TMI Tax Updates - e-Newsletter
December 13, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Once the payment of interest on delayed payment to MSME is regarded as a penal in nature then the said expenditure is not allowable u/s 37

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Articles

1. Advance ruling under GST

   By: Venkataprasad Pasupuleti

2. GST UPDATE ON ADMISSIBILITY OF CREDIT ON RETENTION MONEY

   By: Pradeep Jain

3. Aadhaar Linking: What will happen if Supreme Court rules in favour of the Government this time?

   By: Craig Dsilva

4. S.43B -Un-necessary litigation by revenue an appeal before the Supreme Court on an issue which was well settled. S.43B must be omitted from the Income-tax Act

   By: DEVKUMAR KOTHARI

News

1. Filing of Form TRAN-I to avail Input Tax Credit

2. Frequently Asked Questions - GST

3. India to host 3rd Annual Meeting of Board of Governors of Asian Infrastructure Investment Bank

4. 14 crore PAN-Aadhaar linkages done till now

5. Apprehensions about the negative effects of certain tax demands on the Software Industry are without basis

6. RBI Reference Rate for US $

7. Repayment of 6.25% Government Stock 2018

Notifications

GST - States

1. 989/2017/9(120)/XXVII(8)/2017 - dated 23-11-2017 - Uttarakhand SGST

Seeks to amend Notification No. 514/2017/9/(120)/XXVII(8)/2017 Dated 29 June, 2017

2. 986/2017/9(120)/XXVII(8)/2017 - dated 23-11-2017 - Uttarakhand SGST

Seeks to amend Notification No. 526/2017/9/(120)/XXVII(8)/2017 Dated 29 June, 2017

3. 983/2017/9(120)/XXVII(8)/2017 - dated 23-11-2017 - Uttarakhand SGST

Notification regarding Provisions of composition scheme under Uttarakhand GST Act

4. 979/2017/9(120)/XXVII(8)/2017 - dated 23-11-2017 - Uttarakhand SGST

Regarding exemption in notification no. 522 dt 29 June 2017

5. 978/2017/9(120)/XXVII(8)/2017 - dated 23-11-2017 - Uttarakhand SGST

Regarding amendment in the rate of tax of textile,handmade shawls,stoles,chain stitch,toran, articles made of shola etc

6. 977/2017/9(120)/XXVII(8)/2017 - dated 23-11-2017 - Uttarakhand SGST

Regarding provisions of furnishing returns for dealers having turnover less than 1.5cr.

7. 976/2017/9(120)/XXVII(8)/2017 - dated 23-11-2017 - Uttarakhand SGST

Regarding sec 54 and 55 of SGST Act wherein the Commissioner in the board shall act as proper officers for the purpose of sanction of refund

8. 972/2017/9(120)/XXVII(8)/2017 - dated 23-11-2017 - Uttarakhand SGST

Regarding amendment in rate of tax of textile material,corduroy fabric,narrow wooven fabric

9. 958/2017/9(120)/XXVII(8)/2017 - dated 21-11-2017 - Uttarakhand SGST

Uttarakhand Goods and Services Tax (Eighth Amendment) Rules, 2017

10. 956/2017/9(120)/XXVII(8)/2017 - dated 21-11-2017 - Uttarakhand SGST

Uttarakhand Goods and Services Tax (Tenth Amendment) Rules, 2017

11. 915/2017/9(120)/XXVII(8)/2017 - dated 10-11-2017 - Uttarakhand SGST

Regarding evidences which are required to be produced by the supplier of deemed export supplies for claiming refund against the goods notified by notification no. 914 Dated 10 Nov. 2017 w.e.f 18th Oct. 2017

12. 801/2017/9(120)/XXVII(8)/2017 - dated 12-10-2017 - Uttarakhand SGST

Regarding exemption from taking registrations to the Casual taxable persons making taxable supplies of handicraft goods as the category of persons provided that the aggregate turnover does not exceed 10 lakh rupees

Circulars / Instructions / Orders

GST - States

1. 988/2017/9(120)/XXVII(8)/2017 - dated 23-11-2017

Uttarakhand Goods and Services Tax (Removal Of Difficulties) Order, 2017

DGFT

2. 48/2015-2020 - dated 11-12-2017

Amendment in Standard Input Output Norms A-343 and A-3488 under Chemical & Allied Product Group -reg.

Customs

3. 49/2017 - dated 12-12-2017

Refund/Claim of Countervailing duty as Duty Drawback

Highlights / Catch Notes

Income Tax

• Taxpayer Cannot File Revised Return After Deadline in Section 139(5) of Income Tax Act.

  Case-Laws - HC : Scope of section 80A(5) - Revised return was not permissible and revised return of revised return is not thought of by the legislature. Thus, u/s 139(5) once return is filed after the period of limitation which is prescribed under the Act, the position of the assessee is very clear that he cannot do it. It is only for the department to take the call whether to accept or not. - HC
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• Court Rules Paintings as Stock-in-Trade, Rejects Unjustified Additions; Gifts Properly Accounted in Books.

  Case-Laws - AT : Addition on unexplained paintings - painting are stated to be received by the assessee as gift on various occasions from the artist - since the same have duly been accounted for in the books of accounts of the assessee and forms part of stock-in-trade, the addition thereof is not justified. - AT
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• ITAT Rules Gain from Relinquishing Booking Rights as Short-Term Capital Gain; Calculate Holding from MOU Date.

  Case-Laws - AT : Gain from relinquishment of booking rights in the project - LTCG OR STCG - holding period of the asset - to be reckoned from the date of MOU or offer letter - ITAT found the transaction as short term in nature and to be taxed accordingly.
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• Court Finds Assessee Guilty of Using Fake Purchase Bills; Supplier Proven Fraudulent and Non-Existent.

  Case-Laws - AT : It is amply clear that the assessee has obtained bogus purchase bills. Mere preparation of documents for purchases cannot controvert overwhelming evidence that the provider of these bills is bogus and non-existent. - AT
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• Interest on delayed payments to MSMEs is penal and not deductible u/s 37 of the Income Tax Act.

  Case-Laws - AT : Disallowance of interest expenditure payable to Micro, Small & Medium Enterprises - Once the payment of interest on delayed payment to MSME is regarded as a penal in nature then the said expenditure is otherwise not allowable under Section 37. - AT
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• Cancellation Expenses Not Deductible Under Capital Gains; Only Direct Transfer Costs Allowed as Deductions.

  Case-Laws - AT : Under the head Capital gains only direct expenses relatable to transfer of property are allowed as deduction. Therefore, the cancellation expenses should not be held to be incurred either for acquiring the property or for transfer of property - AT
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Service Tax

• Appellants not liable for service tax on FCCB and GDR public offer; no service provider engagement or tax transfer.

  Case-Laws - AT : Services with reference to public offer of Foreign Currency Convertible Bonds (FCCB) and Global Depository Receipts (GDR) - appellants cannot be fastened with any service tax liability for the reason that they have neither engaged the service provider nor the service tax liability arising on such arrangement can be held as inherited or transferred liability of the appellant - AT
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• Ready-Mix Concrete Supply and Related Activities Exempt from Service Tax under Construction Services Category.

  Case-Laws - AT : Liability of service tax - supply of RMC and carrying out auxiliary and incidental activities of boring, pumping and laying of concrete cannot be considered for tax liability under construction service - AT
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Central Excise

• Duty Paid on Highest Transaction Value for All Depots, Complying with Section 4(1)(b) and Rule 7 of Central Excise.

  Case-Laws - AT : Valuation - depot sale - Duty already stands paid on the highest transaction value determinable for all depots as on the date of clearance from factory. This satisfies the mandate of Sec 4(1) (b) read with Rule 7 - AT
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Case Laws:

• Income Tax

• 2017 (12) TMI 590
  Allowable deduction under Section 43B - Disallowance of the amount deposited by the Appellant in its Central Excise Personal Ledger Account (PLA) before 31st March 2000, i.e. the end of the relevant accounting year - Held that:- The Court is of the view that the above decision of this Court in the Assessee’s own case for AYs 1995-96 and 1996-97 [2012 (12) TMI 671 - DELHI HIGH COURT] covers the issue in favour of the Assessee - For the purpose of claiming benefit of deduction of the sum paid against the liability of tax, duty, cess, fee, etc., the year of payment is relevant and is only to be taken into account. The year in which the assessee incurred the liability to pay such tax, duty, etc., has no relevance and cannot be linked with the matter of giving benefit of deduction under Section 43B Disallowance represented MODVAT credit of excise duty that remained unutilized by 31st March 1999, i.e., the end of the relevant accounting year - Held that:- It was explained by the Bombay High Court in Cartini India Limited v. Assistant Commissioner of Income Tax [2007 (2) TMI 192 - BOMBAY High Court] that “as per the new provision of Section 145A of the Income-tax Act, 1961, the unutilized MODVAT credit had to be included in the closing stock of raw material and work in progress, whereas the excise duty paid on unsold finished goods had to be included in the inventory of finished goods.” However, Section 145A of the Act is prospective and does not apply to the AY in question. The Court is not inclined to permit the Assessee to raise the alternative plea for more than one reason. In the first place, it is a plea taken for the first time in these proceedings. It appears to be an afterthought. Secondly, the ITAT has already accepted another alternate plea made before it by the Assessee by allowing deduction in respect of the unutilized MODVAT credit of the earlier AY, the Court is not inclined to disagree with the reasoning and conclusion of the ITAT. The assessee cannot be allowed to go back and forth on the above plea. There has to be consistency. Thirdly, balance sheet of the Assessee for AY 1999-00 shows that the turnover for the year was over Rs. 8,000 crores. The corresponding sum claimed as deduction representing the unutilized MODVAT credit is not very significant in comparison. - Decided against the Assessee. Disallowance in respect of Sales Tax Recoverable account, under Section 43B - Held that:- In view of the ITA’s finding on question (ii) which has been affirmed by this Court above, the finding of the ITAT on question (iii) to the effect that no deduction can be allowed in terms of Section 43 B of the amount standing to the credit of the 'Sales-tax Recoverable A/c’ is also hereby upheld. Incidentally, here again the ITAT accepted the Assessee’s alternate plea, in para 37 of the impugned order, that the amount “representing advance payment of sales-tax in preceding year should be allowed deduction in the year under consideration since the same has been adjusted against the liability incurred on sales in this year.” The ITAT’s direction that the AO should allow the alternate claim after verification if such claim had not been allowed in the preceding year is affirmed. Consumption of raw materials by the Assessee - Held that:- The Court answers Questions (iv) to (viii) in the affirmative, i.e. in favour of the Assessee and against the Revenue, by holding that: (a) the ITAT erred in remanding the question concerning consumption of raw materials and inputs to the AO for fresh determination; (b) the direction given by the ITAT is directly contrary to and irreconcilable with the evidence and material on record; (c) the ITAT disregarded the PWHC report which is already on record; (d) the ITAT erred in rejecting the Assessee’s books of accounts. Nature of software expenditure - revenue expenditure allowance - Held that:- The Revenue has been unable to dispute that the assessee in fact did not claim the expenditure in any of the earlier AYs. Thus the above expenditure is in the nature of a revenue expenditure and not a capital one. See Binani Cement v. CIT (2015 (3) TMI 849 - CALCUTTA HIGH COURT)

