TMI Tax Updates - e-Newsletter
May 1, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
GST applicability on Seed Certification Tags
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GST:
GST exemption on the upfront amount payable in installments for long term lease of plots, under Notification No. 12/2017 – Central Tax (R) S. No.41 dated 28.06.2017
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Income Tax:
Order Under Section 138(1)(a) of the Income Tax Act, 1961 - Exchange of details of assessee with GSTN under the Goods and Services Tax (GST)
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Income Tax:
Valuation of shares - addition u/s 56(2)(viib) - share allotted prior to insertion of provision of section 56 (2)(viib) and the prescribed method of rule 11U and 11UA was notified - it would implausible to hold that the Valuation report of the independent Valuer is not correct, since method adopted by him is not in accordance with 11UA
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Income Tax:
Penalty u/s 271(1)(c) - recording of satisfaction - penalty initiated u/s 143(3) order for concealment of particulars of income - penalty imposed for furnishing of inaccurate particulars - penalty not sustainable
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Income Tax:
Penalty u/s 271(1)(c) - no original return- return filed pursuant to notice u/s 148 and paid additional tax - assessed income and the returned income are same - no penalty as salary income and rental income were subjected to TDS
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Income Tax:
Stay of demand - directed to deposit 20% of demand as precondition for grant of stay - The authority has to deal with the contentions raised by the parties so as to disclose the application of mind by the authority - reasons are required to be given as reasons now are considered to be one of the pillar of the principles of natural justice - orders are quashed for reconsideration
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Income Tax:
Penalty u/s 271(1)(c) - claim of HRA denied as rent paid to co-owner - The rent was actually paid to the co-owners and this fact has not been disputed by the AO - Merely because the claim of the assessee did not find any favour with the AO would not, ipso facto, become a bogus claim - penalty deleted
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Income Tax:
Provisional attachment of the property u/s 281B - it can be made without serving a Notice for Demand u/s 156 - it is akin to attachment before judgment provided under Order 38 of the CPC, where an attachment of the property of the defendant can be made even at any stage of suit, in order to protect the interest of a decree holder, when such decree is passed, later on.
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Income Tax:
TDS u/s 195 - financial services - services were neither rendered in India nor utilized in India - explanation to Section 9(1)- though widened the scope of applicability of Section 9 but The question of non-resident having rendered services in India is quite different from such services having been consumed by the assessee in India - held not taxable in India
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Income Tax:
Determination of LTCG on sale of shares - period of acquisition - acquisition of shares on the basis of share certificates issued on amalgamation in lieu of the shares originally purchased/acquired by the assessee - rightly claimed for working out the indexed cost of acquisition while computing the long term capital loss from date of shares originally purchased/acquired
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Income Tax:
Disallowance of interest u/s 36(1)(iii) on proportionate basis - mixed funds i.e own funds as well as borrowed funds - commercial expediency - charging / non-charging of interest or charging of interest at a lesser rate would not fall in the domain of the revenue - revenue cannot step into the shoes of the businessman
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Income Tax:
Immunity from penalty - statements u/s 132(4) - AO denied Immunity alleging that admitted tax liability was not paid in the returns filed u/s 153C - no time frame fixed in Clause 5(2) of the Explanation u/s 271(1)(c)for payment of tax - immunity granted even if paid tax belatedly
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Income Tax:
Disallowing the expenses of liquidated damages - year of allowability - a payment based on contingent contract u/s 32 of the Contract Act could be allowable only when the conditions prescribed therein would have been complied with and not on the date of execution of the agreement.
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Income Tax:
Deduction u/s. 80-IB - Profit derived from the business of manufacture and sale of Pig Iron - Profit from the sale of slag, being a by-product - concurrent findings of facts by the CIT(A) & Tribunal that the slag generated out of the manufacturing process - satisfy the test of 'first degree source' - eligible for deduction u/s 80-IB
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Customs:
Freezing of Bank Accounts - bogus addresses for the purposes of claiming IGST refunds - the power to freeze or suspend operations of a bank account cannot legally be exercised.
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Customs:
Revocation of CHA License - forfeiture of security deposit - Where a provision/regulation spells out a specific period of limitation, such period is mandatory and any exclusion there from should also be provided for specifically.
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Customs:
Refund claim - without challenging assessment order on the shipping bill - the enhanced duty was paid by the respondent after issuing letter of protest. Therefore, limitation does not apply even if it is considered as subsequent claim - the refund claim then cannot be said to be time barred.
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Customs:
Import of ‘Dawson Weak Coking coal’ - Since there was no parameter fixed during the relevant period, the entitlement of the exemption would solely depend whether it had less than 12% ash content and is known in the trade as coking coal. - benefit of exemption allowed.
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Service Tax:
Non-payment of service tax - service tax collected but not paid to Revenue - the benefit of limitation cannot be extended to the appellant as the appellant were obviously aware of the law
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Central Excise:
Liability of interest on reversal of irregular CENVAT Credit, before the amendment to Rule 14 - credit availed but not utilized - The amendment to Rule 14 of the Cenvat Credit Rules, 2004, would apply only with prospective effect and not with retrospective effect. - Liability of interest confirmed.
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Central Excise:
Remission of duty - When damage due to fire had caused loss to the appellant, imposition of duty liability on the damage goods would further cause hardship to the appellant who has been struggling to get justice for over the last two years.
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Central Excise:
Valuation - related party transaction - inter-connected undertakings - Once law falsifies the liability of appellant in given circumstances, mere mention by appellant in its record that too in balance sheet only will not create any liability.
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VAT:
Inter-state sale or not - levy of penalty - The third party having not appeared before the Assessing Officer, the question of drawing adverse inference against the petitioner/dealer does not arise.
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VAT:
Benefit of concessional rate of tax for purchase of raw material used in the manufacture and sale of “kathha”, and “cutch” - The subject sale is an intra-State sale liable to tax under the Uttarakhand Sales Tax laws, and not under the CST Act.
Articles
Notifications
GST - States-
F-A-3-41-2017-1-V-(23) - dated
6-3-2019
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Madhya Pradesh SGST
Rescind Notification No. F A-3.-41/2017/1/V (47) dated the 30th June, 2017
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F-A-3-11-2019-1-V-(27) - dated
6-3-2019
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Madhya Pradesh SGST
Madhya Pradesh Goods and Services Tax (Removal, of Difficulties) Order, 2019
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F-A-3-09-2019-1-V-(25) - dated
6-3-2019
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Madhya Pradesh SGST
State Government appoints the 1st day of February, 2019, as the date on which the provisions of the Madhya Pradesh Goods and Services Tax (Amendment) Act, 2019 (No. of 2019), except clause (b) of section 10, Section 19, section 20, clause (a) of section 22, shall come into force.
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F-43-10-2019-1-V-(26) - dated
6-3-2019
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Madhya Pradesh SGST
Madhya Pradesh Goods and Services Tax (Second Removal of Difficulties) Order, 2019
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (4) TMI 1715
Profiteering - BWP Trozan Platinum Ply 19 mm 2.44x1.22 - benefit of reduction in the rate of GST - contravention of the provisions of Section 171 of CGST Act, 2017 - HELD THAT:- It is apparent from the perusal of the facts of the case that there was a decrease in the per unit base price (excluding GST) of the product in the post-GST era as compared to the pre-GST era when the applicable tax was reduced from 28.81% to 28%, when GST was implemented w.e.f. 01.07.2017. Further, the base price of the product was ₹ 1028.07 per square meter in the invoice dated 24.05.2017 and the price of the product was reduced to ₹ 1021.73 in the invoice dated 09.08.2017 after giving a discount of 17.05% on the base price of ₹ 1231/- per square meter (discount of ₹ 90,572/- was given on the total invoice value of ₹ 5,31,125.41 @ 17.05%). Further, the price of the product also remained at ₹ 1021.73 in the invoice dated 02.12.2017 after giving a discount of 17.05% on the base price of ₹ 1231/- per square meter (discount of ₹ 6249/- was given on the total invoice value of ₹ 36,646.87 @ 17.05%). It is apparent that the Respondent did not increase the per unit base price (excluding GST) of the product, which was ₹ 1028.07 in the pre-GST era. Further, it was reduced to ₹ 1021.73 in the post-GST era w.e.f. 01.07.2017 and it also remained at ₹ 1021.73 when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017 and hence, there was no increase in the per unit base price. Therefore, the allegation of profiteering is not sustainable in terms of Section 171 of the CGST Act, 2017. Application dismissed.
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Income Tax
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2019 (4) TMI 1678
Deduction u/s 80IB(10) - extension of project or new project - Assessee had constructed 4 residential buildings as A1, A2, B1 and B2 for which commencement certificate was issued by the local authority on 19/06/1997 and completed on the year 2002-2003 - on same plot of land undertook the construction of another building called 'Devpriya' and certificate for construction was issued after 01/10/1998 - similarly one more project on adjacent land - as alleged commencement of the said project are before the date of 01.10.1998 or thereafter as stipulated in section 80IB(10)(a) - breach of condition of the units not exceeding area of 1000 sq.ft. also - HELD THAT:- Both the projects were independent from the original housing project where only 4 buildings were envisaged. The additional building called Devpriya and Kores Nakshatra were designed, envisaged and constructed later. There is no breach of the condition of Section 80IB(10) which required commencement of construction only after 01/10/1998. Merely because local authority had imposed conditions in relation to Devpriya as were originally imposed in case of earlier 4 residential buildings, would not necessarily mean that this was an extension of the existing project. In relation to the breach of condition of the units not exceeding area of 1000 sq.ft. also, we find that the Tribunal was perfectly justified in overruling the objection of the Revenue. The Revenue authorities agreed that each individual unit had built up area of less than 1000 sq.ft. CIT (Appeals), however, noted that in some cases, adjacent units were sold to the two members of the same family who had removed the partition wall between the units. CIT (Appeals) was of the opinion that this device was in breach of clause (f) of Section 80IB(10) of the Act which imposes a condition that in the same family not more than one unit would be allotted. He agreed that such condition was inserted by Finance Act, 2009 with effect from 01/04/2010. However, he commented that the said condition was procedural and therefore, would apply to the pending cases. Entire approach of the Revenue was erroneous. At the relevant time when the housing project was constructed and residential units were sold, admittedly that was no condition in Section 80IB(10) of the Act restricting allotment of more than one unit to the members of the same family. The Assessee, therefore, was free to allot more than one unit to members of the same family. The material on record would suggest that after such units were sold under different agreements, the allottees desired that the partition wall between the two units be removed. It was thus the decision of the members to remove the wall. It was not the case where the Assessee had, from the beginning, combined two residential units and allotted one such larger unit to one member. ITAT was justified in allowing deduction u/s 80IB(10) of the Income Tax Act, 1961 to the assessee in respect of the Kores Towers project
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2019 (4) TMI 1677
TDS u/s 195 - financial services, for providing services such as Global coordinator and Lead Manager to the GDR offer - income deemed to accrue or arise in India - fees for technical services - Tribunal came to the conclusion that services rendered by Amas Bank were purely of a commercial nature and bore the character of income arising to it wholly outside India. Such services were neither rendered in India nor utilized in India - scope of explanation inserted by the Finance Act of 2010 w.r.e.f. 1.6.1976 in Section 9(1) - HELD THAT:- Through this explanation, thus, the legislature desired to delink the question of income deemed to have accrued or arisen in India from the requirement of the non-resident having a residence or place of business or business connection in India. This, however, did not imply that the basic requirement of income having arisen in relation to the activity in India and having connection to the consumption of such services in India was totally done away with. It provides that for the purpose of the said Section, the income of a non-resident would be deemed to accrue or arise in India under clauses (v),(vi) and (vii) of sub-section (1) and would be included in the total income of the non-resident whether or not such non-resident has a residence or place of business or business connection in India, or, the non-resident has rendered services in India. We are conscious that subsequent explanation which replaced the previous one by the Finance Act of 2010 has somewhat widened the scope of applicability of Section 9. The question of non-resident having rendered services in India is quite different from such services having been consumed by the assessee in India. - The appeals are dismissed
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2019 (4) TMI 1676
Deduction u/s. 80-IB - Profit derived from the business of the industrial undertaking engaged in the manufacture and sale of Pig Iron - Profit from the sale of slag, which is a by-product in the manufacture of Pig Iron - whether the slag generated out of the manufacturing process would satisfy the test 'first degree source' or not and, if satisfies such test, would be eligible to deduction under Section 80-IB of the Act or not ? - HELD THAT:- In view of the findings already rendered by the CIT(A), which are upheld by the Tribunal that the slag generated out of the manufacturing process, the profit earned from such sale, is derived from the Industrial Undertaking which is engaged in manufacturing of Pig Iron, the Revenue cannot be allowed to contend that the sale of slag would not be a part of profits earned from the manufacturing process and would not be eligible for deduction under Section 80-IB of the Act. The findings rendered by the CIT(A) and upheld by the Tribunal having attained finality, are binding on the Revenue. - Decided in favour of the appellant- Assessee.
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2019 (4) TMI 1675
Disallowing the expenses of liquidated damages - contingent contract - allowability in year of execution of contract or fulfillment of conditions mentioned in contracts - HELD THAT:- A perusal of clauses of the agreement indicates that the said agreement dated 5th March, 2010 entered into between the Assessee and M/s. Timblo Minerals Pvt. Ltd. was a contingent contract u/s 32 of the Contract Act and could be enforced only when the conditions prescribed therein would have been complied with and not on the date of execution of the agreement. In our view, the Tribunal was thus right in holding that the Assessee was entitled to seek deductions in respect of the said amount in the Assessment Year 2011-12. We do not find any infirmity in the order passed by the Tribunal. Since the rate of income tax in the Assessment Years 2010-11 and 2011-12 being uniform, it was of no consequence to the Revenue whether to allow the said expenditure in the Assessment Year 2010-11 or 2011-12. The issue raised by the Revenue in these Appeals is thus academic and does not give rise to any substantial question of law. Disallowance of the deferred revenue expenditure - Assessee had claimed deduction at the rate of 1/17th of the said expenditure while filing the return of income in the impugned assessment year - Tribunal held that since the liability was as per interpretation of the accrual towards the said expenditure in the Assessment Year 2011-12 and since the Assessees had made payment on 5th March, 2010, and held that the said sum was also not hit by the provisions of Section 40(a)(ia) - HELD THAT:- Tribunal held that following the rule of consistency, deduction to the Assessee amounting to ₹ 9,87,993/- being 1/17th of ₹ 1,67,95,982/- was allowed. These findings of fact rendered by the Tribunal in the impugned order are admittedly not impugned by the Revenue and have attained finality. In our view, the issue raised by the Revenue recorded in paragraph 3(D) aforesaid is also academic and does not raise any substantial question of law.
