TMI Tax Updates - e-Newsletter
November 6, 2019

Case Laws in this Newsletter:

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

Articles

1. IGST exemption vis-à-vis pre-import condition

   By: Venkataprasad Pasupuleti

2. GSTR1 Returns and its effect on the availment of input credit under the 20% Input credit rule

   By: CASeetharaman KC

3. INDIA ACHIEVES IN EASE OF DOINT BUSINESS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Build brand India for services sector: Piyush Goyal

2. Rising Himachal 2019: Global Investors meet in Dharamshala

3. Code on Wages (Central) Rules, 2019 - Draft Rules

Notifications

DGFT

1. 29/2015-2020 - dated 4-11-2019 - FTP

Amendment in Policy Condition of SI. No. 55 and 57, Chapter 10 Schedule - 2, ITC (HS) Export Policy, 2018

GST - States

2. FTX.56/2017/473 - Order No. 06/2019-State Tax - dated 5-9-2019 - Assam SGST

Assam Goods and Services Tax (Sixth Removal of Difficulties) Order, 2019

3. FTX.56/2017/471 - dated 5-9-2019 - Assam SGST

Seeks to provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services(“OIDAR services”).

4. FTX.56/2017/470 - dated 5-9-2019 - Assam SGST

Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the months of July, 2019 to September,2019.

5. 27/2019-GST - dated 4-9-2019 - Assam SGST

Amendment in Notification No. 26/2019-GST, dated the 28th June, 2019, [CT/GST-14/2017/213 dated the 28th June, 2019]

6. 27/2019–State Tax - dated 31-10-2019 - Delhi SGST

Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the quarters of July, 2019 to September, 2019

7. G.O. (Ms) No. 150 - dated 30-9-2019 - Tamil Nadu SGST

Goods supplied to the Food and Agricultural Organisation of the United Nations - Exemption from state tax

8. G.O. (Ms) No. 149 - dated 30-9-2019 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/212(g-1)/2019,dated 7th March, 2019

9. G.O. (Ms) No. 148 - dated 30-9-2019 - Tamil Nadu SGST

Seeks to amend Notification No. II(2)/CTR/1099(e-5)/2018 dated 31st December, 2018

10. G.O. (Ms) No. 147 - dated 30-9-2019 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532(d-6)/2017, dated 29th June, 2017

11. G.O. (Ms) No. 146 - dated 30-9-2019 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532(d-5)/2017 dated 29th June, 2017

12. G.O. (Ms) No. 145 - dated 30-9-2019 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532(d-4)/2017 dated 29th June, 2017

Income Tax

13. 86/2019 - dated 1-11-2019 - IT

Corrigendum – Notification No. 62/2019 dated 12/09/2019

14. 85/2019 - dated 1-11-2019 - IT

Corrigendum – Notification No. 61/2019 dated 12/09/2019

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/DOP/CIR/P/2019/123 - dated 5-11-2019

e-KYC Authentication facility under section 11A of the Prevention of Money Laundering Act, 2002 by Entities in the securities market for Resident Investors

2. SEBI/HO/MIRSD/RTAMB/CIR/P/2019/122 - dated 5-11-2019

Enhanced Due Diligence for Dematerialization of Physical Securities

3. SEBI/HO/MIRSD/CRADT/CIR/P/2019/121 - dated 4-11-2019

Enhanced Governance Norms for Credit Rating Agencies (CRAs)

Highlights / Catch Notes

GST

• GST Applies to RWA Maintenance Charges; Exemption for Charges Up to Rs. 7,500 Monthly Per Member.

  Case-Laws - AAR : Levy of GST - Residential Welfare Association (RWA) - maintenance charges collected by the applicant from its members - activity of procuring Goods and Services from third parties for upkeep and maintenance of Apartments and collecting the monies from its members to pay third party vendors - activity is liable to GST - Exemption up to ₹ 7,500/- per month per member, is available.
  Visit to Get Source

  ---

• Supplier Discounts Must be Included in Total Consideration u/s 15 of CGST/SGST Act for Accurate Value of Supply.

  Case-Laws - AAR : Valuation - this additional discount reimbursed by the supplier of goods / principal company to the distributor / applicant is liable to be added to the consideration payable by the customer to the distributor / applicant to arrive at the value of supply under Section 15 of the CGST / SGST Act at the hands of the distributor / applicant.
  Visit to Get Source

  ---

• Court Orders ITC Credit to Electronic Ledger Despite Missed Tran-2 Deadline During VAT to GST Transition.

  Case-Laws - HC : Direction to credit the ITC amount to the Electronic Credit Ledger - Transition from VAT to GST - failure to file Tran-2 within the due date - The Writ Petitions are disposed of only by directing the third respondent to pass appropriate orders, after following the procedures as indicated.
  Visit to Get Source

  ---

Income Tax

• Court Declines to Stay Criminal Proceedings for Non-Filing of Tax Returns u/s 276CC; Article 227 Jurisdiction Not Invoked.

  Case-Laws - HC : Non filing of Income Tax Return (ITR) - offence punishable u/s 276CC - Stay of criminal proceedings against the petitioners in the competent court - this is not fit case in which the supervisory jurisdiction of this Court under Article 227 of the Constitution should be invoked to stay the criminal proceedings against the petitioners in the competent court.
  Visit to Get Source

  ---

• Taxpayers using buses for hire can claim a 30% depreciation rate, higher than for personal use vehicles.

  Case-Laws - HC : Depreciation @ 30% - buses which were owned by the assessee and were being run on hire - the natural meaning of the phrase would apply in the present case and those Assessees who are running automobiles for hire would be liable to claim a higher depreciation than those whose automobiles are meant for their use.
  Visit to Get Source

  ---

• Penalty for Excess Stock u/s 271AAB: Internal Inspection Report's 'Undisclosed Income' Argument Rejected as Lacking Merit.

  Case-Laws - AT : Penalty u/s. 271AAB - value of excess stock considered to be ‘undisclosed income’ - there is no merit in the argument that the excess stock found noted in the stock inspection report prepared by the internal team of the assessee constituted ‘undisclosed income’ unearthed as a consequence of search.
  Visit to Get Source

  ---

• Reopening assessments u/s 147 is invalid if no extra tax liability arises u/s 115JB.

  Case-Laws - AT : Reopening of assessment u/s 147 - Disallowance of prior period expenses - in the absence of any addition to the tax liability of the assessee computed u/s 115JB of the Act (which exceeds the tax liability under normal provisions), the jurisdiction of the AO is ousted even if the proposed disallowance of expenditure by the AO under normal provisions is sustained.
  Visit to Get Source

  ---

Customs

• Appellate Case Reduces Redemption Fine Due to Misunderstanding of Freight Costs in Import Valuation for Fairness.

  Case-Laws - AT : Valuation of imported goods - considering the fact that the appellant had entertained the reasonable belief regarding non-inclusion of the element of freight in the transaction value, the redemption fine imposed reduced in the interest of justice
  Visit to Get Source

  ---

• Importers Face Penalties and Confiscation for Violating DGFT Notification on RBD Palmolein Imports.

  Case-Laws - AT : Import of RBD palmolein - appellants have imported the impugned goods in violation of the prohibition imposed by DGFT Notification cited supra and thus, they have rendered the impugned goods liable for confiscation and rendered themselves liable for penalty.
  Visit to Get Source

  ---

DGFT

• DGFT Amends Export Policy Conditions in SI. No. 55 & 57, Chapter 10, Streamlining Export Processes and Compliance.

  Notifications : Amendment in Policy Condition of SI. No. 55 and 57, Chapter 10 Schedule - 2, ITC (HS) Export Policy, 2018
  Visit to Get Source

  ---

Corporate Law

• Court Halts Insolvency Process, Empowers Board to Handle Liabilities Amid Pending Petition, Including Sonepat Unit Concerns.

  Case-Laws - AT : Decision to save the company from Initiation of CIRP during the pendency of the petition - It is a fit case in which the Board of Directors should be allowed to take its own decision as to how it will meet its end for meeting the liabilities of the ‘Operational Creditors’ / ‘Financial Creditors’ and whether the liability is of one or other unit including ‘Sonepat Unit’
  Visit to Get Source

  ---

Indian Laws

• Court Halts Liquidation Proceedings to Prevent Unjust Gains, Upholds Restitution Principle for Fairness and Justice.

  Case-Laws - SC : Termination of liquidation proceedings - Recovery of dues - No one should be allowed to use the judicial process for earning undeserved gains or unjust profits. The object and true meaning of the concept of restitution cannot be achieved unless the courts adopt a pragmatic approach in dealing with the cases.
  Visit to Get Source

  ---

IBC

• Court Admits CIRP Petition: IBC Applicable Even if Company Can't Remain a Going Concern, Appellant's Claim Dismissed.

  Case-Laws - AT : Admissibility of petition - initiation of CIRP - There is no substance in this claim made by the Appellant that if it appears that there is no possibility of keeping the Company a going concern, IBC cannot be invoked
  Visit to Get Source

  ---

SEBI

• Securities market entities can use e-KYC u/s 11A of the Prevention of Money Laundering Act for resident investors.

  Circulars : e-KYC Authentication facility under section 11A of the Prevention of Money Laundering Act, 2002 by Entities in the securities market for Resident Investors
  Visit to Get Source

  ---

Service Tax

• Telecom Services to International Roamers in India Qualify as Exports; Payment from Foreign Provider Confirms.

  Case-Laws - AT : Rebate of Service Tax - exports of service or not - services of tele-communication provided by the appellant to the international inbound roamer in Indian territory and payment thereof received from foreign telecommunication service provider - it is export of service, even though actual user of the service is in India.
  Visit to Get Source

  ---

• Service Tax Demand Overturned for Pre-July 2012 Development Agreement Cancellations; Rule 5 Not Applicable.

  Case-Laws - AT : Demand of service tax on receipt of amount for Cancellation of Development agreement - 'Declared Service’ under Section 66 E(e) of the Finance Act - The declared service under 66E(e) was first introduced from 01.07.2012 while the agreements are prior to the said date. - The Rule 5 of the Point of Taxation Rule has thus no application in this case to create a change in an indirect way - Demand set aside.
  Visit to Get Source

  ---

Central Excise

• Excise Duty Refund Denied for Unjust Enrichment; Refund Possible if Buyer Didn't Bear Duty Costs.

  Case-Laws - AT : Refund of Excise duty - refund claims have been rejected on the ground of unjust enrichment - if the assessee is able to prove that the ultimate buyer of the goods have not borne the duty components, refund can be claimed.
  Visit to Get Source

  ---

• Activity Classification Dispute: Manufacturing vs. Service; No Suppression of Facts Found for Duty Evasion by Appellant.

  Case-Laws - AT : Nature of activity - manufacture or service? - The fact of registration and payment of service tax was in the knowledge of the Revenue and as such it cannot be said that the appellant suppressed any facts with intent to evade payment of duty.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2019 (11) TMI 225
  Classification of goods/services - printed text books for PUC Board classifiable under HSN Code 4901 1010 - whether exempt from the payment of CGST and SGST? - HELD THAT:- The applicant printed the PUC text books and supplied to the various resellers in the state. This activity of printing and supply of the text books to the resellers by the applicant is covered under Notification 2/2017-Central Tax (Rate) dated 28/06/2017 under entry No. 119 reads as Printed Books, including Braille Books. This is exempt from the payment of CGST and SGST. Applicable rate of CGST and SGST - printing and binding of brochures, books, calendars, pamphlets on job work basis to the Government authority and other printers - CBEC Circular no. 11/11/2017- GST dated 20.10.2017 - HELD THAT:- The Applicant undertakes printing and binding of brochures, books, calendars, pamphlets, on a job work basis where content and paper belongs to the customer and only ink and machines belongs to the printer. The nature of supply is supply of services as supply of service is the main supply. Printed books, brochures, leaflets and similar printed matter, whether or not in single sheets are classifiable under HSN 4901 - The aforesaid activities of the applicant are, therefore, covered under the entry No. 26 and 27 of Notification 11/2017-Central Tax (Rate) date 28.06.2017 under the clause (i) of sub clause (da) which attracts 2.5% CGST + 2.5% SGST in respect of job work of printing and binding of books, brochures and leaflets and 6%CGST +6% SGST in respect of calendars. Applicable rate of CGST and SGST - binding of diary, catalogues and books on job work basis - HELD THAT:- Applicant done the job work of binding of Diary, Catalogues and Books, not in relation to printing activity. The activity amounts to supply of service and printing or any work in relation to printing is not involved. Hence this job work is covered under clause (iv) of entry no. 26 of Notification 11 /2017-Central Tax(Rate) inserted vide notification no. 1/2018 Central Tax (rate) Dated 25/01/2018 - the activity of binding of diary, catalogues and books carried out by the applicant on job work basis attracts CGST @9% and SGST @9%. Applicable rate of CGST and SGST - printing and supply of text books and work books to the State Government for onward supply to schools - HELD THAT:- Once the Text books and Work books are printed by the Applicant, the books are thereafter supplied/ delivered to Taluk offices of the State Government across the state for onward supply to schools. As the content is supplied by the recipient of supply the activity carried out by the applicant amounts to supply of service - This activity of the applicant, is therefore, covered under the clause (i) of the entry no. 27 of the Notification 11/2017-Central Tax (Rate) dated. 28.06.2017 inserted vide notification No. 31/2017 Central Tax (Rate) dated. 31/10/2017 and vide notification No. 20/2017 Central Tax (Rate) dated. 22/08/2017 which attracts CGST@ 6% and SGST @ 6%. Exemption form GST or not - printing and supply of periodicals and magazines referred in HSN code 4901 - HELD THAT:- The Applicant prints the magazines on the basis of the design template stipulated by the respective department(s) and supplied to the Government Departments. The materials used for designing is provided by the Applicant. This activity of the applicant covered under the clause (i) of the entry no 27 of the Notification 11/2017-Central Tax (Rate) dated. 28.06.2017 inserted vide notification No. 31/2017 Central Tax (Rate) dated. 31/10/2017 and vide notification No. 20/2017 Central Tax (Rate) dated. 22/08/2017 which attracts CGST @ 6% and SGST @ 6%.

