TMI Tax Updates - e-Newsletter
June 9, 2022

Case Laws in this Newsletter:

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

TMI Short Notes

1. Limitation Act and the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC),2016.

  IBC:

Articles

1. Providing of marketing services and acting as a conduit between a foreign company and customers to be termed as ‘intermediary’

   By: Bimal jain

2. PROSECUTION AGAINST AN ASSESSEE UNDER INCOME TAX ACT, 1961 WHEN THE ASSESSMENTS ARE QUASHED ON LIMITATION

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. CBIC to launch “E-Lecture Series by Eminent Personalities on topics of national interest and indirect taxation” tomorrow

2. RBI allows credit cards to be linked with UPI platform

3. Cabinet approves Memorandum of Understanding between India and United Arab Emirates (UAE) on Cooperation in the field of Industries and Advanced Technologies

4. Various steps taken by Government since 2014 helped keep economy and people afloat in difficult times: Smt. Nirmala Sitharaman

5. Monetary Policy Statement, 2022-23 Resolution of the Monetary Policy Committee (MPC) June 6-8, 2022

6. Union Finance Minister Smt. Nirmala Sitharaman to launch Department of Economic Affairs Iconic Day celebrations in New Delhi today

7. Union Minister of State for Finance Dr. Bhagwat Kishanrao Karad releases e-book “Pratidhwani” as part of Iconic Week celebrations of Ministry of Finance

8. Union Finance Minister Smt. Nirmala Sitharaman launches Single Nodal Agency (SNA) Dashboard as a part of the Azadi ka Amrit Mahotsav (AKAM) celebrations by Ministry of Finance in New Delhi

Notifications

Customs

1. 20/2022 - dated 7-6-2022 - ADD

Seeks to rescind notification No. 28/2017-Customs(ADD) which imposed ADD on Hydrogen Peroxide imported from Bangladesh, Taiwan, Korea RP, Indonesia, Pakistan and Thailand

2. 31/2022 - dated 7-6-2022 - Cus

Seeks to amend notification no. 50/2017-Customs dated 30.06.207 extending the time period for furnishing the final Mega power project certificate from 120 months to 156 months and extending the period of validity of security in the form of Fixed Deposit Receipt or Bank Guarantee from 126 months to 162 months, in case of provisional mega power projects

GST

3. 08/2022 - dated 7-6-2022 - CGST

Seeks to provide waiver of interest for specified electronic commerce operators for specified tax periods

Highlights / Catch Notes

GST

• High Court: Property Attachment Valid Despite Incorrect Legal Citations; Procedural Errors Don't Invalidate Orders.

  Case-Laws - HC : Attachment of property of petitioner - merely because of the wrong quoting of the provision, the order impugned before the Writ Court cannot be successfully assailed by the appellant, as the law is well settled in this regard. Non-quoting of the provision of law or wrong quoting of the same may not vitiate the proceedings on that ground itself. - HC
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• Court Sets Aside GST Order Due to Procedural Errors; Remands Case for Compliance with Section 74(5) Requirements.

  Case-Laws - HC : Seeking to allow petitioner to adjust the credit amount which was blocked - Demand u/s 74(5) - in the notice dated 01.11.2021, it is wrongly mentioned as Form GST ASMT-10 and that has been replied on 24.11.2021. Thereafter, straight away the order under Section 74(1) was issued on 09.12.2021. Therefore, it is a clear case where procedure contemplated under Section 74 especially, under Section 74(5) has not been complied with. Therefore, on that ground, this Court is inclined to set aside the order and remand the matter back to the respondents. - HC
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• Bail Request Highlights Alleged Unfair Treatment in Input Tax Credit Case; Disparities in Investigative Actions Questioned.

  Case-Laws - DSC : Seeking grant of bail - wrongful availment and passing of Input Tax Credit - The investigations in the instant matter smacks of whimsical and arbitrary action on the part of the investigating agency. It is infact baffling as to why two accused persons have been treated with different gloves by the investigating agency and the person whose role appears to be more graver and serious with respect to the alleged offences seems to have been treated with a softer glove. - DSC
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• Court Denies Anticipatory Bail in Fraud Case Involving Bogus Invoices and Inadmissible Input Tax Credit (ITC.

  Case-Laws - DSC : Seeking grant of anticipatory bail - passing huge amount of inadmissible Input Tax Credit (ITC) in fraudulent manner by the way of issuing bogus invoices without supply of any goods - availment of ITC on the basis of purchase invoices without receipt of goods - It is clear that calculation of the tax under Chapter XII is distinct from the Chapter XIX, which relates to offence and penalties. Therefore, there is no substance in the argument advanced by the learned advocate for the applicant. - this is not a fit case to grant anticipatory bail to the applicant. - DSC
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Income Tax

• Insolvent Taxpayer Granted Waiver on Interest and Penalties for Non-Payment of Advance Tax Due to Insolvency Issues.

  Case-Laws - HC : Waiver of interest - interest liability should be computed from the last date for payment of tax in the relevant assessment year up to the date of payment at the same rate of 6% per annum. Ordinarily, the assessee would also be liable to pay interest and penalty for non-payment of advance tax. However, on account of the following reasons: the ex-insolvent/ assessee was not in a position to remit income tax; she took all possible measures to procure payment of tax; and the debatable nature of and legitimate doubts regarding the tax liability of the estate of an insolvent, the assessee is entitled to a waiver of interest and penalty as regards non-payment of advance tax. - HC
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• Export Entitlements and Duty Drawback Count as Business Income: Deductions Allowed u/s 80IB(11A) of Income Tax Act.

  Case-Laws - AT : Deduction u/s 80IB(11A) - the export entitlements (MEIS) and the duty drawback of promotion scheme is an income asssessable under the head “profits or gains from business or profession” as per clause (iiib) and (iiid) to section 28 of the IT Act, 1961 - Deduction allowed - AT
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• Interest expenses disallowed for abandoned projects u/s 36(1)(iii) of Income Tax Act; treated as revenue expenditure.

  Case-Laws - AT : Disallowance of interest expenses u/s.36(1)(iii) - Once project is abandoned, it seizes to become eligible asset to capitalize borrowing cost to the work in progress account, till such asset is put to use in business of the assessee. In this case, since, project of the assessee was abandoned, expenditure incurred on said project, including interest, if any, on borrowed capital would be in the nature of revenue expenditure, which needs to be allowed as deduction. - AT
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• Verification Needed for Late PF/ESI Payments: Deduction Allowed if Deposited Before Income Tax Return Due Date u/s 139(1).

  Case-Laws - AT : Disallowance of late payment of employees contribution to PF/ESI - If the amount is deposited before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the assessee shall be entitled for deduction u/s 36(1)(va) of the 1961 Act. However, whether this amount towards employees share of PF/ESI was actually deposited before the due date for filing of return u/s 139(1) or not is a matter of verification. - The matter restored back for limited purpose of verification - AT
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• Life Membership Fees Not Eligible for Exemption as Corpus Donation u/s 11; Considered Anticipatory Payment for Services.

  Case-Laws - AT : Exemption u/s 11 - Life Membership Fees claimed as capital receipt of the corpus donation - by no stretch of imagination, membership fee can partake character of voluntary contribution so as to qualify being voluntary contribution with a specific direction that it shall form part of corpus of the trust. The membership fee is paid in anticipation/in lieu of services rendered by the assessee. The case law as relied by the assessee is not applicable on the facts of the present case. Hence, ground related to life membership fee is rejected. - AT
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• Reassessment Order u/ss 143(3) & 147 Barred by Limitation Due to Delay Beyond Two-Year Period u/s 263(2.

  Case-Laws - AT : Revision u/s 263 - period of limitation - the case was re-assessed u/s. 143(3) r.w.s. 147 - the case of the assessee was again reopened and the assessment u/s. 143(3) r.w.s. 147 of the Act was completed 22.12.2017. No doubt, original assessment order is liable to be considered to reckon the limitation and accordingly passing the order on 21.03.2021 u/s. 263(2) of the Act is clearly barred by limitation which is beyond two years. - AT
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• Finance Act 2021 Amendment on Employee Provident Fund Contributions is Prospective, Effective from AY 2021-22, Not 2018-19.

  Case-Laws - AT : Disallowance u/s 36(1)(va) - Delayed Remittance of employees contribution towards provident fund (PF) - the amendment brought in the statue i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. - AT
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• Tribunal Orders Re-examination of Working Capital Adjustment in Transfer Pricing Case; Ensures Fair Comparability for Assessee.

  Case-Laws - AT : TP Adjustment - No adjustment towards working capital has been allowed to the assessee - One has to see that reasonable adjustment is being made so as to bring both comparable and test party on same footing. Therefore, working capital adjustment has to be allowed. - The issue with regard to the grant of working capital adjustment should be directed to be examined by the TPO/AO afresh in the light of the decision of the tribunal referred to above, after affording the Assessee opportunity of being heard. - AT
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Customs

• Tribunal Rules Against Authorities: Imported Goods to Be Classified as "Inkjet Printer," Not "Ink-Jet Printing Machine.

  Case-Laws - AT : Classification of imported goods - ‘inkjet printer’ as claimed by appellant, or ‘ink-jet printing machine’ as re-assessed by the assessing authorities - In view of the classification of the same product by the Tribunal in a dispute of the very same importer, the classification adopted by the original authorities and sustained in the impugned order does not survive - AT
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• Court Dismisses Challenge on Jurisdiction; Actions Validated by Finance Act 2022, Decisions Against Section 97 Are Per Incuriam.

  Case-Laws - AT : Application for admission of additional grounds - Challenging the Jurisdiction - proper officer to issue SCN - Amendments made by the Finance Act, 2022 - by the Act, the actions taken have been validated by the will of Parliament. Hence the decisions rendered contrary to the express intent of Section 97 is per incuriam. - Application dismissed - AT
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Corporate Law

• Court Dismisses Petitions Challenging Prosecution Validity; Finds Proper Procedure Followed by Magistrate in Criminal Cases.

  Case-Laws - HC : Violation of principles of natural justice - Validity of prosecution proceedings - service of SCN - Case of petitioners is that, prior to launching the criminal prosecution, no show cause notice was given to the petitioners - The offences alleged against the petitioners are statutory violations for non complying certain mandatory provisions. This Court can gather from the records summoned that the Additional Chief Metropolitan Magistrate had taken cognizance of the cases only after going through the complaint allegations and materials filed in support of the complaint allegations. - These petitions have been filed only to protract the proceedings and deserve to be dismissed - HC
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Direct Taxes

• Property Bought in Wife's Name Presumed for Her Benefit; No Evidence to Challenge Benami Transaction Presumption.

  Case-Laws - HC : Benami transaction - availability of joint family property or income - joint family acquisition - Purchase of property in the name of wife (Mrs. A)  - Presumption of joint family income and joint family funds - The statute would presume that the purchase was for the benefit of Wife and it was not a benami purchase. Of-course, the presumption is rebuttable. To rebut the statutory presumption, there must be firm foundation in pleadings as well as evidence. In the pleadings, there is no averment that Umayal Ammal held the property for the benefit of the joint family members. - HC
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Indian Laws

• Appellate Court's Reduction of Fine in Cheque Dishonor Case Overturned; Trial Court's Original Fine Reinstated.

  Case-Laws - HC : Dishonor of Cheque - he trial court is empowered to direct payment of compensation, double that amount. Rs. 7,02,500/- is the fine imposed in the case on hand and the trial court is justified in doing so. The appellate court has modified the sum to Rs. 5,00,000/-, but, without stating any reasons for doing so. - The modification made by the appellate court in the fine amount is set aside. - HC
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IBC

• Leave Encashment Included in CIRP Costs; Rs. 25,68,000 Compensation Denied Due to Lack of Provision in 2019 Agreement.

  Case-Laws - AT : CIRP process - Leave encashment amount payable to the applicant shall be treated as part of CIRP cost, or not - The compensation amount of Rs. 25,68,000/- claimed by the Appellant is not payable in terms of the agreement dated 13.02.2019 - Keeping in view the relevant rules and the Agreement dated 13.02.2019, it is held that there is no provision for payment of compensation to the Appellant. - AT
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Service Tax

• High Court Dismisses Petition on Service Tax SCN; Issues to be Decided by Adjudicating Authority First.

  Case-Laws - HC : Maintainability of petition - Validity of Show Cause Notice (SCN) - appropriate forum - Recovery of Service tax with interest and penalty - invocation of extended period of limitation - Whether petitioner would be liable to pay service tax on its claim of exemption from payment of stamp duty, is a matter to be decided at the first instance by the Adjudicating Authority. The question does entail adjudication on mixed question of law and facts. - Petition dismissed - HC
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• Service Tax Demand Overruled: Authorities Must Justify Dismissal of Chartered Accountant's Certificate, Says Court.

  Case-Laws - AT : Demand of service tax - value of taxable services - alleged erroneous adjustments in the books of account - It is a settled position that the authorities cannot reject the C A certificate without stating the reasons as to why the CA certificate submitted by the Appellant is not acceptable to such authorities. Therefore, the stand taken by the Ld. Commissioner to confirm the impugned demand of service tax is legally not tenable. - AT
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• Services to USA Firm Qualify as Export, Exempt from Service Tax per Gujarat High Court Judgment.

  Case-Laws - AT : Levy of service tax - export of services or not - Distinct Person - In the present case the appellant are on better footing as they have constitutionally two different entity one is the appellant and other is M/s Celtic Cross Holding Inc. USA. Therefore, following the judgment of Gujarat High Court, it is clear that in the present case the appellant and the service recipient are two distinct person, hence, the service provided by the appellant to M/s. Celtic Cross Holding Inc. USA clearly falls under export of service. - AT
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• No Composition Scheme Benefit for Services Tax Paid Before June 1, 2007, on Certain Construction Services.

  Case-Laws - AT : Works Contract service - Continuous Contracts - Benefit of composite scheme for ongoing projects for which service tax paid before 01.06.2017 under Commercial or Industrial Construction Service/ Construction of Complex Service - for the ongoing projects as on 1-6-2007, if any payment of service tax was made under the respective taxable services, composition scheme would not be available for the same. - AT
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Central Excise

• Court's Decision on Tobacco Seizure Challenged for Ignoring Evidence, Misjudging Liability in Warehouse Fire Case.

  Case-Laws - HC : Seizure of tobacco and loss of the same due to file - Liability of central excise department - Whether the Trial Court has committed error of facts and law in passing the impugned decree in favour of the plaintiff? - considering the impugned judgment of the Trial Court, it appears that the Trial Court has even not bothered to produce the oral evidence of the witnesses and has simply decided the case on the basis of some statement from the evidence. The Trial Court has failed to follow the principles of evidence that while appreciating the oral evidence of any witness, the version of chief examination, cross examination as well as re-examination needs to be appreciated. However, in this case, the learned Trial Court has not even referred to the entire evidence of any witness. Due to that, the Trial Court has wrongly come to the conclusion that the defendants are liable for whatever damage is caused to the plaintiff due to natural fire broke out in his warehouse. - HC
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• Court Misapplies Section 40(2), Wrongly Declares Central Excise Show Cause Notice Invalid; Costs on Officer Unjustified.

  Case-Laws - HC : Validity of SCN issued - Power of trial court to accept the challenge the validity of SCN - Prosecution proceedings against the accused - applicability of time limitation - imposition of cost upon the Central Excise Officer - The Trial Court has not considered the provision of Section 40(2) of the Act which clearly does not apply to the departmental proceedings and only applies for initiation of suit or prosecution. Therefore, in view of the facts and legal provisions, it is clearly found that the Trial Court has committed error in declaring the show cause notice as illegal and time barred. - HC
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• Court Rules Improper Adjustment of Interest & Penalty from Refundable Amount; Issue Was Sub Judice Before Tribunal.

  Case-Laws - AT : Adjustment of interest and penalty from the refundable amount - Such power of adjustment cannot be exercised for demand of tax/interest/penalty which is sub judice. Admittedly, in the facts of the present case, the amount of interest and penalty are sub judice before this Tribunal and this fact was admittedly in the knowledge of the court below. - the adjustment made from the amount refundable to the appellant is bad and the same is set aside. - AT
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VAT

• Tribunal's Denial of Concessional Tax Rate Deemed Unfair; Failed to Explore Legal Options for Appellant.

