Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 4, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeking release of seized goods alongwith vehicle - The writ petition stands disposed of with liberty to the petitioner to get the proceeding which has already been initiated by the authorities taken to its logical conclusion, besides praying before the authorities concerned for provisional release of the vehicle, which shall be considered by the authorities concerned in accordance with law expeditiously. - HC
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Applicable rate of GST - supply of Reverse Osmosis Plant/system (RO Plant/system) to Indian Navy/Indian Coast Guard in normal course - supply of RO Plant/system (Reverse Osmosis Plant) to the Indian Navy/Coast Guard which would be installed in/on a warship. - in the absence of specific exemption, the applicable rate of GST is 18% - AAR
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Validity of summon issued - Prima facie it would appear that issuance of summons after the full enquiry was over and which also resulted into not only issuance of show cause notice but the order in original being passed, was not permissible. Under the circumstances the impugned summons are stayed. - HC
Income Tax
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Disallowance of excise duty liability as deduction since it was not actually paid by the assessee during the relevant year - We find that the Tribunal has rightly taken note of the Central Excise returns and noted that one of the units of the assessee was engaged only in job work activity and therefore, not entitled for benefit of input credit and after taking note of the sum paid on the said account, the Tribunal also found that the balance amount was adjusted with the available input credit in the respective divisions which undoubtedly would tantamount to actual payment of excise duty. Thus, we find that the Tribunal rightly granted relief to the assessee and the order does not call for any interference. - HC
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Penalty u/s.271AAB - Belated filing of regular return after search - Penalty cannot be levied u/s.271AAB of the Act, in respect of income disclosed in regular return of income filed by the assessee for relevant assessment year, even though said return has been filed subsequent to date of search, so long as return filed by the assessee was within due date prescribed u/s.139(1) / 139(4) of the Income Tax Act, 1961. Since the assessee has filed regular return for impugned assessment year within extended due date prescribed u/s.139(4) of the Act, the Assessing Officer cannot levy penalty u/s.271AAB of the Act. - AT
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Disallowance of telephone expenses - expenses have been incurred by the partners of the assessee for the purpose of business - Copies of all the orders of the proceeding years as well as subsequent year have already been placed on record and after going through these orders as well as facts of the present case, we found that no disallowance was called for on telephone expenses and the assessee is entitled to said deduction U/s 37(1) of the Act, accordingly, we direct to delete the same. - AT
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Disallowing the depreciation for the cars AND interest paid on car loan used by the directors - vehicle held in the name of director of the appellant company - the assessee is entitled to the depreciation under the provisions of section 32 of the Act inspite of the fact that the vehicle is registered in the name of the director of the appellant company. - AT
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Unexplained expenditure u/s. 69C - the profit element embedded in unaccounted purchases would have to be brought to tax. Considering the facts of the case as well as the nature of assessee's business, we estimate the profit element in unaccounted purchases @10% - The balance addition stand deleted - AT
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Exemption u/s 11 - Rejection of application u/s 12A - at the time of grant of registration to assessee the ld. CIT(E) has to examine the objects of the assessee as well as the genuineness of activities of the assessee. Therefore in view of these facts and circumstances we deem it appropriate to remit the matter back to ld. CIT(E) who should pass a fresh order in accordance with the provisions of law and after providing sufficient opportunity to the assessee of being heard. Appeal of the assessee is allowed for statistical purposes. - AT
Customs
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100% EOU - Conversion of free shipping bills filed under EOU scheme into drawback shipping bills - In the present case, the request is only for conversion of free shipping bills in terms of section 149 of the Customs Act, 1962. It is not the case of the department that the appellant has not produced sufficient document to prove that the export of goods were done by them. So also there is no allegation that there is delay in filing the request for conversion. On such score, the request for conversion cannot be denied - AT
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Valuation of imported goods - enhancement is made on the basis of DRI alert with reference to some NIDB data - at the time of hearing that Revenue has not served the copy of relevant material, it wanted to use against the respondent – importer, for enhancement in the transaction value. - Thus the respondent / importer had no opportunity to meet the allegations of Revenue, for finalisation of the proposed enhancement made at the time of provisional assessment, even at the finalisation stage of the same. - The respondent–importer shall be entitled to consequential benefits, in accordance of law. - AT
Indian Laws
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Emergency Arbitrator’s Award - Whenever an order is struck down as invalid being in violation of the principles of natural justice, there is no final decision of the case and fresh proceedings are left open. All that is done is to vacate the order assailed by virtue of its inherent defect. Such proceedings are not terminated and are usually remitted back. - However, in this case, much water has flown under the bridge, since the passing of the order by the learned Single Judge, which has now been rendered redundant - SC
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Dishonor of Cheque - service of demand notice - Period of limitation - the petitioner relies on the dates of return memos, i.e., dates of return of cheques in question, to compute the period of 30 days prescribed in the statute and contends that the legal demands notices were not issued in time. To the contrary, the complainant relies on the dates of receipt of return statements from its Bank, i.e., the dates on which intimation was received regarding dishonor of the cheques in question, to submit that the legal demand notices were issued within the statutory period. - the legal notices were posted by the complainant Company within 30 days of the receipt of information from its Bank regarding dishonor of the cheques in question and were not time-barred - HC
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Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - even if a cheque is a security cheque, the same is an integral part of the commercial process and the same acts as a deterrent for the drawer against dishonouring his financial commitment and can also be used towards discharging the liability of the drawer. It is further held that to state otherwise, would defeat the whole purpose of a security cheque. No judgment has been cited by the learned counsel for the petitioner to show any contrary view. - HC
Service Tax
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Rejection of application under the SVLRDS - rejection on the ground that investigation was already initiated against the petitioner and was pending - the respondents had issued a summons only on 30th August, 2019 i.e. after 30th June, 2019 and thus summons issued after the cut-off date of 30th June, 2019 could not be the ground for declaring the application filed by the petitioner under SVLRDS-1 ineligible. - HC
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Condonation of delay in filing appeal before commissioner (appeals) - appeal dismissed for the reason that it was filed beyond the statutory time limit - section 85 of the Finance Act 1994 - The Commissioner (Appeals) was justified in dismissing the appeal on the ground of limitation - AT
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Banking and other financial services - RCM - So far the SWIFT charges are concerned, the privity of contract is between the Indian Bank and the SWIFT society. Thus, the receiver of the services is the Indian Bank, and not the appellant/assessee. - The appellant/assessee only have reimbursed such SWIFT charges to the Indian bank. Accordingly, the appellant is not the receiver of SWIFT services, hence not liable to pay service tax on the same - AT
Central Excise
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Valuation - related party transaction - mutuality of interest - once the adjudicating authority found that the mutuality of interest is not relevant to the instant case, the only conclusion ought to be dropping the SCNs. However, the adjudicating authority went beyond the scope of SCN and made observations which were never alleged in the SCN and have been proved to be incorrect by the Ld. Counsel for the appellant. Such approach of the adjudicating authority of travelling beyond the scope of SCN is legally untenable and held to be a violation of natural justice. - AT
VAT
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Validity of assessment notice u/s 46 of WBVAT Act - carry forward of excess ITC to next FY - The rule of ejusdem generis is inapplicable to the case on hand as Section 46 (1) (b) does not contain enumeration of specific words; the circumstance enumerated in clause (b) does not constitute a class or category; contingencies mentioned therein is not exhausted by enumeration; the general terms do not follow the enumeration and there is clear indication of a different legislative intent. - The words or “for any other reasons” should be given the widest meaning bearing in mind the scheme of the provisions of WBVAT - the notice was issued by respondent on the assessee are valid in law. - HC
Case Laws:
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GST
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2022 (2) TMI 128
Issuance of summons - blocking of utilized ITC - rule 86A of the CGST Rules - It is the case of the petitioner that the petitioner has paid/deposited the substantial amount with the authority under the State GST Act as well as deposited various amounts with the respondent no.5 - HELD THAT:- The respondents are granted four weeks time to file affidavit in reply which shall be served upon the petitioner s advocate simultaneously. Rejoinder, if any, to be filed within two weeks thereafter with a copy to be served upon the respondents advocate simultaneously. Place the matter on board for admission on 28th March, 2022.
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2022 (2) TMI 127
Provisional attachment of bank accounts - Section 83(2) of the CGST Act, 2017 - HELD THAT:- This Court disposes of the present writ petition by observing that the impugned provisional attachment orders have ceased to have effect after the expiry of period of one year from the date the order had been passed under Section 83(1) of the Act. The Respondents are directed to de-freeze the Petitioner Company s Bank Accounts within three workings days of uploading of the present order - Petition allowed.
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2022 (2) TMI 126
Seeking release of seized goods alongwith vehicle - detention on the plea that no document with regard to movement of the goods being carried by the vehicle i.e., granite slabs was produced - procedure under statutes contemplated under law was not properly followed - principles of natural justice - HELD THAT:- The Court is not inclined to interfere in the matter. Keeping in mind the provisions of Section 129(2) of A.P.G.S.T. Act, as also that once such proceeding has been initiated, the same is now required to be taken to its logical conclusion. The writ petition stands disposed of with liberty to the petitioner to get the proceeding which has already been initiated by the authorities taken to its logical conclusion, besides praying before the authorities concerned for provisional release of the vehicle, which shall be considered by the authorities concerned in accordance with law expeditiously.
