Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 16, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
GST - States
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(16/2020)-FD 03 CSL 2020 - dated
7-4-2020
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Karnataka SGST
Seeks to extend due date of furnishing FORM GST CMP-08 for the quarter ending March, 2020 till 07.07.2020 and filing FORM GSTR-4 for FY 2020-21 till 15.07.2020.
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(15/2020)-FD 03 CSL 2020 - dated
7-4-2020
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Karnataka SGST
Seeks to provide relief by conditional waiver of late fee for delay in furnishing outward statement in FORM GSTR-1 for tax periods of February, 2020 to April, 2020.
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(14/2020)-FD 03 CSL 2020 - dated
7-4-2020
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Karnataka SGST
Seeks to provide relief by conditional waiver of late fee for delay in furnishing returns in FORM GSTR-3B for tax periods of February, 2020 to April, 2020.
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(13/2020)-FD 03 CSL 2020 - dated
7-4-2020
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Karnataka SGST
Seeks to provide relief by conditional lowering of interest rate for tax periods of February, 2020 to April, 2020.
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(07/2020)-KGST.CR.01/17-18 - dated
4-4-2020
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Karnataka SGST
Seeks to extend due date for furnishing FORM GSTR-3B for supply made in the month of May, 2020.
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(12/2020) FD 03 CSL 2020 - dated
2-4-2020
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Karnataka SGST
Seeks to prescribe the due date for furnishing FORM GSTR-1 for the quarters April, 2020 to June, 2020 and July, 2020 to September, 2020 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year.
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(11/2020) FD 03 CSL 2020 - dated
2-4-2020
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Karnataka SGST
Seeks to specify class of persons, other than individuals who shall undergo authentication, of Aadhaar number in order to be eligible for registration.
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(10/2020) FD 03 CSL 2020 - dated
2-4-2020
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Karnataka SGST
Seeks to notify the date from which an individual shall undergo authentication, of Aadhaar number in order to be eligible for registration.
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(09/2020) FD 03 CSL 2020 - dated
2-4-2020
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Karnataka SGST
Seeks to specify the class of persons who shall be exempted from aadhar authentication.
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2/2020 - FD 12 CSL 2020 - dated
30-3-2020
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Karnataka SGST
Seeks to amend Notification No. (11/2017) No. FD 48 CSL 2017 dated the 29th June, 2017
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G.O. Ms. No. 9 - dated
1-4-2020
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Puducherry SGST
Supersession Notification G.O. Ms. No. 68, dated the 31st December, 2019
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G.O. Ms. No. 8 - dated
1-4-2020
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Puducherry SGST
Amendment in Notification No. G.O. Ms. No.34, dated the 5th August, 2019
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G.O. Ms. No. 7 - dated
1-4-2020
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Puducherry SGST
Special procedure for corporate debtors undergoing the corporate insolvency resolution process under the insolvency and bankruptcy code, 2016
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G.O. Ms. No. 6 - dated
1-4-2020
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Puducherry SGST
Seeks to exempt foreign airlines from furnishing reconciliation Statement in FORM GSTR-9C
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G.O. Ms. No. 10 - dated
1-4-2020
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Puducherry SGST
Notification to exempt certain class of registered persons capturing dynamic QR code and the date for implementation of QR Code to be extended to 01.10.2020
Money Laundering
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G.S.R. 251(E) - dated
13-4-2020
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PMLA
Prevention of Money-laundering (Maintenance of Records) 2nd Amendment Rules, 2020
SEBI
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SEBI Notification on COVID 19 - dated
15-4-2020
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SEBI
SEBI Notification on COVID 19
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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TCS u/s 206C(1) - activity of sale of scrap - to fall under the definition of scrap as given in the Explanation to section 206C of the Act, the term ‘waste’ and ‘scrap’ are one and which should arise from manufacture and if the scrap is not coming out of manufacture, then the items do not fall under the definition of scrap and thus not liable to TCS.
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Condonation of delay - it filed appeal against the assessment order instead of 154 order passed by the Assessing Officer because the scope in challenging the assessment order in appeal is far more wider than challenging the order passed under Section 154 of the Income-tax Act for rectification of any mistake. Since the assessee has availed one of the courses available to it and this has made its appeal time barred, it is a plausible explanation for condonation of delay. - Delay condoned - AT
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Addition being difference between the value determined by the DVO - As per the records, the assessee has shown project completion method, hence, the profit is liable to be taxed in the assessment year under consideration only , hence, we hold the same. - in such circumstances and non corporative attitude of the assessee, the AO could not do justice with the assessee
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Addition u/s 68 - unexplained cash credit - if the AO wanted to disbelieve the identity, credit-worthiness and genuineness of transaction of cash depositors with the assessee, the AO’s could have carried out more enquiry by examining these persons to establish whether they have given cash to the assessee for carrying out share trading on their behalf or not - Additions deleted.
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Claim of exemption u/s 10(37) - it was a case of compulsory acquisition of land for which the SMC under the instruction of Government of Gujarat for which the SMC has also given a certificate - conditions stipulated in section 10(37) is satisfied.
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Condonation of delay in filing of appeal before CIT (A) - In the case in hands, the branch has to act as per advice of Head Office, hence, which consumed sufficient period of time, therefore, it could not be regarded as negligence or of lacking of bona-fides. We are of the considered opinion that CIT (A) was not justified in refusing to condone the delay in filing of appeal - Delay condoned.
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AO/CIT(A) have erred in disallowing the deduction for education cess on income-tax, dividend distribution tax and fringe benefit tax in computing the total income under normal provisions of the Act, consequently ordered to be deleted. - AT
Customs
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Revocation of approval granted to Overseas Warehousing Private Limited to act as custodian of the imported goods - the appellant has by his action of auctioning the goods which were in his custody acted without putting the importer to notice and without informing/ seeking permission from the Custom Officer has contravened the provisions of Section 48 of the Customs Act, 1962.
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Import of prohibited item - old and used multifunction devices and printers - the impugned goods are to be considered as ‘other wastes’ and the prohibition, applicable upon nonconformity with the conditions for import of ‘hazardous waste’, would not apply to the impugned goods. - The absolute confiscation of the goods must be set aside in the face of restrictions that are not prohibition.
DGFT
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Manner of Continuation of Merchandise Exports from India Scheme (MEIS) for shipments on or after 01.04.2020 and Introduction of the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme - Trade Notice
FEMA
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Offence under FERA / FEMA - Economic Offence cases - failure to realize the respective full export proceeds - By just giving the quota to A-1 to A-3, A-4 to A-6 cannot shirk their responsibility and take a turn and say that since they are not the exporters and that the sale proceeds does not pertain to them, they have not contravened the provisions of Section 18 (3) more so, when A-6 is the joint declarant in the GR Forms along with A-1. - HC
Corporate Law
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Jurisdiction - Status of NCLT as Court or not - The term Adjudicating Authority, as defined in Section 5(1) of IBC cannot come within the ambit of court as defined in Section 2(29) of the Companies Act, 2013. - As per Section 60(1) of ‘I&B’ Code the NCLT is an Adjudicating Authority - NCLT in Law is not empowered to order an investigation directly, to be carried out by the Central Government.
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Cancellation of Certificate of Incorporation - The Chartered Accountant (ACA) failed to fulfil his statutory professional duties in following the extant provisions of the Companies Act, in incorporating the R 1 Company. He has given false declaration that the petitioner has signed the requisite documents in question before him. Therefore, the incorporation of R 1 Company ab initio void as per the said proviso, apart from criminally liable for action against the Second and third Respondent
Indian Laws
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The word “perverse” has to be understood in law as defined to mean “against the weight of evidence.” From the discussions it is held that the findings arrived at by the learned trial Court are perverse and erroneous. - HC
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It is manifest that criminal proceedings had not commenced based on the complaints. When criminal proceedings had not commenced, it will be incongruous to hold that the accused stands acquitted with the dismissal of the complaint - HC
IBC
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Validity of order of spcial bench of NCLT - Irregularity in publishing of Cause List in the prescribed manner - The petitioner got the certified copy of the order within 7 days from the date of pronouncement of the common order dated 20.01.2020 i.e., within the timeline contemplated under Section Sub-Section (2) of Section 61 of IBC and as such, it cannot be said that he has been put to serious prejudice on account of non-uploading of the information relating to pronouncement of the orders on 20.01.2020 and non indication of the same in the Cause List. - HC
PMLA
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Prevention of Money-laundering (Maintenance of Records) 2nd Amendment Rules, 2020 - Notification
RBI
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‘Fully Accessible Route’ for Investment by Non-residents in Government Securities - Circular
Central Excise
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CENVAT Credit - inputs/capital goods - all the items in question has been used by the appellant for fabrication of capital goods - the items in question has been used by the appellant for fabrication of capital goods which are inputs for the appellant and they are entitled to avail cenvat credit - AT
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Cenvat credit can be availed by the manufacturer on the strength of supplementary invoice since such amount of duty cannot be said to be paid on account of any non-levy or short levy by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any provision of the Central Excise Act/Rules with intent to evade payment of duty.
