TMI Tax Updates - e-Newsletter
September 12, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Period of limitation for filing an appeal - whether the appellate authority was justified in rejecting the appeal on the ground of limitation or not? - there was no failure on part of the petitioner to file the appeal within the prescribed period of limitation as the period of limitation did not start till the order passed by the adjudicating authority was uploaded on the GST portal. - HC
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GST:
Grant of Bail - pre trial detention of accused - In view of the allegations of creating fake firms and claiming such fraudulent input tax credit and routing them through various fake firms shows the propensity and wherewithal of accused in committing such crimes, bail application rejected - Further, revenue may also take conscious decision as how it want to proceed against not only the beneficiaries of such sham transactions but also against those person who facilitated such transactions by creating fake firms. - DSC
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GST:
Refund of Service Tax - cancellation of booking of flat - Even if the payment is in the nature of service tax, the date of cancellation of flat will be considered as the relevant date for calculating the time limit of one year - Commissioner
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Income Tax:
Exemption u/s 11 - Whether the appellant is entitled to a registration u/s 12AA - rejected the application on the ground that the assessee's activity of imparting 'financial education/awareness' is a service for price - Tribunal erred in holding that the word “education” should be given a restrictive meaning - HC
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Income Tax:
Deduction u/s 54 - whether advance payment made by the assessee for the purchase of a residential flat would constitute a part of purchase or not, when such advance is made to the seller of flat prior to the date of sale of capital asset in question? - Held Yes - HC
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Income Tax:
Estimation of income - bogus purchases - We admit additional evidence being MVAT paid by the assessee for the concerned assessment years on the impugned purchases. We direct the Assessing Officer to examine the veracity of these MVAT paid @ 4% by the assessee. If the same are found in order, in accordance with the ITAT decision as above addition should be restricted to 2.5% of the impugned purchases. - AT
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Income Tax:
Section 43B is applicable in the case of sales tax and excise duty but same could not be in case of service tax: CIT (A) held that assessee never allowed deduction on account of service tax which is collected on behalf of government and paid to government account, therefore service provider is merely acting as the agent of the government and is not entitled to deduction on account of service tax. - AT
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Income Tax:
Order u/s. 143(3) as barred by limitation - 30/12/2017 and 31/12/2017 were Saturday and Sunday being Government holidays. Being so, the assessment order was rightly sent by Speed Post on 01/01/2018 and it cannot be said that the assessment order was barred by limitation. - AT
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Income Tax:
Scope of the enquiry in a limited scrutiny - The cost of construction, or its indexation, though related to the computation of capital gains, cannot be said to be specific issues arising in the verification of the sale consideration, i.e., the specific area or field qua which the enquiry could only be directed. This is as the Board Instruction is u/s.119 binding on an income tax authority. - AT
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Income Tax:
Under-valuation of closing stock - The onus to establish escapement of income is on the Revenue, which it has completely failed to, with there being no charge of the assessee being not cooperative, or having not, on asking, furnished the relevant details. It is a clear case of non-application of mind by the Revenue. It would therefore be unfair to call upon the assessee to, after lapse of a number of years, justify its case. - Additions deleted - AT
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Income Tax:
Denying the benefit u/s 91 - Tax Credit - Income accrue in India - assessee being “Resident but not Ordinarily Resident" is not a “Resident in India” - persons who are ‘resident but not ordinarily resident’ in India are forming larger group of the persons who are ‘resident’ in India. - we reject the contentions of the revenue that benefit of section 91 (1) of the act does not apply to a person who is ‘not ordinarily resident’ in India. - AT
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Income Tax:
Revision u/s 263 - No error in the action of AO in not travelling to other issues for making addition once no addition was made on the issue for which assessment was reopened. The PCIT clearly erred in invoking revisional jurisdiction on an issue, which the Assessing Officer could not have examined in reassessment proceedings. - AT
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Customs:
Constitutional Validity of Section 25(4) of the Customs Act, 1962 as amended Finance Act, 2016 - Increase in duty on crude palm oil from 30% to 44% - Electronic publication of notification versus publication of notification in the official gazette - The provisions of Section 25(4) of the Customs Act, 1962 is declared as arbitrary and contrary to Section 25(1) & (2)(A) of the Customs Act, 1962. - HC
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Customs:
Imposition of penalty u/s 114 AA of Customs Act for abatement - Textile Broker - allegation that appellant facilatated in inflating the FOB value for the purpose of wrongly claiming higher DEPB benefits - it is found that this appellant have facilitated the main accused M/s J.S. Designer Ltd. and its Directors in inflating FOB value of goods for export, by justifying the cost, indirectly - Levy of penalty confirmed (reduced from ₹ 25 lakhs to ₹ 7,50,000/- ) - AT
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Customs:
Extension / renewal of the letter of approval - Rule 18(4)(d) of the Special Economic Zones Rules, 2006 - Whether the Board of Approval could have rejected the application for renewal / extension of letter of approval filed by the petitioners without giving any opportunity of hearing to the petitioners or not? - Matter restored back before Board to decide after giving adequate opportunity of hearing to the petitioners - HC
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Customs:
Jurisdiction - power of Deputy Commissioner (Customs) to freeze the Bank Accounts of petitioner - The impugned order was passed before the amendment in Section 110(5) of the Customs Act, 1962 had come in operation. Moreover, as per the amendment also, the account cannot be frozen beyond the period of one year - Operation of account allowed - HC
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FEMA:
Seizure and attachment of the bank account - Since it is an admitted fact that the subject matter bank account is not so far issued with any order of attachment or freezing the account, it is open to the first respondent to pass any such order within a period of 30 days from the date of receipt of a copy of this order - If the first respondent has not chosen to pass any attachment order as stated supra, the petitioner shall not be prevented from operating the bank account. - HC
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Indian Laws:
Conduct of investigation by the police officer who himself is the complainant - NDPS - There is no reason to doubt the credibility of the informant and doubt the entire case of the prosecution solely on the ground that the informant has investigated the case. Solely on the basis of some apprehension or the doubts, the entire prosecution version cannot be discarded and the accused is not to be straightway acquitted unless and until the accused is able to establish and prove the bias and the prejudice - SC
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Indian Laws:
Smuggling - offence under Section 20(b)(ii)(B) of Narcotic Drugs & Psychotropic Substances Act, 1985 (NDPS) - There is no law that the evidence of police officials, unless supported by independent evidence, is to be discarded and/or unworthy of acceptance. - It is settled law that the testimony of the official witnesses cannot be rejected on the ground of noncorroboration by independent witness. - SC
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IBC:
Approval of Resolution Plan - Prior permission of the CCI was not obtained - the Adjudicating Authority was conscious of CCI approval and hence, ignoring the fact that CCI approval has been obtained post CoC approval of the Resolution Plan is in order - AT
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Service Tax:
Refund of service tax - SEZ unit - Admittedly, appellant have paid the service tax under reverse charge and produced the challan, and further they have rightly discharged the service tax as recipient of service in terms of 2nd proviso to Rule 7 of the Point of Taxation Rules. Further, there is no such essential condition of payment of amount to the service provider - Refund allowed - AT
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Central Excise:
Valuation - undervaluation - “Polo” and “Vento” models of their car - related party transaction - interconnected undertakings - Mutuality of Interest - It is found that the transaction value is not determined by the appellant, but the transfer value claimed to be the true transaction value is determined by the Planning Round, every year which is headed by M/s VWAG, Germany. - if corporate veil is pierced then we find that the entire operations of manufacture and sale of these vehicle was throughout on account of M/s VWAG, Germany. - By application of Rule 11, in case of related person transactions the value needs to be determined by application of Rule 9 - AT
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VAT:
Concessional benefit of tax - purchase of High Speed Diesel - C form - Upon enquiry with the Assessing Authorities, they have been informed that the benefit of the decision in M/s Ramco Cements Ltd can be extended only to those dealers that are party to the decision. This stand is unacceptable in so far as the decision of this Court as well as other High Courts, one of which has been confirmed by the Supreme Court, are decisions in rem, applicable to all dealers that seek benefit thereunder, of course, in accordance with law. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (9) TMI 426
Grant of Bail - pre trial detention of accused - abatement as provided under section 132 (1) (k) (I) of CGST Act - operating of various firms - HELD THAT:- Apart from the question of prevention being the object of a refusal of bail, one must not lose sight of the fact that any imprisonment before conviction has a substantial punitive content and it would be improper for any court to refuse bail as mark of disapproval of former conduct whether the accused has been convicted for it or not or to refuse bail to an accused person for the purpose of giving him a taste of imprisonment as a lesson. While considering an application for bail either under Section 437 CrPC, it must be kept in mind that the principle that grant of bail is the rule and committal to jail an exception. Refusal of bail is a restriction on personal liberty of the individual guaranteed by Article 21 of the Constitution. Seriousness of the offence should not to be treated as the only ground for refusal of bail. But, the liberty of an individual is not absolute. The Society by its collective wisdom through process of law can withdraw the liberty that it has sanctioned to an individual when an individual becomes a danger to the societal order. A society expects responsibility and accountability from the member, and it desires that the citizens should obey the law, respecting it as a cherished social norm. Therefore, when an individual behaves in a disharmonious manner ushering in disorderly thing which the society disapproves, the legal consequences are bound to follow - Further discretionary jurisdiction of courts u/s 437 CrPC should be exercised carefully and cautiously by balancing the rights of the accused and interests of the society. In view of the allegations of creating fake firms and claiming such fraudulent input tax credit and routing them through various fake firms shows the propensity and wherewithal of accused in committing such crimes. I am satisfied if released on bail at this stage, the accused Amit Kumar Jain most likely will make an attempt to influence the proprietors / partners of the firms involved. The plea that accused has no previous criminal antecedents is humbly rejected as it may also point out that similar crime of accused if any, committed previously remained undetected. The pre trial detention of accused Amit Kumar Jain is necessary at this stage as if released on bail, he will not only try to won over the public witness but may make an attempt to erase the money trail of the alleged crime, hence no ground for bail is made out at this stage. Bail application dismissed.
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2020 (9) TMI 425
Refund of Service Tax - cancellation of booking of flat - denial on the ground that the assessment was final and not provisional - doctrine of unjust enrichment - HELD THAT:- It is important that Section 142(5) provides that any amount eventually accruing shall be paid in cash. I further find that the clause notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 is extremely crucial. It free such claims from the fetters of limitation Ich is provided under sub-Section (1) of Section 11B. The only thing that is not overridden is the requirement of fulfillnent of unjust enrichment clause as provided under sub-Section (2) of Section 11B. No service has been provided to the appellant in this case and therefore the provision of relevant date of one year and date of payment of payment as per Section 11B of CEA cannot be made applicable in the present case. The service tax paid by the appellant is in the nature of deposit and not service tax. Even if the payment is in the nature of service tax, the date of cancellation of flat will be considered as the relevant date for calculating the time limit of one year, as the event that led to the refund of taxes is the cancellation by the buyer. If the cancellation would not have happened, the refund claim would not have arisen at all. Doctrine of Unjust Enrichment - HELD THAT:- Appellant is the customer who had booked the flat, It is on record that the component of Service Tax was recovered from him by the builder and paid to the exchequer. It is also on record that the builder has not refunded Service Tax to the appellant. It is therefore clear that appellant has borne the incidence of Service Tax whose refund is being claimed, It is crystal clear that the claim is not hit by the doctrine of unjust enrichment. Appeal allowed - decided in favor of appellant.
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2020 (9) TMI 427
Period of limitation for filing an appeal - Refund of IGST - violation of section 107 of the CGST Act read with rule 108 of the CGST Rules - whether the appellate authority was justified in rejecting the appeal on the ground of limitation or not? - HELD THAT:- The appeal is required to be filed in electronic mode only and if any other mode is to be prescribed then the same is required to be notified by way of a notification. There is nothing on record to show that any notification has been issued for manual filing of an appeal. In such circumstances, though the physical copy of the adjudication order was handed over to the petitioner, the time period to file appeal would start only when the order is uploaded on the GST portal. Without the order being uploaded, the petitioner could not file the appeal and therefore, the contention raised on behalf of the respondents that the uploading of the order and filing of the appeal are two different processes, is not tenable in law. Moreover, filing of the appeal and uploading of the order are intertwined activities. The order is required to be uploaded online so that the appeal can be filed electronically as per the mandate of the provisions of the Act and the Rules. However, there is no provision or procedure to file the appeal manually - In such circumstances, there was no failure on part of the petitioner to file the appeal within the prescribed period of limitation as the period of limitation did not start till the order passed by the adjudicating authority was uploaded on the GST portal. The impugned order passed by the appellate authority is required to be quashed and set aside by condoning the delay in filing of the appeal manually by the petitioner in absence of availability of the order passed by the adjudicating authority on the GST portal - Petition allowed.
