TMI Tax Updates - e-Newsletter
June 29, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

Articles

1. ATTACHMENT OF BANK ACCOUNTS – NOT TO BE IN THE NATURE OF DRASTIC MEASURE FOR A TEMPORARY PERIOD AND CANNOT BE EXERCISED IN A ROUTINE MANNER

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. TN Govt all praise for GST, calls it "transparent and self-policing tax regime"

2. NITI Aayog to Release First Delta Ranking under the Aspirational Districts Programme

3. Women Transforming India Awards: Submission deadline extended to 31st July

4. RBI Reference Rate for US $

Notifications

GST - States

1. 010/2018-GST - dated 1-6-2018 - Assam SGST

Seeks to extend the due date for filling of FORM GSTR-6 for the months from July 2017 till June, 2018.

2. 009/2018-GST - dated 1-6-2018 - Assam SGST

Seeks to notify NACIN as the authority for conducting the examination for GST Practitioners under rule 83(3)of the Assam GST Rules,2017.

Circulars / Instructions / Orders

GST - States

1. No. 6/2018-GST - dated 9-5-2018

Notified Assignment of functions to proper officers.

DGFT

2. 16/2015-2020 - dated 28-6-2018

Amendment in the Para 9.03 of the Handbook of Procedures for Chapter 3 Scrips-reg.

3. 15/2015-2020 - dated 28-6-2018

Revised ANF 3B for application under Services Exports From India Scheme (SEIS)

Highlights / Catch Notes

Income Tax

• Court Rules Payment Exceeding Limits on Bank Holiday Justified u/s 40A(3) in Land Purchase Case.

  Case-Laws - AT : Disallowance u/s 40A - payment in case exceeding permissible limits - purchase of land from the farmers - payment was made on Sunday, when the banks were closed - disallowance made under section 40A(3) is not justified.
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• High Court rules interest income on RBI share capital deposits is taxable as "Income from Other Sources." Revenue's appeal dismissed.

  Case-Laws - HC : Interest income earned on bank deposits - Income made out of share capital received from the Reserve Bank of India - to be taxed as “Income from Other Sources” - or to be reduced from the capital cost of the project - HC dismissed the revenue appeal.
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• Undisclosed Equipment Investment Dispute Under Income Tax Act Section 69 for Broadcasting Channel in 2011-12 Assessment Year.

  Case-Laws - AT : Undisclosed investment in equipment U/s 69 - the channel has gone on air in the financial year 20010-11 pertaining to assessment year 2011- 12 and if any addition has to be made on account of unexplained investment, it has to be in A.Y. 2011-12 and not in the impugned assessment year.
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• Entity Challenges Non-Appealable Tax Deduction Order; Tribunal's Decision Deemed Flawed, Sent Back to ITAT for Review.

  Case-Laws - HC : Appeal by a person denying liability to deduct tax - appealable orders - Tribunal held that said appeal before the Commissioner of Income Tax [Appeals] was not maintainable u/s. 246, 246A of the Act. - Section 248 - Order by the Tribunal suffers from infirmity and is per incurium - matter restored before ITAT.
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Customs

• Exemption Granted Despite Delay in Goods Re-export; Conditions Not Equally Considered, Purpose Matters in Compliance Assessment.

  Case-Laws - AT : Delay in re-export of goods after processing - It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve. It is not in dispute that the goods were finally exported - Benefit of exemption allowed.
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Indian Laws

• Director Not Liable for Cheque Dishonor Offense if Not Responsible for Business Conduct at Relevant Time, per Section 141.

  Case-Laws - HC : Dishonor of Cheque - insufficiency of funds - A director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the Negotiable Instruments Act.
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• Section 138 of Negotiable Instruments Act: File Cheque Dishonor Complaints Where Complainant's Bank is Located.

  Case-Laws - HC : Dishonor of cheque - Jurisdiction of the courts - under the amended provision of Negotiable Instruments Act, the complaint u/s 138 of Negotiable Instruments Act can be filed within the jurisdiction of the court, where the banker of the complainant is situate.
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• Court Stresses Need for Transparency: Complainant Didn't Disclose Accused's Letter Before Presenting Dishonored Cheque.

  Case-Laws - HC : Dishonor of cheque - insufficiency of funds - suppressed the fact that he has received the letter from the accused even before presenting the cheques. A person who is coming to the court for seeking certain relief should come with clean hands.
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IBC

• Genuine Disputes in Corporate Insolvency Must Be Supported by Evidence to Prevent Process Misuse.

  Case-Laws - AT : Corporate insolvency process - existence of dispute - If the dispute is frivolous unsupported by any evidence, the spurious defence is to be rejected. However, on the basis of records and evidence if there appears to be an ‘existence of dispute’, such case is to be rejected.
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Service Tax

• Airline Packed Food Sale Classified as Goods, Not Service; VAT Obligations Met, Not Outdoor Catering.

  Case-Laws - AT : Service or sale - sale of packed food to the airlines - Since the appellant was simply supplying the food and was not serving the same to the passengers on board, it was specifically a sale of goods, Appellant has already discharged the VAT liability thereof. The same cannot be the outdoor catering services
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• Taxpayers Can Offset Overpaid Service Tax Against Future Liabilities Retroactively u/rs 6(4A) and 6(4B.

  Case-Laws - AT : Adjustment of excess service tax paid against the subsequent service tax due - Though the provisions of Rule 6(4A) and 6(4B) are inserted subsequently but they are applicable retrospectively
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• Appellant's inaccurate returns lead to service tax evasion; extended limitation period invoked with confirmed tax demand and penalty.

  Case-Laws - AT : When the return has to be filed by the appellant, it is expected that they reflect the correct figures in the returns and not by doing so, they have suppressed the value of the services and thereby evaded payment of service tax. - Demand of service tax confirmed by invoking extended period of limitation with penalty
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Central Excise

• Goods Classification Under Central Excise: Single-Stage Process with Ammonium Chloride and Formic Acid; Not a Primary Resin.

  Case-Laws - AT : Manufacture - classification - Captive consumption - the preparation of impugned goods is in one stage process under controlled temperature and pH and addition of Ammonium Cloride Formic Acid in the processes, the emerging product being transferred to glue kitchen area for final use in bonding. The classification of the product as primary resin is not sustainable.
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• Section 142(6)(a) CGST Act mandates cash refunds for any admissible credit claims.

  Case-Laws - AT : Refund in cash - In view of Section 142(6)(a) of Central Goods & Service Tax Act, any amount of credit found to be admissible to the claimant shall be refunded to him in cash.
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• Refund Claims on Pre-Deposit from CENVAT Credit Cannot Reopen if Settled by Order-in-Appeal, No Higher Court Contest.

  Case-Laws - AT : Refund claim - amount of pre-deposit debited from cenvat credit - For a settled issue pursuant to Order-in-Appeal which is not further challenged in appeal before Higher Court, the issue cannot be reopened by issue of a fresh show cause notice.
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VAT

• Court Rules Surcharge on Promoting Local Businesses Unconstitutional; Violates Articles 301, 304(a), and 14 of the Constitution.

  Case-Laws - HC : Levy of Surcharges for promoting indigenous and local business. - In the absence of such an objective in the Budget Speech, the stand taken by the State cannot be accepted as a bonafide one. - There is no hesitation to hold that the impugned levy is discriminatory and violative of Article 301 read with clause (a) of Article 304 as also Article 14 of the Constitution.
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Case Laws:

• GST

• 2018 (6) TMI 1381
  Release of detained goods - Section 129 of the CGST Act - KSGST Act - Held that:- An identical matter has been disposed of by a Division Bench of this Court in THE COMMERCIAL TAX OFFICER AND THE INTELLIGENCE INSPECTOR VERSUS MADHU. M.B. [2017 (9) TMI 1044 - KERALA HIGH COURT], directing expeditious completion of the adjudication of the matter and permitting release of the goods detained pending adjudication, in terms of Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017 - detained goods are to be released - petition disposed off.