  ---

• 2019 (11) TMI 224
  Levy of GST - maintenance charges collected by the applicant from its members - Residential Welfare Association (RWA) - activity of procuring Goods and Services from third parties for upkeep and maintenance of Apartments and collecting the monies from its members to pay third party vendors - HELD THAT:- The applicant association is supplying the services of maintenance of the common areas including repairs and upkeep and since the common areas belongs all apartment owners, the maintenance charges are charged on the basis of the ratio of area of each apartment to the total area of all apartments and hence the applicant is providing a service of maintenance of apartments, buildings and property to all members and this is in the course of business. Hence this would amount to a taxable supply of services. Applicability of exemption entry no 77 of notification 12/2017 Central Tax (Rate) dated 28.06.2017 - maintenance charges collected from members - HELD THAT:- The exemption under entry number 77 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 2/2018 - Central Tax (Rate) dated 25.01.2018 is available for an amount, up to Rs. 7,500/- per month per member, collected for sourcing of goods or services from a third person for common use of the members. If exemption is available, whether it is available on per member basis or per flat basis, as some members could have more than one flat? - Circular No. 109/28/2019-GST dated 22.07.2019 - HELD THAT:- The Circular clarifies that As per general business sense, a person who owns two or more residential apartments in a housing society or a residential complex shall normally be a member of the Residential Welfare Association (RWA) for each residential apartment owned by him separately. The ceiling of Rs. 7,500/- per month per member shall be applied separately for each residential apartment owned by him - in the applicant s terms, the exemption is applicable to eligible members on per flat basis. Whether the exemption as per entry no 77 of Notification 12/2017 Central Tax (Rate) is a standard exemption that can be claimed irrespective of amount collected towards maintenance? - Circular No. 109/28/2019-GST dated 22.07.2019 - HELD THAT:- The Circular clarifies that The exemption from GST on maintenance charges charged by a Resident Welfare Association (RWA) from resident is available only if such charges do not exceed Rs. 7,500/- per month per member. In case the charges exceed Rs. 7,500/- per month per member, the entire amount is taxable - thus, the exemption of Rs. 7,500/- is not available when the maintenance charges exceed Rs. 7,500/- per month per member. Therefore the members are required to discharge GST on the entire maintenance charges and not on just the amount in excess of Rs. 7500/-. The same ratio applies to the earlier period when the exemption was available on maintenance charges upto Rs. 5000/-. Whether the electricity charges paid to BESCOM (Electricity supply authority) for the power consumed towards common facilities and separately recovered from members, liable to GST? - HELD THAT:- The electricity bill received in relation to the consumption of electricity for the common utilities is in the name of the applicant. The applicant is not involved in the supply of electrical energy to the members but is involved in providing the service of upkeep and maintenance of the common utilities of the apartments and for this the electricity consumed by them becomes an input. Though the electricity bill is distributed to all its members, it is not the consideration for the supply of electrical energy to the members but the value is a part of the consideration for the supply of services to its members and hence is liable to tax at appropriate rates - this value of electricity charges separately shown in the invoices is to be added to the considerations shown towards the same service of upkeep and maintenance charged to individual members and then the consideration for the supply of such service is to be arrived and the taxable value shall be determined. Levy of GST - Corpus/Sinking Fund collected from members - HELD THAT:- The applicant collecting the amounts towards corpus / sinking fund for future supply of services meant for its members. It is a fact that the corpus fund or sinking fund is mandatory under the Bye-laws of the Co-operative Societies/ Resident Welfare Associations and is in the nature of a deposit towards unforeseen events or planned events - In the instant case the corpus / sinking fund so collected is the amount collected towards the future supply of service and accordingly gets applied as consideration towards supply of services only at the time of actual supply of services. Therefore the amounts collected towards corpus/ Sinking fund do not form part of consideration towards supply of services at the time of collection and hence is are not liable to GST, at the time of collection. However the amounts so utilized for provision of service are liable to tax at the time of actual supply of service.

  ---

• 2019 (11) TMI 223
  Valuation - treatment of discount/rebate allowed - impact on Input Tax Credit (ITC) - the invoice value of the products is displayed only with the value after deducting discount as per the pre-fixed rate scheme - the discount / rebate is subsequently reimbursed by the Principal Company as Commercial Credit Notes - petitioner is paying the tax due as per the invoice value issued by the applicant and availing the input credit of GST shown in the inward invoice received by the applicant from the Principal Company or their stockist - whether the availment of credit is correct or not? - HELD THAT:- The applicant/distributor is eligible to avail ITC shown in the inward invoice received by him from the supplier of goods / principal company. Whether the discount provided by the Principal Company to their dealers through the applicant as shown in Annexure D attracts any tax under the GST laws? - HELD THAT:- The additional discount given by the supplier through the applicant; which is reimbursed to the applicant is to offer a special reduced price by the distributor / applicant to the customers and hence the amount represent consideration paid by the supplier of goods / principal company to the distributor / applicant for supply of goods by the distributor / applicant to the customer - Therefore, this additional discount reimbursed by the supplier of goods / principal company to the distributor / applicant is liable to be added to the consideration payable by the customer to the distributor / applicant to arrive at the value of supply under Section 15 of the CGST / SGST Act at the hands of the distributor / applicant. Whether the amount shown in the Commercial Credit note issued to the applicant by the Principal Company attracts proportionate reversal of input tax credit? - HELD THAT:- The supplier of goods / principal company issuing the commercial credit note is not eligible to reduce his original tax liability and hence the recipient / applicant will not be liable to reverse the ITC attributable to the commercial credit notes received by him from the supplier. Is there any tax liability under GST laws on the applicant for the amount received as reimbursement of discount or rebate provided by the Principal Company as per written agreement between the Principal Company and their dealers and also an agreement between the principal and distributors? - HELD THAT:- The applicant is liable to pay GST at the applicable rate on the amount received as reimbursement of discount / rebate from the principal company.

  ---

• 2019 (11) TMI 222
  Attachment of Bank Accounts of petitioner - HELD THAT:- Issue Rule, returnable on 28th November 2019. By way of interim relief, the third respondent is directed to forthwith release the attachment over the bank account of the petitioner bearing number 24800210716021.

  ---

• 2019 (11) TMI 221
  Direction to credit the ITC amount to the Electronic Credit Ledger - Transition from VAT to GST - failure to file Tran-2 within the due date - HELD THAT:- This Court at this stage is not expressing any view on the merits of the claim made by both parties, as it is inclined only to direct the third respondent to consider the representations filed by the petitioners on 13.11.2018 and to pass necessary orders on merits and in accordance with law by following due procedure as indicated. The Writ Petitions are disposed of only by directing the third respondent to pass appropriate orders, after following the procedures as indicated.

  ---

• 2019 (11) TMI 220
  Refund claims - time limitation - dealing of refund claims on priority basis since delay in refund of tax beyond the period prescribed in law very severely impedes the generation of business and pace of trade - Rule 91 (2) of the CGST and DGST Rules - HELD THAT:- Though the Petitioner has been granted refund by the Respondent, the claim for interest has been rejected and in this respect, the Respondent have issued a communication dated 14.10.2019. We permit the Petitioner to place on record the said communication along with such other documents that the Petitioner wishes to place on record in relation thereto within two weeks. Reply to the additional affidavit be filed by the Respondents within two weeks thereafter. List on 20.11.2019.

  ---

• Income Tax

• 2019 (11) TMI 219
  Reassessment proceedings u/s 147/148 - Whether reasons to re-open the assessment proceedings for AY 2002-03 amounted to a second opinion or review of the previous view expressed? - HELD THAT:- SLP dismissed.

  ---

• 2019 (11) TMI 218
  Exemption u/s 10(10C) - revised return was filed after the time limit prescribed - request for refund - whether the persons, who retired under the scheme called Early Retirement Option are entitled to claim exemption or not under Section 10(10C) ? - HELD THAT:- The issue involved in this case is squarely covered by the decision of the Apex Court made in S.Palaniappan Vs. Income Tax Officer, Chennai, [ 2015 (10) TMI 405 - SUPREME COURT] respondents are directed to grant the benefit of exemption under Section 10(10C) of the IT Act and refund appropriate amount to the petitioner within a period of eight weeks from the date of receipt of a copy of this order. Petitioner, being a senior citizen, cannot be denied of the benefit of exemption under Section 10(10C) of the Act and the financial benefit that had accrued to the petitioner, which would be more than a lakh of rupees. Therefore, this Court is of the view that the third respondent should grant the benefit of exemption to the petitioner. Accordingly, the writ petition is partly allowed, the impugned order is set aside and the third respondent is directed to grant the benefit of exemption u/s 10(10C) of the Act and refund the appropriate amount to the petitioner, within a period of three months from the date of receipt of a copy of this order. Considering the facts and circumstances of the case, the prayer for interest is rejected.

  ---

• 2019 (11) TMI 217
  Stay of criminal proceedings against the petitioners in the competent court - assessee wilfully not filed the return of income tax for the assessment year 2007-08 within the prescribed time and that they have committed the offence punishable under Section 276CC - HELD THAT:- In the instant case, the prosecution is u/s 276CC of the Act for wilful failure to file returns within due time. It does not depend on the assessment of tax. The decision in Sasi Enterprises [ 2014 (2) TMI 19 - SUPREME COURT] squarely applies to the facts of the present case. Therefore, I find that this is not fit case in which the supervisory jurisdiction of this Court under Article 227 of the Constitution should be invoked to stay the criminal proceedings against the petitioners in the competent court. Petitioners has argued at length on the merits of the complaint filed against them. This is not a petition for quashing the proceedings against the petitioners. Therefore, it is not necessary to advert to those contentions.

  ---

• 2019 (11) TMI 216
  Stay of criminal proceedings against the petitioners in the competent court - assessee wilfully not filed the return of income tax for the assessment year 2007-08 within the prescribed time - commitment of offence punishable under Section 276CC - HELD THAT:- In the instant case, the prosecution is u/s 276CC of the Act for wilful failure to file returns within due time. It does not depend on the assessment of tax. The decision in Sasi Enterprises [ 2014 (2) TMI 19 - SUPREME COURT] squarely applies to the facts of the present case. Therefore, I find that this is not fit case in which the supervisory jurisdiction of this Court under Article 227 of the Constitution should be invoked to stay the criminal proceedings against the petitioners in the competent court. Petitioners has argued at length on the merits of the complaint filed against them. This is not a petition for quashing the proceedings against the petitioners. Therefore, it is not necessary to advert to those contentions.

  ---

• 2019 (11) TMI 215
  Reopening of assessment u/s 147 - HELD THAT:- Attention was invited to the letter dated 12.2.2015 of the Chartered Accountants of the petitioner addressed to the Assessing Officer to point out that representatives of Dharam Impex had duly attended the office of the Assessing Officer in compliance of his directives as per their intimation to the petitioner. As submitted that therefore, in connection with the transaction in question, the Assessing Officer had summoned the party and had duly verified the same and thereafter, had passed the assessment order. As submitted that therefore, it is evident that the Assessing Officer seeks to reopen the assessment on a mere change of opinion. As regards the second ground on which the assessment is sought to be reopened viz. that the petitioner had made a bogus claim of exemption under section 10AA of the Act, it was submitted that this issue was also gone into threadbare at the time of scrutiny assessment. It was submitted that even if such purchase is disallowed, the exempted profit will go up and hence, there is no escapement of income and hence, the formation of belief that the income chargeable to tax has escaped assessment on this ground, is without any basis. Having regard to the submissions advanced by the learned advocate for the petitioner, issue notice, returnable on 10.12.2019. By way of adinterim relief, respondent is restrained from proceeding further pursuant to the impugned notice dated 31.3.2019 issued under section 148 of the Act for Assessment Year 2012-13.

