Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 28, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of supply - The activities performed under the ‘Comprehensive Maintenance Contract’ are to be treated as a composite supply of services and the activities performed under ‘Equipment Parts Supply and Services Agreement’ are to be treated as Mixed Supply.
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Levy of GST - One time concession fees charged - the applicant is not entitled for the benefits of exemption and the activity of long term lease is liable for levy of GST.
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Penalty u/s 129 of GST Act - E-way bill - transport at the behest of an individual, an unregistered person - if the conditions under the Act and Rules are not complied with, definitely Section 129 operates and confiscation would be attracted.
Income Tax
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Method of accounting - mercantile system of accounting for one project and cash basis for another project - The assessee cannot choose to follow mercantile system for all other projects and make a departure only for one of the projects by changing the system of accounting.
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Exemption u/s 10(34) - If a certain income is exempt at the hands of receiptant by virtue of statutory provision, unless a provision is made in the statute itself, such exemption cannot be withdrawn only because the payer has not paid tax.
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Block assessment u/s 158BC - Claim for loss on house property as set off against income computed for the block period - the assessee is entitled to make such claim even during the block period
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It was essential that the AO should have taken the proceedings u/s 158BD within a reasonable time, and a period of three years for issuance of notice and seven years for completing block assessment is definitely not a reasonable time.
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Penalty u/s 271(1)(c) - the assessee has furnished bonafide and genuine explanations as to an inadvertent mistake committed by it which was an human error committed while filing its return of income and there cannot be any ulterior motive attached to this error committed by the assessee, which has taken it out from the clutches of penalty under the provisions of Section 271(1)(c)
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Once the department accepts the settlements and mandatory requirement of affixing the stamps there is no reason to suspect the expenses incurred by the assessee towards stamp duty merely on the basis of surmises and conjunctures.
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Addition u/s 68 - unsecured loans receipt - Merely because the summons issued seeking their personal appearance is not complied with, the entire transactions cannot be treated as bogus and cannot be doubted by the revenue
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Disallowance of exploration expenses pertaining to Pranhita Godavari (PG) Block - the unsuccessful oil exploration expenses is allowable u/s 42(1)(a)
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The withdrawal of recognition u/s 35(1)(ii) in the hands of the payee organizations would not affect the rights and interests of the assessee herein for claim of weighted deduction u/s 35(1)(ii).
Customs
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Refund of IGST paid on exports of goods done from Non-EDI sites-reg.
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Release of detained empty container denied - demurrage - As the importer has been found guilty, they could be made liable for payment of rental dues and not the container owner.
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Classification of imported goods - raw jute cutting grade imported by the appellant from Bangladesh through LCS Petrapole - to be classified under Tariff Heading 53039010
DGFT
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Procedure for allocation of quota for import of (i) Calcined Pet Coke (0.5 Million MT per annum) for Aluminum Industry and (ii) Raw Pet Coke (1.04 Million MT) for CPC manufacturing industry -regd.
Corporate Law
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Compounding of the offences committed under Section 135 r.w. Section 134(3)(o) of the Companies Act, 2013 - offense compounded - The Company is directed to pay the penalty from its accounts but the two officers in default shall pay the penalty from their own resources.
State GST
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Scope of principal and agent relationship under Schedule I of CGST Act, 2017 in the context of del-credre agent.
Indian Laws
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Liability on account of dishonor of Cheque - contention of the petitioner has been that the cheque in question does not bear his signatures and that the signatory thereof is his wife - it is only the drawer of the Cheque that can be prosecuted
SEBI
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Operating Guidelines for Alternative Investment Funds in International Financial Services Centres
Service Tax
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Service of notice - whether speed post is proper service or not - There is nothing on record to show that order sent by speed post was received by the assessee himself.
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Assessee cannot be made liable to pay service tax again on the amount charged for sale of time and space in electronic media, which was held to be separate tax altogether. However, the amount received for providing the service as an intermediary was liable to service tax.
Central Excise
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Process amounting to manufacture or not - processes to refine and purify the various petroleum products (Petroleum Benzine and Hexane) to obtain specified grade of petroleum products - the processes undertaken are processes of manufacture.
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Clandestine removal - The allegation has been raised on the basis of hypothetical and illogical input-output ratio of iron ore to pig iron
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Suo motu adjustment of excess credit wrongly reversed - amount paid by mistake - The appellant clearly show that the excess duty paid can be suo motu adjusted and there is nothing wrong in it.
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Classification of goods - Absorbent Cotton Wool IP, Gauze/Bandage Wool I.P, Absorbent Cotton B.P., Purified Cotton USP, Cotton Gauze Absorbent B.P., Absorbent Lint IP, Rolled Bandages, Cotton Bandages Cloth, Cotton Crepe Bandage B.P. - Would fall under the Sub-heading No.5601, 5203 & Chapter 58
VAT
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Bread and rusk as per the classification enabled under the Trade Marks Act are distinct products falling under the same class. So is the distinction palpable as discernible from the entries under general heading with HSN code 1905; under the Customs Tariff Act
Case Laws:
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GST
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2018 (11) TMI 1350
Maintainability of Advance Ruling application - Liability to pay tax on the services supplied to applicant - exemption to service providers on imported agricultural products Viz., Wheat - exemption under chapter heading 9986 in Sl.No. 54(e) of GST Notification No.12/2017-CT (R) dated 28.6.2017 - recipient of services. Held that:- It is evident that an applicant can seek an Advance Ruling in relation to supply of goods or services or both undertaken or proposed to be undertaken by the applicant. Further, as per Section 103(1) of the CGST Act, the ruling is binding only the applicant and the Concerned officer or the jurisdictional officer of the applicant - In the case at hand, the applicant is the recipient of the services and not supplier of such service. Accordingly, the Application is not liable for admission and therefore rejected without going into the merits of the case. Ruling:- The Application for Advance Ruling of M/s. Naga Limited, Dindigul is not admitted, under sub-section (2) of section 98 of the CGST Act, 2017 and the TNGST Act, 2017.
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2018 (11) TMI 1349
Supply of goods or supply of services - activity of O & M of Fluoride control project on ESCO Model and O & M work - rate of GST - composite supply - Works contract or not. Held that:- The given work is a contract for improvement of the pumping system under the Fluoride control project, wherein transfer of property in goods in the form of new pumping machinery and mechanical/ electrical equipment shall be involved in the execution of such contract - That Works contract in itself is a composite supply in which construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning etc are involved along with transfer or property in goods. The water supply for domestic, industrial and commercial purposes is responsibility of Municipality. It is pertinent to note that given activity of ESCO plant redevelopment is in relation to clean drinking water facility to the citizens. Thus, it is easily ascertained that the applicant is engaged in a Work Contract (Composite supply) to a Governmental Authority - The rate of tax in given service shall be determined in accordance with the Notification No 11/2017-CT (Rate) dated 28.06.2017, as amended from time to time. In the given contract if the value of supplied goods is below 25% of the total value of the composite supply, then the rate of tax would be Nil as per entry number 3A of Notification No 12/2017-CT (Rate) dated 28.06.2018. Further, if in the duration of contract the applicant crosses the benchmark of 25% value of goods then the rate of tax will shift from Nil to 12% as per Notification No 11/2017-CT (Rate) dated 28.06.2017 as amended from time to time. Ruling:- In the given contract, the activity of O & M of Fluoride Control Project on ESCO Model and O &M work by the applicant is being undertaken for a Government Department. If the value of supplied goods under this contract is below 25% of the total value of the composite supply, then the rate of tax would be Nil. Further, if in the duration of contract the applicant crosses the benchmark of 25% value of goods then the rate of tax will shift from Nil to 12%.
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2018 (11) TMI 1348
Classification of supply - composite supply or mixed supply - maintenance services rendered on customers’ equipment under the two agreements i.e. comprehensive maintenance services agreement and supply of parts and services agreement which also includes supply and replacement of spare parts - principal supply between goods and services - rate of GST - relevant place of supply - type of tax which needs to be discharged. Held that:- The Applicant is a multiproduct, multi-division entity, engaged in manufacturing, distribution and sales agency activities of various industrial products which include metal cutting tools, mining/construction equipment, spares for mining equipment, seamless stainless steel tubes and pipes and wires and heating systems. Further, the Applicant is also engaged in the business of after sales support services for the mining equipment manufactured by its overseas group entities which are imported by the customers into India. The maintenance services rendered on customers’ equipment - Held that:- The applicant can supply the parts or services individually or any combination thereof on a single price which is appropriately covered under mixed supply - the contention of the applicant regarding “Comprehensive Maintenance Contract”, that the services would be classifiable under the Composite Services, we are of the view that Services supplied under the said contract are to be treated as composite services and the tax rate applicable on the principle supply would also be applicable on the other services. Principal supply between goods and services - Held that:- The consumption of goods vary substantially depending on the wear and tear of the equipment, however the consumption of services which would be critical may not vary substantially as these engineers would be stationed at the mine site and accordingly perform maintenance activities on the equipment at regular intervals. Therefore, the predominant element in the composite supply would be provision of maintenance services and the supply of goods would be ancillary to such services - the supply of maintenance services should be considered as the principal supply and the supply of other goods or services shall be ancillary to such principal supply. Rate of GST - Held that:- The service code for Maintenance and repair services of commercial and industrial machinery is 9987171 and the prescribed rate of GST is (CGST @ 9% of the taxable value, SGST @ 9% of the taxable value) or IGST @ 18% of the taxable value. Relevant place of supply - type of tax which needs to be discharged - Held that:- The determination of place of supply as requested by the applicant cannot be decided by the authorities for Advance Ruling constituted under Section 96 of SGST Act, 2017. The Authority constituted under the said section can determine or pronounce Advance ruling only on the issues specified under Section 97 (2) of CGST/SGST Act, 2017 and determination of place of supply has not been specified under Section 97 (2). In view of above we are not giving any finding in respect of place of supply. Ruling:- The activities performed under the ‘Comprehensive Maintenance Contract’ are to be treated as a composite supply of services and the activities performed under ‘Equipment Parts Supply and Services Agreement’ are to be treated as Mixed Supply. In respect of the activities performed under ‘Comprehensive Maintenance Contract’, the supply of Operation & Maintenance services is the principal supply and the supply of other services are ancillary to such principal supply. The service code for Maintenance and repair services of commercial and industrial machinery is 9987171 and the prescribed rate of GST is 18% (CGST @ 9% of the taxable value, SGST @ 9% of the taxable value) or IGST @ 18% of the taxable value. For the supply of mixed services, the applicant is liable to pay the highest rate of tax as per Section 8(b) of the CGST Act, 2017.
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2018 (11) TMI 1347
Levy of GST - One time concession fees charged by the appellant in respect of their property at Anjuna, Goa which is given to M/s. Myrayash Hotels Pvt. Ltd. for a long term lease of 60 years for development of infrastructure for financial business on Private Investment mode on DBFOT basis providing exclusive right, license and authority to construct, operate and maintain the project. Ruling:- The service provided by the applicant in the instant matter, is not falling under the criterion mentioned at Sr. No. 41 of the Notification No. 12/2017-Centra1 Tax (Rate), dated 28.06.2017 as amended by the Notification No. 32/2017-Centra1 Tax (Rate), dated 13.10.2017. Therefore, the applicant is not entitled for the benefits of the said notification and the activity of long term lease is liable for levy of GST.
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2018 (11) TMI 1346
Release of seized goods with vehicle - Held that:- The petitioner may get the goods and vehicle released by depositing and furnishing the amount as required and in case such an amount is deposited it shall abide by the final disposal of the regular assessment/penalty - petition disposed off.
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2018 (11) TMI 1345
Detention of goods - detention on the ground that E-Way bill is being used twice - Held that:- There appears to be no material to indicate the use of the same E-Way bill twice. We direct learned Standing Counsel to file counter affidavit within three weeks. One week thereafter is allowed to the petitioner for filing rejoinder affidavit.
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2018 (11) TMI 1344
Penalty u/s 129 of GST Act - transport at the behest of an individual, an unregistered person - interstate supply of more than ₹ 50,000/- value - E-way bill - the temporary registration at Pondicherry - compensation cess is seen collected at 20% instead of 25%. Held that:- Sub-rule (2) of Rule 138 compels the “registered person”, as a consignor or as a consignee, to generate the e-way bill. If he does not generate e-way bill and hands over the consignment to a transporter, sub-rule (3) applies: the registered person as the consignor upload the information about the transporter in the common portal. And that transporter must, then, generate the e-way bill. Here, Mohan is not a “registered person,” nor is he dealing in the cars-he is a consumer - the Ext.P3 is only a document witnessing transport of a pre-owned vehicle-rather than a vehicle whose sale could not be completed until it was delivered at its destination-at the instance of an unregistered person. Does the statutory mandate under section 129 of the GST Act admit of any discretion to let the affected party pay a reduced amount of tax and penalty pending further adjudication, for having the interim custody of the detained goods? - Held that:- Division Bench in Indus Towers [2018 (7) TMI 1181 - KERALA HIGH COURT] has held that “if the conditions under the Act and Rules are not complied with, definitely Section 129 operates and confiscation would be attracted. The respondents are entitled to adjudication, but they would have to prove that” the goods being transported stand exempted from the rigours of the GST regime. I fail to persuade myself that I can take a different course from what has been judicially mandated in Indus Towers, for that case-holding squarely binds me. As a matter of abundant caution, I reiterate that I have not touched on the merits; nor should the authorities construe this judgment as expressing any view on the petitioners’ claims and contentions. The matter, as I have observed, concerns, interim custody of the goods. Section 129 and other provisions of the Act the Rules prescribe the procedure for that purpose. Either petitioner can get the goods released by complying with section 129 and the relevant rules, and seek an early adjudication of the dispute.