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• Income Tax

• 2018 (6) TMI 1401
  Interest income earned on bank deposits - Income made out of share capital received from the Reserve Bank of India - to be taxed as “Income from Other Sources” - or to be reduced from the capital cost of the project - Tribunal following the decision of‘Commissioner of Income Tax Bihar – II, Patna Vs. Bokaro Steel Limited’[1998 (12) TMI 4 - SUPREME COURT] which distinguished the earlier view of ‘Tuticorin Alkali Chemicals & Fertilizers Vs. Commissioner of Income Tax’ [1997 (7) TMI 4 - SUPREME COURT] and held that the interest income earned by the Assessee-Company on bank deposits made out of share capital received by it from the Reserve Bank of India could not be taxed as “Income from Other Sources” as the said interest income was earned prior to commencement of operations of the company during the construction period. Also in the case of ‘Commissioner of Income Tax v. Karnataka Urban Infrastructure and Development and Finance Corporation [2006 (2) TMI 114 - KARNATAKA HIGH COURT] held that such interest income would go to reduce the capital cost of the project and is on the capital account and the same cannot be taxed during the relevant year in which such interest income is earned. Held tht:- No substantial question of law arises in the present case and the Appeal filed by the Revenue is without merit and liable to be dismissed. The Appeal is accordingly dismissed. We express our concern and anguish at the tendency of the Revenue Department to file unnecessary appeals u/s. 260-A of the Act even though the issues are ex facie covered by the decision of the jurisdictional High Courts or even the Hon’ble Supreme Court of India. The substantial question of law essentially means that a question of law which is not already settled by the Constitutional Courts can only fall within the ambit of Section 260-A of the Act and therefore repetitive filing of such appeals by the Tax Department who are expected to be serious and bonafide litigants in the Constitutional Courts is a matter of concern. It is expected of the concerned Authorities who approve filing of such appeals u/s. 260-A of the Act, to bonafide apply their mind to such aspects of the matter and only after recording appropriate reasons for need to file such appeals and need to get substantial question of law genuinely arising from the Order of the Tribunal determined by Constitutional Courts

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• 2018 (6) TMI 1400
  Penalty u/s 271(1)(c) - Concealment of income - assessee's agreement on addition - Held that:- This appeal is squarely covered by the Co-ordinate Bench Judgment of this Court in the case of ‘Commissioner of Income Tax v. Manjunatha Cotton & Ginning Factory and Others [2013 (7) TMI 620 - KARNATAKA HIGH COURT] merely because the assessee agreed for addition and accordingly assessment order was passed on the basis of this addition and when the assessee has paid the tax and the interest thereon in the absence of any material on record to show the concealment of income - it cannot be inferred that the said addition is on account of concealment - the assessee has offered the explanation - The said explanation is not found to be false - On the contrary it is held to be bonafide No concealment on the part of the Assessee, attracting penalty under Section 271[1][c] of the Act. Such cogent and reasonable findings of facts by the learned Tribunal and consequentially set aside the penalty under Section 271[1][c] of the Act does not give rise to any substantial question of law requiring consideration by this Court under Section 260-A of the Act. - Decided in favour of assessee.

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• 2018 (6) TMI 1399
  Penalty u/s 271(1)(c) - excessive deduction claimed under Section 10B - Held that:- Since the Tribunal has reiterated the findings of facts that both the additions made to the income of the Assessee having been set aside following the decision of the High Court in the case of Tata Elxsi Ltd.,[2011 (8) TMI 782 - KARNATAKA HIGH COURT] as far as issue of Section 10B is concerned Additions made in the income on account of alleged excess stock - the said alleged excess stock was not as a result of purchases made outside the books of accounts, but was only on account of wrong entries in the books of accounts and in any case the higher stock in trade declared as closing stock in a particular year would be taken as opening stock at the beginning of the next year and therefore the tax effect of such alleged excess stock is ‘Nil’ and thus it being a tax neutral entry, no concealment on the part of the Assessee, attracting penalty under Section 271[1][c] - Decided in favour of assessee.

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• 2018 (6) TMI 1398
  Appeal by a person denying liability to deduct tax - appealable orders - Tribunal held that said appeal before the Commissioner of Income Tax [Appeals] was not maintainable u/s. 246, 246A of the Act. - Scope of amendment in act - Held that:- Referring to the provisions of Section 248 of the Act before and after its amendment with effect from 1.6.2007 by Finance Act, 2017 from a bare perusal of the Order passed by the learned Tribunal, we are of the opinion that the aforesaid provisions of Section 248 of the Act having a vital bearing on the issue raised before the learned Tribunal has not been noticed by the learned Tribunal and therefore the Order passed by the learned Tribunal suffers from infirmity and is per incurium and the same deserves to be set aside and the matter remanded back to the learned Tribunal to reconsider the said case in view of the aforesaid quoted provision of Section 248 of the Act - peals of the Assessee are allowed. The matter is remitted back to the learned Tribunal for deciding the Appeal afresh

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• 2018 (6) TMI 1397
  Undisclosed bank accounts - survey u/s 133A - AO clubbed the sales with the turnover declared by the assessee in respect of his business concern and applied a profit rate of 8% to the total turnover - arrival by the First Appellate Autority of the profit figure at the rate of 25% of total deposit - Held that:- As appellant has submitted that the importation by the CIT(Appeals) the concept of 25% of the total deposit to be unaccounted profit as income to be without any foundation and arbitrary. His submission is that both the statutory appellate fora were wrong in coming to the finding that the business in which the appellant is engaged involves mostly cash and credit card payments. But these are all factual issues and we do not want to reappreciate the materials on the basis of which the Tribunal arrived at its finding. No substantial question of law

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• 2018 (6) TMI 1396
  Additions made under ALP pricing provisions - additions u/s 40[a][ia] - Held that:- We are of the opinion that since both the issues with regard to TP adjustments under Section 92CA of the Act as well as disallowances under Section 40[a][ia] of the Act, the matter is remanded back by the learned Tribunal to the Assessing Officer, the observations made by the learned Tribunal in Paragraph-26 will depend upon the findings of facts which are arrived at again by the Assessing Officer upon such remand by Tribunal. We consider it appropriate to leave the said question of law open for consideration after appropriate orders are passed upon fresh enquiry by the learned Assessing Officer, upon such remand by Tribunal.

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• 2018 (6) TMI 1395
  Deduction of Section 10A - computation of claim - Held that:- The issue involved in the present case is covered by the decision in the case of ‘Commissioner of Income Tax And Another v. Yokogawa India Limited’ [2016 (12) TMI 881 - SUPREME COURT] holding that deduction under Section 10A of the Act is to be computed at the stage of computing gross total income of the eligible undertaking under Chapter IV of the Act and at the stage of computation of total income under Chapter VI of the Act and deduction under Section 10A of the Act only qua the eligible under taking and without reference to other eligible or non eligible units or undertakings of same assessee. The deductions under Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income

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• 2018 (6) TMI 1394
  Deduction u/s 10A computation - eligibility criteria - Held that:- To be eligible for exemption from payment of income tax, export should earn foreign exchange. It does not mean that the undertaking should personally export goods manufactured / software developed by it outside the country. It may export out of India by itself or export out of India through any other STP Unit. Once the goods manufactured by the assessee is shown to have been exported out of India either by the assessee or by another STP Unit and foreign exchange is directly attributable to such export, then Section 10A of the Act is attracted and such exporter is entitled to benefit of deduction of such profits and gains derived from such export from payment of income tax. The finding of the authorities that the assessee has not directly exported the computer software outside country and because it supplied the software to another STP unit, which though exported and foreign exchange received was not treated as an export and was held to be not entitled to the benefit is unsustainable in law. The substantial question of law is answered in favour of the assessee and against the revenue. The appeal is allowed. The impugned orders are set aside. The assessee is held to be entitled to deduction of such profits and gains derived from the export of the computer software. For computation of deduction if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software under Section 10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature. Even in common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well. See M/s. Tata Elxsi Ltd., vs. Asst. Commissioner of Income Tax [2015 (10) TMI 634 - KARNATAKA HIGH COURT] and Commissioner of Income-tax, Central – III vs. HCL Technologies Ltd.(2018 (5) TMI 357 - SUPREME COURT)

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• 2018 (6) TMI 1393
  Depreciation claim of assessee trust - Held that:- Since the issue regarding claim of Depreciation in the hands of the Charitable Trust is no longer res integra as relying on Hon’ble Supreme Court in the case of ‘Commissioner of Income Tax-III, Pune v. Rajasthan & Gujarati Charitable Foundation Poona’ [2017 (12) TMI 1067 - SUPREME COURT] - We are of the opinion that no substantial question of law now arises in the present Appeals filed by the Revenue. Finding of the learned Tribunal of the accumulation of income not exceeding 15% of the income is concerned, the same is a pure finding of fact and does not give rise to any substantial question of law. Accordingly, We are of the opinion that the Appeals filed by the Revenue are devoid of any merits

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• 2018 (6) TMI 1392
  Disallowance of remuneration to partners u/s 185 - assessee submitted only photo copy of the partnership deed and failed to provide certified copy of the same as required under section 184 - Held that:- The assessee has claimed before us that it had filed the original partnership deed before the Ld. CIT(A), however, same was ignored on the ground that no application under Rule 46A of the Income Tax Rules, 1962 was filed. The assessee has produced the original partnership deed before us. Thus, there is no doubt as the original partnership deed exists, but the assessee is required to make compliance of section 184(2) of the Act by way of filing a copy of the partnership deed duly certified in writing by all the partners. When the original copy is available with the assessee, we do not find any difficulty in filing copy of the said partnership deed duly certified by all the partners, as long as the original deed is genuine - restore this issue to the file of the Assessing Officer, with a direction to the assessee to comply with the provisions of section 184(2) - decided in favour of assessee for statistical purposes. Disallowance on account of vehicle maintenance expenses - Held that:- The onus is on the assessee to substantiate that the expenses debited under the head “vehicle maintenance expenses” have been incurred wholly and exclusively for the purpose of the business irrespective of the fact, whether the same are incurred on fuels or the repair of the vehicles - restore this issue to the file of the Assessing Officer and before him the assessee may produce logbook of the vehicles or any other evidences to substantiate its claim of expenses incurred for business purposes. In case of absence of any logbook or other evidence, the Assessing Officer may consider for disallowing reasonable expenditure towards possible personal use by the partners of the firm, in accordance with law. Decided in favour of assessee for statistical purposes.