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• 2017 (12) TMI 589
  Estimation of profit in IMFL business - Held that:- Both the parties admitted that under identical circumstances, the ITAT, Visakhapatnam bench consistently adopted profit rate of 5% on purchases, clear of all deductions, as a reasonable profit in IMFL business for the assessment year 2011-12 on account of several factors, such as higher license fees, limitations in selling the liquor at tag price, etc. Facts being identical in this year also, modify the order of the Ld. CIT(A) and direct the A.O. to adopt 5% of purchases as net profit clear of all expenditure.

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• 2017 (12) TMI 588
  Validity of Notice u/s 153C - issuance of a notice by an AO of a person who has not been searched, on the basis of a satisfaction note prepared by the AO of a searched person - satisfaction – Held that:- SLP dismissed. HC order confirmed [2014 (8) TMI 425 - DELHI HIGH COURT]. Mere use or mention of the word “satisfaction” or the words “I am satisfied” in the order or the note would not meet the requirement of the concept of satisfaction as used in Section 153C of the Act - The satisfaction note itself must display the reasons or basis for the conclusion that the AO of the searched person is satisfied that the seized documents belong to a person other than the searched person – thus, the very first step prior to the issuance of a notice u/s 153C has not been fulfilled – the condition precedent has not been met, the notices u/s 153C are liable to be quashed – Decided in favour of Assessee.

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• 2017 (12) TMI 587
  Reassessment notices under Sections 147/148 - scheme of amalgamation - Held that:- In the present case, there is no doubt that this court had, while accepting the scheme for amalgamation, facially accepted the method which the assessee indicated. At that stage, neither did the court conduct any detailed inquiry into the question of the appropriateness of the method, nor was it competent to return findings that would have been conclusive. This event was relied upon by the assessee to argue that the court, under the Companies Act, had accepted the method. However, that ipso facto could not have barred any inquiry by the AO. Indisputably, the AO did not proceed further, but merely accepted the assessee’s arguments. In these circumstances, the materials produced for AY 2009-10 triggered the reassessment notices in the present case. Having regard to the law declared in Calcutta Discount (1960 (11) TMI 8 - SUPREME Court) and Phool Chand Bajrangi Lal (1993 (7) TMI 1 - SUPREME Court ) it is held that there is no infirmity with the impugned reassessment notices.

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• 2017 (12) TMI 586
  Disallowance of agricultural income - Held that:- We find that in the facts of the present case the assessment has been made for the Assessment Year 1998-99 purely on the basis guess work and is not supported by any evidence and material on record. The evidence relied upon by the learned counsel for the revenue in the shape of reply as filed by the assessee cannot constitute an admission on the part of the assessee having indulged in private practice for the Assessment Year 1998-99 inasmuch as he specifically stated that in that year the assessee had only indulged in charitable work. Thus, we find that the assessment made against the assessee for the Assessment Year 1998-99 is not based on any material or evidence but on pure guess work unsupported with evidence. Then it is noted, the assessing officer himself allowed agricultural income Rs. 36,000/-. That head of income having been found present in the present case, and there being absence of any proof of assessee having engaged in private practice, disallowance of agricultural income also could not have been made in absence of any cogent material or evidence in that regard.- Decided in favour of the assessee and against the revenue.

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• 2017 (12) TMI 585
  Reopening of assessment - reason to believe - Held that:- The reassessment proceedings initiated against the petitioner for the Assessment Year 2009-10 are barred on two counts i.e. for non-compliance of the first proviso of Section 147; also no tangible material exists in support of the belief recorded by the Assessing Officer that income had escaped assessment. Consequently, 'reason' (to be formed by the assessing authority) that is a sine-qua-non as to the 'belief' of escapement has also to be held to be lacking or non-existent as unless there exists 'tangible material' no 'reason' may arise at all. Therefore, the jurisdictional requirement of section 147 has not been shown to exist or established - Decided in favour of assessee.

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• 2017 (12) TMI 584
  Entitlement to deduction u/s 10BA - denial of claim on the premises that on account of revised return filed by the appellant, it had not claimed exemption u/s 10BA - whether return filed u/s 139(5) is revised return and return filed on 7.5.2008 Annexure-5 can be allowed to be withdrawn vide letter dt. 7.9.2009? - Held that:- On a close reading of Sub-Sec.(5) of Sec.139, it is very clear that the legislature has given a chance to the assessee to check his position within one year or before the end of the relevant assessment, whichever is earlier. Since, the period was expired but for the year the assessee has taken his position and withdrawn his claim after that position is taken. Sec.139(5) is very clear that the assessee could not have withdrawn the claim, having withdrawn the same by filing revised return. It is only open for the department to accept it or not to accept it. Having taken advantage of the position of claiming benefit u/s 139(5) and to avoid penalty, in our considered opinion, it is not desirable to allow any party to blow hot and cold. If the tribunal decision would not have been in his favour, the assessee could not have contended that this is nonest. Even if the department would have denied that this is nonest, he would have contested the matter. Revised return was not permissible and revised return of revised return is not thought of by the legislature. Thus, u/s 139(5) once return is filed after the period of limitation which is prescribed under the Act, the position of the assessee is very clear that he cannot do it. It is only for the department to take the call whether to accept or not. On the point of Sec.80A (5), in our considered opinion the return which is claimed under consideration not of return which he has filed. In that view of the matter, the contention of Mr. Pathak that the revised return alongwith the earlier return ought to have been considered, in our considered opinion, the return which is referred in 80A(5) is to be considered which is filed for the relevant year under consideration of the AO and not of the return which he stated and he cannot claim any benefit of the same. - Decided in favour of the department and against the assessee.

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• 2017 (12) TMI 583
  Benefit of Section 92B - Held that:- Taking into account the observations made in Hindalco Industries Ltd. Vs.ACIT [2011 (12) TMI 227 - BOMBAY HIGH COURT] the first issue is answered in favour of the assessee and against the department. Tribunal while relying on the international transaction granted benefit of Section 92B to the assessee which is just and proper. Regarding LIBOR rate plus 2% on account of interest free loans provided by the appellant to its associated enterprises, in the view of the observations made by the Delhi High Court in para no.14 as reproduced above, the same is required to be answered in favour of the assessee. Regarding ITA preferred by the assessee in view of the Delhi High Court judgment (para no.14), the international transaction is required to be accepted, therefore, tribunal has committed serious error. The assessee will be entitled for the benefit of average LIBOR rate existing at that time which was 0.79% and addition of adhoc 2% is not proper. In that view of the matter, the addition of 2% interest in the income is required to be quashed and set aside.

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• 2017 (12) TMI 582
  Denial of opportunity of hearing before Ext.P7 order - no response to the notice - stay of recovery of the tax due from the appellant subject to his remitting 50% thereof - Held that:- From a reading of Ext.P7, we are not persuaded to accept the contentions because Ext.P7 itself shows that notice dated 16.05.2017 fixing the hearing on 12.06.2017 was issued to the appellant. It is also seen that finding that there was no response to the notice, another attempt was made to contact the appellant over telephone on 03.07.2017 and that when all these attempts fail, the appellate authority proceeded to pass Ext.P7 order. Prima facie, therefore, this order shows that this is not a case where opportunity was denied to the appellant, but it is a case where opportunity extended was not availed of by the appellant. In such a situation, we do not find any illegality in the judgment for interference. Appeal fails and is dismissed accordingly.

