TMI Tax Updates - e-Newsletter
December 9, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Central Excise

TMI SMS

• The Circular is issued based on the interpretation of the provisions by an officer of Customs, cannot be said to be binding on the Court

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Articles

1. DEVELOPMENT OF ARTIFICIAL INTELLIGENCE IN INDIA

   By: DR.MARIAPPAN GOVINDARAJAN

2. Why one should insist for Fixed Deposit Receipt

   By: G Binani

News

1. Income Tax Department conducts search & survey operations on Share Brokers/Traders across India

2. Govt working on more measures to boost economy; income tax rate cut under consideration: FM

3. Availability of National Electronic Funds Transfer (NEFT) System on 24x7 basis

Notifications

DGFT

1. 34/2015-2020 - dated 6-12-2019 - FTP

Corrigendum to Notification No.31/2015-2020 dated 13th November, 2019

GST - States

2. 24/2019-State Tax (Rate) - dated 1-10-2019 - Tripura SGST

Seeks to amend Notification No. 7/2019- State Tax (Rate), dated the 30th March, 2019

3. KA.NI-2-1528/XI-9(47)/17 - dated 26-11-2019 - Uttar Pradesh SGST

Certain exemptions under sub-section (1) of section 11 of the Uttar Pradesh Goods and Services Tax Act, 2017

4. KA.NI-2-1665/XI-9(47)/17 - dated 20-11-2019 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI.-2-2030/XI-9(47)/17-U.P. Act-1-2017-Order-(153)-2018 dated the 22nd October, 2018

5. KA.NI-2-1529/XI-9(47)/17 - dated 20-11-2019 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI-2-810/XI-9(47)/17-U.P. Act-1-2017-Order-(38)-2019 dated the 28th May, 2019

6. KA.NI-2-1527/XI-9(47)/17 - dated 20-11-2019 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI-2-809/XI-9(47)/17-U.P. Act-1-2017-Order-(37)-2019 dated the 28th May, 2019

7. KA.NI-2-1520/XI-9(47)/17 - dated 20-11-2019 - Uttar Pradesh SGST

Amendment in Notification No. KA.Nl.-2-836/Xl-9(47)/17-U.P. Act-1-2017-Order(06)-2017

8. KA.NI-2-1557/XI-9(47)/17 - dated 15-11-2019 - Uttar Pradesh SGST

Notification regarding annual return of dealers having turnover upto 2 crores

9. KA.NI-2-1556/XI-9(47)/17 - dated 15-11-2019 - Uttar Pradesh SGST

Notification to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the quarters from October, 2019 to March, 2020 under the Uttar Pradesh GST Act, 2017

10. KA.NI-2-1521/XI-9(47)/17 - dated 15-11-2019 - Uttar Pradesh SGST

Seeks to notify the grant of alcoholic liquor licence neither a supply of goods nor a supply of service as per Section 7(2) of Uttar Pradesh GST Act, 2017

SEBI

11. SEBI/LAD-NRO/GN/2019/42 - dated 6-12-2019 - SEBI

Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Fifth Amendment) Regulations, 2019

Circulars / Instructions / Orders

GST - States

1. 45/2019 - GST (State) - dated 7-12-2019

Withdrawal of Circular No. 107/26/2019-GST dt. 18.07.2019

2. 44/2019 - GST (State) - dated 26-11-2019

Clarification on scope of the notification entry at item (id), related to job work, under heading 9988 of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017

3. 43/2019 - GST (State) - dated 26-11-2019

Fully electronic refund process through FORM GST RFD-01 and single disbursement

Highlights / Catch Notes

GST

• Vehicle and goods to be released upon providing bank guarantee for tax and penalty, per first respondent's decision.

  Case-Laws - HC : Detention of vehicle alongwith goods - if the petitioner furnishes a bank guarantee for the tax and penalty amounts as determined, then the 1st respondent shall release the goods and vehicle to the petitioner.
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Income Tax

• Refund Claim Dismissed: Jurisdiction Transferred from ACIT Delhi to DCIT Mumbai in Vodafone Idea Post-Merger Case.

  Case-Laws - HC : Refund claim - post merger - transfer of jurisdiction - pending refunds of M/s VMSL with ACIT Delhi - using PAN of M/s Vodafone Idea Ltd. with DCIT Mumbai to the bank account of M/s Vodafone Idea Ltd. - Petition dismissed.
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• Tax Case Transfer Upheld: Section 127(2)(a) Compliance with Proper Reasons and Notice Service Confirmed by Authorities.

  Case-Laws - HC : Transfer of case u/s 127(2)(a) - proper and satisfactory reasons - service of notice - It appears that prior to sending the notice dated 07.12.2017, there was agreement between the Director General of Income Tax (Inv), Kochi and the Principal Chief Commissioner of Income Tax, NER, Guwahati belonging to the two jurisdictions. - All the conditions of section 127 have been complied with.
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• Court Rules Hand Collection Valid, Dismisses Bogus Purchase Claims Due to Missing Dispatch Details; No Transport Proof Needed.

  Case-Laws - AT : Additions towards Bogus purchases - no details in respect of dispatch of goods are available - assessee claimed that delivery has been taken by Hand - the same cannot be declared bogus on the ground that the same were required to be transported by way of mode of vehicular transport.
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• Partner's Remuneration and Interest Not Mandatory for Higher Deduction u/s 80IB(10) of Income Tax Act.

  Case-Laws - AT : Deduction u/s 80IB - AO observed that, partner did not claim remuneration and interest on capital from the firm in order to claim the higher deduction under section 80(IB)(10) - it is not compulsory to claim the remuneration/interest on partner’s capital account despite the fact there was a specific clause in the deed of partnership.
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• Land Transfer to Firm as Capital Contribution Not Capital Asset Transfer Under IT Act Section 2(47), No Capital Gain Section 45.

  Case-Laws - AT : Transfer of property u/s 2(47) or not - capital gain u/s 45 - The land was transferred by the partners to the firm as capital contribution which was recorded as stock-in-trade in the books of the firm. As such there was no transfer of capital assessee as stock-in-trade in the books of the assessee.
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• Income Tax: JCIT's Mechanical Approval u/s 153D Invalid, Assessment Order Overturned Due to Lack of Due Diligence.

  Case-Laws - AT : Assessment u/s 153A - The ld JCIT has granted approval under section 153D of the Act in a mechanical manner without application of mind to the relevant assessment records and draft assessment orders submitted before him by the AO - The approval u/s.153D of the Act cannot be treated as an official formality - Assessment order set aside.
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• SEZ Units' Sales to Other SEZs Not Eligible for Export Turnover Deduction u/s 10AA.

  Case-Laws - AT : Deduction u/s 10AA - SEZ unit - exemption in respect to sale of other SEZ Units, instead of direct export - such sales cannot be included in export turnover as per the definition provided u/s 10AA - benefit of exemption not allowed.
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• Penalty Imposed for Inaccurate Income Details u/s 271(1)(c); Incorrect Long-Term Capital Gain Exemption Claimed u/s 10(38.

  Case-Laws - AT : Penalty u/s 271(1)(c) - it is a clear case of furnishing inaccurate particulars of income by the assessee when the assessee has claimed the long term capital gain exempt under section 10(38) and subsequently this claim of the assessee was found to be wrong.
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• Taxpayer Not Required to Prove Purchasers' Funds Source for Long Term Capital Gains u/s 263.

  Case-Laws - AT : Revision u/s 263 - computation of Long Term Capital Gain/loss - then onus is not on the assessee to show that from where the purchasers have paid the money. Thus, the onus as cast upon the assessee stood duly discharged by showing sale deed.
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• Tribunal's Oversight in Argument Consideration is Judgment Error, Not Record Error.

  Case-Laws - AT : Rectification of mistake - error apparent on the face of record - Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on record, it may be an error of judgement
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Customs

• Misdeclaration of Natural Gold Ore Concentrate for Tax Exemption: Tariff Classification and Composition Standards Dispute.

  Case-Laws - AT : Benefit of exemption - misdeclaration of goods - import of Natural Gold Ore Concentrate - The quality of composition of Ores cannot be standardized as they are naturally occurring substances. Moreover the tariff/HSN does not prescribe any minimum or maximum limit in the definition of ‘Ore’ - the same cannot be called ‘ore’ if they are not naturally occurring material but are produced in a workshop.
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• Customs Broker Licence suspension overturned for lack of reasoning; "enquiry is contemplated" deemed insufficient justification.

  Case-Laws - AT : Suspension of Customs Broker Licence - Commissioner has not recorded any reason for the cause of immediate suspension or continuation of the suspension. - The reason obliviously cannot be “enquiry is contemplated” simplicitor. - appeal allowed.
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Corporate Law

• High Court Can Intervene Under Insolvency Code if Parties Face Unfair Treatment, Justifying Petition's Maintainability.

  Case-Laws - HC : Maintainability of petition before HC in case the Insolvency and Bankruptcy Code, 2016 - the perversity occasioned by meting out a step‐motherly treatment to the parties respectively is, by itself, a sufficient ground to interfere with the impugned order.
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IBC

• Insolvency Proceedings Closed: No Default Proven by Corporate Debtor on Petition Date per Section 7. Affidavit and Bank Certificate Insufficient.

  Case-Laws - AT : Appeal against the initiation of CIRP - The ‘Corporate Debtor’ contends that on the date of filing of the petition, there was no default as contemplated in Section 7 - It appears that in compliance with the order of the Adjudicating Authority dated 29th November 2018 the ‘Corporate Debtor’ filed an Affidavit along with Bank certificate. But in reply no evidence was submitted to prove that the outstanding amount is due and payable. - Insolvency proceedings directed to be closed.
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• Resolution Plan Validity Hinges on Compliance with Section 79 of Income Tax Act in CIRP Process.

  Case-Laws - AT : Validity of Resolution Plan - CIRP - both the ‘Successful Resolution Applicant’ and the Income Tax Department will be guided by the Income Tax Act, 1961 and the Rules and Regulations framed thereunder. If the ‘Successful Resolution Applicant’ is entitled to ‘carry forward losses’ u/s 79 of the Income Tax Act, it may claim such benefit before the appropriate Authority, who will pass appropriate order in accordance with Section 79 of the Income Tax Act, 1961
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• Liquidation order deemed ineffective as ROC software rejects Form INC-28 for "struck off" companies; misuse of resources.

  Case-Laws - Tri : Liquidation order - prayer is made seeking appropriate direction upon the ROC for accepting Form INC-28 for compliance of liquidation of company - Knowing fully well that when the company is "struck off," the software is not going to accept Form INC-28 in any manner. Under such circumstances, the application so filed by the liquidator seeking direction upon the ROC is a futile exercise and is a mere wastage of resources of the Bench and its time.
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SEBI

• SEBI Introduces Fifth Amendment to 2019 Regulations for Enhanced Transparency and Compliance in Capital Issuance and Disclosure.

  Notifications : Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Fifth Amendment) Regulations, 2019
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Central Excise

• Court Rules Refund of NCCD and Education Cesses Unjustified Due to Exemption Notification's Omission of Finance Act, 2001.

  Case-Laws - SC : Area based exemption - Recovery of refund of Refund of NCCD - The duty on NCCD, education cess and secondary and higher education cess are in the nature of additional excise duty and it would not mean that exemption notification dated 9.9.2003 covers them particularly when there is no reference to the notification issued under the Finance Act, 2001.
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• 2004 CBEC Circular Lacks Legal Force; Not Binding on Courts, Highlights Limits of Administrative Interpretations.

