TMI Tax Updates - e-Newsletter
October 10, 2022

Case Laws in this Newsletter:

Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. SC: Liability to pay customs duty invocable when DEPB license is fake/forged

   By: Bimal jain

2. BANKS- MUST ACT REASONABLY

   By: DEVKUMAR KOTHARI

News

1. Indian Footwear sector can grow 10 fold in near future: Shri Piyush Goyal

2. India to accord top priority to national interest in FTA negotiations; Government will not diverge from this approach for the sake of deadlines: Shri Piyush Goyal

Notifications

GST - States

1. 11/2022-STATE TAX - dated 4-10-2022 - Delhi SGST

Amendment in Notification No. 21/2019-State Tax, dated the 17th October 2019

2. 06/2019-STATE TAX - dated 4-10-2022 - Delhi SGST

Amendment in Notification No. 65/2017-State Tax, dated the 22nd December 2017

3. 05/2022-STATE TAX (RATE) - dated 4-10-2022 - Delhi SGST

Amendment in Notification No. 13/2017-State Tax (Rate), the 30th June, 2017

Income Tax

4. 112/2022 - dated 7-10-2022 - IT

Income-tax (Thirty Third Amendment) Rules, 2022

Circulars / Instructions / Orders

Customs

1. Instruction No. 27/2022 - dated 7-10-2022

Amendment in Import Policy Condition under ITC(HS) 08028010 of Chapter 08 of ITC(HS) 2022, Schedule - I (Import Policy)

Highlights / Catch Notes

Income Tax

• Trust Challenges Denial of Exemption u/s 11; Claims Compliance with Separate Books of Accounts Requirement.

  Case-Laws - AT : Denial of Exemption u/s. 11 - non maintaining of separate ledger accounts - assessee is maintaining separate ledger for earning this income and also maintaining separate bill book for this purpose. This amounts to maintenance of separate Books of Accounts and the income is applied for the object of the Trust. Therefore, this will satisfy the maintenance of the separate Books of Accounts. - AT
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• Case Challenges Transfer Pricing Adjustments for AMP Expenses; Revenue Failed to Prove Arm's Length Price Mechanism or Agreement.

  Case-Laws - AT : TP Adjustment - excessive AMP expenses - third party also benefits - Revenue also could not demonstrate the presence of any machinery provision to compute Arm’s Length Price nor could demonstrate existence of any agreement between the assessee and its AE that the expenses on AMP was incurred for enhancing the brand value of the AE. That, even the bright line method cannot be used either to determine the existence of international transaction or ALP of international transaction. - AT
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• Tax Deduction at Source: Rent Falls u/s 194I, Common Area Maintenance u/s 194C.

  Case-Laws - AT : TDS u/s 194I OR 194C - deductibility of the tax on the entire payment as rent or to be segregated into rent and CAM charges (Common Area Maintenance) - While there are no expenses incurred against the rent except for general building maintenance and municipal charges, the CAM involves employment of separate staff and separate operations involved on day to day basis. Hence, we hold that the provisions for rent are governed by Section 194I and CAM charges by Section 194C - AT
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• TDS Credit Denied by AO Due to Unreported Income; Case Sent Back for Detailed Examination.

  Case-Laws - AT : Not allowing credit for the TDS - AO refused to allow credit for the TDS on the ground that the corresponding income was not offered for taxation - - Proper adjudication on this issue cannot be done unless complete factual scenario is looked into. - Matter restored back - AT
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• Income Tax Act Section 69: Cash deposits peak credit treated separately from investments; re-deposited cash not for asset purchase.

  Case-Laws - AT : Addition u/s.69 towards cash deposits in the bank account - determining the peak credit - where the peak is added, the investment made by the assessee has to be added separately and it cannot be claimed that the cash re-deposited in the bank after withdrawal was used for purchase of any other asset. Thus we uphold the addition - AT
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• Court Rejects Income Addition Due to Lack of Witnesses for Alleged Cash Payments; Mere Statements Insufficient Evidence.

  Case-Laws - AT : Addition on account of alleged cash consideration - there was no witnesses to the said cash payments and a mere statement by the said person that some of the amounts received from the accounts of others is not sufficient to make the addition in the hands of the assessee. - AT
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Customs

• Court Rules No Extra Permits Needed for Importing Composite Firearm Parts Due to Lack of Policy Restrictions.

  Case-Laws - HC : Seeking release of withheld consignments - imported Frames and Slides - They do not appear to prohibit the import of a composite part of a firearm in the sense of the imported article bearing more than one component embedded and fitted as a combined product. The respondents have also failed to establish that under the prevalent import policy, the “operational parts” which were found fitted to the Frames and Slides required permissions being obtained separately and independently. - HC
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• High Court Orders Issuance of Export Discharge Certificate and Refund After System Error and Unexplained PRC Denial.

  Case-Laws - HC : Refund claim - Advance Authorization Scheme - The indisputable position is petitioner has fulfilled its export obligations and, therefore, respondent no.3 should have issued the discharge certificate. It is rather strange that a genuine case has been rejected by respondent no.3 only because the computer system in his office would not permit reversal of redemption - the PRC also has rejected petitioner’s application without giving any reason - direction issued for issue of export obligation discharge certificate and refund - HC
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• High Court Orders Reconsideration of GSTIN Amendment in 13 Bills of Entry u/s 149 for Correction.

  Case-Laws - HC : Rejection of petitioner’s application for amendment of the 13 bills of entry - It is petitioner’s case that in the bills of entry as filed petitioner had erroneously given a particular Goods and Services Tax Identification Number (GSTIN), whereas it should be some other GSTIN - Section 149 - Matter restored back - HC
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• Alloy Steel Forging Rings Misclassified Under CTH 73261990; Correctly Classified Under Tariff Item 7326, Ruling Confirms.

  Case-Laws - AT : Recovery of duty drawback - export of Alloy Steel Forging Rings - Rejection of classification of goods under CTH 73261990 - The disputed goods require further operation and such goods when not fit for being ready to use, would appropriately classifiable under Tariff item 7326. - impugned goods classifiable under chapter heading 7326 - AT
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Indian Laws

• Accused Not Required to Testify in Cheque Dishonor Cases, But Must Present Strong Evidence to Rebut Presumption u/s 139.

  Case-Laws - HC : Dishonor of Cheque - It is clear that the accused need not enter the witness box to rebut the presumption. However, such presumption of law cannot be considered as rebutted only by giving denials and suggestions. There has to be some cogent material brought on record during the evidence of the complainant and his witnesses, on the preponderance of probabilities so as to rebut such presumption - In the present matter and from the cross-examination of the complainant, it is clear that the accused failed to rebut the presumption under Section 139 of N.I. Act. - HC
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Central Excise

• Area-Based Exemption: Eligible Units Can Modify Equipment, Produce New Products Post Cut-Off Date in 10-Year Period.

  Case-Laws - AT : Area Based Exemption - The provisions of the notification do not place a bar or restriction on any addition/modification in the plant or machinery or on the production of new products by an eligible unit after the cut-off date and during the exemption period of ten years as per the notification - The appellant could have exercised option for availing the benefit of the notification even after the sunset clause. Sunset clause is only relevant for the purpose of eligibility and there is no bar for filing the declaration after the sunset clause. - AT
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Case Laws:

• Income Tax

• 2022 (10) TMI 283
  Assessment u/s 153A - Disallowance of Agricultural income - HELD THAT:- The assessee preferred to explain a few details/recoveries made by the Department in the search and seizure by filing a cash flow statement. The cash flow statement is an abstract of books of account or primary evidence on the source of income, genuineness of income, and reliability of income to the source claimed by the assessee. In the absence of satisfactory discharge of onus, having perused all the three orders, we are of the view that the findings are properly and correctly rendered by the Authorities as well as the Tribunal. There is no question of law, much less a substantial question of law falling within the jurisdiction of this Court under Section 260A of the Act. The question is answered in favour of Revenue and against the assessee. Investment in M/s.Tristar investments, Bangalore - Whether the Authorities and the Tribunal are justified for including Tristar investments in the computation of the assessee or not? - The assessee can successfully challenge the adding of investment in Tristar Investments by pointing out how the findings recorded from the admitted and undisputed documents are unavailable. The converse of the situation is the findings are rendered from the documents seized from the associates of the assessee, where the assessee s investments in undisclosed in regularly maintained accounts are dealt with. In our considered view, these are the simple findings of the fact recorded by the authorities from the circumstances noted and documents considered by them. We see no reason to disturb the findings recorded on this behalf. Therefore, the question is answered in favour of the Revenue and against the assessee. Amounts credited in the bank accounts of the assessee s employees - Whether the Assessing Authority was right in law in holding that the credits in the bank accounts of the employees represent a share of profit of the appellant in the above partnership concern when the firm itself had not made profits, as per assessment orders passed in its case? - The recipient of the amount explained his nature and circumstance in which substantial amounts are transferred to the credit of those employees. The genuineness or otherwise of the accounts of those firms cannot constitute an issue for examination in the assessments of the assessee. The enquiry, in the case on hand, is on the suppressed or undisclosed income of the assessee. The burden is on the assessee to discharge that the employees are also speaking. We are convinced embarking upon the enquiry into any of the situations would result in going beyond the jurisdiction of this Court under Section 260A of the Act. We have carefully examined the findings, and what is available for including the credits in favour of the assessee s employees has been added to the assessee s income. Except for raising a monotonous objection, nothing substantially pointed out to treat the same as a substantial question for consideration by this Court. The question is answered in favour of the Revenue and against the assessee. Loan to Mohanraj - Whether the Appellate Tribunal did commit an error of the law when the Tribunal set aside the order of the CIT(A) and remanded the matter to the Assessing Authority, Particularly when the addition is based on the retracted statement of Mohanraj? - We have seen the reasons given by the Tribunal for remanding the matter as noted in the order of the Tribunal. Firstly, no ground is made out to interfere with the order of remand, and after perusing the reasons, we appreciate that the reasons, made with the CIT(A) for taking a different view, are found to be untenable. We are in agreement with the view taken by the Tribunal, and the order of remand does not warrant our interference. The question is answered in favour of the Revenue and against the assessee. These questions are answered in favour of the Revenue and against the assessee. Difference in valuation of the factory building and purchase value estimation - After perusing the reasons considered by the Tribunal, we are in complete agreement with the view taken by the Tribunal for remand is warranted in the circumstances of the case. No ground, much less a substantial question of law is made out disturbing the findings recorded by the Tribunal for ordering of remand to the Assessing Authority. The questions raised are answered in favour of the Revenue and against the assessee.

