TMI Tax Updates - e-Newsletter dated: August 15, 2018 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

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TMI Tax Updates - e-Newsletter August 15, 2018 Case Laws in this Newsletter: GST Income Tax Benami Property Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST Challenge to Advance Ruling - Classification of Skin care preparations - the 31 products discussed, supplied or intended to be supplied by the Appellant, are not to be classified under Chapter 30, but are to be classified under Chapter 33 (Cosmetics) or Chapter 34 (Soaps). Visit to Get Source Supply of goods or services - Contract Management System (CMS) - Activities the Applicant proposes to undertake are services associated with manufacturing of metal, and may be termed as “continuous supply of service” within the meaning of Section 2(33) of the GST Act, provided the service is agreed to be provisioned for a period exceeding three months. Visit to Get Source Income Tax Genuineness of the expenditure claimed u/s 37(1) - ITAT disallowed the claim of expenses - A finding of a Tribunal on fact does not become perverse merely because another finding or conclusion was possible. Visit to Get Source Recovery of tax dues - property purchased by the appellant was under attachment - petitioner had no knowledge of such attachment - The petitioner being bonafide purchaser for consideration after due diligence can not be made to suffer on account of the tax dues running in the name of the original owner. Visit to Get Source Nature of transfer of land - agriculture land or not - sale deed shows that the properties in question have been referred as “industrial plot” for industrial purposes. - The sale deed in question is executed by the assessee and is document produced by the assessee. The assessee is therefore bound by the contents of the registered sale deed. Visit to Get Source Revision u/s 263 - The provisions of Section 263 although appears to be of a very wide amplitude and more particularly after insertion of Explanation 2 but cannot possibly mean that recourse to Section 263 of the Act would be available to the Revisional Authority on each and every inadequacy in the matter of inquiries and verification as perceived by the Revisional Authority. Visit to Get Source Claim of relief u/s 89 - receipt of arrears in lieu of employer's contribution to the newly implemented 'Defined Contribution Scheme' - Section 17(2)(vii) of the Act also treats such a sum as a perquisite. But, to hark back, as per section 17(1)(iv), perquisite is salary and receipt of salary paid in arrears or in advance is entitled to relief under section 89. Visit to Get Source Transfer pricing - the issuance of corporate guarantees is covered by the residuary clause of the definition under section 92B of the Act but since such issuance of corporate guarantees, on the facts of the present case, did not have "bearing on profits, income, losses or assets", it did not constitute an international transaction, under section 92B, in respect of which an arm's length price adjustment can be made. Visit to Get Source Accrual of income in India u/s 5(2) - Foreign allowances on account of the international assignment - assessee was an employee in IBM India Private Limited and during the financial year 2012-13 was sent on short term assignment to Switzerland. - exemption in respect of foreign assignment allowance allowed. Visit to Get Source Indian Laws The classification of land in the revenue records as agricultural is not dispositive or conclusive of the question whether the SARFAESI Act does or does not apply. Whether a parcel of land is agricultural must be deduced as a matter of fact from the nature of the land, the use to which it was being put on the date of the creation of the security interest and the purpose for which it was set apart. Visit to Get Source Service Tax Commercial or Industrial Construction Service - activity of laying “underground optical fiber cables” for telecom companies - we cannot be agreed with the findings of the adjudicating authority that the “activity of laying optical fiber cable” is different from the “activity of laying electric cable”. Visit to Get Source Benefit of abatement - GTA Services - reverse charge mechanism - absence of endorsement on the consignment notes - Such procedure prescribed by the Board cannot be said to be mandatory and the same cannot be adopted for denying substantive right especially when it is not the case of the Revenue that credit has been availed by the transporter. Visit to Get Source Central Excise Reversal of Cenvat Credit while opting for SSI exemption - As there is no balance in cenvat credit account, in that circumstances, the appellant are not required to pay cenvat credit in cash for inputs, semi finished goods and finished goods lying in stock as on 01.04.2012 Visit to Get Source Valuation - inclusion of freight and insurance in the assessable value for the manufactured goods delivered at the buyers premises - place of removal not taken as buyer's place - demand set aside. Visit to Get Source Articles Is 34(6) of Arbitration Act is mandatory directory? Intangible assets in case of professions – cost of education and training to acquire know-how, expertise, to be eligible for grant of licenses – depreciation can be claimed. CIN in Tax Invoices Notifications Customs F.No.354/123/2017-TRU(Pt.) - dated 13-8-2018 - Cus Corrigendum - Notification No. 58/2018-Customs, dated the 7th August, 2018 GST - States 21/2018 - State Tax (Rate) - dated 26-7-2018 - Chhattisgarh SGST Exempts the intra-state supplies of handicraft goods 20/2018 - State Tax (Rate) - dated 26-7-2018 - Chhattisgarh SGST Amendment in Notification No. 5/2017-State Tax (Rate), F-10-43/2017/CT/V (73), dated the 28th June, 2017 19/2018 - State Tax (Rate) - dated 26-7-2018 - Chhattisgarh SGST Amendment in Notification No. 2/2017-State Tax (Rate), F- 10-43/2017/CT/V (70), dated the 28th June, 2017 34/2018-State Tax - dated 10-8-2018 - Gujarat SGST Prescribe the due dates for filing form GSTR 3B for the months from July 2018 to March 2019 33/2018-State Tax - dated 10-8-2018 - Gujarat SGST Prescribe the due dates for furnishing the details of outward supply of goods or services or both for GSTR1 from July 2018 to march 2019 76/GST-2 - dated 10-8-2018 - Haryana SGST Notification under section 168 read with Rule 61(5) of HGST Rules to prescribe the due dates for filing FORM GSTR-3B for the months from July, 2018 to March, 2019 under HGST Act, 2017 75/GST-2 - dated 10-8-2018 - Haryana SGST Notification under section 148 to prescribe the due dates for quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crore for the period from July, 2018 to March, 2019 under HGST Act, 2017. ERTS (T) 65/2017/438 - dated 26-7-2018 - Meghalaya SGST Exempts the intra-state supplies of handicraft goods ERTS (T) 65/2017/437 - dated 26-7-2018 - Meghalaya SGST Amendment in Notification No. ERTS (T)65/2017/5, dated 29th June, 2017 ERTS (T) 65/2017/436 - dated 26-7-2018 - Meghalaya SGST Amendment in Notification No. ERTS (T)65/2017/2, dated 29th June, 2017 ERTS (T) 65/2017/435 - dated 26-7-2018 - Meghalaya SGST Amendment in Notification No. ERTS(T)65/2017/l, dated 29th June, 2017 F.1-11 (91)-TAX/GST/2018 - dated 8-8-2018 - Tripura SGST Notification regarding filing of Return in FORM GSTR 3B for each of the months from July, 2018 to March, 2019 22/2018-State Tax (Rate) - dated 8-8-2018 - Tripura SGST Amendment in Notification No. 8/2017-State Tax (Rate), dated the 29th June 2017 Income Tax 39/2018 - dated 10-8-2018 - IT U/s 10(46) of the Income-tax Act, 1961 Central Government notifies Madhya Pradesh Real Estate Regulatory Authority, a body constituted by Government of Madhya