  Case-Laws - SC : Binding nature of Circular issued by the CBEC (CBIC) - The Circular of 2004 issued based on the interpretation of the provisions made by one of the Customs Officers, is of no avail as such Circular has no force of law and cannot be said to be binding on the Court.
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• Appellants Qualify for SSI Exemption Under Notification No. 8/2003-CE Despite CENVAT Credit Use on Branded Goods.

  Case-Laws - AT : The appellants are entitled to avail benefit of SSI exemption N/N. 8/2003-CE dated 1.3.2003 even though they have admittedly availed CENVAT Credit on inputs which have been used in the manufacture of branded goods, cleared on payment of duty during the relevant period.
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Case Laws:

• GST

• 2019 (12) TMI 326
  Detention of goods alongwith vehicle - detention on the ground that a verification of the documents that accompanied the goods showed that the consignor and consignee are two different entities with different GISTINs and the transaction in question was supposedly a stock transfer - HELD THAT:- The definition of supply under Section 7 is not confined to transactions of sale but includes transfer for other purposes also. Under such circumstances, the detention is not found to be unjustified. However, the petitioner is permitted to obtain a release of the vehicle and the goods from the 1st respondent on furnishing a bank guarantee for the tax and penalty amount determined in Ext.P7 order. Petition disposed off.

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• 2019 (12) TMI 325
  Detention of vehicle alongwith goods - Section 129 of the Central Goods and Service Tax Act - HELD THAT:- On a perusal of the detention order, it is seen that the detention of the vehicle was on the account of the fact that the documents produced by the driver of the vehicle showed the consignment as moving from Kasargod to Kolhapur, whereas the detention of the goods was at Perumbavoor - the detention of the vehicle and the goods cannot be said to be unjustified. It is directed that if the petitioner furnishes a bank guarantee for the tax and penalty amounts determined, then the 1 st respondent shall release the goods and vehicle to the petitioner - petition disposed off.

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• Income Tax

• 2019 (12) TMI 324
  Restraining the petition from transferring funds overseas - Offences under Section 277 of Income Tax Act,1961 - Trial court passed the order - HC [ 2018 (7) TMI 2075 - BOMBAY HIGH COURT] set aside the order and restored the matter before trial court to have given an opportunity to the respondent - Held that:- Having regard to the submissions made at the Bar, the special leave petition is disposed of giving liberty to the parties to raise all the contentions before the Additional Chief Metropolitan Magistrate, 38th Court, Ballard Pier, Mumbai.

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• 2019 (12) TMI 323
  Refund claim - post merger - transfer of jurisdiction - pending refunds of M/s VMSL with ACIT Delhi - using PAN of M/s Vodafone Idea Ltd. with DCIT Mumbai to the bank account of M/s Vodafone Idea Ltd. - HELD THAT:- So far as the petitioner s right to make representation and be heard in the matter is concerned, we are of the view that sufficient opportunity has been granted to the petitioner, particularly in the light of the earlier proceedings, which were eventually dropped. The first show cause notice was issued to VMSL on 22.09.2017. VMSL responded to it on 09.10.2017. Thereafter, VMSL and Vodafone India Ltd. merged into Idea Cellular ltd. with appointed date as 31.08.2018. Another show cause notice under Section 127 was issued on 07.08.2019. The petitioner again responded to it on 21.08.2019. Thus, the petitioner has had several opportunities to respond to the proposed transfer of jurisdiction from Delhi to Mumbai. While passing the impugned order, the objections of the petitioner have been considered. The fact remains that the consent of the competent authorities, admittedly, has been obtained before passing of the impugned order. Therefore, the earlier refusal on 12.11.2018 is of no significance.

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• 2019 (12) TMI 322
  DSRM trial run - allowable revenue expenditure - expenditure has been incurred before commissioning - HELD THAT:- Revenue very fairly states that this issue stands concluded in favour of the Assessee and against the Revenue by the decision of this Court in in Pr.CIT v. M/s.Indian Seamless Steels and Alloys Ltd. [ 2019 (4) TMI 1788 - BOMBAY HIGH COURT] Therefore, this proposed question does not give rise to any substantial question of law. Hence, not entertained. Appeal admitted on question (a) - Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that prior to the insertion of Explanation-5 to section 32 of the Income Tax Act, 1961 the claim for depreciation was optional and could not be thrust on the Assessee, if it has not been claimed in the assessment being done under the normal provisions of the Act?

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• 2019 (12) TMI 321
  Transfer of case u/s 127(2)(a) - proper and satisfactory reasons - service of notice - requirement of proper notices and the opportunities of being heard - Held that:- It is clear that an agreement between the two jurisdictional authorities is an essential pre-requisite to be complied with to transfer a case between them. In case of absence of such agreement, the provision of clause (b) of Section 127(2) is to be complied with for passing of an order of transfer where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Principal Director or Director General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners. It appears that prior to sending the notice dated 07.12.2017, there was agreement between the Director General of Income Tax (Inv), Kochi and the Principal Chief Commissioner of Income Tax, NER, Guwahati belonging to the two jurisdictions. It is neither a pleaded case of the petitioners nor it is submitted by the learned counsel for the petitioners that there was lack of agreement or there was disagreement between the two respective jurisdictional authorities for the purpose of transferring the cases of the petitioners from Dimapur, Nagaland to Kollam, Kerala. From the conspectus of facts, it, thus, transpires that it is not a case that all the cases of the petitioners were only assessed with the ACIT, Circle - Dimapur and the ITO, Ward - I, Dimapur with no financial interests and presence in the State of Kerala. It is not a case of the petitioners that there are only 7 (seven) cases of assessment for them and all those were being assessed at Dimapur taking into consideration their financial dealings only in the State of Dimapur and with no connection whatsoever in the State of Kerala. Rather, it goes to show that a substantial part of their financial and business dealings are being carried out in the State of Kerala through various entities. The respondent authorities are found to have provided adequate reasons in the notices dated 23.05.2018 expressly as to why the cases of the petitioners are required to be transferred to the ACIT, Central Circle - Kollam in the State of Kerala which, in turn, have explained the situation implied as to why the cases of the petitioners should not be considered for assessment in the State of Nagaland. Thus, this Court is of the considered view that the notices dated 23.05.2018 did not suffer from absence of reasons. Regarding service of notice - Held that:- A plea has been raised by the petitioners that the first notice escaped their attention which resulted into denial of reasonable opportunity to respond to the said notice, more particularly, for the fact that the first notice did not stipulate any time period within which the objections to the proposal of transfer were to be filed. At the same time, the petitioners have averred in the writ petition that they having received the notice at a much belated stage, were thinking of filing replies to the same and had sent the same to their attorney on record, but by that time, the impugned orders dated 18.07.2018 were served on them. But the petitioners are again conspicuously silent as to when the copies of the first notice were served on them and have not stated anything in rebuttal to the claim of the sender. To raise a credible plea of not being afforded reasonable opportunity to them to respond to the said notice, it entails a disclosure on the part of the petitioners as regards the date of receipt of the said notice by them. But no such disclosure has been made by the petitioners. Considering the time periods, indicated above, it cannot be said that the respondent authorities had fallen short of on that count in adhering to the principles of natural justice. Regarding assigning of reasons - Held that:- there was no denial of affording reasonable opportunity of being heard in the cases of the petitioners. By assigning adequate reasons therein, the petitioners were given adequate opportunities to respond to the two notices containing the proposal to transfer their cases of assessment - the petitioners did not avail the opportunity so granted to them by submitting their responses and, as such, the plea of denial of the principles of natural justice is found to be not tenable and sustainable. Petition dismissed.

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• 2019 (12) TMI 320
  Denial of natural justice - dismissal of appeal except by stating that he is of the considered view that the Assessing Officer s order is a self speaking order and does not call for any interference - HELD THAT:- In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer s order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard. Writ Petition is allowed and the impugned order is set aside and the matter is remitted back to the first respondent for passing fresh order on merits and in accordance with law, after giving an opportunity of hearing to the petitioner.

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• 2019 (12) TMI 319
  Net Profit on unaccounted receipts - assessment for the block period u/s 158BC - HELD THAT:- We direct the AO to recompute the undisclosed income of the assessee by considering the following:- (i) If the assessee has already filed returns of income for the AYs 1999-2000 to 2002-03, then the receipts which are disclosed in the said returns of income should be reduced from the total receipts considered by the AO to arrive at the undisclosed receipts of the relevant A.Ys. (ii) For the AY 2003-04 also, the actual figures of unaccounted cash receipts should be considered. (iii) The Net Profit on such unaccounted receipts from the AY 1999-2000 to 2003-04 should be estimated at the rate of net profit offered by the assessee on its unaccounted turnover. Since the AO has not brought out any comparable cases and the assessee also is only relying on comparable cases where there are losses, we are constrained to direct as above. In the peculiar facts and circumstances of this case, we direct the AO to estimate the net profit as offered by the assessee in its returns of income even on the unaccounted gross receipts arrived at as directed above.

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• 2019 (12) TMI 318
  Reopening of completed assessment - powers of the Assessing Officer to reopen such assessment - time limit for issuance of notice and completion of assessment - addition on account of estimation of unaccounted profit - addition on account of disallowance of expenses - addition on account of unaccounted profit with different parties - addition on account of deemed dividend - addition on account of inflated purchases - addition on account of disallowance u/s 40A(3). HELD THAT:- It is an admitted fact that the time limit for issue of notice u/s 143(2) and completion of the assessment has already been lapsed as on the date of the search - also, the additions made by the Assessing Officer is not based on incriminating material found during the course of search albeit is based on the other record not related to material found during the search. In such a situation, the additions made are beyond the scope of proceedings u/s 153A. This preposition of the law has been well settled by the jurisdictional High Court in the case of COMMISSIONER OF INCOME TAX (CENTRAL) -III VERSUS KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] where the Hon ble High Court clearly spelt that 153A additions have to be made only on the basis of the seized material. It was also held that completed assessments can be interfered with by the Assessing Officer while making assessment order u/s 153A only on the basis of some incriminating material found during the course of search or requisition of documents or undisclosed income or property discovered in course of search which were not produced or not already disclosed to the Revenue. Based on the facts that assessment has been made for the years in question is not based on any incriminating material found during the search, the order of the Ld. CIT(A) is upheld. Appeal dismissed - decided against Revenue.

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• 2019 (12) TMI 317
  Reopening of the case - Addition on account of alleged bogus purchases - Although the assessee defended the purchases by filing various documentary evidences, but notices issued u/s 133(6) to confirm the transactions, did not elicit satisfactory response - HELD THAT:- There could be no sale without actual purchase of material keeping in view the assessee s nature of business. Undisputedly the assessee was in possession of primary purchase documents and the payments to the suppliers were through banking channels. However, at the same time, the assessee failed to produce any of the suppliers to confirm the transactions. The onus casted upon assessee, in this regard, remained undischarged. Keeping in view the assessee s nature of business, the estimation of 15% as made by Ld. CIT(A) could not be said to be unreasonable from any angle - appeal dismissed - decided against Revenue.

