TMI Tax Updates - e-Newsletter
April 3, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Highlights / Catch Notes

• GST:

  Provisional attachment - It is not open for the respondent to attach the bank accounts of other persons on a mere assumption that the funds therein are owned by any taxable person - The attachment of bank accounts is a draconian step and such action can only be taken in case conditions specified in Section 83 of the Act, are fully satisfied - HC
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• GST:

  Refund of unutilized input tax credit - zero rated supply of goods - Constitutional Validity of provision of Rule 89(4) (C) of the CGST Rules - the impugned Rule 89(4)(C) is arbitrary and unreasonable, in as much as the possibility of taking undue benefit by inflating the value of the zero-rated supply of goods, cannot be a ground to amend the Rule, which deserves to be declared invalid on this ground also. - HC
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• GST:

  Levy of GST - sale of commercial super built up area on behalf of MoHUA, Government of India - the appellant is selling the commercial built-up space to the private entities and this activity cannot be treated as a function of Municipality, as envisaged under article 243W of the Constitution of India which provides powers, authority and responsibilities of the Municipalities. Moreover, the commercial built-up spaces are for the purpose of sale to individual buyers who will use them for their commercial gain and this by no stretch of imagination this can be termed as a facility meant for use of common public. - AAAR
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• Income Tax:

  Unexplained cash credit in the bank account u/s 68 - Addition on excess sales - there cannot be such abnormal jump in the sale all of sudden. - To avoid the possibility of revenue leakage instead of entire difference in sales the profit element should be taxed. Hence, we direct the assessing officer to treat 25% of profit on the excess sales identified by AO. - AT
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• Income Tax:

  MAT - inclusion of "transition amount" u/s. 115JB (2C) while computing the book profit - Zero Coupon OFCDs - There will not be any transition amount which requires any adjustment in the book profit as per section 115JB (2C) of the Act. It is important to note that as discussed herein above, the capital liability and financial liability are two different concepts and Ld Pr. CIT has confused with the above two concepts and treated the capital liability as disclosed by the assessee as part of Composite Income in the schedule to the Other Equity. - no adjustment is required in the book profit u/s 115 JB (2C) - AT
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• Income Tax:

  Fees for Technical Services - Reimbursement of salary and other related costs - the salaries of such seconded employees were deposited in their overseas bank accounts, which were reimbursed by the Indian entity on a cost-to-cost basis and the seconded employees were working solely under the control and supervision of the Indian entity, thus hold that the amounts paid by GIPL to the assessee with reference to seconded employees does not come within the 'FTS' or 'FIS' under the Act or under DTAA. - AT
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• Income Tax:

  Exemption u/s 11 - Assessee has violated section 11(2)(b) r.w.s. 11(5) - Only the relevant income falling within the mischief of section 13(1)(d) of the Act will lose the benefit of exemption under section 11 and 12 of the Act and the balance of the total income of the trust will remain eligible for the benefit of exemption under section 11 of the Act. - AT
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• Income Tax:

  Validity of the re-opening of the assessment - non-issuance of notice u/s. 143(2) - In the absence of such notice, it is presumed that AO did not issue any notice u/s. 143(2) of the Act, hence the assessment was framed without meeting the requirement of law. - assessment order quashed being bad in law - AT
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• Income Tax:

  Disallowance u/s. 40(a)(i) towards the salary cost reimbursed by assessee to AE on cost to cost basis - in the event, TDS has been deducted u/s. 192 of the Act, no disallowance can be made u/s. 40(a)(i). Section 40(a)(i) can be invoked only when there has been non-deduction of tax at source - AT
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• Income Tax:

  Revision u/s 263 by CIT - properties received as gift from brother - applicability of provisions of Section 56(2)(vii)(b) and 50C - the AO did not carry out the necessary enquiries/verification during the course of original assessment proceedings, we find no infirmity in the observations of the Principal CIT that the assessment order is erroneous and prejudicial to the interests of the Revenue. - AT
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• Income Tax:

  Transfer pricing (TP) adjustments - The method adopted by the TPO suffered from the defect of the comparing uncomparable chemicals, using an average variation between the ALP and the actual price in two different chemicals, using the same as the variation in the ALP of the ten different chemicals. - We are of the view that the CUP method suffered from multiple infirmities and was not a most appropriate method for the transactions pertaining to the year under consideration. - AT
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• Customs:

  Valuation of imported goods - Motorcycle and Alloy Wheels 18 inches & 19 inches - enhancement of value - As the re-determined amount was accepted by the customs house representative of the appellant, there was no necessity for the Assessing Officer to pass a speaking order. - AT
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• Customs:

  Classification of imported goods - imports of all parts of air-conditioner in CKD/SKD (except capacitors) - It is concluded that imported air-conditioner kits in CKD/SKD condition, as described above have acquired the essential characteristics of an air-conditioner and therefore, when presented together at the stage of assessment under common invoice and bill of entry would merit classification under Heading 8415 - AAR
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• Customs:

  Classification of import goods - Indra Smart Pro” EVSE (Electrical Voltage Supply Equipment) - It emerges that Heading 8537 squarely covers the device involved in this application for advance ruling. Under such circumstances, the device under consideration does not merit classification under Heading 8543. as suggested by the applicant, which is a residual entry and cannot take precedence over a specific heading - AAR
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• Corporate Law:

  Seeking restoration of name of the company in the Register of Companies (ROC) - A perusal of Section 10A as also Section 252(3) of the said Act would show that the delay ultimately is condonable upon the payment of monetary penalty in terms of Section 10A. Even the standards that have been stipulated for restoration of the company by the NCLT is if the NCLT feels it is just that the name ought to be restored or if the company was carrying on business and was in operation. - HC
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• Indian Laws:

  Dishonour of Cheque - guarantor's liability - The petitioner, being stood as a guarantee for the aforesaid two companies, was not liable to pay any amount to the respondent and nothing warranted for the petitioner to issue cheque for any enforceable debt in favour of the respondent herein. Therefore, the alleged cheque was not issued for any legally enforceable debt and the petitioner cannot be held to be liable for the offence punishable under Section 138 of the Negotiable Instruments Act. - HC
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• Indian Laws:

  Dishonour of Cheque - cheque issued as security - Since factum with regard to advancement of loan to the tune of Rs. 1.00 lac stands established on record and same was never repaid, cheque issued as security, if any, could be well presented by the complainant before the bank concerned for encashment. - By now it is well settled that dishonour of cheque issued as security can also attract offence under Section 138 of the Negotiable Instruments Act. - HC
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• Indian Laws:

  Foreign Trade Policy 2023 announced - FTP 2023 is a dynamic and open ended Policy
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• Service Tax:

  Refund of Service Tax - principles of unjust enrichment - As per the work orders, service tax was to be borne by the appellant and the Commissioner (Appeals) has also found, as a fact, that the contract awarded by the Housing Board to the appellant mentions that service tax shall be borne by the contractor - Commissioner (Appeals) was, therefore, not justified in rejecting the refund claim of the appellant on the ground of unjust enrichment. - AT
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• Central Excise:

  Cash refund of cess credit - The "taking" of the input credit in respect of Education Cess and Secondary and Higher Education Cess in the Electronic Ledger after 2015, after the levy of Cess itself ceased and stopped, does not even permit it to be called an input CENVAT Credit and therefore, mere such accounting entry will not give any vested right to the Assessee to claim such transition and set off against such Output GST Liability after 01.07.2017 - Refund not allowed - AT
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• Central Excise:

  Interest on delayed refund - relevant date - order under challenge has wrongly restricted the entitlement of appellant for the interest on the refunded amount to the date w.e.f. the date of filing of appeal. The appellant in view of settled principles is held entitled for the interest on the refunded amount of Rs.50.00 Lakhs from the date of the respective deposit - AT
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Articles

• Interest u/s 36(1)(iii) allowed as deduction even for purchase of Capital Asset.
• INOPERATION OF PERMANENT ACCOUNT NUMBER AND ITS CONSEQUENCES
• Exemption of LTCG cannot be denied on residential property acquired by other than sale deed
• Notice issued without sufficient reasons to initiate reassessment is not sustainable

Notifications

• Central Excise

• 15/2023 - dated 31-3-2023 - CE
  Effective Rate of Duty of excise - High speed diesel (HSD) - Seeks to amend Notification No. 11/2017-Central Excise, dated the 30th June, 2017

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• Customs

• 20/2023 - dated 31-3-2023 - Cus
  Effect to the first tranche of India UAE CEPA - Amendment in Notification No. 22/2022-Customs, dated the 30th April, 2022

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• 19/2023 - dated 31-3-2023 - Cus
  Exemption to specified imports into Republic of India from Republic of Mauritius - Implementation of India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA)- Amendment in Notification No. 25/2021-Customs, dated the 31st March, 2021

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• 23/2023 - dated 31-3-2023 - Cus (NT)
  Courier Imports and Exports (Electronic Declaration and Processing) Amendment Regulations, 2023

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• 22/2023 - dated 31-3-2023 - Cus (NT)
  Courier Imports and Exports (Clearance) Amendment Regulations, 2023

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• 21/2023 - dated 31-3-2023 - Cus (NT)
  Seeks to bring in force provisions of Sections 128, 131 and 135 of the Finance Act, 2023

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• 20/2023 - dated 31-3-2023 - Cus (NT)
  Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

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• DGFT

• 64/2015-2020 - dated 31-3-2023 - FTP
  Amendment in Import Policy Condition under Chapter 29 of ITC (HS) 2022, Schedule - I (Import Policy)

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• GST

• 09/2023 - dated 31-3-2023 - CGST
  Extension of time limit specified u/s 73(10) for issuance of order u/s 73(9) of the CGST Act for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilised - 3 notifications modified

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• 08/2023 - dated 31-3-2023 - CGST
  Waives the amount of late fee referred to in section 47 of the CGST Act

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• 07/2023 - dated 31-3-2023 - CGST
  Delay filing Annual return - Amenity benefit provided in respect of fee referred u/s 47 of the CGST Act - Conditions notified.

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• 06/2023 - dated 31-3-2023 - CGST
  Special procedures for assessment order deemed to be withdrawn for registered persons who failed to furnish a valid return within a period of thirty days from the service of the assessment order issued on or before the 28th day of February, 2023.

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• 05/2023 - dated 31-3-2023 - CGST
  Exemption from Biometric-based Aadhaar authentication u/r 8(4A) - Seeks to amend Notification No. 27/2022-Central Tax, dated the 26th December, 2022

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• 04/2023 - dated 31-3-2023 - CGST
  Central Goods and Services Tax (Amendment) Rules, 2023

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• 03/2023 - dated 31-3-2023 - CGST
  Revocation of cancellation of registration where registration has been cancelled on or before the 31st day of December, 2022

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• 02/2023 - dated 31-3-2023 - CGST
  Waiver of amount of late fee payable under section 47 of CGST Act - Seeks to amend Notification No. 73/2017– Central Tax, dated the 29th December, 2017

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• 01/2023 - dated 31-3-2023 - GST CESS
  Seeks to bring in force provisions of section 163 of the Finance Act, 2023

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• 02/2023 - dated 31-3-2023 - GST CESS Rate
  Rate of goods and services tax compensation cess - Rate of cess as specified that shall be levied on the intra-State supplies or inter-State supplies - Seeks to amend Notification No. 1/2017-Compensation Cess (Rate), dated the 28th June, 2017

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• Income Tax

• 16/2023 - dated 1-4-2023 - IT
  Exemption from specified income U/s 10(46) -‘Bhadohi Industrial Development Authority’ an Authority constituted by the state government of Uttar Pradesh, Notified

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Circulars / Instructions / Orders

• DGFT - 01/2023 - dated 1-4-2023
  The Handbook of Procedures, 2023 notified

Case Laws:

• GST

• 2023 (4) TMI 48
  Provisional attachment of the savings bank accounts of the petitioners - It is the petitioners case that they are neither taxable persons nor persons covered under Section 122(1A) of the Central Goods and Services Tax Act, 2017 - jurisdiction of impugned order - allegation of fake firms involved in passing off fake Input Tax Credit - Section 83 of GST Act - HELD THAT:- Concededly, in the present case, the petitioners are not taxable persons or persons as specified in Section 122(1A) of the Act - The petitioners have also annexed the statement of account which indicates that over a period of 9 years, ₹12.62 crores had been withdrawn from the account of petitioner no. 1 in favour of M/s Hindustan Paper Machinery Industry or Mr. Rajiv Chawla. The statement also indicates that the petitioner no. 1 had received ₹6,05,50,000/- during the aforesaid period. It is not necessary for this Court to examine the nature of the payment made by Shri Rajiv Chawla to the petitioners. Clearly, the same cannot be a subject matter of adjudication in these proceedings. However, it is clear that the petitioners are not taxable persons. The power under Section 83 of the Act, to provisionally attach assets or bank accounts is limited to attaching the bank accounts and assets of taxable persons and persons specified under Section 122(1A) of the Act. The impugned order cannot be sustained. It is not open for the respondent to attach the bank accounts of other persons on a mere assumption that the funds therein are owned by any taxable person - The attachment of bank accounts is a draconian step and such action can only be taken in case conditions specified in Section 83 of the Act, are fully satisfied. The exercise of power under Section 83 of the Act must necessarily be confined within the limits of the aforesaid provision. The order dated 06.02.2023 in so far as it attaches the bank accounts of the petitioners is set aside - Petition allowed.

