Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 12, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Annual returns in GSTR 9 - clarifications
Income Tax
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Deduction u/section 80(IA)(10) r.w.s 10AA(9) - AO made the additions on the ground that, by giving deductions of interest on capital and remuneration to partner of the assessee firm after finding that the assessee had taken undue benefits of section 10AA by not claiming interest on capital and remuneration to partners which resulted in increase in exempted profit - CIT(A) rightly deleted the additions - AT
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Undisclosed income - extra amount subject to verification - Assessee in his search statement clearly stated that investment mentioned in Col B of the seized excel sheet is subject to verification from books of account and it may be more or at lesser figure - CIT(A) has rightly deleted the addition of extra amount - AT
Customs
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Disposal of seized/confiscated foreign origin liquor
Indian Laws
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Dishonor of Cheque - The petitioner cannot be prosecuted in her capacity solely on the ground that she was director of the said company as on the date of the issuance of the said cheque - merely by reproducing the ingredients of section 141(2) of the "Act", the criminal liability cannot be fastened on her.- HC
IBC
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Initiation of CIRP - non-delivery of notice of demand upon the Corporate Debtor - the Adjudicating Authority was empowered to reject the same for failure on the part of Operational Creditor to deliver demand notice to the Corporate Debtor. - AT
PMLA
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Money Laundering - Levy of penalty - failure on the part of banks regarding suspicious transactions - Even if it is assumed that the sting operation was conducted prior to 15.02.2013, there is no infirmity in the decision of the Appellate Tribunal to modify the punishment from a monetary fine to a warning in writing, in terms of Section 13(2)(a) of the Act as substituted with effect from 15.02.2013 - HC
Service Tax
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Levy of penalty u/s 76 - the doubts in the mind of the appellant as to taxability or otherwise of the renting activity was in good faith, which is also due to the fact that there are contrary decisions available and that finally, it has reached the Hon’ble Supreme Court. - penalties set aside - AT
Central Excise
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Issue of fresh show cause notice after the withdrawal of the first SCN - The issue that once an SCN was issued whether the same is permitted to be withdrawn without adjudication was also not considered properly by the adjudicating authority - matter restored before the original authority - AT
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Extension of time for making pre-deposit - As the department has been able to recover the amount of ₹ 2.61 Crore, we are of the view that the applicants may not be now asked to deposit the amount towards the pre-deposit. - HC
Case Laws:
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GST
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2019 (9) TMI 451
Rectification of mistake - inadvertent mistake - it is pointed out that inadvertently, the name of Mr. Bharat Raichandani is not indicated in the appearance for the petitioner along with the learned counsel Shri Aditya R. Parikh - HELD THAT:- The Registry shall add the name of Mr. Bharat Raichandani along with Mr. Aditya Parikh as the learned counsel appearing for the petitioner in our order - The necessary addition shall be effected and a fresh writ of the order shall be issued.
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2019 (9) TMI 450
Rejection of refund claim - refund rejected by a one line communication without disclosing any reason for the rejection - HELD THAT:- The rejection order has been passed without hearing the Petitioner and without recording any reasons for the rejection, that too in the face of the refund sanctioned by the Respondent. Thus, we consider it appropriate to direct Respondent No. 4 (Principal Chief Commissioner) and Respondent No. 5 (Special Commissioner, Delhi GST) to remain personally present in Court with the complete record relating to Petitioner s case, to explain as to why the refund, which had earlier been sanctioned, has now been rejected. List on 06.09.2019.
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2019 (9) TMI 449
Complaints about the functioning of the GST system - Difference of consensus arrived at in the meeting - on some issues there has been a consensus arrived at, whereas on some issues, the Department desires to place on record its response in the form of an affidavit - HELD THAT:- It is made clear that on the issues where a consensus has been arrived at between the Respondents and counsel for the Petitioners pursuant to the above meetings, the changes should be implemented by the Respondents without waiting for further orders by this Court. List on 18th September, 2019.
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Income Tax
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2019 (9) TMI 452
MAT applicability - amount created for unexpired risk - amortization of specific items of expenditure - HELD THAT:- Appeal admitted on the following substantial questions of law:- (i) Whether on the facts and in the circumstances of the case the amount created for unexpired risk is a reserve under Explanation 1(b) of Section 115JB of the Income Tax Act, 1961 and is a part of the book profit for the purpose of determining the Minimum Alternate Tax (MAT) ? (ii) Whether the proposed question with regard to amortization is a pure question of fact as we have observed in our judgment and order made today Principal Commissioner of Income Tax-2, Kolkata v. National Insurance Co. Ltd. [ 2019 (9) TMI 445 - CALCUTTA HIGH COURT]
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2019 (9) TMI 447
Non releasing petitioner s refund arising out of an intimation u/s 143 (1) - power to provisionally attach any property u/s 281 of an assessee to protect the interest of the revenue under certain circumstances HELD THAT:- Previously, the petitioner had filed a Writ Petition before this Court complaining about the department not showing sufficient urgency in processing the petitioner s return for AY 2016-2017 which the petitioner expected would give rise to sizeable refund. High Court directed the respondents to complete the process expeditiously. Consequently, the intimation under section 143(1) of the Act gave rise to refund of a sum of ₹ 180 crores. With interest, this refund came to approximately ₹ 207 crores. Immediately, the department raised the possibility of invoking section 245 of the Act in order not to release the refund. The petitioner pointed out that the tax demands referred to in the communications proposing to invoke section 245 of the Act have all been stayed by the Tribunal under different interim orders. Under sub-section (1) of section 281B thus, where during the pendency of any proceedings for assessment or reassessment, the assessing officer is of the opinion that for the purposes of protecting the interest of revenue, it is necessary so to do, he may with the previous approval of the higher authority pass an order in writing provisionally attaching the property belonging to the assessee. These are drastic powers permitting the assessing officer to attach any property of an assessee even before the completion of assessment or reassessment. These powers are thus in the nature of attachment before judgment. assessing officer is most likely to confirm the demands while carrying out the final assessment of the petitioner s return for the AY 2016-2017, we cannot lose sight of the fact that the demands for the previous assessments have been stayed by the Tribunal. The Tribunal has given reasons why it was persuaded to pass such interim orders. It is not possible for us to dissect the reasons of the Tribunal and come to the conclusion that in the final analysis, such demands would be confirmed. Permitting the department to provisionally attaching the petitioner s refund for the current year on the ground that in the final assessment, the demands are likely to be confirmed, would amount to ignoring the hard fact that for the earlier assessment years, the Tribunal has suspended the recoveries arising out of the demands made by the assessing officer on similar issues. Looked from any angle, the occasion for the competent authority to exercise the drastic power under section 281B of the Act has not arisen. We do not doubt his power, however, we do not find proper justification for exercise of such power. Under the circumstances, the impugned order dated 26.10.2018 is set aside. The respondents shall release the refund arising out of the intimation under section 143(1) of the Act for the AY 2016-2017 with further statutory interest, if any, to be paid within two weeks from the date of receipt of a copy of this order.
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2019 (9) TMI 446
MAT computation - reserve created for unexpired risk - HELD THAT:- We admit this appeal on the following questions of law:- (i) Whether on the facts and in the circumstances of the case the learned tribunal has erred in law in holding that a sum of ₹ 161,86,66,000/- being the reserve created for unexpired risk not to be added while computing the book profit under Section 115JB of the Income Tax Act, 1961 without considering the fact that Clause- (b) to explanation 1 of Section 115JB(2), book profit has to be increased by the said reserve? (ii) Whether on the facts and in the circumstances of the case the learned tribunal has erred in law in holding that a sum of ₹ 87,78,52,000/- being the reserve created for unexpired risk should be considered as reserve for computing the book profit under Section 115JB of the Income Tax Act, 1961?
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2019 (9) TMI 445
Question of fact or law - delayed Employees share of provident fund to the concerned employees respective PF account under Section 36(1)(v)(a) - HELD THAT:- No merit in this appeal. Only questions of fact are sought to be raised. Commissioner (Appeals) had advanced detailed factual reasons to hold that the employees share of provident fund was credited by the assessee to the concerned employees respective PF account under Section 36(1)(v)(a) within the due date. Therefore, we are not minded to interfere with it on appeal. Similar is the case with the findings with regard to amortization of specific items of expenditure.
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2019 (9) TMI 444
Rectification of mistake u/s 154 - brought forward losses set off against the speculative business income - HELD THAT:- Gross total income of the assessee company does not consist mainly of income chargeable as Interest on securities Income from house property , Capital gains and Income from other sources and its principal business is not the business of banking or of granting of loans or advances. The assessee company is a Limited Company engaged in the business of purchase and sales of shares during the year under consideration and has also earned income from Rent and Dividend, etc. The assessee is a non-banking financial company (NBFC) and may be categorized as an Investment Company. The losses of earlier years, i.e., assessment years 2008-09 and 2009-10 were claimed by the assessee to be set off against the profit of the year under consideration for the reason that there was no change in the nature of the business of the assessee company. The set off of loss claimed by the assessee was allowed by the AO vide order passed u/s.143(3) of the Act, in accordance with the Explanation to section 73 as per which, the business of the assessee company is deemed to be a speculative business. To reiterate, in the earlier two years, the business of the assessee was a speculative business. Ergo, the business of the assessee company in the year under consideration remains the same as that in the earlier two assessment years. We hold that there was no mistake apparent from the record in the original assessment order dated 16/3/2016 and the brought forward losses had correctly been set off against the speculative business income for the year under consideration.
