TMI Tax Updates - e-Newsletter
February 6, 2019

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

Articles

1. Changes in GST Act and GST Rules applicable from 01.02.2019

   By: Kumar Kedia

2. VERY QUICK DISPOSAL AFTER TRIBUNAL AND QUICK DISPOSAL BY TRIBUNAL- A LEARNING FOR OTHER COURTS AND SOME SUGGESTIONS

   By: DEVKUMAR KOTHARI

News

1. Issuance of modified Calendar for Auction of Government of India Treasury Bills for the quarter ending March 2019

2. Auction for Sale (Re-issue) of Government Stocks

3. Modified Issuance Calendar for Marketable Dated Securities for the remaining period February 04, 2019 – March 31, 2019

4. 15% direct tax collection growth target for FY20 'realistic': Revenue Secretary

Circulars / Instructions / Orders

Customs

1. PUBLIC NOTICE NO. 09/2019 - dated 28-1-2019

Denotifying a part of Container Freight Station, CWC Virugambakkam

2. PUBLIC NOTICE NO. 06/2019 - dated 28-1-2019

Denotifying an area of 83973.31 Sq.ft in M/S. Sanco Trans Ltd, Container Freight Station, No. 592, Ennore Express High Road, Chennai - 600 057

3. PUBLIC NOTICE NO. 02/2019 - dated 17-1-2019

Permission for Import/Export of all permissible goods from Adani Kandla Bulk Terminal Pvt. Ltd located near Tuna, off Tekra, outside Kandla Creek, Kandla Port

4. PUBLIC NOTICE NO. 06/2019 - dated 16-1-2019

Launch of AEO Website for Online filing of Applications for T1

5. PUBLIC NOTICE NO. 03/2019 - dated 4-1-2019

Processing of KBE at Air Cargo Complex, Kolkata

6. PUBLIC NOTICE No. – 01/2019 - dated 1-1-2019

Clearance of fully facilitated Bills of Entry pending for more than 24 hours

Highlights / Catch Notes

Income Tax

• Section 43D's Curative Nature: Applies to Ongoing Proceedings for Cooperative Banks, Despite Lack of Explicit Retrospective Effect.

  Case-Laws - HC : Section 43D - applicability - cooperative bank - One way of looking at this amendment, can be that, the same is curative in nature and would, therefore, apply to pending proceedings, notwithstanding the fact that, the legislature has not made the provision retrospective.
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• Tax Authority Misapplies "Blood Relative" Instead of "Relative" u/s 56, Leading to Wrongful Income Addition.

  Case-Laws - AT : Addition made on account of gift - Gift received his brother-in-law - exemption u/s 56 - Instead of relative as provided by the statute “blood relative” has been considered by the Learned AO and as a result whereof addition was made which is absolutely erroneous.
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• Penalty u/s 158BFA(2) is Discretionary; No Penalty for Additional Income Declared During Search.

  Case-Laws - AT : Levy of penalty under section 158BFA(2) is discretionary and not mandatory - Undoubtedly, there was some material found during the course of search and additional income on that account was offered by the assessee and the same has been accepted by the Revenue Department but on that account, no penalty has been levied
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• Exemption Denied: Section 11 Tax Benefits Rejected Due to Commercial Intent in Sponsorship Fees for Advertisement Services.

  Case-Laws - AT : Denial of Exemption u/s 11 - the assessee is charging huge amounts for sponsorship fee from corporate against which it provides various types of advertisement services and free passes are also provided - Making slabs for sponsorship fee and specifying the types of service against it are certainly for commercial gains with predominant objective to make profit - No Exemption.
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• Non-resident agent services exempt from TDS u/s 195; no liability u/s 9 for export commitments.

  Case-Laws - AT : TDS u/s 195 - services rendered by the non-resident agent can at best be called as a service for completion of the export commitment and would not fall within the definition of “fees for technical services” - Section 9 is not applicable - No TDS liability.
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• Depreciation Disallowance Not Triggered by Non-Deduction of TDS if Payment Capitalized u/s 40(a)(i.

  Case-Laws - AT : Failure to deduct TDS - Once the assessee has capitalized the payment in question though the assessee has not deducted the tax at source on such payment, Section 40(a)(i) cannot be invoked for disallowance of depreciation.
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• SEBI Clears Kailash Auto in Bogus LTCG Case; Section 68 Additions Deleted, Section 10(38) Exemptions Upheld.

  Case-Laws - AT : Bogus LTCG - addition u/s 68 - exemption u/s 10(38) - SEBI has held that there is no adverse evidence or material that there was any violation of provision of PFUT regulation in respect of Kailash Auto Finance Limited and restrain order on the trading has been revoked - Additions deleted.
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• Section 69 Income Tax Act: Unexplained Income Deemed as Taxable, Employment Status Irrelevant, Including UN Employees.

  Case-Laws - AT : Additions u/s 69 - It is a deeming provision and addition is made on account of unaccounted income of the assessee for which source is not explained. Therefore, whether assessee is working with UNO or not would not make out any case in favour of the assessee.
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• Foreign Subsidiaries' Income Not Taxable in India; AO to Remove Disallowance u/s 40(a)(i) Payments.

  Case-Laws - AT : TDS u/s 195 - it is proved beyond doubt that the subsidiaries do not have any income chargeable to tax in India - AO directed to delete the disallowance made u/s 40(a)(i) in respect of payments made to foreign subsidiaries.
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Customs

• Public Servant's Prosecution Under Customs Act Section 135 Continues with Rs. 50,000 Cost Due to Delays.

  Case-Laws - HC : Validity of complaint filed for Offence u/s 135 of the Customs Act, 1962 - sanction and authorization for prosecution of public servant - omplainant, took its own time in prosecuting the complaint, it having lingered on over the years proceedings to continue subject to cost of ₹ 50,000
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FEMA

• Foreign Exchange from Gifts or Inheritance Exempt from Section 4; No Holding Limit by Reserve Bank.

  Case-Laws - AT : If the foreign exchange has been acquired by way of gift or inheritance then even in that situation the provision of section 4 shall not apply. The reserve bank has not prescribed any limit for holding the foreign exchange in case the foreign exchange has been acquired by gift or inheritance.
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Corporate Law

• Rule 3(2) of Valuers Rules 2017 Upheld, Restricts Valuer Registration to Non-Subsidiary, Non-Associate, Non-Joint Venture Companies.

  Case-Laws - HC : Constitutional validity of Rule 3(2) of the Companies (Registered Valuers and Valuation) Rules, 2017 - making eligible only companies other than subsidiary companies, associate companies and joint ventures for the purpose of registration as valuer - as such the Rule cannot be faulted
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Indian Laws

• Political Motive Claims in Court Decisions Risk Contempt of Court, Undermine Judiciary, Erode Public Trust.

  Case-Laws - SC : Contempt of Court - Whenever any political matter comes to the Court and is decided, either way, political insinuations are attributed by unscrupulous persons/advocates. Such acts are nothing, but an act of denigrating the judiciary itself and destroys the faith of the common man which he reposes in the judicial system.
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• Amended Rules 14-A to 14-D of Madras High Court examined; courts can't assume disciplinary control under Advocates Act.

  Case-Laws - SC : Vires of amended Rules 14-A, 14-B, 14-C and 14-D of the Rules of High Court of Madras, 1970 - the High Court and even this Court (SC) cannot take upon itself the disciplinary control as envisaged under the Advocates Act.
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• Dispute Over Property Ownership: Brothers Barred by Section 4 of Benami Property Transactions Act, 1988 from Claiming Ownership Rights.

  Case-Laws - HC : Real ownership of property - Benami Property or not - purchase consideration was paid by two brothers but registered in the name of 5 members - Section 4 of Prohibition of Benami Property Transactions Act, 1988, put bar on real owner to claim any defense.
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Service Tax

• Service Tax on Works Contract Service Not Applicable for Supervision of Erection and Commissioning Activities.

  Case-Laws - AT : The supervision of erection and commissioning cannot be equated with civil work of erection and commissioning or installation of plant and machinery. When the appellants have not done any erection and commissioning activity. The levy of service tax under WCS is not attracted.
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• Service Tax Refund Approved: Input Services Now Recognized for SEZ Use and Authorized Operations.

  Case-Laws - AT : Refund of service tax - rejection on the ground that the input services are not used with the SEZ area and also that the input services are not used for authorized operations - refund cannot be rejected on this ground.
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• Trucking Contracts for Readymix Concrete Not Classified as GTA Services Under Service Tax Regulations.

  Case-Laws - AT : GTA Service - appellant hired trucks owned by other persons on annual contract basis for transport of Readymix Concrete - the activity would not fall within the GTA Services.
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• Service Tax Refund Denied for Government Building Construction Due to Lapsed Exemptions in Notifications No. 12/2012 and 25/2012.

  Case-Laws - HC : Rejection of refund claim of service tax - construction of Government buildings - Evidently, the notification No. 12/2012 & 25/2012 ceased to exist w.e.f. 01/04/2015. The exemption was revived by notification dated 01/03/2016. But since it was prospective in effect, the appellant was not entitled for any exemption, which the appellant was aware of and with open mind and eyes deposited the service tax due with interest.
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Central Excise

• Invoice Error Leads to Excess Debit; Appellant Entitled to Credit for System Mistake, No Duplicate Duty Payment Involved.

