Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 10, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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GST Annual Returns - Due date for filing FORM GSTR-9, FORM GSTR-9A and FORM GSTR-9C extended till 31.3.2019
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Classification of an item - tutty-fruity - Whether Tutti-fruity be classified under HSN 08111010 or 20060000? - The Tutti-frutti being the product of papaya is covered under Chapter / Heading / Sub-heading / Tariff item 20 06 00 00.
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Classification of goods - rate of GST - the steam was generated out of waste cannot lead to the conclusion that the turbine is a renewable energy device. The same turbine can run equally well on steam generated by use of coal etc. -concessional rate of 5% of IGST not available.
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The two or more supplies of goods or services or both which are naturally bundled in which the principal supply is exempt and others are taxable can be treated as a composite supply of the principal supply if such principal supply is not a non-taxable supply
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Profiteering - benefit of tax reduction not passed on to the recipients - Nestle Munch Nuts 32 Gm. Chocolate - Cadbury Dairy Milk Chocolate - assessee directed to pass on the benefit of reduction in the rate of the tax to his customers.
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Profiteering - benefit of tax reduction not passed on - Johnson & Johnson Baby Shampoo 100 ml. - assessee had deliberately charged the enhanced prices with an intention to pocket the amount which he was bound to pass on to the recipients.
Income Tax
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U/s 115JG(1) of IT ACt 1961 - Central Government notifies conditions a foreign company engaged in the business of banking in India
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Income-tax (13th amendment), Rules, 2018 - Amendments to Rule 8AA
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TDS deduction under section 194A of the Income-tax Act, 1961 in case of Senior Citizens - NO TDS on interest upto ₹ 50,000.
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Reopening of assessment u/s 147 - The assessee has not filed the balance sheet or statement of affairs as noted by the Assessing Officer and in the return of income, the assessee has filed only statement showing computation of income consisting of salary income and interest income from other sources - reopening confirmed.
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Sale of land - Assessment in hands of partnership firm v/s partners - the assessee alone is liable to pay tax on the sale consideration. Therefore, the contention of the assessee on that issue also, cannot be accepted.
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Addition applying the provisions of Section 41(1) and Section 68 - the statement of the creditors were accepted, after granting substantial opportunity to the assessee, wherein the assessee has not made any request to cross-examine the witnesses - additions confirmed.
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Penalty levied u/s 271(1)(c) - bogus claim of exemption u/s 11 - assessee claimed exemption of its income under section 11(1) of the Act without any registration under section 12AA(1) - mensrea - “Bonafides” have to be shown and cannot be assumed. Penalty confirmed.
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TDS liability on Bank guarantee commission u/s 194A - Assessee in present case paid commission to bank not as an agent - there was no need to deduct TDS on the Bank Guarantee Commission paid by assessee to Bank.
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Validity of reopening of assessment - assessee had not disclosed any capital gain on conversion of his capital asset into business asset in the relevant financial year - reasons to believe - reopening quashed on technical grounds as well as on merit.
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Denial of credit of TDS - corresponding income has not been offered to tax - TDS belongs of assessee or HUF - Revenue’s contention that the assessee instead of claiming the entire TDS amount ought to have sought a correction of vendor’s mistake would unnecessarily prolonged the entire process of seeking refund based on TDS credit.
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TDS u/s 194J OR 194C - treating annual maintenance contracts “AMC” payments made to various payees as fee for technical services - the amount paid cannot be considered as fees for technical services within the meaning of section 194J.
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Addition of losses by using Client Code Modification - Appellant has not given satisfactory explanation with respect to the losses incurred by using Client Code Modification - additions confirmed.
Customs
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AEO programme digitization - Ease of doing business - Development of web-based application for AEO-T1- reg.
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Valuation of imported goods - The question of rejecting the value does not arise. The invoice price has to be accepted in such circumstances if the charge under valuation cannot be supporter either by evidence or information about comparable imports, the benefit of doubt must go to the importer.
Indian Laws
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Effective tax rate on complex, building, flat etc.
Service Tax
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Nature of transaction - Sale or service - sale of post paid SIM - amount received by the cellular telephone company from its subscribers towards SIM Card will form part of the taxable value for levy of service tax, for the SIM Cards are never sold as goods independent from services provided - Demand of service tax upheld.
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CENVAT Credit - Since the appellant invoice is inclusive of service provided by 3rd party, the MPSEZ has issued a debit note, therefore, the service for which the debit note was raised which was provided by the 3rd party is a deemed input service for the appellant - credit allowed
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Benefit of abatement - commercial and industrial construction services - the site clearance and excavation is an incidental and ancillary to civil work - the service is correctly classifiable under the commercial or industrial construction service.
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CENVAT Credit - common inputs and input services - By availing only the CENVAT credit of the service tax paid attributable to the taxable services, in my view, appellant had complied with the provisions of Rule 6(2).
Central Excise
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Extended period of limitation - there is no justification to invoke the suppression clause against the appellant on the basis of estimate of cost of production not supported by necessary certificate from an independent Cost Accountant - the entire demand is not sustainable as time barred.
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When the inputs are Ephedrine Powder, then the removal in the form of tablets will not be removal as such requiring reversal of credit. If they are removed as Ephedrine tablets after manufacture then these attract Central Excise duty.
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Valuation - sale of goods through Depot - the appellant is required to discharge the duty at prices prevalent at the depot from where the goods are sold
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Clandestine removal - shortage of sponge iron recorded at the time of stock verification - In any case no evidence has been brought on record to allege that the goods recorded as shortage were cleared clandestinely - Demand set aside.
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Valuation - Motor Spirit - High Speed Diesel - the appellant has rightly paid the excise duty as per transaction value in terms of Section 4 of the Central Excise Act and there is no justification for allegation of under-valuation of the goods with a view to evade excise duty
VAT
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Input tax credit - Denial of credit treating the same to be excess tax paid on purchase in comparison to the tax payable on such purchase - there is no room to enter into any exercise of interpretation to restrict the plain meaning of the word 'paid' - credit allowed.
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Input tax Credit - credit at the rate at which the assessee paid it on purchases - If there is tax payment in excess of the rate available in the Schedule, then necessarily such collection to that extent would be forfeited by the State and the person who has paid the said tax would have to claim refund.
Case Laws:
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GST
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2018 (12) TMI 477
Permission to withdraw Advance Ruling Application - classification of goods - Scientific & Technical Instruments, Equipments - the Applicant requested to permit them to withdraw the application filed for advance ruling vide their e-mail letter dated 22.11.2018, quoting the reason that their claim has no merit - Held that:- The application filed by the Applicant for advance ruling is dismissed as withdrawn.
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2018 (12) TMI 476
Classification of an item - tutty-fruity - Whether Tutti-fruity be classified under HSN 08111010 or 20060000? - Held that:- The Customs Tariff Act, 1975 including the Section & Chapter Notes, General Explanatory Notes shall apply to the classification of the goods under GST also - Chapter 8 of the Customs Tariff Act of India relates to Edible fruits and nuts; peels of citrus fruit or melons. Tariff item 0811 deals with “fruits and nuts, uncooked or cooked by steaming or boiling in water, frozen, whether or not containing added sugar or other sweetening matter. It becomes evident that the main requirement for a commodity to be classified under the tariff heading 08.11 must be: They are fruits and nuts, a. uncooked or cooked by steaming or boiling in water; b. frozen; c. Whether or not containing added sugar or other sweetening matter - The explanatory notes also provide that the heading 08.11 applies to fruits which may have been cooked by boiling and are then frozen - In the instant case the flow chart provided by the applicant, though shows boiling of the fruit, does not indicate the freezing of the fruit consequent to processing. Therefore, the product as presented by the applicant does not qualify classification under Tariff Heading 08.11. Reference is made to the explanatory notes to the Hormonised Commodity Description and Coding System, with respect to the CTH 2006 - In the instant case the process of preparation of the product tutti-frutti by the applicant tallies with the process referred to in the explanation - thus the product tutti-frutti is rightly classifiable under CTH -20060000. Ruling:- The Tutti-frutti being the product of papaya is covered under Chapter / Heading / Sub-heading / Tariff item 20 06 00 00.
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2018 (12) TMI 475
Classification of goods - rate of GST - turbine generator set to be supplied by the applicant to the buyer for use in waste-to-energy project - whether classified as “Renewable energy devices and parts for the manufacture of waste to plants/ devices”, attracting 5% levy? - Sl.No.234 of Schedule 1 of Notification 1/2017 - IGST (Rate) dated 28.06.2017. Held that:- A turbine is a rotary mechanical device that extracts energy from a fluid flow and converts it into useful work. A steam turbine is a device that extracts thermal energy from pressurized steam and uses it to do mechanical work on a rotating output shaft. Therefore a Turbine” is not a device that converts waste to. In fact in the instant case the waste is used to generate steam and the steam runs the turbine to generate electric power. Turbine itself does not work on waste but converts steam into energy. The conversion of waste into energy is done, only at the stage of combustion. The concessional rate of 5% of IGST is available to only such devices which convert waste into but not for the devices that converts energy from one form to the other form. Turbine is not a renewable energy device because the turbine at no stage acquires the nature of a device which converts waste to energy. The waste has already been converted into heat energy’ through the process of the burning/combustion which in turn is utilized to convert water into steam and the said steam runs the turbine to generate electric power. The turbine runs on steam irrespective of whether the steam is obtained by combustion of waste or any other means. Therefore the fact that in this particular case the steam was generated out of waste cannot lead to the conclusion that the turbine is a renewable energy device. The same turbine can run equally well on steam generated by use of coal etc. - turbine in question will not qualify to be covered under serial number 234 of Notification No. 1/2017-lntegrated Tax(Rate) dated 28.06.2017. Ruling:- The Turbine Generator Set to be supplied by the applicant for use in waste to energy project is not covered under Sl.No.234 of Schedule I of Notification No. 1/2017 dated 28.06.2017.
