TMI Tax Updates - e-Newsletter
September 21, 2016

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• No service tax on advances if such advances are adjusted against dues for rendering of service as it would amount to double taxation - Tri

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Highlights / Catch Notes

• Income Tax:

  Settlement of cases - the said mechanism is a complete code in itself and merely because of the fact that an interim admission order has been passed u/s 245(D)(2C), it does not mean that any irreparable loss has been caused to the Income Tax Department. - HC
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• Income Tax:

  For an alleged mistake allegedly made by the Assessing Officer, the assessee made the miscellaneous application seeking modification of the order passed by the Tribunal. The entire move of the assessee was wrongful - HC
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• Income Tax:

  Disallowance made u/s 40A(3) - cash payment - the assessee retail vendor had made payment to the said agent (wholesale licensee) would fall under the exception provided in Rule 6DD(k) of the Rules. - AT
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• Income Tax:

  Reopening of assessment - loss claimed on the gross receipts - assessee has maintained books of accounts are required u/s 44AA(2) but had not got the accounts audited as required u/s 44AB - action of reopening the assessment confirmed - AT
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• Income Tax:

  Status of AOP - property purchased by the husband and wife in the joint names - As per the provisions of Section 45 of the Transfer of Property Act in case of joint ownership of property the share of the co-owner shall be determined as per the ratio of their contribution in the purchase consideration. - AT
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• Income Tax:

  Addition u/s 69 - sale of shares - Since the assessee has credited the amount of sale in its books of account which may represent the allegedly bogus sales consideration floated from entity which is floated by the said group, the case may fall within the parameters of Section 68 also - AT
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• Income Tax:

  Unexplained investment in immovable property - addition u/s 69 - AO, before referring the matter to DVO for valuation of the investment in the property, should have rejected the books of account of the assessee, that too after satisfying the conditions precedent as envisaged u/s 145(3) - AT
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• Income Tax:

  Addition on account of borrowed fund from villagers - The burden of proving the onus is on the assessee to produce the creditors specifically when the facts and circumstances clearly raise the suspicion on the very genuineness of the claim - AT
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• Customs:

  Rejection of refund claim - impact of rejection of value for subsequent imports to the earlier imports - declared value could not have been rejected for assessment making it applicable to all assessments that preceded it - restoration of refund claim upheld - AT
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• Customs:

  Maintainability of writ petition - it is not the legal position that once a petition is admitted, it cannot be dismissed on the ground of alternative remedy. - HC
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• Customs:

  Valuation - inclusion of royalty in the value of imports - Running royalties are condition of sale for the transaction value and thus needs to be added in the value for the purpose of payment of Customs duty. - AT
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• Service Tax:

  Demand of service tax on advances received - works contracts - advances made cannot be subject to tax if such advances are adjusted against dues for rendering of service as that would amount to double taxation. - AT
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• Service Tax:

  Refund claim - Notification No. 40/2012-S.T. - SEZ unit - in the absence of any permission from the Development Commissioner to use said services, the discharging the service tax liability, would not automatically entail availment of Cenvat credit - AT
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• Central Excise:

  Refund claim - claim filed after about 10 years from the relevant date - unutilized Modvat credit in Modvat account which could not be used for payment of duty as the final product has become exempted - claim of refund rejected - AT
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• Central Excise:

  Duty liability - sugar cleared for export but was not exported - a certificate issued by one of the authorities who has been appointed by a statute, cannot be overlooked by the lower authorities. - AT
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• VAT:

  Penultimate sale - export consignment - When the revisional authority noticed discrepancies in the different documents supplied by the assessee, he was within his rights to deny the benefit of tax exemption to such extent. - HC
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• VAT:

  The cleaning material used for the purpose of cleaning the building and other facilities, furniture etc cannot be treated as a consumable used in relation to setting up of the unit or in the manufacture of other goods - it is apparent from the Statute itself that the petitioner is not liable for any exemption. - HC
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Articles

• REGISTERED VALUER UNDER WEALTH TAX ACT, 1957 – PART II

Notifications

• Income Tax

• 84/2016 - dated 16-9-2016 - IT
  Income-tax (22nd Amendment) Rules, 2016

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News

• The Union Finance Minister Shri Arun Jaitley to inaugurate the Seminar on ‘Best Practices in PPPs and Long-term Infrastructure Financing’ of BRICS Countries on 22nd September, 2016;

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• RBI Reference Rate for US $

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• Auction for Sale (Re-issue) of Government Stocks

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• The Twenty Second Issue of the Annual Publication of India’s External Debt: A Status Report 2015-16 released; India’s external debt stock stood at US$ 485.6 billion at end-March 2016, increasing by US$ 10.6 billion (2.2 per cent) over the level at end-March 2015; The rise in External Debt was due to the rise in long-term debt particularly NRI deposits

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• Finance Minister focuses on need for change in the attitude of people at large to pay the due taxes within the prescribed time; Conveys the Government’s Appreciation to tax payers for their contribution towards Nation building

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Case Laws:

• Income Tax

• 2016 (9) TMI 820
  Additional grounds of appeal - whether , the Income Tax Appellate Tribunal was correct in law in holding that the Grounds of Appeal raised before the ITAT could not be entertained as it was not raised as additional grounds of appeal without seeking leave of the court even though the same was part of grounds of appeal filed before the ITAT by the Appellant ? - Held that:- Rule 11 confers wide powers on the Tribunal, although it requires a party to seek the leave of the Tribunal. It does not require the same to be in writing. It merely states that the appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal. In a fit case it is always open to the Tribunal to permit an appellant to raise an additional ground not set forth in the memorandum of appeal. The safeguard is in the proviso to Rule 11 itself. The proviso states that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground. Thus even if it is a pure question of law, the Tribunal cannot consider an additional ground without affording the other side an opportunity of being heard. We venture to state that even in the absence of the proviso it would be incumbent upon the Tribunal to afford a party an opportunity of meeting an additional point raised before it. Moreover, even though Rule 11 requires an appellant to seek the leave of the Tribunal, it does not confine the Tribunal to a consideration of the grounds set forth in the memorandum of appeal or even the grounds taken by the leave of the Tribunal. In other words the Tribunal can decide the appeal on a ground neither taken in the memorandum of appeal nor by its leave. The only requirement is that the Tribunal cannot rest its decision on any other ground unless the party who may be affected has had sufficient opportunity of being heard on that ground. In the present case the Tribunal ought to have exercised its discretion especially in view of the fact that the assessee intends raising only a legal argument without reference to any disputed questions of fact. In view of the afore-referred statement made by learned senior counsel appearing on behalf of the appellant-assessee that for the decision on the new ground raised by the assessee, no additional evidence would be led and that such question arose from the facts which were already on the record of the assessment proceedings and further being convinced that a decision upon the new ground raised by the assessee would only help in determining the assessee's correct tax liability, after setting aside the impugned order, we remand the matter to the Tribunal for adjudicating upon the additional ground on merits. The Tribunal would be at liberty to remand the matter further, if it so deems fit.

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• 2016 (9) TMI 819
  Reopening of assessment - deduction of a loss claimed on account of diminution of value of the derivatives - ascertained liability - Held that:- We are far more concerned about the question whether there was full and true disclosure in respect of such a claim. The answer would be available from the reasons recorded by the Assessing Officer itself. These reasons nowhere demonstrate that the assessee had failed to disclose true and full facts. In fact, to the contrary, the reasons would establish that the Assessing Officer was referring to the material already on record to assert that the claim of expenditure of ₹ 1.88 crores was not in tune with the MAT provisions contained under section 115JB of the Act and in particular, explanation 1(c) thereto. Clearly therefore, the Assessing Officer did not have any additional or new material which did not form part of the original assessment proceedings to question the assessee's claim of deduction in this respect. Notice of reopening based on such ground which was issued beyond a period of four years, would therefore not be valid.- Decided in favour of assessee. Claim of deduction under section u/s. 80IA(4)(iv) of the Act in respect to sale of steam to its sister concern - Held that:- From the reply of the petitioner, it can be seen that the issue under discussion was precisely whether the petitioner was justified in claiming deduction on sale of steam. In this respect, the petitioner relied on a decision of Delhi bench of the Tribunal and contended that the word 'power' has to be given a meaning which in common parlance means energy and that therefore, steam produced by the petitioner would also be termed as power and therefore, qualify for deduction under section 80IA(4)(iv) of the Act. Undisputedly, the Assessing Officer did not disturb this claim in the final order of assessment. It may be that while doing so, she did not record separate reasons in the order of assessment. This would however be of no consequence as has been held by this Court in case of Gujarat Power Corporation Limited v. Asstt. Commissioner of Income Tax, reported in [2012 (9) TMI 69 - Gujarat High Court ]. Thus egarding the second ground also, therefore, it can be seen that there was no failure on the part of the petitioner to disclose truly and fully all material facts. In fact, the claim was examined not only in the context of the petitioner's larger deduction under section 80IA(4)(iv) of the Act but, specifically to that portion of the claim which related to the sale of steam. Such ground cannot be reagitated in exercise of power for reassessment, that too beyond the period of four years. - Decided in favour of assessee.

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• 2016 (9) TMI 818
  Shares dealings - treated as investment in shares or business transaction - Held that:- We are inclined to think that neither the assessing officer nor the CIT (Appeals) insisted upon the assessee to produce evidence from its records to show that the transactions were intended to be investments and not mere dealing in shares. The substance of the matter was not thus adverted to. Stress was laid on the treatment given in earlier years which is not of much importance because a wrong view taken in the earlier years is not binding on the revenue in the subsequent years. Mr.Khaitan, learned Senior Advocate appearing for the assessee submitted that there is evidence to show that shares were held for a period between 18 and 39 months. We are unable to find any evidence in that regard except that the shares of McDowell and Macmillan were according to him held for the period between 18 and 39 months. It is nobody’s case that the gains being subject matter of discussion arose out of sale of those shares. On the contrary, the case of the assessee himself is that “the transactions this year are mere change of investment portfolios from bad performing sectors to good performing sectors.” Bad performing shares could not have yielded profit to the assessee as rightly pointed out by the assessing officer. For the aforesaid reasons we are inclined to think that the matter should go back to the assessing officer. The questions quoted above need not be answered at this stage because we have directed remand of the matter. Therefore, orders passed by the learned Tribunal, CIT (A) and the assessing officer are all set aside. The matter is remanded for reconsideration after giving an opportunity of hearing to the assessee in accordance with law.

