Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 30, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Rejection of books of account - the rejection of books of account solely on the basis of non-maintenance of sales vouchers was not justified - AT
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Undisclosed cash credit - it is not necessary that because AO accepted the credit worthiness in case of other shareholder-companies, he should have accepted in case of the two impugned shareholders also - AT
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Computation of capital gain - transaction with a related party - The amount actually received was admittedly the amount mentioned in the sale agreement - AO did not find the consideration to have been understated. He, therefore, was not entitled to determine the fair market value - HC
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Rental income - whether should be based on the earning of the APPL-company, which runs a business centre in the said premises and also other rentals from other tenants in it - This kind of half-backed attempt of AO in taxing the income of property is unsustainable in law - AT
Customs
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Benami import - misdeclaration of value of goods being watches (with sweat band) - it is very difficult to disturb the assessable value determined by the Customs for the purpose of adjudication - AT
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100% EOU - Mis-declaration of imported goods - Aluminium Paste/Flakes - When the testing laboratory made chemical analysis and that proved to be mis-declared goods as stated in this order, at the outset, there is no scope to intervene to the adjudication order passed by learned Commissioner - AT
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Classification of ladies leather footwear - sandals or chappals? - Revenue, acted upon prejudice and a preconceived notion that ladies sandals cannot be without a back strap - the commercial parlance test would predominate - HC
Service Tax
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Works contract - Valuation - no levy of service tax on the value of goods used in tyre retreading as distinctly shown by appellant in its invoices - AT
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Works Contract - abatement under N/N. 12/2003 - Once the authority is satisfied that there was use of spare parts/components and value thereof is ascertainable, such value shall not be liable to service tax - AT
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CENVAT credit - appellants are not eligible to avail and utilize CENVAT credit on towers, tower parts and pre-fabricated building/shelters. - AT
Central Excise
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The services which were crucial for maintaining the staff colony, such as lawn mowing, garbage cleaning, maintenance of swimming pool, collection of household garbage, harvest cutting, weeding, etc. necessarily had to be considered as input services falling within the ambit of Rule 2(l) of the Cenvat Credit Rules. - AT
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Valuation - demand of differential central excise duty on the ground that the retained amount is not actually paid as VAT to Government and hence will be additional consideration to be added in value for central excise levy - demand confirmed - AT
VAT
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Who is required to declare the goods (consignment in the Railway train) - PVAT - U/s 51 (at the relevant time), the declaration in terms of the first proviso to Section 51(2) is required to be furnished only by 'the owner or person in charge of a goods vehicle' in respect of goods as are being carried in the goods vehicle for the purpose as mentioned in the first proviso - HC
Case Laws:
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Income Tax
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2017 (1) TMI 1299
Deduction under Section 10A - whether the unrealized export proceeds, if any, in foreign currency has to be included in the total turnover for computing deduction under Section 10A? - AO has excluded the sale proceeds, which was not realized from the total turnover - Held that:- As in Galaxy Granites (P.) Ltd. v. CIT [2012 (9) TMI 68 - MADRAS HIGH COURT ] while considering the claim under Section 80HHC of the Act, found that unrealized sale proceeds should be included in total turnover for the purpose of computing allowable deduction under Section 80HHC of the Act. The assessee now claims before this Tribunal that on the basis of very same analogy, for the purpose of allowing deduction under Section 10A of the Act, the unrealized sale proceeds should be included in the total turnover. As rightly submitted by the Ld. D.R., the Assessing Officer or the TPO had no occasion to consider this judgment of Madras High Court in Galaxy Granites (P.) Ltd. (supra). Therefore, this Tribunal is of the considered opinion that the Assessing Officer has to first consider this judgment of Madras High Court. Accordingly, the orders of the authorities below are set aside in respect of inclusion of unrealized sale proceeds in the export turnover and remitted back to the file of the Assessing Officer. The Assessing Officer shall reconsider the issue in the light of the judgment of Madras High Court in Galaxy Granites (P.) Ltd. (supra) and thereafter decide the issue, in accordance with law, after giving an opportunity to the assessee.
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2017 (1) TMI 1298
Eligibility for deduction under section 80IB - As the entitlement of export incentives to deduction under Section 80-IB of the Income Tax Act, 1961 has been squarely decided by this Court in Liberty India vs. C.I.T. [2009 (8) TMI 63 - SUPREME COURT] Commissioner of Income Tax vs. Meghalaya Steels Limited (2016 (3) TMI 375 - SUPREME COURT) does not in any way erode the efficacy of law laid down in Liberty India (supra) as Meghalaya Steels Limited (supra) was primarily a case where the Court was dealing with transport subsidy, which is a reimbursement of the cost incurred by the manufacturing unit in the North-Eastern part of the Country. Held that:- While Liberty India (supra) dealt with a situation of post-manufacture and availability of incentive only in the event there was export of the manufactured goods. Meghalaya Steels Limited (supra), as already noted, dealt with altogether a different situation. Consequently, we do not find any merit in this special leave petition. Special leave petition is, accordingly, dismissed.- HC REF CASE [2014 (6) TMI 981 - BOMBAY HIGH COURT].