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2018 (12) TMI 474
Composite supply or not - Bundled services - principle supply is exempt supply - Health care services - inpatient services - outpatient services - input tax credit - Held that:- Since the healthcare services are exempt from tax under section 11, the same are exempt supplies. But the definition of taxable supplies includes those supplies of goods which are leviable to tax and chosen to be exempted under section 11 and hence the exempt supplies also fall under the category of taxable supplies and hence the supply of goods and services supplied by the applicant company in conjunction with the healthcare services fall under the definition of “composite supply” as the services of supply of food and medicines to the patients are as advised by the doctor or nutritionists. But in case where the supply of food is not as advised by the doctor or nutritionists and is supplied to the patients, then such supply of food cannot be treated as “naturally bundled” supplies and supplies made in conjunction with each other and hence are separate supplies and needs to be treated not as composite supplies Medicines supplied to the inpatients - Held that:- They form part of the healthcare services supplied to the concerned patients and hence are part of the composite supplies of health care services where the principal service is “healthcare services” and is exempt from tax vide Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - However supplies of medicines or food and drinks to persons other than patients, like attendants of the patients and when supplied to the patients not as advised by the doctor or nutritionists, then such supplies would not form part of the composite supplies and would attract applicable tax. Medicine supplied to outpatients - Held that:- The doctors prescribe the medicines and the patients, if they are free to purchase the medicines from any pharmacist (need not be from the same hospital), then such purchase of medicines from the pharmacies of the applicant cannot be treated as a part of the composite supplies as they are independent of the healthcare services provided by the applicant. Similar treatment also needs to be provided in case of food and drinks supplied to patients - But in case where the supply of medicines and food and drinks form part of the supply of healthcare services and there is no choice for the patients to choose them separately, then they would form a composite supply with healthcare services being the principal supply. CENVAT Credit - Held that:- Since the applicant is using the inputs and input services in the course or furtherance of his business, credit of such tax paid on such inward supplies can be claimed by him - The healthcare services being an exempted supply, either as an individual supply or as a composite supply, credit of input tax claimed which is attributable to such supplies of healthcare services needs to be reversed. The reversal of input tax credit claimed shall be made as per the provisions of section 17 of the CGST Act 2017 read with Rule 42 of the Central Goods and Service Tax Rules, 2017. Ruling:- The two or more supplies of goods or services or both which are naturally bundled in which the principal supply is exempt and others are taxable can be treated as a composite supply of the principal supply if such principal supply is not a non-taxable supply as per sub-section (78) of section 2 of the Central Goods and Service Tax Act, 2017 and such composite supply with the principal supply being exempt supply would be treated as an exempt composite supply. The applicant is eligible -to claim credit of input tax credit only on for such taxes paid on the inputs, input services and capital goods which are attributable to the supplies of goods or services which are taxable under the provisions of the Central Goods and Services Tax Act, 2017 and not attributable to exempt supplies of goods or services under the Central Goods and Services Tax Act, 2017.
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2018 (12) TMI 473
Profiteering - benefit of tax reduction not passed on to the recipients - Nestle Munch Nuts 32 Gm. Chocolate - Cadbury Dairy Milk Chocolate - contravention of Section 171 of CGST Act, 2017 - Held that:- It is clear that the Respondent had increased the base price by ₹ 1.56 per unit in respect of the Nestle Munch Nuts 32 Gm. Chocolate and ₹ 3.13 for the Cadbury Dairy Milk Chocolate and hence the MRP charged on both the products had remained ₹ 20/- and ₹ 40/- per unit respectively before and after the reduction in the rate of tax. Therefore, it is established that the Respondent had in fact increased the base prices of these Chocolates and sold them at the same MRPs which he was charging before the reduction in the rate of tax instead of reducing the same and had hence not passed on the benefit of such reduction to the Applicant. The Respondent has vehemently argued that he had no control on the fixing of the base prices as well as the MRPs as he was charged increased base prices by his Distributors Viz. M/S CTC and M/S NE and hence the Respondent could not make any changes in the base prices and the MRPs - Held that:- It is apparent from the record that the Respondent is duly registered under the CGST/SGST Act, 2017 and therefore, he was under legal obligation to follow the Notification dated 14.11.2017 mentioned above vide which the rate of GST was reduced from 28% to 18% on both the above products. He cannot deny his accountability as well as the duty cast upon him under the above Notification by contending that he had not increased the base prices whereas he had charged the increased base prices on both the above products after 15.11.2017. The claim of the Respondent that his profit margins had remained the same is also not tenable as he had not only increased the base prices but had also earned additional margin on the enhanced prices. He had further forced his customers to pay additional GST on the increased base prices otherwise the customers should have got further benefit of reduced base prices. The Respondent has also argued that M/S CTC and M/S NE had not given him discounts for passing on the benefit of tax reduction. However, perusal of the tax invoices issued by both the above Distributors shows that they had given him discounts to pass on the benefit of tax reduction with specific endorsements that he was required to pass on the benefit of reduced rate of GST. It stands concluded that the Respondent has indulged in profiteering in violation of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction of tax as per the Notification dated 14.11.2017 - Accordingly, the Respondent is directed to reduce the sale prices of the above products immediately commensurate to the reduction in the rate of tax as was notified on 14.11.2017 and pass on the benefit of reduction in the rate of the tax to his customers. Penalty - Held that:- Although notice for imposition of penalty has already been issued to the Respondent on 16.08.2018 however, no formal oral or written pleadings have been filed by the Respondent on the same - as per the provisions of the principles of natural justice it would be appropriate to issue fresh show cause notice asking him to explain why penalty should not be imposed on him for the above offence. Application disposed off.
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2018 (12) TMI 472
Profiteering - benefit of tax reduction not passed on - Johnson Johnson Baby Shampoo 100 ml. - Johnson Johnson Baby Powder 200 Gms - It was also alleged that instead of reduction, the base prices of the above two products were increased on and thus the Respondent had indulged in profiteering in contravention of the provisions of Section 171 of the CGST Act, 2017. Held that:- There is no doubt that the Respondent had increased the base prices of the products w.e.f. 15.11.2017, whereas he was required not to increase them and after charging GST @ 18%, he was legally bound to charge the reduced prices so as to pass on the benefit of reduced tax rate to his customers and hence he has indulged in profiteering. The Respondent had increased the base prices of 130 products which were supplied by him during the period between 15.11.2017 to 31.032018 and by doing so he had resorted to profiteering on account of increase in their base prices, Thus, it is established that the Respondent had acted in contravention of the provisions of Section 171 of the CGST Act. 2017 and had not passed on the benefit to his customers by commensurate reduction in the prices of these products. Accordingly, the amount of profiteering made by the Respondent is determined as ₹ 501 ,646/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent has vehemently argued that he had no control on the fixing of the base prices as well as the MRPs as both of them were fixed by J J through the software which he was bound to follow as per the terms of the agreement executed by him with the above Company - However, it is apparent from the record that the Respondent is duly registered under the CGST/SGST Act, 2017 and he was hence bound to follow the Notification dated 14.11.2017 mentioned above vide which the rate of GST was reduced from 28% to 18% on 130 products which he was selling, He cannot escape the legal obligation which was imposed upon him by the above Notification by shifting his accountability on this ground. The Respondent has also not produced any evidence to show that he had made any correspondence with J J to inform it that he was bound to reduce the prices due to reduction in the rate of tax and J J should either not increase the base prices or compensate him for the benefit he was bound to pass on to his customers, therefore, it is quite apparent that he had deliberately charged the enhanced prices with an intention to pocket the amount which he was bound to pass on to the recipients. The Respondent is directed to reduce the prices of all the above products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017 by making commensurate reduction in their prices keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients - The Respondent is also directed to deposit the profiteered amount of ₹ 5,01,646/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from his customers till the above amount is deposited. Penalty - Held that:- It is also established from the record that the Respondent has deliberately and consciously acted in contravention of the provisions of the CGST Act, 2017 by issuing incorrect invoices which is an offence under Section 122 (1) (i) of the above Act and hence he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017 - Although notice for imposition of penalty has already been issued to the Respondent on however, no formal oral or written submissions have been filed by the Respondent on the quantum of penalty. Therefore, keeping in view the principles of natural justice it would be appropriate to issue fresh notice asking him to explain why penalty should not be imposed on him for the above offence. Decided against respondent-assessee.
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Income Tax
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2018 (12) TMI 471
MAT computation - Tribunal deleting the disallowance of warranty provision made by AO while computing book profit Under section 115JB - Held that:- Tribunal in the earlier judgment in a detailed consideration held that the warranty liability was ascertained liability and therefore, could not have been added while computing the assessee's book profit. In the process, the Tribunal referred to and relied upon the judgment of Supreme Court in case of Rotork Controls India Private Limited [2009 (5) TMI 16 - SUPREME COURT OF INDIA]. The Tribunal also placed reliance on the decision of the Gujrat High Court in case of Inox Leisure Limited [2013 (2) TMI 353 - GUJARAT HIGH COURT] and in case of H P Tourism Development Corporation Ltd. [2013 (6) TMI 97 - HIMACHAL PRADESH HIGH COURT] If ascertained liabilities are there same cannot be added while computing alternate minimum tax. In the case under consideration, provisions made under the head gratuity, warranty and leave encashment are not contingent/unascertained and therefore same cannot be adjusted while computing book-profit u/s. 115JB - No question of law arises
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2018 (12) TMI 470
Reopening of assessment - change of opinion - addition u/s 36(1)(iii) on interest-free advance made by the assessee - tangible material or borrowed satisfaction - Held that:- In the present case, however, we are not inclined to undertake minute scrutiny of any reasons and other related material on record. This is so because we are convinced that on merit also assuming that the reassessment is permitted, Revenue does not have an arguable case. We may refer to the decision of this Court in case of Reliance Utilities & Power Ltd. vs. CIT [2009 (1) TMI 4 - BOMBAY HIGH COURT]. The sole disallowance arising out of the order of reassessment passed by the Assessing Officer was one under Section 36(1)(iii) of the Act. It related to interest-free advance made by the assessee to one Nilesh Thakur. The CIT appeals and the Tribunal on facts came to the conclusion that the assessee had not utilized interest bearing borrowed funds for making such interest-free advances. It was found that the assessee had its own interest-free fund far in excess of interest-free advance. This being a pure question of fact, we do not see any question of law in this respect arising. - Decided against revenue
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2018 (12) TMI 469
Assessment u/s 158BE - period of limitation prescribed u/s.158BE(1)(b) - date of ending the search - ITAT held that the Assessment order dated 23.02.2000 is passed beyond the period of limitation prescribed u/s.158BE(1)(b) - Held that:- In the process, the Tribunal relied on the decision of Delhi High Court in case of CIT Vs. Shri S. Katyal (2008 (11) TMI 46 - HIGH COURT DELHI) wherein facts which were substantially similar to the present case. The Court had come to the conclusion that the later events could not be equated with continuation of search. The Court had held that on 3rd January, 2001 i.e. the date which the Revenue wanted to be believe the search had ended, nothing was found or seized. All that was done on 3rd January, 2001, according to the High Court was that the seals were removed from the cash box and the almary and the keys were handed back to the assessee. It was in the nature of revocation of the seizure order passed earlier. Facts are substantially similar in the present case. Though the panchnama drawn on 13th January, 1998 records that the search was temporarily concluded, concededly no further search was carried out on 6th February, 1998. The panchnama of 6th February, 1998 also clearly shows that no articles or things were found or seized. Infact, the search commenced at 11.00 a.m. and ended about in 35 minutes. No hesitation in accepting the findings and conclusion of Tribunal. No question of law arises.
