TMI Tax Updates - e-Newsletter
March 26, 2022
Case Laws in this Newsletter:
GST
Income Tax
Insolvency & Bankruptcy
PMLA
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Classification of supply - composite supply or not - works contract service or not - contract involving supply of equipment / machinery & erection, installation& commissioning services without civil work thereof - Supply of a functional Cattle Feed Plant, inclusive of its Erection, Installation and Commissioning and related works involved for both the question 1&2, is Works Contract Service Supply, falling at SAC998732 attracting GST leviability at 18% - AAR
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GST:
Levy of GST - Pure Agent - 1. TLEF is pure agent of Industry Partner to the extent of reimbursement of the actual amount Stipend incurred by it and thereby said reimbursement amount is not leviable to GST. - 2. TLEF is not pure agent of Industry partner for Insurance premium amount, as TLEF does not satisfy clause (d) to the explanation of Rule 33 CGST Rules. Thereby, insurance amount reflected its invoices, shall not be deducted from arriving at taxable value and thereby leviable to GST - AAR
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GST:
Classification of goods - Geomembranes - Woven Tarpaulin - technical uses of Geomembrane, Geomembrane passing the test of Section note XI(1)(g) to Section XI, Geomembrane satisfying the test of Chapter 59 Note 7(1)(a) and by applying the Doctrine of Harmonious Construction, cleared the bar raised in Section note XI(1)(h) to Section XI; thus ‘Geomembrane’ is a textile article. - Tarpaulin is classified at HSN 3926 - AAR
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GST:
Classification of supply - composite supply of works contract - The subject Service order is for supply of Toll Management System (TMS) to be erected and commissioned, on an expressway. Supply does not include construction of expressway/ road/ terminal but is for limited purpose of supply of TMS simpliciter. The purpose will be for collection of the tolls/ toll fee and not for control/ management of the traffic on road - the conditions of this sr no 3(iv) of said NT is not satisfied in subject matter. - GST is leviable at 18% - AAR
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GST:
Classification of goods - rate of tax - supply of Ready to Serve Fruit Beverage named as ‘Apple Cola Fizzy’ and ‘Malt Cola Fizzy’ made by the applicant - Apple Cola Fizzy and Malt Cola Fizzy are Carbonated Beverages with fruit juice - GST is leviable at 28% on said goods - AAR
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GST:
Levy of GST - amount representing the employees portion of canteen charges, which is collected by the applicant from employees and paid to the Canteen Service Provider - GST, at the hands of the employer, is not leviable - AAR
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Income Tax:
Penalty imposed u/s. 271AAB(1)(a) - search and seizure action u/s. 132(1) - commission amount was not recorded in the books of account - since the assessee as per law need not maintain books of account and since the assessee had time (more than 40 days till 31.03.2013) the said offer of assessee cannot be termed as ‘undisclosed income’ as per the definition discussed supra. So, we find that this commission income which the assessee offered u/s. 132(4) of the Act for AY 2013-14 does not fall in the ken of undisclosed income for the purpose of levy of penalty under section 271AAB. - AT
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Income Tax:
Deduction u/s 54B - Benefit of exemption denined on the ground that, the land was sold by the assessee to a developer and ultimately the land would be used for non-agricultural purposes. -A.O has disputed only one condition of sec. 54B of the Act while denying deduction to the assessee that the land was not used for agricultural purposes, two years prior to the sale transaction and we have already examined this requirement has been fulfilled in the case of the assessee. Beyond this, nothing else is required to get the deduction u/s 54B of the Act when the second condition is not at all disputed by the Department. - AT
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Income Tax:
Deduction us.37(1) on account of “Escrow Disbursement Provision” ('EDP’) - Prior period expenditure - To put it simply, the AO will bifurcate total Escrow Disbursement payment of ₹ 20,76,35,244/- made during the year into the amount of Escrow Incentive in respect of packages sold during the year itself and incentive for the packages sold in earlier years. Deduction of Escrow incentive for the year will be allowed only in respect of the packages sold during the year because for the packages sold in earlier years, the assessee has already availed deduction at the time of creation of the EDP in such earlier years. - AT
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Income Tax:
Additions on the ground of Bogus sundry creditors - since for the earlier years, assessee had opted for presumptive taxation under section 44D of the Act and therefore, he was not statutorily required to maintain any books of account but, mere non-maintenance of books of account for earlier years cannot, ipso facto, result into non-acceptance of claim of the appellant as regard to existence of the opening balance of creditors. The provisions of section 68, although not invoked properly by the AO without examining any books of account, also require the AO to examine each and every credit entry independently and any ad-hoc lump-sum addition, by taking a certain percentage of the total creditors, is neither warranted nor permissible- AT
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Income Tax:
Assessment of trust as Association of Persons (AOP) - Claim of revenue expenditure from the addition of gross receipt - Exemption u/s. 10(23C) denied - appellant trust was not registered u/s 12AA - AO directed to allow the expenditure incurred During the relevant period. - AT
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Income Tax:
Disallowance of payment to sub-contractor - disallowance of 10% from the other payments - the contractors had worked and the TDS was made from the payments but the Assessing Officer unjustifiably disallowed these payments on the ground that the source of the expenditure is not satisfactorily explained. However, the Assessing Officer failed to consider the fact that it was not an undisclosed expenditure but the amounts were debited in the books of the assessee and the source was proved and verifiable from the books of accounts. - AT
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State GST:
Guidelines for recovery proceedings under the provisions of section 79 of the HGST Act, 2017 in cases covered under explanation to sub-section (12) of section 75 of the HGST Act, 2017 - Haryana SGST
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Indian Laws:
Power of State Government to levy tax on Lotteries - the scope and ambit of lotteries organised by Government of India or Government of State under Entry 40 of List I is only in the realm of regulation of such lotteries. The said Entry does not take within its contours the power to impose taxation on lotteries conducted by the Government of India or the Government of State. - Division Benches of the High Courts of Kerala and Karnataka were not right in holding that the respective State Legislatures had no legislative competence to impose tax on the lotteries conducted by other States in their State (in the State of Karnataka and Kerala respectively). - SC
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Indian Laws:
Dishonor of Cheque - funds insufficient - difference in drawer’s signature - Apex Court has held that, criminal prosecution against the accused in such cases should be allowed to proceed even if the cheques were dishonoured by the bank on the ground that drawer’s signatures were incomplete - Therefore, the contention of the petitioner that in the instant case offence under Section 138 of the NI Act is not constituted because the cheque was dishonoured on account of difference in signatures and not for the reason of insufficiency of funds or exceeding the arrangement, deserves to be rejected. - HC
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IBC:
Initiation of CIRP - Operational Creditors - existence of debt and dispute or not - The mere fact that the e-mail was received that the matter shall be looked into. The use of exact words “I have asked Mahesh to look into your case on priority and I am hopeful you will have a resolution soon”. The above expression cannot be read any acknowledgment within the meaning of Section 18. Subsequent mail which is of 27.04.2017 which is written by one of the employees of the Corporate Debtor at Page 45 of the paper book cannot be treated to be acknowledgment by the Corporate Debtor within the meaning of Section 18 by the Corporate Debtor- AT
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VAT:
Refund of excess Input Tax Credit - The lump-sum payment of composite tax under Section 16(2) of the Act in no way can be equated with the powers of State under Section 62(5) of the Act as both have separate and distinct fields of operation. There cannot be any overlapping between the two provisions, therefore, disallowance of ₹ 17,06,715/- payable from ITC to the petitioner by invoking the provisions either of Section 7 or Section 16(2) of the Act is wholly illegal and against the mandate of law - It is held that the payment of presumptive tax under Section 7 or lump-sum tax by way of composition under Section 16(2) of the Act read with Rules 45 to 50 of the rules have their application in the specific field expressly contemplated in the Act and cannot be expanded to include deferment of tax notified under Section 62(5) of the Act. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (3) TMI 1092
Detention of goods alogwith vehicle - applicant has deposited the penalty amount - confiscation proceedings - HELD THAT:- The matter as on date is at the stage of MOV-10. We do not want to come in the way of the authorities so far as the confiscation proceedings are concerned. It is open for the concerned Department to proceed further with the confiscation proceedings. However, we are inclined to order release of the goods and the conveyance since the writ-applicant has deposited an amount of ₹ 3,25,454/- only by a Challan dated 10.03.2022 towards penalty. This is 200% of the tax amount. The value of the goods appears to be approximately ₹ 9,00,000/- - Let the goods and the conveyance be released subject to the writ-applicant filing an appropriate undertaking in writing on oath to the satisfaction of the authority concerned and also, by executing a bond of the amount that may be levied towards fine in-lieu of confiscation. This writ-application stands disposed of.
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2022 (3) TMI 1091
Permission for withdrawal of petition - HELD THAT:- In view of the statement made by learned Assistant Solicitor General of India, learned counsel for the petitioner submits that he may be permitted to withdraw this petition at this stage. Application admitted.
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2022 (3) TMI 1090
Classification of supply - composite supply or not - works contract service or not - contract involving supply of equipment / machinery erection, installation commissioning services without civil work thereof - supply of equipment / machinery erection, installation commissioning services with civil work thereof - applicable rate of GST - test of permanency - HELD THAT:- The equipment are assembled by IDMC at customers premises and are either fitted with foundations/ structures or fitted on foundations/ structures. The functional and operational Cattle Feed Plant in its knocked down, either semi knocked down/ completely knocked down condition loses its identity. Further, it is fact on record that an erected Cattle Feed Plant as such cannot be shifted from one place to another, i.e., to say that all the different equipment, machines parts and accessories, electrical systems are required to be dismantled and then only the equipment can be shifted. On reading the facts, it is found that the test of permanency laid down by the H ble Apex Court for treating cattle plant as an immovable property has been answered positive in subject case and we hold that subject Plant is an immovable property. The Cattle Feed Plant once installed and commissioned in the premises is transferred to the customer, thereby involving transfer of property. The Plant installation comprises cabling and fastening to earth/ foundation and all the equipment/parts are interlinked to constitute a functioning Plant that it cannot be moved as such without dismantling/ dismembering - The supply hinges on providing a functional and operational cattle feed plant which has passed the test of permanency and thereby an immovable property. The supply interalia involves transfer of property to the customer and the subject supply merits consideration under works contract service. Supply of a functional Cattle Feed Plant, inclusive of its Erection, Installation and Commissioning and related works involved for both the supplies, is Works Contract Service Supply, falling at SAC998732 attracting GST leviability at 18%.
