TMI Tax Updates - e-Newsletter
April 6, 2017

Case Laws in this Newsletter:

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

Articles

1. THE GOODS AND SERVICES TAX (COMPENSATION TO STATES) BILL, 2017 – AN OVERVIEW

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Mandatory Quoting of Aadhaar For PAN Applications & Filing Return of Income

2. Lok Sabha Speaker congratulates the Prime Minister, Union Finance Minister, Members of Union Cabinet, Members of Lok Sabha and Officers and Staff of Lok Sabha Secretariat, Ministry of Finance & Parliamentary Affairs for completing all the Budget related processes before 1st April;

3. Reducing Trade Gap with China

4. Pending Patents and Trademark Applications

5. Promotion of NIMZs

6. Impact of India-EU FTA on Textiles Industry

7. RBI Reference Rate for US $

8. India and the UK announce joint UK-India Fund, namely a Green Growth Equity Fund; Aims to leverage private sector investment from the City of London to invest in Green Infrastructure Projects in India;

Notifications

Customs

1. 32/2017 - dated 5-4-2017 - Cus (NT)

Rate of exchange of conversion of the foreign currency with effect from 6th April, 2017

Income Tax

2. 4/2017 - dated 3-4-2017 - IT

Procedure, Formats and Standards for ensuring secured transmission of electronic communication - introduction of E-Proceeding for communication between the Income Tax Department and Assessee- reg.

3. 26/2017 - dated 3-4-2017 - IT

Income-tax (6th Amendment), Rules, 2017

SEZ

4. S.O. 1036 (E) - dated 31-3-2017 - SEZ

Central Government notifies 4.86 hectares area at Kharadi Village, Pune, in the State of Maharashtra and constitutes an Approval Committee

Circulars / Instructions / Orders

Indian Laws

1. 1/5/2016-IR - dated 31-3-2017

Framing RTI Rules, 2017 in supersession of RTI Rules, 2012 — comments regarding.

Highlights / Catch Notes

Income Tax

• Commissioner Violates Rule 46A(3) by Not Requesting Remand Report; Natural Justice Principles Breached, Case Remanded.

  Case-Laws - AT : There is breach of Rule 46A(3) of Income-tax Rules, 1962 as no remand report was called by learned CIT(A) from AO and principles of natural justice is also breached as the Revenue has not be granted opportunity of being heard. - matter remanded back - AT
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• Claim Disallowed for Late Form 15G/15H Submission; Penalty Proceedings u/s 272A(2)(f) Recommended Instead of Section 40(a)(ia.

  Case-Laws - AT : Since the AO made the disallowance only on the ground that Form 15G/15H were not submitted to the ld. Commissioner in time, only penalty proceedings can be initiated under section 272A(2)(f) and no disallowance can be made under section 40(a)(ia) - AT
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• Depreciation Dispute: Assessee Challenges Building Use Date Due to Required Maintenance Before Operational Use.

  Case-Laws - AT : Depreciation on building - though the assessee might have taken possession of the property on 31.03.2007, there was no possibility for the building to be put to use on the same day. It is obvious that after purchase of the building some basic maintenance work would have been required before putting the asset to use. - AT
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• Penalty u/s 271(1)(c) Unjust for Debatable Issues Related to Additions u/s 68.

  Case-Laws - AT : Penalty levied u/s 271(1)(c) - addition u/s 68 - the entire addition itself becomes debatable one. It is well settled proposition of law that the penalty u/s 271(1)(c) cannot be levied on debatable issues - AT
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Customs

• Consultancy Charges Excluded from Import Invoice Values; Unrelated to Imported Goods.

  Case-Laws - AT : Valuation - The consultancy charges are not to be included to the invoice values for import of the goods as product consultancy charge which has got nothing to do with the imported goods. - AT
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• Imported Oil Classified as Waste Due to Lack of Definitive Finding; Subject to Absolute Confiscation by Authorities.

  Case-Laws - AT : Classification of imported oil - In the absence of any categorical finding of the Dy. Chief Chemist that the product is furnace oil, the non-confirming oil has to be treated as a waste oil - the goods imported are waste oil and needs to be absolutely confiscated - AT
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Corporate Law

• Director Removal Breach of Companies Act Section 169 Deemed Mismanagement, Allows Petitioners to Seek Position Restoration.

  Case-Laws - Tri : The removal of the Director in violation of mandatory provisions of Section 169 of the Companies Act, 2013 has repeatedly been held to be an act of mismanagement and, therefore, petitioners are entitled to reliefs - Restored as Directors - Tri
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Service Tax

• Show Cause Notice Challenged: Are Cash and Quantity Discounts Taxable Services? Independent Adjudication Required.

  Case-Laws - HC : Challenge to the show cause notice - Cash discount - quantity discount - whether would come within ambit of service - The show cause notice will have to be adjudicated independent of the version the Revenue projects - HC
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• SEZ Unit Eligible for Service Tax Refund on Pre-Production Services Utilized; Boost for Exporters.

  Case-Laws - AT : SEZ unit - the assessee is eligible for refund of service tax on services used prior to commencement of commercial production - AT
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• Service Providers in Residential Complex Construction Exempt from Service Tax; Demands Set Aside Under Definition Rules.

  Case-Laws - AT : The persons who are providing services of construction of residential complex in the form of designing, planning, developing and so on will not be subject to service tax as such services would fall under the exclusion provided under definition of residential complex - demand of service tax sete aside - AT
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• Section 73(1) Notice Can't Demand Interest or Penalty for Late Tax Payment Under Reverse Charge Mechanism.

  Case-Laws - AT : Delayed payment of tax - reverse charge - whether a notice u/s 73(1) of FA, can demand interest or, for that matter, whether a penalty can be imposed for non-payment of interest? - Held No - AT
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Central Excise

• Revenue Must Pay Interest 3 Months After Refund Application u/s 11BB, Not From Refund Order Date.

  Case-Laws - HC : Liability of the revenue to pay interest u/s 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund u/s 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. - HC
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• Appellant Not Liable for Extra Payment: Liquidated Damages Demand Set Aside for Goods Supplied.

  Case-Laws - AT : Valuation - There is no denying of this fact that this extra amount has been recovered from the buyer and the same is in respect of the goods manufactured and supplied by the appellant - the amount recovered from the buyer by the appellant is in the nature of liquidated damages - demand set aside - AT
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• Duty Demand on Scrap Materials Unwarranted as Drums Acquired Before EOU Status Change, Court Rules.

  Case-Laws - AT : Since the scrap which has been cleared are in the form of old and used drums and claimed to have been received prior to appellant getting the status of EOU, in the facts of this case, demand of duty on the appellant seems to unwarranted - AT
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• No extra duty for appellant's captive use of manufacturing pots; duty liability already discharged on chemicals.

  Case-Laws - AT : Manufacture - captive consumption - no duty liability arises as it is undisputed that the appellant has installed these reacting pots and distillation pots in its factory premises and used the same for manufacturing of the chemicals on which duty liability has been discharged - AT
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Case Laws:

• Income Tax

• 2017 (4) TMI 253
  Validity of the assessment - notice issued under section 143(2) of the Act was beyond the prescribed period of limitation from the original return of income - Held that:- The notice under section 143(2) of the Act has been issued on 01/08/2012 and duly served upon the assessee. As per the provisions of the Act, notice under section 143(2) was required to be served within a period of six months from the end of the financial year in which return is furnished. Thus, according to the provisions of section 143 , notice in the case of the assessee could have been served till 30/09/2012 . In the case of the assessee notice under section 143 (2) was issued on 01/08/2012 and was duly served upon the assessee. In view of these facts, the contention of the Ld. counsel that assessment was barred by limitation, is not acceptable due to the reason that the revised return of income was a valid return and notice under section 143 (2) of the Act was served upon the assessee within the limitation period available as per provisions of the Act. In our opinion merely mentioning by the Additional CIT in the direction issued under section 144A of the Act that the revised return cannot be accepted, cannot change otherwise validity of the assessment. - Decided against assessee Assessing of income from plying of trucks - amount as reported in the original return of income as against the income declared by the assessee in the revised return - interpretation of clause (ii) of the section 44AE(2) - Held that:- The contention of the Revenue is not correct as during the relevant period, the assessee was having option of choosing a prescribed fixed sum towards profit from plying of goods carriages for declaration or higher amount declared in the return of income. The assessee has chosen the option of a prescribed fixed sum per month in the revised return of income, which has already been held by us as a valid return. The provision of assessing higher income out of two options has been made effective only from assessment year 2011-12 and not for the year under consideration. CIT-A is not justified in directing the AO to assess income from plying of goods carriages as was declared in the original return of income. Accordingly, we direct the Assessing Officer to compute profit from goods carriages at the rate of fixed sum prescribed for relevant period under clause (i) of section 44AE(2) of the Act. - Decided in favour of assessee