  Case-Laws - AT : The duty payable is only the amount which was mentioned in the invoice. It is only due to computer system the huge amount of excess as compared to the actual duty payment shown in the invoice was debited, therefore, this is not a case of either of excess payment of duty or twice payment of duty. - The suo moto credit of excess debit made by the appellant is eligible to the appellant
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• Penalty for Delayed Cess Payment Removed Due to Financial Hardships; No Evasion Intent Found.

  Case-Laws - AT : Levy of penalty - delay in payment of cess - delay occurred due to financial hardships, the instalments due to the banks, payment of wages etc., There was no intention to evade payment of Cess - The penalty imposed is harsh and unwarranted is set aside
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• CENVAT Credit Definition Broadens Input Services Scope, Covers All Manufacturing-Related Activities Under Tax Framework.

  Case-Laws - AT : CENVAT Credit - input services - The definition of input service has a 'means part' and an ‘inclusive part’. - The, phrase 'whether directly or indirectly, in or in relation' is so wide so as to include all activities pertaining to manufacture of finished product.
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Case Laws:

• GST

• 2019 (2) TMI 247
  Provisional release of goods - job-work - excess stock of finished goods found during search operations in the premises of job-worker - petitioner requested to provisionally release the finished goods which belonged to the principal suppliers and had to be returned at the earliest - subsection (6) of section 67 of the CGST Act - Held that:- The manner has been prescribed under rule 140 of the CGST Rules, 2017 which provides that the seized goods may be released on a provisional basis upon execution of a bond for the value of the goods in FORM GST INS-04 and furnishing of a security in the form of a bank guarantee equivalent to the amount of applicable tax, interest and penalty payable - Thus the respondents are duly empowered to provisionally release the seized goods, if the requirements of section 67 (6) of the CGST Act read with rule 140 of the CGST Rules are satisfied. The petitioner has already deposited Rs. 14,16,868/- by way of challan and has reversed credit of SGST to the tune of Rs. 7,90,793/-, which comes to approximately Rs. 22 lakhs. Under the circumstances, if the petitioner furnishes bank guarantee of Rs. 50 lakhs and a bond for the value of the goods in FORM GST INS-04, the interest of justice would be served - petition allowed in part.

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• Income Tax

• 2019 (2) TMI 246
  Carry forward of unabsorbed depreciation - limitation of six years - issue raised herein stands concluded against the Appellant - Revenue and in favour of Assessee by HC - Held that:- SLP dismissed.

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• 2019 (2) TMI 245
  Accrual of income - addition made on account of Container Detention Charges (CDC) pertaining to the relevant assessment year - Reopening of assessment - Tribunal hold issue in favour of the assessee inter alia observing that the income accrued to the assessee only upon the principal writing said letter on 25th May, 2009 - Held that:- Tribunal being plausible on the facts of the case, we also note that the assessee has already offered the entire income to tax in the Assessment Year 2010-11. The Revenue's attempt at taxing such income in respect of individual year has failed on several occasions since the reopening of assessment was not permitted. We wonder whether in such circumstances, it is even be prudent for the Revenue to pursue this line. Additionally, we record the statement of the Counsel for the assessee that in order to protect the assessee against double taxation, the assessee has filed appeal before the Tribunal in relation to Assessment Year 2010-11 and kept the question of taxing the entire income in the said year alive so that in case the Revenue succeeds in the present appeal and similar other proceedings, the assessee can atleast protect itself from being taxed all over again for Assessment Year 2010-11. No question of law arises.

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• 2019 (2) TMI 244
  Addition u/s 41(1) on account of bogus claim of liability - Held that:- The Tribunal while giving relief to the assessee, referred to the decision of the Supreme Court and other decisions holding that merely because period of 3 years expired from arising of the liability would not automatically mean that the liability has ceased. No error in the view of the Tribunal. Higher rate of depreciation on the civil construction, electric and other installations by the assessee in the process of erecting and installing windmill - Revenue argues that the expenditure in such activities cannot be seen as a part of installation of windmill and, therefore, the depreciation prescribed for the same would not be available to the assessee - Held that:- Windmill was erected in the desert area of Rajasthan which required special foundation of reinforced cement concrete and that the said reinforced cement concrete formed integral part of the windmill. The Tribunal has also followed the decision of this Court in the case of Commissioner of Income Tax Vs. Herdilla Chemicals Ltd. (1983 (6) TMI 1 - BOMBAY HIGH COURT) in allowing the claim of the assessee. In our opinion, the finding recorded by the Tribunal that RCC foundation forms integral part of the windmill is a finding of fact and no question of law arises from the same. Hence the appeal is dismissed

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• 2019 (2) TMI 243
  TDS credit not granted - Mismatch of TDS claimed by the petitioner and recognized by the department - purchasers of the immovable property from the petitioner, had not deposited the sum of Rs. 9 lakhs deducted from the petitioner while making payment of the sale consideration - recovery proceedings - claim of refund - Held that:- The department does not contend that the petitioner did not suffer deduction of tax at source at the hands of payer, but contends that the same has not been deposited with the Government revenue. As provided under Section 205 of the Act and as elaborated by this Court in case of Yashpal Sahni [2007 (7) TMI 7 - HIGH COURT , BOMBAY) under such circumstances the petitioner cannot be asked to pay the same again. It is always open for the department and infact the Act contains sufficient provisions, to make coercive recovery of such unpaid tax from the payer whose primary responsibility is to deposit the same with the Government revenue scrupulously and promptly. If the payer after deducting the tax fails to deposit it in the Government revenue, measures can always be initiated against such payers. Revenue is correct in pointing out that for long after issuing notice under Section 266(3) of the Act, petitioner has not brought this fact to the notice of the respondent No.2 which led the respondent No.2 to make recoveries from the bank account of the petitioner. In that view of the matter, at best petitioner may not be entitled to claim interest on the amount to be refunded. Petition is disposed of as taking note of the fact that the respondents have lifted the bank account attachment, no need to quash the attachment. Two impugned notices dated 5th February, 2018 as at annexure “B” to the petition and 10th September, 2018 as at annexure “J” to the Petition for recovery are quashed. The respondents shall refund a sum of Rs. 3,67,600/to the petitioner within four weeks from today. If so done, there shall be no interest liability, failing which beyond such period the respondents shall pay simple interest at the rate of 8% p.a. on such amount till actual payment.

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• 2019 (2) TMI 242
  Addition u/s 68 - genuineness of gifts - jurisdiction of the AO making the addition - Held that:- It is true, as pointed out by assessee that when the Additional Commissioner passed the order of assessment, Section 2(7A) did not contain a specific reference of an Additional Commissioner. However, when the statute has been amended with retrospective effect, the effect of such amendment must be applied to the pending proceedings as in the present case. Non-applying such amendment in the present proceedings would destroy the retrospectivity granted to it by the legislature. This contention of the assessee is, therefore, rejected. The assessee claimed to have received an amount of Rs. 25.90 Lacs (rounded off) which at the relevant time was sizable. The assessee failed to even produce must basic details pertaining to the donors. He had never claimed any relations with such persons. The assessee, in plain terms, even failed to establish the donors donee relationship as well as to disturb the stand of the Assessing Officer that the factum of unknown persons giving such sizable gifts without any occasion runs contrary to basis probability of human conduct. All in all, the entire issue is based on facts. The CIT(A) and the Tribunal concurrently held that the gifts were not genuine. Minimum consequences of such findings would be that the amount in question would be the assessee's unexplained cash credit to be brought to tax in terms of Section 68 - Decided against assessee.

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• 2019 (2) TMI 241
  Revision u/s 263 - addition towards entrance fees and annual subscription made by the Assessing Officer in the proceedings under Section 143(3) read with Section 263 - Held that:- This order would suggest that the Commissioner found fault with the Assessing Officer on clear four specific aspects arising out of the order of the assessment and require that the Assessing Officer passes fresh order after making proper inquiries. The question of the treatment to the entrance fees was by then nowhere in picture. The Assessing Officer on his own examined said issue. The Commissioner, undoubtedly, has powers under Section 263 of the Act to annul the entire assessment and required passing of fresh assessment order. However, when the Commissioner, as in the present case, requires the Assessing Officer to carry out inquiries with respect to specified issues, the jurisdiction of the Assessing Officer to pass fresh order must be confined to such issues, failing which we would be giving the power to the Assessing Officer to make reassessment. Gujarat High Court in similar background in the case of CIT Vs. D.N. Dosani [2005 (10) TMI 35 - GUJARAT HIGH COURT] decided in the fresh assessment orders passed in pursuance of the consolidated order under section 263 of the Act, the Assessing Officer was entitled to consider only those two items which had been considered by the Commissioner of Income-tax and was not entitled to consider any other item afresh for making additions. The question referred at the instance of the Commissioner is, therefore, answered in the affirmative, i.e., in favour of the assessee and against the Revenue

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• 2019 (2) TMI 240
  Delay in payment to Income Declaration Scheme - Condonation of delay in making payment of first installment by the defaulters who have not paid any amount will now or further extending the date beyond the due date for regularising/ facilitating the payment of liabilities under IDS - power of the board u/s 119(2) - Held that:- The IDS itself did not make any provisions for relaxation. The Scheme did retain the power of the board under Section 119(2) of the Act. In exercise of such powers, the board laid down the areas where relaxation would be granted and consciously decided not to grant extension or condone delay in cases where reasons were attributable to the declarants. Under Section 119(2) of the Act, the board can exercise power either in individual case or in case of the Assesses as a class. Once the board decided the entire issue by taking into account declaratory as a class, while applying such decision to individual cases, no further flexibility was left open. CBDT Circular dated 28th March, 2017, therefore, cannot be treated as the decision of the board abdicating its power under Section 119(2). It is, in fact, in exercise of such powers that the board took certain conscious decisions. It was not argued before us that the decision of the board was arbitrary or unreasonable so as to be struck down in as opposed to Article 14 of the Constitution of India. In any case, when the legislature frames a special Scheme such as the present one, giving certain concession to the Assesses who had till then not declared their incomes truly and fully, legislature can always lay down its limits of the concession to be granted. As correctly considered by the CBDT in its impugned order dated 16th October, 2017, such concession and excess indulgence in such cases, could have demotivating effect on honest tax payers making regular and prompt tax deposit. This Court in SADHANA RAJENDRA JAIN VERSUS THE CENTRAL BOARD OF DIRECT TAXES & ANOTHER [2017 (9) TMI 666 - BOMBAY HIGH COURT] has given any directions to the board to decide the matter in a particular fashion. The Court merely required the board to decide the Petitioner's application for condonation of delay, particularly, bearing in mind the Circular dated 28th March, 2017. The observations of the Court in this respect, were not meant to be final or conclusive. This has been so specifically stated in the concluding portion of order itself. We, therefore, find that the board was correct in holding that the application of the Petitioner for condonation of delay was not supported by CBDT Circular dated 27th March, 2018. In the result, we do find any reason to interfere in the Petition.