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2022 (2) TMI 125
Levy of IGST - petitioner submitted that the manner in which the order has been passed is patently illegal and even the consideration is not in accordance with law - HELD THAT:- In view of the issues being primarily based on factual aspects, which have to be verified from the records or upon which evidence has to be adduced, in the considered opinion of the Court, under its prerogative writ jurisdiction under Article 226 of the Constitution of India, the same may not be the proper forum for such adjudication. Moreover, as has rightly been submitted by learned counsel for the respondents, the order being appealable, the writ petition stands disposed of with observation that the petitioner may approach the Appellate Forum against the order impugned. Since the limitation for filing such appeal has expired, but in view of the orders passed by the Hon ble Supreme Court extending the limitation period in such matters, the period for filing the appeal still survives. The Court does not find any occasion to allow these Interlocutory Applications as no purpose would be served since the Court is permitting the petitioner to move the appellate authority, before whom all issues can be agitated and, depending on what order is passed by the appellate authority, consequences shall follow - Application disposed off.
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2022 (2) TMI 124
Classification of supply - applicable rate of GST - supply of Reverse Osmosis Plant/system (RO Plant/system) to Indian Navy/Indian Coast Guard in normal course - supply of RO Plant/system (Reverse Osmosis Plant) to the Indian Navy/Coast Guard which would be installed in/on a warship. Applicable rate of GST on supply of Reverse Osmosis Plant/system (RO Plant/system) to Indian Navy/Indian Coast Guard in normal course - HELD THAT:- The said question is pertaining specifically to supply of the impugned goods. In other words, the issue is a supply of goods only. The applicant is of the opinion that the impugned goods are classified under HSN 8421 of the GST Tariff and we also agree with the said opinion of the applicant - the impugned product classified under C.H. 8421 of the GST Tariff attracts 18% GST. Applicable rate of GST on supply of Reverse Osmosis Plant/system (RO Plant/system) to Indian Navy/Indian Coast Guard to be installed in/on a warship - HELD THAT:- The items that are discussed as essential parts of a ship/vessel are such essential components of a vessel/ship without which the ship would not be complete and would not exist. These are very integral for the functioning of the ship and can also be separated from the ship for repair/replacement. When the definition of the word 'part' is referred, it is found that 'part' is a separate piece of something or a piece that combines with other pieces to form the whole of something. Similarly the second definition of part also defines 'part' as one of the pieces that together form a machine or some type of equipment. The classification of goods under Sr. No. 252 depends solely on the nature of use to which the goods are put to. The impugned goods have the function of purifying water. It is not the case that the ship cannot sail without the impugned goods. The applicant has not produced any evidence to show that the impugned goods are so essential that the ships cannot sail without the same - the impugned goods, being in the nature of additional equipment used in ships and not parts of ship cannot be considered for concessional rate of GST as parts of a ship. The fresh water is very essential necessity for the members/crew of the vessels in terms of drinking water, water for cooking, etc. especially when the ship is out for a long haul but such essential necessity of the impugned equipment is for the crew/members and not for the ship as a whole. Any ship can just sail without have the impugned equipment on board and therefore the impugned goods cannot be considered as parts of a ship and therefore, the subject supply of impugned goods cannot be given the benefit of concessional rate of GST as per Sr. No. 252 of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 - in the absence of specific exemption, the applicable rate of GST is 18%.
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2022 (2) TMI 102
Validity of summon issued - powers to be exercised under various provisions of the CGST Act including permission of summon under Section 70 thereof - circular dated 05.07.2017 issued by the Central Board of Excise and Customs - HELD THAT:- Issue notice, returnable on 23.03.2022. Learned counsel Mr. Kinshuk Jain waives notice on behalf of the respondents. His name be shown in the cause list. Prima facie it would appear that issuance of summons after the full enquiry was over and which also resulted into not only issuance of show cause notice but the order in original being passed, was not permissible. Under the circumstances the impugned summons are stayed.
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Income Tax
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2022 (2) TMI 123
Revision u/s 263 by CIT - whether the assessee was entitled to the benefit of deduction u/s 80- IA(4)? - revenue seeks to sustain the order passed by the PCIT under Section 263 of the Act by contending that the two companies which were permitted to use the railway sidings were group companies of the assessee and they were closely held companies by the assessee and, therefore, cannot be construed to be used by general public - HELD THAT:- Contention of the revenue has to be outrightly rejected and such narrow interpretation of the agreement entered into between the assessee and Indian Railways cannot be given. Tribunal rightly referred to the various clauses in the agreement and came to the conclusion that the Railway Administration had a right to use all the sidings which have been put up by the assessee. Thus, the assessee would squarely fall within the ambit of clause (b) of Section 80-IA(4) of the Act. Further, we note Tribunal has relied on the decision in the case of Tamilnadu Petro Products [ 2010 (11) TMI 645 - MADRAS HIGH COURT] wherein as took note of the decision in the case of CIT Vs. Tanfac Industries Ltd. [ 2009 (7) TMI 1260 - SUPREME COURT] wherein while applying Section 80-IA(4) of the Act, The Hon ble Supreme Court took a view that the value of steam used for captive consumption by the assessee was entitled to be deducted under Section 80-IA of the Act. In Tamilnadu Petro Products [ 2010 (11) TMI 645 - MADRAS HIGH COURT] the revenue contended that the expression derived from should be given restricted meaning in which event the claim of the assessee cannot be countenanced. This argument by the revenue was rejected by holding that Section 80-IA (4) provides for the benefit even in respect of electricity generation plant established by the assessee and income derived from such enterprise of the assessee and it was held that the assessee has fully complied with the requirement prescribed under Section 80IA in order to avail the benefit provided therein. The above decision will squarely apply to the facts of the case on hand. Furthermore, the Tribunal also relied upon the decision of the ITAT Mumbai Bench in the case of JSW STEEL VS. PCIT [ 2017 (12) TMI 1204 - ITAT MUMBAI] wherein identical facts were involved and thus we are of the clear view that the Tribunal rightly allowed the appeal filed by the assessee.
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2022 (2) TMI 122
Condonation of delay in filing the Return - Petitioner was not able to file his return as the TDS was not reflecting in petitioner s 26AS at the time of due date of filing the ITR for the Assessment Year 2018-19 - HELD THAT:- Keeping in view the impugned order, this Court is of the view that no adjournment is required. In fact, the Petitioner s application for condonation of delay has been rejected in the present case without giving any reason. In the impugned order, the Respondents had examined the Petitioner s case on merit and rejected the claim of the Petitioner on the ground that the same was not genuine. In the opinion of this Court, the Respondents by deciding an application for condonation of delay has effectively passed an assessment order without giving an opportunity to the Petitioner to argue his case, which is contrary to law. Consequently, the impugned order dated 23rd August, 2021 is set aside and the delay in filing return of the income by the Petitioner for the Assessment Year 2018-19 is condoned.
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2022 (2) TMI 121
Validity of Revision u/s 263 undertaken by CIT - excise duty liability cannot be allowed as deduction since it was not actually paid by the assessee during the relevant year - assessment order revised/modified or set aside on the ground that a certain sum of money had been debited towards excise duty of finished goods and the same amount had been shown under the head Short Term Provision in the balance sheet as on 31st March, 2012 - HELD THAT:- Tribunal considered the paper book filed by the assessee and found that the assessing officer had issued a questionnaire dated 11th November, 2014 along with the notice under Section 142(1) of the Act and sought for calculation of valuation of closing stock and the relevant details were furnished by the assessee along with the letter dated 13th February, 2015 and thereafter the assessing officer having been convinced on the said working, did not make any addition or disallowance under Section 43(B) of the Act on the subject issue. We find that the Tribunal has rightly taken note of the Central Excise returns and noted that one of the units of the assessee was engaged only in job work activity and therefore, not entitled for benefit of input credit and after taking note of the sum paid on the said account, the Tribunal also found that the balance amount was adjusted with the available input credit in the respective divisions which undoubtedly would tantamount to actual payment of excise duty. Thus, we find that the Tribunal rightly granted relief to the assessee and the order does not call for any interference. Appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue.
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2022 (2) TMI 120
Reopening of assessment u/s 147 - Whether there is no suppression on the part of the petitioner to justify reopening of the assessment ? - HELD THAT:- It is the case where a notice for reopening of assessment was issued on 19.10.2011. The petitioner has replied to the same which culminated in Assessment Order dated 28.12.2011. The said order was passed in contravention of the directions of the Hon'ble Supreme Court inasmuch as no speaking order was passed in terms of the decision of the Hon'ble Supreme Court in G.K.N.Driveshafts case [ 2002 (11) TMI 7 - SUPREME COURT ] It was therefore set aside and the case was remitted back to pass a speaking order. The respondent has now passed the impugned order/communication over ruling the objection of the petitioner. By the impugned order, the respondent has merely concluded the reasons why the assessment has been reopened. The fact that the assessment has been reopened itself does not mean that the re-assessment has been completed. It is open for the petitioner to participate in the proceedings and make appropriate submissions before the respondent by convincing the respondent to the effect that there is no case made out for revising the assessment completed earlier.
