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TMI Tax Updates - e-Newsletter August 7, 2019 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise Indian Laws Highlights / Catch Notes GST: Input tax credit - impact of post purchase discount - can avail the ITC of the full GST charged on the undiscounted supply invoice of goods/ services by their suppliers if the GST paid by them for the said goods/ service is not reversed or reimbursed/ re-credited etc to them in any manner by the supplier or on his behalf, after the credit has been availed - no proportionate reversal Visit to Get Source GST: Classification of goods - Produced under license of FSSAI (Biogut Capsule, Zinc Ascorbate Syrup, Lactoin Drop) - in the light of the current Regulations laid down by FSSAI, It is clear that products under the Drugs and Cosmetics Act will not fall under those categories regulated by FSSAI and vice versa - the products in question are classifiable under HSN 2106, and taxable under Sl.No. 23 Schedule III Visit to Get Source Income Tax: Stay of demand - since allowability of deduction u/s 80P is yet to be rendered by the Appellate Authority and registered Co-operative societies functioning with remarkable capital assets hence there will be no difficulty for realising the liabilities, if the ultimate decision goes against the appellants - direct the Appellate Authority for an early disposal of the appeals and till then to grant an absolute stay Visit to Get Source Income Tax: Rectification of mistake u/s 254 - dismissal of Revenue’s appeal for low tax effect - Tribunal failed to note that para 10(c) of CBDT Circular which state that Revenue would contest appeals in respect of orders which were the result of the Department’s acceptance of Revenue audit objections, even if the tax effect in such appeal is lower than the prescribed limit - mistake apparent on record Visit to Get Source Income Tax: Non consideration of Compounding application - court earlier directed to consider the same - the demand notices which are issued without reference to judgment of this court cannot survive and accordingly set aside - no coercive proceedings against the petitioner and shall be deferred til the compounding applications are duly considered and disposed of Visit to Get Source Income Tax: Addition on account of income tax on perquisite while computing book profit u/s 115JB - non-monetary perquisites provided to employees forms part of Employee Benefit cost and akin to FBT since they are certainly not below the line items since the same are expressively disallowed u/s 40(a)(v) and the same do not constitute Income Tax for the assessee in terms of Explanation-2 - hence no disallowance Visit to Get Source Income Tax: Penalty u/s 271(1)(c) - addition of deemed dividend u/s 2(22)(e) - the explanation of the transaction being commercial in nature for purchase of property - the explanation did not save it from the rigors of 2(22)(e), and therefore if the same was found false, it could not be said that the assessee had malafidely not returned the deemed income to tax - no penalty Visit to Get Source Income Tax: Disallowance of service tax written off - the assessee could not utilized the input tax credit on service tax paid for rent and at the end of year such amount was charged to the Profit & Loss Account - rental expenses gross of service tax is allowable as deduction u/s 37(1) hence write off allowable Visit to Get Source Income Tax: Deduction u/s. 54 - construction of house on land taken on lease - assessee is owner of the superstructure constructed by utilizing the capital gain and this is clear from clause-10 of the lease deed by which the land over which the construction has been put up was given on lease to the Assessee - deduction is allowable Visit to Get Source Income Tax: Exemption u/s 54F - assessee has sold certain property and sale proceeds received, has invested in construction of the plot belonging to her husband - since Section 54F is being a beneficial provision, assessee is entitled for deduction Visit to Get Source Income Tax: Addition u/s 69B on account of difference in stock statement given to the Bank - the stock statement tally with the stock statement submitted to the bank at the end of the FY, hence the assessee rightly contended that the stock statement submitted on 28.02.2014 prior to close of the FY was on estimate basis and not on actual basis - even no enquiries have been done by the AO with regard to discrepancy in the stock - no addition Visit to Get Source Income Tax: Revision u/s 263 - dropping of penalty u/s 271(1)(c) - neither the assessment order nor the show cause notice in this case did specify the charges leveled, whether it is for concealment of income or for furnishing inaccurate particulars of income - Since the penalty proceedings initiated is void, it would not serve any purpose to uphold the order of the CIT u/s 263 and the same is quashed Visit to Get Source Income Tax: Validity of search u/s 132 - place of search - the search conducted in the premises in which the assessee may not be carrying on the business would not nullify the search - ITAT was wrong in allowing appeal on the ground of search having been conducted in the premises not belonging to the assessee which is contrary to the tenor and language of Section 132 Visit to Get Source Income Tax: Power of tribunal to remand - exemption u/s 11 - remitting the matters to the CIT (A) for no good reason leads to unnecessary delays and cause prejudice to the revenue if the Appellate Tribunal is in a position to decide the appeal on its own merits having regard to the evidence on record - such remand order is not sustainable in law Visit to Get Source Customs: CFS Operator - Unloading and loading of goods at approved places only - There is no finding that there was a breach of provision of Section 33 of the Act. Already the appellant has suffered the punishment in the order for more than 40 days. It stands idle with huge infrastructure - orders of prohibition and penalty vacated. Visit to Get Source Customs: Penalty for Removal of goods from bonded premises without following proper procedure - Department has produced any evidence to prove that the goods have been clandestinely removed by the appellants from the bonded warehouse - the goods had been warehoused and undisputedly used for the manufacture of export goods, panalty is also not sustainable Visit to Get Source Customs: Extension of the warehousing period - 100% EOU - the warehousing period of capital goods gets extended automatically till the date of expiry of warehousing license u/s 58 of the Customs Act Visit to Get Source Customs: Inspection of import - direction given to open the container, weigh the same and video graph the contents in the container in the presence of the petitioner Visit to Get Source Corporate Law: Disqualification of erstwhile Director - Since the petitioner had resigned from the Board of Directors prior to 01.11.2014, he cannot be held to have been disqualified under Section 164(2)(a) of the Companies Act, 2013 Visit to Get Source Corporate Law: Compounding of default - Tribunal has the power to compound the offence as brought forth in this application. In relation to the provision above it is seen that the defaulter has made good the default - default compounded. Visit to Get Source Indian Laws: Dishonor of Cheque - insufficiency of funds - the presumption u/s 139 comes into play - The accused could not rebut the presumption under Section 139 of the Act. It follows that the complainant has been able to prove that the accused committed an offence punishable u/s 138 Visit to Get Source Service Tax: Scope of the contract - collection of service tax from the parties by enforcing bank guarantee - Since this is purely a contractual dispute and requires interpretation of the terms of the contract, we leave it open for the parties to resolve the issue of payability before the appropriate forum. Visit to Get Source Service Tax: Classification of service - the appellants are selling goods through tender and NOT through auctions. The Auctioneer’s service does not cover the service of tender Visit to Get Source Service Tax: Manpower Supply services - deputation/ secondment of employees from a group company - neither during the pre-negative list nor post negative list, Service Tax could not be levied on deputation of employees from a group company in Japan to the Appellant in India. Visit to Get Source Central Excise: Demand for interest on delayed payment of duty - appellant is liable to pay the interest on the differential duty paid through supplementary invoices. Visit to Get Source Central Excise: Classification of goods - Machineries and Bulkers - semi-trailor type of motor vehicles are not eligible for exemption under N/N. 6/2006-CE - Demand confirmed invoking extended period of limitation. Visit to Get Source Articles THE BANNING OF UNREGULATED DEPOSIT SCHEMES ACT, 2019 – AN OVERVIEW Features of E-Way bill website Notifications Customs 56/2019 - dated 5-8-2019 - Cus (NT) Exchange Rates Notification No.56/2019-Custom (NT) dated 05.08.2019 35/2019-Customs (N.T./CAA/DRI) - dated 5-8-2019 - Cus (NT) Appointment of CAA by Pr. DGRI 34/2019-Customs (N.T./CAA/DRI) - dated 5-8-2019 - Cus (NT) Appointment of CAA by Pr. DGRI 33/2019-Customs (N.T./CAA/DRI) - dated 5-8-2019 - Cus (NT) Appointment of CAA by Pr. DGRI GST - States CCW/74/GST/2015 - dated 1-7-2019 - Andhra Pradesh SGST Specifies that the return in FORM GSTR-3B of the said rules for each of the months from July, 2019 to September, 2019 shall be furnished electronically through the common portal, on or before the twentieth day of the month succeeding such month. 25972-FIN-CT1-TAX-0043/2017/FIN. S.R.O. No.266/2019 - dated 31-7-2019 - Orissa SGST Seeks to amend Notification No. 19873-FIN-CT1-TAX-0022/2017/FIN., dated the 29th June, 2017 25968-FIN-CT1-TAX-0043/2017/FIN. S.R.O. No.265/2019 - dated 31-7-2019 - Orissa SGST Seeks to amend Notification No. 19829-FIN-CT1-TAX- 0022/2017/FIN., dated the 29th June, 2017 25813-FIN-CT1-TAX-0043/2017/FIN. S.R.O.No.260/2019 - dated 30-7-2019 - Orissa SGST Seeks to amend Notification No. 16536-FIN-CT1-TAX-0043/2017/FIN., dated the 24th April, 2019 Insolvency and Bankruptcy G.S.R. 553 (E) - dated 2-8-2019 - IBC Insolvency and Bankruptcy Board of India (Medical Facility to Chairperson and Whole -time Members) Scheme Rules, 2019. Circulars / Instructions / Orders Income Tax - F.No.225/194/2019/ITA-II - dated 5-8-2019 Processing of returns with refund claims under section 143(1) of the Income-tax Act, 1961 beyond the prescribed time limits in non-scrutiny cases GST - States - CT/GST-15/Pt-I/2017/69 - dated 26-7-2019 Corrigendum to Circular No. 57/2019-GST (CT/GST-15/Pt-I/2017/26 dated 1st July, 2019). GST - States - Circular No. 28/2019/GST - dated 24-7-2019 Clarification on various doubts related to treatment of secondary or post-sales discounts under GST. GST - States - Circular No. 27/2019/GST - dated 24-7-2019 Processing of refund applications in FORM GST RFD-01A submitted by taxpayers wrongly mapped on the common portal. GST - States - Circular No. 26/2019/GST - dated 24-7-2019 Clarification regarding determination of place of supply in certain cases. GST - States - Circular No. 25/2019/GST - dated 24-7-2019 Clarification regarding applicability of GST on additional / penal interest GST - States - Circular No. 24/2019 - dated 16-5-2019 GST exemption on the upfront amount payable in installments for long term lease of plots, under G.O.Ms.No.588, Revenue (Commercial Taxes-II), 12th December, 2017 {corresponding Notification 12/2017 - Central Tax (rate) dated 28.06.2017}. GST - States - Circular No. 22/2019 - dated 16-5-2019 Clarification regarding filing of application for revocation of cancellation of registration in terms of Removal of Difficulty Order (ROD) No.09/2019 issued in G.O. Ms.No. 303, Rev(CT-II) dt. 16.05.2019 {corresponding ROD order number 05/2019-Central Tax dated 23.04.2019). DGFT - 24/2015-2020 - dated 5-8-2019 Revision of SION H-68, H-301 & H-302 of Export Products- Double Decorative/Single side Laminates with or without Barrier Paper - M/s Marino Industries Ltd., M/s Merino Panel Product Ltd. & M/s Greenlam Industries Ltd., Kolkata Customs - PUBLIC NOTICE No. 27/2019 - dated 2-8-2019 Clarifications regarding Refunds of IGST paid on import in case of specialized agencies Customs - PUBLIC NOTICE No. 26/2019 - dated 2-8-2019 Clarification regarding applicability of Notification 45/2017- customs dated 30.06.2017 on goods which were exported earlier for exhibition purpose/consignment basis Customs - Facility No. 12/2019 - dated 29-7-2019 Launch of Indian Customs EDI System- (ICES 1.5) for Imports and Exports, at INKGJ1 (Karimganj Steamerghat & Ferry Station LCS), INMREB (Moreh LCS), INMHGB (Muhurighat LCS), INAGTB (Agartala LCS) and INSMPB (Srimantapur LCS) Customs - PUBLIC NOTICE No. 66/2019 - dated 24-7-2019 Entity Registration and Approval under New Sea Cargo Manifest and Transhipment Regulations (SCMTR), 2018 through ICEGATE portal Customs - PUBLIC NOTICE NO. 12/2019 - dated 24-7-2019 Empanelment of Chartered Engineers for Examination /Valuation of Second hand machinery / goods, etc Customs - TRADE NOTICE: 09/2019/CCP/JMR - dated 19-7-2019 ICES Advisory 15 2019- Partially Crediting of Re-ex ort Bonds in ICES—M Customs - PUBLIC NOTICE NO. 17/2019-cus - dated 17-7-2019 Implementation of PGA eSANCHIT — Paperless Processing under SWIFT-Uploading Of Licenses/Permits/Certificates/Other Authorizations ILPCOsl by PGAs News Competition Commission of India imposes penalty on SAAR IT Resources Private Limited and others Auction for Sale (Re-Issue) of ‘6.17% GS 2021’, Auction for Sale (Re-Issue) of ‘7.27% GS 2026’, Auction for Sale (Re-issue) of ‘7.57% GS 2033’, Auction for Sale (Re-Issue) of ‘7.62%GS 2039’, and Auction for Sale (Re-Issue) of ‘7.63% GS 2059’ Case Laws: GST 2019 (8) TMI 308 Classification of goods - Biogut Capsule - Zinc Ascorbate Syrup - Lactoin Drop - whether the products for which classification has been sought fall under the category of dietary/health supplement or they are drugs and medicines as claimed by the Appellant? - HELD THAT:- The Appellant is a license holder under FSSAI and as per the Appellant's submission and observations of WBAAR, the products have stickers pasted on packaging proclaiming Health/Dietary Supplements , Health Drinks and Not for Medicinal Use . This is as per the Regulations set by FSSAI. It is noted that Food for Special Medical Purpose and Food for Special Dietary Use are intended to be used only under medical advice [Regulations 3 8]. The general requirement [Regulation 2(d)(ii)]of the Regulations specifies that the articles of food sold in capsules, tablets, syrups, hard or soft or vegetarian, shall comply with the general monograph and quality requirements specified for them in Indian Pharmacopoeia and also, the quantity of nutrients added to the articles of food shall not exceed the recommended daily allowance as specified by the Indian Council of Medical Research and in cases such standards are not specified the standards laid down by international food standards body, namely, Codex Alimentarius Commission, shall apply. So being prescribed by medical practitioners for a limited period use or sold by pharmacists are not sufficient parameters for the products in question to be classified us medicaments as per HSN classification in the light of the current Regulations laid down by FSSAI, It is clear that products under the Drugs and Cosmetics Act, 1940, will not fall under those categories regulated by FSSAI and vice versa. These two categories, namely the products under the Drugs and Cosmetics Act. 1940, and these regulated by FSSAI are mutually exclusive. In fact the products in question are not eligible drug license under the Drugs and Cosmetics Act, 1940 as these are mainly prebiotic and probiotic supplements, oral rehydration formulate and tonic. The products in question are classifiable under HSN 2106, and taxable under Sl.No. 23 Schedule III or Notification 1/2017-C.T (Rate) dated 28-06-2017 under the Central (Goods and Services ax Act, and Notification No. 1125-FT dated 28-06-2017 under the West Bengal Goods and Services Tax Act, 2017, as amended vide Notification No. 41/2017 (Rate) dated 14-11-2017 under the Central Goods and Services Tax Act, 2017 and Notification No. 2019-FT dated 14-11-2017 under the West Bengal Goods and Services Tax Act, 2017. Appeal dismissed - decided against appellant. 