TMI Tax Updates - e-Newsletter
April 4, 2017

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• FREQUENTLY ASKED QUESTIONS (FAQs) ON GOODS AND SERVICES TAX (GST) - 2nd Edition.

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Articles

1. Goods and Service Tax (GST) and Real Estate Sector

   By: Bijay Shrestha

2. 13th GST Council Meeting: Important Takeaways

   By: Bimal jain

3. APPORTIONMENT OF ‘IGST’ AND SETTLEMENT OF FUNDS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. GST - RETURN - Draft Rules 31-3-2017

2. FinMin seeks public comments on GST rules

3. GST: Tax evasion over ₹ 5 cr a non-bailable offence

4. Mrs. Aruna Sethi appointed as the Chief Adviser (Cost) in the Ministry of Finance, Department of Expenditure

5. Text of the opening remarks of Shri Shaktikanta Das, Secretary, Department of Economic Affairs, Ministry of Finance of India at the meeting of the Finance Ministers of the South Asia Subregional Economic Cooperation (SASEC) countries today

6. Text of “Summary of the Joint Ministerial Statement” delivered by the Union Minister of Finance of India Shri Arun Jaitley, who chaired the South Asia Subregional Economic Cooperation (SASEC) Finance Ministers’ meeting today

7. Joint Ministerial Statement of the South Asia Subregional Economic Cooperation (SASEC) Finance Ministers’ meeting in New Delhi today

8. Text of the speech of Union Minister of Finance of India Shri Arun Jaitley at the meeting of the Finance Ministers of the South Asia Subregional Economic Cooperation (SASEC) countries in New Delhi today

9. RBI Reference Rate for US $

10. First Bi-monthly Monetary Policy Statement, 2017-18 on at 2.30 pm on April 06, 2017

11. The Union Finance Minister Shri Arun Jaitley and NDB President Shri K.V. Kamath discuss operations of the NDB including issuance of Masala Bonds by NDB

12. The Union Minister of Finance Shri Arun Jaitley will chair the South Asia Subregional Economic Cooperation (SASEC) Finance Ministers’ Meeting at Taj Palace Hotel in New Delhi on April 03, 2017

13. FREQUENTLY ASKED QUESTIONS (FAQs) ON GOODS AND SERVICES TAX (GST) - 2nd Edition. 31st March, 2017

Notifications

Income Tax

1. 25/2017 - dated 31-3-2017 - IT

Income-tax (5th Amendment) Rules, 2017

SEZ

2. S.O. 1035(E) - dated 31-3-2017 - SEZ

Central Government notifies the 11.879 hectares area at Kuvakolli Village, Vardaiah Palem Mandal, Chittoor District, in the State of Andhra Pradesh and constitutes an Approval Committee

3. S.O. 1032(E) - dated 31-3-2017 - SEZ

Central Government notifies the 3.22 hectares area at Survey No. 2/2, Venkatala Village, Yelahanka Hobli, Bengaluru, in the State of Karnataka and constitutes an Approval Committee

4. S.O. 1031(E) - dated 31-3-2017 - SEZ

Central Government notifies the 4.063 hectares area at Electronic City, Doddathogur Village, Begur Hobli, Bangalore, in the State of Karnataka and constitutes an Approval Committee

5. S.O. 1030(E) - dated 30-3-2017 - SEZ

Central Government the 1.51 hectares area at Sadarmangala Village, Sadaramangala Industrial Area, Whitefiled, Bengaluru, in the State of Karnataka and constitutes an Approval Committee

Circulars / Instructions / Orders

Customs

1. 13/2017 - dated 28-3-2017

KYC norms for the Shipping lines/freight forwarders etc.-reg.

2. 02/2017 - dated 24-3-2017

Revised Authorized Economic Operator Scheme (AEO) programme- Provision for deferred payment of duty by AEOs, waiver of drawal of sample for sanction of drawback for exports by AEOs - intimating of details of CRM in respect of Airport & ACC Commissionerate, Bengaluru-reg.

3. 29/2017 - dated 17-3-2017

Corrigendum to Public Notice No. 29/2017

4. 29/2017 - dated 9-3-2017

Procedure in respect of discharge and clearance of Liquid Cargo in Bulk for Home Consumption/Warehousing in bonded warehouse as per New Warehousing Licensing Regulations, 2016, issued by the Board vide F. No. 473/20/2013-LC(Vol. II) and for determining duty liability as per CBEC Circular No. 34/2016 dated 26.07.2016.

5. 01/2017-Cus - dated 23-1-2017

Implementation of Risk Management System (RMS) in Imports at ICD Borkhedi – Regarding.

6. 02/2017-CUS - dated 23-1-2017

Implementation of Risk Management System (RMS) in Exports-reg.

7. 02/2017 - dated 6-1-2017

Sealing of LCL consignments for SEZ - regarding.

Highlights / Catch Notes

GST

• CBEC Releases GST FAQ Document to Clarify Taxpayer Queries and Guide Businesses on Compliance and Procedural Requirements.

  : GST - FAQ - CBEC issues Frequently Asked Questions on GST
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Income Tax

• Section 54F Deduction: Minor Children's Income Must Be Considered Separately Before Clubbing with Assessee's Income.

  Case-Laws - AT : Eligibility for deduction u/s 54F - Clubbing of income of the minor children in the hands of the assessee - before arriving at net income for the purpose of clubbing in the hands of the assessee, the deduction available u/s 54F has to be considered separately in the hands of the minor children - AT
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• Bank Challenges TDS Deduction on Foreign Travel Reimbursements u/s 192 and Exemption Section 10(5.

  Case-Laws - AT : Non-deduction of TDS u/s 192 - exemption u/s 10(5) - benefit of leave travel concession granted by the assessee bank to its employees - assessee was under obligation to deduct TDS on the reimbursement of expenditure incurred by the assessee on foreign travel. - AT
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• Assessee Penalized Rs. 20,000 for Non-Compliance with Section 142(1) Notices; Initial Penalty Reduced from Rs. 60,000.

  Case-Laws - AT : Penalty u/s 271(1)(b) - non-appearance on six occasions on notices issues u/s 142(1) - assessee is liable to pay ₹ 20,000/- as penalty under Section 271(1)(b) of the Act as against ₹ 60,000/- imposed by the ld. Assessing Officer. - AT
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• Taxpayer's Bogus Purchases Suspected from Grey Market; Full Amount Not Added to Income.

  Case-Laws - AT : Bogus purchases - the purchases shown by the assessee is not in doubt, but the assessee might have not purchased from these parties who he might have purchased it from the grey market. Therefore, entire purchases cannot be added to the total income of the assessee - AT
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• Keyman Insurance Assignment: Surrender Value Cannot Be Taxed Without Actual Receipt During the Year of Assignment.

  Case-Laws - AT : Keyman Insurance policy - assignment in favour of the appellant - even though the assignment has happened during the year, surrender value as computed as on the date of assignment cannot be brought to tax in absence of actual receipt of the surrender value during the year under consideration - AT
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• India-Singapore DTAA Article 13(4) Applies to Debt Sale; Remittance Evidence to Singapore Deemed Irrelevant by Panel.

  Case-Laws - AT : Sale of debt instrument - Benefit of Article 13(4) of DTAA between India and Singapore - the observation of DRP that the assessee has not furnished any evidence that the Capital Gain earned in India, was remitted to Singapore has no relevance. - AT
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Customs

• Importing Used Tyres: Classification as Prohibited or Restricted Goods Under Review, Entry No.B3140 Requires Prior Consent for Reuse.

  Case-Laws - HC : Import of old and used tyres - Prohibited Goods or Restricted Goods? - the prima facie reading of the Entry No.B3140 clearly goes to say that the tyres meant for direct reused cannot be exempted from the prior consent. - HC
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Indian Laws

• High Court Quashes Proceedings: No Existing Debt or Liability When Cheque Issued as Security u/s 138.

  Case-Laws - HC : Offence under Section 138 of the Negotiable Instruments Act - dishonour of the cheque - the cheque in question was nothing but a security without any subsisting debt or liability as on the date of handing over of the cheque. The liability to pay an amount of ₹ 76 lac and odd could be said to have been incurred by the accused over a period of time in the course of the business transactions - Proceedings quashed - HC
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Service Tax

• Appellants Fail to Prove Pure Agent Status; Must Include All Service Expenses in Gross Taxable Value per Section 67.

  Case-Laws - AT : Valuation - inclusion of reimbursable expenses - appellants did not claim themselves to be a pure agent nor did they produce any evidence for fulfillment of conditions necessary for being a pure agent - Section 67 is clear and unambiguous that all the expenses incurred in relation to rendition of service have to be included in the gross taxable value. - AT
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• Market Research Data Collection by Appellants Not Considered Client Service Procurement Input u/s 65(105)(zzb.

  Case-Laws - AT : Classification of service - The appellants are only collecting data by questionnaire and study. Collection of such data from various target persons cannot be considered as procurement of services which are inputs for the clients - classification of the service under market research agency is correct - AT
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Central Excise

• Exemption Denied: No New Unit Established, Old Machinery Used, Product Type Irrelevant for Notification Benefits.