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2022 (2) TMI 119
Denial of exemption u/s.54F - second unit of the house purchased by the assessee - As per revenue exemption was available only for one residential unit and not the two residential units purchased by the assessee - HELD THAT:- The assessee purchased two flats to be used as a single dwelling unit. Since these two units are adjacent to each other and meant for use as a single property, mandate of the substituted provision, being, one residential house, is still also satisfied. The view point of the ld. CIT(A) that the amendment carried out to section 54F w.e.f. 01-04-2015 has changed the legal position, is albeit factually correct, but, in the given facts, even the amended provision comes to the rescue of the assessee inasmuch as the assessee acquired one residential house only comprising of two flats. The assessee deserves exemption u/s.54F on second unit as well. The impugned order is set-aside to this extent. - Decided in favour of assessee.
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2022 (2) TMI 118
Availability of deduction u/s 80P on interest - AO denied the benefit of deduction on the ground that the amount of interest income did not qualify, which view came to be countenanced partly in the first appeal by the ld. CIT(A) allowing proportionate deduction - HELD THAT:- CIT(A) has accepted the assessee s contention, in principle, about the eligibility of deduction u/s.80P(2) of the Act on interest income. He, however, restricted the benefit proportionately by considering the total receipts of the assessee vis- -vis the amount of interest income. Once the ld. CIT(A) accepted the contention of the assessee for deduction u/s.80P(2), it was to be allowed in respect of the entire interest income. As against the interest income of ₹ 1.04 crore, the assessee s amount of deduction u/s 80P stood only at ₹ 11,04,044. Therefore set-aside the impugned order and direct to grant the benefit of deduction u/s.80P(2)(a) on the full amount claimed by the assessee.- Decided in favour of assessee.
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2022 (2) TMI 117
Penalty u/s.271AAB - Belated filing of regular return after search - income offered by the assessee in regular return of income filed u/s.139(1) of the Income Tax Act, 1961, on cessation of liability u/s.41(1) of the Act, being unsecured loan taken - HELD THAT:- In this case, except fact that regular return of income was filed after the date of search there was no adverse finding from the Assessing Officer regarding income offered by the assessee being cessation of liability u/s.41(1) of the Act, that said income is in nature of undisclosed income which was disclosed consequent to search Cessation of liability treated by the assessee towards unsecured loan taken from M/s. Park Field Developers Builders P.Ltd. was not part of disclosure made in the statement recorded under section 132(4) of the Income Tax Act, 1961, nor it was case of the Assessing Officer that said income was disclosed in return of income filed in response to notice issued u/s.153A of the Act as a consequence of search. Penalty cannot be levied u/s.271AAB of the Act, in respect of income disclosed in regular return of income filed by the assessee for relevant assessment year, even though said return has been filed subsequent to date of search, so long as return filed by the assessee was within due date prescribed u/s.139(1) / 139(4) of the Income Tax Act, 1961. Since the assessee has filed regular return for impugned assessment year within extended due date prescribed u/s.139(4) of the Act, the Assessing Officer cannot levy penalty u/s.271AAB of the Act. The learned CIT(A) without appreciating facts has simply confirmed additions made by the Assessing Officer. Hence, we direct the Assessing Officer to delete penalty levied u/s.271AAB of the Act. - Decided in favour of assessee.
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2022 (2) TMI 116
Delayed deposit of employees contributions qua ESI, PF and Labour Welfare Fund - payment after the due date as prescribed in the relevant Acts, however, before the due date of filing of return of income u/s.139(1) - HELD THAT:- Jurisdictional High Court in the case of PCIT vs., Pro Interactive Service (India) Pvt. Ltd., [ 2018 (9) TMI 2009 - DELHI HIGH COURT] while following the decision in the case of CIT Versus AIMIL Ltd.[ 2009 (12) TMI 38 - DELHI HIGH COURT] has held that legislative intent was/is to ensure that the amount paid is allowed as expenditure only when payment is actually made. It was further held that it was not the legislative intent and objective to treat belated payment of Employees Provident Fund Employees State Insurance Scheme as deemed income of the employer under section 2(24)(x) of the I.T. Act, 1961. From the aforesaid Judgments of the Hon ble High Courts, it is clear that the Hon ble Courts have not drawn any distinction between the employee s and employer s share qua PF ESI contributions, hence, first determination of the Ld. CIT(A) qua non-applicability of the provisions of Section 43B of the Act to the employee s share qua PF, ESI and Labour Welfare Fund is unsustainable. Applicability of the amendment to Sections 36(1)(va) and Section 43B - Various benches of the ITAT including Hyderabad Bench in the case of Value Momentum Software Services Pvt. Ltd.[ 2021 (5) TMI 989 - ITAT HYDERABAD] have taken into consideration the identical issue qua applicability of the amendment to Sections 36(1)(va) and Section 43B of the Act, by inserting Explanations by the Finance Act, 2021 and clearly held that the amendment shall be applicable from 1st April, 2021 onwards . It is also relevant to note that the CBDT has also issued Memorandum of Explanation qua applicability of the amended provisions of Sections 36(1)(va) 43B of the Act w.e.f. 1st April, 2021 and Assessment Year 2021-21 onwards, hence there is no doubt qua applicability of the amended provisions referred above, prospectively. The second aspect as considered by the ld. CIT(A) qua applicability of the amended provisions of Sections 36(1)(va) and 43B of the Act to the cases in hand, is also un-sustainable. - Decided in favour of assessee.
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2022 (2) TMI 115
Deduction u/s 80M - As noted by Ld. AO that the assessee earned dividend income and claimed deduction u/s 80M i.e. to the extent of dividend paid by the assessee - CIT(A) opined that in case of mixed funds, it could not be taken that the investments were out of interest free funds. The assessee was not able to link the share capital and reserves available with the investment - HELD THAT:- Undisputed facts that emerges are that the assessee had own funds by way of share capital and reserves as on 31.03.1990 for ₹ 600 Lacs. Therefore, the investments made on 28.01.1991 for ₹ 564.60 Lacs would bear direct nexus with the same. As on 31.03.1991, the assessee had share capital and reserves of more than ₹ 636.35 Lacs which have been invested in fixed assets and others and therefore, the same could not have been used for the purpose of making investment. However, the assessee had cash accumulations during first quarter of 1991 for ₹ 328.60 Lacs and therefore the investment made on 02.05.1991, to that extent, may be presumed to be made out of cash accumulations. The total investments made by the assessee stood at ₹ 1311.28 Lacs. Hence, the balance ₹ 418.08 Lacs of investment alone could be considered to be sourced out of borrowed funds. AR, in the written submissions, has stated that average cost of borrowing was 14% and considering the profits earned, 50% of cost of funds may be considered as proportionate to earning of income from dividend out of borrowed funds. Accordingly, 7% of ₹ 418.08 Lacs may be considered as proportionate interest expenditure which would roughly translate into ₹ 29.26 Lacs of proportionate interest expenditure. We find these submissions to be reasonable and acceptable and therefore, we direct Ld. AO to compute exact disallowance and restrict the interest disallowance to that extent. No disallowance of management expenses shall be made. No other material arguments have been adduced during hearing before us. Appeal partly allowed in favour of assessee.
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2022 (2) TMI 114
Disallowance of delayed payment of employee contribution to EPF, ESI and other welfare funds u/s. 43B r.w.s. 36(1)(va) - HELD THAT:- As relying on M/S JANA URBAN SERVICES FOR TRANSFORMATION PVT. LTD. [ 2021 (10) TMI 842 - ITAT BANGALORE] we find no merit in the argument of the ld.DR since the explanation as provided in Finance Act 2021 prescribes that the amendment in both sec.36(va) as well as 43B by inserting corresponding explanation that although impugned PF comes in the form of provision and the same is applicable from 1/4/2021 onwards only. In the present case we are concerned with the asst. year 2017-18 and the amended provision could not be applied retrospectively as it is only applicable w.e.f 1/4/2021. Being so no disallowance could be made by the AO in respect of PF/ESI paid within the due date of filing return of income. Though, it was beyond the date mentioned in the respective Act. This view of ours is supported by various judgment relied on by the ld.AR. Accordingly the appeal of the assessee is allowed.
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2022 (2) TMI 113
Deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) - HELD THAT:- As the amended provisions of section 43B as well as 36(1)(va) are not applicable for the assessment years under consideration. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance made by the Assessing Officer is deleted. - Decided in favour of assessee.
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2022 (2) TMI 112
Rectification u/s 154 - non following of Instruction No.17/2008 dated 26.11.2008 during the course of appeal proceedings - HELD THAT:- AR stated on merits that the issue is covered by the decision of Hon ble Supreme Court in the case of CIT vs. Nawanshahar Central Co-opertive Bank Ltd. [ 2005 (8) TMI 28 - SC ORDER] wherein the Board Circular No.18/2015 dated 02.11.2015 has clarified that the investments held by the banking concern are part of business of banking and therefore, the income from the same is taxable under the head profits and gains of business . According to him, the natural corollary of the circular and the decision of Hon ble Supreme Court is that the investments remained at the end of the year has to be treated as stock-in-trade and the settled principle is that the stock-in-trade should be valued at lower of cost or market value. Similar are the facts in assessee s case. Claim of deduction u/s.36(1)(viia) - The issue is squarely covered by Co-ordinate Bench decision of ITAT in assessee s own case in [ 2019 (3) TMI 1002 - ITAT CHENNAI] for assessment year 2007-08 and moreover this issue is covered by the decision of Hon ble High Court of Calcutta in the case of PCIT vs. Uttarbanga Kshetriya Gramin Bank [ 2018 (5) TMI 903 - CALCUTTA HIGH COURT] - In view of the above, both the issues are covered, as noted above, the issue cannot be taken up under rectification proceedings. The issue is first of all highly debatable and requires legal arguments. Even otherwise both the issues i.e., depreciation on investments and claim of deduction u/s.36(1)(viia) of the Act, both are covered in assessee s own case by Tribunal Benches as well as by the Hon ble Jurisdictional High Court in assessee s own case and the Hon ble High Court of Calcutta. Hence, we find no error in the order of CIT(A) and hence, the appeal of Revenue is dismissed.