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2017 (1) TMI 1297
Rejection of books of account - non-maintenance of sales vouchers - Held that:- In the case of Commissioner of Sales Tax vs. Vishnbu Chandra Vipin Chandra []1981 (9) TMI 255 - ALLAHABAD HIGH COURT] wherein the Court held that failure to issue cash memos was insufficient to reject the books of account, where the books were otherwise verifiable. In the present case, the assessee in its reply dated 31.10.2011 noted at page 2 of the assessment order had clearly stated that Stock Register was maintained by assessee which gave all the details of opening stock, purchases and sales quantity-wise. The assessee had also filed month-wise details of purchases, sales and closing stock which has been noted at page 3 of the assessment order. Thus, in the present case also, it cannot be said that there were no details maintained by the assessee in regard to sales. Therefore, the decision relied upon by Ld. counsel for the assessee is squarely applicable to the facts of the present case and, therefore, respectfully following the same, it is held that the rejection of books of account solely on the basis of non-maintenance of sales vouchers was not justified. Accordingly, the addition made by the Assessing Officer, as confirmed by Ld. CIT(A), is deleted. - Decided in favour of assessee
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2017 (1) TMI 1296
Assessment made beyond the period of limitation - applicability of Section 153 (2A) for ascertaining the limitation period - Held that:- Tribunal has held that assessment was made beyond the period of limitation relying on Gujrat High Court judgment in CIT Vs Purshottamdas T. Patel [1993 (8) TMI 21 - GUJARAT High Court] As appellant, submitted that there was no order of setting aside original assessment and therefore, provisions of Section 153(2A) will not apply but it is case covered by Section 153(3) wherein no period of limitation has been provided. However, learned counsel for appellant could not dispute that the order passed by Tribunal directed Assessing Authority to decide issues afresh and pursuant thereto fresh assessment has been made by Assessing Officer meaning thereby it was not a case under Section 153(3) hence, in our view no substantial question of law has arisen.
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2017 (1) TMI 1295
Reopening of assessment - existence of reason to believe - large withdrawals from the HSBC Bank account - no return of income was filed - Petitioner is a non-resident - Held that:- The reasons recorded in support of the impugned notice proceeds on an assumption that the Petitioner has business interest in India merely because he had made large withdrawals from the HSBC Bank account. This is particularly so when, prima facie, it is undisputed that the deposits are sourced from abroad. Non-filing of return of income on accrued interest earned - Prima facie it is not sustainable as a non-resident, in these facts, is not required to file his return of income in view of Section 115G of the Act. Similarly, the other factors viz: expenditure of ₹ 90,000/paid to Trade Mark Registry is explained in the objections being the withdrawal by the wife of the Petitioner from the joint account, an amount of ₹ 1.67 lakhs paid to C.A. was on account of professional services received and payment of ₹ 10.84 lakhs to insurance company was on account of car insurance. The payment of ₹ 2 lakhs to M/s. Sunny Vista Realtors Pvt. Ltd. does not establish, prima facie, any business connection of the Petitioner in India as it was, according to Petitioner, for booking of house to be constructed. None of these, prima facie, taken individually or together can form the basis of reasonable belief that the Petitioner has business connection in India which gives rise to income in India. These materials are indefinite/incomplete to form a reasonable belief of income escaping assessment by themselves. The above material would be at the highest could be reason to suspect but prima facie, not a reason to believe. - Decided in favour of assessee
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2017 (1) TMI 1294
Undisclosed cash credit - Held that:- It is well-settled law that onus of substantiating the facts, as alleged by assessee, squarely lies on assessee and not on Assessing Officer. It was for the assessee to substantiate its claim that the shares were worth so much that it could fetch premium of ₹ 900/-. Moreover, it was for the assessee to establish that the two companies had sufficient net worth to acquire shares. Since assessee has failed on all fours, therefore, mere filing of confirmation from these two parties was of little significance. Ld. counsel has submitted that shares were issued at premium to other concerns also for which Assessing Officer had not made any addition. In this regard, it may point out that in the second round of proceedings Tribunal has to examine the issue in the light of observations made in first round of proceedings. Moreover, it is not necessary that because Assessing Officer accepted the credit worthiness in case of other shareholder-companies, he should have accepted in case of the two impugned shareholders also. Therefore, do not find any force in this submission of assessee. - Decided against assessee
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2017 (1) TMI 1293
Cash credit - source of cash deposited in the bank accounts - Unexplained cash withdrawn - unexpanied payment - Held that:- The assessee has filed a certificate from IDBI Bank contained at page 7 of Paper Book, reproduced earlier, which clearly shows that the amount had been withdrawn in cash of ₹ 6,00,000/- from account of assessee and the cheque was in the name of Shri Rakesh Sharma. Under such circumstances, without further enquiries it could not be inferred that the payment was made to Shri Rakesh Sharma. He was the person who had withdrawn the cash. Many times a cheque is drawn in the name of the person who is sent for withdrawing the cash. The fact whether the amount was towards any payment due from the assessee to Shri Rakesh Sharma or no is not coming out from the records and, therefore, this aspect needs verification by Assessing Officer. The Assessing Officer will also verify the contents of bank’s certificate. Accordingly, the matter is restored on this count to the file of Assessing Officer for verification. As far as the addition out of opening balance is concerned, since the opening balance is from earlier year, therefore, addition cannot be made in the year under consideration. Therefore, the addition to the extent of ₹ 2,05,400/- is deleted. - Decided partly in favour of assessee for statistical purposes.
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2017 (1) TMI 1292
Penalty under Section 271 (1)(c) - difference between furnishing of inaccurate particulars of income and concealment of income - Held that:- The decision of the Supreme Court in Ashok Pai v/s. CIT [2007 (5) TMI 199 - SUPREME Court] [relied upon in Manjunath Cotton & Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT )] – wherein it is observed that concealment of income and furnishing of inaccurate particulars of income in Section 271(1)(c) of the Act, carry different meanings/ connotations. Therefore, the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned under Section 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/ permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the Assessee has no notice. Therefore, the issue herein stands concluded in favour of the Respondent-Assessee by the decision of the Karnataka High Court in the case of Manjunath Cotton and Ginning Factory (supra). - Decided against revenue
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2017 (1) TMI 1291
Income from sale of shares - Short Term Capital Gains or Income from Business and Profession - Held that:- We find that the distinction made on behalf of the Revenue does not carry the matter any further. This for the simple reason the table which has been reproduced in the impugned order and on which reliance is placed gives the details of aggregate purchases and dividend received and not those relatable to short term capital gain only. Moreover, it is to be noted so far as long term capital gains are concerned, character of the respondent-assessee as an investor has been accepted by the Assessing Officer. Therefore, in view of the aforesaid concurrent finding of fact arrived at by the CIT(A) and the Tribunal that the respondent assessee was an investor in respect of short term capital gain declared by her for the subject Assessment year not being shown to be perverse calls for no interference. No substantial question of law.