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Income Tax
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2018 (11) TMI 1343
Depreciation of assets acquired by assessee trust - Charitable activity - Held that:- As decided in RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA [2017 (12) TMI 1067 - SUPREME COURT] the legislature, realizing that there was no specific provision in this behalf in the Income Tax Act, has made amendment in Section 11(6) of the Act vide Finance Act No. 2/2014 which became effective from the Assessment Year 2015-2016. The Delhi High Court has taken the view and rightly so, that the said amendment is prospective in nature - once assessee is allowed depreciation, he shall be entitled to carry forward the depreciation as well. Section 11(6) of the Act has only prospective effect from the assessment year 2015-16. The subject assessment years in the present appeals being prior to the assessment year 2015-16, we have to allow the appeals answering the questions of law in favour of the assessee and against the Revenue.
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2018 (11) TMI 1342
TPA - comparables selection - Motilal Oswal Investment Advisors Pvt. Ltd. and M/s. IDFC Ltd. not comparables for the purpose of Rule 10B of the Income Tax Rules - Held that:- The issue arising herein stands concluded against the Revenue and in favour of the respondent assessee by the decisions of this Court in CIT Vs. Carlyle India Advisors (P) Ltd. [2013 (4) TMI 486 - BOMBAY HIGH COURT] and CIT Vs. General Atlantic (P) Ltd. [2016 (3) TMI 736 - BOMBAY HIGH COURT] Assessee is engaged in providing investment research and advisory services to Bains Capital a Mauritius based Pvt. Ltd. Company. In the above facts, its activity is not comparable to the activity of Motilal Oswal Investment Advisors Pvt. Ltd. which is a Merchant Banker and not an investment advisor as the respondent. Similarly, it held that IDFC Investment Advisors Ltd. is also performing functionally different activity i.e. of portfolio management from that of non binding investment advice given by the respondent. Thus, holding that Motilal Oswal Investment Advisors Pvt. Ltd. and IDFC Investment Aedvisors Ltd. are not comparables
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2018 (11) TMI 1341
Method of accounting - following mercantile system or project completion system in one project and the cash method of accounting in the another - Held that:- Subsection 1 of Section 145 of the Income Tax Act, 1961 provides that income payable under the head “profit and loss account of business” and income from other source shall subject to the provisions of Subsection 2 be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. In terms of this provision, therefore, the choice of the assessee would be either of following mercantile or cash system of accounting. The assessee, however, cannot choose to follow mercantile system for all other projects and make a departure only for one of the projects by changing the system of accounting. The Tribunal, therefore, correctly held this issue against the assessee. The assessee was bound to follow the mercantile system of accounting and offer the income to tax on the basis of accrual and not actual receipts. The assessee had claimed to have acquiesced certain rights in the property in question by way of assignment. Further, even when the Urban Land Ceiling Act was still in forced, such rights the assessee desired to pass on to the assignee for which the deed of assignment was executed. The assessee had never questioned such deeds. In fact, once ULC Act was repealed, such arrangement was finalised. Further, whatever be the nature of the agreement and accrual of rights in favour of the purchaser of the land or the assignor or the assignee the assessee never argued that its right to receive the consideration was under jeopardy. Under the assignment agreement itself there was specific mention of transfer of rights in the property in lieu of which the assignee would pay agreed sum to the assessee. - Decided against assessee.
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2018 (11) TMI 1340
Exemption u/s 10(34) claimed - sum received by the assessee from Spirax Marshall (P) Ltd on sale of its shares to the said company under the Scheme of Arrangement, which is treated as deemed dividend under section 2(22)(d) - whether the deemed dividend under Section 2(22)(d) would fall within the purview of Sub-Section 1 of Section 115O? - Held that:- An explanation to Section 115Q which existed at the relevant time but which was omitted by the Finance Act, 2018 and provided that for the purposes of the said Chapter (Chapter XIID) which contains Section 115O and 115Q, the expression “dividend” shall have the same meaning as it given to dividend under Sub-Section (22) of Section 2, but shall not include sub-clause (e) thereof. The plain effect of the explanation, therefore, would be that even the deemed dividend under Section 2(22)(d) of the Act would be covered from the purpose of Chapter XIID. In turn, therefore, such deemed dividend would be one which is referred to Section 115O of the Act. Inescapable conclusion, therefore, would be that such dividend also would be exempt from tax in the hands of the receiver in terms of Section 10(34) of the Act. The contention of the Revenue that the company having not paid such dividend distribution tax, exemption under Section 10(34) should be deprived to the assessee needs to be noted only for rejection. If a certain income is exempt at the hands of receiptant by virtue of statutory provision, unless a provision is made in the statute itself, such exemption cannot be withdrawn only because the payer has not paid tax. The statute has made specific provision for recovery or unpaid tax from the company. - Decided against revenue
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2018 (11) TMI 1339
Profit on sale of shares - capital gain or business income - whether the transactions in question were in the nature of business transactions or holding of shares by the assessee was purely in the nature of investment? - Held that:- The Revenue cannot object to legitimate tax planning. Legitimately, if the assessee had claimed set off of loss against the gain in sale of shares, the Revenue cannot frown upon the same simply by pointing out that in the process, the assessee reduced his tax liability. The Tribunal has examined both the transactions extensively. With respect to the first transaction of sale of shares in City Parks Pvt ltd., the Tribunal noted that the shares were gifted by his father who himself had held the shares as investment. The company was unlisted Pvt Ltd Company. There was no material on record to suggest that the assessee had entered into the business venture in the process. Likewise in the second transaction also, the Tribunal noted that the Revenue has, in the preceding and succeeding assessment years, accepted, the sale of shares by the assessee as investment and the proceed was treated as capital gain. With respect to HCL Technologies, when the assessee sold the bonus shares in the later year, the Revenue treated the gain as capital gain. We are broadly in agreement with the view of the Tribunal. There is no material to hold that the assessee was in the business of buying and selling shares. No substantial question of law.
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2018 (11) TMI 1338
Recovery proceedings - stay petition - delay in filing appeal - Held that:- In response to the submissions made by the petitioner's counsel, the Standing Counsel has submitted that the petitioner filed the appeal beyond the date this Court allowed in Ext.P6. He has also submitted that the petitioner merely wants to stay of all further proceedings, but never pressed for disposal of the stay petition as a relief, in this writ petition. I reckon there is a couple of days delay in the petitioner's filing an appeal. That may not be fatal. More particularly, the petitioner asserts that it received the certified copy a little late. At any rate, the petitioner's stay petition has been pending for more than one year. Unless, the appellate authority considers it, the petitioner's very appeal may become a mere ritual.Thus reckon the Tribunal will consider the petitioner's stay application, expeditiously. Until it considers that application, the department shall defer all coercive steps. Because of this arrangement, the garnishee order the department served on the 6th respondent stands vacated.
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2018 (11) TMI 1337
Treating sale of agriculture land as long term capital gain tax - capital asset u/s 2(14) - municipal limits demarcations - Held that:- According to notification of the Central Government, the agricultural land situated beyond 5 kms of the municipal limits was liable to be excluded from the definition of capital asset chargeable to tax. On that basis, the Assessing Officer came to the conclusion that the land of the assessee was not an agricultural land, rather urban land in nature. Even the argument of the assessee that any kind of rural land is excluded from the scope of definition of the capital asset under Section 2(14) does not hold water in the light of the notification issued by the Central Government as the provision itself empowers the Central Government to prescribe the agricultural land situated at such a distance, having regard to the extent, and scope of urbanization of that area and other relevant consideration and, therefore, it is apparent that the land of the appellant falls within 5 kms of the municipal limits which included in the definition of capital assets chargeable to tax. The said findings were affirmed by CIT(A) and the Tribunal. No illegality or perversity could be pointed out by the learned counsel for the appellant in the concurrent findings of fact recorded by the authorities below. - Decided against assessee. Allowance of exemption u/s 54F - entertainment to claim made at this point - Held that:- In the present case, the assessee having lost before the Assessing Officer, CIT(A), and the Tribunal has now sought to raise an issue that the assessee would be entitled to benefit of provisions of Section 54F of the Act as there was an investment made in the residential house. A perusal of the order of the Assessing Officer, CIT(A) and the Tribunal clearly shows that no such claim was ever made and no facts relating to this issue had been pleaded, proved or established before any of the authorities below. There is no material on record on the basis of which the claim of the assessee under Section 54F of the Act can be entertained, at this stage.- Decided against assessee.
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2018 (11) TMI 1336
Source of income from which the payments were made by the assessee to Commonwealth Trust - Satisfactory explanation for source - income generated from Abu Dhabi - Held that:- We do not find any reason to sustain the said addition. We see that the Assessing Officer had proceeded on mere surmises and conjectures and had also stated that the assessee was not able to prove that the businesses abroad had not generated any income. The assessee cannot be asked to prove the negative. No material was recovered as to any income having been generated from the businesses abroad. We do not think that an estimation would be proper without any evidence at all. We, hence, uphold the order of the Tribunal deleting the addition from the income generated from Abu Dhabi. We immediately observe that the source found from such income, by the first appellate authority would however have to be reduced in view of the said finding; while considering the source for the real estate transaction. Assessee had claimed as source from sale of various items of the tile factory, namely timber, machinery etc. - The consideration shown in the agreement was for the building also. Before the sale was concluded, the assessee had obtained possession of the property and had also demolished the buildings and dismantled the plant and machinery and sold the same. The assessee submits that the same cannot be treated as his income. However, if the said amounts has to be treated as a source of income for the purpose of consideration, this definitely should be treated as an income at the hands of the assessee. At least, to the extent, it was treated as a source. In such circumstances, the same has to be treated as an undisclosed income for which the assessee would be liable to pay tax. Capital gains - There was a surrender of the land and buildings to the assessee on the basis of the agreement, since before the sale was concluded, the buildings were demolished and the plant and machinery dismantled and sold. The assessee, who had obtained possession of the land and building, had also effected sale of the same and had obtained ₹ 1,19,75,000/- which is treated as income for the previous assessment year. In such circumstances, the order of the Tribunal deleting the assessment with respect to capital gains has also to be set aside. The questions of law framed are answered in favour of the revenue and against the assessee; especially the one on perversity. The Tribunal without any application of mind and without reference to the facts acted in a perverse manner in having deleted the additions for undisclosed income for the three years and confining it to ₹ 50,00,00/- without any basis. We make it clear that we have gone into the facts only to avoid multiplicity of litigation by remanding the matter to the Tribunal as also noticing that the assessee is no more. The addition on undisclosed income for the years, with respect to the payments made to the Trust in pursuance of the sale agreement, the source of which was not convincingly proved,will be:- (i) ₹ 71,50,100/- for the assessment year 2003-04, (ii) ₹ 66,14,500/- for the assessment year 2004-05 and (iii) ₹ 18,98,200/- for the assessment year 2005- 06. The addition on account of undisclosed income from Abu Dhabi will stand deleted as done by the Tribunal. The addition to income from sale of timber and demolished parts of the factory building and that on capital gains would stand restored; on capital gains confirming the modification/direction of the First Appellate Authority, to grant allowance of ₹ 2.5 lakhs as expenditure. We make it clear that the recovery can only be from the assets of the assessee as inherited by the legal heirs. - Decided against assessee.
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2018 (11) TMI 1335
Entitlement to the benefit u/s 10B - deduction of export profit for 100% export oriented industrial unit - benefit of set off of unabsorbed depreciation for Asst.Years 1994-95 to 1996-97 against the assessable income for the AY 2001-02, 2002-03, 2004-05 and 2006-07? - deduction not claimed for a particular year - Held that:- When there is a tax holiday provided for ten consecutive assessment years to 100% EOUs, among others, depreciation, which is the specific subject matter of the present appeals, would be deemed to have been claimed and allowed in the relevant assessment year in which there is eligible a tax holiday. The contention of the assessee that when deduction under Section 10B is not claimed for a particular year, then necessarily there should be permitted a carry forward of unabsorbed depreciation, since sub-section (6) of Section 10B would only be applicable if there is a deduction claimed under the beneficial provision has to be accepted since, when a claim under Section 10B is made in a relevant year; the claim for depreciation arising in that year alone would be deemed to have been allowed, giving the provision for set off full effect. The unabsorbed depreciation carried forward from the earlier years would be permitted set off against any other income or allowed to be carried forward. The unabsorbed depreciation claimed by the assessee is of the earlier years, when there was no claim made under Section 10B. Such unabsorbed depreciation is permitted carry forward in the subsequent years. What is deemed to be allowed, in any relevant year, in which deduction under Section 10B is claimed, is the depreciation arising in that year. The unabsorbed depreciation carried forward to the relevant year, from any year in which Section 10B was not claimed, remains untouched and could be set off against any income, for which Section 10B deduction is not permissible and also could be carried forward to the next years, if not fully set off against other incomes. The prohibition in carry forward is only to the depreciation claim arising in that relevant year; wherein a deduction is claimed under Section 10B; which stands totally effaced by reason of the deeming provision; on applying Section 10B deduction. - Decided in favour of assessee.
