towards face value of the meal vouchers to the affiliates can come within the ambit of section 194C of the Act. In any case of the matter, as per the scheme of PSS Act and Master Circular issued by the RBI, the amount received towards face value of the meal vouchers is not money belonging to the assessee and has to be used exclusively for the purpose of making payment to the affiliates. There is nothing on record to suggest that the regulatory authorities have found any violation of conditions of PSS Act, 2007 or the RBI guidelines by the assessee while carrying out the business. Thus, the assessee is merely a custodian of the money and for facilitating the provision of making available food and beverages to the employees of customers through the affiliates, the assessee is merely a service provider. Because of the service provided by the assessee, both, the affiliates and employees are benefited. For this process of facilitation which is in the nature of service, the assessee receives service charges both from its customers as well as affiliates. The payment made by the assessee towards face value of the meal vouchers to the affiliates are not in the nature of payment made towards works contract so as to fall within the provision of section 194C - Demand raised under section 201(1) and 201(1A) are deleted. The grounds raised by the assessee are allowed.
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2022 (2) TMI 473
Addition u/s 68 - unexplained share application money received - HELD THAT:- CIT(A) has rightly deleted the addition for unexplained share application money in light of the relevant fact and material which remains uncontroverted by the Ld. DR. We, thus confirm the finding of Ld. CIT(A) deleting addition made by the ld. AO u/s 68 of the Act. Ground No.1 raised by the revenue stands dismiss. TDS u/s 40(a)(ia) - non-deduction of tax at source on expenditure towards commission and discount - HELD THAT:- In this figure commission and brokerage on sales was ₹ 26,18,864/- and discount on sales was ₹ 25,99,994/-. We also find that assessee has filed complete details of discount and sales with name and address and has been consistently giving such type of discount on sales is the regular course of business. There is no dispute with regard to the claim of commission of ₹ 26,18,864/-. Under these given facts and circumstances, we find that the addition made by the ld. AO at ₹ 19,70,098/- was merely on surmises and conjectures and was not supported by any material fact or evidence. Thus, there seems no reason to interfere in the finding of Ld. CIT(A) deleted the addition u/s 40(a)(ia) of the Act. Accordingly, ground raised by the revenue stands dismissed. Disallowance of legal and professional expenses - HELD THAT:- We find that the legal and professional charges have been claimed which have increased during the year as compared to the preceding year. The amount in dispute which has been given to six professional. All the details of the professional services provided by these six professional have been filed before us. Tax has been deducted at source on prevailing rates of TDS. The alleged amount received by six professional have been offered to tax in their respective return of income. Under these facts and circumstances of the case there remains no reason to question the genuineness of the expenditure claimed by the assessee and ld. CIT(A) has rightly appreciated the fact of this issue and deleted the disallowance correctly. - Decided in favour of assessee.
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2022 (2) TMI 472
Addition u/s 40A - Addition made as assessee could not explain the reasons for payment of interest to the business creditors that too sister concerns whereas it is not charging any interest from the debtor - HELD THAT:- Trading transactions are genuine and accepted as such, then, disallowance of expenditure is not in accordance with law. It is also his submission that the assessee has received interest and has also paid interest @ 15% to the sister concerns and only the net interest has been debited to the Profit Loss Account. From the various details furnished by the assessee in the paper book, it is noted that the assessee has paid interest as well as received interest from both the sister concerns, namely, M/s Samjhai Nath Industries and Saraswati Ginning Pressing Oil Mills. Further, the transactions with the parties have not been doubted and these are business transactions. The AO has also not brought anything on record to the effect that the assessee has violated the provisions of section 40A(2)(b) - Hon ble Supreme Court in the case of SA Builders [ 2006 (12) TMI 82 - SUPREME COURT ] has held that once the assessee establishes that there was a nexus between expenditure and the purpose of business, the Revenue cannot justifiably claim to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the said role to decide how much is a reasonable expenditure having regard to the circumstances of the case.- Decided in favour of assessee.
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2022 (2) TMI 442
Validity of order u/s 264 read with Section 260 of the Income Tax Act - interest earned on fixed deposits as revenue receipt - subsequent assessment years, the assessee has changed its stand and has claimed the interest income as capital receipt which was not accepted by the AO and addition to the income was made treating the same as revenue receipt also confirmed by the CIT (A) - ITAT has deleted the addition made by AO for A.Y. 2012-13 to 2015-16 the Department has not accepted the decision of ITAT and has preferred appeal before Hon ble High Court as Various Courts have held that interest earned on the circumstances similar to the facts and circumstances of the cased of present assessee, as discussed above, to be revenue in nature chargeable to tax - HELD THAT:- The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not acceptable to the department and is the subject matter of an appeal cannot be a ground for not following it unless its operation has been suspended by a competent Court. See KAMLAKSHI FINANCE CORPORATION LTD. [ 1991 (9) TMI 72 - SUPREME COURT. It is not respondents case that the order of ITAT or the operation of the said order has been suspended by any Court. In the circumstances, we set aside the order dated 16th January 2020 impugned in the petition and remand the matter for denovo consideration.Unless there is a stay by a competent Court of the operation of the order of ITAT, respondent no.1 shall give effect to the same and pass an order in accordance with law. Respondent shall grant personal hearing to petitioner and communicate the date of personal hearing atleast one week in advance. If respondent wishes to rely on any judgments or order passed by any Court or Tribunal, he shall provide a copy thereof to petitioner and give them an opportunity to deal with those judgments or distinguish those judgments and those submissions of petitioner shall also be dealt with in the assessment order.
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Customs
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2022 (2) TMI 471
Validity of Policy Circular No.25 of 2007 dated 1st January, 2008 issued by the Director General of Foreign Trade - SFIS Scheme - suppression of material fact - Whether the said Circular is prospective, in the sense that it would apply only to claims that are yet to be finalized, or whether cases settled and/or closed could be reopened thereby? - seeking to recover the duty benefit received by the petitioner under the SFI Scheme - Whether the writ petition ought to be dismissed for suppression of any material fact or that the petitioner has approached the writ court with unclean hands? - HELD THAT:- Mr. Singh s argument is that by reason of the contents of the Application and/or the Declaration/Undertaking and the disclosures now made, the petitioner was not entitled to any benefit under the SFI Scheme. If indeed that is so, it stands to reason that the petitioner was disqualified from seeking any benefit under the SFI Scheme, yet, the respondents granted the benefit to it. Once the benefit was granted and such benefit is not sought to be taken away by reason of any disqualification evident from the Application and/or the Declaration/Undertaking but in pursuance of the said Circular based whereon the demand notice and the reminder have been issued and such circular and notice/reminder are under challenge, it is considered too far-fetched for Mr. Singh to argue that the petitioner has been guilty of suppression of a material fact. Had the demand notice/reminder been issued without being goaded by the said Circular but on the ground that the petitioner in terms of its Application and/or the Declaration/Undertaking was not qualified to obtain any benefit of the SFI Scheme and such notice had been made the subject matter of challenge without such application and/or such declaration/undertaking being brought on record of the writ petition, the decision on the issue could have been otherwise. The non-disclosure of the Application and/or the Declaration/Undertaking by the petitioner does not amount to suppression of material facts warranting dismissal of the writ petition. Should the answer to the above issue be in the negative, whether the said Circular is ultra vires Articles 14 and 19(1)(g) of the Constitution, section 5 of the FTDR Act and paragraph 3.6.4 of the FTP 2004-2009? - Whether the said Circular is prospective, in the sense that it would apply only to claims that are yet to be finalized, or whether cases settled and/or closed could be reopened thereby? - Whether the demand notice dated 28th January 2010 and the reminder 31st May 2010 seeking to recover the duty benefit received by the petitioner under the SFI Scheme are valid in law and hence, sustainable? - HELD THAT:- Recital of the said Circular envisaging that the same was issued as a clarification of the SFI Scheme notwithstanding, we are not to be bound by such recital but as guided by various decisions of the Supreme Court its contents have to be analyzed to find out whether (i) it is clarificatory in nature; and (ii) even though clarificatory, whether the same is applicable without restrictions. As earlier observed, we have little reason to doubt that the said Circular only highlighted what was implicit in the SFI Scheme. What would Served From India mean required a clarification and it was, accordingly, clarified by the DGFT that where export of service from India does not take place, although foreign exchange may have been earned , such of those services not originating from India (emphasis ours) would not qualify for the benefit under the SFI Scheme. Based on such clarification, it is indeed arguable as to whether the petitioner was qualified to seek the benefit of the SFI Scheme having regard to its admission that in the nature of export of services undertaken by it, the routes neither originated from India or touched India. The terms of the said Circular being at variance with the decision taken in the meeting of the Port Officers dated 14th December, 2007, where it was decided to undertake the exercise even in cases where RAs may have already granted SFI Scheme benefits earlier (emphasis ours), the said Circular would prevail over the said decision; consequently, it would logically follow that it was never the intention of the DGFT while approving the said Circular to permit an exercise of reopening settled and/or closed cases - on the terms of the said Circular that though it is clarificatory in nature, it does not have retrospective operation. As such, it was not open for the third respondent to issue the demand notice and the reminder to recover ₹ 27,40,35,827/- from the petitioner acting on the minutes of the meeting of the Port Officers dated 25th November, 2008. Since the said Circular does not take away the benefits that have accrued on the basis of the SFI Scheme prior to the contents thereof being clarified by the said Circular, there are no reason to hold such circular to be ultra vires Articles 14 and 19(1)(g) of the Constitution of India as well as section 5 of the FTDR Act and paragraph 3.6.4 of the FTP 2004-2009. However, the demand notice dated 28th January 2010 and the reminder dated 31st May 2010 being unauthorized, are invalid in law and inoperative; hence, the same deserve to be set aside. Petition allowed.