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2018 (12) TMI 468
Validity of Assessment u/s. 143(3) - non serving of notice - Revenue has failed to prove the satisfaction regarding service of notice u/s. 143(2) - Held that:- Tribunal has recorded that the notice was not dispatched through the postal authorities. As claimed to have been served through personal service. The notice did not bear the name of the person or identification of the person to whom it was served. The notice merely contained the signature with a date from which, according to the Tribunal, it cannot be ascertained to whom the notice was served. Tribunal records that in the Assessment proceedings, there was no recording of proceeding before 08.08.2008. This, was long after the alleged service of notice by the deponent on the Assessee. The Tribunal also noted that the Assessee was a company. There was noting on record to suggest that the notice, even if, served was on any person authorized by the Company to receive the same. AO had filed affidavit, claiming that the notice was duly served. However, Tribunal recorded that the said affidavit was not based on any personal knowledge of the deponent. It can thus be seen that on the basis of material on record, the Tribunal came to the conclusion that the Department failed to establish that the notice was duly served. Consequently, the stand of the Assessee that no such notice was served upon us, was accepted. No question of law, therefore arises. Appeal dismissed.
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2018 (12) TMI 467
Reopening of assessment u/s 147 - validity of reason to believe - proof of change of opinion - Held that:- Reading of the reasons, clearly shows that the assessing officer intended to verify the transactions as it was not disclosed by the assessee. Thus, the omission on the part of the assessee has been pointed out and the reason why the Assessing Officer wants to verify is also clear from reading the reasons for reopening. Therefore, we do not agree with the submissions of the learned counsel that no opinion was formed by the Assessing Officer for being satisfied that there is a case for reopening. The assessee has not filed the balance sheet or statement of affairs as noted by the Assessing Officer and in the return of income, the assessee has filed only statement showing computation of income consisting of salary income and interest income from other sources. Even when the reassessment proceedings were commenced by issuance of notice, dated 02.11.2011, the assessee did not file a fresh return of income, but informed the Assessing Officer to treat the return of income filed on 30.07.2009, as return in response to the notice under Section 147. Whatever was placed before the Assessing Officer through their authorized representative's letter dated 30.12.2011, cannot be taken to be full and true disclosure pertaining to the transactions with S.Nagarajan. As satisfied with the reasons assigned for reopening of assessment is just and proper and no opinion was formed during the assessment proceedings dated 30.12.2011, for it to be termed as a 'change of opinion', more so, when the assessee has failed to fully and truly disclose all the materials necessary for its assessment. Thus, the reasons assigned by the learned Writ Court is just and proper and does not call for any interference. - decided against assessee.
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2018 (12) TMI 466
Sale of land - Assessment in hands of partnership firm v/s partners - letter written by the partners, they were no more the owners of the property in question from the date of retirement namely 6.6.1978 - relinquishment of rights of partners - Held that:- Partners have stated in the sale deed that they have relinquished their right does not pre-suppose that any right existed in them as on that date. The partners could relinquish only which they possess. The sale deed was executed on 14.2.2001. The partners retired on 6.6.1978. Therefore, they had no right at all which they could relinquish. Therefore, in the absence of possessing any legal right, the question of relinquishment does not arise for consideration. Therefore, such a contention cannot be accepted. The finding recorded by the Tribunal that the assessee was the owner of the land and building, is just and proper. It is also justified in holding that the provisions of Section 45(4) of the Income Tax Act are applicable to the facts of the case. So far as placing reliance by the respondent on the report received from the jurisdictional Sub-Registrar is concerned, the same is in accordance with law. That the fair market value of the capital asset has been determined based on the rules as specified by the Sub-Registrar. Even when repeated requests were made, there was no valuation furnished by the assessee. Therefore, the Assessing Officer had no other option but to obtain the fair market value from the jurisdictional Sub-Registrar who was authorised to furnish the same. So far as the sale is concerned, whether the entire consideration were received in the hands of the assessee or not becomes a secondary question. It is only an adjustment by the assessee with the other persons. The same can be ascertained from the recitals in the sale deed, which would indicate that in order to settle certain disputes, the shares have been given to the said persons. Therefore, the assessee alone is liable to pay tax on the sale consideration. Therefore, the contention of the assessee on that issue also, cannot be accepted. Even so far as upholding of the levy of tax insofar as the furniture and fixtures are concerned, is also in accordance with law and does not call for any interference - Decided in favour of the revenue
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2018 (12) TMI 465
Disallowance of expenses - non business expenses - interest payment was claimed on the loan borrowed from Karnataka State Financial Corporation (for short KSFC) in the name of M/s.Hotel Haveli which was being run by M/s. Maruthi Enterprises, for which the appellant was the proprietress - Held that:- Certain fresh material were produced for consideration. However, the lease deed was not produced, either at the assessment stage or at the appeal stage. The sources of receipts as claimed by the assessee were not genuine. That none of the documents demonstrated that the expenses as claimed towards Hotel Haveli were in any manner related to M/s. Maruthi Enterprises. Therefore, in the absence of any material to substantiate, the same the appeal was dismissed. The material on record would indicate that the assessee could not substantiate her claim and inspite of granting sufficient opportunity, no evidence of material was led-in, in support of her case. Even the few documents that were relied upon did not assist the assessee in any manner whatsoever. Therefore, based on the available material, the findings were recorded. Under these circumstances, we do not find any ground to interfere with the order passed by the Tribunal. The order passed by the Tribunal is based on the material available on record. Therefore, no interference is called for. The Tribunal passed a common order affirming the findings of the Assessing Officer, as well as the Commissioner of Income Tax (Appeals). The Tribunal was also of the view that even before the Tribunal, the assessee could not substantiate her claim with any tangible evidence or material. Therefore, having considered the Balance Sheet and the Profit And Loss Account, the findings recorded by both the authorities were confirmed. - Decided against assessee. Disallowance of annual rent expenditure - AO found that the assessee has not furnished the description of the property, rental agreement, name and address of the tenants, sources of investments, etc. - Held that:- The appellant claims to have closed the hotel in the month of October 1998. Therefore, there was no nexus between the expenditure or depreciation claimed by the assessee and the business of subleasing or leasing the property. Therefore, the Commissioner of Income Tax (Appeals) rightly confirmed the computation made by the Assessing Officer. Except the plea of the assessee that the earning was out of the several deals struck with regard to the real estate, nothing is forthcoming on record. Therefore, in the absence of any material on record, 75% of the gross commission receipt was computed as net income. Even though the proposal was conveyed to the assessee, even till the date of the passing of the order, no reply was furnished by the assessee. No books of accounts were produced. Therefore, the computation was made at a sum of ₹ 6,57,580/-. It was contended that the material produced before the Assessing Officer was not considered. Therefore, the said material was once again produced before the Commissioner of Income Tax (Appeals), which were considered. Jurisdiction to issue a notice u/s 148 - Held that:- As noticed that the assessee did not file the return of income in time. She had not filed the return of income till 31.03.2003. She filed the return of income belatedly on 30.09.2003. Therefore, the return was treated as a non-est return, which would consequently indicate that certain income had escaped assessment. Therefore, the Assessing Officer being satisfied with the same, issued a notice under Section 148 of the Income tax Act. Therefore, the said contention was negated. We find no good ground to take a different view of the matter. Hence, we are of the considered view that the reopening of the assessment under Section 148 of I.T. Act is valid and in tune with law. Imposition of interest under Sections 234-A and 234-B - Held that:- In the given facts and circumstances of the case, we do not find any ground to interfere. Moreover, the interest is imposed in terms of the statute. Interpretation has been made in a catena of judgments by this Court as well as the Hon ble Supreme Court. Hence, we find no error in the imposition of interest under Sections-234-A and 234-B of the Income tax Act.
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2018 (12) TMI 464
Addition applying the provisions of Section 41(1) and Section 68 - failure to grant an opportunity to cross-examine the creditors - accepting the statements of the creditors who had not been examined and without giving opportunity for cross-examination - denial of natural justice - Held that:- In the facts of this case, no such request was made to cross-examine the creditors. In the absence of any request being made, the question of granting an opportunity would not arise for consideration. In fact, the assessee requested for copies of the sworn statement and the confirmation letters obtained by the Department from the creditors. All of them were furnished to him. No objections were raised by him. Thus the plea of the assessee that accepting the statement of the creditors without granting an opportunity to the assessee to cross-examine is incorrect. Therefore, we are of the view that the Tribunal was justified in upholding the impugned additions by applying the provisions of Section 41(1) and Section 68 - That the statement of the creditors were accepted, after granting substantial opportunity to the assessee, wherein the assessee has not made any request to cross-examine the witnesses and therefore, cannot contend that no opportunity was given to cross-examine the creditors. Decided in favour of the Revenue
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2018 (12) TMI 463
Deduction u/s 80HHC - interest income in toto forms part of eligible business profits for the purpose of deduction u/s 80HHC and only 90% has to be excluded from the business profits - whether the deposits made by the assessee with the banks had an immediate nexus with the business? - Held that:- The matter requires a fresh adjudication and a fresh look by the AO by thoroughly examining the factual position and bearing in mind the legal position pointed out in the preceding paragraphs. During the course of such proceedings it is open to the assessee to place all their submissions including the submission based on the decision in the case of ACG Associated Capsules (P) Ltd. [2012 (2) TMI 101 - SUPREME COURT OF INDIA]. The appeal filed by the Revenue is allowed, the order passed by the Tribunal as well as the CIT(A) are set aside, the assessment order dated 31.01.2006, on this particular head alone namely, the entitlement for deduction under Section 80HHC is set aside and the matter is remanded to the Assessing Officer for a fresh consideration to proceed in accordance with law in the manner indicated above.
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2018 (12) TMI 462
Addition on account of difference of commission - scrutiny assessment - unexplained sundry creditors - Held that:- Information u/s 133(6) of the Act was called by A.O himself from the alleged creditor Shivalik Vyapar Pvt. Ltd to which reply was received along with three separate amounts out of which in one of the account namely M/s Harisons debit balance was shown at ₹ 2,39,10,415/- whereas in the assessee’s books of accounts the balance has been shown at ₹ 2,39,33,988/-. This fact has been well noted by the A.O himself in the assessment order. It seems that due to inadvertence he mentioned in para 5 of the assessment order that the confirmation of account has not been received from Shivalik Vyapar Pvt. Ltd and due to this mistake on the part of the Ld.A.O addition of ₹ 2,39,33,988/- was made. CIT(A) rightly appreciated the facts coming to the conclusion that there was only a difference of ₹ 23,573/- which was on account of difference of commission and apart from this there was no other difference in the account balance with the sundry Creditor Shivalik Vyapar Pvt. Ltd. - decided against revenue Difference in the sale account of Shivalik Vyapar Pvt. Ltd. - confirmation of account received from M/s Shivalik Vyapar Pvt. Ltd there was a closing balance at ₹ 68,28,938/- whereas NIL balance was appearing in the balance sheet of the assessee - Held that:- CIT(A) deleted this addition after detailed examination of the fact that the alleged balance was on account of Bank of Baroda LC which was issued by M/s Shivalik Vyapar Pvt. Ltd for purchasing goods from the assessee and the alleged amount is merely a journal entry through which the alleged amount has been credited in the books of M/s Shivalik Vyapar Pvt. Ltd and corresponding debit to Bank of Baroda LC account which is balance payable by M/s Shivalik Vyapar Pvt. Ltd to the bank. In fact there is no balance amount receivable by the assessee from M/s Shivalik Vyapar Pvt. Ltd. The above findings of CIT(A) has not been controverted by Ld. Departmental Representative and the fact emanating out of this finding are duly verifiable with the copy of ledger account placed - no inconsistency in the findings of Ld.CIT(A) deleting the addition. Admission of additional evidence without following rule 46A of the I.T Act and not calling for remand report of the A.O needs to be dismissed in the given facts where it is proved beyond doubt that all the necessary details were directly called for by A.O from the alleged sundry creditors by issuing notice u/s 133(6) of the Act which were duly complied. We accordingly dismiss Ground No.3 of revenue’s appeal. Addition u/s 68 - Held that:- CIT(A) has not been controverted by Ld. Departmental Representative and it is duly discernable from the records that Ld. A.O though was having necessary conformation of account received from M/s. Shivalik Vyapar Pvt. Ltd in his records called by him under the information u/s 136(6) of the Act, but it seems that due to inadvertence he ignored the same which lead to the alleged addition, which has been rightly deleted by Ld.CIT(A). No interference is therefore called for in the finding of Ld.CIT(A) deleting the addition of ₹ 2,44,74,156/-. We accordingly dismiss Ground No.1 raised by the Revenue. Addition on account of creditors - Held that:- Confirmation of amounts of all the alleged five creditors have been examined by the first appellate authority and there is no dispute to the fact that the payment to these creditors have been made through proper banking channel in the succeeding financial year. No interference is therefore called for in the finding of Ld.CIT(A) deleting the addition of ₹ 38,49,923/- and the same is upheld.