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• 2019 (12) TMI 316
  Imposition of penalty u/s 271(1)(c) of the Income Tax Act, 1961 - assessee has challenged the order of the AO before the ld.CIT(A) on the ground that AO imposed penalty u/sec.271(1)(c) of the Act which is not in accordance with the provisions of the Act - HELD THAT:- In this case the AO has issued penalty notice on 05/02/2014 u/s 274 r.w.s. 271(1)(c) in which the AO has not marked one of the two limbs i.e. concealment of particulars of income or furnishing inaccurate particulars of income and has issued notice in mechanical manner in standard format without application of mind. The notice issued by the AO is not valid as the AO failed to mention the charge on which the penalty was proposed to be levied thereby depriving the assessee to respond to the charge on which the penalty was proposed to be levied. The case is squarely covered by the decision of the Hon ble Bombay High Court in the case of THE COMMISSIONER OF INCOME TAX-11 VERSUS SHRI SAMSON PERINCHERY [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT ] which provides that failure on the part of the AO to state the charge on which the penalty was proposed to be levied would render the penalty order as invalid and ab initio and thus penalty cannot be sustained. Appeal of assessee is allowed.

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• 2019 (12) TMI 315
  TDS u/s 194C OR 194J - Carriage Fees/Channel Placement fees - payments made for use/right to use of process are royalty as per Explanation 6 to section 9(1)(vi) - HELD THAT:- Hon ble High Court of Bombay in the case of CIT, TDS-2, Mumbai Vs. UTV Entertainment Television Ltd. [ 2017 (11) TMI 915 - BOMBAY HIGH COURT] had observed, that in case of an assessee carrying on the business of broadcasting television channels, the payments made towards placement charges would fall within the meaning of work covered in Clause (iv) of Explanation to Sec.194C. On the basis of our aforesaid observations, we are of the considered view, that the CIT(A) had rightly vacated the disallowance that was made by the A.O under Sec. 40(a)(ia) of the Act.

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• 2019 (12) TMI 314
  Bogus purchases - Estimation of profit percentage - CIT(A) directed the AO to restrict the addition by estimating profit percentage at the rate of 3% on bogus purchases - HELD THAT:- The issue is decided in appellant own case POPATLAL N. SHAH 1802 VERSUS ACIT 19 (2) , INCOME TAX OFFICE, MUMBAI AND VICE-VERSA [ 2017 (11) TMI 1816 - ITAT MUMBAI] , where it was held that CIT(A) had rightly appreciated that the addition in the hands of the assessee was liable to be restricted only to the extent of the profit element which was embedded in making of purchases from the open/grey market. Following the said decision, it can be safely concluded that the restriction placed by CIT(A) that the addition by estimating profit percentage at the rate of 3% on bogus purchases, is correct. Appeal of the assessee dismissed.

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• 2019 (12) TMI 313
  Bogus purchases - no details in respect of dispatch of goods are available - assessee claimed that delivery has been taken by Hand - huge quantify of computer peripherals like routers, modems, switches, converters - HELD THAT:- When entire purchases have been duly debited in the profit loss account matched with sale proceeds and account books have not been rejected then it is difficult to agree with the reasoning given by the CIT (A) that the purchases cannot be believed. Moreover, when a company has stated to have purchased the computer peripherals etc. which are stated to have been transported/dispatched by hand, the same cannot be declared bogus on the ground that the same were required to be transported by way of mode of vehicular transport. Because it is a matter of common knowledge that many of the companies make available purchases made from them at the doorstep of the buyers. CIT (A) has not decided the issue on the basis of evidence led by the assessee rather decided the issue on the basis of presumptions which is not sustainable in the eyes of law. So, in the interest of justice, we deem it necessary to remit the case back to the ld. CIT (A) to decide afresh after examining the entire evidence led by assessee by providing further opportunity of being heard. Addition u/s 14A r.w.r 8D - HELD THAT:- AO has not recorded his dissatisfaction as to the claim of the assessee that no expenditure has been incurred to earn the dividend income; that no fresh investment has been made by the appellant during the year under assessment; that interest taken for computing the disallowance u/s 8D i.e. Rs. 66,500/- has not been paid towards any loan rather the said interest payment relates to interest paid on late deposit of TDS on salary, but despite all these findings, ld. CIT (A) proceeded to restrict the additions in AYs 2007-08, 2008-09, 2009-10 2010-11 respectively by applying the Rule 8D mechanically. There are inherent contradictions in the impugned order passed by the ld. CIT(A), so, in these circumstances, we are of the considered view that the issue is required to be remitted back to the ld. CIT (A) to decide afresh after examining the entire details and pleadings made by the assessee that no expenditure has been incurred, nor any fresh investment has been made and that no interest payment has been made on the amount of investment during the years under assessment after providing opportunity of being heard to the assessee.

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• 2019 (12) TMI 312
  Transfer of property u/s 2(47) or not - capital gain u/s 45 - transfer of land by the partners to the partnership firm - absence of consideration - Transfer as per Act states u/s 2(47)(iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock in trade of a business carried on by him, such conversion or treatment - HELD THAT:- Land was transferred by the assessee to the partnership firm in the year ending as on 31st March 2005 corresponding to the assessment year 2005-06. This fact can be verified from the partner s capital account in the partnership firm which is placed on page 6 of the paper book. Admittedly, the impugned land was transferred by the partners to the firm as capital contribution which was recorded as stock-in-trade in the books of the firm. As such there was no transfer of capital assessee as stock-in-trade in the books of the assessee. Therefore in our considered view, there cannot be any application of the provisions of section 45(2) of the Act in the hands of the assessee. Provisions of section 45(3) of the Act requires to take the sale consideration in the case of transfer of any capital asset by the partner to the firm as capital contribution which was recorded in the books of accounts of the firm. In the case on hand, there is no dispute that the value of such assets transferred by the partner to the firm was recorded at the book value which can be verified from the financial statements of the assessee placed on pages 2 to 7 of the paper book. Accordingly, there cannot be any income in the hands of the assessee on account of transfer of such assets as capital contribution. In view of the above, we do not find any infirmity in the order of the learned CIT-A. Hence the ground of appeal of the Revenue is dismissed. Deduction u/s 80IB - AO observed that, partner did not claim remuneration and interest on capital from the firm in order to claim the higher deduction under section 80(IB)(10) - whether the assessee is bound to draw the amount of remuneration and interest from the partnership firm in pursuance to the date of partnership firm? - HELD THAT:- The clauses mentioned in the partnership deed are not mandatory but made to avoid any ambiguity and misunderstanding between the partners. As such, there is no dispute among the partners for not claiming the remuneration/interest on capital in the profit and loss account of the firm. Therefore, in our considered view the conduct of the partners of the firm suggests that it was agreed not to claim any remuneration/interest on the capital account. See SMT. MALA TANDON [ 2011 (6) TMI 855 - ITAT AMRITSAR] We note that it is not compulsory to claim the remuneration/interest on partner s capital account despite the fact there was a specific clause in the deed of partnership. Accordingly, we do not find any infirmity in the order of the learned CIT (A). Hence the ground of appeal of the Revenue is dismissed.

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• 2019 (12) TMI 311
  Assessment u/s 153A - admission of the additional ground - it is submitted that, while granting the approval u/s.153D of the Act, proper procedure has not been followed and there was no application of mind by the approving authority. - Held that:- In the present case, the appellants want to challenge the procedure adopted by the revenue authorities while granting approval u/s.153D of the Act on the basis of documentary evidence obtained from the departmental record. The appellants to raise additional ground which is purely legal and goes to the root of the matter and can be decided on the basis of material/relevant appeal record already before the Tribunal without any further exercise or extra material or documentary evidence. - Additional grounds admitted. Adjudication of Additional Ground - Assessing Officer has requested the ld JCIT to grant approval u/s.153D vide letter dated 17.11.2017 in both the cases. The JCIT has granted approval in both the cases by only stating that Approval is hereby accorded as per the provisions of section 153D of the I.T.Act for passing the assessments in respect of the following cases . In this approval, we are unable to see any mention by the approving authority that he has perused the relevant assessment records and draft assessment orders proposed to be passed by the Assessing Officer. - the approving authority i.e. the ld JCIT has not even bothered to mention that he has perused the relevant assessment records and draft assessment orders for which he has granted approval u/s.153D of the Act as per the mandatory requirements of the said provisions of the Act. The ld JCIT has granted approval under section 153D of the Act in a mechanical manner without application of mind to the relevant assessment records and draft assessment orders submitted before him by the AO for grant of approval u/s.153D of the Act before passing the relevant assessment orders u/s.153A r.w.s 143(3) of the Act. In our considered and humble opinion, no procedure for grant of approval has been provided u/s.153D of the Act and the Income tax Rules, 1962. However, when legislature has enacted some provision to be exercised by a higher revenue authority enabling the AO to pass assessment or reassessment orders in the search cases, then, it is the duty of the approving authority to exercise such power by applying his judicious, vigilant and cautious efforts. The approval u/s.153D of the Act cannot be treated as an official formality but the provision has been inserted by the legislature with some specific and useful purpose. It is apparent that the purpose behind enactment of the said provision in the Statute by the legislature are of two folds viz (i) before approval, the Sr. Authority will ensure that the assessee should be protected against undue or irrelevant addition disallowances in the assessment and (ii) the approving granting authority will also ensure that proper enquiry or investigations are carried out by the Assessing Officer on all the relevant materials including material in hands of the department at the time of initiating search proceedings, material or documents found and seized during search operation and materials found and unearthed during post search investigations and enquiries. If an approval has been granted by the approving authority in a mechanical manner without application of mind then the very purpose of obtaining of approval u/s.153D and mandate of enactment by the legislature will be defeated. Accordingly, all assessment orders are vitiated and thus same are void being bad in law. - Orders quashed.

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• 2019 (12) TMI 310
  Penalty u/s 271(c) - AO rejected the books of accounts showed by assessee and considering the nature of the assessee s business estimated the profit at 8% of the total receipts - HELD THAT:- Penalty notice nowhere speaks about specific limb to levy the penalty because the particular charge was not tick off in the notice, therefore, in the said circumstances, the penalty is not justifiable hence the order of the CIT(A) confirming the penalty order of the AO is wrong against law and facts and is liable to be set aside. Penalty is not liable to be leviable in accordance with law. We further, found that in the present case, the penalty was levied on the basis of estimation of the profit after rejecting the books of accounts. The assessee was in the business of Civil Construction business and after rejecting his books of account, the income of the assessee was estimated @ 8% of the total turnover. No penalty is liable to be leviable specifically in the circumstances, when the income has been assessed on the basis of estimation basis in view of the decision of CIT vs. Metal Products of India [ 1984 (1) TMI 36 - PUNJAB AND HARYANA HIGH COURT] and in the case of Harigopal Singh vs. CIT [ 2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT] and in the case of CIT vs. Nawab and Bros. [ 1974 (5) TMI 7 - ALLAHABAD HIGH COURT] . Taking into account, all the facts and circumstances, we are of the view that the penalty is not liable to be sustainable in the eyes of law. - Decided in favour of assessee.