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2022 (2) TMI 470
Direction to issue Summons to the Petitioners for their appearance to record their voluntary statement under Section 108 of the Customs Act, 1962 - permission to allow the presence of their Advocate at visible but not audible distance - seeking permission for videography of their interrogation at the cost of the Petitioners - HELD THAT:- In case of RAJURAM PUROHIT VERSUS UNION OF INDIA [ 2018 (1) TMI 1528 - BOMBAY HIGH COURT ], this Court has permitted the presence of the Advocate at visible but not audible distance and also the videography. We are respectfully bound by the view taken by this Court in case of Rajuram Purohit following principles of law laid down by the Supreme Court in judgment of Om Prakash Vs. Union of India [2011 (9) TMI 65 - SUPREME COURT]. In view of the fact that the Respondents have already issued Summonses annexed at Exh. A to F of the Petition, the Respondents are not required to issue fresh summons upon the Petitioners - Mr. Prakash Shah, learned counsel for the Petitioners states that the Petitioners who are already issued summonses would appear before the Respondent No. 3 on the date as may be assigned by the Respondent No. 3 alongwith their advocate for recording their voluntary statement at visible but not audible distance and would record the interrogation by videography at the cost of the Petitioners. The statement is accepted - The Respondents are directed to issue 72 hours clear notice to the Petitioners before fixing the date on which they require their presence in response to the summonses already issued to the Petitioners. The Petitioners shall not seek any unnecessary adjournment before the Respondent No. 1. The Petitioners are allowed to remain present in presence of their advocates at visible but not audible distance. Videography is also permitted to record their interrogation at the cost of the Petitioners - the interrogation and the recording of statement of the Petitioners shall be done during the office hours - petition allowed.
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2022 (2) TMI 469
Quantum of redemption fine and penalty - misdeclaration of description and value - goods were declared as glass beads unfinished but on examination, the goods appeared to be solid glass ball without hole and glass chatons instead of glass beads unfinished - HELD THAT:- The quantity declared by the respondent in weight and there is no variation on the weight of the consignment and there is no allegation in the show cause notice for misdeclaration of quantity. In that circumstances, the charge of misdeclaration of quantity is rightly dropped by the Ld. Commissioner (Appeal). It is a fact on record that the declared price has been accepted by the respondent on which they have paid the differential duty of ₹ 18,00,000/- (approx.) therefore, considering the duty paid by the appellant and margin of profit, the Ld. Commissioner (Appeal) has rightly reduced the redemption fine from ₹ 17,00,000/- to 1,00,000/-. The redemption fine imposed by the Ld. Commissioner (Appeal) is sufficient in the interest of justice. Further, in the impugned order, the Ld. Commissioner (Appeal) recorded the finding that there is no finding given by the adjudicating authority for imposing the penalty under Section 117 of the Act. In that circumstances, the Ld. Commissioner(Appeal) has rightly dropped the penalty against the respondent. There are no infirmity in the impugned order - appeal dismissed - decided against Revenue.
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2022 (2) TMI 468
Jurisdiction - jurisdiction of proper officer to issue SCN - Export Oriented Unit Scheme - clandestine removal of the imported jewellery - entire case set up by the Revenue alleging clandestine removal of the imported jewellery is based on statements of various persons, who were neither offered for cross-examination, nor examined in the adjudication proceedings - Section 138B of the Customs Act - fax message sent by overseas supplier do not corroborate with the corresponding shipping bill - Cancelled parallel devices - denial of exemption under Section 26 of the Special Economic Zone Act - amount of duty exempted can be recovered under Section 24 of the Act or not? - penalties. HELD THAT:- The denial of exemption is primarily based on the allegations that the appellant s firm have imported brand new gold jewellery by declaring the same as old /outdated gold jewellery and have clandestinely diverted the same to local market and thereafter have re-exported Indian made gold jewellery manufactured by the appellant or by third parties.Thus, the appellant have failed to fulfil their export obligation as required under the scheme of the Special Economic Zone. The allegation of Revenue that the appellant has mis-declared the import consignments inasmuch as they have imported fully finished or high-end gold jewellery which did not require any further processing and have mis-declared the same as old/ outdated gold jewellery. Such allegation is based on the report of the Departmental jewellery appraiser, who in his report have stated that, the jewellery under import which were seized pursuant to inspection on 06.02.2009, appears to be new jewellery. On the basis of this report, Revenue concluded that brand new jewellery was imported under the guise of old/ outdated jewellery and thereafter such jewellery was diverted in the local market - the appellant s firm was evidently authorized to import old/ outdated jewellery or damaged jewellery for melting and re-making into finished product for export. Such outdated jewellery or out of fashion jewellery may also appear at times to be new - Once this is so, it is difficult to understand how the report of jewellery appraiser supports the allegation of mis-declaration. The report of jewellery appraiser nowhere states that the jewellery was not outdated, but it states that the jewellery was appearing as new. Thus, all that glitters is gold. Thus, the report of jewellery appraiser does not advance or support the allegations of Revenue. It is admitted case on facts that during the period in question, the proper Officer of Customs / Special Economic Zone regularly assessed the Bills of Entry filed by these appellants and on finding the same to be tallying with the declaration made in the Bill of Entry allowed the import, each and every time. Never before any mis-declaration was found. There is no allegation by Revenue that these appellants were in collusion with such proper Officer of the Customs / Special Economic Zone. Once this is so then the allegations in the case set up by Revenue regarding mis-declaration in the import consignments is clearly presumptive and not based on any cogent evidence - the Bills of Entry were duly assessed by the proper Officer of Customs in accordance with law and such order of assessment have not been reviewed or challenged by the Revenue. Clandestine removal of imported jewellery to the local market - HELD THAT:- The Adjudicating Authority have erred in presuming the contents of fax message, parallel invoices and the notings in private records, as reliable by applying the provision of Section 139 of the Customs Act - such fax message cannot be relied upon against these appellants, when the person who sent these fax messages and the contents thereof, are not established by the Revenue. The fax machine was also being used by other / neighbours, as stated in the statement of the Director of M/s Shakti Jewellers. Parallel invoices - HELD THAT:- The show cause notice alleges only two sets of export invoices, as parallel invoices. In respect of these, the explanation given by the appellant s firm is that the two invoices were initially prepared and thereafter subsequently cancelled, due to necessary correction. First set of invoice shows export of 27,888 gm of jewellery instead of 28000 gm whereas the second set of invoice shows export of 27,254.60 gm of jewellery instead of 27000 gm Even if the allegation of parallel invoices is accepted, on one occasion the appellant firm can be said to be guilty of exporting less quantity and on the other occasion excess quantity, which leads us to nowhere, as export was duty free - such excess quantity is nominal and an invoice may be revised for clerical errors, which does not invite any adverse inference, unless there are other supporting reasons for the same. This nominal shortage and/ excess in export of goods, which is only on two occasions cannot form the basis for the charge of clandestine removal of 27,888.50 gm and 22,254 gm of gold jewellery in the domestic market. There is virtually no evidence in support of the charge of clandestine removal, and in absence of any cogent evidence on record, we hold that the charge of clandestine removal cannot be sustained. Revenue has also not produced the person before the Adjudicating Authority for examination and consequent cross-examination, whose statements have been relied upon in support of the allegations by Revenue, for cross-examination. Therefore all such statements cannot be read as evidence against the appellant, being in violation of the provisions of Section 138B of the Customs Act. The Adjudicating Authority have not stated any of the exception as provided in Section 138B, for not examining the witnesses of Revenue - the charge of clandestine removal is a serious charge and the same cannot be upheld merely on the basis of assumption and presumption. Penalties - HELD THAT:- Once the allegation of mis-declaration, clandestine clearance, denial of exemption under Section 26 being set aside and decided in favour of the appellants, the imposition of penalties against these appellants also cannot be sustained. Accordingly, we set aside all the penalties imposed on the appellants. Confiscation of gold jewellery from the shared factory premises and the residence of Shri Ajit Singh - HELD THAT:- It cannot be said or held that such goods were removed from the Custom area or warehouse without the permission of the proper Officer. Further, these two consignments were seized even before the said consignment could have been opened by the appellant, and hence there was no occasion for the appellant not to observe the conditions of exemption, i.e., export of manufactured jewellery after processing/ remaking. Therefore, both the clauses (j) and (o) of Section 111 are not attracted in the facts of the present case - Once the charge of clandestine clearance of imported jewellery has been held to be not sustainable, then confiscation on this ground can also not be sustained. Therefore, the confiscation of 24,746 gm and 822.17gm of gold jewellery is set aside. Lack of jurisdiction on the part of Custom Officers including the Officers of DRI to issue SCN - HELD THAT:- In the present case, it is the officer of DRI, who has issued the show cause notice demanding duty and penalty under Section 28 of the Customs Act, which power can be exercised only by the proper Officer . Once the Additional Directorate General of DRI is not a proper Officer , there are no hesitation to hold that the show cause notice itself is wholly without jurisdiction, and any demand based on such show cause notice(s) cannot be sustained. The show cause notices which have been adjudicated in the impugned order-in-original for the purpose of demand of duty and consequential confiscation of goods are wholly without jurisdiction. Accordingly, the impugned order is fit to be set aside on this score alone. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2022 (2) TMI 467
Sanction of Scheme of Amalgamation - Sections 230-232 of the Companies Act, 2013 in terms of Rule 16 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- The Scheme contemplated between the petitioner companies, appears to be prima facie in compliance with all the requirements stipulated under the relevant Sections of Companies Act, 2013. In the absence of any objections and since all the requisite statutory compliance have been fulfilled, this Tribunal sanctions the Scheme of Amalgamation appended as Annexure-19 with the company petition. Notwithstanding the submission that no investigation is pending against the petitioner companies, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners - While approving the scheme, it is clarified that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any, payment is due or required in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law. The Petitioner Companies shall to file the Schedule of Assets of the Transferor Companies in the form as prescribed in the Schedule of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 within three weeks from the date of receiving a copy of this order - Petition disposed off.
