TMI Tax Updates - e-Newsletter
November 1, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Monetary limit for filing an appeal - Lower Tax effect - CBDT has no power of issue any instruction with retrospective effect - SC

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Articles

1. GSTN COMMON PORTAL – SALIENT FEATURES (PART-II)

   By: Dr. Sanjiv Agarwal

2. GST updates: Important developments in GST

   By: Bimal jain

News

1. GST – Frequently Asked Question

2. RBI Reference Rate for US $

Notifications

GST - States

1. EXN-F(10)-19/2017 - dated 12-10-2017 - Himachal Pradesh SGST

Receinding various old notification pre- GST.

2. EXN-F(10)-33/2017 - dated 9-10-2017 - Himachal Pradesh SGST

Amendments in the Notification No. 5/2017-STATE TAX (RATE), dated the 30th June, 2017,EXN-F(10)-15/2017), dated 30th June, 2017 -

3. EXN-F(10)-33/2017 - dated 9-10-2017 - Himachal Pradesh SGST

Amendments in the Notification No.11/2017- STATE TAX (RATE), dated the 30th June, 2017,

4. EXN-F(10)-33/2017 - dated 9-10-2017 - Himachal Pradesh SGST

Amendments in the Notification No. 12/2017- STATE TAX (RATE), dated the 30th June, 2017.

5. EXN-F(10)-32/2017 - dated 9-10-2017 - Himachal Pradesh SGST

waiver the late fee payable in FORM GSTR-3B for the month of July, 2017

6. EXN-F(10)-32/2017 - dated 9-10-2017 - Himachal Pradesh SGST

Last Date for filing of return in FORM-GSTR-3B.

7. EXN-F(10)-32/2017 - dated 9-10-2017 - Himachal Pradesh SGST

Extends the time limit for furnishing the details or return, GSTR-1, GSTR-2, GSTR-3.

8. EXN-F(10)-32/2017 - dated 9-10-2017 - Himachal Pradesh SGST

Extends the time limit for furnishing the return by an Input Service Distributor for the month of July, 2017.

9. 33/2017-State Tax - dated 9-10-2017 - Himachal Pradesh SGST

TDS U/s. 51 of the said Act deduction from the payment made or credited to the supplier of taxable goods or services or both.

10. 32/2017-State Tax - dated 9-10-2017 - Himachal Pradesh SGST

Exemption on “handicraft goods”

11. EXN-F(10)-16/2017 - dated 7-10-2017 - Himachal Pradesh SGST

CORRIGENDUM - Notification No. 13/2017-STATE TAX(RATE) dated 30th June, 2017.

12. EXN-F(10)-16/2017 - dated 7-10-2017 - Himachal Pradesh SGST

Amendments in the Notification No. 12/2017- STATE TAX (RATE), dated the 30th June, 2017, EXN-F(10)-15/2017), dated 30th June, 2017.

13. EXN-F(10)-31/2017 - dated 26-9-2017 - Himachal Pradesh SGST

The Himachal Pradesh Goods and Services Tax (Eighth Amendment) Rules, 2017.

Income Tax

14. 89/2017 - dated 27-10-2017 - IT

U/s 10(46) of the Income-tax Act, 1961 Central Government notifies Madhya Pradesh Pollution Control Board, a Board constituted by Government of Madhya Pradesh, in respect of the following specified income arising to that Board

VAT - Delhi

15. F. 2 (12)/Policy/2017/987-95 - dated 27-10-2017 - DVAT

All the dealers submit details of closing stock

Circulars / Instructions / Orders

GST - States

1. No. 2509/ST-II - dated 28-10-2017

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

2. No. 2510/ST-II - dated 28-10-2017

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

3. 2512/ST-II - dated 28-10-2017

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

4. 05/2017-GST - dated 28-10-2017

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

5. 06/2017-GST - dated 28-10-2017

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

6. 07/2017-GST - dated 28-10-2017

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

7. 08/2017-GST - dated 28-10-2017

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

8. 2222/ST-II - dated 27-9-2017

Specification of Proper officers under the Haryana Goods and Services Tax Act, 2017.

9. No. 2152/ST-II - dated 25-9-2017

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

10. No 2151/ST-Il - dated 25-9-2017

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

Customs

11. 41/2017 - dated 30-10-2017

Implementing Electronic Sealing for Containers by exporters under self-sealing procedure prescribed by circular 26/2017-Cus dated 1st July 2017, circular 36/2017 dated 28.8.2017 and 37/2017 dated 20.9.2017 – reg.

Highlights / Catch Notes

Income Tax

• Supreme Court Rules CBDT Cannot Retroactively Change Monetary Limits for Tax Appeals Below Prescribed Threshold.

  Case-Laws - SC : Monetary limit for filing an appeal - ‘Tax effect’ less than the prescribed limit - CBDT has no power of issue any instruction with retrospective effect - SC
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• High Court Rules: Assessing Officer Cannot Reopen Assessment for Change of Opinion Post-April 1, 1989 Amendment.

  Case-Laws - HC : Reopening of assessment - A.O. cannot take a different view as it would amount to a change in opinion which is not permitted in law even after 1.4.1989 - HC
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• Commission Disguised as Dividends Disallowed for Directors; Ensures Compliance with Tax Regulations and Prevents Misclassification.

  Case-Laws - AT : Disallowance of commission paid to Managing Director and Working Director - it cannot be doubted that the payment of dividend was made in the guise of commission to the directors.
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• Court Rules Against Revenue Authorities on Evaluating Business Decisions, Directors' Salary Increase Disallowance Contested.

  Case-Laws - AT : Disallowance of increase in salary of directors - AO was not convinced that the increase in turnover is only because of efforts of the Director - Revenue authorities in this case are trying to enter into the shoes of the businessman, which is not permissible.
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• Misleading Term "Provision" in Repair Cost Recovery: Deduction of Repair Expenses Permitted Despite Write-Off.

  Case-Laws - AT : Provision towards recovery of cost of repairs - the word ‘provision’ is a misnomer as, in reality, it is not a provision but write off of actual repair expenses (net of recovery) - claim of deduction allowed.
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Indian Laws

• Supreme Court Guidelines on Compensation for Death Under Motor Vehicles Act Sections 163-A and 166: Insurance Liability & Income Calculation.

  Case-Laws - SC : Determination of compensation u/s 163-A and 166 of the Motor Vehicles Act, 1988 - claim in the case of death - liability of insurance company - a person who is selfemployed or who is paid fixed wages / salary - SC framed rules for establishing income of the deceased towards future prospects
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Service Tax

• Appellant Not an Importer of Services for Collection Charges Sent to Foreign Bankers, Exempt from Service Tax.

  Case-Laws - AT : Import of services - collection charges of the Indian bankers who in turn send the same to the appellant for collection to the foreign bankers - Foreign bank has not charged the appellant directly - Appellant cannot be held as importer of services.
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• Service Performed in India Not Received Locally if Paid and Used by Overseas Recipient for Business.

  Case-Laws - AT : Export of services - The performance of such service in India, would not make them received/consumed in India, if beneficiary user/recipient of said service provided in relation to business or commerce, who has paid for these service and has used the service in his business, is located abroad.
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Case Laws:

• Income Tax

• 2017 (10) TMI 1275
  Monetary limit for filing an appeal - ‘Tax effect’ less than the prescribed limit – Power of CBDT to give instruction with retrospective effect - circular dated 10th December, 2015 - Held that:- This Court in the case of Suman Dhamija [2015 (9) TMI 239 - SUPREME COURT] has held that, instructions/circular dated 9.2.11 is not retrospective in nature and they shall not govern cases which have been filed before 2011, and that, the same will govern only such cases which are filed after the issuance of the aforesaid instructions dated 9.2.2011.

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• 2017 (10) TMI 1274
  Reopening of assessment - expenses on films/Tapes of TV serials allowability - change in opinion - Held that:- SLP dismissed. HC Order confirmed [2017 (10) TMI 1273 - DELHI HIGH COURT]. High Court has held that, "As full facts relating to debited expenses on account of expenses on films/Tapes of TV serials were available before the A.O. at the time of framing the original assessment order. All other material facts were already disclosed fully and truly necessary for the said assessment were also available and considered by the A.O. originally. On the basis of the same facts and figures which were considered and one possible view has been taken the same A.O. or his successor A.O. cannot take a different view as it would amount to a change in opinion which is not permitted."

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• 2017 (10) TMI 1273
  Reopening of assessment - expenses on films/Tapes of TV serials allowability - change in opinion - Held that:- As full facts relating to debited expenses on account of expenses on films/Tapes of TV serials were available before the A.O. at the time of framing the original assessment order. All other material facts were already disclosed fully and truly necessary for the said assessment were also available and considered by the A.O. originally. On the basis of the same facts and figures which were considered and one possible view has been taken the same A.O. or his successor A.O. cannot take a different view as it would amount to a change in opinion which is not permitted in law even after 1.4.1989 and even after considering the decisions of Hon’ble Apex Court in Commissioner of Income Tax, Delhi vs. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) rendered in this regard. In our considered opinion the primary facts necessary for the assessee were fully and truly disclosed by the assessee so the A.O. is not entitled to change opinion to commence proceedings for reassessment. - Decided against revenue