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• 2023 (4) TMI 47
  Principles of natural justice - primary grievance of the Petitioner is that Petitioner was not given adequate opportunity to defend the show cause notice and has prayed that an opportunity may be given - HELD THAT:- It is found that request of the Petitioner was not entirely unreasonable. Had the opportunity of two weeks sought for granted to the Petitioner, this petition would not have arisen at all. In these circumstances, an opportunity needs to be given to the Petitioner. The Impugned order dated 23 March 2022 is quashed and set aside - The show cause notice dated 15 February 2002 stands restored - petition disposed off.

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• 2023 (4) TMI 46
  Constitutional Validity of provision of Rule 89(4) (C) of the CGST Rules, as amended vide Para 8 of Notification 16/2020-CT dated 23.03.2020 and Explanation to Rule 93 of the CGST Rule - refund of unutilized input tax credit - zero rated supply of goods - HELD THAT:- The entire concept of refund of unutilized input tax credit relating to zero-rated supply would be obliterated in case the respondents are permitted to put any limitation and condition that takes away petitioner s right to claim refund of all the taxes paid on the domestic purchases used for the purpose of zero-rated supplies. The incentive given to the exporters would lose its meaning and this would cause grave hardship to the exporters, who are earning valuable foreign exchange for the country. It should be noted that exporters would have factored in such incentives in the pricing mechanism when they quote and therefore, the restriction of the same would be highly unreasonable, given the objective of the Government that exports should be zero rated and taxes should not be exported - It is also well settled that if the government perceives that there could be a possibility of abuse of a provision, it should adopt measures to keep a check on the same; however, the law cannot be amended on the premise of distrust. It is also relevant to note that in the GST Council Meeting, it was stated that the FOB value of exports will not be changed, which would mean that there is no doubt about the valuation of the goods; therefore, if there is no doubt about the value of the goods, the artificial restriction of refunds by taking the value of domestic supplies seems irrational. Further, the policy of the Government itself will have to satisfy the test of rationality and must be free from arbitrariness and discrimination. In DEPUTY COMMISSIONER OF INCOME TAX ANR. VERSUS M/S. PEPSI FOODS LTD. (NOW PEPSICO INDIA HOLDINGS PVT. LTD.) [ 2021 (4) TMI 369 - SUPREME COURT] , the Apex Court held that the expression permissible policy of taxation would refer to a policy that is constitutionally permissible. If the policy is itself arbitrary and discriminatory, such policy will have to be struck down. As rightly contended by the learned Senior counsel for the petitioner, the impugned Rule 89(4)(C) is arbitrary and unreasonable, in as much as the possibility of taking undue benefit by inflating the value of the zero-rated supply of goods, cannot be a ground to amend the Rule, which deserves to be declared invalid on this ground also. Thus, the impugned Rule 89(4)(C) of the CGST Rules, 2017 as amended vide Para 8 of the Notification No.16/2020-Central Tax dated 23.03.2020 deserves to be declared ultra vires and invalid and consequently deserves to be quashed - petition allowed.

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• 2023 (4) TMI 45
  Constitutional Validity of Rule 117 of Jharkhand Goods and Services Tax Rules, 2017 - ultra vires to Section 140 of the Jharkhand Goods and Services Tax Act, 2017 or not - period of limitation for claiming of Input Tax Credit (ITC) in Form GST TRAN-1 - HELD THAT:- The petitioner has already filed revised TRAN-I during window period granted by the Hon ble Supreme Court in the case of UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER ]. Having regard to the fact that the grievance of the petitioner has already been redressed in view of the judgment rendered by the Apex Court in the case of Filco Trade Centre Pvt. Ltd. and another, writ petition is disposed of.

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• 2023 (4) TMI 44
  Levy of GST - sale of commercial super built up area on behalf of MoHUA, Government of India - Appellant is also supplier of service while selling such commercial built-up space as an agent on behalf of the Government of India in the colonies under redevelopment - sale of commercial built-up space - sale of built-up space for which part of the consideration was received prior to 01.07.2017, and partly on or after 01.07.2017 - consideration received under an agreement to sell constructed units in a building which is under construction. Liability to pay GST on the sale of commercial super built up area on behalf of MoHUA, Government of India - HELD THAT:- Supplier means any person supplying the goods or services or both and it also includes an agent. The definition of agent includes a commission agent, broker etc. acting as such on behalf of supplier in relation to the goods or services or both. Combined reading of the definitions of both the supplier and the agent as given in section 2(5) and Section 2(105) respectively of the CGST Act, 2017 makes it clear that the appellant is an agent of MoHUA as they are in the business of supply of commercial built-up space on behalf of later. Therefore, he is a taxable person as defined under Section 2(107) of CGST Act, 2017 and is liable to discharge the tax liability as per statutory provisions - It is clear from the Explanation (i) to Section 22 and Clause (vii) of Section 24 of the CGST Act, 2017, that the appellant is required to be registered while acting as an agent for supply of services and is a taxable person as per Section 2(107) of the CGST Act, 2017. Therefore, the responsibility to collect and/ or deposit GST on the taxable supply of goods or services as an agent of MoHUA lies with the appellant, since he is engaged in the sale of commercial built-up area on behalf of MoHUA. Whether or not MoHUA, Government of India, is liable to pay GST on the sale of commercial built-up space? - HELD THAT:- The exemption was granted vide S. No. 4 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as applicable upto 25.07.2018) to the Services by Central Government, State Government, Union territory, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. The said notification was amended vide Notification No. 14/2018-Central Tax(Rate) dated 26.07.2018 and against S. No. 4, in column (3), the words Central Government, State Government, Union territory, local authority or have been omitted. It shows that after the above amendment the exemption under the notification is admissible only if such services are provided by a government authority . There are no force in the claim of the appellant that the functions of Municipalities given in Twelfth Schedule of the Constitution covers construction of commercial built-up space in the redevelopment projects - In the present case, the appellant is selling the commercial built-up space to the private entities and this activity cannot be treated as a function of Municipality, as envisaged under article 243W of the Constitution of India which provides powers, authority and responsibilities of the Municipalities. Moreover, the commercial built-up spaces are for the purpose of sale to individual buyers who will use them for their commercial gain and this by no stretch of imagination this can be termed as a facility meant for use of common public. Whether the appellant is liable to pay GST on the services supplied under GST regime i.e. w.e.f 01.07.2017, even if a part of the consideration had been received prior to 01.07.2017? - HELD THAT:- As per the statutory provisions they are liable to pay GST on the services supplied under GST regime i.e. w.e.f 01.07.2017, even if a part of the consideration had been received prior to 01.07.2017. FAQ on GST in respect of Construction of Residential Complex by Builders/ Developers were issued by the department merely as a clarification. Appellant's liability to pay GST on a consideration received under an agreement involving sale of constructed units in a building which is under construction - HELD THAT:- The appellant has reiterated the plea already advanced before the DAAR and the same have been sufficiently addressed by the authority while passing the impugned Order. Therefore, there are no reason to go to this aspect any further. Appeal dismissed.

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• Income Tax

• 2023 (4) TMI 43
  Income from undisclosed sources - Tribunal held that an amount of Rs.1 lac was rightly added as income of the assessee from undisclosed source as this was reflected by the assessee as NRE gift - HELD THAT:- After the order by the appellate authority (Annexure A-3) and before the Tribunal, the assessee had got relief of Rs.6,15,291/- by deleting the said amount from his income. On a meager amount of Rs. 1 lac, the petitioner filed an appeal before this Court. There is no ground to entertain this appeal as income of Rs. 12 lacs as declared by the petitioner has been accepted and deletion of Rs.6,15,291/- has already been made by the Tribunal The argument of the learned counsel for the appellant that addition of Rs. 1 lac towards income as a gift given by NRE, is liable to be rejected as the petitioner failed to explain its source and genuineness of the gift. No substantial question of law.

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• 2023 (4) TMI 42
  Prosecution u/s 276B read with Section 278B - rental and other payments made by the petitioner were subject to tax deduction but the tax deducted had not been deposited into the treasury as statutorily required - argument of the petitioner is that while admittedly there was some delay in remitting of taxes deducted in a significant number of instances, the rental and other amounts had been outstanding in some cases and in such an instance, the question of tax deduction does not arise. HELD THAT:- The assessee had been given multiple and more than sufficient opportunities to explain its case before the authorities which were not assailed. It is only now, before this Court, that the petitioner pursues the explanation tendered in reply dated 23.03.2015. Revenue points out that there are admitted instances of delay and also that he is right. However, it is also a fact that the legal argument put forth by the petitioner in response dated 23.03.2015 has not been taken note of by the respondents. Thus, to balance the interest of both parties, as permit the petitioner to appear before the respondent on Friday i.e., 24.03.2023, without awaiting any further notice, on which date the respondents shall be heard on the legal submission. The impugned orders are set aside. Orders, as above shall be passed within a period of two weeks.

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• 2023 (4) TMI 41
  Addition u/s 56(2)(viib) of share premium and unexplained cash credits u/s.68 - HELD THAT:- The factual position is hardly found to be any different qua the former issue of sec.56(2)(viib) addition(s) as well wherein both these assessees have not filed all the requisite details, and more particularly, the justification for having received varying sums of exorbitant share premium. We make it clear that this statutory provision casts onus on the concerned taxpayer to justify its share premium vis- -vis fair market value as per the prescribed methods. It is in this backdrop that we note from a combined perusal of both these case files that not only the assessees have failed to file all the supporting evidences during the course of assessments dated 23.03.2016 but also in remand proceedings before the Assessing Officer in light of CIT(A)'s corresponding directions. We, therefore, adopt judicial consistency in this factual backdrop and affirm both the learned lower authorities action making these twin additions u/s.56(2)(viib) and that of unexplained cash credits u/s.68 - Decided against assessee.

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• 2023 (4) TMI 40
  Unexplained cash credit in the bank account u/s 68 - Addition on excess sales - Profit of excess sales - correct method to compare monthly sales with the previous year s monthly sales - HELD THAT:- Abnormal sales in the month of October 2016 created doubt in the mind of lower authorities. The explanation of assessee about exceptional jump in the sales particularly in cash sales was that market is governed by various factors like agriculture sales, festivals and marriage seasons, was also not accepted by lower authorities. As independently considered such facts and find that there cannot be such abnormal jump in the sale all of sudden. However, facts remained the same that the lower authorities have not investigated the fats from the details of purchaser provided by the assessee. Therefore, avoid the possibility of revenue leakage instead of entire difference in sales the profit element should be taxed. Hence, we direct the assessing officer to treat 25% of profit on the excess sales identified by AO. To make it more clear, 25% of addition is treated as profit of the assessee qua the alleged unidentifiable sales. In the result, ground of the appeal is partly allowed. Addition u/s 115BBE - As directed the assessing officer to taxed the profit element only. The addition which is sustained to that extent be treated on account of business income and be taxed under normal provisions of the Act. Hence, ground No. 4 of the appeal is allowed.

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• 2023 (4) TMI 39
  Revision u/s 263 - revenue allowed 80P deduction claim representing interest derived from deposits made in cooperative banks - HELD THAT:- We find merit in assessee s arguments in light of this tribunal s recent order in Rena Sahakari Sakhar Karkhana Ltd. [ 2022 (1) TMI 419 - ITAT PUNE ] as held A.O while framing the assessment had taken a possible view, and allowed the assessee‟s claim for deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 of the Act for dislodging the same. We adopt the foregoing detailed discussion mutatis mutandis to accept the assessee s arguments. The learned PCIT s revision directions stand reversed. Decided in favour of assessee.

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• 2023 (4) TMI 38
  Penalty u/s 271(1)(c) - concealment of income of LTCG - HELD THAT:- The assessee right from the attending the hearing before assessing officer took the plea that he has already paid the due tax with interest, on the capital gain earned on the sale of his ancestral property. We find merit in the submission of Ld. AR for the assessee that there was no mala fide intention of assessee to evade the tax of conceal part of his income and that assessee before completion of assessment, he accepted such fact and paid due tax - we direct the Assessing Officer to delete the entire penalty levied under section 271(1)(c) of the Act. In the result, the grounds of appeal raised by the assessee are allowed.