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• 2017 (4) TMI 252
  Delay in deposit by the assessee of the employees contributions towards PF and ESIC - Held that:- We are of the considered view that as a fall out of the amendment made to Section 43B with effect from vide Finance Act, 2003 which came into force with effect from 1st April 2004, now when the assessee is found to have deposited the employees contribution towards PF and other labour funds though beyond the stipulated time, but prior to the due date of filing of its return of income under Sec. 139(1), therein no disallowance with respect to the said amount would be called for in the hands of the assessee. - Decided in favour of assessee Disallowance made under Sec. 36(1)(iii)- Held that:- No scope for carrying out any disallowance of interest connected with the amount funded for OTS. That as regards the current amount outstanding in respect of VCCL Ltd. (excluding the amount) outstanding on account of OTS, we are of the considered view that in the absence of any material being placed on record by the Ld. DR, in order to persuade us to take a view otherwise for the reason that any new facts had emerged during the year under consideration, we are constrained to conclude that as stand covered from the findings of the lower authorities in the case of the assessee for the preceding years, as o nexus had been proved by the AO in respect of the current amount outstanding in respect of the aforesaid company, viz. VCCL Ltd. and the borrowed funds, therefore no disallowance as regards any part of the said amount is called for under Sec. 36(1)(iii) of the Act, in the hands of the assessee company. We thus in light of our aforesaid observations are of the considered view that the CIT(A) by way of a reasoned order had rightly deleted the addition/disallowance of 1,81,81,940/-.- Decided in favour of assessee Disallowance of interest pertaining to debts which were due to the assessee company - Held that:- We are of the considered view that as the issue pertaining to the disallowance of interest of 1,13,40,000/- as regards the debts due to the assessee company from M/s. ESSLON Synthetics Ltd. as conceded by the Ld. DR is covered in favour of the assessee in the backdrop of the earlier orders passed in the case of the assessee company, we therefore uphold the deletion of the addition/disallowance of interest of 1,13,40,000/- pertaining to the debts due from ESSLON Synthetics Ltd. Thus, the order of the CIT(A) of the aforesaid issue under consideration is upheld as such.- Decided in favour of assessee

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• 2017 (4) TMI 251
  Disallowance of provision for expected loss/defect liability - Held that:- Considering the fact that the assessee accumulated loss of 16.50 Crores as on 31st March 2005 and has got total carried forward loss of 25.59 Crores at the end of A.Y 2006-2007, as rightly observed by the learned CIT [A], no motive of reduction tax liability can be assigned to the assessee for the change in the method of accounting of provision for liability. It is not in dispute that the assessee had no tax liability even in the subsequent year. Under the circumstances and even otherwise in the facts and circumstances of the case, it cannot be said that the learned ITAT has committed any error in deleting the disallowance made by the Assessing Officer. - Decided against revenue

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• 2017 (4) TMI 250
  Penalty u/s 271AAA - assessment pursuant to search - Held that:- On-money received was offered for taxation in the hands of the assessee. No doubt, sub-clause (ii) of section 271AAA postulates three conditions required to be fulfilled by the assessee in order to absolve herself from the rigours of penalty. This condition has been reproduced by the ld.CIT(A) in the impugned order extracted (supra). The AO did not dispute with regard to fulfillment of conditions under clause (i) and (iii) of sub-section (2). His area of grievance is that the assessee failed to fulfill the conditions mentioned in sub-clause (ii) that is manner of earning such income and also failed to substantiate the manner. A perusal of the statement of Shri Shailesh G. Patel who has made a disclosure would indicate that not only he disclosed the income, but also substantiated the manner of earning income by pointing out that it was on-money; it was received through account payee cheque. This deposition could not be refuted by the Revenue and the assessee does not deserve to be visited with penalty. The ld.CIT(A) has rightly appreciated the facts and rightly deleted the penalty. We do not see any reason to interfere in the order of the ld.CIT(A), hence, the appeal of the Revenue is dismissed.

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• 2017 (4) TMI 249
  Penalty u/s 271(1)(c) - bogus purchases - Held that:- As far as addition with respect to suppressed profit is concerned, it is an estimated addition which was significantly reduced by the Tribunal. This issue is a debatable issue as the addition made by the AO was deleted by the ld.CIT(A), and when the Tribunal restored these additions partly, then appeal of the assessee has been admitted by the Hon’ble High Court suggesting the question of law is involved. In such type of issue it cannot be said that the explanation submitted by the assessee in support of its addition as false, proving the fact that the assessee has concealed its income. Similarly, the assessee has given explanation with regard to the issue of bogus purchases. Its explanation was accepted by the ld.CIT(A) in the quantum appeal, but such conclusions of the ld.CIT(A) did not meet the approval of the Tribunal. But again, the Hon’ble High Court has admitted question on this aspect also. Therefore, it is also debatable issue. The ld.CIT(A) has considered both these aspects in the impugned order and deleted the penalty. After going through the order of the ld.CIT(A), we do not see any reason to interfere in it. Accordingly, the appeal of the Revenue is dismissed. - Decided in favour of assessee.

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• 2017 (4) TMI 248
  Non-taxable capital receipt arising from sale of agricultural land - Held that:- The relevant certificate from the competent authority has not been submitted by the assessee as required under law for determination of the distance of land in question from Municipality etc. . The ld. CIT(A) relied upon the certificate from Executive Engineer, Ahmadabad and of Sarpanch of the Village, who are not competent authority as prescribed under law. The assessee need to produce the said certificate from competent authority as prescribed under law for issue of such certificate. The certificate from Executive Engineer , Ahemdabad was introduced by the assessee for the first time before learned CIT(A) and also claim of benefit of notification no. 9447 issued by Central Government dated 06-01-1994 was claimed by the assesse for the first time before learned CIT(A). The learned CIT(A) did not forwarded these additional evidences and fresh claims to the AO for his examination and comments for rebuttal , as no Remand Report was called by learned CIT(A) from the AO. There is breach of Rule 46A(3) of Income-tax Rules, 1962 as no remand report was called by learned CIT(A) from AO and principles of natural justice is also breached as the Revenue has not be granted opportunity of being heard. Considering the factual matrix of the case, we are inclined to set aside this matter back to the file of the A.O. for de-novo determination of the issue on merits.

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• 2017 (4) TMI 247
  Disallowance of commission paid by the assessee - Held that:- In the case of Voltamp Transformer Pvt. Ltd. [1980 (10) TMI 35 - GUJARAT High Court] and CIT Vs. Dalmia Cement Ltd., (2001 (9) TMI 48 - DELHI High Court) we find that the assessee has filed confirmation. It has disclosed various details of commission recipients; it has disclosed sales made through such persons and also disclosed rate of commission. The assessee has submitted complete basic details. The ld.AO has re-appreciated these details, but he could only point out defects in the details. He disallowed the commission payment on the basis of general practice i.e. commission payment ranges in between 1% to 2% in this line of business. Such an issue will differ on case to case basis. The AO has not made reference to any other assesses. More so, when the assessee has established business, he might not be required to pay commission, but a new entity in the process of its establishment might have paid higher rate of commission. The ld.AO failed to give any specific defects. The reference to market rate of commission has no bearing to test the genuineness of the expenditure incurred by an assessee. The ld.CIT(A) has rightly appreciated the circumstances and rightly deleted. As far as salary expenses are concerned, the ld.AO was of the view that the assessee was not required 21 employees. Again we are of the view that this aspect ought to be left to the requirement of businessman. As far as outstanding salaries are concerned, the assessee has pointed out that on account of financial crunch, salary could not be paid in the first view monthly, and ultimately all arrears were cleared. This was not such a strong circumstance which can doubt the existence of employer-employee relationship between assessee and its staff. Therefore, we do not any merit in ground no.2 also. It is rejected. Disallowance of salary paid to the partner AO has disallowed the salary paid to two female partners on the ground that one of them is a simple graduate and she might not be having day-to-day knowledge of business. The ld.CIT(A) has deleted this disallowance by observing that one of the female partner was doing chemical business since 1999 and she had been filing income-tax return. Other lady partner has also B.Com. graduate. The AO has drawn inference without anything on record. On due consideration of the above facts and circumstances, we are of the view that the ld.CIT(A) has rightly deleted the disallowance. It is also pertinent to observe that salary to the partner is being regulated by the provisions of section 40(b) of the Income Tax Act. It is to be paid in accordance with the provision stipulated in the deed which should be in commensurate with the provisions of section 40(b) of the Income Tax Act. On such salary payment, provisions of section 40A(2) cannot be invoked. On due consideration all the facts, we do not find any merit in these grounds of appeals. They are dismissed.

