Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 19, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Maintainability of appeal - appeal rejected on the ground that the appeal is filed beyond even the condonable period holding that the copy of the best Judgment order is served on the petitioner’s registered e-mail - Commissioner (appeals) directed to determine date of communication of order and circumstances first - It would be needless to observe that the Appellate Authority while considering the question of the date of communication as contemplated under Section 107 of the Act would also have to decide on the merits of the case. - HC
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Permission to file Form TRAN-1 - Tansitional Credit - Liberty granted to the petitioner to make an application before GST Council through Standing Counsel, who is further requested to hand over the same to the jurisdictional officer for forwarding the same to the GST Council to issue requisite certificate of recommendation alongwith requisite particulars, evidence and a certified copy of the order instantly and such decision be taken forthwith - HC
Income Tax
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Challenging order u/s 230(1A) - Tax clearance certificate in case of traveling out of the country - An order under Section 230(1A) cannot be arbitrary or capricious based simply on a mere assumption or presumption of the circumstances referred to therein. A general or overreaching perception of the authority that such circumstances exist is also not sufficient in the absence of more tangible material indicating a cause for alarm. - HC
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Addition u/s 68 - Unexplained loan - Neither any written contract nor any identity of the Creditor, having been established in the present case, we cannot find any fault with the findings concurrently rendered by the three authorities below, that the said addition deserves to be made under Section 68 - . Merely because other two loan transactions, with two other persons was believed to be genuine and additions were set aside, that is not a sufficient ground to hold that a similar treatment should have been given with respect to the alleged loan transaction of M/s.AR.Com also - HC
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Depreciation u/s 32(1)(ii) in respect of intangible assets - From perusal of the order passed by the Assessing Officer itself it is axiomatic that he has found that the goodwill has been calculated and has been allotted to intangibles. For yet another reason, the order passed by the tribunal has to be upheld.- - HC
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Addition u/s. 68 - the CIT(A) granted partial relief to the assessee. This relief was granted to the assessee based upon an elaborate remand report filed by the AO which has been extracted in the order passed by the CIT(A) - ITAT confirmed the order of CIT(A) - Revenue appeal dismissed - HC
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Disallowance of Bid loss - merely because a different treatment was given in the books of accounts cannot be a factor which would deprive the Assessee from claiming the entire expenditure as a deduction. - It has been held repeatedly by this Court that entries in the books of accounts are not determinative or conclusive and the matter is to be examined on the touchstone of provisions contained in the Act - HC
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Deduction u/s 10B - activity the Assessee undertakes amount to manufacturing or processing to entail it to the benefit or not? - True, very low-grade iron ore cannot be used in metallurgical plants, for it needs to be upgraded to increase the iron content. In the Assessee's case, iron ore concentrates are manufactured by the process of magnetic separation. It essentially amounts to ‘manufactures’ or ‘process’. - HC
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Nature of expenditure incurred towards research and development - The fact that the expenses incurred by the assessee towards research and expenses have been met out of the grants given by the government, which is treated as capital receipt is immaterial. - The expenditure was incurred by the assessee for research and development for manufacture of aircrafts, which were to be sold. Thus, the expenditure was incurred for the purpose of business of the assessee and the same ought to have been allowed under Section 37 instead of Section 35(1)(iv) - HC
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Denying exemption u/s 10(23C)(vi), 11 and 12 - There are several factual aspects, which have been missed out by the Assessing Officer to be taken into consideration and we cannot be called upon to take a decision in the abstract without examining the foundation facts for their correctness. Considering all the aspects, we deem it appropriate that the matter should be remanded to the Assessing Officer for a fresh consideration. - HC
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Validity of re opening of the assessment - ITAT held that CIT(A) fell in error in holding the re-assessment to be invalid - it is evident that the order passed by the tribunal has been passed in a cryptic and cavalier manner and well reasoned order passed by the Commissioner of Income Tax (Appeals) has been set aside without assigning any cogent reasons. - Matter restored before ITAT - HC
Customs
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Absolute Confiscation - penalty - import of old and used Digital Multifunctional Devices (MFDs) with standard accessories from Singapore - the goods (MFDs) are not liable for absolute confiscation and can be released on payment of redemption fine and penalty - the imported goods may be allowed for clearance on payment of redemption fine @ 10% and penalty @5% of the reassessed value besides payment of applicable Customs duty. - AT
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Revocation of Customs Broker Licence - forfeiture of security deposit - imposition of penalty - failure to to comply with the provisions of Regulations 10(a), 10(d), 10(e), 10(n) and 13(12) of the Licensing Regulations - The inevitable conclusion that follows is that the Commissioner was not justified in revoking the License of the appellant or forfeiting the security deposit or imposing penalty. - AT
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Refund of sale proceeds of the confiscated goods which were later sold in public auction - This claim of the writ petitioner was clearly negated by the Commissioner of Customs (Preventive), with the observation that such certificate/document only establishes that M/s Lapang Eco Products was engaged in supari/betel nuts business and this was not a conclusive proof of rightful ownership of the betel nuts under question. - HC
Corporate Law
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Restoration of name of the Company on the Register of Companies maintained by the RoC - Though the impugned striking off the Company was in accordance with law, the Tribunal has to take into consideration of bona fide contentions of Petitioners seeking to restore name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue. - Name restored - Tri
Indian Laws
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Dishonor of Cheque - prayer for reduction in the quantum of sentence - The concern of the Legislature is obvious. Provisions inserted for inculcating greater faith in banking transactions needed more teeth so that cases involving dishonour of cheques reduced - It is, thus, apparent that deterrence and restoration are the principles to be kept in mind for sentencing - The revision petition is dismissed and conviction is maintained. However, the sentence is reduced to RI for a period of one year and six months along with payment of compensation as awarded by the trial Court. - HC
Service Tax
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Classification of services - Information Technology Software Service or Franchise Service? - licence fee paid to SAP AG, Germany, for grant of non-exclusive licence to use, market and sub-license the software, third party database and third-party software to ‘end user’ in the territory, on ‘reverse charge basis’ - The service in question is not taxable under the head ‘franchisee service’ rather taxable under Information Technology Software Service - AT
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Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDR Scheme was not considered since this amount was not entered in ST-3 Returns. - That apart, the last date of payment under SVLDR Scheme was 30.06.2020 which has expired. - That apart, adjustment of the amount deposited prior to the issuance of the demand-cum-show cause notice may be adjustable against the demand confirmed by the order in original but it cannot be adjusted for the purposes of determination of amount under the SVLDR Scheme. - HC
Central Excise
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CENVAT Credit - capital goods - In the instant case, the capital goods are installed after commencement of production in the year 2016-17. The credit would have been inadmissible to the appellant if they have continued to clear exempted goods till 2018-19. However, records of the case indicate that the appellant has cleared goods on payment of duty during 2017-18 as evidenced by the ER-1 filed for the month of June 2017. Therefore, in view of the amended provisions the credit is admissible to the appellant. - AT
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Maintainability of appeal - appeal dismissed only on the ground that Committee on Disputes (COD) permission has not been taken at the time of filing of the appeal and till its disposal - on the date on which appeal was dismissed by the learned CESTAT, there was no bar in proceeding with the matter in the absence of COD permission. - CESTAT proceeded on an erroneous understanding of law - Appeal restored - HC
Case Laws:
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GST
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2020 (12) TMI 685
Principles of Natural Justice - time limitation - main allegation of the petitioner is that prior to passing of the order of demand, no show cause notice was ever served upon the petitioner and in fact no order passed by the respondent no. 3 was also ever served upon the petitioner - HELD THAT:- In view of the stand taken by the respondents in the counter affidavit, it is clear that show cause notice was never served upon the petitioner as well as the reasons for quantification of the demand has also never been served upon the petitioner. In view thereof, it is clear that the statutory provisions as well as the principles of natural justice have been clearly violated - Service of the show cause notice at a wrong E-mail address is neither contemplated under the Act nor can it be deemed to be a proper service under the Act. As no show cause notice has ever been served, the petitioner never had any occasion to file its reply and thereafter not serving a copy of the reasoned order quantifying the demand is clearly erroneous. The present petition has been filed as the Tribunal contemplated under the GST Act has not been created and the petitioner argues that in the absence thereof he cannot be left remedy less, as such he approached this Court - the orders passed are wholly arbitrary and contrary to the manner of passing of the order, as prescribed under the Act. There is no hesitation in holding that the orders passed against the petitioner are completely in violation of principles of natural justice. Petition allowed - decided in favor of petitioner.
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2020 (12) TMI 684
Permission to file Form TRAN-1 in compliance of Central Goods and Services Tax Act, 2017 - availment of Tansitional Credit in Electronic Credit Ledger - validity of Rule 117 of the CGST Rules - HELD THAT:- The writ petition is liable to be disposed of in terms of the decision rendered by Co-ordinate Division Bench of this Court Principal Seat at Jodhpur in OBELISK COMPOSITE TECHNOLOGY LLP, VERSUS UNION OF INDIA, THE SECRETARY TO THE GOVT. OF INDIA, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE [ 2019 (12) TMI 1162 - RAJASTHAN HIGH COURT] where it was held that this Court cannot entertain such prayer and accordingly reject the same, however, considering the fact that the Union of India and the Finance Department have extended the period contemplated under Rule 1A of Rule 117 till 31st December, 2019. Liberty granted to the petitioner to make an application before GST Council through Standing Counsel, who is further requested to hand over the same to the jurisdictional officer for forwarding the same to the GST Council to issue requisite certificate of recommendation alongwith requisite particulars, evidence and a certified copy of the order instantly and such decision be taken forthwith and if the petitioner s assertion is found to be correct, the GST Council shall issue necessary recommendation to the Commissioner to enable the petitioner to get the benefit of CENVAT credit within the stipulated time as stipulated by the Union of India. Petition disposed off.
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2020 (12) TMI 683
Maintainability of appeal - time limitation - petitioner s appeal rejected on the ground that it is belated by four months and therefore beyond the maximum time permitted under Section 107 of the Act - HELD THAT:- On perusal of Annexure-E, it is seen that the Appellate Authority, the third respondent, has not considered the specific assertions of the petitioner that the petitioner was not aware of the order dated 10.12.2018 until his banker informed him and immediately thereafter i.e., on 5.2.2019 the petitioner has deposited a part of the demand. If 05.02.2019 could be considered the date of communication, the appeal would be in time. These circumstances in the considered opinion of this Court had to receive the third respondent s attention, and even mentioning 10.12.2018 as the date of communication in the appeal format had to be considered in the facts and circumstances. This Court is of the considered view that Annexure-E which is rendered without considering these circumstances cannot stand the scrutiny in law especially given the fact that the Appellate Authority s order results in denial of the right of appeal under the Act. Petition allowed in part.