Pradesh, in respect of the specified income arising to that body 38/2018 - dated 10-8-2018 - IT Central Government notifies ‘Insolvency and Bankruptcy Board of India’, New Delhi, a board established by the Central Government,in respect of the specified income arising to that board News Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified Extension of time inviting comments on updating National Voluntary Guidelines till August 31, 2018 NITI Aayog launches “Pitch to MOVE” Consumer Price Index Numbers on base 2012=100 for Rural, Urban and Combined for the Month of July 2018 Case Laws: GST 2018 (8) TMI 772 Challenge to Advance Ruling - Classification of Skin care preparations - Appellant had argued that its skin care preparations are Ayurvedic Medicaments. meant for therapeutic or prophylactic uses and put up in packaging for retail sale, and entirely correspond to the description of goods under Tariff Head 3004 of Customs Tariff Act, 1975 - in the Advance Ruling, it was held that other than 'Pailab' and 'Rupam', the remaining products mentioned in the list submitted by them are not offered primarily as medicaments and, therefore, not to be included under heading 3004. Whether Ayurvedic Products manufactured by the Appellant, are classifiable under Chapter 33, or any other Chapter, or as medicaments under Chapter 30 of the Tariff? Held that:- As per the descriptions of the products printed on the labels of the products when packaged for retail sale and for information to the customer it is found that the products are used mostly for brightening the skin, controlling the excess oil secretion, keeping skin clean glossy and free of freckles and spots, beautifying the skin of sunburn and black patches etc, - None of the descriptions qualify for categorising the products as “medicaments” or “medicines” as they are not used in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings; rather they are more in tandem with the definition of 'cosmetics' as we find in the Drugs and Cosmetics Act, 1940, because none of the problems that these products treat can be classified as “Injury” or “ailment”. Thus, the 31 products discussed, supplied or intended to be supplied by the Appellant, are not to be classified under Chapter 30, but are to be classified under Chapter 33 (Cosmetics) or Chapter 34 (Soaps). Advance Ruling stands modified - appeal disposed off. 2018 (8) TMI 771 Supply of goods or services - continuous supply of services or not? - time of supply - Contract Management System (CMS) - The Applicant is very clear in stating that the procedure undertaken under the proposed CMS will not involve transfer of title to the refractories used in course of the production process. Use of the refractories delivered to the customer, including application and disposal, will continue to be controlled by the Applicant. Held that:- It is clear from the description of the activities proposed to be undertaken that the Applicant supplies service associated with the manufacturing of metal, value of which is measured at an agreed rate per tonne of hot metal produced and that the Applicant manufactures refractories, which are used as inputs as defined under Section 2(59) of the GST Act. Provisioning of the service involves, inter alia, round-the-clock monitoring of the production process during the entire contract period, and continuous evaluation of the requirement of refractories, quality control, replacement and disposal of used refractories etc. Invoices are to be raised on monthly basis at an agreed rate per tonne of the hot metal manufactured during the period - It is, therefore, continuous supply of service within the meaning of Section 2(33) of the GST Act, provided the service is agreed to be provisioned for a period exceeding three months. Time of supply - Held that:- Provisioning of the service is measured on monthly basis, and the date of payment is within thirty days from end of the month. The tax invoice shall, therefore, be issued in terms of Section 31(5)(b) on or before the supplier receives the payment, and the time of supply shall be the date of issue of invoice in terms of Section13(2)(a) read with Section 31(2) of the GST Act and Rule 47 of the GST Rules. Ruling:- Activities the Applicant proposes to undertake are services associated with manufacturing of metal, and may be termed as “continuous supply of service” within the meaning of Section 2(33) of the GST Act, provided the service is agreed to be provisioned for a period exceeding three months. The time of supply shall be the date of issue of invoice in terms of Section 13(2) (a), read with Section 31(2) of the GST Act and Rule 47 of the GST Rules. Income Tax 2018 (8) TMI 768 Failure to deduct TDS - Additions made u/s 40(a)(ia) - liability of the assessee under Section 201(1) being treated as an assessee in default. - Registration u/s 12AA as a charitable institution - Held that:- Notice issued - Demand stayed. 2018 (8) TMI 767 Eligibility for deduction u/s 10AA - surplus amount in the freight export account and in the insurance export as derived from export activities - export turnover which has been defined in explanation 1 to section 10AA of the Act and whether the same would have any effect in the instant case. - Held that:- There is no merit in this petition - Dismissed. 2018 (8) TMI 766 Levy of penalty u/s 271(1)(c) - period of limitation - whether penalty is to be levied in piecemeal as and when the individual issues of an assessment are concluded - Held that:- SLP is dismissed both on the ground of delay and merits. 2018 (8) TMI 765 Deduction u/s 10AA - whether activity which has been carried out by the assessee was not manufacturing activities and rather it was trading ? - Held that:- No merit in this petition - Dismissed. 2018 (8) TMI 764 Disallowance u/s 40(a)(ia) - whether the provisions of section 40(a)(ia) as amended by the Finance Act, 2010 with effect from 1st April, 2010 are of clarificatory nature and therefore retrospective? - Held that:- the amendment was curative in nature, it should be given retrospective operation - SLP filed by the revenue dismissed. 2018 (8) TMI 763 Additions u/s 68 - unexplained cash credit - further addition in respect of disallowance of interest thereon - onus of the assessee to prove source of source - Held that:- It is true that this Court has been consistently taking a view that prior to amendment to Section 68 of the Act w.e.f. 1st April, 2013, it is not necessary to establish the source of the source. However, in the present case, both the authorities i.e. CIT(A) and the Tribunal have on facts found the transaction is not genuine. This was on the appreciation of all facts, including the absence of the 9 companies of Khandar Group doing any business to generate such huge funds, even when they appeared before the authorities - Additions confirmed - Decided against the assessee. 2018 (8) TMI 762 Assessment u/s 153C - Additions on the account of alleged unaccounted cash receipt - project completion method of accounting - Method of accounting, regularly followed by the Assessee - tribunal has observed that the issue of cash receipts and the project completion date are inter related and deleted the addition made by the Assessing Officer in both the counts. No substantial question of law - Decided against the revenue. 