  Case-Laws - HC : Benefit of the concessional rate of tax - Concededly, the Tribunal took recourse to neither route, and simply ruled against the appellant, both in the appeal as well as in the review application. This approach cannot pass muster as it violates established principles of fairness and according equal opportunity to disputants who are present before an adjudicator. - HC
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Case Laws:

• GST

• 2022 (6) TMI 361
  Freezing of Bank Accounts of petitioner - HELD THAT:- The provisional attachment order was issued on 09.03.2020. The validity period, unless the provisional attachment order is renewed, is one year, as per Section 83 of the CGST Act. List the matter 31.08.2022.

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• 2022 (6) TMI 360
  Attachment of property of petitioner - before completing the reassessment process, now invoking the provisions of Section 79 of the GST Act, the attachment GST DRC-16 has been issued - Section 83 of GST Act - HELD THAT:- Though it has been mentioned as if it was issued under Section 79 of the Goods and Service Tax Act, we find that such attachment order can be construed only as a provisional attachment order made under Section 83 of the said Act. Section 83 enable the revenue to issue provisional attachment order to protect revenue in certain cases and if such orders are issued that will be valid for one year, within which, if the assessment process is completed based on which further proceedings can be initiated by the revenue. Therefore, merely because of the wrong quoting of the provision, the order impugned before the Writ Court cannot be successfully assailed by the appellant, as the law is well settled in this regard. Non-quoting of the provision of law or wrong quoting of the same may not vitiate the proceedings on that ground itself. There is absolutely no scope for interfering with the order of the learned Judge, which is impugned in this Writ Appeal - Appeal dismissed.

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• 2022 (6) TMI 359
  Validity of orders of attachment of bank accounts passed by the respondent/Revenue - Section 83 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Though an argument was advanced by the learned Standing Counsel appearing for Revenue that based on the tangible materials, which are available with the Revenue, they can very well sustain the order of attachment, this Court however feels that, the present order shall not stand in the legal scrutiny as it does not reveal any such tangible material. Therefore, if these orders are set aside, it does not preclude the Revenue to proceed further by once again invoke Section 83 of the Act. The impugned orders are set aside - it is open to the respondent/Revenue to invoke Section 83 of the Act once again, if they have tangible materials at their hands - Petition disposed off.

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• 2022 (6) TMI 358
  Seeking to allow petitioner to adjust the credit amount which was blocked - Section 74(5) of the Tamilnadu Goods and Services Tax Act - HELD THAT:- The issue has already been settled in numbers of cases, where, as per the Scheme under Section 74 of the act, first notice should be given or option should be given to the dealer under Section 74(5) of the Act and if the option is not utilised or responded by the petitioner dealer, then only further notice under Section 74(1) should be issued, thereafter, on receipt of reply or otherwise and considering the same, after giving personal hearing, the Revenue should continue to proceed with Section 74 proceedings. Here in the case in hand, in the notice dated 01.11.2021, it is wrongly mentioned as Form GST ASMT-10 and that has been replied on 24.11.2021. Thereafter, straight away the order under Section 74(1) was issued on 09.12.2021. Therefore, it is a clear case where procedure contemplated under Section 74 especially, under Section 74(5) has not been complied with. Therefore, on that ground, this Court is inclined to set aside the order and remand the matter back to the respondents. The matter is remanded back to the respondents for reconsideration and while reconsidering the same, the procedure contemplated especially in the context of Section 74(5) and 74(1) should be strictly followed by giving an opportunity to the petitioner including personal hearing - Petition disposed off.

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• 2022 (6) TMI 357
  Rate of tax - petition was into wrong apprehension that he need not pay 12% of the tax and it is only 5%, accordingly he started to pay 5% of tax from November 2017 till April 2019 - partnership firm which was subsequently converted into a Private Limited Company - eligibility to claim Input Tax Credit - HELD THAT:- Even though the prayer sought for in these writ petitions is against the order dated 07.10.2021 issued under Section 61 of the GST Act, now in view of the stand taken by the petitioner as projected by the learned counsel appearing for the petitioner that, the petitioner is ready and willing to pay the tax at the rate of 12% by making the payment of the remaining 7% for the period from November 2017 to April 2019, we need not traverse into the merits of the case with regard to the veracity of the impugned notice dated 07.10.2021 as literally the said challenge is given up. This Court feels that, if the petitioner is ready and willing to make the payment of the remaining 7% totally 12% tax for the period from November 2017 to April 2019 covering the assessment year 2017- 18, 2018-19 and 2019-20, it is open to the petitioner to make the said demand at the earliest. Input Tax Credit - HELD THAT:- It is open to the petitioner to make a claim for ITC at the jurisdictional GST Office in the State of Kerala, where the Headquarter of the petitioner company is located and if such an availment is made by the petitioner by filing the return at the Kerala Tax Authorities jurisdiction, the same shall be considered and decided as per the eligibility of the petitioner within the meaning of the provisions of the GST Act, especially Section 16 and in this regard, the change of the GST registration number between old and new, in view of the change of composition of the petitioner s Firm into Private Limited Company, shall not stand in the way. Petition disposed off.

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• 2022 (6) TMI 356
  Seeking grant of bail - wrongful availment and passing of Input Tax Credit - whimsical and arbitrary action on the part of the investigating agency, for treating the person committing graver offence with softer glove - HELD THAT:- GST has been hailed as a major tax reform in the post liberalisation era to check the cascading effects of taxation. However, unfortunately, some of the mischievous brains are busy removing the nuts and bolts from the vehicle of tax reforms to hinder the forward course of growth. The Courts of this country cannot afford to take a lenient view against such mischief - Economic offences cannot be treated as an ordinary crime and deserves to be dealt with sternly. In the case at hand, applicant/accused is a key member of a crime syndicate involved in a multi crores GST fraud. As per Section 132 of CGST Act, not only the person who issued goodsless invoices but even the person who causes the issuance of such invoices is also liable to be prosecuted - the contention of Ld. Defence counsel that he has not been dealt evenly by the investigating agency as compared with principal offenders i.e. the persons behind M/s Imperial Merchants Pvt. Ltd. deserves some consideration. As per the remand application of the complainant department, it is reported that Sanjeev Goel, controller of M/s Imperial Merchants Pvt. Ltd has admitted that he issued goodsless invoices involving Input Tax Credit to the tune of Rs.69.13 crores. Admittedly, the liability of the applicant/accused reported by the complainant department is much less as compared to M/s Imperial Merchants Pvt. Ltd. Therefore, letting off persons behind M/s Imperial Merchants Pvt. Ltd is infact disturbing. The failure of the investigating agency to deal with M/s Imperial Merchants Pvt. Ltd sternly would not absolve the applicant/accused of his individual liability. Thus, the contention of Ld. Defence counsel that the applicant/accused also deserves bail as others have not been arrested is merit less and the same deserves to be discarded. The investigations in the instant matter smacks of whimsical and arbitrary action on the part of the investigating agency. It is infact baffling as to why two accused persons have been treated with different gloves by the investigating agency and the person whose role appears to be more graver and serious with respect to the alleged offences seems to have been treated with a softer glove. Considering the nature of offence, seriousness of allegations and the crucial juncture of the investigation, there are no merits in the application at hand and the same is accordingly dismissed.

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• 2022 (6) TMI 355
  Seeking grant of Bail - availing fake ITC without any valid document and movement of the goods in violation of Section 16 of CGST Act - HELD THAT:- As per say of the respondent, in the matters of Mewani, stand taken by the respondent is that those Mewani were running 17 fake firms and availed ITC and committed offence. Stand taken by the applicant since beginning that he is receiving Rs.20,000/- per month. He is not aware about business of the firms as business was handled by those Mewani. Those pleadings were taken on the basis of investigation by the respondent. Nothing is pointed out that if the applicant is released on bail, there is possibility of tampering with the evidence. Applicant is directed to be released on bail on executing PR bond of Rs.50,000/- with one or more sureties of the same amount. In addition to this, applicant to deposit cash surety of Rs.50,000/- - bail application allowed.

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• 2022 (6) TMI 354
  Seeking grant of Bail - availing and passing of fake Input Tax Credit (ITC) without any actual supplies of goods - bogus invoices - fraudulently making loss of revenue to the Government - violation of Section 132(1) (b) and (c) r/w. 132(5) of Central Goods and Services Tax Act 2017 - HELD THAT:- Offence committed by the applicant is economic offene which is well planned. In the investigation of the respondent, non existent/fake suppliers were noticed. Applicant availed benefit of ITC on the basis of fake invoices. Investigation is till in progress. There is documentary evidence against the applicant of his involvement in the commission of the crime. Therefore, in my opinion, it is not a fit case to grant bail - bail application dismissed.

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• 2022 (6) TMI 353
  Seeking grant of Bail - availment and utilisation of ineligible Input Tax Credit (ITC) on the basis of fake invoices issued in the name of or by several fake/non-existent firms - violation of Section 132(1) (b) and (c) r/w. 132(5) of Central Goods and Services Tax Act 2017 - HELD THAT:- Offence committed by the applicant is economic offense which is well planned. In the investigation of the respondent, non existent/fake suppliers were noticed. Applicant availed benefit of ITC on the basis of fake invoices. Investigation is till in progress. There is documentary evidence against the applicant of his involvement in the commission of the crime. At the time of arrest, applicant was informed about the grounds of his arrest. Applicant was present at the office of respondent and his statement was recorded, this shows that applicant was aware about the matter against him. There is no violation of guidelines of Hon ble Supreme Court in the matter of ARNESH KUMAR VERSUS STATE OF BIHAR ANR [ 2014 (7) TMI 1143 - SUPREME COURT] . Further, this cannot be a sole ground to grant bail in such an offence. Therefore, it is not a fit case to grant bail. In the matter of DAULAT SAMIRMAL MEHTA VERSUS UNION OF INDIA THROUGH THE SECRETARY AND OTHERS [ 2021 (2) TMI 762 - BOMBAY HIGH COURT] is concerned, in this matter, investigation was going on for more than two years and thereafter, there was arrest of the applicant. After arrest of the applicant, he immediately filed application U/s.138 of CGST Act for compounding of offence. He was released on bail upon certain conditions including deposit of Rs.25 Crores. In the present matter, applicant has not shown his willingness to cooperate with the investigation. Applicant has not disclosed name of the broker through whom he received fake invoices. Suppliers of the applicant are fake/non existent. Investigation is started just prior to one month of arrest of the applicant. Investigation is still in progress. Therefore, ratio laid down in the cited judgment cannot be applied to the facts of the present case. Bail application dismissed.

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• 2022 (6) TMI 352
  Seeking grant of anticipatory bail - passing huge amount of inadmissible Input Tax Credit (ITC) in fraudulent manner by the way of issuing bogus invoices without supply of any goods - availment of ITC on the basis of purchase invoices without receipt of goods - offence u/s 132(5) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Matter is at the investigation stage. Apparently, as per say of the respondent, officer of respondent visited the office of suppliers of the firm of the applicant. However, those suppliers are not in existence. This apparently shows that the applicant illegally availed ITC. Applicant may tamper with the evidence and interfere in the investigation. So far as another ground raised by the learned advocate for the applicant on the point that if the ITC availed by the applicant is calculated year wise, then offence is bailable as it falls within the category of Rs.500 lakhs, is concerned, if this submission is accepted at it is, then application is not maintainable if the offence is bailable. It is clear that calculation of the tax under Chapter XII is distinct from the Chapter XIX, which relates to offence and penalties. Therefore, there is no substance in the argument advanced by the learned advocate for the applicant. Considering the nature of offence involvement of the applicant, this is not a fit case to grant anticipatory bail to the applicant. Bail application dismissed.

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• Income Tax

• 2022 (6) TMI 364
  Disallowance u/s 14A in computation of book profit u/s 115JB - HELD THAT:- AO is not correct in disallowing while computing book profit u/s 115JB by invoking the provisions of section 14A read with Rule 8D. Nature of expenditure - Replacement of parts in machinery treated as capital in nature - HELD THAT:- Classification of items in the books is not relevant for deciding the treatment of such items while computing taxable income as held by the Hon ble Supreme Court in the case of Kedarnath Jute Manufacturing Co Ltd [ 1971 (8) TMI 10 - SUPREME COURT ] Thus the book entries are not conclusive for determining the nature of expenditure. The provisions of law prevail over the book entries. Accordingly, consumption of spares being only replacement of spare parts would qualify under the head current repairs and treated as Revenue Expenditure For a power generating company, these bucket spares are in the nature of consumables spares only notwithstanding its high cost. The buckets are designed with special profile of airfoil cross section for efficient energy conversion.Due to high working temperature of around 800 C and high speed of the turbine (5100 RPM), this component is the most critical in the turbine and failure of this component may lead to catastrophic damage to the machine. It is also seen from the Original Equipment Manufacturer namely BHEL/General Electric, USA have very categorically prescribed the operating life of the above bucket which helps to ensure trouble free operation and to avoid any catastrophic damage to the machine. Further it is also stated that by replacement of the buckets on completion of 48000 hours of continuous operation the power generation capacity is neither increased nor is the power plant efficiency or life of the plant gets increased. The cost of the Gas Turbine parts such as Buckets and Nozzles are high primary due to very special metallurgy and manufacturing process provided by the manufacturer out side India and the assessee company procures the same by import and thus attracts custom duty, air freight, insurance etc. Further the replacement of parts is Capital or Revenue is No more Res integra based on the observation made by the Hon ble Supreme Court in the case of CIT V/s. Saravana Spinning Mills [ 2007 (8) TMI 16 - SUPREME COURT ] and CIT V/s. Sri Mangayarkarasi Mills (P) Ltd. [ 2009 (7) TMI 17 - SUPREME COURT ] wherein held that when certain parts of an air-conditioner or a T.V. is replaced, it does not amount to replacement of entire unit. Thus it can be said that there is no replacement of the gas turbine as a whole but certain repair and replacement to some of the parts of the gas turbine, which does not result in bringing into existence a new asset of enduring nature, rather, the repair and maintenance are of recurring nature and essentially required for smooth running of business of the assessee i.e, generation of power - replacement of spares in the machineries would be allowable as Revenue expenditure only and addition made by the AO is directed to be deleted. Additional claim under section 80IA - Initial assessment year - HELD THAT:- As the issue is now settled by the Circular No.1/2016 issued by the CBDT that an assessee who is eligible to claim deduction u/s 80IA has the option to choose the initial/first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen (or twenty) years, as prescribed under that sub-section. The Circular further clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 801A for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfillment of conditions prescribed in the section. Hence, the term initial assessment year would mean the first year opted for by the assessee for claiming deduction u/s 80IA. However, the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years, as the case may be and the period of claim should be availed in continuity. Thus the Assessing Officers are directed to allow deduction u/s 80IA in accordance with this clarification and Standing Counsels/D.R.s are suitably instructed pending litigation on allowability of deduction u/s 80 IA shall also not be pursued to the extent it relates to interpreting initial assessment year as mentioned in subsection (5) of section 80IA of the Act. Disallowance under Section 14A - HELD THAT:- Directions of CIT-A to apply Rule 8D is not proper and there being the surplus funds were invested by the assessee and there were no administrative expenses, the disallowance made u/s.14A is unwarranted and liable to be deleted. Depreciation on building used for Managing Director s residence - HELD THAT:- As the building is used for official-cumresidential purpose by the Managing Director, with all office facilities we find that 10% depreciation can be granted on this Building and direct the AO to allow the same. Accordingly the CO filed on this ground is allowed. Disallowance of contribution made to various organizations - HELD THAT:- The assessee claimed payment to SVADES, to DEEP and to various NGOs the same were disallowed by the AO. But the Ld CIT[A] granted relief in cases were the assessee has submitted Certificate of Registration of 80G in respect of payments made to SVADES and DEEP and balance amount was confirmed - In our considered view the CIT[A] has granted appropriate relief to the assessee, which does not require any further inference. Disallowance u/s 43B - CIT(A) by his detailed order has held that the AO was correct in not allowing the deduction of interest however, the AO is directed to allow this as a deduction in AY 2008-09 - Similarly, the interest payment disallowed in the earlier year, which was actually paid in the PY corresponding to AY 2007-08 should be allowed as deducting in this year - HELD THAT:- In our considered view the CIT[A] has granted appropriate relief to the assessee, which does not require any further inference.