  ---

• 2019 (11) TMI 214
  Reopening of assessment u/s 147 - reason to believe - HELD THAT:- The attention of the court was invited to the detailed submission on the claim made under section 80IA(4) for the Assessment Year under consideration. It was pointed out that after considering the explanation given by the petitioner, the Assessing Officer has, in the Assessment Order dated 05.03.2015 passed under section 143(3) of the Act held that the petitioner fulfills all the conditions for deduction under section 80IA(4) of the Act. It was submitted that at the time of scrutiny assessment, the Assessing Officer has gone into the issue threadbare and hence, it is evident that the respondent seeks to reopen the assessment on a mere change of opinion. It was further pointed out that the assessment is sought to be reopened beyond a period of four years from the end of the relevant assessment year and that, in the absence of any failure on the part of the petitioner to fully and truly disclose all the material facts, the assumption of jurisdiction by the Assessing Officer under section 147 of the Act is without authority of law. Having regard to the submissions advanced by the learned advocate for the petitioner, issue Notice , returnable on 10th December 2019 . By way of ad-interim relief, further proceedings pursuant to the impugned notice dated 28.03.2019 issued by the respondent under section 148 of the Income Tax Act, 1961 for the Assessment Year 2012-13 are hereby stayed.

  ---

• 2019 (11) TMI 213
  Stay of recovery of demand - Tribunal should deal with such cases on priority. He points out that, on the one hand, the assessee has obtained the stay of the outstanding demand while, on the other hand, it is pressing for refund of the amount due in respect of previous assessment years. He points out that the respondent s writ petition is pending before this Court and is listed on 21.01.2020. We are of the considered view that in cases where there is stay of recovery of demand of tax, the Tribunal should deal with the appeals pending before it on a higher priority. The Tribunal should consider forming a separate list of such cases which should be heard on priority after arranging the cases on the basis of their seniority as well as the quantum involved in the stay.

  ---

• 2019 (11) TMI 212
  Depreciation @ 30% - buses which were owned by the assessee and were being run on hire - New Appendix I (effective from assessment year 2006-2007 onwards), as per item No.III (3) (ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire - Tribunal rejected revenue appeal - HELD THAT:- AO disallowed the depreciation holding that this would be applicable only to such businesses who had taken the buses on hire - Tribunal having dismissed the appeal of the Revenue, it is before us in these appeals. A bare perusal of item No.III (3) (ii) quoted above makes it clear that the interpretation given by the Commissioner and the Tribunal is correct and natural while that sought to be given by the Assessing Officer is most unnatural and really makes the provision un-meaning because then it would imply that an Assessee is using the motor buses/ motor lorries and motor taxies in a business of running. We asked the learned counsel for the appellant what the business of running of buses, lorries and taxies would be? He is not in a position to deny that the business of running buses, lorries and taxies can only be for hire because in every other case such vehicles would be only utilized for use of assessee and not for a business. Thus the natural meaning of the phrase would apply in the present case and those Assessees who are running automobiles for hire would be liable to claim a higher depreciation than those whose automobiles are meant for their use. We are not able to find any fault with the judgment and orders of the Tribunal. No other question of law arises.

  ---

• 2019 (11) TMI 211
  Reopening of assessment u/s 147/148 - HELD THAT:- Assessee in the present ground is challenging the validity of the reassessment proceedings u/s 147/148. The law on re-opening of an assessment under the Act, is fairly settled. AO can re-open an assessment only in accordance with the express provisions provided in Section 147/148 of the Act. It is only on the AO strictly satisfying the provisions of Section 147 of the Act that he acquires jurisdiction to re-open an assessment. Section 147 of the Act, clothes the Assessing Officer with jurisdiction to reopen an assessment on satisfaction of the following: (a) The Assessing Officer must have reason to believe that (b) Income chargeable to tax has escaped the assessment and (c) In cases where the assessment sought to be reopened is beyond the period of four years from the end of the relevant assessment year, then an additional condition is to be satisfied viz: there must be failure on the part of the Assessee to fully and truly disclose all material facts necessary for assessment. The requirement in the first proviso to Section 147 of there having to be a failure on the part of the Assessee to disclose fully and truly all material facts does not at all apply where the initial return has been processed under Section 143(1) The reasons recorded by the AO is on the basis of verification of the return of income filed by the Assessee alongwith with the enclosures. According to the AO it shows that assessee has given loan to Shri Gajanan Koli for investment in Adasrsh CHS, the genuineness of the source of investments is not proved and thus he has reason to believe that income chargeable to the extent of loan given has escaped assessment. AO was not justified in taking recourse to the provisions of Sec. 147 of the Act and it stuck down the initiation of assessment proceedings and the consequential assessment order passed u/s 147 AO in the present case was not justified in taking recourse to the provisions of s. 147 of the Act and therefore the initiation of reassessment proceedings are not in accordance with law. Therefore set aside the initiation of reassessment proceedings and the consequential assessment order.

  ---

• 2019 (11) TMI 210
  Reopening of assessment u/s 147 - addition u/s 68 - HELD THAT:- No reference to the assessee for providing any accommodation entry. The A.O. in the re-assessment order also mentioned that information provided by the assessee at re-assessment proceedings stated that details of accounts as reflected in the statement provided showing transaction in bank account of Rs. 10,24,42,961/-. Therefore, contention of the Assessee is correct that this is the amount which has appeared at credit side of the bank account of the assessee. A.O. has taken the entire amount deposited in the Bank account of the assessee as accommodation entry without verifying any fact. The assessee explained before A.O. that the amount in his Bank account reflected on credit side pertain to sales, share application money, income and amount received back from the parties i.e., paid for purchases. Therefore, A.O. did not apply his mind to the information received from Investigation Wing. Assessee also explained before the authorities below that Rs. 80,50,000/- in respect of 16 parties have not been mentioned in the information supplied by the Investigation Wing, then there were no reason for the A.O. to say that both these amounts are accommodation entries received by the assessee in assessment year under appeal. These facts clearly show that A.O. recorded incorrect facts in the reasons recorded for reopening of the assessment. There is no independent application of mind by the A.O. to any tangible material which form the basis of reasons to believe that income chargeable to tax has escaped assessment. The conclusion of the A.O. are at best re-production of the conclusion of investigation report. A.O. in the reasons has not recorded as to from whom assessee has received unaccounted money. The A.O. has merely referred to Annexure-A in the reasons which is credit side of the bank account of the assessee which ultimately found to be correct that the entire bank deposits are not accommodation entries. There were no proceeding pending before the A.O. at the time of recording of reasons, thus, there was no reason for assessee to establish the creditworthiness of the Investors as is noted in the reasons. - Decided against revenue

  ---

• 2019 (11) TMI 209
  Disallowance of principal payments made towards finance lease - allowable revenue expenditure - HELD THAT:- It is well settled Law that rule of consistency do apply to the income tax proceedings. Therefore, the A.O. should not have taken out a different view in the assessment year under appeal, when similar claim of assessee have been allowed as revenue expenditure in earlier years. Nature of infrastructure facilities provided to the assessee on lease rent, it is clear that the same have been provided through Agreement for business purpose of the assessee. Since assessee used these items wholly and exclusively for the purpose of business and was not the owner of the same, therefore, assessee rightly claimed the same as revenue expenditure and rightly claimed the deduction of the same. It is also well settled Law that the liability under the Act is governed by the provisions of the Act and is not depending on the treatment followed for the same in the books of account. It is also well settled that whether the assessee was entitled to a particular deduction or not, would depend upon the provisions of Law relating thereto, and not on the view, which the assessee might take of his right, nor could the existence or absence of entries in the books of account by decisive or conclusive in the matter. No justification to sustain the addition. We, accordingly, set aside the Orders of the authorities below and delete the entire addition. Levy of penalty under section 271(1) (c) - disallowance of loss of 10B Unit, which claim of assessee have been allowed by the Ld. CIT(A) and addition have been deleted. - A.O. made further addition on account of finance lease and long term capital gains - HELD THAT:- Matter requires reconsideration at the level of the Ld. CIT(A). It is well settled Law that CIT(A) while deciding the appeal of assessee shall have to mention point for determination and reasons for decision in the appellate order. CIT(A) confirmed the levy of penalty merely because Ld. CIT(A) confirmed both the additions on quantum appeal. It is well settled Law that quantum proceedings and penalty proceedings are independent and distinct in nature. CIT(A) shall have to give reasons for decision while confirming the penalty or deleting the addition. In this view of the matter, we set aside the impugned order and restore the penalty appeal to the file of CIT(A) with a direction to re-decide the appeal of assessee as per Law, giving reasons for decision in the appellate order. CIT(A) shall have to give reasonable, sufficient opportunity of being heard to the assessee. Appeal of Assessee is allowed for statistical purposes.

  ---

• 2019 (11) TMI 208
  Additional depreciation claimed on new Plant and Machinery in accordance with the provisions of Section 32(i)(iia) - HELD THAT:- No merit in the arguments advanced by the ld. counsel. The provisions of section 32(1)(iia) clearly mention that in the case of any new machinery or plant which has been acquired and installed after the 31st day of March, 2005 by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to 20% of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii). Thus, an analysis of the aforementioned provision shows that the assessee has to by new machinery or plant and not for replacement of any part of the plant or machinery. A perusal of the list of assets on which additional depreciation has been denied by the Assessing Officer shows that these are mainly replacement of various plant machinery earlier in use. We, therefore, do not find any infirmity in the order of the CIT(A) rejecting the claim of additional depreciation on the ground that the various items are not new machinery which has been purchased by the assessee, but, it is in the nature of repair and maintenance of the existing machinery. The grounds raised by the assessee on this issue are accordingly dismissed. Disallowance on account of reclassification of certain assets as Building other than Residential - eligible for depreciation at 10%, which were originally classified by the Appellant as Plant and Machinery , eligible for depreciation at 15% - HELD THAT:- No infirmity in the order of the CIT(A) on this issue. The coal shed and GI sheets, in our opinion, cannot be considered as plant machinery when the assessee is engaged in manufacture of cement. We find merit in the logic given by the CIT(A) that the godowns, warehouses and other buildings which are utilized in an ordinary manner even for housing plant or machinery would not become plant or machinery by itself. Further, he has also given a finding that the GI sheets are such material which are utilized for the plant and by its nature this cannot be characterized as plant or machinery. Under these circumstances, we uphold the order of the CIT(A) and dismiss the grounds raised by the assessee on this issue. Disallowance of net of depreciation on account of capitalization of 25% of Technical Know-how Fee incurred by the Appellant in the subject year - addition on the ground that such expenses have resulted in benefits of enduring nature to the Appellant and thereby constitutes a capital asset - HELD THAT:- We hold that the ld.CIT(A) is not justified in upholding the action of the Assessing Officer in treating 25% of the technical know-how fees as capital in nature. We, therefore, set aside the order of the CIT(A) on this issue and direct the Assessing Officer to treat the entire amount as revenue in nature. The grounds raised by the assessee on this issue are accordingly allowed. See HERO HONDA MOTORS LIMITED [ 2015 (2) TMI 368 - DELHI HIGH COURT]

  ---

• 2019 (11) TMI 207
  Penalty u/s. 271AAB - value of excess stock considered to be undisclosed income - HELD THAT:- As in M/S. NEW HORIZONS LIMITED [ 2019 (9) TMI 859 - ITAT KOLKATA] on the identical factual matrix this Tribunal held that it was not a case where the surplus stock was found as a result of search, representing any undisclosed income of the assessee. On the other hand, the Tribunal found that the physical verification was carried out by the assessee on its own as a matter of internal control in the month of February 2015, well before the search and the surplus stock found on such physical verification having been accounted for by the assessee in its books in the month of March 2015 itself cannot be treated as unexplained investment. Since the facts of the assessee s case are identical, the finding of the coordinate Bench is squarely applicable according to which value of excess stock cannot be considered to be undisclosed income and consequently therefore no penalty u/s 271AAB could be levied. From the Form of the audit report prescribed by the Central Government, we thus find that in order that the auditor gives his report in the prescribed form, every company is required to conduct physical verification of the inventory at reasonable intervals and furnish to the auditor the report prepared on such verification and also satisfy him whether the discrepancies found on such verification were properly dealt with in the books of accounts. We have therefore no hesitation in holding that the stock inspection reports prepared by the internal team of the assessee and found by the search party constituted other documents maintained in the ordinary course of business carried on by the assessee. As noted earlier, such inspection report was prepared at the instance of the management as a matter of internal control and the same was drawn up much prior to the date of search. Having regard to these material facts, we therefore do not find merit in the ld. CIT, DR s argument that the excess stock found noted in the stock inspection report prepared by the internal team of the assessee constituted undisclosed income unearthed as a consequence of search. No infirmity in the order of the ld. CIT(A) holding that the sum did not constitute undisclosed income of the assessee within the meaning of the said expression as set out in Section 271AAB of the Act - Decided in favour of assessee

  ---

• 2019 (11) TMI 206
  Disallowance u/s 14A - book profits for the purpose of computing the taxable liability under Section 115JB - HELD THAT:- CIT(A) is correct to the extent of directing the A.O. to exclude the investments in foreign entities and investment in shares and mutual funds which had not earned exempt income and restricting the amount of disallowance under Section 14A of the Act to the extent of exempt income. The decision of the CIT(A) is based on the ratio of the judgment of jurisdictional High Court in the case of Redington (India) Ltd. v. Addl. CIT [ 2017 (1) TMI 318 - MADRAS HIGH COURT] . The Special Bench of ITAT, Delhi in Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] held that the only investments which yielded exempt income alone had to be considered for the purpose of computing the amount of disallowance under Section 14A of the Act. However, the direction of the CIT(A) to A.O. to exclude the investment in subsidiary companies cannot be upheld in view of the law laid down by Hon ble Supreme Court in Maxopp Investment Ltd. v. CIT [ 2018 (3) TMI 805 - SUPREME COURT] wherein it was laid down that the strategic investments cannot be excluded from the purview of the provisions of Section 14A of the Act. Therefore, the direction of the CIT(A) stands modified to this extent. Disallowance under Section 14A not be added back to the book profit for the purpose of computing taxable income under Section 115JB - CIT(A) cannot be faulted with as he followed the decision of Special Bench of this Tribunal in the case of Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] No contrary decision was cited before us. Hence, we confirm the decision of the CIT(A). Both the appeals filed by the Revenue are partly allowed for statistical purposes. Addition u/s 14A - assessee contended that the provisions of Section 14A of the Act are not applicable since the investments were made only in subsidiary companies for strategic purposes - HELD THAT:- The contention of the assessee was overruled by the Hon ble Supreme Court in Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] Hence, we confirm the order of the CIT(A).