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2019 (4) TMI 1674
Application for stay - precondition for grant of stay on demand - assessee has to deposit 20% of the tax demanded as precondition for grant of stay - HELD THAT:- The assessee himself voluntarily disclosed certain amount of income over and above the regular income during the course of survey proceedings. The case of the petitioner appears to be that the same has been retracted. The said aspect has not been considered by the authority. It is discretion of the authority to direct payment of particular percentage of the amount as a precondition for stay. However while considering the stay petition the prima facie case put forth by the parties is required to be considered. The authority has to deal with the contentions raised by the parties so as to disclose the application of mind by the authority to the contention put forth by the parties. Reasons are required to be given. Reasons now are considered to be one of the pillar of the principles of natural justice. The case put forth by the petitioner has been dealt with while passing impugned order so as to substantiate the discretion exercised by him. If after considering the case put forth by the petitioner, the authority may come to the conclusion about the quantum of the amount the petitioner is required to deposit as a precondition for stay. The impugned orders are quashed and set aside. The authority shall consider the stay application filed by the petitioner on its own merits and take decision prima facie meeting out the case put forth by the petitioner
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2019 (4) TMI 1673
Immunity from penalty - applicability of Clause 5(2) of the Explanation u/s 271(1)(c) - made the disclosure of undisclosed income in the statements u/s 132(4) in search and had also specified the manner in which such income was derived from his real estate business and had also paid tax though belatedly together with interest - AO denied Immunity alleging that admitted tax liability was not paid in the returns filed u/s 153C and subsequent payment of tax cannot entitle the Assessee to the immunity - HELD THAT:- There is no dispute of facts before us that besides the adjustment 1.65 crores of the cash seized during the course of search and the monthly payments of taxes made by the Assessee aggregating to ₹ 2,42,53,137/- total of which would come to ₹ 4,07,53,137/- the total tax paid by Assessee is in excess of the admitted tax liability of ₹ 3.50 crores on the undisclosed income of ₹ 8.25 crores disclosed in the six Returns filed by the Assessee on 13/14th August 2009. Therefore, in our opinion, the Assessee not only satisfied all the three conditions, namely (I) disclosure of undisclosed income in the course of the statements under Section 132(4) of the Act; (II) specify the manner of earning the same from real estate business; and (III) payment of tax with interest for which no time frame is fixed in the said Explanation 5(2). Therefore the Assessee was entitled to the immunity from penalty u/s 271(1)(c). No merits in the contentions raised by the Revenue that the payment of such tax liability in respect of undisclosed income as disclosed in the Returns of income filed by the Assessee after Notice u/s 153C, has to be made at the time of filing of the return itself. We are not dealing with the case for assessment of tax in the hands of the Assessee as per the amended procedure of assessment in question u/s 158(C) after 01.06.2003 but we are concerned with the applicability of Clause 5(2) of Explanation to Section 271(1)(c) which is an exception to the presumption of concealment u/s 271(1)(c). There has been no amendment in the language of the said provision before or after 01.06.2003 and therefore the interpretation as made by the Hon'ble Supreme Court in the case of Gebilal Kanhaialal HUF [ 2012 (9) TMI 297 - SUPREME COURT] is binding and applies to the facts of the present case on all fours. Tribunal has erred in reversing the order passed by the learned CIT (Appeals), denying the immunity as per Clause 5(2) of the Explanation to the Assessee in the present case. The Appeals filed by the Assessee therefore deserve to be allowed and the same are allowed answering the first substantial question of law framed above in favour of the Assessee and against the Revenue. Penalty u/s 217(1)(c) - AO taxed agricultural income as 'Income from Other Sources' and imposed penalty - CIT(A) treated as agricultural income and deleted penalty - HELD THAT:- Matter of there being agricultural income of the Assessee and the estimation of agricultural income by the authorities below is a finding of fact and a particular amount of the same as assessed by the Assessing Authority being reduced the learned CIT (Appeals), nonetheless remains a finding of fact and therefore, on the basis of such findings of fact by the First Appellate Authority below if the learned Tribunal has found it to be a fit case not to impose the penalty on the Assessee u/s 271(1)(c), we do not find any reason to interfere with the said findings of the learned Tribunal and therefore in our opinion, the second question also deserved to be answered in favour of Assessee and against the Revenue.
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2019 (4) TMI 1672
Provisional attachment of the property u/s 281B - notices u/s 147 and 148 - Provisional attachment in absence of final order or demand is permissible? - HELD THAT:- A bare perusal of the provision of Section 281B of the Act would reveal that it provides for a provisional attachment of the property of the Assessee to protect the interest of the revenue, during the pendency of other proceedings for assessment or reassessment. The requirement of passing of the final order or reassessment order before issuing attachment under this provision is not envisaged in this section. Section 281B is akin to attachment before judgment provided under Order 38 of the Civil Procedure Code, where an attachment of the property of the defendant can be made even at any stage of suit, in order to protect the interest of a decree holder, when such decree is passed, later on. The Provisions contained under Sections 220 to 232 of the Act, are different from the provisions in Chapter XXIII of the Income Tax Act, 1961, which deals with 'Miscellaneous' in Sections 281 to 298. The provisions in Chapter XXIII under the head 'Miscellaneous' assist in the effective implementation of the other provisions of the Act. With great respect, appears to have erred in holding that provisional attachment u/s 281B also could not be made without serving a Notice for Demand u/s 156. To this extent, the contention of the learned counsel for the appellant/Revenue deserves to be accepted and the order under appeal deserves to be set aside. As far as the recovery of dues from the Assessee is concerned, since reassessment orders have already been passed by the ACIT on 25.10.2013 and 31.03.2015 against which, first appeals are also pending before the CIT (A), the parties are left free to have their respective course in those proceedings and the same is not required to be interfered with in any manner by this Court.
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2019 (4) TMI 1671
Deemed dividend u/s 2(22)(e) - advance received by the assessee against the property - assessee explained that the money received from HDA Buildcon [P] Ltd. is nothing but advance received by the assessee against the property and being a business transaction - HELD THAT:- There is no dispute that the assessee was having business transaction with HDA Buildcon [P] Ltd. AO himself has accepted the transaction to the extent of ₹ 2.15 crores. CBDT vide Circular No. 19/2017 dated 12.06.2017 issued the Circular to the extent that advances which are in the nature of commercial transactions would not fall within the ambit of the word advance in section 2(22)(e) of the Act. In the case of Creative Dyeing and Printing Pvt. Ltd. [ 2009 (9) TMI 43 - DELHI HIGH COURT] has held that amounts advanced for business transaction do not fall within the definition of deemed dividend u/s 2(22)(e) of the IT Act. As in the case of CIT vs. Arvind Kumar Jain [ 2011 (9) TMI 363 - DELHI HIGH COURT] has held that amount received by the assessee shareholder from a company as a result of trading transaction could not be regarded as deemed dividend Vide agreement dated 20.11.2012 between the appellant and HDA Buildcon [P] Ltd., HDA Buildcon [P] Ltd. has given a sum of ₹ 14 lakhs as an earnest money in advance against the sale of property being entire third floor with its roof/terrace rights upto the sky of the built-up property bearing No. C-377, situated in the layout plan of Government Teachers Co-operative House Building Society Ltd., known as Saraswati Vihar, Pitampura, Delhi. Money received from HDA Buildcon [P] Ltd. is a business transaction and, therefore, outside the ambit of the definition of deemed dividend u/s 2(22)(e). Direct the Assessing Officer to delete the impugned addition. - Decided in favour of assessee.
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2019 (4) TMI 1670
Levy of penalty u/s 271(1)(c) - claim of HRA denied - assessee has claimed HRA deduction from his salary income - HELD THAT:- There is no dispute that the assessee was 1/3rd owner of the house property for which he has paid rent to the other co-owners, It cannot be said that the assessee paid rent with malafide intention to reduce his tax liability. The rent was actually paid to the co-owners and this fact has also not been disputed by the AO. Merely because the claim of the assessee did not find any favour with the AO would not, ipso facto, become a bogus claim. As RELIANCE PETROPRODUCTS PVT. LTD. [ 2010 (3) TMI 80 - SUPREME COURT] direct the Assessing Officer to delete the penalty so levied u/s 271(1)(c) of the Act. - Decided in favour of assessee.
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2019 (4) TMI 1669
Levy of penalty u/s 271(1)(c) - salary income and rental income were subjected to TDS - assessee did not file his return of income originaly and only pursuance to notice issued u/s 148, filed his return of income and paid additional tax - HELD THAT:- There is no dispute that the salary income and rental income were subjected to TDS. It is true that the assessee did not file his return of income and only pursuance to notice issued u/s 148 the assessee filed his return of income. It is equally true that the assessment has been framed on the returned income itself though the notice u/s 148 was issued on the information that the assessee has made agreement for purchase of immovable property for a consideration of ₹ 10.21 lakhs with Shweta Estate Pvt Ltd. I find that no addition has been made in this respect as the Assessing Officer himself is satisfied with the reply of the assessee. When the assessed income and the returned income are same, no reason to hold that the assessee has concealed its particulars of income, since both the incomes were subjected to TDS. This to be a fit case for levy of penalty u/s 271(1)(c) - Decided in favour of assessee.
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2019 (4) TMI 1668
Addition u/s 14A - Assessee received dividend income - HELD THAT:- In the case in hand, the assessee has derived dividend income only from one company and no expenditure has been incurred. Therefore, no disallowance needs to be made. Direct the AO to delete the disallowance. Allowable business loss - advances given in the ordinary course of business - HELD THAT:- Assessee has made advance to Shri Nikhil Talwar in F.Y. 2009-10. The advance was given in respect of tours and travels for business purposes. Shri Nikhil Talwar happens to be the President of the assessee company who died in June, 2013. Since no travelling bills/ bills of expenses incurred by Shri Nikhil Talwar were submitted, the assessee wrote off the advance given to Shri Nikhil Talwar. The advances were given in the ordinary course of business cannot be brushed aside lightly. It is true that the write off does not come within the purview of section 36(2) of the Act, but at the same time, the same has to be considered as business loss u/s 28 of the Act. Similar view has been taken by the Hon'ble Delhi High Court in the case of Mohan Meakin Ltd [ 2011 (5) TMI 243 - DELHI HIGH COURT] and case of Lucky Goldstar Company Ltd [ 2018 (11) TMI 546 - ITAT KOLKATA] . The write off may not be allowable as bad debt but the same is definitely allowable as business loss. Ground No. 2 is also allowed
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2019 (4) TMI 1667
Disallowance of Pooja Expenses of the total expenditure claimed - Addition on adhoc basis - HELD THAT:- Assessee had furnished unit wise details of day to day Pooja Expenses before the Ld. CIT(A). Further, the remand report was also called upon by the CIT(A) from the AO. AO has not disputed the contention of the assessee that out of the total Pooja Expenses of ₹ 1,47,886/-, an amount of ₹ 83,316/- was relatable to Haridwar Unit, the total income of which was eligible for deduction u/s 80IC. Further, considering the small amount of ₹ 64,570/- incurred by the assessee for normal day to day Pooja expenses as compared to the total returned income of ₹ 12,94,52,310/-, we do not find any justification on the part of the lower authorities in making the aforesaid disallowance, as admittedly, the said Pooja expenses have been incurred in the premises of the unit for the need of the workers and to maintain peace and harmony among them. Disallowance of foreign travelling expenses - HELD THAT:- CIT(A) has allowed the expenditure relating to the foreign travel of the wife as well as has restricted the disallowance relating to the boarding lodging of the children to the extent of 25% of the total boarding lodging expenditure as against 50% made by the AO. As noted above, the assessee has disputed the calculation made by the CIT(A) in this respect also. Since there is a calculation issue, we restore the matter to the file of the AO to recompute / calculate the disallowance made under this head after going through the order of the AO as well as considering the relief granted by the CIT(A). Disallowance of interest expenditure u/s 36(1)(iii) - HELD THAT:- The issue is now squarely covered by the recent decision of the Hon'ble Supreme court in the case of CIT (LTU) Vs. Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] as affirmed the proposition of law that if the own funds / interest free funds are available with the assessee to meet the investment, presumption will be that the assessee had used its own / interest free funds for the said investment. This issue is accordingly decided in favour of the assessee and the disallowance made u/s 36(1)(iii) of the Act is ordered to be deleted. Appeal of the Revenue is dismissed on account of low tax effect being hit by the CBDT Circular No. 3/2018 dated 11.07.2018, whereas, the Cross objections of the assessee, in view of our observations made above, are treated as allowed for statistical purposes.
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2019 (4) TMI 1666
Penalty 271(1)(c) - case selected for scrutiny under CASS with the reason suspicious Long Term Capital Gain - assessee suo moto surrendered an amount before any of the authorities of the Income Tax pointed out any undisclosed income of the assessee - furnishing of inaccurate particulars of income - HELD THAT:- The assessee suo moto surrendered an amount of ₹ 37 lacs and paid the due tax alongwith interest thereon much before the Investigation Wing or the A.O. pointed out any discrepancy about the undisclosed or concealed income of the assessee. Considering all the impugned penalty levied by the A.O. u/s 271(1)(c) of the Act and sustained by the CIT(A) was not justified. Accordingly, the same is deleted. This finding has been given by considering the peculiar facts of the present case, therefore, it is made clear that it may not be considered as a precedent in the other cases. - Appeal of the assessee is allowed.
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2019 (4) TMI 1665
Bogus Long term capital gain - ingenuity of purchase and sale of shares - test of human probability - HELD THAT:- Evidences to prove the genuineness of transaction are themselves found to serve as smoke screen to cover up the true nature of the transactions in the facts and circumstances of the case as it is revealed that purchase and sale of shares are arranged transactions to create bogus profit in the garb of tax exempt long term capital gain by well organised network of entry providers with the sole motive to sell such entries to enable the beneficiary to account for the undisclosed income for a consideration or commission. The share transactions leading to long term capital gains by the assessee are sham transaction entered into for the purpose of evading tax. Landmark decision in the case of McDowell and Company Limited [ 1985 (4) TMI 64 - SUPREME COURT] is squarely applicable in this case wherein it has been held that tax planning may be legitimate provided it is within the framework of the law and any colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods. The assessee are on distinguished facts, hence, not applicable in the instant case. The assessee has not raised any legal ground and argued only on merit for which assessee has failed to substantiate his claim before the lower revenue authorities as well as before this Bench. - Appeal of the Assessee is dismissed.
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2019 (4) TMI 1664
Addition Short Term Capital Gain made u/s 50C - adoption of the circle rate value of the immovable property disposed by the assessee during the relevant previous year and the consequential short term capital gains arising to the assessee which has been held to be taxable by the AO - HELD THAT:- In the present case the assessee has accepted the valuation of the capital asset transferred by the assessee has attained finality. Under the provisions of Indian Evidence Act, 1872 the said admitted position of the assessee become proved fact. CIT(A) consistently held that wherever the assessee has accepted the valuation of the capital asset transferred by the assessee as determined by the concerned revenue authorities under the provisions of the Indian Stamp Act, 1899 and the said acceptance has become final and hence, the said assessee cannot go back on its admitted position and accepted valuation of the capital asset before the authorities acting under the provisions of the I.T. Act, 1961. CIT(A) has rightly confirmed the addition in dispute - Decided against assessee.
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2019 (4) TMI 1663
Monetary limit - maintainability of appeal - tax effect - HELD THAT:- The amended circular is not applicable to the facts of the present case rather it is covered by the original circular No.3/18 dated 11.07.2018, vide which the CBDT has revised the monetary limit to ₹ 20,00,000/- for not filing the appeal before the Tribunal. From Clause 12 13 of the above said circular it is clear that these instructions are applicable to the pending appeals also and as per clause 13, there is clear cut instruction to the department to withdraw or not to press the appeals filed before the ITAT wherein tax effect is less than ₹ 20,00,000/-. These instructions are operative retrospectively to the pending appeals. Keeping in view the CBDT Circular No. 3 of 2018 dated 11.07.2018, we are of the view that the Revenue should not have filed the instant appeals before the Tribunal. - Appeals of the department are dismissed
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2019 (4) TMI 1662
Addition u/s 68 - unsecured loans received from various friends and family members - HELD THAT:- Merely suspicion should not be the basis of addition. There should be some material when the assessee has proved credit by furnishing material in the form of confirmation etc. to discard such evidence. AO should ascertain the veracity of claim of the assessee by summoning the persons who have advanced unsecured loans to the assessee. We therefore set aside the orders of the authorities below and restore this issue to the file of the AO for decision afresh. The AO is hereby directed to verify the claim of the assessee by making necessary enquiries and by giving reasonable opportunity to the assessee.- Assessee s appeal is allowed for statistical purposes.
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2019 (4) TMI 1661
Penalty u/s 271(1)(c) - recording of satisfaction - penalty initiated u/s 143(3) order for concealment of particulars of income - penalty imposed for furnishing inaccurate particulars of income - HELD THAT:- We find force in the plea of the assessee that where the penalty has been imposed on a ground different from the ground for which the penalty was originally initiated, the imposition of penalty is vitiated in law. It is apparent that the satisfaction of the AO in the penalty proceedings is not consistent with that of the satisfaction formed in the course of quantum assessment. In parity with the view taken by the co-ordinate bench, the penalty imposed is liable to be struck down on this score alone. Accordingly, we set aside the first appellate order passed by the CIT(A) in this regard and direct the AO to delete the penalty. - Decided in favour of assessee.