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Insolvency & Bankruptcy
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2022 (2) TMI 466
Applicability of effect of amendment in notification dated 24.03.2020 - seeking declaration that the notification dated 24.03.2020 whereby the minimum amount of default was specified as ₹ 1 Crore is prospective and would apply only to cases where the default occurred on or after 24.3.2020 - seeking declaration that the notification will not apply to cases where mandatory notice under Section 8 of the IBC has been issued by the operational creditor and the stipulated 10 days' period had elapsed prior to the date of notification - application which relates to a defaulted amount less than ₹ 1 crore can be filed after 24.3.2020, on which date Ext. P5 amendment to Section 4 was introduced or not? - prospectivity of Ext. P5 has to be decided on the basis of the defaulted amount or on the basis of the date of default? - Whether Ext. P7 order of the NCLT can be challenged in a proceedings under Article 226 or should the petitioner be relegated to the appellate remedy? Maintainability of the writ petition under Article 226 of the Constitution of India, to challenge Ext. P7 order of the Tribunal - HELD THAT:- It is well settled by a catena of decisions that exercising or not exercising jurisdiction under Article 226 on issues where an alternate remedy is available, it is more a rule of self restraint. It has been consistently held that alternate remedy will not be a reason for not exercising jurisdiction when the issue relates to enforcement of the fundamental right or violation of principles of natural justice or where the proceedings challenged are without jurisdiction or in cases where the validity of a Statute is challenged. Whether the Tribunal had jurisdiction to entertain Ext. P1 application in the light of Ext. P5 amendment? - HELD THAT:- Since the amount is less than ₹ 1 Crore, if an application had been filed before 24.3.2020, it would have conformed with the minimum default which had been prescribed at that point of time. However, admittedly, the application was filed six months after the amendment. It is in these circumstances that the 2nd respondent has raised a claim that for the purpose of setting in motion a corporate insolvency resolution process, what is required is the occurrence of a default of more than ₹ 1 lakh prior to 24.3.2020. Since no time limit has been prescribed for preferring an application after the delivery of notice, it is submitted that the date of filing of application is not the material aspect that has to be looked into. The contention that the operational creditors will be left with no alternate and efficacious remedy also is not correct. As held by the Hon'ble Supreme Court in Manish Kumar [[ 2021 (1) TMI 802 - SUPREME COURT] ], the IBC is not enacted to provide for a manner of recovery of debts by the creditors. It is to provide for insolvency resolution. The purpose of the IBC is to protect the rights of the debtors as well as the creditors. It is in the above background that the provisions relating to the IBC have to be understood. By providing for insolvency resolution in case of corporate debtors whose debt is above a specified amount, it can be seen that the very purpose is not to include cases where the debt is lesser than the said amount. None of the rights available to a creditor as against a debtor are taken away in the process. So also the contention that in Manish Kumar (supra), the Apex Court has held that a right accrued cannot be taken away does not appear to be correct, in view of the findings regarding the manner in which a vested right can be modified. In the case on hand, the petitioner could have filed an application before the Tribunal before 24.3.2020. But, after 24.3.2020, the right to approach the Tribunal stood modified and it is only when there is minimum default of ₹ 1 Crore, an application can be filed. As such, Ext. P1 could not have been filed after Ext. P5 amendment. Since Section 4 deals with applicability of the provisions of Part II, it is necessarily a provision which gives jurisdiction to the Adjudicating Authority. Once the application of Part II is taken away for debts more than ₹ 1 Crore, there is no further jurisdiction available under the Statute to the NCLT to act as an Adjudicating Authority under the IBC. It is hence a clear case of total want of jurisdiction - In Ext. P9 order, the Tribunal has held that the notification dated 24.03.2020 is prospective in nature and it is not retrospective or retro-active in nature. It is further stated by the Tribunal that notification will not apply to pending applications before the concerned Adjudicating Authority under the IBC prior to the issuance of the aforesaid notification. The Tribunal has gone wrong in its interpretation of Section 4 of the Act. Section 4, after amendment on 24.3.2020 clearly says that Part II of the IBC shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of default is ₹ 1 Crore. As per Section 3(12) of the IBC, default means nonpayment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. What is to be noted is that Corporate debtors who are in default of less than ₹ 1 lakh prior to the amendment and ₹ 1 Crore after the amendment, also are defaulters. However, whether a proceeding for insolvency or liquidation of such corporate debtor should be initiated would depend on the amount in default. The writ petition under Article 226 is maintainable and there is no necessity or purpose for relegating the petitioner to the alternate remedy. Nor is it necessary to decide on the question whether an appeal is maintainable under the IBC against the order of the Tribunal on a preliminary issue regarding jurisdiction - Application disposed off.
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2022 (2) TMI 465
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - enforcement of security interest over the assets of CD - HELD THAT:- There is no provision in the law that alleged default should be greater than the market value of the assets of the Corporate Debtor for admission of a Section 7 application. It could very well be that the Corporate Debtor is not very well managed, which has led to a default in debt repayment and even if the Corporate Debtor is a going concern, improved management as a result of insolvency resolution could certainly result in better and more robust functioning of the corporate Debtor from the financial and management angles - On perusing the extract of the minutes of the Board of Directors meeting of Tourism Finance Corporation of India Limited held on 17.5.2004 (attached at pg. 225 of Appeal Paperbook Vol. I), it is found that Board of Director has provided authorization in favour of Shri N. Ramachandran, Manager (law) to file suits/claims or initiating legal proceedings against defaulting assisted concerns and/are all guarantors of loans and/or against any such person/persons, body corporate, firms for recovery of dues of the company and/or otherwise inappropriate courts or tribunal. The power of attorney has been issued on the basis of such an authorization by the Board of Directors of the TFCI. Hence there are no strength in this argument of the Appellant that the application under Section 7 is defective on account of improper authorization of the person filing the application. In the light of loan agreement dated 28.3.2018, Respondent No. 1/TFCI is clearly a financial creditor who had provided loan of ₹ 50 crores to the Corporate Debtor/Aryavir Buildcon Private Limited. The repayment of this loan was in default, and consequently the financial creditor sent a notice dated 18.02.2020 to the corporate debtor informing him about the default in repayment as per agreed terms and conditions. As the debt is in default and due for payment to the financial creditor, the Section 7 application has been correctly admitted by the Adjudicating Authority. Appeal dismissed - decided against appellant.