  ---

• 2019 (11) TMI 205
  Expenditure incurred qua commission and brokerage - Allowable business expenditure - CIT (A) disallowed these expenses on the premise that the assessee has failed to furnish copy of bills raised by the payees and that notices issued under section 133(6) have not been responded by the payees - HELD THAT:- CIT (A) was required to return finding if the expenditure are genuine and have been incurred for the purpose of business and then to record the finding that the payment has been made. Answers to both these questions have been given by the AO that payment to both the parties, namely, ABC Real Estate and Real Estate Opportunities Investment on account of commission and brokerage has been proved from the books of account of the parties and from bank statement. So, merely on the ground that letter sent to the parties under section 133(6) of the Act by the AO remained unanswered and bills issued by the payees and details of transactions in respect of brokerage and commission payments have been made, the expenses cannot be disallowed - assessee has given confirmation from both the aforesaid parties along with bank statement. Furthermore, the assessee has duly deducted the TDS on these payments. So, in these circumstances, we are of the considered view that the ld. CIT (A) has erred in confirming the disallowance of claim of Rs. 12,24,329/- out of disallowance of Rs. 15,02,977/- made by the AO on account of expenditure of commission and brokerage, hence ordered to be deleted. Disallowance under the head commission and brokerage paid to six payees - non-compliance of notices issued u/s 133 (6) of the Act by the six of the payees and assessee has not submitted bills and vouchers for making such payment - Assessee has also not given the details as to qua which of the properties booking was made and commission was paid and what was the rate of commission and proof of rendering actual services - HELD THAT:- when the AO has categorically mentioned that all the payments made by the assessee are verifiable being duly recorded in the books of assessee, which have not been otherwise disputed and the same are duly corroborated with bank statement and ledger account. Moreover, out of 22 payees to whom the brokerage have been paid, only 6 payees did not respond. However, their confirmation is available on record. So, when there is no dispute as to the identity of the payees and genuineness of the expenditure has nowhere been disputed by the ld. CIT (A) and these expenditure made under the head commission and brokerage have not been disallowed in the preceding or succeeding year, the same cannot be disallowed. In these circumstances, we are of the considered view that the ld. CIT (A) has erred in making disallowance Addition of sundry creditors - HELD THAT:- When assessee has undisputedly maintaining its books of account on the basis of mercantile system of accounting and the amount in question is shown as opening balance in the books of assessee in the account of I.M. Puri Co. and such expenses having been incurred in the preceding years had not been paid, was shown as outstanding to the creditor s account. In these circumstances, the addition could not be sustained as there is no evidence on record that such liability has ceased to exist. We have examined opening balance of the assessee, available at page 212 of the paper book, in the account of I.M. Puri Com. wherein amount in question has been shown as opening balance in the account of I.M. Puri Co. So, in these circumstances, we are of the considered view that disallowance made by the ld. CIT (A) is not sustainable, hence ordered to be deleted. Deduction u/s 35D - enhancement made by the ld. CIT (A) u/s 251 - HELD THAT:- We fail to agree with the ld. CIT (A) that the proposed enhancement is not a new source of income and is very much part of the income assessable under the head income from business and profession . Bare perusal of the assessment order goes to prove that when the AO has computed the business income of the assessee, question of allowability or dis-allowability of claim in question has not been discussed and decided. So, we are of the considered view that the expenditure disallowed by the ld. CIT (A) by way of enhancement certainly amounts to new source of income. CIT (A) has recorded the finding that when the deduction has been claimed in the computation of income under section 35D of the Act rather ignored to examine the claim. Again, the identical issue has been decided by Hon ble Supreme Court in case of CIT vs. Rai Bahadur Hardutroy Motilal Chamaria [ 1967 (4) TMI 8 - SUPREME COURT] by holding that, the Appellate Assistant Commissioner has no jurisdiction under section 31 (3) of the I.T. Act, 1922 which is pari-materia with section 251(1) of the Act to assess a source of income which is not disclosed either in the returns filed by the assessee or in the assessment order . Disallowance of the interest paid on loans - HELD THAT:- CIT (A) has thrashed the issue in entirety by perusing the closing balance of the assessee at Rs. 459.77 crores whereas interest free loan was of Rs. 229.4 crores and the assessee company was having share capital and reserves of Rs. 759.93 crores and when the loan was given for business expediency of subsidiaries duly explained by the assessee and appreciated by the ld. CIT (A) that the amount paid during the year under assessment was Rs. 275.16 crores from internal accruals, the ld. CIT (A) has rightly deleted the addition by relying upon the decision rendered by Hon ble Supreme Court in SA Builders [ 2006 (12) TMI 82 - SUPREME COURT] - AO in remand proceedings has not given any comments, for the reasons best known to him rather raised a bald objection that additional evidence sought to be led by assessee be not admitted as the assessee had already been granted adequate opportunity, thus has impliedly admitted the submissions of the assessee explaining aforesaid facts that addition was not sustainable, hence ld. CIT (A) has rightly deleted the addition Disallowance of advertisement and publicity expenses - Steep increase in advertisement and publicity expenses by the assessee during the year under assessment - assessee has failed to furnish complete information in respect of some of the parties to whom the payment has been made qua advertisement and publicity expenses - HELD THAT:- AO has not conducted proper enquiry before making the addition in question, the ld. CIT (A) who is having co-terminus powers was required to conduct the enquiry himself or would have called the remand report before deleting such addition. Ld. CIT (A) rather harped upon the case laws without thrashing the facts of the case and deleted the addition, which order is not sustainable in the eyes of law. In view of the matter, we are of the considered view that the issue is required to be remanded back to AO to decide afresh after providing adequate opportunity of being heard to the assessee. Unverified sundry creditors - CIT-A deleted the addition - HELD THAT:- Revenue has failed to controvert the findings returned by the ld. CIT (A) which are purely based upon remand report given by the AO, ledger account of the aforesaid sundry creditors from their books of account and confirmation obtained from the parties in question at the time of audit and AO has specifically recorded the fact that the submissions of the assessee were verifiable from the books of account. CIT (A) has confirmed the addition in case of the parties whose confirmations have not been brought on record by the assessee rather their denial has been obtained by the AO. In these circumstances, we are of the considered view that there is no perversity or illegality in the deletion made by the ld. CIT (A)

  ---

• 2019 (11) TMI 204
  Addition being income allegedly earned by the appellant form the deal of transfer of shares which had been terminated by the parties - HELD THAT:- CIT (A) extensively thrashed the facts of the case in paras 4.5 to 4.8 of the impugned order in the light of the statements of Mahesh Mehta and Kusum Mehta recorded during the search seizure proceedings and reached the conclusion that agreement dated 21.04.2009 is not a legally enforceable document for lack of certainty of the purchaser party. When we examine both the agreements dated 22.08.2008 and 21.04.2009 in the light of the statement recorded by Mahesh Mehta during the course of search u/s 132 (4) to which presumption is attached and has not been retracted spontaneously and no material whatsoever has been brought on record by the assessee if the said statement was made under coercion or under any undue influence, agreement dated 21.04.2009 does not inspire confidence to believe the same. When we examine facts and circumstances of the case, particularly statement of Kunjan Arora recorded during search investigation, it further leads to the conclusion that the agreement to sell in question dated 22.08.2008 owned by RRFSL was executed for a sale consideration of Rs. 25,00,01,100/- as Kunjan Arora has specifically replied that He has paid a total sum of Rs. 9.66 crores over a period from December 2007 till date and had issued post-dated cheques of Rs. 8.84 crores which have not been encashed till date. Furthermore, a sum of Rs. 1,100/- was paid in cash as initial deal signing amount thus paid a total payment of Rs. 18,50,01,100/-. So, the question is answered accordingly that Agreement dated 22.08.2008 is not a dumb document. CIT (A) on facts primarily based on undisputed facts cannot be unsettled merely on the contention of the assessee that the draft agreement dated 22.02.2008 is merely a dumb document because the same has been categorically admitted by assessees in their statements as well as Kunjam Arora recorded during search proceedings, though retracted subsequently. But retraction cannot be relied upon on the ground that it was not spontaneous rather made in the well-orchestrated manner by preparing second agreement dated 21.04.2009 to camouflage the actual transaction. Even Mahesh Mehta during recording of his statement u/s 132 (4) recorded on 01.07.2009 has not disclosed the existence of agreement dated 21.04.2009. Had there been any such agreement in question, Mahesh Mehta would have relied upon the same in support of his case. So, it is a document prepared anti-dated to evade the taxes. Moreover, terms and conditions of the agreement dated 21.04.2009 are against the settled convention followed in such transactions. Moreover, the second agreement was given in the post-search proceedings. CIT (A) has rightly reached the conclusion that since the assessees have not become owner of the shares of RRFSL, profit of Rs. 4,08,00,000/- cannot be treated as their capital gain but it is certainly income from their business or from their sources as broker of the transaction as till today it is not brought on record if on the basis of legal notice issued to assessee for refund of that amount, any legal proceedings have been initiated or any order has been passed by the Civil Court and accordingly, made addition of Rs. 2,04,00,000/- made each in the name of Mahesh Mehta and Kusum Mehta, the assessees, is sustainable. Addition based on sale deed for transfer of HSIIDC plot - It is settled principle of law that addition cannot be made on the basis of sole statement recorded u/s 132(4) of the Act. Moreover when the transaction of sale of plot has been frustrated by the original owner and the buyer by bye-passing the assessees, there is no question of making addition of Rs. 9,20,00,000/- each. Furthermore, when ample evidence is there on record and has been scanned by the ld. CIT (A) that both the assessees have refunded the entire amount received in the deal except an amount of Rs. 4,08,00,000/-, this addition is not sustainable. So the ld. CIT (A) has rightly deleted the addition of Rs. 9,20,00,000/- each made in the hands of Mahesh Mehta and Kusum Mehta. AO has also made addition in case of Mahesh Mehta on account of undisclosed sales of Katha manufactured from Khair wood, a forest product - It is the case of the assessee, Mahesh Mehta that the stock in question was old stock of liquid Katha and due to suspension of production work in the factory due to some legal problem, the stock in question got spoiled/damaged in the factory because of flood on account of heavy rains. The stock in question has been physically verified by the officials of the Forest Department and declared the same actually destroyed and given the report that stock in question is as good as of nil value . Report of the Forest Department declaring the stock in question as spoiled/destroyed with nil value and correspondence with the Forest Department is available. On the basis of report that 549 quintals liquid Katha was unfit for sale, it was ordered to be destroyed and the ld. CIT (A) after verifying the opening and closing stock extracted in para 4.3 of the impugned order rightly reached the conclusion that this addition is not sustainable in the eyes of law and the report given by the Forest Department tallies with stock register maintained with the assessee. So, we are of the considered view that the ld. CIT (A) has rightly deleted the addition of Rs. 1,48,51,840/- made by AO on account of undisclosed sales of katha.So, the amount of Rs. 4,08,00,000/- has been rightly treated as income of the assessee in the year of receipt i.e. AY 2009-10 and not in the AY 2014-15 as contended by the ld. AR for th