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Income Tax
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2020 (9) TMI 414
Revision u/s 263 - claim cost of improvement and exemption u/s. 54F in revised return - contention of Pr. CIT is that the AO cannot exercise jurisdiction to process the revised return of income - HELD THAT:- In the present case, two returns were filed by the assessee one u/s. 139(4) and another u/s. 139(5) of the Act and since return filed u/s. 139(4) of the Act was validly filed by the assessee, it was incumbent upon the AO to complete the assessment in pursuance of the valid return of income. The assessment made by AO with reference to section 139(4) of the Act thus was not invalid and non-est but it was erroneous and prejudicial to the interest of revenue as rightly held by the Pr. CIT u/s. 263. Thus, the order of Pr. CIT is justified and grounds raised by the assessee are dismissed.
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2020 (9) TMI 413
Estimation of income - bogus purchases - restriction to the extent of 15% by CIT(A) as against 100% done by the Assessing Officer - HELD THAT:- ITAT for A.Y. 2010-11 on same facts as directed that the addition should be restricted to 6.5% of the bogus purchases. Thereafter in Miscellaneous Application the ITAT has taken note of assessee s payment of 4% MVAT and thereafter it has directed that addition should be restricted to 2.5%. No case has been made out of the above decision of the ITAT in assessee s own case in Income tax appeals as well as Miscellaneous Application have been reversed by Hon'ble Jurisdictional High Court. In this view of the matter, we have to respectfully follow the Coordinate Bench decision. We admit additional evidence being MVAT paid by the assessee for the concerned assessment years on the impugned purchases. We direct the Assessing Officer to examine the veracity of these MVAT paid @ 4% by the assessee. If the same are found in order, in accordance with the ITAT decision as above addition should be restricted to 2.5% of the impugned purchases.
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2020 (9) TMI 412
Revision u/s 263 - assessee s claim of deduction u/s 54B - Section 50C applicability with regard to computation of capital gain earned on sale of agricultural land - HELD THAT:- During the course of scrutiny assessment, the A.O. examined capital gain earned by him. However, he declined the assessee s claim of deduction u/s 54B of the Act which was appealed by the assessee before the ld. CIT(A) and which is still pending before him. CIT, Administration invoked his power U/s 263 and held that the A.O. had not made any proper enquiry and had not applied provisions of Section 50C with regard to computation of capital gain earned on sale of agricultural land. From the record, we found that the assessee had sold the agriculture land and at the time of sales of land, the statute of the same was agriculture. However, in the sale deed which was executed on 05/12/2014 it has been clearly mentioned that the nature of land is agriculture land. Further from the copy of Jamabandi of agriculture land as placed on record, this fact is also clear that the land use was got converted by the buyer of the land only after sale deed got registered by the assessee. Therefore, at the point of sale, the status of land was agriculture land. Whether the sale of agriculture land attracts provisions of Section 50C ? - We observe that the land held by the assessee was agricultural land which is not capital asset as clearly defined U/s 2(14) of the Act, which excludes agricultural land out of definition of capital asset. It is also not in dispute that the assessee had sold the agricultural land at a consideration which was more than DLC. However, as per Rajasthan Government notification since the sale was to a firm or company, the DLC rate was to be taken at 1.5 times. We found that in the case of joint owner of this agricultural land namely Shri O.P. Agarwal, the Tribunal have decided similar issue 2020 (8) TMI 150 - ITAT JAIPUR wherein it was held that the assessee had declared sale consideration more than DLC, accordingly, there is no justification for making any addition U/s 50C - No merit in the order passed by the ld. CIT(A) U/s 263 of the Act. - Decided in favour of assessee.
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2020 (9) TMI 411
Exemption u/s 54F - adopting the sale consideration for transfer of land and the receipt of constructed area as per the JDA - HELD THAT:- There was no material evidence furnished by the assessee to support the cost of construction (Sale consideration) to be at ₹ 550/- per sq. ft. as claimed by the assessee. At the same time, the assessee claimed the deduction u/s 54F @ ₹ 1200/- per sq. feet and there was apparent inconsistency in the claim of the assessee. The correctness of cost of construction stated to be incurred by the builder also needs verification and cannot be applied blindly. In the absence of proper information, it is obligation of the AO to refer the cost of construction to the valuation cell or to obtain the market information from the SRO to arrive at the sale consideration for the constructed area received by the assessee towards his share. This issue needs to be verified by the AO and hence we remit the matter back to the file of the AO with a direction to re-work the cost of construction on the basis of proper evidence or by referring to the valuation cell or obtaining the information from the SRO. We set aside the issue back to the file of the AO with a direction to re-estimate and determine the sale consideration to compute the capital gains. It is needless to say that the AO is required to give sufficient opportunity to the assessee. Sale consideration to be taken for computing the capital gains - HELD THAT:- We find some inconsistency in this regard. During the appeal hearing the Ld.AR submitted that the balance 1100 sq ft represent the common area where, as per the CIT(A) s order the assessee contended that he had not received the 1100 sq. ft. No evidence was placed before the CIT(A) or before us with regard to non-receipt of the area of 1100 sq ft from the builder. If the same represent the common area, we are of the view that common area also to be considered for sale consideration as per JDA. e, remit the matter back to the file of AO to examine the issue with regard to constructed area received by the assessee with the JDA and the builder and decided the issue on merits after giving opportunity to the assessee. The appeal of the assessee on this issue is allowed for statistical purposes. AR did not make any argument or produce any evidence in support of the ground. No infirmity in the order of the learned CIT (A). CIT(A) allowed the deduction @₹ 550/- per sq feet for 4147 square feet as per the sale consideration claimed by the assessee. Since we have remitted the issue of sale consideration to the file of the AO, we direct the AO to allow the deduction as per the sale consideration determined by the AO in ground No.3 4 of this order. Reopening of assessment u/s 147 - HELD THAT:- In the instant case the original assessment resulted in determining the total income and the re-assessment also resulted in same income. In both the assessments i.e. original as well as re-assessment, the AO assessed the constructed area received under JDA as long-term capital gains. Though the assessment was reopened for computing the capital gains under the head short term or long-term capital gains, ultimately the AO did not find any mistake in his original order thus accepted the income originally assessed. Since there was no escapement of income found by the AO, the reassessment becomes infructuous. Accordingly, the reassessment made u/s 143(3) r.w.s. 147 is treated as infructuous and the same is annulled.
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2020 (9) TMI 410
Estimation of income - bogus purchases - CIT-A sustained 12.5 % disallowance out of the bogus purchases - HELD THAT:- It is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from case of Nikunj Eximp Enterprises [ 2014 (7) TMI 559 - BOMBAY HIGH COURT]. Facts of the present case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer. In such situation in our considered opinion on the facts and circumstances of the case the 12.5 % disallowance out of the bogus purchases done by the learned CIT-A meets the end of justice. Accordingly we uphold the order of learned CIT-A. Disallowance u/s 43B - assessee had not paid an amount on account of VAT before filing the return of income of the year under consideration - HELD THAT:- As decided in own case [ 2017 (8) TMI 1288 - ITAT MUMBAI] CIT (A) has deleted the addition on the ground that section 43B would attract only to a case where an item is allowable as deduction but because of failure to make payment such deduction would not be allowed. Section 43B is applicable in the case of sales tax and excise duty but same could not be in case of service tax: CIT (A) held that assessee never allowed deduction on account of service tax which is collected on behalf of government and paid to government account, therefore service provider is merely acting as the agent of the government and is not entitled to deduction on account of service tax. CIT (A) has also considered that as per rule 6 of Service Tax Rules, the service provider becomes liable to make payment of service tax by 5th of the month immediately following the calendar month which the payments are received towards value of taxable service. Therefore, Ld. CIT (A) has correctly deleted the addition. - Decided against revenue.
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2020 (9) TMI 409
Order u/s. 143(3) as barred by limitation - Deduction u/s.80P(2)(a)(i) denied on the ground that the appellant is not a Co-operative Society - HELD THAT:- Admittedly, in this case, the assessment order was passed on 29/12/2017. However, it was received by the assessee through Speed Post on 02/01/2018. Now the contention of the assessee is that it should have been posted on or before 31/12/2017. However, as find that 30/12/2017 and 31/12/2017 were Saturday and Sunday being Government holidays. Being so, the assessment order was rightly sent by Speed Post on 01/01/2018 and it cannot be said that the assessment order was barred by limitation. Accordingly, reject this additional ground taken by the assessee. Deduction u/s. 80P - AO should have considered the net income by setting off the loss incurred on account of business carried on with the regular members which resulted in loss - HELD THAT:- The assessee has raised this additional ground first time before the Tribunal and the lower authorities had no to consider this ground. In view of this, remit this issue to the file of the CIT(A) for fresh consideration. Accordingly, this additional ground of the assessee is allowed for statistical purposes.
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2020 (9) TMI 408
Computation of capital gain - determination of sale consideration for the purpose of section 50C - HELD THAT:- An agreement enforceable in law was executed by the assessee on 30.12.2010. For the purpose of demonstrating authenticity of this agreement, corroborative evidence in the shape of receipt of part payment through banking channel has been furnished. The assessee has received part payment of the sale consideration at the time of sale agreement, and those payments have also been recognized in the final sale deed. No hesitation in concluding that agreement executed on 30.12.2010 has been given effect by the parties which resulted in execution of the sale deed roughly after one and half years. Circle rate at the time of execution of agreement was lesser than one adopted by the parties as sale consideration. Therefore, the facts in the case of Rahul G. Patel [ 2018 (9) TMI 1696 - ITAT AHMEDABAD] are fully applicable on the facts of the present case, and full sale consideration for the purpose of computing long term capital gain in the hands of the assessee is to be adopted at ₹ 81 lakhs being 25% of share of ₹ 3,24,00,000/-. Appeal of the assessee is partly allowed.
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2020 (9) TMI 407
Scope of the enquiry in a limited scrutiny assessment selected under CASS - Computation of Capital Gains - Traveling beyond the scope of enquiry as selected for verification by the issue of notice u/s. 143(2) - CASS was only for verification of the sale consideration of the property sold by the assessee during the relevant year as it was below that reported in Annual Information Report (AIR) but PCIT required the Assessing Officer (AO) to examine other computational aspects of the capital gain, viz. cost of construction; its indexation, as well - HELD THAT:- Admittedly, the sale consideration adopted in assessment is short by ₹ 0.16 lacs and, therefore, even an acceptance of the assessee s plea would result in a part allowance of his appeal, i.e., the impugned order would stand to be upheld to that extent. As regards the principal issue, the assessee s argument is per se unexceptional, and which also found favor with Tribunal in the cited cases, i.e., what cannot be considered by the assessing authority could not possibly be a ground for regarding his order as erroneous. The various returns, as the Annual Information Report (AIR), TDS returns, etc., are fed into the computer along with the related parameters, viz. mismatch in the stated sale consideration of an immovable property and the value adopted/assessed by the stamp valuation authority; the expenditure claimed per the return of income and that on which tax stands deducted at source, etc. These, then, are the parameters with reference to which the computer picks up/selects cases for limited scrutiny. The mismatch/discrepancy, etc. constitutes the reason/s for which an assessee s case stands selected under the limited scrutiny regime, which is required to be intimated thereto (paras 2(iv), 3(a) of the Instruction). All aspects pertaining to this matter could be validly examined in a limited scrutiny assessment that is to follow. The cost of construction, or its indexation, though related to the computation of capital gains, cannot be said to be specific issues arising in the verification of the sale consideration, i.e., the specific area or field qua which the enquiry could only be directed. This is as the Board Instruction is u/s.119 binding on an income tax authority. The reference to section 48, and of it being an integral part of s.45, as argued by the ld. CIT-DR, is misdirected, even as the statement is per se valid. AO, where he intends to verify the areas of income determination, even if related to capital gains, is to get the scope of enquiry enhanced by converting it into a complete scrutiny case, following the requisite procedure in its respect. We, subject to the upward adjustment of the sale consideration by ₹ 0.16 lacs, i.e., to ₹ 147.66 lacs, conceded to before us, uphold the assessee s claim. The computer does not formulate or enumerate the issues arising, but only throws up the areas, based on defined parameters, for being examined in a limited scrutiny assessment. It was, thus, fully open for the AO in the present case to have considered and, upon so, reject the assessee s claim of commission on the sale of property, stated at ₹ 4.60 lacs, deducted from the sale consideration, which was the reason for the same being reported at a lower figure. Likewise, for the short assessment by ₹ 0.16 lacs. It is, therefore, incorrect to say, as Sh. Doshi does before us, that only issues in the contemplation of the mind of the computer could be examined under a limited scrutiny case. Decided in favour of assessee.
