TMI Tax Updates - e-Newsletter
November 5, 2022

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. PROVISIONAL ATTACHMENT OF BANK ACCOUNTS UNDER GST LAWS

   By: DR.MARIAPPAN GOVINDARAJAN

2. SUMMONS PROCEEDINGS UNDER GST LAW

   By: Dr. Sanjiv Agarwal

News

1. Scheme for Financial Support for Project Development Expenses of PPP Projects – ‘IIPDF Scheme’ (India Infrastructure Project Development Fund Scheme) Notified on 03.11.2022

Circulars / Instructions / Orders

IBC

1. IBBI/IPA/54/2022 - dated 2-11-2022

Annual Compliance Certificate for Insolvency Professional Agencies

Customs

2. 23/2022 - dated 3-11-2022

Faceless Assessment - Anonymized Escalation Mechanism & extension of Standard Examination Orders through RMS (Phase 1, Part 2)

Highlights / Catch Notes

GST

• Court Rules 18% Tax Rate on Alcoholic Liquor Manufacture; Not Classified as Food Products.

  Case-Laws - HC : Classification of goods - rate of tax - Food/food products or not - alcoholic liquor for human consumption - Since the manufacture by the petitioner relates to alcohol for human consumption by way of job work, the petitioner is liable to pay tax at 18%. - HC
  Visit to Get Source

  ---

• Liquidated damages for delay in commissioning not subject to GST, rules Appellate Authority for Advance Ruling.

  Case-Laws - AAAR : Levy of GST - Supply or not - liquidated damages recoverable by the applicant from Belectric India on account of delay in commissioning - The amount recoverable by the applicant in the form of liquidated damages does not qualify as supply, as seen from the agreement. - Not liable to GST - AAAR
  Visit to Get Source

  ---

• Appellant's Advance Ruling Voided Due to Fraud and Misdeclaration; GAAR Legally Invokes Section 104, CGST Act 2017.

  Case-Laws - AAAR : Scope of advance ruling - AAR obtained the ruling by fraud or suppression of facts - misdeclaration of facts - search proceedings were initiated - appellant was also issued with GST DRC-01A - It was encumbent upon the appellant while making application for Advance Ruling, to have declared the true and complete facts, given the provisions of the GST law, in particular Sections 98(2) and 104 of the CGST Act, 2017. - The invocation of Section 104 of CGST Act by the GAAR and declaring advance ruling dated 20.01.2021 void ab initio is legal - AAAR
  Visit to Get Source

  ---

• Sub-contractor's work on NH-34 project not classified as composite supply of works contract under GST rules.

  Case-Laws - AAR : Classification of supply - rate of GST - Composite supply - The activities being carried out by the applicant as a sub-contractor for shifting of electrical utilities for construction of ‘Proposed 4-Laning of Barasat-Krishnagar Section of NH-34 Project cannot be regarded as composite supply of works contract by way of construction of road - AAR
  Visit to Get Source

  ---

• Geomembranes Classified as Textile Articles Under GST Due to Compliance with Section Note XI(1)(g) and Chapter 59 Note 7(1)(a.

  Case-Laws - AAR : Classification of goods - Geomembranes - In view of technical uses of Geomembrane, Geomembrane passing the test of Section note XI( 1 )(g) to Section XI, Geomembrane satisfying the test of Chapter 59 Note 7(1 )(a); it is concluded that 'Geomembrane' is a textile article. - AAR
  Visit to Get Source

  ---

Income Tax

• ITAT Rules Addition u/s 68 Unjustified Due to Lack of Evidence in Assessee's Case; High Court Upholds Decision.

  Case-Laws - HC : Addition u/s 68 - Assessee is not named in MOU, either as a party or as a witness. No cash was found or seized during the search conducted on the premises owned by the Assessee. ITAT held that the second statement recorded on 11th March, 2016, is not corroborated by any evidence or material on record and therefore, the AO or CIT(A) could not have relied upon the second statement. - There is no infirmity in the impugned order of the ITAT deleting the addition - HC
  Visit to Get Source

  ---

• Taxpayer Penalized 30% for Undisclosed Income; Justification u/s 271AAB Lacks Substantial Reasoning.

  Case-Laws - AT : Penalty levied by the AO u/s. 271AAB r.w.s. 274 - levy penalty of 30% on undisclosed income - the reasons given by the AO to levy 30% penalty on undisclosed income is not backed by cogent reasons, because clause (c) of section 271AAB is applicable, if assessee does not admit undisclosed income in the statement recorded u/s. 132(4) and also not declared said income in the return of income furnished within the specified period and pays the tax altogether with interest, if any, in respect of the undisclosed income. - AT
  Visit to Get Source

  ---

• Transfer Pricing Adjustment for IT and IT-enabled Services Receivables Found Unwarranted; Assessee's Margin at Arm's Length.

  Case-Laws - AT : TP Adjustment - no merit in the adjustment made by the TPO/AO on account of outstanding receivables in respect of transaction pertaining to provision of IT and IT enabled services, when margin of assessee was found to be at arm’s length vis-à-vis working capital adjusted margin of comparables. - AT
  Visit to Get Source

  ---

• Transfer Pricing Officer's stance on averaging costs under CUP method contradicts Section 92C(2) & Rule 10B(1)(a) of IT Rules.

  Case-Laws - AT : Arm’s length price adjustment - CIT(A) held that observations of the TPO’s that averaging of cost of purchases was not permissible under CUP method is in contradiction to the provision contained in Section 92C(2) read with Rule 10B(1)(a) of the Income Tax Rules, 1962 wherein it has been explicitly provided that where more than one uncontrolled transactions or prices are available then the ALP shall be the arithmetic mean of such prices. - AT
  Visit to Get Source

  ---

• Court Rules Training Activity Commercial, Denies Tax Exemption u/s 11 of Income Tax Act.

  Case-Laws - AT : Exemption u/s 11 - assessee was in some way providing trainers alone and not using its own infrastructure to give any sort of training of workmanship at its premises and resources. Merely because at the end of training of the recruit they were to be given a certificate by the assessee does not change the nature of its activity from commercial to charitable - AT
  Visit to Get Source

  ---

• Court Upholds Section 68 Application for Unexplained Cash Credits in Bogus Share Capital Case Involving Shell Companies.

  Case-Laws - AT : Addition u/s 68 - If the assessee is unable to explain the alleged cash credit and consistent escaped, the provisions of section 68 of the Act are rightly invoked by ld.AO. Thus, we are of the view that the assessee has routed its unaccounted income in the books of account in the form of share capital by arranging bogus share capital and share premium through accommodation entry provider and shell companies. - AT
  Visit to Get Source

  ---

• Tax Error in Partner Remuneration Deduction u/s 44AD Sent Back for Further Review; Rectification Suggested via Section 154.

  Case-Laws - AT : Rectification of the mistake committed in the return of income - Deduction of remuneration partner from the presumptive income - It is not the claim of the Department that the assessee was not eligible to be assessed to tax under section 44AD of the Act or that the interest and remuneration paid to partners did not find support from the terms of the partnership deed, however, the Ld. DR has suggested that the assessee is open to pursuing alternate remedy under section 154 of the Act. - matter restored back - AT
  Visit to Get Source

  ---

• Secondment charges and related expenses exempt from tax deduction u/s 195; disallowance u/s 40(a)(i) not justified.

  Case-Laws - AT : TDS u/s 195 - Secondment charges and reimbursement - the reimbursement towards secondment charges and reimbursement of expenses are not liable for tax deduction u/s. 195 and therefore the disallowance made u/s. 40(a)(i) is not warranted on this count. - AT
  Visit to Get Source

  ---

• Taxpayer Wins Depreciation Deduction Appeal After Clerical Error in ITR u/s 32 Corrected.

  Case-Laws - AT : Non-granting of deduction in respect of depreciation u/s.32 - correction in the ITR - the CIT(A)’s claim that the assessee the assessee has filed a revised return belatedly and hence not eligible to claim depreciation is factually not correct. The fact that depreciation is correctly fed in the “Part A - P&L" and also in the relevant clause of Tax Audit supports the contention that the depreciation is unintentionally omitted to be fed into while filing the ITR and that it is a clerical error. - Claim allowed - AT
  Visit to Get Source

  ---

• DRP Directs TPO to Reassess Comparable Entities in Transfer Pricing Case; AO Cannot Amend Final Order.

  Case-Laws - AT : TP adjustment - DRP gave clear directions to the TPO to re-examine the inclusion of comparable - the jurisdictional AO has become functus officio once the final assessment order is passed and that there is no authority for him to pass any order modifying the final assessment order. - AT
  Visit to Get Source

  ---

• Section 115JB: Debenture Redemption Reserve Adjustment Validated in MAT Computation; Not a Deductible Charge Against Profits.

  Case-Laws - AT : MAT computation - Adjustments u/s 115JB - reduction of debenture redemption reserve - the liability, for the discharge of which the profits are being set aside, is in the capital field, so that neither the liability (on its assumption) nor the profit set aside (for its discharge) could be considered as a charge against the profits. This is precisely the reason that the same is not either claimed or allowed as deduction in the computation of income under the regular provisions of the Act. - The adjustment made by the assessee in the computation of book profit undersection115JB gets validated. - AT
  Visit to Get Source

  ---

• Taxpayer's Flat Transfer Classified as Income u/s 56(2)(vii); Commissioner Advocates for Indexation and Section 54 Benefits.

  Case-Laws - AT : Addition u/s 56(2)(vii) - A.O has treated the shifting of flat as transfer and booked the difference in stamp duty valuation and the prices paid by the assessee as income u/s 56 - When the assessee has booked the flat that property was not in existing and it was a property to be constructed in future time. CIT(A) had explained in detail that if such transaction are treated as transfer by notionally assigning value then the benefit of indexation and benefit of Sec. 54 etc. to be given to the assessee. - AT
  Visit to Get Source

  ---

Customs

• Customs Duty Demand Dismissed for Goods Stored in Bonded Warehouse u/s 58 of Customs Act 1962.

  Case-Laws - AT : Demand of customs duty - storage of goods outside the bonded warehouse - The letter of licence issuing authority also clearly state that Warehouse -2 situated on the additional land of 17,415 sq. mtr. stands included in the PWB of respondent with effect from 06.02.2009 under Section 58 of the Customs Act 1962. Since the disputed goods were found within the registered and bonded PBW on the date of search, Ld. Commissioner correctly dropped the demand. - AT
  Visit to Get Source

  ---

• Customs Tariff Heading 98.03: Passenger Baggage and Personal Imports Require Individual Assessment for Classification.

  Case-Laws - AT : Valuation of imported goods - When goods are imported as baggage by a passenger, they are classified under Customs Tariff heading 98.03 regardless of what the individual items of baggage are. Similarly, imports for personal use and import of stores in ships and aircrafts are classified under a single heading. The present import is not covered under any of these exceptions and therefore, it is immaterial whether the goods are imported under the same contract or not. Similarly, it is immaterial if the goods are imported into the country under the same Airway Bill or not. Goods must be assessed individually on merits. - AT
  Visit to Get Source

  ---

Corporate Law

• Court Upholds Bank's Rejection of Nomination for Directorship Under Companies Act, Section 160; Deems Issue a Private Concern.

  Case-Laws - HC : Rejection of the nomination of the writ petitioners for the directorship of the appellant under Section 160 of the Companies Act, 2013 by the appellant bank - the issue raised in the writ petition has no public element involved, and the issue of rejection of nomination has nothing to do with the public duty and public function if any discharged by the Bank with respect to the other commercial and financial banking activities of the Bank concerning the public. - HC
  Visit to Get Source

  ---

Indian Laws

• Court Upholds Legality of Simultaneous Cognizance and Process Issuance in Dishonored Cheque Case, No Procedural Error Found.

  Case-Laws - HC : Dishonor of Cheque - recording the sworn statement - Merely in the first paragraph, the learned Magistrate has not stated cognizance was not taken and later in the last paragraph, on the same day, at the same time by a single order it has taken cognizance and issued the process. Therefore, it cannot be said that he has not taken the cognizance thereafter posted the matter for recording statement but both together has been done by learned Magistrate. Therefore, there is no illegality in taking cognizance and issuing process to the accused-petitioner for summoning him to appear before the Court. - HC
  Visit to Get Source

  ---

IBC

• Adjudicating Authority Ordered to Investigate Transactions u/ss 43, 45, 50, and 66 of IBC Due to Auditor's Inconclusiveness.

  Case-Laws - AT : CIRP - Fraudulent transactions - Transaction Auditor has admitted inability to comment on the transactions falling under Sections 43, 45 and 50 of IBC and in respect of fraudulent transactions under Section 66 of IBC also did not give a conclusive opinion and opined need of further investigation. - Adjudicating Authority directed to take appropriate steps to conduct a detailed and in-depth investigation of the transactions in dispute to arrive at a conclusive opinion - AT
  Visit to Get Source

  ---

• Corporate Insolvency Process Begins Due to Cheque Dishonor and Loan Acknowledgment; No Default Date in Agreement.

  Case-Laws - AT : Initiation of CIRP - admission of debt - dishonouring of the three cheques with the comments “Account Closed” - While no date of default is mentioned in the promissory note or any other document such loan agreement has been produced, we are of the view that corporate debtor’s letter dated 7.6.2016 states very clearly the existence of the loan and also the fact that on depositing the cheque with the bank of Respondent No. 2, the same will definitely be honoured and the dishonouring of cheques will be taken as default for which the financial creditor can take legal action. - AT
  Visit to Get Source

  ---

• Court Reviews If Decree Holder Is a Financial Creditor Under Insolvency Code; Loan Agreements Misinterpreted by Authority.

  Case-Laws - AT : CIRP - Financial Creditor - decree holder come within the definition of Financial Creditor or not - The Adjudicating Authority has erred grossly by not considering that the two loan agreements and the features therein are in fact relating to financial debts which are due and payable to the Appellant by the Respondent. - AT
  Visit to Get Source

  ---

PMLA

• Court Denies Bail to Petitioner in Money Laundering Case Due to Non-Disclosure of Investments, Lack of Transparency.

  Case-Laws - HC : Seeking grant of bail - Money Laundering - predicate offence - When the petitioner has not disclosed about the investment, it is for the ED officials to find out any other method to unearth the properties and attach the same. Therefore, when the petitioner himself has not properly explained the investment made by him and is reluctant in giving information, the ED shall make an endeavour to find out truth in various other modes known to law. Hence, the petitioner cannot be released on bail at this stage. - HC
  Visit to Get Source

  ---

Service Tax

• Cricket Match Organization by BCCI Not Subject to Service Tax, Subsidy Deemed Non-Taxable Under Event Management Services.

  Case-Laws - AT : Levy of service tax - Event Management services or not - respondent was conducting Cricket Matches as per the direction of BCCI - the subsidy received from BCCI was held to be non-taxable. - AT
  Visit to Get Source

  ---

• Refund Denial for Penalty Examined; Unjust Enrichment Principles Inapplicable; Section 35 FF Allows Refund on Successful Appeal.

  Case-Laws - AT : Rejection of refund of penalty deposited - applicability of principles of unjust enrichment - the provisions of unjust enrichment are not attracted as the burden of penalty is borne by the appellant and has not been passed on to their service receivers. Moreover, it is found that the refund arising pursuant to being successful in appeal, is available to an assessee under the provisions of Section 35 FF of the Central Excise Act. - AT
  Visit to Get Source

  ---

• Re-evaluation Ordered: No Show Cause Notice for Service Tax on Ocean Freight; No Suppression of Facts Charge.

  Case-Laws - AT : Cash Refund of CENVAT Credit - Ocean Freight - Though the appellant have paid the Service Tax on Ocean freight on the instruction of audit, but no Show Cause Notice was issued for demand of such Service Tax. In absence of any proceedings with respect to the demand of Service Tax, the charge of suppression of fact does not exist - Matter restored for re-adjudicating the issue of levy and refund afresh - AT
  Visit to Get Source

  ---

Central Excise

• Court Rules No Justification for Extended Limitation Period in Excise Case; Department Knew of Issues Since 2013 Audit.

  Case-Laws - AT : Suppression of facts or not - Extended period of limitation - The evidences on record do not show that the appellant had acted otherwise than in a bona fide manner - The issue of purported illegal utilization of credit had come to the Department’s knowledge as far back as in the year 2013 while conducting audit - there are no reason to sustain the invocation of extended period of limitation against the appellant. - AT
  Visit to Get Source

  ---

VAT

• Tribunal Confirms Assessment Order Validity; Assessee Fails to Prove Loan Transaction with Contract or Agreement.

  Case-Laws - HC : Validity of assessment order - sale on loan transaction - the Assesee has neither produced any contract nor the agreement to prove the contention that there was a loan transaction. The Tribunal being the ultimate fact finding authority, finding arrived by it cannot be interfered. - HC
  Visit to Get Source

  ---

• Court Orders Fair Hearing for Petitioner Due to Unclear Assessment Order Details on Dealer's Name and Goods Value.

  Case-Laws - HC : Validity of assessment order - Though the order contains a voluminous list of the details of the dealer's name and value of the goods, the concluding portion of the order is very cryptic - the petitioner should be given an opportunity to present his case before the third respondent after affording an opportunity of hearing. - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (11) TMI 212
  Seeking enlargement on bail - allegation of raising false claims of input tax credit through his fictitious firm M/s Swastik Trader - HELD THAT:- In view the fact that the maximum punishment that can be imposed upon the applicant in case of his conviction is upto five years and he is languishing in judicial custody since 26.2.2022, the applicant is entitled to be released on bail pending conclusion of the trial. The bail application is accordingly allowed, subject to condiions imposed.

  ---

• 2022 (11) TMI 211
  Revocation of cancellation of petitioners GSTN registration - the case of Respondent is that it is not open to the appellate authority to pass any orders disregarding the limitations prescribed therein - HELD THAT:- There is a consistent view taken in these matters. The revenue has not challenged any of such orders of this Court and hence the orders have attained finality. In view of the fact that this Court has been consistently following the directions issued in the case of TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR [ 2022 (2) TMI 933 - MADRAS HIGH COURT ] where it was held that The petitioners are directed to file their returns for the period prior to the cancellation of registration, if such returns have not been already filed, together with tax defaulted which has not been paid prior to cancellation along with interest for such belated payment of tax and fine and fee fixed for belated filing of returns for the defaulted period under the provisions of the Act, within a period of forty five (45) days from the date of receipt of a copy of this order, if it has not been already paid. The Revenue/Department has also accepted the said view as evident from the fact that no appeal has been filed in any of the matters, this Court intends to follow the above order of this Court - this Court is of the considered opinion that the benefit extended by this Court in the earlier orders referred to in Suguna Cutpiece Centre s case may be extended to the Petitioner. Petition disposed off.