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2022 (3) TMI 1089
Exemption from GST - supplies made by the applicant to the Examination Boards and Educational Institution - Applicability of Sr. No. 66, Heading No. 9992 (education Services) of the exemption N/N. 12/2017-CT (Rate) dated 28-6-2017, read with N/N. 14/2018-CT (Rate) dated 26-7-18 - refund of the taxes collected and paid into Govt. treasury - HELD THAT:- On reading the Agreement the applicant entered with the Education Board for the year 2021 and 2022, it is found that applicant supplies services relating to conduct of examination - the Supply of services provided to State educational boards by way of services relating to conduct of examination by State Educational Boards is exempt vide entry 66(b) (iv) of said Notification 12/2017-CT(R), as clarified at clause 3(iv) to the Explanation of the said Notification. The insertion of this clause 3(iv) vide Notification No. 14/2018-CT (R) dated 26-7-18 to the Explanation of the said Notification is clarificatory in nature making clear the applicability of said entry 66(b)(iv) of said Notification 12/2017-CT (R).
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2022 (3) TMI 1088
Levy of GST - Pure Agent - reimbursement received towards stipend paid to Trainees on behalf of Industry partner as part of training agreement - reimbursement received against cost of employee compensation insurance obtained for the benefit of Trainees by the Applicant and reimbursed by the Industry partner as per the training agreement - Pure agent services or not - whether TLEF is pure agent of Industry Partner with respect to Stipend and Insurance? Stipend - HELD THAT:- TLEF is authorized by Industry partner to make payment of stipend to Trainee (Third party) and TLEF is reimbursed the amount by recipient. This amount is separately indicated in invoice. It is deemed that the work performed by the Trainees in the Industry during their training period to be services procured by TLEF from the Trainees (third party), thereby satisfying Rule 33(iii) CGST Rules - the three conditions of Pure Agent laid down vide Rule 33 CGST Rules and the expression of Pure agent as per Explanation to said Rule has been satisfied by TLEF with respect to stipend reimbursement and TLEF submits that it receives only the actual amount incurred to pay stipend amount to the Trainees, in addition to the amount it receives for supplies provided on its own account. Insurance - HELD THAT:- The said single Insurance policy was taken by TLEF for both the trainees as well as its employees. Further, we note that said ICICI Tax invoice dated 1-8-21 of ₹ 191309.86/- is total Insurance premium amount charged by Insurance company on TLEF for both trainees and its (TLEF) employees. TLEF is unable to co-relate the actual Insurance premium amount paid by it to the Insurance company exclusively for the trainees only, vis-a-vis the amount charged by it, as reimbursement, on Industry Partner. TLEF has failed to satisfy that it is pure agent, by not substantiating on record that it receives only the actual amount from Industry Partner for insurance charges incurred by it exclusively for Trainees - The facts of present case is that TLEF is unable to substantiate that the insurance amount it has charged on Industry Recipient in its Invoices was the actual reimbursement of Insurance charges, exclusively, incurred for trainees - TLEF is not pure agent of Industry partner for Insurance premium amount, as TLEF does not satisfy clause (d) to the explanation of Rule 33 CGST Rules. Thereby, insurance amount reflected its invoices, shall not be deducted from arriving at taxable value and thereby leviable to GST.
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2022 (3) TMI 1087
Classification of goods - rate of GST - Marine engine - falling under HSN 8402 and 8407 or not - taxable at the rate of 28% or 5%? - applicability of circular No. 52/26/201-GST dated 9-8-18 - HELD THAT:- The fishing vessels are classifiable under heading 8902, and attract GST @ 5%, as per S. No. 247 of Schedule-I of the notification No. 1/2017-Central Tax (rate), dated 28-6-2017. Further, parts of goods of heading 8902, falling under any chapter also attracts GST rate of 5%, vide S. No. 252 of Schedule I of the said notification. The Marine engine for fishing vessel falling under Tariff item 8408 1093 of the Customs Tariff Act, 1975 would attract a GST rate of 5% by virtue of S. No. 252 of Schedule-I of the notification No. 1/2017-Central Tax (Rate), dated 28-6-2017.
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2022 (3) TMI 1086
Classification of goods - Geomembranes - Woven Tarpaulin - merits classification under Heading 5911, Sub Heading 59111000 or Sub Heading 59119090, as Textile products, coated, covered or laminated with plastic, used for technical purposes? - HELD THAT:- The burden of Classification is on Revenue. However, Revenue without submitting any analysis/evidence before us, made its submission that 5911 Tariff is the most appropriate classification. Now, the Legislature has empowered competent authority vide Section 168 CGST Act, 2017 with the power to issue Instruction or directions as per the GST scheme of law. As per CGST Act and rules framed thereunder, it is not found Textile Ministry empowered under GST scheme of law to issue directions/ instructions for GST Classification - M/s Texel has cited Notification dated 24-9-21 issued by Ministry of Textiles to further their view to classify subject goods. Classification of Geomembrane - HELD THAT:- Construing the wordings of Chapter Note 7(1)(a) to Chapter 59 that textile fabrics coated with other materials used for technical purposes are included in this Chapter, it is held that the goods Geomembrane, though coated with Plastic but used for technical purposes finds place in the Tariff 5911, for the dual reason that the phrase other materials used in this Tariff is vast to include plastics also; coupled with the technical use of Geomembrane - technical uses of Geomembrane, Geomembrane passing the test of Section note XI(1)(g) to Section XI, Geomembrane satisfying the test of Chapter 59 Note 7(1)(a) and by applying the Doctrine of Harmonious Construction, cleared the bar raised in Section note XI(1)(h) to Section XI; thus Geomembrane is a textile article. Classification of Tarpaulin - HELD THAT:- Tarpaulin is used for protecting various things and materials and also covering motor vehicles and the like; for packing and protecting the goods in transportation. Also in general, Tarpaulins are used to cover construction materials and equipment, athletic fields, vehicles or other exposed objects, etc. - the uses of Tarpaulin are general in nature and thereby there are no merit to employ functional concept classification based on technicality in case of Tarpaulin. It is noted that there is also an entry of Tarpaulin at 6306. With our aforementioned findings, it is forthcoming that Tarpaulin is excluded from Textile articles as subject Tarpaulin is a plastic article, with general uses and further laminated with plastic - 6306 Tariff for subject plastic tarpaulin coated with plastic is rejected - thus, Tarpaulin is classified at HSN 3926, tariff item 39269099.
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2022 (3) TMI 1085
Classification of supply - composite supply of works contract - Government entity or not - project of Tolling, Operation, Maintenance Transfer - Toll Management System (TMS) - classified under Entry (vi) of Serial No. 3 of the Notification No. 11/2017-C.T. (R), dated 28th June, 2017 or under Entry (iv) to Serial No. 3 of the CGST Rate Notification read with the GGST Rate Notification - applicable rate of GST - HELD THAT:- TMS works is supplied by Tecsidel to M/s Adani and not to any Central/ State Government, Union Territory, local authority, Government Authority or Government Entity. Further, the activity of collection of Toll excludes the TMS works from the category of predominantly meant for use other than for commerce, industry, or any other business or profession . The word Business has a wide inclusive definition vide Section 2(17) CGST Act including, inter alia, any trade, commerce, or any other similar activity, whether or not it is for a pecuniary benefit, including activities in connection with/ incidental/ ancillary to it, whether or not there is regularity of such transactions. We find that the conditions of this sr. no 3(vi) of said NT is not satisfied in subject matter. The subject Service order is for supply of Toll Management System (TMS)to be erected and commissioned, on an expressway. Supply does not include construction of expressway/ road/ terminal but is for limited purpose of supply of TMS simpliciter. The purpose will be for collection of the tolls/ toll fee and not for control/ management of the traffic on road - the conditions of this sr no 3(iv) of said NT is not satisfied in subject matter. Service provided by sub contractor to main contractor liable to@ 12% in respect of entry No. (iv) and (vi) of Not. No. 11/2017-CT (Rate) - HELD THAT:- In the present matter, only the supply of TMS is under consideration but in the cited Ruling supply of Intelligent transport system installation project which includes Advanced Traffic Management system (AMTS), TMS and Digital Transmission system along with operation and maintenance of AMTS for 4 years to provide real time information about traffic conditions, pollution, weather conditions and status of expressway to road users making road travels convenient, faster and safer was considered. The present case does not involve supply of Road along with TMS, but simply supply of TMS itself on an already constructed national highway stretch. Thus, subject supply is not covered at sr no 3(iv/vi) of said NT. Further, as per discussion at para 11.3, sr no 3(ix) of said notification is not attracted in subject case. GST is leviable at 18% vide Sr. No. 3 (xii) of Not. No. 11/2017-CT (Rate) dated 28-6-17 as amended.
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2022 (3) TMI 1084
Maintainability of Advance Ruling application - Job-work - whether the invoice raised by the applicant considered to be a valid tax invoice as per provisions of GST law? - HELD THAT:- As per Section 95(a), CGST Act, Advance Ruling means a decision provided by the Authority to an applicant on matters/ questions specified in Section 97(2), in relation to the supply of goods/ services or both being undertaken or proposed to be undertaken by the applicant. In view of the statutory provisions of Section 97(2) CGST Act, the Questions raised by Acme does not fall under the gamut of said Section 97(2). Other issues are already withdrawn - The subject application is not maintainable.