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2019 (9) TMI 443
Disallowance of provision for leave liability and disallowance of Transitional Liability for leave provided - HELD THAT:- A sum had been claimed towards leave liability, which had not been paid. Besides, the assessee had also claimed an additional leave liability on account of adoption of AS-15 prescribed by ICAI regarding recognition of liability. We note that the Hon`ble Calcutta High Court has struck down provision of section 43B(f) of the Act, while deciding the case of Exide Industries vs. Union of India [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] We note that based on the identical facts, the Coordinate Bench of ITAT Kolkata in the case of SICPA Vs. DCIT [2017 (3) TMI 1383 - ITAT KOLKATA] , has remitted the matter back to the file of the assessing officer. Therefore, we deem it fit and appropriate, in the interest of justice and fair play, to remand this issue to the file of the ld AO. Therefore, we set aside the order of ld CIT(A) and remit this issue back to the file of the assessing officer to pass order based on the outcome of the main appeal on merits by the Hon ble Supreme Court as stated [ 2008 (9) TMI 921 - SC ORDER] MAT computation - whether transitional liabilities of gratuity and leave encashment as per provisions of AS-15, which is debited to General Reserve in the Balance Sheet, can be adjusted while computing book profit under section 115JB of the Act? - HELD THAT:- Transitional Liability' provided in book of accounts and adjusted against Opening General Reserve as per AS-15 (Revised 2005), towards leave liability and towards gratuity liability done by an outside actuary under mandatory AS-15 (Revised 2005) on employee benefits issued by ICAI, should be reduced from current year`s profit for computation of Book Profit u/s 115JB of the Act. Therefore, we note that notes to accounts are part of financial statements (Profit Loss account and Balance Sheet, cash flow statement etc,) therefore the computation of book profit under section 115JB of the Act should be done taking into account the figures mentioned in the notes to accounts. Hence, we direct the assessing officer to allow deduction in respect of transitional provisions of leave liability of ₹ 85,34,000/- and gratuity liability while assessing book profit u/s 115JB of the Income Tax Act Expenditure disallowed u/s 14A for computation of book profit u/s 115JB of the Act for minimum alternate tax - HELD THAT:- Disallowances made under the Provisions of Sec. 14A r.w.s 8D of the TT Rules, cannot be applied to the Provision of Sec. 115JB of the Act. Therefore, the AO shall work out disallowances in terms of the clause (f) to Explanation-1 of Sec. 115JB of the Act independently after considering the expenses debited in the profit loss account as mandated under the provisions of law. See DCIT vs. CBSC Ltd. [2018 (6) TMI 828 - ITAT KOLKATA] Non- allowance of deduction on account of operating tease rent equalization - appellate authority has power even to admit a claim not made in the proceedings before the lower authority - HELD THAT:- As relying on case of Goetze India Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] that CIT(A) has power to admit additional ground claiming relief not claimed in the return and without filing revised return, even if the same results in assessed income going below the returned income. In his report dated 3.1.2014, the assessing officer has not given any comment or adverse remark on merit of the claim and not pointed out any defect or shortcoming in the same. In the light of the facts discussed earlier, the assessee is entitled for deduction Lease Rent Equalization disclosures under the head Prior Period Items - HELD THAT:- The incremental liability on account of lease rental equalization provided for pursuant to the clarification issued by the Expert Advisor Committee of the ICAl, accrued during the relevant previous year and is allowable deduction in computing income for the said year, notwithstanding that such liability may relate to the earlier years. Therefore, we direct the assessing officer to allow the claim of the assessee in respect of lease rent Disallowance u/s 43B - employees share of contribution towards PF and ESI, if it is paid before filing of return of income then it would be a sufficient compliance of the Act. Accordingly, we dismiss the ground No.1 raised by the Revenue. Depreciation on account of River Embankment under the block of assets building - HELD THAT:-Respectfully following the decision of the Coordinate Bench in the assessee's own case, the ld CIT(A) deleted the disallowance of depreciation . That being so we decline to interfere on the order passed by the ld CIT(A), his order on this issue is hereby accepted and grounds of appeals raised by the Revenue is dismissed. Payment of lumpsum royalty as Capital Expenditure' - HELD THAT:- The assessment for AY 2007-08 was framed u/s 143(3),in that year the Assessing Officer himself did not dispute that the expenditure on royalty payments was revenue in nature and no disallowance was made. That being so we decline to interfere on the order passed by the ld CIT(A), his order on this issue is hereby accepted and grounds of appeals raised by the Revenue is dismissed. MAT computation - prior period items on computation of book profit u/s 115JB - HELD THAT:- We note that this issue is covered in favour of the assessee by the decision of the Hon'ble Delhi High Court in the case of CIT vs. Khaitan Chemicals Fertilizers Ltd [ 2008 (9) TMI 89 - DELHI HIGH COURT] wherein the Court reversed the decision of the Tribunal with regard to deduction of prior period expenses charged to profit and loss account while computing book profit under section 115JA CIT(A) correctly deleted the addition on account of adjustment made by the Assessing Officer on the prior period items held no adjustment to the profit as per P L A/c can be made unless specifically provided under any of the clauses of the explanation to section 115JB. Therefore, it is held that the Assessing Officer was not correct in disallowing such debit. The adjustment made by the Assessing Officer on the prior period items is accordingly deleted. Addition on account of dividend income ignoring the fact that the assessee has never claimed such amount in its return of income - HELD THAT:- We note that dividend income exempts in terms of section 10(34) of the Act therefore it should be excluded under normal computation provisions. It should also be excluded in computing book profit in terms of clause (ii) of Explanation 1 to section 115JB of the Act. Therefore, we direct the AO to exclude dividend income from normal computation as well as computation of book profit under section 115JB of the Act. Contribution to Bata Workers Sickness Benefit Society - HELD THAT:- Issue stands squarely covered in favour of assessee by the decision of the jurisdictional Kolkata Bench of ITAT in assessee's own case in various earlier assessment years. One of the orders of the Kolkata Bench in assessee's case on the issue of allowability of contribution to BWSBS [2002 (9) TMI 254 - ITAT CALCUTTA-A] TP adjustment - downward adjustment - PLI i.e. OP/OC of the assessee was determined by the TPO at 6.55% whereas the PLI of the comparable was 7.47% - HELD THAT:- We note that the downward adjustment proposed by the TPO was in gross violation of the provisions of second proviso to Section 92CA of the Income-tax Act, 1961. Without prejudice to the assessee's claim for use of multiple year data for determining PLI of the comparables, making functional working capital adjustments to the PLI and the manner in which PLI was worked out by the Transfer Pricing Officer, at the very onset it is submitted that going by TPO's own computation of the arm's length value of the transactions, the arm's length price was within the prescribed range of +/- 5% of the actual transaction amount. Arm's length value the transactions as computed by the TPO at ₹ 2,44,31,005/- is within the permitted range for variation of +/ -5% of the actual value of the transaction. However in the order passed u/s 92CA(2) and the impugned order u/ s 143(3) neither the TPO nor the AO took into consideration the provisions of Section 92C of the Income-tax Act, 1961 and failed to appreciate that since the actual value of the transactions was within the permitted variation from the arm's length price so determined, the downward adjustment of ₹ 4,50,658/- was totally unwarranted. Applying the benefit accorded to the assessees in the second proviso to Section 92CA, it is clearly evident that the arm's length price is within the permitted variation of + (-) 5% from the actual value of transactions and therefore the impugned addition has rightly been deleted by the ld CIT(A) Allowance value added tax from sales consideration while computing capital gain - HELD THAT:- The assessee was statutorily required to pay VAT on the sale consideration received. Therefore, the expenditure was directly related with transfer of the asset namely trade-mark. I do not agree with the assessing officer's view that the expenditure on VAT was not related to transfer of trade-mark. Rather, the VAT was directly related to sale of trade-mark and was to be necessarily paid. Thus, this is an expenditure directly related to transfer of asset and hence deductible from sale of consideration in view of clause (i) of section 48. The disallowance to be deleted.
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2019 (9) TMI 442
Penalty u/s.271(1)(d) - assessee has not filed any return of income under the provisions of FBT - HELD THAT:- Assessee has not filed return of FBT even though assessee has incurred several expenditures, which attract FBT provisions. The AO has issued notice u/s.115WH of the Act on 31-10-2008 and in several occasions. Further, notices were issued to the assessee and assessee has not filed any return of income even though the above mistake was brought to the notice of the AR, who was appearing for the regular assessment u/s.143(3) of the Act. But assessee chose not to file return of income under the provisions of Section 115WD of the Act. The AO also issued penalty notice u/s. 271(1)(d) of the Act, initiating penalty proceedings. During the penalty proceedings also, assessee submitted that assessee has neither received any assessment order under FBT provisions nor received any demand notice or penalty notice. The same was served on 24-05-2010. If there is any objection, assessee could have filed submissions before the AO. Even though the penalty proceedings were completed on 31-05-2010. The assessee has chose not to respond to any of the proceedings u/s.115WE of the Act nor penalty proceedings. Therefore, in our considered view, it is a fit case for levy of penalty. Accordingly, we sustain the penalty u/s.271(1)(d) of the Act. Accordingly, the Ground raised by assessee is dismissed.