VAT
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Classification of goods - rate of tax - Medical Oxygen IP - Nitrous Oxide IP - Medical Oxygen IP and Nitrous Oxide IP are medicines used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings falling within the ambit of Section 3(b)(i) of the 1940 Act. Medical Oxygen IP and Nitrous Oxide IP fall within the ambit of Section 3(b)(i) of the 1940 Act and are consequently covered in Entry 88 of the 2005 Act. - SC
Case Laws:
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GST
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2020 (4) TMI 442
Prayer for release of petitioners from the Special Camp at Tiruchirapalli and allow them to stay at Belchem 804, Hiranandini Post, Oragadam, Kancheepuram, due to the prevailing pandemic - case of petitioners is that social distancing is not maintained there properly - HELD THAT:- After seeing the photographs sent by the learned counsel for the Petitioners through e-mail, pertaining to the present condition of the rooms in the Special Camp and the inmates staying there, this Court intended to ascertain the veracity of the same. Accordingly, one S.N.Suthanthira Rajan, Special Deputy Collector was connected through WhatsApp Video call today, and he took this Court to the maximum areas of the Special Camp in Tiruchirapalli District. After watching the same, this Court is able to visualize that, the Special Camp is maintained neatly and there are no stains in the Toilets. When sufficient space is available in the Special Camp in Tiruchirapalli District to accommodate 80 persons and that, only 73 inmates are staying there, this Court is of the view that, photographs furnished by the Petitioners to the effect that, more number of persons are detained in a single room without any sign of social distancing, have been taken by the Petitioners only for the purpose of this case. By doing so, Petitioners are inviting diseases and none can be blamed for their act - It appears that, the Petitioners herein are unable to realize the consequences of the prevailing pandemic. When the Central and State Governments are taking effective steps to prevent further spread of COVID- 19, public, as responsible citizens must extend utmost co-operation to the Government in eradicating this pandemic and shall not try to disrupt the functioning of the Government. Petition dismissed - decided against petitioner.
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2020 (4) TMI 441
Interest on delayed payment of GST - HELD THAT:- Considering facts that as per Section 50 of the Central Goods and Services Act, 2017, interest is payable on the delayed payment of tax and that as per the interest statement filed along with the impugned letter, dated 07.02.2020, there was delay in filing GSTR-3B and hence, interest on 'cash set off' and 'ITC set off' has been calculated and payment thereof has been asked for, recovery of interest against the petitioner, insofar it relates to 'I.T.C. set off', shall remain stayed. Issue notice before admission, on payment of process fee, if not already paid, within three working days, returnable within four weeks.
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Income Tax
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2020 (4) TMI 440
Validity of order of Settlement Commission - full and true disclosure or not - HELD THAT:- It is an admitted position that on identical facts in the case of two of the assessees namely, M/s. Shreyans Corporation and Samarth India, this court by a judgment and order dated [ 2019 (11) TMI 874 - GUJARAT HIGH COURT] has dismissed the petitions by holding that there is no infirmity in the impugned order passed by the Settlement Commission. Since the facts and contentions in all these three petitions are similar to the facts and contentions of the above referred petitions, except that the amount involved in each case is different, it is not necessary to set out the facts and contentions in detail. This court does not find any infirmity in the impugned order dated 17.7.2018 passed by the Settlement Commission, so as to warrant interference. The petitions, therefore, fail and are, accordingly, summarily dismissed.
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2020 (4) TMI 439
Stay of outstanding demand - assessee has paid 20% demand - HELD THAT:- Considerable liability already discharged by the assessee, we are of the view that mitigating circumstances exist in the present case for stay of outstanding demand to the extent of ₹ 5,27,23,794/-. The AO shall be entitled to adjust the refund of excess tax claimed to be under the control of the department to the tune of ₹ 2,90,79,380/-. The Registry is directed to fix the relevant penalty appeals for AYs. 2007-08 to 2010-11 for out of turn hearing on 23/04/2020 as announced in the Open Court and informed to the representatives of both the sides. No separate notice of hearing would thus be required to be served. The parties will file all the requisite documents, such as, paper-book etc. well in advance for expeditious disposal of appeal. Stay granted is also subject to the condition that the assessee will fully cooperate in speedy disposal of the appeal and will not seek any adjournment on any grounds whatsoever save and except wholly unavoidable and bonafide circumstance preventing the assessee from participating in appellate proceedings before the Tribunal.
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2020 (4) TMI 438
TCS u/s 206C(1) - business activity of trading in ferrous and non-ferrous metals carried on by the appellant firm, as an activity of sale of scrap - treating the appellant as an assessee in default for not collecting TCS @ 1 % on the entire sale proceeds made by the appellant firm - HELD THAT:- We find that it is an undisputed fact that the assessee is not a manufacturer and is only a dealer in scrap. During the years under consideration, as noted in the assessment orders, the assessee had sold scrap, which included unburned transformer coils from various distribution companies of UPPCL. We find that whether a trader in scrap is liable to be fastened with liability to collect TCS under section 206C came up for consideration in the case of Navine Fluorine International Ltd. vs. ACIT(TDS) [ 2011 (2) TMI 1110 - ITAT, AHMEDABAD ] wherein, the ITAT held that to fall under the definition of scrap as given in the Explanation to section 206C of the Act, the term waste and scrap are one and which should arise from manufacture and if the scrap is not coming out of manufacture, then the items do not fall under the definition of scrap and thus not liable to TCS. We further find that the Ahmedabad Bench of ITAT in the case of ITO(TDS) vs. Priya Blue Industries Pvt. Ltd. [ 2015 (11) TMI 1263 - ITAT AHMEDABAD ] again relied on the order of the Ahmedbad Bench of the ITAT in the case of Navine Fluorine International Ltd. vs. ACIT(TDS) [supra] and held that the words waste and scrap should have nexus with manufacturing or mechanical working of materials - Decided in favour of assessee.
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2020 (4) TMI 437
Deduction of TDS u/s 194C at lower rate - sec.40(a)(ia) disallowance - HELD THAT:- As clear from a perusal of the foregoing lower appellate discussion that this is not an instance of non-deduction of TDS per se. DR fails to dispute that gong by the AO s detailed discussion in his assessment order dated 07.01.2016, the assessee had indeed deducted TDS u/s.194C albeit at a lesser rate followed by three other head(s) of 194-H, 194-I and 194- J involving nil deduction. Assessing Officer had disallowed the impugned sum under the first head only. We observe in this factual backdrop that hon'ble jurisdictional high court s decision in Commissioner of Income Tax vs. S.K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT ] holds that the impugned disallowance u/s 40(a)(ia) does not apply in a case involving short deduction of TDS. We therefore go by the very reasoning and direct the Assessing Officer to delete the impugned disallowance. - Decided in favour of assessee.
