TMI Tax Updates - e-Newsletter
January 19, 2018

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. ARREST PROVISIONS UNDER GST (PART-1)

   By: Dr. Sanjiv Agarwal

2. 5% GST on Mess facility provided by Educational Institutions – Is it correct?

   By: Bimal jain

News

1. Policy Changes recommended by the 25th GST Council Meeting

2. Recommendations for Changes In GST/IGST Rate and Clarifications in Respect of GST Rate on Certain Goods -As per discussions held in the 25thGST Council Meeting

3. Recommendations made on GST Rate changes on services by the 25th GST Council Meeting

4. GST Council discusses making return filing process simpler - FM Arun Jaitley briefed media on GST Council meeting

5. FREQUENTLY ASKED QUESTIONS - GST

6. The Union Finance Minister, Shri Arun Jailey holds Pre-Budget consultations with the Finance Ministers of States/ Union Territories(with Legislature)

7. Working on strategy to diversify export basket: Prabhu

8. ICSI confers Honorary Fellow Membership to Shri P.P. Chaudhary, Hon’ble Union Minister of State for Law & Justice and Corporate Affair

9. RBI Reference Rate for US $

Notifications

Customs

1. 02/2018 - dated 17-1-2018 - ADD

Seeks to revoke/rescind notification No. 40/2012-Customs (ADD) dated 30.08.2012

2. 06/2018 - dated 18-1-2018 - Cus (NT)

Exchange Rates Notification No.06/2018-Custom(NT) dated 18.1.2018

DGFT

3. 44/2015-2020 - dated 18-1-2018 - FTP

Amendment in policy condition No.3 of Chapter 72 of ITC (IIS), 2017 — Schedule —I (Import Policy)

GST - States

4. S.O. No. 06-01/2018-State Tax - dated 10-1-2018 - Jharkhand SGST

Amendments in the Notification No. S.O 50- State Tax, dated the 29th June, 2017.

5. Va Kar/GST/12/2017-45 - dated 4-1-2018 - Jharkhand SGST

Corrigendum-Notification No S.O-50 (State Tax), Dated- 29.06.2017.

6. Va Kar/GST/07/2017-S.O. No. 05 - dated 3-1-2018 - Jharkhand SGST

Jharkhand Goods and Services Tax (Fourteenth Amendment) Rules, 2017.

7. Va Kar/GST/04/2017-S.O. No. 04 - dated 3-1-2018 - Jharkhand SGST

Appoints the 1st day of February, 2018 as the date from which the provisions of serial number 2(ix)(i) and 2(ix)(ii).

8. Va Kar/GST/04/2017-S.O. No. 03 - dated 3-1-2018 - Jharkhand SGST

Waiver the amount of late fee payable FORM GSTR-4.

9. Va Kar/GST/04/2017-S.O. No. 02 - dated 3-1-2018 - Jharkhand SGST

Extends the time limit for furnishing the details of outward supplies in FORM GSTR-1.

10. Va Kar/GST/04/2017-S.O. No. 01 - dated 3-1-2018 - Jharkhand SGST

Recommendations of the Council, notifies the registered persons having aggregate turnover of upto 1.5 crore rupees in the preceding financial year or the current financial year.

11. Va Kar/GST/04/2017-S.O. No. 148 - dated 29-12-2017 - Jharkhand SGST

The Jharkhand Goods and Services Tax (Thirteenth Amendment) Rules, 2017.

12. Va Kar/GST/12/2017-4311 - dated 28-11-2017 - Jharkhand SGST

Corrigendum - Notification No. S.O. 28 dated 20th June, 2017.

13. 4-J /2017 - dated 3-1-2018 - Karnataka SGST

Karnataka Goods and Services Tax (Tenth Amendment) Rules, 2017

14. 01/2018 - dated 1-1-2018 - Karnataka SGST

State Tax seeks to further amend notification No. 3/2017 - State Tax so as to prescribe effective rate of tax under composition scheme for manufacturers and other suppliers

15. 25/2017 - dated 29-12-2017 - Karnataka SGST

Notifies the date from which E-Way Bill Rules shall come into force

16. FD 47 CSL 2017 - dated 28-12-2017 - Karnataka SGST

Corrigendum to Notification No.FD 47 CSL 2017 (4-I/2017) dated 13-12-2017

17. 4-1/2017 - dated 13-12-2017 - Karnataka SGST

Karnataka Goods and Services Tax (Ninth Amendment) Rules, 2017

18. 42/2017 - dated 14-11-2017 - Karnataka SGST

Amendments in the Notification (02/2017) No. FD 48 CSL 2017, dated 29th June, 2017.

19. 41/2017 - dated 14-11-2017 - Karnataka SGST

Amendments in the Notification (01/2017) No. FD 48 CSL 2017, dated 29th June 2017

20. 4-H/2017 - dated 9-11-2017 - Karnataka SGST

Karnataka Goods and Services Tax (Eighth Amendment) Rules, 2017

21. 4-G /2017 - dated 9-11-2017 - Karnataka SGST

Karnataka Goods and Services Tax (Seventh Amendment) Rules, 2017

Circulars / Instructions / Orders

GST - States

1. 11/2017-GST - dated 21-12-2017

Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03

2. 09/2017-GST - dated 14-11-2017

Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117 of the Jharkhand Goods and Service Tax Rules, 2017

3. 10/2017-GST - dated 14-11-2017

Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Jharkhand Goods and Service Tax Rules, 2017

4. 05/2017-GST - dated 3-11-2017

Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03

5. 06/2017-GST - dated 3-11-2017

Extension of time limit for submitting application in FORM GST REG-26

6. 07/2017-GST - dated 3-11-2017

Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117 of the Jharkhand Goods and Services Tax Rules, 2017

7. 08/2017-GST - dated 3-11-2017

Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Jharkhand Goods and Service Tax Rules, 2017

GST

8. 28/02/2018 - dated 18-1-2018

Corrigendum to Circular No. 28/02/2018-GST dated 08th January 2018 issued vide F.No. 354/03/2018 - reg.

DGFT

9. 54/2015-2020 - dated 18-1-2018

Change of Office Address (location) of India Industries Association (IIA) to authorize their firm as an agency to issue Certificate of Origin (Non-Preferential)-reg.

10. 55/2015-2020 - dated 18-1-2018

Enlistment under Appendix 2E of M/s Asian Exporters' Chamber of Commerce and Industry (AECC&I) - Authorized to issue Certificate of Origin (Non-Preferential) - reg.

Customs

11. 03/2018 - dated 17-1-2018

Amendment in the AEO Programme Circular No. 33/2016 dated 22/7/2016- reg.

Highlights / Catch Notes

GST

• GST Council Plans to Simplify Return Filing Process to Boost Compliance and Efficiency for Taxpayers.

  News : GST Council discusses making return filing process simpler
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Income Tax

• Court Rules Section 68 Doesn't Apply to Partner's Capital in Partnership Firm; Partner Must Explain Capital Source.

  Case-Laws - HC : Addition on account of capital introduction by one of the partner of the firm u/s 68 - no addition can be made with regard to the partner’s capital introduction in the hands of the partnership firm - HC
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• Section 115JB Dispute: Assessee Challenges Provision on Investment Value Diminution Crediting Method to Profit & Loss Account.

  Case-Laws - AT : Addition u/s.115JB under the head ‘provision set aside for diminution in the value of investment holding that the same are not in the nature of provision only.” - MAT - The assessee had credited the difference between the sale price and fair value as on 31.03.2008 to Profit & Loss Account and not the difference between sale price and its cost. - No additions - AT
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• Railway Overloading Payments Are Compensatory, Not Disallowed Under Explanation to Section 37(1) of Income Tax Act.

  Case-Laws - AT : Disallowance as the overloading charges - Railway Punitive Charges - payments made to the railways for overloading of the wagons is compensatory in nature and cannot be disallowed under Explanation to Section 37(1) of the Act. - AT
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• Non-deduction of TDS u/s 194C leads to disallowed expenses u/s 40(a)(ia) for oral retainership contracts.

  Case-Laws - AT : TDS u/s 194C - Disallowance u/s 40(a)(ia) - when the amount in question was paid by the assessee to the concerned 3 persons at the fixed rate on monthly basis for the specified services rendered by them, there was bound to be an oral contract on the basis which the services were agreed to be rendered on retainership basis - the amount in question was liable to be disallowed u/s 40(a)(ia) - AT
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• Officer Lacked Jurisdiction on Assessee's Status for Deductions u/s 80P of Banking Regulation Act.

  Case-Laws - AT : Deduction u/s 80P - The assessing officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view - AT
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• Royalty Payments Not Deductible as Life Insurance Business Expenses Under Income Tax Act Provisions for Shareholders' Accounts.

  Case-Laws - AT : Income in the shareholders a/c has to be computed under the normal provisions of the computation of income in Income Tax Act. Royalty paid by the assessee in our view cannot be regarded to be an expense relating to the life insurance business. - AT
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• Expenditure Deduction u/s 80IC Denied Due to Lack of Examination of Separate Books by Assessing Officer.

  Case-Laws - AT : Deduction u/s. 80IC - Thus, the basis for allocation of expenditure without examining the separate books of account by the AO on the facts and circumstances of the case is not called for and same is rejected. - AT
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• Breads and Buns Manufacturing Eligible for Tax Deduction u/s 80IB; Not Classified as Confectionery.

