TMI Tax Updates - e-Newsletter
June 23, 2018

Case Laws in this Newsletter:

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

Articles

• RECENT ADVANCE RULINGS IN GST (PART-2)
• COMPANIES (SIGNIFICANT BENEFICIAL OWNERS) RULES, 2018 – AN OVERVIEW

News

• RITES IPO subscribed over 66 times

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• Prime Minister lays foundation stone of Vanijya Bhawan

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• PM to inaugurate the Third AIIB Annual Meeting 2018

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• RBI Reference Rate for US $

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Notifications

Companies Law

• File No. 1 /1 /2018 -CL.I-Part - dated 21-6-2018 - Co. Law
  Corrigendum - Notification No. S.O. 2422(E), dated the 13th June, 2018

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Customs

• 57/2018 - dated 22-6-2018 - Cus (NT)
  Seeks to Amend Notification No. 51/2010-CUSTOMS (N.T.) dated the 30th June, 2010

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• 56/2018 - dated 22-6-2018 - Cus (NT)
  Intellectual Property Rights (Imported Goods) Enforcement Amendment Rules, 2018

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GST - States

• 24/2018-State Tax - dated 25-5-2018 - Himachal Pradesh SGST
  Notified the National Academy of Customs, Indirect Taxes and Narcotics, Department of Revenue, Ministry of Finance, Government of India

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• 22/2018-STATE TAX - dated 23-5-2018 - Jharkhand SGST
  Waiver Of Late Fee Payable For Failure To Furnish Return In Form Gstr-3b By Due Date

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• 21/2018-STATE TAX - dated 26-4-2018 - Jharkhand SGST
  Jharkhand Goods and Services Tax (Fourth Amendment) Rules, 2018.

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• (1-H/2018) - dated 31-5-2018 - Karnataka SGST
  Seeks to Amend Extension Of Date For Filing Return By Input Service Distributor In Form Gstr-6

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• (11/2018) - dated 29-5-2018 - Karnataka SGST
  Notified Levy And Collection Of Tax - Reverse Charge On Certain Specified Supplies Of Goods.

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• (1-G/2018) - dated 28-5-2018 - Karnataka SGST
  Notified Authority To Conduct Examination Of Gst Practitioners.

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• (1-F/2018) - dated 18-5-2018 - Karnataka SGST
  Notified Extension Of Time Limit For Filing Form Gstr 3b.

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• FD 47 CSL 2017 - dated 25-4-2018 - Karnataka SGST
  Hereby Constitutes Karnataka Appellate Authority For Advance Ruling For Goods And Services Tax.

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• (4-O/2017) - dated 5-4-2018 - Karnataka SGST
  Notified Karnataka Goods and Services Tax (Fifth Amendment) Rules, 2018.

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Circulars / Instructions / Orders

Customs

• 100/2018 - dated 15-6-2018
  Revised instruction for stuffing and sealing of reefer containers –reg.

Highlights / Catch Notes

GST

• Levy of GST - Composite supply - natural bundle of services - turnkey project - upon examination of the specific nature of the supply envisaged under the draft contract we conclude that the envisaged supply does not amount to a composite supply.
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• Levy of GST - procurement of services or material from Govt./Govt. Authority - The applicant is covered under local authority - exempted from GST
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Income Tax

• Capital gain - sale of shares, debt instruments and derivatives - The expression ‘exempt’ has been loosely used - the overriding nature of Article 13(4) of the Tax Treaty makes the capital gain taxable only in the country of residence of the assessee.
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• Levy of penalty u/s 271D - transaction between husband and wife - transaction of loan between husband and wife does not attract the provisions of section 269SS - Penalty levied u/s 271D of the Act in the instant case is not justified.
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• Treating the loan received as deemed dividend u/s 2(22)(e) - reopening of assessment - the documents produced by the assessee were cooked up and the revision of returns said to have been filed before the Registrar of Companies, was subsequent to the notice issued under Section 147; an afterthought to wriggle out of the liability.
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• Additions u/s 50C - Once, the assessee has invested the entire actual sale consideration for purchase of agricultural land eligible for deduction U/s 54B as well purchase of new residential house eligible for deduction Under section 54F of the Act then, no addition is justified based on the deemed full value consideration as per the provisions of Section 50C of the Act.
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• Penalty - assessee has not been able to show any reasonable cause for not complying with Rules nor for its failure to produce information called for by the ld. TPO. - levy of penalty u/s 271AA as well as 271G of the Act were justified.
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• Exemption u/s 11 - application of income - Donation to another society - Merely because PSESA was not registered u/s 12A of the Act for the year under consideration that cannot be a reason for not allowing corpus donation of ₹ 8.02 crores to the assessee society, keeping in mind that the donee society is also a like minded society.
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• Exemption u/s 11 - application of income - since no benefit has been enured to the specified person from the impugned transaction, denial of exemption u/s 11/12 of the Act is uncalled for.
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• Addition u/s.41(1) - cessation of liability - The onus is on the Assessee to show that year of cessation is different. - addition made in respect of trading liabilities which had ceased to exist represents taxable business income in terms of Section 41(1) of the Act.
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• Accrual of income - Merely because retention money is accounted for in the books of account, that by itself does not make it taxable in A.Y. 2010-11 when in law the same cannot be said to have accrued in that year as discussed above.
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• Penalty u/s 271C - non deduction of tds - the belief, being a reasonable cause, for non deduction of tax at source in respect of lease rent payment, magnetizes the provisions of section 273B. Considering the provisions of section 271C read with section 273B, we hold that the penalty imposed u/s 271C is not sustainable
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Customs

• Revised instruction for stuffing and sealing of reefer containers –reg.
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• Import of Pardini Air Pistol K12 Cal. 177/4.5 - prohibited goods - notification dated 21.11.2007 clearly distinguishes a “shooter” from “renowned shooter” and import of “Arms” from import of “other Arms” by allowing 0.177 air gun pistols for free import by shooters registered with Rifle Clubs /Association.
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Corporate Law

• Declaration in respect of beneficial interest in any share - Amendments to sub-section (6) and (7) came into effect from 7.5.2018 whereas new sub-section (10) came into effect from 13.6.2018 - See Section 89 of the Companies Act, 2013 as amended.
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Indian Laws

• Dishonor of Cheque - issuing cheque without mentioning date - Issuing of disputed cheque and the amount mentioned in it, is admitted by the revisionist. He cannot be given any benefit of the fact that the date mentioned in this cheque was filled up by any other person.
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Service Tax

• Refund - period of limitation - the refund for the quarter October to December was due on 01/01/2016. The refund claim was filed on 08/02/2017 which is beyond one year. Therefore, the refund was rightly rejected on time-bar.
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• It is open for the assessee whether to avail the abatement provided under notification or to pay service tax on GTA on the 100% amount - payment of service tax by the appellant on 100% of the transportation charge is legal and correct.
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• Even if there is some discrepancy in declaring the input service in the letters of approval, so long as taxpaid input services were received and used in the SEZ unit, the refund should be allowed and only because of procedural lapse refund cannot be rejected.
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Central Excise

• CENVAT credit - inputs/capital goods used by sub-contractor - sub-contractor was availing composition scheme - When the Cenvat credit is not available to the contractor, the said cenvat credit cannot be passed on to the appellant.
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• Appellant have knowingly availed the credit only on the invoice without receipt of the goods therefore no case was made out for waiver of penalty - penalty upheld.
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• Classification of goods - plant growth regulators - micronutrients - The presence of nitrogen in chelates is sufficient to bring it within the ambit of heading 3105
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• Valuation - Job work - manufacturing of barley malt on job work basis - whether the cost of sprouts was included by the appellant while discharging his excise liability? - Held No
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Case Laws:

• GST

• 2018 (6) TMI 1127
  Levy of GST - Composite supply - natural bundle of services - Sub-contract - Whether supply of turnkey Engineering, Procurement & Construction (EPC) Contract for construction of solar power plant wherein both goods and services are supplied can be construed to be a Composite Supply in terms of Section 2(30) of CGST Act, 2017? - If Yes, Whether the Principal Supply in such case can be said to be ‘Solar Power Generating System’ which is taxable at 5% GST? - Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors? Whether supply of turnkey EPC Contract for construction of solar power plant wherein both goods and services are supplied can be construed to be a Composite Supply in terms of Section 2(30) of CGST Act, 2017? - Held that:- The different goods and /or services supplied should be naturally bundled. However here the draft contract opens up the question whether such supplies are indeed bundled or not. The draft contract clearly demonstrates that in such projects the owner can procure the major equipments involved on their own also and the contractor may carry out the supply and services portion in respect of the remaining portion. Thus the concept of natural bundling does not apply to the present envisaged supply. In other words the envisaged supply does not constitute a composite supply - upon examination of the specific nature of the supply envisaged under the draft contract we conclude that the envisaged supply does not amount to a composite supply. Whether the Principal supply in such case can be said to be ‘Solar Power generating System’ which is taxable at 5% GST? - Held that:- The answer to this question flows from the answer to the first question. During the examination of the first question it is borne out that the major component of PV Modules is procured by the owner himself. Therefore the same cannot be construed as a principal supply by the applicant. Therefore this question does not remain relevant. Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors? - Held that:- The sub-contractor is an individual supplier and the rate of GST applicable depends on the type of supply and no concessional rate of GST is provided to sub-contractor on the basis of main contractor. Hence the supply made by sub-contractor need to be viewed as an individual supply and thereby the appropriate rate of GST has to be applied. Ruling:- The major component (PV Module) said to have been constituting 70% of the whole project can not be construed to be supplied by the applicant consequent upon High Sea Sale of the said product and hence it cannot be construed to be a principal supply of the project and thereby cannot be a composite supply The supply made by sub-contractor need to be viewed as an individual supply and thereby the appropriate rate of GST has to be applied depending on the specific nature of supply.