2018 (8) TMI 761 Genuineness of the expenditure claimed u/s 37(1) - whether the payment was incurred wholly and exclusively for business purpose or was a surreptitious and covet payment not for any service rendered but other purposes - ITAT disallowed the claim of expenses - Held that:- The Tribunal has highlighted that crucial evidence in relation to four aspects; details of service rendered by the sub-agent, details of expenses incurred by the sub-agent for rendering services, persons whom the sub-agent had contacted in the process of rendering services and letters, report or document submitted by the sub-agent in the process of rendering services were missing and had not been placed on record. There was no evidence to show that the sub-agent had the experts, who had helped in the bidding process or had interacted with the Indian company. No letter or communication from the Korean company or the Indian company to the subagent was filed. A decision of question of fact depends upon appreciation of evidence and material placed before the authorities, i.e. the Tribunal. The Tribunal, as a final fact finding authority, has to determine and decide question of fact in dispute by examination of evidence and material produced. Inference and conclusion based upon appreciation of fact does not give rise to a question of law. In this context that the appellant claims and asserts that the decision of the Tribunal was perverse, and therefore substantial question of law arises from the impugned order. A finding of a Tribunal on fact does not become perverse merely because another finding or conclusion was possible. Test and benchmark of perversity is far stringent and strict. Factual findings can be only interfered with when they are patently unreasonable, not supported by any evidence or are based upon extraneous and irrelevant material. Interference may be justified when the conclusions are based upon mere conjectures and surmises or where no person acting judicially and properly instructed under the relevant law could have come to the same decision and conclusion. Decided against the assessee. 2018 (8) TMI 760 Disallowance u/s. 40A(2)(b) - excess remuneration to directors - disallowance u/s. 14A - valuation of closing stock - Addition on account of notional interest on delayed refund of security deposits - Held that:- Looking to the increase in the profit and the business when in the subsequent year i.e. year in consideration the learned Tribunal accepted the renumeration paid to the Director as admissible, it cannot be said that the learned Tribunal has committed any error. The learned Tribunal has rightly observed that once the renumeration paid in the preceding year was accepted by the Revenue, the Assessing Officer was not justified in considering and/or comparing the renumeration paid in AY 2004-05. - No question of law. Appeal admitted on the following question of law: Whether the Appellate Tribunal is right in law and on facts in holding that the assessee’s profit earned on the sale fo shares shall be treated as capital gain instead of business income? Whether the Appellate Tribunal has erred in law and on facts in deleting the addition of ₹ 2,33,55,558/made u/s 145A of the Act? Whether the Appellate Tribunal was right in law and on facts in confirming the decision of the CIT(A) in deleting the addition u/s 145A of the Act, 1961? as disallowed by the AO? 2018 (8) TMI 759 Condonation of delay in filing of appeal - Held that:- Revenue has tried to explain the delay caused in preferring the Tax Appeal by making necessary averments in para 2 reproduced herein above. Considering the explanation it cannot be said that there was any negligence and/or lethargy on the part of the Department in not preferring the appeal within the period of limitation. Infact the papers were handed over to the standing counsel appearing on behalf of the Revenue to prefer appeals, however the same was not filed. If the delay in the present appeal is not condoned and the appeal is dismissed on the ground of limitation in the case of very assessee, there is likelihood of conflicting orders. Under the circumstances, when the very issue / question involved in the present appeal is at large before this Court in other Tax Appeals in case of the very assessee but with respect to different assessment years, we deem it fit and proper to condone the delay in the present application so that the present appeal also can be heard alongwith those Tax Appeals. - Application allowed - Delay condoned - Decided in favor of revenue. 2018 (8) TMI 758 Additions u/s 40A(3) - payments exceeding ₹ 20,000/- were made in cash to various parties - the amount was shown to be paid to various farmers and even the receipts were also produced. However, the assessee could not furnish / produce those persons / farmers and the assessee explained that it could not produce furnish the names and addresses of the persons to whom cash payment was made - A.O. did not accept the said explanation. However, the A.O., without rejecting the Books of Accounts, made disallowance. - CIT(A) and ITAT deleted the additions. Held that:- it is not in dispute that the assessee is engaged in the business as a Commission Agent for purchase/ sale of food-grain / agricultural produces and is also holding licence issued by the Agricultural Produce Market Committee. In the present case, Rule 6DD(e)(i) shall be applicable and the same is rightly applied by the learned CIT(A) as well as the learned ITAT. It cannot be disputed and it is not disputed that as such, the assessee was engaged in the business of Commission Agent for purchase /sale of food-grain and is also holding licence issued by the Agricultural Produce Market Committee. No substantial question of law arises. - Decided against the revenue. 2018 (8) TMI 757 Transfer pricing - arms length interest rate on loan - loan given to Associated Enterprise - Arms length price on corporate guarantee - Held that:- the assessee considered the markup on the basis of the average spread over LIBOR charged in whole European region. The learned CIT(A) as well as the learned ITAT has also considered the submission on behalf of the Revenue that even the condition prevailing in the country was required to be considered as the same has also been dealt with and considered for which necessary observations are made in para 4.3 itself. - no substantial question of law in this issue. Appeal admitted on the following ground: Whether the Appellate Tribunal has substantially erred in law in deleting the addition of ₹ 3,01,66,650/being Arms length price on corporate guarantee? 2018 (8) TMI 756 Recovery of tax dues - property purchased by the appellant was under attachment - sale deed dated 11.12.2008 - petitioner had no knowledge of such attachment - the petitioner gained knowledge of such attachment subsequently on 29.09.2011 - ultimately, the petitioner received order dated 26.05.2015 declaring the sale of the property as null and void. Held that:- This sale deed is for a consideration and index copy is also issued in connection with this transaction. From the documents it appears that the public notice for executing the sale deed was issued in vernacular news paper on 26.10.2007 and thereafter, search was carried out. The search report dated 01.10.2008 is also on record along with the title clearance certificate of the advocate. All these documents go on to suggest that the property in question was free from all encumbrance having title clear and was available for transaction. The petitioner therefore, being bonafide purchaser for consideration after due diligence can not be made to suffer on account of the tax dues running in the name of the original owner. Section 281 of the Income Tax Act provides for declaring certain transfers to be void. - However, proviso to Section 281 provides that such transfer or charge may not be declared void if such transfer or charge is made for adequate consideration and without notice of pendecny or completion of such proceeding or without the notice of any tax liability or other sum payable by the assessee. Failure to follow procedure under the 2nd Schedule - Held that:- From the affidavit as well as from the additional affidavit the department has not been able to bring on record service of notice under Rule 2 of Schedule 2, only documents on record along with the additional affidavit are the order of attachment of immovable property whereas no notice as contemplated under Rule 2 is found on record. Moreover considering the affidavit filed on behalf of the SubRegistrar, Memnagar3, Ahmedabad City, it is clear that for the first time the order of attachment was given effect to by the SubRegistrar, Memnagar only on 26.06.2015, when the charge was registered in Index II. This obviously is almost six and a half years after sale deed in favour of petitioner. Impugned order is set aside - Decided in favor of petitioner and against the revenue. 