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2020 (12) TMI 682
Maintainability of appeal - appeal rejected on the ground that the appeal is filed beyond even the condonable period holding that the copy of the best Judgment order is served on the petitioner s registered e-mail - HELD THAT:- The provisions of Section 107 of the Act is categorical that a person aggrieved by any decision or order under the Act may prefer an appeal to the prescribed authority within three months from the date on which the said decision or order is communicated to such person with a further condonable period of thirty days. It would therefore be necessary for the Appellate Authority, while dismissing an appeal on the ground that it is filed beyond the period of limitation prescribed and the further condonable period, to decide on the limitation considering the circumstances relied upon by the parties to assert a particular date as the date of communication. In the present case, the Department asserts the date of communication as 09.07.2019 where as the petitioner asserts as 7.11.2019. The impugned order does not indicate that the Appellate Authority has considered the controversy in this regard. The Appellate Authority, given the Scheme of the Act prescribing definite timelines for preferring an appeal and the lapse of right of appeal thereafter, would have to consider the circumstances asserted. It would be needless to observe that the Appellate Authority while considering the question of the date of communication as contemplated under Section 107 of the Act would also have to decide on the merits of the case. Petition disposed off.
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Income Tax
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2020 (12) TMI 681
Validity of re opening of the assessment - whether the escapement of the income, if any, came about because of non disclosure by the assessee warranting action under proviso to Section 147 of the Income Tax Act, 1961? - ITAT held that CIT(A) fell in error in holding the re-assessment to be invalid - HELD THAT:- From perusal of the extracted portion of the order passed by the tribunal, it is evident that the order passed by the tribunal has been passed in a cryptic and cavalier manner and well reasoned order passed by the Commissioner of Income Tax (Appeals) has been set aside without assigning any cogent reasons. Therefore, in the peculiar facts of the case, we deem it appropriate to quash the order of the tribunal and to remit the matter to decide the issue with regard to reopening of the assessment afresh by a speaking order.
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2020 (12) TMI 680
Denying exemption u/s 10(23C)(vi), 11 and 12 - certain advances received from another charitable trust during the financial year 2003-04 - amount was repaid to the other trust and in the course of repayment, the assessee paid excessively a sum which was recoverable from the other institution/trust - assessee contended that the amount had been given to another charitable institution for educational purposes to enable them to construct a building as part of their college and that the same could not be considered as investment and hence, the provisions of Sections 11, 12 and 13 had not been violated - HELD THAT:- There are several factual aspects, which have been missed out by the Assessing Officer to be taken into consideration and we cannot be called upon to take a decision in the abstract without examining the foundation facts for their correctness. Considering all the aspects, we deem it appropriate that the matter should be remanded to the Assessing Officer for a fresh consideration. For all the above reasons, the tax case appeal filed by the assessee is allowed, the impugned order passed by the Tribunal and the orders passed by both the Assessing Officer and the CIT(A) are set aside so far as substantial questions of law 1, 3 and 4 are concerned and the matter is remanded to the Assessing Officer for a fresh consideration
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2020 (12) TMI 679
Nature of expenditure incurred towards research and development - Addition u/s 35 or 37 - HELD THAT:- In the instant case, the total research and development expenses incurred by the assessee which includes expenses towards raw materials, direct expenses, salaries, interest, depreciation and other expenses. Out of the aforesaid amount, AO has disallowed a sum on the ground that the same was made out of the grants given by Government of India. The expenses incurred by the assessee were towards research and development and therefore, the same were revenue in nature and ought to have been allowed as deduction under Section 37. The fact that the expenses incurred by the assessee towards research and expenses have been met out of the grants given by the government, which is treated as capital receipt is immaterial. The Tribunal erred in placing reliance on the case of the assessee for Assessment Year 1995-96 as the Tribunal failed to appreciate the aforesaid order, as the order no where states that the revenue expenses incurred out of the grant would not be allowed as deduction under Section 37 - nature of the expenditure has to be seen and not the nature of receipt and purpose for which such expenditure is made is a relevant criteria. The expenditure was incurred by the assessee for research and development for manufacture of aircrafts, which were to be sold. Thus, the expenditure was incurred for the purpose of business of the assessee and the same ought to have been allowed under Section 37 instead of Section 35(1)(iv) Disallowance u/s 14A - Non recording of satisfaction by AO - HELD THAT:- Sub-Section (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules prescribe a formula for determination of expenditure incurred in relation to income, which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. The sine qua non for invocation of power under Section 14A of the Act read with Rule 8D of the Rules is the recording of satisfaction by the Assessing Authority that having regard to the accounts of the assessee it is not possible to arrive at the satisfaction with regard to the correctness of the claim of the assessee. In the instant case, the Assessing Officer has not recorded any satisfaction with regard to genuineness of the claim of the assessee before invoking the powers under Section 14A of the Act read with Rule 8D of the rules. Revenue appeal dismissed.
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2020 (12) TMI 678
Depreciation claimed on software - treated as royalty u/s 40(a)(ia) - Whether the tribunal is correct in allowing expenditure on imported software when the expenditure per se is capital in nature and is not allowable? - HELD THAT:- Depreciation claimed on software, which was treated as royalty u/s 40(a)(ia) could not have been decided by the tribunal. Remand matter to the tribunal to decide the issue of depreciation claimed on software to the tribunal for decision afresh by taking into account the decision rendered in Wipro Ltd. [ 2010 (8) TMI 1053 - KARNATAKA HIGH COURT ] - Accordingly, the second substantial question of law is answered. From perusal of aforesaid paragraph, it is evident that the issue pertaining to expenditure incurred for purchase of software as royalty has been dealt with and it has been held that the same is not royalty and the provisions of Section 40(a)(ia) are not attracted. The decision of the Supreme Court in the case of Chaudhary Transport Company [ 2020 (8) TMI 23 - SUPREME COURT ] has no application to the fact situation of the case as the Supreme Court has interpreted Section 40(a)(ia) of the Act in the context of Section 194C of the Act. Thus, the second question of law has to be answered in favour of the assessee and against the revenue. Claim of assessee towards set-off of losses of STP/SEZ unit against the other income - Deduction u/s 10A - HELD THAT:- Supreme Court in Yokogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT ] was dealing with the issue whether losses under Section 10A units or non Section 10A units can be set off against the profits of Section 10A units before deductions under Section 10A are effected held that it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature for application. The deductions under Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. It is further held that the somewhat discordant use of the expression 'total income of the assessee' in Section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression 'total income of the assessee' in Section 10A as 'total income of the undertaking'. Thereafter, in para 18 has answered all the substantial questions of law in favour of the assessee including the one whether losses under Section 10A units or non Section 10A units can be set off against the profits of Section 10A units before deductions under Section 10A are effected have answered all the substantial questions of law in favour of the assessee. Therefore, first substantial question of law is answered in favour of assessee and against the revenue.
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2020 (12) TMI 677
Deduction u/s 10B - activity the Assessee undertakes amount to manufacturing or processing to entail it to the benefit or not? - denial of deduction as Assessee does not carry on any manufacturing of iron ore - CIT (A) reversed the AO's finding - Tribunal has held that the Assessee has purchased ROM- that is, material extracted from mine on as is where is basis-and that ROM included a lot of impurities such as mad, silica, sulphur, limestone, and so on - HELD THAT:- As rightly, held that ROM is crude ore, practically of no use unless it is processed and made suitable for steel making industry. Describing the manufacturing process undertaken by the Assessee, the Tribunal has held that in the iron ore production, the ROM is a raw material in a very crude form. When extracted, ROM contains a lot of waste material called 'impurities'. According to the Tribunal, very low-grade iron ore cannot be used in metallurgical plants, for it needs to be upgraded to increase the iron content. In the Assessee's case, iron ore concentrates are manufactured by the process of magnetic separation. For this purpose, the Assessee uses High-Intensity Magnetic Separator, which increases the iron content through concentration. Eventually, the assessee manufactures Iron Ore Concentrate Fines, by upgrading the iron content to around 58%. Assessee purchases ROM, which includes a lot of impurities; it is crude ore, practically of no use unless it is processed and made suitable for its intended end-use. True, very low-grade iron ore cannot be used in metallurgical plants, for it needs to be upgraded to increase the iron content. In the Assessee's case, iron ore concentrates are manufactured by the process of magnetic separation. It essentially amounts to manufactures or process . Therefore, we find no reason to interfere with the Tribunal's findings on this sole substantial question of law. - Decided in favour of assessee.
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2020 (12) TMI 676
Disallowance of Bid loss claimed in the computation of total income in addition to Bid Loss claimed in P L Account - the amount of Bid Loss claimed is incorrect as per provisions of section 145(1) of the Income Tax Act and is not in consonance with the Board's Notification No.69(E) dated: 25.01.2016 and Accounting Standard As 22 of ICAI - Tribunal deleted the addition - HELD THAT:- Substantial question of law is no longer res integra and the same has been answered by the decision of the Supreme Court in TAPARIA TOOLS [2015 (3) TMI 853 - SUPREME COURT] wherein held Assessee did not want spread over of this expenditure over a period of five years as in the return filed by it, it had claimed the entire interest paid upfront as deductible expenditure in the same year. In such a situation, when this course of action was permissible in law to the Assessee as it was in consonance with the provisions of the Act which permit the Assessee to claim the expenditure in the year in which it was incurred, merely because a different treatment was given in the books of accounts cannot be a factor which would deprive the Assessee from claiming the entire expenditure as a deduction. It has been held repeatedly by this Court that entries in the books of accounts are not determinative or conclusive and the matter is to be examined on the touchstone of provisions contained in the Act - As it is evident that the substantial question of law involved in this appeal is no longer res integra and the same is already answered against the revenue.
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2020 (12) TMI 675
Disallowance u/s 36 - entitled to written off the outstanding amount and claimed deduction under Section 36(2) or under Section 37(1) - AO held that the assessee is neither a bank nor a money lender and therefore, is not entitled to written off the outstanding amount and claimed deduction u/s 36(2) or u/s 37(1) - HELD THAT:- From perusal of Clause 13 of the memorandum of Association, it is evident that one of the object's of the assessee is to lend money and the assessee has been engaged in money lending business since its inception from financial year 2004-05. The schedule of loans and advances is a continuing feature in all the past years and has been accepted by the department as part of business by taxing the income under the head 'income from business'. Assessee has been carrying on the money lending business and it has been taxed so under the head business for past 9 years has been over looked. It is pertinent to mention here that holding of money lending licence is not a prerequisite for allowing a claim of bad debts as is held by Supreme Court in TRF Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] and it is enough if the irrecoverable debt is written off in the books of accounts. It is also pertinent to note that non charging of interest is not fatal to the claim for deduction. However, the aforesaid aspect of the matter has not been appreciated by the tribunal. Alternatively, the claim of the assessee under Section 37(1) of the Act has also not been examined. The issue with regard to the claim of the assessee under Section 14A of the Act has not been adjudicated. We therefore, quash the order passed by the tribunal insofar as it pertains to disallowance of the claim of bad debts to the sum and disallowance of claim under Section 14A of the Act and remit the matter to the tribunal for decision afresh in accordance with law. The orders passed by the Commissioner of Income Tax (Appeals) as well as the tribunal with regard to remaining issues are maintained.
