TMI Tax Updates - e-Newsletter
January 6, 2016

Case Laws in this Newsletter:

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

Articles

1. Goods must be exempted goods as pre-requisite for denial of ITC

   By: Rakesh Singh

2. WHETHER COURT ORDER SANCTIONING AMALGAMATION IS AN INSTRUMENT?

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. The Negotiable Instruments (Amendment) Bill, 2015 notified; Focus on clarifying the jurisdiction related issues for filing cases for offence committed under Section 138 of the Act

2. RBI Reference Rate for US $

3. Finance Minister: To make health and social security benefits accessible to un-organised sector workers like construction workers, migrant labourers, volunteers of different schemes including Anganwadi workers are one of the major priorities of the present Government

4. FM: Key challenges faced by the Indian agriculture include the need to increase productivity by leveraging technology-especially for high yielding and resistant variety seeds, efficient utilization of water, adaption of latest IT to increase resilience to nature and to increase the price benefits to the farmer by providing timely market information

Notifications

Customs

1. 01/2016 - dated 4-1-2016 - Cus

Export duty on Iron ore pellets reduced to Nil rate from 5% - Seeks to further amend notification No 27/2011-Customs dated 1.03.2011

Circulars / Instructions / Orders

FEMA

1. 5/2018-19 - dated 26-3-2019

Master Direction - External Commercial Borrowings, Trade Credits and Structured Obligations (Updated as on December 22, 2023) (Supersedes Master Direction - External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers (Updated as on November 22, 2018))

2. 3/2015-16 - dated 1-1-2016

Master Direction - Money Changing Activities (Updated as on May 29, 2024)

3. 19/2015-16 - dated 1-1-2016

Master Direction - Miscellaneous (Updated as on November 12, 2018)

4. 18/2015-16 - dated 1-1-2016

Reporting under Foreign Exchange Management Act, 1999 (Updated as on September 16, 2024)

5. 17/2015-16 - dated 1-1-2016

Master Direction – Import of Goods and Services (Updated as on August 29, 2024)

6. 15/2015-16 - dated 1-1-2016

Master Direction – Direct Investment by Residents in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) Abroad (Updated as on June 24, 2021)

7. 2/2015-16 - dated 1-1-2016

Master Direction – Opening and Maintenance of Rupee/Foreign Currency Vostro Accounts of Non-resident Exchange Houses (Updated as on December 22, 2022)

DGFT

8. 52/2015-2020 - dated 5-1-2016

Implementation of the Track and Trace system for export of Pharmaceuticals and drug consignments

Central Excise

9. F.No.390/Misc./163/2010-JC - dated 1-1-2016

Reduction of Government litigation - providing monetary limits for filing appeals by the Department before CESTAT/High Courts and Supreme Court

Highlights / Catch Notes

Income Tax

• Sodexo Coupons Given by Employers to Employees Not Subject to TDS Provisions, Court Rules.

  Case-Laws - AT : TDS on Sodexo coupons given by an employer to the employee - Sodexo coupons given by an employer to the employee are not amenable to TDS provisions. - AT
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• AO Misinterprets Section 23(1)(a), Overestimates Property Value; Applicable Only for Vacant Properties, Not Let-Out Ones.

  Case-Laws - AT : Estimation of income from house property - AO failed to appreciate such estimation of annual letable value as per provision of Section 23(1)(a) was called for only in case of vacant property and not where the property was actually let out since in the case of let out property, the assessee was not entitled to anything over and above the agreed rent - AT
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• Fees for Late TDS Returns Filing u/s 234E Removed for Defaults before June 1, 2015.

  Case-Laws - AT : Levy of fees under section 234E - Fee for default in furnishing statements - late filing of TDS returns - levy of fee prior to 1.6.2015 deleted - AT
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Customs

• Appellant Challenges Denial of Duty Refund Due to Time Limit; Disputes Relevant Date for Refund Claim.

  Case-Laws - AT : Denial of refund claim - Bar of limitation - The appellant requested for reassessment of the Bill of Entry vide their letter dt. 18.12.2000 addressed to the Deputy Commissioner, MOD Docks, Mumbai. In this letter the appellant have also requested that the excess duty paid by them may be refunded - date of formal application, later, cannot be the relevant date. - AT
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• Iron ore pellets export duty cut to zero, amending Notification No. 27/2011-Customs. Boost for exports and industry.

  Notifications : Export duty on Iron ore pellets reduced to Nil rate from 5% - Seeks to further amend notification No 27/2011-Customs dated 1.03.2011 - Notification
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DGFT

• New Track and Trace System Launched for Exported Pharmaceuticals to Combat Counterfeits and Ensure Safety Compliance.

  Circulars : Implementation of the Track and Trace system for export of Pharmaceuticals and drug consignments - Public Notice
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FEMA

• New Guidelines for Reporting Under Foreign Exchange Management Act, 1999: Key Changes and Compliance Obligations Explained.

  Circulars : Master Direction – Reporting under Foreign Exchange Management Act, 1999 - Master Direction
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• Guidelines for External Commercial Borrowings and Foreign Currency Transactions: Roles of Authorized Dealers and Compliance Framework.

  Circulars : Master Direction – External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers - Master Direction
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• Guidelines for Opening and Managing Rupee and Foreign Currency Vostro Accounts under FEMA for Non-Resident Exchange Houses.

  Circulars : Master Direction – Opening and Maintenance of Rupee/Foreign Currency Vostro Accounts of Non-resident Exchange Houses - Master Direction
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Indian Laws

• High Court Rules in Favor of Accused: Presumption of Liability Rebutted in Cheque Bounce Case u/s 138.

  Case-Laws - HC : Rebuttal of presumption - Complaint u/s 138 of the Negotiable Instruments Act - Cheque Bounce due to payment stopped by drawer - discharge of liability - The defence version given by the accused is probable and rebuts the presumption under Section 139 of the Negotiable Instruments Act - HC
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Service Tax

• Franchisee Payments from Affiliates Defined as RCs and LCs, Align with Section 65(47) Franchise Definition in MOU.

  Case-Laws - AT : Franchisee Service - Amount received from affiliates being RCs and LCs - Scope of the MOU - Indeed, the MOU in question is so clear an example of “franchise” as defined in Section 65 (47) ibid that any further elaboration on this point will be an exercise in over-kill. - AT
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• Appellant Rightly Claimed Cenvat Credit for Subcontractor Services; Paid Due Service Tax on Output Services Provided.

  Case-Laws - AT : Cenvat Credit - eligible input services - the appellant has rightly taken the cenvat credit on the input service provided by the sub-contractors and they have paid the applicable service tax on the output service provided by them. - AT
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• Sub-contractor's Refund Claim Denied Due to Unchallenged Service Classification in School Construction Project.

  Case-Laws - AT : Claim of refund of service tax paid wrongly by the sub-contractor - The sub-contractor having not contested the classification, the appellant cannot come before the authority and say that the refund has to be granted as these services are in respect of construction of school building - AT
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• Penalty Waived for Anodization Firm Due to Limited Scope and Oversight u/s 80; No Invoices for Solar Projects.

  Case-Laws - AT : Levy of penalty - waiver u/s 80 - Job Work - having regard to the fact that appellant is a proprietory firm, undertaking a single activity of anodization and in view of the fact that for the Solar water heater, they were not following any procedure and raising invoice, Penalty waived - AT
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Central Excise

• Cenvat Credit Denied: Rejected Rubber Products Treated as Scrap Not Eligible for Input Credit u/r 4(5)(a.

  Case-Laws - AT : Cenvat Credit - return of rejected articles of rubber back from their customer - if any inputs are issued to the job-worker for manufacturing and manufacturing activity undertaken on such inputs, the resultant product cleared as scrap and no input as such - Demand set aside - AT
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• Supreme Court Urges Coordination Between Customs and Export Authorities to Support Export-Oriented Units' Exemptions.

  Case-Laws - SC : 100% EOU - Claim of exemption - In a three legged race for export promotion by the Customs and Export Promotion authority, the two authorities cannot run in opposite directions. - SC
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• Freight Charges Not Subject to Duty Due to Technical Oversight on Excise Invoice Listing.

  Case-Laws - AT : Valuation -The law does not require charging of duty on freight for technical lapse of not indicating the freight charges separately on the excise invoice. - AT
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• Central Excise Law: Shared utilities don't justify clubbing clearances under SSI exemption; units remain separate entities.

  Case-Laws - AT : SSI Exemption - Clubbing of clearances - Merely because common electricity connection was used by both the units by itself will not make it a dummy of one another. Similarly, a common accountant or a common store room for raw materials cannot be held to be a reason for clubbing the clearances of both the units - AT
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• Small Scale Industry Exemption Denied for Chapter 93 Goods; Amendment Restores Eligibility from October 1, 2001, Not Retroactive.