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• 2018 (6) TMI 1126
  Levy of GST - procurement of services or material from Govt./Govt. Authority - whether the services or material procured by ITDA from Govt./Govt. Authority is exempt from GST? - Held that:- The applicant is covered under local authority which is receiving services from IIT, Mumbai which is covered as Central Government. Whether the services received by the applicant from IIT. Mumbai is liable to GST or not? - Held that:- Serial no. B of Part 3 of GST Tariff-Services [Chapter 99] provides the list of nil rated/fully exempted services. On going through the said list, it is found that Government/Authority providing services to other Government/Authority is exempted from GST. Ruling:- The services received by the applicant from IIT, Mumbai is exempted from GST. As regard to the supply of goods by one Govt/authority to other Govt/authority is concerned, there is no exemption from GST in this regard.

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• 2018 (6) TMI 1125
  Levy of GST - educational and health care services to general public - Whether the amount recovered from post graduate course candidates as compensation on certain contingencies, is liable to GST in the hands of Manipal Academy of Higher Education? - Whether the amount recovered from employees as notice pay recovery for not serving agreed notice period is liable for GST? - Whether fees forfeited from students on discontinuing the course, before the term, is liable to GST? Held that:- The Applicant requested to permit them to withdraw the application filed for advance ruling vide their letter dated 19.02.2018. Ruling:- The application filed by the Applicant for advance ruling is dismissed as withdrawn.

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• Income Tax

• 2018 (6) TMI 1124
  Reopening of assessment - first appellate authority directed reduction of 90% of only net processing charges to the total turnover - Held that:- The cross-objection was allowed granting the relief by setting aside the orders of the lower authorities finding that re-assessment could not be taken up under Section 147. Hence as of now there is no appeal from the order which interfered with assessment and the first appellate order, on grounds of invalidity of a re-assessment under Section 147. The returns originally filed was in accordance with the declaration of law of this Court in CIT v. K.Rajendranathan Nair, [2003 (2) TMI 15 - KERALA HIGH COURT]. The said decision was reversed by the Honourable Supreme Court in CIT v. K.Ravindranathan Nair, [2007 (11) TMI 10 - SUPREME COURT OF INDIA]. There could hence be no suppression found as held by the Honourable Supreme Court in Deputy Commissioner of Income Tax v. Simplex Concrete Piles (India) Ltd., (2012 (9) TMI 516 - SUPREME COURT). In such circumstances, we refuse to answer the questions of law, especially on the ground that there is no appeal filed from the order which allowed the cross-objection of the assessee. - Appeal dismissed.

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• 2018 (6) TMI 1123
  Treating the loan received as deemed dividend under Section 2(22)(e) - reopening of assessment - Held that:- If the assessee had made such transfers and registered it with the Company as stipulated under the Companies Act, 1956, specifically Sections 108 to 112 dealing with transfer of shares and debentures, necessarily the transfer would have been registered by the Company and share certificates issued in the name of the transferee. If that was done, it would find reflection in the annual returns filed by the Company. The annual returns, however, shows the assessee holding 328 shares. Obviously, the documents produced by the assessee were cooked up and the revision of returns said to have been filed before the Registrar of Companies, was subsequent to the notice issued under Section 147; an afterthought to wriggle out of the liability. All the authorities having concurred on facts, we do not find any reason to interfere with the orders. No question of law arises from the orders of the Tribunal and we reject the appeals

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• 2018 (6) TMI 1122
  Levy of penalty u/s 271D - period of limitation - transaction between husband and wife - Held that:- There is gap of more than four and half years from the date of completion of assessment order and initiation of penalty proceedings. Although there is no time limit prescribed for initiation of penalty proceedings under the said provisions, however the courts are invariably holding that such proceedings should be initiated within a reasonable time. Since in the instant case such penalty proceedings have been initiated after a gap of more than four and half years from the completion of assessment proceedings u/s 143(3) of the Act, therefore, initiation of penalty proceedings is barred by limitation Even otherwise also, the transaction is between husband and wife. Various benches of the Tribunal are holding that transaction of loan between husband and wife does not attract the provisions of section 269SS of the Act. Penalty levied u/s 271D of the Act in the instant case is not justified - Decided in favour of assessee.

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• 2018 (6) TMI 1121
  Capitalization of interest u/s 36 (i) (iii) on the machinery purchased during the year - Held that:- We note that in the said proviso interest paid in respect of capital borrowed for acquisition of the asset for extension of existing business or profession was only to be disallowed during the relevant assessment year. The part “for extension of the existing business or profession” has been omitted by Finance Act, 2015, w.e.f. 1/04/2016. In the case of the assessee, the assessment involved is for assessment year 2011-12 and therefore, applicability of the proviso to section 36(1)(iii) has to be seen in the provision available during the relevant period of time. Assessing Officer has not examined the issue of extension of existing business profession in the case of the assessee, and therefore, we feel it appropriate to restore this issue to the file of the Assessing Officer for deciding afresh in accordance with law. Needless to mention, the assessee shall be afforded adequate opportunity of being heard on the issue in dispute. The ground No. 1 of the appeal is accordingly allowed for statistical purposes. Disallowance of building repair expenses, on account of website designing and internet expenses and on account of EAPBX repair aggregating - nature of expenditure - Held that:- Had the expenditure incurred on creation of a new room or space in the building, it would have increased the efficiency of the building. But before us, no such evidences have been brought on record by the Revenue, which could establish coming into existence of a new asset or increase in efficiency of the existing asset. In the circumstances, we hold the building repair expenses in the nature of revenue expenditure As in respect of the expenses on website designing and Internet marketing expenses, the Assessing Officer has not brought on record any evidence to establish that the said expenses would qualify for capital expenditure. Repair to EAPBX, which was damaged due to shortcircuiting. On perusal of copy of EAPBX repair account, which is available on 64 of the Paper Book, it is evident that the expenses have been incurred for battery and other parts of EAPBX against Bills raised by Rasana Telecom. In view of the above, we are of the opinion that by way of replacement of the parts of the existing EAPBX, no new asset has been created, and thus the expenditure incurred is revenue in nature. Disallowance of interest under section 40A(2)(b) paid to three persons - Held that:- there is no change in the facts and circumstances as compared to the earlier years and, therefore, in view of the rule of consistency, no disallowance would have been made. Before us, records of earlier years, for verifying the fact, whether the Assessing Officer allowed interest at the rate of 15% to the three parties, are not available, and therefore, we feel it appropriate to restore this issue to the file of the Assessing Officer for verifying the facts of earliers years and then decide the isuue in dispute in the light of rule of consistency laid down. TDS u/s 194C - Disallowance u/s 40(a)(ia) - non-deduction of tax at source on watch and ward expenses - Held that:- We note from the records available for us that this issue of each transactions being less than threshold amount liable for TDS, has not been examined by the lower authorities. Regarding the payment made to M/S Aries Integrated Security, the Ld. counsel has submitted that in view of the proviso to section 40(a)(ia) inserted by the Finance Act, 2012, w.e.f., 01/04/2013, which has been held to be applicable retrospectively in the case of Ansal Landmark Township Private Limited [2015 (9) TMI 79 - DELHI HIGH COURT], no disallowance under section 40(a)(ia) is required. We have observed that the applicability of the proviso to section 40(a)(ia) inserted by the Finance Act, 2012 has not been examined by the lower authorities - restore this issue to the file of the Assessing Officer for verification of facts and decide the issue in accordance with law. Ad-hoc 10% disallowance of various expenses - Held that:- Assessing Officer has not pointed out any specific defects of non-maintenance of vouchers or non-business purpose of the expenses. The Assessing Officer cannot reject the vouchers simply on the reason that same have been prepared internally. In view of the various decisions cited by the Ld. counsel, it is evident that no disallowance can be made on adhoc basis when the Assessing Officer has accepted the books of accounts. Similarly, the expenses on telephone at the residence of the Managing Director of the assessee company has been held to be allowable as business expenditure in the hands of the company. Similarly, the expenditure on use of car by the directors, has also been held to be allowable under section 37(1) of the Act. Ad-hoc disallowance is not justified

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• 2018 (6) TMI 1120
  Unexplained cash credit - Held that:- Affidavit has been duly furnished by the assessee stating that the sum of ₹ 10 lakhs was received from the purchasers of agriculture land. Thus, in such circumstances and the interest of the justice, we feel that the AO should have verified the purchase consideration from the purchasers for determining the actual sale price of such land and after providing the opportunity of crossexamination to the assessee. Therefore, we incline to restore this issue to the file of the AO to verify the purchase consideration from the purchasers for the agricultural land - ground of appeal filed by the assessee is allowed for statistical purposes. Addition on account of interest income accrued on investment in NSC - income offered to tax - Held that:- We hold that if the assessee has already offered the income on investment on receipt basis then charging the interest income on an accrual basis will lead to double addition which is contrary to the provision of law. Therefore, we are inclined to restore this issue to the file of the AO for fresh adjudication as per the provisions of law and to verify whether the assessee has offered the income on such investments on receipt basis. Thus the ground of appeal filed by the assessee is allowed for statistical purposes.