2018 (8) TMI 755 Reassessment u/s 147 - nature of transfer of land - assessee claimed as an agriculturist and sold agriculture land and agriculture activity was done on the land at the time of transfer of agricultural land. - It is claimed that, The purchaser has purchased the land for industrial purpose but assessee has not sold the land as industrial plot. - Held that:- The copy of the sale deed dated 24.03.2009 shows that the properties in question have been referred as “industrial plot” for industrial purposes. In the sale deed, it is also mentioned that the plot under sale have been declared as industrial area by Khurja Development Authority as per master plan. Thus, on the date of sale, the land in question was not an agricultural land. The same would qualify to be considered as capital assets u/s 2(14) of the IT Act. The sale deed in question is executed by the assessee and is document produced by the assessee. The assessee is therefore bound by the contents of the registered sale deed. The Agreement to Sale has no relevance to the matter in issue on execution of the registered sale deeds. Since prior to sale of the property in question, it was declared as industrial plot by the competent authority, therefore, it could not assume the character of agriculture land. Additions confirmed - Decided against the assessee. 2018 (8) TMI 754 Revision u/s 263 - Supervisory jurisdiction of CIT - Scope of Explanation 2 inserted below Section 263(1) - an order which is erroneous and prejudicial to the interest of the Revenue - CIT directed the AO to pass a fresh assessment order - CIT observed that, AO has failed to make adequate inquiries in respect of various issues discussed in the show cause notice - Eligibility of deduction u/s 80IC - non inquiry towards quality control and regulatory approval in relation to R&D expenses on which the assessee has claimed weighted deduction. Held that:- The action of the Revisional Commissioner requires to be objectively justifiable and cannot be a mere ipse dixit. The Pr.CIT ought to have made some elementary inquiry himself to unearth alleged error in the order of the AO which caused prejudice to the Revenue. Instead, the Pr.CIT has merely alleged absence of fuller inquiry and non-application of mind without showing any systematic efforts on his part to support the allegations. We are of the firm view that the Pr.CIT was expected to do more in the totality of the facts and context. Thus, it is difficult to agree with the allegation of the Pr.CIT on any of the issues raised in the show cause notice and the revisional Order. The Pr.CIT has drawn support from newly inserted Explanation 2 below Section 263(1) of the Act introduced by Finance Act, 2015 w.e.f. 01.06.2015 for his action. The Explanation being clarificatory would not lead to dilution of the basic requirements of Section 263(1) of the Act. The provisions of Section 263 although appears to be of a very wide amplitude and more particularly after insertion of Explanation 2 but cannot possibly mean that recourse to Section 263 of the Act would be available to the Revisional Authority on each and every inadequacy in the matter of inquiries and verification as perceived by the Revisional Authority. The Revisional action perceived on the pretext of inadequacy of enquiry in a plannery and blanket manner must be desisted from. The powers outlined under s.263 of the Act are extraordinary and drastic in nature and thus cannot be read to hold that an uncontrolled, unguided and uncanalised powers are vested with the competent authority. The powers under s.263 of the Act howsoever sweeping are not blanket nevertheless. The AO cannot be expected to go to the last mile in an enquiry on the issue or indulge in fleeting inquiries. The action of the Revisional Commissioner based on such expectation requires to be struck down. The use of expression ‘which should have been made’ in clause (a) to Explanation 2 to Section 263 of the Act is significant. This impliedly tests the action of AO on the touchstone of reasonableness and rationality in approach. It clearly suggests that context also holds the key in the matter of enquiry. The action of the AO requires to be evaluated contextually. We thus find merit in the plea of the assessee that the Revisional Commissioner is expected show that the view taken by the AO is wholly unsustainable in law before embarking upon exercise of revisionary powers. The revisional powers cannot be exercised for directing a fuller inquiry to merely find out if the earlier view taken is erroneous particularly when a view was already taken after inquiry. If such course of action as interpreted by the Revisional Commissioner in the light of the Explanation 2 is permitted, Revisional Commissioner can possibly find fault with each and every assessment order without himself making any inquiry or verification and without establishing that assessment order is not sustainable in law. The Explanation 2 to Section 263 of the Act do not, in our view, thwart the assessment process in the facts and the context of the case. Consequently, we find that the foundation for exercise of revisional jurisdiction is sorely missing in the present case Revision order set aside and cancelled - Decided in favor of assessee. 2018 (8) TMI 753 Monetary limit for filing of appeal by the revenue before the tribunal - recent instruction No.3/2018 dated 11/07/2018 revising the monetary threshold fixing the tax effect limit of ₹ 20 lacs for the revenue to file appeal before the ITAT - The CBDT also clarifies that this instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunal. The Income Tax Act was amended and Section 268A has been introduced on the Statute book with retrospective effect. Held that:- Considering the above CBDT circular, we found that this appeal of the revenue is not maintainable as the tax effect in this appeal is below ₹ 20 Lakhs. Accordingly, appeal of the revenue is dismissed. - Decided against the revenue. 2018 (8) TMI 752 Additions u/s 68 - introduction of amount to capital - unexplained cash credit - Held that:- the assessee had duly submitted all the relevant documents with supporting evidences before the ld AO in the remand proceedings - ld AO was incorrect in stating that the assessee had not cooperated in the remand proceedings by furnishing the requisite details and evidences - Additions to be deleted - Decided in favor of assessee. Addition towards secured loans and unsecured loans received by the assessee as unexplained cash credit - Held that:- the assessee had duly submitted all the relevant documents with supporting evidences before the ld AO in the remand proceedings - d AO was incorrect in stating that the assessee had not cooperated in the remand proceedings by furnishing the requisite details and evidences. Hence there is no case made out by the revenue for disbelieving the loan taken from bank and PNB Housing Finance Ltd. Regarding unsecured loans - Held that:- Merely because the loan creditors had shown lesser income in their income tax returns , that does not automatically mean that the concerned loan creditors did not have sufficient sources to advance loan to the assessee. The loan advanced to the assessee is duly reflected in their balance sheets. We find that the assessee had duly submitted all the relevant documents with supporting evidences before the ld AO in the remand proceedings - Additions directed to be deleted. Decided in favor of assessee. 