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2020 (9) TMI 406
Disallowance u/s. 36(1)(iii) - Interest-free advances by the assessee-proprietor to his close relatives and to an associate concern - HELD THAT:- It is the statement of affairs, i.e., the balance-sheet, both as at the beginning and the end of the period under reference, i.e., f.y. 2008-09, that shall, in a large measure, clarify the various sources and application of funds, demonstrating the utilization of borrowed funds during the relevant year. This is precisely what the assessee was required to do. Why, in a case of variety of sources and application of funds, directed for specific purposes or otherwise, it is the fund flow (or cash flow) statement for the year that may, in addition, be required to throw light on the said utilization. Rather, as afore-noted, the assessee s principal borrowings are secured loans (at least as on 31.3.2009), so that an adequate asset base comprising the security, would itself exhibit the utilization thereof for the stated purpose - matter, accordingly, i.e., in view of the foregoing, is remitted to the file of the AO to allow the assessee opportunity to present his case. Under-valuation of closing stock - HELD THAT:- There has been no examination of the facts. What, then, is the basis for the Revenue to contend that the assessee had incurred a cost higher than ₹ 300/- per sq. ft. for the Township project? We could understand where the Revenue had based its charge of under-valuation w.r.t. the assessee s accounts, or found them unreliable, which is not so. The stated basis, as afore-noted, is wholly presumptuous. Thus, notwithstanding the fact that the assessee has not furnished the cost details, as it ought to have, we find no reason for remission. We have already observed that at no stage was the assessee called upon to prove his case. The onus to establish escapement of income is on the Revenue, which it has completely failed to, with there being no charge of the assessee being not cooperative, or having not, on asking, furnished the relevant details. It is a clear case of non-application of mind by the Revenue. It would therefore be unfair to call upon the assessee to, after lapse of a number of years, justify its case. The addition is without any basis, much less valid, as well as sans any factual finding, and deserves to be deleted. We direct so. Needless to add, the opening stock (for the following year) shall be the closing stock as reflected in the assessee s final accounts for the current year, i.e., as on 31/3/2009.
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2020 (9) TMI 405
Exemption u/s 11 - Application for approval u/s 80G rejected - assessee-applicant, a Trust registered under M.P. Public Trust Act, 1951. It is also registered as a charitable institution u/s. 12AA - HELD THAT:- The question of carrying any activity in the nature of trade, commerce or business, is applicable only to the residuary class, i.e., advancement of any other object of general public utility , and not to the other categories of charitable purpose, as defined u/s. 2(15), viz. education, medical relief, etc. There could be an angle of genuineness as well inasmuch as income could only be at a normative level of receipt, so that any income beyond the same may indicate, or at least prima facie , non-genuineness of the receipt itself. In this regard, 98% of the agricultural receipt as income was explained by Shri Gupta, to be on account of absence of agricultural activity; the receipt being by way of rent, admitting of very low expenditure. Where, then, is the scope for the activity being regarded as commercial on that score? The income component at 27% to 33% for other divisions could be relevant only where it can said to exceed, rather by far, of the normative level, not defined or delineated. The objection of surplus or commercial activity by the ld. CIT(E) is thus not valid. The objection fails. Receipt by way of medical associate share and education associate share - Section 13(2)(a) r/w s. 13(1) shall operate to exclude sections 11 and 12, resulting in contravention of the condition of section 80G(5)(i). Yes, the entity/s using the facility may not be covered u/s. 13(3), for s. 13 to apply, but there is neither any explanation by the assessee nor any finding by the ld. CIT(E) qua this. Further, there is also the angle of genuineness. A more than adequate compensation could, on the other hand, imply routing of perhaps taxable income into the coffers of the assessee for being claimed exempt. That is, non-adequacy is impermissible even in the case of an excess or overcharge where the payer entity is generating taxable income, and irrespective of whether it is covered u/s. 13(3) or not. There being no finding qua this aspect, the matter is set aside to the file of the ld. CIT(E) for the same. Needless to add, he shall do so per a speaking order and after allowing reasonable opportunity of being heard to the assessee. The ld. CIT(E) shall, as explained hereinbefore, record his satisfaction qua each of the conditions specified in clauses (i) to (v) of sec. 80G(5) or, as case may be, specify reason/s for his non-satisfaction of any of the said conditions. A finding as to the non-genuineness of activity/s cannot be lightly issued, particularly considering that the applicant-trust has a long history, and the matter is to be decided on an objective assessment of the obtaining facts. The onus thereof is on the Revenue. That apart, adequacy of consideration entails the technical subject of valuation. The same is therefore to be approached with utmost care, and finding/s issued on a consideration of the totality of the facts and circumstances of the case, on the touchstone of reasonability. The onus to establish and justify its claim of adequacy, we may though clarify, is on the appellant-applicant inasmuch as the same represents a condition precedent for the grant of exemption. As regards agricultural income, the same is exempt u/s. 10(1), and does not therefore require its application for the objects of trust for being claimed exempt, even as argued before us. The same, however, is to utilized only for its purposes, i.e., either the expenses of the trusts or its objects. So utilized, it gets either consumed or becomes the trusts property, income from which is exempt upon being applied for charitable purposes. Appeal is allowed for statistical purposes.
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2020 (9) TMI 404
Denying the benefit u/s 91 - Tax Credit / Double taxation - Income accrue in India - assessee being Resident but not Ordinarily Resident is not a Resident in India - HELD THAT:- As decided in own case [ 2019 (5) TMI 1160 - ITAT DELHI] we hold that assessee is entitled for tax credit of federal as well as state taxes paid by him u/s 91 of the Act. Whether the assessee being resident but not ordinarily resident in India is entitled to tax relief u/s 91 of the income tax act or not? - The provisions of section 6 of the income tax act provides for qualification of the persons who are residents in India. The provisions of section 6 (6) carves out another category of person in Residents , who is said to be not ordinarily resident in India. However such persons are also resident . The category is also called a resident but not ordinarily resident in India. Therefore persons who are resident but not ordinarily resident in India are forming larger group of the persons who are resident in India. In view of this, we reject the contentions of the revenue that benefit of section 91 (1) of the act does not apply to a person who is not ordinarily resident in India.
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2020 (9) TMI 403
Loss incurred in future trading as a speculation loss - HELD THAT:- The issue is covered against the assessee by the decision of CIT vs. DLF Commercial Developers Ltd [ 2013 (7) TMI 334 - DELHI HIGH COURT] and therefore, declined to entertain the plea taken by the assessee. Ld. CIT(A) accordingly dismissed this ground of appeal - unless and until there is change in the facts and circumstances or in the law holding the field, we find it difficult not to follow the decision of the jurisdictional High Court. - Decided against assessee. Disallowance under 14A of the Act read with Rule 8D - HELD THAT:- We set aside the findings of the authorities below on this issue and remand the issue back to the file of AO for considering the extent of own funds of the assessee for investment in the shares and in case the whole funds of the assessee in the shape of share capital and Reserves Surplus exceeds the investment in the current year, the question of interest component under rule 8D(2)(ii) of the Rules does not arise. We direct AO to verify the investments yielding exempt income and to reach the correct amount of disallowance keeping in view the decision of ACB India Ltd [ 2015 (4) TMI 224 - DELHI HIGH COURT]. Disallowance u/s 10AA - Assessee claimed unit situated at Noida, SEZ is engaged in the manufacture and export of articles and things; that such unit commenced production from the financial year 2008-09 and has been 100% export oriented unit; and therefore, the profit of the unit is eligible for exemption under section 10AA - HELD THAT:- There does not seem to be anything illegality or irregularity in the observations of the authorities below as to certain expenses relating to the key man insurance, basic salary of Directors, audit fees, tax audit fees and certification, taxation matters and Directors meeting fee etc. No doubt the Directors do not work for head office alone. The fact that they also oversee the work of the exempt unit, makes it obligation on the part of the exempt unit to contribute to such expenditure. So also, in respect of the other expenditure, other than the one which was separately accounted for in the books of NSEZ. Authorities below missed to notice the contention of the assessee that the expenses relating to transit goods insurance and Diwali expenses in respect of NSEZ were separately claimed in the books of NSEZ and therefore, the question of allocation of such expenses does not arise.This fact needs to be verified. Authorities below noted that at the end of the year the profit of the unit is also transferred to the head office. In such case, the funding of the exempt unit by the head office by incurring interest expense does not arise. Since the learned Assessing Officer did not consider this aspect, it is now necessary for us to direct him to do so. No portion of common expenditure is allocable to the NSEZ in respect of such expenditure as was entered by the NSEZ in its own books of accounts. AO shall verify whether the head office is holding the profit of the NSEZ which is transferred to it at the end of every year out of which certain funds are provided to the NSEZ for its operations. If it be so, no portion of interest expense incurred by the head office is allocable to the NSEZ to the extent of the funds which are not provided to the NSEZ by the head office by incurring interest expenditure. For this purpose and to this extent, we set aside the impugned order and remand issue to the file of the learned AO. Appeal of the assessee is allowed in part and for statistical purpose.
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2020 (9) TMI 424
Exemption u/s 11 - Whether the appellant is entitled to a registration u/s 12AA - rejected the application on the ground that the assessee's activity of imparting 'financial education/awareness' is a service for price, to the investor in the field of investments; the assessee's activity is designed in such a way that what it receives in the form of fee from the client for imparting financial education/awareness is always higher than what is spent for imparting such education/awareness to the said clients - assessee has generated surplus - HELD THAT:- Tribunal erred in holding that the word education should be given a restrictive meaning and we respectfully agree with the decision in the case of Gujarat State Cooperative Union [ 1992 (2) TMI 74 - GUJARAT HIGH COURT] and Ahmedabad Management Association [ 2014 (8) TMI 638 - GUJARAT HIGH COURT] What is important to note is that the surplus cannot be distributed, which is clearly spelt out in the Memorandum of Association, which states that the income and profit of the company, whatsoever derived shall be applied solely for the promotion of its objects as set forth in the memorandum; no portion of the income or property aforesaid shall be paid or transferred, directly or indirectly, by way of dividend, bonus, otherwise by way of profit to persons who, at any time are, or have been member of the company or to any one or more of them or to any person claiming through any one or more of them. It is stated that except with the previous approval of the Central Government, no remuneration or other benefit in money or money's worth shall be given by the company to any of its members whether, officers or servants of the company; in case of winding up or dissolution of the company, after satisfaction of all the debts and liabilities, any property whatsoever, the same shall not be submitted amongst the members of the company, but shall be given or transferred to such other company having objects similar to the objects of the assessee company. The relevant portions of the Memorandum of Association, which we have referred to, also find place in the licence issued under Section 25 of the Companies Act by the Regional Director of Company Affair. Rejection of the application filed by the assessee for registration under Section 12AA is erroneous on account of misreading of the scope of the decision of the Hon'ble Supreme Court in Loka Shikshana Trust [ 1975 (8) TMI 1 - SUPREME COURT]. - Decided in favour of the assessee
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2020 (9) TMI 423
Entitled to exemption in terms of Sections 10 sub Section 23C(iiiab) - HELD THAT:- Instant petitioner was carrying on the activity which squarely fell within the definition of Section 10(15) (charitable purpose) and was dependent upon the finance of the State. The Court was concerned with the factual matrix where gross receipts from different sources received by the petitioner exceeded more than a crore but since the organization was carrying out such activity, which fell wholly and squarely within the ambit and scope, fulfilling all the essential ingredients stipulated under Section 22 action of the Revenue in initiating proceedings for assessment of Income untenable in law. University established by the Government of Karnataka to be financed neither wholly nor substantially by the Government. Nor was it dependent upon it for finance. The finance of the University from the Government was only to the extent of 1% and profit from the relevant year was surplus to the extent of 500 crores, which also was not ploughed back for any activity for which the University was set up; fulfilled its object; or fees of the students reduced. Also, profits generated were far more than the permissible limits (6 to 15%) as laid down by in Islamic Academy of Education Vs. State of Karnataka [2003 (8) TMI 469 - SUPREME COURT] . It is under these circumstances; the Court held that the mandate of the law of securing contributions from the Government source and not fees collected under the statute to be Income not generated from the sources of finance of the Government. We agree with the submission made by Sri Pathy that the impugned action is not only misconceived but wholly unsustainable and untenable in law.