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• 2017 (4) TMI 246
  Assessment u/s 153A - Deduction under section 80IB - Held that:- AO did not dispute with regard to fulfillment of other conditions contemplated under section 80IB of the Income Tax Act, 1961. His objections are very limited. A perusal of the assessee’s note would indicate that it has developed and built a housing project in the name of Ratna Jyoti Apartments. Total area of land used for development of this housing project was 22529 sq.meters i.e. 5.567 acres. It consists of two different plots viz. FP No.107, 108 & 109 of TPS No.2 admeasuring 15034 sq.meters i.e. 3.715 acre, and (ii) F.P.No.05 T.P. Scheme No.7, admeasuring 7495 sq.meters i.e. 1.852 acre. The assessee has constructed eight high rise towers on this area. On the first plot it has constructed tower bearing no.A, B, E, F, G & H, whereas on the plot bearing F.P.No.5 it has constructed towers C and D. The flats constructed in tower C & D were having more than 1500 sq.feet area. Therefore, these towers do not qualify the conditions for grant of deduction under section 80IB of the Act. As far as non-filing of the return within time limit provided in its notice under section 153A is concerned, the assessee has already filed regular return which was revised within time granted, and claim was made in connection with that return, and therefore this is not a valid reason assigned by the AO and this aspect has rightly been considered by the ld.CIT(A). Thus, out of four reasons assigned by the AO three are peripheral procedural reasons wherein the assessee has not committed any default which would statutorily prohibit the assessee for claiming such deduction. The last reasons remained to be dealt with is whether, if an assessee has violated conditions require to be fulfilled under section 80IB qua two towers then it would attract a disqualification for the remaining tower also. We find that as far construction raised by the assessee on TPS No.2, where it has raised six towers is concerned, it has not committed any irregularity or default. In the judgment replied by the ld.counsel for the assessee it has been recognized that if the assessee has completed the construction and fulfilled all the requirements for some of the units or towers in a housing project proportionate deduction would be granted to the assessee. No contrary decision was brought to our notice. Apart from the above, a perusal of site plan, photos of completed towers, their entrance would show that both plot were having more than 1 acre area which is the minimum requirement for development of housing project for claiming deduction under section 80IB(10). They can be treated as two independent project because independently they fulfill all requirement of section 80IB(10), therefore, we are of the view that the ld.CIT(A) has appreciated the facts in right perspective, and we do not find any error in the order of the ld.CIT(A). - Decided against revenue.

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• 2017 (4) TMI 245
  Denial of deduction u/s 80-IA (4) - Held that:- Deduction is allowable not only for development of a infrastructure facility, but is also allowable in case of operating and maintaining or developing, operating and maintaining an infrastructure facility. In the case before us, the Assessing Officer and the CIT(A) have held that the assessee has not created any new infrastructure facility but is only doing the operation on the existing leased infrastructure facility developed by GHIAL. Therefore, it is now necessary to see whether the Cargo facility being operated and maintained by the assessee is an 'infrastructure facility' within the meaning of section 80IA(4) of the Act. Having regard to the rival contentions and to the fact that the claim of deduction u/s 80IA(4) has been disallowed in the earlier years and the Tribunal has already considered and held that the assessee was eligible for such a deduction, we are of the opinion that the assessee’s appeal needs to be allowed. GHIAL has constructed the Cargo building as per the specification of the Menzies and Menzies has provided the facilities at the cargo building and while GHIAL has leased out the cargo terminal to the assessee, Menzies has leased the facilities to the assessee and it is the responsibility of the assessee to operate and maintain the cargo facility in accordance with the obligation of GHIAL to operate and maintain the facility by virtue of the concession granted by the Govt. of India. Each assessee is eligible to claim deduction u/s 80IA(4)(i) of the Act only in relation to the activity carried on by it and there cannot be any duplication of the claim. Therefore, we are of the opinion that the 'Cargo facility' operated and maintained by the assessee is infrastructure facility eligible for deduction u/s 80IA(4) of the Act. - Decided in favour of assessee

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• 2017 (4) TMI 244
  Reopening of assessment - disallowance u/s. 40(a)(ia) - true and full disclosure - Held that:- There was an assessment order u/s. 143(3) completed, after due verification of the return and AO in that order has disallowed various amounts. It shows that AO has examined the documents placed on record. The fact that a notice u/s. 154 was issued prior to reopening u/s. 147, belatedly after four years, itself indicate that the so called disallowance u/s. 40(a)(ia) is based on the evidence available on record. Therefore, it can be concluded that there is no failure on the part of assessee in furnishing necessary details. AO has resorted to proceedings u/s.147, as assessee objected to proceedings u/s. 154 which were initiated beyond four years period from the date of the order. Thus, on that preliminary ground itself, the reopening per se is not justified. - Decided in favour of assessee

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• 2017 (4) TMI 243
  Excess of gold found during the course of search which is over and above the accepted norms or quantity - unexpalined nvestment - Held that:- Hon’ble Gujarat High Court in the case of Commissioner of Income Tax Vs. Ratanlal Vyaparilal Jain [2010 (7) TMI 769 - Gujarat High Court] has also taken note of social customs and norms of Hindu families where the gold or diamond jewellary is usually gifted by close relatives at the time of functions such as marriages, birthdays etc. The findings of the CIT(A) that the affidavits of the assessee’s uncle and also father-in-law does not contain specific items of jewellary may not hold much water as the parties were not examined as to exact nature of gold items presented by them. The value of the excess of gold for which the security of cash was accepted was 22,10,000/-, which is actually 50% of the gold found and seized. If the permitted or accepted quantity of gold by the A.O is taken at 500 grams excess of gold found with the assessee at 487 grams is well within the norms prescribed by the CBDT. Therefore, we are of the opinion that it cannot be treated as unexplained investment. As regards cash found at the time of search, the assessee has filed the copies of the cash book of both the assessee and his father to demonstrate that both he and his father had sufficient cash balance on the date of search. However, this was not verified by the A.O or CIT(A). In view of the same, we deem it fit and proper to remand this issue to the file of the A.O only for verification of the availability of cash balance in the assessee’s and his father’s books of account and if it is found that the assessee and his father had such cash balance, then the addition shall not be made. Accordingly, the assessee’s appeal is partly allowed for statistical purposes.

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• 2017 (4) TMI 242
  Withholding Tax - TDS u/s 195 - Assessee in default - Held that:- When the royalty so credited by the assessee is not taxable at the time of credit of such amount to the account of payee, in the light of law laid down by Hon’ble Supreme Court in the case of GE Information Technology (2010 (9) TMI 7 - SUPREME COURT OF INDIA ), it does not give rise to any tax withholding obligations under section 195 (1) either. As regards the point of time when the payment is actually made, i.e. the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, the taxability in the hands of the recipient arises by @ 20% in terms of the provisions of article 13(2) above. However, even though the assessee is covered by the Indo Italian DTAA, the provisions of the Income Tax Act continue to apply to the extent such domestic law provisions are more beneficial to the assessee, as, even in the cases covered by the DTAAs and in terms of the provisions of Section 90(2), “the provisions of this (Income Tax) Act shall apply to the extent they are more beneficial to that assessee”. However, the provisions of Section 115A prescribed taxability of royalty in the hands of the non-resident @ 10%, and, therefore, adopting the more beneficial rate of 10%, the payer was required to deduct tax at source from the royalty payment so made by the assessee. That is precisely what the assessee has done. The payment was made by the assessee on 12.5.2011 and the tax so deducted was payable within 7 days from the end of May 2011, i.e. by 7th June 2011. The assessee has, however, deposited the said tax deducted at source on 20th June 2011. The delay in depositing the tax deducted at source was thus only for 12 days. To this limited extent, the Assessing Officer could have levied interest under section 201(1A) of the Act. However, the authorities below have upheld the tax liability under section 20(1A) by computing the period of delay with reference to the date on which the amount was credited to payee’s account. That is where the authorities below were in error and we vacate the action of the authorities below to that extent. It is only at the point of time when payment takes place, that the income embedded in payment becomes taxable under the DTAA as also under the domestic law, but then rate of tax prescribed in domestic law being lower, vis-à-vis the rate prescribed in the domestic law, the assessee has the option of adopting the lower rate under the domestic law. The adoption of lower rate under the domestic law, in our humble understanding, does not imply that nonresident recipient could have been saddled with tax liability at the point of accrual when, under the DTAAA provisions, the non-resident could not have been taxed, in respect of accrual of the said income, in India. In view of these discussions, as also for the detailed reasons set out above, and to the extent indicated above, we uphold the grievance of the assessee and direct the Assessing Officer to grant resultant relief.

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• 2017 (4) TMI 241
  Addition on account of deposits made in the bank account - unexplained deposits in the bank account - Held that:- Regarding the deposits of 46010/ found in the a/c no. 624401086077 with ICICI Bank the assessee failed to substantiate his claim that these were the loan amount received as no supporting concrete evidences were furnished. We have noticed that the total cash deposit of 19,37,590/-was consisted of 1,95,290/- in the bank a/c 624401086077 and 17,42,300/- in the bank a/c no. 058401500739 with ICICI respectively. Out of these cash deposit, the assessee has tried to explain the cash deposit of 12,64000/- by claiming that he along with other members have created an AOP called AYUSHI investment and two of the members of this AOP, Shri Sandipbhai H. Dobariya and Shri Virjibhai C. Gajera have brought capital of 4,10,000 and 8,54,000/- respectively. In this connection we have noticed that Shri Sandip H. Dobariya and Shri Virjibhai C. Gajera have produced only the copies of 7/12 of agricultural land before the assessing officer and failed to furnish any concrete evidences of earning agricultural income and also failed to prove that cash was deposited by them in the above mentioned bank account of the assessee. We have also perused the copies of statement recorded u/s 131 of these two persons in which they have revealed their ignorance about nature of business of the AOP and purpose for which the cash was given by them to the assessee. As perused the copy of deed of the AOP the agreement of AOP was made on the hundred rupees non- judicial stamp paper and nowhere date of stamp paper was indicated, the signing parties also had nowhere mentioned the date of signatures on this deed. We have further noticed that in the copy of the AOP deed it was mentioned that it was cratered on 31st of March 2008 and at serial number 3 of this deed it was stated that bank account number 058015739 in the ICICI bank will be used for its business purposes. In this connection we have gone through the copy of bank statement filed in the paper book submitted by the assessee and noticed that bank account number 058015739 with the ICICI bank was opened on 12th of May 2008 whereas the date of creation of the trust deed was stated to be 31.03.2008.These facts indicate that the creation of the trust deed as AOP was the afterthought steps taken by the assessee. We further find that the assessee failed to establish the genuineness of his claim about depositing of cash in the bank account through the above stated two persons. We have also considered the contention of the Ld. Counsel that benefit of peak balance to be provided to the assessee. In this connection we observed that the peak credit theory is based on recycling of funds implying systematic activity. In the case of the assessee, neither of the deposits nor their utilisation stands explained, therefore, we considered that this contention of the assessee is not maintainable. - Decided against assessee.