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• 2019 (12) TMI 309
  Deduction u/s 10AA - SEZ unit - exemption in respect to sale of other SEZ Units, instead of direct export - HELD THAT:- Admittedly, the sales made to other SEZ units are not export sales of the assessee. As per the definition of export turnover under Explanation 1 to section 10AA would mean the consideration in respect of export made by the undertaking. Thus, to come within the ambit of export under section 10AA the assessee must directly export the goods out of India. Whereas, in the facts of the present case, the IUT sales are not directly exported by the assessee out of India, but were sold to other SEZ Units. Therefore, such sales cannot be included in export turnover as per the definition provided under section 10AA. The aforesaid view has been expressed by the Tribunal in case of Sarto Electro Equipment Pvt. Ltd. [ 2016 (7) TMI 1552 - ITAT MUMBAI] . In view of the aforesaid, the alternative / without prejudice working of deduction under section 10AA by including the sales to other SEZ units cannot be accepted. Resultantly, this ground is dismissed. Deduction u/s 10AA - excluding IUT sales - HELD THAT:- AO has observed that after excluding IUT sales, deduction under section 10AA has been shown at Rs. 5,74,56,852 and including IUT sales deduction under section 10AA of the Act has been computed at Rs. 5,98,75,170, however, in the statement of facts attached to the memorandum of appeal in form no.36, the assessee has produced both the working in Para 4. As per the said working, deduction u/s 10AA excluding IUT sales has been shown at Rs. 5,98,75,170, whereas, by including IUT sales deduction u/s 10AA has been shown at Rs. 5,74,56,852. This anomaly between the figures mentioned in the assessment order and in the statement of facts requires reconciliation. No circumstances, the assessee can be allowed deduction under section 10AA in respect of sales made to other SEZ units (IUT sales). In view, the AO is directed to verify the actual figure of exports made by the assessee directly and allow deduction under section 10AA. This ground is allowed for statistical purpose. Excluding the interest received on fixed deposit from the export turnover for computing deduction u/s 10AA - HELD THAT:- It is noticed that on the fixed deposit kept towards margin money, the assessee has earned interest of Rs. 1,10,700. No evidence has been furnished by the assessee to demonstrate that the aforesaid interest income has any direct nexus with the export of article or thing so as to include it in export turnover. That being the case, we are unable to accept assessee s claim.

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• 2019 (12) TMI 308
  Addition u/s. 68 - unexplained creditors - explanation offered by the assessee was not found to be correct and simultaneous treated the same as cessation of liability u/s. 41(1) of the act as M/s Radhaman Holding has denied any liability payable by the assessee - assessee has contended before the ld. CIT(A) that it was prevented by sufficient cause for producing facts and evidences before the assessing officer and requested to admit the same as per provision of rule 46 of the IT Rule 1962 - CIT(A) has admitted such evidences for the sake of substantial justice to decide the issue on merit - HELD THAT:- In the remand report, the assessing officer has submitted that in view of the facts and circumstances, the matter may be decided on merits as the facts during the assessment was contrary to the appellate proceedings. Considering the above facts and findings of ld. CIT(A), it is undisputed fact that assessee has purchased 5 lacs of shares of Parsoli Corporation for a consideration of Rs. 6.75 crore through Parsoli Corporation Ltd. who is also a registered share broker with the BSE and out of these shares 4200 were sold during the year under consideration and the assessee has declared short term capital gain of Rs. 21,82,462 on the sale of these shares. The ld. CIT(A) has categorically established in his findings that these shares issued were not purchased from Radharaman Holding Pvt. Ltd. but 5 lacs shares of Parsoli Corporation Ltd. was purchased through Parsoli Corporation Ltd. and these transactions were not correctly declared in the books of account of the assessee as one of the directors of the assessee company was a relative of the director of Parsoli Corporation Ltd. for the reason of apprehension of action from SEBI. Considering the fact and circumstances, we do not find any reason to interfere in the finding of ld. CIT(A), therefore, the appeal of revenue is dismissed.

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• 2019 (12) TMI 307
  Capital gains - relevant date for determination of stamp duty value - At the time of transfer of ownership of property (i.e. sale deed) or date of agreement to sale - A.O rejected assessee s proposal to adopt stamp value authority value of F.Y 2009-10, on the ground that property was transferred in the A.Y 2010-11 and capital gain was taxable in A.Y 2010-11 - HELD THAT:- The provision of new sec. 43CA under the Act introducing the provisions for taxability of transfer of immovable property (land or building or both) held in the nature of stock in trade, is also applicable on the similar lines which are applicable for immovable property held in the nature of capital asset under section 50C of the Act - Thus, the stamp duty value as on date of initial agreement in the year 2010 can be adopted for the purpose of Sale consideration. A.O is directed to compute capital gain by taking stamp duty value as on date entering agreement in the year 2010, in so far as in the year of entering into agreement assessee had received part payment of Rs. 7,07,000/- by account payee cheque - A.O is liberty to verify the fact of payment received by account payee cheque. The appeal of the assessee is allowed.

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• 2019 (12) TMI 306
  Exemption u/s 11 - application for registration u/s 12AA rejected - Charitable activity u/s 2(15) - HELD THAT:- We find that the object of general public utility is one of the facts of charitable purposes as defined in the Income Tax Act and the Hon ble Supreme Court in the case of CIT vs. Andhra Chamber of Commerce [ 1964 (10) TMI 19 - SUPREME COURT] has explained the object of general public utility as contained in section 2(15) As regards the objectives of the assessee, we find that they fall under the category of object of general public utility and are not restricted to specified individual/persons. Therefore, following the decision of the Hon ble Supreme Court (cited Supra), the objectives of the assessee society are to be considered as charitable in nature and registration u/s 12A is to be granted. Another reason for denial of registration is that the objects do not restrict the spending of the funds only for charitable purposes. U/s 11, only such expenditure which is for charitable purposes, is allowable and the AO, during the assessment proceedings, can examine if the funds were utilized for the purposes for which the society has been formed. Since the CIT (E) has not pointed out any particular objective which is not for charitable purposes, and since the objectives are not restricted to any single or specified person/or persons, we are of the opinion that the assessee is eligible for registration u/s 12AA of the Act. In view of the same, we remand the issue to the file of the CIT (E) with a direction to grant registration u/s 12A of the Act. Assessee s appeal is allowed.

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• 2019 (12) TMI 305
  Penalty u/s 271(1)(c) - false claim of exemption u/s 10(38) towards long term capital gain (LTCG) on sale of shares - HELD THAT:- There is no dispute that in the assessment proceedings assessee accepted the fact that the transaction is not genuine and offered the income to tax. In the penalty proceedings, the assessee has contended that the addition made by the AO would not ipso facto attract the provisions of section 271(1)(c) - Assessee has submitted that the assessee produced all the relevant evidence in support of the claim. All these evidences filed by the assessee are not free from manipulation or creating self serving documents. The assessee has not filed a single piece of evidence which can be verified independently and from independent source. There is no dematerialization of the shares and even the return of income for the assessment year 2013-14 was filed only on 23.03.2014 after the alleged transaction of sale of shares. Therefore, the said return of income for the assessment year 2013-14 and showing the shares in the balance sheet will not help the case of the assessee as the said return was filed belatedly only after the alleged transaction of sale. Hence assessee has not produced any tangible material which can be verified independently and free from any manipulation, the same will not constitute a reasonable and bonafide explanation in terms of section 273B. As regards the legal objection raised by the assessee regarding the validity of order passed under section 271(1)(c), it is a clear case of furnishing inaccurate particulars of income by the assessee when the assessee has claimed the long term capital gain exempt under section 10(38) and subsequently this claim of the assessee was found to be wrong. AO in the penalty order has given a definite finding in para 5.2 of the penalty order that the assessee has furnished inaccurate particulars of income and penalty under section 271(1)(c) is leviable. Accordingly, do not find any merit or substance in the legal ground raised by the assessee.

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• 2019 (12) TMI 304
  Survey - Discrepancy with respect to excess stock - excess cash - HELD THAT:- Ld.CIT(A) has noted that there was no retraction of additional income by the assessee nor any material has been placed by assessee to show that the additional income was admitted by coercion or undue pressure. He has thus concluded that non-declaration of admitted income was a well planned devise to frustrate the efforts of the Department to unearth unaccounted income. These findings of Ld.CIT(A) has not been controverted by assessee. There are no no reason to interfere with the order of Ld.CIT(A) as far as addition of Rs. 5 lac is concerned - With respect to addition of Rs. 1,20,000/- on account of low house hold expenses, once the addition of Rs. 5 lakhs has been made in the present case, it would take care of the addition of low household expenses of Rs. 1,20,000/- and in such a situation, separate addition on account of low household expenses is not called for and therefore, it s directed to delete the addition of Rs. 1,20,000/-. The appeal of the assessee is partly allowed.

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• 2019 (12) TMI 303
  Deduction u/s 80P - Revenue s case is that the Assessing Officer had rightly disallowed the assessee s impugned section 80P(2)(a)(i) deduction claimed since its interest income had been derived from fixed deposits with nationalized bank here only - HELD THAT:- We find that this tribunal s yet another in COMMISSIONER OF INCOME TAX VERSUS M/S EXCEL INDUSTRIES LTD. AND MAFATLAL INDUSTRIES P. LTD. [ 2013 (10) TMI 324 - SUPREME COURT ] holds that such an interest income derived from fixed deposits made in nationalized banks is not entitled for the impugned deduction claimed. We adopt the above detailed discussion mutatis mutandis to decide the instant issues in Revenue s favour to restore the impugned section 80P(2)(a)(i) deduction disallowance of Rs. 6,97,20,658/- made by the Learned Assessing Officer. AR submitted that the impugned section 80P deduction disallowance deserved to be computed on netting basis since the assessee has not only derived its interest income from fixed deposits in nationalized banks but has also incurred corresponding interest expenses as well. Learned CIT-DR is equally fair that the instant netting issue sought to be raised at the assessee s behest, be restored to the Assessing Officer for appropriate computation. We therefore direct the Assessing Officer to compute the impugned section 80P(2)(a)(i) disallowance in assessee s case going by the netting method within three effective opportunities of hearing.

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• 2019 (12) TMI 302
  Rectification of mistake - error apparent on the face of record or not - HELD THAT:- The claim of assessee appears to be correct and accordingly, we modify the order of this Tribunal in page 1 thereon, that returned loss should be Rs. 156,34,64,632/- as against returned income wrongly mentioned in the tabulation in the said order. Disallowance made for provision for doubtful debts while computing book profits u/s 115JB of the Act - HELD THAT:- The assessee had made provision for doubtful debts in the sum of Rs. 6.16 Crores and had claimed the same as deduction while computing the book profits u/s 115JB of the Act in the return of income. The ld. AO added the same in the assessment u/s 115JB of the Act. Then, this matter had travelled before this Tribunal, wherein the ld. AR of the assessee had conceded this issue to be decided against the assessee in view of retrospective amendment brought in the section - When the ld. AR admits at the time of hearing that the said ground was not pressed by him in view of the retrospective amendment in the statute and especially the fact of admission by the ld. AR is not in dispute before us, in our considered opinion, the same would only constitute mistake committed by the ld. AR on behalf of the assessee. Hence, it would not fall under the ambit of mistake apparent on record committed by the Tribunal in the order warranting rectification u/s 254(2) of the Act. Hence, the ground raised by the assessee in its miscellaneous application are hereby dismissed. Non-adjudication of provision for warranty u/s 115JB of the Act - HELD THAT:- This issue has not been adjudicated by this Tribunal. Hence, we find the claim of the assessee to be right and we are inclined to recall the order of this Tribunal dated 21/03/2018 for the limited purpose of adjudication of this issue alone i.e. ground No.12 raised by the assessee with regard to addition of provision for warranty vis- -vis under computation of book profits u/s 115JB of the Act - Registry is directed to re-fix the appeal for the limited purpose of adjudication of Ground No.12 raised thereon. Application allowed in part.