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• 2019 (2) TMI 239
  Interest u/s 244A on refunds - tax collected at source under Section 206C of the Act or paid by way of advance tax or treated as paid under Section 199 of the Act - assessee declared loss and in said return claimed the income relatable to the payments made during the said year as well as during earlier two Assessment Years - Held that:- We are of the opinion that the Assesses case falls under clause (a) which covers situation where the refund is out of any tax collected at source or paid by way of advance tax or treated as paid under Section 199. This reference to treat tax as paid under Section 199 of the Act, would clearly cover the tax deducted at source. In the present case, the Assessee had suffered deduction of tax at source at the time of payments. In that view of the matter, the case of the Assessee would clearly be covered under clause (a) to subsection (1) of Section 244 of the Act. In such a situation, this clause provide that, interest shall be calculated at the rate of ½ % for every month or part thereof, comprising a period from the 1st day of April of the Assessment Year to the date on which the refund is granted, provided the return is filed before the due date, specified in sub-section 1 of Section 139 of the Act. Here, the reference “from the 1st day of April of the Assessment Year” which is the starting point for computing the interest payable, must be to the Assessment Year, in which, the tax was deducted at source. Since this expression has to be read along with the main body of clause (a) which refers to the refund arising out of, inter alia, of the tax treated to have been paid as per Section 199 of the Act. Any other view, would be holding untenable since, the Revenue which has received the tax deducted at source from the payments to be made to the Assessee and appropriate the same, would refund the same but the interest would be accounted much later when the return giving rise to the refund, is filed. - Decided against revenue

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• 2019 (2) TMI 238
  Section 43D - applicability - cooperative bank - scope of amendment - retrospective or prospective - Held that:- The Gujarat High Court in case of Pr. CIT v/s. Shri Mahila Sewa Sahakari Bank Ltd. [2016 (8) TMI 377 - GUJARAT HIGH COURT] had undertaken the detailed exercises to examine an identical situation. The Cooperative Banks were acting under the directives of the Reserve Bank of India with regard to the prudential norms set out. The Court was of the opinion that, taxing interest on NPA cannot be justified on the real income theory. Identical issue was also examined in case of Pr. CIT v/s. Ludhiana Central Coop. Bank Ltd [2018 (11) TMI 442 - PUNJAB AND HARYANA HIGH COURT] a held that tribunal while relying upon the various pronouncements had decided the issue regarding taxability of interest on NPA in favour of the assessee as being taxable in the year of receipt. The deletion made by the CIT(A) on account of addition regarding interest accrued on NPA. No illegality or perversity could be demonstrated by learned counsel for the Revenue in the aforesaid findings recorded by the Tribunal. Section 43D essentially provides for charging of interest on actual basis in case of certain special circumstances, in the hands of the public financial institutions, public companies etc. Explanation to Section 43D defines certain terms for the purpose of said section. Clause (g) was inserted in the said explanation by Finance Act, 2016 w.e.f. 1.04.2018 which provides that for the purpose of such Section, Cooperative Banks, Primary Agricultural Credit Society and Primary Agricultural and Rural Development Bank shall have meanings respectively assigned in Explanation to subsection of Section 80B of the Act. By virtue of such insertion, the Cooperative Banks would get the benefit of 43D of the Act. One way of looking at this amendment, can be that, the same is curative in nature and would, therefore, apply to pending proceedings, notwithstanding the fact that, the legislature has not made the provision retrospective. - Decided against revenue

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• 2019 (2) TMI 237
  Addition of advance amount repaid by the assessee - whether AO could bring anything material on record to prove that the assessee has made repayment to the customers? - Held that:- As regards the deletion of Rs. 10,86,557/-, the IT Appellate Tribunal has not agreed with the finding of the CIT(A) as detailed in paragraph 33 of the order and concluded that the Assessing Officer has rightly applied addition of net profits at the rate of 8% p.a. on the total sale of assessee. Consequently, set aside the finding of the CIT(A) and confirmed the addition. Having perused the orders passed by the AO, CIT(A) and the IT Appellate Tribunal, we are of the considered view that the IT Appellate Tribunal did not commit any error of law and fact while disallowing the addition of Rs. 39,71,000/- as against the addition of Rs. 45,13,000/- made by the assessee. The entire gamut of matter is in realm of facts. No question of law.

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• 2019 (2) TMI 236
  Claim of depreciation to assessee trust - contention of the Assessing Officer is that the assessee has already been allowed an amount of purchase of assets as application of the income in earlier years and, therefore, allowing the depreciation will amount to double deduction - Held that:- We note that the issue of allowance of depreciation despite purchase of assets considered towards application of income, has been decided in the case of CIT vs. Rajasthan and Gujarati Charitable Foundation, Poona (2017 (12) TMI 1067 - SUPREME COURT) - decided against revenue.

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• 2019 (2) TMI 235
  Penalty u/s. 271(1)(c) - non specification of charge - defective notice - Held that:- Notice issued by the Assessing Officer under Section 274 read with Section 271(l)(c) to be bad in law as it did not specify which limb of Section 271(l)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT). Also COMMISSIONER OF INCOME TAX & ANR. VERSUS M/S SSA'S EMERALD MEADOWS [2016 (8) TMI 1145 - SUPREME COURT]- Decided in favour of assessee.

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• 2019 (2) TMI 234
  Stay for recovery of outstanding demand - total tax payable by the assessee excluding interest u/s.234B & 234C - Held that:- Since the passing of the earlier order of Tribunal in Stay petition for AY 12-13, balance of convenience, financial and other hardships, we are of the view that it would be just and appropriate to direct the assessee pay a further sum of Rs. 10 crores in two instalments i.e., Rs. Five Crores (Rs.5,00,00,000) on or before 31st January, 2019 (31.01.2019) and another sum of Rs. Five Crores (Rs.5,00,00,000) on or before 10th February, 2019 (10.02.2019) as a condition for grant of stay. In this regard, we notice that the total tax payable by the assessee excluding interest u/s.234B & 234C of the Income Tax Act, 1961 (Act) is Rs. 492,73,02,320, out of which the assessee has already paid Rs. 163,18,13,536, leaving balance tax payable of Rs. 329,54,88,784. The assessee has further paid a sum of Rs. 150 crores, thereby 45.5% of the outstanding demand in respect of taxes already stands discharged by the assessee. Taking into consideration these aspects, we have fixed a sum of Rs. 10 crores to be paid in two instalments by the assessee which will make the payment of outstanding demand of taxes by the assessee to almost 50% of the tax payable. This will sufficiently safeguard the interest of the assessee as well as the interest of revenue. The stay petition is ordered accordingly. The appeal is fixed already for hearing on 14.02.2019 and the parties will not seek any adjournment on the date of hearing, without just and sufficient cause and are requested to co-operate in the disposal of appeal by the Tribunal at the earliest. Accordingly, there will be a stay of recovery of outstanding demand subject to the conditions already mentioned hereinabove for a period of six (6) months from the date of this order, or till the disposal of the appeal, whichever is earlier.

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• 2019 (2) TMI 233
  Addition made on account of gift - Gift received by the assessee from his brother-in-law - claim of exemption u/s 56 - Held that:- As donor starting from PAN number, capital gain statement, bank statement and others is annexed to the paper book, which was duly placed before the authorities below. It appears that when Shri Narottam Sekhkaria was not brought to the AO by the assessee no further enquiry was conducted by him, no record against the assessee was also brought. The creditworthiness and/or genuineness of the transaction though doubted by the AO, the same has not been proved by any cogent document in favour of the revenue. AO acted beyond his jurisdiction by raising doubts regarding the relationship of the assessee and the donor ignoring the statutory provision in this regard as already been highlighted by the assessee before him in his written reply dated 04.02.2015. Without rebutting the submission made by the assessee the order of addition was made by the AO. Whether the gift so received by the assessee from his brother-in-law is exempted from tax under section 56 of the Act has been considered on a wrong notion. Instead of relative as provided by the statute “blood relative” has been considered by the Learned AO and as a result whereof addition was made which is absolutely erroneous as rightly pointed out by the Learned CIT(A) as it reflects from the order impugned. Thus, in the absence of any infirmity in the order passed by the Learned CIT(A) we decline to interfere with the same. Hence, the Revenue’s appeal is dismissed.