  Case-Laws - AT : Denial of SSI Exemption - benefit of Notification No.9/2001 - goods falling under Chapter 93 were excluded from the scope of SSI benefit during the relevant period - SSI Notification No.8/2001 was amende w.e.f 1st October 2001. By the said amendment, parts falling under Heading 93.06 or 93.07 were again made eligible for the benefit of the SSI exemption - said amendment is not retrospective - AT
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• New Policy Sets Monetary Thresholds for Government Appeals in Tax Cases to Reduce Litigation and Optimize Resources.

  Circulars : Reduction of Government litigation - providing monetary limits for filing appeals by the Department before CESTAT/High Courts and Supreme Court - Order-Instruction
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Case Laws:

• Income Tax

• 2016 (1) TMI 182
  Peak credit - undisclosed bank account - ITAT deleted the addition - Held that:- CIT (A) and Tribunal committed no error. There was nothing with the department to suggest that entire deposit of Rs. 2.46 crores represents the income of the assessee. CIT (A) instead of adding 1% of Rs. 2.46 crores adopted peak credit theory, which was also upheld by the Tribunal. No question of law arises. - Decided against revenue

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• 2016 (1) TMI 181
  Penalty u/s 271(1)(c) - Held that:- Revenue has not been in a position to show that the payments of commission made by the assessee, which is said to have been assessed to tax, were bogus in nature. Further, there is nothing on record to show that the assessee had concealed the particulars of its income or had furnished inaccurate particulars of such income. In such circumstances, we do not find any merit in the appeals filed by the Revenue. As such, the question of law raised in the present appeals is answered in favour of the respondent assessee and against the Revenue.

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• 2016 (1) TMI 180
  Addition of alleged bogus purchase - Held that:- we are of the considered view that in the facts of the present case, where books of account of the assessee had not been rejected and in view of substantial evidence filed by the assessee in order to establish the purchases made from the said parties and where payments to the said concerns have been made by cheque, though after gap of time and where no evidence has been brought on record to establish that the cash has travelled back to the assessee, there is no merit in the orders of authorities below in holding the aforesaid purchases to be bogus. Accordingly, we reverse the order of CIT(A) in this regard and direct the Assessing Officer to allow the claim of purchases at 1,45,50,189/-. - Decided in favour of assessee.

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• 2016 (1) TMI 179
  Disallowance of general/other expenses - whether in the absence of complete details and evidence, the non business use/personal use out of the expenses claimed cannot be ruled out? - Held that:- The assessee’s business activities are not only in Jaipur but all over India and the offices of the company are managed by the professionals. The assessee is a company. It has separate legal entity as per the Company Law from the Director of the Company. Personal element in case of a company as decided by the various ITAT Benches and by the Hon’ble High Courts, is not possible. The ld. AO has not pointed out any specific bill which is personal in nature. The disallowance made by the AO is general. By considering the past history, the coordinate Bench has deleted the similar additions in A.Ys 2005-06, 06-07 and 08-09 in preceding years, we have no hesitation in deleting the disallowances/additions retained by ld. CIT (A) out of various expenses - Decided in favour of assessee Disallowance of Marketing and Survey expenses - Held that:- The coordinate Bench of the Tribunal in assessee’s own case for A.Y 2005-06, 06-07 and 08-09 had considered identical issue and set aside the issue to the file of AO by observing a cohesive verification of material appears to be not made. Assessee has produced the income tax record of the survey agencies which in support of its version; there exist no reasoning as to why they are being ignored by ld. AO & CIT (A). There exist conflicting claims about the existence of such survey agencies coupled with non supply of Inspectors report and non-allowing the customary right of cross examining the denying witnesses. Thus assessee has made out a case for violation of principles of natural justice. In the entirety of facts and circumstances we are inclined to set aside the issues relating to Marketing and Survey expenses back to the file of AO to decide afresh after considering the entire evidence and giving the assessee an adequate opportunity of being heard - Decided in favour of assessee Additional depreciation on Plant and Machinery - CIT(A) allowed the claim - Held that:- Hon’ble Tribunal in assessee’s own case for A.Y. 2005-06, 06-07 and 08-09 had considered the identical issue and upheld the order of ld. CIT (A) as news papers and periodicals are distinct commodity than the paper, printing ink and other ingredients used therein. Since a new commercial product comes into existence, the process involved for such transformation amounts to production and manufacture - Decided in favour of assessee

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• 2016 (1) TMI 178
  Disallowance on account of write off of technical know- how - intangible asset was very much in existence as on 01.04.2004 - CIT(A) allowed the claim - Held that:- when an organization manufacturing a given product, incurs some expenditure on improvement of technology used in the manufacture of the said product, then, said expenditure shall constitute an expenditure incurred for better conduct of business and hence shall be revenue in nature. In the given case, the assessee was already engaged in the manufacture of SNR products. The assessee had merely incurred the expenditure to upgrade itself technologically, i.e. to produce the same product with a better technology Therefore, we are of the view that the said expenditure constitutes revenue expenditure - Decided in favour of assessee

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• 2016 (1) TMI 177
  Tds u/s 194J - band width charges - non deduction of TDS - Held that:- The band width charges are not liable for TDS under section 194J and dismiss the departmental appeal on this issue. - Decided in favour of assessee. TDS on Sodexo coupons given by an employer to the employee - Held that:- As regards the applicability of TDS provisions to Sodexo Coupons is concerned, we find that this issue is covered in favour of the assessee by the decision of Hon’ble Gujrat High Court in the case of CIT vs. Reliance Industries (2008 (9) TMI 115 - GUJARAT HIGH COURT) wherein it was held that Sodexo coupons given by an employer to the employee are not amenable to TDS provisions. - Decided in favour of assessee. Payments made towards purchase of software licenses - Held that:- As regards the payments made towards purchase of software licenses is concerned, we find that this issue is covered in favour of the assessee by the decision of ‘A’ Bench of this Tribunal in the case of ADIT (Int. Taxation) vs. M/s. Batronics India Ltd., Hyderabad [2014 (4) TMI 569 - ITAT HYDERABAD] the assessee has acquired a readymade off – the shelf computer programme to be used in their business and no right was granted to the assessee to utilize the copy right of the programme and, therefore, consideration cannot be treated as royalty. As held by the CIT(A), the payments made by the assessee company cannot be held as ‘royalties’ coming into the ambit of Article 12 of DTAA or ‘fee for technical services’ u/s 9(1)(vii) of the IT Act and accordingly no tax need to be deducted u/s 195 of the IT Act. - Decided in favour of assessee.

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• 2016 (1) TMI 176
  Revision u/s 263 - Held that:- Except for some cosmetic charges, the reasons are adopted verbatim by the CIT. In these circumstances, we find that the decision of Jaipur Bench of the Tribunal in the case of Dharmendra Kumar Bansal vs. CIT (2014 (2) TMI 1210 - ITAT JAIPUR), is squarely applicable to the facts before us. Respectfully following the same, we hold that the revision orders passed by the Ld. CIT are not maintainable for want of valid initiation of the proceedings under section 263 of the Act. - Decided in favour of assessee.

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• 2016 (1) TMI 175
  Estimation of income at 8% - Held that:- A.O. could not reject the books of account and estimate the income at 8%, without there being any basis in doing so. In view of the above, we agree with assessees grounds on the issue and delete the estimation of income as made out by the A.O. It is also seen that in A.Y. 2005-06 assessee declared income at more than 8%. As assessee’s business income varies on year to year basis and the assessee is disclosing the incomes on the basis of the entries in the books of account, there seems no justification in rejecting the books of account on assumptions and presumptions. In view of this, keeping the above facts in mind and principles of law, we cannot approve the rejection of books of account and estimation of income in the impugned assessment years - Decided in favour of assessee. Accrual of income - Addition on the basis of receipts from M/s. SSCPL - Held that:- What A.O. has done in the assessment is to bring to tax the amounts received by the assessees on the basis of receipt in respective assessment years, ignoring that if it is a capital gain transaction on transfer of property, the capital gains occurs when the transfer is complete or deemed to be complete. If the terms of agreement have been fulfilled by the developer/ builder, the capital gain is to be brought to tax in the year in which the agreement was concluded i.e., in this case in the year 2007-08. In case the terms of the agreement are not fulfilled and the agreement has not been implemented as per the terms, then, there can be no transfer in strict sense, capital gain does not arise even though certain advances were received. If it is a business transaction, A.O. missed the point that assessees herein have paid an amount of Rs. 20 lakhs at the time of agreement as initial payment which will be a deduction, along with subsequent expenditure if any, so as to arrive at the correct income. Just because the parties herein have received certain amounts in different assessment years, they cannot be brought to tax on receipt basis without understanding the nature of payments. In view of this, without giving any findings on the respective contentions, we are of the opinion that these issues are to be examined in detail to arrive at proper conclusions. Therefore, in the interest of both parties, we restore the issue to the file of A.O. to re-examine The contention that agreement has not been fulfilled because no permissions have been received and land was not developed also requires examination by the A.O. It is also to be verified whether the amounts received by the assessee is over and above the amounts payable as per the agreement or not. In such case, the nature of receipt by the assessees has to be examined vis-à-vis entries and claims made in the case of SSCPL who paid the amounts by way of cheques. - Decided in favour of assessee for statistical purposes

