TMI Tax Updates - e-Newsletter
June 9, 2016
Case Laws in this Newsletter:
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Non-compete amount received - revenue v/s capital receipt - At any rate, with effect from 01.04.2003, by virtue of introduction of Section 28(va) to the Act, all monies received pursuant to a negative covenant become liable for the incidence of taxation, thus obliterating the distinction between the two that was available till then - HC
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Income Tax:
Reopening of assessment - existence of PE in India to which its profits are attributable - The reasons for reopening merely repeat the words of the statute that there has been a failure by ALF to disclose material particulars. This is certainly not sufficient as far as the legal requirement is concerned. - HC
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Income Tax:
MAT - Adjustment to book profit u/s 115JB - the provision for doubtful debts shall represent a provision made to take care of the diminution in the value of “Sundry debtors” and the same cannot be understood as actual write off as ‘Bad debts’ - AT
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Income Tax:
Since the investment of its funds in the equity shares of a company incorporated outside India was made in violation of statutory provision, the assessee-institution is not entitled for approval under Section 10(23C)(vi) - AT
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Income Tax:
Disallowance of expenses for obtaining ISO certificates - revenue or capital expenditure - Neither the AO nor CIT(A) has established on record that by obtaining the certificate, the assessee created any asset of enduring nature - held as revenue in nature - AT
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Income Tax:
Sale of development rights is to be taxable as long term capital gain and not as income from other sources as held by AO. - The consequential deductions/exemptions u/s. 54 of the Act etc. will be allowed to the assessee - - AT
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Income Tax:
TDS u/s 192 or 195 - payment made to manpower deployed overseas - remuneration paid by the assessee for the contract of services are in the nature of salary only and no TDS is required to be made u/s. 195 of the Act. - AT
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Income Tax:
Entitlement for benefit u/s 11(2) of the Act of the accumulation of funds - when technicalities are pitted against the substantial justice, the course which advances substantial justice is to be preferred - AT
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Income Tax:
What is taxable u/s.56(2)(vi, is receipt of money without consideration - money received by the assessee from various trusts could not have been taxed u/s.56(2)(vi) of the Act. - AT
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Income Tax:
Bogus purchases on the basis of investigation conducted by the Sales Tax Department - AO has accepted the sales turnover disclosed by the assessee. Therefore, unless, the assessee had made purchases he could not have effected corresponding sales - the addition made on account of estimation of profit ha no legs to stand - AT
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Income Tax:
Tax collection at source (TCS) @1% is on sale of any motor vehicle of the value exceeding ten lakh rupees or @1% if sale consideration received in cash exceeds 2 lakh rupees - CBDT clarifies - even if both the conditions are existing, TCS shall be 1% only
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Service Tax:
Denial of benefit of VCES - Delayed payment of second installment of 50% amount - To allow the petitioner to effect payments belatedly would tantamount to altering the terms of the settlement and that cannot be done by this Court in exercise of its powers under Art. 226 of the Constitution of India. - HC
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Service Tax:
Other port services - even if the goods are allowed to be stored after landing, the lease terms does not transform the activity into one of rendering other port services - AT
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Service Tax:
Pure agent - reimbursement of expenses - appellant has not satisfied the conditions prescribed in Rule 5 of the Service Tax (Determination of Value) Rules, 2006 to satisfy the criteria for a pure agent. - AT
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Central Excise:
Entitlement for refund claim - Rule 5 of Cenvat Credit Rules - Unutilized accumulated credit as on the date of their opting for the benefit of an exemption Notification No. 30/2004-CE dated 01/4/2006 which prohibited the availment of Cenvat credit - There is no provision to allow refund - AT
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Central Excise:
Demand of SAD alongwith interest and penalty - 100% EOU - stock transfer made to their own DTA unit - there is no exemption granted by the Sales Tax authorities on the said goods - demand set aside -AT
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Central Excise:
Eligibility for cash refunds of untilized credit - credit could not be unutilized 16 years back due to dispute with the department - appellant is now an SSI unit and their clearance are very much within the limits prescribed under the SSI - cash refund allowed - AT
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Central Excise:
Cenvat Credit - input services - procedural law deserves to be construed as directory instead of mandatory for its application. The non-registration as ISD should not deprive the appellant of substantial benefit of credit - AT
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VAT:
Central sale - Cancellation of 'C' Forms - If the selling dealer has after making a diligent enquiry confirmed that on the date of the sale the purchasing dealer held a valid CST registration, and is also issued a valid C Form then such selling dealer cannot later be told that the C Form is invalid since the CST registration of the purchasing dealer has been retrospectively cancelled. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (6) TMI 302
Non-compete amount received - revenue v/s capital receipt - Applying the legal principles enunciated by the Supreme Court in Rai Bahadur Jairam Valji s case, Kettlewell Bullen & Co Ltd [1958 (10) TMI 6 - SUPREME Court], Gillanders Arbuthnot & Co Ltd [1964 (5) TMI 5 - SUPREME Court], Karam Chand Thapar & Bros [1971 (1) TMI 13 - SUPREME Court], Oberoi Hotel (P) Ltd [1999 (3) TMI 2 - SUPREME Court] and Guffic Chem (P) Ltd [2011 (3) TMI 6 - Supreme Court] the amount equivalent to 4,99,000 pounds paid by the LIG is liable to be treated as a measure of compensation towards the negative covenant of non compete entered into by and between Bio-med Limited and LIG. In our opinion, it is not necessary that the assessee need to shelve all his other sources of income as well, for the receipt of compensation to amount to a capital receipt. Like in the Oberoi Hotel's case where assessee has only lost a right to a particular property only a part of several other business activities which it carries on - compensation received for partial impairment of the business activities normally undertaken by the assessee is liable to be treated as a capital receipt. The litmus test is whether the impairment is one of its sources of income or not and if the answer is that the injury has been caused to one of its sources of income, then it is enough to render the compensation received in that process as a capital receipt. At any rate, with effect from 01.04.2003, by virtue of introduction of Section 28(va) to the Act, all monies received pursuant to a negative covenant become liable for the incidence of taxation, thus obliterating the distinction between the two that was available till then. - Decided in favour of assessee.
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2016 (6) TMI 301
Reopening of assessment - existence of PE in India to which its profits are attributable - software income earned by ALF was taxed as royalty income under the provisions of the Act and the tax treaty - date of execution of the agreement with Indian customers was not taken into account - Held that:- The desperate attempt by the Revenue at trying to infer the failure to disclose material particulars because of the inconsistent stand of ALF on whether it has a PE in India deserves to be rejected. Reasons for the second time were recorded by the AO on 14th March 2013 for reopening the assessment for AY 2006-07 and 13th March 2013 for AY 2008-09. This was after the order dated 29th September 2012 of the CIT(A) which negatived the plea of ALF that it had no PE in India. The AO was aware that ALF was nevertheless maintaining its stand that it did not have a PE although it did not appeal against the order of the CIT(A). It cannot be said that there was any failure to disclose any material particulars only because ALF continued with its stand of not having a PE in India. In any event this was known to the AO and yet in the reasons recorded for reopening the assessment this is not referred to as a failure on the part of ALF to disclose true and material particulars. The reasons for reopening the assessment for AY 2004-05 do not made any reference to Section 44DA(1). Although it has been mentioned in the reasons for the other three AYs in question, this was not an issue that arose for the first time based on any tangible material that came to the notice of the AO subsequent to the original assessment orders which were themselves under Section 147 read with Section 143 (3) of the Act. As far as the issue regarding the agreements, this appears to be brought up for the first time at the stage of rejection of the objections. It did not form part of the original reasons for reopening the assessments. Section 147 is not to be casually invoked to suit the convenience of the Revenue and at every stage to correct the errors of AOs which could have easily been avoided had there been a proper discharge of the statutory duty. Once that legal perspective is kept in view, repeatedly invoking Section 147 of the Act on the same materials, only because there is no statutory bar against it, would constitute an abuse of the process of law. The Court would also like to observe that it is extraordinary that Sections 147 and 148 of the Act have been invoked by the Revenue not once but twice in respect of the same Assessee and on the same set of facts and same reasons. Thus there was no justification for the Revenue to have invoked the power under Sections 147 and 148 of the Act for the second time in respect of ALF for AYs 2004-05, 2005-06, 2006-07 and 2008-09 - Decided in favour of assessee The reasons for reopening merely repeat the words of the statute that there has been a failure by ALF to disclose material particulars. This is certainly not sufficient as far as the legal requirement is concerned. It has been repeatedly held by the Court that the mere repeating of the words in the statute is hardly sufficient compliance - Decided in favour of assessee
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2016 (6) TMI 300
Addition of “Provision for doubtful debts” to the Book profit u/s 115JB - MAT computation - Held that:- It is in the knowledge of every one that the accounts are prepared under the Companies Act in accordance with the Principles of Accounting by following various accounting standards and practices. Under the accounting terminologies “Provision for doubtful debts” and “writing of bad debts” has got distinct meaning. Both the terms stand on different footing and the accounting world also understand their meaning differently. Accordingly, in our considered view, the meaning of the above said expressions should be understood and applied in the same manner while computing book profit u/s 115JB of the Act. Accordingly, the provision for doubtful debts shall represent a provision made to take care of the diminution in the value of “Sundry debtors” and the same cannot be understood as actual write off as ‘Bad debts’. It is well settled proposition of law that the decision rendered by nonjurisdictional High Court has got persuasive value only. Accordingly, we are of the view that the Ld CIT(A) was justified in confirming the addition of “Provision for doubtful debts” to the Book profit - Decided against assessee Chargeability of interest u/s 234B of the Act on the addition so made by Ld CIT(A) on the basis of subsequent amendment - Held that:- The various decisions relied upon by the assessee expresses the view that the assessee should be fastened with interest liability in respect of the addition made on the basis of subsequent amendment, since the assessee could not have foreseen the liability at the time of estimating his income for the purpose of payment of advance tax. Hence, we find merit in the additional ground urged by the assessee. Accordingly, we direct the AO not to levy interest u/s 234B of the Act on the addition relating to “Provision for doubtful debts” made while computing book profit u/s 115JB of the Act. - Decided in favour of assessee
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2016 (6) TMI 299
Application for approval under Section 10(23C)(vi) rejected - whether the assessee-institution can invest any part of its accumulated income or the current income on the equity of non-resident subsidiary company and claim exemption as application of income? - Held that:- The fact remains that the assessee invested its funds in the equity shares of a company incorporated outside India. The third proviso to Section 10(23C) of the Act clearly says that the assessee cannot invest in the equity shares of any company and the investment has to be made only as per the mode prescribed under Section 11(5) of the Act. In this case, the investment was made in violation of mode prescribed under Section 11(5) of the Act. Since the investment was made in violation of statutory provision, this Tribunal is of the considered opinion that the assessee-institution violated the statutory provision at the initial stage itself. Therefore, it is not entitled for approval under Section 10(23C)(vi) of the Act. - Decided against assessee.