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2022 (3) TMI 1083
Classification of goods - rate of tax - supply of Ready to Serve Fruit Beverage named as Apple Cola Fizzy and Malt Cola Fizzy made by the applicant - applicability of N/N. 1/2017 CT (Rate) dated 28.06.2017 as amended up to date - HELD THAT:- The burden of Classification is on Revenue. However, Revenue has neither appeared for personal hearing nor submitted its comments on the applicant s application. In the present case, it is found that the applicant has cited classification of subject goods based on Food safety and standards regulations - the Legislature has empowered competent authority vide Section 168 CGST Act, 2017 with the power to issue Instruction or directions as per the GST scheme of law. As per CGST Act and rules framed thereunder, we do not find FSSAI empowered under GST scheme of law to issue directions/ instructions for GST Classification. The names of both the goods have the word fizzy which gives a reasonable impression in the market that these goods are carbonated with carbon dioxide, due to the very word fizzy appearing in their descriptions. We note that it is a fact that both the goods have been carbonated with carbon di oxide (INS 290). Further, both the goods have INS 211, INS 224, INS 202 as preservatives - carbon di oxide in subject beverages has given them the carbonated effect and the goods are thereby carbonated beverages. The subject goods which consist of water, sugar, sweetener, apple juice concentrate, flavours, aerated with carbon dioxide gas and presented in airtight containers fulfil the criteria to merit consideration for classification at HSN 220210 - also, there is a Tariff item at 22029920 with the description fruit pulp or fruit juice based drinks . Now it is observed that the subject goods having apple juice concentrate 1.9 % [Equivalent to 12.7% Apple Juice Reconstituted] appear to satisfy this description also and prima facie this heading 22029920 cannot be brushed aside as not applicable for subject goods. From reading of Annexure III to the recommendation of the Fitment Committee, it is noted that the Fitment Committee has cited classification of Carbonated beverages with fruit juice at HSN 220210. We, further note that GST Council has approved the recommendation of Fitment Committee. Thus, with this, we infer that competing entries of HSN 220210 and 220299 for subject goods, is answered by the GST Council decision to be 220210 for carbonated beverages with fruit juice. Apple Cola Fizzy and Malt Cola Fizzy are Carbonated Beverages with fruit juice, classifiable at HSN 22021090 - GST is leviable at 28% on said goods - GST Compensation Cess leviable at 12% on said Goods.
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2022 (3) TMI 1082
Levy of GST - amount representing the employees portion of canteen charges, which is collected by the applicant from employees and paid to the Canteen Service Provider - HELD THAT:- Intas has arranged a canteen for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by Intas whereas the remaining part is borne by its employees. The said employees portion canteen charges is collected by Intas and paid to the Canteen Service Provider. Intas submitted that it does not retain with itself any profit margin in this activity of collecting employees portion of canteen charges. GST, at the hands of the Intas, is not leviable on the amount representing the employees portion of canteen charges, which is collected by Intas and paid to the Canteen service provider.
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Income Tax
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2022 (3) TMI 1081
Validity of assessment order in the name of the amalgamating company - assessment framed in the name of the non-existent company - procedural defect - HELD THAT:- High Court has followed the judgment of this Court in Principal Commissioner of Income Tax, New Delhi vs Maruti Suzuki India Limited [ 2019 (7) TMI 1449 - SUPREME COURT] the revenue seeks to make a factual distinction between the position as it obtained in that case with the facts of the present case. Reading the order of the High Court, we do not find that any such submission has been urged before the High Court. Department would be advised to file a review petition before the High Court bringing the distinguishing features on the record of the High Court. We make no expression of opinion on that aspect. Granting liberty to the petitioners to pursue appropriate proceedings in accordance with law including by way of a review before the High Court, the Special Leave Petition is disposed of.
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2022 (3) TMI 1080
Deduction u/s 80P - HELD THAT:- Admittedly, in all these cases, the Assessing Officer has passed orders of assessment determining the income of the respective respondent/ Cooperative Society and demanded tax. Challenging the said orders of assessment, the respondents have already filed appeals before the appellate authority and they are pending. Therefore, it would be appropriate to direct the respondents herein to raise all the contentions including the eligibility of their claim under section 80P of the Act, in the appeals pending before the appellate authority. The appellate authority is also directed to consider the claim of the respondents/co-operative societies and pass orders, on merits and in accordance with law and also in the light of the decision rendered MAVILAYI SERVICE COOPERATIVE BANK LTD. ORS. VERSUS COMMISSIONER OF INCOME TAX, CALICUT ANR. [ 2021 (1) TMI 488 - SUPREME COURT] Accordingly, the orders impugned herein, shall stand modified.
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2022 (3) TMI 1079
Addition made in respect of jewellery found at the time of search - value of 887 grams of jewellery as undisclosed income - HELD THAT:- There is no dispute with regard to the search and seizure of 1387 grams of jewellery in the premises of the appellant on 02.01.2003. The appellant claimed that the said jewels were received from her parents, mother-in-law and sister on various occasions, by way of gift. However, the assessing officer found that there was no evidence adduced by the appellant to support her claim and hence, after deducting 500 grams as gift received by the appellant, the value of balance 887 grams of jewels at ₹ 4,07,880/- was added as undisclosed income. The said addition by the assessing officer in the assessment order was confirmed by the CIT(A) which was also affirmed by the Tribunal Admittedly, the CBDT, vide Instruction No.1916 dated 11.05.1996 has directed not to seize jewellery to the extent of 500 grams in the case of married women. Further, the appellant did not produce any bills / books of accounts / document, except her oral statement, to substantiate her claim that the entire jewels belonged to her. In such circumstances, this court finds no good reason to disagree with the findings so rendered by the Tribunal. No substantial question of law.
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2022 (3) TMI 1078
Penalty u/s. 271AAB - ex-parte orer passed by CIT-A - no compliances on the part of assessee as none appeared on behalf of the assessee before ld. CIT(A) on the date of hearing fixed by ld. CIT(A) - assessee is now claiming that these notices were not received by him - HELD THAT:- The appellate order in the instant case was passed by ld. CIT(A) ex-parte in limine without discussing the issues on merits, which makes this order unsustainable in the eyes of law. The assessee is equally responsible for its woes as the assessee has to be vigilant after filing its appeal. We have observed that the assessee filed its appeal before ld. CIT(A) on 20.11.2017, while the first notice was issued by ld. CIT(A) almost on 27.07.2018. Thus, the assessee is equally responsible for its woes.Both the parties have now fairly stated during the course of hearing before the Division Bench , that based on facts and circumstances of the case the matter can go back to the file of ld. CIT(A) for fresh adjudication of all the issues raised by the assessee in its appeal filed before ld. CIT(A) on merits in accordance with law. Thus we are inclined to set aside the appellate order dated 23.10.2018 passed by ld. CIT(A) and restore the matter back to the file of ld. CIT(A) for fresh adjudication on merits of all the issued raised by assessee in its appeal filed before ld. CIT(A) in accordance with law - Assessee appeal allowed for statistical purposes.
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2022 (3) TMI 1077
Penalty imposed u/s. 271AAB(1)(a) - search and seizure action u/s. 132(1) - commission amount was not recorded in the books of account of the assessee on the date of search, the said amount is an undisclosed income - HELD THAT:- As in the absence of any discovery/seizure of any material during search which un-raveled the purported undisclosed commission income and since the assessee as per law need not maintain books of account and since the assessee had time (more than 40 days till 31.03.2013) the said offer of assessee cannot be termed as undisclosed income as per the definition discussed supra. So, we find that this commission income which the assessee offered u/s. 132(4) of the Act for AY 2013-14 does not fall in the ken of undisclosed income for the purpose of levy of penalty under section 271AAB. So since the assessee s disclosure does not fall in the definition of undisclosed income in sub clause (i) to clause (c) of section 271AAB of the Act, the penalty u/s. 271AAB of the Act cannot be legally sustained in the facts of this case as rightly held by the Ld.CIT(A) by relying on the decision of this Tribunal in M/s. Rashmi Metaliks. - Decided in favour of assessee.
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2022 (3) TMI 1076
Penalty u/s. 271AAA - additional income admitted by the assessee in its statement u/s. 132(4) and which was declared in the return of income - HELD THAT:- It is noted that assessee in its disclosure petition has conditionally offered to cover any other undisclosed income which has been unearthed during search. This action of assessee was out of abundant caution and conditional (provided there is material suggesting any undisclosed income un-earthed during search). However, finding that there was no other undisclosed income to identify with the seized materials/Panchanama, the assessee while filing the return of income pursuant to section 153A notice did not offer ₹ 40 lakhs. AO in the assessment order dated 30.03.2015, added ₹ 40 lakhs since assessee admitted ₹ 3.78 cr. during search. And the Ld. CIT(A) deleted penalty in respect of ₹ 3.38 cr. but sustained ₹ 40 lakhs, which we do not countenance because, the addition of ₹ 40 lakhs, was not based on any material discovered during search in any form described therein the definition of un-disclosed income u/s 271AAA of the Act. It is noted that based on the bald statement of Shri Bubna ₹ 3.78 cr. (out of ₹ 34 cr.) was admitted which includes ₹ 40 Lakhs. Since ₹ 40 lakhs cannot be attributed to any money, bullion, jewellery, article or transaction or entry or documents which has not been recorded in the books for the previous year (AY 2012-13) when searched on 29.05.2012, the same cannot fall in the ken of the definition of undisclosed income for the purpose of levying penalty u/s. 271AAA - Having taking note that the amount has been brought to tax by the AO though not shown by the assessee in the Return of Income, the penalty u/s. 271 AAA of the Act cannot be legally sustained. - Decided in favour of assessee.
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2022 (3) TMI 1075
Levy of penalty u/s 271(1)(c) - Assessee(s) has entered into an international transaction(s) - affirmed the charging of tax @20% on receipts from all the contract - HELD THAT:- We observe that more or less the claim of the Assessee is that the Assessee on the basis of bonafide belief to the effect, as the Assessee do not have PE in India qua projects on the basis of which income has been earned, therefore offered its income for tax on presumptive basis u/s 44BBB of the Act which prescribe the tax payable @ 10%. The said claim of the Assessee was declined by the Assessing officer and income of the Assessee was taxed @ 20%, and subsequently penalty under consideration was imposed which stands sustained by the Ld. Commissioner in appeal. The retuned income and assessed income is the same, which in our considered view favors the Assessee‟s case and respectively following the judgmentsreferred above, we are of the considered view that simply because the Assessee may be on bonafide belief or misconceptionthat the Assessee do not have PE‟ in India and/or on the basis of certificate dated 19.05.2004 issued u/s 197 of the Act by the revenue department, chosen to compute the tax payable on its income u/s 44BBB of the Ac, that itself cannot entail imposition of penalty. Hence, we are inclined to delete the penalty imposed by the ld. AO and affirmed by the ld. Commissioner vide impugned order. Consequently the appeal filed by the Assessee is allowed.