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• 2017 (10) TMI 1263
  Claim for deduction under section 10AA denied - as per AO all the karigars were located outside SEZ Unit and the assessee has no findings to show that the said karigars had taken permission from the Customs Authority to work within the SEZ Unit - AO held that no manufacturing activity was carried on by the assessee company in its SEZ Unit during - Held that:- As submitted that the assessee even has a sufficient evidence to show that the karigars had actually worked in its SEZ unit during the year under consideration to manufacture gold articles from the 24 carat gold by using the machinery installed in the SEZ unit. On being asked by the bench, he has submitted that the assessee can produce such evidence to meet the objections raised by the AO and to support and substantiate its claim for deduction under section 10AA if the matter is again sent back to the Assessing Officer for fresh consideration. Keeping in view all the facts of the case, we consider it fair and proper and in the interest of justice to sent back this matter to the file of the AO for fresh consideration. Even the learned DR has not made any material objection in this regard. The impugned order of the Ld. CIT (A) on this issue is therefore set aside and the matter is restored to the file of the AO for deciding the same afresh in accordance with law after giving one more opportunity to the assessee to support and substantiate its claim for deduction under section 10AA. Addition on account of making charges of 22 carat gold ornaments - Held that:- The market value of 22 carat gold ornaments gets increased only when they are finally ready and it remains as good as raw gold at the semi-finished stage because of the various reasons explained by the assessee. It, therefore, follows that the market value of 22 carat gold ornaments at semi-finished stage remains equivalent to raw gold price and since the valuation of the same was done by the assessee without including making charges as per the method of cost or market whichever is lower that was being consistently followed, we find ourselves that the Ld. CIT (A) that there was no under valuation of stock of 22 carat gold ornaments in process by the assessee as alleged by the AO. The addition made by the AO on this issue, therefore, was not sustainable and we find no infirmity in the impugned order of the Ld. CIT (A) in deleting the same Disallowance for depreciation on the machinery installed in SEZ unit - Held that:- As the learned representatives of both the sides have agreed that this issue is consequential to the issue involved in ground no 1 in as much as if the assessee is found to have carried on the manufacture activity in its SEZ unit making it eligible for deduction under section 10AA, the depreciation on machinery installed in the said unit is liable to be allowed as a corollary. Since the issue involved in ground no 1 has been sent back by us to the Assessing Officer for deciding the same afresh, we also send back the issue involved in ground no 3 to the Assessing Officer for deciding the same afresh depending on his ultimate decision on the issue involved in ground no 1.

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• 2017 (10) TMI 1262
  Disallowance made on account of cess on green leaf - whether cess levied on the production of the green leaf does not come under the purview of composite income? - Held that:- In accordance with the principle as laid by the Hon’ble High Court of Calcutta in the case of AFT Industries [2004 (7) TMI 81 - CALCUTTA High Court] which has been further strengthened by dismissal of SLP by the Hon’ble Supreme Court, we hold that the income so computed is to be apportioned 60: 40 of which 40 is assessable to tax under the Act. Thus, ground no-1 raised by revenue is, accordingly dismissed. Disallowance towards consultancy fees paid to M/s. Globally Managed Services (GMS) - Held that:- CIT-A found that the expenditure incurred by the assessee during normal course of business of tea plantation and the alternative crop farming resulted into the losses and the assessee terminated raising of such alternate crop in subsequent years and as such the expenditure incurred did not give a long lasting benefit to the assessee. We find there is continuity of business with common management and fund. We further find that the expenses in paying the consultancy fees is not for the new line of business and it was incurred for raising alternate crop under the permission of Assam Government to utilize the same land which is under tea plantation. Therefore, in our opinion, the assessee is entitled to claim such expenditure as revenue expenditure. In view of above, we find no infirmity in the impugned order of the CIT-A in deleting the same

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• 2017 (10) TMI 1261
  Disallowance of carriage inward and delivery charge - addition as unverifiable element allegedly involved in the said expenses - Held that:- No case was made out by AO to show that the expenses claimed by the assessee on carriage inward and delivery charges were excessive or unreasonable having regard to the nature of the assessee’s business. At the time of hearing before us, the learned DR has not been able to raise any material contention to dispute the facts and figures furnished by the assessee in this regard. Keeping in view these facts and figures furnished by the assessee as well as having regard to the other aspects of the matter, we find ourselves in agreement with the Ld. CIT (A) that adhoc disallowance of 50% made by the AO out of carriage inward and delivery charges was not sustainable and upholding his impugned order deleting the same - Decided against revenue Addition on understatement of cement sale made in cash - Held that:- As rightly observed by the Ld. CIT (A), it is a normal occurrence of business that sales in cash are made invariably at lower rate than credit sales due to cash discount offered. The allegation of the Assessing Officer regarding the understatement of cash sales by the assessee thus was not well founded and the same was not based on any concrete or cogent material. Keeping in view all these facts of the case, we find no infirmity in the impugned order of the Ld. CIT (A) deleting the addition made by the AO on account of the alleged understatement of cash sales by the assessee and upholding the same, we dismiss ground no 5 of the revenue’s appeal. Addition on account of the alleged low gross profit shown by the assessee on the sale of TMT Bars - Held that:- No basis whatsoever was given by the AO for applying the GP rate of 15% except stating that it is a common knowledge that TMT bars are not sold below 15% of GP. This addition thus was made by the AO arbitrarily on the basis of the conjectures and surmises and the Ld. CIT (A), in our opinion, is fully justified to delete the same.

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• 2017 (10) TMI 1260
  Disallowance paid towards client assistance charges - Held that:- We find that the instant issue is covered in favour of the assessee-company by the order of the ITAT ‘I’ Bench in assessee’s own case for the AY 2004-05 and AY 2005-06, thus allowing the claim. Non deduction of tds on reimbursement expenses to ICICI Securities Limited - Held that:- As decided in assess's own case no tax is deductable at source if payments are made merely towards reimbursement of expenses incurred on assessee’s behalf by another entity. Disallowance of bad debts - assessee-company failed to file party-wise details and actual proof of write off in ledger account of a particular debtor - Held that:- In the case of Oman International Bank (2009 (2) TMI 54 - BOMBAY HIGH COURT ) it has been held that after amendment to section 36(1)(vii), it is neither obligatory nor is there any burden on the assessee to proof that debt written off by him is indeed a bad debt as long as it is bona fide and is based on commercial wisdom or expediency.In the case of Star Chemicals (Bombay) Limited (2008 (2) TMI 399 - BOMBAY HIGH COURT ) it has been held that if assessee has written off debt as bad debt, that would satisfy purpose of section 36(1)(vii).We follow the above decisions which are squarely applicable to the present issue and delete the disallowance Addition u/s 14A - applicability of rule 8D - Held that:- Rule 8D was notified by CBDT by the IT (Fifth Amdt.) Rules 2008 w.e.f. 24.03.2008. Thus it is not applicable to the AY 2007-08. In such a case for AY 2005-06, the Hon’ble Bombay High Court in CIT vs. M/s Godrej Agrovet Ltd. (2014 (8) TMI 457 - BOMBAY HIGH COURT) has held the order of the Tribunal in restricting the disallowance only to the extent of 2% of the total exempt income as proper. We follow the above decision and direct the AO to restrict the disallowance only to the extent of 2% of the total exempt income. Thus the 4th ground of appeal is partly allowed. Disallowance @ 50% of client introduction fees paid to ICICI Securities (INC) (ISI) for non-USA based entities u/s 40(A)(2b) - Held that:- The payment made to ISI was genuine and in accordance with the terms of the agreement dated October 01, 2004.As per the main clause of the aforesaid agreement, ISI would introduce to the assessee-company clients in USA and countries other than USA where permitted from time to time. The assessee-company would execute secondary trades of clients introduced by ISI on the National Stock Exchange and Bombay Stock Exchange. Thus the provisions of section 40(A)(2)(b) of the Act do not cover the payments made to ISI, since ISI does not have any interest in the assessee-company. Addition made on account of penalty for violation of the bye laws of the Stock Exchange - Held that:- The amount paid were not on account of any infraction of law and hence allowable as business expenditure .See case of Angel Capital and Debit Market Ltd [2014 (5) TMI 584 - BOMBAY HIGH COURT] Disallowance on account of transaction charges, VSAT and lease line charges made u/s 40(a)(ia) paid to Stock Exchanges - Held that:- Assessee is not required to deduct tax at source u/s 194J in respect of lease line charges and VSAT charges paid to stock exchange. See The ACIT Cir. 4(2), Mumbai Versus M/s. Twenty First Century Shares & Securities Ltd. [2013 (5) TMI 785 - ITAT MUMBAI ] Disallowance of loss on future and option ‘marked to market margin’ - Held that:- ‘Market to market loss on derivatives could not be treated as contingent liability and hence, same was to be allowed as deduction u/s 37(1)’. See Edelweiss Capital Ltd. vs. ITO [2012 (10) TMI 223 - ITAT, MUMBAI]

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• 2017 (10) TMI 1259
  TP adjustment on account of reimbursement of software cost by the assessee to its AE - Held that:- Coordinate Bench of the Tribunal in taxpayer’s own case for AY 2007-08 upheld the findings of ld. CIT (A) returned in favour of the taxpayer qua the identical issue on the premise that it is settled principle of law that certain transactions entered into by the taxpayer for business expediency need not necessarily attract financial benefits. In such cases, Revenue cannot dictate its term that certain transactions should not be entered into. Even otherwise, there is no data available with the Revenue that the CUP value of the transaction would be NIL nor any comparable has been taken where such adjustment on account of reimbursement of software cost or reimbursement of expatriate cost as the case may be has been taken as NIL. Also keeping in view the concept of “there is no free lunch” a third party shall not charge anything for providing services. TPO as well as CIT (A) have not disputed the incurring of the software cost. Even otherwise, rule of consistency is required to be followed by the Revenue particularly when there is no change in facts and circumstances of the case. When the Revenue has extended relief to the taxpayer in AY 2007-08 and 2008-09 the ld. CIT (A) had no reason to decline the same qua the year under assessment. The Revenue has also accepted same transaction at arm’s length in AY 2011-12 and 2012-13. - Decided in favour of the assessee. Adjustment u/s 92CA on account of value of the royalty transfer in uncontrolled condition - Held that:- The taxpayer has used both internal as well as external comparables to benchmark royalty payment and in fact, for internal payment relied upon technical know-how payment between Bencom and third party based in Syria where licence fee has been paid @ 6% of the net sales. CIT (A) also discussed the benefit of technical knowhow to the taxpayer. Moreover, when the Revenue has been continuously deciding the royalty payment issue in favour of assessee since AY 2007-08 on the basis of same Agreement between assessee and Bencom and there is no change in the business model and facts and circumstances of the case, the rule of consistency is required to be followed by the Revenue. So, we are of the considered view that ld. CIT (A) has rightly deleted the addition of Rs. 13,57,77,031/- made by the AO on account of royalty payment to its AE. So, we find no ground to interfere in the impugned order passed by the ld. CIT (A) qua deletion of royalty payment. - Decided in favour of the assessee.