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• 2022 (6) TMI 351
  Waiver of interest in full - Failure to remit advance tax - seeking the immediate release of the sum held in fixed deposits by the Official Assignee towards the interest demand of the Income Tax Department - direct the Income Tax Department to refund the excess tax remittance by Respondent to the Petitioner without further delay - Interest u/s 234A, 234B and 234C for delayed filing / remittance of tax returns/advance tax - whether the request for waiver of interest should be made before the statutory forum under the I-T Act or before this Court? - HELD THAT:- On perusal of the provisions of the I-T Act and, in particular, the definitions of assessee and representative assessee, as contained therein, the status of the Official Assignee is unclear to say the least because it is debatable as to whether the Official Assignee would qualify as an assessee. The definition of representative assessee also does not appear to include the Official Assignee within its ambit. Indeed, the Income Tax Department appears to have been conscious of this ambiguity. In order to redress the same, the circular dated 28.01.2019 was issued. However, such circular may have compounded the problem inasmuch as it opened up the scope for contending that there was no tax liability prior to the said date. Another dimension to this debate is whether an alleged liability arising after the commencement of insolvency should be reckoned in insolvency proceedings or whether it is limited to prior liabilities. For purposes of this application, it is not necessary to record findings in respect of the income tax liability of the estate of an insolvent because the Official Assignee has remitted tax on the dates indicated in the earlier paragraphs. More importantly, the relevant assessment orders were not assailed either by the Official Assignee or the ex-insolvent. Since the assessment orders have not been challenged, the tax liability on the basis thereof cannot be interfered with by this Court. Therefore, the application for refund is liable to be rejected and it is sufficient to focus on the request for waiver of interest. There is considerable merit in the contention of the ex-insolvent / applicant that she took all reasonable measures to discharge her tax liability. The letter dated 09.01.2007 from the Applicant is on record. By such letter, the Applicant categorically informed the Official Assignee that income tax liability, including capital gains tax liability, is likely to accrue when the assets comprising the estate are sold. The Applicant provided her PAN and requested the Official Assignee to remit the tax. Since the Official Assignee did not accede to her request, the Applicant filed Application seeking a direction to the Official Assignee to pay tax. Eventually, 20% of the sale proceeds were set apart towards tax liability. Nonetheless, the admitted position is that the tax liability was discharged on three dates, with the first of such dates being 29.03.2016. As a result, the Income Tax Department was deprived of the money although the tax liability accrued in the year 2011 as regards capital gains tax from the sale of the immovable asset. Therefore, the request of the Income Tax Department is reasonable from its perspective. On this issue, it should be noticed, however, that the Income Tax Department calculated interest erroneously from the year 2008 although the sale proceeds were received only in 2011. To that extent, the computation and, consequently, the interest claim of the Income Tax Department is unreasonable. Another significant aspect, which was adverted to earlier, is that there is considerable confusion with regard to the liability of the Official Assignee to pay income tax. In the case at hand, income tax was eventually paid under PAN CJLPB1177R, which appears to have been issued by the Income Tax Department in the name of the assessee in the year 2016. It is unclear as to why PAN ACUPB7532Q, which had been obtained by the ex-insolvent/Applicant on 06.05.1999, was not used for the above purpose. From the foregoing discussion, the position that emerges is that the Income Tax Department has a reasonable basis to claim interest inasmuch as the sale proceeds were deposited into an interest bearing account. However, the claim is made at the rate of 12% per annum. Besides, the claim is made from the year 2008 onwards, which is clearly untenable. Given the fact that 20% which is about Rs.1,58,04,342.60, was remitted into an interest bearing account in the year 2013 vide order dated 01.03.2013 such deposit would have earned at least 6% per annum as interest. Moreover, if an analogy were to be drawn from Rule 23 of the II Schedule to the Insolvency Act, which applies to interest on debts due as of the commencement of insolvency, the maximum rate specified therein is 6% per annum. Therefore, as regards capital gains tax, the sum of Rs.1,37,03,299/- should carry interest at 6% p.a. from 29.07.2011, which is the date of sale, up to 29.03.2016, which is the date of remittance of tax thereon. Excluding the aforesaid interest claim, as regards the remaining interest claims for assessment years 2008 2009 to 2016 2017, interest liability should be computed from the last date for payment of tax in the relevant assessment year up to the date of payment at the same rate of 6% per annum. Ordinarily, the assessee would also be liable to pay interest and penalty for non-payment of advance tax. However, on account of the following reasons: the ex-insolvent/ assessee was not in a position to remit income tax; she took all possible measures to procure payment of tax; and the debatable nature of and legitimate doubts regarding the tax liability of the estate of an insolvent, the assessee is entitled to a waiver of interest and penalty as regards non-payment of advance tax. Income Tax Department is directed to recompute the interest liability on the amounts remitted in respect of the respective assessment years by calculating the same at the rate of 6% per annum instead of 1% per month from the dates specified or indicated above, as the case may be, without levying compound interest, penalty, or interest or penalty for non-payment of advance tax or for delayed filing of returns, and make a revised demand on such basis on the Official Assignee. Upon receipt thereof, the Official Assignee is directed to pay the said sum within a period of 30 days from the date of receipt of such revised demand notice. The Official Assignee is further directed to pay the surplus, if any, after discharging the aforesaid liability to the Applicant/ex- insolvent.

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• 2022 (6) TMI 350
  Deduction u/s 80IB(11A) - Pr. CIT referred to the decision of the Hon ble Supreme Court in the case of Liberty India [ 2009 (8) TMI 63 - SUPREME COURT] and directed the AO to exclude the export incentives for the purpose of computation of deduction U/s. 80IB(11A) - HELD THAT:- As the export incentives cannot be considered as profits derived from industrial activities for the purpose of claiming deduction U/s. 80IB(11A) of the Act, the reliance placed by the Ld. AR in the decision in the case of Meghalaya Steels Ltd [ 2016 (3) TMI 375 - SUPREME COURT] have merits in the case. Thus we hold that the export entitlements (MEIS) and the duty drawback of promotion scheme is an income asssessable under the head profits or gains from business or profession as per clause (iiib) and (iiid) to section 28 of the IT Act, 1961. In view of the above, the Ground raised by the assessee is allowed.

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• 2022 (6) TMI 349
  Reopening of assessment u/s 147 - reasons to believe OR reasons to suspect - HELD THAT:- As noted above that reasons were recorded by the assessing officer based on suspect . Since assessee has not fulfilled the conditions for assessment year 2005-06 and for assessment year 2006-07, therefore assessing officer suspects that assessee would not fulfil the conditions for claiming deduction under section 80IB for assessment year 2007-08 also. Reasons must have a live link with the formation of the belief. This is supported by Circular No.549 dated 31.10.1989 which clarified that the words reason to believe did not mean a change of opinion. The Hon ble Supreme Court in ITO vs Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT ] has lucidly explained the power of assessing officer to bring to tax income escaping assessment u/s.147.Hon ble Court first held that the section provides that there must exist reasons to believe and not reasons to suspect . The Courts have analysed and explained in several cases as to what could be the valid reason to believe escapement of income, which would enable the Assessing Officer to successfully reopen the assessment. It has been held that the words reason to believe are stronger than the words reason to suspect or reason to doubt . It requires more than merely satisfaction of the Assessing Officer. The belief entertained by the Assessing Officer must not be arbitrary or irrational. The expression reason to believe does not mean purely subjective satisfaction of the Assessing Officer. The belief must be held in good faith. It cannot be merely pretence. Again, the belief must be of an honest and reasonable person based upon reasonable grounds. The Assessing Officer may act upon direct or circumstantial evidence, but his belief must not be based on mere suspicion, gossip or rumours. The Assessing Officer would be acting without jurisdiction, if the reasons for his belief are not material or relevant. There should be nexus between the information coming into possession of the assessing officer and his belief on the basis of such information that income of the Assessee chargeable to tax has escaped assessment. We note that reasons recorded by assessing officer does not stand the test as laid by judicial precedent as discussed above, which is necessary to assume jurisdiction u/s 147 therefore, we find that the reasons recorded by the assessing officer to justify reopening the assessment u/s 147 fails and, therefore, the very assumption of jurisdiction to reassess the assessee fails. Since the assessing officer failed to do so as discussed, the assumption of jurisdiction by him to reopen itself is corum non judice and, therefore, all subsequent action is null in the eyes of law and therefore, we quash the reopening and consequent reassessment order framed by him.

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• 2022 (6) TMI 348
  Nature of income - commission income received by the assessee from HDFC Asset Management Company - offshore distribution commission income - business income or nature of other income - HELD THAT:- Revenue has sought to tax the said offshore distribution commission income only by treating the same to be having sufficient nexus / business connection with India, as the Mutual Funds distributed by the assessee were controlled and regulated by SEBI and RBI in India. In the present case, it is pertinent to note that the Revenue has sought to tax the offshore distribution commission income earned by the assessee by invoking the provisions of section 9(1)(i) of the Act and it is not the case of the Revenue that the income is taxable under any other provision of section 9 of the Act. Further, as noted above, for the purpose of treating the income as deemed to accrue or arise in India, it is relevant that the said income should be reasonably attributable to the operations carried out in India. As, in the present case, all the operations of the assessee were carried out outside India, therefore, in such circumstances offshore distribution commission income earned by the assessee cannot be treated as being reasonably attributable to any operation carried out in India. As the assessee conducts portfolio investments in Indian securities in its capacity as SEBI registered FII/FPI, conclusion of the learned CIT(A) that the offshore distribution commission income is in the nature of business income of the assessee does not require any interference. Thus, in view of the above factual and legal position, we do not find any infirmity in the impugned order passed by the learned CIT(A). As a result, grounds raised by the Revenue are dismissed. Applicability of correct rate of tax on interest income - Charging of tax on interest income received on rupee denominated bonds/government securities at correct rate - HELD THAT:- As the issue pertains to applicability of correct rate of tax on interest income earned by the assessee and since the AO without recording any reasons has applied the rate of 15% under Article 11(2) of DTAA and has also not examined the basic facts regarding the nature of investment on which interest income is earned. Therefore, we deem it appropriate to remand this issue to the file of AO for de novo adjudication. The assessee is directed to furnish all the details of investments to the AO. We further direct that if it is found that the investment is made on eligible instruments specified in section 115 AD then benefit of lower rate of tax under section 115AD r.w.s. 194 LD of the Act be granted to the assessee. Thus, to this extent we endorse the findings of learned CIT(A).

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• 2022 (6) TMI 347
  Reopening of assessment u/s 147 - Whether no fresh tangible materials in the possession of the Assessing Officer? - disallowance of proportionate interest expenses u/s.36(1)(iii) - HELD THAT:- We do not subscribe to the arguments of assessee for simple reason that once there is element of escapement of income, then the AO can very well look into other issues which come to his knowledge during the course of assessment proceedings. In this case, the assessee himself has conceded fact that there is escapement of income on the issue of deduction towards exceptional items. Therefore, once it is proved that there is escapement of income, then additions made by the Assessing Officer towards other issues being disallowance of interest expenses also in accordance with law. Therefore, we are of the considered view that reopening of assessment u/s.147 of the Act, is valid in the given facts circumstances of the case and thus, arguments of the assessee are rejected. Disallowance of interest expenses u/s.36(1)(iii) - We find that the assessee has substantiated its claim with necessary evidences, including Board resolution and argued that project developed by the assessee is abandoned. Once project is abandoned, it seizes to become eligible asset to capitalize borrowing cost to the work in progress account, till such asset is put to use in business of the assessee. In this case, since, project of the assessee was abandoned, expenditure incurred on said project, including interest, if any, on borrowed capital would be in the nature of revenue expenditure, which needs to be allowed as deduction. This legal principle is supported by the decision in the case of CIT Vs. Priya Village Roadshows Ltd [ 2009 (8) TMI 765 - DELHI HIGH COURT] wherein it has been held that when the project is abandoned without creation of new asset, expenditure related thereto is only that of revenue expenditure. It was further noted that the assessee has incurred amount towards creation of new asset for expansion of existing project. It is well settled principles of law by various judicial precedents that when there is only expansion of existing business, incidental expenditure for bringing capital asset will be revenue in nature. We are of the considered view that the Assessing Officer has erred in disallowing proportionate interest expenses and added back to capital work in progress. CIT(A), without appreciating facts has simply sustained additions made by the Assessing Officer. Hence, we reverse findings of the learned CIT(A) and direct the Assessing Officer to delete additions made towards disallowance of proportionate interest expenses u/s.36(1)(iii) - Decided partly in favour of assessee.

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• 2022 (6) TMI 346
  Disallowance of late payment of employees contribution to PF/ESI - addition confirmed by processing of return u/s 143(1) later confirmed vide rectification order u/s 154 - employee share of PF/ESI collected by employer from salaries of employees which was not deposited before the due date prescribed under the statute governing PF/ESI and claimed by Revenue to be hit by provision of Section 36(1)(va) read with Section 2(24)(x) - Scope of amendment by Finance Act, 2021 in Section 36(1)(va) and 43B - HELD THAT:- As decided in M/S. COMMERCIAL AUTO SALES PRIVATE LIMITED [ 2022 (1) TMI 1000 - ITAT ALLAHABAD] if the employee share of PF/ESI is deposited by employer to the credit of employee with the relevant fund maintained for PF/ESI before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the assessee shall be entitled for deduction u/s 36(1)(va). Issue to be decided in favour of the tax-payer after considering the amendment made by Finance Act, 2021 by holding that if the employee share of contribution towards PF/ESI is deposited by employer-taxpayer with the relevant fund governing PF/ESI to the credit of employee before the due date for filing of return of income prescribed u/s139(1) for the relevant assessment year, the employer-taxpayer shall be entitled for deduction in the previous year relevant to ay to which such employee contribution to PF/ESI pertain. Division Bench of Allahabad-tribunal in the case of M/s Bharat Pumps and Compressors Limited [ 2021 (10) TMI 496 - ITAT ALLAHABAD] also decided this issue in favour of the taxpayer after considering the amendment made by Finance Act, 2021, by holding that if the employee share of contribution towards PF/ESI is deposited by employer-taxpayer with the relevant fund governing PF/ESI to the credit of employee before the due date for filing of return of income prescribed u/s139(1) for the relevant assessment year, the employer-taxpayer shall be entitled for deduction in the previous year relevant to ay to which such employee contribution to PF/ESI pertains. It is also observed that several Benches of tribunal across India have consistently taken a similar view in favour of the tax-payer, even after considering amendment made by Finance Act, 2021 to Section 36(1)(va) and 43B. We hold that in the instant appeal for ay: 2018-19, if the employee share of PF/ESI is deposited by employer to the credit of employee with the relevant fund maintained for PF/ESI before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the assessee shall be entitled for deduction u/s 36(1)(va) of the 1961 Act. However, whether this amount of Rs. 31,46,748/- towards employees share of PF/ESI was actually deposited before the due date for filing of return u/s 139(1) or not is a matter of verification. Thus for limited purposes , we are directing AO to verify the challans evidencing deposit of aforesaid employee share of PF/ESI and that it was deposited before the due date prescribed for filing of return of income u/s 139(1), before allowing claim of deduction u/s 36(1)(va) of the 1961 Act. The assessee is directed to file before AO complete details/bifurcation of employees share of PF/ESI , which was added to income of the assessee u/s 36(1)(va) read with Section 2(24)(x) along with relevant paid challans, for verification. Appeal of assessee allowed.