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2017 (1) TMI 1290
Computation of capital gain - Reference made u/s 55A - transaction with a related party - actual consideration (full value of consideration) versus fair market value - Held that:- The price to be considered is the consideration received or accruing as a result of the transfer and not necessarily the price that the assessee states that it received or which has accrued to it. - The amount actually received was admittedly the amount mentioned in the sale agreement. - Apex Court in the case of K.P. Varghese case [1981 (9) TMI 1 - SUPREME Court] has held that, "Capital gains was intended to tax the gains of an assessee, not what an assessee might have gained. What is not gained cannot be computed as gained." Thus the Assessing Officer proceeded on the erroneous basis that as the assessee and the purchaser are interconnected and the property was sold at an undervalue he had the jurisdiction to invoke the provisions of section 55A or even otherwise to determine the fair market value. As held by the Supreme Court it then is a distinction between undervaluation and understatement of the value. The Assessing Officer did not find the consideration to have been understated. He, therefore, was not entitled to determine the fair market value. Applicability of Section 50C - Held that:- The reliance upon Section 50C is of no assistance to the Revenue either. Mrs. Dugga’s submission that the Assessing Officer’s can be supported under section 50C is not well founded. Even assuming that the Assessing Officer was entitled to invoke Section 50C to have the fair market value determined, it would make no difference. In view of sub section (3) the rate adopted, assessed or assessable by the Stamp authority would prevail. It is common ground that in this case the consideration stated in the sale document is even higher than the valuation by the Stamp authority. The judgment of the Supreme Court in Ms. McDowell & Co. Ltd. v. Commercial Tax Officer, (1985 (4) TMI 64 - SUPREME Court) does not warrant a different view of the matter. The view that we have taken in respect of question (ii) cannot be altered in view of the judgment in McDowell’s case (supra). The ratio of the judgment of the Supreme Court referred to earlier is that for the purpose of Section 48, the full value of the consideration received by or accruing to the assessee must be taken into consideration for the purpose of computing the capital gain and that the market price of the property is not relevant for this purpose. The authorities under the Act cannot possibly take a different view of the matter. As we noted earlier it is not the case of the Revenue that the actual consideration is higher than that stated in the sale deed. The Assessing Officer was, therefore, bound to consider the actual consideration. Decided against the revenue.
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2017 (1) TMI 1289
Rental income of the property - whether should be based on the earning of the APPL-company, which runs a business centre in the said premises and also other rentals from other tenants in it (i.e. Gandhi Mansion / Munshi Manor)? - Held that:- The rental value of the building is conceptually different from that of the building when the same is used for commercial profits. Commercial profits of the company cannot be equated with the rental value – ALV of the property alone. It has the element of profit motive of the businessman and the skilled employees of any organization. It has human element involving decisions of the management / employer and individuals. Rental value of the property is not synonymous with the business profits earned out of the property. From this point of view, the profits of the APPL minus same percentage of expenses do not constitute the ALV of the said Mansion. Therefore, based on this reasoning, we dismiss the relevant conclusions of the AO / CIT (A). Further, we find the Revenue has not taxed / re-assessed the other 50% of the said Mansion for he reasons unknown to us. This kind of half-backed attempt of AO in taxing the income of property is unsustainable in law. Also Revenue has not considered the fact of valid incorporation APPL and object of the said company. Without any sustainable reasons, the profits of the said company are taken as the basis for taxing 50% of the ALV of the said Mansion in the hands of the assessee. In the process, the profits are twice-taxed i.e. once in the hands of the assessee partly and then in the hands of the APPL. In this regard, AO has not granted any relief to the said company. Rather, same is taxed twice and he denied the tax credit too while reassessing in the hands of the assessee. Actually, assessee raised this as the ground of appeal without prejudice. Thus, the approach of the Revenue in dealing with the whole issue is deplorable and legally unsustainable. We find, the AO / CIT (A) has allowed certain percentage of business income of the APPL as expenses and allowed the same before taxing the rental income in the hands of the assessee. As such, AO / CIT (A) failed to justify the said percentage with any data or comparable cases. Whole of this exercise of the officers lack the strength of the Statute or the judicial precedents and it is a case of adhocisam. The same is unacceptable and unsustainable. - Decided in favour of assessee Apex Court in the case of M/s. Chennai Properties & Investments Ltd, Chennai vs. CIT [ 2015 (5) TMI 46 - SUPREME COURT ] held that the object of the company matters so far as the „head of income‟ is concerned. AO cannot alter the business income to property income and cannot alter the company status to AOP or otherwise, whimsically, without making out the good case with evidence. The conclusions of the AO / CIT (A), when unsupported by the evidence, become mere opinions and surmises. Such mere opinions do not constitute validity legally. - Decided in favour of assessee
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2017 (1) TMI 1288
Addition u/s 68 - cash deposited in bank account - Held that:- The assessee also furnished the copy of the gift deed for a sum of ₹ 5,00,000/- received on 29.01.2009 from her father Colonel Dharm Vir Yadav who had stated in the said gift deed that he was getting a handsome salary throughout his carrier and income tax was deducted from his salary income and that he worked as a Solider Board Secretary, after his retirement under Haryana Government. The assessee also furnished the copy of PAN number of Sh. Dharam Vir Yadav which is placed at page no. 32 and also furnished the affidavit of her brother Sh. Ashok Kumar (copy of which is placed at page nos. 34 & 35) in the said affidavit it is mentioned that his father was not feeling well and died on 04.01.2009 and that he had given a cash amount gift of ₹ 5,00,000/- to his sister Smt. Sunita before his death. Therefore, considering the totality of the facts of the present case as discussed hereinabove, the assessee duly explained the source of the gifts received from her sister, father-in-law and father. Therefore, the addition amounting to ₹ 10,00,000/- made by the AO by considering the gifts as non-genuine and sustained by the ld. CIT(A) was not justified. Addition of expenses incurred for operating Chandanvan Tiny Tots School - Held that:- Carefully gone through the material available on the record. In the present case, it is noticed that the assessee was depositing receipts from tuition in her bank account maintained with Punjab National Bank in the name of Chandanvan Tiny Tots School and also had shown withdrawals, so it cannot be said that only deposits were there in the bank account as alleged by the AO. It is also an admitted fact that the assessee had shown the net income amounting to ₹ 1,20,000/- on account of tuition fee. In the present case, the assessee deposited the entire tuition fee in her bank account withdrew the amount to meet out the expenses from the said bank account and had shown net income from tuition in the profit & loss account. Therefore, the addition made by the AO and sustained by the ld. CIT(A) to the extent of ₹ 80,298/- was not justified and therefore, the same is deleted.