2018 (8) TMI 751 Receipt of income u/s 5(2) - Foreign allowances on account of the international assignment received in Nigeria - assessee was an employee in IBM India Private Limited and during the financial year 2012-13 was sent on short term assignment to Nigeria. He had stationed in Nigeria for 311 days during the year under consideration. Accordingly, his residential status for the year under consideration would be Non-Resident. Held that:- CIT(A) had rightly deleted the addition made on account of disallowance of claim of exemption in respect of foreign assignment allowance received by the assessee outside India. - Decided against the revenue. 2018 (8) TMI 750 Reopening of assessment - reason to believe - independent application of mind by the AO - AO has initiated the reassessment proceedings mainly on the basis of information received from the Investigation Wing - allegation of taking accommodation entries from different parties - Held that:- Since the assessment has been reopened on the basis of information received from Investigation Wing and there is no independent application of mind by the Assessing Officer before such reopening, therefore, following the decisions of the Jurisdictional High Court cited (2017 (7) TMI 371 - DELHI HIGH COURT), we hold that such reopening of the assessment is not in accordance with law. - Decided against the revenue. 2018 (8) TMI 749 Monetary limit for filing an appeal by revenue - Restriction on deduction of expenditure u/s 43B - VAT/WCT liability - the customer deducted WCT at the rates applicable and made the net payment to the assessee after the deduction of WCT. The customer deposited the WCT deducted with the State Government on behalf of the assessee and the assessee credited the gross amount of invoice as turnover or sales and debited the amount on account of WCT in the manufacturing / profit & loss account. Held that:- In the instant case, there is no dispute that the liability crystallized during the year under consideration and the payments were made by the customers on behalf of the assessee during the year under consideration. The assessee had already credited the gross amount of invoices as turnover for sales in its profit & loss account and also debited the amount which was deducted by the customers in the manufacturing / profit & loss account. In our opinion, when the liability relating to the business of the assessee was crystallized and paid during the year under consideration then it was an allowable expenditure. - Decided in favor of assessee. 2018 (8) TMI 748 Exemption u/s 11 - educational institution / university - addition of surplus - founder of the trust, treasure of the trust, member of trust are getting personal benefit in the form of salary - Application or use of income or property for the benefit of persons referred to section 13(3) - Held that:- It is apparent that the payment made to these persons clearly attracts the provisions of Sections 13(1) and 13(2) of the Act however, only to the extent of the payment which is found to be excess of what may be reasonably paid for such service. In case no services were rendered then the entire payments to such persons would be treated as the application of income of the trust in violation of the provision of Section 13(1) r.w.s. 13(3) of the Act and therefore, to the extent of the payment the benefit of Section 11 will not be available. Since neither the AO nor the ld. CIT(A) has examined the relevant facts on the point whether all these persons possess the requisite qualification for holding the position as shown by the assessee and further whether they have rendered any services to the trust. - Matter remanded back. 2018 (8) TMI 747 Revision u/s 263 - Doctrine of merger - CIT observed that, AO has not made necessary enquiries/ verification with reference to the purchases - AO has rejected the books of assessee and disallowed 25% of such purchase in the assessment - Held that:- when the addition made by the AO was the subject matter of appeal before the ld. CIT(A) and this issue was pending before the ld. CIT(A) then, the Pr. CIT has not powered to invoke the jurisdiction of U/s 263 of the Act on the same issue. In view of the above facts and circumstances of the case the issue which was the subject matter of appeal before the ld. CIT(A) at the time of issuing the show cause notice then, the initiation of proceedings U/s 263 itself is not valid. - Decided in favor of assessee. 2018 (8) TMI 746 Claim of relief u/s 89 - receipt of arrears in lieu of employer's contribution to the newly implemented 'Defined Contribution Scheme' - He has also relied upon the argument that employer's contribution to an approved superannuation fund in respect of an employee, had become taxable as a 'perquisite' by the insertion of the provision under section 17(2)(vii) w.e.f. 01.04,2010, and since the larger part of the arrears received by him pertained to the years prior to 01.04.2010, the relief under section 89 of the Act should be allowed to him. Held that:- The ld. CIT(A) has correctly held that section 89 does not talk of perquisite, but of, inter alia, salary, whereas the relief claimed by the assessee pertains to ‘perquisite’ and not ‘salary’; that ‘perquisite’ within the meaning of section 17(2)(vii) means contribution in excess of one lac rupees to an approved superannuation fund by the employer in respect of an assessee. However, the following position appears to have escaped the knowledge of the ld. CIT(A). Section 17(1) defines ‘salary’ and ‘perquisite’ separately for the purposes of sections 15 and 16. Section 15 is the charging section qua income from salary, whereas section 16 deals with deduction there-from. Section 17(1)(iv) says that ‘salary’ includes, inter alia, perquisites. Relief u/s 89 is available in respect of salary and so, it is, by virtue of section 17(1) (iv), as a natural corollary thereof, available qua perquisites. Rule 21A of the Rules pertains to, inter alia, salary with respect to which section 89 grants relief. Therefore, the said Rule does pertain to perquisite as well. Rule 21A(1)(a) states that where, inter alia, any portion of the assessee’s salary is received in arrears or in advance, the relief u/s 89 shall be in accordance with the provisions of Rule 21A(2). Section 17(2)(vii) of the Act also treats such a sum as a perquisite. But, to hark back, as per section 17(1)(iv), perquisite is salary and receipt of salary paid in arrears or in advance is entitled to relief under section 89. It is trite that delegated legislation cannot override the provisions of the Act. Moreover, the circular involved herein, is not a circular issued by the CBDT, but an internal circular of GAIL, which is of no consequence over the provisions of the IT Act. Benefit of relief u/s 89 allowed. - Decided in favor of assessee. 2018 (8) TMI 745 Validity of assessment order passed u/s 143(3) r.w.s. 144C - assessment post amalgamation with another company - transfer pricing adjustments - Held that:- the assessment framed by the AO on the non-existent company i.e. Akzo Noble Car Refinishes India Pvt. Ltd. is void ab initio. Accordingly, the same is quashed. - Decided in favor of assessee. 