TMI Tax Updates - e-Newsletter
November 16, 2020

Case Laws in this Newsletter:

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

Articles

• TAXABILITY OF RENTING OF IMMOVABLE PROPERTY SERVICES – DIFFERENCE OF OPINION AND MODIFIED ADVANCE RULING
• QUARTERLY RETURN MONTHLY PAYMENT SCHEME

News

• India’s Foreign Trade: October 2020

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• Income Tax relief for Real-estate Developers and Home Buyers

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• Finance Ministry seeks Ideas/Suggestions/Proposals for Annual Budget 2021-22

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Notifications

GST - States

• (17/2020)-KGST.CR.01/17-18 - dated 12-11-2020 - Karnataka SGST
  Seeks to extend the due date for furnishing of FORM ITC-04 for the period July- September 2020 till 30th November, 2020

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• (16/2020)-KGST.CR.01/17-18 - dated 12-11-2020 - Karnataka SGST
  Seeks to rescind Notification (12/2020), No.KGST.CR.01/17-18, dated the 16th October, 2020

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• (15/2020)-KGST.CR.01/17-18 - dated 12-11-2020 - Karnataka SGST
  Seeks to extend the due date for FORM GSTR-1

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• F.12(46)FD/Tax/2017-III-259 - dated 13-11-2020 - Rajasthan SGST
  Seeks to implement e-invoicing for the taxpayers having aggregate turnover exceeding ₹ 100 Cr from 01st January 2021

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• F.12(46)FD/Tax/2017-III-258 - dated 13-11-2020 - Rajasthan SGST
  Seeks to notify special procedure for making payment of 35% as tax liability in first two month

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• 868-F.T. - dated 4-11-2020 - West Bengal SGST
  Seeks to amend notification No. 1136-F.T. dated 28.06.2017 to exempt Satellite launch services supplied by Indian Space Research Organisation, Antrix Corporation Limited or New Space India Limited

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• 867-F.T. - dated 4-11-2020 - West Bengal SGST
  West Bengal Goods and Services Tax (Twelfth Amendment) Rules, 2020.

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• 866-F.T. - dated 4-11-2020 - West Bengal SGST
  Seeks to notify the number of HSN digits required on tax invoice by amending notification No. 1152-F.T. dated 29.06.2017

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• 865-F.T. - dated 4-11-2020 - West Bengal SGST
  Seeks to make filing of annual return under section 44 (1) of WBGST Act for F.Y. 2019-20 optional for small taxpayers whose aggregate turnover is less than ₹ 2 crores and who have not filed the said return before the due date (amendment of notification No. 1729-F.T. dated 16.10.2019)

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• 864-F.T. - dated 4-11-2020 - West Bengal SGST
  Seeks to prescribe the due date for furnishing FORM GSTR-1 for the quarters October, 2020 to December, 2020 and January, 2021 to March, 2021 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year

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• 12/2020–C.T./GST - dated 4-11-2020 - West Bengal SGST
  Seeks to extend the due date of filing GSTR 9/9C for FY 2018-19 till 31.12.2020.

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• 11/2020–C.T./GST - dated 4-11-2020 - West Bengal SGST
  Seeks to prescribe return in FORM GSTR-3B of WBGST Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021

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• 10/2020–C.T./GST - dated 4-11-2020 - West Bengal SGST
  Seeks to prescribe the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from October, 2020 to March, 2021

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Circulars / Instructions / Orders

SEBI

• SEBI/HO/DDHS/DDHS/CIR/P/2020/231 - dated 13-11-2020
  Non-compliance with provisions related to continuous disclosures

FEMA

• 05 - dated 13-11-2020
  Discontinuation of Returns/Reports under Foreign Exchange Management Act, 1999

Highlights / Catch Notes

Income Tax

• Deduction u/s 37(1) - the SPV was wound up and since no consideration was received by the assessee on account of winding up of the SPV, the entire investment in JSHL was written off. In the instant case, the write off is nothing but write off of an expenditure on an abandoned project ; the project in question had inextricable link with the assessee’s existing business and hence, the expenditure is allowable - AT
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• Addition u/s 68 - Transaction for transferring the shares as discussed above has taken place in the subsequent years. This transaction can create a doubt/suspicion about the genuineness of the transactions but this is not sufficient enough to treat the share capital as unexplained cash credit u/s 68 of the Act for the reasons that the AO has not provided sufficient opportunity to the assessee - AT
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• Exemption u/s.54 - LTCG - the assessee has sold two residential properties and re-invested in one residential property. Hence, entire conditions of Section 54 of the Act, both prior to amendment as well as subsequent to amendment, had been duly satisfied, which had been duly appreciated by the ld. CIT(A) - AT
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• TP Adjustment - PLI computation - if rental expenditure is considered as an operating expenditure, then the reimbursement should be set off against the rental expenditure and net rent expenditure should be taken as operating expenditure. On the other hand, if the rental expenditure is not considered as operating expenditure, then both rental expenditure and reinvestment of reimbursement received by the assessee should be excluded while computing PLI of the assessee. - AT
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• Unexplained expenditure invoking the provisions of section 69C - Assessee has enough resources from his accumulated funds to make payment towards the expenditure as he is earning income from his profession as insurance commission agent for quite a period of time. Further, the assessee's family has also resources for earning agricultural income. - Additions deleted - AT
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• Capital gain - Joint Development Agreement entered - transfer of the land u/s 2(47) - LTCG shall be chargeable to income tax as his income of the previous year in which the land is transferred, and for the purpose of section 48 of the Act, the fair market value of the land on the dated of introducing the land in the Joint Venture shall be deemed to be the full value of the consideration received or accrued as a result of the transfer of the land. - AT
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Customs

• Rejection of Application for Settlement of Case - Revision / Reduction of declared value during the course of hearing - Since there is no scope for the second opportunity to settle the case before the 1st respondent Settlement Commissioner by filing fresh application, one more chance can be given to the petitioner to settle the case by accepting the amounts that was originally offered as admitted the liability by the petitioner. - HC
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• Penalty u/s 114A and 114AA of Customs Act - providing wrong information in the course of business - The penalty imposed under Section 114AA and the penalty imposed under Section 114A are not mutually exclusive and penalty cannot be imposed simultaneously under both these sections. - AT
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Indian Laws

• Dishonor of Cheque - merely because the accused application seeking expert's opinion regarding the age of the ink is rejected, that itself would not take away the defence of the accused in its entirety. However, the accused would be still at liberty to put forth his defence to rebut the presumption, if any, formed in favour of the complainant. - HC
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• Dishonor of Cheque - Stop payment - The trial Court has rightly held that car loan transaction and the loan transaction under Ex.P1 were two distinct transactions and the accused failed to rebut the presumption available to the complainant under Sections 118 and 139 of the Negotiable Instruments Act. - HC
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• Dishonor of Cheque - insufficiency of funds - compromise entered into between the parties - following the Guidelines, this Court deems it appropriate to permit the compounding of offence subject to payment of cost at the rate of 15% of the cheque amount to be paid to the complainant. - HC
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Service Tax

• Collection of amount in the Coin Box - demand under the income heads of 'weighing machine receipts’ and 'miscellaneous income' - By inserting a coin in the coin box an individual would know the weight. This income cannot be classified as 'renting of immovable property’ service - The income received under the head 'miscellaneous receipts' is in connection with the screening of movies for the annual film festival held by Hindustan Times. The said income cannot also be said to be towards provision of any 'renting of immovable property' service. It is, therefore, not leviable to service tax. - AT
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• Demand of service tax - SEBI - ‘negative list regime’ - demand of tax on the fees collected - We cannot but withhold our ascertainment of the legality of the claim made by the appellant before us. - it is difficult to conceive of any motive in not complying with tax liabilities. There is also no allegation of suppression or misrepresentation by the appellant. - The demand for the period beyond normal limitation, therefore, does not sustain - Consequently, the penalty under section 78 of Finance Act, 1994 is set aside. - AT
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Central Excise

• SSI Exemption - supplies made to merchant exporters against Form 'H' and Form ‘ST-49’ - There was no violation of the procedure by the appellant and in any case, procedural infraction, if any, cannot to be a ground to deny of substantive benefit of SSI exemption to the appellant. - AT
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Case Laws:

• Income Tax

• 2020 (11) TMI 460
  Refunds along with interest u/s 244A - initiation of proceedings pursuant to notice under sub-section (2) of Section 143 - exercise of power of withholding of refund - initiation of proceedings pursuant to notice under sub-section (2) of Section 143 of the Act processing of return in terms of sub-section (1) of Section 143 - HELD THAT:- As gone through the Review Petition and do not find any error apparent on record to justify interference in Review Jurisdiction. Review Petition is dismissed.