  Case-Laws - AT : Area based exemption - appellant never started a new unit the appellant has used partly old machinery as stated above in the same premises/shed. Nature of the product is not meaningful to get the benefit of the notification. - AT
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Case Laws:

• Income Tax

• 2017 (4) TMI 128
  Exigibility to capital gains tax - Transfer exigible to tax - JDA - Scope and legislative intent of Section 2(47)(ii), (v) and (vi) of the Act - essential ingredients for applicability of Section 53A of 1882 Act - Meaning to be assigned to the term “possession” - Whether in the facts and circumstances, any taxable capital gains arises from the transaction entered by the assessee? Held that:- The matter is no longer res integra. In C.S. Atwal’s case [2015 (7) TMI 878 - PUNJAB & HARYANA HIGH COURT ] held that:- Perusal of the JDA dated 25.2.2007 read with sale deeds dated 2.3.007 and 25.4.2007 in respect of 3.08 acres and 4.62 acres respectively would reveal that the parties had agreed for pro-rata transfer of land. No possession had been given by the transferor to the transferee of the entire land in part performance of JDA dated 25.2.2007 so as to fall within the domain of Section 53A of 1882 Act. The possession delivered, if at all, was as a licencee for the development of the property and not in the capacity of a transferee. Further Section 53A of 1882 Act, by incorporation, stood embodied in section 2(47)(v) of the Act and all the essential ingredients of Section 53A of 1882 Act were required to be fulfilled. In the absence of registration of JDA dated 25.2.2007 having been executed after 24.9.2001, the agreement does not fall under Section 53A of 1882 Act and consequently Section 2(47)(v) of the Act does not apply. In view of cancellation of JDA dated 25.2.2007, no further amount has been received and no action thereon has been taken. It was urged that as and when any amount is received, capital gains tax shall be discharged thereon in accordance with law. In view of the aforesaid stand, while disposing of the appeals, we observe that the assessee appellants shall remain bound by their said stand. The issue of exigibility to capital gains tax having been decided in favour of the assessee, the question of exemption under Section 54F of the Act would not survive any longer and has been rendered academic. The Tribunal and the authorities below were not right in holding the assessee-appellant to be liable to capital gains tax in respect of remaining land measuring 13.5 acres for which no consideration had been received and which stood cancelled and incapable. - Decided in favour of assessee.

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• 2017 (4) TMI 127
  Addition u/s 40(a)(ia) - non deduction of tds on expenses reimbursed to M/s. Prestige Holidays Resorts Pvt. Ltd - Tribunal delted addition - Held that:- The tribunal found that on all these admitted facts, the Commissioner/first appellate authority reversed the finding of the assessing officer and his consequential order by relying upon a judgment in the case of Siemens Aktiongesellschaft vs. Commissioner of Income Tax (2008 (11) TMI 74 - BOMBAY HIGH COURT) and Linklaters LLP vs. Income Tax Officer (2010 (7) TMI 535 - ITAT, MUMBAI). Before that, in the detailed order, the Commissioner noted the rival contentions and stand of the parties. Once such an approach has been taken by the first appellate authority, naturally, the tribunal found that the view taken by the first appellate authority accords with even the tribunal's view. The tribunal referred to its order in a case of a Holiday Club. We do not think that merely because the tribunal did not make any reference and specifically to the two rulings/judgments of this court or the detailed finding in the Commissioner's order that it has committed any perversity or its order is vitiated by an error of law apparent on the face of the record. We do not think that the tribunal acted in any manner contrary to law.

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• 2017 (4) TMI 126
  Non application of sub-section (9) of section 10B - Tribunal came to the conclusion that the share pattern at the end of each financial year, namely, 31st March, 2000 to 31st March, 2003 reveals that the non-resident share holder in the assessee company was the German company - Held that:- The tribunal perused the contents of the remand report and arrived at the conclusion that the share has been transferred before March, 2003, interim dividend has been received by the transferree. That was verified from the bank statement of Altana Pharma AG. If the assessing officer verified these documents, accepted them by observing that they are in order, then, the tribunal concluded that there was no reason to hold that any change of ownership occurred. Hence, on facts, it concluded that there is no change in ownership to the detriment of the assessee company. That is how sub-section (9) of section 10B on facts was not attracted. Once we come to this conclusion and a pure finding of fact, which cannot be termed as perverse or vitiated by an error apparent on the face of the record is recorded, then, the appeal does not raise any substantial question of law. Once this was the question and essentially projected, then, we need not admit the appeal. As far as the question at para 6.1 is concerned, that is on the construction of section 10B and we do not think that the said question arises in the backdrop of the tribunal's order impugned in this appeal and in the facts and circumstances peculiar to the assessee's case.

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• 2017 (4) TMI 125
  Deemed dividend addition u/s 2(22)(e) - assessee is a partner in the firm M/s. B.K. Industries and is having 60% share in the said firm. M/s. B.K. Industries had secured a loan of Rs. 14.47 crores from M/s. Speedex Trade World Private Limited during the relevant financial year 200809 and the respondent assessee was holding more than 10% equity shares in M/s. Speedex Trade World Private Limited - Held that:- As financing was the substantial business of M/s. Speedex Trade World Private Limited and both the authorities have recorded a clear finding of fact that financing being the substantial business of the said firm, the amount was not liable to be taxed as deemed dividend. - Decided in favour of assessee.

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• 2017 (4) TMI 124
  Application for settlement filed under Section 245C rejected - failure to disclose in its application additional tax payable for the years 2007-08, 2008-09, 2009-10, 2011-12 and 2012-13 - petitioner stated that for the present he does not press for interim reliefs but seeks liberty to file an appropriate Notice of Motion with affidavit in support explaining the petitioner's case for interim reliefs, if so advised - Held that:- we are not called upon to decide today in view of the petitioner not pressing for interim relief. Therefore, at this stage, there is no stay of the impugned order dated 29th July, 2016 to the extent it relates to Assessment Years 2013-14 and 2014-15. However the petitioner is at liberty to file a notice of motion for interim stay of the impugned order to the extent it relates to Assessment Years 2013-14 and 2014-15, if so advised. The admission of this petition may affect assessment of petitioner for large number of years as they would kept in abeyance. It therefore become incumbent that this petition be heard along with Writ Petition No.2216 of 2016 and other connected petitions raising identical issues, which are kept for final hearing on 10th April, 2017 at 3.00 p.m. The respondent would file reply, if any, by 30th March, 2017.

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• 2017 (4) TMI 123
  Eligibility of registration under Section 12AA - Held that:- It has been categorically recorded by the Tribunal that the CIT (E) has to satisfy two conditions while granting registration under Section 12AA of the Act. Firstly, whether the objects of the assessee are charitable in nature and thus, the activities are genuine. It cannot be concluded on the basis that the assessee has not filed its income tax returns in earlier years that the activities of the assessee are not genuine. It has been further recorded that Section 13 of the Act comes into play at the time of granting exemption under Section 11 of the Act and not at the time of granting registration under Section 12AA of the Act. No adverse remarks have been recorded by the CIT (E) with regard to the objects contained in the memorandum of the assessee-trust to come to the conclusion that its activities are not genuine. Thus, it has been rightly directed by the Tribunal to the CIT (E) to grant registration under Section 12AA of the Act. - Decided in favour of assessee

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• 2017 (4) TMI 122
  Addition u/s 68 - unexplained purchase of shares - Tribunal has reversed the finding of the CIT (Appeals) and sustained the addition made by the Assessing Officer - Held that:- Tribunal has without directly dealing with the reasoning given by the CIT (Appeals) passed its order on a solitary reasoning of the purchase of shares having been recorded late in the Demat account of the assessee. In this regard, it is noticed while the assessee claimed to have purchased the shares in the month of February 2003 at the cost of Rs. 55,594/-. They were found recorded in the Demat account of the assessee, for the first time in November 2004. It cannot be denied that the fact of purchase transaction being recorded late in the Demat passbook raises a doubt as to its genuineness and it is also true that this evidence is relevant to the decision on the point in issue in this case, yet, this was not the only evidence relevant to the issue. There exists other evidence, adduced by the assessee in this case, in shape of contract notes; bank transactions pertaining to payment for purchase and sale of share and other material relied upon by the CIT(Appeals). Such other relevant evidence ought to have been also looked at in entirety and thereafter conclusion as to genuineness of the transaction should have been drawn. It may have been open to the Tribunal to declare any piece of evidence relied by the CIT(Appeals) to be irrelevant or unreliable. That having not been done, it could not have side-stepped the evidence and/or the reasoning of the CIT(Appeals), especially, because the order of the Tribunal is one of reversal. Tribunal's finding is not conclusive, and it has been arrived by following a faulty process. The Tribunal has not considered all relevant and other material evidence existing on record before disbelieving the claim of the assessee. The Tribunal has also not specifically dealt with the findings recorded by the CIT (Appeals).he order of the Tribunal is accordingly set aside and the matter is remitted to the Tribunal to reconsider the issue of genuineness of the transaction of purchase of shares as claimed by the assessee. - Decided in favour of assessee

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• 2017 (4) TMI 121
  Disallowance of portfolio management expenses and interest charges (called as safeguarding charges) claimed deductible under section 57 - Held that:- There is reasonable evidence of the expenses having been incurred as copies of related bank documentation is placed on record before us. When the assessee is earning income from foreign securities held by its portfolio managers abroad, and duly offering it to tax as ‘income from other sources’, the safekeeping and administration fee, paid in respect of such securities to its portfolio managers, cannot be declined deduction under section 57(iii). The nexus between earning of dividend and interest income and incurring of these expenses is clear, and since, in our opinion, these expenses are incurred for the purposes of earning income taxable as ‘income from other sources’, the deduction for expenses is duly admissible under section 57(iii) of the Act. We, therefore, uphold the plea of the assessee. The Assessing Officer is, accordingly, directed to grant deduction - Decided in favour of assessee Disallowing relief by way of tax credit claimed deductible u/s 90 - dividend income earned outside India - Indo US tax treaty - Held that:- There is no scope of sweeping generalizations while computing tax credit. The tax credit computation is to be done on a case to case basis, dealing with the tax levied in the other contracting state (i.e. US) and the income in respect of which such tax is levied. As for 25% tax withholding from US dividend income, it is not the applicable withholding rate but the maximum tax withholding rate. It is, therefore, not essential that the entire US tax levy in respect of dividend income is @ 25% only. As a corollary to the this position, the actual admissible withholding under article 10 is bound to be an amount lower than 25% because in some of the cases, the applicable US tax rate could even be 15%. These factors apart, in the case before is, there are some tax deductions at rates other than 15% and 25%. We are, therefore, not inclined to accept the learned counsel’s suggestion for restricting the tax credit to 25% of the dividend income, nor do we think that it is proper to examine all these evidences, in detail, for the first time at the stage of proceedings before this Tribunal. In our considered view, all these issues and evidences should be examined properly at the stage of the Assessing Officer in accordance with the scheme of the Act.