2019 (8) TMI 307 Input tax credit -allowability of discounts on invoice value raised by the suppliers for determination of credit - credit to be allowed on full GST charged on the undiscounted supply invoice or a proportionate reversal of the same is required to be done - post purchase discount given by the supplier to them through the C2FO platform - HELD THAT:- A conjoint reading of Sections 15 and 16 leads to the conclusion that a registered person is entitled to take full credit of the input tax charged on the supply of goods or services or both. The provisions of the second proviso to section 16(2) would come into play only where the buyer/ recipient fails to pay the supplier of goods the amount towards the value of the supply. This is not the situation here. The buyer has discharged the GST charged on the undiscounted transaction value at the time of supply. In the circumstances, if the GST charged and paid is not reversed/ refunded in whole or part subsequently in any manner or circumstances, the credit availed on the same need not be reversed. Like in the case of rule 3 of Cenvat Credit Rules, 2004 which refers to credit of duty paid by the inputs manufacturer and not duty payable , section 16 of the Act refers to the credit of input tax charged and not chargeable . The appellant M/S MRF Ltd can avail the Input Tax Credit of the full GST charged on the undiscounted supply invoice of goods/ services by their suppliers. A proportionate reversal of the credit is not required to be done by them in case of a post purchase discount given by the supplier to them through the C2FO platform, in the circumstances mentioned by them and discussed above. This is subject to their fulfilling the other conditions stipulated by law and that the GST paid by them for the said goods/ service is not reversed or reimbursed/ re-credited etc to them in any manner by the supplier or on his behalf, after the credit has been availed by M/s. MRP. 2019 (8) TMI 281 Classification of goods - rate of GST - sales/supply of Wet Wipes - classified under Entry 235(CTH 9619) of Schedule II of the CGST Act 2017 or under the heading 3004? - HELD THAT:- Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses and put up in measured doses or in form of tablets, ampoules, transdermal applications are classifiable under this CTH. They are meant to be taken into or absorbed the body through any of the above defined means In the case at hand, from the submissions of the applicant and the proforma invoice submitted by them it is seen that the product manufactured by them, Wet Wipes is a non-woven fabric impregnated with antibacterial (Chlorhexidine glutamate), moisturizing, cooling ingredients to help patients prophylactically and therapeutically. From the composition of ingredients submitted by the applicant, it is seen that the major ingredient used in the manufacture of wet wipes is Chlorhexidine Gluconate which is basically a disinfectant consists of about 2%. The wipes are used as a Sanitary towel to wipe the private parts of both (Male Female) who are bed ridden or old aged people. These ingredients are not meant to be absorbed to taken into the body but for wiping the skin. The ingredients are not 'medicaments under CTH 3004 or are the 'wet Wipes' which are non woven textiles impregnated with these ingredients. In the case at hand it is seen that in the products of the applicant, from the submissions that the Non-woven fabric is the medium used and the composition of the wipes are Chlorhexidine Gluconate, Glycerin, Menthol, Allantoin which undergoes a process in agitator and through Wetting and Folding machine made as 'Wet Wipes' and packed using the Packing machine and Carton Packing is done. They also perform the same function of antibacterial, moist rising, cooling effects to prevent infections, bed sores, rashes etc. though they may be meant for adults - it is beyond doubt that the product 'Wet Wipes' used to wipe the bed ridden and made of non-woven fabric impregnated with cosmetics and antibacterial agents is appropriately classifiable under CTH 3307 90 90 viz. other products (wadding, felt and nonwovens, impregnated, coated or covered with perfume or cosmetics). Hence, the product manufactured by the applicant is to be classified under Chapter Heading 3307 90 90. Applicable rate of tax - HELD THAT:- The product in hand is classified under CTH 33079090 and as per Sl No 29 of Schedule IV of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 and as per Sl No 29 of Schedule IV of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017, the applicable rate is 14% CGST and SGST upto 14.11.2017. This was amended by Notification No. 41/2017-C.T. (Rate) dated 14.11.2017 and G.O. (Ms) No.157, dated 14.1 1.2017, so that the rate applicable is 9% CGST and 9% SGST under Schedule Ill. 2019 (8) TMI 280 Extension of time period for filing of GST Tran- 1 - transitional credit - transition to GST regime - HELD THAT:- The respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner. They will also ensure that the petitioner is allowed to pay its taxes on the regular electronic system also which is being maintained for use of the credit likely to be considered for the petitioner. 2019 (8) TMI 279 Waiver/reduction of the conditions of bail - applicant was actively involved in evasion of GST to the tune of more than ₹ 94 Crores in violation of provisions of evasion of Central Goods and Service Tax, Act 2017 of Rules made thereunder - HELD THAT:- This Court is of the opinion that no interference is required by this Court in the impugned orders passed by the Courts below. Petition dismissed. Income Tax 2019 (8) TMI 306 Disallowance of depreciation on non-compete fees - HELD THAT:- Rights acquired by the assessee under the said agreement not only give enduring benefit, protected the assessee s business against competence, that too from a person who had closely worked with the assessee in the same business. The expression or any other business or commercial rights of similar nature used in Explanation 3 to subsection 32(1)(ii) is wide enough to include the present situation Disallowance u/s.40(a)(ia) for non deduction of tax on commission payable to foreign agents - HELD THAT:- As admitted facts are that the non-resident agents appointed by the assessee for procuring export orders do not have permanent establishment in India. Their agents are situated outside India. Their activities as commission agents are being carried out outside India. The Tribunal therefore correctly held that there was no liability on the assessee to deduct tax at source. Merely because a portion of the sale to the overseas purchasers took place in India, would not change situation vis a vis the commission agents. Relying on assessee own case [ 2018 (10) TMI 615 - GUJARAT HIGH COURT] . - Revenue appeal dismissed. 2019 (8) TMI 305 Undisclosed gold and diamond sold - Voluntary disclosure of gold and diamond jewellery u/s 65(1) of VDIS 1997 accompanied by a valuation report in respect of declared items, reflecting item-wise weight with other particulars - tribunal held that assessee had failed to establish that sold diamonds are VDIS declared items on account of number of pieces of diamond, their size, cut and colour of the sold diamonds was not verifiable - tribunal differ from decisions rendred on similar facts - HELD THAT:- The assessee in the instant case being similarly placed and gold having been smelted through Balaji Refinery and having sold the same to M/s.Mahalakshmi Jewellers, the chain of link stood established with regard to the gold/jewellery declared by the assessee under VDIS 1997 on 05.11.1997 being the same items which had been got smelted by them through goldsmith M/s. Shree Balaji Refinery and then sold to M/s.Mahalakshmi Jewellery and M/s.Sheetal Exports. As such, tribunal was not justified in not applying the ratio of its own orders rendered in several matters which have been referred to herein above. In fact, tribunal in its various decisions rendered in respect of the assessees who are similarly placed, who also contended that gold declared by them under VDIS had been smelted through Balaji Refinery and sold thereafter to Mahalakshmi Jewellers had been accepted. Tribunal committed a serious error in not accepting the sale invoices Annexures- F and J submitted by the assessee on the ground that it is not the same items which had been shown and declared by them in the VDIS declaration and the valuation report annexed to such declaration. It further committed a serious error in not applying the ratio of its earlier decision to the facts on hand which were not only similar but also identical as it relates to the same Refinery who had smelted the gold declared by the assessee under VDIS-1997. Hence, we answer the substantial questions of law in favour of the assessee and against the Revenue. 2019 (8) TMI 304 Power of tribunal to remand - exemption u/s 11 - AO held the receipts of admission fees as the revenue receipts instead of capital - ex-parte order of CIT(A) - HELD THAT:- If an order is passed by the CIT (A) on merits despite the fact that the assessee failed to appear before the CIT (A) at the time of the final hearing of the appeal, the order passed by the CIT(A) cannot be termed as ex-parte. An order having been passed by the CIT(A) after service of notices on the assessee, there is no question of failure of natural justice. It cannot be said that the assessee was not given an opportunity of hearing. The order of the CIT(A) is more than clear. On more than one occasion, the assessee remained absent before the CIT (A), and in such circumstances, the CIT (A) had no option but to look into the records and decide the appeal on its own merit. CIT(A) took into consideration three relevant aspects. First, it took into consideration the fact that the assessee had collected fees from the students at the time of their admission and the amount was credited to the balance-sheet treating it as corpus donation, whereas the said amount was not reflected in the income and expenditure account. Secondly, it took notice of the fact that the activities were commercial in nature, and thirdly, and more importantly, it took into consideration the fact that the registration granted u/s 12AA came to be cancelled vide order passed by the DIT (E), Ahmedabad dated 16th March, 2011. With such evidence on record, the Appellate Tribunal could have decided the appeal on merits after hearing the assessee. There was no good reason for the Appellate Tribunal to remit the matter to the CIT (A) so as to give an opportunity of hearing to the assessee. As noticed in many matters that the Appellate Tribunal has been remitting the matters to the CIT (A) for no good reason, more particularly, when the Appellate Tribunal is able to decide the matter on its own merits. There is one another valid reason for us to say that ordinarily the matter should not be remitted by the Appellate Tribunal to the CIT(A) if the Appellate Tribunal is in a position to decide the appeal on its own merits having regard to the evidence on record. Such remand orders lead to unnecessary delays and cause prejudice to the revenue. - Decided in favour of the revenue 2019 (8) TMI 303 Application filed u/s 197 - requesting the said authority to permit the petitioner assessee not to deduct tax at source or to deduct tax at lower rates - authority has prescribed different rates of deduction of tax at source ranging from 1% to 1.5% - HELD THAT:- We noticed that alongwith additional affidavit, the petitioner has produced an order sheet dated 15/5/2019, in which the Dy CIT (TDS) has recorded that there was a proposal for issuing certificate at the rate of 0.4% in relation to sections 194C, 194J, 194H and 194IB of the Act. Dy CIT (TDS) passed the impugned order, which, as can be clearly seen, was influenced by the order dated 31st May, 2019 passed under section 201 of the Income Tax Act, 1961 against the Petitioner. The said order may not be the sole basis, was undoubtedly an important element which went into the decision making process. Therefore, now that the existence of order dated 31st May, 2019 does not survive persuant to decision of this court [ 2019 (8) TMI 111 - BOMBAY HIGH COURT] , the Dy CIT (TDS) should undertake fresh exercise and decide the rate of income tax to be deducted while making payment to the Petitioner under different provisions mentioned above. For such purpose, the impugned order is set aside. The Dy CIT (TDS) shall pass fresh order within four weeks from today in view of the changed circumstances. However, till this is done, the petitioner cannot be left to be verse of then when the impugned order was in operation. Therefore, till fresh order is passed, the Petitioner would continue to be governed by the prescription made in the impugned order. This is purely by way of interim arrangement to protect the interest of the Petitioner as well as the Revenue. 