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• 2020 (11) TMI 459
  Disallowance of royalty amount without TDS - Whether the ITAT is correct in law in holding that the proviso [i] to [iii] of Sec 201[1] and the requirement of furnishing of certificate in Form 26A are independent, and both are to satisfied for an assessee to be treated as an assessee not in default in terms of the provisions of section 201[1]? - HELD THAT:- Tax Case appeals are closed, substantial questions of law are left open. Liberty is granted to the revenue to challenge the impugned order [ 2019 (1) TMI 1822 - ITAT CHENNAI] as well as the order that may be passed in the miscellaneous petitions filed before them. In the event, revenue is unsuccessful, this observation is made because, if the revenue is unsuccessful before the Tribunal, they would be required to file two appeals, for each of the assessment year, one challenging the order impugned in these appeals and another appeal is against the order in the miscellaneous petitions. In such event, this observation would come to the aid of the revenue while explaining the delay that may occasion in filing such appeals. We are inclined to close the appeals, because the revenue cannot maintain parallel proceedings both before the Tribunal as well as before this Court on the same issue and we also find that if the facts are involved, the revenue will be well advised to agitate the same before the Tribunal.

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• 2020 (11) TMI 458
  Deduction u/s 37(1) - Non granting claim holding the expenditure on write off of investment as a capital expenditure and the write off of medical expenses for employees as not being incurred for the purpose of business - disallowing merely on the basis that corresponding income has not been offered to tax in any earlier year - HELD THAT:- The assessee was awarded a project by the NHAI on DBFOT basis - The assessee decided to conduct the project through an existing non-operational company of the Group (M/s IDFC Capital Co Ltd which was renamed as JSHL) and designated the same as the SPV required for undertaking the project. The assessee owned 74% of the share capital of the SPV for which it had paid ₹ 7,40,000/-. However, the NHAI rejected the application to designate JSHL as the SPV. As a result, the SPV was wound up and since no consideration was received by the assessee on account of winding up of the SPV, the entire investment in JSHL was written off. In the instant case, the write off is nothing but write off of an expenditure on an abandoned project ; the project in question had inextricable link with the assessee s existing business and hence, the expenditure is allowable as revenue expenditure u/s 37(1) of the Act. On the basis of the above reasons, we delete the disallowance made by the AO. Payment of bonus - Assessee has claimed bonus expenses out of total eployees salary - HELD THAT:- In the instant case, the assessee had set up a Special Purpose Vehicle (SPV) i.e. Dheeru Powergen Ltd. to implement 1050 MW (3x350 MW) coal based thermal power plant at District Korbar, in the State of Chhattisgarh. That in spite of all the efforts put in by the assessee, the project could not take off because of many limitations. Finally, the assessee decided in its Board Meeting held on March 7, 2012 to exit the non-coal business. In such a situation, there is merit in the contentions of the assessee before the Ld. CIT(A) that Mr. Pradeep Singh(Group head of public sector initiatives) having experience of 34 years was authorized to handle the process identifying a buyer to exit from Dheeru Powergen Limited and also to discuss, negotiate and finalize the drafts of the agreement. That in financial year 2012-13, the team was successful in negotiating the deal with a buyer for purchase of Dheeru Powergen Ltd. at an upfront consideration of ₹ 15 crore. That the payment of bonus was commensurate with the efforts rendered by the team over a period of time in order to exit the Project. Considering the above, we delete the ad-hoc disallowance made by the AO.

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• 2020 (11) TMI 457
  Bogus purchases - HELD THAT:- In the instant case, for the year under consideration also, the sales made by the assessee are not disputed. Hence, it could be safely concluded that without the purchases, there cannot be any sales. We find that the Ld. AR had also placed reliance on the decision in the case of CIT vs Odeon Builders Pvt.Ltd. [ 2019 (8) TMI 1072 - SUPREME COURT] and in the case of Vaman International Pvt.Ltd [ 2020 (2) TMI 464 - BOMBAY HIGH COURT] . As categorically stated that the Ld. AO had not conducted any independent investigation, which is similar to the facts prevailing before us - all the primary documents were duly placed on record including the quantitative details of purchases and corresponding sales together with stock register, confirmations from suppliers etc and hence no addition could be merely made u/s 69C by placing reliance on the statements made by some suppliers and parties before the Sales tax department. We find that the Hon ble Jurisidictional High Court had agreed with the views expressed by both the CITA as well as the Tribunal in the aforesaid case. We find that the facts before us in the impugned appeal squarely falls into the factual matrix of the aforesaid case before the Hon ble Bombay High Court. We direct the Ld. AO to delete the disallowances made on account of non genuine purchases in the peculiar facts and circumstances of the instant case.

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• 2020 (11) TMI 456
  Addition u/s 68 - allegation of providing the accommodation entries in the form of share capital, bogus purchases, bogus sales and the bogus investments through the companies - non-compliance of summons issued by the AO u/s 131 - Reopening of assessment - HELD THAT:- Merely because summons issued to some of the creditors could not be served or they failed to attend before the AO, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the AO u/s 131, by the alleged creditors will not be sufficient to draw an adverse inference against the assessee. As inferred that the principle, which is made applicable to addition under Section 68 is that the initial onus in on the assessee to discharge by producing the evidence which is required of him and once the assessee produces the evidence which is in his power and possession and which evidence prima facie proves the - (i) identity of the creditor; (ii) the capacity/creditworthiness of the creditor to advance the money; and (iii) the genuineness of the transaction, the onus shifts to the AO to make further inquiries. AO cannot perfunctorily reject the evidence produced and has to state cogent reasons for such rejection. Notice under Section 148 of the Act was issued dated 30th March 2016 and the time available with the AO for the completion of the assessment under Section 147 was up to 31stDecember 2016. In other words the available time with the AO was of 9 months from the date of the issue of notice under Section 148 of the Act for the completion of the assessment under Section 147 - Admittedly, the Department was also aware of the time available with it for the completion of the assessment. Accordingly, it was expected from the Department to Act swiftly for completing the assessment by making necessary enquiries within the time prescribed under the law and not to carry the matter till the fag-end of the assessment. What is transpired is that the revenue has not given enough time to the case on hand despite having the necessary powers and other supporting machineries. But the question arises, the assessee should be suffered on account of the inefficiency of the Department. The answers stands in negative. It is because the assessee should not be suffered on account of the inefficiency of the Income Tax Department. Transaction for transferring the shares as discussed above has taken place in the subsequent years. This transaction can create a doubt/suspicion about the genuineness of the transactions but this is not sufficient enough to treat the share capital as unexplained cash credit under Section 68 of the Act for the reasons that the AO has not provided sufficient opportunity to the assessee which has been discussed in detail in the preceding paragraph. Moreover, there can be change in the facts and circumstances in the year when the company has issued shares at premium viz a viz the year in which the director has acquired shares from the said companies. Appeal filed by the Revenue is dismissed.

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• 2020 (11) TMI 455
  Exemption u/s.54 - assessee sells two properties and re-invests in one residential house - HELD THAT:- We find that the exemption u/s.54 of the Act is granted to the assessee for re-investment made in residential house. The Section nowhere restricts the claim of the assessee that he should have sold only one property and claimed exemption u/s.54 of the Act for one property. In fact prior to the amendment made in Section 54 of the Act which came into effect from Finance (No.2 ) Act, 2014 w.e.f. A.Y.2015-16, the very same Section provided for exemption even if assessee had re-invested in more than one residential house. It nowhere prohibited the assessee to sell more than one residential house. In the instant case, the assessee has sold two residential properties and re-invested in one residential property. Hence, entire conditions of Section 54 of the Act, both prior to amendment as well as subsequent to amendment, had been duly satisfied, which had been duly appreciated by the ld. CIT(A) in the instant case. Hence, we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee. Accordingly, the grounds raised by the Revenue are dismissed.