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• 2022 (6) TMI 344
  Income taxable in India - Royalty - income liable for taxation in India within the meaning of Article 12(3) of the India-USA Double Taxation Avoidance Agreement ( DTAA ) - whether resale of the computer software through End User License Agreement (EULA)/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India? - HELD THAT:- Respectfully following the precedent Engineering Analysis Centre of Excellence Private Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] expounded that consideration for the resale of the computer software through End User License Agreement (EULA)/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India - thus duly taking note that Revenue has not disputed that the facts in this care are not identical, we set aside the order of the Revenue authorities and decide the issue in favour of the assessee.

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• 2022 (6) TMI 343
  Validity of reopening of assessment u/s 147 - Notice beyond 4 years - HELD THAT:- Hon ble Delhi High Court in the case of Central India Electric Supply Co. Ltd. [ 2011 (1) TMI 89 - DELHI HIGH COURT] that there was no lack of disclosure by assessee inasmuch issue of enhanced compensation was settled only when Supreme Court pronounced its judgment and on receipt of enhanced compensation assessee had disclosed same in its return for that year. The Hon ble Bombay High Court in the case of Sterling Wilson P. Ltd [ 2021 (12) TMI 1092 - BOMBAY HIGH COURT] held that where assessee filed details regarding claim of depreciation on goodwill in original assessment proceedings and A.O after considering same, allowed said claim, initiation of reassessment to disallow depreciation was nothing but change of opinion. With the assistance of the ld. Representative we have also gone through the copy of reason recorded for issuing notice u/s 148 of the Act. It is noticed that in the form for reopening the assessment for initiating proceeding u/s 147 approval of commissions of Income Tax was obtained on 29.03.2010, however, the reason for belief that income has escaped assessment were recorded on 30.03.2010 after obtaining the approval for issuing of notice u/s 148 - Therefore, we consider that initiation of proceeding u/s 147of the Act in the case of the assessee is not valid, therefore, we quash the issuing of notice u/s 148 of the Act. Since, we have set aside the proceeding u/s 147, therefore, other ground of appeal of the assessee not required any adjudication. Accordingly, appeal of the assessee is allowed.

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• 2022 (6) TMI 342
  Income accrued in India - Royalty u/s 9(1)(vi) read with Article 13 of DTAA entered into between India and UK - Agency PE of the Appellant - HELD THAT:- Article 13 of India-UK DTAA defined royalty only when a payment is made for the use or the right to use a copy right of literary, artistic or scientific work. So the only those payments which allow payers to use/acquire a right to use a copy right in literary, artistic or scientific work are commissioned under the definition of royalty . In the instant case the assessee used to collect the information available in the public domains viz. newspaper and news wires from all over the world including global business and trade publications, targeted industry and regional publications, key websites and business blogs, market data and company professionals by collaborating with the news publishers and other sources and collates such relevant publically available news/information, then create a systematic database of news, article/information with advanced search capabilities and then subscriber of Factiva product gets access to the database, business puts a query in the search box, various news articles and other information in relation to search term, as actual public appears on the screen. Payment received by the assessee is not for any information qua industrial scientific or commercial experience rather it is only for preparing a database on the basis of information already available in the public domain in the form of news, articles etc. Moreover, payment received by the assessee is merely for the use of database and not for the use or right to use any equipment as the subscriber and DJCIPL have no access, right or control of any manner whatsoever offer the data storage devises or the server maintained by the assessee to update its database. In these circumstances, copy right in the news article/blog never belongs to the assessee but always belongs to the publisher or author. So the database prepared by the assessee does not have any copy right or intellectual copy right with the assessee and the customer only gets the right to search, view and display information. So in these circumstances findings returned by the Ld. DRP that Factiva product (access to database) is in the nature of royalty under Article 13 of India-UK DTAA was sector specific specialized knowledge portal as the assessee has a dedicated team of 100 specialists to collate and update the data on daily basis and as such fall within the ambit of use of copy right as well as information concerning industrial scientific or commercial experience is not sustainable in the eyes of law. This issue is covered in favour of the assessee in its group company case M/s. Dow Jones and Company India Pvt. Ltd. [ 2021 (12) TMI 647 - ITAT DELHI] . So the question framed is answered in the negative and as such the payment received by the assessee is not a royalty under Article 13 of India-UK DTAA. So we hereby set aside the addition made by the AO under section 9(1)(vi) of the Act read with Article 13(3) of India-UK DTAA and as such ordered to be deleted the same. Agency PE - Since assessee has vehemently opposed the observation made by the AO that DJCIPL is an agency PE of the assessee. Moreover there is not an iota of material on record to prove this fact. So the payment received by the assessee is not taxable in India as the Revenue has failed to prove that the assessee has a PE in India in terms of Article 5 of India-UK DTAA. - Decided in favour of assessee.

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• 2022 (6) TMI 341
  Nature of expenses - Disallowance of Corporate Debt Restructuring Expenses - expenses were incurred by the assessee towards resettling of interest rate and for restructuring debt. The assessee also paid fees to consult in respect of restructuring - AO disallowed the restructuring expenses on the ground the assessee has derailed benefit of enduring in nature which is not revenue expenditure - HELD THAT:- This issue is been settled by the judgement of the honourable Supreme Court in the case of India cements Ltd wearing it is held that loan is not an asset or a advantage of enduring nature and expenditure incurred in connection with obtaining loan is not capital expenditure. Further in the case of Compton engineering Co Ltd [ 1998 (6) TMI 23 - MADRAS HIGH COURT] held that professional fee paid to management consultant for comprehensive restructuring of business could not be treated as capital expenditure, since the report was not for the purpose of any new business, but for efficient carrying on of existing business. Further it is a fact that out of Rs.17.3 crore of total resetting premium paid, as recovery was made from the assessee to the extent of Rs.14.62 crores in the financial year 2004-05 onwards and credited to sales account. This also shows that resetting premium paid was on revenue account. This the assessing officer contention that by incurring expenses in question, the assessee derailed benefit of enduring nature is not tenable in view of the decision of India cements Ltd., [ 1965 (12) TMI 22 - SUPREME COURT] thus addition made by the assessing officer is hereby deleted and expenditure is to be treated only Revenue in nature. Thus issue allowed in favour of the assessee. Additions under section 115 JB on account of TDS on this delayed payment charges - CIT[A] deleted the addition - HELD THAT:- We do not find any infirmity in the order passed by the ld.CIT[A]. Thus no interference is called for and we uphold the order passed by the ld CIT[A]. Thus issue no. (vii) is allowed in favour of the assessee. Upgradation of software expenses - Capital or revenue expenses - HELD THAT:- As Counsel submitted that jurisdictional High Court in the case of CIT -Vs- N.J. India Invest (P.) Ltd. [ 2013 (7) TMI 738 - GUJARAT HIGH COURT] held that Expenditure on maintenance, back-up and support services to existing hardware and software is revenue in nature, and therefore allow the expenditure as revenue in nature. Per contra the Ld DR could not contravent this decision and could not produce any decision in favour of the Revenue. Therefore respectfully following the jurisdictional judgement supra we allow this ground and delete the addition made by the AO. Thus issue no. (viii) is allowed in favour of the assessee. Charging of interest under section 234B on book profits - AO charged interest u/s.234B on addition made on account of provision for deferred tax in the book profit u/s.115JB relying on restrospective amendment made in section 115JB by the Finance Act, 2008 - HELD THAT:- This issue is squarely covered against the assessee by recent judgement of the Karnataka High Court judgement in the case of CIT -Vs- JSW Steel Ltd.[ 2020 (3) TMI 398 - KARNATAKA HIGH COURT] - we reject this ground and the confirm the addition made by AO. Loss due to foreign exchange difference rate - assessee incurred a loss due to foreign exchange rate difference, which is a actual loss and not notional loss - HELD THAT:- Difference between the exchange rate and the rate as per the forward contract was debited to the profit loss account as foreign exchange loss. AO has not accepted this loss - AR claimed that the issue is directly covered by the judgment in the case of CIT Vs. Industrial Financial Corporation of India Ltd. [ 2009 (9) TMI 877 - DELHI HIGH COURT] wherein it has been held that where the assessee enters into a contract for purchase of foreign currency on a future date at pre-determined rates, the difference between the forward contract rate and exchange rate on the date of entering into contract has to be recognized as income or expenses, which ascertained and definite in terms of contract and would be alone as business expenditure in the year of entering into forward contract itself, though as per the contract part payment is to be succeeding year.

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• 2022 (6) TMI 340
  TP Adjustment - selection of comparable - Infosys BPO inclusion - HELD THAT:- We find similar issue has been considered by the Coordinate Bench of this Tribunal in Assessee s own case [ 2020 (9) TMI 1257 - ITAT DELHI] M/s. Infosys BPO LTD. (erstwhile Infosys BPO Ltd.) has been excluded from the comparables. Since the margin would be within plus or Minus 5%, the Assessee s international transaction is at Arm s Length, the said fact has not disputed by the Ld. D.R. Therefore, the addition made in the issue under consideration will not sustain. Working capital adjustment - As relying on case of Kusum Healthcare Pvt. Ltd [ 2015 (4) TMI 180 - ITAT DELHI] once the impact of receivable on working capital is evaluated and the consequent profitability/pricing is compared vis- -vis the draft comparables, there is no requirement of any further adjustment. Accordingly, we allow the grounds of appeal.

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• 2022 (6) TMI 339
  Estimating the cost of construction - percentage of completion and estimation of profits - Cost of completion of the project worked out to 24.89% - AO on the basis of the details furnished by the assessee came to the conclusion that assessee fall into the category of construction contractor and therefore AS-7 read with Guidance Note on Real Estate Developers issued by Institute of Chartered Accountant of India was applicable - HELD THAT:- When there is increase in saleable area, the cost of construction will definitely increase. We are therefore of the view that the increase in total saleable area with the escalation in cost of material and change in specification by customers had led to the estimated cost at Rs.138 crores. As before CIT(A) assessee had furnished Architect certificate wherein the initial estimated cost of project and with the increase in saleable area and other factors the revised cost has been certified. Based on the total estimated construction cost the percentage of the completion works out to 24.89% which is less than the 25%, being the limit prescribed for recognition of Revenue. We thus find that CIT(A) after considering the details, has given a finding that the architect certificate as on 31.03.2014 has given head wise, item wise project cost and there is no material placed by AO to show that the certificate issued by the architect was bogus. He has further given a finding that the certificate estimating cost of project of the architect as on 31.03.2013 was duly accepted by AO. We further find that CIT(A) while deciding the issue has given a finding that the estimated project cost of Rs.120 crores was calculated as per the provision of Water and Air Act and according to which the amount incurred in Government fee and project over head was not required to be included to the cost of project. Based on the reasoning given by CIT(A) in the order, he has concluded that the cost of completion of the project worked out to 24.89% which is less than 25%. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue.

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• 2022 (6) TMI 338
  TP Adjustment - AMP expenditure as International Transaction - pre-requisite for commencing the TP exercise - AO/TPO treating AMP as a separate international transaction - using bright line test from benchmarking - incurring expenditure on account of advertisement, marketing and promotion, under influence or control of the AE - HELD THAT:- CIT(A) held that there is a rationale to factor in AMP intensity adjustment while equating the functional profit into the comparables in TNMM benchmarking. The bright line test which is the mirror image of intensity approach has no statutory mandate. Hence, cannot be upheld. With regard to the receivables, we hold that the netting of interest paid or receivables as sought by the assessee may be accorded and the benefit of brought forward losses be allowed as per the provisions of Income Tax Act. Appeals of the assessee are allowed.

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• 2022 (6) TMI 337
  Disallowing consultancy expenses - addition was sustained on account of non-furnishing of original evidences - addition was sustained in the absence of the requisite evidences - contention of the assessee is that payment is genuine - HELD THAT:- The tax has been deducted by the Department which is available on Income Tax Portal. The issue is restored to the file of Ld.CIT(A) to verify the claim of the assessee regarding payment of professional charges and deduction of tax thereof. Therefore, the assessee is directed to produce the original copy of confirmation given by the four parties namely [i] M.K.Soil Testing Laboratory, [ii] Balaji Hydro Mech Experts, [iii] Chaudhari Construction and [iv] Ujwal Systems. If the Ld.CIT(A) finds that the assessee has deducted tax on the professional charges paid to afore-mentioned parties and produce original confirmation from the parties, he would delete the addition. Ground raised by the assessee is allowed for statistical purposes.

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• 2022 (6) TMI 336
  Exemption u/s 11 - Life Membership Fees claimed as capital receipt of the corpus donation - AO was of the view that since the receipt is not in the nature of corpus donation within the meaning of provision of section 11(1)(d) - HELD THAT:- As per section 11(1)(d) income in form of voluntary contributions made with a specific direction that it shall form part of the corpus of the trust or institution shall not be included in the total income of the previous year of the person in receipt of the income. In the present case, the assessee did not furnish any specific direction of the donors/members regarding the amount it received. Moreover, by no stretch of imagination, membership fee can partake character of voluntary contribution so as to qualify being voluntary contribution with a specific direction that it shall form part of corpus of the trust. The membership fee is paid in anticipation/in lieu of services rendered by the assessee. The case law as relied by the assessee is not applicable on the facts of the present case. Hence, ground related to life membership fee is rejected. Donation Receipt - As stated before the authorities below that the amount was received and spent on construction of building etc. The AO rejected the claim on the basis that the assessee had received it as an ordinary donation but not as a corpus donation. Looking to the direction given by the donors and the same was credited in land building fund account. The authorities below ought to have taken a liberal approach in construing the direction of the donors. We therefore, direct the AO to delete this addition and allow the claim of the assessee. Hence, this ground raised by the assessee is allowed.

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• 2022 (6) TMI 335
  Assessment u/s 153A - incriminating material seized for the purpose of framing assessment or not? - HELD THAT:- Additions made by the AO dehors any reference to or foundation in any incriminating seized materials are not sustainable for any of the assessment year under appeal, therefore, he deleted the impugned additions/disallowance - See KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] . Addition made on account of Scrap Handling charges - HELD THAT:- As it is not the case of the Department that the assessee has not paid the rent but paid on the last day of the first year. The ld. AO could not prove this as bogus expenditure, whereas the assessee has proved that it required open yard to place the imported goods of its customers for a period of 30 days, which is already collected from its customers as handling charges. In the facts of the above circumstances of the case, we do not find any infirmity in the order passed by the ld. CIT(A) and therefore confirm the same and dismiss the Ground No. 1 raised by the Revenue. Disallowance of interest u/s. 36(1)(iii) - assessee had made interest free advances out of interest bearing funds - Proof of business expediency - HELD THAT:- CIT(A) correctly held that it was clearly noticeable from the balance-sheet extracted for all the assessment years under appeal that thematic average of interest free advance was far less than the available interest free funds, and the borrowed funds also appeared to have been deployed in closing stock, trade receivables and business assets for which primarily the funds have been borrowed. CIT(A) held that the advances prima facie appeared to have been made out of interest free funds available with the assessee; secondly, the AO has not discharged onus of establishing clear cut and direct nexus between the interest bearing loans and interest free advances so as to justify disallowance in the light of the ratio laid down in the case of Reliance Utility [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and Hero Cycles [ 2015 (11) TMI 1314 - SUPREME COURT] and no examination of the accounts of the recipients could yield such nexus, and therefore, as a matter fact, it was to be held that such a nexus did not exist warranting any disallowance under section 36(1)(iii) of the Act; thirdly, there was clear and self-evident mutuality and business expediency in sizable inter-se transactions between the assessee and recipients of funds, and further that there did not appear any noticeable personal or non-business use by recipients of the funds received interest free and thus, on fact of the case as also in view of the law as explained by the Supreme Court in SA Builders and Hero Cycles (supra), there was no case to invoke the provisions of section 36(1)(iii) of the Act for making any disallowance - Decided in favour of assessee.