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2022 (2) TMI 111
Disallowance of speed money u/s 37(1) - expenses under the head office administration expenditure - AO stated that on perusal of the detail, it was noticed that miscellaneous expenses included entertainment expenses speed money etc - HELD THAT:- The assessee explained that these expenses were incurred on behalf of the respective principals and have been debited to respective vessel account. The expenses was ultimately reimbursed by the principal and therefore these expenses were actually incurred on behalf of the principals and ultimately taken by the respective principal amount. The assessee has also explained the exact process of accounting and documentation of such expenses which is also produced in the submission of the assessee It is noticed that ld. CIT(A) after following the decision of M/s M. Jamunadas Company [ 2017 (1) TMI 1445 - ITAT MUMBAI] has sustained the disallowance of 25% to such expenses made by the assessing officer. In this regard the contention of the assessee that in accordance with the above referred decision of the ITAT it has already made suo moto disallowance which was not considered by the lower authorities before making further disallowance - we observe that the contention of the assessee that it has already made suo motto disallowance which pertained to the expenses of the nature of speed money and the claim that the A.O had mistakenly presumed the entire administration expenditure for computing further such disallowance @ 25% as speed money is required verification on the basis of relevant supporting detail and document. Therefore, we consider it will be appropriate to restore this issue to the file of the assessing officer for deciding de novo after verification and examination of the relevant material and submission of the assessee. Therefore, this ground of appeal of the assessee is allowed for statistical purpose. Disallowance u/s 14A r.w.r. 8D - CIT(A) has restricted the disallowance computed by the assessing officer u/s 14A r.w.rule 8D to the extent of the exempt income of ₹ 10 lac earned by the assessee - HELD THAT:- During the course of the appellate proceedings before us the ld. Counsel has referred the provision of Sec. 115BBDA and contended that provision of this section was not considered while computing disallowance in the case of the assessee. Therefore, we are of the considered view that it would be appropriate to restore this issue to the file of the assessing officer for deciding afresh after taking into consideration the applicability of provision of Sec. 115BBDA and after verification of the relevant material and submission of the assessee. Accordingly, the additional ground of appeal of the assessee is allowed for statistical purposes.
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2022 (2) TMI 110
Short deduction of tax and interest on short deduction - HELD THAT:- We are of the considered view that since the alleged amount has already been offered to tax by deductee and necessary evidence are placed on record to prove this fact we direct the revenue authorities to delete the demand made towards short deduction of tax and the interest demand being consequential in nature is also directed to be deleted. - Decided in favour of assessee.
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2022 (2) TMI 109
Disallowance of telephone expenses - According to the ld. AR, these expenses have been incurred by the partners of the assessee for the purpose of business and since the timings of European Countries and USA also Australia there is time differences in working hours of the establishments and for this purpose, the partners have to call at these odd hours to the foreign customers - HELD THAT:- It is an admitted fact that as per Clause 3 of the partnership deed of the firm which has already been placed on record, all the partners are working partners of the firm for carrying out the business activities of the firm and thus, these expenses were incurred wholly and exclusively for the purpose of business of the assessee firm and are entitled to deduction u/s 37(1) of the Act. We also verified the fact that the department had not made any disallowance in preceding year i.e. A.Y. 2012-13 wherein the assessment was completed U/s 143(1) of the Act. The department has also not made any disallowance for the subsequent year i.e. A.Y. 2015-16 wherein the assessment was passed U/s 143(3) of the Act. Copies of all the orders of the proceeding years as well as subsequent year have already been placed on record and after going through these orders as well as facts of the present case, we found that no disallowance was called for on telephone expenses and the assessee is entitled to said deduction U/s 37(1) of the Act, accordingly, we direct to delete the same. Disallowance on account of entertainment expenses - HELD THAT:- No disallowances had been made by the A.O. in the preceding years as well as in the subsequent year. With regard to club subscription/expenses, we observed that the club subscriptions and expenses were incurred for the business purposes as much as it facilitated interaction with business associations etc. The club expenses were incurred with a view to promote to soliciting the customers in export of garments business - A.O. noted that the expenses with regard to entertainment are related to purchase of foods items and some of the bills are in the names of the partners for Delhi Gold club - assessee's business is export of garments out of India and many of the foreign buyers came India in connection with export business activities and the assessee firm have to look after the foreign buyers and soliciting them, but at the same time, we cannot lost sight of the fact that some of the expenses claimed by the assessee are on account of purchase of cigarettes, wines etc., in our view, these expenses incurred by the assessee on purchase of cigarettes, wines etc. cannot be allowed as business expenses. Therefore, Additions are on higher side and in the interest of justice, we restrict this addition to the tune of ₹ 6.00 lacs and rest of the addition is directed to be deleted. We order accordingly. Addition u/s 40(a)(ia) - payment for the membership expenses relating to the Maharani of India Retail Division - HELD THAT:- Since the deduction of tax is not deductible under Chapter XVII-B of the Income Tax Act on the aforesaid payments made by the assessee firm. The ld. AR has submitted that the A.O. has not stated any of the sections under which the assessee firm is required to deduct tax at source on these payments. The membership and subscription charges are not covered under any specific sections provided under Chapter XVII-B of the Act. It is also very important to mention here that in the preceding years i.e. A.Y. 2012-13 and 2013-14 as well as subsequent year i.e. A.Y. 2015-16, the A.O. had not made any disallowance u/s 40(a)(ia) of the Act - Since the tax was not deductible at source under Chapter XVII-B of the Act on these payments we direct to delete the addition made and sustained U/s 40(a)(ia) of the Act. - Decided in favour of assessee.
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2022 (2) TMI 108
Disallowing the depreciation for the cars AND interest paid on car loan used by the directors - vehicle held in the name of director of the appellant company - AO disallowed both the claims on the ground that the car was held in the name of the director instead of appellant company - HELD THAT:- The vehicle i.e. BMW car is registered in the name of director of the appellant company although the repayment of loan out of which the car was acquired, was made by the appellant company and it was used in the business of the appellant company. The fact that the loan was repaid by the appellant company affirms the position that the appellant company is owner of the vehicle. The fact that the vehicle is registered in the name of the director of the appellant company does not make any difference, inasmuch as, the registration under the Motor Vehicle Act, 1988 is not conclusive evidence of the ownership of the vehicle. The term ownership under the Motor Vehicle Act is different from the ownership as envisaged under the provisions of section 32 of the Act as held by the Hon'ble Supreme Court in the case of I.C.D.S. Ltd.[ 2013 (1) TMI 344 - SUPREME COURT] . Hon'ble Calcutta High Court in the case of CIT vs. Salkia Transport Associates [ 1982 (9) TMI 28 - CALCUTTA HIGH COURT] held that there is no requirement under the provisions of section 32 that in order to avail the depreciation, an assessee should be registered the ownership of the vehicle. We are of the considered opinion that the assessee is entitled to the depreciation under the provisions of section 32 of the Act inspite of the fact that the vehicle is registered in the name of the director of the appellant company. Therefore, we direct the Assessing Officer to delete the addition on account of disallowance of depreciation on car and interest paid on car loan. - Decided in favour of assessee.
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2022 (2) TMI 107
Revision u/s 263 by CIT - disallowance of audit fee and payment of sub-contract expenses - HELD THAT:- PCIT's behest is that of sub-contract payments only which in any case stands covered in the foregoing estimation of income being on debit side of the turnover. Same reasoning applies qua assessee's audit fee payment without non-deduction of TDS as well. As decided in Indwell Constructions Vs. CIT [ 1998 (3) TMI 121 - ANDHRA PRADESH HIGH COURT] that such disallowances/additions are no more exigible in case of estimation of gross receipts of an assessee. We lastly refer to landmark decision in Malabar Industrial Co. [ 2000 (2) TMI 10 - SUPREME COURT] held that an assessment has to be fell erroneous as well as prejudicial to the interest of the Revenue; simultaneously, before the CIT or the PCIT; as the case may be, invokes his Section 263 revision jurisdiction. We accordingly are of the opinion that the learned PCIT has erred in law and on facts in exercising his Section 263 revision jurisdiction in both these assessment years. This impugned action to this effect stands reversed. - Decided in favour of assessee.