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2019 (4) TMI 1660
Penalty u/s.271(1)(c) - non specification of charge - disallowance of excise duty paid and disallowance out of technical fees paid - HELD THAT:- From the perusal of the assessment order, it is seen that AO has though specified the charge that he is initiating the penalty proceedings u/s. 271(1)(c) on account of furnishing of inaccurate particulars of income, however, at the time of issuance of show cause notice u/s.274, no such charge has been specified. The notices have been sent on a printed format wherein he has not strike down or mentioned as to under which limb he is proposing to levy the penalty. Section 271(1)(c) stipulates two limbs of charges in which penalty can be levied, one, where any person has concealed the particulars of his income; or second, he has furnished inaccurate particulars of such income. As in the case of CIT vs. Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] has held that a person who is accused of conditions mentioned in Section 271 should be made known about the grounds on which the Department is imposing penalty, as Section 274 makes it clear that the assessee has right to contest such proceedings and should have full opportunity to meet the case of the Department and show that conditions stipulates in Section 271(1)(c) did not exist and is not liable to pay the penalty. Mere sending of printed form with all the grounds mentioned is not sufficient compliance of law. The aforesaid principle and ratio laid down by the Hon'ble Karnataka High Court would also apply in the present case, because here in this case the AO while issuing a show cause notice u/s.274 r.w.s. 271 in printed format has not specified the grounds as to under which limb he is proposing to initiate and levy a penalty u/s. 271(1)(c). Thus, we hold that impugned penalty levied by the Assessing Officer is not valid and same is not sustainable. On this ground the entire penalty is deleted. - Decided in favour of assessee.
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2019 (4) TMI 1659
TP Adjustment - Advertisement Sales Promotion (AMP) expenses - whether advertisement and sales promotion expenses incurred by the assessee being an importer and distributor of wine and spirits in India in the forms of gifts, display at retail outlets, discount schemes, custom duty charged on POSM, etc. are revenue in nature as contended by the assessee? - HELD THAT:- When we examine the facts and circumstances of the case in the light of the ratio of Monto Motors Ltd. [ 2011 (12) TMI 50 - DELHI HIGH COURT] it is proved on record that the assessee has incurred periodical expenses on account of advertisement and sales promotion which is to increase the sales of products in order to remind the customer from time to time so that they do not forget the products and its qualities. Hon ble High Court has held that when the advertisement expenses are incurred to increase the sale of the products, the same are treated as revenue expenditure because the memory of purchasers or customers is short-lived. So, in the instant case, the Revenue has not brought on record any material to prove that advertisement and sales promotion expenses have created long lasting benefits to the assessee, because advertisement and sales promotion are generally made in order to increase the sales and their impact is limited and felt for a short duration by the customers. Also see EMPIRE JUTE COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX [ 1980 (5) TMI 1 - SUPREME COURT] So, in this case, assessee has undisputedly incurred advertisement and sales promotion expenses periodically, and not at once just to refresh the product and quality to be sold in the memory of its customers. So, it cannot be held to be in the nature of enduring benefit for a trader - advertisement and sales promotion expenses have been incurred by the assessee just to enhance its sales and profit and cannot be treated as capital in nature. - Decided in favour of assessee. Addition u/s 40A (ia) - scope of Notification No.56/2012 dated 31.12.2012 issued by the CBDT - disallowance of an amount debited by the assessee in P L account on account of bank guarantee commission - assessee has made certain payments to scheduled banks qua bank guarantee provided by the banks on which TDS was not deducted - AO as well as CIT (A) have accepted the proposition put forth by the assessee that bank guarantee commission does not cover under the definition of interest , hence section 194A is not applicable to such payment - HELD THAT:- It is settled principle of law that in case of bank guarantee commission, section 194H of the Act, where principal agent relationship are not there, is also not applicable. Reliance in this regard is placed on the decision rendered by the coordinate Bench of the Tribunal in Kotak Securities Ltd. vs. DCIT [ 2012 (2) TMI 77 - ITAT MUMBAI] Bare perusal of the Notification in the instant case goes to prove that this Notification is clarificatory in nature. Applicability of the aforesaid Notification to a period prior to the period of its issue has been examined by Hon ble Delhi High Court in case of Pr.CIT vs. Make My Trip India Pvt. Ltd. [ 2019 (3) TMI 1359 - DELHI HIGH COURT]. Furthermore, as per Second Proviso to section 40A (ia) of the Act, disallowance cannot be made because bank guarantee commission paid by the assessee to scheduled banks has been duly included in the total income of the banks as they are tax resident of India and they have duly paid the tax on such guarantee commission. So, under Second Proviso to section 40A (ia), no disallowance can be made. So, disallowance of ₹ 9,81,336/- made by the AO and restricted by the ld. CIT (A) to ₹ 7,92,680/- is not sustainable in the eyes of law, hence ordered to be deleted. - Decided in favour of the assessee.
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2019 (4) TMI 1658
TPA - appropriate method adopted by the assessee for benchmarking in international transaction in the form of export sales to its AE - HELD THAT:- CIT(A) had made an observation that the assessee had not filed the statement of facts before him while filing the appeal in form No.35. But from the perusal of the documents placed on record, we find that the assessee had indeed enclosed statement of facts and grounds of appeal in brief before the CIT(A). CIT(A) had not issued any defect memo in this regard to the assessee. Hence, the observation of CIT(A) in this regard is totally unwarranted. We find from the perusal of the assessment order that there is no mention about examination of most appropriate method adopted by the assessee for benchmarking its international transaction in the form of export sales to its AE. We deem it fit and appropriate, in the interest of justice and fair play, to remand this appeal to the file of the ld. AO for denovo adjudication for determination of arm s length price in respect of international transaction in the form of export sales made to AE by the assessee, in accordance with law. The assessee is at liberty to furnish additional evidences, if any, either in the form of transfer pricing study report or any other evidences, if they so desire, in support of its contentions. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
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2019 (4) TMI 1657
Gain on sale of property - LTCG OR STCG - Whether Date of allotment of property could be reckoned as a specified date as against date of possession / registration of the property for the purpose of determining the period of holding of property? - benefit of exemption u/s.54F - HELD THAT:- As decided in VEMBU VAIDYANATHAN [ 2019 (1) TMI 1361 - BOMBAY HIGH COURT] the date of allotment would be the date on which the purchaser of a residential unit can be stated to have acquired the property. There is nothing on record to suggest that the allotment in construction scheme promised by the builder in the present case was materially different from the terms of allotment and construction by D.D.A.. In that view of the matter, CIT appeals of the Tribunal correctly held that the assessee had acquired the property in question on 31st December, 2004 on which the allotment letter was issued. Respectfully, following the same, we confirm the stand of first appellate authority to the extent that the resultant gains were Long-Term Capital Gains in nature. Eligibility to claim deduction u/s 54F - the assessee has made the payment within stipulated time as envisaged by Section 54F and the allotment in a specific property has been obtained by the assessee on 14/04/2012 which is evident from allotment letter as placed. Therefore, since all the conditions of Section 54F was fulfilled by the assessee, there could be no occasion to deny the benefit of deduction to the assessee - Decided against revenue
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2019 (4) TMI 1656
Valuation of closing stock of unsold flats - Taxable income of the assessee by arbitrarily increasing the valuations of closing stocks of the unsold flats of the two Buildings - renovation expenses not included at the time of determining the values of the unsold portions of the said two buildings i.e. at the time of arriving at the values of Closing Stock of the said two buildings - HELD THAT:- We note that the renovation expenses in respect of property at 157, Rabindra Sarani and 159, Rabindra Sarani were borne exclusively in respect of the areas sold. The assessing officer has failed to bring any cogent evidence on record to show that these expenses were not borne exclusively in respect of the areas sold. Hence, the assessee, OPFPL has applied renovation expenses incurred of ₹ 37,29,731/- and ₹ 23,52,484/- for the sold flats of the two buildings to determine surpluses from the sale of flats of the said two buildings. Based on this factual position we allow the ground No.1 raised by the assessee. TDS u/s 194C - Addition u/s 40(a)(ia) - purchases and purchase of gift items - assessee has fairly agreed that assessee has not submitted purchase bills and other required documents to prove the bona file of purchases - HELD THAT:- As based on the submissions made by the ld. Counsel and ld DR for the Revenue that the deduction of TDS u/s 40a(ia) of the Act and purchases made by the assessee needs to be examined by the Assessing Officer, therefore we are of the view that purchases from M/s Tirupati Mercantile Trading Co. Ltd and purchases of gift items from M/s G.B. Promoters should be remitted back to the file of the Assessing Officer for his necessary verification. Therefore, we allow this grounds of appeal raised by the assessee for statistical purposes.
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2019 (4) TMI 1655
Disallowance of interest u/s 36(1)(iii) on proportionate basis - assessee is in the business of financing having mixed funds in its kitty i.e own funds as well as borrowed funds - it had borrowed monies at an average rate of interest at 13.5% and lent to various persons at an average rate of interest at 12.40%. - disallowance of interest u/s 36(1)(iii) by applying the differential rate of interest at 1.1% - test of commercial expediency - HELD THAT:- Once the lending is meant in the ordinary course of financing activities of the assessee company, then charging / non-charging of interest or charging of interest at a lesser rate would not fall in the domain of the revenue. It is for the businessman to decide the same and the revenue cannot step into the shoes of the businessman in this regard. The test of commercial expediency is to be viewed from the point of view of businessman and not from the point of view of the revenue. Reliance in this regard is placed on the decision in the case of CIT vs Dhanrajgiri Raja Narasingirji [ 1973 (3) TMI 6 - SUPREME COURT] . Once it is proved and accepted that the lending is part of business activities of the assessee company and once there is no finding recorded by the lower authorities that the borrowed funds were diverted for non-business purposes, there cannot be any disallowance of interest u/s 36(1)(iii) of the Act on a proportionate basis. Accordingly, the ground no. 1 raised by the assessee is allowed. Disallowance of set off of business loss and unabsorbed depreciation against the total income of the assessee - claim disallowed by the AO on the ground that the details furnished by the assessee in the return of income under the relevant column differed with the details submitted during the course of assessment proceedings and the assessee failed to reconcile the same - CIT-A however found certain discrepancies in the claim made by the assessee and accordingly directed the AO to verify the amount of losses brought forward / carried forward and compute the correct amount of set off available and grant the same to the assessee as per law - HELD THAT:- There is nothing wrong in the direction of the CIT-A in asking the AO to verify the claim of brought forward business and depreciation losses from earlier years. The assessee cannot be aggrieved by this direction. Hence the order of the ld CIT-A in our considered opinion, does not call for any interference. Accordingly, the ground no. 2 raised by the assessee is dismissed.
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2019 (4) TMI 1654
Disallowance of expenses u/s.14A in respect of earning such exempt income - AO asked the assessee to furnish details of expenses incurred for earning exempt income and also show-caused as to why the expenses incurred and claimed in respect of exempt income should not be disallowed u/s.14A of the Act r.w.r 8D - HELD THAT:- It is now well settled that without recording any subjective satisfaction with cogent reasons, the ld. AO cannot proceed to make disallowance u/s.14A of the Act or by adopting computation mechanism provided in rule 8D(2) of the rules. This position has been made very clear by the recent decision of Hon ble Supreme Court in case of Maxopp Investment Ltd., vs. CIT [ 2018 (3) TMI 805 - SUPREME COURT OF INDIA] AO had not recorded any satisfaction with cogent reasons for rejecting the claim of the assessee that no expenditure was incurred for earning exempt income, the disallowance u/s.14A of the Act made by the AO deserves to be deleted. Suo-moto offered a sum of ₹ 5 lakhs for disallowance u/s.14A on an adhoc basis during the course of assessment proceedings. Even this was not considered by the ld. AO while framing the assessment. Only dividend bearing investments are to be considered for the purpose of computing the disallowance u/s.14A of the Act r.w.rule 8D of the rules. Reliance in this regard is placed on the special bench decision of Delhi High Court in the case of ACIT vs. Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] Consideration of revised claim made by the assessee towards deduction of provision for bad and doubtful debts written back - HELD THAT:- CIT(A) had accepted the claim for reducing the provision for doubtful debts written back in the sum of ₹ 23,96,673/- from the total income after considering the fact that the said sum was duly disallowed by the assessee in the computation of income in earlier years in the year in which said provisions were made. Hence, adding the very same sum in the year under consideration would lead to double addition. Accordingly, we hold that the ld. CIT(A) had rightly granted relief to the assessee by placing reliance on the decision of Hon ble Jurisdictional High Court in the case of Pruthvi Brokers and Shareholders Pvt. Ltd., [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] wherein clarified that the judgment of Hon ble Supreme Court in the case of Goetze India Ltd., [ 2006 (3) TMI 75 - SUPREME COURT] does not impinge upon the hearing of the Income Tax Appellate Tribunal as well as CIT(A) to consider the claim of the assessee and direct the Assessing Officer to allow the claim of the assessee. Addition made towards compensation in the form of mark-up of reimbursement - HELD THAT:- Since the method adopted by the transfer pricing officer for computing the arm's-length price is not as per the provision of law, the action of the authorities below is not sustainable. Hence, we direct that addition in this regard should be deleted. Disallowance of liquidated damages - HELD THAT:- As decided in assessee's own case [ 2013 (4) TMI 925 - ITAT MUMBAI] decided in favour of the assessee on the said orders by the ITAT, we do not see any reason for taking a different view on this issue in the absence of any material change in the facts of the case and thus the order of the Ld.CIT(A) on this count is upheld.
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2019 (4) TMI 1652
Disallowance u/s 14A r.w.r. 8D - addition partly sustained by the CIT(A) being the dividend income actually earned by the assessee in the year under consideration - as contented by assessee that no disallowance on account of interest can be made u/s 14A by applying Rule 8D when there is actually a net income received by the assessee on account of interest and the disallowance u/s 14A cannot exceed the said amount actually claimed by the assessee - DR has contended that these submissions now being specifically made by the learned counsel for the assessee for the first time before the Tribunal require rectification and an opportunity may be given to the AO to verify the same - HELD THAT:- We find merit in the contention of DR and the assessee has not raised any objection in this regard, we restore this issue to the file of the AO for deciding the same afresh after considering the submissions made on behalf of the assessee before the Tribunal. Ground of the assessee s appeal are accordingly treated as allowed for statistical purpose. Disallowance of long term capital loss on sale of shares - period of acquisition of the shares - acquisition of shares on the basis of share certificates issued on amalgamation in lieu of the shares originally purchased/acquired by the assessee - HELD THAT:- As contended that the period of acquisition of these shares thus was September, 1988 and June/July, 1992 as rightly claimed by the assessee for working out the indexed cost of acquisition while computing the long term capital loss and the authorities below were not justified in taking the dates of acquisition of said shares on the basis of share certificates issued by M/s. Amarjyoti Prop (P) Ltd. on amalgamation in lieu of the shares originally purchased/acquired by the assessee in the year 1988 and 1992. Since this contention raised by the assessee is duly supported by the certificates issued by M/s. Amarjyoti Prop (P) Ltd. confirming the relevant dates of acquisition of the corresponding shares by the assessee originally in the year 1988 and 1992, we are inclined to accept the same. AO is accordingly directed to allow the long term capital loss on sale of shares of M/s. Amarjyoti Prop (P) Ltd. as claimed by the assessee - Decided in favour of assessee.
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2019 (4) TMI 1651
Disallowance u/s 40(a)(ia) - TDS u/s 195 - payment of commission to the foreign agents - CIT (A) has examined the nature of services provided by the foreign agent to the assessee and has come to the conclusion that it is fees for technical services - income had accrued/arisen to the foreign agent in India - Specific provision of section 5(2)(b) r.w.s 9(1)(i) - PE in India - no notice by CIT (A) to consider commission as fees for technical services - HELD THAT:- Undoubtedly, the powers of the CIT (A) are co-terminus with that of the AO and therefore, the CIT (A) could have examined the facts of the case if the AO has not done so but before doing so, the CIT (A) is required to give a notice to the assessee. In the present case, the CIT (A) has not given any notice to the assessee but has only examined the issue on his own and has given a finding that the payment made by the assessee is fee for technical services . Therefore, the finding of the CIT (A) is against the principles of natural justice and has to be set aside on this ground alone. We hold that the business receipts of the foreign residents are not taxable in India since the agents have no PE in India and therefore, the assessee was not required to make TDS u/s 195 of the Act. Therefore, the assessee s appeals for all the three A.Ys are allowed.
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2019 (4) TMI 1650
Interest on refund so quantified u/s 244A - Assessee entitled for interest u/s 244A on the refund payable to the assessee arising out of self assessment tax paid in excess than the tax due by the assessee - HELD THAT:- Thus, as we have seen in preceding para s of this order that the issue is highly contentious . Presently, it is not brought to our notice by both the rival parties any judgment of Hon ble Supreme Court directly on this issue. We are bound by decision of Hon ble Bombay High Court being jurisdictional High Court and Respectfully following the decision of Hon ble Bombay High Court in the case of Stock Holding Corporation Limited [ 2014 (11) TMI 899 - BOMBAY HIGH COURT] we hold that the assessee will be entitled for interest on refund arising out of excess self assessment tax in accordance with and as provided vide clause(b) to sub-section(1) to Section 244A of the 1961 Act as it was then prevailing for the impugned assessment year. We uphold/sustain decision of learned CIT(A). Revenue fails in this appeal.