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• 2016 (9) TMI 817
  Matter pending before the Settlement Commission - Held that:- As the matter is still pending before the Settlement Commission, the Settlement Commission has to decide whether the full disclosure is made or not. The petitioner is certainly at a liberty to raise all issues and grounds before the Commission. The Settlement Commission has to proceed the matter in accordance with Section 245D (2B), 245 D(3), 245D(4), 245D(4A),245D(5),245D(6), 245D(6A) of the Act. Thereafter, after examination of record, after considering report of the Commissioner and the materials brought on record before the Settlement Commission, the Settlement Commission has to pass a final order. The Settlement Commission has the jurisdiction to provide for the terms of settlement including demanding any tax, penalty or interest. The Settlement Commission is also having jurisdiction to examine as to whether any order has been obtained by fraud or misrepresentation of facts. Thus, in short, a complete mechanism has been provided for dealing with Settlement applications and the said mechanism is a complete code in itself and merely because of the fact that an interim admission order has been passed under Section 245(D)(2C), it does not mean that any irreparable loss has been caused to the Income Tax Department. In the considered opinion of this Court, as the matter is pending before the Settlement Commission and no final order has been passed and as the Commission is now seized with the matter, all the grounds raised by the petitioner shall be looked into and shall be considered by the Settlement Commission while passing a final Order. Resultantly, no case for interference is made out in the matter. However, by way of abundant caution, it is observed that any observation made by this Court will not affect in any way the subject matter pending for consideration before the Settlement commission. The Settlement Commission shall decide the matter strictly in accordance keeping in view the statutory provisions as contained under the Income Tax Act.

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• 2016 (9) TMI 816
  Fresh evidences submitted ignored - contravention of Sub Rule 2 of Rule 46A of the Income Tax Rule, 1962 - Held that:- It would appear from the observations made by the CIT(A) that the interim report furnished by the Assessing Officer did not contain any complaint that the assessee had relied upon any new material. Mr. Bhowmick, learned Advocate appearing form the appellant, is unable to show that the assessee did, in fact, rely upon any fresh evidence before the CIT(A). When there is no certainty as regards the assessee having relied upon fresh evidence, the question of complying with the provisions of rule 46A(2) would not arise. The learned Tribunal does not appear to have made any mistake because the submissions made by the Revenue before the learned Tribunal did not include even a sentence as regards any new evidence relied upon by the assessee before the CIT(A), as would appear from the part of the Tribunal’s order quoted above by us. In that view of the matter, the question is answered by holding that the order of the learned Tribunal is not erroneous on account of omission to consider any alleged violation of sub-rule (2) of rule 46A.

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• 2016 (9) TMI 815
  Additions under Section 43B both on account of Provident Fund and ESI dues - modification of the tribunal order seeked - Held that:- Direction for enhancement in respect of employee’s contribution was passed by the CIT(A). In any event the averments, quoted go to show that the assessee was aggrieved by an order passed by the Assessing Officer in giving effect to the order of the CIT(A). For an alleged mistake allegedly made by the Assessing Officer, the assessee made the miscellaneous application seeking modification of the order passed by the Tribunal. The entire move of the assessee was wrongful. He deliberately misconstrued the order of the CIT(A). In order to succeed in such misconstruction, he wrongfully imputed mistake in the order of the learned Tribunal as demonstrated above by us. This was not an application made bona fide and was rightly dismissed by the learned Tribunal.

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• 2016 (9) TMI 814
  Deduction u/s 80P - whether ITAT allowing deduction on income earned by the assessee from investment in banks and other financial institutions has rendered the provisions of Section 80P(2)(a)(i) nugatory as the said section of the Act allows deduction to a cooperative Society engaged in carrying on business of banking or providing credit facilities to its members ? - Held that:- We are prepared to agree with Mr. Khaitan to the extent that the interest earned from out of the investments made under Section 64 read with Section 63 of the Multi State Co-operative Societies Act, 2002 is attributable to the business of providing credit facilities to its members. But we are not able to agree with Mr. Khaitan that the rest of the interest earned by the assessee from the investments is also attributable to the business of providing credit facilities to its members. We have not been impressed by the judgements cited by Mr. Khaitan. The question raised for decision is answered in the affirmative and in favour of the revenue to the extent as indicated above. The appeal is allowed. The matter is, however, remanded to the Assessing Officer (a) to work out the interest earned under Sections 63 and 64 of the Multi State Cooperative Societies Act, 2002 and to allow benefit under Section 80P and (b) to ascertain the interest paid to the members for the purpose of earning the sums of ₹ 99 lakhs and 1.2 crores on account of interest from investments. Such interest shall be deducted from the expenses of eligible business. Consequent increased amount of profits of eligible business as discussed above shall be the amount of deduction available to the assessee under Section 80P.

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• 2016 (9) TMI 813
  Disallowance made u/s 40A(3) - nature of payment - Held that:- The payment made by the assessee retail vendor to the Principal, Government of West Bengal through its wholesale agent. The relationship between the assessee (authorized retailer) and Government of West Bengal (the supplier) acting under West Bengal Excise Rules through its Authorised Wholesaler Licensee (Agent), both de facto and dejure , is one of ‘Principal’ and ‘Agent’. We hold that the assessee retail vendor had made payment to the said agent (wholesale licensee) would fall under the exception provided in Rule 6DD(k) of the Rules. The ld AR had advanced another argument that the payment is made by the assessee to State Bank of India and accordingly the same would fall under the exception provided in Rule 6DD(a) of the Rules. We find that the assessee had made payments only to the customer of State Bank of India and not to State Bank of India. Hence the assessee’s case does not fall under the exception provided in Rule 6DD(a) of the Rules. We hold from the aforesaid findings that the assessee’s case falls under the exceptions provided in Rule 6DD(b) and Rule 6DD(k) of the Rules. In view of the aforesaid facts and circumstances we have no hesitation in deleting the disallowance made u/s 40A(3) - Decided in favour of assessee.

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• 2016 (9) TMI 812
  Penalty u/s. 271(1)(c) - Held that:- It is a judicially acknowledged fact that the tax laws of this country are complex and complicated and often requires for compliance therewith, the assistance of a tax practitioner specializing in this field. It is possible that mistake could happen by improper understanding of the law and practice. Viewing from this angle coupled with the fact of the voluntary rectification of the mistake by the assessee besides he is declaring the income in the return of next year, we find that the breach is only venial in nature. With this view of the matter, we do not propose to interfere with the finding of the Ld. CIT(A) and sustain the same. We, therefore, answer the issue in the affirmative holding that the deletion of penalty by the CIT(A) does not suffer any illegality or irregularity. - Decided against revenue.

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• 2016 (9) TMI 811
  Validity of proceedings u/s. 153C - Held that:- As can be seen from the satisfaction recorded by the AO while initiating proceedings u/s. 153C, there is neither any linking up of the documents nor any finding that certain seized documents pertain to assessee. Moreover, AO also has not recorded any satisfaction while initiating proceedings u/s. 153C. In view of this, we are of the opinion that there is no satisfaction recorded by the AO, as required under the provisions. Consequently, the proceedings u/s. 153C are not as per the provisions of the law. Following the principles laid down on this issue and on the facts of the case, we uphold the additional grounds raised. We, accordingly hold that the proceedings initiated u/s. 153C are bad in law. Since the very proceedings are held to be bad in law, there is no need to adjudicate all other grounds raised on merits. However, they are also considered allowed for statistical purposes. - Decided in favour of assessee.

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• 2016 (9) TMI 810
  Disallowance made u/s 40A(3) - nature of payment - Held that:- The payment made by the assessee retail vendor to the Principal, Government of West Bengal through its wholesale agent. The relationship between the assessee (authorized retailer) and Government of West Bengal (the supplier) acting under West Bengal Excise Rules through its Authorised Wholesaler Licensee (Agent), both de facto and dejure , is one of ‘Principal’ and ‘Agent’. We hold that the assessee retail vendor had made payment to the said agent (wholesale licensee) would fall under the exception provided in Rule 6DD(k) of the Rules. The ld AR had advanced another argument that the payment is made by the assessee to State Bank of India and accordingly the same would fall under the exception provided in Rule 6DD(a) of the Rules. We find that the assessee had made payments only to the customer of State Bank of India and not to State Bank of India. Hence the assessee’s case does not fall under the exception provided in Rule 6DD(a) of the Rules. We hold from the aforesaid findings that the assessee’s case falls under the exceptions provided in Rule 6DD(b) and Rule 6DD(k) of the Rules. In view of the aforesaid facts and circumstances and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in deleting the disallowance made u/s 40A(3) of the Act. - Decided in favour of assessee.