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2018 (11) TMI 1334
Assessment u/s 153A - excess claim of wastage - AO estimated the wastage during the manufacturing process at 0.65%, whereas the assessee's claim was 7.90% - Held that:- Tribunal has discussed in detail the process of refining the crude palm oil and palmolein, by means of re-treatment, bleaching and deodorizing. It is on findings on fact that the A.O's observations, were overturned by the First Appellate Authority and that confirmed by the Tribunal. The Tribunal has found that the reasoning given by the A.O. was a general one and not scientifically based. The statement given by the Production Manager is only regarding a part of the process, and therefore, the additions made on account of wastage was improper. The Tribunal was justified in not agreeing with the A.O.'s determination as to the wastage. We find no reason to interfere with the fact finding of the Tribunal. Estimation of the shortage claimed on transportation - additions made by the A.O. on the basis that there was an excess claim - Held that:- It is observed that the rates are finalised only after negotiations and at the time of booking, the rates are put as it is applicable to good quality oil. Apart from the two rates pointed out by the A.O., there is absolutely no other evidence to substantiate the case of under-invoicing as found by the A.O. The Tribunal has found that crude palm oil was imported from Malaysia and Singapore, through ships and necessarily the oil settled at the bottom is bound to be inferior than the oil at the upper level of the container. It is rightly pointed out that there are no duplicate books maintained with two rates contradicting each other and therefore the C.I.T. (Appeals) and the Tribunal rightly came to the conclusion that the additions made on this count were not appropriate. Suppression of sales by under-invoicing sales to M/s Sulekha Traders - The Tribunal has found that this is an issue identical to that of the Revenue's appeal for the assessment year 2003-04 and for the very same reason the addition on account of under-invoicing was improper and therefore the finding of the First Appellate Authority was overturned by the Tribunal, and rightly so. We find absolutely no reason to interfere with the finding of the Tribunal. - Decided against revenue
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2018 (11) TMI 1333
Apportionment of the agricultural income - whether Rule 7 of the Income Tax Rules, 1962 could be applied in the case of the assessee? - Income Tax Authorities applied Rule 7 and made an apportionment of the agricultural income and treated the balance as business income assessable under the Income Tax Act, 1961 - Held that:- The position is more or less same for income from crude palm oil, which is the product in the case of the assessee before it, for reason of the total income having been disclosed for assessment under the Agricultural Income Tax Act with prompt payment of tax. The Central Income Tax Authorities, though was aware of Rule 7 as stood under the rules from its inception, took proceedings for assessment under the Income Tax Act only in the year 2004. Hence, the Division Bench directed all agricultural income assessments completed from assessment year 2005-06 to stand set aside with a direction to the State Taxing Authority to modify the assessments in line with the assessments completed by the 1st respondent under the Central Income Tax. It was also directed that the agricultural income tax assessed for the assessment year 2004-05 and prior years would be treated as confirmed. The Income Tax Authorities were directed not to assess the income under Rule 7 of the Rules for the said years. For assessment years are 2005-06 and 2006-07 - direction of the First Appellate Authority to determine the income based on a formula, which the Senior Counsel for Government of India (Taxes) would submit is not a statutory formula - Held that:- We find force in the contention raised by the Revenue. Since the formula evolved by the First Appellate Authority is not a statutory one, it is only appropriate that the Assessing Officer consider the issue untrammeled by such directions issued by the First Appellate Authority to apply the formula so evolved. Rule 7 in fact gives sufficient guidelines on how to apportion the income and hence there is no requirement for a formula. The Tribunal refused to interfere in the order of the First Appellate Authority finding that it is an open remand. We clarify that it is in fact an open remand and the Assessing Officer will not employ the formula as evolved by the First Appellate Authority.
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2018 (11) TMI 1332
Block assessment u/s 158BC - whether computation of the undisclosed income for the block period has to be done under Section 158BB - Held that:- The assessee made no attempt to prove that he had not received the said amounts, nor disputed individually the documents as received from the SUT hospital. Section 132(4) of the Act raises a statutory presumption, in so far as the statement made under oath being permitted to be used in evidence, which has to be deemed to be true. Unless there is contra evidence to dispel such presumption the statements have an evidentiary value as conferred by the statute. The sworn statement u/s 132(4) in the present case is the evidence relatable to the material or information as available with the Assessing Officer in the nature of the documents recovered from the SUT Hospital. It is also pertinent that the CIT appeals had confirmed only those additions made on account of the undisclosed income from the SUT Hospital and had deleted all the other additions. There was a departmental appeal from the order of the CIT appeals with respect to the additions deleted also, but the Revenue has not chosen to challenge the order of the Tribunal allowing the appeal of the Revenue. The appeal of the Revenue was allowed only with respect to the surcharge levied and the loss claimed on “income from house property”. We do not think that there is any scope for interference in the block assessment as modified by the first appellate authority, affirmed by the Tribunal. The questions of law raised as to whether the Tribunal was correct in having affirmed the additions sustained by the first appellate authority, in the context of there being no evidence recovered from the search in the assessee's premises relatable to the materials or information available with the Assessing Officer is answered against the assessee and in favour of the revenue. Liability to surcharge on tax which was made effective from 01.06.2002 alone - Held that:- On the question of surcharge, a larger Bench of the Hon'ble Supreme Court in 2015 (1) SCC 1 [Commissioner of Income Tax v. Vatika Township P.Ltd.] held that the proviso to section 132 introduced by the Finance Act of 2002 is prospective in operation. There could hence be no surcharge prior to the date on which the said proviso was made effective, i.e. prior to 01.04.2002. The first question is hence answered against the Revenue and in favour of the assessee. Claim for loss on house property can be set off against income computed for the block period - Held that:- AO indicates that the income including the undisclosed income declared in the returns filed for the block period is less than that of the regular income for six years. The assessee has a contention that he can substantiate the loss on income from house property. In any event, the assessee is entitled to make such claim even during the block period as has been held in Assistant Commissioner v. Hotel Bluemoon [2010 (2) TMI 1 - SUPREME COURT OF INDIA]. The question is answered in favour of the assessee and against the Revenue but however, the computation is left to the Assessing Officer. The assessee shall produce the details before the Assessing Officer who shall consider the same and allow it to the extent permissible under the Income Tax Act.
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2018 (11) TMI 1331
Method of Valuation of closing stock - FIFO or LIFO method - as per the assessee undervalued the stock which was below the average cost price of gold - Held that:- This Court had issued notice for considering the remand of the matter as was done by the Tribunal in case of the assessee for the Assessment Year 20072008. In response to such notice, Shri Tushar Hemani, learned counsel appeared for the assessee pointed out that the Tribunal orders for the Assessment Year 2007-2008 concerning two issues; one was the deployment of LIFO method for valuation of closing stock and the other was the portion declared by the assessee at the time of survey which remain unsold and which had come to the part of the closing stock adopted certain rate per gram of the gold. He pointed out that, insofar as applying LIFO method is concerned, the Tribunal had confirmed the view of the CIT(Appeal) and the remand was merely for the purpose of later issue. As perused the order of the Tribunal for the Assessment Year 2007-2008 and confirmed this position. It is therefore not necessary to remand the matter for proceedings. Thus sole question arises in the present appeal is therefore confined to LIFO method.
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2018 (11) TMI 1330
Block assessment validity - AO justification in issuing notice u/s 158BC after a period of more than five years - reasonable period - assessment barred by limitation - whether the time for completion of assessment should have been calculated from the date of the direction of the appellate authority as alleged? - Held that:- It is true that there is no time limit fixed for issuance of notice under Section 158BD of the Act in respect of persons other than searched. But, the Tribunal was right in observing that it would not mean that the proceedings could be delayed unreasonably. Involvement of the sons of Raghunathan was already found by the AO, as is evident from Annexure-A order and it is on that basis that the first appellate authority had, at the first instance, vide Annexure-B order cancelled the assessment with a direction. It was, therefore, essential that the AO should have taken the proceedings under Section 158BD within a reasonable time, and a period of three years for issuance of notice and seven years for completing block assessment is definitely not a reasonable time. We find, absolutely, no illegality in the order of the Tribunal. The question of law is answered in favour of the assessee.
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2018 (11) TMI 1329
Addition u/s 56(1) - unaccounted money of the assessee company which have been introduced in the garb of share application money - ITAT upholding the decision of the CIT(A) in deleting the addition - Held that:- Appellant has taken us to the order of AO, CIT(A) and tribunal and thereafter contended that both CIT(A) as well as Tribunal have erred in deleting the addition of ₹ 1.95 crore which was made u/s 56(1). However, the tribunal while considering the matter has discussed the law as well as factual matrix of the case. In our considered opinion, this is more an appreciation of facts rather question of law. No substantial question of law.
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2018 (11) TMI 1328
Deduction u/s 80IC - proof of manufacture - whether the article claimed to be produced/manufactured by assessee falls under the negative list of article i.e. Thirteenth Schedule at SI. No. 20 being "plastics and articles thereof' and is thus covered u/s 80-IC(2)(a) - Held that:- The assessee has submitted the excise classification that what is the plastic and articles thereof and what are the products manufactured by the assessee. According to that the mere products Manufacturer by the assessee are not articles of plastic. Further the place where the assessee has eligible industrial undertaking was also proved to be notified area for setting up of the industry which is eligible for exemption. The assessee has also shown the relevant rent agreements by which assessee is in possession of the relevant land area. To establish the date of the commencement the assessee has shown that the date of commencement of the unit is 31/3/2010, on the date on which the first sale bill was prepared. Same was also confirmed by the sales tax records and excise records of the assessee. The assessee has also shown the details of the machinery for the purpose of manufacturing of the specified item. Such details are also furnished along with copies of bills etc. The amount of purchases from the related party are also very minuscule that is only of ₹ 5 9568/–. Even otherwise this is not the first year of the claim of the assessee but second-year of the Holiday period of 10 years. In view of this we confirm the finding of the learned CIT appeal in deleting the disallowance of deduction under section 80 IC - decided against revenue Allowing carry forward business losses and unabsorbed depreciation for the earlier years - Held that:- We find that production had commenced from the first year onwards and this is the second year of the operation. Even otherwise Commencement of production or not is not a criteria for allowing such losses. In any case in the AY 2012-13 b/f losses have to be allowed if the losses were claimed in the return of income and the returns were filed in time. It is not the allegation of the revenue that assessee has not claimed this in the return of income or the returns were filed late. Set off and carried forward of losses are governed by section 70 to 80 of IT Act 1961. The grounds for disallowing the losses are not covered in any section from 70 to 80. According to us the action of the learned assessing officer cannot be sustained of not granting the credit of brought forward losses or unabsorbed depreciation. Even otherwise the unabsorbed depreciation is mandatory and becomes the depreciation of the current year. - decided against revenue
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2018 (11) TMI 1327
Penalty under section 271(1)(c) - defective notice - non specification of charge - Held that:- AO has initiated the penalty for concealment of particulars of income or furnishing of inaccurate particulars, which is contrary to the provisions of law. It is also of the view that notice issued by the AO u/s. 271(1)© read with Section 274 of the Act is bad in law as it does not specify under which limb of section 271(1)© of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. Therefore, the penalty in dispute is not sustainable in the eyes of law. In CIT & Anr. Vs. M/s SSA’s Emerald Meadows – 2015 (11) TMI 1620 – Karnataka High Court has held that Tribunal has correctly allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under section 274 read with Section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)© - Decided in favour of assessee.
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2018 (11) TMI 1326
Penalty u/s 271(1)(c) - short disallowance of interest expenditure under the head ‘Income from Business or Profession’ which led to the claim of increased loss by the assessee in the return of income filed with the Revenue causing prejudice to the Revenue - incorrect claim of expenditure - Held that:- The assessee has also explained that during the year there was a major change in shareholding of the assessee to the tune of 100% which led to triggering of provisions of Section 79 and its accumulated losses lapsed, thus no advantage could be obtained by the assessee in any case by inflating losses as the losses lapsed. It is explained that it was a bonafide human error which occurred while filing return of income due to peculiar circumstances as narrated above which led to claim of higher losses which was a bonafide mistake committed inadvertently due to human error and immediately on being notified by the AO, the assessee rectified the said mistake suo-motu during assessment proceedings. It is explained that under the circumstances, assessee could not have derived any benefit and no loss could have been caused to Revenue owing to higher losses claimed as in any case these losses lapsed being hit by provisions of Section 79 of the 1961 Act. As observed from the audited financial statements filed by the assessee that during the year under consideration, 100% shareholding of the assessee got transferred to Suhani Trading and Investment Consultants Private Limited , which led to triggering of provisions of Section 79 of the 1961 Act leading to lapsing of losses. Thus, this explanation of the assessee is also correct that claiming of the higher losses could not have brought any advantage to the assessee on the face of provisions of Section 79. The ratio of decision in the case of Price Waterhouse Coopers Private Ltd. v. CIT (2012 (9) TMI 775 - SUPREME COURT) is applicable on the factual and circumstantial matrix surrounding this particular case and in our considered view the assessee has furnished bonafide and genuine explanations as to an inadvertent mistake committed by it which was an human error committed while filing its return of income and there cannot be any ulterior motive attached to this error committed by the assessee, which has taken it out from the clutches of penalty under the provisions of Section 271(1)(c) as it is well settled proposition of law that every error committed in filing of return of income cannot be visited with penal provisions as are contained in Section 271(1)(c). - decided in favour of assessee.