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2017 (1) TMI 1287
Disallowance u/s. 14A r.w.s 8D computation under the normal provision of the Act and under the provision of MAT u/s 115JB - Held that:- Assessing Officer is directed to restrict the disallowance under section 14A of the Act to 1% of the exempt income for normal computation of income as well under section 115JB of the Act. The disallowance under section 14A would be added in the book profit under section 115JB of the Act in terms of the clause (f) to explanation 1 of section 115JB of the Act as decided by the Hon’ble Mumbai ITAT Benches in the case of DCIT Vs. Viraj Profiles Limited [2015 (11) TMI 277 - ITAT MUMBAI ]. Thus we direct the AO to make the addition of the amount of disallowance under section 14A of the Act read with rule 8D of Income Tax Rules 1962 to the total income of the assessee under the normal provisions and under the provisions of the MAT as specified under section 115JB of the Act Disallowance of advance written off in the year under consideration - Held that:- The assessee also incurred cost on the joint venture project which was not materialized and accordingly the same was dropped. Admittedly the impugned Joint venture project was identical to the activities of the assessee and therefore it can be inferred that the project was for the expansion of the existing business of the assessee. In view of above the loss incurred by the assessee was in connection and in the course of the business and hence allowable for deduction. The ground raised by the assessee is allowed. Addition by increasing the value of closing stock - AO disallowed the valuation of closing stock on the ground that closing stock shall be valued either at the cost or market price whichever is less as on the balance sheet date i.e. 31st March 2005 - Held that:- We find that the closing stock needs to be determined as per the method regularly employed by the assessee. The market price prevailing as on the date of balance sheet date should be taken into account while determining the closing stock. The future price of the closing stock cannot form the basis for the valuation of closing stock as on the balance sheet date. Accordingly we hold that the closing stock valued by the revenue is the correct valuation of the closing stock. However it is pertinent to note that the closing stock determined for the year under consideration will become the opening stock for the subsequent financial year. Accordingly the AO is directed to take appropriate measure as per law for the subsequent financial year. This ground of appeal of the assessee is dismissed in terms of above. Charging the interest under section 234B under the normal provisions and MAT provisions - Held that:- At the outset we find that interest under section 234B is consequential in nature and will be levied under both normal & MAT computation of Income. However if the liability to pay the advance tax arises due to the amendment in the Act retrospectively, then there would be no interest u/s 234B & 234C of the Act. Profit arising out sale-purchase of shares treated as capital gain - Held that:- The order of the Hon’ble ITAT in the own case of the assessee cannot form the basis for holding the capital gain loss as business loss. We also find that basis adopted by the AO for treating the capital gain income as business income is not appropriate. We also find that the assessee claimed the capital gain income in the revised return of income which is within the provisions of the law. As such the AO has not brought any defect in the books of accounts and in the revised return. The assessee has been showing investments in the audited financial statements. The ld. DR has also not brought anything on record to controvert the findings of ld. CIT(A) and the arguments advanced by the ld. AR. Hence this ground of appeal of the Revenue is dismissed. Provision for doubtful debts and advances should not be added back in the computation of book profit - Held that:- AR for the assessee fairly conceded that the issue is squarely covered in favor of Revenue and against the assessee by virtue of the amended provision of Sec. 115JB of the Act. Ld. DR for the Revenue agreed to the submission of the assessee. In the light of the amended provisions of section 115JB of the Act we reverse the order of ld. CIT(A) and this ground of appeal of Revenue is allowed. Treating the bank interest and interest on tax refund as business income - Held that:- In the present case the assessee has also earned income from the interest on the margin money deposited with the bank in order to avail the bank guarantee in order to participate in tenders. There is a direct nexus between interest income and the income of the business of the undertaking. Indeed the interest income does not par take the character of a profit and gains from the activity of assessee, but it is the income which is derived in the course of the business. Hence the ground raised by the Revenue is allowed partly. Provisions for leave encashment - disallowance under the provisions of MAT u/s 115JB - Held that:- The provisions for the leave encashment is ascertained liability and therefore the same cannot be disallowed under the provisions of MAT u/s 115JB of the Act. However from the order of AO we find that necessary details were not furnished at the time of assessment therefore the same was added back. We also find that the remand report was not called by the learned CIT(A) during the hearing of appellate stage. In view of above we’re inclined to restore the issue to the file of AO for fresh adjudication as per law with the direction to verify whether the provision for leave encashment has been crystallized. Hence the ground of appeal of the Revenue is allowed for the statistical purposes. Addition made by AO on account of provision for Wealth Tax Act, 1952 in the book profit - Held that:- From the plain reading of the section, we find that the provision does not require the addition of wealth tax. Thus we are of the view to uphold the order of ld. CIT(A). Hence the ground raised by the Revenue is dismissed.