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• 2017 (12) TMI 581
  Addition on unexplained paintings - painting are stated to be received by the assessee as gift on various occasions from the artist - Held that:- The perusal of these documentary evidences as placed in the paper book support the stand of the assessee that these paintings were acquired by the assessee much prior in earlier years and the revenue had no justification to add the same. The assessee, prima facie discharged the primary onus of proving the source of these painting and the onus was shifted on revenue to negate the same. There is nothing adverse on record to rebut the various contentions of the assessee and revenue has made the additions merely on the basis of suspicion which was not justified. Hence, we are inclined to delete the additions with respect to painting listed at Serial No. 1 to 8. Further, the paintings listed at Serial No. 9 & 10 belonging to an artist A.R.Chugta valued at Rs. 60 Lacs are supported by the voucher dated 12/02/2001 and the payment thereof amounting to Rs. 0.52 Lacs has been made by the assessee vide DD No.56463. A perusal of stock record of M/s reflections as on 31/03/2008 reveals that these painting forms part of the closing stock. Therefore, since the same have duly been accounted for in the books of accounts of the assessee and forms part of stock-in-trade, the addition thereof is not justified. So far as the addition on account of unexplained jewellery is concerned, we are of the opinion that the same is a factual one requiring reconciliation of the jewellery quantity. The onus is on assessee to reconcile the excess jewellery found during search operations. The Ld. AR has contended that the jewellery was held by the assessee under common hotchpotch and other family members had sufficient taxable income to acquire the jewllery. Hence, without delving much deeper into the issue, we remit the matter back to the Ld. AO for re-adjudication with a direction to the assessee to reconcile the quantities of jewellery found during the search. Resultantly this ground of assessee’s appeal stands allowed for statistical purposes.

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• 2017 (12) TMI 580
  Revision u/s 263 - seized material revealed unexplained investment - as per assessee made solely on the basis of entries found in loose papers which were in possession of third party - Held that:- As perused the rival contentions and perused the relevant material on record. Upon perusal of the same, we find that the additions have been made solely on the basis of entries found in loose papers seized from a third party. No cogent material has been placed on record by Ld. AO to corroborate the same. The statement / material procured from third party was being used against the assessee and hence the onus was on revenue to corroborate the same particularly when the assessee vehemently denied having made any cash payment to the concerned party, Further, considering cash payment, the value of the property far exceeded the stamp duty valuation. Therefore, finding the conclusions of Ld. CIT(A) quite logical, we dismiss revenue’s appeal.

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• 2017 (12) TMI 579
  Addition on account of selling and administrative expenses - nature of expenses - revenue or capital - method of accounting - stand of the revenue is that since no income from the project has been offered to tax, all expenditure was required to be capitalized with the project cost - Held that:- A perusal of quantum assessment order for AY 2011-12 as placed on record reveal that the assessee has claimed similar expenditure in that year also which has been allowed by the revenue in an assessment u/s 143(3) despite the fact that unsold inventory has remained with the assessee in the Balance Sheet. The assessee was consistently following a particular method of accounting which was in accordance with Accounting Standard issued by ICAI which is well accepted by higher courts. Further, the revenue has accepted the method adopted by assessee in subsequent year and therefore, precluded from changing stand particularly when both the assessment orders were framed by same assessing officer and on same date. Therefore, on the facts of the case, we find no reason to interfere the with the order of Ld. CIT(A) - Decided against revenue

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• 2017 (12) TMI 578
  Disallow the claim of depreciation being no ownership - claim of amortisation - effective administration and management of the said bridge - transfer the right over BOT asset to the assessee - Held that:- Circular no.9 of 2014 issued by the Board permitting the assessee to claim amortisation of the expenditure also shows that the expenditure incurred by the assessee has to be treated as a capital expenditure and by treating it as intangible asset the expenditure has to be allowed as deduction in each year, so as to arrive at real profit. The provisions of depreciation or amortisation are only aimed at arriving at the true profit, though the methodology is different. Since the tax authorities have accepted the claim of amortisation from 2014 onwards and even in 2011-12, it has allowed depreciation, under proceedings u/s 143(3) of the Act, apart from the fact that in the case of the holding company, the claim of depreciation was consistently being allowed, in which event, it may not be proper, for the interregnum period to disallow the claim of depreciation. Since there are two judgements of two different High Courts, we adopt the view, which is in favour of the assessee, in the backdrop of the facts and circumstances of the case and hold that the assessee is entitled to depreciation in the years under consideration.

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• 2017 (12) TMI 577
  Addition towards suppression of gross profit - stock valuation - Held that:- In the instant case, the assessee filed monthly VAT returns based on the same books of accounts and the same was accepted without making any additions. Neither the bank authorities nor the A.O. made any effort to verify the actual stock to prove that there is existence of unaccounted stock under these circumstances and consistent with the view taken by the ITAT and various High Courts, we hold that the A.O. has not made out a case for making an addition referable to unaccounted stock as well as determining the profit on the alleged sale of such unaccounted stock. Under the circumstances, we uphold the order passed by the Ld. CIT(A). Similarly, with regard to the estimate of gross profit, there cannot be any uniform basis for estimating gross profit. There is no dispute with regard to the fact that there were deficiencies in the maintenance of books of accounts. When the A.O. as well as CIT(A) agreed on this issue, it may not be proper to substitute the case of the A.O. by an Appellate Authority, without any cogent reasons. Since the A.O. followed an acceptable basis such as averaging the 3 years profit rate, we are of the view that the order of the Ld. CIT(A) on this aspect deserves to be modified and we uphold the order of the A.O. of estimating the average rate of 36.85%. - Decided partly in favour of revenue.

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• 2017 (12) TMI 576
  Gain from relinquishment of booking rights in the project - LTCG OR STCG - holding period of the asset - to be reckoned from the date of MOU or offer letter - Held that:- In the offer letter, except area to be purchased and rate agreed upon, no other terms and conditions are mentioned. The acceptance letter issued by Kohinoor Projects Pvt Ltd, one of the consortium partners, simply confirms the arrangement as stated in the offer letter of the assessee subject to receipt of payment on stipulated date. Except these two simple facts, the offer letter and acceptance letter do not contain anything about the description of property, terms and conditions of agreement. MOU is a valid document conferring title and interest in the property in favour of the assessee, which happened on 05-10- 3007, but not on 25-06-2005. - even if date of first payment is considered for the purpose of reckoning holding period, the first payment was made on 19-7-2005 and if that date is considered, holding period of asset is still less than 36 months. Therefore, we are of the view that the assessee has got valid right over property on 05-10-2007, but not on 25-06-2005 and hence, the A.O. was right is treating surplus from surrender of booking right under the head short term capital gain. The CIT(A), without appreciating facts, held that the impugned asset is long term capital asset. Disallowance of interest paid on loan taken against security of fixed deposit - Held that:- Admittedly, in this case, the assessee is involved in the business of property management consultancy. The assessee has kept surplus funds in bank for a short period. Therefore, the interest income from fixed deposit is assessable under the head, ‘Income from other sources’. Though, the assessee claims to have paid interest to bank for loan taken against security of fixed deposit, loan proceeds have been utilized for advancing interest free loans to sister concerns. Therefore, the assessee is not eligible for deduction towards interest paid on loan against interest earned from fixed deposit. In this case, the assessee has paid interest to the bank for loan borrowed against security of fixed deposit. Admittedly, such loan has been utilized for advancing interest free advances to sister concerns and associates. This fact has been admitted by the assessee before the lower authorities. Though the assessee claims to have advanced loans to sister concerns out of commercial expediency failed to prove any commercial expediency in advancing loans to sister concerns. Therefore, we are of the view that the AO was right in denying netting off of interest paid to bank for loan taken against security on fixed deposit against interest earned from fixed deposit from the same bank. - Decided against assessee Set off of interest received from loans and advances against interest earned from fixed deposit - Held that:- We find force in the arguments of the assessee for the reason that if at all any interest is charged on loans and advances from the parties and the same is part of receipts of the assessee for the relevant financial year, then the same needs to be set off against interest paid to the bank on loan borrowed against security deposit, if there is a direct nexus between loans borrowed from bank and loans and advances to other parties. Since, the assessee has raised the issue for the first time, and the lower authorities did not have an occasion to examine the claim of the assessee, we deem it appropriate to set aside the issue to the file of the AO for further verification of facts in the light of the claim of the assessee. In case, the claim of the assessee is found to be correct, then the AO is directed to allow set off of interest earned from loans against interest paid to bank for loan taken against security of fixed deposit. Administrative and other expenses disallowance - Held that:- The assessee has explained that all expenditure are in the nature of general administrative and other overhead expenses which are necessarily to be incurred for keeping corporate entity of the assessee, whether or not any income is generated out of business activity. Therefore, we are of the view that the CIT(A) was right in directing the AO to allow deduction towards expenditure.

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• 2017 (12) TMI 575
  Levy of penalty u/s 271(1)(c) - defective notice - Held that:- As perused the Notice dated 26.3.2013 issued by the AO for initiating the penalty and directing the assessee to appear before him at 11.30 AM on 26/04/2013 and issued a Show Cause to the assessee stating therein that “…..you have concealed the particulars of your income or furnished inaccurate particulars of such income…”. After perusing the notice dated 26.3.2013 issued by the AO to the assessee, we are of the view that the AO has initiated the penalty for furnishing inaccurate particulars of income or concealment of income as well as in the penalty order dated 30.9.2013 AO has stated that he is satisfied that the assessee has concealed particulars of his income, which is contrary to law. - Decided in favour of assessee.

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• 2017 (12) TMI 574
  Allowable business expenditure - provision towards the development expenditure - Held that:- As noted that the assessee has prepared an estimate of development expenses from an architect and detailed working has been submitted. It is noted that the development work has to be carried out by the assessee as per the specifications of the JDA and the same have been considered while working out the above estimation which has been worked out at Rs. 15,55,73,066/- and given the total saleable area of 310052.60 Sq. yards, it gives the development cost of Rs. 501.76 per Sq. yard against which the assessee has made a provision of Rs. 500/- per Sq Yard. As contended that the said estimate of development expenditure is also comparable to development expenditure estimated by JDA’s own scheme at Village Prithvisinghpura wherein the JDA estimated the cost of development expenses at about Rs. 1700/- per sq. Mts. as on 14.02.2014, nothing has been brought on record which dispute the specification of development activities which has to be carried out by the assessee and also in terms of quantification thereof. We accordingly confirm the basis and reasonability of such provision towards the development expenditure and a claim towards such an ascertained liability is therefore clearly allowable for tax purposes under the provisions of section 37 of the Act. Further, we note that the assessee has been consistent in its accounting policy whereby it creates provision towards the development expenditure and there is no deviation from the past years. Further, we note that the assessee has been incurring actual expenditure out of such provision account and it is not a case that where the provision has been built over a period of time without any actual expenditure. The AO has allowed the provision for development expenses in A.Y 2007-08, A.Y 2008-09 and A.Y 2009-10 while completing the assessment u/s 143(3) of the Act and we don’t see any justifiable basis to disturb the same for the impunged assessment year. - Decided in favour of assessee.