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• 2017 (10) TMI 1258
  Non-deduction of tax in respect of the interest paid to financial institutions - Held that:- During the course of hearing, Ld. Counsel for the assessee submitted that the financial institutions have disclosed this receipt in their return of income. This fact requires to be verified at the end of the AO. We therefore, set aside this issue to the file of the AO to verify whether recipient has paid tax on such receipt. In case, the recipient has paid taxes and disclosed receipts in their respective income tax return the AO would delete the disallowance. This ground of appeal is allowed for statistical purpose. Disallowance in respect of remuneration paid to partner Shri Rajiv Jain - Held that:- Since the partnership deed allows expenditure of remuneration paid to the partners in the ratio as recorded in the partnership deed paying less to one partner and paying in excessive of the ratio so fixed, in our considered view would not help the assessee. The only explanation of the assessee is that the other partner has no objection to this effect. In our view, there is no ambiguity into the provisions, if any remuneration is paid in excess of the amount mentioned or the percentage mentioned in the partnership deed that is not allowable expenditure. Therefore, we do not see any infirmity into the order of the Ld. CIT(A), same is hereby affirmed. This ground of appeal is dismissed. Addition on account of interest income from M/s Yash Pharma - accrual of income - Held that:- Since the assessee has been following mercantile system of accounting. Hence, the receipt is requires to be tax on accrual basis. Therefore, we do not see any infirmity finding into the order of the Ld. CIT(A), same is hereby affirmed. This Ground of assessee’s appeal is dismissed.

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• 2017 (10) TMI 1257
  Disallowance of R&D Expenditure u/s 35(1) and unaccounted expenditure under the head R&D - Held that:- Any expenditure relating to business which may be relating to current year or relating to previous expenditure incurred before commencement of the business and restricted to expenses expended within 3 years immediately proceeding the commencement of the business. As per explanation to this sub-clause, the assessee has to submit certificate from the prescribed authority to get the deduction under this head for the expenses incurred before commencement of the business. There is no restriction with regard to expenses expended during the current assessment year. Hence, there is no requirement on the part of the assessee to claim revenue expenditure incurred during the current assessment year. Accordingly, the assessee is eligible to claim deduction u/s 35(1) relating the current year expenditure on R&D. We are in agreement with the findings of Ld. CIT(A). Therefore ground raised by department is dismissed. With regard to deferred revenue expenditure, the assessee has incurred revenue expenditure during this year and classified the same as ‘deferred revenue expenditure’ in order to defer the expenditure in the financial statement. For the purpose of determining taxable income under the IT Act, it has claimed total revenue expenditure incurred during the year, even though classified as deferred revenue expenditure, as expenditure u/s 35(1). Even though the discount is offered in the year of subscription, the discount in fact relates to the tenure of the debentures. It can be spread over to the period of debenture holding. Whereas the nature of expenditure incurred in the given case is R&D. It is peculiar expenditure, it is not necessary that research should be successful all the time, the absorption of the cost depends upon the success rate of the project. It is prudent to absorb the revenue expenses in the year of expenditure incurred, when there is no benefit of enduring nature expected at the time of making such expenditure. It is not brought on record by the revenue authorities that assessee has expended this expenses and there is asset created by such expenditure. Since there is no asset created, which has enduring benefit to the business of the assessee, it is appropriate to allow these expenditure u/s 35(1). - Decided against revenue.

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• 2017 (10) TMI 1256
  Addition of bogus purchases and sales promotion expenses - CIT(A) in restricting disallowance of made out sales promotion expenses to 10%, as against the disallowance made by AO @ 100% - Held that:- CIT(A) noticed that the AO did not give any reasoning for disallowing expenses at different rates. Accordingly he restricted the disallowance made out of Sales promotion expenses also at uniform rate of 10% in all the three years under consideration. We notice that the learned CIT(A) has taken this view upon noticing that the Assessing Officer has not furnished any credible reason for disallowing Sales promotion expenses @ 100%, while making disallowance out of advertisement and transport expenses @ 10%. Before us, the revenue could not furnish any valid reason for adopting different standards for making disallowance out of expenses, when the underlying facts are identical in all the cases. Hence we are of the view that the order passed by the learned CIT(A) on this issue also does not call for any interference in all three years under consideration. - Decided against revenue.

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• 2017 (10) TMI 1255
  Addition u/s 69C - addition at the rate of 15% of gross bogus purchases - purchases from hawala parties - Held that:- Admittedly, in such type of cases, there is no option but to estimate the profit which depends upon the subjective approach of an individual and the material facts available on record. Commissioner of Income Tax (Appeal) considered the factual matrix and the order of Assessment Year 2009-10, wherein, disallowance was confirmed at the rate of 5.08% of the alleged purchases, restricted the disallowance at the rate of 15% of the bogus purchases amounting to Rs. 55,98,500/-. As per the assessee, the assessee has already made declaration the gross profit at the rate of 20.49%. Admittedly, in such type of cases, there is no option but to estimate the gross profit. Thus, considering the totality of facts, to further plug the leakage of Revenue, we direct the Ld. Assessing Officer to restrict the disallowance @ 16% (as agreed by the ld. counsel for the assessee) in place of 15% restricted by the Ld. Commissioner of Income Tax (Appeal). Thus, the appeal of the Revenue is partly allowed.

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• 2017 (10) TMI 1254
  PE in India - attribution of income in India - India-Switzerland DTAA - Held that: - As decided in assessee's own case for A.Y. 2011-12 and 2012-13 held that the assessee does not have service PE in India and respectfully following the said order the DRP has held that the SRSIPL is not an agent of the assessee in India and it neither concludes any contracts on behalf of the assessee nor solicit any orders for the assessee. Further, the services provided by SRSIPL to the assessee are merely preparatory and auxiliary in nature. Further, the Hon’ble ITAT has also relied on Article 5(4) of the DTAA which specifically excludes the reinsurance business from constituting a PE in India. Accordingly, SRSIPL does not constitute a PE of the assessee in India under Article 5(5) of the DTAA and no question of attributing any profits to the PE arises. - Decided in favour of the assessee.

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• 2017 (10) TMI 1253
  P.E. in India - whether the income earned by the assessee from operation of 15 ships was taxable or not in India in light of the above-mentioned provisions of the DTAA or not? - Held that:- Pre-condition, for claiming exemption from Indian tax law is to establish the fact that the income earned/accrued to an assessee had arisen from operation of ships in international traffic. The onus was on the assessee to prove the fact. Under Section 106 of the Evidence Act when any fact is especially within the knowledge of any person, the burden of proving the fact is upon him. In the case under consideration, fact of operation of ships in international traffic was specially within the knowledge of the assessee and it was not possible for the AG to have any knowledge about it. So, it was duty of the assessee to prove the factum of operation of ship for deduction. We have taken note of the fact that it had not produced any of the documents before the AO required by him. Even before the DRP it filed bills of lading for five ships. In case of one ship only copy of delivery note was submitted. Without commenting upon the evidentiary value of the documents produced by it, for claiming exemption from tax provisions of the Act, we would like to mention that it had not produced not even a single paper for nine ships that could prove that same were operating in international traffic. Before us also, the assessee had not produced any document to substantiate its claim. So as far as income from nine ships are concerned, we arc of the opinion that same should be taxed as per the provisions of Act. - Decided against assessee. Charging of interest u/s.234B - Held that:- DRP should have decided the issue raised by the assessee by a speaking order. But, that does not mean that we cannot decide it. It is a legal issue and has remained unadjudicated. It was brought to our notice that the Department had issued Double income Tax Relief Certificate to the assessee. Clearly the assessee was not liable to pay advance tax. Besides for freight income earned by it was liable for deduction of tax at source as per the provisions of section 209(1)(d) of the Act.

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• 2017 (10) TMI 1252
  Manner of grand of refund - amount to be adjusted with interest first or with the principal amount - Held that:- The issue is squarely covered in favour of assessee and against Revenue by the decision of Hon’ble Supreme Court in the case of Union of India Vs. Tata Chemicals Ltd. (2014 (3) TMI 610 - SUPREME COURT) and case of India Trade Promotion Organization vs. CIT (2013 (9) TMI 451 - DELHI HIGH COURT) and the same was followed by the Co-ordinate Bench decision in the case of Union Bank of India Vs. ACIT (2016 (8) TMI 688 - ITAT MUMBAI) wherein it is held that while granting refund in pursuance to appeal effect order, the amount of refund granted earlier should be adjusted first against interest on earlier refund and thereafter balance amount should be adjusted against principal component of tax in refund granted earlier, on which assessee is entitled to get interest under section 244A of the Act.