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• 2020 (11) TMI 454
  Levy of penalty u/s 271(1)(c) - assessee claimed the depreciation @ 60% on control room equipment and digital set top box and the said claimed was declined by AO and restricted the claim to the extent of 15% - concealment of particulars of income nor furnishing inaccurate particulars of income - HELD THAT:- It is quite clear that the declining of the claim of depreciation of the assessee nowhere come within the ambit to levy the penalty u/s 271(1)(c) of the Act. Moreover, we find that in the case of the Fastway Transmission P. Ltd. [ 2020 (5) TMI 190 - ITAT CHANDIGARH ] the depreciation claim upon the set top box (STB) has been held justifiable @ 60%. Anyhow, the penalty is not justifiable, therefore, by relying upon the above mentioned law, we set aside the finding of the CIT(A) on this issue and delete the penalty. - Decided in favour of assessee.

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• 2020 (11) TMI 453
  Income from sale and purchase of land - correct head of income - capital gain or business income - HELD THAT:- In the own case of the assessee held AO as well as CIT(A) misdirected themselves in law and on facts in holding the land/properties to be in the nature of trading asset merely on the ground that some of the agricultural land were converted into non-agricultural land and some agreements were entered for the development of the land in the year under appeal acquired and held for decades in many cases. We find considerable weight in the plea of the assessee that intention at the time of purchase to hold impugned land/properties as a capital asset is manifest on records. The balance-sheet filed by the assessee over years, wealthtax returns filed by the assessee, adequacy of its own capital clearly underscore the intention of the assessee to hold land/properties as capital asset as claimed. Inextricably, we also take note of the plea of the assessee that he is a co-owner of impugned land/properties holding certain percentage of ownership-rights therein and the claim of the land/properties as capital asset has been accepted by the Revenue in the hands of other co-owners in the assessment proceedings u/s.143(3) of the Act. This fact has remained uncontroverted. Therefore, respectfully following the decision of the Coordinate Bench of the Tribunal in AY 2004-05 and having regard to the totality of the facts and circumstances noted above, we find considerable merit in the plea of the assessee. We accordingly hold that land/properties were held by the assessee as capital asset before its sale and consequential gains arising on sale thereto is chargeable under the head of capital gains . Unexplained unsecured loan under Section 68 - HELD THAT:- Assessee has justified the conditions applicable with respect to cash credit under Section 68 i.e. identity, creditworthiness of the parties and the genuineness of the transactions of the loan taken from the parties as discussed above during the appellate proceedings. The necessary details furnished by the assessee in support of his claim were also forwarded to the AO for his comment. But we note that the Learned CIT(A) has given a clear finding that there was no adverse remark of the AO in the remand report with respect to the impugned unsecured loan. Therefore, the Learned CIT(A) has deleted the addition made by the AO. At the time of hearing the Learned DR has not brought anything on record contrary to the finding of the Learned CIT(A). Accordingly, we are not inclined to interfere in the order of Learned CIT(A). Hence, the ground of appeal of the Revenue is dismissed.

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• 2020 (11) TMI 452
  Depreciation on non-compete fees - whether non-compete fees is not an asset and is a right available against the contracting parties only and hence not an asset? - HELD THAT:- This Tribunal in assessee s own case for A.Y. 2012-13 [ 2018 (7) TMI 2148 - ITAT MUMBAI] has upheld the order of the CIT(A) in deleting the disallowance of depreciation - Decided against revenue.

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• 2020 (11) TMI 451
  TP Adjustment - PLI computation - whether the reimbursement amount received by the assessee can be ignored while considering the rental expenditure as operating expenditure? - HELD THAT:- It is imperative to examine as to whether the assessee has utilised the premises for which rental has been paid for the purpose of business carried on by the assessee. If the said premises has been so utilised, then the rental expenditure should be taken as operating expenditure. It is an undisputed fact that M/s. GE Power has given the money to the assessee only in respect of rental expenditure burden that is going to be borne by the assessee. In that case, the reimbursement of rental expenditure, in our view, is intricately related to the rental expenditure. Accordingly, if rental expenditure is considered as an operating expenditure, then the reimbursement should be set off against the rental expenditure and net rent expenditure should be taken as operating expenditure. On the other hand, if the rental expenditure is not considered as operating expenditure, then both rental expenditure and reinvestment of reimbursement received by the assessee should be excluded while computing PLI of the assessee. We feel it proper to restore this issue to the file of A.O./TPO to examine it afresh in the light of discussions made (supra). Working capital adjustment - it was the submissions of the assessee that the relevant details have been furnished to the tax authorities - A.R. submitted that the assessee would be in a position to furnish explanations and information in this regard to the A.O./TPO. In view of the above, we are of the opinion that the claim of working capital adjustment also requires examination at the end of A.O./TPO - we restore the issue of transfer pricing adjustment to the file of A.O./TPO. Interest charged u/s 234A - submission of the assessee that the return of income has been filed by it within the due date prescribed u/s 139(1) of the Act and hence no interest is chargeable u/s 234A of the Act. Since the facts relating to this issue also require examination, we restore this issue also to the file of A.O. Appeal filed by the assessee is treated as allowed for statistical purposes.

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• 2020 (11) TMI 450
  Reopening of assessment - assessee has claimed excess allowance of deduction under section 36(1) (viia) and under section 36(1) (viii) - internal auditors has raised objections on the method of calculation adopted by the assessee to claim deduction under section 36(1) - reopening proceedings are initiated by the assessing officer after 4 years from the end of assessment year - HELD THAT:- We noticed that the assessee has submitted all the relevant information during the original assessment proceedings and the same was verified by the assessing officer in the original assessments and completed the assessment. As relying on M/S LATIN MANHARLAL SECURITIES P LTD. [ 2016 (3) TMI 1390 - ITAT MUMBAI] Reopening of the assessment was initiated based on the internal audit query and it may be a reasonable ground to reopen the assessment but all the relevant information required to reopen the assessment were already available on record and the original assessment was completed only after due verification by the then assessing officer and there is no new material brought on record by the present assessing officer. Since there is no new material available on record it will amounts to change of opinion/mind on the part of the AO - Assessment proceedings were reopened after 4 years from the date of end of relevant assessment year and assessing officer has not brought on record any material which suggests that assessee has failed to submit all the relevant information fully and truly at the time of filing the return of income or failed to substantiate any information at the time of original assessment. Ground raised by the assessee is accordingly allowed.

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• 2020 (11) TMI 449
  Penalty u/s 271(1)(c) - characterisation of expenses - treating the purchase of software as capital expenditure by the assessee whereas as per revenue it is a revenue expenditure - HELD THAT:- We notice that assessee has purchased software at the cost of ₹ 39 lakhs and claimed the same as revenue expenditure. At the time of assessment proceedings, assessing officer brought to the knowledge of the assessee that it is a depreciable asset and as per income tax rules assessee can claim only depreciation @ 60%. The assessee also confirmed that it has claimed the above expenditure inadvertently. As relying on M/S TORQUE PHARMACEUTICALS (P) LTD., [ 2015 (5) TMI 1146 - ITAT CHANDIGARH] the assessee made a bonafide claim of deduction of the expenditure even though it was not acceptable to the revenue, would not lead to inference that assessee has concealed the particulars of income or filed inaccurate particulars of income. Nothing is brought on record if claim of assessee was incorrect in law or was malafide. Penalty deleted - Decided in favour of assessee.