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• 2023 (4) TMI 37
  Revision u/s 263 - PCIT observed that AO had allowed the claim made by the appellant society u/s 80P without verification of the claim - appellant society had earned interest income and dividend income on deposits made out of the surplus with other co-operative society or co-operative banks - PCIT was of the opinion that the said income is liable to tax under head Income from other sources under the provisions of section 68 and does not qualify for deduction u/s 80P - Whether the issue of eligibility of interest income earned on investments made with other co-operative banks qualifies for exemption u/s 80P(2)(a)(i) or section 80P(2)(d)? - HELD THAT:- The interest income earned by the co-operative society from investments made out of the surplus fund with other co-operative banks qualifies for deduction u/s 80P(2)(a)(i) or section 80P(2)(d) is not free from the debate, as the very fact there is cleavage of judicial opinion amongst various High Courts clearly establishes that the existence of debate cannot be ruled out. Thus, it is a purely legal debateable issue, which is not amenable to jurisdiction u/s 263 of the Act in view of the discussion made by us supra. Therefore, we are of the considered opinion that the ld. PCIT was not justified in exercising the power of revision u/s 263 in the facts of the present case. Accordingly, the appeal filed by the assessee stands allowed.

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• 2023 (4) TMI 36
  Estimation of profits - Estimation of income @8% on main contracts and 4% on sub-contracts - non rejection of books of accounts - HELD THAT:- . In the present case on hand, if the AO is not satisfied with the explanation given by the assessee, he should have rejected the books of accounts and estimated the profit, according to the facts of the case. The AO ought to have disallowed the quantum of expenditure for which the assessee failed to produce documentary evidence. But the AO failed to do so and he simply without rejecting the books, estimated the profit @8% on main contracts and 4% on sub contracts, which is not permissible under the law. CIT(A) has erred in confirming the order of the AO and arriving at a conclusion that if some vouchers / evidence pertaining to the claim of the assessee are not satisfactorily established before the AO, the AO is not empowered to estimate the profits of the assessee without rejecting the books of accounts. AO ignoring the established provision u/s 145(3), estimated the profit without rejecting the books. Decided in favour of assessee.

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• 2023 (4) TMI 35
  Correct head of income - Chargeability of rental income under the head IFHP or PGBP - Income From House Property (IFHP) v/s Profits and Gains from Business or Profession (PGBP) - HELD THAT:- Leasing out the property is not one of the objects of the business of assessee as could be culled out from the Memorandum of Association. Consequence is that the decision of Chennai Properties and Investments Ltd [ 2015 (5) TMI 46 - SUPREME COURT] has no application to the facts of the case. We accordingly hold that the learned CIT(A) is right in rejecting the contention of the assessee and maintaining the chargeability of rental income under the head IFHP. Grounds relating to this issue are dismissed. Commencement of business - Assessee incurred expenditure relating to printing and stationery, audit fee, filing fee, miscellaneous expenses etc., which according to the learned AO are not specifically related to the business. Learned Assessing Officer further held that the Income from House Property cannot be equated to business income. We, however, are of the considered opinion that in commencement of business the assessee purchased the property and the rent is a by-product. We, therefore, accept the contention of the assessee that they have commenced their business. Processing fee and interest addition - We held that the assessee commenced its business - in order to claim any deduction towards interest or the processing fee in the nature of interest, the assessee must have acquired a business asset. No dispute that there is neither work in progress nor any stock in trade shown by the assessee in their books. Only some advance was given for acquiring the property in Hyderabad. Giving advance for acquiring a property cannot be equated to the acquisition of the property. Acquisition of property for business purpose means such property must be available to the assessee to be dealt for its business purposes, namely, to carry on the business of real estate s dealers, estate owners etc. Unless and until the assessee purchased the property in Hyderabad, it cannot be said that they are in a possession to use such property for the purposes of carrying out their business. Mere giving advance towards the property in Hyderabad will not entitle the assessee to deal with such property for the purposes of their business and, therefore, it cannot be said that the assessee acquired such property. Till the property is acquired by the assessee and ready for use for carrying out the business purposes, the interest or the processing fee in the nature of interest has to be capitalised and it cannot be claimed as deduction as revenue expenditure . No illegality or irregularity in the findings of the learned CIT(A) and restricting the processing fee and the interest to the extent the borrowed amount was used for repayment of the debt is incurred to acquire the Bangalore property and to disallow the rest of it, holding that at best it can be capitalised.

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• 2023 (4) TMI 34
  Revision u/s 263 by CIT - instruments, viz., convertible debentures issued by the Assessee is required to be included in the transition amount u/s. 115JB (2C) while computing the book profit - financial instruments under consideration are compound financial instruments (CFI) - action of the AO in not applying section 115JB(2C) of the Act to the transition amount has rendered the Assessment order erroneous in so far as it is prejudicial to the interest of the Revenue - whether the instruments (ZOFCDs and FCDs) in question are CFI or not? - HELD THAT:- If the issuer has an unconditional right to avoid delivering cash, it cannot be classified as a financial liability. In the facts of the case of the Assessee, basis the terms of the Instruments, the issuer (Assessee) has an unconditional right to avoid payment of cash.Hence, this condition is resulting into negative for financial liability . In the statement of equity for the year ended 31st March 2017 under the head other equity , the assessee has taken optional convertible debentures and Zero Coupon unsecured fully convertible debenture of Rs. 10 each., which are in the nature of capital liability or capital debt to the company until the same is not fully converted into Equity. There is no corresponding financial liability of such convertible debentures have been shown in the financial statement or in the profit and loss account. Though from the perusal of the financial statement, we find that assessee has shown debt/equity instruments through other comprehensive income which is though not the correct presentation of the debt instrument, because as stated above, the debt instrument has to be classified separately alongwith other capital liability on such instruments. Nothing turns out on such presentation as one thing which is clearly borne out from the financial accounts and facts of the case is that, in so far as Zero Coupon OFCDs and OFCDs in the case of assessee did not have any kind of financial liability to classify it as Compounding Financial Instrument and in turn to quantify the same as transition amount. As already noted in the earlier part of our order that Zero Coupon OFCDs issued on 30th June 1995 which was issued at par for Rs. 441.57 crores was converted into 72388770 equity shares in financial year 2020-21 and the total convergence was at par only. Even though it has been redeemed within the year in a very short span of a year, then also there is neither any interest component nor any financial liability in the form of compounding financial instruments or any kind of discounting factor which can be said to be applicable. Nor assessee has claimed in the financial account or treated it as financial liability. The fact that it was redeemed will not take away the character at the time of issuance of Zero coupon OFCDs as both the issuer and investors had understood that it would be converted into equity shares at par and that s the precise reason no financial liability has been recognized on these instruments by the assessee. This aspect of this matter has already discussed in the earlier part of the order. Coming to the 0% fully unsecured debentures issued in the year 1996, they have been bought back by the company during the FY 2016-17 at par and the OFCDs have been cancelled. Even these OFCDs issued in year 1996 for the period of a decade, no financial liability or any interest cost has been taken into profit and loss account even for the purpose of disclosure under the Companies Act. Accordingly, we entirely agree with submissions of the assessee made before us and hold that none of the OFCDs which has been shown in the balance sheet of the assessee under the head Other Equity , there exist any kind of financial liability or interest liability in any manner which can be classified or determined as a transition amount . We have already held above, that as per the definition of Transition amount, the capital reserves are eliminated while making adjustment in book profit, similarly, the CBDT has clarified to eliminate the capital liability like Share Application Money, the composite Amount declared by the assessee has to readjusted to find the net composite amount by eliminating the capital liability, i.e., Convertible Debentures. There will not be any transition amount which requires any adjustment in the book profit as per section 115JB (2C) of the Act. It is important to note that as discussed herein above, the capital liability and financial liability are two different concepts and Ld Pr. CIT has confused with the above two concepts and treated the capital liability as disclosed by the assessee as part of Composite Income in the schedule to the Other Equity. Thus, we hold that no adjustment is required in the book profit u/s 115 JB (2C) by way of transition amount in the case of the assessee. Accordingly, the order of Ld. PCIT u/s 263 is reversed on merits and matter is decided in favour of the assessee. Assessee has contended as noted in para 17 18 of this order that only those receipts which are chargeable to tax as income u/s 2(24) can be included in computation of book profits and capital receipts cannot be brought to tax in computing book profits - Since we have already held that no adjustment is required u/s 115JB (2C) by way of transition amount , no separate finding is warranted on this proposition of the assessee.

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• 2023 (4) TMI 33
  Validity of assessment order passed u/s 143(3) r/w section 254 r/w section 144C(13) - Reimbursement of salary and other related costs by Owens Corning (India) Pvt Ltd (OCIPL) to the Appellant treated as Fees for Technical Services - HELD THAT:- In the 1st round of assessment proceedings, the assessee was asked to show cause as to why the reimbursement of expenses shown as salary and other related costs should not be brought to tax as fees for technical services. It is evident from the record, the AO did not agree with the submissions of the assessee and held the reimbursement of expenses to be nothing but fees for included services under the provisions of the India Canada DTAA as well as fees for technical services under section 9(1)(vii) of the Act. Tribunal remanded the matter to the AO for re-appreciation of correct facts and re-adjudication of the matter in the light of the submissions made on behalf of the assessee It is pertinent to note that the order passed by the AO in the 2nd round of proceedings is pursuant to the remand by the Tribunal and same was not pursuant to any revisionary order or order passed under reassessment proceedings and therefore was required to be confined to the directions of the Tribunal vis- -vis the subject matter of appeal before the Tribunal. It is trite that the appellant cannot be placed in a worse position as a result of filing an appeal It is also trite that the Tribunal has no power under the Act to enhance the assessment in an appeal. In Sanmar Speciality Chemicals Ltd. [ 2018 (4) TMI 745 - MADRAS HIGH COURT] held that since the Tribunal has no power under the Act to enhance the assessment in an appeal, equally, it cannot be done on an order of remand being passed by the Tribunal to the AO. What cannot be done directly cannot be done indirectly. In the present case, there was no finding of the Tribunal, while remanding the matter, as regards the Service PE of the assessee in India and the said finding was an altogether fresh conclusion reached by the AO in an order passed under section 143 (3) r/w section 254 r/w section 144C(13) of the Act, which in our consideration is beyond the direction of the Tribunal and therefore is bad in law and is accordingly set aside. Characterisation of the receipt of reimbursement of expenses as fees for technical services/fees for included services - We find that a similar issue came up for consideration before the coordinate bench of the Tribunal in M/s Google LLC [ 2023 (3) TMI 89 - ITAT BENGALURU] noted that the tax at source under section 192 of the Act against the salary and other allowances paid/payable to the seconded employees were deducted by the Indian company. The coordinate bench further noted that the salaries of such seconded employees were deposited in their overseas bank accounts, which were reimbursed by the Indian entity on a cost-to-cost basis and the seconded employees were working solely under the control and supervision of the Indian entity, thus hold that the amounts paid by GIPL to the assessee with reference to seconded employees does not come within the 'FTS' or 'FIS' under the Act or under DTAA. Thus we direct the AO to delete the impugned addition on account of reimbursement of salary and other related costs received by the assessee. Levy of interest under section 234B - As in view of the decision of Hon ble Supreme Court in DIT v. Mitsubishi Corporation,[ 2021 (9) TMI 875 - SUPREME COURT] the same is rendered consequential in nature and therefore is allowed for statistical purposes.