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• 2022 (10) TMI 282
  Undisclosed contract receipts - contract receipts as per TDS certificate was not disclosed in its return of income - tax wrongly deducted on amount of service tax and VAT - incorrect assuming of contract amount from form no. 26AS as undisclosed contract income - CIT-A deleted the addition - HELD THAT:- As noted that during the appellate proceedings, the assessee submitted the reconciliation of TDS figures, which were considered by ld CIT(A) in the context of Form No.26AS. In some cases there was arithmetical mistake on the part of AO in making addition which was noted by ld CIT(A) and accordingly addition made by the assessing officer were deleted by ld CIT(A). We do not find any error in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.

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• 2022 (10) TMI 281
  Disallowing being 30% of Income of Incentive Bonus Commission - AO observed from the Salary Certificate (Form 16) issued by the employer, that entire sum has been treated as the Salary of the assessee, including the sum being claimed by the assessee as incentive Bonus - HELD THAT:- Issue squarely covered in favour of assessee by the judgment of Hon ble Allahabad High Court in the case of Sr. Branch Manager, of LIC vs CIT [ 2012 (5) TMI 117 - ALLAHABAD HIGH COURT] held conveyance allowance and additional conveyance allowance received by the Development Officers of the Corporation was permissible deduction under Section 10(14) as they were paid to Development Officer against the expenses actually incurred on duty as per the rules and circulars of the Life Insurance Corporation - both the AO and Appellate Authority as well as the Tribunal have proceeded on the premise that the officers of the Corporation cannot suo motu allow any deduction towards conveyance allowance or additional conveyance allowance and was in the domain of the Assessing Officer, the very premise on which the authorities have proceeded is unfounded as it is the employer who makes the payment to its employee as per the rules or the procedure regulated by it - Decided in favour of the assessee. Disallowance of expenses incurred for Running Maintaining Premium Collection Centre - HELD THAT:- LIC Business is unique business and where the assessee incurs expenses on maintenance of collection centre and these expenses are not income of the assessee. As per the nature of business, the assessee has to incur expenses on collection centers - As relying on Nitibhai Bhuptani [ 2018 (4) TMI 1610 - ITAT RAJKOT] issue decided in favour of assessee.

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• 2022 (10) TMI 280
  Deduction u/s 80P(2)(a)(i) for interest earned from the Nationalized (SBI) Bank - HELD THAT:- We note that before us, Ld. Counsel submitted bye-laws of the assessee-society which is placed at Pg-20 of the paper book, wherein the English translation from Guajarati language of sub-clause of above Credit Society is placed at Pg-20 of the paper book, wherein it is mentioned that assessee is a credit society and as per clause-6, the assessee can make investment of its surplus. Thus, it is evidently clear that assessee-society is engaged in facilities to its members and the assessee-society deposits excess amount for short term in a Nationalized Bank as per section 71 of the Gujarat Co-operate Society Act, 1962. Therefore, the assessee-society claims deduction u/s 80P(2)(a)(i) of the Act. We note that assessee s claim is covered by the order of Mahidharpura Urban Co-Op Credit Society Ltd. [ 2016 (4) TMI 1001 - ITAT AHMEDABAD] as held amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to its members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1) - Decided in favour of assessee.

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• 2022 (10) TMI 279
  Assessment against non-existing entity - amalgamation procedure concluded - Pertinent to mention is that the Income Tax Department was a party in the company petition proceedings before NCLT and it did not raise any objections to the scheme in its report with respect of petitioner companies - HELD THAT:- As very firmly it is established that the assessee company had duly informed of the fact of merger with the appellant company with all relevant details but still the tax authorities below preferred to complete the assessment upon a non-existing entity. The judgments relied by Ld. Counsel for the appellant substantiate the arguments that such assessment order against non-existing company, after due information to the Ld. Tax Authorities, is non-est in the eyes of law. Accordingly, the grounds no 1 and 2, touching the jurisdictional error are decided in favour of the appellant.

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• 2022 (10) TMI 278
  Unexplained unsecured loans - genuineness of the transaction and creditworthiness of the lending company not proved - Case of the assessee was selected for limited scrutiny to ascertain the source of investment in property - HELD THAT:- The company from which appellant has claimed to have obtained loan is a private limited company, therefore, it is bound to abide by the provisions of Companies Act, 2013 and for giving any loan, it is governed by the provisions of section 186 of the Companies Act. However as per details available on record, it is not established that the company in question has complied with these provisions before giving loan to the appellant. Thus in context of the above facts on record the genuineness of the transaction and creditworthiness of the lending company remains unexplained. No interference is called for to the addition made by the AO as appellant has failed to establish the genuineness of the transaction and creditworthiness of the lender, which is a pre-condition to discharge onus lies on the appellant as per the provisions of section 68 of the Act. Accordingly the ground of appeal taken by the appellant is dismissed.

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• 2022 (10) TMI 277
  TDS u/s 195 - assessee during the year under consideration has purchased 0.68 acres land from four non-resident Indians for total consideration - interest u/s. 201 and 201(1A) - HELD THAT:- The word payee was substituted for resident by the Finance (No. 2)Act, 2019 w.e.f. 01.09.2019. Therefore, prior to the amendment, the first proviso to section 201(1) of the Act is applicable only in respect of resident payee and not non-resident payee. CIT(A) despite knowing the fact that the language of section 195(1) for deduction of tax by the payer is clear and unambiguous, gave relief to the assessee by relying on amendment to the proviso to section 201(1) inserted in the statute book by the Finance Act, 2012 w.e.f. 01.07.2012. In our opinion, the said amendment is not applicable to the impugned assessment year. We are of the considered opinion that the CIT(A), instead of following the settle position of law that the provisions of statute as on the date of default committed by the assessee would apply and therefore liability u/s. 201(1) of the Act arises upon such default, directed the AO to make due verification of taxes paid by the payee and to calculate levy of tax u/s. 201(1) and levy of interest u/s. 201(1A) is not correct. We, therefore, reverse the order of the CIT(A) on this issue and the grounds raised by the revenue are allowed. In view of our above discussion, the grounds raised by the assessee are dismissed.

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• 2022 (10) TMI 276
  Deduction u/s 54-B - money for the investment in the purchase of new asset was withdrawn from the account of Shri Ajmer Singh in Account number 18600 from Punjab Sind Bank Kharar - HELD THAT:- Claim of deduction under section 54 in the hands of the legal representative on behalf of the deceased assessee where the subsequent transaction of purchase of new property was initiated by the late assessee during his life time for the purposes of his own residence however on account of death of the assessee, the said transaction was subsequently completed by and in the name of the legal representative. In that factual background, it was held that the word assessee must be given a wide and liberal interpretation so as to include his legal heirs and the legal heirs cannot be differentiated from the assessee and where he was liable to pay the tax, he cannot be denied the benefit of section 54 of the Act. In the instant case, we find that both the transaction of sale of agriculture land and subsequent transaction of purchase of another piece of agriculture land were undertaken by the deceased assessee himself during his life time and on account of death of the assessee, the legal heir was brought on record and proceedings were subsequently initiated in the hands of the legal heir, the grandson of the assessee. Therefore, we find that unlike the aforesaid two cases, as far as satisfaction of the conditions stipulated in section 54B are concerned, there is no question of any impossibility of performance by the assessee in the present case as he himself has purchased another agriculture land and paid the consideration during his lifetime and there was nothing left to be done and which has actually been done by the grandson after the expiry of the assessee. We therefore find that these two cases are distinguishable on facts and doesn t support the case of the assessee even though the assessment is made in the hands of the grandson as legal heir on behalf of the assessee. Now, coming back to the undisputed fact that where the fresh investment in purchase of another agriculture land, out of sale proceeds of the original agriculture land, was made by the late assessee during his lifetime, in individual name of his grandson, all we have to consider is whether the same satisfies the conditions stipulated in section 54B. It is a settled position that once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not reversed by the Hon ble Supreme Court. In that view of the matter, follow the consistent view taken by the Hon ble jurisdictional High Court in series of decisions as discussed above - therefore, hold that the authorities below were justified in making the assessee not eligible to exemption u/s 54B where the investment is made in the name of the grandson of the assessee. Assessee is dismissed.