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• 2017 (4) TMI 120
  Eligibility for deduction u/s 54F - house is leased out to an educational society - Held that:- Assessee is eligible for exemption u/s 54F of the Act, towards all the flats received in pursuance to development agreement. See CIT Vs. Syed Ali Adil [2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT ] The flats constructed by the assessee are commercial property but not residential house, we find that the assessee has filed necessary evidences to prove that the property in question is a residential flat. The assessee has furnished a copy of plan sanctioned by the municipal authorities, which clearly shows that the apartments constructed by the builder are residential houses. Though the assessee has leased out the premises to an educational society, the tenant has used the premises for the purpose of accommodation of students. Therefore,merely because the house is leased out to an educational society, it cannot be said that the property in question is a commercial property, which is not entitled for exemption u/s 54F of the Act. The CIT(A), after considering the relevant facts, and also by following certain judicial precedents has rightly directed the A.O. to allow exemption claimed u/s 54F of the Act. We do not find any reasons to interfere with the order of the CIT(A). Hence, we uphold the CIT(A) order and reject the ground raised by the revenue. Computation of long term capital gain in pursuance of joint development agreement and adoption of consideration for transfer of property - Held that:- Once the issue has been decided that the assessee is eligible for exemption u/s 54F of the Act, in respect of all the flats, the other issues, i.e. computation of capital gains and adoption of guidance value for the purpose of determination of capital gain becomes academic, as the assessee is eligible for exemption towards all the flats received in pursuance of a joint development agreement and hence computation of capital gain and adoption of guidance value for the purpose of determination consideration has no impact on the total income. Clubbing of income of the minor children in the hands of the assessee - Held that:- we are of the view that even though section 64(1)(a) of the Act, applies for clubbing of income of minors in the hands of the assessee, before clubbing of income, the normal procedure for computation of capital gain has to be adopted. Therefore, before arriving at net income for the purpose of clubbing in the hands of the assessee, the deduction available u/s 54F of the Act has to be considered separately in the hands of the minor children. The CIT(A) has rightly considered the issue and we do not find any reasons to interfere with the order of the CIT(A). Accordingly, we uphold the CIT(A) order and reject the ground raised by the revenue. Assessee appeal allowed.

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• 2017 (4) TMI 119
  Disallowance of exemption u/s 54F - Held that:- It is a fact that assessee is holding two properties on the date of purchasing the new property. The second property at Ooty consist of land and outhouse. Whether the outhouse can be treated as residential property or not, is the issue before us. The assessee claims that this house cannot be fit for residential use and she never stayed in that house. At the same time, AO in his remand report opines that this outhouse is big enough having 1600 sft. Area and the photo submitted by the assessee shows that it is habitable. In our considered view, assessee’s house can be regarded as residential only when it is livable. Mere fact that there exists super structure, it cannot be considered as residential. We are also not in a position to adjudicate or give findings by merely looking at the photo submitted by the assessee. In our view, assessee should submit few more photos of the house from interior portion to substantiate that it cannot be used for residential purpose. Hence, we remit this case back to the AO to verify the claim of the assessee in the light of the additional evidence and complete the assessment. This ground is treated as allowed for statistical purposes. Disallowance of the expenditure on cost of improvement of the property sold - Held that:- The cost of improvement was allowed in the case of assessee’s husband and denied in the case of assessee. The property sold was joint property. We are inclined to remit this case back to the AO to verify the assessee’s claim and if it is proper, it should be allowed to the assessee also. Needless to say that assessee may be given proper opportunity of being heard. This ground is also allowed for statistical purposes.

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• 2017 (4) TMI 118
  Disallowance of royalty expenses - Held that:- Similar royalty expenditure was deleted by CIT(A) for AY 2008-09 Assessing Officer has verified and found that the assessee was deriving royalty income mainly on technical know-how purchase from M/s Hercules USA vide agreement dated 01/01/2003 whom the royalty is paid 5% of net sale value of the product. The assessee has sold this technical know-how to one party Connell Brothers Company (CBC) with which he entered into agreement and as per this said agreement the assessee would receive a royalty payment of 14% on net sales value of the product against which the assessee has to make payment of 5% to Hercules USA. Thus the difference of 9% on the sales value is effected. The assessee has credited in profit and loss account 14% of the royalty income and net sale value was arrived at. After giving 5% to Hercules and considering the same agreement the CIT(A) was of a view that the addition on account of difference is not required therefore, same was deleted by CIT(A) and the matter went to the Tribunal and the Tribunal has confirmed the same. Therefore, this issue is covered in the favour of the assessee.

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• 2017 (4) TMI 117
  Disallowance of exemption claimed u/s 54F - construction of new house property has been commenced prior to the date of transfer of original asset - Held that:- We are of the view that the provisions of section 54F does not prescribe any condition as to the date of commencement of construction of new house property. The construction of house property may be commenced before the date of transfer of original asset, however it should be completed within three years after the date of transfer of original asset. In this case, on perusal of the facts available on record, we find that construction of house property has been completed within three years from the date of transfer. Therefore, we are of the view that the assessee is eligible for exemption under section 54F, towards amount invested in construction of house property prior to the date of transfer of original asset. The Commissioner of Income Tax (Appeals) after considering the relevant provisions has rightly deleted additions made by the Assessing Officer. We do not find any error or infirmity in the order of the Commissioner of Income Tax (Appeals), hence, we incline to uphold the order of the Commissioner of Income Tax (Appeals) and dismiss the appeal filed by the Revenue. - Decided in favour of assessee

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• 2017 (4) TMI 116
  Claim of depreciation on motor car - Held that:- We are of the view that assessee should be allowed the claim of depreciation @ 50% on the WDV as on 01.04.2009 of motor car purchased for business purposes on 28.03.2009. In the result, this ground of assessee is allowed. Disallowance of travelling expenses - Held that:- Undoubtedly, the assessee had incurred travelling expenditure, but specifically could not prove the business nexus of Directors’ travelling expenditure to the satisfaction of lower authorities. It is also not disputed that books of accounts are audited and no major adversity has been detected by the Assessing Authority while completing the assessment and it is also the fact that ledger account of travelling expenditure was placed on record. We, therefore, in view of above facts, are of the view that it will meet the ends of justice if the disallowance is restricted to 15% of the Directors’ travelling expenses of Rs. 3,74,069/-, which will work out to Rs. 56,110/-; and we order accordingly. In the result, this ground of the assessee is partly allowed.

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• 2017 (4) TMI 115
  Addition on bogus purchases and bogus labour charges - Held that:- CIT(A) as well as Tribunal have concurrently rendered the finding of fact that payments made for purchase of goods and for labour jobs to Mr. Anilkumar Chahwalla, were genuine. This finding of fact is further supported by the fact that the CIT(A), Valsad while dealing with the appeal filed by Mr. Anilkumar Chahwalla has examined these very transaction to conclude that they were genuine. Therefore, so far as question (a) is concerned, there are concurrent findings of fact by the CIT(A) as well as by the Tribunal. These findings are not shown to be perverse. In view of above, proposed question (a) does not give rise to any substantial question of law. Hence, not entertained. Statement of Shri Anilkumar Chawla was recorded under coercive pressure - Held that:- The authorities CIT (A) as well as Tribunal have recorded the fact that the statement given to the DCIT, Valsad on 24th December, 2008 was a statement made in view of coercion and the same was retracted soon after i.e. 27th December, 2008. This also is a finding of fact which is not shown to be perverse in any manner. In view of the above, the question (b) does not give rise to any substantial question of law.

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• 2017 (4) TMI 114
  Validity of reopening of assessment - Held that:- It is settled law that the reassessment notice is a jurisdictional notice and it is equally settled law that ground of lack of jurisdiction may be raised at a subsequent stage as well. In the instant case the reassessment order was admittedly an exparte order and, therefore, there was no occasion for the assessee to have conceded to the reassessment proceedings. Further, in the instant case, it is clearly being shown by the assessee that he had raised specific ground both before the CIT (Appeals) and also before the Tribunal, challenging the jurisdiction of the Assessing Officer. The issue of validity of reassessment proceedings is a jurisdictional issue. It goes to the root of the matter. The Tribunal ought to have examined the ground no.3 raised in the assessee's appeal on its merit without being prejudiced by the facts that the reassessment order has been passed on the exparte basis in which the proceedings the assessee has not objected to the initiation of the reassessment.Accordingly, question no.1 is answered in favour of assessee and against the department.