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2016 (6) TMI 298
Disallowance of expenses for obtaining ISO certificates - revenue or capital expenditure - Held that:- It is evident from the order of the Departmental Authorities that they have considered the expenditure to be capital in nature because the certificate is valid for three years. However, in our view, that cannot be a ground to treat the expenditure as capital in nature unless it creates an asset of enduring nature. Neither the Assessing Officer nor the learned Commissioner (Appeals) has established on record that by obtaining the certificate, the assessee created any asset of enduring nature. On the other hand, the decisions relied upon by the learned Authorised Representative as referred to above have held that sum paid by the assessee for obtaining ISO certificates are revenue expenditure. Thus we allow assessee’s claim of deduction. As far as the allegation of learned Commissioner (Appeals) that the expenditure does not pertained to the impugned assessment year, we are not convinced with the same. As rightly pointed out by the learned Authorised Representative, there is no dispute that the expenditure was incurred during the relevant previous year. That being the case, assessee is eligible to claim the deduction Disallowance on account of cost of production of feature film - whether provisions of section 194J is applicable to such payments made in kind - Held that:- Since the payment made by the assessee is in kind, the provisions of section 194J are not applicable. Accordingly, allowing assessee’s claim, we delete the addition made by the Assessing Officer. See CIT v/s Chief Accounts Officer, Bruhat Bangalore Mahanagar Palika [2015 (10) TMI 2184 - KARNATAKA HIGH COURT ] Disallowance of advertisement and publicity expenses - Held that:- The expenditure incurred in regular course of business has to be allowed under section 37. The ratio laid down by the co–ordinate bench of the Tribunal is squarely applicable to the facts of the present case. Therefore, expenditure incurred by the assessee being wholly and exclusively laid down for the purpose of assessee’s business is allowable as deduction under section 37 of the Act. Accordingly, allowing assessee’s claim of deduction, we delete the addition made by the Assessing Officer. See Dharma Productions Pvt. Ltd. v/s DCIT[2013 (11) TMI 319 - ITAT MUMBAI] Disallowance of cost of Television serials and film projects abandoned during the year - Held that:- On a perusal of the orders of the Departmental Authorities, it is observed that the Department has not disputed the fact that the assessee has incurred the expenditure. It is also not disputed that the television and film projects have been abandoned. The expenditure has been disallowed only on the ground that the assessee has not been able to prove that by abandoning the projects, the assessee has benefited. In our view, the reasoning of the Departmental Authorities for disallowing the expenditure is not valid. The very fact that the assessee abandoned the projects goes to prove that the projects were not found to be viable or workable. Therefore, keeping in view the business interest, the assessee decided to abandon the projects. In fact, in the CBDT circular no.16 of 6th October 2015, the Board has clearly stated that cost incurred in abandoned projects should be allowed as revenue expenditure under section 37 of the Act Disalllowance under section 14A r/w rule 8D - Held that:- On a perusal of the assessment order, we do not find any observations by the Assessing Officer to the effect that during the relevant previous years, assessee had earned / claimed any exempt income. It is the assertion of the learned Authorised Representative before us that assessee has not earned any exempt income during the previous year relevant to the assessment year under dispute. As held by the Hon'ble Delhi High Court in Cheminvest (2015 (9) TMI 238 - DELHI HIGH COURT unless during the relevant previous year, assessee earns any exempt income no disallowance under section 14A r/w rule 8D can be made. Therefore, applying the ratio laid down by the Hon'ble Delhi High Court as aforesaid, we hold that no disallowance under section 14A r/w rule 8D can be made in case assessee had not earned any exempt income during the relevant previous year. Therefore, we direct the Assessing Officer to verify this aspect and if it is found that the assessee has not earned any exempt income during the relevant previous year, no disallowance under section 14A can be made. In view of our aforesaid observation, there is no need to deal with the alternative contention of the assessee that the investment in shares since was made out of interest free funds available with the assessee, no disallowance under section 14A can be made out of the interest expenditure.
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2016 (6) TMI 297
Transfer of land and building in term of development agreement - whether constitutes Long term capital gain or income from other sources - entitlement of exemptions u/s. 54 - Held that:- In the present case what was transferred by the assessee was development rights in respect of the property. On the plot of land owned by the assessee in co-ownership, which was subject matter of development agreement, certain area of construction was permissible, which was the normal FSI permissible as per the development control rules of the state. Besides the above, the plot of land owned by assessee and carried out additional construction, over and above the permissible FSI, can be made as the plot of land, which was capable of receiving TDR. TDR could be obtained by the developer and could be loaded on the normal FSI construction permissible as per the development control rules. The right to construct building on the said plot of land by consuming FSI and the right as a receiving plot owner to load TDR over and above normal FSI, are rights which accrue to the assessee by virtue of development control regulation of the state government. These are rights over property, which are capital in nature and comes within the definition of capital asset u/s. 2(14) of the Act. The consideration received by the assessee is for transfer of rights over such capital asset for the reason that the 3rd party purchaser has no interest over the land is not relevant. The permission to load the TDR on permissible FSI allowed by the owner is by itself a transfer of right in immovable property and therefore, clearly falls within the provision of section 45 of the Act. Thus in the present case before us, the sale of development rights is to be taxable as long term capital gain and not as income from other sources as held by AO. The consequential deductions/exemptions u/s. 54 of the Act etc. will be allowed to the assessee - Decided against revenue Adoption of market value as per the provisions of section 50C - Held that:- In the present case assessee received consideration in two-folds i.e. partly cash and partly in kind i.e. by way of property in the shape of flats in the re-developed property. Such transactions are thus a combination of sale and exchange.We find that as per development agreement the market value of assessee’s share is ₹ 2,31,41,000/-. Further, assessee has received the sum of ₹ 11.20 lacs due to fall in free area committed by the developer i.e. committed area of 4,000 sq. Ft. as against the same received area is only 3776 sq. Ft. The assessee has computed market value as per agreement at ₹ 34.36 lacs which is the total area of 3776 sq. Ft. as attached in the agreement. Accordingly, the market value of 224 sq. Ft. is ₹ 2,03,830/- only. In view of the above, we are of the view that the value declared in agreement (including all transaction) will be higher than the stamp duty valuation. Accordingly, no tinkering can be made to the value disclosed in the development agreement. - Decided against revenue
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2016 (6) TMI 296
TDS u/s 192 or 195 - payment made to manpower deployed overseas is in the nature of salary or otherwise - disallowance made u/s. 40(a)(ia) - Held that:- It is the finding of the Ld. CIT(A) that the persons recruited in abroad are all employees of the assessee and the contract is in the nature of employment, therefore provisions of Sec. 195 are not applicable. The above findings have not been controverted or rebutted by the Revenue with evidences. In the circumstances, we do not find any infirmity in the order passed by the Ld. CIT(A) in holding that remuneration paid by the assessee for the contract of services are in the nature of salary only and no TDS is required to be made u/s. 195 of the Act. Hence, we direct the Assessing Officer to delete the disallowance made u/s. 40(a)(ia) of the Act. - Decided in favour of assessee.
