Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 27, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Companies Law
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S.O. 2652 (E) - dated
25-7-2019
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Co. Law
Amendment in Notification No. G.S.R. 832(E), dated the 3rd November, 2015
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S.O. 2651 (E) - dated
25-7-2019
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Co. Law
U/s 396 of Companies Act, 2013 Establishment of Registrar of Companies at Guwahati
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S.O. 2650 (E) - dated
25-7-2019
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Co. Law
Amendment in Notification No. S.O. 831 (E), dated the 24th March, 2015
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G.S.R. 528 (E) - dated
25-7-2019
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Co. Law
Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2019
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G.S.R. 527 (E) - dated
25-7-2019
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Co. Law
Companies (Registration Offices and Fees) Fourth Amendment Rules, 2019
IBC
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IBBI/2019-20/GN/REG048 - dated
25-7-2019
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IBC
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2019
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IBBI/2019-20/GN/REG047 - dated
25-7-2019
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IBC
Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019
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IBBI/2019-20/GN/REG046 - dated
25-7-2019
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IBC
The Insolvency and Bankruptcy Board of India (Information Utilities) (Amendment) Regulations, 2019
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Exemption from GST - services for the management of Non-Network Tanker with the help of GPRS system at Nagpur - pure services - NESL is an authority with the control or management with Municipal Fund. And as such NESL is a local authority as defined u/s 2(69) of the GST Act. - Benefit of exemption allowed.
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Compensation and interest towards the substantial delay in making payment of the refund of the Integrated Tax paid on the export of goods - Government liable to pay simple interest on the delayed payment at the rate of 9% per annum.
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Classification of supply - delivery of goods (Maritime Products) to the owner of the ship proceeding to foreign port at the Indian port - supply from Bonded warehouse will fall under Schedule III of CGST Act “and exempted from GST" and supply from Non-Bonded warehouse will not fall under Schedule III of CGST Act “and therefore not exempted from GST"
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Levy of GST - taxability of subscription/contribution to National Institute of Bank Management - contributions received by the applicant from the RBI and other Public Sector Banks is nothing but consideration for the entire gamut of services supplied by them and GST is payable
Income Tax
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Condonation of delay of 264 days - Penalty u/s 271(1)(c) - assessee has admitted the additional income conditionally and the department has levied the penalty inspite of the conditional offer against the spirit of admission made by the assessee, hence, the assessee's case required to be heard on merits to render the justice - delay condoned
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Capital gain computation - FMV for determination of cost of acquisition in case of leasehold land - assessee’s leasehold right for a period of 90 years in question is a capital asset and not tenancy rights to which provisions contained u/s 50C are applicable and assessee is entitled for benefit of FMV as on 01.04.1981 in order to compute the capital gain
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Addition on a/c of under valuation of closing stock - invoices of raw material are booked in the end of year against the material recd - it was demonstrated that the goods were received through challans earlier whereas the invoices were raised later and were entered in the books of account - even VAT authorities have scrutinized the records and have accepted the purchase, sales and closing stock without any mistake - no addition
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Gain from sale of shares - STCG or business income - CBDT Circular No.6/2016 - it is not the case of the AO that the assessee was churning the shares, buying and selling the same shares again and again - There is no quarrel that the assessee has purchased the shares out of its own fund and all the transactions were delivery based transactions of listed companies routed through D-mat Account - STCG
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Admission of additional evidence - Deduction u/s 54F - the evidences furnished are electricity bills, property tax receipts, inaugural photograph of house and the affidavit from the assessee - these evidence goes to the root of the issue, and are material evidence to prove the construction of a new asset - evidences admited
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Disallowance of business loss and unabsorbed depreciation of amalgamated company - once the scheme is sanctioned, the same would relate back to the appointed date of amalgamation - benefit of unabsorbed depreciation and losses of a merging Company with those of principal company would be available from such date
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Penalty u/s 271-C - LTA exemption for TDS under head salary - High Court has admitted the question whether the Assessee is guilty of non deduction of tax at source or not - admission of substantial questions of law by the High Court leads credence to the bona fide of the assessee and therefore, the penalty is not exigible
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TP Adjustment - exclusion of comparables - submission that "an identical transaction being conducted in an uncontrolled manner” overlooks the effect of the Tata brand on the performance of the impugned comparables - The mere fact that the transactions were identical was not either a sole or a reliable yardstick to determine the apposite choice of comparables - excluded
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Assessment u/s 153A - no incriminating material recovered against the Assessee during the search - addition based on statement alleging Assessee had issued cheques against bogus bills for which cash had been later paid had been recorded behind the Assessee’s back and the person making the statement was not subjected to cross-examination - CIT(A) & ITAT rightly deleted addition - no substantial question of law arises
Customs
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Validity of order if not signed by the officer who has held personal hearing - the same Officer, who held the personal hearing ought to have passed the impugned order and therefore, the impugned order is liable to be set aside on this ground
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Penalty u/s 117 on Customs Broker and initiation of enquiry under 'Customs Broker Licensee Regulations, 2018 - petitioner ought to have been given a notice u/s 124(a) of the said Act clearly setting out the grounds on which the penalty was proposed to be imposed, so that the writ petitioner would have got an opportunity to dispel the same - personal hearing alone does not satisfy NJP in the instant case - directed to issue notice
Corporate Law
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Principal of natural justice - Petition filed for arbitration as well as insolvency - impugned order has been passed in violation of principles of natural justice inasmuch as the petitioner was not afforded an opportunity of hearing with regard to merits of the claim of the petitioner u/s 9 of the I&B Code
IBC
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Maintainability of application under I&B Code - pre-existing dispute or not - It is clear that the claim means a right to payment even if it is disputed. Therefore, merely because the ‘Corporate Debtor’ has disputed the claim by showing that there is certain counter claim, it cannot be held that there is pre-existence of dispute - directed to admit the application u/s 9
Service Tax
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Classification of services - supply of manpower services or not - an agreement for execution of various works for the principal–CPP wherein payment for such work is based on the volume of the work executed and not according to the number of workman deployed - discharged of ESI Act and EPF by the principal does not lead to the inevitable conclusion that the appellant has supplied labourers - SCN not maintainable
Central Excise
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Penalty - reversal of CENVAT credit when manufactured goods if exempt - The question of imposition of penalty also does not arise when admittedly the amount of cenvat credit availed is lying unutilised till date in the assessee’s account
VAT
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Parity of remuneration with other members Member Trade Tax Tribunal (UPTT) - parity of pay of advocate being appointed as Judicial Member with pay of the the other members who were in Government service is confirmed
Case Laws:
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GST
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2019 (7) TMI 1285
Exemption from GST - services for the management of Non-Network Tanker with the help of GPRS system at Nagpur - pure services - exempt services in the article 243 W of the constitution of India as well as services rendered to a local authority - HELD THAT:- In the present case, NESL is established as per Nagpur Municipal Corporation Act, 1948 Section 58(B) and thereby permitting corporation to implement their duty allotted by the Government through this body i.e. NESL. From the perusal of Government Resolution and various definition i.e. Government authority, Government Entity and Local authority and MOU, we are of the opinion that NESL is an authority with the control or management with Municipal Fund. And as such NESL is a local authority as defined under section 2(69) of the GST Act. The applicant is providing pure services to local authority and is squarely covered by Entry no.3 of Notification No. 12/2017- CT (Rate) dated 28 th June, 2017. The contract from Nagpur Environmental Services Ltd (NESL) Nagpur (a 100% subsidiary of the Nagpur Municipal Corporation, Nagpur) for providing services for the management of Non-Network Tanker with the help of GPRS system at Nagpur would be exempt from GST - answered in affirmative.
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2019 (7) TMI 1284
Maintainability of petition - HELD THAT:- The present petition has been filed against the order of the First Appellate Authority, since no Tribunal has been constituted under the GST Act. List on 21.08.2019 alongwith Writ Tax Nos.1049 of 2018 and 578 of 2019.
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2019 (7) TMI 1283
Profiteering - passing on the benefit of the profited amount to the land owner who will in turn pass on such benefit along with interest to the buyers - part project completed and few units sold - case of petitioner is that in any event the Petitioner s liability cannot be more than the flats actually sold - HELD THAT:- The Court directs that subject to the Petitioners depositing a sum of ₹ 40 lacs in equal halves (₹ 20 lacs to the CGST fund and ₹ 20 lacs to the SGST fund) on or before 31st August 2019, there shall be a stay of the impugned order of the NAPA dated 14th June 2019. As far as the penalty proceedings are concerned, they will continue and any orders passed therein will be subject to the outcome of the present petitions.
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2019 (7) TMI 1282
Delay in grant of refund - compensation and interest towards the substantial delay in making payment of the refund of the Integrated Tax paid on the export of goods - Section16 of the Integrated Goods and Services Tax (IGST) Act, 2017 - whether the writ applicants are entitled to seek compensation alongwith the interest for the delayed refund? HELD THAT:- The position of law appears to be well settled. The provisions relating to an interest of delayed payment of refund have been consistently held as beneficial and nondiscriminatory. It is true that in the taxing statute the principles of equity may have little role to play, but at the same time, any statute in taxation matter should also meet with the test of constitutional provision - The respondents have not explained in any manner the issue of delay as raised by the writ applicants by filing any reply. The respondents are liable to pay simple interest on the delayed payment at the rate of 9% per annum - On the aggregate amount of refund, the writ applicants are entitled to 9% per annum interest from the date of filing of the GSTR03. The respondents shall undertake this exercise at the earliest and calculate the requisite amount towards the interest - application disposed off.
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2019 (7) TMI 1281
Levy of GST - consideration paid as subscription or contribution towards recurring or capital expenses or reimbursement to National Institute of Bank Management (NIBM) - Whether consideration paid as subscription or contribution towards recurring or capital expenses or reimbursement or by whatever name called to National Institute of Bank Management (NIBM); a society registered under Societies Registration Act, 1860 by its members (being Banks) for its recurring and non-recurring expenses is leviable to GST? HELD THAT:- In the subject case, the applicant receives certain amount of contribution from public sector banks and RBI to cover certain recurring and non-recurring expenses incurred by them. As per Memorandum of Association, the expenses are incurred for promotion and conducting of research in matters pertaining to the improvement of banking operations, pertaining to the maximum augmentation and effective deployment of banks resources including analytical and perspective studies of various sectors of the economy with a view to promoting national development, to assist banking and financial institutions in matters such as designing measurement tests for employee selection, appraisal programs, conducting morale, productivity studies, streamlining organizational structure and to review, from time to time, the impact of educational, training and research activities and offer suggestions for filling the gaps in the banking and financial systems and to maintain liaison with banking and financial institutions. There is a supply of taxable services by the applicant which are performed for consideration (in this case contributions received for performing activities mentioned in the MOA) received in furtherance of their business. As per Section 2 (17) (e) business includes provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members. Here, the applicant is a society formed by the RBI and various Public Sector Bank/s and are providing services mentioned in para 5.6 above to their member banks. Therefore it can safely be said that they are receiving consideration (contribution) for supply of taxable services rendered in furtherance of their business. Principal of Mutuality - HELD THAT:- We do not agree with the applicant s contention that their activity would be covered under the Principal of Mutuality i.e. No man can trade with himself; he cannot make, in what is its true sense or meaning, taxable profit by dealing with himself . This assumption is made by the applicant considering that they and the various Public Sector banks and RBI are one and the same - we are firmly of the opinion that the contributions received by the applicant from the RBI and other Public Sector Banks is nothing but consideration for the entire gamut of services supplied by them as mentioned in para 5.6 supra and GST is payable on such contributions received.