  ---

• 2022 (11) TMI 210
  Classification of goods - rate of tax - Food/food products or not - alcoholic liquor for human consumption - argument of the learned counsel for the petitioner appears to be that since liquor also falls within the category of Food and food products under Chapter 22, as it was sought to be inserted at serial No.26 after clause e , the rate of tax payable is only 5%. Whether imposing tax at 18% for the job work done in relation to manufacture of liquor for human consumption at 18% is prospective in operation? HELD THAT:- It is an admitted fact that there is no definition of food and food products under the Act but at the same time, whatever consumed by human beings cannot be construed as food and food products for the purpose of exemption under G.S.T. In COLLECTOR OF CENTRAL EXCISE VERSUS PARLE EXPORTS (P) LTD. [ 1988 (11) TMI 108 - SUPREME COURT] , the Hon ble Supreme Court held that it will never be the intention of legislature to exempt expensive items like alcoholic liquor under the category of food and food products though the same is for human consumption. While dealing with the meaning of the word food products or food beverages , the Hon ble Supreme Court, in Parle Exports case, observed that there is no direct evidence, as such, as to how in commercial parlance, unlike in ordinary parlance, non-alcoholic beverage bases are treated or whether they are treated as food products or food preparations. The purpose of exemption is to encourage food production and also give boost to the production of goods in common use and need. After all, the purpose of exemption is to help production of food and food preparations at cheaper price and also help production of items which are in common use and need. Notification No.6/2021, dated 30.09.2021, published in the Gazette on 30.09.2021 itself incorporates services by way of job work in relation to manufacture of alcoholic liquor for human consumption as item No.(ica) in Column No.3 of Serial No.26 and the rate of tax is mentioned @ 9% (i.e., 9%+9%=18%). Since the manufacture by the petitioner relates to alcohol for human consumption by way of job work, the petitioner is liable to pay tax at 18%. Whether the petitioner is liable to pay tax at 18% with prospective or retrospective effect? - HELD THAT:- The petitioner is liable to pay tax at the rate of 18% in terms of Notification No.6/2021, dated 30.09.2021. Apart from that, it is also to be noticed that at no point of time, any exemption was specifically granted to alcoholic liquor for human consumption . Neither the notification nor the items mentioned in Chapters 1 to 22 spell out clearly that alcoholic liquor for human consumption as food or food product. The petitioner, on its own, has been claiming exemption, which lead to issuance of notification No.6/2021. Though the same was published in Gazette on 30.09.2021, but this being clarificatory in nature, it has to be retrospective in operation. In view of law laid down by Hon ble Supreme Court and as the notification issued herein being of clarificatory in nature it is retrospective in operation. Petition dismissed.

  ---

• 2022 (11) TMI 209
  Levy of GST - Supply or not - liquidated damages recoverable by the applicant from Belectric India on account of delay in commissioning - time of supply when liability to pay GST is triggered - HELD THAT:- The CBIC has issued Circular No. 178/10/2022-GSTdated:3.8.2022 related to GST applicability on liquidated damages. As per para 7.1.6 of the said circular, it was, interalia, observed that when principal supply is exempt, the ancillary activities to such principal supply would not get attracted to GST - Since in the present case, the applicant s principal supply is production and distribution of electricity, which is exempt from payment of GST, the liquidated damages received by the applicant towards such supply need to be considered as flow of money without having implication of GST payment. As per the circular where the amount paid as liquidated damages is an amount paid only to compensate for injury, loss or damage suffered by the aggrieved party due to breach of the contract and there is no agreement, express or implied, by the aggrieved party receiving the liquidated damages, to do or abstain from doing anything for the party paying the liquidated damages, in such cases liquidated damages are mere a flow of money from the party who causes breach of the contract to the party who suffers loss or damage due to such breach. Such payments do not constitute consideration for a supply and are not taxable. Appeal disposed off.

  ---

• 2022 (11) TMI 208
  Scope of advance ruling - AAR obtained the ruling by fraud or suppression of facts - misdeclaration of facts - Exemption from GST - Healthcare services - Composite Supply or not - search proceedings initiated by Gujarat State Tax authorities before the appellant applied for advance ruling - appellant was also issued with GST DRC-01A by the state tax authorities for payment of GST ascertained along with applicable interest and penalty. HELD THAT:- The appellant in their application for advance ruling made before the GAAR had at Para 17 of Form GST ARA-01 had ticked on both the options thereby declaring that the question raised in the application is not already pending in any proceedings in the applicant s case under any of the provisions of the Act and not already decided in any proceedings in the applicant s case under any of the provisions of the Act. The appellant was aware of the fact that investigations/proceedings were initiated against them by the Gujarat State Tax department and further three GST DRC-01A Part A all dated 11.02.2020 were also issued by the said department. The questions raised in the Advance Ruling application dated 02.12.2020 and the issue pending in the referred investigation and the proceedings initiated are the same - There can be no doubt that the appellant had indeed not declared/ mis-declared the fact of initiation of proceedings clearly evidenced by GST DRC-01A Part A issued in this case and therefore this is also covered under the scope of the term suppression as defined above. It was encumbent upon the appellant while making application for Advance Ruling, to have declared the true and complete facts, given the provisions of the GST law, in particular Sections 98(2) and 104 of the CGST Act, 2017. The invocation of Section 104 of CGST Act by the GAAR and declaring advance ruling dated 20.01.2021 void ab initio is legal - appeal dismissed.

  ---

• 2022 (11) TMI 207
  Classification of supply - rate of GST - Composite supply - works contract services related to modification/construction, renovation maintenance of roads highway projects and works connected with and incidental thereto - does the activity carried out by the applicant falls under Heading 9954: Entry No. 3(iv)(a) of Notification No. 11/2017-CT(R) and liable to tax @ 12%? - HELD THAT:- In the instant case, contract for construction of National Highway pertaining to Nadia District in the state of West Bengal has been awarded to M/s KCC Buildcon Private Limited on Engineering, Procurement, Construction (EPC) mode. The main contractor i.e., M/s KCC Buildcon Private Limited thereafter, has entered into a sub-contract with the applicant for shifting of electrical utilities in respect of the said project. The applicant, therefore, has been awarded a sub-contract from the main contractor for shifting of electrical utilities which requires removing of old materials from the project site along with erection of materials/lines. The applicant thus has been awarded to carry out a specific part of the work as specified in the agreement made between NHAI and M/s KCC Buildcon Private Limited. From the documents produced by the applicant, it is noticed that all the provisions of Articles 9.0 of EPC Agreement, Letter of Award dated 15th October, 2019 and relevant clauses of scope of work mentioned in the EPC Agreement shall apply on back to back basis to the applicant. In the said article, as it is found, that the contractor shall undertake the work of shifting of any utility (including electric lines, water pipes, gas pipelines and telephone cables) to an appropriate location or alignment and the cost of such shifting, as per estimates prepared by the entity owning the utility and approved by the Authority, shall be reimbursed by the Authority to the contractor. In the instant case, the applicant has entered into the agreement with M/s KCC Buildcon Pvt Ltd i.e., the main contractor for shifting of electrical utilities and for this work, the main contractor is liable to pay the consideration to the applicant. So, in terms of sub-clause (a) of clause 93 of section 2, there can be no dispute that the applicant is supplying the services to M/s KCC Buildcon Pvt Ltd and not to NHAI. Whether the work of such shifting of electrical utilities can be regarded as services provided by way of construction of road or not? - HELD THAT:- Admittedly the Scope of Project in respect of the main contractor means and includes construction of Project Highway which demands shifting of obstructing utilities as and where required and for that purpose, such shifting work can be considered as an ancillary to the main work. However, when the sub-contractor, on being awarded, provides services of shifting of electrical utilities only, can it be said that the sub-contractor is supplying services by way of construction of road - in the instant case, the services provided by the applicant, for its very limited scope towards shifting of electrical utilities, cannot be regarded as supply by way of construction of road. The terms and condition of the agreement made between NHAI and the contractor stipulates that the cost of such shifting shall be reimbursed by the Authority to the Contractor which also indicates the independent nature of the work. In the case of Gaurish Sharma [ 2020 (5) TMI 412 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN] , the Rajasthan AAR has observed that the proposed activity carried out by the applicant is of shifting/erection of 11 KV LT lines only and the same cannot be categorised as construction of road as classified under Entry number 3(iv)(a) of the Notification No. 11/2017-CT (Rate) dated 28-6-2017, as amended. The AAR also observed that since such cost of the aforesaid activity will be borne by the Authority or by the entity owning such utility, therefore such payment of above mentioned activity is not the part of the main contract i.e. construction of road as awarded to main contractor by NHAI. Thus, there establish no nexus between the main contract awarded for construction of road by the NHAI and the work proposed to be undertaken by the applicant. The activities carried out by the applicant in the instant case is identical with the case of Gaurish Sharma before the Rajasthan AAR. Further, providing services of shifting of electrical utilities only cannot be regarded as services by way of construction of road - the work being undertaken by the applicant fails to get covered under serial number 3(iv)(a) of the Notification No. 11/2017-Central Tax (Rate) dated 28-6-2017, as amended.

  ---

• 2022 (11) TMI 206
  Classification of goods - Geomembranes - whether Geomembranes merits classification under Heading 5911, Sub Heading 59111000 or Sub Heading 59119090, as Textile products, coated, covered or laminated with plastic, used for technical purposes? - HELD THAT:- The width of such tapes/strips is below 5 mm, and they are wound on metal pipes bobbin. These tapes/strips of below 5 mm are then loaded on circular looms or flat looms and by employing weft and warp method of weaving, woven fabrics are produced - Rolls of uncoated fabrics loaded on extrusion lamination machine are drawn for feeding into the laminating unit. Mix of Low Density Polythene (LDPE), LLDPE and colour/black master batch is fed into the extruder through a Hopper, and melted by applying heat and friction, for forming a thin film in a molten state. Uncoated fabric is thus coated /laminated on one side by this molten mix, and passed over a chill roll containing chilled water. Edges of coated/laminated fabrics are trimmed and then wound on steel pipes on a winder. Same way, the other side of the fabric is also coated /laminated to form a waterproof fabric. For increasing thickness of such fabric, one side coated/laminated fabrics are sandwiched laminated with a film and then laminated again with one more layer of fabric to form a coated/laminated fabric of higher thickness. Thereafter overlap sealing is done to increase the width of the coated/laminated fabric, and they are cut in required length to obtain required size of Geomembranes. Woven Fabrics from HDPE Strips and Tapes of less than 5 mm of Heading 5404 shall be covered under Heading 5407 20 of the HSN. The above Woven Fabric is subjected to sandwich lamination of plastics and brings into existence a new product viz. Geomembranes pond lining fabrics. The said Geomembranes pond lining fabrics are supplied in piece form or are in cut to length as per the specification of customer. In view of technical uses of Geomembrane, Geomembrane passing the test of Section note XI( 1 )(g) to Section XI, Geomembrane satisfying the test of Chapter 59 Note 7(1 )(a); it is concluded that Geomembrane is a textile article. The view that Geomembrane is a textile article is in compliance to the Hon ble Apex Court view held in PORRITTS SPENCER (ASIA) LTD. VERSUS STATE OF HARYANA [ 1978 (9) TMI 72 - SUPREME COURT] . Thus, the product viz. Geomembrane merits classification under HSN 59111000.

  ---

• Income Tax

• 2022 (11) TMI 205
  Addition u/s 68 - search and seizure operation under Section 132 - ITAT deleted the addition - HELD THAT:- ITAT on perusal of the documents on record held that the MOU recovered during the search pertains to Devender and not the Assessee. The presumption against the Assessee that the document belong to him have been rebutted by the aforesaid materials which were placed on record before the ITAT, including the seized material found during the course of search which is corroborated by the statement of Devender - terms of the MOU record that Devender is responsible to acquire land at Harchandpur from Saroj and hand over the same to Newage Infra. The MOU records that Newage Infra has paid consideration of Rs. 20 crores in cash to Devender for the purchase of the land at Harchandpur. Assessee is not named in MOU, either as a party or as a witness. No cash was found or seized during the search conducted on the premises owned by the Assessee. ITAT held that the second statement recorded on 11th March, 2016, is not corroborated by any evidence or material on record and therefore, the AO or CIT(A) could not have relied upon the second statement. There is no infirmity in the impugned order of the ITAT deleting the addition of Rs. 20 crores under Section 68 of the Act against the Assessee. Therefore, we are of the considered view that there is no substantial question of law raised in the present appeal. The Supreme Court in the case of Ram Kumar Aggarwal Anr. vs. Thawar Das (through LRs), [ 1999 (8) TMI 1008 - SUPREME COURT] has reiterated that under Section 100 of CPC, the jurisdiction of the High Court to interfere with the orders passed by the Courts below is confined to hearing on substantial question of law and interference with finding of the fact is not warranted if it involves re-appreciation of evidence. Thus, we see no merit in the appeal and it is accordingly dismissed.

  ---

• 2022 (11) TMI 204
  Validity of reopening of assessment - second notice issued u/s 148 during the pendency of reassessment proceedings - non-disposal of petitioner s objections - HELD THAT:- it is settled law that during the subsistence of a reassessment proceedings, another reassessment notice cannot be issued for the same assessment year. See CIT v. Sanjay Kumar Garg [ 2015 (9) TMI 390 - DELHI HIGH COURT] if an assessment is pending either by way of original assessment or by way of reassessment proceedings, the Assessing Officer cannot issue a notice under Section 148 but if no proceedings are pending either by way of original assessment or by way of reassessment, he can issue a notice under Section 148 within the time mentioned This Court is further in agreement with the submission of the learned counsel for the Petitioner that non-disposal of petitioner s objections dated 22nd July, 2021, was contrary to the law laid down by the Supreme Court in the case of M/S GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] This Court, is also in agreement with the contention of the learned counsel for the Petitioner that there has been a violation of principles of natural justice inasmuch as the Petitioner was not given a reasonable opportunity to respond to the statement of Sh. Kewal Krishna Arora shared by the AO with the petitioner on 25th March, 2022. The impugned second notice issued under Section 148 of the Act during the pendency of reassessment proceedings as well as the consequential notices dated 18 th May, 2022 and 23rd May, 2022 are quashed.

  ---

• 2022 (11) TMI 203
  Penalty levied by the AO u/s. 271AAB r.w.s. 274 - l evy penalty of 30% on undisclosed income - HELD THAT:- Penalty u/s. 271(1)(c) and penalty u/s. 271AAB operates under different circumstances and further, penalty u/s. 271(1)(c) there is a provision for levy of penalty for two situations i.e., concealment of particulars of income and also furnishing inaccurate particulars of income, whereas, u/s. 271AAB in a case where search has been initiated u/s. 132 of the Act on or after 01.07.2012, the assessee shall pay by way of penalty in addition to tax, if any, payable by him, and said penalty ranges from 10% to 30% depending upon the conduct of the assessee. In this case, there is no dispute with regard to the fact that the assessee could not satisfactorily explain with necessary evidences, source for cash seized by Railway Police and therefore, the assessee had admitted additional income in the return of income filed in response to notice issued u/s. 153A of the Act. Therefore, in our considered view, the arguments of the ld. Counsel for the assessee that the penalty cannot be levied u/s. 271AAB of the Act is devoid of merits. We find that the reasons given by the AO to levy 30% penalty on undisclosed income is not backed by cogent reasons, because clause (c) of section 271AAB is applicable, if assessee does not admit undisclosed income in the statement recorded u/s. 132(4) and also not declared said income in the return of income furnished within the specified period and pays the tax altogether with interest, if any, in respect of the undisclosed income. In this case, the assessee has admitted undisclosed income in the return of income filed in response to notice u/s. 153A of the Act and also specified the manner in which said income has been derived by filing necessary bills for cash sales made during the period between 07.12.2012 to 11.12.2012. The assessee has admitted undisclosed income in the return of income and also paid tax together with interest, if any, in respect of the undisclosed income. Although, the AO has not accepted explanation furnished by the assessee on the manner in which said income has been derived, but on the basis of evidences filed by the assessee, we are of the considered view, that the assessee has specified the manner in which said income has been derived. Therefore, in our considered view clause (a) of section 271AAB of the Act is applicable in the given facts and circumstances of this case. Therefore, we direct the AO to restrict the penalty levied u/s. 271AAB of the Act @ 10% of the undisclosed income - Appeal filed by the assessee is partly allowed.

  ---

• 2022 (11) TMI 202
  Assessment u/s 153A - As a consequence to the search, various documents had been found and seized - HELD THAT:- As admitted fact that DB-06 relates to the documents impounded in the course of search on Debabrata Behera. In documents found in the course of searched person is found to relate to any person other than the searched person, there is compulsory requirement under the law to record satisfaction in the file of the searched person by the AO of the searched person. Clearly, no satisfaction has been recorded in the case of Debabrata Behera to show that the said impounded document DB-06 or any part thereof relate to the assessee herein. This being so, on this ground alone, we are of the view that said evidence cannot be used against the assessee. If DB-06 is removed, then the very foundation of the AO for raising the allegation of suppression of sales would also go. This being so, in the absence of valid recording of satisfaction, for the purpose of using DB-06, the assessment as done in the case of the assessee stands quashed. The assessment is made herein u/s.153A. If the evidence in the form DB-06 impounded in the course of search of Debabrata Behera is to be considered, then obviously, the assessment could not have been done u/s 153A of the Act, but u/s.153C even that has not been done in the present case. Consequently, even on this ground also, the present assessment is invalid and same is quashed.