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2022 (2) TMI 106
Unexplained expenditure u/s. 69C - unaccounted purchases from unknown sources - - HELD THAT:- There is clear discrepancy in the financial accounts as well as return of income filed by the assessee. It has casually been stated that the stock was inflated for bank purposes only. However, the same stock of ₹ 300 Lacs is reflected in the financial statements whereas stock ₹ 250 Lacs has been reflected in the return of income. Therefore, the various pleas raised by Ld. AR are not acceptable. The complete onus to reconcile the accounts including stock valuation was on the assessee and the assessee has failed to do so. At the same time, we observe that the assessee's turnover has not been doubted by Ld. AO. The assessee is unable to explain the purchases and could not produce any evidence in support of the same. However, all these purchases could not have been termed as income of the assessee since the material purchased by the assessee would have been consumed in the manufacturing process. The manufacturing process would require consumption of raw material. Therefore, it could be presumed that the purchases were made from unknown sources. Under these circumstances, the profit element embedded in unaccounted purchases would have to be brought to tax. Considering the facts of the case as well as the nature of assessee's business, we estimate the profit element in unaccounted purchases @10% - The balance addition stand deleted. The grounds stand partly allowed. Addition u/s. 40(a)(ia) for want of tax deduction at source (TDS) - HELD THAT:- AR has pleaded that the payee has taken into account the interest income while computing their income and offered the same to tax. Therefore, the benefit of second proviso to Section 40(a)(ia) would be available to the assessee. Concurring with the same, we deem it fit to restore the matter back to the file of Ld. AO so as to provide an opportunity to the assessee to demonstrate the fulfillment of conditions as imposed in second proviso to Sec. 40(a)(ia). If the assessee succeeds, the disallowance shall stand deleted. This ground stand allowed for statistical purposes.
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2022 (2) TMI 105
Addition of unexplained cash deposits in the assessee's bank accounts - HELD THAT:- The subsequent utilization of the deposit amount could also assume significance in this regard. These are of course apart from the aspect of the time lag attending the dates of the first sale and the first bank deposit, as well as a reconciliation of the dates qua the stated source of the second deposit. Meet the assessee's first contention, i.e., of the impugned assessment being invalid as it was finalized while the assessment proceedings were on and, further, without the benefit of the information called for vide notice u/s. 142(1) dated 24/10/2019. The material called for, as apparent from the annexure to the said notice, is the copy of the assessee's HDFC Bank account (for the relevant year) which, in view of the fact that the AO is in the know of the cash deposited by the assessee in his said account (not contended as joint with his father) on 03/3/2012, and which fact is not disputed, rather appears to be available with him. Nothing, thus, turns thereon; there being in fact no explanation by the assessee in its respect either before the AO or before the first appellate authority. No prejudice stands shown caused to the assessee thereby. The argument, therefore, fails. It is a open set-aside, and nothing stated or observed herein, even as it may raise pertinent issue/s to be addressed, may be construed as an expression of any opinion by the Tribunal. Also, the assessee is at liberty to produce and rely upon any material in support of his explanation/s or otherwise to advance his case before the assessing authority, irrespective of whether it was produced during the first round or not - We decide accordingly.
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2022 (2) TMI 104
Exemption u/s 11 - primary reason for rejecting the application of the assessee is that he held that the assessee was not registered u/s. 12A of the Act and therefore it had violated various provisions of the Act and had wrongly claimed the income to be exempted u/s. 12A - HELD THAT:- We find that while rejecting the application of the assessee the CIT(E) has not commented on the object clause of the assessee and neither he had commented adversely on the activities being carried out by the assessee whereas the requirement of the Act is that at the time of grant of registration to assessee the ld. CIT(E) has to examine the objects of the assessee as well as the genuineness of activities of the assessee. Therefore in view of these facts and circumstances we deem it appropriate to remit the matter back to ld. CIT(E) who should pass a fresh order in accordance with the provisions of law and after providing sufficient opportunity to the assessee of being heard. Appeal of the assessee is allowed for statistical purposes.
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2022 (2) TMI 103
Credit for Foreign Tax after verification of the claim in contravention to section 251(1) - HELD THAT:- Tribunal, relying on certain decisions, accepted the assessee's claim of granting tax credit in respect of the interest income that was shown by the assessee in the year under consideration. Tribunal accepted the assessee's contention in the proceedings arising out of the order passed u/s. 143(3), the instant appeal on the very same issue, flowing from the order passed u/s.154, has virtually become infructuous. Respectfully following the order passed by the Tribunal for the same year allowing Foreign Tax credit in respect of interest income offered during the year under consideration, we uphold the impugned order on this score. The facts for the assessment year 2012-13 are admittedly mutatis mutandis similar to the immediately preceding year. For this year also, the AO did not allow credit for Tax credit on interest income credited by the foreign entity. The assessee moved application u/s. 154 and the instant proceedings arose out of such application. The assessee assailed the order u/s. 143(3) before the higher authorities. Tribunal accepted the assessee's contention and the ld. CIT(A) in the impugned order has followed the view point of the Tribunal in allowing the assessee's claim. Since the facts and circumstances of the instant appeal are similar to those for the assessment year 2011-12, following the view taken hereinabove, we uphold the impugned order.
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Customs
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2022 (2) TMI 101
100% EOU - Conversion of free shipping bills filed under EOU scheme into drawback shipping bills - the request for conversion has been rejected without any sufficient grounds - section 149 of the Customs Act, 1962 - HELD THAT:- As per provision of Section 149 of the Customs Act, 1962, if the documents evidencing the export of goods is produced, the request for conversion has to be considered by the officer. Though it is within the jurisdiction of the proper officer to allow the amendment of a free shipping bill, such discretion has to be applied as contained in section 149 of the Customs Act, 1962. The question as to whether appellant is eligible for the drawback benefits has to be considered only after the drawback shipping bills are presented for claim. If the claim of drawback is rejected an appeal against the rejection of drawback benefits has to be filed before the revisionary authority. In the present case, the request is only for conversion of free shipping bills in terms of section 149 of the Customs Act, 1962. It is not the case of the department that the appellant has not produced sufficient document to prove that the export of goods were done by them. So also there is no allegation that there is delay in filing the request for conversion. On such score, the request for conversion cannot be denied - there are no grounds to deny the conversion / amendment of shipping bills in terms of section 149 of the Customs Act, 1962. The eligibility of drawback has to be looked into by the concerned officer. Appeal allowed - decided in favor of appellant.
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2022 (2) TMI 100
Valuation of imported goods - Polyester Knitted Fabric - Rejection of transaction value - enhancement in the transaction value for the purpose of collection of duty, set aside - enhancement is made on the basis of DRI alert with reference to some NIDB data - HELD THAT:- At the time of hearing that Revenue has not served the copy of relevant material, it wanted to use against the respondent importer, for enhancement in the transaction value. Thus, the respondent / importer had no opportunity to meet the allegations of Revenue, for finalisation of the proposed enhancement made at the time of provisional assessment, even at the finalisation stage of the same - such action of Revenue is totally against the principles of natural justice. Hon ble Supreme Court in the case of DHAKESWARI COTTON MILLS LIMITED VERSUS COMMISSIONER OF INCOME-TAX, WEST BENGAL [ 1954 (10) TMI 12 - SUPREME COURT ], have laid down in its ruling that the Adjudicating Authority, if it wants to use any material collected behind the back of the assessee for the purpose of assessment, the Authority is bound to put assessee to notice by serving copy and giving sufficient opportunity to rebut the same. In absence of such notice the assessment order was held to be untenable and set aside - in the facts and circumstances of the present case, the ruling of Hon ble Supreme Court in the case of Dhakeswari Cotton Mills is squarely applicable. Appeal dismissed - decided against Revenue.
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Corporate Laws
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2022 (2) TMI 99
Sanction of proposed Scheme of Arrangement - Section 232 read with 230 of the Companies Act, 2013 and Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, and other applicable provisions - HELD THAT:- Since shareholders of all the companies have given their consent for dispensation of convening the meeting, hence the convening the meeting of shareholders is dispensed with and by exercising powers under Section 230(9) of the Companies Act, 2013, the requirement of convening the meeting of Secured Creditors and Unsecured Creditors of the five Transferor Companies and of the Transferee Company also dispensed with. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2022 (2) TMI 98
Approval of Resolution Plan - Section 30, sub-section (6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The mere fact that Financial Creditors are paid @ 8% and Operational Creditors are paid @ 0.5% cannot be said to be unequitable treatment. It is relevant to note that statutory dues, which are more than of ₹ 10 crores have also been only allocated 0.5%. It is true that the claim of the Appellant was based on Decree of Civil Court. But when we look into the definition of Section 3, sub-section (6), it is clear that the IBC contemplates all claims whether or not such right is reduced to judgment, had to be filed in IBC. Even if, right to payment is reduced to judgment of a Civil Court, the same is also a claim at par with other claimants as referred to in Section 3, sub-section (6). The judgment of Apex Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] has settled the legal position regarding payment to Operational Creditors and Financial Creditors. There are no ground is covered by grounds enumerated in sub-section (3) of Section 61, so as to exercise any jurisdiction by this Tribunal to interfere with the order of Adjudicating Authority approving the Resolution Plan. The Adjudicating Authority has considered claim of the Appellant and approved the Resolution Plan. The appeal is dismissed.
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2022 (2) TMI 97
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Pre-existing dispute or not - service of demand notice - HELD THAT:- The Appellant has no doubt issued a demand notice as required under the Code for initiation of proceedings under Section 9 of the Code. It is true that in a project work change of contractor results into delays and increased costs. So, in a commercial organization an understanding is always created to get the job done through the same contractor - Deduction on account of LD and Performance bank guarantee is a part of contractual terms and hence the Code is being a summary proceeding, the veracity of the statement cannot be examined like a trial court. Pre-existing dispute and chasing for payment also cannot be ruled out in this instant case. The Hon ble Supreme Court in TRANSMISSION CORPORATION OF ANDHRA PRADESH LIMITED VERSUS EQUIPMENT CONDUCTORS AND CABLES LIMITED [ 2018 (10) TMI 1337 - SUPREME COURT ] has already held that IBC is not intended to be a substitute to a recovery forum and also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked. The Appeal is dismissed.