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• 2017 (10) TMI 1251
  Disallowance of expenses - assessee has failed to establish that it had carried out the business activities - Held that:- We do not find any evidence on record which establishes the assessee had carried out the business activities relating to the projects Hindon River Mills Project and Hydro Project, during the financial year relevant to the assessment year under consideration. The AO has specifically mentioned that from the notes to accounts and the WIP expenditure break up it is amply clear the expenses incurred on the projects are not on account of any factual constructions related activities and the same indicates that the project is in the preliminary stage and since the assessee has entered into a construction contract the entire expenditure is relatable to the work in progress. The Ld. CIT (A) has confirmed the disallowance made by the AO after considering the entire factual matrix of the case. The assessee did not produce any evidence even during the appellate proceedings to establish that business activities had commenced during the financial year relevant to the assessment year under consideration. - Decided in favour of assessee Allowable business expenses - travelling expenses - Held that:- Since, the assessee has failed to justify that the travelling expenses was incurred wholly and exclusively for the business purposes before the authorities below and since no material was brought before us to substantiate its claim. We do not find merit in the appeal of the assessee. We therefore, uphold the findings of the Ld. CIT (A) and dismissed this ground of appeal of the assessee.

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• 2017 (10) TMI 1250
  Bogus purchases - Profit estimation - Held that:- As noticed that the Sales tax official has written a reply to the AO, wherein, he was mentioning about the failure of the suppliers to remit the sales tax liability. Since the assessee was dealing in products of reputed companies, whose rates are standardized one, we are of the view that the possibility of making any profit out of such products is also remote. However, there is a possibility that the assessee might have saved VAT tax from such purchases. Keeping in view the facts surrounding the case, we are of the view that the profit that would have been made by the assessee may be estimated at 5% of the value of alleged bogus purchases of both the years and in our view, the same would take care of revenue leakage, if any in both the years. The assessee has submitted that the value of purchases made from the suspicious suppliers was only Rs. 1,13,28,156/- in AY 2009-10 and Rs. 3,77,84,783/- in AY 2010-11. The AO is directed to verify the same and accordingly estimate the profit at 5% on the actual value of purchases made from the suspicious dealers in the years under consideration. The orders passed by Ld CIT(A) would stand modified accordingly.

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• 2017 (10) TMI 1249
  Bogus purchases - Held that:- Disallowance for bogus purchase depends upon the facts of the case. In this case the assessee is not engaged in trading hence relief on the analogy that sales are not doubted cannot be granted. Case laws cited by assessee are not applicable. However, find that in many cases, ITAT Mumbai Benches have held that 12.5% disallowance of the bogus purchases in such cases meets the ends of justice, following Hon’ble Gujarat High Court decision in case of Simit P.Seth [2013 (10) TMI 1028 - GUJARAT HIGH COURT]. Accordingly, modify the order of the learned CIT(A) and hold that 12.5% disallowance of bogus purchases should be done.

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• 2017 (10) TMI 1248
  Disallowance u/s 37(1)(iii) - commission paid to Managing Director and Working Director - Held that:- Similar disallowances were made consistently from AY 2006-07 onwards till AY 20010-11 but only year 2006-07 where Tribunal has deleted the disallowance which was followed in AY 2009-10. For other years, appeals are pending either at CIT(A) stage or before Tribunal. We find that during the year under consideration, the assessee company has already declared the dividend of Rs. 5.40 crores and hence, it cannot be doubted that the payment of dividend was made in the guise of commission to the directors. Disallowance of legal and consultancy charges - Held that:- We find that this issue is settled in the case of Chemosyn Ltd (2015 (2) TMI 863 - BOMBAY HIGH COURT) wherein held that the amounts which were paid by the respondent assessee for the purpose of purchase of its shares, to its shareholder for subsequent cancellation was an expenditure incurred only to enable smooth running of the business. Thus, the expenditure was incurred for carrying on its business smoothly and therefore, was a deductible expenditure. Thus, the impugned order of the Tribunal is essentially a finding of fact. The respondents have not been able to show that these findings are in any manner perverse or arbitrary. Disallowance on payment of assessee’s contribution to PF/ESIC made beyond due date of the respective statutes - Held that:- The payments are within due date of filing of return on income under section 139(1) of the Act and once, the payments are within the due date of filing under section 139 of the Act, the payments are to be allowed as deduction. Revenue appeal dismissed.

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• 2017 (10) TMI 1247
  Addition on bogus purchase at the rate of 12.5% of the bogus purchases - assessee submitted that as in the case of bogus purchases above, the purchase to the extent of 12.5% in this case may be allowed and consequent depreciation granted - Held that:- 12.5% disallowance on account of bogus purchases has been done in the earlier part of this order in the trading account on the premises that the sales have not been doubted. However no such presumption can be made in the case of purchase for fixed assets. Assessee having failed to provide any evidence for the purchase of fixed assets cannot be granted 12.5% allowance for fixed assets purchased on adhoc basis. Hence, do not find any infirmity in the orders of the authorities below on this issue. Hence confirm the same. Disallowance of increase in salary of directors - Double taxation - income taxed in the hands of directors - Held that:- No cogent evidence has been brought on record by the authorities below to disallow the Directors remuneration. It is not the case that the remuneration is bogus, it has been solely disallowed as in the opinion of the Revenue authorities there was no justification for such an increase in the salary as they were not convinced that the increase in turnover is only because of efforts of the Director. As find that Revenue authorities in this case are trying to enter into the shoes of the businessman, which is not permissible. Accordingly set aside the orders of the authorities below on this issue and decide the issue in favour of the assessee.

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• 2017 (10) TMI 1246
  Disallowance of Provision towards recovery of cost of repairs - as per AO assessee failed to file any documentary evidence for making such provision and also the working of such provision - Held that:- As on completion of repair contracts, advance received from customers and other collections after completion of repair contracts are credited to ‘income from services’ in the profit and loss account and expenses incurred on repair contract and debited to Work In Progress (WIP) are transfer to the debit of profit and loss account. At the year-end, a review on progress of repair contracts is undertaken. During such an exercise, it is found that there are some contracts which are dormant in nature. These are the contracts, on which work was done long back and no further work is expected to be done. In such circumstances, expenses incurred on such dormant repair contracts and debited to WIP account are transferred to profit and loss account. Similarly, advances received from customers in respect of such contracts and credited to advances from customers account are also transferred to profit and loss account. Both these amounts are transferred to ‘miscellaneous expense’ under the sub head ‘provision for repair expense’. Thus the above the word ‘provision’ is a misnomer as, in reality, it is not a provision but write off of actual repair expenses (net of recovery). In view of the above, the disallowances made by the AO in AY 2009-10 and AY 2010-11 are deleted. - Decided in favour of assessee. Disallowance of provision for maintenance and free service warranty - Held that:- We find that as the expenses relating to warranty are the expenses for the year in which the elevator is sold, in accordance with the concept of matching revenue with cost, the assessee-company is making provision for the cost of warranty in the year in which the elevator are sold. In Rotork Controls India (P) Ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA), it has been held that (i) for a provision to qualify for recognition, there must be a present obligation arising from past events, settlement of which is expected to result in an out flow of resources and in respect of which reliable estimate of amount of obligation is possible and (ii) if historical trend indicates that in past large number of sophisticated goods were being manufactured and defects existed in some of items manufactured and sold, then provision made for warranty in respect of army of such sophisticated goods would be entitled from gross receipts u/s 37(1), provided data is systematically maintained by the assessee. In view of the factual matrix narrated above, we delete the disallowance - Decided in favour of assessee. Addition u/s 40(a) on the basis of tax audit report - Held that:- As gone through the relevant record and found that documents relating to the above claim were not filed by the assessee-company before the AO or the Ld. CIT(A). Therefore, we set aside the order of the Ld. CIT(A) on the 3rd ground of appeal for the AY 2009-10 and restore the same to the file of the AO to make a fresh assessment after verifying the documents and giving reasonable opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes.

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• 2017 (10) TMI 1245
  Validity of reopening of assessment - non applicability of provisions of Section 44BB - Held that:- As relying on assessee's own case for the assessment year 2002-03 the reasons recorded do not indicate that the assessee has failed to disclose fully and truly all material facts necessary for the assessment. Consequently, the notice issued under Section 148 of the Act cannot be sustained and is quashed. The proceedings initiated in pursuance of the notice under Section 148 of the Act are wholly illegal and without jurisdiction and cannot be executed since the final assessment order and the notice of demand under Section 156 of the Act was issued in gross violation of the interim order of this court. The same is a nullity in the eyes of law and cannot be enforced. PE in India - Held that:- The Hon’ble Delhi High Court for assessment year 2007-08 and 2008-09 [2015 (8) TMI 1390 - DELHI HIGH COURT] respectively has clearly held that assessee did not have a PE in India. - Decided in favour of assessee.

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• 2017 (10) TMI 1244
  Assessee in default u/s 201 - disallowance u/s 40(a)(ia) - interest on EMIs paid to financial institutions - person responsible for deduction and payment of tax at source - Held that:- As decided in assessee's own case that if the payees have admitted the receipt of income, there is no need for the payee to deduct the TDS. Since the provisions of section 201(1) allow such assessee to be not an "assessee in default", consequently, the second proviso to section 40(a)(ia) also comes into operation even though the said provision was introduced from 01/04/2013.and the assessee has followed due procedure of submitting the tax compliance before the AO as similar to the findings of previous AY, we dismiss the appeal filed by the revenue.

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• 2017 (10) TMI 1243
  Entitlement for benefit of section 11(1)(a) - main object of assessee - proof of charitable activities - Held that:- Main object of the assessee was for providing clean environment to the society, maintenance of garden, plantation, horticulture etc. These objects and activities of the assessee were in the nature of charitable purpose, and as such accepted by the Revenue in the past. Exemption under section 11(1)(a) of the Act has been granted to the assessee in the past, and there is no change in the facts and circumstances. Registration granted under section 12A has not been cancelled. The activity of the assessee does not fall in the expression “advancement of any other object of general public utility”. It is specifically fall within the ambit of “preservation of environment”. The ld.CIT(A) has considered both these aspects and accepted explanation of the assessee that it is meant for preservation of environment as well as its objects are of charitable nature. - Decided in favour of assessee.