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• 2018 (6) TMI 1119
  Disallowance on account of warranty expenses - allowable busniss expenses - Held that:- The warranty provision has been created by the assessee following the accounting standard 29 of “provision, contingent liability and contingent assets” which is mandatory for the companies. The Hon'ble Supreme Court in Rotork Controls India Pvt. Ltd Vs. CIT (2009 (5) TMI 16 - SUPREME COURT OF INDIA) has held that provision of warranty expense is allowable as deduction u/s 37 of the Act. Warranty is an integral part of the sale price which is attached to the sale price of the product. It was further held that warranty provision had to be recognized because the assessee had a present obligation as a result of the past events resulting in an outflow of resources and reliable estimate can be made of the amount of the obligation. Present value of the contingent liability if properly ascertained and discounted on accrual basis can be an item of deduction u/s 37. In the present case there is no allegation on the assessee that the warranty provision made by the assessee is not a reliable estimate. - Decided in favour of assessee.

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• 2018 (6) TMI 1118
  Disallowance u/s 37(1) - the assessee had not carried out any business operation during year under consideration and the siness of the assessee was closed? - taxing receipt / discount on loan restructuring under the head 'Income from Other Sources' - Held that:- The reason for taxing this receipt / discount on loan restructuring under the head 'Income from Other Sources' is that there is no business activity. However, as held in the immediately preceding para that while there was no business activity during the relevant AY, yet the business was not discontinued. There is no evidence of such even in the impugned order. Accordingly, the addition made in the impugned order on this point is deleted - Decided in favour of assessee

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• 2018 (6) TMI 1117
  Unexplained cash deposited in bank account - Admission of additional evidence - Held that:- The Hon’ble Delhi High Court in the case of Manish Buildwell P. Ltd [2011 (11) TMI 35 - DELHI HIGH COURT] has held that after admitting the additional evidences by the Ld. CIT(A), the evidences should be forwarded to the Assessing Officer for examination by him and for giving rebuttal, if any. Accordingly, relying on the decision of the Hon’ble High Court, we feel it appropriate to restore this issue to the file of the Assessing Officer for deciding afresh after providing adequate opportunity of being heard to the assessee. The assessee is at liberty to file necessary evidences before the Assessing Officer in support of its claims. The ground of the appeal is accordingly allowed for statistical purposes. Nature of receipt - compensation received from GAIL - revenue or capital expenditure - Held that:-We note that the amount in question has been received by the assessee from the Gas Authority of India Ltd. (GAIL) by way of compensation to lay underground pipe in the agricultural land of the assessee. This compensation received has been held by the Ld. CIT(A) as capital in nature - Compensation has been received by the assessee for laying underground pipe by the GAIL, thus, respectfully following the above finding of the Tribunal in case of Jagan Nath Prasad, HUF [2015 (10) TMI 240 - ITAT DELHI] we uphold the finding of the Ld. CIT(A) on the issue in dispute. Accordingly, the ground of the appeal of the Revenue is dismissed.

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• 2018 (6) TMI 1116
  Penalty u/s 271(1)(c) - revision order passed under section 263 - disallowance made in the original assessment order passed under section 143(3) - status of the original assessment order on the date penalty order passed - Held that:- On the date the penalty order under section 271(1)(c) of the Act was passed, the original assessment order dated 7th December 2011 was not in existence as it was set aside / revised by the learned Commissioner under section 263 of the Act vide order dated 14th March 2014. That being the case, the Assessing Officer could not have passed the impugned penalty order under section 271(1)(c) of the Act in the absence of the original assessment order passed under section 143(3) of the Act. Subsequent setting aside of the revision order passed under section 263 of the Act by the Tribunal vide order dated 4th November 2015 is not material considering the fact that it has to be seen what is the status of the original assessment order on the date penalty order was passed by the Assessing Officer. Since, on the date of penalty order, the original assessment order under section 143(3) of the Act was not in existence, the impugned penalty order is also invalid. For this reason, the penalty order passed under section 271(1)(c) of the Act is legally unsustainable. Invalid notice - Assessing Officer has imposed penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income, however, in the show cause notice dated 7th December 2011 issued under section 274 r/w 271(1)(c) of the Act the Assessing Officer has not struck off the inappropriate words to indicated the specific limb of section 271(1)(c) of the Act violated by the assessee to attract imposition of penalty. That being the case, impugned penalty order passed under section 271(1)(c) of the Act cannot be sustained - Decided in favour of assessee.

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• 2018 (6) TMI 1115
  Value of perquisite provided by the assessee company to its employees-assessee - default for non-deduction of tax at source from the amounts paid to the employees towards car running and maintenance expenses - Held that:- The requisite details as specified in Clause (B) of sub-rule 2 of rule 3 of Income Tax Rules 1962 were not maintained by the assessee - the value of perquisite provided by the assessee company to its employees in the form of reimbursement of car running and maintenance charges was chargeable to tax in their hands and the assessee was liable to deduct tax at source from the said value. Since there was failure on the part of the assessee company to deduct tax at source from the value of the said perquisite, we are of the view that it was rightly treated by the A.O. as the assessee in default for such non or short deduction of tax at source under section 201(1) and interest under section 201(1A) was also correctly charged in accordance with law. - Decided against assessee.

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• 2018 (6) TMI 1114
  Addition u/s 56(2)(viib) - allotment / transfer of shares - adequate consideration / Fair Market Value (FMV) - additional evidence not admitted - Held that:- There is nothing in the assessment order passed by the Assessing Officer to show that any opportunity was given by him to the assessee to exercise its option given as per Explanation (a)(ii) to section 56(2)(viib). The assessee,exercised the said option and filed the valuation of its shares based on the fair market value of its assets duly supported the valuation report prepared by the Registered Valuer. CIT(Appeals), however, did not admit the said additional evidence on the ground that it had no relevance to the issue involved in the appeal of the assessee. The assessee by relying on Explanation (a)(ii) to section 56(2)(viib), the said additional evidence was very much relevant to decide the issue relating to the addition made under section 56(2)(viib) involved in the case of the assessee and the ld. CIT(Appeals), in my opinion, was not justified in declining to admit the same. Set aside the impugned order of the CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer with a direction to decide the issue relating to the addition under section 56(2)(viib) afresh on merit after considering the valuation report filed by the assessee to substantiate its claim of higher fair market value of its shares on the date of issue of shares as per Explanation (a)(ii) - Appeal of the assessee is treated as allowed for statistical purpose

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• 2018 (6) TMI 1113
  Unexplained cash credits u/s 68 - Held that:- When the assessee in course of proceeding brings certain facts to the notice of the assessing officer, it is the duty of the assessing officer to conduct necessary enquiry to ascertain the veracity of assessee’s claim. In these circumstances without countering assessee’s contention that the amount in question does not appear as a credit in the books of account, the Departmental Authorities were not justified in making the addition as unexplained cash credit under section 68 of the Act. Since, we find that the Departmental Authorities have not properly enquired into assessee’s claim on the issue of receipt of share application money, we are inclined to restore the issue to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. Assessee’s appeal is allowed for statistical purposes.

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• 2018 (6) TMI 1112
  Disallowance u/s. 36(1)(iii) - addition of interest on the diversion of the fund - Held that:- The owned funds of the assessee exceed the amount of money advanced to its sister concern. Therefore, the presumption can be drawn that the money has been advanced out of its owned fund - As the owned fund of the assessee exceeds the amount of advances given to its sister concern, we hold that the advances have been made out of the owned funds of the assessee, and therefore there is no question of making any disallowance on account of diversion of fund u/s 36(1)(iii) of the Act. Hence, we do not find any reason to interfere in the order of learned CIT(A). Addition under the provision of Section 14A - Held that:- It is an undisputed fact that the assessee has not earned any dividend income / exempt income from the shares held as an investment. Therefore, in our considered view, no disallowance u/s 14A r.w.r. 8D can be made. In this regard, we find support and guidance from the judgment of Hon’ble Gujarat High Court in the case of CIT vs. Corrtech Energy P. Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT] - Decided against revenue Addition made on account of capitalization of interest expenses - Held that:- As the owned fund of the assessee exceeds the amount of capital work in progress, we hold that it has been made out of the owned funds of the assessee and therefore there is no question of making any disallowance on account of money invested in the capital work in progress. Hence, we do not find any reason to interfere in the order of learned CIT(A). - Decided against revenue

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• 2018 (6) TMI 1111
  Income from early settlement of forward foreign exchange contract - to be assessed under the head “Capital Gain” OR “Income from Other Sources” - assessee is a tax resident of Singapore - Held that:- The Tribunal in assessee’s own case for assessment year 2005–06 and 2006–07 [2012 (10) TMI 1179 - ITAT MUMBAI] has held that the gain from forward foreign exchange contract has to be treated as capital gain. As a natural corollary the loss arising from such contract has to be treated as capital loss. Capital gain - sale of shares, debt instruments and derivatives - taxability in view of Article–13 of the India–Singapore Tax Treaty - Held that:- Article–13(4) in clear and unambiguous terms expresses itself as not an exemption provision but it speaks of taxability of particular income in a particular State by virtue of residence of the assessee. That being the case, the provisions of Article–24 of India Singapore Tax Treaty does not have much relevance insofar as it relates to applicability of Article–13(4) to income derived from capital gain. The expression ‘exempt’ with reference to the capital gain derived by the assessee, in our view, has been loosely used. On the contrary, the overriding nature of Article 13(4) of the Tax Treaty makes the capital gain taxable only in the country of residence of the assessee. - decided against revenue

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• 2018 (6) TMI 1110
  Addition as profit from sale of flats in a housing projects - Held that:- There is categorical finding of the learned Commissioner (Appeals) that occupation certificates have not only been issued by the local authorities in respect of the flats on 20th June 2008, but the flat owners and housing society have also stated in response to the notices issued under section 133(6) of the Act that no advance relating to them is pending with the assessee. It has also been noticed by the Departmental Authorities that the assessee has entered into registered sale agreement with the flat buyers between in the years 2002 and 2007. The assessee has neither appeared before us nor has furnished any documentary evidence to controvert the factual findings of the Departmental Authorities. In view of the above, we do not find any infirmity in the order of the learned Commissioner (Appeals) in sustaining the addition Inclusion of certain loans and advances in the addition made by the Assessing Officer on account of profits from sale of flats - Held that:- On a perusal of the impugned order of the learned Commissioner (Appeals) it is seen that the aforesaid claim of the assessee was duly verified not only by him but also by the Assessing Officer in remand and it was found that such amount represents sale consideration of flats, hence, part of the profit earned by the assessee. Of course, as regards assessee’s claim that a part of the amount was offered as income in assessment year 2013–14, the learned Commissioner (Appeals) has observed that the assessee may make a suitable claim before the Assessing Officer for assessment year 2013–14 and which would be dealt with by the Assessing Officer in accordance with the provisions of law. No infirmity in the aforesaid findings / observations of the learned Commissioner (Appeals) - assessee appeal dismissed.