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2022 (2) TMI 464
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - It is the stand of the Appellant that the impugned order was passed by the Adjudicating Authority , resting on presumption and assumption and there was no proper appreciation of Documents on Record - HELD THAT:- Under Section 9 of the Code, an Adjudicating Authority is required to examine before admitting or rejecting an application under Section 9 of the Code whether the dispute raised by the Corporate Debtor qualify as a dispute , in terms of Section 5 (6) of the Code and whether Notice of Dispute given by the Corporate Debtor satisfies the conditions prescribed in Section 8(2) of the Code. The Adjudicating Authority is to scrutinise the attendant circumstances to the issue of Demand Notice with a view to decide whether a bona fide dispute exists between the parties. The dispute must be one which necessitates more investigation and at this juncture, the Adjudicating Authority will not examine the merits of the dispute . If the dispute is not an imaginary one or a hypothetical one and if the dispute really exists, the application is liable to be rejected, as opined by this Tribunal. If there is plausible contention raised on behalf of the concerned party, which requires a further investigation, then the application cannot be admitted. The dispute in whatever form, ought to have been raised before the Demand Notice under section 8 of the Code was served on the Corporate Debtor . The I B Code, 2016 is not a Debt Enforcement Procedure . The application of an operational creditor is not maintainable, if the Corporate Debtor has a dispute about its outstanding/debt. The dispute is to be seen by the Adjudicating Authority as one based on tenable substantial grounds. In this connection, it is relevantly pointed out that if there is a dispute about the debt, then, it is for the applicant to approach the competent Civil Court to decide the triable issues. In short, the Adjudicating Authority/Appellate Tribunal is not to be utilised as a Debt Collecting Agent . The Appellant/Operational Creditor/Applicant is not in a position to establish that the Debt due free from any Dispute . The Adjudicating Authority cannot admit the application filed by the Appellant/Applicant (under Section 9 of the Code), based on assumptions and presumptions. In short, in the instant case the Dispute raised by the Respondent/Corporate Debtor is not a mere denial but the same is projected on a tangible ground - this Tribunal holds that the Adjudicating Authority came to the right conclusion that the Debt claimed by the Appellant/Operational Creditor cannot be decided in a summary jurisdiction under the I B Code, 2016 and opined that it would be appropriate for the parties to relegate to civil proceedings or to arbitration if the same was contemplated and dismissed the CP 328/IB/2018 which requires no interference in the hands of this Tribunal in Appeal . Appeal dismissed.
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2022 (2) TMI 463
Return of deposit made as security by the Corporate Debtor with the Respondent - period under the Lease Deed expired and the premises leased thereunder was vacated by the Corporate Debtor - Whether the rental dues can be adjusted against the security deposit lying with the Respondent or whether it is liable to be returned to the Applicant? - HELD THAT:- The facts which are available for appreciation before this Tribunal have to be appreciated in the right perspective for arriving at a conclusion on the right of the Applicant to get refund of the deposit amount. Even if the arrears can be adjusted, are they adjusted by the date of CIRP is the crucial question, since, after CIRP no adjustment can be made. One indication that no appropriation was done is the claim form submitted by the Respondent to the RP and the admission of the claim by the RP. The correspondence through the mails also shows that there was a demand by the Applicant for refund of the deposit and that he did not express any acquiescence for any appropriation of the deposit towards the rentals - There is no mention made in the said mail that the amount towards the rental dues have been set-off against the deposit. It only states that the person representing the Trust has requested their people to sit with the accounts people of the hospital and get reconciled again. The counsel on the basis of the said ledger account contends that the appropriation as argued is not done and hence the same is reflected in the ledger account as the due amount from the Applicant. The ledger account is from the period 01.04.2017 to 13.03.2018 which is the CIRP commencement date. Hence as on that date also the ledger reflected that the rental due of ₹ 24,26,736/- was due. The argument of the Respondent's Counsel that the claim was submitted as an abundant caution gets nullified by the ledger account reflecting it as a due amount. The contention of the Respondent that the rental dues are set-off against the deposit and hence the refund of the entire amount of deposit cannot be made stand dismissed - application is allowed and there shall be a direction to the Respondent to return the Security Deposit of ₹ 56,92,040/- to the Corporate Debtor.
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2022 (2) TMI 462
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time limitation - HELD THAT:- In the present case, the occurrence of default of debt is evidenced by the copy of the agreement of term loan, General Power of Attorney, letter of undertaking cum declaration, common deed of hypothecation and sanction letter dated 24.10.2011. The corporate debtor has defaulted in making the regular payments of the credit facilities sanctioned by the petitioner and a demand notice under Section 13(2) of the Sarfaesi Act, 2002 recalling debt. Whether the present application is filed within limitation? - HELD THAT:- The corporate debtor has acknowledged the debt by offering one-time settlement vide its letter dated 20.02.2019 and the present petition has been filed on 13.05.2019. Therefore, the petition has been filed within the period of limitation. Moreover, the Corporate Debtor has also admitted the liability but stated that it has been experiencing financial crises and unable to make payment to the petitioner. The application filed in the prescribed Form No. 1 is found to be complete - the present petition being complete and having established the default in payment of the Financial Debt for the default amount being above the threshold limit, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code. Application allowed.
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2022 (2) TMI 461
Liability of Financial Creditor to pay corporate insolvency resolution fees - liability of Financial Creditors to pay liquidation costs for the liquidation process - Section 53(1)(a) of the I B Code, 2016 - HELD THAT:- A careful examination of provisions/regulations of Section 53 of I B Code, 2016, reveals that the contention of the Applicant is misconceived and not supported by any provision of I B Code, 2016 or by any applicable Regulations. Even in any of the judgments on which the learned Counsel for the Applicant placed reliance, nowhere it was stated that a claimant in a liquidation process need not pay CIRP/liquidation costs at all. Similarly, there was nothing to show that a claimant in a liquidation process required to pay the liquidation costs only from the date of admission of its claims and that too in proportion to the amounts actually recovered by it and not in proportion to its admitted claim. Similarly, there was nothing to show that the Applicant is required to pay its share of the liquidation costs only after the realisation of its security interest and once monies are received by it. The contention of the Applicant in respect of its liability to pay its share of liquidation costs in terms of the impugned letter dated 18.07.2021 is rejected. It is not in dispute that the Applicant is a claimant and its claim also admitted to an extent of ₹ 33,64,47,700/-. We have already held herein above that the Applicant whose claims are admitted by the Liquidator to the said extent, is liable to pay its share of the liquidation costs without reference to the date of admission of its claims and without reference to the monies to be received by it - though the Applicant has chosen to stand outside the liquidation proceedings and to realise its security interest, and not a stakeholder, it is also entitled for the same information and documents as entitled by a stakeholder of the liquidation process. Therefore, the Liquidator is liable to share the information and furnish the documents to the Applicant, on par with any other stakeholder of the liquidation process. The various reliefs claimed with regard to the liability of the Applicant to pay its share of the costs of the Liquidator are rejected - application disposed off.
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2022 (2) TMI 460
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - Non-Performing Assets - HELD THAT:- It is clarified that from the date of filing this Application i.e., 03.12.2021 by the Applicant/Guarantor, Interim Moratorium commences as stipulated under Section 96(1) of the Code in relation to the debts of the Personal Guarantor. During the Interim Moratorium period: (i) any legal action or proceedings pending in respect of any debt shall be deemed to have been stayed: and (ii) the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt. As per Section 96(3) of the Code, the provisions of Sub-section 96(1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. The Resolution Professional is directed to exercise all the powers as enumerated under Section 99 of the Code, r/w Rules made thereunder. He is directed to make the recommendations with reasons in writing for acceptance or rejection of this Application within the stipulated time as envisaged under the provisions of Section 99 of the Code - List the matter for further proceedings in this case on 15.03.2022.
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2022 (2) TMI 459
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Counsel appearing for the Corporate Debtor does not deny the fact that the amount claimed by the Operational Creditor is due. Counsel for the Operational Creditor submits that though the Corporate Debtor took time on earlier occasions stating that they would settle the matter, it could not be done. The Counsel appearing for the Corporate Debtor submits that the Corporate Debtor is not in a position to discharge the amount due to the Operational Creditor and agreed for the CIRP to be initiated. It is a fit case to admit and initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor is ordered - petition admitted - moratorium declared.