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• 2017 (10) TMI 1242
  Income from share trading - short term gain or business income - Held that:- A perusal of the record would show that for earning short term capital gain of Rs. 13,99,030/- the assessee has made purchases of shares having value of Rs. 1,77,68,963/-. The volume of sale proceeds and also purchase value would depict that there were frequent transactions. These transactions were not intended with an objection of earning dividend income or maximizing the profit. They reflect that a large number transaction has been carried out by the assessee by retaining shares for less than a month. It is also pertinent to observe that the assessee failed to demonstrate that delivery of all shares was taken by it. Considering all these aspects and well reasoned order of the CIT(A), we do not find any merit in this appeal.

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• 2017 (10) TMI 1241
  Disallowances of managerial remuneration - AO made the disallowance observed that the assessee has paid the amount in excess of the amount sanctioned by the Central Government under the Companies Act - Held that:- In the present case the assessee claimed that it has paid remuneration to Mr.Kailash Nasta for securing some important agreements for the company. The said contract has resulted in profit of the assessee. The payment was also approved by the board resolution passed on 15th January 2009 and the remuneration paid does not violate any provisions of companies Act, 1956. It was further claimed before CIT(A) that Central Government has granted approval for payment of remuneration to Mr. Kailush Nasta under the provisions of section 334(1B) of the Companies Act, 1956. The approval granted by the Central Government is after considering the special resolution dated 15.03.2009. We gone through the case records and noted that CIT(A) has not considered this aspect while adjudicating the issue. Hence, for the purpose of verification of actual claim approved by Central Government, we restore this issue back to the file of CIT(A). Bogus purchases - whether only the profit element embedded in the bogus purchases is to be taxed instead of whole transaction - Held that:- Actual bogus purchases are at Rs. 56,24,615/- and this should be taken as correct figure in the order of CIT(A). However, we are not convinced with the arguments of learned DR to increase the profit rate or sustained full addition. We confirmed the order of CIT(A) except, the figures mentioned in the order of bogus purchases at Rs. 4,39,803/-, whereas, the actual bogus purchases are at Rs. 56,24,615/- which we have rectified. The appeal of Revenue is dismissed but subject to above directions.

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• 2017 (10) TMI 1240
  Assessee in default - non deduction of tds - Held that:- The assessee before AO as well as before CIT(A) claimed interest on debentures as expense and stated that the recipients parties are assessed to tax and they have included the interest accrued in their respective returns of income and therefore assessee cannot be held as assessee in default under section 201(1) and consequent interest under section 201(1A) of the Act cannot be charged. From the above facts and circumstances, we find that the TDS deducted for AY 2004-05 related to the interest accrued in FY 2000-01 and 2001-02 to these parties. The AO at least can verify this fact whether these parties i.e. the recipients have declared this interest in AY 2004-05 as claimed by assessee, he will delete the addition. - Decided in favour of assessee for statistical purposes.

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• 2017 (10) TMI 1239
  Treating the income on account of gain on foreign exchange transaction under the head income from capital gains as per Article 14(6) of the India Spain tax treaty - Held that:- Loss accrued/arose on account of cancellation of foreign exchange forward contract is capital loss having direct nexus with the investment of the assessee and hence the assessee is entitled to set off the same. So far as the reference u/s. 115 AD is concerned, in our opinion, the said section decide the quantum of the tax payable by the FIIS on the income from securities or capital gains and it has nothing to do with the determination of the nature of gain or loss, whether same is on account of capital or revenue account. Accordingly, grounds taken by the assessee are allowed. Treating gain on sale of shares of companies, engaged in the real estate development, as eligible to benefit of exemption under Article 14 (6) of the India Spain treaty - Held that:- We find that the assessee had invested in certain companies that were in the business of developing properties, that it was not holding any property directly or indirectly, that the provisions of Article 14(5)were applicable for the properties held by a Spanish Company. The FAA had given a categorical finding of fact that assessee was not holding any property in India. In our opinion, the order of the FAA does not suffer from any legal or factual infirmity. So, confirming his order, we decide the effective GOA against the AO.

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• 2017 (10) TMI 1238
  Revision u/s 263 - Held that:- In the present case, the regular books of accounts, viz. the cash book, the ledger, the bank account statements, were produced by the assessee which were verified and examined vis-à-vis the findings of the search (cash found, jewellery found, immovable property found), the diary / loose sheets found and facts emerging out of the statements recorded under section 132(4) and the financial statements filed by the with the return of income. We further find that the case laws cited by the Ld. DR are not applicable in the present case. We hold that the impugned order passed by the Ld. CIT u/s. 263 of the I.T. Act is without jurisdiction and not sustainable in the eyes of law. Accordingly, the impugned order is hereby quashed and appeal of the assessee is allowed.

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• 2017 (10) TMI 1237
  Validity of order u/s. 143(3) r.w.s. 153A - period of limitation - Held that:- The six assessments year as referred in clause (b) of sub section (1) of 153A clearly speaks about six assessment year immediately preceding assessment year relevant to the previous year in which year search is conducted. Further, in our considered view, the assessment year under consideration is out of the preview of scope of section 153A. Since the assessment for the year under consideration was out of the scope of section 153A, thus, the period of limitation prescribed under section 153A(1)(b) has no application for passing the assessment order with a stipulated period as prescribed therein. Hence the order passed by the AO under section 143(3) is within prescribed period of limitation as provided under section 153. Unexplained cash and unexplained jewellery seized at Mumbai Airport - Held that:- AO while passing assessment order has not given sufficient opportunity to explain and substantiate the claim of assessee and these grounds of appeal may also be restored to the file of AO with the direction to allow the assessee to explain about the seizure of cash and jewellery. On the other hand, the ld. DR for the Revenue supported the order of authorities below and would argue that the assessee has not appeared before the AO on a number of appointed dates and asked for adjournment. The assessee started to appear at the fag end of the year when the time period for passing the assessment order was knocking. However, on our specific query, the ld. DR for the Revenue agreed that he has no objection, if the grounds of appeal are restored to the file of AO. However, it was prayed that assessee be directed to fully co-operate and to provide the full detail and not to drag the proceeding unnecessary. Considering the contention of both the parties, the ground no.1 &2 are restored to the file of AO to decide both the ground afresh in accordance with law. The assessee is directed to provide full detail and information which may be required by AO and not to take the adjournment without legitimate ground.

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• Customs

• 2017 (10) TMI 1272
  Misdeclaration of export goods - contraband item - red sanders wood - penalty - Held that: - in the instant case one container was loaded with glass tumblers in the factory of BG. The container was stuffed under the supervision of Central Excise officers and also sealed. The container after export was recalled by the DRI and examined and it was found to contain 9.34 mt of red sander wood which is prohibited for export. Along with the contraband a part of the declared goods i.e. glass tumblers was also found - it is evident that none of the appellants had any role to play in the fraudulent export of red sander wood - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1271
  Classification of imported goods - parts/components/ accessories of various tools/dies - classified under chapter 82 or 84? - Appellant strongly argued that such summary classification of the goods imported under 13 bills of entry cannot be done - It has been claimed by the appellant that none of the goods imported are in the nature of parts of dies - Held that: - a significant portion of the imported goods are meant for captive consumption and not intended for manufacture of tools/ dies for M/s Honda. Goods falling in this category include items such as complete sets of dies checking fixtures, inspection jigs and various other such items. Such items are definitely required to be classified individually taking note of the nature of the goods imported and its individual classification. In respect of goods which have been imported for use in the design and manufacture of tools/ dies to be supplied to M/s Honda, we are of the view that these are required to be assessed as presented at the time of import. If such goods are identifiable as classifiable under any of the headings/ sub-headings of Customs Tariff Heading, they are to be classified therein. Only those goods which are specifically identifiable as parts of base metals which are not specifically covered separately under any of headings/ sub-headings, will be classified under 8207. The matter remanded to Adjudicating Authority for passing de novo order - appeal allowed by way of remand.

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• 2017 (10) TMI 1270
  Determination of duty after the death of importer - at the time of assessment and determination of duty liability through the impugned order, the alleged importer Shri Gurmeet Singh Sehgal is not alive - Held that: - similar issue decided in the case of Shabina Abraham And Others Versus Collector of Central Excise & Customs [2015 (7) TMI 1036 - SUPREME COURT], where it was held that there is in fact no separate machinery provided by the Central Excises and Salt Act to proceed against a dead person when it comes to assessing him to tax under the Act. The present appellants were nowhere in the picture in the proceedings before the adjudicating authority - it is not the case of Revenue recovery proceedings on confirmed duty liability during the life time of an importer. It is a case where the duty liability itself was determined after the death of the proprietor–importer - such demand of duty cannot be confirmed against the deceased person. Consequently, there can be no question of liability on the purported legal heir either for duty or redemption fine. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1269
  Liability of interest - Simultaneous benefit of two schemes - Status Holder Incentive Scrips (SHIS) - Zero Duty Export Promotion Capital Goods (EPCG) - surrender of benefit under SHIS, on pointing out but without any interest - Public Notice dated 08th September, 2016 - Held that: - the said Circular is clarificatory in nature, so it is applicable retrospectively - it appears that the Annexure to the Public Notice dated 08th September, 2016 has not been followed strictly in the instant case. The interest has also not been computed. When it is so, then we set aside the impugned order and remand the matter to the adjudicating authority to decide the issue de novo - appeal allowed by way of remand.

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• 2017 (10) TMI 1268
  Condonation of delay in filing appeal - case of appellant is that the delay caused in filing the present appeal is not deliberate and intentional but on account of the various reasons stated in the application - Held that: - though the reasons stated in the COD application for filing the appeal belatedly are not very convincing, but in the interest of justice, and keeping in view the facts and circumstances of the case, the application is allowed subject to payment of cost of Rs. 20,000/- - application allowed.