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• 2018 (6) TMI 1109
  Addition on account of embezzlement of the fund - assessee in the present case is an AOP and engaged in the business of milk processing and production of various milk products - Held that:- Addition was made in the hands of the assessee for ₹ 1,49,42,167/- on account of embezzlement loss pertaining to the previous year 2009-10 relevant to the A.Y. 2010-11. Thus if the addition is sustained in this year too then, it will amount to double addition of the same item which is contrary to the scheme of income tax provisions. Thus the addition has already been made in the hands of the assessee on substantive basis in the AY 2010- 11. Therefore, we have no hesitation in reversing the order of authorities below. Hence, the ground of appeal of the assessee is allowed.

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• 2018 (6) TMI 1108
  TDS u/s 194A - tds on discounting charges - default for non deduction of TDS u/s. 40(a)(ia) - assessee in default - Held tat:- The discounting charges paid by the assessee are not akin to interest on finance expenses. Therefore, no disallowance on account of non-deduction of TDS u/s. 194A r.w.s. 40(a)(ia) of the Act can be made. See PR. CIT-06 VERSUS M. SONS GEMS N JEWELLERY PVT. LTD. (FORMERLY: M SONS ENTERPRISES PVT. LTD.) C/O SSAR & ASSOCIATES [2016 (4) TMI 1132 - DELHI HIGH COURT] We also find force in the alternate argument raised by the Learned AR that L&T Finance Ltd. has paid the taxes on the discounting charges received from the assessee. Indeed The said proviso though inserted by the Finance Act 2012 w.e.f. 1-4-2013 has been held to be retrospective in operation by recent decision of the Hon'ble Delhi High Court in the case of CIT v. Ansal Land Mark Township (P) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] - decided in favour of assessee

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• 2018 (6) TMI 1107
  Taxability towards reimbursement of expenses - assessment of income - Held that:- Tribunal in previous AY after analyzing the different terms of the agreement and examining the facts on record have recorded a factual finding that the agreement clearly envisages that fee for technical services is different from the expenses incurred on third party cost. Further, it has recorded a finding of fact that there is a clear bifurcation in the agreement between the internal cost incurred by the assessee and external cost borne or paid by the assessee on behalf of GIA India. Thus, on the basis of aforesaid facts, the Tribunal has applied the ratio laid down in case of DIT v/s A.P. Moller Maersk [2017 (2) TMI 993 - SUPREME COURT] and held that the amount received towards reimbursement of cost cannot be taxed at the hands of the assessee. Therefore, the observation of the learned DRP that Tribunal has not addressed the issue is baseless. Departmental Representative has not been able to convince us that there is any difference in facts as involved in the impugned assessment year and assessment years 2009–10 and 2011–12 on the basis of which the Tribunal has decided the issue - unless and until the decision of the Tribunal is reversed or set aside by the higher Appellate Court, it is not only binding on the subordinate authorities but judicial discipline demands that it should be followed by the other Benches of the Tribunal. More so, if such decision is rendered in assessee’s own case and under identical facts and circumstances - Decided in favour of assessee

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• 2018 (6) TMI 1106
  Addition made invoking the Transfer Pricing provisions - Non complied with the provisions of Section 144C - Held that:- It is very obvious that AO and TPO have not followed the directions of the ITAT - In fact the order of TPO is not placed on record nor has AO mentioned why assessee’s contentions are rejected. As per the provisions of the Act, AO is bound to issue draft assessment order so that assessee can raise objections before the DRP as per the provisions of the Act. In this case, AO without issuing the draft assessment order, has passed the final assessment order thereby violating the provisions of the Act. No hesitation to hold that AO has not complied with the provisions of Section 144C which is mandatory in all such cases, where TPO proposes variation in the income and loss returned which is prejudicial to the interest of assessee. Only after complying with the conditions laid down in Section 144C, AO is empowered to pass order u/s. 143(3) r.w.s. 144C. Even in the remand proceedings also AO is bound to follow the provisions of the Act. Since AO has not passed the order in compliance to the provisions of Section 144C, the order passed by AO is bad in law and accordingly, the same is annulled - Decided in favour of assessee

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• 2018 (6) TMI 1105
  Addition on account of difference in valuation of stock as reflected in the accounts of the assessee and as shown in the stock statement submitted to the bank - Held that:- As held by the Hon’ble Madras High Court in the case of Apcom Computers Pvt. Ltd. (2006 (10) TMI 124 - MADRAS HIGH COURT), difference in value of stock based on the inflated stock statement given by the assessee to bank for obtaining higher loan facilities on an estimate basis without any actual physical verification could not be treated as the undisclosed income of the assessee. To the similar effect is the decision in the case of Relaxo Footwear (2001 (11) TMI 14 - RAJASTHAN HIGH COURT) wherein it was held that no addition could be made to the income of the assessee on the basis of stock statement submitted to the bank which was deliberately inflated by the assessee only to get higher limit of credit from bank. Delete the addition of ₹ 10,00,890/- made by the AO and confirmed by the Ld. CIT(A) on the basis of inflated value of stock declared by the assessee to the bank for availing higher credit facility. - Decided in favour of assessee.

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• 2018 (6) TMI 1104
  Denying the claim of deduction u/s 80P(2)(a)(i) - assessee were doing the business of banking, and therefore, in view of insertion of provisions of section 80P(4) the assessee were not entitled to deduction u/s 80P(2)(a)(i) - AO jurisdiction to resolve / decide the issue -Held that:- The undisputed facts are that the assessee in these cases are primary agricultural credit societies, registered as such under the Kerala Co-operative Societies Act. In the case of THE INCOME TAX OFFICER WARD-1, KASARAGOD VERSUS M/S. THE CHENGALA SERVICE CO-OP BANK LTD. [2018 (4) TMI 339 - ITAT COCHIN] had categorically held that when a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction u/s 80P(2) of the Income-tax Act. Assessing Officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r.w.s Section 56 of the Banking Regulation Act. - Decided in favour of assessee.

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• 2018 (6) TMI 1103
  Rejection of books of accounts - addition on estimated basis - Held that:- Quantitative details as required by clause 28(b) of Form No. 3CD regarding raw material and finished products (i.e., opening stock of raw material, raw material issued to production department, raw material consumed and closing stock of raw material, opening stock of finished goods, finished goods produced during the year, finished goods sold and closing stock of finished goods) were prepared and audited by certified accountant and were enclosed with Form No. 3CD which had been placed on record, but the Assessing Officer had ignored the factual figures, both in qualitative and quantitative terms, enclosed with the return and filed during the course of assessment proceedings The accounts maintained by the assessee could not have been said to be incomplete or inaccurate. In fact, the Assessing Officer had no material before him to treat the accounts of the assessee as defective or incomplete. AO erred in rejecting the books of accounts under the provisions of Section 145(3) of the Act. Therefore there was no reason for the AO to estimate the profit after rejecting the books of accounts. AO has taken the guidance from the provisions of section 44AD in adopting the rate @ 8% for determining the profit of the assessee which is not correct as it applies to the small assessee having turnover up to ₹ 1 crore - Decided against revenue

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• 2018 (6) TMI 1102
  Penalty u/s 271C - non deduction of tds - Held that:- As decided in the assessment years 2011-12 to 2013-14 Section 273B of the Act provides that in case of a reasonable cause, penalty otherwise exigible, inter alia, u/s 271C of the Act, cannot be imposed. When we advert to the facts of the instant case, being no deduction of tax at source made prior to the year of survey on 24.02.2014; no other order against the assessee requiring deduction of tax at source at that time when the assessee made payment of lease rental - the assessee entertained a bona fide belief that no tax withholding was required on lease rent payments. This belief, being a reasonable cause, for non deduction of tax at source in respect of lease rent payment, magnetizes the provisions of section 273B. Considering the provisions of section 271C read with section 273B, we hold that the penalty imposed u/s 271C is not sustainable. - Decided in favour of assessee.

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• 2018 (6) TMI 1101
  Addition on account of retention money - Year of assessment - method of accounting - Held that:- the accounting treatment given by the assessee in its Books of account cannot decide the accrual of income in law. It is now well settled that accounting entries are not determinative of taxability of income or deductibility of any expenditure. A mere book keeping entry cannot be income unless income has actually resulted. If income does not result at all, there cannot be a tax, even though in book keeping an entry is made about a ‘hypothetical income.’ Merely because retention money is accounted for in the books of account, that by itself does not make it taxable in A.Y. 2010-11 when in law the same cannot be said to have accrued in that year as discussed above. We do not find any infirmity in the order of CIT(A) for directing the AO to tax the retention money in the year of actual receipt and not in the year of completion of contract.