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• 2020 (11) TMI 448
  Money received on sale of flats - estimation of on money on the flats and shops - amount has been worked out during the course of search and statement of various employees, which were confronted to Mr Sandeep Runwal a director of the assessee who has admitted the same in the statement recorded during the course of search - HELD THAT:- The setting off or telescoping can be allowed only after verification whether the cash was available in the group concerns/directors/assessee. Therefore the issue is restored to the file of the AO to examine and decide it as per facts. So far as the addition on estimation basis by applying adhoc rate of ₹ 25,000/- in case of shops and ₹ 14970/- in case of flats are concerned on the basis of which the on-money was arrived at, the same is without any basis and has to be deleted. The case of the assessee is covered by the decision of coordinating Bench in case of Runwal Homes Pvt. Ltd[ 2017 (12) TMI 1216 - ITAT MUMBAI] . We hereby direct AO to restrict addition only where direct evidences of accepting on money received from customers found during the search. AO will also verify availability of cash flow with the assessee group as stated above and if any shortage is noticed a further addition to the extent of such shortage may be further added in the hands of appellant - we set aside the issue to the AO for limited purpose of quantification of undisclosed income on the basis of incriminating materials/evidences and examining the availability of cash in the group. Ground 1 is allowed for statistical purpose. Income recognition - whether appellant has been following the Project Completion Method to recognize the income from the projects and hence on money is to be taxed in the year of completion of the relevant project from where the on money has been earned? - HELD THAT:- As perusing the material on record including the decision of the coordinate bench in the case of Runwal Homes Pvt Ltd. [ 2017 (12) TMI 1216 - ITAT MUMBAI] on this issue, since out of three projects two already completed during the year and recorded receipts already offered to tax in this year, hence unrecorded income shall also be taxable on all the units which are offered to tax in this year which has been rightly done so. However, qua the R Square project which was not completed during this year, the unrecorded receipts from the will also be liable to be taxed in the year of completion of project as held by the coordinating Bench in sister concern case . Income offered as per books of account on the completed projects is lower vis a vis income estimated as per tentative profit and loss account prepared at the time of search - HELD THAT:- As perusing the facts on records including the impugned orders and decision of the coordinate bench in [ 2017 (12) TMI 1216 - ITAT MUMBAI] wherein assessee has explained reason of difference between estimated profit at the time of search and profit as per audited books of accounts. We note that the AO did not point out any defect or any unsustainable claim in the assessment order nor did he bring any substantive materials on the record to prove to the contrary. Under these circumstances we do not concur to the conclusion of the authorities below on this issue. Disallowing the claim of expenses from the business income - said expenses were claimed by the appellant against the Income from House Property - HELD THAT:- In assessee s own case in A Y 2010-11 2011-12, noted method and manner of disallowance of expenses to the extent these were claimed as deduction u/s 24 of the Act. The coordinate bench has held that notional claim u/s 24 of the Act can not be basis for disallowance by the AO while assessing the income from bsuiness. In this case it has been decided that the AO has to arrive at actual figure of expenses incurred to earn rental income which are debited to the profit and loss account in order to make disallowance. Therefore, following the decision of coordinating bench, we are setting aside the issue for limited purpose to work out actual expenses debited to profit Loss account relating to the rental income and restrict the disallowance to the same only. Accordingly, this ground of appeal is allowed for statistical purpose.

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• 2020 (11) TMI 447
  Addition u/s 68 - unexplained cash credit - addition towards share application and share premium received - AO came to a conclusion that assessee has no explanation to offer and presumed that these 13 investors are not willing to be examined in person and for the want of some identity of the shareholders of the assessee can not be ascertained and finally made the addition to the income of the assessee - whether the ingredients under section 68 of the Act namely identity, creditworthiness of the parties/investors and genuineness of the transactions were satisfied or not.? - HELD THAT:- The details of the investors have been given hereinabove while narrating the facts of the case. In the present case, the AO in order to verify these investments issued commission to DDIT (Inv.) Wing Kolkata under section 131(1)(d) of the Act besides calling upon the assessee to furnish the evidences and documents proving the investments in share capital by the various investments. The assessee filed before the AO various evidences comprising copies of bank statements of these investors evidencing the payments through banking channel, confirmations from the investors, copies of ITRs and balance sheets of the investors along with share application forms and share certificates. The DDIT (Inv.) Wing Kolkata also issued notices to these 13 investors and required their presence. - none appeared but they filed their replies furnishing therewith copies of balance sheets, bank statements, share certificates and confirmations. The DDIT(Inv) finally submitted the report to the AO citing all these facts. See ORISSA CORPORATION PVT. LIMITED [ 1986 (3) TMI 3 - SUPREME COURT] and LOVELY EXPORTS (PVT) LTD [ 2008 (1) TMI 575 - SC ORDER] and M/S. AMI INDUSTRIES (INDIA) P. LTD. [ 2020 (2) TMI 269 - BOMBAY HIGH COURT] Once the assessee has filed the necessary evidences to prove identity, creditworthiness and genuineness by proving sources of investments, then the onus on the assessee is fully discharged and it is for the department to prove to the contrary. We have also perused the case laws relied upon by the Ld. D.R. but found that the same are not applicable to the facts of the present case. - Decided in favour of assessee.

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• 2020 (11) TMI 446
  Unexplained investment u/s. 69 - amount deposited in the individual bank accounts maintained by the assessee in ING Vysya Bank - HELD THAT:- There are no findings by the Ld. Revenue Authorities that both the assessees are engaged in any other activity earning income other than agricultural income. In this situation, it is a great injustice inflicted on both the assessees by the Ld. Revenue Authorities for making additions without properly examining the veracity of the claim of the assessees when sufficient documents and explanation were furnished before them - amount deposited by both the assesses are from the sale proceeds of the agricultural owned by them. Hence the addition made by the Ld. AO which was further sustained by the Ld. CIT (A) on this count is not justifiable - order of the Ld. CIT (A) set aside and the Ld. AO directed to delete the addition made u/s 69. Unexplained expenditure invoking the provisions of section 69C - HELD THAT:- Assessee has enough resources from his accumulated funds to make payment towards the expenditure as he is earning income from his profession as insurance commission agent for quite a period of time. Further, the assessee's family has also resources for earning agricultural income. Hence, addition made by the Ld. AO which is further sustained by the Ld. CIT (A) on this regard is not warranted. Accordingly, hereby set aside the order of the Ld. CIT (A) and direct the Ld. AO to delete the addition made in the hands of the assessee invoking the provisions of section 69C of the Act as unexplained expenditure. Accordingly, this ground raised by the assessee is also allowed in his favour.

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• 2020 (11) TMI 445
  Loss from trading in equity shares - speculation loss - claim of the assessee for setting off the loss from the income earned by the assessee under the head business profession - HELD THAT:- Transaction to be speculative in nature because the purchase and sale of shares are on delivery basis, may be the possession is with the stockbroker. Once it is held that the transactions are not speculative in nature, then the gain arising out of such trading transactions shall be subject to be taxed only under the head income from business in the case of the assessee. Since income from business and income from profession falls under the same head, set off of loss from one source of income with another source of income under the same head is allowable as per the provisions of section 70 - in the case of the assessee provisions of section 73 will not be applicable for the reasons discussed herein above. Therefore set aside the orders of the CIT (A) on this issue and further direct the AO to treat the loss incurred by the assessee with respect to trading in equity shares as loss from business and set off the same against the income earned by the assessee from their profession.

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• 2020 (11) TMI 444
  Capital gain - Joint Development Agreement entered - transfer of the land u/s 2(47) - as per AO by virtue of the agreement both the assessee had transferred their immovable property as per the provisions of section 2(47)(v) of the Act r.w.s 53A of Transfer of Property Act - HELD THAT:- Apart from the execution of the development agreement, it appears that no other activities were pursued by the Developer till date such as obtaining the plan sanction, development of the land etc. As extremely doubtful regarding the legal validity of the development agreement between both the assessee and the Developer. In this situation, we are of the considered view that the decision of the CIT (A) in the case of both the assessee are appropriate. Hence, we do not find it necessary to interfere with the decision of the CIT (A) in the case of both the assessee. Therefore, the appeals of the Revenue are devoid of merits. In the case of Joint Development agreement it should be construed that the land owner had entered into business venture by introducing his landed property into the business, accordingly the provisions of Section 45(2) will come into operation and the LTCG shall be chargeable to income tax as his income of the previous year in which the land is transferred, and for the purpose of section 48 of the Act, the fair market value of the land on the dated of introducing the land in the Joint Venture shall be deemed to be the full value of the consideration received or accrued as a result of the transfer of the land.

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• 2020 (11) TMI 443
  Reopening of assessment u/s 147 - objections are not considered by the Assessing Officer and no order qua that is passed - HELD THAT:- The issue is covered in favour of the assessee for the reason that the objections were not disposed off by the Assessing Officer or even by CIT(A). No hesitation in quashing the assessment in view of the decision of Hon ble Bombay High Court in the case of KSS Petron Private Ltd. [ 2016 (10) TMI 1112 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• Customs

• 2020 (11) TMI 442
  Rejection of Application for Settlement of Case - Revision / Reduction of declared value during the course of hearing - It was the contention of the respondent that since the imported goods are notified under Section 123 of the Customs Act, it was not open for the petitioner to settle the case under Section 127B of the Act. HELD THAT:- The petitioner had originally admitted the liability of ₹ 83,27,539/- and interest of ₹ 23,82,092/-. However, during the course of hearing, the petitioner wanted to reduce the aforesaid amount to ₹ 77,81,844/- and the proportionate interest to ₹ 15,50,791/- vide their letter/submission dated 12-6-2015. The petitioner therefore wanted the 1st respondent to order refund of ₹ 15,92,037/- along with interest of ₹ 8,31,301/- - It is evident that the petitioner has not clearly explained its stand. Instead the petitioner has changed its stand and thereby tried adjudication of dispute by the 1st respondent Settlement Commission which is not warranted. Since there is no clarity in the stand of the petitioner, the 1st respondent Settlement Commission was constrained to dismiss the application stating that the petitioner has raised the several contentious arguments which cannot be considered. Since there is no scope for the second opportunity to settle the case before the 1st respondent Settlement Commissioner by filing fresh application, one more chance can be given to the petitioner to settle the case by accepting the amounts that was originally offered as admitted the liability by the petitioner. The case is remitted back to the 1st respondent Settlement Commission to pass a fresh order within a period of six months from the date of receipt of a copy of this order - petition allowed by way of remand.