  Case-Laws - AT : Deduction u/s 80IB - manufacturing of breads and buns - breads and buns do not qualify as confectionery items and are thus not prohibited to be manufactured by SSI units as per the 11th Schedule of the Act. - AT
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• Cooperative Society Payments to Developers Not Automatically Subject to TDS u/s 194C of Income Tax Act.

  Case-Laws - AT : TDS u/s 194C - payments made to developers/contractors by assessee co-operative society - The mere fact that the contractor/developer were required to layout roads and undertake other activities before the delivery of the completed sites cannot be either determinative of the facts or need to mean that the agreements entered into by the assessee society is a composite contract and amounts to a works contract - no TDS liability - AT
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• Court Rules Seized Cash Can Settle Tax Liability u/s 220(2) of Income Tax Act; Not in Default.

  Case-Laws - AT : Levy of interest u/s 220(2) - such cash seized/ offered to settle the cash liability, should have been accepted and assessee should be deemed to have made the payment specified in the demand notice within the period of limitation as provided u/s 220(1); and cannot be treated in default for not making the payment - AT
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• Disallowance of Business Expenses Without Proper Justification u/s 37(1) of the Income Tax Act Challenged.

  Case-Laws - AT : Disallowance of expenses when the business was not fully functional - - Nowhere in the order of the AO there is a whisper as to how the expenditure is excessive and how the expenditure is not having been incurred for the purpose of business u/s 37(1) or there is a personal expenditure - AO cannot disallow expenditure on estimate basis - AT
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Service Tax

• Service Tax on Reimbursable Expenses Like Electricity and Water Charges Deemed Unsustainable and Overturned.

  Case-Laws - AT : Levy of service tax - reimbursable expenses - Electricity and Water charges - levy of service tax on the reimbursable expenses of electricity charges and water charges is unsustainable and requires to be set aside. - AT
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Central Excise

• Court Considers Wife's Claim on Property Ownership Amid Husband's Outstanding Dues; Validity Could Halt Recovery Efforts.

  Case-Laws - HC : Attachment of immovable properties - creation of charge on such properties for the recovery of the dues of her husband - if the petitioner is correct in contending that all the four immovable properties were purchased by her from her own source of income, the department cannot carry out coercive recovery against such properties merely because her husband died leaving behind sizable departmental dues - HC
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• Automatic Taps and Flushing Systems Classified Under CETH 9032 for Automatic Fluid Control Purposes.

  Case-Laws - AT : Classification of goods - Automatic Taps - Urinals and WC Flushing Systems - classified under CETH 854390 or under CETH 90328910? - The goods manufactured are in the nature of instruments/ apparatus for automatically controlling of the flow of the fluid. Hence, these are most appropriately classifiable under CETH 9032 - AT
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• Pre-stressed cement sleepers used in railway sidings deemed Cenvatable, eligible for CENVAT credit under Central Excise rules.

  Case-Laws - AT : CENVAT credit - Capital goods - the Railway siding was laid down from the factory premises up to the Railway station, which is necessary for inward transportation of the inputs and outward transportation of their final product - the pre-stressed cement sleepers are Cenvatable items - AT
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• Dispute Over Amortization of Casting Patterns Costs; Department Demands Costs Spread Across All Produced Castings.

  Case-Laws - AT : Valuation - amortization of cost of patterns - appellants amortized the entire cost of these patterns against the first Purchase Order for supply of 75 pieces of the castings - The department entertained the view that appellant ought to have amortized the cost of patterns against supply of all castings manufactured using the patterns - demand confirmed - AT
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VAT

• High Court Imposes Rs. 50,000 Penalty on Officers for VAT and Sales Tax Duty Failures; No Act Provisions for Authority Penalties.

  Case-Laws - HC : Lapses and failures on the part of authorities - If the contention and the pleas of the petitioner are rejected, they can be burdened with tax, interest and penalty. However, there is no provision in the Act under which the authorities can be burdened with any penalty or costs for the wrongs committed by them in violation of the provisions of the Act. - we are inclined to impose penalty in form of costs of ₹ 50,000/- on the respondents (officers) - HC
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Case Laws:

• Income Tax

• 2018 (1) TMI 863
  Capital gains resulting from the acquisition of land - revised return not filed - whether in the absence of a revised return, AO is precluded from considering, in a proceedings under Section 143 the contention of the assessee that the capital gains disclosed in the return filed by him is not exigible to tax? - there cannot be any assessment on the basis that the deduction claimed by him under that head is not admissible - Held that:- The capital gains on a transaction is exempted from payment of tax, the assessing officer has a duty to refrain from levying tax on the said capital gains and the assessing officer cannot, in such cases, refuse to grant relief under Section 143 to the assessee on the technical plea that the assessee has not filed a revised return. It is so since the paramount duty of the assessing officer is to complete the assessments in accordance with law. It is all the more so in the light of the mandate under Article 265 of the Constitution that no tax shall be levied or collected except by authority of law. In the instant case, the petitioner has not filed a revised return when he was made to understand that he has no liability to pay tax on the capital gains resulting from the acquisition of land. The reason is obvious that the time prescribed under the Act for submission of revised return had expired by that time. The case of the petitioner, in the circumstances, is only that he shall not be penalised for having paid tax in terms of his return, on account of ignorance, on an income not exigible to tax. No hesitation to hold that Ext.P12 order, which is impugned in the writ petition, is a clear case where the first respondent has penalised the petitioner for having paid tax on an income which is not exigible to tax. The said order, in the circumstances, is liable to be interfered with. - Decided in favour of assessee

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• 2018 (1) TMI 862
  Proceedings for recovery of the amount due - whether sale is vitiated for the reason of not having been conducted within the time stipulated by law? - Held that:- Period stipulated for filing an appeal is 45 days from the date on which the copy of the order is received by him. Therefore, the order could become final only after expiry of the period prescribed for filing an appeal. The said period expired only on 13.4.2004. Since the financial year in which the order has become final, namely, 13.4.2004, has expired only on 31.3.2005, the three year period stipulated by Rule 68B above expired only on 31.3.2008. Admittedly, the sale was conducted on 27.11.2007. Therefore, the sale was conducted within the time stipulated by Section 68B of the Second and Third Schedules to the IT Act. It is necessary to further notice that, the auction proceedings had remained stayed as per the orders of the DRAT as well as this Honourable Court, for varying periods. The said periods are also necessary to be excluded going by the terms of Rule 68B. Even without doing that, it has to be held that the sale was conducted within the time stipulated by the statutory provision. It is held so. Whether in view of section 29 of the DRT Act, all the provisions of the IT Rules would become applicable to proceedings before the DRT? - Held that:- The provisions of the IT Act and the Rules are applicable. There was no necessity for attachment thereof before the sale, as contended. Though it is contended that there was no proclamation, fixation of a reserve price etc., as contemplated by the IT Rules, there is no material on record to support any of the said contentions. Therefore, the said contentions have to fail. Since, we have already found on facts that the sale conducted was within the time stipulated by the statutory provision, we do not find any grounds to interfere with the judgment appealed against or to grant any of the reliefs sought for, except to clarify that the legal position as indicated by the Apex Court in Paramsivan C.N. v. Sunrise Plaza Tr.Partner (2013 (6) TMI 135 - SUPREME COURT OF INDIA) shall apply.

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• 2018 (1) TMI 861
  Addition on account of capital introduction by one of the partner of the firm u/s 68 - Held that:- When the assessee has furnished the details with regard to the source of the capital introduced in the firm and the concerned partner had confirmed such contribution, the assessee had duly discharged the onus cast upon it. If the Assessing Officer was not convinced about the creditworthiness of the partner who had made the capital contribution, the inquiry had to be made at the end of the partner and not against the firm. The controversy involved in the present case, therefore, stands squarely covered by the decision of Commissioner of Income-tax v. Pankaj Dyestuff Industries [2005 (7) TMI 601 - GUJARAT HIGH COURT] as held no addition can be made with regard to the partner’s capital introduction in the hands of the partnership firm and dismissed the appeal. - Decided in favour of assessee

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• 2018 (1) TMI 860
  Application filed u/s 254 (2) seeking rectification of order [2016 (8) TMI 263 - ITAT DELHI] - condonation of delay - Held that:- Having already affirmed the order of the ITAT which is sought to be rectified, this Court is not inclined to interfere with its subsequent order declining to rectify the said order. Secondly, the Court finds that the ground on which such rectification was sought was far beyond the scope of the powers of rectification of the ITAT under Section 254 (2) of the Act. The Court, therefore, finds no error having been committed by the ITAT in dismissing the Appellant’s application under Section 254 (2) of the Act.

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• 2018 (1) TMI 859
  Computation of capital gain - substitute the fair market value in place of the full value of consideration received/accrued - applicability of section 50C - Held that:- Provisions of section 50C are not applicable in the case of the assessee as the capital asset involved here was not land or building but it is a right to purchase a building (shop). Further, the Revenue Authorities has also not brought on record whether the transfer of the property was registered with the Stamp Valuation Authority. Since in the case provisions of section 50C are not applicable, the provisions of section 48 of the Act would be applicable and as observed by us in earlier paras that full value consideration received cannot be substituted by the fair market value determined by the DVO as held in the various decisions cited above, we set aside the finding of the lower authorities on the issue in dispute and delete the addition made by the Assessing Officer. - Decided in favour of assessee.