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2017 (1) TMI 1286
Scope of order u/s 245(D)(4) passed by the Income Tax Settlement Commission - application for settlement under Section 254(D)(4) rejected on the ground of failure to make a full and true disclosure in the application for settlement - Held that:- It would be evident that while reproducing, for the sake of convenience the case of the petitioner before the Commission, the written submission dated 11th July, 2015 is in effect extracted. However, clause “(f) Speed money for getting clearances” as found in the submission has been omitted in the body of the petition. The learned Counsel sought to explain the same by stating that it was not referred to in the petition as speed money expenses incurred for getting clearances are not expenses which are allowable in view of Explanation I to Section 37 of the Act. However no such explanation is offered in the petition. One would have therefore proceeded on the basis that no speed money expenses were estimated while working out the estimated expenditure out of 'on money' received. The petitioner must disclose all material facts even if not favourable to him. It is not open to the petitioner to selectively disclose facts and suppress some facts and yet seek extra ordinary remedy of a prerogative writ. As pointed out above, one of the heads of expenses claimed before the Commission for arriving at estimated expenses is the amount paid as “speed money”. Thus it was a material fact. The degree of materiality is of no consequence and once the court comes to the view that the non-disclosure was deliberate and possibly made with a view to present a picture different from what existed before the Commission, this Court will not exercise its writ jurisdiction. Therefore, the petitioner has not come with clean hands. In the present case, we are of the view that there was suppression of facts in the petition which was material to the issue at hand. Therefore, we see no reason to entertain this petition on the above ground also.
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Customs
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2017 (1) TMI 1275
Benami import - misdeclaration of value of goods being watches (with sweat band) - real owner was not on record - Held that: - Allegation of Customs that the import was benami and made by M/s. Sindhya Exports & Imports on behalf of Arun Kumar could not be demolished by appellant leading any cogent evidence to the contrary. When Customs examined one Shri Jambulingam on 20.8.2004, identity of the real importer came to record. He was Arun Kumar. Neither the owner of the appellant-firm appeared against summons nor also co-operated during the investigation. Such modus operandi reveals that allegation of misdeclaration of the value could not be ruled out by appellant coming out with clean hands. In absence of any evidence led by appellant before the authorities below to support declared value to be transaction value, it is very difficult to disturb the assessable value determined by the Customs for the purpose of adjudication - appeal dismissed - decided against appellant.
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2017 (1) TMI 1274
Valuation - Rule 8 of the Valuation Rule, 1988 - Held that: - There is no material on record to discard adoption of Rule 8 when the justification is given by adjudicating authority in para 8 of his order. There was a technical evaluation of the goods and that demonstrated that the goods imported has still life for the commercial utilization - residual method adopted for valuation is justified. So far as redemption fine is concerned, for no market enquiry done by the authority, to ascertain market value, it is considered proper that imposition of redemption of ₹ 1,00,000/- may be justified. So far as penalty of ₹ 85,000/- is concerned, in absence of any ingredient to prove malafides of appellant, imposition of penalty of ₹ 50,000/- is considered proper. Appeal disposed off - decided partly in favor of appellant.
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2017 (1) TMI 1273
100% EOU - Mis-declaration of imported goods - Aluminium Paste/Flakes - it was found that out of six containers, five containers contained Unserviceable Transformer Scrap as declared. In the sixth container bearing Container No.CRXU-9064745, sealed Steel Barrels containing Aluminium Paste/Flake were found - Held that: - the sixth container was imported with mis-declared goods for which the adjudication was done properly. Accordingly, consequence of adjudication does not call for any interference in absence of any cogent evidence led by appellant to the contrary - there is no ground to appreciate that the declaration was not contrary to law. When the testing laboratory made chemical analysis and that proved to be mis-declared goods as stated in this order, at the outset, there is no scope to intervene to the adjudication order passed by learned Commissioner - appeal dismissed - decided against appellant.
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2017 (1) TMI 1272
Classification of ladies leather footwear - sandals or chappals? - withdrawal of duty drawback - Based on the option of the FDDI (Footwear Design and Development Institute) revenue observed that the goods did not contain a strap at the back and were therefore, Chappals - Held that: - respondents, acted upon prejudice and a preconceived notion that ladies sandals cannot be without a back strap - opinion that the goods were sandals and not chappals was deemed insufficient. Apart from these, the court wonders whether any of the experts in this case was a woman, the ultimate customers. In such cases, the commercial parlance test would predominate. Reliance placed in the case of United Offset Process Pvt. Ltd v Assistant Collector of Customs [1988 (10) TMI 39 - SUPREME COURT OF INDIA], where it was held that It is a well known principle that if the definition of a particular expression is not given, it must be understood in its popular or common sense viz. in the sense how that expression is used everyday by those who use or deal with those goods - duty drawback withdrawal and penalty set aside - petition allowed - decided in favor of petitioner.