  ---

• 2022 (11) TMI 201
  TP Adjustment - Adjustment on account of outstanding receivables from its associated enterprise ( AE ) - HELD THAT:- We find that average line rate charged by the assessee to its AE is higher than the rate charged by the third-party vendors to the AE even after including the foreign currency loan interest of LIBOR + 3.25% to it and considering credit period of 45 days (as per its agreement with the AE). By applying the similar methodology and adopting the interest as calculated by the TPO, i.e. average 6 months USD LIBOR plus 450 basis points, we find that even in this scenario also average line rate charged by the assessee to its AE is higher than the rate charged by the third-party vendors to the AE even after including the imputed interest cost to it. We find merits in the submissions of the assessee and are of considered view that average line rate charged by the assessee to its AE in respect of provision of medical transcription services is at arm s length vis- -vis comparable interest cost adjusted rate charged by the third-party vendors to the AE and thus no further adjustment, as made by TPO/AO and upheld by the learned DRP, is warranted. Accordingly, we direct the TPO/AO to delete the adjustment on account of outstanding receivables in respect of provision of medical transcription services. The transaction pertaining to provision of IT and IT enabled services was benchmarked by the assessee by adopting TNMM and margin of the assessee was found to be at arm s length vis- -vis working capital adjusted margins of the comparables. From the record, it is evident that the TPO has also, inter-alia, accepted the benchmarking analysis conducted by the assessee in respect of transaction pertaining to provision of IT and IT enabled services. The plea of the assessee is that aforesaid benchmarking has already considered the impact of delayed receivables and thus no further adjustment on account of outstanding receivables is required. Thus, respectfully following the aforesaid decision of Hon ble Delhi High Court in Kusum Healthcare (P) Ltd. [ 2017 (4) TMI 1254 - DELHI HIGH COURT] we find no merit in the adjustment made by the TPO/AO on account of outstanding receivables in respect of transaction pertaining to provision of IT and IT enabled services, when margin of assessee was found to be at arm s length vis- -vis working capital adjusted margin of comparables. Accordingly, we direct the TPO/AO to delete the adjustment. - Decided in favour of assessee.

  ---

• 2022 (11) TMI 200
  Revision u/s 263 - case was selected for limited scrutiny - Low income in comparison to very high investments and Large increase in investment in unlisted equities during the year - HELD THAT:- There is no entry in the order sheet of the assessment proceedings of the submission wherein assessee has claimed to produce bills, vouchers and books of accounts for verification at the time of hearing. The last entry is on 19.09.2017 wherein it is recorded that the case was discussed and heard under the signatures of both, the ld. AO and the Authorized Representative of the assessee. These facts evidently demonstrate that Ld. AO has failed to conduct required verification and examination and has not applied his mind before passing the assessment order and accepting the returned income as assessed income. Pr. CIT on his own examination of the assessment records has carefully and elaborately surfaced out the discrepancies in the assessment proceedings as evident from the order sheet entries and has called for the required explanations from the assessee in the revisionary proceedings. In the revisionary proceedings also, assessee asserted to have made all the submissions before the ld. AO on the issues raised by the ld. Pr. CIT vide its submissions dated 11.09.2017 and 21.09.2017. Considering the facts on record and the submissions made by both the parties as elaborately discussed above, we have no hesitation in upholding the revisionary order passed by the ld. Pr. CIT u/s. 263 of the Act. Accordingly, grounds taken by the assessee are dismissed.

  ---

• 2022 (11) TMI 199
  Unexplained cash credit u/s 68 - addition by taking view that there was no closing cash balance in hand in the preceding assessment year as the assessee has himself has shown cash in hand as zero - AO treated such opening balance as unexplained cash credit under section 68 - HELD THAT:- CIT(A) confirmed the action of AO by holding that the if any error occurred, it was the duty of assessee to file revised return of income, the that it is a typographical mistake is devoid of merit. Assessee himself has disclosed nil cash balance as on 31.03.2013, so no stretch of imagination the opening cash balance as on 01.04.2015 can be taken at Rs.8,24,191/-. Assessee made similar submission as made before the lower authorities. However, neither name of such person is disclosed nor any evidence or any letter of corresponding of communication with the persons who has filed return of income and committed such mistake, is filed. The contention of assessee such plea does not inspire confidence. Thus find merit in the submissions of ld DR for the revenue that the business activities of assessee are doubtful and the assessee has raised lame excuse of inadvertent mistake only. Therefore, do not find any merit in the grounds of appeal raised by assessee.

  ---

• 2022 (11) TMI 198
  Arm s length price adjustment - purchase of greasy wool from its AE by the assessee from its associated enterprise by the assessee - Addition by following internal CUP method as the most appropriate method whereas according to TPO/AO the most appropriate method is TNMM method - HELD THAT:- We find that the assessee is engaged in the business of processing raw wool, greasy wool, polyester into wool tops, woolen fabrics etc. during the year - assessee entered into international transactions with its AE and both the international transactions involving import of raw material with AE as well as fabrics to the AE were bench marked by applying internal CUP method. Assessee has reliable data available with regard to the similar transactions with unrelated third parties and thus claimed CUP as the most appropriate method. We note that TPO has rejected the CUP method adopted by the assesse and instead applied external TNMM method after selecting 12 comparables and thus determined the transfer pricing adjustment to arrive at the ALP. CIT(A) held that observations of the TPO s that averaging of cost of purchases was not permissible under CUP method is in contradiction to the provision contained in Section 92C(2) read with Rule 10B(1)(a) of the Income Tax Rules, 1962 wherein it has been explicitly provided that where more than one uncontrolled transactions or prices are available then the ALP shall be the arithmetic mean of such prices. CIT(A) also relied on the decision in the case of JSW Ltd. [ 2018 (11) TMI 1250 - ITAT DELHI] and the decision of Esser Steel Ltd.[ 2014 (11) TMI 254 - ITAT MUMBAI] . We further note that the was having similar transactions with its AE and CUP bench marking analysis done by the assessee under identical facts has been accepted by the TPO in the orders framed u/s 92CA(3) of the Act by accepting the transactions with the AE to be at arms length price and no transfer pricing adjustment was made - we find considerable force in the assesse arguments that once the revenue has accepted accepted the method or proposition in the earlier years , then it is not open to the revenue to take a different in the subsequent years unless there is change in facts or in law. This is in consonance with the ratio raid down in the case of Radhaswami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] - We are of the considered view that the Ld. CIT(A) has passed very reasoned and speaking order and accordingly we uphold the order of Ld. CIT(A)by dismissing the ground nos. 1 to 4 of the revenue. Addition on account of marked to market loss - HELD THAT:- We find that loss claimed by the assessee of Rs. 24,06,174/- pertains to loss incurred upon restatement of loan in foreign currency at the year end which was attributable towards working capital. We note that the orders relied by the AO in respect of AYs 2001-02 to 2003-04 passed by his predecessor were reversed by the CIT(A) and loss pertaining to working capital was allowed. CIT(A) has relied on the decision in the case of Woodward Governor Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] and ONGC [ 2010 (3) TMI 81 - SUPREME COURT] while allowing the appeal of the assessee. CIT(A), we do not find any infirmity in the order of Ld. CIT(A) and accordingly, the same is affirmed by dismissing the ground no. 5 of the revenue s appeal. Addition from bogus non-existent party - HELD THAT:- We find that the assessee has incurred these expenses under the head repair and maintenance for which the payments were made to M/s Prab Brothers Co by account payee cheques. Likewise commission was paid to Rajesh Kapoor for soliciting sales - We note that in respect of both these parties all the necessary material/evidences such as bills vouchers and rate contract etc were placed before the AO as well as Ld. CIT(A) and the payments were made by cheques after proper deduction of TDS and similarly the commission was paid to Rajesh Kapoor with reference to sales effected by him and even invoices were placed on record in respect of which the commission paid to Rajesh Kapoor after deduction of TDS. Considering these facts, we are of the view that the Ld. CIT(A) has rightly allowed the appeal of the assessee. The ground no. 6 of the revenue is dismissed.

  ---

• 2022 (11) TMI 197
  Addition for interest on FDR - HELD THAT:- It is not in dispute that the assessee has received the interest only after passing of the order by the Hon ble High Court on 15/11/2016 and the assessee has offered the said amount for taxation in the Assessment Year 2016-17 2017-18. As per Section 5 of the Income Tax Act, the total income of the assessee in any previous year in case of resident includes all income from whatever sources derived which are received or deem to be received in the taxable territory of India. In the present case, assessee acquired the right to received income of Rs. 65,00,000/-after the passing of judgment dated 15/11/2016 by the Hon ble High Court and the same was subjected to tax in AY 2017-18. Such being the case, there cannot be taxation for the same amount in the year under consideration i.e. Assessment Year 2013-14, which amounts to double taxation . In view of the same, the addition made in the Assessment year 2013-14 deserves to be deleted. Accordingly, we allow Ground No. 1 of the Assessee. Credit of TDS u/s 199 - HELD THAT:- The assessee offered the subject income for taxation in Assessment 2016-17 2017-18. As per Section 199 of the I.T Act, credit for tax deduction at source shall be given to the deductee for the assessment year for which such income is assessable. Therefore, with the above observations the Ground No. 2 deserves to be partly allowed and the assessee is entitled to get the TDS Credit as per Section 199.

  ---

• 2022 (11) TMI 196
  Addition u/s 54 - Claim denied as the amount remained uninvested till 05.08.2016 which was due date of filing the ITR under section 139(1) - capital gain account deposit was delayed by 31 days - CIT-A deleted the addition - HELD THAT:- It is not in dispute that there was 31 days delay in depositing the amount in the capital gain account i.e. the due date for filing return under section 139(1) of the Act for assessment year 2016-17 i.e. 05.08.2016. But the deposit of Rs. One crore each were made by the assessee on 26.09.2016 and 27.09.2016 in the capital gain account. Further it is also not in dispute that the assessee had paid the entire capital gain deposits along with interest accrued thereon directly from the capital gain deposit to the parties for expenses relating to construction for new house between 02.11.2017 to 03.02.2018 within three years, in compliance with Section 54(1) of the Act. The intention of the legislature in section 54 of the Act is very much clear that an assessee who receives the sale consideration has to invest in the new house within specified time framed. Merely because the assesssee has not able to deposit or deposited with a delay of 31 days in the capital gain account he cannot be denied with the benefit of section 54(1) of the Act. The above view has been fortified by the judgment of Hon ble High Court of Karnataka in the case of CIT Vs. Ramachandra Rao [ 2015 (4) TMI 620 - KARNATAKA HIGH COURT] wherein the very same substantial question of law has been decided in favour of the assessee. Thus CIT(A) has rightly deleted the addition made u/s 54 and the order of the Ld. CIT(A) requires no interference. Accordingly, we do not find merit in the Grounds of Appeal of the Revenue.

  ---

• 2022 (11) TMI 195
  Revision u/s 263 - Excessive cash of inventory - applicability of Section 115BBE - statement of the assessee recorded during the course of survey proceedings - invoking the deeming provisions u/s 69, 69A, 69B and 69C - HELD THAT:- What has occurred in the present case is that the Ld. AO has not attempted to enquire as to if the surrendered amount was actually income from business only. AO accepted the surrendered amount as assessee had filed return and paid tax upon the amount of surrender. Ld. AO on the basis of surrendered amount merely proceeded to revalue the reported quantum of sales and in that attempt escaped considering applicability of provisions of Section 115 BBE. As apparent that during survey the information collected had nothing to do with the business turn over alone and the investments were in jewellery and properties were also disclosed. The onus was on the assessee to establish that income from the business alone was used to acquire these and to the contrary that the AO had assumed the turn over exceeded the declared turn over to justify the surrendered income in the form of property and jewellery. Thus, there was failure on the part of the AO to accept the return of the assessee without enquiring as to if the income disclosed was actually business income only. In that way the assessment order was erroneous and prejudicial to the interest of revenue and rightly interfered by the PCIT. In the case in hand the difference in stock inventory was merely Rs. 3,75,000/-, difference in cash inventory was 9,75,000/-, advances to suppliers were 6,35,000/- which may be considered to be having nexus with the business but the investments of Rs. 38 lakhs in the plot and Rs. 3,46,500/- in jewellery have not been examined by the ld. AO as to if they were also proceed of undisclosed sales so as to be accepted in the return of income and on the rate of tax paid or to otherwise invoke provisions of 115BBE of the Act. ACIT has fairly directed the AO to inquire about applicability of Section 115BBE along with explanation 2 inserted by Finance Act, 2015. In the light of aforesaid discussion, the Bench is of considered opinion that impugned order does not require interference. There is no substance in the grounds. The appeal is dismissed.

  ---

• 2022 (11) TMI 194
  Exemption u/s 11 - primary objects of the trust which permitted the assessee trust to give training in skill development to the said hotels - HELD THAT:- The terms and conditions of MOU reproduced above indicate that training services of certain nature beneficial to the two hotels were being provided. The beneficiaries were not the employees directly but these two hotels which were seeking professional expertise and assistance of the assessee for enhancement of their own revenue by managerial level training programs of the recruits. In case of the both hotels the programs were intended to cater to the industrial and management trainees recruited by the hotel with off the job and on the job trainings. Assessee was providing training programs customized to the convenience of the service taker organizations. The beneficiaries were to be identified by the two hotels and the beneficiaries were to continue providing services to the two hotels consequent to their recruitment with the two hotels only. There is no force in the claim of assessee that these training programs were incidental to the main activities. Rather the aforesaid terms of MOU make it appear that the assessee s main activity was to give training of Managerial Nature to the two hotels and they were far beyond the objects relied by the assessee s AR to impress that ultimately the beneficiary were the workers. The object heavily relied by the of assessee to cover the activity is (vii) In general to open, establish, finance, assist and contribute institutions, commercial, technical education pertaining to fine arts or industries such as workshops, factories and other institutions for imparting education in workmanship and for providing employment and means of earning adequate wages for the unemployed and needy. However, same no where seems to be fulfilled by the terms and conditions of aforesaid referred MOU. The intention of these objects seems to be to give some sort of technical training of workmanship to those who are seeking employment and cannot be extended to give on the job training to those persons who have been recruited by some organization. Assessee was merely responsible for organizing qualified trainers for conducting the above mentioned training program and all the remaining infrastructural facilities were to be of the two hotels. That indicates that assessee was in some way providing trainers alone and not using its own infrastructure to give any sort of training of workmanship at its premises and resources. Merely because at the end of training of the recruit they were to be given a certificate by the assessee does not change the nature of its activity from commercial to charitable. As can be observed from the assessment order that the AO had primarily started the enquiry from the fact that TDS on professional services were deducted by the commercial hotels and the service tax was charged by the assessee. On behalf of the appellant at the time of assessment or before CIT(A) or here before the Tribunal, no explanation has been given as to under what circumstances the assessee allowed to deduct the TDS by the two hotels assuming that it was paying for professional services rendered by the assessee. At the same time, there is no explanation why the assessee has made a service tax charged on the receipts. If it was merely providing training of the nature educative in accordance with its object. The findings of Ld. Tax Authorities below require no interference. There is no substance in the ground raised. The appeal of assessee is dismissed.

  ---

• 2022 (11) TMI 193
  Additions towards unexplained cash credit for unsecured loan - AO has rejected explanation furnished by the assessee by misunderstanding explanation furnished by the assessee and made additions - HELD THAT:- AO had not denied the claim of the assessee towards source for capital introduced out of sale of her own property and jewel loan taken from banks etc. As regard, observation of the AO with regard to the purchase of another house property, on perusal of balance sheet filed by the assessee, we find that on the liability side the assessee shown unsecured loan and on the asset side, she had shown purchase of property. Therefore, the observation of the AO that she had utilized sale consideration of property for purchase of another property and thus, source is not available for explaining unsecured loan is a misunderstanding or misreading of balance sheet. Therefore, we are of the considered view that the issue needs to be re-examined by the AO, on the claim of the assessee that she had introduced capital into her business out of her own source. Hence, we set aside the issue and direct the AO to re-examine the claim of the assessee after giving opportunity of hearing to the assessee. Unexplained investments towards unsecured loans given to husband - AO has made additions towards unsecured loan given to her husband u/s. 69A of the Act as unexplained investment, on the ground that the assessee has not declared loan given to her husband in her books of accounts and also could not explain source of loan given to her husband - HELD THAT:- We find that the assessee has claimed before the AO that the unsecured loan given to her husband is debited in her drawings account for two assessment years. We further noted that the assessee has claimed huge drawings in financial year relevant to assessment year 2012-13. AO has not verified the claim of the assessee. Therefore, we are of the considered view that this issue also needs to go back to the AO for further verification. Hence, we set aside the issue and direct the Assessing Officer to re-examine the claim of the assessee and decide the issue in accordance with law. Appeal filed by the assessee is treated as allowed for statistical purposes.

  ---

• 2022 (11) TMI 192
  Addition u/s 68 - share capital along with premium raised by the assessee during the year unexplained - HELD THAT: - We notice that the assessee company had offered Nil income for the AY 2012-13. The assessee company has been able to procure share capital/share premium - Statutory notices u/s. 143(2) 142(1) of the Act duly served upon the assessee and duly complied. Assessee failed to satisfy the ld.AO about identity creditworthiness of shareholders and genuineness of the transaction. Even after providing sufficient opportunity none had appeared either before the CIT(A) even before us. The assessee failed to file necessary details to explain the source of alleged cash credit and also unable to prove identity creditworthiness of the cash creditors as well as genuineness of the transaction as per section 68 - The assessee company has miserably failed to explain the source of alleged cash credit. If the assessee had sufficient details to explain the alleged sum, it could have certainly filed those details. Consistently escaping from appearing before the appellate authority(ld.CIT-A) indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium. If the assessee is unable to explain the alleged cash credit and consistent escaped, the provisions of section 68 of the Act are rightly invoked by ld.AO. Thus, we are of the view that the assessee has routed its unaccounted income in the books of account in the form of share capital by arranging bogus share capital and share premium through accommodation entry provider and shell companies. Therefore no infirmity in the finding of the ld. CIT(A) confirming the addition made u/s. 68 - All the grounds of appeal raised by the assessee are dismissed.

  ---

• 2022 (11) TMI 191
  Unexplained cash credit u/s 68 - Share capital with premium received from three corporate entities unexplained - HELD THAT:- Since the assessee has sufficiently explained the identity and creditworthiness of the share subscriber companies and the genuineness of the transaction of applying for to the equity shares of the assessee company and since nothing contrary to the evidence filed by the assessee has been placed on record by the Revenue, except the reason that the directors failed to appear to the notice issued u/s 131 of the Act, we fail to find any merit in the finding of the CIT(A). We are thus inclined to hold that the assessee has successfully explained the said transaction of receiving share premium and share capital and therefore provisions of section 68 of the Act cannot be invoked. Allow the Ground raised by the assessee and delete the additions made u/s 68 - Decided in favour of assessee.