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• 2023 (4) TMI 32
  Exemption u/s 11 - Activities carried out by the assessee are in the nature of business and are governed by the provisions of section 11 (4) of the Act and the first and second proviso to section 2 (15) - HELD THAT:- As decided in assessee own case [ 2020 (7) TMI 272 - ITAT AHMEDABAD ] the activities carried out by the assessee is for advancement of any other object of general public utility without any intention of the profit motive after considering the provision of the Gujarat Maritime Board Act, 1981 and fact of the case, it cannot be said that the activities carried out by the assessee are in the nature of trade commerce or business. It is observed that predominant object of the assessee is to administer control on miner ports in the State of Gujarat and there is no profit motive as demonstrated by the provision of section 73, 74 and 75 of the Gujarat Maritime Board Act, 1981. The Gujarat Maritime Board is under legal obligation to apply the income which arises directly and substantially from the business held under trust for the development of minor ports in the state of Gujarat. Further after following the decision of Hon'ble Gujarat High Court in the case of AUDA [ 2022 (10) TMI 948 - SUPREME COURT ] and GIDC [ 2017 (7) TMI 811 - GUJARAT HIGH COURT ], the fees collected by the assessee is incidental to the object and purpose of attainment of the main object for development of mining ports as enumerated in the provision of the Gujarat Maritime Board Act, 1981,therefore, we consider that activity of the assessee is for advancement of any other object of general public utility and not hit by the proviso to section 2(15) of the act, therefore, the assessee is entitled for exemption u/s. 11 - Appeal of the assessee is allowed. Assessee has violated section 11(2)(b) r.w.s. 11(5) - violation of provisions of section 11(5) of the Act on the ground that investments were made by the assessee in companies which were not public sector companies as defined in section 2(36A) - HELD THAT:- Only the relevant income falling within the mischief of section 13(1)(d) of the Act will lose the benefit of exemption under section 11 and 12 of the Act and the balance of the total income of the trust will remain eligible for the benefit of exemption under section 11 of the Act. In other words, violation of section 13(1)(d) cannot lead to denial of exemption under section 11 and 12 of the Act, to the total income of the trust. Addition of TDS being outrightly deducted from income available for application purposes - whether the amount deducted as TDS should also be considered for the purpose of application of income? - HELD THAT:- In the case of CIT v. Ganga Charity Trust Fund [ 1985 (10) TMI 67 - GUJARAT HIGH COURT ] held that payment of income-tax by assessee, a charitable trust, was a charge on income or outgoing which ought to be deducted before determining surplus income for purpose of application under section 11(1)(a) of the Act. Again, in the case of CIT v. Jayashree Charity Trust [ 1984 (12) TMI 30 - CALCUTTA HIGH COURT ] the High Court held that where net dividend received by assessee after deduction of tax at source was spent for charitable purposes, assessee was entitled to benefit of exemption on that portion of income which had been taken away by deduction of tax at source even though that amount had not been spent or accumulated for purposes of charity.

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• 2023 (4) TMI 31
  TP Adjustment - comparable selection - Informed Technologies India Ltd. excluded on the ground of low turnover - HELD THAT:- Service income filter which was set by the assessee failed because as per the annual report the other income is more than the service income and not on account of low turnover. Thus the decisions relied on by the ld. Counsel for the assessee has no application to the facts of the case. In view of the above we uphold the directions of the DRP and TPO in excluding Informed Technologies India Ltd. from final set of comparables. R. Systems International - BPO services rejected as this company follows calendar year as against financial year - TPO excluded R. Systems International Ltd. on the ground that this company has different Financial Year ending. The TPO did not reject this company on functional comparability analysis. Thus following the decisions MCKINSEY KNOWLEDGE CENTRE INDIA PVT. LTD. [ 2015 (3) TMI 1226 - DELHI HIGH COURT] and M/S MERCER CONSULTING (INDIA) PVT. LTD. GURGAON [ 2016 (8) TMI 1163 - PUNJAB AND HARYANA HIGH COURT] we direct the AO/TPO to include R Systems International Ltd. - BPO services as comparable company in the final set of comparables. ICRA Techno Analytics Ltd.on the ground that as functionally not comparable to the assessee company - The Bangalore Bench of the Tribunal in the case of Cerner Healthcare Solutions (P.) Ltd. [ 2017 (1) TMI 1491 - ITAT BANGALORE] held that when ICRA Techno Analytics Ltd. is engaged in diversified activities of software development and consultancy, engineering services, web development and hosting and substantially diversified itself into domain of business analysis and business process outsourcing then the same cannot be regarded as functionally comparable with that of the assessee, who is rendering software development services to its AE. Thus, following the decision of the Bangalore Bench of the Tribunal we direct the TPO/AO to exclude ICRA Techno Analytics Ltd. from the final list of comparables. Infosys B.P.O. Ltd. - As in the case of Cadence Design Systems (I) (P.) Ltd. [ 2018 (4) TMI 1574 - ITAT NEW DELHI] Tribunal excluded Infosys B.P.O. Ltd. for the assessment year 2011- 12 holding that it is not as good comparable accepting the submissions of the assessee that Infosys B.P.O. Ltd. is having significantly large operations and is providing high-end integrated services for business platforms, customer service, outsourcing service, functions and accounting on account of resources outsourcing medical process, outsourcing sales and fulfillment, sourcing and procurement outsourcing etc. and also having goodwill of Rs.2.27 crores. We observe that all these factors have not been examined by the TPO while including this company as comparable. Therefore, we restore this comparable to the file of the AO/TPO to re-examine in detail. TCS e-Serve Ltd. - We feel it appropriate to restore this comparable to the file of the AO/TPO and decide in the light of the observations of the Tribunal in assessee s own case for assessment year 2010-11 and also keeping in view various decisions and contentions raised by the assessee on functionality, brand value, intangible assets, extraordinary economic events pointed out in the assessment year under consideration as stated above and decide for the purpose of exclusion/ inclusion from the final set of comparables. Acropetal Technologies Ltd. (Seg) - This company has been considered as a high-end software development company and a KPO services provider and cannot be a comparable to that of a company providing ITES services by the Bangalore Bench Tribunal in the case of S P Capital IQ (India) (P.) Ltd. [ 2016 (7) TMI 1265 - ITAT HYDERABAD ] - Acropetal Technologies Ltd. is having engineering design service segment, which was compared to that of the assessee. The type of services that was being provided by Acropetal Technologies Ltd. was not comparable with the type of services that the assessee is providing. Acropetal Technologies Ltd. was providing high-end services in the engineering design services and whereas the assessee is providing ITES services to its AE. In view of the above, we direct the AO/ TPO to exclude Acropetal Technologies Ltd. from the final set of comparables. Not granting risk adjustment - DR submits that risk adjustment is not allowed automatically and It has to be looked into each and every comparable - HELD THAT:- We are of the view that this issue has to go back to the file of the ld. AO/TPO to decide afresh keeping in view the judgements of various benches after providing adequate opportunity of being heard to the assessee. The TPO shall decide the issue in accordance with law. Working capital adjustment - HELD THAT:- We direct the TPO/AO to re-compute the working capital adjustment keeping in view the directions of the Tribunal and the High Court in assessee s own case. However, in so far as including the income of Philippines PE branch for determining the working capital adjustment, we restore this issue to the file of the AO/TPO to examine afresh in the light of the submissions of the assessee that Philippines PE branch had closed down on 31.03.2010 and no transactions were carried out during the year and, therefore, could not be included to determine the working capital adjustment as there were no transactions and has no relationship with business of the assessee during the year. Disallowance u/s 14A read with Rule 8D - AO applying Rule 8D(2)(iii) made disallowance and while doing so considered even the mutual funds where the dividend is not exempt - HELD THAT:- As contention of the assessee has been dealt with by the DRP by directing the Assessing Officer to exclude those investments which do not yield exempt income to exclude for the purpose of computing disallowance under Rule 8D(2)(iii) and restrict the disallowance only to the dividend income earned. We do not see any infirmity in the order passed by the DRP. Therefore, the grounds raised by the assessee as well as the Revenue on this issue are rejected. DRP considering the forex gain/loss operating in nature for determination of ALP - HELD THAT:- We find that an identical issue has been decided in assessee s own case for the assessment year 2010-11 [ 2015 (11) TMI 1651 - ITAT DELHI ] as affirmed by HC [ 2016 (5) TMI 1434 - DELHI HIGH COURT ] issue stands covered against the Revenue and in favour of the Assessee as held that forex gain/loss in the revenue account is a trading receipt, or, as the case may be, business expenditure, allowable u/s 37(1) of the Act. We, accordingly, direct that the forex gain/ loss be treated as operating income/ loss both in the case of tested party as well as comparable and the PLI should be determined accordingly.

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• 2023 (4) TMI 30
  Validity of order u/s.92CA(3) as barred by limitation - additional ground as stated that since the order of the ld. TPO is barred by limitation, the assessee does not become eligible assessee u/s.144C - HELD THAT:- As relying on Mondelez India Foods Pvt. Ltd [ 2022 (11) TMI 1339 - ITAT MUMBAI] we hold that the order of the ld. TPO dated 01/11/2019 and draft assessment order dated 07/12/2019 as barred by limitation, thereby resulting in assessee not being an eligible assessee u/s.144C(15)(b)(i) of the Act and consequentially the final assessment order is also bad in law. Accordingly, grounds raised by the assessee are hereby allowed.

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• 2023 (4) TMI 29
  Scope of limited scrutiny - Conversion of limited scrutiny to complete scrutiny - CIT(A) upholding the assessment framed by the AO wherein the AO has completed the assessment on the basis of complete scrutiny whereas the notices calling for details and information from the assessee were issued prior to the date on which the approval for complete scrutiny was given under the Act - HELD THAT:- AO has exceeded his jurisdiction in enquiring into those issues beyond the scope of limited scrutiny even prior to the date of conversion which is in clear violation of mandate given by CBDT in the said Circular and has been held by the Co-ordinate Bench of Delhi in the case of Dev Milk Foods Pvt. Ltd. [ 2020 (6) TMI 317 - ITAT DELHI ] to be bad in law. We note that CBDT has in para 4 of the said instruction clarified that in a limited scrutiny, the scrutiny assessment proceedings would initially be confined only to issues and questionnaire, enquiry, investigation etc. would be restricted to such issues in the limited scrutiny. Only upon conversion of such case to complete scrutiny after following the procedure laid down as stated the AO may examine the issues other than the issues involved in the limited scrutiny but in the present case the procedures were not followed and assessment was conducted in violation of this Instruction. In our opinion, the order passed by the AO is bad in law and cannot be sustained for the said reason. Accordingly we quash the assessment order as nullity and bad in law. Issue raised by the assessee in ground no. 1 is allowed.

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• 2023 (4) TMI 28
  Procedure in appeal and powers of the Commissioner [Appeals] - CIT(A) dismissed the appeal on account of non-prosecution of the appeal by the appellant - HELD THAT:- CIT(A) dismissed the assessee s appeal in a summary manner, for non-compliance with the notices of hearing, under the presumption that the assessee had nothing to appeal against the additions made by AO. CIT(A) did not decide the assessee s appeal on merits, and dismissed the appeal in limine. CIT(A) erred in dismissing the appeal of the Assessee in limine in a summary manner and accordingly we direct the Ld. CIT(A) to pass denovo order as per law after providing reasonable opportunity to the appellant assessee, ensuring proper adherence to section 250(6) - Assessee s appeal is partly allowed for statistical purposes.

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• 2023 (4) TMI 27
  Disallowing the claim of brought forward TDS u/s 199 read with rule 37BA - as submitted related income is properly declared in the Income Tax Return and was also appearing in previous Form 26AS of that earlier Assessment Year - HELD THAT:- Considering the totality of the facts and provision of section 199 of the Act and Rule 37BA of the Income Tax Rules, 1962, it would sub-serve the interest of justice, if the matter is restored to the AO who would verify the correctness of the claim of the assessee regarding the income corresponding to brought forward TDS was offered to tax in the concerned Assessment Year. No credit was claimed in respect of the TDS under consideration in the relevant year. If the AO finds that no credit was taken related to the income offered in that particular AY, he would allow the set off of TDS brought forward - Ground raised by the assessee is allowed for statistical purposes.

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• 2023 (4) TMI 26
  Validity of the re-opening of the assessment - non-issuance of notice u/s. 143(2) of the Act - HELD THAT:- The reassessment proceedings initiated by the AO are without due application of mind, and thus, the reassessment proceedings should be quashed as such. AO failed to bring on record notice issued u/s. 143(2) of the Act. In the absence of such notice, it is presumed that AO did not issue any notice u/s. 143(2) of the Act, hence the assessment was framed without meeting the requirement of law. Thus hold accordingly. The case laws relied by the Revenue would not help in view of the fact that AO failed to issue mandatory notice u/s. 143(2) - thus quash assessment being bad in law - Decided in favour of assessee.