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• 2019 (2) TMI 232
  Levy of penalty u/s 158BFA(2) - AO went through the seized documents and computed the valuation of stock as on the date of search / survey i.e. 28.02.1997 as undisclosed income - gross profit rate as applied on such stock found in search - whether assessee concealed nor furnished inaccurate particulars of income in the block return? - Held that:- In respect of evidence found during the course of search in the hands of assessee the addition has been made being the value of undisclosed stock and no penalty on the said addition has been levied in the hands of assessee. However, the gross profit rate which has been applied on such stock is independent of evidence found during the course of search and though addition has been made in the hands of assessee on such account but the said addition is purely estimated addition, which is further strengthened by the fact that starting from Assessing Officer, CIT(A) and the Tribunal, various GP rates have been applied to estimate the aforesaid addition No merit in the orders of authorities below that the addition is based on material found during the course of search. Undoubtedly, there was some material found during the course of search and additional income on that account was offered by the assessee and the same has been accepted by the Revenue Department but on that account, no penalty has been levied, since the conditions of section 158BFA(2) of the Act are not attracted. Further, on the estimated income, we find no merit in levying penalty under section 158BFA(2) - Hon’ble Bombay High Court in CIT Vs. Dodsal Ltd. (2008 (7) TMI 5 - HIGH COURT BOMBAY) has also laid down the proposition that levy of penalty under section 158BFA(2) of the Act is discretionary and not mandatory. In view thereof, we direct the Assessing Officer to delete penalty levied under section 158BFA(2) - Decided in favour of assessee.

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• 2019 (2) TMI 231
  Denial of Exemption under Section 11 - action of AO that the activities conducted by the appellant does not fall within the meaning of education as included in the definition of charitable purpose under Section 2(15) - Held that:- The nature of this expenditure incurred by the assessee which includes event management expenses, summit expenses, expenditure on food and beverages, videography etc to the tune of Rs. 3 crores also support the case that the assessee is in the business of rendering services for a fee which is like any other business/commercial activity carried out by any business/ entity in the market. Hence, on this account also, proviso to section 2(15) is applicable. The assessee’s contention that it is a non-profit entity and it receives funds to meet its operative cost without any motive to earn profit is clearly in contradiction to the surplus of Rs. 1.22 crores generated by the assessee in this year. Here it would be relevant to note that if a charitable organization carrying out objects of 'advancement of general public utility' is involved in carrying on any activity in the nature of trade, commerce, business or is charging fees for services in relation to any trade, commerce, business, it is excluded from being 'charitable.' The assessee’s plea that it is covered by mutuality has also been rightly set aside by the CIT(A). There is absence of complete identity between contributors and participants. The contributors and beneficiary are different. Furthermore, the assessee is rendering services to non members for getting profit. CIT(A) has rightly held that the assessee does not fulfill the condition of mutual organization. It is settled law that before one submits to the rule of precedence, the fact of the case has to be taken into account. The assessee has contended that none of its activities are carried out with an object or any motive to earn profit or surplus. That the earning of revenue is only incidental to the predominant object of providing education and skill development to the entrepreneurs. This submission is quite in contradiction to the fact that the assessee is charging huge amounts for sponsorship fee from corporate against which it provides various types of advertisement services and free passes are also provided. These facts clearly also negate the assessee’s submission that donations obtained by way of advertisements are purely voluntary in nature and therefore, there is no element of quid pro quo. Making slabs for sponsorship fee and specifying the types of service against it are certainly for commercial gains with predominant objective to make profit. Hence, in our considered opinion, there is no infirmity in the orders of the authorities below. - Decided against assessee.

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• 2019 (2) TMI 230
  TDS u/s 195 - non-deduction of TDS with respect to expenditure incurred on overseas commission - M/s. Anvil Corporation, USA a non-resident enterprise acts as an intermediary between the assessee’s company and M/s. Billbang facilitating the business activity of the assessee and the assessee Company is liable to pay commission for it - Held that:- M/s. Anvil Corporation, USA has rendered service to the assessee Company abroad and therefore the facts are identical to the decision rendered by the Hon’ble Jurisdictional Madras High Court in the case CIT vs. Faizan Shoes [2014 (8) TMI 170 - MADRAS HIGH COURT] held that the services rendered by the non-resident agent can at best be called as a service for completion of the export commitment and would not fall within the definition of “fees for technical services”, we are the firm view that Section 9 of the Act is not applicable to the case on hand and consequently, Section 195 of the Act does not come into play. - Decided in favour of assessee.

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• 2019 (2) TMI 229
  Addition made u/s 68 - Held that:- Assessee has failed to prove the credit worthiness of the loan creditors, genuineness of the transactions, is not established, the amounts received from the aforesaid persons need to be added in the hands of the assessee under section 68 of the Act. In respect of the balance loan creditors, the assessee has not proved the credit worthiness of the said persons for making the aforesaid advances wherein Vinayak Satale has advanced a sum of Rs. 8 lakhs, Vinayak Anandrao Satale (HUF) has advanced a sum of Rs. 6,22,000/-, Bharati Dharme has advanced a sum of Rs. 49,900/- and Narayan Salunkhe has advanced a sum of Rs. 50,000/-. The lenders had deposited the cash in their bank accounts and issued cheques subsequently. Since all the lenders did not have sufficient source of income, the explanation of the assessee is not accepted and the addition made under section 68 of the Act is upheld. - Decided against assessee.

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• 2019 (2) TMI 228
  Determination of house property - Correct annual letting value - Application of the provisions of the section 23(1)(c) - Held that:- A perusal of the assessment order clearly shows that the Assessing Officer has not pointed out how the Inspector has determined the fair rent at the rates determined by him. Obviously, when the municipal tax has been paid in respect of the particular property, the annual letting value on the vacant property can be determined only at the municipal retable value. The determination of the annual letting value as done by the AO is found to be erroneous and consequently, the issue is restored to the file of AO for re-adjudication by applying the provisions of the section 23(1)(c) of the Act to determine the correct annual letting value.- Appeal of the assessee is partly allowed for statistical purposes.

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• 2019 (2) TMI 227
  TPA - comparable selection - application Related Party Transaction (RPT) filter i.e. excluded companies which had transactions with related parties - Held that:- Application of RPT filer at 15% of the sales would be appropriate in the given facts and circumstances of the case and as laid down in the case of Auto Desk India Pvt. Ltd. [2018 (7) TMI 1862 - ITAT BANGALORE], we hold accordingly and direct to inclusion of 3 companies which were excluded by application of RPT Filter by the DRP. Assessee is a pure software development services company thus companies functionally dissimilar with that of assessee need to be deselected from final list. Interest on Sundry debtors outstanding for more than 3 months - Held that:- The plea of the assessee has to be accepted as held by the Bangalore Bench in the case of Avnet India Pvt. Ltd., [2016 (1) TMI 410 - ITAT BANGALORE] that giving a credit period cannot be considered as an independent transaction. It is a integral part of transaction of rendering of software development services by the assessee to its AE and has to be considered as part of the international transaction of Software Development Services. The decision of Mumbai Bench of Tribunal in the case of Goldstar Jewellery Ltd., Vs. JCIT [2015 (2) TMI 58 - ITAT MUMBAI]. URO supports the plea of the assessee. Following the aforesaid decision, we hold that there can be no separate determination of ALP of international transaction of realization of sale proceeds with extended credit period as it is only incidental to transaction of sale. The addition made by the TPO and confirmed by the DRP cannot be sustained and the same is directed to be deleted. Disallowance of depreciation on software expenses under section 40(a)(ia) read with section 194J - Held that:- As decided in M/S. WINTAC LIMITED VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 12 (5) , BENGALURU [2017 (4) TMI 819 - ITAT BANGALORE] once the assessee has capitalized the payment in question though the assessee has not deducted the tax at source on such payment, Section 40(a)(i) cannot be invoked for disallowance of depreciation. Accordingly, we set aside the orders of the authorities below and the addition made by the AO is deleted.

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• 2019 (2) TMI 226
  Bogus LTCG - addition u/s 68 - denial of exemption u/s 10(38) - share price has a risen to more than 37 times - Held that:- General observation about the modus operandi of long term capital gain would be of no use unless and until there is some specific information and material qua the assessee. Once purchase of the shares are not doubted and sale has been made through Bombay Stock exchange routed through DMAT account then consideration received has to be treated from amount of sale of shares whether the price has been rigged or not. One factor which has weighed heavily on the authorities below in the present case is that . Once the SEBI has held that there is no adverse evidence or material that there was any violation of provision of PFUT regulation in respect of Kailash Auto Finance Limited and restrain order on the trading has been revoked, then it follows that the share price of which has been sold for genuine quoted price and therefore, the sale proceeds has to be reckoned from sale of such shares and would be treated as explained credit or investment. Accordingly, on the facts and circumstances of the case, we hold that the long term capital gain shown by the assessee is genuine and consequently liable for exemption u/s 10(38). - Decided in favour of assessee.