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• 2020 (11) TMI 441
  Smuggling - Gold Bars - import of Gold via Courier - restricted goods or prohibited goods - Confiscation - redemption fine - penalties under section 112, 114 and 114A of Customs Act - HELD THAT:- Prohibited goods means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported, have been complied with [Section 2(33)]. Thus, it includes not only goods whose import is absolutely prohibited but also those whose import is restricted subject to some conditions being fulfilled if such conditions are not fulfilled. It is undisputed that as per the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy applicable during the period, only banks authorized by RBI, international passengers to a limited extent in baggage and others authorised by DGFT could have imported gold. Shri Amanullah did not fall under any of these categories and import of gold by him was prohibited and therefore the gold bars were prohibited goods in terms of section 2(33). Improperly imported goods are liable for confiscation under Section 111 Gold which is a restricted item for import but which was imported without fulfilling the conditions for import is a prohibited good in terms of Section 2(33) and hence it was also liable for confiscation under Section 111(d) of the Customs Act as asserted by the Revenue. It is undisputed that Section 111 (i) (l) and (m) are also applicable in this case as the gold was found concealed in the package and it was not included in the declaration and the goods which were declared namely UPS do not correspond to goods which were imported namely UPS with gold bars inside them. Therefore, the smuggled gold bars are liable for confiscation under Section 111 (d) also although it will not make material difference because the gold was anyway confiscated under a same section invoking three other clauses. Penalty u/s 112 and 114A of Customs Act - HELD THAT:- A penalty under Section 112 cannot be imposed if a penalty is imposed under Section 114A. Both sides argued that section 114A cannot be applied without determining the amount of duty payable under Section 28. Section 114A provides for penalty or short levy or non-levy of duty in certain cases under Section 28. Section 28, which is section for demand of duty has been invoked in para 25 of the show cause notice but the amount of duty has not been quantified in it. The Show Cause Notice invoked both Section 114A and section 112 - the penalty imposed under Section 114A is correct and calls for no interference. Consequently by virtue of the fifth proviso to Section 114A, no penalty can be imposed under Section 112. The Commissioner has correctly imposed penalty under Section 114A and consequently not imposed a penalty under section 112. Redemption of goods - section 125 of Customs Act - HELD THAT:- The Adjudicating Authority has no discretion in respect of goods which are not prohibited goods and he is bound to give an option of redemption. In case of prohibited goods, such as, the gold in this case, the Adjudicating Authority may allow redemption or may not allow redemption. There is no bar on the Adjudicating Authority allowing redemption of prohibited goods. The reason for such discretion left to the adjudicating authority is evident. In case of prohibited goods, the nature of the goods and the nature of the prohibition vary and cases have to be dealt with exercising discretion - There is absolutely no bar in section 125 on the adjudicating authority releasing any goods whatsoever, which are prohibited or restricted on payment of redemption fine. The adjudicating authority can allow redemption under section 125 of any goods which are prohibited either under the Customs Act or any other law on payment of fine but he is not bound to so release the goods. Not only can the gold which is concealed in the consignment and not declared be allowed redemption under Section 125, the Government of India has now been consistently taking such a view allowing redemption of even gold which is concealed. We find that the impugned order of the Commissioner is consistent with the stand of the Government of India - Also, the amount of redemption fine imposed is reasonable and the Commissioner has not exceeded his mandate in allowing redemption of the gold. Penalty under Section 114AA of Customs Act - last contention of Shri Amanullah in his appeal is that since penalty has been imposed under Section 114A, no penalty should be imposed under Section 114AA also upon them - HELD THAT:- The penalty is for knowingly or intentionally making signing, using or causing to be made signed or used any declaration statement or document in the assessment of any business for the purposes of the Act. The section does not say that it has to be made directly before the customs officers. In this case, the courier agency has no means of declaring the nature of goods or the name of the importer except on the basis of information and material provided by the importer. Shri Amanullah provided wrong information in the course of business under the Act. Therefore, his action is squarely covered by Section 114AA. The penalty imposed under Section 114AA and the penalty imposed under Section 114A are not mutually exclusive and penalty cannot be imposed simultaneously under both these sections. Appeal allowed in part.

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• Corporate Laws

• 2020 (11) TMI 440
  Waiver of the requirements for filing Company Petition - Oppression and Mismanagement - Section 241 read with Section 244 of Companies Act - removal of the First Director form the management of the company - HELD THAT:- It is undisputed that the Respondent was managing the affairs of the appellant No.1 as managing director as per Joint Venture Agreement dated 20.1.2020 and the same was not incorporated in the AoA of appellant No.1. The notice circulated on 6.5.2019 and resolution passed on 14.5.2019 also establishes that one of the Agenda items was to withdraw the rights, powers, privileges of Respondent as Managing Director. Therefore, it cannot be ignored that Respondent was Managing Director of the appellant No.1. It is not disputed that the Respondent is member of appellant No.1 and holding 0.04% shareholding. It is also not disputed that the consent affidavit of his family were filed with the Rejoinder before the Tribunal below (Page 403 of Appeal Paper Book). Thus the Respondent s wife and his daughters has given affidavits to the Respondent in order to protect their rights and interest in the company in which they own shares. It is on this basis the affidavits given by the wife of Respondent and his daughters who holds shares in the company is a valid consent within the meaning of Section 244(2) of the Act. The Respondent alongwith his family members hold 2.93% shareholding. His family has given the consent affidavits which were filed before the Tribunal. There are 19 shareholders as per shareholding pattern of Appellant No.1 as filed by the Appellant (Page 18 of the appeal). In the present case that the Respondent alongwith his family members are 4 in numbers but their shareholding is less than 10%. The arguments of the Respondent that his wife is shareholder of M/s Kurinji Metals Pvt Ltd which holds 30.42% shares in the appellant No.1 and she holds approximately 7% of the shareholding of appellant No.1 through M/s Kurniji Metals Pvt Ltd cannot be considered as the Resolution from M/s Kurniji Metals Pvt Ltd is required to give company s consent. The contention that she is a proportionate shareholder and her shareholding should be counted for making out the criterial is not accepted. This is one of the exceptional and compelling circumstances, which merit the application for waiver - Appeal dismissed.

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• Insolvency & Bankruptcy

• 2020 (11) TMI 439
  Liquidation of Corporate Debtor - no resolution plan submitted - HELD THAT:- The fact remains that during the CIRP period, there was no resolution plan received which was available for CoC to consider. As such Liquidation Order would be unavoidable - Under Section 12 of IBC in 180 days from date of admission of application and after extension, in extended period of 90 days CIRP was required to be concluded. According to the Respondent No. 2, the extended period of CIRP was ending on 16th August 2019. The Respondent Nos. 2 and 3 state that because the Consortium which included the Appellant had stated that they want to submit resolution plan, the initial extension under Section 12 of IBC seeking another 90 days was sought and taken from Adjudicating Authority. The record shows that in spite of giving opportunities to the Consortium (which included Appellant) no resolution plan was submitted and consequently in the fifth CoC meeting, CoC decided to move for liquidation. The Respondent No.1 filed CA No. 452 of 2019 under Section 33 (2) on 01st July 2019 (Annexure A-11). The Liquidation order came to be passed on 06th January, 2020 by when time stated even in Second Proviso of Section 12 (3) of IBC was already over - there are no error in the conclusion of Adjudicating Authority that the liquidation order was required to be passed as no resolution plan was submitted even in the extended period of time. Whether Resolution Professional/Prospective Liquidator should have been charged? - HELD THAT:- In the present matter, the Resolution Professional had already given the written consent and sub-clause a and b of Sub-Section 4 of Section 34 did not arise - The Application filed by CoC Annexure A-12 was under Section 60 (5) of IBC read with rule 11 of National Company Law Tribunal Rules, 2016. The Resolution Professional/Liquidator act in trust of CoC and Creditors. Under Section 10 (3) (b) of IBC name of Resolution Professional is proposed by Corporate Applicant at the time of initiation of CIRP. Under Section 34 the Resolution Professional subject to submission of consent is appointed Liquidator unless replaced by Adjudicating Authority under sub-section (4). The Adjudicating Authority should have considered appointing any other Professional as liquidator instead of appointing the Respondent No. 1 in the face of the Joint Lenders Meeting Minutes reproduced above which claimed that the lenders were of the view that entire CIRP had not been conducted in desired way by the RP. Liquidation Order was yet to be passed and claim of CoC could not have been ignored under Section 27 of IBC. The interest of Financial Creditors and other Creditors is there even during Liquidation proceeding and it would not be appropriate if there are doubts regarding the manner in which the Liquidator is conducting the process. The liquidation order passed by the Adjudicating Authority is maintained - matter is remitted back to appoint another Insolvency Professional as Liquidator replacing Respondent No. 1 - Appeal disposed off.