  ---

• 2022 (11) TMI 190
  Revision u/s 263 - Exemption u/s 11 - Assessment of trust - application of current year s income - CIT ( E ) has alleged that the assessee has wrongly claimed expenditure out of the accumulation fund, the claim of which has already been allowed to the assessee in the past - HELD THAT:- To examine the correctness of this observation, we, on perusal of the audited financial statement notice that in the receipt and payment the assessee has shown application of accumulated fund during the year at Rs. 53,52,500/-. In the income and expenditure account two amounts have been shown as expenditure towards building renovation construction purchase of assets. Now we would like to examine the application of accumulated fund. We find that the assessee in the balance sheet under SCHEDULE-B has reduced the said sum from opening balance of accumulated fund. We find that the assessee trust furnished details of each and every amount forming part of total amount - The sum which the ld. CIT ( E ) mentioned in the show cause notice issued u/s. 263 of the Act, is also part of the list of amount spent - On perusal of the details show that the assessee has accumulated the fund in the past as per provisions of section 11(2) and has rightly applied the accumulated fund for the purpose it was meant for. On perusal of the financial statements clearly shows that the assessee has not claimed the alleged sum of Rs. 53,52, 501/- as application of income during the year. It seems that the ld. CIT ( E ) has inadvertently considered the figures of expenditure shown under the head building renovation construction purchase of assets as part of sum of Rs.53,52,501/-, which in our considered view is not correct. We, therefore, under the given facts and circumstances of the case, are of the considered view that since the reason for which the jurisdiction u/s. 263 of the Act has been invoked/initiated/assumed does not have legs to stand and the facts of the case clearly indicate that the assessee has not claimed the alleged sum of Rs.53,52,501/- towards application of current year s income, we fail to find any merit in the finding of the ld. CIT ( E ) s order passed u/s.263 of the Act. Therefore, the same is hereby quashed. Accordingly, the assessment order dt. 02- 08-2018 framed u/s. 143(3) of the Act is restored. The grounds raised by the assessee are allowed.

  ---

• 2022 (11) TMI 189
  Bogus LTCG - Disallowance of claim of exemption u/s. 10(38) - long-term capital gains (LTCG) arising from sale of shares - genuineness of the claim of exempt income under section 10(38) of the Act in respect of long-term capital gain arising sale of equity shares from the listed companies, which were found to be the penny stock companies and the long-term capital gain so claimed found to be bogus in nature - HELD THAT:- We find that recently this Tribunal has adjudicated the similar issue under identical in the case of Shyam Sunder Bajaj [ 2022 (10) TMI 728 - ITAT KOLKATA] and after placing reliance on the judgment of Swati Bajaj Others [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] wherein held as well as the Commissioner (Appeals) have adopted an inferential process which is found to be a process which would be followed by a reasonable and prudent person. AO and the Commissioner (Appeals) have culled out proximate facts in each of the cases, took into consideration the surrounding circumstances which came to light after the investigation, assessed the conduct of the assessee, took note of the proximity of the time between the buy and sale operations and also the sudden and steep rise of the price of the shares of the companies when the general market trend was admittedly recessive and thereafter arrived at a conclusion which is a proper conclusion - Decided against assessee.

  ---

• 2022 (11) TMI 188
  Rectification of the mistake committed in the return of income - Assessment of the returned loss - taxable income whilst processing us 143(1) of the Act - Deduction of remuneration partner from the presumptive income - Non maintaining the books of accounts - as argued notice under section 139(9) had been served upon the assessee within the due time - demand is arising on the assessee owing to the fact that at the time of filing return of income, the assessee inadvertently made certain errors as a result of which the remuneration and interest paid to partners was not allowed to the assessee - mistake committed by the assessee at the time of filing return of income was that though the assessee was not required to maintain the books of accounts since the return was filed under section 44AD of the Act, however in the return form the assessee had made inadvertently stated yes in the option asking whether the books of accounts are required to be maintained or not by the assessee. HELD THAT:- We observe that in the instant set of facts, the demand is arising on the assessee owing to the fact that at the time of filing return of income, the assessee inadvertently made certain errors as a result of which the remuneration and interest paid to partners was not allowed to the assessee. It is not the claim of the Department that the assessee was not eligible to be assessed to tax under section 44AD of the Act or that the interest and remuneration paid to partners did not find support from the terms of the partnership deed, however, the Ld. DR has suggested that the assessee is open to pursuing alternate remedy under section 154 of the Act. High Court in the case of Devendra Pai [ 2021 (12) TMI 1218 - KARNATAKA HIGH COURT] held that AO not supposed to take advantage of assessee s ignorance to collect tax more than legitimate tax. Keeping in view of the above principles, and in the interest of justice, we are hereby restoring the file to the assessing officer to grant a fresh opportunity of hearing to the assessee, and if the assessee is able to substantiate its claim as stated before us, then an opportunity may be granted for the assessee to rectify the inadvertent mistake made by the assessee in filing the return of income, which could not be rectified since notice under section 139(9) of the Act could not be served on the assessee within time so as to enable the assessee to rectify the mistake which had been done in the return of income. Appeal of the assessee is allowed for statistical purposes

  ---

• 2022 (11) TMI 187
  Undisclosed income - amounts received by the assessee through third parties by way of circular transactions - CIT- A deleted addition - HELD THAT:- Mainly the assessee has to justify the amount credited in the books of accounts of the assessee itself with the identity, creditworthiness and genuineness of the world transaction. Here the assessee has diverted the attention of CIT A producing the directors of 2 related parties. In fact the AO/CIT A should have examined the parties were given credit in the books of the assessee/credited in the bank account of the assessee. This exercise is missing. As relevant that there is a an embezzlement in the transactions of related parties. Assessee has nothing to do with that, it has the prime responsibility of proving the amount credited in the bank account of the assessee. Therefore, CIT A has deleted the addition on the basis of the relevant material. There is no independent evidence available with the learned CIT A to delete the addition. He has deleted the addition merely on the basis of statement of the directors of 2 related parties, statement of the partner of the assessee who is also director in one of the company which is involved in the world transaction as per the statement of the assessee. Thus, lack of independent evidence makes the order of the learned CIT A not sustainable. CIT A has also wrongly held that when the amount is deposited in the bank account with HDFC bank of the assessee the deeming provisions of Section 68 is not applicable to the said receipt as it is credited in the bank account of the appellant. CIT A has ignored the fact that the amount which is credited in the bank account of the assessee is also credited in the books of accounts of the assessee and therefore the provisions of Section 68 are definitely attracted. We set aside whole issue back to the file of the ld. CIT (A) with a direction to pass decide whether the additional evidences submitted by the assessee were admitted or not giving reasons for his order. Thereafter he may decide the issue on merits of the case considering our above finding. Appeal of AO is allowed for statistical purposes.

  ---

• 2022 (11) TMI 186
  TP adjustment - comparable selection - TPO rejecting the comparables of the assessee and choosing a fresh set of comparables - HELD THAT:- We notice that for the AY 2015-16 in assessee s own case, the TPO issued a show cause notice to the assessee wherein the TPO proposed to include United Drilling Tools Ltd. and Groz Engg. Tools Pvt. Ltd. as comparable companies. The assessee filed its response raising objections for inclusion of the said two companies - TPO after considering the submissions of the assessee, in the final assessment order ddid not make any adjustments in the manufacturing segment and has accepted the comparables chosen by the assessee. No merit in the argument of the ld. AR that the TPO cannot a different stand in the year under consideration by rejecting the comparables of the assessee and choosing a fresh set of comparables. We therefore hold that the two comparables United Drilling Tools Ltd. and Groz Engineering Tools Ltd. have to be excluded from the comparables. The TPO is directed to recompute the ALP accordingly. Interest on receivables - TPO treated the delayed receivables as a separate international transaction and levied a notional interest using 6 months LIBOR + 400 basis points that worked out to 4.485% - HELD THAT:- We notice that as per the financials, the assessee is a debt free company. The impugned issue is squarely covered by the decision of the coordinate Bench of the Tribunal in the case of M/s. Barracuda Networks India Private Limited [ 2022 (5) TMI 322 - ITAT BANGALORE] - we remit the issue back to the TPO/AO for bench marking of the transaction of interest on delayed receivables and recomputation of ALP accordingly. TDS u/s 195 - Secondment charges and reimbursement - Addition u/s 40(a)(ia) - HELD THAT:- In assessee s case on perusal of records it is noticed that the seconded employee is in the payroll of the assessee and tax has duly been deducted on the salary paid to the employee including what is paid in Italy. It is also noticed that the reimbursement has also been taken into account for the purpose of TDS u/s.192B. We further notice that the reimbursement of expenses towards insurance, travelling expenses of the visiting employees is a cost to cost reimbursement with no element of income. Respectfully following the ratio laid down in M/S. FLIPKART INTERNET PRIVATE LIMITED [ 2022 (6) TMI 1251 - KARNATAKA HIGH COURT] and GOLDMAN SACHS SERVICES PVT. LTD [ 2022 (4) TMI 1444 - ITAT BANGALORE] we hold that the reimbursement towards secondment charges and reimbursement of expenses are not liable for tax deduction u/s. 195 and therefore the disallowance made u/s. 40(a)(i) is not warranted on this count. Levy of interest u/s.234A - HELD THAT:- AR during the course of hearing submitted that there is no delay in filing the return of income and therefore there should not be any levy of interest u/s.234A. We direct the AO to examine this fact and not to levy interest u/s.234A if the assessee has filed the return of income before the due date u/s.139(1). It is ordered accordingly.

  ---

• 2022 (11) TMI 185
  Non-granting of deduction in respect of depreciation u/s.32 in the intimation order passed u/s. 143(1) - depreciation as omitted to be fed into while filing the ITR - HELD THAT:- In assessee s case, the return of income is filed before the due date u/s.139(1) and as per e-filing report submitted before us, the assessee has filed a rectification on 11.06.2018 which as per the report is not processed. So the CIT(A) s claim that the assessee the assessee has filed a revised return belatedly and hence not eligible to claim depreciation is factually not correct. The fact that depreciation is correctly fed in the Part A - P L and also in the relevant clause of Tax Audit supports the contention that the depreciation is unintentionally omitted to be fed into while filing the ITR and that it is a clerical error. Considering the decision of the coordinate bench of the Tribunal in the case of Rakesh Singh [ 2012 (11) TMI 503 - ITAT BANGALORE] we are of the considered view that the assessee should be allowed the claim of depreciation u/s.32. Appeal by the assessee is allowed.

  ---

• 2022 (11) TMI 184
  Revision u/s 263 by CIT - ALP of international transaction or specified domestic transaction listed in Form 3CEB / 3CD - HELD THAT:- The admitted fact is that one of the reasons for selection of the assessment for scrutiny is transfer pricing risk parameter. In the assessment completed u/s 143(3) of the I.T.Act, there is no discussion about the ALP of international transaction or specified domestic transaction listed in Form 3CEB / 3CD. In such a scenario, as per the Board Instruction No.3/2016 dated 10.03.2016, the case ought to have been mandatorily referred to the TPO by the AO after obtaining necessary approvals. The instruction further states that if the information on international transactions or specific domestic transactions has not been disclosed in the return or the audit report, and the AO comes to know about the same during the course of scrutiny proceedings which have otherwise been selected on non TP risk parameter, then also the A.O. has to mandatorily refer the transactions for examination by the TPO. As further stated in the said Board Instruction that the power to determine the ALP of the international transaction should not be carried out at all by the A.O. Therefore, inspite of the assessment being picked up for scrutiny on account of transfer pricing risk parameter, the A.O. having not referred the matter to the TPO to determine the ALP of the international transaction undertaken by the assessee with its AE, was in direct contravention / non adherence to the Board Instruction, cited supra. Clause (c) of Explanation 2 to section 263(1) states that the assessment order made not in accordance with any order, direction or instruction issued by the Board u/s 119 of the I.T.Act is erroneous order and prejudicial to the interest of the revenue. The Board Instruction No.3/2016 has been issued u/s 119 - Therefore, non-compliance of the above said Instruction by the A.O. will render the said assessment order as erroneous and prejudicial to the interest of the revenue. Hon ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. [ 2011 (11) TMI 196 - DELHI HIGH COURT] had held that when Board Instruction No.3/2016 has been validly upheld, it is binding on the Assessing Officer and not taking recourse thereto would render the assessment order as erroneous and prejudicial to the interest of the revenue - we uphold the order of the PCIT passed u/s 263 as correct and in accordance with law. Appeal filed by the assessee is dismissed.

  ---

• 2022 (11) TMI 183
  MAT Computation u/s 115JB - Provision for doubtful debts - ascertained liability - addition in both income under normal provisions of the Act as well as book profits u/s. 115JB - CIT(A) has deleted the adjustment made by stating that the assessee while computing the income under normal provisions of the Act already disallowed the provision and adding the same would amount to double addition - HELD THAT:- Assessee has adjusted the provision of bad doubtful debts against the sundry debtors and following the decision of the Hon ble Supreme Court in the case of Vijaya Bank [ 2010 (4) TMI 46 - SUPREME COURT] which is followed in the decisions of Kirloskar Systems Ltd. [ 2013 (12) TMI 9 - KARNATAKA HIGH COURT] and Yokogawa India Ltd. [ 2011 (8) TMI 766 - KARNATAKA HIGH COURT] by the Hon ble jurisdictional High Court, we hold that the provision made by the assessee for bad doubtful debts is the actual write off and not a mere provision and therefore cannot be adjusted under clause (i) of Explanation 1 to sub-section (2) of section 115JB. Hon ble Supreme Court in the case of HCL Comnet Systems [ 2008 (9) TMI 18 - SUPREME COURT] has clearly laid down that when the provision is made against a debt receivable, cannot be equated with a provision for liability and therefore cannot be adjusted under clause (c) of Explanation 1 to sub-section (2) of section 115JB. We hold that the addition made by the AO towards provision for bad doubtful debts to the book profit u/s. 115JB is not tenable and the same is deleted. Assessee s appeal is allowed.

  ---

• 2022 (11) TMI 182
  Revision u/s 263 by CIT - assessment order arises out of the original return of income, which was processed u/s 143(1) - revised return filed u/s 139(5) - admittedly, the assessment order arises out of the original return of income, which was processed u/s 143(1) of the assessment order - HELD THAT:- The undisputed facts are that the assessee had filed original return on 06.09.2017, which was processed on 26.11.2018 u/s 143(1) and the same culminated in an assessment u/s 143(3) on 28.11.2019. An admitted fact that the assessee had filed revised return on 07.03.2019. In the instant case, admittedly, the PCIT is seeking to revise the assessment completed u/s 143(3) which stems from the return of income filed u/s 139(1) - For doing so, PCIT states that the revised return of income has been filed beyond the time limit prescribed u/s 139(5) and the same is non est. This statement of the PCIT in the impugned order dated 30.03.2022 is factually incorrect. The revised return filed u/s 139(5) of the I.T.Act dated 07.03.2019 is well within the time limited prescribed and the same is not non est. In the case of CIT v. Mangalore Chemicals Fertilizers Limited [ 1991 (1) TMI 70 - KARNATAKA HIGH COURT] had held that when the assessee files a valid revised return, it completely effaces and obliterates the original return, and therefore, it is only the revised return that has to be taken into account for the purpose of assessment. Since the assessee in the instant case has filed a valid revised return u/s 139(5) which effaces the return filed u/s 139(1) of the I.T.Act, the assessment order ought to have been completed from the figures disclosed in the revised return. In the instant case, admittedly, the assessment order arises out of the original return of income, which was processed u/s 143(1) of the assessment order dated 28.11.2019. Therefore, the said assessment order is bad in law. PCIT s order to revise the said assessment order u/s 263 is also bad in law. Hence, we set aside the impugned order of the PCIT passed u/s 263 - Appeal filed by the assessee is allowed.

  ---

• 2022 (11) TMI 181
  Reopening of assessment u/s 147 - assessment after expiry of period of four years - Capital gain computation - AO rejected the submissions of the assessee and proceeded to add the profit on sale of land to the book profit for computation of tax liability u/s. 115JB - AO also rejected the cost as on 1/4/1981, considered by the assessee and took the original cost of acquisition for the purpose of computing the capital gain - HELD THAT:- AO in reassessment proceedings has raised questions on the facts which have been disclosed in the statement of income of the assessee and has made the addition by taking a different view on the cost of acquisition and the accounting treatment of the sale consideration. The accounting treatment in the books of accounts cannot be considered as failure to disclose fully and truly all material facts, since the assessee while computing the taxable income under the Act, has disclosed the details pertaining to the capital gains on sale of land and depreciable assets. In fact it is based on this disclosure, that the AO has taken the figures while arriving at the additions during the reassessment proceedings. This is not a case where the assessment is sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of the assessee to disclose truly and fully all material facts that were necessary for computation of income but this is a case wherein the assessment is sought to be reopened on account of change of opinion of the AO - we set aside the order of CIT(A) and quash the reassessment order - Decided in favour of assessee.