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• 2019 (2) TMI 225
  Cash deposits in the bank account after withdrawing the some amount out of the same bank account - Held that:- Revenue should prove, it was the assessee who spent the amount in question. Meaning thereby burden is upon by Revenue to prove that withdrawn amount by the assessee have been spent by assessee somewhere else. CIT(A) put a negative onus upon the assessee to prove that money withdrawn from the bank account of the family was not utilized. Since the explanation of assessee has been partly accepted by the AO that cash withdrawn from the same bank account in assessment year under appeal is available to assessee to make re-deposit in the same bank account, therefore, considering the facts of the case, details of record and in the light of decision in the case of Shiv Charan Dass (1980 (4) TMI 74 - PUNJAB AND HARYANA HIGH COURT), the amount withdrawn during the year from the same bank amount is available to assessee to make re-deposit in the same bank account in assessment year under appeal. Thus, the assessee would be entitled to the benefit of Rs. 5,79,100/-. Assessee claimed gifts of Rs. 5 lakhs from family member. The assessee filed affidavits and ITR of the 3 family members in which they have stated that amount of Rs. 2 lakhs, Rs. 2 lakhs and Rs. 1 lakh have been gifted to the assessee, however, no evidence of their creditworthiness have been produced before the authorities below. Mere filing of affidavits and ITR is not sufficient to prove creditworthiness of the donors. No reasons or occasion of gifts have been explained. No evidence of financial capacity of the donors and their source have been filed on record. Therefore, it appears that it was the unexplained amount of the assessee which assessee tried to explain through the alleged gifts. No interference is called for in the matter. Confirm the addition of Rs. 5 lakhs. No other source of balance amounts have been explained and is not supported by any evidence. Ld. Counsel for assessee also contended that assessee is working in UNO, therefore, no addition could be made against the assessee. Since, cash amount have been deposited in the bank account, therefore, Section 69 would apply against the assessee. It is a deeming provision and addition is made on account of unaccounted income of the assessee for which source is not explained. Therefore, whether assessee is working with UNO or not would not make out any case in favour of the assessee.

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• 2019 (2) TMI 224
  Inclusion of stamp value of the common pathway for making addition U/s.56(2)(vii)(b) - Held that:- The stamp value of the assessee’s share in the land jointly acquired by them is Rs. 48.48,000/- which is 1/3rd of 1,45,44000/- being the stamp value of the total extend of land. The actual purchase consideration declared by the assessee is only 27,00,000/-. Therefore the Revenue authorities are right in invoking the provisions of Section 56(2)(vii)(b) and making addition of Rs. 21,48,000/- which is nothing other than the excess of actual purchase consideration over stamp value of the property acquired by the assessee viz., 48,48,000 (-) 27,00,000/-. Therefore the appeal of the assessee is devoid of merits. Hence we hereby uphold the Orders of the Ld.Revenue Authorities. - Decided against assessee

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• 2019 (2) TMI 223
  TDS u/s 195 - payments made by the assessee to its UK and Singapore Subsidiaries as fall within the ambit of 'Fees for Technical Services' - disallowance u/s 40(a)(i) - PE in India - Held that:- As decided in assessee's own case BATLIVALA AND KARANI SECURITIES (INDIA) PVT. LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-5, KOLKATA. [2016 (7) TMI 580 - ITAT KOLKATA] as per Article 7 of UK and Singapore Treaty, in the absence of PE in India, the business income also would not get taxed in India. Hence we hold that the payment made by the assessee to its subsidiaries is not chargeable to tax in India in the hands of the subsidiaries in India. The provisions of section 195(1) of the Act mandates a requirement that the income should be chargeable to tax in India to assume jurisdiction in India. In the instant case, it is proved beyond doubt that the subsidiaries do not have any income chargeable to tax in India - we have no hesitation in directing the Learned AO to delete the disallowance made u/s 40(a)(i) of the Act in respect of payments made to foreign subsidiaries. - Decided in favour of assessee

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• 2019 (2) TMI 222
  Addition of Short term Capital gain - assessee claimed that the sum was received by M/s NPPL in pursuance to the Banachitthi dated 06-09-2010 - Held that:- The impugned transaction was duly confirmed by the director of NPPL in the statement recorded u/s 131 of the Act. The director of NPPL duly admitted the fact in the statement recorded under section 131 of the Act that the impugned transaction was duly disclosed in its books of accounts. Thus hold that the payment was made to NPPL as per the Banachitthi dated 06-09-2010 which was enforceable under the provisions of law. Therefore, the payment made to NPPL cannot be said as a colorable device used by the assessee to escape the tax liability. Hence we do not find any reason to interfere in the order of Ld CIT(A). Thus the ground of appeal of the Revenue is dismissed.

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• 2019 (2) TMI 221
  Treatment as member of AOP - only grievance of the assessee that is to be addressed is that whether Deepali is a member of the AOP or not? - Held that:- It is imperative that the AO must first decide that whether M/s. Deepali Design and Exhibits Pvt. Ltd is a member of PICO Deepali Overlays and Consortium as a member of PICO Deepali Overlays Consortium or not. Further, it is claimed that by subsequent agreements Deepali has exited the AOP. It could not be ascertained from the assessment orders that those agreements were before the lower authorities or not. Even if they are placed before lower authorities whether they have been examined from the angle of the controversy raised before us. It is stated that Deepali was not the members of the AOP after 1/6/2010. It is also not prohibited that member originally member of AOP cannot exit the AOP. Therefore this aspect needs greater examination by the AO. Further Deepali apparently did not have any opportunity to show to the assessing officer that it The LD AO opportunity of hearing to the Deepali. Thereafter, If it is held to be a member of the AOP , then it should be given a proper opportunity of hearing and then the ld AO should pass a fresh assessment order in accordance with law. If Deepali Design and Exhibits Pvt. Ltd is held to be not a member of AOP, then it does not have any locus standi in the present appeal against those orders passed by the lower authorities and further the tax demand raised on the AOP is not recoverable from the Deepali Design and Consortium Pvt. Ltd but by other means . In view of this, we set aside ITA for Assessment Year 2011-12 filed in the name of PICO Deepali Overlays Consortium and signed by Deepali Design and Exhibits Pvt. Ltd back to the file of the ld AO, with a direction to first decide whether Deepali Design and Exhibits Pvt. Ltd is a member of AOP or not. If it is held to be a member, then Deepali be given a proper opportunity of hearing on the merits of the various additions made in the assessment order u/s 69A and other disallowances u/s 37 in the hands of assessee AOP. After that ld AO may pass an order on assessee AOP in accordance with law and all other consequences u/s 177 (3) of the act Shall also be applicable on Deepali. Order passed u/s 177(3) of the act by the AO is neither disputed before us in this appeal nor before the lower authorities. Therefore as the same was not subject matter of this appeal we do not adjudicate the same.

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• Benami Property

• 2019 (2) TMI 196
  Real ownership of property - Benami Property or not - purchase consideration was paid by two brothers but registered in the name of 5 members - Partition of property - no amicable settlement to be done - Prohibition of Benami Property Transactions Act,1988 - Held that:- Section 4 provides that no defence based on any right in respect of any property held benami, whether against the person in whose name property is held, or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property. The defence of the defendant no.1 is thus not allowed under the said law. The defendant no.1 to have not pleaded any exception to the Benami law vis- -vis the subject property - Once it is found to be so, the plaintiff is entitled to a decree forthwith, not only under Order XII Rule 6 of the CPC but also under Rule XV Rule 1 of the CPC. The pleas in the written statement of the defendant no.1, being the only contesting defendant, do not raise any substantial question of law of fact for an issue to arise or framed - The plaintiff is thus entitled to a decree forthwith. Considering the size of the property and the number of shares therein, the property is found to be not capable of division by metes and bounds. No purpose will thus be served in issuing a commission for exploring the possibility of division by metes and bound - Once it is so, there is again no impediment to passing a final decree for partition, of sale of the property and of distribution of sale proceeds as per shares declared in the preliminary decree for partition.

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• Customs

• 2019 (2) TMI 220
  Validity of complaint filed for Offence u/s 135 of the Customs Act, 1962 - sanction and authorization for prosecution of public servant - the complaint was filed by a public servant in official capacity, no preliminary inquiry was held, cognizance being taken on the complaint - principles of natural justice - Held that:- complainant, took its own time in prosecuting the complaint, it having lingered on over the years - The manner in which the proceedings have been held and the manner in which the petitioner has conducted the prosecution gives the impression it is more of persecution than prosecution. It is the duty of the prosecutor to ensure that all such evidence is properly and formally adduced. It is not a private prosecution but prosecution in the name of an entity of the State. The prosecutor had a duty of trust to discharge. He could not assume that the witness would himself offer all the necessary facts. After all, the witness was a public servant holding the rank of an inspector. He required assistance and, for his chief-examination, proper questions had to be put to him by the prosecutor. The failure to bring formal evidence in respect of sanction for prosecution, in these circumstances, is wholly and squarely that of the public prosecutor in-charge. He should have fully awakened to the neglect or omission on his part at least at the time of arguments on charge. The direction of the revisional court for fresh sanction to be obtained was wholly uncalled for inasmuch as the sanction granted prior to the launching of the complaint is already there and it is that sanction which is relevant. The criminal prosecution of such nature cannot be allowed to be reduced to a mockery, not the least, at the whims of individuals. After all, public interest involved in such prosecution also has to be taken care of - petition is allowed with costs of Rs. 50,000/- to be deposited by the petitioner with Delhi High Court Legal Services Committee within two weeks hereof.

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• 2019 (2) TMI 219
  Jurisdiction - power of issue SCN - Remand of the case for adjudication to the concerned official to first decide the issue of jurisdiction after the appeal pending in the Supreme Court against the reported judgment in the case of Mangli Impex Limited vs. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT] - Held that:- The impugned order is hereby set aside and the matters are remitted to the CESTAT, which shall proceed to examine and decide the merits of the appeals - The respondent/assessee’s right to contend that the show cause notice issued in this case were legally untenable, in view of the decision of this Court in Mangli Impex are kept intact - appeal allowed in part.