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• Service Tax

• 2020 (11) TMI 437
  Classification of services - site formation service or mining services - providing mobile drilling services to companies in the oil and gas industry - According to the Department, the appellant had rendered site formation service from April 1, 2006 upto May 31, 2007 - whether the appellant had rendered site formation service for the period April 1, 2006 to May 31, 2007, which is the period prior to June 1, 2007 when mining services became taxable? - Extended period of Limitation - HELD THAT:- It is clear from the definition contained in section 65 (97)(a) of the Finance Act that site formation includes drilling, boring and core extraction services for construction, geophysical, geological or similar purposes. It will also be pertinent to refer to the Circular dated July 27, 2005 that was issued by the Government of India in connection with the issues pertaining to service tax in the budget 2005-06. A plain reading of the definition of site formation service and Circular dated July 27, 2005 clearly shows that site formation service covers those activities which are taken prior to construction of buildings or factory or other civil structures or laying of cables or pipelines or exploring of minerals and mining and are in the nature of preparatory work for making the location suitable for construction or exploration or mining. These facts were specifically stated by the appellant in reply to the show cause notice, but the Commissioner has not considered the submissions in the impugned order. The work required to be performed under the agreement was definitely not the work relating to preparation of site. The preparatory work was carried out by ONGC itself and the appellant carried out the activity on the prepared site. The activity undertaken by the appellant cannot, therefore, be classified under the category of site formation service. This issue can be examined from another aspect. Mining service was introduced w.e.f June 1, 2007 without any change in the site formation taxable service. Thus, when the intention of the legislature was to levy service tax on the activities in relation to mining under mining services only under section 65 (105)(zzzy) of the Finance Act w.e.f June 1, 2007, the said activity cannot be classified under any other category, including site formation service prior to June 1, 2007. Extended period of limitation - HELD THAT:- When the appellant had not rendered any site formation service w.e.f April 1, 2006 to May 31, 2007, it would not be necessary to examine whether, in the facts and circumstances in the case, the extended period of limitation could have been invoked by the Commissioner. Appeal allowed - decided in favor of appellant.

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• 2020 (11) TMI 436
  Renting of immovable property service - Appellant had entered into agreements with films Distributors under which the theatrical exhibition rights for exhibition of the films were transferred to the Appellant, either for a specified number of shows and period or in perpetuity - Bundled services - period October 2008 to March 2014 - HELD THAT:- A perusal of the agreements between the Appellant and the Distributors would also make it abundantly clear that it is the Appellant who makes payment to the Distributors for grant of theatrical rights. This clearly indicates the flow of service and the consideration. Thus, as it is the Appellant who pays a fixed consideration to the Distributor, no service tax can be levied on the Appellant. This issue also came up for consideration before a Division Bench of the Tribunal in M/S. MOTI TALKIES VERSUS COMMISSIONER OF SERVICE TAX, DELHI I [ 2020 (6) TMI 87 - CESTAT NEW DELHI ] . It was held that the demand of service tax under renting of immovable property service was not justified for the reason that the Appellant had not provided any service to the Distributor, nor the Distributor had made any payment to the Appellant as a consideration for the alleged service - It is, therefore, not possible to sustain the finding recorded by the Principal Commissioner that renting of immovable property service had been rendered by the Appellant to the film distributors. Renting of immovable property service - demand under the income heads of 'weighing machine receipts and 'miscellaneous income' - period 2008-09 to 2013-14 - HELD THAT:- The demand of service tax on the income head of 'weighing machine receipts is not sustainable as the said income is on account of collections from the coin box kept with the weighing machine. By inserting a coin in the coin box an individual would know the weight. This income cannot be classified as 'renting of immovable property service - The income received under the head 'miscellaneous receipts' is in connection with the screening of movies for the annual film festival held by Hindustan Times. The said income cannot also be said to be towards provision of any 'renting of immovable property' service. It is, therefore, not leviable to service tax. Appeal allowed - decided in favor of appellant.

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• 2020 (11) TMI 435
  Demand of service tax - SEBI - negative list regime - demand of tax on the fees collected, under the authority of the various Rules and Regulations notified for administration of the financial market in India, and retained in the General Fund of the appellant - Extended period of limitation - HELD THAT:- The legislation, enforcement of laws and administration of justice are sovereign functions. We also deduce that the discharge of these functions may be subject to such laws as the competent legislative authority intends it to be so; consequently, statutes, not especially dealing with these specifically, do not immunize the discharge of sovereign functions if the legislative intent, stated or implied, does not exclude such subordination. The requirement of goods in the operating establishments of government cannot be equated with the discharge of sovereign obligations. The consequent ease with which the distinguishability of goods from functioning as a sovereign affords the latitude of transaction - of manufacture, of import and of sale and purchase in goods to be carved out for assigning to designated subordinates or entities, with attendant accountability to authorities under normal tax laws, is not discerned in the tax relating to services. The generalized definition of services in the negative list regime appears to have been the clarion call for tax intrusion into activities of government. Much of these, not being individual-specific deliveries and, moreover, without perceptible consideration could not have held the attention of tax authorities for long but others, in which government bodies were empowered to receive fees, did. Thus, it, probably, was that the focus of the adjudicating authority rested upon the autonomy of Securities and Exchange Board of India (SEBI), the participants in the financial markets and the fees charged from them as provider , recipient and consideration respectively. Clearly, the concept of service and, particularly, the legislative reliance on the expression for in section 65B (44) of Finance Act, 1994, to substitute to in section 65 (105), did not make any impression on the adjudicating authority. The premise that there is no pale of service outside Finance Act, 1994, and the fitment thereon within the definition, admittedly, without finding a place in the exclusions or exemptions, though eminently convenient, is, nevertheless in error for this reason. This Tribunal has been established to adjudge appeals arising from adjudication orders of Commissioners and appellate orders of Commissioners (Appeals). In appropriate circumstances, we may be called upon to construe circulars and instructions as beyond the scope of enforceability; however, statutory instruments issued by the Central Government in exercise of power to exempt tax conferred by Parliament are beyond the scope of such negation by us. Neither is the continued existence of such statutory instrument dependent on our approval; to do so would be frittering away of judicial resources - With that notification, the Central Government, a custodian of the sovereignty assigned to the Republic by the people of India, has distanced the authority wielded over the financial markets by the appellant, notwithstanding duly acknowledged succession, through creation under an executive order, from a department exercising that authority, from sovereign power. This abnegation, coupled as it is, with the renunciation of future tax liability arising therefrom, is cleansed of the stain of vested interest. We cannot but withhold our ascertainment of the legality of the claim made by the appellant before us. Extended period of limitation - Suppression of facts or not - HELD THAT:- The composition of the Board is determined by the Government of India and the organization is staffed in accordance with rules framed under the governing statute. The receipts accruing to the appellant, in accordance with procedures laid down by law, are retained in a designated fund and scrutinized by the constitutionally established auditor. The retention of such fee in the assigned fund has been prompted by the principle of separation of powers much in the same way that the three organs of State are compartmentalised. Therefore, it is difficult to conceive of any motive in not complying with tax liabilities. There is also no allegation of suppression or misrepresentation by the appellant. Imposition of Fiscal Penalties - HELD THAT:- The appellant is statutorily empowered to impose fiscal penalties for breaches enumerated in the statute and the proceeds of such imposition are credited to the Consolidated Fund of India - no different from the deposit of fines imposed by adjudicating authorities under Finance Act, 1994. As the successor, in due course, of the Government of India in Department of Economic Affairs substituting for the abolished Controller of Capital Issues, its role in the scheme of governance for the larger public interest is not a matter of mere conjecture. Service tax authorities had raised the issue of taxability of the fees charged by the appellant within a few months of the transition to the negative list regime and the appellant had been in correspondence with appropriate levels in the tax administration seeking acceptance of their interpretation. It, therefore, does not behoove the tax administration to claim that there has been suppression or misrepresentation on the part of the appellant. The delay on the part of tax authorities in issuing show cause notice cannot be justified by the argument that the bar of limitation extends to five years past from the date of issue of show cause notice; the jurisdictional tax authority was cognizant of the non-payment, and the reasons thereof, well before the normal period of limitation had lapsed. The mantle of sovereign power was not easily deniable and we cannot but conclude that the impugned order erred in concluding that the ingredients for invoking the extended period, and for imposition of penalty under section 78 of Finance Act, 1994 were, directly and indirectly, evidenced - The demand for the period beyond normal limitation, therefore, does not sustain - Consequently, the penalty under section 78 of Finance Act, 1994 is set aside. Appeal disposed off.