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2020 (12) TMI 674
Disallowance of claim u/s 10B - assessee has not satisfied the requirements of said provision to claim deduction u/s 10B as the assessee was not involved in manufacturing activity and was formed by splitting up of existing company? - tribunal is correct in law in setting aside the disallowance of claim under Section 10B - HELD THAT:- CIT(Appeals) has examined the issue of manufacture / production of any article or thing and after referring to various decisions has recoded a finding that the activity of the assessee amounts to manufacture / production of articles or things. CIT (Appeals) has recorded following reasons for arriving at the conclusion that the assessee is entitled to benefit of Section 10B. The tribunal has held that in respect of first two contingencies, undoubtedly, there is a production or manufacture in the nature of a compound. However, in respect of third contingency by placing reliance on the decision of the Supreme Court in 'CIT VS. M.C.BUDHI RAJA AND CO. [ 1993 (9) TMI 6 - SUPREME COURT ] it has held that even in respect of third contingency, it can be held that the assessee is engaged in the activity of production. Thus, the order passed by the CIT (Appeals) has been upheld. It is pertinent to mention that in the memo of appeal filed before the tribunal, the revenue has not assailed the finding recorded in favour of the assessee that there has been no splitting up of the business, therefore, the question of remitting the matter to the tribunal does not arise. In HERO VINOTH (MINOR) VS. SESHAMMAL [ 2006 (5) TMI 478 - SUPREME COURT ] while dealing with the scope of Section 260A of the Act, it was held that this court will not interfere with findings of the court, unless the courts have ignored material evidence or acted on no evidence or have drawn wrong inferences from proved facts by applying the law erroneously or the decision is based on no evidence. - Decided against the revenue and in favour of the assessee.
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2020 (12) TMI 673
Addition u/s. 68 - assessee has not produced the Name, Address PAN of the so called parties/Commission agents during the assessment proceedings - ITAT deleted - assessee has not proved the cash deposit but changed its stand that the payments were received from various parties and commission agents when such ledger accounts were not maintained by the assessee - HELD THAT:- Substantial Questions of Law raised before us are only with regard to the deletion of the addition made u/s 68 and technically, we are not required to go into the aspect, whether the appeal filed by the Revenue was maintainable before the Tribunal. With regard to the deletion of the addition made under Section 68 as pointed out earlier, the CIT(A) granted partial relief to the assessee. This relief was granted to the assessee based upon an elaborate remand report filed by the AO which has been extracted in the order passed by the CIT(A) dated 31.07.2018 - CIT(A) / the First Appellate Authority has re-examined the entire factual position and granted relief to the assessee to the extent warranted. The assessee was not on appeal as against the disallowed portion and it was only the Revenue which challenged the order before the Tribunal to consider the factual scenario. There is no question of law much less Substantial Question of Law, arising for consideration in this appeal and consequently, the appeal should fail. With regard to the issue regarding the maintainability of the appeal before the Tribunal, we refrain from expressing any opinion on the said issue as in our considered opinion, it is an arguable issue and the Revenue having not raised any Substantial Questions of Law on the said issue, we proposed to leave the said question open.
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2020 (12) TMI 672
Depreciation u/s 32(1)(ii) in respect of intangible assets - Goodwill - Acquisition of business - net assets taken over and the particulars of liability, loans etc - HELD THAT:- The Supreme Court in SMIFS SECURTIES LTD. [2012 (8) TMI 713 - SUPREME COURT] held that good will is an asset under Section 32(1) of the Act and is thus eligible for depreciation. Therefore, the aforesaid issue is no longer res integra. Only contention which has been raised by learned counsel for the revenue is that the assessee has not disclosed the particulars of intangible assets, which have been acquired by it and therefore, it is not entitled for the benefit of depreciation under Section 32(1) - From perusal of the order passed by the Assessing Officer itself it is axiomatic that he has found that the goodwill has been calculated and has been allotted to intangibles. For yet another reason, the order passed by the tribunal has to be upheld.- Decided against the revenue
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2020 (12) TMI 671
TP Adjustment - Comparable selection - whether Infosys Ltd is comparable to the assessee? - substantial question of law - HELD THAT:- It is the cardinal principle of law that tribunal is fact finding authority and a decision on facts on the tribunal can be gone into by the High Court only if a question has been referred to it, which says the finding of the tribunal is perverse - SEE: SUDARSHAN SILKS SAREES VS. CIT [ 2008 (4) TMI 5 - SUPREME COURT ] . The issue whether Infosys Ltd is comparable to the assessee and is functionally dissimilar is a finding of fact. From perusal of paragraphs 12 to 13.2.8 of the order passed by the Commissioner of Income Tax (Appeals) as well as para 21 and 22 of the order of the tribunal, it is evident that the Commissioner of Income Tax (Appeals) has dealt with the findings recorded by the transfer pricing officer and the same has been approved by the tribunal by assigning cogent reasons. The aforesaid findings are finding of fact. Even in substantial questions of law, no element of perversity has either been pleaded or demonstrated before this court. - Decided in favour of assessee.
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2020 (12) TMI 670
Revision u/s 263 - Deduction u/s 35(2AB) wrongly allowed - also held by the CIT that the assessee had two Export Oriented Units (EOU) and the profits of these EOUs were entitled to 100% deduction under Section 10B of the Act as they were EOUs and the benefits of R D would accrue to all the manufacturing units of the assessee - HELD THAT:- Assessee has demonstrated that the enquiries contemplated by the CIT in the show cause notice u/s 263 of the Act were not required at all and this fact has also been accepted by the CIT in the impugned order. The CIT has only remanded the issue to the Assessing Officer for verification of an insignificant issue whether of approval of the Naganathapura unit and the Nashik unit continues even during the previous year and which has been demonstrated by the assessee before the CIT with sufficient documentary evidence. Therefore, the Tribunal has concluded that there was no necessity to have remanded the matter. It has further been held by the Tribunal that the CIT has accepted that if R D activity carried on at the 100% EOUs were different, then there was no need to apportion the R D expenses of the two EOUs. Certificate of the Chartered Accountant given in Form 56G for both these units clearly mention the nature of activities of these two units for the previous year relevant to Assessment Year 2008-09 are the same activity for which approvals were granted to these 100% EOUs, which has been clearly demonstrated by the assessee before the CIT that the expenditure on R D had no connection whatsoever with the 100% EOUs at Naganathapura and Nashik. Therefore, there was for no need for the CIT to set aside the order of the Assessing Officer for suitable enquiries and deciding the issue afresh. The Tribunal has therefore, rightly quashed the impugned order under Section 263 - Decided in favour of the assessee.
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2020 (12) TMI 669
Addition u/s 68 - Unexplained loan - addition based on recording statements under Section 131 - statement was later on retracted by the Assessee, but the time gap between the such retraction and the said statement is more than one year - HELD THAT:- If at all the original statement was recorded by the Assessing Authority, under duress of coercion, the Assessee could have retracted the same at the earliest available opportunity, after such statement was recorded. Taking a period of more than one year and again except such retraction of statement, in the course of second round of recording statements under Section 131 of the Act only, retraction of such statement, without adducing any cogent evidence to establish the identity of the said Creditor and genuineness of the alleged loan transaction, the Assessee seems to have done nothing to establish the genuineness of the entire loan transaction. It is not even believable that from a person, from whom the loan of ₹ 3 Crores is taken, is not even known to the Assessee and only the banking channels are relied upon to establish the genuineness of the so called transaction, which banking channels can be used even for fake transactions of circulating one's own unaccounted money in fake names. Neither any written contract nor any identity of the Creditor, having been established in the present case, we cannot find any fault with the findings concurrently rendered by the three authorities below, that the said addition deserves to be made under Section 68 - . Merely because other two loan transactions, with two other persons was believed to be genuine and additions were set aside, that is not a sufficient ground to hold that a similar treatment should have been given with respect to the alleged loan transaction of M/s.AR.Com also. Decided against the assessee.
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2020 (12) TMI 668
Challenging order u/s 230(1A) - Tax clearance certificate in case of traveling out of the country - circumstances on the basis of which the satisfaction is recorded - Section 230(1A) offered opportunity to an assessee to represent to the assessing officer that satisfactory arrangements had been made to defray the tax and other liabilities, if any, computed, in which case the necessary Tax Clearance Certificate (TCC) could well be issued by the officer permitting the assessee to travel out of the country - HELD THAT:- The satisfaction must be based on tangible material including (i) a history of previous incidents or events that establish the reluctance of the assessee to co-operate with the authorities or comply with statutory requirements, (ii) substantial outstanding arrears under tax enactments (iii) attempts by the assessee to evade the payment of the arrears (iv) difficulties faced by the authorities in collecting outstanding arrears or in ensuring appearance of the assessee in pending proceedings (v) nonco- operation on the part of the assessee in pending proceedings, to name a few illustrative situations. An order under Section 230(1A) cannot be arbitrary or capricious based simply on a mere assumption or presumption of the circumstances referred to therein. A general or overreaching perception of the authority that such circumstances exist is also not sufficient in the absence of more tangible material indicating a cause for alarm. In the present case, there is absolutely no material to indicate the existence of such circumstances as seen from the record. The request seeking approval from the superior authority must contain the details of the circumstances that justify such request. As perused the relevant file and find that it contains the reasons recorded by the respondent authority as well as the approval issued by the DGIT. Nowhere is there any mention any of the circumstances that would justify the invocation of Section 230(1A) as the reasons merely refer to voluminous assets found during search as well as material indicating connections abroad. These, by itself, would not justify invocation of the provision. Section 230(1A) vests substantial power upon an authority to restrain and restrict the mobility of a citizen and with such great power must come great responsibility. One must be conscious of the extent of the power available and ensure that the same is exercised only in those cases where tangible circumstances and evidences justify its deployment. The requirement of prior consent by the superior authority must not be mechanical or automatic but must be preceded by a proper examination as to whether such intrusive and extraordinary measures as advocated under Section 230(1A) are warranted in that specific case. After all, that is the purpose of seeking consent of a superior authority who is expected to examine the circumstances involved and ratify the reasons recorded by the authority. In the present case, both the reasons recorded by the authority as well as the consent of the DGIT are based only on the seizure of substantial assets and the alleged connection of the petitioner with various entities abroad. In my view, these materials do not justify invocation of the rigour of Section 230(1A) that call for evidences and material of a far greater degree and gravity. The impugned order dated 18.10.2019 is set aside and this writ petition allowed.
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2020 (12) TMI 667
Addition of share premium u/s 56(2)(viib) - Determining value of shares - HELD THAT:- AO has proceeded to determine the value of shares by adopting different method without scrutinizing the valuation report furnished by the assessee under DCF method. Accordingly, following the decisions rendered by the co-ordinate benches, we set aside the orders passed by Ld CIT(A) and restore the impugned issue to the file of the AO with the direction to examine this afresh as per the directions given by the co-ordinate bench in the case of Innoviti Payment Solutions P Ltd [ 2019 (1) TMI 688 - ITAT BANGALORE ] - Appeal of the assessee is treated as allowed.