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2019 (9) TMI 441
Penalty u/s 271(1)(c) - expenditure towards bad debts allowable u/s 36(1)(vii) - claim was disallowed consequent to the survey - HELD THAT:- Assessee has prepared two financial statements by writing off two different amounts as bad debts. The company has approved the amount as bad debts in the AGM. Since the Board of Directors proposed to disallow two different amounts as bad debts, the company prepared two sets of financial statements. Assessee, as claimed in the submission, supposed to file return of income with the approved balance sheet with the higher bad debts, but ended up filing the return of income as bad debts, resulted in declaring higher profit. The assessee filed revised return of income in order to rectify the mistake. Subsequently, because of survey, the AO found that the assessee has declared less income because of preparing two financial statements. AO could not establish that the bad debts claimed by the assessee in revised return of income was bogus or that the claim is not as per law. Assessee can declare the bad debts as approved by the shareholder in AGM. Since, there was a mistake, the assessee can revise the return. As the return of income was again revised after survey and due to these circumstances, the AO came to the conclusion that assessee revised the return of income in order to declare less income to avoid tax, which is not supported by any evidence. The conclusion reached by CIT(A) is proper and we are inclined to accept the findings of the CIT(A). Accordingly, ground raised by the revenue is dismissed.
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2019 (9) TMI 440
Penalty u/s 271(1)(c) - assessee has concealed his income to the extent tax was leviable on account of LTCG - HELD THAT:- As decided in MT. AMITA TULSYAN [ 2019 (5) TMI 849 - ITAT HYDERABAD] reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars - we are satisfied that the necessary condition for initiating and levying penalty u/s 271(1)(c) did not exist Therefore, we are satisfied that the penalty u/s 271(1)(c) is not leviable in the case before us. Since the facts and circumstances in all the other cases before us are being similar, following the above, the penalty u/s 271(1)(c) is deleted in all the cases. - Decided in favour of assessee.
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2019 (9) TMI 439
Low tax effect - Maintainability of appeal - HELD THAT:- Respectfully following the principles laid down by the Hon ble Supreme Court in the case of Commissioner of Income Tax-5,New Delhi Vs. Keshav Power Ltd. [ 2019 (8) TMI 811 - SC ORDER] and in the light of the above discussions, all the appeals filed by the Revenue are found to be non-maintainable, and as all the related cross-objections of the assessee arise only as a result of those appeals and merely support the order of the CIT(A), the cross objections filed by the assessee are also dismissed as infructuous
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2019 (9) TMI 438
Addition on account of the transaction with AE s by considering the assessee as a tested party - HELD THAT:- In the identical facts circumstances in the own case of the assessee, the ITAT Delhi Bench in the AY 2008-09 [ 2016 (5) TMI 157 - ITAT DELHI] held that AE s are accepted as tested party being the least complex for comparability analysis of international transaction of the assessee. Allowance of compensation on ESOP and reversal of compensation of ESOP - HELD THAT:- As decided in own case [ 2016 (5) TMI 157 - ITAT DELHI] factum of the employees becoming entitled to exercise options at the end of the vesting period and it is only then that the actual amount of discount would be determined, is akin to the quantification of the precise liability taking place at a future date, thereby not disturbing the otherwise liability which stood incurred at the end of the each year on availing the services. As regards the contention of the ld. DR about the contingent liability arising on account of the options lapsing during the vesting period or the employees not choosing to exercise the option, if some of the options remain unvested or are not exercised, the discount hitherto claimed as deduction is required to be reversed and offered for taxation in such later year. We, therefore, hold that the discount in relation to options vesting during the year cannot be held as a contingent liability - order of AO is reversed holding that deferred employees compensation debited to the profit and loss account is allowable u/s 37(1) of the Act. Regarding the reversal of ESOP expenses in P/L account - We find force in the argument of the learned AR that if the same amount of provision has suffered tax the in the earlier years, then this the cannot be made subject to tax in the year under consideration. The learned AR in support of his claim has also filed the details demonstrating the years in which such amount was suffered to tax. The details are placed on record - such details were not provided by the assessee before the lower authorities. Therefore we are inclined to restore this issue to the file of the AO for fresh adjudication Disallowance of deduction in respect of contribution made to Ranbaxy community healthcare society (RCHS) and Ranbaxy Science Foundation (RCF) - assessee company made a contribution and claimed as deduction u/s 80G but the deduction has not been set off due to a loss in the return - assessee claimed the same as business expenditure u/s 37/35 - AO rejected the contention of the assessee by observing that the earlier year case is pending before the Hon ble High Court of Delhi - HELD THAT:- As decided in own case [ 2016 (5) TMI 157 - ITAT DELHI] reverse the decision of the AO and direct to delete the disallowance of ₹ 47 lacs and ₹ 1250000/- of contribution made by appellant to Ranbaxy Community Healthcare Society and Ranbaxy Science Foundation. Furthermore regarding failure to deduct tax on this sum, Ld. DR. could not point out particular section, which warrants deduction of tax at sources on this payment. Therefore, we also hold that in absence of specific section under which the tax is required to be deducted on such contribution without their being any service rendered by the recipient of the contribution disallowance u/s 40a(ia) also cannot be made. Addition u/s 14A - HELD THAT:- As decided in own case [ 2016 (5) TMI 157 - ITAT DELHI] no disallowance over and above what is admitted by the assessee can be made. - Decided in favour of assessee Computing the book profit u/s 115JB for the disallowance made u/s 14A - HELD THAT:- As decided in own case [ 2016 (5) TMI 157 - ITAT DELHI] the amount of disallowance cannot be worked out by ld. AO without recording satisfaction on examination of books about the correctness of disallowance made by the assessee which in this case has been made by assessee of ₹ 3311708/-. We have also held that disallowance cannot exceed the amount of exempt income. Hence, now no disallowance survives u/s 14A of the act so far as normal computation of total incomeof the appellant. The AO has added to the book profit amount of expense disallowed u/s.14A applying rule 8D of the Income tax act. As per our considered view, no addition u/s.115JB is warranted for amount of disallowance u/s.14A Deduction u/s 80IB/IC - year of assessment - HELD THAT:- As decided in own case [ 2016 (5) TMI 157 - ITAT DELHI] claim u/s 80IB which is in the 7th year of its claim out of 10 years, has earned eligible profit and deduction thereon is claimed at the rate of 30% thereof and New Tablet Plant-I u/s 80IC for which this is the 4th year of the claim and assessee has claimed 100% of the eligible profit as deduction, cannot be disallowed in this year. Re-computing the capital gain/loss on leasehold land along with building during the year under consideration - HELD THAT:- Sale proceeds allocated by the assessee towards the land appear to be un-reasonable. In most of the cases, the value of the land appreciates, and the value of the building depreciates barring the in exceptional circumstances. But in the present case, no such exceptional circumstances were brought to our notice by the assessee. Therefore, we disagree with the value adopted by the assessee for the land and the building. But we also note that the AO has also not brought any reasonable basis for allocation the sale proceeds as discussed. To our mind, he should have referred the matter to the DVO for the valuation of the land and building for the allocating the sale proceeds, but he failed to do so. After considering the facts in totality, we allocate the sale value of the building as discussed above. Hence the ground of appeal of the assessee is partly allowed. Claim of weighted deduction u/s 35(2AB) on the cost of assets provided to employees working in approved R D facilities - HELD THAT:- As decided in own case [ 2016 (5) TMI 157 - ITAT DELHI] neither the AO nor the ld. DRP has applied its mind to the facts of this case and has not adjudicated on the issue. Facts of this expenditure with adequate details are also not record before us. Therefore we set aside this ground of appeal to the file of AO to verify the claim made by the assessee and if the facts and circumstances are similar to the issue decided by the ITAT in case of assessee for earlier years same may be allowed Deduction on account of demand raised by the Ministry of Chemicals Fertilizers, Government of India - HELD THAT:- As decided in own case [2016 (5) TMI 157 - ITAT DELHI] claim is prima facie allowable. Further, we also agree with the argument of ld. AR that when the claim is made by the assessee by way of note then the ld. AO as well as DRP should have considered the claim of the assessee on merits. Not considering the issue and not adjudicating thereon is an injustice to the claim to which the assessee is eligible. In view of this, we direct the Ld. AO to verify the claim - ground of appeal of the assessee is allowed with direction to AO for fresh adjudication as per the provision of the law. Adjustment of exchange fluctuation on external commercial borrowings, hedging contracts and hedging charges to cost of capital assets and allowing depreciation as part of the actual cost of depreciation - HELD THAT:- As decided in own case [2016 (5) TMI 157 - ITAT DELHI] we set aside this ground of appeal to the file of AO to verify the amount of expenditure incurred by the assessee on account of fluctuation of foreign exchange; and if they are on capital account related to acquisition of asset then to grant depreciation thereon in accordance with the provisions of law. In case if this expenditure is found to be of revenue, nature then allows the same u/s 37(1) of the Act. Addition treating the MTM gain as taxable income under the normal provision of tax and u/s 115JB - HELD THAT:- Amount written back by the assessee has already suffered the tax in the immediate preceding AY 2009-10. Accordingly, we hold that the amount written back by the assessee cannot be subject to tax either under normal computation of income or under section 115JB of the Act in the year under consideration. However, we find that the provision for ₹ 1431.63 crores was suffered to tax under section 115JB of the Act in the immediate preceding AY 2009-10 whereas it has been written back in the year under consideration for ₹ 1969.13 crores. Thus the difference between amount of provision disallowed under section 115JB of the Act in the immediate preceding assessment year 2009-10 viz a viz the amount written back in the year under consideration is of ₹ 537.50 crores ( 1969.13-1431.63 crores). Thus the assessee cannot claim the relief more than the amount suffered to tax in the immediate preceding AY 2009-10 while determining the income under section 115 JB of the Act. Thus we direct the AO to restrict the relief to the assessee while determining the income under section 115 JB of the Act to the extent of ₹ 1431.63 crores only - ground of appeal of the assessee is partly allowed.