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• 2018 (6) TMI 1391
  Disallowance u/s 40A - payment in case exceeding permissible limits - purchase of land from the farmers - payment was made on Sunday, when the banks were closed - Held that:- Payment was made on Dt. 05.08.2012 i.e. 'Sunday' which is not disputed by the AO as well as Ld. CIT(A) and Rule 6DD(j) specifically provides exception for disallowance under section 40A(3) on the day on, which banks are closed. The payments were made to farmers for purchase of their agricultural land and the payments are duly supported by the various documentation in form of conveyance deed etc. Therefore, in the above circumstances, disallowance made under section 40A(3) is not justified. - decided in favour of assessee

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• 2018 (6) TMI 1390
  TPA - ALP determination - selection of MAM - Selection of set of comparable companies - Held that:- Before the Ld. DRP, the assessee made both oral and as well as written submissions with respect to issues in hand and the Ld. TPO rejected the comparables including new comparables without assigning any reason and the same were not considered by the Ld. DRP, where the financial data was available but the same was neither considered by Ld. TPO nor by the Ld. DRP. The totality of facts, clearly indicates that the factual matrix needs to be examined afresh at the level of the Ld. DRP. The DRP is at liberty to consider the cases relied upon by the assessee as well as other cases/comparable cases, which are relevant for adjudication for the issues in hand. The assessee is also at liberty to furnish necessary evidences, if any, in support of its claim. Thus, the appeal of the assessee on the issues in hand is remanded back to the file of the ld. DRP for fresh adjudication

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• 2018 (6) TMI 1389
  Revision u/s 263 - payment of royalty - Held that:- There is no dispute that the assessee is paying royalty since the year 2000. The A.Y under consideration is A.Y 2011-12 which means that since the last 10 years Revenue has been accepting the payment of royalty as legitimate revenue expenditure. No new facts have come into existence nor the law has changed. Therefore, the ratio laid down by the Hon'ble Supreme Court in the case of Radhaswami Satsang [1991 (11) TMI 2 - SUPREME COURT] squarely applies. Further, the PCIT’s decision is solely based upon the decision in the case of sister concern Honda SIEL. As mentioned elsewhere the assessee is in existence since the year 2000 and has been paying royalty since past 11 years. Considering the facts of the case in hand, vis a vis the decisions considered by the ld. PCIT for assuming jurisdiction u/s 263 of the Act, we are of the considered opinion that the PCIT has erred in assuming jurisdiction in as much as he has considered the facts of the case of the sister concern without appreciating the facts of the case in hand in true perspective. We are of the considered opinion that the assessment order framed u/s 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue. - Decided in favour of assessee.

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• 2018 (6) TMI 1388
  Levy of penalty u/s 271(1)(c) - method of bench marking international transaction - Held that:- TPO/AO/CIT(A) have held that such action by the assessee is contrary to the provisions of the Act and tantamount to furnishing of inaccurate particulars of income. Prior to 2007, there was a legal debate as to whether multiple year data can be used or current year data has to be used. A.Y under consideration is 2005-06 which means that when the assessee completed its transfer pricing study and filed return of income, this debate was very much alive. This being a debatable issue at the point of time when the assessee filed its return of income, adoption of multiple year data for arriving at ALP is a bonafide exercise. Penalty levied on that count cannot be sustained as the law on this issue was evolving. Mere fact that the addition has been made or confirmed does not per se lead to imposition of penalty u/s 271(1)(c) for the simple reason that both the assessment and penalty proceedings are distinct from each other. If the contention of DR is accepted, then there was no need for separate penalty proceedings. Triggered the levy of penalty relates to the claim of standard deduction @ 5%. This issue is also highly debatable and many disputes arose regarding interpretation of the proviso. Whether tolerance band is standard deduction or not, different courts have interpreted it differently so much so that in the Finance Bill 2012 - even this issue was highly debatable and, therefore, no penalty can be levied on such a highly debatable issue. TPO has not rejected the methodology adopted in the TP report submitted by the assessee obtained from external expert. Difference in ALP arose only on account of difference of opinion between the assessee and the TPO with regard to the use of multiple year data and the claim of standard deduction. On both the counts, the levy of penalty is not justified. - Decided in favour of assessee.

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• 2018 (6) TMI 1387
  Exemption u/s 10(1) on account of agricultural income - Assessing Officer held mere holding of agricultural land does not prove that assessee has produced lemon grass which could fetch it 70,76,750/- - assessee did not produce even a single bill/ invoices against purchase of fertilizer and manure expenses - Held that:- There is substantial increase in agricultural income only during the impugned assessment year. It is not known as to whether the price of lemon grass has fallen down or the quantity grown has fallen down in the preceding or subsequent years. Although the CIT (A) had passed certain remark that when the Assessing Officer had passed the order the return of income for the two subsequent years would have also come on record, however, he himself has not bothered to verify the same. It is the settled proposition of law that the powers of the CIT (A) are co-terminous with that of the Assessing Officer. He can do what the Assessing Officer has failed to do. In the instant case it appears that the CIT (A) was carried away by the arguments advanced by the assessee before him and failed to discharge the powers conferred upon him. When the assessee did not produce the books of account although it is a private limited company and did not produce the relevant details as called for by the Assessing Officer, the CIT (A) should not have granted substantial relief to the assessee on account of agricultural income which under the facts and circumstances of the case appears to be abnormal - restore the issue to the file of the CIT (A) with a direction to decide the issue afresh in accordance with law after giving due opportunity of being heard to the assessee - Appeal filed by the revenue is allowed for statistical purposes.

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• 2018 (6) TMI 1386
  Undisclosed investment in equipment U/s 69 - e-mail communications dated 5.12.2011 and 11.12.2011 which has formed the basis of addition in the hands of the assessee company towards the cost of equipment - lack of enquiry - Held that:- We find that there is nothing on record in terms of any enquiry/ investigation which has been carried by the Assessing officer either during the assessment proceedings or even during the remand proceeding. The Assessing officer has not brought on record any credible verifiable evidence in terms of assessee company having incurred expenditure on purchase of equipments and grant of license over and above what has been stated in the books of accounts or the value of equipment and the cost of obtaining the license if so procured at the relevant point in time is higher than what has been stated in the books of accounts. Further, there is nothing on record which suggests these alleged investments have been made during the year under consideration. CIT(A) has also returned a finding that the channel has gone on air in the financial year 20010-11 pertaining to assessment year 2011- 12 and if any addition has to be made on account of unexplained investment, it has to be in A.Y. 2011-12 and not in the impugned assessment year. In light of the above discussions, we do not see any infirmity in the finding and order of the ld. CIT(A). - decided against revenue.

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• 2018 (6) TMI 1385
  Disallowance of travelling and conveyance expenses - Held that:- It is a case where the AO has disallowed 20% of travelling and conveyance expenses incurred by the assessee and which has been sustained to the extent of 10% by the ld CIT(A). There is no finding recorded regarding any specific defect in claim of the expenses or the expenses have not been incurred for the purposes of the business. It is a clear case of adhoc disallowance of expenses which cannot be sustained in the eyes of law. In the result, addition so sustained by the ld CIT(A) is hereby deleted. Disallowance of 10% of machinery expenses - Held that:- There is no finding recorded regarding any specific defect in claim of the expenses or the expenses have not been incurred for the purposes of the business. It is a clear case of adhoc disallowance of expenses which cannot be sustained in the eyes of law. In the result, addition so made by the AO is hereby deleted. - decided in favour of assessee

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• 2018 (6) TMI 1384
  Denial of exemption claimed u/s.10(38) - claim denied disbelieving the claim of Long Term Capital Gains - claim was disbelieved on the statement given by a share broker Shri Ashok Kumar Kayan who stated that he was providing accommodation entry in the form of bogus Long Term Capital Gains, in connivance with entry operators and promoters of penny stock scripts - Held that:- Directions given required the assessee to prove the transactions of the Long Term Capital Gains by providing all evidence required by the AO and the Revenue has been directed to give the statement of Shri Ashok Kumar Kayan to the assessee for rebuttal - Appeal of the assessee is allowed for statistical purposes.

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• 2018 (6) TMI 1383
  TDS u/s 194C - failure to deduct tds on payment to the transporters - HC has held [2017 (7) TMI 1153 - RAJASTHAN HIGH COURT] that, Section 194(c) read with 204(iii) will come into operation only on the payment made by assessee and as rightly discussed since payment is not made by the assessee if at all there is default the default is of Mangalam. Since the payment was not received, the same is required to be considered in the books of account since TDS is deducted by the Mangalam on behalf of assessee completely. Held that:- No ground to interfere with the impugned order. The special leave petitions are, accordingly, dismissed. - Decided in favour of assessee.