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• 2016 (9) TMI 809
  Sale proceeds of agricultural land - whether the land in question was situated outside the municipal limits of Gurgaon (as confirmed by the Patwari Gurgaon) and hence the land was not a capital asset as defined in section 2(14)(iii)? - Held that:- AO had not given any opportunity to the assessee to negate the Tehsildar’s report that the land in question was within 6.6 kms from the Municipal Corporation of Gurgaon. It was submitted that now the assessee seeks to admit the following as additional evidences under Rule 29- i) Certificate dated 10.07.2013 from the office of SDM Mehrauli confirming that the land is situated outside the limit of Delhi Municipality. ii). Certificate dated 18.07.2013 from the Executive Magistrate, Mehrauli certifying that the land does not fall within their jurisdiction. iii). Certificate dated 4.10.2013 from the Municipal Commissioner, Gurgaon stating that the distance of the land from the municipal limit in the year 2006 was approximately 12kms. iv). Certificate dated 25.10.2013 certifying that the distance of land is 8.5 kms from Mandi village, 11.2 kms from Aya Nagar and 13kms from Ambience Mall, Gurgaon. We have heard the rival submissions and perused the relevant documents. We also deem it fit to admit the documents being admitted as additional evidence under Rule 29 of the ITAT Rules, 1963 as these documents/evidences will have a bearing on the final outcome of this case. However, since the AO has not had the benefit of examining these additional evidences, it will be more appropriate that these additional evidences are examined/verified by the AO so as to be enable him to adjudicate the issue at hand afresh. We accordingly set aside the order of the Ld. CIT (A) and remit the matter to the file of the AO to re-examine the issue after duly considering the documents/evidences as submitted by the assessee and which we have permitted to be admitted as additional evidence as afore said after giving the assessee a proper opportunity of being heard.

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• 2016 (9) TMI 808
  Grant of stay for outstanding demand - prima facie case - addition made on account of payment on account of Management Support Services - Held that:- Assessee has a prima facie case. In respect of the payments made under MSSA as well as payment for IT service, the evidence regarding benefit received by the Assessee have not been considered by the DRP. The circumstance that in respect of MSSA receipt by the holding company KPNV, the revenue has accepted that the Assessee has received benefit from services provided by KPNV to the Assessee, also shows that the stand taken by the revenue is contradictory. Even in respect of the software development services, the ALP determined by the revenue in the light of the decisions rendered by the Tribunal, may not be ultimately sustained. In the given circumstances, we are of the view that the Assessee has made out a prima facie case for grant of stay. The balance of convenience is in favour of the Assessee as substantial outstanding demand has been paid by the Assessee. The Assessee will also be put to hardship if the order of stay is not granted. The revenue is at liberty to appropriate the adjustment of refunds due to the Assessee as agreed by the learned counsel for the Assessee. We therefore grant an order of stay of recovery of outstanding demand arising out of the Assessment for AY 2009-10 & 2011-12 for a period of 6 months from this day or till disposal of the Appeals of the Assessee, whichever is earlier. The appeal of the Assessee is directed to be fixed out of turn for hearing on 29.9.2016

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• 2016 (9) TMI 807
  Nature of income - receipt basis OR accrual basis - amounts received by assessee in respective assessment years - Held that:- The amount can not be brought to tax on receipt basis unless the same has accrued to assessee as income. In view of the facts of the case as well as law on the subject, we are in agreement with the order of the CIT(A) in AY. 2006-07, wherein he has correctly analysed the legal and factual position and deleted the amount in that year. Further, as seen from the order of the CIT(A) in AY. 2010-11, it is very clear that Ld. CIT(A) misunderstood the entire scheme. First of all, the fee was not collected from ‘gullible’ students by assessee, as the admission was taken in the ICFAI in the distinct learning programme. As a part of the curriculum services of placement were also offered, which is optional. Therefore, there is no compulsion on the part of the student to avail the placement services. Secondly, the mechanism to collect fee from ‘gullible’ students at the time of admission does not arise, as the student were given an option which they may or may not avail. There is also no false hope of providing employment, as the services for employment were rendered with a minimum guarantee of salary, which the students may avail or may not avail. Terms of agreement are very clear as most of the options are given to the student itself and the obligation to render services ends at the end of fourth year or accepting the placement by the student. CIT(A) in AY. 2010-11 did not even make any comment why it has to be deferred from the earlier order and why a different stand is taken on the same set of facts. Further, there is also a factual error in the finding of the CIT(A) that ‘no services were rendered and no refund was ever given by assessee’. These two findings were also not correct as assessee was rendering services from AY. 2008-09 to 2012-13 and there was refund in AY. 2013-14, since these facts even though placed before the Ld. CIT(A), were not correctly appreciated, we are not in a position to approve the order of CIT(A) in AY. 2010-11. We are of the firm opinion that assessee has correctly accounted the incomes in the third and fourth years on accrual basis and as seen from the table of amounts received and amounts offered for tax in respective years, it is the department which is not consistent in its assessment procedure. As can be seen, Revenue has accepted higher amounts offered than the receipts (advances) in the interregnum period without disturbing in AYs 2007-08, 2008-09 and 2009-10 and also accepting offered incomes in AY. 2011-12 and 2012-13. Assessee’s method of accounting is according to the prescribed method of accounting of ICAI and method of accounting even though not notified, is binding following the principles laid down by the Hon'ble AP High Court in the case of CIT Vs. Pact Securities & Financial Services Ltd., & Others [2015 (8) TMI 471 - ANDHRA PRADESH HIGH COURT ]. In view of the facts stated above and the law on the subject, we are of the opinion that assessee has correctly accounted the incomes in third and fourth year on accrual basis and the amounts cannot be brought to tax on receipt basis, as these are only advances without any obligation to service in the year of receipt. Accordingly, the Revenue’s appeal in AY. 2006-07 is dismissed upholding the order of CIT(A) and assessee’s appeal in AY. 2010-11 is allowed setting aside the order of CIT(A) in that year on the issue. Addition made towards excess provision of gratuity and EL encashment - Held that:- As seen from the assessment order, there is no discussion while making these additions, whether assessee has added them in the computation suo motto is also not clear. Before the Ld. CIT(A), assessee submitted that there is no such debit to P&L A/c and no details were called for by the AO in the course of assessment proceedings. It was also further submitted that there is no indication as to the reasons why the additions were made. In spite of that, the Ld. CIT(A) dismissed the grounds stating that no submissions were made. We are also unable to verify on what basis these two additions were made by the AO. In the computation statement, assessee itself has added an amount of ₹ 4,02,029/- and returned income at ₹ 59,36,876/- was taken as basis for making the addition. Therefore, further addition of ₹ 1,56,231/- seems to be without any basis. Likewise, EL encashment of ₹ 1,41,271/-. We are not sure whether any audit report has quantified the above amounts. Since the AO’s order is silent and CIT(A) order is also cryptic, we have no option than to set aside these two additions to the file of AO to examine and decided the issue afresh. If these amounts were brought to tax by mistake, AO is directed to delete the same. With these directions, the grounds pertaining to these additions are restored to the file of AO for examination of record and deciding afresh. Grounds are allowed for statistical purposes.

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• 2016 (9) TMI 806
  Reopening of assessment - loss claimed on the gross receipts - assessee has maintained books of accounts are required u/s 44AA(2) but had not got the accounts audited as required u/s 44AB - Held that:- In the present case, since initiation of reassessment proceedings is beyond 4 years from the assessment year, therefore unless and until it is observed and found that the income has escaped assessment due to the failure on the part of the assessee to disclose truly and fully all material facts for the assessment, the AO is not authorized to make reassessment. In the present case, it is a fact that assessee has claimed loss of ₹ 1,33,970/- on the gross receipts of ₹ 5,54,103/- from construction activities. As per the provisions of s. 44AD of the Act, an Assessee can claim lower profits and gains (i.e less than 8% of the gross receipts) only if he keeps and maintains such books of accounts and other documents as required u/s 44AA(2) of the Act and gets his accounts audited and furnishes a report of such audit as required under s. 44AB of the Act. In the present case, though the assessee has maintained books of accounts are required u/s 44AA(2) but had not got the accounts audited as required u/s 44AB of the Act, which according to us was a failure on the part of the assessee to comply with the requirement of section 44AD of the Act and thereby claim loss. In such a situation, we are of the view that no interference to the order of the ld.CIT(A) in confirming the action of reopening the assessment on the part of AO is called for. Further, the decision relied upon by assessee are on different facts and are therefore not applicable to the present case. - Decided against assessee.

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• 2016 (9) TMI 805
  Entitlement for deduction of the amounts paid by assessee to their brothers for getting the premises vacated while computing the capital gains on sale of house-property - Held that:- Keeping in mind social circumstances and the relationship of the brothers. What was their settlement while residing together? What was feeling of elder brother towards their younger brother, when they displaced them from a property where they were residing for last more than 24 years ? Had the controversy been appreciated in a mechanical manner, and if both the brothers, who were residing in the house refused to vacate the house, then, what would be the situation before these assessees. They have to file a suit for possession that might be decided against, and young brother ejected from the premises, but that would consume time in our judicial process of at least more than ten to fifteen years. The prospective buyers may not be available in such circumstances. Shri Laxmanbhai K. Chokshi as well as Shri Jagdishbhai K. Chokshi were candid in their statement that they were residing in these houses along with their brothers. Shri Laxmanbhai K. Chokshi, though had not been paying any rent, but he was paying electricity bills. I am of the view that the payments were made for improvement of title of the property and they are entitled to claim deduction of cost of payment. Therefore, allow solitary ground of appeal raised in the case of Shri Lallubhai Keshavlal Chokshi, HUF and direct the AO to grant him deduction of ₹ 31 lakhs for computing the long term capital gain. Similarly, allow ground nos.1 and 2 in the case of Shri Nanubhai Keshavlal Chokshi, HUF and direct the AO to allow deduction of ₹ 21 lakhs while computing the long term capital gain. Additional expenditure for improvement of property - Held that:- The assessee has purchased property at 11, Shaligram Bungalow-1, Thaltej, Ahmedabad for a sum of ₹ 46,25,000/-. He further incurred an expenditure of ₹ 6.75 lakhs, and accordingly claimed deduction under section 54 of the Income Tax Act. The ld.AO has disallowed the claim of the assessee with regard to the expenditure of ₹ 6.75 lakhs. A perusal of the paragraph 3.00 and 3.2 of the CIT(A)’s order, it would reveal that the ld.CIT(A) has allowed the claim but wrongly mentioned the amount of ₹ 2,88,370/-. To our mind, it is an apparent error committed at the end of the ld.CIT(A). Otherwise, in the assessment order as well as in all other details, the expenditure incurred by the assessee at ₹ 6.75 lakhs has been mentioned. Accordingly, allow this ground of appeal, and direct the AO to grant deduction of ₹ 6.75 lakhs from the sale proceedings while computing long term capital gain as cost of improvement. Indexed cost of acquisition - Action of the ld.AO for taking at ₹ 18,21,000/- as against the value of ₹ 19,79,160/- adopted by the assessee as on 1.4.1981 - Held that:- the assessee has an area of 910.50 sq.meters. The ld. Registered valuer has estimated the total value at ₹ 36.42 lakhs. It represents to the area of 1821.00 sq.meters. Similarly, there was a built-up area of 316.32 sq.meters. He applied the rate of 1000/- and valued at ₹ 3,16,320/-. The total value has been shown at ₹ 39,58,320/-. The assessee has half share and the value has been shown at ₹ 19,79,160/- . Against this valuation report, all other correspondences, i.e. confirmation etc. from valuer is totally irrelevant at the end of the AO, because the valuer was never cross-examined as to how he can change his report unilaterally. The ld.Revenue authority has made reference to all irrelevant details for scaling down the valuation of the property as on 1.4.1981. I direct the AO to take value of the property at ₹ 19,79,160/-, and thereafter, compute the long term capital gain in the hands of the assessee.