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2018 (11) TMI 1325
Restoration of appeal - Application u/s 254 - Appeal rejected as non prosecuted - Misc. application filed beyond the time limit prescribed under section 254(2) - Held that:- By considering the application filed by the assessee and also considering the argument of the ld. counsel for the assessee, we are of the opinion that there is a sufficient cause for not to appear in this appeal when it was posed. We also find that the Misc. Application filed by the assessee is after 98 days of passing of the exparte order, is a reasonable period, in which the assessee approach the Tribunal. In our opinion, this being an exparte order, assessee should be given opportunity and the order has to be passed on the merits of the case. In this case, no merits have been considered, simply dismissed the appeal. In our opinion, not only in the interest of justice and also on the grounds of principles of natural justice, these appeals deserve to be recalled. ITAT did not decide the appeal on merits as it is mandated to but rather rejected for non-prosecution. In the present case also, the appeals filed by the assessee's are dismissed for non-prosecution. The Misc. Applications filed by the assessee are only recalling of the exparte order, it is neither for rectification nor for any amendment. Therefore, under these facts and circumstances of the case, we find that the judgment of the Hon'ble Delhi High Court in the case of Om Prakash Sangwan [2018 (5) TMI 1789 - DELHI HIGH COURT] is squarely applies to the facts of the present case. Misc. Applications filed by the assessee are allowed.
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2018 (11) TMI 1324
Disallowance of stamp duty charges collected by the assessee and incurred as expenditure - survey under section 133A - AO recorded the statements of some employees and the directors at the time of survey and found some inconsistencies in the statements recorded from the concerned persons under section 131 & 133A - Held that:- The assessee has purchased the stamps in cash from the stamp vendors and liasioning agents and through the Government. The said sum was paid by cheque for purchases from Government and whatever stamps purchased from the vendors across the country, the same is paid in cash. Assessee also accounted the stamps in detail settlement-wise in the ledger account. AO did not find any defect in the account of the stamp duty having conducted the survey in the business premises of the assessee. Though the details are available settlement wise, no enquiry was conducted to verify whether the assessee has affixed the requisite stamps or not? The Assessing Officer also did not have any evidence to establish that the purchase of stamps was bogus Merely on the basis of non-furnishing of the details of the vendors, the addition cannot be made especially in the case of purchase of stamps. The consumption of stamps required to be considered on the basis of volume of business and the consumption account. AO did not dispute the fact that there is requirement of affixing the stamps on every contract note, there was no evidence brought on record to show that affixing of stamps in settlement wise as accounted in the ledger account copy is false or overstated. In the earlier years also, the assessee has followed the same practice but the department has not brought on record any evidence to show that department has suspected the payment. Once the department accepts the settlements and mandatory requirement of affixing the stamps there is no reason to suspect the expenses incurred by the assessee towards stamp duty merely on the basis of surmises and conjunctures of the Assessing Officer without bringing any evidence to show that the stamps account is incorrect. The Assessing Officer should have verified the daily transactions on simple basis settlement-wise and given a finding whether assessee is really incurred such expenditure for affixing of stamps. This exercise was not done by the Assessing Officer. Therefore, we hold that disallowance of expenditure claimed by the assessee on account of stamp duty is unsustainable and the same is deleted - Decided in favour of assessee.
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2018 (11) TMI 1323
Deduction u/s 54F - failure to comply with the statutory requirement - purchase of property within stipulated time u/s 139 - sources funded from the bank loan - whether the assessee would be entitled for deduction u/s 54F even if the assessee acquired the new property from the bank loan instead of utilizing the sale consideration for the purpose of acquiring the new property - Held that:- This issue has been considered by the Hon’ble Madras High Court in the case of CIT Vs. R. Srinivasan [2013 (1) TMI 213 - MADRAS HIGH COURT] relied upon by the assessee and held that the assessee is entitled for deduction u/s 54F even if the source was funded from the bank loan. This issue on similar facts was considered in the case of Smt. Sumati Siva Kumari Vs. ITO [2016 (12) TMI 447 - ITAT CHENNAI] for the assessment year 2013-14 for which the Accountant Member is one of the signatories held that the assessee is entitled for deduction u/s 54F even if the amount is sourced from the bank loan. In the instant case, there is no dispute that the assessee has purchased the property within the stipulated time also we hold that the assessee is entitled for deduction u/s 54F on the amount invested for purchase of new property from the bank loans also. - decided in favour of assessee.
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2018 (11) TMI 1322
Revision u/s 263 - deduction u/s 80IA allowability - raising of queries - Held that:- AO did raise queries which were complied by the assessee. It is a settled position of law that powers u/s 263 can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the decision of Hon'ble High Court of Bombay in the case of CIT vs. Nirav Modi, [2016 (6) TMI 1004 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2018 (11) TMI 1321
Addition of unexplained gift -assessee was not able to place on record any material evidence to establish the genuineness of the aforesaid cash gift - AR contends that the aforesaid gift from father to the assessee cannot be taxed in the hands of the assessee in terms of Sec. 56(2)(viic) - Held that:- On a careful perusal of Sec. 56(2)(viic) and the proviso thereto, it of the view that the provisions thereof would not apply as the assessee has failed to prove with material evidence that he had actually received a cash gift of ₹ 10.50 lakhs from his father (i.e. relative); apart from the claim made to that effect. While it is true a gift deed dt.25.9.2017 was filed in this regard before the AO, the same is only a self serving documents bereft of corroboration by any material evidence to establish both the credit worthiness and capacity of the father to give a cash gift of ₹ 10.50 lakhs and in the absence of any corroborative material evidence in this regard, I am of the considered view and hold that the impugned orders of the authorities below on this issue are upheld and the assessee's claims, being bereft of any merit, are to be rejected. - Decided in favour of revenue
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2018 (11) TMI 1320
Addition u/s 68 - unsecured loans receipt - interest paid on unsecured loans - non appearance by creditors on summons issued to them - test of identity, creditworthiness of loan creditors and genuineness of transactions - Held that:- The interest paid on unsecured loans to all the loan creditors till the date of conversion of part of the amounts of the same into equity share capital were duly allowed as deduction by the AO - no scope for treating the loan creditors / shareholders as in-genuine- assessee had furnished all the required documents to prove that the identity of the creditors, creditworthiness of the creditors and the genuineness of transactions within the meaning of section 68 in the instant case. All the creditors had duly filed confirmations before the AO Merely because the summons issued seeking their personal appearance is not complied with, the entire transactions cannot be treated as bogus and cannot be doubted by the revenue, especially when the entire onus has been proved by the assessee in the facts of the instant case. The assessee had only converted the unsecured loans with interest into equity share capital in part in the facts of the instant case. Out of total 8 loan creditors, the assessee had received loans from 6 parties in the earlier years and were carried over as opening balances during the year under appeal. Even the sum of ₹ 15 lacs was received from 2 parties during the year were from existing loan creditors only and not new loan creditors. Hence the test of identity, creditworthiness of loan creditors and genuineness of transactions had already been tested and accepted by the revenue in the earlier year. - Decided in favour of assessee.
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2018 (11) TMI 1319
Disallowance of exploration expenses pertaining to Pranhita Godavari (PG) Block - allowable expenditure u/s 42(1)(a) - failure to prove relinquishment of any area in PG Block - as per AO similar expenditure claimed by the assessee in the earlier assessment years were also disallowed - Held that:- On a perusal of the material placed before us, we find that the assessee vide letter dated 28th December 1995, informed the Ministry of Petroleum and Natural Gas about relinquishment of 7,300 sq.kms. area of PG Block. Also seen, vide letter dated 22nd March 1996, the Dy. Secretary to the Government of India, Ministry of Petroleum and Natural Gas, informed the assessee about the consent of the Government to the relinquishment of 7,300 sq.mtrs. of PG Block. Thus, it is evident, in the previous year relevant to the assessment year under dispute, the assessee’s relinquishment of 7,300 sq.kms. area in PG Block was accepted by the Government. Therefore, the finding of AO and Commissioner (Appeals) that the assessee has failed to prove relinquishment of any area in PG Block is contrary to the material on record. Further, a perusal of Article–16 of the PSC, as placed in the paper book, indicates that the assessee is to be allowed deduction of expenses in terms of section 42 of the Act. Therefore, the unsuccessful oil exploration expenses is allowable under section 42(1)(a) of the Act. - Decided in favour of assessee. Disallowance of set–off of exploration expenses against interest income - Held that:- Authorised Representative fairly submitted that the issue has to be decided against the assessee. In view of the aforesaid submissions made by the learned Authorised Representative, we dismiss the ground raised by the assessee. Short credit of TDS - Held that:- We direct the Assessing Officer to consider assessee’s claim in the context of facts and material available on record and grant proper credit of TDS. Ground raised is allowed for statistical purposes. Rejection of revised return of income filed by the assessee - assessee in the revised return of income the assessee has claimed various deductions, including exploration expenses in respect of some Blocks - assessee can file a revised return of income only for the purpose of correcting obvious omissions / mistakes and it cannot be use to make entirely a new claim - Held that:- A reading of the provision 139(5) makes it clear that, in case, the assessee discovers any omission or any wrong statement in the original return of income he can file a revised return of income in the prescribed time limit. There is nothing in the said provision to suggest that the assessee cannot make a fresh claim in the revised return of income to be filed under section 139(5) of the Act. Only requirement of law is, it must be filed within the time limit prescribed under section 139(5). As regards the allegation of the learned Commissioner (Appeals) that the assessee filed the revised return of income to reduce the taxable income by making jugglery in the accounts, we must observe, nothing prevents the Assessing Officer to disallow on merits the claim made by the assessee in the revised return of income after properly examining such claim in the context of books of account maintained by the assessee as well as other facts and material on record. Merely on presumption and surmises assessee’s revised return of income cannot be rejected if such return of income has been filed in accordance with the statutory provision - restore this issue to the Assessing Officer for fresh adjudication after considering assessee’s claim made in the revised return of income - decided in favour of assessee for statistical purposes. Disallowance u/s 14A - Held that:- AO has given a clear cut finding that the loan burden of the assessee is negligible, hence, it cannot be said that loan bearing funds are invested in tax free securities. Having held so, the Assessing Officer disallowed 15% of the exempt income earned towards administrative expenditure. Whereas, Commissioner (Appeals) without properly examining the facts has upheld the disallowance with the observation that the assessee has used borrowed funds for earning dividend income. Be that as it may, disallowance on account of administrative cost @ 15% of the exempt income, in our view, is on the higher side. We restrict such disallowance to 10% of the dividend income. Ground raised is partly allowed. Allowance of unsuccessful exploration expenses - Held that:- There is no dispute that the assessee has filed the revised return of income within the prescribed time limit as per section 139(5) of the Act. Therefore, the contention of the learned Departmental Representative that the loss claimed in the revised return of income cannot be carried forward is not acceptable. As regards the allowability of expenditure claimed, the Revenue has failed to controvert the factual finding of the Commissioner (Appeals) that, though, the expenditure pertained to the preceding assessment year, however, in view of the Assessing Officer’s own decision, such expenditure is allowable in the assessment year wherein the block is surrendered. In view of the aforesaid, we do not find any infirmity in the order of the learned Commissioner (Appeals). Grounds are dismissed. Allowance of expenditure in respect of PY–3 Block - Held that:- On a reading of section 42(1)(b) of the Act, it becomes clear that after commencement of commercial production, expenditure incurred in respect of drilling or exploration activities or services or in respect of physical assets used in that connection, except, those assets on which depreciation is allowable under section 32 of the Act are allowable as deduction if such expenditure is allowable as per the terms of the agreement with the Government. Undisputedly, AO has not doubted the fact that the assessee has incurred such expenditure or the assessee has commenced commercial production. He has also not doubted that such claim is not provided in the PSC. That being the case, assessee’s claim of expenditure is allowable under section 42(1)(b) of the Act. Even otherwise also, as rightly observed by the learned Commissioner (Appeals), the assessee is entitled to claim 100% depreciation on assets used in the field operation. - Decided in favour of assessee
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2018 (11) TMI 1318
Disallowance u/s 14A - AO recorded dissatisfaction regarding the genuineness of the assessee's claim of the expenses relating to exempt income with regards to his books of account maintained as the assessee has been unable to justify its claim by producing books of account - Held that:- It is not disputed that the assessee has substantial investments and has received tax free income. The AO has made no disallowance under rule 8D(2)(i) and Rule 8D(2)(ii) of the Income Tax Rules. So far disallowance under rule 8D (2) (iii) is concerned, we note that Coordinate Bench of ITAT Kolkata in the case of REI Agro Ltd. Vs. DCIT (2013 (9) TMI 156 - ITAT KOLKATA) has held that it is only the investments which yields dividend during the previous year that has to be considered while adopting the average value of investments for the purpose of Rule 8D(2)(iii) of the Rules. The aforesaid view of the Tribunal has since been affirmed as correct by the Hon’ble Calcutta High [2014 (4) TMI 713 - CALCUTTA HIGH COURT ] We direct the assessing officer to compute the disallowance under Rule 8D(2)(iii) of the Rules by taking into account dividend bearing securities, that is only the investments which yields dividend during the previous year that has to be considered while adopting the average value of investments. Therefore, we allow this appeal for statistical purposes.