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2016 (6) TMI 295
Entitlement for benefit u/s 11(2) of the Act of the accumulation of funds - Held that:- Merely because the Resolution is passed after the end of the previous year relevant to the assessment year will not be sufficient to disentitle the assessee-trust of its claim for accumulation of fund u/s 11(2) of the Act as the assessee-trust has demonstrated that it was in-fact in the process of setting up hospital on its 10 acre plot of land at Jogeshwari for which Maharashtra Government has allowed the earmarking of land for hospital project as set-out above for which accumulation of funds u/s 11(2) of the Act was proposed keeping in view preponderance of probabilities and human conduct and also it is well settled proposition of law that when technicalities are pitted against the substantial justice, the course which advances substantial justice is to be preferred The assessee-trust has duly established its claim for eligibility for grant of the benefit of accumulation u/s 11(2) of the Act which cannot due to the reasons cited by the authorities below be denied to the assessee-trust. In our considered view, the assessee-trust is entitled for the benefit of accumulation of funds u/s 11(2) of the Act to the tune of ₹ 1,89,10,525/- as claimed by the assessee-trust. - Decided in favour of assessee
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2016 (6) TMI 294
Addition as income falling within the purview of Section 56 (2)(vi) - income from other sources - amount received by the assessee from the discretionary trust - Held that:- What was received by the assessee as a beneficiary from the thirteen trusts were nothing but his own income in his status as a beneficiary of the said trust. What has flown from the trustee to the beneficiary is the income the trustee collected on behalf of the beneficiaries. That the character of income in the hands of the beneficiary remains the very same, is clear from the judgment of Hon’ble Apex Court in the case of Managing Trustees, Nagore Durgha (1965 (4) TMI 13 - SUPREME Court ). Character of the income in the hands of the thirteen trusts were under the heads capital gains and / income from other sources. The nature of ‘income from other sources’ was dividends and interest and not the type of income falling u/s.56(2)(vi) of the Act. Once the character of the income in the hands of the beneficiary takes the same colour as that of the income in the hands of the trust, and once it is accepted that trust as such is not having a persona different or distinct from that of the beneficiary, it naturally flows that such income or receipt is not received without consideration. What is taxable u/s.56(2)(vi) of the Act, is receipt of money without consideration. We are therefore of the opinion that money received by the assessee from various trusts could not have been taxed u/s.56(2)(vi) of the Act. At best it could have been considered under the same heads in which the concerned trusts had received the income. Accordingly we set aside the orders of the CIT (A) and remit the issue regarding appropriate classification of the income in the hands of the assessee and apportioning it in the same ratio as such income bears to the income of the various trusts under different heads, to the file of the AO. AO shall proceed after giving a due opportunity to the assessee. What we find is that the thirteen trusts had filed its return of income voluntarily after paying tax. What was done was only a processing of such return u/s.143(1) of the Act. It is true that the amounts paid to the assessee by various trusts were out of the balances which remained after paying taxes. However, if the assessee feels that taxes paid by the trust were refundable since the taxes were assessed in the hands of the beneficiary, it can move the appropriate authority for getting the relief. - Decided partly in favour of assessee for statistical purpose.
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2016 (6) TMI 293
Bogus purchases - investigation conducted by the Sales Tax Department - CIT(A) was of the view that the estimation of profit on such bogus purchases has to be made @ 10.41% instead of 12.5% adopted by the AO - Held that:- The assessee in the course of assessment proceedings has produced documentary evidence to prove the genuineness of the purchases. It is also not disputed that the Assessing Officer has accepted the sales turnover disclosed by the assessee. Therefore, unless, the assessee had made purchases he could not have effected corresponding sales. Therefore, before treating the purchases made by the assessee as bogus, the Assessing Officer should have conducted necessary enquiry keeping in view the aforesaid fact. Without conducting any enquiry, the Assessing Officer solely relying upon the investigation made by the Sales Tax Department cannot make the addition, that too, on the basis of untested material. Therefore, we are of the view, the addition made on account of estimation of profit by treating the purchases as bogus has no legs to stand. Accordingly, we delete the same. - Decided in favour of assessee
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2016 (6) TMI 292
Validity of reopening of assessment - trade discount given by the Appellant to Mahindra & Mahindra Limited (“MML”) for obtaining exclusive vendor status was in the nature of a capital expenditure and not a revenue expenditure - Held that:- The ITAT appears to have overlooked the fact that specific queries were raised by the AO during the course of the original assessment proceedings as regards the agreement entered into between the Assessee and M&M which is referred to in para 12 of the Notes to the Accounts. Query No. 36, as already extracted hereinbefore, was specific to the issue. The reply dated 28th July 2008 by the Assessee to the above questionnaire was a fairly detailed one. Inter alia it was pointed out that this was merely a commercial arrangement entered into between the management of both the companies, providing for a committed overriding volume discount by the Appellant. While the AO could have insisted on seeing the agreement, he appears to have been satisfied with the above detailed reply of the Assessee explaining the nature of the agreement. Merely because the AO did not ask for the copy of the agreement to be produced cannot lead to the inference that he had no occasion to form an opinion thereon. Such a conclusion drawn by the ITAT is belied by the above specific query raised by the AO on the agreement and the detailed explanation offered by the Assessee in response thereto This Court is satisfied that there was occasion for the AO in the original assessment proceedings, to form an opinion on the question of the nature of the agreement between the Assessee and the MM. The AO did form an opinion thereon and after raising a specific query and examining the reply thereto of the Assessee. The original assessment was completed after accepting the explanation offered by the Assessee. The reasons to believe did not refer to any fresh tangible material that came to the notice of the AO after the passing of the original assessment order. It may be recalled that the assessment proceeding under Section 143 (3) of the Act was completed after scrutinizing the documents produced by the Assessee and after specific queries were put to the Assessee which were replied to by the Assessee to the satisfaction of the AO.- Decided in favour of assessee
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2016 (6) TMI 291
Grant of waiver of interest and/or penalty - company in liquidation - whether for the purpose of grant the Official Assignee should approach only the Central Board of Direct Taxes or whether the Official Assignee can get appropriate orders under Section 7 of the Presidency Towns Insolvency Act, 1909 or not? - Held that:- If the ultimate payment to the Department actually depends upon the extent of funds available in the coffers of the Official Liquidator or the Official Assignee, it is unthinkable that the Official Assignee should be driven to the necessity of approaching the Authority for the waiver of the interest and to allow him to come up before the Insolvency Court in case he suffers an order. Hence, we are of the considered view that the question of waiver could also be considered by the Insolvency Court itself. In case where surplus funds are available, the Company Court distributes such surplus funds to the promoters. Similarly, the Insolvency Court distributes surplus funds to the insolvent or his or her legal heirs. But at that time, the Company Court can as well say that these surplus funds should be paid only towards discharge of the liability on account of interest and/or penalty. With that leverage in mind, we are of the considered view that this question of waiver can be decided by the Insolvency Court itself without driving the Official Assignee to go before the Central Board of Direct Taxes depending upon the amounts of funds available with the Official Assignee. As a matter of fact, in the case on hand, the insolvent herself took out an application before the Insolvency Court for a direction to the Official Assignee to set apart capital gains tax. By an order passed by one us (VRSJ) on 28.4.2011, the Official Assignee was directed to set apart 20% of the sale proceeds. Hence, Section 178(4) has been complied with by the Official Assignee and that is the end of Section 178 and nothing more. Thus the original side appeals are allowed, the order of the learned Judge is modified to the effect that the Official Assignee need not go before the Central Board of Direct Taxes praying for waiver of interest. The Insolvency Court itself can consider the question of waiver of interest in terms of the power conferred under Section 7 and in the light of the provisions of the Income Tax Act, together with the quantum of funds available and the distribution already made
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2016 (6) TMI 290
Entitlement for deduction under section 80IA - interpretation of initial assessment year - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills [2010 (3) TMI 860 - Madras High Court]. - Decided in favour of the assessee.
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2016 (6) TMI 289
Reopening of assessment - reasons to believe - Held that:- It is apparent that at the time when the earlier assessment came to be framed under section 143(3) read with section 147 of the Act, all the primary facts were before the Assessing Officer and he had thought it fit to examine certain transactions and on being satisfied about the genuineness thereof, had accepted the return as filed by the petitioner. Now, on the basis of the very same set of facts, the assessment is sought to be reopened merely by placing reliance upon the survey carried out by the Investigation Wing under section 133A of the Act during the course of which no fresh material has come to light, but on the basis of the very same transactions recorded in the cash book, the assessment is sought to be reopened. Under the circumstances, it cannot be said that there is any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the year under consideration. In the absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment, the Assessing Officer lacks jurisdiction to reopen the assessment beyond a period of four years from the end of the relevant assessment year. The impugned notice which has been issued beyond a period of four years from the end of the relevant assessment year, without there being any basis for formation of the requisite belief that income chargeable to tax has escaped assessment on account of any failure on the part of the petitioner to disclose fully and truly all material facts, therefore, cannot be sustained. As this is not a case where the Assessing Officer has formed his belief on the basis of subsequent new and specific information that income chargeable to tax has escaped assessment on account of omission on the part of the petitioner to make full and true disclosure of primary facts. In this case apart from the fact that primary facts were already on the record, the Assessing Officer at the time of framing assessment under section 143(3) read with section 147 of the Act noticed the entries made in the cash book and called for details from the petitioner and formed an opinion thereon. Thus, this is a case of a mere change of opinion based on the self same material which had already been examined at the time when the previous assessment came to be made. - Decided in favour of assessee.