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• 2017 (10) TMI 1267
  Revocation of CB license - penalty - Regulation 11(a) - Held that: - Both the partners of M/s. Unisys Enterprises have disclosed in their statements to DRI that they were not aware of the details of the imports and had never met Shri Sameer Jha, proprietor of CB. From this, it emerges that the appellant has failed to obtain the authorization from the actual importer and violation of regulation 11(a) stands established. Imposition of Regulation 11(d) - Held that: - it stands established that the appellant has not even met the actual importer and as such requesting of advising the client for compliance of various legal positions does not arise. In view of the above failure to observe regulation 11(d) stands established. Imposition of Regulation 11(e) - Held that: - Regulation 11(e) requires due diligence to ascertain the correctness of information which he imparts to client - In the facts of the present case, both the partners of M/s. Unisys Enterprise, have admitted that they were unaware of the actual imports made in their name. Further, the appellant also has admitted that they never met the owner of the firm. From this it appears that the appellant failed to exercise due diligence to ascertain the correctness of information which he imparted to the client with reference to work related to clearance of cargo. Imposition of Regulation 11(n) - Held that: - Regulation 11(n) requires the CB to verify the antecedents, correctness of IEC code no., identity of the client and its functioning at the declared address - In the present case, we find that the appellant has simply accepted the address appearing in the driving license of Shri Sachin Gulati, partner of M/s. Unisys Enterprise. The appellant failed to notice that the address in the IEC document is different. Had the appellant made any serious verification, he would have known that the IEC of the firm was being used by a third person, Shri Aman Vachhar - violation of Regulation 11(n) stands established for failure to verify antecedents, correctness of IEC details. The appellant is guilty of violations of CBLR 2013 - ends of justice will be met by imposing a penalty of Rs. 50,000/- on the appellant, in addition to the forfeiture of the whole amount of security deposit - appeal allowed in part.

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• 2017 (10) TMI 1266
  Penalty u/s 112 and 114AA of the CA, 1962 - the only allegation against the appellant is that he gave authorization for Pass to Shri Biplav Kumar who is their employee and ‘H’ Card holder - Held that: - The Bill of entry for the present consignment was falsely filed in the name of the appellant, by others on 16.11.2010. Even if, it is held that the act of the appellant in issuing a letter dated 20.10.2010 is an infringement, it is not tenable to hold that such act made the goods imported on 16.11.2010 liable for confiscation. There is no link between these two acts. Further, the appellant is not liable for penalty under Section 114 AA as the said penalty relates to act of a person knowingly signing any declaration or documents, which he knows, as false or incorrect in the transaction of any business under the Customs Act. There was apparently linkage between the attempted smuggling of the particular consignment with the CHA and employee. In the present case, the impugned consignment cannot be linked to the appellant - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1265
  Exemption form SAD - N/N. 30/2004-CE - demand on the ground that the importers have not been able to satisfy the condition of non-availment of credit by the manufacturer, in terms of the said notification - Held that: - The issue having been decided by the Hon'ble Supreme Court, in the case of M/s SRF Ltd., M/s ITC Ltd Versus Commissioner of Customs, Chennai, Commissioner of Customs (Import And General) , New Delhi [2015 (4) TMI 561 - SUPREME COURT], where it was held that only those conditions could be satisfied which were possible of satisfaction and the condition which was not possible of satisfaction had to be treated as not satisfied - the judicial discipline requires the same to be followed - It is not the Revenue’s case that any stay has been granted against the said order or their review petition has been allowed - appeal dismissed - decided against Revenue.

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• 2017 (10) TMI 1264
  Penalty u/s 112(b) of the CA - High Seas Sale - penalty on transporters - Held that: - there is no evidence on record to show that the transporters were aware of the fraud if any, committed by importers - The transporters cannot be expected to know as to what fraud is going to be committed subsequently by the said recipient of the goods. As such, the imposition of penalties upon them, on the ground that they had transported the tainted goods, cannot be justified. Penalty on CHA - Held that: - there are no evidence to show that they aided and abetted the fraud - the filing of bills of entries by M/s. Canon Industries Pvt. Limited under Target Plus scheme by the present CHA is in accordance with law and the fraud stands committed only after the clearance of the goods - penalty on CHA set aside. Penalty on purchaser - Held that: - Any purchaser in the ordinary course of business, cannot be held liable to penal action on the ground that the goods involved were tainted and cleared by the original importer with a malafide intention - penalty set aside. Appeal allowed - decided in favor of penalty.

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• 2017 (10) TMI 1236
  Classification of imported goods - Whether difference in percentage of the classification between the appellant as well as the Department should be considered as a reason for alleging misdeclaration? - Held that: - the difference in percentage of the classification between the appellant as well as the Department should not be considered as a reason for alleging misdeclaration - reliance placed in the case of M/s. Saint Gobain Glass India Ltd. Versus CC (AIR) , Chennai [2011 (2) TMI 818 - CESTAT, CHENNAI], where it was held that finalization of the tariff heading under which the goods should fall is the ultimate job of the customs authorities and if the appellants have claimed wrong classification according to their limited understanding of the customs law, mens rea cannot be attributed to them nor confiscation and imposition of penalty can be resorted to. The appellant will be liable to pay differential duty as computed by the lower authorities - the order of confiscation of goods and imposition of redemption fine and penalty are set aside - appeal allowed in part.

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• Service Tax

• 2017 (10) TMI 1232
  Rectification of mistake - the additional grounds raised by the applicant in his application dt. 19/03/2015 were not considered by this Tribunal while deciding the appeal of the appellant - Held that: - Tribunal while disposing of the case of the applicant vide its order dt. 16/12/2016 has not considered these additional grounds which were raised by the applicant by filing miscellaneous application on 19/03/2015 - as per Rule 6(5) of the CCR, 2004 all these services have been specifically been covered in the said rule and all these services have been rendered in connection with taxable services as well as exempted services and therefore they are entitled to 100% credit of the refund in terms of Rule 6(5) of the CCR, 2004. The Final order is amended to the extent that the original authority will also consider these findings while deciding the refund claim of the applicant - ROM application allowed.

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• 2017 (10) TMI 1231
  Levy of service tax - collection charges of the Indian bankers who in turn send the same to the appellant for collection to the foreign bankers - Held that: - it appears that while exporting their goods, they lodged their bills for collection to the Indian Bankers who in turn send the same to the foreign banks. The foreign banks while remitting the money to the Indian Bank, deduct their charges for collection of bills which in turn are charged by the Indian Banks from the appellants. When it is so, then the appellant are not entitled to pay the service tax - identical issue decided in the case of GREENPLY INDUSTRIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I [2015 (12) TMI 80 - CESTAT NEW DELHI], where it was held that No documents have been produced showing that foreign bank has charged any amount from the appellant directly. The facts as narrated in the impugned order clearly indicate that it is the ING Vyasa Bank who had paid the charges to the foreign bank. In view of this, the appellant cannot be treated as service recipient and no Service Tax can be charged from them under Section 66A read with Rule 2(l)(2)(iv) of the Service Tax Rules, 1994. Levy of service tax - conducting the handicrafts fairs in the foreign countries - Held that: - the appellant has participated in a fair organised in foreign country. The appellant paid huge charges for allotment of booth/ space and other arrangements to the Council. There is no dispute that the services were performed outside India - the issue has come up before the Tribunal in the case of Paramount Communication Ltd. Vs. CCE [2017 (1) TMI 1426 - CESTAT, NEW DELHI], where it was held that there is no liability for the Indian assessee when the Business Exhibition Service is entirely performed outside India. Levy of service tax - services of truck operators for inward transportation of goods - Held that: - the identical issue has come up before the Tribunal in the case of South Eastern Coalfields Vs. Commissioner [2016 (8) TMI 677 - CESTAT NEW DELHI], where it was held that tax liability under Goods Transport Agency service cannot be sustained against the appellant. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1230
  Refund of CENVAT credit - Online Information and Data Access or retrieval Services provided by appellant - denial of refund on the ground that the services were provided in India and there was no export of the services - Held that: - identical issue has come up before the Tribunal in the case of GAP International Sourcing (India) Pvt. Ltd. Vs. CST, Delhi [2014 (3) TMI 696 - CESTAT NEW DELHI] wherein it was observed that The performance of such service in India, would not make them received/consumed in India, if beneficiary user/recipient of said service provided in relation to business or commerce, who has paid for these service and has used the service in his business, is located abroad. The position would be different if the company located abroad who has paid for the service, also has some branch/ project in India and the service provided in India is meant for that branch/project only in that case, the consumption of service would be in India and the service would be taxable in India. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1229
  Maintainability of cross-objections - Refund claim - time limitation - Held that: - the Revenue has filed an appeal only with regard to one quarter wherein the Commissioner has held that the same is within time. With regard to other five matters, the Revenue has not filed the appeal. The assessee has not filed cross objection in the appeal filed by the Revenue rather they have filed the cross objection in those cases where the Revenue has not filed the appeal which is not maintainable under law. Cross objections dismissed being not maintainable.

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• 2017 (10) TMI 1228
  Waiver of pre-deposit - reversal of CENVAT credit - Held that: - the appellant to make predeposit of Rs. 45 lakhs (Rupees forty five lakhs only) (approximately 10% of the demand) within one month and report compliance on 03/10/2017 - Subject to due compliance, there will be waiver of predeposit of balance dues and recovery thereof is stayed till the disposal of appeal.

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• 2017 (10) TMI 1227
  Rectification of mistake - both the Commissioners as well as the CESTAT has not passed any order with regard to the levy of penalty - Held that: - Since there was no suppression or concealment on the part of the applicant, therefore the imposition of penalty is not justified. Moreover since the demand itself is not sustainable to a large extent, therefore there can be no case for imposition of penalty and therefore, I allow the application and hold that the appellants are not liable to penalty and the amount of penalty which is imposed in the Order-in-Original is dropped - ROM application allowed.