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2018 (11) TMI 1317
Bogus purchases - Held that:- If two views are possible, one in favour of the assessee has to be adopted. Hence, we uphold the view of the CIT(A) for A.Y. 2010-11 to be applicable in assessee’s case for other year also. Hence, we direct that addition be made @ 6.5% of bogus purchase for all the years. Moreover,the assessee fairly admitted that 6.5% disallowance would meet the end of justice.
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2018 (11) TMI 1316
Unexplained cash credits - Withdrawal of amount from the bank account for the F.Y. 2009-10 - Held that:- The assessee has not filed any corroborative evidence and also not explained what is the purpose of withdrawal and why the same is deposited in the bank account on the same day in different amounts. Therefore, the AO has not believed the explanation of the assessee that the amount deposited on 06/11/2009 is the amount withdrawn on 19/11/2009. On appeal, ld. CIT(A) has observed that subsequent to the withdrawal of ₹ 4,55,000/- on 19/09/2009, the assessee has also withdrawn an amount of ₹ 40.00 lakhs on 07/07/2009. Therefore, the assessee has utilised the amount of ₹ 4,55,000/- and after utilising the above amount, again she withdrawn ₹ 40.00 lakhs therefore, the deposits made by the assessee again on 06/11/2009 cannot be considered the same amount as withdrawn on 19/09/2009 deposited. Before us, assessee is not explained what is the purpose of withdrawal and again deposited the same on 06/11/2009 in two differential amounts i.e. ₹ 3,88,000/- & ₹ 1,12,000/- - we are of the opinion that the amount deposited on 06/11/2009 cannot be considered the same amount she was withdrawn on 19/09/2009. - Decided against assessee.
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2018 (11) TMI 1315
Reopening of assessment - validity of reasons to believe - tangible material in his possession subsequent to the intimation u/s 143(1) - Held that:- The reopening of the assessment solely on the basis of the statement of Sri Ramalinga Raju, without bringing on record any tangible material to come to the conclusion that there is escapement of income is not sustainable. No reason to interfere with the order of the CIT(A), who has followed the ITAT orders in similar cases for setting aside the assessment order. Accordingly, the Revenues appeal is dismissed.
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2018 (11) TMI 1314
Disallowance u/s 35(1)(ii) - Donation made to "The School of Human Genetics and Population Health", an Institute approved by the Central Government - eligibility to claim weighted deduction @175% - Held that:- We note that the statements of the various parties and persons were recorded behind the back of the assessee and the AO did not allow opportunity of cross examination. We note that in absence of opportunity of cross-examination no reliance could be made on such statements to draw any adverse inference against the assessee firm. The assessee firm denied its knowledge of the statements made by these institutes which were relied on by the Investigation Wing and the Assessing Officer. We note that not providing the opportunity of cross-examination is against the principle of natural justice and for that we rely of the judgment of CIT vs. Dharam Pal Prem Chand Ltd.[2007 (5) TMI 131 - HIGH COURT, DELHI]. We note that the withdrawal of recognition u/s 35(1)(ii) in the hands of the payee organizations would not affect the rights and interests of the assessee herein for claim of weighted deduction u/s 35(1)(ii). As relying on DCIT, CIRCLE-12 (1), KOLKATA VERSUS M/S MACO CORPORATION (INDIA) PVT. LTD. [2018 (3) TMI 811 - ITAT KOLKATA] we direct the AO to grant deduction u/s 35(1)(ii). Disallowance u/s 14A - Held that:- We note that in this ground of appeal the Assessee Firm has challenged the disallowance u/s 14A. We note that in the case of REI Agro Ltd.[2014 (4) TMI 713 - CALCUTTA HIGH COURT] has held that it is only the investments which yields dividend during the previous year that has to be considered while adopting the average value of investments for the purpose of Rule 8D(2)(ii) & (iii) of the Rules. The assessee has submitted the details of dividend income vis a vis the value of investments in those shares. We direct the AO to compute disallowance u/s 14A read with rule 8D, only after considering the investments which earned the exempt income. Therefore, we allow this ground for statistical purposes.
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2018 (11) TMI 1313
Disallowance of provision relating interest expenses - applicability of section 43B(d) - specification on various types of payees - Held that:- The lower authorities case is that the impugned claim pertains to any sum payable by the assessee as interest on a loan or borrowing from the specified financial institutions or state financial institution or state industrial investment corporation, as the case may be. We find no substance in this reason. The Revenue fails to rebut the fact that the legislature has specified various types of payees which nowhere includes a government payee as is the case before us. We make it clear that we are dealing with a disallowance provision in a tax statute liable to be strictly construed. As in DCIT vs M/s. Baghpat Co-operative Sugar Mills Ltd. [2017 (9) TMI 1758 - ITAT DELHI] has held that section 43B does not apply in case of a government payee. We therefore reverse both the lower authorities’ action disallowing assessee’s provision of interest in question.
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Customs
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2018 (11) TMI 1311
Time limitation - no suppression of facts - no intent to evade - Held that:- In the present case, the Appellate Authority had come to the conclusion that the service tax rate was increased from 5% to 8% w.e.f. 14th May, 2003 and accordingly, assessee was liable to pay duty at such higher rate, which the assessee had failed to do. The question of nonpayment of duty, is undisputed whether it was deliberate with a view to avoid the duty is question of fact duly addressed by the Commissioner (Appeals), confirming the order of Adjudicating Authority. Appeal dismissed - decided against appellant.
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2018 (11) TMI 1310
Rectification of mistake - Imposition of redemption fine - misdeclaration in the process of importation of car - Held that:- From the first order of the Tribunal itself, it is clear that such a contention was raised and orally argued before the Tribunal. Despite this, the Tribunal failed to decide the same in its order. The appellant applied for rectification. At least in the rectification application, the Tribunal could have redressed the appellant's grievance. The appellant was clearly not asking for review of the order. The appellant's appeals are restored to the Tribunal only to the extent for deciding the appellant's challenge to the imposition of duty with interest on the appellant as has been done by the Adjudication Authority.
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2018 (11) TMI 1309
100% EOU - Penalty u/s 112(a) and 112(b) of the Customs Act, 1962 - diversion of duty free imported goods into the domestic traffic area - Confiscation - Held that:- The appellant himself in his statement made to the Customs on 4th June, 2003 has admitted that he was escorting the duty free imported fabrics into the domestic traffic area. This statement which is not been retracted at any point of time, lead to a conclusion that he was engaged in carrying / dealing with the goods which he knew are liable for confiscation. Undisputed fact that penalty was imposed upon the appellant. The fact that penalty was deleted upon the other co-noticee would not by itself justify deletion of penalty on the appellant - In the case of other three appellants namely; Mr. Govind Khubchandani, Mr. Jairaj Kalyani and Mr. Pawan Lulla, no penalty was imposed as in the case of the above three appellants, a finding of fact was recorded that they have either not dealt with the goods or in case of godown keeper that he had no knowledge that the goods are liable for confiscation. This is not so in the present facts. This concurrent finding of fact both by the adjudicating authority and the Tribunal that the appellant was involved in transporting offending goods with knowledge that they are liable for confiscation under Section 111 of the Act is not shown to be perverse in any manner - the questions as proposed do not give rise to any substantial question of law - appeal not entertained and is dismissed.
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2018 (11) TMI 1308
Maintainability of petition - According to the Standing Counsel, the petitioner ought to have filed a statutory appeal before the learned Division Bench of this Court under Section 129 of the Act. - Short levy of Anti-Dumping Duty - Held that:- Identical issue decided in the case of M/S. INDUS LOGISTICS [2018 (10) TMI 1159 - KERALA HIGH COURT], where it was held that the petitioner's recourse must be under Section 130: a statutory appeal before a learned Division Bench. Petition dismissed.
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2018 (11) TMI 1307
Release of detained empty container denied - demurrage for the period for which the container was stored at Freight Station - demand of demurrage from importer - Held that:- It is well known that the container is kept in the Freight Station at the instance of the Customs. Till confiscation is over, the container will be kept along with seized materials in the Container Freight Station. If at all, rent is payable it shall be collected from importer or exporter and not from the container owner. Since, he leased out the container, he is entitled to rent for the usage of empty container and not more. He cannot be construed to be the owner of goods or the container was kept in the Container Freight Station at his instance. This Court in a similar circumstance, in M/s.Trans Asian Shipping Services (P) Ltd., [2016 (10) TMI 669 - MADRAS HIGH COURT] held that the containers were detained by the Department for investigation and have been kept in the respective container freight stations, the Customs Department/Directorate of Revenue Intelligence shall also endeavour to assist the respective container freight stations for recovery of the rent due and payable. As the importer has been found guilty, they could be made liable for payment of rental dues and not the container owner. Petition allowed - decided in favor of petitioner.
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2018 (11) TMI 1306
Classification of imported goods - raw jute cutting grade imported by the appellant from Bangladesh through LCS Petrapole - whether classified under CTH 5303.9010 of Customs Tariff Act, 1975 or under CTH 5303.1010 of Customs Tariff Act, 1975? - Held that:- Issue is no more res-integra as is settled in the case of M/S. NAFFAR CHANDRA JUTE MILLS LTD., M/S. AI CHAMPDANY INDUSTRIES LTD. AND M/S. GANGES MANFACTURING CO. LTD VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE), KOLKATA [2014 (8) TMI 282 - CESTAT KOLKATA], where it was held that the inference goes in favour of the assessee that what they had imported, were raw jute of cutting grade and correctly classifiable under sub-heading 53031010 of CTA, 1975. The appellant has appropriately classified the imported goods i.e. raw jute cutting grade under Tariff Heading 53039010 of the Customs Tariff Act, 1975 and has rightly claimed the benefit of Notification Nos.21/2002-Cus dt.01.03.2002 and 105/99-Cus dt.10.05.1999 - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1305
Maintainability of appeal - issue relates to import of goods as baggage and the penalty - Section 129A of the Customs Act, 1962 - Held that:- Undisputedly, the present appeal is filed against the order of the Commissioner (Appeals) who has disposed the appeal against the order of the adjudicating authority regarding the import of goods as baggage - In view of the specific stipulation contained in the first proviso to Section 129A of the Customs Act, 1962, the jurisdiction of this Tribunal is ousted in cases relating to import of goods as baggage and the revision application against such order would lie before the Government of India. Appeal dismissed as not maintainable.
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2018 (11) TMI 1304
Penalty u/s 112 and Section 14A of Customs Act - classification of imported goods - consignment of readymade garments for men/boys, jackets of various types - no misdeclaration/suppression of facts - assessment not challenged by Revenue - principles of natural justice. Held that:- In this case the import was made in the year 2004. The applicant filed the bill of entry along with the invoices and related documents claiming appropriate tariff heading as per their appreciation. The goods were examined and the samples were also drawn, which is evident from the examination report on the bills of entry. As the goods were examined before the clearance and the same was found as per the declaration, no allegation of suppression of fact can be made against the appellant - It is also fact that the department has not appealed against the assessment order which was done at the time of clearance of goods by filing the bills of entry. As no appeal was filed against the assessed bill of entry, the same cannot be reopened after period of more than three years. Penalty do not sustain - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1303
Imposition of penalty u/s 112(a) of Customs Act, 1962 - mis-declaration of the imported consignment - classification of the goods which were imported by the M/s Universal Enterprises. Held that:- After going through the impugned order and SCN, it is found that the Adjudicating Authority has not clearly defined the omissions and commissions made by the appellant while filing documents for clearance of goods from the Customs as CHA. In this case the appellant have declared the imported goods to be the Zinc Sulphate and classified the goods accordingly. After the information that the goods were mis-declared the samples were drawn and sent for test so as to arrived at the chemical nature and composition thereof. From the record of the case it is not clear as to how the appellants were have colluded and attempted to evade the Custom duty as the same has not been specifically brought out in the adjudication order - the premises of the appellant were search by the Customs Department and it is also on record that nothing incriminating were found. The appellants have not acted in any manner so as to make themselves liable for Penal action under Section 112 (a) of the Customs Act - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2018 (11) TMI 1312
Compounding of the offences committed under Section 135 r.w. Section 134(3)(o) of the Companies Act, 2013 - Held that:- Company and its Officers who are in default have violated the provisions of Section 134(3)(o) r.w. Section 135 of the Companies Act, 2013, which is punishable under Section 134(8) of the Companies Act, 2013. The said offence is not intentional and it is not prejudicial to the interest of the shareholders or the creditors. The provisions of Section 134(8) of the Companies Act, 2013, provide that the Company shall be punishable with fine which shall not be less than fifty thousand rupees but which extend to twenty-five lakhs rupees, and every officer of the Company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or with both. The Applicants i.e., Company and its two Officers, as mentioned above, are liable to be penalized under Section 134(8) of the Companies Act, 2013, for violation of the provisions of Section 134(3)(o) r.w. Section 135 of the Companies Act, 2013. The Applicants pleaded for taking lenient view on the ground that this is the first offence, which has been confirmed by the concerned RoC. Therefore, the Application of the Company and its Officers in default is allowed and the offence is compounded in exercise of the powers conferred under Section 441, by imposing a fine under Section 134(8) of the Companies Act, 2013, to the tune of ₹ 1,50,000/- i.e. ₹ 50,000 on each the Company, and its two Officers, who are in default viz., (1) Mr. Subramanian Vaithilingam (Director) (2) Mr. Subbiah Muthuvel (Director). The Company is directed to pay the penalty from its accounts but the two officers in default shall pay the penalty from their own resources. The Applicants shall comply with the Order within three weeks from the date, the Order is uploaded on the website of the NCLT.