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2016 (6) TMI 288
Penalty u/s.271(1) (c) - additions made u/s 94(7) - Held that:- This is not a fit case for levying of penalty u/s 271(1)(c) of the Act as the assesseefirm has not concealed the particulars of income nor furnished any inaccurate particulars of income. No doubt there has been slip up in filing the claim u/s 94(7) of the Act but the same keeping in view the explanation submitted by the assessee-firm was an inadvertent omission and mistake which was not intentional or deliberate on the part of the assessee-firm or otherwise with an intention to defraud revenue to fall within four corners of rigours of penalty provisions u/s 271(1)(c) of the Act , and rather the assessee-firm came forward with an bona-fide explanation accepting the inadvertent mistake on its part and did not persue the litigation further. The assessee-firm came forward with an explanation which is a bonafide explanation as set out above and it cannot be said that the assessee-firm has concealed particulars of its income or furnished inaccurate particulars of income so that the rigours of the provisions of section 271(1)(c) of the Act can be attracted. It could be said that the assessee-firm made claim before the authorities below which did not found favour with the Revenue and was not accepted by the authorities below in quantum proceedings which was later confirmed by the learned CIT(A) and the Tribunal in quantum assessments . The case of the assessee-firm is squarely covered by the decision of Hon’ble Supreme Court in the case of CIT v. Reliance Petroproducts Private Limited (2010 (3) TMI 80 - SUPREME COURT ) - Decided in favour of assessee
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2016 (6) TMI 287
Unexplained cash credits u/s. 68 on account on account of deposits in banks - identity of the parties he claimed to have received the amounts from - Held that:- As seen that the fact of the assessee’s cash deposits, etc. in his bank account with Abhudya Co-op Bank and SBI was noticed by the AO. It is seen that on being required by the AO to explain these deposits in the bank account, the assessee was unable to substantiate the explanations he put forth and in the process failed to establish the identity and creditworthiness of the creditors who purportedly advanced these amounts to him and the genuineness of the transactions, resulting in the AO holding that cash credits to the extent of ₹ 14,31,647/- to be unexplained in terms of the provisions of section 68 of the Act and bringing them to tax in his hands. On appeal, in remand proceedings also, it is seen that the assessee was once again unable to prove the basic requirements under section 68 of the Act, i.e. the identity of the parties he claimed to have received the amounts from, their creditworthiness and the genuineness of the transactions, resulting in the learned CIT(A) upholding the addition of ₹ 14,31,647/- made by the AO under section 68 of the Act. Before us also, we find that the assessee, except for raising the grounds of appeal has failed to bring on record any material evidence to establish the genuineness of the aforesaid cash credits in the bank account. In this factual matrix of the case, we are of the considered view that no interference is called for from us in the impugned order of the learned CIT(A) and therefore uphold the same - Decided against assessee.
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2016 (6) TMI 286
Addition on account of cash deposit in various bank accounts and profit estimated thereon - Held that:- Transactions cannot be considered for estimating the business income of the assessee. Furthermore assessee has given a reconciliation of the amount of cash deposited of ₹ 1,49,27,029/- in ICICI Bank stating that ₹ 82,54,580/- is cash deposit out of cash withdrawals from various banks. It was further stated that ₹ 5,50,000/- is received in cash from debtor’s outstanding. The AO has not verified these claims specifically made before the AO vide letter dated 17.2.2014. Furthermore the Ld. CIT(A) has also not considered this aspect but has merely stating that cash book prepared by the assessee is not reliable cannot lead to the addition of the whole cash deposit as gross sales of the assessee. Furthermore assessee has shown opening balance as on 1.4.2010 in the cash book of ₹ 2,03,550/- which assessee could not explain how it has come into the hands of the assessee when it has only salary income and interest income. Therefore, it is apparent that Ld. AO has considered the total cash deposit as turn over incorrectly. Further before us the AR of the appellant has submitted a CBDT instruction dated 8th September 2010, which also says that the scrutiny in cases selected through AIR, would be restricted to that information only. In case the escapement of total income of more than ₹ 10 lacs then only the case may be taken up for wider scrutiny after the approval of the administrative Commissioner. In the present case the addition made by the AO u/s 44AD on undisclosed turnover is ₹ 10,47,947/-. Therefore, it satisfied the first condition of potential escapement of income exceeding ₹ 10 lacs. However it is not clear whether the approval of the administrative Commissioner has been obtained or not. Ld. DR also could not submit that such approval is taken. In view of above facts in the interest of justice the whole issue of addition of ₹ 6,54,967/- is set aside to the file of the AO with the following direction :- a) To determine the exact turnover of the assessee based on the letter dated 27.1.2014 and 17.2.2014 with respect to the cash book submitted by the assessee and cash deposited in bank accounts and then estimate profit thereon @ 5% not exceeding ₹ 654967/- b) In case approval of the administrative Commissioner has not been taken in terms of instruction dated 8th September, 2010 to restrict the addition with respect to turn over contained in ICICI bank account of the assessee wherein total cash deposit is ₹ 1,49,27,092/-. While determining the total income of the assessee the Ld. AO shall provide adequate opportunity to the assessee to substantiate it business receipt in cash, which is deposited in bank and also interbank cash deposit, and cash withdrawals. - Decided in favour of assessee for statistical purposes.
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2016 (6) TMI 285
Expenditure on repair and maintenance of building - revenue v/s capital expenditure - Held that:- As during the course of hearing before us the Ld DR has also referred the various vouchers and bills extensively and could not point out that how these expenditure are capital in nature and what kind of benefit of enduring nature is derived by the assessee. Therefore setting aside the issue back to the file of the ld. AO does not serve any purpose. In view of the above facts we do not find any infirmity in the order of the Ld. CIT(A) in holding that the expenditure incurred by the assessee are repair and other expenditure and are also allowable u/s 30a(i) and 37(1) of the Income Tax Act and They are not capital expenditure in nature. - Decided against revenue
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2016 (6) TMI 284
Disallowance under section 14A - Held that:- Coming to the facts of the instant appeal, it is seen that the year under consideration is assessment year 2006-07. Rule 8D was introduced by virtue of notification no.45/2008 dated 24.03.2008 and the Hon'ble Delhi High Court has held it to be prospective in operation in the case of Maxopp Investment Ltd. vs CIT (2011 (11) TMI 267 - Delhi High Court ). The Assessing Officer calculated the disallowance u/s 14A by adopting the procedure given in Rule 8D and also made a similar disallowance while computing book profits u/s 115JB of the Act. CIT (A) restricted the disallowance both under Rule 8D and u/s 115JB to ₹ 1,18,04,860/-. It is the assessee’s plea that the dividend income (exempt income) earned during the year was only ₹ 34,562/- and the disallowance in any case could not have exceeded the exempt income. We are in total agreement with the contention of the Ld. AR that Rule 8D could not have been applied in assessment year 2006-07. We also concur with the contention of the Ld. AR that the disallowance in any case cannot exceed the exempt income. Therefore, on the facts of the case and respectfully following the ratio laid down by the Hon’ble Delhi High Court in Maxopp Investment Ltd. vs. CIT (supra), we set aside the order of the Ld. CIT (A) and direct the Assessing Officer to re-compute the disallowance restricting it to the amount of dividend earned during the year. The issue is restored to the file of the Assessing Officer for the limited purpose of verification of the dividend income earned by the assessee during the year. - Decided in favour of assessee
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2016 (6) TMI 283
Disallowance of loss - whether the unrealized gain, i.e., as may stand to arise on the basis of the market values (of the underlying shares) as at the close of the year on open contracts, prior to the settlement date, could be taken into account for the purpose of closing accounts and recognizing income for the relevant year? - Held that:- The question of booking ‘gain’, i.e., on an appreciation of the contract value/s, as would be apparent, does not arise. Providing for a liability with reference to the market value, which is adopted as a surrogate measure for realizable value, net of cost, if any, toward realization, i.e., at net realizable value, where held on revenue account, is on the basis of the accounting principle of prudence which suggests booking of all known losses and liabilities. Providing for the same is on the premise that the enterprise following accrual method of accounting, the loss had accrued even though the liability may not have crystallized or its amount may not be quantifiable with exactness and, therefore, represents only an estimate thereof, based on the best available information. Such estimates are called accounting estimates, which inform and permeate the preparation and presentation of final accounts, the background facts with regard to which are generally communicated through the notes to the accounts. The price/s obtaining on the settlement date/s, subsequent to the valuation (balance-sheet) date, may well be different and not in agreement with that as at the year-end, anterior thereto. In fact, even if anticipated, the gain is proscribed for being booked, militate as it clearly does against the accounting principle of prudence, advocating the provision for all known liabilities while at the same time not recognizing any anticipated income. The said principle, prescribed per AS-I issued by the Board, since notified u/s. 145(2) of the Act, therefore acquires the force of law. Reference in this context may also be made to AS-9 (Recognition of income) issued by Institute of Chartered Accountants of India, which again assumes legal status in view of section 209 of the Companies Act, 1956. The statement of a trade liability, at current value, is on an entirely different footing. Finally, before parting, we may add that the loss on the basis of ‘mark to market’ open derivative contracts, standing thus to be allowed in the facts and circumstances of the case, the A.O. shall be at liberty to withdraw the said loss on the settlement date/s, which the Revenue was otherwise bound to allow to the assessee, i.e., to that extent (Rs.11.54 lacs). Like-wise the ‘gain’ on the balance (brought forward) contracts would stand to be taxed in its' entirety on settlement. We state so in order to avoid any prejudice or double benefit to either side. - Decided in favour of assessee
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2016 (6) TMI 282
Assessment u/s 153C - addition of ₹ 1.5 crores cash component - Held that:- We come to learned counsel submission that the Assessing Officer has himself proceeded against the co-vendors u/s. 153C of the Act. There is no material placed before us as to whether those cases satisfied all the relevant conditions for exigibilty of section 153C or not i.e. they furnished their returns and no notice u/s. 143(2) had been served on them or its limitation had expired. This argument therefore does not rescue the assessee. We reject his legal ground challenging validity of section 143(3) assessment by concluding facts of the instant case as narrated in preceding paragraphs do not satisfy all necessary conditions u/s. 153C(2) of the Act for issuing corresponding notices. Addition of cash component - assessee’s plea is that the same has to be equally divided in case of all the five partners - Held that:- It transpires that his two partners S/sh Amit K. Patel and Narendra R. Patel had already waived off their interests in revenue record on 25-04-2008 in Shri Darji’s favour. The same precedes the impugned seized material dated 03-05-2008 and 13-05-2008. The assessee accordingly acquired 60% interest in land in question. This fact is evident from the contents of the registered sale deed dated 17-11-2009. We are of the view that 60% of the impugned cash amount of ₹ 1.5 crores coming to ₹ 90 lacs has to be assessed in assessee’s hands in any case even if his apportionment plea is accepted. Two co-shares/covendors have to be assessed for the remaining sums - Held that:- We find that it is the assessee only who has signed the relevant documents revealing cash payments in question. He is the only person receiving even the cheque payments on behalf of other co-vendors. We are of the opinion that it was for the assessee to discharge a very strong onus for proving that the other co-vendors received the cash payments in question from him or from the vendees. He has failed to do so. This tribunal’s proceedings are summary in nature based on reasonable preponderance of probabilities not requiring application of stricter provisions of evidence law. We observe in these facts that all these payment patterns are sufficient to conclude that it is assessee only who has received the impugned cash sum in tune with the cheque payments. We accordingly hold that the Ld. CIT(A) has rightly assessed the entire cash payment of ₹ 1.5 crores in assessee’s hands thereby partly modifying Assessing Officer’s action as extracted hereinabove. The corresponding grounds raised in the instant appeal accordingly fail. Whether the CIT(A) has erred in treating the impugned additions as his business income instead of short term capital gains - Held that:- It has come on record that the assessee has purchased land in question having huge potential signed joined MOU and ventures, acquired agricultural land having old condition liable to premium for non-agricultural purposes and sold the same within a very short span of time after changing its usage in the impugned three assessment years. We draw inference from assessment year 2007-08 and 2008-09 as well subject matter of this very order to observe that this assessee has been acting in a well planned manner in real estate business thereby purchasing lands at cheaper rates and executing sales thereof at premium prices in addition to huge cash payments being received from the vendees. We uphold CIT(A)’s action. The assessee’s corresponding ground is accordingly rejected. Section 69 addition towards purchase of right from Shri Amit K.Patel and Narendra R. Patel and the latter addition of ₹ 1 lacs pertaining to purchase cost - Held that:- Assessee could not refer to any material in order to rebut the findings of the lower authorities. There is no material placed before us explaining source of former addition amount. Coming to the latter addition of ₹ 1 lacs for calculating short term capital gains, we find that the lower appellate order holds that there is no evidence stating the cost of land to ₹ 9,12,000/- and not ₹ 1 lacs. Both these grounds are accordingly rejected.