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• 2018 (6) TMI 1100
  Addition u/s.41(1) - cessation of liability - whether the purported creditors shown as outstanding in the books for several years were unsupported by complete addresses and were non-traceable and the assessee on few instances did not dispute about closure of its account in rival party's books - we are not impressed by the plea the AO did not bring anything on record to allege that cessation took place during the financial year in question for the purposes of taxability under s.41(1) of the Act. We find that AO has assertive justification to bring the outstanding liability within the net of s.41(1) of the Act in the Financial Year under inquiry. The onus is on the Assessee to show that year of cessation is different. In the instant case, the Assessee does not admit cessation at first place. AO is within its right to hold the Financial Year in question as the right year for taxability when the facts concurring the non existence were unrevealed. The Assessee was failed to discharge onus. Besides, the defect of year of taxation if any can be cured under s.153(6) in such cases. However, we do not consider it expedient to dwell further - addition made in respect of trading liabilities which had ceased to exist represents taxable business income in terms of Section 41(1) of the Act - Appeal of the Revenue is allowed.

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• 2018 (6) TMI 1099
  Denying exemption u/s 11 and 12 - assessee paid interest free deposit - denying of application of income in respect of donation given to Pacific Society for Education and Social Activities - Held that:- No doubt, NRPL is a specified person but then the Act does not bar any normal transaction done with a specified person. All that is provided in the provisions of section 13 of the Act is that any transaction with specified person should not enure any benefit to that person directly or indirectly. If we consider the transaction with NRPL in its right perspective, the only logical conclusion comes is that no benefit has been passed on to NRPL by the assessee-society. The assessee paid interest free deposit only when NRPL has purchased the land and leased out to the assessee on which the assessee constructed the school building and started its operation. We are of the considered opinion that since no benefit has been enured to the specified person from the impugned transaction, denial of exemption u/s 11/12 of the Act is uncalled for. We, accordingly, set aside the findings of the CIT(A) and direct the AO to allow exemption u/s 11/12 of the Act. Donation to PSESA - PSESA is not a registered society during the year under consideration u/s 12A - Held that:- ‘Charitable purpose’ has been defined u/s 2(15) of the Act and education is very much a charitable purpose. It is also an undisputed fact that PSESA was registered u/s 12A and 80G of the Act w.e.f. A.Y 2015-16. While granting registration u/s 12A of the Act revenue has to see objects of the trust and since PSESA has been registered u/s 12A of the Act, the revenue has accepted its objects. Merely because PSESA was not registered u/s 12A of the Act for the year under consideration that cannot be a reason for not allowing corpus donation of ₹ 8.02 crores to the assessee society, keeping in mind that the donee society is also a like minded society. We accordingly direct the AO to allow the corpus donation of ₹ 8.02 crores as application of income. - Decided in favour of assessee

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• 2018 (6) TMI 1098
  Penalty levied u/s 271AA and 271G - failure to keep and maintain information and documents as required under Sub Sections (1) and (2) of Section 92D and failure to furnish such information and documents - Contention of the assessee is that it had followed cost plus method in its transfer pricing study and therefore it was not required to maintain and produce data regarding comparables - Held that:- Section 271AA and Section 271G of the Act were enacted only for the purpose of penalizing the defaults of the nature committed by the assessee. No doubt Section 273B mandates that penalty under Sections 271AA and 271G of the Act are not imposable if the assessee proves that there was a reasonable cause for failure. However, assessee before us in our opinion has not been able to show any reasonable cause for not complying with Rules nor for its failure to produce information called for by the ld. TPO. In the circumstances, we are of the opinion that levy of penalty under Sections 271AA as well as 271G of the Act were justified. We do not find any reason to interfere with the orders of the lower authorities. - Decided against assessee

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• 2018 (6) TMI 1097
  Deduction u/s.80P(2) (a) (vi) denied - society is under the control of NLC Limited and the actual labour member had no independent right carry out the activities of the society - society has provided voting rights to individual/persons who are nominated by the NLC - Held that:- The board of the assessee society is responsible for the affairs of the assessee society and not the NLC board . The ultimate authority of its administration is vested with the General Body of the members. NLC or its nominated members, if any, do not have voting rights in elections of the assessee society as per Rule 22 of its Byelaws. NLC has been co-opted as a member only for operational ease and convenience to assist the board of the assessee society in administration, without which the smooth running of the assessee society will be practically difficult - registration of the society has not been revoked under law for violation of the provisions of TNSCA, 1983 - voting rights in elections have not been conferred on the NLC or its nominated members as per Rule 22 of Byelaws of assessee society the provisions of the Proviso to S 80P(2)(a)(vi) are not violated by the assessee society and so it is eligible for the deduction - Decided in favour of assessee

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• 2018 (6) TMI 1096
  Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. The impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.

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• 2018 (6) TMI 1095
  Penalty 271(l)(c) r.w. Explanation 1A - addition made towards management fees paid u/s 40(a)(ia) for failure to deduct tax u/s 194J - Held that:- mere disallowance of certain expenses during assessment proceedings does not attract penalty provisions u/s 271(1)(c) if such disallowance is made for technical of venial breach of TDS provisions - The Hon’ble Supreme Court in the case of PRICE WATERHOUSE COOPERS (P.) LTD. VERSUS COMMISSIONER OF INCOME-TAX, KOLKATA - I [2012 (9) TMI 775 - SUPREME COURT] held that penalty for concealment cannot be levied in case of bona fide / inadvertent / human error. ITAT, MumbaI Bench “E” in the case of Satyajeet Movies Pvt Ltd (2014 (2) TMI 1335 - ITAT MUMBAI) held that no penalty can be levied u/s 271(1)(c) for any addition made u/s 40(a)(ia) for failure to deduct TDS, once such payment has not been doubted. The default committed by the assessee can be termed it as technical or venial breach for which rigors of penalty provisions cannot be invoked - thus CIT(A), after considering relevant submissions, has rightly deleted penalty levied by the AO in respect of addition made u/s 40(a)(ia) - Decided in favor of assessee.

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• 2018 (6) TMI 1094
  Additions made on LTCG on sale of agricultural land by adopting stamp duty valuation u/s 50C and ignoring the benefit of claim u/s 54B and 54F - AO has made addition of the capital gain which is over and above the investment made in the agricultural land and residential house due to the fair market value adopted as per the provisions of Section 50C - Held that:- Once, the assessee has invested the entire actual sale consideration for purchase of agricultural land eligible for deduction U/s 54B as well purchase of new residential house eligible for deduction Under section 54F of the Act then, no addition is justified based on the deemed full value consideration as per the provisions of Section 50C of the Act. When the capital gain was fully invested in the new capital asset eligible for deduction u/s 54B and 54F then the benefit of the provisions of Sections 54B and 54F would be available to the assessee to the full amount of capital gain computed on the basis of deemed full value u/s 50C - Hence, the addition made by the AO on account of capital gain is deleted - Decided in favor of assessee.

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• 2018 (6) TMI 1093
  Addition taking the net profit ratio at the rate of the unit which was exempted under section 10AA - both the units were engaged in manufacture of similar item and were located in the same area, with the exempted unit only declaring abnormally high profit, for which no satisfactory explanation was put forth by the assessee - Held that:- As found by the DRP that taxable units were manufacturing H7 bulbs meant for European market/continent which fetched high profit, whereas H4 bulbs were meant for local market where the returns were low. This factual finding of the learned Dispute Resolution Panel was never contradicted by the Revenue before this Tribunal. So far as managing the business affairs by the assessee to reduce its tax liability the learned Dispute Resolution Panel duly considered the decision from hon'ble apex court in CIT v. Calcutta Discount Company Ltd. (2006 (11) TMI 135 - SUPREME COURT) wherein it was held that it is the discretion of the assessee to arrange its affairs in a manner which advances his interest subject to the conditions that the transaction in question are bonafide. In the instant case, this factual matrix was not doubted by the learned Assessing Officer rather in the remand report it was accepted by the Assessing Officer that "cost of H4 and H7 bulbs reconcile". The learned Dispute Resolution Panel duly considered the remand report and the submissions of the assessee and thereafter reached to a conclusion in which we find no infirmity. We affirm the same. - Decided against revenue

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• 2018 (6) TMI 1092
  Revision u/s 263 - scope of the order passed by the CIT(A) under Section 263 - Held that:- We note that the Revenue has not challenged the finding of the CIT(A) that the AO has gone beyond the scope of directions given by the CIT(A) in its order under Section 263 of the Act. The issue now being urged by the Revenue, that the Assessment Order dated 24th December, 2009 was in accordance with the order dated 27th September, 2011 of the CIT and not beyond the scope of its directions. As this was not an issue urged by them before the Tribunal, this question does not arise from the order of the Tribunal. Issue raised before the Tribunal and cannot be urged before this Court as held by this Court in CIT v/s. Tata Chemicals [2002 (4) TMI 42 - BOMBAY HIGH COURT]. Set off of R & D Expenses - We find that once it is not disputed by the Revenue before the Tribunal that, the order of the Assessing Officer on set off of R & D Expenses was beyond the scope of the directions given by the Commissioner of Income Tax in exercise of its power under Section 263 of the Act, the occasion to examine the correctness of the same, would not arise. In view of the above, the Question No.(b), in the above facts of the case, is academic and, therefore, does not give rise to any substantial question of law.