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• 2022 (10) TMI 275
  Exemption u/s. 11 - Denial of exemption treating hall hiring charges and royalty as business income - non maintaining of separate ledger accounts - assessee submitted that the main object of the institution is education and during the year assessee has given the hall to the ceremonies etc., and earned Hall Hiring Charges and royalty from caterers, this income earned by the assessee is wholly applied for the purpose of education - HELD THAT:- We observe that the Trust is engaged mainly for imparting the education and the assessee has allowed the hall in the school/college to earn the additional income by way of Hall Hiring Charges and royalty from the caterers and ultimately this income was applied for imparting the education. We also observe that in section 11(1)(a) clearly indicates that income derived from property held under Trust for charitable purpose to the extent to which such income is applied to such purposes in India. It clearly indicates that the purpose of the assessee is for imparting education which is covered in the definition of charitable purpose and assessee has derived the income from the property. Therefore, the earning of income from the property on allowing others to use the hall and earn Hall Hiring Charges and other royalty income is nothing but income derived from the property and ultimately such income was applied for the charitable purpose. We also observe that Assessing Officer rejected the exemption with the observation that assessee has not maintained separate books of accounts, we observe that assessee is maintaining separate ledger for earning this income and also maintaining separate bill book for this purpose. This amounts to maintenance of separate Books of Accounts and the income is applied for the object of the Trust. Therefore, this will satisfy the maintenance of the separate Books of Accounts. As decided in case of Acharya Jiyalal Vasant Sangeet Niketan [ 2021 (4) TMI 113 - ITAT MUMBAI] . it is well understood that teaching of Indian Classical Music is within the field of education . The activities of the studio are carried on in order to achieve the main object of the Trust and cannot be construed as business. As mentioned earlier, since the trust is engaged in education, the proviso to section 2(15) does not apply as clarified by CBDT Circular No. 11 dated 19.12.2008. - Appeal of assessee allowed.

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• 2022 (10) TMI 274
  Disallowance as bad debts as well as business loss//loss incidental to business - HELD THAT:- It is pertinent to note that though the assessee has stated that the intention of the assessee to give advances to its subsidiary for making capital and subsidy but the intention was to control the operation of the GTL and to oversee that the manufacturing cost of the yarn clearer remained below its import cost which has to be economical/cost effective for the assessee. Thus, the advances were intended to have a smooth running of manufacturing activities of the assessee company taking into account the cost effectives while investing in the equity shares of GTL. Thus, the same cannot be stated as advance given for acquisition of capital and hence it was rightly treated as bad debt as well as business loss/loss incidental to business by the assessee when GTL became defunct and it was impossible to recover the amount on its liquidation. Thus, ground no.1 is allowed. Disallowance of bad debts written off - AR submitted that the amounts were outstanding for more than six years and the details of debts written off giving the names of the debtors and the amounts were submitted during the course of assessment proceedings - HELD THAT:- Only contention of the assessee is that the said debts were outstanding for last more than six years but the assessee has not been able to show as to any correspondence made with the parties for recovering the said amount. There was no efforts made by the assessee to recover the said amount and simplicitor saying that the amount was less than Rs.1 lakh cannot be held as bad debt. In the common parlance of business each and every rupee matters and the businessman always try to recover even if it is not filing any legal action as such. But here intention of recovering the said debts were not shown by the assessee before the Assessing Officer or before the CIT(A) as well as before us. Thus, ground no.3 is dismissed. Long Term Capital Loss in respect of equity shares of subsidiary company - HELD THAT:- No reason why a shareholder who in distribution of assets has not received any deemed consideration in satisfaction of his rights and interests in the holding and has thereby suffered a total loss, cannot claim the benefit of set off or carry forward of the loss suffered by him. Otherwise, a startling and unjust situation may arise where the receipt of even one paise would enable him to claim set off or carry forward of capital loss as worked out under section 48, while, a shareholder who is a shade worse off and gets nothing in the event of such total loss should be denied the effect of section 46(2) read with sections 71 and 74 and be put to a perpetual loss. Therefore, even where the receipt is nil on the date of distribution on the liquidation of the company, the case of such shareholder will fall under section and the deemed full value of the consideration for the purpose of section 48 will be regarded as nil and on that basis the income chargeable under the head Capital gains has to be computed under section 48. Therefore, when the assessee company ensures that the assessee company will not gain any consideration in future as the subsidiary company was in liquidation, the assessee Company has rightly claimed for Long Term Capital Loss. This fact was totally ignored by the CIT(A) as well as by the AO - Thus, the CIT(A) was not right in disallowing the Long Term Capital Loss. Non-granting exemption from the tax payable on Long Terms Capital Gain (LTCG) earned on transfer of land - HELD THAT:- Decision of Hon ble Gujarat High Court in case of CIT vs. Mitesh Impex [ 2014 (4) TMI 484 - GUJARAT HIGH COURT ] which is apt in the present case wherein it is held that though the assessee did not raise a claim in the return for deduction u/s 80IB 80HHC, it was entitled to raise the claim before the CIT(A) for the first time. If a claim though available in law is not made either inadvertently or on account of erroneous belief of complex legal position, such claim cannot be shut out for all times to come, merely because it is raised for the first time before the appellate authority without resorting to revising the return before the AO. Courts have taken a pragmatic view and not a technical one as to what is required to be determined in taxable income. Assessment proceedings are not adversarial in nature. In fact in present case, the assessee made a claim during the assessment proceedings itself before the Assessing Officer which was totally ignored by the AO - The decision of Hon ble Supreme Court in case of Goetz (I) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT ] was not at all considered in its true spirit in the present assessee s case. Therefore, ground is allowed.

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• 2022 (10) TMI 273
  Disallowing the provision for warranty - HELD THAT:- We noted from the order of CIT(A) that neither the AO nor CIT(A) has examined the details filed before them during the set aside assessment proceedings or even remand proceedings by the AO and simply noted that the assessee could not establish that all the conditions prescribed in the decision in the case of Rotork Controls India Pvt. Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] are satisfied. We noted that the authorities below have neither examined the issue nor gone into the details and just simpliciter confirmed the disallowance. Assessee could not produce before the AO or the CIT(A) as to how the provision is made based on historical trend and a realiable estimate as held by Hon ble Supreme Court. Now the assessee has filed the details before us but we have no mechanism to verify the same and accordingly, the matter needs to go back to the file of the AO. One more fact that assessment for assessment year 2010-11 is pending before AO and the AO can examine the issue in assessment year 2010-11 according to above observation of ours and the directions of the Tribunal in AY 2010-11. Hence, we set aside these three appeals to the file of the AO for fresh adjudication in term of the above directions. Appeals filed by the assessee allowed for statistical purposes.

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• 2022 (10) TMI 272
  TP Adjustment - excessive AMP expenses - whether an international transaction or not? - as per assessee existence of international transaction cannot be inferred by the T.P.O in the absence of any actual transaction and the presumption by the lower authorities that the benefit had enured to its foreign AE is merely based on the conjectures - HELD THAT:- In the absence of any agreement between the assessee and its foreign AE to incur any A M expenses to the benefit of its foreign AE, the presumption of existence of international transaction is incorrect. Revenue was unable to prove existence of any agreement between the assessee and the foreign AE for incurring advertisement and marketing expenses for the benefit of such foreign AE. That, no interference can be drawn as to the existence of international transaction on mere incurring excess expenditure on those items as compared to expenditure incurred by comparables as chosen by the T.P.O. Revenue also could not demonstrate the presence of any machinery provision to compute Arm s Length Price nor could demonstrate existence of any agreement between the assessee and its AE that the expenses on AMP was incurred for enhancing the brand value of the AE. That, even the bright line method cannot be used either to determine the existence of international transaction or ALP of international transaction. Merely because on account of expenditure incurred by the assessee the third party also benefits thereby, the expenditure cannot be disallowed. In this case, there does not exist any international transaction and therefore, the question of determination of ALP of such transaction does not arise. Furthermore as we have examined from the case-law cited above, the onus is on the Revenue for establishing that there is an international transaction has not been discharged in this case. Consequently, the relief provided by the learned CIT(A) to the assessee is sustained and furthermore since there is no international transaction at all, the question of determining ALP does not exist. Appeal of assessee allowed.

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• 2022 (10) TMI 257
  Deduction u/s 80P - interest earned from Co-operative Banks on FDRs other than co-operative societies - HELD THAT:- We note that issue under consideration is squarely covered by the judgment of Hon ble jurisdictional High Court of Gujarat in the case of Surat Vankar Sahakari Sangh Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT ] as relied on by CIT(A), wherein it was held that assessee-co-operative society was eligible for deduction u/s 80P(2)(d) in respect of gross interest received from cooperative bank. We note that assessee is a co-operative society and therefore is entitled to claim deduction in respect of interest received from another co-operative bank under section 80(P)(2)(d) - we confirm the order passed by the CIT(A) and dismiss the appeal of Revenue.