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2017 (1) TMI 1271
Jurisdiction - Evasion of duty - smuggling - Section 104(4) of the Customs Act - Held that: - Section 104(4) of Customs Act, 1962 clarifies that the offence relating to prohibited goods or evasion or attempted evasion of duty exceeding fifty lakh rupees shall be cognizable - The offence in question comes within the provisions of Section 104(4) of the Customs Act. If it is so, the officer of Customs empowered by general or special order of the Principal Commissioner of Customs may arrest such person and shall, as soon as may be inform him of the grounds for such arrest. In view of the aforementioned legal position, it is not open for Mr.Shajahan Thayyil to contend that he may not be arrested before completion of investigation. The law empowers the investigating officer to arrest such person and thereafter inform him of the grounds for such arrest - appeal allowed - decided in favor of Revenue.
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Corporate Laws
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2017 (1) TMI 1269
Scheme of demerger - Held that:- As in view of the approval accorded by the shareholders and creditors of the Petitioner Companies and the report filed by the Official Liquidator and the representation/affidavit filed by the Regional Director, whereby no objections to the Scheme have been raised, there is no impediment to grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under Sections 391 and 394 of the Act. In terms of the provisions of Sections 391 and 394 of the Act and in terms of the Scheme, (a) Transferor Company No. 1 shall amalgamate with Transferee/Demerged Company; (b) Transferor Company No. 2, Transferor Company No. 3 and Transferor Company No. 4 shall amalgamate with Transferee/Demerged Company; and (c) the Demerged Undertaking (as defined in the Scheme) of the Transferee/Demerged Company shall demerge to the Resulting Company, as on the Appointed Date (as defined in the Scheme) without any further act or deed. Similarly, in terms of the Scheme, all the liabilities and duties of the Transferor Companies be transferred to the Transferee Company and all liabilities and duties of the Demerged Undertaking be transferred to the Resulting Company without any further act or deed.
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2017 (1) TMI 1268
Scheme of amalgamation and arrangement - requirement of convening the meetings of the equity shareholders, secured creditors and unsecured creditors of the Transferor Company and Transferee Company - Held that:- The proposed Scheme has been approved by the respective Board of Directors of the Applicant Companies, in their separate meetings held on 31.03.2016. Copies of the Resolutions passed at the meetings of the Board of Directors of the Applicant Companies have been placed on record. The Transferor Company has 05 (Five) Equity Shareholders and all the Equity Shareholders have given their written consents/NOCs to the implementation of the proposed Scheme. The said written consents/NOCs have been placed on record. The same have been examined and found in order. In view of the foregoing, the requirement of convening the meeting of the equity shareholders of the Transferor Company to consider and, if thought fit, approve, with or without modification, the proposed scheme is dispensed with. The Transferor Company does not have any secured creditors and therefore, the question of convening their meeting, does not arise. The Transferor Company has 03 (three) unsecured creditors and all of them have given their written consents/NOCs to the implementation of the proposed Scheme. The said written consents/NOCs have been placed on record. The same have been examined and found in order. In view of the foregoing, the requirement of convening the meeting of the unsecured creditors of the Transferor Company to consider and, if thought fit, approve, with or without modification, the proposed scheme is dispensed with. The Transferee Company has 02 (Two) Equity Shareholders and both Shareholders have given their written consents/NOCs to the implementation of the proposed Scheme. The said written consents/NOCs have been placed on record. The same have been examined and found in order. In view of the foregoing, the requirement of convening the meeting of the equity shareholders of the Transferee Company to consider and, if thought fit, approve, with or without modification, the proposed scheme is dispensed with.
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2017 (1) TMI 1267
Scheme of Amalgamation - Held that:- In view of the written consent/NOC obtained by the requisite majority of equity shareholders and unsecured creditors of the Applicant Companies, the requirement of convening and holding the meetings of equity shareholders and unsecured creditors of the Applicant Companies to consider and, if thought fit, approve, with or without modification, the proposed scheme is dispensed with. Further, a prayer has also been sought in the present application, seeking dispensation of the requirement of publishing notices of the meetings of shareholders and creditors of the Applicant Companies, in newspapers. In view of the circumstance that the requirement of convening meetings of equity shareholders and unsecured creditors of the Applicant Companies has been dispensed with, the requirement of publishing notices for the said meetings in newspapers is also dispensed with.
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2017 (1) TMI 1266
Restoration of the name of the Petitioner Company in the Register of Companies maintained by the Registrar of Companies, NCT of Delhi & Haryana - Held that:- As relying on decision of this Court in Siddhant Garg and Anr vs. Registrar of Companies and Anr. [2012 (3) TMI 92 - DELHI HIGH COURT] it cannot be said that where the company’s name has been struck off on an application filed under Simplified Exit Scheme, the company cannot be restored. I In view of the foregoing it is of the view that it would be just and proper to order restoration of the name of the Petitioner Company in the Register of Companies maintained by the Respondent. Upon the Petitioner Company filing all the statutory documents i.e. Annual Returns and Balance Sheets till date, along with the prescribed filing fee and additional fee in compliance with all the statutory requirements, the name of the Petitioner Company, its directors and members shall, stand restored to the Register of Companies maintained by the Respondent, in accordance with Section 560(6) of the Act, as if the name of the Petitioner Company had not been struck off.