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• 2017 (4) TMI 113
  Income from share transactions - business income or capital gain - Held that:- In view of the frequency, volume of transactions and treatment given in the books of account and balance sheet along with the fact that dealing in shares were entirely on delivery basis, in respect of its investment portfolio to the extent of Rs. 1.46 Crores as short term capital gains. This on the basis that the intention of the Respondent Assessee was to invest in shares and not trade in shares to the extent of Rs..1.46 Crores allowed under the head 'capital gains'. We find that both the CIT(A) and the Tribunal have come to a concurrent finding of fact that an amount of Rs. 1.46 Crores is taxable under the head 'short term capital gain' as it is on account of investment. Both the CIT(A) and the Tribunal have applied the tests as laid down by the CBDT and as laid down by the Apex Court in various decisions to determine the issue. The Revenue has not been able to show that the application of tests/ principles laid down in the CBDT Circular and the decisions of the Court, by the CIT(A) and the Tribunal, was not correct. - Decided against revenue

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• 2017 (4) TMI 112
  Applicability of 40(ba)- Held that:- The Revenue, when it originally filed its appeal, had not made any grievances with regard to the Tribunal holding that Section 40(ba) of Income Tax Act, 1961 (the Act) is inapplicable. This is apparent not only from the fact that the questions as framed in the appeal when filed but also further evidenced by the fact that there is no ground specifying any grievances with regard to the impugned order's finding in respect of Section 40(ba) of the Act. The residuary ground in the appeal memo has also proceeded on the basis that the order is not sustainable for the grounds mentioned earlier, which in turn are all related to Section 40(a) (ia) of the Act. In view of the objections raised by Mr. Padvekar, Mr. Ahuja, learned Counsel for the Revenue seeks time to consider the objections and respond to the same, including taking appropriate action, if so necessary.

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• 2017 (4) TMI 111
  Addition u/s 68 - amount was deposited by creditors in their accounts on the same date viz. 14.05.2010 on which date they issued the cheque in favour of the assessee - Held that:- No doubt whenever there is proximity of deposit of cash and issuance of cheque then the Assessing Officer rightly gets prompted to examine the genuineness of transactions. However, this fact per se does not lead to any adverse inference and Assessing Officer is required to examine all the attendant circumstances and take a holistic view of the entire transaction with reference to the evidences furnished by assessee before coming to any conclusion. If the assessee furnishes sufficient evidences which prima-facie establish the creditworthiness of the creditor vis-à-vis the amount advanced by creditors, then, merely on account of deposit of cash in the bank on the same date on which the cheque was issued, no adverse inference can be drawn because the primary onus of the assessee stands duly discharged. In the present case from detailed submissions of ld. counsel, it is evident that returned income of both the creditors fully justified the small sums advanced by them. Both the creditors had current account with the assessee inasmuch as they had received rent from assessee. Under such circumstances, all the three ingredients for establishing the genuineness of transactions u/s 68 were fully met. Assessee failed to produce the creditors before Assessing Officer - Held that:- Merely on this count, the addition cannot be made u/s 68. Thus direct for deleting the addition made by Assessing Officer u/s 68 - Decided in favour of assessee Disallowing the interest paid to the unsecured loans not considered as genuine - Held that:- As noted earlier, both the creditors had paid interest to assessee which has duly been credited in the account statement filed by the assessee and, therefore, fail to understand as to how the disallowance could be made on account of interest payment of Rs. 25,300/-. The entire basis on which the findings of Assessing Officer are based misconceived. Thus, this addition is also directed to be deleted. Disallowing 1/6th of expenses out of shop expenses and expenses out of car and telephone expenses on account of personal user - Held that:- Disallowance out of shop expenses are concerned the same has been made because complete vouchers could not be produced. Therefore, do not find any basis for interfering with the order of the lower authorities on this count. Similarly, as regards disallowances out of car and telephone expenses are concerned, it cannot be denied that there was personal user of both these facilities and, therefore, disallowance on account of personal user was called for. The disallowance was quite reasonable and no interference is called for on this count. In the result, grounds are dismissed. Addition on account of low house hold expenses - Held that:- Assessing Officer has observed that assessee is having family of two members. He estimated the overall expenditure on various house hold items at Rs. 8,000/- per month and, since, the assessee had shown Rs. 60,000/- towards house hold expenses, therefore, addition of Rs. 36,000/- was made which was confirmed by ld. CIT(A). Assessing Officer did not consider the withdrawals made by assessee’s wife of Rs. 30,000/-. In this regard, he referred to page 18 wherein the copy of return of income of Smt. Santosh Devi wife of assessee is contained along with statement of total income, capital account and Balance Sheet. These papers were also filed before ld. CIT(A) but he has also not considered on this count. Thus, there was total withdrawal of Rs. 90,000/- and not Rs. 60,000/- of husband and wife together. Having heard both the parties, I find considerable force in the submissions of ld. counsel for the assessee because the total withdrawals towards house hold expenses were Rs. 90,000/- and, therefore, no addition was called for. Thus, this ground is allowed.

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• 2017 (4) TMI 110
  Disallowance u/s 40(a)(ia) - whether section 40(a)(ia) can be invoked only with reference to the amount that has remained outstanding? - Held that:- Assessee has placed reliance upon CIT vs. Vector Shipping Services (P) Ltd. (2013 (7) TMI 622 - ALLAHABAD HIGH COURT). In the said case Hon’ble Allahabad High Court has upheld the finding that when the expenses incurred by the assessee is totally paid and not remained payable as at the end of the relevant accounting period, provisions of section 40(a)(ia) are not applicable. We are also aware that there are certain other Hon’ble High Court decisions wherein this proposition has not been upheld that provisions of section 40(a)(ia) are attracted only when the amount is payable. However, we note that there is no jurisdictional High Court decision on this issue. In such a situation we now have a Hon’ble Allahabad High Court decision which is in favour of the assessee as Hon’ble Apex Court in the case of CIT vs. Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME Court ] has to be followed. In the said decision the Hon’ble Apex Court has expounded that in case there are two views possible, the view in favour of the assessee should be followed. Thus Disallowance u/s 40(a)(ia) can be made only with respect to the sums which have remained unpaid. Since this aspect needs factual examination with reference to the records, we remit this issue to the file of the AO. The AO is directed to examine the amounts which have been paid and which have remained unpaid. The AO is directed to restrict the disallowance only with reference to those amounts which have remained outstanding. Needless to add the assessee should be granted adequate opportunity of being heard.

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• 2017 (4) TMI 109
  Non-deduction of TDS u/s 192 - benefit of leave travel concession granted by the assessee bank to its employees - Held that:- As decided in M/s State Bank of India Versus DCIT (TDS) , Kanpur [2016 (3) TMI 282 - ITAT LUCKNOW ] in the interim order, the Hon’ble Madras High Court has permitted the bankers not to deduct TDS on or after 16.2.2015 on the amount paid/reimbursed to the employees of the bank in respect of LTC/HTC availed where the employee has visited a foreign city/country, irrespective of the fact whether the LFC bills were submitted and paid prior to 16.2.2015; meaning thereby this Circular was passed consequent to the interim order of the Hon’ble Madras High Court. But in the present case, the journey was undertaken in the year 2012 and the bills were settled during that year; meaning thereby at the relevant point of time when the bills were settled, there was no order of the Hon’ble Madras High Court and the assessee was under obligation to deduct TDS on the reimbursement of expenditure incurred by the assessee on foreign travel. In the light of these facts, we are of the considered opinion that the Revenue has rightly held the assessee to be in default, as the assessee has not deducted TDS intentionally on the reimbursement of expenditure incurred on LTC/LFC. Moreover, the ld. CIT(A) has directed the Assessing Officer to recalculate the liability of TDS at 10%. In view thereof, we reject the claim of the assessee of exemption under section 10(5) of the Act. - Decided against assessee

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• 2017 (4) TMI 108
  Penalty u/s 271(1)(b) - non-appearance on six occasions on notices issues u/s 142(1) - Held that;- We observe that if there is a failure on the part of the assessee to comply with the notice under Section 143(2) of the Act or 142(1) of the Act, there lies a remedy with the Assessing Officer for framing “best judgement assessment” under the provisions of Section 144 of the Act and penalty under Section 271(1)(b) of the Act should not be imposed again and again. However, in the case of assessee, we observe that he failed to comply with the notice dated 24.07.2013 and again remained silent in further four notices, as narrated above in the table. It, therefore, shows that at least on two occasions, assessee is liable to pay penalty under Section 271(1)(b) for the Act for non-compliance to the notices dated 02.05.2013 and 10.09.2013. We, therefore, in view of the decision of Co-ordinate Bench in the case of Smt. Rekha Rani (2015 (5) TMI 1100 - ITAT DELHI) and in view of the facts discussed above, hold that assessee is liable to pay Rs. 20,000/- as penalty under Section 271(1)(b) of the Act as against Rs. 60,000/- imposed by the ld. Assessing Officer. - Decided partly in favour of assessee

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• 2017 (4) TMI 107
  Bogus purchases - CIT-A retaining part addition - Held that:- the assessee has made purchases from three parties and these three parties were declared as bogus Hawala dealers and the assessee was unable to produce these three parties before the Assessing Officer. The assessee has made payment by cheque to these parties and thus the purchases have been made by the assessee. Moreover, the assessee has sold this much goods which he has purchased from the above parties therefore, it is rightly concluded that the purchases shown by the assessee is not in doubt, but the assessee might have not purchased from these parties who he might have purchased it from the grey market. Therefore, we are of the view that entire purchases cannot be added to the total income of the assessee Addition on account of capitalization of interest in respect of capital expenses incurred - Held that:- As seen from the record that credit obtained by the assessee firm Canara Bank has been utilized for financing overseas export. Similarly, cash credit facility of Rs. 36 lakh have been utilized for day to day business. Therefore, the entire interest expenditure cannot be disallowed. The assessee himself has capitalized the expenditure of Rs. 6,96,075/- as per the working given by the assessee. The CIT(A) has not pointed out any defect in the working given before CIT(A) therefore, we direct the AO to capitalize interest expenditure of Rs. 6,96,075/- in the result ground of assessee’s appeal is allowed. Disallowance of ‘Administration and Selling expenses’ - Held that:- The total administrative expenses for the year ended 31/03/2010 was Rs. 1,60,40,916/-. This year the expenditure has increased. The total expenditure had increased by 10% as against this sales have increased by 72.93%. All the major expenses have been shown under the heading ‘Administration and selling expenses’. Such expenses are advertisement and sales promotion freight on sales, freight and other commission on sales. Thus we are of the view that there is no scope of estimating the expenditure, therefore, we deleted the same. - Decided in favour of assessee