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• 2018 (6) TMI 1091
  Addition towards commission received - Held that:- Before making any addition of commission income on the ground that the assessee is merely providing accommodation entries, it is necessary to make deeper probe and enquiry to ascertain the true nature of transactions between the assessee and concerned parties. The assessee’s grievance that it was not given opportunity to cross–examine the third parties whose statements were relied upon also needs to be dealt with in accordance with law. In view of the above, we restore the issue to the Assessing Officer for denovo adjudication after due opportunity of being heard to the assessee. Disallowance of rent expenses - Held that:- As AR submitted that given an opportunity the assessee will prove the expenditure through proper evidence. In view of the above submissions of the learned Authorised Representative, we restore the issue to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. Addition on account of difference in total income as per the e–return and as per computation of income - Held that:- AR submitted for an opportunity to be given to the assessee to reconcile the difference. Considering the submissions of the learned Authorised Representative we are inclined to restore the issue to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee to reconcile the difference.

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• Customs

• 2018 (6) TMI 1090
  Confiscation - import of Pardini Air Pistol K12 Cal. 177/4.5 - prohibited goods - Since it is a prohibited goods specified as “Arms” and imported without valid Arms licence the said pistol was held to be liable for confiscation - classification of imported goods - Held that:- In the pre-amended portion of rule governing import of arms and amendment made with effect from 09.02.2012, the definition of “Renowned Shooter” was not found mentioned but he borrowed the same from Note 3 of Import licensing - Admittedly import was done after 2012 and his finding regarding acquirement/ designation of “Renowned Shooter” by the appellant subsequent to such import is apparent on record. But what I find in his order and from the appeal memo is that the Commissioner (Appeals) has followed the definition of “Arms” and had not gone into the item description contained in notification 52 (RE)/2007/2004-09 dated 21.11.2007, which was relied on by the appellant, during the appeal proceeding. It is worth mentioning here that a person would become renowned in the field of sports after successful/ repeated participation in that field and in order to participate in the sports like shooting, availability of air gun is a basic requirement and therefore notification dated 21.11.2007 clearly distinguishes a “shooter” from “renowned shooter” and import of “Arms” from import of “other Arms” by allowing 0.177 air gun pistols for free import by shooters registered with Rifle Clubs /Association. The amended import policy of Arms and Ammunition has amended only the provisions containing the import of arms under which free import of 0.177 air guns/ pistols, which was included in the notification of 2005, has been excluded from the definition of “Arms” in 2012 notification. The order passed by the Commissioner on 22.07.2017 remanding Appellant’s case for fresh adjudication is hereby set aside - appeal allowed.

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• 2018 (6) TMI 1089
  Benefit of reduced penalty - Section 28 of the Customs Act, 1962 - it was alleged that duty, interest and penalty, though, admittedly, tendered initially through demand draft within the prescribed thirty days, had not been credited to the exchequer - Held that:- The impugned order admits to the submission of the demand draft within the stipulated deadline and the failure to encash it. Notwithstanding this, the first appellate authority has taken the view that, while it is open to the appellant to take suitable action as per the law, the benefit of reduced penalty is premised upon strict compliance with the requirements of section 28(6) of the Customs Act, 1962. It appears that the dereliction has been on the part of the tax authorities in failing to deposit the demand draft tendered by the appellant. The appellant has also has been subjected to interest in consequence which was also discharged without demur - the appellant is eligible to benefit of reduced penalty for having tendered duty and interest as well as penalty within the prescribed time in accordance wih section 28 of the Customs Act, 1962. Appeal allowed.

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• Service Tax

• 2018 (6) TMI 1085
  Commercial or Industrial Construction Service - Construction of Complex Service - Works Contract Service - denial of benefit of abatement - Held that:- During the period of dispute i.e. 2006-11, the appellant has undertaken construction activity for various customers. It can be stated that the services rendered in the form of civil construction involves supply of various goods such as steel, cement etc which get consumed in the process of providing construction service. Such activities are evidently in the nature of Works Contract. The ‘Works Contract Service was included in the statue under Section 65 (105) (zzzza) w.e.f. 01/06/2007 - In the wake of authoritative pronouncement by the Apex Court in the case of L&T Ltd. [2015 (8) TMI 749 - SUPREME COURT], no Service Tax can be levied for the period up to 31/05/2007 - the demand of Service Tax up to 31/05/2007 in respect of all the civil contracts executed by the appellant set aside. On fulfillment of the conditions laid down in the above Scheme, the Tax liability of the appellant will need to be reworked and demanded after extending the benefit of the Composition Scheme for the period w.e.f. 01/06/2007. Non-fulfillment of exercising an option for payment of tax under the Composition Scheme cannot be held as a reason for denial of such concession - Subject to fulfillment of the conditions the service tax liability of the appellants is to be re-calculated based on the Composition Scheme. Time Limitation - Held that:- Admittedly the issue of service tax liability on Composite Works Contracts has been a subject matter of large number of litigation and clarifications by the Board. In such a situation, alleging fraud, collusion and willful misstatement on the part of the appellants is not tenable - demand beyond the normal period do not sustain. Appeal disposed off.

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• 2018 (6) TMI 1084
  Penalty u/s 77(2) and 78 of FA - service tax collected but not paid to Government - also service tax registration not obtained - Held that:- In the case of Sri Velmurugan Sago Factory Vs. Commissioner of C. Ex., Salem [2016 (12) TMI 646 - CESTAT CHENNAI], this very Bench of the Tribunal was considering an identical issue and held that When in the first place there was no requirement of issue of SCN itself, penalties will not survive particularly as there was some confusion on the duty rates and the continued eligibility of SSI concessions for these appellants. There is no dispute with regard to the fact that the appellant has paid the duty along with interest at least three years before the issuance of Show Cause Notice, the demand of penalty equal to 15% imposed under 2nd proviso to Section 78 of the Act is bad and unsustainable. So also the fact that the appellant had obtained registration prior to the Show Cause Notice, the same is sufficient reason to hold there was no violation or contravention of Section 77(2). Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1083
  Penalty u/s 76, 77 and 78 of FA - Business Auxiliary Services - service tax not paid - intent to evade not present - Held that:- The service tax amount has already been paid by the Appellant - the Appellant shall be liable to pay only 25% of the penalty u/s 78 subject to the condition that the same is paid alongwith interest within 30 days of the receipt of this order by the Appellant.. Penalty u/s 76 and 77 - the penalty u/s 77 (a) for failure to take registration, Penalty under section 77 (b) for failure to maintain record`have been imposed - Held that:- The penalty u/s 76 and 77 is reduced to ₹ 2500/- each. Appeal allowed in part.

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• 2018 (6) TMI 1082
  CENVAT credit - whether the appellants are entitled for cenvat credit of service tax paid on the retention money relating to construction service rendered by the Appellant? - interpretation of Rule 4(7) of CCR,2004 - Held that:- Since the said retention amount has been paid fully, therefore, credit of the service tax paid earlier is admissible - Reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE, PUNE-I VERSUS THERMAX ENGINEERING CONSTRUCTION CO. LTD. AND VICE-VERSA [2017 (12) TMI 1191 - CESTAT MUMBAI] - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1081
  Business Auxiliary Service - intent to evade not present - the Appellant immediately paid the amount even before issue of SCN - Held that:- Since the non payment was detected from books produced before the officers, there is no element of suppression involved - When penalty has not been imposed on portion of demand on the ground that there is no suppression, in that case it cannot be said that in respect of another portion there has been suppression. Since the Commissioner (Appeals) has held that in respect of portion of demand, the suppression is not applicable, in that case it cannot be alleged for the earlier period portion also. Penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1080
  SEZ unit - Refund of Service Tax paid - denial of refund on the ground that service of mediclaim was not covered by the approved list of services - Held that:- The ‘general insurance’ term clearly covers the mediclaim. It is also observed that the appellant being a SEZ unit their input services otherwise not taxable and the output service being 100% exported no service tax is payable - If at all the appellant does not claim the refund under N/N. 12/2013-ST the appellant will be entitled for the refund under Rule 5 of the CCR 2004. Even if there is some discrepancy in declaring the input service in the letters of approval, so long as taxpaid input services were received and used in the SEZ unit, the refund should be allowed and only because of procedural lapse refund cannot be rejected. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1079
  Adjustment of excess Service Tax paid - Service tax on GTA on the 100% amount paid without availing abatement of 75% - SCN was issued on the ground that as per provisions of sub-rule 4B of Rules 6 of Service Tax Rules, 1994 adjustment of excess paid service tax can only be made in the succeeding month and not beyond that - Held that:- Firstly, the notification is concessional notification. Unlike in Central Excise law wherein the unconditional notification should be mandatorily availed by the assessee, similar provision is not available in service tax. Therefore, it is open for the assessee whether to avail the abatement provided under notification or to pay service tax on GTA on the 100% amount - payment of service tax by the appellant on 100% of the transportation charge is legal and correct. Secondly, appellant was legally entitled for CENVAT credit of service tax paid by them on GTA. Therefore, the objections raised by the audit are unsustainable. Appellant, after reversal of the credit adjusted the excess paid service tax against the service tax liability for the subsequent period - since appellant was entitled for CENVAT credit on the excess paid service tax the entire exercise is revenue neutral. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1078
  Refund claim - export of services - Rrule 5 read with N/N. 27/2012-CE dated on 08/02/2017 - Refund was rejected on the ground of time-bar as the same was filed beyond the period of one year from the date of FIRC - Held that:- As per the facts of the case, against export of services, the FIRC were received during the period October 2015 to December 2015. Therefore, the refund for the quarter October to December was due on 01/01/2016. The refund claim was filed on 08/02/2017 which is beyond one year. Therefore, the refund was rightly rejected on time-bar. As regards the judgment relied upon by the Learned Counsel in the case of mPortal Wireless Solutions India Pvt Ltd [2011 (9) TMI 450 - KARNATAKA HIGH COURT] the same is not applicable in the present case for the reason that as per N/N. 27/2012-CE(NT) as per para 3B, Section 11B was made applicable to the refund case under Rule 5. Appeal dismissed - decided against appellant.