2019 (8) TMI 302 Addition on account of alleged suppression of the value of closing stock - Whether said addition is legally sustainable in view of the constantly followed and accepted method of accounting to value the closing stock in the past - HELD THAT:- question No.1 is covered against the assessee by the decision in M/s Kishan Chand Co. Oil Inds. Ltd.' [ 2011 (12) TMI 243 - PUNJAB HARYANA HIGH COURT] Accrual of interest on FDRs in the bank - when the assessee has been consistently following the cash system of accounting for the receipt of interest - HELD THAT:- Tribunal noticed that the assessee had been using the approval system as a practice but had resorted to the cash system randomly and came to the conclusion that this could not be permissible. We have no hesitation in accepting this exposition of law and consequently uphold the findings of the Tribunal and decide the reference accordingly, with the caveat made by the counsel regarding payment of tax in subsequent years and its exigibility to adjustment. 2019 (8) TMI 301 Assessment u/s 153A - validity of search conducted u/s 132 - search conducted in the premises in which the assessee may not be carrying on the business - HELD THAT:- The language or expression of sub-section (1) of Section 132 is clear and unambiguous. The location of the premises is in relation to the satisfaction reached by the authorities mentioned therein and the authorised officer can search any place mentioned in the warrant including any other place where he suspects that the books of accounts belonging to the assessee are kept and as such, the mere change of address of the assessee even being in the know how of the income tax department by itself would not vitiate or invalidate the search conducted u/s 132. In the instant case, the search conducted is in respect of the premises where the business of the firm carried earlier and continued by Sri.K.M.Vishwanath, who no doubt had retired from the partnership of the assessee-firm and it is in this premises where the books of accounts relating to the assessee-firm has been found and seized, which by itself proves the fact that the said premises was used by the assessee even as on the date of search conducted. Hon ble Delhi High Court in MDLR RESORTS PVT. LTD. AND OTHERS VERSUS CIT [ 2013 (12) TMI 1116 - DELHI HIGH COURT] has held that address being different would not vitiate the search and a person can also operate or keep books of accounts, jewellary etc., at different places and not necessarily the registered office or where the business is conducted. Hence, the search conducted in the premises in which the assessee may not be carrying on the business would not nullify the search. However, if the search is conducted in a premises other than what is reflected in the authorisation, then, the consequences would be different. In the instant case, search has been conducted in the premises, the address of which is reflected in the authorisation and undisputedly, occupied by Mr.K.M.Vishwanath, who was the erstwhile partner of the assessee till he retired on 31.07.2009. Despite notice issued u/s 153A, the said Sri.K.M.Vishwanath had not filed his return of income and had replied to the said notice contending that he is no longer a partner by enclosing the deed of retirement and deed of admission of other two partners. In this background, AO has concluded the proceedings u/s 144 which had been affirmed by the CIT (Appeals) and erroneously on the ground of search having been conducted in the premises not belonging to the assessee, appeal came to be allowed which is contrary to the tenor and language of Section 132. Hence, we answer the substantial questions of law in favour of the revenue and against the assessee. 2019 (8) TMI 300 Stay of demand - interim stay were granted in all the cases by insisting upon payment of 20% of the disputed amount, pending disposal of the appeals - as contended that the insistence for payment of 20% of the disputed amount of tax, for granting stay pending disposal of the appeal, was improper and becomes unreasonable - Deductions allowable u/s 80P admissibility - HELD THAT:- Ultimate finding with respect to the question of allowability of deductions under Section 80P is yet to be rendered by the Appellate Authority. Therefore a uniform insistence for payment of 20% of the amount, pending disposal of the appeals, cannot be held as justified. Further, we take note of the fact that all the appellants are registered Co-operative societies functioning with remarkable capital assets. Therefore it cannot be said that there will be any difficulty for realising the liabilities, if the ultimate decision goes against the appellants. Hence we are inclined to direct the Appellate Authority for an early disposal of the appeals and till then to grant an absolute stay without insisting upon payment of any portion of any disputed amounts. Under the above mentioned circumstances, all the above appeals are hereby allowed. The impugned judgments of the Single Judge are hereby set aside. Ext-P4 interim order impugned in all these cases are modified to the extent of granting absolute stay with respect to realisation of the disputed amount of tax in the respective appeals, pending disposal of such appeals. The Commissioner of Income Tax (Appeals) is hereby directed to dispose of the appeals itself, at the earliest possible, after affording opportunity to the appellants. 2019 (8) TMI 299 Stay of demand - Court directed the petitioner to deposit 20% of the demand within two weeks from 27.5.2019 - HELD THAT:- Having regard to the substantial compliance with the condition, I am satisfied that the writ petition could be disposed of by slightly modifying the condition imposed in Ext.P4. The orders in Exts.P1 and P2 are stayed since the petitioner has already deposited 40% of the demand and, the petitioner is directed to execute simple bond for balance amount within three weeks from today. The Tribunal/second respondent considers and disposes of the appeal within eight weeks from the date of receipt of a copy of this judgment. 2019 (8) TMI 298 Compounding application - demand notices are issued without an order being passed in terms of Ext.P1 judgment - HELD THAT:- A statement has been placed on record on behalf of the respondents in both the writ petitions stating that before Ext.P1 judgment was brought to the notice of the authority, action had already been initiated by issuing the demand notices. It is stated that in the light of the directions contained in Ext.P1, the issue will be reconsidered with notice to the petitioner and after hearing the petitioner also. Having considered the contentions advanced, the demand notices which are issued without reference to Ext.P1 judgment cannot survive. Ext.P2 are accordingly set aside. The respondents shall consider the applications preferred by the petitioner for compounding, subject to maintainability as directed in Ext.P1 within a period of three months from the date of receipt of a copy of this judgment. Needless to say, as directed in Ext.P1, coercive proceedings against the petitioner shall be deferred until the compounding applications are duly considered and disposed of. The petitioner shall produce a copy of this judgment along with a copy of the writ petitions before the first respondent for compliance. 2019 (8) TMI 297 Taxability of wavier of loan(capital) u/s 28 (iv) - profits and gains of business or profession - HELD THAT:- In our considered opinion, the decision of the Hon ble Supreme Court relied upon by the Ld. AO and upheld by the ld. CIT(A) in the case of T.V. Sundaram Iyenger 1996 (9) TMI 1 - SUPREME COURT] is misplaced and has been wrongly applied. In our considered view that applicability of section 28(iv) of the Act has been discussed by the Hon ble Supreme Court in the case of Mahindra Mahindra Mills Ltd. [ 1996 (9) TMI 1 - SUPREME COURT] had held Section 28(iv) would apply only when a benefit or perquisite is received in kind and has no application where benefit is received in cash or money. Considering the totality of facts in the light of ratio laid down by the Hon ble Supreme Court in the case of Mahindra Mahindra Mills Ltd. (supra), we direct the AO to delete the impugned disallowance from the hands of the all the appellants. 2019 (8) TMI 296 Penalty u/s 271(1)(c) - defective notice - Show cause notice has not struck off the irrelevant portion as to whether the charge against the assessee is concealing particulars of income or furnishing of inaccurate particulars of income - HELD THAT:- As observed that the show cause notices issued in the case on hand issued under section 274 r.w.s. 271(1)(c) of the Act dated 26.11.2010 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income . The impugned show cause notice under section 274 r.w.s. 271(1)(c) of the Act shows the AO has not struck out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the case on hand cannot be sustained and the same is directed to be cancelled. See M/S SSA S EMERALD MEADOWS [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] - Decided in favour of assessee. 2019 (8) TMI 295 Characterization of expenses - Expenditure incurred on designing of logo - revenue or capital expenditure - HELD THAT:- From a perusal of the bill, it is evident that the break up includes normal / routine business expenditure in the form of office stationeries, name boards, T-Shirt design, power point presentation, etc. - we do not find that these expenses incurred by the assessee have resulted in the creation of an asset or augmentation of any profit making asset of enduring nature / benefit. The aforesaid expenditure has also to be seen from the context of business necessity or business expediency also. In our view, in the light of the facts and circumstances of the case on hand, as discussed above, since the aforesaid expenditure may be regarded as an integral part of the profit earning process and not for an acquisition of new asset or right of permanent character, the possession of which is a condition for carrying on business, the said expenditure is to be regarded as revenue expenditure. Consequently, grounds 3 to 5 of assessee s appeal are allowed. Charging of interest under section 234D - HELD THAT:- Assessee denies himself liable to be charged interest u/s 234D of the Act. The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon ble Apex Court in the case of Anjum H. Ghaswala [2001 (10) TMI 4 - Supreme Court ] and we, therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234D of the Act. The AO is, however, directed to recompute the interest chargeable u/s 234D of the Act, if any, while giving effect of this order. 2019 (8) TMI 294 Rectification of mistake u/s 254 - dismissal of Revenue s appeal for tax effect below the prescribed monetary limit - HELD THAT:- It is a matter of record that Revenue s appeal for Assessment Year 2009-10 in the case on hand was dismissed vide the Tribunal s order in ITA No.280/Bang/2017 dated 03.08.2018 by relying on the CBDT Circular No.3/2018; that the tax effect involved in the appeal was below the monetary limits prescribed therein. While doing so, the Tribunal was dealing with a cluster of 25 cases comprising 28 appeals; and inadvertently, while disposing off the 28 appeals, failed to note that as per para 10(c) of the said CBDT Circular (supra), Revenue would contest appeals in respect of orders which were the result of the Department s acceptance of Revenue audit objections, even if the tax effect in such appeal is lower than the prescribed limit; as is the position in the case on hand. In these factual circumstances, as laid out above, we are of the view that an error has inadvertently crept into the Tribunal s order dated 03.08.2018 for Assessment Year 2009-10 in the case on hand, which is a mistake apparent from the face of the record before us and is rectifiable under section 254(2) of the Act. the very basis of the dismissal of Revenue s appeal for tax effect below the prescribed monetary limit in the impugned order of the Tribunal was the CBDT Circular No.3/2018; which was placed before the Tribunal in the course of proceedings. Having considered the above CBDT Circular (supra), partly, an error has inadvertently crept into the impugned order of the Tribunal for not having taken cognizance of para 10(c) thereof which, in our view, is rectifiable under section 254(2) of the Act as it is a mistake apparent from the record 2019 (8) TMI 293 Revision u/s 263 - dropping of penalty u/s 271(1)(c) - CIT issued SCNby pointing out the dropping of the penalty proceedings was in a routine manner and was not in accordance with the law - HELD THAT:- The assessment orders for both the assessment years do not mention the ground under which the penalty proceedings were initiated, viz., for concealing of particulars of income or furnishing inaccurate particulars of income. The relevant portion in the show cause notices issued u/s 274 on 30.03.2016 for both the assessment years were struck off before issuance. Hence neither the assessment order nor the show cause notice in this case did specify the charges leveled, whether it is for concealment of income or for furnishing inaccurate particulars of income for which the assessee has to show cause. The omission to mention the specific charges in the show cause notice would make the whole proceedings void. The above view taken by the Cochin Bench of the Tribunal in the case of M/s.Rajadhani Hotels Tourist Enterprises Pvt. Ltd. v. ACIT [ 2019 (8) TMI 190 - ITAT COCHIN] by following the judgment of the Hon ble Apex Court in the case of CIT Anr. V. M/s.SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER]. Since the penalty proceedings initiated is void, it would not serve any purpose to uphold the order of the CIT passed u/s 263 and the same is quashed. - Decided in favour of assessee. 