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2020 (4) TMI 436
Penalty u/s 271(1)(c) - Defective notice - whether the assessee is being visited with penalty for concealment of income or for furnishing of inaccurate particulars of income? - HELD THAT:- Deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations, then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished. If examine the facts, then it would reveal that before issuance of notice under Section 148 assessee itself has brought certain errors in its computation of income to the notice of the Department. Therefore, it shows that there is no deliberate attempt at the end of the assessee to withhold the information. Similarly, the Assessing Officer has made ad-hoc disallowance out of trade settlement expenses, advertisement expenses and commission income etc. CIT(A) has already reduced the disallowance out of trade settlement expenses in the quantum proceedings. Thus, considering the explanation of the assessee, more so in the light of failure of the AO to record a categorical finding as to whether the assessee is being visited with penalty for concealment of income or for furnishing inaccurate particulars of income, assessee does not deserve to be visited with penalty. The penalty proceedings were initiated for furnishing of inaccurate particulars of income. In the show-cause notice, the AO has used both the options i.e. for concealment of income or for furnishing inaccurate particulars of income. So far as the show-cause notice is concerned, this defect is not fatal to the proceedings in view of the judgment of Hon ble jurisdictional High Court in the case of Snita Transport P. Ltd. Vs. ACIT [ 2012 (12) TMI 981 - HIGH COURT OF GUJARAT] has observed that for providing an opportunity to the assessee for explaining its position, the Assessing Officer may use expression or in between the concealment of income and furnishing inaccurate particulars of income in the show-cause notice; but for visiting the assessee with penalty, the Assessing Officer has to record a conclusive finding. Assessee does not deserve to be visited with penalty. Accordingly, the appeal of the assessee is allowed and the penalty is deleted.
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2020 (4) TMI 435
Exemption u/s 80P(2)(a)(i) - interest income received from Axis Bank on the saving bank account maintained by the assessee as well as interest income on loan given to staff - HELD THAT:- In the present case, the assessee has earned income from the saving bank account maintained with Axis Bank. Axis Bank is not a cooperative bank, therefore, any interest income from this bank will not qualify for grant of deduction under section 80P(2)(a)(i) in view of the above judgment of STATE BANK OF INDIA (SBI) VERSUS COMMISSIONER OF INCOME TAX [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] as well as under section 80P(2)(d) because it is not cooperative society. Similar is the position with regard to the interest income on the loans given to the staff. CIT(A) has rightly disallowed claim of the assessee for grant of exemption - Decided against assessee.
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2020 (4) TMI 434
Condonation of delay - Earlier assessee has filing an application for rectification and same was rejected by the AO. - condoning the delay of 157 days in filing the appeal before the learned First Appellate Authority - Assessee contended by the assessee that it had not carried out any business and somebody has wrongly used its PAN data by showing deduction of taxes - HELD THAT:- On rejection of this application, it filed appeal against the assessment order instead of 154 order passed by the Assessing Officer because the scope in challenging the assessment order in appeal is far more wider than challenging the order passed under Section 154 of the Income-tax Act for rectification of any mistake. Since the assessee has availed one of the courses available to it and this has made its appeal time barred, it is a plausible explanation for condonation of delay. Therefore,condone the delay of 157 days in filing the appeal before the learned CIT(A).
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2020 (4) TMI 433
Reopening of assessment u/s 147 - re-opening was done based on the report of the Valuation Officer - additional ground was not raised while filing of appeal - HELD THAT:- The contention that, Reference to DVO made when no proceeding pending and re-opening made is devoid of any merit and based on wrong and misleading facts and contrary to record. Additional ground is neither maintainable as no argument and justification is given and how it has come to be raised in second round of assessment proceedings which was carried out at the behest of Tribunal for supplying reasons for reopening of assessment only, Nor this grounds of appeal was taken before the AO, hence, it is not maintainable in law and also liable to be dismissed on merits due to facts as discussed above. - Additional grounds dismissed. Addition being difference between the value determined by the DVO - HELD THAT:- The assessee has failed to adduce any evidence of cost of construction before the DVO. The perusal of DVO report showed that the AO even try to stop the DVO for making inspection of property and it was done in the presence of Inspector of Department. Therefore, the objection relating to DVO Report is not correct hence, it is not acceptable. Further, seen that the construction was started from 1996-97 and reached finality in the A.Y. 1999-2000. The assessee has not shown any work in progress as no return for A.Y. 1996-97 to 1999-2000 has been ever filed. - As per the records, the assessee has shown project completion method, hence, the profit is liable to be taxed in the assessment year under consideration only , hence, we hold the same. In the Registered Valuer report, the assessee shown rate of construction at 325 per Sq. Ft. for the total construction area of 16980 sq. Ft. However, these figures are not supported by the books of accounts as the assessee failed to produce any books of accounts before the income-tax authorities as well as DVO. The assessee has not cooperated with DVO also nor filed any details. The assessee has not established its claim of cost by producing books of accounts before the AO. In such circumstances and non corporative attitude of the assessee, the AO could not do justice with the assessee. The assessee himself has total cost at ₹ 66,77,000 and expenses at ₹ 65,97,000 of which difference comes to ₹ 87,000 which is the net profit according to the assessee. - Same is also not disclosed as no return of income was filed. Similarly, in such type of project where 21 flats have been constructed, it would be reasonable to adopt Net Profit Rate as applicable to construction business. It is settled law that entire receipts cannot be taxed. In the light of these facts, only net profit is required to be taxed not the entire receipts. Therefore, real income is only to be taxed. - it would meet the end of justice if 5% of net profit rate is to be applied to gross receipts - Decided partly in favor of assessee.
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2020 (4) TMI 432
Addition u/s 68 - unexplained cash credit - assessee has failed to furnish the name and address, PAN, confirmation, acknowledgement of return of income, and bank statement in respect of five person - HELD THAT:- We find that in respect of loan of ₹ 1 Lakh from Shri Parth Kumar Ghediya, the assessee has filed acknowledgement of return of income and copy of bank pass book. Therefore, the assessee has discharged his onus under section 68 of the Act. Similarly, the loan of ₹ 3 Lakh was taken from non-resident through banking channel. Hence, for this loan the onus has been discharged. Therefore, genuineness of the same cannot be doubted, accordingly, addition of ₹ 4 Lakh is deleted and balance addition is sustained. This ground of appeal is therefore, partly allowed. Deemed income under section 68 - admission of additional evidence to prove the genuineness of the transactions - HELD THAT:- The perusal of details of cash deposits taken by the assessee from various persons shows that same are below ₹ 19,000, which have also been repaid during the year by the assessee. AO has denied the claim of the assessee on the ground that no details were filed before him. However, during the course of appellate proceedings, in order to prove the genuineness of the transactions, the assessee has filed details of these persons giving their identity name and address PAN. The assessee has been trading in shares as is evident from the profit and loss account placed in the paper book and was filed before the authorities below. We observed that the assessee has furnished details of their identity in shape of voter ID card, electricity bill, 7/12 extract of agricultural land holding and PAN. Therefore, if the AO wanted to disbelieve the identity, credit-worthiness and genuineness of transaction of cash depositors with the assessee, the AO s could have carried out more enquiry by examining these persons to establish whether they have given cash to the assessee for carrying out share trading on their behalf or not . The learned Sr. D.R. contended that identity proof given by the assessee amounts to additional evidence. We find that such evidences were submitted before Ld. CIT(A), on which a remand report was duly called for from the AO. Hence, these evidences cannot be treated as additional evidences as claimed by the revenue. As decided in CHANAKYA DEVELOPERS [ 2013 (10) TMI 7 - GUJARAT HIGH COURT] in order to prove genuineness of transaction, relating to receipt of booking amount of flats, supplied address and PAN of concerned persons, it had discharged its primary onus and therefore, AO could not make addition of said amount to assessee`s taxable income without making proper enquiries under section 133(6) of the Act. Revering back to the present case, the assessee has filed name and address, PAN, electricity bill, 7/12 extract, confirmation. Therefore, no addition could be made - Decided in favour of the assessee.