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• 2016 (9) TMI 804
  Penalty u/s 271(1)(c) - addition u/s 68 - non-disclosure of certain shares in the closing stock - Held that:- As in the Asstt.Year 2005-06, the addition of ₹ 3.20 lakhs was made by the AO under section 68 of the Income Tax Act. The explanation of the assessee in that year was that he had withdrawn the cash from this firm, M/s.Manishkumar & Co., which was introduced in the capital account for business. This explanation of the assessee was accepted by the ld.CIT(A). According to the ld.CIT(A), the assessee has explained the source to be from the firm, M/s.Manishkumar & Co. On similar items, the explanation was not thoroughly examined by the AO in A.Y.2006-07. Thus, the explanation of the assessee was not found to be false. The assessee has given an explanation that money was withdrawn from the firm, and it was deposited in the Vijay Bank. As far as non-disclosure of certain shares in the closing stock is concerned, the stand of the assessee is that inadvertent mistake was happened at the end of the accountant. This is the item which is revenue neutral and it was not going to affect materially to the Revenue. This explanation was rejected by the Revenue authorities on the ground that it is difficult to accept as to how the accountant has committed the mistake. To my mind, this will always be a difficult question, because, there is no scientific instrument which can tests the mind of an individual as to how he has committed a particular negligence at a particular time. It is very subjective aspect, and it will always be difficult to bring demonstrative evidence of a particular state of mind while committing such mistake. But from circumstantial evidence, it can always be concluded that whether there was a mala fide intention for not including the value of particular shares in the closing tock. No such circumstance have been brought on record for falsifying the explanation of the assessee. Therefore, in view of the above discussion, it is of the view that the assessee does not deserves to be visited with penalty.- Decided in favour of assessee.

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• 2016 (9) TMI 803
  Status of AOP - property purchased by the husband and wife in the joint names - Held that:- There is no dispute that the property in question was purchased by the husband and wife in the joint names and no specific share of the husband and wife is mentioned in the purchase document. However, the assessee has filed the additional evidence showing the independent source of the husband and wife for purchase of the property which was pooled into joint account in USA and transferred to India from where the payment was made in the property. Thus the assesses have claimed that when the husband and wife both have contributed their share of purchase consideration then the share in the property is in the ratio of contribution in the purchase consideration. As per the provisions of Section 45 of the Transfer of Property Act in case of joint ownership of property the share of the co-owner shall be determined as per the ratio of their contribution in the purchase consideration. Since the assesses have filed additional evidence in support of the independent source of income and contribution in the purchase consideration which is required to be examined and verified. Accordingly in the facts and circumstances of the case this issue is set aside to the record of the Assessing Officer to examine and verify the additional evidence filed by the assessee and then decide the issue. Taxing the rental income as ‘income from other sources ’ - Held that:- The predominant purpose was letting out the commercial building/property in question and not the lift or air-conditioners fixed in the building. Therefore the charges for common lift and air condition would partake the character of the main purpose of letting out which is the building and accordingly the rental income will be assessed as ‘income from house property’. Hence the orders of the authorities below for this issue was set aside and the claim of the assessee is allowed.

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• 2016 (9) TMI 802
  Deduction u/s. 80IB - AO disallowed by the AO on the ground that the return was not filed before the due date prescribed u/s. 139(1) of the Act in the light of provisions of section 80AC of the Act - Held that:- The provisions of section 80AC are very clear that if the return is not filed before the due date specified under sub-section (1) of section 139 of the Act, no deduction u/s. 80IB can be allowed to the assessee. The provisions of section 80AC were mandatory and not only directory. Since the impugned issue is covered by the aforesaid judgments, the deduction u/s. 80IB of the Act cannot be allowed as the claim of the assessee is hit by the provisions of section 80AC of the Act. Therefore, we confirm the order of the CIT(Appeals) in this regard. - Decided against assessee.

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• 2016 (9) TMI 801
  Addition u/s 69 - whether sale of shares was genuine, which was substantiated by bogus documents? - Held that:- No contention has been raised that the said Gwalior Tanks & Vessels Ltd was a viable company at the time of sale. This fact itself raises various questions as to who will give such substantial amount for the sale of shares of an allegedly worthless company. Merely because the shares are held by itself do not fit into realities about the sale amount. The Director of M/s. Mahasagar Securities Ltd group himself has accepted that it is a bogus transaction. No director of the main company of a group will give such a statement and without examining the statement, no opinion can be formed. This is evident from the fact that the assessee himself raised this ground before the ld. CIT(A). In the entirety of facts and circumstances, it is satisfied that the relevant facts, surrounding circumstances, human conducts etc., as stipulated by Hon’ble Supreme Court in the case of Sumati Dayal vs. CIT, reported in (1995 (3) TMI 3 - SUPREME Court ), have not been followed while awarding the relief by ld. CIT(A). Since the assessee has credited the amount of sale in its books of account which may represent the allegedly bogus sales consideration floated from entity which is floated by the said group, the case may fall within the parameters of Section 68 also. In view of these facts and circumstances, I am inclined to set aside the matter back to the file of ld. Assessing Officer to reexamine the issue, call for the record of M/s. Mahasagar Securities Ltd and alongwith the assessee an opportunity of cross-examination the material which the Assessing Officer proposes against the assessee. - Decided in favour of Revenue for statistical purposes.

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• 2016 (9) TMI 800
  Penalty under section 271(1)(c) - difference of opinion about the recognisation of income or expenditure - Held that:- AO did not find any factual inaccuracy in the details of the assessee. The only difference in the stand of the assessee and the AO was a difference of opinion about the recognisation of income or expenditure. The assessee has been accounting the expenditure on mercantile basis and recognizing the income on cash basis. Such type of method is not permissible in law, but it was not case of the AO that this method was adopted by the assessee with deliberate attempt to conceal certain things. The assessee has pointed out that under bona fide mistake, it might have been done, and the explanation of the assessee was not found to be false, therefore, allow the appeal assessee and delete the penalty. - Decided in favour of assessee.

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• 2016 (9) TMI 799
  Allowability on taxes paid as credit as per Article 10 & 24 of the DTAA of India and Sri Lanka - Held that:- The taxes paid on declared gross dividend income of ₹ 2,85,44,253/- is allowable to the assessee as credit for the year under consideration in view of Article 10 and 24 of DTAA between India and Sri Lanka. We, therefore, find no flaw in the order of the learned CIT(A) and uphold the same.

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• 2016 (9) TMI 798
  Unexplained investment in immovable property - addition u/s 69 - reference made by the Assessing Officer to the DVO - Held that:- Assessing Officer has noted that “assessee has not maintained complete books of accounts as regard to the construction account of the subjected properties. So I do not have any other option other than taking view of expert of this field. So estimate made by assessee is here by rejected in absence of any documentary bills /vouchers”, which clearly spells out that the Assessing Officer is not satisfied with that part of the books maintained by the assessee in respect to the construction account of the subjected property whereas in our considered opinion, this partial satisfaction does not fulfill the condition precedent laid down in section 145(3) of the Act and so the aforesaid reason given by the AO cannot satisfy the requirement of law to reject the books of account of the assessee. AO, before referring the matter to DVO for valuation of the investment in the property, should have rejected the books of account of the assessee, that too after satisfying the conditions precedent as envisaged under section 145(3) of the Act and without doing so, as found by us, vitiates the reference made by the Assessing Officer to the DVO. In the case of Sargam Cinema vs. CIT (2009 (10) TMI 569 - Supreme Court of India ) wherein held that the reference made to the Valuation Officer under section 142A of the Act without rejecting the books of account for ascertaining the cost of investment is invalid and bad in law. Therefore, we are of the view that the Assessing Officer was not justified to make reference to the DVO for ascertaining the cost of investment without rejecting the books of account of the assessee. Moreover, this is a search case and it is an undisputed fact that no incriminating material was found and seized from the premises of the assessee. - Decided in favour of assessee.