  ---

• 2019 (11) TMI 203
  Deduction u/s 10A - AR admitted that there is mistake in figures pertaining to one undertaking. The Ld. AR submitted that by revised return filed on 22.09.2009, deduction u/s 10A of Rs. 25,61,48,875/- was claimed. - HELD THAT:- Profit of the business was taken at Rs. 23,22,45,490/-. Export turnover and total turnover was reduced by Rs. 3,08,53,780/- and Rs. 7,80,68,057/- on account of telecommunication expenses and travel expenses. Though deduction of Rs. 23,95,42,286/- was allowed in the respect of four undertakings having profit, however, by mistake only the figures pertaining to Noida IT were noted. Thus, these aspects needs to be verified and should be put before the Assessing Officer for fresh adjudication. It will be appropriate to remand back this issue to the file of the Assessing Officer. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Thus, Ground No. 1(a) is partly allowed for statistical purpose. Adjustment u/s.115JB towards provision for diminution in value of investment and doubtful debts as well as advances written back - HELD THAT:- In the present case, net profit for the year ended on 31.3.2007 was increased by the amount of provision of Rs. 1,04,42,237/- and Rs. 1,82,43,319/- therefore, CIT(A) was not justified in upholding the adjustment. Merely because for AY 2007-08, total income under regular provisions was more than the book profit u/s 115JB, it cannot be said that book profit for AY 2007-08 was not increased by the amount of provisions. CIT(A) was not correct in holding that the book profits of the earlier ears have not been increased by the said reserves or provisions therefore as per provision Section 115JB the addition sustains. In fact, the net profit for the year ended on 31.3.2007 was increased by the amount of provision. Thus, Ground Nos. 1(b) and 1(c) are allowed. Exclusion of exchange fluctuation in computing deduction u/s 10A - HELD THAT:- All the transactions relate to foreign operations i.e. investment in subsidiaries. Since the gain relate to capital field being investment in subsidiaries, therefore, such gain was capital in nature. These submissions were not taken into account by the Assessing Officer as well as by the CIT(A). Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Thus, Ground No. 2 is partly allowed for statistical purpose. Charging of interest u/s 234B of tax computed u/s 115JB - HELD THAT:- From the perusal of the record it can be seen that as the amendment of section 115JB by the Finance (No.2) Act 2009 operates with retrospective effect from 1.4.2001, the assessee filed revised computation of book profit and thereby, provision for bad debts of Rs. 1,68,37,339/- and provisions for doubtful advances of Rs. 3,67,86,988/- was added to the book profit which led to shortfall in advance tax. Thus, on such interest u/s 234B cannot be charged as held in various decisions. The legal position is settled that in such cases, interest u/s 234B cannot be charged.

  ---

• 2019 (11) TMI 202
  Capital gain computation - Non obtaining a valuation report from the DVO the capital gain of a particular property can be determined by the authorities below rejecting the valuation done by the registered valuer as relied upon by the assessee - HELD THAT:- AO rejected the valuation made by the registered valuer as relied upon by the assessee but has failed to decide the issue upon obtaining a copy from the DVO regarding the valuation of that particular property which is now a settled legal position in view of the several judicial pronouncements including the order passed by the Hon ble Jurisdictional High Court as relied upon by the Co-ordinate Bench. AO has failed to obtain the DVO s report which ought to have been done by the authorities below. Surprisingly, the CIT(A) is also failed to perform such statutory duties conferred upon him. Hence, we find the decision made by the AO, confirmed by the CIT(A) is not in coherence adhere to the principle laid down by the different judicial pronouncement and having no other alternative, we quash the impugned order for the reason as discussed above. We find it and proper to remit the issue to the file of the Learned AO to decide the matter afresh upon obtaining a copy from the DVO to ascertain the fair market value of the property in question as on 01.04.1981 and also upon giving a reasonable opportunity of being heard to the assessee and to take into consideration any evidence that the assessee may choose to file at the time of hearing of the matter. Hence, the assessee s appeal is allowed for statistical purposes.

  ---

• 2019 (11) TMI 201
  Addition u/s 40(A)(3) - HELD THAT:- It is an admitted fact that the suppliers Mohd Nasim Qureshi who had supplied the raw meat in the F.Y. 2009-10 has submitted that I do not now the above farm or related persons of above farm before or after 01.04.2009. Nothing has been brought on record that the assessee has purchased the raw material from the said person. The assessee has merely stated before the AO that the amount was the opening balance and the total payments had been made less than Rs. 20,000/- in a day. Mere statement by the assessee that it has dispute with this person cannot be sufficient to delete the addition. Since the CIT(A) while sustaining the addition has give justifiable reasons, therefore, we uphold the same. The ground raised by the assessee on this issue is accordingly dismissed. Enhancement of income from u/s 40A(3) - CIT(A) has passed a very detailed and elaborate order while enhancing the income of the assessee u/s 40A(3) of the Act. In the absence of any contrary material available before us, we do not find any infirmity in the order of the CIT(A). Accordingly the same is upheld.

  ---

• 2019 (11) TMI 200
  Addition u/s 69A r.w.s. 115BBE - A.O. proceeded to estimate the agricultural income by taking into consideration the total land holdings of the assessee and approximate crop yield - A.O. has estimated agricultural income partly and the balance amount was assessed as income of the assessee from undisclosed source - HELD THAT:- A.O. has not disputed the fact that the agricultural operations on the agricultural land measuring 30 acres in Hanumangarh were carried out by the tenant one Shri Mahendra Singh S/o Shri Mani Ram. In order to verify the fact, the A.O. examined the said person and recorded his statement. He has admitted the fact of agricultural activity carried out on the agricultural land of the assessee and payment of Rs. 19,60,000/- through cheques issued from OBC bank account. Once the payment of Rs. 19,60,000/- were admitted by the tiller/tenant who has carried out agricultural operations and that too through the banking channel then to that extent the agricultural income of the assessee for the year under consideration cannot be doubted. CIT(A) has accepted the source of deposit to the extent of Rs. 4,10,000/- as past savings of the assessee. Accordingly, by considering the said amount of Rs. 19,60,000/- as agricultural income for the year under consideration and Rs. 4,10,000/- as past savings of the assessee, the source of deposit to the extent of Rs. 23,70,000/- is accepted, as explained by the assessee. Hence, the addition of the remaining amount of Rs. 1,61,200/- is sustained. Appeal of the assessee is allowed in part.

  ---

• 2019 (11) TMI 199
  Reopening of assessment u/s 147 - Disallowance of prior period expenses - whether re-opening u/s147/148 of the Act in maintainable where tax liability as per book profits computed under s.115JB ? - HELD THAT:- We find that the issue is no longer res integra in view of the judgment rendered by Jurisdictional High Court. The Hon ble Gujarat High Court in India Gelatine and Chemicals Ltd. [ 2015 (2) TMI 808 - GUJARAT HIGH COURT] has observed that in the absence of any addition to the tax liability of the assessee computed u/s115JB of the Act (which exceeds the tax liability under normal provisions), the jurisdiction of the AO is ousted even if the proposed disallowance of expenditure by the AO under normal provisions is sustained. We are not in a position to take any indulgence at the plea of the Department for maintainability of re-assessment notice and re-assessment order having regard to legislative fiat by way of Explanation 2 to Section 147 of the Act referred to and relied upon. Needless to say, Article 141 of the Constitution embodies the rule of precedent. All the subordinate courts are bound by judgment of the High Courts. Thus, governed by the decision of the Hon ble Gujarat High Court as noted above, we find merit in the plea raised by the assessee by way of its additional grounds of appeal. The re-assessment notice is accordingly quashed and re-assessment order is declared null and void. Appeal filed by the assessee allowed.

  ---

• 2019 (11) TMI 198
  Addition of cash Deposit in bank accounts - HELD THAT:- Revenue before us during the course of arguments and also in the written submissions have not disputed the correctness of the cashbook. Further, it was also not the case of the Assessing Officer that the cash book maintained by the assessee was incorrect. In view of the above, once the assessee was able to explain the source of deposits in the bank based on the cash book, which were admittedly not disputed and rejected by the AO, therefore, no addition on the basis of the bank deposit can be made out and accordingly, the ground raised by the Revenue is liable to be dismissed. Addition in respect of cash deposits in the account of various creditors - According to AO, the confirmations were filed, but no copy of IT returns and computation and bank statement not filed. Assessee has not proved the deposit, as he added the same in the income - HELD THAT:- As is clear from the tabulatio Assessing Officer had made the addition even in respect of Axis Bank and Barclay Finance. This shows the total non-application of mind by the Assessing officer. In respect of these two creditors, we have no doubts that these are duly explained creditors being the financial Institution/bank, hence, the addition are deleted. With respect to Renu Verma, we had already mentioned that the deposit in the bank account of Renu Verma was duly explained by her in the return of income filed by her. Further, she had also explained that the said amount was duly given by her to her husband. In our view, the assessee had discharged his onus and therefore, the addition made by the AO qua Renu Verma was uncalled for. AO was asked by the assessee during the assessment proceedings to summon all these creditors including Renu Verma, but theAO failed to exercise his powers under the Act. Hence, for this reason also, this addition is deleted. Creditor Arun Chaddha, the confirmation of account was placed by the assessee in the paper book at page 129 and 130. The amount of Rs. 5 lacs was paid by Shri Arun Chaddha through cheque drawn on Shreyas Gramin Bank, SB 791. The above said fact was not disputed by the Assessing Officer in the remand report. In view of the above, the addition made by the assessing officer on account of creditor Arun Chadda is deleted. In respect of Nisha Agarwal - As per confirmation before AO, a closing balance of Rs. 468375/- was mentioned whereas as per confirmation before CIT(A), it was mentioned as Rs. 4,50,000/-. Difference between the two is a very small amount and moreover, the creditor in the books of account of the assessee are required to be seen and in the present case, the amount shown in the assessee s account was less as compared to the confirmation before the AO. In view of the above, we do not find any reason to uphold the action of AO In respect of Shree Timber, the assessee has placed at page 146 to 188 the confirmation from shree Timber through its proprietor sh. Akhil Bansal for an amount of Rs. 2,00,000/-. Even the return of income was placed on record for the relevant assessment year. Since the identity, capacity and creditworthiness of the creditor are beyond the shade of doubt, therefore, the deletion made by the CIT(A) is required to be upheld. In respect to Bharat Bansal the confirmation of account clearly shows the receipt of Rs. 1,50,000/- through the banking channel and therefore, the amount remained to be unpaid by the assessee was only Rs. 1,50,000/-. The said amount was not reflected in the books of account of the assessee. In view of the above, the assessee failed to give any explanation for the credit of Rs. 1,50,000/-. In view of the above, the appeal of the Revenue is dismissed as the assessee s explanation in respect of Rs. 1,50,000/- is accepted on the basis of the books of account of the Bharat Bansal. However, the C.O. of the assessee in respect of remaining Rs. 1,50,000/- which was sustained by the ld. CIT(A), we are of the opinion that the assessee s explanation is without any merit and accordingly, the same is dismissed. Disallowance u/s 40(a)(ia) - interest paid to Barklay Finance Co. without deduction of IDS - HELD THAT:- The payment was made to Barklay Finance Co. which is a bankand is assessed to Income-tax. In our considered opinion, the assessee was not required to deduct the TDS while making the payment of interest and principal to Barklay Finance CO. The bank is liable to be taxed on the interest income and it is not the case of the AO that the bank has not declared the interest income in its return of income and has not paid the taxes. In our view this issue is of applicability to proviso to section 40(a)(ia) is covered in favour of the assessee by the decision of Hon ble High Court in the matter of Ansal Land Mark, [ 2015 (9) TMI 79 - DELHI HIGH COURT] wherein Delhi High Court has followed the decision of Agra Tribunal in the matter of Rajeev Agarwal [ 2014 (6) TMI 79 - ITAT AGRA]

  ---

• 2019 (11) TMI 197
  Addition by applying G.P rate of 6.39% on alleged short stock - HELD THAT:- AO accepted the working and the explanation of the assessee (and has not gone by the valuation carried out by the survey team) and basis the same, where he has held that physical stock is less than the book stock by Rs. 34 lacs, which should actually be Rs. 31,96,346 (Rs. 1,99,71,757 less Rs. 1,67,75,411), we donot see any infirmity in the order of the AO. The argument of the ld AR that instead of 25%, where 15% average variation is taken, there would not have been any difference cannot be accepted for the reason that the assessee was duly provided the opportunity by the Assessing officer to explain the difference and thereafter, even before the ld CIT(A) and before us, no such working is submitted to support the 15% average variation. The physical stock being less than the book stock effectively means out of book sales to the extent of Rs. 31,96,346 and applying gross profit so declared by the assessee @ 6.39%, the addition comes to Rs. 204,246 (as against Rs. 217,260 determined by the AO) which is hereby confirmed. - Appeal of the assessee is partly allowed.

  ---

• Customs

• 2019 (11) TMI 196
  Refund of Customs Duty - refund claim rejected as premature on the ground that the petitioner has not challenged the assessment - HELD THAT:- As the learned counsel for the petitioner fairly submitted before this Court that liberty may be given to the petitioner to challenge the said self assessment before the concerned Appellate Authority, this Writ Petition is disposed of by granting liberty to the petitioner to file such appeal against the self assessment within a period of two weeks from the date of receipt of a copy of this order.