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Service Tax
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2017 (1) TMI 1285
Works contract - Valuation - break-up of cost of material and service charges was given separately, tax paid on service charges only - whether the appellant required to pay service tax on the whole of the gross value of the retreding charges? - Held that: - involvement of goods and services in a contract renders that to be Works Contract. In the case of Imagic Creative Pvt Ltd. Vs Commissioner of Commercial Taxes [2008 (1) TMI 2 - Supreme Court of India] it was noticed that when the invoices bifurcated service element distinctly showing goods used in the contract for levy of sales tax, Hon'ble court held that the service aspect is only taxable under Union List and State government has no jurisdiction to impose sales tax thereon - no levy of service tax on the value of goods used in tyre retreading as distinctly shown by appellant in its invoices - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1284
Works Contract - abatement under N/N. 12/2003 dt. 20.6.2003 - value of the goods used in the maintenance contract taxable or not? - Held that: - When the appellant submitted respective documents in support of its claim as per page 100 of the appeal folder in Appeal S/179/2006, it cannot be said that appellant has not provided any evidence to support its claim - abatement allowed - appeal allowed. If the details of goods used in contract are provided by appellant, that deserves examination to ascertain whether the contract involved supply of spare parts/components for the purpose of maintenance. Both sides shall co-operate with the adjudicating authority and work out the value thereof. Once the authority is satisfied that there was use of spare parts/components and value thereof is ascertainable, such value shall not be liable to service tax - appeal remanded to the Adjudicating Authority to examine and determine the value of material used in the contract and grant exemption thereof from taxation.
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2017 (1) TMI 1283
CENVAT credit - towers, towers parts, pre-fabricated buildings/shelters - whether the Appellant, a service provider of output service viz. Telecom service is eligible to avail CENVAT Credit on various inputs viz. tower and tower parts, pre-fabricated buildings/shelters? - Held that: - following the law laid down by the Hon'ble Bombay High Court in Bharati Airtel Ltd. case [2014 (9) TMI 38 - BOMBAY HIGH COURT] which is applicable to the facts and circumstance of the present case, we are of the opinion that the appellants are not eligible to avail and utilize CENVAT credit on towers, tower parts and pre-fabricated building/shelters. The demand notices are issued for normal period and since the issue involved is a pure question of interpretation of law, in our opinion, imposition of penalty is unwarranted and accordingly set aside - decided in favor of appellant.
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2017 (1) TMI 1282
100% EOU - Refund claim - unutilised CENVAT credit - inward freight - Rule 5 of the CCR, 2004 read with N/N. 5/2006 dated 14.03.2006 - Held that: - the clearing charges/inward freight is specifically covered in the amended definition of ‘input service’ as contained in Rule 2(l) of the Cenvat Credit Rules - reliance placed in the case of CCE, Nagpur Versus Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] - credit allowed - appeal allowed - decided in favor of assessee.
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Central Excise
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2017 (1) TMI 1281
100% EOU - maintainability of appeal - clearance of goods to DTA without proper permission - whether the issue involved is of rate of duty and whether the issue is maintainable or not? - Held that: - reliance placed in the case of SARLA PERFORMANCE FIBERS LTD. Versus UNION OF INDIA [2012 (2) TMI 474 - BOMBAY HIGH COURT], where the Hon’ble Supreme Court laying down the principle for determination of duty on clearance by an 100% EOU in DTA with out proper permission from the appropriate authority, for the period prior to the amendment to Sec.3(1) of CEA,1944 held that the expression allowed to be sold in India used in proviso to Section 3(1) of the Act would be applicable only to sales made in DTA of the production by 100% EOUs, which are allowed to be sold into India as per the provisions of the Exim Policy - appeal dismissed - decided against appellant.
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2017 (1) TMI 1280
CENVAT credit - Guest House Maintenance charges - Colony Up-keeping charges - Held that: - since the factory is located at a remote area in Gulbarga District of Karnataka and there is no nearby township where the employees of the company can get accommodation therefore it becomes necessary for the appellant to provide a Guest House as well as residential colony for its employees and all these things are directly linked to the manufacturing activity - reliance placed in the case of DCM Shriram Consolidated Ltd. [2015 (2) TMI 45 - CESTAT NEW DELHI], where the Tribunal has allowed the cenvat credit on Maintenance of Guest House by observing that up-keeping of guest house which is adjacent to the factory premises is necessary business requirement inasmuch as the factory is located outside the said complex and similarly the maintenance of residential premise has also been held to be associated with the business activity. Colony Up-keeping charges - Held that: - reliance placed in the case of COMMISSIONER OF CUS. & C. EX., HYDERABAD-III Versus ITC LIMITED [2011 (11) TMI 516 - ANDHRA PRADESH HIGH COURT], where it was held that the staff colony being directly and intrinsically linked to its manufacturing activity could not therefore be excluded from consideration - the services which were crucial for maintaining the staff colony, such as lawn mowing, garbage cleaning, maintenance of swimming pool, collection of household garbage, harvest cutting, weeding, etc. necessarily had to be considered as input services falling within the ambit of Rule 2(l) of the Cenvat Credit Rules. Credit allowed - appeal allowed - decided in favor of assessee.