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• 2017 (4) TMI 106
  Deduction u/s. 80IB in respect of ‘common expenses’ - Held that:- On perusal of the orders for AY 2000-01 and 2001-02 shows the basis of apportionment of head office and common selling expenses is being followed by the Assessee consistently. We find the Tribunal found the basis of apportionment of common head office and common selling expenses adopted consistently by the company is scientific and reasonable and accepted and allowed deduction under Section 80IB of the Act. Respectfully following the above, we uphold the impugned order of the CIT-A and we have no hesitation to allow the deduction as claimed u/s.80IB of the Act and therefore, ground raised in this regard fails and it is dismissed. - Decided in favour of assessee Deduction u/s.80IB in respect of ‘interest income’ on sale of scrap - Held that:- Hon’ble High Courts in the cases of DClT vs Harjivandas Juthabhai Zaveri (1999 (12) TMI 5 - GUJARAT High Court ) held that scrap generated in the manufacturing activity is eligible for deduction and respectfully following the same, we hold that the Assessee is entitled to claim deduction under the provisions of the section 80IB of the Act and the impugned order of the CIT-A on this issue is justified and delete the addition - Decided in favour of assessee Disallowance u/section 14 A - applicability of rule 8D - Held that:- as on 11-04-07 the opening surplus was 212 crores and as on the same the share capital was at 63.77 crores. Therefore it amply proves that the Assessee has made investments from its own funds and as rightly pointed by the Ld. AR that the AO did not examine the nexus between the investments if any made from borrowed funds, without the same application of Rule 8D to compute the expenditure for the purpose of disallowance u/ section 14 A of the Act is bad. We find that the issue in hand is covered by the decision in the case of CIT Vs. Ashish Jhunjhunwala [2015 (12) TMI 905 - CALCUTTA HIGH COURT] which held that while rejecting the claim of the Assessee with regard to expenditure or no expenditure, as the case may be, in relation to exempted income, the AO has to indicate cogent reasons. We find the AO without assigning any reasons to the claim of the Assessee applied Rule 8D, therefore, the disallowance as made to an extent of 38,07,778/- is not maintainable. Respectfully following the decision supra, we have no hesitation to delete the impugned addition as made by the AO and confirmed by the CIT- A - Decided in favour of assessee

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• 2017 (4) TMI 105
  Vladity of AO order of Reopening of assessment - A.O inspite of the order proceeded with the matter to dispose off cases prior to prescribed date passed the order under section 143(3) read with section 147 and 254 - Held that:- The question is not of availability of appeal against the impugned orders. The issue is that once this Court after considering the rival contentions directed the Tribunal to deal with the issue afresh, there was no reason for the A.O to proceed with the matters of same Assessment year even in the background of referring to the order passed by this Court in the four Tax Appeals. A copy of this Court's order was placed and was available with the record of the A.O. It is reflected in para 1.9 of the impugned order. We are inclined to dispose of these writ petitions on the sole ground as specific directions have been issued to the Tribunal to decide the appeals afresh. The impugned order passed by the A.O inspite of the order passed by the High Court in our view is unsustainable. There is no question even accepting the submission of the learned counsel appearing for the Department that the petitioner has remedy available against it. This is also for the reason that once the High Court has passed the order directing the Tribunal to decide the appeals afresh, it is required to be followed by all concerned, apart from would be conflict and/or difficulty in passing any order by the Tribunal and/or by the other authority.

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• 2017 (4) TMI 104
  Penalty u/s 271(1)(c) - Addition u/s 41(1) - Held that:- We find that the assessee has disclosed all the facts and substantiated the same with the letter issued by the Bank on 30.06.2004 and 08.08.2005, wherein the Bank has given details of amount waived without any bifurcation of interest and principal amount. Therefore, the addition made on the basis of deeming provisions of Section 41(1) of the Act does not attract penalty u/s 271(1)(c) and its case is not covered by Explanation Clause ‘B’ to Section 271(1)(c) as the assessee has substantiated its explanation that it was bona fide and all the facts relating to the same have been disclosed and as appearing from the profit and loss account and balance sheet. Based on the above facts of the case, it can be held that the assessee has made all the necessary disclosure on a bona fide belief which is not agreeable to the AO, which does not automatically lead to the case for penalty u/s 271(1)(c) The assessee is a sick company and has brought forward business losses from the earlier years and after making disallowance on account of interest also, the income comes to loss figure leaving further set off for brought forward losses. Therefore, there appears no motive to reduce the tax liability by not showing interest amount. We are, therefore, of the considered view that the penalty is not sustainable in law. Moreover, in the light of the decision of Hon'ble Supreme Court in the case of CIT vs. Reliance petro Products Limited, (2010 (3) TMI 80 - SUPREME COURT ), wherein it was held that merely because the assessee has claimed expenditure, which claim was not accepted or was not found acceptable by the Revenue, penalty u/s 271(1)(c) cannot be attracted. - Decided in favour of assessee

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• 2017 (4) TMI 103
  Taxable event - accrual of income - Taxability of surrender value of the Keyman Insurance policy in the hands of the appellant as the assignment in favour of the appellant has happened during the year - whether the taxable event is the date of assignment of the policy which falls in the year under consideration or the date when the amount was actually received by the appellant on actual surrender of the policy which falls in the subsequent financial year? - Held that:- The taxable event will occur when the amount was actually received by the appellant on actual surrender of the Keyman Insurance policy. The surrender of the policy and the actual receipt of money by the appellant under the Keyman Insurance Policy has admittedly not happened during the year under consideration but has happened only in the subsequent financial year. Hence, no amount can be brought to tax in the year under consideration. In our view, the pendulum of taxability will start titling from the firm towards the appellant as soon as the policy has been assigned by the firm in favour of the appellant but the taxability will only be fastened on the appellant when he actually receives the surrender value. The assignment alone cannot be a basis for bringing to tax the surrender value but the act of assignment along with actual receipt of money under the policy would be the correct basis for bringing to tax such amount in the hands of the appellant. This is the way the Legislature in its wisdom has worded these charging provisions and we have to read it accordingly. Referring to Circular No.792 dated 18.02.1998 issued by the CBDT in the context of Finance Act (No 2), 1996 explaining the tax treatment of Keymjan Insurance Policy have to be read in the context of the express provisions in the statute as provided by the legislature and doesn’t support the case of the Revenue. Thus it cannot be held that the arrangement has been entered into between the firm and the appellant with a view to avoid payment of taxes. As we have held above, the taxable event is the year of actual receipt of the surrender value and the Revenue will be well within its rights to bring to tax such receipt on surrender of the Keyman Insurance policy as per law prevailing for the said year. In fact, it is noted that the Revenue has brought to tax the actual surrender value in the year of surrender in subsequent AY 2009-10 which however has not found favour with the ld CIT(A) and the same has been held eligible for exemption by the ld CIT(A) under section 10(10D) of the Act. The fact that the amount has been held eligible for exemption in the year of happening of the taxable event cannot be basis to hold that the taxable event can be shifted to another year or to hold that the arrangement has been entered into between the firm and the appellant with a view to avoid payment of taxes. Thus even though the assignment has happened during the year, surrender value as computed as on the date of assignment cannot be brought to tax in absence of actual receipt of the surrender value during the year under consideration. - Decided in favour of assessee.

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• 2017 (4) TMI 102
  Sale of debt instrument - Benefit of Article 13(4) of DTAA between India and Singapore - non application of Article 24 of the DTAA between India and SingaporeHeld that:- The limitation prescribed under Article 24 of the Treaty is not applicable in the present case as the income earned by assessee on sale of debt instrument is not taxable in India as per Article 13(4) of Treaty. Thus, the observation of DRP that the assessee has not furnished any evidence that the Capital Gain earned in India, was remitted to Singapore has no relevance. Thus, we respectfully following the decision of Co-ordinate Bench in APL Company Pte Ltd. (2017 (2) TMI 849 - ITAT MUMBAI) and in SET Satellite (2011 (2) TMI 1513 - ITAT MUMBAI) hold that the authorities below erred in denying the benefit of Article 13(4) of India-Singapore DTAA as Article 24 of the Treaty has no application. Hence, the appeal of the assessee is allowed.

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• 2017 (4) TMI 101
  Issue of set off of undisclosed profit against surrendered income - nature of directions issued by the Coordinate Bench in the first round of appeal and whether the same has been given duly effect to by the AO - Held that:- Undisputedly, the impunged proceedings are set-aside proceedings with directions to consider the additional ground as submitted before the Co-ordinate Bench in terms of examining the set off of undisclosed profit of Rs. 1.28 Crores against the amount surrendered by the assessee. And in light of these directions, the AO has considered the submissions of the assessee and has stated that since the sale of Mahala property has happened on 3.7.2006, the profit arising from such sale of Mahala property amounting to Rs. 1.28 Crores (after considering the sale consideration of Rs. 3.76 Crores and cost of purchase of Rs. 2.48 Crores as per seized documents) has been worked out and the same was allowed set off against the surrender of stock of Rs. 2.8 Crores. In our view, the AO has rightly given effect to the directions of the Coordinate Bench and we see no infirmity in the same. At the same time, we are not in agreement with the findings of the ld CIT(A) where he states at para 4.3 (vi) of his order that set off OF sale proceeds would be available against the undisclosed stock surrender of Rs. 2.8 crores found at the time of search of sale proceeds realized out of books of Rs. 2.51 crores since there is no material/evidence on record that this amount was invested elsewhere and in view of the clear directions of the ld CIT(A) in his order dated 19.5.09.” The reason for the same is that there is no such directions by the ld CIT(A) in the first round and that’s precisely the reason why the assessee took the additional ground before the Coordinate Bench and which has been rightly given effect to by the AO. - Decided in favour of revenue

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• Customs

• 2017 (4) TMI 83
  Waste - Import of old and used tyres - Prohibited Goods or Restricted Goods? - classification of goods - Held that: - the role of Ministry of Environment, Forest and Climate Change is essentially for regulating, controlling and managing the Hazardous Wastes and its effect upon the environment in our country. The hazardous wastes presupposes the wastes and, therefore, it has required to be wastes and that to hazardous wastes. The goods in question cannot be said to be a waste in any manner, much less, any hazardous waste so as to attract the provision and attract the prohibition under the Rules. Moreover, the prima facie reading of the Entry No.B3140 also clearly goes to say that the tyres meant for direct reused cannot be exempted from the prior consent. The petitioner shall not clear any goods which are not reusable. Petition dismissed - decided against petitioner.