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• 2022 (6) TMI 334
  Late fees u/s 234E - order passed u/s 200A - HELD THAT:- Assessing Officer cannot make any adjustment other than one prescribed in section 200A of the Act. Prior to 01.06.2015, there was no enabling provision in section 200A of the Act for making adjustment in respect of statement filed by the assessee with regard to tax deducted at source by levying fees u/s 234E of the Act. The Parliament for the first time enabled the Assessing Officer to make adjustment by levying fees u/s 234E of the Act with effect from 01.06.2015. The Hon ble jurisdictional High Court in the case of Olari Little Flower Kuries (P.) Ltd. [ 2022 (2) TMI 1061 - KERALAHIGH COURT ] has held that since provision of section 200A of the I.T.Act was amended to enable computation of fee payable u/s 234E of the I.T.Act at the time of processing of return and said amendment came into effect from 01.06.2015 (in view of CBDT Circular No.19 of 2015 dated 17.11.2015) intimations issued u/s 200A of the I.T.Act dealing with fee for belated filing of TDS returns for the period prior to 01.06.2015 were invalid and were to be set aside. Therefore, going by the dictum laid down by the Hon ble jurisdictional High Court judgment in the case of Olari Little Flower Kuries (P.) Ltd [ 2022 (2) TMI 1061 - KERALAHIGH COURT ] levy of late fee for the various quarters for financial years 2013-2014 and 2014-2015 cannot be sustained in order passed u/s 200A of the I.T.Act, prior to 01.06.2015. As amendment relating to section 200A of the I.T.Act is prospective with effect from 01.06.2016. In view of the above we allow the claim of the assessee.

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• 2022 (6) TMI 333
  Penalty u/s 271(1)(c) - concealment of income or furnishing inaccurate particulars of income - HELD THAT:- As assessee has paid the tax on the addition sustained by CIT(A) in the subsequent year. Therefore, in our considered opinion, the case of the assessee is not a fit case to impose penalty u/ 271(1)(c) of the Act. Therefore, we inclined to delete the penalty imposed by A.O which has been confirmed by the CIT(A). Accordingly, we set aside the penalty order passed by A.O and also the order of CIT(A) by allowing the grounds of appeal.

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• 2022 (6) TMI 332
  Disallowance of the employees contribution towards EPF ESI - HELD THAT:- We find that the issue relating to employees contribution towards EPF and ESI is covered in favour of the assessee by the judgment of the Hon ble Jurisdictional High Court in the case of CIT Vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT] The legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of employee s provident fund (EPD) and employee s State Insurance Scheme (ESI) as deemed income of employer under section 2(24)(x) - Decided in favour of assessee.

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• 2022 (6) TMI 331
  Revision u/s 263 - period of limitation - survey u/s. 133A was conducted by Investigation Wing and the case was re-assessed u/s. 143(3) r.w.s. 147 - HELD THAT:- As stated that the subsequent survey u/s. 133A was conducted by Investigation Wing and the case was re-assessed u/s. 143(3) r.w.s. 147 of the Act dated 22.12.2017. Also argued that the passing order on 27.03.2021, is clearly barred by limitation in the provision u/s. 263(2) of the Act. In support of this contention, the Ld. Representative of the assessee has placed reliance upon the decision in the case of Ashoka Buildcon Ltd. [ 2010 (4) TMI 152 - BOMBAY HIGH COURT] and Western India Turf Club [ 2021 (10) TMI 673 - ITAT MUMBAI] However, on the other hand, the Ld. Representative of the Department has refuted the said contention. The factual position is not in dispute. The original assessment was completed on 21.03.2021 u/s. 143(3) of the Act. However, the case of the assessee was again reopened and the assessment u/s. 143(3) r.w.s. 147 of the Act was completed 22.12.2017. No doubt, original assessment order is liable to be considered to reckon the limitation and accordingly passing the order on 21.03.2021 u/s. 263(2) of the Act is clearly barred by limitation which is beyond two years. Therefore, we set aside the order passed by the Ld. PCIT in question. Accordingly, we decide this issue in favour of the assessee against the revenue.

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• 2022 (6) TMI 330
  Disallowance u/s 36(1)(va) - Delayed Remittance of employees contribution towards provident fund - HELD THAT:- Admitted facts of the present case are that the payments of PF ESI contribution relating employee s contribution are before the due date of filing of return of income U/s 139(1) of the Act. We have noted that the issue under consideration is covered by the decision of the Coordinate Bench in case of M/s. Mohanlal Khatri [ 2021 (11) TMI 1035 - ITAT JAIPUR] - Thus it is clear that there are series of decisions of various Hon ble High Courts on this issue and even Hon ble Jurisdictional High Court in the case of M/s. Industrial Security Intelligence India P Ltd.,[ 2015 (7) TMI 1063 - MADRAS HIGH COURT] held that the payment of employees contribution in regard to PF ESI if made before the due date of filing of return of income u/s. 139(1) of the Act, the same is allowable as deduction as per the provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B. Whether by the Finance Act, 2021, the provisions of Section 36(1)(va) by inserting the Explanation 2 r.w.s. 43B of the Act have been amended, whereby it is clarified that the provisions of Section 43B of the Act shall not apply and shall be deemed ought to have been applied for the purpose of determining the due date under this clause? - As this amendment has been brought in the statute book to provide certainty about the applicability of provisions of Section 43B of the Act inspite of belated payment of employee s contribution. We also noted from the memorandum explaining the provisions to Finance Act, 2021, wherein relevant Clauses to said memorandum clearly intended that the amendment shall take effect from 01.04.2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years. Thus we are of the view that the amendment brought in the statue i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee s appeal is allowed.

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• 2022 (6) TMI 329
  TP Adjustment - comparable selection by application of turnover filter - Turnover more than Rs.200 Crores - TPO excluded from the list of comparable companies chosen by the assessee in its TP study companies whose turnover was less than Rs.1 Crore - HELD THAT:- As we hold that companies listed in Sl.No.(a) to (h) in paragraph 7 (i) above, which the assessee seeks exclusion and whose turnover in the current year is more than Rs.200 Crores should be excluded from the list of comparable companies. No adjustment towards working capital has been allowed to the assessee - The rate (or rates) should generally be determined by reference to the rate(s) of interest applicable to a commercial enterprise operating in the same market as the tested party. The tribunal observed that the guidelines conclude by observing that the purpose of working capital adjustments is to improve the reliability of the comparables. The Tribunal further observed that the data available with the assessee and the Department would be the starting point and depending on the facts and circumstances of a case further details can be called for. As far as the assessee is concerned, the facts and figures with regard to his business has to be furnished. Regarding comparable companies, one has to fall back upon only on the information available in the public domain. If that information is insufficient, it is beyond the power of the assessee to produce the correct information about the comparable companies. Revenue has on the other hand powers to compel production of the required details from the comparable companies. If that power is not exercised to find out the truth then it is no defence to say that the assessee has not furnished the required details and on that score deny adjustment on account of working capital differences. One has to see that reasonable adjustment is being made so as to bring both comparable and test party on same footing. Therefore, working capital adjustment has to be allowed. The issue with regard to the grant of working capital adjustment should be directed to be examined by the TPO/AO afresh in the light of the decision of the tribunal referred to above, after affording the Assessee opportunity of being heard.

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• 2022 (6) TMI 328
  Capital gain - Nature of land sold - agricultural land or capital asset u/s 2(14) - HELD THAT:- As the land sold by the assessee was classified as agricultural land in the revenue records. The RTC filed by the assessee before us shows that the assessee raised crops of Ragi and Paddy in certain portion and other portion was temporarily kept idle on account of certain difficulties. Being so, the status of the land therefore remained as agricultural land since mandatory condition stipulated in the conversion order is not complied with and on this count, the CIT(Appeals) was not correct in holding that the land which is subject matter of sale is not agricultural land on the reason that the land was converted for non-agricultural purposes. In view of this, the sale of the impugned land is to be treated as exempt from capital gain in terms of section 2(14) r.w. sections 45 48 of the Act. Accordingly, this ground of the assessee is allowed.

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• 2022 (6) TMI 294
  Reopening of assessment u/s 147 - difference was due to TDS deducted by the principal on service tax @ 12.36 per cent included in the bill raised by the Petitioner - Eligibility of reason to believe - HELD THAT:- In the present case, at the time of making the assessment originally, the Assessing Officer had not formed any opinion regarding the reasons on which the notice under Section 148 of the Act has been issued. To say it more particularly, the A.O. had not formed any opinion regarding (1) receipt of payments under Sections 194 I and 194 J by the petitioner, which had not been shown in its P L account, (2) non-disclosure of the amount of reimbursement of expenses claimed by it, (3) non-submission of the details of expenses incurred by it for verification during the assessment proceedings and (4) non-production of any ledgers, bills and vouchers of expenses incurred on behalf of the Principal Companies etc. Therefore, it is not a case of change of opinion and challenge to the notice under Section 148 of the Act on the ground that it seeks to initiate reassessment on the ground of change of opinion, cannot be accepted. Sanction u/s 151 - As approving authority under Section 151 of the Act has been placed on record by the Department and the detailed reasons recorded by the A.O. have been annexed to, and made a part of the order. The approving authority the PCIT, has stated that he agrees with the comments of the A.O., which were annexed with the order, and has recorded his satisfaction that it was a fit case for issuance of the notice under Section 148 of the Act. The aforesaid order does not indicate non-application of mind by the PCIT to the proposal made by the A.O. and we are not able to accept the submission that the PCIT has granted approval without application of mind to the proposal put up by the A.O. In the instant case, the notice under Section 148 of the Act has been issued by the assessing officer after conducting an investigation and going through the income tax return and other related documents of the petitioner and after recording a reason to believe that the petitioner did not truly and fully disclose all the material facts, because of which income has escaped assessment. We are satisfied that there was prima facie material available on record before the assessing officer for issuing a notice under Section 148 of the Act. The notice dated 26-03-2021 issued under Section 148 of the Act as well as all the proceedings undertaken in consequence of the notice, including the order dated 18-02-2022 passed by the National Faceless Assessment Centre rejecting the petitioner s objections against issuance of the notice, does not suffer from any such illegality as to warrant interference by this Court in exercise of its Writ Jurisdiction. WP dismissed.

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• Benami Property

• 2022 (6) TMI 327
  Benami transaction - availability of joint family property or income - joint family acquisition - Purchase of property in the name of wife (Mrs. A) - Presumption of joint family income and joint family funds - Whether (Mrs. A) held the property for the benefit of the joint family members? - HELD THAT:- The plaintiff has nowhere alleged that (Mrs. A) held the property for the benefit of the joint family members. Mere pleading that she was a name lender would not be sufficient. If (Mrs. A) was running the family business and was in a dominant position, then, the purchase of a property from out of the joint family funds would be in the nature of a trust. It can be stated that she was holding the property for the benefit of all the members of the joint family. But such is not a case here. (Mrs. A) was a mere housewife. It was Shanmugavel Asari who purchased the property in the name of his wife from out of the joint family funds. The statute would presume that the purchase was for the benefit of (Mrs. A) and it was not a benami purchase. Of-course, the presumption is rebuttable. To rebut the statutory presumption, there must be firm foundation in pleadings as well as evidence. In the pleadings, there is no averment that (Mrs. A) held the property for the benefit of the joint family members. (Mrs. A) examined herself as D.W.3 and not even a suggestion has been put in this regard. This is a clear case of complete lack of pleadings and lack of proofs. The very purpose of enacting the Central Act 45 of 1988 is to prohibit the benami transactions. Of-course, the statute carved out certain exceptions. But then, every benami transaction cannot be allowed to be sustained by bringing it within the scope of the exceptions. A careful reading of the statutory scheme as applied to the factual matrix leads me to the conclusion that the purchase of the suit property was very much for the benefit of (Mrs. A) and therefore, the appellant did acquire valid title under Ex.A5. The fourth substantial question of law is answered in favour of the appellant. The impugned judgment and decree passed by the first Appellate Court is set aside. The decision of the Trial Court is restored. As per the undertaking given by the appellant, the appellant is directed to deposit a sum of Rs.1.00 lakh within a period of six weeks from the date of receipt of copy of this judgment to the credit of the suit on the file of the Principal District Munsif Court, Sivagangai. The said amount shall remain in court deposit for a period of one year. If the plaintiff Arunachalam decides to accept this judgment, it is open for him to withdraw the said amount.

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• Customs

• 2022 (6) TMI 326
  Smuggling - Gold - huge quantity of gold was concealed in the compressor of a refrigerator, brought as an unaccompanied luggage - Seeking release of detenues - no apprehension raised at any stage by the sponsoring authority about the likelihood of the detenus to indulge in smuggling in further - certain documents requested, which were needed for making an effective representation, were denied - HELD THAT:- There has been reliance made in the detention order regarding the documents mentioned which might have forced the detaining authority to reach the conclusion about the previous smuggling activities and which necessitated the present order of detention. Inspite of a specific request, as seen from Ext. P12 in the above cases, we find copies were not given. In as much as the contents of the above being relied upon and they have not been given despite asking for them, we feel there has been infraction of the right of the detenus to make an effective representation seeking release. The learned counsel for the petitioner is right in stating that the detaining authority ought to have furnished the said materials as their right to make an effective representation has been impaired. The contention of the learned counsel for the respondents that there was no duty to supply the documents to the detenus, cannot be accepted - the nonsupply has vitally affected the right of the detnus under Article 22(5) of the Constitution of India - the detention order is bad for the non-supply of these documents sought for in Ext. P12. The detenus are forthwith set at liberty - Application allowed.

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• 2022 (6) TMI 325
  Attachment of Bank accounts - Validity of seizure memo - Misdeclaration of export consignments - Carpets - seeking release / de-freeze of the bank accounts of the Petitioner - contention of the respondents is that since the silk content is much less than what was declared, it is a case of misdeclaration of both the composition and the value of the goods, which have been exported in the past and the subject goods - section 110 of the Customs Act - HELD THAT:- Learned Counsel of Respondents, today, informed that the account pertaining to the petitioner bears the following number i.e., 0055010950000015, which, as noted in the extract above, is maintained with the Jammu and Kashmir Bank Ltd., Connaught Place Branch, having a credit balance of Rs.1,04,888.04/-, as of 10.05.2022 - the other contention of Mr Ojha is that the petitioner would use the account maintained by him with the Jammu Kashmir bank, for receipt of remittances and for availing duty drawback and other benefits on account of the export consignment, which is the subject matter of present writ petition, and, perhaps, the past exports as well. At this juncture, this can only be a possibility since there is hardly any money in the petitioner s bank account. Besides this, the investigation is still on. As and when the respondents are in a position to take next steps in the matter, they cannot be prevented from doing so except that they would have to adhere to what the law mandates. But that necessarily does not mean that, at this stage, the hold should continue, especially having regard to the amount which is lying in the petitioner s bank account maintained with the Jammu and Kashmir Bank - It is also made clear that if any further steps are taken by the respondents, albeit insofar as the past exports and/or the subject consignment is concerned, the petitioner will be at liberty to take recourse to an appropriate remedy to challenge any such actions. Petition disposed off.

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• 2022 (6) TMI 324
  Destruction of consignment of goods imported by the petitioner - Import of 2nd Grade Wet Dates - existence of pests in the product imported or not - HELD THAT:- The delay in approaching this Court against Ext.P7 itself, disables the petitioner from pursuing this writ petition. Ext.P7 was issued as early as on 29.12.2021 while this writ petition was preferred only on 04.03.2022. The remedy of an appeal provided under Plant Quarantine (Regulation of Import into India) Order, 2003 is seven days. The reason for prescribing the limited period of seven days is with a purpose, since, orders of destruction or other adverse orders ought to be appealed against, if aggrieved by the appropriate person, within limited time lines. Since the petitioner failed to prefer the statutory appeal within the time provided, recourse to Article 226 of the Constitution to overcome the said statutory period of limitation is not legally tenable. Leaving open the question of jurisdiction of the 2nd respondent to issue an order of destruction, in cases where pests or diseases are not detected, this writ petition is dismissed.

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• 2022 (6) TMI 323
  Provisional attachment of petitioner s Bank account - more than one year (statutory period) has passed - HELD THAT:- Mr Aditya Shekhar, who appears on behalf of the respondent, says that since the statutory period has passed, the provisional attachment order has dissolved. The writ petition is disposed off.