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• 2018 (1) TMI 858
  Entitlement to benefit of section 11 and 12 - whether assessee continues to hold investment in foreign companies as well as in India companies and has not converted the same in the modes specified u/s 11(5)? - Held that:- This Tribunal has time and again in various Assessment Years has allowed exemption under section 11 & 12 to assessee. The Trustees are duty bound and, are protecting the assets of the Trust, so that once the court embargo is taken away after the probate order, the activities of the Trust could be carried out. Till such time they have to incur certain expenditures on maintenance of these properties - immovable and movable - by maintaining staff and hiring lawyers to fight out the various cases to enable the probate to be allowed by the High Court. These expenditures are essential to save the Trust and its assets and these expenditures have been wrongly disallowed in the assessment order. - Decided against revenue

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• 2018 (1) TMI 857
  Entitled to the benefit of deduction u/s 80P(2) - whether "Primary Agricultural Credit Society" not falling within the ambit of Banking Regulation Act? - Held that:- The Reserve Bank of India, which is the competent authority as per the Banking Regulation Act, treats assessee society and similar societies as only "Primary Agricultural Credit Society" not falling within the ambit of Banking Regulation Act. The Reserve Bank of India has given letters to the societies similar to assessee stating that they are Primary Agricultural Credit Societies and therefore in terms of section 3 of the Banking Regulation Act are not entitled for banking license; (Copies of such letter from RBI are placed on record). That being the case, the Assessing Officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r.w.s Section 56 of the Banking Regulation Act. CIT(A) has correctly allowed the claim of deduction - Decided against revenue

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• 2018 (1) TMI 856
  Disallowing the claim of deduction u/s 80P(2) - AO competency and jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank' - Held that:- The Reserve Bank of India, which is the competent authority as per the Banking Regulation Act, treats assessee society and similar societies as only "Primary Agricultural Credit Society" not falling within the ambit of Banking Regulation Act. The Reserve Bank of India has given letters to the societies similar to assessee stating that they are Primary Agricultural Credit Societies and therefore in terms of section 3 of the Banking Regulation Act are not entitled for banking license; (Copies of such letter from RBI are placed on record). That being the case, the Assessing Officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r.w.s Section 56 of the Banking Regulation Act. CIT(A) has correctly allowed the claim of deduction - Decided against revenue

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• 2018 (1) TMI 855
  Addition u/s.115JB under the head ‘provision set aside for diminution in the value of investment holding that the same are not in the nature of provision only.” - MAT - Held that:- As per amended provisions of Section 115JB requires provision for diminution in value of investment to be added back to determine Minimum Alternate Tax. Fair value of units of mutual funds was lower than its cost by 46,94,62,365/- and the same being current investment, the appellant following mandatory Accounting standard – 13, charged 46,94,62,365/- to Profit 46,94,62,365/- appearing in Profit 46,94,62,365/- appearing in Profit 46,94,62,365/- as the same is not in the nature of provision. - Decided against revenue

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• 2018 (1) TMI 854
  Penalty u/s 271(1)(c) - proof of furnishing inaccurate particulars - addition of improvement and transfer expenses incurred for the purposes of the property sold - Held that:- AO has not made any allegations of assessee for furnishing inaccurate particulars. Additions in fact have been made on account of improvement and transfer expenses incurred for the purposes of the property sold. Assessee has also made certain payments to one Mr.Anumod Sharma towards the dispute in the property sold under a compromise agreement which is a part of records. Further it would not be incorrect to hold that no information given in the return was found to be incorrect by Assessing Officer and disallowance is strictly because of a difference of opinion by Ld. AO. Hon’ble Delhi High Court has accepted assessee’s appeal against quantum order passed by ITAT on the following question of law: “Did the Tribunal fall into error in holding that the deduction claimed by assessee did not fall within what was permissible under section 48 (i) of the Income Tax Act?” Thus once question of law has been admitted by Jurisdictional High Court, the issue becomes debatable and no penalty can be levied under such circumstances. - Decided in favour of assessee

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• 2018 (1) TMI 853
  Difference of income as per Income 96,94,906/- (Rs.6,99,706/- Savings Bank Interest + 89,95,200/- Interest from corpus fund), it has offered to tax further interest of 1,13,03,857/- (25% of interest received and considered in corpus fund) and thus it has offered to tax total interest of 2,09,98,763/- which is much higher than interest income of 1,81,76,676/- worked out by assessing officer based on TDS as per Form 26AS. In view of these facts, assessee's contention is acceptable. Therefore, no amount is required to be added to the returned income. In our considered opinion, ld. CIT(A) has rightly granted the relief to the assessee. Disallowance of depreciation on assets purchase out of grant received u/s.35AC towards depreciation in respect of Infrastructure facility developed by cardiac and cancer facility - Held that:- The appellant is eligible for depreciation on the assets purchased out of the donation received u/s.35AC of the Act. Revenue appeal dismissed.

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• 2018 (1) TMI 852
  Income deemed to accrue or arise in India - Holding the income from offshore supply of cables not taxable in India - effective rate on payment made to the assessee under offshore supply contracts - PE in India - Held that:- AO brought to tax the Revenues from offshore supply by considering profit rate of 10% and attributing 25% of profits to operations carried out in India. While doing so, the AO has followed the orders of his predecessors as well as the order of the Ld.CIT passed u/s 264 for the FY 2015-16 i.e. A/y 2016-17. We find the Ld.CIT(A) deleted the addition made by the AO by following order of the Tribunal in assessee’s own case in the preceding years as well as the decision of the Jurisdictional High Court in assessee’s own case. [2016 (1) TMI 1126 - DELHI HIGH COURT] Nothing contrary was brought to our notice by the Ld.CIT DR against the finding of the Ld.CIT(A) except stating that the Ld.CIT(A) has not considered the order passed by the Ld.CIT u/s 264 of the I.T.Act, 1961. The same, in our opinion, cannot be a ground to take a different view than the view taken by the Ld.CIT(A) who has followed the decision of the Tribunal in assessee’s own case in the preceding assessment year as well as the decision of the Hon’ble jurisdictional High Court in assessee’s own case - Decided against revenue

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• 2018 (1) TMI 851
  Agricultural income not accepted - assessee submitted some voucher mentioned the cash receipts of sale of such potatoes - AO was not sure about the genuiness of the vouchers - Held that:- As decided in assessee's own case for Asst. Year 2001-02 [2012 (1) TMI 337 - ITAT AHMEDABAD] the accounts maintained by the assessee for agricultural activities suffer from certain defects. The agricultural income declared by the assessee deserves reduction. Respectfully following the aforesaid judgment of the co-ordinate bench, we treat 5,00,000/- as agriculture income and rest of the income to be treated as ‘income from other sources’. Disallowance of tender fees paid to GSFC - Held that:- CIT(A) has rightly treated the above said amount as capital expenditure because same was spent for expending the business. Addition on sum received from Post Office - AO held that assessee has not produced any documentary evidence to show that it was refund of monthly saving scheme - Held that:- As AR has shown us Passbook of Post Office containing the entry in question; therefore, we allow this ground of appeal in favour of the assessee. Disallowance being 1/5th of car maintenance expenses and depreciation on motor car - CIT(A) has held that in his opinion personal use of car cannot be ruled out - Held that:- In the absence of any evidence, ld. CIT should not have given such findings. On the basis of whims no disallowance can be made. Therefore, we allow this ground of appeal in favour of the assessee. Addition of conveyance allowance u/s.10(14) ignoring 1/5th of car expenses and depreciation is concerned - Held that:- AO no other withdrawal for expenses were made by the appellant. As per the AO since the appellant has not incurred any amount of conveyance allowance and therefore he was requested to explain as to why the claim of deduction of 52,000/- be not disallowed. Ld. CIT(A) confirmed the action of the AO and disallowed the conveyance of allowance of 52,000/-. The appellant in his submission himself submitted that above allowance is being received from company every month as part of remuneration and hence the same partakes the character of special allowance contemplated in section 10(14) of the act. However, the appellant has not been able to prove that the allowance has been received by him to meet the expenses incurred wholly, exclusively and necessarily in performance of his duties. Therefore, we dismiss this ground of appeal. Disallowance in respect of Court Fee Refund - AO added this amount on the ground that the appellant has deducted court fees refund but he did not furnish the details and reasons for such claim - Held that:- Since appellant has failed to furnish the details and reason from such claim during the course of assessment proceedings as well as before the CIT(A). Therefore, we dismiss this ground of appeal. Insurance claim - Held that:- AO in the assessment order for the year under consideration had mentioned that the appellant had received 15,410/- as insurance premium and had shown in other income. As per the AO in the revised return of income, the appellant had claimed the same as deduction and had not furnished any reason from the same. In our opinion insurance claim is revenue receipts and lower authority has rightly confirmed the addition

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• 2018 (1) TMI 850
  Disallowance as the overloading charges - whether it is nothing but a penalty as per Provision of section 73 of the Indian Railway Act, 1989 - Held that:- This issue raised by the revenue in this appeal is squarely covered in favour of the assessee by the decision of ITAT Mumbai bench in the case of Taurian Iron & Steel Co.(P)Ltd (2011 (12) TMI 410 - ITAT, Mumbai) after considering the decision in the case of Prakash Cotton Mills P.Ltd. (1993 (4) TMI 3 - SUPREME Court) and also the nature of railway punitive charges held that the payments made to the railways for overloading of the wagons is compensatory in nature and cannot be disallowed under Explanation to Section 37(1) of the Act. Addition u/s 14A - Held that:- In the light of the uncontroverted factual details with regard to availability of own funds the disallowance of interest expenses in terms of Rule 8D(2)(ii) of the Rules was rightly deleted by CIT(A). As far as disallowance under Rule 8D(2)(III) of the Rules is concerned the CIT(A) has followed the decision of the Tribunal in the case of REI Agro Ltd (2013 (9) TMI 156 - ITAT KOLKATA)and has directed the AO to exclude investments which did not yield tax free income while working out the average value of investment. We find no grounds to interfere with the order of CIT(A). No merits in the ground raised by the revenue.