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• 2017 (4) TMI 82
  Shortage of stock - clandestine removal - Held that: - the stock had not been physically verified. It is also noted that various statements had been record as a prelude to issuance of SCN - There is a significant lack of analysis of the data so collated in the grounds of appeal. Such a sketchy narration in the grounds of appeal does not provide any support whatsoever to the prayer for setting aside the impugned order - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 81
  Fraudulent claims of duty drawbacks - Mis declaration of goods - Held that: - the decision in the case of M/s Contessa Commercial Co. (P) Limited Versus Commissioner of Customs (Preventive) Customs House, Central Revenue Building, the Mall, Amritsar [2014 (11) TMI 298 - PUNJAB AND HARYANA HIGH COURT] contested - SLP dismissed.

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• 2017 (4) TMI 80
  Admissibility of CVD exemption on imported goods - import of silk yarn, silk fabrics - Benefit of N/N. 30/2004-CE dt. 9.7.2004 - the decision in the case of CC Chennai (Seaport-Export) and Enterprises International Ltd. Versus Sun Star International and Others [2015 (8) TMI 191 - CESTAT CHENNAI] contested - appeal dismissed.

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• 2017 (4) TMI 79
  Validity of SCN - Vires of Section 11(2) and 11(3) of the FT(D&R) Act, 1992 - Article 14 of the Constitution - imposition of penalty on directors of company - the case of the directors of the company is that Against them there was no notice at all. The SCN in question was issued against the company. The directors of the company therefore had no opportunity to defend against any adverse consequences. The competent authority straight-way imposed penalty of Rs. 5.00 lacs on each of the directors without ever putting them to notice or granting them an opportunity to defend themselves against such proposal - Held that: - it is not necessary to go into the last contention of the petitioners of the penalty being excessive. The impugned order as confirmed by the appellate authority is set aside. Since we have set aside the impugned order on the ground of lack of opportunity, this would not prevent the department from initiating fresh action against the petitioners, if otherwise, permissible in law - petition allowed - decided in favor of petitioner.

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• 2017 (4) TMI 77
  Time limitation - demand - section 28 of the CA 1962 - non-compliance of conditions prescribed in N/N. 104/94 dated 16th March 1994 - Held that: - The said notification availed by the appellant at the time of landing of the containers within the territory of India is a mechanism devised to facilitate the containerisation of global trade utilised. Such a facility was to be accompanied by adequate safeguards to ensure that the containers are not illicitly diverted for use domestically without payment of duty. It is with that end in view that the extension of the period of retention of the container within the territory of India is also envisaged in the very same notification. It is an acknowledged fact that the containers remained with the custodian/government and hence the scope for illicit usage of non-duty paid containers is non-existent. In these circumstances, there is no justification for invoking of the provisions of section 111 the Customs Act 1962 as well as section 28 of Customs Act 1962 - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 76
  Refund of Drawback with interest - It is the case of the petitioner that during the second week of June, 2016, part of the petitioner’s entitlement was wrongly transferred to the fourth respondent account - The learned counsel for the fourth respondent on instructions would submit that on coming to know of the wrong credit being effected into their drawback account, they have immediately contacted the Customs Department and remitted the amount back to the Customs Department by Demand Draft dated 1-8-2016 - Held that: - the second respondent is directed to consider all these aspects and if there is no other dispute with regard to the balance of Rs. 2,09,680/-, that shall be disbursed to the petitioner - Similarly, if interest is admissible, then the Department shall effect such payment also - matter on remand.

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• Corporate Laws

• 2017 (4) TMI 72
  Conversion from public to private company - Held that:- Petitioner has complied with provisions of Section 14 to be read with Rule 68 of NCLT Rules, 2016. Therefore, having regard to all the circumstances, the conversion from public to private is in the interest of the Company which is being made with a view to comply efficiently with the provisions of Companies Act, 2013 causing no prejudice either to the members or to the creditors of the Petitioner. Therefore, the conversion is hereby allowed. The Petitioner is hereby directed to give effect of the conversion by requisite alteration in its Articles which is hereby addressed and communicate the altered Articles within a period of 15 days to the Registrar of Companies, Pune.

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• Service Tax

• 2017 (4) TMI 100
  Valuation - reimbursable expenses to be included in gross value or not? - Held that: - The law provides that for the purpose of calculating the service tax gross value of service has to be taken in to account. This includes the consideration received before, during or after the service. The costs of expenditure or the amount reimbursed to the clients are not allowed to be deducted or excluded except in the case of pure agent - Admittedly, appellants are no pure agents and Commissioner (Appeals) has also given finding that appellants did not claim themselves to be a pure agent nor did they produce any evidence for fulfillment of conditions necessary for being a pure agent - Section 67 is clear and unambiguous that all the expenses incurred in relation to rendition of service have to be included in the gross taxable value. The extended period has been correctly imposed as the law was clear and unambiguous. Non-inclusion of part of taxable value in such a situation is a positive act of suppression and misdeclaration of value in their ST-3 returns - penalty also rightly imposed. Appeal dismissed - decided against assessee.

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• 2017 (4) TMI 99
  Works contract - assessee claimed exemption from payment of service tax, the items of contract/works being excluded from the purview of the definition of the said service u/s 65 (25b) of FA, 1994 - Department was of the view that the work in question should be considered as part of construction of Hydro Electric Power Project, which is a Commercial Project leviable to service tax - Held that: - the contract with WBSEB was a Works Contract as defined u/s 65(105)(zzzza) of the FA, 1994 and came into force from 1st June, 2007, without any change in the definition of Commercial or Industrial Construction Service [Section 65 (105)(zzq)] or Erection, Commissioning or Installation service [Section 65(105)(zzd)] or Construction of Complex Service [Section 65(105)(zzh)]. It implies that the work undertaken by the respondent was not covered under any of the earlier existing services and came under service tax levy as Works Contract only w.e.f. 1st June, 2007 - Only minor part of the demand from June, 2007 to March, 2008, which is included in the demand of Rs. 4,39,181/- for the period April, 2007 to March, 2008 survives and the balance of the demand does not exist. The appeal filed by the Department is not maintainable under Litigation Policy - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 98
  Refund claim - CENVAT credit - N/N. 5/2006-CE(NT) dated 14.03.2006 - time limitation - Held that: - the relevant date for computing the time limit of one year u/s 11B of CEA, 1994, in case of export of services, would be the date when the consideration for such services is received by an assessee exporter. In this regard, there is CBEC's N/N. 14/2016-CE(NT) dated 1.3.2016, where it clarifies that “in case of service provider, the refund application is to be filed before the expiry of one year from the date of (a) receipt of payment inconvertible foreign exchange, where provision of services had been completed prior to receipt of such payment; or (b) issue of invoice, where payment for the service had been received in advance prior to the date of issue of the invoice.” The appellant is entitled to refund claims, wherever they have filed the claim within the period of one year from the date of receipt of consideration in convertible foreign exchange. The fact that whether the appellant filed the refund claims within the period of one year from the date of receipt of consideration is to be examined by the original adjudicating authority - appeal allowed by way of refund.

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• 2017 (4) TMI 97
  Liability of tax - commercial training or coaching service - denial of exemption N/N. 24/2004-ST available to vocational training institute - denial on the ground that no skill is being imparted by the appellant. It was held that the appellants are only engaged in coaching in English language and as such, they are not a vocational training Institute imparting coaching, which will enable the participants directly to gain employment. Held that: - similar issues came up for decision before the Tribunal. In the case of Maria Computer Systems Pvt. Ltd. vs. CCE, Bhopal [2017 (1) TMI 37 - CESTAT NEW DELHI] the Tribunal held that the term Vocational Training Institute has been defined as one which provides vocational training, which will enable the trainee to seek employment or undertake self-employment directly after such training or coaching. It is common knowledge that acquiring skills in English language definitely improves better chance to seek employment. The appellants will be eligible for exemption under N/N. 9/2003, 24/2004 except for the period 01.07.2004 to 09/09/2004 during which no exemption Notification was available. Regarding English language skills imparted to children, we note that the said Notification itself provides for recreational training institute, defining the same as commercial training or coaching centre which provides training or coaching relating to recreational activities such as, dance, singing, martial arts or hobbies. The appellants are not liable to service tax, except for the period 01.07.2004 to 09.09.2004. The tax liability for the said period shall be calculated after extending the benefit of N/N. 12/2003-ST upon verification of the documents - appeal allowed by way of remand.

