Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 1, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Refund of Cess - zero-rated sales - relevant date - the recent Notification dated 05.07.2022, clearly postulates that in respect of period 1st March, 2020 to 28th February, 2022, the computation of period of limitation, for filing refund application under Section 54 or Section 55 of the said Act shall stand excluded. - It cannot be said that the application for refund was made beyond the period of limitation - HC
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Refund of the IGST paid on the goods supplied to SEZ units - The period from 15.03.2020 till 28.02.2022 stand excluded in computing the period prescribed for limitation. Accordingly, the Appeal filed by the petitioners on 21.04.2021 challenging the rejection of refund claim shall have to be considered within the period of limitation - HC
Income Tax
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Assessment proceedings against dead person - curable defect u/s 292B or not? - the legal representative of the deceased assessee submitted to the jurisdiction of the income tax authorities or in any way participated in the proceedings - Provision of section 292BB would not apply in cases where notices are gone to the dead assessee and the proceedings are started against a dead assessee - HC
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Unexplained credit under Section 68 - The transaction must be looked at in entirety including events that have transpired in the subsequent years. That is to say that the proper facts in regard to whether the advertisement advances had indeed been received in AY 2011-12 and utilized for repayment of the loans must be looked into by the Assessing Officer in order to determine the veracity of the additions under Section 68 - HC
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Exemption u/s. 11 - claim denied as delay in filing audit report in Form 10B - the clarification in condoning the delay in filing Form 10B for A.Y. 2016-17 is binding on the CPC, but however, was ignored to consider the same. Therefore, the delay in filing audit report in Form 10B is condoned in terms of CBDT Circular
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Disallowance of claim of depreciation on the withholding tax (TDS liability) borne by the assessee, which has been capitalised - There should not be any dispute that the identity and character of the asset, which has entered into the block of asset, would be lost. In the instant case also, the TDS liability borne by the assessee on the premium amount, after it is thrown into the common hotchpotch of block asset in AY 2013-14 has lost its identity and become an inseparable part of block asset insofar as calculation of depreciation is concerned. Hence the AO could not have disallowed the depreciation claim as made in the first year. - AT
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Disallowance of long Term Capital loss (LTCL) - Cost of acquisition - The assessee had also furnished the proper reasons for exiting out of her investment from the said company. None of these explanations furnished by the assessee were found to be false by the Revenue. Hence, it was only the failed investment deal of an assessee being a private equity investor, which had resulted in incurrence of loss for the assessee which is claimed as a long term capital loss by the assessee - AO does not have any power to substitute the purchase price of shares with a different value than the value at which actually it was paid. - AT
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Interest u/s 244A on refund of taxes - The time period taking by the ld CIT(A) in disposing off the appeal cannot be attributed to the assessee and the said period cannot be excluded. Admittedly, the assessee has already been allowed interest from the date of passing of the order of the ld CIT(A) i.e, 18/01/2019 to the date of issue of refund i.e, 13/08/2019. Therefore, the assessee shall be eligible for interest for remaining period starting 04/10/2016 to 18/01/2019 - AT
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Deduction 80IB - claim of interest income & other income - CIT(A) had rightly pointed out about the embedded duty drawback value in Export Turn Over which is not separately explained by the assessee in the submission. The claim of interest income & other income should be verified by the ld. AO during hearing - AT
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Addition u/s 68 - share application money - preference shares - additions as dubious transaction for which no proper explanation was given - the assessee was provided with ample opportunities to furnish details pertaining to his claim. From the submissions made by the assessee, notice u/s 133(6) was issued by the AO to the concerned parties which was found to be returned as ‘unserved’. The assessee has not proved the identity, creditworthiness of the investors and genuiness of the transaction. - AT
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Revision u/s 263 by CIT - Even after considering the amendment made by Finance Act, 2015 in the provisions of Section 263 widening the scope of its applicability and including non-proper enquiry within its fold, on perusal of facts and details submitted and in the circumstances of the case, the present issue is also not covered even considering the amended provisions. - the findings of the ld Pr. CIT about the assessment order being erroneous and prejudicial to the interest of Revenue lacks merit - AT
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Addition of gifts - gifts received by the newly wed couple from the immediate family or relatives - there is tradition in marriage of a female - CIT(Appeals) ought to have verified the correctness of the claim of the assessee - Matter restored back - AT
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Levy of interest u/s 234A, 234B and 234C - Disallowance of TDS credit deducted by ex-employer of the appellant - it is seen that for attracting the levy of interest, the calculations necessarily require to be made are to be considered after reducing the TDS deducted in a case like this. Hence, in case the Assessing Officer and the assessee are interpreting the observations/directions in para 8 as a direction to charge interest holding assessee in default, then such an interpretation is contrary to law. The legislature in very clear terms has already factored the factum of TDS deducted by the deductor. - AT
Customs
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Revocation of Customs Broker License - The main contention of the learned counsel for the appellant is that simply because an employee of the appellant had committed an error or fraud, the licence of the appellant should not be revoked. This statement cannot be accepted. - there is no error in the order of the Commissioner holding that the appellant has violated the Regulations - AT
Indian Laws
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Dishonor of Cheque - the mere fact that the statement of the Attorney Holder of the complainant in this case has not been recorded in accordance with the provisions contained in Section 200 of the Cr. P. C would not vitiate the whole proceedings. The argument of learned counsel for the petitioner in this regard is without any merit. - HC
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Dishonor of Cheque - Grant of interim compensation - Although no guidelines for grant of interim compensation have been laid down in Section 143-A of the NI Act, yet it is a settled law that whenever a discretionary power is to be exercised by a Court, the same has to be exercised on well-recognized principles supported by reasons. The court has to spell out the reasons for grant of interim compensation in favour of the complainant and it has also to justify in its order - HC
PMLA
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Grant of bail - respondent is suffering from Malignancy and Cancer - The Department ought not to have filed such a Special Leave Petition wasting the stationery, the legal fees and Court’s time. The Special Leave Petition stands dismissed with exemplary cost, to be borne by the concerned officer, who granted the permission to file the Special Leave Petition, quantified at Rs.1,00,000/-, to be recovered from the salary of such an officer. - SC
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Money Laundering - Provisional Attachment Order - This Court is of the considered opinion that the present is not a fit case wherein this Court should interfere with the order of provisional attachment in exercise of its power under Article 226 of the Constitution of India inasmuch as this Court has held that the authority is having its power and jurisdiction to issue the impugned order of attachmen - HC
Service Tax
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Extended period of limitation - intent to evade payment of duty - Suppression - The reason for such bona fide belief stands corroborated from the fact that the service tax was neither collected by them from M/s. ACCSL nor accordingly, was paid by the appellant. - Since there was the scope and belief with the appellants for entertaining the doubt about no liability of theirs to pay the service tax that the application of Section 73(1) of the Finance Act, 1994 the proviso thereof gets ruled out and resultantly, the extended period of limitation is held to have wrongly invoked by the department. - AT
Central Excise
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Maintainability of appeal of the assessee - threshold amount involved in the appeal - disputed amount is less than Rs.2,00,000/- - the appellant failed to appeared for hearing despite notice - the appeal is dismissed for non-prosecution in terms of Rule 20 of CESTAT (Procedure) Rules, 1982 as also in terms of Section 35B(1) of the Central Excise Act, 1944 being not maintainable as the disputed amount is less than the threshold limit. - AT
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Valuation of goods - finished goods cleared to interconnected sister units - The legislators keeping in mind and accepting the interpretation of valuation provision made in the judgments supra, brought an amendment in Rule 8 and the same is effective from 10.12.2013. This amendment in Rule 8 further strengthen the case of the appellant in their favour. Needless to state that the said amendment cannot be applied retrospectively. For the above reason also the contention of the revenue is not sustainable. - AT
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CENVAT Credit - ISD - distribution of input service credit - credit denied on the ground that credit could be distributed by Parle only to its own manufacturing unit under rule 7 of the CENVAT Credit Rules, 2004 and not to the appellant which is not a manufacturing unit of Parle - the Commissioner (Appeals) was not justified in denying CENVAT credit distributed by Parle prior to 01.04.2016. - AT
Case Laws:
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GST
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2022 (10) TMI 1129
Refund of ITC accumulated due to inverted Tax Structure - Section 54 of CGST Act - HELD THAT:- As rightly contended by the learned counsel for the petitioner, in addition to the fact that the Circular dated 31.03.2020 does not come in the way of the petitioner claiming refund under Section 54(3)(ii) of the CGST Act, 2017, as held by the Gauhati High Court in BMG s case [ 2021 (9) TMI 472 - GAUHATI HIGH COURT] , the said position has been reiterated and clarified by the respondents themselves by issuing the Circular dated 06.07.2022, which is sufficient to show that the petitioner is entitled to seek refund of the said amount paid by him. The petitioner would be entitled to refund of the said amount and the impugned order rejecting the refund deserves to be quashed and the respondents are to be directed to take necessary steps to consider the claim of the petitioner in accordance with law - Petition allowed - decided in favor of petitioner.
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2022 (10) TMI 1128
Validity of assessment order - ex-parte order - de-freezing/de-attachment the bank account - non-realization of amount from the bank account(s) of the petitioner in pursuance of the order of Assessment passed under section 73 of the Bihar Goods and Services Act, 2017 - violation of principles of natural justice - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed does not assign any reasons sufficient, even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order passed in violation of the principles of natural justice, entails civil consequences. The impugned order is set aside - petition disposed off.
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2022 (10) TMI 1127
Refund claim - time limitation - time prescribed under Section 54 of the CGST and APSGST Acts - HELD THAT:- The extension of time granted by Hon ble Supreme Court was only in respect to appeals, but the same is not applicable to any proceedings under GST laws. Recently, the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs issued Notification No.13/2022-Central Tax dated 05.07.2022 which clearly postulates that the period from 1 st March, 2020 to 28th February, 2022, computation shall stand excluded while computing the period of limitation for filing refund application under Section 54 or Section 55 of the said Act - it cannot be said that the application for refund was made beyond the period of limitation. Hence, the order under challenge is set aside and the matter is remanded back to respondent No.1, for fresh consideration in accordance with law. Petition allowed by way of remand.
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2022 (10) TMI 1126
Refund of Cess - zero-rated sales - relevant date in the Explanation to Section 54 of the Central Goods and Services Tax Act, 2017 - Circular No.157/13/2021-GST dated 20.07.2021 - violation of principles of natural justice - HELD THAT:- Though learned Government Pleader would contend that the said application came to be made beyond the period of limitation, but the learned counsel for the petitioner would submit that a reading of Clause 2 to the Explanation to Section 54 of the CGST Act would show that the relevant date is prescribed only for goods exported out of India, but there is no provision determining the relevant date in respect of the supplies to SEZ units, which are considered as zero-rated sales under Section 16 of the Integrated Goods and Services Tax Act, 2017. It would be relevant to note that the recent Notification dated 05.07.2022, clearly postulates that in respect of period 1 st March, 2020 to 28th February, 2022, the computation of period of limitation, for filing refund application under Section 54 or Section 55 of the said Act shall stand excluded. It cannot be said that the application for refund was made beyond the period of limitation - the matter is remanded back to respondent No.1 for consideration afresh in accordance with law - Petition allowed by way of remand.
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2022 (10) TMI 1125
Refund of the IGST paid on the goods supplied to SEZ units - supply would be treated as zero rated supply or not - Section 54 of the CGST Act and Section 16(1) of the CGST Act - HELD THAT:- In the peculiar facts of the case, when the petitioners received order rejecting the refund claim in month of November, 2020, the Covid-19 pandemic situation was prevailing. The Hon ble Apex Court, vide order dated 23rd March, 2020 passed in Suo Motu Writ Petition (Civil) No.3 of 2020 [ 2020 (5) TMI 418 - SC ORDER ], while exercising extra-ordinary jurisdiction under Article 141 of the Constitution of India, extended the period of limitation for filing the Appeal which was further extended from time to time which is evident from the order dated January 10, 2022 passed in Misc. Application No.21 of 2022 in Misc. Application No.665 of 2021 in Suo Motu Writ Petition (Civil) No.3 of 2020 [ 2022 (1) TMI 385 - SC ORDER ]. The period from 15.03.2020 till 28.02.2022 stand excluded in computing the period prescribed for limitation. Accordingly, the Appeal filed by the petitioners on 21.04.2021 challenging the rejection of refund claim shall have to be considered within the period of limitation - the matter is remanded back to the respondent No.2- Appellate Authority to decide the same on merits after giving an opportunity of hearing to the petitioners - Petition disposed off.
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Income Tax
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2022 (10) TMI 1134
Validity of faceless assessment - draft assessment order is not forwarded to the petitioner - ignorance of due procedure of law - whether the respondent authorities have followed the due procedure of law as envisaged under Section 144B(1)(xvi) read with Section 144B(7)(vii) and (xii) of the Act or not, while passing the impugned assessment order dated 26th September, 2021? - HELD THAT:- The answer to the above question are not res integra inasmuch as the provision of Section 144B of the Act which provides for Faceless Assessment for the assessment under Section 143(3) and 144 to be carried out as per the procedure contained therein and Sub-section (9) of Section 144B provides that notwithstanding anything contained in any other provision of the Act, the assessment made under Section 143(3) or Section 144 of the Act, shall be non-est if such assessment is not made in accordance with the procedure laid down u/s 144B of the Act. The opportunity of hearing as envisaged under Section 144B of the Act is also therefore, required to be scrupulously adhered to as the principles of natural justice are unfailingly ingrained in the procedure prescribed for Faceless Assessment. As in the facts of the case, it is not in dispute that the draft assessment order is not forwarded to the petitioner, which is required to be sent along with the show-cause notice as per the procedure prescribed u/s 144B(1) (xvi)(b) - This Court in case of Atulbhai Kantilal Mehta [ 2022 (1) TMI 1289 - GUJARAT HIGH COURT] as well as in case of Agrawal JMC Joint Venture [ 2021 (10) TMI 1317 - GUJARAT HIGH COURT ] has held that it is no more res integra that any order passed in violation of statutory procedure prescribed under Section 144B of the Act, makes the order vulnerable as the same is passed in violation of principles of natural justice. The contention raised on behalf of the Revenue with regard to alternative and efficacious remedy available to the petitioner and preferring an appeal before the Commissioner of Income Tax is concerned, as the impugned order is passed in violation of principles of natural justice and is contrary to the procedure prescribed for Faceless Assessment as per Section 144B of the Act, we are of the opinion that the same can be challenged by invoking the extraordinary jurisdiction under Article 226 of the Constitution of India as per the decision in case of Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai Others [ 1998 (10) TMI 510 - SUPREME COURT ] This petition succeeds and is accordingly allowed. The matter is remanded back to the Assessing Officer by quashing and setting the impugned assessment order dated 26th September, 2021 along with the demand notice issued under Section 156 of the Act. The Assessing Officer shall issue show-cause notice along with the draft assessment order by granting an opportunity of personal hearing to the petitioner as per the procedure prescribed under Section 144B of the Act.