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• 2018 (1) TMI 849
  Addition on account of sales promotion and advertisement expenses as unproved / bogus - Held that:- When the permanent account number as well as other particulars of the income tax assessment of the said party were placed on record before the A.O., he could have easily verified the claim of the assessee directly with the said party instead of harping on the failure of the assessee to give the correct address or produce the said party for verification. As regards the claim of the assessee for deduction paid to M/s. Latest Publicity House for supply of gift articles, it is not supported by any relevant documentary evidence such as bills, delivery challans, vouchers etc and in the absence of the same, the claim of the assessee for the said expenses cannot be allowed. - Decided partly in favour of assessee TDS u/s 194C - Disallowance u/s 40(a)(ia) - payment for performing accountancy job and computer consultancy - contract entered into by the assessee with the said persons - Held that:- As rightly held by the authorities below, when the amount in question was paid by the assessee to the concerned 3 persons at the fixed rate on monthly basis for the specified services rendered by them, there was bound to be an oral contract on the basis which the services were agreed to be rendered on retainership basis. The assessee, therefore, was liable to deduct tax at source in terms of section 194C and having failed to do so, the amount in question was liable to be disallowed under section 40(a)(ia). - Decided against assessee. Addition of installation and delivery expenses - CIT-A sustained 50% expenses - Held that:- Disallowance made by the A.O. for such expenses entirely was not justifiable keeping in view the nature of the assessee’s business of dealing in electronic goods which very much required incurring of expenditure on installation and delivery charges on regular basis - Disallowance made by the Ld. CIT(A) vide his impugned order is excessive and unreasonable and having regard to all the facts of the case including especially the nature of assessee’s business as well as the quantum of expenditure claimed, it would be fair and reasonable to make a disallowance of 50% out of installation and delivery charges to 25%.- Decided partly in favour of assessee Disallowance u/s 40A(3), car expenses and telephone expenses - Held that:- A perusal of the relevant portion of the order of authorities below also shows that a very fair and reasonable view has been taken by them while making this disallowances - Decided against assessee.

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• 2018 (1) TMI 848
  Entitled to the benefit of section 80P deduction - AO's jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank' - Held that:- The Reserve Bank of India, which is the competent authority as per the Banking Regulation Act, treats assessee society and similar societies as only “Primary Agricultural Credit Society” not falling within the ambit of Banking Regulation Act. The Reserve Bank of India has given letters to the societies similar to assessee stating that they are Primary Agricultural Credit Societies and therefore in terms of section 3 of the Banking Regulation Act are not entitled for banking license; (Copies of such letter from RBI are placed on record). That being the case, the assessing officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r.w.s Section 56 of the Banking Regulation Act. - Decided against revenue

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• 2018 (1) TMI 847
  Computation of capital gain - invocation of provisions of sec 50C - most appropriate method for valuation of the galas/building of the assessee - FMV determination - satisfaction of conditions contemplating a transfer as per Sec. 2(47)(v) - Held that:- The tenancies in Mumbai are statutorily controlled by the rent control legislations and rent fetched were likely to remain unaltered for years to come, therefore, in the case of the present assessee before us the valuation of the property was required to be done as per the Rent Capitalization Method. We do not approve of the summary acceptance by CIT-A of the claim of the assessee that as the sale price of the galas/buildings received by the assessee was more than the value determined as per the Rent Capitalisation Method, therefore, no addition was called for in the hands of the assessee. We though are not oblivious of the fact that the assessee had placed on record the valuation of the 31 galas/building as per the Schedule III – Part B of the Wealth tax Act, 1957, but then, we are of the considered view that the said valuation furnished by the assessee was required to be verified and could not have been accepted on the very face of it. We thus in all fairness restore the matter to the file of A.O, and therein direct that the Fair market value of the property be got determined as per the Rent Capitalization Method - Decided in favour of assessee for statistical purposes. Not allowing set-off of the Short Term Capital Loss against the capital gains - Held that:- As perused the order of the A.O in context of the issue under consideration and are of the considered view that he had conclusively proved that the transaction carried out by the assessee was merely a sham transaction with a purpose of evading the tax liability. We have deliberated at length on the orders of the lower authorities as regards the issue under consideration and find ourselves to be in agreement with the view taken by the lower authorities. Before parting, we may herein observe that nothing was brought to our notice which could prove that the observations of the lower authorities were perverse or incorrect. The Ground of appeal No. 1 raised by the assessee is dismissed

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• 2018 (1) TMI 846
  Disallowance of ESOPs expenses - Held that:- The facts of the matter are similar to that of the preceding AYs 2008-09 to 2012-13 which have been decided in favour of the assessee. Amortization of expenses, being the cost of the discounted value of shares allotted to the employees under the ESOP scheme dated 01.04.2007 to 30.05.2011, have been claimed by the assessee and the same being taxable in the hands of the respective employees have been included in their taxable income as perquisite u/s 17(2)(iiia) of the Act. Perusing the details of the perquisite value it is observed that against the total cost of amortized expenses of 44,57,10,475/-, 42,34,51,666/- have been included as perquisite during the FY’s 2008-09 to 2012-13 itself (including under FBT in FY 2008-09 and expenses have been correctly claimed as expenses, as amortized over the years. Hence, CIT(A) by respectfully following the above precedents, has rightly deleted the addition in dispute and allowed the appeal of the assessee.

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• 2018 (1) TMI 845
  Profit disclosed by the assessee in the shareholder’s Profit and loss account (Form A-PL) - not the profit derived from Life Insurance business and therefore the provisions of section 44 read with Schedule First of the Income Tax Act are not applicable - Held that:- Set aside the order of CIT(A) on this issue and direct the assessing officer to take profit shown in shareholders’ profit and loss account i.e. Form A-PL to be part of the income derived from life insurance business. Thus these grounds are allowed. Addition in respect of the amount declared and allocated as bonus for the policy holders - Held that:- We do agree that the term accrual surplus is not defined under the act. The CBDT Circular cannot control the interpretation of Rule 2. We find force in the submissions of the learned Sr. Advocate that CBDT Circular has limited application to a situation where the insurance benefits are assigned to third parties, where the benefits are to be paid/reserved/expended on behalf of the policy holder or the assignee. As the term “on behalf of” implies agency relationship and when the benefits are assigned to third parties, insurance company acts as agent of the policy holder. Even otherwise, if we go to the explanatory note as given under para 40.2 of the Circular 202, according to this bonus paid to the policy holder will also be taxed but that is not the case of the Revenue. The Revenue has only contested the bonus declared and the incremental FFA. 89. We also noted that no such disallowance has been made by the Revenue in the earlier assessment years i.e. up to A.Y.2009-10 and it is for the first time that the CIT(A) has enhanced the assessment. Even on the ground of consistency, the Revenue cannot discard the consistent and regular method followed for determining the taxable income without there being any change or otherwise, the bonus declared and the incremental FFA has been allowed as deduction by the Revenue. Addition considering Funds for Future Appropriation (“FFA”) as part of the actuarial surplus - Held that:- We even noted upto Assessment Year 2009-10, the Revenue has consistently excluded amount appropriated for FFA out of the available surplus for the purpose of ascertaining acturial surplus while computing profit and gains of life insurance business of the assessee. Therefore, following principle of consistency as has been held by Hon’ble SC in the case of Radhasaomi Satsang Baug v CIT [1991 (11) TMI 2 - SUPREME Court] 2,50,00,000/- as there is no submission or argument made on behalf of the assessee that the assessee is eligible for deduction under section 80G of the Income tax Act and the assessee had complied with the conditions as stipulated under section 80G. It is also not the case of the assessee that the assessee has incurred these expenses eligible for deduction under section 35CCA, 35CCB, 35CCC or 35CCD so that we have taken a view that while computing the income from insurance business, in view of specific provisions of section 44 no disallowance could have been made. Thus while deleting the enhancement made by CIT(A) in respect of provision for doubtful debts we also delete the disallowance of 2,500/- taken in ground no. 8 as the assessee derived income from life insurance business only and the computation of the income from life insurance business, in view of S. 44 of the Income Tax Act, has to be made in accordance with Rule 2 of First Schedule of the Income Tax Act which debars Revenue to apply provision of S. 28 to 43B of the Income Tax Act. Thus ground no. 8 stand allowed. Re-compute the losses assessed in earlier AYs for the purpose of allowing setoff thereof u/s 72 - Held that:- CIT(A) although allowed assessee to setoff of losses u/s 72 of AY 2002-03 7,10,43,000/- has duly been shown by assessee under the head ‘income from investment’ and is duly included in the gross receipt of 1,43,19,19,000/- and loss of 20,91,40,000/- has been arrived at after considering said income. Therefore we find that CIT(A) has correctly observed that this is a double addition in income of assessee and he has rightly deleted the said addition. We do not find any illegality or infirmity in the order of CIT(A) while deleting the said addition. Thus the cross objection filed by Revenue stands dismissed.