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2019 (4) TMI 1649
Reopening of assessment u/s 147 - non independent application of mind by AO - Addition of opening cash in hand - A.O. acted only on the basis of the information received from the Investigation Wing - borrowed satisfaction - no addition based on reasons recorded - HELD THAT:- When the closing balance as on 31.3.2008 i.e. the preceding year was considered to be genuine and correct, then there was no reason to doubt the same balance taken by the assessee on 01.04.2008 as opening cash in hand for the year under consideration. In that view of the matter, the addition made by the A.O. and sustained by the CIT(A) deserves to be deleted. A.O. acted upon the information and recorded the reasons that the assessee had deposited a sum in his saving bank account. No addition was made for the said amount and the explanation given by the assessee was accepted, which shows that the A.O. only acted upon the information received by him and did not apply his own mind. As relying on SIGNATURE HOTELS (P) LTD. VERSUS INCOME TAX OFFICER AND ANR. [ 2011 (7) TMI 361 - DELHI HIGH COURT] the re-assessment proceedings were not valid and were liable to be quashed. Viewed from any angle, the addition made by the A.O. and sustained by the CIT(A) was not justified - Decided in favour of assessee.
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2019 (4) TMI 1648
Capital gain computation - Addition by accepting the value as recommended by the DVO - DVO valued at different price of adjacent piece of land - HELD THAT:- Provision of section 50C are not applicable as in the present case, agreement was executed on 15.1.2001, while section 50C was introduced by Finance Act, 2002 applicable from 1.4.2003. Secondly, the valuation adopted by the DVO is not correct as the DVO has adopted different value for the same piece of land. As per the DVO, for one piece of land, it is adopted @ ₹ 591/- per. Sq.ft. and in the case of other buyer, it is ₹ 451/- per sq.ft. The rival submissions and material placed on record. Two different values have been taken by the DVO considering the contemporary cases, the value so adopted is excessive. DVO has not given reason to adopt values of the adjacent piece of land. We therefore, direct the A.O. to adopt the value @ ₹ 451/- per sq.ft. as adopted by the DVO for one part of the land and compute the addition accordingly. This ground of the assessee s appeal is partly allowed.
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2019 (4) TMI 1647
Interest charged on the debit balance of the partner Shri Vinod Sharma - CIT (A) deleted the addition - HELD THAT:- Audited P L account together with the computation of income filed before the concerned AO clearly revealed that the appellant did not pay any interest to any of its partners on its credit balances. At the same times, the over drawal by the partner Sh. Vinod Sharma, from the firm s capital was not made out of interest bearing funds of the firm. In such circumstances any interest free advances given to its partners by the appellant firm could not be made the subject matter of addition on the ground of notional receipt in the form of interest. Amount shown as interest paid to Usha Sharma by the AO in his order in fact represented the share of profit and not interest payable to her as wrongly understood by the AO. As a result of such a mistake in reading the P L account of the appellant an incorrect inference that the appellant firm ought to have charged interest on the debit balance of Vinod Sharma leading to the addition in the hands of the firm on account of debit balance in the books of the appellant firm which was calculated @ 12% Notional interest on interest free advances to the suppliers - CIT (A) deleted the addition - HELD THAT:- Addition so made has no leg to stand on as the facts pointed out by the appellant accorded with the claim pressed by it in the appellate proceedings that it was not liable to receive any interest on advances given to suppliers as it did not pay any such interest to its suppliers. Also it is well settled law that notional additions are not tenable in law as held by the Hon ble Apex Court in the case of CIT vs. Excel Industries Ltd [ 2013 (10) TMI 324 - SUPREME COURT] as held no real income but only hypothetical income had accrued to the assessee and section 28(iv) of the Act would be inapplicable to the facts and circumstances of the case. Essentially, the Assessing Officer is required to be pragmatic and not pedantic CIT (A) violated the provisions of Rule 46A of the Rules - production of books of accounts - HELD THAT:- No specific error or mistake has been highlighted by the Ld. DR in the aforesaid factual inference other than to suggest that the books of accounts were not produced on 6.3.2013. However, having regard to the voluminous evidence enclosed with the replies and placed as part of paper book, we find no infirmity in the conclusion of the CIT (A) that once complete details in respect of books of account as above were produced and accepted there remained no valid justification for the AO to allege that books of account were not produced by the assessee firm, particularly when the trading results as declared have been accepted as such. Accordingly, we are unable to take a view different from that of the Ld. CIT (A) and dismiss ground no. 5. Addition being cash deposited in the bank by close relative of the assessee - AO noted that the partners of the assessee firm and their daughters had cash deposits in their independent bank accounts used for carrying on their businesses which sums were, thereafter, transferred to the assessee firm and, therefore, it was held that the sums transferred represented income from undisclosed sources of the assessee firm - HELD THAT:- Once the assessee firm has received money through banking channels from its partners/their daughters who have duly deposed and confirmed the transaction/s and have also supported the same with documentary evidence/s then the addition, without any evidence/s to the contrary, is absolutely without any force of law and unsustainable. It is well settled law that surmises, conjecture and suspicion can never be resorted to make addition u/s 68 of the Act. The AO has proceeded to make the addition on an assumption that the cash deposited in the proprietorship concern of the partners and their daughter is the cash of the assessee. No basis whatsoever has been stated in the order of assessment for such a farfetched assumption. - Decided against revenue Cash deposited in the two bank accounts out of the cash withdrawals made by the assessee firm - HELD THAT:- There were cash withdrawals from the bank to the extent of ₹ 2,18,20,000/- and also cash sales to the extent of ₹ 31,86,359/-. Under such circumstances, once the trading results and the cash flow statement filed during the assessment proceedings have been accepted, we find no error in the action of the CIT (A) in deleting the addition to the extent to the sum withdrawn in cash from the bank and cash sales duly declared and accepted in the order of assessment. - Decided against revenue.
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2019 (4) TMI 1646
Valuation of shares - addition u/s 56(2)(viib) - value of the shares based on NAV method - enhancement of income by adopting the fair market value of the shares issued during the year at ₹ 10/- per share and thereby disallowing the premium of ₹ 20 paid on such shares as during the year after invoking the provision of section 56(2)(viib) - Application of book value as per Rule 11UA - substantiation of satisfaction of the AO by the Ld. CIT(A) - enhancement of ₹ 20 per share Equity shares allotted during the year - as per AO % age of shareholding of assessee company in Mail Today was 64% instead of 67% shown by the assessee - HELD THAT:- It would be very pertinent to note that shares were allotted on 8th September, 2012, when neither the provision of section 56 (2) (viib) was there in the statute nor the prescribed method of rule 11U and 11UA was notified, as same was brought in the Rules for the purpose of section 56(2)(viib), w.e.f. 29.11.2012, i.e., after more than two months from the date of the allotment of the shares. There was no prescribed method of Rule 11 U UA for determination the market value on the date of allotment of shares. In such a situation, it would implausible to hold that the Valuation report of the independent Valuer is not correct, since method adopted by him is not in accordance with 11UA. Once the computation mechanism as per new prescribed method was not available at the time of issuance of shares, then it is unfathomable to apply such method so as to reject the assessee s valuation and assessee cannot be expected to comply with the method when it was notified subsequent to the date of allotment of the shares. Accordingly, we hold that it would not be fair to make any kind of enhancement or addition simply based on provision of section 11UA. One of the cardinal principles of interpretation of fiscal statute is that they should be strictly construed and so long as the provision is free from any ambiguity, there should be no need to draw any analogy. A deeming provision on the other hand is intended to enlarge the meaning of a particular word which includes matters which otherwise may or may not fall within the normal provision, therefore, it should be extended to the consequences and incidents which has been intended by the Legislature for a definite purpose and should not be extended beyond the mandate of the statute. Thus, deeming provisions require to be construed strictly. Here in this case the assessee has followed one of the options provided under such deeming provision and when such an option has been exercised, then same cannot be discarded to impose other option. DCF method is a recognised method where future projections of various factors by applying hindsight view and it cannot be matched with actual performance, and what Ld. CIT (A) is trying to do is to evaluate from the actual to show that the Company was running into losses, therefore, DCF is not correct. Valuation under DCF is not exact science and can never be done with arithmetic precision, hence the valuation by a Valuer has to be accepted unless, specific discrepancy in the figures and factors taken are found. Then AO or CIT(A) may refer to the a Valuer to examine the same. In so far as rejecting of Valuation report by the Ld. CIT (A) on the ground that the Chartered Accountant who has given the Valuation report in the case of the assessee was not a competent person in terms of 11U, we are of the opinion the same would only be relevant, when the Valuer has done the valuation in the manner prescribed in 11U and 11UA, because it is in Rule 11 such a condition has been prescribed. If assessee has not opted for 11U 11UA, then all those guidelines and formulas given therein would not apply and Ld. CIT(A) cannot thrust upon the assessee the option should be exercised only under 11U and 11UA, which admittedly at the time of issuance of shares such method was not even prescribed in the statute. Accordingly, in view of the reasoning given above, we do not find any justification for reducing the value of shares to ₹ 10 and disallowing premium ₹ 20, as assessee was able to substantiate that the shares issued at ₹ 30 per share was less than the FMV and consequently the enhancement made the Ld. CIT(A) for making the addition of ₹ 48,16,66,660/- u/s 56 (2)(viib) is set aside and the addition by him is deleted. Assessment year 2014-15 - basis of Valuation report prepared by M/s. Joy Financial Consulting Pvt. Ltd. of Mail Today has made the addition on the ground that he has reported that there were huge financial losses in Mail Today and accordingly, he has taken the value of shares of ₹ 10 - HELD THAT:- Ld. CIT (A) in this year also has held that value of the shares based on NAV method has not been prescribed method under 11UA. As held above, the said rule will apply only if option is exercised in sub-clause (i), but if the assessee has been able to substantiate the fair market value in terms of sub-clause (ii), then valuation done by the assessee cannot be rejected simply on the ground that it does not stand the test of method provided in 11U and 11UA. Here the assessee has been able to show that the aggregate consideration received and the shares which were issued does not exceed FMV and has demonstrated the value as contemplated in Explanation (a) and therefore, the working of the assessee as per Explanation (a) sub clause (ii) has to be accepted. Section 56(2)(viib) provides for fair market value to be opted whichever is higher either under sub-clause (i) or sub-clause (ii). Since the working of FMV so substantiated by assessee company as per sub-clause (ii) is higher than value prescribed u/s 11UA, then same should be adopted for the purpose of valuation of the shares of the assessee company. - Decided in favour of assessee.
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2019 (4) TMI 1624
Capital gain computation - transfer u/s 2(47) - year of taxability of capital gain - agreement to sell or execution of sale deed - extinguished the right in the property - monetary limit - HELD THAT:- There is no dispute that a registered agreement to sell was executed on 28.02.2004 between the assessee and M/s Rosebud Construction Pvt. Ltd. The said agreement to sell is exhibited. A perusal of the said agreement to sell clearly shows that the assessee has relinquished all his rights in the said property in favour of the vendee. As per the definition of transfer u/s 2(47) of the Act, transfer in relation to any capital asset means extinguishment of any rights therein . This clause clearly applies on the facts of the case in hand. Since the transfer has taken place in the year 2004, basis of charge i.e. 45(1) arose in the year 2004 as the said provision as well as any profits or gains arising from transfer of capital asset effected in the previous year shall be chargeable to income tax under the head capital gain and shall be deemed to be income as previous year in which transfer took place. Since the transfer has taken place in the year 2004, capital gains tax liability, if any, arose in that year. We, therefore, do not find any error or infirmity in the findings of the CIT(A). Long term capital gain liability, as determined by the Assessing Officer is 99.20 lakhs, 20% of tax on which comes to ₹ 19.84 lakhs. Therefore, this appeal by the Revenue is also hit by the CBDT Circular No. 3/2018 dated 11.07.2018 by which the Board has revised the monetary limit for filing of appeals by the department before the ITAT and the monetary limit has been fixed at ₹ 20 lakhs. In the light of the aforesaid CBDT Circular, the appeal filed by the Revenue is dismissed.
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Customs
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2019 (4) TMI 1714
Freezing of Bank Accounts - bogus addresses for the purposes of claiming IGST refunds - HELD THAT:- The issue is decided in the case of S.B. INTERNATIONAL VERSUS THE ASSISTANT DIRECTOR, DIRECTORATE OF REVENUE INTELLIGENCE AND ORS. [ 2018 (2) TMI 588 - DELHI HIGH COURT] , where after considering the provisions of the Customs Act and other similar enactments, it was held that the power to freeze or suspend operations of a bank account cannot legally be exercised. Petition allowed.
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2019 (4) TMI 1713
Revocation of CHA License - forfeiture of security deposit - time limitation - specific case made out by the writ petitioner is that the notice issued in the present case dated 13.08.2018 under Regulation 20 is beyond the period of ninety days as stipulated statutorily and is liable to be quashed - HELD THAT:- The issue as to whether the 90 day time limit for issuance of notice for revocation of licence under Regulation 20 (1) is mandatory or directory is no longer res integra. There are a series of decisions of the courts that have decided the same holding it to be mandatory. The revenue does not dispute this position either. However, learned counsel urges that in the facts of this case, the period be computed excluding the period when the order of suspension passed under Regulation 19 was stayed by this court. The period when the interim order was in force, 24.08.2017 to 27.07.2018, to be excluded from the period of 90 days from date of receipt of offence report for issuence of notice under Regulation 20(1). The impugned notice has been issued on 13.08.2018 - In the present case, though there was an order of stay passed on 24.04.2018 by this court, there was nothing that prevented the respondent from issuing the show cause notice under Regulation 20 (i) of the CBLR, 2013, within the period of 90 days since the aforementioned period commences from the date of offence report, which, in this case, is 27.02.2018. The Regulation stipulates a seamless procedure commencing from the date of offence report and there is nothing in the regulation that indicates distortion of this time frame by intervening events. Where a provision/regulation spells out a specific period of limitation, such period is mandatory and any exclusion there from should also be provided for specifically. Petition allowed.
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2019 (4) TMI 1712
Refund of SAD - Denial on the ground that they have paid VAT / CST on such imported goods - N/N. 102/2007-CUS dated 14.9.2007 - HELD THAT:- The notification in question provides for exemption/refund of SAD if the imported goods are subsequently sold and they have suffered VAT/ CST - the provision of one statute i.e. Project Regulations cannot be imported into the provisions of Notification No. 102/2007-Cus to interpret and deny the exemption/ refund of SAD. Once the assessee has paid CST/ VAT on sale of imported goods, there is no question of retaining the 4% SAD as the payment of such CST/ VAT is the only criteria for granting refund. The adjudicating and the Appellate authority have found from the records that the imported goods on which SAD was paid have been sold by the Respondent to their buyer on further payment of VAT/CST and in such case, there is no reason to deny refund on the ground that the goods were part of Project contract and has lost their identity. Unjust enrichment - The Revenue has argued that the price indicated in the purchase order is inclusive of all taxes duties and the respondent has passed on the incidence of VAT to the buyer and there has been unjust enrichment - HELD THAT:- The unjust enrichment in the instant case would apply only if the Respondents would have passed the incidence of 4% SAD paid by them and not the element of VAT levied and recovered by the importer from their buyer as part of their subsequent sale of such goods. Para 2 (vii) of Circular 16/2008 issued by the Board clear states that the intention of the Government is not to allow the importer to recover 4% SAD from the buyer and to claim the refund from Customs as well and that the only method to ensure this is to make it conditional to satisfy the principal of unjust enrichment. The recovery of VAT by the Respondent on subsequent sale does not casts any effect on exemption from SAD as the unjust enrichment would apply only if the Claimant recovers the SAD amount from buyers. The Appellate Authority has also examined the issue as to whether the Respondent has passed on the SAD Component to their buyer whether it pertains to passing on SAD component to the buyers. He has observed that none of the sales invoices were issued by the Respondent under rule 11 of the Central Excise Rules to enable the buyer to avail cenvat credit nor the invoices indicate the SAD component separately as available credit. Appeal dismissed - decided against Revenue.