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2019 (9) TMI 437
TP Adjustment - performance guarantee provided by the assessee to a third party - international transaction - HELD THAT:- There is absolutely no risk involved for the assessee in issuing the performance guarantee on behalf of its AE, warranting charging of any commission to mitigate that risk. Hence, we hold that assessee was fully justified in not charging any commission from its AE in the subject mentioned performance guarantee transaction. Hence, there is no need to make any adjustment to arm s length price thereof. In view of this decision in the peculiar facts and circumstances, the issue as to whether issuance of performance guarantee would fall within the ambit of an international transaction or not is left open and no decision is given herein Accordingly, the addition made in the sum is hereby directed to be deleted. Adjustment to arm s length price in respect of performance bank guarantee issued to Chandian Company for Water Electricity (CCWE) - HELD THAT:- The credit rating of the AE was not done in the instant case. It is not in dispute that the said guarantee rate of 0.93% which is charged by the bank on the assessee for issuing the bank guarantee in favour of CCWE on behalf of its AE, had been duly recovered by the assessee from its AE. Hence, it is only a case of recovery of cost by assessee without any margin. We are inclined to accept the argument of the AR that in the instant case, 0.93% of guarantee commission charged by Bank of India could be considered as the most direct comparable uncontrolled transaction to benchmark the rate of guarantee commission. The average rate adopted by the TPO at 1.04% is only an external data in the form of third party guarantees issued by the bank. When internal comparable uncontrolled price is available that should be considered as the most direct and reliable way to apply the arm s length principle. In any case, there is absolutely no loss to the assessee and no bearing on the profits or losses as the entire cost of 0.93% has been duly recovered by the assessee from its AE. Hence, the action of the CIT(A) in holding no further adjustment to ALP is required in respect of the subject mentioned guarantee commission transaction and consequently directing the deletion of addition confirmed. Guarantee commission recovered by the assessee at 0.93% from its AE was at arm s length in respect of bank guarantee given to CCWE for releasing the advance payment - HELD THAT:- The findings given hereinabove in respect of performance guarantee to CCWE by us would hold good for this bank guarantee also. Accordingly, we hold that the finding of the ld. CIT(A) and consequently deletion of adjustment on account of bank guarantee does not call for any interference. Depreciation on the actual cost of assets of the power transmission business acquired by the assessee - Demerger plan conceived - HELD THAT:- AO failed to explicate as to how the transfer would fall within the meaning of demerger as given under section 2(19AA) and as how all the condition specified under section 2(19AA) of the Act were satisfied. Revenue has not disputed the findings of the first appellate authority that the transfer in question is a case of slump sale and not a case of demerger. The valuation has also not been disputed. Under these circumstances, for the reasons noted in the assessee's appeal, we have to necessarily uphold the order of the first appellate authority and dismiss ground No, 1 of the revenue. Addition made towards mark to market loss of foreign exchange contracts outstanding at the end of the year - HELD THAT:- Loss claimed by the assessee on account of fluctuation in the rate of foreign exchange as on the date of balance-sheet is allowable as expenditure under section 37(1). As submitted that since the Accounting Standards mandatorily requires the Appellant to provide for such MTM losses, such accounting treatment needs to be considered even for the purposes of determining the allowability of deduction for such provision under the Act. In the present case too, the Appellant has been actually providing for such MTM losses in its Books of Account in accordance with the applicable Accounting Standards and accordingly, even for this reason, the deduction would be allowable to the Appellant while computing its taxable income. Thus, the Appellant prays that the MTM losses arising on account of forward contracts entered into by the Appellant be considered as an accrued loss to the Appellant and thereby allowed as deduction while computing the taxable income Disallowance made towards provision for doubtful debts and advances both under normal provisions of the Act as well as in computation of book profit u/s.115JB - HELD THAT:- AO has been taken due cognizance by the AO while framing the assessment, under the caption of provision for doubtful debts that the assessee had reflected the figure as nil . This itself again goes to prove that there was no debit to the profit and loss account in the sum as alleged by the AO while making the disallowance All the confusion which is not in consonance with the profit and loss account of the assessee (audited financial statements) and the revised computation of total income of the assessee. However, the note No.4(b) is relevant for the computation of total income which has already been discussed hereinabove, which in any case is not in dispute before us. CIT(A) had categorically observed from the ledgers of provision for doubtful debts and advances that there was absolutely no debit to the P L account in the sum of ₹ 4,63,28,957/- warranting any disallowance thereof. CIT(A) has not been controverted by the ld. DR before us. Hence, we do not find any infirmity in the order of CIT(A) granting relief to the assessee in this regard. - Appeal of the Revenue is partly allowed.
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2019 (9) TMI 436
Deduction u/section 80(IA)(10) r.w.s 10AA(9) - AO made the additions on the ground that, by giving deductions of interest on capital and remuneration to partner of the assessee firm after finding that the assessee had taken undue benefits of section 10AA by not claiming interest on capital and remuneration to partners which resulted in increase in exempted profit - HELD THAT:- In the present case, the assessee firm has not charged any interest and remuneration as per partnership deed does not prescribed so, therefore, the assessee firm cannot be compelled to charge interest or remuneration. CIT(A) was right in observing that the disallowance made by the AO on account of non-provision of interest and remuneration of cannot be disallowed under section 10AA(9) - disallowances so made by the AO are found to be erroneous and incorrect in law and facts as in the peculiar facts of the present case the partnership deed clearly lays down that no interest and remuneration is payable and hence, the CIT (A) was right in deleting the disallowance made by the AO on account of non-provision of interest and remuneration from amount of deduction under section 80IA(10) read with section 10AA(9) of the Act. The issue is covered by the decision Co-ordinate Bench of ITAT, Surat in favour of the assessee in the case of Ruta Jewels [ 2018 (10) TMI 1686 - ITAT SURAT] and no reason to deviate with the finding of ld. CIT(A), accordingly same is upheld. Thus, the grounds of appeal of the Revenue are dismissed
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2019 (9) TMI 435
Undisclosed income - Addition on the basis of figures as per documents seized from the residence of employee of the assessee group - surrender of extra amount subject to verification - HELD THAT:- On the paper seized in search the advance given is only mentioned and it is nowhere mentioned that what was the dates of the payments and what were the mode of payments. If it is presumed that the payments mentioned on this paper was actually made/realized to this party than the same should have been mentioned on the excel sheet seized from the residence of the assessee. Assessee in his search statement clearly stated that investment mentioned in Col B of the seized excel sheet is subject to verification from books of account and it may be more or at lesser figure. After recording findings, the ld. CIT(A) reached to the conclusion that the addition of ₹ 68,40,468/- is covered by the extra surrender so made by the assessee in his return of income. Findings so recorded by the ld. CIT(A) are as per the material on record. Accordingly, we do not find any justification to interfere in the findings so recorded by the ld. CIT(A), therefore, we uphold the order of the ld. CIT(A) in deleting the addition - Decided in favour of assessee
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Customs
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2019 (9) TMI 434
Detention of imported goods - Digital Multifunction Machines (DMM) - prohibited/restricted goods or not - non-compliance with the requirement of producing Extended Producers (EPR) certificate as per E-waste Management Rules (EMR), 2016 - case of petitioner is that the broad classification or entry under which the goods are imported comes under restricted category but not prohibited category? - section 110 of CA. HELD THAT:- The inspection of goods imported under the Bill of Entry has not been taken so far by the respondent. There is a serious dispute on whether the subject goods comes under restricted category or prohibited category under various Enactments, Rules and Regulations referred to above. This Court, without determination on the aspect by the authorities in accordance with law ought not to accept one view or the other strenuously canvassed by the parties. Section 110 deals with seizure of goods, documents and things by the officer authorized by the Act. Section 110(2) deals with a situation where notice under clause (a) of Section 124 is not issued within six months of the seizure of the goods under subsection (1) and such omission obligates the officer to return the goods to person from whose possession it is seized. Condition precedent for complying Section 110(2) is an order of seizure under Section 110 of Customs Act. It is not the case of petitioner that order for seizure of goods imported through Ext.P2 has been made by respondent. The allegations in the writ petition are to the effect that there is complete inaction notwithstanding the decision of Courts of competent jurisdiction on the very same point. While arguing the writ petition an attempt was made on one hand by the petitioner to get a declaration from this Court that the goods imported through Ext.P2 are entitled to be provisionally released albeit payment of applicable tariffs. On the other hand, an attempt is made by the respondent to get a decision on the goods imported, that the goods imported through Ext.P2 come under prohibited category. This Court is not pursuaded at this juncture to assume that the goods imported through Ext.P2 come either under restricted category or prohibited category. But at the same time the Court is not convinced with the continued inaction on the part of respondent in taking up the goods imported through Ext.P2 consignment, for inspection or get the goods inspected by authorities empowered by various Rules and Regulations, receive their reports and then pronounce its view/order. A situation resulting in stalemate is presented by the inaction of respondent. The petitioner notices the objections raised by the respondent in the counter affidavit filed in this behalf and the petitioner is given liberty to request within two weeks from today, the respondent herein or, through the respondent, such competent authority, to inspect the goods imported and obtain report or certificate, as the case may be, on the specification, nature etc of goods imported. By referring to the certificate/authorization/ report made available in this behalf the respondent passes an order whether the goods imported, comes under restricted category or prohibited category. If the goods imported come under restricted category what are the obligations the petitioner is required to comply with for customs clearance. The respondent passes orders as are deemed within five weeks from today.