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Customs
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2016 (6) TMI 308
Anti Dumping Duty - Seeking change of name in the final findings of the Designated Authority (DA) - DA suggested to seek a Mid-Term Review instead of filing an application for change of name - Held that:- it was incumbent on the DA to have first examined whether, on the basis of the documents submitted by the Petitioner, the change in its name has altered or impacted the basis for the imposition of the anti-dumping Duty in terms of the Final Findings. In order to come to such conclusion there has to be preliminary level examination, with the participation, if necessary, of the Petitioner. From the certificate issued by the Swedish Companies Registration Office it appears that the only change was in its name. This has happened subsequent to the Final Findings. This fact has to be taken note of by the DA and nothing more. The consequential change of the name of the Petitioner as recorded in the Final Findings should not ordinarily require an elaborate exercise of a mid-term Review. The failure to devise a procedure for dealing with the contingencies cannot constitute a valid reason to compel the initiation of a mid-term Review to effect changes that are of a routine nature and which do not affect the basis of the Findings. It is made clear, however, that if on examination of application made by such entity together with relevant documents the DA is of the view that such change in name affects the basis of the Findings, then it may, for reasons to be recorded, order a mid-term Review. In the present case the impugned communication issued to the Petitioner gives no reason whatsoever for requiring the Petitioner to go in for a midterm Review. It is also silent on whether the application made by the Petitioner with the enclosed documents was examined by the DA. Accordingly, the said decision as communicated by means of the impugned letter of the DA is hereby set aside. - Decided in favour of petitioner
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2016 (6) TMI 307
Demand of Additional Duty of Customs - Import of different types of HTC Mobile Phones - Confiscation in lieu of redemption fine and imposition of penalty - Failed to follow the procedural requirements under Notification No. 21/2012-CU - Held that:- Revenue's contention in the present appeal is only that the respondent has declared in their bill of entry that the goods were meant for sale and as such the declaration so made has to be accepted. However, otherwise it is found that it is not the case of the Revenue that the goods, in question, were actually meant for sale. The respondent had made the claim in the bill of entry only because in the previous import such claims were being made. This seems to be like human error. - Decided against the revenue
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2016 (6) TMI 306
Imposition of redemption fine and penalty - Section 114A of the Customs Act, 1962 - Mis-declaration of description and quantity of goods - Held that:- when the offending goods itself submitted to the mis-declaration of the description and quantity, that ipso-facto invites penal consequence under law. Since there is a patent mis-declaration as is revealed from the facts, levy of redemption fine is justified. Looking to the regular import of the goods by the appellant and also gravity of the matter, it is considered proper to reduce redemption fine to ₹ 2 lakhs which is nearly 10% ambit margin of the declared value and assessed value. So far as the penalty is concerned, the mis-declaration is apparent from the conduct of presentation of the Bill of Entry. As a preventive measure the penalty of ₹ 1 lakhs imposed by the ld. Commissioner (Appeals) does not call for any interference. The order above has been passed keeping in view of the law laid-down by the Apex Court in the case of CC, Mumbai Vs Mansi Impex [2011 (8) TMI 470 - Supreme Court of India]. - Decided partly in favour of appellant
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2016 (6) TMI 305
Rejection of refund claim - Enhancement of value - Duty paid under protest - Held that:- it is clear that on the second round of litigation, the appellate orders based on which the refund claims were filed, and later rejected, did not give a clear finding regarding enhancement of value though the para dealing with the said enhancement is verbatim reproduction in all the three orders. Somehow the final finding portion are not figuring in the two of the appellate orders. In the absence of such finding specifically against enhancement of value, at this stage the rejection of refund cannot be faulted. Admittedly no appeal was filed against the purportedly faulty orders of Commissioner (Appeals). - Decided against the appellant
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PMLA
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2016 (6) TMI 309
Imports of Heavy Melting Scrap made by mis-declaring the relevant particulars to evade duty and prohibition - Constitutionality of vires of 2(y)(ii) of PMLA as amended vide section 145(ii) of the Finance Act, 2015 enhancing the monetary threshold for the offences specified under Part B of the Schedule from the total value involved in such offences from “Rs. 30 lakhs or more” to “Rs. One crore or more” - Two limitations in grant of bail imposed under Section 45(1) of PMLA are applicable in respect of all offence now falling under Part A of the Schedule to PMLA, after the amendment carried out in 2013 pursuant to proposal contained in Clause 33 of the Prevention of Money-Laundering (Amendment) Bill, 2011 whereby for the then existing Part A, a new Part A was proposed to be substituted, while omitting paragraphs 1 to 25 in the then existing Part B. Held that:- the presumption of the petitioner that rigors in grant of Bail contained in Section 45(1) of PMLA extends to all the offences mentioned in such amended Part A is neither logical nor intended by the legislation. The offences which were in the earlier Part A of the Schedule (prior to 2013 Amendment) are evidently henious offences such as waging war against the country, offences under NDPS Act and Terrorist activities etc. Other scheduled offences, which prior to 2013 amendment were under Part B of the Schedule, cannot be equated with such heinous offences in the context of Section 45(1) of PMLA. Despite the above substantive amendment in the Schedule, we find no corresponding amendment simultaneously carried out in 2013, in Section 45(1), in respect of application of the limitations in grant of bail to person accused of Schedule offences earlier falling under Part B of the Schedule. We do not find any legislative intent from the perusal of the aforesaid “Statement of Objects and Reasons” as incorporated in the Prevention of Money-Laundering (Amendment) Bill, 2011 to apply such stringent limitations in grant of bail to person accused of Scheduled offences earlier falling under Part B of the Schedule, but now existing in Part A thereof. On the contrary, the only object sought to be achieved by the said 2013 amendment in Schedule was to overcome this monetary threshold limit of ₹ 30 lakhs so that for invocation of PMLA in respect of the laundering of proceeds of crime involved in offences earlier falling under Part B of the Schedule, there is no embargo of minimum value of ₹ 30 lacs. This 2013 amendment in Schedule carried out as proposed vide the Prevention of Money-Laundering (Amendment) Bill, 2011 was not intended to introduce a substantive amendment for creating an embargo on grant of bail to a person arrested under PMLA in respect of offences earlier falling under Part B of the Schedule. After having perused the “Statement of Objects and Reasons” as incorporated in the Prevention of Money- Laundering (Amendment) Bill, 2011 which led to 2013 amendment in Schedule, we are unable to agree with the petitioner that by necessary corollary of the aforesaid 2013 amendment, the stringent limitations in grant of bail were now made applicable to all scheduled offences which are punishable for more than three years and were put together in the new Part-A. Therefore, the reference to the offences under Part A of the Schedule in the context of Section 45 (1) requires to read down to apply only to those scheduled offences, which existed under the Part A of the Schedule prior to the said 2013 amendment in Schedule. Guided by the principles laid down by the Hon'ble Supreme Court regarding statutory interpretation and the duty of the Court to secure the ends of justice, we have no hesitation in holding that in 2013, Part B of the Schedule was omitted and the Scheduled Offences falling thereunder were incorporated in Part A with the sole object to overcome the monetary threshold limit of ₹ 30 lakhs for invocation of PMLA in respect of the laundering of proceeds of crime involved in those offences. No substantive amendment was proposed with express intention to apply limitations on grant of bail as contained in Section 45(1) in respect of persons accused of such offences which were earlier listed in Part B. Therefore, twin limitations in grant of bail contained in Section 45(1) as it stands today, are not applicable qua a person accused of such offences which were earlier listed in Part B. If limitations in grant of bail under Section 45(1) of PMLA are sought to be applied to all those offences under the amended Part A which were earlier listed in Part B, it would offend Article 14 and 21 and would be contrary to the Statement of Objects and Reasons of the 2013 amendment in Schedule as incorporated in the Prevention of Money-Laundering (Amendment) Bill, 2011. We, therefore, in light of the “Statement of Objects and Reasons” as incorporated in the Prevention of Money-Laundering (Amendment) Bill, 2011 and the above discussion and findings, have no hesitation in holding that the reference to the offences under Part A of the Schedule in the context of Section 45(1) has to be necessarily read down to apply only to those persons who are arrested under Section 19 of PMLA on accusation of money laundering, who are accused of commission of scheduled offences which were listed under the Part A of the Schedule existing prior to 2013 amendment. In other words, the limitations in grant of bail under Section 45(1) of PMLA are not applicable to those persons who are arrested under PMLA on accusation of commission of such scheduled offences which were earlier listed under Part B of the Schedule (prior to amendment in Schedule carried out in 2013). Consequently, the provisions containing twin limitations in grant of bail under Section 45(1) would override the normal principles governing bail under Sections 438 and 439 qua the persons arrested on accusation of commission of such Scheduled Offences which were earlier listed under Part A of the Schedule. However, only the normal principles