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• 2017 (4) TMI 240
  Disallowance made under section 40(a)(ia) - interest paid without deducting TDS - Held that:- there was no dispute that the assessee has obtained Form 15G from the persons to whom interest was paid/credited. Further, the ld. CIT(A) has observed that the Assessing Officer did not doubted the fact that the assessee obtained Form 15G before crediting/paying interest to the depositors. Since the Assessing Officer made the disallowance only on the ground that Form 15G/15H were not submitted to the ld. Commissioner in time, the ld. CIT(A) was of the opinion that only penalty proceedings can be initiated under section 272A(2)(f) of the Act and no disallowance can be made under section 40(a)(ia) of the Act as has been held by the Hyderabad Benches of the Tribunal in the case of Malineni Babulu (HUF) v. ITO [ 2015 (8) TMI 705 - ITAT HYDERABAD] Since the assessee has made the entire payment during the year itself and nothing is outstanding or yet to pay. CIT(A) has rightly deleted the disallowance made under section 40(a)(ia). See CIT v. Vector Shipping Services (P) Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] - Decided in favour of assessee

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• 2017 (4) TMI 239
  Disallowance under Section 14A - Held that:- Rule 8D has come into effect only from 24.03.2008. Therefore, in the case of the assessee for assessment year 2007-08, Rule 8D cannot be applied. 2% of the exempt income would suffice for disallowance under Section 14A of the Act. Therefore we hereby direct the Ld. AO to disallow 2% of the exempt income as the expenditure incurred for earning exempt income. Depreciation on building - Held that:- From the facts of the case it is apparent that the assessee had purchased the building on 31.03.2007. The property was registered on the very same day. Therefore, though the assessee might have taken possession of the property on 31.03.2007, there was no possibility for the building to be put to use on the same day. It is obvious that after purchase of the building some basic maintenance work would have been required before putting the asset to use. Therefore we do not find any merit in the arguments advanced by the Ld. AR. Accordingly this ground is decided against the assessee and the orders of the Revenue authorities are upheld on this issue. Applicability of the provisions of the Section 14A with respect to subsidiary companies (for the assessment years 2008-09 & 2010-11) - Held that:- Remit back the matter to the file of the Ld. AO to consider the issue afresh in the light of the above order of the Tribunal and pass appropriate order in accordance with merits and law. We also make it clear that for the investments made in mutual funds, provisions of Section 14A read with Rule 8D will be applicable since the assessee would incur some expenditure at least for the decision making process as to in which mutual fund the investment has to be made and at what point of time exit from such funds.

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• 2017 (4) TMI 238
  Pooja expenditure - Held that:- AO opined that the pooja expenses cannot be treated as business expenditure and could be only considered as personal expenditure. Therefore he disallowed the pooja expenses of 21,594/- and added to the income of the assessee. The Ld. CIT(A) also confirmed the addition because the assessee had not furnished any details with respect to pooja expenses in order to prove that it is not personal expenditure. We do not subscribe to this view of the Revenue authorities. In every business establishment it is customary to follow certain religious procedures in order to please the “Gods” for prosperity and development. Considering the nature and the turnover of the business, we are of the considered view that the amount spent by the assessee as pooja expenditure is quite meager and reasonable. Therefore, we hereby direct the Ld. AO to delete the addition made towards pooja expenditure. Invoking of Section 14A and Rule 8D - Held that:- We also make it clear that for the investments made in mutual funds, provisions of Section 14A read with Rule 8D will be applicable since the assessee would incur some expenditure at least for the decision making process as to in which mutual fund the investment has to be made and at what point of time exit from such funds. It is ordered accordingly.

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• 2017 (4) TMI 237
  Revision u/s 263 - disallowance u/s. 40(a)(ia) - Held that:- Assessee had given two separate categories of the expenses. Any prudent Assessing Officer would have been prodded to make further enquiries since a part of the expenses was claimed to be for the benefit of the employees and part of the expenses was claimed to be for corporate advertisement. Whether these expenses would fall in the category of corporate social responsibility, was an issue which should have been looked into by the Assessing Officer before completing the assessment. What he did was only to verify advertisement expenses and make a disallowance u/s. 40(a)(ia) of the Act for want of deduction of tax at source. In our opinion, not making enquiries which was required to be done on the face of the reply given by an assessee, was as good as not making any enquiry. It is trite law that failure to make any enquiry which is required to be done under law by the Assessing Officer in an assessment proceedings, would render the assessment order erroneous and prejudicial to the interests of Revenue. Coming to the question of interest expenditure, nothing has been asked by the Assessing Officer nor any reply given by the assessee during the original assessment, despite the fact that assessee did not show any secured loans or unsecured loans in its balance sheet for the two preceding years. Such circumstances also would clearly indicate that the claim of interest expenditure requires verification. Assessing Officer failed to do this also. Thus lack of enquiry is pregnant in the assessment order on the two aspects mentioned by Ld. PCIT. As held by Hon’ble Apex Court in the case of Toyota Motor Corporation (2008 (8) TMI 56 - SUPREME COURT ), a cryptic order given by the Assessing Officer would be erroneous and prejudicial to the interests of Revenue where the issues require clear reasonings for accepting the claims of the assessee - Decided against assessee.

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• 2017 (4) TMI 236
  Penalty levied u/s 271(1)(c) - addition u/s 68 - cash credits found in the hands of the partnership firm in the name of partner and others - Held that:- As noticed that the assessee’s only source of income is rental income and there is no charge that the assessee has suppressed its rental income. Further the year under consideration, being the first year of operation, the assessee could not have generated income to the extent of cash credits/capital credits offered by it and introduced the same in that form. Hence, in the facts and circumstances of the case discussed above, the assessment of cash credits in the first year of operation was due to legal fiction created in sec. 68 of the Act. Hence acceptance of the said assessment, in our view, would not lead to a case of concealing particulars of income or furnishing of inaccurate particulars of income. The impugned addition has been made due to legal fiction prescribed u/s 68 of the Act and there is no scope that the assessee could have earned income to the extent assessed by the partnership firm. We have also noticed that the question of assessing such cash credits in the hands of partnership firm during the first year of operation has got divergent views. Hence the entire addition itself becomes debatable one. It is well settled proposition of law that the penalty u/s 271(1)(c) cannot be levied on debatable issues. - Decided in favour of assessee

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• 2017 (4) TMI 235
  Disallowance of claim of Provision for warranty expenses - AO took the view that the amount provided by the assessee for warranty claims is excessive and disproportionate to the actual present obligation as a result of past events - CIT-A allowed claim - Held that:- FAA has examined the claim of the assessee by following the principles laid down in the case of Rotork Controls (India) Ltd (2009 (5) TMI 16 - SUPREME COURT OF INDIA ) and has further noticed that the assessee has spent a sum of 85,28,300/- in the succeeding years out of the warranty amount provided for during the instant year. The machinery sold by the assessee are imported second hand machines and hence they may require frequent attendance/repairs. Since the assessee has been declaring profits at a higher level year after year, the Ld CIT(A) has also observed that the creation of provision and reversal of the same are revenue neutral. In any case, a business man would provide for such warranty claims on estimated basis for possible claims only and it is not necessary that the provision so made should be fully spent. The actual expenditure would depend upon the warranty claims actually lodged by the customers, which may vary year after year. In the instant case, it is not the case of the AO that the assessee has provided for amount at an excessive figure in order to suppress the profits. Hence, in our considered view, the Ld CIT(A) has taken judicious view of the matter and the same does not call for any interference. - Decided against the revenue.