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Insolvency & Bankruptcy
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2018 (11) TMI 1351
Corporate Insolvency Resolution Process (CIRP) - Petition lies before Civil Court and not before NCLT - default for repayment of borrowed loan - Held that:- As to the objection raised by the Corporate Debtor that this Petition lies before Civil Court and not before NCLT, our answer is that the RTL Agreement entered between the Banks and the specified companies of Videocon Group including this Corporate Debtor, obliging that they are jointly and severally liable to repay this debt by all or by any one of them as if each one of them is principal borrower to the loan Agreement entered between the Petitioner and these Group companies including the corporate Debtor. In view of the terms of the Agreement, it does not matter as to whether VIL or VTL has been pressed upon to repay the same to the Financial Creditor. The fact of the matter is that there is enough material before this Bench to prove that VIL as well as VTL defaulted in making repayment to the Financial Creditor. On the top of it, for NCLT already having admitted company petition against VIL in respect to the same debt, I don’t think any further evidence is required to prove VIL defaulted in making repayment to this Petitioner. Another specious argument the Corporate Debtor Counsel raised is that the consideration has not been received by this Corporate Debtor therefore, for having this Petitioner proceeded against VIL, this Petition will not lie against this Corporate Debtor, against which, the answer is as to the definition of “debt” under IBC, it has been envisaged that debt means a liability or obligation in respect of a claim which is due from any person. Here for there being an obligation in respect of this claim against this Corporate Debtor as well, and the same not being discharged till date, it squarely falls within the definition of “debt” as mentioned under the IBC. For it need not be said separately that the Corporate Debtor has not denied the fact of lending this loan to this specified companies of Videocon Group, we are of the view that we need not take pains to say that it is a financial debt. For the Petitioner having proved the existence of debt as well as existence of default, this Petition is hereby admitted against this Corporate Debtor. The Corporate Debtor having named the Interim Resolution Professional with his consent, there being no disciplinary proceedings against the same, this Bench hereby admits this petition filed under Section 7 of IBC, 2016, declaring moratorium
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Service Tax
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2018 (11) TMI 1298
Service of notice - whether speed post is proper service or not - section 37C of the Central Excise Act, 1944 - Held that:- There is nothing on record to show that order sent by speed post was received by the assessee himself. No case for interference - appeal dismissed.
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2018 (11) TMI 1297
Rectification of Mistake - mistake apparent from the face of record or not - provision with regard to conducting audit under Service Tax has been held ultra vires by the Hon’ble Apex Court. The silence of this Tribunal in the impugned Final Order to this effect - Held that:- No case law of Hon’ble Apex Court as impressed upon by the appellant about no provisions of audit in Service Tax is placed on record. Perusal of grounds of appeal shows that though the audit note dated 19.11.2010 is objected but Department is not alleged to have wrongly conducted the said audit. The silence in that respect in the impugned final order cannot be held to be an error apparent on record. Time Limitation - Held that:- Since it is one of the grounds of the appeal finding no mention in the order adjudicating upon the same is definitely an error apparent on record. In para 8 of the Final Order, ACs for the Server Rooms are held to be the inputs used in providing output service. Perusal of the order of original authority makes it clear that those ACs were also not considered as input as is apparent from last lines of para 15 of the said order. Thus, the order of original adjudicating authority has been modified to include AC’s of server room also to be the inputs. Hence, dismissing the appeal altogether is an error apparent on record. Application allowed in part.
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2018 (11) TMI 1296
Rectification of mistake - mistake apparent from record or not - invocation of extended period of limitation - The show cause notices in all these matters were issued prior to 10th May, 2013 and the amendment by way of sub-Section (2a) of Section 73 of the Act came into effect post 10th May, 2013. Held that:- The rectification of the order is available only when error apparent on record occurs. Basically it can be typographical, arithmetical or calculation error. In addition, the term may extend to errors as that of skipping an important fact or ignorance of settled legal principal. If a party is aggrieved of the opinion so formed in the order, the remedy lies in challenging the same before the higher forum. Difference of opinion of adjudicating authority than that of the aggrieved party cannot be called as error apparent on record - In the name of ROM, review of appeal is not permissible. ROM have no merits and is dismissed.
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2018 (11) TMI 1295
Works contract service - levy of service tax - erection, commissioning or installation service - Held that:- The issue involved in the present case is no more res integra and has been settled by the Apex Court in the case of Larsen and Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] wherein the Hon’ble Apex Court has held that works contract is taxable only from 01/06/2007 and in the present case, the period involved is 16/06/2005 to 31/03/2007 and therefore the service tax cannot e levied on the works contract service which is rendered by the appellant in the present case. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1294
Rectification of Mistake - applicant submitted that the order dated 15.06.2017 passed by the Tribunal remanding the matter back to the adjudicating authority with a direction to the appellant to produce the CA certificate regarding the input credit is beyond the grounds of appeal and the Order-in-Original and this is an error which is apparent on the face of the record. Held that:- There is no error apparent on the face of the record which can be corrected by allowing the application of the applicant - the Tribunal has only remanded the matter back to the original authority to decide the claim of the appellant afresh after complying with the principles of natural justice. Against the said order, appellant has already moved the Hon’ble High Court and the matter is sub judice before the Hon’ble High Court of Karnataka. In view of these facts, we do not think it appropriate to modify the impugned order dated 15.06.2017. ROM application dismissed.
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2018 (11) TMI 1293
Penalty - Levy of Service Tax in dispute - Tour operator service - non-payment of service tax - it was alleged that appellant had earned income from the supply of vehicles for tourist purpose and the appellant has not paid the service tax on said taxable service - Held that:- The appellant has not collected the service tax from the customers and more over the levy of service tax on tour operators services was challenged before the High Court during the relevant time and it was finally decided on 22/09/2006 - the appellant had a bona fide belief and reasonable cause for non-payment of service tax but subsequently they have paid the service tax and also the interest. Appellant is entitled to waiver of penalty under Section 80 of the Finance Act - appeal is allowed to the extent of dropping the penalty.
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2018 (11) TMI 1292
Penalty u/s 76, 77 and 78 of FA - Non-payment of Service tax - import of services - reverse charge mechanism - It was alleged that the appellants were receiving “Intellectual Property Services” and “Management Consultancy Services” from their principals in UK and have not paid service tax on the same - Held that:- In the instant case, the appellants have paid penalty of 25% before the issuance of show-cause notice. They had a reasonable belief for the reason that the liability of the service recipient to pay service tax under the reverse charge mechanism was in doubt for everyone in the field during the relevant period. It was only after the Supreme Court’s decision in the Indian National Shipowners case [2009 (12) TMI 850 - SUPREME COURT OF INDIA], the issue had attained finality. There were reasons to entertain a reasonable belief. The appellants have also paid the penalty of 25% before the issue of show-cause notice - penalty not imposable - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1291
Condonation of delay in filing appeal - power of Commissioner(Appeals) to condone delay - Non-payment of Service Tax - Works Contract Services - Held that:- The Order-in-Original was passed on 30/11/2016 and allegedly received by the appellant on 06/02/2017 and appeal before the Commissioner(Appeals) was to be filed within two months i.e. before 05/04/2017 - But in the present case, it was filed after a delay of 12 days after the expiry of due date of two months. The Commissioner(Appeals) has dismissed the appeal without exercising his power of condonation of one month delay on sufficient grounds. Since there is a delay of 12 days from the date of receipt of the Order-in-Original and same was within the condonable limit, we condone the delay in filing the appeal before the Commissioner(Appeals) and remand the case back to the Commissioner(Appeals) for disposal on merits. Appeal allowed by way of remand.
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2018 (11) TMI 1290
Short payment of Service tax - wrongful availment of benefit of 75% abatement on the gross taxable value under Notification No. 32/2004-ST dated 13/12/2004 and Notification No. 01/2006-ST dated 01/03/2006 - period of dispute was from April 2006 to September 2006. Held that:- In the present case, the appellant is discharging Service Tax under the Reverse Charge Mechanism, being a recipient of service. The Respondent-Assessee has provided declaration as received from the Goods Transport Agency issued by them on their Letter Head. The Adjudicating Authority discarded the declarations on the ground that the declaration was obtained on the letterhead and not on the body of each consignment note. The issue is no more res-integra in-view of the various decisions of the Tribunal and accordingly, the benefit of the exemption notification cannot be denied to the assessee - In absence of any particular format prescribed under the respective notification, the Department’s insistence for declaration on each consignment note for allowing the abatement under the notification is unsustainable in the eyes of law. The declarations filed by the Goods Transport Agency (GTA) on their letter head certifying that they have not availed Cenvat Credit on inputs or capital goods in availing the benefit under Notification No. 12/2003-ST, should have been accepted by the Department in extending the benefit Notification No. 32/2004-ST and 01/2006-ST. Appeal dismissed - decided against Revenue.
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2018 (11) TMI 1289
Imposition of penalty under Rule 15(4) of Cenvat Credit Rules, 2004 - short payment of Service Tax - non-payment of service tax on the amount paid to the print/electronic media for publishing/broadcasting advertisements in print and electronic media - irregular availment of Cenvat Credit. Held that:- Considering the amount involved for availing Cenvat Credit wrongly, the Adjudicating Authority failed it appropriate not to impose penalty under Rule 15 (4) of the Cenvat Credit Rules, 2004, which we find is not irregular in any way. The issue involved in this case is only that the Respondent has got sale input invoices at the Cuttack Branch at the strength of which credit was taken by the Respondent. This appears to be genuine mistake and is not serious breach of the Cenvat Credit Rules. The Adjudicating authority has correctly held that the service tax was not required to be paid by the Respondent on the amount paid by them to the print media and they have rightly paid the service tax on the discount and commission allowed by the print media during the material period. Regarding broadcasting advertisements by the Respondent, it is on record that the Respondent has arranged broadcasting advertisements and submitted some bills and invoices issued by the electronic media and corresponding debit notes and invoices issued by them to their clients - the Respondent cannot be made liable to pay service tax again on the amount charged for sale of time and space in electronic media, which was held to be separate tax altogether. However, the amount received by the Respondent for providing the service as an intermediary was liable to service tax. The Revenue has not brought before us any evidence to show that there is any suppression, malafide on the part of the Respondent in submitting figures before the Adjudicating Authority - there is no infirmity in the impugned order - appeal dismissed - decided against Revenue.
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Central Excise
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2018 (11) TMI 1288
Penalty u/s 11 AC - excess credit taken - the entire amount of credit was reversed and interest thereon paid before issuance of notice to show cause - Held that:- The Authorities have come to a finding of fact that the error claimed to be an inadvertent error on the part of the appellant is actually not so. This finding of fact cannot be said to be a perverse. Moreover, the contention on behalf of the appellant that Section 11A(1) (b) of the Act would be applicable in the facts of this case, is not acceptable for the reason that Section 11A(1)(b) of the Act would not apply where short payment of duty has been on account of fraud, collusion, misstatement with mala fide intention so as to evade the duty. The view taken by the Tribunal on facts is a possible view and, therefore, cannot be found fault with - appeal dismissed.
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2018 (11) TMI 1287
Classification of the vehicle “Mahindra Armada” - It is the case of the Respondent that the vehicle “Mahindra Armada” is classifiable under Chapter 8702.00 while it the Revenue's contention that its is appropriately classifiable under head 8703.00 of the Tariff Act - Held that:- Apex Court in Navin Chemicals Mfg. & Trading Co. Ltd., v/s. Collector of Customs [1993 (9) TMI 107 - SUPREME COURT OF INDIA] has held that a dispute as to classification of goods directly relates to the rate of duty for purposes of assessment. Thus, the remedy, if any, of the Revenue would be an Appeal from the impugned order before the Hon'ble Supreme Court under Section 35L of the Act as this Appeal is not maintainable under Section 35G of the Act before this Court - appeal disposed off.