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• 2017 (12) TMI 573
  Accommodation entry/bogus purchases - Reopening of assessment - Held that:- The credibility of information relating to reopening remains un-assailed. In such factual scenario, the assessing officer has made the necessary enquiry. The issue of notice to all the parties have returned unserved. Assessee has not been able to provide any confirmation from any of the party. Assessee has also not been able to produce any of the parties. Necessary evidence relating to transportation of the goods was also not on record. In this factual scenario, it is amply clear that the assessee has obtained bogus purchase bills. Mere preparation of documents for purchases cannot controvert overwhelming evidence that the provider of these bills is bogus and non-existent. The Sales Tax Department in its enquiry has found the parties to be providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. We find it further strange that assessee wants the Revenue to produce assessee’s own vendors, whom the assessee could not produce. The purchase bills from these non-existent/bogus parties cannot be taken as cogent evidence of purchases. Thus the Revenue authorities cannot put upon blinkers and accept these purchases as genuine. This proposition is duly supported by case of Sumati Dayal vs. CIT [1995 (3) TMI 3 - SUPREME Court] and CIT vs. Durga Prasad More [1971 (8) TMI 17 - SUPREME Court]. In the present case, the assessee wants that the unassailable fact that the suppliers are non-existent and, thus, bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable in light of Hon’ble Apex Court decisions. - Decided against assessee.

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• 2017 (12) TMI 572
  Order passed beyond the time limit prescribed under section 144C(4) - Action of the Dispute Resolution Panel - 2 day delay in receipt of draft assessment order against the date recorded by the Assessing Officer - Held that:- In our considered opinion, on the facts and circumstances of the case, the two day delay in furnishing the objections to the DRP’s objections deserves to be condoned. Accordingly, we condone the delay in submission of the objection of the DRP. The ld. DRP is directed to pass the direction on the objections. Appeal by the assessee is allowed for statistical purpose.

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• 2017 (12) TMI 571
  Reopening of assessment - reason to believe - Held that:- In the absence of any tangible material establishing escapement of income in the hands of assessee, there is no merit in the exercise of invoking of re-assessment proceedings under section 147 of the Act. The reason to believe escapement of income should have a live link. There is no merit in the stand of authorities below that in the present case, where the assessment order was passed under section 143(1) of the Act, then the Assessing Officer had no action to look at or to consider the same. Under the provisions of the Act, it is incumbent upon the Assessing Officer to come to finding on the basis of tangible material to establish his case of reason to believe of escapement of income; in the absence of which, re-assessment proceedings are invalid and bad in law. Accordingly, we hold so and cancel the same. The consequent order passed under section 143(3) r.w.s. 147 of the Act also does not stand. Thus, the ground of appeal No.1 raised by the assessee is allowed.

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• 2017 (12) TMI 570
  Disallowance of interest expenditure payable to Micro, Small Medium Enterprises - Held that:- Section 23 of MSMED Act has specifically prohibited the assessee from claiming the deduction from the income on account of interest paid to MSME. Section 24 is having overriding effect to the extent of any inconsistent provisions contained in any other law for the time being. We further note that as per the Section 15 of the MSMED Act, the liability of the buyer to make the payment to MSME within the period as agreed between the parties or in case there is a delay beyond 45 days from the date of acceptance or date of deemed acceptance the interest payable as per Section 16 shall be three times of the bank rate notified by the RBI. Thus as per Section 16 of the MSMED Act, the payment of interest on delayed payment is in the nature of penalty or it is penal interest. Therefore once the payment of interest on delayed payment to MSME is regarded as a penal in nature then the said expenditure is otherwise not allowable under Section 37. Hence, in view of the specific provisions under MSMED Act, 2006 for payment of interest to the MSME being penal in nature and having the overriding effect of Sections 15 to 23, we do not find any error or illegality in the orders of the authorities below in disallowing this claim of interest paid to the MSME. Addition on account of the amount received in respect of technical knowhow from M/s. Motogen under the head Business Income as against the claim of the assessee as Long Term Capital Gains (LTCG) - Held that:- The assessee after taking permissions from the Bosch has sub-licensed the right to use of patented technology which has not resulted extinguishing right vested with the assessee. The transfer of capital asset is necessarily ceases the ownership or right in the property in the hand of the transferor and it gets vested in the hand of transferee. Therefore, in the case of transfer the right or ownership of transferor is completely extinguished and it is vested with the transferee. In the case on hand, the assessee is vested with the right to use the patented technical know how / technology under the license agreement and the subsequent sublicensing to M/s. Motogen is only the sharing of the said right with the other party and not transferring of the right of the assessee to the said party. The assessee by virtue of this sub-license has not extinguished its right to use the said technology but it has only shared the technology with the M/s. Motogen. Accordingly, at the first place it is not a case of transfer of any capital asset giving rise to capital gain. Disallowance of deduction under Section 80JJA in respect of workman whose duration of work in a year was less than 300 days - Held that:- As decided in favour of assessee for previous year as per provisions of section 80JJAA as reproduced above, the deduction is allowable for three years including the year in which the employment is provided. Hence, in each of such three years it has to be seen that the workmen was employed for at least 300 days during that previous year and that such work men was not a casual workmen or workmen employed through contract labour. Therefore, if some work men were employed for a period less than 300 days in the previous year then no deduction is allowable in respect of payment of wage to such work men in the present year even if such work men was employed in the preceding year for more than 300 days but in the present year, such work men was not employed for 300 days or more. In this view of the matter, we find no infirmity in the order of the ld. CIT (A) on this issue. Restriction of deduction under Section 35(2AB) of the Act on net expenditure as against the gross expenditure- Held that:- As regards not raising objections before the DSIR we note that when there is no discrepancy or dispute about the gross expenditure as well as the receipts as claimed by the assessee and accepted by the DSIR then the question of raising any objection does not arise. Therefore we do not find any merits in the objections raised by the ld. DR. Disallowance under Section 14A - Held that:- Accordingly, in case when the assessee s own fund is more than the investment made in the tax free securities then the disallowance on account of interest expenditure under Section 14A is not called for. Since the details filed by the assessee are pertaining to the F.Y. 2006-07 and not for the F.Y. 2007-08 relevant to the assessment year under consideration therefore, we set aside this issue to the record of the Assessing Officer for limited purpose of verification of relevant facts of availability of interest free assessee s own funds and then decide this issue in the light of various binding precedents. As regards the indirect administration expenses, we find that the Assessing Officer has applied Rule 8D(2)(iii) without examining the actual expenditure attributable to the exempt income. the case on hand, the assessee has worked out the disallowance on account of indirect administrative expenses by taking the man hours of the higher administration in proportion of the tax free income and taxable income. Therefore in case the quantum of expenditure worked out under Rule 8D is exceeding the actual expenditure then the workings under Rule 8D fails. Accordingly, when the Assessing Officer has not made an attempt to first find out the expenditure which is attributable to the earning of the exempt income and has directly applied Rule 8D then the matter requires a proper verification and reconsideration. Hence, we set aside this issue to the record of the Assessing Officer to verify and consider the attributable expenditure which is debited to the profit and loss account and relatable to the exempt income. Disallowance of depreciation on intangible assets - Held that:- Identical issue was considered by this Tribunal in assessee s own case for the Assessment Year 2004-05 as held when the Assessing Officer itself has treated this expenditure as capital being intangible asset and allowed the depreciation then the claim of depreciation on the said intangible asset cannot be denied for the year under consideration. Further the issue of depreciation on intangible asset is covered by the decision of Hon ble Supreme Court in the case of CIT Vs. Techno Ltd. [2010 (9) TMI 6 - SUPREME COURT OF INDIA ] Disallowance of expenditure being sublicense fees for SAP and other application software - Held that:- When the expenditure in question has not resulted in bringing a new capital asset in existence then the same can be allowed as a revenue expenditure even if the expenditure can have the benefit to the assessee in the form of improvement in the efficiency. Hence we do not find any error or illegality in the order of CIT (Appeals) qua this issue. Deduction under Section 43B - Held that:- Since this claim was not made in the return of income and therefore, it was not allowed by the Assessing Officer. However, this claim was remitted by the CIT (Appeals) and ask the Assessing Officer to verify the factual aspect of payment of the sales tax during the year and then allow the claim. Even for the sake of argument if it is accepted that the CIT (Appeals) has no jurisdiction to remand the issue, we are of the opinion that when the claim of the assessee is only in respect of payment of sales tax during the year under consideration then the only thing to be examined and verified by the Assessing Officer is to confirm the payment of sales tax as claimed by the assessee during the year under consideration. Accordingly, in the facts and circumstances of the case, we set aside this issue to the record of the Assessing Officer to verify the claim of the assessee

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• 2017 (12) TMI 569
  Revision u/s 263 - ALV determination - genuineness of Gross Rent received - Held that:- The present case the CIT has exercised jurisdiction u/s.263 of the Act on the ground that the AO while completing the assessment proceeding did not make enquiries which he ought to have made, it is necessary to look into what enquiries the AO made on the issues raised in the order u/s.263 of the Act. It is clear from the submissions and material available on record with regard to the deduction of Rs. 2,41,347/- u/s.24(b) of the Act on account of interest paid to SBI Rs. 1,35,428/- and Rs. 1,05,919/- to ICICI Bank on loans borrowed.Assessee is an owner of two houses. In the assessment proceedings, the assessee submitted the details of both the houses. The assessee has replied all the enquires made by the Assessing Officer by issuing notice u/s 142(1) of the Act. The assessee had received rent of Rs. 12,000 per month and he offered the sum for taxable purposes. The annual letting value of the house has taken to be nil since the assessee had such option u/s.23(2) /23(4) of the Act where the assessee owned more than one house. Since the assessee was in accommodation of more than one house, so far as the provision of section 23(2) is applicable to him and therefore, considering the factual position as explained above, we do not find any infirmity in the order passed by the Assessing Officer. In these circumstances, it cannot be said that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Therefore, we quash the order u/s.263 of the Act. - Decided in favour of assessee.