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2020 (12) TMI 666
Rectification u/s 254 - co-operative society entitled to benefit of deduction u/s.80P(2)(a)(i) or not? - Tribunal powers to review its order u/s.254(2) - HELD THAT:- Under Sec.254(2) of the Act, what can be rectified is only a mistake that is apparent on the face of the record. The expression mistake apparent on the face of the record will not include a mistake which can be identified only by a difficult process of long drawn reasoning. The tribunal does not have powers to review its order u/s.254(2) - present MP is devoid of any merit as what the Revenue seeks through this MP u/s.254(2) of the Act is only a review of the order of the Tribunal. As to whether the decision in the case of Udaya Souhardha Credit Co-operative society Ltd. [ 2018 (8) TMI 1063 - ITAT BANGALORE] has only remanded the issue to the AO for fresh consideration or has laid down the law on the issue is a debatable issue. Such debatable issues cannot be subject matter of an MP u/s.254(2) of the Act. Decision of the Tribunal in the case of Udaya Souhardha Credit Co-operative Society Ltd. (supra) does not lay out any law that a souharda registered under the Karnataka Souharda Sahakari Act, 1997 cannot be regarded as co-operative society entitled to benefit of deduction u/s.80P(2)(a)(i) of the Act. The Tribunal in the said order has only remanded the issue to the AO for fresh consideration because the issue was raised for the first time before tribunal and required a deeper examination. In the appeal decided by the Tribunal the Tribunal has in paragraph-5 of the order which is subject matter of this MP, has clearly given the reason as to why they cannot remand the issue to the revenue authorities because in the case which was subject matter of the appeal, the AO and CIT(A) have already considered this issue in the light of the Karnataka Souharda Sahakari Act, 1997 -there is no error in the order of the Tribunal which calls for any interference u/s.254(2) of the Act. MP is without any merit and the same is dismissed.
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2020 (12) TMI 665
Cash deposits as unexplained investments taxed u/s.69 - section 44AD applicability - HELD THAT:- Once part of bank credit is accepted as turnover on presumptive basis and has taxed accordingly by applying the provisions of section 44AD then there is no reason for the AO to take a different view for remaining part of cash deposits found in the same bank account and treat the same as unexplained investments to be taxed u/s.69 because it is an admitted that the assessee has proved with necessary evidences that she has received cash from business activity of civil contract and interior decoration work. As admitted fact that said activity has not been disclosed in income-tax return filed for relevant year and the assessee has not maintained regular books of account for the said activity. AO having accepted the explanation furnished by the assessee regarding her business activity and source of income for cash deposits found in her bank account, he ought to have accepted the explanation furnished by the assessee towards total cash deposits found in her savings bank account. In this case, the Assessing Officer has accepted part of cash deposits as out of her business receipts and part of cash deposits as her unexplained investments, without brought on record any cogent reasons to justify different view taken on cash deposits found in her bank account during the same financial year. The learned CIT(A) has also simply upheld the findings of the Assessing Officer without assigning any reason why explanation furnished by the assessee regarding source of income for cash deposits found in her bank account was accepted in part, cannot be accepted for remaining cash deposits found in the same bank account. AO as well as CIT(A) were erred in assessing part of cash deposits as unexplained investments to be taxed u/s.69 and part of cash deposits as receipts from business liable to be taxed u/s.44AD - Hence, we direct the Assessing Officer to treat the total cash deposits found in her bank account maintained with Bank of India, West Mambalam branch as receipts from her civil contract business and estimate 8% net profit on total receipts as per the provisions of section 44AD - Appeal filed by the assessee is partly allowed.
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2020 (12) TMI 664
Unexplained cash credit u/s. 68 - loan received by assessee from a group company ABPL - search and seizure action was conducted in the case of the assessee under s.132 - AO completed the assessment under s.153A - HELD THAT:- The aspersions have been cast on the source of source of lender which would mean source of source of source of lending in the hands of assessee is the basis for invoking Section 68 - The genuineness of loan received has been doubted by Revenue on such ground. The action of Revenue seeking to cast aspersions on genuineness on such remote and unsupported basis is in the realm of conjectures and surmises as canvassed on behalf of assessee. There is nothing on record to show any outcome of enquiry, if any, from the lender of lender for source of his money. Genuineness of the transaction has to be read in the context of all attendant facts cumulatively and cannot be seen in isolation. The burden on the assessee under s.68 of the Act is limited to proving the nature and source of the credit entry. The burden does not extent to establish the quality of source of money in the hands of source of source per se. In the instant case, the lender as well as the lender of the lender are both limited company and are tax assessee in the record of department. In absence of any evidence against the assessee qua the lender of the lender, the onus on the assessee to establish genuineness and creditworthiness of lender, in our view, stands discharged. We see no error in the process of reasoning adopted by the CIT(A) while concluding the issue in favour of the assessee Unexplained investment as capital of the assessee - HELD THAT:- Additions towards presumptive cash contribution amounting to ₹ 32,88,000/- in proportion to the partnership share appears prima facie inexplicable. The onus is on the Revenue to bring some cogent evidences on record to establish that alleged unaccounted cash contribution has been actually made by the assessee partner indeed. Unaccounted expenses for construction project carried out by the partnership firm has been attributed to the partner in proportion to the partner share as a figment of imagination without any legally sustainable basis. The impugned action of AO is apparently driven by misplaced suspicion and a mere ipse-dixit which is not objectively justifiable. It is well settled that suspicion, howsoever strong, cannot take the place of proof. In our view, the CIT(A) has analyzed the facts in its natural perspective and has rightly reversed the action of AO. We do not see any perceptible merit in the appeal of the Revenue and thus decline to interfere.
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2020 (12) TMI 663
Deduction u/s 35(1)(ii) - claim disallowed as research institution i.e HHBRF to which donation was given by the assessee was found to be a bogus institution that was not doing any research activity but was in fact laundering ill-gotten money of the donors - HELD THAT:- in the case before us, we find that the research institution i.e HHBRF, as on the date of giving of donation by the assessee was having a valid approval granted under the Act. On a perusal of the aforesaid Explanation to Sec. 35(1)(ii) of the Act, it can safely be gathered that a subsequent withdrawal of such approval cannot form a reason to deny deduction claimed by the donor. In the case of National Leather Cloth Mfg. Co. [ 1999 (10) TMI 55 - BOMBAY HIGH COURT] while dealing with an identical issue of denial of deduction under Sec.35(1)(ii) of the Act due to a subsequent withdrawal of approval with retrospective effect, had observed, that such retrospective cancellation of registration will have no effect upon the deduction claimed by the donor since such donation was given acting upon the registration when it was valid and operative. On a perusal of the aforesaid statutory provision i.e Sec. 35(1)(ii) of the Act, as well as the ratio laid down in the aforesaid judicial pronouncements it can safely be concluded that if the assessee acting upon a valid registration/approval granted to an institution had donated the amount for which deduction is claimed, then, such deduction cannot be disallowed if at a later point of time the registration is cancelled. - Accordingly, we set aside the order of the CIT(A) and vacate the disallowance of the assesse s claim for deduction under Sec.35(1)(ii) - Decided in favour of assessee.
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2020 (12) TMI 662
Set off of any loss against deemed income u/s 68, 69, 69A to 69D - computing the income referred to in section 115BBE(1) - HELD THAT:- As decided in M/S. VIJAYA HOSPITALITY AND RESPORTS LTD [ 2019 (11) TMI 1106 - KERALA HIGH COURT ] we hold that the assessee is entitled to set off the addition/disallowance made u/s.69A of the Act against the losses, if any, for the assessment Year under consideration.
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2020 (12) TMI 661
Addition of business interest income u/s. 56 as against declared u/s. 28 and not allowing netting off of interest - whether CIT(A) erred in not treating the interest earned, on fixed deposit out of business funds kept as security/margin money for availing O/D facility, as business income u/s. 28 with failure to appreciate the business nexus vis-a-vis utilization of business funds and further erred in not allowing the netting-off of interest which had all the elements of mutuality towards the common business; therefore, the addition of interest u/s. 56 is uncalled for and the same may resultantly be treated as income u/s. 28 and netting-off may consequently be allowed? - HELD THAT:- The assessee has duly explained that by way of pledging the F.D. s over draft for the purpose of business was obtained at the rate of interest 2% higher than F.D. rate. What more explanation is required for netting the interest expenditure is also beyond comprehension. If as per the opinion of the authorities below which itself is in fact sitting in the shoes of the businessman, the assessee should have broken the fixed deposit assessee would have been penalized for the premature realisation of interest. The fact that the rate of interest charged upon the pledge of fixed deposit is linked to the rate of interest accruing on the fixed deposit has been totally ignored by the authorities below. Moreover the fact that this interest was being treated as income from business in the earlier years has been ignored by the authorities below. It is settled law that de horse change in facts or law, the view taken in the earlier years should not be disturbed. This view was expounded by the honourable Supreme Court in the case of Radha Swami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] and reiterated in the case of Excel Industries [ 2013 (10) TMI 324 - SUPREME COURT] . Hence, in our considered opinion the view of the authorities below to treat the said interest as income from other sources is not sustainable. Accordingly, we set aside the orders of authorities below and decide the issue in favour of assessee. Treatment of loan - A.O. added the said amount to the income of the assessee, treating the same as Income from other sources - HELD THAT:- In view of the divergent stand of the assessee we deem it appropriate to remit the issue to the file of assessing officer. Assessing officer should consider the issue de novo after making appropriate enquiries. The assessing officer is also directed to consider the issue under the sanguine provisions of law which he proposes to invoke. Accordingly, this issue stands remitted to the file of assessing officer.
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2020 (12) TMI 660
Correct head of income - sale of plot of land - long term capital gains or income from other sources - gift given by four children to their mother - AO concluded that assessee was only a natural guardian of the immovable property and not joint owner of the property thereon, treated the amount received as income from other sources - whether assessee would be entitled for deduction u/s.54/54F and 54EC of the Act if the aforesaid receipt is assessed as long term capital gains? - HELD THAT:- It is not in dispute that assessee had received ₹ 1,20,00,000/- directly from the purchaser i.e. Oricon Realty Pvt. Ltd., in view of the fact that she has signed the sale deed as consenting party. Alternative argument advanced by the ld. AR before us holds good that the said sum could at best be treated only as gift given by four children to their mother. We are in complete agreement with this. The receipt of money of ₹ 1.20 crores is a movable asset for which no registration is warranted. Even oral gift is permissible and it need not be deduced into writing especially when it is done amongst close family members as there are least chances to suspect the same. This observation made by us gets further strengthened in view of the undisputed fact that the total sale consideration paid by Oricon Realty Pvt. Ltd., for this subject mentioned property at Pisoli Village, Pune was ₹ 6 Crores only. In fact the ld. CIT(A) also in his appellate order categorically states that the total sale consideration of the property is only ₹ 6 Crores and there is absolutely no dispute over the same. Total sale consideration of the property of ₹ 6 Crores should be divided equally among the four children of the assessee i.e. Mrs. Asha Arun Gawli. It is not the case of the revenue that ₹ 1,20,00,000/- paid by Oricon Realty Pvt. Ltd., to the assessee i.e. Mrs. Asha Arun Gawli was over and above the total sale consideration of ₹ 6 Crores. Hence, it could be safely concluded that the amount received in the sum of ₹ 1,20,00,000/- by the assessee i.e. Mrs. Asha Arun Gawli would have to be treated as gift received by the assessee i.e. Mrs. Asha Arun Gawli from her four children in the interest of substantial justice and fair play. While making this decision, we are conscious of the fact that assessee had reported capital gains treating herself as one of co-owners in the subject mentioned property and had reported capital gains thereon. Since, we have held that the said receipt of ₹ 1,20,00,000/- is neither sale consideration on sale of property nor it could be taxed as income from other sources in her hands and it is only a gift received from 4 children which is exempt u/s.56(2) of the Act, the same would ultimately result in a situation where the assessed income becomes lower than the returned income. The total sale consideration of ₹ 6 Crores should be divided equally among four children @ ₹ 1,50,00,000/- each and cost of acquisition of the property also should be distributed equally among four children and indexation benefit to be given to them. The resultant long term capital gains arising in the hands of each children shall have to be recomputed accordingly after giving the benefit of exemption u/s.54 / 54F / 54EC of the Act depending upon the proof submitted therein by each of the children. The ld. AO is directed accordingly.