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2019 (7) TMI 1280
Classification of supply - delivery of goods to the owner of the ship proceeding to foreign port at the Indian port - export of goods or not - section 16 of IGST Act, 2017 - Maritime Products supplies - GST was paid under protest - refund for zero rated supply i.e.; exports or not - intra-state or interstate supply? - whether this supply will fall under Schedule III of CGST Act? HELD THAT:- The imported procured goods are kept in Bonded/Non-Bonded Warehouses. These goods are imported and import duty is paid on them. Once the import duty is paid, it would imply that the said goods have been received cleared by the applicant and are in taxable territory. Further, on receiving purchase orders from the owners/operators of the vessels, they clear the said goods by filing of shipping bills deliver the goods to the vessels at an Indian port, along with delivery challan order confirmation. These documents are handed over to the vessels which are landed at Indian port. Schedule III of CGST Act, is listing activities or transactions which shall be treated neither as a supply of goods nor supply of services. Clause 8(a) of the Schedule mentions Supply of warehoused goods to any person before clearance for home consumption . Clearance from Bonded Warehouses to the vessels - HELD THAT:- The goods in a Bonded Warehouse has not been cleared for home consumption. Clause 8(a) mentioned above would cover the situation mentioned at I above and therefore we are of the opinion that the present supply in such a case will fall under Schedule III of CGST Act. Clearance from Non-Bonded Warehouses to the vessels - HELD THAT:- The imported goods would have been cleared to such non-bonded warehouses on payment of appropriate IGST/Customs duty and therefore the supply in such a case as in (2) above Will not fall under Schedule III of CGST Act. Whether the supply will be termed as Exports of Goods? - If No, then what will be the supply? - whether Intra State or Inter state and which Tax will be levied CGST and SGST or IGST? - Scope of Advance Ruling - HELD THAT:- We find that their main question is whether the transaction effected in the present case can be considered as exports - this question is not covered under the purview of Section 97 of the CGST Act, 2017. Hence we hold the subject application is not maintainable in this respect and cannot be entertained and therefore no opinion is given by us since the matter is beyond the purview of this Authority.
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Income Tax
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2019 (7) TMI 1279
TP Adjustment - ITAT upholding the order of the TPO and the DRP in not excluding M/s TCS EServe Limited; M/s TCS E-Serve International Limited from the list of comparables for the purposes of determining the arms-length price of the international transactions involving the Assessee - HELD THAT:- What weighed invariably is the fact that both companies had huge turnovers when compared to the tested entity. Both entities had close connection of the Tata Group of Companies and TCS E-Serve International had given a huge amount to TCS towards brand equity. Further there was no segmental bifurcation between the transaction processing and technical services. The assets employed by TCS E-Serve along with huge intangibles in the form of brand value were found to have a definite considerable effect on its PLI. These factors vitiated its comparability under the FAR analysis with the tested company, which could be a capital service provider without much intangible and risks. There is merit in the contention of the Assessee that the scale of operations of the comparables with the tested entity is a factor that requires to be kept in view. TCS E-Serve has a turnover of ₹ 1359 crores and has no segmental revenue whereas the Assessee s entire segmental revenue is a mere 24 crores The Director s report of TCS E-Serve Limited bears out the contention of the Assessee that both entities have been leveraging TCSs scale and large client base to increase their business in a significant way. The submission that the two comparables offer an illustration of an identical transaction being conducted in an uncontrolled manner overlooks the effect of the Tata brand on the performance of the impugned comparables. The question was not merely whether the margins earned by the Tata group in providing captive service to the Citi entities were at arm s length. The question was whether they offered a reliable basis to re-calibrate the PLI of the Assessee whose scale of operations was of a much lower order than the two impugned comparables. The mere fact that the transactions were identical was not, in terms of the law explained in the above decisions, either a sole or a reliable yardstick to determine the apposite choice of comparables. For all of the aforementioned reasons, the Court finds merit in the contention of the Assessee that both the impugned comparables viz., TCS EServe Limited and TCS E-Serve International Limited ought to be excluded from the list of comparables for the purposes of determining the ALP of the international transactions involving the Assessee and its AEs. - Decided in favour of assessee.
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2019 (7) TMI 1278
Addition on account of dividend income received - Accrual of income - Tribunal recorded finding of facts that dividend was received in the FY 2012-13 in the bank on 16.10.2012 i.e no dividend income was not received in the year ending 31.3.2012 and further assessee has declared the dividend income in the assessment year 2013-14 amounting to ₹ 15,29,220.00 which was duly accepted by the Revenue - HELD THAT:- In view of the findings of fact with regard to receiving of the dividend, we do not find any error, not to speak of any error of law, in the impugned order. - this Appeal fails and is hereby dismissed.
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2019 (7) TMI 1277
Disallowance of business loss and unabsorbed depreciation of amalgamated company (Dolphin Laboratories) - Scheme of amalgamation conceived - cut off date OR appointed date OR date of amalgamation - HELD THAT:- Issue is no longer res integra in view of the decision of this Court in the case of IRM Limited v. Dy. CIT [ 2016 (7) TMI 972 - GUJARAT HIGH COURT] wherein this Court took the view that, once the scheme is sanctioned, the same would relate back to the appointed date of amalgamation. it was held that once a scheme has been sanctioned by the High Court, which would relate back to the appointed date and such order is passed before the order of assessment is passed, it cannot be stated that the assessee should be denied the benefit of such development merely on the ground that during the accounting period and when the return was filed, the High Court order sanctioning the scheme was not yet passed. The very effect of the order of High Court sanctioned the scheme relating back to the appointed date would be that for all purposes including for recognising the benefit of unabsorbed depreciation and losses of a merging Company with those of principal company would be available from such date. In view of the aforesaid, this Appeal fails and is accordingly dismissed.
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2019 (7) TMI 1276
Assessment u/s 153A - ITAT upholding the order of CIT (Appeals) that there was no incriminating material recovered against the Assessee during the course of the search warranting re-opening of assessments and making the additions u/s 153A - addition based on third party statement - cross examination - HELD THAT:- ITAT has in the impugned order taken note of the fact that before the AO, the Assessee produced various documents which showed that there was litigation between the Assessee and M/s Nitin Enterprises which ended in a settlement. These documents were before the AO who took no adverse view thereof. The ITAT noted that the statement had been recorded behind the Assessee s back and the person making the statement was not subjected to cross-examination. In the circumstances, the ITAT concurred with the detailed findings rendered by the CIT(A) on this issue. A similar view was taken by the ITAT in respect of purchases made from one M/s Kiran Furnitures. The ITAT has in the impugned order examined the documents and evidence afresh and has given detailed reasons in support of its concurrence with view expressed by the CIT (A). The additions made by the AO for AY 2011-2012, which have been deleted by the CIT (A), have also been discussed in detail by the ITAT in the impugned order and findings concurring with the views expressed by the CIT(A) have been rendered. Both the CIT(A) and ITAT on facts, the Court finds that in the present cases, no substantial question of law arises from the impugned common order of the ITAT.
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2019 (7) TMI 1275
Deduction u/s 80P (2) (a) (i) - reopening of assessment u/s 147 - the assessee is to be treated as primary agricultural society and is carrying on the business of banking or providing credit facilities to its members and is entitled for deduction with respect to the interest received from Class B members who were involved in non-agricultural activity - HELD THAT :- In the light of the common submission made in unison by all the learned counsel that the four writ petitions on hand are covered by the common order in NERINJIPETTAI PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD. VERSUS THE ITO [ 2019 (7) TMI 389 - MADRAS HIGH COURT] , it follows as a sequitur that the operative portion of the aforesaid order contained/adumbrated in paragraph 4 will apply to the instant cases also. To be noted, in the aforesaid operative portion extracted and reproduced supra, the term of 'notices' alone will read as 'proceedings' in the instant case. Therefore, in these four writ petitions, the following common order is passed: a) All the four impugned proceedings will be kept in abeyance and there will be no further proceedings pursuant to the same until disposal of the Special Leave Petitions said to have been filed by respondent / Revenue in Hon'ble Supreme Court against the aforementioned orders of Hon'ble Division Bench of this Court in CIT VERSUS TIRUCHENGODE AGRICULTURAL PRODUCERS COOPERATIVE MARKETING SOCIETY LTD.and others [ 2016 (8) TMI 560 - MADRAS HIGH COURT] b) Subject to the outcome of the aforesaid Special Leave Petitions, i.e., if the Special Leave Petitions are in favour of the Revenue, the impugned orders will stand revived and law will take its course. If this scenario unfolds, it is open to the writ petitioner assessee to take all objections and defences available to section 148 notice including calling for reasons and limitation. c) If the Special Leave Petitions end in favour of assessees and if the aforesaid Hon'ble Division Bench orders are confirmed or if the Hon'ble Supreme Court refuses to interfere with the orders of High Court, all the four impugned proceedings will stand set aside without further reference to this Court. d) Though obvious it is made clear that this order pertains to benefit under Section 80P of IT Act qua writ petitioners covered by Hon'ble Division Bench orders against which Revenue submits that SLPs have been filed before Hon'ble Supreme Court and therefore, this order will not preclude Revenue from proceeding against writ petitioners in a manner known to law with regard to other issues, if any.
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2019 (7) TMI 1274
Deduction u/s 54F - proof of construction of a new asset - admission of additional evidence - construction of the new asset was made on plot which is in the name of the assessee wife - HELD THAT:- As perused the materials available on record and gone through the orders of the authorities below. We find that the evidences furnished are electricity bills, property tax receipts, inaugural photograph of house and the affidavit from the assessee. Considering the totality of the facts, these evidence goes to the root of the issue, and are material evidence to prove the construction of a new asset. We therefore, admit the same and set aside the orders of the authorities below on this issue and remit the issue of allowability of deduction u/s 54F to the A.O. The A.O. would decide the issue after considering the evidences placed on record in accordance with law. This ground of the assessee s appeal is allowed for statistical purposes. Addition made towards enhancement of business income - HELD THAT:- The law is well settled where the A.O. makes best judgement by estimating the profit. He is required to make independent enquiries, if he is not satisfied with the profit declared by the assessee from the similarly situated assessee. In the present case, the sales as declared by the assessee were of ₹ 7,29,700/- A.O. has made addition purely on the basis that gross receipts are not declared. However, the assessee has declared the gross profit. We find that the Ld. CIT(A) in his order has stated a figure of ₹ 7,29,700/- as the sale proceeds which could be taken as gross receipts. Therefore, the very foundation of making estimation is not correct. Hence, we cannot confirm this adhoc and casual approach of the assessing authority, he is therefore hereby directed to delete the addition. This ground of the assessee s appeal is allowed.