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• 2019 (2) TMI 218
  Refund of SAD - N/N. 102/2007-Cus. dated 14.9.2007 - rejection on the ground of time limitation - Held that:- The appellant has filed the refund on 24.5.2012. The due date for filing the refund claim is 26.5.2012. The letter dated 12.11.2012 issued by the Deputy Commissioner of Customs (Refunds), Sea Cargo Commissionerate to Air Cargo Commissionerate indicates that the Sea Cargo Commissionerate has received the refund claim on 24.5.2012 - It is seen that the Sea Cargo Commissionerate has slept over the refund claim for almost six months without rejecting or returning the same to the appellant for want of jurisdiction. On receipt of the refund claim, which is filed before wrong jurisdiction, the officer concerned ought to have intimated the appellant to file before the correct jurisdiction. The department having slept over the refund claim for almost six months and thereafter rejecting the same alleging that it is time-barred is unjustified - the appellant has filed the refund claim within the due date before the department. When it has been transferred to the correct Commissionerate (Air Cargo Commissionerate), the Assistant Commissioner of Customs (Refunds) ought to have considered the same on merits. The matter is remanded to the Assistant Commissioner (Refunds), Air Cargo Commissionerate for processing the refund as per law within a period of four weeks from the date of receipt of this order - appeal allowed by way of remand.

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• Corporate Laws

• 2019 (2) TMI 217
  Constitutional validity of Rule 3(2) of the Companies (Registered Valuers and Valuation) Rules, 2017 - violation of Article 14, Article 19(1)(g) and Article 301 of the Constitution of India - eligibility of registered valuer - whether a company, other than a subsidiary company, joint venture or associate of other company forms a separate class for the purpose of eligibility for registration as a valuer under the subject Rules, and as such whether the said classification is reasonable? Held that:- The Supreme Court in the case of Dr. Haniraj L. Chulani [1996 (4) TMI 517] wherein the issue which fell for consideration before the Supreme Court was whether the State Bar Council of Maharashtra and Goa was justified in refusing enrolment of the appellant before the Supreme Court as an Advocate under the Advocates Act, 1961 as he was also a medical practitioner, who did not want to give up his medical practice but wanted to simultaneously practice law. The objective and intention behind laying down the impugned Rule is clearly to introduce higher standards of professionalism in valuation industry, specifically in relation to valuations undertaken for the purpose of Companies Act and IBC, 2016. The impugned Rule obviates the possibility of conflict of interest on account of diverging interests of constituent / associate entities which resultantly shall undermine the very process of valuation, being one of the most essential elements of the proceedings before NCLT. Thus, making eligible only companies other than subsidiary companies, associate companies and joint ventures for the purpose of registration as valuer, a separate class has been carved out based on classification which is founded on intelligible differentia and as such the Rule cannot be faulted - petition dismissed.

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• Insolvency & Bankruptcy

• 2019 (2) TMI 216
  Initiation of Corporate Insolvency Resolution Process - Corporate Debtor defaulted in making payment - Held that:- It is a point to be decided by a trial court as to whether the corporate debtor asking the petitioner to remain on standby during the period of April 2016 to deploy staff only in the case existing service provider created any disruption during the notice period, amounts to obligation upon the corporate debtor to pay the creditor for that month. As to make this claim, that there shall be unpaid invoice for the services rendered, here the invoice was initially paid, subsequent thereto, since the corporate debtor having realised that payment for the month of April was mistakenly made to the petitioner, strictly speaking it will not become operational debt as defined under the code. To construe a claim as operational debt, that there shall be a claim in the form of invoice over the services or goods supplied, then there shall be default, here both are absent because invoice was earlier paid, therefore the result is default against invoice is also absent. Petition dismissed.

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• 2019 (2) TMI 215
  Initiating Corporate Insolvency Resolution Process against the Corporate Debtor - constitution of CoC - it was alleged that RP falls to perform his statutory duties to collect information as to whether any or more members of the CoC is/are party /parties related to the CD - Held that:- The Code has certainly cast an obligation on the RP to ascertain if any member(s) of the CoC is/are related to the CD. He is also expected to do necessary investigation in this regard. However, such a duty cannot be stretched to such absurd limits requiring the learned RP to make investigation against each and every suspicion which may crop up while constituting the CoC regardless of whether or not such suspicion has any basis. None of the members of the CoC raised any query as to the constitution of CoC since the constitution of CoC on 29.05.2018 till the fag end of September, 2018. Only on 27-09-2018, after a gap of almost five months from the date of initiation of CIRP, the applicant (IDBI Bank) raised such contention. I have found that the applicant at first wanted information as to the KYCs of the promoters of the CD as well as information about the mortgagors. I have found that some of the information so sought for was furnished while inability was expressed in regard to furnishing of other information vide email dated 29-09-2018 from RP addressed to the applicant - The information, so furnished by the learned RP, is found to be incomplete. Also, the conduct of the applicant during the course of CIRP is also found far from satisfactory. There are indisputable materials on record to show that the applicant had also kept on asking the learned RP to furnish it with some information viz. liquidation value of the CD, and that too, at a stage, when law forbids the RP from sharing such information with anyone. Such conduct on the part of the applicant again shows that some considerations, other than valid one, might have driven the applicant to keep on hurling queries after queries on the RP in regard to allegation that one of the members of the CoC is a related party to the CD - the RP cannot be adjudged guilty of non-performing of his statutory duty qua constitution of CoC only because of the non-furnishing of the KYCs of the promoters of the CD. Rejection of Resolution Plan, submitted by the SMAIT, for the RP's violating the mandate of law in the form of Section 29(A)(c) of the Code of 2016 - Held that:- Such contention too is without any basis since the Resolution applicant is a AIF, registered with SEBI, which is exempted from the prohibition in Section 29(A)(c) of the Code of 2016 in view of law laid down in Explanation (e) to sub-clause (f) section 29A(c) of the Code. The Final Resolution Plan is in conformity with the provisions of Section 30 (2) of the IBC, 2016 and the same is approved.

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• FEMA

• 2019 (2) TMI 214
  Violation of provisions of section 4 of the Foreign Exchange Management Act, 1999 and Regulation 3 of the Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 - inheritance of foreign exchange - Held that:- There is no dispute that the appellant being a person resident in India has inherited this amount as per the voluntary settlement deed executed by the settlers being person resident outside India - As per settled law, the word inheritance has to be given a wider meaning here. The word inheritance here cannot be limited to mean the asset acquired by a Human being/ natural person upon the death of a natural person because as per section 2(v) of the Act a ‘person resident in India’ includes a legal person. Thus, the property passing upon death of a person being resident outside India to a person resident in India whether the person resident in India is a natural or a legal person. As per Section 9(e) of the Act also if the foreign exchange has been acquired by way of gift or inheritance then even in that situation the provision of section 4 shall not apply. The reserve bank has not prescribed any limit for holding the foreign exchange in case the foreign exchange has been acquired by gift or inheritance - even if for a moment assuming that the provision of section 6(4) and section 9(d), (e) of the Act are not applicable in the instant case even than the appellant should not be held guilty for contravening the provisions of section 4 of the Act The appellant should not be considered to have violated the provisions of section 4 of the Act and Regulation 3 of the Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 in view of peculiar facts and circumstances of the present matter - appeal allowed - decided in favor of appellant.

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• PMLA

• 2019 (2) TMI 213
  Continuation of freezing of the accounts to locate the proceed of crime - section 17 (4) of PMLA - Held that:- The Hon'ble High Court of Delhi in the case of ABDULLAH ALI BALSHARAF & ANR. VERSUS DIRECTORATE OF ENFORCEMENT & ORS. [2019 (1) TMI 515 - DELHI HIGH COURT] has dealt with the issue of Section 102 of Cr.P.C. as to whether such directions could be issued by the Adjudicating Authority under the PMLA and it was held that the contention that officers of the Enforcement Directorate could issue orders of freezing under Section 102 of Cr.P.C. is rejected and the communications issued by the Enforcement Directorate to BSE are, plainly, without authority of law - appeal allowed - decided in favor of appellant.

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• Service Tax

• 2019 (2) TMI 212
  Nature and classification of service - Works Contract services or not - It appeared to the department that the activity undertaken by them under various work orders is in the nature of Works Contract Services, for which, the appellants have not discharged service tax - period from 01.06.2007 to 31.12.2007 - Held that:- Sub-clause (i) of the Explanation provides that Works Contract means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods. The second clause enumerates the various services that would make the activity a Works Contract. Clause (e) specifies about the turnkey projects which involve both design, engineering as well as installation and commissioning activity. In the case before us, it is correct that in the agreement dated 26.11.2002 entered by the appellants with the foreign collaborator. The agreement is to undertake projects in the nature of turnkey projects also. From all these works orders, which are the subject- matter of the demand, it is concluded that the work undertaken by the appellants are only design, engineering, documentation, manufacture and supply of equipment/machinery and design involved in erection and commissioning of such machinery. The appellants have not undertaken any erection and commissioning activity as provided in sub-clause (a) or (e) of the definition of Works Contract Service. The supervision of erection and commissioning cannot be equated with civil work of erection and commissioning or installation of plant and machinery. When the appellants have not done any erection and commissioning activity. The levy of service tax under WCS is not attracted. The demand cannot sustain under Works Contract Services - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 211
  Non-imposition of penalty - short payment of service tax - tax was paid before issuance of SCN - sub-section (3) of Section 73 of FA - Held that:- The respondent has discharged the entire service tax liability along with interest before issuance of the show cause notice - As per sub-section (3) of Section 73, as it stood during the relevant period, no penalty can be imposed when the demand of service tax along with interest stands paid before issuance of show cause notice - The respondents have also explained the reason for delay in paying the service tax. It is seen that the accountant engaged had left the firm as it was proved that he is unreliable and mischievous. The respondent had paid the amount within 10 days of the department having intimated with regard to the short-payment of tax. All these would go to show that the Commissioner has rightly invoked section 80 to waive the penalties - imposition of penalty is not correct - appeal dismissed - decided against Revenue.