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• 2017 (4) TMI 234
  Validity of assessment u/s 153C - No satisfaction not found - lack of validity of jurisdiction assumed - Held that:- Recording of requisite satisfaction in the case of a searched party is a sine qua non for assuming jurisdiction for the issue of notice u/s 153C even if the AO of the searched person and the assessee are same. It is abundantly clear from the records in the case of the searched person that there is no requisite satisfaction granting the AO jurisdiction for issuing notice to the assessee u/s 153C of the I.T. Act. No satisfaction note whatsoever is found in the case of the searched person, namely, M/s Artefact Projects Ltd. In absence of any satisfaction note in the case of M/s Artefact Projects Ltd. that any seized material belonging to the assessee has been found which is incriminating in nature which is to be handed over to the AO of the assessee, the jurisdiction assumed in this case is illegal and the same deserves to be quashed. Accordingly in the background of the aforesaid discussion and precedent, in our considered opinion, the assessee deserve to succeed on this account and the assessments are liable to be quashed on account of lack of validity of jurisdiction. Accordingly we set aside the orders of the learned CIT(Appeals) on this aspect of jurisdiction and quash the assessments by holding that requisite satisfaction was not recorded before issue of notice u/s 153C. - Decided in favour of assessee

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• 2017 (4) TMI 233
  Reopening of assessment - "reason to believe" - sale consideration of property shown lesser than the valuation considered for registration purposes - Held that:- The provisions of the section 50C is applicable. As per Explanation 2 to section 147 it is very clear that due to disclose lower sale consideration by the assessee, the income chargeable to tax had escaped assessment. The assessee has not produced anything before the Commissioner of Income-tax (Appeals) to show as to how this fact was fully and truly disclosed before the assessing authority and that there was not failure on the part of the assessee, especially when provisions of the section 50C is applicable. Hence, the Commissioner of Income-tax (Appeals) considered the action of the Assessing Officer is fully covered by the provisions of Explanation 1 to section 147. It is possible that with due diligence the Assessing Officer would have ascertained this fact at the time of original assessment also, but in view of the Explanation 1 it does not mean that there was no default on the part of the assessee. Hence, reopening under section 147 is held to be valid. The assessee has tried to take shelter under the exception provided by the above stated proviso where an assessment under sub-section (3) of section 143 has been completed, no action after the expiry of four years from the end of the assessment year can be taken. But as stated above, when the assessee has not disclosed fully and truly the facts necessary for the assessment, this proviso will not come to its rescue. Consequently, we hold that the entire reassessment proceeding in this case is valid and therefore, the action of the Assessing Officer is upheld. The assessee fails on this legal issue. Invoking the provisions of the section 50C - Held that:- The main grievance of assessee is that the assessee made a request the Assessing Officer to refer the valuation issue to the valuation cell under section 50C(2) of the Act, which was not considered by the Assessing Officer. When this was raised before the learned Commissioner of Income-tax (Appeals), he also rejected it. In our opinion, we find merit in the argument of the learned authorised representative. Before considering valuation under section 50C(1) of the Act, if the assessee requests for reference to Departmental Valuation Officer (DVO), the Assessing Officer shall refer the matter to the Departmental Valuation Officer and he cannot overlook it. Hence, we direct the Assessing Officer to refer the matter to the DVO and thereafter frame the assessment in accordance with law. This ground of assessee is allowed.

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• 2017 (4) TMI 232
  Addition u/s 14A - Held that:- We direct the Assessing Officer to recalculate the disallowance as per rule 8D as per the guidelines given as above in the case of Transport Corporation of India and calculate the disallowance of expenditure under rule 8D(2)(iii) taking the average investment from which the exempt income is received.

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• 2017 (4) TMI 231
  Unexplained cash credit under section 68 - treatment of advances received from the customers - Held that:- There is merit in the contention of the assessee that the assessee cannot enforce its customers to furnish their permanent account numbers. However, if advances have been adjusted against the subsequent sales, it would be reasonable to accept the genuineness of the advances since they have been received from the regular customers who were not related parties of the assessee. Accordingly we direct the Assessing Officer to delete the addition, if the advances have been adjusted against the subsequent sales. For that purpose, the assessee is directed to furnish a chart showing adjustment of deposits against the subsequent sales. We notice from the orders passed for the assessment years 2006-07 and 2008- 09, the Assessing Officer has sustained a portion of advances, presumably on the reasoning that they have not been adjusted against the subsequent sales. We notice that the assessee had shown before the Dispute Resolution Panel that a sum of 10 lakhs received as advance was returned back and hence the Dispute Resolution Panel has directed the Assessing Officer to delete the same. Hence, in case the advances have not been adjusted against the subsequent sales, we are of the view that the assessee should be provided with an opportunity to explain the reasons, which shall be examined by the Assessing Officer in accordance with the law. Transfer pricing adjustment made on payment of royalty - Held that:- The payment of royalty by the assessee to its associated enterprises, Dow, Netherlands at five per cent. on domestic sales and eight per cent. on export sales is liable to be considered as at an arm's length rate in view of Circular No. 5 dated July 21, 2003 (supra). Therefore, the addition made by the Assessing Officer on this count is unsustainable. Disallowance of leave encashment under section 43B - Held that:- Supreme Court, in the case of Exide Industries Ltd., (2008 (9) TMI 921 - SUPREME COURT ) has stayed the decision rendered by the honourable Calcutta High Court [2007 (6) TMI 175 - CALCUTTA High Court ] and further held that the disallowance should be made in terms of section 43B of the Act, during the pendency of appeal, as if section 43B(f) is in the statute book. Hence the provision for leave encashment is required to be disallowed in terms of section 43B(f) of the Act, if it has not been paid on or before the due date prescribed for furnished return of income under section 139(1) of the Act. However, since the decision of the honourable Supreme Court is pending, we set aside this issue to the file of the Assessing Officer with the direction to modify the addition, if required, in accordance with the decision that shall be rendered by the honourable Supreme Court. Disallowance made under section 43B - Held that:- It is settled proposition of law that the Assessing Officer is required to compute the correct total income and further deduction which is legally allowable to the assessee cannot also be denied. The honourable Bombay High Court in the case of CIT v. Pruthvi Brokers and Shareholders P. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT ] has held that the appellate authorities are entitled to consider new claim made subsequent to filing of return. Accordingly, we admit the additional claim put forth by the assessee and direct the Assessing Officer to consider the same in accordance with the provisions of section 43B of the Act. Disallowance of sample expenses - Held that:- We notice that the assessee did not answer the specific queries raised by the Assessing Officer. Instead the assessee has proceeded to answer the queries under the impression that the Assessing Officer is questioning about its allowability under section 37(1) of the Act. The submissions made before the learned Commissioner of Income-tax (Appeals) shows that the assessee was under wrong impression. We notice that the Assessing Officer has also observed that the assessee has failed to produce evidences. Since the assessee did not appreciate the specific queries raised by the Assessing Officer, in our view, the assessee should be provided with an opportunity to prove the claim. Accordingly we set aside the order passed by the learned Commissioner of Income-tax (Appeals) on this issue and restore this matter to the file of the Assessing Officer for examining the same afresh. The assessee is directed to answer the specific queries raised by the Assessing Officer and also produce other information and explanations that may be called for by the Assessing Officer to substantiate the claim. Claim of set off of brought forward unabsorbed depreciation - Held that:- Since this issue requires verification at the end of the Assessing Officer, we restore the same to his file with the direction to compute and allow the correct amount of brought forward unabsorbed depreciation. Disallowance of loss arising on revaluation of debtors and creditors balances on the basis of foreign exchange fluctuations - Held that:- The impugned loss cannot be treated as notional/speculation loss and the same is allowable as per the decision rendered by the honourable Supreme Court in the case of CIT v. Woodward Governor India P. Ltd. [2009 (4) TMI 4 - SUPREME COURT ] Disallowance of bad debts claim - Held that:- Departmental representative did not dispute the fact that the amount of 9.62 crores represents sales made by the assessee in the earlier years, meaning thereby, the condition prescribed under section 36(2) stands satisfied. There is also no dispute that the assessee has actually written off the debts as bad in its books of account. Hence, we are of the view that the learned Commissioner of Income-tax (Appeals) was justified in allowing the claim of the assessee by following the decision rendered by the honourable Supreme Court in the case of T. R. F. Ltd. [2010 (2) TMI 211 - SUPREME COURT ] Appeal of the assessee is treated as allowed and the appeal of the Revenue is dismissed.

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• Customs

• 2017 (4) TMI 204
  Valuation - royalty - loading of invoice value - goods imported from related foreign supplier - Held that: - It is to be noted that only those royalty license fees are required to be added to the invoices wherein the payments are made as a condition of the sale of goods being imported and also subject to the condition that such royalty is included in the price actually paid or payable - the appellant is required to pay the license fee of 0.5 % of the appellant’s sale revenue from products - Since condition of Rule 10(1)(C) of the Valuation Rules is clearly not satisfied, we find absolutely no justification for such loading of invoice value by the royalty amount. The consultancy charges are not to be included to the invoice values for import of the goods as product consultancy charge which has got nothing to do with the imported goods. Appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 203
  Imposition of penalty u/s 114 of the CA - quantum of redemption fine and penalty - illegal export of drug formulations - N/N. 35/2008-Cus (NT) dt.02.04.2008 - Held that: - Section 114 of the Act, 1962, provides penalty for attempt to export goods improperly etc., Clause (iii) of Section 114 provides that any person, who, in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation u/s 113 or abates the doing or omission of such an act, shall be liable to a penalty not exceeding the value of the goods as declared by the exporter or the value as determined under this Act, whichever is greater - the imposition of penalty u/s 114 of the Act, 1962 is justified - the quantum of redemption fine and penalty are excessive, redemption fine reduced to 10,00,000/- and penalty reduced to 5,00,000/- each - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 202
  Challenge to the issuance of Show Cause notice - Validity of public notices - Held that: - The petitioners have narrated the nature of their activities. They have also highlighted the role if they play at the port. They clarify that the Act applies only to those, who import the goods and desire to clear them either for export or for home consumption. If the petitioners contend that their business, their activities would not bring them within the purview of the Act of 1962, then, we do not see how by mere issuance of the SCN and addressed to them are they precluded from raising this challenge. Even if they are summoned, they can submit a written defence or, as styled in the SCN, a written statement of defence raising therein all contentions and without prejudice to the same, appear before the adjudicating authority. An opportunity of personal hearing will be given to the petitioners, at which, they or their representative can specifically argue these points and raise the above contentions. Once these clarifications have come from the authorities themselves and the learned Additional Solicitor General assures the court that no recoveries will be effected pending adjudication, then, all the more, we need not entertain these petitions. Petition allowed by way of remand.