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2019 (7) TMI 1273
Allowability of Higher depreciation on motor lorries/trucks - Company, which is engaged in the business of providing logistics solution - AO state that motor lorries/trucks were used by it for the said business rather than using the same in the business of running them on hire, the assessee-company was entitled to claim depreciation at the normal rate of 15% - HELD THAT:- It is observed that the claim of the assessee for higher depreciation on motor lorries/trucks was disallowed by the AO after having recorded a finding that the same were used by the assessee-company for its own business of providing logistic solutions and not in the business of running them on hire. As rightly contended by the ld. D.R., the claim of the assessee for higher depreciation thus was disallowed by the AO after recording a specific adverse finding and the ld. CIT(Appeals) was not correct in observing that no such adverse finding was recorded by the AO in the assessment order and that the disallowance was made on the basis of vague reasons. We also find merit in the contention of the ld. D.R. that the case laws cited on behalf of the assessee before the ld.CIT(Appeals) were distinguishable on facts and the ld. CIT(Appeals) was not justified in relying on the same to allow the claim of the assessee for higher depreciation on motor lorries/trucks. In the present case, it appears that neither the AO nor the ld. CIT(Appeals) to have examined as to whether the assessee was in the business of hiring out its motor lorries/trucks in addition to its business of providing logistic solutions and whether it had actually earned any income by hiring the said vehicles. We, therefore, consider it fair and proper and in the interest of justice to set aside the impugned order passed by the ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer for deciding the same afresh in accordance with law after necessary verification. The appeal of the Revenue is accordingly treated as allowed for statistical purposes. Disallowance u/s 14A applying Rule 8D - HELD THAT:- As relying on the decision of this Tribunal in the case of REI Agro Limited (ITA No. 1811/KOL/2012), wherein it was held that while applying Rule 8D only that investment has to be considered which has yielded exempt income during the year under consideration. Since the said decision of this Tribunal in the case of REI Agro Limited 2013 (5) TMI 582 - ITAT KOLKATA] has been upheld by the Hon ble Calcutta High Court [ 2013 (12) TMI 1517 - CALCUTTA HIGH COURT] we do not find any infirmity in the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue. The same is accordingly upheld dismissing Ground No. 2 of the Revenue s appeal.
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2019 (7) TMI 1272
Correct head of income - gain from sale of shares - STCG or business income - revenue alleged that shares were never held for more than two months which shows that they were never intended to be held for investment purpose - HELD THAT:- The details of Short Term Capital Gains are exhibited elsewhere from which it can be seen that the assessee has purchased shares of six companies on various dates and have sold them on various dates. Doing transaction in only six scrips show that the assessee has done one transaction in every 61 days. By any stretch of imagination, this cannot be considered to be that the assessee was engaged in the high frequency transactions. Further it is not the case of the AO that the assessee was churning the shares, buying and selling the same shares again and again. A trader may acquire a commodity in which he is dealing, for, his own purposes, and hold it apart from the stockin- trade of his business. There is no presumption that such an acquisition, even if it is an accretion to the stock-in-trade of the business, is an acquisition for the purpose of his business: in each case the question is one of intention to be gathered from the evidence of conduct and dealings by the acquirer with the commodity. On perusal of CBDT Circular No.6/2016 shows that even Board recognised the fact that where the assessee itself, irrespective of the period of holding the registered shares, treated them stock in trade the income arising from transfer of such shares would be treated as business income which means that where the assessee hold the shares as investment, the income arising therefrom is nothing but capital gains. There is no quarrel that the assessee has purchased the shares out of its own fund and no borrowed funds have been utilised by the assessee in purchasing the shares. The only fact for treating the Short Term Capital Gain as business income is that the period of holding is very less but then the Act itself provides that wherever the holding period is less than 12 months, the gains from the sale of shares would be Short Term Capital Gain. The Act nowhere provides for the smallness of the period of holding. If it is less than 12 months, it will give rise to Short Term Capital Gains and if it is more than 12 months it will give rise to Long Term Capital Gains. There is also no dispute to the fact that all the transactions were delivery based transactions of listed companies routed through D-mat Account. No adverse finding is found in so far as these facts are concerned. Considering the number of transactions, the number of shares with the fact that no borrowed fund was utilised. We are of the considered view that the gains arising out of sale of shares has to be treated as Short Term Capital Gains. Ground no.1 is accordingly allowed. Earning commission from transactions in copper - assessee not adduce any direct evidence in support of purchase and sale of copper/cathode/rods - HELD THAT:- No evidence has been furnished in respect of any godowns available with the assessee whether own or on hire. The bills referred to pertain to transactions on which the assessee has earned commission but no bills have been submitted to demonstrate that there was an actual delivery of goods, we are of the considered view that the copper/cathode/rods transactions that were purchased and sold on the same dates were clearly in the nature of speculation in the light of provisions of section 43(5), which provides the speculative transactions means a transaction in which the contract for purchase or sale of any commodity including stocks in shares is periodically or ultimately settled otherwise than by the actual delivery of transfer of the commodity or scrips. Considering the nature of transactions in light of the facts available on record, we do not find any error or infirmity in the findings of the Ld CIT(A). This ground of appeal is accordingly dismissed.
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2019 (7) TMI 1271
Penalty u/s 271(1)(c) - quantum addition deleted - HELD THAT:- We take support from judicial precedent in the case of K.C. Builders vs. ACIT [ 2004 (1) TMI 7 - SUPREME COURT] as held that where the additions made in the Assessment Order, on the basis of which penalty for concealment was levied, are set aside or cancelled by ITAT or otherwise, the penalty cannot stand by itself and is liable to be cancelled. In such a situation, there remains no basis at all for levying the penalty for concealment, and therefore, in such a case, no such penalty can survive and the same is liable to be cancelled. In view of the foregoing, appeal filed by Revenue is hereby dismissed.
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2019 (7) TMI 1270
Income from sale of shares - correct head of income - business income OR capital gain - HELD THAT:- Under similar set of facts, it was held by the Tribunal in own case [ 2019 (4) TMI 1373 - ITAT DELHI] that the income from sale of shares cannot be taxable as business income, but has to be taxed as capital gain. Since there is no dispute as to the similarity of facts, in the absence of any reasons compelling us to take a different view, while following the same, we hold the issue in favour of the assessee Disallowance of proportional interest u/s 36 (1)(iii) - borrowed funds to the extent of funds advanced in respect of share application money - HELD THAT:- This issue also is no longer res integra and is covered by the order in ITA No. 6585/Del/2015 for the assessment year 2011-12 [ 2019 (4) TMI 1373 - ITAT DELHI] . Since the facts and circumstances are very similar to those involved for the years under consideration, while respectfully following the same, we hold that in view of the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Max India Ltd [ 2017 (3) TMI 1254 - PUNJAB AND HARYANA HIGH COURT] the presumption in favour of the assessee that the advances were only out of this surplus funds and such a presumption does not stand reverted, and consequently the issue is held in favour of the assessee. Addition u/s 14 A and Rule 8D - recording of satisfaction - HELD THAT:- AO failed to record his satisfaction recording the correctness of the claim made by the assessee in relation to expenditure incurred to earn exempt income and therefore, we find it difficult to sustain any disallowance whatsoever on this aspect. We, therefore, while accepting the contention of the assessee and respectfully following the decision of the Hon ble Delhi High Court in the case of Vedanta [ 2019 (1) TMI 476 - DELHI HIGH COURT] delete the addition made u/s 14 A and Rule 8D. Deduction u/s 24 - disallowance of prior period expenses - HELD THAT:- All these issues are covered by the order dated 12/02/2019 for the assessment year 2011-12 in assessee s own case [ 2019 (4) TMI 1373 - ITAT DELHI] Addition on account of late deposit of PF - HELD THAT:- Ld. CIT(A) deleted the same by following the decision of the Hon ble Supreme Court in the case of CIT vs. Vinay Cements Ltd [ 2007 (3) TMI 346 - SC ORDER] and the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. AIMIL Ltd [ 2009 (12) TMI 38 - DELHI HIGH COURT] . No fact is brought to our notice which renders these two decisions inapplicable to the facts of the case on hand are as to how the Ld. CIT(A) went wrong in following the decision in these 2 cases. We, therefore, do not find any illegality or irregularity in the conclusion reached by the Ld. CIT(A) on this aspect.
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2019 (7) TMI 1269
Addition on a/c of under valuation of closing stock - valuation of closing stock of raw material, finished goods and scrap - invoices of raw material are booked in the end of year against the material recd - HELD THAT:- Admittedly, no defect has been pointed out by the AO in the books of account except doubting the valuation of closing stock. We find the VAT authorities have scrutinized the records and have accepted the purchase, sales and closing stock without any mistake. The rate of net profit declared by the assessee at 2.43% for the impugned assessment year is higher than the rate of net profit declared in the immediately preceding four years. Further assessee during the course of hearing had demonstrated before us that the goods were received through challans earlier whereas the invoices were raised later and were entered in the books of account. Since AO in the instant case has not made any adjustment to the opening stock of the subsequent year and for assessment year 2012-13, no addition has been made in the order passed u/s 143(3) and the books of account were never rejected, therefore, we are of the considered opinion that the impugned addition should not have been made on account of valuation of closing stock. We further find merit in the argument of the ld. counsel that when the profit of the subsequent year is higher than the profit of the current year, there was no point on the part of the assessee to suppress its valuation of closing stock which would have become opening stock of the subsequent year. We also find merit in the argument of the ld. counsel that considering the size of business of the assessee it is not possible to receive 20% of the material in five days as against 80% of material in the whole year. In view of the above discussion, we are of the considered opinion that the ld.CIT(A) is not justified in sustaining the addition of ₹ 69,01,453/- on account of undervaluation of closing stock. Following the same reasoning, the addition of ₹ 91,963/- on account of finished stock is also deleted. Addition on account of valuation of scrap - we find identical issue had come up before the Tribunal in the case of sister concern of the assessee, namely, M/s Mahashakti Machines Pvt. Ltd. [ 2011 (4) TMI 1509 - ITAT DELHI] wherein the Tribunal deleted the addition made by the Assessing Officer. Tribunal in the case of sister concern of the assessee, we delete the addition on account of valuation of scrap. Grounds of appeal No.1 and 2 of the assessee are accordingly allowed. Addition of various expenses on ad hoc basis - some of the vouchers are improper and some of the expenses are unvouched - HELD THAT:- It is an admitted fact that the accounts of the assessee are audited and no defects are pointed out either by the auditors or the Revenue. We find the Assessing Officer disallowed the amount on estimate basis on the ground that the vouchers are improper or unvouched. When the vouchers are either not available or improper, the expenses cannot be allowed. It is the settled proposition of law that for allowing any expenditure the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO regarding the allowability of such expenditure. Since, in the instant case, the assessee failed to satisfy the AO with proper vouchers, therefore, disallowance of expenses on estimate basis is justified. However, the disallowance appears to be on the higher side. Considering the totality of the facts of the case, we are of the considered opinion that an addition of ₹ 50,000/- on ad hoc basis under the facts and circumstances of the case will meet the ends of justice.