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2019 (4) TMI 1711
Benefit under Notification No. 93/2004-Cus. - import of relevant synthetic cloth for manufacture and export of synthetic slippers/ sandals with PU sole under SION norms A3541 - Revenue is of the view that the goods are classifiable under Chapter heading 39204900 as against the heading 59031090 mentioned in the license - HELD THAT:- The classification of goods specified in SION norms is not relevant unless it is specifically mentioned in the SION norms. The committee at Ministry of Commerce has also clarified that any change in the ITC (HS) Code has no bearing on the benefits to be given under advance authorization issued under Para 4.7 of HBP. In the instant case the committee has clarified that any change in the ITC (HS) Code has no bearing on the benefits to be given under advance authorization issued under Para 4.7 of HBP. In this circumstance, the amendment made to the license will have a retrospective effect and the benefit of the notification cannot be denied on the ground that the classification of the goods did not match the classification specified in the advance license as long as the description of the goods matches with that prescribed in the license. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1710
Refund claim - denial of refund on the ground that without challenging assessment order on the shipping bill - HELD THAT:- In KARNATAKA POWER CORPORATION LTD. VERSUS COMMR. OF CUS. (APPEALS) , CHENNAI [ 2002 (4) TMI 79 - SUPREME COURT OF INDIA] and AMAN MEDICAL PRODUCTS LTD. VERSUS COMMISSIONER OF CUSTOMS, DELHI [ 2009 (9) TMI 41 - DELHI HIGH COURT] it has been held that filing of refund claim itself is a challenge of the assessment order, and the legitimate right of refund cannot be ignored - Thus, non-challenging of the assessment order is not a ground to deny the refund of duty wrongly collected and therefore, the decision of the Commissioner (Appeals) on this issue requires no interference. Time limitation - HELD THAT:- It is seen that the Commissioner (Appeals) has referred to Section 16 Section 51 of the Customs Act to arrive at the conclusion that the relevant date for reckoning the rate of duty to be paid is the date of let export order. Further, it is seen that the enhanced duty was paid by the respondent after issuing letter of protest. Therefore, limitation does not apply even if it is considered as subsequent claim - the refund claim then cannot be said to be time barred. Appeal dismissed - decided against Revenue.
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2019 (4) TMI 1709
Benefit of Duty Entitlement Pass Book (DEPB) scheme in the Foreign Trade Policy - overvaluation - Confiscation - penalty - HELD THAT:- The applicability of resort to appraisal of value can arise only within the context of deviation from section 14(1) of Customs Act, 1962 and rules for valuation of exports was not in existence during the relevant period. There is no evidence on record to show that the appellant had not been in receipt of the amount transacted for the goods which could, then, have had a bearing on redetermining of transaction value. Reliance placed on ascertainment from local market does not in any way concord with the requirements of section 14 of Customs Act, 1962 which benchmarks time and place of exportation as critical to acceptance of a value. The scrip does not conform any privilege; it prescribes a ceiling of eligibility for duty free import that is within the exclusive jurisdiction of the licensing authority. It is the utilisation of the scrip that triggers exemption from duty and, to the extent of ineligibility, arising from overvaluation of exports, can be proceeded against for recovery of the duty unpaid in consequence under section 28 of Customs Act, 1962 - In the absence of such proceedings, a bland order of recovery is without legal authority as it does not have sanctity of law. Confiscation of goods under section 113(1) of Customs Act, 1962 follows from misdeclaration of value. While the market value of the impugned goods appear to have been ascertained, it cannot, by any stretch of law, be adopted for the purpose of assessment under section 14 of Customs Act, 1962 - Valuation upheld. The penalty that was imposed on M/s Narendra Industries would also fail in the absence of finding of confiscability. Appeal allowed.
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2019 (4) TMI 1708
Maintainability of appeal - monetary amount involved in he appeal - HELD THAT:- The disputed duty involved in this case is below the monetary limit of ₹ 10 lakhs which has been notified by the Government vide Circular No.390/Misc./163/2010-JC(17-12-2015) dated 17th December, 2015 and F.NO.390/Misc./116/2017-JC dated 04.04.2018 - the appeal is dismissed under National Litigation Policy.
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2019 (4) TMI 1707
Rectification of mistake - Typographical error - HELD THAT:- The error is only a typographical one inasmuch as in para 12, this Bench in line No. 4 has quoted shipping bill No. 0982519, dated 03.12.2008 which according to the application filed should be shipping bill No. 145/08-09, dated 03.12.2008 . On perusal of records, we find that shipping bill No. 145/08-09 was only in litigation before the lower authorities. There seems to be a typographical error in the above final order. The error is now rectified - application for ROM allowed.
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2019 (4) TMI 1706
Benefit of N/N. 62/2007-Cus - iron ore fines of Fe content - denial of benefit on the ground that iron content is 62.31% - principles of natural justice - HELD THAT:- There is no definite conclusion can be arrived at regarding the Fe content of the iron ore fines which were exported. There is no evidence to show that either of the two reports is wrong. There is also no third report to substantiate either of the two reports. Re-testing is impossible because there is no sample left. No definite conclusion can be arrived at regarding the iron ore content of the iron ore fine which were exported. Therefore, no definite conclusion can be arrived to decide whether or not the appellant is entitled to the benefit of the exemption benefit of notification No. 62/2007-Cus, dt. 03.05.2007. Since the exemption notification is a general rule, any benefit of doubt must be held against the appellant and in favour of Revenue. Appeal allowed - decided in favor of Revenue.
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2019 (4) TMI 1705
Condonation of delay in filing the application for rectification of mistake - HELD THAT:- The application for condonation of delay is not mentioning any specific reason for filing the rectification of mistake application belatedly though it blandly says that the order was received by the security personnel and was not handed over to the responsible person in the office. The delay is condoned and the application for rectification of mistake is taken up. Rectification of mistake - error apparent on the face of record or not - HELD THAT:- There is no error apparent on the face of record - the application for rectification of mistake stands dismissed.
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2019 (4) TMI 1704
Import of goods - whether the appellant has imported HSD or MGO? - HELD THAT:- It is an accepted principle that he who asserts must prove and the department asserts in this case that the product is HSD and not MGO but has failed to prove so. The imported fuel deserves to be classified as MGO as claimed by the appellant and duty charged appropriately as the test report by the chemical examiner has not tested all the parameters which are required to classify the same as HSD and has also not indicated that the material is not MGO. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1703
Import of Dawson Weak Coking coal - Benefit of Sl. No. 68 of the Notification No. 21/2002-Cus, dated 01.03.2002 - HELD THAT:- There was no statutory definition of what is a coking coal in the notification during the relevant period. During subsequent periods, the principal selling index has been tested as a parameter and for some time CSN 1 and at other item CSN 2 was prescribed. Since there was no parameter fixed during the relevant period, the entitlement of the exemption would solely depend whether it had less than 12% ash content and is known in the trade as coking coal. There is overwhelming evidence that the coal in question was imported and used as coking coal and it has a CSN of 4 (according to the load port survey) or 1.5 (according to the CRCL report). At any rate, this cannot be held to be not coking coal. The appellant is entitled to the benefit of Exemption Notification No. 21/2002-Cus, dated 01.03.2002 in respect of the coking coal imported by them - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1702
Provisional release of goods - Section 110(1) of the customs Act, 1962 - Seizure of goods on the belief that the goods have been imported in contravention of the SAFTA Provisions - HELD THAT:- From the certificates accompanying the consignment, it is noted that the value addition norms have been certified by the Export Promotion Bureau of Bangladesh. The Export Promotion Bureau of Bangladesh has also issued certificates dated 30/10/2018 and 01/11/2018 signed by its Director covering the seven consignments. The benefit claimed has been supported by the necessary certificate; however, we take note of the fact that the Directorate of Revenue Intelligence has seized the goods covered in these consignments and are in the process of carrying out further investigations. Goods being of perishable nature, are required to be Provisional released in terms of Section 110A ibid. The Transaction value declared in the Bills of Entry is much higher. The amount of bond may be determined on the basis of tariff values at the relevant time. Bank guarantee/Security in addition to bond for provisional release - HELD THAT:- The imported consignments have been accompanied by the necessary documents. Nothing on record indicates that the investigating Agency is considering such documents as forged or otherwise suspicious. If the benefit of the Notification is granted, no duty would be payable. The ends of justice will be met by execution of bond for 100% value of goods (determined on the basis of tariff value) with Bank guarantee for an amount of 20% of the applicable duties based on Tariff value. Appeal disposed off.
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Corporate Laws
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2019 (4) TMI 1701
Scheme of Merger - HELD THAT:- No objection to the proposed Scheme as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. Approval of arrangement seeked. Adherence to mandatory convening of meetings Equity Shareholders of the Applicant Companies - Chairpersons appointed for the aforesaid Meeting to issue the notices of the Meeting referred to above - quorum for the aforesaid meeting of the Equity Shareholders shall be as prescribed under Section 103 of the Companies Act, 2013. Scheme is an arrangement between the Applicant Company No.1 and their respective shareholders only a meeting of the Equity Shareholders is proposed to be held in accordance with the provisions of Section 230 (1) (b) of the Companies Act, 2013. This bench hereby directs the Applicant Company No.3 to issue notice to its Unsecured Creditor as required under section 230 (3) of the Companies Act, 2013 with a direction that they may submit their representations, if any, to the Tribunal and copy of such representations shall simultaneously be served upon the Applicant Company No.1.
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2019 (4) TMI 1700
Conversion of a public company into a private company - Change of status of company - seeking approval of this Tribunal to the conversion by altering the Memorandum and Articles of Association of the Company, as sought to be effected by a Special Resolution passed at the Extra Ordinary General Meeting - HELD THAT:- Board of Directors of the Company has passed a resolution in the meeting held on 20-12-2016 approving the conversion to Private Limited Company. A Special Resolution has also been passed on 21-01-2017 with the unanimous approval of the shareholders of the Petitioner Company. The said Special Resolution passed at the EOGM on 21-01-2017, has been filed by the company through e-form MGT-14, which has been approved. The Company is stated to be an unlisted public company. Neither the Registrar of Companies, West Bengal nor any member or creditor of the Company has any objection to the proposed conversion from Public Limited to Private Limited. Since all the requisite statutory compliances have been fulfilled, the conversion of the status of the company from Public Limited to Private Limited as per Special Resolution passed at the AGM on 21-01-2017 is hereby approved in the interest of the company and such change of status of the company shall not cause any prejudice either to the members or the creditors or any other related party of the petitioner company. The Petitioner shall, however, remain bound to comply with the statutory requirements in accordance with law.
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Service Tax
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2019 (4) TMI 1699
Refund of excess service tax paid by mistake - time limitation - HELD THAT:- In the present case the appellant by mistake has paid excess service tax and on realizing his mistake he filed a refund claim and thereafter a show-cause notice was issued to reject the refund claim on the ground of non submission of the documents. Further the appellant furnished all the required documents which were considered by the original authority and after considering the documents sanctioned the refund claim of ₹ 3,17,984/- in respect of the excess service tax paid on GTA during month of May 2014 under Section 11B of the Central Excise Act 1944 read with Section 83 of the Finance Act. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1698
Non-payment of service tax - service tax collected but not paid to Revenue - Interior Decorator Service - period 01.04.2003 to 28.02.2008 - HELD THAT:- It is not clear that whether the appellant has recorded income under the head of design and consultancy income under these agreements or others. It is apparent that these two contracts submitted along with the appeal are not represent contract in that sense. It is therefore, necessary that all contract and account entries made by the appellant need to be examined before going to the final conclusion regarding liability to service tax under the head of interior decorator service. In the present case, it is apparent that in the said case did not involve any advisory consultancy or technical assistance. Thus it is apparent that the verification of the facts from the agreement is necessary before any decision on the issue is reached - the matter needs to be remanded to original adjudicating authority for examination of contract. Management, Maintenance and Repair Service - period 16.05.2006 to 28.02.2008 - HELD THAT:- Appellant relies on the decision of Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I VERSUS ANS CONSTRUCTIONS LTD. [ 2009 (6) TMI 465 - CESTAT, NEW DELHI] . It is seen that the period involved in the said case was 16.06.2005 to 28.02.2006, which is period prior to amendment in definition of Management of Maintenance and Repair Service. Prior to 01.05.2006 the said service was only applicable when provided in respect of immovable property, however, w.e.f 01.05.2006, the said service also become taxable when provide in respect of property other than immovable property. The decision in the case of ANS Construction was based on the ground that the grass and plants etc. being maintained by the appellant were not immovable property and thus not liable to tax under the definition of Maintenance, Management and Repair Service, as defined in 16.06.2005 - the decision would not be applicable for the period after amendment w.e.f 01.06.2006. Time limitation - HELD THAT:- The appellant were paying the service tax on their own for certain period and later stop paying. They have also collected the service tax and not paid to the government tragedy in certain case. In these circumstances, the benefit of limitation cannot be extended to the appellant as the appellant were obviously aware of the law - penalty set aside. Appeal allowed by way of remand.
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2019 (4) TMI 1697
Business Auxiliary Service - appellant had collected commission and had accounted ₹ 33,08,870/- as agency commission for the period April 2008 to February 2009 from its group Companies for marketing of products - HELD THAT:- It is difficult to accept as to how the character of Agency commission changes when it comes to service tax, on its own, without there being any documentary evidence, much less basic documents, furnished. If not agency commission, then the discount which is normally given to the buyer/end user, but the same is enjoyed by an intermediary/appellant. Books reflect it as agency commission but the appellant claims it, contrary to that, as discount. The same has been offered and has accordingly suffered income tax. In the absence of explicit supporting documents, even we find it difficult to dethrone the findings of Ld. Commissioner. Substantial difference between the taxable value declared in the ST-3 return and the service income shown in the profit loss Account - HELD THAT:- The appellant while accepting the difference, has taken the stand that the alleged difference was because of the reason that it was maintaining a consolidated/common balance sheet for all its three units, they had undertaken software development, appellant s unit had recorded the payment of labour charges, that it was showing only income even though the same was not received during the year as it was following accrual system, etc. but it is even surprising to note that the appellant has tested the Commissioner also, by not bothering to produce any documents - we are compelled to accept the findings of Ld. Commissioner who has given a thread-bear analysis based on the best of his judgment due to the non-co-operation of the appellant - impugned order upheld. CENVAT Credit - duty paying documents - appellant did not produce any documents based on which they had taken cenvat credit for the period October 2004 to March 2008 - Rule 9 of Cenvat Credit Rules, 2004 - We are remitting this issue to the file of adjudicating authority to pass de-novo order after affording reasonable opportunities to the appellant. Extended period of limitation - HELD THAT:- There is no ground to interfere with the findings of the lower authority, the appellant could not produce basic documents in time, during audit, etc., that prompted SCNs which is in order. The revenue collated details after audit and issued the notices after analyzing the same and it is not the case that the appellant volunteered to offer explanation in between, when the fact of its non-production of documents was very much on board - invocation of extended period upheld. Appeal disposed off.
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2019 (4) TMI 1696
Taxability - Supply of Tangible Goods Service - supply of machines to its own unit - demand of service tax with interest and penalties - distinct persons or not - HELD THAT:- As per the definition of Supply of Tangible Goods , the same would be taxable only when the services are provided by a person to another person. Where the supplier and recipient of the machines in question is the same identity, it cannot be said that there were two different persons, to be regarded as provider and recipient of services - thus, no service tax liability would arise in respect of machines supplied by them to their own unit at Rudrapur. Supply of Bailing Press Machine to a third party person - HELD THAT:- The payment or non-payment of VAT is not one of the requisite condition of the definition of Supply of Tangible Goods. It is settled law that no condition or requirement, which is not a part of the definition can be introduced by the adjudicator. No doubt the payment of VAT would establish the transaction to be a deemed sale and thus not covered by the definition but non-payment by itself does not lead to the contrary, especially when it stands established from the agreement entered between the parties that the supply was alongwith possession and effective control of the machines - Demand set aside alongwith penalty. Appeal disposed off.
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2019 (4) TMI 1695
Renting of Immovable Property Service - appellant contested the said demand on the ground that they are not providing any renting services inasmuch as the ground rent as also the value of the property collected by them from M/s R.K. Investment Private Limited was transferred to the State Government through his treasury account not chargeable to tax as Union Government income by virtue of Article 289 of the Constitution of India - HELD THAT:- Service tax being a central levy, requires all the assessees to be treated on the same platform. Though the appellant had taken a stand that this Bhoo Bhata collected by them is not retained by them and is further transferred to State Government but the adjudicating authority has observed that the appellant has not adduced any documentary evidence to support their above stand. As such, for verification of the said factual position, we are of the view that the matter needs to be remanded. Appeal allowed by way of remand.