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2019 (9) TMI 433
Validity of Detention order - smuggling - Gold of Foreign Origin - confessions obtained under Section 108 of the Customs Act, 1962 - HELD THAT:- A perusal of grounds of detention and in particular paragraph 7 thereof, clearly reflects that, it is completely bereft of any material expressed therein for the Detaining Authority to arrive at the conclusion to the effect that there is immediate possibility of your release from judicial custody . Further, as is axiomatic from a reading of the same paragraph, the Detaining Authority was aware that the detenus were in judicial custody at the Presidency Correctional Home, Alipore, Kolkata, at the time of passing of the impugned order. In the absence of cogent material, the statement in the grounds of detention regarding the alleged imminent possibility of the detenus coming out on bail, is mere ipse dixit, untenable and without any cogent basis, and consequently has to be ignored. In our considered view, therefore, in the absence of reliable material to this effect, the detention order is vitiated and cannot be sustained. Co-ordinate Benches of this Court in Navpreet Kaur Chadha [ 2013 (6) TMI 302 - DELHI HIGH COURT ] and Sandhya Jain [ 2017 (6) TMI 35 - DELHI HIGH COURT ], it is made clear, categorical and unequivocal that the settled position of law is that when the detenus are in judicial custody and there is no imminent possibility of their release on bail and even no bail applications are pending, the power of preventive detention ought not to be exercised. Threshold objection raised on behalf of the official respondent to the effect that, in view of the pendency of the representations before the Advisory Board which has adequate powers to examine the entire material - HELD THAT:- The present writ petition ought not to be determined at this stage is concerned, the same cannot be countenanced in view of the decision of the Hon ble Supreme Court Piyush Kantilal Mehta vs. Commissioner of Police, Ahmedabad City and Another [ 1988 (12) TMI 339 - SUPREME COURT ] where it was held that The concerned detenus be released forthwith, if not required to be detained in any other case - Petition allowed.
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2019 (9) TMI 432
Valuation of goods - Aluminium scrap - enhancement of value based upon the NIDB data - HELD THAT:- The enhancement stands set aside by Commissioner (Appeals) by referring the earlier matters of the same assessee in which case such assessments were set aside. Appeal dismissed - decided against Revenue.
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2019 (9) TMI 431
Condonation of delay of 99 days in filing appeal - HELD THAT:- It is mentioned in the Misc. Application that the appeals could not be filed within due date owing to un-avoidable circumstances. It is also submitted that the delay is bonafide and un-intentional and accordingly, prayed for condonation of delay - In view of the submissions as mentioned in the Misc. Applications, the delay in filing both the appeals before the Tribunal is condoned. Permission for withdrawal of appeal - monetary amount involved in the appeal - Appellant-Revenue has prayed for withdrawal of their appeals in terms of litigation policy vide Board s instruction being F.No.390/Misc./163/2010-JC (17.12.2015) dated 17.12.2015 - HELD THAT:- The prayer of the Revenue is allowed and the appeals are dismissed as withdrawn under National Litigation Policy. Application disposed off.
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Corporate Laws
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2019 (9) TMI 411
Validity of resolution plan - sections 397 and 398 of the Companies Act, 1956 - oppression and mismanagement - valuation of assets and liabilities - valuation of shares - appointment of auditor for auditing of statements of accounts - HELD THAT:- For auditing of statement of accounts, an auditor was appointed by the Tribunal, and two successive independent chairman, so also valuer was appointed at the request of parties in order to resolve the issue rather than to adjudicate it since various allegations of acts of oppression and mismanagement are hardly tenable, as alleged. Moreover, as stated supra, the Registrar of Companies has already conducted its investigations into various allegations made by the parties, and submitted a report for initiating criminal prosecution. Therefore, various allegations of acts of oppression and mismanagement as alleged by the parties are no more required to be gone into details. There are several violations/offences committed by the parties in the affairs of company, which prima facie requires to launch prosecution by the statutory authorities. Therefore, respondent No. 1-company cannot be ordered to wind up as per law, however, the Tribunal can exercise its powers on it, under section 402 of the Companies Act, 1956 read with section 242 of the Companies Act, 2013 so as to put an end to the affairs of company as alleged in the company petitions, by granting liberty to the statutory authorities to take appropriate action basing on their findings during investigation as stated in their letters. It is settled position of law that the Tribunal is entitled to exercise its powers under the above sections of the Companies Acts. Since, independent chairman and valuer have already discharged their duties, they are no more required to be continued and they are discharged of their duties. The board of directors as existed on the date of filing of cases stands restored so as to take appropriate action basing on the valuation report. It is declared that the report of valuation of assets and liabilities of M/s. Omega Hospitals P. Ltd., dated September 6, 2018 submitted by SNSB Associates, chartered accountants, is legal and the same is binding on both the parties - Both the parties are at liberty to take appropriate action either to buy/sell their respective shareholding of respondent No. 1-company basing on the valuation report dated September 6, 2018.
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Insolvency & Bankruptcy
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2019 (9) TMI 417
Initiation of Corporate Insolvency Resolution Process - non-delivery of notice of demand upon the Corporate Debtor - HELD THAT:- Application of Appellant was required to be rejected merely on the ground of non-delivery of notice of demand upon the Corporate Debtor and the Adjudicating Authority had no jurisdiction to record finding with regard to merits of the claim. Period of limitation - Application filed in Form 5 in compliance to the order of Adjudicating Authority seeking initiation of Corporate Insolvency Resolution Process under Section 9 of I B Code was not hit by limitation but the application was premature as the demand notice stated to have been sent on 11.10.2017 could not be served upon the Respondent and was received back with endorsement Addressee Left . Even the notice sent on alternate address was returned with endorsement No Such Firm . In absence of service of demand notice upon the Respondent - Corporate Debtor whose existence at the given address itself was doubtful, the Appellant - Operational Creditor was not entitled to seek triggering of Corporate Insolvency Resolution Process. Once application in prescribed form was filed by the Appellant, the Adjudicating Authority was empowered to reject the same for failure on the part of Operational Creditor to deliver demand notice to the Corporate Debtor. We find ourselves left with no course but to dismiss the appeal though only for reasons of non-compliance with the procedural requirements as laid down u/s 8(1) r/w Section 9(5)(ii)(c) of I B Code. The impugned order as regards findings on admissibility, sustainability and proof of claim besides observations as regards limitation cannot be supported and is set aside. The Appellant shall be at liberty to seek triggering of Corporate Insolvency Resolution Process under Section 9 of I B Code afresh after complying with the mandatory requirement of Section 8(1) of I B Code within thirty days from the date certified copy of this judgment is provided to it. The period for which the Appellant has been prosecuting his claim before the Adjudicating Authority and before this Appellate Tribunal shall be excluded from computation of limitation.
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2019 (9) TMI 415
Application u/s 7 of the Insolvency and Bankruptcy Code, 2016 - Corporate Debtor failed to pay the debt and default occurred - HELD THAT:- Adjudicating Authority found that there is a debt and default and the application filed by the Financial Creditor was complete, we find no infirmity in the impugned order of admission. We observe that if the Financial Creditor satisfies all the requirements, the Adjudicating Authority has no discretion to reject the application or defer it unless the Corporate Debtor submits that they intend to settle the claim. Only if such request is made to settle the claim, the Adjudicating Authority may give one opportunity to the Corporate Debtor to do so instead of admitting the application.