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2022 (10) TMI 1133
Validity of faceless assessment - Denial of natural justice - gross violation of principles of natural justice - HELD THAT:- As it appears that the respondent Assessing Officer has not considered the reply dated 19th April, 2021 filed by the petitioner in response to the show-cause notice dated 16th April, 2021 issued along with Draft Assessment order, while passing the impugned assessment order. The petitioner submitted 16 documents along with the reply dated 19th April, 2021, however, in paragraph 7.3 of the impugned assessment order it is stated by the AO that the petitioner reiterated his earlier stand and no new documentary evidence or logic has been put forth and the documents submitted were already considered while framing the draft assessment order. This fact is contrary to the record as it appears from the reply dated 19th April, 2021 which contained 16 annexures furnished by the petitioner, which were not supplied earlier. Moreover, the petitioner has not been granted any opportunity of hearing as provided under Section 144B of the Act. Thus, there is gross violation of principles of natural justice while passing the impugned assessment order contrary to the procedure prescribed under Section 144B of the Act, as held by this Court in case of Atulbhai Kantilal Mehta [ 2022 (1) TMI 1289 - GUJARAT HIGH COURT] as well as in case of Agrawal JMC Joint Venture [ 2021 (10) TMI 1317 - GUJARAT HIGH COURT] This petition succeeds and is accordingly allowed. The impugned assessment order dated 2nd June, 2021 and the demand notice under Section 156 of the Act are hereby quashed and set aside and the matter is remanded back to the Assessing Officer. The Assessing Officer shall issue fresh show-cause notice along with the draft assessment order by granting an opportunity of personal hearing to the petitioner as per the provisions of Section 144B of the Act. Such exercise shall be completed within 12 weeks from the date of receipt of copy of this order.
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2022 (10) TMI 1132
Reopening of assessment u/s 147 - Bogus purchases - HELD THAT:- Without finding any defect or inaccuracies in the documentation so submitted by the assessee during the course of assessment proceedings and relying solely on the statement, the assessment proceedings have been initiated and completed by the AO. Even where the AO is of the belief that contents of the statement are clear and specific and goes against the assessee, the question is whether the statement has been supplied to the assessee and whether the assessee has been allowed an opportunity to cross-examine Shri Rajesh Mittal especially where the assessee has requested for the same as evident from the submissions made before the lower authorities. Answer to the same is in negative and the assessee has thus been charged with an offence without even confronting the statement so used as an solitary evidence against it by the Revenue which is clearly in violation of the settled legal principle of natural justice as held in case of Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] - It is thus a case where the disallowance by way of bogus purchases has been made by AO solely based on statement of Shri Rajesh Mittal which was not subjected to further examination and cross-examination during the course of assessment proceedings and the facts of the case are thus at par with the facts in case of Odeon Builders Ltd [ 2019 (8) TMI 1072 - SUPREME COURT] where the SLP filed by the Revenue has been dismissed by the Hon ble Supreme Court. The addition so made by the AO and sustained by the ld CIT(A) is hereby set-aside and the same is hereby directed to be deleted. - Decided in favour of assessee.
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2022 (10) TMI 1131
Revision u/s 263 by CIT - case of the assessee company for the year under consideration was selected for limited scrutiny for the purpose of verifying and examining a solitary issue, i.e., large share application money that was received against unallotted shares - HELD THAT:- As in the present case before us the A.O while framing the assessment had made exhaustive examination and carried out necessary verifications on the issue which had formed the very basis for selection of the assessee s case for limited scrutiny assessment, i.e. large share application money received against unallotted shares, and had only after exhaustive deliberations arrived at a possible and a plausible view and accepted the claim of the assessee of having received genuine share application money from the investor company i.e. M/s. Sakshi Real Estate Pvt. Ltd., therefore, there was no justification for the Pr. CIT to have invoked his jurisdiction u/s 263 of the Act for the purpose of supplanting his view on the issue in hand, on the ground that appraisal of the material that was available before the A.O ought to have been done in a different manner, which, thus, would have resulted to a contrary view as was advocated by him. We, thus, in terms of our aforesaid observations not being able to persuade ourselves to subscribe to the exercise of the revisional jurisdiction by the Pr. CIT set-aside the order passed by him u/s 263 of the act, dated 30.03.2018 and restore the order passed by the A.O u/s 143(3) - Appeal filed by the assessee is allowed.
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2022 (10) TMI 1130
TDS u/s 194C - Disallowance u/s 40(a)(ia) - Non deduction of TDS on freight charges - HELD THAT:- Appellant was not liable to deduct TDS u/s. 194C(1) for payments made to the outside parties and consequently the disallowance made u/s.40(a)(ia) by the authorities below are deleted - Decided in favour of assessee. Unexplained cash deposits found to be made in the bank account - HELD THAT:- At the time of hearing before us, the learned Counsel for the assessee has not filed any details or documents to explain the cash deposits found to be made in the bank account of the assessee with ICICI Bank which was an undisclosed bank account not being reflected in the books of account of the assessee regularly maintained by the assessee. We, therefore, find no infirmity in the impugned order of the learned CIT(A) sustaining the addition made by the AO on account of cash deposits found to be made in the bank account of the assessee to the extent by treating the same as unexplained and upholding the same, we dismiss the ground No.2 of the assessee s appeal. Unexplained unsecured loans - HELD THAT:- As found by the learned CIT(A), even the address and PAN of these loan creditors were not furnished by the assessee. The primary onus that lay on the assessee thus was not discharged by him as rightly held by the learned CIT(A). At the time of hearing before us, there is nothing brought on record to establish the identity and capacity of the concerned loan creditors and the genuineness of the relevant loan transactions. We, therefore, find no justifiable reason to interfere with the impugned order of the learned CIT(A) on this issue and upholding the same, we dismiss Ground No.3 of the assessee s appeal. Unexplained investment made by the assessee in gold ornaments - HELD THAT:- As observed that the investment made by the assessee in gold ornaments was duly recorded in the books of account of the assessee regularly maintained inasmuch as the same was duly reflected in the block of assets as noted by the authorities below. In our opinion, it therefore cannot be said that the source of the said investment, which was duly recorded in the books of account, had remained unexplained. Moreover, no deduction even on account of depreciation was claimed by the assessee in respect of the investment made in gold ornaments and this being so, we are of the view that no addition can be made on account of gold ornaments even if the details and documents such as bills/vouchers are not produced by the assessee in support of the purchase of gold ornaments. We, therefore, delete the addition made by the Assessing Officer and confirmed by the learned CIT(A) on this issue and allow Ground of the assessee s appeal.
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2022 (10) TMI 1124
Deduction u/s 10A - incidental income of the assessee in the form of interest income - HELD THAT:- Having heard learned counsel for the Appellant, this Court finds that the issue raised in the present appeal is no longer res integra. In Principal Commissioner of Income Tax-1 vs. American Express India Pvt. Ltd. [ 2018 (2) TMI 1811 - DELHI HIGH COURT] held that Section 10A/10B of the Act is a complete code providing the mechanism for computing the profits of the business‟ eligible for deduction u/s 10B of the Act. Once an income forms part of the business of the income of the eligible undertaking of the assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction u/s 10B - No substantial question of law arises
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2022 (10) TMI 1123
Assessment proceedings against dead person - curable defect u/s 292B or not? - Notice deemed to be served on legal representative or not? - HELD THAT:- The Division Bench of this Court in Urmilaben Anirudhhasinji Jadeja [ 2019 (9) TMI 356 - GUJARAT HIGH COURT ] addressed the very issue. The Court considered various decisions of the Supreme Court and the High Court, touching the aspects of the issue, and held that there cannot be any assessment against a dead person. In that case also, notice was issued to the dead assessee under Section 148 of the Income Tax Act, 1961. Provision of section 292BB would not apply in cases where notices are gone to the dead assessee and the proceedings are started against a dead assessee The facts of the case do not offer any fact or circumstances to suggest that the legal representative of the deceased assessee in any manner submitted to the jurisdiction of the income tax authorities or in any way participated in the proceedings so as to persuade the court to hold otherwise. In view of the above, the present petition deserves to be allowed. It is hereby allowed by holding that the impugned notice, which was against the dead assessee could not be sustained. - Decided in favour of assessee.
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2022 (10) TMI 1122
Validity of Reopening of assessment - shorter period given to reply to notice u/s 142(1) - violation of principle of natural justice - HELD THAT:- Single Judge noticed that though only two days time was given for filing the reply, the appellant has in fact filed his reply within the time granted by the authorities on 28.3.2022 itself and hence, the appellant cannot complain of violation of the principles of natural justice as he has utilized the limited opportunity granted to him. The learned Single Judge, thereafter, went on to hold that the appellant has got a remedy to challenge the order before the appellate authority and since the Writ Petition has been pending on the files of the court from 26.4.2022 the period spent by the appellant pursuant to the litigation from 24.6.2022 till the date of receipt of the judgment stands excluded while calculating the limitation period for preferring statutory appeal and dismissed the Writ Petition. Thus though we are in full agreement with the finding recorded by the learned Single Judge as the appellant has availed of the opportunity to file reply to the show cause notice. The appellant cannot complain that there is violation of principles of natural justice. But taking into consideration of all facts and circumstances of the case and the short time by which the appellant had to file reply, we deem it appropriate to grant sufficient time to the appellant herein to work out the remedy of the appeal. The appellant is given liberty to file an appeal on or before 17.10.2022 by enclosing a copy of this judgment. In the meanwhile, all coercive steps pursuant to Ext.P9 and P10 shall be kept in abeyance. W.A. dismissed.
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2022 (10) TMI 1121
Validity of reopening of assessment - total violation of the principles of natural justice as no opportunity was given to the petitioner to submit documents, more so because of his sickness - HELD THAT:- Petitioner was not well but the period of his illness was only from 08.12.2021 to 13.12.2021. Notices were issued under the provisions of the Income Tax Act, more particularly under Sections 148, 142(1) and 144 of the Income Tax Act both by the 2nd as well as the 1st respondents long prior to the said date. In fact, the notices were said to have been sent by registered post and also through e-mail but there was no response to any of those notices. The draft assessment order was also sent to the same e-mail, to which the petitioner responded and communicated with the respondent on 16.03.2022 itself, seeking time to file documents. Therefore, the plea of the petitioner that he is not in a habit of seeing the e-mails cannot be accepted. If that was so, the petitioner could not have responded so fast to the draft assessment sent on 15.03.2022. Therefore, the argument of learned Senior Counsel that there was total violation of the principles of natural justice cannot be accepted. It may be true that the petitioner herein would have to pay huge amount if the best assessment goes uncontested but, the averments made in the affidavit itself would show the petitioner has got statutory remedy of filing an Appeal under Section 246-A of the Income Tax Act to the National Faceless Appellate Authority. Hence, in view of statutory remedy of appeal under Section 246-A of the Income Tax Act to the National Faceless Appellate Authority, the petitioner can submit all the documents or information regarding cash deposits etc. Writ Petition is disposed of directing the petitioner to prefer an Appeal in which event the Commissioner of Appeals shall consider the same, including the request for condonation of delay, having regard to the facts involved in the case in accordance with law
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2022 (10) TMI 1120
Revision u/s 263 by CIT - assessee had purchased the property in question with an intention to build Tech Park, but due to recession, the building was not constructed and as the firm had no funds, assessee sold the land - HELD THAT:- A careful analysis of the facts of the case indicate that although the property was purchased with an intention to construct a Tech Park, the same was sold for want of funds. No development whatsoever was made by the assessee. There is no expenditure incurred for anything other than for interest, professional charges and brokerage. This aspect has been considered by the Assessing Officer and he has taken a view that assessee was liable to pay the Capital gains. In the order u/s 263 Commissioner has recorded that the AO has wrongly treated the land as 'Capital asset'. As further recorded in assessee's transaction was a solitary transaction and no construction of building nor any development activity was made. This factual finding that the transaction was a solitary transaction and no development activity was made, is in consonance with the facts recorded by the AO. The only difference is, AO has taken a view that for any purchase or sale of a land, assessee is liable to pay the capital gains tax and the Commissioner has taken a different view. In view of the authority in Malabar Industrial Company Limited. [ 2000 (2) TMI 10 - SUPREME COURT] merely because two plausible views are available and the AO has taken one view, the jurisdiction u/s 263 cannot be exercised. Invoking Section 263 in the facts and circumstances of the case was erroneous. Consequently, the first question as to whether the Tribunal was right in holding that there was no infirmity in the order of revision, requires interference and the said finding needs to be set-aside. Whether the Tribunal was right in holding that no enquiry was made by the AO during the original assessment proceedings? - In view of the admitted facts that the land was purchased and sold without any development, no elaborate enquiry was required and the AO has noted the facts required for the case and passed the AO. Decided in favor of assessee.