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• 2022 (10) TMI 256
  TDS u/s 194I OR 194C - deductibility of the tax on the entire payment as rent or to be segregated into rent and CAM - HELD THAT:- While the lease rentals are paid based on a fixed percentage on the net revenue, the CAM charges are based on the per sq. ft. area. The observation of the CIT(A) is that the rent by any name, lease, sub-lease, tenancy or the reliance on the judgment wherein the services are intrapolated into the rent stand on a different pedestal. In the instant case, the determination of the rent or CAM are separate and the CAM arrangements are not essential and an integral part for use of the premises. While there are no expenses incurred against the rent except for general building maintenance and municipal charges, the CAM involves employment of separate staff and separate operations involved on day to day basis. Hence, we hold that the provisions for rent are governed by Section 194I and CAM charges by Section 194C - AO is directed to re-compute the CAM charges, taking into consideration the two sections mentioned above. Period of limitations for passing an order u/s 201(1) / 201 (1A) - Treating the assessee as assessee in default - With regard to barring by limitation, we rely on the order of the Co-ordinate Bench of Tribunal in the case of ITO Vs. Sh. Rang Infrastructure (P.) Ltd. [ 2019 (9) TMI 307 - ITAT AHMEDABAD ] and dismiss the ground no. 1 of the assessee.

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• 2022 (10) TMI 255
  Validity of order passed by the TPO - period of limitation - Whether order has been passed by the TPO within the limitation prescribed u/s 92CA(3) of the Act, i.e. 60 days prior to the limitation expiry date ? - HELD THAT:- Respectfully following the above decision of M/s Emerson Electric (Company) India Pvt. Ltd [ 2022 (5) TMI 1460 - ITAT MUMBAI] we hold that the order passed by the Transfer Pricing Officer on 30.01.2014 is barred by limitation and therefore, the transfer pricing adjustments made in the Final Assessment Order, dated 26.02.2015 are deleted. Additional Ground No. 1 raised by the Assessee is allowed and Ground No 2 to 6 pertaining to the transfer pricing issues raised in the appeal are disposed of as being infructuous. Disallowance u/s 14A r.w.r. 8D - suo-moto disallowance offered by the Assessee - HELD THAT:- We find merit in the submission advanced on behalf of the Assessee that the benefit of decision of the Special Bench of the Tribunal in the case of Vireet investments Private Limited [ 2017 (6) TMI 1124 - ITAT DELHI] should be granted to the Assessee. Accordingly, we direct the Assessing Officer to verify the investment which yielded exempt income during the year and re-compute disallowance under Section 14A read with Rule 8D(2)(iii) of the Rules by taking into consideration only the investments which yielded exempt income during the previous year for the purpose of calculating Average Value of Investment. Ground raised by the Assessee is, therefore, partly allowed. Deduction for foreign exchange loss - Assessee had claimed deduction for Foreign Exchange Loss in the return of income for the Assessment Year 2009-10 even though the same was changed to Profit Loss Account only in the Assessment Year 2010-11 which is under consideration - Assessee made an alternate claim during the assessment proceedings of the Assessment Year 2010-11 and claimed deduction for the aforesaid Foreign Exchange Loss - HELD THAT:- Rejection of the alterative claim resulted in double disallowance in the hands of the Assessee first disallowance made by the Assessing Officer in assessment proceedings for Assessment Year 2009-10 and second the suo moto disallowance made in return for AY 2010-11 by the Assessee. However, in appeal preferred by the Assessee for the Assessment Year 2009-10, the assessment order for the AY 2009-10 has been quashed by the Tribunal on jurisdictional issue. As a consequence therefore, the return filed by the Assessee for the Assessment Year 2009-10 stands accepted. The alternative claim of the Assessee has, therefore, become infructuous. However, the Learned Authorised Representative for Assessee submitted that the Assessee wishes to reserves the right to contest the alternative plea in case the assessment for the Assessment Year 2009-10 is restored in appeal. Deduction for foreign exchange loss on revaluation of shareholders deposit - HELD THAT:- While preparing return of income the Assessee has treated the exchange loss on revaluation of Shareholders Deposits as capital in nature, during the assessment proceedings the Assessee has claimed the same to be Revenue in nature while retaining the stand that the exchange gain on revaluation of Shareholders Deposits in earlier years is capital in nature. While there is no bar on taking any inconsistent or alternative pleas, mutually repugnant and contradictory pleas which are destructive of each other cannot be permitted to be urged simultaneously. Disallowance of interest u/s 36(1)(iii) - interest bearing funds were used by the Assessee for making the investments instead of using the same for the purposes of business of the Assessee - HELD THAT:- The Assessee has been able to demonstrate before the DRP as well as in the present appellate proceedings that the investments made by the Assessee in IHMS and TIHK were made on account of commercial expediency. The investments have been made for the purpose of business as per its main objects contained in the Memorandum of Association of the Assessee-Company. The said investments were made towards its objective of owning and operating hotels. Both the companies were primarily engaged in the business of owning equity interests in entities that own, operate and/or manage hotels and hospitality business and therefore, helped in furthering the business objectives of the Assessee. Following the above decision, in Assessee s own case for Assessment Year 1994-95 1998-99 to 2002-03, the Tribunal had deleted the disallowance of proportionate interest attributable to the advances given by the Assessee to its subsidiary/group companies at concessional interest rate or interest free - Decided against revenue. Addition u/s 40(a)(ia) - Whether second proviso to Section 40(a)(ia) is retrospective? - HELD THAT:- Second proviso to Section 40(a)(ia) is retrospective in nature, we note that the Tribunal had, in the case of Rajiv Kumar Agarwal [ 2014 (6) TMI 79 - ITAT AGRA] had held that the Second Proviso to Section 40(a)(ia)of the Act was declaratory and curative in nature and therefore, applied retrospective with effect from 01.4.2005. The aforesaid decision of the Tribunal was approved by the Hon ble Delhi High Court in the case of CIT-1 vs. Ansal Land Mark Township (P.) Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] . In the case of PCIT vs. Perfect Circle India Pvt. Ltd. [ 2019 (1) TMI 1532 - BOMBAY HIGH COURT] has also held that the second proviso to Section 40(a)(ia) of the Act being beneficial to the assessee and declaratory/curative in nature, must be given retrospective effect. - Decided against revenue.

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• 2022 (10) TMI 254
  Not allowing credit for the TDS - AO refused to allow credit for the TDS on the ground that the corresponding income was not offered for taxation - HELD THAT:- There is complete mismatch between the assessee s contention based on the Certificate issued by Ultra Tech Cement Ltd. by which the company certified that payment against Leave wages, Holiday wages and Medical expenses etc. were reimbursements vis- -vis the assessee s own reconciliation statement showing the amounts towards Gratuity settlement, LTA Advance and Bonus/ex-gratia reimbursement. The certificate of Ultra Tech Ltd. is general and does not refer to any particular amounts for the year under consideration. No letter from the Company has been placed on record indicating the true nature of the specific amount of Rs.4.76 crore. In contrast, it can be seen from para ii) on the penultimate page of the assessment order that the assessee contended before the AO that the receipt of Rs.4.76 crore did not accrue to the assessee during the relevant financial year and as such was not offered for taxation. This implies that the assessee contended before the AO that though it was a business receipt, but did not pertain to the year under consideration - it is vivid that there are different versions about the receipt of Rs.4.76 crore. When the nature of receipt itself is unclear as to its taxability or otherwise, the question of allowing credit for TDS on such an amount cannot be decided. Proper adjudication on this issue cannot be done unless complete factual scenario is looked into. Due to non-availability of the relevant evidence and conflict between the Certificate and the Reconciliation statement as discussed above on one hand and the assessee s own contention before the AO on the other, it would be just and fair if the impugned order is set aside and the matter is restored to the file of the AO. We order accordingly and direct the AO to first examine the precise nature of the Rs.4.76 crore and then decide the issue afresh as per law after allowing reasonable opportunity of hearing to the assessee.

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• 2022 (10) TMI 253
  Addition u/s.69 towards cash deposits in the bank account - survey u/s.133A - determining the peak credit - As contended before the authorities below that the assessee was carrying on some business outside the books of account, whose proceeds were deposited in the bank account - HELD THAT:- The existence or carrying on of any such business has not been established. When cash is deposited in a bank and thereafter withdrawn and again redeposited, the presumption is that the amount re-deposited came out of the amount withdrawn earlier, unless the AO shows the utilisation of cash elsewhere. In such circumstances, it is only the peak credit which can be charged to tax and not all the deposit entries in the bank account. As such, I set aside the impugned order and remit the matter to the file of the AO for determining the peak credit out of such transactions and make addition for the same in addition to the interest income credited by the bank separately as recorded in the bank statement. Addition towards purchase of plot - AR contended that the purchase of plot should be considered as sourced from the bank withdrawals for which separate addition was made by the AO - HELD THAT:- While disposing of the first issue supra as directed that only the peak credit of the cash deposits and withdrawals should be included in the total income and not all the deposits. The contention of the assessee that Rs.31,990/- should be considered as coming out of the bank withdrawals, cannot be accepted because once the peak credit is taken, the presumption remains that all the amounts withdrawn from the bank were re-deposited. In such a situation, if the assessee makes a claim that a particular amount was utilised elsewhere, then the peak balance has to be adjusted accordingly by increasing it correspondingly. The net effect of the above discussion is that where the peak is added, the investment made by the assessee has to be added separately and it cannot be claimed that the cash re-deposited in the bank after withdrawal was used for purchase of any other asset. Thus we uphold the addition sustained in the first appeal.