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2022 (3) TMI 1074
Deduction u/s 54B - Claim denied on the ground that the first condition of the said provision is not fulfilled i.e. the assessee was not carrying on any agricultural activities on the said land two years immediately preceding the date of transfer of the said land - HELD THAT:- In terms of getting benefit u/s 54B of the Act, case of the assessee before us is on a better footing even compared to the decision of RAJENDRA BASTIMAL CHORDIYA [ 2019 (7) TMI 924 - ITAT PUNE] . We also find that in the narration by the ld. CIT(A), he has denied deduction u/s 54B of the Act on some imaginary ground that the land was sold by the assessee to a developer and ultimately the land would be used for non-agricultural purposes. This is not at all a subject matter for consideration while deciding the issue for giving benefit u/s 54B - A.O has disputed only one condition of sec. 54B of the Act while denying deduction to the assessee that the land was not used for agricultural purposes, two years prior to the sale transaction and we have already examined this requirement has been fulfilled in the case of the assessee. Beyond this, nothing else is required to get the deduction u/s 54B of the Act when the second condition is not at all disputed by the Department. Even in the case of CIT Vs. Smt. Savita Rani [ 2002 (5) TMI 6 - PUNJAB AND HARYANA HIGH COURT] has categorically held that the exemption u/s 54B is available to the seller of a capital asset being land, however, the said land against which the benefit is sought must have been used by the assessee for agricultural purposes for the two years immediately preceding the date of sale. Having satisfied this condition, we are of the considered view that the assessee is entitled to the deduction u/s 54B of the Act and accordingly we reverse the finding of the ld. CIT(A) and allow Ground No. 1 of the assessee. Capital gain computation - disallowing deduction towards indexed cost of improvement u/s 55 of the Act while computing the long term capital gain on sale of agricultural land - HELD THAT:- We are of the considered view that the ld. A.O should verify and re-adjudicate it as per law. Accordingly, the order of the ld. CIT(A) is set aside on this issue and the said issue is restored to the file of the ld. A.O. Needless to mention, the ld. A.O must comply with the principles of natural justice and provide reasonable opportunity of hearing to the assessee. Ground No. 2 is accordingly, allowed for statistical purposes.
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2022 (3) TMI 1073
Eligible for deduction u/s 80IA(4) - AO held that the assessee is merely a contractor and not the developer since the funds are given by the Government - HELD THAT:- The assessee was required to bring finance, technical expertise and materials and adhere to the quality requirements irrespective of cost. That further, for completion of the project the assessee also had to use its own funds, expertise and employees for developing the infrastructure facilities. The facts and circumstances are absolutely identical and similar in both the assessment years before us which were also there in assessee's own case for A.Y. 2005-06 to 2011-12 and even the ld. D.R conceded on the issue. The term contractor as used in reference to sec. 80IA(4) is a person entering into a contract with a Government entity and doing the work as per the specific directions of the Government entity and the funds etc. are all given by the Government entity and the contractor is supposed to work as per the directions of the Government entity as imbibed in the terms of the contract and nothing more than that, meaning thereby there is no independent application of mind and therefore the contractor is also not supposed to poses expertise in the matters of the project. Everything is guided by the Government entity. Whereas in the case of a developer, he enters into a contract and disposes of the project work by using his own acumen, expertise, employees and even has to adhere to quality standards as enshrined in the contract that he enters into. So for a developer it is a work in a much more broader sense of the term, its independent visualisation along with finance as utilised for completion of the project which is not the case in case of the contractor. That on examination of the facts and circumstances, and the various judicial pronouncements, we are of the considered view that this issue has been consistently held in favour of the assessee. That when the facts and circumstances are identical following the rules of consistency and on the same parity of reasoning, we hold that there is no need to interfere with the findings of the ld. CIT(A) which is upheld and the relief provided to the assessee is hereby sustained. Appeal of revenue dismissed.
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2022 (3) TMI 1072
Addition of Medical Check-up Provision (MCP) - assessee submitted that it had four different health packages for sale to customers during the year and there was a fixed cost involved for the medical check-ups under such packages, which was to be paid to the empanelled hospitals at the time of their performing the medical check-ups, which facility could be availed by its customers within three years from the date of sale of package - CIT-A deleted the addition - HELD THAT:- AR fairly admitted that such details of the creation of the MCP were not furnished to the AO as those were claimed not to have been requisitioned from the assessee. It was only before the ld. CIT(A) that the assessee furnished necessary details concerning the MCP. In view of the fact that the ld. CIT(A) deleted the addition made by the AO on this score without calling for the remand report of the AO and further knowing well that such details were not available before the AO, we consider it expedient to set-aside the impugned order and remit the matter to the file of the AO. We order accordingly and direct him to decide this issue afresh by allowing deduction of the MCP created during the year on the basis of number of packages sold as reduced by the reversal of the amount of provision on the expiry of three years period from the date of sale of package for non-availing the facility of medical check-ups. Needless to say, the assessee will place on record all the necessary details in this regard to facilitate the determination of the deductible amount. Deduction us.37(1) on account of Escrow Disbursement Provision ('EDP ) - HELD THAT:- Whatever amount of Incentive is paid by the assessee during the year, notwithstanding the year of sale of package, would qualify for deduction. There is a caveat to it. The assessee has been allowed deduction at the time of creation of the Escrow Disbursement Provision up to the A.Y. 2012-13. Such deduction of the provision allowed in the earlier years includes the Incentive payable to CDs during the years to come. Once deduction has been allowed at the time of creation of the EDP, allowing another deduction at the time of payment in the regime of allowing deduction on payment basis, will amount to double deduction, which is impermissible. It has been brought to our notice that the assessee maintains a complete Incentive payment record for each year indicating the respective year of the sale of packages in respect of which the Incentive is paid during the year. Thus, the amount of deduction for Incentive payment to be allowed in the year under consideration will be determined by finding out the total payments made during the F.Y. 2012-13 on this score, as reduced by the payments made in respect of packages sold up to the F.Y. 2011-12. To put it simply, the AO will bifurcate total Escrow Disbursement payment of ₹ 20,76,35,244/- made during the year into the amount of Escrow Incentive in respect of packages sold during the year itself and incentive for the packages sold in earlier years. Deduction of Escrow incentive for the year will be allowed only in respect of the packages sold during the year because for the packages sold in earlier years, the assessee has already availed deduction at the time of creation of the EDP in such earlier years. We, therefore, set-aside the impugned order on this count and remit the matter to the file of the AO for re-determining the amount of deduction accordingly Disallowance of the difference between the Escrow Disbursement Provision and Escrow Disbursement Payment - A.Y. 2014-15 - HELD THAT:- In view of our decision rendered supra for the A.Y. 2013-14, we set-aside the impugned order and remit the matter to the file of the AO for allowing deduction of Escrow incentive on the basis of payment made during the year for a sum of ₹ 14.34 crore, as reduced by the payments pertaining to the packages sold in the years prior to and including the financial year relevant to the A.Ys. 2012-13. The reason for such a reduction is that the assessee got deduction up to the A.Y. 2012-13 on the basis of creation of the EDP and hence payments made during the year under consideration out of such provisioned amounts cannot again qualify for deduction. However, for the A.Y. 2013-14, we have directed to grant deduction on payment basis, the consequence of which is that the Incentive paid during the year under consideration pertaining to the sale of packages during the financial year relevant to the A.Y. 2013-14, will also qualify for deduction on payment basis. However, it is clarified that in case the total disallowable amount of Escrow Disbursement for the year under consideration exceeds ₹ 1.99 crore, as disallowed by the AO in the assessment order, the disallowance will be restricted to such a level because the Tribunal has no power to order enhancement. We, therefore, set-aside the impugned order and remit the matter to the file of the AO for doing the exercise of allowing deduction of Escrow Incentive. Appeals are allowed for statistical purposes.
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2022 (3) TMI 1071
Late deposit of employees' contribution to ESI PF - Scope of amendment - HELD THAT:- It is not in dispute that employees' contribution to ESI and PF had been deposited well before the due date of filing of return of income u/s. 139(1). It is a consistent position across various Benches of the Tribunal including Chandigarh Benches [ 2021 (11) TMI 1017 - ITAT CHANDIGARH] that the amendment which has been brought in by the Finance Act, 2021 shall apply w.e.f. assessment year 2021-22 and subsequent assessment years and the impugned assessment year being assessment year 2019-20, the said amendment cannot be applied in the instant case. Therefore, addition made by the CPC towards the deposit of employees' contribution towards ESI and PF paid before the due date of filing of the return of income u/s. 139(1) of the Act, is hereby directed to be deleted. Decided in favour of assessee.
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2022 (3) TMI 1070
Disallowance of ESI PF contribution being employees' share of contribution under section 36(1)(va) - case of the assessee that employees' share of ESI has been paid before the due date for filing of return u/s. 139(1) - HELD THAT:- In this case there is no dispute that the assessee made payment of the Employees share of PF/ESI on or before the due date for filing return of income for AY 2017-18 u/s. 139(1) of the Act. The next aspect to be considered is whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of this order on identical issue the tribunal has taken a view that the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act, deserves to be deleted. Assessee received a sum from the Government of Karnataka - Karnataka Government, with a view to promote efficiency of public enterprises in Karnataka and to encourage pay dividends regularly to the Government, announced an award called Chief Minister's Annual Ratna Award - HELD THAT:- From perusal of the proceedings of the Government of Karnataka dated 29.12.2016, it is clear that the award was given for the criteria of earning sustained profits. For 3 Financial Years, dividends should be paid to the Government and significant CSIR activities should have been undertaken each year. The requirements of section 10(17A) of the Act are that award should have been instituted in public interest by Central Government or State Government. The criteria for exemption under section 10(17A) of the Act is therefore public interest which is absent in the present case and therefore we confirm the order of the CIT(A). Credit for TDS was denied because of the mismatch in Form 26AS - HELD THAT:- It appears that the assessee has a physical TDS certificate as per Form 16A. The CBDT in its instruction No. 5/2013 dated 08.07.2013 has taken a view that when physical certificates are produced, credit should be given in the absence of details in the Form. Mismatch in Form 26AS should not be a ground for denying credit on TDS. We therefore remand the issue to the AO for taking cognizance of Form 16A and give credit for TDS in accordance with law.