2018 (8) TMI 744 Disallowance u/s 14A r.w.r. 8D - suo moto disallowance made by assessee - Held that:- AO has not at all recorded the satisfaction for rejecting the claim of expenditure suo moto disallowed by assessee in relation to exempt income. Once this is the position, we are of the view that the CIT(A) has rightly deleted the disallowance. - Decided against the revenue. 2018 (8) TMI 743 Transfer pricing - arms length interest rate on loan for loan given to Associated Enterprise. - Held that:- CIT(A) has rightly held, the arm’s length interest rate for a financing transaction in France should take into account only the average French interest spread and not the average European interest spread as admittedly the conditions in entire European financial market are not the same. Determination of arms length price on the corporate guarantee provided by the appellant company to the banks on behalf of Associated Enterprise - Held that:- the issuance of corporate guarantees were in the nature of shareholder activities- as was the uncontroverted claim of the assessee, and, as such, could not be included in the 'provision for services' under the definition of 'international transaction' under section 92B of the Act. We have also held, taking note of the insertion of Explanation to Section 92B of the Act, that the issuance of corporate guarantees is covered by the residuary clause of the definition under section 92B of the Act but since such issuance of corporate guarantees, on the facts of the present case, did not have "bearing on profits, income, losses or assets", it did not constitute an international transaction, under section 92B, in respect of which an arm's length price adjustment can be made. Decided against the revenue. 2018 (8) TMI 731 Additions u/s 69A - Undisclosed income - failure to record transaction in bank accounts in the books of account - Additions u/s 68 towards bogus gifts received from parents - Held that:- only the combined peak credit of all the 8 bank accounts can be brought to tax in this case. As already stated, the assessee had submitted the statement showing the combined peak credit of all the bank accounts. As it is a matter of computation, we are of the view that this has to be verified. - Decided in favor of assessee. Additions on account of gift received - Held that:- The donors in this case happen to be the father and mother of the assessee. All necessary details were filed in this refund. Both the parents are income-tax assessees. Under these circumstances, in our view, no addition can be made in the hands of the assessee. If the donors could not prove their capacity, addition should have been considered in their hands but not in the hands of the assessee. - Decided in favor of assessee. 2018 (8) TMI 730 Accrual of income in India u/s 5(2) - Foreign allowances on account of the international assignment - assessee was an employee in IBM India Private Limited and during the financial year 2012-13 was sent on short term assignment to Switzerland. - Held that:- The appellant was non-resident during the year under consideration and allowances were received by him in Netherlands. The employer wrongly deducted TDS, the appellant had claimed refund on it. The Indian income has been considered by the appellant as taxable but the allowances paid outside the India are not taxable u/s 5(2) of the Act in the case of non-resident. The case law relied upon by the learned CIT(A) are squarely applicable in the case of the assessee, therefore, we confirm the order of the learned CIT(A). CITA had rightly deleted the addition made on account of disallowance of claim of exemption in respect of foreign assignment allowance received by the assessee outside India - Decided against the revenue. Benami Property 2018 (8) TMI 740 Reliefs of declaration and injunction - who is the owner of the properties - Section 3(2) of the Benami Transactions (Prohibition) Act, 1988 - Held that:- The trial court has committed a grave and fundamental error in rejecting the suit plaint under Order VII Rule 11 CPC by relying upon the provision of Section 4 and repealed provision of Section 3(2) of the Benami Transactions (Prohibition) Act. When the impugned judgment was passed on 19.12.2016, what was, and is now applicable is the Prohibition of Benami Property Transactions Act, 1988 which became applicable w.e.f 1.11.2016. Since the suit has been held to be barred at the threshold by applying Order VII Rule 11 CPC, and the plaint has been rejected by applying the repealed provision of Section 3(2) of the Act which was no longer applicable, and by ignoring the provision of Section 2(9)(A)(b) Exception (iii) which was applicable, the impugned judgment is hence illegal and is set aside. Whether or not the appellant/plaintiff/husband will or will not have the benefit of Section 2(9)(A)(b) Exception (iii) is a matter of fact which requires trial and such a suit cannot be rejected at the threshold by applying Order VII Rule 11 CPC. Appeal allowed - decided in favor of appellant. Corporate Laws 2018 (8) TMI 742 Levy of penalty for violation of SEBI laws - Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (‘PFUTP Regulations, 2003’ for short). - Held that:- The misleading corporate announcements are not in dispute and are found to be violative of the relevant regulations as upheld by this Tribunal. Though, thereafter, Jayesh Shah appeared before the AO and submitted that he would provide details to show that he was not a promoter neither did he provide any details, nor has he appealed against the order which is impugned in these appeals. Such a long period of filing before the stock exchange by a listed company cannot be an oversight or mistake but what is more interesting about the filing is that in some of the filing (for the quarter ending February 31, 2004) these three names i.e. Jayesh Shah, Tushar Shah and Parag Shah were shown both in the promoter and non-promoter category. We do not consider that this is an inadvertent omission or error rather we hold that these are clever steps taken by the company and the promoters, including the appellants herein to deliberately mislead the public. In fact, if the appellants could produce documents relating to how they happened to hold the admitted 40 lakh shares of PCL each that could have been to their advantage. The very fact that they are unwilling to produce any documents relating to the same is sufficient to prove that the appellants are not forthright in their stand. Given the admitted fact that none of the appellants in the matter of PCL, including the appellants herein, has provided details of acquisition cost etc to SEBI, the finding in the impugned order that ₹ 24 lakh profit has been made cannot be faulted. Similarly, as against the maximum of ₹ 25 crore each imposable under Section 15HA of SEBI Act the penalty imposed is only ₹ 72 lakh each which cannot be faulted. Service Tax 2018 (8) TMI 736 Commercial or Industrial Construction Service - activity of laying “underground optical fiber cables” for telecom companies like Reliance Communication, Vodafone Essar, BSNL and IDEA Cellular - Circular No 123 / 5/ 2010-TRU dated 24th May 2010 - Held that:- The activities undertaken by the respondent to be akin to those mentioned at Sl No 2 & 3 in the table in the said circular. In respect of the said Sl No 2 & 3 it has been clarified that “ Not a taxable service under any clause of sub-section (105) of section 65 of the Finance Act, 1994”. Since it has been clarified by the Board that these services do not fall in the category of any taxable service defined by subsection 105 of Section 65 to the Finance Act, 1994, Commissioner (Appeal) has held accordingly. Revenue is not challenging the reliance placed by the Commissioner (Appeal) on the said circular, but it is challenging the order of Commissioner (Appeal) on the ground that the same has traveled beyond the scope of show cause notice as the issue was in respect of classification of services and admissibility of abatement under N/N. 1/ 2006-ST. - If some activity has been clarified to be not taxable, then revenue cannot take a stand that activity would fall under any taxable category, because of the reason that show cause notice raised dispute of classification. Revenue has in their appeal not even challenged the applicability of the said circular in the present case. It cannot be agreed with the findings of the adjudicating authority that the “activity of laying optical fiber cable” is different from the “activity of laying electric cable”. Appeal dismissed - decided against Revenue. 