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2019 (4) TMI 1694
Condonation of delay in filing appeal - time limitation - appeal filed after a period of almost one year and three months from the date of the original order - Manpower supply service - demand alongwith interest and penalties - HELD THAT:- Once the appellant was aware of enquiry and investigation, which started way back in the year 2012 itself vide the letter of Superintendent, Service Tax dated 29.01.2012 and he also acknowledge receiving the show cause notice of 25.09.2013, in furtherance of said investigation, it was appellants incumbent duty to inform not only the Department but the adjudicating authorities as well about the change of address, if any, for his premises. Appellant failed to comply with the said mandate rather opted to maintain silence even of enquiring the status of the show cause notice, the demand whereof was confirmed by the original adjudicating authority in April, 2015. Law of Limitation - HELD THAT:- Law of limitation is meant to fix a period to a lis. No doubt the delay cannot be allowed to take away the substantive right of the parties where the aggrieved party has merits otherwise but since it being a statutory mandate, the law has to be followed in true spirit specially when there is apparent delay either intentional or even negligent on the part of the appellant. Appeal dismissed.
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2019 (4) TMI 1693
100% SEZ - Refund of service tax - input services - business auxiliary service - refund denied on the ground that the said service is not mentioned in the list of specified service approved by the approval committee for the authorized operation under SEZ - HELD THAT:- Perusal of sub-clause (iii) (a) of the Notification makes it clear that the refund shall be allowed on the service tax paid on the specified service that are common to the authorized operations in SEZ - No doubt, the service was not approved at the time it was rendered, but the requisite ingredient for claiming refund as per the aforesaid clause is the time when service tax for the specified service is paid. The service tax was paid after the business support service, as received by the appellant, was categorized as specified service. Since, it was exclusively for authorized operations, the appellant was otherwise entitled for ab initio exemption but for the service to be specified later than the period during which it was received. Since the liability under reverse charge mechanism was discharged only after approval, the period during which the service was rendered is not relevant for claiming the benefit of this Notification. There is no lacuna on part of the appellant while claiming the refund except for a procedural lapse. It has been settled law that substantive benefit as that of tax exemption irrespective by way of refund cannot be denied merely due to the procedural lapse. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1692
Valuation - inclusion of reimbursable expenses received by the service provider in assessable value - Rule 5(1) of Service Tax (determination of value) Rules, 2006 - HELD THAT:- The rule itself has been struck down by the Hon ble Apex Court as ultra vires in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT OF INDIA] and the issue is now finally settled that service tax can only be charged on the amount received for the services and not on the reimbursable expenses - the impugned order which is based on such demand is not sustainable and is liable to be set aside - the demand of interest and penalties also do not survive. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1691
Classification of services - Cargo Handling services or Business Auxiliary services? - loading/unloading/handling and transportation of reels/reams/bundles/pallets/loose broke/machine stage re pulp in trailer/truck to the godown within the mill premises - HELD THAT:- The nature of their activities as per the agreement clearly demonstrates that the appellant was undertaking the movement of materials from one place to another within the factory of the manufacturer and into their godown. The material handling within the factory not being in the nature of cargo cannot be considered as cargo handling service - reliance placed in the case of JAI RAM YADAV VERSUS CCE, CHANDIGARH-II [ 2015 (12) TMI 327 - CESTAT NEW DELHI] . Since the entire agreement was for movement of goods within the factory, we find that there is no evidence that the appellant has actually handled cargo outside the factory of the manufacturer. They have indeed handled material and movement of material within the factory does not amount to cargo handling and it is only material handling. Therefore, no service can be charged - impugned order needs to be set aside. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1690
Refund of service tax paid - transaction amounting to sale or service - section 11 (B)(2)(e) of the Central Excise Act, 1944 made applicable to Chapter V of Finance Act, 1994 - HELD THAT:- The appellant is not liable to pay service tax as he has purchased the completed flat and not a flat under construction. The authority is directed to refund the service tax paid through the builder - refund allowed - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1689
Imposition of penalty - entire service tax alongwith interest paid before issuance of SCN - Renting of immovable property service - HELD THAT:- The penal provisions as provided under the Finance Act, are for the situation where the assessee, intentionally try to evade payment of service tax. The penal provisions of section 78 specify that same can only be invoked in case of fraud, collusion, willful mis-statement, suppression of facts with intention to evade payment of service tax. The assessee, in this particular case, never had any intention to evade Service tax as all the receipts of rents of various godown have been properly recorded in their books of accounts. The Service tax collected by them from their service receivers has also been recorded and deposited with the State Exchequer - It was only a case of confusion with regard to leviability of Service Tax on renting of immovable property services , which delayed the payment of service tax. Since the entire amount of service tax has already been deposited along with interest, there is no valid reason for imposition of penalty on the appellant. Penalty set aside - other part of demand upheld - appeal allowed in part.
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2019 (4) TMI 1688
Benefit of composition scheme for work contract service - N/N. 32/2007 dated 22.05.2007 - Whether not filing of prior intimation before availing the benefit of Notification No. 32/2007 dated 22.05.2007 can be considered as a serious violation of service tax law amounting to non-payment of appropriate amount of service tax? - HELD THAT:- There is no denying of the fact that the work contract entered by the assessee involves supply of goods as well as service component and therefore, the activity undertaken by them was rightly classifiable under the work contract service. Since N/N. 32/2007 is available to the service providers who are providing services of composite work contract, all the substantial benefit of Notification No. 32/2007 cannot be denied only on the ground that the assessee has not intimated the Department prior to deposit of service tax and filing of service tax return under the composite scheme for work contract. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1687
Valuation - Advertising agency services - inclusion of Discount of about 15% received by the appellant in assessable value - HELD THAT:- CBEC in its circular dated 23.8.2007 has very categorically clarified that the activity of merely canvassing advertisement for publishing on commission basis will not fall under the category of advertisement agency service and since the Show cause notice has demanded the Service Tax under the category of Advertising agency services falling under section 65 (105)(e) and therefore the demand of service tax under the category of Advertising agency services is without jurisdiction and the Department has wrongly classified the activity of the appellant. Time Limitation - HELD THAT:- Invoking the extended period of limitation under section 73 of Finance Act, 1994 does not appear to be legally sustainable, as the department since very beginning was aware of the activity undertaken by the appellant and only on the advise of the department, he has taken the registration under the category of Advertising agency services and since as CBEC has clarified that the kind of activity undertaken by the appellant does not qualify to be classified under the category of Advertising Agency Service‟, demanding duty under the Advertising Agency Service‟ becomes legally not sustainable - thus it cannot be alleged that the appellant have suppressed, mis-declared any fact from the department, with intent to evade Service Tax - invocation of extended period not sustainable. Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (4) TMI 1686
Liability of interest on reversal of irregular CENVAT Credit - credit availed but not utilized - Amendment to Rule 14 of Cenvat Credit Rules, 2004 is prospective or retrospective - HELD THAT:- The Appellant in the present case was fully aware that the Appellant was manufacturing not only excisable goods, but also non-excisable goods but availed of the Cenvat credit for the entire inputs required to be used for not only excisable goods, but also for non-excisable goods at the threshold and did not reverse the Cenvat credit taken by it, though it had used the inputs also for nonexcisable goods. The Appellant reversed the Cenvat credit only after the Audit Department of the Respondent brought these facts to the notice of the Appellant. Rule 14 of the Cenvat Credit Rules, thus, was clearly attracted to the facts of this case during the relevant financial years which were subject-matter of this proceeding. In our view, even if the Appellant had not utilized such Cenvat credit, ultimately, since the Appellant had admittedly availed of the Cenvat credit on the entire inputs knowingly well that the entire inputs would not be used exclusively for excisable goods, the Appellant was liable to pay interest under Rule 14 of the Cenvat Credit Rules. The said amendment to Rule 14 of the Cenvat Credit Rules, 2004, vide Notification dated 17 March 2012 would apply only with prospective effect and not with retrospective effect. No such issue was raised by the Appellant before the Commissioner Customs and Central Excise, Goa and also before the CESTAT. Be that as it may a plain reading of the said Notification dated 17 March 2012 clearly indicates that such amendment was applicable only with prospective effect. It is also an admitted position that the notice of demand was issued by the Respondent upon the Appellant much prior to the date of said Notification dated 17 March 2012. No benefit of such amendment thus can be availed of by the Appellant. The said substantial question of law is answered accordingly. Appeal dismissed - decided against appellant.
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2019 (4) TMI 1685
Clandestine removal - reliability of statements - cross-examination of persons - primary contention of the assessee is the denial of cross-examination of the dealers whose statements were made use by the Revenue in order to fasten the duty liability - Section 36 B of the Central Excise Act - HELD THAT:- It is not the cases of the Revenue that the appellant s electricity consumption was not disclosed or that the excess consumption of electricity was discovered by the State Electricity Board for which the appellant was fastened with penalty, etc. Moreover, apart from merely alleging that the excess usage of electricity had resulted in more production which was not recorded, the Revenue has not led any positive evidence to prove that the appellant did receive or found with cash which was also not recorded. There is also an allegation with regard to purchase of excess raw materials but, however, there is no positive evidence placed on record as to the excess/un-recorded cash found to have been used for the purchase of alleged excess raw materials nor is there any evidence or even reference to entry of vehicles/trucks into the factory premises for loading of goods thereon, security gate records, statement of lorry drivers, etc., and therefore, the other evidences are also of no weightage to conclusively hold that there is clandestine activities. It is the settled position therefore that a statement which is sought to be used against a person shall be given to the person against whom it is being used, that person should also be provided with an opportunity of cross-examining such other person which is also the requirement of law as well as natural justice. Even though, the cross-examination was sought for, the Revenue not only denied and rejected the appellant s request, but also made use of such un-corroborated statements to demand duty on the allegations of clandestine removal which is not permissible. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1684
CENVAT Credit - electricity - electricity in their co-generation power plant, used captively in their factory and the excess power is sold to Tamil Nadu Electricity Board (TNEB) - common input used in the manufacture of both dutiable and exempted final products - non-maintenance of separate records - Extended period of limitation - HELD THAT:- The issue has been laid to rest by this very Bench, in the case of M/S. INDIA CEMENTS LTD. VERSUS CCE ST, TIRUNELVELI [ 2018 (3) TMI 180 - CESTAT CHENNAI] where it was held the appellants are liable to pay an amount of ₹ 2,66,09,847/- being the amount equal to 6% of the value of the electricity not used within the factory of production, along with interest at appropriate rates thereof - decided against Assessee. Time Limitation - HELD THAT:- There was no justification for the Revenue to invoke the larger period of limitation and hence, the demand cannot survive for the entire period. Therefore, the demand, if any, will have to be restricted to the normal period and for this limited exercise of determining the duty liability for the normal period, the matter is remanded to the file of the adjudicating authority. Appeal allowed in part.
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2019 (4) TMI 1683
EPCG Scheme - Debonding of EOU - whether the appellant is entitled for the benefit of EPCG scheme at the time of debonding of their unit while exiting from 100% EOU scheme? HELD THAT:- The appellant has applied for opting out of 100% EOU scheme with the Jurisdictional Development Commissioner i.e. NSEZ, Noida in terms of para 6.18 of the Foreign Trade Policy on the payment of duty @ 3.09% in terms of EPCG scheme as notified under Notification No. 64/2008-Cus. dated 9.5.2008. The appellant has obtained necessary permission and No Objection Certificate from the Development Commissioner to that effect. In furtherance of their claim, the appellant has also produced two EPCG licence dated 21.2.2012 and 21.3.2012 in furthering of the Act. Similar issue has come up for consideration before this Tribunal in the case of M/S NITIN SPINNERS LIMITED VERSUS CCE, JAIPUR-II AND (VICE-VERSA) [ 2017 (7) TMI 394 - CESTAT NEW DELHI] , wherein it is held that the benefit of Notification No. 64/2008-Cus. is also available to the EOU at the time of their debonding in terms of para 8.1 of the said notification. Appeal dismissed - decided against appellant.
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2019 (4) TMI 1682
Remission of duty - destruction of finished and capital goods due to fire incidence - HELD THAT:- Admittedly proper officer could not have got the particulars to assess the destruction as reporting was done about 2 years of the occurrence but going by the show-cause notice, one can very well infer that the duty demand has been made on the basis of damage assessed by the insurance authorities. This being so, it can be said that assessment had been made by the department concerning the exact damage on which duty demand has been raised but remission was refused for the reason that application for remission was put after an unreasonable delay. Unreasonable delay is, of course, a question of fact and the same varies from case to case. In the instant case, there was no strict adherence to the internal manual of the department noted in the Order-in-Original and Order-in-Appeal which prescribes that if the matter was not reported within 24 hours, no such remission is admissible. On the other hand, as found from the evidence and record, reporting was done within 24 hours to Fire Brigade and at the Police Station respectively but it was not done to the proper officer of the excise authority for determination of the extent of damage - such procedure lapse cannot take substantial justice away. Further, any prudent man can make out from the factual sequence of the case that appellant was unaware of such requirement of reporting and it did so after being pointed out by the Audit Officer. When damage due to fire had caused loss to the appellant, imposition of duty liability on the damage goods would further cause hardship to the appellant who has been struggling to get justice for over the last two years. CENVAT Credit - capital goods - plastic moulds and other machinery - HELD THAT:- The Commissioner had observed that the goods on which appellant had availed MODVAT credit cannot have attained the character of inputs since appellant claimed that they had been destroyed in the fire for which there was no possibility of those goods being used (further) in relation to manufacture of final products and they were not fit for the intended use in the factory. If this is the observation of the Commissioner then in the normal circumstances, he would have treated those as unusable scrap having nil value and would not have ordered for reversal of credit availed on it. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1681
Extended period of limitation - Valuation - related party transaction - clearance of finished products partly to their sister concern and partly to un-related buyer - Department was of the view that the value required to be adopted by the respondent for the clearances made to their sister concern was required to be done in terms of Section 4(1)(b) of Central Excise Act, 1944 read with provisions of Central Excise Valuation (determination of price of excisable goods) Rules, 2000 - Extended period of Limitation - HELD THAT:- The respondents have filed ER returns in which the clearance and value have been disclosed. All the transactions are accounted in the books; and reflected in financial statements. All records were produced to internal audit (CA 2000) and AG Audit (CERA). For raising an allegation of wilful suppression of fact, there should be some positive act by which the respondent has suppressed fact with an intention to evade payment of duty. When they have obeyed instructions of department and paid the duty as per method of valuation directed by the department, it cannot be said that they are guilty of suppression of facts. The department has not been established any ingredient for invocation of extended period. Time limitation - Held that:- It is to be seen that the clearances were made to their sister concern. The department seems to have been confused by sister concern and related undertaking. When the clearances are made to sister concern, the respondent unit would be eligible for credit and entire situation is revenue neutral one. On the score also the respondent cannot be held to be guilty of suppression of facts with intention to evade payment of duty - there is no ground to interfere with the discussions and conclusion made by the Commissioner (Appeals). Appeal dismissed - decided against Revenue.