governing bail under Section 438 or 439 of the Code would apply in relation to a person arrested under PMLA on accusation of commission of such scheduled offences, which were earlier listed under Part B of the Schedule. Seeking direction for investigation of offence under Section 3 r/w 4 of PMA along with the offence under Customs Act - Held that:- after perusing both the Acts, no specific provision found which completely overrides in this regard the provisions of Sections 200, 156(3) and 155(2) of the Code. Both the Acts however create a bar on taking cognizance vide section 137(1) of the Customs Act,1962 and second proviso to Section 45(1) of PMLA. As per the decision of Hon'ble Supreme Court in the case of Directorate of Enforcement v. Deepak Mahajan [1994 (1) TMI 87 - SUPREME COURT OF INDIA], if any special procedure is prescribed under any provision of PMLA or Customs Act, 1962 which is in conflict with the provisions of the Code, such provision of PMLA or Customs Act, 1962 would have overriding effect on the conflicting provision of the Code. If there is no such overriding provision in these special statutes, the provisions contained in the Code would surely apply in view of section 4(2) read with section 5 of the Code. By application of Section 4(2) of the Code and in view of the aforesaid binding precedents, the words 'police officer' appearing in these definitions would be read as 'officer authorized under the Customs Act, 1962'. Thus, in a 'cognizable offence' under Customs Act, 1962 the Customs Officer would have power to arrest under Section 104(1) without a warrant. He would comply with provisions of Sections 154 to 157 by recording the information and sending forthwith a copy of the Report under Section 157 to the jurisdictional Magistrate. But in a 'non-cognizable offence' under the Act, he would have to obtain from jurisdictional Magistrate permission to investigate and a warrant of arrest under Section 104(1) of the Act. In the Customs Act, 1962 the 'Chapter XIII-Searches, Seizure and Arrest', from Section 100 to 110A, uses the words “Customs officer” or “proper officer” or “adjudicating authority”. Therefore, no police officer can commence investigation, carry search, investigate, arrest , or grant provisional release of seized goods under the Customs Act, 1962, unless authorized under the Act in this behalf. In the context of the provisions of the said Chapter XIII-Searches, Seizure and Arrest', from Section 100 to 110 A, the provisions of the Code would be applicable only to the extent there is nothing inconsistent therewith in the Act. There are certain provisions under the Customs Act, 1962 which override the provisions of the Code such as Section 135-B, 137, 138 and 140A. So far as approaching a Magistrate and seeking directions for investigations into any offence under Customs Act, 1962 by any officer authorised under the said Act is concerned, there is no bar and the Magistrate may direct such investigations under Section 155(2) or 156(3) depending upon whether the alleged offence under Customs Act, 1962 in the complaint is 'cognizable' or 'non-cognizable'. However, the Magistrate cannot take cognizance of the offence unless the conditions specified in the overriding provisions of Section 137(1) or 137(2) are satisfied. Once such directions are issued by the Court, the officer authorised under the said act will follow the procedure specified under the Customs Act, 1962, Rules made thereunder and all those provisions of the Code for which there is no inconsistent provision in the Act. In PMLA, the position would be slightly different than Customs Act, 1962, although the principles governing the application of the procedure prescribed under the Code would remain the same. The offence of Money Laundering punishable under Section 4 is defined in Section 3. As per the said Section 3, the offence of money laundering necessarily requires “knowingly projecting or claiming” any “proceeds of crime” as untainted property. The property covered under the term “proceeds of crime” is defined in section 2(u) of PMLA, and the accused person shall necessarily derive or obtain such property, directly or indirectly as a result of criminal activity relating to such offence which is specified in the Schedule to PMLA. Therefore, any property derived or obtained, directly or indirectly as a result of any criminal activity relating only to such offence which is not specified in the Schedule to PMLA, would not be covered under the term “proceeds of crime” for the purpose of PMLA. Consequently, for invocation of section 3 against any person it is necessary that firstly there shall be such “proceeds of crime”, and secondly such person shall knowingly project or claim such “proceeds of crime” as untainted property. For conducting search or seizure under Section 17 or 18 of PMLA, the first proviso to sub-Section (1) of Section 17 and also of Section 18, create an embargo and bars such search unless in relation to the 'Scheduled Offence, either a report under Section 157 of the Code is forwarded to a Magistrate, or a complaint has been filed for taking cognizance by an officer authorised to investigate Scheduled Offence or other conditions specified are fulfilled. Therefore, so far as PMLA is concerned there is a bar on taking cognizance of any offence punishable under Section 4 except upon a complaint in writing, that too, by the specified officers only. In PMLA there is no question of filing a report under Section 173 for proceeding against the accused, and only if no case is made out after investigations, a closure report would have to be filed under Section 173. Merely on receipt of a complaint of money laundering from a private individual, the investigations cannot be directed by a Court or commenced by an authority under PMLA, unless the Scheduled Offence is registered under Section 154 and a report thereof is sent under Section 157 of the Code to the Magistrate, or, a complaint is filed for taking cognizance of a Scheduled Offence by an officer authorised to investigate Scheduled Offence. Further, cognizance of offence under PMLA can be taken only by a Special Court notified and designated under Section 43 for the specified area, and trial shall be in accordance with Section 44 read with Section 46 of PMLA. Section 46 of PMLA specifies that save as otherwise provided under PMLA, the provisions of Code, including the provisons of bails or bond, shall apply to the proceedings before a Special Court. Any such directions by a Court to the authority under PMLA to investigate an offence under PMLA would not amount to taking 'cognizance'. However, for taking cognizance under PMLA specific bar contained in the second proviso to Section 45(1) would necessarily be applicable and the Special Court cannot take cognizance of any offence punishable under Section 4 except upon a complaint in writing made by the officer specified therein. As of now for the alleged Scheduled Offence under the Customs Act, 1962 neither any case is registered under Section 154 by the Customs Authorities for investigating any cognizable offence under the said Act, nor is there any report in respect of the same forwarded under Section 157 of the Code. There is no complaint for taking cognizance filed in Court by any officer authorized to investigate any non-cognizable offence under Customs Act, 1962. Therefore, at this stage, the prayer of the petitioner so far as PMLA is concerned is premature. Unless as indicated above the alleged Scheduled Offence under Customs Act, 1962 is registered under Section 154 and a report thereof is sent under Section 157 of the Code to the Magistrate, or, a complaint is filed for taking cognizance of the Scheduled Offence by an officer authorized to investigate the said Scheduled Offence, the petitioner cannot seek from the jurisdictional Magistrate any directions under the Code for investigations by the authority under PMLA. Therefore, the composite prayer seeking direction for investigation of offence under Section 3 r/w 4 of PMA along with the offence under Customs Act, 1962, would not be maintainable. Seeking issuance of certificate under Article 134-A of the Constitution of India - Held that:- we have not come across any precedent where the following two issues concerning fundamental rights guaranteed under the Constitution under Article 14 and 21 have been decided by the Hon'ble Supreme Court. Therefore, we are inclined to issue the Certificate as prayed for by the petitioner and grant leave to appeal. - Decided against the petitioner
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Service Tax
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2016 (6) TMI 323
Denial of benefit of Voluntary Compliance Encouragement Scheme, 2013 - Delayed payment of second installment of 50% amount - Recovery of service tax dues for the period April 2008 to March 2015 - Petitioner paid 50% of the tax dues and the balance amount of 50% together with interest thereon was paid by him only on 06.01.2015 - Held that:- the VCES Scheme, 2013, is in the nature of an Amnesty Scheme and, therefore, its provisions have to be strictly interpreted, and the time limit specified in the Scheme for the payment of amounts together with interest have to be strictly adhered to. The scheme partakes of the nature of a settlement between the assessee and the department and from the terms of the settlement neither party can be permitted to resile. To allow the petitioner to effect payments belatedly would tantamount to altering the terms of the settlement and that cannot be done by this Court in exercise of its powers under Art. 226 of the Constitution of India. In the instant case, although the delay occasioned by the petitioner is only of six days from the cut off date mentioned under the Scheme, it has to be borne in mind that the actual amount to be paid under the Scheme was to be paid on or before June 2014 and the extension of time from June 2014 to 31st December, 2014, itself was by way of an exception to the main provisions so as to enable a defaulter to pay the amounts that fell due by June 2014, on or before 31.12.2014, by paying the same together with interest thereon. Here, the petitioner did not effect payment of the amounts even before the extended date of 31.12.2014. Therefore, the petitioner cannot claim the benefit of the VCES Scheme, 2013. - Decided against the petitioner
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2016 (6) TMI 322
Eligibility of input credit - Service tax paid on the input service viz. gardening service - Appellant discharging central excise duty on the final product and availing credit on inputs as well as service - Held that:- in view of the Hon'ble Karnataka High Court decision in the case of CCE Bangalore Vs Millipore India Pvt. Ltd. [2011 (4) TMI 1122 - KARNATAKA HIGH COURT], the gardening service is an input service for the manufacturer who is covered under the Factories Act read with Tamil Nadu Pollution Control Board Act and accordingly the appellants are eligible for input service on the gardening service. - Decided favour of appellant with consequential relief