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• 2017 (4) TMI 201
  Validity of notification dated 30-9-2016 - the Designated Authority which initiates investigation and did so in the present case through the impugned notification, is required first to determine the relevant factors, having regard to the opposition or support, as the case may be, and subject to the conditions outlined in the proviso to sub-rule (3)- Held that: - learned senior counsel could not show any provision in the rules which compels the Designated Authority to give a preliminary ruling as to the validity of the objections raised. In the circumstances, it would not be appropriate for this Court to intervene and interdict with the impugned notifications - petition dismissed - decided against petitioner.

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• 2017 (4) TMI 200
  Classification of imported item - centrifugal pumps - benefit of N/N. 10/2003-C.E., dated 1-3-2003 - whether the respondent herein is eligible for the benefit of reduced rate of duty on the goods imported by them which they had classified under Chapter Heading No. 8413 91 90? - Held that: - the goods which were imported by the respondent i.e. centrifugal pumps, and the benefit of N/N. 10/2003-C.E., dated 1-3-2003 at serial No. 35, specifically states that reduced rate of CVD is applicable under the said notification for the goods falling under Chapter sub-heading 8413.11, 8413.12, 8413.13, 8413.14, 8413.20 or 8413.91. There is no dispute as to the fact that respondent had classified the said products which are imported, under sub-heading 8413.90 aligning the same with eight digits Central Excise Tariff - benefit of notification extended - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 199
  Valuation - it was alleged that value of goods exceeded 50% of market value - Held that: - the entire case is based on the survey conducted with the help of the engineer of a textile company. The engineer has later vide his letter dated 13-9-2005 communicated that he is not a Government approved valuer and was not an authority on the subject. Since the entire basis of the case that the market value of the goods was found to be 10/- per piece, itself has been put in suspicion, the case of Revenue cannot succeed. There is no independent evidence of the market value of the goods and in absence of the same, the impugned order cannot be sustained - in absence of a regular creditable inquiry into market value of goods, the charges of overvaluation cannot be sustained - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 198
  Benefit of N/N. 25/99-Cus. Sr. No. 143 and sr. no. 87 - denial of sr. 143 on the ground that Description of the goods are not matching serial No. 143 of the said notification - denial of sr. 87 on the ground that goods are not used for manufacturing of Lead tabs for electro­lytic capacitors and is used in Plastic Film capacitors - Held that: - the above observation is misplaced in so far as the said Notification is not the end use based notification. Anybody can import the said goods so long as they confirmed to the description given in Sr. No. 87 of List A of the Notification - Sr. No. 143 of List A squarely covers the product and the use. Sr. No. 143 specifically covers the items used in the manufacture of plastic film capacitors, which the appellants manufacture. The only reason, the benefit of Sr. No. 143 has been denied is that the description of the goods does not say that the said product is of non-alloy steel - in absence of any evidence to show that the SPCS was of alloy steel variety, the benefit of Sr. No. 143 of List A of N/N. 25/99-Cus. cannot be denied - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 197
  Valuation - includibility - lump sum amount of 4,00,000/- paid by the appellant to a foreign entity as technical know-how fees - Held that: - Since it has been held by Commissioner (Appeals) that the equipment and machine directly purchased by the licensee are not connected with the technical know-how purchased by the appellant, the question of adding technical know-how fees to the said imports does not arise - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 196
  Classification of imported oil - whether importation is furnace oil or waste oil? - Held that: - The test report which is annexed to the submission made today was analysed by Dy. Chief Chemist (Jt. Director). Dy. Chief Chemist has clearly recorded that the sample which was drawn does not conform to the requirement of fuel oil (furnace oil) as given in the literature available with them, and hence it cannot be termed as furnace oil. In the absence of any categorical finding of the Dy. Chief Chemist that the product is furnace oil, the non-confirming oil has to be treated as a waste oil - the goods imported are waste oil and needs to be absolutely confiscated - the penalty of Rs. 10 lakhs seems to be excessive considering the fact that the entire issue is misunderstanding on merits as well as on procedures. In view of the same, interest of justice will be met if the penalty is reduced from 10,00,000/- to 3,00,000/- - appeal dismissed - decided partly in favor of appellant as regards reduction of penalty.

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• Corporate Laws

• 2017 (4) TMI 193
  Director of a company removed from the Board of Directors before expiry of his term - Held that:- Unfortunately, there is nothing on record to show that any of the provisions so incorporated in Section 169 of the Companies Act, 2013 was followed before removing the petitioners from the Board of Directors of the Company which clearly shows that the petitioners were removed from the Board of Directors on 19.09.2014 in total violation of dictum, contained in Section 169 of the Companies Act, 2013. Therefore, there cannot be any escape from the conclusion that petitioner Nos.l & 2 were removed from the post of directorship of the company violating the requirement of law. It may be stated here that the removal of the Director in violation of mandatory provisions of Section 169 of the Companies Act, 2013 has repeatedly been held to be an act of mismanagement and, therefore, petitioners are entitled to reliefs, claimed on this count. The petitioners have clearly made out the claim that petitioner Nos.l & 2 were removed from the Board of Directors of the company quite illegally and such illegal removal has repeatedly been held to be an act of mismanagement and, therefore, the petitioners are entitled to statutory relief. Resultantly, the resolution dated 19.09.2014 is set aside and consequently, the petitioner Nos.l & 2 stand restored as Directors of the respondent No.1 company. Since the Board Meeting held on 19.09.2014 under which the petitioners stood removed from the Board of Directors is already held to be illegal, therefore, all subsequent Board Meetings and action(s), if any, taken thereunder, save and except, the allotment of equity shares to the respondent Nos. 4 & 5 made on 26.09.2014, in pursuance to the resolution dated 13.09.2014, are also held to be void and illegal and are accordingly quashed.

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• Service Tax

• 2017 (4) TMI 230
  Challenge to the show cause notice - Cash discount - quantity discount - whether would come within ambit of service - Held that: - the SCN, though referring to the earlier adjudication, its acceptance, has further alleged that after the law was amended, it was necessary to probe and investigate the matter. The investigation and the statements, which were recorded during the course thereof, revealed, as provided in para 7 of the SCN and in great details (question answer-wise), that the various incentives were received on account of satisfactory services in various fields, namely, puchase/delivery of goods, namely, vehicles/spare parts, sale of the goods, the servicing of the vehicle parts and customer satisfaction etc. - this matter does not come within the exceptions carved out and noticed above. The show cause notice will have to be adjudicated independent of the version the Revenue projects and places before this court. There is a distinct obligation in the adjudication officer. In these circumstances, by clarifying that the adjudication shall proceed without in any manner being influenced by the stand of the Revenue reflected in the affidavit in reply so also on its own merits and in accordance with law, that all contentions, including those in this writ petition can be raised, we dispose of the writ petition - petition disposed off.

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• 2017 (4) TMI 229
  Refund claim - recovery - Held that: - appellants have been granted letter of approval for setting up a SEZ unit. It is also not disputed that the services were received for the purpose of SEZ unit. In the judgments of COMMISSIONER OF SERVICE TAX Versus ZYDUS TECHNOLOGIES LTD. [2014 (5) TMI 100 - GUJARAT HIGH COURT], the issue whether the assessee is eligible for refund of service tax on services used prior to commencement of commercial production has been analyzed and held in favor of assessee - the assessee is eligible for refund. The impugned order upholding the demand and interest is set aside - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 228
  Refund claim - denial on the ground that the appellants did not produce Bank Realisation Certificate (BRC) in terms of Appendix 22 (A) as prescribed by the Directorate General of Foreign Trade and also that they did not furnish the SOFTEX returns from the STPI authorities as per the Foreign Exchange Management Act, 1999 - Held that: - The appellant while filing the refund claim, has submitted documents alongwith covering letter dt. 29.3.2013. It is stated in this covering letter that they have furnished the Bank Realisation Certificate - The appellants have already produced the BRC as well as FIRC which is evident from their covering letter, the rejection of refund claim on the ground that the appellant has not produced BRC in terms of Appendix 22A is unsustainable. The second ground for rejection of the refund is that the appellant has not produced SOFTEX returns from STPI authorities. Again, the said document as per Foreign Exchange Management (Export of Goods & Services) Regulations, 2015, shows that it relates with export of goods and software and not with regard to export of services - The above regulations shows that the insistence to furnish SOFTEX returns from STPI authorities is not as per law laid in the relevant field. The refund claim has been wrongly rejected - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 227
  Construction of Complex Services - demand - The appellant is contended that the flats constructed by the appellants as works contract and is liable to pay service tax @ 2% amount received from Haryana Housing Board. It is a contention of the appellant is that for period prior to 01.06.2006-2007, the appellant is not liable to pay service tax - Held that: - there is composite contract which is in nature of work contract was awarded to the appellant on 13.06.2006, therefore, for the period prior to 01.06.2007, the service tax cannot be levied on the amount received by the appellant prior to 01.06.2007 - for the period post 01.06.2007, the appellant is liable to pay service tax. As per N/N. 32/2007 ST dt. 22.05.2007, the appellant is at the liberty to pay service tax @ 2% of the total receipt or to pay service tax as per work contract, the appellant is opted to pay @2% at the amount received - Further, as appellant has not received any amount towards service tax from Haryana Housing Board; therefore, the receipt amount is to be taken as cum service tax and benefit of cum service tax is to be given to the appellant. The matter is remanded back to the Adjudicating Authority after setting aside the impugned order to re-quantify the demand as discussed above after deciding the issue of extended period of limitation - appeal allowed by way of remand.