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2018 (11) TMI 1286
Principles of natural justice - on account of the communication gap, the Counsel for the Appellant could not remain present before the Tribunal - Tribunal proceeded ex-parte on the very first day and allowed the Appeal of the Revenue - Held that:- The notice of hearing issued by the Tribunal was for the first date and it is not a case that the Appellant had consistently remained absent in past also. The Appellant was also given otherwise reason for nonappearance before the Tribunal. In the larger interest of justice, let issues be decided by the Tribunal after hearing both the sides - Appeal of the Department filed before the Tribunal is restored to the file of the Tribunal.
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2018 (11) TMI 1285
Levy of Excise Duty - refined oil - decisions rendered prior to the amendments brought to Section 2 of the Central Excise Act, 1944 and the Notes introduced in Chapter 27 of the Central Excise Tariff Act, 2004-05 relied upon - Held that:- In the context of the additions made to the Chapter notes of Schedule I, process for packing or reCEA packing or refining for the purpose of producing lubricating oil would be a 'manufacture'. This aspect has not been looked into by the Tribunal at all. Since adjudication of factual aspects are involved, it is only proper that the Tribunal considers the issue afresh - appeal allowed by way of remand.
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2018 (11) TMI 1284
Process amounting to manufacture or not - processes to refine and purify the various petroleum products (Petroleum Benzine and Hexane) to obtain specified grade of petroleum products - Section 2(f) of Central Excise Act, 1944 - binding precedent - applicability of decision in the case of CCE Bombay Vs E.Merk (I) Ltd [Final Order No 995/98-C dated 12.10.1998 in Appeal No E/2617/94-C of 1994] - applicability of the decision in the present case. Whether the order of the tribunal in case of E Merck, would be binding on the party’s and would be a binding precedent for all the times to come, even if it can be shown that by applying the principles laid down by the Apex Court in the case of S D Fine Chemicals itself, to the facts of present case the processes undertaken amounts to manufacture? Held that:- From the order dated 8.8.1992 of adjudicating Assistant Commissioner, and that of Commissioner (Appeal) dated 26.09.1994, in case of E Merck, it is quite evident that both the authorities had found the facts of the case identical were identical with the case of S D Fine Chemical [1991 (6) TMI 124 - CEGAT, NEW DELHI] as decided by the tribunal. The said order was appealed by the revenue before the Apex Court. Further the said order of tribunal, was not an unanimous order, and there was a difference in opinion amongst the Member’s hearing the matter in first instance. While Member (T) was in favour of allowing the appeal, Member (Judicial) disagreed and was for dismissing the appeals. When the matter was referred to third Member, third member agreed with the view of Member (Technical) for dismissing the appeal. Since the issue in case of E Merck was never examined by the Tribunal, on merits and the matter was agitated only for the reason that decision in case of S D Fine Chemicals, relied upon by adjudicating authority and Commissioner (Appeal) have been appealed before the Apex Court, tribunal has dismissed the appeal filed by revenue only on that ground. Since Tribunal has not considered the issue in E Merck on merits and in light of the Apex Court decision in case of S D Fine Chemicals, the earlier decision of Tribunal referred above cannot be a binding precedent. As result of the processes undertaken the raw material is (1) refining the hydrocarbons present in commercial grade bulk hexane/ petroleum ether (benzene) into fractions of more closely related properties, (2) converting raw material into more desirable reaction products, and (3) purifying the products of unwanted elements and compounds. Such a process may have altered some or all characteristics of the product. However the test for manufacture as laid down by the series of decisions referred above is not vis a vis the alteration in some or all the characteristics of raw material, but is the emergence of a new product having distinct name, character and use As result of the processes undertaken by the party’s on the raw material viz Commercial Grade Bulk Hexane/ Petroleum Ether (Benzine), a new commercially identifiable product having separate name, character and use has emerged, the processes undertaken are processes of manufacture. There is no justification for invocation of extended period. Matter remanded back to the adjudicating authority for re-computation of the duty demand within the normal period and also for allowing CENVAT credit of duty paid on raw materials, subject to submission of documentary evidences - appeal allowed by way of remand.
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2018 (11) TMI 1283
Rectification of Mistake - case of applicant is that Final Order was passed in the absence of the applicant/respondent and the respondent could not make sufficient representation in their favor - Held that:- There is no error apparent on the face of the record in the order dt. 03/05/2017 passed by this Tribunal - the said order though passed ex parte but the same was passed after considering all the grounds of appeal raised by the Revenue in their defence. By this ROM application, the applicant wants the Tribunal to recall the said order and hear the appeal afresh which is beyond the scope of ROM application. ROM Application dismissed.
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2018 (11) TMI 1282
Rectification of mistake - scope of rectification - no error apparent on the face of record - Held that:- There is no apparent mistake being pointed out by the applicants. All the grounds relate to the merits of the case and assessment of the evidences available on record. It is the applicant’s matter that various statements have not been examined in the correct prospective thus leading to a wrong decision. The rectification of mistake application is very limited, which covers the mistakes, which are apparent on the face of the records and do not require long drawn process of arguments by both the sides - It is well settled law that applicants cannot seek review of the order in the garb of rectification of mistake. Inasmuch as there is no apparent mistake, pointed out by the ld. Advocate, in the order, except the one relatable to the merits of the case, there are no reasons to allow the present applications - ROM Application dismissed.
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2018 (11) TMI 1281
Rectification of Mistake - typographical mistake appearing in the preamble of the said order - Held that:- The Order-in-Appeal No. DDN/EXCUS/000/APPEAL-I/12/2015-16 stands written in the preamble whereas the actual impugned order was Order-in-Appeal No. DDN/EXCUS/000/APPEAL-I/13/2015-16 - Inasmuch as the said mistake is a typographical mistake, the same is rectified and replaced with Order-in-Appeal No. DDN/EXCUS/000/APPEAL-I/13/2015-16 - ROM application allowed.
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2018 (11) TMI 1280
Rectification of mistake - Held that:- There is inadvertent error in the order by referring that the Ld. Commissioner (Appeal) which has already been referred in the case impugned order. Thus there appears to be a factual mistake, which needs to be corrected by way of ROM in this case - OM application allowed.
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2018 (11) TMI 1279
Rectification of mistake - recalling Final Order 52354/2018 dated 29.06.2018 in terms of Section 35 C (2) of Central Excise Act, 1944 read with Rule 41 of CESTAT Procedure Rules, 1982 - Held that:- The ambit of the rectification is for a very limited purpose of correcting the mistakes, which are clerical or typographical or arithmetical in nature. In addition, some mistakes, which can be classified as error apparent on record due to non-application of legal precisions or due to being non-appreciation of apparent facts, that the rectification of the order is permissible. In the present Final Order, it is the observation of the ld. Member that since the order under challenge was ex-parte that an opportunity to Department is necessary for the proper decision - no alleged error is apparent on its record. It is merely the opinion of the adjudicating authority. Hence, cannot be the subject matter of Section 35 C (2) of Central Excise Act. The mere fact that the absence of Department was not the ground of appeal also does not appear to be a sustainable ground as from the order it appears that the findings in this respect are not based on the ground of appeal, but on the basis of looking into the circumstances of the case - application dismissed.
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2018 (11) TMI 1278
Clandestine removal - Pig Iron - it was alleged that the appellant has recorded lower quantity of finished goods in the Daily Stock Account (DSA) and has clandestinely removed the final products i.e. Pig Iron without payment of duty - allegations mainly based on private records - Held that:- The entire case is based on the alleged SMS exchanged between the executives of the company. During the visit to the factory on 07.08.2008, the mobile phones of some of the executives were seized and taken away. After several months, the department on their own efforts produced listing of the purported SMS and its contents showing certain figures, which the SCN described as clandestine production and removal - That apart, the fact that the contents of the SMS were discretely ascertained is evident from the comments of Mr. Dipak Pradhan, employee handling IT issues of the assessee company in saying only “print outs taken before me”. Thus, it appears that the entire SMS listing is unverified and does not bear any authentication or signature of any authority competent to do so and is not specifically admitted by any of the executives of the company. No discrepancy has been found in the stock of finished goods or in procurement in the factory and the entire production has been recorded against serially numbered casting slips, with supporting weighment slips. It is a well settled principle that to establish clandestine removal, tangible, strict, positive, concrete, direct, circumstantial and corroborative evidences are required which must form a complete chain to rule out any preponderance of probabilities and lead to inescapable conclusion - While in the instant case allegations have been made solely on the basis of tentative private records and data and no discrepancy has been noticed in the procurement of raw materials/power or stock of raw materials/finished goods. The allegation has been raised on the basis of hypothetical and illogical input-output ratio of iron ore to pig iron at 1.233 MT, which if compared with the average ratio of comparable manufacturing units, is much lower. Ratio of 1.233 MT is practically impossible to achieve not only for NML but also for any other company in the same industry - It is an admitted position that the company had consumed during the impugned period 90722.88 MT of iron ore (on net basis). This itself leads to an impossibility that the total production of hot metal is more than iron ore consumed. This clearly indicated that the contention of the revenue is not sustainable. Demand not sustainable - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1277
Suo motu adjustment of excess credit wrongly reversed - amount paid by mistake - Held that:- The appellant has taken suo motu credit of the excess amount paid by them - before taking recredit, the appellant has intimated to the Department vide their letter dt. 29/03/2013 duly acknowledged and they have shown the same in their ER1 returns filed for the month of June 2012 and further they have also produced a CA certificate showing that the payment was an inadvertent clerical error and there is no unjust enrichment accruing to the appellant. The appellant clearly show that the excess duty paid can be suo motu adjusted and there is nothing wrong in it. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1276
Penalty u/s 11AC - Reversal of CENVAT Credit - penalty not reversed - contravention of the provisions of Rule 3 and Rule 4 of Cenvat Credit Rules, 2004 - Held that:- The Commissioner (Appeals) has invoked 11AC for imposition of equal penalty whereas there is no suppression or willful misstatement with intention to evade payment of duty. The excess credit so availed due to some clerical error which was a bona fide mistake and the same was corrected on being pointed out by the audit. The imposition of equal penalty by resorting to 11AC is not sustainable - penalty set aside - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1275
Rectification of mistake - Tribunal instead of mentioning the formula prescribed under Rule 6(3A) has mentioned “formula prescribed under Rule 6(3)” and has not specified the authority who has to quantify the same - Held that:- The formula for quantification of CENVAT Credit to be disallowed is prescribed under Rule 6(3A) and not in Rule 6(3) which is wrongly observed in the Order dated 05.04.2018 - the original authority is directed to quantify the CENVAT Credit to be disallowed on the basis of the formula prescribed under Rule 6 (3A) - ROM application allowed.
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2018 (11) TMI 1274
Classification of goods - Absorbent Cotton Wool IP, Gauze/Bandage Wool I.P, Absorbent Cotton B.P., Purified Cotton USP, Cotton Gauze Absorbent B.P., Absorbent Lint IP, Rolled Bandages, Cotton Bandages Cloth, Cotton Crepe Bandage B.P. - whether classified under Tariff Heading No. 56012110 of the first Schedule to the Central Excise Tariff Act, 1985 or otherwise - exemption under N/N. 30/2004-CE dated 09.07.2004. Held that:- Identical issue decided in the case of M/s Shanti Surgical Pvt. Ltd. & Ors. vs CCE, Kanpur & Anr. [2017 (7) TMI 50 - CESTAT ALLAHABAD], where it was held that the impugned goods would fall under Chapter Sub-heading No.5601, 5203 & Chapter 58 - Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1273
CENVAT Credit - finished goods or not - welding electrodes, Saw Flux, Saw Wire, Filler Wire and CO2 wire alongwith Flux Cored Wire - these goods were never received physically in the unit of Appellant No.1, but were cleared directly from the unit of Appellant No.2 to the customers - denial of credit on the ground that no manufacturing process taking place - principles of natural justice - time limitation - penalty. Held that:- The record about receipt of goods in the factory of Appellant No.1 alongwith the record of Appellant No.2 was well produced on record. It appears that the adjudicating authority is miserably silent about scrutinising the said record. It is, therefore, opined that the adjudicating authority has committed an error while merely relying upon the lease agreement about manufacturing setup to have been leased out to the Appellant No.2 - The factum of converting the semi-finished goods into finished one by the Appellant No.1 itself and the factum of presence of the set-up about ovenizing and packing required for converting the products into finished states with Appellant No.1 as well has miserably been ignored. Irrespective that the process of said ovenizing and packing may not amount to manufacture but the apparent and admitted fact remains is that Appellant No.1 only had paid the Excise duty while clearing the goods which were received from Appellant No.2 in semi-finished state. Once the Department has accepted the duty on goods, Cenvat Credit ought not to be denied by them irrespective the procedure is not that of the manufacture - The situation stands clarified by the Departments’ own Circular No.911/01/2010 – CX dated 14.01.2010. In the present case, the Cenvat Credit availed is ₹ 2,05,59,139/- against the Central Excise duty of ₹ 2,20,67,060/- on the goods cleared by the Appellant No.1. The duty paid stands more than the credit availed. Seen from this angle also, there is no loss to the Revenue. This has also been overlooked by the adjudicating authority below. Time limitation - intent to evade not present - penalty - Held that:- Even if, the Appellant No.1 was not doing any activity which amounts to manufacture, but he has paid the excise duty while clearing the goods from his premises and the Cenvat Credit availed by him is lesser than the amount of said duty availed, the question of evasion of tax is not sustainable - Once, there is no evasion, the intent of evasion has no existence. For the same reason, the question does not arise for the alleged wilful suppression or mis-representation of the fact - penalty not warranted and is set aside - SCN also barred by time. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (11) TMI 1272
Imposition of penalty - genuine doubt as to the product description as per the Entries in the various Schedules - assessment of goods sold by appellant - toasted bread, crunch toast, sweet toast and milk toast - Whether they are assessable under Entry 6 of the First Schedule or Entry 7 of the Third Schedule or Entry 11 of SRO 82/06, all appended to the KVAT Act; respectively taxable @ 0%, 4 % and 12.5%, at the relevant time? Held that:- In deciding the issue, we are concerned with three enactments, the KVAT Act, the Customs Tariff Act, and the Trade Marks Act. The description of the goods in one of such enactments does not at all regulate the adjudication of issue with respect to the other enactments, except where there is an item aligned to an HSN Code in the Schedule of the VAT Act, when the description would have to be understood from the description of the very same goods under the Customs Tariff Act. There is no dispute that the assessee has a brand name registered for “All kinds of breads” which brand name is also printed in the packet in which the goods are sold - if the specific product has not been included under the Certificate of Registration, issued under the Trade Marks Act, then, the mere fact that the trade name is printed in the package cannot result in the higher tax being levied on the product. The reason being that it is not a product “sold under brand name registered under the Trade Marks Act” as the recital goes in Entry 11 of SRO 82 of 2006. Bread and rusk as per the classification enabled under the Trade Marks Act are distinct products falling under the same class. So is the distinction palpable as discernible from the entries under general heading with HSN code 1905; under the Customs Tariff Act - the assessee's product to be covered under Entry 7 of the Third Schedule which deals with bakery products other than those sold under brand name registered under Trade Marks Act. We hence answer the question raised against the assessee insofar as the claim for exemption under First Schedule and against the Revenue on the claim of inclusion under SRO No. 82/2006 and declare the toasted products of the assessee to be exigible to tax under the Third Schedule. OTRev.193/2015 will stand allowed, setting aside the order in TA(VAT) No.50/2014; with the declaration as above on the question of classification raised. Penalty - Held that:- From the facts and circumstances as also by reason of the debatable issue, which has been answered by the statutory authorities in a manner distinct from the approach of this Court, we are of the opinion that there should be no penalty imposed - penalty set aside. There is no ground for imposition of penalty - The question of law is answered in favor of the assessee and against the revenue.