2019 (8) TMI 292 Addition u/s 69B on account of difference in stock statement given to the Bank - The AO called for information from Manager PNB u/s 133(6) to furnish details regarding the stock/assets hypothecated for obtaining loans/CC limit - HELD THAT:- The assessee submitted that as on the closing of the financial year the closing stock was of ₹ 1,88,17,001/- which is also reported to the bank on the same date which is also certified by the bank (PB-11). It would, therefore, show that the stock statement tally with the stock statement submitted to the bank at the end of the financial year on 31.03.2014. The assessee, therefore, rightly contended that the stock statement submitted on 28.02.2014 prior to close of the financial year was on estimate basis and not on actual basis. The assessee also rightly contended that since assessee deals in controlled items like fertilizer and chemicals, therefore, it is subject to physical verification by Agriculture Department. No enquiries have been done by the AO from the concerned Agriculture Department with regard to discrepancy in the stock. It may also be noted here that in the preceding AY 2013-14 the similar addition was deleted by the Ld. CIT(A) following the judgment of the Hon ble Punjab Haryana High Court in the case of Sidhu Rice General Mills [ 2004 (7) TMI 12 - PUNJAB AND HARYANA HIGH COURT] . Therefore,CIT(A) should not have taken a contrary view in assessment year under appeal. The decisions relied upon by Ld. Counsel for assessee squarely applied to the facts and circumstances of the case. The issue is, therefore, covered by these decisions in favour of the assessee. It is well settled law that Revenue authorities are bound to follow the rule of consistency. Thus the addition is wholly unjustified - Decided in favour of assessee. Addition on account of low household withdrawal - HELD THAT:- It is not in dispute that family of the assessee consists of self and his wife only. The assessee resides in his own house and has sufficient ancestral agricultural land. The assessee has agricultural income also. The AO has not brought any evidence on record to justify the estimate of household expenses in a sum of ₹ 20,000/- per month. The AO did not doubt the explanation given by the assessee that household expenses withdrawn by the assessee and agricultural income are sufficient to maintain the family. It may also be noted here that in preceding AY 2013-14 Ld. CIT(A) considered the same issue in the appellate order dated 25.04.2017 and on identical facts deleted the addition on account of enhancing the household expenses. CIT(A) noted in the appellate order that during assessment year under appeal i.e. 2013-14 assessee had withdrawn a sum of ₹ 1,12,010/-. The further addition made by the AO was deleted as against household expenses of AY 2013-14, there is a substantial increase in household expenses withdrawn by assessee in assessment year under appeal. CIT(A), therefore, should not have taken a contrary view in assessment year under appeal. The addition is made merely on estimate basis. Therefore, same is liable to be deleted. - Decided in favour of assessee. 2019 (8) TMI 291 Disallowance u/s 14A read with Rule 8D - whether any disallowance can be made under section 14A of the Act read with Rule 8D of the Rules in the year when no income is earned, which is exempt from tax? - HELD THAT:- We find that the issue now stands covered by latest decision of Hon'ble Supreme Court in CIT Vs. Chettinad Logistics (P.) Ltd. [ 2018 (7) TMI 567 - SC ORDER] that in the absence of exempt income, no disallowance is to be made under section 14A of the Act. In view thereof, we find merit in the plea of assessee and we delete the disallowance made under section 14A of the Act read with Rule 8D of the Rules. The grounds of appeal raised by assessee are thus, allowed. Eligibility of claim of deduction under section 80IA(4) on Miscellaneous receipts - HELD THAT:- Bank interest received - where the assessee had made the aforesaid bank deposits for tender deposits and security deposits and for guarantees were inextricably linked to the business of assessee and other deposits could not be said to be investment of surplus funds, but on the other hand, was a pre-condition for obtaining bank guarantee / security deposits for running day-to-day activities of business of infrastructure development and hence, were eligible for claim of deduction under section 80IA(4) of the Act. Sales Tax Refund - Under the scheme of Maharashtra VAT Act, VAT / sales tax is paid by assessee or deducted by the contractee from RA bills and the same is debited to Profit and Loss Account. However, excess amounts, if any, after calculating the net liability is credited to Profit and Loss Account; where sales tax / VAT has direct link to the business activity of infrastructure development, the receipts were eligible business receipts in the hands of assessee and entitled to the claim of 80IA(4) deduction. Accordingly, we hold so. VAT reimbursement - Authorized Representative for the assessee explained that as per contract agreement in respect of work of Jalochi and Khadkpurna, VAT liability was payable by the contractee over and above contract price. Such VAT paid was debited to Profit and Loss Account. However, the same was reimbursed by the Department as per contract agreement and as such VAT reimbursement was part of contract price irrespective of the fact that there was no impact on profits derived from business of assessee. Thus, we find merit in the claim of assessee that there is no merit in excluding the said receipts which were in fact reimbursement of amount deducted / paid, on which the assessee is entitled to claim 80IA(4) deduction. Other deduction from sub-contractors and material deduction - These were in the form of recoveries from the sub-contractors on account of material difference or other accounts i.e. diesel, transport charges, rent for machinery, etc. and were in the nature of reimbursement of expenditure, which was already debited to the books of account. Once the said recoveries are made from the sub-contractors, which were against expenditure claimed by assessee, were part of its carrying on of business activity, then the recoveries were to be treated as income from business of infrastructure development and there is no merit in taxing them separately. The assessee is entitled to the aforesaid deduction claimed under section 80IA(4) Other income - assessee claims that it represents Miscellaneous receipts from the Department for Bodhegaon maintenance bill. In view of the nature of receipts being relatable to the business activity carried on by the assessee, there is merit in the claim of assessee of deduction under section 80IA(4) of the Act and the same cannot be denied to the assessee on the aforesaid receipts. Accordingly, we hold so and direct the Assessing Officer to allow the claim of assessee except on the amounts of ₹ 1,60,121/- and ₹ 1,17,218/-. Thus, to that extent appeal of Revenue is allowed. The grounds of appeal raised by Revenue are thus, partly allowed. 2019 (8) TMI 290 Exemption u/sec. 54F - assessee invested in the plot belonging to her husband - Investment made by spouse - assessee has sold certain property and sale proceeds received, has invested in construction of the plot belonging to her husband - AO denied the claim of the assessee on the ground that she has not constructed the house within the stipulated period of 03 years and investment made by her is not in her name and is in the name of her husband - denied the claim of the assessee only on the ground that sale proceeds ought to have been invested in her name instead of her husband name - HELD THAT:- In this case, we find that the assessee has sold certain land and received sale proceeds and invested in construction of a house in plot belonging to the husband. It is a fact that the assessee and her husband are living together and also a fact that sale proceeds received by the assessee are used for construction of the house. AO denied the claim of the assessee only on the ground that sale proceeds ought to have been invested in her name instead of her husband name. By considering the facts and circumstances of the case, the benefit u/sec. 54F cannot be denied to the assessee simply because sale proceeds invested in a plot belonging to her husband. Section 54F is being a beneficial provision. As per the judgments of various High Courts and the tribunals where investment is made by the spouse, benefit has been allowed by construing the definition of assessee liberally. In the present case, the sale proceeds has been invested in the plot belonging to the assessee s husband, therefore, the case law relied on by the ld. CIT(A) has no application to the facts of the present case. Keeping in view of the facts and circumstances of the case and also by following the judgments of M/S. B. SURENDRA CHOWDARY, [ 2017 (8) TMI 1563 - ANDHRA PRADESH HIGH COURT] , SHRI KAMAL WAHAL [ 2013 (1) TMI 401 - DELHI HIGH COURT] and V. NATARAJAN. [ 2006 (2) TMI 136 - MADRAS HIGH COURT] and also N. RAM KUMAR [ 2012 (10) TMI 145 - ITAT HYDERABAD] we are of the opinion that the assessee is entitled for deduction u/sec. 54F of the Act. Thus, these appeals filed by the assessee are allowed. 2019 (8) TMI 289 Deduction u/s. 54 - denied deduction on the ground that since the Assessee was not owner of the land, the condition laid down in Sec.54 for claiming deduction was not satisfied - assessee purchased only tenancy rights and therefore was not entitled to deduction u/s.54 - HELD THAT:- As rightly contended by the learned counsel for the Assessee, when exemption is claimed under the second limb of Sec.54, i.e., utilization of the capital gain in construction of one residential house in India, all that the Assessee has to do is to invest the capital gain in construction of a residential house. It is immaterial whether the Assessee has ownership of the land over which the new asset i.e., one residential house in India, is constructed. Such a condition does not emanate from a plain reading of Sec.54 . In our view the AO fell into an error in reading such a condition and refusing the claim of deduction u/s.54. As rightly submitted deduction in the case of Yogesh Sunderlal Shah [ 2012 (9) TMI 769 - ITAT MUMBAI] was claimed by the Assessee u/s.54 on the first limb i.e., purchase of a new asset i.e., a residential house and not on the basis of the second limb of Sec.54 viz., construction of new asset i.e., one residential house in India. Since the words used in Sec.54 of the Act in so far as it relates to the first limb are purchase of a new asset, there was scope for examining regarding ownership of the new asset purchased, but such conditions cannot be extended to a case of deduction u/s.54 claimed on the basis of the second limb viz., construction of new asset i.e., one residential house in India. The requirement of Sec.54 in the second limb is that capital gain should be used in construction of residential house and nothing more. Assessee in the present case is the owner of the superstructure constructed by utilizing the capital gain and this is clear from clause-10 of the lease deed by which the land over which the construction has been put up was given on lease to the Assessee. Therefore, the deduction u/s.54 of the Act ought to be allowed to the Assessee as claimed by the Assessee. - Decided in favour of assessee. 2019 (8) TMI 288 Disallowance u/s. 14A as per rule 8D - HELD THAT:- So far as certain facts for more than one assessment year are definitely required to be adjudicated in a uniform manner. We are saying this for the reason that though the factual assertions of the assessee having substantial own funds which are more than the investments that yielded interest free income, we are conscious of the facts that out of total investments of ₹ 132.24 crore, nearly ₹ 2.5 crore have been made during the year whereas the balance are brought forward from earlier years. So far as the earlier years are concerned, fact as to whether or not the expenses are attributable to the income earned is still open before the Assessing Officer, since such matters have been set aside to his file for adjudication afresh right from assessment years 2004-05 to 2006-07. Therefore, in the fitness of things, we deem it fit and proper to set aside the issue to the file of the AO to re-compute the disallowance out of the interest expenditure in terms of section 14A of the Act if the facts and law so warrants. Even the issue raised by the assessee with regard to absence or otherwise of the requisite satisfaction of section 14A of the Act is concerned, the same shall also be restored to the AO to be dealt afresh as per law. Disallowance of general and administrative expenses by applying Rule 8D(2)(iii) - Since it is found to be inconsistency with the position of law the disallowance is not maintainable. The learned CIT(A) has rightly set aside the same. Since the disallowance of interest u/s. 14A has been set aside to the AO as done by the CIT(A) for adjudication afresh as per law. Accordingly, the ground of appeal of the assessee is partly allowed as above and that of the Revenue is dismissed. Disallowance of inventory written off - HELD THAT:- AO disallowed the inventory written off by relying on the decision of CIT vs. Herdilla Chemicals Ltd. [ 2017 (10) TMI 421 - BOMBAY HIGH COURT] . We have further noted that the Hon ble jurisdictional High Court by considering the decision of Herdilla Chemicals Ltd. held that write off claimed is essential on the basis of obsolesces of any particular equipment that claimed as write off, which is essentially on account of deterioration of various material including raw-material over a period of time due to wear and tear and that assessee would be entitled to write off in Profit Loss Account. The assessee s similar claim for A.Y. 2010-11 and 2011-12 has been allowed by First Appellate Authority in order dated 17.11.2016 and 20.03.2017 respectively. Therefore, considering the peculiarity of fact for the year under consideration, we are of the view that the assessee is entitled for inventory written off, however for limited purpose, the issue is restored to the file of AO to verify the fact, if equivalent provision thereof had been made in the books and there is no impact on Profit Loss Account and allow the relief to the assessee in accordance with law. Disallowance on account of non-deduction of TDS - no information was provided by AO in respect of disallowance - HELD THAT:- CIT(A) was not justified in confirming the action of AO, when the assessee has specifically stated that the alleged recipient i.e. Jahangir Homi Bhandara is not known to the assessee. Therefore, considering the fact that the AO neither shared the information/material evidence allegedly received by him nor brought any material to prove that assessee made any payment of expenditure attracting the provisions for disallowance u/s 40A(ia). We direct the AO to delete the disallowance of ₹ 11,78,136/-. In the result, this ground of appeal is allowed. Disallowance of service tax written off - AO and CIT(A) referred it as sales tax - assessee submits that assessee in its books of account, accounted the payment of rent net of service tax - CIT(A) confirmed the action of AO holding that assessee has not routed service tax in Profit Loss Account and hence write off cannot be permitted - HELD THAT:- Assessee before us vehemently submitted that the assessee accounted the amount separately to a separate account instead of accounting the tax as a part of cost of purchase made, being service tax on rent and was to be adjusted against this output tax liability. It was also convinced that during the year, the assessee could not utilized the input tax credit on service tax paid for rent and at the end of year such amount was charged to the Profit Loss Account and it should have been included in the rental income itself. We find force in the submission of ld. AR of the assessee that the said expenses gross of service tax is allowable as deduction u/s 37(1). Thus, by accepting the submission of assessee we allowed the deduction u/s 37(1). In the result, this ground of appeal is allowed. Disallowance of interest on loan to its subsidiary company - HELD THAT:- As relying on assessee own for A.Y. 2006-07 case assessee stated that loans and advances which are under consideration have already been considered by the Tribunal in earlier years and decided the