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• 2017 (4) TMI 226
  Recovery of service tax - works contract - the case of appellant is that the Department has wrongly confirmed the demand of service tax on works contract service when they were rendering services of Construction of Residential Complex which is under the provisions of Section 65 (105)(zzzh) of the FA, 1994 - Held that: - The appellants were rendering construction of complex service as they were designing, planning, developing and clearing site on their own land for construction activities for buyers/clients and were not doing any execution of works contract and elements of definition of works contract , therefore, are not found present - paragraph 3 of C.B.E.C. Circular No. 108/2/2009-S.T. dated 29.1.2009 says that the persons who are providing services of construction of residential complex in the form of designing, planning, developing and so on will not be subject to service tax as such services would fall under the exclusion provided under definition of residential complex - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 225
  Delayed payment of tax - reverse charge - whether a notice u/s 73(1) of FA, can demand interest or, for that matter, whether a penalty can be imposed for non-payment of interest? - Held that: - The inclusions and exclusions with particular reference to the transactions of associate enterprise for computation of the tax liability is the intention of the valuation section. It does not purport or pretend to determine the point in time when tax becomes liable. That is envisaged elsewhere but, not having been invoked in the show cause notice, is not relevant in this proceeding. Consequently, the finding advanced in the impugned order to fix the moment of taxability by reference to the quantification provision does not have to be examined further - appeal allowed - decided in favor of assessee.

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• 2017 (4) TMI 209
  CENVAT credit - duty paying documents - whether Cenvat credit may be taken by the appellant on the basis of the debit notes received by them from the service providers? - Held that: - Cenvat credit should not be denied simply on the basis that they are debit notes and are not documents specified under Rule 9(1) of the CCR, 2004 - as long as such debit notes contained all requisite information as prescribed under Rule 9(1), these should be considered on par with invoices and, hence, credit cannot be denied - in the present case, the debit notes contained all necessary details, the credit is thus allowed - appeal allowed - decided in favor of assessee.

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• Central Excise

• 2017 (4) TMI 224
  Natural justice - valuation - salvaged Diamond - The department proposed to include at 100% of the value of the diamonds instead of 40% in the assessable value of the newly manufactured diamonds, drilling bits - Held that: - appellant have submitted all the documents from which it can be ascertained that appellant have submitted value of the salvage diamonds because it is contract between buyer and the appellant that how much value should be considered for the salvaged diamonds. From these documents, prima facie appears that under any circumstances the 100% value of the new diamonds cannot be taken. However, adjudicating authority as well as Commissioner (Appeals) have gravely violated the principle of natural justice by not considering these documents and not properly followed the direction given by the Tribunal in the earlier order. Therefore in our view matter needs to be reconsidered - appeal allowed by way of remand.

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• 2017 (4) TMI 223
  Entitlement of interest - the date from which the petitioners would be entitled to interest on delayed payment of rebate - whether the liability of the revenue to pay interest under section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund or on the expiry of the period from the date on which the order of refund is made - Held that: - the issue is no longer res integra and stands decided by the Supreme Court in the case of Ranbaxy Laboratories Ltd. v. Union of India [2011 (10) TMI 16 - Supreme Court of India] wherein, the court has held that liability of the revenue to pay interest u/s 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund u/s 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. . The respondent authorities are, therefore, not justified in refusing to grant interest on the rebate claims made by the petitioners in accordance with law laid down by the Supreme Court in Ranbaxy Laboratories Ltd. v. Union of India and hence, the petitions deserve to be allowed in terms of the relief prayed for by the petitioners. Petition allowed - decided in favor of petitioner.

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• 2017 (4) TMI 222
  Maintainability of appeal - time bar - Held that: - While entertainment of appeal beyond the period of limitation can’t be allowed, the key question is the date of knowledge of the assessee. We find from the averments in ground A(2) of the appeal filed before the CESTAT that the order-in-original was never actually received by the assessee although the same may have been delivered to the security personnel, posted at the office gate - What is important to notice here is that neither the 1st Appellate Authority nor the CESTAT had considered the merit of the appeal and both were dismissed by considering it to be time-barred. Bearing in mind the statement made in ground A(2) of the memo of appeal, we hold that computation of limitation period made by the 1st Appellate Authority was erroneous - matter remanded to Commissioner (Appeals), for his decision on merit - appeal allowed by way of remand.

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• 2017 (4) TMI 221
  Valuation - raw material charges - cylinder charges - amount recovered by way of debit notes - inclusion of raw material charges and cylinder charges in the assessable value - appellant's case is that they were required under law to add only that proportion of the cylinder cost, as was attributable to the actual production, and not the total cost of the cylinders - Held that: - the buyer of the printed material is not supplying the cylinders to the appellant free of cost. It is the appellant who s purchasing the cylinders. In case the total quantity purchased by the buyer is later reduced by buyer for certain reasons, the balance cost of cylinder is being recovered by the appellant from the buyer as damages. Thus, it is not the case of the buyer supplying cylinders free of cost to the appellant but it is the case of appellant buying the cylinders themselves and recovering part of the cost of cylinders from the buyer as damages. In these circumstances, Rule 6 of the Central Excise Valuation Rules has no application - There is no denying of this fact that this extra amount has been recovered from the buyer and the same is in respect of the goods manufactured and supplied by the appellant - the amount recovered from the buyer by the appellant is in the nature of liquidated damages. Thus, the decisions of the Tribunal in the case of Inox Air Products Ltd.[2000 (12) TMI 184 - CEGAT, MUMBAI] is squarely applicable to the instant case - demand is set-aside. Appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 220
  Refund claim in cash - time limitation - Held that: - the cash refund of accumulated Cenvat Credit for the quarter April 2007 June 2007 was filed by the appellant on 30.6.2008; also, it is not in dispute that if the date of export is considered as the relevant date then the refund application would be hit by limitation - appeal dismissed - decided in favor of appellant.

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• 2017 (4) TMI 219
  100% EOU - diversion of duty free goods in the domestic market without payment of excise duty, and reflected such clearances against fake Advance Licence/Advance Release Order, on paper only, so as to fulfil their export obligation - whether charge of confiscation and penalty sustainable, when the goods are not available for confiscation - Held that: - as the goods were not available for confiscation, as the goods were already diverted/permitted to be warehoused without payment of duty, on furnishing the bond and the undertaking and thereafter, the respondent-Unit clandestinely and illicitly diverted the goods to the open market, the goods which otherwise were liable to be confiscated, in lieu of confiscation, redemption fine was imposable - the matter needs to be remanded to the Adjudicating Authority to ascertain the quantum of fine - appeal allowed by way of remand.

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• 2017 (4) TMI 218
  Benefit of N/N. 29/2004-CE and N/N. 30/2004-CE both dated 09.07.2004 - denial on the ground that respondent failed to maintain separate records - Held that: - the issue is no more res integra and covered by the decision of the Hon’ble Gujarat High Court in the case of C.C.E. vs. Ashima Dyecot Limited [2008 (9) TMI 87 - HIGH COURT GUJARAT], where it was held that reversal of credit amounts to non-taking of credit on the inputs. Hence, the benefit has to be given of the notification granting exemption/rate of duty on the final products - benefit allowed - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 217
  Levy of interest - Whether interest on the amount of CENVAT credit availed but not utilized is recoverable or otherwise? - Rule 14 of the CCR, 2004 - Held that: - I do not find merit in the contentions raised in the respective appeals that mere availment of CENVAT credit without its utilisation of the same will not attract interest at appropriate rate under Rule 14 of Cenvat Credit Rules, 2004 as was in force during the relevant time. However, as far as recovery of interest is concerned for invoking extended period of limitation, the principle laid down in this regard including the judgment of Hon’ble High Court in the case of Hindustan Insecticides Ltd. vs. C.C.E., LTU [2013 (8) TMI 225 - DELHI HIGH COURT] will be applicable, where it was held that Payment of interest is to be made under Section 11A and, therefore, the period of limitation prescribed therein would equally apply as has been held by the Delhi High Court in the case of Kwality Ice Cream Company [2012 (1) TMI 88 - Delhi High Court] and Gujarat High Court in Gujarat Narmada Fertilizers Company Limited [2012 (4) TMI 309 - GUJARAT HIGH COURT] - appeals are remanded to the adjudicating authority for the limited purpose of verification of the fact whether extended period of limitation for recovery of interest is applicable or otherwise - appeal allowed by way of remand.

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• 2017 (4) TMI 216
  SSI exemption - valuation - whether for the purpose of SSI exemption under N/N. 8/99-CE dated 28-2-1999 value of goods cleared under exemption N/N. 5/99-CE has to be included in the threshold limit of aggregate value provided in exemption Notification No. 8/99-CE? Held that: - it is clear that value of only those clearances shall not be taken into account for the purpose determining aggregate value of clearances for home consumption, which are other than exemption based on quantity on value of clearances. As per N/N. 5/99-CE under Sr. No. 70 it can be seen that exemption is based on value of clearances therefore the goods cleared under N/N. 5/99-CE cannot be excluded for determining aggregate value of clearances of home consumption in terms of N/N. 8/99-CE - appeal dismissed - decided against appellant.