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2019 (7) TMI 1268
Capital gain computation - whether leasehold land is entitled for benefit of FMV for determination of cost of acquisition - Tenancy right v/s ownership of the land - land was acquired vide registered lease deed dated 02.07.1977 for a period of 90 years in the industrial area Ghaziabad - HELD THAT:- Covenants inserted in the lease deed go to prove that the assessee is not having tenancy right rather he is having ownership of the land which can be mortgaged/sold by him and the property in question can be inherited by his legal heirs also. Moreover, substantial interest of the assessee has been created in the property in question. So, when the tenure of the lease is for 90 years it certainly creates ownership rights in favour of the assessee who is entitled to erect industrial unit on the same though with the prior permission of the lessor, namely, UP State Development Corporation Ltd. Coordinate Bench of the Tribunal in case of JCIT vs Mukund Ltd. [ 2007 (2) TMI 358 - ITAT MUMBAI] held that premium paid by the assessee for acquisition of the leasehold rights for 99 years in the land are capital in nature and as such the premium paid by the assessee could not be considered as advance payment of rent. Tribunal in case of ITO vs. Shri Hari Om Gupta [ 2016 (1) TMI 486 - ITAT LUCKNOW] while deciding the identical issue held that lease right for the period of 99 years is also capital assets to which provisions of section 50C are applicable. Assessee s leasehold rights for 90 years in the property in question are capital in nature and not tenancy rights and he is entitled for benefit of FMV. FMV valuation as on 01.04.1981 - HELD THAT:- When it is established that the property in question was acquired by the assessee firm on 02.07.1977 as per registered lease deed for the period of 90 years i.e. prior to 01.04.1981 assessee is entitled for benefit of valuing the property in question on the basis of fair market value as on 01.04.1981 and the cost of acquisition is not to be taken into account for computing the capital gain particularly when the assessee has opted for use the fair market value. So, the second question framed is also answered in affirmative in favour of the assessee. We are of the considered view that assessee s leasehold right for a period of 90 years in question is a capital asset and not tenancy rights to which provisions contained u/s 50C are applicable and assessee is entitled for benefit of fair market value as on 01.04.1981 in order to compute the capital gain. So, the findings returned by the ld. CIT (A) are hereby reversed and the AO is directed to compute the capital gain accordingly. Decided in favour of the assessee. Disallowance of deduction claimed on account of brokerage paid to the agents - no evidence has been produced regarding the alleged expenses made on transfer/brokerage etc. - HELD THAT:- As assessee challenging the impugned finding contended that he has made payment of brokerage through banking channel after duly deducting the TDS. Also that payment on account of brokerage has been made to the agents after getting permission from UPSIDC for transfer and has also brought on record PAN and ITR of the payee for the relevant period along with bank statement. In these circumstances, AO is directed to decide the issue afresh after taking into account the evidence brought on record after providing adequate opportunity of being heard to the assessee. Ground determined in favour of the assessee for statistical purposes.
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2019 (7) TMI 1267
Additional depreciation relating to Plant Machinery put to use for less than 180 days - A.O following the order of the CIT(A) for assessment year 2012-13, disallowed 10% of the claim - HELD THAT:- Tribunal in the assessee s own case for assessment year 2012-13 [ 2016 (9) TMI 1338 - ITAT LUCKNOW] dealt with the issue relating to additional depreciation claimed u/s 32(1)(ii)(a) on new plant machinery and allowed the appeal of the assessee. Since the CIT(A) has deleted the addition made on account of additional depreciation claimed by the assessee for assessment year 2012-13, relying on the order of the Tribunal (supra), wherein the Tribunal had directed the A.O to allow additional depreciation to the assessee being 50% of 20% of the cost of new Plant Machinery installed by the assessee, wherein the facts, mutatis mutandis, were the same, and which order of the Tribunal has not been to shown to have been upset, or even stayed, on further appeal, we find no merit in the grounds raised by the Revenue. Addition made u/s 14A read with Rule 8D(ii)/8D(iii) - HELD THAT:- No contrary decision was brought to our knowledge by Learned D. R. against GODREJ AND BOYCE MFG. CO. LTD. VERSUS Dy. CIT [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] which may take a view that the Assessing Officer can compute the disallowance under Rule 8D without recording the non satisfaction about the creditworthiness of the claim of the assessee in respect of the expenditure in relation to the income which does not form part of the total income on the basis of the account of the assessee. - Decided against revenue
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2019 (7) TMI 1266
Penalty u/s. 271-C - LTA exemption for TDS under head salary - High Court has admitted the question whether the Assessee is guilty of non deduction of tax at source or not - debatable issue - HELD THAT:- M/S. ANKITA ELECTRONICS PVT LTD. [ 2015 (3) TMI 1029 - KARNATAKA HIGH COURT] as held mere admission of the appeal by the High Court on the substantial questions of law as have been quoted above, would make it apparent that the additions made were debatable. The Tribunal has thus rightly held that the admission of substantial questions of law by the High Court leads credence to the bona fide of the assessee and therefore, the penalty is not exigible under Section 271(1)(c) of the Act. Merely because the claim of the assessee has been rejected by the revenue authorities would not make the assessee liable for penalty - levy of penalty u/s.271C of the Act, in the given facts and circumstances of the case, cannot be sustained and the same is directed to be deleted. As far as the decision of the co-ordinate Bench in the case of Syndicate Bank [ 2019 (7) TMI 1163 - ITAT BANGALORE] is concerned, we are of the view that this issue has not been raised nor considered in that case. Since the imposition of penalty u/s.271C fails on this ground, we are of the view that there is no necessity to remand the issue to CIT(A) for consideration afresh, as was done by the Tribunal in the case referred to by the learned DR. We therefore hold that the imposition of penalty in the facts and circumstances of the case cannot be justified and the same is directed to be cancelled.
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2019 (7) TMI 1265
Disallowance of royalty payable - adjusted against excess payment of royalty made in the earlier years for which tax was already deducted and remitted in the earlier years - HELD THAT:- The assessee claims that the royalty payable for the first and second quarter was paid in advance and the excess payment of royalty was adjusted during the year under consideration. The assessee also claims that the tax was deducted at the time of payment. Further there was no material evidence to support the claim of the assessee. Hence this Tribunal is of the considered opinion that the matter needs to be re-examined by the AO. Disallowance of reimbursement of marketing services - HELD THAT:- The assessee claims that it is reimbursement of marketing expenses outside the country. Therefore it is not fee for technical services. Even though the assessee claims that there was an agreement between the assessee and Mr. James Drutchas, USA, it was not produced before this Tribunal and there is no reference about this agreement in the orders of both the authorities below. Therefore this Tribunal is of the considered opinion that the matter needs to be re-examined. Remanded to AO with directions. Disallowance of marketing services rendered outside India - payment to Dietrich Sikler, Germany - HELD THAT:- This Tribunal is of the considered opinion that to decide the nature of payment, the agreement between the assessee and Dietrich Sikler or atleast the communication between the assessee and Dietrich Sikler has to be examined. No material is available on record with regard to nature of payment - the matter needs to be re-examined by the AO. Accordingly the orders of both the authorities below are set aside and the addition of ₹ 14,58,647/- is remitted back to the file of the AO who shall re-examine the matter afresh in the light of the agreement that may be filed by the assessee. Disallowance of payment for exhibitions held outside India - sum paid to non-residents - HELD THAT:- For the purpose of claiming the expenditure, the assessee has to necessarily produce the details of the recipient and the purpose for which it was paid. Mere vague statement that the payment was made to non-resident in connection with the exhibition held outside India cannot be a reason for allowing the claim of the assessee. If it is for exhibition, the assessee has to clarify whether it is a rent or license fee for an ear-marked place in the exhibition or it is a travelling expenditure. In the absence of such details, this Tribunal is of the considered opinion, the same cannot be allowed. Therefore the disallowance is confirmed. Disallowance of sum paid to Rane Engine Valve Limited in relation to expenses incurred for China business - HELD THAT:- In the absence of any details, with regard to expenses said to be incurred for China business, this Tribunal is of the considered opinion such a claim cannot be allowed. The assessee has taken one more ground alternatively fee for technical services rendered outside India is taxable only by virtue of amendment to Section 9 by Finance Act 2010, therefore there cannot be any disallowance U/s.40(a)(i) . The assessee could not clarify the nature of the expenditure. A mere statement that the expense was incurred for China business without furnishing any other details cannot be a reason to allow the ground of appeal. Whether it is a fee for technical services or not is irrelevant since the assessee has not submitted any details. Since the assessee has not filed any material, the nature of payment could not be determined, therefore, this Tribunal is of the considered opinion that there cannot be any claim as business expenditure. Hence disallowance is confirmed. Disallowance of payments to railway consultants - HELD THAT:- The assessee claims that a sum of ₹ 1,58,274/- was paid to railway consultant and tax was also deducted. Since the assessee claims that tax was already deducted and paid to government account, the Assessing Officer may verify whether tax was deducted and deposited by the assessee as claimed and the nature of services rendered by the railway consultant and thereafter decide the issue afresh in accordance with law. Accordingly the orders of both the authorities below are set aside and the disallowance of payment made to the railway consultant is remitted back to the file of the AO for reconsideration. Disallowance of advertisement and sales promotion expenses - HELD THAT:- No material is available on record with regard to payment of ₹ 2,09,62,270/- towards incentive scheme for mechanics, coupons for the purchasers, payment to Jullundur Motor Auto, reimbursement of salary and travel expenses of sales representatives, travel expenditure, exhibition and conference expenditure, customer promotion expense, gift and compliments, damages to railway, reimbursement said to be made to Rane Group employees and warranty expenses. Unless the assessee files the details of the expenditure, it may be difficult to decide whether such payment needs deduction of tax at source or not? Therefore the assessee has to file necessary details before the Assessing Officer with regard to the nature of the payment. Accordingly the orders of both the authorities below are set aside and the entire issue is remitted back to the file of the AO. The AO shall reexamine the matter based on the materials that may be filed by the assessee and thereafter decide the issues in accordance with law after giving reasonable opportunity to the assessee. Deduction u/s. 80IB - auditor certificate was not examined - HELD THAT:- In respect of allocation of expenditure, the auditor s certificate is also one of the factor to be considered for the purpose of deduction u/s.80IB. Admittedly the auditor certificate was not examined either by the Assessing Officer or the CIT(A). This Tribunal is of the considered opinion that the Assessing Officer shall re-examine the matter afresh. Accordingly the orders of both the authorities below are set aside and the entire addition is remitted back to the file of the AO. The AO shall re-examine the matter afresh after considering the auditor s certificate and thereafter decide the issue in accordance with law after giving reasonable opportunity to the assessee. Disallowance u/s.14A - HELD THAT:- As rightly submitted by the Ld.AR, during the year under consideration Rule 8D is not applicable at all. In all such cases, this Tribunal disallowed 2% of the dividend income as expenditure U/s.14A for earning exempt income. Accordingly, the orders of both the authorities below are modified. The Assessing Officer is directed to disallow 2% of the exempted income instead of 5%. - the appeal of the assessee is partly allowed for statistical purpose
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2019 (7) TMI 1264
Penalty u/s 271(1)(c) - quantum addition deleted related to difference of opinion between the assessee and the AO regarding valuation of stock - disallowance u/s 14A - HELD THAT:- Since the quantum addition already stands deleted, the penalty levied u/s 271(1)(c) has no legs to stand. In coming to this conclusion, we are guided by the decision of Hon ble Supreme Court in the case of K.C.Builders vs ACIT [ 2004 (1) TMI 7 - SUPREME COURT] as held that where the additions made in the assessment order, on the basis of which penalty for concealment was levied, are deleted there remains no basis at all for levying the penalty for concealment, and therefore, in such a case no such penalty can survive and the same is liable to be cancelled. Therefore, the penalty levied u/s 271(1)(c) in respect of the aforesaid addition is held to be untenable and the order of the CIT(A) on this issue is upheld. Penalty levied in respect of addition u/s 14A r.w. Rule 8D - DR has not disputed the facts, submissions and contentions contained in the aforesaid synopsis filed from the assessee s side during the appellate proceedings in ITAT. In the facts and circumstances of this case, therefore, and having regard to the synopsis filed from assessee s side, we reject the contention of the Ld.DR that every addition made in assessment order should invariably lead to penalty u/s 271(1)(c). For this purpose, we take guidance from the order of the Hon ble Supreme Court in the case of CIT vs Reliance Petro Products Pvt.ltd. [ 2010 (3) TMI 19 - SUPREME COURT] held that a mere making of claim, which is not sustainable in law by itself, will not amount to furnishing inaccurate particulars regarding income of the assessee. No interference from our side is warranted in the order of the Ld. CIT(A) deleting the penalty u/s 271(1)(c) in respect of the aforesaid addition u/s 14A r.w. Rule 8D. Accordingly, the order of Ld.CIT(A) on this issue is also upheld. - Decided in favour of assessee.