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2019 (4) TMI 1680
Clandestine removal - demand based on the data retrieved from the various Pendrives and the computers recovered either from the residential premises of the Director of M/s.Meenu Paper Mills or their residential premises of their employees, read with statements of various persons recorded during the course of investigations - HELD THAT:- Not only the witnesses were not from the locality, the same witnesses were used on different dates at different places. There is no explanation given by the Revenue on the aspect as to why the same very witness (not only one, but number of them were used as witnesses repeatedly) were associated in different raids at different places and on different dates timings. This fact admittedly leads to the doubts about the fairness of the searches and the consequent seizures made by the Revenue. Such non-observance of procedure and repeated calling of the same very witnesses is fatal to the prosecution case and casts serious doubt against the Revenue. It is not understood as to why two Pendrive seized from the residence of Shri Manish Kapoor, Director and Shri Ravinder Kumar were not put under seal, whereas all the other electronic devices recovered from the residence of other employees were properly sealed. It may not be out of place to mention here that incriminating data was recovered from the electronic devices seized from the premises of the Director his accountant and the Revenue s entire case is based upon the data retrieved from the said two unsealed Pendrive recovered from the residence of Shri Manish Kapoor and Shri Ravinder Kumar. That also the data retrieved from the Pendrive allegedly recovered from the residence of Shri Manish Kapoor on two different dates show two different informations. These facts admittedly lead to the doubt about correctness of the data so recovered from the said two Pendrives. Admittedly identical type of electronic equipments including the Pendrive are available in the market. The appellants have strongly contended that whereas the seized Laptop and harddiscs have reflected the unique number for identification, the Pendrive seized from the Director s residence has not reflected the product code number of the said Pendrives. As such there is a serious doubt about the data allegedly retrieved from said Pendrive. It is also seen that the Pendrive 16GB Sandisk recovered from the residence of the Director was opened in the office of the Chief Commissioner, Noida on two different dates i.e. on 03.12.2014 as also on 15.02.2016 and data was retrieved from therein. However, the data retrieved on two different dates is not exactly similar and the retrieved data on 15.02.2016 contains some additional information, which has not been shown in the first retrieved data on 03.12.2014. This fact itself raises doubt about the data having been tampered at some point of time. The question is as to whether such tampered data can be held to be appropriate and legal evidence so as to hold against the assessee. Inasmuch as in the present case also we find that the print outs relied upon by the Revenue have neither been taken in a proper manner, nor adhered to the conditions of the Section 36A and 36B of Central Excise Act nor has been retrieved in a proper manner, the authenticity of the same is doubtful and as such the same cannot be relied upon for upholding the charges and findings of clandestine removal. The applicability of procedural requirement under Section 65B(4) of Evidence Act of furnishing certificate is to be applied only when such electronic evidence is produced by a person, who is in a position to produce such certificate being in control of the said device. In a case where electronic evidence is produced by a party, who was not in possession of a device, applicability of section 63 and 65 of the Evidence Act could not be held to be excluded. The statements recorded during investigation, which have not been tested on the touchstone of cross-examination and examination in chief in terms of the provisions of section 9D of Central Excise Act, cannot be referred to and relied upon as an admissible evidence in the adjudication proceedings. The result of the same would be that the said statements have to be taken out of the consideration and no reliance can be placed upon the same. The Revenue s entire case is based upon the print outs retrieved from the seized electronic documents, which have already been discussed by us in the preceding paragraphs and have been found to be of doubtful nature, read with the statements of various persons recorded during investigations, which have not been tested by the tool of cross-examination, and as such are not admissible, we note that nothing remains as an evidence so as to uphold the charges of clandestine removal. It is a well settled law that clandestine removal allegations are required to be based upon legal, positive and sufficient evidences so as to inspire confidence in the Revenue s allegations or to at least show the evidences, which may tilt the case in favour of the Revenue on the principle of preponderance of probabilities. The clandestine allegations, being in the nature of quasi-criminal proceedings, cannot be upheld on the basis of assumptions and presumptions and require sufficient evidences. If the computer print out and statements are kept out of consideration, as discussed in the previous para as not being admissible evidences, there is virtually no other evidence produced by the Revenue to establish the charges of clandestine removal. It is well settled law that allegations and findings of clandestine removal are required to be upheld on the basis of sufficient and tangible evidences and not merely on the basis of assumptions and presumptions. The Hon ble Allahabad High Court in the case of M/S. CONTINENTAL CEMENT COMPANY VERSUS UNION OF INDIA OTHERS [ 2014 (9) TMI 243 - ALLAHABAD HIGH COURT] has observed that clinching evidences as regards purchase of raw materials, use of extra electricity, sale of final products, transportation, payment, realization of sale proceeds, mode and flow back of funds are required to be produced by the Revenue to establish the charge of clandestine removal, which cannot be confirmed based on presumptions and assumptions. The impugned order of Commissioner upholding the allegations of clandestine removal against M/s.Meenu Paper Mills Pvt.Ltd. are unsustainable and accordingly set aside the demand confirmed against them along with setting aside of personal penalty. Inasmuch as the appeal of M/s.Meenu Paper Mills Pvt.Ltd. stands allowed, the penalties imposed upon the other appellants who are either the Director, Proprietor or partner or the raw material supplier or the alleged buyers are also set aside and their appeal are allowed. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1679
Process amounting to manufacture or not - Manganese ore is heated in a coal fired furnace till it becomes red hot; the material is quenched with water and taken out from the furnace for sun drying; it is pulverized to a fine powder and packed in bags for sale - extended period of limitation - HELD THAT:- It appears that even the samples of the impugned product have not been drawn and tested to confirm whether the product would be eligible to be called MnO, so that it is eligible to be classified under chapter 28 of C. Ex. Tariff Act. It is seen that revenue had simply gone by the process undertaken by the Appellant in their factory and have come to the conclusion on the basis of Wikipedia. The allegation made by revenue is of serious nature and in such a case, a commensurate homework is expected to be done by the department to substantiate their allegation - Coming to a conclusion simply on the basis of the submission of the Appellant and holding that the water which is poured on hot Manganese Ore forms the complete new product, i.e. MnO classifiable under CETH 28209000, appears to be weak. Hon. Supreme Court in the case COMMISSIONER OF C. EX., LUCKNOW VERSUS WIMCO LTD. [ 2007 (10) TMI 3 - SUPREME COURT OF INDIA] observed that merely because there is a tariff entry it does not become excisable unless manufacture is involved. Therefore in this case the department requires to prove that there is an act of manufacture and as a result of that a new product has come into existence. Therefore, the issue requires to go back to the adjudicating authority to go into the issue in the entirety and to come to a conclusion as to whether the process undertaken by the Appellants are not normal to metallurgy so as to exclude the impugned item from the scope of chapter 26 and also to ascertain whether as a result of such process a new product technically and commercially identifiable and usable product which is entirely different from the ore has emerged. If need be adjudicating authority shall obtain opinion of an expert in the field. Time Limitation - HELD THAT:- Having clarified in with manner issuing a Supreme Court Notice dated 28.01.2010 alleging suppression of fact is not acceptable. The department sought to invoke extended period stating that the appellants suppressed the fact that they are adding an inert chemical i.e. H2O. This is a long drawn and spurious argument, hence not acceptable we hold that extendable period is not invocable in this case. Appeal allowed by way of remand.
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2019 (4) TMI 1645
Valuation - deduction of VAT from Transaction value - Section 4 (3) (d) of the Central Excise Act, 1944 - HELD THAT:- In the present case, the appellant in terms of the 2004 Scheme had deposited the entire amount of VAT collected. It is this amount that is used as a measure for granting financial assistance to be subsequently provided. In terms of Clause 6.2 of the 2004 Scheme, units with fixed investment between ₹ 1 crore to ₹ 10 crores are provided financial assistance equivalent to 75% of the sales tax paid. The Adjudicating Authority was not, therefore, correct in stating that the amount of VAT collected by the assessee was retained and not deposited in the Government account. The judgment of the Tribunal in M/S MAIHAR CEMENT VERSUS CCE ST JABALPUR [ 2018 (4) TMI 288 - CESTAT NEW DELHI] and SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [ 2018 (1) TMI 915 - CESTAT NEW DELHI] would, therefore, apply and the financial assistance granted to the appellant cannot be included in the Transaction value for payment of excise duty. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1644
CENVAT credit - fake invoices - supply of cenvatable invoice to the appellant without actual supply of the goods - HELD THAT:- The appellant has also asked for cross examination of Shri Amit Gupta and Shri Maggu which was denied by the adjudicating authority, which is in contravention of the provisions of Section 9(D) of the Excise Act as has held in the various case laws as mentioned in para 4 of above. We, therefore, find that the impugned order is not sustainable in the eyes of law. Further, the department has not taken any step to link the transaction with the supply of other raw materials required for the manufacture of the final product. Investigations also could not identify the finished goods by the appellant. The investigation has not been conducted in a manner so as prove the availment of ineligible Cenvat credit on the basis of invoices only, without receipt of the goods. We also find that as the manufacturer of the goods appellant has taken a due care and has received the good at the strength of invoice and payment of duty. Also, Driver of the truck was transported the goods has not been examined by the adjudicating authority and subjected to cross examination by the appellant. This also is against the provisions of Section 9(D)(i) of the Central Excise Act. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1643
Rectification of Mistake - error apparent from the face of record - Section 35C(2) of Central Excise Act, 1944 - HELD THAT:- The mistake apparent in the order is required to be corrected and, therefore, the same is rectified in the said order stated above at the places mentioned in the said order as per the table annexed herewith. ROM application allowed.
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2019 (4) TMI 1642
Valuation - related party transaction - inter-connected undertakings - Section 4 (3) (b) (l) of the Central Excise Act, 1944 - whether the appellants and M/s. Cosmos Castings (I) Ltd. and others, as above, are related/ inter-connected undertakings and can be so considered merely on the basis of them being mentioned as Related Party Disclosure in their balance sheets? HELD THAT:- The adjudicating authority has failed to appreciate that the provisions of Rule 9 of the Central Excise Valuation Rules, 2000 has been applied in a situation where the buyer is related either in sub-clause (ii), (iii) or (iv) of clause (b) of sub-section (3) of Section 4 of the Central Excise Act, 1944. For attracting the provisions of Rule 9 of the Central Excise Valuation Rules, 2000 the goods should be sold to related person as specified either in sub-clause (ii), (iii) or (iv) of Section 4(3)(b) of the Act and not to anyone else. Once law falsifies the liability of appellant in given circumstances, mere mention by appellant in its record that too in balance sheet only will not create any liability. More so when there is no effort by the Department to show whether price at which the duty liability has been discharged is influenced by relationship between the parties. Penalty - extended period of limitation - HELD THAT:- Penalty can be imposed only for contumacious conduct or for willful infringement of law, which are conspicuously absent on the part of the appellant in the facts of the present case. For the said reason only, the Department was not even entitled to invoke the extended period of limitation - penalty also set aside. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (4) TMI 1641
Classification of goods - seeds becoming inedible and are capable of being used only for sowing purposes by farmers - whether classified under entry 17, 18, 19 and 20 of Part-B of the Third Schedule of the Tamil Nadu General Sales Tax Act, 1959 or otherwise? - HELD THAT:- Although Section 28 A of the TNGST Act empowers the Commissioner of Commercial Taxes to issue a clarification on the rate of tax in response to a request from a registered dealer, the said communication and Clarification also do not cite any applicable provisions of law. Further, the returns filed by the respective Petitioners were rejected and it is proposed by the pre-assessment notices to impose tax and penalty on the assumption that cotton seeds that are used only for seeding purposes are taxable under entry 6(iii) of the II Schedule to the TNGST Act and that such seeds are not exempted under Entry 7 of Part -B of the III Schedule. Thus, it is in the interest of justice that the Assessing Officer is directed to carry out assessment by examining the taxability of cotton seeds that are used exclusively for seeding purposes after providing a reasonable opportunity to the Petitioner to submit objections and make its submissions. Petition allowed.
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2019 (4) TMI 1640
Validity of assessment order - TNGST Act - suppression of turnover or not - recovery of arrears of tax - HELD THAT:- It is clear that during the assessment year 1996-97, the petitioner's father was running a proprietary concern, who had purchased 323 bags of groundnut kernels from a registered dealer and groundnuts purchased, for which the tax has been paid. However it is on the date of the inspection, the petitioner's father was not able to produce the purchase bill. However, on record it is clear that the petitioner's father had subsequently brought his purchases into the account and paid the tax due thereby rectifying the defects pertaining to the year 1996-97. Merely because the purchase bill was not produced at the time of inspection for the alleged stock that were found at the time of inspection, does not always mean that there is a suppression. The petitioner has also maintained a stock register, which has been signed by the Marketing Committee regarding the purchases made. The view taken by the first respondent in the Appeal, which is under challenge before this Court is not correct. The order passed by the second respondent is well found and on perusing the order passed by the first respondent, the first respondent has not given any valid reason for interfering with the orders passed by the second respondent other than stating that at the time of inspection, there was no purchase bill produced by the assessee and the subsequent documents produced are fabricated. Merely on this ground, the first respondent has set aside the order passed by the second respondent, which is not correct. Petition allowed.
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2019 (4) TMI 1639
100% EOU - Refund claim - Section 4-E of the TNGST Act 1959 - HELD THAT:- On reading Section 4-E, it is evident that the word used therein is 'unit' and not 'dealer'. As such, there is no doubt that a 100% EOU is entitled to the refund on satisfying the prescribed conditions. The use of the word 'unit' instead of the word 'dealer' is significant especially in the context of a statute wherein tax is ordinarily imposed on the dealer. In the instant case, it is the admitted position that the two units of the Petitioner are 100% EOU s. From the Registration certificate, it is evident that Rajapalayam Textiles and Rajapalayam Spintex are not separate legal entities but are branches/divisions of the dealer, Rajapalayam Mills Limited, in whose name the Registration Certificate was issued. If the meaning ascribed to the word 'unit' in the aforementioned dictionaries is applied and viewed in the factual context of the Registration Certificate and the Assessment Order, it becomes clear that the two units are constituents of the Petitioner. Whether the condition prescribed in Rule 23(2C) read with Form A-5 is satisfied in the instant case? - HELD THAT:- A fortiori , in the context of a refund application, the principle of substantial compliance would apply. If so applied, it is clear that the two 100% EOUs paid taxes at 2-4% on the purchases made by them and thereby substantially complied with the conditions under Section 4-E read with Rule 23 (2C) and Form A-5. Therefore, the claim for refund is valid and, consequently, the Impugned Order is liable to be quashed. Refund allowed - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1638
Validity of assessment order - export sales - case of the petitioners is that the petitioner is not under obligation or has incurred any tax liability now determined by the respondent because the sales which are reflected in Ext.P6 are export sales effected by the petitioner - HELD THAT:- This Court is of the view that, keeping particularly the reply of the petitioner in perspective, viz, the transactions are exempt from taxability under the Act, to ensure fairness in action or to at least put the petitioner on notice or give personal hearing in this behalf, and then, taxability is decided. Thereafter if the petitioner fails to avail the opportunity or convince the first respondent, then no exception to the best judgment first respondent makes, at the first instance, be taken under Article 226 of the Constitution of India. Matter is remitted to first respondent.
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2019 (4) TMI 1637
Jurisdiction - inter-state sales - Whether in facts and circumstances of the case, there is any jurisdiction to infer estimation of an inter-State sale under the Central Sales Tax Act, 1956 in the absence of any evidence of movement against a particular order or direction? - levy of penalty under Section 16(2) of the Act. HELD THAT:- The right to cross examination will occur only after the witnesses are examined in chief. Therefore, when notice is issued to the third parties by the Assessing Officer, the first requirement is to record a statement from the said person so summoned, after the statement is recorded and if there is any adverse remarks is made by the said third party, then the assessee is entitled to cross examine the third party on the imputations made by the third party against the petitioner/dealer. Unfortunately, the Tribunal did not make a follow up exercise to consider as to whether the findings are correct or not but was carried away by the findings of the Assessing Officer which infact was set aside by the First Appellate Authority. The Tribunal was expected to independently assign reasons as to why it is confirming or setting aside the order of the First Appellate Authority. The Tribunal also committed a serious error by drawing adverse inference against the petitioner/dealer on account of the absence of transporters before the Assessing Officer. It is the duty of the Department to record statement from the transporters and if there is any imputation against the petitioner/dealer, then he has to be afforded an opportunity to cross examine the third party before the statement can be relied on. The third party having not appeared before the Assessing Officer, the question of drawing adverse inference against the petitioner/dealer does not arise. Tax case revision allowed.
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2019 (4) TMI 1636
Liability of Sales Tax Dues - enforceability of charge against property - Section 24(1) of the Tamil Nadu General Sales Tax Act, 1959 - HELD THAT:- It is clear that the Petitioners purchased the property from the erstwhile owners/assessee of the Sales Tax Department on 09.08.2000. It is also clear from the E.C. dated 13.03.2000 that the charge in favour of the Sales Tax Department is not reflected in the E.C. Therefore, there are no materials to conclude that the Petitioners were put on notice either actual or constructive, about the statutory charge in favour of the Sales Tax Department. The limited issue that arises for consideration is whether the charge under Section 24(1) of the TNGST Act can be enforced against the property in the hands of the Petitioners. This issue is no longer res integra and it was decided that such a charge cannot be enforced against a transferee without notice . The principles of law that can be gleaned in respect of the enforcement of charges, including statutory charges - petition allowed.