  ---

• 2022 (11) TMI 180
  Bogus purchases - quantification of the profit - Assessee procuring the goods at a discounted value from the open/grey market - affirmation on oath in statements recorded u/s. 131 by the proprietors of the concerns/brokers during investigation by the Income Tax Department, thereby admitting and confessing on oath that these concerns are bogus entities indulging in accommodation entries and providing bogus bills - CIT-A deleted the addition - HELD THAT:- Entire exercise for quantifying the profit which the assessee would have made by procuring the goods in question at a discounted value from the open/grey market, i.e., by bringing the GP rate of the bogus purchases at the same rate as that of other genuine purchases, is that by so doing the monetary benefit which would have accrued to the assessee but withheld by him in his financial statements by booking the purchases at an inflated value on the basis of bogus purchase bills would stand neutralized. Broken Rice (Kanki) (10,500 quintals) - As in the case of the assessee before us the rate of bogus purchases of broken rice (kanki) i.e. Rs. 1415.62 per quintal (average rate) is lower than the rate of genuine purchases of broken rice (kanki) i.e. Rs. 1437.47 per quintal (average rate), therefore, as a consequence thereto [by taking the sale rate (average) as static] the GP rate of bogus purchases of broken rice (kanki) as in comparison to the GP rate of genuine purchases of broken rice(Kanki) is already on the higher side, therefore, no addition on the said count could have validly been made in its hand. We, thus, in terms of our aforesaid observations vacate the addition of 3.92% of the value of bogus/unproved purchases of broken rice (10500 quintals) as sustained by the CIT(Appeals). Accordingly, the A.O is directed to vacate the addition of Rs. 5,82,668/- [Rs. 1,48,64,000/- X 3.92%] sustained by the CIT(Appeals). Rice (27350 quintals) - As per the judgment of M/s. Mohhomad Haji Adam Company [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] the profit made by the assessee by procuring the goods from the open/grey market is to be determined by bringing the GP rate of the bogus/unproved purchases to the same rate as that of the other genuine purchases. As the aforesaid addition had been sustained by the CIT(Appeals) @ 3.92% of the value of the impugned bogus purchases of rice, the same, thus brings the purchase price (average rate) of the bogus purchase of rice to an amount of Rs. 1642.14 (supra), which, however is still in excess of the purchase of genuine rice (average rate) of Rs. 1636.76 per quintal by an amount of Rs. 5.38 per quintal. We, thus, in terms of our aforesaid observations direct the A.O to make an addition of Rs. 1,47,143/- [i.e. 27350 quintals (bogus purchases) X Rs. 5.38/- per quintal]. Paddy (4470 quintals) - As in the case of the assessee before us the rate of bogus purchase of paddy i.e. Rs. 1142.60 per quintal (average rate) is lower than the rate of genuine purchase of paddy i.e. Rs. 1232.32 per quintal (average rate), and thus, as a consequence thereto [by taking the sale rate (average) as static] the GP rate of bogus purchases of paddy as in comparison to the GP rate of genuine purchases of paddy is already on the higher side, therefore, no further addition on the said count could have validly been made in his hand. We, thus, in terms of our aforesaid observations vacate the addition of 3.92% of the value of bogus/unproved purchases of paddy (4470 quintals) as sustained by the CIT(Appeals). Accordingly, the A.O is directed to vacate the addition of Rs. 2,00,210/- [Rs. 51,07,400/- X 3.92%] out of that sustained by the CIT(Appeals). We, thus partly uphold the order of the CIT(Appeals) as regards the additions that have been sustained by him towards the profit which the assessee would have made by procuring the aforesaid goods i.e. broken rice (kanki)/rice/paddy from the open/grey market. Thus, the grounds of appeal raised by the revenue are partly allowed.

  ---

• 2022 (11) TMI 179
  TP adjustment - Validity of direction of DRP after the assessment order was passed - DRP has revised the TP adjustment - As argued final assessment order is not in accordance with the directions of the DRP - HELD THAT:- We notice that the DRP gave clear directions to the TPO to re-examine the inclusion of M/s. Archroma India Pvt Ltd and M/s. Tarak Chemicals Limited and has also directed for the exclusion of M/s. Sirea India Private Ltd. This would mean that the TP adjustment should be recomputed and thus should undergo change. This is supported by the fact that the jurisdictional AO in the OGE to the directions of the DRP has revised the TP adjustment - However, in the final assessment order passed by NFAC hich is passed prior to TPO s order revising the TP adjustment, the AO has retained the same TP adjustment amount as in the draft assessment order by observing that the DRP has confirmed the addition made by the TPO. From these facts, it becomes clear that the final assessment order passed by the NFAC to the extent of TP adjustment is not in accordance with the directions of the DRP and to this extent, the TP adjustment is quashed. We see merit in the contention that the jurisdictional AO has become functus officio once the final assessment order is passed and that there is no authority for him to pass any order modifying the final assessment order. We therefore hold that the order passed by the jurisdictional AO giving effect to the revised TP adjustment is not sustainable in law and is infructuous. TP adjustment is quashed on the basis that the final assessment order is not in accordance with the directions of the DRP - This ground of the assessee is allowed. Disallowance u/s. 14A - assessee is contending the disallowance as assessee has not earned any exempt income, investments are out of own funds and assessee has not incurred any specific expenditure towards investments - HELD THAT:- Considering the fact that the assessee has not earned any exempt income during the year under consideration and respectfully following the decision of the Hon ble Delhi High Court in the case of Era Infrastructure India Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] . we hold that no disallowance is warranted u/s.14A and delete the disallowance made in this regard.

  ---

• 2022 (11) TMI 178
  Addition u/s 40(a)(ia) - disallowance for the office rent paid to the Directors, payments made to Hypercube Architect, Directors remunerations, interest paid to Directors and salaries paid to employees, etc. - HELD THAT:- Once the recipients have disclosed the remunerations in their respective returns of income and discharged the payments and complies with the filing of the return of income having been completed, no disallowance can be made for the non-deduction of TDS by invoking the provisions of Section 40(a)(ia) if the Act. In view of the second proviso to this Section, we are in full agreement with the arguments of the learned Counsel for the Assessee, as well as the Departmental Representative that, in case the recipients have disclosed the remunerations received from the Assessee in their individual tax returns and discharged the taxes payable there under, in those case, the disallowance should not be made in terms of the second proviso of Section 40(a)(ia). This will also apply to the salaries paid to the employees, namely, salary for the AY 2014 2015, 2015 2016 and 2016 2017 and salaries paid to Shri Sathish and Shri Giri for the Assessment Years 2016 2017 and 2015 2016 respectively. In terms of the above, in all these years, i.e. 20-12 2013, 2013 2014, 2014 2015, 2015 2016 and 2016 2017, the directions will apply accordingly. Thus, in principle we have decided the issue in favour of the Assessee, but subject to the verification of the facts by the AO. Hence, this matter is restored back to the file of the AO for limited purpose of verification of facts, as to whether the recipients have disclosed the remunerations received on the salaries received from the Assessee in their individual tax returns and discharged the taxes payable there under in terms of the second proviso to Section 40(a)(ia) - AO will accordingly allow the claim after verifying the same. Thus, this common issue in all these years is allowed partly as indicated above. Claim of depreciation and expenses on motor vehicles, i.e insurance, interest on vehicle loan, vehicle maintenance and other repairs, etc. for the reason that the aforesaid motor vehicles are registered in the name of individual Directors of the Assessee Company - HELD THAT:- We noted that the cars are registered in the name of the Directors but the vehicles are used for the purpose of business of the Assessee Company and even the funds towards the purchase of the vehicles were provided by the Assessee Company and they have been shown as assets of the Assessee Company in the balance sheet and in the fixed asset chart for claiming depreciation. We are of the view that the Assessee is entitled for the claim of depreciation and other related expenses, but subject to the verification of the Assessing Officer. This issue has been considered by the Co-ordinate Bench of this Tribunal in the case of Edwise Consultants Private Limited [ 2015 (12) TMI 297 - ITAT MUMBAI] We direct the Assessing Officer to allow depreciation and other related expenses claimed by the Assessee. Thus, we allow this issue accordingly. Hence, this issue in the Assessee s appeal in all the Assessment Years is allowed. Disallowance u/s.40(a)(ia) as well as 40A(3) - HELD THAT:- Revenue has committed double jeopardy in respect of these disallowances made on the same set of expenses, i.e. both 40(a)(ia) of the Act for non-deduction of TDS and 40A(3) of the Act for exceeding cash payment of Rs.20,000/-. Assessee stated that the Tribunal in the earlier ground, i.e. first issue, has already considered the disallowance u/s.40(a)(ia) of the Act and had directed to be deleted, and thus the provisions of 40A(3) cannot be invoked. We are in agreement with the learned Counsel for the Assessee that the disallowance can be made only by invoking one provision, i.e. 40(a)(ia) of the Act, but since we have deleted the addition, no disallowance can be made on this count. Hence, this ground of the Assessee is decided in favour of the Assessee in both the Assessment Years. Thus, this issue in the Assessee s appeal is allowed. Disallowance u/s.37(1) in respect of the payment titled Pannallur Minister Expenses - HELD THAT:- We noted that the addition that was made of Rs.64.00 lakhs should be restricted to Rs.60.00 lakhs only for the reason that the payment of Rs.60.00 lakhs made to the Minister on 03.11.2015, i.e. Pannallur Minister Expenses is clearly hit by the Explanation 1 of Section 37(1) of the Act. We affirm the findings of the lower authorities and this issue in the Assessee s appeal is dismissed. Addition of interest payment u/s.40A(3) - payment exceeding Rs.20,000/- as mandated under the said Section - HELD THAT:- We are inclined to remit the matter back to the file of the Assessing Officer who will verify individually the payments which are disbursed to the workers at the construction site besides other legitimate expenses classified as the imprest amount given in lumpsum to be disbursed in smaller fractions to the workers. Accordingly, this issue in the Assessee s appeal is remitted back to the file of the Assessing Officer and is allowed partly.

  ---

• 2022 (11) TMI 177
  Addition being loan taken against the Birla Sun Life Policy - whether CIT [A] failed to appreciate that loan taken against the Birla Sun Life Policy is an opening balance which was carried forward from the previous year ? - HELD THAT:- For the purpose of verification whether loan has been taken from the relevant assessment year or it has been carried forward from the previous year and it includes interest also as submitted by the AR( Authorised Representative) , this issue is sent back to the file of the AO for the purpose of verification and also as per the arguments of the asseseee. If it is found that difference amount includes interest and carried forward from the previous year the AO shall delete the addition. The assessee shall produce necessary documents for substantiating his case. These grounds are allowed for statistical purposes. Disallowing made of 50% of Salaries Wages - HELD THAT:- Considering the submissions and findings of the lower authorities and acceptance made by the ld. AR, we restrict the addition made under this head ( salaries and wages) the disallowance is restricted to the 20% from the total disallowance. Disallowance of insurance expenses - AO disallowed 50% of insurance expenses - AR submitted that in the remand proceedings the AO noticed that it was paid through banking channel, therefore, the disallowance should not be made by the AO - HELD THAT:- Considering the rival submissions and perusing the material on record, in the remand proceedings, the AO fairly accepted that the insurance expenses were paid through banking channels, therefore, the payment should not be doubted . Both the authorities below have accepted that the payments have been for the payment of Insurance expenses , therefore, this issue is allowed. Disallowance of Workman and staff - welfare - HELD THAT:- We observe that in the remand proceedings, the AO accepted that these are the payments which has been deducted by the contractree from the running bills, therefore, the AO should not have been disallowed the payments expenses. The assessee has not incurred nay expenditures directliy. These deduction are mandatory deductions as per the terms and conditions of the contract, therefore this ground of appeal is allowed. Disallowance under the head of other expenses - HELD THAT:- Considering the rival submissions, and findings of the CIT (A) as per his observations the appellant s letter the complete details were submitted by way of annexure but the same facts were not brought in the remand proceedings. The AO after verifying accepted of Rs. 14,85,63,996/-. Considering the prayer of the assessee we think it fit to send back to the AO for denovo examinations. This ground of appeal is allowed for statistical purposes. Addition of Unsecured loan - HELD THAT:- As observed that the details of loan viz. opening balance, additions/payments made during the year, mode of loan taken/refunded, confirmations from the parties and closing balance at the year end has not been provided by the ld. AR. for verifications. In fact the opening balance can of loan cannot be added which was not the subject matter of the scrutiny proceedings. Considering the above noted facts, we deem it fit to sending back to the file of AO for de-novo consideration. If AO finds that there is opening balance of loan as on 01.04.2015, the AO will decide the issue as per the above cited judgement Jagatkuamr Satishbhai Patel [ 2012 (12) TMI 1017 - GUJARAT HIGH COURT] And in respect of others he will decide the issue in accordance with law. This ground is allowed for statistical purposes. Benefit of indexation for cost of improvement - Allegation of not granting principal of natural justice for giving opportunity to the assessee as per section 251 of the I.T.Act. by the CIT(A) - HELD THAT:- The expenditure for cost of improvements were incurred from the drawings made by the assessee in the respective years. Hence the assessee is eligible for indexation benefit for the cost of improvement expenses increased towards capital assets. Considering the rival submissions, we deem it fit to send back the issue to the file of AO for denovo consideration as per law. Further, we observe that the CIT(A) has not violated the principal of natural justice u/s 251 of the Act. The opportunity was provided and remand report was obtained and the assessee has also submitted rejoinder on 27.3.2019 in which he has himself requested to the CIT(A) , not to invoke sec. 251 of the Act. Therefore, this contention is not accepted.

  ---

• 2022 (11) TMI 176
  Disallowing the indexed cost of expenditure - capital expenditure - Disallowance of Indexed cost of expenses by not treating the same as capital expenditure - whether these expenses can be capitalised as cost of improvement towards the land? - HELD THAT:- AO has rightly observed that none of these expenses have direct nexus in improvement of the land. Even at the appellate stage, the assessee could not demonstrate the factual matrix as to which part of expenses are related to the improvement of the land. Assessee relied on the decision in the case of Chellapalli Sugars Ltd. [ 1974 (10) TMI 3 - SUPREME COURT] However, it does not support the case of the assessee as no such interest expenses were there. Moreover, the proviso to section 36 clause (1) sub-clause (iii) also makes the interest on capital asset to be disallowed till it commences production. Assessee could not demonstrate any nexus in improvement of land to preoperative expenses. Hence, it cannot be capitalised. Even reliance placed by the assessee in the case of Cosmic Kitchen Pvt. Ltd. [ 2005 (11) TMI 530 - ITAT DELHI] is also mis-placed since the facts in assessee s case are substantially different where none of the expenses have been incurred towards improvement of the land. As been rightly observed by the CIT(A) that whatever expenses the assessee is claiming are pre-operative expenses and they are allowable u/s 35D - The other expenses which are not allowable u/s 35D needs to be capitalised, but there has to be a direct nexus between such capitalisation of pre-operative expenses to the concerned asset. In this case, neither before the Revenue authorities nor before us, the assessee was able to explain the direct nexus of these expenses with the improvement of the land. Even the case laws relied on by the assessee is substantially different on facts. Since in the case of the assessee, the expenses were not incurred towards improvement of land, hence we do not find any reason to interfere with the findings of the CIT(A) which is hereby upheld. Grounds of appeal of the assessee are dismissed.

  ---

• 2022 (11) TMI 175
  Disallowance u/s 14A r.w.r. 8D - Expenditure incurred in relation to income not includible in total income - HELD THAT:- Section 14A read with Rule 8D clearly mandates that if the AO is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of total income under this Act or where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act, in that situation Rule 8D will come into picture as mentioned (supra) and a formula for calculation of disallowance has been prescribed. The total disallowance calculated under section 14A read with Rule 8D is restricted to the extent of exempt income earned by the assessee. Order of the AO and findings of the Ld. CIT (A), we are of the considered view that assessee is liable for disallowance as determined by the Ld. CIT (A), we are not inclined to disturb the order of Ld. CIT(A). Hence, this ground of appeal of the assessee is dismissed. Exclude interest on any loan that is for specific purpose and only consider interest on such loans that are for general purpose for computing the disallowance while calculating disallowance u/s 14A - HELD THAT:- As assessee s interest cost had been increased from Rs. Nil to Rs. 16.70 Cr. in current year and fresh investments as well as fresh borrowings have also gone up. Despite of a specific query seeking details of the source of the investments during the year, the appellant has not been able to demonstrate that no interest bearing borrowed funds were used for investments, hence, we are not inclined to disturb the factual finding given by Ld. CIT(A). In the result, this ground of appeal of assessee is dismissed. Powers of the Ld. CIT (A) to re-verify claim of Long Term Capital Loss - HELD THAT:- CIT (A) can confirm, reduce, enhance or annul the assessment, but he cannot remand the matter back to the file of AO. Direction of Ld. CIT(A) in directing the AO to re-verify claim of Long Term Capital Loss will tantamount to remand of matter back to the file of AO which is not permissible in the eyes of law. If required and Ld. CIT(A) deemed it fit to confirm, reduce, enhance or annul the assessment, he may ask for a report from the AO to act. Hence, this action of Ld. CIT (A) is bad-in-law and not sustainable. Hence, this ground of appeal raised by assessee is allowed. Enhancement of income by treating loss on sale of derivatives as speculative loss (with its consequential limitation to be carried forward periods and adjustments) and not a business loss as declared by the assessee and accepted by the AO - HELD THAT:- In view of the provisions of section 43(5) and decision of jurisdictional High Court discussed in Souvenir Developers (I) (P.) Ltd. [ 2022 (5) TMI 377 - BOMBAY HIGH COURT] we are of the view that enhancement done by Ld. CIT (A) on account of loss on sale of derivatives is not sustainable, hence deleted. In the result, this ground of appeal of assessee is allowed. MAT computation - Disallowing treatment of reduction of debenture redemption reserve while computing book profit under section 115JB - HELD THAT:- Revenue is not incorrect in stating that the said set aside of the profits is only an appropriation of profits, and would not amount to a provision, so as to qualify for deduction in the computation of the profit of the assessee-company. The issue, in fact, is not if it is a provision against an ascertained liability or a reserve per se, but whether it could be considered as deductible in computing the profit of the enterprise. The said accounting treatment, i.e., the set aside of profit, ensures capitalization of the profits, so that the debenture funds forming part of the capital structure, the same (capital) is no depleted on the redemption of the liability representing the said source of funds. In short, the liability, for the discharge of which the profits are being set aside, is in the capital field, so that neither the liability (on its assumption) nor the profit set aside (for its discharge) could be considered as a charge against the profits. This is precisely the reason that the same is not either claimed or allowed as deduction in the computation of income under the regular provisions of the Act. The adjustment made by the assessee in the computation of book profit undersection115JB gets validated. Thus we are not in agreement with the decision of Ld. CIT(A), hence, enhancement done by him is deleted. In the result, ground of appeal raised by the assessee is allowed.

  ---

• 2022 (11) TMI 174
  Addition u/s 56(2)(vii) - difference in market value and agreement value - A.O has treated the shifting of flat as transfer and booked the difference in stamp duty valuation and the prices paid by the assessee as income u/s 56 - As per assessee agreement so registered was nothing but the ratification of pre existing agreement dated back to the principal agreement of 2010 and this was merely same contract with only to be constructed premises being replaced and there was no new agreement and the earlier payment form part of the consideration of the registered agreement - CIT(A) has considered the complete facts of the case and the circumstances under which the assessee was offered alternative flat by the buyers and deleted the addition - HELD THAT:- CIT(A) has clearly elaborated in his findings that when the developer failed to provide original flat then it had offered another flat in the building which was to be constructed on a future date. When the assessee has booked the flat that property was not in existing and it was a property to be constructed in future time. CIT(A) had explained in detail that if such transaction are treated as transfer by notionally assigning value then the benefit of indexation and benefit of Sec. 54 etc. to be given to the assessee. In the light of the above facts and circumstances, we don t find any infirmity in the decision of CIT(A). Accordingly, both the grounds of appeal of the Revenue are dismissed.