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• 2022 (10) TMI 252
  Deduction u/s 80G - denial of registration on the ground of religious activities - Running Charitable activities besides - Registration u/s 12A has been granted to the assessee society under the head Religious Activities . - HELD THAT:- In the eventuality the assessee can show the facts to the satisfaction of the CIT(E), the assessee may have a case otherwise, to our understanding the assessee in view of the changed circumstances by virtue of the order dated 24.09.2021 in the case of a Trust which is created on 06.09.1989 may need to file a fresh application seeking 80G registration. In the decision rendered by the Hon ble Gujrat High Court in CIT Vs Aravindbhai Maniar Charitable Foundation [ 2015 (1) TMI 109 - GUJARAT HIGH COURT] 80G registration immediately after 12AA registration was sought and the direction given therein was in the background of the fact that it was a new Trust. In the facts as considered by the Co-ordinate Bench in the case of Shri Kaila Devi Temple Trust [ 2017 (10) TMI 241 - ITAT JAIPUR] we have seen that no doubt there were religious ceremonies and expenditure on maintenance of the temple premises, however, at the same time Shri Kaila Devi Temple was also running schools, hospitals etc. which were found to be charitable in nature. Similarly in the case of Shiv Mandir Devsttan Panch Committee Sanstan [ 2012 (11) TMI 352 - ITAT NAGPUR] the fact pleaded on record was that the assessee was carrying on yoga training, tailoring training and free distribution of opticals to the poor and needy people. The building was required for training yoga etc. Food distribution to the needy and poor being called as maha Prasad was a fact argued. Temple was open to everybody without caste and creed. In the facts of the present case, we find that no such submission in regard to the charitable nature of activities carried out is available on record. It need be emphasized that the trust has been in existence from 06.09.1989 and is not a brand new trust incapable of demonstrating the facts required to be considered. Accordingly, we find that on facts, the decisions relied upon are distinguishable. In view thereof, in terms of the above directions, the appeal is remanded back in terms of the prayer of the parties. Appeal of the assessee is allowed for statistical purposes.

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• 2022 (10) TMI 251
  Transfer Pricing Adjustment of Interest and Royalty - HELD THAT:- The assessee had advanced interest free advertising advances in earlier years to one of its AEs i.e., Titan International Marketing Ltd. (TIML), UK who traded in watches, jewellery clocks. These advances were recovered by the assessee during the year. Following our decision for AY 2007- 08 [ 2022 (10) TMI 182 - ITAT CHENNAI] we direct Ld. AO / TPO to apply benchmarking interest at LIBOR+2% on such transactions. The ground stand partly allowed. TPO was on account of Royalty on sales to AE as well as non-AEs - This issue has been restored back by us for AY 2007-08 [ 2022 (10) TMI 182 - ITAT CHENNAI] considering the application filed by the assessee under Rule 29 of Income Tax Appellate Tribunal Rules, 1963 for admission of additional evidences. Similar application has been filed for this year also. Since the issue is recurring in nature, the issue of royalty on sales stands restored back to the file of Ld. TPO / AO on similar lines. The corresponding ground stand allowed for statistical purposes. Disallowance u/s 14A - HELD THAT:- We find that Rule 8D has been applied by Ld. AO without recording any satisfaction as to why the disallowance computed by the assessee was not acceptable having regards to the accounts of the assessee. In the absence of such a satisfaction, no such disallowance could have been made by Ld. AO as per the ratio laid down by Hon ble Supreme Court in Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] . Therefore, the additional disallowance of Rs.2.63 Lacs as made by Ld. AO is not sustainable. We order so. Ground No.2 stand allowed. Disallowance of Loans Written-off - HELD THAT:- The assessee has advanced separate advertising loans to its AEs which are subject matter of determination of ALP by revenue. The loans so granted by the assessee to TIHBV have been stated to have become irrecoverable and accordingly, written-off in the books of accounts. The assessee has accrued interest on these loans in earlier years. Even this interest has not recovered and deduction of the same has been claimed as well as allowed in terms of provisions of Sec.36(1)(vii). In the given factual matrix, we are of the considered opinion that the loans so granted by the assessee are in the capital field only since the same has been further utilized to subscribe to preference share capital which is in the nature of owner s equity. The assessee has granted independent advertising advances to AE which has separately been benchmarked by Ld. TPO and therefore, to say that the loans were for business purpose or in furtherance of business objectives would not be correct. No business expediency of advancement of loan could be demonstrated by the assessee. No further deduction could be allowed to assessee as rightly held by lower authorities. The corresponding grounds stand dismissed. Apportionment of Expenses u/s 80-IC - HELD THAT:- Similar petition u/r 29 has been filed by the assessee for this year as well. Facts being pari-materia the same, our adjudication as above shall mutatis-mutandis apply to this year also. The matter, to a limited extent of allocation of depreciation, stands restored back to the file of Ld. AO on similar lines. The grounds relating to allocation of other overhead expenditure stand dismissed. The corresponding grounds stand partly allowed for statistical purposes. Deduction of Software Expenses - AO treated the expenditure as capital expenditure and granted depreciation of 60% - HELD THAT:- We direct Ld. AO to allow the expenditure as revenue expenditure and reverse the depreciation granted on the same. The ground stand allowed. TDS credit - HELD THAT:- AO is directed to verify the TDS claim and grant TDS credit in accordance with law.

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• 2022 (10) TMI 250
  Addition on account of alleged cash consideration - HELD THAT:- We note that the alleged cash was withdrawn from the accounts of Shri Bapu Vithal Parande, Shri Sandeep Parande and two others. The said person expressed his inability bring Shri Sandeep Parande and two others from whose accounts amounts have been withdrawn as witnesses to the alleged cash payment who are none of them his own family members. We note that the AO in its order clearly observed that certain documents were seized which are related to Dighi property which resulted in making addition in the hands of assessee. CIT(A) also affirmed the said observation of the impugned order but no such documentary evidence brought on record before this Tribunal showing that the assessee received the alleged cash payment. We find the case of DR is that Shri Bapu Vithal Parande made statement that the cash payment to assessee withdrawing such amounts from the accounts of his family members but there was no statement recorded by the AO in this regard from such family members and also Shri Bapu Vithal Parande expressed inability such members for the examination. Thus, the evidence of cash payment by Shri Bapu Vithal Parande cannot be believed for the reason that there was no witnesses to the said cash payments and a mere statement by the said person that some of the amounts received from the accounts of others is not sufficient to make the addition in the hands of the assessee. It is established that there was no documentary evidence corroborating the statement of Shri Bapu Vithal Parande recorded u/s. 131 - Thus, the order of CIT(A) is not justified and it is set aside and the grounds raised by the assessee are allowed.

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• Customs

• 2022 (10) TMI 271
  Seeking release of withheld consignments - imported Frames and Slides - case of respondent is that the import license stood restricted to a Slide and Frame only - requirement of separate import permission for the additional operational components found fitted thereto - violation of the import permission which was granted to the petitioner - whether the stand taken by the respondents that since the Frame and the Slide had various identifiable components of a firearm embedded to it, the terms of the import permission stood violated is sustainable in law? - whether the petitioner was obliged to have obtained the prior permission of the MHA as contemplated under Rule 57(4)? HELD THAT:- The principal objection which is taken by the respondents and which was firstly noticed in the communication of the Delhi Police dated 21 June 2022 was with respect to the imported Slides and Frames being fitted with pre-installed operational parts. The objection essentially was that the operational parts which were found to be fitted to the Slides and Frames were liable to viewed as independent components of a firearm and for which a separate import permission was liable to be obtained. This submission was addressed in the backdrop of the definition of main firearm component set out in Rule 2(29) and the phrase parts and components as defined by Rule 2(37). The respondents also sought to draw sustenance from the Explanation appended to Form VII which, according to them, is an additional indicator of the petitioner being placed under an obligation to have made requisite declarations that additional parts and components of a firearm were also proposed to be imported. This Court finds itself unable to interpret Rules 2(29) and 2(37), in a manner which may lend credence to the submission that a Frame or a Slide must, for the purposes of import, be understood to mean an article which does not have any other component or part of a firearm embedded in them. It must at the outset be noted that the expression main firearm component has been defined in Rule 2(29) to mean the barrel, frame or receiver, slide, bolt or breach block of a firearm. Rule 2(37) while defining the expression parts and components does not independently notice or classify any other part or component of a firearm other than the four components which are also spelt out in Rule 2(29). The Court also bears in mind that Rule 2(37) uses the both the words mean and includes . Both those Rules are therefore liable to be interpreted and understood as being exhaustive. This Court is thus of the considered opinion that merely because some of the sub-parts or components of a firearm are separately chronicled in the Explanation to Form VII, that would not lend credence to the contention that a Slide or a Frame when imported cannot be one which may come fitted with an additional component or part of a firearm - the Court thus finds itself unable to sustain the contention of the respondents that since those components were found fitted onto the Frames and Slides which were imported, the permission granted by the DGFT stood violated or flouted in any manner. As this Court views Rules 2(29) and 2(37) read with the other relevant provisions of the Act and the 2016 Rules, it finds itself unable to countenance the submission that a Frame or a Slide must be understood to mean a component of a firearm which should not or cannot be pre-fitted with other parts thereof. On an overall consideration of the above, the Court reaches the conclusion that the objection that is taken by the respondents is untenable. In summation it may only be noted that the components which are mentioned in the letter of 21 June 2022 of the third respondent and are described as operational parts are neither classified as a main firearm component nor as parts and components under Rules 2(29) and 2(37) of the 2016 Rules - neither the provisions made in the FTP nor those contained in the ITC (HS) or the HS lend support to the objection raised at the behest of the respondents. They do not appear to prohibit the import of a composite part of a firearm in the sense of the imported article bearing more than one component embedded and fitted as a combined product. The respondents have also failed to establish that under the prevalent import policy, the operational parts which were found fitted to the Frames and Slides required permissions being obtained separately and independently. Viewed in the context of the relevant statutory provisions governing the import of parts of firearms, the 1992 Act, the FTP and the ITC(HS), this Court finds itself unable to hold that the restrictive regime relating to import of firearms comprehends a prohibition in respect of items which are being manufactured locally. The respondents are directed to release the consignments - Petition allowed.