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2020 (4) TMI 431
Claim of exemption u/s 10(37) - Addition of long-term capital gain - sale of agricultural land - Whether qualify the definition of Compulsory acquisition or not - whether acquisition of impugned agricultural land by Surat Municipal Corporation (SMC) eligible for exemption under section 10(37)? - HELD THAT:- As decided in SHRI SATISHBHAI M PATEL, SHRI PRAVINKUMAR M PATEL AND ORS. VERSUS DCIT, ITO, WARD-2 (3) (1) , SURAT [ 2019 (12) TMI 1291 - ITAT SURAT] for the purpose of section 10(37) it is not required that the assessee himself should carry out the agricultural operations on the land. As per letter no. ACT/SR/3161 dated. 31.08.2010 it has been clearly mentioned by the SMC that nature of payment was compulsory acquisition (Land/ Building). From the perusal of letter no. TBT/OUT/ 4089/ 22 dated. 23.09.2014that land in question was placed under reservation by the Government of Gujarat vide order dated Notification No. GH/V/100 of 2004/DVP/1403/3307/L dated. 02.09.2014 under the provision of section 20 of Gujarat Town Planning Urban Development Act 1976 at the disposal of the SMC to acquire the land under section 77 of Bombay Provincial Municipal Corporation Act, 1949 for erection of Sewerage Treatment Plant. Thus, it was a case of compulsory acquisition of land for which the SMC under the instruction of Government of Gujarat for which the SMC has also given a certificate dated 12.08.2010 [letter no. ACT/SR/NO2861] wherein nature of payment to the assessee is described against compulsory acquisition of land at Dindoli. In the case of ITO v. Dipak Kalidas Pauwala [ 2015 (8) TMI 1268 - ITAT AHMEDABAD] wherein the Tribunal has held the that said land in Dindoli ( at Block no. 305) was acquired by SMC for sewerage Treatment Plant are agricultural land which has been compulsory acquired by SMC under the provision of section 107 of GTP UD Act, 1976 as the land needed for the purpose of Town Planning Scheme or Development Plan shall be deemed to be meaning for public purpose within the meaning of Land Acquisition Act , 1894 (I of 1894) and eligible for exemption under section 10(37) . Also confirmed by HC [ 2016 (4) TMI 431 - GUJARAT HIGH COURT] Thus we hold that the land in question was compulsory acquisition by the SMC under the direction of Government of Gujarat. Hence, conditions stipulated in section 10(37) is satisfied. - Decided in favour of assessee.
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2020 (4) TMI 430
Condonation of delay in filing of appeal before CIT (A) - delay in these appeal ranging between 101 days to 701 days in filing of appeal - main reason for delay is claimed as that the notice were received at the branch level of the bank. It was further submitted that the appellant being a public Sector bank, it has to take permission through proper channel for filing of appeals which consumes a considerable time. The delay beyond 30 days was due to the following approval procedure prevalent in bank - HELD THAT:- None should be deprived of an adjudication on merits, unless the Court of law or the Tribunal/Appellate Authority finds that the litigant has deliberately and intentionally delayed in filing of appeal, that he is careless, negligent and his conduct is lacking bona-fides. In the case in hands, the branch has to act as per advice of Head Office, hence, which consumed sufficient period of time, therefore, it could not be regarded as negligence or of lacking of bona-fides. We are of the considered opinion that CIT (A) was not justified in refusing to condone the delay in filing of appeal, hence, we condone the delay in filing of appeal and remit back the appeal to CIT(A) to be decide on merits. Assessee has been vigilant in its approach and has not neglected the Income tax proceedings. The Hon`ble Supreme Court in the case of N. Balakrishnan [ 1998 (9) TMI 602 - SUPREME COURT] has observed that the length of the delay is immaterial. The acceptability of the explanation is the only criteria for condoning the delay. In a given case and, delay of the shortest period of time may be uncondonable due to unacceptable explanation, whereas in certain other cases, delay of a long period can be condoned, if the explanation is satisfactory. In every case of delay, there might be some omissions of negligence on the part of the assessee Maxtor mind such omissions/negligence has to be weighed in the light of exist circumstances of each case. It would the negligence of commission is a byproduct of a deliberate attempt with mala-fide intention for delay the process of the litigation which could give some benefit to the litigant, then probably process of litigation which would view some benefit with the litigant then probably that delay would not deserved to be condoned. However, if no mala-fide can be attributed to the delay, that delay will be condonable. - the assessee has been able to demonstrate sufficient cause and reasons for filing an appeal before the CIT (A) - Delay condoned. - Appeal restored before CIT(A)
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2020 (4) TMI 429
Exemption u/s 11 - rejecting application u/s.12AA holding that assessee failed to file documentary evidences to enable him to bring satisfaction about the genuineness of the Trust activities - HELD THAT:- Matter requires reconsideration at the level of Learned CIT(Exemption). Since the assessee could not satisfy ld.CIT(E) by submitting the documents as highlighted by ld.CIT(E) in its order. Therefore, in our view the interest of justice would be met in case Assessee is provided one more opportunity to present the documents. Even otherwise, the principle of audi alteram partem is the basic concept of natural justice. The expression audi alteram partem implies that a person must be given an opportunity to defend himself. This principle is sine qua non of every civilized society. The right to notice, right to present case and evidence, right to rebut adverse evidence, right to cross examination, right to legal representation, disclosure of evidence to party, report of enquiry to be shown to the other party and reasoned decisions or speaking orders. We took this guidance for right of hearing, from the ratio as is laid down by the Hon'ble Supreme Court in the case of Maneka Gandhi v. Union of India [1978 (1) TMI 161 - SUPREME COURT ] wherein laid down that rule of fair hearing is necessary before passing any order. We find that it is pre-decision hearing standard of norm of rule of audi alteram partem. We, are therefore, of the view the matter requires reconsideration at the level of Learned CIT(Exemption), thus, we restore it back to Ld.CIT(Exemption) and direct that assessee be given one more opportunity of being heard - Appeal of the assessee is allowed for statistical purpose.
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2020 (4) TMI 428
Denial of credit of TDS - Income recognition method - AO dismissed the claim of the assessee holding that the credit of TDS is to be allowed only in the year in which receipt has been reflected by the assessee as its income in its account - HELD THAT:- AO has not made any adverse inference in so far as the method of accounting employed by the assessee is concerned and has accepted that the assessee is consistently following POCM for recognizing income from construction contracts as prescribed in Accounting Standard-7 issued by Institute of Chartered Accountants of India, which is mandatory accounting standard. In its reply, the assessee has specifically mentioned that since it is following POCM, it has offered for tax the income on which it has claimed TDS during the year, in subsequent years on the basis of revenue recognized as per the consistent method of accounting followed by the assessee as per POCM. There is no mention of any such income offered in subsequent Assessment Years nor it has been verified by the Assessing Officer. Therefore, in the interest of justice and fair play, we restore this issue to the file of the Assessing Officer. The Assessing Officer is directed to verify whether the income has been recognized in subsequent Assessment Years and if found correct, credit of TDS should be given accordingly. Appeal of the assessee treated as allowed for statistical purposes.
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2020 (4) TMI 427
Penalty u/s 271(1)(c) - scrutiny assessment u/s 144 wherein several additions were made - as per Assessee AO has not stuck off any of the twin charges and further in the penalty order also the Assessing Officer has not specified one of the charges of penalty under Section 271(1)(c) - HELD THAT:- On careful consideration of the notice issued under section 274 of the Act on 28.03.2013, it is apparent that the Assessing Officer has not stuck off any of the twin charges. In the assessment order also in para No. 12 (ii) the Assessing Officer has initiated penalty proceedings, for concealing the particulars of income as well as furnishing of inaccurate particulars of income. Further in the penalty order also he levied the penalty on both the charges, in the last para before the computation of total income. Though the above issue was raised before him, citing the decision of Hon ble Bombay High Court, CIT (Appeals) did not adjudicate on it, but confirmed the penalty on the additions confirmed. In SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [ 2019 (8) TMI 409 - DELHI HIGH COURT] has held that such penalty cannot be sustained if the show cause notice did not specify on which limb of Section 271(1)(c) of the Act the penalty has been initiated. In view of this, we direct the learned Assessing Officer to cancel the penalty levied under Section 271(1)(c). The orders of the lower authorities are reversed and appeal of the assessee is allowed.