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• 2016 (1) TMI 174
  Penalty u/s. 271(1)(c) - proceedings u/s. 153A - Assessee admitted additional incomes and paid taxes thereon - Held that:- Since the facts in this case also are more or less similar to the case of the case of Dilip Kedia Vs. ACIT (2013 (7) TMI 934 - ITAT HYDERABAD ) and assessee filed his returns of income much before the provisions of Explantion-5A were introduced on the statute and as rightly held by the Supreme Court in the case of Reliance Petro Products [2010 (3) TMI 80 - SUPREME COURT], the penalty provisions as applicable on the date of filing the original return are applicable, it is of the opinion that there cannot be any penalty u/s. 271(1)(c) since assessee filed returns of income as declared in statements u/s. 132(4) and proceedings u/s. 153A are independent and separate proceedings from the regular assessment proceedings. In view of this, penalty u/s. 271(1)(c) is not warranted on the facts of the case. Accordingly, the orders of AO and CIT(A) are set aside and grounds are allowed. - Decided in favour of assessee.

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• 2016 (1) TMI 173
  Validity of claim of deduction under sec. 80IB (10) - non fulfilment of 46 clause(c) of section 80IB (l0) of I.T. Act, 1961 that some of the residential units do not confirm to the requirements of built up area i.e. 1500 sq. ft. - Held that:- In this project also for no. of eligible Towers are 24 where each residential unit is having constructed area less than 1500 sq. ft. as per the requirement of clause (c) of section 80IB (l0), where as ineligible no. of towers are 11 spread over on 24.174 acres & these towers are separately Located and separated from other Towers. Hence these towers together is a separate housing projects spread over 25.83 acres of Land & Satisfying all the conditions of section 80IB (l0) separately. Though there is a common approval of entire 50 acres of Land consisting of eligible housing project along with commercial area on 24.174 acres of Land. Both eligible & non eligible projects are separate by road & have separate common facilities. Ld. AR has relied upon various Judicial pronouncements on similar lines as in Omaxe Green Land, Sector 93B, Noida. As considered entire facts & circumstances of the case. Present eligible projects is similar to Omaxe Green Land project. Therefore, treat the eligible projects as a separate housing project on similar lines of Noida project. Commercial area of entire housing scheme is more than permissible limit as per clause (d) of Section 80IB(10) - CIT(Appeals) did not agree with the assessee that the commercial area are within the limit of amended permissible area as per clause D of section 80IB(10) introduced by Finance Act, 2010 as clarificatory in nature as it would apply to the project started before 31.3.2008. We concur with this finding of the Learned CIT(Appeals) that amendment in the said clause (d) is not clarificatory and, therefore, it would not apply retrospectively. The Learned CIT(Appeals) has, however, held that the eligible towers are separate housing projects and, therefore, deduction under sec. 80IB (10) is available. The further contention of the assessee that the commercial area is not developed and right to develop the same is transferred to other company and the said transfer is duly intimated to the local authority and that a transfer is not a mere book entry as claimed by the Assessing Officer was kept open by him in view of his above findings and treating the same as not relevant. We are agreeable to this finding of the Learned CIT(Appeals) especially when the assessee was found eligible to claim deduction under sec. 80IB(10) of the Act on the projects having residential units constructed within the prescribed limit of 1500 sq. fts. The same is upheld. - Decided in favour of assessee.

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• 2016 (1) TMI 172
  Disallowance u/s 14A - Held that:- Section 14A will not apply if no income is received or receivable during the relevant previous year. We, therefore, do not find any justification in the action of the ld. Authorities below while disallowing expenditure u/s. 14A of the Act, as none of the authorities below have pointed out receipt of any such income by the assessee which does not form part of the total income. - Decided in favour of assessee. Disallowance of interest - CIT(A) deleted the addition - Held that:- Ultimately, the appellant suffered a loss of Rs. 4,66,43,500/- which was borne by the other joint venture partner as per the terms agreed between the two parties. Accordingly, the assessee suffered a loss to the extent of interest on capital employed for three to six months for stock market operations, but the other joint venture partner had to bear the burden of the aforesaid loss of Rs. 4,66,43,500/-. In view of these facts, this advance cannot be said to be an interest free non-business transaction. Moreover, the advance was given to the broking company for the purpose of investment in the share market. In view of these facts, we do not find any infirmity in the conclusion of the ld. CIT(A) in this regard. - Decided in favour of assessee. Disallowance on account of delayed payments of employees contribution to ESIC/EPF - CIT(A) deleted the addition - Held that:- Where payments of EPF contribution if made after the due date prescribed under the relevant Act and Rules, but before the due date of furnishing the return of income under section 139(1), would be eligible for deduction under section 36(1)(va) read with section 2(24)(x) and sec. 43B. In the instant case, it is not in dispute that the assessee had made the payments before the due date of filing the return of income. No contrary law is placed by the ld. DR. Therefore, we do not find any infirmity in the conclusion of the ld. CIT(A) for deleting the disallowance made by the AO on this count.- Decided in favour of assessee.

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• 2016 (1) TMI 171
  Addition u/s 40(a)(ia) - withholding of tax - liability to deduct TDS u/s 195 - expenses in the form of reimbursement cost incurred - CIT(A) deleted the addition - Held that:- Reimbursement cost incurred by the assessee is out of the purview of the TDS provision as it does not generate any income in the hands of the recipient and consequently the provisions of section 40(a)(ia) could not be invoked. Hence this ground of appeal of the revenue is dismissed. - Decided in favour of assessee