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2022 (2) TMI 96
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantor to the Corporate Debtor - existence of debt and dispute or not - HELD THAT:- It is pertinent to mention that as per part-III of Form-C, the total debt from the personal guarantor, by way of personal guarantee given to M/s. State Bank of India, including interest as on 17.05.2021, amounts to ₹ 1169,37,87,061/-. It is made known to everyone that on the date of filing this Application by the Applicant/Creditor, the interim-moratorium commences as stipulated under Section 96(1)(a), in relation to all the debts of the personal guarantor and shall cease to have effect on the date of admission of this Application - Application admitted - moratorium declared.
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2022 (2) TMI 95
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - proper service of demand notice - HELD THAT:- The demand notice was delivered via speed post at the registered address of the Corporate Debtor. The original postal receipts are attached as Annexure-8 of the petition. In view of the same, it is held that the demand notice has been duly served. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is submitted in short reply by the Corporate Debtor vide Diary No.00341/01 dated 15.12.2021 that the Corporate Debtor in the e-mail dated 29.12.2018 admits the outstanding payment to the extent of principal amount only. The said e-mail has also been annexed in the main petition as Annexure A-7 at page No.25. It is also submitted by the Corporate Debtor that it is unable to pay the any of amount due and has become financially unviable. Time Limitation - HELD THAT:- The default occurred from 01.05.2019 and the petition is filed on 27.09.2019, hence the debt is not time barred and the petition is filed within the period of limitation. It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. The petitioner states that from the abovementioned facts it is clear that the liability of the corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is as per the threshold limit before the Notification S.O.1205(E) dated March 24, 2020 - the present petition is complete and the petitioner is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. In the backdrop of the above facts and records, the present petition is liable to admitted, in terms of Section 9(5) of IBC, 2016. Petition admitted - moratorium declared.
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Service Tax
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2022 (2) TMI 94
Rejection of application under the SVLRDS - summons issued to the petitioner for giving oral evidence or to submit relevant documents - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Declaration Form under SVLRDS-1 on CBEC website under voluntary category rejected on the ground that the petitioner was not eligible to opt under the said Scheme, since investigation was already initiated against the petitioner and was pending - HELD THAT:- Hon ble Supreme Court in case of TATA ENGINEERING LOCOMOTIVE CO. LTD VERSUS. STATE OF BIHAR AND ANOTHER, [ 2000 (4) TMI 815 - SUPREME COURT] held that if any enquiry or investigation or audit was initiated on or before 30th June, 2019, such a person would not be eligible to make declaration under the voluntary disclosure category. Logical corollary to this would be that an enquiry or investigation or audit post 30th June, 2019 would not act as a bar to the filing of declaration under the voluntary disclosure category. In the facts of that case, the enquiry was initiated after 30th June, 2019. In the present case, this Court was of the opinion that the respondents were not justified in rejecting the declaration of the petitioner dated 26th December, 2019 on the ground that the petitioner was not eligible to file declaration under the category of voluntary disclosure since enquiry was initiated against the petitioner on 19th December, 2019. This Court held that though under Section 125(1)(f) of the said Scheme does not mention the date 30th June, 2019 by simply saying that a person making a voluntary disclosure after being subjected to any enquiry or investigation or audit would not be eligible to make a declaration, the said provision if read and understood in the proper context would mean making of a voluntary disclosure after being subjected to an enquiry or investigation or audit on or before 30th June, 2019. Such a view if taken would be a reasonable construct, consistent with the objective of the scheme. In the facts of this case also the respondents had issued a summons only on 30th August, 2019 i.e. after 30th June, 2019 and thus summons issued after the cut-off date of 30th June, 2019 could not be the ground for declaring the application filed by the petitioner under SVLRDS-1 ineligible. In our view, the stand taken by the respondents is contrary to the principles of law laid down by this Court in case of M/S. NEW INDIA CIVIL ERECTORS PRIVATE LIMITED VERSUS UNION OF INDIA AND OTHERS [ 2021 (3) TMI 545 - BOMBAY HIGH COURT] and also contrary to the objectives, purposes and intent of the said Scheme introduced by the Central Government. The respondents would have been justified to declare the petitioner ineligible to file declaration under voluntary disclosure category, if enquiry or investigation or audit would have been initiated on or before 30th June, 2019. The respondents while rejecting the declaration form submitted by the petitioner also did not grant any opportunity of being heard to the petitioner. If an opportunity would have been granted by the respondents to the petitioner, the petitioner would have pointed out that the summons issued after 30th June, 2019 could not be a ground for declaring the petitioner s application ineligible - the impugned order is in gross violation of principles of natural justice. The Declaration Forms filed by the petitioners are restored to file and are remanded to the respondent no.3 for taking a fresh decision on these two declaration forms filed by the petitioner by treating the same as valid declarations under the voluntary disclosure category and thereafter grant the admissible relief to the petitioner. The respondents shall grant an opportunity of personal hearing to the petitioner by issuing seven days clear notice before the date of proposed hearing. The petitioner shall remain present at the time of hearing before the respondent no.3, without fail - petition allowed.
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2022 (2) TMI 93
Condonation of delay in filing appeal before commissioner (appeals) - appeal dismissed for the reason that it was filed beyond the statutory time limit - section 85 of the Finance Act 1994 - HELD THAT:- In the present case, the appeal was filed not only beyond the statutory limit of two months but even beyond the permissible period of one month. A perusal of sub-section (3A) of Section 85 clearly indicates that an appeal shall be presented within two months from the date of receipt of the order of the adjudicating authority in relation to Service Tax, interest or penalty. It further provides that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, allow it to be presented within a further period of one month - Section 35 of the Central Excise Act, 1944 provides that any person aggrieved by any decision or order passed under the Act, may appeal to the Commissioner (Appeals) within sixty days from the date of the communication to him of such decision or order provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days. The provisions of Section 35 of the Central Excise Act, 1944 are pari materia with Section 85(3A) of the Finance Act. The provision of Section 35 of the Central Excise Act, 1944 relating to appeals before Commissioner (Appeals) had come up for consideration before the Supreme Court in SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] where it was held that the period upto which the prayer for condonation can be accepted is limited by the proviso to sub-section (1) of Section 35 of the Act and the position is crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of thirty days after the expiry period of sixty days. The Commissioner (Appeals) was, therefore, justified in dismissing the appeal on the ground of limitation - appeal dismissed.
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2022 (2) TMI 92
Short payment of service tax - Banking and other Financial Services - Business Auxiliary Services - Erection, Commissioning or installation services - Banking and other financial services imported - Reverse Charge Mechanism. Banking and other financial services - Business Auxiliary services - appellant have received amount for financing charges in the nature of commission - HELD THAT:- If the said amount is actually by way of subsidy, the same will not be exigible to service tax. However, for verification of this fact that the amount of subsidy has been wrongly booked under the Commission Income - this issue is remanded to the Original Adjudicating Authority with directions to verify this claim, and thereafter, to pass a reasoned order in accordance with law. Erection, commissioning and installation services - HELD THAT:- The said amount has been booked by Revenue, from the Director s report for the year 2006-2007, being annexed to the audited accounts for the year - March ending 2007, wherein the Board of Directors have stated that the appellant have received a contract/ project for laying of transmission line worth ₹ 800 million (₹ 80 Crores) - this appellant was only a consortium partner for the sake of giving financial backing to M/s. Voltech Projects Pvt. Ltd., which is the leading party , and as per declarations in the MOU and the consortium agreement , the role of the appellant was limited to give financial backing to the Project, and all the liability of the execution of the project and realisation of Profit Loss arising thereunder, was on the lead partner (Voltech Projects Pvt. Ltd.) - this demand is set aside and the ground is allowed in favour of the appellant/ assessee. Banking and other financial services - Reverse Charge Mechanism - confirmation charges - SWIFT charges - HELD THAT:- The appellant, being initiator of letter of credit, is the receiver of the benefit on such opening of the letter of credit and accordingly, they are liable to pay the confirmation charges and accordingly, they have received the banking services from the foreign bank, through the bank in India. Accordingly, we find that the appellant is required to pay service tax on such confirmation charges under Reverse Charge Mechanism - So far the SWIFT charges are concerned, the privity of contract is between the Indian Bank and the SWIFT society. Thus, the receiver of the services is the Indian Bank, and not the appellant/assessee. The appellant/assessee only have reimbursed such SWIFT charges to the Indian bank. Accordingly, the appellant is not the receiver of SWIFT services, hence not liable to pay service tax on the same - this issue is remanded to the ld. Commissioner for re-calculation of the tax liability (on confirmation charges). Business Auxiliary Services - Reverse Charge Mechanism - HELD THAT:- Such service, admittedly, has been rendered by the service provider located outside India and have been received by the appellant in India. The appellant have been involved in this business being from the year 2006-2007 to 2010-2011. The said taxability (under RCM) was highly debatable and was under litigation - The issue was finally decided by the ruling of the Bombay High Court in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [ 2008 (12) TMI 41 - BOMBAY HIGH COURT] , wherein it was held (in the writ petition) that an assessee is required to pay service tax under Reverse Charge Mechanism for the specified services, w.e.f. 18.04.2006 only, when Section 66 A was introduced in the Finance Act. Further, the appellant/assesse was entitled to cenvat credit on payment of such service tax under Reverse Charge Mechanism. Thus, there is no incentive for them to evade payment of tax. Accordingly, this service tax liability is upheld, but at the same time, the penalty is set aside - in the case of banking and financial charges , as the cenvat credit is available for the payment of service tax, under Reverse Charge Mechanism, the penalty imposed is set aside. Appeal allowed in part and part matter on remand.