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• 2017 (12) TMI 568
  Computation of capital gain - expenses claimed by the assessee for acquiring property and for sale of the property - Held that:- The assessee had declared the cost of acquisition of the property at Rs. 98,07,120/- in the case of 328 sq.yds and Rs. 87,12,470/- in the case of 369 sq.yds. Since the assessee had already declared the cost of acquisition in the assessment year 2007-08 and furnished the relevant balance sheet along with return of income, we do not see any reason to disturb the cost of acquisition declared by the assessee in the return of income. The fact that the cost of acquisition declared by the assessee was not disputed by the assessing officer. Having declared the cost of acquisition by the assessee in the year of acquisition and filed the relevant balance sheet it is not correct to revisit the issue again in the year under consideration. Therefore, we set aside the order of the Ld.CIT(A) and direct the assessing officer to allow the cost of acquisition of properties as declared in the balance sheets and the return of income relating to the year in which it was acquired. This ground of the appeal of the assessee is allowed. Payment of commission for sale of the property - Held that:- As observed by the CIT(A) that from the bank account of the assessee with the ING Vysya Bank account no.716010022199 shows that the assessee had received an amount of Rs. 5 lakhs from D. Srinivas on 8.1.2007, which indicates that impugned payment may not be towards commission. During the appeal hearing, the Ld. A.R. did not bring any evidence to show that the payment in fact was made for the commission. However the assessee has furnished the addresses and the AO should have verified the genuineness of payment of commission. When the addresses were given without making enquiries taking adverse view is unjustifiable. Therefore we are of the considered opinion that the issue should go back to the file of the assessing officer to make the necessary enquiries with regard to the payment of commission and decide the issue afresh on merits. Accordingly we set aside the orders of lower authorities and remit the, matter back to the file of the AO for fresh consideration. Expenditure incurred towards the stamp duty expenses - Held that:- Stamp duty and registration charges forms part of the cost of acquisition of the property, which is required to be borne by the buyer. As per the provisions of section 48 of the Act, the expenditure incurred wholly and exclusively in connection with the transfer of property is allowed as deduction. Since the stamp duty and registration cost is not considered as expenses in relation to transfer in the hands of the transferor, the same is not allowable. Further, as rightly observed by the Ld. CIT(A), the arrangement of incurring stamp duty and registration charges by the vendor effectively reduces the value of the consideration received by the vendor and also violates the mandate specified in the section 50C of the Act. In such case, while determining capital gains, the value as per the stamp valuation authorities has to be adopted for the purpose of computing the capital gains. Payment of interest - whether transaction was not a loan transaction ? - Held that:- the assessee has not taken any loan for acquiring the property and the compensation was not in the nature of interest. - From the agreement it is observed that there was no clause of payment of any compensation. However, the assessee stated that the he had to pay Rs. 6 lakhs as compensation because the sale transaction did not go through. When the assessee has received the entire amount what are the reasons for not concluding the sale transaction was not explained by the assessee. When there was no fault with the assessee in sale of the property, there is no valid reason and for payment of compensation. No agreement for cancellation was furnished by the assessee. In any case the compensation was not relatable to acquiring the property and it was with regard to the sale of agricultural land. The same cannot be linked with the sale of the impugned property. Further, the asset is capital asset and taxed under the head Capital Gains but not business income. Under the head Capital gains only direct expenses relatable to transfer of property are allowed as deduction. Therefore, the cancellation expenses should not be held to be incurred either for acquiring the property or for transfer of property and accordingly, we do not find any infirmity in the order of the Ld. CIT(A) and the same is upheld. This ground of appeal raised by the assessee is dismissed.

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• 2017 (12) TMI 567
  Disallowance in respect of employees’ contribution of ESI u/s. 36(1)(va) - Held that:- This issue is no more res integra as the same has been decided against the assessee and in favour of the revenue by the Hon’ble Jurisdictional High Court in the case of GSRTC Ltd. [2014 (1) TMI 502 - GUJARAT HIGH COURT] Denial of deduction u/s. 80IB - Held that:- It is not coming out from the records that when these items were written off they reduced the eligible profit of the assessee. Therefore in the interest of justice, we restore the entire issue to the files of the A.O. The A.O. is directed to verify when the bad debts were written off, the eligible profits of the assessee were reduced. Further, when the provisions were made in earlier years, the same were charged to the eligible profit. The A.O. is also directed to verify whether the foreign exchange fluctuation gain is on revenue account or capital account and if found on revenue account for the eligible business, the same should be treated as eligible for deduction u/s. 80IB of the Act. Similarly, the A.O. is also directed to verify when the claim of loss was made whether the same was debited to the eligible profit of the assessee and if found so, then the Insurance claim should be allowed as eligible for deduction u/s. 80IB of the Act. The assessee is directed to furnish necessary details for verification. With these directions, ground no. 3 is treated as allowed for statistical purpose. Disallowance of deduction u/s. 80IB on Vatva unit - Held that:- It is true that some of the work was carried out at Vatva unit. It is equally true that the job work charges have been debited to the Profit and Loss account. We further find that the total job work done at Vatva unit constitutes hardly 2 to 5% of the total revenue of the assessee. Added with the fact that the job work charged have been charged to the Profit and Loss account. Therefore, we do not find any merit in the disallowance of the claim of deduction u/s. 80IB. We, therefore, set aside the findings of the ld. CIT(A) and direct the A.O. to allow the deduction u/s. 80IB of the Act. Disallowance of deduction u/s. 80IB - Membership & Subscription Expenses - Held that:- Since the Membership & Subscription Expenses pertain to the magazines which are supplied to the Vatva unit, the expenditure can be wholly charged to Vatva unit only. ROC filing fees being for corporate office of the assessee has been rightly allocated on turnover basis. Since the Insurance Premium of vehicles are in respect of the vehicles relating to the capital assets of the Vatva unit, the same has been rightly debited to the Vatva unit. Tol tax and Parking charges have been rightly allocated on turnover basis by the A.O. The only item remains is that of Directors’ remuneration and all other incidental expenses. As mention elsewhere, only two of the directors are looking after Kathwada Unit and the assessee has charged on 50% of the expenditure related to them to the Kathwada Unit. We do not find any reason for allocating the balance of the expenditure on turnover basis. We find that the A.O. has allocated the expenditure only on surmise and suspicion and the method of allocation by the assessee has been accepted in the past by the Department and the same cannot be changed accept for just cause. We accordingly direct the A.O.to re-allocate only ROC filing fee and Tol tax and Parking fees on the basis of turnover and the other expenditures have to be excluded from the re-allocation. Disallowance of deduction u/s.80IA in respect of Profit from business of operating and maintaining an infrastructure facility for supply of drinking water - Held that:- The initial assessment year is A.Y. 2005-06 and after thorough examination, the claim of deduction was allowed by the Department. In our understanding of the law without disturbing the claim of the initial assessment year, a similar claim cannot be denied in the subsequent assessment years. Thus we direct the A.O. to allow the claim of deduction u/s. 80IA of the Act. See Katira Construction Ltd. case [2013 (3) TMI 416 - GUJARAT HIGH COURT ]

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• 2017 (12) TMI 566
  Disallowance of business expenses - Held that:- Bare perusal of the highlighted expenses disallowed by the AO and sustained by the ld. CIT (A) goes to prove that apparently, the same cannot be treated as business expenses without perusing the exact nature and detail of the expenses. Ld. CIT (A) has merely sustained the addition on the basis of estimation without calling upon the detail as to the nature thereof and without providing an opportunity of being heard to the AO. So, in these circumstances, the question framed is answered in favour of the assessee and this issue is remanded to the file of the ld. CIT (A) to decide afresh by providing an opportunity of being heard to the assessee Addition to the book profit computed u/s 115JB instead of addition to the normal loss computed under the Act - Held that:- Hon’ble Supreme Court in Apollo Tyres Ltd. (2002 (5) TMI 5 - SUPREME Court ) has held that the AO while computing the book profit of a company u/s 115JB of the Act has only the power of examining whether the books of account were certified by the authorities under the Companies Act or having been properly maintained under the Companies Act. In the instant case, undisputedly, the AO has not found any discrepancies in the audited books of account relied upon by the assessee company. So, in these circumstances, the AO to compute the tax liability u/s 115JB in accordance with law laid down by Hon’ble Apex Court in Apollo Tyres Ltd. (supra). - Decided in favour of assessee.

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• 2017 (12) TMI 565
  Assessment made u/s 153A - addition u/s 68 - Held that:- There is no incriminating material qua the assessment year for which impugned addition has been made, we hold that such an addition cannot be roped in in the assessment order passed u/s 153A. Accordingly, same is directed to be deleted. - Decided in favour of assessee.