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PMLA
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2022 (2) TMI 458
Seeking grant of Regular Bail - Money Laundering - scheduled offences - twin conditions in section 45 of PMLA satisfied or not - existence of mens rea or not - submission of forged and false documents to the banks for availing various credit facilities - HELD THAT:- The provisions of law which are declared unconstitutional is not law, it confers no rights, it imposes no duties, it becomes inoperative, as though it has never been passed. Since the Notification dated 29.03.2018 has remained silent about its retrospective applicability, this Court in the present bail application, while observing that sub-section 45(1) (ii) have neither been revived nor resurrected by the amending Act, would consider this bail application on the premise that there is no rigor of the twin conditions of section 45(1) of PMLA. While dealing with the bail application, three factors are mainly to be seen namely; (i) flight risk (ii) tampering evidence and (iii) influencing witnesses. So far as flight risk in context of applicant is concerned, the proceeding in relation to earlier FIRs against the applicant has taken care of the said factor, further the condition of surrender of passport can secure the presence of applicant during the trial. So far, no overt act is alleged against the applicant, who is on interim bail vide order dated 28.10.2021 in Cr.M.A. No.6 of 2021 in present Cr.M.A. No.23944 of 2019 and extended from time to time, to even consider the aspect of influencing the witnesses. Further, all the necessary documents and evidence would be in the custody of investigating agency, so the fear of tampering with the evidence would also not arise - In the present case, the applicant has already spent 20 months imprisonment and in total has spent 47 months. Considering the punishment to sections invoked under the schedule offence, this Court finds the present to be a fit case, where discretion could be exercised in favour of the applicant. The applicant is ordered to be released on regular bail for the offences punishable under sections 3 and 4 of the PMLA on executing a personal bond of ₹ 50,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the fulfilment of conditions imposed - application allowed.
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Service Tax
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2022 (2) TMI 457
Taxable services or not - mining services - Appellant had been providing taxable services in the state of Jharkhand prior to obtaining registration in the state of Jharkhand or not - offices of the Appellant in Odisha and Jharkhand can be construed to be two premises of the proprietor or not - taxability of Mining Services provided by the Appellant prior to 01.06.2007 - HELD THAT:- In the instant case, PAN AAAFI4408C represents a firm/limited liability partnership with the name starting with I ; in this case Interstate Syndicate. Further, PAN AEIPS7146F represents an individual whose surname starts with S ; in this case Sri Bhim Sharma. Therefore, the contention of the Appellant M/s.Interstate Syndicate is the proprietorship concern of Mr. Sharma and that they had obtained registration under a different PAN is factually incorrect. M/s. Interstate Syndicate is a firm/LLP, although no documents in respect of its constitution have been produced - under the eyes of law, M/s. Interstate Syndicate and Prop. Bhim Sharma are separate legal entities and the attempt on the part of the Appellant to mislead this Tribunal and the Adjudicating authority is unwarranted - the services provided by the Appellant in Odisha and the services provided in Jharkhand are to be considered as services provided by two different entities. The contention of the Appellant that they had not been providing services in the state of Jharkhand prior to obtaining registration in the state of Jharkhand is contrary to the evidence on record - as per the work orders and statement of Bills produced by the Appellant for the period prior to 31.12.2010, it is evident that the Appellant was accepting work orders addressed to its address in Jharkhand during the period from 2007 to 2010 - the Appellant was also raising invoices during the period from 2007 to 2010 which contained its address in Jharkhand. It is also observed that surprisingly, certain invoices raised by the Appellant did not contain any address. Therefore, even if for the sake of argument it is accepted that the Appellant was providing services from Odisha, there are no cogent reason to justify the mention of their address in Jharkhand in the invoices while there being no mention of their registered address in Odisha at the same time. Demand of Service Tax in respect of Mining Services provided prior to 01.06.2007 - HELD THAT:- The Central Board of Excise Customs (As it then was) had issued various clarificatory Circulars and Notifications to clarify the treatment of specific services, forming part of Mining Services , prior to 01.06.2007. Therefore, to the extent of the demand raised on the value of service of ₹ 70,35,178/- it is deemed fit to remand the matter to the Adjudicating authority to calculate the actual demand payable by the Appellant keeping in mind the exact nature of service provided by the Appellant and the clarifications issued by CBEC from time to time in respect thereof. Appeal disposed off.
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2022 (2) TMI 456
Refund of CENVAT Credit - credit remained unutilized on closure operation - HELD THAT:- The case law relied upon by the ld.AR has been examined by this Tribunal in the case of M/S SHRI GURU HARGOBIND STEEL INDUSTRIES VERSUS COMMISSIONER OF CE ST, LUDHIANA [ 2020 (12) TMI 753 - CESTAT CHANDIGARH ] and in the case of M/S. SHREE KRISHNA PAPER MILLS AND IND. LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE AND ST., GURGAON [ 2018 (4) TMI 1155 - CESTAT CHANDIGARH] , where it was held that The issue of non-entitlement of Cenvat credit cannot be raised at the stage of entertaining refund claim without challenging the availment of Cenvat credit. This Tribunal in the case of KIRLOSKAR TOYOTA TEXTILE MACHINERY PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BENGALURU SOUTH GST COMMISSIONERATE [ 2021 (8) TMI 818 - CESTAT BANGALORE ] had an occasion to examine the issue and after examining the various judicial pronouncement on the issue has allowed the cash refund of credit lying unutilized on closure of the operation on 19.08.2021 - the appellant is entitled to cash refund under Rule 5 of Cenvat Credit Rules, 2004 of the credit lying unutilized in their Cenvat credit account on closure of operation. Appeal is allowed - decided in favor of appellant.
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2022 (2) TMI 455
Levy of service tax - markup/differential of ocean freight - detention charges - toll tax - demand beyond the period of five years from the date of SCN - period October 2009 to March 2010 - time limitation - penalties - HELD THAT:- If a service is not rendered at all, no service tax can be levied regardless of the fact that an amount has been received. Similarly, if the service so rendered does not squarely fall within the definition of taxable service under section 65 (105), no service tax can be levied. Even if it is doubtful whether the service is taxable or not, the benefit of doubt in respect of the charging section goes in favour of the assessee and against the revenue. The third important element is the consideration for the service. Any amount received must be for the service and it cannot be for some other purpose. For instance, if any amount is received towards any compensation, such amount cannot be taxed. Differential in ocean freight - HELD THAT:- The appellant buys space on ships from the Shipping Line and the Shipping Line issues a Master Bill of Lading in favour of the appellant. In turn, it sells the space to its customers and issues a House Bill of Lading to each of them. The first leg is the contract between the Shipping line and the appellant. The second leg is the contract between the appellant and its customers - In the appellant s case, if the space on the ships which it bought cannot be sold to its customers fully, or due to market conditions, or is compelled to sell at lower than purchase price, the appellant incurs loss. In a contrary situation, it gains profits. This activity is a business in itself on account of the appellant and cannot be called a service at all. Neither can the profit earned from such business be termed consideration for service - the appellant is not liable to pay service tax. Container detention charges - HELD THAT:- There is a difference between consideration under the contract which is what each party to the contract does in return to the other party doing its part of the contract and compensation under the contract which is a penalty for breach of contract by either frustrating the contract through non-performance or by not performing as per the conditions in it. This compensation can take the form of unliquidated damages where the court awards the compensation or liquidated damages where the compensation for breach of contract or its conditions is pre-decided and incorporated in it. The liquidated damages are not the purpose of the contract but are in terrorem to provide a strong incentive against breaching its conditions - the demand of service tax on container detention charges is unsustainable and is liable to be set aside. Issuance of SCN, once duty on the taxable services is paid in terms of Section 73(3) of the Act - waiver of penalties invoking section 80 - demand for the period beyond the normal period, invoking extended period of limitation - Whether the elements of (a) fraud or (b) collusion or (c) willful misstatement or (d) suppression of facts or (e) contravention of act or rules made thereunder with intent to evade payment of duty are present in this case? - HELD THAT:- If the elements of (a) fraud or (b) collusion or (c) willful misstatement or (d) suppression of facts or (e) contravention of act or rules made thereunder with intent to evade payment of duty, are found, then the penalty under section 78 must be sustained and the appellant will be covered under section 73(4) and will not be covered under section 73 (3) which states if the service tax is paid along with the interest no SCN should be issued. The appellant will also not be eligible to be considered for waiver of penalties under Section 80. The findings of the Commissioner in the impugned order regarding the presence of any of the elements necessary for invoking extended period of limitation, holding that Section 73(3) would not apply and imposing penalty under Section 78 are contained in paragraphs 167 and 174 of the impugned order. Since in their ST-3 returns the appellants have not disclosed the service tax leviable on the disputed amounts and these came to light during the investigation from the data provided by the appellant, the Commissioner concluded that there was suppression of facts by the appellant. The only allegation of these elements held against the appellant in the impugned order is that of suppression of facts and the reason for this is that they have not disclosed the full value of the taxable services in their ST-3 returns. It is also accepted in the impugned order that these services were all duly recorded by the appellant. It is now well established legal principle that suppression of facts is not mere omission. It must be a deliberate act with mens rea to suppress and thereby evade. The facts brought out in the impugned order do not demonstrate the mens rea - Insofar as the appellant did not dispute the demands of service tax, it paid the same along with interest even before the SCN was issued. In our considered view, this case is covered squarely by section 73(3) and no SCN should have been issued to that extent. The appellant, having paid the service tax on those services which it rendered even before the SCN was issued and having argued that no SCN should have been issued to it as per Section 73(3), now in the synopsis submitted before us, has sought refund of the service tax paid. This prayer cannot be accepted for more than one reason. Once it is held that section 73(3) applies and no SCN should have been issued demanding the service tax, the basis for forming such a view, viz., payment of service tax with interest cannot now be reversed. Secondly, if service tax is payable, the charge of tax continues to exist. In this case, once the service tax, admittedly due, has been paid, albeit late and on that basis we have accepted the plea of the appellant that section 73(3) applies and no SCN should have been issued at all, the appellant cannot claim refund of the service tax paid. This would also apply to any service tax paid beyond the period of five years - the appellant had, through its conduct during the investigation by providing all the information and paying the service tax with interest to the extent it had not disputed, has made out a case for seeking waiver of penalty invoking section 80. The penalty imposed under section 77(1) and 77(2) on the Act is set aside. The appeal is partly allowed.