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Central Excise
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2022 (2) TMI 91
Demand for the relevant goods in the financial years 2003-04, 2004-05 and 2005-06 - shortly after the demand was made, the appellant paid the entire quantum of duty that it perceived to be due by February 27, 2007, including interest, and claimed that no further sum was due - HELD THAT:- Ordinarily, a demand can be raised by the department within a year of the duty becoming payable. However, in special cases, when the department perceives and it is able to demonstrate that an earlier demand could not be paid since the manufacturer intended to evade excise duty, the period of limitation would stretch to five years. Apropos such ground, it is the contention of the appellant that since the appellant set up its manufacturing unit in the North-East and was entitled to complete exemption or refund pursuant to the notification No.32/1999 dated July, 8 1999, there could never have been any intention on its part to evade excise duty since whatever it may have paid it would have recovered in terms of the notification of 1999. SSI Exemption - use of brand name of other person - Gulab brand - N/N. 8/2003 dated March 1, 2003 - appellant has been insisting from the stage of its reply to the show-cause notice of April 4, 2008 that the Gulab brand which has been manufactured by the appellant has been only on and after December 1, 2006 and for the period prior to December 1, 2006 it was not manufacturing its product under any brand name - HELD THAT:- Since a stand was taken by the appellant immediately upon receipt of the show-cause notice that it commenced manufacturing the relevant goods under the Gulab name only subsequent to December 1, 2006, the onus was on the department to prove otherwise in the event the department sought to establish that the appellant would not be entitled to the benefit under the SSI unit scheme of March 1, 2003 prior to December 1, 2006. Prima facie, the department appears to have come short on such count. However, in the absence of appropriate notification that was applicable at the relevant time pertaining to the exemption of excise duty for goods manufactured by units set up in the North-East, the matter cannot be concluded. Let the matter appear in the first week of February, 2022 as requested by the parties - List on February 2, 2022.
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2022 (2) TMI 90
Valuation - related party transaction - mutuality of interest - petroleum products cleared by the Appellant to the other OMCs are to be valued at Import Parity Price or not - SCNs alleged that the Appellant and the OMCs were mutually interested in the business of each other inasmuch as the MoU permitted the Appellant to use the marketing network of the other OMCs, and OMCs also benefited from the MoU - HELD THAT:- The Appellant and the other OMCs are independent parties and are not related to each other. Though the SCN alleged the mutuality of interest on the ground that the MoU entered into between the parties benefitted each of them mutually, however, the said ground was relinquished by the adjudicating authority itself, while passing the impugned order. Further, even in our view, merely entering into a mutually beneficial arrangement like MoU in the instant case, cannot make the parties related for the purposes of Section 4(3)(b)(iv) of the Central Excise Act, 1944. There are no hesitation in holding that the findings of the adjudicating authority in the impugned order, to the effect that the transaction between the Appellant and other OMCs is not sale but a product sharing arrangement on load/ debt basis, wherein whatever supply is made by the Appellant/ BPCL to the other three OMCs, they i.e. BPCL get back the same quantity from the respective OMCs, are factually incorrect and do not bear from the terms of the MoU - once the adjudicating authority found that the mutuality of interest is not relevant to the instant case, the only conclusion ought to be dropping the SCNs. However, the adjudicating authority went beyond the scope of SCN and made observations which were never alleged in the SCN and have been proved to be incorrect by the Ld. Counsel for the appellant. Such approach of the adjudicating authority of travelling beyond the scope of SCN is legally untenable and held to be a violation of natural justice. The Appellant has correctly valued the goods supplied to the other OMCs at transaction value, viz. the Import Parity Price under the MoU - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (2) TMI 89
Validity of assessment notice u/s 46 of WBVAT Act - carry forward of excess ITC to next FY - notice was challenged before the tribunal in on the ground that it is without jurisdiction as none of the grounds mentioned in the said provision are attracted for initiating assessment proceedings under Section 46 - reasons to believe - HELD THAT:- The first aspect which strikes our mind is with regard to the similarity of both notices, one which was impugned before the tribunal and the other which was impugned in the writ petition. The assessee is precluded from taking a stand that they are not required to place the decision of the Learned Single Bench of this Court before the tribunal as jurisdiction exercised by the tribunal is with regard to the proceedings under the WBVAT Act and the notice which was impugned in the writ petition is under the CST Act read with WBVAT Act. This contention of the assessee deserved to be out-rightly rejected. The notice undoubtedly contains the very same allegations namely carry forward of excess ITC for the next assessment year. The quantum is also the same - the decision rendered by the Learned Writ Court validating the notice issued under Section 9 of the CST Act read with Section 46 of the WBVAT Act binds the assessee and it will also bind the tribunal on account of the fact that the notice impugned before the tribunal was issued under Section 46 of the WBVAT Act. However, we do not wish to comment upon as to whether who was at fault in not placing the order passed in the writ petition before the tribunal as the legal position is clear that the order passed in the writ petition would bind the tribunal. In fact, the tribunal in its order would state that the order passed in the writ petition has persuasive value, however to our mind the order binds the tribunal more particularly when the assessee is the same person and the transaction based on which the assessment proceedings were proposed to be initiated is the same transaction. Hence, the tribunal was fully justified in reviewing its decision. Whether there was a mistake apparent on the face of the order? - HELD THAT:- It appears that the tribunal allowed the application at the admission stage without calling for the records or affidavits. The least that can be expected of the tribunal when a show cause notice is challenged is to first examine whether an application is maintainable challenging the show cause notice. More particularly, when Section 46 (3) provides an opportunity of being heard to the assessee before the decision is taken. Thus, this important aspect was not addressed by the tribunal, probably for the reason that the state did not canvass the same - the tribunal ought to have first addressed itself as to whether the application was maintainable or not thereby counting an error by allowing the application by a non-speaking order. Therefore, this is also one more ground which can be taken into consideration to recall the order passed by the tribunal dated 13.09.2017. Carry forward of excess ITC - HELD THAT:- The contention of the assessee before us that as a matter of right they are entitled to carry forward the excess ITC is an incorrect interpretation of subsection (6) of Section 22. This conclusion of ours is fortified on account of the dealer being liable for penalty under Section 22A for any false claim of ITC. Thus, the proper manner of interpreting the provision is to have regard to the language of entire group of connected provisions which undoubtedly form an integral whole. To be noted that the allegations in the show cause notice is that excess ITC over ₹ 5,00,000/- has been carried forward to the next financial year. Therefore, what the revenue seeks to do is to initiate assessment proceedings on the allegation that excess ITC has been carried forward and not the ITC which has been carried forward. The allegation is that the assessee has carried forward excess ITC than what he is entitled to. If such being the allegation in the notice then it would be well within jurisdiction of the assessing officer to initiate assessment proceedings under Section 46 of the Act. The notice has been faulted on the ground that satisfaction of the authority has not been recorded - The show cause notice clearly states the allegation against the assessee namely excess carry forward of ITC over ₹ 5,00,000/- and the notice cannot be faulty as the assessing officer was prima facie satisfied that there were relevant material based on which he proposes to initiate assessment proceedings under Section 46 (1) of the Act. The rule of ejusdem generis is inapplicable to the case on hand as Section 46 (1) (b) does not contain enumeration of specific words; the circumstance enumerated in clause (b) does not constitute a class or category; contingencies mentioned therein is not exhausted by enumeration; the general terms do not follow the enumeration and there is clear indication of a different legislative intent. The words or for any other reasons should be given the widest meaning bearing in mind the scheme of the provisions of WBVAT - the notice was issued by respondent on the assessee are valid in law. Petition dismissed.