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2018 (12) TMI 461
Penalty levied u/s 271(1)(c) - bogus claim of exemption u/s 11 - assessee claimed exemption of its income under section 11(1) of the Act without any registration under section 12AA(1) - mensrea - Held that:- The claim of exemption of income under section 11(1) is allowed only when the assessee is registered under section 12AA(1) of the Act . In view of the no registration, the claim of exemption under section 11 is a patently bogus claim made by the assessee. It is evident that the assessee failed to give any bonafide explanation in respect of the bogus claim made in all the three assessment years and thus Explanation -1 below the section 271(1)(C) of the Act is conspicuously attracted in the case of the assessee. For levying penalty under section 271(1)(C) of the Act, mensrea of having intention of evading tax is not important. What is important is whether the assessee has substantiated the explanation given and able to prove that the explanation is bonafide. If the assessee failed in doing so , it is liable to attract penalty under section 271(1)(C)of the Act . As in the case of COMMISSIONER OF INCOME TAX vs. HCIL KALINDEE ARSSPL (2013 (8) TMI 245 - DELHI HIGH COURT) has held that Penalty provisions are not criminal and do not require culpable mensrea. Whether or not the assessee had acted malafidely is not the relevant question to be asked and answered. The relevant question to be asked and answered is whether the assessee has discharged the onus and satisfied the conditions mentioned in Explanation 1 to Section 271(1)(c) of the Act. Absurd or illogical interpretations cannot be pleaded and become pretence and excuses to escape penalty. “Bonafides” have to be shown and cannot be assumed. Penalty confirmed - Decided against assessee.
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2018 (12) TMI 460
TDS u/s 194A - addition under section 40(a)(ia) - TDS on lease rent - Held that:- Respectfully following Hon’ble Delhi High Court in case of Rajesh Projects (India) Pvt. Ltd vs. CIT [2017 (2) TMI 1109 - DELHI HIGH COURT], we hold that, TDS needs to be deducted on lease rent. TDS liability on Interest paid to Yamuna Expressway Development Authority (YIEDA) - Held that:- Insofar as definition of, who would constitute an “Authority”, in our considered opinion decision of CANARA BANK [2016 (5) TMI 570 - ALLAHABAD HIGH COURT] cannot be applied wherein held that assessee is entitled to exemption of payment of tax at source under section 194A, due to ratio laid down by Hon’ble Supreme Court in case of New Okhla Industrial Development Authority vs CIT (supra). Accordingly, respectfully following ratio laid down in case of New Okhla Industrial Development Authority vs CIT [2018 (8) TMI 1374 - SUPREME COURT OF INDIA] we hold that TDS needs to be deducted on interest paid to YEIDA. TDS liability on Bank guarantee commission u/s 194A - Held that:- Assessee in present case paid commission to bank not as an agent. Accordingly, we hold that there was no need to deduct TDS on the Bank Guarantee Commission paid by assessee to Bank. Difference in amount of TDS as per 26AS - Held that:- It reveals that assessee received ₹ 2,51,17,344/-, on which TDS of ₹ 25,11,900/- has been deducted. Ld. CIT(A) without verifying any details deleted addition, by holding that no income against advance accrued to assessee. Ld.CIT(A) also failed to note that advance has been received for services which are to be rendered in next year. It is the fact that assessee received money and did not offer to tax during the year under consideration, stating that, it is advance received. However, Ld.CIT(A) failed to observe that advance received, must have culminated in subsequent year as income of assessee. Therefore, in our considered opinion, it is required to be verified, in which year, the same income as been offered by assessee for income tax purposes.
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2018 (12) TMI 459
Revision u/s 263 - assessment u/s 153A - poof of incriminating material unearthed during the course of search - satisfaction of twin conditions being erroneous and prejudicial to the interest of Revenue - assessee has debited expenses towards the shortage of material and is of the opinion that assessee’s primary business is transportation of iron ore and other minerals to various mines to railway siding and loading of the same material into railway rack for onward transportation - whether the assessee has been incurring such expenditure from the earlier years as envisaged before us considering the type of business activity and claim of expenditure Held that:- We are of the opinion on the subject matter of shortage of expenses envisaged by the ld. AR as per the questionnaire in the original assessment proceedings, where the assessee has satisfied the availability of evidence and the assessment was completed - substance in the submissions of AR that the expenditure claimed by the assessee considering the business is normal in nature and the business operations of expenditure is arising out of shortages, which has already been submitted and completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of incriminating material unearthed during the course of search which are not produced. When no incriminating material was found in respect of shortage of materials in the course of search operations, therefore, the order of revision u/s.263 of the Act by Pr. CIT cannot be sustained. Hence, applying the above ratio decidendi to the present case, we quash the order u/s.263 of the Act passed by the Pr. CIT and allow the grounds of appeal of the assessee.
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2018 (12) TMI 458
Addition on account of Rental income - addition on the statement of Shri. Anil Kashinath Khode given at the time of survey - addition based on diaries found in survey - Held that:- The impounded diaries are not prepared by the assessee but by third party and there is no signature of the assessee to even remotely suggest that the assessee has been paid rent by Shri. Kashinath Khemsa Khode for carrying out liquor business under the Excise Licence of the assessee. While it is true that admission is an important piece of evidence; unless corroborated, it cannot be said to be conclusive and it is open to the person who has made the admission to show that it is incorrect; which in my considered opinion has been successfully done in the case on hand. Before me, Revenue has failed to controvert the averments made in the Affidavits dated 19.11.2015 filed by the Khodes and the clarifications by the assessee and Shri. Kashinath Khemsa Khode and Shri. Anil Kashinath Khode in statements dated 17.03.2016 and 18.03.2016 respectively. In this factual matrix of the case, as discussed above, the additions made by the AO and upheld by the CIT(A) on account of Rent for Assessment Years 2011-12 to 2013-14 are hereby deleted. Disallowance of Excise Licence Fees paid - as per assessee assessee’s accounts have been audited u/s 44AB of the Act and the amounts in question have admittedly been claimed in the assessee’s accounts and therefore no disallowance can be made for want of challan - Held that:- as the assessee’s books of accounts have been audited u/s 44AB of the Act; copies of challans for payment of Excise Licence Fees to government are filed to corroborate the assessee’s claims for such expenditure and the fact that the assessee admittedly carried on the business of sale of liquor during the impugned Assessment Years 2012-13 and 2013-14, I am of the view that the same is allowable expenditure. In the light of the aforesaid evidence and in this view of the matter, the disallowance of the expenditure on Excise Licence Fee made by the AO and sustained by the CIT(A) is factually unsustainable - Decided in favour of assessee. Liable to be charged interest u/s 234B and 234D - Held that:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition is upheld by the in the case of Anjum H. Ghaswala [2001 (10) TMI 4 - SUPREME COURT] and therefore, the action of the AO in charging the said interest is upheld. The AO is, however, diverted to re-compute the interest chargeable u/s 234B and 234D of the Act, if any, while giving effect to these orders.
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2018 (12) TMI 457
Validity of reopening of assessment - assessee had not disclosed any capital gain on conversion of his capital asset into business asset in the relevant financial year - reasons to believe - Held that:- The provisions of section 45(2) make it clear that even if there is conversion of capital asset into stock in trade, the capital gains shall arise to an assessee only in the year in which such converted stock in trade is sold. Admittedly the alleged stock in trade was not sold by the assessee in Asst Year 2007-08. It is not the case of the revenue also that any stock in trade was sold by the assessee in Asst Year 2007-08. Hence there cannot be any capital gains in Asst Year 2007-08 even on alleged conversion of capital asset into stock in trade. Hence we hold that the basis of reopening pursuant to reasons recorded, fails on all force of law. The reopening was made in the instant case based on incorrect assumption of facts by the AO. Even on merits, AO estimated the value of 5500 sq.yard of land at ₹ 5,50,00,000/- based on estimated value quoted by the DVO on an interim basis. The ld AO failed to appreciate that ultimately some portion of land was even held by the assessee. In any case, 5500 sq.yard of land was never sold in full by the assessee. The total value determined by the DVO at a later stage i.e during first appellate stage was fixed at ₹ 2,33,24,000/- for entire 5500 sq.yard of land. The ld CITA having agreed to the said consideration value for the purpose of computing capital gains at ₹ 34,87,820/- by considering full value of consideration figure at ₹ 2,33,24,000/-, made totally unwanted and irrelevant observations in his appellate order by observing that the assessee shall be liable for business income at ₹ 5,15,12,180/- ( 5,50,00,000 – 34,87,820) in the year in which land is sold. In any case on merits, we hold that the capital gains arise only in the year in which possession of the land was handed over to the developer pursuant to the provisions of section 2(47)(v) r.w.s. 53A of the Transfer of Property Act, 1882. Reliance in this regard is placed on the decision of Hon’ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia of Bombay vs CIT [2003 (2) TMI 62 - BOMBAY HIGH COURT ] Hence we hold that the reopening made by the AO based on absolute incorrect assumption of facts deserves to be quashed. - Decided in favour of assessee. Land held by the assessee or the shops - capital gains or business income - Held that:- Admittedly the sanction of the building plan was obtained on 29.10.2007 and the possession of land (after retaining the land which was not the subject matter of development agreement) was handed over by the assessee to the developer in Asst Year 2008-09. This tantamounts to transfer u/s 2(47)(v) of the Act read with section 53A of the Transfer of Property Act, 1882 and capital gains, if any, on transfer of land, should be considered only in Asst Year 2008-09. Reliance in this regard is placed on Chaturbhuj Dwarkadas Kapadia of Bombay vs CIT [2003 (2) TMI 62 - BOMBAY HIGH COURT]. We hold that pursuant to the development agreement dated 13.9.2006 and handing over of possession of land in Asst Year 2008-09 by the assessee to the developer, the developer has already been entitled to 50% superstructure portion together with ownership of land thereon in Asst Year 2008-09 itself. Title is already held with developer in Asst Year 2008-09 itself. The Transfer deeds executed on 17.11.2008 in respect of lands proportionate to 4 shops were only for betterment of existing title to the developer. Hence there cannot be any capital gains or business income in the hands of the assessee for Asst Year 2009-10 in respect of the land held by the assessee or the shops. Accordingly, the grounds raised by the assessee are allowed.