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• 2022 (10) TMI 270
  Levy of penalty u/s 112 of the Customs Act, 1962 - allegation is that the Petitioner had conspired in alleged mis-declaration and undervaluation of Modems imported by one M/s. Hindustan Engineering Corporation - HELD THAT:- When Petitioner has been accused of having played role in the procurement of electronic systems and parts for manufacture of automated teller machines and Petitioner has been imposed penalty of Rs.Seventy Five Lakhs under Section 112 of the Customs Act, 1962 for its alleged role in the import effected by M/s. Hindustan Engineering Corporation, and Petitioner having challenged those findings in the Appeal, the CESTAT should have specifically dealt with the grounds of challenge raised by Petitioner, and should have given independent findings as regards role of the Petitioner. Not having done so, and in view of the fact that the averment of Petitioner in the Petition that Petitioner was not given notice of hearing, which has not been denied, in the interest of justice, Petitioner should be given hearing by CESTAT. If a party does not turn up, it is not possible for CESTAT to go though the entire Appeal of the party, consider the grounds and pass a detailed order. At the same time, the CESTAT ought to have checked if a party has been properly served before proceeding to hear the matter and pass the order. Petition disposed off.

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• 2022 (10) TMI 269
  Refund claim - Advance Authorization Scheme - deemed export of plate heat exchanger to Bharat Heavy Electrical Limited (BHEL) - non-fulfilment of export obligation - It is petitioner s case that due to reasons beyond their control they were unable to submit the remaining two invoices that were covered under Form 1-C dated 17th June 2014 - HELD THAT:- The respondent no.3 in his letter to petitioner in effect admits that petitioner had complied with the export obligation because in the letter dated 19th January 2015 respondent no.3 states Had these invoices and Consumption certificate been submitted earlier, there would not have been any excess import and hence, no duty or interest would have been required to be paid . Respondent no.3 in another letter dated 23rd August 2016 also admits that had petitioner submitted the two invoices earlier, the office of DGFT would have processed the same for redemption and there would not have been any liability to pay custom duty plus interest. The only reason why it was rejected was due to non-reversal of redemption in the computer system. The indisputable position is petitioner has fulfilled its export obligations and, therefore, respondent no.3 should have issued the discharge certificate. It is rather strange that a genuine case has been rejected by respondent no.3 only because the computer system in his office would not permit reversal of redemption - the PRC also has rejected petitioner s application without giving any reason more so when respondent no.3 itself has admitted that petitioner has fulfilled the export obligations but missed the bus because it did not submit the documents earlier. Petition disposed off.

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• 2022 (10) TMI 268
  Rejection of petitioner s application for amendment of the 13 bills of entry - It is petitioner s case that in the bills of entry as filed petitioner had erroneously given a particular Goods and Services Tax Identification Number (GSTIN), whereas it should be some other GSTIN - Section 149 of the Customs Act, 1962 - HELD THAT:- While considering application under Section 149 of the said Act, if the goods have been cleared for home consumption, which in this case has been, the proper officer has to only consider the documentary evidence which was in existence at the time the goods were cleared and nothing more. There is nothing to indicate in the impugned order that petitioner had not submitted the documentary evidence which was in existence at the time the goods were cleared. Such a ground has also not been taken when petitioner had approached this Court in the earlier round and, therefore, in our view, there cannot be any impediment to grant petitioner s request for amending the bills of entry. The impugned order dated 29th October 2021 is hereby quashed and set aside. Respondent no.3 is hereby directed to permit amending the bills of entry as per Section 149 of the said Act - Petition disposed off.

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• 2022 (10) TMI 267
  Recovery of duty drawback - Jurisdiction of Tribunal - Appeals to the AppellateTribunal - Section129A of the Customs Act, 1962 - export of Alloy Steel Forging Rings - Rejection of classification of goods under CTH 73261990 and proposal to classify the goods under CTH 84829900 - HELD THAT:- The Appellate Tribunal does not have jurisdiction to decide the appeal in respect of order referred to in clause (c) of sub-section (1) to Section 129A of the Customs Act, which is relatable to payment of drawback as provided in Chapter-X and the rules made thereunder. However the Jurisdiction of the Appellate tribunal is not excluded as regard the appeal against any order of Commissioner (Appeals) if such order relates to recovery of drawback already sanctioned and paid arise due to classification disputes - the Recovery of Drawback already sanctioned and paid is different from payment of drawback. Apart from the general legal proposition that payment and Recovery are two separate events and different proceedings as well as different provisions are involved. Section 130 of Customs Act provides for an Appeal to the High Court from every order passed by the Appellate Tribunal. Such tax appeal is, however, not maintainable against an order relating among other things, to the determination of any questing having a relation to the rate of duty of customs or to the value of goods for purpose of assessment - In the present matter main controversy question is whether the goods were classifiable under Tariff heading 7326 or Tariff heading 8482 and the recovery of drawback is consequential controversy. Following the Hon ble Apex Court judgment in M/S. ASEAN CABLESHIP PTE. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2022 (3) TMI 760 - SUPREME COURT ], it is held that the present Appeals are maintainable before the Tribunal. Classification of the impugned goods manufactured and exported by the Appellant - whether it would be classifiable under Chapter heading 73261600 as claimed by the Appellant or 84829900 as held by the Ld. Commissioner (Appeals)? - HELD THAT:- The disputed goods require further operation and such goods when not fit for being ready to use, would appropriately classifiable under Tariff item 7326. The issue under reference is also duly covered by the case of M/S SHRI ROLEX RINGS PVT. LTD., SHRI MANESH MADEKA VERSUS COMMISSIONER OF CUSTOMS, KANDLA [ 2015 (11) TMI 446 - CESTAT AHMEDABAD] , where it was held that The goods exported by the Appellant declaring Alloy Steel Forging (Machined) for use of rings of Bearing and Gear Blank in their shipping bills, require further operation and such goods when not fit for being ready to use, would appropriately classifiable under tariff item No.732615 of Drawback Schedule. - Therefore, following the ratio of said decision, in the present case also, it is held that impugned goods classifiable under chapter heading 7326 and therefore, the impugned order is not sustainable in law. Appeal allowed - decided in favor of appellant.

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• 2022 (10) TMI 258
  Maintainability of petition - availability of alternate and efficacious remedy of filing an appeal before the CESTAT - pre-condition of filing an appeal - requirement to deposit 7.5% of the penalty that was imposed upon Petitioner - containers allegedly contained goods materially different from the goods disclosed in the Bills of Entry - HELD THAT:- Admittedly, the goods came in sealed containers. Mr. Balani has placed on record seven Bills of Lading by which seven containers arrived at Nhava Sheva Port. The seven containers are 40 ft. containers and were Full Container Load (FCL) containers. The Bills of Lading also provided for disclaimer by carrier. The description of goods in Bills of Lading also states; Shipper s Load and count xxx cartons , and particulars were furnished by Merchant - it is nobody s case that Petitioner knew what was contained in those containers and even if there is any allegation, which we could not find in the impugned order, there is no finding as to how Petitioner would have known what was there inside the sealed containers. The Custom House Agent, which the Petitioner was, only files the Bills of Entry on behalf of the importer relying on the documents provided to him by the importer, and if there is mis-match between what is mentioned in the documents given to the Customs House Agent to file Bills of Entry and what is found in the FCL container, prima-facie, the Custom House Agent cannot be made liable; Added to that in the case at hand the 7x40 ft. containers were FCL containers - To impose total penalty of Rs.5.77 Crores on such Custom House Agent and without any satisfactory findings that he knew what was inside the 7x40 ft. containers or he knowingly or intentionally made any declaration would certainly cause undue hardship and more so to a person who has to file an appeal and deposit Rs.43,27,500/- being 7.5% of Rs.27 Lakhs plus Rs.5.5 Crores as pre-condition to filing an appeal. Petition is admitted.