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• 2016 (9) TMI 797
  Unexplained credit - Held that:- Admittedly the assessee has shown ₹ 1 lakh in the cash book as withdrawal from the Axis Bank however, on verification the Assessing Officer found that there is no such entry in the account. The assessee then explained that this was a mistake committed by the Accountant and the amount involved is loan taken from two persons namely (1) Yagati Naganna & (2) Nerlige Karinayak. The assessee has also explained that the said amount was repaid by the assessee on 21.7.2009 and 22.7.2009 respectively. The Assessing Officer did not choose to verify the facts explained by the assessee and disallowed the explanation at threshold. It is pertinent to note that when the assessee has explained that this loan amount in question has been paid to these creditors and also filed the confirmation of these two parties then in case the Assessing Officer was not satisfied or doubting the veracity of the confirmation as well as the claim then further enquiry / investigation could have been conducted by the Assessing Officer. Instead of conducting further enquiry, the Assessing Officer has out rightly rejected the explanation as well as confirmation produced by the assessee. Accordingly in view of the facts and circumstances of the case we find that this issue requires a proper verification and examination. If need arises the creditors may be examined by the Assessing Officer on being production by the assessee. Addition towards unexplained cash credit - Held that:- The assessee claimed to have received an advance of ₹ 2,50,000 from various persons against the agricultural income. In support of the claim the assessee produced two agreements dt.2.4.2009 and 5.4.2009. However the stamp paper used for these agreements belong to the series of the stamp paper which were available only on 31.12.2010 onwards. Apart from these agreements the assessee has not produced any other supporting documents except confirmation letters from the creditors. It is manifest from the record that when the Assessing Officer questioned the genuineness of the claim the assessee attempted to manufacture the evidence in support of the claim by producing pre-dated agreements on subsequently purchased stamp papers. Therefore the evidence produced by the assessee is after thought and created only after the Assessing Officer has questioned the genuineness of the claim. In the absence of any contemporaneous supporting evidence we do not find any error or illegality in the orders of the authorities below for this issue. Addition on account of borrowed fund from villagers - Held that:- The Assessing Officer had enough reason to doubt the genuineness of the transaction as it is apparent that the assessee shown loan of ₹ 19,000 each from 34 persons. This fact itself shows that it is all well thought out claim of the assessee to escape the relevant provisions of the Act. Further all loans are shown as interest free loans which is not acceptable except in case of a close relatives nobody will advance loan without interest. The burden of proving the onus is on the assessee to produce the creditors specifically when the facts and circumstances clearly raise the suspicion on the very genuineness of the claim. Accordingly, we find that the assessee has failed to discharge his onus to prove the genuineness of the claim. This ground of the assessee is dismissed. Penalty levied under Section 271(1)(c) on the basis of defective notice under Section 274 is not sustainable and accordingly the same is deleted.

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• 2016 (9) TMI 796
  Penalty u/s. 271(1)(c) - Held that:- Notices were issued on a printed proforma in which the AO did not identify, whether the assessee has concealed particulars of income or furnished inaccurate particulars of such income. As undisputedly the AO has not identified in the notices as to whether the penalty proceedings are initiated for concealment of income or furnishing of inaccurate particulars of such income. Therefore we are of the considered view that on account of defective notice issued for initiation of penalty proceedings, the penalty order passed by the AO is not sustainable in the eyes of law. We accordingly set aside the order of the CIT(Appeals) as well as the Assessing Officer and delete the penalty on account of wrong initiation of penalty proceedings. - Decided in favour of assessee

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• 2016 (9) TMI 795
  Penalty u/s 271(1)(c) - defective notice - Held that:- The penalty levied under Section 271(1)(c) on the basis of defective notice under Section 274 is not sustainable and accordingly the same is deleted. - Decided in favour of assessee

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• 2016 (9) TMI 794
  Deduction u/s 80P(2)(a)(i) - Held that:- We find that a categorical finding has been given by the AO that the assessee is hit by sub-sec.4 of sec.80P of the IT Act and on this actual aspect, there is no finding by the ld. CIT(A) that the assessee is not hit by sub-sec.4 of sec.80P of the IT Act, 1961 and therefore, without a finding for dislodging the objection of the AO regarding the applicability of sub-sec.4 of sec.80P of the IT Act, 1961, the order of the ld. CIT(A) is not sustainable. However, in the facts of the present case, we feel it proper that this matter should go back to the file of the ld. CIT(A) for a fresh decision after giving a clear finding on the factual aspect as to whether sub-sec.4 of sec.80P is applicable to the assessee in the present case or not. Accordingly, we set aside the order of the ld. CIT(A) and restore the mater back to the file of the ld.CIT(A) for a fresh decision in the light of above discussion after providing adequate opportunity of being heard to both sides. - Decided in favour of revenue for statistical purposes TDS u/s 194C - Proceedings u/s 201(1)& 201(1A) - Held that:- In the present case, as per agreement available in paper book, the first party i.e. the assessee society agreed to purchase 1500 intermittent sites of various dimensions in the proposed layout to be formed by second party i.e. Shri Lakshman at the rate of 305/- per sq.ft. and the first party has agreed to make an advance payment of ₹ 2.00 Crores to the second party and further payment was to be made in installments. This is true that the land was not owned by the second party at the time of agreement and it was specified in the agreement that the second party was required to acquire the required land and secure either the converted land and secure the approval of the competent authority for use of land for nonagricultural purposes and residential use and also to obtain approval for the layout plan from the competent sanctioning authority and the second party was also required to provide certain specified facilities and amenities in the layout such as wide asphalted roads, water and sanitary connections, electrification with overhead lines and transformers, adequate street lights, dedicated Telephone exchange, milk booths, KPTCL/BESCOM extension counter, Police outpost, Bus terminus, shopping arcades including vegetable market etc., along with overhead tank/sump tank connected to bore wells in order to provide adequate water supply and roadside tree plantation with tree guards etc. but this is also true that the agreement is for purchase and sale of land with specific facilities and it cannot be said that this is works contract. For example, if a person A agrees with different person say ‘B’ to sell and supply certain quantity of specific quality of material at a predetermined price, it cannot be said that such agreement is for carrying out a contract and not a contract of purchase and sale simply because the item to be supplied is to be conforming to certain specified quality and other conditions. Hence, in our considered opinion, in the present case, the agreement of the assessee with Shri Lakshman is for purchase of land with some specific facilities and it is not a contract requiring deduction of TDS u/s 194C of the IT Act, 1961. Thus proceedings u/s 201(1)( 201(1A) of the IT Act are dismissed. - Decided in favour of assessee

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• Customs

• 2016 (9) TMI 834
  Rejection of refund claim - assessment - declared price - valuation - import of 24 consignments of Gambler - Duty Free Replenishment Certificate - Foreign Trade Policy - exemption of basic customs duty - lack of jurisdiction - Assistant Commissioner of Customs - alternative remedy of filing an appeal - section 128 of Customs Act, 1962 - section 27 of Customs Act, 1962 - rejection of declared value - rule 10A of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 - whether the Commissioner (Appeals) was within jurisdiction to reject the enhancement of the declared value? - Held that: - the enhancement of assessable value by the assessing officer was without authority. That lacuna cannot be rectified by mere access to appellate remedies through a ‘bill of entry’ as a cause of action. For the purposes of section 128 of Customs Act, 1962, however, ‘assessment’ and ‘adjudication’, though different, are orders or decisions. Whether the first appellate authority was correct in restoring the refund claim to the jurisdictional competence of the original authority? - Held that: - on the day of rejection of the refund claim, the original authority was not under instructions to disregard refund claims that were submitted without an appellate order setting aside the assessment. The original authority determined ineligibility for the refund claim without any recorded or acceptable rationale. The first appellate authority has, in accordance with the law as it then prevailed, set aside the rejection by the lower authority and restored the refund claim. The first appellate authority has erased the impediment by resolving the assessment dispute which was well within its jurisdiction to do so. That jurisdiction, even if deemed to have been exercised in the latest bill of entry, settles the principle that declared value could not have been rejected for assessment making it applicable to all assessments that preceded it - restoration of refund claim upheld - appeal dismissed - decided against Revenue.

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• 2016 (9) TMI 833
  Maintainability of writ petition - alternative remedy of appeal under Sec. 129A of the Customs Act, 1962 - assorted confectionary items - principles of natural justice - revocation of CHA license under Regulation 20(1) of the CHALR 2004 (replaced by Regulation 18 of the Customs Brokers Licencing Regulations, 2013 - forfeiture of security deposit - whether the writ petition is maintainable when the alternative remedy of appeal is available? - Held that: - the decision in the case Whirlpool Corporation Versus Registrar of Trade Marks, Mumbai & Ors.[1998 (10) TMI 510 - SUPREME COURT] is relied upon. Availability of an efficacious alternative remedy is not an absolute bar to the maintainability of a writ petition. The High Court, having regard to the facts of a case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective alternative remedy is available, the High Court would not normally exercise its writ jurisdiction. The High Court will require the aggrieved party to exhaust the alternative remedy before the Court intervenes by way of judicial review. The customs law is a complete code by itself. The Customs Act and the Rules and bye-laws framed thereunder constitute a comprehensive and exhaustive Code. The appeal is a more comprehensive remedy in which all issues including factual issues and sufficiency or otherwise of the evidence on record can be gone into. When a statute is a complete code in itself on the concerned subject like the Customs Act and it provides a particular remedy before a particular forum, the aggrieved party must ordinarily exhaust such remedy before invoking the high prerogative writ jurisdiction of the High Court. This is a practice ordinarily followed by the Writ Courts and nothing extraordinary found in the facts of this case to depart from such well established practice. The decision in the case Nepa Agency Co. Pvt. Ltd. vs. Union of India [2015 (5) TMI 802 - CALCUTTA HIGH COURT] is followed. Whether a writ petition can be dismissed on the ground of alternative remedy if the same has been admitted for hearing? - Held that: - it is not the legal position that once a petition is admitted, it cannot be dismissed on the ground of alternative remedy. The decision in the case of State of Uttar Pradesh-vs.-Uttar Pradesh Rajya Khanij Vikas Nigam Sangharsh Samiti [2008 (5) TMI 642 - SUPREME COURT] is followed. The court is not inclined to exercise its extraordinary power under Art. 226 of the Constitution - if the petitioners approach the CESTAT by way of appeal against the order under challenge in this writ petition within a period of 6 weeks from date, the Tribunal shall decide such appeal in accordance with law without being influenced by any observation in this order, as expeditiously as possible, and preferably within a period of 6 months from date of presentation of the appeal, if any - petition dismissed - decided against petitioner.