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• 2016 (1) TMI 170
  Disallowance of expenditure - AO repeated that since there was no date in the vouchers and the amount was not recorded in the current year's accounts the same was rightly added - Held that:- Firstly there was a totaling mistake of Rs. 76500/- (Rs. 8500/- taken as Rs. 85000/-), which is not disputed by the AO in the remand report. The AO has not disputed the claim of the assessee that out of the total of Rs. 12,11,301/- (after correcting the totaling mistake) the vouchers for a sum of Rs. 10,71,599/- were duly recorded in the earlier year's books for which specified amount wise details were filed before the AO in course of assessment proceedings and have not been adversely commented by the AO even in the assessment order. Therefore simply because there was no date on the vouchers but specific amount was found debited in the earlier year's cash book and there was no evidence to suggest that these expenses related to this year, the addition was not justified - Decided in favour of assessee Disallowance of certain expenses from the impounded papers - Held that:- The modus operand of the assessee’s business is that apart from its own sale of jewellery, the small gold smiths who also manufactures some jewellery on their own from the small portion of gold retained by them in course of labour work, also gives their jewellery for sale to the assessee. The assessee keeps the said jewellery in the show room and sales the same to the customers and on sale the payment is made thereafter to the gold smiths. This will be apparent from the seized paper MS-5 wherein the payment for small items of jewellery is made to such gold smiths. The assessee has already admitted the sale of jewellery amounting to Rs. 16,89,700/- outside the books and on the said undisclosed sale the AO has already estimated net profit at 14.68%. We find from records that in course of survey the AO found that some of the purchased jewellery as well as the labour charges were not accounted for, as mentioned above, which is not accounted for. AO himself has presumed outgoings for such sale (Rs.16,89,700- Rs. 2,40,048) at 14,41,652/-. The AO has found in the impounded papers the payment amounting to Rs. 10,57,336/-, which is much less than the outgoing estimated by the AO on such sales. Therefore these outgoings can be telescoped with the actual expenses accepted by department to have been incurred for achieving the undisclosed sales of Rs. 16,89,700/-. Thus the addition was not justified - Decided in favour of assessee Unexplained investment - CIT(A) deleted addition - Held that:- While making the tabulation in the assessment order, the AO has mixed up the amount in terms of money and the weight in terms of grams and therefore, confusion has arisen. In all there are 27 items. The assessee has filed complete details of all the 27 items segregating the items in terms of the money i.e Rupees and in terms of grams from the seized papers. We find that the payment to the labour is 23636.50 and the total weight of silver involved was 8753.63 grms and from accounts of the assessee that the total silver manufactured during the year was 26915.64 gms. and the labour charges for manufacturing silver was 2,87,010, 54,570/- and Rs. 8,555/-. Therefore the total silver manufactured during the year as well as the labour charges incurred was much more than what the AO found in the impounded papers. In fact the entire confusion has arisen because of the mistaken belief of recording the figures in terms the money as well as grams as if the same was weight of the silver dealt with. In view of the above facts and circumstances of the case, we are of the view that CIT(A) has rightly deleted this addition - Decided in favour of assessee Addition made on account of unexplained investment made in excess stock - CIT(A) deleted addition - Held that:- AO observed that the assessee disclosed higher side Jewellery found than during the course of Survey. It is also mentioned earlier that during the course of Survey no cash book, ledger, account, etc. was found and the assessee stated that the same was lying with Accountant for Audit purpose. But she failed to disclose name of the Accountant during the course of deposition. It appears that this action of the assessee is intentional for the purpose of avoiding enquiry. As there was no book of accounts found during the course of survey, the purchase recorded as claimed by the assessee is not accepted and the same was added back as excess stock. But we find that the assessee reconciled the excess stock with that the books of account and the reconciliation submitted by the assessee, the assessee had excess stock of jewellery recorded in its books of account as compared to the physical stock found at the time of survey. We find that once the AO had accepted the stock as per books reconciled by the assessee. No deficiency or mistake is found or pointed out in the said reconciliation then AO cannot make any addition on this account. If the books of account show higher figure of stock then what was found in the course of survey, such excess cannot be added as undisclosed investment. Accordingly, this addition has rightly been deleted by CIT(A) - Decided in favour of assessee Addition made on account of customers’ gold lying in stock treating the same as unexplained investment - CIT(A) deleted addition - Held that:- The AO has not disputed the said receipts and has accepted the assessee's stand that the assessee has received the remaking charges of old jewellery given for remaking by the customers. It is of common knowledge that such remaking takes a month or two and in between such jewellery remains with the assessee. We have also gone through the reconciliation submitted on which the AO has relied on the while making addition of Rs. 797234 vide para 11 of the assessment order while considering the stock discrepancy. The AO has accepted the gold ornaments belonging to customers at 13649 gms. Having accepted and relied on the said statement he cannot deny the said availability of gold while making another addition. He should have accepted his own finding as recorded in para 11, Page 14. The AO has also accepted the fact that some gold was lying with the job works for making or remaking. The AO cannot reject the explanation partly. Therefore, we are of the view that CIT(A) has rightly deleted the addition and we confirm the order of CIT(A) on this issue.- Decided in favour of assessee Addition on account of difference in valuation treating the same as unexplained investment - CIT(A) deleted addition - Held that:- Even the CBDT in its Press Note dated 11.5.94 has directed even that even in search and seizure relating to house hold jewellery not to treat the jewellery as unexplained if the weight of the jewellery found tallies with the weight disclosed by the assessee. It has been shown by the assessee that the assessee had sufficient stock of the stones as on the date of survey and further there was direct evidences of the purchase of the stones vide MS-4 page-34. Hence the stones found in the inventory the weight of which was 3015.980 Gms is explained. For the sake of repetition, it is again mentioned that the DVO has taken the market value and not the cost price and there was evidence of purchase of 2578 gms immediately within one month before the date of survey and there was stock of stones b/f from earlier period, the weight of stones found at the time of survey was covered of the stock in hand as explained above. In view of the above facts and circumstances of the case, we are of the view that CIT(A) has rightly deleted the addition - Decided in favour of assessee

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• 2016 (1) TMI 169
  Disallowance u/s 14A - Held that:- applicability of Rule 8D as prospective for and from AY 2008-09 and not retrospective. We further find that the assessee had already offered and identified an amount of Rs. 12,73,10,367/- and Rs. 7,51,731/- being interest on loan and de mat charges respectively for disallowance being related to exempted income. According to us, in view of the above facts and circumstances, no further disallowance can be called for in respect of exempted income. Even otherwise, the assessee company has received the dividend income from one of its group company i.e. EIH Ltd., which has the same registered office as that of the assessee and there is no specific management cost incurred for earning this dividend income. Further, the AO failed to appreciate the facts of the case that there is no satisfaction recorded by the AO with regard to correctness or otherwise of the claim of the assessee made in return having regard to the accounts of the assessee. According to us, assessee’s claim is reasonable and is to be accepted. There is no scope for further disallowance of 1% of the exempted income in view of the above reasons and facts of the case - Decided in favour of assessee Disallowance on account of claim of provisions for leave encashment - Held that:- We find that Ld. counsel for the assessee stated that the deduction on account of provision of leave encashment was made on the basis of the judgment of Hon'ble jurisdictional High Court in the case of Exide Industries Ltd. Vs. Union of India (2007 (6) TMI 175 - CALCUTTA High Court ) but he fairly conceded that subsequently Hon'ble Supreme Court has stayed this judgment of Hon'ble jurisdictional High Court [2009 (5) TMI 894 - SUPREME COURT ]. In view of the above, Ld. counsel for the assessee fairly stated that let Hon'ble Supreme Court decide the issue and by that time the matter can be remitted back to the file of AO for fresh adjudication in term of the decision of Hon'ble Supreme Court. On this, Ld. CIT DR has not objected to the same. Accordingly, we set aside this issue to the file of the AO to await the decision of Hon'ble Supreme Court and decide the issue accordingly. This issue of assessee’s appeal is remitted back to the file of AO and allowed for statistical purposes. Addition on deemed dividend under section 2(22)(e) - Held that:- We find from the findings of CIT(A) that he has admitted the additional evidence submitted before him in the shape of NBFC certificate of Oberoi Investment Pvt. Ltd. and remanded the matter back to the file of the AO. Now before us also Ld. Sr. counsel Shri R. N. Bajoria stated that the issue can be set aside to the file of AO, who will consider the certificate of NBFC of Oberoi Investment Pvt. Ltd. and also Memorandum of Association of the lender company explaining that one of the objects is to carry on money lending business. Once there is money lending business, according to ld. Counsel, the assessee is out of the mischief of the provisions of section 2(22)(e) of the Act i.e. the deemed dividend. In terms of the above, we remit the issue to the file of AO to re-decide after considering the clauses of Memorandum of Association of the lender company and also NBFC certificate of Oberoi Investment Pvt. Ltd.. Accordingly, this issue of both the appeals assessee is set aside and allowed for statistical purposes. Disallowance of depreciation in respect of premise forming part of block of assets, which was earlier used as guest house - Held that:- As this asset forms part of block of assets, the depreciation cannot be disallowed. Accordingly, we allow the claim of assessee and reverse the orders of lower authorities - Decided in favour of assessee Estimation of income from house property - Held that:- The AO while applying clause (a) of Section 1 to Section 23 in the assessee case failed to appreciate that in the present case actually let out the property being a farm house is on rent to EIH Limited and if a property is actually let out, then the expectation of its letting out becomes an actual reality and such property cannot be expected to let from year to year at any figure higher than the rent which is being produced actually by the property in question. Hence, even as per the deeming provision of Section 23(l)(a), in the case of let out property, only the actual rent received was required to be considered as annual value of property. The AO failed to appreciate such estimation of annual letable value as per provision of Section 23(1)(a) was called for only in case of vacant property and not where the property was actually let out since in the case of let out property, the assessee was not entitled to anything over and above the agreed rent. The said action of the AO has resulted in taxing notional income in the hands of the assessee, which never accrued and hence cannot be brought to tax. Accordingly, we are of the view that the CIT(A) has rightly deleted the addition - Decided in favour of assessee Disallowance u/s 40(a)(ia) - non-deduction of tax u/s. 195 for legal services to residence of Thailand and Australia - Held that:- these expenses in foreign currency represent on account of professional services rendered by non-residents from their offices in foreign countries. The parties reside in foreign countries namely, Thailand and Australia. Admitted position is that to these payments the provisions of DTAA will apply because with both the countries India have DTAAs. Under the tax treaties ‘professional services’ includes legal services and the same could only be taxed in the countries of residence of the non-residents unless the services are rendered from a fixed base in India - Decided in favour of assessee