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• 2018 (6) TMI 1380
  Assessment u/s 153C - Addition to income - period of limitation - Held that:- There is no doubt that the notice u/s 153C of the Act was issued to the assessee on 08.11.2012. The Hon'ble High Court of Delhi in the case of RRJ Securities Pvt. Ltd [2015 (11) TMI 19 - DELHI HIGH COURT ] has held that limitation will start on the date of recording of satisfaction that incriminating material belonged to third person. Since the date of notice in the case in hand is 08.11.2012, assessment framed u/s 153C of the Act for assessment year 2005-06 is beyond the scope of provisions of section 153A/153C of the Act, in the light of ratio laid down by the Hon'ble Delhi High Court Assessing Officer himself admitted that the additions have been made on the basis of same documents which were considered while farming earlier assessment order u/s 153C of the Act. As mentioned elsewhere, that assessment order has been set aside by the Tribunal while allowing the appeal of the assessee, therefore, addition is based upon the very same documents cannot be sustained in any case. - Decided against revenue

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• 2018 (6) TMI 1379
  Disallowance u/s 14A - Held that:- The learned Departmental Representative could not controvert the submission of the assessee that it has not received any exempt income. In view of this, respectfully following the decision of Hon’ble Delhi High Court in Cheminvest Ltd. Vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] as held that in absence of any exempt income no disallowance under section 14A can be made. - Decided in favour of assessee. Disallowance of interest expenditure - Held that:- As assessee has shown that assessee has made investment in the companies which are 100% subsidiary of the assessee company and therein the same line of business. It was also not shown before us that investment is made only for the purpose of earning dividend. In view of the decision in CIT Vs. Phil Creation [2011 (6) TMI 912 - BOMBAY HIGH COURT]. According to us, the issue is squarely covered in favour of the assessee. Disallowance of entertainment expenditure sustained @ 10% out of the total expenditure at 50% of Directors traveling expenses - non busniss purposes - Held that:- We have noted that this issue is squarely covered in favour of the assessee by the decision of the Co-ordinate Bench in assessee’s own case for assessment year 2007-08 [2010 (8) TMI 1108 - ITAT DELHI] wherein it has been held that when there is no specific expenses as pointed out by the Assessing Officer for non-business purposes, no disallowance can be made. - Decided in favour of assessee

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• 2018 (6) TMI 1378
  Assessment u/s 153A - addition u/s 68 - Held that:- Despite query from the bench, assessee did not given the details of plot transacted. This is with reference to the nature of the documents produced by the assessee to justify the identity of the company, creditworthiness of the company and the genuineness of the transactions. No hesitation in holding that the documents produced by the assessee do not inspire any confidence in all the 3 ingredients of section 68 in the present case. We are in disagreement on the issue of findings of the ld CIT(A) that transaction of the Cubic Resource are genuine. We are also in disagreement that cross examination of Shri S.K. Gupta should have been given to the assessee. According to us the assessee has failed to establish the creditworthiness and genuineness of the transaction. But for the only reason that the Ld. AO has invoked the provisions of section 153A of the income tax act to make this addition without any incriminating evidence, respectfully following the decision in Meeta Gutguttia (2017 (5) TMI 1224 - DELHI HIGH COURT) following the decision of CIT versus Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT], we agree with the order of the Ld. CIT – A that there is no incriminating material found during the course of search with respect to this addition. In view of this, we dismiss ground No. 1 and 2 of the appeal of the revenue.

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• 2018 (6) TMI 1377
  Addition for discrepancy in closing stock - Held that:- The assessee had denied the value of closing stock arrived at by the survey team throughout i.e. right from the inception when the survey was conducted till the scrutiny proceedings. We find merits in the contentions of the assessee that the Revenue has relied on incorrect set of papers, which reveal two closing stock one at 2,26,31,232.73/- as per ledger extract and another at 0.20 as per the balance sheet print out. Addition of total stock difference between what has been found at the time of survey from the print outs and that as per audited accounts cannot be justified. We find merit in the alternative submissions of the assessee that at the most gross profit on the said stock could be added to the income of the assessee. As during the last three years the average gross profit of the assessee is 3.2% and it would be reasonable if the same is applied to bring to tax the income of the assessee - direct the Assessing Officer to apply gross profit @ 3.42% of 1,15,82,192/- and add it to the income of the assessee and thus the assessee gets relief of 1,11,86,081/-. Decided partly in favour of assessee Addition on account of undisclosed and unaccounted income - addition to the regular income by not giving opportunity under Rule 46A before admitting new evidences - Held that:- The order passed by the CIT(A) is correct in deleting the addition of 4.39 Cr as it was based upon surmises and presumptions and there is no concrete basis for the same. The learned CIT(A) has give a very clear and comprehensive findings while deleting the addition, and, therefore, we do not find any reason to interfere with the order of the first appellate authority and are inclined to dismiss the appeal by the Revenue. Addition on account of discrepancy in closing stock - Held that:- The facts in brief are that the first appellate authority rejected the application of decimal theory by the Assessing Officer and worked out the undisclosed profit at 3,22,371.51 (by taking sales and purchases at 51,81,988.77 minus 48,59,617.26). The contention of the AR is that instead of calculating the undisclosed profit by taking the sales and purchases at respective amount the rate of gross profit should be applied and, thus, average gross profit rate of 3.43% should be applied on the total undisclosed sales of 51,81,988.77/- need to be rejected - CIT(A) has taken a very balanced view of the mater and we, do not find any reason to interfere with the findings of the CIT(A) on this issue. According, ground no.1 raised by the assessee is dismissed. Addition of opening capital - Held that:- The opening balance of cash in hand as on 01.04.2008 was 4,20,481/- and, therefore, the addition of 55,603 was wrong and against the facts on record. We find merit in the contention of the learned AR as there was opening cash balance to the tune of 4,20,481/- as on 01.04.2008. Accordingly, we are inclined to delete the addition of 55,603 sustained by the CIT(A). Resultantly, ground no.2 is allowed. Additions on account of opening balance, initial capital and unaccounted transactions initially recorded - additions from statement of “peak of cash receipts and payments” - Held that:- The first appellate authority has also made the additions without any basis. On examining the statement of receipts and payments filed by the assessee, we find that there was opening balance of 8,32,502/- on 15.04.2008 and the difference between the receipt and payments on the same date was also at 2,47,548/- whereas on all the dates till 12.08.2008 the peak was in negative. Thus, the peak theory has not served the purpose, at the most, on the basis of statement, the highest peak was 8,32,502/-, which could be sustained by the CIT(A) whereas the remaining two additions of 2,47,548/- and 77,13,995/- are not correct and cannot be sustained. Based on our above finding, we direct the Assessing Officer to delete the additions of 2,47,548/- and 77,13,995/-, whereas the addition of 8,32,508/- is sustained. Resultantly, the appeal of the assessee is partly allowed.

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• 2018 (6) TMI 1376
  Eligibility for claiming exemption u/s.11 - excessive payments made to M/s. Amali Builders Private Limited - whether the payments effected to M/s. Amali Builders Private Limited were in the normal course of its activities at market rates and there was no violation as contained in Section 13(1)(c) - Held that:- Apart from saying that two of the trustees were also directors of the M/s. Amali Builders Private Limited, AO has no where shown as to how the said concern satisfied requirement of Explanation 3 to Section 13(1) (9). Just because two trustees were directors would not mean that they were entitled to 20% of the profit or were having 20% of its voting power. That apart, argument of the assessee all along was that payments effected to M/s. Amali Builders Private Limited were not excessive or unreasonable. Total construction cost incurred by the assessee was undisputedly 5,50,51,715/- and the payments to M/s. Amali Builders Private Limited came to 40,78,668/-. Excluding service tax 4,48,668/- the payment for services came to 36,30,000/-. This was only about 6.6% of the total construction cost. There is nothing on record to show how the Revenue came to a conclusion that such payments were excessive viz-a-viz services rendered by them. - Decided against revenue

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• Customs

• 2018 (6) TMI 1375
  Delay in re-export of goods after processing Benefit of N/N. 158/95-Cus dated 14.11.1995 - denial of benefit on the ground of delay in re-export of goods within stipulated time - Held that:- The mere fact that it is statutory does not matter one way or the other. Some conditions may be substantive, mandatory and based on considerations of policy and some other may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve. It is not in dispute that the goods were finally exported - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1374
  Refund of 4% CVD (SAD) in cash - rejection for the reasons that the DEPB scrips are credited after 30/09/2013 as per Board circular No.18/2013-Cus. dt. 29/04/2013 - whether 4% of the SAD paid through DEPB scrips can be refunded through cash or not? - Held that:- This issue has been considered by the Hon'ble High Court of Delhi in the case of Allen Diesels India Pvt. Ltd. [2016 (2) TMI 247 - DELHI HIGH COURT] and the Hon'ble High Court after considering all the submissions of both the parties has come to the conclusion that the circular issued by CBEC cannot impose any additional restriction for grant of refund under a notification and such circulars are ultra vires. Rejection also on the ground of time bar - Held that:- The rejection of refund claims on time bar in the present case is not sustainable because only the defect memo was issued and the refund claims were not rejected - also, the Notification No, 102/2007 does not prescribe any time limit for claiming the refund. The original authority will verify and examine the documents and thereafter will decide the refund claims of the appellant - appeal allowed by way of remand.