  ---

• 2019 (11) TMI 195
  Release the security/bank guarantee amount to the petitioner - HELD THAT:- MMTC is directed to proceed in the matter as if the aforesaid two communications dated 29th October, 2015 and 17th December, 2015 of Directorate of Revenue Intelligence are no longer in operation. Further, MMTC shall release the security/bank guarantee amount to the petitioner to the extent it is entitled, in accordance with law forthwith and in any event not later than two weeks from the date of the receipt of copy of the order of this Court. As far as show cause notice is concerned, if no further hearings are contemplated, Adjudication Officer shall proceed to pass an adjudication order not later than three months from the date of the receipt of copy of the order of this Court in accordance with law. Petition allowed.

  ---

• 2019 (11) TMI 194
  Valuation of imported goods - pharmaceutical gelatin (capsule grade) - addition of 20% of the FOB value as adjusted freight component in terms of Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - redemption fine - penalty - HELD THAT:- Out of the quantity of 10 MT of subject goods, the overseas supplier had supplied 9 MT by sea on 17.08.2012 and since was not complied with the requirement of the purchaser order was not complied with, it had sent the remaining 1 MT by air and the freight was also paid by the supplier. In context with the valuation of imported goods, the proviso clause appended to Section 14 ibid mandates that the transaction value in the case of imported goods shall include inter alia, cost of transportation to the place of importation. The said statutory provision nowhere provides that only the freight paid by the importer should be included in the transaction value. Thus, in absence of any specific mention about the person required to pay the freight component, such amount paid by the overseas supplier should also be considered as part of transaction value for the purpose of determination of duty liability. The rejection of the declared value and re-determination of the same in terms of Rule 10(2) ibid by the original authority is in conformity with the statutory provisions - However, considering the fact that the appellant had entertained the reasonable belief regarding non-inclusion of the element of freight in the transaction value, we are of the view that the redemption fine imposed on it can be reduced in the interest of justice - the impugned order is modified to the extent of reducing the redemption fine of Rs. 1,35,000/- to Rs. 50,000/-. Imposition of penalty on appellant - HELD THAT:- Both the appellant as well as the overseas supplier have communicated to the Department regarding delayed supply of the part quantity through air and that the freight amount was also paid by the overseas supplier. Thus, under such circumstances, the provisions of Section 112(a)(iii) cannot be invoked for imposition of penalty on the appellant - Penalty set aside. Appeal allowed in part.

  ---

• 2019 (11) TMI 193
  Imposition of penalty u/s 112 and 114A of CA - Clandestine removal - illegal diversion of duty free imported and indigenous raw materials i.e Transfer Print paper, Grey Fabrics and Knitted Fabrics etc. as such which was procured by them subject to condition of use of same in manufacture and export of finished goods - cross-examination of witnesses - HELD THAT:- Pursuant to investigation undertaken by the revenue, it was found that the Appellant Unit had been showing the receipt of raw material i.e. transfer print paper, fabric etc in their factory and its use in manufacture of export goods which was shown to have been cleared to M/s Sunshine and Al-Amin Exports. The investigation at M/s Al-Amin and Sunshine showed that infact they did not receive any goods from the Appellant Unit but received a premium of Rs. 4 to 5 from Shri Mahendra Sancheti, director of Appellant Unit in whose favour the CT-3 certificates were issued. Shri Rashid Sayyed, the partner of M/s Al-Amin in his statement stated that one Shri Bilal Latif Memon used to supply readymade cheap goods after purchasing from open market to M/s Sunshine and M/s Al- Amin through the tempos of Shri Akbar Tempowala. No goods were received from M/s Laurel. The EOUs used to do minor jobs of sewing and packing and export the goods. It was found that all the goods were brought by these firms from market. No physical evidence of transportation of finished goods could be shown by M/s Laurel. This clearly shows that M/s Laurel instead of use of duty free raw material in manufacture of finished goods to be exported, has sold the raw material in open market. The Appellant has challenged the impugned order also on ground that no cross examination of panch witnesses and other witnesses was provided. We find that the repeated statements of the concerned persons clearly shows that the raw material was cleared by the Unit in open market and false receipt of goods was shown by the consignee unit. Even the goods seized from consignee M/s Al-Amin could not have been manufactured from goods supplied by M/s Laurel as the same were different in GSM and Denier. It leaves no doubt that M/s Laurel did not use the duty free raw material in manufacture of export goods and instead cleared the same in open market. The impugned order deserves no interference and the appeals filed by M/s Laurel and other co-appellants are required to be dismissed - As regard appeal filed by the revenue that the adjudicating authority has wrongly given option to pay reduced penalty under Section 114A, we consider it appropriate to send the matter back to the adjudicating authority to look into the contentions raise by the revenue and to decide the quantum of penalty - Appeal disposed of by way of remand.

  ---

• 2019 (11) TMI 192
  Whether the appellants have violated the prohibition imposed by DGFT Notification No. 39/RE2007 dated 06.10.2007? - whether, they are liable for penalty and as to whether the Commissioner should have imposed redemption fine on the goods imported by them and cleared provisionally? HELD THAT:- The appellants contended that in view of the Stay granted, by the Hon ble High Court of Kerala, on the operation of Notification cited, they have not violated any prohibition and that the agreements for sale of RBD Palm Oil or Palmolein have taken place when the prohibition was not even notified and therefore, in terms of Para 1.5 of the provisions of Foreign Trade Policy, they have not violated any prohibition imposed on the import of impugned goods. The defence of Department is that the Final Order of the Hon ble High Court of Kerala dismissed the Writ Petition filed by the appellants thereby the position existing before the grant of Stay stands and thus it should be held that the appellants have imported impugned goods contrary to the prohibition in place. The Department also contends that the appellants have not submitted any concrete proof that the conditions of Para 1.5 of the FTP have been satisfied so as to be eligible for the imports despite the prohibitions. The appellants have submitted a few disconnected documents which look like sale deeds, contracts, agreements etc., however as pointed out by the Learned Commissioner AR, the documents are full of inadequacies making the authenticity of the documents subject to doubt. It is also not coming forth as to which of these documents pertain to the impugned imports. Moreover, we do not find any conclusive agreements indicating that an irrevocable letter of credit has been opened or has been enforced at the time of shipment. The appellant s argument fails on both counts and we find that they have imported the impugned goods in violation of the prohibition imposed by DGFT Notification cited supra and thus, they have rendered the impugned goods liable for confiscation and rendered themselves liable for penalty. We allow the appeals of Revenue and impose redemption fine of Rs. 70 Lakhs on M/s Parison Foods Pvt. Ltd. and Rs. 50 Lakhs on M/s Parison Agrotech - decided in favor of Revenue.

  ---

• 2019 (11) TMI 191
  Quantum of redemption fine on re-export of goods - import of Arecanuts - rejection of cargo under section 25 of FSSAI Act, 20006 as samples did not conform to Food Safety and Stands (Food Products Standards and Food Additives) Regulations 2011 - HELD THAT:- The jurisdictional High Court in the case of Sankar Pandi (supra) has held that imposition of redemption fine cannot sustain when the goods are to be redeemed for the purpose of re-export only - the redemption fine is set aside. Imposition of penalty u/s 112(a) of the Customs Act, 1962 - HELD THAT:- The Commissioner (Appeals) has reduced the penalty to Rs. 2 lakhs. The ld. AR has pointed out that the goods imported were intended for human consumption and that the goods did not conform the FSSAI standards, penalty imposed is reasonable. We are in full agreement with the argument put forward by the ld. AR and therefore we find that the imposition of penalty does not require any interference. The impugned order is modified to the extent of setting aside the redemption fine only - appeal allowed in part.

  ---

• 2019 (11) TMI 190
  Imposition of redemption fine and penalty - Classification of imported goods - Brass Scrap Ebony - HELD THAT:- The duty demand involved in the present appeal is around Rs. 1.38 Lacs. Considering the quantum of differential duty confirmed by the department, we are of the view that the redemption fine and penalty imposed on the appellant can be reduced in the interest of justice. The impugned order is modified to the extent of reducing the redemption fine from Rs. 2,00,000/- to Rs. 50,000/- and the quantum of penalty from Rs. 50,000/- to Rs. 20,000/-, which should be deposited by the appellant - Appeal disposed off.

  ---

• Corporate Laws

• 2019 (11) TMI 189
  Oppression and mismanagement - during the pendency of the company petition, the respondents filed Company Petition against the appellant and both the company petitions came to be disposed of by NCLT by the impugned order - HELD THAT:- Record shows that the Respondents initiated action against the appellant to remove him as Director. The respondents have given various instances of misconduct to claim that the appellant indulged in anti-company activities. When the appellant stood on technicalities regarding time the respondents appear to have sent fresh notice dated 3.5.2014 and EOGM came to be held on 6.6.2014. Before this the appellant had filed the Company Petition on 15.5.2014. The NCLT looked into this aspect and did not find fault with the removal of the appellant from the post of Director. We do not find any reason to disagree with the NCLT. In fact, we have gone through the other finding also which have been recorded by the NCLT with regard to the various allegations made by the appellant and those allegations did not find favour with the NCLT. There is no substance in the appeal - appeal dismissed.

  ---

• 2019 (11) TMI 188
  Maintainability of petition - Oppression and mismanagement - name of respondent-company was struck off during the pendency of company petition - sections 397 and 398 of the Companies Act, 1956, read with sections 402 and 406 of the Companies Act, 1956 - HELD THAT:- We are not in agreement with learned counsel for the petitioner that since the Registrar of Companies is not justified for strike off in question and thus the petition is maintainable. Admittedly, neither the petitioner nor respondents stated to have brought to the notice of the Registrar of Companies about pending of the case, when they have issued notices for striking off the name of companies leading to striking off the name of company. Moreover, it is the responsibility of the concerned parties to bring to the notice of the Registrar of Companies, when STK notices were issued by the Registrar of Companies proposing to struck off the company. The petitioner/the company, etc., who are eligible to file any application under section 252 of Companies Act, 2013, can file an application/petition seeking to restore the name of the company, and in such a case, the Tribunal can consider the issue whether the Registrar of Companies is justified to strike off the company, while the present company petition is pending. Petition is hereby disposed of by granting liberty to the petitioner to file a fresh company petition, in accordance with law, after the name of respondent No. 1-company restored to file by the Registrar of Companies.

  ---

• 2019 (11) TMI 187
  Winding up of Company - initiation of CIRP during the pendency of the petition - Section 241 read with Section 242 of the Companies Act, 2013 - HELD THAT:- From bare perusal of Section 241 if read with Section 242 of the Companies Act, 2013, it will be clear that on an application made under Section 241, if the Tribunal is of the opinion that company s affairs have been or are being conducted in a manner prejudicial to the interest of the company and that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound-up, in such case, the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. The purpose of Section 241 read with Section 242 of the Companies Act, 2013 is to save the company from winding up even if the company s affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest. The essence of Sections 241 242 will be defeated if during the pendency of the petition, the Operational Creditors or Financial Creditors are allowed to trigger Corporate Insolvency Resolution Process itself. The Tribunal while dealing with the matter failed to notice the aforesaid fact. It is a fit case in which the Board of Directors should be allowed to take its own decision as to how it will meet its end for meeting the liabilities of the Operational Creditors / Financial Creditors and whether the liability is of one or other unit including Sonepat Unit and we, accordingly, allow the Board of Directors to take such decision to save the company from initiation of the Corporate Insolvency Resolution Process and not for other purpose. Impugned order set aside - appeal allowed.

  ---

• Insolvency & Bankruptcy

• 2019 (11) TMI 186
  Admissibility of petition - initiation of CIRP - Failure on part of corporate Debtor to make repayment of loan - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- At the stage of admission of Application under Section 7, the requirement is to give limited Notice and the considerations would be to see whether or not satisfaction by Adjudicating Authority could be reflected on the basis of Sub-Section (5) of Section 7. If there is a financial debt, which is more than Rs. 1 Lakh and there is a default and if the Application is complete, the Application would have to be admitted. The Corporate Debtor is entitled to point out that a default has not occurred in the sense that the debt which may include a disputed claim is not due. Corporate Debtor may point out that the debt is not due by showing that it is not payable in law or in fact. There is no substance in this claim made by the Appellant that if it appears that there is no possibility of keeping the Company a going concern, IBC cannot be invoked - appeal dismissed.

  ---

• 2019 (11) TMI 185
  Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in repaying the loan availed by it from the Financial Creditor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The corporate debtor in the instant case did not turn up to contest the petition. The applicant has produced all the required documents. The existence of default also stands proved. The applicant here, in this case, succeeds in proving that it has complied with all the requirements to be meted out under Section 7(3) of the I B Code, 2016. Therefore, the application is liable to be allowed. Application admitted - moratorium declared.