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2020 (12) TMI 659
Reopening of assessment u/s 147 - loss on the sale of shares with respect to certain private limited/ limited companies which was set off against the gain on the sale of land rights - as per AO transactions for booking loss on the sale of shares of private limited/ limited company was nothing but a colourable device adopted by the assessee in order to escape the income tax liability - HELD THAT:- We hold that the view initially formed by the AO during the original assessment proceedings cannot be altered for initiating the proceedings under Section 147 of the Act. If the AO does so that will amount to review which is not desirable under the provisions of Section 147 of the Act. In view of the above and after considering the facts in totality, we do not find any reason to interfere in the order of the Learned CIT (A). Hence the ground of appeal of the Revenue is dismissed. Disallowance of loss on account of purchase and sale of shares - colourable device for setting off against the capital gain income - non-response of the notice issued by the AO under section 133(6) - HELD THAT:- Admittedly, the primary onus to prove the correctness of the transaction is on the assessee as it has the special knowledge of the circumstances and privy to the facts of the case. Hence, the assessee has to satisfy the AO about the correctness of the impugned loss. After going through the details filed by the assessee as discussed above, we find that the assessee has discharged its onus to justify the loss claimed by it on the purchase and sale of the shares. Thus the onus shifts on the AO to disprove the contention of the assessee by collecting contrary evidence. But The AO has not brought any contrary evidence against the assessee to prove that the loss claimed by it was not a genuine loss. In other words no contrary evidence was collected or confronted by the AO against the contention of the assessee. Thus it can be inferred that the burden of proof has been discharged by the assessee. Question is that whether the assessee can be blamed for non-response of the notice issued by the AO under section 133(6) of the Act and answer stands against the Revenue and in favour of the assessee. It is because the assessee is not under any obligation to enforce the parties to response to the notice issued by the AO under section 133(6) of the Act. In fact the AO has been authorized to exercise its power granted under the statute i.e. under section 133 (6) of the Act and if the other party does not cooperate then the AO has power to levy the penalty on such party under section 272A of the Act. But the assessee under no circumstance can be penalized on account of non-response of the notice issued under section 133(6) of the Act to the parties. Non-availability of valuation report of the shares of the companies in which the assessee has incurred losses - HELD THAT:- The tax liability, if any arises will be applicable in the hands of the recipient and no liability, can be imposed on the transferor. Therefore, we are of the view that the assessee being the transferor of shares cannot be subject to tax in the instant case. There was no provision under the Act for the year under consideration prescribing the guidelines for pricing of the shares unlike the provisions contained u/s 50C of the Act concerning immovable properties under the head capital gain. Thus in the absence of any specific provision to determine the sale price of the shares of the company, we are inclined to hold that the price declared by the assessee is correct and within the provisions of law. High profit/taxable income cannot be a criteria to decide the price of the share/script. Thus any unusual price rise/ fall in the shares of the company cannot be a basis to draw an inference that capital loss generated by the assessee is bogus in nature. Thus after considering the above facts, we are of the opinion that AO is not correct in challenging the loss declared by the assessee on the purchase and sale of shares. It is not the case of the Revenue that there was some inflow of money from the buyer of the shares to the assessee which is unaccounted. As there is no dispute about the nature of the transaction and the consideration received by the assessee against the sale of shares, therefore the transaction cannot be termed as a sham transaction. Onus is on Revenue to establish that assessee has received some benefit over and above the actual sales consideration. We are not inclined to interfere in the order passed by ld. CIT(A) deleting the addition - Decided against revenue.
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2020 (12) TMI 658
Rectification u/s 154 - reject assessee s claim of carry forward of long term capital loss on sale of shares - HELD THAT:- After examining the issue we find that the Assessing Officer in rectification proceedings has given a finding of fact that Short Term Capital Loss declared by the assessee on sale of shares is the result of sham transaction and falls within the ambit of provisions of section 47(v) - AO in proceedings under section 143(3) of the Act accepted the claim of assessee and thereafter on re-appreciation of facts initiated proceedings u/s 154 to disallow assessee s claim of carry forward of Short Term Capital Loss terming the transaction to be sham. Assessing Officer has revisited the issue and has invoked rectification provision to review his order. As we have pointed earlier that the Assessing Officer has limited scope under section 154 of the Act to rectify any mistake apparent from the record. Substitution of opinion by the Assessing Officer under section 154 of the Act is not permissible. We may point here that the Act provides safeguards to the Revenue to plug the escapement of any income. The cannons in the form of revision under section 263 of the Act, reassessment under section 147 of the Act and rectification of mistake under section 154 of the Act have to be used appropriately. The remedies available to the Revenue under the Act are not mutually alternate. The right cannon has to be fired at right time depending on facts and circumstances of each case. The Assessing Officer in the present case has over stepped his jurisdiction in exercising his powers u/s. 154 to review his order.
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2020 (12) TMI 657
Addition u/s 68 - Unsecured loan - HELD THAT:- Primary onus of establishing the identity of the lender, proving its creditworthiness and to establish the genuineness of the transactions was duly been discharged by the assessee. The assessee was not required to prove the source of source as noted in the opening paragraphs. This is in the backdrop of the fact that the assessee had paid interest on loan after deduction of TDS. Another pertinent fact to be noted is that the loan stood fully squared up 3 years back and therefore, there could be no occasion to treat the same as assessee s income. Merely because the party did not respond after such a long period, the same could not be the sole basis to make additions in the hands of the assessee. By furnishing the documentary evidences, the onus had shifted on revenue to dislodge assessee s claim by bringing on record cogent evidences. The assessee, all along, denied having any business connection with the tainted group. Except for the fact that the party did not respond to summons, there is nothing adverse against the assessee. It is trite law that no addition could be made merely on the basis of suspicion, conjectures or surmises. There is nothing in revenue s armory which would indicate that any cash got exchanged between the assessee and the said entity while accepting as well as while repaying the unsecured loan. We are not inclined to concur with the view of the revenue authorities. Hence, by deleting the impugned addition, we allow ground thus raised before us.Consequently, the interest as claimed on the loans would be deductible from work-in-progress as done by the assessee.
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2020 (12) TMI 656
Nature of land sold - assessee computed long term capital gain from sale of agricultural land and claimed exempt on the ground that the impugned land is agricultural land within the meaning of section 2(14) - whether profit/gain derived from transfer of agricultural land is exempt from tax or which is assessable under the head 'income from business or profession'? - HELD THAT:- When there is no bar in law for a business person to hold land for agricultural purposes, then merely for the reason that the said person engaged in the business of buying and selling of lands, the profit derived from sale of agricultural land cannot be brought to tax under the head 'income from business or profession', more particularly when the nature of land was agricultural land at the time of purchase as well as at the time of sale - assessee has also filed necessary evidence to prove that impugned land was purchased for the purpose of agricultural operations and also before the date of sale, the said land was used for agricultural purposes, which is evident from the fact that assessee has declared agricultural income for the assessment year 2005-06 and 2006-07. land in question was agricultural land and was used for agricultural purposes till the date of sale. Had it been the case of Assessing Officer that assessee has purchased agricultural land, converted into non-agricultural purposes, formed lay out and then sold, then the question could be different. In this case, the lower authorities have categorically admitted the fact that impugned land in question was agricultural land. Once the land in question was agricultural land, then gain derived from transfer of said land is exempt from tax. Accordingly, there is no substance in the reasons given by the authorities below to bring to tax gain derived from sale of land under the head 'income from business or profession'. Hence, we direct the Assessing Officer to delete the addition made towards the profit derived from sale of land under the head 'income from business or profession'. - Decided in favour of assessee.
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2020 (12) TMI 655
Condonation of delay - Ex-parte order passed by the ld. CIT(A) on the ground that the assessee could not e-file the appeal - since the assessee could not e-file the appeal, the ld. CIT(A) dismissed the appeal filed by the assessee without adjudicating the issue on merits - HELD THAT:- In this case, we find that the delay was on account of the venial breach and as the assessee had filed the manual appeal within the time and no show-cause notice to rectify the defect in filing the appeal was served on the assessee. Moreover, no notice under section 250(1) of the Act was issued to the assessee before concluding the appeal filed by the assessee. Thus, respectfully following the principles laid down in the case of State of Punjab v. Shyamalal Murari Others [ 1975 (10) TMI 105 - SUPREME COURT ] wherein, it was categorically purported that when technicalities and substantial justice are pitted against each other, the substantial justice deserves to be prevailed over technicalities, the delay in e-filing of the appeal before the ld. CIT(A) stands condoned and the issues in this appeal are restored to the file of the ld. CIT(A) for adjudication on merits in accordance with law by affording an opportunity of being heard to the assessee.
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2020 (12) TMI 654
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Since, the assessee claims that it has not earned any exempt income during the relevant period under consideration, the fact of which is not disputed by the Revenue, we do not find any reason to interfere with the order of the Ld. CIT(A). Therefore, we dismiss the Revenue's appeal.
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2020 (12) TMI 653
Cash payments made by the assessee to employee in M/s. Navaratna Estates - search u/s. 132 conducted - HELD THAT:- No evidence was found by the department to establish that assessee has given loans to Shri Lanka Anil Kumar during the course of search and no evidence was found regarding utilization of purported advances by Shri Lanka Anil Kumar. Shri Anil Kumar also subsequently retracted from the statement and clarified that he has not received any cash loans from the assessee. Addition was made merely on the basis of whatsapp messages and the statement recorded from section 132(4) from Shri Lanka Anil Kumar which was subsequently retracted. Therefore we are of the view that the addition made by the AO is unsustainable and the Ld. CIT(A) rightly deleted the addition. Accordingly, we do not see any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed. Disallowance of exemption claimed u/s. 10(38) on account of sale of shares of M/s. Tuni Textiles Mills Limited - HELD THAT:- DR did not bring any evidence to controvert the submission of the assessee with regard to sale of shares in respect of Tuni Textiles Ltd. No evidence was also brought on record to show that the assessee had received the money over and above the sum - Therefore, the addition made by the AO appeared to be double addition and the same is unwarranted as observed by the Ld. CIT(A) in his corrigendum dated 14.12.2019. We do not see any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. The appeal of the revenue is dismissed.