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• Central Excise

• 2017 (10) TMI 1226
  Clandestine removal - clearance of processed MMF under the cover of 139 challans - Held that: - In view of the fact that the Director has not specifically admitted that the goods were removed clandestinely from the factory and in view of the fact that the challans contained the name of the consignee as ‘self’, it can be concluded that the charges of clandestine removal cannot be levelled against the appellant with regard to the goods covered under 139 challans - demand set aside. Removal of the goods under the cover of 22 challans - Held that: - In view of the fact that the Director of the Company has admitted that the goods were removed without payment of Central Excise duty, the Central Excise duty demand confirmed in respect of clearance of disputed goods in respect of 22 challans is proper and justified and the impugned order cannot be interfered with at this juncture. Penalty - Held that: - Since the adjudicating authority has not given the option to the appellant to deposit the reduced amount of penalty of 25%, such option should be available to the appellant. Accordingly, the adjudicating authority is directed to quantify the amount of reduced penalty, which is required to be paid by the appellant. Personal penalty on the Director of the appellant company - Held that: - the department has not specifically brought on any evidence, showing his involvement in clandestine removal of goods - provisions of Rule 26 of Central Excise Rules, 2002 cannot be invoked for imposition of personal penalty - penalty set aside. Appeal allowed in part and part matter on remand.

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• 2017 (10) TMI 1225
  CENVAT credit - credit taken was disputed by the Department on the ground that the inputs used in the trial production were converted into waste and scrap; and that since the goods were not used for manufacture of finished goods - Held that: - As per the statutory provisions, taking of Cenvat Credit is subject to the condition that the inputs and capital goods are received in the factory of manufacture of final product. In this case, the fact is not under dispute that the disputed goods were received in the factory and intended for use in the manufacture of excisable final product. Since the appellant commenced its manufacturing activities on trial basis and commissioning of its plant facilities, those goods were used in such trial run. Accordingly, after use in the manufacturing processes, the inputs became waste. Since, the goods have been put to use for the intended purpose and admittedly received in the factory of manufacture, the requirement of Rule 3 ibid has been duly complied with for the purpose of availment of Cenvat credit. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1224
  CENVAT credit - time limitation - maalfide intent - Held that: - the Department took more than 3 and half years for issuing the show cause notice from the date of reply to the spot Memo - no iota of evidence was brought on record to show that the appellant had indulged into malpractices or had fraudulent motive in availment of Cenvat Credit in respect of non-availability of subject goods in the factory - Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1223
  Rectification of mistake - application for change in the cause title of the appeal - Held that: - application for change in the cause title of the appeal inasmuch as the appellant, who was earlier known as M/s Met Trade India ltd., is now, Metenere Ltd., w.e.f. 21.11.2013 - In view of the fact of change in the company's name, we allow the miscellaneous applications and replace the old name of the appellant with the new name.

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• 2017 (10) TMI 1222
  Penalty - Duty paid under protest before issaunce of SCN - NCCD - EC - SHEC - whether the penalty is imposable upon the assessee u/r 25 of the CER, 2002, read with section 11AC of the CeEA, 1944 for violation of provisions of Rule 4 and 8 of CER, 2002 and the provision of N/N. 50/2003, with intent to payment of duty - Held that: - Hon’ble Bombay High Court in the case of CCE Mumbai Vs. Hindustan Petroleum Corporation Ltd. [2016 (12) TMI 1269 - BOMBAY HIGH COURT] observed that ‘in case of non-payment or short-payment of duty, penalty gets automatically attracted and authority had no discretion - the issue is relating to National Calamity Contingent Duty (NCCD); Education Cess, and Secondary and Higher Education Cess which was neither created by the Central Excise Act, 1944, nor a subject matter of Ministry of Finance - penalty sustained - appeal dismissed - decided against appellant.

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• 2017 (10) TMI 1221
  Valuation - includibility - the cash discounts on the goods sold to the dealer from depot/branches directly from factory at the time of clearance of the said goods - Held that: - an identical issue has come up before this Tribunal in the assessee-Appellants’ own case M/s Kisan Irrigation Ltd. Vs CCE, Indore [2016 (1) TMI 696 – CESTAT, New Delhi], where it was held that As relying on Purolator India case [2015 (8) TMI 1014 - SUPREME COURT ] it is held that the appellants are entitled for claiming deduction of cash discount from the transaction value on the clearances made from the factory to all the customers - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1220
  Clandestine removal - DMO - Whether duty have been rightly demanded on the 71 drums of DMO lying in the factory premises on the date of inspection/panchnama dated 27/07/2006? Held that: - there is lack of sufficient material on record to support the contention of the Revenue that the DMO so found and seized was in marketable stage - Revenue have failed to investigate further on the assertions and explanations given by the appellant that the DMO was not marketable but requires further stages of processing to make it marketable and also insisted on test report, which was not done and as such, there is lack of material to support the allegations in the show cause notice - ALSO, DMO was found inside the factory premises and there was no action and/or attempt on the part of the appellant to remove the same clandestinely. Demand set aside - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (10) TMI 1219
  Rescinding of sales tax exemption - The Government of Gujarat had provided certain exemptions from payment of sales tax in case of certified manufacturers registered under the Khadi Board. On the purchases also, the petitioner was subject to certain condition not liable to pay tax. These exemptions were granted under the Gujarat Sales Tax Act. With the replacement of the State Sales Tax Act by the VAT Act w.e.f. 01.04.2006, such exemptions stood withdrawn. Held that: - section 41 of the Act pertains to remission of tax penalty or interest. It was in exercise of powers under sub-section (1) of section 41 that the Government had issued a notification dated 27.02.2009 granting remission of whole of the tax payable on the specified products by a certified manufacturer on the sale of such goods. This was subject to limits imposed in terms of condition No.1 to the notification. Condition No.3 provided that the said certified manufacturer would issue tax invoice or retail invoice in accordance with the provisions of the VAT Act. In essence, the Government desired to waive tax component on sale of such specified goods by the certified manufacturer dealers. In whatever manner the accounting treatment may be given to such tax component, the loss to the ex-chequer would be limited to 4+1% of the tax which, under the said notification, Government had decided to forgo. If the contention of the Assessing Officer is that the assessee having shown to have collected the tax from the purchaser and not deposited with the Government refund by granting refund of such amount, the Government revenue would suffer double loss, such contention is plainly erroneous. The decision of the Assessing Authority to deny the tax remission to the petitioner is set aside. The Assessing authority shall pass fresh order granting such benefit to the assessee with further statutory benefits if any available - petition allowed by way of remand.

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• Indian Laws

• 2017 (10) TMI 1276
  Determination of compensation u/s 163-A and 166 of the Motor Vehicles Act, 1988 - claim in the case of death - liability of insurance company - a person who is selfemployed or who is paid fixed wages / salary - Established income of the deceased towards future prospects - Whether there will be no addition after 50 years? - Held that:- Taking into consideration the cumulative factors, namely, passage of time, the changing society, escalation of price, the change in price index, the human attitude to follow a particular pattern of life, etc., an addition of 40% of the established income of the deceased towards future prospects and where the deceased was below 40 years an addition of 25% where the deceased was between the age of 40 to 50 years would be reasonable. The controversy does not end here. The question still remains whether there should be no addition where the age of the deceased is more than 50 years. Sarla Verma thinks it appropriate not to add any amount and the same has been approved in Reshma Kumari. Judicial notice can be taken of the fact that salary does not remain the same. When a person is in a permanent job, there is always an enhancement due to one reason or the other. To lay down as a thumb rule that there will be no addition after 50 years will be an unacceptable concept. We are disposed to think, there should be an addition of 15% if the deceased is between the age of 50 to 60 years and there should be no addition thereafter. Similarly, in case of selfemployed or person on fixed salary, the addition should be 10% between the age of 50 to 60 years. The aforesaid yardstick has been fixed so that there can be consistency in the approach by the tribunals and the courts. In view of the aforesaid analysis, we proceed to record our conclusions:- (i) The two-Judge Bench in Santosh Devi should have been well advised to refer the matter to a larger Bench as it was taking a different view than what has been stated in Sarla Verma, a judgment by a coordinate Bench. It is because a coordinate Bench of the same strength cannot take a contrary view than what has been held by another coordinate Bench. (ii) As Rajesh has not taken note of the decision in Reshma Kumari, which was delivered at earlier point of time, the decision in Rajesh is not a binding precedent. (iii) While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax. (iv) In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component. (v) For determination of the multiplicand, the deduction for personal and living expenses, the tribunals and the courts shall be guided by paragraphs 30 to 32 of Sarla Verma which we have reproduced hereinbefore. (vi) The selection of multiplier shall be as indicated in the Table in Sarla Verma read with paragraph 42 of that judgment. (vii) The age of the deceased should be the basis for applying the multiplier. (viii) Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs. 15,000/-, Rs. 40,000/- and Rs. 15,000/- respectively. The aforesaid amounts should be enhanced at the rate of 10% in every three years.