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2018 (12) TMI 456
Allowable revenue expenditure u/s 37(1) - assessee company paid compensation for vacating the land, within the leased area - Held that:- Assessee has incurred an expenditure of ₹ 60 lacs during the previous year relevant to impugned assessment year and a claim u/s 37(1) was made during the course of assessment proceedings. The fact of incurrence of the expenditure and the fact that the said expenditure has been incurred for the purposes of the business has not been disputed. In the return of income, the assessee has claimed depreciation of ₹ 52.98 lacs however, the said depreciation relates to expenditure incurred in earlier years and which has been capitalized as well as expenditure incurred during the year under consideration on which depreciation has been claimed. In the earlier year i.e, AY 2013-14, the whole of the expenditure has been allowed as revenue expenditure and therefore, if we were to approve the approach of the Revenue, it will create an inconsistent position as far as this claim of expenditure is concerned. Once a claim is held to be legally allowed, there is thus no basis to restrict the quantum of such claim once other conditions for claiming such expenditure has been duly satisfied. Therefore, consistent with the position in the earlier year and following the decision of the Coordinate Bench referred supra, the whole of the expenditure of ₹ 60,00,000 incurred during the year is allowed as revenue expenditure u/s 37(1) - Decided in favour of assessee Addition towards contribution to PF and ESI - Held that:- The assessee company has deposited employee’s contribution to PF and ESI with delay of few days from the due dates, however the same were deposited before the due date of filing of the return of income U/s 139(1) which is evident from the order of the Assessing Officer. It was further submitted that the matter is squarely covered in favour of the assessee by the decisions in case of CIT vs. State Bank of Bikaner & Jaipur [2014 (5) TMI 222 - RAJASTHAN HIGH COURT] and JAIPUR VIDYUT VITRAN NIGAM LTD AND RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD [2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] - Decided in favour of assessee.
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2018 (12) TMI 455
Penalty u/s 271(1)(c) - defective notice - non specification of charge - Held that:- We find the notice dated 25.03.2014 issued u/s. 274 r.w.s 271 of the Act, placed on record, does not specify the charge of offence committed by the assessee viz. whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. - Imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. See Jeetmal Choraria Vs. ACIT [2017 (12) TMI 883 - ITAT, KOLKATA] - Decided in favour of assessee. - Decided in favour of assessee.
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2018 (12) TMI 454
Penalty u/s 271(1)(c) - defective notice - non specification - Held that:- We find that the notice dt. 18-03-2014 issued u/s 274 r.w.s 271 of the Act, copy of the same is on record, does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. See THE COMMISSIONER OF INCOME TAX & OTHS. VERSUS M/S MANJUNATHA COTTON AND GINNING FACTORY & OTHS., M/S. V.S. LAD & SONS, [2013 (7) TMI 620 - KARNATAKA HIGH COURT]. Show cause notice issued in the present case u/s 274 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 does not strike out the inappropriate words. We are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled.- Decided in favour of assessee.
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2018 (12) TMI 453
Denial of credit of TDS - corresponding income has not been offered to tax - TDS belongs of assessee or HUF - Exemption u/s 10(37) claimed by HUF - contention of the assessee that once TDS certificates are in the name of the assessee and credit for such TDS is appeared in the name of the assessee in AIR data base and also the fact that the 6 particular income is not taxable either in the hands of the assessee or in the hands of the HUF credit for TDS cannot be rejected. Held that:- We find merit in the arguments of the assessee for the reason that when a particular income is exempt from tax in view of specific provisions provided under section 10(37) of the Act and also the fact that the HUFs have declared the compensation received on account of compulsory acquisition of agricultural land in their return of income and claimed exemption under section 10(37) there is no reason for AO to deny credit for TDS merely on the ground that no income has been offered to tax in the hands of the assessee. As compensation received on account of compulsory acquisition of agricultural land is exempt from tax under section 10(37) - HUFs have declared the said compensation in the return of income. It is also undisputed that the HUFs have not claimed credit for TDS in their return of income. Therefore, when the facts are clear in respect of exemption of particular receipt in the hands of the assessee as well as HUFs, the question of offering such income for tax in the hands of the assessee does not arise. When the credit for such TDS is appearing in the name of the assessee in AIR data base and the assessee has furnished necessary TDS certificate in his name, the Assessing Officer erred in rejecting the claim of credit for TDS by citing the provisions of section 199 of the Act r/w rule 37BA of the I.T. Rules. This legal position is supported by the findings of the Hon’ble Delhi High Court in Relcom [2015 (11) TMI 284 - DELHI HIGH COURT] wherein the Court held that this Court relies upon the well settled dictum for procedure is the hand made of justice and it cannot be used to hamper the cause of justice. Therefore, the Revenue’s contention that the assessee instead of claiming the entire TDS amount ought to have sought a correction of vendor’s mistake would unnecessarily prolonged the entire process of seeking refund based on TDS credit. AO erred in denying credit of TDS to the assessee - Decided in favour of assessee.
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2018 (12) TMI 452
Assessment u/s 153A - claim of deduction under section 54F denied - Reopening of assessment - proceedings earlier under section 143(3) r.w.s. 147 and 148 in favour of the assessee and were on the same issue proceedings under section 263 of the Act was initiated and dropped Held that:- AO in the case of the assessee ought not to have revisited and readjudicated the issue with respect to deduction under section 54F of the Act against which proceedings under section 263 of the Act was initiated especially when the learned Assessing Officer on the earlier occasion has already adjudicated the issue in the scrutiny assessment proceedings under section 143(3) read with sections 147 and 148 of the Act. Therefore we are of the considered view that the order of AO dated March 31, 2016 regarding adjudicating the issue of deduction under section 54F of the Act is erroneous. Hence we hereby direct the learned Assessing Officer to delete the addition made by disallowing the deduction under section 54F of the Act. Since we have adjudicated hereinabove the legal issue with respect to revisiting an issue in the subsequent proceedings under section 153A read with section 143(3) of the Act which was already adjudicated in the scrutiny assessment proceedings earlier under section 143(3) read with sections 147 and 148 of the Act in favour of the assessee and were on the same issue proceedings under section 263 of the Act was initiated and dropped, we restrain ourselves from adjudicating the issue with respect to deduction under section 54F of the Act on the merits - Decided in favour of assessee.
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2018 (12) TMI 451
TDS u/s 194J OR 194C - treating annual maintenance contracts “AMC” payments made to various payees as fee for technical services - TDS liability - Held that:- We find no merit in Revenue’s instant argument. There is no dispute about the assessee having made the impugned payments in lieu of availing annual maintenance services from the payees in issue. It deducted TDS thereupon u/s 194C of the Act. The Revenue’s endeavour herein is that the payee(s) party had rendered technical service and therefore sec. 194J steps in. We notice in this backdrop of facts this tribunal’s decision in DCIT vs. Parasrampuria Synthetics [2007 (11) TMI 436 - ITAT DELHI] rejected Revenue’s similar substantive grievance seeking to treat contractual payments as fee for technical services The person rendering certain services has only maintained machinery or converted yam but that knowledge is not now vested with the assessee by which itself it can do research work. In the circumstances, the amount paid cannot be considered as fees for technical services within the meaning of section 194J. We offered sufficient opportunities to the learned departmental representative for indicating any technical expertise to have been made available to the assessee payer forming sine qua non to invoke sec. 194J r.w.s. 9(1)(vii) of the Act. There is no such evidence forthcoming from the case file. We therefore follow the above referred co-ordinate bench’s decision to affirm the CIT(A)’s findings under challenge in all three instant case(s). - decided against revenue.
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2018 (12) TMI 450
Reopening of assessment - assessment barred by limitation or not - addition of genuine losses by using Client Code Modification - non application of mind and without verification of facts and without connecting the information with the assessee - onus to prove allegations - Held that:- In the process, the Appellant is a beneficiary in whose case the loss has been booked by modifying the client code, thereby, reducing the taxable income. As argued that margin management can be done by broker by usurping funds of clients with it. In this case, loss shifting is not the matter ; it is only the matter of usurping the funds of the Appellant. It is stated that huge voluminous transaction cannot be modified in one hour provided by the Stock Exchange. We are not convinced with the assertion of the Appellant because what required to be modified was only the client code for which limited time is given by the Stock Exchange. Now a days techniques have been evolved to get the data ready before hand for uploading on the site. Another argument by the Appellant is that if he had shifted the profits to an outsider, he would have received back corresponding amount from the recipient of the profit. However, the Assessing Officer has not brought any material on record to show that the profit was received back. This argument of the Appellant can also not be supported because the party receiving the profit, under manipulative schemes, cannot transfer the money either by book entry or by bank transaction. It is only the Assessee who can tell the manner of money received back. Appellant has not given satisfactory explanation with respect to the losses incurred by using Client Code Modification (based on the report received from National Stock Exchange and the inquiry' by the Investigation Wing, Ahmedabad). The grounds of appeal are not substantiated further to prove the allegations leveled by the Appellant. Accordingly, the grounds of appeal are decided against the assessee.
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Customs
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2018 (12) TMI 449
Monetary amount involved in the appeal - Penalty u/s 112 and 117 of the Customs Act, 1962 - Invocation of second proviso to Section 129A - Held that:- The CESTAT, which has been conferred jurisdiction under law to adjudicate and decide the issues, both on facts and law in all cases, is expected to do so after adverting to relevant facts. However, a small area of discretion is given to the CESTAT i.e. where the value of the subject matter of the appeal is lower than ₹ 2 lakhs. The parliamentary intent presumably was that in regard to such matters the CESTAT should not be compelled to decide the appeals before it in all cases on merits and rather should be permitted to exercise its jurisdiction in taking up matters having regard to the complexity of the facts or law involved. In the present case, the CESTAT appears to have considered the fact that the appeal value was low - appeal dismissed.