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2022 (10) TMI 1119
Assessment u/s 153C - Necessity of recording satisfaction - HELD THAT:- Assessees' grievance is that the said proceedings are without jurisdiction because recording satisfaction which is a condition precedent before making over it to the jurisdictional Officer even though the AO and the Searching officer are one and the same, is mandatory. This position of law is not disputed by the Revenue. Admittedly, the assessees have filed rectification application before the ITAT with a prayer to call for records and to examine whether satisfaction as required under Section 153C was recorded. The said applications have been rejected. In Calcutta Knitwears, [ 2014 (4) TMI 33 - SUPREME COURT] it is held that satisfaction note is sine qua non and must be proved by the Assessing Officer before he transmits the records to the jurisdictional Assessing Officer. The Apex Court, in that case was considering Section 158BD of the Act, which is pari materia with Section 153C of the Act. In view of the law laid down in Calcutta Knitwears (supra) and the facts and circumstances of this case, we are of the considered opinion that the matter requires a re-look in the hands of the Tribunal
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2022 (10) TMI 1118
Validity of assessment - unexplained credit under Section 68 - stay application filed by the petitioner pending statutory appeals filed by it challenging orders of assessment passed in terms of the provisions of the Income Tax Act - claim of the petitioner had been disbelieved by the Assessing Officer who had proceeded on the basis that the alleged loan represented the funds of the petitioner, being illegal gratification relatable to, and received in connection with the 2G scam - HELD THAT:- All additions have merely been re-confirmed in an automated fashion, simply copying the reasons adduced in the original order of assessment dated 31.03.2014 that has expressly been set aside by the Income Tax Appellate Tribunal as having been framed in blatant disregard to the principles of natural justice, and pasting the same onto the impugned assessment order. Upon a comparison of assessment orders dated 31.03.2014 and 20.12.2019, I find substantial and near total identity in the reasoning adduced for the additions. No doubt there are two instances where the officer reduces the quantum of the addition, one on account of interest. However that would not, in any way, justify or excuse the mere reiteration of an assessment that has been set aside. The officer does have the liberty to adopt the same view as earlier taken, however, following the proper procedure in regard to the framing of a denovo assessment. In the present case, the facts, as set out above leave in no doubt that there was no intention of the officer to afford a fair or a denovo hearing, which, in my view, borders on contempt. The framing of an assessment has to be in line with the procedures that have been set out in the Manual of office procedure - Volume-II issued by the Directorate of Income Tax. We refer to the Manual only to drive home the point that the proper procedure for framing of assessment is not just one evolved by the Courts, but one codified by the department by way of the Guidelines framed for the Officers. The principles of natural justice are reiterated therein on all fronts. That apart at paragraph 3.2.7 the manual requires officers to furnish copies of all documents that are referred to in the assessment order and relied upon by the Officer to the assessee. This has not been done in this matter despite a specific direction by the Tribunal in this regard. Courts have consistently reiterated the position that an order as repugnant to the provisions of natural justice and proper procedure, as the present one, is liable to be set aside and thus have no hesitation in doing so. The only question that survives is whether, as the Standing Counsel would urge, an opportunity be given once again to the Department to go through the process of assessment and reframe the assessment. I think not. An assessment cannot be set aside merely for the asking and simply as a measure of affording multiple opportunism/innings to the respondents. There are simply no mitigating circumstances in the present case that commend themselves to me, that would persuade me to remand the matter yet again. Instead, the blatant disregard to all cannons of law, fairness as well as to the order of the Tribunal, convince me to conclude that this is not a matter where the respondent must be afforded one more innings. The impugned assessment stands annulled. The issue on merits in AYs 2009-10 and 2010-11 pending in first appeal relates to the claim of the petitioner in regard to loans that it had allegedly obtained in the respective FYs, from Cineyug. According to the respondents, the claim is bogus and the funds represent illegal gratification. For the subsequent AY, the petitioner claims that the loan has been repaid from out of advertisement revenues received from four companies. Though the assessment for AY 2011-12 stands annulled by virtue of the present order, the Commissioner of Income Tax Appeals, while disposing the appeals for the previous two (2) years that is 2009-10 2010-11, can certainly examine, analyse and take into account subsequent events including the claim of the petitioner relating to repayment of the loans. The transaction must be looked at in entirety including events that have transpired in the subsequent years. That is to say that the proper facts in regard to whether the advertisement advances had indeed been received in AY 2011-12 and utilized for repayment of the loans must be looked into by the Assessing Officer in order to determine the veracity of the additions under Section 68 for AY 2009-10 2010-11 as well. Annulment of the order of assessment for AY 2011-12 has been effected only for the reasons as above, and does not, by any stretch of the imagination, lead to the acceptance of the petitioner s claims and arguments on merits and I categorically clarify so. Direction to the assessee to pay 10% of the disputed amount requires no interference and hence confirm the same.
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2022 (10) TMI 1117
Estimation of income - bogus purchases - HELD THAT:- In absence of any dependable material for the Assessing Officer to come to the conclusion about the bogus purchases made by the assessee to make addition of the entire purchases under section 68 of the Act as income for the year under consideration. CIT(Appeals) and the Tribunal therefore, considering the possibility of bogus purchases on the basis of documentary evidence produced before the appellate authority have arrived at the concurrent findings of fact by holding that factum of said three parties already being engaged in bogus billing was not ruled out and therefore, sustained the addition by estimating 10% of alleged bogus proceedings considering the Gross Profit Ratio of 3.98% shown by the assessee for the year under consideration. In view of above concurrent findings of the fact arrived at by the CIT(Appeals) and the Tribunal, we do not find any error with the impugned order giving rise to any question of law much-less substantial question of law for consideration.
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2022 (10) TMI 1116
Exemption u/s. 11 - claim denied as delay in filing audit report in Form 10B - whether the CIT(A) is justified in confirming the denial of exemption u/s. 11 of the Act made by the CPC for not filing Form 10B along with return of income in terms of Circular No. 10/2019 issued by the CBDT? - HELD THAT:- CBDT vide para 4(i) clearly explained the delay in filing of Form 10B for A.Ys. 2016-17 and 2017-18 is condoned where the audit report obtained before filing of return of income and furnished subsequent to filing of return of income before due date specified u/s. 139 of the Act. There is no dispute with regard to the assessee filing the original return of income on 02-01-2017 before the date specified u/s. 139 of the Act vide para 4.1 of the said circular. It is also not disputed in obtaining the hard copy of audit report in Form 10B on 03-11-2016 which is the date prior to filing of return of income on 02- 01-2017. Therefore, assessee obtained Form 10B before filing return of income under the provisions u/s. 139 of the Act but it could not be uploaded digitally for want of access to the Income Tax official website. Therefore, the clarification in condoning the delay in filing Form 10B for A.Y. 2016-17 is binding on the CPC, but however, was ignored to consider the same. Therefore, the delay in filing audit report in Form 10B is condoned in terms of CBDT Circular No. 10/2019 dated 22-05-2019 and the denial of exemption u/s. 11 of the Act by the CIT(A) is not justified. The Additional Ground Nos. 1 and 2 raised by the assessee are allowed.
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2022 (10) TMI 1115
Penalty u/s 271(1)(c) - Addition u/s. 68 - unexplained cash credit in bank accounts of the directors advancing the share application money to the Assessee just before advancing the share application amount - HELD THAT:- Addition was made on cash deposit, which was used for share application money. We observe that the Assessee has clearly made adequate disclosure of all facts and it is also not a case here, of submitting a claim which is incorrect in law. There is also nothing on record either to suggest that the Assessee had not acted in a bona fide manner and committed conscious defaultand concealed any income or furnished inaccurate particulars. Simply the Assessee did not prefer any appeal against the said quantum order, ifso facto would not lead to imposition of penalty.On the aforesaid analyzations, in our considered view, the Assessee cannot be held guilty of furnishing of particulars of income, for the purpose of levy of penalty u/s 271(1)(C) of the Act, hence we are inclined to delete the penalty under consideration. - Decided in favour of assessee.
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2022 (10) TMI 1114
Disallowance of claim of depreciation on the withholding tax (TDS liability) borne by the assessee, which has been capitalised - AO noticed that, as per the agreement entered for receiving FCCB, the assessee would be liable to bear withholding tax only in excess of 10% - contention of the assessee that the AO could not have disallowed in the subsequent years, since the depreciation has been allowed in the first year - HELD THAT:- We notice that the above said proposition of the assessee finds support from the decision rendered by Ahmedabad bench of ITAT in the case of Bodal Chemicals Ltd [ 2019 (10) TMI 914 - ITAT AHMEDABAD] wherein it was held that the revenue, once allowed the deduction for the depreciation claimed by the assessee, then it is debarred to reject the claim of the assessee in the subsequent year on the WDV carried forward from the earlier assessment year. Though the AO had disallowed the claim of depreciation made in AY 2013-14, being the first year of claim, the same was deleted by Ld CIT(A) and the ITAT. As such the claim of depreciation made in the first year has been allowed. Hence, there is merit in the above said contention of the assessee. There should not be any dispute that the identity and character of the asset, which has entered into the block of asset, would be lost. In the instant case also, the TDS liability borne by the assessee on the premium amount, after it is thrown into the common hotchpotch of block asset in AY 2013-14 has lost its identity and become an inseparable part of block asset insofar as calculation of depreciation is concerned. Hence the AO could not have disallowed the depreciation claim as made in the first year. We notice that the AO has not enquired on the developments subsequent to the entering of agreement, which compelled the assessee to bear the TDS liability, which in the normal course would be deducted from the amount payable to the payee. Be that as it may, once the assessee has borne the liability of withholding tax, as per the ratio laid down by the Hon ble Madras High Court [ 1998 (11) TMI 49 - MADRAS HIGH COURT] the same would acquire the character of cost in the hands of the assessee and the same would go to increase the cost of asset. Once the cost of asset is increased, then the depreciation is allowable thereon. Accordingly, we are of the view that the ratio laid down by Hon ble Madras High Court in the above said case would apply to the facts of the present case and the same was also applied in the assessee s own case in First of all, it is not shown to us that the assessee has got refund of withholding tax. According to Ld D.R, the assessee is acting as representative of the payees. In case of an representative assessee, there is no personal benefit/consequences, i.e., the consequences/benefits arising from the transactions would belong to the principal and not to the representative. It is not shown to us that the refund, if any, that will be obtained out of the impugned withholding tax would be given back to the assessee by the payees to offset the TDS liability already borne by the assessee. If the above said scenario happens, it would happen in future and in that year of receipt, the AO is always be free to examine the tax liability, if any/ tax treatment to be given thereon. Hence, a future contingency, which may or may not happen, cannot be a ground to deny the depreciation claimed on the amount of withholding tax borne by the assessee and which has been capitalized. In view of the foregoing discussions, we are of the view that the depreciation claim by the assessee cannot be disallowed in all the three years under consideration. Accordingly, we set aside the orders passed by Ld CIT(A) on all the three years and direct the AO to allow the depreciation claimed by the assessee. - Decided in favour of assessee.
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2022 (10) TMI 1113
Rectification order u/s 154 - Addition is made as other income while computing allowable remuneration - HELD THAT:- Remuneration of partners upon which the rectification order was passed thereby making addition, is related to the partners remuneration and the same is taxable in the hands of the partners for income from other sources and not in the hands of the partnership firm i.e. assessee firm herein. The delay before the CIT(A) was also explained by the assessee as the assessee did not receive the assessment order and received the recovery notice of outstanding demand. In fact, the CIT(A) has not taken into account whether the rectification order was received by the assessee or not and did not give any finding as to the service of the rectification order. Thus, the CIT(A) was not right in dismissing the appeal. Besides this before us, AR has explained the case on merit and from the merit of the case it appears that the assessee has explained all the details related to the business expenses and the same are incurred during the business of the assessee firm. Therefore, the rectification order passed by the AO is not just and proper. Hence, appeal of the assessee is allowed.
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2022 (10) TMI 1112
Assessment u/s 153A - incriminating material found during the course of search or not? - Deduction of interest expenditure u/s 57 - HELD THAT:- On reading of the assessment order, we do not find any material which was unearthed during the course of search on 13/7/2016 related to the adjustment made by the learned assessing officer with respect to the adjustment in the closing inventory of the assessee. Now it has been fairly concluded by the Honourable Supreme Court in Sinhgad technical education society [ 2017 (8) TMI 1298 - SUPREME COURT] that without reference to incriminating material seized during search, the concluded assessment cannot be enhanced. Therefore ground number 1 and 3, 4 of the appeal of learned assessing officer are dismissed. Net interest expenditure as cost of inventory is merely an academic in view of our decision in holding that there is no incriminating material with respect to the above adjustment, therefore there is no requirement of going into the merits of the addition. Therefore, ground number 2 is dismissed. Addition u/s 69A - addition made on account of seized material found during search - HELD THAT:- Therefore, as the amount has already been taxed in the settlement petition of the assessee group, making addition once again in the hence of this assessee will amount to double taxation of the same income. Therefore, ground number 5 7 of the appeal are dismissed. Addition of differential interest income - trust income offered in the return of income is less as per the form 26AS the same was shown - HELD THAT:- We find that with respect to the above addition was found during the course of assessment proceedings and the same was made only on the issue of 3 verification of form number 26AS. Therefore, for the same reasoning given by us that concluded assessment can only be tinkered with incriminating material found during the course of search. Same is absent with respect to this addition. Accordingly, ground number 3 of the appeal is dismissed. Claim of the interest expenditure and adjustment in value of the closing stock inventory - HELD THAT:- In the present case the return of income was filed on 26/11/2013 and search took place on 13/7/2016 and therefore the impugned assessment year is concluded assessment, which could have been upwardly adjusted only on account of incriminating material found during the course of search. We find that no such incriminating material has been referred to in the assessment order and no such incriminating material has been produced before us during the course of hearing. In view of this following our reasoning given in the appeal of the learned assessing officer for assessment year 2011 12 and 2012 13 as above, we dismiss ground number 1-4 of the appeal of the learned assessing officer for assessment year 2013 14. Addition of interest on loan - AO aggrieved that appellate authority failed to appreciate the fact that the assessee failed to substantiate with documentary evidence the business expediency of the loan given from which interest expenses was earned and therefore the same is allowable u/s 57 of the income tax act but not u/s 36 (1) (iii) - HELD THAT:- As stated that the fixed deposit receipts made by the assessee is in the normal course of its business and had absolute commercial expediency while doing so and thus the nature of the income of the assessee company must be treated as business income. Further this issue was replied before the learned CIT A which is also placed - Therein also did not discuss any of the facts as stated before us with respect to the agreement entered into by the assessee. CIT A has also did not give any justifiable reason to hold that the income and by the assessee on interest from fixed deposit receipt should be considered as business income but merely believed the written submission of the assessee. The arguments of AR with respect to the stalled project was not considered by any of the lower authorities as emanating from the assessment order or appellate order. We set-aside appeal of AO back to the file of the learned assessing officer for the purpose of determination whether the interest income earned by the assessee on fixed deposit receipt is a business income on income from other sources. The assessee is also directed to justify the same that interest on fixed deposit receipt should be considered as business income and consequently the deduction of interest expenditure is also required to be examined by the learned assessing officer. Accordingly ground number 1 4 of the appeal of the AO is restored back to the file of the learned assessing officer.
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2022 (10) TMI 1111
Reopening of assessment u/s 147 - ITO, Ward-35(4), Kolkata jurisdiction to issue notice u/s. 148 - HELD THAT:- Since the valid notice u/s. 148 of the Act was not issued by the respective AO(Assessing Officer) having jurisdiction over the assessee, the said notice was invalid and the assessment proceedings carried out thereafter u/s.143(3)/147 of the Act are void ab inito and liable to be quashed. Thus, the legal issue raised by the revenue is dismissed.
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2022 (10) TMI 1110
Deduction u/s.80IA(4) - eligible projects undertaken by the assessee - Developer of infrastructure facility v/s contractor - CIT-A granted relief treating that assessee is only a developer of infrastructure facility and not a contractor as alleged by the ld. AO - Recurring issue from past many years - HELD THAT:- Projects were duly examined by the ld.CIT(A) with all supporting documents and he had arrived at the conclusion that the assessee is only a developer. No contrary materials were brought on record with supporting evidences by the revenue to controvert this factual findings of the ld. CIT(A) before us. In view of the above observations and respectfully following various orders of this Tribunal in assessee s own case order dated 31/10/2014 and also the decision of the Hon ble Jurisdictional High Court in the case of ABG Heavy Industries Pvt. Ltd., [ 2010 (2) TMI 108 - BOMBAY HIGH COURT] we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee. Appeals of the Revenue are dismissed.