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• 2022 (6) TMI 322
  Validity of assessment of bills of entry before the Commissioner (Appeals) - appeals before the Commissioner (Appeals) were filed against the bills of entry whereas no speaking order was passed by the assessing authority - enhancement of value by the Department - no contemporaneous data provided to the appellant for enhancement of value - Violation of principles of natural justice - whether the letters submitted by the appellant should be treated as acceptance of the value enhanced by the department? - whether, after giving the letter of acceptance, the appellant has the right to file appeal challenging the assessment? - HELD THAT:- Firstly, the Adjudicating Authority has not passed the speaking order either on the acceptance letter of the appellant and the enhancement of value. It is also not clear whether the assessing authority has relied upon any contemporaneous import price data. On the issue that whether the assessee is entitled to challenge the assessment after giving acceptance letter of enhanced value, there are contrary judgments. The Adjudicating Authority had no occasion to consider all these judgments as he has not passed any speaking order. Moreover, there is no contemporaneous data provided to the appellant for enhancement of value which amounts to clear violation of principles of natural justice. The matter should be remitted back to the assessing officer who shall consider the representation to be given by the appellant on all the issues and thereafter, he shall pass a speaking order - Appeal allowed by way of remand.

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• 2022 (6) TMI 321
  Review order is barred by time limitation or not - appeal filed by department before Commissioner (Appeals) is also barred by limitation or not - Section 129D of the Customs Act, 1962 - HELD THAT:- Sub-section (3) provides that the review order has to be passed within a period of 3 months from the date of communication of decision or order of the adjudicating authority. On perusal of records, it is seen that the date of Order-in-Original is 31.05.2019. The date of dispatch is shown as 03.06.2019. The appellant contends that department would have received it on the same date and therefore the review order passed on 03.09.2019 is beyond 3 months. They have not adduced any evidence to show that the department has received the order passed by the Adjudicating Authority either on 31.05.2019 or on 03.06.2019 - the review order passed on 03.09.2019 is well within time. Consequently, the appeal filed by the department is also within the prescribed time limit. In any case, it is also necessary to state that proviso to sub-section (3) says that on sufficient cause being shown, the period can be extended by another 30 days on filing an application to condone the delay. The delay in the present case is less than 30 days. Conduct of personal hearing - whether hearing was not conducted in a proper manner as both the parties were not present at the same time in the virtual hearing conducted by the Commissioner (Appeals)? - HELD THAT:- From the records, it is seen that department has filed a letter on 09.11.2020 informing that the grounds of appeal filed by the department may be taken on record as arguments for the department. In such case, it cannot be said that department has to appear in the online hearing. From the discussions made in the impugned order also, it is not seen that any new grounds were taken up by the department other than what they have stated in their grounds of appeal. The view taken by Commissioner (Appeal) that the matter has to be remanded for reconsideration does not require any interference - Appeal dismissed.

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• 2022 (6) TMI 320
  Classification of imported goods - inkjet printer as claimed by appellant, or ink-jet printing machine as re-assessed by the assessing authorities - HELD THAT:- The two tariff items though under the same heading part ways at the next level of classification with that of the appellant coming within other printers, copying machine and facsimile machines, whether or not combined corresponding to stand-alone printers capable of connecting to an automatic data processing machine or a network which the tariff item preferred by customs authorities does not require. The argument of Learned Authorised Representative that the product literature shows the incorporation of computer within it to fulfil the same condition does not really pass muster with us because the capacity to be connected to automatic data processing machine or network is not the same as fitment of internal controls system for the operation of the machinery. The two description differ on capability of external connection implying that it is a printer with possibility of varied input. It is in the light of this that the Central Board of Excise and Customs was compelled to issue clarification referred to in the decision of the Tribunal in M/S. MONOTECH SYSTEMS LIMITED VERSUS THE COMMISSIONER OF CUSTOMS (AIR) [ 2020 (3) TMI 323 - CESTAT CHENNAI] . In view of the classification of the same product by the Tribunal in a dispute of the very same importer, the classification adopted by the original authorities and sustained in the impugned order does not survive - Appeal allowed - decided in favor of appellant.

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• 2022 (6) TMI 319
  Rectification of mistake - Error apparent on the face of record or not - It is submitted by the applicant that the final order, for reason of having been passed almost four months after the date of hearing, should be recalled - HELD THAT:- The order makes it abundantly clear that, as the importer, M/s Hindustan Engineering Corporation, had had their appeal dismissed in limine, the finding in the orders impugned before the Tribunal insofar as imports are concerned had attained finality with the consideration of the appeals of the applicant herein restricted only to acts of omission and commission that contributed to the breach for which goods were confiscated. The present applications of Shri Suketu J Mody for reconsideration of the findings on merit appears to be a ploy to substitute for lack of challenge to the offence leading to confiscation. The technical issue raised by the applicant herein for rectification of mistake pertaining to the finding and jurisdiction are tantamount to seeking review of the order which is the prerogative of the appellate courts. Application dismissed.

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• 2022 (6) TMI 318
  Rectification of mistake - mistake apparent on the face of record or not - applications have been filed by one Monika J Mody, claiming to be wife of Mr Jiten P Mody, on the ground that he had since been expired - Levy of penalties - HELD THAT:- There is no provision, in section 129B(2) of Customs Act, 1962, for any person other than Commissioner of Customs or the other party to the appeal to apply for rectification of mistake. Application dismissed.

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• 2022 (6) TMI 317
  Application for admission of additional grounds - Challenging the Jurisdiction - proper officer to issue SCN - whether DRI is proper officer to issue SCN or not - time limitation - whether the plea of jurisdiction sought to be raised at this stage is hit by the delay and latches in taking the plea or not? - HELD THAT:- Admittedly in the present case the plea of the jurisdiction was not raised by the applicants before the original authority. He has made his submissions before the original authority, without raising this issue at any time, since the issuance of the show cause notice to him in the year 2009. Now having failed before the original authority applicant has by way of this application sought to raise this ground at this stage. Such an approach cannot be allowed. In the case of STATE OF ORISSA ANR VERSUS MAMATA MOHANTY [ 2011 (2) TMI 1371 - SUPREME COURT] Hon ble Apex Court clearly rejected that the plea the ground not taken earlier can be taken on the basis of the decision in case of some other person without proper explanation of delay in taking the said ground. The observations have been made in respect of the Finance Bill, 2022 which was under the consideration of parliament and have been made in respect of the proposal introduced in the parliament much after the conclusion of hearing. Thus department was not allowed any opportunity of hearing on the pleas which have never been advanced by any of the parties. The while arriving at the said finding the bench has ignored the provisions of Section 97 completely, whereby by the Act, the actions taken have been validated by the will of Parliament. Hence the decisions rendered contrary to the express intent of Section 97 is per incuriam. In absence of proper explanation on the delay in latches in advancing this plea, there are no merits found in these applications - The miscellaneous applications seeking additional ground to be taken are dismissed.

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• 2022 (6) TMI 304
  Jurisdiction to demand deposit - Power of DRI - petitioner is aggrieved by the fact that the respondents/revenue has forced the petitioner to deposit a sum of Rs.79/- lakhs, albeit without authority of law - HELD THAT:- Having regard to the fact that Mr Raj Kumar Barmecha is a senior citizen, for the moment, no further summons would be issued qua him - Furthermore, insofar as the proprietor of the petitioner concern is concerned, if fresh summons are issued, the proprietor will join the investigation, however, no coercive measures will be taken against him till the next date of hearing. List the matter on 03.08.2022.

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• 2022 (6) TMI 293
  Seizure under Section 110 of Customs Act, 1962 - Rule 41 of the CESTAT (Procedure) Rules 1982 - HELD THAT:- It is more than apparent that Respondent No. 2 - the Commissioner of Customs, Nagpur, was required to decide the application filed by the appellant under section 110A of the Customs Act 1962 in accordance with law, after giving due opportunity of hearing to the petitioner at the earliest and preferably within two weeks from the date of receipt of the order. The instructions that have been made available to the Bench at the time of hearing the application by Shri Manoj Kumar learned Authorized Representative appearing for the Department indicate that the Joint Commissioner of Customs, Customs Commissionerate, Nagpur , took a decision on 25.04.2022 under section 110A of the Customs Act, 1962 - Application disposed off.

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• Corporate Laws

• 2022 (6) TMI 316
  Violation of principles of natural justice - Validity of prosecution proceedings - service of SCN - Case of petitioners is that, prior to launching the criminal prosecution, no show cause notice was given to the petitioners - HELD THAT:- Initiation of criminal proceedings without giving show cause notice is against the principles of natural justice. There is no mentioning in the complaint about issuance of show cause notice. There is also no proof filed to show issuance of show cause notice and its service on the petitioners. If show cause notice had been given, petitioners would have got the opportunity for rectifying their defects. When that opportunity is not given, criminal prosecution is liable to be quashed. There is no specific averment made in the complaint as to whether the Directors are responsible for the offences alleged to have committed by the Company. No speaking order was passed by the Additional Chief Metropolitan Magistrate at the time of taking cognizance of the cases. A reading of the complaint in these cases shows that it was specifically mentioned that show cause notice was issued on 13.08.2018/28.11.2017. In the list of documents, show cause notice is shown as document relied by the prosecution. It is true that the proof for service of the show cause notice on the petitioners is not produced. However, it is for the respondent during the trial to prove the service/non-service of the show cause notice. When there is clear averments made in the complaint that the show cause notice was issued on 13.08.2018/28.11.2017, the contention of the learned counsel for the petitioners that no show cause notice was issued to the petitioners cannot be accepted. The offences alleged against the petitioners are statutory violations for non complying certain mandatory provisions. This Court can gather from the records summoned that the Additional Chief Metropolitan Magistrate had taken cognizance of the cases only after going through the complaint allegations and materials filed in support of the complaint allegations. These petitions have been filed only to protract the proceedings and deserve to be dismissed - Petition dismissed.

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• Insolvency & Bankruptcy

• 2022 (6) TMI 363
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Existence of debt and dispute or not - time limitation - HELD THAT:- The contention of the Corporate Debtor that the Financial Creditor is not entitled to file this present application against the Corporate Debtor as the loan/corporate facilities were sanctioned by the Financial Creditor with the consortium of SBI which is only entitled to file the proceeding before this Adjudicating Authority. Further, the contention of the Corporate Debtor that the S.B.I has already taken the possession the properties of the Corporate Debtor more than the sanctioned amount by both the Banks (Financial Creditor and S.B.I) of Rs. 93.61 Crores. The aforesaid both the contentions of the Corporate Debtor is baseless though the S.B.I is a lead Bank under the consortium of sanctioned credit facilities but Financial Creditor has independently sanctioned the loan/credit facilities to the Corporate Debtor and is entitled to initiate the proceeding under Section 7(1) of the IBC, 2016 and it is an admitted fact that the claim amount is still pending to be paid by the Corporate Debtor. It is also not a disputed fact that the loan was disbursed to the Corporate Debtor by the Financial Creditor. Though, S.B.I. has taken possession of the properties of the Corporate Debtor under the SARFAESI Act, 2002 but if any proceeding initiated either by the Financial Creditor or by the lead Bank i.e., S.B.I. under SARFAESI Act, 2002 does not bar to initiate the proceeding under 7 of the IBC, 2016 - It is also noted that the present petition is duly supported by the affidavit of the authorized person of the Financial Creditor and all the requisite information for initiating the CIRP against the Corporate Debtor under Section 7 of IBC, 2016 has been disclosed by the Financial Creditor. Hence, the contention of the Corporate Debtor that the present petition is defective is not valid. It is observed that the credit facilities were sanctioned to the Corporate Debtor by the Financial Creditor and due to nonpayment of the outstanding amount, the accounts of the Corporate Debtor was classified as N.P.A. on 11.12.2019 and thereafter recall notice dated 17.06.2020 of Rs. 17,46,77,948/- was issued to the Corporate Debtor as well as guarantors of the Corporate Debtor but the Corporate Debtor failed to pay the outstanding amount/regularised the N.P.A. account. Moreover, the Financial Creditor has also issued the notice under 13(2) of the SARFAESI Act, 2002 for the payment of the aforesaid outstanding amount on 31.07.2020 but the Corporate Debtor failed to pay the outstanding amount within the stipulated time under the aforesaid notice. There is a debt and default has been committed by the Corporate Debtor - This application is otherwise complete and defect-free and meets the threshold limit as prescribed under Section 4 of the IBC, 2016. The present petition is well within the limitation as the present petition was filed on 09.03.2021 and the date of default is stated to be 09.12.2019. Application admitted - moratorium declared.

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• 2022 (6) TMI 362
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Personal Guarantor of the Corporate Debtor - existence of debt and dispute or not - HELD THAT:- It is evident from a reading of the Section along with the Rule, that what the Creditor has to serve is the copy of the application made under sub-section (1) to the Debtor, Reading Rule 7(2) with Rule 3 shows that the application filed under sub-section (1) of Section 95 shall be submitted in Form -C and the Creditor will serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. Thus, what has to be sewed is the copy of application which has been submitted . What is contemplated is that the application in Form C should be submitted and then the Creditor should serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. The procedure thus prescribed will give the Personal Guarantor, notice of the application already filed before the Adjudicating Authority. Section 95(5) requires the Creditor to provide a copy of the application made under sub-section (1) , to the Debtor. Thus, serving advance copy is not contemplated. The arguments that Section 98 provides for replacement of the Resolution Professional and hence the Guarantor should have an opportunity to seek replacement of Resolution Professional and hence he should be heard before appointment of IRP was also considered and held that going through Section 98 of IBC, 2016, it is found that Section 98 is not stage specific. Section 98 itself shows that the section could be resorted to even at stages like implementation of repayment plan which would be a stage beyond Section 116, where implementation and supervision of repayment plan is provided for - Section 99 (4) of IBC, empowers the Resolution Professional to seek further information or explanation in connection with the application as may be required from the Debtor or the Creditor or any other person, who, in the opinion of the Resolution Professional, may provide such information. Hence it is not as if, the Debtor is not provided an audience before the submission of the report. The constitutional vires of Section 95, 96, 97, 99 100 of the Code has been challenged before the Supreme Court, on the ground that no opportunity of being heard has been provided in favour of the affected party before the initiation of the insolvency process and that the impugned provisions denude the personal guarantors of the opportunity to raise objections on jurisdictional issues such as double dipping, period of limitation, inconsistent, illegal false claims, quantum, suppression of facts, etc, at the very threshold. This Tribunal is of the considered opinion that there is no hurdle to entertain this application under Section 95 of IBC, 2016, since the application is found to be complete - Petition admitted - moratorium declared.

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• 2022 (6) TMI 345
  Deposit the performance guarantee immediately and in case of his failure, to forfeit the deposit given as EMD as well as partial Performance Security - HELD THAT:- It is noted that though the CIRP started on 28.02.2019, precious time has been lost mainly due to the fact that the respondent has not been able to deposit the performance guarantee in time despite several accommodations made by the CoC - It is also noted that the H-2 Bidder i.e. M/s. Pioneer Facor IT Infra Developers Private Limited (PHK) Consortium has come with a resolution bid of Rs. 75.50 Crores. Records indicate that the H-2 Bidder was rejected by the CoC at the time of the original finalization of the resolution plan because his bid offer was only Rs. 74 Crores less than the H-1 Bidder. The Applicant-Resolution Professional has prayed for a direction to the respondent not only to pay the performance guarantee but also to match the revised bid of Rs. 75.50 Crores now offered by the H-2 Bidder. This Bench, however, feels that this is against the basic tenets of law of contract and performance of a contract. The respondent must pay as per the original bid of Rs. 75 Crores, failing which the original bid fails. Thus, there is no requirement for him to match the revised bid of H-2 Bidder as the original bid is now closed. The respondent is, however, directed to deposit the performance guarantee within a period of one month from the date of this order and the same should be to the satisfaction of the CoC. In the event of the failure of the respondent to comply with the conditions of the performance guarantee, the CoC is directed to first negotiate with the H-2 Bidder to explore the possibility of the resolution in a time-bound manner - Application disposed off. Rejection of Resolution Plan - HELD THAT:- This application is closely linked with the IA No. 716/2020 in the sense that the present applicant was the H-2 Bidder in the CIRP of the Corporate Debtor i.e. International Mega Food Park Limited. In the present application, the applicant has made several allegations regarding the way CIRP proceedings was conducted and the respondent No. 3 - Ajay Yadav and Lata Yadav were declared H-1 Bidder over and above the offer given by the applicant - this Bench has already directed in the order of IA No. 716/2020 that the present offer given by the applicant-H2 Bidder should be considered by the CoC in case there is a failure on the part of respondent No. 3-Ajay Yadav and Lata Yadav (H-1 Bidder) to furnish the performance security within the extended time limit allowed to them by this Bench. It is again reiterated that the CIRP is strictly a time-bound process and any action causing delay will only further devalue the assets of the corporate debtor. Application disposed off.