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2018 (12) TMI 448
Valuation of imported goods - undervaluation - misdeclaration - case of the department is that the price indicated in the BOE is the FOB price and not CIF price - It was also alleged that goods were declared as non-woven fabric (stock lot) whereas the description in the Bill of Lading set to have been recovered from the container, the description was woven fabric (stock lot) - scope of SCN. Held that:- The Department has charged the respondent- importer alleging mis-declaration regarding the price. There is no allegation of mis-declaration in the context of the description of the goods. In the present case, the allegation is of under-invoicing. The charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. It is for the Department to prove that the apparent is not the real. The transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation, i.e., at the time when the goods reach the customs barrier. Therefore, the invoice price is not sacrosanct. However, before rejecting the invoice price the Department has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. In the absence of any special circumstances indicated in Section 14(1) of the Customs Act, 1962, the price paid or payable should be taken as transactional value. The charges under invoices have to be supported by evidences of prices of contemporaneous of imports like goods. Invoice price, though, not sacrosanct, the Department has to give cogent reasons before rejecting the invoice price. The Department has to find out whether there are any imports of identical goods or similar goods at a higher price around of same time unless the evidence is gathered in that regard. The question of rejecting the value does not arise. The invoice price has to be accepted in such circumstances if the charge under valuation cannot be supporter either by evidence or information about comparable imports, the benefit of doubt must go to the importer. In the instant case, the Commissioner on the one hand held that there is no mis-declaration of description on the part of the appellants. He has not adduced any evidence of payment by the appellants over and above the invoice price. No proof of payment either to the foreign suppliers or to the steamer agents for transportation. Differential duty payable has been arrived only on the basis of certain data called for from the steamer agent. The learned Commissioner has not only traversed beyond the SCN but also has not given due consideration to the contemporaneous imports, if any, of identical or similar goods. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 447
Valuation of imported goods - enhancement of value based on DGOV Circular No. Val/Tech/25/2013 dated 07.08.2013 and thereby applying the NIDB data - Held that:- Identical issue decided in the case of M/S. SRR INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS, MUNDRA [2018 (12) TMI 392 - CESTAT AHMEDABAD], where it was held that The assessable value of the goods i.e. PU Belts is enhanced by the customs authorities mainly on the basis of DGOV Circular, which is not an authority to dispute the valuation of the imported goods. It was also held that the NIDB data is also of no basis and relevant to the present case. The enhancement of the value of imported goods and consequential differential duty demand is not legal and correct - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 446
Provisional release of the seized goods - Section 110A of the Customs Act, 1962 - Prohibited goods or not? - Clear ownership - actual importers (identified by DRI during investigation) did not have IEC Code No. - Held that:- It is to be noted that the investigations in the present case have already been concluded by the DRI, as evidenced by issue of show cause notice dated 03.09.2018 in which the seized goods have been proposed for confiscation under Section 111 of the Customs Act, 1962. The findings of the lower authority that the goods were prohibited goods is set aside - also the warehousing of the goods has already been allowed; hence the seized goods will not incur demurrage. Further, the show cause notice has already been issued. In these circumstances, the lower authority is directed to complete the adjudication of the case within a period of two months from the date of receipt of this order, failing which he should pass order under Section 110A ibid for provisional release of the goods as permissible under law - appeal disposed off.
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FEMA
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2018 (12) TMI 445
Gross violation of the principles of natural justice - Dispensation of the pre-deposit - Penalty imposed - whether principles of natural justice was followed or not? - Held that:- Innumerable opportunities have been given to the appellant for appearing/arguing his case and examining the witness but he failed to avail the same. He either did not appear or on the few occasions where he did appear before the adjudicating authority he took adjournment on some plea or the other. We agree with the learned counsel for the respondents that justice is qua both the parties and we do not find any violation by the adjudicating authority in this regard. Therefore, do not see any reason to grant them the dispensation of the pre-deposit. They have not pleaded anything either on merits of the case or on hardship even when specifically asked by me. With regard to the judgments quoted by the counsel for the appellant on the principles of natural justice it goes without saying that these principles are the pillars of justice and there is no denying these judgements. However, the facts of the case has to be seen to come at a conclusion whether there is a denial of these principles or not. The discussions and findings in the previous paras show that the principles have been fully followed by the adjudicating authority. Interests of justice would be served if the appellant is directed to deposit 50 per cent of the total penalty (covering all the four appeals as above) within a period of two months from today.
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2018 (12) TMI 444
Contravention of FERA underhand foreign exchange - Loose sheets found in the house of the main accused Shri Darshan Singh and the statement of the appellant - Held that:- There is no evidence to that effect on record. In fact, the appellant in his statement before the DRI and which finds a mention in the impugned order has not stated that the alleged Darshan Singh was in any way involved in foreign exchange transactions. The so-called loose sheets recovered from the residence of Shri Darshan Singh does not establish that the appellant had received or given any money in contravention of FERA. There are no statements or any other evidence which has been produced by the adjudicating authority to prove the involvement of the appellant in receipt or making payments of foreign exchange. Holding of Indian currency or dealing with it is not a crime and if there is a violation of any other law like the income tax etc. that would be dealt with by the respective authorities. The appeal is accordingly allowed.
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PMLA
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2018 (12) TMI 443
Maintainability of the petition - Appeal to High Court - whether this Court would not like to entertain the petition as the same would militate against the principles of forum convenient, and also in view of Section 42 of The Prevention of Money-Laundering Act, 2002 - jurisdiction of High Court - Held that:- Mr. Chaudhri may be right in contending that the notice under Section 8 of the Act has been issued by the Authority in Delhi, so jurisdiction is there for this Court to entertain the writ petition. But merely because a part of cause of action has arisen under the jurisdiction of this Court, whether this Court needs to exercise its jurisdiction is the question need to be answered. This Court is of the view that it should not , for more than one reason; that it is not in dispute that the petitioner is based in Mumbai. The provisional attachment order has been passed in Mumbai. The complaint though, filed before the adjudicating authority in Delhi, it encompasses all the facts that have arisen in Mumbai. The properties are in Mumbai. It is only after filing of the original complaint as contemplated under Section 5(5) of the Act before the adjudicating authority, which is located in Delhi that the impugned notice has been issued from Delhi but the fact remains that nothing has happened in Delhi. Only notice to show cause has been issued. After the adjudicating authority decides the issue, there is a forum of appeal available to the petitioner. Even thereafter, the remedy of appeal to the High Court is also available under Section 42 of the Act, which has already been enumerated above. In other words, in the case in hand, if an order is passed by the Appellate Authority it shall be the Bombay High Court, which shall have the jurisdiction for both, i.e. the person aggrieved and the Central Government against the order is passed by the Appellate Authority. Therefore, it shall be the Bombay High Court and accordingly this Court is of the view that it should not entertain the present writ petition. The petitioner shall be at liberty to approach the Bombay High Court for appropriate relief
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2018 (12) TMI 442
Offence under PMLA - Held that:- As per prosecution case, petitioner and Raman Kumar Garg were involved in paper transactions and fake documentation in order to cheat State exchequer. Petitioner is the beneficiary of the act of fake companies. ECIR proceedings and the prosecution in FIR are two distinct mechanism. Fictitious export firm had claimed VAT refund of ₹ 1.56 crores from the Government. In the enquiry, it was confirmed that all the shipping bills and documents produced by the said firm were forged and fabricated. VAT refund of ₹ 1,56,76,190/- on the basis of forged and fabricated documents from the Excise and Taxation Department, Ludhiana was transferred through RTGS in different accounts of the proprietors. Petitioner is one of the proprietors along with Smt. Sangeeta Garg, Umesh Garg, Seema Garg and Saiyarh Garg. Direction to videograph the proceedings of interrogation - Held that:- Petitioner was summoned on various occasions for making necessary arrangement for videography. Petitioner did not appear on any of the occasion intentionally and he did not comply with the directions. Petitioner deliberately avoided the investigation in order to escape from the proceedings. Summons were issued to the petitioner on nine occasions, but he did not turn up. All these facts were noticed in the earlier petition while declining the prayer for grant of anticipatory bail vide order dated 11.05.2017. Those proceedings were conspicuously concealed in the earlier petition as the rigor of non-appearance in the investigation would definitely go against the petitioner. Only a reference was made in para no.5 of aforesaid petition that a civil writ petition was filed by the petition which was disposed on 22.12.2015. A review petition is pending. Owing to the conduct of the petitioner, this Court did not grant any indulgence in the earlier petition. The case of Umesh Garg cannot be considered to be on parity with that of the petitioner, as the conduct of petitioner was earlier deprecated with reference to his conduct in not joining the investigation despite directions issued by the High Court for doing videography of the proceedings of the investigation. The petitioner was summoned on various occasions for making necessary arrangement for the videography, but he intentionally did not appear. The summons were issued to the petitioner on nine occasions, but despite service he did not turn up. Those proceedings were concealed in the earlier petition i.e. CRM-M No.12008 of 2017 in a very conspicuous manner so as to avoid rigor of non-appearance in the investigation. No such overt act was attributed to co- accused Umesh, therefore, the case of petitioner stands on different footings where his complicity was noticed in the petition with reference to facts on record. For the reasons recorded hereinabove, extra-ordinary relief of anticipatory bail cannot be granted to the petitioner. However, petitioner would be at liberty to seek regular bail in accordance with law. Consequently, this petition is dismissed.
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Service Tax
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2018 (12) TMI 439
Nature of transaction - Sale or service - sale of post paid SIM - registration of post paid SIM - sale of Anant plan (Life time prepaid SIM) - Levy of service tax - time limitation - Held that:- The issue is squarely covered by Hon’ble Apex Court judgment in the case of M/s. Idea Mobile Communication Ltd. vs Union of India [2011 (8) TMI 3 - SUPREME COURT OF INDIA], where it was held that The position in law is therefore clear that the amount received by the cellular telephone company from its subscribers towards SIM Card will form part of the taxable value for levy of service tax, for the SIM Cards are never sold as goods independent from services provided - Demand of service tax upheld. Time Limitation - Held that:- The appellant have not put forward any evidence to show that the fact of ‘sale of SIM card’ etc. and its value not being included in the taxable value, was in the knowledge of the department - Since the appellant have been working under self-assessment mechanism and if they are having any doubt in their mind, they should have sought clarification from the department regarding the includibility of the sale value of SIM and other plans in the taxable value for levy of Service Tax. However, they have failed to do that - plea that the demand is hit by period of limitation is not acceptable. Appeal dismissed - decided against appellant.