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2022 (10) TMI 1109
Disallowance of long Term Capital loss (LTCL) - Whether CIT(A) erred in not upholding the action of the AO in recalculating the purchase price of the shares? - Revenue seeking to disturb the purchase price of acquisition of shares paid by the assessee @15.40 per share in view of the fact that the company in which assessee had invested is a loss making company and did not command any investment at a premium - whether the Revenue could at all disturb the purchase price of acquisition of shares within the mandate provided in the Act? - HELD THAT:- The answer is an emphatic no in as much as there is no provision in the Act warranting to disturb the purchase price of shares by the assessee. What is required to be seen is whether the assessee had sufficient sources for making such investment in shares. As stated earlier, there is absolutely no dispute that payments for acquisition of shares at Rs.15.40 per share had been duly met out of disclosed sources of the assessee. Moreover, it is also pertinent to note that the said investment had been made by the assessee in A.Y.2012-13 i.e. the earlier year. We find that assessee had duly explained the rationale behind making investment in the shares of Pyxis Systems Pvt. Ltd., at a premium, based on the advice given by certain parties and after analysing the various reports that are made available to her by her advisors and had also taken cognizance of the strength of the promoters of the said company and their capabilities. The assessee had also furnished the proper reasons for exiting out of her investment from the said company. None of these explanations furnished by the assessee were found to be false by the Revenue. Hence, it was only the failed investment deal of an assessee being a private equity investor, which had resulted in incurrence of loss for the assessee which is claimed as a long term capital loss by the assessee. There is absolutely no basis for the ld. AO to arrive at the revised book value per share at Rs.2.69 per share based on the financials as on 31/03/2011 of Pyxis Systems Pvt. Ltd., and concluding that the said rate should be the fair market value which the assessee ought to have paid for the purpose of making investment in shares. If this is to be accepted then what will happen to the remaining money paid by the assessee towards acquisition of shares? The order of the ld. AO is completely silent on this aspect. Hence, we conclude that the ld. AO does not have any power to substitute the purchase price of shares with a different value than the value at which actually it was paid. We hold that the ld. AR was justified in placing reliance on the decision of the Hon ble Madras High Court in the case of CIT vs. Sriram Investments [ 2016 (12) TMI 673 - MADRAS HIGH COURT ] - Decided against revenue.
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2022 (10) TMI 1108
Exemption u/s 11 - CIT cancelled the registration issued to the assessee u/s 12A - AO disallowed exemption as assessee has received substantial amount as donation which in turn are transferred to the three parties and the redonation was compulsion to the assessee as per the terms and conditions of getting donations from the donors - HELD THAT:- We find the CIT(A) upheld the action of the Assessing Officer. It is the submission of assessee that since the Tribunal has restored the registration u/s 12A which was cancelled by the PCIT and since the PCIT has passed consequential order by granting registration u/s 12A, therefore, the denial of exemption u/s 11 is not justified. AO in the instant case denied exemption u/s 11 for the impugned A.Y and following this order he also rejected the claim of benefit u/s 11 for the A.Y 2016-17. After the orders passed by the AO for the A.Ys 2015-16 and 2016-17, the Pr.CIT cancelled the registration issued to the assessee u/s 12A. We find on appeal by the assessee, the Tribunal [ 2021 (9) TMI 1435 - ITAT HYDERABAD] restored the registration u/s 12AA of the I.T. Act and the CIT has given the appeal effect and has granted registration u/s 12AA of the I.T. Act. Under these circumstances, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one more opportunity to the assessee to substantiate his case and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2022 (10) TMI 1107
Interest u/s 244A on refund of taxes in respect of TUFS Subsidy - whether the proceedings resulting in refund are delayed for reasons attributable to the assessee and the period of such delay which shall be excluded from the period ? - claim of the Revenue is that the delay is attributable to the assessee as the assessee has not raised any such claim either in the return of income or during the course of assessment proceedings and the same has been claimed by way of additional ground of appeal before the CIT(A) by virtue of which the claim of the assessee has been allowed by the CIT(A) and refund of taxes have become due to the assessee and therefore, the assessee is only eligible for interest from the date of passing of the order of the ld CIT(A) i.e, 18/01/2019 to the date of issue of refund i.e, 13/08/2019 which has already been granted by the AO, and the period starting from the first day of assessment year i.e, 01/04/2011 to 18/01/2019 has rightly been excluded by the AO while computing interest in terms of provision of Section 244A(2) HELD HAT:- The assessee has filed an appeal before the CIT(A) on 26.03.2014 and during the course of appellate proceedings, the assessee took an additional ground of appeal for the first time before the Ld. CIT(A) vide its letter dated 04.10.2016 stating that TUFS subsidy which has been received by the assessee from the Ministry of Textiles is exempt from tax and should be reduced from the assessed income. CIT(A) vide order admitted the additional ground of appeal and held that the TUFS subsidy received by the assessee company from the Ministry of Textiles, Government of India be treated as capital receipt and directed the AO to reduce the amount of TUFS subsidy received during the year from total assessed income. Therefore, the assessee shall be eligible for interest on the refund amount with effect from 04/10/2016 (and not from 01/04/2011) till the date of grant of refund. We make it clear that for the prior period to 04/10/2016, it shall not be eligible for interest as the delay is attributable to the assessee. The time period taking by the ld CIT(A) in disposing off the appeal cannot be attributed to the assessee and the said period cannot be excluded. Admittedly, the assessee has already been allowed interest from the date of passing of the order of the ld CIT(A) i.e, 18/01/2019 to the date of issue of refund i.e, 13/08/2019. Therefore, the assessee shall be eligible for interest for remaining period starting 04/10/2016 to 18/01/2019 and accordingly, the AO is directed to allow the interest for the said period and the order of the ld CIT(A) thus stand modified. The appeal of the Revenue is partly allowed in light of aforesaid directions.
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2022 (10) TMI 1106
Disallowance u/s 37(1) - allowable business expenditure - payment of compensation for the negligence of the assessee company to provide proper treatment to the patient amounts to breach of contract and the payment of compensation made therefore - HELD THAT:- On perusal of the above finding of ld. CIT(A) and also considering the plethora of judgments filed by the assessee in the paper book so far as the proposition of ld. Counsel for the assessee is concerned that the said amount is not a penalty for an offence or for being any act prohibited by law, we find merit since the said compensation was awarded for the negligence on the part of the hospital in providing proper treatment to the patient named Anuradha Saha but there is lack of mensrea. There is no reference in the litigation before us that the assessee has committed any offence prohibited under the law. Therefore, so far as the finding of ld. CIT(A) that explanation 1 to Section 37 of the Act is not applicable on the assessee is found to be correct and to this extent that the alleged sum is not in the nature of any penalty paid for committing an offence prohibited under the law, the finding of ld. CIT(A) is confirmed. Whether the said sum is a revenue expenditure is still in doubt and the first appellate authority has also not adjudicated this issue which has been observed by ld. AO in the assessment order for making the alleged disallowance. The alleged sum is admittedly not a penalty in nature but whether it a revenue or capital expenditure still needs to be examined. We, therefore, are of the considered view that this issue that whether the alleged sum i.e. compensation paid by the assessee company on the direction of Hon'ble Supreme Court of India to the relative of a patient who died due to the negligence of the doctors and the hospital authority is in the nature of capital expenditure or revenue expenditure needs to be restored to ld. CIT(A) for necessary adjudication. Needless to mention that the assessee shall be provided fair opportunity of being heard and to file necessary submissions as well as to place reliance on judicial pronouncements if considered necessary so that ld. CIT(A) can decide the issue in accordance with law. We therefore, restore the issue raised by the Revenue in ground nos. 1 to 4 to the file of ld. CIT(A). In the result, ground nos. 1 to 4 are allowed for statistical purposes. Correct head of income - rent received from IBS tower is Income from house property or Income from other sources - HELD THAT:- CIT(A) following the decision of the Coordinate Bench of this Tribunal in assessee s own case for AY 2010-11 held it as an Income from house property. Ld. D/R failed to controvert that the issue is covered in favour of the assessee by the decision of this Tribunal in assessee s own case by placing before us any binding precedence in Revenue s favour. We therefore, respectfully following the decision of this Tribunal, hold that the alleged rental income from installation of IBS tower has been rightly offered to tax as Income from house property. Thus, no interference is called for in the finding of ld. CIT(A) and ground nos. 5 to 7 raised by the Revenue are dismissed. Business advance written off - assessee claimed the said amount expenditure by writing it off from the profit loss account.- AO disallowed the sum treating it as capital in nature - HELD THAT:- We find merit in the finding of ld. CIT(A) who has rightly observed that the said advance was given in relation to the business transaction for setting up a hospital project and since the project was abandoned and the advance given could not be recovered, the said sum is a business loss u/s 28(1) and for this view he placed reliance on the judgment Woodward Governor [ 2009 (4) TMI 4 - SUPREME COURT ] Thus, no inference in the finding of ld. CIT(A) allowing the said sum as revenue expenditure. Thus, ground nos. 8 to 10 raised by the Revenue are dismissed.
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2022 (10) TMI 1105
Deduction 80IB - claim of interest income other income - only point raised by the ld. CIT(A) is calculated the other income, but no such other income was pointed out in the calculation of the assessee - HELD THAT:- The claim of the assessee related to section 80IB is restricted by the revenue on determination of other income embedded in the profit of the assessee. Respectfully, we observed the direction of Hon able Apex Court in the case of Krishak Bharati Cooperative Ltd. v. Joint Commissioner of Income-tax [ 2022 (8) TMI 1296 - SC ORDER] held that the interest income is not part of deduction U/s 80IA. CIT(A) had rightly pointed out about the embedded duty drawback value in Export Turn Over which is not separately explained by the assessee in the submission. The claim of interest income other income should be verified by the ld. AO during hearing. The assessee should get reasonable opportunity to submit the evidence during the hearing.Accordingly, the matter is setting aside to ld. AO consider the terms indicated above - Appeal of the assessee is allowed for statistical purpose.
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2022 (10) TMI 1104
Income accrued in India - Addition treating the entire receipt as Royalty u/s 9(1)(vi) taxable @ 10% under the India Germany Double Taxation Avoidance Agreement ( DTAA ) - HELD THAT:- We find that the identical issue was raised before the Co-ordinate Bench of the Tribunal in the case of M/s. Springer Verlag GmbH [ 2022 (8) TMI 1297 - ITAT DELHI] no merit in the findings of the ld. CIT(A) by treating the commission as managerial service under the India Germany DTAA. There is no dispute that the assessee has received commission as per the Commissionaire Agreement with SIPL which is nothing but export commission/sales commission, which has been treated as FTS. Thus we set aside the findings of Ld.CIT(A) and direct the AO to delete the addition. Thus, Ground No.2 raised by the assessee is allowed. Addition in respect of subscription fee collected from third party customers - HELD THAT:- it is not the case of the Revenue that there was transfer of copyright by the assessee - As respectfully following the judgement of Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P.) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] , AO directed to delete the additions.
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2022 (10) TMI 1103
Exemption u/s 54F - claim of the assessee for excess exemption denied - HELD THAT:- Exemption u/s 54F was wrongly claimed by the assessee after taking into consideration the amount of Long Term Capital Gain after reducing the exemption claimed under Section 54EC of the Act. As noted by the learned CIT(A) in paragraph No. 6.1.1. of his impugned order, this mistake in the working of exemption under Section 54F was accepted by the authorized representative of the assessee and keeping in view the same, the learned CIT(A) upheld the action of the Assessing Officer in disallowing the claim of the assessee for excess exemption under Section 54F - Thus find no infirmity in the impugned order of the learned CIT(A) in confirming the disallowance made by the Assessing Officer on this issue and upholding the same, dismiss the appeal filed by the assessee.
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2022 (10) TMI 1102
TP Adjustment - comparable selection - Whether high turnover is a ground for excluding companies as not comparable with a company that has low turnover? - HELD THAT:- As relying on case of Autodesk India Pvt.Ltd. [ 2018 (7) TMI 1862 - ITAT BANGALORE] . we hold that the following 3 companies viz., Exiliant Technologies Pvt. Ltd., Tata Elxsi Ltd., and Mindtree Ltd., whose turnover in the current year is more than Rs.200 Crores should be excluded from the list of comparable companies. Action of the TPO in not giving effect to the directions of the DRP directing Devita Engineering (India) Ltd., as a comparable company - It is undisputed that the DRP in its directions directed Devita Engineering (India) Ltd., to be included as a comparable company (vide Paragraph 2.3.20.1 of the DRP s direction). The TPO, while giving effect to the order of the DRP, failed to give effect to this direction. We are of the view that it would be just and appropriate to direct the TPO/AO to include this company also as a comparable company in the list of comparable companies. We hold and direct accordingly. Grant of working capital adjustment should be directed to be examined by the TPO/AO afresh in the light of the decision of the tribunal in the case of Huawei Technologies India Pvt. Ltd [ 2018 (10) TMI 1796 - ITAT BANGALORE] after affording opportunity of being heard to the assessee.