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• 2016 (1) TMI 168
  Under valuation of stock up to the date of survey by deducting 18.55% for gross profit - CIT(A) deleted the addition - Held that:- The assessee has prepared separate trading account for pre-survey period and post survey period. The assessee has also given gross profit rate and net profit rate in post survey period qua survey period as compared to pre-survey period. Ld. Counsel for the assessee drew our attention to the gross profit rate calculation made by the survey party and valued the stock after reducing approximately 10%. In view of the above explanation given by assessee’s counsel, which was never negated by Ld. Sr. DR, we find that the reduction made by CIT(A) at 18.5% of G.P. rate from the date of survey in consonance with the facts of the case. Actually, the value of stock on the date of survey as per books of account Rs. 4,30,93,290/- and in addition to the stock of Rs. 17,62,820/- was lying with the Karigars. This stock as per books of account of the assessee at Rs. 4,30,93,290/- comprises of gold jewellery of Rs. 3,63,05,575/- and separate diamond stock of Rs. 67,87,715/-. Even otherwise, if we go by rate of gold on the date of survey taken by valuation officer at Rs. 11,965/- as against the rate of Rs. 9395/- the increase is almost 28%. In term of the above facts, we find that the CIT(A) has rightly applied the gross profit rate of 18.55% for reduction of the value of stock and we confirm the same - Decided against revenue Addition being difference between the undisclosed income recorded in the impounded documents MJ-4 and undisclosed income declared by assessee - CIT(A) deleted the addition - Held that:- The assessee has brought out estimated income out of sales at Rs. 2,31,700/-. But in a nutshell, the assessee has offered an income of Rs. 13,50,000/- being undisclosed income out of the above undisclosed transaction of sales and purchases. When a query was put to Ld. Sr. DR from the bench, he could not answer whether there is only sales or purchase element is also there, if we take the transactions of sale as well as purchase then net profit is to be estimated and also some investments. If we apply net profit rate of 19.55% as declared by assessee to the sale of undisclosed transaction at Rs. 38,57,105/- the profit will come to Rs. 7,15,493/- and further we estimate some investments of Rs. 2 to 3 lacs the total will come at Rs. 10,15,943/-. In any case, the assessee has made disclosure of Rs. 13.50 lacs on this account, which is higher than the income is to be estimated out of the undisclosed transactions of sales and purchases. Accordingly, we have no hesitation in confirming the action of CIT(A) in deleting the addition - Decided against revenue Disallowance of expenses made by AO being interest payment without deduction of TDS by invoking the provisions of section 194 - CIT(A) deleted the addition - Held that:- We find that the assessee has received declaration in form No. 15G from the payee of the interest i.e. Smt. Narayani Devi Agarwal and once the assessee received form no. 15G he is not liable to deduct TDS and hence, no disallowance can be made u/s. 40(a)(ia) of the Act. - Decided against revenue

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• 2016 (1) TMI 167
  Validity of reassessment proceedings - maintainability of appeal - Held that:- The appeal is maintainable before this tribunal against the order passed by the Learned AO u/s 143(3) read with section 147 read with section 144C pursuant to the directions of the DRP. The time limit for completion of this reassessment is within one year from the end of the financial year in which the notice u/s 148 was issued. The Learned AO did not seek to refer the case to Learned TPO u/s 92CA(1) of the Act in the reassessment proceedings. Hence he is not entitled for extended one year time limit for completion of reassessment. Hence the reassessment ought to have been completed by 31.3.2015. In the instant case, the Learned AO had completed the reassessment proceedings on 6.4.2015 which is beyond the time limit for completion of assessment prescribed in section 153 of the Act and accordingly the same is barred by limitation by 6 days. - Decided in favour of assessee.

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• 2016 (1) TMI 166
  Penalty u/s. 271(1)(c) - assessment levying tax and interest - Held that:- In the present case the assessee had disclosed the material facts before the AO. When the assessee has made a particular claim in the return of income and has also furnished all the material facts relevant thereto, the disallowance of such claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing inaccurate particulars thereof. What is to be seen is whether the said claim made by the assessee was bona fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s. 271(1) (c) of the Act. Merely because Assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself will not be sufficient for the authorities either to initiate penalty proceedings or impose penalty. We are of the view that in the absence of complete and convincing corroborative evidence, the Revenue may justify addition, but in the matter of penalty proceedings, the onus lies heavily on the Revenue to prove that the assessee had concealed its income or has filed inaccurate particulars of its income - Decided in favour of assessee.

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• 2016 (1) TMI 165
  Eligibility for concessional tax treatment u/s.111 - CIT(A) directing to consider the business income from share trading of Rs. 1,15,01,549/- as short term capital gain - Held that:- The intention of the assessee has to be seen and in the facts of the case it has been strongly pleaded that the intention of the appellant was to make investments and to make gain on sale of shares and it was not to do share trading. Even in earlier year, ie. A.Y.2005-06 the appellant has shown short term capital gain which has been accepted by the A.O. as short term capital gain in assessment made u/s.143(3) of the I.T. Act on 7/12/2007. Considering these facts hold that the appellant has earned short term capital gain and not business income and so direct the AO to treat the income as short term capital gain taxable at concessional rte of 10% - Decided against revenue Computation of income from long term capital gain - CIT(A) confirming the order of AO as to the value adopted for the purpose of payment of Stamp Duty shall be deemed to be the full value of the consideration as per the provisions of Section 50C - Held that:- In the present case, the assessee has demonstrated that before the AO the Valuation adopted by the Stamp Valuation Authority was disputed, therefore, the AO ought to have refer the issue to the Valuation Officer (DVO) in terms of provisions of Section 50C(2) of the Act . Thus restore this issue to the file of AO to decide the issue afresh after obtaining the report from the DVO in the light of the decision of the Coordinate Bench rendered in the case of Manjula Singhal vs. ITO (2011 (2) TMI 48 - ITAT, JODHPUR ). Thus, this ground of assessee’s appeal is allowed for statistical purposes

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• 2016 (1) TMI 164
  Levy of fees under section 234E - Fee for default in furnishing statements - late filing of TDS returns - Held that:- Revenue fairly did not dispute that the provisions accepting levy of late filing fees under section 234E have indeed been brought to the statute w.e.f. 1st June,, 2015 and the impugned order was passed much before that date. Thus we hereby delete the levy of late filing fees in all these three appeals under section 234E of the Act by way of impugned intimation issued. See Lions Club of North Surat Charitable Trust Versus Income Tax Officer TDS-2, Surat (New). [2015 (9) TMI 1231 - ITAT AHMEDABAD ] - Decided in favour of assessee.

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• 2016 (1) TMI 163
  Depreciation claim - put to use - whether the assessee was entitled to depreciation at half the normal rates, even though asset in respect of Deltron Unit was acquired and put to use on 1.10.2004; because the assessee had itself claimed depreciation on assets other than building at half of the normal rates? - Held that:- No merit in the claim of the appellant that depreciation is to be allowed for the entire year particularly having regard to the fact that assessee itself had chosen to claim depreciation for half of the year for all assets other than the building. The assessee has also not placed on record any evidence to substantiate when was the building occupied/put to use by the appellant company. In such regard, the conclusion as drawn by both the Assessing Officer and CIT(A) is in order and therefore, it is directed that the depreciation is to be allowed only for half of the year and not for the entire year. - Decided against assessee Disallowance of 50% of boarding and lodging expenses in respect of foreign travelling - Held that:- In the instant case, the assessee claimed foreign and travelling expenses of Rs. 20,33,758/-. The Assessing Officer has noted that during the assessment proceedings, the assessee could not furnish bills and vouchers in respect of boarding and lodging expenses aggregating to Rs. 6,32,295/- and as such, disallowed 50% of the expenditure and computed the disallowance at Rs. 3,66,148/-. It is thus apparent that Assessing Officer has not disputed the genuineness of the expenditure on an individual specific level. The travelling expenses have also been allowed in entirety other than above disallowance of boarding and lodging disallowance in an adhoc manner on the ground that supporting explanation were not furnished. We do not find merit in such a manner and the method of the disallowance. The Assessing Officer neither having identified, highlighted the specific items in respect of which, disallowance has been made by him, the adhoc disallowance so made is deleted - Decided in favour of assessee

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• Customs

• 2016 (1) TMI 148
  Claim of refund of CVD equivalent to cess paid on Import of natural rubber - Period of limitation - Held that:- The bill of entry presented by the appellant was signed, signifying approval by the assessing officer. That itself is an order of assessment in such a situation. We are, therefore, not prepared to agree that there is no order of assessment in this case, and therefore, the limitation prescribed in Section 27 is emphatic in language. It says that an application for refund of duty shall be made before the expiry of six months from the date on which the duty was paid - therefore appellant's appeal on this point is rejected. - Decided against the assessee.

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• 2016 (1) TMI 147
  Import of restricted goods - Imposition of redemption fine and penalty - Held that:- Appellant had voluntarily chosen to forgo the requirement of issuance of show cause notice and therefore the contention that the order has been issued in violation of principle of natural justice, is not sustainable. The principle of natural justice merely require that nobody shall be condemned unheard. But there is no restriction on the person voluntarily forgoing its right for a show cause notice or personal hearing. There is no dispute that the goods , being old and used, required import licence which the appellant did not possess and he was aware of this fact. It is such a common knowledge for anyone dealing in the import of such goods that old and used goods require import licence. Thus the appellant willfully chose to infringe the import export policy by importing the said goods without import licence. We find that valuation has been done on reasonable basis and having not contested the same at the levels of primary adjudicating authority as well as first appellate authority, it is not open for it to contest the same at the level of the Tribunal as has been held by CESTAT in the case of Vikas Spinners vs. C.C., Lucknow [2000 (11) TMI 196 - CEGAT, COURT NO. IV, NEW DELHI]. - Decided against assessee.