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• 2019 (2) TMI 210
  Refund of service tax - rejection on the ground that the input services are not used with the SEZ area and also that the input services are not used for authorized operations - Held that:- Almost all the activities, which are related to the business of assessees would be covered within the definition of "input services". In various decision of the Tribunal as well as various High Courts, the services in the nature of Air Travel Agents Service, Architect Services, Courier Services, Custom House Agents Service and Repair & Maintenance Services have been held to be eligible for credit - the rejection of refund claim on the ground that the input service do not have nexus with the manufacturing activity of the appellants is without basis. Rejection on the ground that input services having been consumed fully within the SEZ area and also that the services are not used for authorized operations - Held that:- Though, the department alleges that the services are not used for authorized operations, the impugned services like Air Travel Agents Service, Architect Services, Courier Services, Custom House Agents Service and Repair & Maintenance Services etc., is consumed by the appellants for the purpose of the authorized operations as SEZ developer - refund cannot be rejected on this ground. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 209
  GTA Service - appellant hired trucks owned by other persons on annual contract basis for transport of Readymix Concrete - Consignor-Consignee relationship - Held that:- It is very much clear that the respondents do not merely pay freight charges but are paying hire charges on a contract entered by them with the truck owners. The hire charges under the said annual contract includes various elements of charges for the truck such as, fuel and lubricants, salary/wages for drivers, maintenance & repairs charges, insurance charges for vehicles etc. As the hire charges include various elements, it is very much clear that there is no Consignor-Consignee relationship arising out of the contract and the payment is not mere freight charges as under GTA Services. The Tribunal in the case of M/s. Larsen & Touboro [2018 (6) TMI 439 - CESTAT CHENNAI] on similar set of facts had held that the activity would not fall within the GTA Services. Appeal dismissed - decided against Revenue.

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• 2019 (2) TMI 208
  Rejection of refund claim of service tax - construction of Government buildings - refund arising as a result of restoration of exemption benefit of N/N/. 12/2012 and 25/2012 dated 20/06/2016 - Prospective effect or retrospective effect - Rule 173-S of the Central Excise Rules, 1944. Whether an amount paid under the mistaken belief that the service is liable to service tax when the same is actually exempt, be considered as service tax paid? - Held that:- Evidently, the notification No. 12/2012 25/2012 ceased to exist w.e.f. 01/04/2015. The exemption was revived by notification dated 01/03/2016. But since it was prospective in effect, the appellant was not entitled for any exemption, which the appellant was aware of and with open mind and eyes deposited the service tax due with interest. Evidently, the works contract undertaken by the appellant during said period was not exempted. Therefore, the question that, the service tax and interest was paid under misconception does not arise, as would give rise for the proposed substantial question. Rejection of refund on the ground of time limitation - Held that:- There was thus no ambiguity nor any dispute as would have prevented the appellant from seeking refund within the period of limitation. On these given facts the substantial question also does not arise for consideration. Whether service tax paid mistakenly under construction service although actually exempt, is payment made without authority of law? - Held that:- The contention that the service tax was paid mistakenly is also not borne out from the facts - the question do not arise for consideration. As no substantial question of law arises for consideration, the appeal stands dismissed.

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• Central Excise

• 2019 (2) TMI 207
  Imposition of penalty u/r 25 of Central Excise Rules, 2002 - the main duty demand was set aside - Held that:- Against the very same impugned order, the main appeal of M/s Shree Extrusion Ltd., wherein the entire duty demand was confirmed by the lower authority, was set aside by this Tribunal vide order dated 15.11.2018. The penalty imposed in the case of present appellants being consequential to the demand of duty which does not exist as of now, the penalty imposed under Rule 25 will also not survive - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 206
  Recovery of re-credited amount - suo-moto credit of excess debit made is availed - recovery sought on the ground that the appellant could not have taken suo moto credit whereas they should have followed the procedure of filing of refund under Section 11 - Held that:- Larger Bench of this Tribunal in the case of BDH Industries Ltd. [2008 (7) TMI 78 - CESTAT MUMBAI] held that there is no provision under Central Excise Act for suo moto refund of excess/ twice paid duty - However in the present case, there is neither excess payment of duty nor twice duty was paid. The duty payable is only the amount which was mentioned in the invoice. It is only due to computer system the huge amount of excess as compared to the actual duty payment shown in the invoice was debited, therefore, this is not a case of either of excess payment of duty or twice payment of duty. Therefore, the decision of Larger Bench is not applicable in the present case. Hon’ble Rajasthan High Court dealing with the same issue in the case of J K Laxmi Cement Ltd. [2018 (1) TMI 994 - RAJASTHAN HIGH COURT] held that the service tax payment on outward transportation though paid by utilizing cenvat credit but later again paid in cash, the amount paid from cenvat credit account was required to be reversed and the assessee was entitled to take suo moto credit. The suo moto credit of excess debit made by the appellant is eligible to the appellant - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 205
  Process amounting to manufacture - returned goods - Rule 16 of Central Excise Rules, 2002 - Held that:- The Hon'ble Apex Court in the case of Commissioner of Central Excise, Chandigarh Vs M/s. Vee Kayan Industries [1994 (9) TMI 97 - SUPREME COURT OF INDIA] had held that the processing of Round Bars into Bright Bars does not amount to manufacture. The department by Trade Notice No. 18/2003, dated 14.08.2003 clarified that the process of making Bright Bars from Wire Rods amounts to manufacture and credit was being allowed on inputs. A further Trade Notice dated 16.06.2004 was issued in clarification of Trade Notice 18/2003. Extended period of limitation - Held that:- There is no evidence to establish any positive act of suppression on the part of the appellants with intent to evade payment of duty. Their repeated representations made to the department would strongly indicate that they entertained a bona fide doubt as to whether the process is manufacture or not - demand invoking extended period is, therefore, unsustainable. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 204
  Levy of penalty - delay in payment of cess - Penalty u/r 25 of Central Excise Rules, 2002 read with section 11AC of Central Excise Act, 1944 - suppression of facts or not? - Tea Cess for the period Jun.'13 to Dec.'13 - Held that:- No evidence is established that the appellants have suppressed facts in order to evade payment of Cess. On being pointed out, they had paid the Cess. It is argued by learned counsel, that the delay occurred due to financial hardships, the instalments due to the banks, payment of wages etc., There was no intention to evade payment of Cess. The penalty imposed is harsh and unwarranted is set aside - appeal allowed in part.

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• 2019 (2) TMI 203
  Rectification of mistake - Section 35C(2) of the Central Excise Act - apparent mistake present or not? - Held that:- The findings have been arrived at based on some incorrect facts - the Order based on incorrect facts requires rectification - ROM Application allowed.

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• 2019 (2) TMI 202
  CENVAT Credit - input services - services provided under Business Auxiliary Services - post manufacturing activity or not? - allegation of the department is that such activity carried out by TVSFS does not amount to promotion of sale or marketing of the goods belonging to appellants - period of 2005-06 to 2008-09 - Held that:- Prior to 01.04.2011, the definition of 'input services' included the words "activities relating to business" - The appellants being engaged in manufacture of motor vehicle looks upon the authorised dealers to sell their vehicles. The loan facility available at the dealer's premises would naturally enhance the sale of motor vehicles. Thus, the agreement entered by the appellants with TVSFS for arranging and disbursing of loans to customers at the dealers premises is indeed a sales promotion activity rendered by TVSFS to the appellants. Such services cannot be considered as post-manufacturing activity, so as to take it away from the ambit of definition of input services. The sale of motor vehicles is directly linked to the business of manufacture. Any activity which relates to business of manufacture falls within the definition of input service. The definition of input service has a 'means part' and an ‘inclusive part’. In the means part, the second sub-clause says that any service 'used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal'. The, phrase 'whether directly or indirectly, in or in relation' is so wide so as to include all activities pertaining to manufacture of finished product. In the case of M/s. Mahindra & Mahindra Ltd., [2012 (8) TMI 530 - CESTAT, MUMBAI], it was observed that after sale service activities rendered by the dealers as part of warranty offered by manufacturer would qualify as input services, when such expenses have been included in the assessable value - In the present case, the department does not deny the fact that such charges have been included in the assessable value of the appellants. Since, during the relevant period, the definition of 'inputs' included the words "all activities relating to the business", we have to safely conclude that the said activity rendered by TVSFS is an activity relating to the business of manufacture of appellants. The impugned services qualify as "input service" and is eligible for credit - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (2) TMI 201
  Principles of natural justice - ex-parte order - sale of molasses taking place or not? - imposition of tax liability on the assessee for the quantities of molasses sold to M/s Rajasthan Cooperative Dairy Federation Ltd. - Held that:- The revenue led sufficient evidence that the assessee had performed such sale, since those transactions had been found recorded in the books of accounts of the assessee without any narration of the same being commission sale. In such facts, it was for the assessee to have led positive and credible evidence either to disprove the allegation of the revenue or to set up its defense in light of any other evidence. The assessee chose to do neither - Despite an earlier ex-parte assessement order being set aside and that assessment being reopened, even upon such second opportunity, the assessee did not lead any credible evidence to establish its status of commission agent in the sale transactions performed between M/s Raj Enterprises, Uttarakhand and M/s Rajasthan Cooperative Dairy Federation Ltd, Ajmer. There does not arise any occasion to remit the matter (at this late stage), when the assessee had chosen not to file any application to lead additional evidence but had chosen to only place on record photocopies of certain documents before the Tribunal, which admittedly had not been filed up to that stage, before any authority. Revision dismissed.