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2020 (4) TMI 426
Disallowance u/s 14A r.w.r. 8D - suo moto disallowance by assessee - share investments are in the nature of strategic investments to acquire the controlling interest in the appellant s business division sold to its wholly owned subsidiary companies in the year under reference - HELD THAT:- CIT (A) has justified the suo moto disallowance of ₹ 5,00,000/-made by the assessee inter alia on the ground that if strategic investments are excluded disallowance u/s 8D(ii) would come down to ₹ 2,17,950/- and further 0.5% of average investments would worked out to ₹ 59,190/- under rule 8D(2) (iii). As pointed out by the Ld. DR, the Hon ble Supreme Court in the case of Maxopp Investment Ltd. vs. CIT [ 2018 (3) TMI 805 - SUPREME COURT] has held that the dominant purpose for which investment into shares made by the assessee is not relevant as section 14A applies irrespective of whether shares are held to gain control or as stock in trade. Where shares are held as stock in trade the main purposes to trade in shares and earned profit and in this process certain dividend is also earned which is exempt u/s 10(34) of the Act. Therefore, the expenditure attributable to exempt income will have to be apportioned and disallow u/s 14A of the Act. Assessee has rightly pointed out that in the case of Joint Investment Pvt. Ltd. vs. CIT [ 2015 (3) TMI 155 - DELHI HIGH COURT] has held that disallowance u/s 14A cannot exceed the dividend income. In the present case, the assessee earned exempt income of ₹ 7,00,000/- during the previous year and it has made suo moto disallowance of ₹ 5,00,000/- u/s 14A of the Act. In the light of the ratio laid down by the Hon ble Delhi High Court, the disallowance cannot exceed the exempt income of ₹ 7,00,000/-. Hence findings of the Ld. CIT (A) is erroneous to the extent that the Ld. CIT (A) has justified the suo moto disallowance on the ground that the AO has not excluded the strategic investments made by the assessee during the previous year. Partly allow this grounds of appeal of the revenue and modify the impugned order and direct the AO to restrict the disallowance to ₹ 7,00,000/-. Since, we have partly allowed the appeal of the revenue and directed the AO to restrict the addition to the exempt income earned by the assessee, we partly allow the cross objection filed by the assessee. Disallowance u/s 36(1) (va) r.w.s. 2(24) (x) - assessee had deposited being employees contribution towards Provident Fund and ESIC after the due date prescribed under the relevant Act - HELD THAT:- As relying on HINDUSTAN ORGANICS CHEMICALS LTD. [ 2014 (7) TMI 477 - BOMBAY HIGH COURT] and GHATGE PATIL TRANSPORTS LTD. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] appellant has deposited the EPF and ESIC contributions before the due date of filing of Income tax Return, thus disallowance is hereby deleted. Addition of notional interest out of the interest paid during the previous year - whether assessee failed to offer explanation to the satisfaction of the AO, the AO rightly worked out the interest @ 12% on the said advances and added back the same to the income of the assessee? - HELD THAT:- CIT (A) has deleted the addition made on account of disallowance of notional interest out of the interest paid during the relevant year on the ground that the assessee had surplus funds with it while the loans in question were advanced. As per the computation by the Ld. CIT (A) the assessee had surplus fund of ₹ 3846.97 lakhs which was more than the investments made and the loans advanced. Hence, the Ld. CIT (A) has rightly deleted the addition by following the ratio laid down in the case of CIT vs. Reliance Utilities [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] wherein the Hon ble Court has held that if the assessee is having sufficient interest free funds available with it to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were made from the interest free funds available with the assessee. Hence, we do not find any infirmity in the findings of the Ld. CIT (A) to interfere with.
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2020 (4) TMI 425
Eligible deduction u/s 80IC - disallowance on account of excise duty exemption subsidy and transport subsidy on the ground that excise duty exemption subsidy and transport subsidy cannot be treated as profits gains derived from the industrial undertaking of Sikkim unit - HELD THAT:- When identical relief has been given by the ld. CIT (A) to the assessee on account of excise duty grant and transport subsidy for AYs 2010-11 2011-12 which has since been attained finality. CIT(A) had rightly allowed deduction on account of excise duty exemption subsidy and transport subsidy u/s 80IC of the Act having been directly related to manufacturing activities of the assessee company. Reducing the foreign exchange loss pertaining to Sikkim unit for the purpose of computing deduction u/s 80IC is Assessee company has brought on record detail of foreign exchange loss incurred on account of import of raw material used at the industrial undertaking. CIT (A) after taking into account working given by the assessee company restricted the allocation to the tune of ₹ 68.33 lakhs. No doubt, foreign exchange loss being in the nature of indirect/non-operating expenses must not be allocated to the eligible industrial undertaking. However, when the assessee company has come up with specific working/details of suffering foreign exchange loss on account of import of raw material used at the industrial undertaking, the ld. CIT (A) has rightly thrashed the issue on facts and directed the AO to reduce such allocation to ₹ 68.33 lakhs as against ₹ 1 crore estimated by the AO. So, again we find no illegality or perversity in the findings returned by the ld. CIT(A). Addition u/s 14A - computing the book profit u/s 115JB - HELD THAT:- Amount respectively earned by the assessee as capital gain from debt oriented mutual funds cannot be placed in the category of exempt income u/s 14A of the Act and in these circumstances, Rule 8D(2) cannot be invoked. AO himself has excluded the investment from which non-exempt income has been earned by the assessee company in AY 2011-12 for purpose of computing average investment under Rule 8D(2)(iii) of the Rules - disallowance made by the AO and sustained by the ld. CIT (A) u/s 14A of the Act r/w Rule 8D(2)(iii) of the Rules is not sustainable, hence ordered to be deleted. Deduction claimed on account of education cess on income-tax, dividend distribution tax and fringe benefit tax - Whether it is in the nature of surcharge and the term tax includes surcharge, education cess and higher education cess? - HELD THAT:- Issue decided in favour of assessee in CHAMBAL FERTILISERS AND CHEMICALS LTD., PR. COMMISSIONER OF INCOME TAX, KOTA. VERSUS JCIT, RANGE-2, KOTA., M/S. CHAMBAL FERTILIZERS AND CHEMICALS LTD., GADEPAN, DISTT. KOTA. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] - education cess is not a disallowable expenditure u/s 40(a)(ii) of the Act having been expressly excluded from section 40(a)(ii) of the Act. Moreover, cess is not in the nature of tax as has been held in case of Smith Kline Amp; French (India) Ltd. and Ors. vs. CIT [ 1996 (4) TMI 2 - SUPREME COURT] So, we are of the considered view that AO/CIT(A) have erred in disallowing the deduction for education cess on income-tax, dividend distribution tax and fringe benefit tax for AYs 2009-10, 2010-11 2011-12 in computing the total income under normal provisions of the Act, consequently ordered to be deleted. Allowability of business promotion expenses u/s 37 - HELD THAT:- Hon ble Delhi High Court in case of National Industrial Corporation Ltd. vs. CIT [ 2002 (8) TMI 93 - DELHI HIGH COURT] held that when there are no findings that part of the expenditure on sales/ business promotion was for non-business purposes, part of the expenditure not to be disallowed u/s 37 of the Act. So, we are of the considered view that AO/CIT(A) have purely disallowed 50% 15% respectively of the sales promotion expenses on ad hoc basis without pointing out if any part of the business promotion expenses claimed by the assessee company have not been incurred. So, we delete the addition being 15% of the business promotion expenses disallowed by the ld. CIT (A). Computing disallowance under Rule 8D - HELD THAT:- undisputedly strategic investment has been made by the assessee company in its subsidiary company to have control over it, the same has to be excluded for the purpose of computing disallowance under Rule 8D. When undisputedly there is no exempt income no disallowance u/s 14A can be made. Revenue itself has allowed the identical relief to the assessee company in AY 2011-12 which has not been contested before the Tribunal. So, we are of the considered view that ld. CIT (A) has rightly directed to exclude the amount of investment made by the assessee company in its subsidiary for the purpose of computation of disallowance made u/s 14A r/w Rule 8D, hence ground of Revenue s appeal for AY 2009-10 is dismissed. Exclusion of excise duty exemption in computing book profit u/s 115JB confirmed as relying on M/S. ESSAR TELEHOLDINGS LTD. VERSUS THE DCIT, MUMBAI [ 2013 (5) TMI 116 - ITAT MUMBAI] Disallowance u/s 14A read with Rule 8D while computing the book profit u/s 115JB to be deleted Exclusion of other income viz. income earned by way of scrap sales, misc. income, freight income, transport subsidy and cash discount not eligible for deduction u/s 80IC - HELD THAT:- There is direct nexus between profit and business and transport subsidy given by the Government being reimbursement of cost in production of goods as has been held by Hon ble Supreme Court in CIT vs. Meghalaya Steels Ltd. [ 2016 (3) TMI 375 - SUPREME COURT] . So, we are of the considered view that transport subsidy certainly reduced the cost of production would amount to profits derived to industrial undertaking, hence eligible for deduction u/s 80IC of the Act. Misc. income and amount on account of written back amount is also eligible for deduction u/s 80IC being directly inter-linked and derived from the business as has been held by Hon ble Supreme court in Liberty India vs. CIT [ 2009 (8) TMI 63 - SUPREME COURT]. Moreover, identical issue has been decided in favour of the assessee by the Revenue itself in AY 2007-08 which has been accepted by the Revenue and no new facts or law has been brought on record by the ld. DR for the Revenue as to why the Revenue has departed from the earlier binding precedent. Proportionment of Head Office expenses to the unit eligible for deduction u/s 80IC to be deleted. Income eligible for deduction u/s 80IC - Gain qua transaction of entering into forward contracts for hedging the risk associated with payment of foreign currency trade payables as speculation income u/s 43 (5) - HELD THAT:- When forward trading contract was arrived at by the assessee company merely to safeguard against loss arising out of foreign exchange in foreign currency, the same cannot be treated as speculation transaction as business income eligible for deduction u/s 80IC, so we find no ground to interfere the findings returned by the ld. CIT (A) - See M/S. LGW LIMITED [ 2015 (11) TMI 1070 - ITAT KOLKATA]
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2020 (4) TMI 424
Rectification u/s 154 - CPC disallowed the entire claim of the application of income on the ground that the assessee trust was not registered u/s 12A therefore, entire gross receipts were added back to the returned income of the assessee in the proceedings carried out u/s 143(1) - assessee moved a rectification application u/s 154 pleading that even if the assessee is assessed as an AOP, the assessee may be grated the claim of revenue expenditure which has been claimed as application of income in the return of income. However, the said application was also rejected by the CPC - HELD THAT:- Under similar circumstances, the claim of the expenditure has been allowed by the CPC for the assessment year 2016-17 copy of the assessment order has been placed on record. We find force in the contention of the Ld. Counsel for the assessee that if the assessee has not been treated as a charitable trust, still the income of the assessee is to be assessed as per the normal provisions of the Act and the admissible revenue expenditure is to be allowed against the income of the assessee. In view of this, the impugned order of the CIT(A) is set aside, the matter is restored to the file of the Assessing Officer for deciding it afresh, treating the assessee s income as an AOP and considering the claim of the assessee of allowability of expenditure which was inadvertently claimed as application of income in the return of income. Appeal of the assessee is treated as allowed for statistical purposes.