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• 2016 (1) TMI 146
  Denial of refund claim - Bar of limitation - Held that:- Quantity contained in the container was less than the quantity mentioned in the Bill of Entry and other import documents. On the basis of these documents the appellant had paid excess duty. The appellant requested for reassessment of the Bill of Entry vide their letter dt. 18.12.2000 addressed to the Deputy Commissioner, MOD Docks, Mumbai. In this letter the appellant have also requested that the excess duty paid by them may be refunded. - lower authorities have rejected the refund claim on the ground that in respect of the Bill of Entry dt. 4.12.2000 for which duty was paid on 8.12.2000, the refund application was received on 4.9.2001 i.e. after six months from the date of payment of duty. - excess amount of duty is paid by the appellant is ordered to be refunded. - Decided in favour of assessee.

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• 2016 (1) TMI 145
  Condonation of delay - Evasion of custom duty - penalty was sought to be imposed, upon the Customs Officers, they were indisputably the necessary parties and not merely proper parties. - Held that:- It is seen that the applications for impleadment of officers were made in October 2012 i.e. after almost 15 months from the date of that CESTAT order (dated 22.07.2011) while the time granted was only 6 weeks (up to 29.8.2011). Having thus totally failed to comply with the said order of CESTAT, the Revenue's ability to take shelter there-under is completely jeopardised. Revenue 's applications for impleadment of the Custom officers as necessary parties tantamount to filing of fresh appeals against them. Thus the net, indeed the only, effect of such applications for impleadment of customs officers is that these appeals against the Customs officers essentially have to be reckoned as if these were filed on the date of filing of the applications seeking their impleadment. In the applications filed in 2012, no reasons (beyond saying "administrative reasons") even remotely satisfactory have been given to explain the delay of so many years with reference to the date of the impugned order-in-original, or even the delay of more than one year with reference to CESTAT order dated 22.7.2011 against only 6 weeks allowed by CESTAT. Thus we find not even an iota of reasonable ground on the basis of which such inordinate delay can be condoned even by adopting the most liberal approach in this regard. - in the absence of the necessary parties namely the Customs officers, those (i.e. the appeals] also cannot be sustained - Decided against Revenue.

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• Service Tax

• 2016 (1) TMI 162
  Franchisee Service - Amount received from affiliates being RCs and LCs - Scope of the MOU - appellant designed its distance education programme and created a 3-tier architecture for running the same (i.e. distance education programme) through LCs (3rd tier) which were to be supervised by Regional Centres (RCs) (2nd tier) - Held that:- From the foregoing there remains no doubt that LCs were authorised to take students by claiming and making it clear that the education they were providing was on behalf of the appellant. They were allowed even to advertise to that effect. It was because LCs were representing the appellant with regard to providing education, that the MOU cast strict obligations on LCs to ensure that the quality of education remained as per the standards of the appellant. It also comes out from the MOU that RCs framed marketing strategies to be implemented by LCs in consultation with the appellant. As per the MOU, the format and style of any advertisement or hoarding to be placed by RCs/LCs had to be done with the prior written approval of the appellant lest these bring down or cast aspersions on or discredit the appellant. Owing to the fact that LCs represented the appellant with regard to providing education, MOU laid down strict requirements of infrastructure, processes, qualifications of staff, etc. as elaborated in the MOU. Though the MOU states that it is not a franchise arrangement and is a model of public-private partnership for deciding classification of the service rendered thereunder, we have to see the nature, terms and conditions thereof; it is immaterial as to what nomenclature is assigned to it. Indeed, the MOU in question is so clear an example of “franchise” as defined in Section 65 (47) ibid that any further elaboration on this point will be an exercise in over-kill. Valuation of services - Held that:- the entire fee collected by LCs in the name of the appellant cannot be treated as assessable value of franchise service. - the total fee collected by the appellant through LCs, a part was given back to LCs. Obviously, the part of the collection which was given back by the appellant to LCs cannot form part of the assessable value for the purpose of taxability. As per Section 67 ibid, the value of taxable service is the gross amount charged by the service provider for such service and gross amount will be only the amount, which remained with the appellant after payments to LCs. However, the contention of the ld. advocate that only authorisation fee and additional authorisation fee should be taken as a consideration for the service rendered is untenable, because the valuation for the impugned service is to be done in accordance with the provisions of Section 67 ibid, which, to repeal, in effect, states that the value of the taxable service will be the gross amount charged for the service and the gross amount charged by the appellant for the service rendered has to be equal to the amount collected by the appellant from LCs minus the amount paid by it to LCs. Thus, the amount paid to RCs by the appellant was an expense at the hands of the appellant in connection of provision of franchise service. For the sake of elucidation, for example, the appellant could as well have employed its own persons for doing what RCs did in which case the expenses incurred in doing so would not be deductible from the assessable value. Thus, the amount paid by the appellant to RCs is not excludible from the assessable value. Extended period of limitation - Held that:- While there are bland statements made in the Show Cause Notice alleging wilful mis-statement/suppression of facts, there is no evidence adduced in support thereof. Non-payment of service tax/non-obtaining of registration by themselves can hardly ever sustain charge of wilful mis-statement or suppression of facts in-as-much-as in case of a bona fide belief regarding non-taxability, no assessee would file returns or obtain registration. - the allegation of suppression of facts cannot be sustained in the given circumstances. Consequently, penalty under Section 78 ibid is not imposable. The impugned demand has to be re-computed only for the normal period and taking the assessable value as equal to the aggregate amount collected by the appellant through LCs minus the amount paid to LCs. Needless to say that the amount of penalty under Section 76 ibid has also to be re-computed. - Decided partly in favor of assessee.

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• 2016 (1) TMI 161
  Cenvat Credit - eligible input services - clearance of DG sets on payment of Duty of excise - Service Tax paid by the Sub-contractor on Erection, installation and commissioning of the DG sets at the sites of their clients - Held that:- it is undisputed that the appellant is a provider of taxable service and have provided the same. They are utilising the input service provided by sub-contractors, while providing their output service. Therefore, it is abundantly clear that they are eligible to take cenvat credit of the service tax paid on the input service provided by the sub-contractors. Therefore, we find that the appellant has rightly taken the cenvat credit on the input service provided by the sub-contractors and they have paid the applicable service tax on the output service provided by them. Cenvat Credit allowed - Decided in favor of assessee.

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• 2016 (1) TMI 160
  Claim of refund of service tax paid wrongly by the sub-contractor - For construction of such school building appellants have engaged a sub-contractor for excavation for the foundation of the school building - It was the plea of the appellant before the lower authorities that the activities undertaken by the sub-contractor is in respect of construction of the school building and should be seen as such, the refund claim is to be allowed on the ground of construction of educational institutions which are excluded from the definition of Commercial or Industrial Construction Service. Held that:- The sub-contractor having not contested the classification, the appellant cannot come before the authority and say that the refund has to be granted as these services are in respect of construction of school building and in effect wants to make the classification under ‘Commercial and Industrial Construction Service'. We find that the argument of the appellant is based on the decision of the Tribunal in the case of ITD Cementation India Ltd. vs. Commissioner of Service Tax - [2014 (8) TMI 97 - CESTAT MUMBAI] and Radius Corporation Ltd. vs. Commissioner of Central Excise, Raipur [2013 (9) TMI 517 - CESTAT NEW DELHI] are misplaced inasmuch as in both the cases the appellants therein was given EPC contract for undertaking the entire work and the demands were made by bifurcating the same. Refund was rightly denied - Decided against the assessee.

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• 2016 (1) TMI 159
  Condonation delay - appeal could not be filed due to non receipt of order - order was passed on 20/09/2011 - appellant contended that, when the Revenue approached them for recovery proceedings, they came to know about the fact of passing of the said order. They immediately approached the Revenue, procured a copy of the impugned order on 07/04/2014 and filed appeal on 30/06/2014. - Held that:- In view of the above clarification and in view of the absence of any evidence showing actual dispatch of the impugned order to the appellant, we hold that the date of receipt of the impugned order was 07/04/2014, when a copy of the said order was given to the appellant. The appeal stand filed within a period of 3 months from the date of receipt of the said order and as such, it is within the limitation period. COD application is accordingly allowed. Waiver of pre-deposit - Business Support Services - manpower recruitment or supply agency - Inasmuch as information technology service to non-profit organisations was not taxable prior to 01/07/2010 and in this case the period involved is prior to the said date, no tax liability would arise. As the major part of the demand under the said category is on account of this particular category, he prays for dispensation with the condition of predeposit. - Held that:- we, though, find favour with the appellant's contention in respect of the main contract but appreciating that there are other smaller contracts involved in which case the service consideration is a particular fixed amount per person, we are of the view that the appellant has not made out a prima facie case in respect of the other contracts. As such considering overall facts and circumstances of the case, we direct the appellant/applicant to deposit Rs. 10 lakhs (Rupees ten lakhs only) out of the said Rs. 69.70 lakhs. Delay condoned - stay granted partly.