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Central Excise
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2022 (2) TMI 454
SSI exemption - use of brand name of others - entitlement of area based exemption or not - time limitation - whether demand could have been made at all, particularly in respect of the period more than a year prior to the date of the demand - HELD THAT:- The department points out that not every manufacturer in Meghalaya would be entitled to the exemption by way of reimbursement or otherwise. In such context, several notifications published by the Central Excise authorities have been relied upon to demonstrate that the initial scheme was restricted to certain areas of Assam and Tripura and, later, designated places in Meghalaya were also included. According to the department, the manufacturing unit of the appellant is not located within any area designated by the applicable notification for the appellant to claim exemption by way of reimbursement - This aspect of the matter was not taken into consideration, whether in the course of the order-in-original being passed or in the appellate order of the Tribunal. This is a question of fact on which there can be no two opinions and a physical verification is necessary to ascertain whether the manufacturing unit of the appellant falls within the area designated in the applicable notification for the appellant to be entitled to exemption by way of reimbursement. Disqualification of the appellant to be entitled to exemption on the ground that the appellant manufactured the product under the brand name of another - HELD THAT:- When a person claims a benefit under any government scheme and the authorities seek to deny the eligibility of such person to obtain such benefit, the onus is on the authorities to demonstrate why the person would not be entitled to the benefit. As noticed above, it has been the consistent stand of the appellant that it did not manufacture the Gulab brand soya chunks prior to December 1, 2006. It was, thus, incumbent on the department to deny the appellant exemption for the period prior to December 1, 2006 only upon cogent material being produced in such regard, whether by way of bills or vouchers or unimpeachable statements or otherwise. Entitlement of exemption - HELD THAT:- The wording of the applicable notification exempts a manufacturing unit as an SSI till such time it attains a turnover of ₹ 1 crore. In the present case, the initial turnover in 2003-04 was extremely low and same picked up only in 2004-05. In the event the appellant was entitled to exemption as claimed, it requires to be ascertained when the appellant s manufacturing unit exceeded the turnover of ₹ 1 crore for the excise duty to be claimed only thereafter - the three key aspects of the matter have not been addressed in the order of the Appellate Tribunal dated January 23, 2019 in the appeal arising out of the order-in-original of March 16, 2009. These issues cannot be conveniently addressed in the present proceedings which are conducted on summary basis on affidavit evidence. Further, as to whether a person is entitled to an exemption or not based on the geographical location of the manufacturing unit, is essentially question of fact that has to be ascertained. The matter is remanded to the Appellate Tribunal with a request to render the opinion on the three key aspects indicated herein and on any other issue that may be relevant for the purpose of adjudication - Appeal allowed by way of remand.
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2022 (2) TMI 453
Seeking review of petition - error apparent on the face of record or not - Quantum of penalty - Smuggling - contraband item - no reasonable opportunity to cross-examine the witnesses was afforded to the petitioner - HELD THAT:- It is possible that an order has been erroneously made in the sense that the adjudication may be incorrect or the assessment may be awry; but every faulty assessment or erroneous adjudication would not permit a party to approach the same forum for a reconsideration. The grounds of review are limited to an error apparent on the face of the order, in the sense that the same is obvious from a plain reading of the order without requiring more inquiry into the matter. Equally, a review may be maintained when a material fact is erroneously not noticed or the obvious inferences not drawn therefrom. Review is also permitted if some new material comes to light, if such material could not have been placed earlier despite the best diligence. In the present case, the Court noticed that an opportunity to cross- examine some witness had not been given to the review petitioner but, in the same breath, the Court observed that an immediate objection in such regard was not taken by the petitioner. Further, the Court found that the penalty imposed on the petitioner was nominal and that the petitioner had not, at the outset, indicated that the recovery was not made from his possession. It may have been an erroneous inference drawn from the facts that were presented before the Court, but it is not an error apparent on the face of the order that calls for a review. The apparent finality of the statement of the relevant witness has been undone, and, in the criminal proceedings that the petitioner faces, the petitioner has been specifically given a right to cross-examine the relevant witness in accordance with law - While the petitioner may not be satisfied with the limited relief that was granted or the refusal by this Court to interfere with the order of the Tribunal, no ground for revisiting the order has been made out in the review petition - the review petition is dismissed.
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2022 (2) TMI 452
Demand of central excise duty along with interest and penalty - Annual Dispatch Summary being an authorized Official record prepared by the respondent company for the purpose of management information and accounting purpose not appreciated - respondent failed to produce any document that M/s. ACC, DCSL is a subsidiary to the respondent Company then inclusion of clearance figures of an independent central Excise assessee i.e. M/s. ACC, DCSL, in the official Annual Dispatch summary maintained by the respondent company/assessee - provisions of Rules 4, 6 and 8 of the Central Excise Rules, 2002 or not - HELD THAT:- The order passed by the appellant impugned before the Tribunal is a non-speaking order. Substantial portion of the order has been devoted by the appellant to reject the contention of the respondent that they are bona fide assessee and Government of India Enterprise. The reply given by the assessee that there is nothing to indicate to establish the allegation that the new plant belongs to the respondent and they were the manufacturer of the granulated slag and without rendering any finding on the same, the proposal in show cause notice has been confirmed. The Tribunal noted that the Central Excise Duty has been demanded by the appellant on the sole ground of difference between the quantity of the granulated slag shown in the Annual Operational Statistical Report and the quantity shown in the monthly ER-1 return filed for the period July 2004 to March, 2008. Apart from that there is no evidence of removal of goods from the factory. Thus the Tribunal noted that the show cause notice came to be issued solely based upon the difference in the two statements - The respondent explained that during the relevant period, respondent had one granulation plant which was called old plant, one plant was set up by M/s. ACC, DCSL which is in the factory premises of the respondent which was shown as new plant in certain records and that the granulated slag emerging from this plant were cleared on payment of duty. Thus noting these facts, the Tribunal was satisfied with the explanation offered and also took note of an important fact that duty has been paid by M/s. ACC, DCSL with granulated slag, which has been recorded in the order passed by the Commissioner and there is no dispute with the said fact. The Tribunal rightly granted relief to the respondent considering the factual position and we find that no question of law arises for consideration in this appeal - the appeal fails and dismissed.
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2022 (2) TMI 451
CENVAT Credit - capital goods - items used in the maintenance of captive power plant - denial of credit on the ground that Captive Power Plant (CPP) was a turnkey project which was not excisable goods and therefore not covered within the definition of capital goods - denial of credit also on the ground that CPP generates electricity which is not an excisable product and therefore no credit is eligible on capital goods exclusively used for generation of electricity - HELD THAT:- The issue is with regard to the credit availed under the category of capital goods or items which were used for repair and maintenance of the captive power plant intended for generation of electricity. Tribunal for different periods in CHETTINAD CEMENT CORPORATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE (TRICHY) , COMMISSIONER OF CENTRAL EXCISE, LTU (CHENNAI) [ 2016 (12) TMI 218 - CESTAT, CHENNAI ] and M/S. MADRAS CEMENTS LTD VERSUS CCE, TRIICHY [ 2017 (1) TMI 1589 - CESTAT CHENNAI ] had remanded the matter to the adjudicating authority to reconsider the issue on the basis of decisions cited. The Division Bench had set aside the penalty while remanding the matter. Following the decisions of the Tribunal in the appellant s own case for different periods, the matter requires to be remanded to the adjudicating authority who is directed to conduct de novo adjudication and consider the eligibility of credit on the basis of principles laid down in the decisions cited above. Taking note of the fact that the issue is interpretational and appellant has not done any deliberate act to evade duty, the penalty requires to be set aside. Appeal is partly allowed by remand to the adjudicating authority.