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2020 (9) TMI 418
Computation of book profit u/s 115JB - AO treated the interest income as income from other sources thereby denying the deduction under Section 80 IA - whether the assessing officer was right in coming to the conclusion that the accounts of the assessee were not prepared in accordance with the Companies Act, 1956 ? - HELD THAT:- Referring to decisions to emphasis the importance of following the accounting standards as prescribed under the 1956 Act, as already held by us, we find no question of law or substantial question of law arising on the said issue. Additions were made under the normal provisions of the Act as well as under Section 115 JB, which the assessee prayed for deletion and submitted that since it has received and admitted, the impugned receipts for the subsequent year, the additions made under the normal provisions of the Act, as well as under Section 115 JB may be deleted and the rate of tax remains the same in all these years under Section 115 JB. In fact, the ground raised by the assessee was to delete the impugned additions on the ground that the receipts have been subjected to the tax in the subsequent year whatever the assessee had received from TANGEDCO. The Tribunal did not agree with the assessee and sustained the addition, if such is the factual position, the natural consequences that is to flow is to issue a direction to the assessing officer to take appropriate action in so far as the assessments from the year 2010-2011 to 2014-2015, during which the assessee has been taxed on the said receipts. If such a consequential direction is not issued, then, the assessee would be subjected to double taxation which is unauthorised in Law. This issue can clearly be brought within the scope of Sub-Section (4) of 260 A and the Court would be justified in issuing appropriate direction to the assessing officer to reopen the assessments from the year 2010-2011 to 2014 -2015 on this issue alone and examine whether the assessee has paid taxes on these receipts, which addition have been sustained in the impugned assessment year 2009-2010 and after affording an opportunity to the assessee redo the assessment only on this aspect. Appeals are dismissed as no substantial question of law arises for consideration.
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2020 (9) TMI 402
Rectification u/s 154 - Deduction u/s 80IC on re allocation of certain expenditure - HELD THAT:- while completing the assessment under section 143(3) of the Act, the Assessing Officer has allocated the common expenditure including R D expenditure to different units on pro rata basis. It is also a fact that in the assessment order, the Assessing Officer has never given any finding that the eligible deduction under section 35 of the Act has to be allocated to various units. Thus, when the Assessing Officer after applying his mind to the facts and material on record in the course of assessment proceedings has computed deduction under section 80IC of the Act on re allocation of certain expenditure, proceedings under section 154 of the Act could not have been initiated only because it is felt that certain expenditure has been improperly allocated. When the facts on record show that the assessee was maintaining separate books of account in respect of its various units, allocation of common expenses to different units by itself is a debatable issue. That being the case, the Assessing Officer having dealt with such debatable issue in the assessment order, it cannot be dealt with again in rectification proceedings under section 154 of the Act which is only meant to rectify mistakes apparent on the face of record. - Decided against revenue. Disallowance of deduction claimed u/s 80IC - HELD THAT:- Similar allocation of R D expenses and depreciation on Head Office assets were made in assessee s own case in assessment year 2009 10. The Tribunal while deciding the issue [ 2013 (10) TMI 1541 - ITAT MUMBAI] restored the issue to the Assessing Officer. Further, while considering identical issue in assessee s own case in the assessment year 2010 11, the Tribunal following its order in assessment year 2009 10 also restored the issue to the AO for re adjudication. Facts being identical, respectfully following the consistent view of the Tribunal in assessee s own case as noted above, we restore the issue to the Assessing Officer for re adjudication after due opportunity of being heard to the assessee. Ground is allowed for statistical purposes. Disallowance of expenditure incurred towards gifts/freebies given to the doctors - claim disallowed by the Assessing Officer purely on the ground that as per MCI Regulations, 2002, doctors/medical practitioners are debarred from accepting any gift, travel facility, hospitality/cash or monetary grant from pharmaceutical and allied health sector industries - HELD THAT:- The Co ordinate Bench in PHL Pharma Ltd. [ 2017 (1) TMI 771 - ITAT MUMBAI] has held that MCI Regulations are applicable only to the doctors/medical practitioners and not to pharmaceutical companies. MCI Regulations cannot be brought into play to invoke Explanation to section 37(1) of the Act for disallowing expenditure claimed by the assessee. Bench has also held that CBDT circular no.5 of 2012 dated 1st August 2012, cannot enlarge the scope of MCI Regulations de hors any enabling provision either under the Act or the MCI Regulations. Though, CBDT can tone down the rigors of law in order to ensure a fair enforcement of the provisions by issuing circulars for clarifying the statutory provisions, however, it is divested of all its power to create a new impairment adverse to an assessee or to a class of assessees without any sanction or authority of law. Thus neither the MCI Regulations 2002 nor the CBDT circular no.5 of 2012 dated 1st August 2012, would be applicable to the pharmaceutical companies. That being the case, the expenditure incurred by the assessee cannot be disallowed alleging infraction of law in terms of Explanation 1 to section 37(1) of the Act. Bogus purchase - CIT-A restricted the disallowance to 12.5% of the alleged non genuine purchases - HELD THAT:- As rightly observed by Commissioner (Appeals), AO has not rejected the books of account. Further, he has not raised any doubt with regard to the consumption of goods and turnover of sales. Therefore, the only doubt which remains is with regard to the actual source of purchase - As per the settled principle of law, the profit element embedded in such purchases can be considered for addition - we are of the considered opinion that the disallowance @ 12.5% is reasonable, hence, does not require any interference. Part disallowance of deduction claimed under section 80IC by re allocating certain expenditure to Baddi unit which is eligible to claim deduction u/s 80IC - HELD THAT:- Tribunal while deciding assessee s appeal for the assessment year 2010 11 has directed the Assessing Officer to allow the expenditure incurred towards packing and delivery charges, analytical expenses, advertisement and sales promotion expenses, whereas, directed him to re adjudicate afresh the issue of reallocation of R D expenses and depreciation on Head Office assets to the Baddi unit. Facts being identical, respectfully following the consistent view of the Tribunal in assessee s own case as noted above, we allow assessee s claim of expenses with regard to packing and delivery charges, analytical expenses, advertisement and sales promotion expenses. Whereas, the issue relating to re allocation of depreciation on Head Office assets and R D expenses are restored back to the Assessing Officer for fresh adjudication after providing due opportunity of being heard to the assessee. Ground is partly allowed.
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2020 (9) TMI 417
Stay of demand - Recovery proceedings - mechanically directing the petitioner to pay 20% of the disputed amount as a pre-condition for stay of the balance amounts confirmed against the petitioner, pending disposal of the appeal - HELD THAT:- Ext.P7 order of the 2nd respondent cannot be legally sustained inasmuch as it does not consider the merits of the petitioner s case in the appeal, and further has to be seen as passed under dictation, based on the instructions issued by the CBDT. As a quasi-judicial authority, the 2nd respondent cannot see his discretion as fettered by the directions issued by the CBDT, especially when he is performing an adjudicatory function. I therefore quash Ext.P7 order and direct the 2nd respondent to consider and pass orders on Ext.P2 appeal within an outer time limit of six months from the date of receipt of a copy of this judgment, after hearing the petitioner. Recovery steps for recovery of amounts confirmed against the petitioner by Ext.P1 assessment order shall be kept in abeyance till such time as orders are passed in the appeal and the order communicated to the petitioner. In view of the direction issued above, Ext.P7 stay order passed by the 2nd respondent is quashed.
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2020 (9) TMI 416
Deduction u/s 54 - whether advance payment made by the assessee for the purchase of a residential flat would constitute a part of purchase or not, when such advance is made to the seller of flat prior to the date of sale of capital asset in question? - HELD THAT:- It is clear that the intention of the Legislature was to either purchase before or after the date of sale and the word purchased or constructed used in the Notes on Clauses amply makes the intention clear. In the light of the above discussions, we hold that the substantial question of law is required to be answered in favour of the assessee.
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2020 (9) TMI 401
Revision u/s 263 - Reopening of assessment u/s 147 - Client Code Modification misuse for tax evasion - PCIT invoked the provisions of section 263 on the ground that AO has failed to examine interest expenditure claimed in the P L Account, assessee did not have its own capital, therefore, the loan was given from borrowed funds - PCIT observed that the assessee has not shown any interest from borrowed money, as such, interest expenditure debited to the P L Account was required to be disallowed in proportion to money borrowed but not used for business purpose - HELD THAT:- As perused the impugned order and the assessment order passed under section 143(3) r.w.s. 147. A perusal of the assessment order shows that the assessment was reopened to examine misuse of Client Code Modification for tax evasion. No addition was made by the Assessing Officer in respect of the issue for which the assessment was reopened. It is a well settled law that where no addition is made on the issue for which the assessment is reopened, it is not open to the Assessing Officer to make independent addition for which he had not recorded reason to believe for issuing notice u/s 148. No error in the action of AO in not travelling to other issues for making addition once no addition was made on the issue for which assessment was reopened. The PCIT clearly erred in invoking revisional jurisdiction on an issue, which the Assessing Officer could not have examined in reassessment proceedings. Appeal of assessee is allowed.
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2020 (9) TMI 415
Cash found and seized in search proceedings - non-availability of evidence in respect of the claim at the time of search and availability of such proof only subsequent to the search especially when the assessee had not mentioned about the availability of evidence when statement was recorded under Section 132(4) - Tribunal setting aside the orders of the lower authorities with a direction to AO to do the same assessment afresh - Whether Appellate Tribunal is correct in entertaining the afterthought submission of the assessee that the excess cash found at the time of search relates to sales and the bills were pending for updation at the time of search? - HELD THAT:- Substantial Questions of law need not be answered in the instant case as they have become academic. It is true that a Superior Tribunal or a Court cannot mechanically remand matters for fresh consideration or de novo adjudication unless and until it finds a justifiable need for such a remand. In the instant case, the Assessing Officer has passed a given effect to order under Section 143(3) r/w. Section 254 of the Act dated 31.12.2018 and such order is adverse to the assessee as the assessee was not able to establish anything and therefore, the Assessing Officer held that the assessee has concealed the particulars of income and had no explanation worthwhile to offer. We are informed that the assessee has filed an appeal to the Commissioner of Income Tax (Appeals) against the order dated 31.12.2018 and the same is pending. Tax case appeal is disposed of and the Substantial Questions of law are left open as we find that the issue has become academic in the case due to developments which have taken place during the pendency of this appeal.
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Customs
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2020 (9) TMI 387
Imposition of penalty u/s 114 AA of Customs Act for abatement - Textile Broker - over invoicing of export consignments of dyed and printed polyester fabrics with intention to fraudulently avail undue export benefits (DEPB) - allegation that appellant facilatated in inflating the FOB value for the purpose of wrongly claiming higher DEPB benefits - rejection of FOB value - re-determination at the lower value and the actual DEPB benefit. HELD THAT:- This appellant in the course of investigation, wherein documents including cheque books etc. were found with respect to 11 firms/companies and cash of ₹ 7,50,000/- was found and seized. This appellant admitted that all these companies/firms wherein other persons namely Shri Gopal Sharma Shri Ramesh Kumar, Shri Parveen Aggarwal, Shri Mahender Kumar etc. were partner/Director/proprietor have admitted that they are only the name lenders and the actual owner/Manager of these firms/companies is the present appellant - Shri Deepak Goel. Those persons whose name is appearing as proprietor/Director also stated that they were working on a monthly salary of ₹ 3000/- to 12,000/-, doing and working for Shri Deepak Goel as per his instructions. They also stated that Shri Deepak Goel was doing transaction in these firms and companies. Further this appellant had also stated that they were engaged in raising inflated bills for the supply of fabric to M/s J.S. Designer Ltd. and were returning the differential amount in cash to Shri Vikas Mohan Singhal. Further, although Shri Deepak Goel have subsequently denied raising inflated bills for supply of fabric, but the facts are proved on the corroborative evidence being seizure of documents including cheque books etc of various firms and companies, wherein benamidar of this appellant were proprietor/partners/Directors and such benamidar persons have also admitted that they were only the name lenders engaged on salary basis, and such firm/companies were managed by Shri Deepak Goel. Admittedly, as per facts on record such firms and companies were raising inflated bills for the supply of fabric to M/s J.S. Designer Ltd. Thus, it is found that this appellant have facilitated the main accused M/s J.S. Designer Ltd. and its Directors in inflating FOB value of goods for export, by justifying the cost, indirectly - As this appellant have not directly facilitated M/s J.S. Designer Ltd. and its Directors, but have indirectly facilitated them in inflating the FOB value for the purpose of wrongly claiming higher DEPB benefits, taking a liberal view, the penalty reduced from ₹ 25 lakhs to ₹ 7,50,000/-. Appeal allowed in part.