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• 2023 (4) TMI 25
  Revision u/s 263 - long term capital gains declared by the assessee u/s. 10(38) - PCIT came to the conclusion that although the assessment has been re-opened for specific purpose of examination on information received from Income-tax Department, Kolkata, but the AO simply completed reassessment by accepting explanation furnished by the assessee without carrying out required enquiries - HELD THAT:- PCIT, it is abundantly clear that the sole basis for the PCIT to invoke his jurisdiction is information received from Income-tax Department, Kolkata on the survey conducted in case of M/s. Onkar Supply Pvt Ltd and statement recorded from Shri. Ashok Kumar Kayan, a broker acted as an entry operator in providing accommodation entries of long term capital gains. Since, the issue is a subject matter of re-assessment proceedings from the Assessing Officer, it can be safely concluded that the AO has verified the issue in light of relevant facts under right perspective of law and concluded that long term capital gains declared by the assessee is genuine and thus, we are of the considered view that there is no scope for the PCIT to set aside the assessment order u/s. 263. No doubt in case where there is complete lack of enquiries, the PCIT is having powers to set aside the assessment order. However, in a case where there is an enquiry, even if said enquiry is inadequate there is scope for the PCIT to step into revise the assessment order. On perusal of facts available on record, at best it can be said that it is not a case of lack of enquiry, but may be case of inadequate enquiry. Therefore, the powers exercised by the PCIT u/s. 263 of the Act is not in accordance with law. Report of investigation wing is not sacrosanct, but what is necessary to decide the issue is whether said transactions are genuine or not, is independent enquiry in light of available materials. In this case, the evidences filed by the assessee before the AO during the re-assessment proceedings clearly shows that long term capital gains declared u/s. 10(38) is nothing to do with survey conducted in the case of M/s. Onkar Supply Pvt Ltd and statement recorded from Shri Ashok Kumar Kayan. Therefore, we are of the considered view that capital gains declared by the assessee from sale of certain shares cannot be considered as bogus only on the basis of report of Income-tax Department. Thus order passed by the AO is neither erroneous nor prejudicial to the interests of the revenue, on the issue of long term capital gains declared u/s. 10(38) - Decided in favour of assessee.

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• 2023 (4) TMI 24
  Short deduction of TDS - demands u/s 201(1) and u/s 201(1A) - common area maintenance charges (CAM) paid by the lessee to the maintenance company - TDS u/s 194I @ 10% OR u/s 194C @ 2% - HELD THAT:- As relying on NIJHAWAN TRAVEL SERVICE PVT. LTD. case [ 2022 (7) TMI 176 - ITAT DELHI] we hold that the assessee was right in deducting tax @ 2% u/s 194C of the Act on payment of Common Area Maintenance charges and the provisions of section 194I of the Act is not applicable to this payment. Therefore, the assessee cannot be treated as an assessee in default and, thus, the assessee is not liable to pay any amount u/s 201(1) and u/s 201(1A) of the Act. Appeal filed by the assessee is allowed.

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• 2023 (4) TMI 23
  TP Adjustment - comparable selection - HELD THAT:- comparables whose turnover is more than 200 crores should be excluded from the list of comparables. Direct AO/TPO to exclude R S Software (India) Ltd., Inteq Software Pvt. Ltd., and Infobeans Technologies Ltd.as they are functionally not comparable with the assessee. Akshay Software Technologies Ltd. ( Akshay ) and Evoke Technologies Private Limited ( Evoke ) excluded on the ground that these companies did not feature in the search matrix of the TPO - As relying on M/S. ARM EMBEDDED TECHNOLOGIES PVT. LTD., VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1 (1) (1) , BENGALURU. [ 2023 (1) TMI 399 - ITAT BANGALORE] we remit this issue back to the AO/TPO for a fresh consideration in the light of the information in public domain and also the various details submitted by the assessee in this regard. Sagarsoft (India) Ltd ( Sagarsoft ) - We also notice that a similar view has been held by the coordinate bench in the case of NTT Data FA Insurance Systems (India) Pvt. Ltd ( 2022 (10) TMI 1153 - ITAT BANGALORE] where the issue was remitted back to the AO/TPO. Accordingly respectfully following these decisions we remit the issue of inclusion of SagarSoft back to the AO/TPO for fresh examination. Needless to say that the assessee may be given a reasonable opportunity of being heard. AO/TPO is directed to recompute the ALP in accordance with the directions given in this order.

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• 2023 (4) TMI 22
  Correct head of income - profit arising on sale of land should not be assessed - Income from capital gains or Income from profits and gains of business - whether asset sold was capital asset.? - HELD THAT:- From the findings of the CIT(A), we find that the asset sold in question was bought in the year 1997 and the industrial shed was constructed for the purpose of giving the said property on rent and the rental income earned on the said property/shed was assessed under the head Income from house property . This fact clearly establishes that the intention of the respondent-assessee is to hold the asset as capital asset . Therefore, no fallacy in the findings of the ld. CIT(A) in holding that the asset sold was a capital asset. Accordingly, this ground of appeal nos.1, 2 stands dismissed. Allowing the cost of construction of the shed as cost of acquisition - Whether CIT(A) had fell in serious error in allowing the cost of industrial shed on said land and also relying upon a new material which was not furnished before the AO during the course of assessment proceeding and without complying with Rule 46A of the Rules? - HELD THAT:- On perusal of the assessment order, it would be evident that this valuer s report was not furnished before the AO during the course of assessment proceedings and, therefore, the ld. CIT(A) ought not to have allowed the cost of construction at 900 per sq. ft. without complying with the provisions of Rule 46A of the Rules. In these circumstances, we remit this ground to the file of the ld. CIT(A) to decide the cost of acquisition based on the valuer s report after giving an opportunity of hearing to the Assessing Officer. Ground of appeal stands partly allowed.

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• 2023 (4) TMI 21
  TP Adjustment - Determination of Net Cost Margin of Appellant - excluding the sub-contracting charges from the operating cost as they are a pass-through cost - HELD THAT:- As decided in own case [ 2022 (6) TMI 1357 - ITAT BANGALORE ] cost on the software development activity is incurred by the assessee and charging the AE on the said services with a mark up of 10% on cost. The cost of subcontracting in software development services is also charged with 10% mark up to the AE. When the margin on the cost of sub- contracting charges is part of the operating revenue of the assessee then only the cost of sub-contracting activity cannot be excluded as pass through - pass through cost can be considered only when the activity of providing services to the AE does not involve value addition on the part of the AE. - the cost of software development services cannot be treated in this fashion as claimed by the assessee. Hence we do not find any merit in the contention raised by the assessee on this issue. Decided against assessee. Comparable selection - Functionally dissimilar companies cannot be held to be functionally comparable with that of assessee which is a captive service provider that caters only to its AE. Interest on receivables - We note that in assessee s own case TPO has considered a credit period of 90 days. Accordingly, we direct the Ld.AO/TPO to compute the notional interest if any that falls out of this credit period for the year under consideration by considering LIBOR + 300 basis points. Disallowance u/s. 40(a)(i) towards the salary cost reimbursed by assessee to AE on cost to cost basis - HELD THAT:- We remand this issue to the Ld.AO to consider the claim in accordance with the decision of Hon ble Karnataka High Court in case of M/s. Flipkart Internet Pvt. Ltd. [ 2022 (6) TMI 1251 - KARNATAKA HIGH COURT ] and M/s. Toyota Boshoku Automotive India Pvt. Ltd. [ 2022 (4) TMI 1443 - ITAT BANGALORE ], Goldman Sachs Services Pvt. Ltd. [ 2022 (4) TMI 1444 - ITAT BANGALORE ] having regard to the evidences filed by the assessee. We also direct that in the event, TDS has been deducted u/s. 192 of the Act, no disallowance can be made u/s. 40(a)(i). Section 40(a)(i) can be invoked only when there has been non-deduction of tax at source. Assessee has relied on the decision of Coordinate Bench of this Tribunal in case of ACIT vs. AON Specialist Services Pvt. Ltd. [ 2020 (2) TMI 1632 - ITAT BANGALORE ] We accordingly direct the Ld.AO to carry out necessary verification in accordance with the decisions referred to hereinabove.

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• 2023 (4) TMI 20
  Levy of late filing fee u/s 234E - processing of statements filed by the assessee u/s. 200A - levy of fee u/s. 234E(1) in respect of statements delivered u/s. 200(3)/206C(3) after 01/7/2012 but before 01/6/2015 - HELD THAT:- For statements furnished after 31/5/2015, any delay relatable to the period after 30/6/2012, could be taken cognizance of. The statement/s u/s. 200(3) having been filed in the instant case/s after 01/06/2015, its processing u/s. 200A(1)(c), determining the amount payable u/s. 234E, admits of no two views (s.200A(1)(d/e/f, as they stand w.e.f. 01/6/2015). The delay taken cognizance of, and with reference to which fee is levied, is in the instant cases covered by the period falling after 31/5/2015. The controversy arising due to the difference in the view of the Hon ble Courts does not attend the instant case, so that the levy in the instant case admits of no two views. The same cannot therefore be regarded as debatable from any stand point, even as we have clarified our view even in case of periods falling after 30/6/2012. We, accordingly, uphold the levy.

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• 2023 (4) TMI 19
  Revision u/s 263 by CIT - properties received as gift from brother - order was passed by AO without making proper enquiries/verification of applicability of section 50C in respect of properties received as gift from brother and given as gift to brother - HELD THAT:- In the present case, where there was transfer of property between the assessee and his brother, the AO should have done more investigation into the facts at the time of assessment on this issue/aspect, which, in our view is missing in the instant set of facts. AO, in a view, should have examined the facts in detail and after due application of mind on the facts should have decided the issue on merits of the applicability of provisions of Section 56(2)(vii)(b) and 50C - from the records, no such investigation was carried out by the AO during the course of assessment proceedings, which, in our view, should have been done in the instant set of facts. AO did not call for the records regarding the transactions/transfer property between the assessee and his brother, and did not investigate into the nature of transaction, which should have been during the course of assessment. We observe that no documents regarding the transfer property were called for or submitted during the course of assessment proceedings. AO did not apply his mind on the applicability of provisions of Section 50C or 56(2)(vii)(b) of the Act in the instant set of facts. We are of the view that says the AO did not carry out the necessary enquiries/verification during the course of original assessment proceedings, we find no infirmity in the observations of the Principal CIT that the assessment order is erroneous and prejudicial to the interests of the Revenue. Principal CIT has not erred in facts and in law in holding that the assessment order is erroneous and prejudicial to the interests of the Revenue. Appeal of the assessee is dismissed.

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• 2023 (4) TMI 18
  Deferred revenue expenditure deduction - Whether said claim is not allowable u/s 37(1)? - HELD THAT:- As identical issue having similar facts has already been decided in favour of the assessee for the A.Y. 2004-05 in assessee s own case as find that the CIT (Appeals) by placing reliance on the relevant decision on the basis of uncontroverted finding of facts recorded therein, has rightly allowed the claim of the assessee. Deduction on account of pre payment charges paid to IDBI - HELD THAT:- As decided in assessee own case AY 2004-05 this expenditure was incurred to save the interest costs for the company and wholly and exclusively for the purposes of the businesses. If the appellant had not done so, it would have paid interest on term loan @14% for the A.Y. 2003-04 and subsequent years.Since the expenditure has been incurred wholly and exclusively for the business purposes and same has been divided for in three years.Keeping in view the ratio laid down in the case of Madras Industrial Investment Corporation Ltd. Vs. Commissioner of Income Tax [ 1997 (4) TMI 5 - SUPREME COURT] , the expenditure is fully allowable - Decided in favour of assessee. Transfer pricing (TP) adjustments - Adjustment made on account of International Transaction - MAM Selection - A.O enhanced the income of the assessee on account of adjustment in arm s length price in respect of excess cost prices paid by the assessee company to its AE and on account of other miscellaneous items - HELD THAT:- The assessee in order to choose reasonable basis of comparing transactions, furnished additional evidences before the CIT(A) in the form of fluctuations in the price of the material purchased i.e. MICA, to supplement its CUP Data and the calculation of ALP. The assessee proposed two additional method being Profit Split Method (PSM) and Transactional Net Margin Method(TNMM), the assessee furnished the relevant additional data in the form of financial statements of the comparable companies. CIT(A) categorically stated that the TPO in his remand report did not raise any objection on the acceptability of additional evidence furnished by the assessee and had provided her comments on merits. Therefore, we do not see any merit in this ground of the Departmental appeal that the Ld. CIT(A) was not right in accepting the additional evidences. CIT(A) by following the judgment of the Special Bench of ITAT Chandigarh in the case of M/s Quark Systems Pvt. Ltd. [ 2009 (10) TMI 591 - ITAT, CHANDIGARH] accepted the additional evidences in the interest of justice. In the instant case while accepting the additional evidences the Ld. CIT(A) not only adopted all fair procedure in granting the TPO sufficient and ample opportunity to examine the evidences, but the TPO also called further informations from the assessee and did not object to the additional evidences furnished by the assessee. Therefore, we are of the view that the Ld. CIT(A) was justified in admitting the additional evidence furnished by the assessee and there was no contravention of Rule 46A of the Income Tax Rule 1962. The method adopted by the TPO also suffered from the defect of the comparing uncomparable chemicals, using an average variation between the ALP and the actual price in two different chemicals, using the same as the variation in the ALP of the ten different chemicals. We are of the view that the CUP method suffered from multiple infirmities and was not a most appropriate method for the transactions pertaining to the year under consideration. Comparables selection - CIT(A) categorically stated that the assessee was manufacturing Cefixime API (Active Pharmaceutical Ingredient) which was also manufactured by those two comparable companies who were competent to the assessee in the open market, therefore, those should be taken as comparable. CIT(A) forwarded the comparable chart of the financial submitted by the assessee in respect of the comparables, to the TPO who in his remand report could not controvert this contention of the assessee that the three companies i.e; assessee and the two comparable namely M/s Aurobindo Pharma Ltd. and M/s Orchid Chemicals Pharmaceuticals Ltd. were in the similar range of turnover, in terms of size of the operation they were similar, therefore CIT(A) was fully justified in holding that those two companies were comparable to the assessee and as the mean margin of the above said two comparables was less than the margin earned by the assessee (PBT / sales). The International Transactions of the assessee were at arm s length. Accordingly, the addition made by the AO was rightly deleted by the Ld. CIT(A). We do not see any infirmity in the order of the Ld. CIT(A) on this issue. Non taxability of dividend received from Sri Lankan subsidiary of the assessee - HELD THAT:- The issues for the AY 2005-06 and 2006-07 are exactly the same - the taxability of dividend received from Sri Lankan subsidiary company in the hands of the taxpayer. As agreed with the decision of the CIT (A)-XVI, New Delhi in the assessee's own case for the subsequent assessment year. Apart from the merits of the case, the consistency principle as enunciated in the ease of CIT vs LG Rarnamurthy (Madras HC) [ 1976 (10) TMI 18 - MADRAS HIGH COURT] also demands that the decision of the CIT(A) XVI should be accepted - direct the AO to allow the claim made by the appellant in this regard. Dividend Income from its subsidiary company at Sri Lanka - HELD THAT:- In the present case also as per the DTAA between India and Sri Lanka the dividend income would be taxable only in the contracting state where such income accrured and as the income accrued in Sri Lanka and the dividend income sourced from foreign subsidiary was to be considered as exempted in the hands of the Indian holding Company i.e; the assessee. We therefore considering the totality of the facts do not see any valid ground to interfere with the detailed findings given by the Ld. CIT(A) on this issue. Accordingly we do not see any merit in this ground of the Departmental appeal.