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2019 (9) TMI 414
Seeking to initiate Corporate Insolvency Resolution Process - whether outstanding amount is free from dispute? - HELD THAT:- Petitioner that the Respondent is doing its business in the leased premises. Even though notice was issued as early as 2.08.2017, the Petitioner failed to take any action as threatened except issuing another Demand Notice dated 25.10.2018. Respondent, admittedly raised substantial dispute, in terms of Lease Deed in question and the Petitioner, even prior to the issue statutory Demand notice in question. There are serious allegations made against the Petitioner saying that the Building in question was constructed illegally and it was not issued even occupancy certificate and criminal proceedings too was initiated against the Petitioner for cheating, mischief etc., and stated to be pending. Petitioner did not prove that it had complied with all the obligations cast upon it in the Lease Deed to claim rents on the premises in question. Petitioner has alternative remedy to initiate eviction and recovery proceedings by terminating the lease in question as mentioned in their legal notice, as referred to above. However, the Petitioner chose to invoke provisions of Code without substantiating that they are entitled to claim for the alleged rent accrued. They have also not stated as to how period of 45 days exemption of rent and the Advance of ₹ 35 Lakhs deposit were treated. Petitioner has not produced any evidence to show that the lease premises were delivered to Lessee as per the terms and conditions mentioned in the Lease Deed in question. Moreover, the Petitioner failed to attend the defects as pointed out by the Respondent in their reply. Main lease deed was executed by and between the Operational Creditor and M/s. New Deccan International. The prime responsibility lies on M/s. New Deccan International, and subsequently only, they have executed amendment lease deed executed on 05.04.2017. The amendment lease deed only refers all terms and conditions as mentioned in the Lease deed dated 10.12.2015 except the Rent would be paid by the present Corporate Debtor. However, the Petitioner chose to file the present case only against one of them absolving original Lessee i.e. M/s. New Deccan International. Proceedings under provisions of Code are summary in nature and disputed questions fact and law cannot be gone into under it. In the instant case, the terms and conditions as per the Lease Deed in question are not complied with by the Petitioner, especially with regard statutory permission, occupancy Certificate etc., to claim any rent under the Deed. Whether the Petitioner is entitled to claim rents on the leased property itself is in dispute and the Respondent has also raised prior dispute. Therefore, proceedings initiated by the Petitioner under the Code are misconceived and the Petitioner also failed to make out any case that the outstanding amount is free from dispute and the claimed amount is also varying and not correlated as detailed supra. Therefore, the petition is liable to be dismissed.
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PMLA
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2019 (9) TMI 430
Money Laundering - sting operation - Reduction in quantum of penalty - Violation of the reporting obligations on part of the respondent banks - issuance of a warning in writing under Section 13(2)(a) of the Act - whether the Appellate Tribunal could modify the order passed by the Director, FIU by reducing the penalty imposed? - HELD THAT:- It is apparent that FIU s contention that provisions of Section 13(2) of the Act, as in force prior to amendment on 15.02.2013, are applicable, is bereft of any factual foundation. The said contention is premised on the basis that the sting operation had been conducted prior to 15.02.2013 and, therefore, the respondent banks had violated the provisions of the Act, prior to Section 13(2) of the Act being amended. Consequently, the respondent banks are required to be visited with penalty as provided under Section 13(2) of the Act as in force prior to 15.02.2013. However, since there is no material on record to establish that the sting operation had been conducted prior to 15.02.2013, the aforesaid contention is unfounded. The sub-section (2) of Section 13, as in force prior to 15.02.2013, expressly provided that in case a banking company, financial institution or intermediary or any of its officers fail to comply with the provisions of Section 12 of the Act, then the Director, FIU may by an order, levy fine on such banking companies, financial institution or intermediary which shall not be less than ₹ 10,000/- but may extend to ₹ 1,00,000/- for each failure - Section 13(2) of the Act was substituted by Clause (iii) of Section 11 of the Prevention of Money-Laundering (Amendment) Act, 2012. By virtue of the said amendment, it was no longer necessary for the Director to impose a monetary fine; he was enabled to pass other orders as may be warranted, including issuing a warning in writing or issuing directions for compliance with specific instructions or issuing directions for sending reports as may be prescribed on the measures being taken by the reporting entity. The object of amending Section 13(2) of the Act is clearly to enable the Director, FIU to issue such orders as may be warranted. Under the unamended provision, the Director had no discretion except to levy a fine in cases where failure to comply with the provisions of Section 12 of the Act was established. He, however, had the discretion to determine the quantum of fine within the limits as prescribed. The maximum fine that could be imposed by him was ₹ 1,00,000/- for each failure. The same could be reduced, however; but not less than ₹ 10,000/-. The rigors of the aforesaid provisions have been relaxed by virtue of Section 11(iii) of the Prevention of Money-Laundering (Amendment) Act, 2012. Thus, in cases where only a warning is warranted, it is not necessary for the Director to impose a monetary fine. Even if it is assumed that the sting operation was conducted prior to 15.02.2013, there is no infirmity in the decision of the Appellate Tribunal to modify the punishment from a monetary fine to a warning in writing, in terms of Section 13(2)(a) of the Act as substituted with effect from 15.02.2013 - appeal dismissed.
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2019 (9) TMI 429
Failure to report attempted suspicious transactions - Prevention of Money Laundering (Maintenance of Records) Rules, 2005 - HELD THAT:- There is no doubt that the warning letter dated 18.09.2014 was issued by the FIU in respect of the alleged violation of Section 12 of the PMLA, read with the Rules. The subject matter of the allegations included the internal control systems and failure to submit the STRs in relation to the sting operation conducted by Cobrapost. It is clear from the communications that the sting operation conducted by Cobrapost had set in motion an inquiry by the FIU which was not only limited to non-reporting of the transactions, which were subject matter of the sting operation, but also an extensive examination into the internal control system and anti-money laundering procedures established for compliance of the statutory obligations by the respondent. Given the manner in which the inquiry was conducted, there is no scope for separating the allegation relating to non-reporting of transactions, which were subject matter of the sting operation and the systems put in place by the respondent bank for compliance with its reporting obligations. Thus, there is merit in the respondent s claim that the letter dated 18.09.2014 had closed the entire matter by the issuance of a warning - Having issued a warning to the respondent and the respondent having accepted the same, there was no occasion for the FIU to pass the order dated 04.09.2015. Appeal dismissed.
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2019 (9) TMI 428
Money Laundering - proceeds of crime - commission of the offence of Money Laundering under Section-3, PMLA - guilty of the offences under sections 120B read with 420, IPC; and were acquitted in respect of charges under section 467, 468 and 471, IPC - allocation of the coal block - HELD THAT:- The investors have invested in the shares of the Appellant company due to the coal allocation and coal linkage (allocation). Adjudicating Authority s reading of the aforesaid Statements has gone behind the said Statements and amounts to disbelieving the same, without any factual basis or material to the contrary. The aforesaid statements recorded under section 50 of the PMLA have been duly signed and affirmed by the persons giving the statement. The proceedings under Section 50 PMLA are deemed to be judicial proceedings within the meaning of Section 193 and Section 298 of the IPC. The aforesaid Statements have not been disputed by the ED who even has relied upon documents in support of the said OC as well as in Show Cause Notice. The Adjudicating Authority cannot disbelieve the statements of the investors or to interpret them its own matter. The same is not permissible in law - the Adjudicating Authority has gone beyond the material before it to arrive at the finding that the Appellant and/or the other Defendants in the said OC invited investors/public to invest in the Appellant company using the allurement of the allocation of the coal block or its possible allocation, and that therefore, derivation of benefit from such investment would constitute proceeds of crime. The finding in the impugned order was based on materials beyond the record of the present case because there is nothing on record to show that the investors invested in the shares of the Appellant company on being invited by it or by any of the officers of the Appellant company and the allocation or the possibility of allocation of coal block was used as allurement to such investors. There is no conduct, act or omission on the part of the Appellant that has been shown which would lead the ED to believe that the alleged proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceeding under Chapter 2 of PMLA - The transactions pertaining to receipt of SAM from various other companies are duly documented, above-board and legal transactions.The proceedings related to the CBI Charge-sheet and the proceedings under the PMLA have been widely reported and publicized in the media, as such, no prudent person would be willing to deal or transact with Defendant No.1 concerning the attached assets. There can be no question of profiteering or benefitting from the coal allocation and thus, no question of any proceeds of crime - appeal allowed.