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2020 (12) TMI 652
Trading addition - additional income was disclosed by the partner of the assessee firm in his statement recorded during the course of survey on account of difference in stock and difference in purchase sale as found during the course of survey - HELD THAT:- Since this difference was directly affecting the trading results of the assessee firm, the additional income disclosed by the assessee should have been reflected in the trading account instead of profit loss account as done by the assessee. If the said amount of ₹ 35 lakhs is credited to the trading account, it gives a Gross Profit of ₹ 60.67 lakhs which is 3.8% of the sales declared by the assessee for the year under consideration and since the same is more than the GP rate of 3.5% adopted by the CIT(A), we find merit in the contention of the assessee that this is not a fit case to make any trading addition and the trading addition made by the Assessing Officer and sustained by the ld. CIT(A) is liable to be deleted. This vital aspect relating to the mistake committed by the assessee by treating the income disclosed during the course of survey to profit loss account instead of trading account as now highlighted by Assessee was not brought to the notice of CIT(A) and even the ld. CIT(A) failed to take note on the same while sustaining the trading addition made by the Assessing Officer partly. We, accordingly, delete the trading addition - Decided in favour of assessee.
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2020 (12) TMI 651
Deemed dividend u/s. 2(22)(e) - HELD THAT:- A protective basis by the A O clearly amounts to a double addition and therefore, is unfair and unreasonable, which deserves to be deleted does not require any interference and hence the Revenue's above appeals are dismissed.
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Customs
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2020 (12) TMI 650
Refund of sale proceeds of the confiscated goods which were later sold in public auction - betel nuts - goods sold in public auction - sale proceeds of the betel nuts is cannot be released - HELD THAT:- It is palpably evident that the writ petitioner has failed to establish his ownership with regard to the seized goods (betel nuts). Merely because no one else came forward to claim ownership of the seized betel nuts does not ipso facto establish the writ petitioner's ownership or his right, title and interest over the betel nuts. This Court, under Article 226 of the Constitution of India, cannot go into the factual question of deciding ownership or whether the writ petitioner had absolute right, title and interest over the betel nuts. At every stage of the proceedings before the adjudicating authority as well as before the learned Tribunal, the writ petitioner could not establish his claim of ownership over the seized goods (betel nuts) with irrefutable evidence. This claim of the writ petitioner was clearly negated by the Commissioner of Customs (Preventive), North Eastern Region, Shillong, with the observation that such certificate/document only establishes that M/s Lapang Eco Products was engaged in supari/betel nuts business and this was not a conclusive proof of rightful ownership of the betel nuts under question. We are unable to grant such relief to the writ petitioner as prayed for. However, the writ petitioner is always at liberty to approach a competent civil forum in order to establish his claim of rightful ownership in respect of the seized betel nuts, which were later publicly auctioned - Petition disposed off.
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2020 (12) TMI 649
Revocation of Customs Broker Licence - forfeiture of security deposit - imposition of penalty - failure to to comply with the provisions of Regulations 10(a), 10(d), 10(e), 10(n) and 13(12) of the Licensing Regulations - Circular dated April 08, 2010 issued by the Central Board of Excise and Customs, New Delhi - case of Revenue is that of the five exporters, two exporters, namely, M/s Impex Trading and Global Trading were not available at the address mentioned in the KYC documents - Appellant claims that the officers of the Department visited the address provided by these two firms after a long period of about 18 months. Violation of 10 (a) of the Licensing Regulations or not - HELD THAT:- Regulation 10(a) deals with obligations of Customs Broker and provides that the Customs Broker shall obtain an authorisation letter from each of the companies, firms or individuals by whom he is for the time being employed as a Customs Broker and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs - The Regulation requires the Customs Broker to obtain an authorisation, which the Appellant did. It is not the case of the Department that the signatures on the authorisation letter were forged or that the persons authorising the Appellant denied having given the authority letters. This apart, the Appellant also claims that due diligence was carried out for ascertaining the functioning of the clients at the address declared by the clients and in this connection the partnership deed as well as service tax registration, PAN card, Import Export Code, voter card, electricity bill, bank details and mobile number of the partners with email id were also examined. The Commissioner, therefore, committed an illegality in holding that Regulation 10(a) of the Licensing Regulations had been violated. Violation of 10(d) and 10 (e) of the Licensing Regulations or not - HELD THAT:- These two Regulations were taken up together by the Commissioner. Regulation 10(d) requires a Customs Broker to advice his client to comply with the provisions of the Act and the Rules and Regulations. Regulation 10(e) requires a Customs Broker to exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage - When the Importer/Exporter Code Number was provided and before this code was issued a background check of the said importer/exporter is undertaken by the Customs Authority, there should be no doubt about the identity of the said exporter. It would be too onerous to expect a Customs House Agent to inquire into what is stated in the documents when there is a presumption that an appropriate background check is done by the Customs Authorities. In fact, the grant of Importer/Exporter Code Number is a proof regarding verification of facts and if the grant of such a code number to an entity at the address mentioned is in doubt, then for such erroneous grant of the Importer/Exporter Code Number, the Appellant cannot be faulted - The Commissioner was, not justified in ignoring the documents provided by the Appellant. Reliance placed by the Commissioner on the statement made by Virender Kumar Saraswat is misplaced. As noted above, the verification is required to be undertaken on the basis of the documents and it is not possible to draw any inference from the said statement that he had any serious doubts about the existence of the firms. The findings that the Appellant had not followed the provisions of Regulations 10(d) and 10(e) of the Licensing Regulations is, therefore, erroneous. Violation of 10(n) of the Licensing Regulations or not - HELD THAT:- Regulation 10(n) requires the Customs Broker to verify the correctness of Importer/Exporter Code Number, Service Tax Identification Number, identity card of the client and functioning of the client at the declared address by using reliable, independent, authentic documents, data or information - The basic requirement of Regulation 10 (n) is that the Customs Broker should verify the identity of the client and functioning of the client at the declared address by using, reliable, independent, authentic documents, data or information. For this purpose, a detailed guideline on the list of documents to be verified and obtained from the client is contained in the Annexure to the Circular dated April 8, 2010. It has also been mentioned in the aforesaid Circular that any of the two listed documents in the Annexure would suffice. The Commissioner noticed in the impugned order that any two documents could be obtained - Thus, committed an error in holding that the appellant failed to ensure due compliance of the provisions of Regulations 10(n) of the Licensing Regulations. Violation of Regulation 13 (12) of the Licensing Regulations or not - contention of the appellant is that the G-Card holder acted strictly in accordance with the guidelines issued in the Circular dated April 8, 2010. According to the appellant, the G-Card holder exercised due diligence by procuring all independent and authentic documents - HELD THAT:- This Regulation provides that the Customs Broker shall exercise such supervision as may be necessary to ensure proper conduct of his employees in the transaction of business and he will be held responsible for all acts and omissions of his employees during their employment - if the documents that were submitted to the G-Card holder, prima-facie appeared to be authentic, there was no reason for the G-Card holder to verify the contents of the documents. The grant of an Importer Exporter Code number was held by the Delhi High Court in Kunal Travels to pre-suppose verification of facts. The inevitable conclusion, therefore, that follows is that the Commissioner was not justified in revoking the License of the appellant or forfeiting the security deposit or imposing penalty. Appeal allowed - decided in favor of appellant.
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2020 (12) TMI 648
Principles of Natural Justice - request of appellant for cross-examination of witnesses has been rejected during the adjudication proceedings - HELD THAT:- The identical case has been investigated and identical Show Cause Notice was issued in the case of KUDRAT CORPORATION VERSUS C.C. -AHMEDABAD [ 2020 (7) TMI 705 - CESTAT AHMEDABAD ]. In the said case also, the appellant had approached the Tribunal against the order rejecting cross examination of the same witnesses i.e. Shri Ashok Prasad, Assistant Professor, NIFT Delhi and Shri Bipin Kumar, Assistant Professor, IIT, Delhi who have given the expert technical opinion which were relied upon in the show cause notice and this Tribunal has allowed the cross examination. Since the same issue particularly, cross-examination of the same persons was involved, the above decision is directly applicable in the appellant s case - Appeal allowed - decided in favor of appellant.
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2020 (12) TMI 647
Absolute Confiscation - penalty - import of old and used Digital Multifunctional Devices (MFDs) with standard accessories from Singapore - enhancement of value - It appeared to the Department that the appellant has undervalued the goods and has violated the provisions of Hazardous and other wastes (Management Transboundry Movement) Rules, 2016, E-Waste (Management) Rules, 2016 and the Bureau of Indian Standards Act, 1986 read with Electronics IT Goods (Requirement of Compulsory Registration) Order 2012 as well as provisions of FTP 2015-20 - HELD THAT:- This issue of import of MFDs has been considered by various decisions passed by this Tribunal as well as the High Court and the Apex Court, in the case of COMMISSIONER OF CUSTOMS VERSUS M/S. ATUL AUTOMATIONS PVT. LTD., AND PARAG DOMESTIC APPLIANCES [ 2019 (1) TMI 1324 - SUPREME COURT ] where it was held that the MFDs having a utility period, the Extended Producer Responsibility would arise only after the utility period was over. In any event, the E- waste Rules 2016 certificate had since been issued to the respondents by the Central Pollution Control Board before the goods have been cleared. As far as violation of the Bureau of Indian Standard as per Compulsory Registration Order 2012 and also the violation of Hazardous and other waste (Management Transboundry Movement) Rules, 2016 and E-waste (Management) Rules, 2016 are concerned, this Tribunal in PARAG DOMESTIC APPLIANCES, ATUL AUTOMATION PVT LTD, KETAN KAMDAR DIRECTOR VERSUS COMMISSIONER OF CUSTOMS COCHIN-CUS [ 2017 (10) TMI 812 - CESTAT BANGALORE ] has specifically covered all the issues raised and disputed in the present appeal - It was held that the The importation of the impugned goods is in violation of Import Policy of the relevant time and also of some of the conditions of Hazardous Waste Rules 2016. The violation of Hazardous Waste Rules is with reference to country of origin certificate. The appellants in the present appeal are not disputing the enhancement of value made by the Customs on the basis of the report of the Chartered Engineer. Further, it s found that the ground of absolute confiscation has also been considered in various decisions and it has been consistently held that the goods (MFDs) are not liable for absolute confiscation and can be released on payment of redemption fine and penalty - the imported goods may be allowed for clearance on payment of redemption fine @ 10% and penalty @5% of the reassessed value besides payment of applicable Customs duty. Appeal disposed off.