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• 2017 (4) TMI 96
  Refund claim - unutilised CENVAT credit - N/N. 5/2006-CE (NT) dated 14/03/2006 - rejection on the ground that the appellants provided “market research agency service” in terms of Section 65 (105) (y) and not BAS, as claimed by them - further, rejection also on the ground that the services are rendered in India and they cannot be considered as exported in terms of Export of Services Rules, 2005 - Held that: - the work carried out by the appellant will fall under the category of market research agency. The claim of the appellant that they are engaged in procuring services for the foreign client and, as such, should be considered as rendering BAS is not factually or legally sustainable. The appellants are only collecting data by questionnaire and study. Collection of such data from various target persons cannot be considered as procurement of services which are inputs for the clients - classification of the service under "market research agency" is correct - refund rightly rejected. On the second issue regarding the claim of export of service by the appellant, we note that the data collected by the appellants are delivered to the clients outside India in the required format. Without such delivery of the collected data the service will not get completed - In the present case, we are dealing with market research agency service. The same ratio is applicable. The data collected from target groups are to be arranged and delivered in a manner as required by the foreign client. Without such delivery of the collected data there is no completion of service. Hence, that part of the service is performed outside India. In such situation, the proviso clause of Rule 3 (1) of the Export of Services Rules, 2005 will apply. The said proviso stipulates that where such taxable service is partly performed outside India, it will be treated as performed outside India - The claim shall be considered, upon verification of supporting documents and fulfillment of other conditions, as mentioned in the notification issued under the said rule - matter on remand. Appeal rejected in part and part matter on remand.

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• Central Excise

• 2017 (4) TMI 95
  SSI exemption - N/N. 8/2003 dated 01.03.2003 - clubbing of clearances - It was the case of the respondents before the adjudicating authority that respondents 1, 2, 4 and 5 are independent units, they are procuring their own raw materials, working separately having separate plant & machinery, registered with various Government departments like Sales Tax, Income Tax, Service Tax, Property and Professional Tax - whether the adjudicating authority was correct in dropping the proceedings initiated by the show-cause notice for clubbing of clearances of respondent No.1 and respondents 2, 4 and 5 and demanding Central Excise duty and also for imposing penalties on other respondent? Held that: - the adjudicating authority has held the benefit of N/N. 8/2003 is available to all the respondent 1, 2, 4 and 5 after reading the benefit of notification independently - He has come to a fair conclusion with a reasoned order as to how the respondents have satisfied the conditions as reproduced herein above in para 137 of the adjudication order. Reliance placed in the case of Commissioner of Central Excise v. Sotex [2006 (11) TMI 39 - SUPREME COURT OF INDIA]. Benefit allowed - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 94
  Benefit of N/N. 4/2006-C.E., dated 1-3-2006 - manufacture of security paper which is used only for the purpose of printing of currency notes and other security instruments of the Government of India - denial on the ground that the security papers did not bear water mark, security thread, etc. - Held that: - only condition mentioned in the Notification is security paper should be cylinder mould vat made and no other condition is prescribed. In such situation, denial of exemption on the ground that security paper supplied by the appellant as manufactured by the appellant is not of that category as certain features as mentioned in the internet sources is not figuring there - In case the original authority entertained certain doubts regarding correctness of claim by the appellant, the same should have been verified with expert opinion or by reference to the Government authorities or recipient of those goods to find out security paper. Instead of that, the impugned order proceeded to deny the nature/scope of exemption based on certain unsubstantiated definition of the term. There is no justification for such interpretation - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 93
  CENVAT credit - electricity - captive consumption - denial on the ground that the input, input services and capital goods were not fully utilized in the manufacture of the final product and some quantity of the generated electricity is wheeled out from the factory - Held that: - the embargo created in Rule 6 ibid has no application for payment of amount of 6% on the electricity wheeled out from the factory - Since some portion of generated electricity has been sold by the appellant to the grid on payment of consideration, Cenvat credit attributable to the electricity wheeled out from the factory will not be available for the Cenvat benefit - since the quantum of generation of electricity and actual use within the factory captively have not been discussed in the adjudication order and no documents were produced by the appellant to that effect, the matter should go back to the original authority for ascertaining such aspect - The appellant should reverse proportionate Cenvat credit of the electricity not used within the factory for the intended purpose - appeal allowed by way of remand.

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• 2017 (4) TMI 92
  Demand of reversal of cenvat credit in cash - Revenue's case is that pig iron moulds were cleared by the assessee by utilising the Cenvat credit, is not permissible - Held that: - Rule 3(5A) does not say that amount equal to the duty is payable in cash. Therefore, payment made through Cenvat credit is also admissible - there is no wilful suppression of the facts by the assessee and vital element of intention to evade duty has been missing in these proceedings - demand set aside - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 91
  Natural justice - petitioner's case is that the Tribunal erred in law in disposing of the statutory appeal since no effective hearing of appeal had taken place before the Tribunal - Held that: - principle of natural justice have not been complied with inasmuch as evidence on record indicates that the Tribunal had fixed the stay petition for hearing from day-to-day and instead of passing any order on the stay application proceeded to dispose of the appeal on merit without affording the appellant proper opportunity to address the Tribunal on merit - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 90
  Refund claim - time limitation - re-export of goods returned for repair - denial on the ground that the same was filed after six months from the date of payment of duty and hit by limitation - Held that: - the provisions of Rule 173H which are followed by the appellant for receiving the duty paid goods back and removing them after reconditioning or repairing would not amount to discharge of duty liability when the goods are cleared after reconditioning. Since duty liability on the goods exported was discharged and the refund claim was filed beyond six months, provision of Section 11B gets attracted and refund claim has to be held as hit by limitation - refund rightly denied - appeal dismissed - decided against assessee.

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• 2017 (4) TMI 89
  Area based exemption - N/N. 32/99 dated 08.07.1999 - Revenue's case is that the appellant has wrongfully availed the benefit of the refund of the Central Excise duty under the said notification to the tune of Rs. 79,45,526/- only, by willful suppression of the fact - demand of duty with penalty - Held that: - The spirit of the notification is to boost the growth of industries in the North East Region by way of expansion of the old units as well as to set up the new units. The intention of the legislation is very clear that the new unit should not be set up at the expenditure of old units. Needless to mention that the purpose of the area based exemption in the North East is to invest finance in the New Industrial Unit. That is why various tax exemption and facilities were provided to the investors for the period of 10 years - In the instant case, the total investment in the subsequent plant is of Rs. 34 lakhs as said above. Earlier parts and machineries were sold for Rs. 20 Lakhs. Thus the fresh investment is minimum for Rs. 14 lakhs only. So this is against the spirit of the notification. It is evident that appellant never started a new unit the appellant has used partly old machinery as stated above in the same premises/shed. Nature of the product is not meaningful to get the benefit of the notification. It is the investment in North East States to boost the economy - appeal dismissed - decided against appellant.

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• 2017 (4) TMI 88
  Clearance of manufactured item (furnace) - capital items - removal as such or after being used - it is the Revenue's case that since the Appellant had removed the manufactured item (furnace), therefore, they were liable to pay excise duty on the transaction value - Held that: - The subject goods have been in use in the factory of the Appellant for substantially long period. The goods were manufactured during September-November, 1995 and have been cleared by the Invoice dated 16.3.2004. When the Appellant used such goods for such a long period i.e. over eight years, the same cannot be called as “manufactured or produced goods”; they are in the character of „used capital goods . The department has not been able to prove that the Appellant assessee removed the goods as such or did not use these as capital goods. Thus, it is a fact that goods have been cleared after their use for long period - Appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 87
  Valuation - export duty - whether the FOB value would be taken as cum-duty price for the calculation of export duty? - Held that: - the issue raised in these appeals has earlier been examined by this Tribunal in the case of CC,Guntur Vs. Sameera Trading Company [2010 (5) TMI 518 - CESTAT, BANGALORE], where it was held that by the Circular No. 18/2008, dated 10-11-2008 issued by CBEC, it was clarified that by taking the FOB price declared by the exporter as cum-duty price and working backwards from the FOB price to determine the value for assessment - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 86
  Reversal of CENVAT credit - Write off of stock of stores, spares and tools - Held that: - the issue is no more res-integra. In CCE, Navi Mumbai vs. Hindalco Industries Ltd. [2011 (6) TMI 662 - BOMBAY HIGH COURT], where the Hon’ble High Court has observed that since the issue relates to a period prior to the amendment of Rule-3 by insertion of sub-rule 5B & 5C, decided in favor of the assessee - since there was no provision under the Modvat credit already taken under Rules, 1994 that the assessee could not be directed to simply reverse the input goods because the same were not utilized for a certain period of time - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 85
  CENVAT credit - Revenue entertained a view that the process undertaken by the respondent in producing G.I. Wires does not amount to manufacture in terms of Rule 2(f) of the CER, 1944, accordingly, the Cenvat credit availed on H.B. Wire, Zinc, Furnace Oil and Hydrochloride Acid used for producing G.I. Wires appear to be incorrect and recoverable - Held that: - the Adjudicating Authority has not substantiated the charge that the said quantity of GI Wires has been put to only process of galvanisation. It was recorded that the said quantity of GI Wires has been captively used in the manufacture of stay wire and barbed wire, which have been cleared on payment of duty - there is no substantial ground in the present appeal by Revenue to rebut the findings recorded in the impugned order - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 84
  Maintainability of petition - monetary limit for filing appeal - the decision in the case of Commissioner of C. Ex., Ahmedabad-II Versus Parth Pharmachem Industries [2016 (3) TMI 1197 - GUJARAT HIGH COURT] referred - Held that: - As the tax effect is approximately Rs. 68,000/-, we are not inclined to interfere in the impugned order - SLP dismissed - decided against petitioner.

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• CST, VAT & Sales Tax

• 2017 (4) TMI 75
  Attachment of properties - the said properties are sold to clear the outstanding dues due and payable by the petitioners /firm - Held that: - The request made by the petitioners /partners of the firm seems to be reasonable and bonafide. It appears that the petitioners and the partners of the firm want to clear the dues and make the payment by selling their property, which are under attachment and even other properties belonging to their family members, however, they pray for reasonable installments - The respondent authorities are directed to lift the attachment as soon as the petitioners sell any of the properties located at Serial Nos.2 to 6 and deposits the entire consideration from sale of any of the said properties to the Government /Department - petition allowed - decided in favor of petitioner.