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2022 (3) TMI 1069
Addition u/s 36 - late payment of ESI/PF - actual ESI and EPF payments were made before the due date of filing the ITR - HELD THAT:- CIT(A) has referred to the amendment brought in by the Finance Act, 2021 wherein an explanation has been introduced to Sections 36(1)(va) and u/s. 43B of the Income Tax Act. It is a consistent position across various Benches of the Tribunal including Chandigarh Benches [ 2021 (11) TMI 1017 - ITAT CHANDIGARH] that the amendment which has been brought in by the Finance Act, 2021 shall apply w.e.f. assessment year 2021-22 and subsequent assessment years and the impugned assessment year being assessment year 2019-20, the said amendment cannot be applied in the instant case. Therefore addition made by way of adjustment while processing the return of income u/s. 143(1) so made by the CPC towards the deposit of employees' contribution towards ESI and PF paid before the due date of filing of the return of income u/s. 139 of the Act, is hereby directed to be deleted. - Decided in favour of assessee.
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2022 (3) TMI 1068
Undisclosed cash credit - unexplained cash deposits made in his various bank accounts during the previous year - HELD THAT:- Since, the AO has accepted the turnover as well as Net-Profit shown by the appellant in his return of income, merely on the basis of making of deposits in bank accounts, no addition can be sustained specially in a circumstance when the appellant has fully explained the sources of each and every deposits made in his bank accounts and has also substantiated such sources with the documentary evidences. We find that by furnishing the various documentary evidences, the appellant has satisfactorily explained each and every cash deposit made by him in his bank accounts, AO could neither find any specific defect or discrepancy in the explanation of the appellant or any of the documentary evidences so furnished by him and also during the course of the survey proceedings carried out in the assessee s premises, no incriminating material for the year under consideration was found and even the AO has not made reference of any of the materials found during the course of the survey. We also find from the various statements furnished by the assessee that out of the total cash deposits made by the assessee in his bank accounts during the relevant previous year, cash deposits have been made out of receipts from customers towards sales/ booking advances and the remaining cash deposits have been made out of the cash withdrawals from bank accounts themselves. Find no infirmity in the finding given by the ld. CIT(A) for deleting the addition made by the AO on account of unexplained cash deposits u/s 68. Additional surrendered income not shown by the assessee in ITR - HELD THAT:- We find that in the instant cases, the ld. AO based upon the material gathered during the course of the survey, has made separate additions and therefore, merely on the basis of the admission of the assessee, without having any other corroborative material on record, no addition could have been made. Accordingly, we find no infirmity in the findings of the CIT(A) in deleting the additions on this count for all the three assessment years. Reopening of assessment u/s 147 - As argued AO was not having/recorded any reason to believe that any income chargeable to tax had escaped assessment - assessee has also challenged the Notice u/s. 148 on the ground that he was not made aware of the purpose of the Notice whether it was for assessment or reassessment or re-computation of the income/loss/depreciation - HELD THAT:- We note that in the case of the assessee, a Survey under s.133A had taken place on 21-09- 2012 and based upon the findings of the survey, a notice under s.148 was duly issued to the assessee after recording the reasons - AO has clearly mentioned in the body of the assessment order that before issuance of the notice, reasons were duly recorded - no infirmity in the action of the AO in invoking the provisions of s.148 in the instant case. We also find merit in the findings given by CIT(A) that since in the instant case, the assessee did not furnish a valid return, within the time prescribed in the notice u/s 148, there was absolutely no necessity for the ld. AO to issue any notice under s.143(2) of the Act to the assessee. - Decided against assessee. Addition of excess expenditure over income - HELD THAT:- Appellant could be able to establish that the sum was received by him out of realization from customers - we also find that by way of furnishing the date wise details of cash withdrawals made by the appellant from his various bank accounts along with the copies of the bank statements, the appellant could said to able to substantiate his claim of meeting the sources of payments noted down in the diaries out of the cash so withdrawn. Upon going through the impounded diaries, the claim of the appellant to the effect that in such diaries, on payment sides, some jottings were made which were not pertaining to payments made to any outsiders, but were only pertaining to the transactions taken in-house i.e. between the clerk/cashier recording the transactions and the appellant or his wife. Thus, in our considered view, the appellant could be able to explain the sources of entire cash payments found noted in the diaries, for the assessment year under consideration. By furnishing ample of the documentary evidences, the appellant could said to be able to explain the sources of receipts jotted down in the diaries. Even otherwise, we find that while making the impugned addition, AO himself has admitted the sources of receipts in the hands of the appellant as noted down in the diaries. AO has made addition only because the sum of receipts made in such diaries was lesser than the sum of the payments so noted. We find that on the basis of the financial statements for the year under consideration, as furnished by the appellant, there is no case of excess or unexplained payment over the explained sources of receipts - In our opinion, the addition so made by the AO has no substance and the same has rightly been deleted unexplained payment over the explained sources of receipts. In such view of matter, in our opinion, the addition so made by the AO has no substance and the same has rightly been by the ld. CIT(A). Enhancement of income made by the CIT(A) - HELD THAT:- We find that the assessee is in the business of real estate development and in such business, without finding any instance of receipt of any on-money, suppression of sales cannot be estimated. We note that neither the ld. AO nor the ld. CIT(A) could bring on record any specific instance in which the sales were not found recorded or fully recorded in the books of account of the assessee. We find that in the instant case, the assessee himself while furnishing his returns of income, has declared additional income . If the total taxable business income shown by the assessee in his returns of income are compared with the total turnover of the assessee, for A.Y. 2012-13, it works out to be 13.73% and for A.Y. 2013-14, the same works out to be at 22.43% which is quite higher than that estimated by the ld. CIT(A) at the flat rate of 15%. Thus, we find no merit in the action of the ld. CIT(A) in estimating the turnover as well as the net profit rate. Accordingly, the enhancement y made by the ld. CIT(A) for A.Y. 2012-13 and A.Y. 2013-14, are fully deleted Ad-hoc disallowance of various expenses claimed by the assessee - HELD THAT:- Assessee has furnished the copies of the ledger accounts relating to the expenditure - DR could not find any specific defect or discrepancy in the various documentary evidences furnished by the assessee before us. We also find that the assessee has claimed expenditure in his Profit Loss Accounts in respect of project development expenses, salary to staff, office rent, power electricity, bank charges, brokerage Commission, advertisement etc. as per the details given in the Schedules to the audited Profit Loss Accounts filed before us - Nature of all the expenses are those which are necessarily required to be incurred by a real estate developer during the course of his business. Assessee has shown net profit @13.73% for A.Y. 2012-13 and @22.43% for A.Y. 2013-14 and considering the nature of business of the assessee, the same can be said to be quite reasonable. We find that during the Remand Proceedings, the ld. AO could not bring on record any specific expenditure which according to her was not allowable or was not supported by documentary evidences. The ld. AO merely on the guess work, has made the disallowance which is not permissible in the eyes of the law. Thus, we find no infirmity in the action of the ld. CIT(A) in deleting the entire ad-hoc additions. Bogus sundry creditors and advances against properties shown by the assessee - HELD THAT:- Appellant could be able to establish the receipt of advances from various customers during the year under consideration. The appellant submitted that during the course of remand proceedings, he had furnished the details of advances lying as opening balance, details of advances received during the respective years giving break-up of advances received through banking channels and in the form of cash and as also, closing balances of creditors before the AO. Such details were also furnished before us during the course of the appellate proceedings. We also find merit in the contention of the appellant that since for the earlier years, he had opted for presumptive taxation under section 44D of the Act and therefore, he was not statutorily required to maintain any books of account but, mere non-maintenance of books of account for earlier years cannot, ipso facto, result into non-acceptance of claim of the appellant as regard to existence of the opening balance of creditors. The provisions of section 68, although not invoked properly by the AO without examining any books of account, also require the AO to examine each and every credit entry independently and any ad-hoc lump-sum addition, by taking a certain percentage of the total creditors, is neither warranted nor permissible Assessment order passed u/s 144 of the Act passed by the AO without serving any valid notice under s.143(2) - HELD THAT:- We find ourselves in agreement with the findings of the ld. CIT(A) that during the course of the assessment proceedings as well as the first appellate proceedings, the assessee was given sufficient opportunity of being heard. We also find that on merits, the assessee has already been given substantial relief in respect of the entire additions made by the ld. AO in his order of assessment for A.Y. 2013-14 and therefore, the ground raised by the assessee has become academic in nature.
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2022 (3) TMI 1067
Assessment of trust as Association of Persons (AOP) - Claim of revenue expenditure from the addition of gross receipt - Exemption u/s. 10(23C) denied - appellant trust was not registered u/s 12AA - HELD THAT:- In absence of registration u/s.12AA of the Act, the assessee has to be treated as an AOP for the purpose of calculation of tax liability in the hands of the assessee. In this situation, as per normal accounting principles and keeping in view the preposition rendered in the case of Shri Vaishnav Polytechnic College Govern by VSK Market Tech Educational Society [ 2020 (11) TMI 309 - ITAT INDORE] all incidental expenditure incurred by the assessee during the relevant financial period, wholly or exclusively for the purpose of marking or earning such income/receipts has to be allowed as per provisions of section 57(iii) of the Act and this legal provision has not been controverted by Ld. SR DR. Assessee, at Bar, has pleaded that since the total income of the assessee trust is ₹ 97,40,810/-, which is below ₹ 1,00,00,000/-, the audit report is not required in this case. He also vehemently pointed out that no audit report has been filed alongwith the e-return. Therefore, the presumption of Ld. CIT(A) that the assessee trust must have filed audit report, is not based on any documentary evidence furnished before us. However, the remaining amount i.e. receipts of income has to be treated as surplus for the purpose of taxation in the hands of the assessee for the relevant assessment year. Hence, the AO is directed to allow the expenditure incurred During the relevant period. Appeal of the assessee is allowed.