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• Customs

• 2023 (4) TMI 17
  Valuation of imported goods - Motorcycle and Alloy Wheels 18 inches 19 inches - enhancement of value - no speaking order was passed by the Assessing Officer - HELD THAT:- When the appellant was shown the details of how the value was calculated, the appellant accepted that it was based on the value ascertained during the market survey and also undertook to pay the differential value with interest. On the basis of the statements made by the proprietor of the appellant, a detailed order dated May 04, 2017 was passed by the Assessing Officer for re-determination of the market value and this order was upheld by the Commissioner (Appeals) by order dated May 31, 2019. The appeal filed by the appellant to assail this order has been dismissed by order of date. It appears that for this reason the customs house agent of the appellant accepted the value on the hardcopies of the Bills and the differential duty was also paid by the appellant. As the re-determined amount was accepted by the customs house representative of the appellant, there was no necessity for the Assessing Officer to pass a speaking order. The Commissioner (Appeals) in the order that has been impugned in this appeal has also noted that an order dated May 05, 2017 was passed by the Assessing Officer in regard to similar/identical goods on the basis of a market survey that was conducted. Much emphasis has been placed by the learned counsel for the appellant on the letters sent to the Assessing Officer for passing a speaking order. These letters were submitted by the appellant after the appellant had accepted the value and the goods had been cleared on payment of the differential duty. Appeal dismissed.

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• 2023 (4) TMI 16
  Classification of imported goods - imports of all parts of air-conditioner in CKD/SKD (except capacitors), which will be assembled to make complete air-conditioner in India - whether air-conditioners kits, without capacitors have acquired the primary characteristics of an air-conditioner? - whether capacitors and ODS gas are essential or non-essential components of air-conditioners? - HELD THAT:- On cursory reading of technical literature available in public domain suggests that capacitors are essential component of an air-conditioner, which provide the initial jolt of electricity to the air-conditioner s motors needed to run successfully and a bad capacitor prevents the exterior unit from properly functioning, which hinders the cooling process as a whole. Be that as it may, notwithstanding the role of capacitors in air-conditioners, the larger contention is accepted that the air-conditioner kit, as described by the applicant have acquired the characteristics of an air-conditioner and are classifiable as air-conditioners when presented together. It is concluded that imported air-conditioner kits in CKD/SKD condition, as described above have acquired the essential characteristics of an air-conditioner and therefore, when presented together at the stage of assessment under common invoice and bill of entry would merit classification under Heading 8415 and specifically under sub-heading 8415 10 or 8415 81 or 8415 82 or 8415 83, as the case may be depending upon the configuration and model type - an incomplete machine having the features of the complete machine presented unassembled and hence the indoor and outdoor units presented together in CKD/SKD forms are to be classified under Heading 8415 10/8415 81/8415 82/8415 83, as applicable. When the parts of IDU/ODU or Cooler/Condenser [Heat Exchange Units (HEX)] are imported in CKD/SKD condition, would the same also to be treated as parts of air-conditioners inasmuch as such parts are specifically designed for use in the assembly of HEX (IDU/ODU or Cooler/Condenser), which is an integral part of an air-conditioner; and therefore, eligible to be classified under sub-heading 8415 90 00 as parts of a part of air-conditioner? - HELD THAT:- As per the applicant assembly of Heat Exchange Units (HEX) would consist of assembly of IDU or ODU/cooler or condenser. It is indisputable that in the instant case such HEX are component/part of air-conditioners. Therefore, the IDU or ODD/cooler or condenser as parts of air-conditioner would merit classification under sub-heading 8415 90 00 as parts. However, when HEX units are presented together as air-conditioner kit, it would merit classification as air-conditioning machine under Heading 8415 10/8415 81/8415 82/8415 83, as applicable. It is noted that Heat Exchange Units are independently classifiable under sub-heading 8419 50; and they can be so classified if imported on standalone basis, not as parts of air-conditioners. Classification of parts of HEX for air-conditioning machines - HELD THAT:- In cases where air-conditioner kits containing all essential parts/components of the assembly, including cooler or condenser or evaporator are presented together in CKD condition for assessment and clearance, as per Rule 2(a) of GRI such kits in CKD condition, including parts of evaporator or condenser would merit classification as air-conditioning machine under Heading 8415 10/8415 81/8415 82/8415 83, as applicable. However, in the event of parts of HEX units being presented together for assessment, but not as part of air-conditioning kit, noting that these parts of HEX (cooler or condenser or evaporator) are designed specifically to be used in an air-conditioner, these parts would merit classification under sub-heading 8415 90, in accordance with Rule 2(a) of GRI.

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• 2023 (4) TMI 15
  Classification of import goods - Indra Smart Pro EVSE (Electrical Voltage Supply Equipment) - to be classified under Tariff Entry 8543 70 99 or under Tariff Entry 8504 40 30? - HELD THAT:- It is gathered that the device in question is used primarily for providing power to the charger onboard an electric vehicle. In addition, the device has additional features, which make it a smart device. It is also on record that the device supplies AC power supply from the grid/solar module to the charger onboard the vehicle and it doesn t convert the AC supply to DC supply before supplying to the on-board charger. The difference between the device and a 50-kilowatt quick charger is that unlike the latter it doesn t include a converter. While the applicant has explained the functions of the device they have not provided the list of parts and/or components of the said device. It is merely stated that EVSE systems include electrical conductors, related equipment, software, and communication protocols that deliver energy efficiently and safely to the vehicle. Heading 8504 contains electrical transformers and static converters (for example, rectifiers) and inductors. From the description of the product, it is certain that it is neither a transformer nor an inductor. It needs to be examined whether the product is a static converter - Insofar as the device under consideration is concerned, it is incapable of converting electrical energy and merely supplies the AC power supply from the grid to the charger on-board of an EV. Therefore, it is found difficult to concur with the views of the Learned Commissioner that Heading 8504 would be a suitable tariff entry for the device. Heading 8537 covers boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of Heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, and numerical control apparatus, other than switching apparatus of Heading 8517. The basic function of the device under consideration is control of electricity and its distribution along with safety features providing protection against any electrical leakage or surge suppression - the smart programmable features, present in the product under consideration, fall within the ambit of this heading as per explanatory notes. Accordingly, the device merits classification under Heading 8537. More specifically the device is classifiable under six-digit entry 8537 10 which covers a device akin to the one under consideration operating on voltage below 1000V. It emerges that Heading 8537 squarely covers the device involved in this application for advance ruling. Under such circumstances, the device under consideration does not merit classification under Heading 8543. as suggested by the applicant, which is a residual entry and cannot take precedence over a specific heading - thus, Indra Smart Pro (Electrical Voltage Supply Equipment) merits classification under sub-heading 8537 10 00 of the First Schedule to the Customs Tariff Act, 1975.

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• Corporate Laws

• 2023 (4) TMI 14
  Seeking restoration of name of the company in the Register of Companies (ROC) - Section 252 of Companies Act - HELD THAT:- Under Section 10A of the Companies Act 2013, before commencement of business, and after incorporation, a Company has to file a declaration through one of its directors within 180 days that the share capital has been duly contributed as agreed by the subscribers to the memorandum - Under section 10A(3) of the said Act, the ROC can initiate action for the removal of the name of the company in terms of Chapter XVIII i.e. under Section 248. In the present case, the present writ petition has been premised on the ground that the notice itself was not issued, therefore, a writ petition would be liable to be entertained. It is stated that the striking off has taken place vide STK -7 issued on 13th December 2022 and published in the official gazette on 17th December 2022. For whatever reasons, the Petitioner has not approached the National Company Law Tribunal (NCLT) and has chosen to come before this Court - A perusal of Section 10A as also Section 252(3) of the said Act would show that the delay ultimately is condonable upon the payment of monetary penalty in terms of Section 10A. Even the standards that have been stipulated for restoration of the company by the NCLT is if the NCLT feels it is just that the name ought to be restored or if the company was carrying on business and was in operation. Considering the fact that the bonafides of the Petitioners are not in doubt as the companies are running companies, and the striking off has already been prejudicial to them, this Court deems it appropriate not to relegate the Petitioners to the alternative remedy under Section 252. The Petitioner shall deposit a sum of Rs.1 lakh each for each of the companies as a pro term deposit of penalty under Section 10A(2). The said deposit shall be made within one week, upon which the names of the companies shall be restored - Petition disposed off.

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• PMLA

• 2023 (4) TMI 13
  Money Laundering - Freezing of Bank Accounts of petitioner - Section 26 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- The appeal has been filed before the Appellate Tribunal under the PMLA in February, 2023 and is now pending in the Appellate Tribunal. Insofar as the Petitioner in W.P.(C) 12650/2022 is concerned, ld. Counsel for the Petitioner submits that the appeal is in the process of being filed. Considering the fact that the writ petitions itself were directed against the initial debit freeze orders, which have now merged with the final order passed on 21st December, 2022 and the Petitioner has already availed of the appellate remedy, it is deemed appropriate to relegate both the Petitioners to pursue their appellate remedies before the Appellate Tribunal, under the PMLA, in accordance with law. The Petitioners in both the writ petitions shall, along with their appeals, prefer interim applications before the Appellate Tribunal. The said interim applications, if not already listed, may be taken up by the Appellate Tribunal within 4 weeks and shall be adjudicated expeditiously - Petition disposed off.

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• 2023 (4) TMI 12
  Seeking grant of Anticipatory Bail - Money Laundering - scheduled offence - cash deposits not in commensurate with illicit source of income - deposits subsequently used for acquisition of immovable and movable properties - twin conditions in section 45(1) of PMLA 2002, complied with or not - HELD THAT:- This Court is in complete agreement with the Division Bench decision of the Bombay High Court (Nagpur Bench) in AJAY KUMAR VERSUS DIRECTORATE OF ENFORCEMENT THROUGH THE ASSISTANT DIRECTOR, SUB-ZONAL OFFICER, NAGPUR [ 2022 (2) TMI 949 - BOMBAY HIGH COURT ] that the legislature have the power to and competence to amend the provision of the Act. The amended provision has not been struck down by the Court and as such the same cannot be watered down. Thus, it cannot be said that until and unless the entire section gets amended, the decision in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR. [ 2017 (11) TMI 1336 - SUPREME COURT ] will prevail - Thus in the considered view of the Court the twin conditions in section 45(1) of the 2002 Act after amendment stands revived until any decision comes in the matter by the Hon ble Apex Court. Now, coming to case in hand, admittedly, the disproportionate asset assessed by the Enforcement Directorate is/are to the tune of Rs.82,10,661/- which is less than one crore. Further, the petitioner Ramadhar Ram ( Cr. Misc. No. 24534 of 2022) is 67 years old man, sick and infirm and has suffered brain hemorrhage and was operated in Paras HMRI Hospital, Patna (Annexures-6 Series of the petition), the cases having been registered against him, he will be ultimately facing the music, this Court is inclined to grant him privilege of anticipatory bail with conditions - The petitioner herein is son of Ramadhar Ram and as stated above, the amount under question is less than one crore. Further, according to the case of the petitioner, he is suffering from epilepsy (Epileptic Seizure) since 2000 and has been treated by different Neurologist/ Neuro Surgeon in Ranchi (Jharkhand) as well as Patna, (Annexure-8 Series) as relief is being granted to his father, Ramadhar Ram and he will also be facing the trial, this Court is inclined to extend him too the benefit of anticipatory bail with conditions. Let the two petitioners namely Ramadhar Ram (Cr. Misc. No. 24534 of 2022) and Bikash Kumar @ Vikash Kumar (Cr. Misc. No. 24928 of 2022), be released in the event of their arrest or surrender before the Sub-ordinate court within a period of four weeks from the receipt of this order, on furnishing bail bond of Rs.1,00,000/- each with two sureties of the like amount each in connection with Complaint Case subject to the conditions as laid down under Section 438(2) of the Cr.P.C. with further conditions imposed - application allowed.