2018 (8) TMI 735 Benefit of abatement - GTA Services - reverse charge mechanism - Revenue entertained a view that inasmuch as the GTA service provider has not endorsed the consignment notes to the effect that such credit has not been available by them, the appellant is not entitled to the abatement of 75% - Held that:- An identical matter was the subject matter of the Hon’ble Gujrat High Court in the case of Commissioner of Service Tax, Ahmedabad V/s Cadila Pharmaceuticals Ltd. [2013 (1) TMI 353 - GUJARAT HIGH COURT], where it was held that Such procedure prescribed by the Board cannot be said to be mandatory and the same cannot be adopted for denying substantive right especially when it is not the case of the Revenue that credit has been availed by the transporter. In the present case also, it is not the Revenue’s stand that the conditions of the notification does not stand fulfilled otherwise. Nowhere, it stands contented by the Revenue that the transporter have availed the credit. Appeal allowed - decided in favor of appellant. Central Excise 2018 (8) TMI 734 Benefit of N/N. 12/2012-CE dated 17th March, 2012 - exemption claimed on the ground that they being a new unit, escaped attention to the N/N. 12/2012-CE dated 17th March, 2012 extending complete exemption for the medicaments biochemic system not bearing a brand-name - exemption denied by the Department on the ground that the appellants are registered since November, 2013 under Central Excise Registration. Whether a lighted lamp shown on the bio-medicament of the appellants with Bhargava Phytolab mentioned there along, amounts to a brand-name or not and as such, as to whether the appellant shall be entitled to absolute exemption under N/N. 12/2012? Held that:- It becomes clear that anything when used in relation to a product for the purpose of indicating a connection between the product and the person using such name, irrespective it is registered or not and irrespective of any indication or not of the identity of that person, the same shall be the brand-name. The purpose appears to be that if the manufacturer manufactures medicines, which carries its own name then such manufacturer is liable to pay duty. It is an apparent and admitted fact herein that appellant is manufacturing the homeopathic medicines. The said medicines are sold only under the generic names. No manufacturer of homeopathic medicines is selling any generic Homeopathic medicine with any brand-name. These are the generic names endorsed with the name of the company which helps the buyer to establish connection between the medicine and its manufacturer - Bhargava Phytolab alongwith sign of lighted lamp marked on the product of the appellant amounts to the product having a brand-name. Appellant is not entitled to N/N. 12/2012 dated 17th March, 2012 - appeal dismissed - decided against appellant. 2018 (8) TMI 733 Reversal of Cenvat Credit while opting for SSI exemption - demand of credit attributable to inputs, semi finished goods and finished goods lying in stock on the date of opting for the exemption under N/N. 8/2003-CE dated 01.03.2003 - Rule 11(3) of Cenvat Credit Rules, 2004 - Held that:- The assessee is require to reverse the cenvat credit lying in their cenvat credit account on the date of opting for exemption on the inputs, semi finished goods and finished goods lying in stock on the date of opting for exemption. But the said provision does not provide that an assessee is required to pay the amount of cenvat credit in cash, if, no balance is lying in cenvat credit account - The provision of Rule 11(3) of the Rules are only the purpose that if assessee is opting for exemption, in that case assessee is required to reverse the cenvat credit on inputs, semi finished goods and finished goods lying in stock on the date of opting for exemption. It has also been provided that if exemption is absolute, in that case balance in cenvat credit after reversal, shall lapse, so provisions of Rule 11(3) are only transitional provision. As there is no balance in cenvat credit account, in that circumstances, the appellant are not required to pay cenvat credit in cash for inputs, semi finished goods and finished goods lying in stock as on 01.04.2012 - Appeal allowed - decided in favor of appellant. 2018 (8) TMI 732 Valuation - inclusion of freight and insurance in the assessable value for the manufactured goods delivered at the buyers premises - place of removal taken as buyer's place - Held that:- This issue is no more res-integra and covered by the judgment of Hon’ble Supreme Court in the case of Commissioner of Customs & Central Excise, Nagpur vs. Ispat Industries Ltd. [2015 (10) TMI 613 - SUPREME COURT], where it was held that The actual cost of transportation from the place of removal up to the place of delivery of excisable goods is excluded from the computation of excise duty provided it is charged to the buyer in addition to the price of goods and shown separately in the invoices for such goods. Interestingly, despite the substituted Section 4 not providing for a depot or other premises as a place of removal, Rule 7 deals with the normal transaction value of goods transferred to a depot or other premises which is said to be at or about the same time or the time nearest to the time of removal of goods under assessment. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2018 (8) TMI 770 Cancellation of registration of the respondent–dealer - demand of security from the dealer - Whether in the facts and circumstances of the case, the Hon’ble Tribunal was right in law in directing the respondent authorities to restore the registration number of respondent? - Held that:- The learned Tribunal is justified in observing that the first appellate authority in Appeals against the order cancelling the registration had no authority to direct the dealer to furnish the security. Reliance placed upon Sub Section (4) of Section 73 of the Gujarat VAT Act, 2003 by the learned Assistant Government Pleader is absolutely misconceived - Sub Section (4) of Section 73 of the Gujarat VAT Act shall be applicable in a case where the Appeal before the first appellate authority was against the order of assessment. The power to furnish the security by the dealer in a case of cancellation of the registration would be with the registering authority as per Section 28 of the Gujarat Value Added Tax Act, 2003. Restoration of registration - reduction of quantum of penalty per default - Held that:- The same cannot be said to be question of law as on facts the learned Tribunal found and observed that it was the case on behalf of the dealer that he had already filed all the returns and the tax and interest has been paid - Having been satisfied with the explanation given by the dealer, when such an order is passed, the same cannot be said to be erroneous. Appeal dismissed - decided against appellant. Indian Laws 2018 (8) TMI 769 Revisional jurisdiction of the court of Sessions - whether the petitioner having