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• 2018 (6) TMI 1373
  Principles of Harmonious Construction - return of seized goods - case of appellant is that 324 kgs. of silver ornaments, cash of 994.70 and two packets of Bahi Khata seized from Shri Bhagwati Prasad were not handed over to Shri Bhagwati Prasad on 05.10.1974, which is now sought to be refunded - Held that:- Though there was an order in the said Order-in-Original dated 06.03.1978 for release of silver ornaments, gold ornaments, Indian currency and Bahi Khatas to Shri Bhagwati Prasad, the said Order-in-Original dated 06.03.1978 made a clear mention of facts stated on page 2 under para 2 that 324 kgs. of silver ornaments, Indian currency and Bahi Khatas were returned to Shri Bhagwati Prasad - Further the said show cause notice dated 26.03.1975 did not have any proceedings related to silver. Following Principles of Harmonious Construction, it is reasonable to conclude that 324 kgs. of silver ornaments, Indian currency and Bahi Khatas were returned to Shri Bhagwati Prasad on 05.10.1974 - appeal dismissed - decided against appellant.

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• Insolvency & Bankruptcy

• 2018 (6) TMI 1382
  Corporate insolvency process - application rejected on the ground of ‘existence of dispute’ - Held that:- If the dispute is frivolous unsupported by any evidence, the spurious defence is to be rejected. However, on the basis of records and evidence if there appears to be an ‘existence of dispute’, such case is to be rejected. In the present case, it is not disputed that the Respondent had issued Lawyer’s notice dated 12th December, 2015 and disputed the claim on the ground of overcharging. The ‘Operational Creditor’, was also informed that the ‘Corporate Debtor’ incurred huge loss due to overcharging. Counter claim was also made by Respondent. Such dispute having raised by Respondent in December, 2015, we are not inclined to accept the plea taken by the Appellant. We find no merit in this appeal. It is accordingly dismissed.

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• Service Tax

• 2018 (6) TMI 1365
  Service or sale - sale of packed food to the airlines, on which VAT already discharged - whether the said activity amounts to Service and is liable to Service Tax or not? - Held that:- The invoice of the appellant is showing sale of food separately from the charges of other services rendered in addition to supply food. Apparently and admittedly, appellant is not serving the said food on board hence as far as supply of food is concerned property therein stands transferred the moment it is loaded on the air craft trolley - Since the appellant was simply supplying the food and was not serving the same to the passengers on board, it was specifically a sale of goods, Appellant has already discharged the VAT liability thereof. The same cannot be the outdoor catering services - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1364
  Liability of Service Tax - airport service before 01.07.2010 - scope of SCN - remand of the case - Penalties u/s 77 and 78 - Held that:- It is not in dispute that appellant had not discharged the full service tax liability by not disclosing the full value of the services rendered by them in their ST- 3 returns. It is only the investigation of the department which revealed the true value. There is no reason to agree with the Counsel for the appellant that this case should be remanded back to the original authority. The appellant has not correctly reflected the value of the services rendered by them in their ST-3 returns or paid service tax thereon. When the return has to be filed by the appellant, it is expected that they reflect the correct figures in the returns and not by doing so, they have suppressed the value of the services and thereby evaded payment of service tax. Therefore, penalty is imposable under section 78 of the Finance Act, 1994 for not payment of service tax - Penalty is also correctly imposed under section 77 of the Finance Act, 1994. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 1363
  Man Power Recruitment and Supply Service - case of appellant is that they are not commercial concern - Held that:- The works contracted by BHEL to the appellant were “Material Handling Contract” and Mobile Crane Contract”. Perusal of the work schedule rates and approximate quantum of work to be handled given in the annexures to the contract indicates that the rates are per M.T or per Sq. mtr. etc., but not on per man power supplied basis - the work contracted by BHEL to the appellant will not have essential characteristics of man power supply service. True, the appellants supplied labourers to actualise the contracted work. However such man power is not at the disposal or effective control of the service recipient during the period of contract, but such control is still with the appellants themselves. The nature of services provided cannot then be brought within the fold of Man Power Supply Service. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1362
  Support services of business and commerce - taxability of Freight - basic freight - bunker adjustment factor - terminal handling charges - The impugned order takes note of the discharge of tax on ‘documentation fee’ and discards the claim of the appellant that the disputed components are also freight which, admittedly, did not find fitment in section 65 of Finance Act, 1994 and was specifically excluded under the negative list in section 66D of Finance Act, 1994 and the Place of Provision of Service Rules, 2012 - Held that:- ‘Support service of business or commerce’ are activities that the recipient-client would normally have to undertake to carry out its business of manufacture or service and which includes delivery to the customer but which, instead, is outsourced to the service provider. The facility of ‘international ship and port security’ and ‘special equipment’ could not have been offered by the appellant. Only the shipping line could have offered the facility and, if it was not a constituent of freight costs, as a service provided from outside India for use in India should have been subject to tax under section 66A of Finance Act, 1994 and its successor provisions. The same activity could not have been subject to tax again under section 66 of Finance Act, 1994. The shipping line offers these two facilities in relation to transport of goods. It is, therefore, clear that legislative intent did not cover any facility that was offered on the carrier vessel and any attempt to deviate from the legislative intent would have the absurd outcome of taxing the consideration under two mutually exclusive provisions of Finance Act, 1994. The consideration sought to be taxed is freight and, with freight excluded from tax during the relevant period, the demand cannot be sustained - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1361
  Construction Services - demand of Service tax - for the period 10.09.2004 to 16.06.2005, under Construction services, and the period 16.06.2005 to 30.09.2008 under Commercial or Industrial construction Services - for the period 01.04.2008 to 30.09.2008, under Works Contract - Held that:- The payment upto 01.06.2007 will get extinguished on account of the law that has been laid down by the Apex Court in the case of Larsen 26,88,611/- - Held that:- The appellant has not contested the liability under works contract for this period - the demand of 26,88,611/- under works contract service for the period 01.04.2008 to 30.09.2008 is required to be considered as having been paid, albeit subsequent to the visit of the officers - however, the interest liability if any will have to be discharged. Penalties - Held that:- It is also only on 1.04.2008, that the registration certificate had been amended to include works contract service as per the request of the appellant. This being so, and also considering the fact that the issue per se was also mired in litigation and reached finality only after the Hon’ble Apex Court judgement in L& T [2015 (8) TMI 749 - SUPREME COURT], it can be concluded that there cannot be any penalty imposed in the impugned order and therefore set aside the same. Appeal allowed in part.

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• 2018 (6) TMI 1360
  Adjustment of excess service tax paid against the service tax due - Rule 6(3) of the STR - whether such adjustment of excess payment of service tax permissible or not? - Held that:- The provisions of Rule 6(3) of the STR, 1994 are not applicable in the present case whereas the provisions of Rule 6(4A) and 6(4B) of the Service Tax Rules, 1994 are applicable - Though the provisions of Rule 6(4A) and 6(4B) are inserted subsequently but they are applicable retrospectively considering the fact that the appellant is a public sector undertaking and has paid the entire amount of service tax by way of adjustment of excess payment of service tax towards short payment and there is no further liability on the part of the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1359
  Penalty - service tax with interest paid before issuance of SCN - Authorised Service Station Service - Held that:- The appellant has paid the service tax along with interest much before the issue of show-cause notice and therefore the case is covered under Section 73(3) read with Explanation 2 of the Finance Act, 1994. Hon'ble Karnataka High Court in the case of Adecco Flexione Workforce Solutions Ltd. [2011 (9) TMI 114 - KARNATAKA HIGH COURT] has held that once the service tax along with interest is paid before the issue of show-cause notice, then the Department should not issue show-cause notice. Penalties not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1358
  Liability of service tax - reimbursable expenses collected from the customers were higher than the expenses actually incurred by them - maintenance of separate records for service tax as per rule 5 of STR - whether amounts collected in excess were also liable to be included in the taxable value? - Held that:- This issue is no more res integra and has been settled by the Apex Court in the case of UOI Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT OF INDIA], where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax - demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1357
  Construction of Complex Service - Interpretation of Statute - Service provided after obtaining the completion certificate - liability of Service Tax - Held that:- The provisions of law are that if the transaction has taken place in respect of sale of flat or any other property after issue of completion certificate then it is to be treated as sale of immovable property and there is no element of service tax involved in the same. The service tax is involved only when the consideration is received before the issue of completion certificate - Admittedly in the present case entire consideration which was subject matter of proceedings before us, was received after issue of completion certificate - the impugned order set aside and the amount deposited/made by the appellant during the course of investigation be refunded to the appellant forthwith - appeal allowed.