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• 2022 (6) TMI 315
  Seeking direction to the first respondent to register the complaint filed by the petitioner against the third respondent for committing various offences under Indian Penal Code - Settlement of amount between banks without issuing due certificates - pecuniary advantage received from the stakeholders for settling their amount - sale of Stock Materials and container at lower price - non-production of documents relating to the sale of scrap materials - HELD THAT:- From the consideration of materials produced and the submission of the parties, the third respondent appears to have acted as per the terms and conditions imposed in the order dated 23.12.2020. If at all the petitioner has any grievance, is open to the petitioner to approach the appropriate forum as provided under Section 217 and 218 of the Insolvency and Bankruptcy Code, 2016. There is no prima-facie case made out to register a criminal complaint against the third respondent. This Criminal Original Petition is dismissed.

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• 2022 (6) TMI 314
  CIRP process - Leave encashment amount payable to the applicant shall be treated as part of CIRP cost, or not - HELD THAT:- Admittedly, the gratuity amount of Rs. 8,02,500/- has been paid, during the pendency of the I.A before the Adjudicating Authority - Leave Encashment of Rs. 5,67,100/- has been admitted to be payable and since being Director he has been treated as related party and therefore, the Adjudicating Authority has rightly recorded that leave encashment amount payable to the applicant shall be treated as part of CIRP cost and as the Resolution Plan finalized by CoC the approval is pending before the Adjudicating Authority, once approved, the leave encashment will be considered in accordance with law. The compensation amount of Rs. 25,68,000/- claimed by the Appellant is not payable in terms of the agreement dated 13.02.2019 - Keeping in view the relevant rules and the Agreement dated 13.02.2019, it is held that there is no provision for payment of compensation to the Appellant. Further it is observed that even the stipulated one month notice period has been complied with and admittedly the salary payment of Rs. 2,14,000/- has also been paid. Since, payment has been settled in accordance with law, the payment of any further interest does not arise. Appeal dismissed.

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• 2022 (6) TMI 313
  Levy of Labor cess - alleged cess payable for the construction of Oil Palm Division - HELD THAT:- From the facts brought on the record, it is clear that the Respondents in Company Appeal (AT) (Ins.) Nos. 68, 69 and 71 of 2022 have not filed any claim in the CIRP. Thus, after approval of the Resolution Plan, they can neither press any claim nor issue any demand notice. We, thus, allow Company Appeal (AT) (Ins.) Nos. 68, 69 and 71 by allowing I.A Nos. 1418/2021, 2562/2021 and 2577/2021. The last notice was issued on 11.12.2019 by the Additional Collector i.e. subsequent to closure of the CIRP. The proceedings initiated under Section 63 (1-A) of the Maharashtra Tenancy and Agricultural Land Act, 1948 could very well be proceeded with and cannot be subject matter of the insolvency process. The facts of the Company Appeal (AT) (Ins.) No. 70 of 2022 are fully covered by the Judgment of the Hon ble Supreme Court in Embassy Property Developments Pvt. Ltd. vs. State of Karnataka and Ors. [ 2019 (12) TMI 188 - SUPREME COURT ]. We, thus, are of the view that IA 111/2021 filed by the Appellant against the Additional Collector and Tehsildar deserves to be rejected. Company Appeal (AT) (Ins.) No. 70 of 2022 is disposed of while rejecting IA No. 111/2021. Appeal disposed off.

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• 2022 (6) TMI 312
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Debt or not - existence of debt and dispute or not - HELD THAT:- It is very clear from the document placed by the Respondent that the essence of transaction as entered between the parties herein is advance payment/final payment towards supply of materials, commissioning of wind turbines/ completion of wind energy project for subsidiaries of IEDCL. The advance/progressive payments for such work is clearly authored by ILFS group and the loan amount were adjusted at the time of final payment for the work performed by WWIL and its subsidiary company WWWRDPL. The aforesaid facts clearly suggest that the payment has been made by IFIN to WWIL and its subsidiary towards supply of material and for rendering services - The Corporate Debtor herein is merely the corporate guarantor along with another Vishwind Infrastructure LLP as co-guarantor. The amounts assigned by IFIN to the Financial Creditor have been accounted for by Vejas Power Project Limited, as capital advance in the audited balance sheet as filed by the Registrar of Companies for F.Y. 18 F.Y. 19. This clearly shows that the Vejas Power Project Limited has knowledge that the amount due does not come within the meaning of financial debt , therefore, accounted the amount as a Capital Advance and not as a Financial Loan - It is settled law that under Section 129 of the Companies Act, 2013 financial statements shall give true and fair view of the state of affairs of company and shall comply with the Accounting Standard. Therefore, no contrary stand can be taken by Vejas Power Project Limited. In this case, both sides have clearly functioned as collective through their group companies in order to fulfil the terms of MoU and the transactions as stated by the Petitioner needs to be looked as a part of the transaction under the initial MoU dated 27.07.2010 entered between IL FS Energy Development Company Limited (IEDCL) and Wind World India Limited (WWIL). Thus, the amount that has been disbursed by IFIN do not come within meaning of Financial Debt as defined under Section 5(8) of the IBC. Application dismissed as not maintainable.

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• 2022 (6) TMI 311
  Liquidation of the Corporate Debtor - Section 33(2) and 60(5) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Since the COC in its commercial wisdom has decided to take the Corporate Debtor in liquidation, it is opined that the decision of the COC should not be interfered with. The present application seeking liquidation of the Corporate Debtor M/s. Vibrant Fab Private Limited, in the manner laid down in Chapter III of Part II of the Code is allowed. The Corporate Debtor is ordered to be liquidated - application allowed.

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• PMLA

• 2022 (6) TMI 310
  Seeking grant of regular bail - Proceeds of crime - wrongful availment of VAT refund - applicability of Section 45 of PMLA 2002 - HELD THAT:- It is not in dispute that the petitioner himself is not a Director of M/s Jaldhara Cotspin Private Limited and that it is his son and father, who are the Directors. Though learned counsel for the respondent has submitted that the proceeds of crime amount to the tune of Rs.8.7 lakhs had been transferred in the bank account of petitioner Vinod Kumar Garg, but a perusal of the reply filed by the respondent shows that it is infact an amount of Rs.2.56557 lakhs, which had been transferred into the bank account of petitioner Vinod Kumar Garg. It will be debatable as to whether the said amount had been received by the petitioner while being aware that the same was proceeds of crime or not. Applicability of Section 45 of PMLA 2002 - HELD THAT:- The said provisions though stringent in nature were amended w.e.f. 19.4.2018, wherein an exception was carved out in cases where the amount in question is less than Rs.1 crore. The present complaint was instituted in December 2018. In other words, the instant complaint had been instituted after the amendment had been carried out and thus the applicability of Section 45 of PMLA 2002 would be subject to exception that the amount in question is more than Rs.1 crore. The petitioner is ordered to be released on regular bail on his furnishing bail bonds/surety bonds to the satisfaction of learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned - Petition allowed.

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• 2022 (6) TMI 309
  Validity of subsequent orders extending the remand - Money Laundering - illegal delivery of metal gold - whether the trial court was justified in remanding the Petitioner when he was already in custody in relation to another offence in ECIR/KLZO/-II/01/2021 in the Presidency Correctional Home, Kolkata? - HELD THAT:- Section 267 provides a procedure to deal with a person who is alleged to have committed various offences. Section 267 of the Cr.P.C. contemplates a procedure where the court can require the presence of a person who is detained or confined in any other offence in any other jurisdiction. The investigation officer/agency may file an application under Section 267 of the Cr.P.C. for issuance of a P.T. warrant directing the prison authorities where the accused lodged to be produced before the court in a case other than the one in which he is already in custody - Once the person is produced before the court pursuant to the issuance of the P.T. warrant, a question arises whether such a person can be again sent to judicial custody under Section 167 of the Cr.P.C. by the court before which he was produced. The Petitioner was already in judicial custody in Kolkata. Therefore, the Respondent authority could not have directly arrested the Petitioner. On 22.12.2021, the Respondent sent a copy of the petition under Section 267 of the Cr.P.C. r/w Section 50 of the PMLA to the Superintendent, Presidency Correctional Home, Kolkata to be served upon the Petitioner herein. In the said petition, the Respondent authority stated that the Petitioner has been arrested under Section 19 of the PMLA. The said petition was served upon the Petitioner on 23.12.2021and was duly acknowledged by him. The custody of the Petitioner could only be sought after he was produced pursuant to the P.T. warrant under Section 267 of the Cr.P.C. Once he was produced, the trial court considered the fact that he was formally arrested in prison and considering the application under Section 167 of the Cr.P.C. remanded him to judicial custody. According to this Court, there is no illegality in the impugned order dated 11.02.2022 remanding the Petitioner. The only question before this Court was whether the impugned order dated 11.02.2022 remanding the accused was illegal. According to this Court, the impugned order dated 11.02.2022 and the subsequent orders extending the remand are legal and valid. Therefore, the present criminal petition is liable to be dismissed - Criminal Petition dismissed.

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• Service Tax

• 2022 (6) TMI 308
  Maintainability of petition - Validity of Show Cause Notice (SCN) - appropriate forum - Recovery of Service tax with interest and penalty - invocation of extended period of limitation - applicability of first proviso to Sub-Section (1) of Section 73 of Finance Act, 1994 read with Section 119 of Chapter VI of the Finance Act, 2015, Section 161 of Chapter VI of the Finance Act, 2016, Section 95 of the Finance Act (2), 2004 and Section 140 of the Finance Act, 2007 - HELD THAT:- It is consciously refrained from observing anything on the merits of the contention regarding levy of service tax and exemption from payment of stamp duty claimed by the petitioner in exercise of writ jurisdiction, at this stage where the petitioner has only been asked to appear and submit its response to the show-cause notice. The show-cause notice does not suffer from want of jurisdiction. The plea of the petitioner requires scrutiny and examination of service contracts entered both with the Government of Jharkhand and its subcontractors in the light of the Exemption Notifications. Whether petitioner would be liable to pay service tax on its claim of exemption from payment of stamp duty, is a matter to be decided at the first instance by the Adjudicating Authority. The question does entail adjudication on mixed question of law and facts. The writ petition is not fit to be entertained on the principles well settled by the Hon ble Supreme Court - Apex Court in the case of M/s Magadh Sugar Energy Ltd. versus The State of Bihar Ors [ 2021 (10) TMI 691 - SUPREME COURT ] has held that In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with. Present writ petition is dismissed.

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• 2022 (6) TMI 307
  Demand of service tax - value of taxable services - alleged erroneous adjustments in the books of account - rejection of CA certification - period 2010-11 - HELD THAT:- It is found that in the course of adjudication, the Appellant had duly submitted the facts before the Ld. Commissioner as appearing in the reply to the Show Cause Notice. The Appellant also submitted a reconciliation statement which shows the brokerage income as per the ledger and the disputed adjusted amount which was added to the said ledger amount to submit that service tax has been deposited in Financial Year 2012-13. The Appellant also submitted a Chartered Accountant s Certificate to justify the said computation. It is a settled position that the authorities cannot reject the C A certificate without stating the reasons as to why the CA certificate submitted by the Appellant is not acceptable to such authorities. Therefore, the stand taken by the Ld. Commissioner to confirm the impugned demand of service tax is legally not tenable. There are no reason to sustain the service tax demand of Rs.5,17,406/- and interest thereon and equivalent penalty of Rs.5,17,406/- imposed on the Appellant - appeal allowed - decided in favor of appellant.

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• 2022 (6) TMI 306
  Levy of service tax - export of services or not - Distinct Person - IT Service provided by the appellant to their associate company M/s Celtic Cross Holding Inc. USA - appellant could not prove that they have received the export proceeds in convertible foreign exchange - appellant and the service recipient are establishment of a distinct person or not - Rule 6A(1) of Service Tax Rules, 1994 - HELD THAT:- From the facts on the records, it is not disputed that the appellant company is working under the banner of M/s Celtic System Pvt. Ltd. registered with the registrar of companies in India. Whereas, the Service recipient is working under the banner of M/s Celtic Cross Holding Inc. USA. Both the companies are separately registered in their respective countries. Even the directors of the company though two directors are common but others are different. Even if there is a note in the balance sheet of the appellant company that they are associate of M/s Celtic Cross Holding Inc. USA but in the eyes of law as per the companies act both companies are independent entity. Therefore, Clause (f) of Rules 6A (1) of Service Tax Rules, 1994 stand complied with. This issue has been considered of Hon ble Gujarat High in the case of LINDE ENGINEERING INDIA PVT. LTD. VERSUS UNION OF INDIA [ 2020 (8) TMI 181 - GUJARAT HIGH COURT] wherein the Hon ble Gujarat High court even in case where the Indian Company was 100% subsidiary of the foreign company namely Linde AG Germany has held that both are different entity. In the present case the appellant are on better footing as they have constitutionally two different entity one is the appellant and other is M/s Celtic Cross Holding Inc. USA. Therefore, following the judgment of Gujarat High Court, it is clear that in the present case the appellant and the service recipient are two distinct person, hence, the service provided by the appellant to M/s. Celtic Cross Holding Inc. USA clearly falls under export of service. The demand confirmed by the adjudicating authority and upheld by the Commissioner (Appeals) is not correct and legal - Appeal allowed - decided in favor of appellant.

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• 2022 (6) TMI 305
  Rejection of Refund claim - Ocean Freight - double taxation - case of appellant is that they had already paid customs duty, CVD etc. on the import price, which includes ocean freight, the appellant was not required to pay service tax again on the freight (under reverse charge) - HELD THAT:- The transaction value for Custom duty and Excise duty (CVD), includes the ocean freight, and accordingly it is held that the appellant has suffered the double taxation, by again paying the service tax on the ocean freight, as demanded by the Revenue. The appellant is entitled to refund of service tax Rs. 11,31,601/- + Interest Rs. 2,91,590/- + Penalty Rs. 1,69,740/-, totalling Rs. 15,92,931/-. This amount should be refunded to the appellant within a period of 45 days alongwith interest as per the provisions Section 11BB of the Central Excise Act - Appeal allowed - decided in favor of appellant.

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• 2022 (6) TMI 303
  Works Contract service - Continuous Contracts - Benefit of composite scheme for ongoing projects for which service tax paid before 01.06.2017 under Commercial or Industrial Construction Service/ Construction of Complex Service - levy of service tax alongwith interest and penalties - HELD THAT:- From Circular No. 128/10/2010-S.T., dated 24-8-2010, in respect of such continuous contracts, it is clear that for the ongoing contracts which were classified where service tax has been paid in the respective specified services before being classifiable under the works contract service , the benefit of composition scheme would not be applicable - In the instant case it is admitted facts that the appellant has paid service tax on ongoing projects under Commercial or Industrial Construction Services and Construction of complex service. Therefore on these 34 ongoing projects the option to pay service tax under the Works Contract (Composition Scheme for Payment of Service tax) Rule, 2007 is not available to the Appellant. In the case of NAGARJUNA CONSTRUCTION COMPANY LTD. VERSUS GOVERNMENT OF INDIA [ 2010 (6) TMI 91 - ANDHRA PRADESH HIGH COURT] which involved identical issue. The Hon ble High Court, while deciding the applicability of Rule 3(3) of the Composition Scheme discussed the case of ongoing works contracts which were earlier being classified under the Residential Complex Services . It is pertinent to mention that in the appellant s own case the Hon ble Gujarat High Court in JMC PROJECTS (INDIA) LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2014 (5) TMI 106 - GUJARAT HIGH COURT] categorically held that in respect of ongoing projects as on 01.06.2007 if any payment of service tax was made under the respective taxable service head before the said date, qua such contract, composition scheme was not available. Thus, for the ongoing projects as on 1-6-2007, if any payment of service tax was made under the respective taxable services, composition scheme would not be available for the same. Penalties under section 76 and 78 of Finance Act - HELD THAT:- As per the settled legal position penalty under section 76 is not tenable when penalty under section 78 is imposed. This issue no longer res integra. Thus, appellant is not liable for penalty under section 76. Accordingly simultaneous penalty imposed under section 76 is set aside. Thus, the demand of service tax confirmed by the adjudicating authority is upheld along with penalty imposed under Section 76/78 and interest under Section 75 - simultaneous penalty imposed under Section 76 is set aside - appeal allowed in part.