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• 2016 (9) TMI 832
  Release of detained consignments - confiscation of consignments under Section 111(I) of the Customs Act read with Section 3(3) of the Foreign Trade (Development & Regulation) Act, 1992 - option to pay redemption fine of ₹ 3,50,000/- under section 125 of the Customs Act, 1962 - imposition of penalty of ₹ 25,500/- and ₹ 90,000/- under Section 112(a) of the Customs Act, 1962 - order of the Commissioner of Customs (Appeals) Air, Chennai not implemented by the respondent - respondent filed revision before the revisional authority - Held that: - the decision of the case Union of India vs. Kamalakshi Finance Corporation [1991 (9) TMI 72 - SUPREME COURT OF INDIA] would apply. The Hon'ble Apex Court and this Court in various cases very categorically held that the order of the Joint Commissioner of Customs and the Commissioner of Customs (Appeal) clearly shows that the petitioner has not committed any violation, therefore, they should implement the order of the Commissioner of Customs in a true letter and dispute. The petitioner is entitled to get release of the gold, since the long delay in release of the goods would, no doubt, reduce its potency and its market value would deteriorate to the detriment of the petitioner. There is nothing shown on behalf of the respondent to substantiate their claim that necessary steps had been taken to obtain interim order of stay against the order of the authority. Mere filing of the revision against the order of appellate authority would not empower the respondent to deny release of the goods in question and the respondent have not given any proper explanation as to why no stay order has been obtained against the order of the Commissioner of Customs (Appeals) , even though the said order said to have been challenged by way of further appeal. Therefore, the petitioner cannot be made to suffer due to detention of the goods in question, which had been imported by the petitioner - petitioner entitled to get release of the goods - consignment to be released on payment of redemption fine and penalty - petition allowed - decided partly in favor of petitioner.

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• 2016 (9) TMI 831
  Enforcement of Bond and Bank Guarantee - Denial of refund claim - milled rice - broken rice - export - local sales - EPCG scheme - Notification No.55/2003, dated 01.04.2003 - import of two series colour sorter and two feed chutes with essential spare parts from abroad at concessional duty of 5% - discharge of export obligation - whether the petitioner has to be directed to approach the Assistant Commissioner (Refunds) or a direction to be issued to the first respondent who has cancelled the bank guarantee of the petitioner - Held that: - the case of Commissioner of Customs, Chennai Vs. M/s.Aristo Spinners Pvt. Ltd.[2008 (1) TMI 160 - HIGH COURT MADRAS] relied upon. The petitioner need not be called upon to approach the Assistant Commissioner (Refunds) and the first respondent himself can consider the petitioner's claim as the first respondent has cancelled the bond and bank guarantee on the petitioner producing the Export Obligation Discharge Certificate. The petitioner to submit a representation along with a copy of this order - after taking note of the legal position and also the factual position, refund to be effected within a reasonable time, not later than eight weeks from the date of the receipt of the representation - petition disposed off - decided in favor of petitioner.

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• 2016 (9) TMI 830
  Valuation - inclusion of royalty in the value of imports - collaboration agreement - related party - M/s.Herbalife USA holds 75% of the equity in Herbalife International India Pvt. Ltd - import of material from Herbalife USA - valuation by SVB - Rule 2(2) of the Customs Valuation Rules, 1988 - royalty paid by the importer under the agreement relates to the manufacturing process of product to be manufactured in India or to the manufacture of imported goods - Rule 9(1)(C) of the Customs Valuation Rules, 1988 - rules of interpretation - Rule 12 of the Customs Valuation Rules, 1988 - Held that: - the decision of the Hon'ble Apex Court in the case of Matsushita Television & Audio (I) Ltd [2007 (4) TMI 5 - SUPREME COURT OF INDIA] is relied upon. Only such royalty which is relatable to the imported goods and which is a condition of sale of such goods alone could be added to the declared price - the license and technical assistance agreement entered between the appellant and the Herbalife, USA provide for transmission of technical information and grant of license and involves consideration in the shape of royalty. Running royalties are condition of sale for the transaction value and thus needs to be added in the value for the purpose of payment of Customs duty. Appeal allowed - decided partly in favor of appellant.

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• 2016 (9) TMI 829
  Revocation of CHA license - forfeiture of security - imposition of penalty - Regulation 22 of CBLR, 2013 - attempt for irregular export of misdeclared cargo with a view to facilitate ineligible export incentive - statutory time limits - Regulation 20 (5) of CBLR, 2013 - enquiry report to be submitted within 90 days - Held that: - when statutory time limits are prescribed under the law the same has to be strictly adhered to. The legal position in respect of time limits prescribed under Regulation 20 has been repeatedly held to be mandatory in nature. Failure to adhere the same will make the proceedings invalid. The issue is similar as decided in the case Indair Carrier Pvt. Ltd. vs. CC (General) [2016 (5) TMI 775 - DELHI HIGH COURT] - As enquiry report not submitted within 90 days, merits of the case not considered. Appeal allowed - decided in favor of appellant.

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• Service Tax

• 2016 (9) TMI 845
  Demand alongwith interest and penalties - Real Estate Agent Service - development of the plots and carry out the jobs/functions summarised in the agreement - whether service charges received on the works referred to in the agreement, attract service tax under the category of construction services of residential complex service - Held that:- it is found that in the Alokik Township Corporation vs. Commissioner of Central Excise & Service Tax, Jaipur-I [2014 (7) TMI 1017 - CESTAT NEW DELHI] involving similar facts and circumstances, the Tribunal taking into consideration the development work undertaken by the appellant therein observed that such development of plots would not fall within the scope of the construction of complex services. Therefore, in view of the same, we do not see any reason to record a different finding, as the facts are identical in both the cases. In the result, the impugned order is set-aside. - Decided in favour of appellant with consequential relief

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• 2016 (9) TMI 844
  Demand alogwith interest and penalty - service tax payable on Management, Maintenance and Repair (MMR) service for the period 10/2007 to 3/2008 and ECIS rendered by appellant - appellant had discharged the entire service tax liability under MMR service along with interest prior to issuance of show-cause notice - main contractor has discharged the service tax liability for ECIS service rendered to the client - Held that:- we are convinced and satisfied with the arguments put forward by the appellants to conclude that the demand of service tax for ECIS services is not sustainable as the main contractor has discharged the service tax liability. So also as the appellant had paid service tax in regard to MMR services before issuing the show-cause notice, no penalty can be imposed in this regards. Cumulatively, all penalties imposed in the impugned order are unsustainable and liable to be set aside. The demand and interest of service tax on ECIS is set aside for the reason that the main contractor has discharged the liability. - Decided partly in favour of appellant with consequential relief

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• 2016 (9) TMI 843
  Demand of service tax on advances received - works contracts - it was contended that these are payments received towards obtaining necessary equipment and creating basic facilities before the commencement of rendering of service. - Held that:- advances made cannot be subject to tax if such advances are adjusted against dues for rendering of service as that would amount to double taxation. - Decision in the case of Thermax Instrumentation Ltd v. Commissioner of Central Excise, Pune [2015 (12) TMI 1222 - CESTAT MUMBAI] followed - Decided in favor of assessee. Outstandings from associate concerns - it was contended that tax liability was being discharged upon receipt of dues as prescribed in the statute upto May 2008 - Held that:- Department was not in a position to convince us that these submissions were incorrect. Accordingly, we hold that the dues that were liable to be discharged by various payments made as claimed in the appeal and as recorded in the impugned orders on the respective heads. We are, therefore, left to examine in detail the submissions made in connection with the construction of railway sidings and the sinking of the mine shaft on which, admittedly, the appellant has not effected any payment of tax. Demand alongwith interest and penalties - work related to mines - Held that:- in the light of a subsequent entry to tax 'mining service' by section 65(105)(zzzy) of Finance Act, 1994 with effect from 1st June 2007 which was intended to cover all activities relating to mineral exploration and extraction under one head as a consolidation entry, the actual sinking of a shaft cannot be treated as 'site formation and clearance service' but as related to excavation of mineral from the mine. Consequently, we are in agreement with the appellant that the demand for the disputed period is not valid. Demand alongwith interest and penalties - construction of railway sidings - Held that:- it is noticed that the Railway Act, 1989 provides for railways with public investment and private investment and both function under the same statute. Such railways established in the private sector have a statutorily acknowledged Administrator. Consequently, we too hold that railway sidings built by the appellant fall within the exclusionary portion of section 65(25a) and are outside the ambit of taxation. Therefore, the liability to tax on the labour portion of work executed by the appellant and which has been duly discharged by them are confirmed. The demands under the other heads are set aside. Penalties are also set aside. - Appeals disposed of

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• 2016 (9) TMI 842
  Refund claim - Notification No. 40/2012-S.T. - SEZ unit - service tax discharged by them under Reverse Charge Mechanism for the services rendered by an entity situated abroad or otherwise - period involved is April, 2013 to June, 2013 - Held that:- it is undisputed that appellant, SEZ, has one of the director of the board who is a citizen of foreign country, various payments such as insurance premium are paid abroad and appellant reimbursed such insurance premium. It is also undisputed that the appellant has discharged the services tax liability in Reverse Charge Mechanism. It is found that the claim of the learned counsel that services rendered would fall under the category of “Business Auxiliary Services” is already addressed by the adjudicating authority as well as first appellate authority and I find no reason to disagree with such findings of the first appellate authority. Hence, appellant has not listed “any other services” with the Development Commissioner for their authorized operations, in the absence of any permission from the Development Commissioner to use said services, the discharging the service tax liability, would not automatically entail availment of Cenvat credit. - Decided against the appellant