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• 2019 (12) TMI 301
  Revision u/s 263 - source of cash deposit - sale of land - computation of Long Term Capital Gain/loss - HELD THAT:- Explanation 2 does not envisage that Assessing Officer should go to the last point of inquiry on the issue. What is expected from the AO to carry out reasonable and pragmatic inquiry so as to justify his actions and which manifests his application of mind. If inquiry is found to be fleeting or eyewash then it can be held that inquiry has not been done by the AO. Here in this case, we find that AO has examined all the relevant documents asked by him from time to time and after verifying the documents and copy of sale deed he has reached to a conclusion that the source of cash deposits in the bank account has been explained which were tallying from the copy of sale deeds. Even the computation of Long Term Capital Gain/loss was found to be correct in view of the documents furnished and from the Approved Valuer s report. If the assessee has sold the land at a price mentioned in the sale deed, then onus is not on the assessee to show that from where the purchasers have paid the money. Thus, the onus as cast upon the assessee stood duly discharged and Assessing Officer has correctly allowed the claim of Long Term Capital Loss. Revisionary order passed u/s.263 by the ld. CIT cancelling the assessment order is not sustainable and hence is quashed. Thus, the appeal of the assessee is allowed.

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• 2019 (12) TMI 300
  Rectification of mistake - error apparent on the face of record - Validity of remanding the matter - whether this Tribunal erred in remanding the matter to the file of CIT(A) for his fresh consideration in the facts and circumstances of the case? - HELD THAT:- The sub-Section (2) of Section 254 of the Act provides jurisdiction to Tribunal to rectify any mistake apparent in the record, amend any order passed by it under sub-section (1) of section 254 of the Act. It is an established principle that this Tribunal does not have any power to review its own power under the provisions of the Act. The only power which the Tribunal processes is to rectify any mistake in its own order which is apparent from the record. In the present case after examining the record, the Tribunal came to the conclusion that it was not possible to decide the additional ground without there being any relevant material evidence on record. The Tribunal cannot exercise its power of rectification taking into consideration any other circumstances which would support or not support its conclusion so arrived at - The power of rectification U/s 254(2) of the Act can be exercised only when the mistake which is sought to be rectified as an obvious and patent mistake which is apparent on record and not a mistake requires to be on record. Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on record, it may be an error of judgement - there was no opportunity for the respondent Revenue to file its submissions along with the relevant evidence involving the legal ground - miscellaneous application filed by the assessee fails and it is dismissed.

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• 2019 (12) TMI 277
  Grant of refund - HELD THAT:- Issue notice. Mr. Zoheb Hossain learned counsel for the Respondents accepts on behalf of Mr. Ajit Sharma. Respondents are directed to grant refund to the Petitioner within the next two weeks. In case the same is disputed, the Respondents shall file their counter-affidavit within the same period. List on 10.12.2019.

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• 2019 (12) TMI 276
  Refund along with interest - grievance of the petitioner is that though the refund amount has already been determined for the assessment year 2012-13 as early as on 30.08.2019, the same has not been provided to the petitioner till date - HELD THAT:- Issue notice. Mr. Sharma accepts notice. We direct the respondents to positively ensure that the refund amount along with the applicable interest is credited to the petitioner within the next two weeks.

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• Customs

• 2019 (12) TMI 299
  Jurisdiction - power to issue SCN - the petitioner had raised an issue of jurisdiction before the Commissioner of Customs (Import), Mumbai, who issued notice and thereafter, adjudicated on this matter - HELD THAT:- The decisions of the Tribunal, namely COSMO FERRITES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [ 2014 (12) TMI 116 - CESTAT NEW DELHI ] and SAMTEL COLOR LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, MEERUT [ 2000 (4) TMI 112 - CEGAT, COURT NO. II, NEW DELHI ], on the issue of jurisdiction, were clearly cited before the Commissioner of Customs (Import), Mumbai. In fact, there is reference to such decisions in the impugned order in original. However, without considering such decisions or the import of such decisions, the objection relating to the jurisdiction, has been disposed off, merely by observing that this is a case of mis-declaration and therefore, the authorities will have jurisdiction over the matter. Since, this is an issue, which goes to the root of the jurisdiction, it will not be appropriate to relegate the petitioner to alternate remedy. Besides, we find that there is virtually no consideration as such, of the objection as to the jurisdiction, in the present case. Matter remanded to the Commissioner of Customs (Import), Mumbai to re-consider the objection as to the jurisdiction, as raised by the petitioner - petition allowed by way of remand.

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• 2019 (12) TMI 298
  Imposition of penalty - failure to make declaration of currency - Applicability of provisions of Customs Act, 1962 or provisions of Foreign Exchange Management Act, 1999? - the Appellant had pleaded that he was advised by the Bank of England that there was absolutely no restriction to carry currency into India - HELD THAT:- The Appellant, in the present case, had carried currency of about 8,000 GBP in cash and an amount of GBP 60,000 by way of traverller s cheques. From this, it is clear that the bulk of the amount which the Appellant attempted to be imported, was in the form of traveller s cheques. The reason as to why the Appellant required such an amount is not so relevant. The Appellant has stated that he wished to purchase some immovable property in India - This is a case of default on the part of the Appellant in not declaring this in the CDF. However, there is nothing on record to conclude that the action of the Appellant was ex facie mala fide or intended to deliberately evade the legal provisions which were attracted. However, the redemption fine and the penalty imposed upon the Appellant is excessive - Rather than remanding the matter at this stage to the Appropriate Authorities for redetermination of the redemption fine and the penalty, upon taking into consideration the facts and circumstances cumulatively, we find that the redemption fine of Rs. 2,00,000/- and the penalty of Rs. 1,00,000/- would be appropriate in this matter. Quantum of redemption fine and penalty reduced - appeal allowed in part.

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• 2019 (12) TMI 297
  Clandestine removal - physical recovery of prohibited and mis-declared goods - it was detected that the item of import namely calcium carbonate was only used for concealment of other prohibited and undeclared items like firework and telescopic channels - HELD THAT:- It s a matter of record that the import consignment covered by bill of entry No. 3132662 dated 2 November 2015 was filed for clearance of calcium carbonate and on physical examination of the cargo it was found to have fireworks and telescopic channels (of various sizes). It is also a matter of record that in all the above-mentioned appeals, the physical recovery of prohibited and mis-declared goods have not been denied. It is also a matter of record that originally the import consignment of both bill of entry No. 3132662 dated 2 November 2015 as well as the containers which were lying in the internal container depot for which no bill of entry was filed consignments were detected to have branded counterfeit spectacles and some other goods were imported by Shri Bhupesh Tyagi of M/s Swastic Trading Company and Director of M/s Royal D cor India Pvt. Ltd. He has been helped in this work by one Shri Sanjeev Singh Yadav and the work relating to clearance of the cargo was undertaken by CHA namely Shri Sunil Kumar of M/s Mouli Worldwide Logistics. It appears from the record that Shri Sunil Kumar has never interacted with the high sea sale buyers of the goods namely Shri Sanjay Gupta Director of M/s Sanco Industries Ltd. It is found that when the consignment was undertaken for examination and it was detected that the import consignment has been mis-declared and contains prohibited items, such as, fireworks etc. he has informed Shri Sanjeev Singh Yadav and also spoke to Shri Bhupesh Tyagi, however, he did not inform the customs authorities regarding the mis-declaration of the cargo. We also find that all the above appellants in their various statements have confessed to their involvement or have confessed to their misdoings which is also corroborated with the facts of the case. In this case, all the statements of the relevant persons get corroborated by the statements of co-accused persons and with the physical facts as detected by the investigations - no new facts or evidences have been adduced before us to impress that the amount of penalties imposed upon the above-mentioned appellants have been imposed in disproportionate to their role in attempted smuggling of prohibited and mis-declared goods into the country. There are no infirmity in the impugned order-in-original under challenge - appeal dismissed - decided against appellant.

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• 2019 (12) TMI 296
  Imposition of penalties - Mis-declaration of imported goods - Melamine Crystal - misuse of IEC - HELD THAT:- Shri Rajesh P. Joshi in his statement dated 23.12.2008 and 21.10.2008, has accepted that he had applied for IEC in the name of M/s. Ravi Enterprises with an intention to lend the same for a monetary consideration through Shri Naresh M. Dudhela and that he was no aware of any imports in the name of the said firm. This statement has not been retracted - the involvement of Shri Rajesh P. Joshi is limited to the extent of lending IEC to other importers for a consideration. However, for this purpose the penalty levied cannot be comparable to the penalty imposed on the actual perpetrators of the offence - penalty imposed on Shri Rajesh P. Joshi is reduced. Penalty on Shri Naresh M. Dudhela - HELD THAT:- Shri Naresh M. Dudhela was involved in the past as well in the imports made by Shri. Kaushal Anil Shah, in the import of goods using the IEC of M/s. Ravi Enterprises for a consideration. Shri Naresh M. Dudhela in his statement dated 5.7.2008 accepted that he has arranged for the IEC of 6 firms, including that of M/s. Ravi Enterprises to Shri Kaushal A. Shah for a monetary consideration; he got a consideration of 1.5% of the value. He is the person who advised Shri Joshi to obtain the IEC in his name and to lend it; he also obtained signatures of Shri Rajesh P. Joshi on blank letter-heads and cheques of M/s. Ravi Enterprises - role of Shri Naresh M. Dudhela cannot be undermined in the present case also. However as no specific allegations of his role other than arranging for the IEC of M/s. Ravi Enterprises to be used, has been brought on record - Quantum of penalty is reduced. Appeal allowed in part.

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• 2019 (12) TMI 295
  Benefit of exemption - misdeclaration of goods - import of Natural Gold Ore Concentrate - SCN was issued alleging that the appellants had not imported the Natural Gold Ore Concentrate but had artificially mixed gold and various materials like mud, cement etc to artificially create something that could be camouflaged as Natural Gold Ore Concentrate - HELD THAT:- The appellants are claiming benefit of Notification No. 12/2012-CE and the notification exempts Ores falling under heading 2601 to 2617 from Central Excise duty. Note-2 of the Chapter 26 defines the scope of the term ore for the purpose of this chapter. It is apparent that there is no minimum or maximum percentage specified for gold content in gold ore. Different literature may suggest different values, however, this fact has no significance in the present proceedings as term Ore is defined in the tariff itself. The said definition does not contain any maximum or minimum value of metal or non-metal. Learned Counsel further raised the issue regarding use of word usually at various places in the report of Professor at IIT, Bombay. It needs to be appreciated that Ore is naturally occurring substance and therefore cannot be any specific parameter for Ore . The composition of ore and contents of various materials in gold ore may vary from place to place and content to content. Therefore, the term usually appearing in the report of the Professor of IIT is not incorrect and we need to appreciate that variation in the proportions of contents is noticed in naturally occurring minerals from place to place. The quality of composition of Ores cannot be standardized as they are naturally occurring substances. Moreover the tariff/HSN does not prescribe any minimum or maximum limit in the definition of Ore . Even if the samples answered to all physical and chemical parameter of Ore , the same does not qualify to be ore for the purpose of the Tariff or the notification Confiscation - imposition of Redemption fine and penalty - HELD THAT:- The confiscation has been ordered under section 111(d) and (m) of the Customs Act 1962. Confiscation upheld - Redemption fine of Rs. 60 lakhs has been imposed on the goods of declared value of Rs. 1.32 Crores - Considering the facts and circumstances of the case and the fact that duty evaded in this consignment is approximately 18 lakhs, we reduce the said fine to Rs. 15 lakhs. The penalty of Rs. 10 lakhs, imposed under 112(a) in respect of the confiscated consignment is also upheld. Time Limitation - HELD THAT:- Taking of samples of previous consignment, if any, for chemical/physical testing or valuation purposes, does not help the case of the appellant, if the fact that the said goods were produced in a workshop by mixing gold, sand and other materials is suppressed. Thus the fact that samples were taken of earlier consignments or not, does not affect the outcome of this case. Even if those samples were taken and tested it might not have been possible to detect that the same were produced in a workshop and were not of natural origin. In view of the fact that an elaborate mechanism for hoodwinking Customs was devised by the appellant the intention to evade the customs duty cannot be doubted - This is a case involving fraudulent intentions and actions. In view of above the demand of duty and interest on past consignments is also upheld. The penalty under section 114A, of the Customs Act 1962, in respect of past consignments is also upheld.` Penalty u/s 114A of CA imposed on Shri Sanjay Patel - HELD THAT:- Hon ble High Court of Gujarat, in the case of Jai Prakash Motwani [ 2009 (1) TMI 501 - GUJARAT HIGH COURT ], has held that when penalty has been imposed on the firm, separate penalty on partner cannot be imposed - Penalty set aside. Appeal allowed in part.