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• Central Excise

• 2018 (6) TMI 1077
  CENVAT credit - inputs/capital goods used by sub-contractor - sub-contractor was availing composition scheme - The Department was of the view that such cenvat credit on inputs and capital goods was not admissible to the appellant inasmuch as such credits would not have been admissible to the contractor, who has opted to pay the service tax in terms of the Works Contract Composition Scheme - Held that:- It is apparent that goods on which the appellant has availed cenvat credit have been used by M/s Driplex Water for providing the works contract service. It was M/s Driplex Water who has issued purchase order and procured the goods from manufacturer/ dealer. Thus, it was M/s Driplex Water only who could avail the cenvat credit of the duty paid on inputs/ capital goods used by them in providing the works contract service to the appellant in view of the definition of works contract service under clause (zzzza) of Section 65(105) of the Finance Act, 1994. The inputs/ capital goods used by M/s Driplex Water in the present case cannot be distinguished to be out of the scope of being the work contract service. When the Cenvat credit is not available to the contractor, the said cenvat credit cannot be passed on to the appellant namely M/s Bharat Oman Refineries Ltd. Time limitation - Held that:- The fact of availing the benefit of composition scheme by the contractors was very much in knowledge of the appellants. Again the ignorance to the legal consequences thereof cannot be the excuse rather we opine it to be the positive act on part of the appellants committing suppression of facts thereby entitling the department to invoke the extended period of limitation - extended period invoked. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 1076
  CENVAT Credit - input services - Rent a Cab Service for the period April, 2006, to December, 2010 - Held that:- The period involved is prior to 01.04.2011, which is before amendment of Rule 2(l) of the Cenvat Credit Rules, 2004; that prior to this date, the definition of input service did not restrict availment of credit on the said input service - reliance placed in the case of M/S. WIPRO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PONDICHERRY [2018 (4) TMI 967 - CESTAT CHENNAI], where it was held that Rent a Cab services were availed for picking up and dropping of the employees of the company - catering services were used for providing Canteen facilities for the employees. These services were not excluded prior to 01.04.2011 - credit allowed - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1075
  Duty evasion - goods purchased through unaccounted sources - It is also the contention of the petitioner that the Commissioner (Investigation) appointed under Settlement Commission has submitted a report on 28.11.2005 and the Settlement Commission has totally ignored the same - Held that:- The observation made by the Settlement Commission in paragraph 8 of the impugned proceedings dated 16.09.2009 is set aside, as controverted by the learned Counsel for the petitioner. A direction is issued to the Settlement Commission to look into the Investigation Report submitted by the Commissioner (Investigation) appointed by the Settlement Commission and also the materials that are going to be produced by the petitioner before the Commission and arrive at a conclusion - matter remanded to Settlement Commission.

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• 2018 (6) TMI 1074
  CENVAT credit - inputs/capital goods - goods falling under Chapter 38, 40, 73, 83 and 84 - denial on the ground that these goods used in the erection of CPP ceased to be excisable goods - Held that:- A proper adjudication is required on facts, following the guidelines laid down by various higher forums which are referred to in appellant’s own cases - the matter requires reconsideration in the same lines as in the final order in the appellant’s own case in CHETTINAD CEMENT CORPORATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE (TRICHY), COMMISSIONER OF CENTRAL EXCISE, LTU (CHENNAI) [2016 (12) TMI 218 - CESTAT, CHENNAI]. Penalty - Held that:- There shall be no levy of penalty in the circumstances of the case since interpretation of law is involved. Appeal allowed in part.

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• 2018 (6) TMI 1073
  Valuation - Job work - inclusion of cost of sprouts in assessable value - manufacturing of barley malt on job work basis - whether the cost of sprouts was included by the appellant while discharging his excise liability? - Rule 8 of CER - Held that:- In the case of Campco Chocolate Factory, [2010 (6) TMI 383 - CESTAT, BANGALORE] it was held that in case the sale proceeds from sale of husk is retained by the job worker while paying duty it already included in the value of product manufactured as the cost of raw material no question of adding the value of husk in the value of intermediate product cleared by the job worker to principal manufacturer arise. Allegation of additional consideration are held as not sustainable. The department has wrongly invoked rule 8 of the valuation and has wrongly calculated the differential duty - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1072
  Extended period of limitation - Penalty - Classification of goods - Interpretation of Statute - Held that:- As this Tribunal in the case of Raja Forgings & Gears [2008 (7) TMI 710 - CESTAT, NEW DELHI] has held that this is the case involving interpretation tariff entries, therefore, there is no mis-declaration or classification can be attributable to the assessee - Admittedly, in this case also the appellant have described their goods as part of harvesters combines which is not disputed the items manufactured of the appellant are harvester transmission. In that circumstances, this is the issue of interpretation or classification of the goods in question, therefore, relying on the decision of Raja Forgings & Gears wherein this Tribunal dropped the penalty holding that the issue of interpretation - extended period also not invokable - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1071
  100% EOU - Validity of SCN - misuse of the facility of duty-free procurement of fuel and lubricants under N/N. 53/97-Cus dated 3rd June 1997 and N/N. 1/95-CE dated 4th January 1995 for imported goods and indigenously sourced goods - Held that:- A case was attempted to be made out that respondent had manipulated the records to supress efficiency of production of power and thus divert the surplus power by claiming to have used fuel procured from outside. The power transmitted out of the plant was closely monitored by electricity transmission agency to ensure discharge of wheeling charges. The notices have failed to establish that any norms existed for comparison with actual deployment of inputs for generation of power - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1070
  Classification of goods - plant growth regulators - ‘Agromin’ - ‘Chelamin’ - ‘Chelafir’ - whether classifiable under heading no. 3808 20/3808 30 40 of First Schedule of the Central Excise Tariff Act, 1985 or under heading no. 3105/3105 90 90 of the Schedule? - Held that:- There is no dispute that the three products are ‘micronutrients’. It is also clear that ‘micronutrient’ is not a specific entry in the Schedule. Therein lies the nub: owing to privileged treatment accorded to ‘fertilizers’, manufacturers would prefer to classify ‘micronutrients’ as ‘fertilisers’ with Revenue preferring to deny them that privilege. The dispute is not about the fitment of the description of the goods over the description in the Schedule and is characterised by culling out aspects of rival descriptions, circulars and judicial decisions to suit the claims on the rate to be adopted. Considering the unwillingness of the executive to notify its intentions and our conclusion that it is not the conformity with the description that has led to the dissonance, we take it upon ourselves to go to the root of the issue. The ‘fertilizers’ and ‘pharmaceuticals’ are favoured enough to merit separate chapters on their own, justified by their importance for the human race. At the same time, they, being chemicals, are ensconced in section VI of the Schedule to the Central Excise Tariff Act, 1985, i.e. PRODUCTS OF CHEMICAL AND ALLIED INDUSTRIES – reflecting strict adherence to the arrangement of goods in the Schedule. The section, commencing with organic chemicals and inorganic chemicals, recognises that ‘fertilizers’ and ‘pharmaceuticals’ may fall under either and acknowledges that they are to be distinguished from their doppelganger in the other two chapters. We are unable to approve of the proposition made on behalf of Revenue that the classification claimed should have been rejected. Rejection of a claimed classification is not an end in itself as duty liability can be computed only after application of the rate legislated by Parliament to the appropriate value. The presence of nitrogen in chelates is sufficient to bring it within the ambit of heading 3105 of First Schedule of the Central Excise Tariff Act, 1985 owing to its indispensability despite the negligibility of the quantity. Classification under heading 3105 claimed by the manufacturer cannot be denied to them. We find no merit in the challenge to classification of ‘Agromin’, ‘Chelafer’ and ‘Chelamin’ and dismiss the appeal of Revenue to that extent - appeal disposed off.

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• 2018 (6) TMI 1069
  Penalty u/s 11AC - CENVAT Credit on the written off quantity - Held that:- Once the practice of the appellant is that they are reversing the credit, in some of the cases not reversed in time will not amount to mala fide on part of the appellant - Since they are making the provisions in their Books of Account there is not attempt to avoid any reversal of credit, which required in terms of Rule 3(5B) of CENVAT Credit Rules. Therefore, mala fide intention is not proved against the appellant - penalty rightly set aside - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1068
  CENVAT credit - duty paying documents - supplementary invoices - Contention of the department is that at the relevant time there was no provision for allowing credit on the strength of supplementary invoices - Rule 9 of Cenvat Credit Rules, 2004 - Held that:- With this invoice it cannot be ascertained that the appellant have not received the services, no co-relation was submitted by the appellant between the original invoices for service charges and the present invoices for the service tax payment. Therefore, in absence of such co-relation it cannot be established that the credit taken by the appellant is in respect of those services which have been received by the appellant. The adjudicating authority must verify the subject invoices in the present case with the original invoice raised for the service charges which are detailed in the statements enclosed with the invoices - appeal allowed by way of remand.

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• 2018 (6) TMI 1067
  Demand of Interest and penalty - irregular availment of CENVAT credit, but was not utilised - case of the department is that the wrong availed credit was not utilised till the date of reversal - Held that:- Even though Cenvat credit was not utilized but fact remains that credit was availed fraudulently without receipt of the material as admitted by the Director of the company - it is seen that appellant have knowingly availed the credit only on the invoice without receipt of the goods therefore no case was made out for waiver of penalty - penalty upheld. Demand of Interest - Held that:- In the facts of the present case though the appellant had taken wrong credit but same was not utilised therefore as per the amended Rule 14 interest is not chargeable - demand of interest set aside. Personal penalty on Shri. Ravindra Chimanlal Agarwal - Held that:- Shri. Ravindra Chimanlal Agarwal admitted that they have wrongly availed the credit only on the invoice for which they have paid the some charges to the invoice issuing person. In this fact Shri. Ravindra Chimanlal Agarwal does not deserve leniency hence penalty imposed upon him is sustained - penalty upheld. Appeal allowed in part.