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• 2017 (12) TMI 536
  Addition u/s 43B - unutilized MODVAT credit of earlier years adjustment - Held that:- This question is answered in the negative, i.e. in favour of the Revenue and against the Assessee. See Maruti Udyog Ltd. Versus Commissioner of Income Tax, Delhi [2017 (12) TMI 590 - DELHI HIGH COURT] Addition u/s 43B - sales tax paid on raw material and computers in the preceding assessment years - Held that:-Sales tax paid on raw material in the preceding AY was rightly allowed as a deduction in the current assessment year under Section 43B of the Act. This question is, therefore, answered in the affirmative, i.e. in favour of the Assessee and against the Revenue. Addition representing the customs duty paid on imports claimed as a deduction under Section 43B - Held that:- This was directly paid by the Assessee to the customs authorities and paid during the AY in question. Consequently, it was correctly allowed as a deduction by the ITAT. Question (iii) therefore, is answered in the affirmative i.e. in favour of the Assessee and against the Revenue. Addition of duty drawback - Held that:- The issue of duty drawback in any event is answered in favour of the Assessee by the decision in Commissioner of Income Tax v. Excel Industries [2013 (10) TMI 324 - SUPREME COURT ] where it was held that “income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the purposes of taxability that the income is not hypothetical and it has really accrued to the Assessee Whether customs duty paid on 28th April 1999 can be capitalised with retrospective effect and depreciation calculated by including the said amount in the AY 1999-2000? - Held that:- In view of the decisions in Sharanpur Electric Supply Ltd. (1992 (1) TMI 2 - SUPREME Court); CIT v. Woodward Governor India (P) Ltd. [ [2009 (4) TMI 4 - SUPREME COURT] and DGIT v. Official Liquidator (2008 (6) TMI 77 - MADRAS HIGH COURT) - Decided in favour of the Assessee and against the Revenue. Addition u/s 14A - Held that:- Assessee was seized of sufficient funds which it could have invested and therefore, there was no question of disallowance of any amount on account of interest under Section 14A of the Act. Both questions are therefore, answered in the affirmative, i.e. in favour of the Assessee AO was not justified in making the addition on account of excessive consumption of raw material/inputs for the reasons already explained therein. Customs duty paid and debited to the profit and loss account included in the value of the closing stock in view of Sections 43B and 145A - Held that:- In view of the decision in Berger Paints Limited v. CIT [2004 (2) TMI 4 - SUPREME Court] question is answered in the affirmative i.e. in favour of the Assessee and against the Revenue. In this regard, the observations of the ITAT in para 41 of the impugned are reiterated, viz. that the AO should, while giving effect to the ITAT’s order, ensure that no double deduction is allowed. Therefore, he will ensure that the deduction allowed in this year under Section 43B of the Act is included in the income of the next year when such opening stock is disposed of.

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• Customs

• 2017 (12) TMI 564
  Effective date of notification - petitioner has prayed for a declaration that the Notification No. 43 of 2010 dated 09.04.2010 granting the exempt from payment of customs duty came to withdrawn become effective only from 20.04.2010 and not earlier and therefore, cannot be applied to the shipping bills of the petitioner for which let orders were issued by the authorities before such date. Held that: - it is an admitted position that the shipping bills of the petitioner filed with the authorities on 08.04.2010 were processed and let orders were passed by the concerned authority on 09.04.2010. It is not in dispute that the question of charging duty on such exports would have to be decided on the basis of the law prevailing on such dates. In several judgements, the Supreme Court has held that both the conditions contained in sub-section (4) of section 25 as it stood at the relevant time must be satisfied for the notification to become effective in the present case. The date of publication of the notification in the official gazette which admittedly happens to be on 20.04.2010. The notification would be effective only from such date and not earlier. The withdrawal of the exemption from export duty would therefore take effect from 20.04.2010 and onwards alone. For the petitioner's exports made before such date, customs duty cannot be levied. Petition allowed - decided in favor of petitioner.

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• 2017 (12) TMI 563
  DEEC Scheme - Appellant falsely claimed that M/s Watan Tanning Industries Pvt. Ltd., (WTIPL), was supporting manufacturer of the appellant making use of the imports made by it. When investigation was made, WTIPL was found to be non-existent - Held that: - Appellant no where brought out existence of any machinery or infrastructure facility of its own carrying out manufacturing activity. Nor it proved existence of manufacturing facility of supporting manufacturer - It has not come out with clean hands to establish it claim that the goods imported were not diverted to the market - appeal dismissed - decided against appellant.

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• Corporate Laws

• 2017 (12) TMI 561
  Oppression and mismanagement - illegal removal of appellants from their directorship from the 1st Respondent Company - Held that:- In the light of the submissions made by the respondent that the payment has been made and the instrument for transfer of shares having been signed by the appellant, it is only a matter of time when the shares will be transferred from the appellant to the respondent and once the shares have been transferred and have been shown as transferred, the appellant shall not be a shareholder of the 1st respondent. As soon as the appellant is no more/longer a shareholder of the 1st respondent, or the appellant is not shareholder of the 1st respondent on the date of filing of the petition, no petition is maintainable under Section 397, 398 of the Companies Act, 1956 read with Sections 241 of the Companies Act, 2013. It is observed that the appeal of the appellant is not maintainable in as much as the appellants have not come to Hon’ble Court with clean hands. The appellants have no right to file the appeal as the appellant was not holding any shares at the time of filing of appeal. The claim of the appellant is based on oral assertions, which is devoid of any force and is inadmissible in evidence

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• Insolvency & Bankruptcy

• 2017 (12) TMI 562
  Corporate Insolvency Resolution Process (CIRP) - Held that:- It is not in dispute that IBC is the only alternative available to resolve insolvency and Bankruptcy for debts of any Financial Creditor/Operational Creditor, under sections 7, 8, 9 (2) We hereby declared that the moratorium imposed on 10.02.2017 in this case ceased to have effect from the date of receipt of copy of this order; (3) We hereby direct that the Resolution Plan/Revised OTS Scheme of the Corporate Debtor shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. (4) We also hereby direct the Corporate Debtor, as promised by the Managing Director, to reinstate all the 450 employees, who were on the rolls of the Company (both skilled 325 and unskilled 125 workers) before stopping the operations of the Company, however, subject to their eligibility/fitness; (5) We direct the corporate debtor to pay the amount of Rs. 0.13 crores to other Operational Creditors at the time of making initial payment of 5% of OTS Scheme and the balance amount towards electricity dues should be paid in equal instalments along with the payments to be made to the financial creditors as per payment schedule in the revised OTS scheme. Since total dues to operational creditors is Rs. 14.36 crores, out of which Rs. 0.13 crores is for other operational creditors and Rs. 14.23 crores is towards electricity dues to TSSPDCL. (6) We hereby directed the Resolution Professional to forward all records relating to the conduct of Corporate Insolvency Resolution Process and the Resolution plan to the Insolvency and Bankruptcy Board of India to be recorded on its database. (7) The parties are at liberty to make miscellaneous Company Application(s) in order to seek clarification(s), if any, required in implementation of the Resolution plan.

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• 2017 (12) TMI 560
  Transfer of cases pending before the Company Law Board to the Tribunal - Transfer of certain pending proceedings - Held that:- Admittedly, no petition under Sections 433, 439 and 450 of the Companies Act, 1956 was maintainable before the erstwhile Company Law Board and it was maintainable before the Hon’ble High Court. For the said reason, the case pending before the Hon’ble High Court under Section 433 were transferred to the Adjudicating Authority (Tribunal). On the other hand, the cases under other provisions of the Companies Act, 1956 such as Sections 397 and 398 were transferred from the Company Law Board to the Tribunal, not to the Adjudicating Authority. In view of discussion aforesaid, we hold that the petition under Sections 433, 439 and 450 of the Companies Act, 1956 was not maintainable before the Company Law Board. Therefore, the question of treating the case under the I&B Code does not arise. Further, as the Rule 5 relates to transfer of cases from the Hon’ble High Court, we hold that the Rule 5 cannot be made applicable to the cases transferred from Company Law Board.

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• Service Tax

• 2017 (12) TMI 555
  Refund claim - time limitation - Section 11B of the Central Excise Act, 1944 - Held that: - Since, the statutory provision mandates filing of refund application within one year from the relevant date, the time limit prescribed thereunder was to be strictly adhered to by the authorities functioning under the statute - In this case, admittedly, the refund application was filed beyond the period of one year from the relevant date. Thus, the said application, is clearly barred by limitation of time - appeal dismissed - decided against appellant.

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• 2017 (12) TMI 554
  Services with reference to public offer of Foreign Currency Convertible Bonds (FCCB) and Global Depository Receipts (GDR)- Revenue held a view that appellants are liable to pay service tax for availing such services under the category of banking and offered financial services (BOFS) on reverse charge basis - Business Auxiliary Services - Held that: - There is nothing on record to show that the fund mobilization has exclusively been assigned to the appellants manufacturing facility. Further, the appellants categorically asserted that the repayment of loan consequent to FCCB/GDR till date is reflected in the balance-sheets of M/s Aksh Optifibre Limited. It is apparent that the liability continues to rest on M/s Aksh Optifibre Limited. In such factual contexts, we note the appellants cannot be fastened with any service tax liability for the reason that they have neither engaged the service provider nor the service tax liability arising on such arrangement can be held as inherited or transferred liability of the appellant - demand under Banking and other financial services withheld. Advertising services - internet telephone services - scope of SCN - Held that: - the original authority recorded that the service tax liability under advertising services and internet telecommunication services are confirmed even though it was not proposed under these categories of services in the show cause notice - Demand set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 553
  Erection, commissioning or installation service - Composite contract or otherwise - Held that: - the legal principal that composite works contract are liable to be taxed under Finance Act, 1994 only w.e.f. 01/06/2007 is a well settled - Hon’ble Supreme Court in Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] has held that the service tax liability will not arise prior to 01/06/2007. Composition scheme - Held that: - the value of free supply materials given by the clients are not to be considered to decide the eligibility of the appellant on such scheme. The scheme is eligible to the composite work contract subject to the conditions mentioned therein with reference to option and also non-availment of Cenvat credit etc. This can be verified and allowed to the appellant on satisfactory completion of the conditions. Appeal allowed by way of remand.