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2022 (10) TMI 1101
Disallowance u/s 14A r.w.r. 8D - assessee has made suo moto disallowance - AO treated the suo moto disallowance made by the assessee as incurred directly against the earning of exempted income - HELD THAT:- This finding of the AO is fallacious without any evidence on record that said expenditure was connected directly with the earning of exempted income. Further, under Rule 8D(2)(ii), AO disallowed proportionate interest expenses incurred for investment on borrowed funds in mutual funds/shares. The said disallowance has been deleted by the CIT(A) following the decision of the Hon'ble Jurisdictional High Court in the case of Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC Bank [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] as the surplus funds constituting share capital of ₹ 39.23 crores and reserve and surplus of ₹ 73.73 crores available with the assessee are found to be much more than the investment of ₹ 18.70 crores in exempted income yielding assets. Since, the Ld. CIT(A) followed binding precedent of Hon'ble Jurisdictional High Court, we do not find any error in the order of the Ld. CIT(A) on the issue-in-dispute. Disallowance under Rule 8D(2)(iii) for administrative expenses is concerned Assessing Officer has made disallowance - CIT(A), however, in view of the decision of the Hon'ble Bombay High Court in the case of Nirved Traders [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT] wherein it is held that disallowance u/s. 14A is to be limited to the extent of tax exempted income earned during the year, sustained the suo moto disallowance and deleted the remaining disallowance made by the Assessing Officer u/s. 14A of the Act. Since, the Ld. CIT(A) has followed the binding precedent of the Hon'ble Jurisdictional High Court, therefore, we do not find any error in the order of the Ld. CIT(A) on the issue-in-dispute. Accordingly, the ground No. 1 of the appeal of the Revenue is dismissed. Nature of receipt - subsidy receipt in the form of Technology Upgradation Fund (TUF) - revenue v/s capital receipt - HELD THAT:- We find that the TUF scheme was launched by the Ministry of Textile of the Central Government and the Ld. CIT(A) not only relied on the various decision of the High Court but also relied on the decision in the case of Nitin Spinners Ltd. [ 2019 (9) TMI 1154 - RAJASTHAN HIGH COURT] DR could not brought on record any contrary decision of any High Court or the Jurisdictional High Court. Therefore, we do not find any error in the order of the Ld. CIT(A) in following the decision of Nitin Spinners Ltd. (supra) wherein the interest subsidy claim under the very same scheme has been held in the nature of capital receipt. The ground No. 2 of the appeal of the Revenue is accordingly dismissed. MAT computation u/s 115JB - Exclusion of the amount of interest subsidy on TUFS fund for computing book profit u/s. 115JB - HELD THAT:- The issue-in-dispute before us being identical to the issue-in-dispute before the Tribunal in the case of Shri Pushkar Chemicals Fertilizers Ltd. [ 2021 (8) TMI 982 - ITAT MUMBAI] respectfully following the finding of the Tribunal, we set aside the order of the Ld. CIT(A) on the issue-in-dispute and direct AO to exclude the amount of interest subsidy which has also been held by us as capital receipt, from the book profit for the purpose of section 115JB of the Act. The ground No. 1 of the appeal of the assessee is accordingly allowed. Adjustment of disallowance u/s. 14A for the purpose of book profit u/s. 115JB - HELD THAT:- CIT(A) followed the decision of the Special Bench of the Tribunal in the case of the Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] on the issue-in-dispute which being a binding precedent, we do not find any error in the order of the Ld. CIT(A) on the issue-in-dispute. We may also note that the disallowance made by the AO u/s. 14A has already been deleted by us. while computing income under the regular provisions of the Act. The ground No. 3 of the appeal of the Revenue is accordingly dismissed.
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2022 (10) TMI 1100
Addition u/s 68 - unexplained unsecured loan assessee company failed to establish the creditworthiness of all lenders and identity of five lenders therefore genuineness of transaction remained unexplained - CIT-A deleted the addition - HELD THAT:- As on the basis of documents and details filed in respect of all nine (9) depositors, the assessing officer has accepted only one depositor as explained even though she was not produced before assessing officer. Hence we note that approach of AO is arbitrary. We note that assessee furnished the copy of respective returns of income with final accounts of Lenders wherein transactions have been duly found reflected. Lenders have been regularly assessed to tax. In the case of all the lender; assessment u/s. 143(3) for AY.2012-13 have been completed in Surat I.T department. Thus, creditworthiness has been duly examined by the department under scrutiny. Copies of relevant assessment orders have been filed before ld CIT(A). Hon'ble Gauhati High Court in the case of Jalan Timber [ 1996 (8) TMI 83 - GAUHATI HIGH COURT] has held that if assessee and creditors both have shown amount in their income tax return, no addition u/s 68 can be made if the returns of creditors have been accepted by Income Tax Officer - the case of creditor has been accepted by the department. Therefore, we note that all three parameters as laid down u/s 68 of the Act, i.e. (i) Identity of the depositors; (ii) Genuineness of the transactions; and (iii) Creditworthiness of the depositors, have been fulfilled by the assessee in respect of all the seven (7) depositors except in the case of Smt. Rekhdben Bodra, Prop. Gurukrupa Enterprise to the extent deposited by cash (in her Bank A/c) which remained unexplained and therefore, the assessing officer is not justified in treating the entire amount of loans received by the assessee as unexplained cash credits u/s 68 of the Act, therefore, ld CIT(A) deleted the addition of Rs.5,90,90,000/- and sustained the addition of Rs.4,10,000/-.That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. CIT(A) restricting the disallowance on account of business expenses - HELD THAT:- CIT(A) noted that looking to nature of expenses incurred by CASH, the involvement of non-business purpose personal purpose cannot be denied and also because expenses are not supported by vouchers/bills - CIT(A) took a view that it reasonable fair to both parties to sustain disallowance @ 5% of such expenses i.e. Rs.49,810 + Rs.16,20,411 = Rs.16,70,221/- which works out to Rs.83,511/-. CIT(A) also noted that ROC fee incurred for increase in Authorized Capital was of the capital field and hence deserve to be disallowed. Therefore, total disallowance worked out by ld CIT(A) was to the tune of Rs.2,85,011/- (Rs.2,01,500 + Rs.83,511). We do not find any infirmity in the conclusion reached by the ld CIT(A), hence we approve and confirm the findings of ld CIT(A).
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2022 (10) TMI 1099
Validity of reopening of assessment u/s 147 - mandation of application of mind by AO - HELD THAT:- AO has initiated reassessment proceedings and issued notice u/s 148 without application of mind to the facts and circumstances of the case in a hasty manner which vitiates the proceedings. The similar issue was placed before the ITAT Delhi, SMC Bench in the case of Ajendra Pal Singh [ 2022 (6) TMI 1322 - ITAT DELHI] Reassessment proceedings u/s 147 of the Act and notice u/s 148 of the Act has been issued without application of mind by the AO on the basis of incomplete information without any verification of the facts and without complying with the mandatory requirement of section 147 and 148 of the Act. Consequently, the impugned reassessment order passed u/s 147 r.w.s 143(3) of the Act is not sustainable being bad in law and, thus, the same is quashed. Accordingly, the legal grounds of the assessee are allowed.
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2022 (10) TMI 1098
Levy of penalty u/s 271(1)(c) - addition made on account of disallowance of loss incurred on derivatives - HELD THAT:- It is a case of disallowance of a claim by Assessing Officer, which does not tantamount furnishing inaccurate particulars of income or concealment of particulars of income as held by the Hon ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] Thus it cannot be said that the respondent-assessee is guilty of furnishing of inaccurate particulars of income or concealing particulars of income. Therefore, it is not a fit case for levy of penalty u/s 271(1)(c) of the Act. - Decided in favour of assessee.
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2022 (10) TMI 1097
Addition u/s 68 - share application money - preference shares - additions as dubious transaction for which no proper explanation was given - HELD THAT:- We have no doubt that the assessee was provided with ample opportunities to furnish details pertaining to his claim. From the submissions made by the assessee, notice u/s 133(6) was issued by the AO to the concerned parties which was found to be returned as unserved . The assessee has not proved the identity, creditworthiness of the investors and genuiness of the transaction. CIT(A) has rightly relied on the decision in the case of PCIT vs NRA Iron Steel Pvt Ltd [ 2019 (3) TMI 323 - SUPREME COURT] wherein it was held that in the present case, assessee has failed to discharge initial onus cast upon him to prove the identity and creditworthiness of the investors and the genuineness of the said transaction. CIT(A) has relied on the said decision alongwith other judicial precedents such as the Hon ble Calcutta High Court in the case of CIT vs Precision Finance Pvt Ltd [ 1993 (6) TMI 17 - CALCUTTA HIGH COURT] and the Apex Court judgement in the case of Kale Khan Mohammad Hanif [ 1963 (2) TMI 33 - SUPREME COURT] and Roshan Di Hatti [ 1977 (3) TMI 3 - SUPREME COURT] We are of the considered opinion that ground 1 raised by the assessee deserves to fail as we do not find any infirmity in the order of the CIT(A) on this ground. In the result, ground 1 is dismissed. Disallowance of legal and professional charges - HELD THAT:- The lower authorities has disallowed the said expenses on the ground that the assessee has failed to submit documentary evidence to substantiate the assessee s claim that these were business expenses and not payment made for legal and professional expenses for the purchase of factory premises. CIT(A) has relied on the decision in the case of Calcutta Agency Ltd [ 1950 (12) TMI 4 - SUPREME COURT] wherein the burden of proving the necessary facts pertaining to the claim of expenses is on the assessee. The assessee has failed to furnish evidence to prove that these were expenses for the purpose of business and we are of the opinion that the burden of proving the profits / loss of the assessee, is on the assessee. In the present case, assessee has not produced any such evidence before the lower authorities nor before us to substantiate its claim. In view of our above observation, we deem it fit to dismiss this ground of appeal raised by the assessee. Disallowance pertaining to Registrar of Companies filing fees, registration and stamp duty on the grounds that the same is a capital expenditure - HELD THAT:- The assessee has stated that the said expenses were incurred for issue of preference shares. The assessee has claimed the same to be for the purpose of business as it was revenue in nature. It is observed that the CIT(A) has reiterated the view of the AO that the same is in the nature of capital expenditure as against the assessee s claim of revenue expenditure. CIT(A) has relied on the decision in the case of Punjab State Industrial [ 1996 (12) TMI 6 - SUPREME COURT] wherein it was held that the fees paid to the Registrar of Companies is of capital base of the company and was directly related to capital expenditure incurred by the company and although incidentally that would help in the business of the company and may also help in profit making, it still remains the character of the capital expenditure since the expenditure was directly related to the expansion of the capital base of the company. We do not differ with the view taken by the CIT(A) or by the lower authorities in holding that the expenses pertaining to fees paid to Registrar of Companies and other ancillary expenses are for the expansion of the capital base of the assessee company which are directly related to the capital expenditure incurred by the assessee inspite of the fact that the same is incidental, still, it would be held in the business and profit making of the assessee we hold that it is in the nature of capital expenditure and also on the fact that the assessee is not before us to controvert this view taken by the lower authority, we hereby dismiss this ground of appeal raised by the assessee.
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2022 (10) TMI 1096
Additions on account of difference in the closing stock of gold - gold found by the survey party in the course of survey action carried u/s 133A(1) - CIT-A deleted the addition - HELD THAT:- Assessee had discharged primary onus lying upon it by explaining the difference of stock as noted by the survey team and stock as per the books of account maintained by the assessee. AO had not done anything to verify the veracity of explanation offered by the assessee. We note that the AO was of the opinion that the explanation offered by the assessee cannot be believed and proceeded to make addition the alleged difference worked out by the survey team. Further, it is not the case of AO that the assessee failed to discharge the primary onus lying upon it by filing full details in support of its claim, therefore, in our opinion, without making any enquiries involving explanation and documentary evidences filed by the assessee, the AO cannot make any addition based on conjectures and assumptions as well as without bringing any conclusive evidence on record. Therefore, we find the survey team committed an error in adopting the production date and also the closing stock date which was followed by the AO is contrary to the evidences brought on record by the assessee. Therefore, we find the reasons recorded by the CIT(A) in holding that the AO conducted the assessment proceedings in a casual manner, is justified and the order of CIT(A) is fair and reasonable based on appreciation of material facts concerning the case of the assessee. Assessee offered additional income voluntarily for taxation in respect of value of purchase of gold to an extent of 4210 gram, sale of gold to an extent of 4210 gram and excess stock of ornaments 917 gram totaling to Rs.2,19,48,940/- but we find no discussion whatsoever made by the AO regarding the said details offered by the assessee except proceeding to make addition on account of stock difference found by the survey team regarding gold an extent of 193.157 Kgs. We find force in the arguments of ld. AR the addition made by the AO in respect of stock different at 193.157 Kgs is not justified irrespective of having every details along with the submissions with clear evidences vide Schedule I to VIII on record, the AO without considering the same added the same to the total income of the assessee. Therefore, we find no infirmity in the order of CIT(A) and we agree with the final conclusion arrived by the CIT(A). We agree with the conclusion arrived by the CIT(A) in deleting the addition and in directing the AO to confirm the additional income voluntarily offered by the assessee - Thus, ground Nos. 1 to 3 covering the issue raised by the appellant-revenue are dismissed.
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2022 (10) TMI 1095
Revision u/s 263 by CIT - As per CIT, AO has not examined about the disallowances to be made u/s 10(14A) in view of earning of exempt income by the assessee by way of share from partnership firms - HELD THAT:- When these details about the return filed of those firms alongwith tax payments by them were submitted before the ld. Pr. CIT in response to show cause notice then in the final order u/s 263, the ld. Pr. CIT has not mentioned anything about non-payment etc. of taxes by the firms as she was satisfied on this issue. Pr. CIT raised a new issue for which opportunity was not provided to the assessee to explain its case namely that the AO has not examined about the disallowances to be made u/s 10(14A) in view of earning of exempt income by the assessee by way of share from partnership firms. As submitted by assessee before us that firstly this matter was taken up without giving proper opportunity to the assessee and secondly on merits also the issue does not survive in view of the fact that assessee has not claimed any expenditure in its return of income. Accordingly, there is no scope of allegedly applying Section 10(14A) and disallowing any expenditure and, therefore, the assessment order cannot in any way said to be erroneous or prejudicial to the interest of revenue on this issue. We took into consideration the assessment order, order u/s 263 of the Act as well written submission of the assessee and the arguments made by the ld. AR of the assessee. It is a fact that in the show cause notice CIT mentioned as to whether those firms have filed their returns and paid due taxes from whom exempt income is received by the assessee by way of partner in those firms. However, on being satisfied by the explanation and details furnished by the ld. AR before the ld. Pr. CIT, she changed the issue and observed that the AO has not examined the disallowance to be made u/s 10(14A) of the Act without appreciating the fact that the issue is an individual and moreover in its computation of income, the assessee has not at all claimed any expenditure against any taxable income. Therefore, there is no any scope of making any disallowance u/s 10(14A) out of the expenditure as no expenditure was claimed as deduction. Thus on this issue, we full concur on the arguments of the ld. AR of the assessee and observe that this issue lacks merit for the purpose of invoking provisions of Section and passing order u/s 263 of the Act. No enquiry being made in respect of cash deposit made by the assessee in its bank account during demonetization period - As seen that details regarding source of deposit of Rs. 10 lacs was enquired by the ld. AO for which submissions and explanations were given by the assessee that the source of deposit is out of cash withdrawal from the capital account of the firm in which assessee is one of the partner and this withdrawal was made just four days back only. A confirmation from the firm was also filed during assessment proceedings. Accordingly, it cannot be said that no enquiries were made by the AO on this issue. Even after considering the amendment made by Finance Act, 2015 in the provisions of Section 263 widening the scope of its applicability and including non-proper enquiry within its fold, on perusal of facts and details submitted and in the circumstances of the case, the present issue is also not covered even considering the amended provisions. In brief, considering the facts on both the issues and also the legal position on the issue under consideration, the findings of the ld Pr. CIT about the assessment order being erroneous and prejudicial to the interest of Revenue lacks merit and is, therefore, set aside and the order of the AO is restored. Thus the appeal of the assessee is allowed.