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• Insolvency & Bankruptcy

• 2022 (10) TMI 266
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Financial Creditor entered into an agreement of sale dated 09.11.2017 with the Corporate Debtor for Development Allotment of Apartment. The Financial Creditor has paid Rs.3,00,00,000/- (Rupees three crores only) to the Corporate Debtor for against the Agreement - The Corporate Debtor has not disputed the claim amount nor denied the Agreement entered between the parties. On perusal of the documents submitted by the Applicant, it is clear that financial debt amounting to more than Rs.1,00,00,000/- (Rupees One Crore Only) is due and payable by the Corporate Debtor to the Applicant. There is default by the Corporate Debtor in payment of debt amount. Therefore, we do not have any objection on record against the application filed for initiation of CIRP against the Corporate Debtor - The application is complete and has been filed under the proper form and well within limitation. The debt amount is more than Rupees One Crore and default of the Corporate Debtor has been established and the application deserves to be admitted. Application admitted - moratorium declared.

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• 2022 (10) TMI 265
  Resignation of Bama from Nominee Director of Corporate Debtor - related party or not - Whether the resignation of Bama came into effect? - whether the said resignation would exclude them from the category of related party and whether they can be members of COC? - HELD THAT:- There is no denial of the fact that Bafna has been the nominee director in the CD Company and at the instance of Bafna, the CD was taken into CIRP by considering that Bama is an FC. Bama infact became the nominal director of the CD Company by entering as an investor by making an investment. The agreement between the Bama and the CD with regard to the amendment of AoA was not fulfilled - due to the Bama recalling the ICD which is the Intercorporate Debt, it became entitled for recovering the amount from the CD and due to the default in discharging the said debt, it moved this Tribunal by way of an application under Section 7 of the IBC, which was admitted and the CD was taken into CIRP. However, there is no dispute that Mr. Praful Bama and Mr. Yogesh Bafna would continue to be nominal directors till their resignation comes into effect. Section 27 of the General Clauses Act, 1897 under which the notice has to be served by post cannot be applied to a service by courier. Apart from that, the Counsel for the FC submits that the pin code number mentioned in the track record and the one mentioned in the address shown in the application are different. The resignation notice was sent to an address with pin code number 53016 as reflected in the track record of the courier service, whereas the pin code pertaining to the registered address of the FC is 532016 as per the application. Obviously notice is served in the application, which shows that the pin code in the application is the correct one. By virtue of the notice of the resignation not reaching the Company, Bafna continues to be nominee director in the CD and hence his status as related party does not cease - Inspite of the differences, disputes and the breaches which took place much prior to the moving of the Application under Section 7 of IBC by the Bafna they continued as nominee directors till 11.02.2022. Though may not be with a mala fide intention, in their own interest Bafna appears to have considered it appropriate to tender their resignation in order to safeguard their financial interest by taking part in the COC. Hence the intention for resignation apparently seems to be to become part of COC. Though Bafna is an FC as held in section 7 petition filed by it and though it became entitled to recall the ICD due to the breaches committed by the CD, the agreements nevertheless, show that Bafna had good control over the affairs of the CD and it continued to have the control. Hence it taking part in the COC meetings would be against the intent of the provisions of IBC. Bona fides of the Resolution Professional - allegations against the Resolution Professional are that he has failed to diligently carry out his duties and is merely relying on a legal opinion furnished to him for determining whether Bafna is a related party of the CD or not - HELD THAT:- Since the date of resignation is being reflected as 11.02.2022 in the letter of resignation, there is a possibility of the IRP understanding the date of resignation as 11.02.2022, Though little due diligence might have revealed the truth, it cannot be said that the IRP, apart from being negligent, had conspired with Bafna and allowed them into the Coc. However, apart from the said mistaken understanding by the IRP, there is no material which would suggest that the IRP had done so with any mala fide intention of helping Mr. Praful Bafna and Mr. Yogesh Bama in becoming part of COC. IRP is hereby cautioned to be vigilant hereafter. This would be a stricture when his performance comes into question in future - When Bafna decides to become part of COC, they would, by all means, endeavour to serve the notice in compliance of section 168. But however, due to non-service of the resignation letter on the Company, section 168 of the Companies Act stands un-compiled with and Mr. Praful Bafna and Mr. Yogesh Bafna continue to be nominee directors and therefore PP Bafna Ventures Private Limited becomes disentitled to be a part of CoC. Mr. Praful Prakash Bafna, Mr. Yogesh Prakash Bafna and PP Bafna Ventures Private Limited be declared as related parties to the CD and shall not be continued in the CoC. The IRP shall reconstitute the COC accordingly - the applications are partly allowed.

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• 2022 (10) TMI 249
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtor - Section 94 of Insolvency and Bankruptcy Code, 2016 read with Rule 6(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 - HELD THAT:- After perusal of the report submitted by the Resolution Professional, there does not appear to be any request of the Resolution Professional for issuance of instruction for the purpose of conducting negotiations between the debtors and the creditors for arriving at the repayment plan. No objection has been received or filed by Personal Guarantor against the report submitted by Resolution Professional. Therefore, based on the reasons recorded in the report submitted by the Resolution Professional, the application filed under the provisions of Section 94 of IBC, 2016 is hereby admitted under Section 100 of the IBC, 2016. Petition admitted - moratorium declared.

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• 2022 (10) TMI 248
  Service of Notice of the Company Petition by the Respondent/Financial Creditor or not - Principles of natural justice - petitioner was set aside ex-parte - seeking to provide an opportunity to file its counter and contest the Application - HELD THAT:- Any notice or process to be issued by the Tribunal may be served by post or at the email address as provided in the petition or the application or the reply. It is the admitted case of the financial creditor that the notice taken pursuant to the direction of this Tribunal returned on 04.05.2022 with the postal endorsement No such person in the Address . In so far as the purported email said to have been sent to the corporate debtor is concerned, no record or an affidavit of the Company Petitioner has been filed confirming the delivery of the purported email. Thus, a clear case of non-service notice of Company Petition on the Corporate debtor/petitioner stands established. There are force in the submission of the Ld. Counsel for the Applicant that the Applicant was not duly served as mandated under the rule referred supra, besides satisfied that Applicant Corporate debtor was not duly served of the notice in the Company Petition. Hence it is a fit case to invoke the power of this Tribunal under Rule 49 R/W Rule 11 of NCLT Rules. Therefore, in the interest of justice, this application is allowed by setting aside our order dated 18.07.2022. Application allowed.

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• Service Tax

• 2022 (10) TMI 264
  Maintainability of petition - improper pre-deposit made by petitioner while filing the appeal - Section 85 of the Finance Act, 1994 read with Section 35F of the Central Excise Act, 1944 - HELD THAT:- This is a matter that requires to be resolved by the Central Board of Indirect Taxes and Customs (CBI C). From the affidavit filed by Mr. Lal, it appears that many appellants/assessees were paying the pre-deposit under Section 35F of the Central Excise Act, 1944 through service tax challans, whereas few appellants/assessees were using DRC-03 mode under CGST Act, 2017. Some appellants are filing appeals after making pre-deposit payments through DRC-30/GSTR-3B. This has very wide ramifications and certainly requires the CBI C to step in and issue suitable clarifications/guidelines/ answers to the FAQs. We would expect CBI C to take immediate action since the issue has been escalated by Mr. Lal over eight months ago. The respondent no.3 are directed to hear petitioner denovo and pass such orders as he deems fit on merits in accordance with law - petition disposed off.

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• Central Excise

• 2022 (10) TMI 263
  Area Based Exemption - exemption from the whole of the duty of excise in regard to goods manufactured in specified areas in the States of Uttarakhand and Himachal Pradesh - date of change of ownership of the unit - date of filing of intimation by the appellant and required verification of these dates - N/N. 50/2003 CE dated 10.06.20032 - HELD THAT:- The exemption under the notification is qua the unit and an eligible unit can add new products, new plant and machinery and can also transfer the unit to a new owner without affecting the exemption. The provisions of the notification do not place a bar or restriction on any addition/modification in the plant or machinery or on the production of new products by an eligible unit after the cut-off date and during the exemption period of ten years as per the notification - The appellant could have exercised option for availing the benefit of the notification even after the sunset clause. Sunset clause is only relevant for the purpose of eligibility and there is no bar for filing the declaration after the sunset clause. This is clear from the TRU letter dated 26.04.2012. It is seen that the appellant had purchased the entire unit, as is clear from the MOU itself. The agreement was for the transfer of the entire industrial property for a total consideration of 59,45,000/- which comprised plant and machinery also. Part of the said total consideration of Rs. 29,45,000/- related to sheds, for which the sale deed dated 14.08.2013 was executed and part comprised lease of land for which the lease deed of Rs. 29,26,376/- was executed. The balance amount was for plant and machinery. The appellant paid this entire amount of Rs. 59,45,000/- from its bank account, which is supported by the Certificate of the auditor certifying payment of entire amount as agreed - even the findings recorded by the Commissioner (Appeals) on reasons, other than the reason on which a finding was required to be given, are factually incorrect and against the terms of the notifications and the Circular. The denial of exemption to the appellant under the notification for these reasons cannot also be sustained. Once it is held that the appellant is entitled to claim exemption under the notification, all the three appeals deserve to be allowed as this is the core issue on which relief has been denied to the appellant in all the three appeals. Application disposed off.