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• 2019 (12) TMI 294
  Immediate action/continued action of suspension of Customs Broker Licence - Commissioner of Customs (General), in exercise of the powers conferred under provisions of Regulation 16(2) of the Customs Broker Licensing Regulations, 2018, orders that suspension of Customs Broker shall continue pending inquiry proceedings under Regulation 17 of the Customs Broker Licensing Regulations, 2018 - illegal export of contraband substance purported to be ketamine under the provisions of NDPS Act, 1985 read with the provisions of Customs Act, 1962. HELD THAT:- There is enough power vested in the commissioner to suspend the license of Custom Broker, in terms of Custom Broker Licensing Regulation, 2018. However said power which impact the lively hood of the person and his employee needs o be exercised with caution and in accordance with the inbuilt safeguards, to prevent the arbitrary and reckless use of the power. One of the safeguard that has been built in the scheme, is to decide the matter after affording the post decision hearing in case of immediate suspension. This post decision hearing is not an empty formality but the responsibility cast on the Commissioner to decide the issue of continuation of suspension in reasonable and logical manner by way of speaking order, clearly recording the reasons for suspension of licence. The reason obliviously cannot be enquiry is contemplated simplicitor. In the present case Commissioner has not recorded any reason for the cause of immediate suspension or continuation of the suspension. We do not find any merits in the impugned order to sustain the same. - the appeal is allowed

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• Corporate Laws

• 2019 (12) TMI 293
  Suit for declaration and permanent injunction - time limitation - rejection of the plaint on the ground that the same was barred by law - Order XXIII Rule 1 of the Code of Civil Procedure - Section 58 of the Companies Act - HELD THAT:- In the instant case it is not the plaintiffs allegation that the company had refused to register or transfer shares in favour of the plaintiffs. Thus, the decisions relied upon by Mr. Mitra in ADESH KAUR VERSUS EICHER MOTORS LIMITED AND ORS. [ 2018 (8) TMI 836 - SUPREME COURT ] and SHASHI PRAKASH KHEMKA (DEAD) THROUGH LRS. AND ANOTHER VERSUS NEPC MICON (NOW CALLED NEPC INDIA LTD.) AND OTHERS [ 2019 (2) TMI 971 - SUPREME COURT ] are distinguishable on facts. The next point as to whether the decision of the Company Law Board would prevent the Civil Court from deciding the issues relating to the relief claimed with regard to the family arrangement, in my opinion, the proceedings and the findings of the Company Law Board will have to be gone into at the time of trial as a separate issue. Similarly limitation being a question of law and fact unless there is evidence before the Court, the issue cannot be decided. Reading of the plaint in this case simpliciter could not persuade the Civil Court to do decide the suit was barred at its initial stage. Revision dismissed.

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• 2019 (12) TMI 292
  Territorial Jurisdiction to entertain the appeal - proceeding under Section 7 of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- When the application for recalling was admitted by the learned Tribunal and a prima-facie finding is on record to the effect that the registered office of the company was in Odisha. However, by the order impugned, the Tribunal has found that as the petitioner was in knowledge of the proceeding and had received communication by e-mail about the proceeding, then the same should have been contested. It also appears from the order that the Tribunal recorded that it had the territorial jurisdiction to hear the application when the same was filed by the financial creditor. Prima facie, it is found from the records that the registered office of the company shifted to Odisha on January 16, 2018 and the application of the opposite party bank was filed on January 9, 2019. The NCLT, Odisha, was notified on July, 15, 2018. The order of admission was passed on September 5, 2019. The petitioner is directed to serve a copy of the application upon the opposite party by speed post with A/d and file affidavit of service on the next date - List this matter on December 20, 2019.

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• 2019 (12) TMI 291
  Maintainability of petition before the High Court in the case of Insolvency and Bankruptcy Code, 2016 - appellability of orders passed by the Adjudicating Authority - HELD THAT:- It is seen from Section 61(1) that the language used is, notwithstanding anything to the contrary contained under the Companies Act, 2013, any person aggrieved by the order of the Adjudicating Authority under that Part (Part II) may prefer an appeal to the National Company Law Appellate Tribunal - However, in contrast, the very next Section, that is, Section 62 of the IBC provides for an appeal to the Supreme Court against an order of the NCLT to the Supreme Court, thereby creating an explicit distinction between the language of the two successive sections between the appeal preferable against the order of an Adjudicating Authority and that of the NCLT. Seen in such context, it cannot be presumed that the legislature carved out such a distinction without any meaning or reason. Going through the provisions of Part II of the IBC, as rightly argued on behalf of the petitioner, specific provisions have been laid down in the said Part, which confer power on the Adjudicating Authority (the NCLT) to pass an order. There are no other provisions than those referred to by the petitioner for passing any order by the Adjudicating Authority under Part II. Sub section (5) of Section 60 lays down that notwithstanding anything to the contrary contained in any other law for the time being in force, the NCLT shall have jurisdiction to entertain or dispose of the matters provided therein, including those mentioned in clause (c), that is, any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under the IBC - The said provision does not empower the Adjudicating Authority to pass any order, as contemplated in Section 61(1) of the IBC, but merely confer jurisdiction on the NCLT (the Adjudicating Authority) to incidentally decide questions of facts as well, arising out of or in relation to the insolvency resolution. The said provision confers power and jurisdiction on the Adjudicating Authority to deal with such questions while deciding matters under the IBC, which would culminate in orders under Part II, but do not provide for any occasion for the Adjudicating Authority to pass an order. Section 60(5) of the IBC is merely enabling, charting out the territory of the powers of the Adjudicating Authority, and does not contemplate any order being passed by the said authority. The issue of maintainability raised by the opposite party is turned down and it is hereby held that the present application under Article 227 of the Constitution is very much maintainable - In the present case, the perversity occasioned by meting out a step motherly treatment to the parties respectively is, by itself, a sufficient ground to interfere with the impugned order. Moreover, the supplementary affidavit sought to be filed being apparently relevant for a proper and complete adjudication of the proceeding, ought to have been permitted to be filed by the petitioner - application allowed.

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• 2019 (12) TMI 290
  Use of brand name by the two companies managed by the separate group of family members - partition by the CLB after family dispute - Prayer for an order of injunction to restrain the defendant from producing or selling or marketing any product using the said label and carton - short contention of the plaintiff/petitioner is that it is the owner of the copyright in the artistic work on the said label and carton. It has not permitted the defendant to use the said label and carton for carrying on the defendant s business of manufacture and sale of hair oil - whether or not the defendant is entitled to use the name BANPHOOL on its label and carton that it uses to market the hair oil manufactured by it? HELD THAT:- It is not in dispute that the Sharma brothers carried on the business of manufacture and sale of Ayurvedic hair oil under the name BANPHOOL in co-partnership through a duly constituted partnership firm called M/s Sharma Chemical Works. The copyrights in the artistic work on the label and carton in question were registered in the name of the partnership firm. Biswanath was shown as the author of the artistic work BANPHOOL in the registration certificate. The plaintiff company was incorporated by the members of the Sharma family with the object of carrying on the same business through a private limited company. The business, assets, liabilities of the partnership firm vested in the plaintiff company. The members of the Sharma family including Biswanath were the subscribers to the Memorandum of Association of the plaintiff. In other words, they were the promoters of the plaintiff company. The CLB divided the business and assets of the plaintiff company in the manner indicated above. The Saraswati Group was given the Kolkata unit of the plaintiff company. The Biswanath Group was given the Delhi and Baddi units. Biswanath Group was directed to float a separate company adding prefix or suffix to the corporate name used by the plaintiff company and was given the liberty to carry on the same business that they had been carrying on through the plaintiff company. It is important to note that neither of the groups challenged the aforesaid CLB order before a higher forum. It is clear that the rights and obligations of the two groups vis-a-vis each other in relation to the family business of manufacture and sale of Banphool hair oil crystallized in the CLB order. The Saraswati Group was given exclusive control of the plaintiff company and the right to carry on the family business at the Kolkata unit through the instrumentality of the plaintiff company. The Biswanath Group was granted liberty to carry on the same family business through a newly floated private limited company at the Delhi and Baddi units. There was thus, an equitable division of the business and assets of the plaintiff company between the two groups - Application dismissed.

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• 2019 (12) TMI 289
  Disqualification of Petitioner to hold the Office of the Directorship of a Company - Section 164 (2) (a) of the Companies Act 2013 - direction to the Respondents to permit the Petitioner to get re-appointed or appointed as Directors in any other Company without any hindrance - HELD THAT:- The lists dated 08.09.2017 and 01.11.2017 published by the Registrar of Companies, Tamil Nadu, Chennai were the subject matter of challenge before this Court in BHAGAVAN DAS DHANANJAYA DAS VERSUS UNION OF INDIA, REGISTRAR OF COMPANIES, TAMILNADU CHENNAI [ 2018 (8) TMI 436 - MADRAS HIGH COURT ] and came to be disposed by this Court where it was held that Section 164(2)(a) is read down to the extent it disqualifies the directors in other companies which are scrupulously following the requirements of law, making it clear that no directors in other companies can be disqualified without prior notice. As the Petitioner in this case is similarly placed to the Petitioners in the aforesaid batch of cases relating to the same impugned lists published in the website by the Respondents, she is entitled to identical relief that has been granted to them. Petition allowed.

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• 2019 (12) TMI 288
  Rectification of mistake - error apparent on the face of record or not - discrepancies in the record maintained by the company - non compliance of the provisions of Section 131 read with Section 128(1) of the Companies Act, 2013 - Approval of proposed scheme of demerger - HELD THAT:- Every Company must keep relevant Books or Papers and Financial Statements for every Financial year which give a true and fair value of the state of the affairs of the Company. The National Company Law Tribunal found discrepancies, in the statements of balance sheet of the Transferor Company, wherein realisable value to the loan is shown as 1.14 Crores instead of 7.58 Crores, which was to be received from Doloo Tea Company (India) Limited - However, the order of the Tribunal dated 24th January 2019 was appealable order, but no appeal is preferred against that order. But the Appellant intends to challenge the order dated 24th January 2019 by filing the review application under the guise of Section 420(2) of the Companies Act, 2013, which is not permissible under Law. There is no error in the impugned Order passed by the National Company Law Tribunal, Kolkata Bench - Appeal dismissed.