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• Central Excise

• 2020 (11) TMI 434
  Clandestine manufacture and removal - MS Ingots - Excess consumption of electricity - third party evidences - corroborative evidences or not - demand based on assumption and preseumption - demand of Central Excise duty along with imposition of Personal Penalty - xtended period of limitation - HELD THAT:- It is found that the demand has been confirmed only on the basis of the unsubstantiated evidence being the private records of the two brokers viz. M/s.Monu Steels and Kailash Traders and the statement of their proprietors. Further, it is found that the author of private records of M/s. Monu Steels - Mr. Bal Mukund was never examined by the Revenue. Further, M/s. S.K. Pansari during his cross examination has admitted that the said records were maintained under his instructions by Shri Bal Mukund Pansari. Further, Revenue have failed to find out any inconsistency in the records of the appellant, nor there is any seizure of any consignment of goods being raw materials or finished goods, being transported without the documents or clandestinely. It is also observed that although the third party records are good evidence of suspicion of clandestine activity, but the same cannot be adopted for concluding the charge of clandestine removal in the absence of corroborative evidence. Further, in spite of the names being found of the parties, to whom the alleged clandestine removal has been despatched, there is no further inquiry made from the alleged receivers of goods - the demand against the appellant is not sustainable, in absence of sufficient evidence of clandestine manufacture and removal of the goods. Appeal allowed - decided in favor of appellant.

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• 2020 (11) TMI 433
  Cross-examination of witnesses denied - violation of principle of natural justice - Section 129A (i) of the Customs Act, 1962 - HELD THAT:- To the earlier proceedings when the matter was remanded vide order dated 19.09.2014, this Tribunal has directed the adjudicating authority to consider the plea for cross examination of deponents by the adjudicating authority. By going through the impugned order, the cross examination of the persons has been rejected without assigning any reasons, therefore, the arguments made by the Ld. AR are futile as the impugned order for rejection of cross examination is not a speaking order. The way of working of the adjudicating authority cannot be appreciated in these terms - There are no merit in rejecting the request of cross examination without assigning any reasons. The adjudicating authority is directed to consider the request of the appellant for cross examination of the persons and personal hearing be granted for the said request pass a speaking order whether cross examination can be granted or not - appeal allowed - decided in favor of appellant.

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• 2020 (11) TMI 432
  SSI Exemption - supplies made to merchant exporters against Form 'H' and Form ST-49 - denial of exemption under Notifications dated March 1, 2002 and March 1, 2003 by treating the supplies made to merchant exporters against Form 'H' and Form ST-49 as clearances for home consumption - HELD THAT:- The value of branded goods (printed material) cannot also be included in the aggregate value of clearances for the purpose of SSI exemption. The appellant manufactures and clears the printed material for home consumption which do not bear any branded name. The appellant also manufactures printed material which bears the brand name of the buyers. In terms of paragraph 2(vii) of Notifications dated March 1, 2002 and March 1, 2003, one of the conditions for availing SSI exemption is that the aggregate value of clearances of all excisable goods for home consumption does not exceed ₹ 3 Crore (4 Crore w.e.f 01.04.2005) in the preceding financial year. In paragraph 3A, certain categories of clearances have been excluded for determining the aggregate value of clearances under paragraph 2(vii). One such category under clause (b) of paragraph 3A is clearances bearing the brand name or trade name of another person that are ineligible for exemption in terms of paragraph 4. Thus, in terms of paragraph 3A(b) of the Notification, clearances bearing the brand name or trade name of another person are not includible in the aggregate value of clearances for paragraph 2(vii). There was no violation of the procedure by the appellant and in any case, procedural infraction, if any, cannot to be a ground to deny of substantive benefit of SSI exemption to the appellant. Extended period of limitation - HELD THAT:- As the benefit of SSI exemption could not have been denied to the appellant, it is not necessary to examine the contention advanced on behalf of the appellant that the extended period of limitation could not have been invoked. Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2020 (11) TMI 438
  Grant of Bail - Dishonor of cheque - bail to be granted on the condition of deposit 35% of the amount of ₹ 75,00,000/- imposed as fine by the learned Magistrate or not - HELD THAT:- Similar issue decided in the case of YATENDRA BHARDWAJ VERSUS STATE OF U.P. AND ANOTHER [ 2018 (5) TMI 2027 - ALLAHABAD HIGH COURT] where it was held that the Appellate Court may impose a condition while suspending the sentence, however, the power of imposing conditions is discretionary and the Court while suspending the sentence can always direct the applicant to deposit fine in the court but the amount of such condition must not be unreasonable, onerous and unjust so as to deprive the applicant from being released on bail. The orders passed by learned Sessions Judge Agra under Section 138 of N.I. Act, Police Station Hapur Kotwali, Distt. Hapur are hereby modified to the extent that the applicant shall deposit only 10% of the amount of fine of ₹ 75,00,000/- imposed by the appellate Court as a pre-condition for being released on bail and on furnishing a personal bond of ₹ 20,000/- and two sureties of the like amount to the satisfaction of the court concerned till the disposal of the appeal - application allowed in part.

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• 2020 (11) TMI 431
  Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - section 139 of NI Act - HELD THAT:- There is no dispute that the petitioner was running Electro-plating business under the name and style, Lakshmi Venkatesh Electro-platers. The respondent claimed that he was visiting to the petitioner's factory that is how he was acquainted with the petitioner. According to the notice Ex.P7 and the complaint, the petitioner borrowed loan of ₹ 2,00,000/- in December, 2002 to improve his business and another sum of ₹ 75,000/- in March, 2003 from the respondent and towards discharge of that liability he issued Cheque Ex.P2 for ₹ 2,75,000/- on 12.06.2003 - The respondent presented the Cheque for the first time on 13.06.2003 which was returned on 14.06.2003 with the endorsement Insufficient Funds . The respondent claimed that when he approached the petitioner informing him about the dishonour of the Cheque, petitioner requested him to wait till 02.07.2003 promising to arrange the funds. Therefore, he presented the Cheque second time on 02.07.2003 which was returned with the endorsement account closed . The respondent in his notice Ex.P7 had given all the particulars of the Cheque number, if the Cheque was issued to Chennappa, the petitioner could have taken such defence at the earliest point of time in his reply notice. Further though the accused in the evidence claimed that he has taken action against Chennappa by filing complaint before Nelamangala Police, no evidence was adduced to substantiate the same. Therefore the trial Court and the first appellate Court rightly rejected the theory of Cheque being issued to Chennappa. Rebuttal of Presumption - HELD THAT:- In the cross-examination of PW1, petitioner only asked whether PW1 could produce his SB account passbook or the account extract. There was no specific denial of respondent's autorickshow business. In the later part of the cross-examination, it was only suggested that the respondent was not possessing the funds of ₹ 2,75,000/- which he denied. When possession of 5 - 6 autorickshaws and running of the business etc was not disputed, the mere suggestion that he was not possessing funds does not rebut the presumption under Section 139 of the NI Act. This Court does not find any illegality, impropriety or incorrectness in the impugned orders of the Courts below - Petition dismissed.