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2019 (9) TMI 427
Money laundering - proceeds of crime or not - alleged dishonest and fraudulent availment of credit facilities consisting of Cash Credit limit by using fake documents and accommodative transactions on paper - retention of policies, FDs and other important documents - offence punishable under Sections 120B 419, 420, 467,471 of Indian Penal Code (IPC) - scheduled offences or not - HELD THAT:- It is an admitted position that the said policies and FDs are in the name of Jiban Kumar Mitra Mrs. Malobika Mitra, who are the parents of the appellant. The specific submission has been made that her father had been working with I.O.C. for a long period of time and the said policies and FDs are the retirement benefits received from the employers. It is the matter of fact and same is not denied by the ld. counsel for the respondent during the course of the arguments. The ld. counsel for the appellant has also shown the photocopies of the FDs policies which were belonging to the father and mother of the appellant which was, on his retirement, invested the earnings from his retirement benefits and LIC polices. It is also stated by the ld. counsel for the appellant that the same cannot be proceeds of crime. It is apparent that while passing the impugned order, the reply of the appellant has not been dealt with or discussed at all nor any finding arrived by the adjudicating authority that the said FDs and LIC policies which were in the name of Father and mother of the appellant were the proceeds of crime or the appellant has derived the funds towards the same. Nothing has been discussed in the impugned order, even copy of the reasons to believe has not been filed nor produced during the course of the arguments. They are never charsheeted under any offence. Impugned order is set aside in respect of the appellant property - As far as the said LIC Polices and FDs, the same are de-sealed/de-frezeed forthwith - The impugned order has been passed without application of mind nor reply filed by the appellant has been considered by the Adjudicating Authority - appeal is allowed.
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2019 (9) TMI 426
Money Laundering - Provisional Attachment of property - order to vacate the property - VAT refund availed on the basis of forged and fabricated documents - It is the contention of the appellants are that they were not a party before the adjudicating authority though they are the owner of portion of the property in question - HELD THAT:- The offences are of the year 2012- 13. Whereas the property in question was acquired in the year 2011 by Smt. Seema Garg. It is the contention of the respondent that the property in question has been attached as value thereof. There is no allegation that the property in question has been acquired out of proceeds of crime. When the case was registered the appellants and others have already purchased the property in question and in actual physical possession of the same. There is no rebuttal from the side of the respondent in this regard - The property in question was attached without affording opportunities of the appellants. The appellants are bona fide purchasers. In the present case, the case of the appellants are in a better footing as the property in question has been acquired prior to the alleged commission of offences by the husband of Smt. Seema Garg and there is no allegation that the proceeds of crime has been used in any manner to acquire the property in question - There is nothing on record to show that any prosecution complaint with respect to property in question has been filed. The provisional attachment order coupled with order dated 20.10.2016 of the adjudicating authority to the extent of property in question purchased by the appellants is set aside - application disposed off.
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2019 (9) TMI 425
Money Laundering - provisional attachment order - proceeds of crime - Section 26 of Prevention of Money Laundering Act, 2002 - scheduled offences or not - violation of the provisions of sections 120-B read with 409, 420, 467, 468 471 of Indian Penal Code and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988 - HELD THAT:- Tribunal is of the view that the property admeasuring 1180 sq. ft. was not involved in the offence of money laundering under Section 3 of the Prevention of Money laundering Act, 2002. From the entire gamut of the matter that the claim of the respondent with regard to 1080 sq. ft. is a civil dispute. Even tribunal has no jurisdiction to decide the same despite of the fact that the appellants have got the sale deed registered in their favour for the part of the said portion. This tribunal has also no jurisdiction to declare that the appellants are the owner of the entire land. It is disputed fact and it is to be decided in other forum and not here. It is also the admitted position that by virtue of sale deed dated 22.01.2007, only the vacant land 308 sq. ft. out of 1180 sq. ft. was purchased. For remaining portion, the appellant has merely produced the receipt in order to show that certain payment was made the actual owner. The possession of the appellants was not disputed by the counsel for the respondent. At the best, it may be the illegal possession. It is admitted position that no civil litigation is pending against the appellants for remaining portion either by the owner of the property or accused party or the bank. Thus, the inference cannot be drawn that the appellants have no right at all in view of having the possession since 2004. The period of 12 years in order to claim adverse possession also expired. No suit is pending against the appellants. The provisional attachment order is set aside - appeal allowed.
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2019 (9) TMI 424
Money laundering - proceeds of crime - Retention of continuation of order of freezing / Panchnamma issued under section 17(1A) of PMLA - case of the respondent in the reason to believe as well as in the application filed under Section 17(4) was that it was a tainted amount and it amounts to money laundering - whether 1,43,38,330 shares subscribed in 2003 by foreign remittances through State Bank of India are proceeds of crime under section 2(1)(u) (notified on 1.7.2005)? HELD THAT:- Tribunal is of the view that at the best, ED might be frozen the amount at the hand of the appellant if any case is made out against the appellant. It is rightly observed by the Hon ble Court. In the present case, the ED has sought to attach the assets of the Appellants by making out a case of equivalent in value thereof. The same is endorsed by the Adjudicating Authority. For making out such a case, the ED, first of all, has to prime facie establish that the appellants have committed the offences and they have a nexus or a link in relation to criminal activities which is constituting proceeds of crime and the property constituting the value of any such property. The attached property being value of such property , has to have a link or nexus with the actual property derived from criminal activity and it cannot merely be a property equivalent in value , attachment of which is only permissible if the proceeds of crime is taken or held outside India. Such conditions are missing from the facts of the present case, nor it is the case of respondent as nothing has been even prima facie established that the appellants are involved in the money laundering. When the case of the ED falls under equivalent in value of any such property , it cannot take any unrelated property which has no nexus or link with the actual proceeds of crime and attach the same as property equivalent in value in the absence of evidence. In the present case, such property means the shares, in question, which were admittedly acquired in the year 2003. The relevant period of bribes was from 2008 onwards and secondary in the year 2003, PMLA was in existence. It is also a matter of fact that Mr. D.P. Singh, advocate for the respondent, has conceded before the Hon ble Delhi High Court that the shares were not acquired from proceeds of crime.Thus the question of freezing the shares even equivalent in value does not arise.Even there is no material or evidence available prima facie as of today about the involvement of appellants. It is very clear from sub-section(4) of Section 26 that this Tribunal is given power to confirm or modify or setting aside the impugned order. No power is given to pass a decree for recovery of amount. The recovery of amount, interest and to receive the compensation and damages lies with the civil court. There is no evidence available on record against the appellants. They are not charge-sheeted. No prosecution complaint is pending, however, in the interest of justice, equity and fair play and to strike the balance in the present circumstances and the nature of case and in view of investigation is sub-judice by the police under schedule offence against other parties - All the four appeals are partly allowed by modifying the impugned orders, on the compliance is made as per terms mentioned in the preceding paras within the period of one month.
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Service Tax
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2019 (9) TMI 413
Levy of penalty u/s 76 and 77 of FA - taxability of Renting of Immovable Property Services - non payment of tax under Bonafide belief - no suppression of facts - HELD THAT:- The undisputed facts are that the appellant is a local authority and hence, there can be no issue as to suppression of any facts and that too, with an intent to evade any tax. Further, though the activity of renting of building is not a statutory function, the building has been rented to earn revenue to perform the statutory functions entrusted on the appellant under Article 243W of the Constitution of India. Further, the bona fide belief of the appellant can be vouched from the Circular No. 13052/2016/D2 dated 03.05.2017 issued by the Commissioner of Municipal Administration to all the Municipal Commissioners clarifying the exemption available under Sl. No. 39 of Mega Exemption Notification No. 25/2012-ST dated 20.06.2012. Also, the taxability of Renting of Immovable Property Services has not attained finality and is still pending before the Larger Bench of the Hon ble Apex Court, in the matters of UNION OF INDIA AND ORS. VERSUS UTV NEWS LTD. [ 2018 (5) TMI 1367 - SUPREME COURT] and MINERAL AREA DEVELOPMENT AUTHORITY ETC. VERSUS M/S STEEL AUTHORITY OF INDIA ORS [ 2011 (3) TMI 1554 - SUPREME COURT] and therefore, it can be safely assumed that the doubts in the mind of the appellant as to taxability or otherwise of the renting activity was in good faith, which is also due to the fact that there are contrary decisions available and that finally, it has reached the Hon ble Supreme Court. Thus, the main issue of taxability on the Renting of Immovable Property itself being under litigation, the ingredients of Section 76 of the Finance Act, 1994 can be assumed to be absent, for levying penalty - penalty u/s 76 set aside - However, the penalty under Section 77 ibid is imposed because of delay/failure in filing the ST-3 return, which is an admitted fact. Appeal allowed in part.
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Central Excise
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2019 (9) TMI 423
Principles of Natural Justice - the petitioners were not given an opportunity to cross examine the witnesses - HELD THAT:- No reply statement has been filed opposing such a statement made in the counter affidavit. As such it is seen that the petitioners were granted opportunity at least on four occasions which have not been availed by the petitioners. It is also seen that the petitioners has not produced any list of witnesses whom they intend to cross examine. In these circumstances, it can be said that sufficient opportunities were extended to the petitioner, which was not availed by them, within a reasonable time. In cases where there is violation of principles of natural justice, this Court would be justified in interfering with the final orders inspite of an appeal remedy available to the petitioner - Since the respondents had granted sufficient opportunities to the petitioner, it is held that there is no violation of principles of natural justice and hence setting aside the impugned order will not be proper. Since the petitioners have approached this Court within the appeal time prescribed to approach the CESTAT, this Court is of the view that the petitioners can be granted an opportunity to file an appeal within a stipulated time - petition closed.