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2020 (9) TMI 396
Release of the applicant on bail - Smuggling - Gold Biscuits - prayer of bail opposed on the ground that as the applicant could not show any relevant paper regarding the article (gold) obtained from the possession of the applicant of such quantity, it is deemed proper that the said material was being smuggled - statement recorded under Section 108 of the Act, admissible evidence or not - HELD THAT:- Considering to the nature of offence, its gravity and the evidence in support of it and the overall circumstances of this case, this Court is of the view that the applicant has not made out a case for bail. Prayer of Bail rejected.
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2020 (9) TMI 395
Jurisdiction - power of Deputy Commissioner (Customs) to freeze the Bank Accounts of petitioner - it is also claimed that no power to issue orders for freezing of bank account was available under the Customs Act, 1962 and the said power had only been introduced by way of amendment to Section 110(5) inserted by the Finance (No.2) Act, 2019, dated 1.8.2019 - HELD THAT:- Admittedly, investigation under Central Goods and Service Tax Act is pending against the petitioner company. However, the impugned order has been passed by Deputy Commissioner of Customs (Preventive), in view of the investigation initiated against the petitioner company by Anti Evasion Wing of Central Goods and Service Tax, Commissionerate, Jaipur. Vide impugned order, the bank account of the petitioner company was frozen. The impugned order was passed before the amendment in Section 110(5) of the Customs Act, 1962 had come in operation. Moreover, as per the amendment also, the account cannot be frozen beyond the period of one year. The bank account of the petitioner be allowed to be operated by the petitioner company - Petition allowed.
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2020 (9) TMI 421
Smuggling - import of plant khat - Narcotics drugs or not - only ground raised by the petitioner is that the alleged package was booked prior to the notification i.e., on 24.02.2018. Therefore, no offence can be tried as on the date of booking of the package and the substance was not banned in India - HELD THAT:- In the case on hand, the package was reached the shores of Mumbai on 03.03.2018 and thereafter it reached the Foreign Post Office, Meenambakkam, Chennai on 05.03.2018. Thereafter, on 12.03.2018, the parcel was examined and referred to Postal Appraisal Department. Thereafter only on 27.04.2018, in the presence of two independent witnesses, the officer in-charge taken the parcel for examination and found two pink polythene bags containing khat leaves weighing 7.9 kg, addressed to the petitioner herein. Therefore, the commission of the offence had taken place on 27.04.2018 as such, on the date of commission of offence, the contraband called khat leaves were included as psychotropic substances and the same was notified by the Government of India, Ministry of Finance vide notification No.S.O.821(E), dated 27.02.2018. Reliance was placed in the case of CHIRAG HASMUKHRAI BHOJANI 1 VERSUS STATE OF GUJARAT 1 [ 2018 (5) TMI 2018 - GUJARAT HIGH COURT] where it was held that on the date of commission of the offence, the contraband called khat leaves were not included as psychotropic substances. It is notified only on 27.02.2018 and the khat leaves came to be included under NDPS Act after the notification - the above judgement is not applicable to the case on hand and on the date of commission of offence the contraband called khat leaves were very much included in the list of psychotropic substances under the NDPS Act, 1985. Petition dismissed.
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2020 (9) TMI 422
Constitutional Validity of Section 25(4) of the Customs Act, 1962 as amended Finance Act, 2016 - Increase in duty on crude palm oil from 30% to 44% - Electronic publication of notification versus publication of notification in the official gazette - vires of Notification no.29 dated 1st March 2018. Whether the petitioners would be liable to pay increased rate of duty as per the Notification issued under Section 25(1) of the Customs Act on the same day on which the bills of entry were field by the petitioner, but the notification was made available in official gazette in electronic form subsequently, in view of the provisions of Section 25(4) of the Customs Act as amended by the Finance Act, 2016? - Whether the provisions of Section 25(4) of the Customs Act, 1962 as amended by the Finance Act, 2016 is arbitrary, illegal, ultra vires and unconstitutional or not? HELD THAT:- The above questions came for the consideration before the Andhra Pradesh High Court in M/S RUCHI SOYA INDUSTRIES LTD. VERSUS UNION OF INDIA [ 2019 (9) TMI 1374 - ANDHRA PRADESH HIGH COURT] , the petitioner and the Andhra Pradesh High Court after considering the submissions canvassed by both the sides has held as under for striking down Section 25(4) of the Customs Act declaring as arbitrary and contrary to Section 25(1)(2A) of the Customs Act, 1962 - In view of above judgment and order of the Andhra Pradesh High Court dealing with the same issue, we are of the opinion that the same should also apply to the cause of action within the territorial jurisdiction of this Court also so as to maintain consistency for application of the provision of the Customs Act, 1962, which is a Central Act. As held by the Supreme Court in case of KUSUM INGOTS ALLOYS LTD. VERSUS UNION OF INDIA [ 2004 (4) TMI 342 - SUPREME COURT] , the parliamentary legislation without receiving the consent of the President of India and published in a official gazette unless specifically excluded will apply to entire territory of India. If passing of the legislation gives rise to cause of action, the writ petition questioning the constitutionality thereof can be filed in any High Court of the country having requisite territorial jurisdiction and an order passed on writ petition questioning the constitutionality of Parliamentary Act, where interim or final keeping in view the provisions contained in clause (2) of Article 226 of the Constitution of India will effect throughout the territory of India, subject to applicability of the Act. The provisions of Section 25(4) of the Customs Act, 1962 is declared as arbitrary and contrary to Section 25(1) (2)(A) of the Customs Act, 1962. The respondents are therefore, directed to refund the excess amount of custom duty and differential amount of IGST collected from the petitioners for clearance of imported goods for home consumption as per the Notification published subsequently to the date of filing of bills of entry with simple interest @ 6% p.a. from the date of deposit till the date of payment - Petition allowed.
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2020 (9) TMI 389
Extension / renewal of the letter of approval - Rule 18(4)(d) of the Special Economic Zones Rules, 2006 - Whether the Board of Approval could have rejected the application for renewal / extension of letter of approval filed by the petitioners without giving any opportunity of hearing to the petitioners or not? - whether the order passed by the Board of Approval on the basis of the proceeding initiated in the year 2005 against the petitioners for not achieving the positive Net Foreign Exchange Earnings would be relevant factor for rejecting the application for renewal filed by the petitioners while exercising powers under Rule 18(4) of the SEZ Rules, 2006? HELD THAT:- It is not in dispute that no opportunity of being heard was afforded to the petitioners before taking decision in the 89th Meeting of the Board of Approval held on 22nd April 2019. We are, therefore, of the view that the decision on the renewal / extension of the letter of approval, which has a consequential effect of cancelling letter of approval, is in breach of the Section 16 of the SEZ Act, 2005 - the petition is required to be allowed only on this ground, without expressing any opinion on merits, by quashing and setting aside the decision taken by the Board of Approval in the 89th Meeting held on 22nd April 2019 qua the petitioners with a direction to reconsider the case of the petitioners after giving reasonable opportunity of hearing so as to adhere to the principles of natural justice. Matter remanded back to the Board of Approval to reconsider the application filed by the petitioners for renewal / extension of letter of approval, which was renewed on 2nd April 2014 and extended up to 2nd April 2019, after giving adequate opportunity of hearing to the petitioners - appeal allowed by way of remand.
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Corporate Laws
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2020 (9) TMI 400
Sanction of composite Scheme of Arrangement for Amalgamation and Demerger - transfer of shareholding - HELD THAT:- The learned senior counsel appearing for the respondents in the CA, who are the petitioners in the CP, at the outset, submitted that notwithstanding to what is submitted in the above referred affidavits filed on behalf of the petitionercompanies since the issue of transfer of the shareholding in the Roseland Buildtech Private Limited and its four subsidiary companies is a very minor part of the scheme and that the Note 2 with reference to the Roseland Buildtech Private Limited is not an integral part of the scheme, the petitioner-companies have no objection if the CA is disposed of in terms of the alternative relief as per Para 18(b) of the CA i.e. sanctioning the scheme sans Serial No.47 i.e. Roseland Buildtech Private Limited and the Note 2 thereon in Part IV of the Schedule. The instant CA can be disposed of in terms of the alternative relief at Para 18 (b) and without going into the rival contentions - Application disposed off.
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2020 (9) TMI 382
Sanction of Amalgamation Scheme - dispensation of various meetings - HELD THAT:- The Transferor Companies to serve notice upon the Official Liquidator, High Court, Bombay pursuant to Section 230(5) of the Companies Act, 2013. The Tribunal is appointing M/s Gondalia Mandviwalla, Chartered Accountants, having their office at Hamam House, Ambalal Doshi Marg, Fountain, Mumbai 400001, India, Mobile: 022 22634378], with remuneration of ₹ 1,00,000/- (Rupees One Lakh only) inclusive of taxes to assist the Official Liquidator to scrutinize books of Accounts of the Transferor Companies for the last five years. If no response is received by the concerned Tribunal from the Official Liquidator within 30 days it may be presumed that the Official Liquidator, High Court, Bombay at Mumbai has no objection to the proposed Scheme as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.
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2020 (9) TMI 381
Sanction of Amalgamation scheme - sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- The Scheme appears to be fair and reasonable and does not violate of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled, CP (CAA) No. 928/MB-I/2020 is made absolute in terms of prayer made in the Petition. Hence ordered. Petition allowed.
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2020 (9) TMI 380
Sanction of Amalgamation Scheme - Sections 230 to 232 of Companies Act - HELD THAT:- The Official Liquidator has filed his report on 13th August, 2020 in the Company Scheme Petition No. 944 of 2020, inter alia, stating therein that the affairs of the Transferor Companies have been conducted in a proper manner not prejudicial to the interest of the Shareholders of the Transferor Companies and that the Transferor Companies may be ordered to be dissolved by this Tribunal - From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. Petition allowed subject to conditions imposed.
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2020 (9) TMI 379
Sanction of Amalgamation scheme - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- The Scheme appears to be fair and reasonable and does not violate any provisions of law and is not contrary to public policy or public interest - Since all the requisite statutory compliances have been fulfilled, Petition have been made absolute in terms of prayer Clause 32(a) of the Petition mentioned therein. The Scheme of Amalgamation (Merger by Absorption) is sanctioned hereby, and the Appointed Date of the Scheme is 1stApril, 2019. The Transferor Company is dissolved without winding up - The Petitioner Companies are directed to lodge a certified copy of this order and the Scheme of Amalgamation (Merger by Absorption) with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable, if any, on the same within 60 days from the date of receipt of the order. Petition allowed subject to conditions imposed.
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2020 (9) TMI 374
Winding up proceedings - Section 73(4) of the Companies Act, 2013 - tax refund of TDS - HELD THAT:- By the Impugned Order under the Companies Act in a Petition pending under Section 73(4) of the Companies Act, 2013, the NCLT could not have passed such Order directing the Bank to reverse the entry when the bank claims that it had dues of more than ₹ 30 Crores which were to be recovered from the Respondent Company. There appears no source of power giving jurisdiction to give such direction to the Bank in the facts of this matter. According to us, this Order needs to be set aside. The Impugned Order is quashed and set aside and the Canara Bank is directed to hold the amount of ₹ 15.41 Crores, which is said to have been appropriated from the account of Respondent Company, in interest bearing Account - Appeal disposed off.