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2022 (10) TMI 1094
Addition of gifts - gifts received by the newly wed couple from the immediate family or relatives - addition made by AO to total income of assessee - Learned counsel submitted that both the authorities failed to appreciate the fact that there is tradition in marriage of a female - Learned counsel submitted that before learned CIT(Appeals) it was stated that loan was received from 14 people, gift received from 101 persons and family relatives - HELD THAT:- It is seen from the record that the assessee had filed various evidences in the form of affidavit etc. The learned CIT(A) has brushed aside those evidences without even verifying the veracity of such affidavit. Merely stating that the affidavit was procured subsequent to marriage, in my considered view is not justified. CIT(Appeals) ought to have verified the correctness of the claim of the assessee. Therefore, set aside the impugned order and restore the assessment to the file of the Assessing officer to decide it afresh after considering the evidences placed by the assessee in the form of affidavit and frame the assessment afresh. Grounds raised in this appeal are allowed for statistical purpose.
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2022 (10) TMI 1093
Correct head of income - treatment of interest income - income from other sources OR business income claimed by the assessee - HELD THAT:- Admittedly, the fact is that assessee has received incremental advance of flat bookings of Rs.32.18 Cr. during the year which has been duly reported in the audited financial statement. Also it is fact on record that there is an increase of capital WIP in respect of development of construction project of Sunny Fort, Rajarhat of Rs.16.48 Cr. during the year. These facts itself evidently demonstrate that assessee had substantial own funds which were interest free and were utilized by it in its financing activities which were in terms of objects mentioned in its Memorandum of Association (supra). It is also a fact that assessee has not completed its development project and earned any income out of the same during the year. Income earned during the year by the assessee is on intercorporate deposit with Williamson Services Ltd. as interest income. We also note that assessee has consistently reported its earning of interest income from ICDs, as business income which has been accepted by the Department as demonstrated by the Ld. Counsel from the records for AY 2012-13 and AY 2014-15. These facts have not been controverted by the Ld. Sr. DR by bringing any positive material on record. As relying on Chhangalal Khimji Co. Pvt. Ltd. [ 2015 (11) TMI 864 - ITAT MUMBAI ] we are inclined to accept the contentions of the assessee to hold the interest income of the assessee as business income. Ld. AO is accordingly, directed to treat the same as business income. Thus, grounds relating to this issue are allowed. Disallowance of interest expenses for the purpose of capitalization into the working in progress of the construction project - HELD THAT:- We noted that Ld. Counsel has evidently demonstrate from the cash flow statement that there were substantial funds available with it from the advance received on flat bookings amounting to Rs.32.18 Cr. out of which capital WIP has been of Rs.16.48 Cr. during the year under consideration leaving with surplus funds of Rs.15.70 Cr. Thus, interest expenses claimed by assessee is in respect of funds which were not deployed on the development project but were otherwise available to the assessee in its financing activities. Accordingly, from this factual matrix, we find that Ld. AO is not justified in disallowing the claim of interest expense and treating it for capitalization in the project cost. Accordingly, we direct the Ld. AO to allow the claim of interest expenses. Appeal of the assessee is allowed.
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2022 (10) TMI 1092
Levying penalty u/s. 271(1)(c) - differential amount of opening WDV of assets as on 01.04.2015 and the closing WDV of assets as on 31.03.2015 - HELD THAT:- Before us, the Chartered Accountant Shri B. Jeevarathinam categorically admitted in writing that the duplication of assets has happened while calculating the depreciation as per Income Tax Act while computing the tax computation sheet by his staff. He admitted that while doing so, the staff has wrongly computed the deprecation value filed 15% block of assets with respect to the said assessment year and accordingly, excess depreciation claimed was made to the extent of Rs. 17,86,187/-. As noted that this mistake has occurred at the office of the Chartered Accountant and there is no intention of the assessee to evade the tax. Moreover, the assessee has already accepted assessment and paid taxes. In view of the facts and circumstances narrated above and the cumulative effect of the facts, if we analyze, it clearly shows that the assessee was under bonafide belief in claiming this depreciation. Hence, we delete the penalty and allow the appeal of the assessee.
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2022 (10) TMI 1091
Levy of interest u/s 234A, 234B and 234C - Disallowance of TDS credit deducted by ex-employer of the appellant - HELD THAT:- Section 203 of the Income Tax Act, 1961 casts a duty on the person deducting tax to furnish certificate for tax deducted at source to the person to whose account credit has been given. Section 203 casts the duty on the person deducting tax to prepare statement for such period giving the details of the tax deducted at source and remit it to the credit of the Central Government in the prescribed form and if such a person fails to remit the same, then the provision provides that he would be treated as assessee in default u/s 201(1) of the Income Tax Act. It may also be relevant to refer to Section 205 of the Act which restricts the tax authorities from enforcement of any demand on the assessee payee in so far as the amount of tax which had been deducted by the payer and not deposited with the Government. Sub-clause (ii) of clause (b) of Section 234A(1) specifically and clearly states that any tax deducted or collected at source is required to be reduced therefrom. Similarly, when provisions of 234B is considered. It is seen that for charging interest for defaults in payment of advance tax is considered, in terms of Explanation1 to Section 234B(1)(i) again specifically makes a reference to the fact that assessed tax is to be reduced by the amount of any tax deducted or collected at source. Similarly, for attracting the charge of levy of interest for deferment of advance tax as addressed by Section 234C it is seen that Explanation-1 to the 3rd Proviso to Section 234C(1)(b) specifically in sub-clause (1) again makes a clear mention that tax due on the returned income is to be reduced by the amount of any tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income. Accordingly, it is seen that for attracting the levy of interest, the calculations necessarily require to be made are to be considered after reducing the TDS deducted in a case like this. Hence, in case the Assessing Officer and the assessee are interpreting the observations/directions in para 8 as a direction to charge interest holding assessee in default, then such an interpretation is contrary to law. The legislature in very clear terms has already factored the factum of TDS deducted by the deductor. Credit of the said deduction is clearly embedded in the calculation of amount of tax on the total income as considered in Section 234A; and assessed tax as applicable in Section 234B and tax due on the returned income to be considered for Section 234C. Thus,find that the tax authorities are necessarily bound to factor in the deduction made on behalf of the assessee to the tune of Rs.9,37,296/-. Any other shortfall in the assessed tax and tax on total income or tax due on the returned income would be the only limited areas open to the AO. As far as the present issue of non deposit of the tax deducted from the salary of the assessee in the present case is concerned, the provisions of Section 234A, 234B and 234C would have no role to play.
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2022 (10) TMI 1090
Disallowance in respect of commission - commission was paid to ten individuals who procured orders and medicines from the retail medicine shops for the assessee, which was paid on weekly basis - Commission paid @ 1% or lesser on the orders procured by them - HELD THAT:- We note that the issue has already been dealt in appeal on similar set of facts in assessee s own case in AY 2006-07 [ 2015 (11) TMI 1879 - ITAT KOLKATA] by deleting the disallowance and restricting it to 50% of the expenses claimed. Ld. CIT(A) did not pay heed to this finding of AY 2006-07 relating to disallowance of commission but relied on the same order of Ld. CIT(A) for AY 2006- 07 while dealing with the other issue of disallowance of carriage outward expenses. We do not find any justification in placing reliance on one issue and not on the other issue by the Ld. CIT(A) while dealing with identical issues. Considering this, we restrict the disallowance of commission in the present case before us to 50% of the claim of Rs.13,18,500/- and delete the balance. The assessee gets a relief accordingly. Disallowance of 70% made on expenses towards carriage outward for the reasons that proper supporting evidence for the expenses was not produced - HELD THAT:- We note that this issue was also dealt with by the then Ld. CIT(A)-XXXIV, Kolkata in the order in assessee s own case wherein the disallowance was restricted to 50% of the carriage outward expenses as against 70%. Following the same, we give part relief to the assessee on this issue by restricting the disallowance to 50% instead of 70% made by the Ld. AO. The assessee gets part relief accordingly. Bogus purchases - Difference on account of opening balance in the details as furnished by the three parties - HELD THAT:- We fail to understand how the opening balance in respect of purchases made by the assessee can lead to disallowance from the purchases of the current year since the purchases for the current year from the three parties by the assessee are in reconciliation and have no differences as tabulated by the AO. CIT(A) confirmed this addition by observing that no reconciliation was furnished in this respect. However, we note from the tables reproduced that there is no differences in the purchases made during the year. The difference is only on account of opening balance in the details as furnished by the three parties. We do not find any merit and rationality in making such a disallowance by treating the opening balance as bogus purchases from the purchases of the current year. The opening balance would always relate to the purchases which were made in the preceding years and not the year under consideration and, therefore, there cannot be any disallowance on account of the opening balance from the current year s purchases. In terms of this observation and finding, we are inclined to delete the addition made by the Ld. AO and confirmed by the Ld. CIT(A) towards bogus purchases. Appeals of assessee are partly allowed.
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2022 (10) TMI 1089
Revision u/s 263 by CIT - Unexplained source of cash deposits - HELD THAT:- The entire documents furnished by the assessee in this regard before the AO as well in response to the show cause notice issued by the Ld. PCIT indicate that the claim of the assessee regarding the source of bank deposits is correct. The query letter issued by the AO indicates that the AO had duly applied his mind to the issue before him and further the assessee also had duly responded to the query raised by the AO in this regard and only thereafter the AO had accepted the return of income of the assessee. Therefore it is our considered view, that there is no lack of inquiry on the part of the Assessing officer warranting invocation of revisionary proceedings by the Ld. PCIT. We would like to place reliance on the judgement in the case of Sunbeam Auto Ltd. [ 2009 (9) TMI 633 - DELHI HIGH COURT] wherein as held that if there was any inquiry, even inadequate, that would not by itself give the powers to the Commissioner to pass order u/s 263 of the Act, merely because the Commissioner has a different opinion in the matter and that it is only in those cases where there was no enquiry, that the powers u/s 263 of the Act can be exercised. PCIT cannot pass an order u/s 263 of the Act merely on the ground that further or thorough enquiry should have been made by the AO - We also note that in the case of Malabar Industries Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] has held that if the Assessing officer adopts one of the possible courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the AO adopts one view with which the Commissioner does not agree, it would not be an order prejudicial to the interests of the Revenue for the purpose of invoking the revisionary powers u/s 263 - Therefore, we are of the considered opinion, that the impugned order was definitely outside the purview of section 263 of the Act and, we hold the impugned order to be bad in law and quash the same. Appeal of the assessee stands allowed.
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2022 (10) TMI 1088
Revision u/s 263 by CIT - direction to reassess the loan outstanding as on 31/03/2011 - disallowance u/s 40(a)(i) of interest paid on loan - HELD THAT:- We find substance in the claim of the Ld. AR, that now when the AO while framing the re-assessment u/s. 143(3) r.w.s 147 of the Act, dated 23.11.2018 had not made any addition as regards the very reason on the basis of which the case of the assessee was reopened i.e., source of cash deposits in the assessee s Saving bank account with State Bank of Bikaner Jaipur, therefore, in absence of any addition on the said count, it was not permissible for him to have made any independent verifications and/or additions/disallowances in the hands of the assessee. Now when in absence of any addition having been made as regards the issue on the basis of which the case of the assessee was reopened, the AO stood divested of his jurisdiction of making any independent additions/disallowances, therefore, no infirmity could be related to the order passed by him under Sec. 143(3) r.w.s 147 for the reason, that he had failed to have carried out verifications as regards the unsecured loans that were raised by the assessee during the year from seven parties, and also failed to disallow under Sec. 40(a)(ia) her claim for deduction of interest that was paid to the aforesaid lenders i.e, without deduction of tax at source, as both of the said issues were independent issues that were unconnected with the reason on the basis of which her case was reopened under Section 147. In sum and substance, as the view taken by the AO i.e., not making of any independent addition/disallowance in the absence of any addition as regards the issue on the basis of which the case of the assessee was re-opened, is found to be in conformity with the judgment in the case of Jet Airways (I) Ltd. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY ] therefore, we are unable to concur with the view taken by the Pr. CIT that the failure on the part of the AO to carry out verifications and/or make addition/disallowance as regards such independent and unconnected issues would render the order passed by him under Sec. 143(3) r.w.s 147, dated 23.11.2018 as erroneous in so far as it was prejudicial to the interest of the revenue under Sec. 263 - We, thus, in terms of our aforesaid observations set-aside the order passed by the Pr. CIT u/s 263 of the Act, dated 22.02.2021 and restore the order passed by the Assessing Officer u/s.143(3) r.w.s.147, dated 23.11.2018. Thus, the appeal filed by the assessee is allowed in terms of our aforesaid observations.
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Customs
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2022 (10) TMI 1087
Seeking quashing of Clause 6 of Regulation 6 of Customs Brokers Licensing Regulations, 2018 - Permission to eligible applicant a total of six attempts to clear the prescribed written and oral examination for obtaining the Customs Broker License - HELD THAT:- As per Clause 6 of Rule 6 of CBLR, 2013, an applicant was permitted a maximum period of seven (7) years from the date of his/her original application to pass both the written as well as oral examinations. Thus, an applicant was allowed a 'period' for passing his/her written and oral examinations. The said clause makes no reference to 'attempts'. For instance, as per the Notice for Customs Broker Examination, which was to be held on 20th January, 2017, an applicant could ve applied for the said examination, at the latest by 18th November, 2016. Therefore, as per the aforesaid provision of CBLR, 2013, an applicant would ve been eligible for further attempts till 18th November, 2023 i.e., seven (7) years from the date of original application, effectively resulting in a maximum of seven (7) attempts, if the applicant chose to appear in the exam every single year. Further, it is evident from the record that the Petitioner himself has appeared for four (4) written examinations starting from 2019 to 2022 as per CBLR, 2018 and was not aggrieved by the said Regulations at the relevant time - the notification inviting applications for examinations was issued on 24th August, 2022, and the applications for appearing in the written examination are to be filed from 18th October, 2022. The present petition has been filed on the eve of 18th October, 2022, and it is a speculative attempt to appear in the said examination for the seventh (7th) time. Petition dismissed.