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2019 (9) TMI 422
Condonation of delay in filing appeal - Service of order - proper mode of communication - appeal dismissed on the ground of time limitation - whether the Tribunal was justified in declining to condone the delay when the Excise and Customs Department had failed to establish that the Appellate order dated 08/02/2012 was tendered to the Appellant by registered post as mandated under Section 37(1)(a) of the Act of 1944? HELD THAT:- The stipulation or by speed post with proof of delivery or by courier approved by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 which appears in Sub-clause (a) was inserted by Act No.17 of 2013, Section 100(i) w.e.f. 10/05/2013. Thus, before said amendment/insertion, imperative it was for the department to have sent/tendered the decision dated 06/02/2012 by registered post with acknowledgment due - Various correspondence on record entered into between the Appellant with the Postal Department and also the findings arrived at by the Tribunal reveals that the order dated 06/02/2012 was tendered through speed post which apparently was not the mode of service prior to 10/05/2013. The Tribunal ought to have considered the fact that the copy of final order was delivered vide letter No.ST/R-I/GWL/DAR-129/2006-07/171, dated 17/02/2014 and not on 24/02/2012. The Tribunal having glossed over the same, the impugned order cannot be given the stamp of approval. The matter is relegated to the Tribunal for its decision on merit - Substantial questions of law is answered in favour of the Assessee and against the Revenue.
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2019 (9) TMI 420
Extension of time for making pre-deposit - auction of property - recovery of amount from auction of property - HELD THAT:- As the department has been able to recover the amount of ₹ 2.61 Crore, we are of the view that the applicants may not be now asked to deposit the amount towards the pre-deposit. The interest of the revenue could be said to be protected. The applicants must get an opportunity to argue the appeal on merits rather than the appeal being dismissed on the ground of failure of pre-deposit. CESTAT is directed to hear the appeal on merits without insisting for the pre-deposit - appeal restored - application disposed off.
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2019 (9) TMI 412
Issue of fresh show cause notice after the withdrawal of the first SCN - Classification of goods - appellant contended that the SCN once issue shall be adjudicated by determining the demand of duty. Therefore, the withdrawal of the first SCN is illegal, consequently, the present SCN also became illegal - HELD THAT:- The adjudicating authority has not considered very vital legal issue that once a chemical test examination was done by the Chemical Examiner-Vadodara, thereafter if re-test has been done, it should be done by the Higher Authority i.e. Chief Chemist-New Delhi - The issue that once an SCN was issued whether the same is permitted to be withdrawn without adjudication was also not considered properly by the adjudicating authority. The matter needs to be remitted back to adjudicating authority - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2019 (9) TMI 421
Principles of Natural Justice - reversal of Input Credit - TNVAT Act, 2006 - the main ground argued is that the detailed objections filed by the petitioner on 17.11.2014 and 21.01.2015, both filed along with voluminous annexures, have not been considered by the Assessing Officer - HELD THAT:- In the present case, there is no dispute with the position that the primary details in support of the petitioners' claim of ITC as required under Rule 10(2) of the Rules, have been produced by the petitioner and are part of the record. In such a situation, there is no justification for the Assessing Authority, to have arbitrarily reversed the claim of ITC. No doubt, the Assessing Officer is empowered to reverse a claim of ITC, but only if he is in a position to establish that the claim was incorrect. In the present case, the reversal of the claim of ITC is based on materials allegedly collected from the departmental website that have, admitted nor been supplied to the petitioner despite its requests. It has thus been denied an opportunity to peruse or rebut the same - In such circumstances, the addition made on this score is set aside - the issue is remitted to the file of the Assessing Officer to be redone afresh after providing all material sought to be relied upon to the petitioner, and affording it an opportunity of personal hearing. Alleged difference between the purchase turnover in the monthly returns filed by the petitioner and its profit and loss accounts - HELD THAT:- The petitioner has placed, for the perusal of the Assessing Authority, the details of such freight charges as well as discounts at pages 15 to 24 of the compilation of papers. Though the proposal on this account has been confirmed, there is nothing in the operative portion of the order of Assessment to indicate that the material supplied by the assessee has been perused or analysed in proper perspective - issue remitted to the file of the Assessing Officer for consideration in the light of the materials already available on record. Certain incomes received by the assessee in relation to its operations with AMWAY - HELD THAT:- There are no findings whatsoever in relation to this issue in the context of the material filed by the assessee or its submissions, that find place in the impugned order - this matter also remitted for reconsideration. Addition of estimated turnover towards deletion of assets as condemned articles - HELD THAT:- This position has also not been taken into consideration by the Assessing Authority, who simply estimates the turnover on the assumption that the assets have been sold in the relevant periods, despite specific assertions of the petitioner to the contrary - This issue is also set aside and remitted to the file of the Assessing Officer. Penalty - HELD THAT:- A perusal of the impugned order indicates patently that the Assessing Authority has not applied his mind to the materials furnished by the petitioner and as such, the orders of Assessment are vitiated by lack of application of mind and lack of consideration of relevant particulars that form part of records of the Assessing Officer. Thus, all orders of assessment are set aside - penalties also set aside. Petition disposed off by way of remand.
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2019 (9) TMI 419
Refund of input tax credit - export of goods to Nepal - refund was rejected on the ground that the actual export was not sufficiently proved, there is no shipping bill or bill of lading to support the export - The Learned counsel for the revision petitioner, submitted that, he is in possession of the entire documents in original. According to him, at the time of argument the Tribunal had never expressed that the copies produced therein were insufficient. HELD THAT:- The counsel made an attempt to produce the originals of the documents across the Bar. But, we are of the opinion that a perusal of such records while exercising the revisional jurisdiction by this court and taking a decision on the basis of such records may not be proper. The interest of justice could be served if the revision petitioner is given liberty to produce the original documents before the Tribunal. For the said purpose, we are inclined to remand the matter for a fresh consideration and disposal by the Tribunal. The appeal is remanded to the Tribunal for fresh consideration and disposal - Appeal allowed by way of remand.
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Wealth tax
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2019 (9) TMI 416
Wealth tax assessment - asset to fall within the ambit of taxable asset - whether the land being Khasra No. 335, Village Bandwahi, Gurgaon admeasuring 21.65 acres is a taxable asset for the purpose of wealth tax or not ? - HELD THAT:- Here in this case, the first exception that the land has been classified as agricultural land in the records of the Government and is used for the agricultural purposes will not apply as assessee himself has contended that it was a non agricultural and uncultivable land being (Gair Mumkin Pahar). Now the only condition left which is required to be examined, whether any construction of a building is permissible under any law for the time being in force the area in which land is situated. If it is ascertained that construction of a building is permissible, then ostensibly it will be held as taxable asset for the purpose of imposing wealth tax. However, if construction of a building is not permissible, then it shall be outside the scope of taxable asset. In view of the aforesaid position of law, we are of the opinion that this matter needs to be sent back to the file of the AO, who shall seek clarification from the Government authorities or the local authority as to whether the construction is permissible by any law in force on the land in which this asset is situated. Assessee will also try to obtain necessary certificates/Records from the authorities in this regard and cooperate with the AO and if it is found to be a waste land where construction is not permitted, then it should be removed from taxable asset. With this direction appeal of the assessee is allowed for statistical purposes.
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Indian Laws
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2019 (9) TMI 418
Dishonor of Cheque - section 138 of NI Act - case of petitioner is that they are neither a party to the agreement nor is an authorised signatory - petitioner was prosecuted in the capacity of the director of the company - subsisting debt or liability or not - section 141 of NI Act. Whether the petitioner, being the director of the company, which issued the cheque in question, could be deemed guilty of the offence punishable under section 138 of the Act? HELD THAT:- When the managing director or joint managing director is sought to be prosecuted for the offence under section 138 of the Negotiable Instruments Act, there need not be any specific averment in the complaint that the managing director was in charge and responsible for the conduct of the business of the company. It stands to reason that the affairs of the company being managed by the managing director, he is answerable to the acts of commission or omission by the company without further proof of the fact that at the time of the commission of the offence he was in charge of the affairs of the company. In a case as in the instant case, when the managing director and also a director of the company are sought to be prosecuted, it cannot be presumed that the director was also running the affairs of the company and was in charge and management of the company. The IDEB Projects P. Ltd., did not owe any debt or liability to the complainant. According to the complainant, the cheque in question was issued to satisfy the liabilities or the debt incurred by M/s. IDEB Parkway Holdings P. Ltd., and M/s. IDEB PSB Estates P. Ltd. Under the said circumstances, without there being any further material to show that as on the date of occurrence of the liability, the petitioner being one of the directors of the company was fully aware of the affairs of the company and with her knowledge and consent, the cheque in question was issued through IDEB Projects P. Ltd., merely by reproducing the ingredients of section 141(2) of the Act , the criminal liability cannot be fastened on her. The petitioner cannot be prosecuted in her capacity solely on the ground that she was director of the said company as on the date of the issuance of the said cheque. The prosecution of the petitioner for the alleged offence under section 138 of the Act is bad in law and cannot be sustained. - the prosecution of the petitioner has turned out to be an abuse of the process of court and is liable to be quashed - application disposed off.
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