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• 2023 (4) TMI 11
  Seeking grant of Regular Bail - Money Laundering - proceeds of crime - it is alleged that the co-accused Vikram Seth operated a few bogus entities in his name and also in the name of the family members - allegations against the petitioner are that being an accountant, he has sanctioned the loan without any verification - HELD THAT:- Till the time of filing of the complaint, the Enforcement Directorate chose not to arrest the accused. Only when the concerned trial Court summoned the accused, as they failed to put in an appearance, the court issued bailable and non-bailable warrants, which led to the arrest of the accused Vikram Seth and in the interregnum also of the petitioner-Suresh Seth. Thus, it is clear that ED filed the complaint without arresting any of the accused. The most important aspect is the decision of the Directorate of Enforcement not to arrest all the accused; coupled with the nature of allegations attributed to each accused, the case of every accused in the FIR stood on a different footing and decided independently of the other. In GUDIKANTI NARASIMHULU AND ORS. VERSUS PUBLIC PROSECUTOR, HIGH COURT OF ANDHRA PRADESH [ 1977 (12) TMI 143 - SUPREME COURT ], Supreme Court held that the delicate light of the law favors release unless countered by the negative criteria necessitating that course. In PRAHLAD SINGH BHATI VERSUS N.C.T., DELHI AND ANR. [ 2001 (3) TMI 1053 - SUPREME COURT ], Supreme Court highlighted one of the factors for bail to be the public or the State's immense interest and similar other considerations. In DATARAM SINGH VERSUS STATE OF UTTAR PRADESH AND ANR. [ 2018 (2) TMI 410 - SUPREME COURT ], Supreme Court held that the grant or refusal of bail is entirely within the discretion of the judge hearing the matter and though that discretion is unfettered, it must be exercised judiciously, compassionately, and in a humane manner. If the petitioner finds bond amount beyond social and financial reach, it may be brought to the notice of this Court for appropriate reduction. Further, if the petitioner finds bail condition(s) as violating fundamental, human, or other rights, or causing difficulty due to any situation, then for modification of such term(s), the petitioner may file a reasoned application before this Court, and after taking cognizance, even to the Court taking cognizance or the trial Court, as the case may be, and such Court shall also be competent to modify or delete any condition - This order does not, in any manner, limit or restrict the rights of the Police or the investigating agency from further investigation as per law. In case the Investigator/Officer-In-Charge of the concerned Police Station arraigns another section of any penal offence in this FIR, and if the new section prescribes maximum sentence which is not greater than the sections mentioned above, then this bail order shall be deemed to have also been passed for the newly added section(s). However, suppose the newly inserted sections prescribe a sentence exceeding the maximum sentence prescribed in the sections mentioned above, then, in that case, the Investigator/Officer-In-Charge shall give the petitioner notice of a minimum of seven days providing an opportunity to avail the remedies available in law - Petition allowed.

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• Service Tax

• 2023 (4) TMI 10
  Condonation of delay in filing appeal - power of Commissioner (Appeals) to condone delay - appellant received the order dated 31.07.2012 passed by the Joint Commissioner on 06.09.2012, but the appeal was filed before the Commissioner (Appeals) only on 20.06.2014 - HELD THAT:- It is clear from the provisions of section 85(3A) of the Finance Act, that an appeal can be filed within two months from the date of communication of the order but if the Appeal is filed after two months but within one month after the expiry of two months, the Commissioner (Appeals) may condone the delay in filing the Appeal if he is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within two months. It, therefore, implies that if the Appeal is filed after one month after the expiry of the initial period of two months, the delay cannot be condoned. This issue was considered by the Supreme Court in Singh Enterprises [[ 2007 (12) TMI 11 - SUPREME COURT] ], the Supreme Court examined the provisions of section 35 of the Central Excise Act, 1944, which is para materia to the provisions of section 85 of the Finance Act, and observed that delay can be condoned in accordance with the language of the Statute which confers power on the Appellate Authority to entertain the appeal by condoning the delay only up to 30 days after expiry of 60 days which is normal period for preferring the appeal. It is for this reason that the Supreme Court observed that the Commissioner and High Court were justified in holding that there was no power to condone the delay after expiry of 30 days period. As the appeal was preferred before the Commissioner (Appeals) even beyond the extended period of one month after the expiry of the statutory period of two months, it was liable to be dismissed and was rightly dismissed by the Commissioner (Appeals) - It is not possible to accept the contention of the learned counsel for the appellant that the delay in filing the appeal should have been condoned by the Commissioner (Appeals) nor is it possible to examine the contention on merit as to whether the service tax demand could have been confirmed or not. There is, therefore, no error in the order passed by Commissioner (Appeals) - appeal dismissed.

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• 2023 (4) TMI 9
  Refund of Service Tax - amount deposited by mistake for construction of individual/ independent residential houses - period July 01, 2012 to December 31, 2013 - appellant contends that the houses constructed by it for the Rajasthan Housing Board will not be covered by the definition of a residential complex and, therefore, would not be taxable as the contract executed with the Housing Board was not in relation to construction of a complex - principles of unjust enrichment - HELD THAT:- A Division Bench of the Tribunal in AS SIKARWAR VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [ 2012 (11) TMI 1000 - CESTAT, NEW DELHI ] also observed that service tax can be demanded only if the building concerned has more than 12 residential units in the building and such levy will not apply in cases where one compound has many buildings, each having not more than 12 residential units. It is true that w.e.f July 01, 2012 construction of complex is a declared service, but the Exemption Notification exempts services by way of construction, erection, commissioning or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex have been exempted - the Commissioner (Appeals) was not justified in holding that the appellant would not be entitled to the benefit of the Exemption Notification. The Commissioner (Appeals) was also not justified in holding that the refund was hit by the principles of unjust enrichment. As per the work orders, service tax was to be borne by the appellant and the Commissioner (Appeals) has also found, as a fact, that the contract awarded by the Housing Board to the appellant mentions that service tax shall be borne by the contractor - Commissioner (Appeals) was, therefore, not justified in rejecting the refund claim of the appellant on the ground of unjust enrichment. Appeal allowed.

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• 2023 (4) TMI 8
  Classification of services - works contract service or not - appellant claims that the services provided would not fall under works contract for the reason that laying of the pipeline/conduit was not for the purpose of commerce or industry - extended period of limitation - HELD THAT:- The issue as to whether laying of the pipeline for conduit purposes would fall within the definition of works contract was elaborately considered by a Larger Bench of the Tribunal in M/S. LANCO INFRATECH LTD. AND OTHERS VERSUS VERSUS CC, CE ST, HYDERABAD [ 2015 (5) TMI 37 - CESTAT BANGALORE (LB)] where it was held that Construction of pipeline or conduit (otherwise than under a turnkey/EPC mode), when executed for Government/Government undertakings for transmission of water or sewerage would be outside the ambit of levy of tax, in terms of the definition itself, since this would undisputedly fall within the ambit of sub-clause (b) of WCS. A Division Bench of the Tribunal in M/S ANGRAJ CIVIL PROJECTS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, LUCKNOW [ 2018 (12) TMI 251 - CESTAT ALLAHABAD] , after making reference to the aforesaid Larger Bench decision of the Tribunal in Lanco Infratech Ltd., also held that the activity of laying of pipeline would not be for the purpose of commerce or industry and, therefore, would not fall within the definition of works contract services. Thus, in view of the Larger Bench decision of the Tribunal in Lanco Infratech Ltd. and the Division Bench of the Tribunal in Angraj Civil Projects Pvt. Ltd., it has to be held that laying of pipeline for sewerage purposes would not fall within the definition of works contract services since it was not for commerce or industry purposes. Extended period of limitation - HELD THAT:- It is not necessary to examine the contention raised by the learned counsel for the appellant that the extended period of limitation, as contemplated under the proviso to section 73(ii) of the Finance Act, could not have been invoked in the facts and circumstances of the case. Appeal allowed.

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• 2023 (4) TMI 7
  Levy of service tax - penalty - commercial or industrial construction service - Short payment of interest on late payment of Service Tax - Service Tax on freight and cartage - Service Tax on legal services under reverse charge - Incorrect credit as invoices not in the name of service provider - Excess abatement on mandap keeper service - Service Tax on renting of immovable property service - Service Tax on grid electricity billing, common area maintenance back up electricity charges under BSS - Credit demand @6% of the value of exempted service in the nature of sale of plots, under Rule 6(3) of Credit Rules - Wrong exemption under CICS due to invalid completion certificate - Service Tax due to difference in taxable value of renting service in ST-3 return - Late fee due to non-filing of ST-3 return. HELD THAT:- It is seen that both the issues now sought to be raised by the learned counsel for the appellant were not raised before the Commissioner. It would not be appropriate for the Tribunal to examine these issues in the first instance. The matter would, therefore, have to be remitted to the Commissioner to examine these issues. Appeal disposed off.

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• Central Excise

• 2023 (4) TMI 6
  Cash refund of cess credit - Whether the cash refund of Cenvat credit of Cess in the form of Education Cess (EC) and Secondary Higher Education Cess (SHEC) is permissible as the assessee was unable to utilize the said credit? - cess is cenvatable or not - Rule 3 of Cenvat Credit Rules - transitional CENVAT Credit - HELD THAT:- Cess is commonly employed to connote a tax with a purpose or a tax allocated to a particular thing suggested by the name of the cess. In the present case, it is related to education. Cess is generally for such levy which is for some special administrative expense as shall be suggested by the name of the cess. Education cess was levied by virtue of Finance Act No. 2 of 2004 in Section 92 to 94 thereof to be charged as a duty of excise with an objective to fulfill commitment of the government to provide a finance universalized quality basic education - thus, no doubt the Cess are the part of the excise duty - the levy of EC and SHEC was however dropped and deleted by the Finance Act, 2015. Whether the cess are cenvatable? - HELD THAT:- Sub-rule (vii) of Rule 3 of CENVAT Credit Rules, 2004, specifically provided that CENVAT Credit in respect of Education Cess and Secondary and Higher Education Cess shall be utilised only towards the payment of Education Cess leviable on the taxable services only and not against the normal excise duty. Thus CENVAT Rules, 2004 clearly restricted the utilisation of Education Cess and Higher and Secondary Education Cess on the output tax on goods and services and not against the normal excise duty or service tax liability. It is not disputed even before me that cross utilisation of CENVAT Credit in the form of Education Cess and Secondary and Higher Education Cess against normal service tax and excise duty liability was not allowed. The definition of 'eligible duties and taxes' as per the explanation 3 under Section 140 of the CGST Act, 2017 was amended with retrospective effect from 01.07.2017 whereby it is specified that cesses are excluded from the definition of 'eligible duties and taxes', Thus, the credit is ab initio not available for utilization for GST. In view of the above, cesses are not be transitioned through TRAN-1, as per the transitional provisions specified under CGST Act, the credit balances not transitioned to GST regime shall lapse, and, as such, the argument of the appellant the impugned credits never lapse, as there is no provision retaining the same is not sustainable. In the present case Notification No. 14 and 15 of 2015 exempted all goods and services from the levy of EC and SHEC from 01.03.2015 and 01.06.2015 respectively. Both these notifications were challenged before Hon ble High Court of Delhi in the case of CELLULAR OPERATORS ASSOCIATION OF INDIA AND OTHERS VERSUS UNION OF INDIA AND ANOTHER [ 2018 (2) TMI 1264 - DELHI HIGH COURT ], while upholding both the notifications Hon ble High Court held that the Cenvat credit of EC and SHEC which could have been availed till the cutoff date had lapse to the Government and thus, cannot be cross utilized as against the excise duty and service tax. The balance of EC and SHEC credit available on inputs lying before 01.03.2015 cannot be utilized for payment of excise duty. Though Notification No. 12/2015 dated 30.04.2015 the Cenvat has taken on or after 01.03.2015 of EC @ 2% and SHEC @ 1% to be utilized for payment of duty of excise. But in the present case the Cenvat of Cess paid prior March, 2015 was never taken till the onset of CGST Act on 01.07.2017. Transitional arrangement for input tax credit - HELD THAT:- Transitioning in the Electronic Credit Ledger, the amount of such Education Cess and Secondary and Higher Education Cess, does not entitle appellant/assess to utilize the said unutilised amount of Education Cess and Secondary and Higher Education Cess against the Output GST Liability. The taking of the input credit in respect of Education Cess and Secondary and Higher Education Cess in the Electronic Ledger after 2015, after the levy of Cess itself ceased and stopped, does not even permit it to be called an input CENVAT Credit and therefore, mere such accounting entry will not give any vested right to the Assessee to claim such transition and set off against such Output GST Liability after 01.07.2017 - the refund has to be dealt with in accordance of Section 11B as already explained above that refund of EC and SHEC, in the given circumstance, shall not be available under Section 11B of Central Excise Act, 2002 nor even under Rule 5 of CCR, 2004. There are no infirmity in the order under challenge vide which the refund claim for the amount of Cenvat credit of EC and SHEC, paid prior March 2015, has been denied to the appellant as was filed under the garb of transitional provisions of CGST Act, 2017 - appeal dismissed.