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• 2016 (1) TMI 158
  Levy of penalty - waiver u/s 80 - Job Work - process of anodizing the aluminium frames sent to them by solar water heater manufacturers - appellant admitted that they were liable to service tax and interest thereon and the service tax with interest was paid during the months of June 2007 to March 2008 - Held that:- appellant really did not know about the law and they had not even collected the tax and even then they discharged the liability with any question. Therefore, in my opinion, invocation of Section 80 by the original authority was in order. Unfortunately, the original authority did not discuss in detail about the aspects which convinced him to waive the penalty under Section 80 of Finance Act, 1994. In my opinion, having regard to the fact that appellant is a proprietory firm, undertaking a single activity of anodization and in view of the fact that for the Solar water heater, they were not following any procedure and raising invoice, I consider this is a fit case for waiver of penalty - Penalty waived - Decided in favor of assessee.

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• 2016 (1) TMI 151
  Penalty u/s 76, 77 as soon as he came to know about his liability, he made the payment. The facts on record go in favour of the respondents and this is a situation where provisions of Section 80 of Finance Act 1994 would be applicable. There is no proper justification and substance in the appeal of the appellant - Decided against Revenue.

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• Central Excise

• 2016 (1) TMI 157
  Cenvat Credit - return of rejected articles of rubber back from their customer - removal of such goods as scrap later - scope of Rule 16 of CE Rules, 2002 - Held that:- assessee had tried to reprocess the finished goods received and in few cases no duty was paid. The finished goods received back resulted in scrap. The assessee has discharged the duty liability on scrap on the value of the invoices raised by them. In our considered view, this is a correct position of the law and if any inputs are issued to the job-worker for manufacturing and manufacturing activity undertaken on such inputs, the resultant product cleared as scrap and no input as such - Demand set aside - Decided in favor of assessee. As regards the demand of duty on the value of moulds used by the respondent in manufacturing the final products to their customers - Held that:- when the Central Excise duty is paid on moulds at one time or recovered by amortising the cost of goods produces, it is the same i.e. duty on value of mould is to be recovered, which in this case has already discharged by the assessee - No demand can be made - Decided in favor of assessee.

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• 2016 (1) TMI 156
  100% EOU - Claim of exemption - Tribunal in [2005 (3) TMI 188 - CESTAT, CHENNAI] has held that, the same goods cannot be treated as export by export promotion authority and non-export by another governmental authority. In a three legged race for export promotion by the Customs and Export Promotion authority, the two authorities cannot run in opposite directions. Lack of clarity, if any, should be resolved in a manner facilitating the advancement of the policy and not in a manner that defeats public policy. - Apex Court dismissed the appeal of the Revenue.

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• 2016 (1) TMI 155
  Condonation of delay in filing of appeal before the High Court - slackness on the part of the Advocate and department - It was asserted that the delay has been caused on account of slackness on the part of the earlier Counsel. A copy of the supplementary affidavit, that is alleged to have been prepared on 12.10.2015, has also been annexed with the supplementary affidavit, which indicates that the affidavit was to be signed by the Clerk of the Advocate. - This supplementary affidavit however, does not explain the delay as to why the appeal could not be filed from 12.6.2015 to 20.9.2015. However, since the allegations were serious, we directed the Registry to serve a copy of this affidavit to the earlier counsel of the department and requested him to file a reply. Held that:- we are constrained to observe that this kind of mud slinging between the representatives of the Department viz-a-viz their counsel posted at Allahabad is unwarranted. Dirty linen should not be washed in public. We are also constrained to observe that the action of the Department in replacing the counsel in the facts and circumstances of the given case is unwarranted. No doubt, it is the prerogative of the Department to engage their counsel. It is also their prerogative to change their counsel but not in the manner in which it was done in the instant case. We are also constrained to observe that when an official of the Department was present in the office of the counsel for preparation of the affidavit on 12.10.2015, the said official or Officer was required to also sign the affidavit and not to delegate the filing of the affidavit to the Clerk of the learned counsel. It is not the duty of the Clerk to file an affidavit on behalf of the Department. The Court can read between the lines and see the fine print that comes out. From the affidavit, it is also clear that no valid explanation has been given explaining the delay. Prima facie, it appears that a certified copy of the impugned order was not given to the learned counsel on 07.07.2015 and what was sent was an attested copy of the order, which was not permissible. On the other hand, we also are constrained to observe the slackness on the part of the Advocate in not pursuing the matter diligently. The learned counsel failed to intimate the Department about the defect in writing though he may have intimated them orally. However delay condoned.

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• 2016 (1) TMI 154
  Valuation - whether the substantive benefit of exclusion of transportation charges to arrive at the assessable value - Held that:- The appellant has shown the contract/purchase order with the railways which indicate freight charges as Rs. 3/- per liter. The corresponding excise invoice does not indicate the freight charges but for each consignment there is a corresponding GR which indicates the freight amount. Further, a separate commercial invoice is raised for freight corresponding to the purchase order. This commercial invoice indicates the value and freight amount separately. We find all these documents tallying in respect of a particular consignment. Only because the freight amount was not indicated separately in the excise invoice, although it is clearly reflected in the commercial invoice and GR, is not sufficient ground to deny the substantive benefit. The law does not require charging of duty on freight for technical lapse of not indicating the freight charges separately on the excise invoice. Reliance is placed on the judgments in the case of West Coast Paper Mills Ltd. v. CCE [2004 (7) TMI 150 - CESTAT, BANGALORE] and Goodyear India Ltd. v. CCE [2014 (6) TMI 682 - CESTAT NEW DELHI] - Impugned order is set aside - Decided in favour of assessee.

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• 2016 (1) TMI 153
  Maintainability if appeal - Monetary limit - Held that:- amount involved is less than Rs. 5,00,000/- and as per the litigation policy of the Government vide Board's letter F.No. 390/Misc./163/2010-JC dated 17/08/2011 read with Hon'ble Gujarat High Court's judgments in the case of Shreenath Fabrics (2012 (8) TMI 865 - GUJARAT HIGH COURT) and in the case of CCE & C v. Pharmanza Herbal (P.) Ltd. [2014 (9) TMI 330 - GUJARAT HIGH COURT] and the judgment of the hon'ble Karnataka High Court in the case of CCE v. Presscom Products [2011 (3) TMI 726 - KARNATAKA HIGH COURT], the appeal of the Revenue is dismissed - Decided against Revenue.

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• 2016 (1) TMI 152
  Disallowance of the benefit of value based SSI exemption under Notification No. 08/2003-CE - whether appellant has crossed the exemption limit of Rs. 4.00 crores under Notification No. 8/2003-CE or not - Held that:- If cost of bought out items, freight incurred in despatch of excisable goods & element of excise duty is taken out of the contracted value then the value of clearances made by the appellant in each of the relevant financial years will be within the Small Scale exemption. As the issue involved in these proceedings lie in a narrow compass, therefore, after allowing the stay applications, appeals themselves are taken up for disposal. It is observed from the case records that main appellant M/s. Mahindra Tubes (P) Ltd. asked for certain deductions from the value of clearances computed by the Revenue. - No such calculations or Chartered Accountant's certificate was even produced by the appellant before us. In the absence of any such quantification it was difficult for the adjudicating authority to make out any head or tail of the submissions made by the appellant. These verifications have to be made by the Adjudicating authority on production of such quantification C.A.'s certificates claimed by the appellant. The matter is, therefore, remanded to the Adjudicating authority for de novo consideration after affording an opportunity of personal hearing to the appellants. Appellants should produce the relevant data /C.A. certificate before the Adjudicating authority during remand proceedings - Decided in favour of assessee.