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2022 (10) TMI 1086
Revocation of Customs Broker License - Forfeiture of security deposit - penalty - Confiscation of goods - revocation of license of the courier was set aside on the ground that the offence was committed by its employee without knowledge of the courier firm and also for the reason that the licence of the courier had already been suspended for one year before and therefore the courier had suffered sufficient punishment - HELD THAT:- It is undisputed that commercial goods whose import requires an Import Export Code (IEC) and also clearance and FSSAI (in case of food supplements) were imported through 37 bills of entry filed by the appellant. These were filed in the name of 37 different people who had nothing to do with nor any knowledge of the imports. The appellant had in its possession the details of these people which it misused. The real owner of the goods was Shri Anmol Krishna Murthy who, in his statement, admitted that the details of the consignors and consignees indicated in the bills of entry and on the cartons were provided to him by Shri Azarouddin Kadar of the appellant firm. The main contention of the learned counsel for the appellant is that simply because an employee of the appellant had committed an error or fraud, the licence of the appellant should not be revoked. This statement cannot be accepted. The employee of the courier has no locus standi in getting the goods cleared through the customs. The licence is issued to the appellant and the appellant has to get the goods cleared - It is not the case that somebody hacked into the system and misused the credentials of the appellant to file the bills of entry. They were filed by the appellant s own employee Shri Azarouddin Kadar Riswan who was employed as Assistant Manager by the appellant to manage its business in Delhi. Therefore, the full responsibility for any action of the employees of the appellant rests on the appellant. Regulation 12(1)(i) requires the courier to obtain an authorisation from each of the consignees or consignors of imported goods for couriers of export goods to the effect that it may act as an agent of such consignor or consignee. In this case the so called consignors and consignees indicated in the bills of entry had nothing to do with the consignments - there is no error in the order of the Commissioner holding that the appellant has violated the Regulations. These provide that the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may revoke the registration of an authorised courier and also pass an order for forfeiture of security on any of the grounds prescribed. The impugned order was correct in holding that the appellant violated several regulations there is no reason for us to interfere with the forfeiture of security deposit - for the various contraventions of these regulations as discussed the appellant was correctly held liable to penalty under Regulation 14 and penalty of Rs. 50,000/- was imposed by the Commissioner in the impugned order. The impugned order is correct and proper and calls for no interference - Appeal dismissed.
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2022 (10) TMI 1085
Application for early hearig of the appeal - appeal rejected on the ground of time limitation - HELD THAT:- The Order-in-Original dated 11.05.2021 was received by the assessee on 17.05.2021 and the Appeal was filed on 14.07.2021. From 17.05.2021, they were required to file Appeal before the First Appellate authority on or before 17.07.2021 - It is not clear whether there was any delay at all or the delay is of 4(four) days as calculated by the Ld.Commissioner(Appeals). On facts and under the circumstances, even if the date of communication of the order is taken as 11.05.2021, the delay, if any, is only of 2(two) days, which is condoned. It would be appropriate to remand the matter to the Ld.Commissioner(Appeals) to decide the Appeal on merits without further visiting the aspect of limitation. Needless to mention a reasonable opportunity of hearing be granted to the Appellant. Appeal is allowed by way of remand to the Ld.Commissioner(Appeals).
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2022 (10) TMI 1084
Maintainability of appeal - appeal rejected on the ground of time bar - appeal was filed after 90 days, considering the date of order/ letter as 11.01.2016 and 01.08.2016 - HELD THAT:- Though the appellant had been corresponding with the department on the issue on merit and department has responded vide letter dated 11.01.2016 and 01.08.2016 but the appellant preferred the appeal against the letter dated 03.05.2018 and in a column 4 i.e. date of communication was mentioned as 10.05.2018. In this fact, the learned Commissioner (Appeals) should have decided the appeal considering the letter dated 03.05.2018, if this be so, then the appeal was not time barred, therefore, the Commissioner (Appeals) ought to have decided the appeal on the basis of letter dated 03.05.2018 and dismissing the appeal on ground of time bar is not proper. The matter is remanded to the Commissioner (Appeals) to decide the appeal keeping in mind, letter dated 03.05.2018 as impugned letter - the appeal is disposed of by way of remand to the Commissioner (Appeals).
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Corporate Laws
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2022 (10) TMI 1083
Possession of suit property - recovery of arrears of rent - family company - real beneficiary / lifting of corporate veil - relationship of lessor and lessee between the parties or not - Order XII R-6 read with Order XIIIA of the Code of Civil Procedure, 1908 - HELD THAT:- While examining an application under Order XII Rule 6 of the CPC, the court has to see whether clear and categorical admissions has been made on behalf of the defendant on the basis of which a decree can be passed in favour of the plaintiff. As per the Lease Agreement, a sum of Rs.2,50,000/- per month was payable as rent. As per the defendant firm, from the time of execution of the aforesaid lease on 1st April, 2007, no rent was ever paid by the defendant firm to the plaintiff company. A perusal of the relevant extracts of the profit and loss account and balance sheets of the plaintiff company from the year 2007 to the year 2014 would only show that some amount of rental income was received/receivable by the plaintiff company - the accounts of the defendant firm that have been placed on record pertain to the years prior to execution of the Lease Agreement. Therefore, none of these documents show that any rent was being paid or was payable by the defendant firm to the plaintiff company under the Lease Agreement. The plaintiff company was incorporated as a family owned company with the two grandchildren of late Sh. Sanmukh Singh Batra being the only shareholders and directors. Subsequently, disputes arose between the parties and it appears that Sanmukh Singh Batra sided with one of the grandsons, resulting in the shares of the plaintiff company and the control of the plaintiff company being transferred in favour of Jaspreet Pal Singh Batra, to the exclusion of Prabhdit Singh Batra - From the accounts of the plaintiff company that have been placed on record, it is evident that the plaintiff company was not engaged in any business activity and was only an asset holding company owned by the family. The only income shown of the plaintiff company is from lease rental. Further, the directorship and majority shareholding of the plaintiff company has, at all times, been with the family members of late Sh. Sanmukh Singh Batra. In view of settled principles of law with regard to Order XII Rule 6 of the CPC, no case is made out for passing of a judgment on the basis of admission - application dismissed.
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PMLA
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2022 (10) TMI 1082
Grant of bail - respondent is suffering from Malignancy and Cancer - HELD THAT:- The Department ought not to have filed such a Special Leave Petition wasting the stationery, the legal fees and Court s time. The Special Leave Petition stands dismissed with exemplary cost, to be borne by the concerned officer, who granted the permission to file the Special Leave Petition, quantified at Rs.1,00,000/-, to be recovered from the salary of such an officer. The cost to be deposited by the Department with the Registry of this Court within a period of four weeks from today. On such deposit, Rs.50,000/- be transferred to National Legal Services Authority, New Delhi and Rs.50,000/- to Mediation and Conciliation Project Committee, Supreme Court of India.
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2022 (10) TMI 1081
Plea of alternative remedy - maintainability of the present writ petition - Money Laundering - Provisional Attachment Order - Plea of forum non convenience - Jurisdiction. Plea of alternative remedy - maintainability of the present writ petition - HELD THAT:- The law is well settled that alternative remedy is not a bar to the exercise of power judicial review under Article 226 of the Constitution of India by the High Court, if the writ petition is filed when it is filed alleging breach of enforcement of fundamental rights, violation of principles of natural justice and where the order or the proceeding are wholly without jurisdiction or when the vires of an act is challenged. In the case in hand the petitioners had questioned the power and jurisdiction or of the authority and the entire proceeding initiated under PMLA, 2002 has been challenged on the ground that the authorities under PMLA are not having their jurisdiction to initiate the proceeding in the given facts of the present case - this Court is of the considered opinion that in the aforesaid factual backdrop neither the adjudication under Section 8 or Section 26 can be treated as an officious alternative remedy when the jurisdiction of authority itself is questioned. Plea of forum non convenience - HELD THAT:- Section 42 of the Act, provides that High Court shall be an appellate authority against the decision of the appellate tribunal constituted under Section 25 of the PMLA, 2002. In the case in hand, the proceeding was admittedly initiated by the authorities of the Enforcement Directorate at Guwahati Zonal Office, Rajgarh in the State of Assam and as the jurisdiction of the said authority in initiating the proceeding under PMLA, 2002 is the subject matter, this Court is of the considered opinion that this Court shall have a jurisdiction to entertain the petition inasmuch as at least cause of action in part arose within the jurisdiction of this Court. This court is of the view that when the jurisdiction of an authority, more particularly the authority under PMLA, 2002 is under challenged in a writ proceeding, the explanation given in Section 42 relating to appeal before the High Court shall not be applicable in toto. Therefore, the argument of the Mr. Sarma, learned counsel in this regard is also rejected. The jurisdiction - Proof of commission of offence - HELD THAT:- The Section 8 and 5 empowers the authority to act when they are satisfied that there are reasons to believe that any person has committed an offence under Section 3 of PMLA, 2002. The legislature has not used the word for proof of commission of offence but reasonable believe can be a basis to proceed under Sections 5 and 8 of the Act, 2002. Therefore, the criminal activity shall mean not a proof of criminal offence but an alleged criminal activity relating to schedule offence. In view of the aforesaid finding, it is the considered opinion of this Court that the authority in initiating the proceeding in the case in hand is having the jurisdiction. Whether the subjective satisfaction arrived at while issuing the impugned provisional attachment order, the authority had before it, any credible materials or information or such decision was supported by supervening factor? - HELD THAT:- The adjudicating authority under Section 8 of the PMLA, Act is having the power of adjudicate the correctness of the attachment including provisional attachment. For the purpose of such determination, the persons whose property has attached are given opportunity to be heard and to prove that the property is not involved in money laundering. Further when the provisional attachment order is passed in violation of the Sub Section 1 of Section 5 of the PMLA, Act and its proviso, such as that the property attached is not proceeds of crime and there is no likelihood of concealment of property etc., can be raised before the adjudicating authority and adjudicating authority, in the scheme of the Act, need to determine such objection also while exercising its power under Section 8 of the PMLA, Act. It is also well settled that more the stringent provision, more the stricter requirement for adherence of procedural safeguard. The order of the adjudicating authority can also be challenged before the Appellate Authority. Section 26 (1) of the PMLA Act gives a right to the person aggrieved by an order of confirmation of provisional attachment to approach to the Appellate Tribunal. The order of such Appellate Authority can further be challenged before the High Court under Section 42 of the PMLA Act. The High Court shall have power to deal with any question of fact or law in such a proceeding - the present petitioner shall have opportunities as provided under the Act and agitate the same before the authority under the PMLA Act. This Court is of the considered opinion that the present is not a fit case wherein this Court should interfere with the order of provisional attachment in exercise of its power under Article 226 of the Constitution of India inasmuch as this Court has held that the authority is having its power and jurisdiction to issue the impugned order of attachment and that the adjudicating authority is having the power and duty to examine the validity of the order of attachment and test the same including the ground of satisfaction that is required under Section 5(1) (a) and (b) of the PMLA Act - the provisional attachment order is not interfered with. Petition disposed off.
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2022 (10) TMI 1080
Money Laundering - scheduled offences - submission of documents of properties with existing encumbrance as collateral security for the loan - Section 420 IPC - Sections 48 and 49 of the PMLA r/w Notification vide G.S.R.441(E), dated 01.07.2005 as amended by G.S.R.579(E), dated 29.08.2013, S.O.1275(E) dated 13th September 2005 - HELD THAT:- Section 48 (c) ibid., clearly classifies the Assistant Director as an authority for the purposes of this Act . Thus, when the statute itself classifies the Assistant Director as an authority, we are afraid no further authorisation is required for him to file a complaint for the Special Court to take cognizance of the offence u/s.44(b) of the PMLA. It is true that Section 420 IPC was not a scheduled offence under the PMLA on 25.09.2008 when the case was registered by the CBI and that it was included in the statute only with effect from 01.06.2009. In this case, the Enforcement Directorate has registered the case only after 01.06.2009, viz. , on 23.11.2010 - irrespective of the fact as to when the scheduled offence was committed, if the proceeds of crime that is generated from the commission of a scheduled offence is laundered after the coming into force of the PMLA, 2002, then one can be prosecuted u/s.3 r/w 4 of the PMLA. Manjula cannot claim prejudice for non-identification by any witness during trial. If Anuraag Jain and Manjula were not arrested and released on bail or if they are not on anticipatory bail, the trial Judge shall obtain a bond u/s.88 Cr.P.C. for Rs.25,000/- with two sureties each from them, if not already obtained - Petition dismissed.
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Service Tax
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2022 (10) TMI 1079
Extended period of limitation - Business Auxiliary Services - providing various services including that of Consultants - negative list of Section 66B of Service Tax Act (Finance Act, 2012) - HELD THAT:- Section 73(1) of the Finance Act, 1994 deals with the recovery of service tax not levied or not paid or short levied or short paid or erroneously refunded. According to which the recovery may be called for by the Central Excise Officer within the period of 30 months. However, the demand could be raised for a period beyond the said period of 30 months to the maximum of 5 years. But for the reason of fraud or collusion or any willful mis- statement or suppression of facts or contravention of any of the provisions of this act or of the rules made there under with intent to evade payment of duty - Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 73(1) of the Finance Act, 1994 the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of any incorrect statement with the knowledge that the statement was not correct. Though the proviso to Section 73(1) of the Finance Act, 1994 carves out an exception and permits the authority to exercise their power recovery within 5 years from the relevant date in the circumstances in the proviso, one of it being suppression of facts - mensrea/the intent to evade the tax liability is the core for invoking the extended period over the normal period. Appellants apparently have mentioned themselves to be under the bona fide belief of still not being liable under service tax. Based on the said belief only they neither had applied the registration nor had ever filed the service tax return. The reason for such bona fide belief stands corroborated from the fact that the service tax was neither collected by them from M/s. ACCSL nor accordingly, was paid by the appellant. There is no denial to the fact that appellants have not charged service tax from M/s. ACCSL. There is also no denial to the fact that the entire amount of commission was shown by the appellants in their income tax returns and the tax liability under direct taxes was duly discharged by the appellants. These perusals and undisputed facts are sufficient to hold that there was no mala fide intent on the part of the appellants to evade the payment of service tax. They rather were under bona fide belief. Since there was the scope and belief with the appellants for entertaining the doubt about no liability of theirs to pay the service tax that the application of Section 73(1) of the Finance Act, 1994 the proviso thereof gets ruled out and resultantly, the extended period of limitation is held to have wrongly invoked by the department. The adjudicating authorities below are held to have wrongly confirmed the demand for the extended period of limitation - Appeal allowed.
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2022 (10) TMI 1078
Cash Refund of service tax - ocean freight - refund sought on the ground that appellant is entitled for Cenvat credit of service tax paid on ocean freight - Section 142(3) read with Section 11B - HELD THAT:- This Tribunal in the case of GALAXY POLY PLAST INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA [ 2022 (7) TMI 567 - CESTAT AHMEDABAD ] has held that Both the lower authorities passed the order on the ground that the refund which were claimed than cash refund of Cenvat credit of service tax paid on ocean freight in terms of Section 142(3) read with Section 11B is not admissible. The matter is remanded to the original authority - Appeal allowed by way of remand.