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Corporate Laws
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2020 (12) TMI 646
Restoration of name of the Company in the Register of Companies maintained by the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- It is not in dispute that the Registrar of Companies is conferred with power U/ s. 248(1) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any Application within such period for obtaining the status of a dormant Company U/ s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. Though the impugned striking off the Company was in accordance with law, the Tribunal has to take into consideration of bona fide contentions of Petitioner seeking to restore name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue. It is also not in dispute that the instant Company Petition is filed in accordance with law; there are no investigations pending against the Company; the Respondent has not opposed the Petition; and left the issue to Tribunal to consider the case subject terms and conditions. The interest of justice would be met, if the name of Company is restored - the Respondent herein, is directed to restore the name of the Company in the Register maintained by the Registrar of Companies, Karnataka as if its name had not been struck off from the rolls of the Register, with restoration of all other consequential actions taken by Registrar of Companies in pursuance to the impugned action - application allowed.
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2020 (12) TMI 645
Restoration of name of the Company on the Register of Companies maintained by the Registrar of Companies - section 252 of the Companies Act, 2013, R/w Rule 87A of the NCLT (Amendment) Rules, 2017 - HELD THAT:- It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(1) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any Application within such period for obtaining the status of a dormant Company U/s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. Though the impugned striking off the Company was in accordance with law, the Tribunal has to take into consideration of bona fide contentions of Petitioners seeking to restore name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue. It is also not in dispute that the instant Company Petition is filed in accordance with law; there are no investigations pending against the Company; the Respondent has not opposed the Petition; and left the issue to Tribunal to consider the case subject terms and conditions. Therefore, the interest of justice would be met if the name of Company is restored as prayed for, however, subject to conditions mentioned. The name is restored - application allowed.
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Insolvency & Bankruptcy
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2020 (12) TMI 644
Maintainability of petition - availability of alternative remedy of appeal - sale of the properties offered by the petitioners towards guarantee - sum and substance of the case of the petitioners is that in view of the pendency of the proceedings before the National Company Law Tribunal, Amaravati Bench and in view of Section 14 of the said IBC, the 1st respondent herein cannot proceed with the sale of the properties offered by the petitioners towards guarantee - HELD THAT:- In view of the said alternative remedy available to the petitioners herein under the said provision of law, this Court is not inclined to entertain the present Writ Petition for the purpose of examining the validity of the proceedings initiated under the provisions of SARFAESI Act. This Court deems it proper to dispose of the Writ Petition, with a liberty to the petitioners herein to file an appropriate petition before the Debts Recovery Tribunal against the steps taken by the respondents under the provisions of the SARFAESI Act, within a period of two (02) weeks from the date of receipt of a copy of this order - Petition disposed off.
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2020 (12) TMI 643
Preferential transactions and fraudulent trading/ wrongful trading - scope of powers of the Adjudicating Authority to look into the transactions which attract the provisions of Sections 43/66 of the I B Code - HELD THAT:- It is abundantly clear that allegations of preferential transactions as also fraudulent trading/ wrongful trading carried on by the Corporate Debtor during the insolvency resolution can be inquired into by the Adjudicating Authority. This being the settled position of law, it was not open to the Adjudicating Authority to link the fate of CA-1342/2019 with CA-702/2019. All that the Adjudicating Authority was required to do was to take cognizance of the complaint emanating from the Liquidator in regard to the alleged preferential transactions and fraudulent trading/wrongful trading having occurred qua the Corporate Debtor - impugned order to the extent indicated, cannot be supported and the same is modified by providing that the Adjudicating Authority will inquire into such alleged dealings in accordance with law with expedition, preferably within two months. Appeal disposed off.
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2020 (12) TMI 642
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of its debt and dispute or not - Petitioner is a responsible Bank and the custodian of public money - HELD THAT:- It is clear from the submissions and the long history of efforts of the Petitioner to repay it's the debt, the matters being taken to Court, several attempts at OTS which the Petitioner has repeatedly gone back upon, and the present position wherein an offer of settlement made by the Respondent is pending before the Petitioner Bank, that the Respondent is keen to settle the debt but is constrained because of the temporary lull in business due to Covid pandemic and the lockdown and is therefore only seeking deferment in loan repayment instalments, that the as on date the Petition is not ripe for consideration and is premature. The provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. The Hon'ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT ], has inter alia, held that I B Code, 2016 is not intended to be substitute to a recovery forum. The Code cannot be used prematurely or for extraneous considerations or reasons as a substitute for debt enforcement procedures - this Petition is only filed to use this Tribunal as a recovery forum in its continuing recovery actions against the Respondent Corporate Debtor, and in any case is premature as an accepted OTS proposal is pending final approval of the Petitioner Bank. The fact is also taken into account that due to the Covid-19 pandemic, the Central and State governments have ordered lockdowns for different periods which led to large scale hindrance to movement of men and material. This has impacted businesses all over India, and has necessitated several pronouncements for facilitating business. Statutory changes such as increase of thresh hold limit for filing a petition under the IBC for initiating CIRP, suspension of CIRP, deferment of loan repayments and restructuring of debt etc. have been made to prevent businesses from going into liquidation. Under the circumstances narrated in the objections filed by the Respondent, it is clear that its business has been hampered in the current economic scenario, as all the Educational Institutions and Universities have postponed examinations and no tentative dates are fixed for any examination. Since the Respondent has offered new terms of payment, the matter is pending before the Petitioner, and since the proposal for deferment is for genuine reasons namely effect of Covid-19 pandemic on its business, as on all businesses, this Petition is premature in the present circumstances. Though the Petition is not found fit for admission, the fact is also considered that the Petitioner is a responsible Bank and the custodian of public money and has to effectively discharge its onerous banking functions. Hence, in the facts and circumstances of the case, at this point in time it would be premature to either dismiss or admit the Petition. It is considered just to dispose of the Petition granting liberty to the Petitioner to file a fresh Petition if the debt owed is not repaid by the Respondent, as per the settlement talks that are admittedly in progress and pending before the Petitioner Bank, within a reasonable time, provided a case is otherwise made out as per the provisions and objectives of the Code - petition disposed off.
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2020 (12) TMI 641
Seeking for exclusion of period of lockdown w.e.f. 25.03.2020 to 30.06.2020 from the liquidation process period - Section 60(5) read with Regulation 47-A of the IBBI (Liquidation Process) Regulations, 2016 and read with Rule 11 of NCLT Rules, 2016 - HELD THAT:- The Insolvency and Bankruptcy Board of India, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, vide notification dated 29.03.2020 held that Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process. Similarly, the Insolvency and Bankruptcy Board of India, vide notification dated 20.04.2020, inserted Regulation 47 A to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and the said regulation held that Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purpose of computation of the timeline for any task that could not be completed due to such lockdown, in relation to any liquidation process. In view of the Regulations issued by Insolvency and Bankruptcy Board of India, application is allowed.
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PMLA
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2020 (12) TMI 640
Maintainability of Revision application - Grant of Police custody - Money Laundering - scheduled offences - Seeking extension of the custody of the accused-respondent No.2 with the applicant for a period of 10 days - investigation under section 156 (3) of the Code of Criminal Procedure - HELD THAT:- In view of the judgment in case Ambarish Rangeshahi Patnigere Vs. State of Maharashtra [ 2010 (7) TMI 1191 - BOMBAY HIGH COURT ] , the Single Judge of this Court has considered the aspect in respect of refusal by the Magistrate to consider the request for Police custody and has observed that the observations of the Apex Court in the case State represented by Inspector of Police and others Vs. of N.M.T Joy Immaculate, [ 2004 (5) TMI 573 - SUPREME COURT ] would not apply to the facts of that case since the question which fell for consideration before the Apex Court in the said case was whether the order passed by the Magistrate granting Police custody for one day was an interlocutory order or not. Refusal to grant Police custody, therefore, became a final order since thereafter the State cannot file further application for grant of Police custody and in respect of the said subject matter the order has become final - Thus, in view of the ratio laid down by this Court, the revision application is maintainable. Nexus of respondent No.2 as well as his knowledge and indulgence either directly or indirectly in the offence of money laundering as well as possessing or holding proceeds of crime - HELD THAT:- It appears that the learned Judge has taken a very casual and perfunctory approach by ignoring that it is not a simple crime but is so enormous and complex which requires a thorough probe and investigation by the Investigating Agency in view of the provisions of P.M.L Act. Merely because, the Investigating Officer could not answer the queries of the learned Judge does not ipso facto mean that the material collected and the statements recorded by the Investigating Agency are figments as there is no reason for the Enforcement Directorate to falsely implicate respondent No.2 when there is clinching material prima facie exhibiting nexus of respondent No.2 with the co-conspirators. Unless there is free, fair and full investigation of the crime of such a large and colossal magnitude, which could fructify only by a custodial investigation, the learned Judge ought to have applied his mind while considering prayer of extending custodial interrogation - It appears that the learned Judge pre-supposed that the complainant being an ex employee of the Tops Group has every reason to implicate the former employer. Such observations are uncalled for, unnecessary and without any basis. Thus, requirements of section 3 of P.M.L Act are precisely attracted from the aforesaid material placed on record. Prima facie, it appears that the proceeds of crime exchanged hands from M.M.R.D.A, Tops Group and respondent No.2. Arrest of respondent No.2 - HELD THAT:- There is an endorsement in the handwriting of respondent No.2 which has been signed by him in acknowledgment of having been informed about the grounds of arrest on the same day. Not only that there is further endorsement by respondent No.2 that he had informed about his arrest to his lawyer Mr. Shoeb Memon whose mobile number has also been mentioned therein. Therefore, unless something contrary is produced on record, it has to be presumed and held that respondent No.2 was informed about the grounds of arrest and acknowledgment thereof. He has signed beneath the arrest order. If no such grounds were communicated to him, then it is clear that he would have made an endorsement to the effect that he has not received the grounds of arrest. Respondent No.2 is not an illiterate person in the sense that he is not a naive person. The learned Additional Sessions Judge holding charge of the Holiday Court has not exercised his jurisdiction with due application of mind and approached to the matter in a very casual manner. I am mindful of the fact that liberty of an individual is of paramount importance. However, at the same time, balance needs to be struck between individual s right as well as there should be no prejudice to the free, fair and full investigation. Material placed on record, prima facie indicates complicity and nexus of respondent No.2 in the alleged crime. The impugned order is set aside - appeal allowed.
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2020 (12) TMI 639
Grant of Bail - Bribe - allegation that applicant was found in the possession of moveable and immoveable assets - money laundering - HELD THAT:- Trial of the case in relation to disproportionate asset is also pending. In the meantime, on 23rd March, 2010, proceeding under the provisions of PML Act was also initiated by registering a case in the office of Enforcement Directorate as ECIR/02/PMLA/LZ0/2010 and notice was issued to the applicant, reply of which was given by the applicant along with the details of the friends and relatives, who allegedly gifted the applicant the cash or ornaments etc. Thereafter, notices were also issued to the said persons. Out of 31 members, 12 members appeared before the Enforcement Directorate and their statements were also recorded. It is also evident from the record that Ajay Raj Tripathi, who appeared on 13th March, 2014 before the authorities, categorically denied that any advance was given to the applicant. After investigation, evidence in relation to money laundering was also found against the applicant and the Proceed of Crime was found to be ₹ 1,38,63,445/-. Thereafter, provisional attachment order of property was passed on 30.09.2016, which was confirmed by the competent authority under Section 5 of the PML Act. After investigation, a complaint was filed on 31st March, 2017 before the Special Judge, which was registered as Complaint Case No. 8 of 2017 under Section 3/4 of PML Act. Summoning order was passed on 4th April, 2017, but since applicant failed to appear before the trial court, non-bailable warrant was issued on 17th March, 2018. There are no case for bail is made out at this stage - bail application dismissed.