availed of the remedy of revision should be allowed to take recourse to Section 482 Cr. PC as a substitute for virtually initiating a second revisional challenge or scrutiny which is clearly barred under Section 397(3) Cr. PC.? Held that:- A perusal of the criminal complaint in which the impugned order was passed by the Magistrate, which has been upheld by the court of Sessions in revision, would show that it is admitted case of the petitioner that he had come in contact with the private respondents herein, they being connected to the company described as M/s. DPA Finance Pvt. Ltd. engaged in the business of providing loans and further that he had executed certain documents to avail of certain loan facility though, as per his case, upon being induced to do so. The Magistrate was not satisfied with the prayer for direction to the police for investigation under Section 156(3) Cr. PC holding that the evidence is available and that the complainant was in a position to adduce the same - This court finds no special case made out for this court to exercise the extraordinary jurisdiction under Section 482 Cr. PC in the matter at hand. There is no miscarriage of justice or illegality in the approach adopted by the two courts below. Petition dismissed. 2018 (8) TMI 741 Security interest in agricultural land - Validity of proceedings under the SARFAESI Act, 2002 - applicability of act to agricultural land - Held that:- The expression ‘security interest’, both before and after the amendment, excludes what is specified in Section 31. Clause (i) of Section 31 stipulates that the provisions of the Act will not be applicable to any security interest created in agricultural land. The statutory dictionary in Section 2 does not contain a definition of the expression “agricultural land”. Whether a particular piece of land is agricultural in nature is a question of fact. The classification of land in the revenue records as agricultural is not dispositive or conclusive of the question whether the SARFAESI Act does or does not apply. Whether a parcel of land is agricultural must be deduced as a matter of fact from the nature of the land, the use to which it was being put on the date of the creation of the security interest and the purpose for which it was set apart. In the absence of a specific finding, it would be appropriate and proper to set aside the judgment of the High Court and to remit the proceedings for being considered afresh - matter restored. 2018 (8) TMI 739 Suspending the execution of sentence - Section 138 of the Negotiable Instruments Act, 1881 - Held that:- Hon’ble Supreme Court in case titled as Stanny Felix Pinto v. Jangid Builders Pvt. Ltd., [2001 (1) TMI 878 - SUPREME COURT OF INDIA] held that a pre condition for suspending the execution of sentence, of imprisonment imposed upon the convict, it being not imperative for the Court, to, direct the convict to deposit the entire fine amount/compensation amount, yet imposition, qua depositing of, some reasonable per centum thereof, solitarily being sufficient, to, enable the Court, while excising its jurisdiction, to suspend the execution of sentence of imprisonment imposed upon the convict, to hence make an apposite order qua its execution being suspended. In aftermath, subject to deposit of 10% of the fine amount within four weeks from today, if not already deposited, and subject to the petitioner’s furnishing within four weeks, from today, personal and surety bonds in the sum of ₹ 50,000/- each to the satisfaction of the learned trial Court, and also with an undertaking therein to (a) appear in the Court as and when called upon to do so (b) and in case the instant Revision is dismissed, the petitioner shall surrender before the learned trial Court for receiving the sentence, thereupon the operation/execution of the sentence recorded on 16.11.2017 by the learned Judicial Magistrate, Ist Class, Court No.1, Solan, District Solan, H.P., in criminal case No. 138/3 of 2014. Application disposed off. 2018 (8) TMI 738 Refund of two Fixed deposits made with Interest - total denial of the receipt of ₹ 30 lakhs in cash from the respondent by Bank. Whether the suit filed by the respondent/plaintiff is barred by the law of limitation? - Held that:- This Court does not want to go into this question for the first time at the stage of appeal. It is true that the question of limitation can be gone into by a Court, even without the same being raised as an issue, where on a bare reading of the plaint, this Court finds that the claim is barred by limitation. In this case limitation was not taken as a defense in the written statement and was not made as an issue before the learned Single Judge. What is the effect of the Statement of Accounts filed by the appellant Bank under the Bankers' Books Evidence Act, 1891? - Held that:- In the instant case, the presumption that can be drawn by this Court in relation to the facts of this case is that the respondent has tried to take advantage of the availability of two original fixed deposit receipts for ₹ 20 lakhs and ₹ 10 lakhs that was not collected from him by mistake by the Officers of the appellant Bank at the time of consolidating the fixed deposit. The conduct of the appellant in waiting for 5 years and thereafter trying to take advantage of these original fixed deposit receipts, can be clearly seen in the facts and circumstances of this case. Whether the appellant Bank has discharged the onus by disproving the claim made by the respondent and whether the respondent on the onus being shifted has established the claim? - Held that:- Even if the fixed deposit receipt marked as Exs.P-1 and P-2 is taken to be a negotiable instrument and presumption under Section 118 of the Negotiable Instruments Act, is to be drawn against the appellant Bank, the appellant Bank is entitled to rebut the presumption by means of preponderance of probabilities and for the said purpose, evidence adduced on behalf of the plaintiff and the materials on record and also the circumstances upon which the defendant relies up can be taken into consideration for the purpose of rebutting the presumption. Whether the judgment and decree of the learned Single Judge deserves to be interfered with in this appeal? - Held that:- The learned Single Judge has drawn an adverse inference against the appellant Bank for not examining Mr.Sivasubramanian Ex.D-3 speaks for itself and there is no requirement for Mr.Sivasubramanian to come and explain about the entries made in the books of accounts and DW-1 himself was competent to explain the same. In fact, this Court is drawing an adverse inference against the respondent for not producing the books of accounts or the income tax returns in order to prove that he paid ₹ 30 lakhs by way of cash towards the fixed deposit - We are not in agreement with the findings of the learned Single Judge while allowing the suit filed by the respondent - the judgment and decree of the learned Single Judge set aside. Appeal allowed. 2018 (8) TMI 737 Dishonor of Cheque - Section 138 of Negotiable Instrument Act - rebutting of presumption - Held that:- In Rangappa v. Sri Mohan [2010 (5) TMI 391 - SUPREME COURT OF INDIA] it is held by Hon’ble Supreme Court that “it is a settled position that when an accused has to rebut the presumption under Section 39, the standard of proof for doing so is that of ‘preponderance of probabilities’. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own”. The petitioner accused has presented those facts, i.e., the defence of the petitioner-accused. These facts must be produced before the Trial court then Trial Court will consider all the facts produced by the petitioner accused - Application dismissed.
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