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• 2016 (1) TMI 150
  SSI Exemption - Clubbing of clearances - whether or not the turnover of 4 SSI appellants are to be clubbed together with the main appellant for the purpose of arriving at the turnover to extend the benefit of notification 1/93-CE dated 28.02.1993 - Held that:- For the subsequent period Revenue authorities have treated the manufacturing units as separate from petitioners and thus accepted that there is a relationship of buyer and seller between the petitioner and the four manufacturing units without any mutuality. It was also observed that the Adjudicating Authority dropped the proceedings vide order dated 18.03.2005 following the Tribunal's order dated 04.08.2004 - confirming the demand of recovery from the SSI units along with the principal (M/s. Kores (India) Ltd.) indicates ambiguity in the demand to the effect that if there is only one manufacturer in terms of notification no. 1/93-CE the duty liability will arise only against such manufacturer not against two units. If the department recognizes more than one manufacturer clubbing up their turnover is not provided for in the notification. Holding that the SSI units have separate legal existence but turnover has to be clubbed for the purpose of notification no. 1/93-CE is not a tenable legal proposition. There is no clarity on this aspect for the impugned order. There is no supporting evidence for common finance and common management and there is no finding by the original authority that the main appellant has floated, financed and incorporated the SSI units. There is no evidence that the main appellant investing money in SSI units. The main appellant and the other SSI units are limited / Pvt. Ltd. companies respectively and are independent entities irrespective of their Directors / shareholders. We find that there is no evidence that Directors of SSI units are related with M/s. Kores (India) Ltd. as per the provision of Central Excise Act or Companies Act. Merely because common electricity connection was used by both the units by itself will not make it a dummy of one another. Similarly, a common accountant or a common store room for raw materials cannot be held to be a reason for clubbing the clearances of both the units - independent existence and legal identity of the SSI units have not been disputed. In that position we find the financial and management control as discussed in the impugned order has also not been categorically established. The original order also did not assert under which provision such clubbing is called for either in terms of the notification 1/93-CE or the provision of Central Excise Act or Rules made there under. As such we find that the findings of the original authority cannot be sustained and accordingly we set aside the order - Decided in favour of assessee.

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• 2016 (1) TMI 149
  Denial of SSI Exemption - benefit of Notification No.9/2001 - Held that:- Notification No. 8/2001 dated 1.3.2001, w.e.f. 1.4.2001 the goods falling under Chapter 93 were excluded from the scope of SSI benefit. It is also not disputed that the goods produced by the appellant are classifiable under Chapter 93. Their goods are, therefore, not eligible for the benefit of Notification No. 8/2001 from 1.4.2000 onwards. The SSI Notification No.8/2001 was amended vide Notification No.47/2001-CE dated 1st October 2001. By the said amendment, parts falling under Heading 93.06 or 93.07 were again made eligible for the benefit of the SSI exemption. However, the said exemption notification was not made with retrospective effect but was to come in force from 1st October 2001 only - appellant was not eligible for the benefit of Notification No.8/2001-CE dated 1.3.2001. The appellant has contended about the speech of the Finance Minister. We find that in the notification issued by the Government, there is no such mention that only parts which are meant for private use will get excluded. Even after the amendment on 1st October, there is no concept of use by the private person or by the Defence - Decided against assessee.

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• CST, VAT & Sales Tax

• 2016 (1) TMI 144
  Detention of Goods at check post - supply of Pan Masala (without Tobacco and Nocotine) - According to the petitioner, the transaction has been effected after being CST charging tax @ 2% against C Form. - According to the learned counsel for the petitioner, though the goods were accompanied with proper documents, the 2nd respondent has passed the impugned order mechanically with no acceptable reason. - Held that:- Admittedly, the goods are detained from 05.12.2015. Till date, tax has not been quantified. Hence, for the purpose of release of goods, the 2nd respondent is directed to quantify the tax to be paid by the petitioner in consultation with the assessing authority and intimate the same to the petitioner within a period of one week from today and on such payment being made by the petitioner, if the goods detained are not prohibitory in nature, the same are directed to be released forthwith. As far as the compounding fee is concerned, it is open to the petitioner to adjudicate the same in the manner known to law. - petition is disposed of.

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• 2016 (1) TMI 143
  Condonation of delay - Tribunal refused to condoned the delay of 448 days which occurred in filing of the Reference applications. - Held that:- The Tribunal, in the impugned order found that the delay is of 448 days. A liberal approach will not enable it to condone such a erroneous delay. There is no explanation forthcoming. A vague statement or a general remark of administrative difficulties was not enough. The version orally canvassed was not supported by any affidavit. The reasons that are assigned from paragraphs 9 to 12 in the impugned order do not suffer from any error apparent on the face of the record or perversity warranting our interference in the writ jurisdiction. The Supreme Court in the case of Office of the Chief Post Master General v/s Living Media India Ltd [2012 (4) TMI 341 - SUPREME COURT OF INDIA] has held that the Government bodies are required to be informed that unless they have reasonable and acceptable reasons for delay and there was bonafide effort, there is no need to accept the usual explanation that the file was kept pending for several months/years due to considerable degree of procedural redtape in the process. Delay cannot be condoned. - The Writ Petitions are devoid of merits and are dismissed. - Decided against the revenue.

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• 2016 (1) TMI 142
  Whether the first appellate authority was justified and within its jurisdiction to remand the matter for passing fresh assessment order after considering the issues which were not assailed by the assessee - Held that:- Court that under the HGST Act, the appellate authority i.e. the DETC(A) had not been vested with the powers to act on his own motion. Only when an appeal was filed under Section 39 of the Act, did the appellate authority adjudicate upon the specific issues raised in the grounds of appeal or upon those which were urged before it at the time of hearing. The respondent was also given an opportunity to be heard and to reply to the points raised by the appellant. However, the appellate authority while deciding an appeal filed by a party could not take up issues on merit which had not been raised by the appellant. The respondent in the appeal could not invite the appellate authority to take up on merits points or issues not raised,pleaded or urged by the appellant. Accordingly, the DETC(A) was not held to be competent to go into the matters not raised in the appeal and set aside the order of the assessing authority. Appellate authority was not justified in remanding the matter for fresh assessment for considering those issues which were not subject matter of appeal before it. Consequently, the impugned order dated 30.3.2015 passed by the Tribunal as well as order dated 17.7.2014 passed by the DETC(A) for remanding the matter for fresh assessment are set aside and the matter is remanded to the first appellate authority to pass fresh order in accordance with law after hearing learned counsel for the parties - Matter remanded back - Decided in favour of assessee.

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• 2016 (1) TMI 141
  Works contract service - TDS - Rajasthan Value Added Tax Act, 2006 - Held that:- Court after perusing the present petition and without expressing any opinion on the merits of the case, we dispose of the present petition with liberty to the petitioner to file a detailed and comprehensive reply raising all the pleas as raised in the present writ petition within a period of two weeks from the date of receipt of certified copy of this order before respondent No.3 who shall decide the same in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner within a period of four weeks from the date of receipt of the reply. The petitioner shall be entitled to lead any evidence to substantiate its claim before the concerned authority. It is further directed that in case it is found that the petitioner is entitled to the amount of refund, the same be paid to the petitioner - Petition disposed of.

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• 2016 (1) TMI 140
  Whether the revenue authorities could treat the transaction in question to be that of inter-State sale when a branch office of Lucky Laboratories is said to have obtained the goods from Ghaziabad and has claimed to have sold the goods to the appellant within the State of Bihar - Held that:- Question of mandatory provision of Section 11 of the Act raised on behalf of the appellant has been considered in detail with reference to the earlier decisions of the Tribunal as also the decision of the Supreme Court. The Tribunal also noted the consideration of the same in the original order dated 1.3.1995 passed in revision as also in the review judgment dated 7.9.1999 stating that the case laws reported in [1996 (7) TMI 3 - SUPREME COURT] were discussed in detail and the applicability of the ratios decided in these cases and came to the conclusion that the case laws cited do not help the petitioner and accordingly it was of the firm view that the Tribunal did not overlook the mandatory provision of Section 11 of the Act and has rightly opined that if M/s. Lucky Laboratories Ltd. had paid any tax treating its transaction as inter-State transaction it can seek redressal in proper forum according to law. - A review by its very nature has a limited scope and it is not that the reviewing authority sits in appeal over the order passed earlier. - fresh substantial question of law sought to be raised by the appellant has any substance in it. - Decided against assessee.

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• Indian Laws

• 2016 (1) TMI 139
  Rebuttal of presumption - Complaint u/s 138 of the Negotiable Instruments Act - Cheque Bounce due to payment stopped by drawer - discharge of liability - Held that:- during the cross-examination, the complainant has not given reply on so many material questions to know whether complainant was knowing the accused or not. Again, complainant is the resident of Sri Muktsar Sahib whereas the accused is resident of Sri Ganganagar. The defence version given by the accused is probable and rebuts the presumption under Section 139 of the Negotiable Instruments Act. - The judgment dated 25.05.2015 passed by learned JMIC, Sri Muktsar Sahib, is correct, as per law and evidence - accused-respondent was acquitted. - Decided against the complainant / appellant.

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