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• 2018 (1) TMI 844
  Deduction u/s. 80IC - the assessee company is having two units, one at Bawal which is taxable unit; and other one is at Haridwar - Held that:- In the impugned orders as well as the material referred to before us at the time of hearing. The assessee is carrying out operation from two units; Bawal unit which is a taxable; and unit of Haridwar which is eligible for deduction 100% u/s.80IC on its profits derived. The Revenue’s case is that, the assessee has loaded more expenditure in the taxable unit to reduce the profit and therefore, indirect expenditure have been allocated on the turnover ratio. It is an undisputed fact that the assessee has been maintaining separate bank accounts and separate books of account, wherein income and expenditure are separately debited and credited to the respective books of account. From the perusal of the expenses allocated by the Assessing Officer, we find that he has in general picked up the indirect expenditures for the purpose of allocation, without even identifying the expenditure which can be reckoned as common. Thus, the basis for allocation of expenditure without examining the separate books of account by the AO on the facts and circumstances of the case is not called for and same is rejected. It is further seen that though, the ld. CIT (A) has identified certain expenditure which can be reckoned as common, but he too appears to have not examined the accounts of the units as to which expenditures are identifiable qua each unit. Therefore, we are of the opinion that the matter should be restored back to the file of the Assessing Officer for a limited purpose to examine:- * Firstly, to identify the expenditure qua each unit from the separate ledger accounts; and if the expenditures debited are attributable for the particular unit, that is, the expenditure pertains to Bawal unit only then same should be allowed from the profits of Bawal Unit or vice-versa for the Haridwar unit and in that case no allocation should be made for such expenditures. * Secondly, only in case where expenditures are not identifiable and are common in nature that alone should be considered for the allocation purpose. * Lastly, after identifying the common expenditure, the details of which would be provided by the assessee, the Assessing Officer will also examine as to whether the allocation key should be based on ‘product ratio’ or ‘turnover ratio’, because, there could be certain expenses, for example, sales promotion, packing and freight etc., definitely the same should be allocated on ‘product ratio’ wise; however if certain common expenses like salary of managing directors, travelling expenses of the employees which may be common for both the units including that of the directors and auditors remunerations, then same could be taken on ratio of turnover basis. However, the assessee will provide the necessary details for allocation key to common expenses which are identified and only if such expenses required allocation on product ratio then same may be examined and if not, then turnover ratio should be taken. Allocation of ‘management fees’ there could not be any allocation in the AY 2011-12 for the reasons stated by the Ld. Counsel above, which is not disputed by the Ld. DR and hence, we hold that for the A.Y. 2011-12, there cannot be any allocation. As for the A.Y. 2012-13, the assessee has already allocated the management fees as admitted above, hence no further allocation is required. Thus, on this point, we completely agree with the ld. Counsel and reject the arguments raised by the ld. DR. Matter is remanded back to the Assessing Officer who shall provide ample opportunity to the assessee to substantiate its case on the issue of allocation in view of our direction.

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• 2018 (1) TMI 843
  Capital Gains - JDA - Revision u/s 263 - as per CIT AO ought to have held that there was a transfer of a capital asset by the assessee by virtue of agreement dated 11.11.2000 and capital gain had accrued during the previous year - assessee parted with possession of the property as contemplated in Section 53A - taxability of capital gain in the present year because the JDA was executed in the present year - Held that:- Possession was given by these assessees to the builder in the present year because in the present year, the JDA talks about handing over of possession and there is no other document shown as per which, the possession was handed over to the developer in any subsequent year. This is also noted by the AO on page no. 7 of the assessment order in Para no. 9.5 that as per Rider -2 dated 02.02.2009, the parties to the JDA being these four assessees before us had renegotiated clause 13 of the JDAs dated 27.11.2008 and had received a sum of 2.5 Crores as non-refundable deposit. Since in the present case, not only JDA was executed, but possession was also handed over to the developer and non-refundable deposit was received by the assessee to the extent of 2.50 Crores, in our considered opinion, this judgment rendered in the case of CIT Vs. Dr. T.K. Dayalu (2012 (6) TMI 405 - Karnataka High Court) is squarely applicable. - Decided against assessee.

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• 2018 (1) TMI 842
  Eligibility of the assessee to claim deduction u/s 80IB on profits earned by Noida unit - assessee to qualify as an SSI undertaking as per section 11B of the IDR Act, 1951 - Held that:- The eligibility criteria for claiming deduction u/s 80IB as an SSI unit is that it should be regarded as an SSI undertaking u/s 11B of the IDR Act, 1951. Admittedly, the assessee has been issued such a certificate by the Directorate of Industries and which is valid for the impugned year also. The said fact has not been controverted by the Revenue. Therefore, having been issued such a certificate by the concerned Ministry itself, it is obvious that the assessee fulfills all the conditions required under the said Act to qualify as an SSI undertaking. The Revenue has neither controverted the contention of assessee that not all assets qualified as plant and machinery, nor has disputed the detail of qualifying assets filed before us - the investments in plant and machinery of the Noida undertaking is well within the specified limit of 1 crore to qualify as an SSI undertaking. No merit in the contention of the Revenue that for the purpose of determining quantum of investments in plant and machinery by the assessee undertaking, investments by all undertakings owned by the assessee are to be considered. Manufacturing of buns undertaken by the Noida unit is part of confectionery item which is a prohibited item for manufacture by SSI units claiming deduction u/s 80IB, as per Schedule XI of Income Tax Act, 1961 - Held that:- We concur with the Ld. counsel for assessee that the assessee is not manufacturing a confectionery item which is prohibited as per 11th Schedule of the Income Tax Act. The meaning of word “confectionery” and “buns” as per Webster’s dictionary coupled with the fact as pointed out by the Ld. counsel for assessee that the breads and buns fall under the items which are reserved exclusively for manufacture by micro and small enterprise and which fact have not been controverted by the Revenue adequately proves the assessee’s case as rightly held by the Ld.CIT(Appeals). We, therefore, hold that the breads and buns do not qualify as confectionery items and are thus not prohibited to be manufactured by SSI units as per the 11th Schedule of the Act. Thus the assessee is an SSI unit as defined u/s 80IB(14(g) and is not manufacturing a prohibited item specified in the 11th Schedule of the Act and thus qualifies for deduction of its profits u/s 80IB as rightly held by the Ld.CIT(Appeals). - Decided in favour of assessee Deduction claimed u/s 80IC in respect of Tahliwal unit - claim reduced by AO by 10% of the amount of net profits for the reason that the assessee is manufacturing biscuits on its own account as well as doing job work for ITC Limited at Tahliwal, H.P. and further it is also manufacturing biscuits at Phillaur unit, which is not eligible for any deduction of its profits - Held that:- Undeniably, the reduction of profits to the extent of 10% has been done by the Assessing Officer on estimate basis without demonstrating by way of evidence whether any expenses on account of knowhow, goodwill, trade name, etc. had been incurred by the Phillaur unit with respect to Tahliwal unit. The same has not been demonstrated even before us. Further as rightly held by the Ld.CIT(A), the provisions of section 80IA (8) and 80IA (10) cannot be invoked in the present case in the absence of any transaction between the two units. DR has not pointed out any infirmity in the order of the Ld.CIT(Appeals) - Uphold the order of the Ld.CIT(Appeals) in deleting the reduction of profits of the Tahliwal unit by 10% of the profits - Decided in favour of assessee Disallowance of deduction u/s 80IC on job work charges - Held that:- CIT(Appeals) correctly relying upon the decision of the Hon'ble jurisdictional High Court in the case of CIT Vs. Impel Forge & Allied Industries Ltd., [2008 (12) TMI 370 - PUNJAB & HARYANA HIGH COURT] and CIT Vs. Northern Aromatics Ltd. (2005 (2) TMI 830 - DELHI HIGH COURT) held that the assessee was entitled to claim deduction on profits earned on account of job work undertaken by it - Decided against revenue disallowance out of claim of interest u/s 36(l)(iii) - e assessee could not provide the copies of accounts of various persons covered u/s 40A(2)(b)- CIT-A deleted the addition - Held that:- Hon'ble jurisdictional High Court in the case of Bright Enterprises Pvt. Ltd. [2015 (11) TMI 342 - PUNJAB & HARYANA HIGH COURT] relied upon by the Ld.CIT(Appeals) holding that no disallowance u/s 36(1)(iii) of the Act is warranted where sufficiency of interest free own funds for the purpose of making interest free advances is demonstrated - no reason to disturb the order of the Ld.CIT(Appeals) on the issue and, therefore, uphold the deletion of disallowance of interest

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• 2018 (1) TMI 841
  TDS u/s 194C - liability to deduct tax at source on the payments made to developers/contractors by assessee co-operative society - assessee-in-default - Held that:- The mere fact that the contractor/developer were required to layout roads and undertake other activities before the delivery of the completed sites cannot be either determinative of the facts or need to mean that the agreements entered into by the assessee society is a composite contract and amounts to a works contract. Various co-ordinate benches of this Tribunal after examining the same has applied the ratio of the judgment of the Hon’ble Karnataka High Court in the case of Karnataka State Judicial Department Employees House Building Co-operative Society Ltd., (2010 (3) TMI 1211 - KARNATAKA HIGH COURT) and have held that there was no requirement for deduction of tax at source u/s 194C of the Act. Uphold the impugned orders of the ld CIT(A) deleting the demands raised by the AO u/s 201(1) and 201(1A) of the Act - Decided in favour of assessee.