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Indian Laws
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2022 (2) TMI 88
Failure to adhere to the principles of natural justice - validity of Emergency Arbitrator s Award - order passed under Section 17(2) of the Arbitration Act, in enforcement proceedings, is appealable under Section 37 of the Arbitration Act or not - HELD THAT:- The serious procedural errors were committed by the learned Single Judge. Natural justice is an important facet of a judicial review. Providing effective natural justice to affected parties, before a decision is taken, is necessary to maintain the Rule of law. Natural justice is usually discussed in the context of administrative actions, wherein procedural requirement of a fair hearing is read in to ensure that no injustice is caused. When it comes to judicial review, the natural justice principle is built into the rules and procedures of the Court, which are expected to be followed meticulously to ensure that highest standards of fairness are afforded to the parties. It is well known that natural justice is the sworn enemy of unfairness. It is expected of the Courts to be cautious and afford a reasonable opportunity to parties, especially in commercial matters having a serious impact on the economy and employment of thousands of people. Coming to the facts herein, the opportunity provided to the appellants herein was insufficient, and cannot be upheld in the eyes of law - Whenever an order is struck down as invalid being in violation of the principles of natural justice, there is no final decision of the case and fresh proceedings are left open. All that is done is to vacate the order assailed by virtue of its inherent defect. Such proceedings are not terminated and are usually remitted back. The contempt of a civil nature can be made out under Order XXXIX Rule 2A CPC not when there has been mere disobedience , but only when there has been wilful disobedience . The allegation of wilful disobedience being in the nature of criminal liability, the same has to be proved to the satisfaction of the court that the disobedience was not mere disobedience but wilful and conscious . A disconcerting aspect wherein the interim order enforcing the Emergency Award has adopted a standard beyond prima facie view , as required under law. It is expected of Courts to be cautious while making observations on the merits of the case, which would inevitably influence the Arbitral Tribunals hearing the matters on merit. The order dated 09.09.2021, imposed no bar on the High Court to adjudicate the issue concerning legality of the vacate application order by the Arbitral Tribunal. In our opinion, adjudication of the applications under Section 37(2), Arbitration Act filed by the appellants before the Delhi High Court are distinct from the earlier appeals filed before this Court - certain important questions of law concerning the effect of the award of an Emergency Arbitrator and the jurisdiction of an Arbitral Tribunal qua such awards arise in the present matter. Therefore, these matters need to be remitted back for adjudication on its own merits. Appeal allowed by way of remand.
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2022 (2) TMI 87
Validity of meeting dated December 26, 2021, of the Northern India Regional Council (NIRC) of the ICSI - validity of appointment of office bearers made in the alleged meeting dated 26th December, 2021 - election to the posts of Chairman, Vice-Chairman, Secretary and Treasurer of NIRC, who are elected for one year, otherwise, normally the tenure is four years - It is the case of the petitioners that the notice for the 259th meeting and the agenda thereof suffers from irregularities and legal infirmities as the same are in violation of Regulation 90 of the Regulations of 1982 and SS-I, and as such there was no valid notice/agenda for the 259th meeting - HELD THAT:- It is clear that the presence of words ordinarily not less than seven days indicate that the Regulation 90 of the Regulations of 1982 does not mandatorily stipulate a period of seven days in sending notice to the members unlike Paragraph 1.3.7 of the SS-I. The words, by stipulating notice for every meeting shall be sent ordinarily not less than seven days before the date of the meeting, confer a discretion on the Chairman to give a notice of even less than seven days. This is so, because, SSI cannot take away / dilute, the discretion vested with the Chairman by the Regulation of 1982 to give, a notice of less than seven days. The word ordinarily denotes, that the underlying provision does not promote a cast-iron rule. On the issue of agenda, the Regulations only contemplate, as far as practicable, a statement of the business to be transacted be provided, unlike the SS-I, which stipulates, agenda and agenda notes be mandatorily sent seven days prior to the meeting. In this instance as well, a discretion has been conferred on the Chairman by the provisions of the Regulations of 1982 to, as far as practicable, send a statement of the business to be transacted to the members. Even if it is not sent, the same is not fatal. The above is not to be construed to mean that the SS-I should not be followed at all. If in a given case it is followed, the same shall be proper / justified. In other words, if a notice of less than seven days is given along with a statement of the business to be transacted, the same shall not be held to be illegal merely because the notice of not less than seven days along with the agenda and agenda notes have not been sent. Validity / Legality of the meeting of December 26, 2021 - HELD THAT:- The process of holding the scheduled meeting on December 26, 2021 at 11 AM started on December 18, 2021 with the issuance of notice to all the members of NIRC stating that the same is for electing office bearers for the year 2022. The notice of December 18, 2021 satisfies the requirement of ordinarily not less than 7 days as contemplated by Regulation 90 of the Regulations of 1982. The e-mails also inform the business to be transacted, i.e., election of office bearers of NIRC for the year 2022. Such a report of an independent authority has to be given credence and cannot be ignored. The report suggests that the meeting of December 26, 2021 and the election of the office bearers held therein are justified. Agenda / Notes on Agenda - HELD THAT:- With the agenda being sent on December 23, 2021, i.e., four days prior to the scheduled meeting and the Regulation 90 of the Regulation of 1982 stipulating ordinarily not less than seven days , which gives discretion to the Chairman to send it even within seven days, the notice of December 18, 2021 informing the business of election for the year 2022 to the members and even sending the agenda in the manner depicted above, are not in violation of Regulation 90 of the Regulations of 1982 - the agenda / agenda notes circulated on January 11, 2022 for the meeting proposed to be conducted on January 18, 2022, with which the petitioners are satisfied, is nothing but a coalescence of the minutes of the 258th meeting held on December 20, 2021 and the agenda / notes for the meeting of December 26, 2021 sent on December 23, 2021. In fact, Mr. Kathpalia has heavily relied upon the agenda for January 18, 2022 to contend that it is in that manner, the agenda note should have been circulated. Hence, even on this ground, the plea of the petitioners that agenda / agenda notes were not circulated, resulting in the petitioners not being aware of the manner in which the modalities and process of election was to take place, is unsustainable. The Chairman had no power to adjourn the proceedings as per Regulation 95 of the Regulation of 1982 by himself. The plea of Mr. Kathpalia that the Chairman was asked by the members to take a decision in the meeting because no consensus could be arrived at and he had subsequently postponed the meeting in terms of Regulation 91 of the Regulation of 1982 is unmerited as the same is not borne out from the record and also the facts, and as it is clear from the report of the Regional Director / Returning Officer that, nine members stayed back to continue the meeting. This report of the Regional Director / Returning Officer of December 26, 2021 is not under challenge. Powers of the President / Secretary of ICSI - HELD THAT:- The plea of Mr. Kathpalia that the respondent Nos.4 to 7 have not challenged the email dated December 26, 2021 of the Chairman informing the postponement of the 259th meeting of NIRC is also unmerited. They have rightly refrained from challenging the same in view of the subsequent email of the Regional Director / Returning Officer; conclusion of the President of ICSI and circulation of the names of the elected office bearers of all Regional Councils by the ICSI itself. Thus it must be held that the meeting held on December 26, 2021 is proper, in accordance with the Regulations of 1982, and the business transacted thereof, i.e., election of office bearers of NIRC for the year 2022, cannot be faulted with. Having said that, the e-mail of the incumbent Chairman dated December 31, 2021 scheduling the 259th meeting on January 8, 2022 (as re-scheduled to January 18, 2022) and circulating the agenda thereof with regard to election of the office bearers of NIRC for the year 2022 would be unsustainable and cannot be acted upon. Petition dismissed.
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2022 (2) TMI 86
Dishonor of Cheque - service of demand notice - legal demand notices were issued after the expiry of statutory period of 30 days set out under the N.I. Act - Section 138 read with Sections 141/142 of the Negotiable Instruments Act, 1881 - HELD THAT:- In the present case, the primary issue raised by learned counsel for the petitioners during the course of submissions is that the legal demand notices were not issued by the complainant Company within 30 days of the receipt of information regarding dishonor of the cheques, i.e., from the date of the return memos, and thus the complaints are not maintainable. On the other hand, the complainant Company maintains that it was intimated of the dishonor of the cheques in question only when its Bank sent the aforesaid return statements, and the legal demand notices were issued within 30 days thereafter. In view of Econ Antri [ 2013 (9) TMI 246 - SUPREME COURT ], a decision albeit rendered in relation to Section 138(c) and Section 142(b) N.I. Act, it is discernible that the words of and from used under Section 138 N.I. Act do not imply different meanings. It is safe to infer that the use of the word of in Section 138(b) N.I. Act does not imply either that the day on which information regarding dishonor of cheque is received by the complainant from the bank is to be included while computing the limitation period for issuance of a valid legal notice - Applying the law to the facts of the present case, it is noted that the petitioner relies on the dates of return memos, i.e., dates of return of cheques in question, to compute the period of 30 days prescribed in the statute and contends that the legal demands notices were not issued in time. To the contrary, the complainant relies on the dates of receipt of return statements from its Bank, i.e., the dates on which intimation was received regarding dishonor of the cheques in question, to submit that the legal demand notices were issued within the statutory period. This Court is of the prima facie opinion that the legal notices were posted by the complainant Company within 30 days of the receipt of information from its Bank regarding dishonor of the cheques in question and were not time-barred. The contentions raised on behalf of the petitioner do not weigh with this Court and are accordingly rejected - Petition dismissed.
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2022 (2) TMI 85
Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - rebuttal of presumption - Section 138 of NI Act - HELD THAT:- The arguments of the learned counsel for the petitioner to the effect that the loan agreement had not been produced on record and the complainant should have filed a civil suit for recovery, also does not deserve any merit. The factum with respect to the loan having been taken is not disputed. The issuance of cheque and the signatures on the same have also not been disputed. It is not the case of the petitioner that the loan had been repaid and even the Statement of Account Ex.C6 shows that an amount of ₹ 16,48,026.44 was due from the petitioner as on 10.08.2016. Further, once the cheque has been produced on record and outstanding amount has also been proved without there being any rebuttal to the same, then, the presumption under Section 139 of the Act of 1881 would operate in favour of the complainant. There is nothing on record to even remotely rebut the said presumption. The offer to pay 25% of the total amount is not sufficient inasmuch as, on a specific query put by the Court to the counsel for the petitioner, as to whether the petitioner is ready to pay the entire amount, learned counsel for the petitioner has answered the same in the negative. The present Criminal Revision has no merits and is accordingly, dismissed.
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9911796707