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• 2018 (6) TMI 1356
  Renting of Immovable Property Service - invocation of extended period of limitation - case of appellant is that extended period of limitation was not applicable before June 2000 since the said levy was introduced through Finance Act, 2010 with retrospective effect of 01.06.2007 onwards - Held that:- Tribunal in the case of M/s.Jindal Vegetables Products Ltd. v. C.C.E. Meerut-II [2013 (3) TMI 56 - CESTAT, NEW DELHI], where it was held that when during the period of dispute there was doubt about interpretation of some provision of law on account of conflicting judgements which were later on resolved by a larger Bench, the extended period under proviso to Section 11A(1) cannot be invoked - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1355
  Liability of Service Tax - Manpower Supply Services - case of appellant is that the service tax on the service has been paid by the service recipient - Held that:- Admittedly ‘Manpower Supply Services’ cannot be considered to be either as a part of the construction services or sub-contract of the main contractor of civil construction services - Neither any evidence has been shown to us to substantiate the plea that the main contractor has discharged Service Tax liability in respect of the said ‘Manpower Supply Services’ provided by the appellant - demand upheld - appeal dismissed - decided against appellant.

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• Central Excise

• 2018 (6) TMI 1354
  Natural justice - opportunity to the noticee to cross examine the witnesses - rehearing of case - error apparent on the face of record - the decision in the case of PRINCIPAL COMMISSIONER CUSTOMS, CENTRAL EXCISE & SERVICE TAX VERSUS M.S.S. FOODS PROCESSORS, M/S ELORA TOBACCO CO. LTD., KISHORE WADHWANI [2017 (7) TMI 987 - MADHYA PRADESH HIGH COURT] contested - Held that:- the decision in the above case upheld - Exemption from filing certified copy of the impugned order is granted - SLP dismissed.

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• 2018 (6) TMI 1353
  Classification of goods - Kimam - w.e.f. 1-4-2006 the goods manufactured by the appellant were also notified for assessment on MRP basis under Section 4A - the decision in the case of GULAB GUNDHI TOBACCO CO. VERSUS COMMISSIONER OF C. EX., DELHI-I [2018 (5) TMI 6 - CESTAT NEW DELHI] contested - Held that:- The decision in the above case upheld - The judgment impugned does not warrant any interference - appeal dismissed.

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• 2018 (6) TMI 1352
  Classification of goods - C.I. Castings - The decision in the case of COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX BELGAUM VERSUS M/S. JP FOUNDRIES [2017 (5) TMI 457 - CESTAT BANGALORE] contested - Held that:- The judgment impugned does not warrant any interference - there is no reason to entertain the appeal - appeal dismissed.

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• 2018 (6) TMI 1351
  CENVAT Credit - effect of amendment - supply of goods to SEZ - Amendment of Rule 6(6)(i) of Cenvat Credit Rules, 2004, amended in the year 2008 - whether amendment have retrospective or prospective effect? - Held that:- The issue is covered by the decision of the cognate bench of this Court in the case of Commissioner of C. Ex. & S.T., Bangalore –vs- Fosroc Chemicals (India) Pvt. Ltd., [2014 (9) TMI 633 - KARNATAKA HIGH COURT] in which the cognate bench of this Court has held that the Amendment of Rule 6(6)(i) of Cenvat Credit Rules, 2004, amended in the year 2008, has to be given retrospective effect as it was clarificatory in nature and has to be extended to the goods cleared to a “developer” of a Special Economic Zone for their authorized operation. No Substantial Question of Law arises for our consideration - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1350
  Rectification of Mistake - order passed without application of mind - parallel remedy for the same cause of action - Held that:- The order passed by the Tribunal cannot be sustained and has to be set aside for the reason that the Tribunal has not applied its mind and decided the appeals, but mistakenly passed a cryptic and non-speaking order in the appeals, which arose from the order dated 6-1-2004 made in Orders-in-Appeal Nos. 6 and 7/2014 (M-1) - appeal stands allowed.

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• 2018 (6) TMI 1349
  Valuation - inclusion of VAT subsidy amount (in the form of Vat-37 B challans, which can be utilized for subsequent period for discharge VAT), for arriving at the assessable value - Section 4 of the Central Excise Act, 1944 - Held that:- The issue is covered by the decision in the case of GREENLAM INDUSTRIES LTD [2018 (4) TMI 1552 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1348
  Liability of Excise Duty - vintage case - case of appellant is that the adjudicating authority has not considered their plea for reduction in the duty liability on account of some quantities of the LAB having been used for manufacture of cleaning powder without the aid of power, which is exempted from central excise duty - Held that:- The evidence relied upon by the appellants, which was produced to the adjudicating authority in respect of the impugned adjudication proceedings, were beyond the period of demand. This dispute is of 1992 vintage and in the last 25 years that have passed by, the matter has come up to the Tribunal on three earlier occasions which has resulted in the proceedings having been adjudicated on four occasions. The fact that the appellants could not produce satisfactory evidence of their claim in respect of the exempted clearances in all these proceedings leads us to the obvious conclusion that no such clearances would have taken place during the period of dispute - thus, there is no infirmity in the aforesaid conclusions of the adjudicating authority. Penalty - Held that:- he original Show Cause Notice dated 20.11.1992 and 31.08.1993 had alleged differential duty liability of 4.69 crores and 89.51 lakhs respectively. In the course of the four adjudications which have resulted in the last 25 years, these amounts have now been whittled down to 12.70 lakhs and 2.09 lakhs respectively - is it proper to reduce the penalty imposed on Meenakshi Soap Works under Rule 173(q) of the erstwhile Central Excise Rules, 1944 from 5 lakhs to 1 lakh - Similarly, the penalty of 1 lakh imposed on Aruna Industry under Rule 173(q) ibid. is reduced to 20,000/-. Appeal allowed in part.

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• 2018 (6) TMI 1347
  Constitutional Validity of Rule 8(3A) of the CER, 2002 - restriction on payment of excise duty without availing CENVAT credit - case of Revenue is that the department has filed an appeal before the Apex Court and the matter is pending before the Apex Court for final decision regarding the constitutional validity of Rule 8 (3A) of the CENVAT Rules - Held that:- The Division Bench of the Delhi Tribunal in the case of Weldon Cello Plast Ltd vs. CCE, Delhi IV [2013 (3) TMI 386 - CESTAT NEW DELHI] have also followed the other High Courts and held that the ratios of the decision is still binding and therefore, Division Bench held that payment through CENVAT credit is not bad in law - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1346
  Adjustment of remand with the demands - demand was not attained finality - pendency of appeal - Held that:- The adjustment by the ACCE against a demand which is subjudice before the Tribunal is not sustainable in law - the issue is squarely covered by the decision in the case of UNISULE LABORATORIES LTD. VERSUS COMMISSIONER OF C. EX., ROHTAK [2008 (6) TMI 417 - CESTAT, NEW DELHI], where it was held that where the stay has been extended till disposal of appeal, and not for a limited period, it is none of the business of the Department to insist on payment of duty etc., which is subject matter of the appeal, and any action on the part of officer will be seriously viewed by the Tribunal as an attempt to flout its order - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1345
  Principles of Natural Justice - case of appellant is that the impugned order has been passed without considering the material facts and evidence on record - allowability of turn over tax, prompt payment discount and quantity discount while finalizing the provisional assessment - Held that:- As per the settled law the appellants are entitled to prompt payment discount, quantity discount and turn over tax provided the discounts are known to the customers before the clearance of the goods and secondly there are sufficient documents to show that the discounts have been passed on to the customers. The learned counsel submitted that on account of fire most of the documentary evidences have been destroyed but from other sources and other records, they may prove these abatements and turn over tax if the matter is remanded to the original authority - the matter remanded for reconsideration - appeal allowed by way of remand.