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Insolvency & Bankruptcy
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2020 (9) TMI 386
Approval of Resolution Plan - Prior permission of the CCI was not obtained under Proviso to Section 31(4) of I B Code - HELD THAT:- This is a material irregularity by the Respondents and contravention of Section 30 of the I B Code, 2016; it seems that the purpose of the IBC is to ensure that wherever a Combination as referred in Section 5 of the Competition Act, 2002 the requirement is the concerned Resolution Applicant shall obtain the approval of CCI prior to the approval of such Resolution plan by the CoC. The purpose is complied with in the present case, the approval from CCI has been obtained in June, 2019 and approval of the Resolution plan has been made by the Adjudicating Authority in April, 2020/May, 2020, this aspect has been taken care of by the Adjudicating Authority. The Adjudicating Authority, while approving the plan has also stated vide its order dated 30.04.2020 para 17(2) that wherever approval/ permissions are required the same is to be obtained within a period of one year from the date of the approval of the Resolution Plan. In Para 17 of the impugned order dated 30.04.2020, the Adjudicating Authority has provided various directions to various authorities to assist the Corporate Debtors, so that the Resolution Plan is operational - All this suggests that the Adjudicating Authority was conscious of CCI approval and hence, ignoring the fact that CCI approval has been obtained post CoC approval of the Resolution Plan is in order. Suppression of Fact regarding implementation of Resolution Plan - HELD THAT:- Suppression of Fact regarding implementation of Resolution Plan resulting from resignation of Mr.Johannes Sittard on 01.04.2018 and being only a person technically competent to run the Corporate Debtor was also examined and it is found that Dr. Sittard resigned only as a partner of Nittah Capital Resources on 01.04.2018 but he is still associated with Nittah Capital Resources in his capacity and designation as Non-Executive Chairman and Director Nittah Capital Resources and as on date he continues to hold the designation of Non- Executive Chairman and Director of Nittah Capital Resources. However, the Adjudicating Authority has already made appropriate arrangement by putting a specific condition that the Resolution Applicant would appoint an observer. In any case, individual can come and go and Company is to run. However, a responsibility is fixed on the Resolution Applicant/Respondent No.3 that Dr. Sittard should continue for next one year or for such extended period till the Corporate Debtor stands on its feet. Extension of Performance Bank Guarantee and its variation in terms of the Request for Resolution Plan (RFRP) - HELD THAT:- It is found that the Bank Guarantee for the requisite amount was kept for one year for full amount of ₹ 250 Crore but after one year due to the financial crisis faced by pandemic Covid-19, the Resolution Applicant requested for reduction of amount of Performance Bank Guarantee and CoC has accepted the lower amount of ₹ 50 Crore in place of PBG of ₹ 250 Crore as required by RFRP after expiry of the PBG on 30.04.2020. the CoC has exercised its right under Clause 6.4 of the RFRP, agreed to allow for modification in the validity period of PBG. The Adjudicating Authority has elaborately covered this issue in para 61 of its order dated 30.04.2020. There are no merits in the appeal - appeal dismissed.
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2020 (9) TMI 385
Liquidation of Corporate Debtor - Reduction of share capital - specific case of the Appellant(s) is that they have duly complied with the conditions to be followed by them, as per order dated 15.05.2019, but the direction in the said order of the vesting of the ownership, control and management of the affairs of the Corporate Debtor was never complied with the 1st Respondent thereby depriving the Appellant(s) from the vesting its control and management upon the Corporate Debtor for its implementation of the Resolution Plan . HELD THAT:- In the instant case, the 1st Appellant / Resolution Applicant had deposited ₹ 15 crores in the Escrow account was permitted as per order of this Tribunal on 29.07.2020 and further this Tribunal had directed that the said amount so deposited in Escrow Account shall not be appropriated without prior approval of this Tribunal. Also, that the 1st Appellant / Resolution Applicant had averred in the Affidavit in compliance of order dated 18.08.2020 at paragraph 7 that it is agreeable for forfeiture of an amount of ₹ 15 crores in addition to the already forfeited amount of ₹ 5 crores, in case it fails to deposit an amount of ₹ 50 crores within the three months period, from the date of reversal of the liquidation order. A perusal of Section 29A clause of the I B Code (i) indicates that it disqualifies a person if he has been subject to any of disabilities stated in clauses (a) to (h) of Section 29A in any jurisdiction outside India. In reality, Section 29A (i) will have to be read as a disability which corresponds to Section 29A(f) in view of the antecedent conduct on the part of a person applying as a Resolution Applicant in a jurisdiction outside India - Section 29A(f) and (i) of I B Code speaks of persons prohibited by foreign securities market regulator. It is seen from Section 29A(f) of the Code that if any of the individuals mentioned therein is prohibited by SEBI from either trading in securities are accessing the securities market, again ineligibility of an individual furnishing the plan attaches. In fact, as per sub- clause (i) if a person situate abroad is subject to any disability which correspond to sub-clause (a) of the code such person also is forbidden. Therefore, if a person is prohibited by a Regulator of the Securities market in a foreign market of trading in security and accessing the security market the then disability as per sub-clause (i) of section 29A would get attracted. This Tribunal, taking note of the entire conspectus of the attendant facts and circumstances of the instant case in an encircling manner and also keeping in mind of the plea taken on behalf of the liquidator that the Resolution Applicant(s) cash flow mentioned in the failed Resolution Plan is squarely dependent upon the sale of assets and hence it is subjective in character , this Tribunal, bearing in mind that the 1st Appellant / Resolution Applicant is only said to be holding 12% equity in Kridhan Infra Limited etc. and added further in view of the specific plea taken by the Liquidator that the Resolution Applicant through its subsidiaries had defaulted to Union Bank of India, Hongkong Branch to an extent of INR 750 crores approx. and hence, ineligible u/s 29A of the I B Code - Appeal dismissed.
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2020 (9) TMI 384
Reconsideration of claim submitted by the Applicant /Financial Creditor - direction to the R.P. to treat the payment of EMIs received by the Applicant/ Financial Creditor, as adjusted against the claim of the Applicant. Direction to the Resolution Professional to reconsider the claim submitted by the Applicant /Financial Creditor - HELD THAT:- It is only a direction to the R.P., to reconsider the claim submitted by the Applicant in accordance with the provisions of the Code and Regulations. The said directions cannot be treated as an order passed by the Adjudicating Authority. This is a general direction whereby the Adjudicating Authority has directed the Resolution Professional to reconsider the claim of the financial creditor, as per Rules and Regulation. Thus, no Appeal lies against the said direction. Direction to the R.P. to treat the payment of EMIs received by the Applicant/ Financial Creditor, as adjusted against the claim of the Applicant, witha further direction that the remaining amount of loan will be considered and admitted by the R.P., after verification of the claim submitted by the Applicant - HELD THAT:- It is about treating payments of EMIs received by the Financial Creditor during the moratorium, as adjusted against the claim. It is also clarified that the remaining amount of the loan will be considered and admitted by R.P. after verification of claim submitted by the Applicant. It is essential to mention that on 06th November 2019 the Applicant/Financial Creditor filed the Petition filed under Section 7 of the Insolvency Bankruptcy Code, 2016, for the initiation of Corporate Insolvency Resolution Process. The public announcement was made on 13th November 2019. After that on 04th December 2019, the Resolution Professional intimated the Bank of the Corporate Debtor to close all active ECS Accounts of the Corporate Debtor and further directed that no further ECS should be debited from the accounts of the Corporate Debtor. Whether, during the currency of the moratorium which has been imposed through Section 14 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as IBC, 2016),can anyamount be released or realised from the total assets of the Corporate Debtor? - whether the AA was justified in allowing the amount debited from the Corporate Debtor s account in ICICI Bank? - HELD THAT:- A reading of the Sections 14 and 15 of the IBC, 2016 makes it clear that the during the currencyof moratorium the sanctity of maintaining the integrity of the assets of the Corporate Debtor is a sine qua non for the CIRP. Section 14(1)(b) prohibits transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein. In view of the blanket prohibition mandated by Section 14 after the initiation of CIRP it stands to reason that any change in the conditions of assets from what existed on the date of initiation of CIRP is not permitted in the normal course. The section 14 also does not give any authority to the RP or AA to accord any preferential treatment to any creditor. The statute and the judicial pronouncement do not allow any preferential treatment to be given to any particular creditor. If one creditor is given preferential treatment then others should also get it to provide them a level playing field and same treatment in the eyes of law. This would not only cause confusion in the eyes of possible Resolution Applicants thereby putting a spanner in the resolution of the company which is the ultimate objective under the IBC, 2016. It would also lead to the collapse of waterfall mechanism regarding payment of liabilities to various stakeholders as is mandated and required under the IBC, 2016. Thus, the statute does not offer any in-built scope for preferential treatment to be accorded to any creditor. In addition, the provision in Section 14 do not allow any latitude to either the RP or the AA to give preferential treatment to any creditor - grounds exist for a full hearing to be accorded to the appellant after giving notice to the respondents and hearing both sides for a well-thought out and judicious decision. Hence, notices be issued to the respondents to be present in the tribunal and present their cases. The appellant shall provide fees etc. for service alongwith full contact details including postal and email address of the respondents. Matter be listed for hearing for admission (after notice).
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2020 (9) TMI 378
Maintainability of application - Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute regarding the supply of goods or not - HELD THAT:- Admittedly, no complaint in regard to allegations of fabrication of the debit note and genuineness of the cheque in terms whereof payment had been effected by the Corporate Debtor has been lodged by the Appellant Operational Creditor with the competent authorities. The dispute raised by the Corporate Debtor in reply to demand notice in regard to supply of goods and payment made after reconciliation and settlement of accounts between the two parties taking into consideration the debit note raised by the Respondent much before the issuance of demand notice and the rebate given later through the credit note cannot be said to be illusory or moonshine. Such dispute, being pre-existing i.e. prior to issuance of demand notice and Corporate Debtors plea of having satisfied the Operational Debt after reconciliation of accounts and rebate allowed cannot be resolved in Corporate Insolvency Resolution Proceedings. In the given circumstances, the Adjudicating Authority was right in declining to initiate CIRP against the Corporate Debtor. The appeal is accordingly dismissed at the very pre-admission stage.
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2020 (9) TMI 399
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Operational debt or not - existence of debt and dispute or not - time limitation - HELD THAT:- It is admitted case of the applicant that the present application is filed for the breach of the terms and conditions of the settlement agreement entered in between the parties on 15.06.2018. We further find that this settlement agreement is to settle the amount which according to the case of the applicant was due in terms of the agreement dated 28.11.2014. Therefore, it can be said that the present application is not against the invoices raised in terms of the agreement dated 28.11.2014 rather it is a breach of terms and conditions of the account settlement agreement dated 15.06.2018. Time Limitation - HELD THAT:- The CD has failed to raise the dispute within the time prescribed under Section 8(2) of the IBC, therefore, there are force in the contention raised on behalf of the OC that the CD has not raised the dispute under Section 8(2) of the IBC within the time prescribed under law. Existence of dispute and default or not - HELD THAT:- The definition of debt as defined under the IBC does not mean the operational debt only rather it includes financial debt as well as liability or obligation in respect of a claim which is due from any person and default means non payment of debt, but in order to trigger Section 9 of IBC an Operational Creditor is required to establish a default for non payment of Operational debt as defined in Section 5(21) of IBC, which means a claim in respect of the provision of goods or services including employment or a debt in respect of the [payment] of dues arising under any law for the time being in force and if a person fails to establish that, then they can not initiate CIRP under Section 9 of the IBC - Now it is the settled principle of law that National Company Law Tribunal is not recovery court rather when a default of either financial debt or operational debt occurred in that case, financial creditor or operational creditor may file an application for initiating corporate insolvency resolution process u/s 7 or section 9 respectively. Thus, the settlement agreement on the basis of which the present application is filed by the applicant does not come under the definition of operational debt - the failure or Breach of settlement agreement can't be a ground to trigger CIRP against Corporate Debtor under the provision of IBC 2016 and remedy may lie elsewhere not necessarily before the Adjudicating Authority .
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2020 (9) TMI 398
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and default or not - HELD THAT:- As per Section 10 of Insolvency and Bankruptcy Code, 2016, a Corporate Applicant can file an application before the Adjudicating Authority, seeking initiation of Corporate Insolvency Resolution Process of the Corporate Debtor that has committed a default, for initiating Corporate Insolvency Resolution Process with the Adjudicating Authority, in a prescribed form - As per Section 10(4) the Adjudicating Authority can admit an application if the same is complete and no disciplinary proceedings are pending against the proposed Resolution Professional. It is a settled position of law that once debt and default is proved to the satisfaction of the Adjudicating Authority, the case has to be admitted to initiate CIRP, and appoint IRP etc. We are satisfied with the reasons cited by the Petitioner to initiate CIRP. The instant Company Petition is filed in accordance with law. Petition admitted - moratorium declared.