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Service Tax
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2020 (12) TMI 638
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - adjustment of amount deposited by the petitioner - time limitation - HELD THAT:- The grievance of the petitioner in the present writ petition is with respect to the amount determined by the designated authority under the aforesaid SVLDR Scheme. The petitioner represented before the designated authority in the matter of amount determined under the SVLDR Scheme and the designated authority has communicated the petitioner vide letter dated 08.09.2020 that the request for adjustment of ₹ 15,69,098/- in SVLDR Scheme was not considered since this amount was not entered in ST-3 Returns. That apart, the last date of payment under SVLDR Scheme was 30.06.2020 which has expired. The letter/order dated 08.09.2020 has not even been challenged by the petitioner in the present writ petition - That apart, adjustment of the amount deposited prior to the issuance of the demand-cum-show cause notice may be adjustable against the demand confirmed by the order in original but it cannot be adjusted for the purposes of determination of amount under the SVLDR Scheme. This writ petition dismissed making open to the petitioner to approach the concerned authority for adjustment of the alleged deposited amount, if any, towards the demand confirmed by the order in original dated 28.03.2017 and if the petitioner so approaches, the authority concerned shall examine the matter and take appropriate action in accordance with law.
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2020 (12) TMI 637
Classification of services - Information Technology Software Service or Franchise Service? - licence fee paid to SAP AG, Germany, for grant of non-exclusive licence to use, market and sub-license the software, third party database and third-party software to end user in the territory, on reverse charge basis - HELD THAT:- The appellant is making payment to SAP, Germany in terms of Article 6.1, 6.2 and 3.7.2 of the agreement between them, which is payment towards license fee for use of software by the client in India for the software developed by SAP, Germany and 3rd party database / software and also towards support services for software which is essentially for upgradation of the software and for fixing technical difficulties encountered while using the software. Amount paid under Article 3.7.2 is for use of SAP software by appellant itself to SAP, Germany. We find that the services squarely covered in the forecorners of the definition of Information Technology Software Service as defined under Section 65(105)(zzzze) of the Finance Act, 1994, which was brought on statute w.e.f. 16.05.2008. Further, the same activity of the appellant was earlier classified under Consulting Engineer Service for the period 07.07.1997 to 27.02.1999 which was upheld by this Tribunal in BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [ 2006 (3) TMI 1 - SUPREME COURT ] thereafter, there was exemption from March, 1999. Subsequently, for the period 16.10.1997 to 31.03.1998 the said activity was classified as Management Consultant Service. Further, admittedly the appellant is paying service tax under the head Information Technology Software Service w.e.f. 16.05.2008 which is not disputed by the Department. It is an accepted principle laid down by the Apex Court in COMMR. OF C.E. CUSTOMS SER TAX VERSUS M/S FEDERAL BANK LIMITED [ 2016 (3) TMI 354 - SUPREME COURT ] wherein affirming the order of the Kerala High Court that there was new head of service tax noticed and unless the same is carved out from the existing entry, the service tax under the said head cannot be said to be exigible prior the date of its enactment under any other existing head. The service in question is not taxable under the head franchisee service rather taxable under Information Technology Software Service - Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (12) TMI 636
Maintainability of petition - availability of alternative remedy of appeal - Petitioner did not prefer any such appeal before that Appellate Authority, but has instead filed this Writ Petition - HELD THAT:- Hon'ble Supreme Court of India in ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [ 1984 (11) TMI 63 - SUPREME COURT] has succinctly explained the legal position relating to the exercise of discretionary powers under writ jurisdiction holding that It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article 226 of the Constitution. But then the Court must have good and sufficient reason to by-pass the alternative remedy provided by statute. There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute. It is also not the case of the Petitioner that the contentions raised in this Writ Petition could not be agitated in the appeal before the Appellate Authority - Viewed from that perspective, this Court is not inclined to delve into the merits of the controversy involved in this case, touching upon disputed questions of fact for effectual and complete adjudication of the matter. Petition dismissed.
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2020 (12) TMI 635
Maintainability of appeal - appeal dismissed only on the ground that Committee on Disputes (COD) permission has not been taken at the time of filing of the appeal and till its disposal - HELD THAT:- The requirement of obtaining COD permission within 30 days was also not sacrosanct, but the institution of the suit was not prohibited, as the litigant was entitled to institute the proceeding to save limitation. The only rider was that the concerned Tribunal or Court could not proceed with the suit so long the COD permission was not taken. This prohibition or rider in proceeding with the case or suit by a Tribunal or a court of law was lifted by virtue of Constitution Bench decision in the case of ELECTRONICS CORPORATION OF INDIA LTD. VERSUS UNION OF INDIA ORS. [ 2011 (2) TMI 3 - SUPREME COURT ]. Therefore, on the date on which appeal was dismissed by the learned CESTAT, there was no bar in proceeding with the matter in the absence of COD permission. The learned CESTAT proceeded on an erroneous understanding of law that the appeal instituted by the appellant on 1st June 2010 could not be decided on merits in the absence of COD permission - substantial question of law posed for determination in the instant appeal is answered in favour of the appellant.
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2020 (12) TMI 634
CENVAT Credit - capital goods - production and clearance of dutiable goods takes place within two years from the date of commencement of production / installation of capital goods - applicability of amended rule 6(4) of CCR - goods exported under bond - exempt goods or not - HELD THAT:- On perusal of the amended rule 6(4) extracted supra, it is clear that no credit shall be allowed on capital goods used exclusively in the manufacture of the exempted goods or in providing exempted services for a period of two years from the date of commencement of the commercial production or from the date of installation of capital goods. In the instant case the fact that the capital goods are installed during 2016-17 is not disputed. The only dispute that is raised by the Revenue is that during 2016-17 the appellant has either cleared the goods availing the exemption under notification 30/2004 or exported the goods under bond under rule 19. It appears that the impugned order fails to take into consideration the amended rule which is very clear that credit is not admissible if the said capital goods are utilized exclusively in the manufacture of exempted goods for a period of two years from the date of commencement of commercial production or from the date of installation of capital goods. In the instant case, the capital goods are installed after commencement of production in the year 2016-17. The credit would have been inadmissible to the appellant if they have continued to clear exempted goods till 2018-19. However, records of the case indicate that the appellant has cleared goods on payment of duty during 2017-18 as evidenced by the ER-1 filed for the month of June 2017. Therefore, in view of the amended provisions the credit is admissible to the appellant. The appellant have also taken an alternative plea that goods exported under bond cannot be treated as exempted goods and therefore inspite of the fact that they have cleared only exempted goods during 2016-17 are cleared goods for export under Rule 19, credit is admissible - the provisions of amended rule being clear and the conditions thereupon have been fulfilled by the appellant and hence credit is admissible. Appeal allowed - decided in favor of appellant.
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2020 (12) TMI 633
Maintainability of appeal - preliminary submission has been raised by respondent that the appeal filed by the Department is liable to be dismissed for the reason that the issue raised in this appeal has already been decided by the Tribunal and the order passed by the Tribunal in favour of the respondent has not been set aside in any proceedings - Recovery of CENVAT Credit - only trading of goods and no manufacture. HELD THAT:- Learned authorised representative appearing for the appellant states that he is not aware whether any appeal was filed by the Department against the order dated September 18, 2018 passed by the Tribunal or whether the order has been set aside. The order passed by the Tribunal was against the Department and, therefore, the Department should be aware as to whether any appeal has been filed or not. As the Department has not placed on record any decision setting aside the aforesaid order of the Tribunal, the present appeal filed by the Department deserves to be dismissed - Appeal dismissed.
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CST, VAT & Sales Tax
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2020 (12) TMI 632
Concessional benefit of tax - purchase of High Speed Diesel from suppliers in other States - difficulty in obtaining C-Form - HELD THAT:- The issue involved in this Writ Petition is squarely covered by a decision of this Court in the case of M/S. DHANDAPANI CEMENT PRIVATE LTD., M/S. TERU MURUGAN BLUE METAL VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) TERRITORIAL, THE DEPUTY COMMISSIONER (ST) [ 2019 (2) TMI 1850 - MADRAS HIGH COURT ] wherein the identical issue was raised where it was held that Petitioner in these Writ Petitions has stated on affidavit that it is unable to download the C forms from the websites as the same stand blocked from use. Upon enquiry with the Assessing Authorities, they have been informed that the benefit of the decision in M/s Ramco Cements Ltd can be extended only to those dealers that are party to the decision. This stand is unacceptable in so far as the decision of this Court as well as other High Courts applicable to all dealers that seek benefit thereunder, of course, in accordance with law. The petitioner is entitled to the inclusion of High Speed Diesel Oil as a commodity in the registration certificate. Let this exercise be carried out within a period of four (4) weeks from date of uploading of this order. The request of the petitioner for issuance of C Forms is allowed as a consequence thereof - petition allowed.
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Indian Laws
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2020 (12) TMI 631
Dishonor of Cheque - acquittal of the accused - prayer for reduction in the quantum of sentence - whether the petitioner is entitled to reduction of his sentence? HELD THAT:- Sentencing is primarily a matter of discretion as there are no statutory provisions governing the same. Even guidelines have not been laid down to assist the Courts in this matter. In the STATE OF HIMACHAL PRADESH VERSUS NIRMALA DEVI [ 2017 (4) TMI 1524 - SUPREME COURT] , the Supreme Court has considered the issue of sentencing in detail and has crystallized certain principles - From the authoritative pronouncement, it is evident that the sentence imposed must be commensurate with the crime committed and in accordance with jurisprudential justification such as deterrence, retribution or restoration. Mitigating circumstances as well as aggravating circumstances should also be kept in mind. The concern of the Legislature is obvious. Provisions inserted for inculcating greater faith in banking transactions needed more teeth so that cases involving dishonour of cheques reduced - It is, thus, apparent that deterrence and restoration are the principles to be kept in mind for sentencing. While imposing a sentence under Section 138 of the Act, the Court must be alive to the concern of the Legislature in inserting Chapter XVII in the Act and then amending the provisions thereof to make the same more stringent as well as the jurisprudential principles of deterrence and restoration and that the offence is quasi criminal in nature - Maximum sentence of rigorous imprisonment for two years has been imposed on the ground that the offence is a socio economic offence. No other consideration has weighed with the trial. Keeping in view the principle of restoration, compensation of payment of the cheque amount along with interest @ 9% per annum from the date of issuance of cheque till the date of the judgment has been awarded. The award of compensation is justified and reflects a judicious exercise of mind - Thus, the revision petition is dismissed and conviction is maintained. However, the sentence is reduced to RI for a period of one year and six months along with payment of compensation as awarded by the trial Court.
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