issue in favour of assessee allowing the claim of the assessee. The assessee stated that the issue now stands covered in favour of assessee. On the other hand, the learned Sr. DR fairly conceded that there is reduction in loans and advances what was in earlier years. We find that this issue is squarely covered in favour of assessee and against Revenue by the decision of the Tribunal in assessee s own case. Hence, respectfully following the same we allow the claim of the assessee. The orders of the lower authorities are set aside and this issue of assessee s appeal is allowed. Disallowance of capital advance and depreciation - AO disallowed written off capital advances given to vendors for purchase of enterprises resources planning (ERP) software - HELD THAT:- lower authorities have not given any finding on the explanation furnished by assessee about the submission of assessee that implementation was ERP software was not materialized and was scrapped. The lower authorities simply concluded that the advances paid for ERP software was capital in nature. In our considered view, it is settled legal position that the expenses incurred by assessee on software are revenue in nature. Moreover, the implementation of software was not materialized. Thus, it is purely a business loss and is allowable expenses. So far as disallowance on account of depreciation on accelerated basis of ₹ 19,23,421/- is concerned. Assessee vehemently submitted that accelerated depreciation of ₹ 19,23,421/- was offered to tax by assessee on account of disallowance of entire amount of book depreciation and disallowance by AO resulted in disallowing the accelerated depreciation twice and it should be deleted. We have noted that the lower authority has not examined the clam related to the factual explanation furnished by assessee on depreciation on accelerated basis. Therefore, this part of disallowance is restored to the Assessing Officer to verify the fact as explained by assessee before ld. CIT(A) as well as before us and grant relief to the assessee in accordance with law. Disallowance of prior period expenditure - HELD THAT:- Hon ble Bombay High Court in CIT vs. Nagri Mills Co. Ltd. [ 1957 (9) TMI 30 - BOMBAY HIGH COURT ] while considering the question of law held that actual payment is not necessary for purpose of deduction and it is sufficient if liability to bonus is incurred according to method of accounting upon basis of which profits or gains are computed. Considering the decision of jurisdictional High Court, we are of the view that the assessee is entitled for claiming prior period expenses. However, the lower authority has not examined the expenses. Therefore, we restore this issue to the file of AO to verify fact and expenses and allow the same in the year to which is pertains. In the result, this ground of appeal is allowed for statistical purpose. Provision for contingencies and recoveries for calculation of books profit - HELD THAT:- As we have noted above the assessee is now pressing only provisions for contingencies and provisions of recoveries. For provisions of contingencies, the assessee vehemently submitted that due inadvertence in computing book profit and a wrong figure due to typographical mistake was taken. We have noted that despite bringing the fact in the notice of CIT(A), CIT(A) not examined furnished by assessee. Similarly for provisions of recoveries, the lower authority has not examined the explanation furnished by assessee. Therefore, both the components of this issue are restored to the Assessing Officer to verify the fact as per the contention/explanation furnished by assessee before ld. CIT(A) as well as before the Tribunal and to pass the order afresh. In the result, this ground of appeal is allowed for statistical purpose. Addition u/s 50C - AO invoked the provision of section 50C and increased the sale consideration by 10%, which resulted in difference in the capital gain - HELD THAT:- Before the CIT(A), the assessee furnished detail submission and specifically stated that valuation considered by assessee on transfer of land, is the same as that considered by stamp duty authority. CIT(A) instead of giving any finding over the explanation/submission furnished by assessee confirmed the action of AO. Therefore, considering the submission of the assessee, this ground of appeal is also restored the file of AO to verify the fact, if the assessee adopted same value as considered by stamp duty authority for the purpose of computation of capital gain and pass the order afresh in accordance with law. In this result, this ground of appeal is allowed for statistical purpose. 2019 (8) TMI 287 Disallowance u/s. 14A - HELD THAT:- There is merit in the contentions of Ld. Counsel for the assessee. Accordingly by following the decision rendered by the Hon'ble Bombay High Court in the case of CIT Vs. Godrej Agrovet Ltd [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] we modify the order passed by the Ld. CIT(A) and direct the AO to restrict the disallowance u/s. 14A of the Act to 2% of the dividend income earned by the assessee. Disallowance of expenditure relating to exempt income for the purpose of computing book profits u/s. 115JB - HELD THAT:- In the case of Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] held that the amount disallowed u/s. 14A cannot be imported for the purpose of Section 115JB of the Act, meaning thereby, the AO is required to compute disallowance for the purpose of Clause(f) of Explanation (1) to Section 115JB in an independent manner. AR submitted that the investment held by the assessee had been brought forward from earlier years and most of the investments have been made long back. During the year under consideration, the assessee has earned dividend income and has also sold some of its shares. Thus we notice that there is no much of activity for the purpose of earning exempt income. In order to put this issue at rest, we are of the view that the amount of disallowance computed u/s 14A of the Act, in the facts and circumstances of the case, would meet the requirements of clause (f) of Explanation 1 of sec.115JB of the Act. We make it clear that we have held so only to put this issue at rest for the year under consideration, as it is an old matter. Accordingly direct the AO to adopt the 2% of the dividend income for the purpose of computing disallowance under Clause(f) of Explanation (1) to Section 115JB TP Adjustment - comparable selection of M/s. Escorts Ltd.- HELD THAT:- TPO has rejected M/s. Escorts Ltd., only for the reason that the data was not available for the period under consideration, since M/s. Escorts Ltd., was following different financial year. Since M/s. Escorts Ltd., is a listed company, the quarterly results published by the said company should be available in the public domain and it should be possible to collate the figures relating to the financial year under consideration. In any case this issue has been restored to the file of AO/TPO in the immediately preceding year by the Tribunal. Following the same, we set aside the order passed by the CIT(A) on this issue and restore the same to the file of AO/TPO for examining it afresh. TP adjustment made in respect of royalty payment - Though the TPO made adjustment in respect of royalty payment, no separate addition was made as the assessee itself has disallowed the same u/s. 40(a)(ia) - HELD THAT:- We noticed that Coordinate Bench has restored the identical issue in assessee s own case for the AY. 2004-05 restore this issue to the file of the AO with a direction to verify whether the similar payment of royalty has been accepted in the subsequent years as at arm's length after undertaking the exercise as prescribed in section 92C read with Rule 10B. If it is found that such exercise has been done in the subsequent years, the AO is directed to accept the similar payment of royalty made by the assessee for the year under consideration as at arm's length. However, if it is found that such an exercise has not been done even in the subsequent year, the AO/TPO is directed to do the same in the year under consideration to determine the arm's length price in relation to the royalty paid by the assessee to its associated enterprises. Ground No. 2 of the Revenue's appeal is accordingly treated as allowed for statistical purposes Addition of unutilised cenvat credit - HELD THAT:- Provisions of sec.145A require following of inclusive method of accounting the duties and taxes for the purpose of taxation. The assessee has followed exclusive method, by which the Cenvat was accounted separately without including the same with purchases, sales, stock. Both are recognised methods of accounting. The question of making any addition would arise only if the method employed by the assessee is having any effect on profit. The assessee has demonstrated that the net profit amount does not change, even if the inclusive method of accounting is followed. Hence the impugned addition is not warranted. Accordingly we set aside the order passed by Ld CIT(A) on this issue. However, the computations given by the assessee requires verification. Accordingly we restore this issue to the file of the AO for the limited purpose of examining and satisfying himself with the figures furnished in the reconciliation statement filed by the assessee. In case of variation, the AO may make the addition to the extent of variation. Addition made u/s. 50C - HELD THAT:- Since the submissions made by assessee relate to factual aspects, we are of the view that the same requires verification at the end of the AO, since the DVO has omitted to consider important aspect that the stamp duty valuation is different for Pillaiyar Koil Street and Old Mahabalipuram Road. When question as to whether this difference was not brought to the notice of Stamp valuation authority, since the Stamp valuation authority also appears to have adopted the valuation applicable to Old Mahabalipuram Road, the Ld A.R submitted that the stamp duty was paid by the purchaser and further the purchaser, being a software company, it was getting concession of stamp duty also. Since the assessee is bringing new facts, we are of the view that this issue requires fresh examination at the end of the AO. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of AO for examining the same afresh by duly referring the matter to DVO in order to consider the contentions of assessee in the matter of valuation of the property. After affording adequate opportunity of being heard to assessee, AO made take appropriate decision in accordance with law. Addition u/s 28(iv)/41(1) in respect of waiver of loan - A company named M/s Rajasthan Polymers and Reisins Ltd was amalgamated with the assessee company - HELD THAT:- From the observations made by Ld CIT(A), we notice that the assessee has failed to demonstrate the user of the loans taken from Bank of Baroda, i.e., it was not shown that the loan amount was used for acquiring capital assets. Further it is not clear as to whether the amount so waived was related to principal portion of loan only. If the waived amount was related to interest portion of loan and the said interest had been allowed as deduction in the earlier years, then the provisions of sec.41(1) shall apply. Similarly if the loan taken has been used for trading transactions, then also the provisions of sec.41(1) shall apply. Since the relevant details are not available, in the interest of natural justice, we are of the view that the assessee may be provided with an opportunity to produce the same. Accordingly we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining it afresh in the light of discussions made supra. The assessee is also directed to furnish relevant details to substantiate its contentions. Disallowance u/s 40(a)(ia) - HELD THAT:- As noticed earlier, the assessee had suomotu disallowed the provision for royalty payment, as it did not deduct tax at source. Hence there was no occasion for the AO to examine this issue. Before Ld CIT(A), the assessee contended that the suo-motu disallowance made by it should be deleted, as it has obtained a legal opinion that there is no requirement to make any disallowance u/s40(a)(ia) of the Act. Since the matter was not examined by the AO, the Ld CIT(A) restored this issue to the file of the AO. Since the matter requires examination at the end of the AO, we also restore the same to the file of the AO. 2019 (8) TMI 286 Levy of penalty u/s 271(1)(c) - addition of deemed dividend u/s 2(22)(e) - HELD THAT:- The true nature of the amount was not income, but loan/advance. It was only deemed to be in the nature of dividend on account of fulfillment of conditions specified u/s 2(22)(e). The assessee is an individual who, unlike corporate, is generally not guided and assisted by professionals in tax matters, which, as is evident from the issue before us, are highly complex taxing even receipts which are not in the nature of income. In such circumstances, it cannot be said that having disclosed all particulars of the deemed income, the assessee had intentionally not returned it to tax. The bonafides of the assessee therefore cannot be doubted. The fact that the ITAT held the explanation of the transaction being commercial in nature for purchase of property, as an after thought and sham, makes no difference, since the ITAT also held that the explanation in any case was of no help to the assessee and did not save it from the rigors of section 2(22)(e). The ITAT held that merely because an advance is received in a commercial transaction does not suffice to exempt it from being treated as deemed dividend, unless and until the advance is received in the course of money lending business of the company giving the advance. Therefore the explanation did not save it from the rigors of 2(22)(e), and therefore if the same was found false, it could not be said that the assessee had malafidely not returned the deemed income to tax. We set aside the order of the Ld.CIT(A) and hold that no penalty is exigible in the present case. The penalty so levied is directed to be deleted - Decided in favour of assessee. 2019 (8) TMI 278 Reopening of assessment u/s 147 - accommodation entries dealing - record element of income chargeable to tax having escaped assessment - HELD THAT:- SLP dismissed. 