  ---

• Service Tax

• 2019 (11) TMI 184
  Rebate of Service Tax - exports of service or not - services of tele-communication provided by the appellant to the international inbound roamer in Indian territory and payment thereof received from foreign telecommunication service provider - principal of unjust enrichment - HELD THAT:- The Tribunal in the case of M/S VODAFONE ESSAR CELLULAR LTD VERSUS CCE, PUNE-III [ 2013 (7) TMI 178 - CESTAT MUMBAI] , dealing with absolutely identical issue, clearly held that service provided to international roamer in India is export of service on the ground that the recipient of service located out of India and the payment is received in convertible foreign exchange, even though actual user of the service is in India - The issue of unjust-enrichment was also considered in the above judgment on which it was held that in case of export of service, provisions of unjust-enrichment is not applicable. The appellant is entitled for the refund on both the counts i.e. on merits as well as on unjust-enrichment - appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 183
  Demand of service tax on receipt of amount for Cancellation of Development agreement - Declared Service under Section 66 E(e) of the Finance Act - whether the cancellation of the Development Agreement in terms of the Settlement Agreement would be liable to service tax under Section 66E (e) of the Finance Act and the other one is regarding non supply of iron ore from M/s Amit Mines, which resulted into payment of compensation would be chargeable to service tax within the said Section 66E(e) of the Finance Act? - HELD THAT:- It is not in dispute that the Development Agreement and Settlement Agreement has been concluded before the introduction of Section 66E (e) of the Act which deals with declared service. The declared service has been defined as agreeing to obligation or to refrain from the act or to tolerate and act and situation or to do an act . Learned Adjudicating Authority has concluded that the amount received by way of Settlement Agreement is agreeing to refrain from an act and thus chargeable to service tax. We find that these two activities have been rendered prior to introduction of declared service under the statue, and therefore, the same cannot be made applicable to the event that as concluded before the introduction of the new levy. This issue has also been decided held in case of Vistar Construction Pvt Ltd vs. Union of India [2013 (2) TMI 52 - DELHI HIGH COURT], wherein it is held that taxable event is rendition of service and hence the rate of tax applicable would be one on the date on which services were rendered but not on the date when payment is received. Thus, there is no justification in imposition of service tax liability on the Appellant, has been held in the impugned order. The declared service under 66E(e) was first introduced from 01.07.2012 while the agreements are prior to the said date. The rules cannot go beyond Act since the charge under Finance Act was not available on the date of agreements in question. The Rule 5 of the Point of Taxation Rule has thus no application in this case to create a change in an indirect way - we also find that the all payments have been received towards the compensation for non performance of contract and the same will not be within the definition of Section 66 E (e) of the Act, which is for obligation to refrain from the Act or to tolerate and act of situation by the service provider. The Appellant has not provided any service as the Development Agreement itself has been cancelled. So, there is no question of any liability towards the service tax on the payment. The compensation received by the appellant towards termination of Development Agreement is to be treated as actionable claim which is not liable to service tax in terms of Section 65B(44) of the Finance Act - once it is held that the Development Right is not service but it is benefit arising out of immovable property there is no scope of levy of service tax on the sum received out of the Settlement claim. Impugned order set aside - appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 182
  Permission for withdrawal of application - HELD THAT:- The application is dismissed as withdrawn. Abatement of appeal - Learned Counsel further submits that the appellant has expired on 18th February 2019 and has furnished the appropriate certificate issued by the Competent Authority - HELD THAT:- In accordance with rule 22 of Customs, Excise Service Tax Appellate Tribunal (Procedure) Rules, 1982, the Appeal stands abated.

  ---

• 2019 (11) TMI 181
  CENVAT Credit - construction of residential complex services - Revenue by entertaining a view that after the completion certificate, no service was being provided by the appellant attracting any payment of service tax, they are required to reverse the proportionate credit involved in the subsequent sale purchase of the flats - HELD THAT:- Identical issue decided in the case of M/S ALEMBIC LTD. AND SHRENO LTD. VERSUS C.C.E. S.T. VADODARA-I [ 2018 (10) TMI 1557 - CESTAT AHMEDABAD] where it was held that the appellant was not required to avail the cenvat credit on the input service, if any, received after obtaining the completion certificate. In the present case, the appellant have either not availed the cenvat credit in respect of the services received after obtaining the completion certificate in respect of exempted service or availed proportionate credit attributed to the taxable output service. For this reason also Rule 6 has no application for the period after obtaining the completion Certificate. The provisions of Rule 6 wherein an explanation was added it explaining that the exempted services would also include an activity, which is not a service as defined in Section 65B (44) of the Finance Act, 1994 - Inasmuch as the period involved in the present is appeal prior to introduction of the said explanation, it has to be held that there was no obligation on the part of the assessee to reverse any credit subsequent to the issuance of the completion certificate. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 180
  CENVAT Credit - input services - GTA service for transportation of the excisable goods from the factory for delivery at the buyer s premises - period from July 2015 to June 2016 - HELD THAT:- The place of removal was the factory gate and the appellant had arranged transportation for delivery of the goods at the buyer s factory. The issue, as to whether, buyer s premises should be considered as place of removal for the benefit of Cenvat credit of service tax paid on GTA service was dealt with by the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] , holding that Cenvat credit on goods transport agency service availed for transport of goods from place of removal to buyer s premises was not admissible to the respondent. Since, the modus operandi adopted by the appellant in the present case is identical to the facts and circumstances of the case decided by the Hon ble Supreme Court, there are no justifiable reason to accept the submissions of learned Advocate for the appellant that the benefit of outward transportation of goods should be available to the appellant for the Cenvat benefit. Appeal dismissed - decided against appellant.

  ---

• 2019 (11) TMI 179
  Condonation of delay in filing application - in the application, it has been stated that since the delay was not under the control of the Appellant, it should be condoned by taking a liberal view - HELD THAT:- The averments made in the delay condonation application do not convince us that the appellant was prevented by sufficient cause from preferring the appeal within the stipulated period. There is no statement as to when and how the applicant came to know about the impugned order. The averments made in paragraph 1 are vague because all that has been stated is that the order escaped the attention of the proprietor, though it was received on 10 July, 2018 and it is only when the order came to the notice of the management, then immediate action was taken. The delay condonation application is rejected - appeal dismissed.

  ---

• 2019 (11) TMI 178
  Imposition of penalty - construction service - Point of taxation rules - appellant were discharging Service Tax liability on the basis of receipt of payment instead of accrual basis - period from July 2011 to March 2012 - HELD THAT:- Before issuance of SCN, differential Service Tax and interest thereupon were paid by the appellant therefore as provided under sub-section 3 of section 73 of Finance Act, 1994 there was no provision for issue of SCN - the impugned order confirming imposition of penalty under section 78 of Finance Act, 1994 is not sustainable - appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 177
  Valuation - C F Agent services - inclusion of reimbursable expenses in the value of the taxable services - CENVAT credit of duty availed on various inputs services like GTA Service, Care Insurance Services etc. - HELD THAT:- The matter is required to be reconsidered by the Original Adjudicating Authority in the light of subsequent declaration of law by Hon ble Supreme Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. [ 2018 (3) TMI 357 - SUPREME COURT ]. Similarly, the availability of Cenvat credit is also required to be re-examined afresh - Appeal allowed by way of remand.

  ---

• 2019 (11) TMI 176
  Health services - exemption under N/N. 30/2011-ST dated 25.04.2011 w.e.f. 01.05.2011 - period 01.07.2010 to 30.04.2011 - Levy of service tax - Extended period of limitation - HELD THAT:- Admittedly the demand for the period 01.07.2010 to 30.04.2011 stands raised by way of issuance of show cause notice dated 21.10.2015 i.e. by invoking the longer period of limitation. The dispute relates to the interpretational issue i.e. as to whether the cost of the medicines are required to be formed part of the value of the services or not. The original adjudicating authority had extended the benefit to the appellant. This fact, by itself, shows that the issue is a bona fide issue of interpretation and is capable of being interpreted in two different maners. In such a scenario no mala fide can be attributed to the assessee. The impugned order of Commissioner(Appeals) on limitation is not sustainable - Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2019 (11) TMI 175
  Valuation - under-valuation - veneers/block board/plywood manufactured and cleared by M/s. Kammadi Plywoods and Block Boards ie. the appellants - allegation was that the Appellant was indulging in undervaluation of goods; were showing a lesser price/value than the actual selling price of the final product and collecting the excess sale price in cash and were procuring raw materials and paid cash without accounting the same in their books of account and showing wrong description to suppress the value of such raw materials - preponderance of probability. HELD THAT:- We find that Department alleges that purchase of phenol is not found mentioned under Glue register. We also find that Shri Ramesh Shetty vide affidavit dated 27.09.2006 has retracted his statement dated 26.09.2006. However, he did not choose to appear before the Deputy Director of DGCEI to put forth evidence in support of his claim. We also find that Shri Hajee Ibrahim, who has accepted the statement of Shri. Ramesh Shetty and also the fact of existence of undervaluation in the trade of plywood and veneers, has not retracted his statement. The records maintained by Shri Ramesh Shetty in the factory of the appellants cannot be brushed aside as nobody would note down such entries just for fun. Ongoing through the entirety of the circumstances of the case, we find that the Department has undertaken a wide investigation and has established the fact that the appellants were indulging in undervaluation. We find that as this is a case of tax evasion and not a criminal offence to be proved beyond reasonable doubt. We hold that the investigation could establish to set the principles of preponderance of probability in motion for a proper appreciation of the case. Tax evasion - HELD THAT:- The principle of pre-ponderance of probability has precedence over proof beyond doubt. It is widely accepted that Preponderance of probability is met when a proposition is more likely to be understood by people of reasonable intelligence to be true than to be not true. Effectively, the standard is satisfied if at least there is 50% or more chance that the given proposition is believable by a reasonably prudent to be true. Acceptance of the principle of preponderance cannot be a License to demand duty on the basis of assumptions/presumptions/ vague imputations. Inability to investigate and establish evasion cannot be covered up by mere citing of the principle. A fine line of distinction requires to be drawn. Therefore, while accepting the fact that there was under-valuation resorted to by these companies, we find that the methodology adopted to quantify the duty evaded should be sustainable on the evidence available and quantum thereof, need to be arrived in a logical, rational and legally appropriate manner. We find that in the instant case the Department has some sort of corroborative evidence in the form of slips recovered from Shri. Ramesh Shetty, Manager, which is supported by the statements of Shri Ramesh Shetty and Shri Hajee Ibrahim. Retraction of statements - HELD THAT:- The allegation of duty evasion can be held to be sustainable only where corroborative evidence other than the statements recorded. In the instant case, the statements are retracted though in a belated manner. Only statements which are supported by corroborative evidence are not vitiated by retractions. Therefore, in the instant case the allegation of duty evasion is sustainable only for the year 2004-05, as discussed in the show-cause notice. The issue needs to go back to the Adjudicating Authority, who shall re-quantify the duty evaded, in view of our findings above, after going through the available records to arrive at the value in respect of each of the transactions after giving an opportunity to the appellants of being heard - the penalty imposable under Section 11AC of the Central Excise Act shall be equal to such duty re-quantified. Appeal allowed by way of remand.

  ---

• 2019 (11) TMI 174
  Valuation - physician sample - job-work - period from March 2007 to June 2009 - HELD THAT:- The appellant does not clear physician s sample except to principal manufacturer and to M/s Serum Institute. The determination of assessable value on the basis of rule 4 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 cannot be held to apply in this circumstance. Tribunal in GOA ANTIBIOTICS PHARMACEUTICALS LTD, GOA VERSUS GOA ANTIBIOTICS PHARMACEUTICALS LTD, GOA VERSUS [ 2013 (12) TMI 390 - CESTAT MUMBAI] has clearly held that when the principal manufacturer directs that duty be paid on a specific assessable value and the clearances are not for captive consumption but dispatched for further free distribution, the appropriate value to be adopted for assessment is the nearest available transaction value. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 173
  Refund of Excise duty - refund claims have been rejected on the ground of unjust enrichment - HELD THAT:- Clause 7 gives the right to the buyer that the buyer with a notice to the supplier can make a reasonable adjustment in price or other terms as a result of any such change. The said clause does not talk about any composition/design etc. It says only that if they want to reduce the price, they will give notice to the supplier and price can be reduced. As per the decision of the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS M/S ADDISON CO. LTD. [ 2016 (8) TMI 1071 - SUPREME COURT] , wherein it has been held that if the assessee is able to prove that the ultimate buyer of the goods have not borne the duty components, refund can be claimed - Admittedly in the case, in hand the buyer M/s Ashok Leyland Ltd. was the ultimate consumer of the parts which have been used by them to manufacture the vehicles. Therefore, the appellant is able to prove that duty component has not been passed on the buyer, as the buyer has issued debit note to them for duty component. In that circumstances, the appellant is entitled to claim refund of excess duty paid at the time of clearance of the goods. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 172
  Refund claim - refund claim was returned to the appellant stating that it was premature as show-cause notice for recovery of the credit had been pending adjudication - Reversal of CENVAT Credit - capital goods brought to their factory in the year 2008-09 - HELD THAT:- The proceedings initiated for recovery/ appropriation of the credit ultimately dropped by the Commissioner vide order dated 15.01.2014. In the meantime, the proceedings relating to refund claim by the appellant was decided by the learned Commissioner (Appeals) rejecting their claim. Since the adjudicating Commissioner dropped the demand notice, therefore, the order rejecting heir refund claim needs to be re-examined. The impugned order is set aside and the matter is remanded to the adjudicating authority for fresh adjudication of their claim - appeal allowed by way of remand.