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• 2018 (6) TMI 1344
  Refund claim - appellant reversed the said credit under protest by debiting the credit in RG-23A Part-II, vide Entry No. 1396 dated 15 January, 1999 - rejection of refund claim in the ground of time limitation - Held that:- SCN was issued in June, 2004, which is ab initio void and not permissible under the provisions of the Central Excise Act and the Rules thereunder. For a settled issue pursuant to Order-in-Appeal which is not further challenged in appeal before Higher Court, the issue cannot be reopened by issue of a fresh show cause notice. SCN dated 9 June, 2004, is illegal and ab initio void - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1343
  Refund in cash - Whether the claim of the appellant for transfer of the set-off amount in their RG-23 account under Rule 57H(3) of erstwhile Central Excise Rules, 1944 is admissible or not? - Held that:- The learned Commissioner (appeals) have misdirected himself as he has not been able to appreciate that the issue of Cenvat credit of the stock of inputs lying in stock was under Rule 57H(1) as amended by N/N. 28/91-CE - From a plain reading of the amended Rule 57H(1), it is evident that the Assistant Collector of Central Excise was required to allow credit of the duty on inputs lying in stock on 25th day of July, 1991 or inputs received in the factory on or after 25th day of July, 1991 upon obtaining the dated acknowledgement of the declaration made under the said rule. In view of Section 142(6)(a) of Central Goods & Service Tax Act which provides for cash refund in every proceeding of appeal, review or reference relating to claim for Cenvat credit initiated whether before, on or after the appointed day under the existing law shall be disposed of, in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1342
  Clandestine manufacture and removal - allegation based on Computer printouts allegedly taken from hard disk shown to be resumed from Geeta Nagri office, Bijnore, Statements of various persons, alleged confession by suppliers of MS ingots and buyers of Saria (M.S. Bars) and alleged confession by Shri Lalit Agarwal etc. - cross-examination of witnesses - CENVAT credit - Rule 9(5) of Cenvat Credit Rules - penalty u/r 26 - Confiscation of cash and its release. Held that:- The Hon ble High Court of Delhi in the case of CCE vs. Vishnu Co. Pvt. Ltd. [2015 (12) TMI 593 - DELHI HIGH COURT], has held, that it was the responsibility of the Revenue to produce prosecution witnesses for cross examination, therefore, we do not find the finding by the Original Authority tenable that cross examination could not be offered because the appellant could not produce the prosecution witnesses - it was obligation on the part of the Revenue to produce its witnesses for cross examination. From the impugned Order-in-Original if the statements recorded in respect of the above stated persons are removed, then there is no evidence left for arriving at the conclusions drawn by the Original Authority. The statements of above stated persons were relied upon for alleging that the Geeta Nagari, Bijnore premises was taken on rent by the appellant, the computer was purchased by the appellant, Shri Bhagirath Roy, Shri Monmohan Gautam were employees of appellant and they were making entries in the computer on behalf of appellant and that the said entries revealed that the extra/unaccounted goods were manufactured by the appellant and clandestinely removed. All these conclusions do not have any other basis, than the statements of above stated persons, and as directed and ruled by Hon ble Allahabad High Court, the statements of above stated persons cannot be relied as evidence, since they were not produced for cross examination. Therefore, the findings by the Original Authority to arrive at a conclusion and passing of the present order has no basis. Regarding Parmarth Steel Alloys Pvt. Ltd. - Held that:- It is clear from the records that the case of Revenue against Parmarth Steel Alloys Pvt. Ltd., is not based on any record resumed during search at the factory premises of Parmarth Steel Alloys Pvt. Ltd., but is based solely on the statements of Sheeru Malik, AasMohd. Idris, who were not produced by Revenue for cross-examination, hence in view of the law discussed above, demand of duty against Parmarth Steel cannot be sustained. In respect of Kamakhya Steel Pvt. Ltd. - Held that:- The whole demand is based on assumption and on the basis of statements which are not a good piece of evidence as discussed hereinabove. Accordingly, demand in respect of Kamakhya Steel Pvt. Ltd., is also set aside alongwith penalty. They shall also be entitled to consequential benefits. Since the demands are not sustainable no penalties are sustainable. Appeal allowed.

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• 2018 (6) TMI 1341
  Clandestine removal - Gutkha - cross-examination of witnesses - Manufacture of alleged quantity of Gutkha could not be established by Revenue - Held that:- The statements recorded during investigation in respect of Shri S.P. Pandey and Shri Rajesh Verma are not having a character of admissible evidence - During the whole course of proceedings there is no positive evidence to establish that the alleged quantity of 133452000 pouches of Gutkha was manufactured by the appellant. Revenue could not establish manufacture of alleged quantity of Gutkha - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1340
  CENVAT credit - inputs - manufacturing activity stopped - case of appellant is that just because, the certain quantity of inputs in semi finished stage are lying in the silos and certain quantity of finished goods is lying in stock, the Cenvat credit cannot be denied - Held that:- It is evident that the inputs in respect of which the Cenvat credit had been taken, have been used for manufacture of finished products and just because some of the inputs in form of work in progress and some of the finished products are still lying in stock, the Cenvat credit cannot be denied as Cenvat credit is admissible in respect of inputs used in or in relation to manufacture of some final products. The Cenvat credit would be deniable only when the inputs are cleared as such which is not the department’s case against the assessee. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1339
  Manufacture - classification - Captive consumption - intermediate product - Benefit of N/N. 67/95-CE dated 16.03.1995 - Resins - It appeared to Revenue that the said Resins were classifiable under chapter heading No.3909 of schedule to Central Excise Tariff Act, 1985 and said Resins were included in negative list, since negative list included said chapter heading No.3909 at Sl.No.20 of negative list of N/N. 50/2003-CE dated 10.06.2003 - Held that:- Identical issue decided in the case of M/S. BALAJI ACTION BUILDWELL VERSUS CCE, MEERUT-II [2016 (4) TMI 59 - CESTAT NEW DELHI], where it was held that The fact is that the preparation of impugned goods is in one stage process under controlled temperature and pH and addition of Ammonium Cloride Formic Acid in the processes, the emerging product being transferred to glue kitchen area for final use in bonding. The classification of the product as primary resin is not sustainable - demand not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1338
  Clandestine removal - Gutkha - there has been an allegation that the Original Authority did not appreciate the contentions of show cause notice - principles of Natural Justice - Held that:- The findings by the Original Authority are reasoned and on the basis of examination of evidences produced before him on the basis which the show cause notice was issued and we do not find any ground raised by Revenue satisfactorily contends non-sustainability of findings by the Original Authority - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1337
  Invocation of Extended period of Limitation - intent to evade absent - revenue neutral situation - Held that:- The transactions were duly recorded in the books of accounts ordinarily maintained by the appellant. There is no element of any suppression or contumacious conduct and/or any falsification of records on the part of the appellant - Further this situation is wholly Revenue neutral as the Cenvat Credit is stated to be disallowed to unit-I for input service was allowable to unit-2 as input service. The show cause notice is not maintainable for invoking the extended period of limitation - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1336
  CENVAT Credit - effect of amendment dated 01.03.2011 - whether M/s Balsons Paint Industries (India) have failed to follow procedure by failing to pay an amount equal to 8% (for 2008-09 to April, 2009-July, 2009) and/or 6% (for September, 09-March, 2010 to 2010-11) of the value of exempt services, i.e. trading of raw material during the period 2008-09 to 2011-12? - Held that:- It is admitted fact, that credit attributable to trading activity w.e.f. 01/04/2011 have been reversed - Also, 'Debit Note' is a valid document for taking Cenvat credit, if it contains the relevant particulars - credit allowed - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1335
  CENVAT credit - input - Unchained Cold Rolled P.T. Aluminum Coil - Aluminum Trefoil Clamp - whether the appellant, manufacturer of cement is entitled to Cenvat credit on the items in dispute being Unchained Cold Rolled P.T. Aluminum Coil and Aluminum Trefoil Clamp? - Held that:- Both the items in question have been undisputedly used in the factory of production - It is not the case of revenue that the appellant could manufacture the dutiable output without the use of the items in question. Credit on both the items in question, are allowable, as inputs under Rule 2 (k) of CCR, 2004 being used in the factory of production - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (6) TMI 1334
  Levy of Surcharges for promoting indigenous and local business. - Constitutional validity of Sub section (1A) of Section 3 of the Kerala Surcharge on Taxes Act, 1957 - demand of surcharge at the rate of 10 percent on the output tax collected - The case of the petitioners is that dealers who do not import into the State more than 50 percent of their stock, but nevertheless fulfilling all the remaining conditions mentioned in the impugned provision, are not subjected to the levy under the said provision and therefore the said levy is also a levy on the goods imported into the State. Held that:- The impugned levy was introduced in Section 3 of the Act in terms of the Kerala Finance Act, 2008 - The object of the legislation as evident from the Budget Speech is that the same was introduced with a view to augment the revenue for the purpose of implementing social security measures. Though in the counter affidavit filed by the State it is contended that the impugned levy was introduced with the specific objective of promoting indigenous and local business as well, such an object is absent in the Budget Speech of the Minister. Had the same been one of the objectives of the legislation, I have no doubt in my mind that the same would have certainly reflected in the Budget Speech of the Minister with supporting empirical data. In the absence of such an objective in the Budget Speech, the stand taken by the State in the counter affidavit that the impugned levy was introduced with the objective of promoting indigenous and local business cannot be accepted as a bonafide one. If the object of the legislation is augmentation of revenue, a classification of the dealers based on the criterion viz., whether they import goods into the State is per se unjustifiable and unintelligible. There is no hesitation to hold that the impugned levy is discriminatory and violative of Article 301 read with clause (a) of Article 304 as also Article 14 of the Constitution. The contention that the impugned levy is only an additional tax on multi national companies falling within the criteria provided therein, and the same, therefore, does not in any way impede trade or business cannot be accepted, for the liability to pay surcharge applies only to multi national companies who import goods into the State from other States. The contention of the learned Government Pleader that Article 301 is not attracted in the instant case as the impugned levy is only a levy based on the turnover of the dealer also cannot be accepted. Petition disposed off.