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• Central Excise

• 2016 (9) TMI 841
  Refund claim - unjust enrichment - cement was cleared at 12% instead of 8% on 7th and 8th December, 2008 - Rate of duty on cement was reduced from 12% to 8% of RSP w.e.f 07-12-2008 - Held that:- when the Chartered Accountants certificate has certified that the cement was dispatched to depots and not to end customer and that the depots are neither registered under Central Excise Act nor have issued any Central Excise invoices, unless the department has evidence or proof to the contrary, it cannot be concluded without basis that incidence of duty has been passed on to the customers requiring the claimed amounts to be credited to CWF. This being so, the appellants were very much eligible for being refunded the amount of ₹ 10,23,618/- being excise duty inadvertently paid on 7th and 8th December 2008 at pre-revised rates of duty. - Decided in favour of appellant

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• 2016 (9) TMI 840
  Period of limitation - Refund claim - claim filed after about 10 years from the relevant date - unutilized Modvat credit in Modvat account which could not be used for payment of duty as the final product has become exempted - Held that:- the accumulation of credit is not due to any export of final product by the appellant. Hence, the claim made under Notification No. 85/87-CE dated 01/3/87 itself is without any legal basis. The said notification is in terms of sub-Rule (3) of Rule 57F of Central Excise Rules. Admittedly, the said notification has no application to the appellant's case. In such situation, we are not able to appreciate under which provision of law the present refund claim was preferred by the appellant. Neither the original order nor the impugned order discussed the legal provision under which the claim for the refund was made by the appellant. It is only mentioned that as the final product become exempted they were not able to use the credits lying in their book and hence the amount should be refunded in cash. In the absence of any legal provision in support of such refund claim we are not able to examine the merits of the claim. Regarding time limit, it is an admitted fact that the claim was filed after almost 10 years. No explanation has been provided by the appellant except to state that the provisions of Section 11B will not apply to the present case of refund. This position also, we are not able to appreciate in the absence of supporting legal provision. As the claim is not supported by any legal provision, even on the question of time limit also the appellant is not having any case on merit. - Decided against the appellant

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• 2016 (9) TMI 839
  Captively consumed goods - Valuation - goods captively consumed for further manufacturing of excisable goods from the factory premises - period involved is February 1997 to January 2002 - Held that:- as regards the period prior to 01.07.2000 provisions of Rule 6 (b)(i) of Central Excise (Valuation) Rules, 1975 could be applicable in the case wherein the goods are captively consumed as well as sold outside. Revenue's case is that the appellant should have discharged the duty liability on the captively consumed goods based upon the value of the comparable goods sold outside, while the claim is defended by the appellant on the ground that the captively consumed goods were of the substandard quantity. It is found that in the Grounds of Appeal also identical arguments are put forth, but no evidence is on record to show that the captively consumed yarn/goods were of substandard or inferior quality. In the absence of any such evidence we have to hold that the valuation of captively consumed goods needs to be done based upon the provisions of Rule 6(b)(i) of Central Excise (Valuation) Rules, 1975 read with Section 4 of Central Excise Act, 1944. As regards the liability post 01.07.2000, we find that the provisions of Rule 8 of the Valuation Rules are very clear inasmuch as the said Rules mandate from an assessee to discharge the duty liability on 110% or 115% of the cost of production of the goods. Apparently the appellant had produced a certificate from Chartered Accountant indicating the value for captively consumed goods, the same was rejected by the lower authorities on the ground that the Chartered Accountant has not justified the consumption of material was being inferior quality and was not evidenced by any supporting documents. Even before us also this findings are not contested. Therefore, in the absence of any supporting documents, we find that both the lower authorities are correct in confirming the demand raised along with interest and also imposition of penalty. - Decided against the appellant

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• 2016 (9) TMI 838
  Imposition of penalty - Section 11AC of the Central Excise Act, 1944 - appellant have reversed the CENVAT credit and interest before issuance of show cause notice - Held that:- it is not disputed that they have reversed the CENVAT credit immediately on being pointed out by the Audit. Subsequently, they have also paid the interest. Both were done before the issuance of show cause notice. In the peculiar facts and circumstances of the instant case, the matter should have been concluded in accordance with the provisions of Section 11 A(2B) and there was no need for issuance of show cause notice, much lesser any imposition of penalty under Section 11 AC. Hence, the imposition of penalty under Section 11AC in the impugned order-in-original is not maintainable and the impugned order is modified to the said extent. - Decided in favour of appellant

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• 2016 (9) TMI 837
  Whether exemption under Notification No. 253/82-CE dated 8.11.2002 is deniable to cotton grey fabrics subjected to process of scouring or otherwise - fabrics whether scoured or bleached - Held that:- on perusal of the orders of both the lower authorities, the findings of the Assistant Commissioner indicate that he has considered treatment of fabrics with soda bleach at room temperature amounting to bleaching which is not supported by any technical or authoritative books. We also find from the records that the sample of the fabrics was sent for analysis and Deputy Chief Chemist informed the results to the Superintendent, which indicated that the sample is in the form of cut piece of off white woven fabrics, which would mean that there was possibly no bleaching process. It is to be noted that the scouring process has been clearly exempted by Notification No.253/82-CE without any conditions. In the absence of any other evidence to show that the appellant had undertaken the process of scouring, we have to hold that the impugned order is unsustainable, liable to be set aside. - Decided in favour of appellant with consequential relief

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• 2016 (9) TMI 836
  Duty liability - sugar cleared for export but was not exported - production of certificates issued by Indian Sugar and General Industry Export Import Corporation, New Delhi - Held that:- the export agency has categorically stated in the various certificates issued by them to the appellant that the appellant has fulfilled their obligation of export of sugar against the quota allotted to them. Such documents/certificates are not contested by the Revenue. One of the certificates is dated 20th September 1996 annexed at page No.62 of the appeal memoranda specifically states that the appellant has fulfilled the export quota obligation as directed by the said Corporation. We are at a loss to understand how the adjudicating authority as well as the first appellate authority came to a conclusion that the appellant has not delivered the sugar meant for export to such export agency. It is found that the lower authorities while investigating the case has not recorded any statement of any official of the export agency to hold that they had given the certificates to the appellant without receiving sugar for export. In the absence of any such contrary evidence, a certificate issued by one of the authorities who has been appointed by a statute, cannot be overlooked by the lower authorities. We have to hold that the appellant has exported the sugar as is required to be done by them, hence the impugned order that confirmed the demands with interest and penalty needs to be set aside. - Decided in favour of appellant

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• 2016 (9) TMI 835
  Imposition of penalty - entire duty liability with interest was discharged before issuance of show cause notice - Held that:- appellant has paid the differential duty and the interest thereof on 22.7.2002 on their own ascertainment which is not disputed as the adjudicating authority has appropriated the very same amount with interest. In our view, the provisions of Section 11(2B) of the Central Excise Act, 1944 will apply in full force and the lower authority should not have issued any show cause notice to the appellant. Therefore, we, while upholding the duty liability and interest thereof, set aside the penalty imposed by the lower authorities. - Appeal disposed of

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• CST, VAT & Sales Tax

• 2016 (9) TMI 828
  Validity of decision taken by the Assessing Officer solely on the basis of report of Enforcement Wing - opportunity of being heard not provided to petitioner - TNVAT Act, 2006 - inspection conducted by Enforcement Officers in the place of business of petitioner - the decision in the case Madras Granites Private Limited Vs. Commercial Tax Officer, Arisipalayaam Circle, Salem and another [2002 (10) TMI 767 - MADRAS HIGH COURT] shall apply - Held that: - the decision in the case Madras Granites Private Limited should be an eye-opener for the Assessing Officer to act as an independent authority. The procedure of sending the deviation proposal to the Enforcement wing is an internal matter. The statute does not state that the Assessing Officer, should act as per the dictates of the Enforcement Wing. The pre-revision notices were issued to the petitioner pursuant to an inspection by the Enforcement Wing in the business premises of the petitioner. In recent decisions, it was held that the report can at best, be treated as an information or the first information to the Assessing Officer giving a cause of action for issuing the revision notice and nothing more can be attached to such a report given by the Enforcement Wing. It is thereafter, the entire proceedings are in the hands of the Assessing Officer who should exercise his statutory powers, apply correct legal principles and then take a decision in the matter. Assessing Officer to apply his mind to arrive at a decision. Opportunity of being heard to be provided to the petitioner - petition disposed off - decided in favor of petitioner.

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• 2016 (9) TMI 827
  Demand of tax with interest - imposition of penalty under Section 45(6) of the Act - documents in support of the claim for exemption from demand of tax - GVAT - Penultimate sale - drums - packing material - export consignment - local sales - benefit of tax exemption on penultimate sale - Held that: - the penultimate sale before export of the goods shall also be deemed to be in course of such export provided the conditions contained in sub-section 3 of Section 5 are satisfied. For applicability of sub-section 3 of Section 5, the seller has to fulfill the requirements of sub-section 4, failing which the provisions of sub-section 3 would not apply. The requirements are thus prescribed to ensure the compliance requirements under sub-section 3 and further to ensure that the competent authority can verify the claim of the assessee of being a penultimate seller of the goods in course of export sale. To satisfy the requirements of sub-section 4 of Section 5, a necessary declaration as prescribed under the Rules would have to be made. This would include declaration containing specified details. These details provided in items no.3 to 6 to the Schedule contain various information such as name of airport, seaport or land customs station through which the goods have been exported, name of airlines, ship etc. or other means of transport through which the export has taken place and such other relevant details. All these requirements would relate to actual export of goods sold by the assessee to the exporter. Only through such declarations would it be possible for the Assessing Authority to verify the claim of a dealer that the goods supplied were for the purpose of export and were actually exported by the purchaser-exporter. Mere declaration or assertion by the assessee would not be sufficient. Only upon satisfying such requirements contained in sub-section 4 of Section 5, the assessee would be covered by the deeming fiction provided under sub-section 3 of Section 5 and can claim the benefit of the export sale. When the revisional authority noticed discrepancies in the different documents supplied by the assessee, he was within his rights to deny the benefit of tax exemption to such extent. The penalty is discretionary and can be levied upto 1 ½ times the difference between the amount paid and tax assessed. Their is no attempt on part of the assessee to avoid payment of legitimate taxes - no penalty levied. Demand of tax and interest upheld. Imposition of penalty withheld - petition disposed off - decided partly in favor of respondent.