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2019 (4) TMI 1635
Validity of assessment proceedings - revision of assessment - Section 16(1) of the TNGST 1959 - HELD THAT:- From the Original Assessment Order, it appears that the Petitioner submitted Form-H and also submitted other relevant documents. However, the party claiming the benefit of exemption is required to establish the entitlement to exemption by filing and producing for verification all relevant documents. Even assuming that the documents were submitted by the petitioner when the Form-H was originally filed, as correctly contended by the learned counsel for the Respondent, the Assessing Officer is entitled to call for such documents to verify the validity of the claim for exemption. This Court is of the view that the Petitioner should be given an opportunity to submit necessary supporting documents and establish the claim for exemption especially in view of the fact that the Petitioner did not previously submit a written representation on receipt of the reassessment notice. The matter is remanded to the Respondent to carry out the reassessment after providing a reasonable opportunity to the Petitioner to submit all necessary documents to substantiate its claim for exemption - Petition allowed by way of remand.
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2019 (4) TMI 1634
Jurisdiction - Invocation of revisional power by Joint Commissioner - TNGST Act - HELD THAT:- The Joint Commissioner has erred in invoking the revisional power to bring to tax the aforesaid items of receipts, either receipts for the job work or the receipts for designing the moulds for manufacturing of pet bottles for the specified customers, as taxable turnover in the hands of the Assessee. Even though the Assessee was engaged in the business of manufacture and sale of pet bottles (plastic bottles), but it is only the bottles manufactured from its own raw materials and sold in general market could be taxed in the hands of the Assessee as the taxable turnover. The receipts for the job work of converting the raw materials from plastic into pet bottles in a specified size or design for other customers is not a taxable turnover in the hands of the Assessee. Even though the learned counsel for the Revenue submitted before us that at the time of inspection, these moulds were not produced for verification, he was unable to support the said stipulation made in the show cause notice given by the revisional authority with the help of any document or certain report that the further verification of the inspection report by the enforcing authority by producing him in cross-examination of the Assessee during the course of revisional proceedings - nothing as a fact was proved against the Assessee that all the moulds were not available with the Assessee for verification. Thus, the revisional authority has not correctly invoked his revisional jurisdiction in this matter, under Section 34 of the Act, which empowers him to call for and examine an order passed by the Appellate Assistant Commissioner - The discretionary power given under Section 34 of the Act to the revisional authority is wide and therefore, the said discretionary power has to be exercised with a great amount of circumspection, but the reason for invoking such revisional power should be based on the relevant materials and such materials should inspire confidence when the reasons are examined by the appellate forum or Constitutional Courts. Petition allowed.
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2019 (4) TMI 1633
Refund claim - non-disbursement of refund validly due to the petitioners - retrospective cancellation of certificate of entitlement - HELD THAT:- The mighty Government insists on the petitioners paying all the dues for the different periods prior to availing of the benefit of refund from them. On account of the fact that the respondents have issued the eligibility certificate for the period 14.7.2013 to 13.7.2021 on 23.12.2014, the petitioners who till they were granted such certificate had discharged their tax dues as normal dealers were now saddled with the liability of discharging the output tax liability which they had paid by taking credit of input tax paid on purchases. The petitioners, on account of being called upon to pay unanticipated tax dues are in financial straits and not in a position to pay such amount unless the amount payable to them under the scheme by the Government is also paid over to them. On the one hand the petitioners are called upon to pay the entire tax liability and on the other and they are denied reimbursement of the output tax on the ground that they had paid the same by adjusting the input tax credit. Thus it is a no win situation for the petitioners. In the opinion of this court, under the Gujarat Textile Policy which is in the nature of an incentive scheme, there is also an obligation cast upon the Government to grant refund/reimbursement of the amount due and payable to the dealers. However, for the purpose of considering as to whether there is due compliance with the provisions of the scheme, it is only the obligation cast upon the dealer which has been taken into consideration, ignoring the fact that such failure has occasioned on account of the non-fulfillment of the reciprocal obligation cast upon the Government authorities to refund/reimburse the amounts due to the dealers. The controversy in the present case is therefore, required to be amicably resolved by ensuring that while the Government does not have to compromise insofar as recovery of taxes is concerned, a balance is maintained, whereby the petitioners are also in a position to continue with the business to fulfil the object of the textile policy - the amount due and payable by the petitioners works out to approximately ₹ 2,75,26,130/- and in terms of the garnishee order issued by the Commercial Tax Department to the Industries Department, the petitioners are entitled to a refund of approximately ₹ 5 crore. Thus, if the Commercial Tax Department and the Industries Department work out the outstanding amount payable by the petitioners and the refund/ reimbursement to which they are entitled and adjust the same, by and large the entire controversy could be resolved. Petition allowed in part.
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2019 (4) TMI 1632
Benefit of concessional rate of tax for purchase of raw material used in the manufacture and sale of kathha , and cutch - whether the sale, of khair wood to the petitioner, is in the course of inter-State trade or commerce from the place of business of the Corporation i.e. in the State of Uttarakhand, for it is only in the case of an inter-State sale would Section 8(4) of the CST Act require the petitioner to submit a declaration in Form-C to the Corporation, and for the Corporation in turn to submit the said declaration to the Trade Tax Department? HELD THAT:- Among the conditions stipulated in the notification dated 26.12.2000, is that the sale must be in the course of inter-State trade or commerce. As the Notification dated 26.12.2000 provides for a concessional rate of tax, on fulfillment of the conditions prescribed therein, and such a notification must be strictly construed, it is only if the sale of goods is in the course of inter-State trade or commerce would the benefit of the said notification be available to the petitioner. The field of taxation on the sale or purchase of goods, taking place in the course of inter-state trade or commerce, was excluded from the competence of the State Legislature. The situs of the sale or purchase was wholly immaterial as regards inter-state trade or commerce. In view of Section 3(a) of the CST Act, all that had to be ascertained was whether the sale or purchase occasioned the movement of goods from one State to another. If the transaction of sale satisfied this requirement, it was deemed to be a sale or purchase of goods in the course of inter-State trade or commerce and, by virtue of Articles 269 and 286 of the Constitution, was beyond the legislative competence of a State legislature to tax. There is no integral link between the contract of sale and the movement of goods (Khair wood) from the State of Uttarakhand to the State of Uttar Pradesh. Sale of goods (i.e. Khair wood), in the present case, cannot therefore be said to be an inter-State sale falling within the ambit of Section 3(a) of the CST Act. The order under appeal, to the extent the learned Single Judge held it to be an inter- State sale falling within the ambit of Section 3(a) of the CST Act, must be and is, accordingly, set aside. Doctrine of unjust enrichment - HELD THAT:- The very collection and/or retention of tax, without authority of law, entitles the person, from whom it is collected, to claim its refund - the doctrine of unjust enrichment has no application, in the facts and circumstances of the present case, as Khair wood purchased by the petitioner was not sold as they were, but were used as inputs for the manufacture of kattha. The subject sale is an intra-State sale liable to tax under the Uttarakhand Sales Tax laws, and not under the CST Act, the question of refund of the arrears of tax, collected by the Corporation from the petitioner, does not arise. Decided in favor of revenue.
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Indian Laws
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2019 (4) TMI 1631
Rejection of Discharge application - Section 239 read with Section 245 Cr.P.C. - whether in the present case, appellant was entitled to be discharged from the offence under Sections 504 and 506 and whether Courts below committed error in rejecting the discharge application? HELD THAT:- From the facts, it is clear that appellant s role was only of a surveyor appointed by insurance company to survey and submit report on the fire insurance claim alleged by the complainant with regard to incident dated 18.12.2010, which took place in his factory premises at Kosikala, District Mathura - While considering the discharge application, the Court is to exercise its judicial mind to determine whether a case for trial has been made out or not. It is true that in such proceedings, the Court is not to hold the mini trial by marshalling the evidence. The ingredients of Sections 504 and 506 are not made out from the complaint filed by the complainant. When the complaint filed under Section 156(3) Cr.P.C., which has been treated as a complaint case, does not contain ingredients of Sections 504 and 506, we are of the view that Courts below committed error in rejecting the application of discharge filed by the appellant. In the facts of the present case, we are of the view that appellant was entitled to be discharged for the offence under Sections 504 and 506. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1630
Who can file contempt petition - Whether the information sought under the Right to Information Act, 2005 can be denied by the Reserve Bank of India (RBI) and the other banks on the ground of economic interest, commercial confidence, fiduciary relationship or public interest? HELD THAT:- There is no fiduciary relationship between the RBI and the other banks, this Court stressed the importance of the RTI Act, and held that it is in the interest of the general public that the information sought for by the Respondents therein has to be furnished. There is a specific reference to the inspection reports and the other materials, which were directed to be given to the Respondents therein. The Respondents have committed contempt of this Court by exempting disclosure of material that was directed to be given by this Court. In all fairness, Mr. Gupta has submitted that the disclosure policy shall be deleted from the website - We do not agree with Mr. Gupta that a contempt petition is maintainable only at the behest of a party to the judgment. The directions issued by this Court are general in nature and any violation of such directions would enable an aggrieved party to file a contempt petition. Contempt petitions are disposed off.
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2019 (4) TMI 1629
When the answer scripts of appellant s examination is sought whether the fee prescribed under Rule 4 of the Right to Information (Regulation of Fee and Cost) Rules, 2005 payable or that under Guideline No. 3 of the Guideline, Rules and Procedures for Providing Inspection and/or Supply of Certified Copy(ies) of Answer Book(s) to Students, framed by the Examination Committee of appellant s statutory Council at its 148th Meeting held on 14.08.2013? HELD THAT:- Guideline no.3 of the appellant does not take away from Rule 4, The Right to Information (Regulation of Fees and Cost) Rules, 2005 which also entitles the candidates to seek inspection and certified copies of their answer scripts. In our opinion, the existence of these two avenues is not mutually exclusive and it is up to the candidate to choose either of the routes. Thus, if a candidate seeks information under the provisions of the Right to Information, then payment has to be sought under the Rules therein, however, if the information is sought under the Guidelines of the appellant, then the appellant is at liberty to charge the candidates as per its guidelines. Such quashing was done despite no prayer being made to that effect on behest of the respondent, quashing of Guideline No.3 was unwarranted. It is to this limited extent that we allow the appeal and set aside the impugned order of Division Bench of Delhi High Court whereby it quashed Guideline No.3. Appeal disposed off.
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2019 (4) TMI 1628
Dishonor of cheque - insufficiency of funds - section 138 of NI Act - HELD THAT:- The accused No.1/Firm not only made party but it is also proved by the complainant that accused No.1/Firm has committed the offence punishable under Section 138 of the Negotiable Instruments Act. Accused No.2 being the Managing Director, who issued the cheque, was held responsible. Therefore, impugned judgment of Additional Sessions Judge, Akola in Criminal Appeal No. 120 of 2013 is liable to be quashed and set aside. In the present case, accused Nos.3 and 4 were not the incharge and responsible for the conduct and business of the company. Accused No.2 issued cheques in favour of the complainant. He was the responsible persons for the act of accused No.1/Firm. He was managing the affairs of the firm/accused No.1. Therefore, learned JMFC has rightly convicted accused No.2 and acquitted accused Nos.3 and 4. The complainant has made firm as accused No.1 in the complaint itself. Learned JMFC has recorded his findings in para 51 that the complainant has proved that offence is committed by accused No.1/Firm. However, failed to prove that accused Nos.3 and 4 are vicariously liable for the act of accused No.1/Firm because accused Nos.3 and 4 were not the acting partners of the firm. Therefore, it is clear that accused No.2 issued cheques (Exhs.146 and 147) on behalf of accused No.1/Firm towards discharge of legal debt and liability - accused No.2 was held guilty of the offence punishable under Section 138 of the Negotiable Instruments Act. Accused No.2 was managing the affairs of accused No.1/Firm. He himself has signed the cheques (Exhs.146 and 147). The said cheques were not encashed. Criminal revision application allowed.
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2019 (4) TMI 1627
Principles of natural justice - cancellation of certificate of registration - section 45-IA (7) of the Act of 1934 - HELD THAT:- In the facts of the present case, the petitioner was issued a show cause notice, to which the petitioner replied in writing. In its reply, the petitioner acknowledged that there was default on the part of the petitioner in meeting the requirement of having a net owned fund of ₹ 200 lakhs as at March 31, 2017. Principles of natural justice do not require that, a delinquent has to be given an oral hearing at every time or at every stage. It is sufficient compliance of the principles of natural justice when, a delinquent issued a show cause notice delineating the charges which is required to be met and is afforded a reasonable opportunity of making a representation with regard thereto. In the present case, in its reply the petitioner did not ask for an oral hearing to be granted. The second proviso to Section 45-IA(6) does not mandate an oral hearing to be given. Requirement of a statute to hear the parties does automatically translate into a right of oral hearing at every stage or any stage for that matter. It would be sufficient compliance with the requirements of the second proviso to Section 45-IA(6) allows the notice an opportunity to make a representation and considers such representation in an impartial manner, with an open mind, fairly and in accordance with law. Section 45-IA(7) explanation provides the formula by which the net owned fund that, a company carrying on a business as a non-banking financial companies, is required to be calculated. Nothing is placed on record to suggest that, the calculation of net owned fund by applying the formula prescribed in the statute is in excess of ₹ 200 lakhs as on March 31, 2017. The impugned order contains reasons. It is not vitiated by breach of principles of natural justice. Petition dismissed - decided against petitioner.
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2019 (4) TMI 1626
Interpretation of statute - Section 107A of the Patents Act, 1970 - Bolar provision - availability of a competitor's product immediately after the expiry of patent in the Indian market without having to wait for regulatory approval post patent expiry - HELD THAT:- It is, therefore, clear that whilst there is one rule generally speaking, use of a term or expression in a statute, carries upon it to be interpreted in the same manner in all provisions of that statute, the rule is neither inflexible admitting no exception nor of universal application. The object of the concerned provision is one of the important factors which weigh in while interpreting whether the same meaning has to be attributed to all parts of the statute. Given these circumstances, this Court is of the opinion that exports is used in different contexts in Sections 84, 90 and 92A. Section 84 is the provision which enables compulsory licensing of certain conditions. Section 84(7) spells out what are reasonable requirements of the public. These are deemed not to have been satisfied if under Section 84(7)(a)(iii), a market for the patented article manufactured in India is not being supplied or developed. Section 90(1)(vii) is in a sense, complimentary to Section 84 and has to be read with it: it guides the Controller to ensure inter alia that the license granted under Section 84(7)(a)(c)(iii) is with the predominant purpose of supply to the Indian market and that the licensee may also export the patented product. Having regard to all these factors, it cannot be held that the Parliament intended to per se exclude exports from the sweep and width of the term sale in Section 107A regard being had to the disparate and differing objectives of Sections 84, 90 and 92A all of which in some way or the other primarily deal with compulsory licensing and on the other hand, Section 107A is the only provision that allows an exception to be used- construction and sale of a patented article only for research purposes and subject to fulfillment of the conditions specified therein. The court is of the opinion that there is no question of treating Section 107A(a) as an exception to Section 48. Its history of interpretation by TRIPS, the discussion in the Parliamentary Joint Committee Report, all clearly point to its being a special provision that deals with the rights of the patented invention for research purposes.
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2019 (4) TMI 1625
Settlement of dispute through mediation - seizure of fake credit cards - HELD THAT:- There is no bar to the disputant parties to be referred by the court to mediation, even in cases involving such non-compoundable offences the action in which context can be lawfully terminated by approaching the High Court under Section 482 Cr. PC, provided the parties are willing and there exists an element of settlement. After all, amicable settlement restores peace and tranquillity not only to the parties but also to the society at large. The concern to be addressed, however, is as to whether the court is to make a reference of a criminal case to the process of mediation merely for the asking or should there be scrutiny before such reference; and further as to whether the mediator is obliged to proceed ahead, hold parleys to negotiate and broker some settlement irrespective of the nature of offences only because there is a reference from the court. This Court is of the firm view that before making a reference to mediation in the context of criminal case, the court must consider as to whether a settlement reached by such effort would be acceptable for the criminal process to be brought to an end. The court while considering reference of the parties to a criminal case to mediation must before even ascertaining as to whether elements of settlement exist first examine, by preliminary scrutiny, the permissibility in law for the criminal action to be brought to an end either because the offence involved is compoundable or because the High Court would have no inhibition to quash it, bearing in mind the broad principles that govern the exercise of jurisdiction under Section 482 Cr.P.C.
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