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• 2023 (4) TMI 5
  Interest on delayed refund - relevant date - interest to be calculated on the amount of refund at the rate of 12% per annum from the date of deposit thereof, or not - Section 11 B of Central Excise Act - HELD THAT:- The amount of Rs.40.00 Lakh is an amount of pre-deposit i.e. an amount paid under section 35 F of Central Excise Act. The refund thereof is permissible in terms of Section 35FF - The bare reading makes it clear that the amount of pre-deposit has to be refunded alongwith the interest from the date of the payment of the amount till the date of refund of the said amount. Thus, it is clear that the entire amount of Rs. 50.00 Lakhs was not an amount of duty as has been held by the adjudicating authority below. It was merely a revenue deposit. The issue is no more res-integra and these observations have attained finality vide several decisions including the decision of Hon ble Apex Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT ] where it was held that Once finding recorded by Tribunal that amount deposited by appellant during investigation as also that deposited pursuant to interim order passed by Tribunal was revenue deposit and not Excise duty deposit and there was no challenge to this finding of Tribunal, Department, after Commissioner (Appeals) allowed appeal allowing interest on refunded such deposit, cannot raise this issue by filing present appeal before Tribunal, especially when earlier order passed by Tribunal was already accepted by Revenue Furthermore, when Assistant Commissioner, also ordered for refund of amount, said order was also not assailed by Department - Section 35C of Central Excise Act, 1944. Thus, it becomes clear that the amount deposited by the assessee during the investigation is not an amount of duty hence section 11B/ 11BB cannot be invoked. Commissioner (Appeals) has not considered any of those decisions. Thus, he is observed to have violated the judicial protocol. It is observed from the order under challenge that the amount has been acknowledged to have been deposited during the course of investigation, still holding the same to be an amount of duty specially when this Tribunal has set aside the confirmation of duty demand is highly unreasonable. Thus, it is held that order under challenge has wrongly restricted the entitlement of appellant for the interest on the refunded amount to the date w.e.f. the date of filing of appeal. The appellant in view of settled principles is held entitled for the interest on the refunded amount of Rs.50.00 Lakhs from the date of the respective deposit i.e. for Rs.10.00 Lakhs w.e.f. 30th September, 2008 and for Rs. 40.00 Lakhs w.e.f. 1st August, 2011 that too at the rate of 12 % till the sanction thereof - appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (4) TMI 4
  Interest on refund - relevant period - interest for the period commencing from the date when two months elapsed [which in turn would commence from the date when the return was filed], and running till the date when the refund was paid, or not - whether the assessee's right to interest fructifies immediately, upon the expiry of the period prescribed under Section 38(3)(a)(ii) of the 2004 Act? HELD THAT:- It is crystal clear that strict timelines have been set forth in the 2004 Act for the grant of refund. In the instant matter, since the revised return was filed on 10.07.2015, the refund in terms of Section 38(3)(a)(ii) of the 2004 Act accrued in favour of the assessee on 10.09.2015. Admittedly, the notice under Section 59(2) of the 2004 Act seeking additional information was issued only thereafter, i.e., 11.09.2015. This notice led to the issuance of the notice of default assessment dated 02.08.2017, giving rise to a demand amounting to Rs.1,25,60,785/- via order dated 02.08.2017; which was, ultimately, set aside by the OHA via order dated 26.08.2019. Rule 34(4), which is invoked by the revenue, has no application to the instant case, as is evident upon a plain reading of Sub-rule (1) and (4) of the said Rule. The OHA, in a brief order, concluded that ITC was wrongly denied to the assessee, i.e., the objector, since it had in its possession valid tax invoices and there was no dissonance in the 2A-2B mismatch report of the purchasing and selling dealer. OHA noted that the Assessing authority in the assessment order has not brought any material to prove collusion between purchasing dealer and selling dealer and also [did] not invoked Section 40A of the DVAT Act . Accordingly, the assessee's objections were accepted and the impugned order dated 02.08.2017 passed under Section 32 of the 2004 Act was set aside - while the OHA ruled on the legal tenability of the order dated 02.08.2017, concerning objections filed under Section 74 of the 2004 Act, it could not have stymied the accrual of interest which was based on a claim lodged by the assessee via its revised return. The assessee's right to refund accrued on completion of the timeframe given in Section 38(3)(a)(ii) of the 2004 Act, i.e., on 10.09.2015. The proceedings taken out thereafter, i.e., issuance of notice under Section 59(2) of the 2004 Act on 11.09.2015 followed by a default assessment order dated 02.08.2017 and the adjustment order dated 25.08.2017, were non-est in the eyes of law. Sub-rule 34(4) of the 2005 Rules had no applicability in the present case. The provision which did apply was Section 38(3)(a)(ii) of the 2004 Act insofar as the assessee is concerned - Since the claim for a refund made by the assessee was embedded in its return, it did not arise out of an order passed by the Court or an authority constituted under the 2004 Act, the assessee was not required to file a fresh claim as contended by the revenue under DVAT 21. Thus, the assessee will be entitled to interest at the rate of 6% (simple) per annum for the period spanning between 11.09.2015 and 14.08.2020. Interest for the said period will be quantified on the principal amount refunded to the assessee i.e., Rs.1,25,60,785/- - appeal of Revenue dismissed.

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• 2023 (4) TMI 3
  Input tax credit for claim of burning loss - Time limitation - two separate notices issued for different assessment years, one covering for the years 2006-07 upto 2010-11 and the other covering for the years 2011-12 upto 2015-16, the contention of the learned counsel for the petitioner that it is a single notice has to be rejected by this Court - Section 27(1) of the Tamil Nadu Value Added Tax Act 2006 - HELD THAT:- The separate notices make it clear that the first notice has been issued for the assessment years 2006-07 upto 2010-11 and the second notice has been issued for the assessment years 2011-12 upto 2015-16. Being two separate notices issued for different assessment years, one covering for the years 2006-07 upto 2010-11 and the other covering for the years 2011-12 upto 2015-16, the contention of the learned counsel for the petitioner that it is a single notice has to be rejected by this Court. The first notice dated 12.07.2021 for the assessment years 2006-07 upto 2010-11 is alone barred by limitation and the second notice dated 12.07.2021 issued by the respondent for the assessment years 2011-12 upto 2015-16 is not barred by limitation as the demand has been made, within a period of six years by the respondent as prescribed under Section 27(1) of the Tamil Nadu Value Added Tax Act 2006. The impugned notice dated 12.07.2021 issued by the respondent for the assessment years 2006-07 upto 2010-11 is hereby quashed and insofar as the second notice is concerned, the contention of the petitioner is rejected by this Court. Admittedly, the petitioner has not challenged the assessment order passed by the respondent in respect of the assessment years 2011-12 upto 2015-16. If aggrieved by the same, the petitioner will have to challenge the same in the manner known to them under law and liberty is granted to the petitioner for challenging the said assessment order pertaining to the assessment years 2011-12 upto 2015-16. This writ petition is partly allowed.

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• Indian Laws

• 2023 (4) TMI 2
  Dishonour of Cheque - guarantor's liability - funds insufficient - legally enforceable debt or not - vicarious liability - discharge of initial burden in order to prove its case under Section 138 of the Negotiable Instruments Act - failure to rebut by oral or documentary evidence - HELD THAT:- The guarantor's liability under the Indian Contract Act, 1872 is a civil liability. However, vicarious liability in the criminal law in terms of Section 141 of the Negotiable Instruments Act cannot be fastened because of the civil liability. Vicarious liability under sub-Section (1) to Section 141 of the Negotiable Instruments Act cannot be pinned when the person is in overall control of the day-to-day business of the company or firm. There was no legally enforceable debt in order to issue any cheque by the petitioner. The petitioner, being stood as a guarantee for the aforesaid two companies, was not liable to pay any amount to the respondent and nothing warranted for the petitioner to issue cheque for any enforceable debt in favour of the respondent herein. Therefore, the alleged cheque was not issued for any legally enforceable debt and the petitioner cannot be held to be liable for the offence punishable under Section 138 of the Negotiable Instruments Act. Unfortunately, both the Courts below mechanically convicted the petitioner for the offence punishable under Section 138 of the Negotiable Instruments Act and it cannot be sustained against the petitioner herein. The Criminal Revision Case is allowed.

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• 2023 (4) TMI 1
  Dishonour of Cheque - legally enforceable debt or not - rebuttal of presumption - HELD THAT:- This Court is not persuaded to agree with learned counsel for the petitioner that courts below have not appreciated the evidence in its right perspective, rather same being based upon the proper appreciation of facts as well as law, calls for no interference. In the case at hand, there is no denial, if any, by the petitioner-accused with regard to issuance of cheque in question as well as his signature thereupon, rather an attempt has been made by the accused to carve out a case that cheque in question was issued as security while taking shuttering from the complainant. Complainant in his statement recorded under Section 313 Cr.PC though denied the liability, if any, of him to pay the amount, but stated that entire rent qua the shuttering taken by him was paid, but yet complainant failed to return the cheque procured by him as security at the time of hiring of shuttering. Since there is no dispute, if any, with regard to issuance of cheque as well as signature thereupon of petitioner, presumption as available under Sections 118 and 139 of the Act comes into play, which clearly provides that there is presumption available in favour of the holder of the cheque that same was issued in discharge of the lawful liability. No doubt, aforesaid presumption is rebuttable, but for that purpose, accused is/was under obligation to raise probable defence. The Hon ble Apex Court in M/s Laxmi Dyechem V. State of Gujarat, [ 2012 (12) TMI 106 - SUPREME COURT ], has categorically held that if the accused is able to establish a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. To raise probable defence, accused can rely on the materials submitted by the complainant. Needless to say, if the accused/drawer of the cheque in question neither raises a probable defence nor able to contest existence of a legally enforceable debt or liability, statutory presumption under Section 139 of the Negotiable Instruments Act, regarding commission of the offence comes into play. If the entire evidence led on record by the complainant is read in its entirety, no illegality and infirmity can be said to have been committed by the courts below while holding the petitioner-accused guilty of having committed offence punishable under Section 138 of the Act. In the case at hand, complainant successfully proved all the ingredients of Section 138 of the Act. He successfully proved on record that before instituting proceedings under Section 138 of the Act, he had served legal notice upon the accused, thereby calling upon him to make the payment good. Nor he replied to the legal notice, nor paid the money - Since factum with regard to advancement of loan to the tune of Rs. 1.00 lac stands established on record and same was never repaid, cheque issued as security, if any, could be well presented by the complainant before the bank concerned for encashment. By now it is well settled that dishonour of cheque issued as security can also attract offence under Section 138 of the Negotiable Instruments Act. Hon ble Apex Court in case titled Sripati Singh v. State of Jharkhand [ 2021 (11) TMI 66 - SUPREME COURT ]. Since after having carefully examined the evidence in the present case, this Court is unable to find any error of law as well as fact, if any, committed by the courts below while passing impugned judgments, there is no occasion, whatsoever, to exercise the revisional power - this Court sees no valid reason to interfere with the well reasoned judgments recorded by the courts below, which otherwise, appear to be based upon proper appreciation of evidence available on record and as such, same are upheld. The present criminal revision petition is dismissed being devoid of any merit.

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