  ---

• Benami Property

• 2022 (11) TMI 173
  Prohibition of Benami Property Transactions - provisional attachment order - As challenged the transaction for which the provisional attachment order was passed and subsequently affirmed by the adjudicating authority took place on 20.12.2014 much prior to coming into force of the Benami Transactions (Prohibition) (Amendment) Act, 2016 - HELD THAT:- This issue has already been decided by this Court in the case of Nexus Feeds Limited Vs. Assistant Commissioner of Income Tax [ 2022 (5) TMI 262 - TELANGANA HIGH COURT] The views expressed by this Court has since been affirmed by the Supreme Court in the case of Union of India Vs. Ganpati Dealcom Pvt. Ltd. [ 2022 (8) TMI 1047 - SUPREME COURT] Thus impugned order of the adjudicating authority are hereby set aside and quashed.

  ---

• Customs

• 2022 (11) TMI 172
  Seeking direction with regard to the disposal of the petitioner s representation - mis-declaration of imported goods - dry dates or black pepper and areca nuts - grievance that the petitioner has articulated is that the subject consignments are being examined for alleged misdeclaration by more than one agency, causing delay and detriment to its interests - HELD THAT:- The writ petition is disposed of with a direction to the CBEC to consider the representation as expeditiously as possible, though, not later than 10 days from today - CBEC will pass a speaking order, a copy of which will be furnished to the petitioner. Application closed.

  ---

• 2022 (11) TMI 171
  Seeking return of Bank Guarantee given by petitioner in favour of Prothonotary and Senior Master of this court - time limit of 120 days to submit the statement of facts - Section 130(A)(4) of the Customs Act - HELD THAT:- The time limit of 120 days prescribed in Section 130(A)(4) of the Customs Act, in our view, should be construed as being directory only and not imperative. The CESTAT (Respondent No.1) is a judicial body and over its actions Respondent No.2 has no control. In those circumstances, to construe the time limit for the submission of the case as mandatory might be to deprive Respondent No.2 of its right to have a question of law considered by the High Court which the Customs Act intends to be so considered. A party should not be deprived of a statutory right for no fault of its own, but for the fault of a public body over which it has no control. Respondent No.1 has no excuse for not filing the statement of case at least with regard to the three files made available, one of which is of petitioner herein - Respondent No.1 (CESTAT through its Registrar) is therefore, directed once again to submit the statement of case. This shall be submitted within six weeks of receiving a copy of this order. Ms. Bharucha states that Respondent No.2 will ensure that this is strictly followed up with CESTAT (Respondent No.1) and Respondent No.2 shall, within two weeks of this order being uploaded, give all details to Respondent No.1. Petition disposed off.

  ---

• 2022 (11) TMI 170
  Demand of customs duty - storage of goods outside the bonded warehouse - search was conducted - HELD THAT:- Respondent on 16.02.2006 had initially obtained the permission for a private bonded warehouse on an area of 118.195 sq mtrs. Subsequently, when additional land was allotted to Respondent by the Gujarat Maritime Board, they filed the revised Ground Plan with the authorities and sought permission for the additional land to be included in their existing Private Bonded Warehouse Licence and registered Central Excise premises. After the last acquisition of land, respondent filed a revised ground plan for 67,411 sq. mtrs under cover of their letter dated 06.02.2009 with the Assistant Commissioner of Central Excise Bhavnagar for approval of necessary permission and pursuant to the said application, Respondent s premises were visited by the Jurisdictional officers for verification and site inspection on 17.06.2009 and on 3rd July 2009, the Deputy Commissioner granted his approval - in the present matter Commissioner of Central Excise, Bhavnagar vide letter dated 23.03.2010 also informed the DRI that party had applied for approval of additional premises on 06.02.2008 and after getting the verification report dated 17.06.2009 from the Range Superintendent, the Deputy Commissioner of Central Excise, City Division has approved the additional premises on 03.07.2009. The letter of licence issuing authority also clearly state that Warehouse -2 situated on the additional land of 17,415 sq. mtr. stands included in the PWB of respondent with effect from 06.02.2009 under Section 58 of the Customs Act 1962. Since the disputed goods were found within the registered and bonded PBW on the date of search, Ld. Commissioner correctly dropped the demand. There are no infirmity in the impugned order - appeal dismissed - decided against Revenue.

  ---

• 2022 (11) TMI 169
  Valuation of imported goods - import of baggage - goods to be assessed separately or not - inclusion of charges for importation of design engineering and site run in the assessable value - case of assessee is that the design engineering and site run had already been assessed separately under Chapter 49 was not decided by the Tribunal - HELD THAT:- This matter was remanded by the Supreme Court to this Tribunal with a direction to re-decide the issue regarding includability of the charges paid for importation of design engineering and site run in the assessable value of the fermenters afresh because in the Final Order passed this Tribunal had not discussed Rule 9(1)(b) and 9(1) (e) read with Rule 4 and had also not examined the effect of the exigibility of the design engineering and site run which were assessed separately under Chapter 49 - So, it is to be decided if the assessment of the design engineering and site run was completed under Chapter 49 and if so, what is the effect of such assessment. It has been represented by the appellant before the Supreme Court that design engineering and site run had already been assessed separately under Chapter 49 . In the synopsis presented by the learned counsel before us, it has been submitted that the technical documents had already been allowed assessment under Chapter 49 at Nil rate of duty. Therefore, once their assessment has been finalized independently, the value of the same cannot be included in the value of the fermenters . Once an order permitting clearance of goods for home consumption is issued by the proper officer, they cease to be imported goods and the person who imported them ceases to be an importer. Since the duty, if applicable, has to be paid before the order for clearance of goods for home consumption can be issued, such goods also cease to be dutiable goods. No duty can be assessed under section 17 of the Act on such goods because duty can be charged on the goods imported into India as per Section 12 (the charging section) and once the goods are no longer imported goods, no duty can be charged. The process of assessment, whether the assessment is done by the officer (as in this case) or it is a process of self-assessment is completed with the order permitting clearance of goods for home consumption except in cases of provisional assessment where the assessment is completed with the order finalizing the assessment. When goods are imported as baggage by a passenger, they are classified under Customs Tariff heading 98.03 regardless of what the individual items of baggage are. Similarly, imports for personal use and import of stores in ships and aircrafts are classified under a single heading. The present import is not covered under any of these exceptions and therefore, it is immaterial whether the goods are imported under the same contract or not. Similarly, it is immaterial if the goods are imported into the country under the same Airway Bill or not. Goods must be assessed individually on merits. Whether in this case, the sale of the design engineering and site run was a condition for the sale of the fermenters? - HELD THAT:- There are nothing in the records to show that there was any condition in the agreements or invoices that unless the importer buys the design engineering and site run, it will not be sold the fermenters. Merely because more than one goods are bought by the buyer from the seller under the same agreement and under the same invoice, the sale of one good does not become the condition of sale for another. This is also true even if the goods so bought are related in terms of their use. For instance, one may buy a car and also buy some accessories of the car. Unless there is a condition in the sale contract that if the accessories are not bought, the car will not be sold at all or will not be sold at that price, the purchase of the accessories does not become a condition for sale of the car. It does not matter if the accessories will be used with the car to improve its appearance or have some additional conveniences in the car - there exists nothing to say that the purchase of the design engineering and site run was a condition for sale of the fermenters and therefore, the value of the design engineering and site run cannot be added to the value of the fermenter even though both were purchased as per the same contract and invoice and were imported under the same Airway bill. Therefore, Rule 9(1)(e) of the Valuation Rules does not apply to this case and the value of the design engineering and site run cannot be included in the assessable value of the fermenters. The impugned order is set aside insofar as the valuation is concerned with consequential benefits, if any, to the appellant - the impugned order cannot be sustained - appeal allowed - decided in favor of appellant.

  ---

• Corporate Laws

• 2022 (11) TMI 168
  Scope of writ jurisdiction - statutory violation - rejection of the nomination of the writ petitioners for the directorship of the appellant under Section 160 of the Companies Act, 2013 by the appellant bank - HELD THAT:- Section 1(4)(a) of the Companies Act, 2013 makes it clear that it applies to companies incorporated under the Act 2013 or under any previous company law. Clause (c) of Section 1(4) makes it clear that the provisions apply to the banking companies, except in so far as the said provisions are inconsistent with the provisions of the Banking Regulation Act, 1949. It is true, from the provision of Section 160 of Act 2013, that definite parameters are prescribed concerning how an application for Directorship is to be submitted and considered. Section 178 of Act 2013 deals with the Nomination and Remuneration Committee and Stakeholders Relationship Committee. Sub-section (1) thereto specifies that the Board of Directors of every listed company and such other class shall constitute a Nomination and Remuneration Committee consisting three or more non-executive Directors out of which not less than one half shall be independent Directors. On a conjoint reading of Section 160, Section 178 of the Companies Act, 2013 and Rule 13 of the Rules 2014, it is evident that a clear cut procedure is prescribed in so far as the notice of candidature is concerned. Whatever that be, the primary question to be considered is whether the rejection of nomination and election to the Director Board of the appellant company, a private banking company, has any public law element in order to consider the alleged violations exercising the powers conferred under Article 226 of the Constitution of India. The prayer sought for in petition for complaints filed before the RBI as well as SEBI against its nominee Directors, are not at all connected or related to the fundamental issue raised in the writ petition on account of the rejection of nomination. It is also stated that the matters with respect to Exts. P6 and P7 are not at all germane to decide the issue with regard to the rejection of the nomination of the petitioners. Even though learned Senior Counsel for the writ petitioners Sri. P. Chidambaram contended that from the website of the appellant Bank, it could be gathered that there are only two Directors in the Nomination and Remuneration Committee, learned Senior Counsel appearing for the appellant Bank Sri. Rafiq Dada submitted that no such contention is raised before the writ court and further that the present members of the Nomination and Remuneration Committee limited to two is on account of various factors and developments that have taken place subsequent to the rejection of nomination of the petitioners and the same would not have any bearing to the issue to be decided in the appeal - there are force in this contention. Whether a writ in the matter of rejection of nomination can be issued against the appellant Bank? - HELD THAT:- It may be true that the Dhanalakshmi Bank, though a private Bank, may be discharging certain duties with respect to receipt of deposits and issue of loans and other financial activities. But the said duty cast upon a private Bank like the appellant, even assuming it as a public duty, has nothing to do with the election to the Director Board of the banking company, whose activity is confined to the realm and control of the shareholders of the appellant company. The appellant Bank is able to satisfy this Court that the rejection of the nomination for the post of Directorship has nothing to do with the public element or public duty of the appellant company or its Board of Directors or the Nomination and Remuneration Committee - There are no hesitation to say that interference is required to the interim order of the learned Single Judge in view of the fact that the issue raised in the writ petition has no public element involved, and the issue of rejection of nomination has nothing to do with the public duty and public function if any discharged by the Bank with respect to the other commercial and financial banking activities of the Bank concerning the public. The writ petitions are dismissed as being not maintainable under law.

  ---

• 2022 (11) TMI 167
  Dissolution of the company - Section 481 of the Companies Act, 1956 - HELD THAT:- On perusal of the record of this report and in the facts of this case and considering the ratio laid down by the Hon ble Apex Court in the case of MEGHAL HOMES (P.) LTD. VERSUS SHREE NIWAS GIRNI KK. SAMITI [ 2007 (8) TMI 447 - SUPREME COURT ], the report deserves to be accepted. Supreme Court of India in case of MEGHAL HOMES (P.) LTD. VERSUS SHREE NIWAS GIRNI KK. SAMITI has held that When the affairs of the Company had been completely wound up or the courts find that the official Liquidator cannot proceed with the winding up of the Company for want of funds or for any other reason, the court can make an order dissolving the Company from the date of that order. This puts an end to the winding-up process. The Company, named, M/s. ARM Polymers Limited (In Liquidation) is hereby dissolved under Section 481 of the Act and the Official Liquidator attached to this Court stands discharged and is relieved as liquidator of M/s. ARM Polymers Limited (In Liquidation). The official liquidator is also permitted to make the payment of Rs. 1500/- to M/s. P.C. Rathod Co., Chartered Accountants towards preparation of Auditor s Certificate from account of the company in liquidation. The report is allowed.

  ---

• Insolvency & Bankruptcy

• 2022 (11) TMI 166
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - execution of the MOU - genuineness of MOU - time limitation - HELD THAT:- From the bare reading of MOU, it is apparent that the alleged past dues of the Appellant were ultimately settled to the tune of Rs. 4.50 Crores as on 31.07.2013 and it was agreed that the said sum shall carry an interest at the Bank deposit rate w.e.f. 01.08.2013 till it is actually paid. It was also agreed that the Appellant shall keep on providing the services to the Respondent and shall be entitled to 20% of the income earned from the business after 31.07.2013 - Even for the sake of arguments, if it is presumed that MOU has been duly executed between the parties yet the application under Section 9 of the Code filed by the Appellant on 13.04.2019 in respect of Rs. 4.50 Crores is beyond the period of limitation because right to apply accrued from 31.07.2013 and the period three years would be over by 31.08.2016. The argument of the Appellant that the subsequent payment made in the year 2018 by the Respondent would attract Section 19 of the Limitation Act, 1963 is totally fallacious. The petition filed under Section 9 of the Code to claim of Rs. 4.50 Crores on the basis of the MoU dated 24.08.2013 is clearly barred by limitation as the residuary Article 137 of the Limitation Act, 1963 would apply which provides a limitation of three years from the date when the right to apply accrues. Genuineness of the MOU - HELD THAT:- Nothing has been brought on record as evidence by the Appellant that the executant, namely, Shantilal Ratanchand Lunkad was duly authorized by the Respondent. Moreover, he is neither a director nor a key managerial personnel to bind the company by executing the MOU on its behalf without having any authority much less the resolution of the board passed in his favour. There are no error in the impugned order, which requires any interference by this Tribunal - appeal dismissed.

  ---

• 2022 (11) TMI 165
  Direction for payment of Rs. 15,00,000/- as a consolidated fee to the Resolution Professional for the entire CIRP period - HELD THAT:- In view of the resolution in its fifth meeting of Committee of Creditors held on 23rd September, 2020 whereby the Committee of Creditors approved the fees of Resolution Professional at the rate of Rs. 2.50 lacs per month with a maximum of Rs. 15 lacs, the Adjudicating Authority has rightly considered all these facts and also recommendation of the Committee of Creditors. The instant Appeal is hereby dismissed devoid of merit.

  ---

• 2022 (11) TMI 164
  Fraudulent transactions - Direction to Respondents (including the present Appellant) to contribute jointly and severally to the assets of the Corporate Debtor which was under Corporate Insolvency Resolution Process (CIRP) - directing criminal prosecution of the Respondents (including the present Appellant) under Section 69 of IBC - HELD THAT:- On going through the TAR, it is more than amply clear that Transaction Auditor has admitted inability to comment on the transactions falling under Sections 43, 45 and 50 of IBC. Even in respect of fraudulent transactions under Section 66 of IBC, the Transaction Auditor has admitted that they are not in a position to give a conclusive opinion and that this matter requires further investigation. Transaction Auditor has admitted inability to comment on the transactions falling under Sections 43, 45 and 50 of IBC and in respect of fraudulent transactions under Section 66 of IBC also did not give a conclusive opinion and opined need of further investigation. This aspect was also emphatically asserted by the Learned counsel for the Appellant while making his pleadings - the Adjudicating Authority has also taken due cognisance of the observations made in the TAR that in respect of the alleged fraudulent transactions under Section 66 of IBC, no conclusive opinion could be given by them and that the matter required further investigation. There is clear convergence of opinion between the Transaction Auditor and the Adjudicating Authority that further investigation was warranted in the matter. The real nature of transactions in question requires deeper examination and the matter be put to rest only after the true character of the transactions is unravelled. The need for unearthing the true nature and character of these transactions has acquired special relevance in the present matter since the Adjudicating Authority has ordered initiation of criminal prosecution of the Appellant under Section 69 of IBC besides directing recovery of Rs. 2687.27 lakhs jointly and severally including from the present Appellant while fore-closing his right to reply, which prima-facie militates against the principles of natural justice. Matter remanded back to the Adjudicating Authority for taking appropriate steps to conduct a detailed and in-depth investigation of the transactions in dispute to arrive at a conclusive opinion whether they fall within the bracket of Section 66 of the IBC without getting influenced by any comments made in this judgment and decide on merits in accordance with law - the right of the Appellant to furnish his reply/clarifications on the transactions in question in the interest of justice is restored - appeal disposed off.

  ---

• 2022 (11) TMI 163
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - whether payment to the Operational Creditor/Respondent No.1 was due from the Corporate Debtor giving rise to an operational debt? - whether a default has been committed by the Corporate Debtor/Appellant in respect of payment of such operational debt having already become due and payable? - whether the said operational debt exceeds an amount of Rs. 1 lakh and is an undisputed debt? HELD THAT:- Having failed to make the requisite payments, it is noticed that the Operational Creditor sent a notice under Section 8 of IBC to the Corporate Debtor. It has been contested by the Corporate Debtor that the notices were not received as they were not delivered as per prescribed procedure. On this aspect, it is found that the Adjudicating Authority has dwelled upon the issue of service of Demand Notice in details. Having perused the speed post tracking report, the Adjudicating Authority found that the notice which was sent to the Corporate Office of the Corporate Debtor at Gurgaon was duly delivered - After taking note of rules relating to service of Demand Notice, the Adjudicating Authority has rightly found no force in the contention raised by the Corporate Debtor that the Demand Notice was not delivered. Whether there was any pre-existing dispute raised during the stage of notice or whether there was any dispute on the date of filing the application under Section 9 of the IBC? - HELD THAT:- From material on record it is clear that notice under section 8(1) was sent to the Corporate Debtor by the Operational Creditor - It is also an admitted fact that the Corporate Debtor did not reply to the Section 8(1) notice and it follows therefore that the existence of dispute was not raised by the Corporate Debtor at the stage which it was obligated to do under section 8(2) of IBC on receipt of notice under Section 8(1) of the IBC - When no mention of existence of dispute was made by the Corporate Debtor, the statutory scheme of IBC entitled the Operational Creditor to file an application under Section 9 and this is exactly the course of action followed by the Operational Creditor. From the papers on record and submissions made, no reasons are found to disagree with the Adjudicating Authority that the Corporate Debtor has failed to show any correspondence to establish that the Corporate Debtor had ever raised any dispute regarding defective goods prior to the issuance of Demand Notice. Even when the goods were supplied to Air India on the instructions of the Corporate Debtor, Air India before accepting delivery at their site inspected the complete consignment of HRC and noted that they were accepted in apparent good order and condition as clearly indicated in Airways Bill, illustrative examples of which are at pages 172-173 and onwards in the Appeal Paper Book. No evidence to the contrary has been submitted by the Appellant. The Adjudicating Authority in the present case has carefully considered the reply and submissions made by the Corporate Debtor and has correctly come to the conclusion that there is no ground to establish any real and substantial pre-existing dispute which can thwart the admission of section 9 application against the Corporate Debtor - all the requisite conditions necessary to trigger the Corporate Insolvency Resolution Process under Section 9 of the IBC stand fulfilled in the present case. No error has been committed by the Adjudicating Authority in admitting the application under Section 9 of the IBC and initiating CIRP - Appeal dismissed.