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• 2019 (12) TMI 287
  Sanction of Amalgamation of companies - convening and holding of meeting of shareholders and the creditors of the company for the purpose of approving with or without modification, to obtain sanction of the Tribunal to the scheme of amalgamation - Section 230 232 of the Companies Act, 2013 - HELD THAT:- Since the requirement of the holding and convening of meetings of the equity shareholders and creditors of the company, on 28th February, 2018 the Appellant filed the petition for sanction of the scheme of amalgamation under Sections 230 232 of the Companies Act, 2013 read with Companies (Compromise, Arrangements and Amalgamations) Rule, 2016. Notice was issued to the office of the Regional Director, Registrar of Companies, Official Liquidator, Income Tax Department and Reserve Bank of India. The Tribunal also directed for publication of the notices in English daily Newspaper (the Hindu), Bangalore Edition and Udayavani, Kannada daily Newspaper , Bangalore Edition and ordered to list the matter for hearing. The Tribunal has not shown any provision and also not record any ground while passing the impugned order dated 17th December, 2018. It is also not made clear as to how such stand has been taken by the Tribunal while earlier order of amalgamation as detailed above with regard to the Transferor Company and the Transferee Company (Appellant) has been approved. Matter remitted to the Tribunal to pass appropriate order approving the scheme of amalgamation/merger under Section 230 -232 of the Companies Act, 2013 with such condition as required to be imposed in terms of any law including The Chit Funds Act, 1982 , taking into consideration the Appellant Transferee Company otherwise fulfils the conditions and if so required may allow the Appellant/parties to take consent of the foreman and all the subscribers to the chits in terms of section 15 of the Chit Funds Act, 1982; approval of the registration of chits in terms of Section 19 of the Chit Funds Act, 1982 which prohibits persons from carrying on chit business in a new place of business without obtaining prior approval of the concern registry of chits - appeal allowed.

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• Insolvency & Bankruptcy

• 2019 (12) TMI 285
  Appeal against the initiation of CIRP - default committed by the Corporate Debtor in repayment of its dues under the loan Agreement - The Corporate Debtor contends that on the date of filing of the petition, there was no default as contemplated in Section 7 HELD THAT:- It is pertinent to mention that the Corporate Debtor / Applicant has filed an Affidavit dated 28th March 2019 along with letter issued by YES Bank, dated 10th August 2018, to substantiate that the amount of Rs. 18.86 crores under the loan agreement dated 1st April, 2016 was credited in its account, and it immediately paid back the entire amount to the Applicant /Respondent in two tranches, firstly on 13th April, 2016 a sum of Rs. 17 Crores and secondly on 16th April, 2016 a sum of Rs. 1.86 crores. It is also asserted that the said amount has not been paid towards any previous outstanding. It appears that the Corporate Debtor pleaded before the Adjudicating Authority that amount disbursed under the Loan Agreement dated 1st April, 2016, Rs. 18,86,00,000/- has been paid back on 13th April 2016 and 16th April 2016 itself, and as on date, no payment is due to the Financial Creditor under the said Agreement - It appears that in compliance with the order of the Adjudicating Authority dated 29th November 2018 the Corporate Debtor filed an Affidavit along with Bank certificate. But in reply no evidence was submitted to prove that the outstanding amount is due and payable. It is clear that document which was already rejected by the Adjudicating Authority, has been made the basis for passing the Order of Admission, which is not permissible under law - it is clear that finding of the Adjudicating Authority that a sum of Rs. 18,86,00,000/- was again disbursed to the Corporate Debtor by the Financial Creditor which is still due and payable is erroneous, without any basis and un-sustainable. In effect, order (s) passed by Ld. Adjudicating Authority appointing Interim Resolution Professional , declaring moratorium, freezing of account and all other order (s) passed by Adjudicating Authority pursuant to impugned order and action taken by the resolution Professional , including the advertisement published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by the 1st Respondent under Section 7 of the I B Code is dismissed. The Adjudicating Authority will now close the proceeding.

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• 2019 (12) TMI 284
  Validity of Resolution Plan - Section 30(2) of the I B Code - prayer for direction to the Resolution Applicant for immediate implementation of the Resolution Plan and to pay the interest - right to receivables - carry forward of losses of Corporate Debtor - subsidiaries, associate companies and joint ventures of the Corporate Debtor. Right to receivables - HELD THAT:- The Adjudicating Authority has directed that any amount recovered by the Corporate Debtor due from any third party which has been written off as bad debts or which stands in the books but has not been recovered as on the date Adjudicating Authority approved, before being put to any other use, would be used to pay the balance amount to dissenting Financial Creditors - the Adjudicating Authority has no jurisdiction to impose such conditions with regard to amount as may be recoverable by the Corporate Debtor in future - the Appellant rightly suggested that any amount receivable by the Company, being an asset of the Company, shall continue to remain with the Company upon implementation of the Resolution Plan . After approval of the plan in terms of Section 31 of the I B Code , it is binding on all the stakeholders, including the Creditors and no party can claim any right against the Corporate Debtor including right to set off. In fact, the Resolution Plan makes the debt payable to any stakeholders/ Creditors clear and no stakeholders including the Creditors can claim any dues from the earlier period thereafter. Carry forward losses of the Corporate Debtor - HELD THAT:- In spite of notice to the Income Tax Authority, no reply has been filed and no objection has been raised - taking into consideration the submissions made by the counsel for the Appellant- JSW Steel Limited and taking into consideration the provisions of the Income Tax Act, 1961, including Section 79 and the Rules and Regulations framed thereunder, it is held that both the Successful Resolution Applicant and the Income Tax Department will be guided by the Income Tax Act, 1961 and the Rules and Regulations framed thereunder. If the Successful Resolution Applicant is entitled to carry forward losses under Section 79 of the Income Tax Act, it may claim such benefit before the appropriate Authority, who will pass appropriate order in accordance with Section 79 of the Income Tax Act, 1961 and the Rules and Regulations framed thereunder. Subsidiaries, associate companies and joint ventures of the Corporate Debtor - HELD THAT:- If any of them had any privilege or claim or assets to which they are entitled from the Corporate Debtor prior to approval of the Resolution Plan , it is held that such right of privilege, claim or rights over the assets stand extinguished after the approval of the plan under Section 31 - However, if the Corporate Debtor has any right over the subsidiaries or associate companies or joint ventures of the Corporate Debtor , once the Successful Resolution Applicant takes over the Corporate Debtor , it is for the Corporate Debtor to decide whether they will continue with such right over the subsidiaries or associate companies or joint ventures and others. For such right, the Adjudicating Authority is not required to make any such suggestion nor can lay down any condition. The part of the impugned order dated 19th December, 2018 so far as it relates to laying down conditions by the Adjudicating Authority is concerned, are set aside and deleted - rest part of the impugned order dated 19th December, 2018 as clarified vide order dated 16th April, 2019 approving the Resolution Plan in favour of the Appellant is confirmed - appeal allowed in part.

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• 2019 (12) TMI 283
  Liquidation order - prayer is made seeking appropriate direction upon the ROC for accepting Form INC-28 for compliance of liquidation of company - HELD THAT:- It is a matter of record that the CP(IB) 219 of 2018 was admitted on 25.7.2018 and during the pendency of Corporate Insolvency Resolution Process, the Company is struck off from the register of ROC. The said fact is very much in the knowledge of then RP, now liquidator, but so far he has not taken any steps to restore the company for completing the liquidation process. Knowing fully well that when the company is struck off, the software is not going to accept Form INC-28 in any manner. Under such circumstances, the application so filed by the liquidator seeking direction upon the ROC is a futile exercise and is a mere wastage of resources of the Bench and its time. The instant application is not maintainable at this stage - Application dismissed.

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• Central Excise

• 2019 (12) TMI 286
  Area based exemption - Recovery of refund of Refund of NCCD on the ground that exemption was not permissible under the notification for the units located in the State of Sikkim - Binding nature of Circular issued by the CBEC (CBIC) - appellant submitted that NCCD, education cess, and secondary and higher education cess form part of the excise duty - manufacture of Indian Mouth Freshener - Levy of education cess, higher education cess, and National Calamity Contingent Duty (NCCD) - Notification dated 17.2.2003 - N/N. 71/2003 dated 9.9.2003 HELD THAT:- It is not in dispute that when initial exemption notification was issued in 1997 for the North-Eastern States, which was later on applied to the State of Sikkim on 9.9.2003. The benefits from payment of excise duty and additional excise duty were confined to the basic excise duty payable under the Acts of 1944, 1957 and 1978. There was no reference made to NCCD imposed under the Finance Act, 2001. Apart from that, when the notification came to be issued, the education cess and secondary and higher education cess, which came to be imposed by Finance Acts of 2004 and 2007, were not in vogue. A Division Bench of this Court in SRD Nutrients Private Limited [ 2017 (11) TMI 655 - SUPREME COURT ] has considered the Finance Acts of 2004 and 2007, by which education and secondary and higher education cess were imposed. Under the Industrial Policy dated 1.4.2007 for the North Eastern States, the notification dated 25.4.2007, issued by the Central Government, came up for consideration before this Court. In Bajaj Auto Limited [ 2019 (3) TMI 1427 - SUPREME COURT ] a Division Bench of this Court considered the question of liability towards NCCD, education cess and secondary and higher education cess on manufacturing establishment which is exempted from payment of central excise duty under the Act of 1944. - The most unfortunate part is that the binding decision of larger bench consisting of three Judges of this Court in Union of India v. Modi Rubber Limited, [ 1986 (8) TMI 60 - SUPREME COURT ], dealing with the similar issue, was not placed for consideration before this Court when the abovementioned decisions came to be rendered. This Court in Modi Rubber Limited (supra) has considered the purport of the notifications and the specific provisions mentioned therein and held that exemption has to be considered in the light of provisions of Central Excise Rules, 1944, as envisaged under Rule 2(v) of Central Excise Rules, 1944. It cannot, in the circumstances, bear an extended meaning to include special excise duty and auxiliary excise duty. Merely reference to the source of power is not enough to attract the exemption and what exemption has been granted to be read from the notification issued therein. This Court has further laid down that in case notification granting exemption issued under the Central Excise Rules, 1944 without reference to any other statute, the exemption must be read as limited to the duty of excise payable under the Central Excises and Salt Act, 1944. It cannot cover such special or another kind of duty of excise. Notification dated 9.9.2003 issued in the present case makes it clear that exemption was granted under Section 5A of the Act of 1944, concerning additional duties under the Act of 1957 and additional duties of excise under the Act of 1978. It was questioned on the ground that it provided for limited exemption only under the Acts referred to therein. There is no reference to the Finance Act, 2001 by which NCCD was imposed, and the Finance Acts of 2004 and 2007 were not in vogue. The notification was questioned on the ground that it should have included other duties also. The notification could not have contemplated the inclusion of education cess and secondary and higher education cess imposed by the Finance Acts of 2004 and 2007 in the nature of the duty of excise. The duty on NCCD, education cess and secondary and higher education cess are in the nature of additional excise duty and it would not mean that exemption notification dated 9.9.2003 covers them particularly when there is no reference to the notification issued under the Finance Act, 2001. The Circular of 2004 issued based on the interpretation of the provisions made by one of the Customs Officers, is of no avail as such Circular has no force of law and cannot be said to be binding on the Court. Similarly, the Circular issued by Central Board of Excise and Customs in 2011, is of no avail as it relates to service tax and has no force of law and cannot be said to be binding concerning the interpretation of the provisions by the courts. Appeal dismissed - decided against appellant.