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• 2017 (12) TMI 552
  Liability of service tax - activity of the appellant of production and supply of RMC - Held that: - the appellants are engaged in production and supply of RMC. Necessarily such production and supply at site requires the equipments relevant to the same. Considering the nature of RMC, the same are to be supplied and used immediately. Use of equipments for due delivery of RMC in the required site in a manner as required by the client, will not make the supplier of RMC as a person engaged in commercial construction of building - in GMK Concrete Mixing Pvt. Ltd. [2011 (11) TMI 425 - CESTAT, NEW DELHI], it was held that supply of RMC and carrying out auxiliary and incidental activities of boring, pumping and laying of concrete cannot be considered for tax liability under construction service - demand set aside. Construction of Hostel for Medical College - whether taxable under commercial or industrial construction service or not? - Held that: - certain amount is held to be liable to Service Tax by the original authority, in view of the submission made by the appellant to indicate that they have received the amount in two different financial years. Though the ld. Counsel for the appellant submitted that this is only a typographical error in their written submission, we find that the facts requires verification with basic documents - matter on remand. Demand of service tax - construction of apartments for Army - Held that: - the construction of apartments is for the personal use of the staff of Army. The impugned order did not classify the service under construction of complex service. Proposal in the notice was to tax all consideration under commercial or industrial construction service. Admittedly, the appellants have produced documentary evidence in this regard before us only. The same can be scrutinized by the original authority for exclusion from the tax liability - matter on remand. Demand of service tax - landscaping horticultural work - Held that: - The appellants are managing and maintaining gardens and undertaking various activities. The activities are covered by Clause (a) and (b) of Section 65 (64) of the Finance Act, 1994, which talks about management of properties immovable or not and maintenance or repair of properties immovable or not - the appellants shall be liable to tax for their activities of managing and maintaining gardens and horticultural activities with reference to such gardens - demand upheld. Construction of parking at Narender Cinema and Nehru Garden for Municipal Corporation, Jalandhar - demand of service tax - Held that: - the parking lots are used for commercial purpose and it cannot be considered as a non-commercial activity - demand upheld. Extended period of limitation - Held that: - considering the nature of services and also the issues of interpretation involved including supply of RMC mix, maintenance of gardens, work executed for Jalandar Municipality and Karnataka Government, there can be no case for invoking extended period in such situation - extended period rightly invoked. Appeal allowed in part and part matter on remand.

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• Central Excise

• 2017 (12) TMI 551
  Clandestine manufacture and removal - pan masala - It was observed that the appellant was indulged in the surreptitious activity of packing and removing of such notified goods manufactured with the aid of undeclared pouch packing machine - Held that: - the machine was used only for two days in manufacturing the notified goods. As per the 8th proviso appended to Rule 9 of the said rules, the duty payable shall be calculated on pro-rata basis of the total number of days remaining in that month, starting from the date of such commencement of production. However, the adjudicating authority by placing reliance on Rule 7 of the rules, has held that the appellant is required to pay the duty for the entire month of February, 2012. The fact is not under dispute that the appellant had contravened the provisions of Chewing Tobacco and Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010 - On perusal of Rule 18 ibid, it reveals that the said rule does not provide for confiscation of raw material, packing material of notified/nonnotified goods and un-declared pouch packing machine. Thus, it is evident that under the said rules, the finished goods are only liable for confiscation. The matter should go back to the original authority for quantification of the redemption fine, payable by the appellant on the finished goods - appeal allowed by way of remand.

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• 2017 (12) TMI 550
  CENVAT credit - input - materials for making structurals, platforms etc. to support the machinery etc. in the factory - Held that: - cenvat credit on the cement and TMT bar in lying foundation is applicable as per the ratio laid down by the Tribunal in the case of Lafarge India Pvt. Ltd. vs. CCE, [2016 (10) TMI 615 - CESTAT NEW DELHI] where cenvat credit was allowed on the cement which were used for the capital goods. Regarding structural items, cenvat credit is applicable as per the ratio laid down by the Tribunal in the case of Singhal Enterprises Pvt. Ltd. vs Commissioner of Customs & Central Excise, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the User Test to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat credit. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 549
  Penalty - Department has alleged that M/s. Laxmi Pipes & Fittings Pvt. Ltd. had availed Cenvat Credit, without actual receipt of the goods - Held that: - Since the statement recorded from Shri Mukesh Sangla was not considered by the Tribunal vide order dated 17.06.2015 and exonerated the appellants therein, included Shri Mukesh Sangla, holding that there is no clandestine receipt of only fabricated documents, I am of the view that similar treatment can be adopted for appellant Shri Mukesh Sangla, inasmuch as, he was also the appellant before the Tribunal in the case booked against M/s. Parag Pentachem Pvt. Ltd. - penalty in both the cases set aside. With regard to imposition of penalty on Shri Sunil Kotari, the Director of Laxmi Pipes & Fittings Pvt. Ltd., the Department has basically relied on the statement dated 06.12.2007 recorded from Shri Mukesh Sangla, the Director of M/s. SOL and concluded that by diverting the goods to M/s. SOL, M/s. Laxmi Pipe & Fittings Pvt. Ltd. had received the payment in cash through its Director Shri Sunil Kotari. Since the statement recorded from Shri Mukesh Sangle was discarded by this Tribunal in the same investigation conducted by Department, such statement cannot be taken into contingence in view of the facts that the statements were discarded by the Tribunal on earlier occasions - penalty set aside. Penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 548
  Penalty u/s 11AC - Valuation - whether the valuation of physician samples supplied free of cost is governed by Rule 8 of Central Excise Valuation (Determination of price of excisable goods) Rules, 2000 i.e. 110% of cost of manufacture or pro rata of MRP of trade pack? - Held that: - there is no dispute that issue on valuation of free supply of physician’s samples was contentious and interpretation of valuation of provision was involved. The board circular dated 1-7-2002 also clarified that valuation of physician samples should be in terms of Rule 8 - the suppression of facts or malafide intention to evade duty cannot be alleged on the appellant, therefore penalty under Section 11AC was wrongly imposed upon them - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 547
  Area Based Exemption - Job work - Benefit under N/N. 214/86 - As the principal manufacturer was enjoying the area based exemption notification, Revenue was of the opinion that the job worker could not have sent the aluminum ingots to the principal manufacturer without payment of duty inasmuch as the final product of the principal manufacturer was exempted - Held that: - The goods apparently have been cleared from the appellants premises back to M/s. Superlink Poly Fab Ltd. without payment of duty. Since the principal manufacturer, after receipt of goods from the appellant did not clear his final products on payment of duty, the benefit of job work N/N. 214/86 will not be available to the appellant - appeal dismissed - decided against appellant.

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• 2017 (12) TMI 546
  N/N. 65/1995 dated 16.03.95 - tools manufactured remain with the appellant even after recovering the cost of the tooling. Thus, the tooling so removed never come out from the factory of the appellant - Held that: - identical issue has come up before the Tribunal in the case of Ozla Plastooraft (P) Ltd. and Sh. Manjeet Singh Director Vs. CCE, Delhi-II [2016 (4) TMI 279 –CESTAT, New Delhi], where it was held that only criteria for grant of exemption is the capital goods manufactured in a factory are used within the factory of production - the condition of notification fulfilled - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 545
  Penalty and interest - It was claimed that the said goods were manufactured by the appellant with more than 25% by weight of blast furnace slag so the rate of duty comes to NIL - Held that: - the dutiability of the goods manufactured by the appellant was in dispute and hence the assessee cannot be held liable for availing cenvat credit as a precautionary measure - the cenvat credit availed also stands reversed - interest will be chargeable in respect of credits utilised by the appellant before its reversal - penalty set aside - appeal allowed in part.

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• 2017 (12) TMI 544
  CENVAT credit - garden services - air travel service - denial on account of nexus - Held that: - permission to operate factory has been granted subject to the condition that the appellants maintain a green zone. In these circumstances, Cenvat Credit on gardening service is clearly admissible to the appellants as that is mandatory requirements of the manufacturer. Air travel services can be used for various purposes, which are indeed related to manufacturing operations or related to operations covered by the definition of input service. However, it is also possible that air travel services are used to provide air travel and for the purpose on LTC, etc. of the employees. The issue is remanded to the Commissioner (Appeals) to enable the appellants to produce the necessary evidence to show nexus between the services availed and the definition of input service - appeal allowed by way of remand.