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Central Excise
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2022 (10) TMI 1077
CENVAT Credit - inputs - capital goods - input services - Consulting Engineering Services - Supply of Tangible Goods Services - period from October 2011 to March 2012 - appeal rejected on the ground that the CENVAT Credit which has been utilized for payment of Service Tax on output service has been availed as a manufacturer and should have been utilized for payment of duties related to manufacture of excisable goods and not for payment of Service Tax payable on output services provided by the Appellant. HELD THAT:- A manufacturer of excisable goods can take credit of CENVAT paid on input services and there is no such requirement for one to one co-relation and there is no bar on the utilization of CENVAT credit availed on input services for payment of tax on excisable goods so manufactured and cleared. This issue is already settled in favour of the Appellant in various cases cited by the Appellant. Although the cases referred to are not identical in terms of the factual position, however, they decide the general principles that in respect of utilization of credit there is no requirement of one to one correlation and cross utilisation of credit is permissible. C.B.E. C. vide Letter F. No. 381/23/2010/862, dated 30-3-2010, clarified that Cenvat credit on inputs, capital goods and input services which are used for manufacture of goods or for provision of services is available in a common pool and can be used for payment of Excise duty and/or Service Tax. Credit accumulated by the service provider or manufacturer on the input services availed as well as inputs is available for payment of Excise duty or Service Tax. The impugned orders cannot be sustained and are therefore set aside - Appeal allowed - decided in favor of appellant.
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2022 (10) TMI 1076
Valuation of goods - finished goods cleared by the appellant to their interconnected sister units at the value for charging duty appear to be transaction value as stipulated in Section 4(1)(a) of the Act - revenue neutrality - time limitation. Whether valuation of the goods cleared by the appellant to their sister units should be made under Rule 8 i.e. 110% of the cost of production or on transaction value i.e. in terms of Rule 4 of Valuation Rules read with Section 4(1)(a) of Central Excise Act? HELD THAT:- As per the facts of the case, the appellant have cleared their goods to their sister units and value of the same was determined as per the transaction value in terms of Rule 4 of Valuation Rules read with Section 4(1)(a) of Central Excise Act, 1944. The claim of the revenue is that for the clearance of goods to their own unit for the purpose of value Rule 8 shall apply and according to which the value should be arrived at by applying the price on the basis of 110% of the cost of manufacture. As of now it is settled law that in a case where the assessee sell the same goods partly to unrelated person and partly to their related person, the transaction value which is charged to unrelated buyer shall prevail and the same price shall be applicable in case of clearance of goods to the assessee s own unit. The Rule 8 does not make it clear that in respect of same goods being cleared partly to the assessee s own unit and partly to the unrelated buyer, whether in both cases the valuation under Rule 8 shall apply or otherwise. In view of the various judgments, it is settled law that wherever there are clearance partly to the assessee s own unit or captive consumption and partly on sale basis, the transaction value of the sale of the goods to the unrelated person shall be applicable for assessment in case of supplies made to their own unit/captive consumption. Applying the same principal, in the present case also, the appellant have rightly paid the duty on the transaction value in terms of Rule 4 of Valuation Rules - Reliance can be placed in judgement of Hon ble Supreme Court in COMMISSIONER VERSUS STEEL COMPLEX LTD. [ 2015 (10) TMI 500 - SC ORDER] wherein, the hon ble Apex Court has given the following observation that Rule 8 of the Central Excise Valuation (Determination of Price of excisable goods) Rules 2000, which was prevailing at that time will have no application in the present case where the goods are only partly sold under ex-factory basis and partly cleared for captive consumption. For the period prior to 1st December, 2013 the valuation of the goods cleared to their sister units shall be governed by Rule 4 of the Valuation Rules whereby, the transaction value of the similar goods cleared to independent buyers shall be the assessable value for charging excise duty in respect of the goods cleared to the assessee s own other units. In the present case also the period involved is up to November, 2013 therefore, the ratio of the above decisions is directly applicable in the present case. From the statutory changes, pre and post 01.12.2013, it is clear that prior to 01.12.2013 the Larger Bench and Hon ble Apex court interpreting the Rule 8 prevailing at that time held that wherever part clearance is for own unit or captive use and part for independent buyers, the price charged to independent buyer should be taken as transaction value in terms of Section 4(1)(a) read with Rule 4 of Valuation Rules. The legislators keeping in mind and accepting the interpretation of valuation provision made in the judgments supra, brought an amendment in Rule 8 and the same is effective from 10.12.2013. This amendment in Rule 8 further strengthen the case of the appellant in their favour. Needless to state that the said amendment cannot be applied retrospectively. For the above reason also the contention of the revenue is not sustainable. The impugned order is not sustainable hence the same is set aside - Appeal allowed.
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2022 (10) TMI 1075
CENVAT Credit - ISD - distribution of input service credit - credit denied on the ground that credit could be distributed by Parle only to its own manufacturing unit under rule 7 of the CENVAT Credit Rules, 2004 and not to the appellant which is not a manufacturing unit of Parle - whether the appellant was entitled to take CENVAT credit prior to 01.04.2016 since credit for the period w.e.f. 01.04.2016 has been granted by the Commissioner (Appeals)? HELD THAT:- The submission that was advanced on behalf of the appellant before the Larger Bench in M/S. KRISHNA FOOD PRODUCTS, M/S. MARIAMMA R. IYER, M/S. PARLE BISCUITS PVT LTD. VERSUS THE ADDITIONAL COMMISSIONER OF CGST C. EX [ 2021 (51) TMI 906 - CESTAT NEW DELHI] was that rule 7 of CENVAT Rules allowed distribution of credit even prior for the period to 01.04.2016 and, in any case, substitution of rule 7 of the CENVAT Rules would have retrospective application. After noticing the provisions of the CENVAT Rules and the Authorization submitted by Parle, which was accepted by the appellant, the Larger Bench observed that there are substance substance in the contention advanced by learned counsel appearing for the appellant that the amended provisions of rule 2(m) and rule 7 of the CENVAT Rules, after the 01.04.2016, merely seek to rectify the lacuna in the unamended rules and, therefore, would have effect from the inception of the rules. In view of the aforesaid decision of the Larger Bench of Tribunal in Krishna Food Products, it has to be held that the Commissioner (Appeals) was not justified in denying CENVAT credit distributed by Parle prior to 01.04.2016. The order dated 25.03.2019 passed by the Commissioner (Appeals) to the extent is has denied such benefit is, therefore, set aside - the appeal is allowed.
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2022 (10) TMI 1074
Maintainability of appeal of the assessee - threshold amount involved in the appeal - disputed amount is less than Rs.2,00,000/- - the appellant failed to appeared for hearing despite notice - Rule 20 of the CESTAT (Procedure) Rules, 1982 - HELD THAT:- The amount involved in this appeal is less than the threshold limit. In terms of Section 35B(1) of the Central Excise Act, 1944, the Tribunal may refuse to admit an appeal filed before it, if the value of the disputed amount is less than Rs.2,00,000/-. On this ground alone, as the amount involved is very petty, this appeal should be held to be non-maintainable and dismissed - the appeal is dismissed for non-prosecution in terms of Rule 20 of CESTAT (Procedure) Rules, 1982 as also in terms of Section 35B(1) of the Central Excise Act, 1944 being not maintainable as the disputed amount is less than the threshold limit.
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2022 (10) TMI 1073
Improper availment of credit of tax paid - input service - rental of lease-hold land - Period between August 2010 and January 2015 - HELD THAT:- It is seen from the records that the appellant had availed credit of tax paid on input service deployed in rendering of output service but had utilized the credit for discharge of duty on output cleared by them. The decision of the Hon ble High Court of Bombay in Deepak Fertilizers Petrochemicals Corporation Ltd v. Commissioner of Central Excise, Belapur [ 2013 (4) TMI 44 - BOMBAY HIGH COURT] does not appear to have been considered either by the original authority or the first appellate authority. It would, therefore, be appropriate for the ascertainment of relevance of these decisions to the specific facts of the dispute. To enable this, the impugned order is set aside and the matter is remanded back to the original authority for subjecting the facts to the test of law as settled by the decision of the Hon ble High Court of Bombay that has thereafter been relied upon in the decisions of the Tribunal. The matter is remanded.
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CST, VAT & Sales Tax
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2022 (10) TMI 1072
Permission for withdrawal of appeal - Validity of assessment - levy of tax, interest and penalty - suppression of sale - non-refund of input tax credit - sale of the set of product at a price lower than the actual purchase price - Section 40A of DVAT Act - HELD THAT:- There are no material on record to conclude that the submission made in this behalf by Mr Sarin is correct. According to us, the appellant should have, in these circumstances, immediately moved the Tribunal by way of a review application. The appeal is, accordingly, dismissed as withdrawn with liberty as prayed for.
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2022 (10) TMI 1071
Rejection of appeal by appellate Tribunal - reversal of input tax credit against purchase return beyond the period prescribed under the KVAT Act and Rules - goods are returned after period of 90 days the selling dealer - availability of benefit of turnover exemption from payment of tax - HELD THAT:- The questions now formulated do not point out the illegality or irregularity in the finding recorded by the Tribunal. The finding of disallowing the claim of the dealer is agreed upon, and secondly, no exception is pointed out warranting interference of this Court under Section 63 of the Act. Revision dismissed.
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2022 (10) TMI 1070
Maintainability of appeal - requiring the full amount of tax to be deposited towards pre-deposit - cancellation of registration of three parties - non-production of statutory forms - time period to produce all the statutory forms - concessional rate of tax against the form C - HELD THAT:- The tribunal concluded that the case was fit where the appellant should be directed to pay full amount of tax. The orders regarding pre-deposit and the extent to which the tribunal may require the assessee to make such pre-deposit, are the issues in the realm of discretion of the tribunal to be exercised subject to considerations based on the facts of each case and the prima facie view of the merits emerging from the record - the tribunal satisfies the said requirements to exercise the discretion whereby it thought it fit to direct pre-deposit to the extent of 100%. This court would not substitute its own reasons and for that matter the discretion validly exercised by the tribunal. The present Appeal does not raise any question of law much less substantial question of law - Appeal dismissed.
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Indian Laws
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2022 (10) TMI 1069
Dishonor of Cheque - insufficiency of funds - petitioner has challenged the impugned complaint and the impugned orders, primarily, on the ground that the complaint has not been filed through a competent person, inasmuch as original Power of Attorney in favour of Shri Basharat Gul, through whom the complaint has been filed, has not been placed on record of the trial court - section 138 NI Act - HELD THAT:- It is clear that in a case where the complainant is a company, an authorized employee can represent the said company. Once an averment to this effect is made in the complaint, it is sufficient for the Magistrate to take cognizance and issue process. It also emerges that in case authority of a person filing complaint on behalf of the company is disputed by the accused, the same would be a matter of trial to be decided during the course of trial and it would not be a ground to dismiss the complaint at the threshold itself. In the instant case, the respondent/complainant has specifically pleaded that Shri Basharat Gul is the duly constituted Attorney of the Bank who is authorized to institute the complaint and verify the pleadings. A copy of the Power of Attorney has been annexed to the complaint. Therefore, the learned Magistrate was justified in taking cognizance of the complaint and issuing process against the petitioner on the basis of the impugned complaint. It is true that in the instant case the statement of the Attorney of the respondent has not been recorded on oath as contemplated by Section 200 of the Cr. P. C but then the same is only an irregularity which would not vitiate the proceedings - Besides the averments made in the complaint, the complainant has placed on record the cheque in question, the memo of dishonour, demand notice and the receipt depicting the issuance of notice. When this material is considered, even in the absence of the statement of the Attorney Holder of the complainant, a case for issuance of process against the petitioner is made out. Therefore, the mere fact that the statement of the Attorney Holder of the complainant in this case has not been recorded in accordance with the provisions contained in Section 200 of the Cr. P. C would not vitiate the whole proceedings. The argument of learned counsel for the petitioner in this regard is without any merit. There are no merits in the petition - petition dismissed.
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2022 (10) TMI 1068
Dishonor of Cheque - insufficiency of funds - discharge of existing debt or not - subject matter of the impugned complaint were stale or not - initiation of prosecution on the basis of these cheques - Section 138 of NI Act - HELD THAT:- The issuance of a number of cheques by the petitioner/accused in favour of the respondent/ complainant has to be considered as a bundle of facts giving rise to a cause of action. If one of the facts alleged is not found to be correct, it does not make the whole complaint false nor does it defeat the cause of action that has arisen in favour of the respondent/ complainant against the petitioner/accused. Thus, merely because one of the cheques, which is subject matter of the impugned complaint, had become stale before its presentation for encashment would not offer a ground for quashment of the impugned complaint as a whole. However, the impugned complaint has to be restricted only to the cheques that were valid as on the date of their presentation for encashment. This aspect of the matter has to be borne in mind by the learned trial Magistrate while trying the complaint. Grant of interim compensation - HELD THAT:- It appears that the learned Magistrate has inadvertently skipped to change the date in the order and while announcing the order on 29.07.2021, the date has been recorded as 23.07.2021 - This has resulted in confusion in actual date of the impugned order. It appears to be an inadvertent error and not a deliberate one. For this inadvertent error, the impugned order is not rendered illegal. A Court trying a complaint for offence under Section 138 of NI Act has discretion to order the drawer of the cheque to pay interim compensation to the complainant. This amount of compensation has not to exceed 20% of the amount of the cheque. Thus, grant of interim compensation is a discretionary power which has to be exercised by a Magistrate trying a complaint under Section 138 of NI Act and such order has to be based on reason and logic - Although no guidelines for grant of interim compensation have been laid down in Section 143-A of the NI Act, yet it is a settled law that whenever a discretionary power is to be exercised by a Court, the same has to be exercised on well-recognized principles supported by reasons. The court has to spell out the reasons for grant of interim compensation in favour of the complainant and it has also to justify in its order with reasons the quantum of interim compensation that is being awarded by him as the said quantum can vary from 1% to 20% of the cheque amount. The learned Magistrate has, after narrating the allegations made in the complaint, simply awarded the interim compensation of Rs.5,30,000/, which constitutes 20% of the total cheque amount, in favour of the complainant. The order impugned is devoid of any reasons and no discussion is made in the impugned order as to why interim compensation is being awarded. Simply narration of allegations made in the complaint does not make an order under Section 143-A of the NI Act a reasoned one. The fact that the learned Magistrate has included even the amount of stale cheque while calculating the cheque amount shows non-application of mind on his part. Therefore, the said order is not sustainable in law. Petition allowed in part.
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