  ---

• 2022 (11) TMI 162
  Power to Review/recall of the order - Appellant submits that Adjudicating Authority has power to recall the Order since Prayer d of I.A. No. 2407 of 2022 was not considered on merits - HELD THAT:- The Application I.A. No. 2407 of 2022 was heard on merits and after hearing the parties, the Application was rejected. Mere use of the word Recall in the Application I.A. No. 4004 of 2022 shall not change the nature of the relief which was asked for by the Appellant. Applicant wanted to review of the Order to allow the Application which was rejected earlier by the Adjudicating Authority on 27th May, 2022. Present is not a case where earlier order was passed by the Adjudicating Authority which suffers from lack of jurisdiction or any fraud was committed by the Court. Learned Counsel for the Appellant lastly submits that the Adjudicating Authority has power to rectify and in this regard refers to Section 420 of the Companies Act. Present is not a case for rectification of any error. The provisions of Companies Act are not applicable. Thus, no error has been committed by the Adjudicating Authority in rejecting the application - appeal dismissed.

  ---

• 2022 (11) TMI 161
  Exclusion of a period of approximately 15 months from 30.11.2018 to 24.2.2020 while calculating the fee of the Liquidator under Regulation 4 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - section 61 of the Insolvency and Bankruptcy Code - HELD THAT:- The Resolution Professional was following the procedure as set out in the Liquidation Process Regulations with regard to the disposal of secured assets, including the HSIIDC Bawal Property in which SIDBI has expressed its intent to realise its security interest. It also becomes clear that due to misinterpretation and lack of proper understanding of the procedure, SIDBI was unable to follow the requirements as was being communicated to him by the liquidator and, hence the liquidator had to approach the Adjudicating Authority thrice in the course of liquidation to seek necessary directions qua the Appellant. It is also found that such difficulties being faced by the liquidator were being brought to the knowledge of the Stakeholders Consultation Committee and necessary directions for further actions were being obtained by the liquidator. It thus becomes quite clear that compliance of regulations 2(ea), 2-A, 21-A and 37 of the Liquidation Process Regulations and Section 52/53 of the IBC are absolutely necessary even if the secured creditor proceeds to realise its security interest. The liquidator has carried out his responsibility with due diligence and without any prejudice to Appellant or any other stakeholder, and therefore, cannot be held responsible for delay that has taken place in pursuing the liquidation of the corporate debtor - the Adjudicating Authority has not committed any error in excluding period from 30.11.2018 to 24.2.2020 from the liquidation process for calculation of liquidator s fees slab under Regulation 4 of the Liquidation Process Regulations - Appeal dismissed.

  ---

• 2022 (11) TMI 160
  Maintainability of petition - initiation of CIRP - whether the loan advanced by Respondent No. 2 to the corporate debtor regarding which the promissory note has been executed is a financial debt - whether the letter dated 7.6.2016 constitutes admission of such debt and whether the date of dishonouring of cheques i.e. 16.12.2016 is the date of default? HELD THAT:- The ledger statement regarding confirmation on account of the corporate debtor for the period 1.4.2014 to 2015, which was sent by the corporate debtor to Respondent No. 2 (attached at page 97 of the appeal paperbook) clearly shows that interest on unsecured loan amount of Rs.170625/- was paid on 9.4.2014, further an amount of Rs.172500/- was paid on 20.11.2014 and an amount of Rs.341250 was paid on 20.06.2015 - the argument of Respondent No. 2 that the question of demanding payment on account of the promissory note during the existence did not arise till June, 2016 when he approached the corporate debtor for repayment of the loan amount convincing. The three-cheques bearing no. 964293 dated 22.10.2016 for an amount of Rs. 50,00,000/-, cheque no. 958801 dated 22.10.2016 for an amount of Rs.3,41,250/- and cheque no. 964332 dated 27.10.2016 for an amount Rs.1,72,500/- (copies at page 81 of appeal paperbook) relating to the principal loan amount and the interest thereon were presented in the bank for realisation, when they were dishonoured and the advice notes have been sent by the Central Bank of India regarding dishonouring of the three cheques with the comments Account Closed - While no date of default is mentioned in the promissory note or any other document such loan agreement has been produced, we are of the view that corporate debtor s letter dated 7.6.2016 states very clearly the existence of the loan and also the fact that on depositing the cheque with the bank of Respondent No. 2, the same will definitely be honoured and the dishonouring of cheques will be taken as default for which the financial creditor can take legal action. Thus the date 16.12.2016 has been correctly considered as the date of default by the Adjudicating Authority, which the said cheques were dishonoured. Respondent No. 2 deposited the cheques in accordance with date of the cheques, i.e. 22.10.2016. Therefore, it also supports the contention of the Financial Creditor that the date of 16.12.2016, when these cheques were dishonoured, has been correctly considered as the date of default - the Adjudicating Authority has not committed any error in admitting the section 7 application. Appeal dismissed.

  ---

• 2022 (11) TMI 159
  CIRP - scope of Financial Creditor - decree holder come within the definition of Financial Creditor or not - HELD THAT:- The Adjudicating Authority has not considered the amount advanced by the Appellant to the Respondent as financial debt particularly because in its opinion the advanced amounts do not involve a time value of money. The two loans agreements in question make it clear that the loans are interest bearing and the interest rate is also clearly specified in the respective loan agreements. The time period of the loans are also specified in the loan agreements and security towards timely repayment of loan has also been specified in clause 3 of both the loan agreements. Further clause 5 of both the loan agreements make it clear that the borrower shall execute post-dated cheques for repayment in favour of lenders. All these features of the two loan agreements very clearly show that the amounts advanced by the Appellant to Respondent are in the nature of financial debt which carry time value of money - It appears that the interest rates mentioned in loan agreements have not been noticed by the Adjudicating Authority and the interest rate of 24% p.a., which is included in the decree by Hon ble Delhi High Court, has been taken as the first instance when interest was levied on the amount of debt. The jural relationship between the parties is also clearly established in the loan agreements and thus the amounts advanced by the Appellant are covered in the definition of financial debt under sub-section (8) of section 5 of the IBC. The decision in Dena Bank [ 2021 (8) TMI 315 - SUPREME COURT ] makes it clear that the judgment or decree of money in favour of the financial creditor passed by DRT or any other tribunal or court would give rise to a fresh cause of action for the financial creditor, to initiate proceedings under section of the IBC. In the present case, the judgment-decree dated 11.1.2018 of the Hon ble High Court of Delhi in favour of Appellant thus provides a fresh cause of action to the Appellant to move application under section7 of IBC. The loan agreements also establish the jural relationship between the Appellant and Respondent. The Adjudicating Authority has erred grossly by not considering that the two loan agreements and the features therein are in fact relating to financial debts which are due and payable to the Appellant by the Respondent. As a result, we set aside the Impugned Order and direct admission of the section 7 application. The matter is sent to the Adjudicating Authority for passing necessary orders under the IBC consequent to the admission of section 7 application.

  ---

• 2022 (11) TMI 158
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - whether the Corporate Debtor- Proprietary and Proprietorship can not be deemed to be separate entity and the Corporate Debtor being the Proprietary will be liable to clear the dues of the Proprietorship concern? - existence of debt and dispute or not - time limitation - HELD THAT:- From the perusal of the facts and materials on record, it does appear that the family was carrying a business and business dispute has arisen between the parties. The proprietorship Company i.e. The Mining and Engineering Corporation had carried out various business. The Amounts were pooled by the Family Members including Financial Creditor. This Court had by its Order dated 22nd July, 2022 on the offer made by the Appellant to deposit the entire amount principal and interest as claimed in the Application was permitted to deposit the amount drawn in the Bank Draft in favour of Pay and Accounts Officer Ministry of Corporate Affairs which order has been complied with and when the Case is taken today, the offer made by the Appellant to pay the entire interest up to date by a cheque has also shown the Court. The offer made by the Appellant to pay entire demanded amount with interest has been refused by the Financial Creditor which clearly indicates that Financial Creditor is not interested in the debt or the Insolvency Resolution of the Corporate Debtor and wants the Corporate Insolvency Resolution Process (CIRP) to be continued. This is a fit case where CIRP should not be allowed to continue when Financial Creditor proceeded for CIRP not for purposes of Resolution of Insolvency of the Corporate Debtor but for other purposes with some other agenda. The Court should not permit such CIRP to go on, which has been initiated to settle family business dispute. Appeal allowed.

  ---

• 2022 (11) TMI 157
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether the present application is filed within limitation? - HELD THAT:- It can be seen from the records that the date of default is 06.11.2015 i.e., the date on which the account of the corporate debtor was classified as Non-Performing Asset. Further, the CD gave OTS of Rs. 12.25 crore on 12.03.2018 along with an upfront payment of Rs. 61,25,000/- through cheque no. 829701 dated 12.03.2018. Therefore, OTS offer will amount to acknowledgment under section 18 of the Limitation act, 1963, and the present petition is re-filed vide Diary No.82 dated 06.01.2020. Therefore, the present petition is filed within limitation. Whether there is a default in payment or not? - HELD THAT:- It is observed from the record that in the present case, the occurrence of default is evidenced by the fact that the CD in need of financial assistance requested the Boha Branch of the petitioner/financial creditor for the grant of financial facilities. Subsequently, on the request of the CD, an overall financial facility to the tune of Rs.33.08 crores were sanctioned by the consortium of the bank including the present petitioner i.e. State bank of India and Punjab National Bank on 17.01.2014 out of which share of the petitioner/SBI was Rs.18.27 crores. An inter-se agreement was executed between the financial creditor and the other member of the consortium for the overall financial facilities granted by way of consortium finance to settle inter-se rights and liabilities. A copy of the same is attached as the consortium executed the letter of authority in favour of the Financial Creditor on 17.01.2014 (Annexure-1/15). The CD failed to maintain financial discipline and in spite of repeated requests, the CD did not regularize their account, and as such the accounts of the CD were classified as Non-Performing Assets as per RBI guidelines on 6.11.2015. Consequently, a demand notice under Section 13(2) of the SARFAESI Act dated 14.12.2015 (Annexure-I/16, Page No.231-243) was served on the FC within a period of 60 days. Since the CD failed to repay the amount as claimed by the petitioner, after a statutory period of 60 days, issued symbolic possession notice Section 1394) of the SARFAESI Act read with Rule 8(1) of the Security Interest (Enforcement) Rules, 2002. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above the threshold limit, the petition is admitted in terms of Section 7(5) of the IBC - Moratorium declared.

  ---

• 2022 (11) TMI 156
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - whether the demand notice dated 13.01.2020 was properly served? - HELD THAT:- The demand notice sent at registered address of the respondent/corporate debtor, as available on the master data of the corporate debtor, was delivered and tracking report showing its delivery has also been annexed with the petition. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The petitioner/operational creditor has filed an affidavit dated 28.01.2020 (Annexure A-9) under Section 9(3)(b) of the Code, wherein it has been deposed that after service of demand notice on the respondent/corporate debtor, neither any payment has been received from the corporate debtor nor the corporate debtor has provided proof of payment within the meaning of Section 8(2)(b)(ii) of the Code, nor there is any reply received from the corporate debtor in response to the demand notice objecting to the demand leading to inference that the demand and the documents are correct and admitted by the corporate debtor. Also, it is deposed that there is no pre-existing dispute with respect to the subject matter of the present petition. Whether this application was filed within limitation? - HELD THAT:- A perusal of the case file shows that the application was filed vide Diary No.887 dated 03.02.2020, and the date of default is 20.09.2019 i.e. the date by which the outstanding invoices dated 22.07.2019 were to be cleared. Therefore, this Adjudicating Authority finds that this application has been filed within limitation. The operational creditor has provided the details of the debt due and has also annexed with the petition copy of ledger account statement, and invoices. Accordingly, the petitioner/operational creditor has established the debt and the default, which is more than Rupees one lakh i.e. the threshold limit (pre-revised) - It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident from the above-mentioned facts that the liability of the corporate debtor is undisputed and established. Also, there is no rebuttal to the claim filed by the petitioner as respondent/corporate debtor chose not to appear. Accordingly, the petitioner has proved the debt and the default which is above threshold limit. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, instant petition is admitted - moratorium declared.

  ---

• FEMA

• 2022 (11) TMI 141
  Appeal before the Appellate Tribunal - Appellate Tribunal was not functional in the absence of members having been appointed - Tribunal has become functional and the Court is informed that Members as well as the Chairperson have come to be appointed - As petitioner submits that it chooses not to pursue the appeal which is pending before the Tribunal subject to rights being reserved to agitate all questions in the pending writ petition. This, in the backdrop, as Mr. Ganesh would contend, of the fact that pleadings have been duly exchanged on the instant writ petition and the Division Bench has framed directions for the disposal of the writ petition itself. In view of the aforesaid, let the petitioner, if so chosen and advised, withdraw the appeal which is pending before the Appellate Tribunal subject to rights being reserved to pursue and agitate all questions in the instant writ petition.

  ---

• PMLA

• 2022 (11) TMI 155
  Seeking grant of bail - Money Laundering - predicate offence - scheduled offence - creation of bogus/fake deposits by debiting loans and advances - allegation is said that the accused No. 1-Ramakrishna, who is said to be the Director of the co-operative bank lent loan to the petitioner to the tune of Rs. 105 crores without following the procedure and without obtaining proper and adequate security and collected the documents for the purpose of recovering the loan amount - main apprehension of the prosecution is that the petitioner is having considerable influence and if he is released on bail, he would scuttle the investigation and destroy the evidence and he may also defeat the objectives of the PML Act. HELD THAT:- The petitioner was released on bail in the predicate offence, but this case is based upon the money laundering. Of course, Section 45 provides that if the Court is satisfied that there are reasonable grounds to believe that the petitioner is not guilty of such offence and he is not likely to commit any offence while on bail, then only he shall be released. Here in this case, the petitioner has not whispered and has not given any details of the property on which he has invested. Even though, he has received Rs. 60 crores by way of cash which was against the law has not disclosed the amount in which he has invested. Considering the facts and circumstances of the case, if the petitioner is granted bail, there is every possibility of obstructing the ED from attaching the properties and they require some more time for getting other sources to trace the property in which the petitioner has invested. When the petitioner has not disclosed about the investment, it is for the ED officials to find out any other method to unearth the properties and attach the same. Therefore, when the petitioner himself has not properly explained the investment made by him and is reluctant in giving information, the ED shall make an endeavour to find out truth in various other modes known to law. Hence, the petitioner cannot be released on bail at this stage. Bail application dismissed.

  ---

• 2022 (11) TMI 154
  Seeking grant of anticipatory bail - Money Laundering - received huge donations/funds from the Government and other sources which have been siphoned off and concealed for acquiring properties - proceeds of crime - Scheduled Offences - compliance with the twin conditions of Section 45 of PMLA or not - HELD THAT:- From a bare perusal of Section 45 of the Act, it is established that petitioner cannot claim anticipatory bail as above mentioned eventualities depends on the discretion of the learned Special Court and learned Special Court has rightly exercised its discretion and in the facts of the case has rejected the anticipatory bail of the petitioner as money laundering is an economic offence of grave nature and assisted the main accused in laundering proceeds of crime generated from criminal activities relating to scheduled offence. In SHYAM SUNDER BAJAJ, SON OF LATE JUGAL KISHORE BAJAJ VERSUS THE UNION OF INDIA, THROUGH THE ASSISTANT DIRECTOR (P.M.L.A.) ENFORCEMENT DIRECTORATE, GOVERNMENT OF INDIA, PATNA [ 2022 (3) TMI 1436 - PATNA HIGH COURT] , the Hon ble Patna High Court has refused to grant anticipatory bail and held that twin conditions have to be considered at the time of grant of anticipatory bail. The Court did not grant anticipatory bail in the light of the gravity of the offence of money laundering, facts of the case which reveals his complicity and the fact that trial could not proceed because of his non-appearance. The prayer for grant of anticipatory bail to the petitioner stands rejected.

  ---

• 2022 (11) TMI 153
  Money Laundering - Scheduled offence - Legal jugglery - framing of charges - Acquittal form predicate offence - accused 1 and 2 are said to have involved in the commission of murder of one Rajesh and one Ramu while injuring few others in a farm house belonging to one Muddappa situated behind APMC in Hunsur - petitioners having been acquitted of the predicate offences made under the IPC - whether accused 1 and 2 having been acquitted of the offences alleged under the IPC predicate offence, the offence alleged i.e., scheduled offence under the Act can continue? - HELD THAT:- The offence under Section 3 is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property which constitutes the offence of money laundering. The Apex Court holds that the authorities under the Act cannot prosecute any person on notional basis or on the assumption that the scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. The Apex Court answers the issue further holding that if a person is finally discharged/acquitted of the predicate offences or the criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against him or any one claiming such property being the property linked to stated scheduled offence through him. The Apex Court answers the very issue which is the kernel of the conundrum in the case at hand, in the aforesaid clause of conglomeration of conclusions. The view as taken by the Trial Court in this matter had been a justified view of the matter and the High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence. It is not in dispute that accused 3, 4 and 5 are hauled into the proceedings under the Act only because the property that they have acquired is linked to the criminal activity of accused 1 and 2. Accused 1 and 2 are into the proceedings under the Act for the reason of allegations of money laundering under Section 3, as according to the prosecution it is proceeds of crime. Therefore, the entire issue initiated by the Enforcement Directorate against the accused herein would revolve round Section 3 of the Act. Section 3 of the Act is interpreted by the Apex Court (supra). The conclusion of the Apex Court is that if they are discharged/acquitted or the criminal case against them is quashed, there can be no offence of money laundering against them or anyone claiming such property being the property linked to the scheduled offence through them. The contention of the respondent that the issue inter partes has become final is unacceptable. The Criminal Petitions are allowed.