  ---

• 2019 (11) TMI 171
  Nature of activity - manufacture or service? - Activity amounting to manufacture or not - respondents were receiving certain goods for job work against the returnable challans and after doing job work, the same were sent been to the principal manufacturer - tax discharged under the head Business Auxiliary Services - Revenue entertained a view that the activity undertaken by the respondents amounted to manufacture and as such they should have paid duty of excise instead of payment of service tax - time limitation. HELD THAT:- As against the finding of Commissioner (Appeals) Revenue has not produced any evidence to show that the non-payment of duty of excise by the respondents was on account of any mala fide. Admittedly, he was registered with the Service Tax Department and was discharging tax liability accordingly. The fact of registration and payment of service tax was in the knowledge of the Revenue and as such it cannot be said that the appellant suppressed any facts with intent to evade payment of duty. The benefit of extended period stands rightly allowed by Commissioner (Appeals). No infirmity is found in the said order of the Appellate Authority - appeal dismissed - decided against appellant.

  ---

• CST, VAT & Sales Tax

• 2019 (11) TMI 170
  Entitlement to Interest on amount retained by the State Commercial Tax Authorities between the period 23.11.2005 and 29.07.2011 - TNGST Act - Section 24(4) of the Act - HELD THAT:- Admittedly, the refund has been determined and paid over to the petitioner herein both within the timelines set out by the Supreme Court and the provisions of Section 24(4) of the Act - In my considered view, it is only if the said timelines had been breached that interest would statutorily, be payable. The provisions of Section 24(4) of the Tamil Nadu General Sales Tax Act specifically provide for (i) the quantification of refund (ii) the stage of such quantification, being final assessment/revision assessment/appellate, revisional, review order, (iii) refund of tax determined in such final assessment or order as in point (ii) above, (iv) prescription of a timeline for issue of such refund, being 90 days from the date of assessment/appellate order reaching finality (v) provision for interest in the event of breach of the aforesaid scheme. In the admitted facts and circumstances of the present case, the assessee finds no support from the provisions of Section 24(2) of the Act. In SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT ] , the Supreme Court considered a prayer for grant of interest for delay in effecting refund pursuant to an appellate order. After analysing the provisions of Sections 244 and 244A of the Income Tax Act 1961, the Bench concluded that the statute did not provide for the payment of interest as prayed for. However on general principles the Bench held that the assessee ought to be compensated for the inordinate delay in receiving money legally due to it, in that case, seventeen long years. Thus the Department was directed to pay interest at the rate of 9% for part of the period when the petitioner was deprived of the capital. Petition dismissed.

  ---

• 2019 (11) TMI 169
  Interpretation of statute - Basis for payment of tax for the business carried on in the new branch - initially tax was paid on compounded basis - KVAT Act - payment of tax under Section 8(f) of the KVAT Act, in respect of the category of dealers enumerated therein, or payment of tax in terms of Section 6 of the KVAT Act? Whether or not the petitioner herein is obliged to pay tax on compounded basis, in respect of the newly opened branch, for the whole year or only for that portion of the year when it was functioning as a business entity? HELD THAT:- As per the charging section under the KVAT Act (Section 6), there can be a levy of tax under the Act only when the taxable event of sale or purchase of goods occurs. In other words, there cannot be a levy of tax under the Act, either actual or notional, for the period when the assessee did not occasion a taxable event - In the instant case, although the petitioner had exercised his option to pay tax on compounded basis, in lieu of the regular method of payment of tax under the Act, the assessment and consequential collection of tax from him could only have been for the period during which he carried on a business of sale or purchase of goods, that attracted the levy of tax, in his newly opened branch. The tax liability of the branch that was opened in December 2012 had to be computed on the basis of the tax paid in relation to the principal place of business, but for the period during which the branch functioned as a business entity during the relevant assessment year. The assessment of the petitioner for the year 2012-13 would, therefore, have to be completed by adopting the figure of Rs. 23,07,180/- as the compounded tax payable for the principal place of business and adding to the said sum, an amount of Rs. 7,67,269/- [(2307180/12) x4] as the compounded tax payable for the newly opened branch. Inasmuch as in Ext.P3 assessment order, the assessment has not been completed in the manner indicated above, this Writ Petition is allowed by quashing Ext.P3 and direct the 1st respondent to pass a fresh order of assessment - petition allowed by way of remand.

  ---

• Indian Laws

• 2019 (11) TMI 168
  Interpretation of statute - definition of gross revenue as defined in clause 19.1 of the licence agreement granted by the Government of India to the Telecom Service Providers - shifting of revenue sharing regime - benefit of migration package - It was a case of the telecom operators that the department was supposed to determine the quantum based on the recommendations of the TRAI. According to the telecom operators, the department had illegally included various elements of income in the definition of the term AGR which do not accrue from the operations under the license viz., dividend income, interest income on short term investment, discounts on calls, revenues from other activities separately licensed, reimbursements under the Universal Service Fund (USF) etc. HELD THAT:- It cannot be said that DOT has taken inconsistent stands at different stages of the same litigation. Their stand is apparent that the gross revenue has been clearly defined in the agreement. Parties have agreed to various inclusions in the agreement and have willingly switched over to revenuesharing regime under the 1999 policy and same is apparent from the stand and the reliefs prayed in the petitions filed in 2003 and 2005 extracted above. The licensees were aware of items specifically included in the agreement. TSPs agreed to interpretation and accepted it as held by this Court in 2011 judgment. Licensees are taking inconsistent stands, earlier they have taken the stand that all these items concerning which disputes have been raised, had been included illegally in the definition of gross revenue, the definition may be declared ultra vires, invalid, and be struck down. They have also contended that revenue from activities under the licence cannot be included in gross revenue, which submission has been negated by this Court in 2011, it was held that the gross revenue would include the revenue generated from nonlicensing activities. Licensees cannot be permitted to approbate and reprobate and to take inconsistent stands that they are not included in gross revenue as per AS9. The stand taken rather than buttressing the submissions raised by them, counters and militates against their own interest and paves the way in favour of DOT. The submission raised that the definition is not wide, cannot be accepted, and stands repelled. Clauses 22.1, 22.2 and 22.3 cast obligation upon the licensee to draw, keep and furnish independent accounts for the service. Under clauses 22.1 and 22.2, the licensee has to maintain records quarterly. Accounts have to be audited and can be called for by the licensor or the TRAI, as provided in Clause 22.3. The format of gross revenue is supportive of definition of gross revenue as defined in the agreement. Clause 22 is a rider upon the licensee to maintain the records of activities and other matters such as financial position as enumerated therein. The appeals of licensees are dismissed and filed by DOT, are accordingly allowed.

  ---

• 2019 (11) TMI 167
  Termination of liquidation proceedings - Recovery of dues - time limitation - whether under the provisions of Section 109 of the Maharashtra Cooperative Societies Act, 1960 on expiry of the period fixed for liquidation, the proceedings for recovery of dues instituted/pending as against the members, shall stand closed? HELD THAT:- The winding up of the Society has been ordered and liquidator has been appointed as the Society has utterly failed to achieve its avowed objectives in disbursement of loans to proper persons and in its recovery. No doubt about it that the liquidation of the Society has come to an end after a particular period of time as fixed under section 109. However, on lapse of time as fixed under sub-section (1) of section 109 of the Act, proceedings have to be terminated by the Registrar on receipt of final report from the liquidator as ordered under section 109(2). However, at the same time, the Registrar has power to extend the period of 6 years fixed under section 109(1), not exceeding one year at a time and four years in the aggregate, and maximum for 10 years. In case time is not extended, the winding up comes to an end on the expiry of 6 years or at the end of the extended period. The total period can be 10 years. The second proviso to section 109 makes it clear that if the Registrar comes to a conclusion that the work of liquidation could not be completed by the liquidator due to the reasons beyond his control, he shall call upon the liquidator to submit his report. After getting the report, if the Registrar is satisfied that the realisation of assets, properties, sale of properties still remains to be realised, he shall direct the liquidator to complete the entire work and carry out the activities only for the purposes of winding up and submit his report within such period not exceeding one year reckoned from the date of receipt of the report from the liquidator. It is apparent that on the termination of the liquidation proceedings, liability of the members for the debts taken by them does not come to an end. There is no such provision in the Act providing once winding up period is over, the liability of the members for loans obtained by them which is in their hands, and for which recovery proceedings are pending shall come to an end. No automatic termination of recovery proceedings against the members is contemplated. On the other hand, on completion of the period fixed to liquidate the society, final report has to be submitted as to the amount standing to the credit of the society in liquidation after paying off its liabilities including the share or interest of members - Thus, even in the case of liquidation the accountability remains towards surplus and liabilities do not come to an end. It is a settled law that when there is stay of proceedings by court, no person can be made to suffer for no fault on his part and a person who has liability but for the interim stay, cannot be permitted to reap the advantages on the basis of interim orders of the court - The Court should never permit a litigant to perpetuate illegality by abusing the legal process. It is the bounden duty of the court to ensure that dishonesty and any attempt to abuse the legal process must be effectively curbed and the court must ensure that there is no wrongful, unauthorised or unjust gain for anyone by the abuse of process of the court. No one should be allowed to use the judicial process for earning undeserved gains or unjust profits. The object and true meaning of the concept of restitution cannot be achieved unless the courts adopt a pragmatic approach in dealing with the cases. Concept of restitution - Principles of perpetuity - HELD THAT:- The concept of restitution is a common law principle and it is a remedy against unjust enrichment or unjust benefit. The court cannot be used as a tool by a litigant to perpetuate illegality. A person who is on the right side of the law, should not have a feeling that in case he is dragged in litigation, and wins, he would turn out to be a loser and wrongdoer as a real gainer, after 20 or 30 years. Thus, the members who have obtained stay in appeal or on recovery proceedings or the case is pending, cannot take advantage of the fact that the period fixed for Liquidator under the Act is over. Once a report has been submitted, the Registrar has to take action in terms of the report and in such circumstances when the proceedings for recovery are pending against the members and the Society has taken loan from the banks for its member, the actual money has to go to the creditor i.e., to the bank who is going to be benefitted by recovery of public money in the hands of members. In such cases it would be appropriate for the Registrar to send notice of the proceedings to a person who is to be benefitted from the recovery. In the instant case, the bank itself is a prime lender cum liquidator. The proceedings cannot come to the end. Though the Liquidator cannot continue once the proceedings are over. Notice in such cases should be issued by the Registrar to the creditors and to persons for whose benefit recovery is to be made, to continue the pending proceedings in the instrumentality of court/tribunals/recovery officers etc. We hold that appellant Bank can continue the pending proceedings - Appeal allowed.

  ---

• 2019 (11) TMI 166
  Summon of order - section 138 read with section 142 of the Negotiable Instrument Act - cognizable offences or not - HELD THAT:- Fact remains that the case in hand is not a warrants case, therefore, Section 468 (2)(C) under which cognizance should be taken within the time mentioned therein based upon the offences committed by the accused. In view of Indra Kumar Patodia And Another [ 2012 (12) TMI 154 - SUPREME COURT ] , the limitation provided under Section 468 is not applicable. Moreover, the cognizance of the complaint was taken by the concerned CMM, who thereafter marked the case to the concerned Trial Court. The Trial Court after going through the contents of the complaint and evidence on record, issued summons. However, nowhere it is provided in Section 138 142 of N.I. Act that the summons shall be issued within the prescribed time. There is no merits in the petition - petition dismissed.

  ---

• 2019 (11) TMI 165
  Dishonor of Cheque - cheques returned for funds insufficient - mandatory provisions of Section 138 of the Negotiable Instruments Act have been complied or not - HELD THAT:- There are specific allegations made by the complainant against the present Applicant that he is the director of accused No.1 company along with other accused and they are all collectively involved in the core functioning of the company including all its major decision making i.e. finance etc and, they were and are in charge of and responsible for the conduct of the business and affairs of the company at the time commission of the offence. It is also alleged that Accused Nos. 2 to 8 play an active role in the functioning affairs and business activities of the company. The complainant has specifically alleged that Accused Nos. 2 to 8 have dealt with Respondent No.1 complainant at the time of the transaction with the complainant. It is required to be noted that the present Applicant is original accused No.6 in the complaint. This Court is of the opinion that, whether the appointment of the Applicant was an independent director or the director of the company and, whether he was playing active role in the day to day affairs of the company at the relevant time or not, would be a matter for appreciation of the contentions of the parties by the trial Court. It would depend upon appreciation of evidence, and the documents filed in the Trial Court. The question as to whether the present Applicant was an independent director of accused No.1 company or he was a director of accused No.1 company at the relevant time has to be decided only during trial after giving opportunity to the parties to lead evidence in that regard. Application dismissed.

  ---