2019 (8) TMI 277 Addition in respect of share capital - denial of natural justice - AO has not made any endeavour to give a copy of the statements purportedly recorded during search u/s. 132(4) or recorded u/s 131 which the AO claims to contain adverse statements against the assessee - HELD THAT:- Though the AO is at liberty to make private enquiries against the assessee, however the material, he collected behind the back of the assessee cannot be used against the assessee without furnishing the same to the assessee and if the material statement is adverse in nature against the assessee then an opportunity to cross-examine the maker of the document or the third person who made the statement has to be given to the assessee as held by the Hon ble Supreme Court in Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] . AO has not made any endeavour to give a copy of the statements purportedly recorded during search u/s. 132(4) of the Act or recorded u/s 131 of the Act which the AO claims to contain adverse statements against the assessee, which action is in gross violation of natural justice for the simple reason that the AO cannot use a material which is adverse against the assessee without confronting him with that to say in other words the AO cannot keep the assessee in dark and draw adverse inference without confronting the assessee with the materials/third parties statement which the AO intends to use against the assessee and an opportunity to cross-examine those third party s must be given to the assessee without which the third partie s statement cannot be relied upon by the AO. No proper opportunity the assessee got before the AO - we are inclined to set aside the order of the Ld. CIT(A) and remand it back to AO with a direction to frame assessment de-novo after hearing the assessee - Appeal of the assessee is allowed for statistical purpose. Customs 2019 (8) TMI 285 Inspection of import - direction to open the container, weigh the same and video graph the contents in the container - HELD THAT:- Petitioner is given liberty to re-submit Ext.P13 along with a copy of this judgment, within three days from today. The respondent considers and disposes of Ext.P13 request within one week from the date of resubmission of Ext.P13 and if inspection to open the container is undertaken, the same shall be in the presence of the petitioner. 2019 (8) TMI 284 Permission for withdrawal of petition - availability of Statutory Appeal u/s 128 of Customs Act, 1962 - HELD THAT:- This writ petition is dismissed as withdrawn - Time spent in the instant writ petition i.e., period from 15.7.2019 (being the date of filing of instant writ petition) to the date on which copy of this order is made available by Registry of this Court shall stand excluded in computing limitation for the said statutory appeal, obviously preserving the rights of writ petitioner to prefer statutory appeal under Section 128 of the said Act. 2019 (8) TMI 283 100% EOU - extension of the warehousing period - renewal of warehousing license under Section 58 of the Customs Act - illegal removal of goods from the warehouse - inability to produce the warehoused goods for verification. Whether the warehousing period of the capital goods gets automatically extended with the renewal of warehousing license under Section 58 of the Customs Act are of separate extension of the capital goods lying in the warehouses has to be obtained? - HELD THAT:- The Tribunal has decided in the case Sun Microsystems India Pvt. Ltd. [ 2007 (12) TMI 117 - CESTAT, BANGALORE ] and HCL Technologies [ 2017 (6) TMI 1133 - CESTAT BANGALORE ] that warehousing period of capital goods gets extended automatically till the date of expiry of warehousing license Whether inability to produce the warehoused goods for verification at the time of visit of officers amounts to removal of the goods from the warehouse? - HELD THAT:- The Bench in the case of WIPRO GE MEDICAL SYSTEMS PVT. LTD. VERSUS COMMR. OF CUS., BANGALORE [ 2009 (7) TMI 704 - CESTAT, BANGALORE ] has held that duty cannot be demanded on the goods just because of the appellants could not show the goods for physical visit of the officers - demand set aside. Appeal allowed - decided in favor of appellant. 2019 (8) TMI 282 100% EOU - extension of warehousing period for various capital goods - It was alleged that the appellants have removed the goods from bonded premises without following proper procedure and without maintaining proper records - HELD THAT:- It is seen that the appellants have obtained extension of warehousing period in respect of 82 bonds and only in respect of 8 bonds, they could not produce the goods for verification. While the goods appear to have been imported during 2002-03, the inspection appears to have been conducted during 2008 i.e. above 5 years later than the import - As submitted by the appellants, we do not find that the Department has produced any evidence to prove that the goods have been clandestinely removed by the appellants from the bonded warehouse. It is also not disputed that the goods have been warehoused after import. Looking into the volume of the capital goods and other goods imported by the appellants under 82 bonds for which they have sought extension, the items which were not produced before the authorities at the time of inspection appear to be very minuscule. As submitted by the appellants the possibility of the items being consumed up during the process are the possibility of the items being misplaced cannot be ruled out. - No penalty Appeal allowed - decided in favor of appellant. 2019 (8) TMI 276 Suspension of CHA License - the export goods were found to be overvalued -order for suspension was passed almost after 2 years from the date of seizure - HELD THAT:- There is no dispute that the goods with reference to which the suspension order was passed was seized on 10.03.2017 and the SCN was issued on 07.09.2017 - If at all the revenue is of view, customs broker should be prohibited from carrying out the work of customs broker, the license should have been suspended immediately after detection of the case by the customs authority whereas in the present case admittedly, the order for suspension was passed almost after 2 years from the date of seizure. The suspension order not valid - appeal allowed - decided in favor of appellant. 2019 (8) TMI 275 Benefit of N/N. 30/2004 as amended - exemption from CVD on imported goods subject to no cenvat credit - import of consignment of the non textured polyester lining cloth - HELD THAT:- The issue is decided in favor of the appellant in the case of COMMISSIONER OF CUSTOMS (PORT) , KOLKATA. VERSUS ENTERPRISE INTERNATIONAL LTD. [2019 (2) TMI 890 - CESTAT KOLKATA] wherein it is held that even after the amendment the benefit of Notification No. 30/2004-CE the benefit is available to the importer of the goods. Appeal allowed - decided in favor of appellant. 2019 (8) TMI 274 CFS Operator - Unloading and loading of goods at approved places only - it was alleged that the appellant did not bring the container within 6 hours as required under the Public Notice No. 70 of 2016 and also did not report to the Assistant Commissioner of CFS whereby the safety of the container was threatened - HELD THAT:- The enquiry report does not discuss any evidence on which the finding in the Report is based. The Hon ble Supreme Court in the case of SHER BAHADUR VERSUS UNION OF INDIA ORS. [ 2002 (8) TMI 842 - SUPREME COURT] held that mere noting in the report would not in principal satisfy the rule of sufficiency of evidence. There is no finding that there was a breach of provision of Section 33 of the Act. Already the appellant has suffered the punishment in the order for more than 40 days. It stands idle with huge infrastructure - also the Adjudicating Authority never disputed the fact that the appellant informed the Competent Authority from time to time about the breakdown of the trailer and the movement of the container. Appeal allowed - decided in favor of appellant. Corporate Laws 2019 (8) TMI 273 Taking over of property - liabilities of the workmen under Section 529A of the Companies Act, 1956 - costs of security provided at the property by the Official Liquidator - HELD THAT:- It is plain that in terms of the proviso to Section 529(1), the security of every secured creditor is deemed to be subject to a pari passu charge in favour of the workman to the extent of the workman s dues. Consequently, the impugned order of the learned Single Judge requiring the Appellant to undertake the liability of workmen s dues cannot be said to be contrary to the law - As far as the obligation of the Appellant to provide security at the site of the property in question is concerned, the proviso to Section 529(2) of the Act is clear in this regard that if the secured creditor proceeds to realise security, it shall be liable to pay his portion of expenses incurred by the liquidator for preservation of security. In the present case, even if one were to consider that the Appellant could not have proceeded to realise the security till it actually got possession of the property in question i.e. from the date it was ordered to be de-sealed by the DRT i.e. 12th October 2017, certainly the obligation to preserve the property thereafter was that of the Appellant. The Appellant will be handed over possession of the property in question by the OL subject to the Appellant - Appeal disposed off. 2019 (8) TMI 272 Disqualification of Director - Resignation of petitioner from the post of Director of the company - resignation on the ground that the said company had not filed a Form-32 and the petitioner had not filed Form DIR-11 with the ROC - HELD THAT:- The essential facts of the case are not disputed. There is no dispute that the petitioner was a Nominee Director and had no equity stake in the Company. There is also no material to doubt the petitioner s claim that he had tendered his resignation and despatched the same by a registered post as well as an e-mail. Since the petitioner had resigned from the Board of Directors prior to 01.11.2014, he cannot be held to have been disqualified under Section 164(2)(a) of the Companies Act, 2013 on account of defaults committed by the said company for a period of three consecutive years commencing from 01.11.2014. This Court is informed that the petitioner s DIN and DSC have been restored - petition allowed. 2019 (8) TMI 271 Compounding of default in compliance with the provisions of Sections 159 and 220 of the Companies Act, 1956 - non-filing of annual return and balance sheet and profit and loss account for the financial year 2013-14 - Applicants have pleaded that the default was committed only due to inadvertent mistake with no mala fide intentions on part of the Applicants and it is not likely to cause any prejudice to either the members of the Applicant Company or any other party. HELD THAT:- The Registrar of Companies has filed a detailed report, a perusal of which shows that prosecution in relation to the offence has been filed and pending before the Hon'ble Tis Hazari Court. That no similar offence has been compounded during the last 3 years. It is further represented that the company has filed the Balance Sheet and Annual Return for the Financial Year ended 31.03.2016. Further, it is also represented by the RoC in the report that no complaint has been received against the Applicant Company and that there is no inspection or investigation proceeding pending against the Applicant Company. Since the offence is said to have been committed under the erstwhile provisions of companies Act, 1956, this Tribunal has the power to compound such like offences attendant with such like punishment as in the present one and even if prosecution is pending before Criminal Court and also taking into consideration the change in law on and from 09.02.2018 to Section 441 (1) as brought forth by companies Amendment Act, 2017 (1 of 2018) this Tribunal has the power to compound the offence as brought forth in this application. In relation to the provision above it is seen that the defaulter has made good the default - This Tribunal is of the view it will be fit and proper to impose the following fine on the applicant company aggregating in all to ₹ 865,600/- for the FY 2013-14. Subject to the remittance of the fine, the offence shall stand compounded - application disposed off. 2019 (8) TMI 270 Direction to allot or transfer such number of shares so as to entitle the Petitioner to maintain her percentage shareholding - HELD THAT:- Although it appears that if the relief was being granted to the Appellant as was directed in the primary Order directing Respondents to allot all the three rights issue shares, the consequential relief should also have been considered and granted by the NCLT. However, Appellant preferred no Appeal and now the position happens to be that after the primary Order was passed by NCLT, the Respondents preferred Appeal and even that has been decided. The Tribunal can rectify any mistake apparent from the record, if the mistake comes or is brought to its Notice by the parties within two years. The Sub-Section (2) has a proviso which puts an embargo on this power of NCLT by directing that no such amendment shall be made in respect of any Order against which Appeal has been preferred under this Act. Undisputedly, the appeal was filed. Even in the Appeal although the Appellant appeared as Respondent, the Appellant does not appear to have raised this grievance that the further or consequential relief was not granted. The Appellant did not file the Appeal on its own also, if she had grievances regarding part of relief not being granted. Admittedly, relief on the count of consequential relief had been sought in the Company Petition and when the NCLT did not say anything about it in the final operative Order which was passed, keeping the above general principle of law in view, it amounted to refusing to grant the relief - If at that time, the Appellant did not file Appeal and even when the other side filed the Appeal, did not raise grounds to seek relief, we do not think that the NCLT has now committed any error in the present Impugned Order whereby the application of the Appellant has been dismissed. Appeal dismissed - decided against appellant. Insolvency & Bankruptcy 2019 (8) TMI 269 Admissibility of petition - initiation of Corporate Insolvency Resolution Process - Corporate Debtor - default in payment against various invoices for supply of goods related to the welding fabrication of industrial consumables - existence of dispute or not - HELD THAT:- The Corporate Debtor has not raised any dispute regarding the supply of goods neither has it stated that the debt had been repaid. The only contention of the Corporate Debtor is that the Operational Creditor is a related party of an ex-employee of the Corporate Debtor and that this fact was not disclosed to the management of the Corporate Debtor and the Operational Creditor has taken advantage by charging higher prices of the goods than the market value. It is pertinent to note that Mr. Shibu Nadar left the employment of the Corporate Debtor in November 2014. Since then, the Corporate Debtor has not raised any dispute until the first petition is filed under section 9 of I B Code and withdrawn in the year 2017. This contention of the Corporate Debtor is a mere argument without any supporting evidence and cannot be taken as a pre-existing dispute for rejection of section 9 Petition. The application made by the Operational Creditor is complete in all respects as required by law, and it clearly shows that the operational debt is due and has not been paid. Thus it is clear that petition filed U/S 9 of the Code deserves to be admitted - petition admitted - moratorium declared. 