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2019 (7) TMI 1263
Condonation of delay of 264 days - Penalty u/s 271(1)(c) - assessee made a conditional surrender and paid the tax on the said surrender subject to no penalty u/s 271(1)(c) - HELD THAT:- In the instant case the assessment was completed accepting the revised returns instead of making the assessment on the basis of the seized material and the evidences collected during the search. If the proposal of the assessee with regard to taking lenient view is not possible the AO ought to have intimated the same to the assessee and should have completed the assessment rejecting the revised return which was filed on conditional surrender. The AO would have completed the assessment as per incriminating material found during the course of search instead of accepting the revised returns. We are convinced that the assessee has admitted the additional income conditionally and the department has levied the penalty inspite of the conditional offer against the spirit of admission made by the assessee. Hence, the assessee's case required to be heard on merits to render the justice. Therefore, we hold that there is reasonable cause for filing the appeal belatedly and delay of filing the appeal required to be condoned. Accordingly, we condone the delay and remit the matter back to the file of the CIT(A) to decide the appeal on merits after giving opportunity to the assessee.
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2019 (7) TMI 1262
Assessment u/s 153A - unexplained advances - in search evidences were found in the form of receipts for payment of ₹ 180 lakhs to Sri Srisaila Babu, GPA holder in cash and ₹ 15 lakhs in cash and ₹ 10 lakhs by DD to Sri Murali Krishna - HELD THAT:- In the instant case, the receipts are available evidencing the payment to the builder but no other documents are available at the time of search in the residential premises, evidencing the repayment of the amounts advanced to Sri L. Murali Krishna. There was no agreement or an iota of evidence available in the premises. Having not produced any evidence during the course of search or post search proceedings and failed to produce the books of accounts and confirmation during assessment proceedings, mere oral statements without furnishing the corroborating evidence is not sufficient to hold that the source for the advances are explained or to prove that the amount paid to the builder was returned. AO neither examined Sri Murali Krishna nor examined Sri Srisaila Babu and the reasons for not producing the evidence at the time of search or post search and the assessment proceedings. Therefore, we are of the considered opinion that the issue was not properly verified by the lower authorities to find out the source and the receipt of the amount. It is incumbent upon the AO to verify the bank accounts of the assessee with matching dates of advance as well as the bank accounts of Sri L. Murali Krishna with matching dates for the sources of both the parties. Therefore, we are of the view that the issue needs detailed examination to verify the sources with the bank accounts of the assessee, Sri Murali Krishna and other corroborative evidences. Hence, we are of the considered opinion that the issue should be remitted back to the file of the AO to make detailed examination and decide the issue afresh on merits. - The appeals of the revenue and cross objections of the assessee for the A. Y. 2008-09 and 2009- 10 on this issue are allowed for statistical purposes. Disallowance of expenses as Direct work expenditure, General Expenses and EPUI Expenses - CIT(A) allowed up to 50% - HELD THAT:- It is settled issue that the expenditure wholly and exclusively laid for the purpose of the business is to be allowed as deduction and it is the obligation of the assessee to prove that the expenditure with proper evidences. It is incumbent upon the assessee to furnish the names of the persons to whom the payments were made, nature of services rendered by them and the sources of payment. Though the assessee explained the source of payment, the assessee failed to furnish the evidence with regard to payments made. The expenditure of the assessee is income of the recipient. Therefore, for allowing the expenditure, payment should be capable of cross verification. Apart from the above, the AO obliged to see various issues such as the disallowance u/s 40A(3), deduction of TDS, the disallowance u/s 40(i)(a), the allowability of expenditure u/s 37(1) and the illegal payments. In the absence of evidences filed by the assessee to support the expenditure, the AO is incapable of making the cross verification and also it is impossible to decide whether such expenditure was incurred in regular course of business or not. In the normal course these excess expenses also required to be explained with relevant evidences and the reasons. It appears that assessee neither explained before the AO nor before the CIT(A). Though glaring differences were found by the Ld. CIT(A), the CIT(A) considered the trade practices and the explanation offered by the assessee and reasonably allowed 50% of expenditure. Considering all the facts and materials placed before us, we are of the considered opinion that it is also unreasonable to disallow the entire expenditure and restricting the disallowance to the extent of 50% is fair and reasonable. Accordingly, we uphold the order of the Ld. CIT(A) and dismiss the appeals of the revenue, cross objections filed by the assessee as well as the cross appeals filed by the assessee Addition made towards pronotes found in search - whether pro-notes were not financial transactions and they are only paper transactions given for security in the absence of any documentary evidence? - HELD THAT:- We are unable to accept the theory of the assessee as well as the executant of the pro-notes that the pro-notes were not financial transactions and they are only paper transactions given for security in the absence of any documentary evidence. Accordingly we reject the argument placed by the assessee that the pro-notes are not financial transactions. We have gone through the pro-notes, the pro-notes are written very clearly that the recipient has received a sum of ₹ 50. 00 lakhs each on 01. 07. 2011 from R. Sulochana Devi and Sri R. Venkatramaiah and as per the contents of the pro-notes, they are genuine transactions with complete details on the pro-notes. Since the valid pro-notes are available with the assessee, during the course of search, as per section 292C of the Act, it is presumed that the assessee had given loans to Sri R. Muthaiah. Since the assessee failed to prove that the pro-notes were obtained only for the purpose of security, we have no hesitation to hold that the promissory notes of ₹ 1. 00 crore (50. 00 lakhs each) on 01. 07. 2011 are genuine transactions, accordingly we uphold the order of the CIT(A) and dismiss the appeal of the assessee. Telescopic benefit - Set off of addition made by the AO relating to pronotes against the undisclosed income admitted by the assessee - HELD THAT:- The assessee has claimed for the set off of addition made by the AO against the additional income declared by the assessee in the earlier assessment years. However, the assessee did not furnish the details of expenditure which was bogus. The modus operandi of the expenditure and the generation of cash flow out of the disallowance of expenditure were not explained by the assessee. As per the statement of computation of income, the assessee admitted the additional income disallowing the expenditure. It is seen from the statement of computation of income that the sum was spent and there was no cash balance or generation of cash made out of the disallowance of expenditure. The assessee, even during the appeal hearing also did not explain how the assessee could generate the cash by disallowing the expenditure which was already spent. Though the disallowance of expenditure is hidden the addition, the assessee must explain the modus operandi of inflation of expenditure under each head and also explain the generation of cash for advancing the amount out of sums saved from the inflation of expenditure. In the absence of such details, it is not correct to allow telescopic benefit, hence, we set aside the order of the Ld. CIT(A) and restore the order of the AO. Accordingly, appeal of the revenue is allowed and CO of the assessee is dismissed.
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2019 (7) TMI 1255
Disallowance of deduction u/s.36(1) (va) r.w.s. 2(24)(x) - HELD THAT:- The question of law proposed in the present appeal is squarely covered by the DECO MICA LIMITED VERSUS DEPUTY COMMISSIONER OF INCOME TAX [ 2018 (10) TMI 1696 - GUJARAT HIGH COURT] . In such circumstances referred to above, this appeal, at this stage, is dismissed. However, if the Supreme Court reverses the judgement in the case of CIT vs. GSRTC [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] it would be open for the appellant to revive this appeal by filing an application for such purpose within three months from the date of the judgement. Appeal stands disposed of accordingly.
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2019 (7) TMI 1254
Addition on account of assessee s claim for bad debts written off - HELD THAT:- As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to A.Y. 2009-10, we respectfully follow the order of Coordinate Bench of this Tribunal for A.Y. 2009-10 and uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of bad debts written off. The appeal of the Revenue is accordingly dismissed. Addition u/s 14A read with Rule 8D(2)(iii) - whether no exempt income was actually earned by the assessee during the year under consideration and, therefore, the disallowance made under section 14A read with Rule 8D(2)(iii) is not sustainable? - D.R. contended that this claim is being made on behalf of the assessee for the first time before the Tribunal and, therefore, the Assessing Officer may be given an opportunity to verify the same - HELD THAT:- We find merit in this contention of the ld. D.R. The impugned order of the ld. CIT(Appeals) on this issue is accordingly set aside and the matter is restored to the file of the Assessing Officer for verifying the claim of the assessee made for the first time before the Tribunal and decide the issue accordingly. Ground No. 1 of the assessee s appeal is accordingly treated as allowed for statistical purposes. Provision made for diminution in the value of quoted shares in the earlier years - HELD THAT:- We direct the Assessing Officer to verify the claim of the assessee of having not claimed any deduction in the earlier years on account of the provision made for diminution in the value of quoted shares and if it is found correct on such verification, the Assessing Officer shall delete the addition made on account of write back of the said provision in the year under consideration while computing the total income of the assessee under the normal provisions of the Act. Ground No. 2 of the assessee s appeal is accordingly treated as allowed for statistical purposes. Set off and carry forward of brought forward losses and unabsorbed depreciation - HELD THAT:- Since the ld. D.R. has also agreed for sending the matter back to the Assessing Officer for verification, we direct the Assessing Officer to consider the claim of the assessee for the set off/carry forward of the brought forward losses and unabsorbed depreciation after due verification of the relevant facts and figures. Ground No. 3 of the assessee s appeal is accordingly treated as allowed for statistical purposes.
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Customs
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2019 (7) TMI 1261
Validity of order if not signed by the officer who has held personal hearing - Service of notice - grant of time in the SCN - Section 8(1)(c) of Foreign Trade Development Act - HELD THAT:- This Court is convinced that time granted, which is less than 48 hours, is too short and certainly does not qualify as reasonable time within the meaning of Section 8 of Foreign Trade Development Act, more particularly Section 8(1)(c) of Foreign Trade Development Act. The order-in original as served on the writ petitioner, shows that it has been signed by an Officer other than the one before whom the writ petitioner appeared for personal hearing, the records show that the order has, in fact, been passed by the same officer before whom the writ petitioner has appeared and the other officer has merely communicated the said order. - In any event, the order has to be signed by the Officer who has passed the order and in instant case, the order has been signed by an Officer who is not the one, who held the personal hearing . Therefore, with regard to the second point raised by the writ petitioner also, this Court is convinced that the same Officer, who held the personal hearing ought to have passed the impugned order and therefore, the impugned order is liable to be set aside on this ground also. This Court is of the considered view that it would serve the purpose to set aside the impugned order without expressing any opinion on merits and directing the second respondent to afford a fresh personal hearing, pass orders afresh after taking into account the response and records of the writ petitioner. This Court is informed that Joint Director General of Foreign Trade at Bangalore who will hold the personal hearing and hear the matter afresh is an Officer other than the Officer who issued the SCN dated 15.05.2019 (Shakuntala Naik) and the Officer who passed the order-inoriginal dated 17.05.2019 (Varun Singh) - Petition allowed by way of remand.