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• 2018 (1) TMI 840
  Levy of interest under section 220(2) - amount seized from the accounts of various companies during the course of search - interest imposed from the date of original demand notice - Held that:- If the Department on its own volition has made the addition, both in the hands of the assessee as well as in the hands of the companies for the same amount and chooses to adjust cash seized out of the demand of the companies, which was denied by the companies in their hands; and ultimately has been found to be not sustainable in their assessments, then charging of interest under section 220(2) from the assessee for such a huge delay of payment of demand cannot be attributed to the assessee, especially when finally Revenue in the wake of appellate orders had accepted that the amount seized from the companies belong to the assessee and instead of refunding the same to the said companies should have adjusted the cash in the hands of the assessee that very time under the given facts and circumstances of the case. Now finally, when Revenue has admitted that the amount seized belong to the assessee and tax liability was upon the assessee only, then, in our opinion, such cash seized/ offered to settle the cash liability, should have been accepted and assessee should be deemed to have made the payment specified in the demand notice within the period of limitation as provided u/s 220(1); and cannot be treated in default for not making the payment and thereby shift the adjustment of seized cash after expiry of more than 10 years from the date of demand created by the Assessing Officer. Thus, we hold that the interest u/s 220(2) under the given facts and circumstances of the case cannot be imposed from the date of original demand notice - Decided in favour of assessee.

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• 2018 (1) TMI 839
  Disallowance of expenses when the business was not fully functional - Held that:- Assessing Officer has not disallowed 100% expenditure and he had considered the maximum expenditure as genuine and having been incurred for the purpose of business u/s 37(1) of the Act, which means that the expenditure claimed by the assessee has been considered as excessive. Nowhere in the order of the Assessing Officer there is a whisper as to how the expenditure is excessive and how the expenditure to the extent of 25,13,385/- is not having been incurred for the purpose of business u/s 37(1) of the Act or there is a personal expenditure. Making of estimation for disallowance under such circumstances and facts of the case is not permissible. Treatment to rental income - business income or income from house property - Held that:- The assessee had exploited the asset for commercial exploitation in the form of employees’ quarters, office premises, etc. Therefore, under such facts and circumstances of the case, we find no infirmity in the order of the CIT(A) who has rightly treated the income as income assessable under the head ‘business income’ instead of assessable under the head ‘income from house property’. Disallowance u/s 14A - Held that:- AO has wrongly applied the formula given in Rule 8 of the I.T. Rules. The arguments made by the ld. AR that the investments were old investments except the shares of MTCPL which were revived as part of rehabilitation scheme duly approved by BIFR and on which no dividend income was earned during the year. The assessee having incurred demat charges amounting to 2,18,304/- which, in fact, relates to earning of dividend income and to that extent, the CIT(A) has rightly disallowed and allowed the balance relief of 36,95,625/-. - Revenue appeal dismissed.

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• 2018 (1) TMI 838
  Receipts on account of carbon credit - Held that:- Receipts on account of carbon credit is not in the nature of income and not chargeable to tax. See case of CIT Vs. My Home Power Ltd. [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] wherein it was held that "carbon credit was not an offshoot of business of the assessee but an offshoot of environmental concerns. No asset was generated in the course of business but it was generated due to environmental concerns. There was no cost of acquisition or cost of production to get entitlement for the carbon credits - Decided against revenue Acceptance of revised return - the assessee in the return of income did not make any claim that receipts on account of carbon credit is not taxable - Held that:- CIT(A) being the First Appellate Authority has the power to entertain a new claim even in the absence of a revised return of income. The Supreme Court in case of Goetze (India) Ltd. (2006 (3) TMI 75 - SUPREME Court) has clarified that "the decision was restricted to the power of the assessing authority to entertain a claim for deduction otherwise than by a revised return, and did not impinge on the power of the Appellate Tribunal under section 254 of the Income-tax Act, 1961”. CIT(A) was right in accepting the revised claim regarding non taxable of carbon credits. Accordingly ground no.2 raised by the revenue is also dismissed.

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• Customs

• 2018 (1) TMI 837
  Constitutional Vires of sub-para (i) of paragraph 3 of Notification No. 43(RE-2013) 2009-2014 dated 25th September, 2013 and sub-para (i) of paragraph 2 of Notification No. 44(RE2013) 2009-2014 dated 25th September, 2013 - non-speaking order. Held that: - Sub-Section (4) of Section 9 of the Foreign Trade (Development and Regulation) Act, 1992 mandates and requires the authority to pass a reasoned and a speaking order - This is a specific direction of the Court and in case a speaking and a reasoned order is not passed, appropriate directions and orders, adverse comments, including imposition of costs may be required and can be made - the respondents are expected to abide by the said stipulation. Petition allowed - decided in favor of petitioner.

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• 2018 (1) TMI 836
  Classification of export goods - DEPB benefits - whether the Tribunal in the earlier round of litigation has concluded the issue so far as the classification of goods for export benefits is concerned, there being no material change in the circumstances and whether in facts of the present case, writ jurisdiction should be exercised without relegating the petitioners to the appellate forum? Held that: - The Tribunal was of the opinion that when for the purpose of DEPB Scheme, the product is accepted as one of Alloy Steel Forging (Machined), as per the circular of CBEC, for the purpose of Duty Drawback Scheme also it will carry the same classification - Even without the aid of the previous classification under DEPB Scheme and the CBEC circular, the Tribunal's finding that the product was Alloy Steel Forging (Machined) and not Bearing Races, would remain unshaken. The conclusions of the Tribunal are not based merely on the fact that previously for DEPB Scheme, a certain classification claimed by the petitioners was accepted by the department. The Tribunal has come to independent findings based on voluminous evidence produced by the petitioners. Reference of the Commissioner in the present case that the petitioners had described the goods as Bearing Races for domestic clearances was also at issue before the Tribunal in the earlier round. In plain terms, therefore, the Commissioner was bound by the judgment of the Tribunal as confirmed by the Supreme Court. Relegating the petitioners to the appellate remedy would therefore, be futile. Further, the statute now requires a mandatory predeposit before filing any appeal. The petitioners would therefore, have to deposit a sizeable amount with the department. This appeal thus comes with an onerous condition. In facts of the case, therefore, appeal cannot be stated to be an efficacious remedy. Petition allowed.

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• 2018 (1) TMI 835
  Renewal of CHA License - renewal of licence for a period of ten years from 04.01.2018 - pendency of SCN. Held that: - mere pendency of a show cause is not a ground to withhold the petitioner's application for renewal - the Department should take an appropriate stand in the matter in extending the licence of the petitioner for a shorter period, when the petitioner, in terms of the regulations, is entitled for renewal up to ten years - Admittedly, no action has been taken by the Department under the Customs Brokers Licensing Regulations, 2013 against the petitioner. In such circumstances, to renew the licence of the petitioner for shorter periods would result in not only prejudice being caused to the petitioner, but also leading to multiplicity of proceedings, which definitely should not be at the behest of the Department. This writ petition is partly allowed by directing the first respondent to renew the petitioner's customs brokers licence for a period of two years with effect from 04.01.2018 onwards and pass orders to the said effect within a period of one week from the date of receipt of a copy of this order.

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• 2018 (1) TMI 834
  Amendment of Shipping Bill - Section 149 of the Customs Act, 1962 - It is submitted by the learned counsel for the petitioner that the representation dated 09.11.2017 was sent to the first respondent by registered post and that it would have reached the office of the first respondent within two or three days of dispatch - Held that: - the writ petition is disposed of with a direction to the first respondent to consider the representation of the petitioner dated 09.11.2017 requesting for issuance of a no objection certificate for amending 'MEIS Reward Detail - No to MIES Reward Detail - Yes' and such a consideration shall be made within a period of two weeks from the date of receipt of a copy of this order.