  ---

• Service Tax

• 2022 (11) TMI 152
  Levy of service tax - Event Management services or not - respondent was conducting Cricket Matches as per the direction of BCCI and for that purpose the BCCI are transferring/ paying various type of amounts under the cover of subsidies / subvention from the amount of profit which was earned by the by way of conducting matches - It is the contention of the department that the respondent were treated as Sponsor/organizer because they are not organizing the event themselves, but for the same, BCCI has appointed/ authorized the respondent to conduct and manage such events. HELD THAT:- In the present case the show cause notice was raised by the revenue on the amount receive by the respondent from the BCCI as subsidy. The department has construed the said receipt as service charges received from BCCI against the services of event management. From the facts, it is clear that the respondent have received the subsidy against the expenses incurred for conducting Cricket Matches, therefore, by any stretch of imagination it cannot be said that the respondent has provided any taxable service to BCCI. This issue has already been considered by this tribunal in the case of VIDARBH CRICKET ASSOCIATION [ 2014 (1) TMI 204 - CESTAT MUMBAI (LB) ] where it is settled that in the case of the Cricket Association, similarly, placed as the appellant the subsidy received from BCCI was held to be non-taxable. The demand in the present case in the show cause notice was rightly dropped by the adjudicating authority - there are no infirmity in the impugned order - appeal of Revenue dismissed.

  ---

• 2022 (11) TMI 151
  Recovery of Service tax - Broadcasting Service - appellant is neither Broadcasting agency nor has provided broadcasting services, but have collected the service tax on broadcasting charges from their clients under the category of Broadcasting Service - contravention of provisions of Section 73A(2) of the Finance Act, 1994 in as much as the service tax is collected, which is not required to be collected from their clients and have failed to pay the amount so collected to credit of the Central Government - time limitation. HELD THAT:- The provisions of Section73A of the Act are applicable where the amount of service tax has been collected and retained by the assessee. In the present case, it is admitted facts that that no service tax was chargeable on the activity of the appellant, since the activity of Appellant do not qualify them as a broadcasting agency nor can be classified under Broadcasting Services. It is also true that Section73A (2) which mandated that any person who collects any amount as representing service tax to deposit it with the Government also. In the present case demand of service tax under the provisions of section 73A of the finance Act confirmed by the Ld. Commissioner without discussing the activity of appellant and without going into the facts of the case legally not correct. The Broadcasting companies deposited such amount of service tax with the Government for discharging their liabilities of service tax under the category of broadcasting service. Clearly, the role in the entire transaction of appellant is just like an mediator who collects money from the clients on behalf of the broadcasting company. It is also admitted fact in the present case that the retainership fees or commission income separately charged and collected from the clients, appellant paid the service tax under the advertising services. The said undisputed facts clearly established that the present one is not a case where the appellant had collected any amount as service tax and retained the same by not depositing the same with the Government exchequer - the Appellant has collected the service tax from the clients on behalf of Broadcasters in relations to service of Broadcasting services and transferred the said service tax amount to Broadcaster for discharging service tax liability on Broadcasting services . In the present matter revenue nowhere disputed the facts that Broadcaster had paid the said disputed service tax to Government. In the present matter Broadcasters already deposited the service tax amount to government as allegedly collected by the appellant from clients against the Broadcasting Services and demand of service tax again from the appellant would amount to double payment. However, the Broadcasters having already paid such collected amount to the government, the appellant cannot be asked to deposit the same again with the Government exchequer - once tax has already been paid on the services, it was not open to the Department to confirm the same against the appellant, in respect of the same services. The impugned order liable to be set aside - Since the entire case is being decided on merit, the limitation and time bar issues raised by the Ld. Counsel are not taken up - appeal allowed - decided in favor of appellant.

  ---

• 2022 (11) TMI 150
  Rejection of refund of penalty deposited, after passing of the order-in-original - short payment of service tax - case of appellant is that since they have deposited entire amount of service tax with interest before issuance of show cause notice, no show cause notice should have been issued to them in terms of provisions of Section 73(3) of the Finance Act, 1994 - applicability of principles of unjust enrichment - time limitation - HELD THAT:- It is held that, for refund of penalty, which has admittedly been deposited after passing of the order-in-original dated 26.03.2013, no limitation applies. Further, in the facts and circumstances, the provisions of unjust enrichment are not attracted as the burden of penalty is borne by the appellant and has not been passed on to their service receivers. Moreover, it is found that the refund arising pursuant to being successful in appeal, is available to an assessee under the provisions of Section 35 FF of the Central Excise Act. For this reason also, no limitation is applicable. The Adjudicating Authority is directed to grant refund of Rs.1,98,773/- with interest from the date of deposit till the date of refund - appeal allowed.

  ---

• 2022 (11) TMI 149
  Cash Refund of CENVAT Credit - Ocean Freight - duty paying documents - denial of refund on the ground of suppression of facts in terms of Rule 9(1)(bb) of Cenvat Credit Rules - HELD THAT:- Though the appellant have paid the Service Tax on Ocean freight on the instruction of audit, but no Show Cause Notice was issued for demand of such Service Tax. In absence of any proceedings with respect to the demand of Service Tax, the charge of suppression of fact does not exist, for holding that there is a suppression of facts on the part of the appellant. It is necessary that the said charge is adjudicated by issuing a Show Cause Notice and adjudication process, which is absent in the present case. Therefore, the contention of the Lower Authorities that there is a suppression of fact is only based on assumption and presumption, hence, the same is not sustainable. Since, there is no suppression of fact, Rule 9(1)(bb) is not applicable - the cash refund of the said amount, even though there is no provision under Section 11B but as per special provision under Section 142(3) of CGST Act, the appellant are prima facie entitled for cash refund. The issue of taxability on Ocean freight has now been decided in the case of MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT] where it was held that The Notification Nos.15/2017- ST and 16/2017-ST making Rule 2(1)(d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting Explanation-V to reverse charge Notification No.30/2012-ST is struck down as ultra vires Sections 64, 66B, 67 and 94 of the Finance Act, 1994; and consequently the proceedings initiated against the writ applicants by way of show cause notice and enquiries for collecting service tax from them as importers on sea transportation service in CIF contracts are hereby quashed - Since this judgment was not available before the Lower Authority as this judgment was passed after the orders in this case passed by the Lower Authorities, the issue of taxability is also kept open and the appellant has liberty to raise this issue also before the Adjudicating Authority. The appeals are allowed by way of remand to the Adjudicating Authority.

  ---

• Central Excise

• 2022 (11) TMI 148
  Utilization of Cenvat Credit of basic Excise Duty for discharge of E Cess and SHE Cess - suppression of facts or not - Extended period of limitation - HELD THAT:- There can be no doubt that the purported demands against the appellant could have been confirmed only if the invocation of extended period of limitation was proven to be legal and justified. Upon perusal of the show cause notice dated 19.02.2015 it is clear that no allegation had been framed that the appellant had suppressed material facts from the Department or that the appellant had committed any specific default warranting invocation of the extended period of limitation. Thus, the appellant was never put to notice as to which of the various acts or omissions mentioned in the proviso to Section 11A(1) of the Act had been committed by it - thus, the invocation of extended period of limitation was totally contrary to law. The assessee could not have been faulted for its conduct, even if it were to be held that cross utilization of basic Excise Duty credit for payment of E Cess and SHE Cess was prohibited under the Rules. In the case of M/s Madura Industrial Textiles, [ 2013 (1) TMI 352 - GUJARAT HIGH COURT] , the Hon ble Gujarat High Court had considered the issue and ruled in favour of the assessee. The evidences on record do not show that the appellant had acted otherwise than in a bona fide manner. It is not disputed that the details regarding availment and utilization of the disputed credit had been disclosed in the appellant s Central Excise returns filed with the Department. The issue of purported illegal utilization of credit had come to the Department s knowledge as far back as in the year 2013 while conducting audit - there are no reason to sustain the invocation of extended period of limitation against the appellant. It is held that the purported disallowance of Cenvat Credit of Rs. 9,08,676/- against the appellant is illegal and unjustified. The confirmation of interest and equivalent penalty under Section 11AB/AA of the Act and Rule 15 of the Rules respectively is also held as unsustainable - Appeal is disposed of on the point of limitation.

  ---

• CST, VAT & Sales Tax

• 2022 (11) TMI 147
  Exemption of turnover - movement of goods otherwise than by way of sale to a consignment agent of the petitioner - Form-F filed before the second respondent along with sale list - second respondent refused to accept the claim, stating merely on the strength of Form-F and sale list, such inference cannot be made - HELD THAT:- The provisions of Section 6-A of the Central Sales Tax Act,1956, and Rule 4 (3-A) of the Central Sale Tax (Tamil Nadu) Rules, 1957 is perused. The Division Bench of this Court in A DHANDAPANI VERSUS STATE OF TAMIL NADU AND ANOTHER [ 1994 (9) TMI 326 - MADRAS HIGH COURT] has laid down that the requirement to discharge the burden to prove. The petitioner has not satisfied the requirement, as laid down in the above decision, regarding the discharge of burden to prove - That apart, the scope of revision under Article 226 of the Constitution of India is confined only to the decision making process and not the decision per se . There are no error in the procedure adopted by the first respondent Tribunal while allowing the State s Appeal - this Writ Petition is devoid of merit and is dismissed.

  ---

• 2022 (11) TMI 146
  Validity of assessment order - sale on loan transaction - alleged stock transfer effected by the Petitioner - petitioner was unable to produce any evidence as a conclusive proof - HELD THAT:- The definition of sale in Section 2(g) of the Central Sales Tax Act, 1956 has been given in a very wide interpretation - To hold to state that there was no sale on account of loan transactions, the documents of the petitioner should have clearly established the same. In this case, they have not established the same. The order of the Tribunal is well reasoned and does not suffer from any infirmity. It requires no interference. That apart, the Assesee has neither produced any contract nor the agreement to prove the contention that there was a loan transaction. The Tribunal being the ultimate fact finding authority, finding arrived by it cannot be interfered. The petition is dismissed.

  ---

• 2022 (11) TMI 145
  Validity of assessment order - petitioner submits that Ext.P3 order is passed by the third respondent without considering any of the objections raised by the petitioner such as opportunity for cross-examination of the consignors shown in the list, their details and address and an opportunity of hearing etc. - non-application of mind - HELD THAT:- On a perusal of Ext.P3 order, it is seen that the 3rd respondent have given a voluminous list of unaccounted sales and unaccounted purchases. Further, the order does not reflect any detailed consideration of the issues raised by the petitioner such as the details of the respective consignors or the request for cross-examination made by the petitioner etc. Further, the request of the petitioner for opportunity of hearing was totally ignored by the 3rd respondent and Ext.P3 does not reflect any consideration on the said aspect. More over, the details of the list obtained from the KVATIS is out of reach of the petitioner since the list does not contain any address or details of the dealers for the petitioner to cross-verify the same. Though Ext.P3 order contains a voluminous list of the details of the dealer s name and value of the goods, the concluding portion of the order is very cryptic - the petitioner should be given an opportunity to present his case before the third respondent after affording an opportunity of hearing. The third respondent is directed to reconsider the entire issue on merits in accordance with law, after affording an opportunity of hearing to the petitioner, within a period of three months from the date of receipt of a certified copy of this judgment - Petition disposed off.

  ---

• Indian Laws

• 2022 (11) TMI 213
  Seeking permanent injunction against respondent no. 1 from infringement, passing off, its relevant trademarks - exclusive right to use a trademark - case set up by the appellant is that it is the prior and registered proprietor of the VASUNDHRA Trademarks, registered for goods falling under Class 14 and thus, the impugned marks used by respondent no.1, dealing in allied goods, is deceptively similar to its marks - HELD THAT:- The VASUNDHRA Trademarks are device marks and the registration of the said trademarks does not automatically grant the appellant exclusive right in respect of the word Vasundhra . It is well settled that a composite trademark or label trademark is not required to be dissected to determine whether there is any deceptive similarity with another trademark. The question whether there is any deceptive similarity between two trademarks has to be ascertained by examining the marks in question as a whole. In M/S. SOUTH INDIA BEVERAGES PVT. LTD. VERSUS GENERAL MILLS MARKETING INC. ANR. [ 2014 (10) TMI 1060 - DELHI HIGH COURT] , the Division Bench of this Court had explained the anti-dissection rule in some detail. The Court reiterated that conflicting composite marks are to be compared by looking at them as a whole, rather than breaking the marks up into their components parts for comparison . However, the Court had also observed that while a mark is to be considered in entirety, yet it is impermissible to accord more or less importance or dominance to a particular portion or element of a mark in cases of composite marks . In the facts of the present case, the learned Single Judge had found that the appellant held registration of the device marks/composite marks that contain the word Vasundhra but it did not have any registration of the word mark VASUNDHRA . It is material to note that the appellant had applied for registration of the word mark but the same has not been granted to it as yet. The Court had, thus, found that the appellant did not have an exclusive right to use the word Vasundhra except as part of its device trademarks. This Court finds no infirmity with the said view. This Court concurs with the view that a proprietor of a trademark cannot expand the area or protection granted to the mark. Indisputably, the appellant does not enjoy the monopoly for use of the word Vasundhra - this Court is unable to accept that the appellant can now, by indirect means, secure the benefit of the registration for the word mark VASUNDHRA after having secured the registration of its mark by claiming that it was not similar to other cited marks, which contain the word Vasundhra . This Court does not find any ground to interfere with the impugned judgment - Appeal dismissed.

  ---

• 2022 (11) TMI 144
  Dishonor of Cheque - power of revision provided under Sections 357 and 401 of Cr.P.C. - failure on the part of the courts below to appreciate and re-appreciate the evidence - HELD THAT:- The power of revision available to this court is no more res-integra. In this context, I am inclined to refer the power of revision available to this Court under Section 401 of Cr.P.C r/w Section 397, which is not wide and exhaustive to re-appreciate the evidence to have a contra finding. In the decision STATE OF KERALA, MANAGING DIRECTOR, WESTERN INDIA PLYWOODS VERSUS PUTTUMANA ILLATH JATHAVEDAN NAMBOODIRI [ 1999 (2) TMI 676 - SUPREME COURT] the Apex Court, while considering the scope of the revisional jurisdiction of the High Court, laid down that the said revisional power cannot be equated with the power of an appellate court nor can it be treated even as a second appellate jurisdiction. Ordinarily, therefore, it would not be appropriate for the High Court to reappreciate the evidence and come to its own conclusion on the same when the evidence has already been appreciated by the Magistrate as well as the Sessions Judge in appeal, unless any glaring feature is brought to the notice of the High Court which would otherwise tantamount to gross miscarriage of justice. On scrutinising the impugned judgment of the High Court from the aforesaid standpoint, we have no hesitation to come to the conclusion that the High Court exceeded its jurisdiction in interfering with the conviction of the respondent by reappreciating the oral evidence. In another decision reported in SANJAYSINH RAMRAO CHAVAN VERSUS DATTATRAY GULABRAO PHALKE AND OTHERS [ 2015 (1) TMI 1332 - SUPREME COURT] , the Apex Court held that the High Court in exercise of revisional jurisdiction shall not interfere with the order of the Magistrate unless it is perverse or wholly unreasonable or there is non-consideration of any relevant material, the order cannot be set aside merely on the ground that another view is possible. The Revision Petitions stand allowed in part - Considering the request made by the learned counsel for the revision petitioner, one months time from today is granted to the revision petitioner to pay the fine and to undergo the sentence imposed by the appellate court and modified by this Court - The revision petitioner shall appear before the trial court on 18.11.2022 to pay the fine and to undergo the sentence.

  ---

• 2022 (11) TMI 143
  Dishonor of Cheque - applicability of Section 142 of the N.I. Act - HELD THAT:- Section of the I.P.C. is not attracted in a case where subject matter of the case is arising out of N.I. Act. and this aspect of the matter is being considered by the larger Bench of the Hon ble Supreme Court as to whether in a case which is arising under Section 138 of the N.I. Act, Section 406, 420 of the I.P.C. is attracted or not. Moreover, the case is arising under Section 138 of the N.I. Act and for that only complaint case can be entertained, which is lacking in the case in hand. It is admitted fact that the matter is of Section 138 of the N.I. Act and opposite party no. 2 cannot be allowed to be remediless and the answer to this has already been given by the Hon ble Supreme Court in YOGENDRA PRATAP SINGH VERSUS SAVITRI PANDEY ANR. [ 2014 (9) TMI 1129 - SUPREME COURT] . Petition allowed.

  ---

• 2022 (11) TMI 142
  Dishonor of Cheque - the learned magistrate posted the matter for recording the sworn statement and after recording the sworn statement, cognizance was taken and issued summons to the petitioner - HELD THAT:- It is a well settled process of law that the Magistrate has to take the cognizance and post the matter for recording the statement of the complainant and thereafter, proceed to issue notices. The Hon ble Co-ordinate Bench of this Court in the case of V.S. JOSHI VERSUS N.G. BHAT CHITRIGI AND ORS. [ 2005 (12) TMI 602 - KARNATAKA HIGH COURT] , wherein, it is categorically stated that when the Magistrate posted the matter for recording the statement without mentioning the word as taking cognizance, it cannot be said that the Magistrate has not applied the mind and thereafter, taking cognizance for second time is not a bar under the law. The learned Magistrate has not stated that he has taken the cognizance and thereafter posted the matter for recording the statement. But this statement along with the complaint both of them were filed together and based upon the complaint as well as the sworn statement, the learned Magistrate took cognizance - Merely in the first paragraph, the learned Magistrate has not stated cognizance was not taken and later in the last paragraph, on the same day, at the same time by a single order it has taken cognizance and issued the process. Therefore, it cannot be said that he has not taken the cognizance thereafter posted the matter for recording statement but both together has been done by learned Magistrate. Therefore, there is no illegality in taking cognizance and issuing process to the accused-petitioner for summoning him to appear before the Court. Petition dismissed.

  ---