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• 2016 (9) TMI 826
  Imposition of penalty - detention of goods by department - SCN - in reply to the show-cause notice at first opportunity the assessee had produced these forms-31 - Tribunal silent about the relevancy of forms - whether forms-31 relate to the goods, which were carried or not? - Held that: - when an opportunity to show-cause is given then any material which is produced by the offender must be considered either it could be accepted or rejected. Tribunal is completely silent about the veracity of these forms and whether related or not related to the goods which were being transported - the matter remanded to the Tribunal for a consideration of these facts whether the forms were good or bad and could have been accepted. The matter on remand to be considered by the Tribunal within a period of three months from the date of production of certified copy of the order before it. A certified copy of the order may be produced before the Tribunal within next 15 days. The penalty may be kept in abeyance till the matter is finally decided by the Tribunal. Revision disposed off - decided in favor of assessee.

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• 2016 (9) TMI 825
  Imposition of penalty under Section 67(1) of the KVAT Act - claim of exemption from payment of tax on the turnover based on Form No.43 - commodity under Section 6(7)(b) of the KVAT Act 2003 - whether the petitioner was entitled for any exemption in terms of the Statute under Section 6(7)(b)? - Held that: - the consumable used by the developer or industrial unit or establishments situated in the Special Economic Zone should be for setting up of the unit or use in the manufacture of other goods for being exempt. The cleaning material used for the purpose of cleaning the building and other facilities, furniture etc cannot be treated as a consumable used in relation to setting up of the unit or in the manufacture of other goods - it is apparent from the Statute itself that the petitioner is not liable for any exemption. Even in Form No.43 submitted by the dealer it is clearly mentioned as house keeping materials and house keeping consumables - ineligible for exemption. Whether in the light of Form No.43 issued by the purchaser whether the petitioner can be imposed with penalty? - Held that: - a bare reading of Section 6(7)(b) would clearly indicate that the product supplied by the petitioner is liable to be taxed and no exemption can be claimed at all. That apart, as rightly contended by the learned Government Pleader, the petitioner did not raise any invoice showing the taxable component. If the petitioner had clearly indicated that it is taxable and the purchaser had issued Form No.43 it would have been a different situation. Therefore, this is an instance where the petitioner had acted deliberately in avoiding payment of tax knowing fully well that there is an obligation to pay tax on the said consumables - penalty rightly imposed. Section 25(1) of the Act - Held that: - The Assessing Officer had occasioned to consider the penalty orders and issued fresh notice. There is no legal bar for the same. Therefore, it cannot be contended that there is any lack of jurisdiction on the part of the authorities in proceeding further. No interference with the order required - If aggrieved, the remedy of the petitioner is to challenge the penalty orders by approaching the revisional authority and it shall always be open for the petitioner to file appropriate objection to the notice under Section 25(1) of the Act - rest part of petition dismissed - decided against petitioner.

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• 2016 (9) TMI 824
  Restoration of appeal petition - revision notice to petitioner to revise the total and taxable turnover - reversal of input tax credit - imposition of penalty - whether the second respondent was justified in rejecting the appeal as not entertainable? - Section 84 of the TNVAT Act - Held that: - the decision in the case of State of Tamil Nadu v. Sabarigiri Industries [2014 (3) TMI 193 - MADRAS HIGH COURT] apply - appeal maintainable. Rectification of assessment order - whether the petitioner has made out any grounds to interfere with the rectified assessment order, only with regard to the points which have been held against the petitioner? - Held that: - as against the order of rectification passed resulting in the modification of the original order passed, the assessee has the right of appeal before the appellate forum. Appeal petition restored to the file of the second respondent, who shall hear and decide the appeal on merits and in accordance with law - appeal allowed - decided in favor of assessee.

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• 2016 (9) TMI 823
  Rejection of refund claim - Rule 4(1) of the Punjab General Sales Tax (Deferment and Exemption) Rules, 1991 - benefit of exemption/deferment for payment of tax available from the date of issuance of exemption/entitlement certificate - Rule 3(2) of the Rules - special and alloys steels - eligibility certificate - delay in issuance of eligibility certificate - extension of eligibility period - alternative remedy of appeal - Held that: - the orders are passed under the Act and the Rules, which is a complete code in itself. There is no question of representation being entertained when the orders are being passed by quasi-judicial authorities against which statutory remedies are available. The petitioner having failed to avail of the same at the appropriate time cannot be permitted to get the issue re-opened merely by filing a representation. There was statutory remedy available to the petitioner against the order passed by the Excise & Taxation Commissioner on 13.10.2003, any subsequent representation made by the petitioner, that too more than three years thereafter raising any plea was not maintainable and as a consequence all subsequent orders passed thereon have no value at all. There is nothing on record to suggest that the petitioner ever raised any issue regarding the period of its entitlement of exemption from payment of tax immediately after the eligibility and exemption certificates were issued to it. The issue initially was also sought to be raised nearly two years after the expiry thereof. There is no provision in the Rules providing for extension of period of eligibility or changing the dates thereof. It is too late to consider the prayer of the petitioner regarding validity of the provisions of the Rules with reference to the period of entitlement of exemption from payment of tax once the issue had attained finality way back in the year 2003. The plea of discrimination sought to be raised is also to be noticed and rejected for the reason that firstly M/s Godrej & Boyce Mfg. Co. Ltd. was granted deferment from payment of tax and not exemption and further there was an amendment made in the Rules to that effect. The vires of that Rule has not been challenged. Petition dismissed - decided in favor of petitioner.

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• Indian Laws

• 2016 (9) TMI 822
  Default in liquidating the liability - Held that:- Discipline is not only to be employed by the bank in its day to day business activities but even customers of a bank require to show a steadfast commitment and discipline. Failure to live up to the promises made, which alone induce the bank to lend money, will have a cascading effect on the business operations of a bank. This apart, when the non-performing assets are mounting, the very vitals of the economy gets impacted. Keeping all these factors in mind and to keep the economy afloat in the most-testing and trying circumstances, the SARFAESI Act has been ushered in by the Parliament. This is a special piece of legislation intended to secure the interest of the financial institutions, while at the same time, affording a reasonable protection to the borrowers as well. When the measures adopted by the respondent bank by affording opportunity after opportunity to the petitioners to liquidate their liability have not been availed, there is nothing that this Court can do, particularly in exercise of its jurisdiction under Article 226 of the Constitution of India, which is essentially a discretionary jurisdiction, all the more so in the absence of any enforceable right in the hands of the petitioners vis--vis the 1st respondent bank. This apart, the transaction of financial arrangements entered into by and between the petitioners on the one hand and the 1st respondent bank on the other, have no element of public duty and hence, it falls squarely within the realm of private arrangement. Keeping all these factors in our mind, we regret to concede to the demand made by the learned counsel for the petitioners that the 1st respondent bank shall be directed to negotiate with the petitioners and settle the dispute under one-time settlement scheme nor do we see any justifiable reason for us to interdict the intended sale on 10.03.2016.

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• 2016 (9) TMI 821
  E-auction - procedure prescribed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Held that:- For the whole of the entire loan transaction availed by a borrower and if he has created different security interests in different movable/immovable properties by using the expression that secured asset, an option has been provided to the borrower to retrieve that particular secured asset, which is sold by the secured creditor, like in the instant case, where more than one collateral security has been created by the borrower as the security for the loan availed and now only one such security interest has fallen for sale by e-auction mode, the right of the borrower to retrieve that secured asset cannot be denied. For retrieving that particular secured asset, it may not be really necessary for the borrower to liquidate the entire outstanding liability in the loan account and it is enough, if he pays the value fetched at the sale/public auction of that particular secured asset and retrieve it. But, at the same time, the incidental costs, charges and expenses, which the bank may have incurred for undertaking the securitization measures, may also have to be tendered. Hence, apart from repayment of ₹ 3,60,10,000/-, which is the price offered and paid by the 2nd respondent herein for the secured asset, which was sold by the 1st respondent on 23.12.2015, the petitioner shall also pay the securitization expenses incurred by the bank and also such expenses in the form of compensatory costs to the 2nd respondent for the monies deposited by him in the form of interest, not exceeding @ 9% per annum, on or before 09.05.2016. The 1st respondent and/or State Bank of India, Main Branch, Srikakulam, shall not register the Sale Certificate already issued in favour of the 2nd respondent with regard to the secured asset sold on 23.12.2015. Should the petitioner commit any default in paying the aforesaid monies on or before 09.05.2016, the bank would be at perfect liberty to register the Sale Certificate already issued in favour of the 2nd respondent, at his expenses and deliver vacant possession of the secured asset purchased by him. Should the petitioner honour the commitment, which he made to this Court today, it is needless for us to observe that the Sale Certificate issued in favour of the 2nd respondent with regard to the secured asset shall be cancelled and possession of the secured asset should be restored to the writ petitioner.

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