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• 2019 (2) TMI 200
  Assessment u/s 3-F on estimation basis - audited balance sheet and other accounts had been maintained in the ordinary course of business - Held that:- It is clear that the books of accounts of the assessee had been accepted by the assessing officer. Once those books of accounts were accepted, clearly there was no room to invoke the provisions of Section 3-F(3) of the State Act - To allow the assessing officer to both accept the books of accounts and yet disbelieve part thereof would be to allow self-contradicted findings to arise and exist in the assessment order - answered in favor of the assessee. Whether the goods can be treated as steel structure or steel structural? - Held that:- It does not stand established from the record if any tax liability has been created in excess of 4 percent on any goods falling under the scheme of Sections 14 and 15 of the Central Act. Perusal of the assessment order discloses, the higher tax liability was created with respect to items - tower components and galvanized components etc. The Tribunal has made reference to the same and observed there is no error in the quantification of that tax liability. Nothing has been shown to exist on record to establish that those items were of the description as may satisfy the language of Section 14(iv) (v) of the Central Act. In absence of any material being shown to the Court, the findings recorded by the Tribunal and the lower authorities, though not very happily worded, yet do not call for any interference in exercise of its limited jurisdiction of revision, by this Court - answered against the assessee. Revision allowed in part.

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• Wealth tax

• 2019 (2) TMI 199
  Validity of Wealth Tax Assessments - section 25 (2) of Wealth Tax Act - whether inquires were carried out by the ld. WTO, during the course of the assessments? - Held that:- When a ld. WTO, who is having a duty to do a Wealth Tax assessment after conducting enquiry which are required of him, in discharge of his duties, does not do so, there is a clear non application of mind. Merely because details were filed by assessee or claim was made through a return would not make it a case, where necessary enquiries required under the Act were carried out - thus, there was indeed a lack of enquiry on the aspect of cash balance held by the respective assessees and such lack of enquiry rendered the Wealth Tax Assessments erroneous and prejudicial to the interest of the Revenue. Ld PCWT was justified in holding so. There are no reasons to interfere with the orders of the ld. PCWT(A) - the appeals of the assessee are dismissed.

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• Indian Laws

• 2019 (2) TMI 198
  Vires of amended Rules 14-A, 14-B, 14-C and 14-D of the Rules of High Court of Madras, 1970 - section 34(1) of the Advocates’ Act, 1961 - Bar on Advocate from practicing - The petitioner in person has urged that rules are ultra vires and impermissible to be framed within scope of section 34(1) of the Advocates Act. They take away the independence of the Bar and run contrary to the Constitution Bench decision of this Court in Supreme Court Bar Association v. Union of India [1998 (4) TMI 531 - SUPREME COURT]. Whether disciplinary power vested in the Bar Council can be taken away by the Court and the international scenario? - Held that:- The legislature has reposed faith in the autonomy of the Bar while enacting Advocates Act and it provides for autonomous Bar Councils at the State and Central level. The ethical standard of the legal profession and legal education has been assigned to the Bar Council. It has to maintain the dignity of the legal profession and independence of Bar. The disciplinary control has been assigned to the Disciplinary Committees of the Bar Councils of various States and Bar Council of India and an appeal lies to this Court under section 38 of the Act - The bar association must be self-governing is globally recognised. Same is a resolution of the United Nations also. Even Special Rapporteur on the independence of Judges and lawyers finds that bar associations play a vital role in safeguarding the independence and integrity of the legal profession and its members. The UN’s basic principles on the role of lawyers published in 1990 noted that such institutions must possess independence and its self-governing nature. The bar association has a crucial role to play in a democratic society to ensure the protection of human rights in particular due process and fair-trial guarantees. The International Bar Associations Presidential Task Force was constituted to examine the question of independence of the legal profession. In the report while discussing the indicators of independence, it has been pointed out that a bar association is generally deemed to be independent when it is mostly free from external influence and can withstand pressure from external sources on matters such as the regulation of the profession, disbarment proceedings and the right of lawyers to join the association. Judicial independence ensures that lawyers are able to carry out their duties in a free and secure environment and an independent judiciary also acts as a check on the independence of lawyers and vice versa. Complete lack of self-regulation can have a negative effect on the independence of the lawyers and lawyers have to be free from fear of prosecution in controversial or unpopular cases. Political, societal and, in some circumstances, media pressure in times of war, terror, and emergency can have a profound impact on the independence of the profession. They can be attacked by unscrupulous persons for discharging their duties in a fearless manner. That is why independence of the bar is imperative. The Advocates Act has never intended to confer the disciplinary powers upon the High Court or upon this Court except to the extent dealing with an appeal under Section 38 - By amending the High Court Rules in 1970, the High Court of Madras has inserted impugned Rules 14(A) to 14(D). The rules have been framed in exercise of the power conferred under Section 34 of the Advocates Act. Section 34 of the Act does not confer such a power to frame rules to debar lawyer for professional misconduct. The amendment made by providing Rule 14(A)(vii) to (xii) is not authorized under the Advocate Act. The High Court has no power to exercise the disciplinary control. It would amount to usurpation of the power of Bar Council conferred under Advocates Act. However, the High Court may punish advocate for contempt and then debar him from practicing for such specified period as may be permissible in accordance with law, but without exercising contempt jurisdiction by way of disciplinary control no punishment can be imposed. As such impugned rules could not have been framed within the purview of Section 34. Provisions clearly impinge upon the independence of the Bar and encroach upon the exclusive power conferred upon the Bar Council of the State and the Bar Council of India under the Advocates Act. The amendment made to the Rules 14(A) to 14(D) have to be held to be ultra vires of the power of the High Court. The High Court is not authorized by the provisions of the Advocates Act to frame such rules. Section 34 does not confer such power of debarment by way of disciplinary methods or disciplinary inquiry as against an advocate as that has to be dealt with by the Bar Council as provided in other sections in a different chapter of the Act. It is only when the advocate is found guilty of contempt of court, as provided in Rule 14 as existed in the Madras High Court Rules, 1970 takes care of situation until and unless an advocate who has committed contempt of court purges himself of contempt shall not be entitled to appear or act or plead in the Court - The debarment cannot be ordered by the High Court until and unless advocate is prosecuted under the Contempt of Courts Act. It cannot be resorted to by undertaking disciplinary proceedings as contemplated under the Rules 14-A to 14-D as amended in 2016. That is a clear usurpation of the power of the Bar Council and is wholly impermissible. The very purpose of disciplinary control by Bar Council cannot be permitted to be frustrated. In such an exigency, in a case where the Bar Council is not taking appropriate action against the advocate, it would be open to the High Court to entertain the writ petition and to issue appropriate directions to the Bar Council to take action in accordance with the law in the discharge of duties enjoined upon it. But at the same time, the High Court and even this Court cannot take upon itself the disciplinary control as envisaged under the Advocates Act. No doubt about it that the Court has the duty to maintain its decorum within the Court premises, but that can be achieved by taking appropriate steps under Contempt of Courts Act in accordance with law as permitted under the decisions of this Court and even by rule making power under Section 34 of the Advocates Act. An advocate can be debarred from practicing in the Court until and unless he purges himself of contempt. The High Court has overstretched and exceeded its power even in the situation which was so grim which appears to have compelled it to take such a measure. In fact, its powers are much more in Contempt of Courts Act to deal with such situation court need not look for Bar Council to act. It can take action, punish for Contempt of Courts Act in case it involves misconduct done in Court/proceedings. Circumstances may be grim, but the autonomy of the Bar in the disciplinary matters cannot be taken over by the Courts. It has other more efficient tools to maintain the decorum of Court. In case power is given to the Court even if complaints lodged by a lawyer to the higher administrative authorities as to the behaviour of the Judges may be correct then also he may be punished by initiating disciplinary proceedings as permitted to be done in impugned Rules 14 A to D that would be making the Bar too sycophant and fearful which would not be conducive for fair administration of justice. Thus, there is no hesitation to strike down impugned Rules 14-A to 14-D as framed in May, 2016 by the High Court of Madras as they are ultra vires to Section 34 of the Advocates Act and are hereby quashed. Petition allowed.

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• 2019 (2) TMI 197
  Dishonor of Cheque - Section 138 of Negotiable Instruments Act, 1881 - Held that:- The revisional court considered it proper to stay the proceedings in the criminal complaint case under Section 138 NI Act against the respondents on the ground that the same would “unnecessarily prejudice” the trial court while the criminal case arising out of FIR no. 53/2013 is pending - This Court finds the view taken by the revisional court to be wholly unfair and unjust. Though questions would arise in the criminal case under Section 138 NI Act as to whether cheque in question had come in the hands of the petitioner legitimately or not, the contentions of the respondents are a matter of defence which will have to be raised by them, the burden of proof of the requisite facts in such regard being placed on them. There is no reason why the case arising out of above-mentioned FIR should have a primacy or priority over the case of the petitioner against the opposite party. The impugned order staying the proceedings in the case under Section 138 NI Act is hereby vacated - petition allowed.

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