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• Indian Laws

• 2022 (10) TMI 262
  Dishonor of Cheque - failure of the learned JMFC, Quepem (A Court), in supplying certified copies of judgments and orders in criminal cases - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- The Hon ble Supreme Court referred to R.C. Sharma V/s. Union of India [ 1976 (5) TMI 96 - SUPREME COURT] held that though the CPC did not provide a time limit to deliver a judgment, unreasonable delay between hearing of arguments and delivery of a judgment unless explained by exceptional or extraordinary circumstances, is highly undesirable even when written arguments are submitted. It is not unlikely that some points the litigants consider important may have escaped notice. But, more importantly, litigants must have complete confidence in litigation results. This confidence tends to be shaken if there is an excessive delay between hearing arguments and delivery of judgment. Justice must not only be done but manifestly appear to be done - The Hon ble Supreme Court explained that the intention of the legislature regarding the pronouncement of judgments could be inferred from the provisions of Section 353(1) of the Criminal Procedure Code, which provides that judgment in every trial in any criminal court of original jurisdiction, shall be pronounced in open Court immediately after the conclusion of the trial or on some subsequent time for which due notice shall be given to the parties or their pleaders. The words some subsequent time mentioned in Section 353 contemplates the passing of the judgment without undue delay, as delay in the pronouncement of judgment is opposed to the principle of law. In this case, the learned JMFC only declared the trial result by pronouncing in open Court that the accused persons were convicted and sentenced. No judgment, as such, was prepared and furnished to the parties despite the mandate of Sections 353 and 354 of Cr.P.C. notwithstanding - In the facts of the present case, the learned Counsel agreed that the best course of action to be followed would be to quash and set aside the orders dated 05.03.2021 convicting and sentencing the respondents and remanding the matter to the learned JMFC, Quepem, B Court (and not A Court) for hearing final arguments based on the evidence already led by the parties and passing judgments and orders within a prescribed timeline. Application disposed off.

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• 2022 (10) TMI 261
  Dishonor of Cheque - power of witness/attorney to file the complaint on behalf the complainant - territorial jurisdiction of learned Magistrate at Quepem to try and decide the complaint filed on behalf of the complainant - Section 138 of the Negotiable Instruments Act - HELD THAT:- Section 138 of the Negotiable Instruments Act provides that the payee or the holder in due course of the cheque must make demands for the payment of the said cheque by giving notice; in writing and in case of failure of payment of the amount mentioned in the cheque within the stipulated period, the complaint could be filed within a period of one month of the date on which the cause of action arose under clause (c) of the proviso to Section 138. Thus, the payee or the holder in due course is the Society/complainant herein as the cheque was issued in the name of the Society itself which is clear from the cheque produced on record. Admittedly, the Society has to be represented by an authorised person before the Court of law either to launch prosecution of a case or to defend. The main thrust on behalf of the accused persons is on the interpretation which is adopted by the learned Additional Sessions Judge in both the matters thereby observing that the words proceed all the cases as found in the resolution cannot be interpreted otherwise but has to be considered that the authority is given to proceed in all cases which are pending as on the date of resolution. In other words, both the learned Additional Sessions Judges accepted the contentions of the accused persons that such resolution nowhere gives power to the representative to file criminal cases but only authorised him to appear and conduct the pending cases. The proper course available in the present matter before the learned Additional Sessions Court was to quash and set aside the judgment passed by the learned Magistrate at Quepem for want of territorial jurisdiction and to remand the matter with directions that the matter stands transferred as observed by the Apex Court, to the jurisdictional Court at Ponda as the transaction took place in Shiroda. Dismissing the said case for want of territorial jurisdiction, was, therefore, not proper as complaint was filed, entertained and decided on the basis of the law laid down by the Apex Court in the case of K. Bhaskaran [ 1999 (9) TMI 941 - SUPREME COURT] . The proper course is to quash and set aside the judgment passed by the learned Magistrate at Quepem in Criminal Case No.38/NI/2009 and to remand it to the said Court with directions to transfer the said case to the learned Magistrate having territorial jurisdiction, i.e. the Court at Ponda. The approach of the Court must be justice oriented. Appeal allowed.

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• 2022 (10) TMI 260
  Dishonor of Cheque - acquittal of the accused - respondent/accused succeeded in rebutting the presumption - appellant strongly contended that the learned Magistrate failed to consider presumption under Section 139 of N.I. Act and wrongly put a burden on the complainant to prove otherwise - cross-examination of the complainant - sharing of profit - preponderance of probablities - Section 138 of the Negotiable Instrument Act - HELD THAT:- The civil suit, though based on the same Agreement between the parties, is for the purpose of recovery of the amount whereas present proceedings are under Section 138 of the N.I. Act which is a penal provision on the ground that the accused failed to pay the amount mentioned in the cheque within a stipulated period of 15 days from the date of receipt of a legal notice. Thus, the civil action is completely separate and distinct and cannot be mixed up with the present proceedings. In the present case, the complainant paid the amount of Rs. 10,00,000/- to the accused by cheques which are reflected in the Agreement. The accused admitted a receipt of such an amount. The complainant stated that she received the said amount as a gift from her husband. Therefore, when the bank transaction clearly shows that the complainant was having an amount of Rs.10,00,000/- which she paid to the accused by way of three cheques and the accused admitted of the receipt of such amount in an Agreement, the said accused cannot be allowed to question the capacity of the complainant to pay such amount. The evidence to that effect is more convincing on the basis of the Agreement and the cheques by which the amount was paid to the accused a friendly loan. It is clear that the accused need not enter the witness box to rebut the presumption. However, such presumption of law cannot be considered as rebutted only by giving denials and suggestions. There has to be some cogent material brought on record during the evidence of the complainant and his witnesses, on the preponderance of probabilities so as to rebut such presumption - In the present matter and from the cross-examination of the complainant, it is clear that the accused failed to rebut the presumption under Section 139 of N.I. Act. Once the accused acknowledged the debt of Rs.12,50,000/- as mentioned in the Agreement itself, there was no need for the complainant to prove anything further. However, the accused was required to rebut such presumption by leading cogent and convincing evidence or by showing probabilities in his favour from the cross-examination of the complaint, both are absent in the present matter - On one hand he admitted receipt of three cheques issued by the complainant in his favour for a sum of Rs.10,00,000/- as hand loan and thereafter tried to raise the defence that the complainant was not having sufficient finance, which cannot be permitted. Thus, the observations of the learned Trial Court are against the settled propositions of law and therefore, need interference. As far as the date of the cheque is concerned, the learned Magistrate has clearly observed that it was drawn on 23/11/2011 and not on 23/04/2011 as tried to be projected. Such findings are not challenged by the accused in any proceedings. Even otherwise such ground is of no substance as the Agreement at Exh-47 clearly discloses the number of the cheque, the date and the amount. The accused/respondent No.1 herein is found guilty of the offence punishable under Section 138 of the N.I. Act - Appeal allowed.

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• 2022 (10) TMI 259
  Seeking direction to respondent to grant extension of time for making the balance payment of the OTS - seeking direction to respondent not to take any coercive action against the properties of the petitioners, and to maintain status quo regarding the mortgaged properties pending the disposal of this Writ Petition - HELD THAT:- There is no dispute that there was COVID-19 pandemic which resulted in lockdowns in the country which continued from 24.03.2020 to 30.06.2020 preventing operation of industries and movement of men and vehicles. Even though lockdown was lifted on 01.07.2020, still the restrictions on running of factories continued for considerable period of time - According to the petitioners, for the above reason and also because the purchasers, who had agreed to purchased the properties under the agreements of sale dt. 30.04.2019 (Annexures P-6 and P-7) delayed payment of the amounts thereunder to the petitioners, it was forced to seek extension of time for making payment under the said OTS. The contention of the Bank that the time limit fixed in the OTS is final, and the same cannot be extended under any circumstances cannot be countenanced since having regard to the COVID-19 pandemic, it would have been virtually impossible for the petitioners to make the full payment by 26.09.2020 with the lockdowns in place, and the prohibition to the industrial activities being enforced by the State and Center Governments strictly in the Country - the reason for delay in the payment was on account of the circumstances beyond their control. Since the entire amount of OTS was paid, though with some delay, and the circumstances of the case justify the grant of extension of time by about six months; and for the said delay the respondent can be compensated by payment of interest; the said sale of machinery, even if true, has no bearing on this case. The time for payment of the OTS as per Annexure P-16 letter dt. 26.03.2020 shall stand extended upto 31.03.2021 subject to the petitioners paying interest @ 1 month MCLR on reducing balance w.e.f. 26.03.2020 till 31.03.2021 within four weeks from the date of receipt of certified copy of this order; on receipt of the same, the loan dues of the petitioners shall be treated as having been fully satisfied, and the documents of title deposited by the petitioners with the respondent shall be returned to the petitioners within 4 weeks of receipt of such payment. The Writ Petition is allowed.

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