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2022 (2) TMI 450
Benefit of reduced penalty - the issue in respect of other co-noticees was heard by the tribunal and remanded back to the original authority - HELD THAT:- Since the matter of other co-noticees is pending before the original authority (Commissioner, Palghar), in remand proceedings as per the CESTAT order, these matters also need to be remanded back to same Commissioner for consideration along with the matters of other co-noticees. Appeals are allowed and the matter remanded back to the original authority for consideration along with the matters earlier remanded in case of other co-noticees - appeal allowed by way of remand.
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2022 (2) TMI 449
Refund claim - Applicability of principles of unjust enrichment - duty was paid provisionally prior to amendment to Rule 9B of Central Excise Rules, 1944 brought into statute with effect from 25.06.1999 - HELD THAT:- In this case, the duty was paid under provisional assessment during December 1998 to May 1999. At the relevant time, there was no provisions of unjust-enrichment in Rule 9B (5) of Central Excise Rules, 1944 and the same was inserted from 25.06.1999. Therefore, the provisions of unjust-enrichment of Rule 9B (5) of Central Excise Rules, 1944 cannot be made applicable retrospectively. Hence the refund claim could not have been rejected on the ground of unjust-enrichment. This Tribunal in the case SHREE BALAJI DYEING AND PRINTING MILLS PVT. LTD. VERSUS CCE ST- SURAT [ 2018 (6) TMI 888 - CESTAT AHMEDABAD ], while dealing with identical matters has held that The duty paid is pertaining to the period December 1998. The same was paid on 05.06.1999. The assessment was provisional during the relevant period. There was no provision of unjust enrichment in the case of provisional assessment under Rule 9B. This express provision brought into the statute w.e.f 25.06.1999 by inserting the Sub-Rule (5) of Rule 9B of Central Excise Rules, 1944. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (2) TMI 448
Validity of assessment order - violation of principles of natural justice - petitioner claimed input tax credit belatedly - HELD THAT:- Earlier Notices were issued on 10.02.2010 and fresh Notices were also issued on 14.07.2014. After the petitioner was issued with fresh Notices, the petitioner also replied to the same and field additional written submission. The fact remains that a personal hearing was held by an officer earlier. The impugned Assessment Orders have been passed by another officer long after the aforesaid personal hearing by another officer. Since it is not possible to go into disputed questions of facts in these Writ Petitions as to the correctness or otherwise the claim of the petitioner, the impugned Assessment Orders are liable to be passed. Since the impugned Assessment Orders have been passed without following principles of natural justice, the impugned Assessment Orders are quashed and the cases are remitted back to the respondent to pass fresh orders - Petition allowed by way of remand.
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Indian Laws
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2022 (2) TMI 447
Seeking release of property - handover of possession along with the title deeds of the residential/housing property in question to the borrower - Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT:- From the impugned judgment and order passed by the High Court it appears that the Division Bench of the High Court has treated and/or considered the market value of the mortgaged property at ₹ 71 lakhs. The DRT when initially granted the interim relief in favour of the borrower which was the subject matter before the DRAT and the learned Single Judge and thereafter before the Division Bench of the High Court, directed to handover the possession of the mortgaged property to the borrower on payment of ₹ 48.65 lakhs which was the reserve price/base price. The possession was taken over by the bank under the provisions of the SARFAESI Act and after following the proceedings as required under Section 13 of the SARFAESI Act, the mortgaged property was put to auction and at that stage the borrower preferred an appeal/application before the DRT under Section 17 of the SARFAESI Act and as such the said appeal can be said to be technically pending as the order dated 17.01.2014 passed by the DRT was an interim order. It is required to be noted that ₹ 65.65 lakhs was not the amount realized by selling the mortgaged property in a public auction. It was only a highest bid received and before any further auction proceedings were conducted, the DRT passed an interim order directing to handover the possession and handover the original title deeds on payment of ₹ 48.65 lakhs which was the base price, which was the subject matter before the DRAT and before the learned Single Judge. Therefore, the borrower did not deposit and was not ready to deposit the entire amount of dues with secured creditor with all costs, charges and expenses incurred by the secured creditor. Therefore, it was open for the secured creditor to sell the mortgaged property which was put as a security and realize the amount by selling it in a public auction. At this stage, it is required to be noted that even as per the Division Bench of the High Court the borrower made an offer to deposit/pay ₹ 71 lakhs as a purchaser and not by way of redeeming the mortgaged property. Therefore, the impugned judgment and order passed by the Division Bench of the High Court directing to release the mortgaged property/secured property and to handover the possession as well as the original title deeds to the borrower on payment of a total sum of ₹ 65.65 lakhs only is contrary to Subsection (8) of Section 13 of the SARFAESI Act. Even otherwise on making the payment i.e. ₹ 65.65 lakhs against the total dues ₹ 1,85,37,218.80/as on 07.01.2013 the entire liability outstanding against the borrower cannot be said to have been discharged. Even if the mortgaged property would have been sold in a public auction say for an amount of ₹ 71 lakhs and the bank has realized ₹ 71 lakhs by selling the mortgaged property, in that case also the liability of the borrower to pay the balance amount would still continue - the liability of the borrower with respect to the balance outstanding dues would still be continued. Therefore, the Division Bench of the High Court has erred in directing to release the mortgaged property/secured property and to handover the possession along with the original title deeds to the borrower on payment of a total sum of ₹ 65.65 lakhs only. The DRT in its order dated 17.01.2014 which as such was an interim relief order pending the appeal under Section 17 of the SARFAESI Act was not justified in directing to release the mortgaged property and handover the possession along with the original title deeds to the borrower on payment of ₹ 48.65 lakhs only which was the base price/ reserve price, which the Division Bench of the High Court has increased to ₹ 65.65 lakhs on the ground that the highest bid received was ₹ 71 lakhs (which was not materialized as the highest bidder did not come forward). Unless and until the borrower was ready to deposit/pay the entire amount payable together with all costs and expenses with the secured creditor, the borrower cannot be discharged from the entire liability outstanding. Therefore, as such no order could have been passed either by the DRT and/or by the Division Bench of the High Court to discharge the borrower from the entire liability outstanding and to discharge the mortgaged property and handover the possession along with original title deeds to the borrower - The Division Bench of the High Court has erred in interfering with the order passed by the learned Single Judge and has erred in directing to release the mortgaged property/secured property and handover the possession along with the original title deeds to the borrower on payment of a total sum of ₹ 65.65 lakhs only. The impugned judgment and order dated 20.09.2017 passed by the Division Bench of the High Court in DBSAW No.349/2017 is hereby quashed and set aside and the order passed by the learned Single Judge quashing and setting aside the order passed by the DRT dated 17.01.2014 confirmed by the DRAT is hereby restored - Appeal allowed.
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2022 (2) TMI 446
Dishonor of Cheque - insufficient funds - petitioner failed to act as per the compromise agreement entered into between the parties - Section 138 of the N.I. Act - HELD THAT:- It is clear that after the dishonor of the two cheques of ₹ 37.50 Lacs each dated 26.11.2016, the respondent-complainant had issued statutory Notice against the petitioners under Section 138 of the N.I. Act. Thereafter, the parties had executed compromise / settlement agreements on three different occasions, i.e. on 16.03.2017, 14.07.2017 and 12.02.2018. However, the petitioner could not abide by the terms of the aforesaid settlement agreements and therefore, after the dishonor of cheques issued by the petitioners in pursuance of the settlement agreement dated 12.02.2018, the respondent-complainant issued statutory Notice to the petitioner dated 20.02.2019 raising demand of ₹ 85 Lacs, which was duly served upon the petitioner on 21.02.2019. A copy of the demand Notice dated 20.02.2019 is produced on record vide Annexure-E wherein, all the above facts have been narrated in unequivocal terms. It is true that originally, the claim of the respondentcomplainant was ₹ 75 Lacs. However, when the petitioner could not honor the two cheques of ₹ 37.50 Lacs, which led to the issuance of statutory Notice dated 13.12.2016 under Section 138 of the N.I. Act by the respondent-complainant raising a demand of ₹ 75 Lacs, the petitioner arrived at a compromise with the respondent-complainant and executed the settlement agreement dated 16.03.2017 whereby, the petitioner agreed to pay additional amount of ₹ 10 Lacs towards loss / damages, over and above the claim of ₹ 75 Lacs, meaning thereby that the petitioner had agreed to pay ₹ 85 Lacs to the respondent-complainant - it is not open for the petitioner to now contend that the claim of ₹ 85 Lacs raised in the statutory Notice dated 20.02.2019 exceeds the original claim of ₹ 75 Lacs since the additional amount of ₹ 10 Lacs is an outcome of the settlement agreement dated 16.03.2017 duly executed by and between the parties and which has not been disputed by the petitioners. There is no dispute regarding the proposition of law laid down in the case of Vijay Gopala Lohar v. Pandurang Ramchandra Ghorpade s (supra) that the notice issued under Section 138 of the N.I. Act has to be for the cheque amount and not for any other amount. In the statutory Notice dated 20.02.2019, the respondent-complainant has raised a claim of ₹ 85 Lacs, which is the amount of cheque and has expressly stated that a failure to make such payment within the due period would lead to initiation of proceedings under Section 138 of the N.I. Act - the statutory Notice dated 20.02.2019 issued under Section 138 of the N.I. Act clearly makes a bifuraction between the cheque amount of ₹ 85 Lacs and the Legal Consultation / Advocate Fees of ₹ 10 Lacs. The said fact is evident from paragraphs-8(a) and 8(b) of the statutory Notice dated 20.02.2019. Thus, it cannot be said that the statutory Notice is defective in nature. This Court is in complete agreement with the concurrent findings recorded by both the Courts below and hence, find no reasons to entertain these petitions. Before parting, this Court finds it necessary to state that the first claim by way of statutory notice was raised in the year 2016 and for all these years, the petitioners have been successful in depriving the respondent-complainant of his legitimate rights to claim his legally enforceable debt. Hence, appropriate directions deserve to be issued to the trial Court concerned to dispose of the case expeditiously. Since the claim is of the year 2016, the trial Court concerned is directed to expedite the proceedings pending before it and to dispose of the same within a period of One Year from the date of receipt of writ of this order - Petition dismissed.