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Customs
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2020 (4) TMI 423
Principles of natural justice - EPCG scheme - non-fulfillment of export obligations - grievance of the petitioner is that the petitioner was not offered any opportunity of personal hearing, though the provision u/s 9(4) of the Foreign Trade (Development and Regulation) Act, 1992 extracted above mandates that - HELD THAT:- Without going into the merits of the case, the impugned order is set aside and the respondents are directed to issue notice to the petitioner in furtherance to his representation dated 27.06.2019, grant personal hearing to the petitioner and examine the records if any produced by the petitioner and thereafter pass order on merits with reasons - The respondents are directed to complete the exercise undertaken by them on or before 28.02.2020. Petition allowed by way of remand.
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2020 (4) TMI 422
Revocation of approval granted to Overseas Warehousing Private Limited to act as custodian of the imported goods - auction of goods - Department proceeded against the appellant alleging that by auctioning the goods appellants have contravened the provisions of regulation 5 and 6 of HCCAR for which action was warranted in terms of Regulation 11 and 12 ibid - principles of natural justice - HELD THAT:- Undisputedly appellants is working as Custodian as per Section 45 of the Customs Act, 1962 for operating as a Custom Cargo Service Provider under HCCAR and is bound to function as per the provision of the Customs Act, 1962 and the HCCAR. In case of any contravention of the provisions of Custom Act, 1962 or the HCCAR, action has to betaken against him in terms of the said regulations. From the provisions of the Customs Act, 1962 and HCCAR, it is quite evident that Custodian appointed in terms of Section 45 ibid, do not hold the title to the goods whether before or after the order of the clearance made in terms of Section 47. He holds the goods as custodian of the goods and is bound to follow these provisions while handling the goods while they are in his custody. He could not have dealt with the goods in any manner including sale/ auction of the goods without obtaining written authorization in this respect from the Customs Authority - Undisputedly in the present case the appellant has by his action of auctioning the goods which were in his custody acted without putting the importer to notice and without informing/ seeking permission from the Custom Officer has contravened the provisions of Section 48 of the Customs Act, 1962. Principles of natural justice - HELD THAT:- Commissioner has also failed to take note of certain correspondences between the custom authorities, appellant and the importer in the present case while adjudging the case against the appellant. He has failed to record his findings in respect of these correspondences which were relied upon by the appellants in the proceedings initiated against him. All such correspondences which appellant wish to rely upon in his defence merit consideration and finding recorded - Since it is held that duty in respect of the goods in custody of the custodian if not cleared for home consumption as provided for by in terms of Section 47, needs to be paid by the custodian, amount of ₹ 25 lakhs deposited by the appellant in escrow account to be maintained with the Custom Authority will continue to be in deposit in the said escrow account till finalization of these proceedings in remand. The appeal filed is allowed by setting aside the impugned order and remitting back the matter to the Commissioner for de novo adjudications.
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2020 (4) TMI 421
Import of prohibited item - old and used multifunction devices and printers - no possession of authorization, prescribed in paragraph 2.31 of the Foreign Trade Policy notified under the Foreign Development and Regulation Act, 1992 - Absolute Confiscation - penalty - HELD THAT:- It is clear from the decision of the Hon ble Supreme Court in COMMISSIONER OF CUSTOMS VERSUS M/S. ATUL AUTOMATIONS PVT. LTD., AND PARAG DOMESTIC APPLIANCES [ 2019 (1) TMI 1324 - SUPREME COURT] that the impugned goods are to be considered as other wastes and the prohibition, applicable upon nonconformity with the conditions for import of hazardous waste , would not apply to the impugned goods. It is also abundantly clear that five conditions prescribed in the said schedule VIII of the said Rules are complied with and that the contention of the lower authorities, of capacity to print on paper smaller than A3 as disqualifying it from the ambit of the diluted conditions in the said Schedule, does not appear to be acceptable - The requirement of Form 6 and Form 7, incorporated for hazardous waste , are not, therefore, mandated for the import of the impugned goods. It is clear from the exclusive categorization of the impugned goods as multifunctional devices that the prescription of standards to be conformed by each of the machines, when intended to function separately, that make up this composite machine are not applicable to the impugned goods; hence the need for certification under Bureau of Indian Standards Act is not mandated. The absolute confiscation of the goods must be set aside in the face of restrictions that are not prohibition. The economic advantage of import even in the absence of license mandated for restricted goods must be neutralized with reference to the market price of goods that are imported against such license - It is, therefore, necessary for the adjudicating authority to decide upon the redemption fine and penalty on the impugned goods - The adjudicating authority is required to complete the process of re-adjudication of the above within a period of two weeks from the receipt of this order - Appeal allowed by way of remand.
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Corporate Laws
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2020 (4) TMI 420
Jurisdiction - Status of NCLT as Court or not - invocation of Section 210(2) of the Companies Act, 2013 while exercising jurisdiction under the provisions of I B Code - Appellants contends that for the purpose of exercise of jurisdiction as per Section 210(2) of the Companies Act, 2013, the meaning of term Court or the Tribunal has to be considered in terms of the definition specified under the Companies Act, 2013 - HELD THAT:- In the instant case, it comes to be known that the Applicant/Resolution Professional came across various instances and materials to exhibit that the business of Corporate Debtor was carried on with in intent to defraud its creditors and for fraudulent purposes by the erstwhile management of the 'Corporate Debtor'. Apart from that, the Applicant/Respondent had grounds to believe that CIRP of the Corporate Debtor was initiated fraudulently and/or with malicious intent for a purpose other than for Resolution of Insolvency or Liquidation of Corporate Debtor - Before the Adjudicating Authority the Applicant/Resolution Professional in the application had averred that directions (in suspension) of the Corporate Debtor had not deliberately disclosed the affairs of the 'Corporate Debtor' from time to time to the Applicant / Resolution Professional and indulged in falsification and determination of Books and 12 Records of the Corporate Debtor and made wilful and material omissions relating to its affairs and further defrauded its creditors. In the present case it is to be pointed out that the term Adjudicating Authority, as defined in Section 5(1) of IBC cannot come within the ambit of court as defined in Section 2(29) of the Companies Act, 2013. In fact, Section 2(29)(i) of the Companies Act defines Court the High Court having jurisdiction in relation to the place at which the registered office of the Company concerned is situated etc. Section 2(29)(ii) of the Act speaks of District Court and Section 29(iii) deals with the Court of Session, Section 29(iv) pertains to the Special Court constituted u/s 435 and Section 29(5) is concerned with any Metropolitan Magistrate or Judicial Magistrate of the 1st Class. As per Section 60(1) of I B Code the National Company Law Tribunal is an Adjudicating Authority, possessing concurrent jurisdiction under the Companies Act and also under the I B Code, 2016. This Tribunal refers the matter to the Secretary, Ministry of Corporate Affairs, Government of India in carrying out an investigation by the Inspector or Inspectors by following the due procedure as per Section 213 of the Companies Act, 2013 etc. If the matter needs to be examined by Serious Fraud Investigation Office , the Central Government may do so, if the case of fraud is made out and proceed further in accordance with law This tribunal comes to an irresistible and inescapable conclusion that the Adjudicating Authority (Tribunal) in Law is not empowered to order an investigation directly, to be carried out by the Central Government.