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2018 (12) TMI 438
CENVAT Credit - various input services - denial on account of nexus - Air Travel Agent / Rail travel Agent Services - Cable operator services - Convention service - Membership service - Erection commission/installation service - Civil works services/Repairs and maintenance - Designing and printing services - Cleaning services/Housekeeping - Sponsorship services - Finance Lease services - Accommodation services. Air travel agent / rail travel agency service - cable operator service - convention service - erection, commission and installation service - designing and printing service - cleaning service / housekeeping - sponsorship service - finance lease service - Held that:- The credit availed on air travel agent / rail travel agency service, cable operator service, convention service, erection, commission and installation service, designing and printing service, cleaning service / housekeeping, sponsorship service and finance lease service are eligible for credit - These issues were considered by the Tribunal in Xilinx India Tech. Services Pvt. Ltd. Vs CC., CE. & ST., Hyderabad-IV [2017 (1) TMI 658 - CESTAT HYDERABAD] - credit allowed. Membership fees - Held that:- In CCE, Pune III vs Zensar Technologies Ltd [2015 (11) TMI 1561 - CESTAT MUMBAI] the said services were held to be eligible - These services therefore cannot be said to be for personal consumption - credit allowed. Civil works / repairs and maintenance - Held that:- It is not possible to make out from the SCN or the order as to the services which come under works contract service and civil works services. This aspect needs to be reconsidered - matter on remand. Accommodation services - Held that:- The appellant has to establish with necessary documents that the accommodation was availed for official purposes only. The Counsel for appellant submitted that the appellant would be able to furnish documents to establish that this was availed for official purposes only - the accommodation service also requires to be remanded to the adjudicating authority - matter on remand. Appeal allowed in part and part matter on remand.
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2018 (12) TMI 437
Advertising Agency Service - Print industry - electronic media - Revenue entertained a view that the appellant’s payment of Service Tax on 15% of the commission received by them is not proper and they should have discharged the Service Tax on the full value of 100% - CENVAT Credit. Print industry - tax on 100% amount - Held that:- As the disputed issue stands considered by the Tribunal in various decisions, it was legally obligatory on the part of the adjudicating authority to go through the same and follow the decisions - Similarly the Circulars issued by the Board with which the authorities working under the C.B.E.C. are bound, as per settled law, should have been taken into consideration. Having not done so, we feel that the impugned order is required to be set aside and the matter needs to be remanded to the adjudicating authority for fresh decision - matter on remand. Electronic media - tax on 100% amount - CENVAT Credit - duty paying document - Held that:- Appellant are ready to pay tax on the full 100% value collected by them from their customers and further forwarded to the electronic media - As long as the invoices show the appellant’s name, they would be eligible documents for the purpose of Cenvat credit. Appeal allowed by way of remand.
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2018 (12) TMI 436
Cargo Handling service - demand of accound of MPSEZ issued debit notes on account of deficiencies of service - adjustment of excess paid service tax - period November 2011 to March 2011 - Held that:- The debit notes issued were in respect of deficiency of service provided by the appellant on which on the entire value service tax was paid. Since the debit note was issued, the value of the output service stand reduced, in such case on the amount of debit note, the service tax is not payable - however, since the appellant have already paid the service tax in the entire bill value and due to deficiency in the service, the excess paid service tax is adjustable in the future liability. CENVAT Credit - denial on the ground that the appellant have taken credit on the debit notes raised by MPSEZ towards the part of service provided by 3rd party to MPSEZ - Held that:- Since the appellant invoice is inclusive of service provided by 3rd party, the MPSEZ has issued a debit note, therefore, the service for which the debit note was raised which was provided by the 3rd party is a deemed input service for the appellant - credit allowed - penalty set aside. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 435
Benefit of abatement - commercial and industrial construction services - case of the department is that abatement of 67% is not admissible as per the aforesaid Notification on the ground that the service provided by the appellant is falling under the category of site formation and clearance, excavation and earth moving and demolition - Held that:- It is clear that the site clearance and excavation is an incidental and ancillary to civil work - the service is correctly classifiable under the commercial or industrial construction service. The abatement on 67% as per Notification 01/2006-ST is legally admissible to the assessee - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 434
Benefit of abatement - construction of residential complex - denial of abatement on the ground that activity of the appellant is in the nature of completion and finishing services - Held that:- The period involved in the present case is April, 2005 to September, 2007. The issue of work contract was not considered by the lower authority. Since the lower authority had no occasion to deal with this vital issue matter needs to be reconsidered - appeal allowed by way of remand.
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2018 (12) TMI 426
CENVAT Credit - common inputs and input services used of manufacture of goods as well as for taxable and exempt service - non-maintenance of separate records - Rule 6(3A) of CCR 2004 - Extended period of limitation - Held that:- The intention of the Legislature was that a manufacturer or a service provider should not avail the entire CENVAT credit of the service tax paid on common input services and should avail proportionate credit attributable to the taxable output service for which the CENVAT credit Rules provides for maintaining separate accounts. Appellant herein has followed this rule by taking the credit of only an amount which is attributable to the taxable services provided by him and not availing the CENVAT credit of the input services which are attributable to the trading activity. By availing only the CENVAT credit of the service tax paid attributable to the taxable services, in my view, appellant had complied with the provisions of Rule 6(2). The decision in the case of M/S. TRANS ASIAN SHIPPING SERVICES PVT LTD VERSUS THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX (VICE-VERSA) [2018 (9) TMI 922 - CESTAT BANGALORE], is directly applicable to the facts of present case, where it was held that the appellants have maintained separate records and as such, there is force in the arguments made by learned counsel for the appellant-assessee. Extended period of limitation - the records of the appellant were audited time and again by EA 2008 audit - Held that:- The audits were regularly conducted and this objection was never raised, in view of it, even on limitation also appellant succeeds. Appeal allowed on merits as well as on limitation.
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Central Excise
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2018 (12) TMI 433
Abatement of proceedings initiated against deceased - Held that:- It would be appropriate that all the contentions urged in support of the claim made here should be considered and final orders made by the concerned adjudicating authority - petition disposed off.
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2018 (12) TMI 432
SSI Exemption - denial on the ground that assessee was using brand name of third party - Extended period of limitation - Held that:- While filing the declaration under Rule 173B of Central Excise Rules, 1944, the assessee has declared that they are using the brand name ‘MEFA’ which is their company’s name - Therefore, it cannot be alleged that the assessee has not declared the fact that of using the brand name of third party. In that circumstance, the Ld. Commissioner has rightly dropped the demand pertaining to the extended period of limitation. Use of brand name - case of appellant is that vide deed of assignment dt.5.10.2003, the assigner has assigned its rights to use trade mark to the assessee - Held that:- The assessee has placed on record assignment deed as well as lease deed in favour of use of said brand name, plant, machinery of M/s.Metal Fabrics India Pvt.Ltd. although the said lease deed/assignment deed has not been registered - the assessee is entitled to claim the benefit of SSI exemption notification as the assessee is not using the brand name of third party - benefit allowed. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 431
Refund claim - duty was paid under protest - disallowance of deduction claimed on account of secondary packing - whether the cost of secondary packing that is, wooden crates is includable in the assessable value of the final product of the respondent? - Held that:- The refund claim in the present case has arisen from the order of demand case which was decided by this Tribunal and the same was upheld by the Hon’ble High Court of Gujarat. In this position, the respondent is prima-facie entitled for the refund of duty paid on merit. Unjust Enrichment - Held that:- Since refund in the present case is governed by the provisions of Section 11B of Central Excise Act, 1944, the refund under the mandate of said law must pass the test of unjust enrichment. Appeal allowed by way of remand to reconsider the issue afresh.
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2018 (12) TMI 430
Valuation - clearances of unbranded Pan Masala to three separate units of the appellant situated elsewhere - area based exemption also availed - Rule 8 of the Central Excise Valuation Rules, 2000 - Held that:- The basis for arriving at the cost of production has been prescribed in CAS-4 Standards formulates by the Institute of Cost Accountants. Perusal of the record indicates that the estimate of cost of production by the appellant is not supported by any Certificate from Cost Accountant. The department has proceeded to redetermine the cost of production under their own methodology, but it is seen that cost of production arrived at by the department is also not as per CAS-4 Standard - thus, neither of the assessments is made as per the prescribed standard. The allegation of the department is that the appellant has inflated the assessable value, paid more duty than required and availed extra amount by way of refund available to them under Notification No.32/99 - extended period of limitation - Held that:- There is a record of price list having been filed under the then Rule 173C of the Central Excise Rule, 1994 on 28th June, 2001. Further, it is on record that the cost of production has also been intimated to the Jurisdictional Superintendent on 01.03.2002 alongwith cost sheet. In view of the above, the departmental authorities were very much aware of the fact that unbranded Pan Masala was being cleared to sister concerns - there is no justification on the part of Revenue Authorities to invoke the suppression clause against the appellant on the basis of estimate of cost of production not supported by necessary certificate from an independent Cost Accountant - the entire demand is not sustainable as time barred. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 429
CENVAT Credit - fake invoices - only invoices issued without receipt of goods - Demand alongwith interest and penalties - extended period of limitation - principles of natural justice - Held that:- The investigation did not take place at the end of the transporters, no statement was recorded of any individual from Padmashri Road Lines, and it is seen from the impugned orders that the adjudicating authority as well as the first appellate authority are not disputing the existence of such consignment note nor it is alleged that this consignment note is a fake - In the absence of anything to discredit consignment note of Padmashri Road Lines which carried the material from Vadodara to Hyderabad, it is difficult to accept the revenue’s view point that the main appellant had availed CENVAT credit only on documents. This view is fortified by the decision of the Tribunal in the case of Dhakad Metal Corporation [2015 (8) TMI 146 - CESTAT AHMEDABAD]. Demand set aside on merits itself - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 428
CENVAT Credit - common input and input services used for dutiable and exempted final products - non-maintenance of separate account - Rule 6(3) of CCR - extended period of limitation - Scope of SCN - Held that:- Admittedly reversal of proportionate credit was made much before issue of show-cause notice. Show-cause notice doe not reveal as to how the matter has gone to the knowledge of the department or brought to the notice of the parties but order-in-original at para 2 indicates that during the course of audit, it was noticed that assessee had availed cenvat credit on common inputs and input services which are used in the manufacture of dutiable as well as exempted final products - there is force in the submission of ld. Counsel for the appellant that it had not availed credit of duty paid on common inputs and the dispute is therefore restricted to availment of cenvat credit on common input service. Extended period of limitation - Held that:- The respondent department has not disputed the figures of proportionate payment but order-in-original reveals that in not giving such intimation/option, the assessee has suppressed the material fact that they have availed cenvat credit on common input services which was noticed only during audit, for which extended period of limitation as envisaged in proviso to Section 11A(1) prior to 08.04.2001 and Section 11A(4) with effect from 08.04.2001 is justifiably invocable. Statutory audit procedure - Held that:- It cannot be said that only because audit party had found non-maintenance of separate records appellant is to be tasked for suppression etc. In exercise of option as contemplated in Rule 6(3A), the assessee has to choose either of those options, and non-intimation of such exercise of option can only be treated as mere procedural lapse. Further, nowhere in the said procedure it has been mentioned that in the event of such intimation not being given, tax liability at the higher rate would be applicable to the assessee for which the order passed by the Commissioner confirming 6% liability against proportionate availment of 1.33% credit is not sustainable. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 427
Validity of SCN - CENVAT/MODVAT Credit - removal of input as such by raising invoices without reversing credit - diversion of controlled substances (Ephedrine) from the factory - manufacture not taken place - period involved is from 24.8.1998 to 24.3.1999 - penalty - Held that:- The Show cause notice is highly vague and does not give the exact allegation. It is presumed to be alleged that appellant removed inputs as such without reversing the credit and has contravened provisions of 57F. But then it is also stated that inputs are removed as tablets. When the inputs are Ephedrine Powder, then the removal in the form of tablets will not be removal as such requiring reversal of credit. If they are removed as Ephedrine tablets after manufacture then these attract Central Excise duty. From the facts narrated in the show cause notice, it is not clear whether the allegation is inputs were removed as such or whether Ephedrine tablets manufactured were removed without payment of duty. When Ephedrine Powder is the input, the allegation that they removed inputs as such in the guise of Ephedrine Tablets does not make any sense. Penalty - Held that:- When the amount of duty demand have been paid as per the invoices and credit has been reversed, the penalties imposed cannot be sustained. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 425
Valuation - sale of goods through Depot - rates prevalent at the Depot - Department was of the view that the Central Excise duty is required to be paid by the appellant at the factory gate at prices prevalent at the depot from where the products were ultimately sold - demand of differential duty - Held that:- The goods were not sold from the Haldia Depot, but were further transferred to other depots of the appellant and sold at different prices. As such in terms of the provisions of Section 4 of the Central Excise Act, 1944 read with Rule 7 of the Central Excise Valuation Rules, 2000, the appellant is required to discharge the duty at prices prevalent at the depot from where the goods are sold - demand upheld. Penalty - Held that:- There is no malafide intention on the part of the appellant - penalty set aside. Appeal allowed in part.