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• Wealth tax

• 2018 (6) TMI 1333
  Lamborghini Car for computation of wealth tax liability - ownership of the Lamborghini car was not with the assessee, therefore, the assessee was not entitled to any depreciation thereon - Held that:- CWT (Appeals) has also noted that the assessee’s appeal before the ITAT was decided in assessee’s favour. Thus, there appears to be a contradiction in the finding recorded by the Ld. CWT (A). The Ld. AR also could not shed any light on the issue. This aforementioned order of the ITAT has not been placed before us by either of the parties and nor have any supporting documents been filed by the assessee so as to enable us to appreciate the issue in right perspective. Although we are inclined to dismiss the appeal of the assessee for want of active participation in the appellate proceedings before us, in the interest of justice, we deem it fit to restore the file to the office of the Ld. CWT (A) to be adjudicated de novo after giving due opportunity to the assessee to present its case

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• 2018 (6) TMI 1332
  Non appearance before the Commissioner of Income Tax (Appeals) - legitimate reason for non-appearance - Held that:- Shri Fazal Muhhammad Ibrahim Khan had died during the pendency of appeal before the First Appellate Authority. The assessee/appellant is legal heir of Shri Fazal Muhhammad Ibrahim Khan and is now representing the deceased. On account of death of Shri Fazal Muhhammad Ibrahim Khan, the assessee could not appear in the other appeal as well before the Commissioner of Income Tax (Appeals). In view of the statement made by ld. AR we are of considered opinion that there was legitimate reason for non-appearance of assessee before the Commissioner of Income Tax (Appeals). Without going into the merits of the appeals, we are restoring these appeals to the file of Commissioner of Income Tax (Appeals) to decide the grounds afresh after considering the orders of Commissioner of Wealth Tax (Appeals) in assessee’s case for assessment years 2003-04, 2004-05 and 2005-06.

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• 2018 (6) TMI 1331
  Wealth escaped assessment - whether department should not have assessed the capital gains for AY. 2007-08 on the reason that possession was handed over on 01-04-2006 - Held that:- We are of the opinion that the order of AO and CIT(A) cannot be sustained. It was the contention of the AO in Income Tax proceedings that assessee had indeed handed over the possession of the property as on 01-04-2006, which led to assessing the capital gains arising on the transfer of that property in AY. 2007-08. Therefore, as on 31-03-2007, the property was no longer in the possession or ownership of assessee. Moreover, if the property is deemed to be in assessee’s ownership, then, the money received towards sale would have to be considered as liability on the date of valuation. There cannot be a Wealth Tax arising in this transaction. The orders of AO and CIT(A) are against the principles of law and facts of the case. Accordingly, we have no hesitation in setting aside the orders by allowing the grounds of assessee.

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• Indian Laws

• 2018 (6) TMI 1372
  Bail Application - Smuggling of Drugs - contraband involved is Ephedrine Hydrochloride - The case of the Prosecution is that A-1 is a drug smuggler, A- 2 is alleged to have financed A-1and A-3 assisted him - whether the inactive ingredients required to hold the active ingredients constitute commercial quantity or not and the petitioners are entitled for bail? Held that:- A person accused of offence punishable under Section 19 or Section 24 or 27A and also for offence involving commercial quantity is not entitled to be released on bail unless the Public Prosecutor has been given an opportunity to oppose the application, for such release and / or where the Public Prosecutor opposes the application, the Court is satisfied that there are reasonable grounds for believing that accused is not guilty of such offence and that he is not likely to commit any offence while on bail - It is true that since the offence under Section 25(A) of the Act is punishable with imprisonment which may extend up to 10 years and other offences to the line of Section 25(A) of the Act, the prosecution needs to file complaint on completion of investigation within 60 days from the date of remand of the accused in terms of Section 167(2) Cr.P.C. It is also true that the petitioners were remanded to judicial custody on 28.11.2016 but the complaint was filed by DRI only on 24.05.2017 i.e, beyond the period of 60 days and thereby the indefeasible right to claim bail was accrued to petitioners/accused immediately after the expiry of the 60 days. Petition allowed.

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• 2018 (6) TMI 1371
  Dishonor of cheque - insufficiency of funds - offence punishable u/s 138 of Negotiable Instruments Act - Whether the learned Metropolitan Magistrate was right in acquitting the accused? - Whether this appeal has to be allowed? - Held that:- From the very beginning, the accused has taken a consistent stand. On the contrary, the complainant has willfully suppressed the material fact. He suppressed the fact that he has received the letter from the accused even before presenting the Ex.P1 and Ex.P2 cheques. A person who is coming to the court for seeking certain relief should come with clean hands. This court is of the view that the complainant has not come with clean hands. The trial court has rightly acquitted the accused - It cannot be said that the findings of the trial court are perverse. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 1370
  Dishonor of cheque - Jurisdiction of the courts - location of the accused - return of cheque for the reason "Account Closed" - case of petitioner is that The 2nd petitioner resigned his post as Managing Director of the first petitioner company with effect from 31.03.2012 and since the cheques were presented only on 08.06.2012, the 2nd petitioner cannot be held liable for the offence punishable under Section 138 of Negotiable Instruments Act - Held that:- Section 202 of Code of Criminal Procedure envisages that the Magistrate should postpone the issue of summons against the accused, if the accused is residing at a place beyond the area, in which the Magistrate exercises his jurisdiction. In this case, the Magistrate is exercising his jurisdiction in Chennai District and the petitioners/accused admittedly are residing in Karnataka State - The amendment of Section 202 of Criminal Procedure Code was made by the Central Act 25 of 2005, in order to curb the practice of private complaints being filed by unscrupulous person against persons residing in far off places. In a case under Section 138 of Negotiable Instruments Act, petitioners/accused and the complainant would be knowing each other and there should have been some transactions between them. In the instant case, the petitioners/accused had purchased computers and other accessories from the respondent/complainant and they are not stranger to the complainant. It is relevant to note that under the amended provision of Negotiable Instruments Act, the complaint under Section 138 of Negotiable Instruments Act can be filed within the jurisdiction of the court, where the banker of the complainant is situate. In this case, the bank of the complainant is in Chennai and therefore, the complaint was filed within the jurisdictional court. Since the case is of the year 2013, the learned Metropolitan Magistrate, III Fast Track Court, Saidapet, Chennai is directed to dispose off the matter within a period of 3 months from the date of receipt of a copy this order. At this juncture, the learned counsel appearing for the petitioners would contend that since the 2nd petitioner is a senior citizen aged 81 years, his personal appearance before the trial court should be dispensed with. Petition dismissed.

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• 2018 (6) TMI 1369
  Cheque bounced / dishonored - discrepancy in statutory notice issued by the complainant to the accused - specification of amount and interest due - Section 482 of Cr.P.C. - Held that:- After perusing the statutory notice, whereby, the petitioners herein were called upon to pay the value of the cheque-in-question and insofar as the contention of the petitioner that in the statutory notice, there is no specific amount in demanding the amount over and above, the cheque amount does not arise - the statutory notice is in order and the alleged contention raised by the petitioners does not arise on the facts and circumstances of the case, especially in view of the specific statement in the statutory notice and hence, this Criminal Original Petition is dismissed - Criminal Original Petition is dismissed.

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• 2018 (6) TMI 1368
  Dishonor of Cheque - insufficiency of funds - The present cheque is alleged to have been issued on 31.05.2012 and so on the date of issuance of the cheque, the present petitioner was not a director in the first accused Company - Held that:- The cheque in question was issued on 30.05.2012 and admittedly, the cheque was not issued by the present petitioner. Though, it is contended by the respondent/complainant that the petitioner/4th accused is one of the directors of the first accused Company, he has not made specific averments as to the role played by him. Time and again, it has been asserted by the Hon'ble Supreme Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of Commission of an offence, will be liable for criminal action. A director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the Negotiable Instruments Act. The complaint filed against the present petitioner cannot be sustained and therefore, is liable to be quashed under Section 482 of Cr.P.C. However, the trial should go as far as the other accused are concerned. Since the complaint has been filed during the year 2012, the learned Judicial Magistrate No.VI, Coimbatore, is directed to dispose of the complaint within a period of three months from the date of receipt of a copy of this order - petition allowed.

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• 2018 (6) TMI 1367
  Dishonor of Cheque - Insufficiency of funds - Section 138 of Negotiable Instruments Act, 1881 - Held that:- When there are prima facie materials against the present petitioner, the entire proceedings cannot be quashed especially when there is a clear cut statement in the complaint that the accused gave an assurance to the complainant to pay the balance amount of 3,58,87,500/- at the time of execution of the documents - The points raised by the petitioner/accused cannot be decided in this petition filed under section 482 of the Code of Criminal Procedure. Petition dismissed.

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• 2018 (6) TMI 1366
  Acquittal of Offence - Section 138 read with 142 of the Negotiable Instruments Act - The case of the appellant is that the accused had financial transaction with the appellant and in the said transaction, he had borrowed 9 Lakhs on 10.12.2003 after executing a promissory note, and to discharge the said liability, the respondent/accused issued a cheque dated 04.08.2004 for 10,04,850/- - Held that:- This Court is not able to accept the contention of the accused, since he has not examined any one of the Panchayatar to prove the above said alleged Panchayat took place. In view of the discussion made above this Court has no hesitation to hold that the subject cheque was issued by the accused/Respondent for the legally enforceable debt and the accused has not rebutted the presumption available to the complaint under Section 139 of Negotiable Instruments Act. The finding of the Learned Magistrate that complainant has not produced proper accounts to prove the existing liability as on 2004 is immaterial. The learned Magistrate ought to have seen that whether the subject cheque in question was issued by the accused, if so, the same was issued for the legally enforceable debt - the accused has admitted the issuance of cheque and the same was also held to be issued for the legally enforceable debt. Appeal allowed - decided in favor of appellant.

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