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2016 (6) TMI 321
Taxability - Amount collected as placement fees from students - Held that:- the issue is no more res integra. In view of the judgment of Tribunal in the case of Motilal Nehru National Institute of Technology v. Commissioner of Central Excise & Service Tax, Allahabad [2015 (8) TMI 1138 - CESTAT ALLAHABAD], the amount collected as placement fees from students is not taxable. The impugned order is set aside. - Decided in favour of appellant with consequential relief
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2016 (6) TMI 320
Admissibility of Cenvat credit - Services regarding valuation of fixed assets - No evidence furnished regarding services availed pertaining to manufacturing unit or not - Held that:- as per Rule 2 (l) of the Cenvat Credit Rules, 2004, accounts relating to business such as accounting, financing will be covered within the definition of input service. Accordingly, valuation of the fixed assets got done by the Appellant with respect to manufacturing activities will have to be considered as an activity in relation to the manufacture of the goods. Cenvat Credit of such services will thus be admissible to the Appellant. - Decided in favour of appellant with consequential relief
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2016 (6) TMI 319
Other port services - Consideration received for exclusive use of jetty and back-up land - Demand of Service tax alongwith interest and imposition of penalty - Section 76, 77 and 78 of the Finance Act, 1994 - Held that:- the respondent has been discharging its tax liability on the consideration for cargo handled. In relation to the fixed charges, the very nature of the charge delinks it as consideration for handling of cargo. The fixed charges pertain to exclusive access afforded to M/s United Shippers Ltd of the jetty and the back-up land. There is no segregation of consideration for the back-up land even if that is assumed to be facilitation of space in relation to cargo. It is also an admitted fact that duty liability on import cargo is discharged while yet on the mother vessel. Consequently, custodianship of import cargo requiring assigning of storage space is not a statutory obligation of the Maharashtra Maritime Board. Therefore, even if the goods are allowed to be stored after landing, the lease terms does not transform the activity into one of rendering other port services. Therefore, show cause notice do not sustain. - Decided against the revenue
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2016 (6) TMI 318
Extended period of limitation - Demand of Service tax - including both fixed and variable amounts of commission in the taxable value - Clearing and Forwarding agent services - Suppression - Held that:- the Revenue has taken up an identical issue regarding valuation of the services covering an earlier period by invoking the suppression clause and claimed the extended time limit for demand of service tax. On an identical issue invoking suppression and extended time limit for one more time clearly cannot be done and hence the demand for the period beyond the normal time limit available under Section 73 of the Finance Act, 1994 fails. With reference to the Section 67 of the Finance Act, 1994 read with Service Tax (Determination of Value) Rules, 2006, the consideration has to include all amounts charged for providing service. This should include the fixed as well as variable parts of the consideration received by the appellant. This brings us to the claim of the appellant that he functioned as a pure agent of the service receiver and hence the amount reimbursed by M/s Lafarge India Limited cannot form part of value of taxable service. The first appellate authority has clearly given a finding that the appellant has not satisfied the conditions prescribed in Rule 5 of the Service Tax (Determination of Value) Rules, 2006 to satisfy the criteria for a pure agent. Therefore, no reason found to defer from that view and hence uphold the merits of the order. However, the demand will need to be reworked out for the normal time limit under Section 73. - Appeal disposed of
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2016 (6) TMI 317
Imposition of penalty - Section 76, 77 and 78 of the Finance Act, 1994 - Business Auxiliary Service - Service of billing, cash collection etc. were rendered for a statutory body under Government of Rajasthan as per the terms of contract - Held that:- the appellants are small individual businessman providing service to a statutory corporation coming under Government of Rajasthan, and also considering the plea that the appellants acted in a bonafide manner in line with similarly placed contractors, therefore, this is a fit case for invoking the provision of Section 80 to waive the penalties imposed on the appellants. - Decided in favour of appellants
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Central Excise
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2016 (6) TMI 316
Entitlement for refund claim - Rule 5 of Cenvat Credit Rules - Unutilized accumulated credit as on the date of their opting for the benefit of an exemption Notification No. 30/2004-CE dated 01/4/2006 which prohibited the availment of Cenvat credit - Held that:- There is no provision either in the Cenvat Credit Rules or under the Central Excise Act allowing cash refund of such accumulated credit. Such cash refunds of the credit, which is meant for only further utilization in discharge of the duty of excise on the final product, would enrich the Assessee unjustifiably. The Tribunal being a creature of the Act, has to act within the framework of the Act and cannot go beyond that. In the absence of any provision specifically permitting the refund of such credit, in cash, the same cannot be allowed on the basis of equity, justice and good conscious. In the absence of any such rule or provision of law, which learned Advocate has also been unable to show us, we find no justifiable reasons to grant the refund of the said credit. - Decided against the appellant
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2016 (6) TMI 315
Demand of SAD alongwith interest and penalty - 100% EOU - stock transfer made to their own DTA unit - Eligibility for availment of exemption - Notification No. 23/2003-CE dated 31.3.2003 - Held that:- the goods cleared by the appellant to their own unit is on stock transfer basis, the same goods cleared to any other DTA unit for the sale is on payment of the appropriate Sales Tax on the clearances made; there is no exemption granted by the Sales Tax authorities on the said goods. An identical issue has been decided by this Tribunal in the case of M/s Micro Inks Versus CCE. & ST. Daman [2014 (2) TMI 207 - CESTAT AHMEDABAD]. Therefore, in view of this, the impugned order is unsustainable and liable to be set aside. - Decided in favour of appellant with consequential relief
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2016 (6) TMI 314
Eligibility for cash refunds of untilized credit - credit could not be unutilized 16 years back due to dispute with the department - appellant is now an SSI unit and their clearance are very much within the limits prescribed under the SSI. - credit under transitional provisions - Rule 57H of erstwhile CER 1944 - Held that:- it is very clear that the appellants were prevented from taking of credit due to the objections from the department and the contention of the appellant that had the department granted refund in the year 1994 itself, the appellant would not have made the payment by cash from the PLA and due to the dispute being not settled for 16 years, the appellant cannot be denied of their benefit to cash refund. The appellant is now an SSI unit and their clearance are very much within the limits prescribed under the SSI. The ratio of decision of Karnataka High Court in the case of UOI Vs Slovak India Trading Co. Pvt. Ltd. [2006 (7) TMI 9 - HIGH COURT OF KARNATAKA (BANGALORE)] which has been upheld by the Supreme Court in UOI Vs Slovak India Trading Co. Pvt. Ltd. [2007 (1) TMI 556 - SUPREME COURT] supports the appellant's contention that they are eligible for cash refund as it was not due to appellant's fault or lapse in availing the credit. Had the department not objected to their availment, their need to have paid the amounts through PLA would have been drastically reduced. The authorities below have lost sight of the fact that cenvat credit is a beneficial legislation and disputes such as the one if allowed to continue would deprive the assessees, as in the instant case. Therefore, the appellant is entitled to cash refund. - Decided in favour of appellant with consequential relief
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2016 (6) TMI 313
Eligibility for availment of Cenvat credit - Excise duty paid on inputs and capital goods as well as Service tax paid on Input services - Invoices addressed to appellant's head office at Chennai based - valid duty paying documents - services relatable to "trading" - not registered as Input Service Distributor during the period April 2011 to March 2012. Held that:- it is found that this Bench of the Tribunal, in the case of Pricol Ltd. Vs CCE Coimbatore [2015 (1) TMI 350 - CESTAT CHENNAI] is directly on the issue on hand wherein the Tribunal has held that procedural law deserves to be construed as directory instead of mandatory for its application. The non-registration as ISD should not deprive the appellant of substantial benefit of credit. Moreover, it is found that the appellant has taken the ISD Registration w.e.f. 18.3.2013, and since this is only a procedural lapse in law, credit cannot be denied. The other aspect with regard to trading of goods should be looked into by the adjudicating authority and for that purpose, I remand the matter back to the adjudicating authority to have a relook into the whole issue. In the event, if it is found that appellant has availed the credit which are used for trading of goods, they shall reverse the same immediately. Since the credit is held to be eligible, the consequential penalty is also set aside. - Appeal disposed of
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2016 (6) TMI 312
Stay petition - Recovery of balance amount - Petitioner contended that during the pendency of the appeal when the petitioner has deposited 7.5% subject to a limit of ₹ 10 crores, no coercive measures should be taken against it - Held that:- there is nothing on record to indicate that the petitioner has satisfied the jurisdictional authority about the aforesaid two conditions mentioned in Clause 4.2. It is for the petitioner to satisfy the jurisdictional authority regarding deposit of 7.5% of the tax demanded and the fact that an appeal has been filed. - Petition disposed of