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2018 (12) TMI 424
Valuation - sponge iron transferred to Unit-II - applicability of Rule 8 of the Central Excise Valuation Rules, 2000 - clandestine removal - Held that:- The final product i.e. sponge iron has been cleared from the Raniganj Unit to Burdwan Unit. Since such clearances do not involve any sale, but are in the nature of transfer, the valuation to be adopted for payment of duty is to be determined as per the Central Excise Valuation Rules, 2000. Identical issue decided in the case of ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD [2007 (2) TMI 5 - CESTAT, MUMBAI], where it was held that the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to the independent buyers. The appellant has made clearances to independent buyers in addition to the Burdwan Unit. The values for clearances to Burdwan Unit are in line with the values adopted for independent buyers - there is no justification for demand of differential duty. Clandestine removal - shortage of sponge iron recorded at the time of stock verification - Held that:- Looking at the nature of the finished products i.e. sponge iron, which is in loose granule form, carrying out weighment physically is also impractical. In any case no evidence has been brought on record to allege that the goods recorded as shortage were cleared clandestinely - Demand set aside. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 423
Valuation - Motor Spirit - High Speed Diesel - appellant paid duty on the quantity of goods cleared and sold through their own depots, on the basis of the price per kilo liter for volume at ambient temperature - Since the volume of goods at 15°C will be lesser than the volume of the same products at ambient temperature, the department proceeded by taking the view that the appellant has short paid the duty. Held that:- An identical dispute pertaining to the appellant’s refinery at Ambala was before the Delhi Bench of the Tribunal and has been decided in favor of the appellants in INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF C. EX.. PANCHKULA [2013 (1) TMI 526 - CESTAT, NEW DELHI], where it was held that the appellant has rightly paid the excise duty as per transaction value in terms of Section 4 of the Central Excise Act and there is no justification for allegation of under-valuation of the goods with a view to evade excise duty Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (12) TMI 422
Input tax credit - Denial of credit treating the same to be excess tax paid on purchase in comparison to the tax payable on such purchase - Held that:- It is undisputed that the amount with respect to which the I.T.C. being claimed is admittedly the amount paid by the assessee by way of tax on purchase of goods that have given rise to the dispute - The language of Section 13(1)(a) [table entry 1(1)] read with Section 2(p) of the Act, is sufficiently clear and provides that the input tax credit would be referable to the entire amount of tax i.e. the aggregate amount of tax paid or payable, in respect of the purchase of goods. Insofar as the legislature has itself contemplated that amount paid, may itself give rise to input tax, there is no room to enter into any exercise of interpretation to restrict the plain meaning of the word 'paid'. While, it is undisputed that the sale was made by the assessee within the State, the reasoning offered by the authorities based solely on the excess realization of tax made by the seller cannot be sustained. Merely because the selling dealer may have acted with abundant caution in realizing the higher amount to avoid any litigation with the State authorities and in absence of any allegation of the assessee had passed on the liability of higher tax paid, the question of law raised in the present case is answered in the negative i.e. in favour of the assessee and against the revenue - revision allowed.
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2018 (12) TMI 421
Compliance with pre-deposit - section 62(5) of the Punjab VAT Act, 2005 - Whether on the facts and in the circumstances of the case, the Ld. Tribunal was justified in rejecting the pleas of the appellant for not having the sufficient means to comply with the condition of pre-deposit U/s 62(5) of the Punjab VAT Act, 2005? Held that:- The Assessing Officer while framing the assessment had noticed that in the absence of original purchase invoices and supporting documents like bank statement, GRs, in/out register or any other proof of movement of goods, the Input Tax Credit (ITC) claim cannot be allowed to the appellant. The ITC claimed on an amount of ₹ 55,205,933/- was disallowed. Accordingly, the Assessing Officer framed the assessment vide order, Annexure A-2, creating demand of ₹ 1,09,86,225/- including the interest and penalty. The order of the First Appellate Authority and dismissed the appeal by holding that neither the appellant had pleaded that it had gone insolvent or was not in possession of any funds, nor it deposited any amount in terms of Section 62 (5) of the Act. The appellant had not filed any affidavit to the effect that it had gone into losses and was unable to pay even 10% of the tax demand. The appellant has failed to pin point any illegality or perversity in the aforesaid findings recorded by the authorities below which may warrant interference by this Court. No substantial question of law as claimed by the appellant arises in this appeal - appeal dismissed.
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2018 (12) TMI 420
Limitation for completion of assessment under Section 6(5) of the Central Sales Tax Rules, 1957 - the challenge is against the issuance of notice and completion of assessments beyond the four year period as provided under sub-rule (7) & (8) of Rule 6 of the CST Rules - Held that:- Reliance is placed on sub-clause (iii) to contend that the CST assessment has to be treated as pending for the purpose of Section 23 and the time limit mentioned therein shall not be applicable in such cases. We have to notice that the amendments have been brought in after the limitation expired in certain cases, which is before us for consideration - In any event, we have to emphasise that the provision brought in is for extension of period for the purpose of Section 25, which speaks of an assessment of escaped turnover and not the initial completion of assessment. We are of the opinion that the provision would have no application to the present set of cases. The cases in which notices alone were issued and completion of assessment has not been effected, wherever it has been upheld, necessarily the assessee would be entitled to file objections within 30 days from the date of receipt of the certified copy of this judgment and the Assessing Officer would complete the proceedings in accordance with law, leaving open the remedy of the assessee to file statutory appeals as against the quantum, but not against the question of limitation. It is made clear that the assessment orders wherever they have been upheld, have been upheld only on the question of limitation.
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2018 (12) TMI 419
Input tax Credit - credit at the rate at which the assessee paid it on purchases - Whether the Tribunal was right in having allowed the input tax credit to the goods at the rate in which the assessee-respondent purchased it without reference to the rate of tax levied as per the Schedule to the Kerala Value Added Tax Act, 2003? Held that:- Admittedly, there was an amendment made bringing 'paints' as a commodity taxable at 20% under a table appended to Section 6(1)(a) of the Kerala Value Added Tax Act, 2003. Obviously, various assessees dealing in similar products had purchased the same at 20% and had sold it also at 20%. Later, the Commissioner had come out with a circular bearing No.43/2006, wherein specific items of paints taxable at 20% were enumerated. Later, a further circular was issued bearing No.52/2006 wherein 'synthetic enamel paints' were excluded. The general purpose of the amendment and the circulars would indicate that what was sought to be taxed at the higher rate were those items which are more expensive and not commonly used. The input tax credit can be only at the rate at which the commodity is taxed as per the Schedule to the Act. If there is tax payment in excess of the rate available in the Schedule, then necessarily such collection to that extent would be forfeited by the State and the person who has paid the said tax would have to claim refund. However, since the confusion created by the departmental circular for certain items, credit allowed to the extent of confusion so created. Decided in favor of Revenue.
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Wealth tax
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2018 (12) TMI 418
Inclusion of two plots of land to net wealth as 'urban land' u/s. 2(ea) (v) of the wealth tax Act - Held that:- There is a clear distinction between a case where the construction of a building is not permissible under any law for the time in force and where construction though permissible, must be preceded by permission, approval or sanction from the prescribed authority. Counsel for the Assessee had argued that the Wealth Tax is to be computed on the basis of net wealth of an Assessee on the prescribed date on which construction of a building was not permissible on the land in question. In our opinion, this argument begs the question. As held by us, requirement of permission for construction would not make construction on the land impermissible. This being the position, as on which date such requirement is being tested would be of no consequence. In our opinion, therefore, question (a) raised by Assessee, does not give rise to any substantial question of law. For the purposes of enabling the Assessee to appear before the Tribunal only press question No.(b) and (c) in relation to the respective Wealth Tax Appeals, the impugned common judgment of the Tribunal is set aside. Appeals are restored to the Tribunal for fresh consideration
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Indian Laws
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2018 (12) TMI 441
Smuggling - Heroin - recovery of Heroin made properly or not - Statements made by the accused - admissible evidence or not - Section 67 of NDPS Act - retraction of statement or not - effect of retraction - conscious possession of heroin by the two accused proved or not - Held that:- There is no illegality or infirmity with the judgment as regards the conviction of both the accused. The judgment is well reasoned one. The trial Court in light of the facts and circumstances of the case on appreciation of evidence adduced by the complainant taking into view the stand taken by the accused in the defence and evidence adduced by them in that regard had come to the conclusion that both the accused connived with each other in furtherance of their common mind and common object and hatched a criminal conspiracy to bring 22.250 kgs. heroin from Jalandhar to Amritsar - there is no reason to disagree with such findings recorded by the trial Court. Appellant have not been able to put forward any plausible or convincing reason, which might have prompted to find any fault with the inference of conviction recorded by the trial Court and to interfere therewith - the judgment of conviction against both the appellants/accused is upheld. The ends of justice shall be adequately met, if sentence of 12 years of rigorous imprisonment of both the accused is reduced to rigorous imprisonment for 10 years, whereas keeping the fine part intact. Appeal allowed in part.
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2018 (12) TMI 440
Dishonor of Cheque - insufficiency of funds - rebuttable presumption or not - Held that:- The mere factum of dishonor, of, the afore dishonoured negotiable instrument, does rear, a rebuttable presumption, qua, hence it standing issued towards, a, legally enforceable debt or liability, erupting inter se, the complainant and the accused. However, the afore presumption is rebuttable. The learned trial Court has appraised the entire evidence on record in a wholesome and harmonious manner apart therefrom the analysis of the material on record by the learned trial Court does not suffer from a gross perversity or absurdity of mis-appreciation and non appreciation of evidence on record - there is no merit in the instant appeal and it is dismissed.
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9911796707