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2022 (3) TMI 1066
Difference in closing stock held by the assessee as on the date of search, when compare to book stock - HELD THAT:- Assessee has substantiated average mark-up of 32% with necessary evidences including sample purchase invoices, as per which, the average mark-up on various products ranges from 32% to 47.5%, whereas, the AO has taken average mark-up of 25% on the basis of mark-up allowed in other group concerns' case, but such rate is not supported with any evidences. There is no reason for the AO to deviate from the method followed by the Investigation Wing to quantify excess stock held by the assessee as on the date of search by allowing mark-up on tag price of 32% when the assessee has justified mark-up of 32% on tag price of closing stock held as on the date of search. The estimations made by the AO on difference in mark-up price of closing stock is purely on suspicion and surmises basis, without any evidence to suggest that the assessee is having average mark-up of 25% on all goods. Therefore, we are of the considered view that the AO is erred in making additions towards difference in mark-up price of closing stock by allowing 25% average mark-up of closing stock on tag price to determine closing stock as on the date of search. CIT(A) after considering relevant facts has rightly directed the AO to allow average mark-up of 32% to arrive at cost price of closing stock as on the date of search. Hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground taken by the Revenue. Disallowance of employees' contribution to PF u/s. 36(1)(va) r.w.s. 43B - HELD THAT:- The coordinate Bench in the case of M/s. Adyar Anand Bhavan Sweets India Pvt. Ltd. v. ACIT [ 2021 (12) TMI 558 - ITAT CHENNAI] had considered an identical issue and the Tribunal after considering the amendments to Sec. 36(1)(va) of the Act by the Finance Act, 2020 w.e.f. 01.04.2021, held that amendment inserted to Sec. 36(1)(va) of the Act, is prospective in nature which is applicable from the AYs 2020-21 onwards - we are of the considered view that there is no error in the findings given by the Ld. CIT(A) to delete the additions made towards disallowance of employees' contribution to PF u/s. 36(1)(va) r.w.s. 43B of the Act. Hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground taken by the Revenue.
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2022 (3) TMI 1065
Disallowance of interest on loans and advances - AO disallowed the interest expenses on the ground that the advances have been given by the assessee for purposes unrelated to business activities and the assessee has given interest free loans and advances to related parties out of the interest bearing fund - HELD THAT:- From the perusal of the above schedule it can be observed that all the loans and advances are in the nature of Advance against material services, Security Deposits, MAT Credit, Balance with statutory/government Authority etc and are business advances and as such are related to business purposes. As such the observation made by the Assessing officer that advances are not for business purposes are contrary to the facts on record. Balance sheet of the assessee company for FY 2013-14 as per which the shareholder fund and as such the appellant has sufficient non-interest bearing fund. Thus, the assessee has been found to be having enough own non-interest bearing fund. Hence, we hold that no disallowance is called for on account of loans and advances given is called for. Ad hoc disallowance of expenses - AO disallowing 10% of total expenses under the head brokerage and commission and while disallowing 10% of expenses under various heads (like packing material consumed, electricity water, equipment hire charges, communication expenses, freight forwarding, business promotion expenses, legal professional charges, stock handling supervision charges, clearing forwarding charges etc) observed that the assessee has not submitted the documentary evidence - HELD THAT:- The said observation made by the AO that the assessee has not provided the documentary evidence in respect of expenses is contrary to the facts on record. In this regard the assessee submitted all the documentary evidence with the submission filed during assessment proceedings. CIT(A) held that the disallowances are simply made on ad hoc basis without pointing out any defects in the books of the assessee or any other specific short coming. The expenses that are duly vouched and audited cannot be summarily disallowed. Such a disallowance cannot be sustained in absence of any valid basis. The disallowances are liable to be deleted. Thus the disallowances were made on ad hoc basis, we decline to interfere with the order of the Ld. CIT(A). - Decided against revenue.
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2022 (3) TMI 1064
TDS u/s 195 - Levy of interest under 201 (1)/201 (1A) - assessee was held to the assessee-in-default for want of TDS and it was also saddled with interest for the said default - payment was predominantly towards cost of parts and small portion towards fitment and repair charges. The expenditure so incurred was reimbursed by the assessee to non-resident distributors on actual basis - HELD THAT:- The services have been carried as well as utilized outside India. There is nothing on record that any of the payees has any permanent establishment in India. Therefore, as held by the bench M/s Nissan Motors India Pvt. Ltd. [ 2018 (3) TMI 1956 - ITAT CHENNAI] there would be no obligation for assessee to deduct tax at source. We also concur with the submissions of Ld. AR that the warranty obligation being part and parcel of sales transactions and therefore, the same could not be held to be fees for technical services . Therefore, considering the fact of the case, we direct Ld. AO to delete the impugned demand as raised against the assessee. - Decided in favour of assessee.
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2022 (3) TMI 1063
Assessment u/s 153A - Deduction u/s 80IB(10) - HELD THAT:- As during the course of search proceedings no incriminating material was found which could question the genuineness of claim u/s 80IB (10) of the Act made by the assessee - Accordingly, grounds regarding deduction u/s 80IB(10) raised in assessee s appeals stand allowed. Claim of deduction u/s 80IB(10) for A.Y.2009-10 to 2011-12 - CIT(A) after taking into consideration the permission granted by the local authority and completion certificate obtained by the assessee within the prescribed time limit has allowed the claim - HELD THAT:- We find that the Revenue could not controvert the factual findings recorded by the learned CIT(A) by bringing any contrary material on record. We find that the Ld. CIT(A) rightly allowed the deduction u/s 80-IB(10) on the ground that the completion certificate was obtained by the assessee within the prescribed time and all other conditions were satisfied and as such, the assessee is entitled to the said deduction. Thus, we do not find any reason to interfere with the findings of the learned CIT(A). We confirm the order of CIT(A) on this point. Accordingly, grounds regarding issue of deduction u/s 80IB(10) raised in the departmental appeals for the Assessment Years 2009- 10 to 2011-12 stand dismissed. Disallowance of payment to sub-contractor - CIT disallowed the whole payment on the ground that the identity of the sub-contractors has not been proved - HELD THAT:- We find forced in the contention of the Learned Counsel for the assessee submitted that the payments are genuine and no disallowance should have been made. Regarding the bills, bank statements of the contractors found at the premises of the assesse, we find that some of the contractors were illiterate and the bills were given by them after part completion of the work, therefore, the blank letter heads and the vouchers were available at the premises of the assessee. Thus, the presence of these documents at the premises of the assessee should have not been considered as bogus payments as these contractors have the PAN and also operating their bank accounts which proved the identities. Therefore, the disallowance on this point was not justified. Regarding the disallowance of 10% from the other payments, we find that the contractors had worked and the TDS was made from the payments but the Assessing Officer unjustifiably disallowed these payments on the ground that the source of the expenditure is not satisfactorily explained. However, the Assessing Officer failed to consider the fact that it was not an undisclosed expenditure but the amounts were debited in the books of the assessee and the source was proved and verifiable from the books of accounts. Thus we decide the issue in favour of the assessee as TDS wherever applicable were made, the payments were genuine, the assessee explained the presence of documents in question and source of the expenditure was also satisfactorily explained as the said amounts were debited in the books of the assesse. Accordingly, grounds raised in the appeals of the assessee.
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Insolvency & Bankruptcy
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2022 (3) TMI 1062
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The copy of the Application filed under Section 9 by the Appellant has been brought on the record where under Part-IV, it has been clearly mentioned that debt fell due on 30.12.2016. Application was filed beyond three years from the date when debt fell due. The submission which has been pressed by the Appellant is regarding extension of limitation by virtue of the e-mails dated 26.03.2017 and 27.04.2017. The mere fact that the e-mail was received that the matter shall be looked into. The use of exact words I have asked Mahesh to look into your case on priority and I am hopeful you will have a resolution soon . The above expression cannot be read any acknowledgment within the meaning of Section 18. Subsequent mail which is of 27.04.2017 which is written by one of the employees of the Corporate Debtor at Page 45 of the paper book cannot be treated to be acknowledgment by the Corporate Debtor within the meaning of Section 18 by the Corporate Debtor - Explanation (a) to Section 18 has no applicability in the facts of the present case nor any benefit can be claimed by the Appellant on the basis of explanation (a). The Application filed under Section 9 by the Appellant could not have been entertained and has been rightly rejected by the Adjudicating Authority - appeal dismissed.
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2022 (3) TMI 1061
Seeking voluntary dissolution of Company - section 59 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 (IBBI Regulations) - HELD THAT:- This Bench had directed that notice be issued to the RoC. Pursuant to the service of the notices to the ROC, ROC has filed their status report dated 06.08.2021 and had no objection qua acceptance of the present Application. Necessary compliances of Section 59 and other relevant provisions of the Insolvency and Bankruptcy Code, 2016 read with the regulations have been made within time. More specifically, the submission of the Form GNL-2 to the ROC, after realisation and distribution of the assets to its members and closure of the Bank account. In view of the necessary compliances made and satisfaction accorded by the voluntary liquidator, the present company is hereby stands dissolved with effect from the date of the present order - the present petition for voluntary Liquidation stands allowed.
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2022 (3) TMI 1060
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It appears that four invoices totalling 11,987.45 were raised by the Operational Creditor for legal services rendered to the Corporate Debtor. Three invoices dated 05.01.2015, 13.07.2015, 06.10.2015 are beyond the period of limitation of three years but the invoice raised on 31.03.2016 of 1382 (equivalent to ₹ 11,03,745.75) is within the limitation. Though, no reply was given by the Corporate Debtor on Demand notice dated 16.11.2018, issued by the Operational Creditor, but the Corporate Debtor has already raised the dispute in respect of the quality of services provided by the Operational Creditor through an e-mail reply in response to the email of Sterling wherein the Corporate Debtor had undertaken to pay the outstanding amount, if remaining work is completed by the Operational Creditor. It is also noted that affidavit regarding no dispute is not on record, and also the proof of delivery is not on record. The proof of delivery is required under Section 8 of the IBC, 2016 - there is a pre-existing dispute in respect to the services provided by the Operational Creditor - This application is rejected and disposed of.