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• 2017 (4) TMI 74
  Benefit of Sales tax incentive scheme - for Phase-I Project the petitioner has been granted the Incentive Scheme under the Government Resolution dated 11.09.1995 treating it as premier unit. However, for Phase-II Project the petitioner has been denied the Sales Tax incentive under the Government Resolution dated 11.09.1995 on the ground that for Phase-II Project the unit is based on natural gas which can be said to be local mineral resources for which permit / license is required under the Mineral Rules or Act and therefore, for the Phase-II, the petitioner is ineligible to get the incentive benefit as per Clause 9(c) of the Annexure-B to the Incentive Scheme - whether for its Phase-II Project the petitioner is entitled to the benefit of Incentive Scheme under the Government Resolution dated 11.09.1995 more particularly as a premier unit or not? Held that: - while considering the question posed in the present petition, it is required to be considered whether natural gas / gas used by the petitioner in its Phase-II Project can be said to be local mineral resources for which permit / license is required under any Rules or Mineral Act,At this stage it is required to be noted that the raw material used in Phase-II of Gandhar Complex was gas and ethylene. The gas was procured from GAIL which supplied it to the petitioner through pipeline. In light of the aforesaid facts it is required to be considered whether the gas used can be said to be local mineral resource for which any license or permit under any Mineral Act or Rules is required. Natural gas cannot be said to be mineral/local mineral resource for which any permit/license is required under any of the provisions of the Mines and Mineral Act or Rules, the impugned decision to deny the benefit of the Sales Tax incentive under the Government Resolution dated 11.09.1995 to the petitioner for Phase-II Project cannot be sustained and the same deserves to be quashed and set aside and the matter is required to be remanded to the State Government for its fresh decision in light of the observations made hereinabove and to grant the benefit of the Incentive Scheme to the petitioner for Phase-II Project of Gandhar Complex if all other conditions of the Government Resolution dated 11.09.1995 are satisfied. Petition allowed by way of remand.

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• 2017 (4) TMI 73
  Classification of goods - air gun - air pistol - Whether 'air gun' and 'air pistol' are to be taxed under Entry 124 of Schedule-II 'toys including electronic toys', or is to be taxed as 'arms and ammunition' vide Entry 2 of Schedule IV? - Held that: - as dispute regarding the classification was not getting settled, the matter referred to Larger Bench.

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• Indian Laws

• 2017 (4) TMI 78
  Impoundment of passport - rejection of renewal of passport on the ground that the condition which the bail was granted to the petitioner imposed a restriction on his travel to abroad and in that background has rejected the application - Held that: - it is only in cases where the petitioner seeks to travel abroad that permission of the court where the criminal case is pending is warranted, there is no indication that even for renewal of passport the petitioner would require such permission from the court - The passport authorities having rejected the application without reference to any legal provision may not be tenable. Consequently, it would be proper if the petitioner should approach the court below and seek modification of the condition imposed in the first place that he shall not travel abroad. If that is modified it would then be open for the petitioner to seek renewal of the passport for which he does not require separate permission from the court - petition allowed - decided in favor of petitioner.

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• 2017 (4) TMI 71
  Presence of liquor vends on national and state highways across the country - Held that:- There are three areas where the rigors of the directions which have been issued by this Court may require to be suitably modulated without affecting the basic principle underlying the judgment. The first is in relation to limits of local bodies with a population of less than 20,000 people. In such areas, it has been urged before this Court that a state highway is the main thoroughfare area along which the township has developed in small clusters of 20,000 or less. Hence, the requirement of maintaining a distance of 500 metres from the outer edge of the highway or service lane may result in a situation where the entire local area may fall within the prohibited distance. We find some substance in the submission. We must emphatically clarify that even in such areas falling under local bodies with a population of less than 20,000, no licence for the sale of liquor should be issued along either a national or state highway or a service lane along the highway. Similarly, the sale of liquor should be from a point which is neither visible from a national or state highway or which is directly accessible from a national or state highway. However, in such a situation, the prohibited distance should in our view be restricted to 220 metres from the outer edge of the national or state highway or of a service lane along the highway. We accordingly direct that the following paragraph shall be inserted, after direction (v) in paragraph 24 of the operative directions of this Court in the judgment dated 15 December 2016 namely : “In the case of areas comprised in local bodies with a population of 20,000 people or less, the distance of 500 metres shall stand reduced to 220 metres”. The second area upon which we propose to issue a relaxation is in respect of direction (iii) contained in paragraph 24 of the judgment of this Court. This Court has directed that existing licences which have been renewed prior to the date of the order shall continue only until the term of the licence expires but not later than 1 April 2017. This was on the basis that the excise year ends on 31 March with the end of the financial year. This Court has been apprised during the course of hearing, that different states have different periods of operation for their excise years. Shri P.P.Rao, learned senior counsel, urged that the implementation of the directions should be carried out so as to inflict ‘minimum pain’ on the trade, which is not illegal. For instance, our attention has been drawn to the fact that the excise year in Telangana commences on 1 October and ends on 30 September of the following year. In the State of Andhra Pradesh, the excise year is stated to end on 30 June. Licencees to whom licences have been allotted prior to the date of the judgment would have made their investments. The cut-off date of 1 April 2017 was intended to protect such individuals. However, some modification is warranted due to the prevalence of varying excise years. In our view, the ends of justice would be met by issuing the following direction in continuation of direction (iii) in paragraph 24 of the judgment of this Court : “In the case of those licences for the sale of liquor which have been renewed prior to 15 December 2016 and the excise year of the concerned state is to end on a date falling on or after 1 April 2017, the existing licence shall continue until the term of the licence expires but in any event not later than 30 September 2017”. No licence shall either be granted or renewed or shall remain in operation in violation of the direction of this Court beyond 30 September 2017. In the State of Tamil Nadu, liquor vends are operated by TASMAC which is a state owned entity. In the judgment of this Court, time until 1 April, 2017 was granted on the request of the State. Hence, we decline to grant any further extension to the State of Tamil Nadu. The third area is in relation to the States of Sikkim (argued by Shri A.K.Ganguly, learned senior counsel) and Meghalaya which have moved this Court for a suitable modification of the judgment having regard to the nature of the hilly terrain. In relation to the State of Sikkim, this Court has been apprised on behalf of the State Government that nearly 82 per cent of the area of the state is forested and 92 per cent of the shops will have to be closed as a result of the directions of this Court. Similarly, the State of Meghalaya has placed before this Court peculiar conditions prevailing in the State as a result of the hilly terrain. We are of the view that insofar as the States of Meghalaya and Sikkim are concerned, it would suffice if the two states are exempted only from the application of the 500 metre distance requirement provided in paragraph 24(v)(iii) of the judgment of this Court on 15 December 2016. Insofar as the State of Himachal Pradesh is concerned, we are of the view that the exemption which has been granted earlier in respect of areas falling under local bodies with a population of 20,000 will sufficiently protect the interests of the State. No further relaxation is granted over and above what has already been stated in that regard.

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• 2017 (4) TMI 70
  Offence under Section 138 of the Negotiable Instruments Act - dishonour of the cheque - Held that:- The dictum laid down by the Supreme Court in Sampelly Satyanarayana Rao (2016 (9) TMI 867 - SUPREME COURT) makes the position of law abundantly clear that the crucial question to determine the applicability of Section 138 of the Negotiable Instruments Act is, whether the cheque represents discharge of existing enforceable debt or liability or whether it represents advance payment without there being any subsisting debt or liability. In the year 2011, when the blank signed cheque was handed over by the accused to the company, indisputably, there was no liability existing on that date. If such is the position, then have no other option but to hold that the cheque in question was nothing but a security without any subsisting debt or liability as on the date of handing over of the cheque. The liability to pay an amount of Rs. 76 lac and odd could be said to have been incurred by the accused over a period of time in the course of the business transactions. In such circumstances referred to above, the proceedings of the Criminal Case pending before the court of the learned Metropolitan Magistrate, Surat, are hereby ordered to be quashed. Rule made absolute.

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• 2017 (4) TMI 69
  Acquittal of the accused tried for alleged offences punishable under the NDPS Act - Held that:- The respondents were originally accused nos.1, 3 to 5 , 8, 9 & 11. According to the appellant, PW-1, an Intelligence Officer of the Narcotics Bureau was in his office at 9:00 PM on 11.12.1999, a Saturday, which in itself is unusual, when he had received information, in writing, from a person, whose identity is not disclosed. The said information was in turn said to have been reduced to writing by him and thereafter forwarded to his immediate superior, a Superintendent, examined at the trial as PW-20. The said document so forwarded is marked as Exhibit P-1. It is stated in evidence by PW-1 that the information received by him in writing was kept in a sealed cover in the office of the NCB. It is also stated that it was not in his custody. Further, that there were other officers present in the office at that point of time (PW-2, 4 and 16). The emphasis on the circumstance that normally, the office of the NCB is closed on Saturdays and Sundays and the unusual presence of the officers on that Saturday not being explained or disclosed is indeed curious. Thus the contention as to the document at Exhibit P-1 being a false and concocted document cannot be ruled out. More importantly, the original information said to have been received in writing by PW-1 is not brought on record. The explanation offered that it would have placed the informant in a vulnerable position, is not acceptable. There was no impediment in taking the court into confidence and requesting that the identity of the informant be screened. The non-production of the said crucial document would add to the suspicion created about the receipt of any information as stated. There is no way to ascertain whether Exhibit P-1 is a true reproduction of the original information, especially when PW-1 has stated that Exhibit P-1 is a translated version of the original. The employment of expressions such as "narcotic drug", "mount surveillance" and "intercept heroin a narcotic drug", therein is especially suspicious. This is a serious lacuna on which ground alone the prosecution has failed. The trial court has rightly held that there is a patent violation of Section 42 of the NDPS Act.

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