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2019 (7) TMI 1260
Penalty u/s 117 on Customs Broker and initiation of enquiry under 'Customs Broker Licensee Regulations, 2018 - service of order - impugned order assailed primarily on the ground that the writ petitioner was not given notice u/s 124 of 'The Customs Act, 1962' - It is the specific case and stated position of writ petitioner that if the grounds i.e., grounds on which penalty was proposed to be levied had been communicated in accordance with Section 124(a) of the said Act, the writ petitioner would have been able to meet the same - principles of natural justice - HELD THAT:- This Court is left with the considered view that personal hearing alone does not satisfy NJP in the instant case. In other words, this Court sustains the submission of learned counsel for writ petitioner in this regard. The writ petitioner has admitted in its capacity as CBL holder that it has failed to verify the correctness of the value and quality of the export consignment, which was exported, t he question as to whether it is the responsibility of the customs broker to so verify is left open owing to the nature of the order, which this Court proposes to pass - it is open to the writ petitioner to contend that duty is not cast on the customs broker licensee to verify the value and the quality of the consignment. It is open to the respondents to take a decision on the same. This Court is convinced that the writ petitioner ought to have been given a notice under Section 124(a) of the said Act clearly setting out the grounds on which the penalty was proposed to be imposed, so that the writ petitioner would have got an opportunity to dispel the same. This Court is informed by Revenue counsel that exporter has not chosen to assail the impugned order. This assumes significance as a perusal of the impugned order reveals that exporter has clearly waived issue of notice under Section 124 (a) of the Act. With regard to the writ petitioner, the respondent shall issue a notice u/s 124 of said Act to the writ petitioner within a period of fortnight from the date of receipt of a copy of this order. In this notice as mandated under Section 124(a) of the Act, the grounds on which the penalty is proposed to be imposed shall be set out besides other necessary particulars. Petition disposed off.
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2019 (7) TMI 1253
Review petition - release of seized goods - demurrage/ detention charges - HELD THAT:- The orders dated 19th September, 2018 and 29th October, 2018 are hereby recalled. W.P.(C) No. 9863/2018 together with the CM No. 45169/2018 filed in the said writ petition are restored to file.
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2019 (7) TMI 1230
Service of SCN - SCN was served on the petitioner in person on the same day - HELD THAT:- At request of Revenue Counsel, to get instructions, list this matter on 17.07.2019 in the 'Motion List'.
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Insolvency & Bankruptcy
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2019 (7) TMI 1259
Maintainability of application - Initiation of Corporate Insolvency Resolution Process - pre-existing dispute or not - Section 8(1) of the I B Code - HELD THAT:- In an application under Section 9, it is always open to the Corporate Debtor to point out existence of dispute, if any. Such existence of dispute should be that of a period prior to the issuance of the demand notice under Section 8(1) of the I B Code . In MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT ] , the Hon ble Supreme Court held that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice, as the case may be. From the aforesaid decision, it is clear that the existence of dispute must be pre-existing i.e. it must exist prior to issuance of the demand notice or invoice. If it comes to the notice of the Adjudicating Authority that the operational debt is exceeding ₹ 1 lakh and the application shows that the aforesaid debt is due and payable and has not been paid, in such case, in absence of existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt , the application under Section 9 cannot be rejected and is required to be admitted. It is clear that the claim means a right to payment even if it is disputed. Therefore, merely because the Corporate Debtor has disputed the claim by showing that there is certain counter claim, it cannot be held that there is pre-existence of dispute - In the present case, there is no record to suggest pre-existence of dispute with regard to the services rendered by the Appellant, the application under Section 9 should not have been rejected by the Adjudicating Authority on the ground that the dispute about the quantum of payment cannot be determined. Case remitted to the Adjudicating Authority to admit the application under Section 9 after notice to the Respondent.
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2019 (7) TMI 1252
Admissibility of petition - Initiation of Corporate Insolvency Resolution Process -Corporate debtor - default in repayment - Section 9 of the IBC, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudication Authority) Rules, 2016 - HELD THAT:- The debt and default is not only in dispute and it is also barred by latches and limitation. Moreover, the instant main Company Petition is filed to recover the alleged outstanding amount, which is in dispute. It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount. Therefore, the Company Petition is liable to be dismissed. Petition dismissed.
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2019 (7) TMI 1251
Termination of agreement - Directions to the Resolution Professional of the Corporate Debtor to handover to the Applicant certain Plant Machinery owned by it which are lying at the Premises of the Corporate Debtor - Whether the termination of the agreement on 28.11.2017 by the Applicant under Clause 15.3(b) of the agreement dated 12.05.2011 during the moratorium declared under Section 14 of the IBC, 2016 on 13.09.2017 is legally tenable? HELD THAT:- The intention of the legislature in relation to Section 14 is to ensure that after the declaration of moratorium, there is a standstill period during which there is a bar on creating any encumbrance, sale or alienation of the assets of the Corporate Debtor, so that the financial position of the Corporate Debtor must remain preserved and transparent as a going concern. The suspension of all proceedings against the Corporate Debtor is essential, as it stabilizes the assets of the Corporate Debtor thereby giving the creditors clarity regarding the financial health of the Corporate Debtor and providing them a drawing board to formulate a Resolution Plan, which could effectively restructure the outstanding debts. The action of the Applicant terminating the agreement during the moratorium declared vide order dated 13.09.2017 by this Authority is in violation of Clause (d) of Sub-Section (1) of Section 14 of the IBC, as the interest created in favour of Corporate Debtor by virtue of the agreement has been taken away, on which the whole of the business of the Corporate Debtor was dependent. Thus, the termination of the agreement vide letter dated 28.11.2017 by the Applicant is declared as null and void and stands set aside. Both the Applicant and the Corporate Debtor are directed to perform their respective obligations as per the terms and conditions of the Agreement dated May 12, 2011 r/w Addendum Agreement dated April 27, 2016, as if the agreement(s) was never terminated - this Tribunal is not inclined to grant any relief to the Applicant as prayed for.
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2019 (7) TMI 1250
Admissibility of application - Initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Settlement Agreement - main plea taken is that prior to the admission of the application under 9 of the I B Code, the parties had reached the settlement on 10th December, 2018 - HELD THAT:- We have heard the learned counsel for the parties and perused the so called Settlement Agreement dated 10th December, 2018, which is on plain paper and does not have date at the foot nor has the date of verification below the signatures. In absence of such dates below the signatures and being on plain paper and the fact that it was not brought to the notice of the Adjudicating Authority by either of the parties and the Operational Creditor filed claim subsequently dated 25th December, 2018, we are not inclined to exercise our inherent power under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 and not inclined to allow the Operational Creditor to withdraw the application under Section 9 of the I B Code. Appeal dismissed.
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2019 (7) TMI 1249
Issuance of directions for liquidation of the corporate debtor - Section 33 (1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the factual background and in the absence of any resolution plan and for want of time beyond statutory CIRP period; there is no other alternative but to order in conformity with the required majority decision of the CoC for liquidation of the corporate debtor under Section 33 of the Code - The Resolution Professional has submitted its written consent by filing an affidavit, in Form AA under the Code, to be appointed as Liquidator in the present case. The application is allowed by ordering liquidation of the corporate debtor, namely Shilpi Cable Technologies Limited.
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2019 (7) TMI 1248
Admissibility of petition - initiation of Corporate Insolvency Resolution Process - Corporate Debtor - default in repayment - Section 9 (2) and Section 9 (5) of IBC, 2016 - HELD THAT:- The present application in prescribed form is complete and the Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. Form No. 2 of the proposed Interim Resolution Professional (IRP) has been filed vide diary No. 6581 dated 12.09.2018 and stipulated that no disciplinary proceedings are pending against with the board or the Insolvency Professional Agency - the present application is admitted, in terms of section 9 (5) (i)of IBC, 2016. Application admitted - moratorium declared.
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Service Tax
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2019 (7) TMI 1258
Classification of services - supply of manpower services or not - period prior to 31.03.2010 - extended period of limitation - HELD THAT:- The appellant has entered into an agreement for execution of various works for the principal CPP. The payment for such work is based on the volume of the work executed and not according to the number of workman deployed by the appellant. The principal-CPP has discharged their obligation under the provisions of ESI Act and EPF Act. The same does not lead to the inevitable conclusion that the appellant has supplied labourers but has entered into colourable contracts to avoid the liability of service tax - the show cause notice is not maintainable as the same is based on the presumption, having no sanctity of law. Extended period of Limitation - HELD THAT:- There is no case of any contumacious conduct, suppression or falsification of records on the part of the appellant. Further, whatever service tax the appellant would have paid was available to the principal CPP as the cenvat credit, as they have discharged central excise liability for their manufactured goods paper/paper pulp - extended period is not invokable. Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 1247
Determination of value of the land and the value of the goods for the purposes of a works contract - Undivided share in the land separately - Rule 2A of the Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- While Section65(105)(zzzza) deals with works contract and it is possible to argue that a composite contract for the development of complex and sale of units could fall within its scope,this Court did not propose to examine that issue since the entire argument revolved around the scope of taxable service as envisaged in Section 65 (105) (zzzh) of the Finance Act, 2010 which is specific to construction of complex . There is merit in the contention of the learned counsel for the Respondent that the amendment to Rule 2A of the Rules would not advance the case of the Respondents/Review Petitioners - review petition dismissed.
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2019 (7) TMI 1246
CENVAT Credit - sales commission paid to their sale agents - the services provided by the commission agents were denied to be the input service - contradictory decisions - matter sub-judice before Apex Court - HELD THAT:- Hon ble High Court Gujarat in ASTIK DYESTUFF PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS [ 2014 (1) TMI 776 - GUJARAT HIGH COURT] has relied upon C.C.E., Ahmedabad Vs. Cadila Healthcare Ltd.[2013 (1) TMI 304 - GUJARAT HIGH COURT] however Hon ble High Court of Punjab and Haryana in the case COMMISSIONER OF CENTRAL EXCISE, LUDHIANA VERSUS AMBIKA OVERSEAS [ 2011 (7) TMI 980 - PUNJAB HARYANA HIGH COURT] had given a contradictory decision. It is thereafter that the matter was referred to Hon ble Supreme Court. Subsequent thereto there has been a CBEC Circular No. 934/4/2011 dated 29.04.2011 vide which the sales promotion activities as mentioned in explanation to Rule 2(l) of Cenvat Credit Rules, 2004 (as was inserted vide Notification No. 2/2016 dated 03.02.2016) was considered. The said Circular was passed by the Department with a view to resolve the confusion prevalent due to the different views of the above said High Courts. It was clarified therein that an explanation inserted in a Section/ Rule is generally to explain the meaning and intendenments of the said Section/ Rule. Sometimes when the explanation is inserted to clarify a doubtful point of law it would be effectively retrospective in nature. The fact that the matter is still subjudiced before Hon ble Apex Court due to the contrary decisions from two different High Courts but that the Department has subsequently tried to resolve the confusion, Order is hereby set aside - Appeal dismissed.