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2017 (1) TMI 1279
Benefit of N/N. 8/2003-CE dated 01.03.2003 - SSI exemption - use of brand name of others - Held that: - although the appellant is manufacturing of branded goods for others and availing cenvat credit on inputs used in manufacturing of branded good for others which have been cleared on payment of duty, the appellant is entitled for benefit of Notification No. 8/2003-CE dated 01.03.2003 for their own manufactured goods. The issue is no more res integra, as decided in the case of League Laboratories Ltd. [2016 (8) TMI 117 - CESTAT CHANDIGARH] where it was held that the goods cleared by the appellant for home consumption, as no availed cenvat credit. Therefore, by following the decision of Hon'ble Apex Court in the case of Nabulae Health Care Ltd. [2015 (11) TMI 95 - SUPREME COURT] wherein the Hon’ble Apex Court has held that the assessee is entitled to benefit of exemption notification 8/2003-CE dated 01.03.2003, the impugned order is set aside and the appellant is entitled to the benefit of N/N. 8/2003-CE. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1278
Benefit of exemption N/N. 14/2002-CE - denial on the ground of decision passed in the case of Dhiren Chemical Industries [2001 (12) TMI 3 - SUPREME COURT OF INDIA], where it was held that Notification exempting finished goods if made from materials “on which the appropriate amount of duty of excise has already been paid” - Held that: - the issue is no more res-integra, similar issue decided in the case of M/s Arora Knit Fabrics Pvt. Ltd. [2016 (8) TMI 117 - CESTAT CHANDIGARH], where it was held that benefit of N/N. 14/2002-C.E., should be available if no credit is taken by the manufacture. For such interpretation Explanation-II to N/N. 14/2002-C.E., creating fiction of ‘Deemed duty paid’, becomes relevant and has to be harmoniously read with the conditions prescribed under N/N. 14/2002-C.E. It is also a well accepted judicial discipline that if two interpretations of a statute are possible then the one more favourable to the tax payer should be taken - the assessee is entitled for benefit of exemption under N/N. 14-15/2002-CE dated 01.03.2002 - appeal allowed - decided in favor of assessee.
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2017 (1) TMI 1277
Valuation - demand of differential central excise duty on the ground that the retained amount is not actually paid as VAT to Government and hence will be additional consideration to be added in value for central excise levy - Held that: - reliance placed in the appellant's own case on similar issue, for the earliar period M/s Emsons Organics Pvt Ltd Versus Commissioner of Central Excise, Chandigarh-II [2016 (2) TMI 284 - CESTAT NEW DELHI] where it was held that the appellants are liable to pay the Central Excise duty as per the valuation determined in the impugned order the demand for extended period cannot be sustained - the main appellant is liable to pay Central Excise duty as per valuation determined in the impugned order alongwith interest and no penalty is imposable - appeal disposed off - decided against Assessee.
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2017 (1) TMI 1276
100% EOU - refund claim - unutilised CENVAT credit - Time Bar - Held that: - the learned Commissioner (A) has wrongly interpreted the relevant date as prescribed in Section 11B. As per the said provision, the last date of the quarter i.e., 30.12.2011 should have been considered as the relevant date and not the first date of the export. Therefore, only an amount of ₹ 12,821/- relates to accumulated CENVAT credit attributable for the period from 1.10.2011 to 11.10.2011 is time barred and the rest of the claim amounting to ₹ 1,31,942/- is very much within the period of limitation as prescribed under Section 11B of the Central Excise Act, 1944 - the appellant is entitled to refund of ₹ 1,31,942/- which is within time and reject the rest of the refund claim to the extent of ₹ 12,821/- as time barred - appeal disposed off - decided partly in favor of appellant.
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CST, VAT & Sales Tax
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2017 (1) TMI 1270
Who is required to declare the goods (consignment in the Railway train) - PVAT - Whether the use of the term 'person' in the first proviso to Section 51(2) as distinct from 'the owner or person in charge of a goods vehicle' in Section 51(2) foists the obligation in terms of the proviso to furnish or cause to be furnished a declaration in the form prescribed, on any person selling goods in the course of inter-State trade or commerce even when such goods are not being transported in a 'goods vehicle'? Held that: - Section 51(2) of the Act obliges each and every 'owner or person in charge of a goods vehicle' to carry with him the documents prescribed therein in respect of goods meant for the purpose of business and being carried in the goods vehicle - But in respect of goods being sold from within or outside the State in the course of inter-state trade or commerce the first proviso imports an additional condition of furnishing a declaration with such particulars as may be prescribed. Thus the purpose of the proviso appears to be to require furnishing of an additional declaration in respect of goods being sold from within or outside the State in the course of inter-state trade or commerce. In terms of the provisions at the relevant time, the use of the term 'person' in the first proviso to Section 51(2) of the Act as distinct from 'the owner or person in charge of a goods vehicle' in Section 51(2) of the Act does not foist obligation of furnishing a declaration in terms of the first proviso, on any person when goods are not being transported in a goods vehicle. It is opined that as per the scheme of the Section 51 (at the relevant time), the declaration in terms of the first proviso to Section 51(2) is required to be furnished only by 'the owner or person in charge of a goods vehicle' in respect of goods as are being carried in the goods vehicle for the purpose as mentioned in the first proviso. The proceedings initiated against the appellant are held to be without jurisdiction. Appeal allowed - decided in favor of appellant.
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Indian Laws
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2017 (1) TMI 1265
Case under Section 138 of the Negotiable Instruments Act, 1881 - 'Burden of Proof' - Held that:- A perusal of the complaint (filed by the Appellant / Complainant) before the trial court shows that the entire complaint is conspicuously silent as to the quantum of the interest agreed to be paid by the Respondent / Accused. Ordinarily, if a person lends money and that too a higher amount like ₹ 3,00,000/- then, the said amount will carry some percentage of interest, which was agreed to be paid by the Respondent / Accused. However, as stated already, the complaint is silent about any agreement for payment of interest for the loan amount of ₹ 3,00,000/-. When the Respondent / Accused is not a relative of the Appellant / Complainant and also not a close friend, then, the averment made in the complaint that the Respondent / Accused borrowed a sum of ₹ 3,22,511/- from the Appellant / Complainant does not create a favourable circumstances in his favour. In view of the aforesaid detailed qualitative discussions, also this Court taking note of the attendant facts and circumstances of the instant case in a conspectus fashion and also by considering the defence taken on behalf of the Respondent / Accused comes to an inevitable and irresistible conclusion that the Respondent / Accused had raised some probable defences in the present case. In fact, the Appellant / complainant had not established his case under Section 138 of the Negotiable Instruments Act, 1881 against the Respondent / Accused. Looking at from any angle, the Criminal Appeal fails.
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