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2022 (3) TMI 1059
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 corporate debtor has raised a pre-existing dispute as stated in its reply by sending debit note by way of 'Journal Voucher' dated 31.03.2018 which was sent to the applicant much prior to issuance of the demand notice under Section 8 dated 18.06.2019. Moreover, the corporate debtor had engaged a third party to complete the remaining work at the project site. There is 'Pre-existing dispute' which was raised by the corporate debtor on 31.03.2018 which is much prior to the issuance of demand notice dated 18.06.2019 served under section 8 of the Code. It is reiterated that the claim of the applicant has not been acknowledged by the corporate debtor and in fact there is a debit note issued by the corporate debtor with remarks for providing unsatisfactory services provided by them. Hence, the corporate debtor has to engage a third party to complete the work and the applicant was directed to remove its belongings from the project site w.e.f. June 2017. Thus, it is established on record that there is preexisting dispute between both the Applicant and Respondent. Hence, the Applicant failed to prove it's claim against the Corporate Debtor. The present petition stands rejected with no order to costs.
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2022 (3) TMI 1058
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Whether the Operational Creditor is entitled for the refund of the training costs of ₹ 25,00,000/- along with interest? - deduction of TDS - HELD THAT:- A demand notice was issued calling upon the Corporate Debtor to pay the outstanding amounts. The demand notice dated 13.02.2020 does not specify the amounts that are due. It specifies that a demand notice is enclosed but no such enclosure is found with the said demand notice. The enclosed demand notice is nothing but the application filed before the Tribunal in Form-5. A reply notice was issued on 18.02.2020 stating that the Operational Creditor joined service with effect from 29.06.2015 and continued till 28.02.2017 and that he paid ₹ 25,00,000/- as training costs and he completed the training hence, he is not entitled for the refund of the said amount. When there are disputed question of facts pertaining to the manner and period of training this Tribunal does not have the jurisdiction to decide the same. Whether the Corporate Debtor is due any amount to the Operational Creditor and whether he has committed default of the same? - HELD THAT:- It is not disputed that the Operational Creditor has voluntarily resigned from the service. Clause - 6 (F) (iv) is clear with regard to the obligations in case of resignation of Pilot. The resignation is tendered on 28.02.2017. The full and final settlement of accounts shows that the amount payable thereunder was mentioned. The same is filed by the Operational Creditor himself from which it can be understood that the said amount was received by the Operational Creditor. TDS dues for the month of January February, 2017 - HELD THAT:- Since the salaries are not paid to the Operational Creditor. The TDS amounts are not credited to the account is the argument of the Corporate Debtor's Counsel which is cogent. When it is found that no salaries are due, the question of paying interest would not arise hence, claim for interest is also rejected. There is no dispute that except for the months of January February, 2017 the salaries pertaining to the period prior to the date of termination are paid. Pre-existing dispute or not - HELD THAT:- It can be seen that the contention of the Corporate Debtor is not that there is any dispute with regard to the payments that have to be made to the Corporate Debtor. The contention is that there is no due at all to the Operational Creditor - Form the material brought before the Tribunal it is found that no amount is due to the Operational Creditor. Petition dismissed.
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PMLA
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2022 (3) TMI 1057
Seeking grant of regular bail - money laundering - proceeds of crime - forged documents - diversion/siphoning off of the funds - twin test laid down under Section 45 of PML Act satisfied or not - HELD THAT:- Section 45(1) of the PML Act imposed two conditions before bail could be granted to a person accused of an offence punishable for a term of imprisonment for more than three years under Part A of the Schedule attached to the PML Act. As per these conditions, before grant of bail, the Public Prosecutor was required to be given an opportunity to oppose the plea for bail and that where the Public Prosecutor opposed such plea, the Court could order release of the accused on bail only after recording a satisfaction that there were reasonable grounds to believe that the person to be released was not guilty of the offence he was accused of and that while on bail he was not likely to commit any offence. The constitutional validity of the aforesaid provisions imposing the twin conditions for grant of bail, came up for consideration of the Hon'ble Supreme Court in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR. [ 2017 (11) TMI 1336 - SUPREME COURT] the Hon'ble Supreme Court, after holding that the prescribed twin conditions for release on bail were violative of Articles 14 and 21 of the Constitution, declared Section 45(1) of the PML Act, as unconstitutional, to that extent. It is well settled principle of law that when the investigation is complete and the charge-sheet is filed in the Court, conclusion of the trial is likely to take a long time, a person/accused like the petitioner, who is aged about 53 years, can be released on bail, subject to his furnishing bail/surety bonds and with a condition that his passport shall remain deposited with the Court/Prosecuting Agency and he will not leave the country without seeking prior permission of the Court - After considering the entire matter and in particular that investigation is the case is complete and a complaint has already been filed by the E.D.; the petitioner has been in custody since 26.07.2021 and that the properties of the petitioner have already been attached, this Court is of the opinion that the present petition deserves to be allowed. Ordered accordingly. Bail granted subject to conditions imposed - application allowed.
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Central Excise
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2022 (3) TMI 1056
Maintainability of application - Confiscation of seized vehicle alongwith the goods - alternative remedy available under the U.P. Excise Act, 1910 for filing civil appeal against the order of confiscation of vehicle - HELD THAT:- It is relevant to mention that clause (e) of sub-Section (1) of Section 72 of U.P. Excise Act, 1910 provides that whenever an offence is punishable under this Act, every animal, cart, vessel or other conveyance used in carrying such receptacle or package shall be liable to confiscation. The power of confiscation of vehicle has been given to the Collector of the District and sub-section 7 of Section 72 provides appeal against the order of confiscation under sub-section 2 or sub-section 6 of Section 72 to the Judicial Authority as the Government may appoint. There is no dispute that as per provisions of Section 72(7) of U.P. Excise Act, 1910, against the order of confiscation passed by the District Magistrate, Civil Appeal would lie before the District Judge of the respective District - the instant application is not liable to be entertained on account of having alternative statutory remedy available to the applicant - Application dismissed.
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CST, VAT & Sales Tax
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2022 (3) TMI 1055
Restoration of penalty - at the time of interception, the e-sugam was not tendered and was furnished subsequently - Section 64(1) of Karnataka Value Added Tax Act, 2003 - HELD THAT:- The SLP is dismissed.
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2022 (3) TMI 1054
Refund of excess Input Tax Credit - purchases from dealers covered by the Deferment Scheme, 2005 notified under section 62 of HP VAT Act - presumptive taxation - HELD THAT:- Sub section 7(c)(iii) of section 11 of the Act specifically bars the claim of ITC by a purchasing dealer who has purchased goods in the State from a registered dealer who either opted to pay lump-sum amount in lieu of tax by way of composition under section 16(2) or presumptive tax under section 7, therefore, glance at provisions of section 7 and section 16(2) of the Act becomes necessary to assess the applicability of said provisions in the facts of the case - In the facts of the case in hand, there is nothing to suggest that the selling dealer i.e. M/S Samana Industries had opted to pay presumptive tax or had ever paid it. Applicability of section 16(2) - HELD THAT:- From the conjoint reading of Section 7 and Section 16(2) of the Act and Rule 45 of the rules, it is clear that a registered dealer under the Act has option to pay presumptive lump-sum tax under Section 7 or by way of composition under Section 16(2) in the manner as prescribed in Chapter VI of the Rules. Importantly, by virtue of Rule 45(6), the dealer opting to pay the lump-sum is not liable to issue tax invoices under Section 30 - It is not understandable as to under what assumption, learned Tribunal has upheld the order of the Commissioner by placing reliance upon Section 16(2) of the Act. Again, there is nothing on record to suggest even remotely that the selling dealer M/s Samana Industries Ltd. had opted to pay lump-sum tax for the year 2010-11. The findings recorded by learned Tribunal in this behalf can easily be termed to be non- speaking being bereft of any reasoning. The lump-sum payment of composite tax under Section 16(2) of the Act in no way can be equated with the powers of State under Section 62(5) of the Act as both have separate and distinct fields of operation. There cannot be any overlapping between the two provisions, therefore, disallowance of ₹ 17,06,715/- payable from ITC to the petitioner by invoking the provisions either of Section 7 or Section 16(2) of the Act is wholly illegal and against the mandate of law - It is held that the payment of presumptive tax under Section 7 or lump-sum tax by way of composition under Section 16(2) of the Act read with Rules 45 to 50 of the rules have their application in the specific field expressly contemplated in the Act and cannot be expanded to include deferment of tax notified under Section 62(5) of the Act. There is no dispute on facts that the selling dealer i.e. M/s Samana Industries Limited had initially availed the benefit of deferred payment subsequently converted to upfront payment of 65% of the payable amount by virtue of provisions of notification dated 26.07.2005 - deficit, if any, of 35% in receipt of tax suffered by the State was its voluntary Act under a scheme formulated by it. Such deficit to the State coffers cannot be made basis for penalizing the petitioner who was not at fault. The petitioner was entitled to refund of entire amount of ITC to the tune of ₹ 82,15,821/-. Dis-allowance of ₹ 17,06,715/- from payable amount of ITC to the petitioner as ordered by learned Commissioner vide order dated 28.05.2012 and upheld by learned Tribunal vide order dated 29.08.2015 is held to be wrong, illegal and against the provisions of VAT Act and rules framed thereunder - the instant revision petition is allowed.