2019 (8) TMI 268 Admissibility of petition - it is alleged that the claim of the Bank and the date of default both are barred by limitation - HELD THAT:- The I B Code having come into force since 1st December, 2016 and the application having been filed on 24th October, 2018, the application under Section 7 is well within the time and is not barred by limitation - Further, as the default has occurred after notice issued on 13th November, 2015 and application having been filed on 24th October, 2018, the claim is also not barred by limitation. The impugned order dated 25th February, 2019 upheld - appeal dismissed. 2019 (8) TMI 267 Validity of Resolution Plan - initiation of Corporate Insolvency Resolution Process - Corporate Debtor - default in paying the operational debt towards professional charges - whether the plan is in conformity of provisions of section 30(2) of I B Code or any other law for the time being in force? HELD THAT:- In this case, no provision of upfront payment is made towards any operational creditors' claim. There is no discrimination made in between operational creditors inter se. Hence, above order does not have binding precedent. The plan is approved by CoC by 100% votes. The CoC took commercial decisions in their wisdom, while approving the plan. Now this authority cannot sit in appeal against the CoC's decision - the objection raised by one of the operational creditors against the approval of this plan is rejected. Clause (c) and (d) of section 30(2) of I B Code requires the plan should provide mechanism of its effective implementation and mechanism for management of affairs of the corporate debtor. Part-B, sub-para (c) and (d) in the plan, it is mentioned that after approval of the plan, the resolution applicant will appoint Board of Directors to take over the affairs of the corporate debtor from the RP. The Monitoring Committee is also confirmed to oversee effective implementation of the plan - It is seen from the perual of the plan that it does not contravene any provisions of law for the time being in force. It also meets all other requirements as specified by the IBBI. The Resolution Plan which is approved by the CoC with 100% voting percentage, is hereby approved under provisions of section 31(1) of the Insolvency Bankruptcy Code, 2016 - the revival plan of the company in accordance with approved Resolution Plan shall come into force with immediate effect - moratorium order passed under Section 14 shall cease to have effect. FEMA 2019 (8) TMI 266 Imposition of penalty by Special Director - contravention of Sections 8(1) 9(1)(a) of FERA, 1973 and Sections 9(1)(f)(i), 8(1) 9(1)(a) of FERA, 1973 - unlawful detention - initiation of adjudication proceedings as contemplated under Section 51 FERA, 1973. HELD THAT:- The Adjudicating Authority has not been taken into account in the Impugned Order that prior to the Notification dated 31.07.1995, the position was that foreign currency could be deposited in NRE Accounts by power of attorney holders of NRIs. That being the case the necessary ingredients to make out the violations under Sections 8(1), 9(1)(a) and 9(1)(f) of FERA are not made out - It is rightly stated that in the Impugned Order proceeds on the erroneous premise that the foreign exchange deposited in the NRE Accounts of Mr. V.D. Jaiswal were deposited by the Appellant, whereas in fact the deposits of foreign exchange in the said Accounts were made by Mr. V.D. Jaiswal from his earnings abroad. The Impugned Order all the material facts were not taken into account the fact that the Adjudicating Authority has in 52 cases against the Appellant, quashed penalty imposed against him and the same have till date not been challenged by the Respondent before the Appellate authorities. The present proceedings, which are based on factually parallel route, atleast all the said orders and facts ought to have been considered in the impugned at the time of passing the order. In the present case, it is the case of the appellant that apart from the retracted confessional statement of the Appellant, there is no independent evidence on record to corroborate the retracted confessional statement of the Appellant - the said statement cannot be relied upon to impose any penalty upon the Appellant. Appeal allowed - decided in favor of appellant. 2019 (8) TMI 265 Maintainability of the appeal - Section 19 of the Foreign Exchange Management Act, 1999 - appeals were fixed for orders when there is a difference of opinion - HELD THAT:- There is no dispute that the impugned orders are interlocutory orders and these orders are passed during the course of inquiry proceedings as provided under the Act and Rules thereto. The object of Section 19 (1) is to give a right to appeal to a party aggrieved by an order which affects the party s right or liability. If the present type of orders are allowed to be agitated than there will be no end to litigation and the very purpose of the relevant provisions and intention of the legislature would be defeated. The scope of the words an order of Adjudicating Authority is not as wide as any order or every decision or order in the context of Sections 19 (1), 19 (6) Section 35 respectively of FEMA, 1999 - As held by Hon ble Supreme Court, in many judgments, only those orders which affect the rights and liabilities of the parties can only be appealable. After considering the materials on record, oral and written submissions of learned counsels and the relevant judgments in the present appeals, I do not find any materials to support that the present impugned orders in any way affects the rights and liabilities of the parties, hence in view of the discussions made in the preceding paras, it is held that these impugned orders are not covered within the scope of the words an order occurring in Section 19 (1) of FEMA, 1999 for the purpose of filing an appeal as required under the said section. Therefore, these appeals are not maintainable. Appeal not maintainable. 2019 (8) TMI 247 The appellants has not filed affidavit with proof of dasti service upon sole respondent - HELD THAT:- Two weeks time is granted to learned counsel for the appellants to file affidavit with proof of dasti service. PMLA 2019 (8) TMI 264 Money Laundering - bribing during the time of money demonetisation - retention of seized valuables - HELD THAT:- It has come to our notice that the prescribed period of 90 days was incorporated by amendment of the provision of Section 8(3)(a) only on 19.04.2018. The said amendment was prospective and no retrospective effect can be given. It may be another plea of the appellant that the prosecution complaint ought to have been filed within the period of 180 days as prescribed under the Act from the date of attachment - The said arguments were never addressed by any of the parties. The order was reserved with the understanding that after amendment carried out on 19.04.2018, no prosecution complaint has been filed within the period of 90 days. The same is not the position of the present case. It has only come to notice to this Tribunal once the written-submission is filed by the respondent. Both the parties are directed to argue the appeal on this aspect as to whether under the un-amended act, the prosecution complaint was to be filed within 180 days from the date of provisional attachment order or after passing the confirmation order within the meaning of amended Section 8(3)(a) of the Act. List this appeal for re-hearing/fresh argument on 22.10.2019. Service Tax 2019 (8) TMI 263 Scope of the contract - collection of service tax from the parties by enforcing bank guarantee - power of Power Distribution Company to initiate recovery proceedings - mere audit objection raised by the Accountant General as regarding liability admissible under the Service Tax Law - HELD THAT:- We are in no confusion to hold that in absence of adjudication by the respondent Department on the issue, we are not required to express ourselves as to whether the contract executed by the petitioner was exigible to service tax and if the answer was Yes , then the extent of liability to be suffered by each of the party. We would leave such determination at the wisdom of the Department to come to a just conclusion on the issue obviously, in a duly constituted proceeding and on hearing the parties. Whether the act of the Power Distribution Company to mechanically proceed on the audit objection of the Accountant General to make realization of the service tax from the bills of the petitioner by enforcement of the Bank Guarantee is justified? - HELD THAT:- It is not a case that while making payment of the bill of the petitioner, any amount was deducted by the Power Distribution Company rather having made payment for execution of the contract in question that when audit objection came they have chosen to enforce the Bank Guarantee to realize that amount of service tax which as per their own statement, was actually payable by them in terms of the notification bearing no. 30 of 2012 dated 20.06.2012 - Since this is purely a contractual dispute and requires interpretation of the terms of the contract, we leave it open for the parties to resolve the issue of payability before the appropriate forum. The respondents no. 2 to 4 are directed to remit the amount recovered within a period of eight weeks from today - petition allowed. 2019 (8) TMI 262 Classification of service - Auctioneer s Service - Business Support Service - extended period of limitation - HELD THAT:- As far as Auctioneers Service is concerned, it can be levied on the service of auctioning. Undisputedly, in the present case, as recorded in the impugned order itself, the appellants are selling goods through tender and NOT through auctions. The Auctioneer s service does not cover the service of tender - demand set aside. Business Support Service - HELD THAT:- Evidently, the cooperative society is engaged in the business of lending money to their members and have been collecting some charge towards appraising the value of the pledged jewels in the process. This is not service rendered to anybody at all. It is true that, in turn, the appellant has been borrowing money from their bank but it does not mean that the appellant is supporting service of the bank. They are borrowing money from the bank on their account and in turn lending it to their members - demand set aside. The demand of interest and penalties also deserve to be set aside - appeal allowed - decided in favor of appellant. 2019 (8) TMI 261 Cash Refund of accumulated CENVAT Credit - denial on account of nexus of input services with output services - HELD THAT:- The service tax paid on the input services are admissible to CENVAT Credit and consequently eligible to refund of accumulated CENVAT Credit due to export of the services, except the services viz. Phonographic Performance, Testing of Food Water Sample for Canteen, Video Projection Agency Service, Rent-a-cab Service. Denial of credit on input service invoices which are addressed earlier to their old registered office - HELD THAT:- The learned Commissioner (Appeals) has held that credit cannot be denied merely because there has been change in the address, but proceeded further in remanding the matter to the Adjudicating authority - there is no reason in remanding the matter to the Adjudicating authority once the learned Commissioner (Appeals) holds a view that mere change in the address would not dis-entitle the Appellant in availing the credit. Hence, remanding the matter, is not necessary in the present case. Appeal allowed in part. 2019 (8) TMI 260 Manpower Supply services - deputation/ secondment of employees from a group company in Japan to the appellant in India - reverse charge mechanism - HELD THAT:- The Division Bench in M/s India Yamaha Motor Private Limited [2019 (7) TMI 772 - CESTAT NEW DELHI] examined the issue both for the period prior to 1 July, 2012 and for the post negative list for the period subsequent to 1 July, 2012 and held that neither during the pre-negative list nor post negative list, Service Tax could not be levied on deputation of employees from a group company in Japan to the Appellant in India. Demand do not sustain - appeal allowed - decided in favor of appellant. 2019 (8) TMI 259 Taxability - amount of penalty deducted by the principal from their bills - work relating to road construction done for M/s.Bhagwati Construction and Supplier, Jhansi - chargeability to service tax - extended period of limitation - HELD THAT:- In spite of audit conducted from time to time, no such objection was raised by the Department even in the aforesaid Audit Report dated 15.3.2011 - the demand of service tax for the extended period of limitation is bad, thus is set aside. So far as the demand for normal period is concerned, we hold that if the amount of penalty has been deducted in terms of the contract between the parties, and the appellant is not entitled to receive the same, at any further point of time, in such case, the amount of consideration under Section 67 of the Act stands ipso facto reduced - on such penalty, no service tax is exigible or chargeable - demand set aside. Construction of road done for M/s.Bhagwati construction Suppliers, Jhansi - HELD THAT:- The demand has been confirmed for want of sufficient evidence by the court below. This demand is set aside and the matter is remanded to the file of the Adjudicating Authority for de novo consideration - Penalty set aside as there is no suppression of facts or deliberate default on the part of the appellant. Appeal allowed in part and part matter on remand. 2019 (8) TMI 258 Condonation of delay of around 556 days in filing appeal - appellant submits that the said delay occurred on account of death of his wife on 05.03.2016, as, the appellant was in complete shock - HELD THAT:- The appellant had not shown that on account of his being shocked and depressed, all the other activities including his business activity was stopped by him. Admittedly, an unfortunate incident happened on 05.03.2016 but we note that the appeal stands filed in February, 2018 i.e. almost after a period of two years and during the said period of two years the appellant attended all other works including his business. The said fact cannot be adopted as a reasonable cause for the delay in filing the present appeal. There were admittedly latches on the part of the assessee and such a huge delay cannot be condoned for even an unfortunate incident having happened in March, 2016. Monetary amount involved in the appeal - HELD THAT:- The amount of service tax involved in the present case is much on the lower side i.e. ₹ 62,141/- and the issue according to learned A.R. is also settled against the assessee - As such, there is no justifiable reason to condone the delay. COD application dismissed. Central Excise 2019 (8) TMI 257 Condonation of delay in filing appeal - whether a statutory Appellate Authority can condone delay beyond the cap, when the statute provides for a cap? - HELD THAT:- A perusal of the grounds of appeal before first Appellate Authority reveals that this point has not been raised before the Appellate Authority. When this point has not been raised before the Appellate Authority, it cannot be gainsaid that Appellate Authority fell error in rejecting the appeal as time barred as the Appellate Authority has made it clear that he is rejecting the appeal as time barred without going into merits of the matter. In this writ petition, impugned order is the order of the Appellate Authority and hence this Court will perambulate within the four corners of the grounds which were raised qua challenge to the order of the Appellate Authority. Petition dismissed. 