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• 2019 (12) TMI 282
  Permission to make necessary correction/amendment in the title, MCC and Meta Data Form - HELD THAT:- CONXP No. 29/2018 and MCC No. 55/2018 had been filed for readmission of EXAP No. 19 of 2013 whereas CONXP no. 24/2018 and MCC No. 143 of 2018 had been filed for re-admission of EXAP No. 24/2013 but inadvertently counsel for the applicant had mentioned EXAP No. 24 of 2013 in the title of both the sets of applications i.e., CONXP No. 29/2018 MCC No. 55/2018 and CONXP No. 24/2018 and MCC No. 143/2018. It is due to this reason that EXAP No. 19 of 2013 has not been decided. It is, therefore, prayed by the learned counsel for the applicant that necessary correction/amendment in the title of the CONXP No. 29 of 2018 and MCC No. 55 of 2018 and in Meta Data Form be made. The applicant is permitted to make necessary correction/ amendment in the title of the CONXP No. 29 of 2018 and MCC No. 55 of 2018 and Meta Data form before the Registrar Judicial of this Court - Application allowed.

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• 2019 (12) TMI 281
  Benefit of N/N. 8/2003 CE dt. 01.03.2003 - use of brand name of others - the impugned order has mainly confirmed demand on the ground that the Appellant unit is not entitled for the SSI exemption as they have sold machines bearing the trade/ brand name Bhayani - whether the Appellant M/s Om Synthetics are entitled for the benefit of SSI notification No. 8/2003 CE dt. 01.03.2003 where the goods bearing brand name Bhayani was cleared by them and also whether demand of duty against both the Appellant is sustainable on alleged removal of goods without payment of duty? HELD THAT:- In terms of co-ownership agreement entered into M/s Bhayani Engineering Co. on one part and M/s Om Synthetics and M/s Thakar Traders on second part for use of Trademark Bhayani on co-ownership basis. Thus it cannot be said that the said brand name is owned by others and hence the exemption cannot be denied. We also note that in case of M/s Thakar Traders, the other appellant the Appellate Authority has held that SSI exemption cannot be denied on ground of use of trade name Bhayani as it is co-owned - the Appellant are entitled for SSI Exemption on clearance of goods. Demand against M/s Thakar Traders - Supply of various types of wheels viz. Girder Wheels, Bruter wheels, Russian Wheels - HELD THAT:- The demand has been made on ground that the clearances made by Appellant are liable for duty. The Appellant has contended that the Russian bruter wheel was sent for jobwork of grinding without following the procedure under central excise rule or job work exemption notification and the goods came into existence only after grinding of wheels were completed - The activity of manufacture as per Section 2 (f) of the Central Excise Act was completed and Russian Bruter wheel came into existence after the jobworker under took the process of grinding. In such case when the procedure as contemplated under Exemption Notification No. 214/86 CE dt. 01.03.86 was not followed the jobworker of the goods become liable for duty and the duty cannot be demanded from M/s Thakar Traders. We have also gone through the Annexure A . The goods detailed therein were for testing as appearing in seized record. No investigation was made as to why this record was maintained. In absence of any investigation it cannot be concluded that the record pertains to clandestine clearances. In such case the demands cannot be confirmed without corroborative evidence. No independent and corroborative evidence has been brought to show any excess procurement of raw material or clearance of goods to buyer which can show that the Appellant cleared goods clandestinely - the charges of any clandestine removal against the Appellant are not sustainable - the fines and penalties imposed upon the Appellants set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 280
  Clandestine removal - admissible evidence or not - Section 65B of the Indian Evidence Act 1872 and Section 36B of the Central Excise Act,1944 - demands made on the basis of Ledger Account Pipe Sales retrieved from Pen Drive seized from residence of Bhavesh/Snehal R. Shah is liable to be set aside as the data stored in the Pen Drive is inadmissible as evidence since the requirements of Section 65B of the Indian Evidence Act 1872 and Section 36B of the Central Excise Act,1944 have not been satisfied - cross-examination of third person. HELD THAT:- The investigation was initiated by searching the factory premises and office of M/s SSPL and residential premises of Shri Bhavesh/Snehal R. Shah. During search at factory premises of M/s SSPL, no incriminating papers were found nor any discrepancy was observed in raw material/ finished goods stock, their accounting and production/ clearance of finished goods. No document in the form of production record, accounting record or gate register showing unaccounted purchase/ receipt of raw material or unaccounted clearance/sale/ transportation of finished goods was found - Shri Snehal/ Bhavesh Shah in his statement has stated that the Pen Drive ledger pertained to trading done by him of SS Patta, SS Coils and SS Pipes in his personal capacity. The show cause notice and the impugned order has alleged that the persons whose statements have been relied upon has stated that they were doing trading or acting as broker in SS Pipes of M/s SSPL. They have also verified the Pen drive ledger as pertaining to their firm. The Appellant Unit in its reply to show cause notice had challenged the authenticity/ genuineness of such pen drive data on the ground that the same is inadmissible in evidence as the requirements of Section 65B of the Indian Evidence act and procedure required under Section 36B of the Central Excise Act was not followed - Section 36B of Central Excise Act is parimateria to Section 65 of the Indian Evidence Act. As per Section 36B(1) computer printout is considered as document for the purpose of central excise act and rules and is admissible as evidence subject to condition in Section 36 B (2). There is no computer on which the data stored in pen drive was produced. There is also no person was identified and examined who has prepared such data. In such case the pen drive data cannot be considered as admissible evidence - the pen drive data cannot be relied upon without following the requirements Section 36B of the Central Excise Act, 1944. As such the demands based upon pen drive in the present case cannot be confirmed against M/s SSPL. The Appellant during the adjudication proceedings had sought cross examination of persons and officers whose statements were relied upon in show cause notice under Section 9 D of the Central Excise Act. However the same was denied to them. When the demand against M/s SSPL was based upon pen drive and papers seized from residence of third party Shri Bhavesh Shah as well as statements of third party i.e traders/ brokers, in that case it was imperative for the adjudicating authority to allow cross examination of such persons to the Appellant. Since no opportunity to cross examine such persons whose statements has been relied upon was provided to the assessee, the statements given by these persons cannot be considered to uphold the charges of clandestine removal against Appellant Unit - the demands cannot be made on the basis of pen drive data and statements made by third parties. No inculpatory record/ papers were found at the factory of Appellant Unit which could show that any excess raw material has been received by them or any goods has been cleared clandestinely by them. There is no production record or raw material consumption record showing excess unaccounted production. No statement of production incharge or worker is appearing. Except pointing out the transport register of Suvidha Transport and that too for few transports, there is no other independent evidence of transportation of goods - Pertinently, it was found that statements of few traders/ broker were recorded but none of them has provided even a single name of customer or actual buyer. No finished goods alleged to be clandestinely cleared was seized from any alleged buyer. No transport Bilty or octroi receipts/ records has been brought on record to show that the goods were consigned from Chhatral to Mumbai. Thus there is no primary evidence to allege any clandestine clearance. The statements and third party records which are secondary evidence cannot be relied upon to allege clandestine clearance as the same has no independent evidentiary value. Further in case of ARYA FIBRES PVT. LTD. [2013 (11) TMI 626 - CESTAT AHMEDABAD], the tribunal while dealing with the reliability of papers found from the evidence of the buyer held that private records seized from the premises of the buyer cannot be sole basis for demand especially when corroborative evidence like purchase of extra raw material, actual removal of clandestine goods, receipt of sale proceeds, etc. not produced. In the facts of the present case there is no dispute that the documents/records recovered solely from third parties, statements of third parties whose cross examination was not allowed despite it is mandatory under section 9D of CEA, 1944, no incriminating documents recovered from the Appellant SSSPL, no excess/short stock of raw material or finished goods were found; no excess electricity consumption was proved, no evidence of any cash receipt or it s seizure, no excess raw material consumption was found - thus, the clandestine removal without any evidence as narrated above cannot be established. The demands made against the Appellant Unit are not sustainable - appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 279
  Refund of excess duty paid - price variation clause - goods were valued at 110% of the cost of production - refund was rejected on the ground of unjust enrichment - HELD THAT:- The appellant had initially paid the Excise Duty on the estimated cost, which was determined to be more than the actual cost, and accordingly, the duty element on the excess cost alone was claimed as refund. The Supply Order clearly mandates that the tax, duty and other levies shall be borne by the Ministry of Defence, which in fact was initially borne by the appellant and later on recovered from the Ministry of Defence. The appellant which is engaged in the manufacture of rail coaches, established in 1952, is owned and operated by the Indian Railways and by virtue of this, it is a Government of India undertaking and as such, the ratio of the decision of the Hon ble jurisdictional High Court in the case of M/s. Sescot Sheet Metal Works Ltd. Vs. CESTAT, Chennai [ 2015 (4) TMI 386 - MADRAS HIGH COURT ] can be applied to underline the fact that it cannot be said that the appellant was unjustly enriched and that thereby, the unjust enrichment attributed to the appellant has to necessarily fail. The material takeaway is that the mischief of unjust enrichment could not be attributed to the appellant and the reason given for denying the refund being unjust enrichment, must fail - refund is to be allowed. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 278
  SSI exemption - use of brand name of others - Department objected to availing of such simultaneous of benefit under Notification No 8/2003- CE and CENVAT Credit in respect of the goods cleared on payment of duty - period September 08 to August 2009 - whether simultaneous availment of CENVAT Credit in respect of the inputs used in manufacture of dutiable final products viz Branded Goods and SSI exemption under notification No 8/2003-CE dated 01.03.2003 as amended is permissible or not? - Difference of opinion - majority order. HELD THAT:- The issue of eligibility of SSI exemption under various notifications issued from time to time in line with Notification No. 8/2003-CE dated 1.3.2003, when the assessee also avails CENVAT Credit on inputs used for the goods manufactured on job-work basis by affixing the brand name of others, has been considered by the Hon ble Supreme Court in Nebulae Health Care Ltd. s case [ 2015 (11) TMI 95 - SUPREME COURT ]. Their Lordships analyzing the principles laid down in earlier judgments including that in Ramesh Food Products case [ 2004 (11) TMI 103 - SUPREME COURT ] - In the said judgment, the Hon ble Supreme Court distinguished the ratio laid down in Ramesh Food s case (supra) and held that an assessee can avail the SSI benefit and also CENVAT credit on inputs used in the manufacture of Branded goods cleared on payment of duty. Besides, Notification No. 8/2003-CE dated 1.3.2003 has been amended w.e.f. 11.2.2009 vide Notification No. 2/2009-CE dated 11.2.2009 incorporating the following proviso to clause (iii) of condition (2) of the said notification. The opinion of learned Member (Judicial) is agreed upon that the appellants are entitled to avail benefit of SSI exemption N/N. 8/2003-CE dated 1.3.2003 even though they have admittedly availed CENVAT Credit on inputs which have been used in the manufacture of branded goods, cleared on payment of duty during the relevant period.

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