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• Central Excise

• 2022 (6) TMI 302
  Validity of SCN issued - Power of trial court to accept the challenge the validity of SCN - Prosecution proceedings against the accused - applicability of time limitation - imposition of cost upon the Central Excise Officer - monitory decree alongwith the interest - acquittal of the accused - suit for permanent injunction for restraining the defendants from taking action against him. Validity of SCN - plaintiff has challenged the show cause notice issued under the Act on the grounds that it was issued after lapse of 6 months and it is time barred - HELD THAT:- In the present case, it is admitted fact that notice has been issued to the plaintiff after six months. It is also admitted facts that against the said notice, the plaintiff ha approached the authority by way of appeal and even thereafter by way of revision, challenging the said notice. Thus, the alternative appropriate remedy has already been exhausted by the plaintiff, of course during the pendency of the suit. Thus, there was no question of declaration to be wade in respect of show cause notice issued to the plaintiff - Admittedly, in this Case, the authority has not initiated any legal proceedings of recovery or penalty against the plaintiff. The course adopted by the defendant authority is in the realm of Quasi-judicial proceedings of seeking penalty under the Act. Therefore, though the notice has been issued after six months from the date of checking i.e. 21.02.1979, the notice cannot be held to be illegal one and no declaration or injunction against the same can be granted in favour of the plaintiff. The Trial Court has not considered the provision of Section 40(2) of the Act which clearly does not apply to the departmental proceedings and only applies for initiation of suit or prosecution. Therefore, in view of the facts and legal provisions, it is clearly found that the Trial Court has committed error in declaring the show cause notice as illegal and time barred. In the facts and circumstances of the case, whether the Trial Court has committed error of facts and law in deciding the issue of maintainability of the suit under the provisions of Section 40 of the Act? - HELD THAT:- The right to restoration of the goods is a vested Civil Right and on expiry of the initial period of six months this right to restoration of the goods vested indefeasibly and absolutely in the petitioner and it cannot be taken away. The defence raised by the department regarding the provisions of Section 123 of the Customs Act, it was held that, that Section does not apply with the facts of the case. It is pertinent to note that Sub-section 2 of Section 40 of the Act as referred to herein above provides that no proceedings, other than a suit, shall be commenced against the Central Government or any Officer of the Central Government or State Government for anything done or purported to have been done in pursuance of this Act or any rule made thereunder, without giving the Central Government a month s previous notice in writing of the intended proceedings and of the cause thereof or after the expiration of three months from the accrual of such cause. Thus, the provision relates regarding the proceedings other than a suit - admittedly, in the present case, the plaintiff has already issued prior notice to the Government for his intended action of filing suit for damages and the plaintiff has filed a suit after service of notice. The suit is also for damages. Therefore, considering the facts of the present case, the suit is maintainable even under Section 40(2) of the Act - Trial Court has not committed any error of facts and law in holding that the suit is maintainable. In the facts and circumstances of the case, whether the Trial Court has committed error of facts and law in observing that the plaintiff is entitled to recover the amount of Rs.9,33,378.37 with interest? - In the facts and circumstances of the case, whether the Trial Court has committed error of facts and law in passing the impugned decree in favour of the plaintiff? - HELD THAT:- There is no dispute regarding the checking of the warehouse of the plaintiff by the officers of the Excise Department. It also reveals from the evidence that at the time of checking plaintiff Somabhai was not present. It is also established that at the time of checking Mahendrabhai and Chhaganbhai were also present. Not only that, but as per evidence of the labourer Muljibhai Kachrabhai Mangora that he himself has called other labourers and the officers have instructed them to bring bags from the different lots of bags and the weight was carried out of almost 400 to 500 bags. He has also stated that the officers have returned back the bags and have instructed them to arrange it as it was, prior to checking, however, as there was no time available for them, they did not do so. It also reveals from his evidence that the necessary writing was also being done as and when there was weighting of the bags. Thus the factum of preference of the panchnama and weighting of the bags and handing over the bags to the plaintiff side is clearly established. Further, it reveals from the evidence that the tobacco was lying in the warehouse of the plaintiff. As per the entire oral evidence of the plaintiff witnesses, all the bags of tobacco were kept in the same warehouse. Further it reveals that as per the oral evidence of the plaintiff side, fire was broken out as there was no proper ventilation available and due to heat, fire broke out. Since the tobacco was lying in the warehouse of the plaintiff, it was for the plaintiff to see to it that there is proper ventilation available in it and no untoward incident of fire took place. The entire case of the plaintiff is based upon the allegations that due to negligence on the part of officers of the Excise Department, not permitting him to sold out tobacco, he has suffered damages due to fire occurred in his warehouse - it is not the case of the plaintiff that at the time of checking the bags were made empty and tobacco was converted into heap. Thus, the version of the plaintiff is also not probable one. Further, considering the impugned judgment of the Trial Court, it appears that the Trial Court has even not bothered to produce the oral evidence of the witnesses and has simply decided the case on the basis of some statement from the evidence. The Trial Court has failed to follow the principles of evidence that while appreciating the oral evidence of any witness, the version of chief examination, crossexamination as well as re-examination needs to be appreciated. However, in this case, the learned Trial Court has not even referred to the entire evidence of any witness. Due to that, the Trial Court has wrongly come to the conclusion that the defendants are liable for whatever damage is caused to the plaintiff due to natural fire broke out in his warehouse. The present appeal is liable to be allowed and the impugned judgment and decree of the Trial Court needs to be set aside - Appeal allowed.

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• 2022 (6) TMI 301
  Adjustment of interest and penalty from the refundable amount - Whether from the refundable amount, adjustment have been rightly made for the amount of interest and penalty, which is sub judice before the higher court of appeal? - HELD THAT:- Section 11 of the Central Excise Act grants power to the Central Excise officers, being in the nature of special power of recovery, which in the nature of garnishee proceedings . The Adjudicating Authority is empowered to not only adjust arrears of tax recoverable from the assessee from any money/refund which is in the hands of the authority payable to the assessee, further empowers to issue certificate for adjustment to another Central Excise Officer who may have any money payable to the assessee, and also empowers to issue certificate to the District Collector for recovery of tax dues as arrears of land revenue. Such power of adjustment cannot be exercised for demand of tax/interest/penalty which is sub judice. Admittedly, in the facts of the present case, the amount of interest and penalty are sub judice before this Tribunal and this fact was admittedly in the knowledge of the court below. The adjustment made from the amount refundable to the appellant is bad and the same is set aside. The Adjudicating Authority directed to grant the refund of balance amount of Rs. 42,02,518/- in cash alongwith interest under Section 35FF of Central Excise Act - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (6) TMI 300
  Benefit of the concessional rate of tax - C-Forms issued by the purchaser located in the State of Rajasthan - registration of the dealer i.e., the purchaser located in the State of Rajasthan was cancelled, with retrospective effect - inter-state sale - HELD THAT:- Since the Tribunal is the final fact-finding authority, it ought to have given an opportunity to the appellant that the subject transaction were inter-state sale transactions, contrary to what was contended by the respondents/revenue - Tribunal could have also taken recourse to an alternative route, which was to remand the matter to the Assessing Officer for determination of this very issue i.e. whether or not the subject transactions were inter-state sales transactions. Concededly, the Tribunal took recourse to neither route, and simply ruled against the appellant, both in the appeal as well as in the review application. This approach cannot pass muster as it violates established principles of fairness and according equal opportunity to disputants who are present before an adjudicator. The impugned orders are set aside - matter remanded to the Tribunal for a de novo hearing.

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• Indian Laws

• 2022 (6) TMI 365
  Work Contract - termination for breach of contract by the respondent no.4 - validity of proceedings under the MSMED Act - HELD THAT:- It was held in M/S. KONE ELEVATOR INDIA PVT. LTD. VERSUS STATE OF TAMIL NADU AND OTHERS [ 2014 (5) TMI 265 - SUPREME COURT] that the work contract is an individual contract but, by legal fiction, is divided into two parts, one for sale of goods and the other for supply of labour and services. As held in Principal Chief Engineer vs M/S Manibhai and Bros (Sleeper) [ 2017 (7) TMI 1419 - SC ORDER] , The Supreme Court upheld the Gujarat High Court s judgment [ 2016 (6) TMI 1444 - GUJARAT HIGH COURT] on the interpretation of Section 18 of the Act. The High Court held that since the Act is a special legislation and has an overriding effect, the parties governed by it are bound to follow the mechanism provided under Section 18 of the Act. It was further reiterated in Mackintosh Burn Limited v. Micro and Small Enterprises Facilitation Council [ 2020 (2) TMI 1639 - CALCUTTA HIGH COURT] . The Learned Single Judge rightly observed that without prejudice to any of the rights and contentions of the writ petitioner, the petitioner shall participate in arbitration and that the Tribunal shall decide on its jurisdiction on inter alia the questions raised by the writ petitioner before entering into other questions. - Appeal dismissed.

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• 2022 (6) TMI 299
  Dishonor of Cheque - allegation of non-application of mind, as the order itself is incongruous - applicability of Section 143A of the Negotiable Instruments Act - HELD THAT:- The application filed by the complainant came to be rejected by the learned Magistrate and the same is allowed by the Revisional Court. The mandate of the statute though is to award interim compensation of an amount of 20% to the maximum, it can varry from 0 to 20%. The said variance is not taken note of by the Revisional Court - the amount of 20% be reduced to 10% in the peculiar facts and circumstances of the case, on the entire cheque amount for a resolution of the lis before this Court. It is deemed appropriate to modify the order passed by the Revisional Court dated 25.10.2021 by modifying the amount that is payable by the petitioner in terms of 143A of the Negotiable Instruments Act to 10% of the instrument from 20% as ordered, which shall be deposited before the learned Magistrate by the petitioners, within four weeks from the date of receipt of the copy of this order and the complainant would be at liberty to withdraw the same in terms of the mandate of the statute - criminal petition disposed off.

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• 2022 (6) TMI 298
  Dishonor of Cheque - sufficient opportunity to adduce defence evidence provided or not - right to fair trial - HELD THAT:- Undoubtedly, an accused should be given adequate opportunity for his defence. Denial of opportunity to adduce evidence would definitely go against the spirit of free trial. In the instant case, it cannot be said that the court did not give any opportunity to the petitioner to adduce any evidence, 06.10.2021 was the first date fixed for defence evidence. On that date, the petitioner did not appear. He was represented by his counsel, who sought adjournment and exemption from his personal appearance, which was allowed. In the instant case, on 29.10.2021, the petitioner did not appear personally. He did not adduce any evidence in his defence and even he did not seek any adjournment. The court, in fact, did not have any reason to adjourn the proceeding at the same stage. The court closed the opportunity of adducing defence evidence by the petitioner and proceeded ahead. It cannot be said that the impugned order is against any provision of law. It cannot be said that the petitioner did not get opportunity to adduce evidence in defence. Opportunity does not mean that it may be unguided. An accused does not have unrestricted rights to adduce evidence as and when he requires. As stated, in the instant case, opportunity to adduce defence evidence was granted to the petitioner - The petitioner did not apply to the court seeking permission to adduce defence evidence on that date. Even thereafter, again, the petitioner moved another application to get himself examined, which was rejected by the court on 1611.2021 on the ground that the opportunity to adduce defence evidence has already been closed on 29.10.2021. The petitioner would have assigned the reasons for not adducing evidence on 29.10.2021 for consideration of the court below, which the petitioner did not choose. Even it has not been stated before the court as to why the evidence was not adduced on 29.10.2021. Criminal trial cannot be delayed without any reason. This Court is of the view that there is no reason to make any interference and the petition deserves to be dismissed at the admission stage itself - Petition dismissed.

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• 2022 (6) TMI 297
  Dishonor of Cheque - seeking to recall and re-examine the complainant for the purpose of marking certain additional documents produced after concluding examination of the complainant as PW1 - Section 142 of the Negotiable Instruments Act, 1881 - HELD THAT:- In the case on hand, the trial court has observed after perusing the documents proposed to be marked in additional evidence that the matters proposed to be established through the documents are in no way related to the pleadings of the complainant in the complaint. Complainant s specific case in the complaint was that he is conducting steel and cement business and the accused as a customer of him owed a liability of Rs. 5,00,000/- to him. The name of the business concern having not been mentioned in the complaint, the bills proposed for marking cannot be said to have any connection to the transaction alleged in the complaint. The impugned order is not liable to be interfered with - application dismissed.

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• 2022 (6) TMI 296
  Dishonor of Cheque - power to trial court to impose fine / penalty upto double of the amount of cheque - appellate court reduced the penalty equal to cheque amount - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- The trial court after finding the accused guilty for the offence under Section 138 NI Act had imposed a substantive sentence of imprisonment till rising of the court and fine of Rs. 7,02,500/- and to undergo simple imprisonment for four months as default sentence. In a prosecution under Section 138 NI Act the trial court is empowered to sentence the accused to imprisonment upto two years or with fine upto twice the amount of the cheque or with both. The amount covered by Ext. P1 cheque being Rs. 5,00,000/-, the trial court is empowered to direct payment of compensation, double that amount. Rs. 7,02,500/- is the fine imposed in the case on hand and the trial court is justified in doing so. The appellate court has modified the sum to Rs. 5,00,000/-, but, without stating any reasons for doing so. The modification made by the appellate court in the fine amount is set aside. The sentence imposed by the trial court with the modified term of default sentence for two months is restored. Therefore, the accused has to serve imprisonment till rising of the court and pay fine of Rs. 7,02,500/- as substantive sentence and to serve simple imprisonment for two months as sentence in case of default in payment of fine.

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• 2022 (6) TMI 295
  Dishonor of Cheque - acquittal of the accused - section 138 of N.I. Act - Whether the appellant/complainant has made out the ground to interfere with the impugned judgment of acquittal? - HELD THAT:- The offence punishable under section 138 of N.I. Act can be completed only with the concatenation of a number of acts. The following are the acts which are components of the offence. (1) drawing of the cheque, (2) presentation of cheque to the bank, (3) returning the cheque unpaid by the drawee Bank, (4) giving notice in writing to the drawer of the cheque demanding payment of the dishonoured cheque amount, (5) failure of the drawer to make payment within 15 days of the receipt of the notice - Section 139 of the N.I. Act says, it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability. On perusal of Ex. P1-cheque, which indicates that there are two signatures found on it. The Respondent has denied the signature affixed in the amount corrected. No effort has been made to prove the signature of the Respondent. The Appellant admitted that the Respondent had a money transaction with his mother-in-law and his mother-in-law has died. A specific question was put to the Appellant during cross-examination that he had no financial capacity to lend such a huge amount; it was the Appellant who had to discharge the initial burden. In this case, PW. 1 has examined his co-brother-PW. 2 and tried to convince the Court about the financial capacity to give the loan to the Respondent, which created doubt. The Appellant has failed to establish the monetary transaction with the Respondent and was unable to discharge the initial burden to raise the presumption as envisaged under section 139 of N.I. Act. The trial Court is justified in acquitting the accused for the offence punishable under section 138 of N.I. Act - the Appellant has not made out grounds to interfere in the order of acquittal passed by the trial Court - The appeal filed by the appellant/complainant is dismissed.

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