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• 2017 (4) TMI 215
  Valuation - Job-work - short payment of duty - The case of the department is that value of such goods should have been determined by cost construction method, the appellant suppressed the fact about increase in cost of raw material. Accordingly correct assessable value consequent upon increase in raw material cost was not declared - demand - Held that: - appellant has adopted valuation in terms of N/N. 27/92-CE(NT) i.e. sale price of the goods manufactured on the job work basis at which the goods is sold by the principle manufacturer i.e. M/s. TISCO. In this case the said price is in conformity to Section 4(i)(a) therefore value u/s 4(i)(a) cannot be influenced by any other factor. The proposal of the department to add differential cost of raw material is only permissible if the appellant adopt the valuation as per principle laid down in case of Ujagar Print, which is not the case here. Therefore addition of any amount in the present case differential cost of raw material is not permissible - Appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 214
  Time limitation - Section 11A - CENVAT credit - freight for outward transportation of goods from the factory gate to premises of ultimate customers - Held that: - It is clear from the definition of relevant date that the period of one year has to be reckoned from the date of filing of monthly return or the last date for filing of such return. It is further specified in Rule 12(1) of the CER, 2002 that the monthly return has to be filed within 10th of the following month. Consequently, the SCN covering the demand of the earliest month in the present dispute i.e. month of May, 2012 can be up to 10th June, 2013. In the present case, the SCN issued on 23-5-2013 and hence it is within time - appeal dismissed - decided against assessee.

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• 2017 (4) TMI 213
  Benefit of N/N. 10/97-C.E., dated 1-3-1997 - the appellant manufactured certain goods and supplied the same to M/s. Solid State Physics Laboratory, Delhi, which is working under Defense Research and Development Organization - denial of notification on the ground that the goods cleared by the appellant were not specified in the said notification - Held that: - The notification is applicable for Apparatus and it requires a certificate by DRDO to the effect that the goods are required for such purpose. We find that all the requirements of the notification are fulfilled. The ledger also indicates that the Excise duty component has not been received by the manufacturer - benefit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 212
  SSI exemption - benefit of N/N. 8/2003-C.E., dated 1-3-2003 - dummy units - it is the case of Revenue that Appellants 2 to 4 are basically front companies floated by Appellant No. 1 in order to avail small scale unit exemption - Held that: - apart from filing documents of incorporation the appellants themselves have not submitted any documentary evidence to controvert the factual finding as recorded by the lower authorities. While the bottling units involved in the earlier proceedings were different, the manufacturers of gas (Appellant No. 1) is same in both the proceedings. Hence, we find it is not totally out of place to draw inference from earlier findings involving same set of facts as well as Appellant No. 1 - appeal dismissed - decided against appellant.

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• 2017 (4) TMI 211
  Taxability - bulk drug 4 Hydroxy 7 Chloroqununoline - It is the case of the Revenue that 4 Hydroxy 7 Chloroqununoline emerging as intermediate product has distinct identity and marketability and since the final product is exempt, this intermediate product should suffer duty in the absence of any exemption - N/N. 6/2003-C.E. - Held that: - during the material time the subject goods which are admittedly used captively by the Respondent were covered for exemption under the above-mentioned Notification - As such we find the Respondent non-liability on Central Excise duty as held by the impugned order is correct - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 210
  100% EOU - benefit of N/N. 23/2003-C.E., dated 31-3-2003 - benefit of drawback on the duty paid on the indigenously procured inputs - Held that: - There is nothing on record to show that the intended benefit was sought to be misused by the respondent by devising colourable methods - during the period 1-7-2007 to 16-5-2008 when the DTA clearances were made by the respondent, they had not availed any benefit of deemed export, on the raw materials used. Thus, during the said period, they were eligible for the benefit in terms of Sl. No. 3 of the N/N. 23/2003-C.E - benefit allowed - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 208
  Question of fact - whether the appellant is manufacturing ceramic tiles or not? - Held that: - the appellants are manufacturing the bricks for construction purpose which exempted under N/N. 5/2006-C.E., dated 1-3-2006 - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 207
  Whether the appellant during the relevant period, being a 100% Export Oriented Unit could have cleared items like scrap into DTA without obtaining permission and without payment of appropriate duty payable thereon? - Held that: - if the claim of the appellant that old machineries which were dismantled and cleared as scrap, were those machineries on which credit as capital goods were not utilised, nothing survives which could enable the department to demand Central Excise duty even if it is a fact that the said scrap was cleared after the appellant being granted status of EOU - since the scrap which has been cleared are in the form of old and used drums and claimed to have been received prior to appellant getting the status of EOU, in the facts of this case, demand of duty on the appellant seems to unwarranted - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 206
  CENVAT credit - CTD bars, beams, M.S. angles, plates, sheets, etc - denial on the ground that they are neither inputs nor capital goods so as to become eligible for credit - Held that: - The lower authorities categorically recorded that various items like Kiln cooler, material handling/conveyor system are all specifically classifiable as machinery falling under Chapter Heading 84, the various items on which credit has been availed are directly used for fabrication or manufacture of various capital goods. The nature of such usage and emergence of various final product have been explained by the lower authorities in detail - the allegation in show cause notice is very vague and without any support - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 205
  Manufacture - Job-work - captive consumption - Demand of duty - the case of appellant is that by any stretch of imagination, the main appellant cannot be considered as a manufacturer of these item - Held that: - the appellant had supplied mild steel to the job workers. The job workers have fabricated the reacting vessels and the distillation pots for the appellant, hence, the job worker becomes manufacturer in the absence of any procedure adopted by the appellant for accepting the duty liability on him as provided under N/N. 214/86-C.E - Further, even if the appellant is considered as a manufacturer of these items like reacting pots and distillation pots, no duty liability arises as it is undisputed that the appellant has installed these reacting pots and distillation pots in its factory premises and used the same for manufacturing of the chemicals on which duty liability has been discharged - demand set aside - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (4) TMI 195
  Rate of tax - iron and steel - concessional rate of tax - whether taxable at 4% or 13% - Held that: - the issue is no more res-integra - The Hon’ble Supreme Court in the case of B. Narasamma [2016 (8) TMI 636 - SUPREME COURT], held that commercial goods without change of their identity as such, are merely subject to some processing or finishing, or are merely joined together, and therefore remain commercially the same goods which cannot be taxed again, given the rigor of Section 15 of the Central Sales Tax Act - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 194
  Validity of revision order - service of notice as per the said provisions in Rule 68 - notice of reassessment was sent by Registered Post Acknowledgement Due. The addressee refused to accept it. There is an endorsement on the packet that the addressee has refused to accept the service. When the packet containing the notice was returned with this remark, the Deputy Commissioner proceeded on the footing that the sole proprietor is duly served. Though this was the factual position, yet this notice was also pasted on a conspicuous part of the sole proprietor's business place. It is in these circumstances that on 27.1.2003 the Deputy Commissioner passed an ex parte revisional order - Held that: - in the backdrop of the factual position which emerges from the record of this reference, can it be said that there was no service. This matter essentially is of fact. No question of law and for the opinion and answer of this Court in abstract can arise. Eventually a factual conclusion would have to be recorded if there is compliance with this procedural rule or not. The rule requires service to be effected. Thus, service is mandated but its mode is set out in the sub-rules. Whether there is proof of service or not would, therefore, necessarily depend on the facts and circumstances in each case. The reference is returned because there was no question of law arising for decision or opinion and answer of this Court - appeal disposed off.

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• Indian Laws

• 2017 (4) TMI 192
  Offence u/s 138 of the Negotiable Instruments Act - will it be necessary to specifically state in the complaint that the person accused was in-charge of and responsible for the conduct of the business of the Company? - Held that:- It is evident that every person who at the time the offence was committed is in charge of and responsible to the Company shall be deemed to be guilty of the offence under Section 138 of the Act. In our opinion, in the case of offence by Company, to bring its Directors within the mischief of Section 138 of the Act, it shall be necessary to allege that they were in-charge of and responsible to the conduct of the business of the Company. It is necessary ingredient which would be sufficient to proceed against such Directors. However, I may add that as no particular form is prescribed, it may not be necessary to reproduce exact the words of the section. If reading of the complaint shows and substance of accusation discloses the necessary averments, that would be sufficient to proceed against such of the Directors and no particular form is necessary. However, it may not be necessary to allege and prove that, in fact, such of the Directors have any specific role in respect of the transaction leading to the issuance of cheque. Section 141 of the Act makes the Directors incharge and responsible to Company "for the conduct of the business of the Company" within the mischief of Section 138 of the Act and not particular business for which the cheque was issued. Thus, although in the complaint in question, there is no specific averment in so many words that the accused herein at the time of the commission of the offence, was incharge of and responsible for the conduct of the business of the company, yet reading the other averments, it can safely be said that the accused had played some role indicating his involvement in the daytoday affairs and management of the company. The substance of the accusations discloses prima facie that the applicant herein was incharge of and responsible for the conduct of the business of the company at the relevant point of time.

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