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• 2018 (1) TMI 833
  Smuggling - mis-declaration of imported goods - the department is of the view that Shri Sandeep Rikhi was actively involved in clearance of impugned consignment and that the statement of various witnesses corroborated one another to sustain the chain of events - Held that: - it appears that M/s. Naresh Hand Work, a proprietary concern of Shri Naresh Kumar had imported the bags in which cosmetics, readymade garments, mobile phone housing etc. were stored. The present case, undoubtedly is a case of smuggling / mis-declaration, which was committed by Shri Naresh Kumar, proprietor of firm, who had imported the goods. In this attempt, all five persons have played their own vital role - From the whole episode, it appears that none of the appellant has tried to know what is the real content in the impugned consignment, they just passed on the documents and money from one hand to another hand without knowing its contents. It shows their carelessness and casual attitude on their part, for which they are entitled for punishment. the main culprit is Shri Naresh Kumar, proprietor of M/s. Naresh Hand Work, who was having the full knowledge. The present appellants have just facilitated in a mechanical way the attempt of smuggling the goods - penalty, being on higher side, is reduced. Appeal allowed in part.

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• 2018 (1) TMI 832
  Validity of SCN - whether the appellants have rightly availed the benefit under N/N. 203/92-Cus against presenting Value Based Import Licence (VABAL) transferred in their favor? Held that: - the licence was issued to some other manufacturers/exporters who have sold the licence to the appellant. Under such circumstances, under the Scheme of Customs Act, duty cannot be demanded from the appellant who is holding the Value Based Advance Licence as transferee - there is no allegation that the appellant or the original holder M/s Satnam Overseas Ltd, had availed modvat credit on any inputs in order to deny benefit of N/N. 203/1992 - reliance placed in the case of The show-cause notice is vague and non-maintainable - appeal allowed.

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• 2018 (1) TMI 831
  Penalty u/s 112(a) of the CA, 1962 - scope of SCN - case of appellant is that there was no allegation in the notice to the effect that the appellant had abetted anybody else in violating the provisions of the Customs Act and the Import Trade (Control) Regulation - Held that: - Deputy Commissioner has travelled beyond the scope of the SCN as there is no allegation in the notice that the appellant had abetted with anybody else in the alleged violation of the customs Act read with Import Trade (Control) Regulation. The main allegation in the Notice was that the Appellant was the real importer who had used Lakshan Electronics as a dummy and it is on this basis that the duty was sought to be demanded from the Appellant and not from the importer. The Revenue has not placed on record any credible evidence to prove Appellant s complicity in the ITC violation of the importer. It has already been held by the Commissioner (Appeals) in the appeal filed by the importer that a mere statement is not sufficient evidence to prove the charge of under-valuation. Since the Revenue had accepted this order of the Commissioner (Appeals) the statement of the Appellant cannot be relied upon as the sole basis for imposition of penalty - penalty set aside. Appeal allowed.

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• Corporate Laws

• 2018 (1) TMI 830
  Compounding of the offences for violation of certain provisions during some of the financial years - Composition of certain offences u/s 621A - Held that:- Merely on the ground that investigation by SFIO is going on or some other cases are pending Ld. Tribunal ought not have rejected all the appeals. Sub-section (1) of Section 621 prohibits compounding when an offence punishable with imprisonment only, or with imprisonment and also with fine. Where fine is alternative to the imprisonment or where there are no provisions of punishment is well within the jurisdiction of the Tribunal to compound the offence. Sub-section (6) of Section 621A further makes it clear that any offence which is punishable under Act with imprisonment or with fine, or with both, the case is liable to be compounded. Thus we hold that the Appellant is entitled for compounding of offence

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• Insolvency & Bankruptcy

• 2018 (1) TMI 864
  Corporate insolvency proceedings - eligible debt - Held that:- It is established there is default of Debts which comes to 1,18,41,92,137.17/- and which is in excess of 1,00,000/- (Rupees One Lakh only). Hence, the present application can be considered for its Admission. Having heard the submission of Shri Nath Tiwari Advocate for Financial Creditor as well as of Shri P.K Bajpai, Advocate for Corporate Debtor, the present petition deserves admission. Hence, it is admitted under the Section 7 of the I & B Code, with consequential directions

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• PMLA

• 2018 (1) TMI 829
  Offence under PMLA - Whether a supplementary complaint is maintainable? - Held that:- The extreme view that once a complaint is filed then a second complaint is totally barred and cognizance on the second complaint against a new accused person is illegal appears to be erroneous as once power of investigation is vested in an agency and cognizance can be taken on a complaint only then on a further investigation carried out with the leave of the court, the investigating agency is required to place on record the said material collected during further investigation and the only mode available to the investigating agency to place on record the said material is a supplementary complaint. Thus if the Court grants leave to the investigating agency to place on record further material collected, it is bound to place the same on record. Whether cognizance is required to be taken again on filing of a supplementary complaint? - Held that:- cognizance is taken of the offence and not the offender. It is also well settled that cognizance of an offence/offences once taken cannot be taken again for the second time. Since this Court has already taken a view that a supplementary complaint on additional evidence qua the same accused or additional accused who are part of same larger transactions/conspiracy is maintainable however, with the leave of the Court and cognizance is taken of the offence/offences, not the offender and in case no new offence is made out from the additional material collected during further investigation, supporting an earlier offence on which cognizance has already been taken or additional accused are arrayed no further cognizance is required to be taken. If cognizance is required to be taken whether the order passed by the learned Trial Court on 2nd August, 2017 amounted to taking cognizance? - Held that:- Since in the present supplementary complaint no new offence was found out and it was only additional evidence in support of the offence already filed in the main complaint and evidence against additional accused, the cognizance was not required to be taken again and the order dated 2nd August, 2017 passed by the learned Special Court tagging the supplementary prosecution complaint with the main complaint cannot be held to be illegal. Whether the custody of the petitioner after 11th August, 2017 is illegal, resulting in a right to the petitioner to be released on bail? - Held that:- no order of remand in the eyes of law was passed on 11th August, 2017, the remand if any was beyond 15 days hence the custody of the petitioner was illegal which additional grounds were also allowed vide order dated 25th August, 2017 before the custody could be legalized on 31st August, 2017. Even the bail application in the present case was heard on 29th August, 2017, that is, the date before the custody of the petitioner became legal, hence the date of application, the date of return and the date of hearing were all at the time when the custody of the petitioner was illegal, hence the petitioner is entitled to be released on bail on this count itself. It is, therefore, directed that the petitioner be released on bail on his furnishing a personal bond in the sum of 1 lakh with two sureties of the like amount, subject to the satisfaction of the Special Court

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• Service Tax

• 2018 (1) TMI 827
  CENVAT credit - input service - construction service - Held that: - Prior to 16.6.2005 5,16,774/-, Appellant is not contesting this portion of the demand. The same is upheld - Between 16.6.2005 and 01.06.2007, the impugned input services availed by appellant are included in Rule 6 (5) of CCR, 2004, and as the appellants were also using these services partly for rendering MMR services, availment of impugned input service credits availed during this period in entirety, amounting to 11,63,81,259/-, is very much in order. This being so, that part of the order denying this quantum of input credit is set aside - Post 1.6.2007, denial of input service credit of 12,04,53,005/- for the period post-1.6.2007 also cannot be sustained and hence the relevant portion of the impugned order denying the same is also set aside. Levy of service tax - reimbursable expenses - Electricity and Water charges - Held that: - The said issue is covered by the decision in the case of CST Chennai Vs Sangamitra Services Agency [2013 (7) TMI 862 - MADRAS HIGH COURT], where it was held that if a receipt is for reimbursing the expenditure incurred for the purpose, the mere act of reimbursement, per se, would not justify the contention of the Revenue that the same, having the character of the remuneration or commission, deserves to be included in the sum amount of remuneration / Commission - levy of service tax on the reimbursable expenses of electricity charges and water charges is unsustainable and requires to be set aside. Demand of service Tax on Fitout charges - Held that: - these are movable items (chairs, tables and other items) which are handed over to the tenants for use by them. The appellant has paid VAT on the consideration received in the said transaction for transfer of right to use the goods - VAT and Service Tax being exclusive, further demand of service tax on the very same consideration received for transfer or right to use of goods cannot sustain - demand set aside. Appeal allowed in part.

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• Central Excise

• 2018 (1) TMI 826
  Attachment of immovable properties - creation of charge on such properties for the recovery of the dues of her husband - case of petitioner is that all the four properties proposed to be attached were purchased by her out of her own source of income and not acquired by her through inheritance from her late husband and the department therefore, cannot attach such properties - duty demand against the petitioner, wife of deceased assessee. Held that: - if the petitioner is correct in contending that all the four immovable properties were purchased by her from her own source of income, the department cannot carry out coercive recovery against such properties merely because her husband died leaving behind sizable departmental dues - The departmental authorities have not applied their minds to this aspect of the matter. It is not clear in what manner the petitioner has placed such certificate of the Chartered Accountant dated 10.06.2011 before the departmental authorities. To avoid any confusion, we allow the petitioner to place the same before the Commissioner of Central Excise, Vadodara, alongwith representation pointing out the source of acquisition of such properties. Appeal allowed by way of remand.

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• 2018 (1) TMI 825
  Classification of goods - Automatic Taps - Urinals and WC Flushing Systems - classified under CETH 854390 or under CETH 90328910? - Held that: - It is evident from the head note under 8481 that this heading covers various types of Taps, Locks, valves etc - The Automatic Tap manufactured by the appellant, no doubt incorporates an electronic control device, but functions as a Tap to regulate the flow of liquid. Consequently, the essential character of the products remains the tap and hence it is rightly classifiable under CETH 8481. Automatic Flushing System for Urinal and WC - Held that: - the appellants manufacture only the electronic device that is fitted to the water supply line so as to flush the device automatically. However, WC/ Urinal is not part of the goods manufactured by the appellant. The goods manufactured are in the nature of instruments/ apparatus for automatically controlling of the flow of the fluid. Hence, these are most appropriately classifiable under CETH 9032, as ordered in the impugned order. Appeal dismissed - decided against appellant.