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• 2017 (10) TMI 1235
  Offence punishable under Section 138 of the Negotiable Instruments Act - order passed in Criminal Complaint passed by the Metropolitan Magistrate by virtue of which the petitioners were summoned as accused - whether in presence of the final judgment and decree passed in Civil Suit of this Court, the impugned summoning order is bad in law? - Held NO The petitioners are invoking the jurisdiction under Section 482 of the Code of Criminal Procedure, 1973 to set aside the order dated 30th March, 2015 passed by the Metropolitan Magistrate, Saket District Court, New Delhi in Criminal Complaint whereby the application of the petitioners for stay of the proceedings under Section 138 of NI Act was dismissed ; to quash the Criminal Complaint and to set aside the order dated 13th December, 2010 passed by the Metropolitan Magistrate by virtue of which the petitioners were summoned as accused for offence punishable under Section 138 of the Negotiable Instruments Act. In the instant petition, the complaint under Section 138 read with Section 141 of the Negotiable Instruments Act was filed pertaining to dishonouring of the two cheques i.e. cheque no. 504080 dated 30.09.2010 of Rs. 4,35,00,000/- (Rupees Four Crores Thirty Five Lakhs Only) and second cheque no. 504081 dated 30.09.2010 of Rs. 97,69,266/- (Rupees Ninety Seven Lakhs Sixty Nine Thousand Two Hundred Sixty Six Only), which were dishonoured vide dishonor memo dated 15.10.2010 in respect of cheque no. 504080 and dishonor memo dated 16.10.2010 in respect to cheque no. 504081 with the remarks “Funds Insufficient”. Thereafter, the complainant/respondent issued two legal demand notices dated 26.10.2010 in respect of the two dishonoured cheques which was duly served upon the petitioners. The complainant/respondent at the same time also filed a Civil Suit (OS) No. 47 of 2011 for the recovery of Rs. 5,75,17,240/- before this Court and the same was decreed in favour of the present respondent on 19th March, 2013. The said decree was for a sum of Rs. 5,75,17,240/- with pendente lite interest @ 9% p.a. and future interest @ 15% p.a. Since the judgment and decree in the Civil Suit (OS) No. 47 of 2011 has attained finality between the same parties with respect to the same transaction and the counsel for the petitioner has not argued the case on merit as observed in order dated 27.03.2017 before this Court, the plea taken by the petitioners in the present case loses significance and this Court finds no merit to interfere with the impugned summoning order dated 13th December, 2010 and with the impugned order dated 30th March, 2015 passed by the Metropolitan Magistrate, South East, Saket Court in Criminal Complaint No. 2492 of 2015. 28. Consequently, the present petition is dismissed and disposed of accordingly. All the pending application(s), if any are also disposed of. One copy of this judgment be sent to the concerned Court(s).

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• 2017 (10) TMI 1234
  Offence punishable under Section 138 of NI Act - court taking cognizance of the offence - Held that:- In the present case, the complainant did not arraign the company as an accused when there was no legal impediment in impleading the company as accused. The drawer of the cheque was company which was evident from the cheque. The complainant had knowledge that the accused was impleaded by filing complaint, he was in­charge and responsible for conduct of the business of the said company. Therefore, the complainant ought to have impleaded the company as an accused. Therefore, the present case cannot be equated with the case where during trial it is disclosed that some other accused is required to be impleaded as an accused, or that the evidence on record which may be in the form of examination­-in­-chief disclosed the involvement of the accused, who is not arraigned as accused in the complaint. From the face of cheque, statement in the complaint, evidence of the complainant, it was manifestly clear that the drawer of the cheque was company. The respondent no.2 filed the application u/s 319 only when she knew that as per Aneeta Hada’s decision (2012 (5) TMI 83 - SUPREME COURT OF INDIA ), the complaint would become void and untenable in law. The Trial Court failed to appreciate that powers could have been exercised where it is difficult to ascertain as to who exactly committed the offence. In a technical offence like Section 138 of N.I.act, the offender is known to the complainant but is not arraigned as an accused, then in such eventuality, the company cannot be arraigned as an accused at a later stage to circumvent the decision of Supreme Court. It is pertinent to note that offence u/s 138 of N.I.Act is qua the drawer of the cheque. The cognizance can be taken within the time limit prescribed under the Act. The order passed by the Trial Court is against the settled principles of law. The cases relied upon by learned advocate for respondent no.2 were delivered in distinct facts and are not applicable in the present case, also contrary to the recent decision in case of N.Harihara Krishnan Vs. J.Thomas (2017 (9) TMI 1 - SUPREME COURT OF INDIA ). In the said decision it has been observed that failing to comply with the steps contemplated u/s 138 of N.I.Act, would not provide cause of action for prosecution and, therefore, in the context of prosecution u/s 138, the concept of taking cognizance of the offence but not an offender, is not appropriate. Unless a complaint of necessary factual allegations constituting each of the ingredients of the offence u/s 138 of N.I. Act is made out, the Court cannot take cognizance of the offence. There is no substance in the contentions of respondent no.2 respectively in these applications and the same are devoid of merit. The prosecution in all these applications which are subject matter of challenge under these applications as well as the orders passed by the learned Magistrate u/s 319 of Cr.P.C deserves to be quashed and set aside.

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• 2017 (10) TMI 1233
  Recourse to the provisions of SARFAESI Act - execute the recovery certificate issued by the Debts Recovery - validity of One Time Settlement (OTS) - release the mortgaged property in proportion to the debt repaid by the petitioners - secured creditor disabled from continuing to take action under the SARFAESI ACT merelry because it had later filled an application under sec 19(1)of the RDDB ACT for recovery of its dues? - Held that:- If the bank/financial institution had already initiated action under the SARFAESI Act before it filed an application under Section 19(1) of the RDDB Act, it would make no sense for it to withdraw its application under Section 19(1) of the RDDB Act to pursue its remedy under the SARFAESI Act which it had initiated earlier, as it can simultaneously pursue both its remedies under the RDDB Act and the SARFAESI Act. Nothing prevents a bank/financial institution from continuing with the proceedings initiated by it earlier under the SARFAESI Act, even if it has subsequently invoked the jurisdiction of the DRT under Section 19(1) of the RDDB Act. This contention of bar of jurisdiction under the SARFAESI Act, merely because a secured creditor has instituted proceedings under the RDDB Act after having initiated proceedings under the SARFAESI Act earlier, does not merit acceptance. Respondent bank violaton to RBI guidelined regarding extension of the one time settlment schme - As banks deal with public funds, waiver of even a part of the principal debt would endanger the financial viability of these banks. It would also put to risk the hard earned money of small depositors who park their life savings in these institutions, to ensure safety and security of their deposits, even if the interest offered thereon is far lower than in other forms of investment. We wish to say no more, as the petitioners have failed even to adhere to the OTS offered by the 2nd respondent-bank which is now seeking to recover the entire amount due to it from the petitioners herein. Failure of the 2ND respondent bank to show title deeds to the petitioner borrower - The respondent-bank has pointed out, in our opinion rightly, that, since a decree was passed by the DRT and recovery proceedings were pending before the Recovery Officer, they could not withdraw the original documents from the DRT at that juncture. The petitioners have not even stated, in their writ affidavits, why they chose not to submit an application seeking permission of the DRT to have the title deeds inspected by the prospective buyers. On the other hand, they have specifically asserted in the writ affidavits that no person would be willing to go to the DRT for inspection of the original documents for fear of buying properties under litigation. It is evident, therefore, that no prospective buyer came forward to inspect the title deeds in the custody of the DRT. The ruse of a prospective buyer coming forward to purchase the property, and the 2nd respondent being blamed for not showing the documents, is only to avoid sale, of their mortgaged immovable properties, by the 2nd respondent-bank for recovery of its dues. Respondent bank obligation to release the mortgaged properties proportionate to the repayment of the debt by the petitioner - petitioners have chosen not to pursue this request for, in their letter dated 03.05.2017, they have sought for release of the mortgaged securities only on payment of the OTS amount of Rs. 10.50 Crores, and have not requested proportionate release of their properties on part payment of the OTS amount. Despite the respondent-bank’s request that they should deposit Rs. 10.50 Crores in a third party no lien account to show their bonafides, (for the said amount to be appropriated towards their loan in case their proposal was accepted and, in case the proposal was not accepted, for return of the said sum of Rs. 10.50 Crores to them), the petitioners have not taken up the offer of the respondent-bank to pay the said amount; and, under the protection of the interim order dated 23.08.2016, (which precluded the respondent-bank from taking coercive steps for recovery of the balance amount due from the petitioners account), have chosen not to pay even a single rupee towards the amounts due from them to the respondent bank. It is evident, therefore, that there are no bonafides in these Writ Petitions, and the petitioners are merely seeking to drag on proceedings and thwart all attempts of the respondent-bank to recover the amounts due to it. We see no reason to accede to the petitioners request for grant of two months time to pay the OTS amount of Rs. 10.5 crores. It is because of the petitioners failure to adhere to the repayment schedule, stipulated by the respondent bank and the DRT, initially by 31.03.2016 and later by 30.06.2016, was the bank constrained to cancel the OTS offer, made by them earlier on 19.01.2016, vide their letter dated 08.08.2016. As noted hereinabove after the OTS offer dated 19.01.2016, for payment of 11.51 crores (12.71 crores minus 1.20 crores paid by them), the petitioners did not pay any amount apart from Rs. 10 lakhs on 15.05.2016 that too only because the DRT had, by its order in I.A. No. 206 and 207 of 2016 in SA No.252 of 2015 dated 12.05.2016, directed them to do so. For the past more than 16 months (i.e., from 15.05.2016 till date), the petitioners have not paid a single rupee in discharge of the debt due to the respondent-bank, and their request for grant of further time of two months is only to avoid sale of the secured assets without having to repay the debt. As against the OTS offer of Rs. 12.71 Crores, the petitioners have paid only Rs. 1.30 Crores and, even in terms of the said OTS offer, they were still due Rs. 11.41 Crores to the respondent-bank. The repeated indulgence shown to them by the DRT has, evidently, emboldened the petitioners to reduce the OTS offer to Rs. 9.35 Crores, and to subsequently marginally increase it to Rs. 10.50 Crores as is evident from their letter dated 03.05.2017, though the balance amount due, even in terms of the earlier OTS offer dated 19.01.2016, is Rs. 11.41 Crores. The petitioners have successfully thwarted all legitimate attempts of the respondentbank to recover its dues. It is not even contended before us, by the petitioners herein, that they have identifiable buyers ready and willing to purchase the secured assets, nor have they furnished any information of the price which the so called prospective buyers are willing to pay for the mortgaged properties. The present Writ Petitions are a last ditch effort to prevent the respondent-bank from putting the subject properties to sale for recovery of its dues.

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