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2016 (6) TMI 311
Admissibility of MODVAT credit - Excise duty paid on High Speed Diesel Oil (hereafter 'HSD') which was consumed by the Petitioner for generation of electricity used for the manufacture of excisable goods in its factory - The disputes in the present case essentially concern the MODVAT credit which was claimed and allowed to the Assessee for the period 16th March, 1995 till 1st March, 1998. - Period before the retrospective amendment vide Section 112 of the Finance Act, 2000 Held that:- the Supreme Court noticed the Notification No. 5/94-C.E. (N.T.) dated 1st March, 1994 and Notification No.8/95-C.E. (N.T.) dated 16th March, 1995 issued under Rule 57A of the Rules and held that the appellants were not entitled to credit for the duty paid on HSD. The Supreme Court further noticed that although the appellants were not entitled to claim MODVAT credit on the duties paid on HSD, the Tribunals had held otherwise and "therefore, there was a necessity for the Finance Act to be brought in whereby a clarificatory explanation to the legal position was laid down". The Supreme Court also rejected the contention of the appellants therein that Section 112 of the Act had the effect of taking away vested rights. Appellant is correct when he contends that the constitutional validity of Section 112 of the Act was not challenged in Sangam Spinners Limited. However, as noted above, the contention whether any vested right was created in favour of the appellants was considered by the Supreme Court and the same was expressly rejected. The Supreme Court had further held that Section 112 of the Act was clarificatory and the appellants were not entitled to credit for duties paid on HSD by virtue of the express exclusion in notifications dated 1st March, 1994 and 16th March, 1995. Thus, the very basis on which the Petitioner advanced its contentions stands eroded. Therefore, the contention that the provisions of Section 112 of the Act are expropriatory must be rejected, as squarely covered by the decision of the Supreme Court in Sangam Spinners Limited v. Union of India and Ors. [2011 (3) TMI 4 - Supreme Court]. The Petitioner’s contention that a separate adjudication was required for raising a demand for recovery of MODVAT credit availed on HSD also cannot be accepted as the said issue was considered by the Supreme Court in Ors. v. Maharaja Shree Umaid Mills [2013 (12) TMI 878 - SUPREME COURT]. Therefore, it is clear that Section 112 of the Finance Act 2000 has been held to be clarificatory and it has been conclusively held that MODVAT credit on duties paid on HSD used as an input was not available. Consequently, assessees who had claimed the same were liable to refund the credit wrongly taken. - Decided against the petitioner
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CST, VAT & Sales Tax
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2016 (6) TMI 304
Cancellation of C-Form issued by the DT T - Whether there exists a power in the Commissioner VAT, Delhi under the CST Act and the Rules thereunder to cancel a C-Form and further if such power exists then whether in the facts and circumstances of the present case such power was rightly exercised - Held that:- with their being a valid registration of the purchasing dealer on the date of the transaction and the C-Form having been validly issued on the date it was so issued, there could not have been a retrospective cancellation of the C-Form. At the risk of repetition, it must be observed that there is no statutory power that permits cancellation of a C-Form that has been validly issued, much less retrospectively. The only circumstance perhaps that could lead to the cancellation of a C Form is the failure by the issuing authority to notice the cancellation of the purchasing dealer's CST registration previous to the date of the sale. That would be a case of a purchasing dealer obtaining a C Form by fraudulent means concealing the fact of cancellation of his CST registration. The issuance of a C Form in such instance would be void ab initio since it would not satisfy the requirement of Section 8(1) of the CST Act read with Section 7 (4) thereof. If the selling dealer has after making a diligent enquiry confirmed that on the date of the sale the purchasing dealer held a valid CST registration, and is also issued a valid C Form then such selling dealer cannot later be told that the C Form is invalid since the CST registration of the purchasing dealer has been retrospectively cancelled. Where, a selling dealer fails to make diligent enquiries and proceeds to sell goods to a purchasing dealer who does not, on the date of such sale, hold a valid CST registration then such selling dealer cannot later be seen to protest against the cancellation of the C-Form. As observed by the Supreme Court in Commissioner of Sales Tax, Delhi v. Shri Krishna Engg. Co. [2005 (1) TMI 389 - SUPREME COURT OF INDIA] the selling dealer in such instance will have to pay for his recklessness . Therefore, the order passed by the DT T cancelling the C Form issued to the Petitioner in the present case with effect from 27th November 2015 is hereby set aside. The Petitioner will continue to treat the said C-Form issued to it as having been validly issued. The DT T shall, not later than ten days from today, make the necessary corrections on its website to indicate the validation of the above C-Form. - Petition disposed of
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2016 (6) TMI 303
Commitment of forgery with an intent to defraud the exchequer - Order passed without affording opportunity of being heard and by relying on the report of relevant tax officer - Violation of principles of natural justice - Held that:- it is evident that the adjudicating authority perceived the petitioning assessee to have committed forgery and having indulged in fraudulent conduct. Once any person sitting in judgment over a matter or a party comes to such a conclusion, it is difficult to expect a balanced assessment from such authority. There is no doubt that the entire process of adjudication in this case has been vitiated by the reliance on the report obtained by the adjudicating authority behind the back of the petitioning assessee and without further reference to the petitioning assessee. For the abject breach of the principles of natural justice evident from the order impugned dated January 27, 2016, such order is set aside. The alternative remedy in this case was not necessary to be invoked since the prejudice complained of in this extraordinary jurisdiction was capable of being addressed herein. - Petition allowed by way of remand
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Indian Laws
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2016 (6) TMI 310
Seeking modification in the sentence order - undergo rigorous imprisonment for three years and pay fine of ₹ 10,000/-, in default thereof - Possession of 130 grams of heroine - Non-compliance of Section 50 of the NDPS Act, 1985 - Held that:- Since the accused were not informed about their right of search, therefore, the search is otherwise bad in the eyes of law. Moreover, the manner of search and obtaining consent memo is also doubtful. It is not clear whether ASI Ajaib Singh gave the offer of search to the accused in English or it was SI Gurwinder SIngh, who himself gave the offer of search and communicated with the accused. Admittedly, the accused are Nigerian nationals and they do not understand Hindi or Punjabi. Then the statement of ASI Ajaib Singh shows that on apprehension of accused Alexander, he took out the polythene/envelope from the left pocket of his trouser and then produced the accused and the polythene packet before the SI Gurwidner Singh, whereas SI Gurwinder Singh has stated that he himself conducted the search and took out the polythene packet from the left pocket of the trouser of the accused. If the statement of ASI Ajaib Singh is accepted, that would mean that before giving the offer of search after or before apprising the accused of their right of search, the search was already conducted by ASI Ajaib Singh, after he took out a polythene packet from the left pocket of the accused Alexander. This would mean that the compliance of provisions of Section 50 of the NDPS Act, 1985, was not made and the search is defective. Non-compliance of provisions of Section 42 of the NDPS Act, 1985 - Police received information on the midnight of 3/4.7.2009 and the said information was not reduced into writing and that the ruqa was sent to the police station, which registered the FIR - Whether the ruqa amounts to compliance of provisions of Section 42 of the NDPS Act, 1985 - Held that:- the matter was recently examined by the Apex Court in Darshan Singh Versus State of Haryana [2016 (3) TMI 1037 - SUPREME COURT], a distinction has to be made about non recording of secret information separately and recording of secret information in the FIR. The secret information is required to be separately recorded. Non-examination of independent witness - Held that:- it is very difficult on the part of the police to obtain the services of an independent witness at the time of effecting recovery of narcotics and many times, the witnesses, if joined during investigation, are not willing to come forward for fear of reprisal by the accused. Therefore, non examination of independent witness is not material. Tampering of case property - Held that:- the Station House Officer is to handle many case properties. There were two other seals i.e. of DSP (D) and of the Investigating Officer. There is no evidence on file that the case property was ever tampered with, nor it is shown that despite the fact that the case property was ultimately sent on 10.7.2009, there was any tampering with the case property. Sample taken before the Court, but the same was not produced - Held that:- this fact itself is not sufficient to throw out the prosecution case. Similarly, if while complying with the provisions of Section 52-A of the NDPS Act, 1985, the photographs were not taken, it would not be fatal to the prosecution case. Moreover, in this case, according to the prosecution, four persons were arrested from the spot. From the three persons, similar quantity i.e. 130 grams of heroine was recovered, which rather appears to be strange. This fact coupled with the discussion above makes the prosecution case doubtful. As the prosecution could not prove its case beyond all reasonable doubts, the impugned judgment of conviction and order of sentence passed by the learned Judge, Special Court, SAS Nagar, Mohali, are set aside. The accused-appellant stands acquitted of the charges framed against him under Section 21 of the NDPS Act, 1985. He be released forthwith, if not required in any other case. - Decided in favour of appellant
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