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2022 (2) TMI 445
Dishonor of cheque - rejection of application filed by the revisionists for being exonerated of the liabilities/obligations mentioned in the complaint - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- The submission of the learned counsel for the revisionists, that the application for discharge was filed on the direction issued by this Court in the order dated 22.02.2021 passed in Application under Section 482 Cr.P.C. No. 1901 of 2021, is apparently wrong, as by means of the aforesaid order, this Court had merely granted a liberty to the revisionists to move an application and the application was directed to be decided in accordance with the law, which includes the law regarding its maintainability. Therefore, the learned Court below has not committed any illegality in examining the maintainability of the application - the application does not mention the provision of law under which it has been moved presumably because there is no such provision - the application does not mention the provision of law under which it has been moved presumably because there is no such provision. In IN RE : EXPEDITIOUS TRIAL OF CASES UNDER SECTION 138 OF N.I. ACT 1881. [ 2021 (4) TMI 702 - SUPREME COURT] , the Hon'ble Supreme Court has held that Section 258 cannot come into play in respect of the complaint filed under Section 138 of the Act. Affirming the earlier decisions in the Adalat Prasad (supra), the Hon'ble Supreme Court held that the Trial Court cannot be conferred with inherent power either to review or recall the order of issuance of process. Therefore, keeping in view the law laid down by the Hon'ble Supreme Court, the conclusion of the learned Court below that it has no jurisdiction to recall or review the order passed by itself summoning the accused does not suffer from any legal infirmity and needs no interference by this Court in exercise of its revisional power under Section 397/401 Cr.P.C. A proprietorship concern is not a juristic person. It is merely a trade name used by a person for doing his business. A person may carry on a business in the name of the proprietorship concern but he being the proprietor of the business, would be solely responsible for all the actions and liabilities of the proprietorship concerned. It is correct that the provisions of Section 141 of the Act have no bearing to the present case where the revisionist no. 1 is not a company - the stand taken by the revisionists in the application for discharge is that in para 11 of the complaint, a prayer has been made to punish the revisionists under Section 141 of the Act. No punishment is prescribed under Section 141 of the Act which has been reproduced above and the revisionists have not been summoned for being punished under Section 138 of the Act only and not under Section 141. In In Re: Expeditious Trial of Cases Under Section 138 of N.I. Act 1881, the Hon'ble Supreme Court has been pleased to hold that Section 202 (2) of the Code in respect of examination of witnesses on oath is not applicable to the complaints filed under Section 138 of the Act. The evidence of witnesses on behalf of the complainant shall be permitted on affidavit. If the Magistrate holds an inquiry himself, it is not compulsory that he should examine the witnesses. In suitable cases, the Magistrate can examine documents for satisfaction as to the sufficiency of grounds for proceeding under Section 202 Cr.P.C. As the Magistrate has taken into consideration the complainant's affidavit and the documentary evidence on record, he has complied with the mandate of Section 202 Cr.P.c. Therefore, the submission of the learned counsel for the revisionists regarding non-compliance of Section 202 Cr.P.C. is also without any force and is hereby rejected. This Court does not find any illegality in the impugned order - the instant Criminal Revision lacks merits and is hereby dismissed at the admission stage.
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2022 (2) TMI 444
Prayer for appointment of Sole Arbitrator to adjudicate the disputes among the parties - existence of an arbitration agreement between the parties - Section 11 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- It prima facie, appears that the intention of the parties was to carry out the transaction under the MOUI in the re-negotiated form while accepting all other attendant agreements. It is for this reason all ICDs, Share-Pledge Agreements and Deeds of Guarantees, which were executed on 25.11.2019, were incorporated as part of the MOU-II. There is no reason to exclude the Arbitration Agreement, which was also executed on the same date, from the scope of incorporation by reference under Clause 15 of the MOU-II - It is also the respondents case that the question as to the existence of the Arbitration Agreement must be left open for the Arbitral Tribunal to decide. The Court will decline appointment of an arbitrator if it finally concludes that an arbitration agreement does not exist. However, the Court needs only to be prima facie satisfied as to the existence of an arbitration agreement for the arbitrator to be appointed - this Court is prima facie satisfied as to the existence of an arbitration agreement. Thus, this Court considers it apposite to allow the present petition. It is, however, clarified that this would not preclude the respondents from contesting the existence of an arbitration agreement before the Arbitral Tribunal. Justice (Retd.) Aftab Alam, a former Judge of the Supreme Court, is appointed as the Sole Arbitrator to adjudicate the disputes between the parties subject to the learned Sole Arbitrator making the necessary disclosure as required under Section 12(1) of the A C Act and not being ineligible under Section 12(5) of the A C Act. The parties are at liberty to approach the learned Sole Arbitrator for further proceedings. Petition allowed.
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2022 (2) TMI 443
Registration of trademark - only ground on which the impugned order refuses registration of the appellant's mark is that it is not distinctive - HELD THAT:- The impugned order does not allege that the mark, or any mark deceptively similar thereto, was ever registered, or even in use in respect of goods or services identical or similar to the marks in respect of which registration was sought by the appellant. Nor could it be alleged that the mark AND THEN THERE WERE NONE was descriptive of the services in respect of which its registration was sought by the appellant - The Trade Marks Act, 1999, confers, as a matter of right, the right to register a trademark which does not suffer from any of the infirmities which the Act contemplates. The circumstances in which registration of a mark can be refused, being specifically statutorily delineated in the Trade Marks Act, have to be regarded as exhaustive. Absent any of these circumstances, therefore, a request for registration of a trademark cannot be refused - There is no finding or observation, by the author of the impugned order, that the name AND THEN THERE WERE NONE is not capable of being represented graphically or is incapable of distinguishing the services being provided, or intended to be provided, by the appellant, from those provided or intended to be provided by others. There is no obligation, in law, requiring, mandatorily, the name or other insignia, whereunder goods or services are provided, to be registered under the Trade Marks Act, 1999. Registration of a trademark, however, permits transparency in trade and is also in the interests of the consuming public who would, then be able to identify and distinguish goods and services being provided by one entity from those provided by another. As such, if the trademark is not one, the registration of which is inhibited by any of the provisions of the Trade Marks Act, its registration must be allowed - Essentially, if the mark is distinctive, and is not identical or confusingly or deceptively similar to any earlier mark which is registered or in use from a prior date in respect of similar goods or services, or which results in the passing off, by the applicant, of its goods or services as those of another, registration of the mark is a matter of right. The impugned order is also liable to be set aside, in my view, as being unreasoned. The right to register a mark under which one intends to provide good or services is a valuable right, partaking of the character of Article 19(1)(g) of the Constitution of India. Any decision not to allow registration of a mark has, therefore, to be informed by reasons which should be apparent on the face of the decision - the matter is remitted to the office of the Registrar of Trade Marks with the direction that, if the application of the appellant does not suffer from any other fatal infirmity, the mark AND THEN THERE WERE NONE , as sought by the appellant, be registered under Classes 9, 16 and 41 - appeal allowed by way of remand.
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