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2020 (4) TMI 419
Cancellation of Certificate of Incorporation - whether the incorporation of the R-1 Company was done in accordance with extant provisions of Law with due consent of the Petitioner or not? - HELD THAT:- As per Section 7(1)(b) of the Companies Act 2013, a declaration in the prescribed form by an Advocate, a Chartered Accountant, Cost Accountant or Company Secretary etc. has to certify the requirements of this Act and the Rules made thereunder in respect of registration and matters precedent or incidental thereto have been complied with. As per Section 7 (5) of the Companies Act 2013, says if any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be liable for action under Section 447. The Respondent No. 3 failed to fulfil his statutory professional duties in following the extant provisions of the Companies Act, in incorporating the R 1 Company. He has given false declaration that the petitioner has signed the requisite documents in question before him. Therefore, the incorporation of R 1 Company ab initio void as per the said proviso, apart from criminally liable for action against the Second and third Respondent - also, the Lease Agreement in question for lease of house of father of Petitioner for the office of the Company cannot be relied upon and the statement in this regard by the third Respondent is also deemed to be false. The incorporation of R 1 Company vitiated by fraud, and the same is done by the Second Respondent in connivance with third Respondent - Application disposed off.
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Insolvency & Bankruptcy
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2020 (4) TMI 418
Validity of order of spcial bench of NCLT - Irregularity in publishing of Cause List in the prescribed manner - Whether non-adherence to Rules 89, 150 to 153 of NCLT Rules, 2016 would vitiate the impugned order? - initiation of CIRP - the petitioner is ready and willing to clear the outstanding dues of the secured creditor / 4th respondent herein within a period of 15 days HELD THAT:- This Court is of the considered view that though Rule 89 of the NCLT Rules have not been complied with by the 2nd respondent, the fact remains that after the pronouncements of the impugned common order on 20.01.2020, certified copy of the said order was furnished to the learned counsel for the petitioner on 27.01.2020 i.e., within 7 days from the date of pronouncement of the order. Section 30 of IBC speaks about Submission of Resolution Plan and Section 31 speaks about Approval of Resolution Plan. Section 61 speaks about Appeals and Appellate Authority and Sub-Section (1) of Section 61 says that Notwithstanding anything to the contrary contained under the Companies Act, 2013, any person aggrieved by the order of the Adjudicating Authority under this Part may prefer an appeal to the NCLAT . Sub-Section (2) of Section 61 says that the appeal shall be filed within 30 days before the NCLAT and Sub-Section (3) of Section 61 says that an appeal against an order approving a resolution plan under Section 31 may be filed on five grounds - petitioner got the certified copy of the order within 7 days from the date of pronouncement of the common order dated 20.01.2020 i.e., within the timeline contemplated under Section Sub-Section (2) of Section 61 of IBC and as such, it cannot be said that he has been put to serious prejudice on account of non-uploading of the information relating to pronouncement of the orders on 20.01.2020 and non indication of the same in the Cause List. Mandatory nature of NCLT Rules, 2016, more particularly Rules 150 and 153 - HELD THAT:- In the light of the settled legal position that consequences that may arise on account of the non-adherence to the time line/procedure have not been indicated in the said Rules, it can be considered to be only directory. Petition dismissed.
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FEMA
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2020 (4) TMI 417
Offence under FERA - Economic Offence cases - failure to realize the respective full export proceeds of the goods within the stipulated period - Transaction in clandestine manner - Whether opportunity notice as contemplated under the proviso to Section 61 (2) (ii) of FERA has been issued to A-1 to A-3? - Whether prior permission as mandated u/s 18 (2) of FERA has been obtained by A-1 to A-3 from the Reserve Bank of India;? - judgment of acquittal recorded by the trial court - HELD THAT:- This Court has no hesitation in holding that even non-issuance of opportunity notice as contemplated u/s 61 (2) (ii) of FERA will not vitiate the case. However, in the case on hand, Ex.P-41, opportunity notice as contemplated u/s 61 (2) (ii) of FERA has been issued to the accused. In such circumstances, the finding of the trial court that no opportunity notice has been issued to the accused is not only against the materials available on record, but also not in line with the law laid down by this Court and, accordingly, the said finding of the trial court is liable to be interfered with. Insofar as the issue relating to contravention of Section 18 (3) of FERA by A-4 to A-6 is concerned A-4 to A-6 not only gave their quotas to A-1 to A-3 for being used, but have also jointly signed the declaration and that A-4 and A-5 have also given letter to their bankers to credit the realisation of the export proceeds in the account of A-1. That being the undisputed case, it is not now open to A-4 to A-6 to contend that they have not contravened the provisions of Section 18 (3) of FERA. Though it is not A-4 to A-6, who have sold the goods, but have only given their quotas to A-1 to A-3, however, A-6 being a joint declarant, a duty is cast upon A-4 to A-6 to see that all reasonable steps have been taken to receive or recover the payment for the goods sold and in the absence of following the provisions by taking the necessary steps to recover the export proceeds, it is to be presumed that A-4 to A-6 have contravened the provisions of Sections 18 (2) and (3) of the Act. The quota used by A-1 to A-3 is that of A-4 to A-6 and it is the imperative duty of A-4 to A-6 to see that the provisions of FERA are complied with in letter and spirit. By just giving the quota to A-1 to A-3, A-4 to A-6 cannot shirk their responsibility and take a turn and say that since they are not the exporters and that the sale proceeds does not pertain to them, they have not contravened the provisions of Section 18 (3) more so, when A-6 is the joint declarant in the GR Forms along with A-1. Losing sight of the above materials, the finding recorded by the trial court is not only illegal, but is also perverse, which requires interference. Once this Court comes to the conclusion that the findings recorded by the trial court are illegal and perverse, then there is no legal bar for this Court to interfere with the said acquittal, in the light of the decisions aforesaid. Accordingly, this Court is of the considered view that the findings recorded by the trial court are illegal and perverse and is against the materials available on record and in the above circumstances, this Court is left with no other option, than to overturn the verdict of acquittal recorded by the trial court and convict the accused. Though minimum sentence has been prescribed for the offence under Section 18, however, this Court, after taking into consideration the submissions advanced on behalf of the accused, and also considering their age and also the fact that the offence was committed during the period 2008-2009, and that almost a decade has passed since the commission of the offence, is of the considered view that the accused could be sentenced to a period of one day to be undergone from the time of sitting of this Court till the raising of this Court along with imposition of fine. Accordingly, this appeal is allowed setting aside the acquittal recorded by the trial court and instead the accused/respondents herein are found guilty of the charges framed against them and they are hereby convicted and sentenced to undergo simple imprisonment for a period of one day before this Court, which is to be undergone on 12.02.2020 from the time of the sitting of this Court till the raising of this Court on the said day. Each of the accused is directed to pay a fine of ₹ 1,00,000/- (Rupees One Lakh only) by way of demand draft in favour of the Enforcement Directorate before 12/02/2020.