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2020 (9) TMI 377
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - Time Limitation - HELD THAT:- Various documents on record itself show that the defence of Respondent on this count with regard to who is the employer requires a tripartite adjudication, is not baseless. We have perused Annexure A-4 (Page 88). It is titled Contract Agreement dated 19th March, 2008. The index (Annexure A-4) claims that the Agreement is only of three pages (Pages 80 82). Clearly, there are other documents. The Appeal has referred to only these pages from the Agreement, as the Contract. At Page 80, in the beginning of the Agreement, the title is The employer and the Contractor agree as follows:- Then Serial No.1 states that In this Agreement words and expression shall have the same meanings as are respectively assigned to them in the Conditions of Contract hereinafter referred to . When definition clause says particular thing, for purpose of interpretation, we would ignore the initial portion of Annexure A-4, where the Respondent - Nitesh Estates Limited is called the employer . It is apparent that the document itself says that the employer would be as stated in the conditions of contract and document at Page 128 says that the employer is NRHPL. We have looked into this as learned Counsel for Appellant wanted us to lift the corporate veil and see. The Respondent is right in saying that it requires tripartite adjudication, considering different documents and conduct of parties. Time Limitation - HELD THAT:- Appellant claims that project was completed in 2012 and the hotel was taken over in 2013. Take Over Certificate is stated to be dated 07.04.2014 The Application under Section 9 filed on 22.12.2017 would thus be clearly time barred with regard to the debt claimed. If the project was completed in 2012, the amounts payable must be said to have become due. When the works are completed and the hotel is also taken over and made functional, the time had begun to run. Whether or not this or that formality was completed would not stop the running of time. Pre-existing dispute or not - HELD THAT:- The Respondent has pointed out an e-mail dated 21.01.2016 (Annexure - E Page 58 of the Reply) which shows that the Chief Engineer of Ritz Carlton Hotel had sent communication to the Appellant with regard to the various leakages and seepages found in various rooms and the damage caused to upholstery, paint, furniture, etc. Various room numbers are pointed out which required various treatments. This document clearly shows that the quality of work done was disputed and the dispute was raised in 2016 itself and Appellant was informed that in spite of continuously following up, there was no response. It is quite apparent that there was pre-existing real dispute regarding the quality of work done. When this is so, the Adjudicating Authority is not required to go into further details and we find that the Application under Section 9 was rightly rejected by the Adjudicating Authority. Appeal dismissed.
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2020 (9) TMI 376
Request for withdrawal of original Application filed under Section 9 of IBC - HELD THAT:- Considering Judgement of the Hon ble Supreme Court in the matter of SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT ], in exercise of powers under Rule 11 of National Company Law Appellate Tribunal Rules, 2016, we accept the request made by the Counsel for Appellant and Counsel for Respondent No.1. The request of Respondent No.1 is that the Respondent No.1 wants to withdraw the original Application filed under Section 9 of IBC, in view of the settlement reached by the parties. Respondent No.1 is permitted to withdraw the original Application filed before the Adjudicating Authority - Appeal allowed.
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2020 (9) TMI 375
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute - HELD THAT:- We are not ready to discard the loan Agreement pointed out by the Respondent and the MOU only because the Appellant now turns around to brand one of its Directors as not good Director with whom the other Director, his brother subsequently claims to have developed disputes. Calling a document as forged is not enough to throw out the document unless there is, prima facie, evidence to show that the document is a false creation by the opposite party. The record shows that when the Appellant sent the recall Notice, the Respondent immediately by way of another Notice which is at Page 138 referred to the documents executed between the parties and claimed that for want of the investment, it had suffered damages. In the Reply before the Adjudicating Authority, the forfeiture was also claimed. We are not entering into the dispute relating to these documents which are stated to be before the Arbitrator. What we hold from the record is that the Appellant Financial Creditor fails to make out case that there is debt which is admitted and enforceable and that it is in default. Appeal dismissed.
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FEMA
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2020 (9) TMI 392
Seizure and attachment of the bank account of the petitioner's father - grievance of the petitioner before this Court is that the bank account mentioned in the writ petition is not allowed to be operated by the petitioner under the guise of investigating the matter under FEMA and no order of attachment was passed by the first respondent at any point of time in respect of the said bank account and therefore, the petitioner cannot be prevented from operating the bank account - HELD THAT:- Investigation under FEMA is pending and the investigation conducted so far reveals that the amount inter alia lying in the subject matter bank account appears to have been involved in violation of provisions of FEMA. Though such counter affidavit is filed, when a specific question is put to the leaned counsel for the first respondent by this Court as to whether any order of freezing the account has been issued by the first respondent, he submitted that no such order is issued so far. When it is stated that the first respondent has not issued any order freezing the subject matter bank account so far, no justification on the part of the first respondent in not allowing the petitioner to operate the bank account. Either the first respondent should pass an order in accordance with law to freeze the bank account or allow the petitioner to operate the bank account, in the absence of any such attachment order. Without doing either of these things, the respondents make the petitioner to stand in a position namely neither here nor there. Therefore, this Court is of the view that it is for the first respondent to take a decision and if they choose to attach the bank account, it should be done only by the manner in which law so provides to do so. Order - Since it is an admitted fact that the subject matter bank account is not so far issued with any order of attachment or freezing the account, it is open to the first respondent to pass any such order within a period of 30 days from the date of receipt of a copy of this order. If the first respondent has not chosen to pass any attachment order as stated supra, the petitioner shall not be prevented from operating the bank account.
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Service Tax
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2020 (9) TMI 388
Refund of service tax - service tax paid for the services received in the SEZ - Condition No. 3(f) (ii) under Notification No. 40/2012-ST - HELD THAT:- Condition No. 3(f) (ii) under Notification No. 40/2012-ST provides for the unit in a SEZ claiming exemption by way of refund, to have paid the amount indicated in the invoice/ bill or as the case may be, challan, including the service tax payable, to the person liable to pay the said tax or the amount of service tax payable under reverse charge, as the case may be, under the provisions of the said Act. The Court below have erred in misconstruing the condition in clause (f) of Sl. No.(ii) of the Notification No. 40/2-12-ST as the requirement is SEZ developer or unit has paid the service tax payable under reverse charge or as the case may be. Admittedly, appellant have paid the service tax under reverse charge and produced the challan, and further they have rightly discharged the service tax as recipient of service in terms of 2nd proviso to Rule 7 of the Point of Taxation Rules. Further, there is no such essential condition of payment of amount to the service provider. The Adjudicating Authority is directed to grant the refund of ₹ 11,23,911/- within a period of 45 days from the receipt of this order alongwith interest as per rules - appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (9) TMI 383
Valuation - undervaluation - Polo and Vento models of their car - related party transaction - interconnected undertakings - Mutuality of Interest - Section 4(3)(b) of the Central Excise Act, 1944 - four SCN for same transactions and same period - Impact of the CAG report of 2014 on determination of value - benefit of cum-duty price - extended period of limitation - change of opinion - demand of interest - various penalties. Whether the Commissioner could have considered and adjudicated four different Show Cause Notices in respect of the same transactions for the same period proposing to demand duty by invoking different routes to the valuation of Goods Cleared? - HELD THAT:- We cannot agree with the method adopted by the Commissioner while dealing with the three Show Cause Notice dated 06.02.2015. Commissioner could not have determined three different methods for valuation of the same goods simultaneously. Commissioner while adjudicating has to be judicious enough to determine what is the correct approach to determine the value of the goods cleared. Accordingly he/ she have to determine the value and duty payable - in such a case only one of the three show cause notices which as per the understanding of adjudicator are logical and legally sustainable should have been adjudicated and the other two summarily dismissed. Appellants have contended that the value determined by them for payment of duty is the transaction value determined purely on commercial considerations at arm s length. However we find that the documents and evidences suggests that both M/s VWIPL (Appellant) and M/s VWGSIPL do not independently determine the value at which the M/s VWIPL would transfer the cars to M/s VWGSIPL . The transfer value claimed to be the true transaction value is determined by the Planning Round, every year which is headed by M/s VWAG, Germany. Mutuality of Interest and Related Person - HELD THAT:- Undisputedly, Appellant and VWGSIPL are subsidiaries of M/s VWAG, Germany. Appellant is engaged in the manufacture and production of the cars of models Polo and Vento, as per the designs and specifications of M/s VWAG, Germany, and sell them in the territory of India to only and only M/s VWGSIPL, a marketing subsidiary of M/s VWAG. Any operating loss suffered by the appellant i.e. VWIPL is made good by the M/s VWAG, Germany. As per the submissions made by the appellant counsel at the time of hearing and in written submissions we note that appellant was suffering losses that were made good by M/s VWAG Germany. All the facts as recorded in impugned order on the basis of the various agreements clearly point to one fact that the issue for consideration is not one of relationship between the buyer and seller simplicitor, because the two Indian subsidiaries are mere puppets in the hand of M/s VWAG, Germany who is authority to determine and take decisions in relation to production and sale of the vehicles of Volkswagen Brand namely Polo and Vento in Indian territory. In fact German unit by rendering financial assistance to both the Indian subsidiaries make them financially viable for their operation. In none of the cases relied upon by the Appellants during the course of arguments on appeal have such an arrangement been considered. In our opinion, in the present case if corporate veil is pierced then we find that the entire operations of manufacture and sale of these vehicle was throughout on account of M/s VWAG, Germany. Impact of the CAG report of 2014, on determination of Value of Polo and Vento Models of Cars cleared by the Appellant - HELD THAT:- Appellants have submitted that it is also the view of the Ministry that in this case the transactions between VWIPL and VWGSIPL, are not covered by rule 10 as they are not the holding and subsidiary company. Hence the valuation could not be done in terms of Rule 9 by taking the sale price of the VWGSIPL, as the basis for determination of assessable value. We are not in position to accept the submissions made by the appellants, for the reason that in its reply the Ministry has not outrightly rejected the contentions of the audit but have clearly referred to the investigations in the case of under-valuation under process. The points made by the audit have been made the part of that investigation. The opinion of the Ministry referred in the Audit Reports is not conclusive and also is not the statement of law. It is also not a binding judicial precedent. The value that qualifies to be a value under Section 4(1)(a) can be value which is on account of sale at arm s length, and not any value that is determined for transfer/ clearance of goods. In absence of any value under Section 4(1)(a), the only route available for determination of the value will be under Sec.4(1)(b) through Rule 11 of valuation rules and the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of section 4 of the Act. By application of Rule 11, in case of related person transactions the value needs to be determined by application of Rule 9 of the Central Excise Valuation (determination of Price of Excisable Goods) Rules, 2000. Thus in absence of Section 4(1)(a) value satisfying the criteria laid down by the Apex Court in case of M/s FIAT Industries the value is finally determined in terms of Rule 9 only, on the basis of sale price of M/s VWGSIPL to the dealers. Benefit of Cum Duty Price - HELD THAT:- The Commissioner has in the impugned order not even examined the issue at all. We are in full agreement with this submission of the Appellant that the benefit of cum duty price will be admissible to them if it can be shown that the price which is taken for computation of assessable value and duty demand is inclusive of excise duty and cesses. Since the Commissioner has not even examined this aspect, the matters need to be remanded back to the Commissioner for re-determining the value of clearances after allowing the benefit of cum duty price - Thus the demand for duty needs to be recomputed after allowing the benefit of cum duty price from the sale price to dealers. Extended period of Limitation - Change of opinion - HELD THAT:- The impugned order has completely mis-directed while determining the issue of limitation. There can be no dispute about the fact that the issue of valuation of Polo and Vento Variants of the Cars manufactured and cleared by the Appellant was always in the knowledge of the department and was subject matter of correspondence and discussions. It was also taken up in the audit conducted by Central Excise Revenue Audit and is part of the CAG Report of 2014, tabled in Parliament. When the entire issue was under discussion and inquiry, and revenue entertained the view about the correctness of the methodology of valuation adopted as is evident from the CAG Report of 2014. Change in opinion or insufficiency of enquiries earlier made by the department cannot be said to be amongst the grounds enumerated in section 11A (4) for invoking the extended period of limitation - extended period of limitation as provided by Section 11A (4) will not be available for making the demand of duty in the circumstances of this case. Demand of Interest - HELD THAT:- Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 11AA, is for delay in the payment of tax from the date when it was due. Since appellants have failed to determine the correct assessable value and pay the correct amount of duty by the due date interest demanded cannot be faulted. Penalty under Section 11AC of the Central Excise Act, 1944 - HELD THAT:- We do not agree with the findings of the Commissioner that there was suppression with intention to evade payment of Central Excise duty, hence we did not find any merits in the invocation of extended period of limitation - the penalty imposed under Section 11AC is liable to be set aside the moment it is held that extended period of limitation cannot be invoked for making the demand. Penalty under Rule 26 of Central Excise Rules, 2002 - HELD THAT:- Since we find that the issue involved in the matter is of interpretation of legal provisions and number of contractual agreements and documents. On the merits till the time investigations were undertaken by Director General of Central Excise Intelligence, revenue authorities also held the view akin to held by the Appellants. When revenue authorities also held the same view as the appellant then how can appellants alone be held guilty of contumacious conduct for imposition of penalty - in such case involving complex issues in relation to interpretation of statutory provisions, where revenue also entertained the same view as appellants the penalties imposed under Rule 26 of Central Excise Rules, 2002 cannot be justified and are set aside. The appeals filed by Appellant namely M/s VWIPL, are partially allowed and the matter remanded back to the Commissioner for redetermination of the quantum of duty payable.