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• 2018 (1) TMI 824
  Clandestine removal - shortage of stock - burden of prove - Held that: - case of clandestine removal without payment has to be established with supporting evidence, the goods which are recorded, as produced/in stock, are not available in the approved premises of the appellant. In such situation, necessarily the burden shifts to the appellant to explain such shortage satisfactorily - In the present case, the appellant failed to do so - it is not a case of clandestine clearance of unaccounted production. It is a case of unaccounted clearance of accounted production. The appellant has responsibility to explain the unaccounted shortage - appeal dismissed - decided against appellant.

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• 2018 (1) TMI 823
  Clandestine removal - shortage of stock - demand on the basis of Statement of Shri H M Thakore and Shri U H Thakore and delivery challans recovered at the factory and office premises - Held that: - It is undisputed that the delivery challans were in fact indicating the name of the purchaser; no efforts were made by the Revenue authorities to record the statements any of purchaser of the finished goods, more so when the delivery challans had the name and address of the purchasers - the investigation in this case is done haphazardly as the Officers of the Revenue not recorded any statement of transporters or purchasers whose name according to the revenue was mentioned on the delivery challans recovered from the factory premises and office premises of the main appellant. There is no iota of an evidence produced by the by the Revenue in the allegation in the show cause notice of purchasing of unaccounted raw-material, clandestinely manufactured the goods which could have been ascertained by the unexplained consumption of resources and the movement of the goods clandestinely from the factory premise is not established in any form. The Division Bench of the Tribunal in the case Arya Fibre Ltd [2013 (11) TMI 626 - CESTAT AHMEDABAD] has held that there has to be corroborative evidence of actual manufacture of the goods and clearance to identify the persons, place of appellants made in order to upholdi the allegation of clandestine removal. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 822
  CENVAT credit - Capital goods - pre-stressed concrete sleepers falling under Chapter 65 of the Central Excise Tariff - Held that: - In the appellant's own case reported as Ultra Tech Cement Ltd. [2016 (9) TMI 284 - CESTAT HYDERABAD], it was observed that mono block concrete sleepers for Rail track are eligible Cenvatable goods - in the present case, admittedly the Railway siding was laid down from the factory premises up to the Railway station, which is necessary for inward transportation of the inputs and outward transportation of their final product - the pre-stressed cement sleepers are Cenvatable items. Time limitation - Held that: - Admittedly the credit was being availed by reflecting the same in Cenvat credit account, which is a part of the statutory documents. In such a scenario no mala-fide can be attributed to the assessee so as to invoke longer period of limitation - demand barred by limitation. Appeal allowed - decided in favor of appellant-assessee.

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• 2018 (1) TMI 821
  CENVAT credit - input services - professional services as regard charges for expansion of production capacity - Held that: - the services which are used in modernization, renovation, repairs of the factory Service Tax credit can be availed - It is not clear from the records as to how both the authorities have come to a conclusion that the said expansion/renovation is not covered under the definition of the input service and especially under modernization/ renovation or repair of the factory. It can not disputed that the services rendered by the service provider in the factory premises of the appellant and the services hired were used for the reasons mentioned for - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 820
  Valuation - amortization of cost of patterns - appellants amortized the entire cost of these patterns against the first Purchase Order received from M/s.Bharat Earth Movers Ltd. (BEML) for supply of 75 pieces of the castings - The department entertained the view that appellant ought to have amortized the cost of patterns against supply of all castings manufactured using the patterns. Held that: - the value of amortization of the pattern supplied free are to be included in the assessable value for discharging the central excise duty. The appellants have amortized the entire cost of the pattern on 75 pieces of castings - Whatever is the No. of pieces manufactured the amount involved is the cost that is 100000/- on which excise duty is paid and the quantity produced is irrelevant. Appeal dismissed.

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• 2018 (1) TMI 819
  Principles of Natural justice - denial of opportunity to cross-examine in remand proceedings - Held that: - The adjudicating authority between September 2014 and February 2015 extended three opportunities to the Appellants for cross-examination of the witnesses, however, the Appellants did not avail any of the said opportunities - even though they made the claim that they have not received intimation of hearings, no evidence has been adduced by them to substantiate the said claim. Also, it is not in dispute that on all these occasions, the witnesses on whose cross-examinations were sought by the Appellant had been present and reiterated their statements - non-availing of the opportunity of cross-examination extended by the adjudicating authority, in the remand proceedings , in my opinion, has not resulted in violation of principles of natural justice. Appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2018 (1) TMI 818
  Jurisdiction - power of of delegation of Special Commissioner to appoint officers - Form DVAT-50 - principles of sub-delegation - consequences for wrongful doings on the part of delegated officers Held that: - Section 68 of the Act deals with the power of the Commissioner to delegate any of his powers under the Act to any Value Added Tax Authorities. Sub-section (2) is relevant, for it relates to delegation of power under Chapter-X, and states that the delegate shall carry and produce on demand evidence in the prescribed proforma while exercising the power. Sub-section (3) states that where the Commissioner has delegated power to a Value Added Tax authority, he may supervise, review and rectify any decision made or action taken by that authority. Object and purpose behind this provision has been elucidated and explained below. The power of delegation given under Section 68 is of importance, for the enactment i.e. the Act invariably uses the expression “the Commissioner” and does not define and prescribe functions and powers inter-se the Value Added Tax authorities. This is left to the Commissioner, who in exercise of power under Section 68 can delegate and prescribe functions, powers and jurisdiction to the Value Added Tax authorities. This power is exercised by means of notification(s) issued by the Commissioner - This authority of delegation of power and functions is vested with the Commissioner subject to restrictions and conditions as may be prescribed. These restrictions and conditions can be prescribed by Rules. Chapter-X, as noted above, deals with audit, investigation and enforcement and the chapter conferring powers requires that the delegate shall carry and produce on demand evidence in the prescribed form while exercising powers delegated to him by the Commissioner. The Commissioner has, by notification / order of empowerment dated 23rd March, 2016, conferred the said power upon Special Commissioner. Thus the Special Commissioners are authorized to issue an authorization in DVAT -50. The authorization in Form DVAT-50 would authorize the person named with their rank to conduct survey/investigation or search. Authorized officers should not be below the rank of Value Added Tax Officer for operations under Section 60(1) and (2) of the Act. There is a difference between issue of authorization and officers who are authorized to conduct survey/ investigation or search. The contention of the petitioner, if accepted, would warrant accepting the position that the Special Commissioner must himself undertake the search and seizure. The power to authorize survey/ investigation or search is different and distinct from the power exercised by the officers so authorized and who actually undertake the search and survey. - Decided against the assessee. Lapses and failures on the part of authorities - Held that:- in the present case only inspection of records, i.e. books of accounts, etc. and the goods was undertaken under Section 59 and sub-section (1) to Section 60 of the Act. As per the respondents, this is not a case in which search and seizure operations were undertaken under sub-section (2) to Section 60. Having held so, we would observe that certain lapses and failures on the part of authorities are apparent. - If the contention and the pleas of the petitioner are rejected, they can be burdened with tax, interest and penalty. However, there is no provision in the Act under which the authorities can be burdened with any penalty or costs for the wrongs committed by them in violation of the provisions of the Act. - we are inclined to impose penalty in form of costs of 50,000/- on the respondents. - petition disposed off.

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• 2018 (1) TMI 817
  Recovery of Arrear Sales Tax - it is submitted by petitioner that if at all, the respondent has to recover any arrears of sales tax, then, the respondent should proceed against the dealer, or, in other words, the Proprietor, who owns the said Concern, as subsequently he released his part of shares - Held that: - even if the petitioner had not obtained a decree from the Civil Court, the respondent could not proceed against the petitioner's father for the alleged sales tax due payable by the petitioner. In any event, the respondent cannot proceed against the petitioner, since the petitioner had succeeded before the Civil Court and obtained decree, which is ruled in favour of the petitioner, and held that the petitioner is not a Partner of M/s.S.S.Metals on and from 01.04.1990. The respondent has issued the impugned notice, which is bereft of particulars, and there seems to be a change of Officer, who was unaware of what has happened earlier and issued the impugned notice - impugned notice is held to be unenforceable against the petitioner - petition allowed.

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• Indian Laws

• 2018 (1) TMI 828
  Demand of various electronic transfers made by the Plaintiffs to the Defendants - cheque was returned with the remarks “Funds Insufficient” - Section 138 of the Negotiable Instruments Act, 1881 - Held that: - In the present appeal, on 23rd May 2016, an option was given to the Defendants to deposit the decretal amount. However, since the Defendants did not avail of the said option, this Court directed that execution petition would be proceeded with. It was recorded on 16th March, 2017 that subsequent to the settlement agreement entered into in the mediation centre, the complaint under Section 138 of the NI Act was rejected and the Defendants were acquitted. Appeal disposed off.

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