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• 2017 (12) TMI 543
  Valuation - depot sale - whether the assessment was to be done as per Section 4 or otherwise? - Held that: - In respect of the clearances made through depots, the goods are stock transferred first to the warehouse and subsequently to the depot from where the goods are sold to the dealers. In such cases duty payable at the factory gate will be covered by Section 4 (1) (b) of the Central Excise Act read with Rule 7 of the Valuation Rules - the mandate given by Section 4 (1) (b) read with Rule 7 of the Valuation Rules, for taking contemporaneous depot prices cannot be extended to depot sale invoice which is nearly one month subsequent to the date of clearance. It is common knowledge that on the date of clearance from the factory only those depot invoice prices will be available to the assessee which have been issued prior to that date and it is four to consider the value on the basis of such invoices. The basis on which the demand has been raised by demanding differential duty is not legally sustainable. Duty already stands paid on the highest transaction value determinable for all depots as on the date of clearance from factory. This satisfies the mandate of Sec 4(1) (b) read with Rule 7 ibid - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 542
  Clandestine removal - shortage of stock - whether the appellant was engaged in the manufacture of M.S. Billets & M.S. Bars duly have rightly been levied on apparent shortage of stock? - validity of SCN - Held that: - from a copy of the Panchnama on record that there is no record of weighment, forming part of the Panchnama. Thus, the stock verification of the finished goods have been done by way of eye estimation only. Further there is variation of 10%, which is normal in the facts and circumstances of the case, where the stock verification of the finished goods has been done by way of eye estimation - SCN is vague and presumptive - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 541
  Penalty u/r 26 - violation of import conditions - case of the Revenue is that such export did not happen and the goods have been diverted in domestic market in violation of condition for duty free procurement - Held that: - The Role of Shri Pankaj Agrawal has been brought out clearly in the impugned order. he was handling the sales of the main party and was closely connected with the business activities to the effect of virtually managing the same. Similarly, the other two appellants, who themselves had a separate unit under their control, Shri Krishna Kumar Gupta and Shri Pramod Agrawal, were the Directors of M/s Ultimate Mercantile Ltd. and it is brought out in the investigation that Shri K.K. Gupta also a Director of M/s Unique Ltd. opened a bank account in his capacity as the Director and also opened a joint account with shri Pramod in the same bank. These two bank accounts were extensively used to transfer the sale proceeds and the illegal gains that accrued by diversion of goods which were originally procured without payment of duty and intended for export, but diverted to domestic market on a profit - penalty upheld - appeal dismissed.

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• 2017 (12) TMI 540
  Penalty - only case of Revenue is that M/s. Sanmati Steel Pvt. Ltd. as per the specifications of railway for manufacture of ERC were required to use a particular grede of rounds wherein it appeared that other than the said particular grade of rounds, they have also purchased some other rounds from the appellant - whether the learned Commissioner (Appeals) have rightly retained the penalty of Rupees One lakh imposed u/r 25 of CER, 2002 on Daga Trading Company and Rs. 50,000/- as penalty u/r 26 of CER, 2002. on its Director Shri Ramesh Kumar Daga? - Held that: - the whole case of Revenue was made on the presumption that M/s. Sanmati Steel Pvt. Ltd. was requiring a particular grade of rounds as per requirement of its buyer – Railways. As the appellants herein have sold them rounds, which also includes some other grade of rounds, the whole transaction is presumed fictitious and accordingly penalty are being imposed on the appellants. Penalty on Director U/R 26 - Held that: - Although it has been admitted by the Director of M/s. Sanmati Steel Pvt. Ltd. Mr Vinod Kumar Jain that he have indulged in procuring other goods other than specified by Railways from Daga Trading Company but it is not the case of the Director of M/s. Sanmati Steel Pvt. Ltd. that they have not received goods from M/s. Daga Trading Company - the allegation against the appellants do not stand established and thus no elements of penalty are established, under the provisions of Rule 25 of Rule 26 against these appellants. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 539
  Clandestine Removal - whether on the date of inspection that is 23/01/2012, whether the appellant had stocked finished goods clandestinely for clearing without payment of duty? - Held that: - the whole SCN is presumptive. In spite of categorical assertion by the Director of the company in the statement recorded during investigation under section 14 of the act, wherein he categorically stated that the goods detained and seized are work-in-progress and not finished goods, Revenue have failed to test the goods - no case of clandestine stocking or removing of any goods is made out against the appellant. As such, the order of confiscation and penalty is bad and fit to be set aside - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 538
  Liability of interest - Rule 14 of CCR 2004 - wrong availment of CENVAT credit - Held that: - appellant had availed Cenvat credit on capital goods which are received in the factory of the appellant as per the CCR, 2004. Appellant was entitled to take credit immediately on receipt of the capital goods in the factory. Once it was decided by the appellant that the machines not to be installed in the factory they suo moto reversed credit and declared in their ER-1 return in Feb, 2011 - In this fact availment of credit was legal and correct and hence it cannot be said that Cenvat credit was wrongly taken or utilized. In absence of nature of wrong availment of credit, interest provision under Rule 14 cannot be invoked - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (12) TMI 537
  Defective application - application for waiver of penalty - Exemption from payment of tax - Held that: - In somewhat similar circumstances, the Hon ble Division Bench in the case of Chetak Timber Products (P) Ltd., vs. Joint Commissioner and another [2014 (9) TMI 72 - MADRAS HIGH COURT], held that when there is a defective application, the Designated Authority should return the application for rectification. The reason assigned by the first respondent to state that the petitioner s application does not comply with the conditions of the Samadhan Act, is incorrect and for all practical purposes, the payment effected by the petitioner by paying 10% of the penalty and 25% of the interest as provided for under Section 7(c) of the Samadhan Act, should date back to 13.11.2006 - the matter is remanded to the first respondent for fresh consideration, who shall take on file the application for settlement - appeal allowed by way of remand.

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• Indian Laws

• 2017 (12) TMI 559
  Award under Arbitration proceedings - High Court while setting aside the said award directing to carry out the modifications required by it at the risk and costs of the appellants(respondents firm) and in terms of the agreement, the costs thereafter shall be recovered from the earnest money or pending payment - Held that:- The subject matter covered by the aforesaid impugned direction of the High Court was not one of the items of reference to the Arbitrator. If that is so, after setting aside the award the High Court under Section 37 of the Arbitration and Conciliation Act, 1996 was not competent to issue the direction in question in respect of a subject which was not the subject matter of reference to arbitration. Accordingly, while maintaining the order of the High Court insofar as setting aside the award is concerned, the aforesaid direction, extracted above, is interfered with.

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• 2017 (12) TMI 558
  Dishonour of cheques - offence under NI Act - petitioner has stated in his defence that the two cheques as alleged to have been issued to the complainant for discharge of his legal liability was in fact stolen by the complainant from the house of the petitioner as he was on regular visiting terms - delay in lodging the complaint - Held that:- Perusal of the record reveals that the complainant in the present case had lodged his complaint on 24.08.2012; the petitioner appeared before the Trial Court on 09.11.2012; and the notice under Section 251 Cr.P.C. was served upon the petitioner on 14.01.2013. However a complaint was filed by the petitioner on 26.06.2013 to SHO. There has been a clear lapse of 7 months in filing the complaint by the petitioner. The petitioner deposed that "I came to know that my cheques having got stolen only after receiving the summons from this Hon'ble Court." If the same is assumed to be true, the petitioner even then did not take any prompt action despite being aware of the fact that a complaint has been lodged against him by misusing his stolen cheques. The petitioner approached the police authorities only after seven months. Therefore from the inordinate and unexplained delay in lodging the complaint, it is quite apparent that the said complaint was a clear afterthought on the part of the petitioner to create a fictious defence in his favour. Therefore for the reasons set out above, it is of the considered view that the on no count does the impugned judgment and order on sentence call for any interference. The Trial Court has fully appreciated the evidence placed on record by the parties. Findings of conviction cannot be said to be erroneous or perverse.

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• 2017 (12) TMI 557
  Offence punishable under Section 138 Negotiable Instruments Act - Held that:- A contextual analysis of the provisions of Section 145 of the Act leaves no manner of doubt that the special procedure enabling the complainant to give evidence on affidavit notwithstanding anything contained in the Code of Criminal Procedure is a procedure available only in relation to a complaint for an offence punishable under Section 138 Negotiable Instruments Act. In the opinion of the Court, the said special procedure cannot be utilized or invoked by a complaint, the Drawer, in this case, to prosecute the accused for an offence under Penal Code; in this case, the Payee under Section 420 IPC. Thus, the impugned order summoning the applicant to stand his trial for an offence punishable under Section 420 IPC on the basis of affidavit evidence received by the learned Magistrate with the aid of Section 145 of the Negotiable Instruments Act is manifestly illegal and cannot be sustained. Thus, the impugned order in so far as it relates to summoning the applicant for an offence punishable under Section 420 IPC is not sustainable and is liable to be quashed. In the result, the instant application is partly allowed. The impugned order only to the extent that it summons the applicant to stand his trial for an offence punishable under Section 420 IPC is quashed. The rest of the order by which the applicant has been summoned to stand trial for an offence punishable under Section 138 of the Negotiable Instruments Act is upheld. The Magistrate would proceed with the complaint under Section 138 of the Negotiable Instruments Act in accordance with law and conclude the trial in accordance with provisions of Section 143 (2) &(3) of the Act. Interim order dated 15.12.2004 stands vacated.

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• 2017 (12) TMI 556
  Cognizance of offence under Section 138 of NI Act - Held that:- This Court is of the considered opinion that it was not necessary for the complainant to allege that even on the date of the issuance of the subsequent cheques the applicant was responsible and in-charge of day-to-day business of the Company. The averments made in paragraph 2 of the complaint are sufficient to proceed against the applicant for an offence under Section 138 of the Negotiable Instruments Act. The basic averments are that the accused no.1 M/s Amrit Feeds Limited. had purchased DOC and for payment of the said purchased material cheques of Rs. 16,66,75,992/- were issued and when they stood bounced, another set of cheques were issued by the accused no.2 Harish on 13/2/2016. Whether the second set of cheques issued on 13-2-2016 would also amount to acknowledgment in writing or not is also a question, which is to be decided he Trial Court. This Court is of the considered opinion that since the question of limitation is a mixed question of fact and law, which can be decided by the trial Court only after considering the evidence which would ultimately come on record, therefore, at this stage it is held that there is sufficient allegation in the complaint to proceed against the applicant under Section 138 of Negotiable Instruments Act. It is an undisputed fact that the Trial has reached to an advanced stage and the case is fixed for recording of accused statement. Even otherwise, on that ground also, the application under Section 482 of Cr.P.C. is liable to be dismissed. Thus, this Court is of the considered opinion that the Trial Court did not commit any mistake in taking cognizance of the offence under Section 138 of Negotiable Instruments Act,

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