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• 2020 (11) TMI 430
  Dishonor of Cheque - offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- A perusal of the impugned orders passed by the trial Court would go to show that, in its impugned order dated 09.09.2019, for rejecting the application filed by the complainant seeking deletion of the words on the dated first week of December 2018 , the trial Court has given the reason that, mentioning of the date or the period of transaction is very much necessary in a criminal proceeding under Section 138 of the N.I. Act, as such, deletion of the alleged period of transaction cannot be permitted. The said reasoning given by the trial Court is not a convincing reason in my view for the reason that, it is not mandatory that the alleged date of transaction must necessarily be given by the complainant in the proceedings under Section 138 of the N.I. Act to maintain the petition. It is for the complainant to decide whether giving the date of transaction or the period of transaction is necessary. If to prove the alleged transaction, date or the period is necessary, then it is required. If he fails to furnish such particulars, then it amounts to complainant himself leaving it vacant. Thus, it is for the complainant to decide regarding the strength of his complaint. If he wants to make his complaint more vivid and detailed, then it is for him to give all the details. But if he himself opts for deleting certain details from the complaint, then it is his act. Advantage of the same in such a circumstance may be taken by the defence side. The impugned order is set aside and the application under consideration filed by the complainant, which is dated 10.05.2019, is allowed and the complainant is permitted to delete the words on the dated first week of December 2018 in para 3 of his complaint - Petition allowed in part.

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• 2020 (11) TMI 429
  Dishonor of Cheque - argument of the learned counsel for the petitioner is that, when it is the specific defence of the accused in the trial Court that the cheque in question though was bearing the signature of the accused, but the same was issued not to the complainant, but to one M/s. Mahaveera Traders at Kampli as a security in a cloth purchase transaction - HELD THAT:- The defence of the accused is that, the cheque was signed and issued by him, however, to a different establishment called M/s.Mahaveer Traders, but not to the present complainant. Section 20 of the N.I. Act makes it amply clear that the person who signs the cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque has been issued for payment of debt or discharge of liability. He undertakes the risk that the instrument remains to be an inchoate instrument. In such an event, the age of the ink may not matter much. However, it is also made clear that, merely because the accused application seeking expert's opinion regarding the age of the ink is rejected, that itself would not take away the defence of the accused in its entirety. However, the accused would be still at liberty to put forth his defence to rebut the presumption, if any, formed in favour of the complainant. Petition dismissed.

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• 2020 (11) TMI 428
  Dishonor of Cheque - Whether the impugned order of conviction and sentence passed by the Trial Court against the petitioner for the offence punishable under Section 138 of the Negotiable Instruments Act and confirmed by the First Appellate Court suffer any illegality, impropriety or incorrectness? - HELD THAT:- This being the revision petition under Section 397 of Cr.P.C., against the concurrent findings of the trial Court and the First Appellate Court, the scope of interference in the matter is very limited. Unless it is shown that the impugned orders suffer perversity, glaring illegality, impropriety or incorrectness, this Court in the revisional jurisdiction cannot interfere with the matter. Admittedly, the accused neither issued any notice to the complainant for returning the cheque and the car nor initiated any legal proceedings prior to the complainant issuing notice Ex.P3. He admits that he had no impediment to do so - DW.1 in his cross-examination admitted that the complainant's relative was the surety to the car loan borrowed by him, but he does not know his name and his residential address. That supports the contention of the complainant that to relieve his relative from the car loan liability and he intervened and paid the car loan and that they were two distinct transactions. The trial Court held that car loan transaction and the loan transaction under Ex.P1 were two distinct transactions and the accused failed to rebut the presumption available to the complainant under Sections 118 and 139 of the Negotiable Instruments Act. Thus, the trial Court on the sound appreciation of the evidence and the law rightly rejected the defence of the accused, convicted and sentenced him and that was upheld by the First Appellate Court - revision petition is dismissed.

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• 2020 (11) TMI 427
  Dishonor of Cheque - insufficiency of funds - It is argued that the law regarding compounding of offences under the N.I. Act is very clear and is no more res integra and the offences under the N.I. Act can be compounded even at any stage of the proceedings - HELD THAT:- It is clear that the parties have already entered into a settlement outside the court and the entire amount as directed by the learned trial Court duly affirmed by the appellate Court has been paid to the complainant. The complainant has also made a categorical statement before the Court and he has also filed an affidavit to the aforesaid effect in the present revision. It is pointed out that the entire amount of ₹ 65,000/- has already been paid in cash to the complainant. This Court deems it appropriate to permit the parties to compound the offence on the basis of the compromise entered into between the parties. However, in terms of the Guidelines framed by the Hon'ble Supreme Court as the accused/revisionist has not appeared before the Court and has not taken effective steps to compound the offence at initial stage, thus following the Guidelines, this Court deems it appropriate to permit the compounding of offence subject to payment of cost at the rate of 15% of the cheque amount to be paid to the complainant. Thus, in the aforesaid terms it is directed that if the accused/revisionst pays a cost of 15% of the cheque amount to the complainant within a period of 15 days from the date of passing of this order, this Court permits the compounding of offence to the parties. If such an amount towards the cost is being paid to the complainant then the judgment and conviction dated 16.04.2018 passed by the trial Court duly affirmed by the appellate court is set aside. The revisionist is acquitted from all the charges. He is in custody, he be released forthwith and set free, if not requires in any other case. The application for suspension of sentence of the revisionist has rendered infructuous - Application disposed off.

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• 2020 (11) TMI 426
  Criminal Conspiracy - allegation against the applicant is that by virtue of his position as appellate authority he dishonestly and fraudulently adjudicated 13 appeals outside his jurisdiction conspiring with the co-accused, thereby, causing wrongful loss at ₹ 7.26 crores to the revenue - HELD THAT:- The acts of commission and omission on the part of the applicant in respect of the appeals is that the applicant in connivance with co-accused Anil Kumar, (Chartered Accountant)/assessee entertained and adjudicated the appeals without having jurisdiction; no order-sheet and other records indicating the date of submission of appeal, date of hearings, date of final order and nature of final order in respect of appeals was prepared; the applicant without mandatory intimation to the Assessing Officer and without receipt of ITNS-51, duly filled by the Assessing Officer, the appeals were heard; the assessment records pertaining to the appeals was not summoned from the concerned Assessing Officers; false and manufactured records was created in respect of the appeals to indicate the hearing and disposal of the appeal of the assessees noted therein; some of the appeals has been shown to have been allowed and disposed of in favour of the assessee when it was not at the hearing stage; appellate orders are antedated having passed after the applicant demitting office. The evidence and the material brought on record, prima facie, establishes that applicant abusing his position as Commissioner (Appeals) entered into criminal conspiracy with co-accused Anil Kumar (Chartered Accountant) as a public servant, obtained undue advantage for extraneous considerations, committed acts of commission and omission with mala fide intentions thereby causing wrongful loss to the department and wrongful gain to the assessees and himself. The evidence and the surrounding circumstances taken on face value constitute commission of the offence under Section 120B, 420 IPC and Section 7 of Prevention of Corruption Act, 1988, against the applicant and co-accused. It is well established proposition of law that a criminal prosecution, if otherwise justifiable and based upon adequate evidence does not suffer on account of mala fide or vendetta of the complainant. There is prima facie evidence in support of the charges. The submission of the learned counsel for the applicant that the criminal prosecution does not constitute the ingredients of the offence against the applicant, lacks substance - applicant failed to point out any illegality, infirmity or jurisdictional error in the impugned order - Petition dismissed.

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• 2020 (11) TMI 425
  Dishonor of Cheque - applicant submits that applicant is innocent, he has committed no offence and has been falsely implicated in the present case and he has not issued any cheque in favour of complainant-opposite party no.2 herein and from the perusal of application / complaint no case is made out - HELD THAT:- Admittedly copy of the cheque is not annexed on record. Issuance of cheque or signature on the cheque has not been specifically denied by the accused-applicant; whether cheque has been issued by the accused-applicant or not is the matter of evidence and it can only be adjudicated after the evidence is adduced by both the parties. Merit of the case cannot be adjudicated under Section 482 Cr.P.C. It is well settled that exercise of powers under Section 482 of the Cr.P.C. is the exception and not the rule. Under this section, the High Court has inherent powers to make such orders as may be necessary to give effect to any order under the Code or to prevent the abuse of process of any court or otherwise to secure the ends of justice. But the expressions abuse of process of law or to secure the ends of justice do not confer unlimited jurisdiction on the High Court and the alleged abuse of process of law or the ends of justice could only be secured in accordance with law, including procedural law and not otherwise. Application dismissed.

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