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CST, VAT & Sales Tax
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2020 (9) TMI 393
Concessional benefit of tax - purchase of High Speed Diesel from suppliers in other States - difficulty in obtaining C-Form - HELD THAT:- The issue squarely covered in the case of M/S. DHANDAPANI CEMENT PRIVATE LTD., M/S. TERU MURUGAN BLUE METAL VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) TERRITORIAL, THE DEPUTY COMMISSIONER (ST) [ 2019 (2) TMI 1850 - MADRAS HIGH COURT] where it was held that he Petitioner in these Writ Petitions has stated on affidavit that it is unable to download the C forms from the websites as the same stand blocked from use. Upon enquiry with the Assessing Authorities, they have been informed that the benefit of the decision in M/s Ramco Cements Ltd can be extended only to those dealers that are party to the decision. This stand is unacceptable in so far as the decision of this Court as well as other High Courts, one of which has been confirmed by the Supreme Court, are decisions in rem, applicable to all dealers that seek benefit thereunder, of course, in accordance with law. The order in Writ Appeal is final, and following the rationale thereof, these Writ Petitions are allowed.
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2020 (9) TMI 391
Violation of the principles of natural justice - Request for personal hearing rejected - Validity of assessment order - periods 2010-11 to 2015-16 - HELD THAT:- A pre-assessment proposal dated 24.04.2019 was issued by the Officer, wherein no reference was made to communication dated 13.08.2018, though the petitioner has placed on record at page 14 of the document compilation an acknowledgement for filing of the letter requesting personal hearing - In response to the aforesaid notice, the petitioner appears to have filed a letter dated 15.06.2019, for which there is no acknowledgement on record, seeking some more time to submit the required documents. The assessments have however been finalized vide impugned orders of assessment dated 31.07.2019 without reference to either of the requests of the petitioner. Thus, no effective opportunity has been extended to the petitioner in this matter and in the interests of substantial justice, it would be appropriate for the petitioner to be heard in person in the light of this Courts specific direction to that effect vide order dated 11.04.2018 and the petitioners request for personal hearing in letter dated 13.08.2018 - impugned orders are set aside - Matter restored before the AO.
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2020 (9) TMI 420
Constitutional Validity of Section Section 2(15)(ix) and 2 (33(vi), explanation I of Tamil Nadu Value Added Tax Act 2006 - Club and association service - principles of mutuality - incorporation of clubs after 46th amendment to the Constitution - HELD THAT:- The theory of mutuality will apply to both incorporated and unincorporated clubs. - Following the decision of Supreme Court in the matter of CALCUTTA CLUB LIMITED / M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT] , the petition is disposed off.
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Indian Laws
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2020 (9) TMI 397
Smuggling - Ganja - acquittal of accused - offence under Section 20(b)(ii)(B) of Narcotic Drugs Psychotropic Substances Act, 1985 - HELD THAT:- In the present case the prosecution has been successful in proving the case against the accused by examining the witnesses PW3, PW4, PW5, PW7 and PW8. It is true that all the aforesaid witnesses are police officials and two independent witnesses who were panchnama witnesses had turned hostile. However, all the aforesaid police witnesses are found to be reliable and trustworthy. All of them have been thoroughly cross-examined by the defence. There is no allegation of any enmity between the police witnesses and the accused. No such defence has been taken in the statement under Section 313, Cr.P.C. There is no law that the evidence of police officials, unless supported by independent evidence, is to be discarded and/or unworthy of acceptance. It is settled law that the testimony of the official witnesses cannot be rejected on the ground of noncorroboration by independent witness. It has been established and proved that the samples which were seized and sealed were sent to the FSL. From the record, it establishes that the recovery from Rizwan Khan was marked as B1 and B2 and the treasury record also that the narcotic substances recovered from Rizwan Khan were shown as B1 and B2 . There seems to be some clerical error in numbering of sample in memorandum of Superintendent of Police and the same was mentioned as A1 . However, it has been established and proved that the samples which were seized and sealed from Rizwan were sent to the FSL. Both the courts below have rightly convicted the accused for the offence under Section 20(b)(ii)(B) of the NDPS Act - there are no reason to interfere with the conviction of the accused for the offence under Section 20(b)(ii)(B) of the NDPS Act. Appeal dismissed.
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2020 (9) TMI 394
Maintainability of complaints - Dishonor of Cheque - insufficiency of funds - proceedings conducted by the trial court including order of cognizance and summoning passed by the trial court - HELD THAT:- he complaints in question though initially have had been filed with a defect of not mentioning name of defacto complainant -the Managing Director of the Company namely Rajat Chadha yet the said defect had been allowed to be removed by the trial court vide order dated 14.08.2017 and the said order though questioned by the petitioner in earlier 561-A petitions was not set aside by this court meaning thereby that the complaints in question are very well competent. Similarly the issue raised by the petitioner about taking on record of preliminary statement original affidavit of the complainant attested by oath commissioner pursuant to the order of trial court dated 01.07.2017, which order too though challenged in the earlier 561-A petitions was not set aside by this court. The said orders thus assumed finality and in law, could not be re-agitated in the instant petitions. Although the trial court while considering the matter upon receiving record back from this Court seemingly has erred initially while summoning the petitioner/ accused pursuant to orders dated 09.06.2018, 30.06.2018 and 21.07.2018, however, subsequently corrected the conducting of proceedings upon recording preliminary statement of the respondent/ complainant and upon passing fresh cognizance and summoning order dated 17.12.2018 notwithstanding the earlier summoning of the petitioner herein. The aforesaid errors committed by the trial Court by no sense of imagination could said to be fatal to the entire proceedings, in that, even if same or treated nullity or are set aside the further proceedings subsequently conducted by the trial court would not get affected. Thus, complaining of suffering a prejudice or injustice on this account by the petitioner is insignificant and legally of no consequence. Furthermore the petitioner cannot question the order of cognizance or else proceedings conducted by the trial court after receipt of record back from this court on account of denial of hearing is also legally not sustainable, since hearing of accused at the time of recording of preliminary statement of the complainant, passing of cognizance order as also before issuance of process is not, in law, conceived of. This court is of the view that in the instant cases exercise of inherent power is not warranted - Petition dismissed.
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2020 (9) TMI 419
Conduct of investigation by the police officer who himself is the complainant - it is alleged that in case the investigation is conducted by the police officer who himself is the complainant, the trial is vitiated and the accused is entitled to acquittal - present matter is placed before the Bench consisting of five Judges - Principles of Natural Justice. Whether in case the investigation is conducted by the informant/police officer who himself is the complainant, the trial is vitiated and in such a situation, the accused is entitled to acquittal? HELD THAT:- The first decision relied upon on behalf of the accused is the decision in the case of BHAGWAN SINGH VERSUS THE STATE OF RAJASTHAN [ 1975 (8) TMI 147 - SUPREME COURT ], which has been subsequently followed and even considered in the subsequent decisions. It is true that in the case of Bhagwan Singh, this Court acquitted the accused by observing and holding that the complainant himself cannot be an investigator. However, it is required to be noted that in that case the investigation was conducted by a Head Constable who himself was the person to whom the bribe was alleged to have been offered and who lodged the first information report as informant or the complainant. It was noted that the entire case of the prosecution rests solely on the testimony of the Head Constable Ram Singh and four other police constables. It was found that there was not a single independent witness to depose to the offer of bribe by the accused. It was noticed that the Head Constable Ram Singh did not make any effort to get independent respectable witnesses in whose presence the seizure could be made - on facts and considering the entire evidence on record having doubted the prosecution case against the accused and more particularly in the absence of any independent witnesses, though the independent witnesses were available, this Court acquitted the accused by giving him benefit of doubt. Therefore, as such, the decision of this Court in the case of Bhagwan Singh can be said to be a decision on its own facts and cannot be said to be laying an absolute proposition of law that in no case the informant/complainant can be the investigator and that in all the cases where the complainant/informant and the investigating officer is the same, the entire trial is vitiated and the accused is entitled to acquittal. Considering Section 157 Cr.P.C., either on receiving the information or otherwise (may be from other sources like secret information, from the hospital, or telephonic message), it is an obligation cast upon such police officer, in charge of a police station, to take cognizance of the information and to reduce into writing by himself and thereafter to investigate the facts and circumstances of the case, and, if necessary, to take measures for the discovery and arrest of the offender. Take an example, if an officer in charge of a police station passes on a road and he finds a dead body and/or a person being beaten who ultimately died and there is no body to give a formal complaint in writing, in such a situation, and when the said officer in charge of a police station has reason to suspect the commission of an offence, he has to reduce the same in writing in the form of an information/complaint. In such a situation, he is not precluded from further investigating the case. He is not debarred to conduct the investigation in such a situation. The NDPS Act is a complete Code in itself. Section 41(1) authorises a Metropolitan Magistrate or a Magistrate of the first class or any Magistrate of the second class specially empowered by the State Government in this behalf, may issue a warrant for the arrest of any person whom he has reason to believe to have committed any offence punishable under the NDPS Act, or for the search, whether by day or by night - the NDPS Act does not specifically bar the informant/complainant to be an investigator and officer in charge of a police station for the investigation of the offences under the NDPS Act. On the contrary, it permits, as observed hereinabove. To take a contrary view would be amending Section 53 and the relevant provisions of the NDPS Act and/or adding something which is not there, which is not permissible. There is no reason to doubt the credibility of the informant and doubt the entire case of the prosecution solely on the ground that the informant has investigated the case. Solely on the basis of some apprehension or the doubts, the entire prosecution version cannot be discarded and the accused is not to be straightway acquitted unless and until the accused is able to establish and prove the bias and the prejudice - As rightly observed, if at all, the investigation could only be assailed on the ground of bias or real likelihood of bias on the part of the investigating officer the question of bias would depend on the facts and circumstances of each case and therefore it is not proper to lay down a broad and unqualified proposition that in every case where the police officer who registered the case by lodging the first information, conducts the investigation that itself had caused prejudice to the accused and thereby it vitiates the entire prosecution case and the accused is entitled to acquittal. Reference is answered.
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2020 (9) TMI 390
Dishonor of Cheque - time limitation - Section 142 of N.I. Act - HELD THAT:- Instant application has been after three years of issuance of impugned summoning order, which was passed on 16.08.2017 and as no satisfactory explanation for delay has been given, thus there being undue delay and latches on the part of applicant in filing of this application, this application is liable to be dismissed on this ground alone. Even on merits, so far the contention that impugned complaint is barred by period of limitation prescribed under section 142 NI Act is concerned, it may be stated that a bare perusal of provisions under section 138 and 142 of NI act, makes it clear that the drawee has to send a legal notice within 30 days from the date of return dishonour of cheque and asking for payment mentioned in the cheque to be maid within the 15 days. On expiry of fifteen days from the service of notice, the complaint may be filed within one month. In the instant case it may be seen that as per allegations of complaint, the cheque was issued by the applicant on 18.01.2017, which was presented by complainant in his bank Allahabad Bank, Mawana on 02.02.2017. This cheque was dishonored on 03.02.2017 due to insufficiency of funds in account of applicant and memo of bank to this effect was received by the complainant on 04.02.2017 - as the notice was served on 17.03.2017, thus the cause of action arose on 15.04.2017 when the applicant failed to make payment within 15 days after receipt of notice, and thereafter the complaint was filed within the prescribed period of one month after cause of action arose. All the conditions are satisfied for initiation of proceedings under section 138 N. I. Act and it can not be said that complaint filed by O.P. No. 2 is barred by limitation and therefore the contention raised by learned counsel has no force - The instant application under section 482 CrPC being devoid of any merit is hereby dismissed.
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