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Indian Laws
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2022 (3) TMI 1093
Power of State Government to levy tax on Lotteries - Legislative competence to enact the Kerala Tax on Paper Lotteries, Act, 2005 - interpretation to the expression betting and gambling in Entries 34 and 62 of List II of the Seventh Schedule of the Constitution of India - whether the lotteries organised by the Government of India or Government of a State , which is a subject in Entry 40 of List I also encompasses the power to levy tax on the said lotteries? - whether under Entry 62 of List II the State Legislature is denuded of the power to levy tax on the said subject? - whether, the legislature of States of Karnataka and Kerala had the legislative competence to enact Karnataka Act, 2004 and Kerala Act, 2005 respectively? HELD THAT:- Following summary of conclusions are arrived at:- (i) That the subject betting and gambling in Entry 34 of List II is a State subject. (ii) From the judgments of this Court, it is now clear that lotteries is a species of gambling activity and hence lotteries is within the ambit of betting and gambling as appearing in Entry 34 List II. (iii) The expression betting and gambling is relatable to an activity which is in the nature of betting and gambling . Thus, all kinds and types of betting and gambling fall within the subject of Entry 34 of List II. The expression betting and gambling is thus a genus it includes several types or species of activities such as horse racing, wheeling and other local variations/forms of betting and gambling activity. The subject lotteries organised by the Government of India or the Government of a State in Entry 40 of List I is a Union subject. It is only lotteries organised by the Government of India or the Government of State in terms of Entry 40 of List I which are excluded from Entry 34 of List II. In other words, if lotteries are conducted by private parties or by instrumentalities or agencies authorized, by Government of India or the Government of State, it would come within the scope and ambit of Entry 34 of List II. (iv) Thus, the State legislatures are denuded of their powers under Entry 34 of List II only to the extent of lotteries organised by the Government of India or the Government of a State, in terms of Entry 40 of List I. In other words, except what is excluded in terms of Entry 40 of List I, all other activities which are in the nature of betting and gambling would come within the scope and ambit of Entry 34 of List II. Thus, betting and gambling is a State subject except to the extent of it being denuded of its powers insofar as Entry 40 of List I is concerned. (v) Entry 62 of List II is a specific taxation Entry on luxuries, including taxes on entertainments, amusements, betting and gambling . The power to tax is on all activities which are in the nature of betting and gambling, including lotteries. Since, there is no dispute that lotteries, irrespective of whether it is conducted or it is organised by the Government of India or the Government of State or is authorized by the State or is conducted by an agency or instrumentality of State Government or a Central Government or any private player, is betting and gambling , the State Legislatures have the power to tax lotteries under Entry 62 of List II. This is because the taxation contemplated under the said Entry is on betting and gambling activities which also includes lotteries, irrespective of the entity conducting the same. Hence, the legislations impugned are valid as the Karnataka and Kerala State Legislatures possessed legislative competence to enact such Acts. (vi) Thus, the scope and ambit of lotteries organised by Government of India or Government of State under Entry 40 of List I is only in the realm of regulation of such lotteries. The said Entry does not take within its contours the power to impose taxation on lotteries conducted by the Government of India or the Government of State. (vii) We also hold that lottery schemes by the Government of other States are organised/conducted in the State of Karnataka or Kerala and there are express provisions under the impugned Acts for registration of the agents or promoters of the Governments of respective States for conducting the lottery schemes in the State of Karnataka and the State of Kerala. This itself indicates sufficient territorial nexus between the respondents States who are organising the lottery and the States of Karnataka and Kerala. (viii) In view of the aforesaid conclusions, we find that Division Benches of the High Courts of Kerala and Karnataka were not right in holding that the respective State Legislatures had no legislative competence to impose tax on the lotteries conducted by other States in their State (in the State of Karnataka and Kerala respectively). The appeals filed by the State of Karnataka and State of Kerala and others are allowed.
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2022 (3) TMI 1053
Dishonor of Cheque - funds insufficient - difference in drawer s signature - cheque issued for discharge of any legally outstanding amount or in discharge of any debt or was given by the petitioner to the respondent as a security pursuant to a memorandum of understanding executed by the parties - Section 138 of NI Act - HELD THAT:- The contention of the petitioner that in the instant case offence under Section 138 of the NI Act is not constituted because the cheque was dishonoured on account of difference in signatures and not for the reason of insufficiency of funds or exceeding the arrangement, deserves to be rejected. It is clear that an offence under Section 138 of the NI Act is constituted when a cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge of any debt, is returned by the bank unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank - it appears that it is only in two situations that Section 138 of the NI Act is attracted, firstly when there are insufficient funds available in the bank account of the person who is drawing the cheque and secondly where it exceeds the arrangement. It is clear that even if it is assumed that the petitioner had issued the cheque in favour of respondent as a security, still then it cannot be stated that no offence is made out, once the cheque issued by him has been dishonoured by the banker. Even otherwise, the questions whether the petitioner had issued the cheque as a security pursuant to the memorandum of understanding executed between the parties and whether at the time when the cheque was presented for its payment, it was not for discharge of any debt or any other liability cannot be determined either by the trial Magistrate at the time of taking of cognizance or by this Court in these proceedings. These are defences available to the accused/petitioner, veracity whereof can be determined during the trial of the case. The petition is found to be devoid of merit and the same is, accordingly, dismissed.
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2022 (3) TMI 1052
Dishonor of Cheque - insufficient funds - legally enforceable debt or not - alteration in the date of the cheque so as to bring it within the validity period - Rebuttal of presumption - HELD THAT:- Section 139 of the N.I.Act enables the Courts to raise a presumption that the holder of a cheque received the cheque, of the nature referred to in Section 138, for the discharge, in whole or in part, of any debt or other liability. It is for the accused to prove that it was not issued for any legally enforceable debt. True it is that accused need not step into witness box to prove that there was no legally enforceable debt. He can prove it from the cross-examination of the witnesses and other evidence that there was no legally enforceable debt. In the case at hand, except alleging that there was alteration in the date, nothing has been brought on record to show that there was no legally enforceable debt. Report of the Handwriting Export was received indicating therein that there was alteration - in the cross-examination also, accused could not bring on record that there was no legally enforceable debt for issuance of cheque. The learned Additional Sessions Judge has also given cogent reasons for rejecting this argument of the accused. Revisional Court cannot re-appreciate evidence unless it is shown that the findings of the learned trial Court and the learned Appellate Court are perverse. It cannot be said that the findings of the learned trial Court and learned Appellate Court are perverse. Therefore, there are no infirmity in the appreciation of evidence made by the learned trial Court and the learned Appellate Court. It cannot be said that the learned Additional Sessions Judge has given cogent reasons. No documentary proof was placed on record to show that accused is a handicapped person. His age shown to be 55 years. Thus, at the time of deciding the appeal, he was not even Senior Citizen. Therefore, the leniency shown by the learned Additional Sessions Judge was wholly unwarranted - In the case at hand, the learned Additional Sessions Judge awarded a fee-bite sentence. Smt.Kulkarni, learned counsel for the complainant is right in contending that accused did not pay the amount since the year 2004 and if deterrence of punishment of imprisonment is removed, there is no possibility of the accused paying the amount. Award of sentence should be to give proper effect to the object of the legislation. By awarding fee-bite sentence, object of Section 138 of the N.I.Act is frustrated. Therefore, the learned Appellate Court committed error in setting aside the substantive sentence. Criminal Revision application is allowed.
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2022 (3) TMI 1051
Dishonor of Cheque - rebuttal of presumption - Section 118 and Section 139 of the NIA - Section 138 of the NI Act, 1881 - HELD THAT:- The present applicant has preferred appeal against the judgment and order of the trial court before the District and Sessions Court vide Criminal Appeal No. 26 of 2021 wherein, at the first time, in paragraph no. F of the appeal memo, grievance was raised by the appellant as per the judgment of the Hon'ble Apex Court, applicant was entitled to claim for the interest at the rate of 9% p.a. That, the lower appellate court, after hearing the a parties, discussed issue in para 9 of the judgment and dismissed the appeal of the present applicant and partly confirmed the order of the trial court. It was further ordered that respondent no. 2/original accused shall pay amount of ₹ 1 lac by way of fine and out of this amount, ₹ 50,000/- shall be given to the present applicant by the respondent no. 2 by way of compensation. It appears that no special circumstances were shown by the present applicant allegedly extended at the relevant point of time. For the first time before the lower appellate court, grievance was raised by the present applicant that he was not awarded interest at the rate of 9% p.a. as per the judgment - in absence of any special circumstance, trial court as well as lower appellate court has committed no error by not awarding any interest at the rate of 9% p.a. as prayed by the present applicant. Revision dismissed.
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2022 (3) TMI 1050
Dishonor of Cheque - amicable settlement of disputes between the parties - Section 138 of NI Act - HELD THAT:- Having gone through the material placed on record, it has emerged that the applicant has been convicted by the concerned Criminal Court for the offence punishable under Section 138 of the N.I. Act. However, now, the parties have amicably settled the dispute and, therefore, the complainant has filed an affidavit stating that if the order of conviction passed against the applicant is quashed and set aside, he has no objection. When the parties have settled the dispute amicably, compounding of the offence is required to be permitted. Accordingly, the application is allowed - Respondent No.2 filed a complaint under Section 138 of the N.I. Act for dishonour of the cheque amounting to ₹ 25,036/-. Therefore, as per the decision rendered by the Honourable Supreme Court, the applicant is required to deposit 15% of the amount of the cheque with the Gujarat State Legal Services Authority.
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2022 (3) TMI 1049
Dishonor of Cheque - insufficient funds - discharge of legally enforceable debt or not - time limit for issuance of demand notice - whether the complaint petition was filed within the prescribed period or it was not a complaint in the legal sense as it was filed prior to the date on which cause of action arose? - HELD THAT:- Keeping in view the ratio laid down in the case of SUBODH S. SALASKAR VERSUS. JAYPRAKASH M. SHAH ANR [ 2008 (8) TMI 795 - SUPREME COURT] , when a demand notice was sent through the Advocate of the petitioner on 18.01.2013 and neither the acknowledgment nor the envelope containing demand notice returned back, then the due service date would be thirty days from the date of issuance of legal notice which falls on 17.02.2013 and as per the clause-(c) of 138 of the N.I. Act, the opposite party was required to make payment in terms of the said notice within fifteen days thereafter i.e. on 04.03.2013. Since the complaint petition was filed on 16.02.2013 and cognizance of offence was taken on such complaint, in view of the ratio laid down in the case of YOGENDRA PRATAP SINGH VERSUS SAVITRI PANDEY ANR. [ 2014 (9) TMI 1129 - SUPREME COURT] , such a complaint is no complaint in the eyes of law and no cognizance of offence can be taken up on the basis of such complaint. There are no perversity or illegality in the same - there are no reasons to grant leave to the petitioner to prefer an appeal against the order of acquittal passed by the learned Appellate Court as per impugned judgment - petition dismissed.
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