2019 (8) TMI 256 Excisability/movability - manufacture of turnkey projects at the site - immovable property or not - Short payment of duty - appellant have manufactured various parts of chlorinators in their factory and transferred to their customer s site but failed to discharge duty on the entire goods used in the turnkey projects - HELD THAT:- No evidence has been placed by the Revenue that the chlorination plant erected and commissioned at site could easily be unassembled and shifted to other place without causing damage to the components and plant as a whole, hence, be considered as movable one. The chlorination plant installed at various sites out of the goods manufactured and cleared by the appellant from their factory on payment of excise duty and assembling with other bought out items at the site of the customer, resulted into an immovable property and hence not leviable to excise duty - appeal allowed - decided in favor of appellant. 2019 (8) TMI 255 Valuation - residue - leftover solvents known as spent solvents - Department was of the opinion that these are goods which are manufactured / produced by the appellant along with the final products and are therefore chargeable to excise duty at appropriate rates - HELD THAT:- In the same issue for a different period, this Bench in M/S. ORCHID PHARMA LTD. (FORMERLY M/S. ORCHID CHEMICALS PHARMACEUTICALS LTD.) VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, CHENNAI NORTH [2019 (2) TMI 10 - CESTAT CHENNAI ] held that no duty is chargeable on the spent solvents / sludge which arises during the process of manufacture of the final products. Appeal allowed - decided in favor of appellant. 2019 (8) TMI 254 Valuation - residue - leftover solvents known as spent solvents - Department was of the opinion that these are goods which are manufactured / produced by the appellant along with the final products and are therefore chargeable to excise duty at appropriate rates - HELD THAT:- In the same issue for a different period, this Bench in M/S. ORCHID PHARMA LTD. (FORMERLY M/S. ORCHID CHEMICALS PHARMACEUTICALS LTD.) VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, CHENNAI NORTH [2019 (2) TMI 10 - CESTAT CHENNAI ] held that no duty is chargeable on the spent solvents / sludge which arises during the process of manufacture of the final products. Appeal allowed - decided in favor of appellant. 2019 (8) TMI 253 Process amounting to manufacture or not - process of roasting of ores into concentrate - benefit of N/N. 4/2006-C.E.- HELD THAT:- The issue arising out of the present case is no more res integra in view of the judgment of the Hon ble Supreme Court in the case of the respondent itself, M/S. STAR INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) , RAIGAD [ 2015 (10) TMI 1288 - SUPREME COURT] , where the Hon ble Apex Court have held that in view of Chapter Note 4 appended to Chapter 26 of the Tariff Act, the process of roasting of ores into concentrate shall be considered as manufacture and thus, the benefit of duty exemption provided under Notification No. 4/2006-C.E. should not be available. Appeal allowed - decided in favor of Revenue. 2019 (8) TMI 252 Demand for interest on delayed payment of duty - whether the Department can demand interest under Section 11AB of the Central Excise Act 1944 on the differential duty paid through supplementary invoices due to subsequent increase in price of the goods by virtue of price escalation clause? - HELD THAT:- Since this issue has now been settled by the Larger Bench of the Supreme Court in the case of M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [2015 (12) TMI 594 - SUPREME COURT] - Therefore, by following the ratio of the above said decision of the Apex Court, I hold that appellant is liable to pay the interest on the differential duty paid through supplementary invoices. Time Limitation - HELD THAT:- The time limit prescribed under Section 11A of the Central Excise Act is also applicable for recovery of interest - the longer period of limitation is not invokable in the present case because the short payment is not due to fraud, collusion, suppression etc with intent to evade duty - the extended period of limitation is not invokable in the present case. In the present case the entire demand of interest on supplementary invoice is barred by limitation - Appeal allowed on limitation. 2019 (8) TMI 251 Interest on delayed refund - Rule 7(5) of the Central Excise Rules - HELD THAT:- A bare perusal of the aforesaid Rule 7(5) indicates that when the assessee is entitled to refund there shall be paid an interest on such refund at the rate specified by the Central Government by notification issued under section 11BB of the Act. Rule 7(5) is an independent provision relating to payment of interest in a case where an assessee is held entitled to a refund consequent to an order for final assessment when the duty determined under the final assessment is lesser than that determined under a provisional assessment. It is only the rate of interest that has to be specified by the Central Government by a Notification issued under section 11BB of the Act - the appellant was entitled for payment of interest at the rate specified in the Notification dated 12 September, 2003. It is not possible to sustain the view taken by the Commissioner (Appeals) - Appellants are held entitled to payment of interest at the rate specified in the notification from the first day of the month succeeding the month for which such refund was determined till the date of refund - Appeal allowed. 2019 (8) TMI 250 Classification of goods - Machineries and Bulkers - classified under CSH 87042319 of Central Excise Tariff Act, 1985 or otherwise? - fabrication of bulkers which are mounted on duty paid chassis and such vehicles are used for transportation of cement and fly ash. - benefit of N/N. 6/2006-CE,dt.1.3.2006 S.No.39, (Condition No.9) - period April 2005 to March 2010 - HELD THAT:- Undisputedly, the Appellants had also manufactured /fabricated bulkers fitted with tri-axle and other accessories fitted with a king pin whether be called as a semi-trailor under subheading 8716 of Central Excise Tariff Act, 1985. A plain reading of heading 8706, there cannot be any iota of doubt that building a body or fabrication or mounting or fitting of structure or equipment on the chassis falling under CH 8706 shall amount to manufacture of a motor vehicle. Thus, by the said fiction, the activity of fabrication or mounting body on the chassis falling under Chapter 8706 will deemed to be manufacture of a motor vehicle - In the present case, explaining the manufacturing process of 30 Cubic Mtrs bulkers, the learned Advocate submitted that the shells are initially fabricated and then mounted on the chassis which ultimately used for transporting cement and fly ash. Therefore, by mounting the shell on the chassis by virtue of Note 5 of Chapter 87, activity becomes manufacture and the resultant would be considered as a motor vehicle. The Appellant has rightly classified the fabricated/mounted shell on the duty paid chassis falling under CSH 87042319 of Central Excise Tariff Act, 1985. Benefit of N/N. 6/2006-CE,dt.1.3.2006 S.No.39, (Condition No.9) - HELD THAT:- Appellants are eligible to the benefit of the said notification as they have also fulfilled the other condition of not availing CENVAT Credit on the inputs used in the manufacture of the bulkers. However, there is no merit in the contention of the Appellant when they advanced similar argument to 45 Cubic Mtrs bulkers, which are fabricated and attached with tri-axle tyres and other accessories and are attached to the horse by a king pin. These are semi-trailor type of motor vehicles and not covered under the scope of the said exemption notification, accordingly dutiable. Extended period of limitation - HELD THAT:- Since the Appellant has not disclosed the manufacture of semi-trailor type bulkers, but considered as bulkers mounted on the chassis and claimed exemption. Therefore, extended period of limitation has been rightly applicable for recovery of duty against these semi-trailors. The demand in relation to 105 mounted bulkers is set aside and the demand in relation to 4 semi-trailors classifiable under Chapter 8716 of Central Excise Tariff Act, 1985 is hereby confirmed with interest and penalty - appeal allowed in part. Indian Laws 2019 (8) TMI 249 Dishonor of cheque - sufficiency of funds - rebuttal of presumption - offence punishable under Section 138 of the Negotiable Instruments Act,1881 - plea of the accused is that he had subscribed to the kuri conducted by the firm 'Crown Kuries' and when he received the kuri amount, he had given a signed blank cheque as security - HELD THAT:- The evidence of the complainant, where it is found to be credible and trustworthy, is sufficient to conclude that the cheque was duly executed by the accused and delivered to him. Corroboration is a rule of prudence and not one of law. Whether corroboration to the evidence of the complainant is required or not would depend upon the circumstances of each case - In the instant case, in the light of the inconsistency in the evidence of PW1 regarding the drawing and delivering of the cheque by the accused, examination of the independent person, who had allegedly seen the accused drawing and delivering the cheque to the complainant, was necessary. But the complainant did not prefer to examine that person as a witness. In the instant case, the accused has raised a plea which is probable and acceptable. He entered the witness box and gave evidence in support of his plea. Admittedly, the complainant is a partner of the firm 'Crown Kuries'. The plea of the accused that, he had given a signed blank cheque when he received the kuri amount from Crown Kuries, is highly probable - It is undoubtedly true that when a cheque is signed and issued by a person and the complainant reasonably discharges the initial burden of proving execution of the cheque by the accused, the burden is upon the accused to rebut the presumption under Section 139 of the Act. But the standard of proof required for rebutting any such presumption is not as high as that required of the prosecution. So long as the accused can make his version reasonably probable, the burden of rebutting the presumption would stand discharged. Whether or not it is so in a given case depends upon the facts and circumstances of that case. It is trite that the courts can take into consideration the circumstances appearing in the evidence to determine whether the presumption should be held to be sufficiently rebutted. Even while exercising the appellate power against a judgment of acquittal, the High Court should bear in mind the well-settled principle of law that where two views are possible, the appellate court should not interfere with the finding of acquittal recorded by the trial court. An order of acquittal can be interfered with only under compelling grounds or circumstances - there is no reason to upset the verdict of acquittal passed by the court below. Appeal dismissed. 2019 (8) TMI 248 Dishonor of Cheque - insufficiency of funds - acquittal of accused - complainant failed to prove execution of the cheque by the accused and the presumption under Section 139 of the Act cannot drawn in his favour and found the accused not guilty of the offence punishable under Section 138 of the Act and acquitted him - HELD THAT:- The denial of execution and transaction canvassed by the accused, necessarily, has to be appreciated in the totality of the facts and circumstances presented in the case. It is well settled that where execution of the cheque is denied it has to be proved by the complainant. But, what is the rigour of proof that is required to prove the execution, where there is denial by the accused, depends upon the facts and circumstance involved in the case. In the instant case, there is no sufficient reason to disbelieve the evidence of PW1 that the accused made the entries in the cheque and signed it and gave it to him. When the evidence of PW1 is appreciated in the totality of the facts and circumstances presented in the case and in the context of the unreasonable and improbable plea raised by the accused, it can very well be found that his evidence is sufficient to prove that Ext.P1 cheque was drawn and delivered to him by the accused - Once execution of the cheque by the accused is proved, the presumption under Section 139 of the Act comes into play. The burden is upon the accused to rebut the presumption. It is obligatory on the court to raise the presumption under Section 139 of the Act in every case where the factual basis for raising the presumption had been established. It is a presumption of law as distinguished from a presumption of fact. When the facts required to form the basis of a presumption of law exist, no discretion is left with the court but to draw the statutory conclusion. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. In the present case, no attempt whatsoever was made by the accused to rebut the presumption under Section 139 of the Act. It is not essential that the accused should adduce evidence of his own to rebut the presumption. It is enough if he succeeds in discharging the burden to rebut the presumption by the cross examination of the complainant or by bringing in probabilities in his favour and improbabilities against the complainant. But he has to prove that his version is probable and acceptable and competes in probabilities convincingly with the version of the complainant. That burden remains undischarged in the facts and circumstances of this case - the complainant had proved that the accused had drawn and delivered Ext.P1 cheque to him. The accused could not rebut the presumption under Section 139 of the Act. It follows that the complainant has been able to prove that the accused committed an offence punishable under Section 138 of the Act. The impugned judgment of acquittal warrants interference. Appeal allowed - decided in favor of appellant
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