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• 2018 (6) TMI 1066
  Rectification of Mistake Application - as regards the order in respect of Yusuf I Agwan, this Tribunal in para 6 of the order dated 31.10.2017 mentioned that Shri Yusuf I Agwan is a Director of the appellant company. Accordingly, the penalty was imposed. Applicant submits that Shri Yusuf I Agwan is a partner of Act Trading Company and not a Director of M/s Agwan Coach Pvt. Ltd. - Held that:- There is an apparent mistake occurred in particularly para 6 of order of this Tribunal taking reference of para 7 of the order. Since the appeal of Act Trading Co. was allowed, the same facts applicable to Shri Yusuf I Agvvan as a partner of Act Trading Co. The duty evasion was committed by M/s Agwan Coach Pvt. Ltd. Therefore, since the penalty was set aside by allowing the appeal of M/s Act Trading Co., in similar line, the penalty is not imposable on Yusuf I Agwan. ROM application filed by Act Trading Co. - It was wrongly mentioned that M/s Act Trading Co. is manufacturing certain parts and clearing it to M/s Agwan Coach Pvt. Ltd in para 7 of the order - Held that:- It was observed that M/s Act Trading Co. is not a manufacturing but is a trading concern. Therefore, there is an apparent mistake in para 7 of the order. Accordingly, we rectify the order by amending the second and third line starting from "M/s Act Trading Co. is manufacturing certain parts and clearing it to M/s Agwan Coach Pvt. Ltd." be corrected and read as "M/s Act Trading Co. is trading in parts which is sold to M/s Agwan Coach Pvt. Ltd." ROM Application allowed.

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• CST, VAT & Sales Tax

• 2018 (6) TMI 1065
  Restoration of order of Assessing Officer - addition of ₹ 42,24,413/- on the ground of probable sale suppression - whether the addition of ₹ 42,24,413/- on account of probable suppression was so unreasonable that it requires the interference of this Court? - Revisionary Jurisdiction of High Court - Held that:- Admittedly the Assessee, failed to account for invoice No.48 dated 03.12.2004 issued by Tvl. Lakshmi Stores to the Assessee. The findings of all three forums below have been that the Assessee did not maintain his accounts properly - A reading of Section 16 of the Act, makes it amply clear that the Assessing Officer had the power to add the amount in dispute, on account of probable omission. The use of the words, to the best of it's judgment creates a wide discretionary power upon the Assessing Officer, who in the instant case has taken the view that in light of the suppression that was uncovered, it was plausible to assume that the Assessee must have suppressed sales at least worth ₹ 42,24,413/-. This view ultimately found favour with the Appellate Tribunal as well. The view taken by the Tribunal is a probable view, and the High Court while exercising its revisionary jurisdiction should not substitute its own view to the view taken by the last fact finding Authority - there is no error in the decisions of the authorities below - tax case revision dismissed.

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• 2018 (6) TMI 1064
  Validity of Notice of Attachment - case of petitioner is that Section 25 of the A.P. VAT Act, 2005 can be invoked only for the recovery of tax due under a deferred payment scheme but not for recovery of interest due thereon - recovery of interest on loan - it is also the case of petitioner that the properties sought to be attached are already mortgaged with the 3rd respondent Bank, and hence, the Banks dues will have priority of treatment, in terms of Section 26E of the SARFAESI Act, 2002. Held that:- From Rule 24(5)(b) it is clear that whenever any default in payment of tax is committed, the order granting the facility of payment by installments would become infructuous. Once the order granting the facility of deferred payment of tax becomes infructuous, the amount that remains unpaid automatically gets restored to the status of a tax. As a consequence, Section 22(2) would come into play, imposing a liability upon the dealer to pay interest on the amount due at a rate statutorily fixed. It is of relevance to point out that the liability to pay interest arising under Section 22(2) is not merely on tax. The invocation of Section 25 of the Act for the recovery of interest on the amount remaining unpaid under a deferment scheme, as if it were an arrear of land revenue, is clearly borne out by the provision itself. The expression interest payable under the Act used in Section 25 has to be understood in the context of Section 22 (2), which makes every other amount, apart from tax and penalty, liable to bear interest - the liability to pay interest is fastened under Section 22 (2). Interest on amount of loan - section 25 of the A.P. Revenue Recovery Act, 1864 - Held that:- Amount due even under the contract of deferred payment of tax, is an amount due under the Act, since the very power to grant such a facility arises out of statutory prescription and not outside the purview of the Act. Hence the second contention cannot also be accepted. The property sought to be attached is mortgaged - Section 26E of the SARFAESI Act, 2002 - Held that:- To have an attachment on the property which is already under mortgage to the Bank is completely different from the priority that Section 26E of the Securitization Act talks about. There is no bar in law for any property to be mortgaged second time, subject to the concurrence of the first mortgagee. The second mortgagee will stand in queue next to the first mortgagee - there is no illegality in the impugned order of attachment. Petition dismissed.

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• Indian Laws

• 2018 (6) TMI 1088
  Offence u/s 138 of Negotiable Instruments Act, 1881 - revisional jurisdiction under Sections 397 and 401 of Code of Criminal Procedure, 1973 - release of applicant on Bail. Held that:- The Trial Court has taken into account all the aspects. The defence raised by the applicant-accused has been dealt with by assigning reasons. The judgment of the Trial Court also indicate that the Court has scrutinized and appreciated the evidence on record and after giving opportunity to the defence, has held that the applicant-accused is liable to be convicted for the said offence. The Appellate Court has confirmed the judgment of conviction by taking into consideration the evidence on record and the submissions advanced by both the parties. The complainant has examined himself and two other witnesses. The accused has examined himself as a defence witness to contend that the transactions were in the nature of Badla transactions, which are prohibited in law - Admittedly from February1993, the applicant-accused was dealing with the complainant in connection with purchase and sale of shares. The accused has issued cheques in question which were exhibited in evidence vide Exhibits19, 20 and 21. The applicant-accused has admitted that the amount of cheques is due and payable to the complainant. However, the defence of the applicant-accused is that the alleged transactions are forward trading transactions, which are also called as Badla transactions, which were prohibited by Pune Stock Exchange, and therefore, the same are not legally enforceable. In accordance with Section 138 of Negotiable Instruments Act, it shall be presumed unless contrary is proved, that the holder of the cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge in whole or in part of any debt or other liability. In the present case, the complainant has proved that the cheques were issued by the applicant-accused. The said presumption is not rebutted by the applicant-accused in any manner. The applicant-accused had admitted issuance of cheques and that there were outstanding due from him to the complainant in February 1996. The findings of conviction imposed by the Trial Court and confirmed by the Appellate Court, are required to be accepted. While imposing sentence, however, the Trial Court has ordered that the applicant is sentenced to suffer imprisonment for three months and to pay fine of ₹ 10,000/. The sentence of fine was modified by the Appellate Court by maintaining substantive sentence of imprisonment. Criminal Revision Application disposed off.

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• 2018 (6) TMI 1087
  Dishonor of Cheque - closure of Bank Account of complainant - Presumptions as to negotiable instruments - section 118 of N.I. Act - Held that:- Supreme Court in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd., [2001 (11) TMI 837 - SUPREME COURT OF INDIA], has held that the authority shows that even when the cheque is dishonoured by reason of stop-payment instructions by virtue of Section 139 the court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the "stop-payment" instructions were not issued because of insufficiency or paucity of funds. The important thing is that the burden of so proving would be on the accused." we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. So far as the arguments that "date 02.05.2012" was fabricated and was not in handwriting of the revisionist is concerned, date is not a substantial things, in the case where post dated cheques are issued. Issuing of disputed cheque and the amount mentioned in it, is admitted by the revisionist. He cannot be given any benefit of the fact that the date mentioned in this cheque was filled up by any other person. Revision dismissed.

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• 2018 (6) TMI 1086
  Whether a person summoned for investigation (and whose statement may be recorded) has the right to be represented by an advocate merely because the Authority investigating is empowered to take evidence? - Section 30 of the Advocates Act. Held that:- Section 30 provides a right both to the advocate to the practice, and to the litigant to engage the services of an advocate - Since the rule is that advocates must have the right of practice under Section 30 of the Advocates Act, necessarily, any exception to this rule cannot be lightly presumed and must be specifically provided under the statute. Since competition law in our country is in a nascent stage, the Commission, COMPAT and the Supreme Court have often relied on foreign jurisprudence and the position of EU antitrust laws and US in order to interpret the provisions of the Competition Act. Adopting a similar approach, it can be seen that both the US and the EU (or EC) allow parties to be represented by legal counsels at the investigation stage as well - Since the DG’s powers are so far-reaching and the consequences of an investigation by the DG so drastic, it would necessary that the right of a party/person to be accompanied by an advocate during the investigations by the DG, when the latter is collecting or recording evidence, not be taken away. Since the DG’s powers are so far-reaching and the consequences of an investigation by the DG so drastic, it would necessary that the right of a party/person to be accompanied by an advocate during the investigations by the DG, when the latter is collecting or recording evidence, not be taken away. The DG shall ensure that the counsel does not sit in front of the witness; but is some distance away and the witness should be not able to confer, or consult her or him. The Court does not deem it necessary or appropriate to say more on this aspect of the matter, leaving it to the Commission to decide the appropriate course. Appeal dismissed.

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