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2019 (7) TMI 1245
Refund of service tax - principles of unjust enrichment - refund claim was rejected holding that as the appellant has recovered service tax from the service recipient, therefore, bar of unjust enrichment is applicable - HELD THAT:- In terms of Section 11B(2)(e), the person who has borne the tax, can file the refund claim. Therefore, the service tax in the impugned matter paid by the appellant is required to be refunded to the service recipient directly. The refund of service tax paid by the appellant cannot be rejected - refund allowed subject to that it is payable in the account of service recipient directly. Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 1244
Refund claim - N/N. 41/2012-ST dated 29.06.2012 - refund denied on the ground that the service provider was not required to pay service tax on the services provided abroad - denial also on the ground that the original invoices were not produced - HELD THAT:- Considering the fact that although services has been provided in abroad but the service provider has paid service tax and the same has been deposit with the Revenue and the appellant has borne the said service tax, therefore, in terms of Section 11(B) of the Central Excise Act, 1944, the appellant is entitled to file refund claim of the service tax borne by them, therefore, the appellant is entitled to claim the refund. Original invoices - HELD THAT:- The appellant has produced the invoices which are computer generated invoices. On those invoices, no signature is required and it is presumed by the adjudicating authority as well as the Commissioner (A) that these are not original invoices. To that effect, the appellant has produced certificate from the provider of the services to the appellant. In that circumstances, the appellant is entitled to refund claim and the same cannot be rejected only on this sole ground. Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (7) TMI 1257
Non reversal of CENVAT credit - Benefit of N/N. 01/2011 CE dated 01.03.2011 and 12/2012 CE dated 17.03.2012 (Serial No. 128) - CENVAT Credit on inputs not available - HELD THAT:- It is an admitted and apparent fact on record that for availing the benefit of Notification No. 01/2011 CE dated 01.03.2011 and under Notification No. 12/2012 CE dated 17.03.2012 (Serial No. 128), the assessee is not allowed to avail the cenvat credit on the capital goods. Admittedly, the appellant has availed the cenvat credit on capital goods and admittedly the final product of appellant is only Single Super Phosphate , a fertilizer (the exempted good). Since it is a statutory mandate it was incumbent for the appellant to reverse the cenvat credit as was prior availed on the capital goods used in manufacture of exempted goods on which the benefit of lesser duty vide the impugned Notification was subsequently availed. Admittedly, there is no such book entry to reverse the remaining amount as well. Admittedly, no subsequent return has been filed by the appellant to reverse the balance amount of the cenvat credit which as per him is still lying unutilised. Penalty - HELD THAT:- The question of imposition of penalty also does not arise when admittedly the amount of cenvat credit availed is lying unutilised till date in the assessee s/ appellant s account. Appeal allowed in part.
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2019 (7) TMI 1243
Maintainability of appeal - Section 85(3A) of Finance Act, 1994 - time limitation - HELD THAT:- It can be safely inferred that the date of receipt of the order-in-original i.e., order dated 11.07.2018 is 14.01.2019 and not any earlier date. There is no disputation or disagreement before this Court that vide the impugned order, first respondent, who is the First Appellate Authority, in exercise of quasi judicial powers has dismissed the appeal solely on the ground of limitation without examining the matter on merits. The impugned order is set aside without expressing any opinion or view on the merits of the matter. It is being set aside for the purpose of facilitating the matter being examined on merits by the First Appellate Authority namely the 1st respondent - petition allowed by way of remand.
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2019 (7) TMI 1242
Refund of CENVAT Credit - duty paid under protest - Section 142 (3) of CGST Act, 2017 - HELD THAT:- Considering the fact that as per Section 142 (3) of CGST Act, 2017, which was enforced with effect from 1.7.2017 if any refund arises on account of Cenvat credit, duty, tax, interest or any amount, the same shall be paid in cash to the assessee. Despite, clear-cut provisions of law in GST regime, the Commissioner (Appeals) has allowed the refund to be credited in their Cenvat Credit account which is against the spirit of law. The order of the adjudicating authority is restored - appeal allowed.
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CST, VAT & Sales Tax
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2019 (7) TMI 1256
Retiral benefits from post of Member Trade Tax Tribunal (UPTT) - opposite parties refused to pay the pension - The simple reason given in the impugned order is to the effect that the services are not pensionary - HELD THAT:- There is no reason to interfere with the impugned order(s) of the High Court - SLP dismissed. Parity of remuneration with other members Member Trade Tax Tribunal (UPTT) - Judicial Member (advocate) seeking parity of pay with the other members who were in Government service - HELD THAT:- The High Court granted the relief of parity of pay to him with interest @ 6% from the date of his appointment which is of the year 1994. As the writ petition was filed in the year 2001, we modify the order of payment of interest @ 6 % p.a. of the arrears of salary w.e.f. the date of the filing of the writ petition.
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2019 (7) TMI 1241
Imposition of Penalty u/s 15A(1)(o) of the U.P. Trade Tax Act, 1948 - clerical error in filling up the invoice of the Form-31 - intent to evade present or not - demand of penalty at the maximum rate - whether demand of penalty is wholly excessive and arbitrary? - HELD THAT:- The assessee had disclosed import of 67 bags of P.P. fabric. It is not the case of the revenue that 25 bags of unlaminated P.P. fabric were found over and above the consignment of 67 bags of the P.P. fabric. Thus, if there was undisclosed consignment of 25 bags of unlaminated P.P. fabric found being imported by the assessee, then at the same time, necessarily there was over disclosure of 25 bags of laminated P.P. fabric as the assessee had disclosed 67 bags of laminated P.P. fabric against 42 bags of laminated P.P. fabric. The demand of penalty @ 40% is found to be excessive. While normally the Court would remit the proceedings to appeal authority, however, keeping in mind the fact that the penalty is for A.Y. 2000-01 and the amount of penalty is not heavy, I am inclined to dispose of the present revision with the observation that the Tribunal may pass appropriate order to confine the penalty to ₹ 25,000/- (in all) - The balance amount, deposited in excess, may be refunded to the assessee. Revision allowed in part.
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2019 (7) TMI 1240
Compounding benefits - Section 7-D of the U.P. Trade Tax Act, 1948 - Whether in face of the entire tax liability of the assessee having been compounded and in absence of any material to establish sale of coal, the Assessing Officer could impose any tax liability on the assessee on the presumed sale of coal? HELD THAT:- Under Section 7-D of the Act, the alternative method of assessment of tax liability by way of composition is subject to the direction of the State Government. As to the directions that are applicable to the present case, clearly under Clause (1) of the composition scheme dated 08.03.2001 as circulated by communication dated 12.03.2001 issued by the Commissioner of the Trade Tax, U.P., the State Government had issued directions for composition of the entire liability of tax on purchase of bricks, tiles etc., manufactured in the brick kiln and also the entire liability of tax that may have otherwise existed on the purchase of sand, coal, wood and sawdust. It appears that the Assessing Authority had compounded the entire liability of tax on the purchase of entire quantities of coal without any stipulation of limitation as to the quantities which are required for running the brick kiln of the capacity disclosed by the assessee. The order under Section 7-D of the Act and composition of tax liability thereunder is in the nature of an alternative to regular assessment - Also, once accepted, it creates a binding contract between the assessee and the revenue. Therefore, the revenue cannot claim contrary to the order under Section 7-D of the Act. What remains to be considered is whether there was any material to draw an inference of sale of coal made by the assessee outside its books of accounts during A.Y. 2002-03. In this regard, a perusal of the three orders, in this case reveal, other than the circular of the Commissioner dated 19.04.1993, there is no material, whatsoever, to infer that the assessee had engaged in an activity of trading in coal. Thus, there is no evidence that the assessee violated the terms of the composition scheme - thus there is a complete absence of any evidence or material to reach a conclusion that the assessee had engaged in trading in coal and he was liable to tax on such quantities of coal sold by him. The question of law, framed above, is answered in negative i.e. in favour of the applicants-assessee and against the revenue - revision allowed.
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2019 (7) TMI 1239
Revision of assessment order - TNVAT Act - HELD THAT:- This Court is informed is in the anvil, respondent shall make assessments afresh. Assessments made afresh in aforesaid manner shall be communicated to the writ petitioner under due acknowledgement in a manner known to law more particularly in accordance with applicable Rules in this regard under Rules under TNVAT Act.
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2019 (7) TMI 1238
Concessional rate of tax - inter-state purchases of High Speed Diesel Oil - 'C' forms could not be downloaded - HELD THAT:- In the M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] , this Court allowed the writ petitions filed by the assessees and directed the Revenue to permit the petitioners assessees to download 'C' forms. It is not in dispute (as submitted by the learned counsel for Revenue) that though an intra Court appeal has been preferred against Ramco Cements matter with a delay of three days, the same remains unnumbered as of today. In other words, Ramco Cemets authored by a Hon'ble Judge of this Court is holding the field as of today. There is no dispute or disagreement that the instant writ petition falls clearly within the four corners of Ramco Cements matter - petition allowed.
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2019 (7) TMI 1237
Imposition of penalty u/s 54(1)(14) of the U.P. Value Added Tax Act, 2008 - stock transfer or not - intent to evade or not - HELD THAT:- In the facts of the present case, the assessee had offered an explanation that coloumn no.6 had remained blank on account of clerical error. More importantly, he had submitted that the transaction was one of stock transfer. In support where of, he had adduced evidence in shape of stock transfer invoice, bilty etc., which documents were produced at the stage of detention of goods. Clearly, none of the authorities has applied their mind to that explanation and have not recorded any finding to reject the explanation based on the claim of stock transfer. It also cannot be lost sight of that the assessee is a manufacturer of goods and that against the total stock transfer in excess of ₹ 4,00,00,000/- made during the assessment year in question, only a single transaction of value at ₹ 5.5 lakhs has been doubted solely on account of coloumn no.6 being left blank, though the stock transfer invoice and other documents were accompanying the goods. Normally the proceedings may have been remitted to the Tribunal to pass a fresh order, however, in view of the fact that the appeal is pertaining to A.Y. 2008-09 and the fact that the VAT Act itself has now been repealed and has been replaced by the G.S.T. Act, no useful purpose would be served in remanding the matter, specially in light of the observations made above, which are peculiar to the facts and circumstances of the present case involving manufactured goods duly packaged and identified nos. of packing boxes, weight and value. The question of law is answered in favour of the assessee and against the revenue - revision allowed.
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2019 (7) TMI 1236
Disallowance of Special Economic Zone (SEZ) sale - issue was not dealt on the ground of petitioners failed to produce documents in support of their claim - HELD THAT:- Without going into the issue as to whether or not the petitioners made over the documents to the departmental representative as claimed, it would be appropriate to permit the petitioner to lead such evidence as are available to the petitioners, in accordance with law, before the revisional authority in respect of their claim on account of Special Economic Zone (SEZ) sale. The revisional authority will look into such evidence in accordance with law, and if such claim stands substantiated, allow the same. The matter is remanded to the revisional authority for fresh consideration of such in accordance with law - petition allowed by way of remand.