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2018 (11) TMI 1271
Limitation under Section 67 - proceedings initiated u/s 67 of the KVAT Act, 2003 challenged on the ground of the proceedings initiated by notice dated 28.01.2016 pursuant to an inspection conducted on 18.05.2010; being vitiated on the ground of period of limitation having expired - Held that:- In the case of M/s Acme Furniture and Interiors v. CTO [2009 (2) TMI 886 - KERALA HIGH COURT], a Division Bench of this Court had found that there is no time stipulated in the Statute for detection of offence, though there is a limitation provided for finalisation of proceedings. Their Lordships found that the limitation provided in Section 67 is for completion of proceedings, which period has to be computed from the date of detection of offence. In such circumstances, it was also held that detection of offence should be within a reasonable time from the date of inspection or the date of verification of books of accounts. The proceedings cannot be sustained - petition allowed.
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2018 (11) TMI 1270
Limitation under Section 67 - proceedings initiated u/s 67 of the KVAT Act, 2003 challenged on the ground of the proceedings initiated by notice dated 28.01.2016 pursuant to an inspection conducted on 18.05.2010; being vitiated on the ground of period of limitation having expired - Held that:- In the case of M/s Acme Furniture and Interiors v. CTO [2009 (2) TMI 886 - KERALA HIGH COURT], a Division Bench of this Court had found that there is no time stipulated in the Statute for detection of offence, though there is a limitation provided for finalisation of proceedings. Their Lordships found that the limitation provided in Section 67 is for completion of proceedings, which period has to be computed from the date of detection of offence. In such circumstances, it was also held that detection of offence should be within a reasonable time from the date of inspection or the date of verification of books of accounts. The proceedings cannot be sustained - The petitioners would have to be relegated to the statutory remedy. The petitioners would be entitled to file appeals under the statute within 30 days from the date of receipt of a certified copy of this judgment - petition disposed off.
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2018 (11) TMI 1269
Limitation under Section 67 - proceedings initiated u/s 67 of the KVAT Act, 2003 challenged on the ground of the proceedings initiated by notice dated 28.01.2016 pursuant to an inspection conducted on 18.05.2010; being vitiated on the ground of period of limitation having expired - Held that:- In the case of M/s Acme Furniture and Interiors v. CTO [2009 (2) TMI 886 - KERALA HIGH COURT], a Division Bench of this Court had found that there is no time stipulated in the Statute for detection of offence, though there is a limitation provided for finalisation of proceedings. Their Lordships found that the limitation provided in Section 67 is for completion of proceedings, which period has to be computed from the date of detection of offence. In such circumstances, it was also held that detection of offence should be within a reasonable time from the date of inspection or the date of verification of books of accounts. The proceedings cannot be sustained - petition allowed.
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2018 (11) TMI 1268
Limitation prescribed under the Kerala General Sales Tax Act, 1963 for completion of penalty proceedings, under Section 45A and Section 67 of the respective enactments - Section 67 of the KVAT Act. Held that:- Obviously here, the notice was first issued long after the defalcation alleged by the DRI, was brought to the notice of the CTD. But the proceedings initiated by the DRI was pending and the CTD waited for the final result - If the notice has been delayed, as in the present case, where the proceedings were initiated by the DRI in 2006 and the same was concluded only in the year 2011 after which the CTD took out proceedings under Section 45A of the KGST Act and Section 67 of the KVAT Act, then necessarily it would have to be decided as to whether the offence alleged by the CTD was one dependent only on the proceedings initiated by the DRI or also on the order of the Commissioner of Customs. There is no question of limitation arising, since the proceedings were completed within three years from the date of the order of the Commissioner of Customs itself, the notice having been issued in the year 2012, which is for reason of the receipt of the order of 2011, being in 2012 - the respondent-assessee is directed to file an appeal from the impugned orders within a period of thirty days from the date of receipt of a certified copy of this judgment. Appeal allowed in part.
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Indian Laws
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2018 (11) TMI 1352
Import of Anode grade raw pet coke - Held that:- Calcined Pet Coke (CPC) (domestic as well as imported) can be used as raw-material for anode making in the Aluminium industry with the revised BIS specifications - the imported raw-material cannot exceed 0.5 MT per annum in total - application disposed off.
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2018 (11) TMI 1302
Dishonor of Cheque - Closure of proceedings - Section 138 of NI Act - whether a compromise, at this stage, can be permitted to be effected between the parties where the petitioner has been charged under Section 138 of the Act? Held that:- This Court after being satisfied that the cheque amount with the assessed cost and interest has been paid, can close the proceedings even in absence of the complainant. Since, the petitioner has paid the entire compensation amount, therefore, quashing of the complaint initiated at the instance of complainant/respondent No.1 would be a step towards securing the ends of justice and to prevent abuse of process of the Court, especially, when the petitioner is facing pangs and suffered agony of protracted trial and thereafter appeal/revision for the last seven years and has paid the entire compensation amount. This is a fit case to exercise the powers not only under Sections 397, 401 and Section 482 of the Code, but even under Section 147 of the Act - the impugned substantive sentence of simple imprisonment imposed in this case shall stand modified and substituted in lieu of the compensation amount of ₹ 5,50,000/- that stands already paid/deposited by the petitioner - petition disposed off.
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2018 (11) TMI 1301
Liability on account of dishonor of Cheque - contention of the petitioner has been that the cheque in question does not bear his signatures and that the signatory thereof is his wife Taruna Kingrani and that the account on which the cheque had been been drawn belongs to M/s Thought Work Events which is the sole proprietorship concern of his wife and that thus the complaint against the petitioner cannot be sustained and is liable to be quashed. Held that:- Reliance placed in the case of Hon’ble Supreme Court in Aparna A. Shah v. Sheth Developers private Limited and Another [2013 (7) TMI 718 - SUPREME COURT], wherein it has been categorically observed to the effect: that under Section 138 of the Negotiable Instruments Act, 1881 (as amended) it is only the drawer of the Cheque that can be prosecuted and that the penal provisions have to be strictly construed and no one can be held criminally liable for an act of another. Thus, to attract a penal action under Section 138 of the Negotiable Instruments Act, 1881 (as amended) it is the drawer of the cheque which has been dishonoured who is to be made accountable under Section 142 of the Seciton138 Negotiable Instrument Act, 1881 (as amended) and not someone else - in present case, in view of the re-verification report of the Bank of Baroda verifying the signatures of the account holder thereof as visible on annexure P-6 as being of Ms. Taruna Kingrani and there being no signatures of the petitioner on the same it is apparent that the proceedings under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 (as amended) in Complaint No. 04/4R/16 to that extent cannot be continued. The summoning order dated 29.5.2015 as had been issued by the then Metropolitan Magistrate Seciton 138 Negotiable Instruments Act, bearing No. 17733/15 and now bearing No.4/4R/2016 as pending in the Ld. Court of MM(NW) cannot continue and is thus set aside - petition allowed - decided in favor of petitioner.
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2018 (11) TMI 1300
Dismissal of the complaint in default by learned Magistrate - Held that:- Keeping in view the effect of dismissal of complaint under Section 138 of the NI Act, the apex Court in case titled as Associated Cement Co. Ltd. versus Keshvanand, [1997 (12) TMI 629 - SUPREME COURT], after discussing the object and scope of Section 256 Cr.P.C, has held that, though, the Section affords protection to an accused against dilatory tactics on the part of the complainant, but, at the same time, it does not mean that if the complainant is absent, the Court has duty to acquit the accused in invitum. It has further been held in the said judgment that the discretion under Section 256 Cr.P.C. must be exercised judicially and fairly without impairing the cause of administration of criminal justice. Keeping in view the effect of dismissal in default, the Magistrate is supposed to exercise his discretion with care and caution clearly mentioning in the order that there was no reason for him to think it proper to adjourn the hearing of the case to some other day. In present case after leading preliminary evidence by the complainant, the case was transferred to Joginder Nagar, wherefrom it was again sent back to Mandi and the case was tossing between Courts and after receiving it at Mandi, notice was issued to complainant for his presence - the learned Magistrate was not justified in dismissing the complaint in default for single absence of the complainant coupled with failure of his counsel to attend the date. In view of the fact that case was transferred from Mandi to Jogindernagar and again re-transferred from Jogindernagar to Mandi, learned Magistrate instead of dismissing the complaint in default should have adjourned the case at least once for a future date, particularly keeping in view the effect of dismissal of the same in default. Dismissal of complaint on first absence of complainant is improper. In normal circumstances, no complainant will be disinterested in pursuing his complaint without any reason. It was a fit case for the Magistrate to exercise his discretion to adjourn the case for a subsequent date. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1299
Validity of recovery proceedings initiated by bank - waiver of pre-deposit - Section 21 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - altered cheques - petitioners were not the true owners - principles of unjust enrichment - Held that:- A collecting bank, in order to avail of the statutory protection of Section 131 of the Act, must show and establish that it had acted in good faith and no negligence can be attributed to it at the time of “receiving” the payment. The test to determine and decide whether the bank had acted in good faith and with due diligence, depends upon general practice of the banks. In some cases it could extend to opening of accounts in which the cheque was deposited. However, the bank is not required to subject the cheque to minute and microscopic examination. On the face of it, the instrument should give rise to suspicion. Lastly, contributory negligence it has been observed is of no consequence. Unjust enrichment - Held that:- The principle of unjust enrichment requires that the defendant has been enriched by the receipt of the benefit and that the enrichment is at the expense of the plaintiff, and lastly, that retention of enrichment is unjust. In the present case, there is no doubt that the payment was made to the petitioners under a mistake of fact, that it was due when actually it was not due. The respondent-bank did not know that the cheque was altered. The petitioners have certainly been enriched at the expense of the respondent-bank and the retention of this enrichment is unjust. The payment in the present case was made by mistake due to fraud. Since respondent-bank was merely a collecting agent, what is to be considered in such a case is whether there was any negligence on its part in making the payment and what was the cause of delay, and legal effect of the delay. The circumstance or reason which could have caused any doubt in the mind of a prudent bank to initiate inquiries, rather the facts of the case demonstrate that the respondent-bank and the petitioners were in the same position. The mere fact that the collecting bank has made a payment to its customer who deposited the tampered cheque does not raise an estoppel against the paying bank if later on it is found that the cheque is forged. The respondent-bank was not called upon to be overtly suspicious. The standard of care expected from a banker in collecting the cheque did not require him to subject the cheque to a minute and microscopic examination. The collecting bank has its remedies against its clients for indemnification by asking them to return the money. In turn the clients, i.e., the petitioners have remedies against the drawer of the cheque or her customer to recover the amount from them as per law. Petition dismissed.
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