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Service Tax
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2020 (4) TMI 416
Manpower recruitment or supply agency service - provider of service by an employee to the employer - whether beyond the scope of taxation? - HELD THAT:- Learned Authorised Representative who submits that the decision relied upon by Learned Counsel affirms the tax liability and, therefore, it would appear that the appeal itself should be dismissed. The grounds now intended to be incorporated in the appeal arises from the provisions of the law and from settled judicial disputes. Accordingly, the miscellaneous application for additional ground is allowed. Matter to be decided afresh by original authority after taking note of the submissions of the noticee into account - Appeal disposed off by way of remand.
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Central Excise
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2020 (4) TMI 415
CENVAT Credit - inputs/capital goods - channel, sheets etc. - HELD THAT:- The facts of the case are not in dispute that all the items in question has been used by the appellant for fabrication of capital goods. Therefore, the items in question has been used by the appellant for fabrication of capital goods which are inputs for the appellant and they are entitled to avail cenvat credit in terms of Rule 2(k) of Cenvat Credit Rules, 2004. Credit allowed - appeal allowed - decided in favor of appellant.
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2020 (4) TMI 414
CENVAT Credit - duty paying documents - supplementary invoices issued by M/s SECL - Rule 9 (1) (b) of Cenvat Credit Rules, 2004 - HELD THAT:- It has already been held in the case of HINDUSTAN ZINC LTD VERSUS CE ST-UDAIPUR [ 2018 (8) TMI 549 - CESTAT NEW DELHI] that the Cenvat credit can be availed by the manufacturer on the strength of supplementary invoice since such amount of duty cannot be said to be paid on account of any non-levy or short levy by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any provision of the Central Excise Act/Rules with intent to evade payment of duty. The appellant is entitled for taking Cenvat credit on the strength of supplementary invoices - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (4) TMI 413
Classification of goods - rate of tax - Medical Oxygen IP - Nitrous Oxide IP - taxable under Entry 88 of Schedule IV of the Andhra Pradesh Value Added Tax Act 2005 or as unclassified goods under Schedule V? - HELD THAT:- Entry 88 includes drugs and medicines, whether patent or proprietary as defined in clauses (i), (ii) and (iii) of Section 3(b) of the 1940 Act. Any drug or medicine that falls within the ambit of clauses (i), (ii) and (iii) of Section 3(b) falls within the ambit of Schedule IV. Entry 88 also stipulates that hypodermic syringes, hypodermic needles, catguts, sutures, surgical cotton, dressing, plasters, catherters, cannulae, bandages and similar articles are also included, save and except for the three specified exclusions. The judgments in PANKI OXYGEN THRU' PARTNER SUMIT BABBAR VERSUS STATE OF UP. THRU' PRINCIPAL SECRETARY TAX REGD. ORS. [ 2014 (2) TMI 764 - ALLAHABAD HIGH COURT] and THE STATE OF TAMIL NADU, REPRESENTED BY THE DEPUTY COMMISSIONER (COMMERCIAL TAXES) VERSUS RAM OXYGEN (PVT.) LTD. [ 2010 (6) TMI 710 - MADRAS HIGH COURT] highlight the curative and instrumental use of Medical Oxygen IP and Nitrous Oxide IP in the mitigation and prevention of disease or disorder. Nitrous Oxide is used as anesthetic agent. Medical oxygen with 99.9% purity is predominantly used in hospitals. Medical Oxygen is also used for the treatment of patients and to mitigate the intensity of disease or disorder in human beings. It is utilised to prevent a sudden collapse of patients and to aid in the recovery of health. As stated in the Counter Affidavit filed by the respondents, in order to carry out critical surgical procedures, supplemental oxygen is administered to patients. Medical Oxygen is also administered in resuscitation, major trauma, anaphylaxis, major hemorrhage, shock and active convulsions, amongst other conditions. There is no doubt that Medical Oxygen IP and Nitrous Oxide IP are medicines used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings falling within the ambit of Section 3(b)(i) of the 1940 Act. Medical Oxygen IP and Nitrous Oxide IP fall within the ambit of Section 3(b)(i) of the 1940 Act and are consequently covered in Entry 88 of the 2005 Act. The impugned judgment of the High Court, to the extent it held that Medical Oxygen IP and Nitrous Oxide IP fall within Entry 88 of the 2005 Act is upheld - appeal dismissed.
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Indian Laws
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2020 (4) TMI 412
Dishonor of Cheque - failure to prove the ingredients of giving notice as required under Section 138 of the N.I. Act - existence of legally enforceable debt or not - rebuttal of presumption - Section 139 of the N.I. Act - HELD THAT:- From the provisions of Section 27 of the General Clauses Act, 1897 and Section 114 of the Indian Evidence Act, 1872 it manifests that once Notice is served by registered post by correctly addressing it to the drawer of the Cheque, the service of Notice is deemed to have been effected. In such a circumstance the requirements of Proviso (b) of Section 138 of the N.I. Act stands complied if the Notice is served in the manner prescribed therein. The object of these provisions are to ensure that unscrupulous drawers of Cheques are unable to avoid service of the statutory Notice by leaving their homes for sometime, and thereby evade prosecution. No deficiency emanates on the part of the Appellant for having issued Notices to the Respondent in his admitted address and it therefore concludes that the Notices having been sent to the Respondent s correct address were duly served, fulfilling the requirement of giving Notice, contrary to the finding of the learned trial Court. Legally enforceable debt or not - HELD THAT:- In view of the contents in Exhibit 1 there is a clear admission by the Respondent of his liability to repay the amounts mentioned in the document. There is no escaping the fact that it was a legally enforceable liability. The issuance of three post dated Cheques by the Respondent further endorses this circumstance. The argument of learned Counsel for the Respondent that the Appellant is a Government servant hence the source from where he afforded ₹ 42,00,000/- only, has not been indicated was never raised in the evidence of the Respondent and for the first time finds place only in Appeal. Rebuttal of presumption - HELD THAT:- The presumption under Section 139 of the N.I. Act is an extension of the presumption of Section 118(a) of the Act. If the negotiable instrument happens to be a Cheque, Section 139 raises a further presumption that the holder of the Cheque received the Cheque in discharge in whole or in part of any debt or other liability. Section 118 of the N.I. Act uses the phrase until the contrary is proved, Section 139 of the N.I. Act provides unless the contrary is proved. Section 4 of the Evidence Act which defines may presume and shall presume makes it clear that presumptions to be raised under the aforestated provisions are rebuttable. This Court is conscious and aware that interference against an acquittal recorded by the learned trial Court should be rare and in exceptional circumstances, however it is open to the High Court to reappraise the evidence and the conclusion drawn by the learned trial Court to consider whether the Judgment of the learned trial Court can be stated to be perverse. The word perverse has to be understood in law as defined to mean against the weight of evidence. From the discussions it is held that the findings arrived at by the learned trial Court are perverse and erroneous. Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 411
Maintainability of Special Leave to appeal - right to appeal - case of respondent is that in absence of an order of acquittal passed by the learned Magistrate, no right of appeal is conferred by statute upon the appellant/complainant - whether on the dismissal of a complaint consequent upon rejection of an application for condonation of delay, the same amounts to acquittal of the accused? - HELD THAT:- An order of dismissal of first complaint under Section 203 CrPC is no bar for the entertainment of a second complaint on the same facts but it can be entertained only in exceptional circumstances such as where the previous order was passed on incomplete record, or on a misunderstanding of the nature of the complaint or where new facts which could not, with reasonable diligence, have been brought on record in the previous proceeding. The fact that a second complaint can be entertained on same facts, albeit in exceptional circumstances, after dismissal of a complaint under Section 203 CrPC, demonstrates that dismissal of a complaint at every stage does not automatically result in acquittal of the accused because if the accused is acquitted, such acquittal can be questioned only by taking recourse to Section 378 (4) CrPC. - dismissal of a complaint under Section 203 CrPC is at a stage prior to issuance of process. In the instant cases, no cognizance of any offence was taken by the Court and even the cognizance of the complaint was not taken as the Court had rejected the applications for condonation of delay in not making the complaints within the prescribed period and therefore, there was no occasion to issue summons to the accused. It is manifest that criminal proceedings had not commenced based on the complaints. When criminal proceedings had not commenced, it will be incongruous to hold that the accused stands acquitted with the dismissal of the complaint - thus, in a circumstance where a complaint is dismissed as a consequence of the Court being not satisfied that the complainant had sufficient cause for not making the complaint within the prescribed period, the same does not result in acquittal of the accused. These leave petitions seeking leave to appeal are not maintainable.
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