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2019 (7) TMI 1235
Sick units - levy of interest for delay - Whether an application filed and registered before the BIFR would extend protection to the Unit under Section 22 (1) of the Act, 1994 - HELD THAT:- Section 22(1) of the SIC Act is unambiguous. Unless the scheme would be extended to the extent of even non-payment of outstanding dues of various Revenue Departments, in this case, the Sales Tax Department, mere registration of an application of a sick unit before the BIFR cannot be said to be a ground for either exemption from such payment or will provide protection as a justification for non-payment - Another thing of significance is that the registration of the application of the Appellant has been made on 29.05.2002, whereas this liability has arisen prior to the said date and we are of the opinion that in matters of obligations created under taxing statute, no leeway as such can be permitted to shy away from compliance or else the entire fiscal management of the State and the Union will go into disarray. The defence taken by the Appellants before the learned Single Judge did not stand the judicial test, keeping in mind the precedents which have been taken note of in the order impugned of the learned Single Judge. Appeal dismissed.
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Indian Laws
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2019 (7) TMI 1234
Existence or otherwise of the Arbitration clause governing the parties and more particularly with regard to the conduct of the Arbitrator - Compensation for damage - damage on account of failure of Shingada in an appropriate manner - HELD THAT:- In the ultimate analysis since we are not adverting to the merits of the claim and in that regard since, we have not adverted to the finding recorded by the learned Arbitrator on the merits of claim we would not venture to examine with regard to the ultimate conclusion on the claim as to whether it is justified or not. However, in the above background, what is to be seen is that there has been a reasonable basis for the appellants to make a claim that in the present circumstance the learned Arbitrator would not be fair to them even if not biased. It could no doubt be only a perception of the appellants herein. The learned Judge of the High Court of Judicature at Bombay was not justified in allowing the appeal filed under Section 37(1)(b) of the Act, 1996. Appeal allowed.
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2019 (7) TMI 1233
Completion of construction projects - failure to complete the projects in time - unable to allot/deliver booked flats on committed time - tri-partite agreement - siphoning off the amount of the buyers - permission to take into custody various Directors - Forensic Audit - HELD THAT:- It is a shocking and surprising state of affairs that such large- scale cheating has taken place and middle and poor class home buyers have been duped and deprived of their hard-earned money and lifetime savings and some of them had taken a loan from the bank and they are not getting houses. Bank has made payment to the builder, owners have the liability of making payment of amount with interest, home buyers are still waiting for their dream houses to be completed. This is not only with respect to the Amrapali builders that projects have not been completed as reflected in the affidavits of Noida and Greater Noida Authorities. More than 70% of the projects have not been completed which were initiated way-back in the year 2008-09 and were supposed to be completed within 3 years. By the Amrapali Group, the buyers' money which has been obtained has not been invested in the construction activities, rather it has been diverted to a great extent. Money obtained from the banks has also not been invested in the projects and has been diverted elsewhere to acquire other assets. Whether the builders and promoters can be permitted to usurp and divert the money of home buyers and home buyers can be left in the lurch as a silent spectator? - HELD THAT:- As per the Noida and Greater Noida authorities, in case the lease-deed is snapped, the entire constructed buildings shall have to be demolished within 3 months. As per the bankers, they have a charge on the property as the land has been mortgaged to them and until and unless their amount is paid, the builder will have no right on the property which has been constructed by their money, and the buyers have also to wait for the satisfaction of the dues. If the real estate business has to survive in India, it has to be answerable to the public and has necessarily to uphold the trust reposed in builders/promoters. They have been paid huge amounts not only by the home buyers but also, they have to pay a huge amount for the public land given to them on lease by Noida and Greater Noida Authorities for construction of houses. The land has been given to them by the authorities on a concessional basis by making payment of 10% amount at the time of allotment. The builders have to be accountable to public/home buyers as well as the authorities and bankers. It is a matter relating to housing needs dealing with shelter place, such an activity is of the public importance as the real estate sector plays a pivotal role in the fulfilment of needs of housing infrastructure. Public Trust Doctrine - HELD THAT:- Once the Noida and Greater Noida Authorities knew very well that there were defaults, they could not have allotted further land to the Amrapali group without insisting for payment of its dues. Secondly, it was not open to the authorities to permit the sub-leases of plot of land executed by builders, thereby allowing the leaseholder to earn a huge amount without making payment of the amount due to them. The officials of the authorities have acted in clear breach of public trust. They have permitted the defaulting leaseholders to earn the amount by sub-leasing its land of which dues had not been cleared. Thus, apparently, the officials of the authorities acted clearly in collusion with the builders and overlooked the interest of the Authorities and home buyers while permitting the sub-leases of plot of land to be granted - The action of the officials of the authorities has the effect of causing unjust enrichment of builder from the land held by the concerned authorities. It was wholly an illegal exercise permitted. The officials of the Noida and Greater Noida authorities have acted clearly in a breach of public trust and apart from that, they have failed to act as per the statutory mandate, the regulations and the terms of the lease deed. The transfer of the plot by the lessee was only on fulfilment of certain conditions. The dues of lessor towards the cost of land were to be cleared in accordance with the schedule of payment. It is apparent that the officials of the concerned authorities have not discharged their duty in accordance with the trust enjoined upon them under aforesaid terms and conditions of lease deed, thus, by their inaction, enabled cheating of the home buyers at a large scale. They were well aware of what was happening on the spot. Mortgage - HELD THAT:- By the collusion, the money paid by home buyers to builders which included money payable to the Authorities could be diverted, had the deposit made by home buyers been unutilised, money due under lease would have been paid to authorities before the creation of the mortgage. Money borrowed from bank, in fact, was not required for completion of these projects as the money paid by the buyers was enough for that purpose, but that was also diverted and the money obtained from the banks was also not utilised for the purpose it was taken and it was well within the knowledge of the bankers and Authorities that the funds were being diverted, but they remained mute spectators. Diversion of funds - HELD THAT:- As a matter of fact, the bank has not been able to show what steps it has taken to stop the diversion of funds to third parties on the same date of disbursal of the amount - in view of the finding of the Forensic Audit that there was no necessity of obtaining the loan from the Bankers as Amrapali Group had sufficient money from the home buyers, which has also been diverted and has not been utilised in the construction activities. Other assets have been created with the help of the same and the borrowings have been used in order to siphon off the money by making payment of some unusual amount not only to J.P. Morgan, but also to IPFII Singapore in violation of the FEMA Rules and FDI Rules as found by the Auditors in the respective cases. The Noida and Greater Noida Authorities and the Bankers have permitted diversion of funds of home-buyers and the possession of other assets by Amrapali Group. The buyers' money had been diverted, which was meant for construction on payment of dues of Authorities in case they were paid timely by the Amrapali Group to the Authorities and to the Banks substantively liability would have been cleared. But by their inaction and rather conniving, the buyers were cheated by the Amrapali Group. Authorities did not object when mortgages were effected in favour of Banks in violation of conditions. Bankers could not have violated conditions. The concerned Authorities have to issue occupancy certificate as well as completion certificate with respect to the projects in which home buyers residing without insisting for the payment of their dues. This Court has to monitor the payment of the dues to the Authorities as well as the Bankers, from guarantors and other proprietors. The innocent buyers cannot be made to suffer for no fault on their part. Once Authorities have allowed 9000 home-buyers to occupy the premises without terminating the lease on the ground that occupation is illegal. Obviously, builders have put them in possession, they are not the encroachers and they have invested their valuable saving and have no other shelter place to live. They cannot be deprived of their houses and cannot be left without basic necessities of life like water, electricity, etc. - Wherever we seek any favour for home- buyers, we see that defrauding parties i.e., promoters/builders are further obliged by making certain concessions by the Government that would amount to perpetrating further fraud and unjust enrichment of builder. The case poses challenge to the law enforcement agencies to act in tandem to book such culprits. We direct the concerned Authorities to look into the violation of the FEMA and FDI norms as projected by the Forensic Auditors in their report and to submit progress report in this Court. Applicability of RERA - HELD THAT:- he projects of Amrapali Group have registration under the RERA is an admitted fact. The provisions of the RERA are applicable is also not in dispute - A blatant violation of the provisions of RERA has been done by the Amrapali Group. Since RERA contemplates timely completion of projects once registration has been granted under Section 5 and extension of registration under Section 6, it is only in the event of force majeure in case there is no default on the part of the promoter, registration can be extended in aggregate for the period not exceeding one year. It is clear that RERA intends for completion of the project in case any fraud is committed by the promoter and the activity is not completed, the home-buyers cannot be left in lurch, allowing the prayer on behalf of Bankers as well as by the Authorities would amount to unfair treatment of home buyers in the facts of this case. It is too late for them to submit that home buyer has no rights in the teeth of the provisions contained in the RERA, which intends to prevent fraud - Once registration lapses on non-completion of project within the time stipulated or it is revoked the consequence ensue as enumerated in Section 8 of RERA, the Authority is enjoined upon the duty to consult with the appropriate Government to take such action as it may deem including the carrying out of the remaining development works by competent authority or by the association of allottees or any other manner as may be determined by the Authority. It is clear that is the duty of the promoter to abide by the time schedule of the completion of the project of the allottee. The time of completion of the project is fixed from the date of the agreement. Though the RERA has come into force after the mortgage had been created, the intendment of RERA is that after the execution of the agreement no such mortgage or charge should be created. The registration of Amrapali Group of Companies under RERA shall stand cancelled - The various lease deeds granted in favour of Amrapali Group of Companies by Noida and Greater Noida Authorities for projects in question stand cancelled and rights henceforth, to vest in Court Receiver - Noida and Greater Noida Authorities shall have no right to sell the flats of the home buyers or the land leased out for the realization of their dues. Their dues shall have to be recovered from the sale of other properties which have been attached. The direction holds good for the recovery of the dues of the various Banks also. NBCC is appointed to complete the various projects and hand over the possession to the buyers. The percentage of commission of NBCC is fixed at 8 percent - The home buyers are directed to deposit the outstanding amount under the Agreement entered with the promoters within 3 months from today in the Bank account opened in UCO Bank in the Branch of this Court. The amount deposited by them shall be invested in the fixed deposit to be disbursed under the order of this Court on phase-wise completion of the projects/work by the NBCC. Let the cases be listed for further hearing before us on 9.8.2019.
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2019 (7) TMI 1232
Dishonor of Cheque - existence of legally enforceable debt or liability - pre-summoning evidence - HELD THAT:- Supreme Court in Pepsi Foods Ltd. and Another Vs. Special Judicial Magistrate and Others [1997 (11) TMI 518 - SUPREME COURT] had quashed the complaint and the summoning order, as it was found that there were no averments in the complaint on the basis of which a complaint could be maintained. In the instant case, to assert the necessary ingredients of existing debt or liability, it is required to be averred in a complaint of Section 138 of NI Act, as to what is the factual basis to show existing debt or liability. This Court is of the considered opinion that necessary ingredients to maintain the complaints in question are lacking, thereby rendering the impugned order unsustainable and so, continuance of proceedings arising out of the complaints in question would be an exercise in futility. Petition disposed off.
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2019 (7) TMI 1231
Enhancement of daily wages from 1.1.2006 as per the recommendations of the 6th Central Pay Commission - Rule 7 of the Central Administrative Tribunal Rules of Practice, 1993 - HELD THAT:- Prima facie, we are satisfied that the requisite documents were not filed by the petitioner in compliance of Rule 7 of the Central Administrative Tribunal Rules of Practice, 1993 and therefore, the finding arrived at by the tribunal appears to be justified - We have also gone through the Annexure-6 as annexed with the petition and observe that the same is simply on a plain paper without having any details about the office of the union or the office bearers of the said union. The Annexure-6 does not inspire confidence in us about the veracity and authenticity of the same. The present writ petition being devoid of merit, is hereby dismissed.
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